Valley National Bancorp in Wayne, N.J., has taken several steps to help it navigate through a difficult interest rate environment.
The $22 billion-asset company said in a press release Tuesday that it prepaid $405 million of Federal Home Loan Bank borrowings that would have otherwise matured in 2018, resulting in a $20 million penalty.
Valley said it refinanced the borrowings, which had a 3.69% rate, with new borrowings at a 2.51% rate. Valley said it does not expect to report a loss tied to the restructuring, though it should save the company about $4.8 million a year.
The company also disclosed that it had terminated an interest rate swap with a notional amount of $125 million. The swap, which was set to mature in 2023, was used to convert certain fixed-rate subordinated debt to a variable rate. As a result, Valley now holds subordinated debt at a 3.32% rate. The valuation adjustment was not disclosed.
Valley said that terminating the swap should reduce its exposure to potential future interest rate increases.