Filed Pursuant to
424(b)(3)
Registration No.
333-157133
PROSPECTUS
SANDY
SPRING BANCORP, INC.
83,094
SHARES OF FIXED RATE CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES A
WARRANT
TO PURCHASE 651,547 SHARES OF COMMON STOCK
651,547
SHARES OF COMMON STOCK
This prospectus relates to the offer
and resale by the selling securityholders identified in this prospectus of up to
83,094 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A,
par value $1.00 and liquidation preference $1,000 per share (the “Series A
preferred stock”), a warrant to purchase 651,547 shares of our common stock, and
any shares of our common stock issuable upon exercise of the
warrant. The warrant is exercisable at $19.13 per share at any time
on or before December 5, 2018. The Series A preferred stock and the
warrant were originally issued by us pursuant to the Letter Agreement dated
December 5, 2008, and the related Securities Purchase Agreement – Standard
Terms, between us and the United States Department of the Treasury, which we
refer to as the initial selling securityholder, in a transaction exempt from the
registration requirements of the Securities Act of 1933, as
amended.
The initial selling securityholder and
its transferees or assignees, which we refer to as the selling securityholders,
may offer the securities offered by this prospectus from time to time through
public or private transactions at prevailing market prices, at prices related to
prevailing market prices or at privately negotiated prices.
Although we will incur expenses in
connection with the registration of the securities, we will not receive any
proceeds from the sale of securities by the selling
securityholders. We will receive gross proceeds of up to $12.5
million from the exercise of the warrant, if and when it is exercised, if the
exercise price is paid in cash instead of via “net exercise.”
The Series A preferred stock is not
listed on any exchange or quoted in any interdealer quotation system, and,
unless requested by the initial selling securityholder, we do not intend to the
list the Series A preferred stock on an exchange.
Our common stock is traded on the
NASDAQ Global Select Market under the symbol “SASR.” On February 19, 2009, the
closing sale price of the common stock on NASDAQ Global Select Market was $13.28
per share. You are urged to obtain current market quotations for the common
stock.
Investing in the securities offered
under this prospectus involves a high degree of risk. See “Risk Factors”
beginning on page 1 of this prospectus.
These securities are not deposits or
obligations of a bank or savings association and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental
agency.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date
of this prospectus is February 19, 2009
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SANDY
SPRING BANCORP, INC.
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1
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RISK
FACTORS
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1
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SPECIAL
NOTE REGARDING FORWARD-LOOKING INFORMATION
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1
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USE
OF PROCEEDS
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2
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RATIO
OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
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DIVIDENDS
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3
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SELLING
SECURITYHOLDERS
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3
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PLAN
OF DISTRIBUTION
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4
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SECURITIES
TO BE REGISTERED
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5
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DESCRIPTION
OF SERIES A PREFERRED STOCK
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5
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DESCRIPTION
OF THE WARRANT TO PURCHASE COMMON STOCK
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9
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DESCRIPTION
OF OUR COMMON STOCK
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11
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LEGAL
MATTERS
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12
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EXPERTS
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12
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WHERE
YOU CAN FIND MORE INFORMATION
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13
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INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
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You
should rely only on the information contained or incorporated by reference in
this prospectus. Neither we nor the selling securityholders have authorized
anyone to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. The selling
securityholders are not making an offer to sell these securities in any
jurisdiction where the offer or sale of these securities is not permitted. You
should assume that the information appearing in this prospectus is accurate only
as of the date on the front cover of this prospectus and that any information we
have incorporated by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of the delivery of this
prospectus or any sale of these securities. Our business, financial condition,
results of operation and prospects may have changed since these
dates.
All
references in this prospectus to “Sandy Spring Bancorp,” “we,” “us,” and “our,”
refer to Sandy Spring Bancorp, Inc. and its subsidiaries on a consolidated
basis, unless the context otherwise requires.
Sandy Spring Bancorp, Inc. is the
one-bank holding company for Sandy Spring Bank. We are registered as a bank
holding company pursuant to the Bank Holding Company Act of 1956, as
amended. As such, we are subject to supervision and regulation by the
Board of Governors of the Federal Reserve System (the “Federal Reserve”). Sandy
Spring Bancorp began operating in 1988. Sandy Spring Bank was founded in 1868,
and is the oldest banking business based in Montgomery County, Maryland. Sandy
Spring Bank is independent, community oriented, and conducts a full-service
commercial banking business through 42 community offices located in Anne
Arundel, Carroll, Frederick, Howard, Montgomery and Prince George's counties in
Maryland, and Fairfax and Loudoun counties in Virginia. Sandy Spring
Bank is a state chartered bank subject to supervision and regulation by the
Federal Reserve and the state of Maryland. Sandy Spring Bank's deposit accounts
are insured by the Deposit Insurance Fund administered by the Federal Deposit
Insurance Corporation (the “FDIC”) to the maximum permitted by
law. Sandy Spring Bank is a member of the Federal Reserve System and
is an Equal Housing Lender. We are an Affirmative Action/Equal
Opportunity Employer.
As of
September 30, 2008, Sandy Spring Bancorp had consolidated assets of $3,195
million, consolidated deposits of $2,249 million and consolidated stockholders’
equity of $320 million. Shares of our common stock are traded on the
NASDAQ Global Select Market under the trading symbol “SASR.”
Our executive offices are located at
17801 Georgia Avenue, Olney, Maryland 21202, and our telephone number at these
offices is (301) 774-6400. Our Internet address is
www.sandyspringbank.com. The information on our Web site is not
incorporated by reference in this prospectus.
An investment in our securities
involves significant risks. You should carefully consider the risks and
uncertainties and the risk factors set forth in the documents and reports filed
with the SEC that are incorporated by reference into this prospectus, as well as
any risks described in any applicable prospectus supplement, before you make an
investment decision regarding the securities. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also affect
our business operations.
This
prospectus, as well as other written communications made from time to time by us
and oral communications made from time to time by our authorized officers, may
contain statements relating to our future results (including certain projections
and business trends) that are considered “forward-looking statements” as defined
in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such
forward-looking statements may be identified by the use of such words as
“believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “intend”
and “potential.” Examples of forward-looking statements include, but are not
limited to, possible or assumed estimates with respect to the financial
condition, expected or anticipated revenue, and results of our operations and
business, including earnings growth determined using GAAP; revenue growth in
retail banking, lending and other areas; origination volume in our consumer,
commercial and other lending businesses; asset quality and levels of
non-performing assets; impairment charges with respect to investment securities;
current and future capital management programs; non-interest income levels,
including fees from services and product sales; tangible capital generation;
market share; expense levels; and other business operations and strategies. For
these statements, we claim the protection of the safe harbor for forward-looking
statements contained in the PSLRA.
We caution you that a number of
important factors could cause actual results to differ materially from those
currently anticipated in any forward-looking statement. Such factors include,
but are not limited to:
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the
factors identified in this document under the headings “Special Note
Regarding Forward-Looking Information” and “Risk
Factors;”
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prevailing
economic conditions, either nationally or locally in some or all areas in
which we conduct business, or conditions in the banking
industry;
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changes
in interest rates, deposit flows, loan demand, real estate values and
competition, which can materially affect, among other things, consumer
banking revenues, revenues from sales on non-deposit investment products,
origination levels in our lending businesses and the level of defaults,
losses and prepayments on loans we have made and make, whether held in
portfolio or sold in the secondary
markets;
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changes
in the quality or composition of the loan or investment
portfolios;
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factors
driving impairment charges on
investments;
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our
ability to successfully integrate any assets, liabilities, customers,
systems and management personnel we may acquire into our operations and
our ability to realize related revenue synergies and cost savings within
expected time frames;
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our
timely development of new and competitive products or services in a
changing environment, and the acceptance of such products or services by
customers;
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operational
issues and/or capital spending necessitated by the potential need to adapt
to industry changes in information technology systems, on which we are
highly dependent;
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changes
in accounting principles, policies, and
guidelines;
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changes
in any applicable law, rule, regulation or practice with respect to tax or
legal issues;
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risks
and uncertainties related to mergers and related integration and
restructuring activities;
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litigation
liabilities, including related costs, expenses, settlements and judgments,
or the outcome of other matters before regulatory agencies, whether
pending or commencing in the future;
and
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other
economic, competitive, governmental, regulatory and technological factors
affecting our operations, pricing, products and
services.
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Additionally,
the timing and occurrence or non-occurrence of events may be subject to
circumstances beyond our control. Readers are cautioned not to place undue
reliance on these forward-looking statements which are made as of the date of
this prospectus. Except as may be required by applicable law or regulation, we
assume no obligation to update the forward-looking statements or to update the
reasons why actual results could differ from those projected in the
forward-looking statements.
USE OF PROCEEDS
We will not receive any proceeds from
the sale of securities by the selling securityholders. We will
receive gross proceeds of $12,464,094 from the exercise of the warrant, if and
when it is exercised, assuming that the exercise price of the warrant is paid in
cash and not via the “net exercise” method. If received, we expect to
use these proceeds for general corporate purposes.
The selling securityholders will pay
any underwriting discounts and commissions and expenses incurred by the selling
securityholders for brokerage, accounting, tax or legal services or any other
expenses incurred by the selling securityholders in disposing of the securities.
We will bear all other costs, fees and expenses incurred in effecting the
registration of the shares covered by this prospectus, including, without
limitation, all registration and filing fees, NASDAQ listing fees and fees and
expenses of our counsel and our accountants.
RATIOS
OF EARNINGS TO COMBINED FIXED CHARGES
AND
PREFERRED STOCK DIVIDENDS
The historical consolidated ratios of
earnings to combined fixed charges and preferred stock dividends for the periods
indicated is as follows:
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Nine Months Ended
September 30,
2008
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Year
Ended December 31,
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2007
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2006
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2005
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2004
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2003
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Excluding
Interest on Deposits
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2.84
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3.50
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3.19
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4.27
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1.55
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2.67
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Including
Interest on Deposits
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1.56
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1.58
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1.76
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2.28
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1.35
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2.08
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For the purpose of computing the
consolidated ratio of earnings to fixed charges, “earnings” consist of income
before income taxes and extraordinary items plus fixed charges, excluding
capitalized interest. “Fixed charges” consist of interest on short-term and
long-term debt, including interest related to capitalized leases and capitalized
interest, and one-third of rent expense (net of rental income), which
approximates the interest component of that net expense. We did not pay any
preferred stock dividends during any of the periods presented. In
addition, where indicated, fixed charges include interest on deposits. The
ratios are based solely on historical financial information, and no pro forma
adjustments have been made thereto.
The initial selling securityholder is
the United States Department of the Treasury. We issued 83,094 shares
of our Series A preferred stock and a warrant to purchase 651,547 shares of our common stock
to the initial selling securityholder on December 5, 2008 in a transaction
exempt from the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”). In connection with that transaction,
we granted registration rights to the initial selling securityholder and its
transferees or assigns with respect to the resale or other disposal of the
Series A preferred stock, the warrant and the common stock that may be issued
pursuant to the exercise of the warrant.
In accordance with the registration
rights granted to the selling securityholders, we have filed with the Securities
and Exchange Commission (referred to in this prospectus as the “SEC”) a
registration statement on Form S-3, of which this prospectus forms a part, with
respect to the resale or other disposal of the securities covered by this
prospectus. We have agreed to prepare and file amendments and supplements to the
registration statement to the extent necessary to keep the registration
statement effective until the securities are sold pursuant to this prospectus or
are no longer required to be registered for resale by the selling
securityholders.
The following table presents
information regarding the beneficial ownership of our outstanding securities by
the initial selling securityholder, including shares of common stock that the
initial selling securityholder has the right to acquire within 60 days of the
date of this prospectus upon exercise of the warrant. The information
in the table assumes that the initial selling securityholder sells all of the
securities covered by this prospectus. However, we do not know when
or in what amounts the selling securityholders may offer the securities for
sale. The selling securityholders might not sell any or all of the securities
offered by this prospectus. Information about the selling
securityholders may change over time and changed information will be set forth
in supplements to this prospectus if and when necessary.
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Shares
Beneficially
Owned
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Shares
Beneficially Owned Following this Offering
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Class
of Security
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Number
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Percent
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Number
of Shares That May Be Sold in this Offering
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Number
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Percent
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Fixed
Rate Cumulative Perpetual Preferred Stock, Series A
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83,094
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100%
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83,094
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0
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0%
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Common
stock
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651,547
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3.8%
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651,547
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0
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0%
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The securities covered by this
prospectus may be offered and sold from time to time by the initial selling
securityholder and its transferees and assignees who hold Series A preferred
stock with a liquidation preference, or the warrant or common stock with a
market value, of no less than $1,662,000. The selling securityholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. Such sales may be made on one or more exchanges or in the
over-the-counter market or otherwise, at prices and under terms then prevailing
or at prices related to the then current market price or in negotiated
transactions. The selling securityholders may sell their securities by one or
more of, or a combination of, the following methods:
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purchases
by a broker-dealer as principal and resale by such broker-dealer for its
own account pursuant to this
prospectus;
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
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block
trades in which the broker-dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the
transaction;
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an
over-the-counter distribution in accordance with the rules of the NASDAQ
Global Select Market;
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in
privately negotiated transactions;
and
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in
options transactions.
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In addition, any shares that qualify
for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this prospectus.
The selling securityholders may
transfer or assign their Series A preferred stock, the warrant or common stock,
in which case the transferees or assignees will be the selling beneficial owners
for purposes of this prospectus.
In connection with distributions of the
securities or otherwise, the selling securityholders may enter into hedging
transactions with broker-dealers or other financial institutions. In connection
with such transactions, broker-dealers or other financial institutions may
engage in short sales of our common stock in the course of hedging the positions
they assume with selling securityholders. The selling securityholders may also
sell the common stock short and redeliver the shares to close out such short
positions. The selling securityholders may also enter into option or other
transactions with broker-dealers or other financial institutions which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). The selling securityholders may also pledge
securities to a broker-dealer or other financial institution, and, upon a
default, such broker-dealer or other financial institution may effect sales of
the pledged securities pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
In effecting sales, broker-dealers or
agents engaged by the selling securityholders may arrange for other
broker-dealers to participate. Broker-dealers or agents may receive commissions,
discounts or concessions from the selling securityholders in amounts to be
negotiated immediately prior to the sale.
The aggregate proceeds to the selling
securityholders from the sale of the securities will be the purchase price
of the securities less discounts and commissions, if any.
In offering the securities covered by
this prospectus, the selling securityholders and any broker-dealers who execute
sales for the selling securityholders may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales. Any profits
realized by the selling securityholders and the compensation of any
broker-dealer may be deemed to be underwriting discounts and commissions.
Selling securityholders who are “underwriters” within the meaning of
Section 2(a)(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act and may be subject to certain
statutory and regulatory liabilities, including liabilities imposed pursuant to
Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
In order to comply with the securities
laws of some states, if applicable, the securities must be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, the securities may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
The anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling securityholders. In addition, we will make
copies of this prospectus available to the selling securityholders for the
purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling securityholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities
Act.
At the time a particular offer of
shares is made, if required, a prospectus supplement will be distributed that
will set forth the number of shares being offered and the terms of the offering,
including the name of any underwriter, dealer or agent, the purchase price paid
by any underwriter, any discount, commission and other item constituting
compensation, any discount, commission or concession allowed or reallowed or
paid to any dealer, and the proposed selling price to the public.
We do not intend to apply for listing
of the Series A preferred stock on any securities exchange or for
inclusion of the Series A preferred stock in any automated quotation system
unless requested by the initial selling securityholder. No assurance
can be given as to the liquidity of the trading market, if any, for
the Series A preferred stock.
We have agreed to indemnify the selling
securityholders against certain liabilities, including certain liabilities under
the Securities Act. We have also agreed, among other things, to bear
substantially all expenses (other than underwriting discounts and selling
commissions) in connection with the registration and sale of the securities
covered by this prospectus.
SECURITIES
TO BE REGISTERED
This prospectus covers 83,094 shares of
Series A preferred stock, a warrant to purchase 651,547 shares of our common
stock, and 651,547 shares of our common stock. Our authorized capital
stock consists of 50,000,000 shares of capital stock, par value $1.00 per
share. As of December 31, 2008, we had 16,398,523 shares of common
stock and 83,094 shares of Series A preferred stock outstanding. The
following is a summary of the securities included in this
prospectus. For more detailed information, see our articles of
incorporation, articles supplementary for the Series A preferred stock, bylaws
and warrant to purchase common stock, copies of which have been filed with the
SEC and are also available upon request from us.
DESCRIPTION
OF SERIES A PREFERRED STOCK
The following is a brief description of
the terms of the Series A preferred stock that may be resold by the selling
securityholders. This summary does not purport to be complete in all respects.
This description is subject to and qualified in its entirety by reference to our
articles of incorporation, as amended, including the articles supplementary with
respect to the Series A preferred stock.
Dividends
Holders of the Series A preferred stock
are entitled to receive, if, as and when declared by our board of directors out
of assets legally available for payment, cumulative cash dividends at a rate of
5% per annum on the liquidation preference per share, accruing from the
beginning of the relevant dividend period. Accrued and unpaid
dividends compound quarterly. Beginning February 15, 2014, the dividend rate
will increase to 9% per annum.
Dividends are paid quarterly in arrears
on each February 15, May 15, August 15 and November 15, beginning on February
15, 2009. If any dividend payment date is not a business day, then
the next business day will be the applicable dividend payment date, and no
additional dividends will accrue as a result of the applicable postponement of
the dividend payment date. Dividend record dates are the 15th calendar day
immediately preceding the applicable dividend payment date or such other date
designated by our board of directors not more than 60 nor less than 10 days
before such dividend payment date. Dividends payable on the Series A preferred
stock will be computed on the basis of a 360-day year consisting of twelve
30-day months.
If we determine not to pay any dividend
or a full dividend with respect to the Series A preferred stock, we are required
to provide written notice to the holders of shares of Series A preferred stock
prior to the applicable dividend payment date.
Holders of the Series A preferred stock
will not be entitled to participate in any dividends, whether payable in cash,
property or shares, paid on any other securities issued by us, including our
common stock and other junior stock.
Payment
Restrictions
So long as any shares of Series A
preferred stock remain outstanding, no dividends or distributions will be
declared or paid on our common stock or any class or series of our equity
securities ranking junior, as to dividends and upon liquidation, to the Series A
preferred stock (“junior stock”) (other than dividends payable solely in shares
of our common stock) or on any other class or series of our equity securities
ranking, as to dividends and upon liquidation, on a parity with the Series A
preferred stock (“parity stock”), and no common stock, junior stock or parity
stock may be repurchased or redeemed by us unless all accrued and unpaid
dividends for past dividend periods, including the latest completed dividend
period, have been paid or have been declared and a sufficient sum has been set
aside for the benefit of the holders of the Series A preferred
stock. The foregoing limitation does not apply to:
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redemptions
or repurchases of common stock or other junior stock in connection with
the administration of any employee benefit plan in the ordinary course of
business and consistent with past practice, but only to offset the
increase in the number of diluted shares outstanding resulting from the
grant, vesting or exercise of equity-based
compensation;
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purchases
or other acquisitions by a broker-dealer subsidiary of ours solely for the
purpose of market-making, stabilization or customer facilitation
transactions in junior stock or parity stock in the ordinary course its
business;
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purchases
by a broker-dealer subsidiary of ours of our capital stock for resale
pursuant to an offering by us of our capital stock underwritten by such
broker-dealer subsidiary;
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any
dividends or distributions of rights or junior stock in connection with a
stockholders’ rights plan or any redemption or repurchase of rights
pursuant to any stockholders’ rights
plan;
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the
acquisition by us of record ownership in junior stock or parity stock for
the beneficial ownership of any other persons, including as trustees or
custodian; and
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the
exchange or conversion of junior stock for or into other junior stock or
of parity stock for or into other parity stock (with the same or lesser
aggregate liquidation amount) or junior stock, in each case, solely to the
extent required pursuant to binding contractual agreements entered into
prior to December 5, 2008 or any subsequent agreement for the accelerated
exercise, settlement or exchange thereof for common
stock.
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When dividends are not paid in full on
any dividend payment date (or declared and a sum sufficient for such full
payment is not set aside) upon the Series A preferred stock and all parity stock
(or, with respect to parity stock with a different dividend payment date, on the
applicable dividend date falling within the dividend period related to the
dividend payment date for the Series A preferred stock), all dividends declared
upon the Series A preferred stock and any parity stock shall be declared pro
rata so that the amount of dividends declared per share of Series A preferred
stock and all such parity stock will in all cases bear to each other the same
ratio that accumulated dividends per share of Series A preferred stock and all
parity stock (which shall not include any accumulation in respect of unpaid
dividends for prior dividend periods if such parity stock does not have a
cumulative dividend) bear to each other.
Liquidation
Rights
In the event we voluntarily or
involuntarily liquidate, dissolve or wind up our affairs (referred to herein
sometimes as a “liquidation”), each holder of Series A preferred stock then
outstanding will be entitled to receive out of our assets available for
distribution to stockholders (after payment or provision for payment of all of
our debts and other liabilities and subject to the rights of holders of any
equity securities issued by us ranking senior to the Series A preferred stock as
to liquidation rights) an amount equal to $1,000 (the “liquidation preference”)
per share, plus the amount of any accrued but unpaid dividends thereon, whether
or not declared, to the date of payment before any distribution of assets is
made to holders of common stock and any other shares of our equity securities
that rank junior to the Series A preferred stock as to liquidation
rights.
If, upon any such voluntary or
involuntary liquidation, our assets are insufficient to make full payment to
holders of the Series A preferred stock and any shares of other classes or
series of our equity securities ranking on a parity with the Series A preferred
stock as to liquidation rights, then the holders of the Series A preferred stock
and all other such classes or series of equity securities ranking on a parity
with the Series A preferred stock as to liquidation rights will share ratably in
any distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
preferred stock will have no right or claim to any of our remaining
assets. A consolidation or merger by us with or into another entity,
including a merger or consolidation in which the holders of Series A Preferred
Stock receive cash, securities or other property for their shares, or the sale,
lease or exchange of all or substantially all of our assets, will not be
considered a liquidation, dissolution or winding up of our affairs.
Ranking
The Series A preferred stock, with
respect to dividend rights and rights upon liquidation, dissolution or winding
up of our affairs, will rank on parity with all equity securities the terms of
which do not expressly provide that such securities will rank senior to or
junior to the Series A preferred stock, and senior to our common stock and
to all equity securities the terms of which provide that such equity securities
will rank junior to the Series A preferred stock.
Redemption
at Our Option
On and after February 15, 2012, we may,
at our option, redeem shares of the Series A preferred stock, in whole or in
part, at any time and from time to time, for cash at a per share amount equal to
the sum of the liquidation preference per share and any accrued and unpaid
dividends to but excluding the redemption date, to the extent we have funds
legally available therefor. Any redemption of the Series A preferred
stock is subject to receipt of prior regulatory approval.
Prior to February 15, 2012, we may
redeem shares of the Series A preferred stock only if we have received aggregate
gross proceeds of at least $20,773,500 from one or more offerings of common
stock, perpetual preferred stock or a combination thereof that may be included
in Tier 1 capital as of the time of issuance (a “qualified equity offering”),
and the aggregate redemption price for the Series A preferred stock cannot
exceed the net proceeds received by us from such qualified equity
offerings.
If fewer than all of the outstanding
shares of Series A preferred stock are to be redeemed pursuant to our optional
redemption right, the shares to be redeemed will be selected pro rata or in such
other equitable method prescribed by our board of directors.
We will mail notice of any redemption
of Series A preferred stock by first class mail, postage prepaid, addressed to
the holders of record of the shares of Series A preferred stock to be redeemed
at their respective last addresses appearing on our books. This
mailing will be at least 30 days and not more than 60 days before the date fixed
for redemption. Any notice mailed or otherwise given as described in
this paragraph will be conclusively presumed to have been duly given, whether or
not the holder receives the notice, and failure duly to give the notice by mail
or otherwise, or any defect in the notice or in the mailing or provision of the
notice, to any holder of Series A preferred stock designated for redemption will
not affect the redemption of any other Series A preferred stock. Each notice of
redemption will set forth the applicable redemption date, the redemption price,
the place where shares of Series A preferred stock are to be redeemed, and the
number of shares of Series A preferred stock to be redeemed (and, if less than
all shares of Series A preferred stock held by the applicable holder, the number
of shares to be redeemed from the holder).
Shares of Series A preferred stock that
are redeemed, repurchased or otherwise acquired by us will revert to authorized
but unissued shares of our preferred stock.
The Series A preferred stock is not
subject to any mandatory redemption, sinking fund or similar
provisions. Holders of shares of Series A preferred stock have no
right to require the redemption or repurchase of the Series A preferred
stock.
Voting
Rights
The holders of Series A preferred stock
do not have any voting rights except as described below or as otherwise required
by Maryland law.
Whenever dividends on the Series A
preferred stock have not been paid for six or more quarterly periods (whether or
not consecutive), then the number of our directors will automatically be
increased by two and the holders of the Series A preferred stock (voting
together as a single class with all of our other equity securities upon which
like voting rights have been conferred and are exercisable) will be entitled to
fill the newly created directorships until all accrued and unpaid dividends and
the dividend for the then current dividend period on the Series A preferred
stock have been paid in full, at which time such right will terminate with
respect to the Series A preferred stock. It will be a qualification
for election for any director elected by the holders of preferred stock that the
election of such person not cause us to violate any corporate governance
requirements of any securities exchange on which we are listed. Upon
termination of the right of holders of Series A preferred stock and all other
equity securities upon which like voting rights have been conferred to vote for
directors as described above, the term of office of each director elected as
described in this paragraph will expire.
So long as any shares of Series A
Preferred Stock are outstanding, in addition to any other vote or consent of
stockholders required by law or by our articles of incorporation, the vote of
the holders of at least two-thirds of the Series A preferred stock outstanding
at the time, voting as a separate class, shall be necessary to:
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authorize,
create or increase the authorized amount of or issue any class or series
of, or any securities convertible or exchangeable for shares of, any
capital stock ranking senior to the outstanding Series A preferred stock
with respect to the payment of dividends and/or the distribution of assets
upon any liquidation, dissolution or winding up of our
affairs;
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amend,
alter or repeal the provisions of our articles of incorporation or the
Series A Articles Supplementary (including, unless no vote on such merger
or consolidation is required, by merger or consolidation or otherwise), so
as to adversely affect the rights, preferences, privileges or voting power
of the Series A preferred stock; or
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consummate
a binding share exchange or reclassification involving the Series A
preferred stock, or of a merger or consolidation by us with another
corporation or other entity, unless in each case (i) the shares of Series
A preferred stock remain outstanding or, in the case of any such merger or
consolidation with respect to which Sandy Spring Bancorp is not the
surviving or resulting entity, are converted into or exchanged for
preference securities of the surviving or resulting entity or its ultimate
parent, and (ii) such shares remaining outstanding or such preference
securities, as the case may be, have such rights, preferences, privileges
and voting powers, and limitations and restrictions thereof, taken as a
whole, as are not materially less favorable to the holders thereof than
the rights, preferences, privileges and voting powers, and limitations and
restrictions thereof, of Series A preferred stock immediately prior to
such consummation, taken as a
whole.
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The foregoing voting provisions will
not apply if, at or prior to the time when the vote or consent would otherwise
be required, all outstanding shares of Series A preferred stock have been
redeemed or called for redemption upon proper notice and sufficient funds have
been set aside by us for the benefit of the holders of Series A preferred stock
to effect the redemption.
To the extent of the voting rights of
the Series A preferred stock, each holder of Series A preferred stock will have
one vote for each $1,000 of liquidation preference to which such holder’s shares
of Series A preferred stock are entitled.
The increase in the amount of
authorized preferred stock or the creation and issuance of any other series of
preferred stock ranking equally with or junior to the Series A preferred stock
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of our affairs will not require the vote
or consent of the holders of the outstanding shares of Series A preferred
stock.
Conversion
Rights
Holders of our Series A preferred stock
have no right to exchange or convert such shares into any other
securities.
Listing
Our Series A preferred stock is not
listed on any national securities exchange or quoted on any interdealer
quotation system.
DESCRIPTION
OF THE WARRANT TO PURCHASE COMMON STOCK
A warrantholder will not be deemed a
shareholder of our underlying common stock until the warrant is exercised and,
as a result, will not have any voting rights or such other rights until the
warrant is exercised and the underlying common stock has been
issued. The exercise price of the warrant is $19.13. The
number of shares of common stock that may be acquired upon exercise of the
warrant and the exercise price of the warrant will be adjusted if specific
events, summarized below, occur. The warrant will expire on December
5, 2018.
Shares
of Common Stock Subject to the Warrant
The warrant is initially exercisable
for 651,547 shares of our common stock. If we complete one or more
qualified equity offerings on or prior to December 31, 2009 that result in our
receipt of aggregate gross proceeds of not less than $83,094,000, which is equal
to 100% of the aggregate liquidation preference of the Series A preferred stock,
the number of shares of common stock underlying the portion of the warrant then
held by the initial selling securityholder will be reduced by 325,773
shares. The number of shares of common stock that may be acquired
upon exercise of the warrant and the exercise price of the warrant are subject
to the further adjustments described below.
Transferability
The initial selling securityholder may
not transfer a portion of the warrant with respect to more than 325,773 shares
of common stock until the earlier of the date on which we have received
aggregate gross proceeds from a qualified equity offering of at least
$83,094,000 and December 31, 2009. The warrant, and all rights under the
warrant, are otherwise transferable.
Exercise
The holder of the warrant may exercise
the warrant, in whole or in any part, at any time before December 5, 2018 by
delivering to us notice of exercise and payment of the exercise
price. The holder is entitled to a “cashless exercise” or “net
exercise” option, which means that the holder of the warrant may pay the
exercise price by having us withhold from the shares of common stock that would
otherwise be delivered to the holder that number of shares equal in value to the
aggregate exercise price of the warrant exercised. Alternatively,
with our consent, the holder of the warrant can pay the exercise price in
cash.
For purposes of a net exercise, the
value of the shares to be withheld will be based on the market price of our
common stock, as determined by the terms of the warrant, on the trading day on
which the warrant is exercised and notice of exercise is delivered to
us.
The exercise of the warrant is subject
to the condition that the holder will have first received any applicable
regulatory approvals.
Upon exercise of the warrant,
certificates for the shares of common stock issuable upon exercise will be
issued to the warrantholder. We will not issue fractional shares upon
any exercise of the warrant. Instead, the warrantholder will be
entitled to a cash payment equal to the market price of our common stock on the
last day preceding the exercise of the warrant (less the pro-rated exercise
price of the warrant) for any fractional shares that would have otherwise been
issuable upon exercise of the warrant. We will at all times reserve
the aggregate number of shares of our common stock for which the warrant may be
exercised.
Adjustments
to Exercise Price and Number of Shares
Stock Dividends, Splits and
Reclassifications. If we pay a stock dividend, subdivide or
reclassify our outstanding shares of common stock into a greater number of
shares, or combine or reclassify our outstanding shares of common stock into a
smaller number of shares, the number of shares issuable upon exercise of the
warrant and the exercise price will be proportionally adjusted to reflect the
change in the number of outstanding shares.
Certain Issuances of Common Shares
or Convertible Securities. Until the earlier of the date on
which the initial selling securityholder no longer holds any portion of the
warrant or December 5, 2011, if we issue shares of common stock or other
securities exercisable or convertible into our common stock without
consideration or at a consideration per share that is less than 90% of the
market price on the last day of trading preceding the date of the agreement on
pricing such shares, then the number of shares issuable upon exercise of the
warrant and the exercise price will be adjusted.
There will be no adjustments for share
issuances (i) as consideration for or to fund the acquisition of businesses
and/or related assets, (ii) in connection with employee benefit plans and
compensation-related arrangements in ordinary course and consistent with past
practice approved by the Board of Directors, (iii) in connection with a public
or broadly marketed offering and sale of common stock or convertible securities
for cash in a registered offering or pursuant to Rule 144A conducted on a basis
consistent with capital raising transactions by comparable financial
institutions; and (iv) in connection with the exercise of preemptive rights on
terms existing as of December 5, 2008.
Other
Distributions. If we make a distribution to all holders of our
common stock of securities, evidences of indebtedness, assets, cash, rights or
warrants (excluding ordinary cash dividends, common stock dividends or other
reclassifications of our common stock), then the number of shares issuable upon
exercise of the warrant and the exercise price will be adjusted to reflect such
distribution.
Certain Repurchases of Common
Stock. If we effect a pro rata purchase of our common stock,
then the number of shares issuable upon exercise of the warrant and the exercise
price will be adjusted. For purposes of the warrant, a “pro rata
repurchase” means any purchase of shares by us pursuant to a (i) a tender offer
or exchange offer subject to Section 13(e) or 14(e) of the Exchange Act or
Regulation 14E promulgated thereunder or (ii) any other offer available to
substantially all holders of our common stock.
Business
Combinations. In the event of a business combination, such as
merger, consolidation, statutory share exchange or similar transaction that
requires approval of our shareholders, the warrant will be converted into the
right to acquire the number of shares of stock or other securities or property
(including cash) that the common stock issuable upon exercise of the warrant
immediately prior to the business combination would have been entitled to
receive upon consummation of the business combination. If the holders
of our common stock have the right to elect the kind or amount of consideration
receivable upon consummation of the business combination, then the consideration
that the warrantholders will be entitled to receive upon exercise of the warrant
will be deemed to be the types and amounts of consideration received by the
majority of all holders of common stock that affirmatively make an
election.
Other Events. For
so long as the initial selling securityholder holds any portion of the warrant,
if any event occurs as to which the anti-dilution adjustments described above
are not strictly applicable or, if strictly applicable, would not, in the good
faith judgment of our board of directors, fairly and adequately protect the
purchase rights of the warrant in accordance with the essential intent and
principles of such provisions, then the board of directors will make such
adjustments as shall be reasonably necessary, in the good faith opinion of the
board of directors, to protect the purchase rights of the warrant.
DESCRIPTION
OF OUR COMMON STOCK
Our authorized capital stock consists
of 50,000,000 shares of capital stock, par value $1.00 per
share. Each share of our common stock has the same relative rights
as, and is identical in all respects with, each other share of common
stock.
Voting
Rights
The holders of our common stock are
entitled to one vote per share on all matters presented to stockholders. Holders
of common stock are not entitled to cumulate their votes in the election of
directors.
Dividends
The holders of our common stock are
entitled to receive and share equally in any dividends as may be declared by our
board of directors out of funds legally available for the payment of
dividends. Under Maryland law, we may pay dividends if, after giving
effect to such dividends, (1) we will be able to pay our indebtedness as such
indebtedness becomes due in the usual course of business and (2) our total
assets exceed out total liabilities plus the amount that would be needed to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights upon dissolution are superior to those receiving
dividends.
The terms of our Series A preferred
stock also impose certain restrictions on our ability to declare and pay
dividends on our common stock and to repurchase our common stock. We
may pay dividends on or repurchase our common stock only if we have paid or
provided for all dividends on our Series A preferred stock for the then current
period and all prior periods.
In addition, prior to the earlier of
(i) December 5, 2011 or (ii) the date on which the Series A preferred stock has
been redeemed in full or the initial selling securityholder has transferred all
of the Series A preferred stock to non-affiliates, we cannot increase our
quarterly cash dividend above $0.24 or repurchase any shares of common stock or
other capital stock or equity securities or trust preferred securities without
the consent of the initial selling securityholder. The repurchase
restrictions do not apply in certain limited circumstances, including the
repurchase of common stock in connection with the administration of any employee
benefit plan in the ordinary course of business and consistent with past
practice, but only to offset the increase in the number of diluted shares
outstanding resulting from the grant, vesting or exercise of equity-based
compensation.
Liquidation
Upon our liquidation, dissolution or
winding up, the holders of our common stock are entitled to receive their pro
rata portion of our remaining assets after payment, or provision for payment, of
all our debts and liabilities and the holders our preferred stock, if any, have
been paid in full any sums to which they may be entitled.
No
Preemptive or Redemption Rights
Holders of our common stock are not
entitled to preemptive rights with respect to any shares that may be issued. The
common stock is not subject to redemption.
Certain
Charter and Bylaw Provisions Affecting Stock
Our Articles of Incorporation and
Bylaws contain several provisions that may make us a less attractive target
for an acquisition of control by anyone who does not have the support of our
board of directors. Such provisions include, among other things, the requirement
of a supermajority vote of stockholders to approve certain business combinations
and other corporate actions, a minimum price provision, several special
procedural rules, a staggered board of directors, and the limitation that
stockholder actions may only be taken at a meeting and may not be taken by
unanimous written stockholder consent. The foregoing is qualified in its
entirely by reference to our Articles of Incorporation and Bylaws, both of which
are on file with the SEC.
Restrictions
on Ownership
The Bank Holding Company Act generally
would prohibit any company that is not engaged in financial activities and
activities that are permissible for a bank holding company or a financial
holding company from acquiring control of us. “Control” is generally defined as
ownership of 25% or more of the voting stock or other exercise of a controlling
influence. In addition, any existing bank holding company would need the prior
approval of the Federal Reserve Board before acquiring 5% or more of our voting
stock. The Change in Bank Control Act of 1978, as amended, prohibits a person or
group of persons from acquiring control of a bank holding company unless the
Federal Reserve Board has been notified and has not objected to the
transaction. Under a rebuttable presumption established by the
Federal Reserve Board, the acquisition of 10% or more of a class of voting stock
of a bank holding company with a class of securities registered under Section 12
of the Exchange Act, such as Sandy Spring Bancorp, could constitute acquisition
of control of the bank holding company. Maryland law generally requires the
prior approval of the Commissioner of Financial Regulation before a person,
group of persons, or company may acquire 25% or more of our voting
stock or otherwise exercise a controlling influence over the
direction of the management or policy of Sandy Spring Bancorp or Sandy Spring
Bank.
Transfer
Agent and Registrar
The transfer agent and registrar for
our common stock is American Stock Transfer & Trust.
Listing
Our common stock is listed on the
NASDAQ Global Select Market under the symbol SASR.
The validity of the shares offered by
this prospectus has been passed upon by Kilpatrick Stockton LLP.
EXPERTS
The consolidated financial statements
of Sandy Spring Bancorp, Inc. as of December 31, 2007 and 2006, and for each of
the three years in the period ended December 31, 2007, and the effectiveness of
Sandy Spring Bancorp, Inc.’s internal control over financial reporting as of
December 31, 2007, appearing in Sandy Spring Bancorp, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2007, have been audited by McGladrey
& Pullen, LLP, an independent registered public accounting firm, as stated
in their reports that are incorporated by reference in this Prospectus and
Registration Statement in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE
INFORMATION
We file reports, proxy statements and
other documents with the SEC. You may read and copy any document we file at the
SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C.
20549. You should call 1-800-SEC-0330 for more information on the public
reference room. Our SEC filings are also available to you on the SEC’s Internet
site at http://www.sec.gov.
This prospectus is part of a
registration statement that we filed with the SEC. The registration statement
contains more information than this prospectus regarding us, including certain
exhibits and schedules. You can obtain a copy of the registration statement from
the SEC at the address listed above or from the SEC’s Internet
site.
The SEC allows us to “incorporate by
reference” information into this prospectus. This means that we can disclose
important information to you by referring you to another document that we file
separately with the SEC. The information incorporated by reference is considered
to be a part of this prospectus, except for any information that is superseded
by information that is included directly in this document or in a more recent
incorporated document.
This
prospectus incorporates by reference the documents listed below that we have
previously filed with the SEC.
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SEC
Filings
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Period
or Date Filed (as applicable)
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Annual
Report on Form 10-K
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Year
ended December 31, 2007
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Quarterly
Reports on Form 10-Q
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Quarter
ended March 31, 2008
Quarter
ended June 30, 2008
Quarter
ended September 30, 2008
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Current
Reports on Form 8-K
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January
16, 2008
January
29, 2008
March
12, 2008
March
18, 2008
March
18, 2008
March
28, 2008
July
10, 2008
July
30, 2008
October
7, 2008
October
17, 2008
November
20, 2008
December
5, 2008
December
22, 2008
January
5,
2009
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In addition, we also incorporate by
reference all future documents that we file with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of our initial
registration statement relating to the securities until the completion of the
distribution of the securities covered by this prospectus. These documents
include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K (other than Current Reports
furnished under Items 2.02 or 7.01 of Form 8-K), as well as proxy
statements.
The information incorporated by
reference contains information about us and our financial condition and is an
important part of this prospectus.
Any statement contained in a document
incorporated or deemed to be incorporated by reference into this prospectus
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any other
subsequently filed document that is or is deemed to be incorporated by reference
into this prospectus modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
You may request a copy of these
documents, which will be provided to you at no cost, by writing or telephoning
us using the following contact information:
Sandy
Spring Bancorp, Inc.
17801
Georgia Avenue
Olney, MD
20832
Attention: Ronald
E. Kuykendall, General Counsel and Secretary
Telephone: (301)
774-6400