It's unusual to hear the chief executive of a small regional bank say he isn't worried about remaining independent.

But Gerald H. Lipkin, chairman, chief executive, and president of Wayne, N.J.-based Valley National Bancorp, said he isn't concerned about being acquired by the bigger banks in the state, although Valley - with $4.6 billion in assets and a strong suburban retail and small-business-lending base - is eminently attractive.

"We do our job right," the brash 55-year-old executive declared in a recent interview here. "Why would I have to be afraid of someone else because they are larger than me? They should be afraid of me," he said.

In the last four years, Mr. Lipkin has been on the offensive, acquiring small community banks in northern New Jersey. Part of his strategy is to avoid wandering outside Valley's strictly defined market of wealthy suburban communities.

"If the bank is successful when we are acquiring them, there is more to the institution than just bricks and mortar and deposits," Mr. Lipkin maintained.

The bank's moves have pleased analysts, who point out that Valley can plumb the same attractive northern New Jersey market for retail and small- business customers.

"Valley's performance has been very good, and it is in a healthy economic environment where the opportunities are growing," said Thomas Romano, bank equity analyst with McConnell, Budd & Downes Inc., Morristown, N.J.

Shareholders, too, appreciate Mr. Lipkin's feisty confidence. Austin Drukker, a professor of managerial ethics at Montclair State University, said he's held the stock since 1973 and has no plans to sell any of his 17,575 shares.

"What it boils down to is that Valley sticks to what it knows, and that it's doing plain, basic banking," said another shareholder, Gerald Korde, who serves on Valley's board of directors.

Bank analysts point out that one of Valley's strengths is its strong management team, which has enabled it to deal with change better than most banks its size.

Having acquired a bank a year for the past four years, and with another transaction scheduled to close in the first quarter of 1997, Valley has worked out a blueprint on how to complete a deal. One particularly appealing characteristic of Valley acquisitions: layoff announcements are rare.

One of the first things the management team does when it sizes up targets is to keep within a 50-mile radius of Valley's Wayne, N.J. headquarters. Valley's three-building home base is the nerve center of an 82-branch system in 10 northern New Jersey counties.

Mr. Lipkin is wary of playing leapfrog in unfamiliar ponds, and he is dedicated, he said, to preserving Valley's community bank culture. "It is just outside of our three-year plan to have any offices further away than Princeton," Mr. Lipkin said.

The next feature that the Valley acquisition specialists focus on is asset size. The ideal target has between $200 million and $500 million in assets.

A number of Northern New Jersey banks could pop up on Valley's radar screen: Union-based Center Bancorp; Independence Bancorp in Ramsey, and Ramapo Financial Corp. in Wayne, to name a few.

Once Mr. Lipkin closes a deal, forming a successful relationship with his new employees is crucial. "We go out of our way to hire everybody who works in the (acquired) bank," he said.

In Valley's latest deal, for Paramus-based Midland Bancorp, all of the $405 million-asset target's 200 employees, including executives, have been invited to stay on. Even if some jobs are eliminated in a merger, Valley cross-trains employees so they can be placed in new positions at the company.

"It may impact negatively the first year on how much money we could have made, but if we carry over an extra 20 people, it may cost $300,000 after taxes, and paying $100 million for the bank to start with - it isn't going to amount to anything," Mr. Lipkin said.

But as with any purchase, if there are no layoffs, expenses must be cut somewhere. In the case of Midland, Mr. Lipkin identified projected cost savings of $2 million by March, which includes Midland's marketing and advertising in Bergen County newspapers - a savings of $450,000.

Plans also call for the merged company to write down half the value of Midland's $2 million data processing center, six months after the acquisition is complete.

"We can add them on to our system with virtually no additional cost because we have the capacity to do it," Mr. Lipkin said. "We may have to add an extra operator, but it's nominal."

Valley's low-cost operations have given it one of the best efficiency ratios in the nation. For the third quarter, Valley's ratio of expenses to revenues was 46.2%, compared to 51.0% at Summit Bancorp, 57.4% at First Union Corp., and 58.5% at PNC Bank Corp.

Valley's stellar operating performance is especially important given the beefed up competition in New Jersey. Analysts said Charlotte, N.C.-based First Union, which acquired $35 billion-asset First Fidelity Bancorp in January, is a formidable rival, as are CoreStates Financial Corp. of Philadelphia, PNC of Pittsburgh, and Summit of Princeton.

These same banks are also possible acquirers of Valley, if it should stumble. However, right now that doesn't seem likely. Mr. Lipkin likes to point out that a buyer would have to pay 12 times Valley's third-quarter earnings of $53.3 million, or 2.5 times its book value to buy the bank. As a result, Mr. Lipkin said, he can operate Valley as though it will remain independent forever.

"We don't position Valley to sell it, because that neither shows care for customers, care for the staff, nor does it bring the highest possible price for the bank," he said.

At least one of Valley's competitors agreed with Mr. Lipkin's assessment. "Valley has a great reputation, and has every right to be confident," said Thomas A. Bracken, president and chief executive of CoreStates' New Jersey National Bank.

But, he added, large banks have their own advantages, among them access to more capital and better technology. "Though, Valley is primarily in northern New Jersey; you can't really say how they would do in the entire state," Mr. Bracken said.

But Mr. Lipkin maintained that Valley brings something to the table a big bank never can: the personal touch. How many New Jersey banks can offer 90% of their customers a chance to meet with the chief executive in his office, and to get there in less than an hour, he asked.

"I am sure that Mr. Crutchfield (First Union CEO Edward E. Crutchfield Jr.) will be only too happy to meet with any customer of the bank, as I am, but it will take a lot more than an hour to see him," he added.

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