<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 29, 1996
---------------
Sandy Spring Bancorp, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 0-19065 52-1532952
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission file (IRS Employer
of incorporation) number) Identification Number)
17801 Georgia Avenue, Olney, Maryland 20832
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 774-6400
--------------
<PAGE>
Item 2. Acquisition or Disposition of Assets.
- ----------------------------------------------
Effective at 5:00 p.m. on August 29, 1996, Sandy Spring Bancorp, Inc.
("Bancorp") consummated its acquisition of Annapolis Bancshares, Inc. ("ABI")
and ABI's wholly owned state trust company subsidiary, Bank of Annapolis,
Annapolis, Maryland ("BOA") through the merger of ABI into Bancorp and BOA into
Sandy Spring National Bank of Maryland, Olney, Maryland (the "Bank"), a wholly
owned subsidiary of Bancorp. Upon consummation of the merger of ABI with and
into Bancorp, each outstanding share of ABI common stock, par value $1.00 per
share was converted into .62585 shares of Bancorp common stock, par value $1.00
per share, with cash to be paid in lieu of fractional share interests. The
Annapolis office of BOA will be operated as a branch of the Bank. For additional
information, see the Press Release dated August 30, 1996, filed as Exhibit 99.1
hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- --------------------------------------------------------------------------
(a) Audited Consolidated Financial Statements of Annapolis Bancshares, Inc. for
the year ended December 31, 1995 (including consolidated balance sheets for the
years ended December 31, 1995 and 1994, and consolidated statements of income
and cash flows for each of the years ended December 31, 1995, 1994, and 1993)
are incorporated by reference to the Annual Report to Shareholders of Annapolis
Bancshares, Inc. for the year ended December 31, 1995, filed as Appendix C to
the Prospectus contained within the Sandy Spring Bancorp, Inc. Registration
Statement on Form S-4 (No. 333-7521).
Unaudited Consolidated Financial Statements of Annapolis Bancshares,
Inc. for the six months ended June 30, 1996 and 1995 (including consolidated
statements of income and cash flows for such periods and a consolidated balance
sheet as of June 30, 1996) are incorporated by reference to the Annapolis
Bancshares, Inc. Report on Form 10-Q filed for the Quarterly Period Ended June
30, 1996 (Commission File No. 0-25710).
(b) Unaudited Pro-Forma Financial Information, including a pro-forma combined
balance sheet as of June 30, 1996 and unaudited pro forma combined statements of
income for the six months ended June 30, 1996 and 1995 and for each of the years
ended December 31, 1995, 1994 and 1993 follow.
(c) Exhibit 2 - Agreement and Plan of Reorganization dated as of April 16,
1996 among Sandy Spring Bancorp, Inc., Sandy Spring
National Bank of Maryland, Annapolis Bancshares, Inc. and
The Bank of Annapolis, incorporated by reference to
Exhibit 2 to Sandy Spring Bancorp, Inc. Registration
Statement on Form S-4 (No. 333-7521).
Exhibit 23 - Consent of Rowles & Company, LLP
Exhibit 99.1 - Press Release dated August 30, 1996
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SANDY SPRING BANCORP, INC.
By: /s/ Hunter R. Hollar
-------------------------------
Hunter R. Hollar, President and
Chief Executive Officer
Dated: September 13, 1996
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma combined balance sheets and the unaudited pro forma
combined statements of income of Sandy Spring Bancorp, Inc. ("Sandy Spring") set
forth below give effect, using the pooling of interests method of accounting, to
the merger of Annapolis Bancshares, Inc. ("ABI") with and into Sandy Spring (the
"Merger") based upon the exchange ratio of 0.62585 shares of Sandy Spring Common
Stock for each share of ABI Common Stock outstanding as of each respective
period end. For calculations of earnings per share the exchange ratio was
applied to average ABI shares outstanding for the period. The unaudited pro
forma balance sheets are presented as though the Merger had occurred on June 30,
1996. The unaudited pro forma combined income statements are presented as though
the Merger had occurred on January 1, 1993. The Merger actually was consummated
on August 29, 1996.
The unaudited pro forma financial information set forth below is for
illustrative purposes only, and therefore is not necessarily indicative of the
financial condition or results of operations of Sandy Spring as they would have
been had the Merger occurred during the periods presented or as they may be in
the future.
Under generally accepted accounting principles, all costs incurred to
effect a combination accounted for as a pooling of interests are expenses of the
combined enterprise and, accordingly, are charged to expense and deducted in
determining the results of operations of the combined entity. Specific one-time
costs associated with the Merger that will cause significant reductions to the
combined entity's results of operations in the initial period following
consummation of the Merger include change in control and severance payments,
registration and application fees, legal, accounting and advisory fees and
expenses, and costs of combining the operations of ABI and Sandy Spring, which
are estimated to amount to approximately $663,000 on a pretax basis, and
$541,000 net of related tax effects. The amounts shown on the Unaudited Pro
Forma Combined Balance Sheets of Sandy Spring and ABI have been calculated by
adding the balances from the historical unaudited consolidated balance sheets of
Sandy Spring and ABI as of June 30, 1996, and adjusting for the specific one
time costs associated with the Merger and the effects of the issuance of Sandy
Spring Common Stock and the cancellation of ABI Common Stock in the Merger. The
amounts shown on the Unaudited Pro Forma Combined Statements of Income have been
calculated by adding the amounts from the historical statements of income of
Sandy Spring and ABI for the indicated periods, without reduction for the
specific one time costs of the Merger. Earnings per share amounts have been
based upon the pro forma weighted average number of common shares outstanding at
the Conversion Ratio of 0.62585 shares of Sandy Spring Common Stock for each
share of ABI Common Stock.
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEETS
At June 30, 1996
<TABLE>
<CAPTION>
ABI Adjustments Pro Forma
Sandy Spring --- ----------- Combined
------------ (Dollars in thousands) --------
----------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 30,464 $ 84 $ - $ 30,548
Interest-bearing deposits with banks 6,025 17 6,042
Federal funds sold 23,259 2,417 25,676
Residential mortgage loans held for sale 2,773 497 3,270
Investments available for sale (at fair value) 184,927 - 184,927
Investments held to maturity 121,961 459 122,420
Other equity securities 3,965 982 4,947
Total loans (net of unearned income) 438,099 74,003 512,102
Less: Allowance for credit losses (6,033) (745) (6,778)
----------- ---------- -----------
Net loans 432,066 73,258 - 505,324
Premises and equipment 18,072 1,909 19,981
Accrued interest receivable 6,460 668 7,128
Other real estate owned, net of all allowance 93 - 93
Other assets 5,227 772 - 5,999
------------ ---------- ------------ -----------
TOTAL ASSETS $ 835,292 $ 81,063 $ - $ 916,355
============ ========== ============ ===========
LIABILITIES
Noninterest-bearing deposits $ 103,089 $ 2,037 $ - $ 105,126
Interest-bearing deposits 604,822 63,722 668,544
------------ ---------- -----------
Total deposits 707,911 65,759 773,670
Short-term borrowings 38,766 5,000 43,766
Long-term borrowings 5,136 - 5,136
Accrued interest and other liabilities 2,512 707 541 (1) 3,760
------------ ---------- ----------- -----------
TOTAL LIABILITIES 754,325 71,466 541 826,332
------------ ---------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized
15,000,000 shares; outstanding 4,381,584
actual shares and 4,877,617 pro forma
combined shares 4,382 496 (2) 4,878
Common stock, $1 par value, authorized
5,000,000 shares; outstanding 792,575 793 (793) (2) -
shares -
Surplus 27,090 5,407 297 (2) 32,794
Retained earnings 50,559 3,397 (541) (1) 53,415
Net unrealized loss on investments
available-for-sale (1,064) - - (1,064)
----------- ---------- ---------- -----------
TOTAL STOCKHOLDERS' EQUITY 80,967 9,597 (541) 90,023
----------- ---------- ---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 835,292 $ 81,063 $ - $ 916,355
----------- ---------- ---------- -----------
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
Six Months Ended June 30, 1996
(Dollars in thousands,
except for per share data)
<TABLE>
<CAPTION>
Pro Forma
Sandy Spring ABI Combined
------------ --- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 19,120 $ 3,762 $ 22,882
Interest on loans held for sale 82 - 82
Interest on deposits with banks 97 - 97
Interest and dividends on securities:
Taxable 6,997 62 7,059
Nontaxable 1,692 2 1,694
Interest on federal funds sold 626 103 729
---------- -------- -----------
TOTAL INTEREST INCOME 28,614 3,929 32,543
Interest expense:
Interest on deposits 12,215 1,690 13,905
Interest on short-term borrowings 720 136 856
Interest on long-term borrowings 150 - 150
---------- -------- -----------
TOTAL INTEREST EXPENSE 13,085 1,826 14,911
---------- -------- -----------
NET INTEREST INCOME 15,529 2,103 17,632
Provision for credit losses 150 58 208
---------- -------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 15,379 2,045 17,424
Noninterest income:
Securities gains(losses) - (51) (51)
Service charges on deposit accounts 1,369 22 1,391
Gains on mortgage sales 341 103 444
Other income 1,427 1 1,428
---------- ------- -----------
TOTAL NONINTEREST INCOME 3,137 75 3,212
Noninterest expenses:
Salaries and employee benefits 6,354 674 7,028
Occupancy expense of premises 1,054 (20) 1,034
Equipment expenses 1,009 42 1,051
FDIC insurance expense 1 1 2
Outside data services 436 31 467
Other expenses 2,264 186 2,450
---------- ------- -----------
TOTAL NONINTEREST EXPENSES 11,118 914 12,032
---------- ------- -----------
Income before income taxes 7,398 1,206 8,604
Income tax expense 2,360 466 2,826
---------- ------- -----------
NET INCOME $ 5,038 $ 740 $5,778
========== ======= ===========
NET INCOME PER COMMON SHARE $ 1.16 $ 0.93 $ 1.19/2/
========== ======= ===========
Weighted average shares outstanding 4,358,402 792,879 4,854,625/2/
========== ======= ===========
</TABLE>
See Notes to Pro Forma Combined Financial Information
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 1995
(Dollars in thousands,
except for per share data)
<TABLE>
<CAPTION>
Pro Forma
Sandy Spring ABI Combined
------------ --- ---------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 18,082 $ 2,864 $ 20,946
Interest on loans held for sale 5 - 5
Interest on deposits with banks 5 - 5
Interest and dividends on securities:
Taxable 6,718 151 6,869
Nontaxable 1,759 2 1,761
Interest on federal funds sold 304 93 397
--------- -------- ---------
TOTAL INTEREST INCOME 26,873 3,110 29,983
Interest expense:
Interest on deposits 11,208 1,410 12,618
Interest on short-term borrowings 1,291 30 1,321
Interest on long-term borrowings 110 75 185
--------- -------- ---------
TOTAL INTEREST EXPENSE 12,609 1,515 14,124
--------- -------- ---------
NET INTEREST INCOME 14,264 1,595 15,859
Provision for credit losses - 98 98
NET INTEREST INCOME AFTER PROVISION --------- -------- ---------
FOR CREDIT LOSSES 14,264 1,497 15,761
Noninterest income:
Securities (losses) (5) - (5)
Service charges on deposit accounts 1,212 18 1,230
Gain(Loss) on mortgage sales 27 (7) 20
Other income 971 4 975
--------- -------- ---------
TOTAL NONINTEREST INCOME 2,205 15 2,220
Noninterest expenses:
Salaries and employee benefits 5,500 497 5,997
Occupancy expense of premises 939 (24) 915
Equipment expenses 892 42 934
FDIC insurance expense 722 63 785
Outside data services 319 30 349
Other expenses 1,892 182 2,074
---------- -------- ---------
TOTAL NONINTEREST EXPENSES 10,264 790 11,054
---------- -------- ---------
Income before income taxes 6,205 722 6,927
Income tax expense 1,894 279 2,173
---------- -------- ---------
NET INCOME $ 4,311 $ 443 $ 4,754
---------- -------- ---------
NET INCOME PER COMMON SHARE $ 1.00 $ 0.63 $ 1.00/2/
---------- -------- ---------
Weighted average shares outstanding 4,293,060 703,219 4,733,170/2/
---------- -------- ---------
</TABLE>
See Notes to Pro Forma Combined Financial Information
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
Year Ended December 31, 1995
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Pro Forma
Sandy Spring ABI Combined
--------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 37,576 $ 6,350 $ 43,926
Interest on loans held for sale 55 - 55
Interest on deposits with banks 35 4 39
Interest and dividends on
securities:
Taxable 13,471 298 13,769
Nontaxable 3,450 4 3,454
Interest on federal funds sold 654 218 872
---------- -------- ---------------
Total interest income 55,241 6,874 62,115
Interest expense:
Interest on deposits 23,604 3,101 26,705
Interest on short-term borrowings 2,175 111 2,286
Interest on long-term borrowings 219 132 351
---------- -------- ---------------
Total interest expense 25,998 3,344 29,342
---------- -------- ---------------
Net interest income 29,243 3,530 32,773
Provision for credit losses - 180 180
Net interest income after provision
for credit losses 29,243 3,350 32,593
---------- -------- ---------------
Noninterest income:
Securities losses (240) (39) (279)
Service charges on deposit 2,533 36 2,569
accounts
Gains on mortgage sales 232 12 244
Other income 1,921 23 1,944
---------- -------- ---------------
Total noninterest income 4,446 32 4,478
Noninterest expenses:
Salaries and employee benefits 11,630 1,096 12,726
Occupancy expense of premises 1,881 (67) 1,814
Equipment expenses 1,867 76 1,943
FDIC insurance expense 752 66 818
Outside data services 737 48 785
Other expenses 3,920 418 4,338
---------- -------- ---------------
Total noninterest expenses 20,787 1,637 22,424
---------- -------- ---------------
Income before income taxes 12,902 1,745 14,647
Income tax expense 3,979 674 4,653
---------- -------- ---------------
Net income $ 8,923 $ 1,071 $ 9,994
========== ======== ===============
Net income per common share $ 2.07 $ 1.42 $ 2.09/(2)/
========== ======== ===============
Weighted average shares outstanding 4,303,287 748,709 4,771,867/(2)/
</TABLE>
See Notes to Pro Forma Combined Financial Information.
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
Year Ended December 31, 1994
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Pro Forma
Sandy Spring ABI Combined
-------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 27,672 $ 4,922 $ 32,594
Interest on loans held for sale 57 - 57
Interest on deposits with banks 37 1 38
Interest and dividends on
securities:
Taxable 14,030 269 14,299
Nontaxable 4,037 4 4,041
Interest on federal funds sold 431 118 549
---------- -------- ---------------
Total interest income 46,264 5,314 51,578
Interest expense:
Interest on deposits 17,864 2,168 20,032
Interest on short-term borrowings 1,165 149 1,314
Interest on long-term borrowings 150 - 150
---------- -------- ---------------
Total interest expense 19,179 2,317 21,496
---------- -------- ---------------
Net interest income 27,085 2,997 30,082
Provision for credit losses 160 52 212
---------- -------- ---------------
Net interest income after provision
for credit losses 26,925 2,945 29,870
---------- -------- ---------------
Noninterest income:
Securities losses (84) - (84)
Service charges on deposit accounts 2,308 40 2,348
Gains on mortgage sales 164 11 175
Other income 1,741 9 1,750
---------- -------- ---------------
Total noninterest income 4,129 60 4,189
Noninterest expenses:
Salaries and employee benefits 11,060 899 11,959
Occupancy expense of premises 1,828 77 1,905
Equipment expenses 1,545 72 1,617
FDIC insurance expense 1,388 122 1,510
Outside data services 582 48 630
Other expenses 3,492 349 3,841
---------- -------- ---------------
Total noninterest expenses 19,895 1,567 21,462
---------- -------- ---------------
Income before income taxes 11,159 1,438 12,597
Income tax expense 3,139 555 3,694
---------- -------- ---------------
Net income $ 8,020 $ 883 $ 8,903
========== ======== ===============
Net income per common share $ 1.89 $ 1.32 $ 1.90/(2)/
========== ======== ===============
Weighted average shares outstanding 4,248,186 700,240 4,686,431/(2)/
</TABLE>
See Notes to Pro Forma Combined Financial Information.
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
Year Ended December 31, 1993
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Pro Forma
Sandy Spring ABI Combined
------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 23,695 $ 4,220 $ 27,915
Interest on loans held for sale 300 - 300
Interest on deposits with banks 399 - 399
Interest and dividends on securities:
Taxable 12,350 115 12,465
Nontaxable 4,247 - 4,247
Interest on federal funds sold 683 180 863
---------- -------- ---------------
Total interest income 41,674 4,515 46,189
Interest expense:
Interest on deposits 16,990 2,082 19,072
Interest on short-term borrowings 641 - 641
Interest on long-term borrowings 64 16 80
---------- -------- ---------------
Total interest expense 17,695 2,098 19,793
---------- -------- ---------------
Net interest income 23,979 2,417 26,396
Provision for credit losses 950 106 1,056
---------- -------- ---------------
Net interest income after provision
for credit losses 23,029 2,311 25,340
---------- -------- ---------------
Noninterest income:
Securities gains 257 - 257
Service charges on deposit accounts 2,028 24 2,052
Gains on mortgage sales 976 29 1,005
Other income 1,547 9 1,556
---------- -------- ---------------
Total noninterest income 4,808 62 4,870
Noninterest expenses:
Salaries and employee benefits 9,066 673 9,739
Occupancy expense of premises 1,598 162 1,760
Equipment expenses 1,252 56 1,308
FDIC insurance expense 1,275 104 1,379
Outside data services 519 42 561
Other expenses 3,232 361 3,593
---------- -------- ---------------
Total noninterest expenses 16,942 1,398 18,340
---------- -------- ---------------
Income before income taxes 10,895 975 11,870
Income tax expense 2,888 373 3,261
---------- -------- ---------------
Net income $ 8,007 $ 602 $ 8,609
========== ======== ===============
Net income per common share $ 1.95 $ 1.05 $ 1.92/(2)/
========== ======== ===============
Weighted average shares outstanding 4,117,220 572,536 4,475,542/(2)/
</TABLE>
See Notes to Pro Forma Combined Financial Information.
<PAGE>
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
(Unaudited)
(1) Specific, one time expenses to effect the Merger of approximately $541,000,
net of related tax effects, have been reflected in the Pro Forma Combined
Balance Sheets as of June 30, 1996.
(2) Based on an Exchange Ratio of 0.62585 shares of Sandy Spring Common Stock
for each share of ABI Common Stock.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated February 7, 1996, on the
audit of the consolidated financial statements described therein of Annapolis
Bancshares, Inc. in the Current Report on Form 8-K filed by Sandy Spring
Bancorp, Inc. with the Securities and Exchange Commission in connection with the
consummation of the acquisition by Sandy Spring Bancorp, Inc. of Annapolis
Bancshares, Inc.
ROWLES & COMPANY, LLP
/s/ Rowles & Company, LLP
Baltimore, Maryland
September 12, 1996
<PAGE>
Exhibit 99.1
SANDY SPRING BANCORP, INC.
_________________
FOR IMMEDIATE RELEASE
CONTACTS:
Hunter R. Hollar
President and Chief Executive Officer
or
James H. Langmead
Vice President and Treasurer
(301) 774-6400
SANDY SPRING BANCORP ACQUIRES BANK OF ANNAPOLIS
August 30, 1996, Olney, Maryland . . . . Sandy Spring Bancorp, Inc.
(NASDAQ National Market--SASR) today announced the completion of the acquisition
of Annapolis Bancshares, Inc. (NASDAQ--ANNB), and the merger of Annapolis
Bancshares into Sandy Spring Bancorp. Under the terms of the agreement that
governs the merger, each outstanding share of Annapolis Bancshares common stock
has been converted into 0.62585 shares of Sandy Spring Bancorp common stock.
Sandy Spring Bancorp common stock has a recent market price of $35.50 per share.
In addition, Bank of Annapolis, the wholly owned bank subsidiary of Annapolis
Bancshares, has been merged into Sandy Spring National Bank of Maryland. After
these mergers, Sandy Spring Bancorp's consolidated assets total approximately
$915 million, based upon recent financial statements.
Hunter R. Hollar, President and Chief Executive Officer of Sandy Spring
Bancorp, stated, "We are pleased to enter Annapolis through merger with a strong
and profitable community institution. We intend to keep the hometown approach of
Bank of Annapolis under the banner of Sandy Spring National Bank as we grow in
the Annapolis and Anne Arundel County communities."
Sandy Spring Bancorp expects the merger will result in a positive impact on
consolidated net income and have a minimal effect on its earnings per share in
the first year after the acquisition.
Sandy Spring Bancorp is the bank holding company for Sandy Spring National
Bank of Maryland, which has 17 banking offices in Montgomery and Howard Counties
in Maryland. With consummation of this merger, the single Bank of Annapolis
office with become the 18th community banking office of Sandy Spring National
Bank of Maryland.
# # # #
