Market Digest

Valley National Bancorp (“Valley”), the holding company for Valley National Bank, is pleased to announce that it has been chosen as one of the nation’s stronger regional banks to participate in the U.S. Treasury Department’s TARP Capital Purchase Program. On October 24, 2008, Valley was advised by the Treasury that Valley’s application under the program was approved. Valley filed an application with the Treasury under such program for the sale of $330 million in Valley nonvoting senior preferred stock to the Treasury. Valley intends to use the proceeds from this sale for general corporate purposes which include additional capital to grow lending operations and support acquisitions of other financial institutions which may become available in the current economic downturn.

Valley has no plan or current need to participate in other aspects of the Treasury’s overall TARP program, specifically the sale of troubled assets to the Treasury. However, as an added benefit to Valley customers, Valley does plan to voluntarily participate in the FDIC’s fee-based expanded insurance program which provides, without limitation, a guarantee on all of Valley’s non-interest bearing accounts through December 31, 2009.

“We view the terms of the Capital Purchase Program to be favorable and a very attractive low-cost alternative to other capital sources in today’s market,” noted Gerald H. Lipkin, Chairman, President and CEO. Mr. Lipkin added, “Although Valley is a well-capitalized organization, we believe such a program provides an excellent opportunity for healthy strong banks like Valley to participate in and support the recovery of the U.S. economy. Valley chose to voluntarily enter the program in order to shore up the Treasury’s efforts to provide additional long-term funds which should facilitate additional lending. Furthermore, the enhancement to our already solid capital position will provide strategic flexibility to our management team while promoting continued confidence in the Valley brand.”

Valley’s senior preferred shares will pay a cumulative dividend rate of five percent per annum for the first five years and will reset to a rate of nine percent per annum after year five. The shares are callable by Valley at par after three years and may be replaced if Valley were to choose to repurchase them with newly raised equity capital at any time.

In conjunction with the purchase of Valley’s senior preferred shares, the Treasury will receive warrants to purchase approximately 2.5 million in Valley common shares with an aggregate market price equal to $49.5 million or 15 percent of the senior preferred investment. The Valley common stock underlying these warrants represents less than two percent of Valley’s outstanding common shares at September 30, 2008. The exercise price will be the market price of Valley’s common stock at the time of issuance, calculated on a 20-trading day trailing average.

Valley, like other institutions, has not yet been provided with the final documentation and the closing on this purchase is subject to the execution of satisfactory definitive documentation. The purchase, according to the Treasury, will occur within 30 days of the approval and before year-end.

At September 30, 2008, Valley National Bank’s capital ratios were all above the level required to be categorized as “well capitalized.” Valley National Bank’s total risk-based capital, Tier I capital, and leverage capital were 10.12 percent, 8.41 percent, and 6.83 percent, respectively, at September 30, 2008.

Source: Valley National Bancorp