PR Newswire
WAYNE, N.J., Aug. 9, 2016
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:
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.
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SOURCE Valley National Bancorp
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