Valley bolstering NY footprint with Westchester deal

Valley National Bancorp in New York is expanding to the north with an agreement to buy Westchester Bank Holding in White Plains, N.Y. 

The $41 billion-asset Valley said in a press release Tuesday that it will pay $210 million in cash and stock for the $1.3 billion-asset parent of Westchester Bank. Another $10 million in cash will go to those who hold Westchester options.

The deal is expected to close in the fourth quarter.

Westchester has seven branches, $900 million of loans and $1.1 billion of deposits.

The deal is expected to be about 1% accretive to Valley’s earnings and neutral to its tangible book value ratio.

“Westchester has evolved into a high-performing and growth-oriented commercial bank in a desirable market,” Ira Robbins, Valley’s chairman, president and CEO, said in the release. “Westchester’s conservative credit culture and high-touch approach to commercial banking align extremely well with Valley’s own value proposition.”

John Tolomer, Westchester’s president and CEO, will join Valley as a market president after the deal closes.

Valley plans to cut about 30% of Westchester’s annual noninterest expenses. The company expects to incur $11 million in merger-related expenses. 

"We expect others had an interest in the attractive [Westchester] franchise, and this supports our thinking that Valley is a preferred acquirer in the metro New York market," Frank Schiraldi, an analyst at Piper Sandler, wrote in a note to clients.

"While we don't believe this necessarily creates a trend, this is probably an incremental positive for potential targets in a similar size range and geography as it floats the potential of another acquirer, and one with a strong relative currency," Schiraldi added.

Covington & Burling advised Valley. Raymond James and Goodwin Procter advised Westchester.