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Valley National Closes CNL Merger, Stays Positive on Florida

Zacks Equity Research
Updated

Wayne, NJ-based Valley National Bancorp VLY has been undertaking meaningful initiatives to enhance its scale of operations and geographical footprints. Notably, after foraying into the Florida region with its acquisition of United Bancorp, Inc., last year, the company has been seeking to further capitalize on the region’s growth potential.

In this regard, Valley National inked a deal in May 2015 to acquire Orlando-based CNLBancshares, Inc. Notably, the merger was successfully closed on Dec 1, and the company expects to complete the integration process within the first quarter of 2016. Moreover, the transaction is expected to be accretive to the company’s earnings within the next 12 months.

CNLBank, the wholly owned subsidiary of CNL, has the sixteenth-largest deposit market share in Florida. Overall, the company has assets worth approximately $1.4 billion, and loans and deposits amounting to $833 million and $1.1 billion, respectively.

With the latest acquisition, Valley National has gained access to CNL’s 16-branch network spread across the west coast markets of Naples, Bonita Springs, Fort Myers and Sarasota. Moreover, the company added 3 new offices in the Boca Raton, Fort Lauderdale, Coral Gables and Jacksonville areas, thereby strengthening its hold in the central and southern Florida markets.

Gerald H. Lipkin, chairman, president & CEO of Valley National, stated that the company’s “outlook for Florida remains very positive and we are focused on supporting growth in that region through other acquisitions or de novo opportunities”. Apart from Florida, the company also seeks to expand operations in New Jersey and New York.

According to terms of the merger, Valley National will issue 21 million shares of its common stock at a 20-day average trading price (ending 5 days prior to the close) of $10.7815 (at an exchange ratio of 0.705). As such, the deal is approximately valued at $227 million. Further, the company has retained the management team of CNL.

Valley National currently carries a Zacks Rank #3 (Hold). Investors interested in the same industry can consider Beneficial Bancorp, Inc. BNCL, Middlefield Banc Corp. MBCN and Fox Chase Bancorp, Inc. FXCB. All these stocks sport a Zacks Rank #1 (Strong Buy).

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FOX CHASE BANCP (FXCB): Free Stock Analysis Report
 
BENEFICIAL BCP (BNCL): Free Stock Analysis Report
 
MIDDLEFIELD BC (MBCN): Free Stock Analysis Report
 
VALLEY NATL BCP (VLY): Free Stock Analysis Report
 
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Zacks Investment Research