Bank Lures Customers Of Rivals

April 22, 2009|By Eileen Ambrose | Eileen Ambrose,

Sandy Spring Bancorp Inc. launched a campaign this month to attract customers from nearby rivals acquired by out-of-state banks, even as it faces weaker profits amid the economic slowdown.

Sandy Spring's top executive discussed plans to win over customers from Chevy Chase Bank and Provident Bankshares Corp. during a conference call with analysts Tuesday to discuss first-quarter earnings. Capital One Financial Corp. bought Chevy Chase this year; M&T Bank is buying Provident.

The Olney-based bank reported that its earnings available to common shareholders dropped to $1 million, or 6 cents per share, mostly because of a $10.6 million loan loss provision related mainly to its real estate development portfolio. In the first quarter last year, Sandy Spring posted an $8.2 million profit, or 50 cents per share.

Daniel J. Schrider, president and chief executive of Sandy Spring, told analysts that Sandy Spring hoped to capitalize on the recent mergers to build the bank's business across all lines.

"There is market disruption working in our favor," Schrider said.

Sandy Spring has hired staff from the two competitors, Schrider said, and plans to lure customers - a campaign internally called "Operation Take Share" - include a "Switch Kit" on the bank's Web site that allows customers to transfer their account to Sandy Spring.

Those acquiring banks, however, are working to shore up their base of customers from their new companies. Buffalo-based M&T has been sending letters to current Provident customers informing them of changes and added services the company offers.

"We hope to retain all of Provident's customers," said spokesman Phil Hosmer.

Schrider said the local economy hasn't shown meaningful improvement yet for its builder and developer customers.

Nonperforming assets rose by $53.6 million to $125.8 million in the first three months of this year. The bulk of the increase came from one commercial loan and four residential real estate development loans.

Deposits were up 9 percent at the end of March over a year earlier. Schrider credits part of that growth to a new money-market account that allows customers to lock in a competitive rate for three months.

Residential mortgage loan closings, mostly refinancings, nearly doubled in the quarter, to more than $121 million, from a year ago. Assets by the end of the quarter totaled $3.5 billion, up 11 percent from a year ago.

The bank announced this year that it was cutting its quarterly common stock dividend in half to 12 cents.

Sandy Spring's stock closed up 43 cents Tuesday at $14.39 per share.

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