WAYNE, N.J., July 20 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) today reported net income of $39.0 million for the second quarter
ended June 30, 2005, compared to $36.7 million for the second quarter of 2004
representing a 6.2 percent increase. Diluted earnings per share increased to
$0.36 for the second quarter of 2005 from $0.35 for the same period in 2004
inclusive of the additional shares issued as a result of Valley's recent
acquisitions. Share data also reflects the 5 percent stock dividend paid on
May 20, 2005. Net income for the six months ended June 30, 2005 was
$77.3 million compared to $75.2 million for the same period in 2004. Diluted
earnings per share were $0.72 for both the six month period ended June 30,
2005 and 2004.
Gerald H. Lipkin, Valley's Chairman, President and CEO stated, "The
current quarter includes, for the first time, the earnings of Shrewsbury for
the full quarter and one month of earnings for NorCrown which closed on
June 3, 2005. We remain optimistic with the opportunities presented in both
acquisitions. While the current quarter reflects additional expenses as a
result of the Shrewsbury and NorCrown integration and core deposit
amortization, we anticipate both acquisitions to increase their contribution
to our bottom line in the next few months as the full cost saves are realized.
In a testimony to Valley's historical successes with integration, Shrewsbury
deposits have increased by 13 percent in balances and 16 percent in number of
accounts during the initial quarter of operations. Shrewsbury's data
operations were successfully converted to Valley's data processing systems
during May while the NorCrown conversion is expected to be complete by the end
of July.
"We are pleased with Valley's ability to absorb the acquisition costs
together with the external challenges and pressures arising from the continued
net interest margin compression resulting from a flattening yield curve, loan
and deposit pricing pressures, and the overall costs related to increasing
government regulation. In spite of these factors and additional branch opening
expenses, net income for the quarter increased over the prior year.
"Loans during the quarter increased by $111 million or 6.1 percent
annualized excluding $413 million of loans added from NorCrown. The most
significant growth was in the automobile sector and commercial loans.
Automobile lending increased, as expected, from the sluggish first quarter. In
addition to the normal increases, we realized some increase from the General
Motors employee discount sales program. In the first weeks of July, we saw a
large increase in application volume and expect it to continue throughout the
third quarter. In addition, commercial lines of credit in New York increased,
also as expected during the quarter, but were offset in part by competitive
pricing on other commercial credits. Valley continues to maintain its credit
and interest rate risk standards as we forego larger volumes of loans which
would likely hurt credit quality in the future. Deposits increased
9.1 percent on an annualized basis from the first quarter exclusive of the
$554 million added from NorCrown. The largest growth came from various types
of savings accounts and demand deposits both increasing in excess of
10 percent annualized during the quarter. Deposits grew at a faster pace than
loans during the quarter. We are pricing competitively with the market in an
attempt to increase deposits.
"The acquisition of NorCrown provides an opportunity to add to our
footprint in Essex and Morris Counties. On July 13, 2005, we completed the
wholesale issuance of $100 million subordinated 10 year notes due July 15,
2015 with a fixed rate of 5 percent. This replaces cash payments made in
connection with the recent acquisitions. Our branch strategy continues to
exceed expectations in deposit growth and we look forward to opening three new
branches in New Jersey and three in Manhattan before the end of 2005."
For the quarter ended June 30, 2005, Valley achieved an annualized return
on average tangible shareholders' equity of 22.50 percent, an annualized
return on average assets of 1.35 percent and an efficiency ratio of
50.8 percent. The annualized return on shareholders' equity was 18.41 percent
and includes intangible assets arising from the Shrewsbury and NorCrown
mergers. Valley's risk-based capital ratios at June 30, 2005 were
10.18 percent for Tier 1 capital, 11.02 percent for total capital and
8.01 percent for Tier 1 leverage. Valley expects the efficiency ratio to
return to more traditional levels as the cost savings associated with
Shrewsbury and NorCrown take effect.
Net interest income for the second quarter increased $8.5 million or
9.3 percent to $99.8 million over the same quarter of 2004 and $5.2 million or
5.5 percent over the first quarter of 2005. The net interest margin on a tax
equivalent basis was 3.76 percent, 4 basis points lower than the first quarter
of 2005. This decline is mainly the result of the flattening of the yield
curve with funding costs increasing faster than yields on new and re-pricing
term loans and investments. The overall yield on loans and investments
increased over the first quarter of 2005 by 14 basis points, while deposit and
borrowing costs increased 21 basis points causing most of the narrowing of the
margin. Deposit costs have been increasing mainly due to competitive pricing
pressure combined with rising short-term interest rates. Valley continues to
grow its loan portfolio through traditional lending products using well
established credit underwriting standards and does not seek to grow its
balance sheet with non-traditional products offered by other financial
institutions. These products include negative amortization residential
mortgages and high loan to value home equity loans.
Net charge-offs for the second quarter were $936 thousand compared to
$633 thousand for the first quarter of 2005 and $2.8 million for the fourth
quarter of 2004. The provision for loan losses was $925 thousand for the
second quarter of 2005 compared to $752 thousand for the first quarter of 2005
and $3.2 million for the fourth quarter of 2004. Total non-performing assets,
which include non-accrual loans and other real estate owned ("OREO"), totaled
$26.1 million, or 0.33 percent of loans and OREO, at June 30, 2005, compared
to $26.0 million at March 31, 2005 and $30.8 million at December 31, 2004.
Loans past due 90 days or more and still accruing at June 30, 2005 were
$5.0 million, or 0.06 percent of $7.8 billion of total loans, compared to
$1.5 million at March 31, 2005 and $2.9 million at December 31, 2004. Total
loans past due in excess of 30 days were 0.69 percent of all loans at June 30,
2005 compared to 0.63 percent at March 31, 2005 and 0.90 percent at December
31, 2004.
Non-interest income for the second quarter of 2005 was $19.3 million
compared to $20.7 million for the second quarter of 2004. The decrease was
mainly due to lower insurance premiums and securities gains offset by higher
service charges on deposit accounts.
Non-interest expense for the second quarter of 2005 increased $5.7 million
or 10.4 percent to $60.5 million from the 2004 second quarter, mostly the
result of operating expenses related to the Shrewsbury and NorCrown mergers
combined with additional regulatory related expenses. Other operating expenses
increased for the cost and staffing of new branches, Sunday and extended
branch hours and expanding the call center to 24/7 hours. These costs have
added to Valley's franchise value as evidenced by an increase in account
openings and a decline in account closures.
Valley National Bancorp is a regional bank holding company headquartered
in Wayne, New Jersey. Its principal subsidiary, Valley National Bank,
currently operates 161 offices located in 104 communities serving 12 counties
throughout northern and central New Jersey and Manhattan. Valley's web site
can be found at http://www.valleynationalbank.com.
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 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 and the ability of Valley to successfully integrate
NorCrown without the loss of significant loan and deposit business. 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,
(Dollars in
thousands,
except for share
data) 2005 2004 2005 2004
FINANCIAL DATA:
Net income $38,991 $36,729 $77,259 $75,161
Net interest
income 99,840 91,386 194,433 181,603
Net interest
income - FTE (1) 101,581 92,938 197,819 184,710
Weighted Average
Number of Shares
Outstanding: (2)
Diluted 109,753,156 104,072,353 107,057,239 104,082,491
Per share data: (2)
Basic earnings $0.36 $0.35 $0.72 $0.73
Diluted
earnings 0.36 0.35 0.72 0.72
Cash dividends
declared 0.22 0.21 0.43 0.42
Book value 8.24 6.35 8.24 6.35
Tangible book
value 6.21 5.89 6.21 5.89
Closing stock
price - high 25.27 25.85 26.50 26.12
Closing stock
price - low 22.82 23.00 22.82 23.00
FINANCIAL RATIOS:
Net interest
margin - FTE (1) 3.76 % 3.90 % 3.78 % 3.96 %
Annualized return
on average assets 1.35 1.45 1.38 1.51
Annualized return
on average equity 18.41 21.56 19.77 22.37
Annualized return
on average tangible
equity (3) 22.50 23.24 22.68 24.18
Efficiency ratio (4) 50.75 48.88 49.81 47.88
AVERAGE BALANCE
SHEET ITEMS:
Assets $11,583,688 $10,142,322 $11,173,330 $9,957,712
Interest earning
assets 10,801,202 9,521,979 10,468,622 9,330,816
Loans 7,480,523 6,371,083 7,234,991 6,301,040
Interest bearing
liabilities 8,774,898 7,682,550 8,505,138 7,519,346
Deposits 8,200,244 7,330,069 7,857,009 7,274,956
Shareholders'
equity 847,214 681,387 781,730 671,840
(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) Share data reflects the 5 percent stock dividend issued May 20, 2005.
(3) Tangible shareholders' equity equals total shareholders' equity less
goodwill and identifiable intangible assets. The annualized return on
average tangible equity is computed by dividing annualized net
earnings by average monthly tangible shareholders' equity.
(4) 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
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2005 2004 2005 2004
ALLOWANCE FOR LOAN LOSSES:
Beginning of period $69,029 $64,796 $65,699 $64,650
Provision for loan losses 925 1,476 1,677 3,324
Charge-offs 1,886 2,501 3,264 5,980
Recoveries 950 1,041 1,695 2,818
Allowance for loan losses
- Shrewsbury and NorCrown 6,041 0 9,252 0
End of period $75,059 $64,812 $75,059 $64,812
As of June 30,
2005 2004
BALANCE SHEET ITEMS:
Assets $12,267,025 $10,484,538
Loans 7,844,791 6,507,689
Deposits 8,627,093 7,374,502
Shareholders' equity 916,725 658,563
CAPITAL RATIOS:
Tier 1 leverage ratio 8.01 % 8.32 %
Risk-based capital - Tier 1 10.18 10.99
Risk-based capital - Total Capital 11.02 11.83
ASSET QUALITY:
Non-accrual loans $25,037 $14,594
Other real estate owned (OREO) 1,083 524
Total non-performing
assets 26,120 15,118
Loans past due 90 days or
more and still accruing 4,984 4,952
ASSET QUALITY RATIOS:
Non-performing assets to total loans plus
other real estate owned (OREO) 0.33 % 0.23 %
Allowance for loan losses to loans 0.96 1.00
Net charge-offs to average loans 0.04 0.10
SHAREHOLDER RELATIONS
Requests for copies of reports and/or other inquiries should be directed
to Dianne Grenz, Director of Public & Shareholder Relations, Valley National
Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at
(973) 305-3380, by fax at (973) 696-2044 or by e-mail at
dgrenz@valleynationalbank.com.
VALLEY NATIONAL BANCORP
Consolidated Statements of Financial Condition
($ in thousands, except per share data)
June 30,
Assets 2005 2004
Cash and due from banks $272,721 $247,721
Federal funds sold 33,000 0
Securities:
Available for sale 2,175,026 1,913,624
Held to maturity 1,241,389 1,319,248
Trading account 2,349 2,174
Total securities 3,418,764 3,235,046
Loans held for sale 5,806 5,508
Loans 7,838,985 6,502,181
Less: Allowance for loan losses (75,059) (64,812)
Loans, net 7,763,926 6,437,369
Premises and equipment, net 172,596 138,672
Due from customers on acceptances
outstanding 10,124 11,897
Accrued interest receivable 53,226 43,547
Intangible assets 226,096 48,278
Bank owned life insurance 178,946 167,517
Other assets 131,820 148,983
Total assets $12,267,025 $10,484,538
Liabilities
Deposits:
Non-interest bearing $2,063,792 $1,738,417
Interest bearing:
Savings 4,176,816 3,529,446
Time 2,386,485 2,106,639
Total deposits 8,627,093 7,374,502
Federal funds purchased and securities
sold under agreements to repurchase 577,541 452,836
Treasury tax and loan account and other
short-term borrowings 11,250 27,093
Long-term debt 1,990,142 1,820,308
Bank acceptances outstanding 10,124 11,897
Accrued expenses and other liabilities 134,150 139,339
Total liabilities 11,350,300 9,825,975
Shareholders' Equity
Preferred stock, no par value
30,000,000 shares authorized;
none issued 0 0
Common stock, no par value, authorized
164,894,580 shares; issued 111,432,471
shares in 2005 and 103,843,232 shares
in 2004 39,332 34,956
Surplus 742,238 438,481
Retained earnings 140,462 198,042
Unallocated common stock held by the
employee benefit plan (26) (170)
Accumulated other comprehensive loss (1,707) (7,808)
920,299 663,501
Treasury stock, at cost (153,074 common
shares in 2005 and 207,006 in 2004) (3,574) (4,938)
Total shareholders' equity 916,725 658,563
Total liabilities and
shareholders' equity $12,267,025 $10,484,538
* Share data reflects the 5 percent stock dividend issued May 20, 2005.
VALLEY NATIONAL BANCORP
Consolidated Statements of Income Three Months Ended
($ in thousands, except per share data) June 30,
2005 2004
Interest Income
Interest and fees on loans $111,183 $88,967
Interest and dividends on investment
securities 40,594 36,675
Interest on federal funds sold and
other short-term investments 291 34
Total interest income 152,068 125,676
Interest Expense
Interest on deposits:
Savings deposits 12,073 5,162
Time deposits 15,739 11,038
Interest on other borrowings 24,416 18,090
Total interest expense 52,228 34,290
Net Interest Income 99,840 91,386
Provision for loan losses 925 1,476
Net interest income after provision for
loan losses 98,915 89,910
Non-Interest Income
Trust and investment services 2,090 2,183
Insurance premiums 2,773 3,745
Service charges on deposit accounts 5,921 5,171
Gains on securities transactions, net 585 1,051
Fees from loan servicing 1,788 2,034
Gains on sales of loans, net 559 691
Bank owned life insurance 1,753 1,534
Other 3,863 4,321
Total non-interest income 19,332 20,730
Non-Interest Expense
Salary expense 27,004 24,173
Employee benefit expense 7,121 5,791
Net occupancy expense 10,064 8,860
Amortization of intangible assets 2,340 2,690
Other 13,948 13,283
Total non-interest expense 60,477 54,797
Income before income taxes 57,770 55,843
Income tax expense 18,779 19,114
Net Income $38,991 $36,729
Earnings Per Share: (*)
Basic $0.36 $0.35
Diluted $0.36 $0.35
Weighted Average Number of Shares Outstanding:(*)
Basic 109,338,563 103,593,023
Diluted 109,753,156 104,072,353
* Share data reflects the 5 percent stock dividend issued May 20, 2005.
VALLEY NATIONAL BANCORP
Consolidated Statements of Income Six Months Ended
($ in thousands, except per share data) June 30,
2005 2004
Interest Income
Interest and fees on loans $212,377 $176,799
Interest and dividends on investment
securities 78,457 72,268
Interest on federal funds sold and
other short-term investments 397 124
Total interest income 291,231 249,191
Interest Expense
Interest on deposits:
Savings deposits 20,707 9,875
Time deposits 28,658 22,441
Interest on other borrowings 47,433 35,272
Total interest expense 96,798 67,588
Net Interest Income 194,433 181,603
Provision for loan losses 1,677 3,324
Net interest income after provision
for loan losses 192,756 178,279
Non-Interest Income
Trust and investment services 4,103 4,415
Insurance premiums 6,063 7,417
Service charges on deposit accounts 10,864 9,998
Gains on securities transactions, net 2,318 4,617
Fees from loan servicing 3,562 4,211
Gains on sales of loans, net 1,067 1,508
Bank owned life insurance 3,312 3,113
Other 7,401 8,450
Total non-interest income 38,690 43,729
Non-Interest Expense
Salary expense 51,446 48,279
Employee benefit expense 13,778 11,207
Net occupancy expense 19,899 18,130
Amortization of intangible assets 4,076 4,889
Other 26,924 25,373
Total non-interest expense 116,123 107,878
Income before income taxes 115,323 114,130
Income tax expense 38,064 38,969
Net Income $77,259 $75,161
Earnings Per Share:(*)
Basic $0.72 $0.73
Diluted $0.72 $0.72
Weighted Average Number of Shares Outstanding:(*)
Basic 106,606,673 103,561,378
Diluted 107,057,239 104,082,491
* Share data reflects the 5 percent stock dividend issued May 20, 2005.
Valley National Bancorp
(dollars in thousands)
End of End of End of End of End of
Period - Period - Period - Period - Period -
06/30/05 03/31/05 12/31/04 09/30/04 06/30/04
Loan Loan Loan Loan Loan
Portfolio Portfolio Portfolio Portfolio Portfolio
Commercial
Loans $1,368,499 $1,310,757 $1,261,854 $1,316,972 $1,205,739
Construction 457,258 435,812 368,120 282,299 254,007
Residential
Mortgage 2,044,527 1,980,833 1,853,708 1,774,827 1,699,035
Commercial
Mortgage 2,189,195 1,877,144 1,745,155 1,741,674 1,692,201
Total Mortgage
Loans 4,690,980 4,293,789 3,966,983 3,798,800 3,645,243
Home Equity 559,049 554,534 517,325 510,790 486,962
Credit Card 8,849 8,745 9,691 9,433 9,636
Automobile 1,104,749 1,064,150 1,079,050 1,098,375 1,058,238
Other Consumer 112,665 89,050 99,412 89,255 101,871
Total Consumer
Loans 1,785,312 1,716,479 1,705,478 1,707,853 1,656,707
Total Loans $7,844,791 $7,321,025 $6,934,315 $6,823,625 $6,507,689
Quarter End - 06/30/05
Average Avg.
Balance Interest Rate
Assets
Loans $7,480,523 $111,225 5.95%
Taxable Investments 2,960,641 37,439 5.06%
Non-Taxable Investments 325,138 4,854 5.97%
Fed Funds and Other Int. Earning Assets 34,900 291 3.34%
Total Int. Earning Assets 10,801,202 153,809 5.70%
Other Assets 782,486
Total Average Assets $11,583,688
Liabilities and Shareholders' Equity
Savings $3,993,938 $12,073 1.21%
Time Deposits 2,285,187 15,739 2.75%
S/T Borrowings 535,485 3,769 2.82%
Long-term Debt 1,960,288 20,647 4.21%
Interest Bearing Liabilities 8,774,898 52,228 2.38%
Non-Interest Bearing Deposits 1,921,119
Other Liabilities 40,457
Shareholders' Equity 847,214
Total Average Liabilities and
Shareholders' Equity $11,583,688
Net Interest Income and Margin -
tax equivalent basis $101,581 3.76%
Quarter End - 03/31/05
Average Avg.
Balance Interest Rate
Assets
Loans $6,986,730 $101,235 5.80%
Taxable Investments 2,809,959 34,882 4.97%
Non-Taxable Investments 323,590 4,587 5.67%
Fed Funds and Other Int. Earning Assets 12,067 106 3.51%
Total Int. Earning Assets 10,132,346 140,810 5.56%
Other Assets 626,066
Total Average Assets $10,758,412
Liabilities and Shareholders' Equity
Savings $3,658,713 $8,634 0.94%
Time Deposits 2,093,702 12,919 2.47%
S/T Borrowings 590,699 3,350 2.27%
Long-term Debt 1,889,266 19,667 4.16%
Interest Bearing Liabilities 8,232,380 44,570 2.17%
Non-Interest Bearing Deposits 1,757,545
Other Liabilities 52,968
Shareholders' Equity 715,519
Total Average Liabilities and
Shareholders' Equity $10,758,412
Net Interest Income and Margin -
tax equivalent basis $96,240 3.80%
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%
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%
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.
SOURCE Valley National Bancorp
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Related links:
www.valleynationalbank.com
CONTACT:
Alan D. Eskow, Executive Vice President and
Chief Financial Officer of Valley National Bancorp,
+1-973-305-4003
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