NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has commented on the acquisition of USAmeriBancorp, Inc. by Valley National Bancorp.
We make the following key points:
- USAmeriBancorp, Inc. and Valley National Bancorp (NYSE:VLY) announced a merger agreement, with Valley National Bancorp as the surviving entity. The deal is expected to close in the first quarter of 2018, and Valley anticipates the transaction will accrete to earnings within 12 months of closing.
- KBRA views this transaction as a potentially credit positive event for USAmeriBancorp’s subordinated note holders given that USAmeriBancorp will be merged into a much larger, more diversified institution with a favorable financial track record.
- Valley appears to have sound overall financial condition. As of fourth quarter 2016 data, KBRA’s Subscription Rating Service rated Valley’s lead subsidiary, Valley Bank, B- on the financial strength rating scale.
- After completion of the merger, Valley’s branch network will expand to 239 locations throughout New Jersey, New York, Florida, and Alabama, with pro-forma total assets of approximately $28 billion.
- In March of 2017, KBRA affirmed the senior unsecured debt rating of BBB, subordinated debt rating of BBB-, and a short-term debt rating of K3 for USAmeriBancorp, Inc. In addition, KBRA affirmed the senior unsecured debt and deposit ratings of BBB+ and short-term debt and deposit ratings of K2, as well as assigned a subordinated debt rating of BBB for USAmeriBancorp’s bank subsidiary, USAmeriBank. The Outlook on the long-term ratings is Stable.
- Ratings of USAmeriBancorp, Inc. and its subsidiary bank will likely be withdrawn when the merger closes, given that USAmeriBancorp, Inc. and USAmeriBank will merge into Valley National Bancorp and Valley National Bank, respectively.
The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.
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