(Bloomberg) -- Sandy Spring Bancorp Inc., a small bank with operations in the mid-Atlantic US, has been working with financial advisers as it considers takeover talks with potential buyers, according to people familiar with the matter.
With consolidation accelerating among small and midsize banks, the Olney, Maryland-based company has held discussions with suitors including Atlantic Union Bankshares Corp., said the people, who asked to not be identified because the details aren’t public. Talks are preliminary with no deal imminent and Sandy Spring could opt to to remain independent, said one of the people.
Sandy Spring’s shares rose as much as 4.5% in New York trading Wednesday. The shares were up 3% to $31.67 at 3:10 p.m., giving the lender a market value of about $1.4 billion. Atlantic Union’s shares were down 1.6% to $38.38, giving that company a market value of about $3.4 billion.
Representatives for Sandy Spring and Atlantic Union declined to comment.
Mergers have been picking up in recent months among banks with less than $50 billion in assets. Those institutions have been struggling with tepid loan growth and anemic net interest margins, or the spread between what banks earn from loans and pay for deposits. Elevated interest rates have hurt that key metric of profitability. Small banks also don’t have the deep pockets to compete with gigantic lenders such as JPMorgan Chase & Co. and Bank of America Corp., which have the wherewithal to spend heavily on new branches and promotional campaigns.
There is also a view that regulators are more amenable to letting smaller banks pair up, even as they discourage big deals such as Toronto-Dominion Bank’s failed $13.4 billion purchase last year of First Horizon Corp.
That’s encouraged a spate of small-cap bank deals in recent months, including First Busey Corp.’s $917 million purchase of CrossFirst Bankshares Inc., Renasant Corp.’s $1.2 billion pact for First Bancshares Inc. and WesBanco Inc.’s $959 million deal for Premier Financial Corp.
Atlantic Union and Sandy Spring have complementary branch-footprints in the mid-Atlantic region, making them ideal merger partners. Richmond, Virginia-based Atlantic Union, with about $25 billion in assets, has 129 branches, mainly in that state. Most of $13 billion-asset Sandy Spring’s more than 50 branches are primarily clustered in neighboring Maryland.
(Updates with share changes in third paragraph)
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