2 community banks report earnings

Two Maryland community banks reported second-quarter earnings results yesterday, with Columbia Bancorp posting a 9.7 percent increase in net income and Olney-based Sandy Spring Bancorp recording a 27 percent decrease as low interest rates and a suffering securities portfolio sapped profits.

Sandy Spring had net income of $6.4 million, or 43 cents per share, in the quarter that ended June 30, down from $8.7 million, or 60 cents per share, posted for second-quarter 2003.


Year over year, deposits were up 6 percent to $1.7 billion and total assets climbed 2 percent to $2.4 billion. But net interest margin, the difference between what the bank charges for loans and what it pays in interest on deposits and other liabilities, fell to 3.58 percent from 3.74 percent in second-quarter 2003.

Mortgage loan profits declined 36 percent in the second quarter compared with a year ago, and the bank's securities portfolio declined 12 percent to $912.2 million.


The bank's shares fell $1.08, or 3 percent, to $32.92 in trading yesterday.

Hunter R. Holler, president and chief executive of Sandy Spring, said he believes that the bank has reached a "turning point" beyond which margins and loan growth are expected to improve.

"The underlying attributes of a high-performing banking company are all still self-evident and our core engine is quite healthy as we enter the second half of the year with optimism in an ever-competitive marketplace," he said in a statement.

Analysts said the bank is being dragged down by its poorly performing securities portfolio.

"I think when you have a securities portfolio that comprises more than 50 percent of your earnings assets, it should be really a focal point of attention, especially when you're in a volatile interest rate environment," said Collyn Bement Gilbert, an analyst who follows the bank for Ryan Beck & Co.

Columbia Bancorp reported net income of $3.1 million, or 42 cents per share, compared with $2.84 million, or 39 cents per share, in second-quarter 2003.

Loans for the Columbia-based bank reached a record $900.3 million, a 20 percent increase from last year's quarter. The bank said the increase came from all segments of its lending business. Assets also reached a record $1.13 billion, an increase of 6.3 percent from second-quarter 2003.

Noninterest income fell $571,000, or 23.4 percent, compared with second-quarter 2003.


The bank said it expects its margin on loans to improve as Federal Reserve policy-makers move to increase interest rates in an effort to curb inflation. Its shares rose 4 cents to $28.54 in trading yesterday.