Alabama National Bancorp. of Shoal Creek said it is negotiating to merge with a slightly larger institution, which it declined to identify.
Alabama National said that under the proposed deal its top executives would have to resign.
In a somewhat unusual step, the $271 million-asset bank issued a press release last week stating that its chief executive, chief financial officer, and treasurer would have to sell their stock in the company in addition to stepping down if the merger goes through.
As for their future roles and severance packages, these had not been determined, the release said. The discussions were "preliminary," and a merger is not guaranteed, it said.
William P. Johnson, attorney for the holding company, said it "made sense" to issue the early announcement, because "there was some market movement, and we wanted to avoid the risk of some parties' trading with less information than others."
During the preceding 10 days - about as long as the talks had been under way - trading of Alabama National's stock had been about 16% heavier than normal. The stock surged 87 cents a share after Wednesday's announcement, to $11.62.
The company's stock price has climbed steadily, from $8.75 a share on Dec. 31.
The potential merger partner is an in-state institution, Mr. Johnson said.
Only two Alabama banks have slightly more assets than Alabama National. They are Peoples Bank and Trust of Selma and Community Bank of Blountsville.
"It's not us," said Elam P. Holley Jr., president of Peoples. No one could be reached at Community Bank.
Analysts were not surprised by the proposed condition that Alabama National's top officials step down. In a merger of equals, they pointed out, leadership is one issue that merging parties like to clear up as soon as possible.
"Their strategy has been not to run the hottest bank in America, but to piece together low-cost deposits in community banks and build a nice little company ultimately to be acquired," said Richard X. Bove, an analyst at Raymond James & Associates Inc., Tampa, Fla. "They've executed this very admirably."
The bank has been fairly active in the last year, completing two acquisitions last spring that brought in $100 million of assets. It raised $10 million in an initial public offering in November. The money is being used to retire long-term debt and acquire financial institutions, the bank said.