OLNEY, Md., July 21, 2022 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc. (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $54.8 million ($1.21 per diluted common share) for the quarter ended June 30, 2022, compared to net income of $57.3 million ($1.19 per diluted common share) for the second quarter of 2021 and $43.9 million ($0.96 per diluted common share) for the first quarter of 2022.

Current quarter core earnings were $44.2 million ($0.98 per diluted common share), compared to $58.4 million ($1.23 per diluted common share) for the quarter ended June 30, 2021 and $45.1 million ($0.99 per diluted common share) for the quarter ended March 31, 2022. Core earnings are determined by excluding the after-tax impact of merger, acquisition and disposal expense, the loss on FHLB redemptions, amortization of intangibles, gain on disposal of assets and investment securities gains. Core earnings for the current period when compared to the prior year quarter were reduced primarily as a result of the activity associated with provisioning for credit losses, a decline in mortgage banking income, lower other non-interest income from isolated events that occurred in 2021 and a decline in net interest income. The provision for credit losses for the current quarter was a charge of $3.0 million compared to a credit of $4.2 million for the second quarter of 2021 and a charge of $1.6 million for the first quarter of 2022.

"We have sustained robust commercial loan production for three consecutive quarters. Our teams are focused and strategic, our products and services are competitive, and we are maximizing our in-market presence to win new relationships," said Daniel J. Schrider, President and CEO of Sandy Spring Bank. "Despite the economic concerns in the marketplace, the businesses we bank continue to grow and our pipeline remains strong. We are committed to supporting local businesses of all sizes and helping the Greater Washington region thrive."

Second Quarter Highlights:

At June 30, 2022, total assets were $13.3 billion, a 3% increase compared to $12.9 billion at June 30, 2021. During the previous twelve months, liquidity generated by PPP loan forgiveness was utilized to fund the growth in the loan and investment securities portfolios. Excluding the PPP balances, total assets grew 10% year-over-year.
Total loans, excluding PPP loans, increased 17% to $10.8 billion at June 30, 2022 compared to $9.2 billion at June 30, 2021. Excluding PPP loans, total commercial loans grew by $1.3 billion or 17% during the previous twelve months. During this period, the Company generated new commercial gross loan production of $4.4 billion, of which $3.0 billion was funded, more than offsetting $1.6 billion in non-PPP commercial loan run-off. Funded commercial loan production increased 60% to $804.6 million during the second quarter of the current year compared to $502.5 million for the same quarter of the prior year. Total mortgage loans grew $249.7 million, primarily in conventional 1-4 family mortgage loans, during the same period.
Net interest income for the second quarter of 2022 declined $2.1 million or 2% compared to the second quarter of 2021. Excluding PPP interest and fees, net interest income increased $9.9 million or 10% for the current quarter compared to the prior year quarter driven by the growth of the commercial loan portfolio.
For the second quarter of 2022, the net interest margin was 3.49%, compared to 3.63% for the second quarter of 2021, and 3.49% for the first quarter of 2022. Excluding the amortization of the fair value marks derived from the previous acquisitions and interest and fees from PPP loans, the current quarter's net interest margin was 3.45% compared to 3.49% for second quarter of 2021, and 3.41% for the first quarter of 2022.
The provision for credit losses was a charge of $3.0 million for the current quarter compared to the prior year quarter's credit to the provision of $4.2 million. The provision for the current quarter is a reflection of the growth in the loan portfolio and an increase in the qualitative reserve to consider the potential impact of future recessionary pressures. These factors were partially offset by the benefit to the provision derived from continuing improvement in forecasted macroeconomic indicators in the quantitative model.
Non-interest income for the current quarter increased by 34% or $9.0 million compared to the prior year quarter as a result of the $16.7 million gain from the disposition of the Company's insurance business. Excluding the disposition gain, non-interest income declined 29% compared to the prior year quarter as a result of the $4.3 million decline in income from mortgage banking activities and the $3.4 million decline in other non-interest income compared to the second quarter of 2021.
Non-interest expense for the current quarter increased $2.0 million or 3% compared to the prior year quarter with a significant component of the increase consisting of $1.1 million in merger, acquisition and disposal expense. Other non-interest expense increased $1.4 million driven by the combination of various operating expenses.
Return on average assets ("ROA") for the quarter ended June 30, 2022 was 1.69% and return on average tangible common equity ("ROTCE") was 20.42% compared to 1.79% and 20.44%, respectively, for the second quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.37% and core ROTCE was 16.49% compared to core ROA of 1.83% and core ROTCE of 20.87% for the second quarter of 2021.
For the second quarter of 2022, the GAAP efficiency ratio was 46.03% compared to 46.89% for the second quarter of 2021, and 50.92% for the first quarter of 2022. The non-GAAP efficiency ratio for the second quarter of 2022 was 49.79% compared to 45.36% for the prior year quarter, and 49.34% for the first quarter of 2022.
During the quarter, the Company repurchased 625,710 shares of its common stock for $25.0 million at an average price of $39.93 per share. The repurchase plan that was authorized on March 30, 2022 permits the repurchase of up to $50.0 million in shares of common stock.

Balance Sheet and Credit Quality

Total assets grew 3% to $13.3 billion at June 30, 2022, as compared to $12.9 billion at June 30, 2021. During this period, total loans grew by 7% to $10.8 billion at June 30, 2022, compared to $10.1 billion at June 30, 2021. At June 30, 2022, excluding PPP loans, total assets grew 10% and total loans grew 17% compared to June 30, 2021. Total commercial loans, excluding PPP loan, grew by $1.3 billion or 17% during the past twelve months. During this period, the Company generated commercial gross loan production of $4.4 billion, of which $3.0 billion was funded, offsetting $1.6 billion in commercial loan run-off. During the second quarter of 2022, funded commercial loan production was $804.6 million, an increase of 60% compared to $502.5 million for the same quarter of the prior year. The growth in the commercial portfolio, excluding PPP loans, occurred in all commercial portfolios led by the $1.0 billion or 28% growth in the investor owned commercial portfolio. Year-over-year the total mortgage loan portfolio grew 22%, as a greater number of conventional 1-4 family mortgages were retained to grow the portfolio.

During the past twelve months, deposits increased 1%. Noninterest-bearing deposits grew 3% reflecting the impact of the PPP forgiveness and growth in transaction relationships, while interest-bearing deposits remained essentially unchanged. During the period, time deposits decreased 9% and money market accounts decreased 4%, while savings and interest bearing demand categories experienced year-over-year growth of 15% and 12%, respectively.

The tangible common equity ratio decreased to 8.45% of tangible assets at June 30, 2022, compared to 9.28% at June 30, 2021 as a result of the $132.3 million repurchase of common shares during the previous twelve months and the $88.9 million increase in the accumulated other comprehensive loss in the investment portfolio due to the impact of the rising rate environment on the value of securities coupled with the increase in tangible assets during the past year. At June 30, 2022, the Company had a total risk-based capital ratio of 16.07%, a common equity tier 1 risk-based capital ratio of 11.58%, a tier 1 risk-based capital ratio of 11.58%, and a tier 1 leverage ratio of 9.53%.

Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. At June 30, 2022, the level of non-performing loans to total loans was 0.40% compared to 0.93% at June 30, 2021, and 0.46% at March 31, 2022. At June 30, 2022, non-performing loans totaled $43.5 million, compared to $94.3 million at June 30, 2021, and $46.3 million at March 31, 2022. Loans placed on non-accrual during the current quarter amounted to $0.9 million compared to $1.5 million for the prior year quarter and $1.5 million for the first quarter of 2022.

The company realized an insignificant amount of net recoveries for the second quarter of 2022, as compared to net charge-offs of $2.2 million for the second quarter of 2021 and net charge-offs of $0.2 million for the first quarter of 2022.

At June 30, 2022, the allowance for credit losses was $113.7 million or 1.05% of outstanding loans and 261% of non-performing loans, compared to $110.6 million or 1.09% of outstanding loans and 239% of non-performing loans at the end of the previous quarter. The increase in the allowance during the current quarter compared to the previous quarter resulted from the growth in the loan portfolio and the effect of management's consideration of the potential impact of recessionary pressures. The impact from these metrics applied in the determination of the allowance continue to be partially mitigated by forecasted improvement in certain economic metrics, notably the projected improvement in the unemployment rate in future periods.

Income Statement Review

Quarterly Results

Net income for the three months ended June 30, 2022 was $54.8 million compared to net income of $57.3 million for the prior year quarter. The decline in earnings was the result of lower net interest income, the current quarter's provision for credit losses compared to the prior year's credit to the allowance, and an increase in non-interest expense, which were partially offset by the increase in non-interest income. The decline in net interest income was the product of lower PPP fees and interest partially offset by interest income from loan growth, and an increase in interest expense. Non-interest income increased as a result of the sale of the Company's insurance business, offsetting lower mortgage banking income. Non-interest expense increased primarily as a result of the transaction costs associated with the asset sale and increases in various categories of operational costs in the current quarter compared to the prior year quarter. Current quarter core earnings were $44.2 million ($0.98 per diluted common share), compared to $58.4 million ($1.23 per diluted common share) for the quarter ended June 30, 2021 and $45.1 million ($0.99 per diluted common share) for the quarter ended March 31, 2022.

Net interest income for the second quarter of 2022 decreased $2.1 million or 2% compared to the second quarter of 2021, due to the combined impact of the $0.9 million reduction in interest income and the increase of $1.2 million in interest expense. The decline in interest income was driven by a $12.0 million decline in interest and fees on PPP loans, which was substantially offset by interest income from the remaining categories of commercial loans and, to a lesser degree, an increase in investment securities income. The increase in interest expense was primarily the result of the interest expense associated with issuance of subordinated debt late in the first quarter of the current year. The net interest margin for the second quarter of 2022 was 3.49% as compared to 3.63% for the same quarter of the prior year, as the yield on interest-earning assets declined eleven basis points and the rate paid on interest-bearing liabilities increased six basis points. Excluding the effects of amortization of the fair value marks derived from acquisitions and interest and fees from PPP loans, the net interest margin was 3.45% for the current quarter compared to 3.49% for second quarter of 2021.

The provision for credit losses was a charge of $3.0 million for the second quarter of 2022 compared to a credit of $4.2 million for the second quarter of 2021. The provision for credit losses for the first quarter of 2022 was a charge of $1.6 million. The provision for the current quarter reflects the growth in the loan portfolio during the quarter and management's consideration of the increased potential of an economic recession. These factors exceeded the impact derived from continuing improvement in forecasted macroeconomic indicators.

Non-interest income increased $9.0 million or 34% for the second quarter of 2022, compared to the prior year quarter as a direct result of the gain on the sale of the Company's insurance business. Excluding the disposal gain, non-interest income declined 29% compared to the prior year quarter. The gain was partially offset by a $4.3 million decline in income from mortgage banking activities and the $3.4 million decline in other non-interest income compared to the second quarter of 2021. Wealth management income remained stable and service charges on deposit accounts grew 25%. Other non-interest income declined 62% compared to the prior year, which included the full payoff of a purchased credit deteriorated loan and activity-based vendor incentives.

Non-interest expense increased $2.0 million or 3% for the second quarter of 2022, compared to the prior year quarter. The majority of the increase was the result of $1.1 million merger, acquisition and disposal expense associated with the sale of the Company's insurance business during the quarter. Other expenses increased $1.4 million as a result of the combination of the provision for lines of credit, franchise taxes and other operating costs. The remaining categories of non-interest expense experienced modest increases or decreases with professional fees declining $0.8 million during the current quarter compared to the prior year quarter as a result of lower consulting fees.

For the second quarter of 2022, the GAAP efficiency ratio was 46.03% compared to 46.89% for the second quarter of 2021, and 50.92% for the first quarter of 2022. The non-GAAP efficiency ratio was 49.79% for the current quarter as compared to 45.36% for the second quarter of 2021, and 49.34% for the first quarter of 2022. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the second quarter of the prior year to the current year quarter was primarily the result of the 7% decline in non-GAAP revenue, driven chiefly by the decrease in the non-GAAP non-interest income. ROA for the second quarter ended June 30, 2022 was 1.69% and ROTCE was 20.42% compared to 1.42% and 16.04%, respectively, for the first quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 1.37% and core ROTCE was 16.49% compared to core ROA of 1.45% and core ROTCE of 16.45% for the first quarter of 2022.

Year-to-Date Results

The Company recorded net income of $98.7 million for the six months ended June 30, 2022 compared to net income of $132.7 million for the same period of the prior year. The decline in year-to-date earnings for the current year primarily reflects the impact of the decline in PPP fees and interest, partially offset by the impact on interest income from the growth in the commercial loan portfolio, and the activity in the provision for loan losses, which shifted from the significant credit in the prior year to the charge for the current year. Core earnings were $89.3 million for the six months ended June 30, 2022 compared to $142.0 million for the prior year. Core earnings for the current period compared to the prior year period were reduced primarily as a result of the activity associated with the provision for credit losses, a decline in mortgage banking income and lower other non-interest income from isolated events that occurred in 2021. Core earnings for the current period exclude the gain from the disposal of the Company's insurance business.

For the six months ended June 30, 2022, net interest income decreased 2% or $5.2 million compared to the prior year as a result of the $19.7 million reduction in PPP interest and fees, partially offset by the positive impact on interest income from the year-over-year loan growth and the decrease in interest expense. Excluding the impact of interest and fees on PPP loans, tax-equivalent interest and fees on loans, driven by commercial loans, increased 5% compared to the prior year period. The decrease in interest expense was primarily the result of the decline in interest expense associated with money market and time deposits and total borrowings. The net interest margin declined to 3.49% for the six months ended June 30, 2022, compared to 3.60% for the prior year. Excluding the impact of the amortization of the fair value marks derived from acquisitions and PPP interest and fees, the net interest margin for the current year would have been 3.43% compared to 3.46% for the prior year.

The provision for credit losses for the six months ended June 30, 2022 amounted to a charge of $4.7 million as compared to a credit of $38.9 million for 2021. For the six months ended June 30, 2022, provision for credit losses is a reflection of the growth in the loan portfolio, coupled with the management's consideration of the potential impact of recessionary pressures, which exceeded the benefit to the provision derived from continuing improvement in forecasted macroeconomic indicators. The prior year's credit to the provision for credit losses was a reflection of the net impact of forecasted economic metrics and other factors applied in the determination of the allowance.

For the six months ended June 30, 2022, non-interest income which included a $16.7 million gain on the disposal of assets, increased 1% to $55.8 million compared to $55.1 million for 2021. Excluding the gain, non-interest income decreased 29% driven by a 76% decline in income from mortgage banking activities and a 55% decline in other income. The decline in income from mortgage banking activities is the result of the rising interest rate environment, which has dampened new mortgage and refinancing activity. Other income declined from the prior year which included the full payoff of a purchased credit deteriorated loan and activity-based vendor incentives. These declines exceeded the 3% growth in wealth management income, 25% growth in service charges on deposit accounts and 5% growth in bank card fees. Wealth management income grew, despite the erosion of assets under management due to the marketplace volatility, as a result of increased asset management fees. Service charge and bank card income growth occurred as a result of increased customer activity.

Non-interest expense decreased 3% to $127.1 million for the six months ended June 30, 2022, compared to $131.1 million for 2021. Excluding merger, acquisition and disposal expense from the current and prior year periods and the $9.1 million in prepayment penalties on FHLB borrowings that occurred in the prior year, non-interest expense increased 3% year-over-year. The drivers of the increase in non-interest expense were a 4% increase in salaries and benefits and a 20% increase other expense, excluding the FHLB prepayment penalties. The year-over-year increase in salaries and benefits was the result of staffing increases, salary adjustments and increased benefit costs. The principal component of the increase in other expense was the increase in the provision for credit losses provided on lines of credit compared to the prior year period. Marketing and outside data services costs increased 9% and 10%, respectively, while FDIC insurance premiums and professional fee and service costs decreased 30% and 10%, respectively, for the period.

For the six months ended June 30, 2022, the GAAP efficiency ratio was 48.30% compared to 48.98% for the same period in 2021. The non-GAAP efficiency ratio the current year was 49.57% compared to 44.01% for to prior year. The growth in the current year's non-GAAP efficiency ratio compared to the prior year, indicating a decline in efficiency, was the result of the 8% decrease in non-GAAP revenue combined with the 4% growth in non-GAAP non-interest expense.

Explanation of Non-GAAP Financial Measures

This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company's management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and, therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:

Tangible common equity and related measures are non-GAAP measures that exclude the impact of goodwill and other intangible assets.
The non-GAAP efficiency ratio excludes amortization of intangible assets, loss on FHLB redemption, gain on disposal of assets, merger, acquisition and disposal expense and investment securities gains and includes tax-equivalent income.
Core earnings and the related measures of core earnings per diluted common share, core return on average assets and core return on average tangible common equity reflect net income exclusive of merger, acquisition and disposal expense, amortization of intangible assets, loss on FHLB redemption, gain on disposal of assets and investment securities gains, on a net of tax basis.

These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to the non-GAAP Reconciliation tables included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Conference Call

The Company's management will host a conference call to discuss its second quarter results today at 2:00 p.m. (ET). A live Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-844-200-6205. Please use the following access code: 532489. Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available on the website until August 4, 2022. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 378796.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank, a premier community bank in the Greater Washington, D.C. region. With over 50 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust services throughout Maryland, Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of wealth management services.

Category: Webcast

Source: Sandy Spring Bancorp, Inc.

Code: SASR-E

For additional information or questions, please contact:

Daniel J. Schrider, President & Chief Executive Officer, or

Philip J. Mantua, E.V.P. & Chief Financial Officer

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

Email: DSchrider@sandyspringbank.com

PMantua@sandyspringbank.com

Website: www.sandyspringbank.com

Media Contact:

Jen Schell

301-570-8331

jschell@sandyspringbank.com

Forward-Looking Statements

Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the effect of the pandemic on our borrowers and their ability to make payments on their obligations, the effectiveness of vaccination programs, and the effect of remedial actions and stimulus measures adopted by federal, state and local governments; 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; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; 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, 2021, 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

	Three Months Ended June 30,						% Change		Six Months Ended June 30,						% Change
(Dollars in thousands, except per share data)	2022			2021			% Change		2022			2021			% Change
Results of operations:
Net interest income	$	105,950		$	108,046		(2	)%	$	207,401		$	212,646		(2	)%
Provision/ (credit) for credit losses		3,046			(4,204	)	(172	)		4,681			(38,912	)	(112	)
Non-interest income		35,245			26,259		34			55,840			55,125		1
Non-interest expense		64,991			62,975		3			127,138			131,148		(3	)
Income before income tax expense		73,158			75,534		(3	)		131,422			175,535		(25	)
Net income		54,800			57,263		(4	)		98,735			132,727		(26	)

Net income attributable to common shareholders	$	54,606		$	56,782		(4	)	$	98,259		$	131,606		(25	)
Pre-tax pre-provision net income⁽¹⁾	$	76,204		$	71,330		7		$	136,103		$	136,623		—

Return on average assets		1.69	%		1.79	%				1.56	%		2.09	%
Return on average common equity		14.97	%		15.07	%				13.39	%		17.84	%
Return on average tangible common equity⁽¹⁾		20.42	%		20.44	%				18.21	%		24.35	%
Net interest margin		3.49	%		3.63	%				3.49	%		3.60	%
Efficiency ratio - GAAP basis⁽²⁾		46.03	%		46.89	%				48.30	%		48.98	%
Efficiency ratio - Non-GAAP basis⁽²⁾		49.79	%		45.36	%				49.57	%		44.01	%

Per share data:
Basic net income per common share	$	1.21		$	1.20		1	%	$	2.18		$	2.79		(22	)%
Diluted net income per common share	$	1.21		$	1.19		2		$	2.17		$	2.77		(22	)
Weighted average diluted common shares		45,111,693			47,523,198		(5	)		45,223,086			47,469,470		(5	)
Dividends declared per share	$	0.34		$	0.32		6		$	0.68		$	0.64		6
Book value per common share	$	33.10		$	33.02		—		$	33.10		$	33.02		—
Tangible book value per common share⁽¹⁾	$	24.45		$	24.58		(1	)	$	24.45		$	24.58		(1	)
Outstanding common shares		44,629,697			47,312,982		(6	)		44,629,697			47,312,982		(6	)

Financial condition at period-end:
Investment securities	$	1,595,424		$	1,482,123		8	%	$	1,595,424		$	1,482,123		8	%
Loans		10,786,290			10,092,515		7			10,786,290			10,092,515		7
Interest-earning assets		12,542,388			12,167,067		3			12,542,388			12,167,067		3
Assets		13,303,009			12,925,577		3			13,303,009			12,925,577		3
Deposits		10,969,461			10,866,466		1			10,969,461			10,866,466		1
Interest-bearing liabilities		7,570,671			7,233,536		5			7,570,671			7,233,536		5
Stockholders' equity		1,477,169			1,562,280		(5	)		1,477,169			1,562,280		(5	)

Capital ratios:
Tier 1 leverage⁽³⁾		9.53	%		9.49	%				9.53	%		9.49	%
Common equity tier 1 capital to risk-weighted assets⁽³⁾		11.58	%		12.49	%				11.58	%		12.49	%
Tier 1 capital to risk-weighted assets⁽³⁾		11.58	%		12.49	%				11.58	%		12.49	%
Total regulatory capital to risk-weighted assets⁽³⁾		16.07	%		15.85	%				16.07	%		15.85	%
Tangible common equity to tangible assets⁽⁴⁾		8.45	%		9.28	%				8.45	%		9.28	%
Average equity to average assets		11.30	%		11.91	%				11.63	%		11.73	%

Credit quality ratios:
Allowance for credit losses to loans		1.05	%		1.23	%				1.05	%		1.23	%
Non-performing loans to total loans		0.40	%		0.93	%				0.40	%		0.93	%
Non-performing assets to total assets		0.33	%		0.74	%				0.33	%		0.74	%
Allowance for credit losses to non-performing loans		261.44	%		131.44	%				261.44	%		131.44	%
Annualized net charge-offs to average loans⁽⁵⁾		—	%		0.09	%				—	%		0.05	%

(1) Represents a non-GAAP measure.

(2) The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger, acquisition and disposal expense from non-interest expense; gain on disposal of assets and investment securities gains from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

(3) Estimated ratio at June 30, 2022.

(4) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets. See the Reconciliation Table included with these Financial Highlights.

(5) Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED (CONTINUED)

OPERATING EARNINGS - METRICS

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2022			2021			2022			2021
Core earnings (non-GAAP):
Net income (GAAP)	$	54,800		$	57,263		$	98,735		$	132,727
Plus/ (less) non-GAAP adjustments (net of tax):
Merger, acquisition and disposal expense		793			—			793			34
Amortization of intangible assets		1,090			1,236			2,211			2,500
Loss on FHLB redemption		—			—			—			6,792
Gain on disposal of assets		(12,417	)		—			(12,417	)		—
Investment securities gains		(28	)		(53	)		(34	)		(96	)
Core earnings (Non-GAAP)	$	44,238		$	58,446		$	89,288		$	141,957

Core earnings per diluted common share (non-GAAP):
Weighted average common shares outstanding - diluted (GAAP)		45,111,693			47,523,198			45,223,086			47,469,470

Earnings per diluted common share (GAAP)	$	1.21		$	1.19		$	2.17		$	2.77
Core earnings per diluted common share (non-GAAP)	$	0.98		$	1.23		$	1.97		$	2.99

Core return on average assets (non-GAAP):
Average assets (GAAP)	$	12,991,692		$	12,798,355		$	12,785,040		$	12,797,068

Return on average assets (GAAP)		1.69	%		1.79	%		1.56	%		2.09	%
Core return on average assets (non-GAAP)		1.37	%		1.83	%		1.41	%		2.24	%

Core return on average tangible common equity (non-GAAP):
Average total stockholders' equity (GAAP)	$	1,468,036		$	1,523,875		$	1,487,170		$	1,500,642
Average goodwill		(367,986	)		(370,223	)		(369,098	)		(370,223	)
Average other intangible assets, net		(23,801	)		(30,224	)		(24,580	)		(31,056	)
Average tangible common equity (non-GAAP)	$	1,076,249		$	1,123,428		$	1,093,492		$	1,099,363

Return on average tangible common equity (non-GAAP)		20.42	%		20.44	%		18.21	%		24.35	%
Core return on average tangible common equity (non-GAAP)		16.49	%		20.87	%		16.47	%		26.04	%

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2022			2021			2022			2021
Pre-tax pre-provision net income:
Net income (GAAP)	$	54,800		$	57,263		$	98,735		$	132,727
Plus/ (less) non-GAAP adjustments:
Income tax expense		18,358			18,271			32,687			42,808
Provision/ (credit) for credit losses		3,046			(4,204	)		4,681			(38,912	)
Pre-tax pre-provision net income (non-GAAP)	$	76,204		$	71,330		$	136,103		$	136,623

Efficiency ratio (GAAP):
Non-interest expense	$	64,991		$	62,975		$	127,138		$	131,148

Net interest income plus non-interest income	$	141,195		$	134,305		$	263,241		$	267,771

Efficiency ratio (GAAP)		46.03	%		46.89	%		48.30	%		48.98	%

Efficiency ratio (Non-GAAP):
Non-interest expense	$	64,991		$	62,975		$	127,138		$	131,148
Less non-GAAP adjustments:
Amortization of intangible assets		1,466			1,659			2,974			3,356
Loss on FHLB redemption		—			—			—			9,117
Merger, acquisition and disposal expense		1,067			—			1,067			45
Non-interest expense - as adjusted	$	62,458		$	61,316		$	123,097		$	118,630

Net interest income plus non-interest income	$	141,195		$	134,305		$	263,241		$	267,771
Plus non-GAAP adjustment:
Tax-equivalent income		992			930			1,858			1,910
Less non-GAAP adjustment:
Investment securities gains		38			71			46			129
Gain on disposal of assets		16,699			—			16,699			—
Net interest income plus non-interest income - as adjusted	$	125,450		$	135,164		$	248,354		$	269,552

Efficiency ratio (Non-GAAP)		49.79	%		45.36	%		49.57	%		44.01	%

Tangible common equity ratio:
Total stockholders' equity	$	1,477,169		$	1,562,280		$	1,477,169		$	1,562,280
Goodwill		(363,436	)		(370,223	)		(363,436	)		(370,223	)
Other intangible assets, net		(22,694	)		(29,165	)		(22,694	)		(29,165	)
Tangible common equity	$	1,091,039		$	1,162,892		$	1,091,039		$	1,162,892

Total assets	$	13,303,009		$	12,925,577		$	13,303,009		$	12,925,577
Goodwill		(363,436	)		(370,223	)		(363,436	)		(370,223	)
Other intangible assets, net		(22,694	)		(29,165	)		(22,694	)		(29,165	)
Tangible assets	$	12,916,879		$	12,526,189		$	12,916,879		$	12,526,189

Tangible common equity ratio		8.45	%		9.28	%		8.45	%		9.28	%

Outstanding common shares		44,629,697			47,312,982			44,629,697			47,312,982
Tangible book value per common share	$	24.45		$	24.58		$	24.45		$	24.58

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

(Dollars in thousands)	June 30, 2022			December 31, 2021			June 30, 2021
Assets
Cash and due from banks	$	84,215		$	65,630		$	109,147
Federal funds sold		291			312			358
Interest-bearing deposits with banks		136,773			354,078			520,989
Cash and cash equivalents		221,279			420,020			630,494
Residential mortgage loans held for sale (at fair value)		23,610			39,409			71,082
Investments held-to-maturity (fair value of $250,915)		274,337			—			—
Investments available-for-sale (at fair value)		1,268,823			1,465,896			1,441,026
Other equity securities		52,264			41,166			41,097
Total loans		10,786,290			9,967,091			10,092,515
Less: allowance for credit losses		(113,670	)		(109,145	)		(123,961	)
Net loans		10,672,620			9,857,946			9,968,554
Premises and equipment, net		63,243			59,685			55,592
Other real estate owned		739			1,034			1,234
Accrued interest receivable		33,459			34,349			40,630
Goodwill		363,436			370,223			370,223
Other intangible assets, net		22,694			25,920			29,165
Other assets		306,505			275,078			276,480
Total assets	$	13,303,009		$	12,590,726		$	12,925,577

Liabilities
Noninterest-bearing deposits	$	4,129,440		$	3,779,630		$	4,000,636
Interest-bearing deposits		6,840,021			6,845,101			6,865,830
Total deposits		10,969,461			10,624,731			10,866,466
Securities sold under retail repurchase agreements and federal funds purchased		185,744			141,086			140,708
Advances from FHLB		175,000			—			—
Subordinated debt		369,906			172,712			226,998
Total borrowings		730,650			313,798			367,706
Accrued interest payable and other liabilities		125,729			132,518			129,125
Total liabilities		11,825,840			11,071,047			11,363,297

Stockholders' equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 44,629,697, 45,118,930 and 47,312,982 at June 30, 2022, December 31, 2021 and June 30, 2021, respectively		44,630			45,119			47,313
Additional paid in capital		730,285			751,072			850,555
Retained earnings		799,707			732,027			659,578
Accumulated other comprehensive loss		(97,453	)		(8,539	)		4,834
Total stockholders' equity		1,477,169			1,519,679			1,562,280
Total liabilities and stockholders' equity	$	13,303,009		$	12,590,726		$	12,925,577

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands, except per share data)	2022		2021			2022		2021
Interest income:
Interest and fees on loans	$	106,221	$	107,751		$	205,715	$	215,179
Interest on loans held for sale		145		549			343		1,086
Interest on deposits with banks		358		47			471		93
Interest and dividends on investment securities:
Taxable		4,630		4,373			8,737		8,272
Tax-advantaged		2,554		2,103			4,678		4,454
Interest on federal funds sold		1		—			1		—
Total interest income		113,909		114,823			219,945		229,084
Interest Expense:
Interest on deposits		3,795		3,851			6,088		8,681
Interest on retail repurchase agreements and federal funds purchased		201		43			255		96
Interest on advances from FHLB		17		373			17		2,649
Interest on subordinated debt		3,946		2,510			6,184		5,012
Total interest expense		7,959		6,777			12,544		16,438
Net interest income		105,950		108,046			207,401		212,646
Provision/ (credit) for credit losses		3,046		(4,204	)		4,681		(38,912	)
Net interest income after provision/ (credit) for credit losses		102,904		112,250			202,720		251,558
Non-interest income:
Investment securities gains		38		71			46		129
Gain on disposal of assets		16,699		—			16,699		—
Service charges on deposit accounts		2,467		1,976			4,793		3,828
Mortgage banking activities		1,483		5,776			3,781		15,945
Wealth management income		9,098		9,121			18,435		17,851
Insurance agency commissions		812		1,247			2,927		3,400
Income from bank owned life insurance		703		705			1,498		1,385
Bank card fees		1,810		1,785			3,478		3,303
Other income		2,135		5,578			4,183		9,284
Total non-interest income		35,245		26,259			55,840		55,125
Non-interest expense:
Salaries and employee benefits		39,550		38,990			78,923		75,642
Occupancy expense of premises		4,734		5,497			9,768		10,984
Equipment expenses		3,559		3,020			7,095		6,242
Marketing		1,280		1,052			2,473		2,264
Outside data services		2,564		2,260			4,983		4,543
FDIC insurance		1,078		1,450			2,062		2,942
Amortization of intangible assets		1,466		1,659			2,974		3,356
Merger, acquisition and disposal expense		1,067		—			1,067		45
Professional fees and services		2,372		3,165			4,389		4,896
Other expenses		7,321		5,882			13,404		20,234
Total non-interest expense		64,991		62,975			127,138		131,148
Income before income tax expense		73,158		75,534			131,422		175,535
Income tax expense		18,358		18,271			32,687		42,808
Net income	$	54,800	$	57,263		$	98,735	$	132,727

Net income per share amounts:
Basic net income per common share	$	1.21	$	1.20		$	2.18	$	2.79
Diluted net income per common share	$	1.21	$	1.19		$	2.17	$	2.77
Dividends declared per share	$	0.34	$	0.32		$	0.68	$	0.64

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

	2022						2021
(Dollars in thousands, except per share data)	Q2			Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	114,901		$	106,902		$	110,933		$	112,060		$	115,753		$	115,241
Interest expense		7,959			4,585			4,803			4,525			6,777			9,661
Tax-equivalent net interest income		106,942			102,317			106,130			107,535			108,976			105,580
Tax-equivalent adjustment		992			866			862			931			930			980
Provision/ (credit) for credit losses		3,046			1,635			1,585			(8,229	)		(4,204	)		(34,708	)
Non-interest income		35,245			20,595			22,536			24,394			26,259			28,866
Non-interest expense		64,991			62,147			66,141			63,181			62,975			68,173
Income before income tax expense		73,158			58,264			60,078			76,046			75,534			100,001
Income tax expense		18,358			14,329			14,674			19,070			18,271			24,537
Net income	$	54,800		$	43,935		$	45,404		$	56,976		$	57,263		$	75,464
GAAP financial performance:
Return on average assets		1.69	%		1.42	%		1.41	%		1.75	%		1.79	%		2.39	%
Return on average common equity		14.97	%		11.83	%		11.87	%		14.54	%		15.07	%		20.72	%
Return on average tangible common equity		20.42	%		16.04	%		16.07	%		19.56	%		20.44	%		28.47	%
Net interest margin		3.49	%		3.49	%		3.51	%		3.52	%		3.63	%		3.56	%
Efficiency ratio - GAAP basis		46.03	%		50.92	%		51.75	%		48.23	%		46.89	%		51.08	%
Non-GAAP financial performance:
Pre-tax pre-provision net income	$	76,204		$	59,899		$	61,663		$	67,817		$	71,330		$	65,293
Core after-tax earnings	$	44,238		$	45,050		$	46,575		$	58,151		$	58,446		$	83,511
Core return on average assets		1.37	%		1.45	%		1.44	%		1.79	%		1.83	%		2.65	%
Core return on average common equity		12.09	%		12.13	%		12.17	%		14.84	%		15.38	%		22.93	%
Core return on average tangible common equity		16.49	%		16.45	%		16.49	%		19.96	%		20.87	%		31.50	%
Core earnings per diluted common share	$	0.98		$	0.99		$	1.02		$	1.23		$	1.23		$	1.76
Efficiency ratio - Non-GAAP basis		49.79	%		49.34	%		50.17	%		46.67	%		45.36	%		42.65	%
Per share data:
Net income attributable to common shareholders	$	54,606		$	43,667		$	45,114		$	56,622		$	56,782		$	74,824
Basic net income per common share	$	1.21		$	0.97		$	0.99		$	1.21		$	1.20		$	1.59
Diluted net income per common share	$	1.21		$	0.96		$	0.99		$	1.20		$	1.19		$	1.58
Weighted average diluted common shares		45,111,693			45,333,292			45,655,924			47,086,824			47,523,198			47,415,060
Dividends declared per share	$	0.34		$	0.34		$	0.32		$	0.32		$	0.32		$	0.32
Non-interest income:
Securities gains	$	38		$	8		$	34		$	49		$	71		$	58
Gain on disposal of assets		16,699			—			—			—			—			—
Service charges on deposit accounts		2,467			2,326			2,305			2,108			1,976			1,852
Mortgage banking activities		1,483			2,298			3,622			4,942			5,776			10,169
Wealth management income		9,098			9,337			9,598			9,392			9,121			8,730
Insurance agency commissions		812			2,115			1,332			2,285			1,247			2,153
Income from bank owned life insurance		703			795			819			818			705			680
Bank card fees		1,810			1,668			1,818			1,775			1,785			1,518
Other income		2,135			2,048			3,008			3,025			5,578			3,706
Total non-interest income	$	35,245		$	20,595		$	22,536		$	24,394		$	26,259		$	28,866
Non-interest expense:
Salaries and employee benefits	$	39,550		$	39,373		$	41,535		$	38,653		$	38,990		$	36,652
Occupancy expense of premises		4,734			5,034			5,693			5,728			5,497			5,487
Equipment expenses		3,559			3,536			3,427			3,214			3,020			3,222
Marketing		1,280			1,193			1,090			1,376			1,052			1,212
Outside data services		2,564			2,419			2,123			2,317			2,260			2,283
FDIC insurance		1,078			984			991			361			1,450			1,492
Amortization of intangible assets		1,466			1,508			1,609			1,635			1,659			1,697
Merger, acquisition and disposal expense		1,067			—			—			—			—			45
Professional fees and services		2,372			2,017			2,381			3,031			3,165			1,731
Other expenses		7,321			6,083			7,292			6,866			5,882			14,352
Total non-interest expense	$	64,991		$	62,147		$	66,141		$	63,181		$	62,975		$	68,173

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

	2022						2021
(Dollars in thousands, except per share data)	Q2			Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Commercial investor real estate loans	$	4,761,658		$	4,388,275		$	4,141,346		$	3,743,698		$	3,712,374		$	3,652,418
Commercial owner-occupied real estate loans		1,767,326			1,692,253			1,690,881			1,661,092			1,687,843			1,644,848
Commercial AD&C loans		1,094,528			1,089,331			1,088,094			1,177,949			1,126,960			1,051,013
Commercial business loans		1,353,380			1,349,602			1,481,834			1,594,528			1,974,366			2,411,109
Residential mortgage loans		1,147,577			1,000,697			937,570			911,997			960,527			1,022,546
Residential construction loans		235,486			204,259			197,652			181,319			172,869			171,028
Consumer loans		426,335			419,911			429,714			450,765			457,576			493,904
Total loans		10,786,290			10,144,328			9,967,091			9,721,348			10,092,515			10,446,866
Allowance for credit losses		(113,670	)		(110,588	)		(109,145	)		(107,920	)		(123,961	)		(130,361	)
Loans held for sale		23,610			17,537			39,409			44,678			71,082			84,930
Investment securities		1,595,424			1,586,441			1,507,062			1,470,652			1,482,123			1,472,727
Interest-earning assets		12,542,388			12,205,058			11,867,952			12,245,374			12,167,067			12,132,405
Total assets		13,303,009			12,967,416			12,590,726			13,017,464			12,925,577			12,873,366
Noninterest-bearing demand deposits		4,129,440			4,039,797			3,779,630			3,987,411			4,000,636			3,770,852
Total deposits		10,969,461			10,852,794			10,624,731			10,987,400			10,866,466			10,677,752
Customer repurchase agreements		110,744			130,784			141,086			147,504			140,708			129,318
Total interest-bearing liabilities		7,570,671			7,313,783			7,158,899			7,320,132			7,233,536			7,423,262
Total stockholders' equity		1,477,169			1,488,910			1,519,679			1,546,060			1,562,280			1,511,694
Quarterly average balance sheets:
Commercial investor real estate loans	$	4,512,937		$	4,220,246		$	3,769,529		$	3,678,886		$	3,675,119		$	3,634,174
Commercial owner-occupied real estate loans		1,727,325			1,683,557			1,669,737			1,671,442			1,663,543			1,638,885
Commercial AD&C loans		1,096,369			1,102,660			1,140,059			1,161,183			1,089,287			1,049,597
Commercial business loans		1,334,350			1,372,755			1,482,901			1,820,598			2,225,885			2,291,097
Residential mortgage loans		1,070,836			964,056			925,093			934,365			994,899			1,066,714
Residential construction loans		221,031			197,366			186,129			170,511			176,135			179,925
Consumer loans		421,022			424,859			436,030			452,289			468,686			496,578
Total loans		10,383,870			9,965,499			9,609,478			9,889,274			10,293,554			10,356,970
Loans held for sale		12,744			17,594			29,426			50,075			66,958			82,263
Investment securities		1,686,181			1,617,615			1,535,265			1,403,496			1,482,905			1,407,455
Interest-earning assets		12,283,834			11,859,803			12,012,576			12,121,048			12,037,701			12,029,424
Total assets		12,991,692			12,576,089			12,791,526			12,886,460			12,798,355			12,801,539
Noninterest-bearing demand deposits		4,001,762			3,758,732			3,879,572			3,869,293			3,763,135			3,394,110
Total deposits		10,829,221			10,542,029			10,809,665			10,832,115			10,663,346			10,343,190
Customer repurchase agreements		122,728			131,487			144,988			145,483			136,286			148,195
Total interest-bearing liabilities		7,377,045			7,163,641			7,247,756			7,315,021			7,356,656			7,742,987
Total stockholders' equity		1,468,036			1,506,516			1,517,793			1,554,765			1,523,875			1,477,150
Financial measures:
Average equity to average assets		11.30	%		11.98	%		11.87	%		12.07	%		11.91	%		11.54	%
Investment securities to earning assets		12.72	%		13.00	%		12.70	%		12.01	%		12.18	%		12.14	%
Loans to earning assets		86.00	%		83.12	%		83.98	%		79.39	%		82.95	%		86.11	%
Loans to assets		81.08	%		78.23	%		79.16	%		74.68	%		78.08	%		81.15	%
Loans to deposits		98.33	%		93.47	%		93.81	%		88.48	%		92.88	%		97.84	%
Assets under management	$	5,171,321		$	5,793,787		$	6,078,204		$	5,733,311		$	5,676,141		$	5,401,158
Capital measures:
Tier 1 leverage⁽¹⁾		9.53	%		9.66	%		9.26	%		9.33	%		9.49	%		9.14	%
Common equity tier 1 capital to risk-weighted assets⁽¹⁾		11.58	%		12.03	%		11.91	%		12.53	%		12.49	%		12.11	%
Tier 1 capital to risk-weighted assets⁽¹⁾		11.58	%		12.03	%		11.91	%		12.53	%		12.49	%		12.11	%
Total regulatory capital to risk-weighted assets⁽¹⁾		16.07	%		16.77	%		14.59	%		15.30	%		15.85	%		15.52	%
Book value per common share	$	33.10		$	32.97		$	33.68		$	33.52		$	33.02		$	32.04
Outstanding common shares		44,629,697			45,162,908			45,118,930			46,119,074			47,312,982			47,187,389

(1) Estimated ratio at June 30, 2022.

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

	2022				2021
(Dollars in thousands)	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
Non-performing assets:
Loans 90 days past due:
Commercial real estate:
Commercial investor real estate	$	—	$	—	$	—	$	14,830	$	—	$	—
Commercial owner-occupied real estate		—		—		—		—		—		—
Commercial AD&C		—		—		—		7,344		—		—
Commercial business		—		—		—		—		—		31
Residential real estate:
Residential mortgage		353		296		557		679		680		398
Residential construction		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Total loans 90 days past due		353		296		557		22,853		680		429
Non-accrual loans:
Commercial real estate:
Commercial investor real estate		11,245		11,743		12,489		15,386		42,072		42,776
Commercial owner-occupied real estate		7,869		8,083		9,306		9,854		8,183		8,316
Commercial AD&C		1,353		1,081		650		1,022		14,489		14,975
Commercial business		7,542		8,357		8,420		9,454		9,435		13,147
Residential real estate:
Residential mortgage		7,305		8,148		8,441		9,511		9,440		9,593
Residential construction		1		51		55		62		62		—
Consumer		5,692		6,406		6,725		7,826		7,718		7,193
Total non-accrual loans		41,007		43,869		46,086		53,115		91,399		96,000
Total restructured loans - accruing		2,119		2,161		2,167		2,199		2,228		2,271
Total non-performing loans		43,479		46,326		48,810		78,167		94,307		98,700
Other assets and other real estate owned (OREO)		739		1,034		1,034		1,105		1,234		1,354
Total non-performing assets	$	44,218	$	47,360	$	49,844	$	79,272	$	95,541	$	100,054

	For the Quarter Ended,
(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
Analysis of non-accrual loan activity:
Balance at beginning of period	$	43,869		$	46,086		$	53,115		$	91,399		$	96,000		$	112,361
Non-accrual balances transferred to OREO		—			—			—			—			(257	)		—
Non-accrual balances charged-off		(376	)		(265	)		(754	)		(7,171	)		(2,166	)		(699	)
Net payments or draws		(3,234	)		(2,787	)		(5,786	)		(36,526	)		(3,693	)		(16,028	)
Loans placed on non-accrual		948			1,503			511			5,699			1,515			421
Non-accrual loans brought current		(200	)		(668	)		(1,000	)		(286	)

Sandy Spring Bancorp Reports Quarterly Earnings of $54.8 Million