Valley National Bancorp Reports 34 Percent Increase in Fourth Quarter Results

27 Jan, 2011, 07:00 ET from Valley National Bancorp

WAYNE, N.J., Jan. 27, 2011 /PRNewswire/ -- Valley National Bancorp (NYSE: VLY), the holding company for Valley National Bank, today reported net income for the fourth quarter of 2010 of $38.2 million, $0.24 per diluted common share, as compared to the fourth quarter of 2009 earnings of $28.6 million, after $3.5 million in dividends and accretion on Valley preferred stock (fully redeemed in 2009 under the U.S. Treasury’s TARP Capital Purchase Program), or $0.18 per diluted common share.  See the “Fourth Quarter 2010 Performance Highlights” section below for more details.

Net income for the year ended December 31, 2010 was $131.2 million, $0.81 per diluted common share, compared to 2009 earnings of $96.5 million, after $19.5 million in dividends and accretion on Valley preferred stock, or $0.64 per diluted common share. The increase in net income was largely due to: (i) a 26.4 percent increase in non-interest income, (ii) higher net interest income, resulting from a widening of the net interest margin on an annual basis, and (iii) a decline in the FDIC insurance assessment due to the industry-wide special assessment in 2009, partially offset by (iv) increases in all other non-interest expense categories caused, in part, by two FDIC-assisted acquisitions in March 2010.

Gerald H. Lipkin, Chairman, President and CEO commented that, “We recorded strong fourth quarter and annual results reflecting our solid credit metrics, despite some interest margin compression during the fourth quarter due to the prolonged low level of interest rates. Our ability to generate consistent earnings, while navigating one of the worst economic times in recent history, allowed us the flexibility of maintaining our cash dividend to our shareholders throughout 2010.  We continue to face challenging headwinds in 2011 due to the slow recovery in both our local markets and the U.S. economy.  However, we are confident that our position of capital strength, our ability to evaluate credit and other investment opportunities, and Valley’s commitment to provide excellent service to its customers will continue to benefit our shareholders.”  

Fourth Quarter 2010 Performance Highlights

  • Asset Quality: Total non-accrual loans declined $547 thousand from September 30, 2010 to $105.1 million, or 1.1 percent of our entire loan portfolio of $9.4 billion, at December 31, 2010.  Total loans past due 30 days or more were 1.77 percent of the loan portfolio at December 31, 2010 compared to 1.70 percent at September 30, 2010.  The increase was largely due to one $4.0 million commercial real estate loan, that is matured and in the normal process of renewal, within the past due 30 – 89 days category.  The residential mortgage and home equity loan portfolios totaling nearly 22,000 individual loans had only 253 loans past due 30 days or more at December 31, 2010.  At December 31, 2010, the residential mortgage and home equity loan delinquencies totaled $45.7 million, or 1.88 percent of $2.4 billion in total loans within these categories. See “Credit Quality” section below for more details.
  • Provision for Non-Covered Loan Losses and Unfunded Letters of Credit: The provision for non-covered loan (i.e., loans which are not subject to our loss-sharing agreements with the FDIC) losses and unfunded letters of credit totaled $8.7 million for the fourth quarter of 2010 as compared to $9.3 million for the third quarter of 2010 and $12.2 million for the fourth quarter of 2009. Net loan charge-offs were $4.4 million lower than the provision for non-covered loan losses and unfunded letters of credit during the fourth quarter of 2010 and $1.8 million lower than the net loan charge-offs recorded during the third quarter of 2010. At December 31, 2010, our total allowance for credit losses, net of $6.4 million in reserves for covered loans, was 1.33 percent of non-covered loans at December 31, 2010 as compared to 1.28 percent at September 30, 2010.
  • Provision for Covered Loan Losses:  We recorded a $6.4 million provision for covered loans (i.e., loans subject to our loss-sharing agreements with the FDIC) during the fourth quarter of 2010 due to declines in the expected cash flows caused by credit impairment in certain loan pools.  
  • FDIC Loss-Share Receivable: The $6.4 million increase in the estimated credit losses on certain pools of covered loans during the fourth quarter of 2010 resulted in a partially offsetting increase in our FDIC loss-share receivable.  The change in the FDIC loss-share receivable due to the additional estimated credit losses and our recognition of discount accretion resulting from the present value of the receivable recorded at the acquisition dates resulted in non-interest income of $5.1 million and $1.2 million, respectively, during the fourth quarter of 2010.
  • Residential Mortgage Loans: We originated over $350 million in new and refinanced residential mortgage loans during the fourth quarter of 2010.  Our residential volumes continued to be strong during the quarter due to the historically low level of interest rates and our successful one price refinancing program with total closing costs as low as $499 including title insurance fees.  During the fourth quarter, we recorded $7.5 million in gains on sales of residential mortgage loans due to the sale of the majority of our loan originations, and the sale of $83 million in conforming residential mortgage loans transferred to loans held for sale during the third quarter of 2010.  Based on our internal analysis, we determined the loans transferred and sold were likely to prepay in the short-term due to the current low level of interest rates.
  • Net Interest Margin: Net interest margin on a tax equivalent basis was 3.63 percent in the fourth quarter of 2010 versus 3.78 percent in the third quarter of 2010 and 3.47 percent in the fourth quarter of 2009.  The net interest margin experienced some compression during the fourth quarter of 2010 due to the current low interest rate environment and normal repricing activity and balance reductions within our loan and investment security portfolios.  Additionally, interest income recognized on covered loans declined from the prior linked quarter as a result of lower loan pool balances. However, the majority of our pools of covered loans are performing better than originally expected and increased forecasted cash flows for such pools are expected to benefit the amounts of interest income recognized in future periods.  See the “Net Interest Income and Margin” and “Covered Loans” sections below for more details.
  • Investments: We recognized $7.0 million in net gains on securities transactions during the fourth quarter of 2010 primarily due to the sale of $46 million in certain residential mortgage-backed securities that, in our view, had a high level of prepayment risk given the low level of interest rates, as well as gains realized on $15 million in trust preferred securities that were called for early redemption. No impairment charges were recognized on securities in earnings during the fourth and third quarters of 2010, as compared to $1.0 million during the fourth quarter of 2009.  
  • Trading Mark to Market Impact on Earnings: Net income for the fourth quarter of 2010 included net trading losses totaling $2.1 million ($0.01 per common share).  These trading losses consisted of $1.9 million and $194 thousand in non-cash mark to market losses on our junior subordinated (“trust preferred”) debentures carried at fair value, and the fair value of our trading securities portfolio, respectively. The fourth quarter of 2009 included net trading losses of $1.5 million ($0.01 per common share) mainly due to a change in market value of the trust preferred debentures.
  • Business Combination: In December 2010, Masters Coverage Corp., an all-line insurance agency which is a wholly-owned subsidiary of Valley National Bank, acquired certain assets of S&M Klein Co. Inc., an independent insurance agency located in Queens, New York. The purchase price totaled $5.3 million, consisting of $3.3 million in cash and earn-out payments totaling $2.0 million that are payable over a four year period, subject to certain customer retention and earnings performance. The transaction generated goodwill and other intangible assets totaling $1.9 million and $3.3 million, respectively.  The earnings from the acquired assets are expected to be positive, but also immaterial, to our future consolidated results of operations.  

Net Interest Income and Margin

Net interest income on a tax equivalent basis was $114.5 million for the fourth quarter of 2010, a $4.7 million decrease from the third quarter of 2010 and an increase of $1.6 million from the fourth quarter of 2009. The linked quarter decrease was primarily due to a decline in interest income caused by the prepayment and sale of higher yielding loans and investment securities, loan refinance activity in the current low interest rate environment, a decline in accretion on pooled loans resulting from lower balances, and a general lack of loan growth with the exception of our residential mortgage loan portfolio.  However, interest expense on time deposits declined $986 thousand due to maturing high cost time deposits and lower average balances, and partially mitigated the negative impact of the decrease in interest income during the quarter.

The net interest margin on a tax equivalent basis was 3.63 percent for the fourth quarter of 2010, an increase of 16 basis points from the fourth quarter of 2009, and a decrease of 15 basis points from 3.78 percent for the linked quarter ended September 30, 2010. The yield on average interest earning assets decreased by 19 basis points on a linked quarter basis mainly due to a 18 basis point decrease in the yield on average loans resulting mainly from new and refinanced loans at lower interest rates and a $2.0 million decline in the accretion recognized on our pools of the covered loans acquired in FDIC-assisted transactions.  The yield on our taxable and non-taxable investments also declined eight and nine basis points, respectively, from the linked quarter of 2010 as principal paydowns and sales of higher yielding investments were partly reinvested in lower yielding securities during the period. The cost of average interest bearing liabilities declined 2 basis points from the third quarter of 2010 mainly due to a 10 basis point decrease in the cost of average time deposits caused by the continued run-off of higher cost deposits.  Our cost of total deposits was 0.72 percent for the fourth quarter of 2010 compared to 0.76 percent for the three months ended September 30, 2010.  

Credit Quality

Total loan delinquencies as a percent of total loans were 1.77 percent at December 31, 2010 as compared to 1.70 percent at September 30, 2010 and 1.61 percent at December 31, 2009.  With a loan portfolio totaling approximately $9.4 billion, net loan charge-offs for the fourth quarter of 2010 were $4.3 million compared to $6.1 million for the third quarter of 2010, and $13.6 million for the fourth quarter of 2009.

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, 2010, September 30, 2010 and December 31, 2009:

December 31, 2010

September 30, 2010

December 31, 2009

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*

$      58,229

3.19%

$      55,346

3.03%

$      50,932

2.83%

Commercial and construction real

estate loans:

Commercial real estate

15,755

0.47%

15,980

0.47%

10,253

0.29%

Construction

14,162

3.31%

14,485

3.29%

15,263

3.47%

Total commercial and construction

real estate loans:

29,917

0.79%

30,465

0.79%

25,516

0.65%

Residential mortgage loans

9,128

0.47%

8,196

0.43%

5,397

0.28%

Consumer loans:

Home equity

2,345

0.46%

1,628

0.31%

1,680

0.30%

Auto and other consumer

12,154

1.29%

11,952

1.24%

13,800

1.23%

Total consumer loans

14,499

1.00%

13,580

0.91%

15,480

0.92%

Covered loans

6,378

1.79%

-

0.00%

-

0.00%

Unallocated

8,353

NA

8,128

NA

6,330

NA

Allowance for credit losses

$    126,504

1.35%

$    115,715

1.23%

$    103,655

1.11%

* Includes the reserve for unfunded letters of credit.

Total non-performing assets (“NPAs”), consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets, totaled $117.3 million, or 1.24 percent of loans and NPAs at December 31, 2010 compared to $112.1 million, or 1.18 percent of loans and NPAs at September 30, 2010.  The $5.2 million increase in non-performing assets was mainly due to a $5.8 million increase in our non-covered OREO assets.  

Non-accrual loans slightly decreased to $105.1 million at December 31, 2010 as compared to $105.6 million at September 30, 2010.  Although the timing of collection is uncertain, management believes 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 $154.3 million at December 31, 2010 and had $15.2 million in related specific reserves included in our total allowance for loan losses. OREO and other repossessed assets, excluding OREO subject to loss-sharing agreements with the FDIC, totaled a combined $12.2 million at December 31, 2010 as compared to $6.5 million at September 30, 2010.  The increase from the linked quarter was mainly due to one additional OREO property with a carrying value of $5.3 million at December 31, 2010.

Loans past due 90 days or more and still accruing decreased to $2.5 million, or 0.03 percent of total loans at December 31, 2010 compared to $4.4 million, or 0.05 percent at September 30, 2010 primarily due to a $1.4 million decrease in commercial real estate loans within this delinquency category.  

Troubled debt restructured loans (“restructured” loans), with modified terms and not reported as loans 90 days or more past due and still accruing or non-accrual, are performing restructured loans to customers experiencing financial difficulties where a concession has been granted.  All loan modifications are made on a case-by-case basis.  The majority of our loan modifications that are considered restructured loans involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications rarely result in the forgiveness of principal or interest. In addition, we frequently obtain additional collateral or guarantor support when modifying such loans.

Valley has continued its efforts to assist customers by modifying certain performing loans during the fourth quarter of 2010. As a result, our performing restructured loans increased to $89.7 million at December 31, 2010 and consisted of 44 loans (primarily in the commercial and industrial loan and mortgage loan portfolios) as compared to 17 loans totaling $48.2 million at September 30, 2010.  On an aggregate basis, the $89.7 million in restructured loans at December 31, 2010 had a weighted average modified interest rate of approximately 5.14 percent as compared to a yield of 5.64 percent on the entire loan portfolio for the fourth quarter of 2010.

Loans and Deposits

Overall, total loans remained relatively unchanged at approximately $9.4 billion at December 31, 2010 as compared to September 30, 2010.  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 decreased $45.5 million to approximately $9.0 billion at December 31, 2010 from September 30, 2010.  The linked quarter decrease was mainly comprised of decreases in commercial real estate, automobile, home equity, and construction loans of $27.8 million, $26.5 million, $18.4 million and $12.7 million, respectively, partially offset by an increase of $35.0 million in residential mortgage loans. The decreases in the aforementioned loan categories are mainly due to the persistently weak economic conditions, and its negative impact on the amount of new quality loan opportunities in our primary markets.  However, the residential mortgage loan portfolio increased over seven percent on an annualized basis during the fourth quarter of 2010 due to the success of our low-cost refinance program, and the decision to retain, rather than sell in the secondary market, some fixed mortgage loans (within the $350 million originations during the period) meeting certain collateral and interest rate levels.

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 $356.7 million at December 31, 2010 as compared to $377.0 million at September 30, 2010. These loans are accounted for on a pool basis, and the pools are considered to be performing loans.  During the fourth quarter, we recognized $6.4 million of credit impairment attributable to various loan pools established at the acquisition dates.  In conjunction with the credit impairment, Valley recorded $5.1 million of non-interest income as the FDIC loss-share receivable was increased to reflect the FDIC’s share of the potential credit impairment losses.  Although we recognized credit impairment during the quarter, on an aggregate basis the acquired pools of covered loans are performing better than originally expected, and based on our current estimates, we will receive more future cash flows than originally modeled at the acquisition dates.  The forecasted increase in cash flows will be recorded as a prospective adjustment to our interest income on loans over future periods.  Additionally, as the future projected cash flows materialize, we will reduce the FDIC loss-share receivable by an amount equal to approximately 80 percent of the amount received.

We may experience declines in the loan portfolio during 2011 and beyond due to a slow economic recovery cycle, increased competition for quality borrowers, or a change in asset/liability management strategy.

Deposits.  Total deposits increased $94.9 million to approximately $9.4 billion at December 31, 2010 from September 30, 2010.  Non-interest bearing deposits increased $62.8 million as compared to September 30, 2010 mainly due to general increases in both commercial and retail deposits.  Time deposits also increased $57.0 million during the fourth quarter due to higher municipal and retail balances as we increased rates on certain time deposit products.  However, savings, NOW, and money market deposits decreased $24.8 million as compared to September 30, 2010 largely due to lower commercial money market deposit balances.

Non-Interest Income

Fourth quarter of 2010 compared with fourth quarter of 2009

Non-interest income for the fourth quarter of 2010 increased $11.3 million to $35.8 million as compared to $24.6 million for the same period of 2009.  The change in the FDIC loss-share receivable due to additional estimated credit losses on covered loans and discount accretion resulting from the present value of the receivable recorded at the acquisition dates resulted in an increase of $6.3 million in non-interest income as compared to fourth quarter of 2009.  Net gains on sales of loans increased $5.8 million to $7.5 million for the fourth quarter of 2010 mainly due to a $3.9 million gain recognized on the sale of approximately $83 million of conforming residential mortgage loans transferred to loans held for sale during the third quarter of 2010 and a higher volume of loans originated for sale during the fourth quarter of 2010.  Additionally, net impairment losses on securities declined $1.0 million as compared to the same period in 2009.  Partially offsetting these increases to non-interest income, net gains on securities transactions declined $792 thousand and net trading losses increased $530 thousand as compared to the fourth quarter of 2009.

Fourth quarter of 2010 compared with third quarter of 2010

Non-interest income for the fourth quarter of 2010 increased $18.5 million from $17.3 million for the quarter ended September 30, 2010.  Net gains on securities transactions increased $6.9 million to $7.0 million during the fourth quarter of 2010 as compared to the linked quarter. The fourth quarter gains primarily resulted from the sale of $46 million in certain residential mortgage-backed securities, as well as gains realized on $15 million in trust preferred securities that were called for early redemption.  The change in the FDIC loss-share receivable resulted in an increase of $6.3 million in non-interest income as compared to the third quarter of 2010.  Net gains on sales of loans increased $6.0 million as compared to the linked quarter mainly due to higher sales volumes during the fourth quarter of 2010.

Non-Interest Expense

Fourth quarter of 2010 compared with fourth quarter of 2009

Non-interest expense increased $3.3 million to $80.4 million for the three months ended December 31, 2010 from $77.1 million for the same period of 2009. Salaries and employee benefit expense increased $3.1 million to $45.3 million for the fourth quarter of 2010 primarily due to the resumption of cash incentive compensation accruals during the 2010 period and normal annual pay increases.  Professional and legal fees increased $1.3 million from $1.6 million in the same period in 2009 due to general increases caused by the FDIC-assisted transactions and other corporate matters.

Fourth quarter of 2010 compared with third quarter of 2010

Non-interest expense increased by $1.5 million from $78.9 million for the linked quarter ended September 30, 2010.  Salary and employee benefit expense increased $1.7 million from $43.6 million for the third quarter of 2010 mainly due to a $1.3 million increase in stock-based compensation expense mostly related to immediate expensing of stock awards to retirement eligible employees and higher cash incentive compensation accruals, partially offset by lower payroll taxes.  Other non-interest expense increased by $1.5 million to $12.2 million for the fourth quarter of 2010 mainly due to a $989 thousand increase in write-downs of affordable housing investments recorded in other assets.  Partially offsetting these increases, amortization of other intangible assets declined $1.6 million from $2.6 million in the linked quarter mainly due to a $945 thousand recovery of impairment charges on certain loan servicing rights in the fourth quarter of 2010 as compared to $811 thousand in impairment charges recognized during the third quarter of 2010.

Income Tax Expense

Income tax expense was $15.3 million and $14.7 million for the fourth quarter of 2010 and 2009, respectively.  However, the effective tax rate declined 2.9 percent to 28.6 percent for the three months ended December 31, 2010 as compared to 31.5 percent for the same period one year ago. The decrease in the effective tax rate from the 2009 period reflects an increase in our investment in tax credits.  

Income tax expense was $55.8 million and $51.5 million for the years ended December 31, 2010 and 2009, respectively.  However, the effective tax rate decreased to 29.8 percent for the 2010 annual period from 30.7 percent for 2009. The decrease in the effective tax rate from the 2009 period is mainly due to an increase in our investment in tax credits.  

For 2011, we anticipate that our effective tax rate will approximate 31 percent.  

About Valley

Valley is a regional bank holding company with over $14 billion in assets, headquartered in Wayne, New Jersey. Its principal subsidiary, Valley National Bank, currently operates 198 branches in 134 communities serving 14 counties throughout northern and central New Jersey, Manhattan, Brooklyn and Queens. Valley National Bank is the largest commercial bank 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. Valley National Bank offers a wide range of deposit products, mortgage loans and cash management services to consumers and businesses including products tailored for the medical, insurance and leasing business. Valley National Bank’s comprehensive delivery channels enable customers to bank in person, by telephone or online.

For more information about Valley National Bank and its products and services, please visit www.valleynationalbank.com or call Customer Service 24/7 at 1-800-522-4100.

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 continued weakness or unexpected decline in the U.S. economy, in particular in New Jersey and the New York Metropolitan area;
  • 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;
  • a continued or unexpected decline in real estate values within our market areas;
  • declines in value in our investment portfolio;
  • 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 may disrupt our business;
  • 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 possibility that the expected benefits of the LibertyPointe Bank and The Park Avenue Bank acquisitions will not be fully realized, including lower than expected cash flows from covered loans;
  • other unexpected material adverse changes in our operations or earnings.

A detailed discussion of these and other factors that could affect our results is included in our SEC filings, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and our Annual Report on Form 10-K for the year ended December 31, 2009.  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)

2010

2010

2009

2010

2009

FINANCIAL DATA:

Net interest income

$             113,141

$             117,734

$             111,569

$       462,752

$       449,314

Net interest income - FTE (3)

114,478

119,212

112,922

468,342

454,541

Non-interest income (2)

35,846

17,328

24,577

91,327

72,251

Non-interest expense

80,408

78,947

77,084

317,682

306,028

Income tax expense

15,322

14,168

14,739

55,771

51,484

Net income

38,158

32,639

32,098

131,170

116,061

Dividends on preferred stock and accretion

-

-

3,528

-

19,524

Net income available to common stockholders

38,158

32,639

28,570

131,170

96,537

Weighted average number of common

shares outstanding: (4)

Basic

161,358,150

161,121,214

156,547,672

161,059,906

151,675,691

Diluted

161,360,945

161,122,351

156,549,123

161,068,175

151,676,409

Per common share data: (4)

Basic earnings

$                   0.24

$                   0.20

$                   0.18

$             0.81

$             0.64

Diluted earnings

0.24

0.20

0.18

0.81

0.64

Cash dividends declared

0.18

0.18

0.18

0.72

0.72

Book value

8.02

7.93

7.80

8.02

7.80

Tangible book value (1)

5.89

5.84

5.80

5.89

5.80

Tangible common equity to tangible

assets (1)

6.90

%

6.84

%

6.68

%

6.90

%

6.68

%

Closing stock price - high

$                 14.42

$                 14.88

$                 13.51

$           15.95

$           18.01

Closing stock price - low

12.61

12.42

11.26

12.42

7.98

CORE ADJUSTED FINANCIAL DATA: (1)

Net income available to common stockholders, as adj.

$               38,158

$               32,639

$               29,208

$       134,075

$       100,522

Basic earnings per share, as adjusted

0.24

0.20

0.19

0.83

0.66

Diluted earnings per share, as adjusted

0.24

0.20

0.19

0.83

0.66

FINANCIAL RATIOS:

Net interest margin

3.59

%

3.73

%

3.43

%

3.65

%

3.45

%

Net interest margin - FTE (3)

3.63

3.78

3.47

3.69

3.49

Annualized return on average assets

1.08

0.93

0.90

0.93

0.81

Annualized return on average shareholders' equity

11.85

10.24

9.93

10.32

8.64

Annualized return on average tangible shareholders' equity (1)

16.06

13.86

13.19

13.97

11.34

Efficiency ratio (5)

53.97

58.45

56.62

57.34

58.67

CORE ADJUSTED FINANCIAL

RATIOS: (1)

Annualized return on average assets, as adjusted

1.08

%

0.93

%

0.92

%

0.95

%

0.84

%

Annualized return on average shareholders' equity, as adjusted

11.85

10.24

10.12

10.55

8.94

Annualized return on avg tangible shareholders' equity, as adjusted

16.06

13.86

13.45

14.28

11.73

Efficiency ratio, as adjusted

53.97

58.45

56.20

56.86

57.97

AVERAGE BALANCE SHEET ITEMS:

Assets

$        14,099,979

$        14,050,659

$        14,296,346

$  14,119,230

$  14,277,957

Interest earning assets

12,621,007

12,615,556

13,009,257

12,679,756

13,031,646

Loans

9,458,332

9,474,723

9,464,300

9,474,994

9,705,909

Interest bearing liabilities

10,217,104

10,302,898

10,592,119

10,363,969

10,585,800

Deposits

9,421,254

9,454,380

9,565,443

9,497,664

9,414,293

Shareholders' equity

1,288,140

1,274,742

1,293,380

1,270,778

1,342,790

As of and For the Period Ended

December 31,

September 30,

December 31,

($ in thousands)

2010

2010

2009

BALANCE SHEET ITEMS:

Assets

$        14,143,826

$        14,087,611

$        14,284,153

Total loans

9,365,795

9,431,697

9,370,071

Non-covered loans

9,009,140

9,054,661

9,370,071

Deposits

9,363,614

9,268,703

9,547,285

Shareholders' equity

1,295,205

1,278,019

1,252,854

Total Tier 1 common capital (1)

967,015

959,092

961,975

CAPITAL RATIOS:

Tier 1 leverage ratio

8.31

%

8.27

%

8.14

%

Risk-based capital - Tier 1

10.94

10.73

10.64

Risk-based capital - Total Capital

12.91

12.58

12.54

Tier 1 common capital ratio (1)

9.25

9.07

8.99

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

ALLOWANCE FOR CREDIT LOSSES:

2010

2010

2009

2010

2009

Beginning balance - Allowance for credit losses

$             115,715

$             112,504

$             105,054

$       103,655

$         94,738

Loans charged-off:

Commercial and industrial

(1,593)

(3,223)

(5,095)

(15,475)

(16,981)

Commercial real estate

(100)

(307)

(2,808)

(1,823)

(3,110)

Construction

(1,314)

(5)

(1,197)

(1,738)

(1,197)

Residential mortgage

(730)

(844)

(1,731)

(3,741)

(3,488)

Other consumer

(2,009)

(2,485)

(3,580)

(10,882)

(17,689)

(5,746)

(6,864)

(14,411)

(33,659)

(42,465)

Charged-off loans recovered:

Commercial and industrial

804

187

223

4,121

449

Commercial real estate

17

19

30

156

75

Construction

-

-

-

-

-

Residential mortgage

17

28

8

97

36

Other consumer

598

533

526

2,678

2,830

1,436

767

787

7,052

3,390

Net charge-offs

(4,310)

(6,097)

(13,624)

(26,607)

(39,075)

Provision charged for credit losses

15,099

9,308

12,225

49,456

47,992

Ending balance - Allowance for credit losses

$             126,504

$             115,715

$             103,655

$       126,504

$       103,655

Components of allowance for credit losses:

Allowance for non-covered loan losses

$             118,326

$             113,786

$             101,990

$       118,326

$       101,990

Allowance for covered loan losses

6,378

-

-

6,378

-

Allowance for unfunded letters of credit

1,800

1,929

1,665

1,800

1,665

Allowance for credit losses

$             126,504

$             115,715

$             103,655

$       126,504

$       103,655

Components of provision for credit losses:

Provision for non-covered loan losses

$                 8,850

$                 9,238

$               12,168

$         42,943

$         47,821

Provision for covered loan losses

6,378

-

-

6,378

-

Provision for unfunded letters of credit

(129)

70

57

135

171

Provision for credit losses

$               15,099

$                 9,308

$               12,225

$         49,456

$         47,992

Annualized ratio of net charge-offs to average loans outstanding

0.18

0.26

%

0.58

%

0.28

%

0.40

%

Allowance for non-covered loan losses as a % of non-covered loans

1.31

1.26

1.09

1.31

1.09

Allowance for credit losses as a % of total loans

1.35

1.23

1.11

1.35

1.11

As of and For the Period Ended

December 31,

September 30,

December 31,

ASSET QUALITY (NON-COVERED

ASSETS): (6)

2010

2010

2009

Accruing past due loans:

($ in thousands)

30 to 89 days past due:

Commercial and industrial

$               13,852

$           9,917

$         11,949

Commercial real estate

14,563

7,281

4,539

Construction

2,804

3,750

1,834

Residential mortgage

12,682

13,426

12,462

Other consumer

14,638

15,937

22,835

Total 30 to 89 days past due

58,539

50,311

53,619

90 or more days past due:

Commercial and industrial

12

722

2,191

Commercial real estate

-

1,424

250

Construction

196

-

-

Residential mortgage

1,556

1,297

1,421

Other consumer

723

924

1,263

Total 90 or more days past due

2,487

4,367

5,125

Total accruing past due loans

$               61,026

$         54,678

$         58,744

Non-accrual loans:

Commercial and industrial

$               13,721

$         16,967

$         17,424

Commercial real estate

32,981

29,833

29,844

Construction

27,312

29,535

19,905

Residential mortgage

28,494

27,198

22,922

Other consumer

2,547

2,069

1,869

Total non-accrual loans

105,055

105,602

91,964

Other real estate owned (7)

10,498

4,698

3,869

Other repossessed assets

1,707

1,849

2,565

Total non-performing assets ("NPAs")

$             117,260

$       112,149

$         98,398

Troubled debt restructured loans (performing)

$               89,696

$         48,229

$         19,072

Total non-accrual loans as a % of loans

1.12

%

1.12

%

0.98

%

Total NPAs as a % of loans and NPAs

1.24

1.18

1.04

Total accruing past due and non-accrual loans as a % of loans (7)

1.77

1.70

1.61

Allowance for non-covered loan losses as a % of non-accrual loans

112.63

107.75

110.90

NOTES TO SELECTED FINANCIAL DATA

(1) This press release contains certain supplemental financial information, described in the following notes, which has been determined by methods other than 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)

2010

2010

2009

2010

2009

Tangible book value per common share:

Common shares outstanding

161,460,596

161,123,404

160,637,298

161,460,596

160,637,298

Shareholders' equity

$          1,295,205

$          1,278,019

$          1,252,854

$    1,295,205

$    1,252,854

Less: Goodwill and other intangible assets

(343,541)

(337,431)

(320,729)

(343,541)

(320,729)

Tangible shareholders' equity

$             951,664

$             940,588

$             932,125

$       951,664

$       932,125

   Tangible book value

$5.89

$5.84

$5.80

$5.89

$5.80

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)

2010

2010

2009

2010

2009

Annualized return on average tangible equity:

Net income

$               38,158

$               32,639

$               32,098

$       131,170

$       116,061

Average shareholders' equity

1,288,140

1,274,742

1,293,380

1,270,778

1,342,790

Less: Average goodwill and other intangible assets

(337,662)

(333,091)

(319,663)

(331,667)

(319,756)

   Average tangible shareholders' equity

$             950,478

$             941,651

$             973,717

$       939,111

$    1,023,034

   Annualized return on average tangible

   shareholders' equity

16.06%

13.86%

13.19%

13.97%

11.34%

Adjusted net income available to common stockholders:

Net income, as reported

$               38,158

$               32,639

$               32,098

$       131,170

$       116,061

Net impairment losses on securities recognized in earnings (net of tax)

-

-

638

2,905

3,985

Net income, as adjusted

38,158

32,639

32,736

134,075

120,046

Dividends on preferred stock and accretion

-

-

3,528

-

19,524

   Net income available to common  stockholders, as adj.

$               38,158

$               32,639

$               29,208

$       134,075

$       100,522

Adjusted per common share data:

Net income available to common stockholders, as adj.

$               38,158

$               32,639

$               29,208

$       134,075

$       100,522

Average number of basic shares outstanding

161,358,150

161,121,214

156,547,672

161,059,906

151,675,691

   Basic earnings, as adjusted

$                   0.24

$                   0.20

$                   0.19

$             0.83

$             0.66

Average number of diluted shares outstanding

161,360,945

161,122,351

156,549,123

161,068,175

151,676,409

   Diluted earnings, as adjusted

$                   0.24

$                   0.20

$                   0.19

$             0.83

$             0.66

Adjusted annualized return on average assets:

Net income, as adjusted

$               38,158

$               32,639

$               32,736

$       134,075

$       120,046

Average assets

$        14,099,979

$        14,050,659

$        14,296,346

$  14,119,230

$  14,277,957

   Annualized return on average assets,

   as adjusted

1.08%

0.93%

0.92%

0.95%

0.84%

Adjusted annualized return on average shareholders' equity:

Net income, as adjusted

$               38,158

$               32,639

$               32,736

$       134,075

$       120,046

Average shareholders' equity

1,288,140

1,274,742

1,293,380

1,270,778

1,342,790

   Annualized return on average

   shareholders' equity, as adjusted

11.85%

10.24%

10.12%

10.55%

8.94%

Adjusted annualized return on average tangible shareholders' equity:

Net income, as adjusted

$               38,158

$               32,639

$               32,736

$       134,075

$       120,046

Average tangible shareholders' equity

950,478

941,651

973,717

939,111

1,023,034

   Annualized ret. on avg. tangible shareholders' equity, as adjusted

16.06%

13.86%

13.45%

14.28%

11.73%

Adjusted efficiency ratio:

Non-interest expense

$               80,408

$               78,947

$               77,084

$       317,682

$       306,028

Net interest income

113,141

117,734

111,569

462,752

449,314

Non-interest income

35,846

17,328

24,577

91,327

72,251

Add: Net impairment losses on securities

  recognized in earnings

-

-

1,004

4,642

6,352

   Gross operating income, as adjusted

$             148,987

$             135,062

$             137,150

$       558,721

$       527,917

   Efficiency ratio, as adjusted

53.97%

58.45%

56.20%

56.86%

57.97%

Tangible common equity to tangible assets:

Tangible shareholders' equity

$             951,664

$             940,588

$             932,125

$       951,664

$       932,125

Total assets

14,143,826

14,087,611

14,284,153

14,143,826

14,284,153

Less: Goodwill and other intangible assets

(343,541)

(337,431)

(320,729)

(343,541)

(320,729)

Tangible assets

$        13,800,285

$        13,750,180

$        13,963,424

$  13,800,285

$  13,963,424

   Tangible common equity to tangible assets

6.90%

6.84%

6.68%

6.90%

6.68%

NOTES TO SELECTED FINANCIAL DATA - CONTINUED

Tier 1 Common Capital and the Tier 1 Common Ratio are non-GAAP financial measures.  Valley's management believes Tier 1 Common Capital and the Tier 1 Common Ratio are useful because they are measures used by banking regulators in evaluating a company's financial condition and capital strength and thus investors desire to see this information.  A reconciliation of Tier 1 Common to Valley's common stockholder's equity, and the Tier 1 Common Ratio to Valley's Tier 1 Capital Ratio are included below.  Tier 1 Common Capital and the Tier 1 Common Ratio were developed by the banking regulators.  Tier 1 Common Capital is defined as Tier 1 Capital less non-common elements including qualifying trust preferred securities.

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

($ in thousands)

2010

2010

2009

2010

2009

Tier 1 common:

Common shareholders' equity

$          1,295,205

$          1,278,019

$          1,252,854

$    1,295,205

$    1,252,854

Less :  Net unrealized gains on securities available

for sale *

(13,950)

(14,902)

(3,446)

(13,950)

(3,446)

Plus:  Accumulated net losses on cash flow hedges, net of tax

708

5,240

2,716

708

2,716

Plus:  Pension liability adjustment, net of tax

18,398

18,352

19,111

18,398

19,111

Less:  Intangible assets:

            Goodwill

(317,891)

(315,975)

(296,424)

(317,891)

(296,424)

            Other disallowed

            intangible assets

(15,455)

(11,642)

(12,836)

(15,455)

(12,836)

Tier 1 common capital

967,015

959,092

961,975

967,015

961,975

Trust preferred securities

176,313

176,313

176,313

176,313

176,313

Total Tier 1 capital

$          1,143,328

$          1,135,405

$          1,138,288

$    1,143,328

$    1,138,288

Risk-weighted assets (under Federal Reserve Board

Capital Regulatory Guidelines (RWA)

$        10,453,352

$        10,579,775

$        10,702,224

$  10,453,352

$  10,702,224

Tier 1 capital ratio (Total tier 1 capital / RWA)

10.94%

10.73%

10.64%

10.94%

10.64%

Tier 1 common ratio (Total tier 1 common / RWA)

9.25%

9.07%

8.99%

9.25%

8.99%

____________

*  Tier 1 Capital excludes net unrealized gains (losses) on available-for sale debt securities and net unrealized gains on available-for-sale equity securities

with readily determinable fair values, in accordance with regulatory risk-based capital guidelines.  In arriving at Tier 1 Capital, institutions are required to

deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax.

(2) Non-interest income includes net trading (losses) gains:

Trading securities

$                  (194)

$                  (517)

$                    776

$          (1,056)

$           5,394

Junior subordinated debentures

(1,884)

(2,110)

(2,324)

(5,841)

(15,828)

  Total trading losses, net

$               (2,078)

$               (2,627)

$               (1,548)

$          (6,897)

$        (10,434)

(3)

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.

(4)

Share data reflects the five percent common stock dividend issued on May 21, 2010.

(5)

The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income.

(6)

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.  Fair value of these loans as of acquisition includes estimates of credit losses. These loans are accounted for on a pool basis, and the pools are considered to be performing.

(7)

Excludes OREOs that is related to the LibertyPointe Bank and The Park Avenue Bank FDIC-assisted transactions.  OREOs related to the FDIC-assisted transactions, which totaled $7.8 million and $12.5 million at December 31, 2010 and September 30, 2010, respectively, is subject to the loss-sharing agreements with the FDIC.

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,

2010

2009

Assets

Cash and due from banks

$        302,629

$        305,678

Interest bearing deposits with banks

63,657

355,659

Investment securities:

Held to maturity, fair value of $1,898,872 at December 31, 2010 and $1,548,006 at December 31, 2009

1,923,993

1,584,388

Available for sale

1,035,282

1,352,481

Trading securities

31,894

32,950

Total investment securities

2,991,169

2,969,819

Loans held for sale, at fair value

58,958

25,492

Non-covered loans

9,009,140

9,370,071

Covered loans

356,655

-

Less: Allowance for loan losses

(124,704)

(101,990)

Net loans

9,241,091

9,268,081

Premises and equipment, net

265,570

266,401

Bank owned life insurance

304,956

304,031

Accrued interest receivable

59,126

56,245

Due from customers on acceptances outstanding

6,028

6,985

FDIC loss-share receivable

89,359

-

Goodwill

317,891

296,424

Other intangible assets, net

25,650

24,305

Other assets

417,742

405,033

Total Assets

$   14,143,826

$   14,284,153

Liabilities

Deposits:

Non-interest bearing

$     2,524,299

$     2,420,006

Interest bearing:

Savings, NOW and money market

4,106,464

4,044,912

Time

2,732,851

3,082,367

Total deposits

9,363,614

9,547,285

Short-term borrowings

192,318

216,147

Long-term borrowings

2,933,858

2,946,320

Junior subordinated debentures issued to capital trusts (includes fair value of $161,734

at December 31, 2010 and $155,893 at December 31, 2009 for VNB Capital Trust I)

186,922

181,150

Bank acceptances outstanding

6,028

6,985

Accrued expenses and other liabilities

165,881

133,412

Total Liabilities

12,848,621

13,031,299

Shareholders' Equity*

Preferred stock, no par value, authorized 30,000,000 shares; none issued

-

-

Common stock, no par value, authorized 210,451,912 shares; issued 162,058,055 shares

 at December 31, 2010 and 162,042,502 shares at December 31, 2009

57,041

54,293

Surplus

1,178,325

1,178,992

Retained earnings

79,803

73,592

Accumulated other comprehensive loss

(5,719)

(19,816)

Treasury stock, at cost (597,459 common shares at December 31, 2010 and 1,405,204

common shares at December 31, 2009)

(14,245)

(34,207)

Total Shareholders' Equity

1,295,205

1,252,854

Total Liabilities and Shareholders' Equity

$   14,143,826

$   14,284,153

____________

* Share data reflects the five percent common stock dividend issued on May 21, 2010.

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended

Years Ended

(in thousands, except for share data)

December 31,

December 31,

2010

2009

2010

2009

Interest Income

Interest and fees on loans

$           133,478

$           136,533

$

543,009

$

561,252

Interest and dividends on investment securities:

    Taxable

26,732

29,630

115,593

131,792

    Tax-exempt

2,480

2,507

10,366

9,682

    Dividends

2,275

2,038

7,428

8,513

Interest on federal funds sold and other short-term investments

125

299

416

945

    Total interest income

165,090

171,007

676,812

712,184

Interest Expense

Interest on deposits:

    Savings, NOW and money market

4,742

6,573

19,126

24,894

    Time

12,247

17,285

55,798

93,403

Interest on short-term borrowings

350

409

1,345

4,026

Interest on long-term borrowings and junior subordinated debentures

34,610

35,171

137,791

140,547

    Total interest expense

51,949

59,438

214,060

262,870

Net Interest Income

113,141

111,569

462,752

449,314

Provision for non-covered loan losses and unfunded letters of credit

8,721

12,225

43,078

47,992

Provision for covered loan losses

6,378

-

6,378

-

Net Interest Income After Provision for Credit Losses

98,042

99,344

413,296

401,322

Non-Interest Income

Trust and investment services

1,913

1,858

7,665

6,906

Insurance commissions

2,917

2,150

11,334

10,224

Service charges on deposit accounts

6,204

6,707

25,691

26,778

Gains on securities transactions, net

6,967

7,759

11,598

8,005

Other-than-temporary impairment losses on securities

-

(434)

(1,393)

(6,339)

    Portion recognized in other comprehensive income (before taxes)

-

(570)

(3,249)

(13)

    Net impairment losses on securities recognized in earnings

-

(1,004)

(4,642)

(6,352)

Trading losses, net

(2,078)

(1,548)

(6,897)

(10,434)

Fees from loan servicing

1,285

1,254

4,919

4,839

Gains on sales of loans, net

7,504

1,662

12,591

8,937

Gains on sales of assets, net

237

128

619

605

Bank owned life insurance

1,158

1,511

6,166

5,700

Change in FDIC loss-share receivable

6,268

-

6,268

-

Other

3,471

4,100

16,015

17,043

    Total non-interest income

35,846

24,577

91,327

72,251

Non-Interest Expense

Salary and employee benefits expense

45,332

42,204

176,106

163,746

Net occupancy and equipment expense

14,495

14,627

61,765

58,974

FDIC insurance assessment

3,246

3,342

13,719

20,128

Amortization of other intangible assets

974

1,350

7,721

6,887

Professional and legal fees

2,945

1,612

10,137

7,907

Advertising

1,203

1,504

4,052

3,372

Other

12,213

12,445

44,182

45,014

    Total non-interest expense

80,408

77,084

317,682

306,028

Income Before Income Taxes

53,480

46,837

186,941

167,545

Income tax expense

15,322

14,739

55,771

51,484

Net Income

38,158

32,098

131,170

116,061

Dividends on preferred stock and accretion

-

3,528

-

19,524

Net Income Available to Common Stockholders

$             38,158

$             28,570

$

131,170

$

96,537

Earnings Per Common Share*:

    Basic

$                 0.24

$                 0.18

$

0.81

$

0.64

    Diluted

0.24

0.18

0.81

0.64

Cash Dividends Declared per Common Share*

0.18

0.18

0.72

0.72

Weighted Average Number of Common Shares Outstanding*:

    Basic

161,358,150

156,547,672

161,059,906

151,675,691

    Diluted

161,360,945

156,549,123

161,068,175

151,676,409

____________

* Share data reflects the five percent common stock dividend issued on May 21, 2010.

Valley National Bancorp

Loan Portfolio

(in thousands)

As Of

12/31/2010

9/30/2010

6/30/2010

3/31/2010

12/31/2009

Non-covered Loans:

Commercial loans:

Commercial and industrial

$                 1,825,066

$             1,824,014

$            1,760,071

$              1,765,431

$            1,801,251

Commercial real estate

3,378,252

3,406,089

3,444,169

3,483,378

3,500,419

Construction

428,232

440,929

437,115

433,999

440,046

Total commercial loans

5,631,550

5,671,032

5,641,355

5,682,808

5,741,716

Consumer Loans:

Residential

1,925,430

1,890,439

1,911,466

1,893,279

1,943,249

Home equity

512,745

531,168

545,607

553,951

566,303

Automobile

850,801

877,298

866,313

934,118

1,029,958

Other consumer

88,614

84,724

80,909

80,514

88,845

Total consumer loans

3,377,590

3,383,629

3,404,295

3,461,862

3,628,355

Total non-covered loans

$                 9,009,140

$             9,054,661

$            9,045,650

$              9,144,670

$            9,370,071

Covered Loans *

356,655

377,036

385,326

425,042

-

Total Loans

$                 9,365,795

$             9,431,697

$            9,430,976

$              9,569,712

$            9,370,071

______________________

* 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 - 12/31/2010

Quarter End - 09/30/2010

Quarter End - 06/30/2010

Quarter End - 03/31/2010

Quarter End - 12/31/2009

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)

$                 9,458,332

$               133,480

5.64%

$                  9,474,723

$               137,744

5.82%

$        9,544,364

$  136,422

5.72%

$        9,422,162

$  135,371

5.75%

$            9,464,300

$  136,536

5.77%

Taxable investments (3)

2,567,952

29,007

4.52%

2,610,933

30,040

4.60%

2,670,495

32,094

4.81%

2,720,110

31,880

4.69%

2,752,892

31,668

4.60%

Tax-exempt investments (1)(3)

401,511

3,815

3.80%

433,559

4,219

3.89%

415,978

3,996

3.84%

371,234

3,917

4.22%

328,375

3,857

4.70%

Federal funds sold and other interest bearing deposits

193,212

125

0.26%

96,341

61

0.25%

106,461

76

0.29%

233,750

154

0.26%

463,690

299

0.26%

Total interest earning assets

12,621,007

166,427

5.27%

12,615,556

172,064

5.46%

12,737,298

172,588

5.42%

12,747,256

171,322

5.38%

13,009,257

172,360

5.30%

Other assets

1,478,972

1,435,103

1,463,383

1,379,392

1,287,089

Total assets

$               14,099,979

$                14,050,659

$      14,200,681

$      14,126,648

$          14,296,346

Liabilities and shareholders' equity

Interest bearing liabilities:

Savings, NOW and money market deposits

$                 4,198,511

$                   4,742

0.45%

$                  4,270,386

$                   4,711

0.44%

$        4,144,113

$      4,813

0.46%

$        4,071,641

$      4,860

0.48%

$            4,111,471

$      6,573

0.64%

Time deposits

2,693,056

12,247

1.82%

2,761,018

13,233

1.92%

3,026,929

14,720

1.95%

3,116,322

15,598

2.00%

3,135,131

17,285

2.21%

Short-term borrowings

207,027

350

0.68%

198,938

334

0.67%

179,677

330

0.73%

192,498

331

0.69%

215,019

409

0.76%

Long-term borrowings (4)

3,118,510

34,610

4.44%

3,072,556

34,574

4.50%

3,080,261

34,298

4.45%

3,128,309

34,309

4.39%

3,130,498

35,171

4.49%

Total interest bearing liabilities

10,217,104

51,949

2.03%

10,302,898

52,852

2.05%

10,430,980

54,161

2.08%

10,508,770

55,098

2.10%

10,592,119

59,438

2.24%

Non-interest bearing deposits

2,529,687

2,422,976

2,441,776

2,315,621

2,318,841

Other liabilities

65,048

50,043

63,292

47,068

92,006

Shareholders' equity

1,288,140

1,274,742

1,264,633

1,255,189

1,293,380

Total liabilities and shareholders' equity

$               14,099,979

$                14,050,659

$      14,200,681

$      14,126,648

$          14,296,346

Net interest income/interest rate spread (5)

$               114,478

3.24%

$               119,212

3.41%

$  118,427

3.34%

$  116,224

3.28%

$  112,922

3.06%

Tax equivalent adjustment

(1,337)

(1,478)

(1,401)

(1,373)

(1,353)

Net interest income, as reported

$               113,141

$               117,734

$  117,026

$  114,851

$  111,569

Net interest margin (6)

3.59%

3.73%

3.68%

3.60%

3.43%

Tax equivalent effect

0.04%

0.05%

0.04%

0.05%

0.04%

Net interest margin on a fully tax equivalent

basis (6)

3.63%

3.78%

3.72%

3.65%

3.47%

______________________

(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



RELATED LINKS

http://www.valleynationalbank.com