Sandy Spring Bancorp Stock

Sandy Spring Bancorp, Inc. (Bancorp) operates as the bank holding company for Sandy Spring Bank that provides a broad range of commercial and retail banking, mortgage, private banking and trust services.

The company operates at over 50 locations throughout central Maryland, northern Virginia, and Washington D.C.

The company is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Through its trust department and its subsidiaries, West Financial Services, Inc. (‘West Financial’) and SSB Wealth Management, Inc. (d/b/a Rembert Pendleton Jackson, ‘RPJ’), Sandy Spring Bank offers a comprehensive menu of investment management services.

West Financial, located in McLean, Virginia; and RPJ, located in Falls Church, Virginia, are asset management and financial planning companies.

Loan Products

The company offers a broad menu of loan products primarily in the company’s identified market footprint.

Commercial Loans

The company’s commercial loans consist of commercial real estate loans, commercial construction loans and commercial business loans. The company’s commercial loan clients represent a diverse cross-section of small to mid-size businesses within the company’s market footprint.

Commercial Real Estate

The company’s commercial real estate loans consist of loans secured by both owner-occupied properties and nonowner-occupied properties (‘investor real estate loans’). The commercial real estate categories contain mortgage loans to developers and owners of commercial real estate. Commercial real estate loans secured by owner-occupied properties are based upon the borrower’s financial condition and the ability of the borrower and the business to provide for repayment. Investor real estate loans, which are secured by nonowner-occupied properties involve investment properties for multi-family, warehouse, retail, and office space with a history of occupancy and cash flow.

Commercial acquisition, development and construction (‘AD&C’) loans to residential builders, are either made for the construction of residential homes with an existing binding sales contract where the prospective buyers have been pre-qualified for permanent mortgage financing by a lender, or homes that are built by residential builders in the anticipation of a future sale.

The company primarily lends for AD&C in local markets that are familiar and understandable, work selectively with top-quality builders and developers, and require substantial equity from the company’s borrowers. Development and construction loans are secured by the properties under development or construction, and personal guarantees are typically obtained.

Commercial Business Loans

The company also originates commercial business loans. Commercial term loans are made to provide funds for equipment and general corporate needs. This loan category is designed to support borrowers who have a proven ability to service debt.

Residential Real Estate Loans

The residential real estate category contains loans principally to consumers secured by residential real estate. The residential real estate portfolio includes both conforming and non-conforming mortgage loans.

Conforming mortgage loans represent loans originated in accordance with underwriting standards set forth by government-sponsored entities (‘GSEs’), including the Federal National Mortgage Association (‘Fannie Mae’), the Federal Home Loan Mortgage Corporation (‘Freddie Mac’), and the Government National Mortgage Association (‘Ginnie Mae’), which serve as the primary purchasers of loans sold in the secondary mortgage market by mortgage lenders.

The company originates non-conforming loans for the company’s own portfolio and for sale to third-party investors, usually large mortgage companies, under commitments by the mortgage company to purchase the loans subject to compliance with pre-established investor criteria. The company may sell both conforming and non-conforming loans on either a servicing released or servicing retained basis.

The company makes residential real estate development and construction loans generally to provide interim financing on property during the development and construction period. Loans to individuals for the construction of primary personal residences are typically secured by the property under construction, frequently include additional collateral (such as a second mortgage on the borrower's present home), and commonly have maturities of twelve to eighteen months.

Consumer Loans

Consumer lending continues to be important to the company’s full-service, community banking business. This category of loans includes primarily home equity loans and lines, installment loans and personal lines of credit.

The home equity category mainly consists of revolving lines of credit to consumers that are secured by residential real estate. The company secures home equity lines of credit and other home equity loans with mortgages on the homes (typically a second mortgage). Purchase money second mortgage loans originated by the company have maximum terms ranging from ten to thirty years.

Other consumer loans include installment loans used by customers to purchase automobiles, boats and recreational vehicles. These consumer loans are generally governed by the same overall lending policies as described for residential real estate loans.

Consumer installment loans are generally offered for terms of up to six years at fixed interest rates. The company also makes other consumer loans, which may or may not be secured.

Deposit Activities

As of December 31, 2023, the company’s deposits included noninterest-bearing deposits; and interest-bearing deposits, such as demand deposits, money market savings accounts, regular savings accounts, time deposits of less than $250,000, and time deposits of $250,000 or more.

Treasury Activities

The company invests primarily in the U.S. Treasury and Agency securities, the U.S. Agency mortgage-backed and asset-backed securities (‘MBS’), the U.S. Agency collateralized mortgage obligations (‘CMO’), municipal bonds, and to a minimal extent, corporate bonds.

Investment Securities

As of December 31, 2023, the company’s investment securities included U.S. treasuries and government agencies, state and municipal securities, and mortgage-backed and asset-backed securities.

Regulation, Supervision, and Governmental Policy

Bancorp is registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the ‘Holding Company Act’) and is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the ‘Federal Reserve’).

The bank is a state-chartered bank subject to supervision and regulation by the Federal Reserve and the state of Maryland. The bank's deposit accounts are insured by the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (the ‘FDIC’) to the maximum extent permitted by law. The bank is a member of the Federal Reserve System and is an Equal Housing Lender. The company is an Affirmative Action/Equal Opportunity Employer.

The company is subject to regulation by the Consumer Financial Protection Bureau (‘CFPB’), which is responsible for promoting fairness and transparency for mortgages, credit cards, deposit accounts and other consumer financial products and services and for interpreting and enforcing the federal consumer financial laws that govern the provision of such products and services.

West Financial and RPJ are investment advisors registered with the SEC under the Investment Advisors Act of 1940. In this capacity, West Financial and RPJ are subject to oversight and inspection by the SEC.

The company’s mortgage banking business is subject to the rules and regulations of the U.S. Department of Housing and Urban Development (‘HUD’), the Federal Housing Administration (‘FHA’), the Veterans’ Administration (‘VA’), and Fannie Mae with respect to originating, processing, selling and servicing mortgage loans.

The company is also subject to examination by Fannie Mae, FHA and VA to assure compliance with the applicable regulations, policies and procedures. Mortgage origination activities are subject to, among others, the Equal Credit Opportunity Act, the Federal Truth-in-Lending Act, the Fair Housing Act, the Fair Credit Reporting Act, the National Flood Insurance Act, and the Real Estate Settlement Procedures Act and related regulations that prohibit discrimination and require the disclosure of certain basic information to mortgagors concerning credit terms and settlement costs. The company’s mortgage banking operations are also affected by various state and local laws and regulations and the requirements of various private mortgage investors.

The bank was assigned a ‘satisfactory’ rating as a result of its most recent CRA examination. The company is also subject to the Gramm-Leach-Bliley Act (the ‘GLBA’) and its implementing regulations and guidance. Some of the aspects of the company’s lending and deposit business that are subject to regulation by the Federal Reserve and the FDIC include reserve requirements and disclosure requirements in connection with personal and mortgage loans and deposit accounts.

History

Sandy Spring Bancorp, Inc. was founded in 1868. The company was incorporated in 1992.