Dive Brief:

• Richmond, Virginia-based Atlantic Union Bank agreed to acquire Olney, Maryland-based Sandy Spring Bank in a roughly $1.6 billion all-stock transaction, the banks announced Monday.
• Buying Sandy Spring will bolster Atlantic Union’s presence in the Washington, D.C., area, giving the Richmond bank 53 additional branches, along with $14.4 billion in added assets, $11.7 billion in deposits and $11.5 billion in loans.
• The transaction is set to close by the third quarter of 2025, after which Sandy Spring locations will use the Atlantic Union name and brand, Sandy Spring CEO Daniel Schrider said in a separate message to customers.

Dive Insight:

Rumors of Sandy Spring’s potential sale have floated since last month, when sources told Bloomberg it had hired financial advisers. Atlantic Union was mentioned among possible buyers.

“At our 2018 investor day, I noted that part of our long-term vision was to complete the ‘Golden Crescent’ from Baltimore, through Washington D.C. and Richmond to Hampton Roads and re-create a banking franchise that had not existed since the 1990s,” John C. Asbury, Atlantic Union’s CEO, said in a statement Monday. “With today’s announcement of our partnership with Sandy Spring, Atlantic Union will create a preeminent regional bank, with Virginia as its linchpin, that spans the lower mid-Atlantic into the Southeast and that is committed to the communities it serves.”

With the acquisition, Atlantic Union would become the largest regional bank headquartered in the lower mid-Atlantic, the bank said, noting that the addition of Sandy Spring would more than double the Richmond bank’s wealth business — boosting its assets under management by more than $6.5 billion. The combined company would count $39.2 billion in assets, $32 billion in deposits and $29.8 billion in loans.

To help finance the transaction, Atlantic Union raised $336 million through an agreement to sell roughly 9.9 million shares of common stock at $35.50 per share. The bank also said it planned sell up to $2 billion of Sandy Spring commercial real estate loans after the deal closed. That sale would reduce the combined bank's ratio of CRE loans to total risk-based capital to 285%. A 300% threshold typically spurs tougher regulatory scrutiny. The move also would bring a combined Atlantic Union’s loan-to-deposit ratio below 90%. 

Sandy Spring’s Schrider called the acquisition the “right long-term decision for our shareholders, clients and employees.”

“This combination will deliver enhanced scale, diversity in the market, and capabilities for our clients, and it will provide greater opportunities for our employees to grow within a larger organization,” he said. “Together we will add even greater value to the individuals, families and businesses we serve across our expanded footprint.”

Schrider and two other members of Sandy Spring’s board will join Atlantic Union’s board once the transaction closes.

Under Monday’s deal, Sandy Spring shareholders will receive 0.9 shares of Atlantic Union common stock, or $34.93, based on Friday’s closing price, for each Sandy Spring share they hold.

That would make the Atlantic Union-Sandy Spring deal the third-largest bank acquisition announcement this year — behind SouthState’s May proposed purchase of Independent Bank and UMB’s April move to acquire Heartland. Each of those is valued at roughly $2 billion. They both pale in value to Capital One’s $35.3 billion deal to combine with card network Discover, proposed in February.