UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarter Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Period Ended March 31, 1995
[ ] 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
(State or other Jurisdiction of
incorporation or organization)
22-2477875
(I.R.S. Employer Identification No.)
1455 Valley Road, Wayne, New Jersey 07474-0558
(Address of principal executive offices) (Zip Code)
(201)305-8800
(Registrant's Telephone Number, including area code)
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
for 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 XXX NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock (No par value), of which 30,626,827
shares were outstanding as of May 1, 1995.
VALLEY NATIONAL BANCORP
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition 3
March 31, 1995 and December 31, 1994
(Unaudited)
Consolidated Statements of Income 4
Three Months Ended March 31, 1995 and 1994
(Unaudited)
Consolidated Statements of Cash Flows 5
Three Months Ended March 31, 1995 and 1994
(Unaudited)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 7 - 11
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Matters 12
Item 6. Exhibits and Reports on Form 8-K. 12
SIGNATURES 13
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VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(Unaudited)
($ in thousands)
March 31, December 31,
1995 1994
Assets
Cash and due from banks..................$ 131,359 $ 154,647
Federal funds sold....................... 40,000 --
Investment securities held to maturity,
fair value of $803,586 and $809,828 in 1995 and 1994,
respectively........................... 822,206 846,151
Investment securities available for sale. 484,091 458,223
Loans, net of unearned income............ 2,248,208 2,187,808
Less: Allowances for possible loan
losses................................. (37,087) (36,434)
Loans, net............................... 2,211,121 2,151,374
Premises and equipment, net.............. 49,301 45,416
Due from customers on acceptances
outstanding............................ 3,765 1,498
Accrued interest receivable.............. 24,398 25,597
Other assets............................. 57,885 61,037
Total assets...........................$3,824,126 $3,743,943
Liabilities
Deposits:
Non-interest bearing deposits..........$ 458,955 $ 479,944
Interest bearing:
Savings.............................. 1,555,423 1,629,308
Time................................. 1,410,069 1,224,769
Total deposits..................... 3,424,447 3,334,021
Federal funds purchased and securities sold under
repurchase agreements.................. 30,177 63,804
Treasury tax and loan account............ 9,409 15,549
Other borrowings......................... 2,212 2,331
Bank acceptances outstanding............. 3,765 1,498
Accrued expenses and other liabilities... 32,016 26,549
Total liabilities...................... 3,502,026 3,443,752
Shareholders' Equity
Common stock, no par value, authorized
39,414,375 shares, issued 30,728,665
shares in 1995 and 28,950,100 in 1994.. 17,229 16,276
Surplus.................................. 177,017 133,190
Retained earnings........................ 136,612 169,060
Unrealized loss on investment securities available
for sale, net of tax................... (6,594) (16,171)
324,264 302,355
Treasury stock, at cost (121,696 common shares in
1995 and 1994)......................... (2,164) (2,164)
Total shareholders' equity............. 322,100 300,191
Total liabilities and shareholders'
equity.............................$3,824,126 $3,743,943
See accompanying notes to consolidated financial statements.
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VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME(Unaudited)
($ in thousands, except for per share data)
Three Months Ended
March 31,
1995 1994
Interest Income
Interest and fees on loans.............. $ 46,379 $ 37,948
Interest and dividends on investment securities:
Taxable............................... 15,623 16,525
Tax-exempt............................ 3,618 3,414
Dividends............................. 52 53
Interest on federal funds sold and other short term
investments........................... 375 329
Total Interest Income................. 66,047 58,269
Interest Expense
Interest on deposits:
Savings............................... 10,647 9,959
Time.................................. 17,210 10,900
Interest on federal funds purchased and securities sold
under repurchase agreements........... 443 227
Interest on other short-term borrowings. 193 47
Total Interest Expense................ 28,493 21,133
Net interest income..................... 37,554 37,136
Provision for possible loan losses...... 519 945
Net interest income after provision for possible
loan losses........................... 37,035 36,191
Non-Interest Income
Trust income............................ 220 180
Service charges on deposit accounts..... 1,707 1,549
Gains on securities transactions, net.... 537 3,341
Fees from mortgage servicing............. 806 845
Gains on sales of loans.................. 373 399
Other.................................... 1,073 1,221
Total Non-Interest Income.............. 4,716 7,535
Non-Interest Expense
Salaries expense......................... 7,888 7,567
Employee benefit expense................. 2,227 1,958
FDIC insurance premiums.................. 1,894 1,813
Occupancy and equipment expense.......... 2,996 2,912
Amortization of intangible assets........ 495 889
Other.................................... 4,203 4,238
Total Non-Interest Expense............. 19,703 19,377
Income before income taxes............... 22,048 24,349
Income tax expense....................... 7,330 8,326
Net Income...............................$ 14,718 $ 16,023
Net income per share.....................$ 0.48 $ 0.53
Weighted average shares outstanding......30,581,185 30,042,660
See accompanying notes to consolidated financial statements.
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VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
($ in thousands)
Three Months Ended
March 31,
1995 1994
Cash flows from operating activities:
Net income............................$ 14,718 $ 16,023
Adjustments to reconcile net income to net
cash provided by operating activities:
activities:
Depreciation and amortization of
intangible assets................... 1,669 2,079
Amortization of compensation costs pursuant to
long term stock incentive plan..... 75 71
Provision for possible loan losses... 519 945
Net amortization (accretion) of
premiums and discounts............. 1,250 2,299
Net gains on securities transactions. (537) (3,341)
Gains on sales of loans.............. (373) (399)
Proceeds from recoveries on charged
-off loans........................ 1,142 387
Net decrease in accrued interest receivable
and other assets................... (1,965) (102)
Net decrease in accrued expenses and
other liabilities.................. 5,349 6,963
Net cash provided by operating
activities: 21,847 24,925
Cash flows from investing activities:
Proceeds from maturing investment securities held
to maturity.......................... 36,325 91,395
Purchases of investment securities held
to maturity.......................... (13,257) (79,068)
Proceeds from sales of investment securities
available for sale.................. 1,042 131,194
Proceeds from maturing investment securities
available for sale.................. 4,955 15,267
Purchases of investment securities
available for sale.................. (15,508) (154,418)
Purchases of mortgage servicing
rights.............................. (796) --
Net (increase)decrease in federal funds sold and other
short term investments.............. (40,000) 79,951
Net increase in loans made to
customers........................... (61,035) (49,699)
Purchases of premises and equipment,
net of sales........................ (5,018) (907)
Net increase in due from customers on acceptances
outstanding......................... (2,267) (203)
Net cash provided by (used in)
investing activities: (95,559) 33,512
Cash flows from financing activities:
Net increase(decrease) in deposits.... 90,426 (7,211)
Net increase(decrease) in federal funds purchased
and other short term borrowings..... (39,767) 13,273
Repayments of other borrowings........ (119) (85)
Net increase in bank acceptances
outstanding......................... 2,267 203
Dividends paid to common shareholders. (7,207) (6,537)
Common stock issued, net of
cancellations....................... 399 1,093
Net increase in shareholders' equity due to
acquisition of American Union Bank. 4,425 --
Net cash provided by financing
activities: 50,424 736
Net increase(decrease) in cash and due
from banks............................. (23,288) 59,173
Cash and due from banks at January 1..... 154,647 75,927
Cash and due from banks at March 31......$ 131,359 $ 135,100
Cash paid during the period for:
Interest on deposits and other
borrowings...........................$ 26,844 $ 21,032
Federal and state income taxes.........$ 325 2,200
See accompanying notes to consolidated financial statements.
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VALLEY NATIONAL BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Consolidated Financial Statements
The Consolidated Statements of Financial Condition as of March
31, 1995 and December 31, 1994, the Consolidated Statements of
Income for the three month periods ended March 31, 1995 and
1994 and the Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1995 and 1994 have been
prepared by Valley National Bancorp ("Valley"), without audit.
In the opinion of management, all adjustments (which included
only normal recurring adjustments) necessary to present fairly
Valley's financial position, results of operations, and cash
flows at March 31, 1995 and for all periods presented have
been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. These
consolidated financial statements are to be read in
conjunction with the financial statements and notes thereto
included in Valley's December 31, 1994 Annual Report to
Shareholders.
2. Earnings Per Share
All share and per share amounts have been restated to reflect
the 5% stock dividend declared March 23, 1995 to Shareholders
of record on April 14, 1995 and payable May 2, 1995.
3. Acquisition
On February 28, 1995, Valley acquired approximately $58
million in assets of American Union Bank ("American"), a two
office bank headquartered in Union, New Jersey. Each share of
American common stock outstanding was converted into 0.525
shares (as adjusted for the 5% stock dividend payable May 2,
1995) of Valley common stock, resulting in the issuance by
Valley of 288,713 shares of Valley common stock. The
acquisition has been accounted for as a pooling of interests.
The consolidated financial statements for periods presented
for 1994 of Valley have not been restated to include American,
as the combined results would not be materially different from
those presented.
4. Accounting by Creditors for the Impairment of a Loan
Effective January 1, 1995 Valley adopted Statement of
Financial Accounting Standards Board (SFAS) No. 114,
"Accounting by Creditors for the Impairment of a Loan" and its
subsequent amendment, SFAS No. 118, "Accounting by Creditors
for the Impairment of a Loan - Income Recognition and
Disclosures." Adoption of SFAS No. 114, as amended,
prescribes the recognition criteria for loan impairment and
the measurement methods for certain impaired loans and loans
whose terms are modified in troubled debt restructuring and
amends SFAS No. 5, "Accounting for Contingencies," and SFAS
No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructurings."
SFAS No. 114, as amended, addresses the accounting for
impaired loans and specify how allowances for credit losses
related to these impaired loans should be determined. SFAS
No. 114 sets forth measurement methods for estimating the
portion of total loans attributable to impaired loans. It
does not address the overall adequacy of the allowance for
loan losses, but focuses instead on the allowance for
estimated credit losses on impaired loans. It is Valley's
responsibility to ensure that the overall allowance for loan
losses is adequate to cover all estimated credit losses in the
loan portfolio. At March 31, 1995 impaired loans totaled
$30.1 million and the related allowance for loan losses was
$5.3 million. Since Valley sufficiently evaluates the
adequacy of the allowance for loan losses, the impact of
adopting SFAS No. 114, as amended, did not have an effect on
the allowance for loan losses or the existing income
recognition and charge-off policies for nonperforming loans.
- 6 -
Recent Acquisition
On February 28, 1995, Valley acquired American Union Bank
("American"), headquartered in Union, New Jersey, with
approximately $58 million in assets and two branches. The
transaction resulted in the issuance of 288,734 shares and was
accounted for using the pooling of interests method of accounting.
Each share of common stock of American was exchanged for 0.50
shares of Valley common stock.
Pending Acquisitions
On February 27, 1995 Valley entered into a definitive merger
agreement to acquire the $661 million Lakeland First Financial
Group, Inc. ("LFG"), the holding company for Lakeland Savings Bank
("Lakeland"), a state chartered saving bank headquartered in
Succasunna, New Jersey, with sixteen branches in Morris, Sussex and
Warren counties, New Jersey. The transaction is scheduled to close
by the end of June 1995 and will be accounted for using the pooling
of interests method of accounting. The letter of intent stipulates
that 1.286 (adjusted for the stock dividend payable May 2, 1995 to
shareholders of record April 14, 1995) shares of common stock of
Valley will be exchanged for each share of common stock of LFG.
There were 3,913,315 shares of LFG common stock outstanding as of
March 31, 1995. Valley and LFG also entered into a separate stock
option agreement which gives Valley the option to purchase 1.25
million shares of authorized, but unissued common stock of LFG at
an exercise price of $21.00 per share in the event that another
party obtains control of LFG.
Earnings Summary
Net income was $14.7 million, or $0.48 per share for the
first quarter ended March 31, 1995 compared with $16.0 million or
$0.53 per share for the same period in 1994 (all amounts have been
restated for the Rock Financial Corporation merger and the 1994 per
share amounts have been restated to give effect to a 5% stock
dividend in 1995). Net income before security gains was $14.4
million for the first quarter ended March 31, 1995 as compared to
$14.0 million for the first quarter of 1994, a 2.4% increase. The
first quarter of 1994 was positively impacted by securities gains
of $3.3 million, compared to only $537 thousand of securities gains
in the first quarter of 1995. The annualized return on average
assets decreased to 1.55% from 1.78%, while the annualized return
on average equity also decreased to 19.0% from 21.9% for the
quarters ended March 31, 1995 and 1994, respectively.
Net Interest Income
Net interest income is the largest source of Valley's
operating income. Net interest income on a tax equivalent basis
increased to $39.7 million from $39.2 for the quarter ended March
31, 1995 as compared to the quarter ended March 31, 1994. This
increase was due primarily to the average interest earning assets
being greater than average interest earning liabilities. The net
interest margin decreased 17 basis points to 4.46% for the quarter
ended March 31, 1995 compared to 4.63 for the same quarter in 1994.
The decrease in net interest margin was caused substantially
by the upward movement in interest rates during 1994. This
increase in rates caused depositors to shift funds from short term
savings accounts to longer term certificates of deposit. Deposit
rates increased faster than loan rates in 1994, leading to a
decline in the net interest margin into 1995.
Average interest earning assets increased $180.5 million
during the quarter ended March 31, 1995, or 5.3% over the same
quarter in 1994. This increase was mainly the result of increased
automobile loan and commercial mortgage loan volume. Average loans
increased by $308.3 million or 16.0% over the 1994 quarter.
Approximately $33.9 million of the increase was the result of the
American Union merger of February 28, 1995 accounted for as a
pooling of interests. The average rate on loans increased 42 basis
points and combined with the increase in average loan volume,
interest income on loans for the first quarter of 1995 increased by
$8.5 million over the same period in 1994. The average balance of
investment securities for the quarter ended March 31, 1995
decreased by $112.2 million or 7.9% from the amount in the
portfolio for the same period in 1994, net of the amount from
American Union of $23.3 million. The average balance of taxable
investment securities decreased by $136.6 million or 12.2% over the
1994 average balance. Tax-exempt investments increased $24.4
million or 8.2% taking advantage of the increased yield available
over taxable investments.
- 7 -
Average interest-bearing liabilities for the quarter ended
March 31, 1995 as compared to March 31, 1994 grew 5.9% or $167.1
million of which $43.5 million was due to the acquisition of
American Union Bank. Time deposits increased by $262.4 million or
23.8%, while savings deposits decreased by $111.2 million or 6.5%.
The net interest margin decreased to 4.46% for the first
quarter ended March 31, 1995 from 4.63% during the same quarter in
1994 and from 4.57% at December 31, 1994. The decrease mainly
resulted from the increase in the cost of average interest bearing
liabilities for those periods shown. The cost of those liabilities
increased 81 basis points between the quarter ended March 31, 1994
and March 31, 1995. The decrease in the net interest margin of 17
basis points during those same periods was offset by the increase
in average earning assets over average interest-bearing
liabilities, causing the increase in net interest income.
Non-Interest Income
The following table presents the components of non-interest
income for the three months ended March 31, 1995 and 1994.
Three months ended
March 31,
1995 1994
(in thousands)
Trust income.......................... $ 220 $ 180
Service charges on deposit accounts... 1,707 1,549
Gains on securities transactions, net. 537 3,341
Fees from mortgage servicing.......... 806 845
Gains on sales of loans............... 373 399
Other................................. 1,073 1,221
Total.......................... $ 4,716 $ 7,535
Non-interest income continues to represent a considerable
source of income for Valley. Excluding gains on securities
transactions and the gain on the sale of loans, total non-interest
income amounted to $3.8 million for both the three months ended
March 31, 1995 and 1994.
Service charges on deposit accounts increased $158 thousand or
10.2%. A majority of this increase is due to the expansion of
account volume and increased fees charged on deposit accounts.
Net gains on securities transactions for the quarter ended
March 31, 1995 was $537 thousand compared to $3.3 million for the
three months ended March 31, 1994.
Other income decreased $148 thousand from $1.2 million for the
three months ended March 31, 1994 to $1.1 million for the same
period in 1995. This was the result of decreased credit card fees
and decreased application fees for residential mortgages.
Non-Interest Expense
The following table presents the components of non-interest
expense for the three months ended March 31, 1995 and 1994.
Three months ended
March 31,
1995 1994
(in thousands)
Salary expense........................ $ 7,888 $ 7,567
Employee benefit expense.............. 2,227 1,958
FDIC insurance premiums............... 1,894 1,813
Occupancy and equipment expense....... 2,996 2,912
Amortization of intangible assets..... 495 889
Other................................. 4,203 4,238
Total........................... $ 19,703 $ 19,377
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Non-interest expense totalled $19.7 million for the quarter
ended March 31, 1995, $326 thousand, or 1.7% above the same 1994
quarter The largest component of non-interest expense is salaries
and employee benefit expense which totalled $10.1 million for the
quarter ended March 31, 1995 compared to $9.5 million for the first
quarter of 1994, an increase of $590 thousand or 6.2%. At March
31, 1995, full-time equivalent staff was 1,130 compared to 1,148 at
March 31, 1994.
Amortization of intangible assets decreased to $495 thousand
for the quarter ended March 31, 1995 from $889 thousand for the
same period in 1994, representing a decrease of $394 thousand, or
44.3%. The majority of this decrease resulted from amortization of
purchased mortgage servicing rights of $335 thousand during the
three months ended March 31, 1995, compared with $609 thousand for
the same period in 1994, a decrease of $274 thousand, or 45.0%. At
current interest rate levels, the expected life of the serviced
portfolio has increased, causing amortization expense to decrease.
Income Taxes
Income tax expense as a percentage of pre-tax income declined
to 33.2% for the quarter ended March 31, 1995 compared to 34.2% in
1994. This decrease was attributable to a higher amount of non-
taxable income on investment securities.
ASSET/LIABILITY MANAGEMENT
Interest Rate Sensitivity
At March 31, 1995, rate sensitive liabilities exceeded rate
sensitive assets at the 90 day interval and resulted in a negative
gap of $141 million or a ratio of .90:1. Rate sensitive
liabilities also exceeded rate sensitive assets at the 91 to 365
day interval by $222 million or a ratio of .41:1 and resulted in a
negative gap. The total negative gap repricing within 365 days as
of March 31, 1995 is $364 million or .79:1. Management is
attempting to reduce this negative gap, and does not view these
amounts as presenting an unusually high risk potential, although no
assurances can be given that Valley is not at risk from rate
increases or decreases.
The above gap results take into account repricing and
maturities of assets and liabilities, but fails to consider the
interest rate sensitivities of those asset and liability accounts.
Management has prepared for its use an income simulation model to
project future net interest income streams in light of the current
gap position. Management has also prepared for its use alternative
scenarios to measure levels of net interest income associated with
various factors including changes in interest rates. According to
this computer model, an interest rate increase of 300 basis points
and a decrease of 100 basis points resulted in an impact on future
net interest income which is consistent with target levels
contained in Valley's Asset/Liability Policy. Management cannot
provide any assurance about the actual effect of changes in
interest rates on Valley's net interest income.
Liquidity
Liquidity measures the ability to satisfy current and future
cash flow needs as they become due. Maintaining a level of liquid
funds through asset-liability management seeks to ensure that these
needs are met at a reasonable cost. On the asset side, liquid
funds are maintained in the form of cash and due from banks,
federal funds sold, investments securities held to maturity
maturing within one year, securities available for sale and loans
held for sale. At March 31, 1995, liquid assets amounted to $1.1
billion, as compared to $671 million at December 31, 1994. This
represents 30.5% and 19.2% of earning assets, and 28.7% and 17.9%
of total assets at March 31, 1995 and December 31, 1994,
respectively.
On the liability side, the primary source of funds available
to meet liquidity needs is Valley's core deposit base, which
generally excludes certificates of deposit over $100 thousand.
Core deposits averaged approximately $2.66 billion and $2.65
billion at March 31, 1995 and December 31, 1994, respectively,
representing 74.6% and 76.6% of average earning assets. Short term
borrowings and large dollar certificates of deposit, generally
those over $100 thousand, are used as supplemental funding sources
during periods when growth in the core deposit base does not keep
pace with that of earning assets. Additional liquidity is derived
from scheduled loan and investment payments of principal and
interest, as well as
- 9 -
prepayments received. Proceeds from the sales of investment
securities were $1.0 million, and proceeds of $41.3 million were
generated from investment maturities. Purchases of investment
securities during the same period were $28.8 million. Short term
borrowings and certificates of deposit over $100 thousand amounted
to $352.9 million and $271.5 million, on average, at March 31, 1995
and December 31, 1994, respectively.
The parent company's cash requirements consist primarily of
dividends to shareholders. This cash need is routinely satisfied
by dividends collected from its subsidiary bank. Projected cash
flows from this source are expected to be adequate to pay
dividends, given the current capital levels and current profitable
operations of its subsidiary.
Investment Securities
The securities portfolio on March 31, 1995 consisted of
securities held to maturity totaling $822.2 million and securities
available for sale totaling $484.1 million, compared to $846.2
million and $458.2 million, respectively, on December 31, 1994.
The balances at March 31, 1995 included approximately $22 million
of investment securities from the acquisition of American Union.
Unrealized loss on investment securities available for sale
reduced shareholders' equity by $6.6 million March 31, 1995
compared to a reduction of $16.2 million on December 31, 1994.
This change was primarily due to an increase in prices and a
corresponding decline in interest rates.
Loan Portfolio
The following table reflects the composition of the loan
portfolio as of March 31, 1995 and December 31, 1994.
March 31, December 31,
1995 1994
(in thousands)
Commercial.................. $ 272,700 $ 266,853
Construction................. 72,642 64,836
Commercial mortgage......... 547,994 522,696
Residential mortgage........ 709,745 684,629
Installment................. 647,312 645,719
2,250,393 2,184,733
Less: Unearned income....... (2,185) (1,499)
Loans, net of unearned
income.................... 2,248,208 2,183,234
Loans held for sale......... -- 4,574
Total loans............. $2,248,208 $2,187,808
Total loans increased $60.4 million or 2.8% during the three
month period ended March 31, 1995. Residential mortgage loans
increased by 3.7% or $25.1 million to a total of $709.7 million at
March 31, 1995, and represents 31.5% of the loan portfolio.
Installment loans, including predominantly automobile and credit
card loans, totalled $647.3 million at March 31, 1995, representing
28.8% of the loan portfolio. Commercial mortgages increased 4.8%
or $25.3 million from December 1994 to March 31, 1995.
Loan balances at March 31, 1995 included approximately $32
million of loans from the acquisition of American Union, which is
comprised of $8.6 million of residential mortgage loans, $8.2
million of commercial mortgage loans, $6.4 million of commercial
loans, and $5.9 million of installment loans.
Non-Performing Assets
Non-performing assets include non-accrual loans and other real
estate owned (OREO). Non-performing assets decreased $1.5 million
to $24.2 million at March 31, 1995 as compared to December 31, 1994
as the economy continued its strength and recovery.
- 10 -
The following table sets forth non-performing assets and
accruing loans which are 90 days or more past due as to principal
or interest payments on the dates indicated.
March 31, December 31,
1995 1994
(in thousands)
Loans past due in excess of
90 days and still accruing..... $ 5,741 $ 5,416
Non-performing loans............. $ 17,852 $ 18,796
Other real estate owned.......... 6,303 6,865
Total non-performing assets.... $ 24,155 $ 25,661
Non-performing loans as
a % of loans................... 0.79% 0.87%
Non-performing assets as a %
of loans plus other real
estate owned................... 1.07% 1.17%
Allowance as a % of loans........ 1.65% 1.67%
Allowance as a % of
non-performing assets.......... 154% 142%
Asset Quality and Risk Elements
Valley's allowance for loan loss stayed virtually unchanged
since December 31, 1994. At March 31, 1995 the allowance for loan
losses amounted to $37.1 million or 1.65% of loans, as compared to
$36.4 million or 1.67% at December 31, 1994.
The allowance is adjusted by provisions charged against income
and loans charged-off, net of recoveries. Net loan charge-offs
were $233 thousand for the quarter ended March 31, 1995 compared
with $546 thousand for the quarter ended March 31, 1994. The ratio
of net charge-offs to average loans amounted to 0.04% for the
quarter ended March 31, 1995 compared with 0.11% for 1994.
Capital Adequacy
A significant measure of the strength of a financial
institution is its shareholders' equity, which must expand in close
proportion to asset growth. At March 31, 1995, shareholders'
equity totalled $322.1 million or 8.4% of total assets, compared
with $300.2 million or 8.0% at year-end 1994. Valley has achieved
steady internal capital generation throughout the past five years.
Valley's capital position at March 31, 1995 under risk-based
capital guidelines was $324.3 million, or 13.9% of risk-weighted
assets, for Tier 1 capital and $353.5 million, or 15.2% for Total
risked-based capital. The comparable ratios at December 31, 1994
were 13.7% for Tier 1 capital and 15.0% for Total risk-based
capital. Valley's ratios at March 31, 1995 are above the "well
capitalized" requirements, which require Tier 1 capital of at least
6% and Total risk-based capital of 10%. The Federal Reserve Board
requires each "well capitalized" holding company to maintain a
minimum leverage ratio of 5.0%. At March 31, 1995 and December 31,
1994, Valley was in compliance with the leverage requirement having
a Tier 1 leverage ratio of 8.5% and 8.3%, respectively.
The primary source of capital growth is through retention of
earnings. Valley's rate of earnings retention, derived by dividing
undistributed earnings by net income was 50.5% at March 31, 1995,
compared to 59.2% at March 31, 1994. Cash dividends declared
amounted to $.24 per share, equivalent to a dividend payout ratio
of 49.5%, up from the 40.8% for the same quarter in 1994. Valley
declared at 5% common stock dividend on March 23, 1995 to
shareholders of record on April 14, 1995, payable May 2, 1995.
Valley maintained the cash dividend at $1.00 per share per annum
after the payment of the stock dividend. Valley's Board of
Directors continues to believe that cash dividends are an important
component of shareholder value and that at its current level of
performance and capital, Valley expects to continue its current
dividend policy of a quarterly distribution of earnings to its
shareholders.
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PART II
Item 4. Submission of Matters to a Vote of Security Holders
a) On March 23, 1995 the Annual Meeting of Shareholders of
Valley National Bancorp was held. The Shareholders voted
upon the election of 16 persons, named in the Proxy
Statement, to serve as directors of the Corporation for
the ensuing year. All directors were elected and there
was no solicitation in opposition to management's
nominees as listed in the proxy statement. The following
is a list of directors elected at the Annual Meeting with
the number of votes "For" and "Withheld". There were no
abstentions.
Number of Votes
Name For Withheld
Andrew Abramson 21,008,261 113,736
Pamela Bronander 21,010,981 111,016
Joseph Coccia, Jr. 21,013,101 108,897
Austin C. Drukker 21,013,101 108,897
Thomas P. Infusino 21,012,585 108,418
Gerald Korde 21,013,101 108,897
Gerald H. Lipkin 21,013,101 108,897
Robert L. Marcalus 21,012,286 108,712
Robert E. McEntee 21,013,101 108,897
Sam P. Pinyuh 21,013,101 108,897
Robert Rachesky 21,013,101 108,897
Barnett Rukin 21,012,807 109,191
Peter Southway 20,968,302 153,785
Richard F. Tice 21,013,101 108,897
Leonard J. Vorcheimer 21,013,101 108,897
Joseph L. Vozza 21,013,101 108,897
Item 5. Other Matters
a) The Board of Directors approved a five percent common
stock dividend on March 23, 1995. The new stock was
issued May 2, 1995 to shareholders of record as of April
14, 1995. In conjunction with the announced stock
dividend, the Board of Directors also approved to
maintain the regular quarterly dividend of 25 cents. In
connection with the stock dividend the company filed an
amendment to its Certificate of Incorporation which
increased the authorized common shares to 39,414,375
shares effective April 14, 1995.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K
1) Filed February 2, 1995 to report the signing of a Letter of
Intent to effect a merger between Valley National Bancorp and
Lakeland First Financial Group.
2) Filed March 2, 1995 to report the signing of the Agreement and
Plan of Merger dated February 27, 1995 between Valley National
Bancorp and Lakeland First Financial Group and to report the
merger of American Union Bank into Valley National Bancorp at
the close of business on February 28, 1995.
3) Filed March 30, 1995 to report a five percent common stock
dividend issued May 2, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant had duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VALLEY NATIONAL BANCORP
(Registrant)
Date: May 12, 1995 /s/PETER SOUTHWAY
PETER SOUTHWAY
PRESIDENT AND CHIEF
OPERATING OFFICER
Date: May 12, 1995 /s/ALAN D. ESKOW
ALAN D. ESKOW
SENIOR VICE PRESIDENT
FINANCIAL ADMINISTRATION
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