OLNEY, Md., April 18, 2019 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2019 of $30.3 million ($0.85 per diluted share) compared to net income of $21.7 million ($0.61 per diluted share) for the first quarter of 2018 and net income of $25.6 million ($0.72 per diluted share) for the fourth quarter of 2018. The prior year’s first quarter’s results included the impact of $9.0 million in merger expenses associated with the acquisition of WashingtonFirst Bankshares, Inc. Exclusive of the after-tax impact of these expenses adjusted earnings per diluted share for the prior year quarter was $0.79 per share.

“In the first quarter we saw balanced results and meaningful contributions from all major business lines,” said Daniel J. Schrider, President and Chief Executive Officer. “Our strong performance reflects the coordinated approach we take to serving our clients. Our teams work across disciplines and geographic locations to address our clients’ complete financial picture. This approach distinguishes us in a highly competitive market, and it delivers results for our clients and the company.”

First Quarter Highlights:

• Total assets grew by 5% while loans and deposits grew by 8% and 11%, respectively, compared to the prior year.

• First quarter results reflected an annualized return on average assets of 1.49% and annualized return on average common equity of 11.46% as compared to 1.12% and 8.70% respectively for the first quarter of 2018. Exclusive of the prior year’s first quarter merger costs on an after-tax basis, the return on average assets and return on average common equity would have been 1.47% and 11.40%, respectively.

• The net interest margin was 3.60% for the first quarter of 2019, compared to 3.58% for the first quarter of 2018 and 3.57% for the fourth quarter of 2018. Excluding recovered interest income on acquired credit impaired loans during the quarter the net interest margin would have been 3.52%. No recovered interest was recorded in the first or fourth quarter of 2018.

• Non-interest income excluding insurance mortality proceeds and securities gains increased 6% from the prior year quarter.

• Tangible book value increased 10% to $21.05 per share at the end of the first quarter of the current year compared to $19.12 at March 31, 2018.

• The tangible common equity ratio increased to 9.39% at March 31, 2019 from 8.99% at March 31, 2018.

• The Non-GAAP efficiency ratio was 51.44% for the current quarter as compared to 49.54% for the first quarter of 2018 and 51.78% for the fourth quarter of 2018.

Review of Balance Sheet and Credit Quality

Driven by loan growth, total assets grew to $8.3 billion at March 31, 2019, as compared to $7.9 billion at March 31, 2018. Total loans at March 31, 2019, were $6.6 billion compared to $6.1 billion at March 31, 2018. Deposit growth was 11% from March 31, 2018, to March 31, 2019, as interest-bearing deposits experienced 14% growth and noninterest-bearing deposits grew 3%.

Tangible common equity grew to $748 million at March 31, 2019, compared to $678 million at March 31, 2018. At March 31, 2019, the Company had a total risk-based capital ratio of 12.54%, a common equity tier 1 risk-based capital ratio of 11.19%, a tier 1 risk-based capital ratio of 11.35% and a tier 1 leverage ratio of 9.61%.

The level of non-performing loans to total loans increased to 0.61% at March 31, 2019, compared to 0.48% at March 31, 2018. At March 31, 2019, non-performing loans totaled $40.1 million, compared to $29.4 million at March 31, 2018, and $36.0 million at December 31, 2018. The growth in non-performing loans occurred as a result of modest increase in all segments of the loan portfolio, predominantly loans secured by real estate. Non-performing loans include accruing loans 90 days or more past due and restructured loans, but exclude loans that were considered non-performing from the acquired loan portfolios.

Loan charge-offs, net of recoveries, totaled $0.3 million for the first quarter of 2019 compared to $0.3 million for the first quarter of 2018. The allowance for loan losses represented 0.81% of outstanding loans and 132% of non-performing loans at March 31, 2019, compared to 0.77% of outstanding loans and 160% of non-performing loans at March 31, 2018.

Income Statement Review

Net interest income for the first quarter of 2019 increased 6% compared to the first quarter of 2018 as a result of the Company’s organic loan growth during the period which more than offset the impact of deposit growth. The net interest margin improved to 3.60% for the first quarter of 2019 compared to 3.58% for the first quarter of 2018. The first quarter of 2019 included $1.8 million in recovered interest income on acquired credit impaired loans. Excluding the recovered interest income, the first quarter’s net interest margin would have been 3.52% compared to the prior year’s margin of 3.58% which did not contain any recovered interest income.

The provision for loan losses was a credit of $0.1 million for the first quarter of 2019 compared to a charge of $2.0 million for the first quarter of 2018 and $3.4 million for the fourth quarter of 2018. The decrease in the provision for the current period compared to the prior year was primarily the result of the overall improvement in the qualitative credit metrics of the loan portfolio during the previous twelve months and lower loan growth during the current quarter.

Non-interest income was $17.0 million for the first quarter of 2019 as compared to the $17.1 million for the first quarter of 2018. The current quarter included $0.6 million in life insurance mortality proceeds compared to $1.6 million in the prior year quarter in addition to $0.1 million in securities gains. Exclusive of these proceeds and securities gains, the growth in non-interest income for the quarter was 6% or $0.9 million compared to the prior year quarter. The majority of this increase was derived from mortgage banking activities and, to a lesser extent, wealth management income and credit related fees.

Non-interest expenses decreased 11% to $44.2 million for the first quarter of 2019 compared to $49.6 million in the first quarter of 2018. The prior year’s quarter included $9.0 million in merger expenses. Exclusive of the merger expenses, non-interest expense for the current quarter increased 9% primarily due to the increase in compensation and benefit expense. This increase was the result of the combination of higher compensation expense from normal merit increases over the preceding twelve months, an increase in health care expenses experienced during the current quarter and management’s decision to increase the Company’s contribution to the employee retirement savings plan as a result of the reduction in the corporate tax rate that occurred at the end of 2017.

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:

• Adjusted diluted earnings per share is non-GAAP in that it excludes merger expenses and other selected items, net of tax.
• 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, merger expenses and securities gains and includes tax-equivalent income.

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 table included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

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. Visit www.sandyspringbank.com for more information.