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Sandy Spring Bancorp, Inc. Q1 2010 Earnings Call Transcript

Sandy Spring Bancorp, Inc. Q1 2010 Earnings Call Transcript

Sandy Spring Bancorp, Inc.




Q1 2010 Earnings Call Transcript

April 22, 2010 2:00 pm ET


Daniel Schrider – President and CEO

Ron Kuykendall – EVP, General Counsel & Secretary


Steve Moss – Janney Montgomery

Avi Barak – Sandler O'Neill

Bryce Rowe – Robert W. Baird

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Mike Shafir – Sterne, Agee



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Good day, ladies and gentlemen and thank you for your patience. You've joined the Sandy Spring Bancorp Incorporated first quarter 2010 conference. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, this conference may be recorded.

I would now like to turn the conference over to the President and CEO of Sandy Spring Bancorp Incorporated Mr. Daniel J. Schrider. Sir, you may begin.

Daniel Schrider

(Audio Gap) Officer and Ron Kuykendall, General Counsel for Sandy Spring Bancorp. As always, this call today is open to all investors, analysts and the news media. There will be a live webcast of today's call and there will be a replay of the call available at our website beginning later today.

We will take your questions after a brief review of some key highlights before we make our remarks and then take your questions, Ron will give the Safe Harbor statement.

Ron Kuykendall

Thank you, Daniel and good afternoon ladies and gentlemen. Sandy Spring Bancorp will make forward-looking statements in this webcast that are subject to risk and uncertainties. These forward-looking statements include statements of goals and intentions, earnings and other expectations, estimates of risk and future cost and benefits, assessments of probably 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 uncertainty as they are based upon or 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 necessary indicate its future results.

Daniel Schrider

Thank you, Ron. In today's press release we announced the net loss available to common stockholders for the first quarter of 2010 at $700,000 or $0.04 per diluted share compared to net income available to common stockholders of $1 million or $0.06 per diluted share for the first quarter of 2009 and the net loss available to common stockholders of $4.4 million or $0.27 per diluted share for the fourth quarter of 2009.

Certainly the main highlight of the quarter was our recent comment stock offering of 7.5 million shares, which was very well received and resulted in net proceeds of $95.6 million. As I stated in today's press release, repayment of TARP remains as one of our highest port for priorities and the successful offering was a key step towards achieving this goal.

Stockholders equity totaled $471.9 million at March 31st and represented 12.9% of total assets compared to 11.2% at March 31, a year ago. So, at quarter end the Company had total risk-based capital ratio of 17.04%, the tier 1 risk-based capital ratio of 15.77% and the tier 1 leverage ratio of 12.01%, which are all above amounts needed in order to be categorized as well capitalized for regulatory purposes.

Obviously our regulatory capital ratio is due include proceeds from the offering. Last quarter, I talked about our net interest margin, which continues to be a main focus and I'm pleased to report that the margin was 3.56% for the first quarter compared to 339 for the first quarter of 2009 and 3.4% for the linked fourth quarter of '09.

We think this is especially positive concerning the total loans and lease is decreased 8% to $2.3 billion compared to the prior year and 2% lower than they were at year-end. This decrease in loans was attributable to declines in all major categories of the loan portfolio primarily due to the lack of loan demand, which is being driven by ongoing soft, regional and economic conditions.

Additionally, our proactive credit risk management is also resulted in run-off of undesirable loans in excess of newly originated lending relationships. On the deposit side, customer funding sources, which include deposits and other short-term borrowings from core customers, were head 3% to $2.3 billion at quarter end compared to the prior year with the increase primarily attributable to consisting growth and balances and our premier money market account and noninterest-bearing deposits.

I should also point out that the total deposits were down slightly by 1% compared to the fourth quarter of 2009 due to seasonal fluctuations, some intentional run-offs of both high cost time deposit and higher price public funds. So, as I've explained before managing our cost of funds is key to sustain end growth of margin in this tough cycle, and keeping a tight rate on the noninterest expenses remains critical in order to maximize our pre-tax, pre-provision earnings.

To give you some perspective on the performance of their core company, pre-tax, pre-provision earnings for the first quarter of 2010 was the second highest ever $14 million compared to $12 million, $0.75 million at the first quarter of 2009 and $13.9 million in the late fourth quarter of '09.

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