Valley National Bancorp Reports A $405 Million Debt Modification And Other Long-Term Borrowing Cost Enhancements

WAYNE, N.J., Aug. 9, 2016 /PRNewswire/ -- Valley National Bancorp (NYSE: VLY), the holding company for Valley National Bank, reported in its Form 10-Q Quarterly Report filed on August 8, 2016 that in early August it elected to prepay all $405 million of its Federal Home Loan Bank borrowings contractually maturing in 2018.  Valley refinanced the 2018 debt, with a total average cost of 3.69 percent, into a new 5-year FHLB borrowing with an effective average interest rate of 2.51 percent, which includes amortization of prepayment penalties totaling $20.0 million. The prepayment penalties will not result in a loss charged to earnings in the third quarter of 2016. 

The debt transactions will result in pre-tax interest expense savings of approximately $4.8 million on an annualized basis. 

In August, Valley also terminated a fair value interest rate swap with a notional amount of $125 million in August 2016.  The terminated swap, originally maturing in September 2023, was essentially used to convert Valley's fixed 5.125 percent subordinated notes issued in September 2013 to variable rate instruments.  The August transaction will now result in an adjusted fixed annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date.  While the interest expense related to this instrument will moderately increase as compared to the second quarter of 2016, the new adjusted fixed rate is expected to reduce Valley's exposure to potential increases in market interest rates over the remaining life of the debt. 

Valley continuously evaluates opportunities, like the aforementioned transactions, to enhance the interest rate risk position of its balance sheet and optimize the long-term returns from its asset and liability management strategy.

About Valley

Valley National Bancorp is a regional bank holding company headquartered in Wayne, New Jersey with approximately $21.8 billion in assets. Its principal subsidiary, Valley National Bank, currently operates 213 branch locations serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn, Queens and Long Island, and Florida. Valley National Bank is one of the largest commercial banks headquartered in New Jersey and is committed to providing the most convenient service, the latest in product innovations and an experienced and knowledgeable staff with a high priority on friendly customer service 24 hours a day, 7 days a week. For more information about Valley National Bank and its products and services, please visit www.valleynationalbank.com or call Customer Service, 24/7 at 800-522-4100.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about 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 "should," "expect," "believe," "view," "opportunity," "allow," "continues," "reflects," "typically," "usually," "anticipate," 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. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

• weakness or a decline in the U.S. economy, in particular in New Jersey, New York Metropolitan area (including Long Island) and Florida;
• unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities;
• less than expected cost savings from the maturity, modification or prepayment of long-term borrowings that mature through 2022;
• further prepayment penalties related to the early extinguishment of high cost borrowings;
• less than expected cost savings in 2016 and 2017 from Valley's branch efficiency and cost reduction plans;
• lower than expected cash flows from purchased credit-impaired loans;
• claims and litigation pertaining to fiduciary responsibility, contractual issues, environmental laws and other matters;
• cyber attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;
• Results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
• government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve;
• our inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital requirements (including those resulting from the U.S. implementation of Basel III requirements);
• higher than expected loan losses within one or more segments of our loan portfolio;
• unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors;
• unanticipated credit deterioration in our loan portfolio;
• unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events;
• an unexpected decline in real estate values within our market areas;
• changes in accounting policies or accounting standards, including the potential issuance of new authoritative accounting guidance which may increase the required level of our allowance for credit losses;
• higher than expected income tax expense or tax rates, including increases resulting from changes in tax laws, regulations and case law;
• higher than expected FDIC insurance assessments;
• the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships;
• lack of liquidity to fund our various cash obligations;
• unanticipated reduction in our deposit base;
• potential acquisitions that may disrupt our business;
• declines in value in our investment portfolio, including additional other-than-temporary impairment charges on our investment securities;
• future goodwill impairment due to changes in our business, changes in market conditions, or other factors;
• legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations) subject us to additional regulatory oversight which may result in higher compliance costs and/or require us to change our business model;
• our inability to promptly adapt to technological changes;
• our internal controls and procedures may not be adequate to prevent losses;
• the inability to realize expected revenue synergies from the CNL merger in the amounts or in the timeframe anticipated;
• inability to retain customers and employees, including those of CNL; and
• other unexpected material adverse changes in our operations or earnings.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2015.

We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

SOURCE Valley National Bancorp

Related Links

http://www.valleynationalbank.com