Sandy Spring Bancorp in Olney, Md., said a 17% increase in net loans and leases drove its second-quarter net income up 4% from a year earlier, to $8.1 million.
But analysts said higher funding costs and declines in mortgage banking income caused its earnings per share to fall well short of their estimates.
The $2.6 billion-asset company said Tuesday that diluted earnings per share rose by a penny, to 54 cents. However, the figure was 5 cents below the average estimate of analysts surveyed by Thomson Financial.
Sandy Spring's net interest margin dropped 9 basis points, to 4.3%. The company attributed the decline to "slowing growth in noninterest-bearing deposits and increased short-term borrowings within a flat yield curve environment."
Gains on the sale of mortgages fell 38%, to $549,000, but Sandy Spring's overall noninterest income rose 4%, to $9.4 million.
Its stock price fell 1.38% Tuesday in heavy trading, to close at $35.04 a share.
