Sandy Spring Bancorp in Olney, Md., has agreed to buy WashingtonFirst Bankshares in Reston, Va.
The $5.2 billion-asset Sandy Spring said in a press release Tuesday that it will pay $489 million in stock for the $2.1 billion-asset WashingtonFirst. The deal, which is expected to close in the fourth quarter, priced WashingtonFirst at 256.3% of its tangible book value.
Sandy Spring will retain $25 million of WashingtonFirst's subordinated debt and $8 million of trust-preferred securities.
“This expansion … will create a premier bank that will better serve clients across the greater Washington D.C. region and preserve the tradition of true community banking,” Daniel Schrider, Sandy Spring’s president and CEO, said in the release.
“Our mix of products and services are complementary, our cultures are aligned, and we share a commitment to providing the best possible service to our clients over a lifetime," Schrider added.
The deal is expected to be 8.3% accretive to Sandy Spring's earnings per share in 2018. It should take Sandy Spring just under four years to earn back the deal's 4.8% dilution to tangible book value.
Sandy Spring said it expects to cut about 39% of WashingtonFirst's annual noninterest expenses and to incur about $25.8 million in merger-related expenses.
Four WashingtonFirst directors, including Chairman Joseph Searcy Bracewell and President and CEO Shaza Andersen, will join Sandy Spring’s board. Andersen and Bracewell will also join Sandy Spring's executive committee.
Kafafian Group and Kilpatrick Townsend & Stockton advised Sandy Spring, while Sandler O’Neill provided a fairness opinion. Keefe, Bruyette & Woods and Troutman Sanders advised WashingtonFirst.