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Valley National Bancorp Reports Net Income For Second Quarter.

Article Excerpt
WAYNE, N.J., July 18 /PRNewswire-FirstCall/ -- Valley National Bancorp ("Valley"), the holding company for Valley National Bank, announced today second quarter and six months results for 2007. Net income for the second quarter of 2007 was $39.7 million, which includes a $1.8 million net loss on trading securities after taxes, compared to $40.8 million for the same period in 2006, which included a $191 thousand net gain on trading securities after taxes. Adjusted for a five percent stock dividend issued on May 25, 2007, fully diluted earnings per common share were $0.33 for the second quarter of 2007, unchanged from the same quarter of 2006. All common share data presented below was adjusted to reflect the stock dividend.

Net income was $89.1 million for the six months ended June 30, 2007 compared to $81.7 million for the same period in 2006, an increase of 9.1 percent. Fully diluted earnings per common share were $0.74 for the six months ended June 30, 2007 as compared to $0.66 per common share for the six months ended June 30, 2006.

Set forth below are highlights of several significant events that occurred during the second quarter of 2007:

-- Total loans increased $139.7 million from the first quarter as automobile and commercial loans grew by 34.7 percent and 19.4 percent, respectively, on an annualized basis. -- Net interest margin on a fully tax equivalent basis was 3.45 percent, unchanged from the first quarter of 2007. -- During the quarter, Valley unwound and eventually terminated all of a series of interest rate derivative transactions entered into during April 2007 for the purpose of offsetting the volatility in changes in the market value of certain long-term mortgage-backed securities classified as trading securities. The hedged trading securities were sold and primarily reinvested in short-term U.S. treasury securities, short-term other government agencies and short-term corporate debt held at fair value in the trading securities portfolio at June 30, 2007. The termination of the derivatives and hedged securities sold resulted in a $3.0 million net loss recorded in losses on trading securities, net during the second quarter of 2007. -- Net gains on loans held for sale totaled approximately $2.7 million primarily due to the sale of approximately $240 million in residential mortgage loans held at fair value. -- Other non-interest expense includes an offset of $2.7 million in unrealized gains on Valley's junior subordinated debentures issued to capital trust (commonly known as trust preferred securities) and Federal Home Loan Bank advances held at fair value. -- Valley redeemed $20.6 million, or 10 percent of the contractual principal balance, of its outstanding 7.75 percent junior subordinated debentures due on December 31, 2031. Valley's Board of Directors granted management authorization to call, from time to time, all or part of its remaining junior subordinated debentures. -- Valley made an additional $75 million investment in bank owned life insurance to help manage the rising cost of employee benefits. -- Valley repurchased approximately 428 thousand of its common shares at an average price per share of $23.84 pursuant to its publicly announced share repurchase plans on May 14, 2003 and January 17, 2007. -- Valley opened two new branches, including its second branch office in Brooklyn, New York this year. Valley has opened four new branches through June 30, 2007 and intends to open nine additional branch offices by December 31, 2007. Chairman's Comments

Gerald H. Lipkin, Chairman, President and CEO noted that, "Valley's second quarter earnings generated an annualized average return on tangible shareholders' equity of 21.9 percent, while our annualized return on average shareholders' equity for the quarter was 17.0 percent. While we are pleased with our overall performance and credit quality, the relatively flat yield curve environment continues to negatively impact net interest income compared to the same period one year ago. Valley has and will continue to diligently manage operating expenses and its balance sheet to optimize long-term returns for our shareholders.

We would like to affirm that Valley is not a participant in sub-prime residential mortgage lending, negative amortization loan or collateralized debt obligation (CDOs) markets. Valley's historical risk-based underwriting approach continues to be a key element in producing strong loan performance, as evidenced by Valley's current and historically low delinquency rates.

Overall loan volumes improved during the second quarter as compared to the first quarter of 2007 primarily due to auto and commercial loans increasing 34.7 percent and 19.4 percent, respectively, on an annualized basis. Much of the increase in auto loans is attributable to Valley's strategic efforts to expand the geographic presence of its indirect auto loan origination franchise. Nearly 44.0 percent of Valley dealer auto originations were made outside of New Jersey during the second quarter of 2007, as compared to only 33.0 percent in the same period one year ago.

Valley continued its focused branch expansion in northern and central New Jersey and New York City and opened four new branches during the first six months of 2007,...