| Item 1.01 | Entry into a Material Definitive Agreement. |
Pursuant to the Underwriting Agreement (as defined below), on September 20, 2022 (the “Closing Date”), Valley National Bancorp (the “Company”) completed the issuance and sale (the “Offering”) of $150,000,000 aggregate principal amount of the Company’s 6.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Notes”). The Notes were sold pursuant to shelf registration statement on Form S-3 (File No. 333-254696) (the “Registration Statement”), which was filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2021, and became automatically effective on March 25, 2021, a base prospectus dated March 25, 2021 included as part of the Registration Statement, a preliminary prospectus supplement, dated September 15, 2022, filed with the SEC pursuant to Rule 424(b) under the Securities Act, and a final prospectus supplement, dated September 15, 2022, filed with the SEC pursuant to Rule 424(b) under the Securities Act.
On the Closing Date, the Company entered into a Second Supplemental Indenture with U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), in connection with the issuance and terms of the Notes (the “Second Supplemental Indenture”). The Second Supplemental Indenture supplements an indenture dated May 28, 2021 (the “Base Indenture” and, together with the Second Supplemental Indenture, the “Indenture”), between the Company and U.S. Bank National Association, as trustee.
The Notes are the Company’s unsecured, subordinated obligations. Unless earlier redeemed, the Notes will mature on September 30, 2032. From and including the date of issuance to, but excluding September 30, 2027 or any earlier redemption date, the Notes will bear interest at a fixed annual interest rate equal to 6.25%, payable semi-annually in arrears on each March 30 and September 30, commencing on March 30, 2023. From and including September 30, 2027 to, but excluding, the maturity date or the date of earlier redemption, the interest rate will reset quarterly to an annual interest rate equal to a benchmark rate (expected to be three-month term SOFR) plus a spread of 278 basis points (2.78%), payable quarterly in arrears on each March 30, June 30, September 30, and December 30, beginning on December 30, 2027.
The Notes are unsecured and rank subordinate and junior, to the extent and in the manner set forth in the Indenture, in right of payment and upon liquidation of all the Company’s obligations to the holders of senior debt of the Company, including liabilities to general creditors. The Notes rank equally among themselves and with all of the Company’s other subordinated unsecured indebtedness the terms of which provide that such indebtedness is not superior in right of payment to the Notes. The Notes are intended to qualify (subject to applicable limitations) as Tier 2 capital under applicable capital regulations, guidance and interpretations of the Board of Governors of the Federal Reserve System (the “Federal Reserve”).
The Company may, at its option, beginning with the interest payment date of September 30, 2027, and on any interest payment date thereafter, redeem the Notes, in whole at any time or in part from time to time, subject to obtaining the prior approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest to, but excluding, the date of redemption.
The Company may also redeem the Notes at any time prior to their maturity, including prior to September 30, 2027, in whole, but not in part, subject to obtaining the prior approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve, upon the occurrence of a “Tax Event, ” or a “Tier 2 Capital Event,” as described in the Indenture, or upon the Company becoming required to register as an investment company pursuant to the Investment Company Act of 1940, as amended.
Payment of principal on the Notes may be accelerated in the case of certain events of bankruptcy or insolvency involving the Company or the Bank. There is no automatic acceleration or right of acceleration in the case of default in the payment of interest on the Notes or in the performance of any of other obligations under the Notes or the Indenture.
The foregoing summary of the terms of the Indenture and the Notes does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Base Indenture, the Supplemental Indenture and the form of the Notes, which are included herewith as Exhibits 4.1, 4.2 and 4.3, respectively, and are incorporated herein by reference.
