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Valley National (VLY) in Forefront to Buy Bank Leumi U.S. Arm

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Valley National Bancorp (VLY - Free Report) is leading the race to acquire Bank Leumi Le-Israel BM’s U.S. banking division – Bank Leumi USA. This was first reported by Bloomberg citing persons familiar with the matter.

Apart from Valley National, Israel-based Bank Leumi’s U.S. unit has attracted interest from several other firms.  

No final decision about selling the unit has been made yet and Bank Leumi may opt out of divesting it in case it doesn’t get an attractive price. The firm might even take the division public.

Earlier this May, Bloomberg had reported that Bank Leumi was planning to sell the unit as part of an investment agreement with two minority shareholders – Endicott Group and MSD Capital LP. At that time, persons familiar with the matter had stated that Bank Leumi could get approximately $1 billion for the unit.

According to FDIC data, as of Dec 31, 2020, Bank Leumi USA had $7.2 billion in assets and roughly $6 billion in deposits. As of the same date, it had five branches located in New York, Los Angeles, Palo Alto, Aventura and Chicago. If Valley National clinches the potential deal, its market share and footprint will get further enhanced.

Similar to other mid-sized banks like Independent Bank Corp. (INDB - Free Report) , F.N.B. Corporation (FNB - Free Report) and BancorpSouth , Valley National is taking inorganic expansion plans to diversify its revenue mix amid the low interest rate environment and soft loan demand. In June, the bank announced an all-stock agreement to acquire The Westchester Bank Holding Corporation. The deal, expected to be 1% accretive to Valley National’s earnings, will complement its existing Westchester County lending operations.

Further, Valley National is leveraging digital technology and has launched its online bank – Valley Direct. This will help the company in reaching beyond its current footprint in New York, New Jersey, Florida and Alabama.

Shares of Valley National have soared 73.4% over the past 12 months, outperforming the industry’s rally of 68.7%.
 

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Currently, Valley National carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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