Valley National completes share sale to government

The bank, which has branches in New Jersey and New York, received the capital from the government in exchange for the preferred shares and warrants to purchase common stock.

The government received warrants to purchase about 2.3 million shares of Valley National stock at a price of $19.59 as part of the deal. The warrants represent about 1.7 percent of Valley National's outstanding common stock as off Sept. 30.

The government investment, administered by the U.S. Treasury Department, is part of a broader program to invest in banks amid the ongoing credit crisis in an effort to stabilize the financial services sector and spur lending between banks and to consumers and other businesses.

Many banks have been hit hard over the past year-and-a-half by a sharp rise in mortgage defaults and a freezing of credit markets. As some financial firms collapsed in recent months, banks shied away from lending to each other and to customers for fear that losses would mount.

Valley National said it plans to use the new cash for general corporate purposes, including increasing its lending operations and for potential acquisitions.

Shares of Valley National fell 37 cents, or 2 percent, to $18.37 in afternoon trading.