Sandy Spring Bancorp(US:SASR)2024-08-09 12:35Financial 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].