Financial Performance - Net income was $54.8 million ($1.21 per diluted common share) compared to net income of $57.3 million ($1.19 per diluted common share) for the prior year quarter[6] - Core earnings were $44.2 million ($0.98 per diluted common share) compared to core earnings of $58.4 million ($1.23 per diluted common share) for the prior year quarter[6] - Pre-tax pre-provision net income was $76.2 million compared to $71.3 million for the prior year quarter[6] - Non-interest income increased by 34% or $9.0 million compared to the prior year quarter, primarily due to a $16.7 million gain from the disposition of the Company's insurance business[7,33] Balance Sheet - Total assets were $13.3 billion, a 3% increase compared to $12.9 billion at June 30, 2021; excluding PPP balances, total assets grew 10% year-over-year[8] - Total loans, excluding PPP loans, increased 17% to $10.8 billion compared to $9.2 billion at June 30, 2021[8] - Year-over-year deposits grew 1%, driven by 3% growth in noninterest-bearing deposits[8] Asset Quality - Non-performing loans to total loans was 0.40% compared to 0.93% at June 30, 2021[7] - Nonperforming loans totaled $43.5 million, compared to $94.3 million at June 30, 2021[7] - Allowance for credit losses on loans and leases was $113.7 million, or 1.05% of loan balances at June 30, 2022[59] Capital - Risk-based capital ratio of 16.07%, a common equity tier 1 risk-based capital ratio of 11.58%, a tier 1 risk-based capital ratio of 11.58%, and a tier 1 leverage ratio of 9.53%[7] - The company repurchased 625,710 shares of its common stock for $25.0 million at an average price of $39.93 per share during 2Q 2022[86]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ____________ Commission File Number: 0-19065 SANDY SPRING BANCORP, INC. (Exact name of registrant as specified in its charter) Maryland 52-1532952 (State of incorporat ...

Sandy Spring Bancorp, Inc. (NASDAQ:SASR) Q1 2022 Earnings Conference Call April 21, 2022 2:00 PM ET Company Participants Daniel Schrider – President and Chief Executive Officer Aaron Kaslow – General Counsel Phil Mantua – Chief Financial Officer Conference Call Participants Casey Whitman – Piper Sandler Erik Zwick – Boenning & Scattergood Catherine Mealor – KBW Russell Gunther – D.A. Davidson Brody Preston – Stephens Operator Hello and welcome to today's Sandy Spring Bancorp, Incorporated Earnings Conferenc ...

Subtitle Copy 4th Quarter 2021 Investor Presentation February 8, 2022 1 Forward Looking Statements and Non-GAAP Financial Information 2 Forward-Looking Statements Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the effect of the pandemic on our borrowers and their ability to make payments on their obligations, the effectiveness of vaccination programs, and the ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Sandy Spring Bancorp, Inc. is a community banking organization with over 50 locations in the Washington metropolitan area, focusing on commercial and retail banking, mortgage, private banking, and wealth management services Company Overview as of December 31, 2021 | Metric | Value | | :--- | :--- | | Total Assets | $12.6 billion | | Total Loans | $10.0 billion | | Total Deposits | $10.6 billion (as of Dec 31, 2021) | | Locations | Over 50 | | Primary Markets | Central Maryland, Northern Virginia, Washington D.C. | - The company completed the acquisition of Revere Bank on April 1, 2020, which added over **$2.8 billion** in assets, and acquired wealth advisory firm Rembert Pendleton Jackson (RPJ) on February 1, 2020, which had approximately **$1.5 billion** in assets under management[14](index=14&type=chunk) - The company participated extensively in the Small Business Administration's (SBA) Paycheck Protection Program (PPP), originating **8,574 loans** totaling **$1.6 billion** in 2020 and 2021. As of December 31, 2021, **$1.4 billion** of these loans had been forgiven, with an outstanding balance of **$183.5 million**[24](index=24&type=chunk)[25](index=25&type=chunk) - The company's workforce as of December 31, 2021, consisted of **1,116 employees**, with **58.6%** being women and **41.4%** minorities[49](index=49&type=chunk) [Loan Products](index=7&type=section&id=Loan%20Products) The company offers diverse loan products, primarily commercial lending including real estate and business loans, alongside residential real estate and consumer loans - The commercial loan portfolio is diversified, with no single industry concentration exceeding **10%** of total loans[23](index=23&type=chunk) - Commercial real estate loans consist of both owner-occupied and nonowner-occupied (investor) properties. The company mitigates risk through conservative loan-to-value ratios, personal guarantees, and floating or short-term fixed interest rates[27](index=27&type=chunk) - The company's strategic decision is to sell the majority of new conforming mortgage loan production in the secondary market[34](index=34&type=chunk) [Deposit, Treasury, and Borrowing Activities](index=10&type=section&id=Deposit,%20Treasury,%20and%20Borrowing%20Activities) The company funds long-term lending through core deposit growth, manages its investment portfolio for liquidity, and uses borrowings for short-term needs - The company relies primarily on core deposit growth to fund long-term loan growth, viewing deposit products as the lead product for developing multi-product customer relationships[43](index=43&type=chunk) - The investment portfolio's primary objective is to provide liquidity. As of year-end 2021, **96%** of the portfolio was rated AA or above, with an average duration of **4.3 years**[45](index=45&type=chunk) - The company issued **$175 million** in subordinated debt in November 2019 to support future growth and redeem higher-priced debt from previous acquisitions. This debt qualifies as Tier 2 capital[47](index=47&type=chunk) [Regulation, Supervision, and Governmental Policy](index=14&type=section&id=Regulation,%20Supervision,%20and%20Governmental%20Policy) The company operates under extensive federal and state regulations, including capital adequacy, consumer protection, and anti-money laundering laws, with oversight from the Federal Reserve and SEC - The company is subject to minimum capital requirements, including a leverage ratio of **4%**, a common equity Tier 1 ratio of **4.5%**, and a total risk-based capital ratio of **8%**, plus a **2.5%** capital conservation buffer[81](index=81&type=chunk)[83](index=83&type=chunk) - As an institution with over **$10 billion** in assets, the Bank is subject to the supervisory and enforcement authorities of the Consumer Financial Protection Bureau (CFPB)[79](index=79&type=chunk) - The Bank received an "outstanding" rating in its last Community Reinvestment Act (CRA) examination[85](index=85&type=chunk) - Due to crossing the **$10 billion** asset threshold, the company will become subject to interchange fee restrictions (Durbin Amendment) beginning July 1, 2022[77](index=77&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from economic downturns, geographic concentration, interest rate fluctuations, high commercial real estate loan concentration, operational failures, and regulatory changes - The company's lending operations are concentrated in central Maryland, Northern Virginia, and Washington D.C., making it susceptible to downturns in local economic conditions[104](index=104&type=chunk) - The commercial real estate loan portfolio totaled **$6.9 billion**, or **69%** of the total loan portfolio at December 31, 2021, exposing the company to increased lending risks dependent on the successful operation of these properties[118](index=118&type=chunk) - The company's total commercial investor real estate loans represented **380%** of the Bank's total risk-based capital, exceeding the **300%** regulatory guidance threshold that could trigger increased supervisory scrutiny[119](index=119&type=chunk)[120](index=120&type=chunk) - The company will become subject to the interchange fee restrictions of the Durbin Amendment beginning July 1, 2022, which could adversely affect non-interest income[155](index=155&type=chunk) - The transition from LIBOR to alternative reference rates like SOFR for its loans, swaps, and debt obligations may introduce financial and operational risks, including potential disputes with counterparties[108](index=108&type=chunk)[109](index=109&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) The company's headquarters is in Olney, Maryland, with 12 owned banking centers and other locations leased - The company owns **12** of its full-service community banking centers and leases the remaining locations[172](index=172&type=chunk) [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation, with management not expecting any material impact on financial condition or operating results - Management does not anticipate that any currently pending legal proceedings will have a material effect on the company's financial condition or results of operations[173](index=173&type=chunk) PART II [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, completed a stock repurchase plan in 2021, and outperformed its peer group in cumulative total return over five years - The company's common stock trades on the NASDAQ Global Select Market under the symbol "**SASR**"[175](index=175&type=chunk) - In 2021, the company repurchased all **2,350,000 shares** authorized under its December 2020 stock repurchase plan at an average price of **$45.65 per share**[177](index=177&type=chunk) Cumulative Total Return Comparison (2016-2021) | Index | 12/31/16 | 12/31/21 | | :--- | :--- | :--- | | Sandy Spring Bancorp, Inc. | $100.00 | $141.59 | | S&P 500 Index | $100.00 | $233.41 | | Peer Group | $100.00 | $113.98 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income significantly increased in 2021 due to a credit to provision for credit losses, with improved net interest income and margin, while assets slightly decreased and credit quality improved Key Financial Results (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Income | $235.1 million | $97.0 million | | Diluted EPS | $4.98 | $2.18 | | Net Interest Income | $424.5 million | $363.2 million | | Net Interest Margin | 3.56% | 3.35% | | Provision for Credit Losses | ($45.6 million) | $85.7 million | | Non-performing Loans / Total Loans | 0.49% | 1.11% | - Total loans declined **4%**, driven by an **$874.4 million** reduction in PPP loans. Excluding PPP loans, total commercial loans grew by **$681.1 million** during the year[190](index=190&type=chunk) - Deposits increased **6%** year-over-year, driven by **14%** growth in noninterest-bearing deposits. This growth, along with PPP loan forgiveness, provided excess liquidity used to reduce borrowings[190](index=190&type=chunk) - The GAAP efficiency ratio improved to **49.47%** in 2021 from **54.90%** in 2020, as revenue growth outpaced non-interest expense growth[190](index=190&type=chunk) [Financial Condition](index=62&type=section&id=Financial%20Condition) Total assets decreased slightly to $12.6 billion, with loan portfolio changes driven by PPP forgiveness and growth in investor commercial real estate, while deposits grew and borrowings significantly reduced Loan Portfolio Composition (December 31, 2021) | Loan Category | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Commercial Investor Real Estate | $4,141,346 | 41.5% | | Commercial Owner-Occupied Real Estate | $1,690,881 | 17.0% | | Commercial AD&C | $1,088,094 | 10.9% | | Commercial Business | $1,481,834 | 14.9% | | Residential & Consumer Loans | $1,564,936 | 15.7% | | **Total Loans** | **$9,967,091** | **100.0%** | Deposit Composition (December 31, 2021) | Deposit Category | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Noninterest-bearing deposits | $3,779,630 | 35.6% | | Interest-bearing deposits | $6,845,101 | 64.4% | | **Total Deposits** | **$10,624,731** | **100.0%** | - Total borrowings decreased by **73%** to **$313.8 million** at year-end 2021 from **$1.1 billion** at year-end 2020, primarily due to the reduction of federal funds purchased and FHLB advances[250](index=250&type=chunk)[265](index=265&type=chunk) Key Capital Ratios (December 31, 2021) | Ratio | Company | Minimum Requirement | | :--- | :--- | :--- | | Tier 1 Leverage | 9.26% | 4.00% | | Common Equity Tier 1 Capital | 11.91% | 4.50% | | Total Capital | 14.59% | 8.00% | [Credit Risk](index=69&type=section&id=Credit%20Risk) Credit quality improved significantly in 2021, with non-performing loans and the allowance for credit losses decreasing due to improved economic forecasts and portfolio management Non-Performing Assets (NPA) Summary | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Non-performing loans | $48,810 thousand | $115,452 thousand | | Non-performing loans to total loans | 0.49% | 1.11% | | Non-performing assets to total assets | 0.40% | 0.91% | Allowance for Credit Losses (ACL) Activity | (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Balance, January 1 | $165,367 | $56,132 | | Provision for credit losses | ($45,556) | $85,669 | | Net charge-offs | ($10,666) | ($807) | | **Balance, period end** | **$109,145** | **$165,367** | | ACL to total loans | 1.10% | 1.59% | - The reduction in non-performing loans was driven by partial payoffs and charge-offs of a few large borrowings in the hospitality sector[280](index=280&type=chunk) - In response to the COVID-19 pandemic, the company granted payment modifications/deferrals on over **2,500 loans** totaling **$2.1 billion**. As of December 31, 2021, only **38 loans** with an aggregate balance of **$7.6 million** remained in deferral status[286](index=286&type=chunk) [Market Risk and Liquidity Management](index=77&type=section&id=Market%20Risk%20and%20Liquidity%20Management) The company actively manages interest rate risk, is asset-sensitive, and is transitioning from LIBOR, while maintaining strong liquidity supported by core deposits and significant credit lines Net Interest Income (NII) Sensitivity Analysis (as of Dec 31, 2021) | Change in Interest Rates | Estimated % Change in NII | | :--- | :--- | | +200 bp | +4.80% | | +100 bp | +2.16% | - The company has ceased originating new LIBOR-indexed loans and is developing transition plans for approximately **$1.6 billion** in existing loans indexed to LIBOR that mature after June 30, 2023[319](index=319&type=chunk) - The company has significant external liquidity sources, including an available line of credit with the FHLB totaling **$3.9 billion** with no outstanding borrowings as of December 31, 2021[323](index=323&type=chunk) [Financial Statements and Supplementary Data](index=81&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Management concluded internal control over financial reporting was effective, and the independent auditor issued unqualified opinions on both internal control and financial statements - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2021, based on the COSO framework[329](index=329&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion, stating that the company maintained effective internal control over financial reporting as of December 31, 2021[333](index=333&type=chunk) - Ernst & Young LLP also issued an unqualified opinion on the consolidated financial statements, stating they present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[343](index=343&type=chunk) - The critical audit matter identified by the auditor was the allowance for credit losses, specifically noting the high degree of subjectivity and significant judgment required in determining the qualitative reserve related to loan portfolio concentrations[349](index=349&type=chunk) [Controls and Procedures](index=156&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting during the fourth quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[571](index=571&type=chunk) - No material changes to internal control over financial reporting occurred during the fourth quarter of 2021[570](index=570&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=156&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for the upcoming Annual Meeting of Shareholders - This section incorporates by reference information from the company's Proxy Statement regarding directors and corporate governance[575](index=575&type=chunk) [Executive Compensation](index=156&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding director and executive compensation, including the CEO pay ratio, is incorporated by reference from the company's definitive proxy statement - This section incorporates by reference information from the company's Proxy Statement regarding executive compensation[576](index=576&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=156&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the company's definitive proxy statement - This section incorporates by reference information from the company's Proxy Statement regarding stock ownership[577](index=577&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=156&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information regarding director independence and transactions with related persons is incorporated by reference from the company's definitive proxy statement - This section incorporates by reference information from the company's Proxy Statement regarding related party transactions and director independence[578](index=578&type=chunk) [Principal Accountant Fees and Services](index=156&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to the principal accountant and Audit Committee pre-approval policies is incorporated by reference from the company's definitive proxy statement - This section incorporates by reference information from the company's Proxy Statement regarding audit and non-audit fees[581](index=581&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=159&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including consolidated financial statements and auditor reports - This section contains the list of all financial statements and exhibits filed with the Form 10-K, including certifications by the CEO and CFO[583](index=583&type=chunk)[584](index=584&type=chunk)

Industry Portfolio - Hotels: Total commitments of $389 million, with $382 million outstanding, and 9% of the portfolio criticized[2] - Restaurants: Total commitments of $174 million, with $165 million outstanding, and 6% of the portfolio criticized[2] - Services: Total commitments of $413 million, with $248 million outstanding, and 4% of the portfolio criticized[2] - CRE Investment (Office): Total commitments of $846 million, with $785 million outstanding, and 0% of the portfolio criticized[2] - CRE Investment (Retail): Total commitments of $1,429 million, with $1,371 million outstanding and 0% of the portfolio criticized[2] - CRE Investment (Multifamily): Total commitments of $729 million, with $630 million outstanding and 0% of the portfolio criticized[2] Allowance for Credit Losses (ACL) - Q4 2021 ACL increased slightly, driven by loan portfolio growth and qualitative adjustments, partially offset by improved economic variables[6] - Full year 2021 ACL declined by $563 million, primarily due to improved economic conditions, partially offset by increased qualitative factors and loan portfolio growth[10] - The allowance for credit losses as a % of total loans outstanding at December 31, 2021 was 1.10%[14] - Excluding PPP loans, the allowance for credit losses as a % of total loans outstanding at December 31, 2021 would increase to 1.12%[14] Capital Position - Total Sandy Spring Bancorp shareholders' equity was $1,5197 million in 4Q21[16] - Common equity tier 1 capital ratio was 119% in 4Q21[16] - Total risk-based capital ratio was 146% in 4Q21[16]

Financial Data and Key Metrics Changes - The company reported net income of $45.5 million or $0.99 per diluted common share for Q4 2021, down from $56.7 million or $1.19 per diluted common share in Q4 2020 and $57 million or $1.20 per diluted common share in Q3 2021 [11] - Core earnings for Q4 were $47.8 million, compared to $55.7 million for the prior year quarter and $52 million for the linked quarter, attributed to a decrease in non-interest income and an increase in non-interest expense [12] - The provision for credit losses was $1.6 million, compared to a credit of $4.5 million for Q4 2020 and a credit of $8.2 million for Q3 2021, indicating improved credit quality [13] Business Line Data and Key Metrics Changes - Total loans declined by 4% to $10 billion at December 31, 2021, compared to $10.4 billion at December 31, 2020, but excluding PPP loans, total loans grew 5% to $9.8 billion [16] - The commercial loan portfolio grew by $681 million, while the residential mortgage loan portfolio declined by $153 million [16] - Non-interest income decreased by 30% or $9.7 million compared to the prior year quarter, primarily due to a slowdown in refinance activity and a strategic shift to hold more mortgage production on the balance sheet [23] Market Data and Key Metrics Changes - Year-over-year deposits increased by 6%, driven by a 14% growth in non-interest bearing deposits and a 2% growth in interest bearing deposits [22] - The net interest margin was 3.51%, compared to 3.38% for the same quarter of 2020, indicating stability despite a slight decline from the linked quarter [26] Company Strategy and Development Direction - The company aims for continued growth in commercial loans, projecting an 8% to 10% growth in commercial categories and mid-to-upper single digits for overall loan growth in 2022 [60] - There is a focus on investing in talent, technology, and future growth opportunities, with a commitment to maintaining a strong capital position [49][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic recovery and the company's ability to absorb liquidity into loan growth, anticipating benefits from strong loan production in Q1 2022 [65] - The company is positioned well for potential rate hikes, with a loan-to-deposit ratio of about 93%, which is traditionally low for the company [67] Other Important Information - The company repurchased 1,088,172 shares of its common stock at an average price of $48.66 per share, completing the authorized repurchase of 2,350,000 shares [35] - The tangible common equity ratio increased to 9.21% of tangible assets, reflecting a strong capital position [34] Q&A Session Summary Question: What is the expectation for commercial growth and overall growth this year? - Management expects commercial growth of 8% to 10% and overall loan growth in the mid-to-upper single digits [60] Question: Did any loan purchases impact growth this quarter? - No loan purchases were made during the quarter [61] Question: How is the company positioned for rate hikes? - The company is slightly asset sensitive and expects to benefit from potential rate hikes, with a loan-to-deposit ratio that allows for flexibility [63][67] Question: What is the appetite for M&A going forward? - The company is interested in both organic growth and partnerships, particularly in the wealth space, but has no immediate plans for acquisitions [79] Question: What is the expected run rate for expenses in 2022? - A normalized run rate of $64 million to $65 million is expected, with a growth rate of around 4% [92] Question: How does the company view credit reserves moving forward? - Management believes the reserve levels are likely to stabilize, moving in line with loan growth [96]

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Sandy Spring Bancorp, Inc [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including statements of condition, income, and cash flows, along with detailed accounting policy notes for Sandy Spring Bancorp, Inc [Condensed Consolidated Statements of Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Condition) As of September 30, 2021, total assets increased to **$13.02 billion** from **$12.80 billion** at year-end 2020, driven by a rise in cash to **$1.11 billion**, while net loans decreased to **$9.61 billion** and total deposits grew to **$10.99 billion** | (Dollars in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total assets** | **$13,017,464** | **$12,798,429** | | Cash and cash equivalents | $1,114,633 | $297,003 | | Net loans | $9,613,428 | $10,235,142 | | **Total liabilities** | **$11,471,404** | **$11,328,474** | | Total deposits | $10,987,400 | $10,033,069 | | Total borrowings | $320,143 | $1,149,320 | | **Total stockholders' equity** | **$1,546,060** | **$1,469,955** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the nine months ended September 30, 2021, net income surged to **$189.7 million** from **$40.3 million** in the prior-year, driven by a **$(47.1) million** credit for credit losses and a **21%** increase in net interest income | (Dollars in thousands, except per share data) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net interest income | $319,250 | $263,332 | | Provision/ (credit) for credit losses | $(47,141) | $90,158 | | Total non-interest income | $79,519 | $70,482 | | Total non-interest expense | $194,329 | $194,121 | | **Net income** | **$189,703** | **$40,291** | | **Diluted net income per common share** | **$3.98** | **$0.93** | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail significant accounting policies, including revenue recognition and credit loss allowance, and provide breakdowns of key financial statement items and segment reporting - The company's loan portfolio is segmented for credit risk management into: Commercial investor real estate, Commercial owner-occupied real estate, Commercial acquisition, development and construction (AD&C), Commercial business, Residential mortgage, Residential construction, and Consumer loans[54](index=54&type=chunk) - The company operates in three segments: Community Banking, Insurance, and Investment Management, with the **Community Banking segment** being the largest, holding nearly all assets and generating the majority of income[129](index=129&type=chunk)[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=39&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial condition and results of operations for Q3 and the first nine months of 2021, highlighting increased net income due to credit for credit losses and lower funding costs [Financial Overview](index=41&type=section&id=Financial%20Overview) For Q3 2021, net income increased **28%** to **$57.0 million** ($1.20 per diluted share), driven by lower interest expense and a credit to the provision for credit losses, with total assets growing **3%** to **$13.0 billion** | Metric | Q3 2021 (Millions USD) | Q3 2020 (Millions USD) | | :--- | :--- | :--- | | Net Income | $57.0 million | $44.6 million | | Diluted EPS | $1.20 | $0.94 | | Core Earnings | $52.0 million | $52.1 million | | Net Interest Margin | 3.52% | 3.24% | | Provision for Credit Losses | $(8.2) million | $7.0 million | - During Q3 2021, the company repurchased **1,261,828 shares** of its common stock at an average price of **$43.04 per share**[148](index=148&type=chunk) [Financial Condition](index=60&type=section&id=Financial%20Condition) As of September 30, 2021, total assets were **$13.0 billion**, loans decreased **6.5%** to **$9.7 billion** (due to PPP forgiveness), and deposits grew **9.5%** to **$11.0 billion**, improving the tangible common equity ratio to **9.10%** - The loan to deposit ratio declined significantly to **88.5%** at September 30, 2021, from **103.7%** at December 31, 2020, reflecting strong deposit growth and reduced total loans[218](index=218&type=chunk) | Capital Ratios | September 30, 2021 | Minimum Requirement | | :--- | :--- | :--- | | Tier 1 leverage | 9.33% | 4.00% | | Common equity tier 1 capital | 12.50% | 4.50% | | Tier 1 capital | 12.50% | 6.00% | | Total capital | 15.26% | 8.00% | [Results of Operations](index=44&type=section&id=Results%20of%20Operations) For the first nine months of 2021, net income was **$189.7 million**, a substantial increase driven by a **$47.1 million** credit for credit losses, **21%** net interest income growth, and **13%** non-interest income growth - The net interest margin for the nine months ended September 30, 2021, improved to **3.57%** from **3.33%** in the prior-year period, as the average rate paid on interest-bearing liabilities fell **52 basis points**[168](index=168&type=chunk) - Non-interest income for the first nine months of 2021 increased by **12.8%**, driven by a **21.9%** increase in wealth management income and a **133.3%** increase in other income, offsetting an **18.3%** decline in mortgage banking activities[177](index=177&type=chunk) - Excluding prior-year merger expenses of **$25.2 million** and FHLB prepayment penalties, non-interest expense grew **14%** year-over-year, driven by higher salaries and benefits related to 2020 acquisitions and strategic initiatives[180](index=180&type=chunk) [Credit Risk](index=63&type=section&id=Credit%20Risk) Credit quality improved significantly in 2021, with non-performing loans decreasing to **0.80%** of total loans and the allowance for credit losses (ACL) reducing to **$107.9 million** (1.11% of loans) due to an improved economic forecast | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Non-performing loans (Millions USD) | $78.2 million | $115.5 million | | Non-performing loans to total loans | 0.80% | 1.11% | | Allowance for credit losses (ACL) (Millions USD) | $107.9 million | $165.4 million | | ACL to total loans | 1.11% | 1.59% | | ACL to non-performing loans | 138.06% | 143.23% | - As of September 30, 2021, only **$13.6 million** in loans remained under COVID-19 related payment accommodations, a significant decrease from a peak of **$2.1 billion**[245](index=245&type=chunk) [Market Risk and Liquidity Management](index=69&type=section&id=Market%20Risk%20and%20Liquidity%20Management) The company manages interest rate risk through its ALCO committee, maintaining an asset-sensitive position with NII projected to increase by **3.76%** in a +100 bp rate shock, and strong liquidity with **$5.4 billion** in available credit lines - The company's liquidity position is strong, with available lines of credit totaling **$3.9 billion** from the FHLB and **$1.5 billion** from the Federal Reserve and correspondent banks, with no outstanding borrowings as of September 30, 2021[280](index=280&type=chunk) | Change in Interest Rates | Estimated % Change in NII (12 months) | | :--- | :--- | | +400 bp | 15.75% | | +300 bp | 11.61% | | +200 bp | 8.09% | | +100 bp | 3.76% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section incorporates by reference the Market Risk Management discussion from the MD&A, detailing the company's interest rate risk management through its ALCO committee and simulation modeling - The company's market risk disclosures are incorporated by reference from the 'Market Risk Management' section of the MD&A[286](index=286&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls over financial reporting during Q3 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[287](index=287&type=chunk) PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, and details regarding unregistered sales of equity securities and use of proceeds [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings in the normal course of business, but management does not anticipate a material effect on its financial condition, operating results, or liquidity - Management does not anticipate that the ultimate liability from pending litigation will have a material effect on the Company's financial condition[288](index=288&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20RISK%20FACTORS) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020, were reported - No material changes in risk factors were reported from the company's 2020 Annual Report on Form 10-K[289](index=289&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q3 2021, the company repurchased **1,261,828 shares** of common stock at an average price of **$43.04 per share**, with **1,088,172 shares** remaining available for repurchase | Period | Total Shares Purchased | Average Price Paid (USD) | | :--- | :--- | :--- | | July 2021 | 88,985 | $41.85 | | August 2021 | 567,522 | $43.11 | | September 2021 | 605,321 | $43.17 | | **Q3 2021 Total** | **1,261,828** | **$43.04** |

Sandy Spring Bancorp, Inc. (NASDAQ:SASR) Q3 2021 Earnings Conference Call October 21, 2021 2:00 PM ET Company Participants Dan Schrider - President and CEO Phil Mantua - CFO Aaron Kaslow - General Counsel Conference Call Participants Casey Whitman - Piper Sandler Erik Zwick - Boenning and Scattergood Catherine Mealor - KBW Brody Preston - Stephens Operator Welcome to the Sandy Spring Bancorp, Inc. Earnings Conference Call and Webcast for the Third Quarter of 2021. My name is Harry and I'll be your coordinat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Maryland 52-1532952 (State of incorporation) (I.R.S. Employer Identification Number) 17801 Georgia Avenue, Olney, Maryland 20832 (Address of principal executive office) (Zip Code) 301-774-6400 (Registra ...