2. ACQUISITIONS

Sandy Spring Bancorp, Inc. Acquisition

On April 1, 2025, the Company completed its previously announced acquisition of Sandy Spring, the holding company for Sandy Spring Bank, headquartered in Olney, Maryland. Under the terms of the Sandy Spring merger agreement, at the effective time of the Sandy Spring acquisition, each outstanding share of Sandy Spring common stock was converted into the right to receive 0.900 shares of the Company’s common stock, with cash paid in lieu of fractional shares, resulting in 41.0 million additional shares issued, or an aggregate transaction value of approximately $1.3 billion, based on the closing price per share of the Company’s common stock as quoted on the New York Stock Exchange (“NYSE”) on March 31, 2025, which was the last trading day prior to the consummation of the acquisition. With the acquisition of Sandy Spring, the Company acquired over 50 branches in Virginia, Maryland, and Washington D.C., enhancing the Company’s presence in Northern Virginia and Maryland.

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As a result of the Sandy Spring acquisition, the Company recorded preliminary goodwill totaling $496.9 million at April 1, 2025, which reflects expected synergies and economies of scale from the acquisition, allocated between the Company’s Wholesale Banking ($387.6 million) and Consumer Banking ($109.3 million) reporting segments, which is not deductible for tax purposes. While the Company believes the information available on April 1, 2025 provided a reasonable basis for estimating fair value, the Company may obtain additional information and evidence within the one-year measurement period that could result in changes to the estimated fair value amounts and associated goodwill. Valuations subject to change include, but are not limited to: LHFI, identified intangible assets, certain deposits, certain other assets and liabilities, and related deferred and income taxes. Subsequent adjustments, if necessary, will be reflected in future filings.

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The following table provides a preliminary assessment of the consideration transferred and the fair value of the assets acquired and liabilities assumed as of the date of the Sandy Spring acquisition (dollars in thousands).

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(1) Other assets include deferred tax assets, accrued interest receivable, accounts receivable, and other intangibles, as well as other miscellaneous assets acquired from Sandy Spring.

American National Bankshares Inc. Acquisition

On April 1, 2024, the Company completed its previously announced merger with American National, the holding company for American National Bank and Trust Company, headquartered in Danville, Virginia. Under the terms of the American National merger agreement, at the effective time of the American National merger, each outstanding share of American National common stock was converted into 1.35 shares of the Company’s common stock, resulting in 14.3 million additional shares issued, or aggregate consideration of $505.5 million, based on the closing price per share of the Company’s common stock as quoted on the NYSE on March 28, 2024, which was the last trading day prior to the consummation of the acquisition. With the acquisition of American National, the Company acquired 26 branches, deepening its presence in central and western Virginia, and expanding its franchise into contiguous markets in southern Virginia and in North Carolina.

As a result of the American National acquisition, the Company recorded goodwill totaling $288.8 million, which reflects expected synergies and economies of scale from the acquisition, allocated between the Company’s Wholesale Banking ($210.8 million) and Consumer Banking ($78.0 million) reporting segments, which is not deductible for tax purposes.

The following table provides a summary of the consideration transferred and the fair value of the assets acquired and liabilities assumed as of the date of the American National acquisition, (dollars in thousands):

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The Company assessed the fair value based on the following methods for the significant assets acquired and liabilities assumed:

Cash and cash equivalents: The fair value was determined to approximate the carrying amount based on the short-term nature of these assets.

Securities Available for Sale (“AFS”): The fair value of the investment portfolio was based on pricing obtained by independent pricing services and quoted market prices.

Restricted stock: The carrying value approximates the fair value.

Loans held for sale (“LHFS”): Fair values for the Sandy Spring LHFS CRE and LHFS — non-CRE portfolios were estimated using a discounted cash flow analysis that considered factors including loan type, interest rate type, prepayment speeds, duration, and current discount rates. The American National LHFS portfolio was recorded at fair value based on quotes or bids from third parties.

Loans held for investment: Fair values for LHFI were estimated using a discounted cash flow analysis that considered factors including loan type, interest rate type, prepayment speeds, duration, and current discount rates. The discount rates used for loans were based on current market rates for new originations of comparable loans and factored in adjustments for any expected liquidity events. Expected cash flows were derived using inputs that considered estimated credit losses and prepayments.

Premises and equipment: The fair value of bank premises and equipment held for use was valued by obtaining recent market data for similar property types with adjustments for characteristics of individual properties.

Core deposit intangible (“CDI”) and other intangibles: CDI represents the future economic benefit of acquired customer deposits. The fair value of the CDI asset was estimated based on a discounted cash flow methodology that incorporated expected customer attrition rates, cost of deposit base, net maintenance cost associated with customer deposits, and the cost for alternative funding sources. The discount rates used were based on market rates. Other intangibles include customer relationship intangible assets and non-compete intangible assets. Customer relationship intangible assets represent the value associated with customer relationships related to the wealth management business that was acquired. Non-compete intangible assets represent the value associated with non-compete agreements for former employees in place at the date of the acquisition.

Bank owned life insurance (“BOLI”): The fair value of BOLI is carried at its current cash surrender value, which is a reasonable estimate of fair value.

Lease Right of Use (“ROU”) assets and lease liabilities: The fair value of the lease ROU assets was measured at an amount equal to the lease liability and evaluated for favorable or unfavorable lease terms when compared with market terms on a lease-by-lease basis.

Deposits: The fair value of interest-bearing and non-interest-bearing deposits is the amount payable on demand at the acquisition date. The fair value of time deposits was estimated using a discounted cash flow calculation that includes a market rate analysis of the current rates offered by market participants for certificates of deposits that mature in the same period.

Short-Term Borrowings: Acquired short term borrowings consist of Federal Home Loan Bank of Atlanta (“FHLB”) overnight borrowings and borrowings under repurchase agreements. The carrying amount on short-term borrowings was determined to approximate fair value.

Long-Term Borrowings: The fair value of long-term borrowings, including trust preferred securities and subordinated debt, were estimated using a discounted cash flow approach analysis, factoring in market terms and the structural terms of the borrowings.

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The following table presents for illustrative purposes only certain pro forma information as if the Company had acquired Sandy Spring and American National on January 1, 2024. These results combine the historical results of Sandy Spring and American National in the Company's Consolidated Statements of Income and while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2024. No adjustments have been made to the pro forma results regarding possible revenue enhancements, provision for credit losses, or expense efficiencies. Pro forma adjustments below include the net impact of Sandy Spring’s and American National’s accretion and the elimination of merger-related costs, as disclosed below. The Company expects to achieve further operating cost savings and other business synergies, as a result of the acquisitions, which are not reflected in the pro forma amounts below (dollars in thousands):

⁽¹⁾ Includes net interest income and noninterest income.

⁽²⁾ Includes the net impact of Sandy Spring’s accretion adjustments of $21.0 million for the six months ended June 30, 2025. There were no pro forma net accretion adjustments for the three months ended June 30, 2025.

⁽³⁾ Includes the net impact of Sandy Spring’s accretion adjustments of $21.4 million and $42.6 million for the three and six months ended June 30, 2024, respectively, and the net impact of American National’s accretion adjustments of $5.0 million for the six months ended June 30, 2024. There were no pro forma net accretion adjustments for American National for the three months ended June 30, 2024.

⁽⁴⁾ For the periods presented, excludes merger-related costs as noted below.

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Merger-related costs, net of tax, were $63.3 million and $24.2 million, for the three months ended June 30, 2025 and 2024 and were $68.0 million and $25.8 million for the six months ended June 30, 2025 and 2024, respectively, and are recorded in “Merger-related costs” on the Company’s Consolidated Statements of Income and have been expensed as incurred. For the three and six months ended June 30, 2025, merger-related costs were related to the Sandy Spring acquisition and such costs included employee severance, other employee related costs, professional fees, and facilities related costs. All merger-related costs for the three and six months ended June 30, 2024 were related to the American National acquisition and such costs included employee severance, professional fees, system conversion, and lease and contract termination expenses.

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The Company’s operating results for the three and six months ended June 30, 2025 and June 30, 2024, include the operating results of the acquired assets and assumed liabilities of Sandy Spring subsequent to the acquisition on April 1, 2025 and American National subsequent to the acquisition on April 1, 2024, respectively. Due to the merging of certain processes and the conversion of Sandy Spring’s systems that is expected to occur during the fourth quarter of 2025 and American National’s system conversion that occurred during the second quarter of 2024, historical reporting for the former Sandy Spring and American National operations is impracticable and thus disclosures of the revenue from the assets acquired and income before income taxes is impracticable for the periods subsequent to acquisition.