Sandy Spring Bancorp Reports Third Quarter Results

OLNEY, Md., Oct. 23 /PRNewswire-FirstCall/ -- Sandy Spring Bancorp, Inc.,
(Nasdaq: SASR) the parent company of Sandy Spring Bank, today announced net
income for the third quarter of 2008 of $5.4 million ($.33 per diluted share)
compared to $8.2 million ($.50 per diluted share) for the third quarter of
2007 and $5.7 million ($.34 per diluted share) for the linked second quarter
of 2008. The third quarter of 2008 includes an estimated pre-tax impairment
charge of $2.3 million to write down the value of goodwill in the Company's
leasing subsidiary, The Equipment Leasing Company, and a pre-tax pension
credit of $1.5 million relating to the Company's defined benefit pension plan
which was frozen in 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010424/SSPRINGLOGO-a )
Net income for the nine-month period ending September 30, 2008 totaled
$19.2 million ($1.17 per diluted share) compared to $23.9 million ($1.50 per
diluted share) for the prior year period. The results for the current year-to-
date include the goodwill impairment charge and pension credit mentioned
above.
"Our company is a good old fashioned profitable community bank that has
been conservatively managed for 140 years. We are locally run, well
capitalized, locally headquartered, our employees live in the same
neighborhoods where they work - and we are continuing to safely support the
daily needs and growth plans of our local customers through this economic
cycle," said Hunter R. Hollar, Chairman and Chief Executive Officer. "These
attributes have enabled us to grow into the second largest independent banking
franchise headquartered in Maryland, with a high-value footprint that covers
great demographics in the best markets between Washington, Baltimore, and
Northern Virginia."
"We think it is important to not lose sight of these facts, despite the
daily reports of huge losses and ongoing major problems at many of the
nation's largest and best-known financial companies. The extraordinary events
of the past month have served to reshape the entire U. S. financial system,
yet we believe the well-managed better-performing community banks such as ours
should have solid prospects now and in the future."
"Sandy Spring Bancorp is not totally immune from the impact of recent
economic events, including the slump in housing. We are recognizing the
problem loans whose repayment is dependent on home sales and we are working
hard to manage through these loans in order to minimize the impact on Sandy
Spring Bank and on the borrower. Further, we are continuing to focus on
controlling operating expenses and on high quality customer service and
retention."
Third Quarter and Year-to-Date Highlights:
-- The net interest margin declined to 4.02% for the third quarter
compared to 4.16% for the third quarter of 2007 and increased compared to
3.96% for the linked second quarter of 2008. For the year-to-date, the net
interest margin declined to 3.99% compared to 4.10% for 2007.
-- As mentioned above and in a prior press release dated October 7, 2008,
the Company recognized an estimated pre-tax impairment charge of $2.3 million
relating to the write down of the value of goodwill in its leasing subsidiary,
The Equipment Leasing Company, based on completion of Phase I of the
impairment analysis. Phase II is expected to be completed during the next
reporting period, which may require an additional adjustment. Total goodwill
allocated to The Equipment Leasing Company after this quarter's write down is
$1.9 million.
-- During the third quarter the Company recognized a credit of $1.5
million for prior service costs relating to its defined benefit pension plan.
This plan was frozen during the fourth quarter of 2007 with the intention of
terminating the plan at a still to be determined future date.
-- Noninterest expenses decreased 2% for the quarter compared to the third
quarter of 2007 and increased 2% versus the linked second quarter of 2008.
Excluding the goodwill impairment charge and the pre-tax pension credit in the
third quarter of 2008, noninterest expenses decreased 5% compared to the third
quarter of 2007. For the first nine months of 2008, noninterest expenses
increased 1% compared to the first nine months of 2007. Excluding the goodwill
impairment charge and the pre-tax pension credit, noninterest expenses
decreased 1% versus the prior year-to-date. These decreases are consistent
with the Company's expectations for project LIFT, the Company's previously
disclosed initiative for managing operating expenses.
-- The provision for loan and lease losses totaled $6.5 million for the
quarter compared to $0.8 million for the third quarter of 2007 and $6.2
million for the linked second quarter of 2008. For the year-to-date, the
provision for loan and lease losses totaled $15.4 million compared to $2.4
million in 2007. These increases were in response to internal risk rating
downgrades primarily in the residential real estate development portfolio.
-- The Company as of September 30, 2008 recorded a total risk-based
capital ratio of 10.98%, a tier 1 risk-based capital ratio of 9.73% and a
capital leverage ratio of 8.76%. Capital adequacy, as measured by these
ratios, was above the "well-capitalized" regulatory requirement levels for the
Company.
"Non-performing assets increased from the second quarter due to the
volatile condition of the financial markets and, in particular, their effect
on local residential real estate developers with whom we have long-standing
relationships. Our foremost priority is to aggressively monitor credit
quality and we have been extremely proactive in identifying and dealing with
the problem credits which gave rise to the higher provision for loan and lease
losses discussed above," said Daniel J. Schrider, President of Sandy Spring
Bancorp. "We continue to believe that our conservative loan underwriting
standards and our comprehensive methodology for risk-rating our loans will
serve us well for the long term as we manage through this most difficult
economic environment."
Review of Balance Sheet and Credit Quality
Comparing September 30, 2008 balances to September 30, 2007, total assets
increased 8% to $3.2 billion due mainly to continued growth in the commercial
loan portfolio. Total loans and leases increased 13% to $2.5 billion compared
to the same period for the prior year. This increase in loans was comprised
mainly of a 14% increase in commercial loans. Compared to the linked second
quarter of 2008, total loans increased 2%.
Customer funding sources, which include deposits plus other short-term
borrowings from core customers, decreased 3% to $2.3 billion at September 30,
2008 compared to the same period for the prior year. On a linked quarter
basis, such customer funding sources decreased 3% compared to the second
quarter of 2008. This decrease was due primarily to continued intense
competition for deposits in the Company's market area. Borrowings from the
Federal Home Loan Bank of Atlanta increased 163% to $484 million compared to
the same period for the prior year. Compared to the linked second quarter of
2008, such borrowings increased 22%. These increases were necessary to fund
loan growth due to the lack of growth in customer funding sources mentioned
above.
Stockholders' equity totaled $319.7 million at September 30, 2008, and
represented 10.0% of total assets, compared to 10.5% at September 30, 2007.
The Company at September 30, 2008 recorded a total risk-based capital ratio of
10.98%, a tier 1 risk-based capital ratio of 9.73% and a capital leverage
ratio of 8.76% which were all above "well capitalized" regulatory requirement
levels.
The provision for loan and lease losses totaled $6.5 million for the third
quarter of 2008 compared to $0.8 million for the third quarter of 2007 and
$6.2 million for the linked second quarter of 2008. As discussed above, these
increases were primarily due to a higher level of nonperforming loans,
specifically in the residential real estate development portfolio. Loan
charge-offs, net of recoveries totaled $1.7 million for the third quarter of
2008 compared to $0.8 million for the third quarter of 2007. The allowance
for loan and lease losses represented 1.54% of outstanding loans and leases
and 56% of non-performing assets at September 30, 2008 compared to 1.07% of
outstanding loans and leases and 91% of non-performing assets at September 30,
2007.
Non-performing assets totaled $68.4 million at September 30, 2008 compared
to $64.9 million at June 30, 2008 and $25.8 million at September 30, 2007. The
increase over the linked second quarter of 2008 was due primarily to two
residential real estate development loans totaling $3.9 million, which
management believes are adequately reserved or well secured. The increase over
the same period for the prior year also reflects five residential real estate
development loans, in addition to the two mentioned above, totaling $26.3
million, which management believes are also adequately reserved or well
secured.
Income Statement Review
Comparing the third quarter of 2008 and 2007, net interest income
increased by $0.9 million, or 3%, due primarily to continued growth in the
loan portfolio which was largely offset by the decline in market interest
rates due to the effect of previous interest rate cuts by the Federal Reserve
during the first quarter of 2008 and increases in deposit rates during the
third quarter. Such activity caused loan yields to decline faster than yields
on deposits due to the Company's asset sensitive position and produced a net
interest margin decrease to 4.02% in 2008 from 4.16% in 2007.
Noninterest income decreased to $10.9 million in the third quarter of 2008
as compared to $11.1 million in the third quarter of 2007, a decrease of 2%.
Service charges on deposit accounts increased 8% due primarily to higher
overdraft fees while fees on sales of investment products increased 7%. These
increases were offset by a decrease in gains on sales of mortgage loans of 46%
due to lower mortgage volumes reflecting market conditions and a decrease of
15% in other noninterest income.
Noninterest expenses were $25.3 million in the third quarter of 2008
compared to $25.9 million in the third quarter of 2007, a decrease of $0.6
million or 2%. Excluding the goodwill impairment charge and pre-tax pension
credit in the third quarter of 2008, noninterest expenses decreased $1.4
million or 5% compared to the same period for the prior year. Salaries and
benefits expenses decreased 18%, while occupancy and equipment expenses
decreased 7%. These decreases were somewhat offset by a 47% increase in
marketing expenses due to costs to promote new deposit initiatives and an
increase of 28% in outside data services due mainly to overall growth in
customer accounts and branches acquired from the acquisition of CN Bancorp,
Inc. and Potomac Bank in 2007. Other expenses decreased 6% due largely to the
effect of project LIFT.
Comparing the first nine months of 2008 and 2007, net interest income
increased by $4.4 million, or 6%, due primarily to continued growth in the
loan portfolio which was offset to some extent by the decline in market
interest rates and to higher rates offered to attract deposits. These factors
produced a net interest margin decrease to 3.99% in 2008 from 4.10% in 2007.
Noninterest income increased to $35.3 million for the first nine months of
2008 as compared to $32.9 million for the first nine months of 2007, an
increase of 7%. Service charges on deposit accounts increased 19% due
primarily to higher overdraft fees while Visa(R) check fees increased 7%
reflecting continued growth in electronic transactions. Other noninterest
income increased 18% due primarily to higher accrued gains on mortgage
commitments resulting from the adoption of a new accounting principle in the
first quarter and due to valuation adjustments on matched commercial loan
swaps. These increases were somewhat offset by decreases of 18% in gains on
sales of mortgage loans due to lower mortgage volumes reflecting market
conditions and 13% in insurance agency commissions due to lower fees on
commercial lines and reduced contingency fees.
Noninterest expenses were $74.9 million for the first nine months of 2008
compared to $74.5 million for the first nine months of 2007, an increase of
$0.4 million or 1%. Excluding the goodwill impairment charge and the pre-tax
pension credit in the third quarter of 2008, noninterest expenses decreased
$0.4 million or 1% compared to the same period for the prior year. Salaries
and benefits expenses decreased 5% due largely to project LIFT. This decrease
was somewhat offset by an increase of 16% in outside data services due mainly
to the overall growth in the loan and deposit portfolios and the branches
added from the two acquisitions mentioned above. Intangibles amortization
increased 13% as a result of the two acquisitions.
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 Web cast of the conference
call is available through the Investor Relations' section of the Sandy Spring
Web site at www.sandyspringbank.com. Participants may call 877-795-3638; a
password is not necessary. Visitors to the Web site are advised to log on 10
minutes ahead of the scheduled start of the call. An internet-based replay
will be available at the Web site until 12:00 midnight (ET) November 23, 2008.
A telephone voice replay will also be available during that same time period
at 888-203-1112. Please use pass code #7448665 to access.
About Sandy Spring Bancorp/Sandy Spring Bank
With $3.2 billion in assets, Sandy Spring Bancorp is the holding company
for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance
Corporation, The Equipment Leasing Company and West Financial Services, Inc.
Sandy Spring Bancorp is the second largest publicly traded banking company
headquartered in Maryland. Sandy Spring is a community banking organization
that focuses its lending and other services on businesses and consumers in the
local market area. Independent and community-oriented, Sandy Spring Bank was
founded in 1868 and offers a broad range of commercial banking, retail banking
and trust services through 42 community offices in Anne Arundel, Carroll,
Frederick, Howard, Montgomery, and Prince George's counties in Maryland, and
Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy
Spring Bank also offers a comprehensive menu of leasing, insurance and
investment management services. Visit www.sandyspringbank.com to locate an ATM
near you or for more information about Sandy Spring Bank.
Forward-Looking Statements
Sandy Spring Bancorp makes forward-looking statements in this news release
and in the conference call regarding this news release. These forward-looking
statements may include: statements of goals, intentions, earnings
expectations, and other expectations; estimates of risks and of future costs
and benefits; assessments of probable loan and lease losses; assessments of
market risk; and statements of the ability to achieve financial and other
goals.
Forward-looking statements are typically identified by words such as
"believe," "expect," "anticipate," "intend," "outlook," "estimate,"
"forecast," "project" and other similar words and expressions. Forward-
looking statements are subject to numerous assumptions, risks and
uncertainties, which change over time. Forward-looking statements speak only
as of the date they are made. Sandy Spring Bancorp does not assume any duty
and does not undertake to update its forward-looking statements. Because
forward-looking statements are subject to assumptions and uncertainties,
actual results or future events could differ, possibly materially, from those
that Sandy Spring Bancorp anticipated in its forward-looking statements, and
future results could differ materially from historical performance.
Sandy Spring Bancorp's forward-looking statements are subject to the
following principal risks and uncertainties: general economic conditions and
trends, either nationally or locally; conditions in the securities markets;
changes in interest rates; changes in deposit flows, and in the demand for
deposit, loan, and investment products and other financial services; changes
in real estate values; changes in the quality or composition of the Company's
loan or investment portfolios; changes in competitive pressures among
financial institutions or from non-financial institutions; the Company's
ability to retain key members of management; changes in legislation,
regulations, and policies; and a variety of other matters which, by their
nature, are subject to significant uncertainties. Sandy Spring Bancorp
provides greater detail regarding some of these factors in its Form 10-K for
the year ended December 31, 2007, 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)
(Dollars in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, % September 30, %
2008 2007 Change 2008 2007 Change
Profitability for
the period:
Net interest
income $28,087 $27,212 3% $81,785 $77,426 6%
Provision for loan
and lease losses 6,545 750 773 15,401 2,369 550
Noninterest income 10,879 11,130 (2) 35,270 32,909 7
Noninterest
expenses 25,267 25,899 (2) 74,856 74,472 1
Income before income
taxes 7,154 11,693 (39) 26,798 33,494 (20)
Net income $5,359 $8,181 (34) $19,215 $23,895 (20)

Return on average
assets 0.67% 1.08% 0.82% 1.10%
Return on average
equity 6.64% 10.55% 8.04% 11.28%
Net interest margin 4.02% 4.16% 3.99% 4.10%
Efficiency ratio -
GAAP based * 64.84% 67.55% 63.95% 67.50%
Efficiency ratio
- traditional * 58.27% 62.30% 59.06% 62.51%

Per share data:
Basic net income $0.33 $0.50 (34)% $1.18 $1.50 (21)%
Diluted net income 0.33 0.50 (34) 1.17 1.50 (22)
Dividends declared 0.24 0.23 4 0.72 0.69 4
Book value 19.51 18.92 3 19.51 18.92 3
Tangible book
value 14.08 13.17 7 14.08 13.17 7
Average fully
diluted shares 16,418,588 16,508,922 16,419,180 15,980,035

At period-end:
Assets $3,195,117 $2,965,492 8% $3,195,117 $2,965,492 8%
Deposits 2,248,812 2,280,102 (1) 2,248,812 2,280,102 (1)
Total Loans and
leases 2,482,418 2,201,599 13 2,482,418 2,201,599 13
Securities 417,935 452,195 (8) 417,935 452,195 (8)
Stockholders'
equity 319,700 310,624 3 319,700 310,624 3

Capital and credit
quality ratios:
Average equity to
average assets 10.14% 10.19% 10.21% 9.72%
Allowance for loan
and lease losses
to loans and leases 1.54% 1.07% 1.54% 1.07%
Nonperforming assets
to total assets 2.14% 0.87% 2.14% 0.87%
Annualized net
charge-offs to
average loans and
leases 0.28% 0.16% 0.12% 0.07%

* The GAAP based efficiency ratio is noninterest expenses divided by net
interest income plus noninterest income from the Consolidated Statements of
Income. The traditional, non-GAAP efficiency ratio excludes intangible asset
amortization, the goodwill impairment loss and the pension prior service
credit from noninterest expenses; excludes securities gains from noninterest
income; and adds the tax-equivalent adjustment to net interest income. See the
Reconciliation Table included with these Financial Highlights.
Certain reclassifications of information previously reported have been
made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
Reconciliation of GAAP-based and Traditional Efficiency Ratios (Unaudited)
(In thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Noninterest expenses-GAAP based $25,267 $25,899 $74,856 $74,472
Net interest income plus noninterest
income-GAAP based 38,966 38,342 117,055 110,335

Efficiency ratio-GAAP based 64.84% 67.55% 63.95% 67.50%

Noninterest expenses-GAAP based $25,267 $25,899 $74,856 $74,472
Less non-GAAP adjustment:
Goodwill Impairment Loss 2,250 0 2,250 0
Amortization of intangible assets 1,103 1,123 3,344 2,956
Plus non-GAAP adjustment:
Pension prior service credit 1,473 0 1,473 0
Noninterest expenses-traditional
ratio 23,387 24,776 70,735 71,516

Net interest income plus noninterest
income-GAAP based 38,966 38,342 117,055 110,335
Plus non-GAAP adjustment:
Tax-equivalency 1,180 1,447 3,381 4,096
Less non-GAAP adjustments:
Securities gains 9 22 662 28
Net interest income plus
noninterest income -
traditional ratio 40,137 39,767 119,774 114,403

Efficiency ratio - traditional 58.27% 62.30% 59.06% 62.51%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

September 30 December 31
(Unaudited)
2008 2007 2007
Assets
Cash and due from banks $55,321 $58,698 $63,432
Federal funds sold 19,712 13,375 22,055
Interest-bearing deposits with banks 483 483 365
Cash and cash equivalents 75,516 72,556 85,852

Residential mortgage loans held for
sale (at fair value) 4,541 6,099 7,089
Investments available-for-sale (at
fair value) 206,898 196,138 186,801
Investments held-to-maturity - fair
value of $181,734 $241,984 and
$240,995, respectively 178,690 237,231 234,706
Other equity securities 32,347 18,826 23,766

Total loans and leases 2,482,418 2,201,599 2,277,031
Less: allowance for loan and
lease losses (38,266) (23,567) (25,092)
Net loans and leases 2,444,152 2,178,032 2,251,939

Premises and equipment, net 52,441 55,016 54,457
Other real estate owned 1,698 431 461
Accrued interest receivable 12,491 16,008 14,955
Goodwill 75,701 76,625 76,585
Other intangible assets, net 13,286 17,754 16,630
Other assets 97,356 90,776 90,712
Total assets $3,195,117 $2,965,492 $3,043,953

Liabilities
Noninterest-bearing deposits $468,101 $453,536 $434,053
Interest-bearing deposits 1,780,711 1,826,566 1,839,815
Total deposits 2,248,812 2,280,102 2,273,868

Short-term borrowings 484,595 298,083 373,972
Other long-term borrowings 76,828 7,793 17,553
Subordinated debentures 35,000 35,000 35,000
Accrued interest payable and other
liabilities 30,182 33,890 27,920
Total liabilities 2,875,417 2,654,868 2,728,313

Stockholders' Equity
Common stock -- par value $1.00;
shares authorized 50,000,000;
shares issued and outstanding
16,383,671 16,420,911 and
16,349,317, respectively 16,384 16,421 16,349
Additional paid in capital 85,065 85,982 83,970
Retained earnings 222,126 211,787 216,376
Accumulated other comprehensive loss (3,875) (3,566) (1,055)
Total stockholders' equity 319,700 310,624 315,640
Total liabilities and
stockholders' equity $3,195,117 $2,965,492 $3,043,953

Certain reclassifications of information previously reported have been
made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Interest income:
Interest and fees on loans and
leases $37,263 $39,789 $112,428 $112,756
Interest on loans held for sale 100 234 318 701
Interest on deposits with banks 6 590 79 1,081
Interest and dividends on
securities:
Taxable 3,171 3,211 7,749 10,832
Exempt from federal income taxes 1,409 2,468 6,712 7,776
Interest on federal funds sold 99 666 529 1,720
Total interest income 42,048 46,958 127,815 134,866
Interest expense:
Interest on deposits 9,325 15,898 32,930 45,263
Interest on short-term borrowings 3,544 3,198 9,886 10,265
Interest on long-term borrowings 1,092 650 3,214 1,912
Total interest expense 13,961 19,746 46,030 57,440
Net interest income 28,087 27,212 81,785 77,426
Provision for loan and lease losses 6,545 750 15,401 2,369
Net interest income after
provision for loan and
lease losses 21,542 26,462 66,384 75,057
Noninterest income:
Securities gains 9 22 662 28
Service charges on deposit accounts 3,249 2,999 9,481 7,937
Gains on sales of mortgage loans 397 738 1,772 2,149
Fees on sales of investment products 820 765 2,547 2,471
Trust and investment management fees 2,380 2,365 7,282 7,007
Insurance agency commissions 1,282 1,294 4,725 5,422
Income from bank owned life
insurance 742 720 2,183 2,097
Visa check fees 727 730 2,184 2,037
Other income 1,273 1,497 4,434 3,761
Total noninterest income 10,879 11,130 35,270 32,909
Noninterest expenses:
Salaries and employee benefits 11,949 14,654 39,574 41,864
Occupancy expense of premises 2,732 2,946 8,150 8,072
Equipment expenses 1,515 1,631 4,514 4,734
Marketing 526 359 1,511 1,563
Outside data services 1,116 870 3,319 2,873
Amortization of intangible assets 1,103 1,123 3,344 2,956
Goodwill impairment loss 2,250 0 2,250 0
Other expenses 4,076 4,316 12,194 12,410
Total noninterest expenses 25,267 25,899 74,856 74,472
Income before income taxes 7,154 11,693 26,798 33,494
Income tax expense 1,795 3,512 7,583 9,599
Net income $5,359 $8,181 $19,215 $23,895
Basic net income per share $0.33 $0.50 $1.18 $1.50
Diluted net income per share 0.33 0.50 1.17 1.50
Dividends declared per share 0.24 0.23 0.72 0.69

Certain reclassifications of information previously reported have been
made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends in Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per 2008
share data) Q3 Q2 Q1

Profitability for the quarter:
Tax-equivalent interest income $43,228 $42,903 $45,062
Interest expense 13,961 14,723 17,343
Tax-equivalent net interest income 29,267 28,180 27,719
Tax-equivalent adjustment 1,180 1,061 1,140
Provision for loan and lease losses 6,545 6,189 2,667
Noninterest income 10,879 11,695 12,696
Noninterest expenses 25,267 24,886 24,703
Income before income taxes 7,154 7,739 11,905
Income tax expense 1,795 2,088 3,700
Net Income 5,359 5,651 8,205
Financial ratios:
Return on average assets 0.67% 0.73% 1.07%
Return on average equity 6.64% 7.09% 10.45%
Net interest margin 4.02% 3.96% 3.99%
Efficiency ratio - GAAP based * 64.84% 64.11% 62.90%
Efficiency ratio - traditional * 58.27% 59.73% 59.18%
Per share data:
Basic net income $0.33 $0.35 $0.50
Diluted net income $0.33 $0.34 $0.50
Dividends declared $0.24 $0.24 $0.24
Book value $19.51 $19.56 $19.50
Tangible book value $14.08 $13.89 $13.77
Average fully diluted shares 16,418,588 16,427,213 16,407,778
Noninterest income breakdown:
Securities gains $9 $79 $574
Service charges on deposit accounts 3,249 3,202 3,030
Gains on sales of mortgage loans 397 653 722
Fees on sales of investment products 820 905 822
Trust and investment management fees 2,380 2,505 2,397
Insurance agency commissions 1,282 1,357 2,086
Income from bank owned life insurance 742 727 714
Visa check fees 727 761 696
Other income 1,273 1,506 1,655
Total 10,879 11,695 12,696
Noninterest expense breakdown:
Salaries and employee benefits $11,949 $13,862 $13,763
Occupancy expense of premises 2,732 2,619 2,799
Equipment expenses 1,515 1,560 1,439
Marketing 526 488 497
Outside data services 1,116 1,081 1,122
Amortization of intangible assets 1,103 1,117 1,124
Goodwill impairment loss 2,250 0 0
Other expenses 4,076 4,159 3,959
Total 25,267 24,886 24,703

(Dollars in thousands, 2007
except per share data) Q4 Q3 Q2 Q1
Profitability for the quarter:
Tax-equivalent interest
income $47,519 $48,405 $47,378 $43,179
Interest expense 18,709 19,746 19,815 17,879
Tax-equivalent net
interest income 28,810 28,659 27,563 25,300
Tax-equivalent adjustment 1,410 1,447 1,364 1,285
Provision for loan and
lease losses 1,725 750 780 839
Noninterest income 11,380 11,130 10,873 10,906
Noninterest expenses 25,316 25,899 24,959 23,614
Income before income taxes 11,739 11,693 11,333 10,468
Income tax expense 3,372 3,512 3,164 2,923
Net Income 8,367 8,181 8,169 7,545
Financial ratios:
Return on average assets 1.10% 1.08% 1.10% 1.12%
Return on average equity 10.69% 10.55% 11.45% 11.96%
Net interest margin 4.19% 4.16% 4.08% 4.07%
Efficiency ratio - GAAP
based * 65.28% 67.55% 67.33% 67.62%
Efficiency ratio -
traditional * 60.22% 62.30% 62.26% 63.01%
Per share data:
Basic net income $0.51 $0.50 $0.51 $0.49
Diluted net income $0.51 $0.50 $0.51 $0.49
Dividends declared $0.23 $0.23 $0.23 $0.23
Book value $19.31 $18.92 $18.62 $17.51
Tangible book value $13.60 $13.17 $12.76 $13.11
Average fully diluted
shares 16,422,161 16,508,922 16,069,771 15,400,865
Noninterest income breakdown:
Securities gains $15 $22 $4 $2
Service charges on deposit
accounts 3,211 2,999 2,630 2,308
Gains on sales of mortgage
loans 590 738 773 638
Fees on sales of
investment products 518 765 906 800
Trust and investment
management fees 2,581 2,365 2,361 2,281
Insurance agency
commissions 1,203 1,294 1,438 2,690
Income from bank owned
life insurance 732 720 693 684
Visa check fees 747 730 717 590
Other income 1,783 1,497 1,351 913
Total 11,380 11,130 10,873 10,906
Noninterest expense breakdown:
Salaries and employee
benefits $13,343 $14,654 $13,776 $13,434
Occupancy expense of premises 2,288 2,946 2,709 2,417
Equipment expenses 1,829 1,631 1,501 1,602
Marketing 674 359 675 529
Outside data services 1,094 870 1,077 926
Amortization of intangible
assets 1,124 1,123 1,031 802
Goodwill impairment loss 0 0 0 0
Other expenses 4,964 4,316 4,190 3,904
Total 25,316 25,899 24,959 23,614

* The GAAP based efficiency ratio is noninterest expenses divided by net
interest income plus noninterest income from the Consolidated Statements of
Income. The traditional, non-GAAP efficiency ratio excludes intangible asset
amortization expenses from noninterest expenses; excludes security gains from
noninterest income; and adds the tax-equivalent adjustment to net interest
income. See the Reconciliation Table included with these Historical Trends in
Quarterly Financial Data.

Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends in Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per 2008
share data) Q3 Q2 Q1
Balance sheets at quarter end:
Residential mortgage loans $452,815 $461,000 $459,768
Residential construction loans 221,630 199,602 183,690
Commercial mortgage loans 804,728 752,905 732,692
Commercial construction loans 247,930 273,059 256,714
Commercial loans and leases 358,097 356,256 354,509
Consumer loans 397,218 386,126 376,650
Total loans and leases 2,482,418 2,428,948 2,364,023
Less: allowance for loan and lease
losses (38,266) (33,435) (27,887)
Net loans and leases 2,444,152 2,395,513 2,336,136
Goodwill 75,701 78,376 78,111
Other intangible assets, net 13,286 14,390 15,507
Total assets 3,195,117 3,164,123 3,160,896
Total deposits 2,248,812 2,294,791 2,340,568
Customer repurchase agreements 77,630 93,919 101,666
Total stockholders' equity 319,700 320,218 318,967
Quarterly average balance sheets:
Residential mortgage loans $463,778 $462,858 $463,597
Residential construction loans 210,363 193,822 174,626
Commercial mortgage loans 779,652 733,905 690,289
Commercial construction loans 253,806 261,360 266,098
Commercial loans and leases 356,327 359,287 351,862
Consumer loans 391,640 380,911 378,261
Total loans and leases 2,455,566 2,392,143 2,324,733
Securities 423,082 431,182 427,819
Total earning assets 2,898,968 2,862,012 2,795,453
Total assets 3,167,145 3,134,440 3,072,428
Total interest-bearing liabilities 2,363,299 2,344,266 2,311,629
Noninterest-bearing demand deposits 453,281 441,330 412,369
Total deposits 2,264,990 2,306,867 2,260,837
Customer repurchase agreements 81,158 92,968 94,841
Stockholders' equity 321,028 320,409 315,755
Capital and credit quality measures:
Average equity to average assets 10.14% 10.22% 10.28%
Allowance for loan and lease losses
to loan and leases 1.54% 1.38% 1.18%
Nonperforming assets to total assets 2.14% 2.05% 1.48%
Annualized net charge-offs (recoveries)
to average loans and leases 0.28% 0.11% (0.02)%
Miscellaneous data:
Net charge-offs (recoveries) $1,714 $642 ($129)
Nonperforming assets:
Non-accrual loans and leases 64,246 60,373 37,353
Loans and leases 90 days past due 2,074 2,538 8,244
Restructured loans and leases 395 655 655
Other real estate owned, net 1,698 1,352 661
Total nonperforming assets 68,413 64,918 46,913

(Dollars in thousands, except 2007
per share data) Q4 Q3 Q2 Q1
Balance sheets at quarter end:
Residential mortgage loans $456,305 $439,091 $427,252 $404,177
Residential construction loans 166,981 154,908 154,444 144,744
Commercial mortgage loans 662,837 645,790 660,004 621,692
Commercial construction loans 262,840 246,569 236,278 225,108
Commercial loans and leases 351,773 343,653 316,409 282,854
Consumer loans 376,295 371,588 370,621 357,607
Total loans and leases 2,277,031 2,201,599 2,165,008 2,036,182
Less: allowance for loan and
lease losses (25,092) (23,567) (23,661) (22,186)
Net loans and leases 2,251,939 2,178,032 2,121,347 2,013,996
Goodwill 76,585 76,625 77,457 53,913
Other intangible assets, net 16,630 17,754 18,878 15,244
Total assets 3,043,953 2,965,492 3,101,409 2,945,477
Total deposits 2,273,868 2,280,102 2,386,226 2,274,322
Customer repurchase agreements 98,015 122,130 113,622 114,712
Total stockholders' equity 315,640 310,624 306,255 275,319
Quarterly average balance
sheets:
Residential mortgage loans $453,568 $441,190 $426,496 $406,886
Residential construction loans 163,922 151,306 151,785 151,194
Commercial mortgage loans 649,101 647,659 630,335 565,277
Commercial construction loans 252,705 244,975 239,299 203,371
Commercial loans and leases 339,744 323,439 300,325 246,218
Consumer loans 374,572 370,585 362,221 353,668
Total loans and leases 2,233,612 2,179,154 2,110,461 1,926,614
Securities 451,168 458,984 523,507 551,566
Total earning assets 2,725,801 2,733,572 2,711,225 2,518,797
Total assets 3,006,086 3,019,065 2,979,820 2,743,890
Total interest-bearing
liabilities 2,222,387 2,214,606 2,212,376 2,048,323
Noninterest-bearing demand
deposits 439,967 463,018 450,887 408,954
Total deposits 2,283,122 2,340,004 2,290,413 2,099,409
Customer repurchase agreements 112,828 113,425 109,187 101,805
Stockholders' equity 310,605 307,564 286,040 255,781
Capital and credit quality
measures:
Average equity to average
assets 10.33% 10.19% 9.60% 9.32%
Allowance for loan and lease
losses to loan and leases 1.10% 1.07% 1.09% 1.09%
Nonperforming assets to total
assets 1.15% 0.87% 0.71% 0.24%
Annualized net charge-offs
(recoveries) to
average loans and leases 0.04% 0.16% 0.05% 0.00%
Miscellaneous data:
Net charge-offs (recoveries) $200 $844 $265 ($17)
Nonperforming assets:
Non-accrual loans and leases 23,040 17,362 18,818 1,982
Loans and leases 90 days
past due 11,362 8,009 3,347 5,084
Restructured loans and leases 0 0 0 0
Other real estate owned, net 461 431 0 0
Total nonperforming assets 34,863 25,802 22,165 7,066

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)
Three Months Ended September
2008
Annualized
Average Average
Balances Interest Yield/Rate
Assets
Residential mortgage loans $463,778 $7,150 6.17 %
Residential construction loans 210,363 3,132 5.92
Commercial mortgage loans 779,652 12,936 6.60
Commercial construction loans 253,806 3,260 5.11
Commercial loans and leases 356,327 5,822 6.51
Consumer loans 391,640 5,063 5.14
Total loans and leases 2,455,566 37,363 6.16
Securities* 423,082 5,760 5.38
Interest-bearing deposits with banks 1,311 6 1.91
Federal funds sold 19,009 99 2.07
TOTAL EARNING ASSETS 2,898,968 43,228 5.93 %

Less: allowance for loan and lease
losses (34,897)
Cash and due from banks 49,860
Premises and equipment, net 52,912
Other assets 200,302
Total assets $3,167,145

Liabilities and Stockholders' Equity
Interest-bearing demand deposits $242,488 $177 0.29 %
Regular savings deposits 155,039 118 0.30
Money market savings deposits 647,258 2,410 1.48
Time deposits 766,924 6,620 3.43
Total interest-bearing deposits 1,811,709 9,325 2.05
Borrowings 551,590 4,636 3.35
TOTAL INTEREST-BEARING LIABILITIES 2,363,299 13,961 2.35

Noninterest-bearing demand deposits 453,281
Other liabilities 29,537
Stockholder's equity 321,028
Total liabilities and
stockholders' equity $3,167,145

Net interest income and spread on a
fully tax equivalent basis 29,267 3.58 %
Less: tax equivalent adjustment 1,180
Net interest income 28,087

Interest income/earning assets 5.93 %
Interest expense/earning assets 1.91
Net interest margin 4.02 %

Three Months Ended September
2007
Annualized
Average Average
Balances Interest Yield/Rate
Assets
Residential mortgage loans $441,190 $6,773 6.14 %
Residential construction loans 151,306 2,754 7.22
Commercial mortgage loans 647,659 11,499 7.04
Commercial construction loans 244,975 5,593 9.06
Commercial loans and leases 323,439 6,828 8.38
Consumer loans 370,585 6,576 7.07
Total loans and leases 2,179,154 40,023 7.30
Securities* 458,984 7,126 6.11
Interest-bearing deposits with banks 44,986 590 5.20
Federal funds sold 50,448 666 5.24
TOTAL EARNING ASSETS 2,733,572 48,405 7.03 %

Less: allowance for loan and lease
losses (23,964)
Cash and due from banks 53,935
Premises and equipment, net 54,546
Other assets 200,976
Total assets $3,019,065

Liabilities and Stockholders' Equity
Interest-bearing demand deposits $239,683 $223 0.37 %
Regular savings deposits 170,548 128 0.30
Money market savings deposits 683,909 6,614 3.84
Time deposits 782,846 8,933 4.53
Total interest-bearing deposits 1,876,986 15,898 3.36
Borrowings 337,620 3,848 4.53
TOTAL INTEREST-BEARING LIABILITIES 2,214,606 19,746 3.54

Noninterest-bearing demand deposits 463,018
Other liabilities 33,877
Stockholder's equity 307,564
Total liabilities and
stockholders' equity $3,019,065

Net interest income and spread on a
fully tax
equivalent basis 28,659 3.49 %
Less: tax equivalent adjustment 1,447
Net interest income 27,212

Interest income/earning assets 7.03 %
Interest expense/earning assets 2.87
Net interest margin 4.16 %

*Interest income includes the effects of annualized taxable-equivalent
adjustments (reduced by the nondeductible portion of interest expense) using
the appropriate marginal federal income tax rate of 35.00% and, where
applicable, the marginal state income tax rate of 7.51% (or a combined
marginal federal and state rate of 39.88%) for 2008 and a marginal state
income tax rate of 6.37% (or a combined marginal federal and state rate of
39.14%) for 2007, to increase tax-exempt interest income to a taxable-
equivalent basis. The annualized taxable-equivalent adjustment amounts
utilized in the above table to compute yields aggregated to $4.5 million in
2008 and $5.5 million in 2007.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)

Nine Months Ended September 30,
2008
Annualized
Average Average
Balances Interest Yield/Rate
Assets
Residential mortgage loans $465,832 $21,571 6.17 %
Residential construction loans 193,001 8,728 6.04
Commercial mortgage loans 734,780 37,205 6.76
Commercial construction loans 260,397 11,141 5.72
Commercial loans and leases 355,827 18,369 6.89
Consumer loans 383,633 15,732 5.48
Total loans and leases 2,393,470 112,746 6.29
Securities* 427,345 17,842 5.59
Interest-bearing deposits with banks 4,119 79 2.56
Federal funds sold 27,381 529 2.58
TOTAL EARNING ASSETS 2,852,315 131,196 6.14 %

Less: allowance for loan and lease
losses (29,750)
Cash and due from banks 49,651
Premises and equipment, net 53,582
Other assets 198,930
Total assets $3,124,728

Liabilities and Stockholders' Equity
Interest-bearing demand deposits $244,943 $528 0.29 %
Regular savings deposits 156,093 365 0.31
Money market savings deposits 680,189 9,760 1.92
Time deposits 760,569 22,277 3.91
Total interest-bearing deposits 1,841,794 32,930 2.39
Borrowings 498,023 13,100 3.51
TOTAL INTEREST-BEARING LIABILITIES 2,339,817 46,030 2.63

Noninterest-bearing demand deposits 435,725
Other liabilities 30,115
Stockholder's equity 319,071
Total liabilities and
stockholders' equity $3,124,728

Net interest income and spread on a
fully tax
equivalent basis 85,166 3.51 %
Less: tax equivalent adjustment 3,381
Net interest income 81,785

Interest income/earning assets 6.14 %
Interest expense/earning assets 2.15
Net interest margin 3.99 %

Nine Months Ended September 30,
2007
Annualized
Average Average
Balances Interest Yield/Rate
Assets
Residential mortgage loans $424,147 $19,264 6.06 %
Residential construction loans 151,429 8,230 7.27
Commercial mortgage loans 615,648 33,350 7.24
Commercial construction loans 229,368 15,602 9.09
Commercial loans and leases 290,190 18,018 8.30
Consumer loans 362,220 18,993 7.04
Total loans and leases 2,073,002 113,457 7.31
Securities* 511,013 22,704 5.95
Interest-bearing deposits with banks 27,681 1,081 5.22
Federal funds sold 43,936 1,720 5.24
TOTAL EARNING ASSETS 2,655,632 138,962 7.00 %

Less: allowance for loan and lease
losses (22,439)
Cash and due from banks 54,448
Premises and equipment, net 51,786
Other assets 175,021
Total assets $2,914,448

Liabilities and Stockholders' Equity
Interest-bearing demand deposits $237,173 $626 0.35 %
Regular savings deposits 168,957 421 0.33
Money market savings deposits 611,881 17,349 3.79
Time deposits 784,995 26,867 4.58
Total interest-bearing deposits 1,803,006 45,263 3.36
Borrowings 356,039 12,177 4.57
TOTAL INTEREST-BEARING LIABILITIES 2,159,045 57,440 3.56

Noninterest-bearing demand deposits 441,151
Other liabilities 30,916
Stockholder's equity 283,336
Total liabilities and
stockholders' equity $2,914,448

Net interest income and spread on a
fully tax
equivalent basis 81,522 3.44 %
Less: tax equivalent adjustment 4,096
Net interest income 77,426

Interest income/earning assets 7.00 %
Interest expense/earning assets 2.90
Net interest margin 4.10 %

*Interest income includes the effects of annualized taxable-equivalent
adjustments (reduced by the nondeductible portion of interest expense) using
the appropriate marginal federal income tax rate of 35.00% and, where
applicable, the marginal state income tax rate of 7.51% (or a combined
marginal federal and state rate of 39.88%) for 2008 and a marginal state
income tax rate of 6.37% (or a combined marginal federal and state rate of
39.14%) for 2007, to increase tax-exempt interest income to a taxable-
equivalent basis. The annualized taxable-equivalent adjustment amounts
utilized in the above table to compute yields aggregated to $4.7 million in
2008 and $5.7 million in 2007.
SOURCE Sandy Spring Bancorp, Inc.

Hunter R. Hollar, Chief Executive Officer, HHollar@sandyspringbank.com, or
Daniel J. Schrider, President, DSchrider@sandyspringbank.com, or Philip J.
Mantua, E.V.P. & Chief Financial Officer, PMantua@sandyspringbank.com of Sandy
Spring Bancorp, +1-800-399-5919