Valley National Bancorp has issued Series B non-cumulative perpetual preferred stock to provide investors with an attractive yield [1, 2].
This issuance allows the bank to leverage its improved net interest income to attract capital while offering a structured return to shareholders [1].
The preferred shares feature a 5.50% fixed-to-floating rate [2]. Reports on the yield vary by source, with some citing an 8% yield for at least three years [1], and others reporting a forward yield of 7.77% [2].
Investors holding the stock will receive a quarterly dividend of $0.4838 per share [2]. The dividend is payable on Oct. 1 [2]. To be eligible for this payment, shareholders must meet the record and ex-dividend date of Sept. 15 [2].
As a perpetual security, the Series B stock does not have a fixed maturity date. The non-cumulative nature of the dividends means that if the bank misses a payment, it is not required to pay those missed dividends to shareholders in the future [2].
The bank's decision to offer these shares comes as it seeks to optimize its balance sheet through diversified funding sources [1].
“Valley National Bancorp has issued Series B non-cumulative perpetual preferred stock”
The issuance of perpetual preferred stock serves as a hybrid financing tool for Valley National Bancorp, sitting between debt and common equity. By offering a competitive yield backed by rising net interest income, the bank can raise capital without diluting common shareholders, though the non-cumulative terms shift the risk of missed payments to the investors.
