Sandy Spring Bancorp Reports Record Quarterly Earnings of $56.7 Million
01/21/2021 - 07:00 AM
Fourth Quarter Earnings Increase 27% over Prior Quarter and Drive Annual Net Income to $97.0 Million
OLNEY, Md., Jan. 21, 2021 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported record net income of $56.7 million ($1.19 per diluted common share) for the fourth quarter of 2020. The current quarter’s result compares to net income of $28.5 million ($0.80 per diluted common share) for the fourth quarter of 2019 and net income of $44.6 million ($0.94 per diluted common share) for the third quarter of 2020.
Operating earnings for the current quarter, which exclude the impact of the provision for credit losses, the effects from the Paycheck Protection Program (“PPP” or “PPP program”) and merger and acquisition expense, each on an after-tax basis, were $48.2 million ($1.02 per diluted common share), compared to $30.4 million ($0.85 per diluted common share) for the quarter ended December 31, 2019 and $45.8 million ($0.97 per diluted common share) for the quarter ended September 30, 2020.
The provision for credit losses for the current quarter was a credit of $4.5 million as compared to a charge of $7.0 million for the third quarter of 2020. The decrease in the provision for credit losses compared to the prior quarter is mainly the result of changes in macroeconomic factors, primarily the reduction in projected near term business bankruptcies as indicated in the most recent economic forecast.
“In 2020 we completed a significant integration of Revere Bank while navigating a global pandemic and helping our clients through unprecedented challenges. This was a massive undertaking, especially in a remote work environment, but our newly combined institutions were unified in our efforts to serve our clients and to keep people safe,” said Daniel J. Schrider, President and Chief Executive Officer. “Given our strong operating results and the resilience we demonstrated throughout the year, we remain very optimistic about our future.”
Fourth Quarter Highlights:
Total assets at December 31, 2020, grew 48% to $12.8 billion compared to December 31, 2019, primarily as a result of the Revere Bank (“Revere”) acquisition and participation in the PPP. During the past year, loans and deposits grew by 55% and 56% , respectively. On the date of acquisition, Revere’s loans and deposits were $2.5 billion and $2.3 billion , respectively. The Company originated $1.1 billion in commercial business loans through its participation in the PPP program. The net interest margin was 3.38% for the fourth quarter of 2020, compared to 3.38% for the same quarter of 2019, and 3.24% for the third quarter of 2020. Excluding the impact of the amortization of the fair value marks derived from acquisitions, the current quarter’s net interest margin would have been 3.31% , compared to 3.34% for fourth quarter of 2019, and 3.18% for the third quarter of 2020. The provision for credit losses was a credit of $4.5 million for the current quarter. The credit to the provision for the current quarter as compared to the prior quarter’s provision charge of $7.0 million is primarily the result of the reduction in forecasted business bankruptcies impacted by governmental support programs aimed at individuals and small businesses. Non-interest income for the current quarter increased by 68% or $13.0 million compared to the prior year quarter as a result of a 248% increase in income from mortgage banking activities and growth of 28% in wealth management income as a result of the acquisition of Rembert Pendleton Jackson (“RPJ”) in the first quarter of the current year. Non-interest expense increased $15.6 million or 34% for the fourth quarter of 2020 compared to the prior year quarter. This increase was driven by the impact of the acquisitions of Revere and RPJ, which increased compensation and operational costs, in addition to intangible asset amortization. FDIC insurance cost increased from the same period of the prior year as a result of the effect of the assessment credit received during the prior year quarter. Return on average assets (“ROA”) for the quarter ended December 31, 2020 was 1.78% and return on average tangible common equity (“ROTCE”) was 22.24% . This compares to ROA of 1.32% and ROTCE of 14.39% for the prior year. The non-GAAP efficiency ratio for the fourth quarter of 2020 was 45.09% compared to 51.98% for the fourth quarter of 2019. Branch Rationalization
The Company announced its intention to close three branch locations in 2021. The affected branches are located in Northern Virginia (2) and Montgomery County (1) Maryland. Customer accounts will be consolidated into nearby locations. The changes come into effect as a part of the Company’s continuing analysis of its branch network, including usage, proximity to other Sandy Spring Bank offices and the needs of the Company’s customers. The branch closures are expected to be completed in the second quarter of 2021.
Response to COVID-19
Protecting the health and well-being of its employees and clients in addition to assisting clients who have been impacted by the pandemic remains the focus of the Company. A significant majority of non-branch employees continue to work remotely and clients are served at branches primarily through drive-thru facilities and limited lobby access. Area jurisdictions continue to monitor and modify their respective guidelines based on the metrics of the pandemic. Currently, the Company is maintaining the first phase of its return to work plan.
During the current quarter, the Company began accepting digital PPP forgiveness applications. The Company has paused extending invitations to its forgiveness application portal pending updates to reflect recent amendments to the PPP program and to focus on accepting loan applications for both first and second draw loans under the restarted program.
During 2020, the Company has granted payment modifications/deferrals on 2,575 loans with and aggregate balance of $2.1 billion of which 203 loans with an aggregate balance of $217 million remain in deferral status. Currently, the vast majority of loans that had been granted modifications/deferrals have returned to their original payment plans without a significant impact on payment delinquencies.
For additional information about the Company’s response to the pandemic, segments of the Company’s loan portfolio exposed to industries adversely impacted by the pandemic, and our response to clients who sought loan payment deferral, we have provided supplemental materials available at the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com
Balance Sheet and Credit Quality
Total assets grew to $12.8 billion at December 31, 2020, as compared to $8.6 billion at December 31, 2019. Year-over-year asset growth was primarily the result of the acquisition of Revere during the year, as well as the Company’s participation in the PPP program. During this period, total loans grew by 55% to $10.4 billion at December 31, 2020, compared to $6.7 billion at December 31, 2019. Excluding PPP loans, total loans grew 39% to $9.3 billion at December 31, 2020 as compared to the prior year quarter. The acquisition of Revere drove the majority of the increase in commercial loans, which, excluding PPP loans, grew 52% or $2.6 billion . The residential mortgage loan portfolio remained stable year-over-year as the vast majority of loan originations during the past year were sold in the secondary market. Consumer loan growth during the year was 11% , also a result of the acquisition. Deposit growth was 56% during the past twelve months, as noninterest-bearing deposits experienced growth of 76% and interest-bearing deposits grew 47% . This growth was driven primarily by the Revere acquisition and, to a lesser extent, the PPP program.
Tangible common equity increased to $1.0 billion or 8.46% of tangible assets at December 31, 2020 compared to $782.3 million or 9.46% at December 31, 2019, as a result of the equity issuance in the Revere acquisition. The year-over-year change in tangible common equity also reflects the effects of the repurchase of $50 million of common stock and the increase in intangible assets and goodwill associated with the two acquisitions completed during the past twelve months. Excluding the impact of the PPP program from tangible assets at December 31, 2020, the tangible common equity ratio would be 9.25% . At December 31, 2020, the Company had a total risk-based capital ratio of 13.93% , a common equity tier 1 risk-based capital ratio of 10.58% , a tier 1 risk-based capital ratio of 10.58% and a tier 1 leverage ratio of 8.92% .
The level of non-performing loans to total loans increased to 1.11% at December 31, 2020, compared to 0.62% at December 31, 2019, and 0.72% at September 30, 2020. At December 31, 2020, non-performing loans totaled $115.5 million , compared to $41.3 million at December 31, 2019, and $74.7 million at September 30, 2020. Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. The year-over-year growth in non-performing loans was driven by three major components: loans placed in non-accrual status, acquired Revere non-accrual loans, and loans previously accounted for as purchased credit impaired loans that have been designated as non-accrual loans as a result of the Company’s adoption of the accounting standard for expected credit losses at the beginning of the year. Loans placed on non-accrual during the current quarter amounted to $54.7 million compared to $5.4 million for the prior year quarter and $0.9 million for the third quarter of 2020. Loans placed on non-accrual status during the current quarter relate primarily to a limited number of large borrowing relationships within the hospitality sector. These large relationships are collateral dependent and required no individual reserves due to sufficient values of the underlying collateral.
The Company recorded net charge-offs of $0.5 million for the fourth quarter of 2020, as compared to net charge-offs of $0.5 million and $0.2 million for the fourth quarter of 2019 and third quarter of 2020, respectively.
At December 31, 2020, the allowance for credit losses was $165.4 million or 1.59% of outstanding loans and 143% of non-performing loans, compared to $170.3 million or 1.65% of outstanding loans and 228% of non-performing loans at September 30, 2020.
Income Statement Review
Quarterly Results
Net interest income for the fourth quarter of 2020 increased 52% compared to the fourth quarter of 2019, driven primarily by the acquisition of Revere. The PPP program and its associated funding contributed a net of $6.9 million to net interest income for the quarter. The net interest margin remained unchanged at 3.38% for the fourth quarter of 2020 as compared to the same quarter of the prior year. Excluding the net $2.3 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current quarter would have been 3.31% . This compares to the adjusted net interest margin of 3.34% for the fourth quarter of 2019.
The provision for credit losses was a credit of $4.5 million for the fourth quarter of 2020, compared to a charge of $1.7 million for the fourth quarter of 2019, and $7.0 million for the third quarter of 2020. The credit in the current quarter’s provision for credit losses, compared to the provision charge recorded in the prior quarter, is primarily the result of an improvement in the forecasted business bankruptcies indicated in the most recent economic forecast.
Non-interest income increased $13.0 million or 68% during the current quarter compared to the same quarter of the prior year. As a result of the significant decline in lending rates, mortgage origination activity for new and refinanced mortgages resulted in income from mortgage banking activities increasing by $10.3 million during the current quarter compared to the prior year quarter. In addition, wealth management income increased $1.8 million as a result of the first quarter acquisition of RPJ. The growth of these two categories in non-interest income more than compensated for the decline in service fee income compared to the prior year quarter.
Non-interest expense increased 34% or $15.6 million compared to the prior year quarter. Excluding the impact of merger and acquisition expense, non-interest expense grew 37% year-over-year, primarily as a result of the operational costs of the Revere and RPJ acquisitions, increased compensation expense related to staffing increases and incentive compensation, in addition to an increase in FDIC insurance and the amortization of intangible assets.
The non-GAAP efficiency ratio was 45.09% for the current quarter as compared to 51.98% for the fourth quarter of 2019, and 45.27% for the third quarter of 2020. The decrease in the efficiency ratio (reflecting an increase in efficiency) from the fourth quarter of last year to the current year was the result of the $47.2 million growth in non-GAAP revenue outpacing the $15.4 million growth in non-GAAP non-interest expense.
Year to Date Results
The Company recorded net income of $97.0 million for the year ended December 31, 2020 compared to $116.4 million for the prior year, representing a 17% decrease. The net earnings for the current year included the effects of the initial implementation of the accounting standard for current expected credit losses, the impact of the pandemic on the provision for credit losses, which resulted in a significant provision in the second quarter, and the impact of the acquisitions of RPJ and Revere. Pre-tax, pre-provision, pre-merger income was $235.3 million for the year ended December 31, 2020 compared to $158.9 million for the prior year.
Net interest income for the year ended December 31, 2020 increased 37% or $97.9 million compared to the prior year. This increase was driven primarily by the acquisition of Revere in the second quarter of 2020. Additionally, the income generated by the PPP program, net of its associated funding costs, contributed a net of $19.0 million to the growth in net interest income year-over-year. The net interest margin declined to 3.35% for the year ended December 31, 2020, compared to 3.51% for the prior year. Excluding the net $12.7 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current year would have been 3.23% . The amortization of the fair value marks recognized during the current year included a benefit realized from the accelerated amortization of the $5.9 million purchase premium on acquired FHLB advances as a result of the prepayment of those borrowings. The net interest margin for 2019, excluding the amortization of fair value marks, would have been 3.46% .
The provision for credit losses for the full year of 2020 amounted to $85.7 million as compared to $4.7 million for the same period in 2019. The provision for credit losses under the CECL standard reflects the combined results of the impact of the deteriorated economic forecasts during the year ($44.1 million ) and the initial allowance on acquired Revere non-purchased credit deteriorated loans ($17.5 million ). The change in the portfolio mix and various qualitative adjustments resulted in the remainder of provision growth for the period.
Non-interest income increased 44% to $102.7 million for 2020 compared to $71.3 million for 2019. During the current year income from mortgage banking activities increased $25.3 million as a result of the high levels of new mortgage and refinancing activity resulting from historically low mortgage lending rates, and wealth management income increased $7.9 million as a result of the first quarter acquisition of RPJ. These increases more than exceeded the declines in deposit service fees and BOLI income.
Non-interest expense increased 43% to $255.8 million for 2020, compared to $179.1 million for 2019. Merger and acquisition expense accounted for $23.9 million of the growth of non-interest expense. The non-interest expense growth also included $5.9 million in prepayment penalties resulting from the liquidation of acquired FHLB borrowings. Excluding the impact of these items results in a year-over-year growth rate of 26% . This growth rate was driven by operational and compensation costs associated with the Revere and RPJ acquisitions, increased incentive expense related to the significant level of mortgage loan originations, increased intangible asset amortization, higher FDIC insurance premiums and annual employee merit increases.
The effective tax rate for the year ended December 31, 2020 was 22.1% , compared to 23.8% for the same period in 2019. This decrease was the result of the recent changes to tax laws that expanded the time permitted to utilize previous net operating losses. The Company applied this change to the 2018 acquisition of WashingtonFirst Bankshares, Inc. to realize a tax benefit of $1.8 million for the current year.
The non-GAAP efficiency ratio for the current year was 46.53% compared to 51.52% for the prior year. The improvement in the current year’s efficiency ratio compared to the prior year was the result of the growth in non-GAAP revenue, which outpaced the 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 intangible assets. The non-GAAP efficiency ratio is non-GAAP in that it excludes amortization of intangible assets, loss on FHLB redemption, merger and acquisition expense and securities gains and includes tax-equivalent income. Operating earnings - and the related measures of operating earnings per share, operating return on average assets and operating return on average tangible common equity - reflect net income exclusive of the provision for credit losses, merger and acquisition expense and the income and expense associated with the PPP program, in each case net of tax. 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 which 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 fourth 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
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 6 0 locations commercial retail banking mortgage private banking t rust R embert Pendleton Jackson Sandy Spring Insurance Corporation West Financial Services, Inc., insurance wealth management services
For additional information or questions, please contact:DSchrider@sandyspringbank.com PMantua@sandyspringbank.com www.sandyspringbank.com
Media Contact: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 length of time that the pandemic continues, the imposition or re-imposition of stay-at-home orders and restrictions on business activities or travel; the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; the remedial actions and stimulus measures adopted by federal, state and local governments; the inability of employees to work due to illness, quarantine, or government mandates; 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, 2019, 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 December 31, % Change Year Ended December 31, % Change (Dollars in thousands, except per share data) 2020 2019 2020 2019 Results of operations: Net interest income $ 99,827 $ 65,583 52 % $ 363,159 $ 265,308 37 % Provision/ (credit) for credit losses (4,489 ) 1,655 n/m 85,669 4,684 n/m Non-interest income 32,234 19,224 68 102,716 71,322 44 Non-interest expense 61,661 46,081 34 255,782 179,085 43 Income before income tax expense 74,889 37,071 102 124,424 152,861 (19 ) Net income 56,662 28,457 99 96,953 116,433 (17 ) Net income attributable to common shareholders $ 56,194 $ 28,273 99 $ 96,170 $ 115,671 (17 ) Pre-tax pre-provision pre-merger income (1) $ 70,403 $ 39,674 77 $ 235,267 $ 158,857 48 Return on average assets 1.78 % 1.32 % 0.82 % 1.39 % Return on average common equity 15.72 % 9.93 % 7.24 % 10.51 % Return on average tangible common equity 22.24 % 14.39 % 10.38 % 15.33 % Net interest margin 3.38 % 3.38 % 3.35 % 3.51 % Efficiency ratio - GAAP basis (2) 46.69 % 54.34 % 54.90 % 53.20 % Efficiency ratio - Non-GAAP basis (2) 45.09 % 51.98 % 46.53 % 51.52 % Per share data: Basic net income per common share $ 1.19 $ 0.80 49 % $ 2.19 $ 3.25 (33 )% Diluted net income per common share $ 1.19 $ 0.80 49 $ 2.18 $ 3.25 (33 ) Weighted average diluted common shares 47,284,808 35,543,254 33 44,132,251 35,617,924 24 Dividends declared per share $ 0.30 $ 0.30 - $ 1.20 $ 1.18 2 Book value per common share $ 31.24 $ 32.40 (4 ) $ 31.24 $ 32.40 (4 ) Tangible book value per common share (1) $ 22.28 $ 22.37 - $ 22.28 $ 22.37 - Outstanding common shares 47,056,777 34,970,370 35 47,056,777 34,970,370 35 Financial condition at period-end: Investment securities $ 1,413,781 $ 1,125,136 26 % $ 1,413,781 $ 1,125,136 26 % Loans 10,400,509 6,705,232 55 10,400,509 6,705,232 55 Interest-earning assets 12,095,936 7,947,703 52 12,095,936 7,947,703 52 Assets 12,798,429 8,629,002 48 12,798,429 8,629,002 48 Deposits 10,033,069 6,440,319 56 10,033,069 6,440,319 56 Interest-bearing liabilities 7,856,842 5,485,055 43 7,856,842 5,485,055 43 Stockholders' equity 1,469,955 1,132,974 30 1,469,955 1,132,974 30 Capital ratios: Tier 1 leverage (3) 8.92 % 9.70 % 8.92 % 9.70 % Common equity tier 1 capital to risk-weighted assets (3) 10.58 % 11.06 % 10.58 % 11.06 % Tier 1 capital to risk-weighted assets (3) 10.58 % 11.21 % 10.58 % 11.21 % Total regulatory capital to risk-weighted assets (3) 13.93 % 14.85 % 13.93 % 14.85 % Tangible common equity to tangible assets (4) 8.46 % 9.46 % 8.46 % 9.46 % Average equity to average assets 11.34 % 13.31 % 11.38 % 13.25 % Credit quality ratios: Allowance for credit losses to loans 1.59 % 0.84 % 1.59 % 0.84 % Non-performing loans to total loans 1.11 % 0.62 % 1.11 % 0.62 % Non-performing assets to total assets 0.91 % 0.50 % 0.91 % 0.50 % Allowance for credit losses to non-performing loans 143.23 % 136.02 % 143.23 % 136.02 % Annualized net charge-offs to average loans (5) 0.02 % 0.03 % 0.01 % 0.03 % n/m - not meaningful (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 Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; 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 December 31, 2020. (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 and other comprehensive gains/ (losses). 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 Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2020 2019 2020 2019 Pre-tax pre-provision pre-merger income: Net income $ 56,662 $ 28,457 $ 96,953 $ 116,433 Plus non-GAAP adjustments: Merger and acquisition expense 3 948 25,174 1,312 Income tax expense 18,227 8,614 27,471 36,428 Provision/ (credit) for credit losses (4,489 ) 1,655 85,669 4,684 Pre-tax pre-provision pre-merger income $ 70,403 $ 39,674 $ 235,267 $ 158,857 Efficiency ratio - GAAP basis: Non-interest expense $ 61,661 $ 46,081 $ 255,782 $ 179,085 Net interest income plus non-interest income $ 132,061 $ 84,807 $ 465,875 $ 336,630 Efficiency ratio - GAAP basis 46.69 % 54.34 % 54.90 % 53.20 % Efficiency ratio - Non-GAAP basis: Non-interest expense $ 61,661 $ 46,081 $ 255,782 $ 179,085 Less non-GAAP adjustments: Amortization of intangible assets 1,655 481 6,221 1,946 Loss on FHLB redemption - - 5,928 - Merger and acquisition expense 3 948 25,174 1,312 Non-interest expense - as adjusted $ 60,003 $ 44,652 $ 218,459 $ 175,827 Net interest income plus non-interest income $ 132,061 $ 84,807 $ 465,875 $ 336,630 Plus non-GAAP adjustment: Tax-equivalent income 1,052 1,149 4,128 4,746 Less non-GAAP adjustment: Investment securities gains 35 57 467 77 Net interest income plus non-interest income - as adjusted $ 133,078 $ 85,899 $ 469,536 $ 341,299 Efficiency ratio - Non-GAAP basis 45.09 % 51.98 % 46.53 % 51.52 % Tangible common equity ratio: Total stockholders' equity $ 1,469,955 $ 1,132,974 $ 1,469,955 $ 1,132,974 Accumulated other comprehensive (income)/ loss (18,705 ) 4,332 (18,705 ) 4,332 Goodwill (370,223 ) (347,149 ) (370,223 ) (347,149 ) Other intangible assets, net (32,521 ) (7,841 ) (32,521 ) (7,841 ) Tangible common equity $ 1,048,506 $ 782,316 $ 1,048,506 $ 782,316 Total assets $ 12,798,429 $ 8,629,002 $ 12,798,429 $ 8,629,002 Goodwill (370,223 ) (347,149 ) (370,223 ) (347,149 ) Other intangible assets, net (32,521 ) (7,841 ) (32,521 ) (7,841 ) Tangible assets $ 12,395,685 $ 8,274,012 $ 12,395,685 $ 8,274,012 Tangible common equity ratio 8.46 % 9.46 % 8.46 % 9.46 % Outstanding common shares 47,056,777 34,970,370 47,056,777 34,970,370 Tangible book value per common share $ 22.28 $ 22.37 $ 22.28 $ 22.37
Sandy Spring Bancorp, Inc. and Subsidiaries RECONCILIATION TABLE - UNAUDITED (CONTINUED) OPERATING EARNINGS - METRICS Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2020 2019 2020 2019 Operating earnings (non-GAAP): Net income $ 56,662 $ 28,457 $ 96,953 $ 116,433 Plus non-GAAP adjustments: Provision/ (credit) for credit losses - net of tax (3,343 ) 1,205 63,789 3,460 Merger and acquisition expense - net of tax 3 698 18,745 969 PPPLF funding expense - net of tax 122 - 829 - Less non-GAAP adjustment: PPP interest income and net deferred fee - net of tax 5,239 - 14,948 - Operating earnings (Non-GAAP) $ 48,205 $ 30,360 $ 165,368 $ 120,862 Operating earnings per common share (non-GAAP): Weighted average common shares outstanding - diluted (GAAP) 47,284,808 35,543,254 44,132,251 35,617,924 Earnings per diluted common share (GAAP) $ 1.19 $ 0.80 $ 2.18 $ 3.25 Operating earnings per diluted common share (non-GAAP) $ 1.02 $ 0.85 $ 3.75 $ 3.39 Operating return on average assets (non-GAAP): Average assets (GAAP) $ 12,645,329 $ 8,542,837 $ 11,775,096 $ 8,367,139 Average PPP loans (1,060,995 ) - (710,264 ) - Adjusted average assets (non-GAAP) $ 11,584,334 $ 8,542,837 $ 11,064,832 $ 8,367,139 Return on average assets (GAAP) 1.78 % 1.32 % 0.82 % 1.39 % Operating return on adjusted average assets (non-GAAP) 1.66 % 1.41 % 1.49 % 1.44 % Operating return on average tangible common equity (non-GAAP): Average total stockholders' equity (GAAP) $ 1,433,900 $ 1,136,824 $ 1,339,491 $ 1,108,310 Average accumulated other comprehensive (income)/ loss (16,398 ) 3,005 (11,326 ) 7,069 Average goodwill (370,419 ) (347,149 ) (365,543 ) (347,149 ) Average other intangible assets, net (33,675 ) (8,146 ) (28,357 ) (8,873 ) Average tangible common equity (non-GAAP) $ 1,013,408 $ 784,534 $ 934,265 $ 759,357 Return on average tangible common equity (GAAP) 22.24 % 14.39 % 10.38 % 15.33 % Operating return on average tangible common equity (non-GAAP) 18.92 % 15.35 % 17.70 % 15.92 %
Sandy Spring Bancorp, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED (Dollars in thousands) December 31, 2020 December 31, 2019 Assets Cash and due from banks $ 93,651 $ 82,469 Federal funds sold 291 208 Interest-bearing deposits with banks 203,061 63,426 Cash and cash equivalents 297,003 146,103 Residential mortgage loans held for sale (at fair value) 78,294 53,701 Investments available-for-sale (at fair value) 1,348,021 1,073,333 Other equity securities 65,760 51,803 Total loans 10,400,509 6,705,232 Less: allowance for credit losses (165,367 ) (56,132 ) Net loans 10,235,142 6,649,100 Premises and equipment, net 57,720 58,615 Other real estate owned 1,455 1,482 Accrued interest receivable 46,431 23,282 Goodwill 370,223 347,149 Other intangible assets, net 32,521 7,841 Other assets 265,859 216,593 Total assets $ 12,798,429 $ 8,629,002 Liabilities Noninterest-bearing deposits $ 3,325,547 $ 1,892,052 Interest-bearing deposits 6,707,522 4,548,267 Total deposits 10,033,069 6,440,319 Securities sold under retail repurchase agreements and federal funds purchased 543,157 213,605 Advances from FHLB 379,075 513,777 Subordinated debentures 227,088 209,406 Total borrowings 1,149,320 936,788 Accrued interest payable and other liabilities 146,085 118,921 Total liabilities 11,328,474 7,496,028 Stockholders' equity Common stock -- par value $1.00 ; shares authorized 100,000,000; shares issued and outstanding 47,056,777 and 34,970,370 at December 31, 2020 and December 31, 2019, respectively 47,057 34,970 Additional paid in capital 846,922 586,622 Retained earnings 557,271 515,714 Accumulated other comprehensive income/ (loss) 18,705 (4,332 ) Total stockholders' equity 1,469,955 1,132,974 Total liabilities and stockholders' equity $ 12,798,429 $ 8,629,002
Sandy Spring Bancorp, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED Three Months Ended December 31, Year Ended December 31, (Dollars in thousands, except per share data) 2020 2019 2020 2019 Interest income: Interest and fees on loans $ 104,756 $ 77,522 $ 393,477 $ 316,550 Interest on loans held for sale 592 462 1,686 1,607 Interest on deposits with banks 27 724 446 2,129 Interest and dividends on investment securities: Taxable for federal income taxes 4,866 5,437 22,136 21,739 Exempt from federal income taxes 1,550 1,243 5,814 5,834 Interest on federal funds sold - 2 1 10 Total interest income 111,791 85,390 423,560 347,869 Interest Expense: Interest on deposits 6,410 14,723 41,651 61,681 Interest on retail repurchase agreements and federal funds purchased 234 216 1,965 1,161 Interest on advances from FHLB 2,730 3,189 6,593 16,578 Interest on subordinated debt 2,590 1,679 10,192 3,141 Total interest expense 11,964 19,807 60,401 82,561 Net interest income 99,827 65,583 363,159 265,308 Provision/ (credit) for credit losses (4,489 ) 1,655 85,669 4,684 Net interest income after provision/ (credit) for credit losses 104,316 63,928 277,490 260,624 Non-interest income: Investment securities gains 35 57 467 77 Service charges on deposit accounts 1,917 2,427 7,066 9,692 Mortgage banking activities 14,491 4,170 40,058 14,711 Wealth management income 8,215 6,401 30,570 22,669 Insurance agency commissions 1,356 1,331 6,795 6,612 Income from bank owned life insurance 705 660 2,867 3,165 Bank card fees 1,570 1,435 5,672 5,616 Other income 3,945 2,743 9,221 8,780 Total non-interest income 32,234 19,224 102,716 71,322 Non-interest expense: Salaries and employee benefits 36,080 26,251 134,471 103,950 Occupancy expense of premises 5,236 4,663 21,383 19,470 Equipment expenses 3,121 2,791 12,224 10,720 Marketing 1,058 1,085 4,281 4,456 Outside data services 2,394 1,854 8,759 7,567 FDIC insurance 1,527 123 4,727 2,260 Amortization of intangible assets 1,655 481 6,221 1,946 Merger and acquisition expense 3 948 25,174 1,312 Professional fees and services 2,473 2,553 7,939 6,978 Other expenses 8,114 5,332 30,603 20,426 Total non-interest expense 61,661 46,081 255,782 179,085 Income before income tax expense 74,889 37,071 124,424 152,861 Income tax expense 18,227 8,614 27,471 36,428 Net income $ 56,662 $ 28,457 $ 96,953 $ 116,433 Net income per share amounts: Basic net income per common share $ 1.19 $ 0.80 $ 2.19 $ 3.25 Diluted net income per common share $ 1.19 $ 0.80 $ 2.18 $ 3.25 Dividends declared per share $ 0.30 $ 0.30 $ 1.20 $ 1.18
Sandy Spring Bancorp, Inc. and Subsidiaries HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED 2020 2019 (Dollars in thousands, except per share data) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Profitability for the quarter: Tax-equivalent interest income $ 112,843 $ 113,627 $ 116,252 $ 84,966 $ 86,539 $ 88,229 $ 88,423 $ 89,424 Interest expense 11,964 15,500 13,413 19,524 19,807 20,292 21,029 21,433 Tax-equivalent net interest income 100,879 98,127 102,839 65,442 66,732 67,937 67,394 67,991 Tax-equivalent adjustment 1,052 643 1,325 1,108 1,149 1,147 1,209 1,241 Provision/ (credit) for credit losses (4,489 ) 7,003 58,686 24,469 1,655 1,524 1,633 (128 ) Non-interest income 32,234 29,390 22,924 18,168 19,224 18,573 16,556 16,969 Non-interest expense 61,661 60,937 85,438 47,746 46,081 44,925 43,887 44,192 Income/ (loss) before income tax expense/ (benefit) 74,889 58,934 (19,686 ) 10,287 37,071 38,914 37,221 39,655 Income tax expense/ (benefit) 18,227 14,292 (5,348 ) 300 8,614 9,531 8,945 9,338 Net income/ (loss) $ 56,662 $ 44,642 $ (14,338 ) $ 9,987 $ 28,457 $ 29,383 $ 28,276 $ 30,317 Financial performance: Pre-tax pre-provision pre-merger income $ 70,403 $ 67,200 $ 61,454 $ 36,210 $ 39,674 $ 40,802 $ 38,854 $ 39,527 Return on average assets 1.78 % 1.38 % (0.45 )% 0.46 % 1.32 % 1.39 % 1.37 % 1.49 % Return on average common equity 15.72 % 12.67 % (4.15 )% 3.55 % 9.93 % 10.38 % 10.32 % 11.46 % Return on average tangible common equity 22.24 % 18.16 % (5.80 )% 5.36 % 14.39 % 15.13 % 15.10 % 16.82 % Net interest margin 3.38 % 3.24 % 3.47 % 3.29 % 3.38 % 3.51 % 3.54 % 3.60 % Efficiency ratio - GAAP basis (1) 46.69 % 48.03 % 68.66 % 57.87 % 54.34 % 52.63 % 53.04 % 52.79 % Efficiency ratio - Non-GAAP basis (1) 45.09 % 45.27 % 43.85 % 54.76 % 51.98 % 50.95 % 51.71 % 51.44 % Per share data: Net income/ (loss) attributable to common shareholders $ 56,194 $ 44,268 $ (14,458 ) $ 9,919 $ 28,274 $ 29,196 $ 28,065 $ 30,120 Basic net income/ (loss) per common share $ 1.19 $ 0.94 $ (0.31 ) $ 0.29 $ 0.80 $ 0.82 $ 0.79 $ 0.85 Diluted net income/ (loss) per common share $ 1.19 $ 0.94 $ (0.31 ) $ 0.28 $ 0.80 $ 0.82 $ 0.79 $ 0.85 Weighted average diluted common shares 47,284,808 47,175,071 46,988,351 34,743,623 35,543,254 35,671,721 35,634,924 35,618,346 Dividends declared per share $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.28 Non-interest income: Securities gains $ 35 $ 51 $ 212 $ 169 $ 57 $ 15 $ 5 $ - Service charges on deposit accounts 1,917 1,673 1,223 2,253 2,427 2,516 2,442 2,307 Mortgage banking activities 14,491 14,108 8,426 3,033 4,170 4,408 3,270 2,863 Wealth management income 8,215 7,785 7,604 6,966 6,401 5,493 5,539 5,236 Insurance agency commissions 1,356 2,122 1,188 2,129 1,331 2,116 1,265 1,900 Income from bank owned life insurance 705 708 809 645 660 662 654 1,189 Bank card fees 1,570 1,525 1,257 1,320 1,435 1,462 1,467 1,252 Other income 3,945 1,418 2,205 1,653 2,743 1,901 1,914 2,222 Total non-interest income $ 32,234 $ 29,390 $ 22,924 $ 18,168 $ 19,224 $ 18,573 $ 16,556 $ 16,969 Non-interest expense: Salaries and employee benefits $ 36,080 $ 36,041 $ 34,297 $ 28,053 $ 26,251 $ 26,234 $ 25,489 $ 25,976 Occupancy expense of premises 5,236 5,575 5,991 4,581 4,663 4,816 4,760 5,231 Equipment expenses 3,121 3,133 3,219 2,751 2,791 2,641 2,712 2,576 Marketing 1,058 1,305 729 1,189 1,085 1,541 887 943 Outside data services 2,394 2,614 2,169 1,582 1,854 1,973 1,962 1,778 FDIC insurance 1,527 1,340 1,378 482 123 (83 ) 1,084 1,136 Amortization of intangible assets 1,655 1,968 1,998 600 481 491 483 491 Merger and acquisition expense 3 1,263 22,454 1,454 948 364 - - Professional fees and services 2,473 1,800 1,840 1,826 2,553 1,546 1,634 1,245 Other expenses 8,114 5,898 11,363 5,228 5,332 5,402 4,876 4,816 Total non-interest expense $ 61,661 $ 60,937 $ 85,438 $ 47,746 $ 46,081 $ 44,925 $ 43,887 $ 44,192 (1) 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 and acquisition expense from non-interest expense; 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.
Sandy Spring Bancorp, Inc. and Subsidiaries HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED 2020 2019 (Dollars in thousands, except per share data) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Balance sheets at quarter end: Commercial investor real estate loans $ 3,634,720 $ 3,588,702 $ 3,581,778 $ 2,241,240 $ 2,169,156 $ 2,036,021 $ 1,994,027 $ 1,962,879 Commercial owner-occupied real estate loans 1,642,216 1,652,208 1,601,803 1,305,682 1,288,677 1,278,505 1,224,986 1,216,713 Commercial AD&C loans 1,050,973 994,800 997,423 643,114 684,010 678,906 658,709 688,939 Commercial business loans 2,267,548 2,227,246 2,222,810 813,525 801,019 772,619 772,158 769,660 Residential mortgage loans 1,105,179 1,173,857 1,211,745 1,116,512 1,149,327 1,199,275 1,241,081 1,249,968 Residential construction loans 182,619 175,123 169,050 149,573 146,279 150,692 171,106 176,388 Consumer loans 517,254 521,999 558,434 453,346 466,764 480,530 489,176 505,443 Total loans 10,400,509 10,333,935 10,343,043 6,722,992 6,705,232 6,596,548 6,551,243 6,569,990 Allowance for credit losses (165,367 ) (170,314 ) (163,481 ) (85,800 ) (56,132 ) (54,992 ) (54,024 ) (53,089 ) Loans held for sale 78,294 88,728 68,765 67,114 53,701 78,821 50,511 24,998 Investment securities 1,413,781 1,425,733 1,424,652 1,250,560 1,125,136 946,210 955,715 987,299 Interest-earning assets 12,095,936 11,965,915 12,447,146 8,222,589 7,947,703 7,742,138 7,713,364 7,648,654 Total assets 12,798,429 12,678,131 13,290,447 8,929,602 8,629,002 8,437,538 8,398,519 8,327,900 Noninterest-bearing demand deposits 3,325,547 3,458,804 3,434,038 1,939,937 1,892,052 2,081,435 2,023,614 1,813,708 Total deposits 10,033,069 9,964,969 10,076,834 6,593,874 6,440,319 6,493,899 6,389,749 6,224,523 Customer repurchase agreements 153,157 142,287 143,579 125,305 138,605 126,008 150,604 122,626 Total interest-bearing liabilities 7,856,842 7,643,381 8,313,546 5,732,349 5,485,055 5,093,265 5,136,860 5,297,108 Total stockholders' equity 1,469,955 1,424,749 1,390,093 1,116,334 1,132,974 1,140,041 1,119,445 1,095,848 Quarterly average balance sheets: Commercial investor real estate loans $ 3,599,648 $ 3,582,751 $ 3,448,882 $ 2,202,461 $ 2,092,478 $ 1,982,979 $ 1,960,919 $ 1,964,699 Commercial owner-occupied real estate loans 1,643,817 1,628,474 1,681,674 1,285,257 1,274,782 1,258,000 1,215,632 1,207,799 Commercial AD&C loans 1,017,304 977,607 969,251 659,494 695,817 651,905 686,282 676,205 Commercial business loans 2,189,828 2,207,388 1,899,264 819,133 765,159 786,150 756,594 780,318 Residential mortgage loans 1,136,989 1,189,452 1,208,566 1,139,786 1,169,623 1,215,132 1,244,086 1,230,319 Residential construction loans 180,494 173,280 162,978 145,266 149,690 162,196 174,095 189,720 Consumer loans 515,202 543,242 575,734 465,314 477,572 486,865 505,235 515,644 Total loans 10,283,282 10,302,194 9,946,349 6,716,711 6,625,121 6,543,227 6,542,843 6,564,704 Loans held for sale 68,255 54,784 53,312 35,030 50,208 61,870 37,121 17,846 Investment securities 1,418,683 1,404,238 1,398,586 1,179,084 1,002,692 941,048 964,863 1,010,940 Interest-earning assets 11,882,542 12,049,463 11,921,132 7,994,618 7,859,836 7,690,629 7,619,240 7,627,187 Total assets 12,645,329 12,835,893 12,903,156 8,699,342 8,542,837 8,370,789 8,294,883 8,258,116 Noninterest-bearing demand deposits 3,424,729 3,281,607 3,007,222 1,797,227 1,927,063 1,909,884 1,796,802 1,682,720 Total deposits 9,999,144 9,862,639 9,614,176 6,433,694 6,459,551 6,405,762 6,247,409 5,952,942 Customer repurchase agreements 146,685 142,694 144,050 135,652 126,596 138,736 141,865 129,059 Total interest-bearing liabilities 7,609,829 7,969,487 8,326,909 5,612,056 5,326,303 5,202,876 5,269,209 5,403,946 Total stockholders' equity 1,433,900 1,401,746 1,390,544 1,130,051 1,136,824 1,123,185 1,099,078 1,073,291 Financial measures: Average equity to average assets 11.34 % 10.92 % 10.78 % 12.99 % 13.31 % 13.42 % 13.25 % 13.00 % Investment securities to earning assets 11.69 % 11.91 % 11.45 % 15.21 % 14.16 % 12.22 % 12.39 % 12.91 % Loans to earning assets 85.98 % 86.36 % 83.10 % 81.76 % 84.37 % 85.20 % 84.93 % 85.90 % Loans to assets 81.26 % 81.51 % 77.82 % 75.29 % 77.71 % 78.18 % 78.00 % 78.89 % Loans to deposits 103.66 % 103.70 % 102.64 % 101.96 % 104.11 % 101.58 % 102.53 % 105.55 % Capital measures: Tier 1 leverage (1) 8.92 % 8.65 % 8.35 % 8.78 % 9.70 % 9.96 % 9.80 % 9.61 % Common equity tier 1 capital to risk weighted assets (1) 10.58 % 10.45 % 10.23 % 10.23 % 11.06 % 11.37 % 11.43 % 11.19 % Tier 1 capital to risk-weighted assets (1) 10.58 % 10.45 % 10.23 % 10.23 % 11.21 % 11.52 % 11.59 % 11.35 % Total regulatory capital to risk-weighted assets (1) 13.93 % 14.02 % 13.79 % 14.09 % 14.85 % 12.70 % 12.79 % 12.54 % Book value per common share $ 31.24 $ 30.30 $ 29.58 $ 32.68 $ 32.40 $ 32.00 $ 31.43 $ 30.82 Outstanding common shares 47,056,777 47,025,779 47,001,022 34,164,672 34,970,370 35,625,822 35,614,953 35,557,110 (1) Estimated ratio at December 31, 2020.
Sandy Spring Bancorp, Inc. and Subsidiaries LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED 2020 2019 (Dollars in thousands) December 31, September 30, 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 $ 133 $ - $ 775 $ - $ - $ 1,201 $ 1,248 $ - Commercial owner-occupied real estate - - 515 - - - - 90 Commercial AD&C - - - - - - - - Commercial business 161 93 - - - 17 - - Residential real estate: Residential mortgage 480 320 138 8 - - - 221 Residential construction - - - - - - - - Consumer - 1 - - - - - - Total loans 90 days past due 774 414 1,428 8 - 1,218 1,248 311 Non-accrual loans: Commercial real estate: Commercial investor real estate 45,227 26,784 26,482 17,770 8,437 8,454 6,409 6,071 Commercial owner-occupied real estate 11,561 6,511 6,729 4,074 4,148 3,810 3,766 5,992 Commercial AD&C 15,044 1,678 2,957 829 829 829 1,990 3,306 Commercial business 22,933 17,659 20,246 10,834 8,450 6,393 7,083 8,013 Residential real estate: Residential mortgage 10,212 11,296 11,724 12,271 12,661 12,574 10,625 9,704 Residential construction - - - - - - - 156 Consumer 7,384 7,493 7,800 5,596 4,107 4,561 4,439 4,081 Total non-accrual loans 112,361 71,421 75,938 51,374 38,632 36,621 34,312 37,323 Total restructured loans - accruing 2,317 2,854 2,553 2,575 2,636 2,287 2,133 2,479 Total non-performing loans 115,452 74,689 79,919 53,957 41,268 40,126 37,693 40,113 Other assets and other real estate owned (OREO) 1,455 1,389 1,389 1,416 1,482 1,482 1,486 1,410 Total non-performing assets $ 116,907 $ 76,078 $ 81,308 $ 55,373 $ 42,750 $ 41,608 $ 39,179 $ 41,523 For the Quarter Ended, (Dollars in thousands) December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 Analysis of non-accrual loan activity: Balance at beginning of period $ 71,421 $ 75,938 $ 51,374 $ 38,632 $ 36,621 $ 34,312 $ 37,323 $ 33,583 Purchased credit deteriorated loans designated as non-accrual - - - 13,084 - - - - Non-accrual balances transferred to OREO (70 ) - - - - - (195 ) - Non-accrual balances charged-off (513 ) (144 ) (162 ) (575 ) (454 ) (705 ) (604 ) (227 ) Net payments or draws (13,212 ) (4,248 ) (1,881 ) (1,860 ) (2,916 ) (2,903 ) (5,517 ) (1,786 ) Loans placed on non-accrual 54,735 893 27,289 2,369 5,381 6,015 3,396 6,202 Non-accrual loans brought current - (1,018 ) (682 ) (276 ) - (98 ) (91 ) (449 ) Balance at end of period $ 112,361 $ 71,421 $ 75,938 $ 51,374 $ 38,632 $ 36,621 $ 34,312 $ 37,323 Analysis of allowance for credit losses: Balance at beginning of period $ 170,314 $ 163,481 $ 85,800 $ 56,132 $ 54,992 $ 54,024 $ 53,089 $ 53,486 Transition impact of adopting ASC 326 - - - 2,983 - - - - Initial allowance on purchased credit deteriorated loans - - - 2,762 - - - - Initial allowance on acquired PCD loans - - 18,628 - - - - - Provision/ (credit) for credit losses (4,489 ) 7,003 58,686 24,469 1,655 1,524 1,633 (128 ) Less loans charged-off, net of recoveries: Commercial real estate: Commercial investor real estate 379 21 (4 ) - (3 ) (3 ) (3 ) (7 ) Commercial owner-occupied real estate - - - - - - - - Commercial AD&C - - - - - (224 ) (4 ) - Commercial business 56 88 (463 ) 108 15 389 735 7 Residential real estate: Residential mortgage 37 (6 ) 15 333 264 209 (10 ) 89 Residential construction (1 ) (2 ) (1 ) (2 ) (2 ) (2 ) (2 ) (2 ) Consumer (13 ) 69 86 107 241 187 (18 ) 182 Net charge-offs/ (recoveries) 458 170 (367 ) 546 515 556 698 269 Balance at the end of period $ 165,367 $ 170,314 $ 163,481 $ 85,800 $ 56,132 $ 54,992 $ 54,024 $ 53,089 Asset quality ratios: Non-performing loans to total loans 1.11 % 0.72 % 0.77 % 0.80 % 0.62 % 0.61 % 0.58 % 0.61 % Non-performing assets to total assets 0.91 % 0.60 % 0.61 % 0.62 % 0.50 % 0.49 % 0.47 % 0.50 % Allowance for credit losses to loans 1.59 % 1.65 % 1.58 % 1.28 % 0.84 % 0.83 % 0.82 % 0.81 % Allowance for credit losses to non-performing loans 143.23 % 228.03 % 204.56 % 159.02 % 136.02 % 137.05 % 143.33 % 132.35 % Annualized net charge-offs/ (recoveries) to average loans 0.02 % 0.01 % (0.01 )% 0.03 % 0.03 % 0.03 % 0.04 % 0.02 %
Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED Three Months Ended December 31, 2020 2019 (Dollars in thousands and tax-equivalent) Average Balances Interest (1) Annualized Average Yield/Rate Average Balances Interest (1) Annualized Average Yield/Rate Assets Commercial investor real estate loans $ 3,599,648 $ 38,867 4.30 % $ 2,092,478 $ 24,982 4.74 % Commercial owner-occupied real estate loans 1,643,817 19,440 4.70 1,274,782 15,606 4.86 Commercial AD&C loans 1,017,304 10,400 4.07 695,817 9,388 5.35 Commercial business loans 2,189,828 20,015 3.64 765,159 9,821 5.09 Total commercial loans 8,450,597 88,722 4.18 4,828,236 59,797 4.91 Residential mortgage loans 1,136,989 10,102 3.55 1,169,623 11,030 3.77 Residential construction loans 180,494 1,698 3.74 149,690 1,650 4.37 Consumer loans 515,202 4,806 3.71 477,572 5,594 4.65 Total residential and consumer loans 1,832,685 16,606 3.62 1,796,885 18,274 4.05 Total loans (2) 10,283,282 105,328 4.08 6,625,121 78,071 4.68 Loans held for sale 68,255 592 3.48 50,208 462 3.68 Taxable securities 1,138,767 4,925 1.73 816,008 5,704 2.79 Tax-exempt securities (3) 279,916 1,971 2.81 186,684 1,576 3.38 Total investment securities (4) 1,418,683 6,896 1.94 1,002,692 7,280 2.90 Interest-bearing deposits with banks 111,820 27 0.10 181,394 724 1.58 Federal funds sold 502 - 0.10 421 2 1.66 Total interest-earning assets 11,882,542 112,843 3.78 7,859,836 86,539 4.38 Less: allowance for credit losses (171,026 ) (54,653 ) Cash and due from banks 111,565 68,011 Premises and equipment, net 58,060 59,277 Other assets 764,188 610,366 Total assets $ 12,645,329 $ 8,542,837 Liabilities and Stockholders' Equity Interest-bearing demand deposits $ 1,195,307 $ 293 0.10 % $ 800,263 $ 685 0.34 % Regular savings deposits 406,637 57 0.06 325,540 94 0.11 Money market savings deposits 3,194,999 1,870 0.23 1,875,045 5,820 1.23 Time deposits 1,777,472 4,190 0.94 1,531,640 8,124 2.10 Total interest-bearing deposits 6,574,415 6,410 0.39 4,532,488 14,723 1.29 Other borrowings 377,362 234 0.25 133,716 216 0.64 Advances from FHLB 428,278 2,730 2.54 516,101 3,189 2.45 Subordinated debentures 229,774 2,590 4.51 143,998 1,679 4.66 Total borrowings 1,035,414 5,554 2.13 793,815 5,084 2.55 Total interest-bearing liabilities 7,609,829 11,964 0.63 5,326,303 19,807 1.48 Noninterest-bearing demand deposits 3,424,729 1,927,063 Other liabilities 176,871 152,647 Stockholders' equity 1,433,900 1,136,824 Total liabilities and stockholders' equity $ 12,645,329 $ 8,542,837 Net interest income and spread $ 100,879 3.15 % $ 66,732 2.90 % Less: tax-equivalent adjustment 1,052 1,149 Net interest income $ 99,827 $ 65,583 Interest income/earning assets 3.78 % 4.38 % Interest expense/earning assets 0.40 1.00 Net interest margin 3.38 % 3.38 % (1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.54% and 26.13% for 2020 and 2019, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million in both 2020 and 2019. (2) Non-accrual loans are included in the average balances. (3) Includes only investments that are exempt from federal taxes. (4) Available for sale investments are presented at amortized cost.
Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED Year Ended December 31, 2020 2019 (Dollars in thousands and tax-equivalent) Average Balances Interest (1) Annualized Average Yield/Rate Average Balances Interest (1) Annualized Average Yield/Rate Assets Commercial investor real estate loans $ 3,210,527 $ 142,105 4.43 % $ 2,000,571 $ 99,410 4.97 % Commercial owner-occupied real estate loans 1,560,223 73,655 4.72 1,239,289 60,581 4.89 Commercial AD&C loans 906,414 40,262 4.44 677,536 39,241 5.79 Commercial business loans 1,781,197 69,633 3.91 772,052 41,300 5.35 Total commercial loans 7,458,361 325,655 4.37 4,689,448 240,532 5.13 Residential mortgage loans 1,168,668 43,001 3.68 1,214,625 46,438 3.82 Residential construction loans 165,567 6,683 4.04 168,797 7,232 4.28 Consumer loans 524,897 20,356 3.88 496,199 24,391 4.92 Total residential and consumer loans 1,859,132 70,040 3.77 1,879,621 78,061 4.15 Total loans (2) 9,317,493 395,695 4.25 6,569,069 318,593 4.85 Loans held for sale 52,893 1,686 3.19 41,905 1,607 3.84 Taxable securities 1,106,315 22,482 2.03 768,521 22,873 2.98 Tax-exempt securities (3) 244,168 7,378 3.02 211,236 7,403 3.50 Total investment securities (4) 1,350,483 29,860 2.21 979,757 30,276 3.09 Interest-bearing deposits with banks 246,155 446 0.18 108,534 2,129 1.96 Federal funds sold 403 1 0.28 572 10 1.76 Total interest-earning assets 10,967,427 427,688 3.90 7,699,837 352,615 4.58 Less: allowance for credit losses (128,793 ) (53,746 ) Cash and due from banks 122,826 65,181 Premises and equipment, net 59,031 60,595 Other assets 754,605 595,272 Total assets $ 11,775,096 $ 8,367,139 Liabilities and Stockholders' Equity Interest-bearing demand deposits $ 1,062,474 $ 1,812 0.17 % $ 750,606 $ 1,990 0.27 % Regular savings deposits 374,196 269 0.07 329,158 415 0.13 Money market savings deposits 2,741,230 12,424 0.45 1,751,989 25,437 1.45 Time deposits 1,924,429 27,146 1.41 1,604,996 33,839 2.11 Total interest-bearing deposits 6,102,329 41,651 0.68 4,436,749 61,681 1.39 Other borrowings 509,523 1,965 0.39 152,088 1,161 0.76 Advances from FHLB 545,652 6,593 1.21 645,587 16,578 2.57 Subordinated debentures 224,306 10,192 4.54 64,251 3,141 4.89 Total borrowings 1,279,481 18,750 1.47 861,926 20,880 2.42 Total interest-bearing liabilities 7,381,810 60,401 0.82 5,298,675 82,561 1.56 Noninterest-bearing demand deposits 2,880,294 1,830,008 Other liabilities 173,501 130,146 Stockholders' equity 1,339,491 1,108,310 Total liabilities and stockholders' equity $ 11,775,096 $ 8,367,139 Net interest income and spread $ 367,287 3.08 % $ 270,054 3.02 % Less: tax-equivalent adjustment 4,128 4,746 Net interest income $ 363,159 $ 265,308 Interest income/earning assets 3.90 % 4.58 % Interest expense/earning assets 0.55 1.07 Net interest margin 3.35 % 3.51 % (1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.54% and 26.13% for 2020 and 2019, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $4.1 million and $4.7 million 2020 and 2019, respectively. (2) Non-accrual loans are included in the average balances. (3) Includes only investments that are exempt from federal taxes. (4) Available for sale investments are presented at amortized cost.
