8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 22, 2010

SANDY SPRING BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	000-19065	52-1532952
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

17801 Georgia Avenue, Olney, Maryland  20832

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:  (301) 774-6400

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02   Results of Operations and Financial Condition

On April 22, 2010, Sandy Spring Bancorp, Inc. issued a news release announcing its results of operations and financial condition for the quarter ended March 31, 2010.  A copy of the news release is included as Exhibit 99.1 to this report.

Item 9.01   Financial Statements and Exhibits

Exhibits

Number	Description
99.1	Press Release dated April 22, 2010

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SANDY SPRING BANCORP, INC.
	(Registrant)
Date: April 22, 2010	By:	/s/ Daniel J. Schrider
		Daniel J. Schrider
		President and Chief Executive Officer

3

EX-99.1

 
NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS FIRST QUARTER RESULTS

OLNEY, MARYLAND, April 22, 2010 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced a net loss available to common stockholders for the first quarter of 2010 of $0.7 million (($0.04) per diluted share) compared to net income available to common stockholders of $1.0 million ($0.06 per diluted share) for the first quarter of 2009 and a net loss available to common stockholders of $4.4 million (($0.27) per diluted share) for the fourth quarter of 2009. The first quarter of 2010 included a provision for loan and lease losses of $15.0 million.

“Our cautious optimism was further confirmed by our first quarter results. As we continued to aggressively address and resolve our problem credits,  we concurrently executed well on fundamentals such as sound expense control and continued improvement in our net interest margin, all of which were strong drivers of our results for the quarter. This was particularly satisfying considering the decline in loan balances compared to the prior year due to weak customer demand and our prudent application of conservative underwriting standards,” said Daniel J. Schrider, president and chief executive officer.”

“The loan-loss provision declined for the second quarter in a row, largely due to a reduced level of net charge-offs and a stabilizing level of non-performing loans. These encouraging developments are mainly related to our residential real estate development portfolio, where the majority of problem loans are concentrated,” said Schrider.

“We are extremely pleased with the market reception to our recent common stock offering, which was substantially over subscribed and resulted in net proceeds of $95.6 million. Repayment of TARP remains one of our highest corporate priorities for the proceeds of this offering,” said Schrider.

First Quarter Highlights:

· The Company issued 7.475 million shares of common stock in a public offering during the first quarter. The offering resulted in net proceeds after expenses of $95.6 million.

· The provision for loan and lease losses totaled $15.0 million for the quarter compared to $10.6 million for the first quarter of 2009 and $21.1 million for the fourth quarter of 2009.

· The net interest margin was 3.56% for the first quarter compared to 3.39% for the first quarter of 2009 and 3.40% for the fourth quarter of 2009.

· Non-interest expenses increased 4% for the quarter compared to the first quarter of 2009 and were relatively even with the fourth quarter of 2009.

Review of Balance Sheet and Credit Quality

Comparing March 31, 2010 balances to March 31, 2009, total assets increased 4% to $3.7 billion. Total loans and leases decreased 8% to $2.3 billion compared to the prior year. This decrease in loans was attributable to declines in all major categories of the loan portfolio due to conservative underwriting standards and a lack of loan demand as a result of soft regional economic conditions. Total loans decreased 2% compared to the fourth quarter of 2009.

Customer funding sources, which include deposits and other short-term borrowings from core customers, increased 3% to $2.7 billion at March 31, 2010 compared to the prior year. The increase over the prior year was due primarily to growth resulting from the Company’s Premier Money Market account as well as growth in noninterest-bearing deposits. Total deposits decreased 1% compared to the fourth quarter of 2009.

Stockholders’ equity totaled $471.9 million at March 31, 2010, and represented 12.9% of total assets, compared to 11.2% at March 31, 2009.  At March 31, 2010 the Company had a total risk-based capital ratio of 17.04%, a tier 1 risk-based capital ratio of 15.77% and a tier 1 leverage ratio of 12.01% which were all above amounts needed in order to be categorized as “well capitalized” for regulatory purposes. The Company’s regulatory capital ratios include the proceeds of its recent public offering.

The provision for loan and lease losses totaled $15.0 million for the first quarter of 2010 compared to $10.6 million for the first quarter of 2009 and $21.1 million for the fourth quarter of 2009. The increase over the prior year quarter was primarily due to charge-offs and additional specific reserves primarily related to loans in the residential real estate development portfolio. The decrease compared to the fourth quarter of 2009 was also largely due to a decline in net charge-offs.

Loan charge-offs, net of recoveries totaled $10.0 million for the first quarter of 2010 compared to net charge-offs of $1.3 million for the first quarter of 2009 and net charge-offs of $19.5 million for the fourth quarter of 2009. The allowance for loan and lease losses represented 3.08% of outstanding loans and leases and 51% of non-performing loans at March 31, 2010 compared to 2.43% of outstanding loans and leases and 50% of non-performing loans at March 31, 2009 and 2.81% of outstanding loans and leases and 48% of non-performing loans at December 31, 2009. Non-performing loans includes loans 90 days or more past due which are still accruing interest.

Non-performing assets totaled $143.3 million at March 31, 2010 compared to $125.8 million at March 31, 2009 and $141.2 million at December 31, 2009. The increase over the prior year was due primarily to an increase in delinquencies in the residential mortgage portfolio.

Income Statement Review

Comparing the first quarter of 2010 and 2009, net interest income increased by $3.1 million, or 13%. This increase was due to the decline in rates paid on deposits and borrowings together with a higher level of interest earning assets.

Non-interest income decreased 5% to $11.3 million in the first quarter of 2010 as compared to $12.0 million in the first quarter of 2009. This decrease was due primarily to other non-interest income which decreased $0.3 million or 16% compared to the first quarter of 2009 due largely to lower accrued gains on mortgage commitments which was somewhat offset by higher mark-to-market adjustments on commercial loan swaps. In addition, gains on sales of mortgage loans decreased $0.4 million or 40% due to lower mortgage loan origination volumes while service charges on deposit accounts declined $0.2 million or 8% due to lower overdraft fees. Trust and investment fees increased $0.2 million or 7% due to growth in assets under management and Visa check charges increased $0.1 million or 16% due to higher volumes of electronic transactions.

Non-interest expenses were $25.3 million in the first quarter of 2010 compared to $24.3 million in the first quarter of 2009, an increase of $1.0 million or 4%. Salaries and benefits expenses remained relatively flat for the quarter. Outside data services increased $0.3 million or 39% compared to the prior year period due primarily to costs associated with the issuance of new Visa debit cards while FDIC insurance expense increased $0.2 million or 19% due to higher deposit balances and increased assessment rates. Other non-interest expenses increased $0.8 million or 24% due primarily to higher mark-to-market adjustments associated with commercial loan swaps and other real estate owned expenses.

Conference Call

The Company’s management will host a conference call to discuss its first 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 877-380-5664. 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) May 22, 2010.  A telephone voice replay will also be available during that same time period at 800-642-1687.  Please use pass code #68368535 to access.

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, The Equipment Leasing Company 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 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.

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, 2009, 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
	March 31,						%
(Dollars in thousands, except per share data)	2010			2009			Change
Results of Operations:
Net interest income	$	28,159		$	25,025			13	%
Provision for loan and lease losses		15,025			10,613			42
Non-interest income		11,340			11,974			(5	)
Non-interest expenses		25,306			24,250			4
Income (loss) before income taxes		(832	)		2,136			(139	)
Net income		501			2,217			(77	)
Net income (loss) available to common stockholders	$	(699	)	$	1,017			(169	)
Return on average assets (1)	(0.08		)%		0.12	%
Return on average common equity (1)	(0.92		)%		1.32	%
Net interest margin		3.56	%		3.39	%
Efficiency ratio - GAAP (3)		64.07	%		65.54	%
Efficiency ratio - Non-GAAP (3)		61.56	%		61.29	%
Per share data:
Basic net income	$	0.03		$	0.14			(79	)%
Basic net income (loss) per common share		(0.04	)		0.06			(167	)
Diluted net income		0.03			0.13			(77	)
Diluted net income (loss) per common share		(0.04	)		0.06			(167	)
Dividends declared per common share		0.01			0.12			(92	)
Book value per common share		16.33			19.06			(14	)
Average fully diluted shares		17,243,415			16,433,788
Financial Condition at period-end:
Assets	$	3,673,246		$	3,519,432			4	%
Total loans and leases		2,256,657			2,461,845			(8	)
Investment securities		985,966			661,169			49
Deposits		2,653,448			2,553,912			4
Stockholders' equity		471,857			392,522			20
Capital ratios:
Tier 1 leverage		12.01	%		10.52	%
Tier 1 capital to risk-weighted assets		15.77	%		12.00	%
Total regulatory capital to risk-weighted assets		17.04	%		13.26	%
Tangible common equity to tangible assets (4)		8.53	%		6.74	%
Average equity to average assets		10.78	%		11.60	%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases		3.08	%		2.43	%
Nonperforming loans to total loans		6.05	%		4.90	%
Nonperforming assets to total assets		3.90	%		3.57	%
Annualized net charge-offs to average loans and leases (2)	1.78		%		0.22	%

(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 and the goodwill impairment loss from non-interest expenses; excludes securities gains (losses) from non-interest income; 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

	Three Months Ended
	March 31,
(Dollars in thousands)	2010			2009
GAAP efficiency ratio:
Non-interest expenses	$	25,306		$	24,250
Net interest income plus non-interest income	$	39,499		$	36,999
Efficiency ratio–GAAP		64.07	%		65.54	%
Non-GAAP efficiency ratio:
Non-interest expenses	$	25,306		$	24,250
Less non-GAAP adjustment:
Amortization of intangible assets		496			1,055
Non-interest expenses as adjusted	$	24,810		$	23,195
Net interest income plus non-interest income	$	39,499		$	36,999
Plus non-GAAP adjustment:
Tax-equivalent income		1,008			1,009
Less non-GAAP adjustments:
Securities gains		203			162
Net interest income plus non-interest income - as adjusted	$	40,304		$	37,846
Efficiency ratio–Non-GAAP		61.56	%		61.29	%
Tangible common equity ratio:
Total stockholders' equity	$	471,857		$	392,522
Accumulated other comprehensive (income) loss		(477	)		6,466
Goodwill		(76,816	)		(76,816	)
Other intangible assets, net		(8,042	)		(11,128	)
Preferred stock		(80,257	)		(79,601	)
Tangible common equity	$	306,265		$	231,443
Total assets	$	3,673,246		$	3,519,432
Goodwill		(76,816	)		(76,816	)
Other intangible assets, net		(8,042	)		(11,128	)
Tangible assets	$	3,588,388		$	3,431,488
Tangible common equity ratio		8.53	%		6.74	%

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

	March 31,			December 31,			March 31,
(Dollars in thousands)	2010			2009			2009
	(Unaudited)						(Unaudited)
Assets
Cash and due from banks	$	39,405		$	49,430		$	46,380
Federal funds sold		1,543			1,863			392
Interest-bearing deposits with banks		148,059			8,503			126,286
Cash and cash equivalents		189,007			59,796			173,058
Residential mortgage loans held for sale (at fair value)		8,937			12,498			14,515
Investments available-for-sale (at fair value)		832,259			858,433			472,161
Investments held-to-maturity — fair value of $124,265, $137,787 and $163,009 at March 31, 2010, December 31, 2009 and March 31, 2009, respectively		119,376			132,593			156,877
Other equity securities		34,331			32,773			32,131
Total loans and leases		2,256,657			2,298,010			2,461,845
Less: allowance for loan and lease losses		(69,575	)		(64,559	)		(59,798	)
Net loans and leases		2,187,082			2,233,451			2,402,047
Premises and equipment, net		48,780			49,606			50,981
Other real estate owned		6,796			7,464			5,093
Accrued interest receivable		13,220			13,653			11,937
Goodwill		76,816			76,816			76,816
Other intangible assets, net		8,042			8,537			11,128
Other assets		148,600			144,858			112,688
Total assets	$	3,673,246		$	3,630,478		$	3,519,432
Liabilities
Noninterest-bearing deposits	$	560,027		$	540,578		$	545,540
Interest-bearing deposits		2,093,421			2,156,264			2,008,372
Total deposits		2,653,448			2,696,842			2,553,912
Securites sold under retail repurchase agreements and federal funds purchased		78,416			89,062			91,928
Advances from FHLB		411,341			411,584			412,312
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		23,184			24,404			33,758
Total liabilities		3,201,389			3,256,892			3,126,910
Stockholders' Equity
Preferred stock—par value $1.00 (liquidation preference of $1,000 per share) shares authorized, issued and outstanding 83,094, net of discount of $2,837, $2,999 and $3,493 at March 31, 2010, December 31, 2009 and March 31, 2009, respectively		80,257			80,095			79,601
Common stock — par value $1.00; shares authorized 49,916,906; shares issues and outstanding 23,985,149, 16,487,852 and 16,414,523 at March 31, 2010, December 31, 2009 and March 31, 2009, respectively		23,985			16,488			16,415
Warrants		3,699			3,699			3,699
Additional paid in capital		175,684			87,334			85,820
Retained earnings		187,755			188,622			213,453
Accumulated other comprehensive income (loss)		477			(2,652	)		(6,466	)
Total stockholders' equity		471,857			373,586			392,522
Total liabilities and stockholders' equity	$	3,673,246		$	3,630,478		$	3,519,432

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended
	March 31,
(Dollars in thousands, except per share data)	2010			2009
Interest Income:
Interest and fees on loans and leases	$	29,374		$	33,233
Interest on loans held for sale		81			280
Interest on deposits with banks		34			46
Interest and dividends on securities:
Taxable		6,006			3,195
Exempt from federal income taxes		1,864			1,972
Interest on federal funds sold		1			2
Total interest income		37,360			38,728
Interest Expense:
Interest on deposits		5,290			9,454
Interest on retail repurchase agreements and federal funds purchased		72			62
Interest on advances from FHLB		3,620			3,631
Interest on subordinated debt		219			556
Total interest expense		9,201			13,703
Net interest income		28,159			25,025
Provision for loan and lease losses		15,025			10,613
Net interest income after provision for loan and lease losses		13,134			14,412
Non-interest Income:
Securities gains		203			162
Service charges on deposit accounts		2,626			2,863
Gains on sales of mortgage loans		609			1,022
Fees on sales of investment products		741			700
Trust and investment management fees		2,449			2,287
Insurance agency commissions		1,989			2,050
Income from bank owned life insurance		693			711
Visa check fees		740			638
Other income		1,290			1,541
Total non-interest income		11,340			11,974
Non-interest Expenses:
Salaries and employee benefits		13,371			13,204
Occupancy expense of premises		3,090			2,775
Equipment expenses		1,214			1,514
Marketing		516			420
Outside data services		1,123			806
FDIC insurance		1,141			959
Amortization of intangible assets		496			1,055
Other expenses		4,355			3,517
Total non-interest expenses		25,306			24,250
Income (loss) before income taxes		(832	)		2,136
Income tax benefit		(1,333	)		(81	)
Net income	$	501		$	2,217
Preferred stock dividends and discount accretion		1,200			1,200
Net income (loss) available to common stockholders	$	(699	)	$	1,017
Net Income Per Share Amounts:
Basic net income per share	$	0.03		$	0.14
Basic net income (loss) per common share		(0.04	)		0.06
Diluted net income per share	$	0.03		$	0.13
Diluted net income (loss) per common share		(0.04	)		0.06
Dividends declared per common share	$	0.01		$	0.12

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA (Unaudited)

	2010			2009
(Dollars in thousands, except per share data)	Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	38,368		$	40,025		$	40,516		$	39,791		$	39,737
Interest expense		9,201			10,816			12,783			14,220			13,703
Tax-equivalent net interest income		29,167			29,209			27,733			25,571			26,034
Tax-equivalent adjustment		1,008			1,376			1,331			1,123			1,009
Provision for loan and lease losses		15,025			21,084			34,450			10,615			10,613
Non-interest income		11,340			11,575			10,662			11,030			11,974
Non-interest expenses		25,306			25,364			26,567			26,858			24,250
Income (loss) before income taxes		(832	)		(7,040	)		(23,953	)		(1,995	)		2,136
Income tax expense (benefit)		(1,333	)		(3,822	)		(10,379	)		(1,715	)		(81	)
Net Income (loss)		501			(3,218	)		(13,574	)		(280	)		2,217
Net Income (loss) available to common stockholders	$	(699	)	$	(4,421	)	$	(14,779	)	$	(1,482	)	$	1,017
Financial ratios:
Return on average assets	(0.08		)%		(0.48	)%		(1.62	)%		(0.17	)%		0.12	%
Return on average common equity	(0.92		)%		(4.66	)%		(19.01	)%		(1.90	)%		1.32	%
Net interest margin		3.56	%		3.40	%		3.27	%		3.11	%		3.39	%
Efficiency ratio - GAAP (1)		64.07	%		64.36	%		71.68	%		75.70	%		65.54	%
Efficiency ratio - Non-GAAP (1)		61.56	%		61.29	%		66.49	%		70.58	%		61.29	%
Per share data:
Basic net income (loss) per share	$	0.03		$	(0.20	)	$	(0.83	)	$	(0.02	)	$	0.14
Basic net income (loss) per common share		(0.04	)		(0.27	)		(0.90	)		(0.09	)		0.06
Diluted net income (loss) per share		0.03			(0.20	)		(0.83	)		(0.02	)		0.13
Diluted net income (loss) per common share		(0.04	)		(0.27	)		(0.90	)		(0.09	)		0.06
Dividends declared per common share		0.01			0.01			0.12			0.12			0.12
Book value per common share		16.33			17.80			18.25			18.92			19.06
Average fully diluted shares		17,243,415			16,477,925			16,496,480			16,444,252			16,433,788
Non-interest income:
Securities gains	$	203		$	211		$	15		$	30		$	162
Service charges on deposit accounts		2,626			2,896			2,823			2,851			2,863
Gains on sales of mortgage loans		609			434			1,011			786			1,022
Fees on sales of investment products		741			761			740			622			700
Trust and investment management fees		2,449			2,358			2,406			2,370			2,287
Insurance agency commissions		1,989			1,098			1,048			1,040			2,050
Income from bank owned life insurance		693			730			740			725			711
Visa check fees		740			776			758			748			638
Other income		1,290			2,311			1,121			1,858			1,541
Total non-interest income	$	11,340		$	11,575		$	10,662		$	11,030		$	11,974
Non-interest expense:
Salaries and employee benefits	$	13,371		$	13,141		$	14,411		$	13,704		$	13,204
Occupancy expense of premises		3,090			2,702			2,685			2,548			2,775
Equipment expenses		1,214			1,359			1,444			1,374			1,514
Marketing		516			777			484			485			420
Outside data services		1,123			967			987			961			806
FDIC insurance		1,141			1,124			1,219			2,790			959
Amortization of intangible assets		496			496			1,048			1,047			1,055
Goodwill impairment loss		-			-			-			-			-
Other expenses		4,355			4,798			4,289			3,949			3,517
Total non-interest expense	$	25,306		$	25,364		$	26,567		$	26,858		$	24,250

(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 and the goodwill impairment loss; excludes securities gains (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)

	2010			2009
(Dollars in thousands)	Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Residential mortgage loans	$	460,129		$	457,414		$	455,312		$	450,500		$	461,359
Residential construction loans		83,902			92,283			115,258			138,923			163,861
Commercial mortgage loans		882,040			894,951			873,438			862,315			859,882
Commercial construction loans		130,064			131,789			174,052			199,278			222,805
Commercial loans and leases		302,995			321,924			314,599			333,025			342,870
Consumer loans		397,527			399,649			401,623			405,348			411,068
Total loans and leases		2,256,657			2,298,010			2,334,282			2,389,389			2,461,845
Less: allowance for loan and lease losses		(69,575	)		(64,559	)		(62,937	)		(58,317	)		(59,798	)
Net loans and leases		2,187,082			2,233,451			2,271,345			2,331,072			2,402,047
Goodwill		76,816			76,816			76,816			76,816			76,816
Other intangible assets, net		8,042			8,537			9,033			10,080			11,128
Total assets		3,673,246			3,630,478			3,632,391			3,617,497			3,519,432
Total deposits		2,653,448			2,696,842			2,683,487			2,650,845			2,553,912
Customer repurchase agreements		78,416			74,062			84,138			98,827			91,928
Total stockholders' equity		471,857			373,586			380,571			391,262			392,522
Quarterly average balance sheets:
Residential mortgage loans	$	462,803		$	464,737		$	460,772		$	477,955		$	481,721
Residential construction loans		89,732			106,115			123,892			150,914			176,811
Commercial mortgage loans		891,722			877,419			871,831			862,658			854,402
Commercial construction loans		131,265			165,784			191,021			216,897			224,229
Commercial loans and leases		317,492			312,547			327,569			341,039			359,820
Consumer loans		398,233			401,164			401,930			408,200			408,843
Total loans and leases		2,291,247			2,327,766			2,377,015			2,457,663			2,505,826
Securities		970,681			1,026,179			956,350			772,878			536,981
Total earning assets		3,318,070			3,409,867			3,370,823			3,298,923			3,117,590
Total assets		3,591,786			3,672,382			3,627,617			3,549,185			3,375,715
Total interest-bearing liabilities		2,653,187			2,709,152			2,671,944			2,595,303			2,471,762
Noninterest-bearing demand deposits		524,313			549,347			532,462			527,713			476,361
Total deposits		2,640,853			2,718,882			2,661,108			2,581,837			2,431,471
Customer repurchase agreements		81,622			92,471			95,310			93,980			69,212
Total stockholders' equity		387,099			380,534			391,571			393,201			391,673
Capital and credit quality measures:
Average equity to average assets		10.78	%		10.36	%		10.79	%		11.08	%		11.60	%
Allowance for loan and lease losses to loans and leases		3.08	%		2.81	%		2.70	%		2.44	%		2.43	%
Non-performing loans to total loans		6.05	%		5.82	%		6.14	%		5.84	%		4.90	%
Non-performing assets to total assets		3.90	%		3.89	%		4.14	%		4.05	%		3.57	%
Annualized net charge-offs (recoveries) to average loans and leases (1)	1.78		%		3.34	%		5.00	%		1.97	%		0.22	%
Net charge-offs (recoveries)	$	10,009		$	19,462		$	29,831		$	12,095		$	1,341
Non-performing assets:
Non-accrual loans and leases	$	110,719		$	111,180		$	127,473		$	123,117		$	110,761
Loans and leases 90 days past due		25,085			19,001			15,491			16,004			9,545
Restructured loans and leases		682			3,549			395			395			395
Other real estate owned, net		6,796			7,464			6,873			6,829			5,094
Total non-performing assets	$	143,282		$	141,194		$	150,232		$	146,345		$	125,795

(1) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

	Three Months Ended March 31,
				2010								2009
						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)	$	462,803		$	6,479		5.60	%	$	481,721		$	7,185		5.97	%
Residential construction loans		89,732			1,094		4.94			176,811			2,372		5.44
Commercial mortgage loans		891,722			13,232		6.02			854,402			13,266		6.30
Commercial construction loans		131,265			821		2.54			224,229			1,821		3.29
Commercial loans and leases		317,492			4,002		5.10			359,820			4,845		5.45
Consumer loans		398,233			3,827		3.90			408,843			4,024		3.99
Total loans and leases (2)		2,291,247			29,455		5.20			2,505,826			33,513		5.41
Taxable securities		802,150			6,221		3.10			369,009			3,335		3.61
Tax-exempt securities (4)		168,531			2,657		6.82			167,972			2,841		7.21
Interest-bearing deposits with banks		54,416			34		0.26			71,571			46		0.26
Federal funds sold		1,726			1		0.14			3,212			2		0.24
Total interest-earning assets		3,318,070			38,368		4.69			3,117,590			39,737		5.17
Less:  allowance for loan and lease losses		(67,195	)							(53,416	)
Cash and due from banks		45,036								47,024
Premises and equipment, net		49,344								51,408
Other assets		246,531								213,109
Total assets	$	3,591,786							$	3,375,715
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	274,122			84		0.12	%	$	242,799			121		0.20	%
Regular savings deposits		157,997			36		0.09			147,537			55		0.15
Money market savings deposits		909,597			1,573		0.70			713,295			2,416		1.37
Time deposits		774,824			3,597		1.88			851,479			6,862		3.27
Total interest-bearing deposits		2,116,540			5,290		1.01			1,955,110			9,454		1.96
Other borrowings		90,179			72		0.33			69,213			62		0.36
Advances from FHLB		411,468			3,620		3.57			412,439			3,631		3.57
Subordinated debentures		35,000			219		2.50			35,000			556		6.35
Total interest-bearing liabilities		2,653,187			9,201		1.41			2,471,762			13,703		2.25
Noninterest-bearing demand deposits		524,313								476,361
Other liabilities		27,187								35,917
Stockholders' equity		387,099								391,675
Total liabilities and stockholders' equity	$	3,591,786							$	3,375,715
Net interest income and spread				$	29,167		3.28	%				$	26,034		2.92	%
Less: tax-equivalent adjustment					1,008								1,009
Net interest income				$	28,159							$	25,025
Interest income/earning assets							4.69	%							5.17	%
Interest expense/earning assets							1.13								1.78
Net interest margin							3.56	%							3.39	%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2010 and  2009. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.0 million and $1.0 million in 2010 and 2009, 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.