Hudson Valley Holding Corp. (HVB), a New York City-area lender with about $3.2 billion in assets, is exploring a sale, people with knowledge of the matter said.

The Yonkers-based bank has drawn interest from potential buyers including Sterling Bancorp (STL) and People's United Financial Inc. (PBCT), said the people, who asked not to be identified because the matter is private.

Hudson Valley jumped 22 percent to $23.01 today, its biggest gain in 11 years, giving the company a market value of about $460 million. Sterling rose less than one percent, while People's United gained about 1 percent to $14.34.

Hudson Valley is working with Stifel Financial Corp.'s Keefe Bruyette & Woods Inc. unit on the sale, the people said.

Low interest rates and high regulatory costs are eroding profits at small banks, pushing them to sell to larger rivals. Hudson Valley Bank has 28 branches mostly in Westchester County, and reported earnings of $4 million in the first half of 2014, compared with about $7 million a year earlier, data compiled by Bloomberg show.

Last month, BB&T Corp. agreed to pay about $363 million for the $1.9 billion-asset Bank of Kentucky Financial Corp., while Bank of the Ozarks Inc. in July said it would pay $229 million for Intervest Bancshares Corp., a lender with about $1.6 billion in assets.

Representatives for Hudson Valley and Keefe Bruyette & Woods declined to comment. Spokesmen for Sterling and People's United didn't return calls seeking comment.

Sterling, of Montebello, New York, had over $7 billion in assets and 34 branches at the end of June, according to the Federal Deposit Insurance Corp. It merged with Provident New York Bancorp last year.

People's United, of Bridgeport, Connecticut, has been expanding into New York via acquisitions in the last four years. The bank, with $34 billion in assets, took over local supermarket branches from Citizens Financial Group Inc. in 2012, and it acquired Long Island's Smithtown Bancorp Inc. in 2010.

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