on January 26, 2012 by admin in National News, Comments (0)

Valley National Bancorp Reports Fourth Quarter Earnings, Solid Loan Growth and …

WAYNE, N.J., Jan. 26, 2012 /PRNewswire via COMTEX/ -- Valley National Bancorp /quotes/zigman/245014/quotes/nls/vly VLY +1.09% , the holding company for Valley National Bank, today reported net income for the fourth quarter of 2011 of $24.8 million, or $0.15 per diluted common share, after non-cash impairment charges on investment securities and merger expenses totaling $13.4 million after taxes ($0.08 per common share), as compared to the fourth quarter of 2010 earnings of $38.2 million, or $0.23 per diluted common share. See the "Key highlights for the fourth quarter" section below for more details.

Net income for the year ended December 31, 2011 was $133.7 million, or $0.79 per diluted common share, compared to 2010 earnings of $131.2 million, or $0.78 per diluted common share.

Key highlights for the fourth quarter:

Loan Growth: Total non-covered loans (i.e., loans which are not subject to our loss-sharing agreements with the FDIC) increased by $210.1 million to $9.5 billion at December 31, 2011 from September 30, 2011. Our residential mortgage and commercial real estate (including construction) loans grew by $113.0 million and $59.0 million, or 20.8 percent and 6.0 percent, respectively, on an annualized basis, during the fourth quarter of 2011. Commercial and industrial loans increased by $45.2 million at December 31, 2011 compared to September 30, 2011; however, most of the increase in this portfolio was due to a $37.0 million short-term loan to State Bancorp, Inc. (used to repurchase State's Series A Preferred Stock from the Treasury), which was acquired by Valley effective January 1, 2012. The loan was subsequently eliminated as of the acquisition date. Total covered loans (i.e., loans subject to our loss-sharing agreements with the FDIC) decreased to $271.8 million, or 2.8 percent of our total loans, at December 31, 2011 as compared to $282.4 million at September 30, 2011 mainly due to normal payment activity. Excluding the loan to State Bancorp, our total loan portfolio grew by 6.8 percent on an annualized basis during the fourth quarter of 2011.

Net Interest Income and Margin: Net interest income decreased $3.6 million to $118.3 million for the quarter ended December 31, 2011 as compared to $121.9 million for the quarter ended September 30, 2011. On a tax equivalent basis, our net interest margin decreased 12 basis points to 3.74 percent in the fourth quarter of 2011 as compared to 3.86 percent for the third quarter of 2011, and was 11 basis points higher than the 3.63 percent net interest margin for the fourth quarter of 2010. The decreases in the net interest income and margin as compared to the linked third quarter of 2011 were mainly due to lower yields on taxable investments and loans. See the "Net Interest Income and Margin" section below for more details.

Rate Reduction on Long-Term Borrowings: In November and December 2011, we modified the terms of $435 million in FHLB advances within our long-term borrowings. The modifications resulted in a reduction of the interest rate on these funds, an extension of their maturity dates to 10 years from the date of modification, and a conversion of the advances to non-callable for periods ranging from 3 to 4 years. We similarly modified the terms of an additional $150 million in FHLB advances during January 2012. After the modifications, the weighted average interest rate on these borrowings declined by 0.86 percent to 3.99 percent. There were no penalties or fees incurred in the modification transactions.

Asset Quality: Total loans past due 30 days or more were 1.69 percent of the loan portfolio at December 31, 2011 compared to 1.73 percent at September 30, 2011. Total non-accrual loans were $124.3 million, or 1.27 percent of our entire loan portfolio of $9.8 billion, at December 31, 2011. The residential mortgage and home equity loan portfolios totaling over 23,000 individual loans had only 272 loans past due 30 days or more at December 31, 2011. At December 31, 2011, residential mortgage and home equity loans delinquent 30 days or more totaled $44.6 million, or 1.62 percent of the $2.8 billion in total loans within these categories. See "Credit Quality" section below for more details.

Provision for Losses on Non-Covered Loans and Unfunded Letters of Credit: The provision for losses on non-covered loans and unfunded letters of credit was $11.9 million for the fourth quarter of 2011 as compared to $7.8 million for the third quarter of 2011 and $8.7 million for the fourth quarter of 2010. Net loan charge-offs on non-covered loans increased to $14.4 million for the fourth quarter of 2011 compared to $4.8 million for the third quarter of 2011 and $4.3 million for the fourth quarter of 2010. Two new impaired loan relationships contributed $6.5 million to the increase in net loan charge-offs during the fourth quarter of 2011 (See further detail under the "Credit Quality" section below). At December 31, 2011, our allowance for losses on non-covered loans and unfunded letters of credit totaled $122.7 million and was 1.29 percent of non-covered loans, as compared to 1.34 percent and 1.33 percent at September 30, 2011 and December 31, 2010, respectively.

Provision for Losses on Covered Loans: We recorded a $3.4 million provision for losses on covered loans (i.e., loans subject to our loss-sharing agreements with the FDIC) during the fourth quarter of 2011 as compared to no provision for the third quarter of 2011 and $6.4 million in the fourth quarter of 2010. The provisions were recognized due to credit impairment caused by subsequent declines in the expected cash flows within certain pools of covered loans at the acquisition date and/or decreases in the additional cash flows expected to be collected due to changes in estimate after acquisition. The negative impact of the provisions was partially offset by the recognition in other non-interest income of the FDIC's applicable portion of the impairment under the loss-sharing agreements. Loan charge-offs on covered loans (impaired subsequent to acquisition) were $2.5 million for the fourth quarter of 2011 as compared to $6.1 million for third quarter of 2011 and no charge-offs in the fourth quarter of 2010. Our allowance for losses on covered loans totaled $13.5 million at December 31, 2011 as compared to $12.6 million at September 30, 2011 and $6.4 million at December 31, 2010.

Investments: We recognized $12.0 million in net gains on securities transactions during the fourth quarter of 2011 as compared to $7.0 million in net gains during the fourth quarter of 2010 as we continued to reduce our holdings of certain residential mortgage-backed securities issued by Freddie Mac and Fannie Mae with increased prepayment risk. Other-than-temporary impairment charges attributable to credit totaling $19.1 million ($11.7 million after taxes, or $0.07 per common share) were recognized in earnings during the fourth quarter of 2011 mainly related to trust preferred securities issued by one bank holding company. The issuer of the trust preferred securities has deferred interest payments on these securities since late 2009 as required by an operating agreement with its bank regulators. While the issuer has reported reasonably consistent financial performance in its recent regulatory filings, we have lengthened our estimate of the timeframe over which Valley could reasonably anticipate receiving the expected cash flows and, as a result, we concluded that the securities were other-than-temporarily impaired at December 31, 2011. The total impairment loss of $41.2 million on these securities consisted of $18.3 million attributable to credit and $22.9 million attributable to factors other than credit. After the credit impairment charges, the trust preferred securities had a combined adjusted amortized cost of $46.4 million and a fair value of $23.5 million at December 31, 2011. Subsequent to the impairment analysis, management no longer had a positive intent to hold these securities to their maturity due to the significant deterioration in the securities' value caused by the credit of the issuer. Accordingly, we transferred the securities from held to maturity to the available for sale portfolio at December 31, 2011.

Trading Mark to Market Impact on Earnings: Net income for the fourth quarter of 2011 included net trading losses of $839 thousand (less than $0.01 per common share) as compared to net trading losses of $2.1 million ($0.01 per common share) for the fourth quarter of 2010. Net trading losses mainly represent non-cash mark to market losses on our junior subordinated debentures carried at fair value.

Merger Expenses: We incurred approximately $2.3 million ($1.7 million after taxes, or $0.01 per common share) in merger expenses during the fourth quarter of 2011 related to our acquisition of State Bancorp, Inc., which was completed effective January 1, 2012. Professional and legal fees, salary and employee benefits expense, and other non-interest expense included $1.3 million, $640 thousand, and $290 thousand, respectively, of merger related expenses for the three months ended December 31, 2011.

Capital Strength: Our regulatory capital ratios continue to reflect Valley's strong capital position. The Company's total risk-based capital, Tier 1 capital, and leverage capital were 12.75 percent, 10.92 percent, and 8.07 percent, respectively, at December 31, 2011.

Gerald H. Lipkin, Chairman, President and CEO commented that, "With a few exceptions, we are pleased with Valley's operating performance for the fourth quarter given the current environment. Most notable, we had solid loan growth in our commercial real estate loan portfolio during the quarter, combined with the continued residential mortgage loan growth reflective of our very successful mortgage refinance program." Mr. Lipkin added, "In January 2012, we completed our acquisition of State Bancorp, Inc. and its principal subsidiary, State Bank of Long Island with approximately $1.6 billion in assets. We are very excited about the benefits that are expected from integrating the two companies. Our expansion into this attractive area of the Long Island market should provide many additional lending, retail, and wealth management service opportunities to further strengthen our New York Metropolitan operations in 2012. Given the expected synergies from the acquisition, strengthening commercial loan demand, and the recent signs of a steadily improving economy, we are optimistic about the year ahead and our ability to grow the Valley Brand to further benefit our shareholders."

State Bank of Long Island, a commercial bank with 16 branches located in Nassau, Suffolk, Queens and Manhattan, was merged into Valley National Bank. Full systems integration is expected to be completed during the latter half of the first quarter of 2012 and is anticipated to be a relatively seamless transition for all former State Bank customers.

Net Interest Income and Margin

Net interest income on a tax equivalent basis was $120.1 million for the fourth quarter of 2011, a $3.6 million decrease from the third quarter of 2011 and an increase of $5.6 million from the fourth quarter of 2010. The linked quarter decrease was mainly driven by lower yields on average taxable investments and loans, as well as a $130.2 million decline in average taxable investment balances for the fourth quarter of 2011. Average taxable investment balances declined due to normal repayment activity on higher yielding securities and lower reinvestment in new securities. Alternatively, we used the security repayments to fund higher yielding loan growth and maintained additional excess balances in overnight interest bearing deposits with correspondent banks. Interest income on loans declined during the fourth quarter mainly due to lower rates on refinanced loans and a decrease in loan prepayment fees and interest recoveries on non-accrual loans.

The net interest margin on a tax equivalent basis was 3.74 percent for the fourth quarter of 2011, a decrease of 12 basis points from 3.86 percent in the linked third quarter of 2011, and an 11 basis point increase from 3.63 percent for the quarter ended December 31, 2010. The yield on average interest earning assets decreased by 17 basis points on a linked quarter basis mainly as a result of lower yields on both average taxable investments and loans caused by the activity described above. The cost of average interest bearing liabilities declined three basis points from the third quarter of 2011 mainly due to a $197.3 million decline in average time deposits caused principally by maturing deposits that were not renewed by customers due to lower rates offered on most of our certificates of deposit products. The maturing deposits contributed to a seven basis point decrease in the cost of the average time deposits during the fourth quarter of 2011. Our cost of total deposits was 0.66 percent for the fourth quarter of 2011 compared to 0.71 percent for the three months ended September 30, 2011.

We believe our margin may continue to face the risk of compression into the foreseeable future due to the current low level of interest rates on most interest earning asset alternatives. However, we continue to tightly manage our balance sheet and our cost of funds to optimize our returns. During the fourth quarter of 2011, we continued to reduce the interest rates on many of our deposit products, including time deposits, and lower the interest rates paid on certain modified long-term FHLB borrowings. We have yet to fully realize the benefits of these recent reductions. We believe these actions and other asset/liability strategies will partially temper the negative impact of the current interest rate environment.

Credit Quality

Total loan delinquencies as a percentage of total loans were 1.69 percent at December 31, 2011 as compared to 1.73 percent at September 30, 2011 and 1.77 percent at December 31, 2010. With a non-covered loan portfolio totaling $9.5 billion, net loan charge-offs on non-covered loans for the fourth quarter of 2011 totaled $14.4 million as compared to $4.8 million for the third quarter of 2011 and $4.3 million for the fourth quarter of 2010. Charge-offs on loans in our impaired covered loan pools totaled $2.5 million and $6.1 million for the fourth and third quarters of 2011, respectively, and are substantially covered by loss-sharing agreements with the FDIC.

The following table summarizes the allocation of the allowance for credit losses to specific loan categories and the allocation as a percentage of each loan category at December 31, 2011, September 30, 2011 and December 31, 2010:



                                                   December 31, 2011               September 30, 2011         December 31, 2010
                                                   ------------------------------  -------------------------  -------------------------
                                                                       Allocation                 Allocation                 Allocation
                                                                       as a % of                  as a % of                  as a % of
                                                   Allowance           Loan        Allowance      Loan        Allowance      Loan
                                                   Allocation          Category    Allocation     Category    Allocation     Category
                                                   ------------------  ----------  -------------  ----------  -------------  ----------
        Loan Category:
        Commercial and Industrial loans*           $      65,076       3.46%       $      62,717  3.44%       $      58,229  3.19%
        Commercial real estate loans:
                           Commercial real estate  19,222              0.54%       20,079         0.58%       15,755         0.47%
                           Construction            12,905              3.14%       14,614         3.53%       14,162         3.31%
                                                   ------------------              -------------              -------------
        Total commercial real estate loans         32,127              0.81%       34,693         0.89%       29,917         0.79%
        Residential mortgage loans                 9,058               0.40%       10,158         0.47%       9,128          0.47%
        Consumer loans:
                           Home equity             2,214               0.47%       2,794          0.58%       2,345          0.46%
                                                   ------------------              -------------              -------------
                           Auto and other consumer 6,463               0.71%       7,297          0.79%       12,154         1.29%
                                                   ------------------              -------------              -------------
        Total consumer loans                       8,677               0.63%       10,091         0.72%       14,499         1.00%
        Covered loans                              13,528              4.98%       12,587         4.08%       6,378          1.79%
        Unallocated                                7,719               NA          7,455          NA          8,353          NA
                                                   ------------------              -------------              -------------
        Allowance for credit losses                $    136,185        1.39%       $    137,701   1.44%       $    126,504   1.35%
        * Includes the reserve for unfunded letters of credit.
        


Total non-performing assets ("NPAs"), consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities, totaled $167.4 million at December 31, 2011 compared to $122.6 million at September 30, 2011. The $44.8 million increase in NPAs from September 30, 2011 was mainly due to non-accrual debt securities (consisting of other-than-temporarily impaired trust preferred securities classified as available for sale) totaling $27.2 million and three additional non-accrual loan relationships (one included in each of the commercial and industrial, commercial real estate, and construction loan categories) totaling $22.5 million. Two of the additional non-accrual loan relationships were also responsible for $6.5 million of the $14.4 million in total net loan charge-offs recognized during the fourth quarter of 2011 due to partial charge-offs resulting from valuation of their collateral at December 31, 2011.

Non-accrual loans increased $16.6 million to $124.3 million at December 31, 2011 as compared to $107.7 million at September 30, 2011 mainly due to the aforementioned additional loan relationships classified as non-accrual loans. Although the timing of collection is uncertain, management believes that most of the non-accrual loans are well secured and largely collectible based on, in part, our quarterly review of impaired loans. Our impaired loans, mainly consisting of non-accrual and troubled debt restructured commercial and commercial real estate loans, totaled $184.1 million at December 31, 2011 and had $23.2 million in related specific reserves included in our total allowance for loan losses. OREO (which consists of 17 commercial and residential properties) and other repossessed assets, excluding OREO subject to loss-sharing agreements with the FDIC, totaled a combined $16.0 million at December 31, 2011 as compared to $14.9 million at September 30, 2011.

Loans past due 90 days or more and still accruing increased $164 thousand to $4.0 million, or 0.04 percent of total loans at December 31, 2011 compared to $3.9 million, or 0.04 percent at September 30, 2011 primarily due to a modest increase in commercial and industrial loans within this delinquency category.

Loans past due 30 to 89 days decreased $16.5 million to $37.6 million at December 31, 2011 compared to September 30, 2011 partly due to the migration of a $7.3 million commercial real estate loan to non-accrual status (reported as a potential problem loan last quarter), as well as improved performance of commercial and industrial and residential mortgage loans within this delinquency category.

Troubled debt restructured loans ("TDRs") represent loan modifications for customers experiencing financial difficulties where a concession has been granted. Performing TDRs (i.e., TDRs not reported as loans 90 days or more past due and still accruing or as non-accrual loans) totaled $101.0 million at December 31, 2011 and consisted of 60 loans (primarily in the commercial and industrial loan and commercial real estate portfolios) as compared to 58 loans totaling $103.7 million at September 30, 2011. On an aggregate basis, the $101.0 million in performing TDRs at December 31, 2011 had a modified weighted average interest rate of approximately 4.93 percent as compared to a pre-modification weighted average interest rate of 6.11 percent.

Loans and Deposits

Total loans increased by $199.6 million to $9.8 billion at December 31, 2011 as compared to September 30, 2011. See discussion below for a complete analysis of the change in mix between each loan category.

Non-Covered Loans. Non-covered loans are loans not subject to loss-sharing agreements with the FDIC. Non-covered loans increased $210.1 million to approximately $9.5 billion at December 31, 2011 from September 30, 2011. The linked quarter increase was mainly comprised of increases in residential mortgage, commercial real estate (including construction) and commercial and industrial loans of $113.0 million, $59.0 million and $45.2 million, respectively, partially offset by a decrease of $13.0 million in automobile loans. Residential mortgage loans increased due to the continued success of our $499 refinance program and the current low level of market interest rates. During the fourth quarter of 2011, we originated over $380 million in new and refinanced residential mortgage loans and retained approximately 79 percent of these loans in our loan portfolio at December 31, 2011. Commercial real estate loans continued to increase quarter over quarter due to our stronger business emphasis on co-op and multifamily loan lending in our primary markets during 2011, as well as a slight increase in new loan demand mainly from our current borrowers. Commercial and industrial loans increased largely due to a $37.0 million short-term loan to State Bancorp. The funds were used by State Bancorp to repurchase all of its Series A Preferred Stock issued under the Treasury's Capital Purchase Program prior to being acquired by Valley effective January 1, 2012. Exclusive of the merger related loan, soft loan demand coupled with strong competition for quality credits continued to challenge our ability to achieve significant loan growth in this category during the quarter. Automobile loan balances have continued to decline due to several factors, including our high credit standards, acceptable loan to collateral value levels, and high unemployment levels. Additionally, in an attempt to build market share, some large competitors continue to offer rates and terms that we have elected not to match. These factors may continue to constrain the levels of our auto loan originations during the first quarter of 2012 and the foreseeable future.

Covered Loans. Loans for which Valley National Bank will share losses with the FDIC are referred to as "covered loans," and consist of loans acquired from LibertyPointe Bank and The Park Avenue Bank as a part of FDIC-assisted transactions during the first quarter of 2010. Our covered loans consist primarily of commercial real estate loans and commercial and industrial loans and totaled $271.8 million at December 31, 2011 as compared to $282.4 million at September 30, 2011. These loans are accounted for on a pool basis. For loan pools with better than originally expected cash flows, the forecasted increase is recorded as a prospective adjustment to our interest income on loans over future periods. Additionally, on a prospective basis, we reduce the FDIC loss-share receivable by the guaranteed portion of the additional cash flows expected to be received from borrowers on those loan pools. During the fourth and third quarters of 2011, we reduced our FDIC loss-share receivable by $2.4 million and $2.9 million, respectively, due to the prospective recognition of the effect of additional cash flows from pooled loans with a corresponding reduction in non-interest income for the periods.

Deposits. Total deposits increased $52.8 million to approximately $9.7 billion at December 31, 2011 from September 30, 2011. Non-interest bearing deposits increased $168.5 million to $2.8 billion during the fourth quarter mainly due to general increases in commercial and retail deposits caused by seasonal business activity and the low level of interest rates on alternative investment and savings products. Savings, NOW and money market deposits increased $77.5 million to $4.4 billion at December 31, 2011 as compared to September 30, 2011 partly due to the low level of interest rates on time deposits and the migration of some maturing certificate of deposits to these account types. However, time deposits declined $193.2 million to $2.5 billion at December 31, 2011 primarily due to lower interest rates offered on most of our certificate of deposit products.

Non-Interest Income

Fourth quarter of 2011 compared with fourth quarter of 2010

Non-interest income for the fourth quarter of 2011 decreased $22.0 million to $13.8 million as compared to $35.8 million for the same period of 2010 primarily due to a $19.1 million increase in other-than-temporary impairment charges. The impairment charges recognized in earnings during the fourth quarter of 2011 mainly related to trust preferred securities issued by one bank holding company, as previously discussed, but also included a charge for one private label mortgage-backed security found to be other-than-temporarily impaired at December 31, 2011. Gains on sales of loans decreased $4.9 million to $2.6 million for the fourth quarter of 2011 as compared to the fourth quarter of 2010 mainly due to lower sales volumes of our new and refinanced residential mortgage loan originations and a $3.9 million gain recognized in the fourth quarter of 2010 on the sale of $83 million in conforming residential mortgage loans transferred to loans held for sale. Non-interest income recognized due to changes in the FDIC loss-share receivable also declined $4.9 million as compared to the fourth quarter of 2010 largely due to a lower level of additional estimated credit losses on covered loans at December 31, 2011 as compared to one year ago. However, net gains on securities transactions increased $5.1 million as compared to the 2010 period due to an increase in the amount of residential mortgage-backed securities sold in the fourth quarter of 2011. Additionally, insurance commissions increased by $1.2 million and net trading losses declined by $1.2 million as compared to the three months ended December 31, 2010.

Fourth quarter of 2011 compared with third quarter of 2011

Non-interest income for the fourth quarter of 2011 decreased $6.4 million from $20.2 million for the quarter ended September 30, 2011 mainly due to the aforementioned $19.1 million in other-than-temporary impairment charges recognized during the fourth quarter. Net trading losses increased $1.6 million primarily due to non-cash mark to market losses in the fourth quarter on our trust preferred debentures carried at fair value. Partially offsetting the negative impact of these items, net gains on securities transactions increased $11.2 million from $863 thousand during the third quarter of 2011 to $12.0 million in the fourth quarter. Non-interest income recognized due to the change in the FDIC loss-share receivable increased $3.0 million as compared to the third quarter of 2011 largely due to additional estimated credit losses on covered loans at December 31, 2011 as compared to September 30, 2011.

Non-Interest Expense

Fourth quarter of 2011 compared with fourth quarter of 2010

Non-interest expense increased $4.0 million to $84.4 million for the three months ended December 31, 2011 from $80.4 million for the same period of 2010. Professional and legal fees increased $1.9 million to $4.9 million for the three months ended December 31, 2011 primarily due to increased fees related to our acquisition of State Bancorp on January 1, 2012, assets acquired in the FDIC-assisted transactions and other general corporate matters. Net occupancy and equipment expense increased $1.6 million to $16.1 million for the fourth quarter of 2011 mainly due to general increases in real estate taxes, repairs and maintenance, and depreciation expense. Amortization of other intangible assets increased $1.2 million to $2.2 million during the fourth quarter of 2011 mainly due to a $945 thousand recovery of impairment charges on certain loan servicing rights in the fourth quarter of 2010 as compared to $27 thousand in impairment charges recognized during the fourth quarter of 2011. Other non-interest expense also increased $964 thousand to $13.2 million for the three months ended December 31, 2011 partly due to merger related expenses as well as OREO and other expenses related to assets acquired in FDIC-assisted transactions. Partially offsetting these increases, salary and employee benefits expense decreased $2.4 million to $42.9 million for the three months ended December 31, 2011 mainly due to lower cash incentive accruals during the 2011 period.

Fourth quarter of 2011 compared with third quarter of 2011

Non-interest expense decreased by $925 thousand from $85.3 million for the linked quarter ended September 30, 2011. Salary and employee benefits expense decreased $2.2 million from $45.1 million for the third quarter of 2011 mainly due to lower cash incentive accruals during the fourth quarter of 2011. Amortization of other intangible assets decreased approximately $1.1 million mainly due to our recognition of a $1.6 million impairment charge on certain loan servicing rights during the third quarter of 2011 as compared to a $27 thousand impairment charge during the fourth quarter of 2011. Professional and legal fees increased $1.2 million from $3.7 million for the three months ended September 30, 2011 primarily due to $1.3 million in fees recognized during the fourth quarter related to our acquisition of State Bancorp. Other non-interest expense also increased $851 thousand from $12.3 million for the three months ended September 30, 2011 partly due to merger related expenses and expenses related to assets acquired in FDIC-assisted transactions.

Income Tax Expense

Income tax expense was $7.5 million for the three months ended December 31, 2011, reflecting an effective tax rate of 23.3 percent compared to $15.3 million for the same period of 2010, reflecting an effective tax rate of 28.6 percent. The 5.3 percent decrease in the effective tax rate as compared to the fourth quarter of 2010 was largely due to our lower pre-tax book income caused, in part, by other-than-temporary impairment charges, and our increased investment in additional tax credits during 2011.

Income tax expense was $63.5 million for the year ended December 31, 2011, reflecting an effective tax rate of 32.2 percent compared to $55.8 million for 2010, reflecting an effective tax rate of 29.8 percent. The effective tax rate increased by 2.4 percent as compared to 2010 largely due to a one-time tax provision of $8.5 million related to a change in tax law during 2011, partially offset by our increased investment in additional tax credits during 2011.

For the first quarter of 2012, we anticipate that our effective tax rate will approximate 32 percent.

About Valley

Valley is a regional bank holding company headquartered in Wayne, New Jersey with nearly $16 billion in assets after the acquisition of State Bancorp. Its principal subsidiary, Valley National Bank, currently operates 211 branches in 147 communities serving 16 counties throughout northern and central New Jersey, Manhattan and Long Island. Valley National Bank is one of the largest commercial banks headquartered in New Jersey and is committed to providing the most convenient service, the latest in product innovations and an experienced and knowledgeable staff with a high priority on friendly customer service 24 hours a day, 7 days a week. For more information about Valley National Bank and its products and services, please visit www.valleynationalbank.com or call Customer Service 24/7 at 800-522-4100.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as "should," "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 materially from those contemplated by such forward-looking statements include, but are not limited to:

A severe decline in the general economic conditions of New Jersey and the New York Metropolitan area;

declines in value in our investment portfolio, including additional other-than-temporary impairment charges on our investment securities;

higher than expected increases in our allowance for loan losses;

higher than expected increases in loan losses or in the level of nonperforming loans;

unexpected changes in interest rates;

higher than expected tax rates, including increases resulting from changes in tax laws, regulations and case law;

a continued or unexpected decline in real estate values within our market areas;

charges against earnings related to the change in fair value of our junior subordinated debentures;

higher than expected FDIC insurance assessments;

the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships;

lack of liquidity to fund our various cash obligations;

unanticipated reduction in our deposit base;

potential acquisitions that may disrupt our business;

government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve;

legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs and/or require us to change our business model;

changes in accounting policies or accounting standards;

our inability to promptly adapt to technological changes;

our internal controls and procedures may not be adequate to prevent losses;

claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;

the inability to realize expected cost savings and revenue synergies from the merger of State Bancorp with Valley in the amounts or in the timeframe anticipated;

costs or difficulties relating to the integration of State Bancorp's systems might be greater than expected;

inability to retain State Bancorp's customers and employees;

lower than expected cash flows from covered loan pools acquired in FDIC-assisted transactions; and

other unexpected material adverse changes in our operations or earnings.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011.

We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.



        VALLEY NATIONAL BANCORP
        CONSOLIDATED FINANCIAL HIGHLIGHTS
        SELECTED FINANCIAL DATA
                                                                      Three Months Ended                                                     Years Ended
                                                                      -------------------------------------------------------------------
                                                                      December 31,            September 30,           December 31,           December 31,
                                                                                                                                             --------------------------------------------
        ($ in thousands, except for share data)                       2011                    2011                    2010                   2011                     2010
                                                                      -------------------     -------------------     -------------------    -------------------      -------------------
        FINANCIAL DATA:
        Net interest income                                           $      118,314          $      121,935          $      113,141         $      474,811           $      462,752
        Net interest income - FTE (4)                                 120,055                 123,611                 114,478                480,888                  468,342
        Non-interest income (2)                                       13,772                  20,203                  35,846                 112,297                  91,327
        Non-interest expense                                          84,377                  85,302                  80,408                 336,588                  317,682
        Income tax expense                                            7,528                   13,696                  15,322                 63,532                   55,771
        Net income                                                    24,817                  35,357                  38,158                 133,653                  131,170
        Weighted average number of common shares outstanding: (5)
                             Basic                                    170,185,439             170,007,399             169,426,058            169,928,460              169,112,901
                             Diluted                                  170,185,880             170,007,983             169,428,992            169,929,590              169,121,584
        Per common share data: (5)
                             Basic earnings                           $              0.15     $              0.21     $              0.23    $              0.79      $              0.78
                             Diluted earnings                         0.15                    0.21                    0.23                   0.79                     0.78
                             Cash dividends declared                  0.17                    0.17                    0.17                   0.69                     0.69
        Book value                                                    7.44                    7.69                    7.64                   7.44                     7.64
        Tangible book value (1)                                       5.45                    5.69                    5.61                   5.45                     5.61
        Tangible common equity to tangible assets(1)                  6.67                %   6.96                %   6.90                %  6.67                %    6.90                %
        Closing stock price - high                                    $          12.69        $          14.09        $          13.73       $          14.20         $          15.19
        Closing stock price - low                                     10.14                   9.89                    12.01                  9.89                     11.83
        CORE ADJUSTED FINANCIAL DATA: (1)
        Net income, as adjusted                                       $        36,508         $        35,357         $        38,158        $      145,861           $      134,075
        Basic earnings per share, as adjusted                         0.21                    0.21                    0.23                   0.86                     0.79
        Diluted earnings per share, as adjusted                       0.21                    0.21                    0.23                   0.86                     0.79
        FINANCIAL RATIOS:                                                                                                                                             `
        Net interest margin                                           3.68                %   3.80                %   3.59                %  3.71                %    3.65                %
        Net interest margin - FTE (4)                                 3.74                    3.86                    3.63                   3.75                     3.69
        Annualized return on average assets                           0.69                    0.99                    1.08                   0.94                     0.93
        Annualized return on average shareholders' equity             7.57                    10.74                   11.85                  10.20                    10.32
        Annualized return on average tangible
        shareholders' equity (1)                                      10.21                   14.52                   16.06                  13.80                    13.97
        Efficiency ratio (6)                                          63.88                   60.01                   53.97                  57.33                    57.34
        CORE ADJUSTED FINANCIAL RATIOS: (1)
        Annualized return on average assets, as adjusted              1.02                %   0.99                %   1.08                %  1.02                %    0.95                %
        Annualized return on average shareholders' equity as adjusted 11.13                   10.74                   11.85                  11.13                    10.55
        Annualized return on average tangible
        shareholders' equity, as adjusted                             15.02                   14.52                   16.06                  15.06                    14.28
        Efficiency ratio, as adjusted                                 55.79                   60.01                   53.97                  55.44                    56.86
        AVERAGE BALANCE SHEET ITEMS:
        Assets                                                        $  14,306,673           $  14,283,783           $  14,099,979          $  14,270,289            $  14,119,230
        Interest earning assets                                       12,845,931              12,821,312              12,621,007             12,814,236               12,679,756
        Loans                                                         9,710,251               9,642,366               9,458,332              9,608,480                9,474,994
        Interest bearing liabilities                                  10,145,279              10,295,144              10,217,104             10,284,332               10,363,969
        Deposits                                                      9,835,527               9,788,550               9,421,254              9,738,592                9,497,664
        Shareholders' equity                                          1,311,498               1,316,733               1,288,140              1,310,939                1,270,778
        




                                           As Of
                                           ------------------------------------------------
                                           December 31,     September 30,    December 31,
        ($ in thousands)                   2011             2011             2010
                                           --------------   --------------   --------------
        BALANCE SHEET ITEMS:
        Assets                             $   14,244,507   $   14,231,155   $   14,143,826
        Total loans                        9,799,641        9,600,087        9,365,795
        Non-covered loans                  9,527,797        9,317,691        9,009,140
        Deposits                           9,673,102        9,620,339        9,363,614
        Shareholders' equity               1,266,248        1,307,102        1,295,205
        CAPITAL RATIOS:
        Tier 1 leverage ratio              8.07           % 8.10           % 8.31           %
        Risk-based capital - Tier 1        10.92            10.82            10.94
        Risk-based capital - Total Capital 12.75            12.65            12.91
        




                                                                                                 Three Months Ended                                                Years Ended
                                                                                                 ---------------------------------------------------------------
                                                                                                 December 31,          September 30,         December 31,          December 31,
                                                                                                                                                                   -----------------------------------------
        ($ in thousands)                                                                         2011                  2011                  2010                  2011                  2010
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
        ALLOWANCE FOR CREDIT LOSSES:
        Beginning balance - Allowance for credit losses                                          $        137,701      $        140,893      $        115,715      $        126,504      $        103,655
        Loans charged-off: (3)
                         Commercial and industrial                                               (10,204)              (9,297)               (1,593)               (29,229)              (15,475)
                         Commercial real estate                                                  (1,132)               (719)                 (100)                 (6,305)               (1,823)
                         Construction                                                            (3,533)               (520)                 (1,314)               (4,053)               (1,738)
                         Residential mortgage                                                    (1,727)               (269)                 (730)                 (3,222)               (3,741)
                         Consumer                                                                (1,542)               (1,251)               (2,009)               (5,906)               (10,882)
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                                                             Total loans charged-off             (18,138)              (12,056)              (5,746)               (48,715)              (33,659)
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
        Charged-off loans recovered:
                         Commercial and industrial                                               617                   559                   804                   2,365                 4,121
                         Commercial real estate                                                  106                   2                     17                    134                   156
                         Construction                                                            -                     -                     -                     197                   -
                         Residential mortgage                                                    23                    16                    17                    129                   97
                         Consumer                                                                512                   504                   598                   2,236                 2,678
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                                                             Total loans recovered               1,258                 1,081                 1,436                 5,061                 7,052
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
        Net charge-offs                                                                          (16,880)              (10,975)              (4,310)               (43,654)              (26,607)
        Provision charged for credit losses                                                      15,364                7,783                 15,099                53,335                49,456
                                                                                                 -------------------   -------------------   -------------------
        Ending balance - Allowance for credit losses                                             $        136,185      $        137,701      $        126,504      $        136,185      $        126,504
        Components of allowance for credit losses:
                         Allowance for non-covered loans                                         $        120,274      $        122,775      $        118,326      $        120,274      $        118,326
                         Allowance for covered loans                                             13,528                12,587                6,378                 13,528                6,378
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                                                             Allowance for loan losses           133,802               135,362               124,704               133,802               124,704
                         Allowance for unfunded letters of credit                                2,383                 2,339                 1,800                 2,383                 1,800
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
        Allowance for credit losses                                                              $        136,185      $        137,701      $        126,504      $        136,185      $        126,504
        Components of provision for credit losses:
                         Provision for losses on non-covered loans                               $          11,904     $            7,711    $            8,850    $          31,242     $          42,943
                         Provision for losses on covered loans                                   3,416                 -                     6,378                 21,510                6,378
                         Provision for unfunded letters of credit                                44                    72                    (129)                 583                   135
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
        Provision for credit losses                                                              $          15,364     $            7,783    $          15,099     $          53,335     $          49,456
        Annualized ratio of net charge-offs of
                         non-covered loans to average loans                                      0.59                % 0.20                % 0.18                % 0.30                % 0.28                %
        Annualized ratio of total net charge-offs
                         to average loans                                                        0.70                  0.46                  0.18                  0.45                  0.28
        Allowance for non-covered loan losses as
                         a % of non-covered loans                                                1.26                  1.32                  1.31                  1.26                  1.31
        Allowance for credit losses as a % of total loans                                        1.39                  1.43                  1.35                  1.39                  1.35
                                                                                                                       As Of
                                                                                                                       ---------------------------------------------------------------
        ($ in thousands)                                                                                               December 31,          September 30,         December 31,
        ASSET QUALITY (NON-COVERED ASSETS): (7)                                                                        2011                  2011                  2010
                                                                                                                       -------------------   -------------------   -------------------
        Accruing past due loans:
        30 to 89 days past due:
                         Commercial and industrial                                                                     $           4,347     $           9,866     $         13,852
                         Commercial real estate                                                                        13,115                22,220                14,563
                         Construction                                                                                  2,652                 -                     2,804
                         Residential mortgage                                                                          8,496                 12,556                12,682
                         Consumer                                                                                      8,975                 9,456                 14,638
                                                                                                                       -------------------   -------------------   -------------------
        Total 30 to 89 days past due                                                                                   37,585                54,098                58,539
        90 or more days past due:
                         Commercial and industrial                                                                     657                   164                   12
                         Commercial real estate                                                                        422                   268                   -
                         Construction                                                                                  1,823                 2,216                 196
                         Residential mortgage                                                                          763                   721                   1,556
                         Consumer                                                                                      351                   483                   723
                                                                                                                       -------------------   -------------------   -------------------
        Total 90 or more days past due                                                                                 4,016                 3,852                 2,487
                                                                                                                       -------------------   -------------------   -------------------
        Total accruing past due loans                                                                                  $         41,601      $         57,950      $         61,026
        Non-accrual loans:
                         Commercial and industrial                                                                     $         26,648      $         16,737      $         13,721
                         Commercial real estate                                                                        42,186                41,453                32,981
                         Construction                                                                                  19,874                14,449                27,312
                         Residential mortgage                                                                          31,646                31,401                28,494
                         Consumer                                                                                      3,910                 3,645                 2,547
                                                                                                                       -------------------   -------------------   -------------------
        Total non-accrual loans                                                                                        124,264               107,685               105,055
        Other real estate owned (8)                                                                                    15,227                14,091                10,498
        Other repossessed assets                                                                                       796                   822                   1,707
        Non-accrual debt securities (9)                                                                                27,151                -                     -
                                                                                                                       -------------------   -------------------   -------------------
        Total non-performing assets ("NPAs")                                                                           $       167,438       $       122,598       $       117,260
        Performing troubled debt restructured loans                                                                    $       100,992       $       103,690       $         89,696
        Total non-accrual loans as a % of loans                                                                        1.27                % 1.12                % 1.12                %
        Total accruing past due and non-accrual loans as a % of loans                                                  1.69                  1.73                  1.77
        Allowance for losses on non-covered
                         loans as a % of non-accrual loans                                                             96.79                 114.01                112.63
        NOTES TO SELECTED FINANCIAL DATA
        ----------------------------------------------------------------------------------------
        (1)              This press release contains certain supplemental financial information, described in Notes (1) - (4), which has been determined by methods other
                         than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance.  Management believes
                         these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides
                         measures based on what it believes are its operating earnings on a consistent basis and excludes non-core operating items which affect the GAAP
                         reporting of results of operations.  Management utilizes these measures for internal planning and forecasting purposes. Management believes that
                         Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting
                         Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered
                         a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their
                         entirety and not to rely on any single financial measure.  Because non-GAAP financial measures are not standardized, it may not be possible to
                         compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
                                                                                                 Three Months Ended                                                Years Ended
                                                                                                 ---------------------------------------------------------------
                                                                                                 December 31,          September 30,         December 31,          December 31,
                                                                                                                                                                   -----------------------------------------
                         ($ in thousands, except for share data)                                 2011                  2011                  2010                  2011                  2010
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Tangible book value per common share:
                         Common shares outstanding                                               170,174,314           170,025,364           169,533,626           170,174,314           169,533,626
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Shareholders' equity                                                    $     1,266,248       $     1,307,102       $     1,295,205       $     1,266,248       $     1,295,205
                         Less: Goodwill and other intangible assets                              (338,780)             (339,850)             (343,541)             (338,780)             (343,541)
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Tangible shareholders' equity                                           $        927,468      $        967,252      $        951,664      $        927,468      $        951,664
                         Tangible book value                                                     $5.45                 $5.69                 $5.61                 $5.45                 $5.61
        NOTES TO SELECTED FINANCIAL DATA - CONTINUED
                                                                                                 Three Months Ended                                                Years Ended
                                                                                                 ---------------------------------------------------------------
                                                                                                 December 31,          September 30,         December 31,          December 31,
                                                                                                                                                                   -----------------------------------------
                         ($ in thousands, except for share data)                                 2011                  2011                  2010                  2011                  2010
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Annualized return on average tangible equity:
                         Net income                                                              $          24,817     $          35,357     $          38,158     $        133,653      $        131,170
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Average shareholders' equity                                            1,311,498             1,316,733             1,288,140             1,310,939             1,270,778
                         Less: Average goodwill and other intangible assets                      (339,528)             (342,506)             (337,662)             (342,122)             (331,667)
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Average tangible shareholders' equity                                   $        971,970      $        974,227      $        950,478      $        968,817      $        939,111
                         Annualized return on average tangible
                         shareholders' equity                                                    10.21%                14.52%                16.06%                13.80%                13.97%
                         Adjusted net income available to common stockholders:
                         Net income, as reported                                                 $          24,817     $          35,357     $          38,158     $        133,653      $        131,170
                         Net impairment losses on securities recognized in earnings (net of tax) 11,691                -                     -                     12,208                2,905
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Net income, as adjusted                                                 36,508                35,357                38,158                145,861               134,075
                         Adjusted per common share data:
                         Net income, as adjusted                                                 $          36,508     $          35,357     $          38,158     $        145,861      $        134,075
                         Average number of basic shares outstanding                              170,185,439           170,007,399           169,426,058           169,928,460           169,112,901
                         Basic earnings, as adjusted                                             $              0.21   $              0.21   $              0.23   $              0.86   $              0.79
                         Average number of diluted shares outstanding                            170,185,880           170,007,983           169,428,992           169,929,590           169,121,584
                         Diluted earnings, as adjusted                                           $              0.21   $              0.21   $              0.23   $              0.86   $              0.79
                         Adjusted annualized return on average assets:
                         Net income, as adjusted                                                 $          36,508     $          35,357     $          38,158     $        145,861      $        134,075
                         Average assets                                                          14,306,673            14,283,783            14,099,979            14,270,289            14,119,230
                         Annualized return on average assets, as adjusted                        1.02%                 0.99%                 1.08%                 1.02%                 0.95%
                         Adjusted annualized return on average shareholders' equity:
                         Net income, as adjusted                                                 $          36,508     $          35,357     $          38,158     $        145,861      $        134,075
                         Average shareholders' equity                                            1,311,498             1,316,733             1,288,140             1,310,939             1,270,778
                         Annualized return on average shareholders' equity, as adjusted          11.13%                10.74%                11.85%                11.13%                10.55%
                         Adjusted annualized return on average tangible shareholders' equity:
                         Net income, as adjusted                                                 $          36,508     $          35,357     $          38,158     $        145,861      $        134,075
                         Average tangible shareholders' equity                                   971,970               974,227               950,478               968,817               939,111
                         Annualized return on average tangible shareholders' equity, as adjusted 15.02%                14.52%                16.06%                15.06%                14.28%
                         Adjusted efficiency ratio:
                         Non-interest expense                                                    $          84,377     $          85,302     $          80,408     $        336,588      $        317,682
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Net interest income                                                     118,314               121,935               113,141               474,811               462,752
                         Non-interest income                                                     13,772                20,203                35,846                112,297               91,327
                         Add: Net impairment losses on securities recognized in earnings         19,143                -                     -                     19,968                4,642
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Gross operating income, as adjusted                                     $        151,229      $        142,138      $        148,987      $        607,076      $        558,721
                         Efficiency ratio, as adjusted                                           55.79%                60.01%                53.97%                55.44%                56.86%
                         Tangible common equity to tangible assets:
                         Tangible shareholders' equity                                           $        927,468      $        967,252      $        951,664      $        927,468      $        951,664
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Total assets                                                            14,244,507            14,231,155            14,143,826            14,244,507            14,143,826
                         Less: Goodwill and other intangible assets                              (338,780)             (339,850)             (343,541)             (338,780)             (343,541)
                                                                                                 -------------------   -------------------   -------------------   -------------------   -------------------
                         Tangible assets                                                         $   13,905,727        $   13,891,305        $   13,800,285        $   13,905,727        $   13,800,285
                         Tangible common equity to tangible assets                               6.67%                 6.96%                 6.90%                 6.67%                 6.90%
        NOTES TO SELECTED FINANCIAL DATA - CONTINUED
                                                                                                 Three Months Ended                                                                     Years Ended
                                                                                                 -------------------------------------------------------------------------------------
                                                                                                 December 31,                 September 30,                December 31,                 December 31,
                                                                                                                                                                                        --------------------------------------------------------
                                                                                                 2011                         2011                         2010                         2011                         2010
                                                                                                 ---------------------------  ---------------------------  ---------------------------  ---------------------------  ---------------------------
        (2)              Non-interest income includes net trading (losses) gains:
                                                             Trading securities                  $            492             $            136             $            (194)           $          1,015             $         (1,056)
                                                             Junior subordinated debentures      (1,331)                      640                          (1,884)                      1,256                        (5,841)
                                                             Total trading (losses) gains, net   $            (839)           $            776             $         (2,078)            $          2,271             $         (6,897)
                                                                                                 ---------------------------  ---------------------------  ---------------------------  ---------------------------  ---------------------------
        (3)              Total loans charged-off includes the following covered loan charge-offs:
                         Commercial and industrial                                               $         (2,476)            $         (6,131)            $                 -          $       (14,212)             $                 -
                         Commercial real estate                                                  -                            -                            -                            (38)                         -
                         Residential mortgage                                                    -                            -                            -                            (110)                        -
                                                                                                 ---------------------------  ---------------------------  ---------------------------  ---------------------------  ---------------------------
                                                             Total covered loans charged-off     $         (2,476)            $         (6,131)            $                 -          $       (14,360)             $                 -
        (4)              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.
        (5)              Share data reflects the five percent common stock dividend issued on May 20, 2011.
        (6)              The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income.
        (7)              Past due loans and non-accrual loans excludes loans that were acquired as part of the Liberty Pointe Bank and The Park Avenue Bank transactions.  These loans are accounted for on a pool basis.
        (8)              Excludes OREO properties related to the LibertyPointe Bank and The Park Avenue Bank FDIC-assisted transactions totaling $6.4 million, $6.2 million, and $7.8 million at December 31, 2011, September 30, 2011, and December 31, 2010, respectively.  These assets are covered by the loss-sharing agreements with the FDIC.
        (9)              Includes other-than temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value (not of unrealized losses totaling $24.5 million) at December 31, 2011.
        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)
                                                                                                                                                December 31,
                                                                                                                                                --------------------------------
                                                                                                                                                2011              2010
                                                                                                                                                --------------    --------------
        Assets
        Cash and due from banks                                                                                                                 $      372,566    $      302,629
        Interest bearing deposits with banks                                                                                                    6,483             63,657
        Investment securities:
                               Held to maturity, fair value of $2,027,197 at December 31, 2011 and $1,898,872 at December 31, 2010              1,958,916         1,923,993
                               Available for sale                                                                                               566,520           1,035,282
                               Trading securities                                                                                               21,938            31,894
                                                                                                                                                --------------    --------------
                                                                                                   Total investment securities                  2,547,374         2,991,169
                                                                                                                                                --------------    --------------
        Loans held for sale, at fair value                                                                                                      25,169            58,958
        Non-covered loans                                                                                                                       9,527,797         9,009,140
        Covered loans                                                                                                                           271,844           356,655
                               Less: Allowance for loan losses                                                                                  (133,802)         (124,704)
                                                                                                                                                --------------    --------------
                                                                                                   Net loans                                    9,665,839         9,241,091
                                                                                                                                                --------------    --------------
        Premises and equipment, net                                                                                                             265,475           265,570
        Bank owned life insurance                                                                                                               303,867           304,956
        Accrued interest receivable                                                                                                             52,527            59,126
        Due from customers on acceptances outstanding                                                                                           5,903             6,028
        FDIC loss-share receivable                                                                                                              74,390            89,359
        Goodwill                                                                                                                                317,962           317,891
        Other intangible assets, net                                                                                                            20,818            25,650
        Other assets                                                                                                                            586,134           417,742
                                                                                                                                                --------------    --------------
                                                                                                   Total Assets                                 $ 14,244,507      $  14,143,826
        Liabilities
        Deposits:
                               Non-interest bearing                                                                                             $   2,781,597     $   2,524,299
                               Interest bearing:
                                                                 Savings, NOW and money market                                                  4,390,121         4,106,464
                                                                 Time                                                                           2,501,384         2,732,851
                                                                                                                                                --------------    --------------
                                                                                                   Total deposits                               9,673,102         9,363,614
                                                                                                                                                --------------    --------------
        Short-term borrowings                                                                                                                   212,849           192,318
        Long-term borrowings                                                                                                                    2,726,099         2,933,858
        Junior subordinated debentures issued to capital trusts (includes fair value of $160,478
                               at December 31, 2011 and $161,734 at December 31, 2010 for VNB Capital Trust I)                                  185,598           186,922
        Bank acceptances outstanding                                                                                                            5,903             6,028
        Accrued expenses and other liabilities                                                                                                  174,708           165,881
                                                                                                                                                --------------    --------------
                                                                                                   Total Liabilities                            12,978,259        12,848,621
                                                                                                                                                --------------    --------------
        Shareholders' Equity*
        Preferred stock, no par value, authorized 30,000,000 shares; none issued                                                                -                 -
        Common stock, no par value, authorized 220,974,508 shares; issued 170,209,090 shares
                               at December 31, 2011 and 170,131,085 shares at December 31, 2010                                                 59,955            57,041
        Surplus                                                                                                                                 1,179,135         1,178,325
        Retained earnings                                                                                                                       90,011            79,803
        Accumulated other comprehensive loss                                                                                                    (62,441)          (5,719)
        Treasury stock, at cost (34,776 common shares at December 31, 2011 and 597,459
                               common shares at December 31, 2010)                                                                              (412)             (14,245)
                                                                                                                                                --------------    --------------
                                                                                                   Total Shareholders' Equity                   1,266,248         1,295,205
                                                                                                   Total Liabilities and Shareholders' Equity   $ 14,244,507      $ 14,143,826
        *                      Share data reflects the five percent common stock dividend issued on May 20, 2011.
        




        VALLEY NATIONAL BANCORP
        CONSOLIDATED STATEMENTS OF INCOME (Unaudited)                                       Three Months Ended                              Years Ended
        (in thousands, except for share data)                                               December 31,                                    December 31,
                                                                                            ----------------------------------------------  ----------------------------------------------
                                                                                            2011                    2010                    2011                    2010
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Interest Income
        Interest and fees on loans                                                          $           138,355     $           133,478     $           547,365     543,009
        Interest and dividends on investment securities:
                           Taxable                                                          23,395                  26,732                  108,129                 115,593
                           Tax-exempt                                                       3,230                   2,480                   11,273                  10,366
                           Dividends                                                        1,443                   2,275                   6,655                   7,428
        Interest on federal funds sold and other short-term investments                     149                     125                     402                     416
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
                           Total interest income                                            166,572                 165,090                 673,824                 676,812
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Interest Expense
        Interest on deposits:
                           Savings, NOW and money market                                    5,154                   4,742                   19,876                  19,126
                           Time                                                             11,085                  12,247                  48,291                  55,798
        Interest on short-term borrowings                                                   244                     350                     1,154                   1,345
        Interest on long-term borrowings and junior subordinated debentures                 31,775                  34,610                  129,692                 137,791
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
                           Total interest expense                                           48,258                  51,949                  199,013                 214,060
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Net Interest Income                                                                 118,314                 113,141                 474,811                 462,752
        Provision for losses on non-covered loans and unfunded letters of credit            11,948                  8,721                   31,825                  43,078
        Provision for losses on covered loans                                               3,416                   6,378                   21,510                  6,378
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Net Interest Income After Provision for Credit Losses                               102,950                 98,042                  421,476                 413,296
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Non-Interest Income
        Trust and investment services                                                       1,779                   1,913                   7,523                   7,665
        Insurance commissions                                                               4,131                   2,917                   15,627                  11,334
        Service charges on deposit accounts                                                 5,702                   6,204                   22,610                  25,691
        Gains on securities transactions, net                                               12,034                  6,967                   32,068                  11,598
        Other-than-temporary impairment losses on securities                                (42,775)                -                       (42,775)                (1,393)
                           Portion recognized in other comprehensive income (before taxes)  23,632                  -                       22,807                  (3,249)
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
                           Net impairment losses on securities recognized in earnings       (19,143)                -                       (19,968)                (4,642)
        Trading (losses) gains, net                                                         (839)                   (2,078)                 2,271                   (6,897)
        Fees from loan servicing                                                            981                     1,285                   4,337                   4,919
        Gains on sales of loans, net                                                        2,639                   7,504                   10,699                  12,591
        Gains on sales of assets, net                                                       44                      237                     426                     619
        Bank owned life insurance                                                           1,805                   1,158                   7,380                   6,166
        Change in FDIC loss-share receivable                                                1,414                   6,268                   13,403                  6,268
        Other                                                                               3,225                   3,471                   15,921                  16,015
                           Total non-interest income                                        13,772                  35,846                  112,297                 91,327
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Non-Interest Expense
        Salary and employee benefits expense                                                42,948                  45,332                  176,307                 176,106
        Net occupancy and equipment expense                                                 16,055                  14,495                  64,364                  61,765
        FDIC insurance assessment                                                           3,135                   3,246                   12,759                  13,719
        Amortization of other intangible assets                                             2,206                   974                     9,315                   7,721
        Professional and legal fees                                                         4,853                   2,945                   15,312                  10,137
        Advertising                                                                         2,003                   1,203                   8,373                   4,052
        Other                                                                               13,177                  12,213                  50,158                  44,182
                           Total non-interest expense                                       84,377                  80,408                  336,588                 317,682
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Income Before Income Taxes                                                          32,345                  53,480                  197,185                 186,941
        Income tax expense                                                                  7,528                   15,322                  63,532                  55,771
                                                                                            ----------------------  ----------------------  ----------------------  ----------------------
        Net Income                                                                          $             24,817    $             38,158    $           133,653     $           131,170
        Earnings Per Common Share*:
                           Basic                                                            $                 0.15  $                 0.23  $                 0.79  $                 0.78
                           Diluted                                                          0.15                    0.23                    0.79                    0.78
        Cash Dividends Declared per Common Share*                                           0.17                    0.17                    0.69                    0.69
        Weighted Average Number of Common Shares Outstanding*:
                           Basic                                                            170,185,439             169,426,058             169,928,460             169,112,901
                           Diluted                                                          170,185,880             169,428,992             169,929,590             169,121,584
        ____________
        *  Share data reflects the five percent common stock dividend issued on May 20, 2011.
        




         VALLEY NATIONAL BANCORP
         LOAN PORTFOLIO
         (in thousands)
                                                                 12/31/2011                                    09/30/2011                                        06/30/2011                            03/31/2011                                   12/31/2010
         Non-covered Loans
         Commercial and industrial                               $               1,878,387                     $               1,833,211                         $               1,825,782             $             1,859,626                      $               1,825,066
         Commercial real estate:
                       Commercial real estate                    3,574,089                                     3,524,891                                         3,486,597                             3,457,768                                    3,378,252
                       Construction                              411,003                                       401,166                                           413,951                               418,304                                      428,232
                                                                 -------------------------                     -------------------------                         ----------------------------          -----------------------                      -------------------------
         Total commercial real estate                            3,985,092                                     3,926,057                                         3,900,548                             3,876,072                                    3,806,484
         Residential mortgage                                    2,285,590                                     2,172,601                                         2,147,362                             2,047,898                                    1,925,430
         Consumer:
                       Home equity                               469,604                                       477,517                                           484,812                               492,328                                      512,745
                       Automobile                                772,490                                       785,443                                           807,489                               827,485                                      850,801
                       Other consumer                            136,634                                       122,862                                           116,606                               106,184                                      88,614
                                                                 -------------------------                     -------------------------                         ----------------------------          -----------------------                      -------------------------
         Total consumer loans                                    1,378,728                                     1,385,822                                         1,408,907                             1,425,997                                    1,452,160
                                                                 -------------------------                     -------------------------                         ----------------------------          -----------------------                      -------------------------
         Total non-covered loans                                 $               9,527,797                     $               9,317,691                         $               9,282,599             $             9,209,593                      $               9,009,140
         Covered loans*                                          271,844                                       282,396                                           308,424                               336,576                                      356,655
                                                                 -------------------------                     -------------------------                         ----------------------------          -----------------------                      -------------------------
         Total loans                                             $               9,799,641                     $               9,600,087                         $               9,591,023             $             9,546,169                      $               9,365,795
         _________________________
         * Loans that Valley National Bank will share losses with the FDIC are referred to as "covered loans".
                                                                 Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
                                                                 Net Interest Income on a Tax Equivalent Basis
                                                                 ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Quarter End - 12/31/2011                                                 Quarter End - 09/30/2011                                     Quarter End - 06/30/2011                                                Quarter End - 03/31/2011                             Quarter End - 12/31/2010
                                                                 -----------------------------------------------------------------------  -----------------------------------------------------------  ----------------------------------------------------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                 Average                                       Avg.                       Average                                              Avg.    Average                                      Avg.                       Average                                      Avg.    Average                                      Avg.
         ($ in thousands)                                        Balance                    Interest           Rate                       Balance                Interest                      Rate    Balance                  Interest            Rate                       Balance                  Interest            Rate    Balance                  Interest            Rate
         Assets
         Interest earning assets
         Loans (1)(2)                                            $               9,710,251  $       138,356    5.70%                      $           9,642,366  $                  140,305    5.82%   $             9,619,959  $        135,085    5.62%                      $             9,458,201  $        133,625    5.65%   $             9,458,332  $        133,480    5.64%
         Taxable investments (3)                                 2,406,927                  24,838             4.13%                      2,537,173              28,117                        4.43%   2,698,706                30,193              4.48%                      2,823,185                31,636              4.48%   2,567,952                29,007              4.52%
         Tax-exempt investments (1)(3)                           477,841                    4,970              4.16%                      464,873                4,783                         4.12%   372,002                  3,737               4.02%                      400,049                  3,854               3.85%   401,511                  3,815               3.80%
         Federal funds sold and other
                       interest bearing deposits                 250,912                    149                0.24%                      176,900                110                           0.25%   137,372                  88                  0.26%                      79,208                   55                  0.28%   193,212                  125                 0.26%
                                                                 -------------------------  -----------------  -------------------------  ---------------------  ----------------------------  ------  -----------------------  ------------------  -------------------------  -----------------------  ------------------  ------  -----------------------  ------------------  ------
         Total interest earning assets                           12,845,931                 168,313            5.24%                      12,821,312             173,315                       5.41%   12,828,039               169,103             5.27%                      12,760,643               169,170             5.30%   12,621,007               166,427             5.27%
                                                                                            -----------------  -------------------------                         ----------------------------  ------                           ------------------  -------------------------                           ------------------  ------                           ------------------  ------
         Other assets                                            1,460,742                                                                1,462,471                                                    1,447,244                                                               1,453,613                                            1,478,972
         Total assets                                            $             14,306,673                                                 $         14,283,783                                         $           14,275,283                                                  $           14,214,256                               $           14,099,979
         Liabilities and shareholders' equity
         Interest bearing liabilities:
                       Savings, NOW and money market deposits    $               4,463,682  $           5,154  0.46%                      $           4,395,239  $                      4,961  0.45%   $             4,431,929  $            5,082  0.46%                      $             4,303,555  $            4,679  0.43%   $             4,198,511  $            4,742  0.45%
                       Time deposits                             2,584,980                  11,085             1.72%                      2,782,254              12,424                        1.79%   2,815,223                12,616              1.79%                      2,731,981                12,166              1.78%   2,693,056                12,247              1.82%
                       Short-term borrowings                     185,091                    244                0.53%                      175,636                293                           0.67%   167,864                  276                 0.66%                      241,786                  341                 0.56%   207,027                  350                 0.68%
                       Long-term borrowings (4)                  2,911,526                  31,775             4.37%                      2,942,015              32,026                        4.35%   2,933,165                32,150              4.38%                      3,073,543                33,741              4.39%   3,118,510                34,610              4.44%
                                                                 -------------------------  -----------------  -------------------------  ---------------------  ----------------------------  ------  -----------------------  ------------------  -------------------------  -----------------------  ------------------  ------  -----------------------  ------------------  ------
         Total interest bearing liabilities                      10,145,279                 48,258             1.90%                      10,295,144             49,704                        1.93%   10,348,181               50,124              1.94%                      10,350,865               50,927              1.97%   10,217,104               51,949              2.03%
                                                                                            -----------------  -------------------------                         ----------------------------  ------                           ------------------  -------------------------                           ------------------  ------                           ------------------  ------
         Non-interest bearing deposits                           2,786,865                                                                2,611,057                                                    2,554,909                                                               2,488,726                                            2,529,687
         Other liabilities                                       63,031                                                                   60,849                                                       59,692                                                                  71,802                                               65,048
         Shareholders' equity                                    1,311,498                                                                1,316,733                                                    1,312,501                                                               1,302,863                                            1,288,140
         Total liabilities and shareholders' equity              $             14,306,673                                                 $         14,283,783                                         $           14,275,283                                                  $           14,214,256                               $           14,099,979
         Net interest income/interest rate spread (5)                                       $       120,055    3.34%                                             $                  123,611    3.48%                            $        118,979    3.33%                                               $        118,243    3.33%                            $        114,478    3.24%
         Tax equivalent adjustment                                                          (1,741)                                                              (1,676)                                                        (1,309)                                                                 (1,351)                                              (1,337)
         Net interest income, as reported                                                   $       118,314                                                      $                  121,935                                     $        117,670                                                        $        116,892                                     $        113,141
         Net interest margin (6)                                                                               3.68%                                                                           3.80%                                                3.67%                                                                   3.66%                                                3.59%
         Tax equivalent effect                                                                                 0.06%                                                                           0.06%                                                0.04%                                                                   0.05%                                                0.04%
                                                                                                               -------------------------                                                       ------                                               -------------------------                                               ------                                               ------
         Net interest margin on a fully tax equivalent basis (6)                                               3.74%                                                                           3.86%                                                3.71%                                                                   3.71%                                                3.63%
         _________________________
         (1) Interest income is presented on a tax equivalent basis using a 35 percent federal tax rate.
         (2) Loans are stated net of unearned income and include non-accrual loans.
         (3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
         (4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
         (5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
         (6) Net interest income as a percentage of total average interest earning assets.
        


SOURCE Valley National Bancorp

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Article source: http://www.marketwatch.com/story/valley-national-bancorp-reports-fourth-quarter-earnings-solid-loan-growth-and-net-interest-margin-2012-01-26

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