WAYNE, N.J., April 5 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) ("Valley") expects to release its 2007 first quarter earnings
after the market closes on Wednesday, April 18, 2007. Valley anticipates
reporting earnings above analyst estimates due to several events which
occurred during the quarter.
On March 23, 2007, Valley sold a nine-story building in Manhattan for
approximately $37.5 million while simultaneously entering into a long-term
lease for its branch office located on the first floor. Valley elected to
sell the property because it was not a major occupant of the building and
the asset, monetized at its current market value, could be reallocated to
interest-earning assets, which should increase future earnings. The
transaction resulted in a $32.3 million pre-tax gain, of which $16.4
million will be recorded in Valley's first quarter earnings as allowed
under sale leaseback accounting rules. On an after-tax basis, the sale will
result in additional income of approximately $0.09 per common share for the
quarter. The remaining $15.9 million portion of the gain will be deferred
and amortized into earnings over the lease term of 20 years. Valley owns
over 90 properties in northern New Jersey and New York City and will
consider monetizing these properties in the future based on prevailing
market conditions and the opportunity to better utilize any appreciation on
such assets.
Effective January 1, 2007, Valley elected early adoption of Statements
of Financial Accounting Standards ("SFAS") No.159 and 157. SFAS No. 159,
which was issued in February 2007, generally permits the measurement of
selected eligible financial instruments at fair value at specified election
dates. Upon adoption of SFAS No. 159, Valley selected the fair value
measurement option for various pre-existing financial assets and
liabilities, including investment securities from both the held to maturity
and available for sale portfolios totaling approximately $1.4 billion,
mortgage loans of $254 million, Federal Home Loan Bank advances of $40
million and junior subordinated debentures issued to capital trusts
(commonly known as "trust preferred securities") of $206 million. The
initial fair value measurement of these items resulted in, approximately, a
$31 million cumulative-effect adjustment, net of tax, recorded as a
reduction in retained earnings as of January 1, 2007. Under SFAS No. 159,
this one-time charge will not be recognized in current earnings.
As a result of Valley's fair value measurement election for the above
financial instruments, Valley will record trading gains in its first
quarter earnings for the change in fair value of such instruments from the
election date of January 1, 2007 to March 31, 2007. Additionally, Valley
believes its adoption of the standard will have a positive impact on its
ability to manage the market and interest rate risks associated with
certain financial instruments, and potentially benefit interest income, net
income and earnings per common share during the remainder of 2007, as well
as future periods.
On April 3, 2007, Valley purchased various derivative financial
instruments designed to hedge the market risks associated with
approximately $925 million of the $1.4 billion investment securities Valley
elected to fair value on January 1, 2007.
Valley National Bancorp is a regional bank holding company with over
$12 billion in assets, headquartered in Wayne, New Jersey. Its principal
subsidiary, Valley National Bank, currently operates 169 branches in 111
communities serving 13 counties throughout northern and central New Jersey
and New York City.
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 direction of interest rates, effective income
tax rates, loan and investment prepayments and 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. Valley assumes no obligation for updating any such
forward-looking statement at any time.
SOURCE Valley National Bancorp
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Related links:
http://www.valleynationalbank.com
http://www.prnewswire.com/comp/141340.html/
CONTACT:
Alan D. Eskow, Executive Vice President and
Chief Financial Officer, +1-973-305-4003
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