EGBN - Sandy Spring Bancorp Squeezed By Weak Spreads

Summary

• Sandy Spring posted weak fourth quarter results, with significant net interest margin pressure from higher deposit costs and not enough loan or fee-based income growth to offset.
• Earning asset yields should improve over time, but the deposit funding side is vulnerable until the Fed stops hiking rates.
• A meaningful allocation of retail and office CRE loans is a risk in a downturn, but Sandy Spring operates in some very wealthy countries and that should offset the risk.
• I still believe that Sandy Spring can generate healthy mid-to-high single-digit core earnings growth, but the near-term outlook is lackluster and the valuation just isn't cheap enough.

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