N.J. bank buying Jericho-based State Bank

State Bank of Long Island, with eight branches in Nassau County and five in Suffolk, will be bought by a New Jersey bank in a $222-million deal.

Pending shareholder and regulatory approval, Valley National Bancorp, of Wayne, N.J., will buy the Jericho-based bank in a one-for-one stock exchange for the bank's parent company, State Bancorp.

"It's a wonderful franchise," Gerald Lipkin, president and chief executive officer of Valley National, said Friday. "We did a demographic study of Long Island, and it's amazingly similar to the northern New Jersey area."

The New Jersey bank plans to expand consumer, automobile and residential mortgage lending on Long Island through the acquired branches.

"We do a large percentage of our business as either residential mortgages or automobile loans, and those are two products that they have not emphasized that we will be emphasizing," Lipkin said.

State Bank's Jericho headquarters will become Valley's Long Island regional office. Lipkin said that most employees at Island branches will keep their jobs.

State Bancorp has $1.58 billion of assets, including $1.1 billion of loans, and $1.34 billion of deposits, according to its first- quarter earnings statement. Most of its outstanding loans, 87 percent, were to businesses and commercial real estate, whereas more than a third of Valley National's were consumer, automobile or residential mortgages, according a bank presentation.

"They've got a very full menu and very competitively priced consumer products, and that was a big attraction for us," said State Bank president and CEO Tom O'Brien, who will stay on at the combined bank at least through the transition period.

Though Long Island has community banks, it doesn't have a prominent full-service bank in the way that New Jersey has Valley, said Collyn Bement Gilbert, analyst at investment bank Stifel Nicolaus.

"It just fits with the profile that Valley has been so successful at building -- densely populated market, good household incomes," Gilbert said.

The combined bank will have about $16 billion in assets, $10.5 billion in loans, $11 billion in deposits, 215 branches covering 16 counties from northern and central New Jersey to central Long Island, and will rank as the 37th largest U.S. publicly traded commercial bank, Valley said in a news release.

The deal is expected to close in the fourth quarter of 2011 and requires approval by State Bancorp shareholders and the Office of the Comptroller of the Currency.

The two banks' stock prices moved closer together Friday as State Bancorp's gained $2.24 to close up 20.44 percent at $13.20 while Valley National's dropped early in the day before recovering most of its loss after noon on Friday to close down nine cents, or 0.62 percent, at $14.32.