Sandy Spring Bancorp Reports Net Income of $11.0 Million for the Third Quarter
Company Release - 10/22/2015 07:00
OLNEY, Md., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2015 of $11.0 million ($0.45 per diluted share) compared to net income of $11.1 million ($0.44 per diluted share) for the third quarter of 2014 and net income of $10.3 million ($0.42 per diluted share) for the second quarter of 2015.
For the nine months ended September 30, 2015, net income was $32.6 million ($1.31 per diluted share) compared to net income of $29.1 million ($1.16 per diluted share) for the same period of the prior year.
“Our core financial results for the third quarter were solid, as loan growth continued to fuel higher net interest income. Our growth in all three major loan portfolios has been significant given the level of competition in the marketplace and the state of the economy,” said Daniel J. Schrider, President and Chief Executive Officer.
“A stable net interest margin, our strong capital position, diverse revenue stream, and consistent credit quality were key drivers of our financial performance. These results provide evidence of our continuing dedication to provide a consistent and valuable client experience in all facets of our franchise,” said Schrider.
Third Quarter Highlights:
- Total loans increased 15% compared to the third quarter of 2014 and were up 4% compared to the second quarter of 2015. This increase was driven primarily by year-over-year growth of 19% in the commercial loan portfolio.
- Combined noninterest-bearing and interest-bearing transaction account balances increased 9% to $1.6 billion at September 30, 2015 as compared to $1.5 billion at September 30, 2014.
- The provision for loan and lease losses for the third quarter of 2015 was a charge of $1.7 million compared to a credit of $0.2 million for the third quarter of 2014 and a charge of $1.2 million for the second quarter of 2015.
- The net interest margin was 3.43% for the third quarter of 2015, compared to 3.42% for both the third quarter of 2014 and the second quarter of 2015.
- The non-GAAP efficiency ratio improved to 59.73% for the current quarter from 61.09% for the prior year quarter due to stable expense levels and higher net interest income resulting from strong loan growth over the prior year quarter.
- During the third quarter of 2015, the Company repurchased 153,460 shares of its common stock at an average price of $25.76 per share as part of its existing share repurchase program. For the year-to-date, the Company has repurchased 728,932 shares at an average price of $25.88 per share.
Review of Balance Sheet and Credit Quality
Total assets grew 9% to $4.6 billion at September 30, 2015 compared to $4.2 billion at September 30, 2014. This growth was driven by a 15% increase in the loan portfolio as total loans and leases ended the period at $3.4 billion.
At September 30, 2015, combined noninterest-bearing and interest-bearing checking account balances, a primary driver of multiple-product banking relationships with clients, increased 9% compared to balances at September 30, 2014. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers increased 10% compared to September 30, 2014.
Tangible common equity totaled $437 million at September 30, 2015 compared to $434 million at September 30, 2014. The ratio of tangible common equity to tangible assets decreased to 9.66% at September 30, 2015 from 10.42% at September 30, 2014 due primarily to the growth in assets and continued share repurchases. Dividends per common share were $0.66 per share for the first nine months of 2015 compared to $0.56 per common share for the first nine months of 2014, an 18% increase. At September 30, 2015, the Company had a total risk-based capital ratio of 14.27%, a common equity tier 1 risk-based capital ratio of 12.20%, a tier 1 risk-based capital ratio of 13.17% and a tier 1 leverage ratio of 10.65%.
Non-performing loans totaled $36.9 million at September 30, 2015 compared to $43.7 million at September 30, 2014 and $37.3 million at June 30, 2015. The level of non-performing loans to total loans decreased to 1.08% at September 30, 2015 compared to 1.47% at September 30, 2014 due to growth in the overall loan portfolio. The decrease in non-performing loans at September 30, 2015 compared to June 30, 2015 was driven primarily by payoffs and charge-offs on several such loans that exceeded loans added to non-performing status during the quarter.
Loan charge-offs, net of recoveries, totaled $0.8 million for the third quarter of 2015, compared to net loan charge-offs of $0.2 million for the third quarter of 2014. The allowance for loan and lease losses represented 1.16% of outstanding loans and leases and 107% of non-performing loans at September 30, 2015 compared to 1.26% of outstanding loans and leases and 86% of non-performing loans at September 30, 2014. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.
Income Statement Review
Net interest income for the third quarter of 2015 increased 8% compared to the third quarter of 2014. The net interest margin was 3.43% for the third quarter of 2015 compared to 3.42% for the third quarter of 2014.
The provision for loan and lease losses was a charge of $1.7 million for the third quarter of 2015 compared to a credit of $0.2 million for the third quarter of 2014 and a charge of $1.2 million for the second quarter of 2015. The majority of the current quarter’s charge reflects the growth in the loan portfolio.
Non-interest income decreased 2% to $12.4 million for the third quarter of 2015 compared to $12.6 million for the third quarter of 2014. The decrease in non-interest income for the quarter compared to the prior year quarter was due primarily to decreases in service charges on deposit accounts and other non-interest income, which were somewhat offset by an increase in insurance agency commissions.
Non-interest expenses increased to $29.6 million for the third quarter of 2015 compared to $28.6 million in the third quarter of 2014. The current quarter included increases in salaries and benefits. The non-GAAP efficiency ratio was 59.73% for the third quarter of 2015 compared to 61.09% for the third quarter of 2014.
Net interest income for the first nine months of 2015 increased 6% compared to the first nine months of 2014 due primarily to an increase in average loans. The net interest margin was 3.43% for the first nine months of 2015 compared to 3.46% for the first nine months of 2014.
The provision for loan and lease losses was a charge of $3.5 million for the first nine months of 2015 compared to a credit of $1.0 million for the first nine months of 2014. The change in the provision for the current year-to-date period is primarily due to the growth in the loan portfolio over the prior year period.
Non-interest income increased 6% to $37.7 million for the first nine months of 2015 compared to $35.5 million for the first nine months of 2014. This increase was driven by increases in income from wealth management and mortgage banking due primarily to higher mortgage origination volumes. Other non-interest income increased due to higher gains on sales of SBA loans.
Non-interest expenses decreased 2% to $88.4 million for the first nine months of 2015 compared to $90.3 million for the first nine months of 2014. Excluding accrued litigation expenses, non-interest expenses increased 5% over the prior year period. The current year-to-date included increases in salaries, pension costs and health benefits and other non-interest expenses. The non-GAAP efficiency ratio was 60.41% for the first nine months of 2015 compared to 61.32% for the first nine months of 2014.
Conference Call
The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 1-866-235-9910. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) November 6, 2015. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10072996.
About Sandy Spring Bancorp, Inc.
Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. With $4.6 billion in assets, the bank operates 44 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.
Forward-Looking Statements
Sandy Spring Bancorp makes forward-looking statements in this news release and in the conference call regarding this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.
Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements and future results could differ materially from historical performance.
Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2014, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.
Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED