SASR - Sandy Spring Bancorp Likely Range-Bound Until Rates Drop

2024-06-30 01:44:56 ET

Summary

• Sandy Spring Bancorp is still struggling with the pressures of higher funding costs, with weaker net interest income and adverse fixed cost leverage leading to much lower earnings.
• Despite concerns about CRE credit losses, Sandy Spring's credit quality is holding up relatively well, with manageable stress in the portfolio.
• Management's outlook could be at risk if rates don't start heading lower, but once rate cuts do happen, there should be significant earnings leverage.
• There is room for the shares to re-rate higher, and SASR is a name to consider as a play on faster rate cuts, but I have questions about the long-term profitability that leave me on the sidelines for now.

Tom Petty said that the waiting was the hardest part, and he was on to something. There’s really not a lot that Sandy Spring Bancorp ( SASR ) can do in the short term to change the reality that the bank is basically stuck until rates start to fall, loan activity picks up, and credit worries about CRE resolve. In the meantime, it’s a decently-run but volatile bank that pays a solid dividend....

For further details see: