Merger and acquisition activity is at a trickle for most of the banking industry, but Valley National Bancorp in Wayne, N.J., is just revving up.

The $13 billion-asset Valley, an active acquirer during the economic downturn of the early 1990s, had done little buying lately. Its acquisition of Greater Community Bancorp of Totowa, N.J., this month was its first since 2005.

But now it is eager to do more deals, said Gerald H. Lipkin, its chairman, president, and chief executive officer.

Analysts said it has the means to fulfill that goal. A conservative lender, Valley has often been criticized for a lack of growth in recent years, but that strategy is paying off lately, they said. It does not have any trouble with asset quality or capital.

Investors also have rewarded its stock with a higher valuation, giving it stronger leverage to pursue acquisitions.

"I would be happy to find somebody who would be interested in getting together with us," Mr. Lipkin said during the company's earnings conference call last week. "If they're listening in, give me a call."

Peyton Green, an analyst at First Horizon National Corp.'s FTN Midwest Securities Corp., said this is a perfect time for Valley to grow, whether through acquisitions or organically.

A buying strategy would be contrarian these days. In the first half of the year 77 deals were announced, versus 153 in the first half of 2007, according to the investment bank Carson Medlin Co. If the current pace holds, this would be the first year since 2002 in which fewer than 200 deals were announced and the slowest for bank deals since at least 1990.

Industry observers said M&A activity could increase in the second half if banks in dire need of capital cannot raise it and are forced to sell themselves, but even then the number of deals is likely to remain well below the average of recent years.

Valley's stock, which was trading at $18.28 Monday, is at about 2.99 times tangible book value, versus a median of 1.74 times book for a sampling of comparably sized U.S. banks, according to data from FTN. This gives it greater currency for deals, Mr. Green said.

Valley, one of the most conservative banking companies in the Northeast, also has been relatively unscathed by the economic downturn, and that has allowed it to aggressively increase assets at a time when others are working hard to shrink theirs, Mr. Green said.

Loan growth helped boost Valley's second-quarter net income 4.5% from a year earlier, to $41.5 million. Its loans grew 4.3% from the previous quarter and 10.5% from a year earlier, to $9 billion.

"More of their growth is countercyclical, so when times get tough, they are in a very good position to grow," Mr. Green said.

In the second quarter Valley's ratio of nonperforming assets to total assets rose only 2 basis points from the previous quarter and a year earlier, to 0.4% of loans.

Joseph Fenech, an analyst at Sandler O'Neill & Partners LP in New York, said that Valley has been opening branches in New York City's eastern boroughs recently, and that buying a bank on Long Island would be a natural next step, particularly in Nassau County.

"That's also a good place demographically — it's wealthy, very similar to northern New Jersey, which is Valley's back yard," Mr. Fenech said.

Neither Mr. Green nor Mr. Fenech would name any potential buyout targets.

A spokeswoman said Mr. Lipkin was unavailable to comment by press time, but the company has previously said it would prefer to remain within 100 miles of its headquarters in northern New Jersey, according to the analysts.

Mr. Green said Valley likely would zero in on banking companies with assets of $500 million to $2 billion. Depending on the price of any deal it makes, he said, Valley's capital ratios should remain strong.

Valley paid $167.2 million in stock for Greater Community, or 2.3 times the seller's tangible book value.

Mr. Green said the acquisition of the $976 million-asset Greater Community was "capital neutral" for Valley; its Tier 1 ratio remained at 9.51% and its risk-based capital ratio remained at 11.25%.

Valley has bought 17 bank and thrift companies since 1990, more than a third of them between 1990 and 1993. During that span it doubled its service area and increased its deposits 75% with seven acquisitions, Mr. Green said.

Five of them were government-assisted, and the other two were valued at or below tangible book value.So in all, Valley picked up $1.2 billion of deposits for a premium of less than 1% in those seven acquisitions, Mr. Green said.

Mr. Fenech said Valley's conservative approach to loan growth in recent years is paying off in more ways than one. "This company has taken a lot of criticism over the last several years because they haven't aggressively pursued business and earnings had been flat," he said. "But the wisdom of their strategy is starting to become more apparent, and now they're able to go on the offensive" because other banks' valuations are down.

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