Exhibit 99
| | | | |
| FOR IMMEDIATE RELEASE | | Contact: | | Alan D. Eskow |
| | | | Executive Vice President and |
| | | | Chief Financial Officer |
| | | | 973-305-4003 |
VALLEY NATIONAL BANCORP REPORTS NET INCOME FOR SECOND QUARTER
WAYNE, NJ – July 18, 2007 —Valley National Bancorp (NYSE:VLY) (“Valley”), the holding company for Valley National Bank, announced today second quarter and six months results for 2007. Net income for the second quarter of 2007 was $39.7 million, which includes a $1.8 million net loss on trading securities after taxes, compared to $40.8 million for the same period in 2006, which included a $191 thousand net gain on trading securities after taxes. Adjusted for a five percent stock dividend issued on May 25, 2007, fully diluted earnings per common share were $0.33 for the second quarter of 2007, unchanged from the same quarter of 2006. All common share data presented below was adjusted to reflect the stock dividend.
Net income was $89.1 million for the six months ended June 30, 2007 compared to $81.7 million for the same period in 2006, an increase of 9.1 percent. Fully diluted earnings per common share were $0.74 for the six months ended June 30, 2007 as compared to $0.66 per common share for the six months ended June 30, 2006.
Set forth below are highlights of several significant events that occurred during the second quarter of 2007:
| | • | | Total loans increased $139.7 million from the first quarter as automobile and commercial loans grew by 34.7 percent and 19.4 percent, respectively, on an annualized basis. |
| | • | | Net interest margin on a fully tax equivalent basis was 3.45 percent, unchanged from the first quarter of 2007. |
| | • | | During the quarter, Valley unwound and eventually terminated all of a series of interest rate derivative transactions entered into during April 2007 for the purpose of offsetting the volatility in changes in the market value of certain long-term mortgage-backed securities classified as trading securities. The hedged trading securities were sold and primarily reinvested in short-term U.S. treasury securities, short-term other government agencies and short-term corporate debt held at fair value in the trading securities portfolio at June 30, 2007. The termination of the derivatives and hedged securities sold resulted in a $3.0 million net loss recorded in losses on trading securities, net during the second quarter of 2007. |
| | • | | Net gains on loans held for sale totaled approximately $2.7 million primarily due to the sale of approximately $240 million in residential mortgage loans held at fair value. |
| | • | | Other non-interest expense includes an offset of $2.7 million in unrealized gains on Valley’s junior subordinated debentures issued to capital trust (commonly known as trust preferred securities) and Federal Home Loan Bank advances held at fair value. |
| | • | | Valley redeemed $20.6 million, or 10 percent of the contractual principal balance, of its outstanding 7.75 percent junior subordinated debentures due on December 31, 2031. Valley’s Board of Directors granted management authorization to call, from time to time, all or part of its remaining junior subordinated debentures. |
Valley National Bancorp (NYSE: VLY)
2007 Second Quarter Earnings
July 18, 2007
| | • | | Valley made an additional $75 million investment in bank owned life insurance to help manage the rising cost of employee benefits. |
| | • | | Valley repurchased approximately 428 thousand of its common shares at an average price per share of $23.84 pursuant to its publicly announced share repurchase plans on May 14, 2003 and January 17, 2007. |
| | • | | Valley opened two new branches, including its second branch office in Brooklyn, New York this year. Valley has opened four new branches through June 30, 2007 and intends to open nine additional branch offices by December 31, 2007. |
Chairman’s Comments
Gerald H. Lipkin, Chairman, President and CEO noted that, “Valley’s second quarter earnings generated an annualized average return on tangible shareholders’ equity of 21.9 percent, while our annualized return on average shareholders’ equity for the quarter was 17.0 percent. While we are pleased with our overall performance and credit quality, the relatively flat yield curve environment continues to negatively impact net interest income compared to the same period one year ago. Valley has and will continue to diligently manage operating expenses and its balance sheet to optimize long-term returns for our shareholders.
We would like to affirm that Valley is not a participant in sub-prime residential mortgage lending, negative amortization loan or collateralized debt obligation (CDOs) markets. Valley’s historical risk-based underwriting approach continues to be a key element in producing strong loan performance, as evidenced by Valley’s current and historically low delinquency rates.
Overall loan volumes improved during the second quarter as compared to the first quarter of 2007 primarily due to auto and commercial loans increasing 34.7 percent and 19.4 percent, respectively, on an annualized basis. Much of the increase in auto loans is attributable to Valley’s strategic efforts to expand the geographic presence of its indirect auto loan origination franchise. Nearly 44.0 percent of Valley dealer auto originations were made outside of New Jersey during the second quarter of 2007, as compared to only 33.0 percent in the same period one year ago.
Valley continued its focused branch expansion in northern and central New Jersey and New York City and opened four new branches during the first six months of 2007, including the first two of at least five new branches expected to be opened in Brooklyn and Queens during 2007. Valley anticipates opening approximately nine de novo branches through the remainder of 2007. Our expansion strategy is to find the most attractive building sites and expand our presence in the New Jersey counties neighboring our current office locations, as well as Kings and Queens Counties in New York. New offices generally add franchise value, but the additional operating costs will have a negative impact on non-interest expense and net income in the short-term.”
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Valley National Bancorp (NYSE: VLY)
2007 Second Quarter Earnings
July 18, 2007
Net Interest Income and Margin
Net interest income on a tax equivalent basis was $97.4 million for the second quarter of 2007, a $2.6 million decrease from the same quarter of 2006 and a decrease of $386 thousand from the linked quarter ended March 31, 2007. The moderate decline in net interest income during the second quarter of 2007 was mainly a result of lower average earning assets and a $75 million investment in bank owned life insurance. The change in the cash surrender value of the additional bank owned life insurance generated $827 thousand of non-interest income during the three months ended June 30, 2007 which is not shown in the net interest margin calculation.
The net interest margin on a tax equivalent basis was 3.45 percent for the second quarter of 2007, unchanged from the linked quarter ended March 31, 2007 and a decrease of 3 basis points from the prior year second quarter. The yield on average interest earning assets increased 8 basis points mainly due to a 13 basis point increase in the yield on average total loans from the three months ended March 31, 2007. However, the cost of average interest bearing liabilities increased 11 basis points from the first quarter of 2007 as deposits and other borrowings continue to reprice at higher interest rates.
Valley’s cost of total deposits remained relatively low by industry standards at 2.51 percent for the second quarter of 2007 compared to 2.44 percent for the three months ended March 31, 2007. The increase of 7 basis points was primarily due to a growth in retail time deposits during the quarter partially offset by the maturity of lower cost brokered deposits.
Non-Interest Income
Second quarter of 2007 compared with second quarter of 2006
Non-interest income for the second quarter of 2007 increased $283 thousand, or 1.5 percent from $19.4 million for the quarter ended June 30, 2006. Net gains on loans held for sale increased $2.2 million from the second quarter of 2006 primarily due to the sale of approximately $240 million residential mortgages held at fair value. Service charges on deposit accounts increased $1.0 million mainly due to better collection of overdraft fees compared to the same quarter in 2006. Bank owned life insurance income increased $849 thousand primarily due to $827 thousand of income generated from an additional investment of $75 million during the second quarter of 2007 to offset rising employee benefit costs. Partially offsetting these increases, net gains on trading securities decreased $3.1 million mainly due to the sale of approximately $1.1 billion in mortgage-backed securities and the termination of certain derivative transactions during the second quarter of 2007.
Second quarter of 2007 compared with first quarter of 2007
Non-interest income for the second quarter of 2007 decreased $21.4 million, or 52.1 percent from $41.1 million for the quarter ended March 31, 2007 mainly due to a $16.1 million decrease in net gains on sale of premises and equipment. In the first quarter of 2007, Valley sold an office building in Manhattan and recognized a gain of $16.4 million. Net gains on trading securities decreased $8.3 million from the first quarter of 2007 primarily due to net losses recognized on the sale of $1.1 billion in mortgage-backed securities and the termination of certain derivative transactions during the second quarter. Offsetting the decreases, service charges on deposit accounts increased approximately $1.3 million
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Valley National Bancorp (NYSE: VLY)
2007 Second Quarter Earnings
July 18, 2007
mainly due to better collection of overdraft fees in the second quarter. Net gains on loans held for sale increased $1.0 million from the first quarter of 2007 primarily due to the sale of residential mortgages during the second quarter of 2007.
Non-Interest Expense
Second quarter of 2007 compared with second quarter of 2006
Non-interest expense decreased approximately $1.0 million, or 1.7 percent to $60.9 million for the quarter ended June 30, 2007 from $61.9 million for the quarter ended June 30, 2006 primarily due to $2.7 million of unrealized gains on the junior subordinated debentures issued to capital trust and Federal Home Bank advances held at fair value which were recorded in other non-interest expense during the three months ended June 30, 2007. Advertising expense also declined $1.6 million from the second quarter of 2006 as Valley ran less branding promotions in the second quarter of 2007. Offsetting these decreases to non-interest expense, salary and employee benefits increased $2.9 million and net occupancy and equipment expense increased $1.6 million mainly due to the addition of ten de novo branches to Valley’s branch network over the last twelve month period.
Second quarter of 2007 compared with first quarter of 2007
Non-interest expense decreased $3.3 million, or 5.2 percent to $60.9 million for the second quarter of 2007 from $64.2 million for the linked quarter ended March 31, 2007 mainly due to a $2.4 million unrealized gain on the junior subordinated debentures issued to capital trust held at fair value in the second quarter compared to an unrealized loss of $1.4 million recognized in the first quarter of 2007. Offsetting the decrease in non-interest expense, net occupancy and equipment expense increased $682 thousand from the first quarter primarily due to higher rent and depreciation expense caused by Valley’s de novo branching activities.
Income Tax Expense
Income tax expense was $12.5 million for the second quarter of 2007, reflecting an effective tax rate of 24.0 percent, compared with $11.9 million for the second quarter of 2006, reflecting an effective tax rate of 22.6 percent. The increase over the prior comparable quarter was primarily due to lower tax expense in 2006 caused by the settlement of income tax examinations.
For the remainder of 2007, Valley anticipates that its effective tax rate will remain relatively unchanged from the 27.7 percent for the six months ended June 30, 2007. The rate is projected based upon management’s judgment regarding future results and could vary due to changes in income, tax planning strategies and federal and state income tax laws.
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Valley National Bancorp (NYSE: VLY)
2007 Second Quarter Earnings
July 18, 2007
Balance Sheet
Investments
During the second quarter, total investment securities decreased $146.6 million, or 5.2 percent, to $2.7 billion at June 30, 2007 from approximately $2.8 billion at March 31, 2007 mainly due to a decline in trading securities. Trading securities decreased $327.7 million partially due to $164.6 million in securities sold but not reinvested as the securities transactions remained unsettled receivables at June 30, 2007. The remaining decrease in trading securities is primarily due to the funding of loan growth during the second quarter of 2007.
During the second quarter of 2007, Valley unwound and eventually terminated all of a series of interest rate derivative transactions entered into during April 2007 for the purpose of offsetting the potential volatility in changes in the market value of over $800 million in trading securities. The hedged trading securities were part of $1.1 billion in long-term mortgage-backed securities sold during the period and primarily reinvested in short-term U.S. treasury securities, short-term other government agencies and short-term corporate debt held in trading securities at June 30, 2007. The termination of the derivatives and mortgage-backed securities sold resulted in a $3.0 million net loss recorded in losses on trading securities, net during the second quarter of 2007.
Loans
During the second quarter, loans increased $139.7 million, or 7.0 percent on an annualized basis, to $8.2 billion at June 30, 2007 from approximately $8.0 billion at March 31, 2007. The linked quarter growth in loans is mainly comprised of increases in automobile and commercial loans of $111.0 million and $70.0 million, respectively, partially offset by declines in construction and commercial mortgage loans totaling $22.5 million and $19.6 million, respectively. Automobile loan volumes were exceptionally strong as Valley has focused efforts to expand the geographic presence of its indirect auto loan origination franchise. The decreases seen in the construction and commercial mortgage loans reflect a decline in demand primarily caused by the current interest rate environment and a slow down in the home building market, while Valley experiences normal paydowns on existing construction loans as residential projects are completed and sold.
Deposits
During the quarter, deposits remained relatively flat at approximately $8.3 billion as of June 30, 2007. A total decrease of $80.9 million in savings, NOW, and money market deposits was partially offset by a $73.6 million increase in time deposits. Saving, NOW, and money market deposits declined due to increased competition for approximately $83 million in municipal deposits which were lost in the second quarter due to less aggressive bidding by Valley. Time deposits grew through retail certificates of deposit promotions which outpaced the maturity of approximately $50 million in brokered certificates of deposit. Non-interest bearing deposits totaling $1.9 billion at June 30, 2007 remained relatively unchanged from the linked quarter.
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Valley National Bancorp (NYSE: VLY)
2007 Second Quarter Earnings
July 18, 2007
Credit Quality
Net loan charge-offs for the second quarter of 2007 were approximately $3.1 million compared to $3.3 million for the second quarter of 2006, and $1.1 million for the first quarter of 2007. The provision for credit losses was $2.4 million for the second quarter of 2007 compared to $3.1 million for the second quarter of 2006, and $1.9 million for the first quarter of 2007. Total non-performing assets, consisting of non-accrual loans, other real estate owned and other repossessed assets, totaled $30.9 million, or 0.38 percent of loans at June 30, 2007 up slightly from $30.8 million or 0.38 percent of loans at March 31, 2007.
Loans past due 90 days or more and still accruing at June 30, 2007 were $6.7 million, or 0.08 percent of $8.2 billion of total loans, compared to $7.4 million at June 30, 2006 and $2.9 million at March 31, 2007. Total loans past due in excess of 30 days were 0.80 percent of total loans at June 30, 2007 compared with 0.81 percent at March 31, 2007.
Financial Ratios
Valley’s annualized return on average shareholders’ equity was 16.98 percent and 17.25 percent for the three months ended June 30, 2007 and 2006, respectively. On a comparative basis, adjusting for Valley’s goodwill and other intangible assets, the annualized return on average tangible equity was 21.89 percent and 22.31 percent for the same periods. See “Notes to Selected Financial Data” section in the tables that follow for information regarding the computation of these ratios.
For the quarter ended June 30, 2007 and 2006, annualized return on average assets was 1.30 percent and 1.33 percent, respectively.
Valley’s risk-based capital ratios were 9.99 percent for Tier 1 capital, 11.86 percent for total capital and 7.79 percent for Tier 1 leverage at June 30, 2007.
Valley National Bancorp is a regional bank holding company with over $12 billion in assets, headquartered in Wayne, New Jersey. Its principal subsidiary, Valley National Bank, currently operates 169 branches in 114 communities serving 13 counties throughout northern and central New Jersey and New York City.
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Valley National Bancorp (NYSE: VLY)
2007 Second Quarter Earnings
July 18, 2007
Forward Looking Statement
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, relationships, opportunities, taxation, technology and market conditions. These statements may be identified by such forward-looking terminology as “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ from those contemplated by such forward-looking statements include, among others, the following: the impact of management’s implementation of SFAS No. 159, unanticipated changes in the direction of interest rates, effective income tax rates, loan and investment prepayments and assumptions, levels of loan quality and origination volume, relationships with major customers, as well as the effects of unanticipated economic conditions and legal and regulatory barriers including compliance issues related to AML/BSA compliance and the development of new tax strategies or the disallowance of prior tax strategies. Valley assumes no obligation for updating any such forward-looking statement at any time.
# # #
-Tables to Follow-
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Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
| | | | | | | | | | | | | | | | |
(in thousands, except for share data) | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| FINANCIAL DATA: | | | | | | | | | | | | | | | | |
Net income | | $ | 39,679 | | | $ | 40,786 | | | $ | 89,113 | | | $ | 81,697 | |
Net interest income | | | 95,781 | | | | 98,337 | | | | 191,953 | | | | 196,878 | |
Net interest income - FTE (2) | | | 97,382 | | | | 99,978 | | | | 195,150 | | | | 200,216 | |
Weighted Average Number of Shares Outstanding (3): | | | | | | | | | | | | | | | | |
Basic | | | 120,291,220 | | | | 122,727,825 | | | | 120,590,026 | | | | 122,711,750 | |
Diluted | | | 120,777,560 | | | | 123,278,696 | | | | 121,087,329 | | | �� | 123,194,496 | |
Per share data (3): | | | | | | | | | | | | | | | | |
Basic earnings | | $ | 0.33 | | | $ | 0.33 | | | $ | 0.74 | | | $ | 0.67 | |
Diluted earnings | | | 0.33 | | | | 0.33 | | | | 0.74 | | | | 0.66 | |
Cash dividends declared | | | 0.21 | | | | 0.20 | | | | 0.41 | | | | 0.40 | |
Book value | | | 7.72 | | | | 7.69 | | | | 7.72 | | | | 7.69 | |
Tangible book value (1) | | | 5.97 | | | | 5.95 | | | | 5.97 | | | | 5.95 | |
Closing stock price - high | | | 24.89 | | | | 24.49 | | | | 25.18 | | | | 24.49 | |
Closing stock price - low | | | 22.42 | | | | 22.77 | | | | 22.42 | | | | 21.01 | |
| | | | |
| FINANCIAL RATIOS: | | | | | | | | | | | | | | | | |
Net interest margin | | | 3.39 | % | | | 3.42 | % | | | 3.39 | % | | | 3.43 | % |
Net interest margin - FTE (2) | | | 3.45 | | | | 3.48 | | | | 3.45 | | | | 3.49 | |
Annualized return on average assets | | | 1.30 | | | | 1.33 | | | | 1.46 | | | | 1.33 | |
Annualized return on average shareholders’ equity | | | 16.98 | | | | 17.25 | | | | 19.25 | | | | 17.32 | |
Annualized return on average tangible shareholders’ equity (1) | | | 21.89 | | | | 22.31 | | | | 24.90 | | | | 22.46 | |
Efficiency ratio (4) | | | 52.72 | | | | 52.59 | | | | 49.50 | | | | 52.06 | |
| | | | |
| AVERAGE BALANCE SHEET ITEMS: | | | | | | | | | | | | | | | | |
Assets | | $ | 12,195,790 | | | $ | 12,294,841 | | | $ | 12,177,491 | | | $ | 12,274,970 | |
Interest earning assets | | | 11,299,934 | | | | 11,501,020 | | | | 11,310,493 | | | | 11,479,359 | |
Loans | | | 8,181,248 | | | | 8,243,355 | | | | 8,236,758 | | | | 8,197,622 | |
Interest bearing liabilities | | | 9,305,357 | | | | 9,363,120 | | | | 9,308,699 | | | | 9,357,439 | |
Deposits | | | 8,339,489 | | | | 8,503,424 | | | | 8,358,654 | | | | 8,445,135 | |
Shareholders’ equity | | | 934,727 | | | | 946,018 | | | | 925,760 | | | | 943,184 | |
Valley National Bancorp
Consolidated Financial Highlights
SELECTED FINANCIAL DATA
| | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | Six Months Ended June 30, | |
(Dollars in thousands) | | 2007 | | 2006 | | 2007 | | | 2006 | |
ALLOWANCE FOR CREDIT LOSSES: | | | | | | | | | | | | | | |
Beginning of period | | $ | 75,533 | | $ | 75,898 | | $ | 74,718 | | | $ | 75,188 | |
Provision for credit losses | | | 2,388 | | | 3,117 | | | 4,298 | | | | 4,411 | |
Charge-offs | | | 4,058 | | | 3,845 | | | 5,788 | | | | 5,239 | |
Recoveries | | | 912 | | | 526 | | | 1,547 | | | | 1,336 | |
| | | | | | | | | | | | | | |
End of period | | $ | 74,775 | | $ | 75,696 | | $ | 74,775 | | | $ | 75,696 | |
| | | | | | | | | | | | | | |
Components: | | | | | | | | | | | | | | |
| | | | |
Allowance for loan losses | | $ | 72,442 | | $ | 75,696 | | $ | 72,442 | | | $ | 75,696 | |
Reserve for unfunded letters of credit (5) | | | 2,333 | | | 0 | | | 2,333 | | | | 0 | |
| | | | | | | | | | | | | | |
Allowance for credit losses | | $ | 74,775 | | $ | 75,696 | | $ | 74,775 | | | $ | 75,696 | |
| | | | | | | | | | | | | | |
| | | |
| | | | | | | As of June 30, | |
| | | | | | | 2007 | | | 2006 | |
BALANCE SHEET ITEMS: | | | | | | | | | | | | | | |
Assets | | | | | | | | $ | 12,319,087 | | | $ | 12,429,815 | |
Loans | | | | | | | | | 8,180,141 | | | | 8,335,692 | |
Deposits | | | | | | | | | 8,332,469 | | | | 8,571,267 | |
Shareholders’ equity | | | | | | | | | 926,602 | | | | 944,511 | |
| | | | |
CAPITAL RATIOS: | | | | | | | | | | | | | | |
Tier 1 leverage ratio | | | | | | | | | 7.79 | % | | | 8.18 | % |
Risk-based capital - Tier 1 | | | | | | | | | 9.99 | | | | 10.54 | |
Risk-based capital - Total Capital | | | | | | | | | 11.86 | | | | 12.41 | |
| | | | |
ASSET QUALITY: | | | | | | | | | | | | | | |
Non-accrual loans | | | | | | | | $ | 28,843 | | | $ | 29,015 | |
Other real estate owned | | | | | | | | | 1,055 | | | | 1,728 | |
Other repossessed assets | | | | | | | | | 1,044 | | | | 930 | |
| | | | | | | | | | | | | | |
Total non-performing assets | | | | | | | | $ | 30,942 | | | $ | 31,673 | |
| | | | | | | | | | | | | | |
Loans past due 90 days or more and still accruing | | | | | | | | $ | 6,686 | | | $ | 7,374 | |
| | | | | | | | | | | | | | |
| | | | |
ASSET QUALITY RATIOS: | | | | | | | | | | | | | | |
Non-performing assets to total loans | | | | | | | | | 0.38 | % | | | 0.38 | % |
Allowance for loan losses to total loans | | | | | | | | | 0.89 | | | | 0.91 | |
Allowance for credit losses to total loans | | | | | | | | | 0.91 | | | | 0.91 | |
Annualized net charge-offs to average loans | | | | | | | | | 0.10 | | | | 0.10 | |
Valley National Bancorp
Consolidated Financial Highlights
NOTES TO SELECTED FINANCIAL DATA
| (1) | This press release contains certain supplemental financial information, described in the following notes, which has been determined by methods other than Generally Accepted Accounting Principles (“GAAP”) that management uses in its analysis of Valley’s performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley’s financial results and facilitates comparisons with the performance of peers within the financial services industry. |
Tangible book value and return on average tangible equity, which represent non-GAAP measures, are computed as follows:
| | - | Tangible book value is computed by dividing total shareholders’ equity less goodwill and other intangible assets by shares outstanding. |
| | - | Return on average tangible equity is computed by dividing net income by average shareholders’ equity less average goodwill and average identifiable intangible assets. |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
(Dollars in thousands, except for share data) | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Common shares outstanding | | | 120,031,674 | | | | 122,749,328 | | | | 120,031,674 | | | | 122,749,328 | |
| | | | | | | | | | | | | | | | |
Shareholders’ equity | | $ | 926,602 | | | $ | 944,511 | | | $ | 926,602 | | | $ | 944,511 | |
Less: Goodwill and other intangible assets | | | 209,731 | | | | 214,758 | | | | 209,731 | | | | 214,758 | |
| | | | | | | | | | | | | | | | |
Tangible shareholders’ equity | | $ | 716,871 | | | $ | 729,753 | | | $ | 716,871 | | | $ | 729,753 | |
| | | | | | | | | | | | | | | | |
Tangible book value | | $ | 5.97 | | | $ | 5.95 | | | $ | 5.97 | | | $ | 5.95 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income | | $ | 39,679 | | | $ | 40,786 | | | $ | 89,113 | | | $ | 81,697 | |
| | | | | | | | | | | | | | | | |
Average shareholders’ equity | | $ | 934,727 | | | $ | 946,018 | | | $ | 925,760 | | | $ | 943,184 | |
Less: Average goodwill and other intangible assets | | | 209,714 | | | | 214,874 | | | | 209,956 | | | | 215,693 | |
| | | | | | | | | | | | | | | | |
Average tangible shareholders’ equity | | $ | 725,013 | | | $ | 731,144 | | | $ | 715,804 | | | $ | 727,491 | |
| | | | | | | | | | | | | | | | |
Annualized return on average tangible shareholders’ equity | | | 21.89 | % | | | 22.31 | % | | | 24.90 | % | | | 22.46 | % |
| | | | | | | | | | | | | | | | |
| (2) | Net interest income and net interest margin are presented on a tax equivalent basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. |
| (3) | Share data reflects a five percent common stock dividend issued on May 25, 2007. |
| (4) | The efficiency ratio measures Valley’s total non-interest expense as a percentage of net interest income plus total non-interest income. |
| (5) | On January 1, 2007, Valley transferred the portion of the allowance for loan losses related commercial lending letters of credit to other liabilities. |
SHAREHOLDER RELATIONS
Requests for copies of reports and/or other inquiries should be directed to Dianne Grenz, Director of Shareholder and Public Relations, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 696-2044 or by e-mail at dgrenz@valleynationalbank.com.
VALLEY NATIONAL BANCORP
Consolidated Statements of Financial Condition (Unaudited)
(in thousands, except for share data)
| | | | | | | | |
| | | June 30, 2007 | | | December 31,
2006 | |
Assets | | | | | | | | |
Cash and due from banks | | $ | 228,650 | | | $ | 236,354 | |
Interest bearing deposits with banks | | | 9,614 | | | | 7,795 | |
Federal funds sold | | | 175,000 | | | | 175,000 | |
Investment securities: | | | | | | | | |
Held to maturity, fair value of $577,416 and $1,090,883 at June 30, 2007 and December 31, 2006, respectively | | | 580,436 | | | | 1,108,885 | |
Available for sale | | | 1,260,292 | | | | 1,769,981 | |
Trading securities | | | 839,303 | | | | 4,655 | |
| | | | | | | | |
Total investment securities | | | 2,680,031 | | | | 2,883,521 | |
| | | | | | | | |
Loans held for sale, at fair value as of June 30, 2007 | | | 6,233 | | | | 4,674 | |
| | |
Loans | | | 8,180,141 | | | | 8,331,685 | |
Less: Allowance for loan losses | | | (72,442 | ) | | | (74,718 | ) |
| | | | | | | | |
Net loans | | | 8,107,699 | | | | 8,256,967 | |
| | | | | | | | |
Premises and equipment, net | | | 223,452 | | | | 209,397 | |
Bank owned life insurance | | | 268,853 | | | | 189,157 | |
Accrued interest receivable | | | 60,000 | | | | 63,356 | |
Due from customers on acceptances outstanding | | | 11,784 | | | | 9,798 | |
Goodwill | | | 181,497 | | | | 181,497 | |
Other intangible assets, net | | | 28,234 | | | | 29,858 | |
Other assets | | | 338,040 | | | | 147,653 | |
| | | | | | | | |
Total assets | | $ | 12,319,087 | | | $ | 12,395,027 | |
| | | | | | | | |
Liabilities | | | | | | | | |
Deposits: | | | | | | | | |
Non-interest bearing | | $ | 1,942,290 | | | $ | 1,996,237 | |
Interest bearing: | | | | | | | | |
Savings, NOW and money market | | | 3,443,655 | | | | 3,561,807 | |
Time | | | 2,946,524 | | | | 2,929,607 | |
| | | | | | | | |
Total deposits | | | 8,332,469 | | | | 8,487,651 | |
| | | | | | | | |
Short-term borrowings | | | 452,410 | | | | 362,615 | |
Long-term borrowings (includes fair value of $39,660 for an FHLB advance at June 30, 2007) | | | 2,278,161 | | | | 2,278,728 | |
Junior subordinated debentures issued to capital trust, at fair value as of June 30, 2007 | | | 186,977 | | | | 206,186 | |
Bank acceptances outstanding | | | 11,784 | | | | 9,798 | |
Accrued expenses and other liabilities | | | 130,684 | | | | 100,459 | |
| | | | | | | | |
Total liabilities | | | 11,392,485 | | | | 11,445,437 | |
| | | | | | | | |
Shareholders’ Equity* | | | | | | | | |
Preferred stock, no par value, authorized 30,000,000 shares; none issued | | | — | | | | — | |
Common stock, no par value, authorized 181,796,274 shares; issued | | | | | | | | |
122,586,577 shares and 122,658,486 shares at June 30, 2007 and December 31, 2006, respectively | | | 43,221 | | | | 41,212 | |
Surplus | | | 880,286 | | | | 881,022 | |
Retained earnings | | | 92,575 | | | | 97,639 | |
Accumulated other comprehensive loss | | | (24,976 | ) | | | (30,873 | ) |
Less: Treasury stock, at cost, 2,554,903 shares and 1,533,355 shares at June 30, 2007 and December 31, 2006, respectively | | | (64,504 | ) | | | (39,410 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 926,602 | | | | 949,590 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 12,319,087 | | | $ | 12,395,027 | |
| | | | | | | | |
| * | Share data reflects a five percent common stock dividend issued on May 25, 2007. |
VALLEY NATIONAL BANCORP
Consolidated Statements of Income (Unaudited)
(in thousands, except for share data)
| | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2007 | | | 2006 | | 2007 | | 2006 |
Interest Income | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 139,588 | | | $ | 133,672 | | $ | 278,535 | | $ | 261,100 |
Interest and dividends on investment securities: | | | | | | | | | | | | | |
Taxable | | | 32,477 | | | | 35,745 | | | 65,525 | | | 71,990 |
Tax-exempt | | | 2,910 | | | | 2,974 | | | 5,807 | | | 6,047 |
Dividends | | | 1,993 | | | | 1,362 | | | 4,030 | | | 2,791 |
Interest on federal funds sold and other short-term investments | | | 4,188 | | | | 573 | | | 6,388 | | | 795 |
| | | | | | | | | | | | | |
Total interest income | | | 181,156 | | | | 174,326 | | | 360,285 | | | 342,723 |
| | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | |
Interest on deposits: | | | | | | | | | | | | | |
Savings, NOW and money market | | | 19,216 | | | | 18,865 | | | 38,634 | | | 35,888 |
Time | | | 33,143 | | | | 26,095 | | | 64,907 | | | 47,816 |
Interest on short-term borrowings | | | 4,522 | | | | 4,142 | | | 8,500 | | | 9,553 |
Interest on long-term borrowings and junior subordinated debentures | | | 28,494 | | | | 26,887 | | | 56,291 | | | 52,588 |
| | | | | | | | | | | | | |
Total interest expense | | | 85,375 | | | | 75,989 | �� | | 168,332 | | | 145,845 |
| | | | | | | | | | | | | |
Net Interest Income | | | 95,781 | | | | 98,337 | | | 191,953 | | | 196,878 |
Provision for credit losses | | | 2,388 | | | | 3,117 | | | 4,298 | | | 4,411 |
| | | | | | | | | | | | | |
Net interest income after provision for credit losses | | | 93,393 | | | | 95,220 | | | 187,655 | | | 192,467 |
| | | | | | | | | | | | | |
Non-Interest Income | | | | | | | | | | | | | |
Trust and investment services | | | 1,841 | | | | 1,931 | | | 3,621 | | | 3,613 |
Insurance premiums | | | 2,803 | | | | 2,779 | | | 5,764 | | | 5,418 |
Service charges on deposit accounts | | | 6,946 | | | | 5,938 | | | 12,642 | | | 11,528 |
Gains on securities transactions, net | | | 44 | | | | 553 | | | 70 | | | 1,507 |
(Losses) gains on trading securities, net | | | (2,845 | ) | | | 302 | | | 2,583 | | | 678 |
Fees from loan servicing | | | 1,394 | | | | 1,489 | | | 2,784 | | | 3,076 |
Gains on loans held for sale, net | | | 2,691 | | | | 529 | | | 4,362 | | | 1,194 |
Gains on sales of premises and equipment, net | | | 230 | | | | 9 | | | 16,603 | | | 9 |
Bank owned life insurance | | | 2,888 | | | | 2,039 | | | 5,015 | | | 4,042 |
Other | | | 3,687 | | | | 3,827 | | | 7,293 | | | 7,700 |
| | | | | | | | | | | | | |
Total non-interest income | | | 19,679 | | | | 19,396 | | | 60,737 | | | 38,765 |
| | | | | | | | | | | | | |
Non-Interest Expense | | | | | | | | | | | | | |
Salary expense | | | 29,152 | | | | 27,053 | | | 57,680 | | | 53,569 |
Employee benefit expense | | | 7,478 | | | | 6,713 | | | 15,439 | | | 13,885 |
Net occupancy and equipment expense | | | 12,698 | | | | 11,148 | | | 24,714 | | | 22,733 |
Amortization of other intangible assets | | | 1,866 | | | | 2,183 | | | 3,790 | | | 4,371 |
Professional and legal fees | | | 1,412 | | | | 2,065 | | | 3,067 | | | 3,998 |
Advertising | | | 806 | | | | 2,450 | | | 1,742 | | | 4,249 |
Other | | | 7,455 | | | | 10,307 | | | 18,650 | | | 19,876 |
| | | | | | | | | | | | | |
Total non-interest expense | | | 60,867 | | | | 61,919 | | | 125,082 | | | 122,681 |
| | | | | | | | | | | | | |
Income before income taxes | | | 52,205 | | | | 52,697 | | | 123,310 | | | 108,551 |
Income tax expense | | | 12,526 | | | | 11,911 | | | 34,197 | | | 26,854 |
| | | | | | | | | | | | | |
Net Income | | $ | 39,679 | | | $ | 40,786 | | $ | 89,113 | | $ | 81,697 |
| | | | | | | | | | | | | |
Earnings Per Common Share:* | | | | | | | | | | | | | |
Basic | | $ | 0.33 | | | $ | 0.33 | | $ | 0.74 | | $ | 0.67 |
Diluted | | | 0.33 | | | | 0.33 | | | 0.74 | | | 0.66 |
Cash Dividends Declared Per Common Share* | | | 0.21 | | | | 0.20 | | | 0.41 | | | 0.40 |
Weighted Average Number of Common Shares Outstanding:* | | | | | | | | | | | | | |
Basic | | | 120,291,220 | | | | 122,727,825 | | | 120,590,026 | | | 122,711,750 |
Diluted | | | 120,777,560 | | | | 123,278,696 | | | 121,087,329 | | | 123,194,496 |
| * | Share data reflects a five percent common stock dividend issued on May 25, 2007. |
Valley National Bancorp
(dollars in thousands)
| | | | | | | | | | | | | | | |
| | | Loan Portfolio |
| | | For the periods ended |
| | | 6/30/2007 | | 3/31/2007 | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 |
Commercial Loans | | $ | 1,517,184 | | $ | 1,447,165 | | $ | 1,466,862 | | $ | 1,443,539 | | $ | 1,492,688 |
| | | | | | | | | | | | | | | |
Construction | | | 470,592 | | | 493,095 | | | 526,318 | | | 514,842 | | | 515,683 |
Residential Mortgage | | | 1,873,943 | | | 1,849,069 | | | 2,106,306 | | | 2,082,233 | | | 2,093,694 |
Commercial Mortgage | | | 2,262,290 | | | 2,281,871 | | | 2,309,217 | | | 2,354,791 | | | 2,311,897 |
| | | | | | | | | | | | | | | |
Total Mortgage Loans | | | 4,606,825 | | | 4,624,035 | | | 4,941,841 | | | 4,951,866 | | | 4,921,274 |
| | | | | | | | | | | | | | | |
Home Equity | | | 555,306 | | | 560,577 | | | 571,138 | | | 577,587 | | | 570,500 |
Credit Card | | | 9,105 | | | 8,498 | | | 8,764 | | | 8,490 | | | 8,279 |
Automobile | | | 1,391,801 | | | 1,280,809 | | | 1,238,145 | | | 1,229,450 | | | 1,234,005 |
Other Consumer | | | 99,920 | | | 119,313 | | | 104,935 | | | 102,155 | | | 108,946 |
| | | | | | | | | | | | | | | |
Total Consumer Loans | | | 2,056,132 | | | 1,969,197 | | | 1,922,982 | | | 1,917,682 | | | 1,921,730 |
| | | | | | | | | | | | | | | |
Total Loans | | $ | 8,180,141 | | $ | 8,040,397 | | $ | 8,331,685 | | $ | 8,313,087 | | $ | 8,335,692 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and Net Interest Income on a Tax Equivalent Basis | |
| | | Quarter End - 6/30/07 | | | Quarter End - 3/31/07 | | | Quarter End - 12/31/06 | | | Quarter End - 9/30/06 | | | Quarter End - 6/30/06 | |
| | | Average
Balance | | Interest | | | Avg.
Rate | | | Average
Balance | | Interest | | | Avg.
Rate | | | Average
Balance | | Interest | | | Avg.
Rate | | | Average
Balance | | Interest | | | Avg.
Rate | | | Average
Balance | | Interest | | | Avg.
Rate | |
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans (1)(2) | | $ | 8,181,248 | | $ | 139,622 | | | 6.83 | % | | $ | 8,292,884 | | $ | 138,983 | | | 6.70 | % | | $ | 8,346,362 | | $ | 143,060 | | | 6.86 | % | | $ | 8,307,228 | | $ | 140,355 | | | 6.76 | % | | $ | 8,243,355 | | $ | 133,710 | | | 6.49 | % |
Taxable investments (3) | | | 2,525,972 | | | 34,470 | | | 5.46 | % | | | 2,580,236 | | | 35,085 | | | 5.44 | % | | | 2,709,053 | | | 35,484 | | | 5.24 | % | | | 2,830,076 | | | 36,610 | | | 5.17 | % | | | 2,919,614 | | | 37,107 | | | 5.08 | % |
Tax-exempt investments (1)(3) | | | 277,274 | | | 4,477 | | | 6.46 | % | | | 279,176 | | | 4,457 | | | 6.39 | % | | | 281,366 | | | 4,482 | | | 6.37 | % | | | 285,387 | | | 4,502 | | | 6.31 | % | | | 292,738 | | | 4,577 | | | 6.25 | % |
Federal funds sold and other interest bearing deposits | | | 315,440 | | | 4,188 | | | 5.31 | % | | | 168,873 | | | 2,200 | | | 5.21 | % | | | 152,546 | | | 2,063 | | | 5.41 | % | | | 99,987 | | | 1,312 | | | 5.25 | % | | | 45,313 | | | 573 | | | 5.06 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest earning assets | | | 11,299,934 | | | 182,757 | | | 6.47 | % | | | 11,321,169 | | | 180,725 | | | 6.39 | % | | | 11,489,327 | | | 185,089 | | | 6.44 | % | | | 11,522,678 | | | 182,779 | | | 6.35 | % | | | 11,501,020 | | | 175,967 | | | 6.12 | % |
Other assets | | | 895,856 | | | | | | | | | | 837,820 | | | | | | | | | | 833,424 | | | | | | | | | | 800,964 | | | | | | | | | | 793,821 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 12,195,790 | | | | | | | | | $ | 12,158,989 | | | | | | | | | $ | 12,322,751 | | | | | | | | | $ | 12,323,642 | | | | | | | | | $ | 12,294,841 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and shareholders’ equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Savings, NOW and money market deposits | | $ | 3,503,061 | | $ | 19,216 | | | 2.19 | % | | $ | 3,559,302 | | $ | 19,418 | | | 2.18 | % | | $ | 3,603,822 | | $ | 20,048 | | | 2.23 | % | | $ | 3,666,485 | | $ | 19,886 | | | 2.17 | % | | $ | 3,853,598 | | $ | 18,865 | | | 1.96 | % |
Time deposits | | | 2,898,393 | | | 33,143 | | | 4.57 | % | | | 2,894,086 | | | 31,764 | | | 4.39 | % | | | 2,938,977 | | | 33,265 | | | 4.53 | % | | | 2,900,781 | | | 31,573 | | | 4.35 | % | | | 2,683,610 | | | 26,095 | | | 3.89 | % |
Short-term borrowings | | | 419,937 | | | 4,522 | | | 4.31 | % | | | 371,911 | | | 3,978 | | | 4.28 | % | | | 373,838 | | | 4,340 | | | 4.64 | % | | | 386,034 | | | 4,318 | | | 4.47 | % | | | 415,298 | | | 4,142 | | | 3.99 | % |
Long-term borrowings (4) | | | 2,483,966 | | | 28,494 | | | 4.59 | % | | | 2,486,780 | | | 27,797 | | | 4.47 | % | | | 2,493,764 | | | 29,144 | | | 4.67 | % | | | 2,492,702 | | | 27,831 | | | 4.47 | % | | | 2,410,614 | | | 26,887 | | | 4.46 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest bearing liabilities | | | 9,305,357 | | | 85,375 | | | 3.67 | % | | | 9,312,079 | | | 82,957 | | | 3.56 | % | | | 9,410,401 | | | 86,797 | | | 3.69 | % | | | 9,446,002 | | | 83,608 | | | 3.54 | % | | | 9,363,120 | | | 75,989 | | | 3.25 | % |
Non-interest bearing deposits | | | 1,938,035 | | | | | | | | | | 1,924,645 | | | | | | | | | | 1,929,283 | | | | | | | | | | 1,918,596 | | | | | | | | | | 1,966,216 | | | | | | | |
Other liabilities | | | 17,671 | | | | | | | | | | 5,572 | | | | | | | | | | 23,404 | | | | | | | | | | 6,832 | | | | | | | | | | 19,487 | | | | | | | |
Shareholders’ equity | | | 934,727 | | | | | | | | | | 916,693 | | | | | | | | | | 959,663 | | | | | | | | | | 952,212 | | | | | | | | | | 946,018 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 12,195,790 | | | | | | | | | $ | 12,158,989 | | | | | | | | | $ | 12,322,751 | | | | | | | | | $ | 12,323,642 | | | | | | | | | $ | 12,294,841 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income/interest rate spread (5) | | | | | | 97,382 | | | 2.80 | % | | | | | | 97,768 | | | 2.83 | % | | | | | | 98,292 | | | 2.75 | % | | | | | | 99,171 | | | 2.81 | % | | | | | | 99,978 | | | 2.87 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tax equivalent adjustment | | | | | | (1,601 | ) | | | | | | | | | (1,596 | ) | | | | | | | | | (1,606 | ) | | | | | | | | | (1,614 | ) | | | | | | | | | (1,641 | ) | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income, as reported | | | | | $ | 95,781 | | | | | | | | | $ | 96,172 | | | | | | | | | $ | 96,686 | | | | | | | | | $ | 97,557 | | | | | | | | | $ | 98,337 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin (6) | | | | | | | | | 3.39 | % | | | | | | | | | 3.40 | % | | | | | | | | | 3.37 | % | | | | | | | | | 3.39 | % | | | | | | | | | 3.42 | % |
Tax equivalent effect | | | | | | | | | 0.06 | % | | | | | | | | | 0.05 | % | | | | | | | | | 0.05 | % | | | | | | | | | 0.05 | % | | | | | | | | | 0.06 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin on a fully tax equivalent basis (6) | | | | | | | | | 3.45 | % | | | | | | | | | 3.45 | % | | | | | | | | | 3.42 | % | | | | | | | | | 3.44 | % | | | | | | | | | 3.48 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Interest income is presented on a tax equivalent basis using a 35 percent federal tax rate. |
| (2) | Loans are stated net of unearned income and include non-accrual loans. |
| (3) | The yield for securities that are classified as available for sale is based on the average historical amortized cost. |
| (4) | Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition. |
| (5) | Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. |
| (6) | Net interest income as a percentage of total average interest earning assets. |
