Valley National Bancorp
Valley National Bancorp (VLY): A conservative bank with a strong position in northern New Jersey and a presence in Manhattan. The bank, founded in 1927, has about $12 billion in assets. Valley operates 154 branches in northern and central New Jersey as well as 10 branches in Manhattan
Valley focuses on relationship banking. The company has residency requirements for its directors. The majority of directors are to live within 100 miles of the corporate headquarters. Furthermore, each board member is required to use Valley for both business and personal accounts. Theoretically, these two requirements ensure board members are familiar with the bank’s services and are best able to understand the needs of local businesses.
This excellent bank has somewhat limited growth prospects, because of its commitment to disciplined lending in an increasingly undisciplined, competitive region. Valley will benefit greatly from a steeper yield curve, because the bank is more dependent on interest rate spreads than most of its competitors.
Valley is a well-run, conservative bank worth considering at a price around two times book value.
Valley has consistently earned extraordinary returns on assets and equity. Over the last twenty years, Valley has averaged a 1.74% return on assets and a 21.12% return on equity.
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