ACQUISITION OF REVERE BANK

6 Months Ended

Jun. 30, 2020

Acquisition of Revere bank [Abstract]

Acquisition of Revere bank

Note 2 – Acquisition of revere bank

On April 1, 2020 (“Acquisition Date”), the Company completed the acquisition of Revere Bank (“Revere”), a Maryland chartered commercial bank, in accordance with the definitive agreement that was entered on September 23, 2019 by and among the Company, the Bank and Revere. In connection with the completion of the merger, former Revere shareholders received 1.05 shares of Sandy Spring common stock for each share of Revere common stock they held. Based on the $22.64 per share closing price of Sandy Spring common stock on March 31, 2020, and including the fair value of options converted or cashed-out, the total transaction value was approximately $293 million. Upon completion of the acquisition, Sandy Spring shareholders owned approximately 74 percent of the combined company, and former Revere shareholders owned approximately 26 percent.

As of March 31, 2020, Revere, headquartered in Rockville, MD, had more than $2.8 billion in assets and operated 11 full-service community banking offices throughout the Washington D.C. metropolitan region.

The acquisition of Revere was accounted for as a business combination using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid are recorded at estimated fair values on the Acquisition Date. The provisional amount of goodwill recognized as of the Acquisition Date was approximately $0.8 million. The Company will continue to keep the measurement period open for certain accounts, including loans, core deposit intangible, and deferred tax assets, where its review procedures of any updated information related to the transaction are ongoing. If considered necessary, additional adjustments to the fair value measurement of these accounts will be made until all information is finalized, the Company’s review procedures are complete, and the measurement period is closed. Any subsequent adjustments to the fair values of assets acquired and liabilities assumed, identifiable intangible assets, or other purchase accounting adjustments, as discussed above, will result in adjustments to goodwill within the first 12 months following the Acquisition Date. The goodwill is not expected to be deductible for tax purposes.

The consideration paid for Revere’s common equity and outstanding stock options and the provisional fair values of acquired identifiable assets and assumed identifiable liabilities as of the Acquisition Date were as follows:

(In thousands)			April 1, 2020
Purchase price:
Fair value of common shares issued (12,768,949 shares) based on Sandy Spring's share price of $22.64		$	289,089
Fair value of Revere stock options converted to Sandy Spring stock options			3,611
Cash paid for cashed-out Revere stock options			291
Cash for fractional shares			11
	Total purchase price	$	293,002
Identifiable assets:
Cash and cash equivalents		$	80,768
Investments available-for-sale			180,752
Loans			2,502,244
Premises and equipment			3,443
Accrued interest receivable			7,651
Core deposit intangible asset			18,360
Other assets			52,812
	Total identifiable assets	$	2,846,030
Identifiable liabilities:
Deposits		$	2,322,422
Borrowings			205,514
Other liabilities			25,931
	Total identifiable liabilities	$	2,553,867
Provisional fair value of net assets acquired including identifiable intangible assets			292,163
Provisional resulting goodwill		$	839