Sandy Spring Bancorp Inc.

17801 Georgia Ave.

Year founded: 1868

Industry: Banking

Post 200 Category: Top Financial Companies

Revenue: $140.16 Million

Net Income/Loss: $14.37 Million

Earnings per share: $0.98

Dividend: $0.78

Stockholder equity: $195.08 Million

Auditor: McGladrey & Pullen LLP

Stock: SASR

Assets: $2.31 Billion

Market capitalization: $452.14 Million

52-week high: 40.1 4/28/2004

52-week low: 30.4 4/12/2005

President and CEO: Hunter R. Hollar

COO: Frank H. Small

Employees: 608

Local employees: 375

Description: Sandy Spring Bancorp, a bank holding company, is the parent of Sandy Spring Bank, and the bank's two subsidiaries, Sandy Spring Insurance Co. and the Equipment Leasing Co. Founded in 1868, the bank has 30 branches spread among five Maryland counties.

Developments: As Sandy Spring Bancorp executives themselves acknowledged, the bank had a "disappointing year." It was forced to quit a financial strategy that backfired when interest rates started to rise, and the cost of exiting that strategy hit the bottom line. The bank had relied heavily in recent years on borrowing money for short terms at low rates from the Federal Home Loan Bank of Atlanta, and investing the proceeds in longer-term bonds, especially debt instruments issued by the mortgage giants Fannie Mae and Freddie Mac. About 37 percent of the bank's assets were deployed in that manner, which was profitable while interest rates were at rock-bottom lows. But when short-term rates began moving higher in late 2003, the strategy started to turn against the bank. In October, Sandy Spring announced that it would refocus on traditional banking activities, and it also disclosed that two top executives had departed — James H. Langmead, executive vice president and chief financial officer, and Lawrence T. Lewis, executive vice president and chief investment officer. In their place, the bank named Philip J. Mantua, a five-year Sandy Spring veteran, as chief financial officer. Soon thereafter, the bank decided to prepay $195 million of borrowings from the Federal Home Loan Bank, which resulted in a pretax expense of $18.4 million due mainly to prepayment penalties. By taking that "short-term hit," the bank "eliminated what could well have turned out to be a sustained drag on earnings over the next three or four years," chief executive Hunter R. Hollar told analysts in January. Sandy Spring also announced in December that it was acquiring Wolfe & Reichelt Insurance Agency of Burtonsville, Md., a general insurance agency with about $700,000 in annual revenue.