Sandy Spring Bancorp Reports Quarterly Earnings of $33.6 Million

OLNEY, Md., Oct. 20, 2022 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc. (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $33.6 million ($0.75 per diluted common share) for the quarter ended September 30, 2022, compared to net income of $57.0 million ($1.20 per diluted common share) for the third quarter of 2021 and $54.8 million ($1.21 per diluted common share) for the second quarter of 2022.

Current quarter core earnings were $35.7 million ($0.80 per diluted common share), compared to $58.2 million ($1.23 per diluted common share) for the quarter ended September 30, 2021 and $44.2 million ($0.98 per diluted common share) for the quarter ended June 30, 2022. Core earnings are determined by excluding the after-tax impact of merger, acquisition and disposal expense, the loss on FHLB redemptions, amortization of intangibles, gain or loss on disposal of assets, contingent payment expense and investment securities gains. Core earnings for the current period when compared to the prior year quarter were reduced primarily as a result of the activity associated with provisioning for credit losses, a decline in mortgage banking income, and declines in insurance commission and bankcard income. The provision for credit losses for the current quarter was a charge of $18.9 million compared to a credit of $8.2 million for the third quarter of 2021 and a charge of $3.0 million for the second quarter of 2022. The provision for credit losses was comprised of a provision for credit losses of $14.1 million directly attributable to funded loans and an adjustment to the provision of $4.8 million associated with unfunded loan commitments.

“We once again demonstrated our ability to grow new client relationships while maintaining exceptional credit quality,” said Daniel J. Schrider, President and Chief Executive Officer. “We continue to work through this challenging economic environment and are focused on generating core client funding from both our retail and commercial lines of business.”

Third Quarter Highlights:

• At September 30, 2022, total assets were $13.8 billion, a 6% increase compared to $13.0 billion at September 30, 2021. Excluding PPP loans, the total assets increased 10% during the same period.
  
  
• Total loans, excluding PPP loans, increased 21% to $11.2 billion at September 30, 2022 compared to $9.3 billion at September 30, 2021. Excluding PPP loans, total commercial loans grew by $1.6 billion or 21% during the previous twelve months. During this period, the Company generated new commercial gross loan production of $4.6 billion, of which $3.0 billion was funded, more than offsetting $1.4 billion in non-PPP commercial loan run-off. Funded commercial loan production increased 43% to $762.3 million during the third quarter of the current year compared to $532.7 million for the same quarter of the prior year. Total mortgage loans grew $354.5 million, primarily in conventional 1-4 family mortgage loans, during the twelve months ended September 30, 2022.
  
  
• Net interest income for the third quarter of 2022 grew $6.4 million or 6% compared to the third quarter of 2021. Excluding PPP interest and fees, net interest income increased $17.5 million or 18% for the current quarter compared to the prior year quarter driven by the growth of the commercial loan portfolio.
  
  
• For the third quarter of 2022, the net interest margin was 3.53% compared to 3.52% for the third quarter of 2021, and 3.49% for the second quarter of 2022. Excluding the amortization of the fair value marks derived from previous acquisitions and interest and fees from PPP loans, the current quarter’s net interest margin was 3.50% compared to 3.32% for third quarter of 2021, and 3.45% for the second quarter of 2022.
  
  
• The provision for credit losses directly attributable to the funded loan portfolio was $14.1 million for the current quarter compared to the prior year quarter’s credit to the provision for credit losses of $8.2 million. In addition, to the current quarter's provision for credit losses mainly driven by loan growth, the quarterly provision expense contained an adjustment of $4.8 million associated with unfunded loan commitments. Excluding the provision for unfunded commitments, the provision for the current quarter is a reflection of the growth in the loan portfolio and an increase in the qualitative reserve to consider the potential impact of future recessionary pressures and other qualitative considerations.
  
  
• Non-interest income for the current quarter decreased by 31% or $7.5 million compared to the prior year quarter. The decrease represents the cumulative result of the impact of the economic environment on mortgage banking activities and wealth management income, the decline in insurance commission income as a result of the previous quarter's disposition of the Company's insurance business and lower bankcard income due to regulatory restrictions on fee recognition.
  
  
• Non-interest expense for the current quarter increased $2.6 million or 4% compared to the prior year quarter driven by the increases of $1.5 million in compensation expense and $1.4 million in other non-interest expense. The primary cause of the increase in other non-interest expense was the result of a $1.2 million accrual towards the contingent earn-out associated with the 2020 acquisition of Rembert Pendleton Jackson. Excluding this accrual, non-interest expense increased 2% in the current quarter compared to the prior year quarter.
  
  
• Return on average assets (“ROA”) for the quarter ended September 30, 2022 was 0.99% and return on average tangible common equity (“ROTCE”) was 12.10% compared to 1.75% and 19.56%, respectively, for the third quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.05% and core ROTCE was 12.86% compared to core ROA of 1.79% and core ROTCE of 19.96% for the third quarter of 2021.
  
  
• For the third quarter of 2022, the GAAP efficiency ratio was 50.66% compared to 48.23% for the third quarter of 2021, and 46.03% for the second quarter of 2022. The non-GAAP efficiency ratio for the third quarter of 2022 was 48.18% compared to 46.67% for the prior year quarter, and 49.79% for the second quarter of 2022.
  

Balance Sheet and Credit Quality

Total assets grew 6% to $13.8 billion at September 30, 2022, as compared to $13.0 billion at September 30, 2021. During this period, total loans grew by 15% to $11.2 billion at September 30, 2022, compared to $9.7 billion at September 30, 2021. At September 30, 2022, excluding PPP loans, total assets grew 10% and total loans grew 21% compared to September 30, 2021. Total commercial loans, excluding PPP loans, grew by $1.6 billion or 21% during the past twelve months. During this period, the Company generated commercial gross loan production of $4.6 billion, of which $3.0 billion was funded, offsetting $1.4 billion in commercial loan payment activity. During the third quarter of 2022, funded commercial loan production was $762.3 million, an increase of 43% compared to $532.7 million for the same quarter of the prior year. The growth in the commercial portfolio, excluding PPP loans, occurred in all commercial portfolios led by the $1.3 billion or 35% growth in the investor owned commercial portfolio. Year-over-year the total mortgage loan portfolio grew 32%, as a greater number of conventional 1-4 family mortgages were retained to grow the portfolio. During the past twelve months, deposits decreased 2%. Noninterest-bearing deposits remained stable, while interest-bearing deposits declined 3%. During the period, time deposits increased 12% and money market accounts decreased 12%, while savings increased 9% and interest-bearing demand declined 3%. Borrowings increased by $1.1 billion during the period to provide funding for the loan growth.

The tangible common equity ratio decreased to 7.98% of tangible assets at September 30, 2022, compared to 9.10% at September 30, 2021 as a result of the $132.3 million repurchase of common shares during the previous twelve months and the $141.9 million increase in the accumulated other comprehensive loss in the investment portfolio due to the impact of the rising rate environment on the value of securities coupled with the increase in tangible assets during the past year. At September 30, 2022, the Company had a total risk-based capital ratio of 14.15%, a common equity tier 1 risk-based capital ratio of 10.18%, a tier 1 risk-based capital ratio of 10.18%, and a tier 1 leverage ratio of 9.33%. During the current quarter risk-based capital ratios declined from sequential quarters as a result of an adjustment to risk-weighted assets for unfunded commitments.

Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. Credit quality improved at September 30, 2022 compared to September 30, 2021, as the level of non-performing loans to total loans declined to 0.40% compared to 0.80%. These levels of non-performing loans compare to 0.40% for the prior quarter and indicate stable credit quality during a period of significant loan growth. At September 30, 2022, non-performing loans totaled $44.5 million, compared to $78.2 million at September 30, 2021, and $43.5 million at June 30, 2022. Loans placed on non-accrual during the current quarter amounted to $4.2 million compared to $5.7 million for the prior year quarter and $0.9 million for the second quarter of 2022. The Company realized net recoveries of $0.5 million for the third quarter of 2022, as compared to net charge-offs of $7.8 million for the third quarter of 2021 and insignificant recoveries for the second quarter of 2022.

At September 30, 2022, the allowance for credit losses was $128.3 million or 1.14% of outstanding loans and 289% of non-performing loans, compared to $113.7 million or 1.05% of outstanding loans and 261% of non-performing loans at the end of the previous quarter. The increase in the allowance during the current quarter compared to the previous quarter resulted from the growth in the loan portfolio, the impact of forecasted economic factors and, to a lesser degree, adjustments to certain other qualitative metrics.

Income Statement Review

Quarterly Results

Net income for the three months ended September 30, 2022 was $33.6 million compared to net income of $57.0 million for the prior year quarter.   The decline in earnings was primarily the result of the current quarter's charge to provision for credit losses compared to the prior year's credit to provision for credit losses and the decrease in non-interest income, which were partially offset by the increase in net interest income. Non-interest income decreased as a result of the combination of lower mortgage banking income, the impact of the sale of the Company's insurance business, which reduced commission income and lower bankcard fees resulting from the implementation of applicable regulations. Non-interest expense increased 4% primarily as a result of the rise in compensation costs and other expenses in the current quarter compared to the prior year quarter. Current quarter core earnings were $35.7 million ($0.80 per diluted common share), compared to $58.2 million ($1.23 per diluted common share) for the quarter ended September 30, 2021 and $44.2 million ($0.98 per diluted common share) for the quarter ended June 30, 2022.

Net interest income for the third quarter of 2022 increased $6.4 million or 6% compared to the third quarter of 2021, as a result of the $19.3 million growth in interest income, which was partially offset by growth of $12.9 million in interest expense. During the period, interest and fees on PPP loans declined by $11.2 million. Excluding this decline, net interest income grew 18% in the current year quarter compared to the prior year quarter, driven predominantly by interest income growth in all categories of commercial loans and, to a lesser degree, increases in residential mortgage loans and investment securities income. The increase in interest expense was the result of the increased cost of interest-bearing deposits, primarily time and money market deposits, and the increased volume and cost of borrowings in the current year period compared to the same period of the prior year. The net interest margin for the third quarter of 2022 was 3.53% as compared to 3.52% for the same quarter of the prior year, as the yield on interest-earning assets, which rose 40 basis points, was offset by the 63 basis point rise in the rate paid on interest-bearing liabilities.

The total provision for credit losses was a charge of $18.9 million for the third quarter of 2022 compared to a credit of $8.2 million for the third quarter of 2021. The provision for credit losses directly attributable to loan portfolio was $14.1 million for the current quarter compared to the prior year quarter’s credit to the provision for credit losses of $8.2 million. The provision for credit losses for the second quarter of 2022 was a charge of $3.0 million. The quarterly provision expense also contained an adjustment of $4.8 million associated with unfunded loan commitments. The provision for credit losses attributable to the loan portfolio for the current quarter reflects the growth in the loan portfolio during the quarter, the assessment of the forecasted impact of an economic recession and consideration of various qualitative factors.

Non-interest income decreased $7.5 million or 31% for the third quarter of 2022, compared to the prior year quarter. This decline is the cumulative result of the decrease in income from mortgage banking activities reflecting the impact of the economic environment, lower wealth management income driven by market performance, the decline in insurance commission income as a result of the previous quarter's disposition of the Company's insurance business, and reduced bankcard income due to regulatory restrictions on fee recognition.

Non-interest expense increased $2.6 million or 4% for the third quarter of 2022, compared to the prior year quarter, as a result of the rise in compensation costs and other expenses. The rise in compensation costs during the comparative period was the result of increases in salaries and incentive payments, partially mitigated by a decline in commission expense resulting from the disposition of the Company's insurance business. The primary cause of the increase in other non-interest expense was the accrual of $1.2 million for contingent earn-out compensation based on the performance of the 2020 acquisition of Rembert Pendleton Jackson. Excluding this accrual, non-interest expense increased 2% in the current quarter compared to the prior year quarter.

For the third quarter of 2022, the GAAP efficiency ratio was 50.66% compared to 48.23% for the third quarter of 2021, and 46.03% for the second quarter of 2022. The increase in the GAAP efficiency ratio was primarily the result of the 4% increase in GAAP non-interest expense compared to the 1% increase in GAAP revenue during the comparative period. The non-GAAP efficiency ratio was 48.18% for the current quarter as compared to 46.67% for the third quarter of 2021, and 49.79% for the second quarter of 2022. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the third quarter of the prior year to the current year quarter was primarily the result of the 1% decline in non-GAAP revenue, driven chiefly by the decrease in non-GAAP non-interest income, while non-GAAP expenses rose 3%. ROA for the third quarter ended September 30, 2022 was 0.99% and ROTCE was 12.10% compared to 1.69% and 20.42%, respectively, for the second quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 1.05% and core ROTCE was 12.86% compared to core ROA of 1.37% and core ROTCE of 16.49% for the second quarter of 2022.

Year-to-Date Results

The Company recorded net income of $132.3 million for the nine months ended September 30, 2022 compared to net income of $189.7 million for the same period of the prior year. Year-to-date earnings declined as a result the activity in the provision for loan losses, which shifted from the significant credit in the prior year to the charge for the current year, the decline in non-interest income from isolated events that occurred in 2021 and the reduction in insurance agency commissions subsequent to the sale of the insurance business by the Company and the flattening of net interest income as the growth in interest expense offset the increase in interest income. Core earnings were $125.0 million for the nine months ended September 30, 2022 compared to $200.1 million for the prior year. Core earnings for the current period compared to the prior year period were reduced primarily as a result of the activity associated with the provision for credit losses in addition to the decline in mortgage banking income and lower other non-interest income.

For the nine months ended September 30, 2022, net interest income increased $1.1 million compared to the prior year as a result of the $10.2 million increase in interest income, despite the $30.9 million reduction in PPP interest and fees, which was offset by the $9.0 million increase in interest expense. Excluding the impact of interest and fees on PPP loans, tax-equivalent interest and fees on loans, driven by commercial loans, increased 13% compared to the prior year period. The increase in interest expense was primarily the result of additional interest expense associated with subordinated debt issued in March 2022, and, to a lesser degree, increased interest expense on money market accounts and other borrowings. The net interest margin declined to 3.50% for the nine months ended September 30, 2022, compared to 3.57% for the prior year.

The provision for credit losses for the nine months ended September 30, 2022 amounted to a charge of $23.6 million as compared to a credit of $47.1 million for 2021. For the nine months ended September 30, 2022, the provision for credit losses was a reflection of the growth in the loan portfolio, coupled with the management's consideration of the potential impact of recessionary pressures and other portfolio qualitative metrics. The prior year's credit to the provision for credit losses was a reflection of the net impact of forecasted economic metrics and other factors applied in the determination of the allowance.

For the nine months ended September 30, 2022, non-interest income, which included a $16.7 million gain on the disposal of assets, decreased 9% to $72.7 million compared to $79.5 million for 2021. Excluding the gain, non-interest income decreased 29% driven by a 74% decline in income from mortgage banking activities, a 49% decline in insurance commission income, reduced bank card income of 23% and a 42% decline in other income. The decline in income from mortgage banking activities is the result of the rising interest rate environment, which has continued to dampen mortgage origination and refinancing activity. Other income declined from the prior year, which included the full payoff of a purchased credit deteriorated loan and activity-based vendor incentives. Insurance commission income declined due to the corresponding disposition of the Company's insurance business. Fess from bank cards diminished as a result of regulatory restrictions on fee recognition effective in the second quarter of the current year. Wealth management income remained stable, despite the erosion of assets under management due to the marketplace volatility, as a result of increased asset management fees. Service charge income grew as a result of increased customer activity.

Non-interest expense decreased 1% to $192.9 million for the nine months ended September 30, 2022, compared to $194.3 million for 2021. Excluding merger, acquisition and disposal expense from the current and prior year periods, the previously mentioned earn-out accrual and the $9.1 million in prepayment penalties on FHLB borrowings that occurred in the prior year, non-interest expense increased 3% year-over-year. The drivers of the increase in non-interest expense were a 4% increase in salaries and benefits and a 14% increase in other expense, excluding the FHLB prepayment penalties and the earn-out expense. The year-over-year increase in salaries and benefits was the result of staffing increases, salary adjustments and increased benefit costs. The rise in other expense was driven by increased costs in other various categories of operating expenses. Marketing and outside data services costs increased 6% and 9% as a result of specific initiatives and transaction volumes, respectively, while professional fee and service costs decreased 17% for the period due to a reduction in the utilization of consultant services.

For the nine months ended September 30, 2022, the GAAP efficiency ratio was 49.08% compared to 48.73% for the same period in 2021. The non-GAAP efficiency ratio the current year was 49.09% compared to 44.88% for to prior year. The growth in the current year’s non-GAAP efficiency ratio compared to the prior year, indicating a decline in efficiency, was the result of the 5% decrease in non-GAAP revenue combined with the 3% growth in non-GAAP non-interest expense.

Explanation of Non-GAAP Financial Measures

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

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

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

Conference Call

The Company’s management will host a conference call to discuss its third quarter results today at 2:00 p.m. (ET). A live Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-844-200-6205. Please use the following access code: 142064. Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available on the website until November 3, 2022. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 479150.

About Sandy Spring Bancorp, Inc.

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

Category: Webcast
Source: Sandy Spring Bancorp, Inc.
Code: SASR-E

For additional information or questions, please contact:
   Daniel J. Schrider, President & Chief Executive Officer, or
   Philip J. Mantua, E.V.P. & Chief Financial Officer
   Sandy Spring Bancorp
   17801 Georgia Avenue
   Olney, Maryland 20832
   1-800-399-5919
   Email: DSchrider@sandyspringbank.com 
   PMantua@sandyspringbank.com 
   Website: www.sandyspringbank.com 

   Media Contact:
   Jen Schell
   301-570-8331
   jschell@sandyspringbank.com 

Forward-Looking Statements

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the effect of the pandemic on our borrowers and their ability to make payments on their obligations, the effectiveness of vaccination programs, and the effect of remedial actions and stimulus measures adopted by federal, state and local governments; general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2021, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov. 

Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED

		Three Months Ended September 30,								% Change			Nine Months Ended September 30,								% Change
(Dollars in thousands, except per share data)			2022				2021							2022				2021
Results of operations:
Net interest income		$	112,960			$	106,604			6	%		$	320,361			$	319,250			—	%
Provision/ (credit) for credit losses			18,890				(8,229	)		N/M				23,571				(47,141	)		N/M
Non-interest income			16,882				24,394			(31	)			72,722				79,519			(9	)
Non-interest expense			65,780				63,181			4				192,918				194,329			(1	)
Income before income tax expense			45,172				76,046			(41	)			176,594				251,581			(30	)
Net income			33,584				56,976			(41	)			132,319				189,703			(30	)
Net income attributable to common shareholders		$	33,470			$	56,622			(41	)		$	131,744			$	188,484			(30	)
Pre-tax pre-provision net income (1)		$	64,062			$	67,817			(6	)		$	200,165			$	204,440			(2	)
Return on average assets			0.99	%			1.75	%						1.36	%			1.98	%
Return on average common equity			8.96	%			14.54	%						11.90	%			16.70	%
Return on average tangible common equity (1)			12.10	%			19.56	%						16.14	%			22.68	%
Net interest margin			3.53	%			3.52	%						3.50	%			3.57	%
Efficiency ratio - GAAP basis (2)			50.66	%			48.23	%						49.08	%			48.73	%
Efficiency ratio - Non-GAAP basis (2)			48.18	%			46.67	%						49.09	%			44.88	%
Per share data:
Basic net income per common share		$	0.75			$	1.21			(38)%			$	2.93			$	4.00			(27)%
Diluted net income per common share		$	0.75			$	1.20			(38	)		$	2.92			$	3.98			(27	)
Weighted average diluted common shares			44,780,560				47,086,824			(5	)			45,098,073				47,315,725			(5	)
Dividends declared per share		$	0.34			$	0.32			6			$	1.02			$	0.96			6
Book value per common share		$	32.52			$	33.52			(3	)		$	32.52			$	33.52			(3	)
Tangible book value per common share (1)		$	23.90			$	24.90			(4	)		$	23.90			$	24.90			(4	)
Outstanding common shares			44,644,269				46,119,074			(3	)			44,644,269				46,119,074			(3	)
Financial condition at period-end:
Investment securities		$	1,587,279			$	1,470,652			8	%		$	1,587,279			$	1,470,652			8	%
Loans			11,218,813				9,721,348			15				11,218,813				9,721,348			15
Interest-earning assets			12,987,589				12,245,374			6				12,987,589				12,245,374			6
Assets			13,765,597				13,017,464			6				13,765,597				13,017,464			6
Deposits			10,749,486				10,987,400			(2	)			10,749,486				10,987,400			(2	)
Interest-bearing liabilities			8,172,349				7,320,132			12				8,172,349				7,320,132			12
Stockholders' equity			1,451,862				1,546,060			(6	)			1,451,862				1,546,060			(6	)
Capital ratios:
Tier 1 leverage (3)			9.33	%			9.33	%						9.33	%			9.33	%
Common equity tier 1 capital to risk-weighted assets (3)			10.18	%			12.53	%						10.18	%			12.53	%
Tier 1 capital to risk-weighted assets (3)			10.18	%			12.53	%						10.18	%			12.53	%
Total regulatory capital to risk-weighted assets (3)			14.15	%			15.30	%						14.15	%			15.30	%
Tangible common equity to tangible assets (4)			7.98	%			9.10	%						7.98	%			9.10	%
Average equity to average assets			10.99	%			12.07	%						11.41	%			11.84	%
Credit quality ratios:
Allowance for credit losses to loans			1.14	%			1.11	%						1.14	%			1.11	%
Non-performing loans to total loans			0.40	%			0.80	%						0.40	%			0.80	%
Non-performing assets to total assets			0.33	%			0.61	%						0.33	%			0.61	%
Allowance for credit losses to non-performing loans			288.50	%			138.06	%						288.50	%			138.06	%
Annualized net charge-offs to average loans (5)		(0.02)%					0.31	%						—	%			0.14	%

(1) Represents a non-GAAP measure.
(2) The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, contingent payment expense, and merger, acquisition and disposal expense from non-interest expense; gain on disposal of assets and investment securities gains from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(3) Estimated ratio at September 30, 2022.
(4) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets. See the Reconciliation Table included with these Financial Highlights.
(5) Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.

 

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED (CONTINUED)
OPERATING EARNINGS - METRICS

		Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)			2022				2021				2022				2021
Core earnings (non-GAAP):
Net income (GAAP)		$	33,584			$	56,976			$	132,319			$	189,703
Plus/ (less) non-GAAP adjustments (net of tax):
Merger, acquisition and disposal expense			—				—				796				33
Amortization of intangible assets			1,076				1,211				3,284				3,711
Loss on FHLB redemption			—				—				—				6,779
Loss/ (Gain) on disposal of assets			108				—				(12,309	)			—
Investment securities gains			(2	)			(36	)			(36	)			(132	)
Contingent payment expense			929				—				929				—
Core earnings (Non-GAAP)		$	35,695			$	58,151			$	124,983			$	200,094
Core earnings per diluted common share (non-GAAP):
Weighted average common shares outstanding - diluted (GAAP)			44,780,560				47,086,824				45,098,073				47,315,725
Earnings per diluted common share (GAAP)		$	0.75			$	1.20			$	2.92			$	3.98
Core earnings per diluted common share (non-GAAP)		$	0.80			$	1.23			$	2.77			$	4.23
Core return on average assets (non-GAAP):
Average assets (GAAP)		$	13,521,595			$	12,886,460			$	13,033,256			$	12,827,195
Return on average assets (GAAP)			0.99	%			1.75	%			1.36	%			1.98	%
Core return on average assets (non-GAAP)			1.05	%			1.79	%			1.28	%			2.09	%
Core return on average tangible common equity (non-GAAP):
Average total stockholders' equity (GAAP)		$	1,486,427			$	1,554,765			$	1,486,920			$	1,518,881
Average goodwill			(363,436	)			(370,223	)			(367,190	)			(370,223	)
Average other intangible assets, net			(22,187	)			(28,600	)			(23,774	)			(30,228	)
Average tangible common equity (non-GAAP)		$	1,100,804			$	1,155,942			$	1,095,956			$	1,118,430
Return on average tangible common equity (non-GAAP)			12.10	%			19.56	%			16.14	%			22.68	%
Core return on average tangible common equity (non-GAAP)			12.86	%			19.96	%			15.25	%			23.92	%

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED

		Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)			2022				2021				2022				2021
Pre-tax pre-provision net income:
Net income (GAAP)		$	33,584			$	56,976			$	132,319			$	189,703
Plus/ (less) non-GAAP adjustments:
Income tax expense			11,588				19,070				44,275				61,878
Provision/ (credit) for credit losses			18,890				(8,229	)			23,571				(47,141	)
Pre-tax pre-provision net income (non-GAAP)		$	64,062			$	67,817			$	200,165			$	204,440
Efficiency ratio (GAAP):
Non-interest expense		$	65,780			$	63,181			$	192,918			$	194,329
Net interest income plus non-interest income		$	129,842			$	130,998			$	393,083			$	398,769
Efficiency ratio (GAAP)			50.66	%			48.23	%			49.08	%			48.73	%
Efficiency ratio (Non-GAAP):
Non-interest expense		$	65,780			$	63,181			$	192,918			$	194,329
Less non-GAAP adjustments:
Amortization of intangible assets			1,432				1,635				4,406				4,991
Loss on FHLB redemption			—				—				—				9,117
Merger, acquisition and disposal expense			1				—				1,068				45
Contingent payment expense			1,247				—				1,247				—
Non-interest expense - as adjusted		$	63,100			$	61,546			$	186,197			$	180,176
Net interest income plus non-interest income		$	129,842			$	130,998			$	393,083			$	398,769
Plus non-GAAP adjustment:
Tax-equivalent income			951				931				2,809				2,841
Less non-GAAP adjustment:
Investment securities gains			2				49				48				178
Gain/ (loss) on disposal of assets			(183	)			—				16,516				—
Net interest income plus non-interest income - as adjusted		$	130,974			$	131,880			$	379,328			$	401,432
Efficiency ratio (Non-GAAP)			48.18	%			46.67	%			49.09	%			44.88	%
Tangible common equity ratio:
Total stockholders' equity		$	1,451,862			$	1,546,060			$	1,451,862			$	1,546,060
Goodwill			(363,436	)			(370,223	)			(363,436	)			(370,223	)
Other intangible assets, net			(21,262	)			(27,531	)			(21,262	)			(27,531	)
Tangible common equity		$	1,067,164			$	1,148,306			$	1,067,164			$	1,148,306
Total assets		$	13,765,597			$	13,017,464			$	13,765,597			$	13,017,464
Goodwill			(363,436	)			(370,223	)			(363,436	)			(370,223	)
Other intangible assets, net			(21,262	)			(27,531	)			(21,262	)			(27,531	)
Tangible assets		$	13,380,899			$	12,619,710			$	13,380,899			$	12,619,710
Tangible common equity ratio			7.98	%			9.10	%			7.98	%			9.10	%
Outstanding common shares			44,644,269				46,119,074				44,644,269				46,119,074
Tangible book value per common share		$	23.90			$	24.90			$	23.90			$	24.90

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

(Dollars in thousands)		September 30, 2022				December 31, 2021				September 30, 2021
Assets
Cash and due from banks		$	88,780			$	65,630			$	105,937
Federal funds sold			213				312				352
Interest-bearing deposits with banks			169,815				354,078				1,008,344
Cash and cash equivalents			258,808				420,020				1,114,633
Residential mortgage loans held for sale (at fair value)			11,469				39,409				44,678
Investments held-to-maturity (fair value of $226,030)			265,648				—				—
Investments available-for-sale (at fair value)			1,244,335				1,465,896				1,429,555
Other equity securities			77,296				41,166				41,097
Total loans			11,218,813				9,967,091				9,721,348
Less: allowance for credit losses - loans			(128,268	)			(109,145	)			(107,920	)
Net loans			11,090,545				9,857,946				9,613,428
Premises and equipment, net			64,703				59,685				58,362
Other real estate owned			739				1,034				1,105
Accrued interest receivable			37,074				34,349				36,219
Goodwill			363,436				370,223				370,223
Other intangible assets, net			21,262				25,920				27,531
Other assets			330,282				275,078				280,633
Total assets		$	13,765,597			$	12,590,726			$	13,017,464
Liabilities
Noninterest-bearing deposits		$	3,993,480			$	3,779,630			$	3,987,411
Interest-bearing deposits			6,756,006				6,845,101				6,999,989
Total deposits			10,749,486				10,624,731				10,987,400
Securities sold under retail repurchase agreements and federal funds purchased			206,287				141,086				147,504
Advances from FHLB			840,000				—				—
Subordinated debt			370,056				172,712				172,639
Total borrowings			1,416,343				313,798				320,143
Accrued interest payable and other liabilities			147,906				132,518				163,861
Total liabilities			12,313,735				11,071,047				11,471,404
Stockholders' equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 44,644,269, 45,118,930 and 46,119,074 at September 30, 2022, December 31, 2021 and September 30, 2021, respectively			44,644				45,119				46,119
Additional paid in capital			732,239				751,072				799,766
Retained earnings			818,049				732,027				701,301
Accumulated other comprehensive loss			(143,070	)			(8,539	)			(1,126	)
Total stockholders' equity			1,451,862				1,519,679				1,546,060
Total liabilities and stockholders' equity		$	13,765,597			$	12,590,726			$	13,017,464

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

		Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands, except per share data)			2022				2021				2022			2021
Interest income:
Interest and fees on loans		$	121,327			$	104,384			$	327,042		$	319,563
Interest on loans held for sale			161				379				504			1,465
Interest on deposits with banks			774				302				1,245			395
Interest and dividends on investment securities:
Taxable			5,735				3,958				14,472			12,230
Tax-advantaged			2,422				2,106				7,100			6,560
Interest on federal funds sold			3				—				4			—
Total interest income			130,422				111,129				350,367			340,213
Interest Expense:
Interest on deposits			9,490				3,521				15,578			12,202
Interest on retail repurchase agreements and federal funds purchased			977				43				1,232			139
Interest on advances from FHLB			3,049				—				3,066			2,649
Interest on subordinated debt			3,946				961				10,130			5,973
Total interest expense			17,462				4,525				30,006			20,963
Net interest income			112,960				106,604				320,361			319,250
Provision/ (credit) for credit losses			18,890				(8,229	)			23,571			(47,141	)
Net interest income after provision/ (credit) for credit losses			94,070				114,833				296,790			366,391
Non-interest income:
Investment securities gains			2				49				48			178
Gain/ (loss) on disposal of assets			(183	)			—				16,516			—
Service charges on deposit accounts			2,591				2,108				7,384			5,936
Mortgage banking activities			1,566				4,942				5,347			20,887
Wealth management income			8,867				9,392				27,302			27,243
Insurance agency commissions			—				2,285				2,927			5,685
Income from bank owned life insurance			693				818				2,191			2,203
Bank card fees			438				1,775				3,916			5,078
Other income			2,908				3,025				7,091			12,309
Total non-interest income			16,882				24,394				72,722			79,519
Non-interest expense:
Salaries and employee benefits			40,126				38,653				119,049			114,295
Occupancy expense of premises			4,759				5,728				14,527			16,712
Equipment expenses			3,825				3,214				10,920			9,456
Marketing			1,370				1,376				3,843			3,640
Outside data services			2,509				2,317				7,492			6,860
FDIC insurance			1,268				361				3,330			3,303
Amortization of intangible assets			1,432				1,635				4,406			4,991
Merger, acquisition and disposal expense			1				—				1,068			45
Professional fees and services			2,207				3,031				6,596			7,927
Other expenses			8,283				6,866				21,687			27,100
Total non-interest expense			65,780				63,181				192,918			194,329
Income before income tax expense			45,172				76,046				176,594			251,581
Income tax expense			11,588				19,070				44,275			61,878
Net income		$	33,584			$	56,976			$	132,319		$	189,703
Net income per share amounts:
Basic net income per common share		$	0.75			$	1.21			$	2.93		$	4.00
Diluted net income per common share		$	0.75			$	1.20			$	2.92		$	3.98
Dividends declared per share		$	0.34			$	0.32			$	1.02		$	0.96

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

			2022												2021
(Dollars in thousands, except per share data)		Q3				Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the quarter:
Tax-equivalent interest income		$	131,373			$	114,901			$	106,902			$	110,933			$	112,060			$	115,753			$	115,241
Interest expense			17,462				7,959				4,585				4,803				4,525				6,777				9,661
Tax-equivalent net interest income			113,911				106,942				102,317				106,130				107,535				108,976				105,580
Tax-equivalent adjustment			951				992				866				862				931				930				980
Provision/ (credit) for credit losses			18,890				3,046				1,635				1,585				(8,229	)			(4,204	)			(34,708	)
Non-interest income			16,882				35,245				20,595				22,536				24,394				26,259				28,866
Non-interest expense			65,780				64,991				62,147				66,141				63,181				62,975				68,173
Income before income tax expense			45,172				73,158				58,264				60,078				76,046				75,534				100,001
Income tax expense			11,588				18,358				14,329				14,674				19,070				18,271				24,537
Net income		$	33,584			$	54,800			$	43,935			$	45,404			$	56,976			$	57,263			$	75,464
GAAP financial performance:
Return on average assets			0.99	%			1.69	%			1.42	%			1.41	%			1.75	%			1.79	%			2.39	%
Return on average common equity			8.96	%			14.97	%			11.83	%			11.87	%			14.54	%			15.07	%			20.72	%
Return on average tangible common equity			12.10	%			20.42	%			16.04	%			16.07	%			19.56	%			20.44	%			28.47	%
Net interest margin			3.53	%			3.49	%			3.49	%			3.51	%			3.52	%			3.63	%			3.56	%
Efficiency ratio - GAAP basis			50.66	%			46.03	%			50.92	%			51.75	%			48.23	%			46.89	%			51.08	%
Non-GAAP financial performance:
Pre-tax pre-provision net income		$	64,062			$	76,204			$	59,899			$	61,663			$	67,817			$	71,330			$	65,293
Core after-tax earnings		$	35,695			$	44,238			$	45,050			$	46,575			$	58,151			$	58,446			$	83,511
Core return on average assets			1.05	%			1.37	%			1.45	%			1.44	%			1.79	%			1.83	%			2.65	%
Core return on average common equity			9.53	%			12.09	%			12.13	%			12.17	%			14.84	%			15.38	%			22.93	%
Core return on average tangible common equity			12.86	%			16.49	%			16.45	%			16.49	%			19.96	%			20.87	%			31.50	%
Core earnings per diluted common share		$	0.80			$	0.98			$	0.99			$	1.02			$	1.23			$	1.23			$	1.76
Efficiency ratio - Non-GAAP basis			48.18	%			49.79	%			49.34	%			50.17	%			46.67	%			45.36	%			42.65	%
Per share data:
Net income attributable to common shareholders		$	33,470			$	54,606			$	43,667			$	45,114			$	56,622			$	56,782			$	74,824
Basic net income per common share		$	0.75			$	1.21			$	0.97			$	0.99			$	1.21			$	1.20			$	1.59
Diluted net income per common share		$	0.75			$	1.21			$	0.96			$	0.99			$	1.20			$	1.19			$	1.58
Weighted average diluted common shares			44,780,560				45,111,693				45,333,292				45,655,924				47,086,824				47,523,198				47,415,060
Dividends declared per share		$	0.34			$	0.34			$	0.34			$	0.32			$	0.32			$	0.32			$	0.32
Non-interest income:
Securities gains		$	2			$	38			$	8			$	34			$	49			$	71			$	58
Gain/ (loss) on disposal of assets			(183	)			16,699				—				—				—				—				—
Service charges on deposit accounts			2,591				2,467				2,326				2,305				2,108				1,976				1,852
Mortgage banking activities			1,566				1,483				2,298				3,622				4,942				5,776				10,169
Wealth management income			8,867				9,098				9,337				9,598				9,392				9,121				8,730
Insurance agency commissions			—				812				2,115				1,332				2,285				1,247				2,153
Income from bank owned life insurance			693				703				795				819				818				705				680
Bank card fees			438				1,810				1,668				1,818				1,775				1,785				1,518
Other income			2,908				2,135				2,048				3,008				3,025				5,578				3,706
Total non-interest income		$	16,882			$	35,245			$	20,595			$	22,536			$	24,394			$	26,259			$	28,866
Non-interest expense:
Salaries and employee benefits		$	40,126			$	39,550			$	39,373			$	41,535			$	38,653			$	38,990			$	36,652
Occupancy expense of premises			4,759				4,734				5,034				5,693				5,728				5,497				5,487
Equipment expenses			3,825				3,559				3,536				3,427				3,214				3,020				3,222
Marketing			1,370				1,280				1,193				1,090				1,376				1,052				1,212
Outside data services			2,509				2,564				2,419				2,123				2,317				2,260				2,283
FDIC insurance			1,268				1,078				984				991				361				1,450				1,492
Amortization of intangible assets			1,432				1,466				1,508				1,609				1,635				1,659				1,697
Merger, acquisition and disposal expense			1				1,067				—				—				—				—				45
Professional fees and services			2,207				2,372				2,017				2,381				3,031				3,165				1,731
Other expenses			8,283				7,321				6,083				7,292				6,866				5,882				14,352
Total non-interest expense		$	65,780			$	64,991			$	62,147			$	66,141			$	63,181			$	62,975			$	68,173

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

			2022												2021
(Dollars in thousands, except per share data)		Q3				Q2				Q1				Q4				Q3				Q2				Q1
Balance sheets at quarter end:
Commercial investor real estate loans		$	5,066,843			$	4,761,658			$	4,388,275			$	4,141,346			$	3,743,698			$	3,712,374			$	3,652,418
Commercial owner-occupied real estate loans			1,743,724				1,767,326				1,692,253				1,690,881				1,661,092				1,687,843				1,644,848
Commercial AD&C loans			1,143,783				1,094,528				1,089,331				1,088,094				1,177,949				1,126,960				1,051,013
Commercial business loans			1,393,634				1,353,380				1,349,602				1,481,834				1,594,528				1,974,366				2,411,109
Residential mortgage loans			1,218,552				1,147,577				1,000,697				937,570				911,997				960,527				1,022,546
Residential construction loans			229,243				235,486				204,259				197,652				181,319				172,869				171,028
Consumer loans			423,034				426,335				419,911				429,714				450,765				457,576				493,904
Total loans			11,218,813				10,786,290				10,144,328				9,967,091				9,721,348				10,092,515				10,446,866
Allowance for credit losses - loans			(128,268	)			(113,670	)			(110,588	)			(109,145	)			(107,920	)			(123,961	)			(130,361	)
Loans held for sale			11,469				23,610				17,537				39,409				44,678				71,082				84,930
Investment securities			1,587,279				1,595,424				1,586,441				1,507,062				1,470,652				1,482,123				1,472,727
Interest-earning assets			12,987,589				12,542,388				12,205,058				11,867,952				12,245,374				12,167,067				12,132,405
Total assets			13,765,597				13,303,009				12,967,416				12,590,726				13,017,464				12,925,577				12,873,366
Noninterest-bearing demand deposits			3,993,480				4,129,440				4,039,797				3,779,630				3,987,411				4,000,636				3,770,852
Total deposits			10,749,486				10,969,461				10,852,794				10,624,731				10,987,400				10,866,466				10,677,752
Customer repurchase agreements			91,287				110,744				130,784				141,086				147,504				140,708				129,318
Total interest-bearing liabilities			8,172,349				7,570,671				7,313,783				7,158,899				7,320,132				7,233,536				7,423,262
Total stockholders' equity			1,451,862				1,477,169				1,488,910				1,519,679				1,546,060				1,562,280				1,511,694
Quarterly average balance sheets:
Commercial investor real estate loans		$	4,898,683			$	4,512,937			$	4,220,246			$	3,769,529			$	3,678,886			$	3,675,119			$	3,634,174
Commercial owner-occupied real estate loans			1,755,891				1,727,325				1,683,557				1,669,737				1,671,442				1,663,543				1,638,885
Commercial AD&C loans			1,115,531				1,096,369				1,102,660				1,140,059				1,161,183				1,089,287				1,049,597
Commercial business loans			1,327,218				1,334,350				1,372,755				1,482,901				1,820,598				2,225,885				2,291,097
Residential mortgage loans			1,177,664				1,070,836				964,056				925,093				934,365				994,899				1,066,714
Residential construction loans			235,123				221,031				197,366				186,129				170,511				176,135				179,925
Consumer loans			422,963				421,022				424,859				436,030				452,289				468,686				496,578
Total loans			10,933,073				10,383,870				9,965,499				9,609,478				9,889,274				10,293,554				10,356,970
Loans held for sale			15,211				12,744				17,594				29,426				50,075				66,958				82,263
Investment securities			1,734,036				1,686,181				1,617,615				1,535,265				1,403,496				1,482,905				1,407,455
Interest-earning assets			12,833,758				12,283,834				11,859,803				12,012,576				12,121,048				12,037,701				12,029,424
Total assets			13,521,595				12,991,692				12,576,089				12,791,526				12,886,460				12,798,355				12,801,539
Noninterest-bearing demand deposits			3,995,702				4,001,762				3,758,732				3,879,572				3,869,293				3,763,135				3,394,110
Total deposits			10,740,999				10,829,221				10,542,029				10,809,665				10,832,115				10,663,346				10,343,190
Customer repurchase agreements			104,742				122,728				131,487				144,988				145,483				136,286				148,195
Total interest-bearing liabilities			7,892,230				7,377,045				7,163,641				7,247,756				7,315,021				7,356,656				7,742,987
Total stockholders' equity			1,486,427				1,468,036				1,506,516				1,517,793				1,554,765				1,523,875				1,477,150
Financial measures:
Average equity to average assets			10.99	%			11.30	%			11.98	%			11.87	%			12.07	%			11.91	%			11.54	%
Investment securities to earning assets			12.22	%			12.72	%			13.00	%			12.70	%			12.01	%			12.18	%			12.14	%
Loans to earning assets			86.38	%			86.00	%			83.12	%			83.98	%			79.39	%			82.95	%			86.11	%
Loans to assets			81.50	%			81.08	%			78.23	%			79.16	%			74.68	%			78.08	%			81.15	%
Loans to deposits			104.37	%			98.33	%			93.47	%			93.81	%			88.48	%			92.88	%			97.84	%
Assets under management		$	4,969,092			$	5,171,321			$	5,793,787			$	6,078,204			$	5,733,311			$	5,676,141			$	5,401,158
Capital measures:
Tier 1 leverage (1)			9.33	%			9.53	%			9.66	%			9.26	%			9.33	%			9.49	%			9.14	%
Common equity tier 1 capital to risk-weighted assets (1)			10.18	%			10.42	%			10.78	%			11.91	%			12.53	%			12.49	%			12.11	%
Tier 1 capital to risk-weighted assets (1)			10.18	%			10.42	%			10.78	%			11.91	%			12.53	%			12.49	%			12.11	%
Total regulatory capital to risk-weighted assets (1)			14.15	%			14.46	%			15.02	%			14.59	%			15.30	%			15.85	%			15.52	%
Book value per common share		$	32.52			$	33.10			$	32.97			$	33.68			$	33.52			$	33.02			$	32.04
Outstanding common shares			44,644,269				44,629,697				45,162,908				45,118,930				46,119,074				47,312,982				47,187,389

(1) Estimated ratio at September 30, 2022.

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

			2022									2021
(Dollars in thousands)		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		$	—		$	—		$	—		$	—		$	14,830		$	—		$	—
Commercial owner-occupied real estate			—			—			—			—			—			—			—
Commercial AD&C			—			—			—			—			7,344			—			—
Commercial business			1,966			—			—			—			—			—			31
Residential real estate:
Residential mortgage			167			353			296			557			679			680			398
Residential construction			—			—			—			—			—			—			—
Consumer			34			—			—			—			—			—			—
Total loans 90 days past due			2,167			353			296			557			22,853			680			429
Non-accrual loans:
Commercial real estate:
Commercial investor real estate			14,038			11,245			11,743			12,489			15,386			42,072			42,776
Commercial owner-occupied real estate			6,294			7,869			8,083			9,306			9,854			8,183			8,316
Commercial AD&C			—			1,353			1,081			650			1,022			14,489			14,975
Commercial business			7,198			7,542			8,357			8,420			9,454			9,435			13,147
Residential real estate:
Residential mortgage			7,514			7,305			8,148			8,441			9,511			9,440			9,593
Residential construction			—			1			51			55			62			62			—
Consumer			5,173			5,692			6,406			6,725			7,826			7,718			7,193
Total non-accrual loans			40,217			41,007			43,869			46,086			53,115			91,399			96,000
Total restructured loans - accruing			2,077			2,119			2,161			2,167			2,199			2,228			2,271
Total non-performing loans			44,461			43,479			46,326			48,810			78,167			94,307			98,700
Other assets and other real estate owned (OREO)			739			739			1,034			1,034			1,105			1,234			1,354
Total non-performing assets		$	45,200		$	44,218		$	47,360		$	49,844		$	79,272		$	95,541		$	100,054

		For the Quarter Ended,
(Dollars in thousands)		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Analysis of non-accrual loan activity:
Balance at beginning of period		$	41,007			$	43,869			$	46,086			$	53,115			$	91,399			$	96,000			$	112,361
Non-accrual balances transferred to OREO			—				—				—				—				—				(257	)			—
Non-accrual balances charged-off			(197	)			(376	)			(265	)			(754	)			(7,171	)			(2,166	)			(699	)
Net payments or draws			(3,509	)			(3,234	)			(2,787	)			(5,786	)			(36,526	)			(3,693	)			(16,028	)
Loans placed on non-accrual			4,212				948				1,503				511				5,699				1,515				421
Non-accrual loans brought current			(1,296	)			(200	)			(668	)			(1,000	)			(286	)			—				(55	)
Balance at end of period		$	40,217			$	41,007			$	43,869			$	46,086			$	53,115			$	91,399			$	96,000
Analysis of allowance for credit losses - loans:
Balance at beginning of period		$	113,670			$	110,588			$	109,145			$	107,920			$	123,961			$	130,361			$	165,367
Provision/ (credit) for credit losses - loans			14,092				3,046				1,635				1,585				(8,229	)			(4,204	)			(34,708	)
Less loans charged-off, net of recoveries:
Commercial real estate:
Commercial investor real estate			—				(300	)			(19	)			(109	)			5,797				(144	)			(27	)
Commercial owner-occupied real estate			(10	)			(12	)			—				—				136				—				—
Commercial AD&C			—				—				—				—				2,007				—				—
Commercial business			(512	)			331				111				564				(53	)			2,359				634
Residential real estate:
Residential mortgage			(8	)			(9	)			120				(80	)			(49	)			(11	)			(270	)
Residential construction			(3	)			(5	)			—				(2	)			(2	)			(1	)			—
Consumer			27				(41	)			(20	)			(13	)			(24	)			(7	)			(39	)
Net charge-offs			(506	)			(36	)			192				360				7,812				2,196				298
Balance at the end of period		$	128,268			$	113,670			$	110,588			$	109,145			$	107,920			$	123,961			$	130,361
Asset quality ratios:
Non-performing loans to total loans			0.40	%			0.40	%			0.46	%			0.49	%			0.80	%			0.93	%			0.94	%
Non-performing assets to total assets			0.33	%			0.33	%			0.37	%			0.40	%			0.61	%			0.74	%			0.78	%
Allowance for credit losses to loans			1.14	%			1.05	%			1.09	%			1.10	%			1.11	%			1.23	%			1.25	%
Allowance for credit losses to non-performing loans			288.50	%			261.44	%			238.72	%			223.61	%			138.06	%			131.44	%			132.08	%
Annualized net charge-offs/ (recoveries) to average loans		(0.02)%					—	%			0.01	%			0.01	%			0.31	%			0.09	%			0.01	%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

		Three Months Ended September 30,
			2022										2021
(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		$	4,898,683			$	51,463		4.17	%		$	3,678,886			$	37,760		4.07	%
Commercial owner-occupied real estate loans			1,755,891				20,284		4.58				1,671,442				19,184		4.55
Commercial AD&C loans			1,115,531				15,501		5.51				1,161,183				11,702		4.00
Commercial business loans			1,327,218				17,196		5.14				1,820,598				22,849		4.98
Total commercial loans			9,097,323				104,444		4.55				8,332,109				91,495		4.36
Residential mortgage loans			1,177,664				9,980		3.39				934,365				7,867		3.37
Residential construction loans			235,123				1,845		3.11				170,511				1,438		3.35
Consumer loans			422,963				5,531		5.19				452,289				4,033		3.54
Total residential and consumer loans			1,835,750				17,356		3.77				1,557,165				13,338		3.41
Total loans (2)			10,933,073				121,800		4.42				9,889,274				104,833		4.21
Loans held for sale			15,211				161		4.24				50,075				379		3.03
Taxable securities			1,251,599				5,735		1.83				984,452				3,958		1.61
Tax-advantaged securities			482,437				2,900		2.40				419,044				2,588		2.47
Total investment securities (3)			1,734,036				8,635		1.99				1,403,496				6,546		1.87
Interest-bearing deposits with banks			150,992				774		2.03				777,763				302		0.15
Federal funds sold			446				3		2.30				440				—		0.16
Total interest-earning assets			12,833,758				131,373		4.07				12,121,048				112,060		3.67
Less: allowance for credit losses - loans			(114,512	)									(121,630	)
Cash and due from banks			93,327										100,292
Premises and equipment, net			64,039										57,220
Other assets			644,983										729,530
Total assets		$	13,521,595									$	12,886,460
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	1,444,801			$	941		0.26	%		$	1,425,893			$	238		0.07	%
Regular savings deposits			555,057				21		0.02				494,331				67		0.05
Money market savings deposits			3,202,507				5,281		0.65				3,484,101				1,234		0.14
Time deposits			1,542,932				3,247		0.83				1,558,497				1,982		0.50
Total interest-bearing deposits			6,745,297				9,490		0.56				6,962,822				3,521		0.20
Federal funds purchased			158,211				947		2.37				68				—		0.18
Repurchase agreements			104,742				30		0.11				145,483				43		0.12
Advances from FHLB			514,022				3,049		2.35				—				—		—
Subordinated debt			369,958				3,946		4.27				206,648				961		1.86
Total borrowings			1,146,933				7,972		2.76				352,199				1,004		1.13
Total interest-bearing liabilities			7,892,230				17,462		0.88				7,315,021				4,525		0.25
Noninterest-bearing demand deposits			3,995,702										3,869,293
Other liabilities			147,236										147,381
Stockholders' equity			1,486,427										1,554,765
Total liabilities and stockholders' equity		$	13,521,595									$	12,886,460
Tax-equivalent net interest income and spread						$	113,911		3.19	%						$	107,535		3.42	%
Less: tax-equivalent adjustment							951										931
Net interest income						$	112,960									$	106,604
Interest income/earning assets									4.07	%									3.67	%
Interest expense/earning assets									0.54										0.15
Net interest margin									3.53	%									3.52	%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.47% and 25.64% for 2022 and 2021, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.0 million and $0.9 million in 2022 and 2021, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Available-for-sale investments are presented at amortized cost.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

		Nine Months Ended September 30,
			2022										2021
(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		$	4,546,440			$	138,245		4.07	%		$	3,662,890			$	114,525		4.18	%
Commercial owner-occupied real estate loans			1,722,522				58,126		4.51				1,658,076				57,224		4.61
Commercial AD&C loans			1,104,901				37,821		4.58				1,100,431				32,917		4.00
Commercial business loans			1,344,608				49,370		4.91				2,110,803				72,891		4.62
Total commercial loans			8,718,471				283,562		4.35				8,532,200				277,557		4.35
Residential mortgage loans			1,071,634				26,632		3.31				998,174				26,045		3.48
Residential construction loans			217,978				5,112		3.14				175,489				4,606		3.51
Consumer loans			422,941				13,112		4.14				472,356				12,761		3.61
Total residential and consumer loans			1,712,553				44,856		3.50				1,646,019				43,412		3.52
Total loans (2)			10,431,024				328,418		4.21				10,178,219				320,969		4.22
Loans held for sale			15,174				504		4.43				66,314				1,465		2.95
Taxable securities			1,204,240				14,472		1.60				984,354				12,230		1.66
Tax-advantaged securities			475,463				8,533		2.39				446,917				7,995		2.39
Total investment securities (3)			1,679,703				23,005		1.83				1,431,271				20,225		1.88
Interest-bearing deposits with banks			202,882				1,245		0.82				386,717				395		0.14
Federal funds sold			581				4		0.91				538				—		0.11
Total interest-earning assets			12,329,364				353,176		3.83				12,063,059				343,054		3.80
Less: allowance for credit losses - loans			(112,384	)									(138,378	)
Cash and due from banks			81,673										101,433
Premises and equipment, net			62,510										56,439
Other assets			672,093										744,642
Total assets		$	13,033,256									$	12,827,195
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	1,477,956			$	1,513		0.14	%		$	1,397,623			$	700		0.07	%
Regular savings deposits			553,982				62		0.02				472,059				189		0.05
Money market savings deposits			3,334,534				7,403		0.30				3,419,948				3,951		0.15
Time deposits			1,418,740				6,600		0.62				1,647,792				7,362		0.60
Total interest-bearing deposits			6,785,212				15,578		0.31				6,937,422				12,202		0.24
Federal funds purchased			85,983				1,128		1.75				20,257				13		0.09
Repurchase agreements			119,554				104		0.12				143,312				126		0.12
Advances from FHLB			174,493				3,066		2.35				148,823				2,649		2.38
Subordinated debt			315,065				10,130		4.29				220,175				5,973		3.62
Total borrowings			695,095				14,428		2.78				532,567				8,761		2.20
Total interest-bearing liabilities			7,480,307				30,006		0.54				7,469,989				20,963		0.37
Noninterest-bearing demand deposits			3,919,600										3,677,254
Other liabilities			146,429										161,071
Stockholders' equity			1,486,920										1,518,881
Total liabilities and stockholders' equity		$	13,033,256									$	12,827,195
Tax-equivalent net interest income and spread						$	323,170		3.29	%						$	322,091		3.43	%
Less: tax-equivalent adjustment							2,809										2,841
Net interest income						$	320,361									$	319,250
Interest income/earning assets									3.83	%									3.80	%
Interest expense/earning assets									0.33										0.23
Net interest margin									3.50	%									3.57	%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.47% and 25.64% for 2022 and 2021, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $2.8 million and $2.8 million in 2022 and 2021, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Available-for-sale investments are presented at amortized cost.