UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1993 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number 0-11179 VALLEY NATIONAL BANCORP (Exact name of registrant as specified in its charter) New Jersey 22-2477875 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1445 Valley Road, Wayne, New Jersey 07470 (Address of principal executive offices) Registrant's telephone number including area code (201) 305-8800 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of class on which registered None None Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock (based upon the closing price of these shares as quoted by NYSE) held by non-affiliates of the registrant was approximately $649,811,000 on February 18, 1994. There were 24,427,274 shares of Common Stock outstanding at February 18, 1994. VALLEY NATIONAL BANCORP DOCUMENTS INCORPORATED BY REFERENCE PARTS I AND II: Certain portions of the Annual Report to Shareholders for the year ended December 31, 1993 as referenced on the pages listed below. PART III: Certain portions of the Proxy Statement for the Annual Meeting of Shareholders to be held March 22, 1994 as referenced on the pages listed below. PART IV: Certain exhibits from the registrant's FORM 10-K Annual Report for the fiscal periods ended December 31, 1990, December 31, 1991 and December 31, 1992. Page(s) in Form 10-K Heading(s) in Annual Report to Annual Item No. Shareholders for Year Ended December 31, 1993 Report* 1. Business Analysis of Average Assets, Liabilities, and Shareholders' Equity and Net Interest Earnings on a Tax Equivalent Basis...........................22 Change in Interest Income and Expense on a Tax Equivalent Basis....................................23 Maturity Distribution of Investment Securities......24 Selected Consolidated Financial Data - Financial Ratios..............................................45 2. Properties Commitments and Contingencies.......................40-41 5. Market for the Dividends...................................41 Registrant's Selected Consolidated Financial Data......45 Common Equity Price Range of Common Stock................45 and Related Stockholder Matters 6. Selected Selected Consolidated Financial Data........45 Financial Data 7. Management's Management's Discussion and Analysis of Financial Discussion and Condition and Results of Operations.......17-25 Analysis of Financial Condition and Results of Operations 8. Financial Consolidated Statements of Financial Condition...26 Statements and Consolidated Statements of Income................27 Supplementary Consolidated Statements of Changes in Shareholders' Data Equity...........................28 Consolidated Statements of Cash Flows...........29 Notes to Consolidated Financial Statements.....30-43 Independent Auditors' Report....................44 *Page numbers refer to pages in non-edgar version of Annual Report and Proxy Statement. Heading(s) in Proxy Statement for Annual Pages(s)in Form 10-K Meeting of Shareholders to be held Proxy Item No. March 22, 1994 Statement* 10. Directors and Election of Directors..................... 2-4 Executive Officers of the Registrant 11. Executive Executive Compensation................... 6-11 Compensation Compensation Committee Report........... 11-13 12. Security Stock Ownership of Management and Principal Ownership of Shareholders........................... 4-6 Certain Beneficial Owners and Management 13. Certain Certain Transactions with Management.......14 Relationships and Related Transactions *Page numbers refer to pages in non-edgar version of Annual Report and Proxy Statement. TABLE OF CONTENTS Item Page PART I. 1. Business a) General Description of Business........................ 5 - 7 b) Statistical Information and Analysis................... 8 - 12 2.Properties............................................. 12 3.Legal Proceeding....................................... 12 4.Submission of Matters to a Vote of Security Holders.... 12 PART II. 5. Market for the Registrant's Common Equity and Related Shareholder Matters.......................................13 6.Selected Financial Data..................................... 13 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.................................13 8.Financial Statements and Supplementary Data................. 13 9.Changes in or Disagreements with Accountants on Accounting and Financial Disclosure.................................. 13 PART III. 10. Directors and Executive Officers of the Registrant. 13 - 14 11.Executive Compensation............................ 14 12.Security Ownership of Certain Beneficial Owners and Managers..................................................14 13.Certain Relationships and Related Transactions.............. 14 PART IV. 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................................................. 14 - 16 SIGNATURES........................................................ 17 - 18 *Page numbers correspond to non-edgar version of Form 10-K. PART I Item 1. BUSINESS a) GENERAL DESCRIPTION OF BUSINESS VALLEY NATIONAL BANCORP Valley National Bancorp (Valley) is a bank holding company organized on May 2, 1983, under the laws of the State of New Jersey and registered with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956. Its principal business activities are restricted to those permissible by Bank Holding Companies under the Bank Act of 1956, as amended, and include the management and control of Valley National Bank (VNB). As of December 31, 1993, Valley's subsidiaries operated 59 full service banking branches located throughout northern New Jersey. RECENT DEVELOPMENTS On June 18, 1993, Valley issued approximately 421,000 shares of its common stock at a cost of $10,962,000 in exchange for approximately 661,000 shares of common stock of PeoplesBancorp ("Peoples") of Fairfield, New Jersey, a New Jersey Corporation and a registered bank holding company of Peoples Bank, National Association, a banking association. The merger was accounted for under the purchase method of accounting. The acquisition of Peoples resulted in the following statement of condition increases as of the acquisition date: Investment securities.............................................$ 47,472,000 Loans, net of unearned income.....................................$138,459,000 Total deposits....................................................$204,825,000 SUBSIDIARIES VNB, a wholly-owned subsidiary of Valley, is a national association established in 1927 under the laws of the United States. VNB provides a full range of commercial and retail bank services, including the acceptance of demand, savings and time deposits; extension of consumer, real estate, S.B.A. and other commercial credits; and offers full personal and corporate trust services, as well as pension and other fiduciary services. VNB operates 59 full service branch offices in five (5) New Jersey Counties. Valley Investment Corporation, a wholly-owned subsidiary of VNB, was organized on December 27, 1984, under the laws of the State of Delaware. Its business activities include holding, maintaining, and managing tangible investment assets. These assets include a tax-exempt money market fund, state and municipal bonds, U.S. Treasury Notes, U.S. Agency Bonds,mortgage-backed securities and mortgages secured by real estate situated outside of the State of Delaware. VNB Mortgage Services, Inc., a wholly-owned subsidiary of VNB, was organized on March 28,1989, under the laws of the State of New Jersey. Its primary business activities include servicing residential mortgage loan portfolios for VNB and various investors. BNV Realty Incorporated, a wholly-owned subsidiary of VNB, was organized on August 16, 1991, under the laws of the state of New Jersey. Its primary business activities are limited to holding and disposing of real estate VNB may acquire as other real estate owned. VN Investment Inc., a wholly-owned subsidiary of VNB, was organized on October 28, 1993,under the laws of the State of New Jersey. Its business activities include holding,maintaining, and managing tangible investment assets. These assets include U.S. Agency Bonds and mortgage-backed securities. Mayflower Financial Corporation ("Mayflower") is a savings and loan holding company for Mayflower Savings Bank, S.L.A., (MSB) a New Jersey-chartered stock savings bank, which operated two (2) full-service offices located in Livingston, New Jersey. Mayflower was incorporated in April 1988, under the laws of the State of Delaware, as a stock corporation,at the direction of the Board of Directors of MSB for the purpose of becoming company which would own all of the outstanding capital stock of MSB upon its conversion from the mutual-to-stock form of organization. MSB was organized in 1921 as a New Jersey chartered mutual savings and loan association. MSB converted to the stock form of organization and sold all of its outstanding capital stock to Mayflower in August 1988. Valley acquired Mayflower and MSB as of December 31, 1990. As of the close of business, January 31, 1993, Mayflower Financial Corporation ("Mayflower") and its wholly-owned savings and loan subsidiary, Mayflower Savings Bank ("MSB") were merged into Valley and VNB, respectively. COMPETITION Vigorous competition for loans and deposit accounts exists in all the major areas where Valley, or any of its subsidiary companies are presently engaged in business. Competition for banking services is based on price, product type, service quality and convenience of location. VNB and its subsidiaries compete with other commercial banks, other financial institutions such as savings banks, savings and loan associations, mortgage companies, leasing companies, finance companies and a variety of financial service and advisory companies. EMPLOYEES At year-end 1993, VNB and its subsidiaries employed 1,081 full-time equivalent persons.Management considers relations with employees to be satisfactory. SUPERVISION AND REGULATION Valley and VNB are subject to regulation and supervision by federal bank regulatory agencies. Valley is regulated and examined by the Federal Reserve Board and VNB is regulated and examined by the Comptroller of the Currency. There are a variety of statutory and regulatory restrictions governing the relations among Valley and VNB. The payment of dividends by VNB to Valley is restricted under the National Bank Act. The approval of the Comptroller of the Currency is required if the dividends for the year exceed the net profits, as defined in the Act, of that year plus the retained net profits for the preceding two years. In addition, a national bank's capital surplus must be equal to or exceed the stated capital for its common stock, or else the bank must make certain transfers from retained earnings to capital surplus. The Banking Affiliates Act of 1982 severely restricts loans and extensions of credit by VNB to Valley and its affiliates (except affiliates which are banks). In general, such loans must be secured by collateral having a market value ranging from 100% to 130% of the loan, depending upon the type of collateral. Furthermore, the aggregate of all loans from VNB to Valley and its affiliates in the aggregate may not exceed 20% of VNB's capital stock and surplus and, singly to Valley or any affiliate, may not exceed 10% of VNB's capital stock and surplus. Similarly, the Banking Affiliates Act of 1982 also restricts VNB in the purchase of securities issued by, the acceptance as loan collateral of securities issued by, the purchase of assets from, and the issuance of a guarantee or standby letter-of-credit on behalf of, Valley or any of its affiliates. Under the Bank Holding Company Act, Valley may not acquire directly or indirectly more than 5% of the voting shares of, or substantially all of the assets of, any bank without the prior approval of the Federal Reserve Board. Valley cannot acquire any bank located outside New Jersey unless the law of such other state specifically permits the acquisition. As of January 1, 1988, New Jersey law permits New Jersey banking organizations to acquire or be acquired by banking organizations in other states on a "reciprocal" basis (i.e., provided the other state's laws permit New Jersey banking organizations to acquire banking organizations in that state on substantially the same terms and conditions applicable to banking acquisitions solely within the state). Generally, the Bank Holding Company Act limits the business of a bank holding company and its affiliates to banking, managing or controlling banks, and furnishing or performing services for banks controlled by the holding company. The major exception to this rule is that a bank holding company directly or through a subsidiary may engage in non-banking activities which the Federal Reserve Board has determined to be so closely related to banking or managing or controlling banks so as to be a proper incident thereto. The Federal Reserve under its Regulation "Y" has restricted such activities to things such as lease financing, mortgage banking, investment advice, certain data processing services and discount brokerage services and ownership of a savings and loan association. The Federal Reserve Board, the Office of the Comptroller of the Currency ("OCC") and the FDIC have issued risk-based capital guidelines for U.S. banking organizations. The objective of these efforts was to provide a more uniform capital framework that is sensitive to differences in risk profiles among banking companies. Below is a list of such requirements and shows Valley and VNB's ratios as of December 31, 1993. Valley regulatory VNB regulatory capital capital Regulatory ($ in thousands) Amount Percent(1) Amount Percent(1) capital percent(2) Risk based capital: Tier-one capital $258,622 13.93% $231,709 12.57% 6.00% Tier-one & Tier two capital $281,918 15.18% $254,904 13.83% 10.00% Tier-one leverage $260,269 7.62% $232,328 6.86% 3.00-5.00% (1) Ratio of qualifying capital to consolidated total risk-adjusted assets. (2) For qualification as a well-capitalized institution. On August 9, 1989, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") was enacted. FIRREA established new capital standards and enhanced regulatory oversight of the thrift industry. Under FIRREA, banks are now permitted to acquire all thrifts and may convert such acquired thrifts into commercial bank branches. In such a conversion the thrift may have to pay insurance fund exit and entrance fees to the FDIC. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") was enacted in December 1991. FDICIA identifies the following capital standard categories for financial institutions: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions depending on the category in which an institution is classified. Pursuant to FDICIA, undercapitalized institutions must submit recapitalization plans, and a company controlling a failing institution must guarantee such institutions's compliance with its plan. FDICIA also required the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet such standards. The FDIC has adopted many of these regulations. The deposits of VNB are insured up to applicable limits by the FDIC. Accordingly, VNB is subject to deposit insurance assessments to maintain the Bank Insurance Fund (the "BIF") of the FDIC. Pursuant to FDICIA, the FDIC established a risk-based insurance assessment system. This approach is designed to ensure that a banking institution's insurance assessment is based on three factors: the probability that the applicable insurance fund will incur a loss from the institution; the likely amount of the loss; and the revenue needs of the insurance fund. Under the risk-based assessment system, each BIF member institution is assigned to one of nine assessment risk classifications based on its capital ratios and supervisory evaluations. The lowest risk institutions presently pay deposit insurance at a rate of .23% of domestic deposits while the highest risk institutions are assessed at the rate of .31% of domestic deposits. Each institution's classification under the system is reexamined semiannually. In addition, the FDIC is authorized to increase or decrease such rates on a semiannual basis. The Bank presently pays a premium of .23%. b) STATISTICAL INFORMATION AND ANALYSIS The following information is being presented pursuant to requirements of SEC Guide 3, "Statistical Disclosure by Bank Holding Companies". I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL A. AVERAGE BALANCE SHEETS - are incorporated by reference under the caption "Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Earnings on a Tax Equivalent Basis" on page 22 of the 1993 Annual Report to Shareholders. B. NET INTEREST EARNINGS AND INTEREST RATE ANALYSIS - are incorporated by reference under the caption "Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Earnings on a Tax Equivalent Basis" on page 22 of the 1993 Annual Report to Shareholders. C. ANALYSIS OF NET INTEREST EARNINGS, VOLUME AND RATE VARIANCE - are incorporated by reference under the caption "Change in Interest Income and Expense on a Tax Equivalent Basis" on page 23 of the 1993 Annual Report to Shareholders. II. INVESTMENT PORTFOLIO A. BOOK VALUE - The following tables set forth the book value of Valley's different types of investment securities over the last three years: INVESTMENT SECURITIES HELD TO MATURITY December 31 ($ in thousands) 1993 1992 1991 Government agencies and corporations... $ 75,106 $ 118,778 $ 353,645 Obligations of state and political subdivisions......................... 283,805 222,396 184,856 Mortgage-backed securities............. 579,839 744,625 667,364 Other securities....................... 1,243 1,954 10,223 INVESTMENT SECURITIES AVAILABLE FOR SALE December 31 ($ in thousands) 1993 1992 1991 U.S. Treasury securities and other government agencies and corporations....$ 184,019 $ 305,118 $ -- Mortgage-backed securities............... 256,417 24,783 -- Equity securities...................... 1,046 871 -- B. MATURITIES AND AVERAGE WEIGHTED YIELDS - are incorporated by reference under the caption "Maturity Distribution of Investment Securities" on page 24 of the 1993 Annual Report to Shareholders. C. SECURITIES OF A SINGLE ISSUER EXCEEDING TEN PERCENT OF SHAREHOLDERS' EQUITY - As of December 31, 1993, there were no securities, in the name of any one issuer, exceeding 10% of shareholders' equity, except for securities issued by the United States and its political subdivisions and agencies. III. LOAN PORTFOLIO A. TYPES OF LOANS - The following table sets forth Valley's different types of loans over the past five years: ($ in thousands) 1993 1992 1991 1990 1989 Commercial, financial and agricultural.............. $209,657 $ 218,789 $ 251,781 $ 320,778 $ 314,323 Real estate - construction.. 63,096 58,077 76,327 90,333 101,299 Real estate - commercial....387,503 306,167 290,038 262,848 262,970 Real estate - residential...597,423 508,308 373,884 368,676 269,620 Loans to individuals........528,616 428,828 389,293 410,443 404,684 1,786,295 1,520,169 1,381,323 1,453,078 1,352,896 Loans held for sale......... 16,905 -- -- -- -- Less: Unearned income...... (1,200) (226) (987) (1,339) (812) Loans, net of unearned income.............. 1,802,000 1,519,943 1,380,336 1,451,739 1,352,084 Less: Allowance for possible loan losses. (35,205) (28,772) (21,937) (15,921) (8,925) $1,766,795 $1,491,171 $1,358,399 $1,435,818 $1,343,159 Efforts are made to maintain a diversified portfolio as to type of borrower and loan to guard against a downward turn in any one economic sector. B. MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES - The following table sets forth Valley's commercial loans and real estate construction loans as of December 31, 1993: 1 Yr. Over 1 Over ($ in thousands) or less to 5 Yrs. 5 Yrs. Total Commercial, financial & agricultural-fixed rate....... $ 3,911 $ 27,545 $ 13,438 $ 44,894 Commercial, financial & agricultural-adjustable rate.. 64,054 32,422 68,287 164,763 Real estate construction - fixed rate.................... -- 194 -- 194 Real estate construction - adjustable rate............... 35 884 21,665 5,353 62,902 The majority of payments due after 1 year represent loans with floating interest rates. Prior to maturity of each loan, Valley generally conducts a review which normally includes an analysis of the borrower's financial condition and, if applicable, a review of the adequacy of collateral. A rollover of the loan at maturity may require a principal paydown. C. RISK ELEMENTS 1.NON ACCRUAL, PAST DUE AND RESTRUCTURED LOANS - The following table sets forth Valley's problem loans for each of the past five years: ($ in thousands) 1993 1992 1991 1990 1989 Loans on non-accrual basis...$ 18,535 $ 21,371 $ 25,837 $ 19,713 $ 2,414 Loans past due in excess of 90 days and still accruing. 8,498 11,096 10,506 7,640 6,205 $ 27,033 $ 32,467 $ 36,343 $ 27,353 $ 8,619 The amount of interest income that would have been recorded on non-accrual loans in 1993 had payments remained in accordance with the original contractual terms approximated $2,158,000, while the actual amount of interest income recorded on these types of assets in 1993 totalled $439,000, resulting in lost interest income of $1,719,000. Loans are generally placed on a non-accrual status when they become past due in excess of 90 days as to payment of principal or interest. Exceptions may be made if the loan is sufficiently collaterized and in the process of collection. Additionally, loans may be transferred to non-accrual before they are past due more than 90 days if, in management's judgment, the ultimate collectiblity of the interest is doubtful. A loan may only be restored to an accruing basis when it again becomes well secured and in the process of collection and all past due amounts have been collected. Generally, all accrued but unpaid interest at the date a loan is placed on a non-accrual status is reversed against current earnings unless the aggregate amount of the principal outstanding and accrued interest on the loan is sufficiently supported by the value of the underlying collateral. Subsequent payments received on non-accrual loans are applied as a reduction of principal amounts outstanding. 2. POTENTIAL PROBLEM LOANS - Although substantially all risk elements at December 31, 1993 have been disclosed in the categories presented above, Management believes that the current economic conditions may affect the ability of certain borrowers to comply with the contractual repayment terms on certain real estate and commercial loans. As part of the analysis of the loan portfolio by management, it has been determined that there are approximately $46.8 million in potential problem loans at December 31, 1993 which have not been classified as non-accrual, past due or restructured. Potential problem loans are defined as performing loans for which management believes that the borrower's ability to repay the loan may be impaired. Of this total $5.3 million of loans were acquired in the Peoples merger. $38.0 million of these loans are considered to be adequately collaterized and supported by personal guarantees. Approximately $3.1 million has been provided for in the allowance for loan losses for these potential problem loans. There can be no assurance that Valley has identified all of its problem loans. At December 31, 1992, Valley had identified approximately $30.7 million of problems loans. 3. FOREIGN OUTSTANDINGS - None. 4. LOAN CONCENTRATIONS - There were no loan concentrations at December 31, 1993 other than those disclosed in section III A. above. Valley's lending activities are primarily concentrated within the northern section of New Jersey. For additional information, see Loan Portfolio on page 25 of the 1993 Annual Report to Shareholders. D. OTHER INTEREST BEARING ASSETS - None. IV.SUMMARY OF LOAN LOSS EXPERIENCE - The following table sets forth the relationship amongloans, loans charged-off and loan recoveries, the provision for loan losses and the allowance for loan losses for the past five years: ($ in thousands) Years Ended December 31, 1993 1992 1991 1990 1989 Average loans outstanding,..... $1,665,545 $1,441,320 $1,405,446 $1,347,475 $1,256,571 Beginning balance - Allowance for loan losses.............. $ 28,772 $ 21,937 $ 15,921 $ 8,925 $ 8,339 Balance from acquisition....... 4,466 -- -- 355 -- Loans charged-off: Commercial................... 1,430 5,751 3,001 3,396 686 Construction................. 441 813 300 400 -- Mortgage-Commercial.......... 784 -- -- -- -- Mortgage-Residential......... 191 79 105 4 4 Installment.................. 2,496 3,676 4,052 2,507 1,429 5,342 10,319 7,458 6,307 2,119 Charge-off loans recovered: Commercial................... 438 238 511 171 244 Construction................. -- -- -- -- -- Mortgage-Commercial.......... -- -- -- -- -- Mortgage-Residential......... 1 -- -- -- -- Installment.................. 870 916 963 552 436 1,309 1,154 1,474 723 680 Net charge-offs................ 4,033 9,165 5,984 5,584 1,439 Provision charged to operations................... 6,000 16,000 12,000 12,225 2,025 Ending Balance - Allowance for loan losses.............. $ 35,205 $ 28,772 $ 21,937 $ 15,921 $ 8,925 Ratio of net charge offs during the period to average loans outstanding during the period....................... .24% .64% .43% .41% .11% The allowance for possible loan losses is maintained at a level necessary to absorb potential loan losses and other credit risk related charge-offs. It is the result of an analysis which relates outstanding balances to expected reserve levels required to absorb future credit losses. Current economic problems are addressed through management's assessment of anticipated changes in the regional economic climate, changes in composition and volume of the loan portfolio and variances in levels of classified loans, non-performing assets and other past due amounts. Additional factors include consideration of exposure to loss including size of credit, existence and nature of collateral, credit record, profitability and general economic conditions. The following table summarizes the allocation of the allowance for loan losses to specific loan categories for the past five years: ($ in thousands) Years Ended December 31, 1993 1992 1991 Percent Percent Pecent of Loans of Loans of Loans Category Category Category Allowance to Total Allowance to Total Allowance to Total Allocation Loans Allocation Loans Allocation Loans Loan category: Commercial, financial and agricultural...... $ 10,352 16.9% $ 8,364 14.3% $ 9,850 18.1% Real estate............. 6,312 47.6% 5,054 57.4% 4,681 53.6% Consumer................ 6,562 35.5% 4,916 28.3% 3,967 28.3% Unallocated............... 11,979 N/A 10,438 N/A 3,439 N/A $ 35,205 100.0% $ 28,772 100.0% $ 21,937 100.0% 1990 1989 Percent Percent of Loan of Loan Category Category Allowance to Total Allowance to Total Allocation Loans Allocation Loans Loan category: Commercial, financial and agricultural......$ 7,791 22.1% $ 5,015 23.2% Real estate............. 3,679 49.6% 793 46.9% Consumer................ 2,749 28.3% 1,715 29.9% Unallocated............... 1,702 N/A 1,402 N/A $ 15,921 100.0% $ 8,925 100.0% For additional information, see Asset Quality and Risk Elements on page 20 of the 1993 Annual Report to Shareholders. Net charge-offs decreased during 1993 as a result of improved current economic conditions. The amount of anticipated charge-offs for 1994 is estimated to be consistent with 1993. V. DEPOSITS - The classification of average deposits is incorporated by reference under the caption "Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Earnings on a Tax Equivalent Basis" on page 22 of the 1993 Annual Report to Shareholders. The following table lists, by maturity, all certificates of deposit of $100,000 and over at December 31, 1993. These certificates of deposit are generated primarily from core deposit customers and are not brokered funds. ($ in thousands) Less than three months................................ $ 74,986 Three to six months................................... 21,708 Six to twelve months.................................. 16,083 More than twelve months............................... 22,821 VI.RETURN ON EQUITY AND ASSETS - The key ratios including return on equity and assets are incorporated by reference under the caption "Selected Financial Data" on page 45 of the 1993 Annual Report to Shareholders. The following table presents the ratio of average " on page 45 of the 1993 Annual Report to Shareholders. The following table presents the ratio of average equity to assets of Valley for each of the past three years. 1993 1992 1991 Average shareholders' equity as a % of average total assets.......... 7.46% 6.97% 8.28% VII. SHORT TERM BORROWINGS - Not applicable Item 2. Properties At present Valley owns no real property, but utilizes the offices and space provided by VNB at 615 Main Avenue, Passaic, New Jersey and 1445 Valley Road, Wayne, New Jersey. VNB operates from its administrative headquarters and three other locations, 59 branch offices and two warehouses. VNB owns the warehouses and 28 banking offices, including its main office and leases 31 branch offices, including the administrative headquarters. During 1993 VNB acquired a 62,000 square foot office building adjacent to its administrative headquarters in Wayne, New Jersey. As space becomes available, VNB will begin using the building, as early as 1994, to consolidate sections of its operations. OWNED PROPERTIES: County Square Feet Passaic 154,500 Bergen 94,260 Essex 67,959 Hudson 23,870 Morris -- 340,589 LEASED PROPERTIES: County Square Feet Passaic 90,435 Bergen 23,090 Essex 29,595 Hudson 2,520 Morris 10,800 156,440 Item 3. Legal Proceedings There were no material pending legal proceedings to which Valley, the subsidiary banks or companies were a party, other than ordinary routine litigations incidental to business and which had no material effect on the presentation of the financial statements contained in this report. Item 4. Submission of Matters to a Vote of Security Holders None PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters Market information is incorporated by reference under the caption "Price Range of Common Stock" on page 45 of the 1993 Annual Report to Shareholders. Supervisory regulations regarding the maximum amount of cash dividends that VNB may declare annually are covered under the caption "Dividend Restrictions" on page 41 of the 1993 Annual Report to Shareholders. Cash dividends declared during the two year period ended December 31, 1993 are incorporated by reference under the caption "Consolidated Quarterly Financial Data" on page 42 of the 1993 Annual Report to Shareholders. Valley had approximately 4,406 shareholders of record at February 18, 1994. Valley's Board of Directors continues to believe that cash dividends are an important component of shareholder value and that if the current level of performance and capital strength continue, Valley expects to be able to continue its current dividend policy of a quarterly distribution of earnings to its shareholders. Item 6. Selected Financial Data Selected Financial Data for the past five years is incorporated by reference under the caption "Selected Consolidated Financial Data", on page 45 of the 1993 Annual Report to Shareholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - is incorporated by reference under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations", reported on pages 17 through 25 of the 1993 Annual Report to Shareholders. Item 8. Financial Statements and Supplementary Data The consolidated financial statements, notes to consolidated financial statements, and Independent Auditors' Report thereon are incorporated by reference on pages 26 through 44 of the 1993 Annual Report to Shareholders. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There was neither a change in accountants nor disagreement with accountants on accounting and financial disclosure during 1993. PART III Item 10. Directors and Executive Officers of the Registrant Information regarding directors of the registrant are incorporated by reference to the sections included under the primary heading " Proposal 1 -Election of Directors" on pages 2, 3 and 4 of the Proxy Statement for the Annual Meeting of Shareholders to be held on March 22, 1994 except for certain information on Executive Officers of the Registrant which is included in Part I of this report. Executive Officers of the Registrant AGE AT IN OFFICE NAMES 12/31/93 SINCE OFFICE Gerald H. Lipkin 52 1989 Chairman of the Board and Chief Executive Officer Peter Southway 59 1987 President and Chief Operating Officer Sam P. Pinyuh 61 1990 Executive Vice President Peter Crocitto 36 1992 First Senior Vice President Robert E. Farrell 47 1992 First Senior Vice President Richard P. Garber 50 1992 First Senior Vice President Robert Mulligan 46 1993First Senior Vice President Peter John Southway 33 1992 First Senior Vice President Jack M. Blackin 51 1993 Senior Vice President Ernest Bozzo 50 1992 Senior Vice President Stephen P. Cosgrove 49 1993 Senior Vice President Alan D. Eskow 45 1993 Senior Vice President Robert Farnon 55 1992 Senior Vice President John Harris 41 1993 Senior Vice President William O'B Kelly 63 1977 Senior Vice President Lucinda P. Long 47 1992 Senior Vice President Garret G. Nieuwenhuis 53 1983 Senior Vice President John H. Prol 56 1992 Senior Vice President Peter G. Verbout 50 1992 Senior Vice President All officers serve at the pleasure of the Board of Directors. Item 11. Executive Compensation - is incorporated by reference to the sections included under the primary headings "Executive Compensation" on pages 6 through 11 and "Compensation Committee Report" on pages 11 through 13 of the Proxy Statement for the Annual Meeting of Shareholders to be held March 22, 1994. Item 12. Security Ownership of Certain Beneficial Owners and Management - is incorporated by reference under the primary heading "Stock Ownership of Management and Principal Shareholders" on pages 4 through 6 of the Proxy Statement for the Annual Meeting of Shareholders to be held March 22, 1994. Item 13. Certain Relationships and Related Transactions - is incorporated by reference under the secondary heading "Certain Transactions with Management" on page 14 of the Proxy Statement for the Annual Meeting of Shareholders to be held March 22, 1994. The percentage of loans to directors, executive officers, and their affiliates as a percentage of shareholders' equity was 7.75 percent at December 31, 1993. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents are filed as part of this report: 1. Financial Statements: Consolidated Statements of Financial Condition - December 31, 1993 and 1992 Consolidated Statements of Income - for years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Changes in Shareholders' Equity - for years ended December 1993, 1992 and 1991 Consolidated Statements of Cash Flows - for years ended December 1993, 1992 and 1991 Notes to Consolidated Financial Statements Independent Auditors' Report These statements are incorporated herein by reference to the Registrant's Annual Report to Shareholders for the year ended December 31, 1993, as noted on page 2 of this Form 10-K Annual Report. 2. Financial Statement Schedules: All schedules are omitted because they are either inapplicable or not required, or because the required information is included in the Consolidated Financial Statements or notes thereto. 3. Exhibits (numbered in accordance with Item 601 of Regulation S-K): (3) Articles of incorporation and bylaws: A.Restated Certificate of Incorporation of the registrant dated March 22, 1994. B.By-Laws of the Registrant adopted as of March 14, 1989 and amended March 19, 1991. (10) Material Contracts: *** A."Employment Agreements" dated June 6, 1986 between Valley, VNB and Gerald H. Lipkin and Sam P. Pinyuh. **** B."The Valley National Bancorp Long-term Stock Incentive Plan" dated January 18, 1994. * C.Warrant Agreement by and between Valley National Bancorp and Valley National Bank, Trust Department governing the terms of 450,000 warrants to purchase Valley National Bancorp common stock dated as of December 31, 1990. ** D.Amendment to "Employee Agreements" between Valley, VNB and Gerald H. Lipkin and Sam P. Pinyuh dated December 10, 1991. ** E."Employee Agreement" dated December 10, 1991 between Valley, VNB and Peter Southway. ** F."Severance Agreements" dated December 10, 1991 between Valley, VNB and Gerald H. Lipkin, Peter Southway, and Sam P. Pinyuh. * This document is incorporated herein by reference from the Registrant's Form 10-K Annual Report for the fiscal period ending December 31, 1990. ** This document is incorporated herein by reference from the Registrant's Form 10-K Annual Report for the fiscal period ending December 31, 1991. *** This document is incorporated herein by reference from the Registrant's Form 10-K Annual Report for the fiscal period ending December 31, 1992. ****This document is incorporated herein by reference from the Registrant's Notice of Annual Meeting of Shareholders and Proxy dated March 1, 1994. (13) 1993 Annual Report to Shareholders (21) List of Subsidiaries: (a) Subsidiary of Valley: Percentage of Voting Jurisdiction of Securities Owned by Name Incorporation the Parent Valley National Bank (VNB) United States 100% (b) Subsidiaries of VNB: Valley Investment Corp. Delaware 100% VNB Mortgage Services, Inc. New Jersey 100% BNV Realty Incorporated New Jersey 100% VN Investment, Inc. New Jersey 100% (22) Published Report Regarding Matters Submitted to Vote of Security Holders Notice of Annual Meeting of Shareholders to be held Tuesday, March 22, 1994 Proxy Statement dated March 1, 1994 (23) Consents of Experts and Counsel Consent of KPMG Peat Marwick dated March 22, 1994. (b) Reports on Form 8-K There were no reports on Form 8-K filed by Valley during the last quarter of the period covered by this report. SIGNATURES Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VALLEY NATIONAL BANCORP By:/s/Gerald H. Lipkin Gerald H. Lipkin, Chairman of the Board and Chief Executive Officer Dated: March 22, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. /s/Gerald H. Lipkin Chairman of the Board and March 22, 1994 GERALD H. LIPKIN Chief Executive Officer and Director /s/Peter Southway President and March 22, 1994 PETER SOUTHWAY Chief Operating Officer (Principal Financial Officer) and Director /s/Alan D. Eskow Senior Vice President March 22, 1994 ALAN D. ESKOW Financial Administration (Principal Accounting Officer) /s/Pamela Bronander Director March 22, 1994 PAMELA BRONANDER /s/Joseph Coccia, Jr. Director March 22, 1994 JOSEPH COCCIA, JR. /s/Austin C. Drukker Director March 22, 1994 AUSTIN C. DRUKKER /s/Thomas P. Infusino Director March 22, 1994 THOMAS P. INFUSINO /s/Gerald Korde Director March 22, 1994 GERALD KORDE /s/Robert L. Marcalus Director March 22, 1994 ROBERT L. MARCALUS /s/Robert E. McEntee Director March 22, 1994 ROBERT E. McENTEE /s/Sam P. Pinyuh Executive Vice President March 22, 1994 SAM P. PINYUH and Director /s/Rubin Rabinowitz Director March 22, 1994 RUBIN RABINOWITZ /s/Robert Rachesky Director March 22, 1994 ROBERT RACHESKY /s/Barnett Rukin Director March 22, 1994 BARNETT RUKIN /s/Richard F. Tice Director March 22, 1994 RICHARD F. TICE /s/Leonard Vorcheimer Director March 22, 1994 LEONARD VORCHEIMER /s/Joseph L. Vozza Director March 22, 1994 JOSEPH L. VOZZA