Good afternoon. Thank you for attending the Sandy Spring Bancorp Earnings Conference Call and Webcast for the third quarter. My name is Matt, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions- and- answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Daniel Schrider, President and CEO of Sandy Spring Bancorp. Daniel, please go ahead. Thank you, Matt, and good afternoon, everyone. Thank you all for joining us for our conference call to discuss Sandy Spring Bancorp's performance for the third quarter of 2022. This is Daniel Schrider, and I'm joined here by my colleagues, Philip Mantua, Chief Financial Officer, and Aaron Kaslow, General Counsel and Chief Administrative Officer. Today's call is open to all investors, analysts, and the news media. There's a live webcast of today's call, and a replay will be available on our website later today. Before we get started covering highlights from the quarter and taking your questions, Aaron will give the customary safe harbor statement. Thank you, Dan. Good afternoon, everyone. Sandy Spring Bancorp will make forward-looking statements in this webcast that 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, and 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, including the impact of the COVID-19 pandemic, 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. Thank you, Aaron, and it's good to be on the line with you this afternoon. To set the stage for our discussion today, it is important to acknowledge we are managing the company through an unprecedented environment, evidenced by the magnitude and pace of Fed action, as well as the rate of inflation and the expectation of recession. Despite this, we remain focused on the long game. We are growing new and existing client relationships and investing in technologies and human capital that will fuel continued growth. We're also addressing the near-term realities by keeping a keen eye on credit quality, launching initiatives to drive core funding, and managing operating costs. We incurred an outsized provision expense this quarter, which was a result of our success in driving loan growth, changes to the probability of recession, and a reassessment of the accounting for unfunded commitments, a majority of which is a one-time adjustment. With that, let's take a look at our overall results, and we will drill down on the details in a few moments. Today, we reported net income of $33.6 million or $0.75 per diluted common share for the quarter ended September 30, compared to net income of $57 million or $1.20 per diluted common share for the third quarter of 2021 and $54.8 million or $1.21 per share for the second quarter of 2022. Core earnings were $35.7 million compared to $44.2 million for the linked- quarter and $58.2 million for the prior year quarter. The decline in core earnings is primarily the result of the provision for credit losses given substantial growth and the expected decline in mortgage banking income, insurance commissions, and bank card fees. Looking at earnings through another lens, pre-tax, pre-provision income for the quarter was $64.1 million, a 6% increase after adjusting the linked-quarter $76.2 million for the $16.7 million dollar gain on the sale of the insurance agency and $1.1 million in related M&A expenses. This pre-tax, pre-provision growth is primarily based on the additional net interest income driven by our larger balance sheet, offset by the continuing pressure on our non-interest income sources as mortgage gains and wealth management revenues are impacted by the current economic and rate environment. The provision for credit losses was a charge of $18.9 million compared to a credit of $8.2 million for the prior year quarter and a charge of $3 million for the linked-quarter. The provision includes a provision for credit losses of $14.1 million for the funded loans and an adjustment of $4.8 million for unfunded loan commitments. Shifting to the balance sheet, total assets were $13.8 billion compared to $13.3 billion in the linked-quarter. Compared to the prior-year quarter, total assets this quarter increased 6% and excluding PPP balances, total assets increased 10% year-over-year. Total loans excluding PPP increased 21% to $11.2 billion compared to $9.3 billion at September 30, 2021. Total commercial loans net of PPP grew by $1.6 billion or 21% during the prior twelve months. Gross new commercial loan production over the past twelve months was $4.6 billion of which $3 billion was funded. Funded commercial loan production increased 43% to $762 million during the third quarter compared to $533 million for the same quarter of the prior year. If you look at page 17 in the supplemental information we released today, you can see our loan composition, and we also break down year-over-year and quarterly growth in these respective areas. Our C&I lending continues to remain on a positive trend. Excluding PPP, we grew all commercial portfolios led by the $1.3 billion or 35% growth in the investor-owned commercial portfolio. Year-over-year consumer loan portfolio decreased 6.2%. At the end of the quarter, our commercial pipeline was $1.3 billion compared to $1.7 billion at the linked-quarter end. As we shift to the deposit side of things, it's fair to say that deposit growth has been a challenge. Deposits over the past 12 months decreased 2%, and non-interest-bearing deposits remained stable, while interest-bearing deposits declined 3%. Given the pace that Fed moves and the amount of liquidity leaving the banking system, it's been difficult to gain traction on deposits. However, we have several short- and longer-term efforts underway to address these realities. We continue to offer some of the most competitive rates for this market, and we have introduced targeted CD rate specials and higher-priced money market products linked to private client relationships. We are incentivizing, well, actually enhanced our incentives for every salesperson to drive deposits from both our retail and commercial lines of business. Looking into early 2023, we have plans to launch a sophisticated online account opening platform that will expand the channels we offer clients and significantly reduce friction in the account opening process. Given this challenging environment, we have recently relied on more expensive non-core funding, and as a result, this will put pressure on the margin over the next few quarters. The net interest margin for the current quarter at 3.53% was four basis points higher than the prior quarter, but we ended the quarter with a margin in the low 340s as funding costs continued to increase at a greater pace than earning asset yields due to the impact of the two most recent Fed increases on short-term rates. We anticipate our margin will be in the low 330s range for the next few quarters before it begins to expand again, as we do expect the Fed to continue to increase short-term rates, which will continue to drive up our funding costs. Excluding the amortization of fair value marks derived from previous acquisitions and interest and fees from PPP loans, the current quarter's net interest margin was 3.50% compared to 3.32% for the third quarter of 2021 and 3.45% for the second quarter of 2022. Non-interest income for the current quarter decreased by 31%, or $7.5 million, compared to the prior year quarter. This anticipated reduction is a result of several factors, primarily the impact the economic environment is having on mortgage banking activities and wealth management income, as well as a decline in the insurance commission income given the previous quarter's disposition of our insurance business, and finally, lower bank card income due to regulatory restrictions on fees as the Durbin Amendment became effective. Income from mortgage banking activities decreased $3.4 million compared to the prior year quarter and $83,000 compared to the linked-quarter. It should be noted that total mortgage loans grew $355 million, primarily in conventional one-to-four-family mortgage loans during the 12 months ended September 30, 2022. We have successfully executed on our strategy to hold a larger percentage of mortgage production on the balance sheet and regrow this asset class, and we have achieved our current desired level for mortgage loans held in portfolio, which grew 4.7% compared to the linked-quarter, and we do not intend to further grow this asset class in the near future. We expect future levels of mortgage gain revenue to be about where they were this quarter, at least for the next couple of quarters, and we may see that expand a bit as the spring season comes on and if there's moderation in longer-term rates. Wealth management income decreased $231,000, or 2.5%, compared to the linked-quarter due to ongoing market volatility. Non-interest expense for the current quarter increased $2.6 million, or 4%, compared to the prior year quarter, and this was driven by a $1.5 million increase in compensation expense and $1.4 million in other non-interest expense. I should note that the 2% increase in other non-interest expense compared to the prior year quarter is a result of a $1.2 million accrual towards the fully realized contingent earn-out for RPJ. We acquired RPJ in 2020, and over the past two years, the firm has demonstrated the ability to grow revenue and drive business. We expect to continue to grow our expense base commensurate with our ongoing long-term strategic objectives, including efforts to improve our digital delivery and data analysis capabilities, continuing to add necessary skills to our employee base, and keep up with inflationary-based employee costs. On an annualized basis, expense growth in the near term should be in the 4%-5% range, although could get to higher single-digit growth with greater success in hiring for the future. The non-GAAP efficiency ratio for the third quarter of 2022 was 48.18 compared to 46.67 for the prior year quarter and 49.79 for the second quarter of 2022. Given our outlook on expenses and net revenues, we expect the efficiency ratio to hover around the 50% mark for the foreseeable future. Shifting to credit quality, in spite of the increase in the provision this quarter, our overall credit quality continues to be strong, and we see no inherent signs of weakness in the major sectors of the loan portfolio. As mentioned, the increase in the provision was driven by growth and an assumed greater probability of recession versus any underlying change in current or projected credit-based performance of the portfolio. The level of non-performing loans to total loans held steady at 40 basis points throughout the current and linked-quarter and decreased from 80 basis points at September 30, 2021. These levels of non-performing loans indicate stable credit quality during a period of significant growth. Loans placed on non-accrual during the current quarter amounted to $4.2 million, compared to $5.7 million for the prior year quarter and $900,000 for the second quarter of 2022. We did realize net recoveries of $0.5 million compared to net charge-offs of $7.8 million for the third quarter of 2021 and insignificant recoveries for the second quarter of 2022. The allowance for credit losses was $128.3 million, or 1.14% of outstanding loans, and 289% of non-performing loans. This compares to $113.7 million, or 1.05% of outstanding loans and 261% of non-performing loans at the end of the previous quarter. The tangible common equity ratio decreased to 7.98% of tangible assets at September 30 compared to 9.10% at September 30, 2021. This decrease is a result of the $132.3 million repurchase of common shares during the previous twelve months and the $141.9 million increase in the accumulated other comprehensive loss in the investment portfolio due to the impact of the rising rate environment on the value of securities, coupled with the increase in tangible assets during the past year. At September 30, 2022, the company had a total risk-based capital ratio of 14.15%, a common equity tier one risk-based capital ratio of 10.18%, a tier one risk-based capital ratio also at 10.18%, and a tier one leverage ratio of 9.33%. Before we move to your questions, just a couple of other updates I'd like to share. In August, the bank paid a special one-time bonus of up to $1,000 per employee to all employees. Like everyone, our people have been feeling the effects of inflation, so we wanted to do something to show our appreciation and support, for our people. Finally, Bank Director recently issued the 2022 bank ranking study. This report ranks the financial performance of the 300 largest publicly traded banks in the country, and Sandy Spring Bancorp ranked number 23 among all banking companies. We're really pleased to be recognized for our best-in-class financial results, and I'm grateful to the 1,200 exceptional employees who made this possible. Matt, that concludes our general comments for today, and now we can move to your questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question is from the line of Catherine Mealor with KBW. Your line is now open. Thanks. Good afternoon. Good afternoon, Catherine. Hey, Catherine. Dan, I think you said in your prepared remarks that the margin near term, did you say would be in the low 3.30% range? Yes. As we forecast out what we think the Fed, you know, projected to do before our earning asset yields, you know, kind of catch up to where the cost of funds are going, I think in the next few quarters, we're gonna see some compression down into the low 3.30% before we see that rebound. Okay. I just wanted to make sure I heard that right. In that 3.30% estimate, you know, how are you thinking about deposit betas and maybe as an indication where were deposit costs at September or quarter end, just to give us an indication of what we've seen for the full quarter, you know, the impact to spread? Yeah, Katherine, this is Phil. You're right on it as it relates to it's more about where we ended the quarter, and the implications going forward from that point, with the assumption that the Fed's gonna continue to move rates ahead, than it is the overall average during the quarter. I think in your earlier note, you had the beta right around 20-23. In reality, it's probably closer. During this quarter, it probably was closer to the overall 40 range that we've stated before, and in some cases, in areas like our money market products, it's probably more like 50 or 55%. You know, we lagged as long as we could in order to try to preserve the margin to date. With the speed and size of what the Fed did here more recently and our liquidity needs, we've had to get more aggressive. Those betas are gonna be elevated from where we would normally have projected them to be. For an example, you know, the quarterly average rate on our money market group of deposits was 65 basis points, but that same rate at the end of September or for the month of September was 109. I think that gives you some indication of, you know, just how we're progressing in terms of what it's costing us to fund within the deposit base, much less even more so on the wholesale basis. That makes sense. How about on CDs? Do you give the same kind of number on that? Yeah. Same type of thing, but probably not as significant just because you know it's the incremental element of the time deposits. For the quarter, the time deposit average cost was 56 basis points. By the end of the quarter, in September, it was 83. Great. Okay. As you grow deposits, which I'm lucky maybe that's the next question, just we saw deposits decline this quarter, and again, you talked a lot about, in your prepared remarks about just the challenge of growing deposits right now. Where do you think, if you're able to grow deposits, where the push comes from, mostly in this money market line or CDs, or where are you seeing maybe the most I mean. Increase seen? From the standpoint of what we're emphasizing relative to rate, those are the two categories that we would expect the growth to come from. I would also say that, you know, based on what we're trying to do more broadly in the efforts of our frontline folks, we really would like to see and hope to see some additional growth in the DDA area as well, especially from the, you know, the commercial side of the house relative to to lending clients and the like. Okay. By the way, I think we've had pretty good- Go ahead. Excuse me. By the way, I think we've had pretty good success of holding the line in terms of the DDA balances here. The only major category there, as you might expect that's gonna be down, was really anything related to title company business, affected by, you know, the mortgage environment. Yes, for sure. How about borrowings? What's your kind of strategy or plan with appetite for adding borrowings anymore from here? Yeah. Our general approach to anything wholesale is to utilize it as we need to backfill and match commensurate growth on the other side of the balance sheet. That's essentially what we've been doing here throughout the quarter. We're at $840 million at quarter end, you know, in terms of advances. They're mostly short term. Of course, the problem with that is that's, you know, unfortunately, one of the, you know, kind of the more expensive part of the curve today. We are doing so with the anticipation that over time, the deposits piece will catch up, and we'll be able to eliminate that position. Great. Okay. Your loan-to-deposit ratio is now over 100 or right at 100. How do you think about that ratio? Where's the kind of upper end of that range where you would not be comfortable going? Well, we normally, I think as we've talked before, are comfortable managing that in the 1-1.05 range. Just knowing the nature of the market here and the general, you know, profile of customers alike. Our kind of, you know, pain point is where when it gets more towards the 1.10 level. Then it also depends on just how that ratio is constructed relative to how much of the deposit base is true core versus how much in those ranges would, you know, happen to be brokered or wholesale because they're, you know, the profile is dramatically different in my mind, depending on how that deposit base and those ratios are built. On the other side of the balance sheet, I'm just really digging in the margin, but, it's just on loan yields. You know, again, maybe question one is you had really strong loan growth this quarter. Maybe on average, where are you seeing new pricing come on? Then I know you've got a total loan portfolio that's more heavily weighted towards fixed rate. How are you thinking about loan betas over the next couple of quarters? I think I'd speak a little bit to your question as it relates to kind of the pipeline going forward compared to what we've done in the past, Catherine. We've, you know, obviously come out of a cycle where it's been largely fixed rate production that we've seen over the last few quarters. As we look forward into the fourth quarter, we've seen a pretty material change based upon, you know, the focus that we've had our front line take. Probably 80% of that $1.3 billion commercial pipeline is floating rate business. When I say, you know, either prime-based or thirty-day SOFR-based, you know, opportunities in front of us. We've really shifted the focus to drive opportunities that are, you know, gonna be more tied to what's happening with short-term rates as opposed to longer-term fixed rates, which should obviously help on at least, you know, kind of being closer to what we're paying on the funding side of the equation to fund that growth. Phil, I don't know if you have anything on that. Yeah. I would say that the lion's share of the current pricing, especially in the, well, in the commercial portfolio in particular, has probably been into that mid- to high-5% range. Although, I think we're imploring, you know, our folks to really be thinking about it in the more 6.5%-7% range as we move forward here. We are seeing some migration in that direction, in general. I think that that's really where we're trying to get to. Okay. Great. All right. I think I have a lot of questions. I've been, like, the only Mid-Atlantic analyst. If there are any other analysts on, then I may pop back in, but I'll just see if there's anyone else in the queue for now. Thanks. You, Catherine, you can keep going. There's no one else? Okay. We can see the queue in front of us, and so you are the questioner at this point. Everyone's been enjoying my one-on-one calls, all day this week. Okay. Maybe we can move to the credit side. Just the ACL build was so big this quarter, and I know a lot of that was just from CECL and the macro change and, you know, the growth and obviously the unfunded commitment that you talked about. Just, you know, generally, I don't know, just maybe kind of talk about your outlook for where you think provisions may be next quarter or next year. I know that's hard just given it's so uncertain, but, you know, this number felt like it was really big. Just curious how you're kind of thinking the cadence of reserve builds, you know, may look over the next couple of quarters relative to that. Yeah. Well, Catherine, this is Phil again. It feels pretty big to us too. Well, I think we also do have to recognize that, you know, about $5 million, almost $6 million of it was, you know, directly related to growth as well. You know, depending on if we're, you know, if we have a little bit, you know, a little bit less or mitigated growth, that aspect of that build would certainly ebb back as well. The other thing that's related to this, you know, more purely CECL oriented is, you know, we have these qualitative factors in here now that are related to the probability of recession. At some point, as you approach the recession, you probably no longer need to have that qualitative factor because it then becomes embedded, so to speak, in the baseline forecast, economic forecast that you're using as well. You know, we might see some of that kind of, you know, ebb away a little bit as it transitions into the more baseline forecast. That might be, you know, one of the other places that it comes back a little bit. You know, in terms of, you know, just general levels of provision going forward, I mean, this quarter's is outsized by probably at least $5-$6 million. Okay, great. Just generally, anything that you're seeing that you're pulling back on or more concerned about from a credit perspective in your markets? We've heard of some pulling back on construction, you know, but that's been a little bit mixed. Yeah. We probably focused as much on the nature of the underlying opportunity from how it's priced, you know, structure of pricing. A lot more emphasis on the C&I and floating rate opportunities. You know, it's no secret that we're a little elevated compared to our peer group on CRE exposure, but that is largely what the greater Washington market. You know, that's consistent with kind of what this market, how it's built. But not real interested in throwing longer term, you know, fixed rates and continuing to grow that concentration. We're probably managing some sub-portfolios within commercial real estate to not, at least not see them expand significantly. As we go through our process of portfolio reviews, you know, stress testing, analytics around, you know, market trends within real estate, we're not seeing signs. We are seeing movements in cap rates, which will obviously, you know, drive, you know, pricing or, you know, valuations in a different direction. Nothing that's given us, you know, cause for concern, apart from just making sure what we're putting on the books makes sense from a, from a pricing and concentration standpoint. On growth, I'm assuming growth will slow from the level we saw this quarter. What's an appropriate growth rate to think about for next year? Yeah. Good, great question. You know, Q4 is always a wild card because, you know, right now from a pipeline of new opportunities, we would not expect to see the same level of growth that we just saw in the third quarter. There is always year-end kind of window dressing going on within your commercial client base, so you might see things, you know, pop at the very end of the year. Our expectation going into 2023 continues to be in that 8%-10% kind of loan growth expectation. You know, high single digits we think would be reasonable of our appetite, our ability to fund and what we, you know, would foresee in the economic environment. You know, one of the things that's a little bit unique, at least it seems this way to us, is we've. The teams, you know, coupled with, you know, coming out of the pandemic, having done Revere in the middle of it, kind of came out of the pandemic with a great deal of momentum and really have developed a reputation as kind of the go-to bank in the market here locally. I think that momentum, you know, to some extent, will continue. We continue to see existing clients wanna grow and new clients wanna come here. The last thing we wanna do is turn that off. Our greatest challenge right now is just making sure we can fund it with core sources of funding. That's probably the, you know, the one thing that could put a governor on growth. That 8%-10% number seems to be reasonable outlook right now. Great. Any update on buyback appetite? You weren't active this quarter, but, you know, your stock is down today. Any thoughts on reengaging on the buyback? We don't have plans at this moment, but something always under consideration. After looking at the market right now, maybe we should be active this afternoon. You know, the capital piece, you know, I know. Do you look at kind of your growth and capital levels as the governor for that? Yes. You know, we You know, it's more of if you'll be active or not. Yeah. Yep. Yeah. I think going into, you know, what could be, you know, a little bit of uncertainty from an economic standpoint, I think we'd probably hold the line there and maintain our capital levels, let that continue to grow as we move through what might be a recessionary period. My last question is just on M&A. Any updated thoughts on the potential for deals that you're looking at? M&A markets felt quiet over the past couple of months. Just any updated thoughts there? Yeah. Continue to be. You know, we're coming up on, what? 2.5 to three years from our last released bank opportunity. We continue to build those relationships and, you know, it's certainly something we expect to be part of our strategy going forward. As well as, we'd love to find another one or two, you know, RIAs to fold into our wealth practice as well. We're working diligently on both of those fronts, but don't really have anything more to report at this time. Okay. All right. Great. Well, thanks for the one-on-one, and sorry it was the KBW show this afternoon. Hopefully we'll have more analysts on next quarter. Thank you. Thank you so much. Thanks, Catherine. See you, Catherine. Thank you for your question. The next question is from the line of Manuel Navas with D.A. Davidson. Your line is now open. Good afternoon, Manuel. Manuel, please check to see if you're on mute. Hey. Hey. Sorry, guys. I was on mute. There was more than one analyst here. Hey, this, the NIM forecast. Welcome to the party. Does the NIM forecast that you're talking about with the next couple quarters at 3.30%, or kind of heading towards 3.30%, is that kind of the timeframe that it's gonna take to replace the wholesale funding to deposit funding? Just kind of thinking about it on that piece. Yeah. That's a key part of it, Manuel. This is Phil. That's a key part of it as well as, you know, hoping within that couple quarter period that the Fed gets done with what they're going to do and things can kind of settle from, you know, from having to try, you know, to keep up with continued, you know, upward movements in overall rates. So I think it's those things that we are looking at here as we project out, you know, into the first half of next year and looking at what the implications would be. Yep. With the money market fund money market rate kind of being higher at the end of September, was that to just prevent attrition or are you actually seeing some new flows because you raised rates? We're probably looking to both counter any possible attrition as well as just putting a you know a legitimately attractive rate out there to attract new relationships. We've normally used that money market vehicle for doing that and giving our folks over time an opportunity to expand the relationship once we kind of use that as the hook. I mean, the actual six-month guarantee rate that we're offering right now is 2.5%. We're leading with that and having all the other tiers behind it you know follow suit, but not to that exact degree. That is our traditional hook product. Any early indications of success or wait till next quarter? I think that we're certainly starting to hold our own in that respect. We have had, you know, decent traction on the CD side as well. It's just that, you know, the numbers of which we need to be able to, you know, to offset and fund the growth we had on the loan side is just that much bigger. There is some traction, you know, kind of underneath the surface there, but it just needs to be more, just needs to be greater. Got it. Okay. I appreciate this. Thank you, guys. Thanks, Manuel. Yep. Thank you for your question. There are currently no further questions registered, so as a reminder, it is star one on your telephone keypad. There are no additional questions waiting at this time, so I'll pass the conference back to the management team for any closing remarks. Thanks, Matt. Thanks again everyone for joining our call this afternoon. Appreciate your questions and your time, and we hope that you have a wonderful afternoon. That'll conclude our call. That concludes the conference call. Thank you for your participation. You may now disconnect your line.