News
July 18, 2005
OLNEY, Md., July 19 /PRNewswire-FirstCall/ -- Sandy Spring Bancorp, Inc. , (Nasdaq: SASR) the parent
company of Sandy Spring Bank, today announced net income for the second quarter of 2005 of $7.8
million ($.53 per diluted share) compared to $6.4 million ($.43 per diluted share) for the second quarter of
2004, a 22% increase. Net income for the six-month period ending June 30, 2005 totaled $15.7 million
($1.06 per diluted share) compared to $13.7 million ($.93 per diluted share) for the prior year period, a
14% increase.
Sandy Spring Bancorp also announced it has reached an agreement to acquire West Financial Services,
Inc., an asset management and financial planning company located in McLean, Virginia. The company was
founded in 1982, and currently has over $550 million in assets under management.
"It is rewarding to see our company producing improved net income and returns on equity and assets,"
said Hunter R. Hollar, President & Chief Executive Officer of Sandy Spring Bancorp . "We intend to
continue to emphasize our commitment to managing each client interaction to produce a consistently
satisfying set of rewarding experiences. That should further drive our trends back into the highperformance
league as we move through the balance of the year."
"One of our goals has been to diversify our sources of noninterest income," said Hollar. "West Financial
Services' expertise and outstanding reputation will enhance our investment capabilities. This opportunity
allows us to broaden our market as well as expand the depth of investment resources and types of
solutions we can offer our clients." The transaction is expected to be completed by October 31, 2005,
pending regulatory approval. The company declined to disclose the terms of the acquisition.
"Approximately 20% of our client base is located in Maryland and this opportunity to couple our mission of
excellence with Sandy Spring Bank's exceptional reputation and service will allow us to aggressively
compete in this market segment," said Ronald L. West, President and Founder.
The company will continue to operate under the name West Financial Services, Inc. and Ronald L. West,
President and Founder, will continue to lead the company as Chief Executive Officer. West has been
selected as one of the "Best Financial Advisors in Washington D.C." by Washingtonian Magazine. The
majority of West Financial Services' 18-person employee base are CERTIFIED FINANCIAL PLANNER(TM)
Professionals; Chartered Financial Analyst(R) Charterholders (CFA(R)); Certified Employee Benefit
Specialists (CEBS); and Certified Public Accountants (CPA).
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP(R), CERTIFIED
FINANCIAL PLANNER(TM) and CFP (with flame logo)(R) in the U.S., which it awards to individuals who
successfully complete CFP Board's initial and ongoing certification requirements.
Sandy Spring Bancorp's return on average stockholders' equity was 15.63% for the second quarter of
2005, compared to 13.07% for the same period in the prior year. Return on average assets for the second
quarter of 2005 was 1.36%, compared to 1.08% for the second quarter of 2004.
For the first six months of 2005, return on average stockholders' equity was 15.91% compared to 14.03%
for the first six months of 2004. Return on average assets for the first six months of 2005 was 1.37%
compared to 1.17% for the first six months of 2004.
Comparing June 30, 2005 balances to June 30, 2004, total assets declined 3% to $2.3 billion due mainly
to the balance sheet restructuring completed at the end of 2004. Total deposits increased 6% to $1.8
billion, while total loans and leases increased 20% to $1.5 billion compared to the prior year. During the
same period, stockholders' equity increased 4% to $203 million or 8.7% of total assets.
Due to continued growth in the loan portfolio, the provision for loan and lease losses totaled $.9 million for
the second quarter of 2005 compared to no provision in the second quarter of 2004. The provision for loan
and lease losses totaled $1.0 million for the first six months of 2005 compared to no provision in the same
period in 2004. The allowance for loan and lease losses represented 1.03% of outstanding loans at June
30, 2005.
The Company's management will host a conference call to discuss its second 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 http://www.sandyspringbank.com.
DETAILED REVIEW OF FINANCIAL RESULTS
Comparing the second quarter of 2005 and 2004, net interest income increased by $3.8 million, or 21%,
due primarily to an improved net interest margin. The net interest margin increased to 4.39% in 2005
from 3.56% in 2004 due primarily to increased loan volume and active management of deposit rates
together with the early payoff of FHLB advances in the fourth quarter of 2004.
Noninterest income increased $.8 million or 9% in the second quarter of 2005 as compared to 2004. On a
non-GAAP basis, noninterest income, excluding the effect of securities gains of $.8 million in 2005 and $.1
million in 2004, increased $.1 million or 1%. This increase was due primarily to an increase of 19% in
Insurance agency commissions over 2004 due in part to the acquisition of the Wolfe & Reichelt Insurance
Agency in December 2004. In addition, Visa(R) check fees increased 11% reflecting a growing volume of
electronic checking transactions. These increases were somewhat offset by a 14% decline in gains on sales
of mortgage loans due to lower refinancing volumes.
Noninterest expenses were $19.2 million in the second quarter of 2005 compared to $18.1 million in 2004,
an increase of $1.1 million or 6%. This increase primarily resulted from increases in salaries and benefits
due largely to higher incentive compensation and benefits expense and increased occupancy expenses,
due mainly to the opening of the Bank's Columbia Center office facility in the second quarter of 2004 and
new branches opened in 2005. These increases were partially offset by a 16% decrease in marketing costs
due mainly to advertising initiatives conducted in 2004 that were not continued in 2005. Other noninterest
expenses also declined 6% due largely to declines in legal and consulting fees.
Comparing the first six months of 2005 and 2004, net interest income increased by $6.4 million or 18%,
due primarily to increased loan volume and the early payoff of FHLB advances mentioned above which
resulted in an increase in the net interest margin to 4.39% for the first six months of 2005 compared to
3.68% for the same period in 2004.
Noninterest income was $16.9 million for the six months ended June 30, 2005 versus $15.9 million for the
same period in 2004, an increase of $1.0 million or 6%. On a non-GAAP basis, noninterest income,
excluding the effect of securities gains of $.8 million in 2005 and $.3 million in 2004, increased $.5 million
or 3%. This increase was due primarily to increases of 41% in insurance agency commissions and 13% in
Visa(R) check fees. These increases were largely offset by a decrease of 10% in gains on sales of
mortgage loans and a decline of 16% in fees on the sale of investment products.
Noninterest expenses were $37.6 million for the first six months of 2005 compared to $34.8 million for the
same period in 2004, an 8% increase. This increase was due mainly to the same expense growth factors
mentioned above.
About Sandy Spring Bancorp/Sandy Spring Bank
With $2.3 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its
principal subsidiaries, Sandy Spring Insurance Corporation and The Equipment Leasing Company. Sandy
Spring Bancorp is the third 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
31 community offices and 46 ATMs located in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and
Prince George's counties in Maryland. Visit http://www.sandyspringbank.com for more information.
Forward-Looking Statements
Sandy Spring Bancorp makes forward-looking statements in this News
Release that are subject to risks and uncertainties. These forward-looking statements 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. These forward-looking statements are subject to
significant uncertainties because they are based upon or are affected by: management's estimates and
projections of future interest rates, market behavior, and other economic conditions; future laws and
regulations; and a variety of other matters which, by their nature, are subject to significant uncertainties.
Because of these uncertainties, Sandy Spring Bancorp's actual future results may differ materially from
those indicated. In addition, the Company's past results of operations do not necessarily indicate its future
results.
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