Valley Bank Merges With Bank Leumi

Valley National Bancorp and Bank Leumi Le-Israel Corporation recently announced today the companies have entered into a definitive merger agreement whereby Valley will acquire Leumi, the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA.

This move will help broaden Valley Bank’s commercial product offerings and enhances its funding verticals. As a result of the mutually beneficial transaction, Valley will significantly expand its technology and venture capital banking business, and Bank Leumi Le-Israel B.M. will enhance its exposure to the U.S. banking market. This combination further solidifies Valley’s position as a top-tier, relationship-focused commercial bank. The pro forma company will be the 29th largest publicly traded U.S. bank by assets.

Bank Leumi provides full-service relationship banking for middle-market commercial clients and private banking services for high net-worth individuals. As of June 30, 2021, Bank Leumi had total assets of $8.4 billion, total deposits of $7.1 billion and gross loans of $5.4 billion. The loan portfolio is well diversified by asset class, with nearly one-third of the portfolio in commercial and industrial loans. Bank Leumi operates five commercial offices in New York, Los Angeles, Palo Alto, Chicago and Miami, a strategically located distribution network that drives the geographic diversity of its loan portfolio. The bank’s commercial focus has contributed to its expansive funding base, including nearly $2 billion of low-cost deposits in the technology and venture capital space. With approximately 20% of revenue coming from non-interest sources, the combination with Bank Leumi will increase Valley’s revenue diversity.

Under the terms of the merger agreement, the shareholders of Leumi will receive 3.8025 shares of Valley common stock and $5.08 in cash (subject to specified adjustments) for each share of Leumi common stock they own. The transaction is valued at an estimated $1.148 million, inclusive of the value of options, based on Valley’s closing stock price on September 22, 2021. Upon completion of the acquisition, Bank Leumi Le-Israel B.M. will own over 14% of Valley’s common stock. Valley and Bank Leumi Le-Israel B.M. have also entered into an agreement providing an ongoing business relationship, including loan participation and customer referrals.

The strategic relationship will enable Bank Leumi Le-Israel B.M. to expand its activity in the U.S. The merger agreement further provides that, effective as of and contingent upon the merger, Valley will add two directors designated by Bank Leumi Le-Israel B.M. to its board of directors.

The transaction is expected to close by the late first quarter or early second quarter of 2022, subject to the receipt of required regulatory approvals, approval of Valley shareholders, as well as other customary conditions. Leumi shareholders have already approved the transaction.

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