WAYNE, N.J., July 16 NY-Valley-National
WAYNE, N.J., July 16 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) ("Valley"), the holding company for Valley National Bank, today
announced second quarter and six months results for 2008. Net income for the
second quarter of 2008 was $41.5 million compared to $39.7 million for the
same period in 2007. Adjusted for a five percent stock dividend issued on May
23, 2008, fully diluted earnings per common share were $0.33 for the second
quarter of 2008 compared to $0.31 for the same quarter of 2007. All common
per share data presented below was adjusted to reflect the stock dividend.
The results do not reflect the acquisition of Greater Community Bancorp
("Greater Community"), which was completed on July 1, 2008.
Net income was $73.1 million for the six months ended June 30, 2008
compared to $89.1 million for the same period in 2007. The decline in net
income was mainly attributable to an after tax one-time gain of $10.3 million
($16.4 million pre-tax) recognized on the sale of a Manhattan office building
in the first quarter of 2007 and an after tax decline of $4.6 million ($7.4
million pre-tax) in trading income. Fully diluted earnings per common share
were $0.58 for the six months ended June 30, 2008 as compared to $0.70 per
common share for the six months ended June 30, 2007.
Set forth below are highlights that occurred during the second quarter of
2008:
-- Net interest income on a fully tax equivalent basis increased for the
third consecutive quarter, up $6.9 million from the first quarter of 2008.
The increase was primarily due to a 40 basis point decline in the cost of
interest-bearing liabilities during the quarter. Net interest margin on a
fully tax equivalent basis increased 13 basis points from the first quarter of
2008 to 3.48 percent as the reduced cost of funds and strong loan volume
during the quarter more than offset a 20 basis point decline in the yield on
interest earning assets.
-- Total loans grew by $376.6 million, or 17.4 percent on an annualized
basis, to over $9.0 billion at June 30, 2008 compared to total loans at March
31, 2008 as Valley experienced solid linked quarter growth in commercial
mortgage, residential mortgage, commercial, and automobile loans.
-- Valley's home equity and residential mortgage loan delinquencies
remained below the banking industry averages. At June 30, 2008, Valley's $538
million home equity portfolio consisting of over 14,200 loans had only 11
loans past due 30 days or more. These loans totaled $727 thousand or 0.14
percent of the portfolio. At the same time, Valley's residential mortgage
portfolio totaling $2.2 billion and approximately 9,100 total loans had 49
loans past due 30 days or more. These loans totaled $7.6 million or 0.34
percent of the portfolio. On July 14, 2008, SNL Financial ranked Valley's
home equity loan portfolio the 8th best-performing portfolio among publicly
traded banks and thrifts with more than $100 million in home equity lines of
credit on their books during the twelve months ended March 31, 2008. See
"Credit Quality" section below for more details.
-- Valley National Bank's capital ratios were all above the "well
capitalized" regulatory requirements at June 30, 2008. Valley anticipates no
change in its regular quarterly cash dividend to common shareholders during
the remainder of 2008.
-- Net gains on securities transactions declined $1.1 million from the
linked first quarter of 2008 mainly due to Valley's recognition of an other-
than-temporary impairment charge of $1.4 million ($841 thousand after-taxes)
on the equity securities of two financial institutions and one FHLMC ("Freddie
Mac") government sponsored, investment grade perpetual callable preferred
security.
-- Net trading losses declined $2.9 million from the linked first quarter
of 2008 mainly due to the change in the fair value of Valley's junior
subordinated debentures carried at fair value.
-- A reduction in Valley's deferred tax asset valuation allowance of $6.5
million (See "Income Tax Expense" section below).
-- Valley opened three new branches, including its fourth branch location
in Brooklyn, New York. Valley also opened branches in Jersey City and
Piscataway, New Jersey during the quarter.
Chairman's Comments
Gerald H. Lipkin, Chairman, President and CEO noted that, "We are very
pleased with Valley's second quarter results and the expansion of our net
interest margin. Our core operating results remain solid and Valley's balance
sheet is well-positioned for the future. Reflective of this, loan growth
continued to be a very positive factor for us during the second quarter.
During the second quarter of 2008, Valley's commercial loan portfolio grew
over 24 percent on an annualized basis, while the commercial mortgage,
residential, and automobile loan portfolios also experienced growth. We
believe much of our commercial and commercial mortgage loan growth during the
second quarter was the result of new quality customer relationships which came
from other financial institutions which were unable to compete due to their
own capital limitations caused by today's market.
Valley's primary strength is its straight-forward lending practices.
Management has avoided the use of non-traditional, higher-risk loan products
that could jeopardize precious capital and potentially create solvency and
liquidity issues. Valley's delinquency levels remained relatively low with
total loans past due in excess of 30 days declining to 0.82 percent of our
total loan portfolio of $9.0 billion at June 30, 2008 as compared to 0.93
percent of total loans at March 31, 2008 and 1.00 percent of total loans at
December 31, 2007. These numbers continue to demonstrate the strong
performance of our loan portfolio and management's dedication to conservative
loan underwriting standards.
On July 1, 2008, we were pleased to announce that the merger of Greater
Community with and into Valley was completed just 104 days after Valley's
signing of the merger agreement. The addition of Greater Community's 16 full-
service branches in our primary northern New Jersey market expanded Valley's
branch network to 193 locations and strengthened our position within this very
competitive and desirable market. Most importantly, Valley has focused on the
retention of the branch and lending staff of Greater Community in continuing
Valley's relationship-based approach to customer service. Management
anticipates no change in the level of cost saves forecasted for this in-market
transaction. Full systems integration into Valley is expected to be completed
by August 31, 2008 and we believe that it will be a relatively seamless
transition for all of Greater Community's former customers."
Credit Quality
Management believes that Valley's credit quality is strong with
delinquencies and losses remaining relatively low, despite the difficulties
being reported by many other financial institutions. Valley's focus has been
and continues to be on originating traditional prime grade mortgage loans.
With a loan portfolio totaling over $9.0 billion, net loan charge-offs for the
second quarter of 2008 were $4.9 million compared to $3.9 million for the
first quarter of 2008, and $3.1 million for the second quarter of 2007. The
provision for credit losses was $5.8 million for the second quarter of 2008
compared to $4.0 million for the first quarter of 2008, and $2.4 million for
the second quarter of 2007. The quarterly provision is the result of Valley's
quarterly analyses of the loan portfolio and, among other factors, reflects
the increase in the size and rate of growth of the loan portfolio, the level
of net loan charge-offs, delinquencies and the current economic environment.
The allowance for credit losses as a percentage of total loans declined 3
basis points to 0.84 percent at June 30, 2008 as compared to March 31, 2008
and decreased 4 basis points as compared to December 31, 2007. The quarter
over quarter decline was mainly the result of solid quarter over quarter loan
growth, including expansion in loan categories with historically low net
charge-off rates, such as Valley's residential mortgage portfolio which grew
by 18.7 percent on an annualized basis during the second quarter of 2008. The
following table summarizes the allocation of the allowance for credit losses
to specific loan categories and the allocation as a percentage of each loan
category:
June 30, 2008March 31, 2008
AllocationAllocation
as a % of as a % of
Allowance loan Allowance loan
Allocation categoryAllocationcategory
Loan category:(Dollars in thousands)
Commercial* $35,330 2.10% $32,0712.02%
Mortgage:
Construction 11,676 2.92% 11,7992.96%
Residential mortgage3,364 0.15%3,3100.16%
Commercial mortgage10,177 0.40%9,6110.39%
Total mortgage loans 25,217 0.49% 24,7200.50%
Consumer:
Home equity 1,549 0.29%1,6110.30%
Other consumer 10,041 0.61%9,7170.62%
Total consumer loans 11,590 0.53% 11,3280.54%
Unallocated 3,812NA 6,911 NA
$75,949 0.84% $75,0300.87%
* Includes the reserve for unfunded letters of credit
December 31, 2007
Allocation
as a % of
Allowance loan
Allocation category
Loan category: (Dollars in thousands)
Commercial* $31,6382.02%
Mortgage:
Construction11,7482.92%
Residential mortgage 3,1240.15%
Commercial mortgage 8,7880.37%
Total mortgage loans 23,6600.49%
Consumer:
Home equity 1,6340.29%
Other consumer 9,1810.60%
Total consumer loans 10,8150.52%
Unallocated8,822 NA
$74,9350.88%
* Includes the reserve for unfunded letters of credit
Total non-performing assets, consisting of non-accrual loans, other real
estate owned and other repossessed assets, totaled $36.1 million, or 0.40
percent of loans at June 30, 2008 compared to $33.3 million, or 0.38 percent
of loans at March 31, 2008.
Loans past due 90 days or more and still accruing increased $3.4 million
to $11.2 million, or 0.12 percent of total loans at June 30, 2008 compared to
$7.8 million, or 0.09 percent at March 31, 2008 due to a $3.4 million increase
in matured performing loans in the normal process of renewal. Loans past due
90 days or more and still accruing include matured performing loans in the
normal process of renewal which totaled approximately $5.6 million and $2.2
million at June 30, 2008 and March 31, 2008, respectively. Total loans past
due in excess of 30 days declined to 0.82 percent of total loans at June 30,
2008 compared with 0.93 percent of total loans at March 31, 2008 and include
matured performing loans in the normal process of renewal totaling
approximately $10.7 million and $10.6 million at June 30, 2008 and March 31,
2008, respectively.
Loans and Deposits
During the quarter, loans increased $376.6 million, or 17.4 percent on an
annualized basis, to $9.0 billion at June 30, 2008. The linked quarter
increase in loans is mainly comprised of increases in commercial mortgage,
residential mortgage, commercial, automobile and other consumer loans of
$120.9 million, $99.2 million, $96.1 million, $48.5 million and $15.8 million,
respectively, partially offset by a $4.2 million decrease in home equity
loans. Valley's lending operations continue to benefit from the dislocation
in the credit markets and the expansion of its lending teams through Valley's
growing branch network.
During the quarter, deposits decreased $40.2 million, or 1.9 percent on an
annualized basis, to approximately $8.4 billion at June 30, 2008 mainly due to
a $75.9 million decrease in time deposits as older high yielding certificates
of deposit matured. Offsetting the decrease in time deposits, non-interest
bearing accounts increased $22.3 million and lower cost savings, NOW, and
money market accounts increased $13.3 million during the quarter. Much of the
increases continue to come from deposit initiatives at Valley's de novo
branches, as well as increased customer demand for such products in light of
the turmoil in the current financial markets. Future deposit growth is
expected to be dependent on earning asset demand combined with the rates
dictated by market competition versus the cost of alternative funding sources.
Investments
As part of management's regular quarterly review for impairment of
marketable securities, Valley recognized an other-than-temporary impairment
charge of $1.4 million ($841 thousand after-taxes) on equity securities of two
financial institutions and one Freddie Mac government sponsored, investment
grade perpetual callable preferred security. Prior to the impairment charge,
these investment securities had a total book value of approximately $6.5
million.
At June 30, 2008, Valley owned a total of eleven investment grade
perpetual callable preferred securities issued by either Freddie Mac or Fannie
Mae with a total book value of $78.7 million and unrealized losses totaling
$3.5 million. The continued turbulence in the residential and sub-prime
markets has caused these investments to further decline in value. Valley
continues to closely monitor these investments, as well as the entire
investment portfolio. Although, Valley believes the recent declines in market
value are temporary, Valley cannot guarantee that it will not need to record
additional impairment charges if market values do not recover in the future.
Net Interest Income and Margin
Net interest income on a tax equivalent basis was $103.9 million for the
second quarter of 2008, a $6.5 million increase from the same quarter of 2007
and an increase of $6.9 million from the linked quarter ended March 31, 2008.
The linked quarter increase was mainly a result of a decline in funding costs
of $7.3 million, or 40 basis points, and strong loan growth, partially offset
by a 20 basis point decrease in yield on average interest earning assets. The
declines in funding cost and the yield on average interest earning assets
resulted mainly from a decrease in interest rates as the average target
Federal funds rate decreased 114 basis points from the linked quarter in
response to four rate cuts by the Federal Reserve totaling 225 basis points
over the first six months of 2008.
The net interest margin on a tax equivalent basis was 3.48 percent for the
second quarter of 2008, an increase of 13 basis points from 3.35 percent for
the linked quarter ended March 31, 2008 and an increase of 3 basis points from
3.45 percent for the prior year second quarter. The cost of average interest
bearing liabilities decreased 40 basis points from the first quarter of 2008
mainly due to a decrease in the cost of deposits. The yield on average
interest earning assets decreased by 20 basis points on a linked quarter basis
mainly due to a 30 basis point decrease in yield on average total loans as
compared to the three months ended March 31, 2008. The decrease in yield on
average total loans was partially the result of the Federal Reserve rate cuts
during the six months ended June 30, 2008.
Valley's cost of total deposits remained relatively low by industry
standards at 1.83 percent for the second quarter of 2008 compared to 2.18
percent for the three months ended March 31, 2008. The decrease of 35 basis
points was primarily due to lower interest rates on savings, NOW and money
market accounts, and normal repricing of time deposit maturities at lower
interest rates during the second quarter of 2008.
Non-Interest Income
Second quarter of 2008 compared with second quarter of 2007
Non-interest income for the second quarter of 2008 decreased $4.4 million,
or 19.9 percent from $22.4 million for the quarter ended June 30, 2007 mainly
due to a $2.3 million decline in net gains on sales of loans as Valley sold
approximately $240 million of residential mortgage loans held for sale during
the 2007 period. Net gains on securities transactions decreased $1.0 million
as compared to the second quarter of 2007 due to Valley's recognition of an
other-than-temporary impairment charge of $1.4 million ($841 thousand after-
taxes) on equity securities issued by two financial institutions and one
Freddie Mac government sponsored perpetual callable preferred security during
the second quarter of 2008. Insurance premiums also declined $539 thousand
due to higher sales volume during the second quarter of 2007.
Second quarter of 2008 compared with first quarter of 2008
Non-interest income for the second quarter of 2008 decreased approximately
$1.2 million to $18.0 million for the three months ended June 30, 2008 from
$19.2 million for the quarter ended March 31, 2008. Other non-interest income
decreased $2.0 million from the first quarter of 2008 mainly due to a $1.6
million gain in the prior quarter resulting from the mandatory redemption of a
portion of the Class B Visa (member bank) shares as part of the Visa Inc.
initial public offering that occurred in March of 2008. Insurance premiums
declined $1.1 million in the second quarter due to higher quarterly bonus
commissions received from insurance carriers during the first quarter of 2008.
Net gains on securities transactions also declined $1.1 million during the
second quarter mainly due to Valley's recognition of an other-than-temporary
impairment charge of $1.4 million ($841 thousand after-taxes) on equity
securities issued by two financial institutions and one Freddie Mac preferred
security. Partially offsetting these decreases, net trading losses declined
$2.9 million from the linked first quarter of 2008 mainly due to the change in
the fair value of Valley's junior subordinated debentures carried at fair
value.
Non-Interest Expense
Second quarter of 2008 compared with second quarter of 2007
Non-interest expense increased by $368 thousand to $64.0 million for the
quarter ended June 30, 2008 from $63.6 million for the quarter ended June 30,
2007. Professional and legal fees increased $485 thousand and salary and
employee benefits expense increased by a combined $405 thousand as compared to
the second quarter of 2007 mainly due to organizational growth through the
expansion of Valley's branch network. Advertising expense declined $465
thousand as compared to the 2007 period due to a reduction in Valley branding
promotions in 2008.
Second quarter of 2008 compared with first quarter of 2008
Non-interest expense decreased $3.5 million, or 5.2 percent to $64.0
million for the second quarter of 2008 from $67.5 million for the linked
quarter ended March 31, 2008. Salary and employee benefits decreased $2.1
million mainly due to a $1.0 million decrease in stock award expense during
the second quarter of 2008 mostly related to immediate expense recognized for
awards granted to several retirement eligible employees during the first
quarter of 2008, as well as a decline in payroll taxes. Net occupancy and
equipment expense also decreased $706 thousand from the linked quarter as
Valley experienced normal seasonal declines in utilities and other maintenance
expenses.
Income Tax Expense
Income tax expense was $9.3 million for the second quarter of 2008,
reflecting an effective tax rate of 18.3 percent, compared with $12.5 million
for the second quarter of 2007, reflecting an effective tax rate of 24.0
percent. The decrease compared to the second quarter of 2007 was primarily
due to a reduction in Valley's deferred tax asset valuation allowance of $6.5
million during the second quarter of 2008, partially offset by increased state
taxes caused by tax law changes in the State of New York during 2008.
For the third and fourth quarters of 2008, Valley anticipates that its
effective tax rate will approximate 29 percent as compared to 22.4 percent for
the six months ended June 30, 2008. The rate is projected based upon
management's judgment regarding future results and could vary due to changes
in income tax planning strategies and federal and state income tax laws.
De novo Branch Program
In the second quarter of 2008, Valley continued its branch expansion plan
which focuses on finding attractive building sites and expanding our presence
in the New Jersey counties and towns neighboring our current office locations,
as well as in Manhattan, Kings and Queens Counties in New York. During the
first six months of 2008, eight new branch offices were opened, including
Valley's first two locations in Queens and its fourth branch office in
Brooklyn. Valley anticipates opening approximately six additional de novo
branches through the remainder of 2008. Generally, new branches can add
immediate franchise value; however, the additional operating costs and capital
requirement will have a negative impact on non-interest expense and net income
for several years as the branch operations become individually profitable.
About Valley
Valley is a regional bank holding company, headquartered in Wayne, New
Jersey, with nearly $14.0 billion in assets after its completion of the merger
with Greater Community on July 1, 2008. Its principal subsidiary, Valley
National Bank, currently operates 193 branches in 131 communities serving 14
counties throughout northern and central New Jersey and Manhattan, Brooklyn
and Queens. Valley is the largest commercial bank headquartered in New Jersey
and is committed to providing the most convenient service, the latest in
product innovations and an experienced and knowledgeable staff with a high
priority on friendly customer service 24 hours a day, 7 days a week. Valley
offers a wide range of deposit products, mortgage loans and cash management
services to consumers and businesses including products tailored for the
medical, insurance and leasing business. Valley's comprehensive delivery
channels enable customers to bank in person, by telephone or online.
For more information about Valley National Bank and its products and
services, please visit www.valleynationalbank.com or call Customer Service
24/7 at 1-800-522-4100.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements are not
historical facts and include expressions about management's confidence and
strategies and management's expectations about new and existing programs and
products, relationships, opportunities, taxation, technology and market
conditions. These statements may be identified by such forward-looking
terminology as "expect," "believe," "view," "opportunity," "allow,"
"continues," "reflects," "typically," "usually," "anticipate," or similar
statements or variations of such terms. Such forward-looking statements
involve certain risks and uncertainties. Actual results may differ materially
from such forward-looking statements. Factors that may cause actual results to
differ from those contemplated by such forward-looking statements include,
among others, the following: unanticipated changes in the financial markets
and the resulting unanticipated effects on financial instruments in Valley's
investment portfolio; unanticipated changes in the direction of interest
rates; volatility in earnings due to certain financial assets and liabilities
held at fair value; the occurrence of an other-than-temporary impairment to
investment securities classified as available for sale or held to maturity;
stronger competition from banks, other financial institutions and other
companies; changes in loan, investment and mortgage prepayment assumptions;
insufficient allowance for credit losses; a higher level of net loan charge-
offs and delinquencies than anticipated; the inability to realize expected
cost savings and synergies from the merger of Greater Community with Valley in
the amounts or in the timeframe anticipated; material adverse changes in
Valley's operations or earnings; the inability to retain Greater Community's
customers and employees; a decline in the economy in Valley's primary market
areas, mainly in New Jersey and New York; changes in relationships with major
customers; changes in effective income tax rates; higher or lower cash flow
levels than anticipated; inability to hire or retain qualified employees; a
decline in the levels of deposits or loss of alternate funding sources; a
decrease in loan origination volume; a change in legal and regulatory barriers
including issues related to compliance with anti-money laundering ("AML") and
bank secrecy act ("BSA") laws; adoption, interpretation and implementation of
new or pre-existing accounting pronouncements; the development of new tax
strategies or the disallowance of prior tax strategies; operational risks,
including the risk of fraud by employees or outsiders and unanticipated
litigation pertaining to Valley's fiduciary responsibility; and the inability
to successfully implement new lines of business or new products and services.
Valley National Bancorp
Consolidated Financial Highlights
Selected Financial Data
Three Months Ended Six Months Ended
(in thousands, June 30, June 30,
except for share data) 2008 2007 20082007
FINANCIAL DATA:
Net interest income$102,578 $95,781 $198,160$191,953
Net interest income
- FTE (2) 103,915 97,382200,940 195,150
Non-interest income 17,954 22,403 37,181 62,059
Non-interest expense 63,959 63,591131,437 126,404
Income tax expense9,290 12,526 21,038 34,197
Net income 41,483 39,679 73,066 89,113
Weighted average number
of shares outstanding (3):
Basic 125,954,880 126,305,781125,923,025 126,619,527
Diluted126,068,172 126,816,438126,041,018 127,141,695
Per share data (3):
Basic earnings $0.33 $0.31 $0.58 $0.70
Diluted earnings 0.330.31 0.580.70
Cash dividends declared 0.200.20 0.400.40
Book value7.557.35 7.557.35
Tangible book value (1) 5.955.69 5.955.69
Closing stock price - high 19.31 23.70 19.49 23.98
Closing stock price - low15.77 21.35 15.77 21.35
FINANCIAL RATIOS:
Net interest margin 3.44%3.39% 3.37% 3.39%
Net interest margin -
FTE (2) 3.48 3.45 3.42 3.45
Annualized return on
average assets 1.28 1.30 1.14 1.46
Annualized return on average
shareholders' equity17.2016.98 15.24 19.25
Annualized return on average
tangible shareholders'
equity (1) 21.7621.89 19.33 24.90
Efficiency ratio (4) 53.0653.81 55.85 49.76
AVERAGE BALANCE SHEET ITEMS:
Assets $12,960,231 $12,195,790$12,771,342 $12,177,491
Interest earning
assets 11,940,528 11,299,934 11,758,613 11,310,493
Loans8,897,0048,181,248 8,718,408 8,236,758
Interest bearing
liabilities10,024,2609,305,357 9,856,731 9,308,699
Deposits 8,353,9008,339,489 8,267,683 8,358,654
Shareholders' equity 964,914 934,727959,077 925,760
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
Three Months Ended Six Months Ended
(Dollars in thousands) June 30, June 30,
2008 2007 2008 2007
ALLOWANCE FOR CREDIT LOSSES:
Beginning of period $75,030 $75,533 $74,935 $74,718
Provision for credit losses 5,800 2,388 9,800 4,298
Charge-offs (5,447) (4,058) (10,049) (5,788)
Recoveries 566 912 1,263 1,547
End of period $75,949 $74,775 $75,949 $74,775
Components:
Allowance for loan losses $73,729 $72,442 $73,729 $72,442
Reserve for unfunded letters of
credit 2,220 2,333 2,220 2,333
Allowance for credit losses$75,949 $74,775 $75,949 $74,775
As of June 30,
2008 2007
BALANCE SHEET ITEMS:
Assets $12,987,718 $12,319,087
Loans 9,044,095 8,180,141
Deposits 8,372,403 8,332,469
Shareholders' equity951,331 926,602
CAPITAL RATIOS:
Tier 1 leverage ratio 7.51% 7.79%
Risk-based capital - Tier 19.51 9.99
Risk-based capital - Total Capital11.25 11.86
ASSET QUALITY:
Non-accrual loans $27,559 $28,843
Other real estate owned 4,416 1,055
Other repossessed assets 4,158 1,044
Total non-performing assets $36,133 $30,942
Loans past due 90 days or more and
still accruing $11,249$6,686
ASSET QUALITY RATIOS:
Non-performing assets to total loans 0.40%0.38%
Loans past due 30 days or more to total loans 0.82 0.80
Allowance for credit losses to total loans 0.84 0.91
Annualized net charge-offs to average loans0.20 0.10
Valley National Bancorp
Consolidated Financial Highlights
NOTES TO SELECTED FINANCIAL DATA
(1) This press release contains certain supplemental financial
information, described in the following notes, which has been
determined by methods other than Generally Accepted Accounting
Principles ("GAAP") that management uses in its analysis of Valley's
performance. Management believes these non-GAAP financial measures
provide information useful to investors in understanding Valley's
financial results and facilitates comparisons with the performance of
peers within the financial services industry.
Tangible book value and return on average tangible equity, which
represent non-GAAP measures, are computed as follows:
- Tangible book value is computed by dividing total shareholders'
equity less goodwill and other intangible assets by shares
outstanding.
- Return on average tangible equity is computed by dividing net
income by average shareholders' equity less average goodwill and
average identifiable intangible assets.
Three Months EndedSix Months Ended
(Dollars in thousands,June 30, June 30,
except for share data) 20082007 20082007
Tangible Book Value
Common shares
outstanding 125,975,875 126,033,258 125,975,875 126,033,258
Shareholders' equity$951,331$926,602 $951,331$926,602
Less: Goodwill and other
intangible assets201,738 209,731 201,738 209,731
Tangible shareholders'
equity $749,593$716,871 $749,593$716,871
Tangible book value$5.95 $5.69$5.95 $5.69
Return on Average Tangible
Equity
Net income $41,483 $39,679 $73,066 $89,113
Average shareholders'
equity $964,914$934,727 $959,077$925,760
Less: Average goodwill
and other intangible
assets 202,410 209,714 203,104 209,956
Average tangible
shareholders' equity $762,504$725,013 $755,973$715,804
Annualized return on
average tangible
shareholders' equity 21.76% 21.89% 19.33% 24.90%
(2) Net interest income and net interest margin are presented on a tax
equivalent basis using a 35 percent federal tax rate. Valley believes
that this presentation provides comparability of net interest income
and net interest margin arising from both taxable and tax-exempt
sources and is consistent with industry practice and SEC rules.
(3) Share data reflects the five percent stock dividend issued on May 23,
2008.
(4) The efficiency ratio measures Valley's total non-interest expense as a
percentage of net interest income plus total non-interest income.
SHAREHOLDER RELATIONS
Requests for copies of reports and/or other inquiries should be directed
to Dianne Grenz, Director of Shareholder and Public Relations, Valley
National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone
at (973) 305-3380, by fax at (973) 696-2044 or by e-mail at
dgrenz@valleynationalbank.com.
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
($ in thousands, except for share data)
June 30, December 31,
20082007
Assets
Cash and due from banks $277,208 $218,896
Interest bearing deposits with banks 9,4739,569
Federal funds sold36,3009,000
Investment securities:
Held to maturity, fair value of
$605,708 at June 30, 2008 and
$548,353 at December 31, 2007 651,156 556,113
Available for sale1,864,6961,606,410
Trading securities 67,457 722,577
Total investment securities 2,583,3092,885,100
Loans held for sale, at fair value 4,1622,984
Loans 9,044,0958,496,221
Less: Allowance for loan losses (73,729) (72,664)
Net loans 8,970,3668,423,557
Premises and equipment, net 235,645 227,553
Bank owned life insurance279,758 273,613
Accrued interest receivable 54,699 56,578
Due from customers on acceptances
outstanding 5,5748,875
Goodwill 179,735 179,835
Other intangible assets, net 22,003 24,712
Other assets 329,486 428,687
Total Assets $12,987,718 $12,748,959
Liabilities
Deposits:
Non-interest bearing $1,973,667 $1,929,555
Interest bearing
Savings, NOW and money market3,463,3903,382,474
Time 2,935,3462,778,975
Total deposits 8,372,4038,091,004
Short-term borrowings432,560 605,154
Long-term borrowings (includes fair
value of $41,359 for a Federal Home
Loan Bank advance at December 31, 2007) 2,949,1522,801,195
Junior subordinated debentures
issued to capital trust, at fair value 162,969 163,233
Bank acceptances outstanding 5,5748,875
Accrued expenses and other liabilities 113,729 130,438
Total Liabilities 12,036,387 11,799,899
Shareholders' Equity*
Preferred stock, no par value,
authorized 30,000,000 shares; none issued --
Common stock, no par value,
authorized 190,886,088 shares;
issued 128,493,557
shares at June 30, 2008 and
128,503,294 shares at December 31, 2007 45,287 43,185
Surplus 879,360 879,892
Retained earnings125,906 104,225
Accumulated other comprehensive loss (37,435) (12,982)
Treasury stock, at cost (2,517,682
common shares at June 30, 2008 and
2,659,220 common shares at
December 31, 2007) (61,787) (65,260)
Total Shareholders' Equity951,331 949,060
Total Liabilities and
Shareholders' Equity $12,987,718 $12,748,959
* Share data reflects the 5% common stock dividend issued on May 23, 2008.
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($ in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Interest Income
Interest and fees on
loans $134,613 $139,588 $270,242 $278,535
Interest and dividends
on investment securities:
Taxable 36,065 32,477 70,207 65,525
Tax-exempt 2,4702,9105,1355,807
Dividends2,3451,9934,5974,030
Interest on federal
funds sold and other
short-term
investments4064,1881,9026,388
Total interest income 175,899 181,156 352,083 360,285
Interest Expense
Interest on deposits:
Savings, NOW and
money market 11,155 19,216 25,220 38,634
Time27,162 33,143 57,650 64,907
Interest on short-term
borrowings 2,2124,5224,5198,500
Interest on long-term
borrowings and junior
subordinated debentures 32,792 28,494 66,534 56,291
Total interest expense 73,321 85,375 153,923 168,332
Net Interest Income 102,578 95,781 198,160 191,953
Provision for credit
losses 5,8002,3889,8004,298
Net interest income
after provision for
credit losses 96,778 93,393 188,360 187,655
Non-Interest Income
Trust and investment
services 1,7441,8413,5123,621
Insurance premiums2,2642,8035,6365,764
Service charges on
deposit accounts 7,0416,946 13,622 12,642
(Losses) gains on
securities transactions,
net (958) 44 (813) 70
Trading (losses) gains, net(301)(121) (3,492) 3,905
Fees from loan servicing 1,1951,3942,4472,784
Gains on sales of loans, net3912,691 7244,362
(Losses) gains on sale
of assets, net (8) 230 85 16,603
Bank owned life insurance 2,9052,8886,1455,015
Other 3,6813,6879,3157,293
Total non-interest income 17,954 22,403 37,181 62,059
Non-Interest Expense
Salary expense 30,138 29,152 60,301 57,680
Employee benefit expense 6,8977,478 15,852 15,439
Net occupancy and
equipment expense 12,775 12,698 26,256 24,714
Amortization of intangible
assets 1,4021,8663,1483,790
Professional and legal fees 1,8971,4124,1863,067
Advertising 341 806 7171,742
Other10,509 10,179 20,977 19,972
Total non-interest expense 63,959 63,591 131,437 126,404
Income before income taxes 50,773 52,205 94,104 123,310
Income tax expense9,290 12,526 21,038 34,197
Net Income $41,483 $39,679 $73,066 $89,113
Earnings Per Share:*
Basic $0.33$0.31$0.58$0.70
Diluted 0.33 0.31 0.58 0.70
Cash Dividends
Declared Per Common Share*0.20 0.20 0.40 0.40
Weighted Average
Number of Shares
Outstanding:*
Basic125,954,880 126,305,781 125,923,025 126,619,527
Diluted 126,068,172 126,816,438 126,041,018 127,141,695
* Share data reflects the 5% common stock dividend issued on May 23, 2008.
Valley National Bancorp
(dollars in thousands)
For the periods ended
Loan Portfolio6/30/2008 3/31/2008 12/31/2007 9/30/2007 6/30/2007
Commercial Loans $1,680,337 $1,584,190 $1,563,150 $1,665,169 $1,517,184
Mortgage Loans:
Construction 399,279 399,069 402,806 408,969470,592
Residential
Mortgage 2,228,197 2,128,949 2,063,242 1,933,321 1,873,943
Commercial
Mortgage 2,564,605 2,443,719 2,370,345 2,282,669 2,262,290
Total Mortgage5,192,081 4,971,737 4,836,393 4,624,959 4,606,825
Loans
Consumer Loans:
Home Equity 537,913 542,162 554,830 554,859555,306
Credit Card 9,459 9,338 10,077 9,290 9,105
Automobile 1,531,537 1,483,067 1,447,838 1,433,178 1,391,801
Other Consumer 92,768 76,990 83,933 83,009 99,920
Total Consumer
Loans2,171,677 2,111,557 2,096,678 2,080,336 2,056,132
Total Loans $9,044,095 $8,667,484 $8,496,221 $8,370,464 $8,180,141
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
Quarter End - 6/30/2008
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,897,004$134,619 6.05%
Taxable investments (3)2,723,835 38,410 5.64%
Tax-exempt investments
(1)(3) 244,551 3,800 6.22%
Federal funds sold and other
interest bearing deposits75,138 406 2.16%
Total interest earning
assets 11,940,528 177,235 5.94%
Other assets 1,019,703
Total Assets $12,960,231
Liabilities and shareholders'
equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,479,046 $11,155 1.28%
Time deposits 2,981,166 27,162 3.64%
Short-term borrowings555,799 2,212 1.59%
Long-term borrowings (4) 3,008,249 32,792 4.36%
Total interest bearing
liabilities 10,024,260 73,321 2.93%
Non-interest bearing
deposits1,893,688
Other liabilities77,369
Shareholders' equity964,914
Total liabilities and
shareholders' equity $12,960,231
Net interest income/interest
rate spread (5)103,9143.01%
Tax equivalent adjustment (1,336)
Net interest income, as
reported $102,578
Net interest margin (6) 3.44%
Tax equivalent effect0.04%
Net interest margin on a
fully tax equivalent
basis (6) 3.48%
Quarter End - 3/31/2008
AverageAvg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,539,812$135,638 6.35%
Taxable investments (3)2,590,800 36,394 5.62%
Tax-exempt investments
(1)(3) 254,701 4,100 6.44%
Federal funds sold and other
interest bearing deposits 191,384 1,496 3.13%
Total interest earning
assets 11,576,697 177,628 6.14%
Other assets 1,005,756
Total Assets $12,582,453
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,386,570 $14,065 1.66%
Time deposits 2,918,671 30,488 4.18%
Short-term borrowings406,726 2,307 2.27%
Long-term borrowings (4) 2,977,234 33,742 4.53%
Total interest bearing
liabilities 9,689,201 80,602 3.33%
Non-interest bearing deposits 1,876,223
Other liabilities63,789
Shareholders' equity953,240
Total liabilities and
shareholders' equity $12,582,453
Net interest income/interest
rate spread (5)97,026 2.81%
Tax equivalent adjustment(1,444)
Net interest income, as
reported $95,582
Net interest margin (6) 3.30%
Tax equivalent effect0.05%
Net interest margin on a
fully tax equivalent
basis (6) 3.35%
Quarter End - 12/31/07
AverageAvg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,362,192$140,365 6.71%
Taxable investments (3)2,649,378 37,684 5.69%
Tax-exempt investments
(1)(3) 262,269 4,178 6.37%
Federal funds sold and
other interest bearing
deposits69,533 809 4.65%
Total interest earning
assets 11,343,372 183,036 6.45%
Other assets 1,037,171
Total Assets$12,380,543
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,407,805 $17,825 2.09%
Time deposits 2,969,684 33,876 4.56%
Short-term borrowings487,852 4,489 3.68%
Long-term borrowings (4) 2,548,503 30,055 4.72%
Total interest bearing
liabilities 9,413,844 86,245 3.66%
Non-interest bearing deposits 1,929,133
Other liabilities90,122
Shareholders' equity947,444
Total liabilities and
shareholders' equity $12,380,543
Net interest income/interest
rate spread (5) 96,7912.79%
Tax equivalent adjustment (1,473)
Net interest income, as
reported $95,318
Net interest margin (6) 3.36%
Tax equivalent effect0.05%
Net interest margin on a
fully tax equivalent
basis (6) 3.41%
Quarter End - 9/30/07
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,207,941$141,210 6.88%
Taxable investments (3)2,549,294 35,732 5.61%
Tax-exempt investments
(1)(3) 260,094 4,223 6.49%
Federal funds sold and other
interest bearing deposits 267,262 3,505 5.25%
Total interest
earning assets 11,284,591 184,670 6.55%
Other assets931,828
Total Assets$12,216,419
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,430,218 $19,236 2.24%
Time deposits 3,055,620 35,891 4.70%
Short-term borrowings441,227 4,656 4.22%
Long-term borrowings (4) 2,453,424 28,962 4.72%
Total interest bearing
liabilities9,380,489 88,745 3.78%
Non-interest bearing deposits 1,903,502
Other liabilities 1,069
Shareholders' equity931,359
Total liabilities and
shareholders' equity $12,216,419
Net interest income/interest
rate spread (5) 95,9252.77%
Tax equivalent adjustment (1,511)
Net interest income, as
reported $94,414
Net interest margin (6) 3.35%
Tax equivalent effect0.05%
Net interest margin on a
fully tax equivalent
basis (6) 3.40%
Quarter End - 6/30/07
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,181,248$139,622 6.83%
Taxable investments (3)2,525,972 34,470 5.46%
Tax-exempt investments
(1)(3) 277,274 4,477 6.46%
Federal funds sold and other
interest bearing deposits 315,440 4,188 5.31%
Total interest earning
assets 11,299,934 182,757 6.47%
Other assets895,856
Total Assets$12,195,790
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,503,061 $19,216 2.19%
Time deposits 2,898,393 33,143 4.57%
Short-term borrowings419,937 4,522 4.31%
Long-term borrowings (4) 2,483,966 28,494 4.59%
Total interest bearing
liabilities9,305,357 85,375 3.67%
Non-interest bearing deposits 1,938,035
Other liabilities17,671
Shareholders' equity934,727
Total liabilities and
shareholders' equity $12,195,790
Net interest income/interest
rate spread (5) 97,3822.80%
Tax equivalent adjustment (1,601)
Net interest income, as
reported $95,781
Net interest margin (6) 3.39%
Tax equivalent effect0.06%
Net interest margin on a
fully tax equivalent
basis (6) 3.45%
(1) Interest income is presented on a tax equivalent basis using a 35
percent federal tax rate.
(2) Loans are stated net of unearned income and include non-accrual loans.
(3) The yield for securities that are classified as available for
sale is based on the average historical amortized cost.
(4) Includes junior subordinated debentures issued to capital trusts which
are presented separately on the consolidated statements of condition.
(5) Interest rate spread represents the difference between the average
yield on interest earning assets and the average cost of interest
bearing liabilities and is presented on a fully tax equivalent basis.
(6) Net interest income as a percentage of total average interest earning
assets.
SOURCE Valley National Bancorp
