Sandy Spring Bancorp(US:SASR)2022-01-20 21:15Financial 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]