Valley National Buying 1st United in Florida for $312 Million

Valley National Bancorp (VLY) in Wayne, N.J., has agreed to buy 1st United Bancorp (FUBC) in Boca Raton, Fla.

The $16 billion-asset Valley National will pay $312 million in stock for the $1.7 billion-asset 1st United. The transaction is expected to close in the fourth quarter. Valley said it expects the deal to be accretive to its 2015 earnings and that an expected 2.7% tangible book value dilution will be earned back in just over four years.

Valley National said in a press release Thursday that this "bold and unique expansion opportunity will provide an entrée for Valley into Florida's high-growth market, beyond its traditional Northeastern regional footprint," adding that 1st United has 21 branches, $1.2 billion in loans and $1.4 billion in deposits. The company said it decided to enter Florida to leverage its own mortgage and automobile lending platforms, past real estate and commercial lending experience in Florida markets and attractive demographics in the Sunshine State.

"Valley has always employed a highly focused geographic growth strategy based on creating long-term shareholder value, however, we ultimately welcomed this tremendous opportunity to expand into one of the premiere growth markets of the United States," Gerald Lipkin, Valley's chairman, president and chief executive, said in a press release. "With its middle-market commercial corporate emphasis, 1st United has an experienced and conservative banking team, and strong core deposit and capital bases."

This the second deal announced this week involving an out-of-state bank buying a Florida institution. First American Bank in Elk Grove Village, Ill., agreed on Monday to buy Bank of Coral Gables in Florida. The moves are interesting from an historical perspective; a number of regional banks took hits during the last recession and financial crisis from exposure to Florida tied to bank acquisitions in the state.

• Tangible book value dilution of 2.7 percent with an expected 4.25 year earn-back period
• Anticipated to be accretive to earnings in 2015
• 16.7 percent core deposit premium

Sandler O'Neill', MG Advisors and Day Pitney advised Valley. Keefe, Bruyette & Woods and Gunster, Yoakley & Stewart advised 1st United.