Valley National Bancorp Announces Pricing of Series C Preferred Stock Offering

Rhea-AI Summary

Valley National Bancorp (NASDAQ: VLY) has announced the pricing of a public offering of 6,000,000 shares of its 8.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C. The offering is expected to raise $150 million in gross proceeds, with each share priced at $25. Dividends will accrue quarterly at 8.250% per annum until September 30, 2029, after which the rate will reset based on the five-year U.S. treasury rate plus 4.182%.

The underwriters have a 30-day option to purchase up to 900,000 additional shares. Valley plans to list the Preferred Stock on the Nasdaq Global Select Market within 30 days of issuance. The offering is set to close on August 5, 2024. Proceeds will be used for general corporate purposes and to boost regulatory capital at Valley National Bank.

Positive

• Raising $150 million in gross proceeds through preferred stock offering
• 8.250% fixed dividend rate until September 2029, providing stable returns for investors
• Potential for additional $22.5 million if underwriters exercise over-allotment option
• Strengthening regulatory capital position of Valley National Bank

Negative

• Potential dilution of existing shareholders' equity
• Increased dividend payment obligations may impact future earnings

Insights

Financial Analyst

Valley National Bancorp's pricing of its Series C Preferred Stock offering marks a significant capital-raising move. The $150 million gross proceeds from 6,000,000 shares at $25 per share demonstrate strong investor interest. The 8.250% fixed dividend rate until September 2029, followed by a floating rate, offers an attractive yield in the current market.

The additional 900,000 share over-allotment option could potentially increase the offering size by 15%, bringing total proceeds to $172.5 million if fully exercised. This flexibility allows Valley to capitalize on strong demand if present.

Notably, the intended use of proceeds for general corporate purposes and as regulatory capital for Valley National Bank suggests a strategic move to strengthen the bank's capital position. This could enhance its ability to navigate economic uncertainties and potentially support future growth initiatives.

The involvement of major underwriters like Morgan Stanley, BofA Securities and J.P. Morgan lends credibility to the offering and may facilitate broader distribution. The planned listing on Nasdaq Global Select Market should provide liquidity for investors, potentially making the stock more attractive.

Overall, this offering appears to be a prudent capital management strategy, potentially positioning Valley National Bancorp for improved financial stability and future opportunities in the banking sector.

Market Research Analyst

Valley National Bancorp's preferred stock offering comes at an interesting time in the banking sector. The 8.250% dividend rate is notably high, reflecting current market conditions and investor expectations for returns in the financial sector.

This offering may signal a trend among regional banks to bolster their capital positions amidst economic uncertainties. The successful pricing and potential overallotment suggest there's appetite for higher-yielding bank securities, despite recent sector challenges.

The five-year reset feature with a 4.182% spread over the five-year U.S. Treasury rate post-2029 is an intriguing structure. It provides some inflation protection for investors while allowing the bank to potentially lower its cost of capital if interest rates decrease in the future.

The timing of this offering, just before the Federal Reserve's next meeting, could indicate Valley's strategy to secure funding before any potential changes in monetary policy. It also suggests confidence in the bank's ability to maintain strong financials to support these dividend payments.

Investors should note that while the high yield is attractive, it comes with the trade-off of being non-cumulative, meaning missed dividends won't accumulate. This structure benefits the bank by providing flexibility but adds a layer of risk for investors.

Overall, this offering reflects the current state of the banking market, where institutions are seeking to strengthen their positions while investors are hunting for yield in a still-uncertain economic environment.

NEW YORK, July 29, 2024 (GLOBE NEWSWIRE) -- Valley National Bancorp (“Valley”) (NASDAQ: VLY), the holding company for Valley National Bank, today announced the pricing of a public offering of 6,000,000 shares of its 8.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C (the “Preferred Stock”), for gross proceeds of $150 million. Each share of the Preferred Stock will be issued at a public offering price of $25 per share and has a liquidation preference of $25 per share. Dividends on the Preferred Stock will accrue and be payable quarterly in arrears, at a fixed rate per annum equal to 8.250% from the date of original issue to, but excluding September 30, 2029, and thereafter at a rate per annum equal to the five-year U.S. treasury rate (as defined in the preliminary prospectus supplement relating to the offering) as of the most recent dividend payment date (as defined in the preliminary prospectus supplement) plus 4.182%.

In addition, Valley has granted the underwriters a 30-day option to purchase up to an additional 900,000 shares of Preferred Stock at the public offering price, less underwriting discounts and commissions, solely to cover over-allotments, if any. Valley intends to list the shares of Preferred Stock on the Nasdaq Global Select Market. Subject to listing approval, Valley anticipates trading of the Preferred Stock on the Nasdaq Global to commence within 30 days after the shares of Preferred Stock are first issued. The offering is expected to close on August 5, 2024, subject to the satisfaction of customary closing conditions.

Valley intends to use the net proceeds from this offering for general corporate purposes and investments in Valley National Bank as regulatory capital.

Morgan Stanley, BofA Securities, J.P. Morgan, UBS Investment Bank, Wells Fargo Securities and Keefe, Bruyette & Woods, A Stifel Company, are acting as joint book-running managers for the Preferred Stock offering. Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Valley.

The Preferred Stock will be issued pursuant to an effective shelf registration statement (File No. 333-278527) (including base prospectus) and a preliminary prospectus supplement filed with the Securities and Exchange Commission (the “SEC”), and a final prospectus supplement to be filed with the SEC.

Copies of the preliminary prospectus supplement and accompanying base prospectus relating to the Preferred Stock offering can be obtained without charge by visiting the SEC’s website at www.sec.gov, or may be obtained from: Valley National Bancorp, 70 Speedwell Avenue, Morristown, New Jersey 07960, Attention: Tina Zarkadas, (973) 305-3380, or by calling Morgan Stanley & Co. LLC toll free at 1-866-718-1649; BofA Securities, Inc. toll free at 1-800-294-1322; J.P. Morgan Securities LLC toll free at 1-212-834-4533; UBS Securities LLC toll free at 1-888-827-7275; Wells Fargo Securities, LLC toll-free at 1-800-645-3751; or Keefe, Bruyette & Woods, Inc. toll free at 1-800-966-1559.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Preferred Stock in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Any offering of the Preferred Stock is being made only by means of a written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

About Valley

As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with over $62 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations and commercial banking offices across New Jersey, New York, Florida, Alabama, California and Illinois, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy.

Forward Looking Statements

This news release and other statements made by Valley in connection with it may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include statements regarding the completion of the offering, expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. A detailed discussion of factors that could affect our results is included in Valley’s SEC filings, including Item 1A. “Risk Factors” of its Annual Report on Form 10-K for the year ended December 31, 2023. Valley undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. Although Valley believes that the expectations reflected in the forward-looking statements are reasonable, Valley cannot guarantee future results, levels of activity, performance or achievements.

Contact:		Michael D. Hagedorn
		Senior Executive Vice President and
		Chief Financial Officer
		973-872-4885

FAQ

What is the pricing of Valley National Bancorp's Series C Preferred Stock offering?

Valley National Bancorp (VLY) has priced its Series C Preferred Stock offering at $25 per share, with a total of 6,000,000 shares being offered for gross proceeds of $150 million.

When will Valley National Bancorp's Series C Preferred Stock begin trading on Nasdaq?

Valley National Bancorp anticipates that trading of the Series C Preferred Stock on the Nasdaq Global Select Market will commence within 30 days after the shares are first issued, subject to listing approval.

What is the dividend rate for Valley National Bancorp's Series C Preferred Stock?

The Series C Preferred Stock will pay dividends at a fixed rate of 8.250% per annum until September 30, 2029. After that, the rate will reset based on the five-year U.S. treasury rate plus 4.182%.

When is the expected closing date for Valley National Bancorp's Series C Preferred Stock offering?

The offering is expected to close on August 5, 2024, subject to the satisfaction of customary closing conditions.

How does Valley National Bancorp (VLY) plan to use the proceeds from the Series C Preferred Stock offering?

Valley National Bancorp intends to use the net proceeds from the offering for general corporate purposes and investments in Valley National Bank as regulatory capital.