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Valley National (VLY) Closes Westchester Deal Amid Buyout Spree

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Valley National Bancorp (VLY - Free Report) completes the previously announced merger deal with The Westchester Bank Holding Corporation. This June, Valley National entered an agreement to acquire Westchester with an aim to expand its presence.

Headquartered in Westchester County, Westchester is the largest independent commercially focused bank with seven branch networks. As of Sep 30, 2021, Westchester had $1.3 billion in assets, $906 million in loans and $1.1 billion in deposits.

Per the deal, Valley National will issue nearly 15.7 million shares of common stock. Westchester shareholders will receive 229.645 shares of Valley National's common stock for each of their own shares held.

The acquisition is expected to provide Valley National with a physical footprint and additional commercial lending expertise in the Westchester County market. With the addition of Westchester's branches, Valley National will now have 233 total branches, 131 in New Jersey, 45 in New York, 41 in Florida, and 16 in Alabama.

The full system integration is expected to be completed in first-quarter 2022.

The deal got regulatory approvals from the Office of the Comptroller of the Currency, the board of governors of the Federal Reserve System and the New York State Department of Financial Services on Oct 27. Westchester shareholders approved the merger on Oct 5.

At the time of the deal announcement, it was anticipated that Westchester shareholders would receive Valley National's shares worth $210 million (based on Valley National's closing stock price on Jun 28). Westchester options were expected to be cashed out for $10 million.

Moreover, the transaction was expected to be 1% accretive to Valley National's earnings, and neutral to its pro-forma tangible book value and capital ratios.

Our Take

Supported by a robust balance sheet position, Valley National has been expanding largely via acquisitions. This October, it acquired the Arizona-based advisory firm specializing in the investment and management of tax credits, Dudley Ventures while in September, the company inked a deal to acquire Bank Leumi Le-Israel B.M.'s U.S. banking arm for $1.15 billion.

In 2019, Valley National acquired Oritani Financial for $740 million, while in 2018, it acquired Clearwater, FL-based USAmeriBancorp. The deals along with the several past acquisitions are expected to be earnings accretive and help Valley National diversify revenues.

Over the past year, shares of Valley National have gained 41.3% compared with 47.1% growth recorded by the industry.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

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.

Inorganic Growth Efforts by Other Firms

Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with the heightened costs of investments in technology.

Last month, CVB Financial Corp. (CVBF - Free Report) , the holding company for Citizens Business Bank, announced that Citizens received regulatory approvals from the Federal Deposit Insurance Corporation, and the California Department of Financial Protection and Innovation to complete its previously-announced merger agreement with Suncrest Bank. The stock-and-cash deal worth $204 million, announced this July, is expected to close on or about Jan 7, 2022, subject to the satisfaction of all remaining closing conditions.

In an effort to expand its presence, CVBF announced an agreement and plan of reorganization and merger, according to which Suncrest bank would merge with and into Citizens. The acquisition is the second-largest in CVB Financial's history.

Citizens Financial Group, Inc. (CFG - Free Report) recently completed its previously announced merger with JMP Group LLC. Citizens Financial announced the all-cash deal in September in a bid to augment its capital market capabilities.

The buyout is expected to foster growth, diversify Citizens Financial's capital market platform, and provide greater scale in key verticals like healthcare, technology, financials and real estate.

Likewise, in an effort to broaden its capabilities for institutional investors and investment management clients, SEI Investments Company (SEIC - Free Report) acquired a global portfolio intelligence platform company, Novus Partners.

SEI Investments' chairman and CEO, Alfred P. West, Jr., stated, "The financial services landscape is ever-evolving. Our markets continue to face an unprecedented pace of change, and we continuously seek opportunities to stay ahead of and manage this change. By making strategic investments in our solutions and workforce, we drive growth and help our clients make confident decisions for their futures."