Junior Subordinated Debentures Issued to Capital Trusts

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Junior Subordinated Debentures Issued to Capital Trusts

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 11)

All of the statutory trusts presented in the table below were acquired in past bank acquisitions, including the Aliant Statutory Trust II acquired from USAB on January 1, 2018. These trusts were established for the sole purpose of issuing trust preferred securities and related trust common securities. The proceeds from such issuances were used by the trust to purchase an equivalent amount of junior subordinated debentures issued by the acquired bank, and now assumed by Valley. The junior subordinated debentures, the sole assets of the trusts, are unsecured obligations of Valley, and are subordinate and junior in right of payment to all present and future senior and subordinated indebtedness and certain other financial obligations of Valley. Valley does not consolidate its capital trusts based on U.S. GAAP but wholly owns all of the common securities of each trust.

The table below summarizes the outstanding junior subordinated debentures and the related trust preferred securities issued by each trust as of December 31, 2018 and 2017:

	GCB Capital Trust III		State Bancorp Capital Trust I		State Bancorp Capital Trust II		Aliant Statutory Trust II
	($ in thousands)
Junior Subordinated Debentures:
December 31, 2018
Carrying value (1)	$	24,743	$	8,924	$	8,337	$	13,366
Contractual principal balance	24,743		10,310		10,310		15,464
December 31, 2017
Carrying value (1)	$	24,743	$	8,824	$	8,207	NA
Contractual principal balance	24,743		10,310		10,310		NA
Annual interest rate (2)	3-mo. LIBOR+1.4%		3-mo. LIBOR+3.45%		3-mo. LIBOR+2.85%		3-mo. LIBOR+1.8%
Stated maturity date	July 30, 2037		November 7, 2032		January 23, 2034		December 15, 2036
Initial call date	July 30, 2017		November 7, 2007		January 23, 2009		December 15, 2011
Trust Preferred Securities:
December 31, 2018 and 2017
Face value	$	24,000	$	10,000	$	10,000	$	15,000
Annual distribution rate (2)	3-mo. LIBOR+1.4%		3-mo. LIBOR+3.45%		3-mo. LIBOR+2.85%		3-mo. LIBOR+1.8%
Issuance date	July 2, 2007		October 29, 2002		December 19, 2003		December 14, 2006
Distribution dates (3)	Quarterly		Quarterly		Quarterly		Quarterly

(1) The carrying values include unamortized purchase accounting adjustments at December 31, 2018 and 2017.

(2) Interest on GCB Capital Trust III was fixed at an annual rate of 6.96 percent until July 30, 2017, thereafter, it resets quarterly to 3-month LIBOR plus 1.4 percent. The annual interest rate for all of the junior subordinated debentures and related trust preferred securities excludes the effect of the purchase accounting adjustments.

(3) All cash distributions are cumulative.

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at the stated maturity date or upon early redemption. The trusts’ ability to pay amounts due on the trust preferred securities is solely dependent upon Valley making payments on the related junior subordinated debentures. Valley’s obligation under the junior subordinated debentures and other relevant trust agreements, in aggregate, constitutes a full and unconditional guarantee by Valley of the trusts’ obligations under the trust preferred securities issued. Under the junior subordinated debenture agreements, Valley has the right to defer payment of interest on the debentures and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity dates in the table above. Currently, Valley has no intention to exercise its right to defer interest payments on the debentures.

The trust preferred securities are included in Valley’s total risk-based capital (as Tier 2 capital) for regulatory purposes at December 31, 2018 and 2017.