WAYNE, N.J., Oct. 23 /PRNewswire-FirstCall/ -- Valley National Bancorp
(NYSE: VLY) ("Valley"), the holding company for Valley National Bank, today
announced third quarter and nine months results for 2008. Net income for
the third quarter of 2008 was $3.6 million, or $0.03 fully diluted earnings
per common share. Third quarter results were reduced by a $70.9 million
securities loss on Fannie Mae and Freddie Mac perpetual preferred stock
held in the available for sale securities portfolio. On an after tax basis,
this charge reduced third quarter net income by $44.1 million, or $0.33 per
diluted share. A preliminary estimate of the impact of this charge was
previously disclosed in Valley's Form 8-K on September 4, 2008.
On a core operating basis, excluding the above securities loss, net
income for the third quarter was $47.7 million or $0.35 per fully diluted
share. Management believes the core operating results present a more
relevant measure of ongoing business trends and offer a better comparison
with prior periods. The selected financial data in this report include a
reconciliation of results that include securities losses and impairment
charges (reported results) with those that do not (core operating results).
Net income was $76.7 million for the nine months ended September 30,
2008 or $0.59 fully diluted earnings per common share. The nine month
results were reduced by a $71.9 million securities loss on Fannie Mae and
Freddie Mac perpetual preferred stock. On an after tax basis, this charge
reduced the nine month net income by approximately $44.6 million, or $0.35
per diluted share. On a core operating basis, excluding the above
securities loss, net income for the nine months was $121.3 million, or
$0.94 per diluted share.
Set forth below are highlights that occurred during the third quarter
of 2008:
-- On July 1, 2008, Valley completed the acquisition of Greater Community
Bancorp ("Greater Community") with approximately $1.0 billion
in total assets and 16 full-service branches in northern New Jersey.
The purchase price of $167.8 million was paid through a combination of
Valley's common stock and warrants. The transaction generated
approximately $114.2 million in goodwill and $7.5 million in core
deposit intangible assets subject to amortization. Greater
Community's systems were integrated into Valley during the third
quarter with minimal disruption to customer service.
-- Net interest income on a fully tax equivalent basis increased for the
fourth consecutive quarter, up $12.7 million from the second quarter of
2008. The increase was primarily due to increased loan volumes caused
by the Greater Community acquisition and organic loan growth, as well as
an expansion of Valley's net interest margin by 16 basis points to
3.64 percent.
-- Valley's home equity and residential mortgage loan delinquencies
remained below the banking industry averages. At September 30, 2008,
Valley's $600.6 million home equity portfolio consisting of over
15,400 loans had only 15 loans past due 30 days or more. These 15 loans
totaled $792 thousand or 0.13 percent of the portfolio. Valley's
residential mortgage portfolio totaling $2.3 billion and approximately
9,600 total loans had 59 loans past due 30 days or more. These 59 loans
totaled $12.3 million or 0.53 percent of the portfolio. At the same
time, automobile loans totaling $1.5 billion and over 117,000 loans had
1,923 loans past due 30 days or more. These 1,923 loans totaled $22.4
million or 1.52 percent of all automobile loans. See "Credit
Quality" section below for more details.
-- September 30, 2008, Valley National Bank's capital ratios were all
above the minimum level required to be categorized as "well
capitalized." Valley National Bank's total risk-based capital,
Tier I capital, and leverage capital were 10.12 percent, 8.41 percent,
and 6.83 percent, respectively, at September 30, 2008. Valley
anticipates no change in its regular quarterly cash dividend to common
shareholders during the remainder of 2008.
-- Total loans grew by $1.0 billion to approximately $10.1 billion at
September 30, 2008 compared to June 30, 2008 primarily due to $811.1
million in loans acquired from Greater Community. Valley also
experienced solid organic loan growth in commercial mortgage and
commercial loans from the linked quarter.
-- Net trading gains increased $14.0 million from the linked second quarter
of 2008 mainly due to the change in the fair value of Valley's
junior subordinated debentures issued to VNB Capital Trust I (which are
carried at fair value), partially offset by $6.1 million in mark to
market losses on trading securities.
Chairman's Comments
Gerald H. Lipkin, Chairman, President and CEO noted that, "Our third
quarter earnings results were substantially impacted by write-downs and
realized losses associated with the government's decision to place Fannie
Mae and Freddie Mac into conservatorship and cause the value of their
preferred securities to substantially decline. While we're upset about the
impact of these charges brought on by current market conditions, these same
market conditions have benefited us by creating more loan opportunities
with new quality customers unable to find financing at other financial
institutions which are not currently in a stable financial position
competing in our primary markets. Excluding the positive impact of the
Greater Community acquisition during the quarter, Valley's commercial
mortgage and commercial loan portfolios each grew organically over 22
percent on an annualized basis.
As previously disclosed in Valley's Form 8-K on September 4, 2008,
management is currently reviewing certain owned real estate properties for
potential sale-leaseback transactions. Sale-leaseback transactions allow
the monetization of the appreciated fair value of such properties and
provide cash for future company growth, including additional growth in
Valley's loan portfolio.
Valley's strength continues to be its straight-forward lending
practices. Management has avoided the use of non-traditional, higher-risk
loan products that could jeopardize capital and potentially create
liquidity issues. Valley's delinquency levels remained relatively low with
total loans past due in excess of 30 days totaling 0.86 percent of our
$10.1 billion loan portfolio at September 30, 2008 as compared to 0.82
percent of total loans at June 30, 2008 and 1.00 percent of total loans at
December 31, 2007. These numbers continue to demonstrate the strong
performance of our loan portfolio and management's dedication to
conservative loan underwriting standards.
The Treasury Department recently outlined a plan under which the
government will offer certain banks a direct capital infusion in exchange
for nonvoting senior preferred stock. Although Valley is well-capitalized
and its credit performance has remained solid during the current economic
crisis, we are carefully examining opportunities for Valley to participate
in this program and determine if there is a compelling benefit to Valley
and its shareholders. Additionally, the FDIC has expanded its deposit
insurance without additional cost to cover, without limitation, all of
Valley's non-interest bearing accounts until November 13, 2008. After such
date this coverage becomes a voluntary fee-based program set to expire on
December 31, 2009. Valley plans to participate in such program."
Credit Quality
Management believes that Valley's credit quality is stable with
delinquencies and losses remaining relatively low, despite the difficulties
being reported by other financial institutions. Valley's focus has been and
continues to be on traditional lending, utilizing our time-tested
conservative underwriting approach. With a loan portfolio totaling
approximately $10.1 billion, net loan charge-offs for the third quarter of
2008 were $4.4 million compared to $4.9 million for the second quarter of
2008, and $2.9 million for the third quarter of 2007. The provision for
credit losses was $6.9 million for the third quarter of 2008 compared to
$5.8 million for the second quarter of 2008, and $2.7 million for the third
quarter of 2007. The quarterly provision is the result of Valley's
quarterly analysis of the loan portfolio and, among other factors, reflects
the increase in the size and rate of growth of the loan portfolio, the
level of net loan charge-offs, delinquencies and the current economic
environment.
The allowance for credit losses as a percentage of total loans
increased 5 basis points to 0.89 percent at September 30, 2008 as compared
to June 30, 2008 and increased 1 basis point compared to December 31, 2007.
The quarter over quarter increase was mainly the result of solid quarter
over quarter loan growth, including non-acquisition related expansion in
commercial mortgage and commercial loan categories, and additional reserves
of $11.4 million assumed in the Greater Community acquisition during the
third quarter of 2008. The following table summarizes the allocation of the
allowance for credit losses to specific loan categories and the allocation
as a percentage of each loan category:
September 30, 2008 June 30, 2008 December 31, 2007
Allocation Allocation Allocation
as a % of as a % of as a % of
Allowance loan Allowance loan Allowance loan
Allocation category Allocation category Allocation category
Loan
category: (Dollars in thousands)
Commercial* $ 40,546 2.13% $ 35,330 2.10% $ 31,638 2.02%
Mortgage:
Construction 14,397 3.06% 11,676 2.92% 11,748 2.92%
Residential
mortgage 3,771 0.16% 3,364 0.15% 3,124 0.15%
Commercial
mortgage 12,520 0.39% 10,177 0.40% 8,788 0.37%
Total
Mortgage
loans 30,688 0.51% 25,217 0.49% 23,660 0.49%
Consumer:
Home equity 1,627 0.27% 1,549 0.29% 1,634 0.29%
Other
consumer 11,428 0.72% 10,041 0.61% 9,181 0.60%
Total
consumer
loans 13,055 0.60% 11,590 0.53% 10,815 0.52%
Unallocated 5,472 NA 3,812 NA 8,822 NA
$ 89,761 0.89% $ 75,949 0.84% $ 74,935 0.88%
* Includes the reserve for unfunded letters of credit.
Total non-performing assets, consisting of non-accrual loans, other
real estate owned (OREO) and other repossessed assets, totaled $41.8
million, or 0.42 percent of loans at September 30, 2008 compared to $36.1
million, or 0.40 percent of loans at June 30, 2008. Non-accrual loans
increased $3.1 million mainly due to four commercial loans totaling $3.0
million acquired from Greater Community. OREO also increased $2.7 million
due to the foreclosure on a $3.2 million property securing one non-accrual
commercial loan during the third quarter of 2008. Repossessed assets
remained relatively unchanged, totaling $4.1 million at September 30, 2008
as compared to $4.2 million at June 30, 2008.
Loans past due 90 days or more and still accruing increased $1.5
million to $12.7 million, or 0.13 percent of total loans at September 30,
2008 compared to $11.2 million, or 0.12 percent at June 30, 2008. Loans
past due 90 days or more and still accruing include matured performing
loans in the normal process of renewal which totaled approximately $6.3
million and $5.6 million at September 30, 2008 and June 30, 2008,
respectively. Total loans past due in excess of 30 days remained low given
the current economic conditions, increasing 0.04 percent to 0.86 percent of
total loans at September 30, 2008 compared with 0.82 percent of total loans
at June 30, 2008.
Loans and Deposits
During the quarter, loans increased $1.0 billion to approximately $10.1
billion at September 30, 2008 mainly due to $811.1 million in loans
acquired from Greater Community. The remaining linked quarter organic loan
growth was mainly comprised of increases in commercial mortgage and
commercial loans of $148.3 million and $94.3 million, respectively,
partially offset by a $60.9 million decrease in automobile loans. Valley's
lending operations continue to benefit from the dislocation in the credit
markets and the expansion of Valley's lending teams through its growing
branch network, including the addition of 16 full-service branches from the
Greater Community acquisition. The decline in automobile loans during the
third quarter of 2008 resulted from Valley's tightening of its already
conservative auto loan credit standards, as well as lower consumer demand
for such products in the current economic environment.
During the quarter, deposits increased $691.0 million to approximately
$9.1 billion at September 30, 2008 due to $714.9 million in deposits
assumed from the Greater Community acquisition. Excluding the deposit
increases resulting from the Greater Community acquisition, Valley
experienced declines in savings, NOW and money market accounts, as well as
non-interest bearing accounts due to several factors caused by the current
market conditions, including concerns over the general welfare of U.S.
financial institutions and increased interest rate pressure by competitors
in need of liquidity. Valley was able to offset much of the decrease in
these account types by offering competitive time deposit rates during the
period and increasing such balances through deposit initiatives in Valley's
expanded branch network. 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.
Net Interest Income and Margin
Net interest income on a tax equivalent basis was $116.6 million for
the third quarter of 2008, a $20.7 million increase from the same quarter
of 2007 and an increase of $12.7 million from the linked quarter ended June
30, 2008. The linked quarter increase was primarily due to increased loan
volumes caused by the Greater Community acquisition, organic loan growth,
and an 11 basis point decline in funding costs during the third quarter of
2008, partially offset by additional interest expense related to higher
average interest-bearing liabilities. In addition, the payoff of former
Greater Community Federal Home Loan Bank advances totaling $25 million in
September of 2008 reduced interest expense by $1.8 million due to the
accelerated purchase premium amortization on these advances. During the
third quarter of 2008, funding costs declined mainly due to continued
repricing of matured time deposits renewing at lower interest rates, as
well as a slight decrease of eight basis points in the average target
Federal funds rate as compared to the second quarter of 2008.
The net interest margin on a tax equivalent basis was 3.64 percent for
the third quarter of 2008, an increase of 16 basis points from 3.48 percent
for the linked quarter ended June 30, 2008 and an increase of 24 basis
points from 3.40 percent for the prior year third quarter. The yield on
average interest earning assets increased by six basis points on a linked
quarter basis mainly due to a three basis point increase in yield on
average total loans as compared to the three months ended June 30, 2008.
The cost of average interest bearing liabilities decreased 11 basis points
from the second quarter of 2008 mainly due to a decrease in the cost of
deposits.
Valley's cost of total deposits remained relatively low by industry
standards at 1.77 percent for the third quarter of 2008 compared to 1.83
percent for the three months ended June 30, 2008. The decrease of six basis
points was primarily due to the normal repricing of time deposit maturities
at lower interest rates during the third quarter of 2008.
Non-Interest Income
Third quarter of 2008 compared with third quarter of 2007
Non-interest income decreased $52.4 million to a net loss of $32.1
million for the quarter ended September 30, 2008 compared to non-interest
income of $20.3 million for the quarter ended September 30, 2007. Net
losses on securities transactions increased $67.5 million during the third
quarter of 2008 due to other-than-temporary impairment and realized losses
on Fannie Mae and Freddie Mac perpetual preferred stock totaling $70.9
million ($44.1 million after-taxes) partially offset by gains on the sale
of available for sale securities. Partially offsetting the decline in
non-interest income, net trading gains increased $14.0 million to $14.7
million for the third quarter of 2008. The increase was primarily due to a
$20.8 million change in the fair value of Valley's junior subordinated
debentures carried at fair value partly offset by $6.1 million in mark to
market losses on trading securities during the third quarter of 2008. Other
non-interest income also increased $873 thousand mainly due to general
increases in other income associated with the Greater Community
acquisition.
Third quarter of 2008 compared with second quarter of 2008
Non-interest income decreased $50.1 million to a net loss of $32.1
million for the three months ended September 30, 2008 compared to
non-interest income of $18.0 million for the linked second quarter of 2008.
Net losses on securities transactions totaled $67.5 million for the third
quarter of 2008 compared to $1.0 million in net losses for the second
quarter of 2008 due to other-than-temporary impairment and realized losses
on Fannie Mae and Freddie Mac perpetual preferred stock totaling $70.9
million ($44.1 million after-taxes), partially offset by gains on the sale
of available for sale securities during the 2008 period. Partially
offsetting the decline in non-interest income, net trading gains increased
$15.0 million compared to a net loss of $301 thousand for the second
quarter of 2008. The increase was mainly due to the change in the fair
value of Valley's junior subordinated debentures carried at fair value
partly offset by higher mark to market losses on trading securities during
the third quarter of 2008. Other non-interest income increased $964
thousand mainly due to general increases in other income associated with
the Greater Community acquisition.
Non-Interest Expense
Third quarter of 2008 compared with third quarter of 2007
Non-interest expense increased by $9.7 million, or 15.1 percent to
$73.8 million for the quarter ended September 30, 2008 from $64.1 million
for the quarter ended September 30, 2007 primarily due to the Greater
Community acquisition on July 1, 2008 and the addition of nine de novo
branches to Valley's branch network over the last twelve-month period.
Valley's organizational expansion since the third quarter of 2007 accounted
for a combined $4.7 million increase in salary and employee benefits and a
$1.7 million increase in net occupancy and equipment expense during the
third quarter of 2008. Other non-interest expense increased $3.0 million or
28.3 percent to $13.5 million for the quarter ended September 30, 2008
mainly due to a $1.2 million prepayment penalty on certain long-term
Federal Home Loan Bank advances assumed in the Greater Community
acquisition and an $886 thousand increase in expenses related to other real
estate owned. The remaining increase in other non-interest expense was
primarily due to several general increases caused by the Greater Community
acquisition and Valley's de novo branching efforts since the 2007 period.
Third quarter of 2008 compared with second quarter of 2008
Non-interest expense increased $9.8 million, or 15.5 percent to $73.8
million for the third quarter of 2008 from $64.0 million for the linked
quarter ended June 30, 2008. Salary and employee benefits increased a
combined $4.5 million and net occupancy and equipment expense increased
$1.3 million mainly due to the acquisition of Greater Community during the
third quarter of 2008. Other non-interest expense increased $3.0 million
for the quarter ended September 30, 2008 mainly due to a $1.2 million
prepayment penalty on Federal Home Loan Bank advances and an $829 thousand
increase in other real estate owned expense. The remaining increase in
other non-interest expense was primarily due to several general increases
caused by the Greater Community acquisition.
Income Taxes
Income tax benefit was ($1.2) million for the third quarter of 2008,
reflecting an effective benefit rate of (47.6) percent, compared with
income tax expense of $11.4 million for the third quarter of 2007,
reflecting an effective tax rate of 23.8 percent. The decrease in taxes
compared to the third quarter of 2007 was primarily due to the tax effect
of the other-than-temporary impairment charges on Fannie Mae and Freddie
Mac perpetual preferred stock during the third quarter of 2008. Due to
Valley's inability to utilize a portion of the capital losses generated
from the impairment charges, Valley recorded a $2.9 million deferred tax
valuation allowance. The $2.9 million allowance will be reversed as a tax
benefit in the fourth quarter of 2008 based upon a tax provision of "The
Emergency Economic Stabilization Act of 2008," enacted into law on October
3, 2008, under which these losses will be treated as ordinary losses
(rather than capital losses) for tax purposes.
For the fourth quarters of 2008, Valley anticipates that its effective
tax rate will approximate 26 percent as compared to 20.6 percent for the
nine months ended September 30, 2008. 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.
De novo Branch Program
Valley maintains a branch expansion plan which focuses on finding
attractive building sites and expanding its presence in the New Jersey
counties and towns neighboring Valley's current office locations, as well
as in Manhattan, Kings and Queens Counties in New York. During the first
nine months of 2008, eight new branch offices were opened, including
Valley's first two locations in Queens and its fourth branch office in
Brooklyn. Valley anticipates completing five additional de novo branch
projects during the fourth quarter of 2008, including two additional
locations in both Brooklyn and Queens. The slowing economy, coupled with
the possibility that other opportunities may become available through
acquisition, may slow future branch expansions on a de novo basis.
Generally, new branches can add immediate franchise value; however, the
additional operating costs and capital requirement will have a negative
impact on non-interest expense and net income for several years as the
branch operations become individually profitable.
About Valley
Valley is a regional bank holding company, headquartered in Wayne, New
Jersey, with $14.3 billion in assets. Its principal subsidiary, Valley
National Bank, currently operates 193 branches in 131 communities serving
14 counties throughout northern and central New Jersey and Manhattan,
Brooklyn and Queens. Valley is the largest commercial bank headquartered in
New Jersey and is committed to providing the most convenient service, the
latest in product innovations and an experienced and knowledgeable staff
with a high priority on friendly customer service 24 hours a day, 7 days a
week. Valley offers a wide range of deposit products, mortgage loans and
cash management services to consumers and businesses including products
tailored for the medical, insurance and leasing business. Valley's
comprehensive delivery channels enable customers to bank in person, by
telephone or online.
For more information about Valley National Bank and its products and
services, please visit http://www.valleynationalbank.com/ or call Customer
Service 24/7 at 1-800-522-4100.
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 financial markets and the resulting
unanticipated effects on financial instruments in Valley's investment
portfolio; unanticipated changes in the direction of interest rates;
volatility in earnings due to certain financial assets and liabilities held
at fair value; the occurrence of an other-than-temporary impairment to
investment securities classified as available for sale or held to maturity;
stronger competition from banks, other financial institutions and other
companies; changes in loan, investment and mortgage prepayment assumptions;
insufficient allowance for credit losses; a higher level of net loan
charge-offs and delinquencies than anticipated; the inability to realize
expected cost savings and synergies from the Greater Community merger in
the amounts or in the timeframe anticipated; material adverse changes in
Valley's operations or earnings; the inability to retain Greater
Community's customers and employees; a decline in the economy in Valley's
primary market areas, mainly in New Jersey and New York; changes in
relationships with major customers; changes in effective income tax rates;
higher or lower cash flow levels than anticipated; inability to hire or
retain qualified employees; a decline in the levels of deposits or loss of
alternate funding sources; a decrease in loan origination volume; a change
in legal and regulatory barriers including issues related to compliance
with anti-money laundering ("AML") and bank secrecy act ("BSA") laws;
adoption, interpretation and implementation of new or pre-existing
accounting pronouncements; the development of new tax strategies or the
disallowance of prior tax strategies; operational risks, including the risk
of fraud by employees or outsiders and unanticipated litigation pertaining
to Valley's fiduciary responsibility; and the inability to successfully
implement new lines of business or new products and services.
-Tables to Follow-
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
-----------------------
Three Months Ended Nine Months Ended
(in thousands, except September 30, September 30,
for share data) 2008 2007 2008 2007
--------------------- ---- ---- ---- ----
FINANCIAL DATA:
---------------
Net interest income $115,232 $94,414 $313,392 $286,367
Net interest income -
FTE (2) 116,588 95,925 317,529 291,075
Non-interest (loss)
income (32,104) 20,299 5,077 82,358
Non-interest expense 73,842 64,173 205,279 190,577
Income tax (benefit)
expense (1,159) 11,373 19,879 45,570
Net income 3,595 36,454 76,661 125,567
Weighted average
number of shares
outstanding (3):
Basic 134,827,600 125,964,857 128,912,882 126,398,906
Diluted 134,969,373 126,315,018 128,987,839 126,839,039
Per share data (3):
Basic earnings $0.03 $0.29 $0.59 $0.99
Diluted earnings 0.03 0.29 0.59 0.99
Cash dividends
declared 0.20 0.20 0.60 0.60
Book value 8.07 7.48 8.07 7.48
Tangible book
value (1) 5.68 5.83 5.68 5.83
Closing stock price
- high 24.00 22.43 24.00 23.98
Closing stock price
- low 14.44 19.94 14.44 19.94
CORE ADJUSTED FINANCIAL
DATA (1):
-----------------------
Net income, as
adjusted $47,675 $36,454 $121,336 $125,567
Basic earnings per
share, as adjusted 0.35 0.29 0.94 0.99
Diluted earnings per
share, as adjusted 0.35 0.29 0.94 0.99
FINANCIAL RATIOS:
-----------------
Net interest margin 3.59% 3.35% 3.45% 3.38%
Net interest margin -
FTE (2) 3.64 3.40 3.49 3.43
Annualized return on
average assets 0.10 1.19 0.78 1.37
Annualized return on
average shareholders'
equity 1.28 15.66 10.09 18.05
Annualized return on
average tangible
shareholders' equity (1) 1.80 20.18 13.28 23.31
Efficiency ratio (4) 88.83 55.94 64.46 51.69
CORE ADJUSTED FINANCIAL
RATIOS (1):
-----------------------
Annualized return on
average assets, as
adjusted 1.36% 1.19% 1.23% 1.37%
Annualized return on
average shareholders'
equity, as adjusted 17.03 15.66 15.97 18.05
Annualized return on
average tangible
shareholders'
equity, as adjusted 23.92 20.18 21.01 23.31
Efficiency ratio, as
adjusted 47.94 55.94 52.58 51.69
SELECTED FINANCIAL DATA
-----------------------
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2008 2007 2008 2007
-------------- ---- ---- ---- ----
AVERAGE BALANCE SHEET
ITEMS:
---------------------
Assets $14,002,952 $12,216,419 $13,184,875 $12,190,610
Interest earning
assets 12,821,684 11,284,591 12,115,556 11,301,764
Loans 9,988,829 8,207,941 9,144,973 8,227,047
Interest bearing
liabilities 10,744,038 9,380,489 10,154,659 9,332,892
Deposits 9,053,000 8,389,340 8,531,366 8,368,995
Shareholders' equity 1,120,011 931,359 1,013,113 927,647
-------------------- --------- ------- --------- -------
ALLOWANCE FOR CREDIT
LOSSES:
--------------------
Beginning of period $75,949 $74,775 $74,935 $74,718
Provision for
credit losses 6,850 2,713 16,650 7,011
Charge-offs (5,197) (3,892) (15,246) (9,680)
Recoveries 749 1,028 2,012 2,575
Addition from Greater
Community Bancorp
acquisition 11,410 0 11,410 0
------ - ------ -
End of period $89,761 $74,624 $89,761 $74,624
======= ======= ======= =======
Components:
Allowance for
loan losses $88,158 $72,161 $88,158 $72,161
Reserve for
unfunded letters
of credit 1,603 2,463 1,603 2,463
----- ----- ----- -----
Allowance for
credit losses $89,761 $74,624 $89,761 $74,624
======= ======= ======= =======
As of September 30,
-------------------
2008 2007
---- ----
BALANCE SHEET ITEMS:
--------------------
Assets $14,288,151 $12,439,474
Loans 10,057,281 8,370,464
Deposits 9,063,406 8,439,695
Shareholders' equity 1,088,612 942,782
-------------------- --------- -------
CAPITAL RATIOS:
---------------
Tier 1 leverage ratio 7.26% 7.87%
Risk-based capital - Tier 1 8.94 10.02
Risk-based capital -
Total Capital 10.65 11.87
-------------------- ----- -----
ASSET QUALITY:
--------------
Non-accrual loans $30,663 $29,908
Other real estate owned 7,119 832
Other repossessed assets 4,060 1,511
----- -----
Total non-performing assets $41,842 $32,251
------- -------
Loans past due 90 days or
more and still accruing $12,677 $5,373
------------------------- ------- ------
ASSET QUALITY RATIOS:
---------------------
Non-performing assets
to total loans 0.42% 0.39%
Loans past due 30 days or
more to total loans 0.86 0.79
Allowance for credit
losses to total loans 0.89 0.89
Annualized net charge-offs
to average loans 0.19 0.12
-------------------------- ---- ----
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. Specifically, Valley provides measures based on
what it believes are its operating earnings on a consistent basis and
exclude non-core operating items which affect the GAAP reporting of
results of operations. Management utilizes these measures for
internal planning and forecasting purposes. Management believes that
Valley's presentation and discussion, together with the accompanying
reconciliations, provides a complete understanding of factors and
trends affecting Valley's business and allows investors to view
performance in a manner similar to management. These non-GAAP measures
should not be considered a substitute for GAAP basis measures and
results and Valley strongly encourages investors to review its
consolidated financial statements in their entirety and not to rely on
any single financial measure. Because non-GAAP financial measures are
not standardized, it may not be possible to compare these financial
measures with other companies' non-GAAP financial measures having the
same or similar names.
(Dollars in
thousands, Three Months Ended Nine Months Ended
except for September 30, September 30,
share data) 2008 2007 2008 2007
------------ ---- ---- ---- ----
Tangible Book
Value
-------------
Common shares
outstanding 134,940,776 125,961,562 134,940,776 125,961,562
----------- ----------- ----------- -----------
Shareholders'
equity $1,088,612 $942,782 $1,088,612 $942,782
Less: Goodwill
and other
intangible
assets 321,948 208,061 321,948 208,061
------- ------- ------- -------
Tangible
shareholders'
equity $766,664 $734,721 $766,664 $734,721
-------- -------- -------- --------
Tangible
book value $5.68 $5.83 $5.68 $5.83
===== ===== ===== =====
Return on Average
Tangible Equity
-----------------
Net income $3,595 $36,454 $76,661 $125,567
------ ------- ------- --------
Average
shareholders'
equity $1,120,011 $931,359 $1,013,113 $927,647
Less: Average
goodwill and
other
intangible
assets 322,685 208,640 242,964 209,513
------- ------- ------- -------
Average
tangible
shareholders'
equity $797,326 $722,719 $770,149 $718,134
-------- -------- -------- --------
Annualized
return on
average
tangible
shareholders'
equity 1.80% 20.18% 13.27% 23.31%
==== ===== ===== =====
Adjusted net
income
------------
Net income, as
reported $3,595 $36,454 $76,661 $125,567
Add: Impairment
and realized
losses on FNMA
and FHLMC
preferred stock 70,905 0 71,909 0
Less: Tax benefit
on FNMA and
FHLMC preferred
stock losses 26,825 0 27,234 0
------ - ------ -
Net income, as
adjusted $47,675 $36,454 $121,336 $125,567
======= ======= ======== ========
Adjusted per
share data
------------
Net income, as
adjusted $47,675 $36,454 $121,336 $125,567
------- ------- -------- --------
Average number of
basic shares
outstanding 134,827,600 125,964,857 128,912,882 126,398,906
----------- ----------- ----------- -----------
Basic earnings,
as adjusted $0.35 $0.29 $0.94 $0.99
===== ===== ===== =====
Average number of
diluted shares
outstanding 134,969,373 126,315,018 128,987,839 126,839,039
----------- ----------- ----------- -----------
Diluted earnings,
as adjusted $0.35 $0.29 $0.94 $0.99
===== ===== ===== =====
Adjusted
annualized
return on
average assets
---------------
Net income, as
adjusted $47,675 $36,454 $121,336 $125,567
Average assets 14,002,952 12,216,419 13,184,875 12,190,610
---------- ---------- ---------- ----------
Annualized
return on
average
assets, as
adjusted 1.36% 1.19% 1.23% 1.37%
==== ==== ==== ====
Adjusted
annualized
return on
average
shareholders'
equity
--------------
Net income, as
adjusted $47,675 $36,454 $121,336 $125,567
------- ------- -------- --------
Average
shareholders'
equity 1,120,011 931,359 1,013,113 927,647
--------- ------- --------- -------
Annualized
return on
average
shareholder
equity, as
adjusted 17.03% 15.66% 15.97% 18.05%
===== ===== ===== =====
NOTES TO SELECTED FINANCIAL DATA - CONTINUED
Three Months Ended Nine Months Ended
(Dollars in thousands, September 30, September 30,
except for share data) 2008 2007 2008 2007
----------------------- ---- ---- ---- ----
Adjusted annualized
return on average
tangible shareholders'
equity
-----------------------
Net income, as adjusted $47,675 $36,454 $121,336 $125,567
------- ------- -------- --------
Average tangible
shareholders'
equity 797,326 722,719 770,149 718,134
------- ------- ------- -------
Annualized return on
average tangible
shareholder equity, as
adjusted 23.92% 20.18% 21.01% 23.31%
===== ===== ===== =====
Adjusted efficiency ratio
-------------------------
Total non-interest expense $73,842 $64,173 $205,279 $190,577
======= ======= ======== ========
Net interest income $115,232 $94,414 $313,392 $286,367
Non-interest income (32,104) 20,299 5,077 82,358
Add: Impairment
and realized
losses on FNMA
and FHLMC
preferred stock 70,905 0 71,909 0
------ - ------ -
Gross operating
income, as
adjusted $154,033 $114,713 $390,378 $368,725
======== ======== ======== ========
Efficiency ratio, as
adjusted 47.94% 55.94% 52.58% 51.69%
===== ===== ===== =====
(2) Net interest income and net interest margin are presented on a tax
equivalent basis using a 35 percent federal tax rate. Valley
believes that this presentation provides comparability of net
interest income and net interest margin arising from both taxable
and tax-exempt sources and is consistent with industry practice and
SEC rules.
(3) Share data reflects the five percent common stock dividend issued on
May 23, 2008.
(4) The efficiency ratio measures Valley's total non-interest expense as
a percentage of net interest income plus total non-interest income.
SHAREHOLDER RELATIONS
---------------------
Requests for copies of reports and/or other inquiries should be directed
to Dianne Grenz, Director of Shareholder and Public Relations, Valley
National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by
telephone at (973) 305-3380, by fax at (973) 696-2044 or by e-mail at
dgrenz@valleynationalbank.com.
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
($ in thousands, except for share data)
September 30, December 31,
2008 2007
---- ----
Assets
Cash and due from banks $246,937 $218,896
Interest bearing deposits with banks 151,984 9,569
Federal funds sold 100,000 9,000
Investment securities:
Held to maturity, fair value of
$558,038 at September 30, 2008 and
$548,353 at December 31, 2007 654,193 556,113
Available for sale 1,713,061 1,606,410
Trading securities 61,383 722,577
------ -------
Total investment securities 2,428,637 2,885,100
--------- ---------
Loans held for sale, at fair value 2,367 2,984
Loans 10,057,281 8,496,221
Less: Allowance for loan losses (88,158) (72,664)
------- -------
Net loans 9,969,123 8,423,557
--------- ---------
Premises and equipment, net 254,285 227,553
Bank owned life insurance 298,695 273,613
Accrued interest receivable 61,619 56,578
Due from customers on acceptances
outstanding 7,943 8,875
Goodwill 293,988 179,835
Other intangible assets, net 27,960 24,712
Other assets 444,613 428,687
------- -------
Total Assets $14,288,151 $12,748,959
=========== ===========
Liabilities
Deposits:
Non-interest bearing $2,107,112 $1,929,555
Interest bearing
Savings, NOW and money market 3,597,921 3,382,474
Time 3,358,373 2,778,975
--------- ---------
Total deposits 9,063,406 8,091,004
--------- ---------
Short-term borrowings 802,298 605,154
Long-term borrowings (includes fair value
of $41,359 for a Federal Home Loan Bank
advance at December 31, 2007) 3,005,583 2,801,195
Junior subordinated debentures issued to
capital trust (includes fair value
of $134,193 at September 30, 2008 and
$163,233 at December 31, 2007 for VNB
Capital Trust I) 159,534 163,233
Bank acceptances outstanding 7,943 8,875
Accrued expenses and other liabilities 160,775 130,438
------- -------
Total Liabilities 13,199,539 11,799,899
---------- ----------
Shareholders' Equity*
Preferred stock, no par value, authorized
30,000,000 shares; none issued - -
Common stock, no par value, authorized
190,886,088 shares; issued 136,971,037
shares at September 30, 2008 and
128,503,294 shares at December 31, 2007 48,237 43,185
Surplus 1,038,836 879,892
Retained earnings 98,147 104,225
Accumulated other comprehensive loss (46,884) (12,982)
Treasury stock, at cost (2,030,261 common
shares at September 30, 2008 and
2,659,220 common shares at December 31, 2007) (49,724) (65,260)
------- -------
Total Shareholders' Equity 1,088,612 949,060
--------- -------
Total Liabilities and Shareholders'
Equity $14,288,151 $12,748,959
=========== ===========
* Share data reflects the 5% common stock dividend issued on May 23,
2008.
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($ in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2008 2007 2008 2007
---- ---- ---- ----
Interest Income
Interest and
fees on loans $151,871 $141,177 $422,113 $419,712
Interest and dividends
on investment
securities:
Taxable 34,270 33,859 104,477 99,384
Tax-exempt 2,507 2,745 7,642 8,552
Dividends 2,222 1,873 6,819 5,903
Interest on federal
Funds sold and other
short-term investments 130 3,505 2,032 9,893
--- ----- ----- -----
Total interest
income 191,000 183,159 543,083 543,444
------- ------- ------- -------
Interest Expense
Interest on deposits:
Savings, NOW
and money market 12,080 19,236 37,300 57,870
Time 27,902 35,891 85,552 100,798
Interest on short-term
borrowings 2,122 4,656 6,641 13,156
Interest on long-term
borrowings and junior
subordinated debentures 33,664 28,962 100,198 85,253
------ ------ ------- ------
Total interest
expense 75,768 88,745 229,691 257,077
------ ------ ------- -------
Net Interest Income 115,232 94,414 313,392 286,367
Provision for
credit losses 6,850 2,713 16,650 7,011
----- ----- ------ -----
Net Interest Income
after Provision for
Credit Losses 108,382 91,701 296,742 279,356
------- ------ ------- -------
Non-Interest Income
Trust and investment
services 1,774 1,897 5,286 5,518
Insurance premiums 2,351 2,509 7,987 8,273
Service charges on
deposit accounts 7,480 7,133 21,102 19,775
(Losses) gains
on securities
transactions, net (67,456) 14 (68,269) 84
Trading gains, net 14,747 731 11,255 4,636
Fees from loan
servicing 1,243 1,387 3,690 4,171
Gains on sales of
loans, net 282 262 1,006 4,624
Gains (losses) on
sale of assets, net 171 (645) 256 15,958
Bank owned life insurance 2,659 3,239 8,804 8,254
Other 4,645 3,772 13,960 11,065
----- ----- ------ ------
Total non-interest
(loss) income (32,104) 20,299 5,077 82,358
------- ------ ----- ------
Non-Interest Expense
Salary expense 33,147 29,459 93,448 87,139
Employee benefit
expense 8,363 7,342 24,215 22,781
Net occupancy and
equipment expense 14,032 12,285 40,288 36,999
Amortization of
intangible assets 1,959 1,881 5,107 5,671
Professional and
legal fees 1,852 2,003 6,038 5,070
Advertising 965 665 1,682 2,407
Other 13,524 10,538 34,501 30,510
------ ------ ------ ------
Total non-interest
expense 73,842 64,173 205,279 190,577
------ ------ ------- -------
Income Before
Income Taxes 2,436 47,827 96,540 171,137
Income tax (benefit)
expense (1,159) 11,373 19,879 45,570
------ ------ ------ ------
Net Income $3,595 $36,454 $76,661 $125,567
====== ======= ======= ========
Earnings Per
Common Share:*
Basic $0.03 $0.29 $0.59 $0.99
Diluted 0.03 0.29 0.59 0.99
Cash Dividends
Declared Per
Common Share* 0.20 0.20 0.60 0.60
Weighted Average
Number of Shares
Outstanding:*
Basic 134,827,600 125,964,857 128,912,882 126,398,906
Diluted 134,969,373 126,315,018 128,987,839 126,839,039
* Share data reflects the 5% common stock dividend issued on May 23,
2008.
Valley National Bancorp
-----------------------
(dollars in thousands)
For the periods ended
---------------------
Loan Portfolio 9/30/2008 6/30/2008 3/31/2008 12/31/2007 9/30/2007
--------- --------- --------- ---------- ---------
Commercial
Loans $1,905,469 $1,680,337 $1,584,190 $1,563,150 $1,665,169
---------- ---------- ---------- ---------- ----------
Mortgage Loans:
Construction 470,006 399,279 399,069 402,806 408,969
Residential
Mortgage 2,297,868 2,228,197 2,128,949 2,063,242 1,933,321
Commercial
Mortgage 3,204,537 2,564,605 2,443,719 2,370,345 2,282,669
--------- --------- --------- --------- ---------
Total Mortgage
Loans 5,972,411 5,192,081 4,971,737 4,836,393 4,624,959
--------- --------- --------- --------- ---------
Consumer Loans:
Home Equity 600,623 537,913 542,162 554,830 554,859
Credit Card 9,872 9,459 9,338 10,077 9,290
Automobile 1,474,328 1,531,537 1,483,067 1,447,838 1,433,178
Other Consumer 94,578 92,768 76,990 83,933 83,009
------ ------ ------ ------ ------
Total Consumer
Loans 2,179,401 2,171,677 2,111,557 2,096,678 2,080,336
--------- --------- --------- --------- ---------
Total
Loans $10,057,281 $9,044,095 $8,667,484 $8,496,221 $8,370,464
=========== ========== ========== ========== ==========
Quarterly Analysis of
Average Assets,
Liabilities and
Shareholders' Equity and
Net Interest Income on a
Tax Equivalent Basis
------------------------
Quarter End - 9/30/2008
-----------------------
Average Avg.
Balance Interest Rate
------- -------- ----
Assets
Interest earning assets:
Loans (1)(2) $9,988,829 $151,877 6.08%
Taxable investments (3) 2,544,825 36,492 5.74%
Tax-exempt investments (1)(3) 262,079 3,857 5.89%
Federal funds sold and other
interest bearing deposits 25,951 130 2.00%
------ --- ----
Total interest earning assets 12,821,684 192,356 6.00%
Other assets 1,181,268
---------
Total Assets $14,002,952
===========
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,766,357 $12,080 1.28%
Time deposits 3,228,453 27,902 3.46%
Short-term borrowings 530,408 2,122 1.60%
Long-term borrowings (4) 3,218,820 33,664 4.18%
--------- ------ ----
Total interest bearing
liabilities 10,744,038 75,768 2.82%
Non-interest bearing deposits 2,058,190
Other liabilities 80,713
Shareholders' equity 1,120,011
---------
Total liabilities and
shareholders' equity $14,002,952
===========
Net interest income/interest rate
spread (5) 116,588 3.18%
----
Tax equivalent adjustment (1,356)
------
Net interest income, as reported $115,232
========
Net interest margin (6) 3.59%
Tax equivalent effect 0.05%
----
Net interest margin on a fully tax
equivalent basis (6) 3.64%
====
Quarter End - 6/30/2008
-----------------------
Average Avg.
Balance Interest Rate
------- -------- ----
Assets
Interest earning assets:
Loans (1)(2) $8,897,004 $134,619 6.05%
Taxable investments (3) 2,723,835 38,410 5.64%
Tax-exempt investments (1)(3) 244,551 3,800 6.22%
Federal funds sold and other
interest bearing deposits 75,138 406 2.16%
------ --- ----
Total interest earning assets 11,940,528 177,235 5.94%
Other assets 1,019,703
---------
Total Assets $12,960,231
===========
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,479,046 $11,155 1.28%
Time deposits 2,981,166 27,162 3.64%
Short-term borrowings 555,799 2,212 1.59%
Long-term borrowings (4) 3,008,249 32,792 4.36%
--------- ------ ----
Total interest bearing
liabilities 10,024,260 73,321 2.93%
Non-interest bearing deposits 1,893,688
Other liabilities 77,369
Shareholders' equity 964,914
-------
Total liabilities and
shareholders' equity $12,960,231
===========
Net interest income/interest rate
spread (5) 103,914 3.01%
----
Tax equivalent adjustment (1,336)
------
Net interest income, as reported $102,578
========
Net interest margin (6) 3.44%
Tax equivalent effect 0.04%
----
Net interest margin on a fully tax
equivalent basis (6) 3.48%
====
Quarter End - 3/31/2008
-----------------------
Average Avg.
Balance Interest Rate
------- -------- ----
Assets
Interest earning assets:
Loans (1)(2) $8,539,812 $135,638 6.35%
Taxable investments (3) 2,590,800 36,394 5.62%
Tax-exempt investments (1)(3) 254,701 4,100 6.44%
Federal funds sold and other
interest bearing deposits 191,384 1,496 3.13%
------- ----- ----
Total interest earning assets 11,576,697 177,628 6.14%
Other assets 1,005,756
---------
Total Assets $12,582,453
===========
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,386,570 $14,065 1.66%
Time deposits 2,918,671 30,488 4.18%
Short-term borrowings 406,726 2,307 2.27%
Long-term borrowings (4) 2,977,234 33,742 4.53%
--------- ------ ----
Total interest bearing
liabilities 9,689,201 80,602 3.33%
Non-interest bearing deposits 1,876,223
Other liabilities 63,789
Shareholders' equity 953,240
-------
Total liabilities and
shareholders' equity $12,582,453
===========
Net interest income/interest rate
spread (5) 97,026 2.81%
----
Tax equivalent adjustment (1,444)
------
Net interest income, as reported $95,582
=======
Net interest margin (6) 3.30%
Tax equivalent effect 0.05%
----
Net interest margin on a fully tax
equivalent basis (6) 3.35%
====
Quarter End - 12/31/07
----------------------
Average Avg.
Balance Interest Rate
------- -------- ----
Assets
Interest earning assets:
Loans (1)(2) $8,362,192 $140,365 6.71%
Taxable investments (3) 2,649,378 37,684 5.69%
Tax-exempt investments (1)(3) 262,269 4,178 6.37%
Federal funds sold and other
interest bearing deposits 69,533 809 4.65%
------ --- ----
Total interest earning assets 11,343,372 183,036 6.45%
Other assets 1,037,171
---------
Total Assets $12,380,543
===========
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money
market deposits $3,407,805 $17,825 2.09%
Time deposits 2,969,684 33,876 4.56%
Short-term borrowings 487,852 4,489 3.68%
Long-term borrowings (4) 2,548,503 30,055 4.72%
--------- ------ ----
Total interest bearing
liabilities 9,413,844 86,245 3.66%
Non-interest bearing deposits 1,929,133
Other liabilities 90,122
Shareholders' equity 947,444
-------
Total liabilities and
shareholders' equity $12,380,543
===========
Net interest income/interest rate
spread (5) 96,791 2.79%
----
Tax equivalent adjustment (1,473)
------
Net interest income, as reported $95,318
=======
Net interest margin (6) 3.36%
Tax equivalent effect 0.05%
----
Net interest margin on a fully tax
equivalent basis (6) 3.41%
====
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 28,962 4.72%
--------- ------ ----
Total interest bearing
liabilities 9,380,489 88,745 3.78%
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) 95,925 2.77%
----
Tax equivalent adjustment (1,511)
------
Net interest income, as reported $94,414
=======
Net interest margin (6) 3.35%
Tax equivalent effect 0.05%
----
Net interest margin on a fully tax
equivalent basis (6) 3.40%
====
(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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CONTACT:
Alan D. Eskow, Executive Vice President and
Chief Financial Officer, Valley National Bancorp, +1-973-305-4003
|
