Terms

Series

Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B

Liquidation Preference

$25.00

Coupon Rate

5.5%

Rate Type

Fixed To Floating

Annual Dividend

$1.38

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

September 30, 2022

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Indebtedness And Non-Equity Claims Including 4.55% Subordinated Debentures Due 2025, All Liabilities Of Subsidiaries; Pari Passu With: Series A Preferred Shares, Any Future Parity Preferred Stock; Senior To: Common Stock, Any Future Junior Capital Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Shares Offered

4,000,000

Prospectus Summary

Valley National Bancorp, a New Jersey bank holding company with ~$23 billion in assets, is offering 4,000,000 shares of its Series B Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock at a liquidation preference of $25 per share, listed on the NYSE as VLYPRB. The shares pay a fixed 5.50% per annum (approximately $0.344/quarter) through September 29, 2022, then convert to a floating rate of three-month LIBOR plus 357.8 basis points, payable quarterly on March 30, June 30, September 30, and December 30. Critically, dividends are non-cumulative: if the board does not declare a dividend in any period, that payment is permanently forfeited and investors have no right to recover it. The Series B Preferred ranks senior to Valley's common stock and any future junior preferred, and on parity with its existing Series A Preferred. However, as obligations of the holding company, the shares are structurally subordinated to all liabilities of Valley National Bank and other subsidiaries — since dividends upstream from the bank to the holding company, bank creditors have first claim on subsidiary assets. At the holding company level, the preferred ranks junior to all debt, including Valley's 4.55% Subordinated Debentures due 2025. A regulatory capital treatment event call is available: if the Series B Preferred loses its Tier 1 capital qualification, Valley may redeem all shares (not part) within 90 days at $25 plus declared and unpaid dividends — giving the issuer an escape valve before the September 30, 2022 optional call date. At the $25 offering price, the fixed-period yield is 5.50% annually. Dividends are expected to qualify for the preferential qualified dividend income (QDI) rate for individual investors and the dividends-received deduction (DRD) for corporate holders, though investors should confirm with their tax advisors. Payment dates are March 30, June 30, September 30, and December 30 each year. Two stopper mechanisms can interrupt dividends: (1) if paying a dividend would cause Valley to breach capital adequacy regulations, and (2) if Valley is deferring interest or in default under its junior subordinated debt indentures, which would also block any preferred dividend payments.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Valley National Bancorp defers or defaults on interest under its junior subordinated debt securities indentures, it is prohibited from paying dividends on the Series B Preferred Shares; additionally, dividends cannot be declared if doing so would cause the company to violate applicable capital adequacy regulations.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 71 (Strong)