JOHN VALLIADES AND KEVIN CURRY
PRESIDENT AND VICE PRESIDENT
VALCUR INTERNATIONAL INCORPORATED

COMPANY: Valley National Bancorp
TICKER: VLY (NYSE)
PRICE: $24.81
52-WEEK RANGE: $20.80-$25.72
MARKET CAPITALIZATION: $2.90 billion

John Valliades and Kevin Curry are president and vice president of ValCur International Incorporated, securities offered through Peterson Investments Incorporated, a member NASD-SIPC. Messrs. Valliades and Curry spoke with Benjamin Weintraub of The New York Sun about Valley National Bancorp and how the possibility of the company being bought out bodes well for the stock and long-term investors.

What does the company do?

Valley National Bancorp is a regional bank. It’s the 60th largest U.S. regional holding company, with 163 branches in 12 northern and central New Jersey counties as well as Manhattan. The company’s lending niche is small businesses in New Jersey and New York.

Why do you like the stock?

This particular bank is not volatile. And this is not a volatile stock as the market has been lately, and Valley wasn’t really affected by the market. It has a dividend yield of about 3.4%, but what makes this stock attractive is that this bank is a strong takeover candidate. Gerry Lipkin is the CEO. He’s 65 years old and has been running the company for about 20 years, and we believe that if the right transaction comes along, Mr. Lipkin will be persuaded to sell the bank.

The valuation of this bank is based on earnings, deposit premium, scarcity value, and book value. We believe that the bank could bring along anywhere between $28 and $32 dollars a share based on scarcity value and also the level of interest. The beauty here is that it pays a nice dividend while you’re waiting. It also has hidden assets. Valley owns about 44% of its branches, or about 73 of the branches. Valley actually owns the branches whereas a lot of banks just rent the property. That means there’s a lot of added value there, because the bank does own a lot of their real estate.

Do you think the stock is undervalued?

I think the stock is fairly valued at this price. But what really makes this stock attractive is the takeover appeal.

How do you expect the company or industry to perform going forward?

We feel that since it is the 9th inning of the interest rate hike, the worst is over for the stock and the financial industry. This bank has been pretty quiet, but basically solid throughout the year, and the earnings have been consistent. It’s not a stock that collapses.

What’s the company’s revenue?

The revenue in 2005 was $625 million and the net income was $163 million, at $1.50 per common share. They have about 118 million shares outstanding, about $12.5 billion in assets, and about $8.5 billion in deposits.

Is it a good time to buy?

Yes, it’s a good time to buy. You have a safe dividend and you have the upside potential of the bank getting bought out. Lately in the New York area, North Fork Bancorp was bought out in March by Capital One Financial Corporation, and Independence Community Bank Corporation by Sovereign Bancorp. So recently you can see that the consolidation is there, and this bank is also an attractive candidate.

What are the risks?

The risks are that if the interest rate rises substantially higher then the net interest margin will get smaller and that can affect the bank’s earnings.

How long will you hold the stock?

This is a long-term investment for investors who will enjoy the yield, and one day they will be rewarded. I will hold this bank until it gets bought out. I think this is a great bank and it’s not a speculative investment. This is really a solid institution and it is good for long-term conservative investors.