Sandy Spring agrees to acquire CN Bancorp

December 15, 2006|By Laura Smitherman | Laura Smitherman,sun reporter

Sandy Spring Bancorp announced yesterday that it has agreed to acquire CN Bancorp Inc. for $44.1 million in cash and stock in an effort to expand the bank's presence in the Anne Arundel County market dominated by larger, out-of-state banks.

Olney-based Sandy Spring has been expanding its footprint in the affluent suburbs of the Baltimore-Washington corridor. With the CN Bancorp deal, Sandy Spring picks up four County National Bank branches in Glen Burnie, Pasadena, Odenton and Millersville, and an administrative center. It comes two months after Sandy Spring inked a separate deal to acquire Potomac Bank in Virginia for $64.7 million.

Sandy Spring and County National each have captured about 2 percent of the market in Anne Arundel County. In comparison, Bank of America, BB&T and M&T Bank have more than one-third of the deposit share combined, according to FDIC data.

Competition for banking customers is expected to heat up in the area as the Pentagon's military base realignment is projected to bring thousands of jobs to Fort Meade. The county also is home to Baltimore-Washington International Thurgood Marshall Airport and has a median household income of about $64,000, or $10,000 more than the statewide figure, U.S. Census data show.

The banking industry has been consolidating, most recently with the sale of Mercantile Bankshares Corp., the largest bank based in Maryland, to PNC Financial Services Group of Pittsburgh.

Hunter R. Hollar, chief executive at Sandy Spring, said the bank aims to remain independent.

"We are certainly aware of the atmosphere in the industry," he said. "It's just our attitude that if we continue to have good results and do well, we think we'll be able to remain independent."

Jan W. Clark, chairman and CEO at County National, said several suitors approached the company in recent years. He said a deal with Sandy Spring made sense, because the two institutions have similar cultures and the combined bank could offer his customers expanded investment products, trust services and insurance. The County National branches will continue to operate under that brand for at least a year to ease the transition for customers.

Under the deal, County National shareholders would receive 0.6657 Sandy Spring shares for each County share or $25 in cash, or a combination of each. County National shares, which are thinly traded, closed yesterday at $24.15 on the OTC Bulletin Board.

Sandy Spring stock rose 32 cents, or less than 1 percent, to $37.72 yesterday on the Nasdaq stock market.

Through the transaction, Sandy Spring expects to reduce operating expenses at County National by 25 percent by eliminating redundant operations and administrative functions. Hollar said job losses would be minimal, because the bank hopes to move employees in eliminated positions to current job openings. Sandy Spring has more than 600 employees; County National about 50.

The deal, which needs shareholder and regulatory approval, is expected to close in the second quarter of 2007.

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