Moving to beef up its presence in wealthy Bergen County, N.J., Valley National Bancorp said Friday it had agreed to acquire Paramus-based Midland Bancorp. for $96 million in stock.
The price is a hefty 2.6 times Midland's current book value, based on the $25.625 closing price for Valley shares last Thursday.
Despite the high purchase cost, analysts said the deal makes sense.
The deal "is a unique opportunity for the bank to expand further into Bergen County," said Thomas Romano, a bank analyst with McConnell, Budd & Downes Inc., of Morristown, N.J. "And the price they paid for Midland showed they really wanted it."
"It's a great franchise and a bank that we have long desired to be affiliated with," said Gerald H. Lipkin, chairman, president, and chief executive of Valley National.
Midland has $405 million in assets and 13 branches in Bergen County, a densely populated suburb of New York City.
Valley National, based in the neighboring Passaic County community of Wayne, has $4.6 billion of assets and 80 branches statewide, including 17 in Bergen County.
The deal will be a tax-free pooling of interests and is expected to be accretive to Valley's earnings in 12 months. The transaction is scheduled to close by the end of March.
The transaction calls for Valley to exchange every one of Midland's 125,294 outstanding shares for 30 of its own.
Midland will also give Valley the option to acquire 35,000 of its authorized, but unissued, common stock.
Mr. Lipkin said Midland is one of the last independent banks in New Jersey and that now is the right time to grab it.
He said there is no overlap of employees or branches, so no branch closings or layoffs are expected.
Analysts have praised Valley National, which has one of the nation's best efficiency ratios. For the second quarter, Valley's efficiency ratio was 44.80%, compared with 45.86% in second quarter 1995.
In the last two years, Valley has bought Lakeland First Financial, Succasunna; American Union Bank, Union; and Rock Financial Corp., North Plainfield, all in New Jersey.
Robert Meyer, president and chief executive of Midland, has not yet been given a title in the merged entity, but, he will be named a senior officer with Valley National, Mr. Lipkin said. Walter H. Jones 3d, Midland's chairman, and Graham O. Jones, a director, will be named to Valley's board.