Valley National Bancorp to Acquire Westchester Bank in $220M Deal
WHITE PLAINS—New York City-based Valley National Bancorp and The Westchester Bank Holding Corporation announced on June 28 they had entered into a definitive merger agreement whereby Valley will acquire Westchester, parent company of The Westchester Bank.
The acquisition of this high-performing commercial bank will provide Valley a physical footprint and additional commercial lending expertise in the demographically attractive Westchester County market, Valley Bank officials stated.
Under the terms of the merger agreement, the stockholders of Westchester will receive 229.645 shares of Valley common stock for each share of Westchester common stock they own. Based on Valley’s closing stock price on June 28, 2021, Westchester’s stockholders will receive approximately $210 million in Valley common stock. Existing Westchester options will be cashed out for approximately $10 million in cash.
Westchester is the largest independent commercially focused bank headquartered in Westchester County with total assets of $1.3 billion, total loans of more than $0.9 billion, and total deposits above $1.1 billion across its seven branch network as of March 31, 2021. Westchester has consistently produced returns on average assets above 1.25% supported by a robust net interest margin, and an efficiency ratio below 50%. This acquisition will supplement Valley’s existing Westchester County lending operations, and add a strong low-cost core funding base in the market.
This strategically compelling acquisition fills in a geographic gap within Valley’s metro New York franchise, and will meaningfully enhance Valley’s presence and growth opportunities within the densely populated, affluent, and commercially active Westchester County market. This acquisition is also expected to be approximately 1% accretive to Valley’s earnings, and neutral to Valley’s pro forma tangible book value and capital ratios at close.
Ira Robbins, Valley’s chairman, president & CEO of Valley National said, “Under John Tolomer’s leadership, Westchester has evolved into a high-performing and growth-oriented commercial bank in a desirable market. Westchester’s conservative credit culture and high-touch approach to commercial banking align extremely well with Valley’s own value proposition.”
He also stated, “We look forward to having John and his team join Valley where they will continue to drive growth in the Westchester County market that they know so well. The ability to offer Valley’s comprehensive suite of financial solutions to Westchester’s commercial customers, along with the support of our larger balance sheet and significant capital resources, should drive meaningful growth for Valley in the Westchester County market. We are excited to support John and his team in the next evolution of their company as a part of the Valley family.”
John Tolomer, president & CEO of Westchester Bank said, “We are thrilled about our new partnership with Valley and the opportunities for growth that it will provide for our employees and customers. The infrastructure and culture that has been built at Valley over the past few years will enable our customers to access a robust product offering while still receiving access to the local decision making and exceptional service they have become accustomed to at The Westchester Bank.” Following the closing, Tolomer will join Valley as Market President leading Valley’s Westchester County efforts.
On a pro-forma basis as of March 31, 2021, the combined company’s balance sheet would have $43 billion of assets, and $34 billion of each loans and deposits. The addition of Westchester’s seven branches will bring Valley’s branch count to 233 comprised of 131 in New Jersey, 45 in New York, 41 in Florida, and 16 in Alabama.
The acquisition is expected to close in the fourth quarter of 2021, subject to standard regulatory approvals, approval of Westchester stockholders, as well as other customary conditions.
Covington & Burling LLP acted as legal counsel to Valley. Raymond James & Associates, Inc. served as financial advisor to Westchester, and Goodwin Procter LLP served as its legal counsel.