OLNEY, Md., April 20, 2017 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2017 of $15.1 million ($0.63 per diluted share) compared to net income of $10.8 million ($0.45 per diluted share) for the first quarter of 2016 and net income of $13.3 million ($0.55 per diluted share) for the fourth quarter of 2016.

“Higher net interest income driven primarily by strong loan growth over the preceding year was the main driver of our record first quarter earnings. Continued strong credit quality, the execution of efficient funding strategies and disciplined expense control were also contributing factors to our performance for the quarter,” said Daniel J. Schrider, President and Chief Executive Officer.

First Quarter Highlights:

• Total loans increased 12% compared to the first quarter of 2016 and 2% compared to the fourth quarter of 2016. These increases were driven primarily by year-over-year growth of 16% in the commercial loan portfolio.
• Total deposits grew 11% from the prior year period and 6% from the prior quarter.
• The net interest margin was 3.51% for the first quarter of 2017, compared to 3.44% for the first quarter of 2016 and 3.52% for the fourth quarter of 2016.
• Return on average equity increased 38% to 11.45% as compared to 8.29% from the prior year.
• The Non-GAAP efficiency ratio was 54.78% for the current quarter as compared to 61.84% for the first quarter of 2016 and 57.54% for the fourth quarter of 2016.
• Pre-tax, pre-provision income increased 33% compared with the first quarter of 2016.

Review of Balance Sheet and Credit Quality

Total assets grew 10% to $5.2 billion at March 31, 2017 compared to $4.7 billion at March 31, 2016. This growth was driven by the increase in the loan portfolio as total loans ended the period at $4.0 billion.

At March 31, 2017, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 12% compared to balances at March 31, 2016. Total deposits and certain other short-term borrowings that comprise the funding sources derived from clients, increased 12% compared to March 31, 2016.

Tangible common equity totaled $463 million at March 31, 2017 compared to $434 million at March 31, 2016. The ratio of tangible common equity to tangible assets decreased to 9.06% at March 31, 2017 from 9.37% at March 31, 2016 due to the impact of the growth in assets over the preceding 12 months. Dividends per common share were $0.26 per share for the first quarter compared to $0.24 per share for the first quarter of 2016, an 8% increase.

At March 31, 2017, the Company had a total risk-based capital ratio of 12.06%, a common equity tier 1 risk-based capital ratio of 11.02%, a tier 1 risk-based capital ratio of 11.02% and a tier 1 leverage ratio of 9.26%. On January 6, 2017 the Company repurchased all of its remaining $30 million in subordinated debentures at par value. This strategy was executed to improve the Company’s future net interest margin.

Non-performing loans totaled $30.9 million at March 31, 2017 compared to $36.1 million at March 31, 2016 and $31.9 million at December 31, 2016. The level of non-performing loans to total loans decreased to 0.77% at March 31, 2017 compared to 1.01% at March 31, 2016 as a result of the growth in the loan portfolio and a concurrent decrease in the level of non-performing loans.

Loan charge-offs, net of recoveries, totaled $0.4 million for the first quarter of 2017 compared to $0.4 million for the first quarter of 2016. The allowance for loan losses represented 1.10% of outstanding loans and 142% of non-performing loans at March 31, 2017 compared to 1.17% of outstanding loans and 116% of non-performing loans at March 31, 2016. The decline in the allowance to outstanding loans ratio is a reflection of improved overall credit quality during the past year that offset the impact of the growth in the loan portfolio during the same period. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the first quarter of 2017 increased 11% compared to the first quarter of 2016. The net interest margin improved to 3.51% for the first quarter of 2017 compared to 3.44% for the first quarter of 2016. This improvement reflects the impact of loan growth over the preceding year combined with the cumulative benefits associated with the execution of funding strategies and the shift from lower yielding investments to the higher yielding loan portfolio during the past 12 months.

The provision for loan losses was $0.2 million for the first quarter of 2017 compared to $1.2 million for the first quarter of 2016 and $0.6 million for the fourth quarter of 2016. The decrease in the current quarter’s charge versus the prior year’s quarter reflects improved loan portfolio credit quality, which partially offset the effects of loan growth on the provision over the past year.

Non-interest income decreased to $12.6 million for the first quarter of 2017 compared to $13.4 million for the first quarter of 2016. The first quarter of 2016 included gains of $1.8 million on sales of investment securities. Excluding these securities gains, non-interest income increased 9% compared to the prior year quarter due to increases in insurance agency commissions and other non-interest income.

Non-interest expenses decreased 7% to $30.0 million for the first quarter of 2017 compared to $32.3 million in the first quarter of 2016. The first quarter of 2016 included $1.8 million in prepayment penalties on the early payoff of high-rate FHLB advances. Excluding this transaction, non-interest expenses decreased 2% compared to the first quarter of 2016 due to lower employee benefit costs. The non-GAAP efficiency ratio was 54.78% for the first quarter of 2017 compared to 61.84% for the first quarter of 2016 primarily a result of the growth in net interest income coupled with the effects of expense control.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. With $5.2 billion in assets, the bank operates 44 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.