WAYNE, N.J., Oct. 18 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) ("Valley"), the holding company for Valley National Bank,
announced today nine months and third quarter results for 2006. Net income
for the nine months ended September 30, 2006 was $125.6 million compared to
$119.2 million for the same period in 2005, an increase of 5.4 percent.
Fully diluted earnings per common share were $1.07 for the nine months
ended September 30, 2006, compared to $1.05 per common share for the nine
months ended September 30, 2005. All common share data is adjusted to
reflect a five percent stock dividend issued on May 22, 2006.
Net income for the third quarter of 2006 was $43.9 million compared to
$41.9 million for the third quarter of 2005, an increase of 4.6 percent.
Fully diluted earnings per common share were $0.37 for the third quarter of
2006, compared to $0.36 per common share in the same quarter of 2005.
Set forth below are highlights of several significant events that
occurred during the third quarter of 2006:
-- Total interest income on a fully tax equivalent basis increased $6.8
million as the tax equivalent yield on average total loans improved by
27 basis points.
-- Net interest margin on a fully tax equivalent basis declined four basis
points from the second quarter to 3.44 percent primarily due to an
increase in funding costs.
-- Cash flow hedges that effectively converted $300 million prime-based
floating rate commercial loans to a fixed rate since July 2004 expired
on August 1, 2006. The expiration is expected to have a positive
impact on Valley's net interest income.
-- Release of previously established income tax reserves of $11.2 million
(See "Income Tax Expense" Section below).
-- An impairment loss totaling $4.7 million before income taxes was
primarily the result of management's decision to sell $132.0 million in
low yielding mortgage-backed securities classified as available for
sale at September 30, 2006. These securities were sold in the fourth
quarter.
-- Valley repurchased approximately 474 thousand of its common shares at
an average price per share of $25.68 pursuant to its publicly announced
repurchase plan on May 14, 2003.
-- Three new branches were opened during the quarter, including two
offices in Manhattan.
Chairman's Comments
Gerald H. Lipkin, Chairman, President and CEO noted that, "Despite the
inverted yield curve and a challenging loan and deposit gathering
environment, Valley recorded strong shareholder returns during the quarter
with an annualized average return on tangible shareholders' equity that
exceeded 23.0 percent. We believe our focus on structuring the balance
sheet in a manner which optimizes long-term returns and diligent management
operating expense levels will continue to greatly benefit our shareholders.
Under current economic conditions, we are concerned about the future
profitability and possible viability of some business and consumer credit
facilities in our marketplace. Accordingly, we encouraged approximately $50
million in various types of lending relationships to move to other
financial institutions during the third quarter. While none of these
relationships were impaired or delinquent, we believe within a slowing
economy each company could be susceptible to future earnings pressure. We
believe Valley's proactive strategy is prudent in the current credit cycle,
as recently evidenced by the Chapter 11 filing of a local New Jersey
builder. Now is not the time for a Bank to be expanding the loan portfolio
with marginal credits.
Our funding needs through deposits lessened during the quarter due to a
slight decline in the loan portfolio and our continued reduction of the
investment securities portfolio through normal principal paydowns. As a
result, higher cost municipal deposits decreased approximately $84 million
during the quarter, while management focused on retaining consumer and
commercial deposit relationships with the potential for expanded account
services. We do not expect a significant expansion of the deposit
portfolio, until loan demand with Valley's historical credit
characteristics accelerates.
Valley's net interest margin remained relatively stable during the
period, contracting four basis points from the second quarter of 2006. The
margin contraction mainly reflects the competitive deposit pricing within
our markets, and we anticipate continued pressure on the margin during the
fourth quarter.
In the current interest rate environment, we believe targeted
repurchases of Valley's common shares is an attractive use of shareholders'
capital. As a result, we actively repurchased common shares during the
third quarter and continue do so in the fourth quarter. In the fourth
quarter of 2006, Valley repurchased approximately 654 thousand common
shares at an average price per share of $25.76 as of October 17, 2006.
Valley remains committed to providing exceptional financial services
and products to attract new customers and better serve our existing
customers. In September, we announced the addition of real time reporting
and processing capabilities for business and government clients managing
their banking activities on VNB Connect Plus, Valley's on-line business
banking platform. We anticipate a positive response from customers on this
new level of cash management functionality rarely provided by other
financial institutions.
Additionally, Valley's focused branch expansion within one hour of our
headquarters in Wayne, New Jersey yielded seven new branch offices,
including two in Manhattan, since the beginning of 2006. We anticipate
opening four more offices by year-end. Our expansion strategy is to find
the most attractive building sites to fill in and expand our presence in
neighboring counties, including Kings and Queens Counties in New York.
While these new offices immediately add franchise value, the additional
operating costs will have a negative impact on non-interest expense in the
near-term."
Net Interest Income and Margin
Net interest income on a tax equivalent basis was $99.2 million for the
third quarter of 2006, a $5.4 million decrease from the same quarter of
2005 and a decrease of $807 thousand from the linked quarter ended June 30,
2006. The decrease during the quarter was mainly a result of an increase in
funding costs of $7.6 million, or 29 basis points, from the second quarter
of 2006.
The net interest margin on a tax equivalent basis was 3.44 percent for
the third quarter of 2006, a decline of four basis points from the linked
quarter ended June 30, 2006. The yield on average total loans continued to
improve as the third quarter of 2006 yield equaled 6.76 percent, an
increase of 62 basis points from the same period a year ago and a 27 basis
point increase from the second quarter of 2006.
Valley's cost of total deposits remained relatively low by industry
standards at 2.43 percent for the third quarter of 2006 compared to 2.11
percent for the three months ended June 30, 2006. The increase of 32 basis
points was within management's expectations given the competitive rate
environment and the average federal funds rate increased approximately 35
basis points from the second quarter.
Non-Interest Income
Non-interest income declined $6.0 million from the second quarter of
2006, totaling approximately $13.4 million for the three months ended
September 30, 2006. The decline is mainly due to net losses on securities
transactions of $4.7 million for the third quarter of 2006 compared to net
gains on securities transactions of $553 thousand for the second quarter of
2006. The $4.7 million represents an impairment loss recognized on certain
mortgage-backed and equity securities held available for sale. Net gains on
sale of loans and service charges on deposit accounts declined $350
thousand and $167 thousand, respectively, due to lower activity compared to
the linked quarter ended June 30, 2006.
Non-interest income decreased $5.9 million from $19.3 million for the
same period in 2005. Net gains on securities transactions declined $5.1
million from a year ago due to the $4.7 million loss described above. Net
gains on sale of loans declined $322 thousand from a year ago due to lower
loan activity during the period. Fees from loan servicing decreased $248
thousand to $1.5 million for the third quarter of 2006 compared to the same
period in 2005 mainly due to smaller balances of loans serviced resulting
from refinance and payoff activity. However, bank owned life insurance
income increased $233 thousand, or 12.8 percent, primarily due to a higher
yield on the underlying investment securities.
Non-Interest Expense
Non-interest expense increased $3.7 million, or 5.9 percent to $65.6
million for the third quarter of 2006 from $61.9 million for the linked
quarter ended June 30, 2006. Salary and employee benefits increased $2.3
million due to increased accruals for health care insurance, incentive
compensation, and pension costs. Net occupancy and equipment expense
increased $812 thousand due to additional expenses related to Valley's
branch expansion and seasonally higher utilities expense. Professional and
legal fees also increased $1.0 million from the linked quarter mainly due
to fees related to tax planning. However, other non-interest expense
decreased $367 thousand from the linked quarter primarily due to customer
events and postage for additional customer mailings during the second
quarter of 2006.
Non-interest expense increased by $4.1 million, or 6.7 percent to $65.6
million for the quarter ended September 30, 2006 from $61.5 million for the
quarter ended September 30, 2005. Salary and employee benefits increased
$1.9 million largely due to increased accruals for health care insurance,
incentive compensation, and pension costs in the third quarter of 2006, as
well as Valley's branch expansion. Advertising expense was higher by $877
thousand from last year due to an increase in promotional programs during
2006. Net occupancy and equipment expense increased $719 thousand from last
year due to Valley's branch expansion, which includes, among other things,
additional rents, utilities, real estate taxes, and depreciation charges in
connection with investments in technology and facilities. Professional and
legal fees also increased $532 thousand from last year mainly due to fees
related to tax planning.
Income Tax Expense
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. Management, as
part of its periodic assessment, reduced its income tax reserve by $11.2
million during the third quarter of 2006. The assessment was based upon the
passing of the statute of limitations and completion of its most recent
income tax examination. As a result, the effective tax rate was
approximately zero percent for the three months ended September 30, 2006
compared to 29.6 percent for same period one year ago.
For the fourth quarter of 2006, Valley anticipates an effective tax
rate of approximately 27.0 percent, compared to 17.6 percent for the nine
months ended September 30, 2006. 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 or state income tax
laws.
Loans and Deposits
During the quarter, loans decreased $22.6 million, or 0.3 percent to
approximately $8.3 billion at September 30, 2006. The linked quarter
decline in loans is mainly comprised of decreases in commercial,
residential mortgage and consumer loans of $49.1 million, $11.5 million and
$4.0 million, respectively, partially offset by a $42.9 million increase in
commercial mortgage loans. The decrease in commercial loans was mainly due
to lower loan volumes and approximately $50.0 million in certain customer
relationships which moved to other financial institutions.
During the quarter, deposits decreased $104.4 million, or 1.2 percent
from $8.6 billion at June 30, 2006, primarily due to a decline in municipal
deposits of approximately $84.0 million. Future deposit growth is expected
to be dependent on earning asset demand combined with the rates dictated by
market competition versus the cost of alternative funding sources.
Credit Quality
Net loan charge-offs for the third quarter of 2006 were $2.0 million
compared to $1.0 million for the third quarter of 2005, and $3.3 million
for the second quarter of 2006. The decrease in net loan charge-offs from
the linked quarter is mainly due to two non-accrual commercial loans
totaling $2.2 million that were charged-off in the second quarter of 2006.
The provision for loan losses was $1.6 million for the third quarter of
2006 compared to $1.1 million for the third quarter of 2005, and $3.1
million for the second quarter of 2006. Total non-performing assets,
consisting of non-accrual loans, other real estate owned and other
repossessed assets, totaled $34.7 million, or 0.42 percent of loans at
September 30, 2006 up from $31.7 million or 0.38 percent at June 30, 2006.
The increase from the prior quarter is primarily due to the addition of one
commercial loan relationship totaling $3.6 million to non-accrual loans as
of September 30, 2006.
Loans past due 90 days or more and still accruing at September 30, 2006
were $2.1 million, or 0.02 percent of $8.3 billion of total loans, compared
to $6.8 million at September 30, 2005 and $7.4 million at June 30, 2006.
Total loans past due in excess of 30 days were 0.69 percent of total loans
at September 30, 2006 compared with 0.65 percent at June 30, 2006.
Financial Ratios
Valley's annualized return on average shareholders' equity was 18.43
percent and 18.20 percent for the three months ended September 30, 2006 and
2005, respectively. On a comparative basis, adjusting for Valley's goodwill
and other intangible assets, the annualized return on average tangible
shareholders' equity was 23.77 percent and 23.94 percent, respectively, for
the three months ended September 30, 2006 and 2005. See "Notes to Selected
Financial Data" section in the tables that follow for information regarding
the computation of these ratios.
For the third quarter of 2006 and 2005, annualized return on average
assets was 1.42 percent and 1.37 percent, respectively.
Valley's risk-based capital ratios were 10.69 percent for Tier 1
capital, 12.56 percent for total capital and 8.24 percent for Tier 1
leverage at September 30, 2006.
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 167 offices in 109
communities serving 12 counties throughout northern and central New Jersey
and Manhattan.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements are
not historical facts and include expressions about management's confidence
and strategies and management's expectations about new and existing
programs and products, relationships, opportunities, taxation, technology
and market conditions. These statements may be identified by such
forward-looking terminology as "expect," "believe," "view," "opportunity,"
"allow," "continues," "reflects," "typically," "usually," "anticipate," or
similar statements or variations of such terms. Such forward-looking
statements involve certain risks and uncertainties. Actual results may
differ materially from such forward-looking statements. Factors that may
cause actual results to differ from those contemplated by such
forward-looking statements include, among others, the following:
unanticipated changes in the direction of interest rates, effective income
tax rates, loan and investment prepayments and assumptions, levels of loan
quality and origination volume, relationships with major customers, as well
as the effects of unanticipated economic conditions and legal and
regulatory barriers including compliance issues related to AML/BSA
compliance and the development of new tax strategies or the disallowance of
prior tax strategies. Valley assumes no obligation for updating any such
forward-looking statement at any time.
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except for 2006 2005 2006 2005
share data)
FINANCIAL DATA:
Net income $ 43,882 $ 41,942 $ 125,579 $ 119,201
Net interest income 97,557 102,888 294,435 297,321
Net interest income -
FTE (2) 99,171 104,611 299,388 302,431
Weighted Average
Number of Shares
Outstanding(3):
Basic 116,895,752 116,818,835 116,877,573 113,582,165
Diluted 117,494,842 117,218,362 117,368,775 114,020,411
Per share data (3):
Basic earnings $ 0.38 $ 0.36 $ 1.07 $ 1.05
Diluted earnings 0.37 0.36 1.07 1.05
Cash dividends
declared 0.22 0.21 0.64 0.62
Book value 8.40 7.86 8.40 7.86
Tangible book
value (1) 6.57 5.99 6.57 5.99
Closing stock
price - high 27.00 23.37 27.00 25.23
Closing stock
price - low 25.04 21.62 22.06 21.62
FINANCIAL RATIOS:
Net interest margin 3.39% 3.60% 3.42% 3.67%
Net interest margin
- FTE (2) 3.44 3.66 3.47 3.74
Annualized return on
average assets 1.42 1.37 1.36 1.38
Annualized return on
average shareholders'
equity 18.43 18.20 17.70 19.17
Annualized return on
average tangible
shareholders'
equity(1) 23.77 23.94 22.90 23.17
Efficiency ratio(4) 59.07 50.31 54.30 49.98
AVERAGE BALANCE SHEET
ITEMS:
Assets $ 12,323,642 $ 12,255,800 $ 12,291,372 $ 11,538,118
Interest earning
assets 11,522,678 11,420,341 11,493,958 10,789,348
Loans 8,307,228 7,962,189 8,234,559 7,480,054
Interest bearing
liabilities 9,446,002 9,308,938 9,387,284 8,776,015
Deposits 8,485,862 8,644,289 8,458,860 8,122,319
Shareholders' equity 952,212 921,977 946,227 828,993
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2006 2005 2006 2005
ALLOWANCE FOR LOAN LOSSES:
Beginning of period $75,696 $75,059 $75,188 $65,699
Provision for loan losses 1,618 1,125 6,029 2,802
Charge-offs 2,408 1,889 7,647 5,153
Recoveries 456 885 1,792 2,580
Additions from acquisitions -- -- -- 9,252
End of period $75,362 $75,180 $75,362 $75,180
As of September 30,
2006 2005
BALANCE SHEET ITEMS:
Assets $12,438,555 $12,483,716
Loans 8,313,087 8,081,812
Deposits 8,466,870 8,690,535
Shareholders' equity 978,593 918,127
CAPITAL RATIOS:
Tier 1 leverage ratio 8.24% 7.75%
Risk-based capital - Tier 1 10.69 10.13
Risk-based capital - Total Capital 12.56 12.03
ASSET QUALITY:
Non-accrual loans $ 32,117 $ 24,192
Other real estate owned 1,240 1,628
Other reposessed assets 1,312 898
Total non-performing assets 34,669 26,718
Loans past due 90 days or more and still
accruing 2,068 6,816
ASSET QUALITY RATIOS:
Non-performing assets to total loans 0.42% 0.33%
Allowance for loan losses to loans 0.91 0.93
Annualized net charge-offs to average loans 0.09 0.05
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. Valley's management believes these non-GAAP financial
measures provide information useful to investors in understanding the
underlying operational performance of Valley, its business and
performance trends and facilitates comparisons with the performance of
others in 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 common shares
outstanding.
- Return on average tangible shareholders' equity is computed by
dividing net income by average shareholders' equity less average
goodwill and average other intangible assets.
Three Months Ended Nine Months Ended
(Dollars in thousands, September 30, September 30,
except for share data) 2006 2005 2006 2005
Common shares
outstanding 116,474,672 116,790,029 116,474,672 116,790,029
Shareholders' equity $ 978,593 $ 918,127 $ 978,593 $ 918,127
Less: Goodwill and
other intangible
assets (213,434) (219,007) (213,434) (219,007)
Tangible shareholders'
equity $ 765,159 $ 699,120 $ 765,159 $ 699,120
Tangible book value $ 6.57 $ 5.99 $ 6.57 $ 5.99
Net income $ 43,882 $ 41,942 $ 125,579 $ 119,201
Average shareholders'
equity 952,212 921,977 946,227 828,993
Less: Average goodwill
and other intangible
assets (213,679) (221,124) (215,014) (142,972)
Average tangible
shareholders'
equity $ 738,533 $ 700,853 $ 731,213 $ 686,021
Annualized return
on average tangible
shareholders' equity 23.77% 23.94% 22.90% 23.17%
(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 stock dividend issued on May 22,
2006.
(4) The efficiency ratio measures Valley's total non-interest expense as a
percentage of net interest income plus total non-interest income.
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,
Assets 2006 2005
Cash and due from banks $ 212,606 $ 246,119
Interest bearing deposits with banks 10,253 13,926
Federal funds sold 71,000 --
Investment securities:
Held to maturity, fair value of
$1,168,778 at September 30, 2006
and $1,218,081 at December 31, 2005 1,187,570 1,229,190
Available for sale 1,888,983 2,038,894
Trading securities 1,906 4,208
Total investment securities 3,078,459 3,272,292
Loans held for sale 1,149 3,497
Loans 8,313,087 8,130,457
Less: Allowance for loan losses (75,362) (75,188)
Net loans 8,237,725 8,055,269
Premises and equipment, net 198,421 182,739
Bank owned life insurance 187,081 182,789
Accrued interest receivable 64,760 57,280
Due from customers on acceptances
outstanding 11,072 11,314
Goodwill 181,497 179,898
Other intangible assets, net 31,937 37,456
Other assets 152,595 193,523
Total assets $12,438,555 $12,436,102
Liabilities
Deposits:
Non-interest bearing $ 1,957,749 $ 2,048,218
Interest bearing:
Savings, NOW and money market 3,560,674 4,026,249
Time 2,948,447 2,495,534
Total deposits 8,466,870 8,570,001
Short-term borrowings 394,837 582,575
Long-term borrowings 2,499,205 2,245,570
Bank acceptances outstanding 11,072 11,314
Accrued expenses and other
liabilities 87,978 94,732
Total liabilities 11,459,962 11,504,192
Shareholders' Equity*
Preferred stock, no par value,
authorized 30,000,000 shares; none
issued -- --
Common stock, no par value,
authorized 173,139,309 shares;
issued 116,942,942 shares at
September 30, 2006 and 116,985,373
shares at December 31, 2005 41,264 39,302
Surplus 883,938 741,456
Retained earnings 85,150 177,332
Accumulated other comprehensive loss (19,734) (24,036)
Less: Treasury stock, at cost,
468,270 common shares at September
30, 2006 and 92,320 shares at
December 31, 2005 (12,025) (2,144)
Total shareholders' equity 978,593 931,910
Total liabilities and
shareholders' equity $12,438,555 $12,436,102
* Share data reflects a five percent common stock dividend issued May 22,
2006.
VALLEY NATIONAL BANCORP
Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Interest Income
Interest and fees on
loans $ 140,317 $ 122,084 $ 401,417 $ 334,461
Interest and dividends
on investment
securities:
Taxable 35,131 37,370 107,121 107,570
Tax-exempt 2,926 3,119 8,973 9,255
Dividends 1,479 1,179 4,270 3,300
Interest on federal
funds sold and
other short-term
investments 1,312 247 2,107 644
Total interest
income 181,165 163,999 523,888 455,230
Interest Expense
Interest on deposits:
Savings, NOW and
money market 19,886 16,129 55,774 36,836
Time 31,573 18,162 79,389 46,820
Interest on short-term
borrowings 4,318 4,298 13,871 11,417
Interest on long-term
borrowings 27,831 22,522 80,419 62,836
Total interest
expense 83,608 61,111 229,453 157,909
Net Interest Income 97,557 102,888 294,435 297,321
Provision for loan
losses 1,618 1,125 6,029 2,802
Net interest income
after provision for
loan losses 95,939 101,763 288,406 294,519
Non-Interest Income
Trust and investment
services 1,794 1,603 5,407 4,799
Insurance premiums 2,893 3,004 8,311 9,067
Service charges on
deposit accounts 5,771 5,875 17,299 16,739
(Losses) gains on
securities
transactions, net (4,712) 361 (3,205) 2,679
Gains on trading
securities, net 324 353 1,002 1,260
Fees from loan
servicing 1,461 1,709 4,537 5,271
Gains on sales of
loans, net 179 501 1,373 1,568
Bank owned life
insurance 2,053 1,820 6,095 5,132
Other 3,682 4,091 11,382 11,492
Total non-interest
income 13,445 19,317 52,201 58,007
Non-Interest Expense
Salary expense 28,109 27,371 81,678 78,817
Employee benefit
expense 7,915 6,774 21,800 20,552
Net occupancy and
equipment expense 11,951 11,232 34,675 31,131
Amortization of
other intangible
assets 2,165 2,275 6,536 6,351
Professional and
legal fees 3,085 2,553 7,083 6,400
Advertising 2,402 1,525 6,651 5,958
Other 9,940 9,748 29,816 28,392
Total non-interest
expense 65,567 61,478 188,239 177,601
Income before income
taxes 43,817 59,602 152,368 174,925
Income tax (benefit)
expense (65) 17,660 26,789 55,724
Net Income $ 43,882 $ 41,942 $ 125,579 $ 119,201
Weighted Average
Number of Common
Shares
Outstanding:*
Basic 116,895,752 116,818,835 116,877,573 113,582,165
Diluted 117,494,842 117,218,362 117,368,775 114,020,411
Earnings Per Common
Share:*
Basic $ 0.38 $ 0.36 $ 1.07 $ 1.05
Diluted 0.37 0.36 1.07 1.05
Cash Dividends
Declared Per Common
Share* 0.22 0.21 0.64 0.62
* Share data reflects a five percent common stock dividend issued May 22,
2006.
Valley National Bancorp
(Dollars in thousands)
Loan Portfolio
For the periods ended
9/30/2006 6/30/2006 3/31/2006 12/31/2005 9/30/2005
Commercial
Loans $1,443,539 $1,492,688 $1,449,207 $1,449,919 $1,414,639
Construction 514,842 515,683 456,478 471,560 459,935
Residential
Mortgage 2,082,233 2,093,694 2,099,696 2,083,004 2,061,366
Commercial
Mortgage 2,354,791 2,311,897 2,298,239 2,234,950 2,230,586
Total
Mortgage
Loans 4,951,866 4,921,274 4,854,413 4,789,514 4,751,887
Home Equity 577,587 570,500 559,118 565,960 571,441
Credit Card 8,490 8,279 8,061 9,044 8,764
Automobile 1,229,450 1,234,005 1,194,749 1,221,525 1,233,125
Other Consumer 102,155 108,946 95,252 94,495 101,956
Total
Consumer
Loans 1,917,682 1,921,730 1,857,180 1,891,024 1,915,286
Total Loans $8,313,087 $8,335,692 $8,160,800 $8,130,457 $8,081,812
Quarterly Analysis of Average Assets, Liabilities and Shareholders'
Equity and
Net Interest Income on a Tax Equivalent Basis
Quarter End - 9/30/06 Quarter End - 6/30/06
Average Avg. Average Avg.
Balance Interest Rate Balance Interest Rate
Assets
Interest earning
assets:
Loans (1)(2) $ 8,307,228 $ 140,355 6.76% $ 8,243,355 $ 133,710 6.49%
Taxable
investments (3) 2,830,076 36,610 5.17% 2,919,614 37,107 5.08%
Tax-exempt
investments
(1)(3) 285,387 4,502 6.31% 292,738 4,577 6.25%
Federal funds
sold and other
interest bearing
deposits 99,987 1,312 5.25% 45,313 573 5.06%
Total interest
earning assets 11,522,678 182,779 6.35% 11,501,020 175,967 6.12%
Other assets 800,964 793,821
Total assets $12,323,642 $12,294,841
Liabilities and
shareholders'
equity
Interest bearing
liabilities:
Savings, NOW
and money
market
deposits $ 3,666,485 $ 19,886 2.17% $3,853,598 $ 18,865 1.96%
Time deposits 2,900,781 31,573 4.35% 2,683,610 26,095 3.89%
Short-term
borrowings 386,034 4,318 4.47% 415,298 4,142 3.99%
Long-term
borrowings 2,492,702 27,831 4.47% 2,410,614 26,887 4.46%
Total interest
bearing
liabilities 9,446,002 83,608 3.54% 9,363,120 75,989 3.25%
Non-interest
bearing
deposits 1,918,596 1,966,216
Other
liabilities 6,832 19,487
Shareholders'
equity 952,212 946,018
Total
liabilities
and
shareholders'
equity $12,323,642 $12,294,841
Net interest
income/interest
rate spread(4) 99,171 2.81% 99,978 2.87%
Tax equivalent
adjustment (1,614) (1,641)
Net interest
income,
as reported $ 97,557 $ 98,337
Net interest
margin (5) 3.39% 3.42%
Tax equivalent
effect 0.05% 0.06%
Net interest
margin on a
fully tax
equivalent
basis (5) 3.44% 3.48%
Quarter End - 3/31/06 Quarter End - 12/31/05
Average Avg. Average Avg.
Balance Interest Rate Balance Interest Rate
Assets
Interest earning
assets:
Loans (1)(2) $ 8,151,381 $ 127,472 6.26% $ 8,106,582 $ 127,026 6.27%
Taxable
investments (3) 2,990,948 37,674 5.04% 3,115,049 39,196 5.03%
Tax-exempt
investments
(1)(3) 297,505 4,726 6.35% 301,445 4,731 6.28%
Federal funds
sold and other
interest bearing
deposits 17,624 222 5.04% 59,887 600 4.01%
Total interest
earning assets 11,457,458 170,094 5.94% 11,582,963 171,553 5.92%
Other assets 797,420 827,871
Total assets $12,254,878 $12,410,834
Liabilities and
shareholders'
equity
Interest bearing
liabilities:
Savings, NOW
and money
market
deposits $ 3,916,783 $ 17,023 1.74% $ 4,206,136 $ 18,620 1.77%
Time deposits 2,529,421 21,721 3.43% 2,482,182 20,781 3.35%
Short-term
borrowings 565,787 5,411 3.83% 584,695 5,099 3.49%
Long-term
borrowings 2,339,703 25,701 4.39% 2,192,011 24,250 4.43%
Total interest
bearing
liabilities 9,351,694 69,856 2.99% 9,465,024 68,750 2.91%
Non-interest
bearing
deposits 1,939,995 1,973,843
Other
liabilities 22,870 48,387
Shareholders'
equity 940,319 923,580
Total
liabilities
and
shareholders'
equity $12,254,878 $12,410,834
Net interest
income/interest
rate spread (4) 100,238 2.95% 102,803 3.01%
Tax equivalent
adjustment (1,697) (1,700)
Net interest
income, as
reported $ 98,541 $ 101,103
Net interest
margin (5) 3.44% 3.49%
Tax equivalent
effect 0.06% 0.06%
Net interest
margin on a
fully tax
equivalent
basis (5) 3.50% 3.55%
Quarter End - 9/30/05
Average Avg.
Balance Interest Rate
Assets
Interest earning assets:
Loans (1)(2) $ 7,962,189 $122,127 6.14%
Taxable investments (3) 3,114,714 38,549 4.95%
Tax-exempt investments (1)(3) 313,324 4,799 6.13%
Federal funds sold and other
interest bearing deposits 30,114 247 3.28%
Total interest earning assets 11,420,341 165,722 5.80%
Other assets 835,459
Total assets 12,255,800
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money market deposits $ 4,249,153 $ 16,129 1.52%
Time deposits 2,430,264 18,162 2.99%
Short-term borrowings 555,043 4,298 3.10%
Long-term borrowings 2,074,478 22,522 4.34%
Total interest bearing liabilities 9,308,938 61,111 2.63%
Non-interest bearing deposits 1,964,872
Other liabilities 60,013
Shareholders' equity 921,977
Total liabilities and shareholders'
equity $12,255,800
Net interest income/interest rate
spread (4) 104,611 3.17%
Tax equivalent adjustment (1,723)
Net interest income, as reported $102,888
Net interest margin (5) 3.60%
Tax equivalent effect 0.06%
Net interest margin on a fully tax
equivalent basis (5) 3.66%
(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) 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.
(5) Net interest income as a percentage of total average interest earning
assets.
SOURCE Valley National Bancorp
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