Sandy Spring turns profit, repays $83M in TARP funds

Sandy Spring Bancorp Inc., the parent company of Sandy Spring Bank, not only reported a profit for the fourth quarter of 2010, but said Thursday it had paid off the $83 million in preferred stock issued to the U.S. Treasury under the TARP Capital Purchase Program.

With $3.5 billion in assets, Olney-based Sandy Spring is the largest independently owned banking company in Maryland. The company said for the quarter ending Dec. 31, net income available to common stockholders was $6.6 million, or 27 cents per diluted share, compared with a net loss of $4.4 million for the fourth quarter of 2009. According to Thomson Reuters, analysts expected earnings per share of 27 cents.

“We are very pleased to report that we have redeemed the remainder of the preferred stock issued under TARP,” Daniel J. Schrider, Sandy Spring president and CEO, said in a prepared statement. “We believe this validates our turnaround in performance, which is largely driven by the substantial improvement in credit quality.”

The company also reported a decline in the provision for loan and lease losses, which totaled $2.3 million for the quarter, compared to $21.1 million for the fourth quarter of 2009. It was also down from the third quarter of 2010, when the bank set aside $2.5 million. The decline in the amount set aside to cover bad loans was attributed to a decline in the nonperforming loans.

For the quarter, nonperforming loans totaled $89.3 million as of Dec. 31. This compares with $141.2 million the prior year and $103.6 million at Sept. 30, 2010.

“The provision for loan losses has continued to decline for the last several quarters due primarily to the efforts of our credit team to reduce the level of non-performing loans,” Schrider said. “However, we recognize the need to focus on the continuing resolution of problem credits. Our consistent expense control and improved net interest margin continue to be major drivers of our improved performance and return to profitability. We believe that our consistent emphasis on the fundamental elements of community banking will serve us well as the business climate slowly improves.”

Shares of Sandy Spring gained 5 cents Thursday to close at $19.43 on the Nasdaq.