Sandy Spring Bancorp Reports Net Income of $13.3 Million for the Fourth Quarter

OREANDA-NEWS. Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the fourth quarter of 2016 of $13.3 million ($0.55 per diluted share) compared to net income of $12.8 million ($0.52 per diluted share) for the fourth quarter of 2015 and net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016.

Net income for the year ended December 31, 2016, was $48.3 million ($2.00 per diluted share) compared to net income of $45.4 million ($1.84 per diluted share) for the prior year.

“Our continued ability to meet the needs of our clients is reflected in our record performance this year. Strong loan growth, combined with an improved net interest margin, were the primary drivers to our profitability for both the fourth quarter and full year. This record performance enabled us to increase our dividend to its highest level ever and supported our repurchase of $13.3 million of the Company’s shares during the year. Shareholders also benefited from a 48% increase in our stock price over the year,” said Daniel J. Schrider, President and Chief Executive Officer.  

Fourth Quarter Highlights: 

• Total loans increased 12% compared to the fourth quarter of 2015 and 4% compared to the third quarter of 2016. These increases were driven primarily by year-over-year growth of 17% in the commercial loan portfolio.
   
• The net interest margin improved to 3.52% for the fourth quarter of 2016, compared to 3.45% for the fourth quarter of 2015 and 3.50% for the third quarter of 2016.
   
• Pre-tax, pre-provision income increased 25% compared with the fourth quarter of 2015.
   
• The Non-GAAP efficiency ratio was 57.54% for the current quarter as compared to 63.08% for the fourth quarter of 2015 and 56.33% for the third quarter of 2016.
   
• Return on equity increased to 9.92% for the fourth quarter of 2016 compared to 9.73% for the fourth quarter of 2015 and decreased compared to 10.11% for the third quarter of 2016.

Review of Balance Sheet and Credit Quality

Total assets grew 9% to $5.1 billion at December 31, 2016 compared to $4.7 billion at December 31, 2015.  This growth was driven by the increase in the loan portfolio as total loans ended the year at $3.9 billion. 

At December 31, 2016, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 12% compared to balances at December 31, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from clients, increased 10% compared to December 31, 2015.

Tangible common equity totaled $454 million at December 31, 2016 compared to $441 million at December 31, 2015. The ratio of tangible common equity to tangible assets decreased to 9.07% at December 31, 2016 from 9.66% at December 31, 2015 due to the combined impact of the growth in assets and share repurchases over the preceding 12 months. Dividends per common share increased to $0.26 per share in the fourth quarter and totaled $0.98 per share for the year compared to $0.90 per share for 2015, a 9% increase. 

At December 31, 2016, the Company had a total risk-based capital ratio of 12.80%, a common equity tier 1 risk-based capital ratio of 11.01%, a tier 1 risk-based capital ratio of 11.74% and a tier 1 leverage ratio of 10.14%. On January 6, 2017 the Company repurchased all of its remaining $30 million in subordinated debentures at par value. The Company estimates that this will reduce the above capital ratios by approximately 75 basis points and that the Company will remain well-capitalized for regulatory purposes. This strategy was executed to improve the Company’s future net interest margin.

Non-performing loans totaled $31.9 million at December 31, 2016 compared to $34.5 million at December 31, 2015 and $32.0 million at September 30, 2016. The level of non-performing loans to total loans decreased to 0.81% at December 31, 2016 compared to 0.99% at December 31, 2015 as a result of the growth in the loan portfolio and a concurrent decrease in the level of non-performing loans.

Loan charge-offs, net of recoveries, totaled $0.4 million for the fourth quarter of 2016 compared to $0.6 million for the fourth quarter of 2015. The allowance for loan losses represented 1.12% of outstanding loans and 138% of non-performing loans at December 31, 2016 compared to 1.17% of outstanding loans and 119% of non-performing loans at December 31, 2015. As the ratio of the allowance to outstanding loans decreased due to loan growth during the year, the coverage ratio improved due to the decline in non-performing loans, a reflection of improved credit quality in the loan portfolio. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the fourth quarter of 2016 increased 9% compared to the fourth quarter of 2015. The net interest margin improved to 3.52% for the fourth quarter of 2016 compared to 3.45% for the fourth quarter of 2015.  This improvement reflects the impact of loan growth over the preceding year combined with the cumulative benefits associated with the prepayment of FHLB advances and the early call of subordinated debentures, and the shift from lower yielding investments to the higher yielding loan portfolio during 2016.  

The provision for loan losses was $0.6 million for the fourth quarter of 2016 compared to $1.9 million for the fourth quarter of 2015 and $0.8 million for the third quarter of 2016. The decrease in the current quarter’s charge versus the prior year’s quarter reflects lower net-charge offs during the quarter, and continued improvement in loan quality which partially offset the effects of loan growth on the provision.

Non-interest income increased to $12.3 million for the fourth quarter of 2016 compared to $12.2 million for the fourth quarter of 2015 due to higher mortgage banking income from increased loan sales volume that more than offset the decrease in income from wealth management.

Non-interest expenses increased 13% to $30.5 million for the fourth quarter of 2016 compared to $27.0 million in the fourth quarter of 2015. The prior year quarter included a $4.5 million recapture of previously accrued litigation expenses and a $1.0 million charitable contribution. Excluding these transactions, total non-interest expenses remained virtually level compared to 2015. The non-GAAP efficiency ratio was 57.54% for the fourth quarter of 2016 compared to 63.08% for the fourth quarter of 2015 as a result of the combined growth in the net interest income and the effects of expense control discipline. 

Net interest income for the year ended December 31, 2016 increased 8% compared to 2015 due primarily to an increase in average loans, which was funded, in part, by a decrease in lower-yielding investment securities. 

The provision for loan losses was a charge of $5.5 million for the year ended December 31, 2016 compared to a charge of $5.4 million for 2015. The provision for the current year is primarily due to growth in the loan portfolio that was offset by the decrease in nonperforming loans and improvement in loan quality.

Non-interest income increased 2% to $51.0 million for 2016 compared to $49.9 million for 2015.  This increase was driven by $1.9 million in gains on securities sales and a gain of $1.2 million due to the extinguishment of subordinated debentures during the first half of 2016. Excluding these transactions, non-interest income decreased 4% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management in the first quarter of 2016. 

Non-interest expenses increased 7% to $123.1 million for 2016 compared to $115.3 million for the prior year. This increase was due largely to prepayment penalties of $3.2 million for the early payoff of $75 million in high-rate FHLB advances in 2016, combined with the impact of the recapture of previously accrued litigation expenses and the charitable contribution that occurred in late 2015. Excluding these transactions, non-interest expenses increased 1% over the prior year. This increase was due primarily to higher software and outside data services expenses. The non-GAAP efficiency ratio was 58.66% for 2016 compared to 61.09% for 2015.

 

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 $5.1 billion in assets, the bank operates 44 community offices and six financial centers across the region. 

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 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, 2015, 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										Twelve Months Ended
		December 31,						%				December 31,						%
(Dollars in thousands, except per share data)			2016			2015		Change					2016			2015		Change
Results of Operations:
Net interest income		$	38,967		$	35,777		9		%		$	149,552		$	138,199		8		%
Provision for loan losses			572			1,850		(69	)				5,546			5,371		3
Non-interest income			12,344			12,243		1					51,042			49,901		2
Non-interest expenses			30,544			26,996		13					123,058			115,347		7
Income before income taxes			20,195			19,174		5					71,990			67,382		7
Net income			13,316			12,802		4					48,250			45,355		6
Pre-tax pre-provision income		$	20,767		$	16,638		25				$	77,536		$	68,884		13
Return on average assets			1.09	%		1.11	%						1.02	%		1.01	%
Return on average common equity			9.92	%		9.73	%						9.15	%		8.73	%
Net interest margin			3.52	%		3.45	%						3.49	%		3.44	%
Efficiency ratio - GAAP basis  (1)			59.53	%		56.22	%						61.35	%		61.32	%
Efficiency ratio - Non-GAAP basis  (1)			57.54	%		63.08	%						58.66	%		61.09	%
Per share data:
Basic net income		$	0.55		$	0.53		4		%		$	2.00		$	1.84		9		%
Diluted net income		$	0.55		$	0.52		6				$	2.00		$	1.84		9
Average fully diluted shares			24,140,534			24,455,847		(1	)				24,149,121			24,697,908		(2	)
Dividends declared per share		$	0.26		$	0.24		8				$	0.98		$	0.90		9
Book value per share			22.32			21.58		3					22.32			21.58		3
Tangible book value per share			18.98			18.17		4					18.98			18.17		4
Outstanding shares			23,901,084			24,295,971		(2	)				23,901,084			24,295,971		(2	)
Financial Condition at period-end:
Investment securities		$	779,648		$	841,650		(7	)	%		$	779,648		$	841,650		(7	)	%
Loans			3,927,808			3,495,370		12					3,927,808			3,495,370		12
Interest-earning assets			4,801,613			4,378,403		10					4,801,613			4,378,403		10
Assets			5,091,383			4,655,380		9					5,091,383			4,655,380		9
Deposits			3,577,544			3,263,730		10					3,577,544			3,263,730		10
Interest-bearing liabilities			3,384,524			3,091,034		9					3,384,524			3,091,034		9
Stockholders' equity			533,572			524,427		2					533,572			524,427		2
Capital ratios:
Tier 1 leverage  (4)			10.14	%		10.60	%						10.14	%		10.60	%
Tier 1 capital to risk-weighted assets  (4)			11.74	%		13.13	%						11.74	%		13.13	%
Total regulatory capital to risk-weighted assets  (4)			12.80	%		14.25	%						12.80	%		14.25	%
Common equity tier 1 capital to risk-weighted assets  (4)			11.01	%		12.17	%						11.01	%		12.17	%
Tangible common equity to tangible assets  (2)			9.07	%		9.66	%						9.07	%		9.66	%
Average equity to average assets			10.95	%		11.36	%						11.12	%		11.58	%
Credit quality ratios:
Allowance for loan losses to loans			1.12	%		1.17	%						1.12	%		1.17	%
Non-performing loans to total loans			0.81	%		0.99	%						0.81	%		0.99	%
Non-performing assets to total assets			0.66	%		0.80	%						0.66	%		0.80	%
Allowance for loan losses to non-performing loans			138.00	%		118.54	%						138.00	%		118.54	%
Annualized net charge-offs to average loans  (3)			0.05	%		0.07	%						0.06	%		0.07	%
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income.
The efficiency ratio - Non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI;
and the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.
(2) 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
and other comprehensive gains (losses).  See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at December 31, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
(Dollars in thousands)			2016				2015				2016				2015
Pre-tax pre-provision income:
Net income		$	13,316			$	12,802			$	48,250			$	45,355
Plus non-GAAP adjustment:
Litigation expenses			-				(4,386	)			-				(3,869	)
Income taxes			6,879				6,372				23,740				22,027
Provision for loan losses			572				1,850				5,546				5,371
Pre-tax pre-provision income		$	20,767			$	16,638			$	77,536			$	68,884
Efficiency ratio - GAAP basis:
Non-interest expenses		$	30,544			$	26,996			$	123,058			$	115,347
Net interest income plus non-interest income		$	51,311			$	48,020			$	200,594			$	188,100
Efficiency ratio - GAAP basis			59.53	%			56.22	%			61.35	%			61.32	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses		$	30,544			$	26,996			$	123,058			$	115,347
Less non-GAAP adjustment:
Amortization of intangible assets			36				52				130				372
Loss on FHLB Redemption			-				-				3,167				-
Litigation expenses			-				(4,386	)			-				(3,869	)
Non-interest expenses -  as adjusted		$	30,508			$	31,330			$	119,761			$	118,844
Net interest income plus non-interest income		$	51,311			$	48,020			$	200,594			$	188,100
Plus non-GAAP adjustment:
Tax-equivalent income			1,718				1,662				6,711				6,478
Less non-GAAP adjustments:
Securities gains			13				16				1,932				36
Gain on redemption of subordinated debentures			-				-				1,200				-
Net interest income plus non-interest income - as adjusted		$	53,016			$	49,666			$	204,173			$	194,542
Efficiency ratio - Non-GAAP basis			57.54	%			63.08	%			58.66	%			61.09	%
Tangible common equity ratio:
Total stockholders' equity		$	533,572			$	524,427			$	533,572			$	524,427
Accumulated other comprehensive income			6,614				1,297				6,614				1,297
Goodwill			(85,768	)			(84,171	)			(85,768	)			(84,171	)
Other intangible assets, net			(680	)			(138	)			(680	)			(138	)
Tangible common equity		$	453,738			$	441,415			$	453,738			$	441,415
Total assets		$	5,091,383			$	4,655,380			$	5,091,383			$	4,655,380
Goodwill			(85,768	)			(84,171	)			(85,768	)			(84,171	)
Other intangible assets, net			(680	)			(138	)			(680	)			(138	)
Tangible assets		$	5,004,935			$	4,571,071			$	5,004,935			$	4,571,071
Tangible common equity ratio			9.07	%			9.66	%			9.07	%			9.66	%
Outstanding common shares			23,901,084				24,295,971				23,901,084				24,295,971
Tangible book value per common share		$	18.98			$	18.17			$	18.98			$	18.17

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED
		December 31,				December 31,
(Dollars in thousands)			2016				2015
Assets
Cash and due from banks		$	53,190			$	46,956
Federal funds sold			1,953				472
Interest-bearing deposits with banks			78,982				25,454
Cash and cash equivalents			134,125				72,882
Residential mortgage loans held for sale (at fair value)			13,222				15,457
Investments available-for-sale (at fair value)			733,554				592,049
Investments held-to-maturity -- fair value of $211,704 at December 31, 2015			-				208,265
Other equity securities			46,094				41,336
Total loans			3,927,808				3,495,370
Less: allowance for loan losses			(44,067	)			(40,895	)
Net loans			3,883,741				3,454,475
Premises and equipment, net			53,562				53,214
Other real estate owned			1,911				2,742
Accrued interest receivable			14,589				13,443
Goodwill			85,768				84,171
Other intangible assets, net			680				138
Other assets			124,137				117,208
Total assets		$	5,091,383			$	4,655,380
Liabilities
Noninterest-bearing deposits		$	1,138,139			$	1,001,841
Interest-bearing deposits			2,439,405				2,261,889
Total deposits			3,577,544				3,263,730
Securities sold under retail repurchase agreements and federal funds purchased			125,119				109,145
Advances from FHLB			790,000				685,000
Subordinated debentures			30,000				35,000
Accrued interest payable and other liabilities			35,148				38,078
Total liabilities			4,557,811				4,130,953
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding
23,901,084 and 24,295,971 at December 31, 2016 and December 31, 2015, respectively			23,901				24,296
Additional paid in capital			165,871				175,588
Retained earnings			350,414				325,840
Accumulated other comprehensive loss			(6,614	)			(1,297	)
Total stockholders' equity			533,572				524,427
Total liabilities and stockholders' equity		$	5,091,383			$	4,655,380

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
		Three Months Ended							Twelve Months Ended
		December 31,							December 31,
(Dollars in thousands, except per share data)			2016			2015				2016			2015
Interest Income:
Interest and fees on loans		$	39,510		$	35,516			$	150,868		$	135,170
Interest on loans held for sale			93			122				387			544
Interest on deposits with banks			57			29				213			98
Interest and dividends on investment securities:
Taxable			2,751			3,416				11,500			14,440
Exempt from federal income taxes			1,830			1,991				7,583			8,059
Interest on federal funds sold			2			-				5			1
Total interest income			44,243			41,074				170,556			158,312
Interest Expense:
Interest on deposits			2,155			1,685				8,161			5,878
Interest on retail repurchase agreements and federal funds purchased			78			76				290			255
Interest on advances from FHLB			2,798			3,307				11,610			13,081
Interest on subordinated debt			245			229				943			899
Total interest expense			5,276			5,297				21,004			20,113
Net interest income			38,967			35,777				149,552			138,199
Provision for loan losses			572			1,850				5,546			5,371
Net interest income after provision for loan losses			38,395			33,927				144,006			132,828
Non-interest Income:
Investment securities gains			13			16				1,932			36
Service charges on deposit accounts			2,059			1,950				7,953			7,607
Mortgage banking activities			1,279			548				4,049			3,114
Wealth management income			4,605			4,891				17,805			19,931
Insurance agency commissions			1,228			1,029				5,408			5,176
Income from bank owned life insurance			616			634				2,462			2,571
Bank card fees			1,176			1,177				4,674			4,652
Other income			1,368			1,998				6,759			6,814
Total non-interest income			12,344			12,243				51,042			49,901
Non-interest Expenses:
Salaries and employee benefits			18,055			18,437				71,354			71,003
Occupancy expense of premises			3,195			3,061				12,960			12,809
Equipment expenses			1,781			1,608				6,883			6,071
Marketing			880			735				2,851			2,896
Outside data services			1,310			1,331				5,377			5,023
FDIC insurance			729			641				2,741			2,491
Amortization of intangible assets			36			52				130			372
Litigation expenses			-			(4,386	)			-			(3,869	)
Other expenses			4,558			5,517				20,762			18,551
Total non-interest expenses			30,544			26,996				123,058			115,347
Income before income taxes			20,195			19,174				71,990			67,382
Income tax expense			6,879			6,372				23,740			22,027
Net income		$	13,316		$	12,802			$	48,250		$	45,355
Net Income Per Share Amounts:
Basic net income per share		$	0.55		$	0.53			$	2.00		$	1.84
Diluted net income per share		$	0.55		$	0.52			$	2.00		$	1.84
Dividends declared per share		$	0.26		$	0.24			$	0.98		$	0.90

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
			2016																2015
(Dollars in thousands, except per share data)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the Quarter:
Tax-equivalent interest income		$	45,961			$	44,545			$	43,443			$	43,317			$	42,736			$	41,980			$	40,438			$	39,343
Interest expense			5,276				5,126				5,071				5,531				5,297				5,201				4,916				4,699
Tax-equivalent net interest income			40,685				39,419				38,372				37,786				37,439				36,779				35,522				34,644
Tax-equivalent adjustment			1,718				1,688				1,640				1,664				1,662				1,663				1,589				1,271
Provision for loan losses			572				781				2,957				1,236				1,850				1,706				1,218				597
Non-interest income			12,344				12,584				12,751				13,363				12,243				12,390				12,109				13,159
Non-interest expenses			30,544				29,326				30,871				32,317				26,996				29,630				29,477				29,244
Income before income taxes			20,195				20,208				15,655				15,932				19,174				16,170				15,347				16,691
Income tax expense			6,879				6,734				5,008				5,119				6,372				5,175				5,014				5,466
Net income		$	13,316			$	13,474			$	10,647			$	10,813			$	12,802			$	10,995			$	10,333			$	11,225
Financial Performance:
Pre-tax pre-provision income		$	20,767			$	20,989			$	18,612			$	17,168			$	16,638			$	18,031			$	16,727			$	17,488
Return on average assets			1.09	%			1.13	%			0.92	%			0.93	%			1.11	%			0.96	%			0.93	%			1.04	%
Return on average common equity			9.92	%			10.11	%			8.21	%			8.29	%			9.73	%			8.41	%			8.02	%			8.73	%
Net interest margin			3.52	%			3.50	%			3.51	%			3.44	%			3.45	%			3.43	%			3.42	%			3.44	%
Efficiency ratio - GAAP basis (1)			59.53	%			58.28	%			62.39	%			65.31	%			56.22	%			62.37	%			64.02	%			62.85	%
Efficiency ratio - Non-GAAP basis (1)			57.54	%			56.33	%			59.12	%			61.84	%			63.08	%			59.73	%			61.35	%			60.53	%
Per Share Data:
Basic net income per share		$	0.55			$	0.56			$	0.45			$	0.45			$	0.53			$	0.45			$	0.42			$	0.45
Diluted net income per share		$	0.55			$	0.56			$	0.44			$	0.45			$	0.52			$	0.45			$	0.42			$	0.45
Average fully diluted shares			24,140,534				24,122,923				24,108,668				24,222,940				24,455,847				24,602,817				24,689,762				25,048,576
Dividends declared per common share		$	0.26			$	0.24			$	0.24			$	0.24			$	0.24			$	0.22			$	0.22			$	0.22
Non-interest Income:
Securities gains		$	13			$	-			$	150			$	1,769			$	16			$	1			$	19			$	-
Service charges on deposit accounts			2,059				2,035				1,956				1,903				1,950				1,936				1,839				1,882
Mortgage banking activities			1,279				1,129				1,106				535				548				566				822				1,178
Wealth management income			4,605				4,347				4,448				4,405				4,891				4,963				5,161				4,916
Insurance agency commissions			1,228				1,786				949				1,445				1,029				1,648				881				1,618
Income from bank owned life insurance			616				616				615				615				634				618				606				713
Bank card fees			1,176				1,189				1,220				1,089				1,177				1,198				1,220				1,057
Other income			1,368				1,482				2,307				1,602				1,998				1,460				1,561				1,795
Total Non-interest Income		$	12,344			$	12,584			$	12,751			$	13,363			$	12,243			$	12,390			$	12,109			$	13,159
Non-interest Expense:
Salaries and employee benefits		$	18,055			$	17,848			$	17,221			$	18,230			$	18,437			$	17,733			$	17,534			$	17,299
Occupancy expense of premises			3,195				3,130				3,162				3,473				3,061				3,086				3,173				3,489
Equipment expenses			1,781				1,745				1,693				1,664				1,608				1,600				1,490				1,373
Marketing			880				628				662				681				735				688				942				531
Outside data services			1,310				1,349				1,355				1,363				1,331				1,329				1,102				1,261
FDIC insurance			729				726				649				637				641				565				654				631
Amortization of intangible assets			36				34				28				32				52				107				106				107
Litigation expenses			-				-				-				-				(4,386	)			155				162				200
Professional fees			1,268				987				1,447				1,138				1,322				1,089				1,199				1,209
Other real estate owned expenses			2				5				(5	)			17				14				48				4				10
Other expenses			3,288				2,874				4,659				5,082				4,181				3,230				3,111				3,134
Total Non-interest Expense		$	30,544			$	29,326			$	30,871			$	32,317			$	26,996			$	29,630			$	29,477			$	29,244
(1) The efficiency ratio - GAAP basis is non-interest expenses 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 from non-interest expense; excludes securities gains;
OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these
Financial Highlights.

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
			2016																2015
(Dollars in thousands)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Balance Sheets at Quarter End:
Residential mortgage loans		$	841,692			$	854,055			$	820,618			$	804,105			$	796,358			$	773,889			$	744,195			$	728,858
Residential construction loans			150,229				144,998				142,710				138,221				129,281				139,492				137,134				130,321
Commercial AD&C loans			308,279				302,522				285,585				261,204				255,980				239,160				223,103				203,731
Commercial investor real estate loans			928,113				847,946				824,252				783,161				719,084				710,694				694,179				668,931
Commercial owner occupied real estate loans			775,552				736,744				700,599				675,560				678,027				680,601				643,973				618,846
Commercial business loans			467,286				444,129				451,711				451,239				465,765				423,855				409,795				385,452
Leasing			-				-				-				-				-				19				21				36
Consumer loans			456,657				450,113				447,149				447,198				450,875				444,729				436,465				428,531
Total loans			3,927,808				3,780,507				3,672,624				3,560,688				3,495,370				3,412,439				3,288,865				3,164,706
Allowance for loan losses			(44,067	)			(43,942	)			(43,384	)			(41,766	)			(40,895	)			(39,661	)			(38,713	)			(37,475	)
Loans held for sale			13,222				15,822				13,490				27,806				15,457				10,418				19,445				13,899
Investment securities			779,648				691,471				734,828				742,401				841,650				862,409				878,284				912,565
Interest-earning assets			4,801,613				4,537,331				4,461,180				4,447,063				4,378,403				4,339,375				4,222,667				4,125,549
Total assets			5,091,383				4,810,611				4,739,449				4,716,608				4,655,380				4,611,034				4,507,367				4,401,380
Noninterest-bearing demand deposits			1,138,139				1,154,227				1,176,135				1,084,746				1,001,841				1,068,299				1,092,413				1,017,566
Total deposits			3,577,544				3,537,157				3,510,141				3,412,308				3,263,730				3,275,668				3,247,346				3,109,892
Customer repurchase agreements			125,119				124,205				117,887				121,043				109,145				121,378				111,817				101,640
Total interest-bearing liabilities			3,384,524				3,087,135				2,996,893				3,073,605				3,091,034				2,973,747				2,851,750				2,818,966
Total stockholders' equity			533,572				536,655				529,479				522,392				524,427				523,594				518,873				521,768
Quarterly Average Balance Sheets:
Residential mortgage loans		$	848,399			$	836,452			$	811,705			$	807,443			$	781,015			$	754,007			$	734,382			$	724,248
Residential construction loans			148,248				147,602				142,854				134,708				133,812				134,448				137,216				132,456
Commercial AD&C loans			310,110				287,836				272,090				261,687				247,612				227,545				218,341				206,105
Commercial investor real estate loans			878,511				832,529				788,785				750,821				717,742				704,068				668,883				645,163
Commercial owner occupied real estate loans			750,679				717,371				684,907				677,786				673,883				656,337				624,407				611,722
Commercial business loans			452,195				446,123				453,459				460,903				424,510				413,300				398,510				383,111
Leasing			-				-				-				-				17				19				28				44
Consumer loans			454,349				450,171				449,594				451,075				448,439				441,740				434,011				425,434
Total loans			3,842,491				3,718,084				3,603,394				3,544,423				3,427,030				3,331,464				3,215,778				3,128,283
Loans held for sale			12,454				10,207				8,326				14,036				11,951				21,070				14,075				7,053
Investment securities			703,574				709,527				739,132				810,593				840,276				869,461				898,237				925,683
Interest-earning assets			4,599,426				4,477,438				4,394,879				4,411,796				4,320,674				4,261,939				4,162,963				4,097,648
Total assets			4,878,660				4,747,020				4,664,343				4,685,747				4,594,025				4,537,142				4,438,670				4,372,988
Noninterest-bearing demand deposits			1,167,379				1,131,739				1,082,762				1,021,471				1,058,215				1,063,500				1,023,042				986,688
Total deposits			3,582,437				3,528,665				3,429,897				3,300,131				3,285,299				3,263,993				3,128,562				3,056,186
Customer repurchase agreements			128,471				120,702				122,597				110,862				125,275				121,127				106,179				90,020
Total interest-bearing liabilities			3,138,420				3,045,998				3,020,505				3,103,710				2,968,555				2,906,348				2,852,414				2,817,575
Total stockholders' equity			534,057				530,241				521,387				524,309				521,786				518,619				516,940				521,346
Financial Measures:
Average equity to average assets			10.95	%			11.17	%			11.18	%			11.19	%			11.36	%			11.43	%			11.65	%			11.92	%
Investment securities to earning assets			16.24	%			15.24	%			16.47	%			16.69	%			19.22	%			19.87	%			20.80	%			22.12	%
Loans to earning assets			81.80	%			83.32	%			82.32	%			80.07	%			79.83	%			78.64	%			77.89	%			76.71	%
Loans to assets			77.15	%			78.59	%			77.49	%			75.49	%			75.08	%			74.01	%			72.97	%			71.90	%
Loans to deposits			109.79	%			106.88	%			104.63	%			104.35	%			107.10	%			104.18	%			101.28	%			101.76	%
Capital Measures:
Tier 1 leverage  (1)			10.14	%			10.25	%			10.29	%			10.23	%			10.60	%			10.65	%			10.83	%			11.00	%
Tier 1 capital to risk-weighted assets  (1)			11.74	%			12.17	%			12.42	%			12.74	%			13.13	%			13.17	%			13.54	%			14.01	%
Total regulatory capital to risk-weighted assets  (1)			12.80	%			13.29	%			13.57	%			13.86	%			14.25	%			14.27	%			14.65	%			15.12	%
Common equity tier 1 capital to risk-weighted assets  (1)			11.01	%			11.41	%			11.63	%			11.79	%			12.17	%			12.20	%			12.53	%			14.01	%
Book value per share		$	22.32			$	22.47			$	22.18			$	21.92			$	21.58			$	21.44			$	21.12			$	21.10
Outstanding shares			23,901,084				23,886,651				23,874,650				23,827,305				24,295,971				24,424,944				24,562,471				24,733,868
(1) Estimated ratio at December 31, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
			2016																2015
(Dollars in thousands)		December 31,				September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business		$	-			$	163			$	-			$	-			$	-			$	-			$	-			$	-
Commercial real estate:
Commercial AD&C			-				-				-				-				-				-				-				-
Commercial investor real estate			-				-				-				-				-				-				-				-
Commercial owner occupied real estate			-				-				-				-				-				-				-				-
Leasing			-				-				-				-				-				1				2				-
Consumer			-				-				2				1				-				-				7				-
Residential real estate:
Residential mortgage			232				-				-				-				-				-				-				-
Residential construction			-				-				-				-				-				-				-				-
Total loans and leases 90 days past due			232				163				2				1				-				1				9				-
Non-accrual loans and leases:
Commercial business			5,833				4,140				4,263				3,741				3,696				3,881				3,285				4,166
Commercial real estate:
Commercial AD&C			137				137				137				147				194				194				194				1,363
Commercial investor real estate			8,107				9,189				8,868				7,885				8,368				8,609				10,023				10,083
Commercial owner occupied real estate			4,823				5,591				5,678				7,149				6,340				7,932				8,423				8,974
Leasing			-				-				-				-				-				-				-				-
Consumer			2,859				2,726				2,600				2,715				2,193				1,621				1,214				1,962
Residential real estate:
Residential mortgage			7,257				7,321				6,186				9,329				8,822				7,488				7,780				3,235
Residential construction			195				199				202				412				418				770				780				788
Total non-accrual loans and leases			29,211				29,303				27,934				31,378				30,031				30,495				31,699				30,571
Total restructured loans - accruing			2,489				2,512				3,420				4,716				4,467				6,419				5,620				5,446
Total non-performing loans and leases			31,932				31,978				31,356				36,095				34,498				36,915				37,328				36,017
Other assets and real estate owned (OREO)			1,911				1,274				1,311				2,414				2,742				2,619				4,514				3,227
Total non-performing assets		$	33,843			$	33,252			$	32,667			$	38,509			$	37,240			$	39,534			$	41,842			$	39,244
		For the Quarter Ended,
		December 31,				September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)			2016				2016				2016				2016				2015				2015				2015				2015
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period		$	29,303			$	27,934			$	31,378			$	30,031			$	30,495			$	31,699			$	30,571			$	28,530
Non-accrual balances transferred to OREO			(637	)			(38	)			-				-				(423	)			(180	)			(1,309	)			(32	)
Non-accrual balances charged-off			(390	)			(245	)			(1,305	)			(274	)			(869	)			(752	)			(549	)			(1,077	)
Net payments or draws			(1,547	)			(525	)			(4,810	)			(914	)			(3,084	)			(1,846	)			(2,970	)			(1,067	)
Loans placed on non-accrual			2,482				2,486				2,671				2,535				3,912				1,574				5,956				4,217
Non-accrual loans brought current			-				(309	)			-				-				-				-				-				-
Balance at end of period		$	29,211			$	29,303			$	27,934			$	31,378			$	30,031			$	30,495			$	31,699			$	30,571
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	43,942			$	43,384			$	41,766			$	40,895			$	39,661			$	38,713			$	37,475			$	37,802
Provision for loan losses			572				781				2,957				1,236				1,850				1,706				1,218				597
Less loans charged-off, net of recoveries:
Commercial business			285				95				106				67				(128	)			(25	)			73				(89	)
Commercial real estate:
Commercial AD&C			(18	)			(22	)			-				48				-				-				(547	)			706
Commercial investor real estate			(9	)			(12	)			(107	)			192				(4	)			(5	)			85				(5	)
Commercial owner occupied real estate			-				(1	)			(1	)			(3	)			725				104				(1	)			212
Leasing			-				-				-				-				4				-				-				-
Consumer			177				145				364				54				(31	)			348				395				43
Residential real estate:
Residential mortgage			18				24				989				15				80				342				(18	)			65
Residential construction			(6	)			(6	)			(12	)			(8	)			(30	)			(6	)			(7	)			(8	)
Net charge-offs			447				223				1,339				365				616				758				(20	)			924
Balance at end of period		$	44,067			$	43,942			$	43,384			$	41,766			$	40,895			$	39,661			$	38,713			$	37,475
Asset Quality Ratios:
Non-performing loans to total loans			0.81	%			0.85	%			0.85	%			1.01	%			0.99	%			1.08	%			1.13	%			1.14	%
Non-performing assets to total assets			0.66	%			0.69	%			0.69	%			0.82	%			0.80	%			0.86	%			0.93	%			0.89	%
Allowance for loan losses to loans			1.12	%			1.16	%			1.18	%			1.17	%			1.17	%			1.16	%			1.18	%			1.18	%
Allowance for loan losses to non-performing loans			138.00	%			137.41	%			138.36	%			115.72	%			118.54	%			107.44	%			103.71	%			104.05	%
Annualized net charge-offs to average loans			0.05	%			0.02	%			0.15	%			0.04	%			0.07	%			0.09	%			0.00	%			0.12	%