Competition Augurs a Year of Sales by Under $1B's.

Like many banks its size, Potomac Bank of Virginia in Fairfax has found the competition for loans and deposits to be especially fierce in recent quarters.

So instead of continuing to slug it out alone in the heavily banked Washington suburbs, the $247 million-asset bank announced in October that it would sell itself to Sandy Spring Bancorp Inc. in Olney, Md., and would operate as a division of the $2.6 billion-asset company.

Price certainly factored into the decision. Potomac shareholders are to get $65 million for the eight-year-old bank, or 2.65 times its book value and 41 times trailing earnings.

But G. Lawrence Warren, Potomac's chief executive, said that the deal was also driven by competitive pressures. Potomac would keep its name and its management team, but it would gain higher lending limits and could share marketing, compliance, and other costs with a much larger parent.

"For the first half of this decade, we really had the wind to our backs and had pretty smooth sailing," Mr. Warren said. "But frankly, we felt that the second half of this decade was going to be a bit more challenging because of the fight for deposits and yield-curve issues."

This is a familiar refrain among community bankers these days -- and industry observers say it …