Sandy Spring Bancorp Reports 84% Decline in Net Income for Fiscal Year 2024

Sandy Spring Bancorp, Inc. reported a significant decline in financial performance for the fiscal year ending December 31, 2024, with net income falling to $19.9 million, or $0.44 per diluted share, compared to $122.8 million, or $2.73 per diluted share, in 2023. This 84% decrease was primarily attributed to a $54.4 million goodwill impairment charge, a higher provision for loan losses of $31.8 million, and a reduction in net interest income by $27.4 million. Core earnings, which exclude non-recurring items, also decreased to $85.3 million from $134.3 million in the previous year.

Total assets increased by 1% to $14.1 billion, while total loans rose by $171 million, or 2%, to $11.5 billion. The growth in loans was driven by a $155.3 million increase in commercial loans, particularly in acquisition, development, and construction (AD&C) loans, which surged by 34%. However, the commercial investor real estate segment saw a decline of $324.8 million. Deposits also grew by $749.1 million, or 7%, to $11.7 billion, with interest-bearing deposits increasing by 11%, reflecting a shift by customers towards higher-yielding accounts.

Strategically, Sandy Spring Bancorp is in the process of merging with Atlantic Union Bankshares Corporation, a move that has been approved by both companies' shareholders and necessary regulatory bodies. The merger agreement, which was signed on October 21, 2024, is expected to close on April 1, 2025. The merger will see Bancorp shareholders receive 0.900 shares of Atlantic Union common stock for each share of Bancorp common stock they hold, with cash paid for any fractional shares. The combined entity will have a board of directors consisting of 17 members, including three from Sandy Spring Bancorp.

Operationally, the company reported an increase in non-interest income by 18% to $79.3 million, driven by higher wealth management income and income from bank-owned life insurance. However, non-interest expenses rose by 25% to $343.3 million, largely due to the goodwill impairment charge and merger-related expenses. The efficiency ratio, a measure of operating efficiency, deteriorated to 84.46% from 65.24% in the previous year, indicating increased costs relative to revenue.

Looking ahead, Sandy Spring Bancorp's management expressed cautious optimism regarding the merger's potential benefits, including cost savings and strategic gains. However, they acknowledged the risks associated with the integration process and the potential for unanticipated costs. The company remains focused on maintaining its capital ratios above regulatory requirements, with a total risk-based capital ratio of 15.38% as of December 31, 2024, categorizing it as "well-capitalized" under regulatory standards.