Sandy Spring Bancorp(US:SASR)2025-04-24 13:00Financial Data and Key Metrics Changes - The company reported net income available to common shareholders of $46.9 million, with diluted earnings per share of $0.52, while adjusted operating earnings were $51.6 million or $0.57 per diluted common share, resulting in an adjusted operating return on tangible common equity of 13.2% [17][18] - The net interest margin expanded by 12 basis points to 3.45%, driven by an 18 basis point reduction in the cost of funds [19][10] - Total allowance for credit losses increased to $209 million, representing 1.13% of loans held for investment, up from the previous quarter [18][12] Business Line Data and Key Metrics Changes - Average loan growth was approximately 1.3% annualized quarter over quarter, with loans held for investment down 0.9% annualized from the end of the fourth quarter [10][21] - Non-interest income decreased by $6 million to $29.2 million, primarily due to a decline in loan-related interest rate swap fees and other operating income [19][18] - Non-interest expense increased by $4.5 million to $134.2 million, with adjusted operating non-interest expense rising to $123.8 million [19][20] Market Data and Key Metrics Changes - Total deposits increased by $105.3 million or 2.1% annualized from the prior quarter, with non-interest bearing deposits representing 22% of total deposits, up from 21% [11][21] - The company expects loan balances at year-end to be between $28 billion and $29 billion, with deposit balances projected to be within the $31 billion to $32 billion range [43] Company Strategy and Development Direction - The acquisition of Sandy Spring Bancorp is expected to enhance the company's market position, with Sandy Spring representing about one-third of the combined company by asset size [23] - The company plans to leverage its market power and expand its presence in North Carolina over time, aiming for upper single-digit loan growth in the long term [32][66] - The integration of Sandy Spring is on track, with core systems conversion moved up to October 2025, expected to accelerate cost savings [34][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty and volatility in financial markets but expressed confidence in the company's ability to capitalize on its strengths [9][22] - The company does not forecast a recession but recognizes the potential impacts of new trade policies on the economy [12][14] - The outlook for 2025 includes expectations for net interest income between $1.15 billion and $1.25 billion, with a projected net interest margin of 3.75% to 4% [43][44] Other Important Information - The company has proactively taken actions related to capital raise and commercial real estate loan sales to better position the balance sheet for future growth [36] - The company is well-capitalized, with regulatory capital ratios comfortably above well-capitalized levels [21] Q&A Session Summary Question: Update on interest rate marks from the Sandy Spring deal - The low mark is about 7% of loans, approximately $800 million, higher than the initial projection of $600 million [47][48] Question: Change to the credit mark with Sandy Spring - The credit mark came in better than projected at about 1.3% for the entire portfolio, compared to an initial estimate of 1.5% [52] Question: Risks regarding the commercial real estate loan sale - The company is monitoring the market closely but does not foresee major negatives affecting the projected discount [54] Question: Long-term loan growth perspective - The company aims for upper single-digit loan growth in the long term, with mid-single digits expected in the medium term [65][66] Question: Signs of portfolio deterioration due to tariffs - There are currently no known issues with credit quality, but the company is closely monitoring the situation [85][88]