Russell Gunther

Manuel Navas

Casey Whitman

David Bishop

Steve Moss

- **Q1 2025 earnings** showcased GAAP net income available to common shareholders of **$46.85 million** and diluted EPS of **$0.52**, with key operating metrics including a loan/deposit ratio of **89.9%** (docs  **[1901152:4]** **[1901152:3]** ).  
- The call emphasized **integration progress**, noting the completed acquisition on **April 1, 2025** and the upcoming Sandy Spring core systems conversion scheduled for **October 2025**, along with the launch of a CRE loan sale process targeting completion by **June 30, 2025** (docs  **[1901152:3]** **[1901152:10]** ).  
- **Loan and deposit growth** details highlighted average loan growth of **1.3% annualized** and deposit growth of **2.1% annualized**, reflecting shifts in deposit mix with increased demand deposits (docs  **[1901152:3]** **[1901152:8]** ).

Sandy Spring Bancorp Q1 2025 Earnings Call Highlights

765f1a088f662e6b8cda7f309ab28af046dfe99f0c7217de0d90038e3b4761c9

- **Merger Completed:** On **April 1, 2025**, Sandy Spring Bancorp Inc merged with Atlantic Union Bankshares Corporation, with Atlantic Union continuing as the surviving entity.  **[0001104659-25-030581_tm2510685d3_8k.htm:0]** **[0001104659-25-030581_tm2510685d3_8k.htm:1]**   
- **Share Conversion Structure:** Each share of Sandy Spring common stock was converted into **0.900 shares** of Atlantic Union common stock, with fractional shares being paid in cash.  **[0001104659-25-030581_tm2510685d3_8k.htm:1]** **[0001104659-25-030581_tm2510685d3_8k.htm:2]**   
- **Delisting and Reporting Changes:** Following the merger, Sandy Spring common stock was delisted from NASDAQ and its reporting obligations were terminated.  **[0001104659-25-030581_tm2510685d3_8k.htm:0]** **[0001104659-25-030581_tm2510685d3_8k.htm:3]**

Sandy Spring Bancorp Inc Merges with Atlantic Union Bankshares

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- The combined company **projects a strong net interest margin between 3.75% to 3.85% upon close**, reflecting expected accretion income and improved profitability post-merger.  **[SASR_3403131_16]**
- Management **plans to sell up to $2 billion in commercial real estate (CRE) loans** to **reduce CRE concentration ratios** and **enhance capital ratios**, effectively **positioning the company for future growth** and mitigating risk.  **[SASR_3403131_19]** **[SASR_3403131_14]**
- Executives expressed **confidence in their ability to manage interest rate risk**, stating that even if rates **rise by 100 basis points**, the company would still be **in good shape**, demonstrating prudent risk management and a strong capital position.  **[SASR_3403131_22]**

9cf4a45292148b808d22d9a68658f8eebf730baffb6274a324fb9b256c63366f

- The bank's projections for **net interest margin (NIM)** improvement are heavily dependent on the assumption that the Federal Reserve will cut interest rates later in the year, with **four rate cuts next year**. If the Fed does not reduce rates as expected, **margin expansion may be limited to 2 to 4 basis points per quarter**, potentially impacting earnings growth.  **[SASR_3393958_13]**
- The bank is experiencing increased credit risk, having **reclassified $144 million to special mention and $19.5 million to substandard loans** due to credits falling below covenants. This increase in **criticized loans** could lead to higher credit losses in the future.  **[SASR_3393958_8]**
- The improvement in the bank's capital ratios was due to a **reduction of $360 million in risk-weighted assets** achieved by reclassifying certain home equity lines of credit as unconditionally cancellable. This method of capital ratio improvement may not be sustainable, and further such adjustments may not be available.  **[SASR_3393958_9]**

9c6135848612e8d8773a76541794d5e3b2168791f252c625fb00330642e39c98

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- The company expects **minimal expense growth** in 2024, projecting expenses to be **flat or grow by maybe 1% overall** after adjusting for one-time costs in 2023. However, upcoming investments in digital transformation, particularly in building out small business and commercial online capabilities planned for late 2024 into 2025, are **not included in the 2024 expense run rate**. This could lead to higher expenses than forecasted, potentially impacting earnings.  **[SASR_3370634_6]** **[SASR_3370634_11]**
- **Net interest margin (NIM)** is expected to **bottom out in Q1 2024** and improve with anticipated Fed rate cuts in the **second half of 2024**. The company's margin recovery plan assumes a significant reduction in deposit costs, especially on **high-yield savings accounts** where they expect a **beta assumption of more than 100%**. If the rate cuts do not occur as expected, or deposit costs do not decrease as planned, the NIM may remain compressed, impacting profitability.  **[SASR_3370634_7]** **[SASR_3370634_9]**
- The bank has significant amounts of high-cost funding sources maturing in 2024, including **$430 million in brokered CDs at 4.5%** and **$250 million in FHLB advances averaging 4.6%**. If these funds are not replaced with lower-cost deposits or if market rates remain high, the bank may face continued pressure on funding costs, which could negatively affect margins.  **[SASR_3370634_10]**

3c0ae0d049e2ed2c3ea616bb0b3d644a2ea96806160ff0789febc546bc4e6cab

- **Broad-Based Deposit Growth Enhancing Funding Mix:** SASR is experiencing success across multiple initiatives to grow deposits, increasing core deposits by **3%** quarter-over-quarter and reducing reliance on brokered deposits. This improvement in funding mix positions the bank to manage funding costs more effectively and support net interest margin expansion.  **[SASR_3393958_12]**
- **Anticipated Net Interest Margin Expansion:** The bank expects net interest margin to expand by **2 to 4 basis points per quarter** in 2024, with potential acceleration to **5 to 10 basis points per quarter** in 2025 following anticipated Federal Reserve rate cuts. SASR is targeting a net interest margin of approximately **3%** by the end of 2025.  **[SASR_3393958_13]**
- **Growing Non-Interest Income Diversifying Revenue Streams:** SASR anticipates fee income growth reaching **high single digits to low double digits** in 2024, driven by strong performance in wealth management and the forthcoming contributions from its new SBA lending program. This growth enhances non-interest income and diversifies the bank's revenue streams.  **[SASR_3393958_11]**

08a680299cf26135cf717c416d210ec13742fe3258731e40711aca3d1cab0102

- **Potential impact from reductions in government office space in the D.C. market**, which could affect commercial real estate investors and lead to increased credit risk. While management believes their own exposure is limited, the broader market could be affected if the government reduces its office space significantly.  **[SASR_3380271_18]**
- **Declining net interest margin (NIM)**, which has decreased from **2.99% in Q1 2023** to **2.41% in Q1 2024**, indicating pressure on profitability. Management expects only a modest improvement of **2 to 4 basis points per quarter** without Fed rate cuts, which may not be sufficient to offset margin pressures.  **[SASR_3380271_3]** ,  **[SASR_3380271_6]**
- **High deposit costs**, with the bank offering **a 5% CD for 7 months and a 14-month CD at 4.75%**, which could continue to pressure margins if interest rates remain high and loan yields do not rise accordingly.  **[SASR_3380271_7]**

318eabfbe267ab88375241c90553ef6639bde2bba6c2512833bc35636fa75d32

- The company plans to **sell up to $2 billion of commercial real estate (CRE) loans**, which may indicate concerns about the risk profile of its CRE portfolio and could negatively impact future earnings due to loss of interest income.  **[SASR_3403131_19]** **[SASR_3403131_16]**
- Management has **not hedged the interest rate risk** associated with the planned CRE loan sale because hedging is considered expensive, potentially exposing the company to losses if interest rates move unfavorably.  **[SASR_3403131_22]**
- The company is experiencing **loan growth headwinds**, adjusting expectations from high-single-digit to **mid-single-digit loan growth**, which could impact future revenue growth.  **[SASR_3403131_2]**

ebef766a6bbe83180538baf5d124fe30eb6fad34f0fa3c79f890a58ac6abb786

- Sandy Spring Bancorp expects **improved net interest margin** due to the upward repricing of assets. Approximately **$250 million to $350 million** of fixed-rate loans are maturing per quarter in 2024, which are expected to **reprice up the curve by over 100 basis points**, contributing to higher loan yields even in a stable rate environment.  **[SASR_3380271_6]**
- The bank's **wealth management segment is performing well**, with **Assets Under Management (AUM) increasing** to **$6.2 billion**, and there is potential for continued growth driven by market performance and the ability to attract new clients.  **[SASR_3380271_16]**
- Sandy Spring Bancorp has **limited exposure to large office properties** in the D.C. market and expects **minimal impact** from potential government reductions in office space, indicating **strong asset quality and risk management**.  **[SASR_3380271_18]**

cc587a2a9b7e1bd8b58a3ec03bbaf722c57c5b0e3c20bd562d8195146c3b9a31

643a0330ce2ac69b3669b8f80bbbaf561ec17b1eb29e4d981c081574b5782c20

474ee63c703a315a78823ee8ada6cf8a3c43007127edd4ea15f2f46bb74854ef

- **Anticipated Net Interest Margin Expansion:** Sandy Spring Bancorp expects its net interest margin to bottom out in the first quarter of 2024 in the low **2.40%** range and then rebound by **7 to 10 basis points per quarter**, reaching above **3% during the second half of next year**. This improvement is expected due to anticipated **Federal Reserve rate cuts**, the bank's ability to aggressively manage deposit costs, and the maturing of high-cost borrowings and brokered CDs throughout 2024.  **[SASR_3370634_5]** **[SASR_3370634_10]** **[SASR_3370634_9]**
- **Higher Loan Growth with Improved Yields:** The bank plans to achieve **mid to upper single-digit loan growth** in 2024, driven predominantly by **C&I and owner-occupied real estate loans**. New loan production is coming on at significantly higher yields, with overall commercial production averaging about **8.3%**, compared to the existing loan portfolio's yield of **5.25%**, indicating potential for increasing net interest income.  **[SASR_3370634_8]** **[SASR_3370634_12]**
- **Successful Digital Initiatives Boosting Deposit Growth:** Sandy Spring Bancorp is optimistic about generating deposit growth through its new digital capabilities, including integrated account opening and enhanced online banking services. Since launching these technologies, they have opened over **2,200 new accounts**, with over **half being new client acquisitions**. This digital transformation is expected to drive deposit growth, deepen existing relationships, and support funding needs for loan growth.  **[SASR_3370634_13]** **[SASR_3370634_11]**

350b8a3d65592176815be14408a40c7551c0cfb851257e52b50706db67571624

| Name                  | Is Executive | Is Board Member | Position                                   | External Roles                                                                 | Short Bio                                                                                                                                                     | Start Date       |
|-----------------------|--------------|-----------------|-------------------------------------------|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
| Daniel J. Schrider    | true         | true            | Chair, President, and CEO                 | None                                                                          | CEO since 2009, focuses on core deposit strategies and wealth management.                                             | N/A  **[0000824410-24-000033_sasr-20240723.htm:3]** **[0001628280-24-043144_sasr-102124xexx991earnings.htm:0]**        |
| Charles S. Cullum     | true         | false           | Chief Financial Officer                   | None                                                                          | Joined in 2006, promoted to CFO in May 2024, contributed to SASR's growth from $3B to $14B.                           | May 23, 2024  **[0000824410-24-000027_sasr-20240522.htm:1]** **[0000824410-24-000027_cfochangepressrelease.htm:0]**  |
| Ronda M. McDowell     | true         | false           | Executive Vice President and COO          | None                                                                          | No detailed bio available.                                                                                            | N/A  **[0001104659-24-129292_tm2428626-8_defm14a.htm:135]**          |
| Lynne Pulford         | true         | false           | Executive Vice President and Chief Consumer Banking Officer | None                                                                          | With SASR for 36 years, promoted to current role in July 2023.                                                        | July 2023  **[0000824410-24-000011_sasr-20231231.htm:24]**     |
| Joseph J. O'Brien, Jr.| true         | false           | Executive Vice President and Chief Banking Officer | None                                                                          | With SASR for 16 years, became Chief Banking Officer in 2021.                                                         | 2021  **[0000824410-24-000011_sasr-20231231.htm:24]**          |
| Kevin Slane           | true         | false           | Executive Vice President and Chief Risk Officer | None                                                                          | Joined SASR in 2015, became Chief Risk Officer in May 2018.                                                           | May 2018  **[0000824410-24-000011_sasr-20231231.htm:24]**      |
| Aaron M. Kaslow       | true         | false           | Executive Vice President, Chief Administrative Officer, and General Counsel | None                                                                          | Joined SASR in July 2019, promoted to Chief Administrative Officer in May 2022.                                       | July 2019  **[0000824410-24-000011_sasr-20231231.htm:24]**     |
| Gary J. Fernandes     | true         | false           | Executive Vice President and Chief Human Resources Officer | None                                                                          | Joined SASR in 2015, promoted to CHRO in May 2021.                                                                    | May 2021  **[0000824410-24-000011_sasr-20231231.htm:24]**      |
| R. Louis Caceres      | true         | false           | Executive Vice President and Chief Wealth Officer | None                                                                          | With SASR since 2002, leads wealth management strategies.                                                             | 2002  **[0000824410-24-000011_sasr-20231231.htm:24]**          |
| Ralph F. Boyd         | false        | true            | Director                                   | President and CEO of SOME, Inc.; Director at InfuSystem Holdings, Inc.; Chair of the NHP Foundation                  | Director since 2012, extensive leadership in non-profits and public service.                                          | 2012  **[0001193125-24-144933_d787126ds8pos.htm:7]** **[0001193125-24-091479_d784978ddef14a.htm:6]** **[0001193125-23-097267_d390376ddef14a.htm:7]** |
| Mark E. Friis         | false        | true            | Director                                   | Chair of Rodgers Consulting, Inc.; Trustee Emeritus at Hood College                                               | Director since 2005, extensive experience in land development and planning.                                           | 2005  **[0001193125-23-097267_d390376ddef14a.htm:2]** **[0001193125-23-097267_d390376ddef14a.htm:6]**     |
| Brian J. Lemek        | false        | true            | Director                                   | Founder and Owner of Lemek, LLC (Panera Bread franchisee); Trustee at Saint Ambrose University                      | Director since 2020, operates over 60 Panera Bread locations.                                                         | 2020  **[0001193125-24-091479_d784978ddef14a.htm:2]** **[0001193125-24-091479_d784978ddef14a.htm:8]**     |
| Pamela A. Little      | false        | true            | Director                                   | Board Member at Excella; Trustee at Norwich University; Board Member at Modern Technology Solutions Inc.            | Director since 2020, extensive financial leadership experience.                                                       | 2020  **[0001193125-24-091479_d784978ddef14a.htm:8]** **[0001193125-23-097267_d390376ddef14a.htm:6]**     |
| Robert L. Orndorff    | false        | true            | Lead Independent Director                 | President of RLO Contractors, Inc.                                                                                  | Director since 1991, served as Board Chair from 2010 to 2022.                                                         | 1991  **[0000824410-22-000050_exhibit991-pressreleasedat.htm:0]** **[0000824410-22-000050_sasr-20221214.htm:3]**     |
| Craig A. Ruppert      | false        | true            | Director                                   | Executive Chair of Ruppert Companies; Active in multiple trade and charitable organizations                         | Director since 2002, transitioned to Executive Chair of Ruppert Companies in 2023.                                     | 2002  **[0001193125-24-091479_d784978ddef14a.htm:2]** **[0001193125-24-091479_d784978ddef14a.htm:8]**     |
| Mona Abutaleb Stephenson | false     | true            | Director                                   | CEO of Medical Technology Solutions, LLC                                                                            | Director since 2015, extensive leadership in technology and healthcare.                                               | 2015  **[0001193125-24-091479_d784978ddef14a.htm:2]** **[0001104659-24-110026_tm2426519d4_8k.htm:0]**     |
| Mark C. Michael       | false        | true            | Director                                   | Senior Advisor to Occasions Caterers; Founder of Protocol Staffing Services and CaterXpert                          | Director since 2018, extensive experience in hospitality and entrepreneurship.                                        | 2018  **[0001193125-23-097267_d390376ddef14a.htm:2]** **[0001193125-23-079942_d390376dpre14a.htm:7]**     |
| Mark C. Micklem       | false        | true            | Director                                   | Retired Managing Director at Robert W. Baird & Co.; Former Head of Financial Services Investment Banking at Legg Mason | Director since 2019, completed over 250 financing and M&A advisory engagements.                                       | 2019  **[0001193125-24-091479_d784978ddef14a.htm:2]** **[0001193125-23-079942_d390376dpre14a.htm:8]**     |
| Christina B. O'Meara  | false        | true            | Director                                   | President and Founder of O'Meara Properties                                                                         | Director since 2020, founder of a real estate development company.                                                    | 2020  **[0001193125-24-091479_d784978ddef14a.htm:2]**         |

41031c946420c1428386e43442a10e74d15a086da1eada846cac9906aceba787

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178c0b5deaca80b0f2e50de7eb2c9f99bd7fabc5b7c0ad4adf7a154c08a98991

1. **Margin Outlook and Deposit Costs**  
   **Q:** Are deposit costs near their peak and will they decline?  
   **A:** Management believes deposit costs have come close to peaking, with June's deposit cost at **$3.56** compared to **$3.54** for the quarter.  **[SASR_3393958_6]**  They project deposit costs may increase by only **1 to 2 basis points** over the next couple of quarters until the Fed cuts rates.  **[SASR_3393958_6]**  Earning asset yields continue to expand, leading to expected margin expansion of a few basis points.  **[SASR_3393958_6]** 

2. **Loan Repricing Opportunities**  
   **Q:** What is the fixed rate repricing opportunity ahead?  
   **A:** In the next two quarters, about **$500 million** per quarter of commercial loans will reprice from rates in the **mid- to upper 6%** range.  **[SASR_3393958_7]**  While not significant for near-term loan yields, as we enter 2025, repricing rates fall to the **mid-6%**, and by early 2026, to the **upper 5% to low 6%**, leading to gradual improvement in loan yields.  **[SASR_3393958_7]** 

3. **Credit Quality and Reserves**  
   **Q:** Why is there confidence in low loss content of stressed credits?  
   **A:** Management doesn't view rate outlook as a catalyst for moving credits to special mention and substandard.  **[SASR_3393958_8]**  Issues are due to specific circumstances like new projects stabilizing or short-term lease turnovers causing covenant breaches.  **[SASR_3393958_8]**  If rates stay higher for longer, some projects could be impacted, but overall, they're not concerned about reserves and aren't seeing many credits deteriorate further.  **[SASR_3393958_8]** 

4. **Deposit Initiatives and Loan Growth**  
   **Q:** What's driving better deposit growth and loan mix?  
   **A:** Success is across the board, with branch networks, digital marketing, and commercial bankers contributing to deposit growth.  **[SASR_3393958_12]**  The pipeline has grown from the **mid-$600 million** range to the **low $800 million**, predominantly in C&I and owner-occupied real estate loans.  **[SASR_3393958_12]** 

5. **Net Interest Margin Improvement with Rate Cuts**  
   **Q:** How will NIM improve with expected rate cuts?  
   **A:** Management expects margin expansion to accelerate once the Fed cuts rates.  **[SASR_3393958_13]**  Initial cuts may have a muted effect due to pricing pressures, but subsequent cuts should allow deposit betas to improve significantly.  **[SASR_3393958_13]**  They anticipate quarterly margin improvement of **5 to 10 basis points** with rate cuts, compared to **2 to 4 basis points** without them.  **[SASR_3393958_13]** 

6. **Risk-Weighted Asset Optimization**  
   **Q:** What was the impact of RWA optimization initiatives?  
   **A:** By reclassifying certain home equity lines of credit as unconditionally cancelable, they reduced risk-weighted assets by about **$360 million** during the quarter.  **[SASR_3393958_9]**  They changed the classification for over **$700 million** in HELOCs.  **[SASR_3393958_9]**  Further optimizations are expected in the third quarter.  **[SASR_3393958_9]** 

7. **Fee Income Outlook**  
   **Q:** Is fee income growth outlook conservative?  
   **A:** Double-digit fee income growth is possible.  **[SASR_3393958_10]**  Wealth management fees could perform well if markets remain strong.  **[SASR_3393958_10]**  However, one-time BOLI income won't recur, and SBA gains may be delayed until Q4 or Q1 next year.  **[SASR_3393958_10]**  Management considers high single-digit to low double-digit improvement likely.  **[SASR_3393958_10]** 

a570f9176b048e3eb56c5976407489a0a15229fbd77047f34b0b5d3645220e15

1. **CRE Loan Sale Impact**  
   **Q:** What's the discount assumed in the CRE loan sale?  
   **A:** The company plans to sell up to **$2 billion** in CRE loans, assuming a total discount in the low **90s**.  **[SASR_3403131_13]**  This includes a **1.5%** credit mark and a **5%** interest rate mark.  **[SASR_3403131_13]**  The sale is expected to reduce book value by about **$0.29** per share.  **[SASR_3403131_13]** 

2. **Net Interest Margin Outlook**  
   **Q:** How will the CRE sale affect the NIM outlook?  
   **A:** The pro forma NIM is expected to be in the **3.75% to 3.85%** range upon closing, including the impact of the CRE loan sale.  **[SASR_3403131_16]**  Despite a temporary headwind, the company anticipates NIM expansion in 2025 due to aggressive deposit rate management and expected Fed rate cuts.  **[SASR_3403131_15]** 

3. **Loan Growth Strategy**  
   **Q:** How will you drive loan growth post-merger?  
   **A:** The company plans to leverage its strengths in C&I lending to grow in Sandy Spring's markets.  **[SASR_3403131_17]**  By bringing new capabilities and having no lending constraints, they expect mid-single-digit loan growth, supported by strong pipelines.  **[SASR_3403131_27]** 

4. **Details of CRE Loans Sold**  
   **Q:** What is the profile of the CRE loans being sold?  
   **A:** The loans are high-quality, performing notes totaling about **200** loans.  **[SASR_3403131_18]**  The largest categories are **retail** and **multifamily** properties.  **[SASR_3403131_18]**  The average life of the loans being sold is just under **4 years**, similar to the overall CRE portfolio.  **[SASR_3403131_19]** 

5. **Deposit Cost Trends**  
   **Q:** What are your expectations for deposit costs ahead?  
   **A:** The company is aggressively reducing deposit rates, aiming for a mid-**40%** deposit beta through the down cycle.  **[SASR_3403131_23]**  They are modeling deposit costs to come down following the recent **50 basis point** Fed rate cut.  **[SASR_3403131_23]** 

6. **Hedging the CRE Loan Sale**  
   **Q:** Are you hedging the CRE loans planned for sale?  
   **A:** They have considered hedging options but found them expensive.  **[SASR_3403131_22]**  Currently, they have not locked in any hedges but feel they can absorb rate movements up to **100 basis points** without significant impact on planned metrics.  **[SASR_3403131_22]** 

7. **CRE Loan Paydowns**  
   **Q:** Are you seeing increased CRE loan paydowns?  
   **A:** Yes, they expect an elevation in CRE loan payoffs as developers refinance or sell properties.  **[SASR_3403131_26]**  This normalization is viewed as a healthy trend and could lead to above-average payoffs temporarily.  **[SASR_3403131_26]** 

8. **Business Model Post-Merger**  
   **Q:** Will the merger change your business model?  
   **A:** They will continue current strategies but gain capacity to serve larger, middle-market clients.  **[SASR_3403131_24]**  New capabilities like equipment finance and asset-based lending will be introduced to Sandy Spring's markets.  **[SASR_3403131_24]** 

015e3757adebdae52c6b53894989b503624d3e6aa2058ce042cc37395827c245

1. **Net Interest Margin Outlook**  
   **Q:** Will deposit costs peak next quarter, improving NIM?  
   **A:** Deposit costs may increase slightly into Q1 and Q2, but we anticipate our net interest margin to bottom in the first quarter and start to rise from the second quarter onward. This improvement will be aided by rebuilding non-interest-bearing deposits and repaying higher-cost funding sources like the bank term funding program in April.  **[SASR_3370634_7]** 

2. **Expense Guidance**  
   **Q:** Are expenses expected to be flat in 2024?  
   **A:** We are projecting expenses to be flat year-over-year in 2024 after adjusting for one-time items in 2023, with overall growth of maybe **1%**.  **[SASR_3370634_6]** 

3. **Loan Growth Targets**  
   **Q:** What's your loan growth target and timing?  
   **A:** We plan for mid to upper single-digit loan growth in 2024, driven mainly by C&I lending and owner-occupied real estate, with growth building from the second quarter onward.  **[SASR_3370634_12]** 

4. **Deposit Costs and Funding Mix**  
   **Q:** How will deposit betas affect margins with rate cuts?  
   **A:** Assuming Fed cuts in June, September, and December, we expect deposit betas of about **40%** on money market and checking products, and around **90%** or more on high-yield savings. This should lead to significant cost reductions as rates decline.  **[SASR_3370634_9]** 

5. **Deposit Growth Strategies**  
   **Q:** Where are you seeing core deposit inflows?  
   **A:** Core inflows are coming from featured time deposits with mid-term maturities of **1 to 2 years** at rates near **5%**, and strong growth in high-yield savings accounts. We're optimistic about leveraging our digital capabilities to drive new deposit growth.  **[SASR_3370634_13]** 

6. **Loan Yields and Production**  
   **Q:** What are yields on new loan production?  
   **A:** New commercial loan production averaged yields of about **8.3%** this quarter, with owner-occupied real estate loans at **6.5% to 7%**, ADC loans at **8% to 8.5%**, and other commercial loans at **7.5% to 8.5%**.  **[SASR_3370634_8]** 

7. **Digital Transformation and Expenses**  
   **Q:** What's the status of digital transformation spending?  
   **A:** We completed our retail digital initiatives in 2023, which are now in the run rate. Future projects, like small business and commercial online capabilities, are in design and won't significantly impact 2024 expenses.  **[SASR_3370634_11]** 

8. **Loan-to-Deposit Ratio**  
   **Q:** What's your comfort level with loan-to-deposit ratio?  
   **A:** Currently around **100%**, we aim to bring it down to the mid-90s over time, but we're not in a hurry.  **[SASR_3370634_12]** 

93506606300a6d26edab23599625414fde01ad324198b4cb6408f479753789e0

| Program Details          | Program 1              |
|--------------------------|------------------------|
| **Approval Date**        | **March 30, 2022**  **[0000824410-24-000045_sasr-20240930.htm:103]**  |
| **End Date/Duration**    | Ongoing as of September 30, 2024  **[0000824410-24-000045_sasr-20240930.htm:103]**  |
| **Total Additional Amount** | **$50.0 million**  **[0000824410-24-000045_sasr-20240930.htm:103]**  |
| **Remaining Authorization** | **$25.0 million** as of September 30, 2024  **[0000824410-24-000045_sasr-20240930.htm:103]**  |
| **Details**              | No shares repurchased during 2023 or 2024  **[0000824410-24-000045_sasr-20240930.htm:103]**  |

f7005b9020beedb5d3263edffdab51ffafd228fbcfd28fecb1230dc16659ac0d

1. **Margins and Impact of Rate Cuts**  
   **Q:** How will rate cuts affect your margins?  
   **A:** We expect to improve our margin by **2 to 4 basis points per quarter** without rate cuts. If the Federal Reserve cuts rates, we can reduce deposit costs quickly, leading to a margin improvement of about **10 basis points per quarter**, capturing approximately **40%** of each **25-basis-point** cut. This assumes the long end of the yield curve remains stable.  **[SASR_3380271_8]** 

2. **Deposit Costs Stabilization**  
   **Q:** Are deposit costs stabilizing, and can they decline?  
   **A:** Deposit costs declined by **3 basis points** from February to March, with the cost of interest-bearing deposits moving from **$355 million** to **$352 million**. We anticipate some moderation but don't expect significant increases going forward. Our retail high-yield savings rate is at **4.5%**, and new CDs are offered at **5%** for 7 months and **4.75%** for 14 months.  **[SASR_3380271_7]** 

3. **Loan Growth Outlook and C&I Focus**  
   **Q:** What's your outlook for loan growth and mix?  
   **A:** We expect around **3%** commercial loan growth in the second quarter, focusing on C&I and owner-occupied lending, while keeping CRE exposure flat or reducing its concentration of capital. Our pipeline is strong in C&I, ranging from small business to middle market, which will drive funded production quarter over quarter.  **[SASR_3380271_11]** 

4. **Credit Quality and Net Charge-offs**  
   **Q:** What are your expectations for net charge-offs?  
   **A:** While it's tough to predict, we typically anticipate about **5 basis points** of annualized net charge-offs in any given year. Recent experience shows a few smaller credits moving through the cycle, but nothing material. Ending up in the **5 to 10 basis point** range for the year would be reasonable, though we have no specific projection pointing to that.  **[SASR_3380271_14]** 

5. **Exposure to D.C. Office Market Risks**  
   **Q:** How could government office space reduction impact you?  
   **A:** A substantial reduction in government office space could materially affect the D.C. office market, especially large floor-plate buildings that are hard to re-tenant. However, we have minimal exposure to those properties, focusing instead on small professional office spaces that are easier to re-tenant. We don't expect a material impact on us from such developments.  **[SASR_3380271_18]** 

6. **Securities Portfolio Repricing**  
   **Q:** What's the outlook for your securities portfolio yields?  
   **A:** Our securities portfolio reprices about **$15 million to $20 million per month**, with current yields in the low to mid-2% range increasing significantly upon repricing. We're employing a barbell strategy, buying seasoned MBS and floating-rate securities, achieving average yields close to **6% or greater**. This should enhance overall portfolio yields throughout the year.  **[SASR_3380271_9]** 

7. **Capital Allocation and Buybacks**  
   **Q:** Will you consider share buybacks given your stock price?  
   **A:** While repurchasing shares makes sense given our stock price, preserving capital is our priority amid current uncertainties and profitability considerations. We're not positioned to be active in buybacks at the moment, but that could change with more clarity in the environment.  **[SASR_3380271_10]** 

8. **Fee Income and Wealth Management**  
   **Q:** What's driving fee income growth in wealth management?  
   **A:** Fee income growth is driven by market performance and our ability to attract new assets under management. Occasionally, one-time fees from trust dispositions may contribute, but for the remainder of the year, growth will depend on these factors.  **[SASR_3380271_16]** 

9. **Cross-selling High-Yield Savings Accounts**  
   **Q:** Can you elaborate on cross-selling high-yield savings accounts?  
   **A:** We're focusing on deepening relationships with high-yield savings clients through outreach by our commercial bankers, retail offices, and wealth management professionals. We've created a DDA account with attractive features for these clients. While it's early, we believe our relationship approach gives us a higher probability of turning them into full banking clients.  **[SASR_3380271_17]** 

85363aa1c9ac965752bf8a860e3d95823faaa3c498b7018b72fc8e8f538edb44

Company not found (SASR)

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Manuel Navas

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