PhillyDeals: Souderton's Univest buys Phila.'s Valley Green Bank

Posted: June 20, 2014

Bank capital, which long flowed out of postindustrial Philadelphia and into its growing suburbs, is now flowing the other way, if a deal Wednesday is any sign.

Univest Corp., the Souderton company that runs one of the largest banks still based in the Philadelphia area, is moving downtown with its deal to buy Valley Green Bank - based in the city's Mount Airy section, with branches in Center City and South Philly - for $76 million in stock, worth about $27 a share.

"My shareholders are very happy today," Valley Green chief executive Jay Goldstein told me. He said the sale price was triple the $9 a share the bank's 300 owners invested, starting when it opened in 2005.

By contrast, investors in Blue Bell-based Continental Bank, founded the same year as Valley Green, stand to get less than double their money in the bank's planned sale to Bryn Mawr Trust Corp. Continental is nearly twice as large as Valley Green but reports lower profits, according to government bank data.

What will the deal mean for Philadelphia retailers, landlords, and other small-business investors, Valley Green's target customers? Thanks to Univest's larger size, "we can triple the size of the loans that we can do now" to as much as $15 million, Goldstein said.

Why has Univest, with an all-suburban branch network and roots in farm country, picked this time to enter the city?

"Philadelphia is a growth market. We saw the investment and revitalization going on there, and we wanted to be part of it, and that meant getting people who know the market," Univest CEO Jeffrey M. Schweitzer told me.

The deal adds Valley Green's three city branches, $329 million in loans (booked partly from special business lending centers in Center City and Radnor), and $335 million in deposits to Univest's Montgomery and Bucks Counties network of 38 branches, $1.7 billion in loans, and $2 billion in deposits.

Valley Green kept lending to small businesses when other banks cut back after the 2008 financial crisis, according to Blue Bell loan broker Amir Kassar. It could afford to because its local board - chairman Algot F. Thorell Jr., former Lincoln Benefits Group boss (who previously ran and sold the former Chestnut Hill Bank), and, as members, real estate broker Robert Elfant; Homecare Associates boss Karen Kulp; Mount Airy developer Ken Weinstein; and Saul Ewing law partner/ex- State Rep. Richard Hayden - invested fresh capital so the bank could keep making business loans, often as part of government-backed programs.

"This is exciting. It's a validation of the high-density, stable, urban business model" for banking, said Christopher McGill, chief executive at rival East River Bank, which also has been expanding its Philadelphia neighborhood lending network.

"Interest rates are low, margins stink, so you aren't going to [profit] just from an investment portfolio. You have to get it on the street" by making carefully priced loans, McGill told me. "There is business to be had in the city."

215-854-5194 @PhillyJoeD

comments powered by Disqus