UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)

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þ		Definitive Proxy Statement

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o		Soliciting Material Pursuant to § 240.14a-12

SANDY SPRING BANCORP, INC.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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17801 Georgia Avenue
Olney, Maryland 20832
301-774-6400

March 15, 2007

Dear Shareholder:

     On behalf of the Board of Directors, we are pleased to invite you to the Annual Meeting of Shareholders on Wednesday, April 18, 2007 at 3:00 p.m., at the Ten Oaks Ballroom, 5000 Signal Bell Lane, Clarksville, Maryland. The official notice of meeting and proxy statement on the following pages contain information about the meeting. The Board of Directors recommends that you vote FOR the election of the director-nominees and FOR the ratification of appointment of the independent registered public accounting firm. We have also enclosed the 2006 Annual Report, including our financial statements. In addition to the business matters contained in the proxy statement, we will review operating results for the past year and other information concerning Sandy Spring Bancorp, Inc. We believe you will find the meeting to be informative.

     Even if you own only a few shares it is important that your shares be represented at the meeting and we urge you to vote your shares by returning your proxy card as soon as possible. If you have any questions, please call Ronald E. Kuykendall, Executive Vice President, General Counsel and Secretary, at 301-774-6400 or 800-399-5919.

     Thank you for the cooperation and continuing support you have given this institution.

Sincerely,

W. Drew Stabler
Chairman of the Board

Hunter R. Hollar
President and Chief Executive Officer

NOTE: THIS PAGE INTENTIONALLY LEFT BLANK

SANDY SPRING BANCORP, INC.
17801 Georgia Avenue, Olney, Maryland 20832

NOTICE OF 2007 ANNUAL SHAREHOLDERS MEETING

		Date:		Wednesday, April 18, 2007
		Time:		3:00 p.m., Eastern Time
		Place:		Ten Oaks Ballroom
				5000 Signal Bell Lane
				Clarksville, MD 21029

     A Proxy and Proxy Statement for the Annual Meeting and the 2006 Annual Report on Form 10-K of Sandy Spring Bancorp, Inc. (“Bancorp”) are enclosed. The Proxy Statement and Proxy are being furnished to you in connection with the solicitation of proxies by Bancorp’s Board of Directors for use at the Annual Meeting.

     The purposes of the Annual Meeting are:

	(1)		To elect the six (6) directors named in the attached Proxy Statement, five (5) to serve as Class I directors with terms expiring at the 2010 Annual Meeting, and one (1) director to serve as a Class III director with a term expiring at the 2009 Annual Meeting, in each case until their successors are duly elected and qualified;
	(2)		To ratify the appointment of McGladrey & Pullen, LLP as the independent registered public accounting firm for the year 2007; and
	(3)		To transact any other business as may properly come before the Annual Meeting.

     Note: The Board of Directors is not aware of any other business to come before the Annual Meeting.

     Only shareholders of record of Sandy Spring Bancorp’s common stock as of the close of business on March 5, 2007 will be entitled to notice of, and to vote at, the Annual Meeting, or any adjournment thereof. To grant a proxy to vote your shares, you are requested to fill in and sign the enclosed Form of Proxy and to mail it in the enclosed envelope. The Proxy will not be used if you attend and choose to vote in person at the Annual Meeting. Please vote promptly whether or not you expect to attend the Annual Meeting.

     In the event that there are not sufficient votes to conduct the election of directors or to approve other business properly before the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies by Bancorp.

		By Order of the Board of Directors,
		Ronald E. Kuykendall
		Executive Vice President,
		General Counsel & Secretary

March 15, 2007
Olney, Maryland

IT IS IMPORTANT THAT THE PROXY CARD BE RETURNED PROMPTLY. WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND COMPLETE THE PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF THIS ENVELOPE IS MAILED IN THE UNITED STATES.

SANDY SPRING BANCORP, INC.
Proxy Statement

Table of Contents

Solicitation, Voting, and Revocability of Proxies			1
PROPOSAL I : Election of Directors			2
Corporate Governance and Other Matters			4
Code of Business Conduct			7
Stock Ownership of Directors and Executive Officers			8
Owners of More Than 5% of Bancorp’s Common Stock			9
Compensation Discussion and Analysis			9
Compensation Committee Report			17
Executive Compensation			18
Transactions and Relationships with Management			25
Shareholder Proposals and Communications			25
Compliance with Section 16(a) of the Securities Exchange Act of 1934			26
PROPOSAL II: Ratification of Selection of Bancorp’s Independent Registered Public Accounting Firm			26
Report of the Audit Committee			27

SANDY SPRING BANCORP, INC.

Proxy Statement

Annual Meeting of Shareholders
April 18, 2007

Solicitation, Voting, and Revocability of Proxies

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Sandy Spring Bancorp, Inc. (“Bancorp”) to be used at the 2007 Annual Meeting of Shareholders. The Annual Meeting will be held on Wednesday, April 18, 2007, at 3:00 p.m. EST at the Ten Oaks Ballroom, 5000 Signal Bell Lane, Clarksville, Maryland. The Notice of Annual Meeting, the Proxy, and this Proxy Statement are being first mailed together on or about March 15, 2007, to shareholders of record as of the close of business on March 5, 2007.

If the enclosed Proxy is properly executed and returned to Bancorp in time to be voted at the Annual Meeting, the shares represented by it will be voted in accordance with the instructions marked on the form. Executed but unmarked proxies will be voted FOR Proposal I to elect the six director-nominees of Bancorp’s Board of Directors as directors and FOR Proposal II to ratify the appointment of the independent registered public accounting firm. Proxies marked as abstentions and shares held in street name that have been designated by brokers on proxies as not voted will not be counted as votes cast, but will be counted for purposes of determining a quorum at the Annual Meeting. Bancorp does not know of any other matters that are to come before the Annual Meeting except for incidental, procedural matters. If any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy will vote the shares represented by each proxy on such matters as determined by a majority of the Board of Directors.

The presence of a shareholder at the Annual Meeting will not automatically revoke that shareholder’s proxy. However, shareholders may revoke a proxy at any time prior to its exercise by filing with Ronald E. Kuykendall, Executive Vice President, General Counsel and Secretary, a written notice of revocation; by delivering to Bancorp a duly executed proxy bearing a later date; or by attending the Annual Meeting and voting in person.

Many shareholders whose shares are held in accounts at brokerage firms or banks will have the option to submit their proxies or voting instructions electronically through the Internet or by telephone. Shareholders should check their proxy card or voting instructions forwarded by their broker, bank or other holder of record to see which options are available. Shareholders submitting proxies or voting instructions via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that would be borne by the shareholder. To revoke a proxy previously submitted electronically through the Internet or by telephone, a shareholder may simply submit a new proxy at a later date before the taking of the vote at the Annual Meeting, in which case, the later submitted proxy will be recorded and the earlier proxy will be revoked.

The cost of soliciting proxies will be borne by Bancorp. In addition to the solicitation of proxies by mail, Bancorp also may solicit proxies personally or by telephone or telegraph through its directors, officers, and regular employees. Bancorp also will request persons, firms, and corporations holding shares in their names or in the name of nominees that are beneficially owned by others to send proxy materials to and obtain proxies from those beneficial owners and will reimburse the holders for their reasonable expenses in doing so.

We plan to take advantage of the householding rules of the Securities and Exchange Commissions that permit us to deliver one set of the proxy materials and annual report to shareholders who have the same address, unless they request otherwise. Doing so will allow us to reduce the expenses of delivering duplicate materials. We will continue to send a separate proxy card for each shareholder residing at a shared address.

A separate notice of our intention to use the householding rules is included with this mailing. Please note that if you own Bancorp common stock through a nominee (such as a bank or broker), information regarding householding should be forwarded to you by the nominee.

The securities that can be voted at the Annual Meeting consist of shares of common stock, par value $1.00 per share (the “Common Stock”), of Bancorp. Each share entitles its owner to one vote on all matters. The close of business on March 5, 2007 has been fixed by the Board of Directors as the record date for determination of shareholders entitled to vote at the Annual Meeting. There were approximately 2,400 record holders of the Common Stock as of February 16, 2007. The number of shares outstanding on February 16, 2007 was approximately 15,723,367. The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of Common Stock is necessary to constitute a quorum at the Annual Meeting.

A copy of the Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the Securities and Exchange Commission (“SEC”), but excluding exhibits, is provided with this Proxy Statement. Shareholders may obtain a copy of the exhibits to the Annual Report on Form 10-K upon payment of a reasonable fee by writing Ronald E. Kuykendall, Executive Vice President, General Counsel and Secretary, at Sandy Spring Bancorp, Inc., 17801 Georgia Avenue, Olney, Maryland 20832. Shareholders also may access a copy of the Form 10-K including exhibits on the SEC Website at www.sec.gov or through Bancorp’s Investor Relations Website maintained at www.sandyspringbank.com.

Shareholders whose shares are held in a brokerage firm or bank and who share the same address may receive only one Annual Report on Form 10-K and one Proxy Statement, unless the shareholder has provided contrary instructions. Shareholders who wish to receive separate copies of the Annual Report on Form 10-K or the Proxy Statement or who wish to receive separate copies of future annual reports and proxy statements, and shareholders sharing an address who received multiple copies of these documents but wish to request delivery of single copies of them should follow the instructions provided by the shareholders’ brokerage firms or banks or contact Mr. Kuykendall at the above address or by phone at 301-774-6400 or 800-399-5919.

PROPOSAL I : Election of Directors

The Board of Directors has set the total number of directors at fifteen, in accordance with Bancorp’s Articles of Incorporation and Bylaws. Bancorp’s Articles of Incorporation divide the directors into three classes, as nearly equal in number as possible. In general, the term of office of only one class of directors expires in each year, and their successors are elected for terms of three years and until their successors are elected and qualified. At the Annual Meeting a total of five director-nominees will be elected for three-year terms and one director nominee will be elected for a two-year term. With respect to the election of directors, each shareholder of record on the record date is entitled to one vote for each share of Common Stock held. A plurality of all the votes cast at the Annual Meeting will be sufficient to elect a nominee as a director.

Information as to Nominees and Incumbent Directors

The following table sets forth the names of the Board of Directors’ six nominees for election as directors. Also shown is certain other information, some of which has been obtained from Bancorp’s records and some of which has been supplied by the nominees and continuing directors, with respect to their principal occupations during at least the past five years, their ages at December 31, 2006, the periods during which they have served as directors, and the positions they currently hold with Bancorp. It is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election as directors of the one nominee listed below for a term of two years and five nominees listed below for terms of three years unless otherwise directed by the shareholder. The Board of Directors believes that each of the nominees will stand for election and will serve if elected as director. If any person nominated by the Board of Directors fails to stand for election or is unable to accept election, the proxies will be voted for the election of such other person or persons as the Board of Directors may recommend.

Incumbent Class III Director-Nominee for Term to Expire at the 2009 Annual Meeting:

						Position(s) Held		Member of				Current Term
Name		Age				with Bancorp		Board Since(1)				Expires
Marshall H. Groom			68			Director			2007				2009
Incumbent Class I Director–Nominees for Terms to Expire at the 2010 Annual Meeting:
Solomon Graham			63			Director			1994				2007
Gilbert L. Hardesty			66			Director			1997				2007
Charles F. Mess			68			Director			1987				2007
Lewis R. Schumann			63			Director			1994				2007
W. Drew Stabler			69			Chairman of the Board of Directors			1986				2007

Continuing Directors:

Incumbent Class II Directors:

						Position(s) Held		Member of				Current Term
Name		Age				with Bancorp		Board Since(1)				Expires
John Chirtea			69			Director			1990				2008
Mark E. Friis			51			Director			2005				2008
Hunter R. Hollar			58			President, Chief Executive Officer and Director			1990				2008
Pamela A. Little			52			Director			2005				2008
Craig A. Ruppert			53			Director			2002				2008
Incumbent Class III Directors:
Susan D. Goff			61			Director			1994				2009
Robert L. Mitchell			70			Director			1991				2009
Robert L. Orndorff, Jr.			50			Director			1991				2009
David E. Rippeon			57			Director			1997				2009

The principal occupation(s) and business experience of each nominee and director of Bancorp for at least the last five years are shown below.

Director-Nominees:

Solomon Graham is founder, President and Chief Executive Officer of Quality Biological, Inc., a biotechnology firm providing reagents for medical research.

Marshall H. Groom is a former director of Potomac Bank of Virginia and past chairman of the board of that bank. Mr. Groom became a Bancorp board member effective as of February 15, 2007 and is a Director-Nominee pursuant to the terms of the definitive agreement dated October 10, 2006 and plan of merger entered into between Bancorp, Sandy Spring Bank and Potomac Bank of Virginia.

Gilbert L. Hardesty is a retired bank executive, having served as President of Crestar Bank-Annapolis from June 1994 to June 1997 and as President of Annapolis Federal Savings Bank from April 1986 to June 1994.

Charles F. Mess, M.D. is practicing Physician of Potomac Valley Orthopaedic Associates Chtd.

Lewis R. Schumann is a Partner in the Rockville, Maryland law firm of Miller, Miller and Canby, Chtd.

W. Drew Stabler is a Partner in Sunny Ridge Farm, a crop and livestock operation in Laytonsville, Maryland.

Incumbent Directors:

John Chirtea is a Real Estate Consultant who is retired from LCOR, a real estate development company.

Mark E. Friis is President and Chief Executive Officer and senior principal of Rodgers Consulting, Inc., in Frederick, Maryland, a land planning and engineering firm.

Susan D. Goff is a retired executive, formerly employed by Mid-Atlantic Medical Services, Inc., a health maintenance organization.

Hunter R. Hollar is President and Chief Executive Officer of Bancorp and the Bank.

Pamela A. Little is a financial and business consultant. She is the former Chief Financial Officer of Athena Innovative Solutions, Inc., a government contracting firm. She is also the former Chief Financial Officer of ZKD, Inc. a provider of professional services to the federal government.

Robert L. Mitchell is Chairman and Chief Executive Officer of Mitchell and Best Group, LLC, in Rockville, Maryland, which is engaged in home building and real estate development.

Robert L. Orndorff, Jr. is President of RLO Contractors, Inc. in Dayton, Maryland, an excavating contractor.

David E. Rippeon is President and Chief Executive Officer of Gaithersburg Equipment Company and Frederick Equipment Company, a tractor and equipment dealership.

Craig A. Ruppert is President and owner of The Ruppert Companies, comprised of nursery and landscaping, business investment and management, and commercial real estate development and management businesses.

The Board of Directors recommends a vote “FOR” each of the nominees named above as a director of Bancorp.

Corporate Governance and Other Matters

During 2006, each of Bancorp’s and the Bank’s Boards of Directors held thirteen regular meetings.

The average attendance was 94% for meetings of Bancorp’s and the Bank’s Boards of Directors. All incumbent directors attended 75% or more of the aggregate of (a) the total number of meetings of the Boards of Directors and (b) the total number of meetings held by all committees on which they served during the period of their service during the year.

Bank directors who are not employed by the Bank receive an annual retainer of $14,000 ($35,000 for the Chairman), plus $7,500 for the Audit Committee Chairman and $5,000 for all other Committee Chairmen and fees of $1,100 for attendance at each meeting of the Board of Directors. Directors also receive $1,000 for each committee meeting. Bancorp directors who are not employed by Bancorp do not receive any additional compensation (beyond compensation received for service as bank directors) except as follows. Such directors receive fees of $1,100 for attendance at each meeting of Bancorp’s Board of Directors not held in conjunction with a meeting of the Bank’s Board of Directors. Bancorp directors are also eligible to receive non-incentive stock options and restricted shares under Bancorp’s 2005 Stock Plan. These options have a maximum term of 7 years and an exercise price that may not be less than 100% of the closing price of the common stock on the date of grant. Director options are included in the computation of share dilution. Options for 16,263 shares and 3,497 restricted shares were granted in 2006 to directors who were not employees of Bancorp or any of its subsidiaries, at an exercise price of $37.40. Under the Director’s Stock Purchase Plan, directors may elect to apply from 50% to 100% of their annual retainers to purchase newly issued Bancorp common stock at market value.

Directors of the Bank are eligible to defer all or a portion of their fees under Director Fee Deferral Agreements between the Bank and individual directors. Amounts deferred accrue interest at the prime rate. Except in the case of death or financial emergency, deferred fees and accrued interest are payable only following termination of a director’s service on the board. The Director Fee Deferral Agreements also provide for benefits that may exceed deferred fees and accrued interest in the event a party dies while a director of the Bank, but only to the extent the

Bank owns an insurance policy in effect on the director’s life at the time of death that pays a greater amount than the total of deferred fees and accrued interest.

DIRECTORS’ COMPENSATION

																		Change in
																		Pension Value
																		and Nonqualified
		Fees Earned																Deferred
		or Paid in				Stock				Option				Non-Equity				Compensation
		Cash				Awards				Awards				Incentive Plan				Earnings
Name		(1)				(2)				(3)				Compensation				(4)				Total
John Chirtea		$	43,000				—				—				—			$	13,732			$	56,732
Mark E. Friis			32,700				—				—				—				—				32,700
Susan D. Goff			—				—				—				—				50,987				50,987
Solomon Graham			7,500				—				—				—				33,721				41,221
Gilbert L. Hardesty			43,600				—				—				—				—				43,600
Pamela A. Little			17,000				—				—				—				18,263				35,263
Charles F. Mess			24,750				—				—				—				11,820				36,570
Robert L. Mitchell			45,100				—				—				—				—				45,100
Robert L. Orndorff, Jr.			—				—				—				—				67,627				67,627
David E. Rippeon			34,300				—				—				—				—				34,300
Craig A. Ruppert			31,500				—				—				—				—				31,500
Lewis R. Schumann			—				—				—				—				56,707				56,707
W. Drew Stabler			74,700				—				—				—				—				74,700

Committees

Bancorp’s Board of Directors has standing Audit, Executive, Human Resources and Nominating Committees. The Executive Committee performs the functions of a corporate governance committee. The Human Resources Committee performs the functions of a compensation committee. The functions, composition, and number of meetings for these committees in 2006 were as follows:

Audit Committee—The Audit Committee is composed of John Chirtea, Chairman, Mark E. Friis, Gilbert L. Hardesty, Pamela A. Little, Charles F. Mess, and Craig A. Ruppert. The Audit Committee is appointed by the Board to assist the Board in monitoring the integrity of the financial statements and of financial reporting, including the proper operation of internal and disclosure controls and procedures in accordance with the Sarbanes-Oxley Act of 2002, compliance with legal and regulatory requirements and the independence and performance of internal and external auditors. The audit committee reviews the Forms 10-K and 10-Q prior to filing. All members of the committee are “independent” as defined in applicable law, regulations of the Securities and Exchange Commission (“SEC”), the Federal Deposit Insurance Act and related regulations (the “FDIA”), and the Listing Standards of the NASDAQ Stock Market, Inc., (the “Listing Standards”). Members of the committee also meet all other applicable

requirements of the SEC, FDIA, and Listing Standards for financial, accounting or related expertise. The Board of Directors has determined that Ms. Pamela A. Little qualifies as an audit committee financial expert under the Listing Standards and applicable securities regulations. During 2006, four meetings were held.

Executive Committee—The Executive Committee is composed of W. Drew Stabler, Chairman, Susan D. Goff, Gilbert L. Hardesty, Hunter R. Hollar, Robert L. Mitchell, Robert L. Orndorff, Jr. and Lewis R. Schumann. In addition to conducting board business between regular monthly meetings, the Executive Committee serves the function of a corporate governance committee. It provides oversight and guidance to the Board of Directors to ensure that the structure, policies, and processes of the Board and its committees facilitate the effective exercise of the Board’s role in the governance of Bancorp. The committee reviews and evaluates the polices and practices with respect to the size, composition, independence and functioning of the Board and its committees and reflects those policies and practices in the Corporate Governance Policy and the written charter, which is available on the Investor Relations area of Bancorp’s Website at www.sandyspringbank.com. During 2006, thirteen meetings were held.

Human Resources (Compensation) Committee—The Human Resources Committee is composed of Robert L. Mitchell, Chairman, John Chirtea, Susan D. Goff, Charles F. Mess, Robert L. Orndorff, Jr., David E. Rippeon and W. Drew Stabler. Members of the committee are independent directors within the meaning of the Listing Standards. The Human Resources Committee recommends salaries and other compensation for executive officers, conducts an annual review of the salary budget, considers other compensation and benefit plans and makes recommendations to the Board, deals with matters of personnel policy and, with the Stock Option Committee, administers the 2005, 1999 and 1992 Stock Option Plans. During 2006, five meetings were held. In 2006, no Bancorp executive officer served as a member of the compensation committee of another entity that had an executive officer who served as a Bancorp director, and no Bancorp executive officer served as a director of another entity that had an executive officer serving on Bancorp’s Human Resources Committee.

Nominating Committee—The Nominating Committee is composed of Robert L. Orndorff, Jr., Chairman, Solomon Graham, Gilbert L. Hardesty, David E. Rippeon, Craig A. Ruppert and W. Drew Stabler. Members of the committee are independent directors within the meaning of the Listing Standards. The Nominating Committee makes recommendations to the Board of Directors with respect to nominees for election as directors. In exercising its responsibilities, the Nominating Committee considers general, minimum criteria and particular goals and needs of Bancorp for additional competencies or characteristics. Each director of Bancorp is expected to exhibit the highest standards in exercising his or her duty of loyalty, care and commitment to all shareholders and to protect the values and legacy of the organization. Additionally, directors must manage themselves well in their personal deportment and display their ability to challenge the thinking of others and to influence them with constructive approaches. Directors must be able to read and act on financial information including, but not limited to, balance sheets, income statements and cash flow analyses. Finally, directors need to be able to apply informed judgment and long-term, conceptual and systemic thinking to all decisions. The Board gathers input from all directors prior to the recruitment of a new director in order to form a collective picture of the competencies needed. The Board also values diversity and seeks to include women and members of minority groups as well as to maintain a range of thinking and personality styles. The Board of Directors of Bancorp has adopted a written charter for the Nominating Committee and a Corporate Governance Policy that also relates to director nominees and the nominating process. The Charter and Policy are available on the Investor Relations area of Bancorp’s Website at www.sandyspringbank.com. The Nominating Committee encourages suggestions for nominees to the Board from the Chief Executive Officer, the Chairman of the Board, other Directors, and from shareholders, and is responsible for the evaluation of such suggestions. Shareholders may communicate such suggestions for nominees to the Nominating Committee in care of Bancorp’s Secretary. Please see Shareholder Proposals and Communications on page 25. One meeting of the Nominating Committee was held during 2006.

Director Independence

The Board of Directors has affirmatively determined that all Directors other than Mr. Hollar are independent under the Listing Standards. Those independent directors are:

John Chirtea		Gilbert L. Hardesty		Robert L. Orndorff, Jr.
Mark E. Friis		Pamela A. Little		David E. Rippeon
Susan D. Goff		Charles F. Mess		Craig A. Ruppert
Solomon Graham		Robert L. Mitchell		Lewis R. Schumann
Marshall H. Groom				W. Drew Stabler

The Board of Directors complies with or exceeds the independence requirements for the board and board committees established by the NASDAQ stock market and federal securities and banking laws and the additional standards included in Bancorp’s Corporate Governance Policy, all as described below:

No more than two inside directors may be on the Board at any one time. All other directors must be independent. An inside director is defined as a director that is employed as either an officer of Bancorp or the Bank and serves as a member of the Board of Directors. A director will be considered independent if he or she:

	•		Has not been an officer or employee of Bancorp or any of its subsidiaries within the past three years;
	•		Has not received during the current year or any of the three previous years any payments from the Bancorp or any of its subsidiaries in excess of $60,000, other than payments for board service, dividends, or loans made in compliance with Regulation O of the Board of Governors of the Federal Reserve System, which establishes approval procedures and limits for extensions of credit by banks and their officers and directors. In addition, this prohibition extends to the receipt of payments, other than receipt of compensation to non-executive officers, by a family member of the director;
	•		As a member of the Audit Committee, receives no payments for advice or consulting services provided to Bancorp or its subsidiaries other than for board service and does not own over 10% of Bancorp’s common stock;
	•		Has not had a family member who was an executive officer of Bancorp or any of its subsidiaries during the previous three years;
	•		Is not, or has not had a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which Bancorp or any of its subsidiaries received payments for property or services in the current or any of the previous three years that exceed 5% of the recipient’s consolidated gross revenues for that year or $200,000, whichever is more, other than payments arising solely from investment in Bancorp’s securities or payments under non-discretionary charitable contribution matching programs;
	•		Is not, or has not had a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of Bancorp or any of its subsidiaries, served on the compensation committee of the other entity;
	•		Is not, or has had a family member who is, a current partner of Bancorp’s independent auditor, or was a partner or employee of Bancorp’s independent auditor who worked on Bancorp’s audit at any time during any of the past three years; or
	•		Does not have any other relationship that the Board determines would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director.

Family members include a director’s spouse, parents, children, and siblings (by blood, marriage, or adoption) and any person living in the director’s home.

Code of Business Conduct

Bancorp’s Board of Directors has adopted a Code of Business Conduct applicable to all directors, officers, and employees of Bancorp and its subsidiaries that sets forth the legal and ethical standards that govern the conduct of business performed by Bancorp and its subsidiaries. The Code of Business Conduct includes a Code of Ethics established pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, related SEC regulations, and the Listing Standards. The Code of Business Conduct is available on the Investor Relations area of Bancorp’s website at www.sandyspringbank.com.

Stock Ownership of Directors and Executive Officers

The following table sets forth information as of February 16, 2007 (the latest practicable date), with respect to the shares of Common Stock beneficially owned by each director continuing in office and nominee for director of Bancorp, by certain executive officers of Bancorp, and by all directors and executive officers of Bancorp as a group. Directors qualifying shares are included in shares owned.

		Amount and Nature				Percentage of
		of Beneficial				Common
Name		Ownership(1)(2)(3)				Stock Outstanding
John Chirtea			46,364				*
Mark E. Friis			2,424				*
Susan D. Goff			9,502				*
Solomon Graham			15,048				*
Marshall H. Groom			13,481				*
Gilbert L. Hardesty			15,356				*
Hunter R. Hollar			158,600				1.00	%
Pamela A. Little			1,009				*
Charles F. Mess			20,370				*
Robert L. Mitchell			24,554				*
Robert L. Orndorff, Jr.			184,209				1.17	%
David E. Rippeon			21,989				*
Craig A. Ruppert			33,508				*
Lewis R. Schumann			94,806				*
W. Drew Stabler			64,803				*
Frank H. Small			79,690				*
R. Louis Caceres			25,989				*
Daniel J. Schrider			28,810				*
Philip J. Mantua			20,550				*
All directors and executive officers as a group (21 persons)			930,010				5.84	%

Owners of More Than 5% of Bancorp’s Common Stock

Beneficial owners of more than 5% of the common stock are required to file certain ownership reports under the federal securities laws. The following table shows the common stock beneficially owned by the person who has filed a report of beneficial ownership that exceeds 5% of Bancorp’s outstanding common stock at December 31, 2006.

		Amount and Nature				Percentage of
		of Beneficial				Shares
Name		Ownership(1)				Outstanding(2)
T. Rowe Price Associates, Inc. 100 East Pratt St., Baltimore, MD 21202			1,175,245				7.92	%

Compensation Discussion and Analysis

Overview

This Compensation Discussion and Analysis describes Bancorp’s compensation philosophy, objectives, and processes, including the methodology for determining executive compensation for the Bancorp’s Principal Executive Officer, Principal Financial Officer, and three most highly compensated other executive officers for 2006 (the “Named Executive Officers”). Please also refer to the more detailed compensation disclosures beginning on page 18 of this proxy statement.

Overall Compensation Philosophy & Guiding Principles

Bancorp recognizes and values the critical role that executive leadership plays in its performance. The executive compensation philosophy is intended to attract, motivate, and retain top executive talent, to link executive rewards with shareholder returns, to achieve strategic business objectives, to reward both short and long-term performance, and to provide incentives for better than target results.

The philosophy is to pay conservatively competitive base salaries based on company and individual experience, performance, and contributions. Short-term incentives, generally payable in cash, and long-term incentives, generally provided through equity based awards, are targeted to be competitive but depend more heavily upon company performance than does base pay. The compensation programs are externally benchmarked to the compensation paid by comparable companies. Total compensation and accountability are intended to increase with position and responsibility.

Compensation Decision Process

The Human Resources Committee is appointed by the Board of Directors of Bancorp and Bank to assist it in recommending, managing, and monitoring compensation and benefit plans for the Chief Executive Officer and other Named Executive Officers. The process by which the committee makes specific decisions relating to executive compensation includes consideration of the following factors:

	•		The compensation philosophy;
	•		Bancorp’s performance relative to peers and industry standards;
	•		Success in attaining annual and long-term goals and objectives;
	•		Alignment of executive interests with shareholder interests through equity based awards vesting over a period of years;
	•		Management of compensation expense, and emphasis on performance based compensation;
	•		Individual performance, experience, and contributions;
	•		Executive officer potential;
	•		Total compensation and the mix of compensation elements for each named executive officer;
	•		The competitiveness of executive compensation relative to Bancorp’s peers and conditions in our labor markets;
	•		The relative appropriateness of each named executive officer’s compensation as compared to compensation of other executive officers; and
	•		Retention considerations.

Role of the Human Resources Committee, Management and the Compensation Consultants in the Executive Compensation Process

Role of the Human Resources Committee

In the capacity as compensation committee, it is the duty of the Human Resources Committee to review compensation policies applicable to executive officers; to consider the relationship of corporate performance to that compensation; to recommend salary and bonus levels and equity based awards for executive officers for consideration by the Board of Directors of Bancorp and the Bank or its committees, as appropriate; and to monitor the adequacy and effectiveness of various compensation and benefit plans and executive succession planning of Bancorp and the Bank. The committee meets throughout the year (four times in 2006) and also takes action by written consent. The chairman of the committee reports on committee actions at meetings of the Board of Directors.

The committee reviews all compensation components for Bancorp’s executive officers, including the Named Executive Officers. Compensation includes base salary; annual bonuses and other short-term incentives; long-term incentives including equity based awards; benefit plans; and other perquisites. The committee determines the appropriate mix of compensation components for each named executive officer.

The committee reviews chief executive officer’s performance and makes recommendations regarding his compensation with the advice of independent consultants. Decisions regarding compensation for other executives are made by the Human Resources Committee considering recommendations from the Chief Executive Officer, Chief Operating Officer, the Senior Vice President of Human Resources, and independent consultants. Decisions by the Human Resources Committee with respect to the compensation of executive officers are approved by the full Board of Directors.

The committee has the authority to obtain advice and assistance from internal or external legal, human resource, accounting or other experts, advisors, or consultants as it deems desirable or appropriate. The committee has sole authority to retain and terminate any compensation consultants and to approve their compensation and the terms of their engagement. Details on the Human Resources Committee’s functions are described in its charter, which has been approved by the Board of Directors.

Role of the Compensation Consultant

The Human Resources Committee is advised by independent compensation consultants. In general, the consultants provide compensation benchmarking and analytical data and render advice to the committee regarding all aspects of the committee’s compensation decisions including the CEO performance review process. The committee has direct access to the consultants and control over their engagement. The committee was advised by three compensation consulting firms during 2006. The firm of FURR Resources, Inc. has been engaged to assist in connection with the annual performance evaluation process for the Chief Executive Officer. The firm of Pearl Meyer & Partners was engaged during 2006 to conduct a review and competitive assessment of total compensation and benefits for Bancorp’s executive officers, including the Named Executive Officers, and to provide a comprehensive assessment of the competitiveness and effectiveness of the total executive compensation programs. In that capacity, it has developed peer groups and provided other market data used by Bancorp for benchmarking and has provided advice regarding levels and components of compensation for each named executive officer. Pearl Meyer & Partners replaced Bancorp’s prior independent compensation consultants Strategic Compensation Planning, Inc., which had served in that capacity for a number of years, as the result of a request for proposal process conducted by Bancorp during 2006.

Role of Bancorp’s Management

Below is a summary of the role of Bancorp’s management in assessing or recommending executive compensation:

	•		The CEO is responsible for the development of Bancorp’s strategic plan and annual business plan, which are reviewed and approved by the Board of Directors.
	•		The CEO conducts a self-assessment, which is reviewed annually by the Board of Directors. In 2006, Mr. Hollar also participated in a “360 degree” feedback process, which incorporated assessments by other executive officers and board members.
	•		The CEO presents executive performance ratings to the Executive Committee and makes recommendations relating to executive compensation, considering the recommendation of the external consultant.
	•		The CEO and the Senior Vice President of Human Resources in collaboration with the external compensation consultants, develop proposals relating to potential changes in compensation programs for review and approval by the Human Resources Committee.
	•		The CEO, Senior Vice President of Human Resources, and the external compensation consultants, provide the Human Resources Committee with Company data necessary to evaluate and implement compensation proposals and programs.
	•		The Senior Vice President of Human Resources works with outside consultants to provide data and information related to the Human Resources Committee’s needs and objectives.

The Human Resources Committee occasionally requests one or more members of executive management or the Senior Vice President of Human Resources to be present at Committee meetings where executive compensation and company or individual performance is discussed and evaluated. Executives are free to provide insight, suggestions, or recommendations regarding executive compensation. However, only independent Human Resources Committee members are allowed to vote on decisions regarding executive compensation.

The Executive Committee meets with the CEO to discuss his performance. The Human Resources Committee makes recommendations and the Board of Directors reviews and approves decisions regarding his compensation package while considering advice from the compensation consultants, as requested. Recommendations for compensation packages for other executives are made by the Human Resources Committee, considering recommendations from the CEO, as well as input from the compensation consultant as requested. These recommendations are ultimately approved by the full Board of Directors.

Compensation Structure/Elements

Bancorp’s total compensation program consists of four main components of compensation: Base Salary, Annual Incentive, Long-Term Incentive/Equity Awards, and Executive Benefits/Perquisites. Following is a summary of the role of each component, a description of how decisions regarding the component are made and the resulting 2006 decisions as they relate to the Named Executive Officers.

Base Salary

Base salary is a critical element of executive compensation because it provides executives with a base level of monthly income. In determining base salaries, we consider the executive’s qualifications and experience, scope of responsibilities and future potential, the goals and objectives established for the executive, the executive’s past performance, as well as competitive salary practices at financial institutions in the peer group benchmarking.

In 2006, executive salaries were reviewed and the following adjustments made:

				Base Salary								Increase
Name		Title		2005				2006				Amount				Percentage
H. Hollar		President & Chief Executive Officer		$	421,200			$	445,000			$	23,800				5.65	%
F. Small		Chief Operating Officer			296,400				300,000				3,600				1.21
P. Mantua		Chief Financial Officer			187,200				215,000				27,800				14.85
D. Schrider		Executive Vice President			218,400				235,000				16,600				7.60
L. Caceres		Executive Vice President			218,400				235,000				16,600				7.60

These adjustments were made consistent with the goal of paying conservatively competitive base salaries and were based primarily on peer group benchmarking. The increase for Mr. Mantua also reflected his strong performance. Benchmarking was the basis for the modest salary increase to Mr. Small.

Annual Incentives

During 2006, each of the Named Executive Officers participated in Bancorp’s Stakeholder incentive plan. This plan is designed to pay out a cash reward based on pre-established key performance indicators that assess actual performance relative to plan. This plan also has a minimum net income trigger that must be met before payouts may be made. The key performance indicators are:

	•		Growth as measured by gross loans, noninterest bearing accounts, and interest-bearing accounts and repurchase agreements.
	•		Pricing/profitability as measured through net interest margin, fee and service charge income.
	•		Quality as measured through client satisfaction score, non-performing assets, and net charge offs.
	•		Productivity as measured through efficiency ratio.

As part of its annual compensation review, the Human Resources Committee received recommendations from an independent compensation consultant regarding competitive annual incentive awards. The Human Resources Committee has determined that the interests of management, employees, and shareholders are most effectively aligned if the executive’s annual incentive is tied to the Stakeholder incentive plan. Incentives are calculated based on budget and business plan goals as measured by the key performance indicators. For 2006, these target amounts were approved at the March meeting of the Human Resources Committee. The payouts were made in February 2007 based on final company performance for the year. Following are the payouts for the Named Executive Officers:

						Percentage of
Named Executive Officer		2006 Annual Incentive				Base Pay
H. Hollar		$	200,302				45.01	%
F. Small			112,033				37.34
P. Mantua			52,739				24.53
D. Schrider			77,639				33.04
L. Caceres			77,639				33.04

These payouts are based upon multiples of the percentage of base compensation payable to all eligible employees generally for the year under the Stakeholder incentive plan.

Bancorp does not have a policy regarding adjustment or recovery of awards or payments if the key performance indicators are restated or adjusted. However, as noted under “Committee Discretion and Final Compensation Decisions,” the Human Resources Committee reserves the right to increase or decrease incentive payments in its discretion.

Long-Term Incentive Compensation/Equity Based Awards

Bancorp believes that equity based compensation is among the most effective means of creating a long-term link between the interests of our shareholders and the performance of our organization and our executive team. Vesting schedules for equity based awards also encourage officer retention.

Executives are eligible to receive annual equity awards in the form of stock options, restricted stock, and stock appreciation rights under Bancorp’s 2005 Omnibus Stock plan. The value of equity awards granted is based on competitive market practice, company performance, and individual performance. The Human Resources Committee recommends, in its discretion, the form, number, and terms of equity based awards, and the full Board of Directors approves the awards.

In December of 2006, the Human Resources Committee recommended and the Board of Directors approved the following equity based awards of stock options and restricted stock, primarily based upon individual executive officer performance. The values of the grants of options and restricted stock to each officer are approximately equal, based upon mathematical models used by management for valuation of equity based awards.

Named Executive		Number of Shares				Number of
Officer		Subject to Options				Restricted Shares
H. Hollar			11,500				2,500
F .Small			7,000				1,500
P. Mantua			5,000				1,000
D. Schrider			5,000				1,000
L. Caceres			5,000				1,000

Options vest one-third each on the first, second, and third anniversaries of grant. Restricted stock vests one-fifth each on the first through the fifth anniversaries of grant.

Benefits and Perquisites

The purpose of executive benefits and perquisites is to provide economic value to the executive in order to attract, retain, and motivate key executives. Bancorp’s policy on executive benefits has been to provide benefits consistent with market practice. The Human Resources Committee periodically reviews perquisite practices to ensure alignment with our desired philosophy.

Currently, the Named Executive Officers participate in benefit plans available to all employees including the 401(k) Plan and the Employee Stock Purchase Plan. Other benefits and perquisites are limited and are provided at the discretion of the Human Resources Committee. These benefits include a $6,500 maximum fund for out-of-pocket medical expenses and payment of a supplemental long term disability and a long term care policy for Named Executive Officers. Mr. Hollar received a company-paid automobile and was reimbursed for his health club dues.

Total Compensation Mix

The Human Resources Committee believes that the elements described above provide a well proportioned mix of security-oriented compensation, at-risk/performance-based compensation, and retention-based compensation that produces short-term and long-term incentives and rewards. By following a portfolio approach to benefits, we provide the executive a measure of security as to the minimum levels of compensation he or she is eligible to receive, while motivating the executive to focus on the business measures that will produce a high level of performance for Bancorp and long-term wealth creation for the executive, as well as reducing the risk of recruitment of top executive talent by competitors. The mix of annual incentives and the equity based awards likewise provides an appropriate balance between short-term financial performance and long-term financial and stock performance; between reward and retention.

For Bancorp’s key executives, the mix of compensation is weighted heavily toward at-risk, performance pay, as delivered through the annual incentive plan and equity based award program. This mix strategy results in a pay-for-performance orientation that aligns with our philosophy to pay median pay for median performance and above market pay for superior performance.

Inputs for Compensation Determinations

Company Goal Setting for Compensation Purposes

On an annual basis, the Board of Directors approves annual company-wide goals. These goals are designed to support the multi-year strategic plan by setting annual targets for achievement. The committee uses the CEO goals to measure the CEO’s annual performance review. These goals along with competitive information help determine the incentive award determination for the CEO and executive officers. Once the annual strategic goals are defined, the Human Resources Committee works with management, its independent compensation consultant, and the Senior Vice President of Human Resources to set the performance levels for the Stakeholder incentive plan.

The CEO discusses and reports on the performance of Bancorp with the Board of Directors on a regular basis throughout the year.

At the end of the plan year, the CEO reviews the performance relative to the strategic plan and specific incentive targets. This information is used in assessing individual performance of the CEO and executives.

Pay Levels and Benchmarking

Pay levels for executives are determined based on a number of factors, including the individual’s role and responsibilities within Bancorp, the individual’s experience and expertise, the pay levels of peers within Bancorp, pay levels in the market place for similar positions, and performance and contribution of the individual and Bancorp as a whole.

The Human Resources Committee assesses “competitive market” compensation using a number of data sources reflecting industry practices of other banking organizations similar in size and region to Bancorp.

A primary data source used in setting competitive market for the Named Executive Officers is the information publicly disclosed by a peer group of other publicly traded banking organizations. This peer group for 2006 was recommended by our independent compensation consultants, and was reviewed by the CEO and Human Resources Committee. It includes banking organizations of similar asset size in our region (two factors that influence executive compensation in financial institutions). The peer group is reviewed and updated each year as appropriate since the comparable organizations may change depending on acquisitions and business focus of Bancorp or peer institutions. Given Bancorp’s growth and the high rate of mergers in the banking industry, the peer group has traditionally been reviewed and updated from year to year. Overall, the goal is to have 20-24 comparative banks that provide a market perspective for executive total compensation.

Matches to proxy data are made based on comparison of role, rather than rank to ensure a better comparison. The banks are between $2.1 and $4.5 billion in total assets, with a median total assets size of approximately $2.8 billon, consistent with Bancorp’s asset size. All banks are within the Northeast region. Below is a listing of the 24 peer banking institutions used by Bancorp:

						Total Assets				Return on				Return on
Institution		State				(Billions)				Assets				Equity
WSFS Financial Corporation		DE				$	2.5				1.10	%			13.54	%
Lakeland Bancorp, Inc.		NJ				$	2.1				.90				10.79
Sun Bancorp		NJ				$	3.1				.63				7.80
Yardville National Bancorp		NJ				$	2.8				.70				12.38
Community Bank System, Inc.		NY				$	4.4				1.20				11.39
Dime Community Bankshares		NY				$	3.4				1.38				16.76
Financial Institutions		NY				$	2.2				.57				6.73
Flushing Financial		NY				$	2.1				1.13				14.97
NBT Bancorp		NY				$	4.2				1.21				15.69
Partners Trust Financial		NY				$	3.7				.51				3.5
Signature Bank		NY				$	3.4				1.16				11.70
Trustco Bank Corp		NY				$	2.9				2.00				25.27
USB Holding		NY				$	2.7				.96				16.14
First Financial Bancorp		OH				$	3.9				1.05				11.21
First Place Financial		OH				$	2.2				.83				7.46
United Community Financial		OH				$	2.3				.83				7.01
Harleysville National Corp.		PA				$	3.0				1.39				15.31
KNBT Bancorp		PA				$	2.4				.81				4.57
National Penn		PA				$	4.5				1.21				13.25
Omega Financial		PA				$	2.1				1.24				8.89
S&T Bancorp		PA				$	3.0				1.83				16.07
Sterling Financial		PA				$	2.7				1.39				14.28
City Holding Company		WV				$	2.2				2.10				22.4.3
WesBanco, Inc.		WV				$	4.0				2.07				11.37
Median						$	2.8				1.12				12.04
Average						$	3.0				1.13				12.44
Sandy Spring Bancorp, Inc. (2005)		MD				$	2.5				1.41				16.21

Peer Data Sources:            SNL Financial and Strategic Compensation Planning, Inc.

The specific elements of compensation reviewed as part of this comparable company analysis include base salaries, annual performance bonuses, and long-term incentives relative to the peer group.

The Human Resources Committee generally intends that the base salary for each executive will be conservatively competitive, but that above target performance will be rewarded above market incentives. Bancorp has set an aggressive strategic plan and performance goals, and is therefore willing to make awards commensurate with the achievement of these performance goals and objectives.

Committee Discretion and Final Compensation Decisions

The Human Resources Committee retains the discretion to decrease all forms of incentive payouts based on significant individual or Bancorp performance shortfalls; this is the premise behind the Stakeholders incentive plan. Likewise, the committee retains the discretion to increase payouts or consider special awards for significant performance, or due to subjective factors described above. The Human Resources Committee believes that the compensation package for each of the Named Executive Officers is appropriately within the range of the peer data and reasonable given Bancorp and individual performance.

Employment and Other Significant Agreements with Executive Officers

Employment Agreements

Each of the Named Executive Officers has an employment agreement with Bancorp and the Bank. The Human Resources Committee and the Board of Directors believe that these agreements assure fair treatment of the executive in relation to his career with Bancorp by assuring him of some financial security. The agreements also protect the shareholders by encouraging the executive to continue his attention to his duties without distraction in a potential merger or takeover circumstance and by helping to maintain the executive’s objectivity in considering any proposals to acquire Bancorp.

These employment agreements have an initial term of three years for Mr. Hollar and two years for the other Named Executive Officers, and are automatically renewed for an additional one year upon each anniversary unless written notice not to renew has been given by the executive or Bancorp. They provide for minimum base salaries, subject to annual review, and the right to participation in incentive compensation and benefit plans.

Upon termination of the executive without just cause by Bancorp, or with good reason by the executive, the executive is entitled to salary and bonuses for the remaining term of the Agreement, payable in a lump-sum based upon prior year compensation levels. The executive is prohibited from conflicts of interest, and is required to maintain the confidentiality of nonpublic information regarding Bancorp and its customers. The executive also is bound by a covenant not to compete and not to interfere with other employees of Bancorp if the executive’s employment is terminated for just cause, disability, or retirement or he resigns without good reason.

In the event of a voluntary resignation, the named executive officer will receive only the compensation, vested rights, and employee benefits up to the date of termination. In the event of a retirement, the named executive officer would receive no additional compensation under the agreement.

The agreements provide for additional benefits in the event of a change in control of Bancorp or the Bank and either a termination of the officer’s employment without just cause or a resignation by the officer with good reason, as defined in the agreements. In those circumstances, the officer is entitled to a lump-sum cash payment equal to 2.99 times the sum of the executive’s annual salary at the highest rate in effect during the preceding twelve months and bonuses for the preceding calendar year. The executive also would be entitled to continued participation for a three-year period in Bancorp-sponsored health and welfare plans. The agreement requires Bancorp and the Bank to hold the executive harmless from the federal excise tax assessable if payments and benefits exceed the amount allowable as a deduction under Section 280G of the Internal Revenue Code.

Supplemental Executive Retirement Agreements

The Bank, upon the recommendation of the Human Resources Committee, has entered into individual Supplemental Executive Retirement Agreements with certain executives, including Named Executive Officers. These agreements are designed to provide post-retirement benefits to enable a targeted level of covered retirement income to be met and to provide certain pre-retirement death and disability benefits should the executive die or become disabled prior to retirement age. The annual post-retirement deferred compensation benefit is designed to replace between 65% and 70% of the executive’s projected final average pay at retirement date in conjunction with the Bank’s Pension Plan, 401(k) Plan, Social Security retirement benefits, and any benefits payable to the executive under a prior employer’s pension plan. Normal retirement benefits under the agreements are payable in equal monthly payments over 15 years or until the death of the executive, whichever is longer. There are also provisions in this plan in the event of early retirement, death, disability, or in the event of a change in control of Bancorp or the Bank and either a termination of the officer’s employment without just cause or a resignation by the officer with good reason.

Change in Control Benefit Triggers

The right to change in control benefits under the employment agreements and Supplemental Executive Retirement Agreements are dependent on a “double trigger,” that is, there must be both a change in control and a termination of employment without just or cause or with good reason. However, the employment agreements allow each executive officer to terminate “with good reason” for any reason within the sixty day period that begins six months after the closing date of a definitive agreement that results in the change in control. The Human Resources Committee believes these trigger provisions are reasonable and in the best interests of shareholders and should help (a) to retain executives useful for the transition of a change in control for at least six months after the closing; (b) to reduce

potential misincentives for executives in the period in which a change in control is being evaluated and negotiated; and (c) to avoid the potential double payment of executives who continue their employment after a change in control that could result from a single change in control trigger.

Impact of Accounting and Tax on the Form of Compensation

The Human Resources Committee and Bancorp consider the accounting and tax (individual and corporate) consequences of the compensation plans prior to making any changes to the plans.

The Human Resources Committee has considered the impact of the Statement of Financial Accounting Standard No. 123 (R), “Share-Based Payment,” which Bancorp adopted on January 1, 2006, on Bancorp’s use of equity based awards. This consideration factored heavily in our decision to move to a mix of restricted stock and stock options for 2006.

The committee also considers the limits on deductibility of compensation imposed by Section 162(m) of the Internal Revenue Code (the “Code”) with respect to annual compensation exceeding $1 million and Section 280(g) of the Code with respect to change in control payments exceeding specified limits.

Equity Based Award Practices

Equity based awards are granted in December of each year. The committee’s compensation consultants provide information and advice to the committee in connection with its recommendation, including advice regarding the types, terms, and value of equity based awards to grant. In 2006, the committee considered a number of alternatives for annual awards with the assistance of its independent compensation consultants and management. The committee placed particular emphasis on the expense implications to Bancorp of various types of awards. Based upon its analysis, the committee recommended and the stock option committee approved grants of both stock options, vesting over a three-year period and restricted stock vesting over a five-year period. The grant date for all awards is the date of Board approval of the grants. The exercise price is the closing price of Bancorp common stock on the grant date.

Ownership Guidelines

Bancorp does not currently have a formal stock ownership requirement for executives, but all of our current executive officers own Bancorp common stock. We encourage stock ownership by executives on a voluntary basis. Bancorp retains the discretion to implement a minimum ownership requirement of mandatory holding period for shares received under our equity compensation plan.

Compensation Committee Report

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006.

February 15, 2007

		HUMAN RESOURCES COMMITTEE
		Robert L. Mitchell, Chairman
		John Chirtea		Susan D. Goff
		Charles F. Mess		Robert L. Orndorff, Jr.
		David E. Rippeon		W. Drew Stabler

Executive Compensation

Summary Of Compensation Table

The following table summarizes compensation earned by or awarded to Bancorp’s Principal Executive Officer, Principal Financial Officer, and the three most highly compensated other executive officers for 2006 (the “Named Executive Officers”).

																						Change in
																						Pension Value
																						&
																						Nonqualified
																		Non-Equity				Deferred				All Other
										Stock				Option				Incentive Plan				Compensation				Compen-
Name and Principal						Salary				Awards				Awards				Compensation				Earnings				sation
Position		Year				(1)				(2)				(3)				(4)				(5)				(6)				Total
Hunter R. Hollar			2006			$	437,677				—				—			$	200,302			$	403,036			$	26,894			$	1,067,909
President & Chief Executive Officer
Philip J. Mantua			2006				206,446				—				—				52,739				79,196				8,793				347,174
Executive Vice President & Chief Financial Officer
Frank H. Small			2006				298,892				—				—				112,033				413,724				17,991				842,640
Executive Vice President & Chief Operating Officer
R. Louis Caceres			2006				229,892				—				—				77,639				59,827				10,516				377,874
Executive Vice President
Daniel J. Schrider			2006				229,892				—				—				77,639				51,382				9,478				368,391
Executive Vice President

Outstanding Equity Awards At Fiscal Year End ⁽¹⁾

The following table shows outstanding equity awards to the Named Executive Officers at December 31, 2006.

		Option Awards																Stock Awards
																						Market
						Number of																Value of
		Number of				Securities												Number of				Shares or
		Securities				Underlying												Shares or Units				Units of
		Underlying				Unexercised												of Stock That				Stock That
		Unexercised				Options (#)				Option				Option				Have Not				Have Not
		Options (#)				Unexercisable				Exercise				Expiration				Vested (#)				Vested ($)
Name		Exercisable				(2)				Price ($)				Date				(3)				(4)
Hunter R. Hollar			9,000				—				16.42				12/17/2007				—				—
			4,500				—				20.33				12/16/2008				—				—
			10,520				—				17.21				12/15/2009				—				—
			7,481				—				14.54				12/13/2010				—				—
			18,400				—				32.25				12/21/2011				—				—
			17,000				—				31.25				12/11/2012				—				—
			16,950				—				38.91				12/17/2013				—				—
			18,650				—				38.00				12/15/2014				—				—
			15,001				7,499				38.13				12/14/2012				—				—
			—				11,500				37.40				12/13/2013				2,500				95,450
Philip J. Mantua			175				—				17.21				12/15/2009				—				—
			1,800				—				14.54				12/13/2010				—				—
			1,500				—				32.25				12/21/2011				—				—
			1,750				—				31.25				12/11/2012				—				—
			2,200				—				38.91				12/17/2013				—				—
			6,050				—				38.00				12/15/2014				—				—
			4,264				2,131				38.13				12/14/2012				—				—
			—				5,000				37.40				12/13/2013				1,000				38,180
Frank H. Small			4,500				—				16.42				12/17/2007				—				—
			2,250				—				20.33				12/16/2008				—				—
			6,750				—				17.21				12/15/2009				—				—
			12,001				—				14.54				12/13/2010				—				—
			6,400				—				32.25				12/21/2011				—				—
			8,350				—				31.25				12/11/2012				—				—
			10,325				—				38.91				12/17/2013				—				—
			11,250				—				38.00				12/15/2014				—				—
			7,917				3,958				38.13				12/14/2012				—				—
			—				7,000				37.40				12/13/2013				1,500				57,270

(continued)

Outstanding Equity Awards At Fiscal Year End ⁽¹⁾ (continued)

		Option Awards																Stock Awards
																						Market
						Number of																Value of
		Number of				Securities												Number of				Shares or
		Securities				Underlying												Shares or Units				Units of
		Underlying				Unexercised												of Stock That				Stock That
		Unexercised				Options (#)				Option				Option				Have Not				Have Not
		Options (#)				Unexercisable				Exercise				Expiration				Vested (#)				Vested ($)
Name		Exercisable				(2)				Price ($)				Date				(3)				(4)
R. Louis Caceres			2,081				—				17.21				12/15/2009				—				—
			3,000				—				32.25				12/21/2011				—				—
			4,700				—				31.25				12/11/2012				—				—
			5,000				—				38.91				12/17/2013				—				—
			6,050				—				38.00				12/15/2014				—				—
			4,264				2,131				38.13				12/14/2012				—				—
			—				5,000				37.40				12/13/2013				1,000				38,180
Daniel J. Schrider			800				—				17.21				12/15/2009				—				—
			2,499				—				14.54				12/13/2010				—				—
			2,000				—				32.25				12/21/2011				—				—
			4,700				—				31.25				12/11/2012				—				—
			5,000				—				38.91				12/17/2013				—				—
			6,625				—				38.00				12/15/2014				—				—
			4,264				2,131				38.13				12/14/2012				—				—
			—				5,000				37.40				12/13/2013				1,000				38,180

Grants of Plan-Based Awards

The following table provides information regarding grants of awards of restricted stock and stock options under Bancorp’s Omnibus Stock Plan.

						Estimated Future
						Payouts Under				Exercise or Base				Grant Date Fair Value
						Equity Incentive Plan				Price of Option				of Stock and Option
Name		Grant Date				Awards (1)				Awards ($/sh)				Awards (2)
Hunter R. Hollar			12/13/2006			$	187,110			$	37.40			$	187,110
Philip J. Mantua			12/13/2006				78,100				37.40				78,100
Frank H. Small			12/13/2006				113,080				37.40				113,080
R. Louis Caceres			12/13/2006				78,100				37.40				78,100
Daniel J. Schrider			12/13/2006				78,100				37.40				78,100

Option Exercises and Stock Vested

The following table shows exercises of stock options by the Named Executive Officers during 2006 and the value realized by them upon exercise.

		Number of
		Shares Acquired				Value Realized
		on Exercise				Upon Exercise
Name		(#)				($)
Hunter R. Hollar			4,500			$	117,518
Philip J. Mantua			—				—
Frank H. Small			2,250				58,759
R. Louis Caceres			—				—
Daniel J. Schrider			—				—

Pension Benefits

The following table shows the present value of the accumulated benefit under Bancorp’s Pension Plan and the Supplemental Executive Retirement Agreements with each Named Executive Officer.

				Number of Years				Present Value of
Name		Plan Name (1)		of Credited Service				Accumulated Benefit (1)
Hunter R. Hollar		Pension Plan			16			$	218,101
		Supplemental Executive Retirement Agreement			16				1,363,647
Philip J. Mantua		Pension Plan			8				34,327
		Supplemental Executive Retirement Agreement			7				109,863
Frank H. Small		Pension Plan			16				247,399
		Supplemental Executive Retirement Agreement			16				1,032,619
R. Louis Caceres		Pension Plan			8				40,095
		Supplemental Executive Retirement Agreement			7				109,550
Daniel J. Schrider		Pension Plan			18				48,144
		Supplemental Executive Retirement Agreement			17				83,872

Bancorp’s defined benefit, tax-qualified Pension Plan is generally available to employees. Benefits under Bancorp’s Pension Plan are provided on a 10-year certain and life basis and are not subject to deduction for Social Security or other offset amounts. Earnings covered by the Pension Plan are total wages, including elective pre-tax contributions under Section 401(k) of the Internal Revenue Code, overtime pay, bonuses, and other cash compensation, which for the named executives correspond, in general, to the total of the amounts in the “Salary” and “Bonus” columns in the Summary Compensation Table, up to a total of $220,000. Retirement benefits equal the sum of three parts: (a) the benefit accrued as of December 31, 2000, based on the formula of 1.5% of highest five-year average salary as of that date times years of service as of that date, plus (b) 1.75% of each year’s earnings after December 31, 2000 (1.75% of career average earnings) through December 31, 2005, and (c) 1.0% of each year’s earnings thereafter. In addition, if the participant’s age plus years of service as of January 1, 2001 equals at least 60, and the participant had at least 15 years of service at that date, he or she will receive an additional benefit of 1% of year 2000 earnings for each of the first 10 years of service completed after December 31, 2000. The Pension Plan permits early retirement at age 55 after at least 10 years of service.

Nonqualified Deferred Compensation

The following table summarizes the contributions and earnings for the Named Executive Officers under the nonqualified deferred compensation plan.

		Executive				Registrant												Aggregate
		Contributions				Contributions				Aggregate				Aggregate				Balance at
		in Last Fiscal				in Last Fiscal				Earnings in Last				Withdrawals/				Last Fiscal
Name		Year				Year				Fiscal Year (1)				Distributions				Year End (1)
Hunter R. Hollar			0				0			$	14,601				0			$	209,392
Philip J. Mantua			0				0				0				0				0
Frank H. Small			0				0				0				0				0
R. Louis Caceres			0				0				0				0				0
Daniel J. Schrider			0				0				0				0				0

Potential Payments Upon Termination

The following table summarizes the payments to which Named Executive Officers are entitled upon a termination of employment in different, specified circumstances under their employment agreements, the Supplemental Executive Retirement Agreements, the Option Plans, and the 2005 Omnibus Stock Plan. Benefits payable under Bancorp’s Pension Plan or 401(k) Plan are not included.

		Hunter R.				Philip J.				Frank H.				R. Louis				Daniel J.
		Hollar				Mantua				Small				Caceres				Schrider
Termination without a Change in Control:
Retirement:(1)
Employment agreements		$	—			$	—			$	—			$	—			$	—
Supplemental executive retirement agreements(2)			1,363,647				43,945				1,032,619				43,820				83,872
Equity awards			—				—				—				—				—
Total		$	1,363,647			$	43,945			$	1,032,619			$	43,820			$	83,872
Death:
Employment agreements(3)		$	—			$	—			$	—			$	—			$	—
Supplemental executive retirement agreements (4)			1,363,647				109,863				1,032,619				109,550				83,872
Equity awards (5)			104,795				42,293				62,928				42,187				42,187
Total		$	1,468,442			$	152,156			$	1,095,547			$	151,737			$	126,059
Disability:
Employment agreements(6)		$	365,307			$	171,655			$	302,867			$	181,579			$	194,486
Supplemental executive retirement agreements(7)			897,761				72,329				679,828				72,123				55,217
Equity awards(5)			104,795				42,293				62,928				42,187				42,187
Total		$	1,367,863			$	286,277			$	1,045,623			$	295,889			$	291,890
Voluntary termination by executive officer:
Employment agreements		$	—			$	—			$	—			$	—			$	—
Supplemental executive retirement agreements(8)			1,363,647				43,945				1,032,619				43,820				83,872
Equity awards			—				—				—				—				—
Total		$	1,363,647			$	43,945			$	1,032,619			$	43,820			$	83,872
Termination by Bancorp with Just Cause		None				None				None				None				None
Termination by Bancorp without Just Cause or by executive with Good Reason:
Employment agreements(9)		$	1,378,264			$	447,917			$	597,500			$	381,875			$	341,403
Supplemental executive retirement agreements(10)			1,363,647				43,945				1,032,619				43,820				83,872
Equity awards			—				—				—				—				—
Total		$	2,741,911			$	491,862			$	1,630,119			$	425,695			$	425,275
Termination in connection with a Change in Control:
Employment agreements-compensation and benefits (11)		$	1,928,546			$	755,556			$	1,480,403			$	785,002			$	862,183
Employment agreements-tax gross up(12)			636,461				439,558				734,920				452,712				430,652
Supplemental executive retirement agreements (13)			1,363,647				109,863				1,032,619				109,550				83,872
Equity awards (5)			104,795				42,293				62,928				42,187				42,187
Total		$	4,033,449			$	1,347,270			$	3,310,870			$	1,389,451			$	1,418,894

Transactions and Relationships with Management

Bancorp and the Bank have had in the past, and expect to have in the future, banking transactions with directors and executive officers in the ordinary course of business on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with other persons. In the opinion of management, these transactions do not and will not involve more than the normal risk of collectibility or present other unfavorable features.

Bancorp’s written Code of Ethics requires that all related party transactions involving executive officers or directors, as defined in Item 404 of SEC Regulation S-K, must be reviewed and approved by the Audit Committee, another committee of independent directors, or the independent directors on the Board. As required by Federal regulations, extensions of credit by the Bank to directors and executive officers are subject to the procedural and financial requirements of Regulation O of the Board of Governors of the Federal Reserve System, which generally require advance approval of such transactions by uninterested directors. Other related party transactions as defined in Item 404 (generally, any financial transactions, arrangements, or relationships, regardless of dollar amount, other than extensions of credit and bank deposits) are reviewed by the independent directors with the affected director not present or voting.

Director Lewis R. Schumann is a partner in the Rockville, Maryland law firm of Miller, Miller and Canby, Chtd., which Bancorp and the Bank have retained during 2006 and expect to retain during the current year as legal counsel. The law firm provides legal services on matters such as routine litigation, customer account issues, and trust and estate administration.

Shareholder Proposals and Communications

From time to time, individual shareholders may wish to submit proposals that they believe should be voted upon by the shareholders. The Securities and Exchange Commission has adopted regulations that govern the inclusion of such proposals in Bancorp’s annual proxy materials. Shareholder proposals intended to be presented at the 2008 Annual Meeting of Shareholders may be eligible for inclusion in Bancorp’s proxy materials for that Annual Meeting if received by Bancorp at its executive offices not later than November 12, 2007 unless the date of the 2008 annual meeting is more than 30 days from April 16, 2008, in which case the deadline is a reasonable time before Bancorp begins to print and mail proxy materials. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.

In addition, Bancorp’s Bylaws require that to be properly brought before an annual meeting, shareholder proposals for new business must be delivered to or mailed and received by Bancorp not less than thirty nor more than ninety days prior to the date of the meeting; provided, however, that if less than forty-five days notice of the date of the meeting is given to shareholders, such notice by a shareholder must be received not later than the fifteenth day following the date on which notice of the date of the meeting was mailed to shareholders or two days before the date of the meeting, whichever is earlier. Each such notice given by a shareholder must set forth certain information specified in the Bylaws concerning the shareholder and the business proposed to be brought before the meeting.

Shareholders also may nominate candidates for director, provided that such nominations are made in writing and received by Bancorp at its executive offices not later than December 13, 2007. The nomination should be sent to the attention of Bancorp’s Secretary and must include, concerning the director nominee, the following information: full name, age, date of birth, educational background and business experience, including positions held for at least the preceding five years, home and office addresses and telephone numbers, and a signed representation to provide all information requested by Bancorp in a timely manner for preparation of its disclosures regarding the solicitation of proxies for election of directors. The name of each such candidate for director must be placed in nomination at the Annual Meeting by a shareholder present in person. The nominee must also be present in person at the Annual Meeting. A vote for a person who has not been duly nominated pursuant to these requirements will be deemed to be void.

Bancorp’s shareholders may communicate with the Board of Directors or any individual Director by addressing correspondence to the board or such director in care of the Secretary at Bancorp’s main office by mail, courier, or facsimile or by e-mail through the “contact us” feature of the Investor Relations area of its website at www.sandyspringbank.com.

The Board of Directors believes it is important for all directors to attend the annual meeting of shareholders in order to show their support for Bancorp and to provide an opportunity for shareholders to express any concerns to them. Bancorp has adopted a policy that all directors should attend each annual meeting of shareholders unless they are unable to attend by reason of personal or family illness or pressing matters.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp’s executive officers and directors, and any persons who own more than ten percent of a registered class of Bancorp’s equity securities, to file reports of ownership and changes in ownership on Forms 3, 4, and 5 with the Securities and Exchange Commission. Executive officers, directors and greater than ten percent stockholders are required by applicable regulations to furnish Bancorp with copies of all Forms 3, 4, and 5 they file.

Based solely on Bancorp’s review of the copies of such forms it has received, Bancorp believes that all its executive officers and directors have complied with all filing requirements applicable to them with respect to transactions during 2006.

PROPOSAL II: Ratification of Selection of Bancorp’s Independent Registered Public Accounting Firm

The Audit Committee has appointed the firm of McGladrey & Pullen, LLP as Bancorp’s independent registered public accounting firm for 2007. In accordance with established policy, the Board is submitting this proposal to the vote of the shareholders for ratification. In the event the appointment is not ratified by a majority of the shareholders it is anticipated that no change in auditors will be made for the current year because of the difficulty and expense of making a change so long after the beginning of the year, but the vote will be considered in connection with the auditor appointment for 2008.

The affirmative vote of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting is required to ratify the appointment of McGladrey & Pullen, LLP as Bancorp’s independent registered public accounting firm for 2007. Therefore, abstentions effectively count as votes against this proposal.

McGladrey & Pullen, LLP was appointed as Bancorp’s independent registered public accounting firm for 2006. Representatives of McGladrey & Pullen will be present at the Annual Meeting and will be given the opportunity to make a statement, if they desire, and be available to respond to appropriate questions.

Audit and Non-Audit Fees

The following table presents fees for professional audit services rendered by McGladrey & Pullen, LLP for the audit of the annual financial statements of Sandy Spring Bancorp, Inc., and subsidiaries for the year ended December 31, 2006 and December 31, 2005, and fees billed for other services rendered by McGladrey & Pullen, LLP and RSM McGladrey, Inc. (an affiliate of McGladrey & Pullen, LLP).

		2006				2005
Audit Fees(1)		$	322,250			$	283,750
Audit-Related Fees(2)		$	48,346			$	89,500
Tax Services(3)		$	163,508			$	57,866

The Audit Committee is required to preapprove all auditing services and permitted non-audit services provided by Bancorp’s independent registered public accounting firm, under Securities and Exchange Commission regulations that became effective in May 2003. There is an exception for preapproval of non-audit services if the aggregate amount of all such non-audit services provided to Bancorp constitutes not more than 5 percent of the total amount of revenues paid by it to its independent registered public accounting firms during the fiscal year in which the non-audit services are provided; such services were not recognized by Bancorp at the time of the engagement to be non-audit services; and the non-audit services are promptly brought to the attention of the committee and approved prior to the completion of the audit by the committee or by one or more members of the committee to whom authority to grant such approval has been delegated by the committee. All audit services and permitted non-audit services to be performed by Bancorp’s independent registered public accounting firm have been preapproved by the Audit Committee as required by Securities and Exchange Commission regulations and the Audit Committee’s charter without exception.

Report of the Audit Committee

Bancorp’s Audit Committee is appointed by the Board of Directors to assist the Board in monitoring the integrity of the financial statements, compliance with legal and regulatory requirements, and the independence and performance of internal and external auditors. The committee (1) has reviewed and discussed the audited financial statements included in Bancorp’s 2006 Annual Report on Form 10-K with management; (2) has discussed with the Bancorp’s independent registered public accounting firm the matters required to be discussed by Statement of Auditing Standards 61; and (3) has received the written disclosures and the letter from the Bancorp’s independent registered public accounting firm required by Independence Standards Board Standard No. 1 and discussed independence with the Bancorp’s independent registered public accounting firm. Based upon this review, discussion, disclosures, and materials described in (1) through (3), the committee recommended to the Board of Directors that the audited financial statements be included in the 2006 Annual Report on Form 10-K. The committee also has considered whether the amount and nature of non-audit services rendered by the Bancorp’s independent registered public accounting firm are consistent with its independence. The Audit Committee Charter is available on the Investor Relations area of Bancorp’s website at www.sandyspringbank.com.

February 28, 2007

		AUDIT COMMITTEE
		John Chirtea, Chairman
		Mark E. Friis		Gilbert L. Hardesty
		Pamela A. Little		Charles F. Mess
		Craig A. Ruppert

The Board recommends a vote “FOR” the ratification of McGladrey & Pullen, LLP as the Bancorp’s independent registered public accounting firm for 2007.

By order of the Board of Directors,

Ronald E. Kuykendall
Executive Vice President, General Counsel
& Secretary

Dated: March 15, 2007

-FORM OF PROXY-

REVOCABLE PROXY
SANDY SPRING BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 2007

The undersigned hereby constitutes and appoints Susan D. Goff and Robert L. Orndorff, Jr. and each of them the proxies of the undersigned, with full power of substitution, to attend the annual meeting of shareholders (the “Annual Meeting”) of Sandy Spring Bancorp, Inc. (“Bancorp”) to be held at the Ten Oaks Ballroom, 5000 Signal Bell Lane, Clarksville, MD. on Wednesday, April 18, 2007 at 3:00 p.m. Eastern Time, or at any adjournment thereof, and to vote all the shares of stock of Bancorp that the undersigned may be entitled to vote, upon the following matters:

(Continued and to be signed on the reverse side)

Please detach along perforated line and mail in the envelope provided.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL DIRECTOR NOMINEES AS SHOWN IN ITEM I AND “FOR” ITEM 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x

1. The election as directors of all nominees listed below:

				NOMINEES
o		FOR ALL NOMINEES		O		Marshall H. Groom
		WITHHOLD AUTHORITY		O		Solomon Graham
o		FOR ALL NOMINEES		O		Gilbert L. Hardesty
o		FOR ALL EXCEPT		O		Charles F. Mess
(See instructions below)				O		Lewis R. Schumann
				O		W. Drew Stabler

INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: l

2. The ratification of appointment of McGladrey & Pullen, LLP, as the independent registered public accounting firm for 2007.

FOR		AGAINST		ABSTAIN
o		o		o