Sandy Spring Bancorp(US:SASR)2024-11-08 12:49Financial Performance - For the quarter ended September 30, 2024, the company reported net income of $16.2 million ($0.36 per diluted common share), a decrease 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 [173]. - Net income for the three months ended September 30, 2024 was $16.2 million, down from $20.7 million for the prior year quarter, primarily due to increased provision for credit losses [192]. - Core earnings for the nine months ended September 30, 2024 were $64.3 million, down from $107.2 million for the same period in the prior year [195]. - Core earnings decreased to $17.9 million ($0.40 per diluted share) from $27.8 million ($0.62 per diluted share) year-over-year [240]. Asset and Loan Management - Total assets increased by 3% to $14.4 billion at September 30, 2024, compared to $14.0 billion at June 30, 2024 [174]. - Total loans remained stable at $11.5 billion as of September 30, 2024, with a reduction of $64.9 million in commercial investor real estate loans, while AD&C and commercial business loans increased by $71.3 million and $19.4 million, respectively [175]. - Total loans increased to $11,409,514 thousand, with total interest income of $458,268 thousand and an annualized yield of 5.36% [201]. - Total loan balances increased by $124.9 million or 1%, with commercial business loans growing by 8% [245]. Deposits and Funding - Deposits increased by $397.5 million or 4% to $11.7 billion at September 30, 2024, with strong growth in interest-bearing deposits, particularly in money market, time deposits, and savings accounts [176]. - Total deposits increased by $741.2 million or 7% to $11.7 billion at September 30, 2024, from December 31, 2023 [253]. - Interest-bearing deposits grew by $752.3 million or 9%, primarily due to increases in savings and money market accounts [253]. - Core deposits accounted for 94% of total deposits, indicating a stable funding source [306]. Interest Income and Expense - Net interest income for the third quarter of 2024 grew by $1.1 million or 1% compared to the previous quarter, but declined by $3.7 million or 4% compared to the same quarter last year [178]. - The net interest margin was 2.44% for the third quarter of 2024, slightly down from 2.46% in the previous quarter and 2.55% in the same quarter last year [179]. - Interest expense increased by $61.1 million for the first nine months of 2024, primarily due to a $71.8 million rise in interest-bearing deposits [206]. - The average yield on interest-earning assets grew to 5.03% for the first nine months of 2024, up from 4.74% in the prior year period, reflecting increases in yields on loans and investment securities [205]. Credit Quality and Losses - The ratio of non-performing loans to total loans was 1.09% at September 30, 2024, up from 0.81% at June 30, 2024, primarily due to a single AD&C loan placed on non-accrual status [177]. - Non-performing loans totaled $125.3 million at September 30, 2024, an increase from $51.8 million at September 30, 2023, resulting in a non-performing loan ratio of 1.09% [190]. - Provision for credit losses was $6.3 million for the current quarter, compared to $3.0 million in the previous quarter and $3.2 million in the same quarter last year [180]. - The allowance for credit losses was $131.4 million or 1.14% of outstanding loans at September 30, 2024, compared to 1.09% at the end of the third quarter of 2023 [191]. Non-Interest Income and Expense - Non-interest income increased by 1% or $0.1 million compared to the linked quarter and grew by 13% or $2.3 million compared to the prior year quarter, driven by higher wealth management income [181]. - Non-interest expense increased by $4.8 million or 7% compared to the second quarter of 2024, primarily due to higher salaries and benefits [182]. - Non-interest income rose by 14% to $57.7 million for the nine months ended September 30, 2024, compared to $50.5 million for the same period in 2023, driven by higher wealth management income and service fees [207]. Capital and Equity - The tangible common equity ratio increased to 8.83% of tangible assets at September 30, 2024, compared to 8.42% at September 30, 2023 [188]. - Total risk-based capital ratio was 15.53% at September 30, 2024, up from 14.85% at September 30, 2023 [189]. - Stockholders' equity grew to $1,590,682 thousand, up from $1,522,153 thousand [201]. - The ratio of average equity to average assets was 11.37% for the quarter ended September 30, 2024, compared to 10.97% for the quarter ended December 31, 2023 [256]. Economic and Market Conditions - The company aims to increase net interest income while minimizing fluctuations as a percentage of interest-earning assets through effective interest rate risk management [295]. - The economic value of equity (EVE) at risk declined in most rate change scenarios from December 31, 2023, to September 30, 2024, reflecting a higher proportion of variable rate and soon to be repricing assets and liabilities [304]. - Liquidity stress testing conducted at the end of Q3 2024 indicated sufficient liquidity in severe scenarios [305].