Valley National Bancorp Reports Increase in Fourth Quarter and Annual Results

WAYNE, N.J., Jan. 21 /PRNewswire-FirstCall/ -- Valley National Bancorp (NYSE: VLY), the holding company for Valley National Bank, today reported net income for the fourth quarter of 2009 of $32.1 million, $0.19 per diluted common share, compared to fourth quarter of 2008 earnings of $16.9 million, $0.10 per diluted common share. Diluted earnings per common share were reduced by other-than-temporary impairment on securities totaling $1.0 million (less than $0.01 per common share) for the fourth quarter of 2009, as compared to $17.5 million ($0.08 per common share) for the fourth quarter of 2008.  See the performance highlights and other sections below for further analysis of our quarterly results.  

Net income for the year ended December 31, 2009 was $116.1 million, $0.67 per diluted common share, compared to $93.6 million, $0.67 per diluted common share, for the year ended December 31, 2008.  Diluted earnings per common share for the 2009 annual period were negatively impacted by our cost to carry preferred stock under the TARP Capital Repurchase Program, increases in the provision for credit losses, the increased and special FDIC insurance assessment caused, in part, by the economic downturn, as well as net trading losses incurred due to non-cash mark to market losses on our junior subordinated debentures carried at fair value. However, these items were offset by a $78.5 million decrease in other-than-temporary impairment on securities recognized in earnings for 2009.

Performance Highlights

• Asset Quality: Total loans past due 30 days or more on our entire loan portfolio of $9.4 billion were 1.61 percent at December 31, 2009 compared to 1.60 percent at September 30, 2009. Our commercial real estate loan portfolio had loans past due 30 days or more totaling 0.99 percent at December 31, 2009 as compared to 1.05 percent at September 30, 2009. The residential mortgage and home equity loan portfolios totaling over 22,000 individual loans had only 220 loans past due 30 days or more at December 31, 2009. The residential mortgage and home equity loan delinquencies totaled $39.2 million, or 1.56 percent of $2.5 billion in total loans within these categories at December 31, 2009. See "Credit Quality" section below for more details.

• Provision for Credit Losses: The provision for credit losses totaled $12.2 million for the fourth quarter of 2009 as compared to $12.7 million for the third quarter of 2009 and $11.6 million for the fourth quarter of 2008.  The provision for credit losses was $1.4 million lower than net charge-offs totaling $13.6 million for the fourth quarter of 2009 due to, among other factors, a continued decline in our total loan portfolio, a reduction in specific reserves for two performing commercial loans totaling $34.0 million, and $4.4 million in charge-offs relating to collateral dependent impaired loans that were partially covered by specific valuation allowances as of September 30, 2009.  At December 31, 2009, our allowance for credit losses as a percentage of total loans was 1.11 percent as compared to 1.10 percent as of September 30, 2009.  The $4.4 million in charge-offs related to impaired loans reduced the allowance to total loans ratio by 0.04 percent at December 31, 2009.

• Capital Strength: Our regulatory capital ratios continue to reflect Valley's strong capital position. The Company's total risk-based capital, Tier I capital, and leverage capital were 12.54 percent, 10.64 percent, and 8.14 percent, respectively at December 31, 2009. During the fourth quarter of 2009, we completed our previously announced registered direct offering, consisting of the sale of 5 million shares of newly issued common stock to several institutional investors for net proceeds totaling $63.7 million.  Including our "at-the-market" common equity offering completed in the third quarter of 2009, we raised $135.3 million in additional capital on the issuance of 10.67 million common shares during 2009.

• Exit from TARP Program: In December 2009, we repurchased 100,000 shares of our Series A Fixed Rate Cumulative Perpetual Preferred Stock from the U.S. Department of the Treasury for an aggregate purchase price of $100.5 million (including accrued and unpaid dividends). Including our repurchase of 75,000 shares in June 2009 and 125,000 shares in September 2009, we have repurchased all $300 million in senior preferred shares issued to the Treasury under the Capital Purchase Program during November 2008 and effectively ended our participation in such program. However, a warrant to purchase 2.4 million of our common shares (at $18.66 per share) remains outstanding to the U.S. Treasury. We have made no final decision as to the repurchase of such warrant at this time.

Preferred stock dividends and accretion on our senior preferred shares reduced net income available to common stockholders and diluted earnings per common share by $3.5 million ($0.02 per common share) and $2.1 million ($0.01 per common share) for the fourth quarter of 2009 and 2008, respectively, and $19.5 million ($0.14 per common share) and $2.1 million ($0.02 per common share) for the years ended December 31, 2009 and 2008, respectively.

• Loans: Commercial real estate loans grew by $26.8 million, or 3.1 percent on an annualized basis during the fourth quarter of 2009 due to additional loan demand from existing customers coupled with our ability to find new quality lending opportunities made available by the tight credit markets. The majority of the other loan categories experienced declines during the quarter as the overall loan portfolio declined 5.9 percent on an annualized basis to $9.4 billion at December 31, 2009. The declines were due to several factors, including our high credit standards, current economic conditions, and our decision to sell or hold for sale approximately $91 million in residential mortgage loan originations during the fourth quarter of 2009. See "Loans and Deposits" section below for more details.

• Net Interest Margin: Net interest margin on a tax equivalent basis was 3.47 percent in the fourth quarter of 2009 versus 3.61 percent in the third quarter of 2009 and 3.30 percent in the fourth quarter of 2008. The linked quarter decrease in net interest margin was largely the result of a decrease in the tax equivalent interest income on investment securities, and refinance and new loan sale activity in our residential mortgage operations, partially offset by lower costs of deposits.  As a result, net interest income on a fully tax equivalent basis decreased by $3.4 million as compared to the third quarter of 2009. See "Net Interest Income and Margin" section below for more details.

• Investments and Trading Activity: We recognized $7.8 million in gains on securities transactions during the fourth quarter of 2009 due to the sale of $129.5 million of corporate debt securities and residential mortgage-backed securities issued by Freddie Mac and Fannie Mae that were classified as available for sale.  The sale proceeds were reinvested primarily in U.S. Treasury securities and residential mortgage-backed securities issued by Ginnie Mae. The Company did not engage in actual trading activity during the fourth quarter of 2009; however, net income included net trading losses totaling $1.5 million ($0.01 per common share) for the fourth quarter of 2009 which consists of $2.3 million in non-cash mark to market losses on our junior subordinated debentures carried at fair value, partially offset by $776 thousand in non-cash mark to market gains on the fair value of our trading securities portfolio.  Net trading losses totaled $8.1 million ($0.04 per common share) for the fourth quarter of 2008.  

• Operating Efficiency: Total operating expenses for the fourth quarter of 2009 increased by 4.3 percent to $77.1 million from $73.9 million in the third quarter of 2009 mainly due to increases in major medical insurance expense, stock compensation expense related to restricted stock awards, advertising expense, and a $1.4 million write down of the carrying value of a repossessed aircraft. Our operating efficiency ratio was 56.6 percent for the fourth quarter of 2009.

• FDIC Insurance Assessments: During the fourth quarter, the FDIC adopted a rule that required insured institutions to prepay their estimated quarterly assessments for all periods through December 31, 2012 on December 30, 2009.  The total cash assessment for Valley National Bank totaled $48.5 million, of which $45.5 million was recorded as a non-interest earning prepaid asset as of December 31, 2009. The prepayment did not have a significant impact on our cash position, liquidity or operations.

Chairman's Comments

Gerald H. Lipkin, Chairman, President and CEO commented that, "Our fourth quarter and annual results for 2009, reflect Valley's ability to navigate one of the worst economic recessions in recent history. The current economic downturn continues to negatively impact us, as well as all financial institutions. However, we are pleased with the overall level of our loan delinquencies when compared to the most recent results reported by our peers. Our total delinquencies 30 days or more past due for the entire loan portfolio were 1.61 percent, of which only 1.04 percent are greater than 90 days past due or non-accrual loans.  As a further reflection of the overall economy, our non-accrual loans increased approximately $18.0 million mainly due to the migration of several commercial real estate and residential mortgage loans from the loans 90 days or more past due and still accruing category.  Although we believe the majority of these loans are sufficiently collateralized and will ultimately be collectable, the current economic downturn has added uncertainty as to the timing of repayment.  Additionally, we believe our commercial real estate loan delinquencies totaling 0.99 percent at December 31, 2009 remain well controlled mainly due to our underwriting standards which typically require a combination of strong cash flow, substantial equity on the part of the borrower, and personal guarantees.

Our capital levels remained strong during the fourth quarter, and as a result we were able to repurchase the remaining $100 million of senior preferred shares from the U.S. Treasury after careful consideration of our balance sheet's credit risk and economic conditions. This repurchase eliminated the requirement to pay costly preferred dividends in the future to the U.S. Treasury and should have a positive impact on net income available to our common stockholders in future periods. While not a condition to the repurchase of our preferred shares, we also raised net proceeds of approximately $64 million from a direct equity offering of 5 million common shares to several institutional investors during the fourth quarter of 2009.  Weighing the costs and restrictions that the TARP program had placed on our business operations, we view the equity raise as a more cost effective way to protect our stockholders' interests in the current economic downturn."  

Credit Quality

Management believes that our credit quality remains good given the current state of the U.S. economy and the level of our loan delinquencies, which remained in-line with the level of the third quarter of 2009. Our focus has been and continues to be on traditional lending, utilizing our time-tested underwriting approach.  With a loan portfolio totaling approximately $9.4 billion, net loan charge-offs for the fourth quarter of 2009 were $13.6 million compared to $10.0 million for the third quarter of 2009, and $6.7 million for the fourth quarter of 2008.  As previously noted in the performance highlights above, $4.4 million of the charge-offs during the fourth quarter of 2009 relate to collateral dependent impaired loans that were partially covered by specific valuation reserves in our allowance for credit losses as of September 30, 2009. As required by regulatory guidance, collateral dependent impaired loan balances are written down to the current appraised value of each loan's underlying collateral, excluding any personal guarantees that may be pursued in our loan collection process.

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:

Valley's allocated reserves for the commercial and industrial loan portfolio decreased $5.8 million or 31 basis points as a percentage of the commercial loan portfolio during the period due to several factors, including a reduction in specific reserves for two performing commercial loans totaling $34.0 million, specific reserves that were charged off on collateral dependent impaired loans, and relatively stable net charge-offs and delinquencies as compared to the third quarter of 2009.

Total non-performing assets, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets, totaled $98.4 million, or 1.05 percent of loans at December 31, 2009 compared to $82.8 million, or 0.87 percent of loans at September 30, 2009.  Non-accrual loans increased $18.0 million to $92.0 million at December 31, 2009 as compared to $74.0 million at September 30, 2009.  The increase in non-accrual loans was mostly due to the migration of several commercial real estate and residential mortgage loans from the loans 90 days or more past due and still accruing category.  Although the timing of collection is uncertain, management believes most of the non-accrual loans are well secured and, ultimately, collectible based on, in part, our quarterly valuation of impaired loans. Our impaired loans, mainly consisting of non-accrual and troubled debt restructured commercial and commercial real estate loans, totaled $79.0 million at December 31, 2009 and had $7.3 million in related specific reserves included in our total allowance for loan losses. OREO and other repossessed assets totaled a combined $6.4 million at December 31, 2009 as compared to $8.7 million at September 30, 2009.  The decrease of $2.3 million was primarily due to a $1.4 million write down of the carrying value of a repossessed aircraft based on our quarterly valuation analysis and the sale of another repossessed aircraft which resulted in an immaterial gain during the fourth quarter of 2009.  Repossessed assets are comprised of automobiles and one aircraft at December 31, 2009.    

Loans past due 90 days or more and still accruing decreased $18.0 million to $5.1 million, or 0.05 percent of total loans at December 31, 2009 compared to $23.1 million, or 0.24 percent at September 30, 2009 primarily due to the migration of several commercial real estate and residential mortgage loans to non-accrual loans as previously mentioned above.

Troubled debt restructured loans, with modified terms and not reported as loans 90 days or more past due and still accruing or non-accrual totaled $19.4 million at December 31, 2009, unchanged as compared to September 30, 2009.  At December 31, 2009, these restructured loans consisted of eight commercial loans.

Loans and Deposits

During the quarter, loans decreased $141.3 million to approximately $9.4 billion at December 31, 2009.  The linked quarter decrease was mainly comprised of decreases in automobile, residential mortgage, and home equity loans of $84.1 million, $68.3 million, and $9.0 million, respectively, partially offset by a $26.8 million increase in commercial real estate loans. Our automobile loan portfolio has declined for six consecutive quarters mainly due to low consumer demand for new and used vehicles, as well as Valley's move to further strengthen its auto loan underwriting standards in light of the weakened economy. The decline in the residential mortgage loan portfolio continued during the fourth quarter of 2009 as expected by management based on our secondary market sales of most refinanced loans and new loan originations. The decline in home equity loans is mainly a by-product of refinancing within our residential mortgage portfolio. Commercial real estate loans continued to modestly increase quarter over quarter as we've experienced additional demand from existing loan customers, as well as demand from new quality borrowers obtained, in part, from the dislocation in the credit markets. We may experience further declines in the loan portfolio during 2010 due to a slow economic recovery cycle or as a result of our asset/liability management strategies, including the sale of residential mortgage loan originations with low fixed interest rates.

During the quarter, total deposits increased $104.8 million to approximately $9.5 billion at December 31, 2009. At December 31, 2009, non-interest bearing deposits increased $194.4 million and savings, NOW, and money market deposits increased approximately $19.8 million, partially offset by a $109.4 million decline in time deposits as compared to September 30, 2009.  The increases in non-interest bearing deposits and savings, NOW, and money market deposits and time deposits were due, in part, to additional new and existing customer deposits at our de novo branch locations and the nominal level of long-term interest rates on other investment options currently available to customers, including time deposits. Time deposits decreased 3.4 percent during the fourth quarter of 2009 due to higher yielding retail deposits maturing in the latter half of the quarter that were not renewed mainly due to the current low level of interest rates.  We did not actively pursue the retention of higher cost interest bearing deposits during the fourth quarter of 2009 due to low loan volumes and current interest rates available to us on other investment alternatives.

Net Interest Income and Margin

Net interest income on a tax equivalent basis was $112.9 million for the fourth quarter of 2009, a $4.2 million increase from the same quarter of 2008 and a decrease of $3.4 million from the third quarter of 2009. The linked quarter decrease was partly due to a $3.4 million decline in interest income on investments, on a tax equivalent basis.  The decline in interest on investments was primarily caused by normal principal paydowns of higher yield securities over the last six months of 2009 replaced by purchases of shorter term and lower yield securities, including U.S. Treasury securities and residential mortgage-backed securities issued by Ginnie Mae.  Interest income on loans, on a tax equivalent basis, also declined $3.0 million for the fourth quarter of 2009 due to a $117.1 million decline in average loans and a 5 basis point decrease in the yield on average loans.  The declines were due, in part, to mortgage refinancing activity at lower rates and management's decision to sell most of its refinanced and new mortgage loan originations in the secondary market. The yield on average loans was also negatively impacted by the reversal of interest income on $18.0 million in loans classified as non-accrual during the fourth quarter of 2009.  The negative impact of these items on our net interest income was partially offset by a $2.8 million decrease in interest expense mainly caused by maturing high cost time deposits during the fourth quarter of 2009.

The net interest margin on a tax equivalent basis was 3.47 percent for the fourth quarter of 2009, an increase of 17 basis points from the fourth quarter of 2008, and a decrease of 14 basis points from 3.61 percent for the linked quarter ended September 30, 2009.  The yield on average interest earning assets decreased by 25 basis points on a linked quarter basis mainly due to a 58 basis point decrease in tax equivalent yield on average investments which totaled 4.61 percent for the fourth quarter of 2009 as compared to 5.19 percent for the third quarter of 2009. The cost of average interest bearing liabilities declined 15 basis points from the third quarter of 2009 mainly due to a 34 basis point decrease in the cost of average time deposits caused by maturing higher cost certificates of deposit.

Our cost of total deposits totaled 1.00 percent for the fourth quarter of 2009 compared to 1.13 percent for the three months ended September 30, 2009.  The decrease of 13 basis points was due to maturing high cost certificates of deposit and a $49.6 million increase in average non-interest bearing deposits.

Non-Interest Income (Loss)

Fourth  quarter of 2009 compared with fourth  quarter of 2008

Non-interest income for the fourth quarter of 2009 increased $26.4 million to $24.6 million as compared to a non-interest loss of approximately $1.8 million for the fourth quarter of 2008. Net impairment losses on securities decreased by $16.5 million to $1.0 million in impairment related to estimated credit losses on two previously impaired private label mortgage-backed securities, one pooled trust preferred security, and one equity security issued by a financial institution for the fourth quarter of 2009 as compared to losses of $17.5 million for the same period of 2008.  The other-than-temporary impairment charges incurred during the comparable fourth quarter of 2008 were due to a further decline in fair value of Freddie Mac and Fannie Mae perpetual preferred securities, one private label mortgage-backed security, and two pooled trust preferred securities. Net trading losses decreased approximately $6.6 million to $1.5 million for the fourth quarter of 2009 compared to $8.1 million in the same period of 2008 primarily due to the change in the fair value of our junior subordinated debentures carried at fair value and our trading securities portfolio. Net gains on securities transactions increased $1.8 million to $7.8 million for the fourth quarter of 2009 compared to $6.0 million for the same period of 2008 mainly due to larger gains recognized on the sales of corporate debt securities and residential mortgage-backed securities classified as available for sale during the 2009 period as management attempted to reduce the overall credit risk exposure within the investment portfolio. Net gains on sales of loans increased $1.4 million to $1.7 million for the quarter ended December 31, 2009 mainly due to higher sale volumes. Valley is currently selling most refinanced and new residential mortgage loan originations in the secondary market due to our decision to not hold long-term mortgages at current interest rates.

Fourth quarter of 2009 compared with third quarter of 2009

Non-interest income for the fourth quarter of 2009 increased $7.5 million to $24.6 million as compared to $17.1 million for the third quarter of 2009 mainly due to an increase in net gains on securities transactions of $7.8 million in the fourth quarter of 2009.  The increase in securities gains resulted from the sale of $129.5 million of corporate debt securities and residential mortgage-backed securities issued by Freddie Mac and Fannie Mae that were classified as available for sale.  Net trading losses declined $1.9 million from $3.5 million for the third quarter of 2009 mainly due to non-cash mark to market gains on the trading securities portfolio totaling $776 thousand in the fourth quarter of 2009 as compared to non-cash mark to market losses totaling $648 thousand for the third quarter of 2009.  Partially offsetting the positive impact of these items, net gains on sales of loans decreased $1.0 million from $2.7 million for the third quarter of 2009 due to lower volatility in interest rates and slightly lower sales volume during the fourth quarter of 2009.

Non-Interest Expense

Fourth quarter of 2009 compared with fourth quarter of 2008

Non-interest expense decreased $2.9 million, or 3.6 percent to $77.1 million for the three months ended December 31, 2009 from $80.0 million for the same period of 2008. Other non-interest expense declined $7.1 million mainly due to a $4.6 million loss related to a check fraud scheme and $3.1 million in accelerated amortization expense on certain hedging relationships terminated in the fourth quarter of 2008. However, the FDIC insurance assessment increased $2.2 million to $3.3 million for the fourth quarter of 2009 as compared to $1.1 million for the fourth quarter of 2008 due to the depletion of our prior period FDIC assessment credit, higher normal assessment rates and our election to participate in the FDIC's Temporary Liquidity Guarantee Program starting in the latter half of the fourth quarter of 2008. Employee benefit expense also increased $2.5 million to approximately $10.0 million for the fourth quarter of 2009 mainly due to increases in major medical insurance expense, stock-based compensation expense relating to immediate expense recognized for restricted stock awards to retirement eligible employees, and pension costs.

Fourth quarter of 2009 compared with third quarter of 2009

Non-interest expense increased by $3.2 million, or 4.3 percent to $77.1 million for the fourth quarter of 2009 from $73.9 million for the linked quarter ended September 30, 2009. Employee benefit expense increased $1.7 million from $8.3 million for the third quarter of 2009 mainly due to a $904 thousand increase in major medical insurance expense and a $958 thousand increase in stock-based compensation expense mostly relating to immediate expense recognized for restricted stock awards to retirement eligible employees, partially offset lower payroll taxes.  Other non-interest expense increased by $1.3 million to $12.4 million for the fourth quarter of 2009 due to, in part, a $1.4 million write down of the carrying value of a repossessed aircraft at December 31, 2009.

Income Tax Expense

Income tax expense was $14.7 million for the fourth quarter of 2009, reflecting an effective tax rate of 31.5 percent, compared with an income tax benefit of $2.9 million for the fourth quarter of 2008, reflecting an effective tax benefit rate of 21.1 percent.  The increase in income tax expense from the 2008 period reflects the lower level of pre-tax income during the fourth quarter of 2008 and the reversal of the $2.9 million state tax valuation allowance for capital losses recorded in the third quarter of 2008.  Additionally, the effective tax rate for the fourth quarter of 2009 was adversely impacted by higher state and local tax expense.  

Income tax expense was $51.5 million for the year ended December 31, 2009, reflecting an effective tax rate of 30.7 percent, compared with $16.9 million for the same period of 2008, reflecting an effective tax rate of 15.3 percent.  The increase was due to several factors, including the lower level of 2008 pre-tax income and a $6.5 million reduction in Valley's deferred tax asset valuation allowance in 2008.  Additionally, the effective tax rate in 2009 was negatively impacted by lower tax advantaged income and higher state and local tax expense.

Management expects that our adherence to the income tax guidelines under U.S. generally accepted accounting principles ("GAAP") will continue to result in increased volatility in our future quarterly and annual effective income tax rates because U.S. GAAP requires that any change in judgment or change in measurement of a tax position taken in a prior annual period be recognized as a discrete event in the period in which it occurs. Factors that could impact management's judgment include changes in income, tax laws and regulations, and tax planning strategies. For 2010, we anticipate that our effective tax rate will approximate 31 percent.

De novo Branch Program

Over the last several years, we have maintained a branch expansion plan which focuses on expanding our presence in the New Jersey counties and towns neighboring our current office locations, as well as in Manhattan, Kings and Queens Counties in New York. Due to the current downturn in the economy, coupled with the possibility that acquisition opportunities may become available in our target markets, we intend to slow future de novo branch expansions during 2010. Generally, new branches add future franchise value; however, the additional operating costs and capital requirement normally have a negative impact on non-interest expense and net income for several years until the branch operations become individually profitable.

No new branches were opened during the fourth quarter of 2009.  However, we opened one new branch location in Queens, and also expanded our drive up only branch in Upper Montclair, New Jersey to a full service location during the first quarter of 2010. We currently have seven branches in Brooklyn and five branches in Queens since first entering these new markets in 2007 and 2008, respectively.

About Valley

Valley is a regional bank holding company, headquartered in Wayne, New Jersey, with over $14 billion in assets. Its principal subsidiary, Valley National Bank, currently operates 198 branches in 135 communities serving 14 counties throughout northern and central New Jersey and 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, relationships, opportunities, taxation, technology and market conditions.  These statements may be identified by such forward-looking terminology as "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 or unexpected decline in the economy, in particular in New Jersey and the New York Metropolitan area;
• increases in our allowance for loan losses;
• 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;
• reduction in our deposit base as a result of lower-cost funding sources;
• a reduction in dividend payments, distributions and other payments from our banking subsidiary;
• possible reduction or elimination of the dividend on our common stock;
• increased or unexpected competition from our competitors;
• further offerings of our equity securities may result in dilution of our common stock and a reduction in the price of our common stock;
• potential acquisitions may disrupt our business and dilute shareholder value;
• we may be unable to successfully implement our growth strategies;
• additional regulatory oversight which may require us to change our business model;
• changes in accounting policies or accounting standards;
• market conditions and other factors may adversely affect the market price of our common stock;
• we may be unable to adapt to technological changes;
• our internal controls and procedures may not be adequate;
• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
• our failure or inability to raise additional capital, if it is necessary or advisable to do so;
• future earnings volatility caused by economic or other factors; and
• 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, 2009 and our Annual Report on Form 10-K for the year ended December 31, 2008.  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.