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On October 24, Valley said it was advised by the Treasury that its application under the program was approved. Valley filed an application with the Treasury under such program for the sale of $330 million in Valley nonvoting senior preferred stock to the Treasury.
Valley plans to use the proceeds from this sale for general corporate purposes, which include additional capital to grow lending operations and support acquisitions of other financial institutions which may become available in the current economic downturn.
The company said it has no plan or current need to participate in other aspects of the Treasury's overall TARP program, specifically the sale of troubled assets to the Treasury. Valley said it does plan to voluntarily participate in the FDIC's fee-based expanded insurance program which provides, without limitation, a guarantee on all of Valley's non-interest bearing accounts through December 31, 2009.
Valley's senior preferred shares will pay a cumulative dividend rate of five percent per annum for the first five years and will reset to a rate of nine percent per annum after year five. The shares are callable by Valley at par after three years and may be replaced if Valley were to choose to repurchase them with newly raised equity capital at any time.
In conjunction with the purchase of Valley's senior preferred shares, the Treasury will receive warrants to purchase around 2.5 million in Valley common shares with an aggregate market price equal to $49.5 million or fifteen percent of the senior preferred investment.
The Valley common stock underlying these warrants represents less than two percent of Valley's outstanding common shares at September 30. The exercise price will be the market price of Valley's common stock at the time of issuance, calculated on a twenty-trading day trailing average.
Wayne, New Jersey-based Valley National Bancorp's principal subsidiary, Valley National Bank, currently operates 195 branches in 132 communities serving fourteen counties throughout northern and central New Jersey and Manhattan, Brooklyn and Queens.
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Free annual reports for companies mentioned in the news are available at http://investrend.ar.wilink.com/?level=279 .
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