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Executives with Chevy Chase Bank, the third-largest bank in Maryland with deposits of $8.2 billion in 153 branches, are talking about selling the institution to Citigroup, according to published reports.

Liz Fogarty, a spokeswoman for Citigroup in New York, declined to comment on the reports Thursday. Citigroup is the 12th-largest bank in Maryland deposits with $1.4 billion in 16 offices, as of June, according to the Federal Deposit Insurance Corp.

Mary Lou Hayes, spokeswoman for Chevy Chase Bank, said in an email, "Chevy Chase Bank is a strong, successful bank with an enviable share of the Washington banking market. Not surprisingly, rumors have arisen from time to time over the years about the interest of other banks in seeking to acquire Chevy Chase Bank. Chevy Chase Bank has never commented on such rumors."

If the reports are accurate, with the slow economy and credit crunch, it's not surprising that Chevy Chase would be in such discussions, said Bethesda banking consultant Paul Joegriner, a former executive with Chevy Chase Bank and American Partners Bank.

"We are seeing the next wave of industry consolidation, either in the form of managed consolidation, encouraged by the regulators, or strategic acquisitions of banks with solid core deposits and an established franchise," Joegriner said. "Chevy Chase Bank is more of the latter than the former."

Chevy Chase built a large wholesale mortgage operation mostly through acquisitions and moved into offering more of the "non-traditional mortgage products," he said. Executives also probably invested too heavily in in-store retail branches, which the bank has largely exited, he added.

"When the downturn came, these strategies placed a significant amount of financial pressure on the bank," Joegriner said. "To its credit, the bank was quick and smart to dump the businesses that were dragging it down, which has allowed it to refocus on the core franchise."

In the second quarter, Chevy Chase reported net income of $2.2 million, down about 90 percent from the 2007 second quarter, according to the FDIC. In the first quarter, the bank reported a net loss of $4.9 million, after a loss of $5.9 million in the 2007 first quarter.

The value of deposits and loans has increased in the past year, with assets rising to $14.9 billion in June from $14.7 billion a year earlier, according to the FDIC. Some 72 percent of Chevy Chase's deposits are in Maryland.

Like most banks, Chevy Chase has been hurt by delinquent loans. The percentage of noncurrent loans and leases — those 90 days or more past due or already in default — to total loans rose to 3.6 percent in June from 0.5 percent a year earlier.

In its most recent review by financial research company Bankrate, which rates institutions' financial strength and stability, Chevy Chase scored a below-average rating. Chevy Chase had "substantially lower than normal" profitability, satisfactory asset quality, below standard capitalization and ample liquidity, the report said.

For its part, Citigroup is sitting on $25 billion of new federal capital and needs low-cost funded and high-value franchises to maximize use of that infusion, Joegriner said.

"This may be a right time for Chevy Chase or any other bank that has a solid core deposit base and a well-established franchise to sell," he said. "The premiums that were paid for banks in the past, based on the value of its earning assets, has now shifted to the value of the low-cost deposit base and franchise."

Citigroup recently tried to purchase Wachovia Bank before Wells Fargo & Co. bought that institution.

Earlier, Chevy Chase executives said they would shut down branches in 54 Giant Food stores in the region to focus on regular branches, citing privacy concerns from customers. Some of those in-store branches have already closed, and others are planned to be shuttered this year or by next spring. Provident Bank and PNC Bank are taking over many of those in-store Giant branches.

Chevy Chase has shed employees in the past year. The bank had about 3,900 in June, down from some 4,750 a year earlier, according to the FDIC.

Chevy Chase was established as the Chevy Chase Savings and Loan Association in 1955 and became an FDIC-insured federal savings bank in 1985, according to the FDIC. In 1986, it changed the name to Chevy Chase Savings Bank FSB, and then to Chevy Chase Bank FSB in 1994.

The bank moved its headquarters from Chevy Chase to McLean, Va., in 1996, according to the FDIC. Then, executives moved into new administrative headquarters in Bethesda in 2001, according to its 2007 annual report.