WAYNE, N.J., Jan. 24 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) today reported net income of $0.40 per diluted share or
$39.9 million for the fourth quarter ended December 31, 2004, compared to
$0.39 per diluted share or $38.4 million for the fourth quarter of 2003. All
data reflects the 5 percent stock dividend that was issued May 17, 2004.
Net income for the year ended December 31, 2004 was $1.56 per diluted
share or $154.4 million compared to $1.55 per diluted share or $153.4 million
for the year ended December 31, 2003.
Gerald H. Lipkin, Valley's Chairman, President and CEO stated, "2004
marked another successful year for Valley as we increased our earnings per
share for the ninth consecutive year. In a challenging interest rate,
regulatory and competitive environment Valley earned record net income and
earnings per share, expanded our customer service initiatives, announced the
acquisition of two commercial banks and most importantly continued to manage
the bank for the long run. In doing so, the bank is expected to open between
7-10 de novo branches during 2005, the first of which opened January 3rd in
South Orange, New Jersey.
"The announced acquisitions of NorCrown and Shrewsbury, anticipated to
close during the first quarter or early second quarter of 2005, are both
expected to be accretive within one year, expand our market presence and
accordingly increase our franchise value. Since beginning our 24/7 customer
service hours and Sunday branch banking initiative in November 2003, we have
seen an increase in customer lobby traffic, an increase in accounts per
household and a significant decrease in deposit account turnover as evidenced
by approximately a 50 percent decrease in checking account closings.
"We had a very successful year in lending as our loan portfolio grew
approximately 12.3 percent. This increase was partially the result of our new
business development staff for which we absorbed the expense starting early in
2004 and began to see results of their efforts as the year progressed.
Overall, deposits increased almost 5 percent for the full year while our non-
interest bearing and low cost savings deposits showed the greatest growth.
Municipal deposits continued to increase throughout the year as our government
deposit team expanded their footprint. The positive increases in the balance
sheet during 2004 translated into smaller gains in net interest income than
traditionally experienced by Valley due to a lower net interest margin.
Short-term interest rates began to increase during the latter part of the year
from their historical lows as the Federal Reserve increased the federal funds
rate 5 times. While this helped our loans which adjust with the prime rate, it
also increased our cost of funding. Long-term interest rates did not rise in
conjunction with the federal funds rate increases and therefore, had no impact
on interest rates for new fixed rate long-term loans and investments. This
flattening of the yield curve is making it more difficult to earn the
traditional spreads that Valley is accustomed to earning in addition to
diminishing the positive effect of Valley's asset sensitive balance sheet
position. However, Valley's balance sheet does continue to remain asset
sensitive and should react positively should the yield curve become steeper."
For the quarter and year ended December 31, 2004, Valley achieved a return
on average shareholders' equity (ROE) of 22.70 percent and 22.77 percent, a
return on average assets (ROA) of 1.50 percent and 1.51 percent and an
efficiency ratio of 48.9 and 48.2 percent, respectively. Valley's risk-based
capital ratios at December 31, 2004 were 11.10 percent for Tier 1 capital,
11.93 percent for total capital and 8.28 percent for Tier 1 leverage.
Net interest income for the fourth quarter increased to $95.9 million, an
increase of $1.2 million or 5 percent on an annualized basis over the third
quarter of 2004. The net interest margin on a tax equivalent basis was 3.90
percent or 4 basis points below the third quarter. This decline was mainly
the result of a flattening of the yield curve causing funding costs to
increase faster than yields on fixed rate loans and investments. Net interest
income increased to $372.3 million, an increase of $23.7 million or 6.8
percent over the prior year. The net interest margin on a tax equivalent
basis was 3.94 percent for the twelve months ended December 31, 2004 compared
with 4.04 percent for the same period in 2003. The change for the full year
was mainly attributable to interest rates declining to historic low levels
during 2004 that compressed the net interest margin throughout the banking
industry.
Net charge-offs for 2004 were $7.0 million compared with $6.8 million for
2003, while the fourth quarter of 2004 had net charge-offs of $2.8 million.
The provision for loan losses was $3.2 million for the fourth quarter 2004
compared to $1.5 million for the third quarter and was $8.0 million for the
full year ended December 31, 2004. The provision was higher than the prior
quarter as a result of higher non-performing loans at the end of the quarter.
Total non-performing assets, which include non-accrual loans and other real
estate owned ("OREO"), totaled $30.8 million, or 0.44 percent of loans and
OREO, at December 31, 2004, compared to $23.1 million at December 31, 2003.
Loans past due 90 days or more and still accruing at December 31, 2004
were $2.9 million, or 0.04 percent of $6.9 billion of total loans, compared to
$3.8 million at September 30, 2004 and $2.8 million at December 31, 2003.
Total loans past due in excess of 30 days were 0.90 percent of all loans at
December 31, 2004 compared with 0.55 percent at September 30, 2004 and .92
percent at December 31, 2003.
Non-interest income for the year ended December 31, 2004 decreased
22.1 percent or $23.9 million to $84.3 million mainly due to lower gains from
residential mortgage loan sales, lower securities gains and reduced insurance
commissions. Non-interest income for the fourth quarter of 2004 was
$21.2 million, down $1.8 million or 7.9 percent from $23.0 million for the
fourth quarter of 2003.
Non-interest expense for the year ended December 31, 2004 increased by
1.7 percent or $3.8 million due to higher salary, benefit and occupancy
expenses as a result of new branches and additional regulatory compliance
staff. This was partially offset by a decline in the amortization of loan
servicing rights. In addition, Valley and most other U.S. Banks continue to
be under great pressure to enhance their level of compliance with the US
Patriot Act, Bank Secrecy Act and other anti-money laundering laws and
regulations. Consequently, staffing levels and related operating costs have
increased and Valley expects that these expenses will further increase during
2005.*
The effective income tax rate for the fourth quarter was 29.6 percent,
lower than the effective rate for the full year 2004, as a result of tax
credits and tax benefits from low income housing projects combined with the
results of the analysis of Valley's tax accruals.
Valley National Bancorp is a regional bank holding company headquartered
in Wayne, New Jersey. Its principal subsidiary, Valley National Bank,
currently operates 134 offices located in 88 communities serving 11 counties
throughout northern New Jersey and Manhattan.
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 an "asterisk" (*) or such
forward-looking terminology as "expect," "believe," "view," "opportunity,"
"allow," "continues," "reflects," 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 direction of interest rates, effective
income tax rates, loan prepayment assumptions, levels of loan quality and
origination volume, relationships with major customers, as well as the effects
of unanticipated economic conditions and legal and regulatory barriers
including compliance issues related to AML/BSA compliance and the development
of new tax strategies or the disallowance of prior tax strategies,
consummation of the acquisitions of NorCrown and Shrewsbury including the
receipt of regulatory approval and the ability of Valley to successfully
integrate NorCrown and Shrewsbury without the loss of significant loan and
deposit business. Valley assumes no obligation for updating any such
forward-looking statement at any time.
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
Three Months Ended Twelve Months Ended
(Dollars in thousands, December 31, December 31,
except for share data) 2004 2003 2004 2003
SELECTED FINANCIAL DATA:
Net income $39,851 $38,369 $154,398 $153,415
Net interest income 95,945 88,829 372,319 348,576
Net interest income
- FTE (1) 97,585 90,373 378,708 354,699
Weighted Average Number
of Shares Outstanding:
Diluted 99,297,607 99,160,181 99,178,722 99,223,550
Per share data:
Basic earnings $0.40 $0.39 $1.56 $1.55
Diluted earnings 0.40 0.39 1.56 1.55
Cash dividends declared 0.225 0.21 0.89 0.85
Book value 7.16 6.62 7.16 6.62
Closing stock
price - high 28.44 28.54 28.44 28.54
Closing stock
price - low 25.83 26.76 24.15 21.77
FINANCIAL RATIOS:
Net interest margin
- FTE (1) 3.90% 4.00% 3.94% 4.04%
Annualized return
on average assets 1.50 1.58 1.51 1.63
Annualized return
on average equity 22.70 23.80 22.77 24.21
Efficiency ratio (2) 48.91 46.56 48.19 47.35
SELECTED BALANCE SHEET ITEMS AND RATIOS
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in thousands) 2004 2003 2004 2003
AVERAGE BALANCE
SHEET ITEMS:
Assets $10,644,006 $9,684,356 $10,242,679 $9,399,734
Interest earning
assets 10,003,378 9,045,663 9,616,170 8,771,760
Loans 6,913,293 6,163,441 6,541,993 6,056,439
Interest bearing
liabilities 8,095,754 7,326,062 7,770,425 7,120,683
Deposits 7,528,894 7,218,405 7,373,992 6,947,540
Shareholders' equity 702,219 644,776 678,068 633,744
ALLOWANCE FOR LOAN LOSSES:
Beginning of period $65,324 $65,138 $64,650 $64,087
Provision for
loan losses 3,204 1,250 8,003 7,345
Charge-offs 4,976 2,725 13,138 11,647
Recoveries 2,147 987 6,184 4,865
End of period $65,699 $64,650 $65,699 $64,650
(1) 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.
(2) The efficiency ratio measures Valley's total non-interest expense as a
percentage of net interest income plus total non-interest income.
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
As of December 31,
(Dollars in thousands) 2004 2003
BALANCE SHEET ITEMS:
Assets $10,775,571 $9,880,740
Loans 6,934,315 6,172,409
Deposits 7,518,739 7,162,968
Shareholders' equity 707,598 652,789
CAPITAL RATIOS:
Tier 1 leverage ratio 8.28 % 8.35 %
Risk-based capital - Tier 1 11.10 11.23
Risk-based capital - Total Capital 11.93 12.13
ASSET QUALITY:
Non-accrual loans $30,274 $22,338
Other real estate owned (OREO) 480 797
Total non-performing assets 30,754 23,135
Loans past due 90 days or
more and still accruing 2,870 2,792
ASSET QUALITY RATIOS:
Non-performing assets to total loans
plus other real estate owned (OREO) 0.44 % 0.37 %
Allowance for loan losses to loans 0.95 1.05
Net charge-offs to average loans 0.11 0.11
SHAREHOLDER RELATIONS
Requests for copies of reports providing more detailed financial
statements and analysis, as well as all other inquiries regarding
Shareholder Relations should be directed to Dianne Grenz, Senior
Vice President, Director of Shareholder & Public Relations, Valley
National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by
telephone at (973) 305-3380, by fax at (973) 696-2044 or by e-mail at
dgrenz@valleynationalbank.com.
VALLEY NATIONAL BANCORP
Consolidated Statements of Financial Condition
($ in thousands, except for share data)
December 31,
Assets 2004 2003
Cash and due from banks $163,371 $218,166
Securities:
Available for sale 1,883,729 1,805,680
Held to maturity 1,292,338 1,232,239
Trading account 2,514 4,252
Total securities 3,178,581 3,042,171
Loans held for sale 2,157 5,720
Loans 6,932,158 6,166,689
Less: Allowance for loan losses (65,699) (64,650)
Loans, net 6,866,459 6,102,039
Premises and equipment, net 161,473 128,606
Due from customers on acceptances outstanding 11,294 15,148
Accrued interest receivable 46,737 40,445
Intangible assets 45,888 52,050
Bank owned life insurance 170,602 164,404
Other assets 129,009 111,991
Total assets $10,775,571 $9,880,740
Liabilities
Deposits:
Non-interest bearing $1,768,352 $1,676,764
Interest bearing:
Savings 3,591,986 3,283,716
Time 2,158,401 2,202,488
Total deposits 7,518,739 7,162,968
Federal funds purchased and securities
sold under agreements to repurchase 493,654 349,577
Treasury tax and loan account and
other short-term borrowings 16,637 27,729
Long-term debt 1,890,170 1,547,221
Bank acceptances outstanding 11,294 15,148
Accrued expenses and other liabilities 137,479 125,308
Total liabilities 10,067,973 9,227,951
Shareholders' Equity
Preferred stock, no par value
30,000,000 shares authorized; none issued 0 0
Common stock, no par value,
authorized 157,042,457 shares;
issued 98,891,645 shares in 2004 and
98,912,481 shares in 2003 34,930 33,304
Surplus 437,659 318,599
Retained earnings 232,431 288,313
Unallocated common stock held by the
employee benefit plan (88) (259)
Accumulated other comprehensive gain 3,355 20,531
708,287 660,488
Treasury stock, at cost (27,496 common
shares in 2004 and 306,490 in 2003) (689) (7,699)
Total shareholders' equity 707,598 652,789
Total liabilities and
shareholders' equity $10,775,571 $9,880,740
VALLEY NATIONAL BANCORP
Consolidated Statements of Income
($ in thousands, except for share data) Three Months Ended
December 31,
2004 2003
Interest Income
Interest and fees on loans $100,045 $89,512
Interest and dividends on investment securities 37,163 34,444
Interest on federal funds sold and
other short-term investments 96 230
Total interest income 137,304 124,186
Interest Expense
Interest on deposits:
Savings deposits 7,354 4,831
Time deposits 12,570 11,970
Interest on other borrowings 21,435 18,556
Total interest expense 41,359 35,357
Net Interest Income 95,945 88,829
Provision for loan losses 3,204 1,250
Net interest income after provision for loan losses 92,741 87,579
Non-Interest Income
Trust and investment services 2,118 2,280
Insurance premiums 3,164 3,697
Service charges on deposit accounts 5,126 5,146
Gains on securities transactions, net 1,264 3,253
Fees from loan servicing 1,865 2,326
Gains on sales of loans, net 739 904
Bank owned life insurance 1,554 1,585
Other 5,358 3,819
Total non-interest income 21,188 23,010
Non-Interest Expense
Salary expense 25,386 23,634
Employee benefit expense 7,339 4,666
Net occupancy expense 9,263 8,633
Amortization of intangible assets 1,992 3,050
Other 13,314 12,084
Total non-interest expense 57,294 52,067
Income before income taxes 56,635 58,522
Income tax expense 16,784 20,153
Net Income $39,851 $38,369
Earnings Per Share:
Basic $0.40 $0.39
Diluted $0.40 $0.39
Weighted Average Number of Shares Outstanding:
Basic 98,748,394 98,512,548
Diluted 99,297,607 99,160,181
VALLEY NATIONAL BANCORP
Consolidated Statements of Income
($ in thousands, except for share data) Twelve Months Ended
December 31,
2004 2003
Interest Income
Interest and fees on loans $370,921 $364,091
Interest and dividends on investment securities 147,709 132,785
Interest on federal funds sold and
other short-term investments 296 622
Total interest income 518,926 497,498
Interest Expense
Interest on deposits:
Savings deposits 23,115 22,871
Time deposits 46,832 48,095
Interest on other borrowings 76,660 77,956
Total interest expense 146,607 148,922
Net Interest Income 372,319 348,576
Provision for loan losses 8,003 7,345
Net interest income after
provision for loan losses 364,316 341,231
Non-Interest Income
Trust and investment services 8,432 8,562
Insurance premiums 13,982 17,558
Service charges on deposit accounts 20,242 21,590
Gains on securities transactions, net 6,475 15,606
Fees from loan servicing 8,010 9,359
Gains on sales of loans, net 3,039 12,966
Bank owned life insurance 6,199 6,188
Other 17,949 16,368
Total non-interest income 84,328 108,197
Non-Interest Expense
Salary expense 99,325 97,197
Employee benefit expense 24,465 22,162
Net occupancy expense 36,374 34,234
Amortization of intangible assets 8,964 12,480
Other 50,921 50,205
Total non-interest expense 220,049 216,278
Income before income taxes 228,595 233,150
Income tax expense 74,197 79,735
Net Income $154,398 $153,415
Earnings Per Share:
Basic $1.56 $1.55
Diluted $1.56 $1.55
Weighted Average Number of Shares Outstanding:
Basic 98,671,289 98,695,082
Diluted 99,178,722 99,223,550
Valley National Bancorp
(dollars in thousands)
End of End of End of End of
Period - Period - Period - Period -
12/31/04 09/30/04 06/30/04 12/31/03
Loan Loan Loan Loan
Portfolio Portfolio Portfolio Portfolio
Commercial Loans $1,261,854 $1,316,972 $1,205,739 $1,184,652
Construction 368,120 282,299 254,007 222,748
Residential Mortgage 1,853,708 1,774,827 1,699,035 1,596,859
Commercial Mortgage 1,745,155 1,741,674 1,692,201 1,553,037
Total Mortgage Loans 3,966,983 3,798,800 3,645,243 3,372,644
Home Equity 517,325 510,790 486,962 476,149
Credit Card 9,691 9,433 9,636 10,722
Automobile 1,079,050 1,098,375 1,058,238 1,013,938
Other Consumer 99,412 89,255 101,871 114,304
Total Consumer Loans 1,705,478 1,707,853 1,656,707 1,615,113
Total Loans $6,934,315 $6,823,625 $6,507,689 $6,172,409
Valley National Bancorp
(dollars in thousands)
Quarter End - 12/31/04
Average Avg.
Balance Interest Rate
Assets
Loans $6,913,293 $100,085 5.79%
Taxable Investments 2,749,399 34,191 4.97%
Non-Taxable Investments 322,141 4,572 5.68%
Fed Funds and Other Int. Earning Assets 18,545 96 2.07%
Total Int. Earning Assets 10,003,378 138,944 5.56%
Other Assets 640,628
Total Average Assets $10,644,006
Liabilities and Shareholders' Equity
Savings $3,569,992 $7,354 0.82%
Time Deposits 2,157,664 12,570 2.33%
S/T Borrowings 508,105 2,235 1.76%
Long-term Debt 1,859,993 19,200 4.13%
Interest Bearing Liabilities 8,095,754 41,359 2.04%
Non-Interest Bearing Deposits 1,801,238
Other Liabilities 44,795
Shareholders' Equity 702,219
Total Average Liabilities and
Shareholders' Equity $10,644,006
Net Interest Income and Margin -
tax equivalent basis $97,585 3.90%
Notes:
Interest income is presented on a tax equivalent basis using a 35 percent
federal tax rate.
Loans are stated net of unearned income and include non-accrual loans.
Valley National Bancorp
(dollars in thousands)
Quarter End - 09/30/04
Average Avg.
Balance Interest Rate
Assets
Loans $6,644,741 $94,114 5.67%
Taxable Investments 2,803,510 35,307 5.04%
Non-Taxable Investments 325,127 4,576 5.63%
Fed Funds and Other Int. Earning Assets 16,989 76 1.79%
Total Int. Earning Assets 9,790,367 134,073 5.48%
Other Assets 611,625
Total Average Assets $10,401,992
Liabilities and Shareholders' Equity
Savings $3,491,498 $5,886 0.67%
Time Deposits 2,160,260 11,821 2.19%
S/T Borrowings 484,850 1,603 1.32%
Long-term Debt 1,802,459 18,350 4.07%
Interest Bearing Liabilities 7,939,067 37,660 1.90%
Non-Interest Bearing Deposits 1,762,175
Other Liabilities 34,581
Shareholders' Equity 666,169
Total Average Liabilities and
Shareholders' Equity $10,401,992
Net Interest Income and Margin -
tax equivalent basis $96,413 3.94%
Notes:
Interest income is presented on a tax equivalent basis using a 35 percent
federal tax rate.
Loans are stated net of unearned income and include non-accrual loans.
Valley National Bancorp
(dollars in thousands)
Quarter End - 06/30/04
Average Avg.
Balance Interest Rate
Assets
Loans $6,371,083 $89,002 5.59%
Taxable Investments 2,819,716 33,850 4.80%
Non-Taxable Investments 317,298 4,342 5.47%
Fed Funds and Other Int. Earning Assets 13,882 34 0.98%
Total Int. Earning Assets 9,521,979 127,228 5.34%
Other Assets 620,343
Total Average Assets $10,142,322
Liabilities and Shareholders' Equity
Savings $3,446,731 $5,162 0.60%
Time Deposits 2,167,642 11,038 2.04%
S/T Borrowings 372,815 921 0.99%
Long-term Debt 1,695,362 17,169 4.05%
Interest Bearing Liabilities 7,682,550 34,290 1.79%
Non-Interest Bearing Deposits 1,715,696
Other Liabilities 62,689
Shareholders' Equity 681,387
Total Average Liabilities and
Shareholders' Equity $10,142,322
Net Interest Income and Margin -
tax equivalent basis $92,938 3.90%
Notes:
Interest income is presented on a tax equivalent basis using a 35 percent
federal tax rate.
Loans are stated net of unearned income and include non-accrual loans.
Valley National Bancorp
(dollars in thousands)
Quarter End - 12/31/03
Average Avg.
Balance Interest Rate
Assets
Loans $6,163,441 $89,553 5.81%
Taxable Investments 2,525,018 31,655 5.01%
Non-Taxable Investments 267,097 4,291 6.43%
Fed Funds and Other Int. Earning Assets 90,107 230 1.02%
Total Int. Earning Assets 9,045,663 125,729 5.56%
Other Assets 638,693
Total Average Assets $9,684,356
Liabilities and Shareholders' Equity
Savings $3,267,588 $4,831 0.59%
Time Deposits 2,311,486 11,969 2.07%
S/T Borrowings 199,562 422 0.85%
Long-term Debt 1,547,426 18,134 4.69%
Interest Bearing Liabilities 7,326,062 35,356 1.93%
Non-Interest Bearing Deposits 1,639,331
Other Liabilities 74,187
Shareholders' Equity 644,776
Total Average Liabilities and
Shareholders' Equity $9,684,356
Net Interest Income and Margin -
tax equivalent basis $90,373 4.00%
Notes:
Interest income is presented on a tax equivalent basis using a 35 percent
federal tax rate.
Loans are stated net of unearned income and include non-accrual loans.
SOURCE Valley National Bancorp
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