Valley National Bancorp (VLY, Financial) filed Quarterly Report for the period ended 2009-09-30.
Valley National Bancorp is a bank holding company whose principal subsidiary is Valley National Bank. Valley National Bank provides a full range of commercial and retail banking services through branch offices located in northern New Jersey. These services include the following: the acceptance of demand savings and time deposits; extension of consumer real estate Small Business Administration and other commercial credits; title insurance; investment services; and full personal and corporate trust as well as pension and fiduciary services. Valley National Bancorp has a market cap of $1.86 billion; its shares were traded at around $13.04 with a P/E ratio of 22.7 and P/S ratio of 2.6. The dividend yield of Valley National Bancorp stocks is 5.9%. Valley National Bancorp had an annual average earning growth of 0.6% over the past 5 years.
Our credit quality performance ratios for the third quarter of 2009 deteriorated slightly as compared to the second quarter of 2009, reflecting the negative impact of the current economic recession. Mindful of the poor operating environment and the higher delinquency rates reported throughout the industry, management believes our loan portfolios performance remains good. Total loans past due in excess of 30 days increased 0.11 percent to 1.60 percent of our total loan portfolio of $9.5 billion as of September 30, 2009 compared to 1.49 percent of total loans at June 30, 2009. Our non-accrual loans increased $16.3 million to $74.0 million, or 0.78 percent of total loans at September 30, 2009 as compared to $57.7 million, or 0.60 percent of total loans at June 30, 2009. The increase in non-accrual loans was mainly due to three construction loans and two commercial real estate loans totaling $14.4 million and an increase in non-performing residential mortgage loans. In general, we believe most of our non-accrual loans are well secured and, ultimately, collectible. Our lending strategy is based on underwriting standards designed to maintain high credit quality; however, due to the potential for future credit deterioration caused by a prolonged recession, management cannot provide assurance that our loan portfolio will not continue to decline from the levels reported as of September 30, 2009. See Non-performing Assets section at page 61 for further analysis of our credit quality.
Management continues to assess the expected impact of the recession on our operations and our ability to maintain a well-capitalized position. Based on such an assessment, in September 2009, we repurchased 125,000 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 $125.7 million (including accrued and unpaid dividends). Including our repurchase of 75,000 shares in June 2009, we have repurchased $200 million of the $300 million in senior preferred share issued to the Treasury under the Capital Purchase Program during November 2008. The September 2009 repurchase resulted in an accelerated accretion charge of $3 million to retained earnings in the third quarter of 2009 based on the difference between the par value of $125 million and the carrying value of $122 million. The reduction in our preferred shares should increase net income available to common stockholders in future periods as preferred dividends payable will decline. Management will continue to assess the changes in the economic environment, our credit risk, capital position, and other factors prior to any future redemption requests.
For the three months ended September 30, 2009, we reported an annualized return on average shareholders equity (ROE) of 9.35 percent and an annualized return on average assets (ROA) of 0.89 percent which includes intangible assets. Our annualized return on average tangible shareholders equity (ROATE) was 12.25 percent for the third quarter of 2009. The comparable ratios for the third quarter of 2008 were an annualized ROE of 1.28 percent, an annualized ROA of 0.10 percent, and an annualized ROATE of 1.80 percent. All of the above ratios were impacted by the change in fair value of our junior subordinated debentures carried at fair value and net impairment losses on securities. Net income included a non-cash charge of $2.8 million ($1.8 million after-taxes) for the third quarter of 2009 compared to a non-cash gain of $20.9 million ($13.6 million after-taxes) for the same period of 2008 due to the change in fair value of the debentures. Net impairment losses on securities totaled $743 thousand ($465 thousand after-taxes) and $65.5 million ($44.1 million after-taxes) for the three months ended September 30, 2009 and 2008, respectively.
For the third quarter of 2009, average federal funds sold and other interest bearing deposits and average investment securities increased $275.5 million and $187.1 million, respectively, while average loans decreased $407.4 million as compared to the third quarter of 2008. Compared to the second quarter of 2009, average loans decreased by $188.9 million primarily due to decreases in the automobile, residential mortgage, commercial and industrial, and construction loans, partially offset by an increase in the commercial real estate loans during the three months ended September 30, 2009. Our automobile loan portfolio has declined for five consecutive quarters mainly due to low consumer demand for new and used vehicles, as well as Valleys 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 third quarter of 2009 as expected by management
Average interest bearing liabilities for the quarter ended September 30, 2009 decreased $330.6 million, or 3.1 percent compared with the same quarter of 2008. Compared to the second quarter of 2009, average interest bearing liabilities decreased $88.9 million, or 0.8 percent for the three months ended September 30, 2009. Average total interest bearing deposits decreased $40.2 million, or 0.6 percent from the second quarter of 2009 mainly due to a decrease in higher cost average time deposits partially offset by an increase in lower cost average savings, NOW, and money market deposits. Average time deposits declined $300.4 million, or 8.8 percent during the third quarter of 2009 as compared to the second quarter of 2009 as management chose to be less competitive on interest rates to retain maturing certificates of deposit due to growth in the other deposit categories and less funding needs as loan volumes declined during the period. The increases in average non-interest bearing and average savings, NOW, and money market deposits were due, in part, to additional deposits generated from de novo branch locations put in service over the last twelve months.
Read the The complete ReportVLY is in the portfolios of Richard Snow of Snow Capital Management, L.P., Richard Snow of Snow Capital Management, L.P..
Valley National Bancorp is a bank holding company whose principal subsidiary is Valley National Bank. Valley National Bank provides a full range of commercial and retail banking services through branch offices located in northern New Jersey. These services include the following: the acceptance of demand savings and time deposits; extension of consumer real estate Small Business Administration and other commercial credits; title insurance; investment services; and full personal and corporate trust as well as pension and fiduciary services. Valley National Bancorp has a market cap of $1.86 billion; its shares were traded at around $13.04 with a P/E ratio of 22.7 and P/S ratio of 2.6. The dividend yield of Valley National Bancorp stocks is 5.9%. Valley National Bancorp had an annual average earning growth of 0.6% over the past 5 years.
Highlight of Business Operations:
Net income for the third quarter of 2009 was $31.6 million, or $0.18 per diluted common share, compared to $3.6 million, or $0.03 per diluted common share, for the same period of 2008. The increase in net income was largely due to (i) a $64.8 million decrease in net impairment losses on securities mainly due to a $65.5 million loss on Fannie Mae and Freddie Mac perpetual preferred securities during the third quarter of 2008 resulting from the governments decision to place these issuers into conservatorship, partially offset by (ii) a $18.2 million increase in net trading losses which includes a $2.8 million non-cash charge related to the change in the fair value of our junior subordinated debentures carried at fair value in the third quarter of 2009 compared to a non-cash gain of $20.9 million on such debentures for the same period of 2008, (iii) a $5.9 million increase in the provision of credit losses due to higher net charge-offs and loan deterioration resulting from the economic recession, and (iv) a $15.1 million increase in income taxes mainly caused by the tax benefit realized for net impairment losses on perpetual preferred securities in the third quarter of 2008. Accrued preferred dividends and accretion of the discount on Valleys preferred stock reduced diluted earnings per common share by $0.04 for the three months ended September 30, 2009.Our credit quality performance ratios for the third quarter of 2009 deteriorated slightly as compared to the second quarter of 2009, reflecting the negative impact of the current economic recession. Mindful of the poor operating environment and the higher delinquency rates reported throughout the industry, management believes our loan portfolios performance remains good. Total loans past due in excess of 30 days increased 0.11 percent to 1.60 percent of our total loan portfolio of $9.5 billion as of September 30, 2009 compared to 1.49 percent of total loans at June 30, 2009. Our non-accrual loans increased $16.3 million to $74.0 million, or 0.78 percent of total loans at September 30, 2009 as compared to $57.7 million, or 0.60 percent of total loans at June 30, 2009. The increase in non-accrual loans was mainly due to three construction loans and two commercial real estate loans totaling $14.4 million and an increase in non-performing residential mortgage loans. In general, we believe most of our non-accrual loans are well secured and, ultimately, collectible. Our lending strategy is based on underwriting standards designed to maintain high credit quality; however, due to the potential for future credit deterioration caused by a prolonged recession, management cannot provide assurance that our loan portfolio will not continue to decline from the levels reported as of September 30, 2009. See Non-performing Assets section at page 61 for further analysis of our credit quality.
Management continues to assess the expected impact of the recession on our operations and our ability to maintain a well-capitalized position. Based on such an assessment, in September 2009, we repurchased 125,000 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 $125.7 million (including accrued and unpaid dividends). Including our repurchase of 75,000 shares in June 2009, we have repurchased $200 million of the $300 million in senior preferred share issued to the Treasury under the Capital Purchase Program during November 2008. The September 2009 repurchase resulted in an accelerated accretion charge of $3 million to retained earnings in the third quarter of 2009 based on the difference between the par value of $125 million and the carrying value of $122 million. The reduction in our preferred shares should increase net income available to common stockholders in future periods as preferred dividends payable will decline. Management will continue to assess the changes in the economic environment, our credit risk, capital position, and other factors prior to any future redemption requests.
For the three months ended September 30, 2009, we reported an annualized return on average shareholders equity (ROE) of 9.35 percent and an annualized return on average assets (ROA) of 0.89 percent which includes intangible assets. Our annualized return on average tangible shareholders equity (ROATE) was 12.25 percent for the third quarter of 2009. The comparable ratios for the third quarter of 2008 were an annualized ROE of 1.28 percent, an annualized ROA of 0.10 percent, and an annualized ROATE of 1.80 percent. All of the above ratios were impacted by the change in fair value of our junior subordinated debentures carried at fair value and net impairment losses on securities. Net income included a non-cash charge of $2.8 million ($1.8 million after-taxes) for the third quarter of 2009 compared to a non-cash gain of $20.9 million ($13.6 million after-taxes) for the same period of 2008 due to the change in fair value of the debentures. Net impairment losses on securities totaled $743 thousand ($465 thousand after-taxes) and $65.5 million ($44.1 million after-taxes) for the three months ended September 30, 2009 and 2008, respectively.
For the third quarter of 2009, average federal funds sold and other interest bearing deposits and average investment securities increased $275.5 million and $187.1 million, respectively, while average loans decreased $407.4 million as compared to the third quarter of 2008. Compared to the second quarter of 2009, average loans decreased by $188.9 million primarily due to decreases in the automobile, residential mortgage, commercial and industrial, and construction loans, partially offset by an increase in the commercial real estate loans during the three months ended September 30, 2009. Our automobile loan portfolio has declined for five consecutive quarters mainly due to low consumer demand for new and used vehicles, as well as Valleys 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 third quarter of 2009 as expected by management
Average interest bearing liabilities for the quarter ended September 30, 2009 decreased $330.6 million, or 3.1 percent compared with the same quarter of 2008. Compared to the second quarter of 2009, average interest bearing liabilities decreased $88.9 million, or 0.8 percent for the three months ended September 30, 2009. Average total interest bearing deposits decreased $40.2 million, or 0.6 percent from the second quarter of 2009 mainly due to a decrease in higher cost average time deposits partially offset by an increase in lower cost average savings, NOW, and money market deposits. Average time deposits declined $300.4 million, or 8.8 percent during the third quarter of 2009 as compared to the second quarter of 2009 as management chose to be less competitive on interest rates to retain maturing certificates of deposit due to growth in the other deposit categories and less funding needs as loan volumes declined during the period. The increases in average non-interest bearing and average savings, NOW, and money market deposits were due, in part, to additional deposits generated from de novo branch locations put in service over the last twelve months.
Read the The complete ReportVLY is in the portfolios of Richard Snow of Snow Capital Management, L.P., Richard Snow of Snow Capital Management, L.P..
