Sandy Spring Bancorp(US:SASR)2024-01-23 21:31Financial Data and Key Metrics Changes - Core earnings for the current quarter were $27.1 million or $0.60 per diluted common share, down from $27.8 million or $0.62 per diluted common share in the previous quarter and $35.3 million or $0.79 per diluted common share in the same quarter last year [7] - Net income for the quarter ended December 31, 2023, was $26.1 million or $0.58 per diluted common share, compared to $20.7 million or $0.46 per diluted common share for the third quarter of 2023 and $34 million or $0.76 per diluted common share for the fourth quarter of 2022 [20] - The net interest margin decreased to 2.45% from 2.55% in the previous quarter and 3.26% in the same quarter last year [35] Business Line Data and Key Metrics Changes - Total loans increased by $66.7 million or 1% to $11.4 billion at December 31, 2023, compared to $11.3 billion at September 30 [24] - Commercial loan production totaled $245 million, yielding $153 million in funded production for the quarter, down from $323 million yielding $96 million in the previous quarter [25] - Non-interest income decreased by 5% or $800,000 compared to the linked quarter but grew by 16% or $2.3 million compared to the prior year quarter [31] Market Data and Key Metrics Changes - Total deposits decreased by $154.5 million or 1% to $11 billion compared to $11.2 billion at September 30 [28] - The loan to deposit ratio increased to 103% at December 31 from 101% at September 30 [29] - Total borrowings remained unchanged across all categories at December 31 [12] Company Strategy and Development Direction - The company has shifted focus towards diversifying its asset base by growing small business and commercial & industrial (C&I) relationships while de-emphasizing growth in the commercial real estate portfolio [6] - The company implemented new technologies to enhance client access to products and services, aiming to deepen existing relationships and develop new ones through digital offerings [19] - The company anticipates a mid to upper-single digit growth in loans driven predominantly by C&I work and owner-occupied real estate [58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the core deposit base and the potential for deposit growth through enhanced digital capabilities [63] - The company expects the net interest margin to bottom out in the first quarter of 2024 and rebound in subsequent quarters [33] - Management noted that the overall expense growth for 2024 is expected to be flat compared to 2023 levels after adjusting for one-time costs [34] Other Important Information - The company reported a total risk-based capital ratio of 14.92%, which remains well above regulatory requirements [38] - The CFO announced his retirement, with a transition plan in place for a new CFO [39] Q&A Session Summary Question: Can you clarify the expense guidance for 2024? - Management indicated that they expect overall expense growth to be flat year-over-year after adjusting for one-time costs from 2023 [43] Question: What is the outlook for deposit costs and noninterest-bearing deposits? - Management anticipates some incremental increases in deposit costs but expects to rebuild demand deposit account balances, which will help improve margins [44] Question: What is the expected loan production yield? - The average yield on new commercial production was about 8.3%, with various segments yielding between 6.5% to 8.5% [46] Question: How does the company view its digital transformation and ongoing projects? - Management confirmed that significant digital capabilities have been rolled out, with ongoing projects aimed at enhancing small business and commercial online capabilities [55] Question: What is the loan growth guidance for 2024? - The company aims for mid to upper-single digit loan growth, primarily driven by C&I and owner-occupied real estate [58]