WAYNE, N.J., July 18 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) ("Valley"), the holding company for Valley National Bank,
announced today second quarter and six months results for 2007. Net income
for the second quarter of 2007 was $39.7 million, which includes a $1.8
million net loss on trading securities after taxes, compared to $40.8
million for the same period in 2006, which included a $191 thousand net
gain on trading securities after taxes. Adjusted for a five percent stock
dividend issued on May 25, 2007, fully diluted earnings per common share
were $0.33 for the second quarter of 2007, unchanged from the same quarter
of 2006. All common share data presented below was adjusted to reflect the
stock dividend.
Net income was $89.1 million for the six months ended June 30, 2007
compared to $81.7 million for the same period in 2006, an increase of 9.1
percent. Fully diluted earnings per common share were $0.74 for the six
months ended June 30, 2007 as compared to $0.66 per common share for the
six months ended June 30, 2006.
Set forth below are highlights of several significant events that
occurred during the second quarter of 2007:
-- Total loans increased $139.7 million from the first quarter as
automobile and commercial loans grew by 34.7 percent and 19.4 percent,
respectively, on an annualized basis.
-- Net interest margin on a fully tax equivalent basis was 3.45 percent,
unchanged from the first quarter of 2007.
-- During the quarter, Valley unwound and eventually terminated all of a
series of interest rate derivative transactions entered into during
April 2007 for the purpose of offsetting the volatility in changes in
the market value of certain long-term mortgage-backed securities
classified as trading securities. The hedged trading securities were
sold and primarily reinvested in short-term U.S. treasury securities,
short-term other government agencies and short-term corporate debt
held at fair value in the trading securities portfolio at June 30,
2007. The termination of the derivatives and hedged securities sold
resulted in a $3.0 million net loss recorded in losses on trading
securities, net during the second quarter of 2007.
-- Net gains on loans held for sale totaled approximately $2.7 million
primarily due to the sale of approximately $240 million in residential
mortgage loans held at fair value.
-- Other non-interest expense includes an offset of $2.7 million in
unrealized gains on Valley's junior subordinated debentures issued to
capital trust (commonly known as trust preferred securities) and
Federal Home Loan Bank advances held at fair value.
-- Valley redeemed $20.6 million, or 10 percent of the contractual
principal balance, of its outstanding 7.75 percent junior subordinated
debentures due on December 31, 2031. Valley's Board of Directors
granted management authorization to call, from time to time, all or
part of its remaining junior subordinated debentures.
-- Valley made an additional $75 million investment in bank owned life
insurance to help manage the rising cost of employee benefits.
-- Valley repurchased approximately 428 thousand of its common shares at
an average price per share of $23.84 pursuant to its publicly
announced share repurchase plans on May 14, 2003 and January 17, 2007.
-- Valley opened two new branches, including its second branch office in
Brooklyn, New York this year. Valley has opened four new branches
through June 30, 2007 and intends to open nine additional branch
offices by December 31, 2007.
Chairman's Comments
Gerald H. Lipkin, Chairman, President and CEO noted that, "Valley's
second quarter earnings generated an annualized average return on tangible
shareholders' equity of 21.9 percent, while our annualized return on
average shareholders' equity for the quarter was 17.0 percent. While we are
pleased with our overall performance and credit quality, the relatively
flat yield curve environment continues to negatively impact net interest
income compared to the same period one year ago. Valley has and will
continue to diligently manage operating expenses and its balance sheet to
optimize long-term returns for our shareholders.
We would like to affirm that Valley is not a participant in sub-prime
residential mortgage lending, negative amortization loan or collateralized
debt obligation (CDOs) markets. Valley's historical risk-based underwriting
approach continues to be a key element in producing strong loan
performance, as evidenced by Valley's current and historically low
delinquency rates.
Overall loan volumes improved during the second quarter as compared to
the first quarter of 2007 primarily due to auto and commercial loans
increasing 34.7 percent and 19.4 percent, respectively, on an annualized
basis. Much of the increase in auto loans is attributable to Valley's
strategic efforts to expand the geographic presence of its indirect auto
loan origination franchise. Nearly 44.0 percent of Valley dealer auto
originations were made outside of New Jersey during the second quarter of
2007, as compared to only 33.0 percent in the same period one year ago.
Valley continued its focused branch expansion in northern and central
New Jersey and New York City and opened four new branches during the first
six months of 2007, including the first two of at least five new branches
expected to be opened in Brooklyn and Queens during 2007. Valley
anticipates opening approximately nine de novo branches through the
remainder of 2007. Our expansion strategy is to find the most attractive
building sites and expand our presence in the New Jersey counties
neighboring our current office locations, as well as Kings and Queens
Counties in New York. New offices generally add franchise value, but the
additional operating costs will have a negative impact on non-interest
expense and net income in the short-term."
Net Interest Income and Margin
Net interest income on a tax equivalent basis was $97.4 million for the
second quarter of 2007, a $2.6 million decrease from the same quarter of
2006 and a decrease of $386 thousand from the linked quarter ended March
31, 2007. The moderate decline in net interest income during the second
quarter of 2007 was mainly a result of lower average earning assets and a
$75 million investment in bank owned life insurance. The change in the cash
surrender value of the additional bank owned life insurance generated $827
thousand of non-interest income during the three months ended June 30, 2007
which is not shown in the net interest margin calculation.
The net interest margin on a tax equivalent basis was 3.45 percent for
the second quarter of 2007, unchanged from the linked quarter ended March
31, 2007 and a decrease of 3 basis points from the prior year second
quarter. The yield on average interest earning assets increased 8 basis
points mainly due to a 13 basis point increase in the yield on average
total loans from the three months ended March 31, 2007. However, the cost
of average interest bearing liabilities increased 11 basis points from the
first quarter of 2007 as deposits and other borrowings continue to reprice
at higher interest rates.
Valley's cost of total deposits remained relatively low by industry
standards at 2.51 percent for the second quarter of 2007 compared to 2.44
percent for the three months ended March 31, 2007. The increase of 7 basis
points was primarily due to a growth in retail time deposits during the
quarter partially offset by the maturity of lower cost brokered deposits.
Non-Interest Income
Second quarter of 2007 compared with second quarter of 2006
Non-interest income for the second quarter of 2007 increased $283
thousand, or 1.5 percent from $19.4 million for the quarter ended June 30,
2006. Net gains on loans held for sale increased $2.2 million from the
second quarter of 2006 primarily due to the sale of approximately $240
million residential mortgages held at fair value. Service charges on
deposit accounts increased $1.0 million mainly due to better collection of
overdraft fees compared to the same quarter in 2006. Bank owned life
insurance income increased $849 thousand primarily due to $827 thousand of
income generated from an additional investment of $75 million during the
second quarter of 2007 to offset rising employee benefit costs. Partially
offsetting these increases, net gains on trading securities decreased $3.1
million mainly due to the sale of approximately $1.1 billion in
mortgage-backed securities and the termination of certain derivative
transactions during the second quarter of 2007.
Second quarter of 2007 compared with first quarter of 2007
Non-interest income for the second quarter of 2007 decreased $21.4
million, or 52.1 percent from $41.1 million for the quarter ended March 31,
2007 mainly due to a $16.1 million decrease in net gains on sale of
premises and equipment. In the first quarter of 2007, Valley sold an office
building in Manhattan and recognized a gain of $16.4 million. Net gains on
trading securities decreased $8.3 million from the first quarter of 2007
primarily due to net losses recognized on the sale of $1.1 billion in
mortgage-backed securities and the termination of certain derivative
transactions during the second quarter. Offsetting the decreases, service
charges on deposit accounts increased approximately $1.3 million mainly due
to better collection of overdraft fees in the second quarter. Net gains on
loans held for sale increased $1.0 million from the first quarter of 2007
primarily due to the sale of residential mortgages during the second
quarter of 2007.
Non-Interest Expense
Second quarter of 2007 compared with second quarter of 2006
Non-interest expense decreased approximately $1.0 million, or 1.7
percent to $60.9 million for the quarter ended June 30, 2007 from $61.9
million for the quarter ended June 30, 2006 primarily due to $2.7 million
of unrealized gains on the junior subordinated debentures issued to capital
trust and Federal Home Bank advances held at fair value which were recorded
in other non-interest expense during the three months ended June 30, 2007.
Advertising expense also declined $1.6 million from the second quarter of
2006 as Valley ran less branding promotions in the second quarter of 2007.
Offsetting these decreases to non-interest expense, salary and employee
benefits increased $2.9 million and net occupancy and equipment expense
increased $1.6 million mainly due to the addition of ten de novo branches
to Valley's branch network over the last twelve month period.
Second quarter of 2007 compared with first quarter of 2007
Non-interest expense decreased $3.3 million, or 5.2 percent to $60.9
million for the second quarter of 2007 from $64.2 million for the linked
quarter ended March 31, 2007 mainly due to a $2.4 million unrealized gain
on the junior subordinated debentures issued to capital trust held at fair
value in the second quarter compared to an unrealized loss of $1.4 million
recognized in the first quarter of 2007. Offsetting the decrease in non-
interest expense, net occupancy and equipment expense increased $682
thousand from the first quarter primarily due to higher rent and
depreciation expense caused by Valley's de novo branching activities.
Income Tax Expense
Income tax expense was $12.5 million for the second quarter of 2007,
reflecting an effective tax rate of 24.0 percent, compared with $11.9
million for the second quarter of 2006, reflecting an effective tax rate of
22.6 percent. The increase over the prior comparable quarter was primarily
due to lower tax expense in 2006 caused by the settlement of income tax
examinations.
For the remainder of 2007, Valley anticipates that its effective tax
rate will remain relatively unchanged from the 27.7 percent for the six
months ended June 30, 2007. 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.
Balance Sheet
Investments
During the second quarter, total investment securities decreased $146.6
million, or 5.2 percent, to $2.7 billion at June 30, 2007 from
approximately $2.8 billion at March 31, 2007 mainly due to a decline in
trading securities. Trading securities decreased $327.7 million partially
due to $164.6 million in securities sold but not reinvested as the
securities transactions remained unsettled receivables at June 30, 2007.
The remaining decrease in trading securities is primarily due to the
funding of loan growth during the second quarter of 2007.
During the second quarter of 2007, Valley unwound and eventually
terminated all of a series of interest rate derivative transactions entered
into during April 2007 for the purpose of offsetting the potential
volatility in changes in the market value of over $800 million in trading
securities. The hedged trading securities were part of $1.1 billion in
long-term mortgage- backed securities sold during the period and primarily
reinvested in short- term U.S. treasury securities, short-term other
government agencies and short- term corporate debt held in trading
securities at June 30, 2007. The termination of the derivatives and
mortgage-backed securities sold resulted in a $3.0 million net loss
recorded in losses on trading securities, net during the second quarter of
2007.
Loans
During the second quarter, loans increased $139.7 million, or 7.0
percent on an annualized basis, to $8.2 billion at June 30, 2007 from
approximately $8.0 billion at March 31, 2007. The linked quarter growth in
loans is mainly comprised of increases in automobile and commercial loans
of $111.0 million and $70.0 million, respectively, partially offset by
declines in construction and commercial mortgage loans totaling $22.5
million and $19.6 million, respectively. Automobile loan volumes were
exceptionally strong as Valley has focused efforts to expand the geographic
presence of its indirect auto loan origination franchise. The decreases
seen in the construction and commercial mortgage loans reflect a decline in
demand primarily caused by the current interest rate environment and a slow
down in the home building market, while Valley experiences normal paydowns
on existing construction loans as residential projects are completed and
sold.
Deposits
During the quarter, deposits remained relatively flat at approximately
$8.3 billion as of June 30, 2007. A total decrease of $80.9 million in
savings, NOW, and money market deposits was partially offset by a $73.6
million increase in time deposits. Saving, NOW, and money market deposits
declined due to increased competition for approximately $83 million in
municipal deposits which were lost in the second quarter due to less
aggressive bidding by Valley. Time deposits grew through retail
certificates of deposit promotions which outpaced the maturity of
approximately $50 million in brokered certificates of deposit. Non-interest
bearing deposits totaling $1.9 billion at June 30, 2007 remained relatively
unchanged from the linked quarter.
Credit Quality
Net loan charge-offs for the second quarter of 2007 were approximately
$3.1 million compared to $3.3 million for the second quarter of 2006, and
$1.1 million for the first quarter of 2007. The provision for credit losses
was $2.4 million for the second quarter of 2007 compared to $3.1 million
for the second quarter of 2006, and $1.9 million for the first quarter of
2007. Total non-performing assets, consisting of non-accrual loans, other
real estate owned and other repossessed assets, totaled $30.9 million, or
0.38 percent of loans at June 30, 2007 up slightly from $30.8 million or
0.38 percent of loans at March 31, 2007.
Loans past due 90 days or more and still accruing at June 30, 2007 were
$6.7 million, or 0.08 percent of $8.2 billion of total loans, compared to
$7.4 million at June 30, 2006 and $2.9 million at March 31, 2007. Total
loans past due in excess of 30 days were 0.80 percent of total loans at
June 30, 2007 compared with 0.81 percent at March 31, 2007.
Financial Ratios
Valley's annualized return on average shareholders' equity was 16.98
percent and 17.25 percent for the three months ended June 30, 2007 and
2006, respectively. On a comparative basis, adjusting for Valley's goodwill
and other intangible assets, the annualized return on average tangible
equity was 21.89 percent and 22.31 percent for the same periods. See "Notes
to Selected Financial Data" section in the tables that follow for
information regarding the computation of these ratios.
For the quarter ended June 30, 2007 and 2006, annualized return on
average assets was 1.30 percent and 1.33 percent, respectively.
Valley's risk-based capital ratios were 9.99 percent for Tier 1
capital, 11.86 percent for total capital and 7.79 percent for Tier 1
leverage at June 30, 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 114
communities serving 13 counties throughout northern and central New Jersey
and New York City.
Forward Looking Statement
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: the impact
of management's implementation of SFAS No. 159, 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.
-Tables to Follow-
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, 2007 2006 2007 2006
except for share
data)
FINANCIAL DATA:
Net income $39,679 $40,786 $89,113 $81,697
Net interest income 95,781 98,337 191,953 196,878
Net interest
income - FTE (2) 97,382 99,978 195,150 200,216
Weighted Average
Number of Shares
Outstanding (3):
Basic 120,291,220 122,727,825 120,590,026 122,711,750
Diluted 120,777,560 123,278,696 121,087,329 123,194,496
Per share data (3):
Basic earnings $0.33 $0.33 $0.74 $0.67
Diluted earnings 0.33 0.33 0.74 0.66
Cash dividends
declared 0.21 0.20 0.41 0.40
Book value 7.72 7.69 7.72 7.69
Tangible book
value (1) 5.97 5.95 5.97 5.95
Closing stock
price - high 24.89 24.49 25.18 24.49
Closing stock
price - low 22.42 22.77 22.42 21.01
FINANCIAL RATIOS:
Net interest margin 3.39 % 3.42 % 3.39 % 3.43 %
Net interest
margin - FTE (2) 3.45 3.48 3.45 3.49
Annualized return
on average assets 1.30 1.33 1.46 1.33
Annualized return
on average
shareholders' equity 16.98 17.25 19.25 17.32
Annualized return
on average tangible
shareholders'
equity (1) 21.89 22.31 24.90 22.46
Efficiency ratio (4) 52.72 52.59 49.50 52.06
AVERAGE BALANCE
SHEET ITEMS:
Assets $12,195,790 $12,294,841 $12,177,491 $12,274,970
Interest earning
assets 11,299,934 11,501,020 11,310,493 11,479,359
Loans 8,181,248 8,243,355 8,236,758 8,197,622
Interest bearing
liabilities 9,305,357 9,363,120 9,308,699 9,357,439
Deposits 8,339,489 8,503,424 8,358,654 8,445,135
Shareholders'
equity 934,727 946,018 925,760 943,184
SELECTED FINANCIAL DATA
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2007 2006 2007 2006
ALLOWANCE FOR CREDIT LOSSES:
Beginning of period $75,533 $75,898 $74,718 $75,188
Provision for credit losses 2,388 3,117 4,298 4,411
Charge-offs 4,058 3,845 5,788 5,239
Recoveries 912 526 1,547 1,336
End of period $74,775 $75,696 $74,775 $75,696
Components:
Allowance for loan losses $72,442 $75,696 $72,442 $75,696
Reserve for unfunded letters of
credit (5) 2,333 0 2,333 0
Allowance for credit losses $74,775 $75,696 $74,775 $75,696
As of June 30,
2007 2006
BALANCE SHEET ITEMS:
Assets $12,319,087 $12,429,815
Loans 8,180,141 8,335,692
Deposits 8,332,469 8,571,267
Shareholders' equity 926,602 944,511
CAPITAL RATIOS:
Tier 1 leverage ratio 7.79 % 8.18 %
Risk-based capital - Tier 1 9.99 10.54
Risk-based capital - Total Capital 11.86 12.41
ASSET QUALITY:
Non-accrual loans $28,843 $29,015
Other real estate owned 1,055 1,728
Other repossessed assets 1,044 930
Total non-performing assets $30,942 $31,673
Loans past due 90 days or more and
still accruing $6,686 $7,374
ASSET QUALITY RATIOS:
Non-performing assets to total loans 0.38 % 0.38 %
Allowance for loan losses to total loans 0.89 0.91
Allowance for credit losses to total loans 0.91 0.91
Annualized net charge-offs to average loans 0.10 0.10
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 Ended Six Months Ended
June 30, June 30,
(Dollars in 2007 2006 2007 2006
thousands, except
for share data)
Common shares
outstanding 120,031,674 122,749,328 120,031,674 122,749,328
Shareholders' equity $926,602 $944,511 $926,602 $944,511
Less: Goodwill and
other intangible
assets 209,731 214,758 209,731 214,758
Tangible shareholders'
equity $716,871 $729,753 $716,871 $729,753
Tangible book value $5.97 $5.95 $5.97 $5.95
Net income $39,679 $40,786 $89,113 $81,697
Average shareholders'
equity $934,727 $946,018 $925,760 $943,184
Less: Average
goodwill and other
intangible assets 209,714 214,874 209,956 215,693
Average tangible
shareholders'
equity $725,013 $731,144 $715,804 $727,491
Annualized return
on average tangible
shareholders'
equity 21.89% 22.31% 24.90% 22.46%
(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 a five percent common stock dividend issued on May
25, 2007.
(4) The efficiency ratio measures Valley's total non-interest expense as a
percentage of net interest income plus total non-interest income.
(5) On January 1, 2007, Valley transferred the portion of the allowance
for loan losses related commercial lending letters of credit to other
liabilities.
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,
Assets 2007 2006
Cash and due from banks $228,650 $236,354
Interest bearing deposits with banks 9,614 7,795
Federal funds sold 175,000 175,000
Investment securities:
Held to maturity, fair value of
$577,416 and $1,090,883 at June 30,
2007 and December 31, 2006,
respectively 580,436 1,108,885
Available for sale 1,260,292 1,769,981
Trading securities 839,303 4,655
Total investment securities 2,680,031 2,883,521
Loans held for sale, at fair value as
of June 30, 2007 6,233 4,674
Loans 8,180,141 8,331,685
Less: Allowance for loan losses (72,442) (74,718)
Net loans 8,107,699 8,256,967
Premises and equipment, net 223,452 209,397
Bank owned life insurance 268,853 189,157
Accrued interest receivable 60,000 63,356
Due from customers on acceptances
outstanding 11,784 9,798
Goodwill 181,497 181,497
Other intangible assets, net 28,234 29,858
Other assets 338,040 147,653
Total assets $12,319,087 $12,395,027
Liabilities
Deposits:
Non-interest bearing $1,942,290 $1,996,237
Interest bearing:
Savings, NOW and money market 3,443,655 3,561,807
Time 2,946,524 2,929,607
Total deposits 8,332,469 8,487,651
Short-term borrowings 452,410 362,615
Long-term borrowings (includes fair
value of $39,660 for an FHLB
advance at June 30, 2007) 2,278,161 2,278,728
Junior subordinated debentures issued
to capital trust, at fair value
as of June 30, 2007 186,977 206,186
Bank acceptances outstanding 11,784 9,798
Accrued expenses and other liabilities 130,684 100,459
Total liabilities 11,392,485 11,445,437
Shareholders' Equity*
Preferred stock, no par value,
authorized 30,000,000 shares; none
issued --- ---
Common stock, no par value,
authorized 181,796,274 shares;
issued 122,586,577 shares and 122,658,486
shares at June 30, 2007 and December 31,
2006, respectively 43,221 41,212
Surplus 880,286 881,022
Retained earnings 92,575 97,639
Accumulated other comprehensive loss (24,976) (30,873)
Less: Treasury stock, at cost,
2,554,903 shares and 1,533,355
shares at June 30, 2007 and December 31,
2006, respectively (64,504) (39,410)
Total shareholders' equity 926,602 949,590
Total liabilities and
shareholders' equity $12,319,087 $12,395,027
*Share data reflects a five percent common stock dividend issued on May
25, 2007.
VALLEY NATIONAL BANCORP
Consolidated Statements of Income (Unaudited)
(in thousands, except for share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Interest Income
Interest and fees on
loans $139,588 $133,672 $278,535 $261,100
Interest and dividends
on investment securities:
Taxable 32,477 35,745 65,525 71,990
Tax-exempt 2,910 2,974 5,807 6,047
Dividends 1,993 1,362 4,030 2,791
Interest on federal
funds sold and
other short-term
investments 4,188 573 6,388 795
Total interest
income 181,156 174,326 360,285 342,723
Interest Expense
Interest on deposits:
Savings, NOW and
money market 19,216 18,865 38,634 35,888
Time 33,143 26,095 64,907 47,816
Interest on short-
term borrowings 4,522 4,142 8,500 9,553
Interest on long-
term borrowings and
junior subordinated
debentures 28,494 26,887 56,291 52,588
Total interest
expense 85,375 75,989 168,332 145,845
Net Interest Income 95,781 98,337 191,953 196,878
Provision for credit
losses 2,388 3,117 4,298 4,411
Net interest income
after provision for
credit losses 93,393 95,220 187,655 192,467
Non-Interest Income
Trust and investment
services 1,841 1,931 3,621 3,613
Insurance premiums 2,803 2,779 5,764 5,418
Service charges on
deposit accounts 6,946 5,938 12,642 11,528
Gains on securities
transactions, net 44 553 70 1,507
(Losses) gains on
trading securities, net (2,845) 302 2,583 678
Fees from loan
servicing 1,394 1,489 2,784 3,076
Gains on loans held
for sale, net 2,691 529 4,362 1,194
Gains on sales of premises
and equipment, net 230 9 16,603 9
Bank owned life insurance 2,888 2,039 5,015 4,042
Other 3,687 3,827 7,293 7,700
Total non-interest
income 19,679 19,396 60,737 38,765
Non-Interest Expense
Salary expense 29,152 27,053 57,680 53,569
Employee benefit expense 7,478 6,713 15,439 13,885
Net occupancy and
equipment expense 12,698 11,148 24,714 22,733
Amortization of
other intangible assets 1,866 2,183 3,790 4,371
Professional and
legal fees 1,412 2,065 3,067 3,998
Advertising 806 2,450 1,742 4,249
Other 7,455 10,307 18,650 19,876
Total non-interest
expense 60,867 61,919 125,082 122,681
Income before income
taxes 52,205 52,697 123,310 108,551
Income tax expense 12,526 11,911 34,197 26,854
Net Income $39,679 $40,786 $89,113 $81,697
Earnings Per Common
Share:*
Basic $0.33 $0.33 $0.74 $0.67
Diluted 0.33 0.33 0.74 0.66
Cash Dividends
Declared Per Common
Share* 0.21 0.20 0.41 0.40
Weighted Average
Number of Common
Shares Outstanding:*
Basic 120,291,220 122,727,825 120,590,026 122,711,750
Diluted 120,777,560 123,278,696 121,087,329 123,194,496
*Share data reflects a five percent common stock dividend issued on May
25, 2007.
Valley National Bancorp
(dollars in thousands)
Loan Portfolio
For the periods ended
06/30/2007 03/31/2007
Commercial Loans $1,517,184 $1,447,165
Construction 470,592 493,095
Residential Mortgage 1,873,943 1,849,069
Commercial Mortgage 2,262,290 2,281,871
Total Mortgage Loans 4,606,825 4,624,035
Home Equity 555,306 560,577
Credit Card 9,105 8,498
Automobile 1,391,801 1,280,809
Other Consumer 99,920 119,313
Total Consumer Loans 2,056,132 1,969,197
Total Loans $8,180,141 $8,040,397
For the periods ended
12/31/2006 09/30/2006 06/30/2006
Commercial Loans $1,466,862 $1,443,539 $1,492,688
Construction 526,318 514,842 515,683
Residential Mortgage 2,106,306 2,082,233 2,093,694
Commercial Mortgage 2,309,217 2,354,791 2,311,897
Total Mortgage Loans 4,941,841 4,951,866 4,921,274
Home Equity 571,138 577,587 570,500
Credit Card 8,764 8,490 8,279
Automobile 1,238,145 1,229,450 1,234,005
Other Consumer 104,935 102,155 108,946
Total Consumer Loans 1,922,982 1,917,682 1,921,730
Total Loans $8,331,685 $8,313,087 $8,335,692
Quarterly Analysis of Average Assets, Liabilities and
Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
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 assets 895,856
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 borrowings 419,937 4,522 4.31%
Long-term borrowings (4) 2,483,966 28,494 4.59%
Total interest bearing liabilities 9,305,357 85,375 3.67%
Non-interest bearing deposits 1,938,035
Other liabilities 17,671
Shareholders' equity 934,727
Total liabilities and shareholders'
equity $12,195,790
Net interest income/interest rate
spread (5) 97,382 2.80%
Tax equivalent adjustment (1,601)
Net interest income, as reported $95,781
Net interest margin (6) 3.39%
Tax equivalent effect 0.06%
Net interest margin on a fully tax
equivalent basis (6) 3.45%
Quarter End - 3/31/07
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,292,884 $138,983 6.70%
Taxable investments (3) 2,580,236 35,085 5.44%
Tax-exempt investments (1)(3) 279,176 4,457 6.39%
Federal funds sold and other
interest bearing deposits 168,873 2,200 5.21%
Total interest earning assets 11,321,169 180,725 6.39%
Other assets 837,820
Total assets $12,158,989
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money market deposits $3,559,302 $19,418 2.18%
Time deposits 2,894,086 31,764 4.39%
Short-term borrowings 371,911 3,978 4.28%
Long-term borrowings (4) 2,486,780 27,797 4.47%
Total interest bearing liabilities 9,312,079 82,957 3.56%
Non-interest bearing deposits 1,924,645
Other liabilities 5,572
Shareholders' equity 916,693
Total liabilities and shareholders'
equity $12,158,989
Net interest income/interest rate
spread (5) 97,768 2.83%
Tax equivalent adjustment (1,596)
Net interest income, as reported $96,172
Net interest margin (6) 3.40%
Tax equivalent effect 0.05%
Net interest margin on a fully tax
equivalent basis (6) 3.45%
Quarter End - 12/31/06
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,346,362 $143,060 6.86%
Taxable investments (3) 2,709,053 35,484 5.24%
Tax-exempt investments (1)(3) 281,366 4,482 6.37%
Federal funds sold and other
interest bearing deposits 152,546 2,063 5.41%
Total interest earning assets 11,489,327 185,089 6.44%
Other assets 833,424
Total assets $12,322,751
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money market deposits $3,603,822 $20,048 2.23%
Time deposits 2,938,977 33,265 4.53%
Short-term borrowings 373,838 4,340 4.64%
Long-term borrowings (4) 2,493,764 29,144 4.67%
Total interest bearing liabilities 9,410,401 86,797 3.69%
Non-interest bearing deposits 1,929,283
Other liabilities 23,404
Shareholders' equity 959,663
Total liabilities and shareholders'
equity $12,322,751
Net interest income/interest rate
spread (5) 98,292 2.75%
Tax equivalent adjustment (1,606)
Net interest income, as reported $96,686
Net interest margin (6) 3.37%
Tax equivalent effect 0.05%
Net interest margin on a fully tax
equivalent basis (6) 3.42%
Quarter End - 9/30/06
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,307,228 $140,355 6.76%
Taxable investments (3) 2,830,076 36,610 5.17%
Tax-exempt investments (1)(3) 285,387 4,502 6.31%
Federal funds sold and other
interest bearing deposits 99,987 1,312 5.25%
Total interest earning assets 11,522,678 182,779 6.35%
Other assets 800,964
Total assets $12,323,642
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money market deposits $3,666,485 $19,886 2.17%
Time deposits 2,900,781 31,573 4.35%
Short-term borrowings 386,034 4,318 4.47%
Long-term borrowings (4) 2,492,702 27,831 4.47%
Total interest bearing liabilities 9,446,002 83,608 3.54%
Non-interest bearing deposits 1,918,596
Other liabilities 6,832
Shareholders' equity 952,212
Total liabilities and shareholders'
equity $12,323,642
Net interest income/interest rate
spread (5) 99,171 2.81%
Tax equivalent adjustment (1,614)
Net interest income, as reported $97,557
Net interest margin (6) 3.39%
Tax equivalent effect 0.05%
Net interest margin on a fully tax
equivalent basis (6) 3.44%
Quarter End - 6/30/06
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $8,243,355 $133,710 6.49%
Taxable investments (3) 2,919,614 37,107 5.08%
Tax-exempt investments (1)(3) 292,738 4,577 6.25%
Federal funds sold and other
interest bearing deposits 45,313 573 5.06%
Total interest earning assets 11,501,020 175,967 6.12%
Other assets 793,821
Total assets $12,294,841
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money market deposits $3,853,598 $18,865 1.96%
Time deposits 2,683,610 26,095 3.89%
Short-term borrowings 415,298 4,142 3.99%
Long-term borrowings (4) 2,410,614 26,887 4.46%
Total interest bearing liabilities 9,363,120 75,989 3.25%
Non-interest bearing deposits 1,966,216
Other liabilities 19,487
Shareholders' equity 946,018
Total liabilities and shareholders'
equity $12,294,841
Net interest income/interest rate
spread (5) 99,978 2.87%
Tax equivalent adjustment (1,641)
Net interest income, as reported $98,337
Net interest margin (6) 3.42%
Tax equivalent effect 0.06%
Net interest margin on a fully tax
equivalent basis (6) 3.48%
(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 Bank
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