WAYNE, N.J., Oct. 17 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) ("Valley"), the holding company for Valley National Bank,
announced today its nine months and third quarter results for 2007. Net
income for the nine months ended September 30, 2007 was approximately
$125.6 million unchanged from the same period in 2006. Adjusted for a five
percent common stock dividend issued on May 25, 2007, fully diluted
earnings per common share were $1.04 for the nine months ended September
30, 2007, compared to $1.02 per common share for the nine months ended
September 30, 2006. All common share data presented below was adjusted to
reflect the stock dividend.
Net income for the third quarter of 2007 was $36.5 million compared to
$43.9 million for the third quarter of 2006. The net income for the third
quarter of 2006 included an $11.2 million reduction in income tax expense
(See "Income Tax Expense" section below). Fully diluted earnings per common
share were $0.30 for the third quarter of 2007, compared to $0.36 for the
third quarter of 2006, inclusive of $0.09 per common share in income tax
benefit.
Set forth below are highlights of several significant events that
occurred during the third quarter of 2007:
-- Net interest margin on a fully tax equivalent basis was 3.43 percent
for the third quarter of 2007, 2 basis points less than the second
quarter of 2007, primarily due to higher funding costs related to an
increase in average time deposit balances of $157.2 million.
-- Loans past due in excess of 30 days were 0.79 percent of total loans at
September 30, 2007 compared to 0.80 percent at June 30, 2007.
-- Net loan charge-offs were at relatively low levels at $2.9 million for
the third quarter of 2007 as compared to $3.1 million for the second
quarter of 2007.
-- Non-performing assets totaled $32.3 million at September 30, 2007
compared to $30.9 million at June 30, 2007.
-- Effective tax rate for the third quarter of 2007 was 23.8 percent
compared to zero for the same quarter last year.
-- On September 27, 2007, Valley delivered a notice of redemption
effective October 29, 2007 for $20.6 million, or 11.1 percent of the
contractual principal balance totaling $185.6 million, of its
outstanding 7.75 percent junior subordinated debentures due on December
31, 2031. During the second quarter, Valley also redeemed $20.6
million or 10 percent of the contractual principal balance. After
October 29, 2007, Valley will have $165 million remaining junior
subordinated debentures.
-- Valley repurchased approximately 130 thousand of its common shares at
an average price per share of $21.96 pursuant to its publicly announced
repurchase plan on January 17, 2007.
Chairman's Comments
Gerald H. Lipkin, Chairman, President and CEO noted, "The business
environment remains a challenge. During this time of uncertainty for so
many consumers and mortgage lenders caught in the subprime and mortgage
debacle, Valley intends to remain steadfast in its underwriting criteria in
its efforts to grow the balance sheet. Our conservative loan underwriting
policy has supported our earnings in the face of a housing market slump
that has hurt many within the banking industry.
Valley's credit quality continues to outpace its peers and remains the
hallmark of our organization. Total loans past due in excess of 30 days
were 0.79 percent of total loans at September 30, 2007, an improvement of
one basis point over the prior three months ended June 30, 2007. Loans 90
days or more past due declined $1.3 million from the second quarter,
however, exclusive of matured loans which were in the normal process of
renewal, the balances remained relatively flat for the quarter (See "Credit
Quality" section below).
We would like to reaffirm that Valley is and was not a participant in
subprime residential mortgage lending, negative amortization loans or
collateralized debt obligation 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.
We are pleased with a recently completed third party evaluation of
Valley's first mortgages which comprise the vast majority of $1.9 billion
residential mortgage portfolio. The evaluation shows the weighted average
loan to collateral value ("LTV") at the origination date of these first
mortgages was 60.3 percent while a market analysis, based on recent data,
calculates an LTV exposure of just 42.7 percent taking into consideration
the amortized outstanding loan balances and statistically adjusting the
collateral value based on current market conditions. A current update of
FICO scores in Valley's loan portfolio shows a weighted average FICO of 744
across the residential mortgage portfolio. Furthermore, Valley has limited
geographic concentrations in states with high foreclosure rates, including
Valley's modest mortgage origination activities in Florida which account
for less than one percent of the residential mortgage portfolio.
Overall loan volumes improved during the third quarter as compared to
the second quarter of 2007 primarily due to continued growth in Valley's
dealer auto loan originations which increased $41.4 million, or 11.9
percent on an annualized basis, as well as an increase in residential
mortgage loans of $59.4 million, or 12.7 percent on an annualized basis,
and an increase in commercial loans due to one $141.1 million short-term
loan origination scheduled to mature in the fourth quarter of 2007, which
is fully collateralized by a certificate of deposit held by Valley. 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 throughout New Jersey, Pennsylvania, New York, and Florida. The
increase in residential mortgage loans is largely the result of the
reduction of liquidity in the secondary markets which has provided
increased opportunities for Valley to purchase loans in the "A" grade,
jumbo market.
During the nine months ended September 30, 2007, Valley opened its
first two de novo branches in Brooklyn and three additional offices in
Highlands, Hillsborough and Edison, New Jersey, as Valley continued its
focused branch expansion in northern and central New Jersey and New York
City. Valley anticipates opening approximately 13 de novo branches over the
next 12 month period, including eight locations in Brooklyn and Queens. Our
expansion strategy is to find the most attractive building sites and expand
our presence in the New Jersey counties and towns 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 for
several years."
Net Interest Income and Margin
Net interest income on a tax equivalent basis was $96.6 million for the
third quarter of 2007, a $2.5 million decrease from the same quarter of
2006 and a decrease of $733 thousand from the linked quarter ended June 30,
2007. The moderate decline in net interest income during the third quarter
of 2007 was mainly a result of lower average interest earning assets as
well as higher average time deposits and a 13 basis point increase in the
cost of these funds as compared to the second quarter of 2007.
The net interest margin on a tax equivalent basis was 3.43 percent for
the third quarter of 2007, compared with 3.45 percent for the linked
quarter ended June 30, 2007 and 3.44 percent for the prior year third
quarter. The yield on average interest earning assets increased by 8 basis
points for the second consecutive quarter mainly due to a 5 basis point
increase in yield on average total loans and a 13 basis point increase in
the yield on average total investments as compared to the three months
ended June 30, 2007. The cost of average interest bearing liabilities also
increased 8 basis points from the second quarter of 2007, mainly due to an
increase of 13 basis points in the cost of time deposits.
Valley's cost of total deposits remained relatively low by industry
standards at 2.63 percent for the third quarter of 2007 compared to 2.51
percent for the three months ended June 30, 2007. The increase of 12 basis
points was primarily due to growth in retail time deposits during the
quarter.
Non-Interest Income
Third quarter of 2007 compared with third quarter of 2006
Non-interest income for the third quarter of 2007 increased $6.5
million, or 47.9 percent from $13.5 million for the quarter ended September
30, 2006 primarily due to a $4.7 million impairment loss taken on $132.0
million in low yielding mortgage-backed securities classified as available
for sale in the third quarter of 2006. Service charges on deposit accounts
increased $1.4 million mainly due to initiatives implemented during the
second quarter of 2007 to increase non-interest income throughout the Bank.
Bank owned life insurance income increased $1.2 million primarily due to
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, Valley recognized net losses on sales of
premises and equipment totaling $645 thousand during the third quarter of
2007 mainly due to the closure and consolidation of two leased branch
locations in Valley's branch network.
Third quarter of 2007 compared with second quarter of 2007
Non-interest income for the third quarter of 2007 increased $293
thousand, or 1.5 percent from $19.7 million for the quarter ended June 30,
2007. Net gains on trading securities increased $3.2 million from the
second quarter of 2007 primarily due to net losses totaling $2.8 million
recognized on the sale of $1.0 billion in mortgage-backed securities and
the termination of certain derivative transactions during the second
quarter. Offsetting the increased trading revenue, net gains on loans held
for sale decreased $2.4 million primarily due to the sale of approximately
$240 million of residential mortgages during the second quarter of 2007.
Net gains on sales of premises and equipment also declined $875 thousand
from the second quarter of 2007 mainly due to losses recognized on the
closure and consolidation of two leased branch locations during the third
quarter of 2007.
Non-Interest Expense
Third quarter of 2007 compared with third quarter of 2006
Non-interest expense decreased approximately $1.1 million, or 1.6
percent to $64.6 million for the quarter ended September 30, 2007 from
$65.6 million for the quarter ended September 30, 2006. Advertising expense
declined $1.7 million from the third quarter of 2006 as Valley decreased
name branding promotions in the third quarter of 2007. Professional and
legal fees also decreased $1.1 million mainly due to fees related to tax
planning recognized during the third quarter of 2006. Offsetting these
decreases to non-interest expense, other non-interest expense increased
approximately $1.0 million and salary and employee benefits increased $777
thousand mainly due to the addition of eight de novo branches to Valley's
branch network over the last twelve month period.
Third quarter of 2007 compared with second quarter of 2007
Non-interest expense increased $3.7 million, or 6.1 percent to $64.6
million for the third quarter of 2007 from $60.9 million for the linked
quarter ended June 30, 2007 mainly due to a $3.5 million increase in other
non-interest expense. The increase was primarily due to an unrealized gain
of $2.7 million on Valley's junior subordinated debentures in the second
quarter of 2007.
Income Tax Expense
Income tax expense was $11.4 million for the third quarter of 2007,
reflecting an effective tax rate of 23.8 percent, compared with an income
tax benefit of $65 thousand for the third quarter of 2006. The income tax
benefit realized during the third quarter of 2006 resulted from a reduction
in Valley's income tax reserve by $11.2 million. Valley maintains a reserve
related to certain tax positions and strategies that management believes
contain an element of uncertainty. Periodically, Valley evaluates its tax
positions and strategies to determine whether the reserve continues to be
appropriate. For the fourth quarter of 2007, Valley anticipates that its
effective tax rate for the quarter will be approximately 25 percent,
resulting in an overall 26 percent effective rate for the full year. 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.
Loans
During the third quarter, total loans increased $190.3 million, or 9.3
percent on an annualized basis, to $8.4 billion at September 30, 2007 from
approximately $8.2 billion at June 30, 2007. The linked quarter growth in
loans is mainly comprised of increases in commercial loans, residential
mortgage and automobile loans of $148.0 million, $59.4 million and $41.4
million, respectively, partially offset by normal construction loan
payments and declines in other consumer loans totaling $61.6 million and
$16.9 million, respectively. The commercial loan increase was primarily due
to one short- term commercial loan totaling $141.1 million scheduled to
mature in the fourth quarter of 2007. The increase in residential mortgage
loans is largely the result of the reduction of liquidity in the secondary
markets which has provided increased opportunities for Valley to purchase
loans in the "A" grade, jumbo market. Automobile loan volumes continue to
be strong as Valley has focused efforts to expand the geographic footprint
of its indirect auto loan origination franchise. Construction loans
declined during the second quarter through normal principal paydown
activity and a lack of new loan volume, as the slowdown in home building
market continues to negatively impact this category.
Deposits
During the quarter, total deposits increased $107.2 million to $8.4
billion as of September 30, 2007 from $8.3 billion at June 30, 2007. An
increase of $228.3 million in time deposits was partially offset by
declines in non-interest bearing deposits and savings, NOW, and money
market deposits of $101.2 million and $19.8 million, respectively. The
increase in time deposits was mainly due to a short-term loan
collateralized by a certificate of deposit held by Valley, as well as other
normal deposit activities. The decrease in demand deposits reflects
seasonal withdrawals from many of Valley's commercial customers.
Credit Quality
Net loan charge-offs for the third quarter of 2007 were approximately
$2.9 million compared to $2.0 million for the third quarter of 2006, and
$3.1 million for the second quarter of 2007. The provision for credit
losses was $2.7 million for the third quarter of 2007 compared to $1.6
million for the third quarter of 2006, and $2.4 million for the second
quarter of 2007. Total non-performing assets, consisting of non-accrual
loans, other real estate owned and other repossessed assets, totaled $32.3
million, or 0.39 percent of loans at September 30, 2007 up slightly from
$30.9 million or 0.38 percent of loans at June 30, 2007.
Loans past due 90 days or more and still accruing at September 30, 2007
were $5.4 million, or 0.06 percent of $8.4 billion of total loans, compared
to $2.1 million at September 30, 2006 and $6.7 million at June 30, 2007.
Loans past due 90 days or more and still accruing include matured loans in
the normal process of renewal which totaled approximately $1.5 million at
September 30, 2007, compared to $403 thousand at September 30, 2006 and
$3.0 million at June 30, 2007. Total loans past due in excess of 30 days
were 0.79 percent of total loans at September 30, 2007 compared with 0.80
percent at June 30, 2007.
Financial Ratios
Valley's annualized return on average shareholders' equity was 15.66
percent and 18.43 percent for the three months ended September 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 20.18 percent and 23.77 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 September 30, 2007 and 2006, annualized return on
average assets was 1.19 percent and 1.42 percent, respectively.
Valley's risk-based capital ratios were 10.02 percent for Tier 1
capital, 11.87 percent for total capital and 7.87 percent for Tier 1
leverage at September 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 170 branches in 114
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: the impact
of management's implementation and interpretation of new accounting
pronouncements, 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.
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
(in thousands, Three Months Ended Nine Months Ended
except for September 30, September 30,
share data) 2007 2006 2007 2006
FINANCIAL DATA:
Net income $36,454 $43,882 $125,567 $125,579
Net interest
income 95,139 97,557 287,092 294,435
Net interest
income -
FTE (2) 96,650 99,171 291,800 299,388
Weighted
Average
Number of
Shares
Outstanding
(3):
Basic 119,966,530 122,740,540 120,379,910 122,721,452
Diluted 120,300,017 123,369,584 120,799,085 123,237,214
Per share
data (3):
Basic
earnings $0.30 $0.36 $1.04 $1.02
Diluted
earnings 0.30 0.36 1.04 1.02
Cash
dividends
declared 0.21 0.20 0.62 0.61
Book value 7.86 8.00 7.86 8.00
Tangible book
value (1) 6.12 6.26 6.12 6.26
Closing stock
price - high 23.55 25.71 25.18 25.71
Closing stock
price - low 20.94 23.85 20.94 21.01
FINANCIAL
RATIOS:
Net interest
margin 3.37% 3.39% 3.39% 3.42%
Net interest
margin -
FTE (2) 3.43 3.44 3.44 3.47
Annualized
return on
average
assets 1.19 1.42 1.37 1.36
Annualized
return on
average
shareholders'
equity 15.66 18.43 18.05 17.70
Annualized
return on
average
tangible
shareholders'
equity (1) 20.18 23.77 23.31 22.90
Efficiency
ratio (4) 56.09 59.09 51.56 54.31
AVERAGE
BALANCE SHEET
ITEMS:
Assets $12,216,419 $12,323,642 $12,190,610 $12,291,372
Interest
earning
assets 11,284,591 11,522,678 11,301,764 11,493,958
Loans 8,207,941 8,307,228 8,227,047 8,234,559
Interest
bearing
liabilities 9,380,489 9,446,002 9,332,892 9,387,284
Deposits 8,389,340 8,485,862 8,368,995 8,458,860
Shareholders'
equity 931,359 952,212 927,647 946,227
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2007 2006 2007 2006
ALLOWANCE FOR CREDIT
LOSSES:
Beginning of period $74,775 $75,696 $74,718 $75,188
Provision for credit
losses 2,713 1,618 7,011 6,029
Charge-offs 3,892 2,408 9,680 7,647
Recoveries 1,028 456 2,575 1,792
End of period $74,624 $75,362 $74,624 $75,362
Components:
Allowance for loan
losses $72,161 $75,362 $72,161 $75,362
Reserve for unfunded
letters of credit (5) 2,463 0 2,463 0
Allowance for credit
losses $74,624 $75,362 $74,624 $75,362
As of September 30,
2007 2006
BALANCE SHEET ITEMS:
Assets $12,439,474 $12,438,555
Loans 8,370,464 8,313,087
Deposits 8,439,695 8,466,870
Shareholders' equity 942,782 978,593
CAPITAL RATIOS:
Tier 1 leverage ratio 7.87% 8.24%
Risk-based capital - Tier 1 10.02 10.69
Risk-based capital - Total Capital 11.87 12.56
ASSET QUALITY:
Non-accrual loans $29,908 $32,117
Other real estate owned 832 1,240
Other repossessed assets 1,511 1,312
Total non-performing assets $32,251 $34,669
Loans past due 90 days or
more and still accruing $5,373 $2,068
ASSET QUALITY RATIOS:
Non-performing assets to total loans 0.39% 0.42%
Allowance for loan losses
to total loans 0.86 0.91
Allowance for credit
losses to total loans 0.89 0.91
Annualized net charge-offs
to average loans 0.12 0.09
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.
(Dollars in Three Months Ended Nine Months Ended
thousands, except September 30, September 30,
for share data) 2007 2006 2007 2006
Common shares
outstanding 119,963,392 122,298,406 119,963,392 122,298,406
Shareholders' equity $942,782 $978,593 $942,782 $978,593
Less: Goodwill and
other intangible
assets 208,061 213,434 208,061 213,434
Tangible
shareholders'
equity $734,721 $765,159 $734,721 $765,159
Tangible book
value $6.12 $6.26 $6.12 $6.26
Net income $36,454 $43,882 $125,567 $125,579
Average
shareholders'
equity $931,359 $952,212 $927,647 $946,227
Less: Average
goodwill and other
intangible assets 208,640 213,679 209,513 215,014
Average tangible
shareholders'
equity $722,719 $738,533 $718,134 $731,213
Annualized
return on
average
tangible
shareholders'
equity 20.18% 23.77% 23.31% 22.90%
(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 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)
September 30, December 31,
2007 2006
Assets
Cash and due from banks $209,016 $236,354
Interest bearing deposits with banks 9,151 7,795
Federal funds sold 73,000 175,000
Investment securities:
Held to maturity, fair value of
$565,057 at September 30, 2007 and
$1,090,883 at December 31, 2006 567,276 1,108,885
Available for sale 1,411,679 1,769,981
Trading securities 909,718 4,655
Total investment securities 2,888,673 2,883,521
Loans held for sale, at fair value as
of September 30, 2007 3,066 4,674
Loans 8,370,464 8,331,685
Less: Allowance for loan losses (72,161) (74,718)
Net loans 8,298,303 8,256,967
Premises and equipment, net 229,779 209,397
Bank owned life insurance 270,321 189,157
Accrued interest receivable 65,832 63,356
Due from customers on acceptances
outstanding 12,209 9,798
Goodwill 181,614 181,497
Other intangible assets, net 26,447 29,858
Other assets 172,063 147,653
Total assets $12,439,474 $12,395,027
Liabilities
Deposits:
Non-interest bearing $1,841,064 $1,996,237
Interest bearing:
Savings, NOW and money market 3,423,813 3,561,807
Time 3,174,818 2,929,607
Total deposits 8,439,695 8,487,651
Short-term borrowings 430,410 362,615
Long-term borrowings (includes fair
value of $40,385 for a Federal
Home Loan Bank advance at September
30, 2007) 2,276,305 2,278,728
Junior subordinated debentures issued
to capital trust, at fair value
as of September 30, 2007 186,309 206,186
Bank acceptances outstanding 12,209 9,798
Accrued expenses and other
liabilities 151,764 100,459
Total liabilities 11,496,692 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 122,546,034 shares at
September 30, 2007 and 122,658,486
at December 31, 2006 43,217 41,212
Surplus 880,579 881,022
Retained earnings 102,930 97,639
Accumulated other comprehensive loss (19,153) (30,873)
Less: Treasury stock, at cost,
2,582,642 common shares at September
30, 2007 and 1,533,355 common
shares at December 31, 2006 (64,791) (39,410)
Total shareholders' equity 942,782 949,590
Total liabilities and
shareholders' equity $12,439,474 $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 Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Interest Income
Interest and
fees on loans $141,177 $140,317 $419,712 $401,417
Interest and
dividends on
investment securities:
Taxable 33,859 35,131 99,384 107,121
Tax-exempt 2,745 2,926 8,552 8,973
Dividends 1,873 1,479 5,903 4,270
Interest on federal
funds sold and other
short-term investments 3,505 1,312 9,893 2,107
Total interest
income 183,159 181,165 543,444 523,888
Interest Expense
Interest on deposits:
Savings, NOW and
money market 19,236 19,886 57,870 55,774
Time 35,891 31,573 100,798 79,389
Interest on short-term
borrowings 4,656 4,318 13,156 13,871
Interest on long-term
borrowings and junior
subordinated debentures 28,237 27,831 84,528 80,419
Total interest
expense 88,020 83,608 256,352 229,453
Net Interest Income 95,139 97,557 287,092 294,435
Provision for credit
losses 2,713 1,618 7,011 6,029
Net Interest Income After
Provision for Credit
Losses 92,426 95,939 280,081 288,406
Non-Interest Income
Trust and investment
services 1,897 1,794 5,518 5,407
Insurance premiums 2,509 2,893 8,273 8,311
Service charges on
deposit accounts 7,133 5,771 19,775 17,299
Gains (losses) on
securities transactions,
net 14 (4,712) 84 (3,205)
Gains on trading
securities, net 404 324 2,987 1,002
Fees from loan servicing 1,387 1,461 4,171 4,537
Gains on loans held for
sale, net 262 179 4,624 1,373
(Losses) gains on sales of
premises and equipment,
net (645) 59 15,958 68
Bank owned life insurance 3,239 2,053 8,254 6,095
Other 3,772 3,682 11,065 11,382
Total non-interest
income 19,972 13,504 80,709 52,269
Non-Interest Expense
Salary expense 29,459 28,109 87,139 81,678
Employee benefit expense 7,342 7,915 22,781 21,800
Net occupancy and
equipment expense 12,285 12,010 36,999 34,743
Amortization of other
intangible assets 1,881 2,165 5,671 6,536
Professional and
legal fees 2,003 3,085 5,070 7,083
Advertising 665 2,402 2,407 6,651
Other 10,936 9,940 29,586 29,816
Total non-interest
expense 64,571 65,626 189,653 188,307
Income Before Income
Taxes 47,827 43,817 171,137 152,368
Income tax expense
(benefit) 11,373 (65) 45,570 26,789
Net Income $36,454 $43,882 $125,567 $125,579
Earnings Per Common
Share:*
Basic $0.30 $0.36 $1.04 $1.02
Diluted 0.30 0.36 1.04 1.02
Cash Dividends Declared
Per Common Share* 0.21 0.20 0.62 0.61
Weighted Average Number
of Common Shares
Outstanding:*
Basic 119,966,530 122,740,540 120,379,910 122,721,452
Diluted 120,300,017 123,369,584 120,799,085 123,237,214
* 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
09/30/2007 06/30/2007 03/31/2007 12/31/2006 09/30/2006
Commercial
Loans $1,665,169 $1,517,184 $1,447,165 $1,466,862 $1,443,539
Construction 408,969 470,592 493,095 526,318 514,842
Residential
Mortgage 1,933,321 1,873,943 1,849,069 2,106,306 2,082,233
Commercial
Mortgage 2,282,669 2,262,290 2,281,871 2,309,217 2,354,791
Total
Mortgage
Loans 4,624,959 4,606,825 4,624,035 4,941,841 4,951,866
Home Equity 554,859 555,306 560,577 571,138 577,587
Credit Card 9,290 9,105 8,498 8,764 8,490
Automobile 1,433,178 1,391,801 1,280,809 1,238,145 1,229,450
Other
Consumer 83,009 99,920 119,313 104,935 102,155
Total
Consumer
Loans 2,080,336 2,056,132 1,969,197 1,922,982 1,917,682
Total
Loans $8,370,464 $8,180,141 $8,040,397 $8,331,685 $8,313,087
Quarterly Analysis of Average Assets, Liabilities and
Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
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 assets 931,828
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 borrowings 441,227 4,656 4.22%
Long-term borrowings (4) 2,453,424 28,237 4.60%
Total interest bearing liabilities 9,380,489 88,020 3.75%
Non-interest bearing deposits 1,903,502
Other liabilities 1,069
Shareholders' equity 931,359
Total liabilities and shareholders'
equity $12,216,419
Net interest income/interest rate
spread (5) 96,650 2.80%
Tax equivalent adjustment (1,511)
Net interest income, as reported $95,139
Net interest margin (6) 3.37%
Tax equivalent effect 0.06%
Net interest margin on a fully tax
equivalent basis (6) 3.43%
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%
(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
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