Filed by Sandy Spring Bancorp, Inc.

Pursuant to Rule 425 under the Securities Act of 1933

Subject Company:  CommerceFirst Bancorp, Inc.

(Commission File No. 0-51104)

 

 

News release

 

FOR IMMEDIATE RELEASE

 

SANDY SPRING BANCORP REPORTS FOURTH QUARTER PROFIT OF

$7.3 MILLION; NET INCOME FOR 2011 WAS $34.1 MILLION, UP 45% OVER 2010

 

OLNEY, MARYLAND, January 26, 2012 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the fourth quarter of 2011 of $7.3 million ($.30 per diluted share) compared to net income of $8.3 million ($0.34 per diluted share) for the fourth quarter of 2010 and net income of $11.3 million ($0.47 per diluted share) for the previous quarter of 2011. The provision for loan and lease losses for the fourth quarter of 2011 was a charge of $2.3 million compared to a charge of $2.3 million for the fourth quarter of 2010 and a credit of $3.5 million for the third quarter of 2011.

 

Net income for the year ended December 31, 2011 totaled $34.1 million ($1.41 per diluted share), up 45% compared to net income of $23.5 million ($1.05 per diluted share) for the prior year. The provision for loan and lease losses for the year ended December 31, 2011 was a charge of $1.4 million for 2011 compared to a charge of $25.9 million for 2010.

 

“We are very pleased to report another quarter of increased loan growth even in the face of volatile financial markets and continued uneven economic conditions on both a regional and national level. This organic loan growth is an especially encouraging prospect in view of the anticipated infusion of additional quality loans in the coming year from our recently announced acquisition of CommerceFirst Bank,” said Daniel J. Schrider, President and Chief Executive Officer. “We have proactively managed our funding costs to improve the mix of lower cost transaction accounts as compared to other higher cost funding sources.

 

“The higher levels of core deposits and wealth management revenues are strong indicators of our success in building long term customer relationships that are centered on a consistent unique and positive experience for each of our clients,” reiterated Schrider. “This is evidence of the resiliency of our business model, especially during such a competitive and prolonged tough economic climate.”

 

Fourth Quarter Highlights:

 

  · Total loans reflected a second straight quarterly increase due primarily to growth in commercial business, ADC loans and residential construction loans. New commercial loan originations totaled $269 million for the year compared to $112 million for the prior year.

 

 
 

 

  · Non-performing loans declined to $79.1 million at December 31, 2011 compared to $88.1 million at December 31, 2010 and $82.8 million at September 30, 2011. The coverage ratio of the allowance for loan and lease losses to non-performing loans decreased to 62% at December 31, 2011 compared to a ratio of 71% at December 31, 2010 and 60% at September 30, 2011.
     
  · The net interest margin declined to 3.51% for the fourth quarter of 2011, compared to 3.61% for the fourth quarter of 2010 and 3.53% for the third quarter of 2011.
     
  · Revenue from wealth management services, which includes fees from trust and investment management and sales of investment products, increased 7% for the fourth quarter of 2011 compared to the fourth quarter of 2010 due to growth in average assets under management resulting primarily from adding new clients and market conditions that permitted more favorable returns.

 

Review of Balance Sheet and Credit Quality

 

Comparing December 31, 2011 balances to December 31, 2010, total assets increased 5% to $3.7 billion. Total loans and leases increased 4% to $2.2 billion compared to the prior year end. The increase in loans for the year was due primarily to growth in the commercial loan portfolio, most of which occurred during the last quarter of the year. During the current quarter, total loans increased 4% compared to balances at September 30, 2011.

 

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 3% compared to December 31, 2010. This increase was due largely to a 15% increase in noninterest-bearing and interest-bearing checking accounts which more than offset a 7% reduction in certificates of deposit, which declined as a result of continuing rate reductions reflecting the Company’s net interest margin strategy. Growth in checking accounts was the main driver in the increase in core deposits due to clients’ emphasis on safety and liquidity.

 

Tangible common equity totaled $351.3 million at December 31, 2011 compared to $326.8 million at December 31, 2010 resulting in an increase in the ratio of tangible common equity to tangible assets from 9.51% at December 31, 2010 to 9.68% at December 31, 2011. This increase was due primarily to net income earned during the period. At December 31, 2011, the Company had a total risk-based capital ratio of 15.83%, a tier 1 risk-based capital ratio of 14.57% and a tier 1 leverage ratio of 10.84%.

 

Non-performing assets totaled $83.6 million at December 31, 2011 compared to $97.7 million at December 31, 2010 and $90.8 million at September 30, 2011. Overall credit quality continued to improve as a result of resolution of existing problem credits and limited migration of new credits to non-performing status.

 

The provision for loan and lease losses was a charge of $2.3 million for both the fourth quarter of 2011 and the fourth quarter of 2010 and a credit of $3.5 million for the third quarter of 2011. The increase in the provision for the fourth quarter of 2011 compared to the prior quarter was due to a combination of factors including an increase in outstanding loan balances during the fourth quarter and specific reserves on several commercial loan credits.

 

 
 

 

Loan charge-offs, net of recoveries, totaled $2.6 million for the fourth quarter of 2011 compared to net charge-offs of $7.5 million for the fourth quarter of 2010 and net charge-offs of $2.0 million for the third quarter of 2011. The allowance for loan and lease losses represented 2.21% of outstanding loans and leases and 62% of non-performing loans at December 31, 2011 compared to 2.88% of outstanding loans and leases and 71% of non-performing loans at December 31, 2010 and 2.32% of outstanding loans and leases and 60% of non-performing loans at September 30, 2011. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

 

Income Statement Review

 

Net interest income for the fourth quarter of 2011 decreased by $0.5 million or 2% compared to the fourth quarter of 2010 due primarily to a decrease in interest income resulting from lower average overall earning asset yields. This decline in interest income was somewhat offset by a decrease in interest expense as average rates paid on deposit products decreased, although at a slower pace, together with a planned run-off in average deposits. These factors resulted in a decline in the net interest margin to 3.51% for the fourth quarter of 2011 compared to 3.61% for the fourth quarter of 2010.

 

Non-interest income decreased $0.3 million or 3% to $11.4 million for the fourth quarter of 2011 compared to $11.7 million for the fourth quarter of 2010. This decrease was due primarily to a decline of $0.3 million or 24% in other non-interest income due to lower commercial loan fees. In addition, income from mortgage banking activities decreased $0.1 million or 10% due to lower origination and sale volume compared to the fourth quarter of 2010. These decreases were largely offset by an increase in trust and investment management fees of $0.3 million or 11% due primarily to higher average assets under management and an increase in insurance agency commissions of $0.1 million or 10% due to higher income from commercial lines.

 

Non-interest expenses were $27.3 million for the fourth quarter of 2011 compared to $26.2 million in the fourth quarter of 2010, an increase of $1.1 million or 4%. This increase was driven by an increase of $1.4 million or 10% in salaries and benefits expense due to higher salary and incentive compensation expenses. This increase was partially offset by a decrease of $0.4 million or 37% in FDIC insurance premiums.

 

Net interest income for the year ended December 31, 2011 decreased by $2.7 million or 2% compared to 2010 as a result of a decline in interest income due mainly to lower average loan balances and record low market interest rates. The impact of an $8.9 million decline in interest income was substantially mitigated by a $6.2 million decline in interest expense as average rates paid on deposit products decreased, although at a slower pace. This resulted in a net interest margin of 3.57% for 2011 compared to 3.60% for 2010.

 

Non-interest income totaled $43.5 million for the year ended December 31, 2011 as compared to $43.8 million for the prior year. Deposit service charges declined $0.8 million or 8% as a result of the impact of recently enacted legislation on overdraft fees while income from mortgage banking activities decreased $0.4 million or 12% due to lower gains on sales resulting from declines in both rates and volumes. Trust and investment management fees increased $1.7 million or 16% primarily due to growth in average assets under management. Fees on sales of investment products increased $0.3 million or 8% due primarily to an increase in managed assets. These increases in asset management fee income substantially offset the erosion experienced in deposit service fee income. Visa check fees increased $0.3 million or 9% due to a continued increase in the volume of electronic transactions.

 

 
 

 

Non-interest expenses were $105.1 million for the year ended December 31, 2011 compared to $100.9 million for 2010, an increase of $4.2 million or 4%. Salaries and benefits expense increased $4.2 million or 7% due primarily to higher salary and incentive compensation expenses. Other non-interest expenses increased $1.3 million or 8% due largely to losses on sales of other real estate owned and loan work out expenses. These increases were partially offset by a decrease of $1.3 million or 29% in FDIC insurance premiums.

 

Additional Information For Shareholders

 

In connection with the proposed merger transaction, Sandy Spring Bancorp will file with the Securities and Exchange Commission a Registration Statement on Form S-4 that will include a Proxy Statement of CommerceFirst Bancorp and a Prospectus of Sandy Spring Bancorp, as well as other relevant documents concerning the proposed transaction. Shareholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information.

 

A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Sandy Spring Bancorp and CommerceFirst Bancorp, may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Sandy Spring Bancorp at www.sandyspringbank.com under the tab “Investor Relations,” within the section “News & Media” and then under the heading “Documents” or from CommerceFirst Bancorp by accessing CommerceFirst Bancorp’s website at www.commerce1st.com under the tab “About Us,” within the section “Investor Relations” and then under the heading “CommerceFirst Bancorp Security and Exchange Commission (SEC) Filings.”

 

Sandy Spring Bancorp and CommerceFirst Bancorp and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of CommerceFirst Bancorp in connection with the proposed merger. Information about the directors and executive officers of Sandy Spring Bancorp is set forth in the proxy statement for Sandy Spring Bancorp’s 2011 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 28, 2011. Information about the directors and executive officers of CommerceFirst Bancorp is set forth in the proxy statement for CommerceFirst Bancorp’s 2011 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 16, 2011. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

 

 
 

 

Conference Call

 

The Company’s management will host a conference call to discuss its fourth quarter and full year 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 1-877-317-6789. 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 9:00 am (ET) February 27, 2012. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10008474.

 

About Sandy Spring Bancorp/Sandy Spring Bank

 

With $3.7 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating 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 43 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.

 

For additional information or questions, please contact:

Daniel J. Schrider, President & Chief Executive Officer, or

Philip J. Mantua, E.V.P. & Chief Financial Officer

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

Email: DSchrider@sandyspringbank.com
  PMantua@sandyspringbank.com

Web site: www.sandyspringbank.com

 

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, 2010, 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 

 

   Three Months Ended     Twelve Months Ended   
   December 31,  %  December 31,  %
(Dollars in thousands, except per share data)  2011  2010  Change  2011  2010  Change
Results of Operations:                  
Net interest income  $28,452   $28,953    (2)%  $112,946   $115,607    (2)%
Provision for loan and lease losses   2,282    2,323    (2)   1,428    25,908    (94)
Non-interest income   11,370    11,722    (3)   43,500    43,782    (1)
Non-interest expenses   27,323    26,201    4    105,071    100,912    4 
Income before income taxes   10,217    12,151    (16)   49,947    32,569    53 
Net income   7,258    8,276    (12)   34,102    23,520    45 
Net income available to common stockholders  $7,258   $6,604    10   $34,102   $17,371    96 
                               
Return on average assets (1)   0.79%   0.73%        0.95%   0.48%     
Return on average common equity (1)   6.54%   6.34%        8.07%   4.56%     
Net interest margin   3.51%   3.61%        3.57%   3.60%     
Efficiency ratio - GAAP (3)   68.61%   64.42%        67.16%   63.31%     
Efficiency ratio - Non-GAAP (3)   65.10%   61.85%        63.75%   60.36%     
                               
Per share data:                              
Basic net income  $0.30   $0.34    (12)%  $1.42   $1.05    35%
Basic net income per common share   0.30    0.27    11    1.42    0.78    82 
Diluted net income   0.30    0.34    (12)   1.41    1.05    34 
Diluted net income per common share   0.30    0.27    11    1.41    0.78    81 
Average fully diluted shares   24,141,084    24,087,482    —      24,149,205    22,380,135    8 
Dividends declared per common share   0.10    0.01    —      0.34    0.04    —   
Book value per common share   18.52    16.95    9    18.52    16.95    9 
Tangible book value per common share   14.58    13.59    7    14.58    13.59    7 
Outstanding Common Shares   24,091,042    24,046,627    —      24,091,042    24,046,627    —   
                               
Financial Condition at period-end:                              
Investment securities  $1,164,699   $1,042,943    12%  $1,164,699   $1,042,943    12%
Loans and leases   2,239,692    2,156,232    4    2,239,692    2,156,232    4 
Interest-earning assets   3,452,214    3,240,313    7    3,452,214    3,240,313    7 
Assets   3,711,370    3,519,388    5    3,711,370    3,519,388    5 
Deposits   2,656,520    2,549,872    4    2,656,520    2,549,872    4 
Interest-bearing liabilities   2,590,164    2,520,061    3    2,590,164    2,520,061    3 
Stockholders' equity   446,109    407,569    9    446,109    407,569    9 
                               
Capital ratios:                              
Tier 1 leverage   10.84%   10.30%        10.84%   10.30%     
Tier 1 capital to risk-weighted assets   14.57%   14.11%        14.57%   14.11%     
Total regulatory capital to risk-weighted assets   15.83%   15.37%        15.83%   15.37%     
Tangible common equity to tangible assets (4)   9.68%   9.51%        9.68%   9.51%     
Average equity to average assets   12.07%   12.41%        11.80%   12.21%     
                               
Credit quality ratios:                              
Allowance for loan and lease losses to loans and leases   2.21%   2.88%        2.21%   2.88%     
Non-performing loans to total loans   3.53%   4.08%        3.53%   4.08%     
Non-performing assets to total assets   2.25%   2.78%        2.25%   2.78%     
Allowance for loan and lease losses to non-performing loans   62.46%   70.57%        62.46%   70.57%     
Annualized net charge-offs to average loans and leases (2)   0.47%   1.37%        0.66%   1.27%     

   

(1)  Calculation utilizes net income available to common stockholders.
(2)  Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.
(3)  The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and adds the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.
(4) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets, other comprehensive losses and preferred stock.  See the Reconciliation Table included with these Financial Highlights.

 

 
 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

  

   Three Months Ended  Twelve Months Ended
   December 31,  December 31,
(Dollars in thousands)  2011  2010  2011  2010
GAAP efficiency ratio:                    
Non-interest expenses  $27,323   $26,201   $105,071   $100,912 
Net interest income plus non-interest income  $39,822   $40,675   $156,446   $159,389 
                     
Efficiency ratio–GAAP   68.61%   64.42%   67.16%   63.31%
                     
Non-GAAP efficiency ratio:                    
Non-interest expenses  $27,323   $26,201   $105,071   $100,912 
Less non-GAAP adjustment:                    
Amortization of intangible assets   461    472    1,845    1,959 
Non-interest expenses as adjusted  $26,862   $25,729   $103,226   $98,953 
                     
Net interest income plus non-interest income  $39,822   $40,675   $156,446   $159,389 
Plus non-GAAP adjustment:                    
Tax-equivalent income   1,448    1,352    5,602    4,836 
Less non-GAAP adjustments:                    
Securities gains   9    473    292    796 
OTTI recognized in earnings   —      (43)   (160)   (512)
Net interest income plus non-interest income - as adjusted  $41,261   $41,597   $161,916   $163,941 
                     
Efficiency ratio–Non-GAAP   65.10%   61.85%   63.75%   60.36%
                     
Tangible common equity ratio:                    
Total stockholders' equity  $446,109   $407,569   $446,109   $407,569 
Accumulated other comprehensive income   (13,248)   2,620    (13,248)   2,620 
Goodwill   (76,816)   (76,816)   (76,816)   (76,816)
Other intangible assets, net   (4,734)   (6,578)   (4,734)   (6,578)
Tangible common equity  $351,311   $326,795   $351,311   $326,795 
                     
Total assets  $3,711,370   $3,519,388   $3,711,370   $3,519,388 
Goodwill   (76,816)   (76,816)   (76,816)   (76,816)
Other intangible assets, net   (4,734)   (6,578)   (4,734)   (6,578)
Tangible assets  $3,629,820   $3,435,994   $3,629,820   $3,435,994 
                     
Tangible common equity ratio   9.68%   9.51%   9.68%   9.51%
                     
Outstanding Common Shares   24,091,042    24,046,627    24,091,042    24,046,627 
Tangible book value per common share  $14.58   $13.59   $14.58   $13.59 

 

 
 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

 

   December 31,
(Dollars in thousands)  2011  2010
Assets          
Cash and due from banks  $49,832   $44,696 
Federal funds sold   1,006    1,813 
Interest-bearing deposits with banks   21,476    16,608 
Cash and cash equivalents   72,314    63,117 
Residential mortgage loans held for sale (at fair value)   25,341    22,717 
Investments available-for-sale (at fair value)   951,301    907,283 
Investments held-to-maturity — fair value of $184,167 and $104,124 at December 31, 2011 and December 31, 2010, respectively   178,465    101,590 
Other equity securities   34,933    34,070 
Total loans and leases   2,239,692    2,156,232 
Less: allowance for loan and lease losses   (49,426)   (62,135)
Net loans and leases   2,190,266    2,094,097 
Premises and equipment, net   48,483    49,004 
Other real estate owned   4,431    9,493 
Accrued interest receivable   12,898    12,570 
Goodwill   76,816    76,816 
Other intangible assets, net   4,734    6,578 
Other assets   111,388    142,053 
Total assets  $3,711,370   $3,519,388 
           
Liabilities          
Noninterest-bearing deposits  $650,377   $566,812 
Interest-bearing deposits   2,006,143    1,983,060 
Total deposits   2,656,520    2,549,872 
Securities sold under retail repurchase agreements and federal funds purchased   143,613    96,243 
Advances from FHLB   405,408    405,758 
Subordinated debentures   35,000    35,000 
Accrued interest payable and other liabilities   24,720    24,946 
Total liabilities   3,265,261    3,111,819 
           
Stockholders' Equity          
Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 24,091,042 and 24,046,627 at December 31, 2011 and 2010, respectively   24,091    24,047 
Warrants   —      3,699 
Additional paid in capital   177,828    177,344 
Retained earnings   230,942    205,099 
Accumulated other comprehensive income (loss)   13,248    (2,620)
Total stockholders' equity   446,109    407,569 
Total liabilities and stockholders' equity  $3,711,370   $3,519,388 

 

 
 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

 

   Three Months Ended  Twelve Months Ended
   December 31,  December 31,
(Dollars in thousands, except per share data)  2011  2010  2011  2010
Interest Income:                    
Interest and fees on loans and leases  $26,758   $28,047   $107,355   $115,789 
Interest on loans held for sale   189    213    577    534 
Interest on deposits with banks   15    19    77    177 
Interest and dividends on investment securities:                    
Taxable   5,314    5,984    22,096    24,624 
Exempt from federal income taxes   2,431    1,850    9,363    7,222 
Interest on federal funds sold   1    1    2    3 
Total interest income   34,708    36,114    139,470    148,349 
Interest Expense:                    
Interest on deposits   2,329    3,193    11,002    16,934 
Interest on retail repurchase agreements and federal funds purchased   57    71    212    269 
Interest on advances from FHLB   3,628    3,650    14,397    14,599 
Interest on subordinated debt   242    247    913    940 
Total interest expense   6,256    7,161    26,524    32,742 
Net interest income   28,452    28,953    112,946    115,607 
Provision for loan and lease losses   2,282    2,323    1,428    25,908 
Net interest income after provision for loan and lease losses   26,170    26,630    111,518    89,699 
Non-interest Income:                    
Investment securities gains   9    473    292    796 
Total other-than-temporary impairment ("OTTI") losses   -    (337)   (178)   (1,505)
Portion of OTTI losses recognized in other comprehensive income, before taxes   -    294    18    993 
Net OTTI recognized in earnings   -    (43)   (160)   (512)
Service charges on deposit accounts   2,394    2,342    9,527    10,326 
Mortgage banking activities   824    914    3,228    3,664 
Fees on sales of investment products   935    974    3,703    3,438 
Trust and investment management fees   3,106    2,799    11,943    10,287 
Insurance agency commissions   1,473    1,334    4,650    5,229 
Income from bank owned life insurance   674    695    2,636    2,800 
Visa check fees   927    887    3,637    3,325 
Other income   1,028    1,347    4,044    4,429 
Total non-interest income   11,370    11,722    43,500    43,782 
Non-interest Expenses:                    
Salaries and employee benefits   15,433    14,077    59,625    55,470 
Occupancy expense of premises   2,802    2,852    11,519    11,477 
Equipment expenses   1,292    1,153    4,705    4,808 
Marketing   727    681    2,389    2,359 
Outside data services   1,092    985    4,159    3,992 
FDIC insurance   698    1,114    3,187    4,497 
Amortization of intangible assets   461    472    1,845    1,959 
Other expenses   4,818    4,867    17,642    16,350 
Total non-interest expenses   27,323    26,201    105,071    100,912 
Income before income taxes   10,217    12,151    49,947    32,569 
Income tax expense   2,959    3,875    15,845    9,049 
Net income  $7,258   $8,276   $34,102   $23,520 
Preferred stock dividends and discount accretion   —      1,672    —      6,149 
Net income available to common stockholders  $7,258   $6,604   $34,102   $17,371 
                     
Net Income Per Share Amounts:                    
Basic net income per share  $0.30   $0.34   $1.42   $1.05 
Basic net income per common share   0.30    0.27    1.42    0.78 
Diluted net income per share  $0.30   $0.34   $1.41   $1.05 
Diluted net income per common share   0.30    0.27    1.41    0.78 
Dividends declared per common share  $0.10   $0.01   $0.34   $0.04 

 

 
 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

   

   2011   2010 
(Dollars in thousands, except per share data)  Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 
Profitability for the quarter:                                        
Tax-equivalent interest income  $36,156   $36,424   $36,435   $36,057   $37,466   $38,688   $38,663   $38,368 
Interest expense   6,256    6,674    6,854    6,740    7,161    7,868    8,512    9,201 
Tax-equivalent net interest income   29,900    29,750    29,581    29,317    30,305    30,820    30,151    29,167 
Tax-equivalent adjustment   1,448    1,420    1,427    1,307    1,352    1,321    1,155    1,008 
Provision for loan and lease losses   2,282    (3,520)   1,151    1,515    2,323    2,453    6,107    15,025 
Non-interest income   11,370    11,336    10,802    9,992    11,722    10,539    10,674    10,847 
Non-interest expenses   27,323    25,848    25,838    26,062    26,201    25,140    24,758    24,813 
Income (loss) before income taxes   10,217    17,338    11,967    10,425    12,151    12,445    8,805    (832)
Income (loss) tax expense   2,959    6,081    3,671    3,134    3,875    3,961    2,546    (1,333)
Net income   7,258    11,257    8,296    7,291    8,276    8,484    6,259    501 
Net income (loss) available to common stockholders  $7,258   $11,257   $8,296   $7,291   $6,604   $6,410   $5,056   $(699)
Financial ratios:                                        
Return on average assets   0.79%   1.24%   0.93%   0.84%   0.73%   0.70%   0.56%   (0.08)%
Return on average common equity   6.54%   10.42%   8.03%   7.26%   6.34%   6.26%   5.13%   (0.92)%
Return on average tangible common equity   8.04%   12.90%   10.03%   9.13%   9.06%   9.08%   6.42%   0.67%
Net interest margin   3.51%   3.53%   3.58%   3.65%   3.61%   3.64%   3.58%   3.56%
Efficiency ratio - GAAP (1)   68.61%   65.16%   66.33%   68.58%   64.42%   62.79%   62.41%   63.61%
Efficiency ratio - Non-GAAP (1)   65.10%   62.02%   62.82%   65.09%   61.85%   59.08%   59.44%   61.08%
Per share data:                                        
Basic net income per share  $0.30   $0.47   $0.34   $0.30   $0.34   $0.35   $0.26   $0.03 
Basic net income (loss) per common share   0.30    0.47    0.34    0.30    0.27    0.27    0.21    (0.04)
Diluted net income per share   0.30    0.47    0.34    0.30    0.34    0.35    0.26    0.03 
Diluted net income (loss) per common share   0.30    0.47    0.34    0.30    0.27    0.27    0.21    (0.04)
Average fully diluted shares   24,141,084    24,142,137    24,130,357    24,115,906    24,087,482    24,102,497    24,033,158    17,243,415 
Dividends declared per common share  $0.10   $0.08   $0.08   $0.08   $0.01   $0.01   $0.01   $0.01 
Non-interest income:                                        
Securities gains  $9   $231   $32   $20   $473   $25   $95   $203 
Net OTTI recognized in earnings   -    (76)   (43)   (41)   (43)   (380)   (89)   - 
Service charges on deposit accounts   2,394    2,444    2,437    2,252    2,342    2,567    2,791    2,626 
Mortgage banking activities   824    1,141    808    455    914    1,516    806    428 
Fees on sales of investment products   935    905    1,005    858    974    782    941    741 
Trust and investment management fees   3,106    3,032    3,018    2,787    2,799    2,505    2,534    2,449 
Insurance agency commissions   1,473    1,044    953    1,180    1,334    978    928    1,989 
Income from bank owned life insurance   674    662    654    646    695    709    703    693 
Visa check fees   927    927    949    834    887    843    855    740 
Other income   1,028    1,026    989    1,001    1,347    994    1,110    978 
Total non-interest income  $11,370   $11,336   $10,801   $9,992   $11,722   $10,539   $10,674   $10,847 
Non-interest expense:                                        
Salaries and employee benefits  $15,433   $14,892   $14,676   $14,624   $14,077   $13,841   $14,181   $13,371 
Occupancy expense of premises   2,802    2,784    2,790    3,143    2,852    2,826    2,709    3,090 
Equipment expenses   1,292    1,143    1,128    1,142    1,153    1,137    1,304    1,214 
Marketing   727    468    709    485    681    589    573    516 
Outside data services   1,092    1,073    999    995    985    966    918    1,123 
FDIC insurance   698    709    736    1,044    1,114    1,056    1,186    1,141 
Amortization of intangible assets   461    461    462    461    472    495    496    496 
Professional fees   1,414    1,314    1,088    1,126    1,842    1,337    1,189    1,218 
Other real estate owned expenses   604    383    726    699    443    236    (55)   352 
Other expenses   2,800    2,621    2,524    2,343    2,582    2,657    2,257    2,292 
Total non-interest expense  $27,323   $25,848   $25,838   $26,062   $26,201   $25,140   $24,758   $24,813 

 

(1) The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; excludes securities gains; OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

  

 
 

  

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

   

   2011   2010 
(Dollars in thousands)  Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 
Balance sheets at quarter end:                                        
Residential mortgage loans  $448,662   $440,606   $445,605   $444,519   $436,534   $442,723   $458,502   $460,129 
Residential construction loans   108,699    90,727    81,425    84,939    91,273    92,485    86,393    83,902 
Commercial ADC loans   160,946    141,576    149,215    151,135    151,061    153,139    155,751    177,498 
Commercial investor real estate loans   371,948    357,358    353,749    355,967    327,782    335,426    328,244    316,336 
Commercial owner occupied real estate loans   522,076    519,837    511,271    509,215    503,286    511,453    511,673    518,271 
Commercial business loans   260,327    226,528    225,624    231,448    250,255    240,671    263,886    279,520 
Leasing   6,954    8,484    10,200    12,477    15,551    17,895    20,823    23,474 
Consumer loans   360,080    360,287    360,831    360,349    380,490    391,415    393,560    397,527 
 Total loans and leases   2,239,692    2,145,403    2,137,920    2,150,049    2,156,232    2,185,207    2,218,832    2,256,657 
Allowance for loan and lease losses   (49,426)   (49,720)   (55,246)   (58,918)   (62,135)   (67,282)   (71,377)   (69,575)
Investment securities   1,164,699    1,174,180    1,128,589    1,087,620    1,042,943    1,099,518    1,062,541    985,966 
Interest-earning assets   3,452,214    3,370,360    3,322,317    3,283,819    3,240,313    3,343,173    3,437,731    3,401,162 
Total assets   3,711,370    3,626,043    3,612,013    3,549,533    3,519,388    3,606,617    3,701,150    3,673,246 
Noninterest-bearing demand deposits   650,377    643,169    648,605    619,905    566,812    580,309    593,007    560,027 
Total deposits   2,656,520    2,640,324    2,657,861    2,599,634    2,549,872    2,585,496    2,659,956    2,653,448 
Customer repurchase agreements   63,613    79,529    65,214    75,516    86,243    97,884    86,062    78,416 
Total interest-bearing liabilities   2,590,164    2,517,180    2,515,053    2,495,916    2,520,061    2,547,334    2,597,445    2,618,178 
Total stockholders' equity   446,109    440,791    423,984    409,076    407,569    451,717    483,681    471,857 
Quarterly average balance sheets:                                        
Residential mortgage loans  $463,754   $453,645   $455,803   $458,329   $461,700   $466,437   $467,970   $462,803 
Residential construction loans  99,983    89,128    84,144    85,891    92,033    87,522    85,617    89,732 
Commercial ADC loans  153,598    145,835    149,773    149,071    155,795    154,863    165,510    182,918 
Commercial investor real estate loans  353,975    350,925    352,668    340,008    330,717    335,279    324,717    317,671 
Commercial owner occupied real estate loans  521,212    515,185    509,273    500,875    505,248    512,370    512,997    522,398 
Commercial business loans  231,773    225,041    225,646    236,949    240,083    253,058    271,839    292,844 
Leasing  7,671    9,269    11,154    14,009    16,562    19,295    22,329    24,648 
Consumer loans  361,888    360,875    362,098    367,261    387,375    393,491    395,833    398,233 
 Total loans and leases  2,193,854    2,149,903    2,150,559    2,152,393    2,189,513    2,222,315    2,246,812    2,291,247 
Investment securities   1,173,418    1,168,712    1,121,325    1,054,740    1,112,128    1,058,175    1,013,756    970,681 
Total earning assets   3,392,773    3,355,937    3,305,059    3,237,556    3,332,705    3,360,758    3,379,388    3,318,070 
Total assets   3,647,291    3,610,219    3,566,278    3,500,807    3,594,812    3,620,881    3,645,090    3,591,786 
Noninterest-bearing demand deposits   655,381    631,192    607,092    582,441    587,570    568,835    547,245    524,313 
Total deposits   2,658,676    2,640,729    2,607,854    2,548,117    2,584,025    2,607,190    2,612,633    2,640,853 
Customer repurchase agreements   74,267    72,646    70,313    79,067    92,049    87,927    85,178    81,622 
Total interest-bearing liabilities   2,525,128    2,524,728    2,519,114    2,485,451    2,534,716    2,571,000    2,596,353    2,653,187 
Total stockholders' equity   440,154    428,511    414,624    407,007    446,256    455,101    475,521    387,099 
Capital measures:                                        
Average equity to average assets   12.07%   11.87%   11.63%   11.63%   12.41%   12.57%   13.05%   10.78%
Tier 1 leverage   10.84%   10.79%   10.64%   10.63%   10.30%   11.15%   12.00%   12.01%
Tier 1 capital to risk-weighted assets   14.57%   14.96%   14.75%   14.21%   14.11%   15.29%   16.50%   15.77%
Total regulatory capital to risk-weighted assets   15.83%   16.21%   16.01%   15.48%   15.37%   16.56%   17.77%   17.04%
Book value per common share  $18.52   $18.31   $17.58   $16.99   $16.95   $17.14   $16.80   $16.33 
Outstanding common shares   24,091,042    24,079,204    24,095,123    24,084,423    24,046,627    24,006,748    23,998,950    23,985,149 

  

 
 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

  

   2011   2010 
(dollars in thousands)  December 31,   September 30,   June 30,   March 31,   December 31,   September 30,   June 30,   March 31, 
Non-Performing Assets:                                        
Loans and leases 90 days past due:                                        
Commercial business  $-   $-   $-   $-   $19   $56   $357   $3,829 
Commercial real estate:                                        
Commercial AD&C   -    -    -    -    -    -    -    - 
Commercial investor real estate   -    -    -    -    -    944    -    - 
Commercial owner occupied real estate   -    -    -    -    -    317    160    - 
Leasing   2    63    20    24    407    409    582    163 
Consumer   165    373    337    169    182    550    745    848 
Residential real estate:                                        
Residential mortgage   167    2,291    3,820    4,616    9,871    12,545    18,131    16,879 
Residential construction   243    -    -    2,367    3,675    3,447    4,251    3,366 
Total loans and leases 90 days past due   577    2,727    4,177    7,176    14,154    18,268    24,226    25,085 
Non-accrual loans and leases:                                        
Commercial business   7,226    8,038    8,288    9,649    7,938    10,747    14,512    17,600 
Commercial real estate:                                        
Commercial AD&C   18,702    24,481    26,133    28,310    30,417    44,175    47,341    72,021 
Commercial investor real estate   16,963    16,118    2,975    2,519    1,753    1,160    1,160    1,171 
Commercial owner occupied real estate   14,709    11,847    13,019    12,304    11,781    10,197    11,620    9,327 
Leasing   853    956    1,017    1,529    1,887    1,903    1,621    1,472 
Consumer   1,786    1,478    590    720    300    20    227    604 
Residential real estate:                                        
Residential mortgage   5,722    6,081    6,295    6,652    3,946    2,149    3,011    4,120 
Residential construction   5,719    5,034    5,701    5,222    5,305    3,525    4,395    4,404 
Total non-accrual loans and lease   71,680    74,033    64,018    66,905    63,327    73,876    83,887    110,719 
Total restructured loans - accruing   6,881    6,088    8,299    14,266    10,571    1,199    1,199    682 
Total non-performing loans and leases   79,138    82,848    76,494    88,347    88,052    93,343    109,312    136,486 
Other assets and real estate owned (OREO)   4,431    7,938    6,951    7,960    9,493    10,011    8,730    6,796 
Other assets owned   -    -    -    -    200    200    -    - 
Total non-performing assets  $83,569   $90,786   $83,445   $96,307   $97,745   $103,554   $118,042   $143,282 

 

   For the quarter ended, 
   December 31,   September 30,   June 30,   March 31,   December 31,   September 30,   June 30,   March 31, 
(dollars in thousands)  2011   2011   2011   2011   2010   2010   2010   2010 
Analysis of non-accrual loan and lease activity                                        
Balance at beginning of period  $74,033   $64,018   $66,905   $63,327   $73,876   $83,887   $110,719   $111,181 
Non-accrual balances transferred to OREO   (511)   (142)   (791)   (535)   (222)   (1,119)   (540)   (1,982)
Non-accrual balances charged-off   (2,758)   (1,375)   (2,112)   (2,701)   (7,288)   (3,664)   (4,599)   (8,642)
Net payments or draws   (6,724)   (4,839)   (8,016)   (2,531)   (16,191)   (4,288)   (25,043)   (2,179)
Loans placed on non-accrual   8,640    17,226    8,032    9,526    13,152    2,656    5,640    12,537 
Non-accrual loans brought current   (1,000)   (855)   -    (181)   -    (3,596)   (2,290)   (196)
Balance at end of period  $71,680   $74,033   $64,018   $66,905   $63,327   $73,876   $83,887   $110,719 
                                         
Analysis of Allowance for Loan Losses:                                        
Balance at beginning of period  $49,720   $55,246   $58,918   $62,135   $67,282   $71,377   $69,575   $64,559 
Provision for loan and lease losses   2,282    (3,520)   1,151    1,515    2,323    2,453    6,107    15,025 
Less loans charged-off, net of recoveries:                                        
Commercial business   (65)   397    769    790    1,651    1,469    (1,325)   2,395 
Commercial real estate:                                        
Commercial AD&C   275    151    253    (137)   2,990    1,923    2,656    4,914 
Commercial investor real estate   335    30    504    (4)   231    (1)   -    - 
Commercial owner occupied real estate   329    45    113    -    464    164    515    544 
Leasing   181    85    455    333    3    -    98    2 
Consumer   352    375    713    1,091    610    642    947    1,072 
Residential real estate:                                        
Residential mortgage   792    751    1,319    2,095    1,396    2,170    1,333    793 
Residential construction   377    172    697    564    125    181    81    289 
Net charge-offs   2,576    2,006    4,823    4,732    7,470    6,548    4,305    10,009 
Balance at end of period  $49,426   $49,720   $55,246   $58,918   $62,135   $67,282   $71,377   $69,575 
                                         
Asset Quality Ratios:                                        
Non-performing loans to total loans   3.53%   3.86%   3.58%   4.11%   4.08%   4.27%   4.93%   6.05%
Non-performing assets to total assets   2.25%   2.50%   2.31%   2.71%   2.78%   2.87%   3.19%   3.90%
Allowance for loan losses to loans   2.21%   2.32%   2.58%   2.74%   2.88%   3.08%   3.22%   3.08%
Allowance for loan losses to non-performing loans     62.46    60.01 %    72.22 %    66.69 %    70.57    72.08    65.30    50.98 
Net charge-offs in quarter to average loans   0.47%   0.37%   0.90%   0.89%   1.37%   1.18%   0.77%   1.78%

   

 
 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

  

   Three Months Ended December 31, 
   2011   2010 
           Annualized           Annualized 
   Average   (1)   Average   Average   (1)   Average 
(Dollars in thousands and tax-equivalent)  Balances   Interest   Yield/Rate   Balances   Interest   Yield/Rate 
Assets                              
Residential mortgage loans (3)  $463,754   $5,224    4.53%  $461,700   $5,849    5.09%
Residential construction loans   99,983    962    3.82    92,033    993    4.28 
Commercial ADC loans   153,598    2,006    5.18    155,795    1,809    4.61 
Commercial investor real estate loans   353,975    4,977    5.53    330,717    4,956    5.95 
Commercial owner occupied real estate loans   521,212    7,511    5.75    505,248    7,572    5.95 
Commercial business loans   231,773    2,851    4.88    240,084    3,080    5.33 
Leasing   7,671    131    6.83    16,561    275    6.66 
Consumer loans   361,888    3,285    3.62    387,375    3,726    3.84 
Total loans and leases (2)   2,193,854    26,947    4.89    2,189,513    28,260    5.13 
Taxable securities   902,211    5,661    2.51    934,784    6,403    2.68 
Tax-exempt securities (4)   271,207    3,532    5.21    177,344    2,783    6.28 
Interest-bearing deposits with banks   24,374    15    0.25    29,410    19    0.26 
Federal funds sold   1,127    1    0.12    1,654    1    0.18 
Total interest-earning assets   3,392,773    36,156    4.24    3,332,705    37,466    4.46 
                               
Less:  allowance for loan and lease losses   (51,126)             (67,164)          
Cash and due from banks   46,121              45,042           
Premises and equipment, net   48,800              48,326           
Other assets   210,723              235,903           
Total assets  $3,647,291             $3,594,812           
                               
Liabilities and Stockholders' Equity                              
Interest-bearing demand deposits  $352,244    86    0.10%  $302,401    68    0.09%
Regular savings deposits   188,877    41    0.09    169,021    36    0.08 
Money market savings deposits   871,923    682    0.31    882,323    1,009    0.45 
Time deposits   590,250    1,520    1.02    642,710    2,080    1.28 
Total interest-bearing deposits   2,003,294    2,329    0.46    1,996,455    3,193    0.63 
Other borrowings   81,387    57    0.27    96,016    71    0.30 
Advances from FHLB   405,447    3,628    3.55    407,245    3,650    3.56 
Subordinated debentures   35,000    242    2.77    35,000    247    2.82 
Total interest-bearing liabilities   2,525,128    6,256    0.98    2,534,716    7,161    1.12 
                               
Noninterest-bearing demand deposits   655,381              587,570           
Other liabilities   26,628              26,270           
Stockholders' equity   440,154              446,256           
Total liabilities and stockholders' equity  $3,647,291             $3,594,812           
                               
Net interest income and spread       $29,900    3.26%       $30,305    3.34%
Less: tax-equivalent adjustment        1,448              1,352      
Net interest income       $28,452             $28,953      
                               
Interest income/earning assets             4.24%             4.46%
Interest expense/earning assets             0.73              0.85 
Net interest margin             3.51%             3.61%

   

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2011 and  2010. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.4 million and $1.4 million in 2011 and 2010, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.
(4) Includes only investments that are exempt from federal taxes.

  

 
 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

   Twelve Months Ended December 31, 
   2011   2010 
           Annualized           Annualized 
   Average   (1)   Average   Average   (1)   Average 
(Dollars in thousands and tax-equivalent)  Balances   Interest   Yield/Rate   Balances   Interest   Yield/Rate 
Assets                              
Residential mortgage loans (3)  $457,886   $21,971    4.80%  $464,462   $24,838    5.35%
Residential construction loans   89,823    3,410    3.80    88,729    4,037    4.55 
Commercial ADC loans   149,571    6,819    4.56    157,879    6,459    4.09 
Commercial investor real estate loans   349,447    20,213    5.78    335,141    20,174    6.02 
Commercial owner occupied real estate loans   511,692    30,197    5.90    512,008    30,820    6.02 
Commercial business loans   229,825    11,344    4.94    264,281    13,329    5.04 
Leasing   10,505    707    6.73    20,682    1,460    7.06 
Consumer loans   363,010    13,271    3.68    393,703    15,206    3.88 
Total loans and leases (2)   2,161,759    107,932    5.00    2,236,885    116,323    5.20 
Taxable securities   885,023    23,471    2.65    875,292    25,630    2.93 
Tax-exempt securities (4)   244,958    13,590    5.55    163,834    11,052    6.75 
Interest-bearing deposits with banks   30,270    77    0.25    69,755    177    0.25 
Federal funds sold   1,337    2    0.14    1,773    3    0.17 
Total interest-earning assets   3,323,347    145,072    4.37    3,347,539    153,185    4.58 
                               
Less:  allowance for loan and lease losses   (56,770)             (69,393)          
Cash and due from banks   45,721              44,736           
Premises and equipment, net   49,047              48,738           
Other assets   220,221              241,368           
Total assets  $3,581,566             $3,612,988           
                               
Liabilities and Stockholders' Equity                              
Interest-bearing demand deposits  $340,110    364    0.11%  $292,106    324    0.11%
Regular savings deposits   184,050    183    0.10    165,032    164    0.10 
Money market savings deposits   859,608    3,547    0.41    890,187    5,015    0.56 
Time deposits   611,192    6,908    1.13    706,487    11,431    1.62 
Total interest-bearing deposits   1,994,960    11,002    0.55    2,053,812    16,934    0.82 
Other borrowings   78,207    212    0.27    89,932    269    0.30 
Advances from FHLB   405,577    14,397    3.55    409,697    14,599    3.56 
Subordinated debentures   35,000    913    2.61    35,000    940    2.69 
Total interest-bearing liabilities   2,513,744    26,524    1.06    2,588,441    32,742    1.27 
                               
Noninterest-bearing demand deposits   619,260              557,197           
Other liabilities   25,881              26,155           
Stockholders' equity   422,681              441,195           
Total liabilities and stockholders' equity  $3,581,566             $3,612,988           
                               
Net interest income and spread       $118,548    3.31%       $120,443    3.31%
Less: tax-equivalent adjustment        5,602              4,836      
Net interest income       $112,946             $115,607      
                               
Interest income/earning assets             4.37%             4.58%
Interest expense/earning assets             0.80              0.98 
Net interest margin             3.57%             3.60%

 

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2011 and  2010. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $5.6 million and $4.8 million in 2011 and 2010, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.
(4) Includes only investments that are exempt from federal taxes.