NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases a research report entitled “Comment on Sandy Spring Bancorp, Inc. and WashingtonFirst Bankshares, Inc. Merger.”
The report makes the following key points:
- WashingtonFirst Bankshares, Inc. (NASDAQ:WFBI) (“WashingtonFirst”) and its subsidiary WashingtonFirst Bank, announced a definitive agreement to merge with Sandy Spring Bancorp, Inc. (NASDAQ: SASR) (“Sandy Spring”) the holding company and parent of Sandy Spring Bank.
- The deal, valued at $489 million in the aggregate, is expected to close during the fourth quarter of 2017 and would result in the creation of the largest locally headquartered community bank in the Greater Washington, D.C. region.
- The acquisition of WashingtonFirst Bankshares, Inc. would allow Sandy Spring to extend its branch system into the strategically important Northern Virginia marketplace. The acquisition is also anticipated to increase Sandy Spring’s mortgage-fee income, while offering opportunities to grow other sources of noninterest income with enhanced cross-sell of Sandy Spring fee-based lines of business.
- Sandy Spring Bancorp, Inc. and its subsidiary appear to be of sound overall financial condition. Based on fourth quarter 2016 financials, KBRA’s Subscription Rating Service (SRS) rated Sandy Spring Bank B on the financial strength rating (FSR) scale.
- In KBRA’s view, if the deal is successfully executed and integrated, the combination of Sandy Spring and WashingtonFirst could be a credit positive for WashingtionFirst’s bond holders, particularly given strong pro forma capital ratios and increased revenue, product, and geographic diversification.
- In July of 2016, KBRA affirmed the senior unsecured debt rating of BBB, subordinated debt rating of BBB-, and short-term debt rating of K3 for WashingtonFirst Bankshares, Inc. KBRA also affirmed the deposit and senior unsecured debt ratings of BBB+ and short-term deposit and debt ratings of K2 for WFBI’s subsidiary, WashingtonFirst Bank. In addition, KBRA assigned a subordinated debt rating of BBB at the bank level. The Outlook on all long-term ratings was updated to Positive from Stable.
- Ratings of WFBI and its subsidiary bank will likely be withdrawn when the merger closes, given that WashingtonFirst Bankshares, Inc. and WashingtonFirst Bank will merge into Sandy Spring Bancorp, Inc. and its subsidiary Sandy Spring Bank, respectively.
The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.
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