Sandy Spring Bancorp, Inc. (SASR) - Gabelli Research analyst Steven Comery (2-28-2018)

Sandy Spring Bancorp, Inc. (SASR) - Gabelli Research analyst Steven Comery (2-28-2018)

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Transcript:Sandy Spring Bank is a pro-forma $7.4B-asset bank holding company headquartered in Olney, Maryland. The subsidiary bank operates forty-four branches across Virginia, Maryland, and the District of Columbia, primarily lending to commercial real estate and commercial and industrial borrowers.

The company has about 35 million shares outstanding pro forma for the Washington First acquisition, closed around $39 dollars per share for an equity market cap of about one point four billion dollars.

As we discuss in our initiation report, since 2010, Sandy Spring’s balance sheet has demonstrated better-than-peer-average credit performance through lower non-performing asset ratios and charge-off rates.

While Sandy Spring’s net interest margins have historically underperformed peers, sticky retail and noninterest commercial deposits have helped the company expand NIMs during the current Fed tightening cycle, while peer margins have contracted.

At $39, SASR trades at about one point eight times our 2018 tangible book value per share estimate of $21.20, and approximately twelve point eight times our earnings per share estimate of $3.10, well below peer transaction multiples between two point two and two point five times tangible book value and seventeen to twenty-four times earnings per share.

We value SASR conservatively at two point two times our twenty eighteen tangible book value estimate, for a private market value estimate of forty seven dollars per share. We therefore see compelling upside potential in SASR.

Source: Gabelli TV (via YouTube)
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