Sandy Spring Bancorp, Inc.

Second-quarter 2024 net income was $22.8 million, or $0.51 diluted EPS, versus $20.4 million, or $0.45, in Q1 and $24.7 million, or $0.55, in the prior-year quarter. Core earnings were $24.4 million, or $0.54 per diluted share, versus $21.9 million, or $0.49 in Q1 and $27.1 million, or $0.60 a year ago. Net interest margin improved to 2.46% from 2.41% sequentially. Noninterest income increased 7% sequentially and 14% year over year; noninterest expense was flat at $68.1 million. The provision for credit losses fell to $1 million from $2.4 million in Q1, and net charge-offs were $200,000 versus $1.1 million. Total loans rose $119.6 million, or 1%, to $11.5 billion; total deposits increased $113 million, or 1%, to $11.3 billion. Guidance: funded loan production is expected at $200 million to $250 million per quarter, commercial loan growth at 1% to 2% per quarter, mortgage banking revenue in Q3 at $1 million to $1.5 million, and expenses in the $68 million to $70 million per quarter range. Management said margin should expand by 2 to 4 basis points per quarter absent Fed action, with more upside if rate cuts begin later in the year.

Dan Schrider said the quarter reflected progress on the bank’s core priorities: growing core deposits, growing C&I loans, improving margin, and managing expenses. He emphasized that the bank is focusing on profitability, stronger funding, credit portfolio management, and reducing commercial real estate exposure. His tone was constructive and confident, pointing to the Greater Washington, D.C. market, pipeline growth, and the new SBA lending program as examples of future opportunity.

Charlie Cullum highlighted a stronger funding mix, with total deposits up to $11.3 billion and core deposits up 3% excluding brokered balances. He said deposit costs are near a peak, June deposit cost was 3.56, and he expects only a 1 to 2 basis point further increase before rate cuts, with wholesale funding costs likely offsetting some pressure. He also cited the 2.46% net interest margin, flat $68.1 million expenses, and capital ratios of 15.49% total risk-based, 11.28% CET1, and 9.7% leverage. He explained that a risk-weighted asset review reduced RWA by about $360 million, mainly by reclassifying a little over $700 million of home equity lines to 0% risk weight.

Analysts focused on margin timing, repricing, credit reserves, and the outlook for fee income. Management said the loan portfolio has about $500 million of fixed-rate repricing in each of Q3 and Q4 at rates in the mid- to upper-6% range, then $200 million to $300 million per quarter in 2025, with only gradual yield improvement. On credit, Dan Schrider said the move to special mention and substandard was driven by current covenant and cash flow assessments rather than the rate outlook, and that no updated appraisals were required broadly; he added that higher-for-longer rates could stress some floating-rate construction projects. On fees, Charlie Cullum said double-digit noninterest income growth is possible, but BOLI income was one-time and SBA gains may not land until Q4 or Q1.