Olney-based Sandy Spring Bancorp Inc. reported Thursday that it made $7 million net income in the second quarter.
That’s a noticeable decline from the same quarter last year, when the company brought in a $12.2 million profit, and from the first quarter of 2014, when it made $10.9 million.
But that’s because the bank used $6.1 million in the second quarter for a litigation cost reserve. A jury in May awarded $6,063,000 to three men, of the business C&P Sons Inc., who alleged they were assaulted by a former vice president of CommerceFirst Bank.
The lawsuit regarded an incident in November 2011, when Thomas L. Bolander, the CommerceFirst employee, allegedly threatened the men with a gun as they were moving out of a business space in Prince Frederick.
CommerceFirst had foreclosed upon the space in 2010, so C&P signed a lease with the bank. The lease expired on October 31, 2011. C&P agreed with the bank on items it could remove from the property and removed them Nov. 7.
But on Nov. 8, Bolander called police to say that C&P was taking unauthorized items from the site. Then, according to the lawsuit, he showed up there with the gun.
The jury awarded $5 million in punitive damages and $1.05 million in compensatory damages. Sandy Spring said the compensatory damages were expected to be covered by insurance.
Sandy Spring announced in December, after that incident, that it would acquire CommerceFirst, and the transaction closed in 2012. Bolander was never a Sandy Spring employee.
President and CEO Daniel J. Schrider said on a conference call with investors Thursday that the company has continued to pursue relief from the case.
“We do not believe that Sandy Spring Bank should be held liable for the actions of a former CommerceFirst Bank employee who acted outside the scope of his employment,” he said in May, following the jury verdict.
Schrider said that he does not expect the case to have any long-term earnings impact beyond the second quarter, and that it will not change the company’s mergers and acquisitions strategy.
Not including this litigation expense, the company’s pre-tax, pre-provision income increased year-over-year from $15.6 million to $16 million.
The bank’s non-interest income declined by 4 percent year over year due to a decline in mortgage loan originations. But interest income increased by 3 percent and total loans were up 12 percent year over year.
Sandy Spring is Maryland’s largest bank, with $4.2 billion in assets as of June 30. Its total assets have grown by 4 percent since 2013.