Sandy Spring Bancorp, Inc.

earnings conference call, and webcast for the second quarter. My name is Elliot, and I'll be coordinating the call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I would now like to hand over to Aaron Caslow, General Counsel and Chief Administrative Officer. Please go ahead.

Thank you, Elliot. Good afternoon, everyone, and welcome to Sandy Spring Bancorp's second quarter earnings conference call. Today I am joined by Dan Schreider, Chair, President, CEO, and Charlie Collum, Chief Financial Officer. I'd like to remind listeners that remarks made during today's calls may include forward-looking statements which are subject to risks and uncertainties. These forward-looking statements include statements of goals, intentions, earnings, and other expectations, estimates of risks and future costs and benefits, assessments of expected credit losses, assessments of market risk, statements of the ability to achieve financial and other goals. These forward-looking statements are subject to significant uncertainties because they are based upon or affected by management's estimates and projections of future interest rates, market behavior, other economic conditions, future laws and regulations, and a variety of other matters which by their very nature are subject to significant uncertainties. Because of these uncertainties, Sandy Spring Bancorp's actual future results may differ materially from those indicated. In addition, the company's past results of operations do not necessarily indicate its future results. I'll now turn the call over to Dan.

Thank you, Aaron, and thanks, everyone, for joining us today. I'll begin today's call by discussing some of our results for the quarter and then turn it over to Charlie. And I will follow with some commentary and subsequently open up the call for your questions. In the second quarter, we successfully grew core deposits and C&I loans, while also improving the net interest margins. In addition, we prudently managed expenses. We reported net income of $22.8 million or $0.51 per diluted common share for the second quarter of 2024 compared to $20.4 million or $0.45 per diluted common share for the first quarter and $24.7 million or $0.55 per diluted common share for the second quarter of last year. Core earnings for the current quarter were $24.4 million or $0.54 per diluted common share compared to 21.9 million or 49 cents per diluted common share for the previous quarter, and 27.1 or 60 cents per diluted common share for the second quarter of last year. The increase in net income and core earnings compared to the previous quarter was driven by higher non-interest income and net interest income, which improved the net interest margin for the first time in several quarters. Additionally, second quarter results benefited from a lower provision for credit losses which declined to $1 million from $2.4 million for the first quarter of this year. The provision for credit losses directly attributable to funded loan growth or the funded loan portfolio, I should say, was $3 million for the second quarter of 2024 compared to $3.3 million for the linked quarter. The second quarter provision mainly reflects higher individual reserves on collateral dependent loans, overall growth of the loan portfolio, and lower qualitative adjustments due to the reduction in commercial real estate loans. The reserve for unfunded commitments declined by $1.9 million, a result of higher utilization rates on lines of credit during the quarter. Turning our attention to the balance sheet, total assets increased to $14 billion at the end of the second quarter, compared to $13.9 billion at March 31, 2024. As of June 30, total loans increased by $119.6 million, or 1%, to $11.5 billion compared to the previous quarter. Commercial business loans and lines grew $91.9 million, or 6%. For the remainder of 2024, we expect funded loan production to continue to be in the range of $200 to $250 million per quarter, and based on pipelines, we expect commercial loan growth of 1% to 2% per quarter. Consistent with our strategy, the commercial investor real estate segment declined by 64.5 million or 1% as compared to the first quarter of this year. Total mortgage and consumer loan portfolios remain relatively unchanged in the second quarter compared to the first quarter of 2024. As you refer to the supplemental information we also released this morning, pages 7 through 9 provide more detail on the composition of our loan portfolios data related to specific property types in our commercial real estate portfolio, and specific commercial real estate composition in the urban markets of DC and Baltimore. Slide 16 through 20 of the supplemental deck provide a detailed commercial real estate overview for our retail, multifamily, office, flex slash warehouse, and hotel portfolios. As you review the data on these slides, you will notice an increase in criticized loans in each portfolio. In response to regulatory guidance issued last year and due to our continued focus on portfolio management, we reassessed commercial credits where cash flow fell short of covenants, despite having satisfactory payment performance. And based on this review, we recategorized $144 million to special mention and $19.5 million to substandard. There are minimal delinquencies within these credits as repayment has continued to be supported by strong sponsors or guarantors. And the reclassification had an impact of $900,000 on the allowance for loan losses, but no loans required specific reserves. As we also note in these slides, we are lending in our primary market that we know well. We have five accruing delinquent credits among the five portfolios referenced in the supplemental deck and only a handful of non-performing loans that have been subject to early identification and appropriately reserved. We continue to focus on our portfolio management, including staying close to our clients, assessing credits that are subject to repricing throughout the year, closely monitoring other portfolios, and evaluating the need for specific reserves should credit show further deterioration. Now I'll turn it to Charlie, who will walk through other aspects of our financial results. Thanks, Dan.