Valley National Bancorp's (VLY) acquisition of Chicago-based Providence Financial will mean a broader banking platform in that region, and the deal will likely also lead to solid accretion, RBC Capital Markets said in a note emailed Wednesday.

RBC noted that Valley already has a "modest commercial presence" in Chicago through its 2022 acquisition of Bank Leumi USA. Providence is a community bank with about $1.6 billion in assets, representing about 2% of Valley's pro forma total assets, the note said.

RBC described its overall view of the deal as "both neutral due to small size and positive due to the reasonable pricing." The transaction assumptions are "reasonable and favorable as the acquisition advances Valley's stated long-term strategic growth goals," the note said.

The deal also addresses Valley's stated priorities of diversifying core deposits, loans, and fee income, RBC said. Providence has a "granular and low-cost deposit base (1.49% total cost), which provides incremental funding for growth in these markets," it added.

RBC views the "disciplined pricing, solid EPS accretion, and minimal TBV dilution as supportive of the acquisition."

RBC maintained an Outperform rating on Valley and a $17 price target.