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Sandy Spring CEO expects more industry consolidation in DC area

? WashingtonFirst acquisition opens the door to urban Washington, D.C., market


? Sandy Spring focused on driving double digit EPS growth


? Expects more industry consolidation in the Washington metro area

In May, Sandy Spring Bancorp Inc. President, CEO and Director Daniel Schrider announced a $499.6 million deal for Reston, Va.-based WashingtonFirst Bankshares Inc. If the deal closes, the urban presence of WashingtonFirst would help Olney, Md.-based Sandy Spring become the largest locally headquartered community bank in the Greater Washington region. S&P Global Market Intelligence caught up with Schrider at the KBW Community Bank Investor Conference in New York City on Aug. 2 to talk about what's next for Sandy Spring.

Below is an edited transcript of that conversation.

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Sandy Spring Bancorp Inc. President, CEO and Director Daniel Schrider

S&P Global Market Intelligence: How do you view the new markets you're acquiring with the WashingtonFirst acquisition?

Schrider: Being where we are, we've always had a presence and client base in D.C. but not a branch presence, not a physical presence until about a year and a half, two years ago when we opened our first D.C. branch. WashingtonFirst was actually founded in D.C., their home office was originally there. Shaza Andersen, the CEO, and the many of the team members, had significant experience banking businesses in D.C. And so we love the fact that’s going to open the door for us. They’re a $2 billion bank but their sophistication, and the nature of the clients that they bank would rival any of the large players. So they have connections with some of the better real estate developers, businesses, philanthropic organizations, nonprofits in the D.C. region. While I don't think there's a significant cultural difference between the organizations, because we're both focused on creating great experiences for clients, they certainly do open up the door for us in a more significant way in D.C. and in the more urban areas in the beltway.

What was your focus in that acquisition? The funding side of WashingtonFirst or the lending opportunities?

I think the most attractive thing was when you look at their balance sheet, their revenue streams, coupled with the geographic access that it provides our collective client base — we've got about 70,000 retail clients, 20,000 business clients; they have about 20,000 clients — we’re opening up the world for them to access their relationships much more broadly. So I think the geographic aspect of what WashingtonFirst brings, and then they're very complimentary in terms of their loan-to-deposit mix. So it’s really more size to drive more earnings long term and more access to new markets.

You would approach about $7.5 billion in total assets if the deal closes. Are you starting to think about the $10 billion asset threshold? Where do you expand to after that, now that you're the largest locally headquartered community bank in the Greater Washington region?

The focus today is getting this thing integrated and getting it integrated well. Winning over the hearts of their employees and their clients. We’re not size focused, we’re double digit EPS growth focused. So that will drive our strategy on a going-forward basis. From a geographic standpoint, we’re thrilled with what Greater Washington brings us. There are aspects of adjacent markets that would be attractive: southern Maryland, eastern shore of Maryland, a little further south in Virginia. But that is not on the immediate horizon.

How have you seen the M&A environment change in the last 10 months or so?

Obviously that hasn't had an impact on us with this deal, but my sense in talking to other community banks that are in half a billion to two billion in our region is that they're all looking to do something. We have many that I think are both buyers and sellers. Some that are just looking for the right upstream bargain. So while I certainly don't know all things, I would expect to see consolidation in the Greater Washington region continue in a significant way in the next 12 to 18 months.

But Sandy Spring would be the biggest player in that region?

In terms of resulting players. But I think there are a number of folks that are looking for an upstream partner. I'm not sure what the driver is, but maybe its seeing some multiples that are attractive to them. But again for us, we're just focused on executing on this thing.