UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarter Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Period Ended March 31, 1994
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________.
Commission File Number 0-11179
VALLEY NATIONAL BANCORP
(Exact name of registrant as specified in its charter)
New Jersey
(State or other Jurisdiction of
incorporation or organization)
22-2477875
(I.R.S. Employer Identification No.)
1445 Valley Road, Wayne, New Jersey 07474-0558
(Address of principal executive offices) (Zip Code)
(201)305-8800
(Registrant's Telephone Number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES XXX NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock (No par value), of which 26,993,248
shares were outstanding as of May 5, 1994.
VALLEY NATIONAL BANCORP
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition 3
March 31, 1994 and December 31, 1993
(Unaudited)
Consolidated Statements of Income 4
Three Months Ended March 31, 1994 and 1993
(Unaudited)
Consolidated Statements of Cash Flows 5
Three Months Ended March 31, 1994 and 1993
(Unaudited)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 7 - 12
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 13
Item 5. Other Matters 14
Item 6. Exhibits and Reports on Form 8-K. 15
SIGNATURES 16
- 2 -
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
($ in thousands)
March 31, December 31,
1994 1993
Assets
Cash and due from banks $ 126359 $ 67455
Federal funds sold 11000 88050
Investment securities held to maturity, fair value
of $924,113 and $960,813 in 1994 and 1993,
respectively 932184 939993
Investment securites available for sale, fair
value of $448,818 in 1993 440316 441482
Loans, net of unearned income 1851464 1802000
Less: Allowance for possible loan
losses -35585 -35205
Loans, net 1815879 1766795
Premises and equipment, net 40007 40248
Due from customers and acceptances
outstanding 1395 1192
Accrued interest receivable 21124 23650
Other assets 49775 44637
Total assets $ 3438039 $ 3413502
Liabilities
Deposits:
Non-interest bearing deposits $ 407446 $ 408605
Interest bearing:
Savings deposits 1626097 1637381
Time deposits 1043379 1033771
Total deposits
Federal funds purchased and securities sold under
repurchase agreements 50282 35110
Treasury tax and loan account 6102 7834
Bank acceptances outstanding 1395 1192
Accrued expenses and other liabilities 29747 22514
Other borrowings 2582 2667
Total liabilities 3167030 3149074
Shareholders' Equity
Common stock, no par value, authorized 37,537,500
shares, issued 27,065,331 shares in 1994 and
24,529,552 in 1993 14990 8660
Surplus 114553 46438
Retained earnings 147375 211296
Unrealized loss on investment securities
available for sale -3943 - -
272975 266394
Cost of shares in treasury (113,003 common shares
in 1994 and 113,003 common shares in 1993)
-1966 -1966
Total shareholders' equity 271009 264428
Total liabilities and shareholders'
equity $ 3438039 $ 3413502
See accompanying notes to consolidated financial
statements.
- 3 -
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($ in thousands except for per share data)
Three Months Ended
March 31
1994 1993
Interest Income
Loans, including fees $35827 $32411
Investment securities held to maturity
Taxable 10314 14539
Tax-exempt 3347 3057
Dividends 15 31
Investment securities available for sale
Taxable 5336 4909
Dividends 19 - -
Federal funds sold and other short term
investments 292 282
Total Interest Income 55150 55229
Interest Expense
Savings deposits 9497 10199
Time deposits 10323 12284
Federal funds purchased and securities
sold under repurchase agreements 226 169
Other short-term borrowings 39 41
Other borrowings 5 169
Total Interest Expense 20090 22862
Net interest income 35060 32367
Provision for possible loan losses 900 1500
Net interest income after provision
for possible loan losses 34160 30867
Non-Interest Income
Fees from trust services 180 160
Service charges on deposit accounts 1396 1161
Gains on securities transactions, net 3342 3272
Fees from mortgage servicing 845 1039
Gains on sales of loans 240 457
Other 1196 1198
Total Non-Interest Income 7199 7287
Non-Interest Expense
Salaries and other compensation 6784 6054
Employee benefit expense 1786 1592
FDIC insurance premiums 1715 1652
Occupancy and equipment expense 2786 2355
Amortization of intangible assets 884 958
Other 3859 3436
Total Non-Interest Expense 17814 16047
Income before income taxes 23545 22107
Income tax expense 8055 7451
Income before cumulative effect
of accounting change 15490 14656
Cumulative effect of accounting change 0 -402
Net Income $15490 $14254
Per share data:
Income before cumulative effect
of accounting change $0.58 $ 0.56
Cumulative effect of accounting change 0.00 -0.02
Weighted average shares outstanding 26888868 26233002
See accompanying notes to consolidated financial
statements.
- 4 -
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in thousands) Three Months Ended
March 31,
1994 1993
Cash flows from operating activities:
Net income $ 15490 $14253
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of intangible assets 2,015 1,831
Amortization of compensation costs pursuant
to long term stock incentive plan 71 51
Provision for possible loan losses 900 1500
Net amortization (accretion) of premiums and
discounts 2154 1309
Net deferred income tax benefit -521 -787
Net gains on securities transactions -3342 -3272
Gain on sales of loans -240 -457
Net increase(decrease) in unearned income - - 944
Proceeds from recoveries on charged-off loans 387 356
Net increase(decrease) in accrued interest
receivable and other assets -253 -653
Net (increase)decrease in accrued expenses and
other liabilities 7233 6875
Net cash provided by operating activities: 23894 21950
Cash flows from investing activities:
Proceeds from maturing investment securities
held to maturity 85354 73877
Proceeds from sales of investment securities
held to maturity - - - -
Purchases of investment securities held to
maturity -79068 -134288
Proceeds from sales of investment securities
available for sale 131109 98682
Proceeds from maturing investment securities
available for sale 152671284
Purchases of investment securities available
for sale -149164 -62056
Purchases of mortgage servicing rights - - 10
Net (increase) decrease in federal funds sold 77050 54650
Net increase in loans made to customers -50130 -50032
Purchases of premises and equipment -891 -1184
Net (increase)decrease in due from customers on
acceptances outstanding -203 481
Net cash provided by (used in) investing
activities: 29324 -18576
Cash flows from financing activities:
Net decrease in deposits -2835 -9601
Net increase in federal funds purchased
and other short term borrowings 13440 25816
Repayments of other borrowings -85 - -
Net increase(decrease) in bank acceptances
outstanding 203-481
Dividends paid to common shareholders -6123 -4771
Common stock issued 1086 27
Net cash provided by financing activities 5686 10990
Net increase in cash and due from banks 58904 14364
Cash and due from banks at January 1 67455 89695
Cash and due from banks at March 31 $126359 $104059
Cash paid during the period for:
Interest on deposits and other borrowings $ 20010 $ 23896
Federal and state income taxes $ 2200 $ - -
See accompanying notes to consolidated financial
statements
- 5 -
VALLEY NATIONAL BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Consolidated Financial Statements
The Consolidated Statements of Financial Condition as of March
31, 1994, the Consolidated Statements of Income for the three
month periods ended March 31, 1994 and 1993 and the
Consolidated Statements of Cash Flows for the three month
periods ended March 31, 1994 and 1993 have been prepared by
Valley National Bancorp ("Valley"), without audit. In the
opinion of management, all adjustments (which included only
normal recurring adjustments) necessary to present fairly
Valley's financial position, results of operations, and cash
flows at March 31, 1994 and for all periods presented have
been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. These
consolidated financial statements are to be read in
conjunction with the financial statements and notes thereto
included in Valley's December 31, 1993 Annual Report to
Shareholders.
2. Earnings Per Share
All share and per share amounts have been restated to reflect
the 10% stock dividend declared March 22, 1994 to Shareholders
of record on April 15, 1994 and payable May 3, 1994.
- 6 -
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Earnings Summary
Net income grew to $15.5 million, or $0.58 per share for the first
quarter ended March 31, 1994 compared with $14.3 million or $0.54
per share for the same period in 1993 (the 1993 per share amounts
have been restated to give effect to a 10% stock dividend declared
March 22, 1994 to shareholders of record April 15, 1994 and payable
May 3, 1994). This increase is largely attributable to an increase
in net interest income of $2.7 million or 8.3%, and to a lesser
extent a decrease in the provision for loan losses of $600 thousand
or 40.0%. This was offset by increased operating expenses of $1.8
million or 11.0% due substantially to the acquisition of Peoples
Bank in the second quarter 1993. The annualized return on average
assets was 1.81% for both the quarter ended March 31, 1994 and
1993, while the annualized return on average equity decreased to
22.6% for the first quarter of 1994 from 25.13% for the first
quarter of 1993.
Net Interest Income
Net interest income is the largest source of Valley's operating
income. Net interest income on a fully tax equivalent ("FTE")
basis increased to $37.1 million for the quarter ended March 31,
1994 as compared to $34.2 million for the same quarter in 1993.
The increase in 1994 was due primarily to the decrease in interest
rates on all interest bearing liabilities of 56 basis points, which
was greater than the decline of 54 basis points on all interest
earning assets. This caused the net interest margin to increase 2
basis points to 4.61% for quarter ended March 31, 1994 compared to
4.59% for the quarter ended March 31, 1993.
Average interest earning assets increased $234.6 million during the
first quarter of 1994, or 7.9% over the 1993 quarter. This
increase was mainly the result of the acquisition of Peoples
Bancorp ("Peoples") during June of 1993 with loans and investments
acquired of approximately $185.9 million. The average balance of
taxable investment securities held to maturity and available for
sale decreased by $123.6 million or 10.5% over the 1993 average
balance. Non-taxable investments increased $65.3 million or 28.7%
taking advantage of the increased yield available over taxable
investments. Residential mortgage loans, automobile loans and
commercial mortgages have increased during the first quarter of
1994 and continue to be the largest source of loan volume. Average
loans, including loans held for sale, increased $292.3 million or
19.1% during the quarter ended March 31, 1994 over the same period
in 1993 with $138.5 million of this increase from the Peoples
acquisition. The average rate on loans, including loans held for
sale, decreased 60 basis points, but combined with the increase in
average loan volume, interest income on loans on an FTE basis for
the first quarter of 1994 increased by $3.4 million over the same
quarter in 1993.
Average interest-bearing liabilities grew 4.7% or $120.8 million
and was due mainly to the 1993 acquisition of Peoples. Average
demand deposits continued to grow and increased by $88.0 million or
27.5% over 1993 first quarter balances.
The net interest margin increased to 4.61% from 4.59% during the
first quarter in 1994 compared to the same period in 1993 which was
substantially the result of changes in market interest rates. The
increase in the net interest margin of 2 basis points, coupled with
the increase in average earning assets over average interest-
bearing liabilities, was the basis for the increase in net interest
income.
- - - 7 -
Non-Interest Income
Non-interest income continues to represent a considerable source of
income for Valley. Excluding gains on securities transactions,
total non-interest income amounted to $3.9 million for the quarter
ended March 31, 1994 compared with $4.0 million for the same
quarter in 1993, representing a decrease of $158 thousand or 3.9%.
Service charges on deposit accounts increased $235 thousand or
20.2% for the first quarter ended March 31, 1994 compared to the
same period in 1993. Increased volume due to the Peoples
acquisition and increased fees charged on deposit accounts
generated a majority of this increase.
Fees from mortgage servicing decreased by 18.7% from $1.0 million
for the three months ended March 31, 1993 to $845 thousand for the
same period in 1994. As of March 31, 1994 MSI serviced a total of
$1.14 billion of loans, of which $484.0 million are serviced for
VNB. The portfolio declined during the first quarter of 1994 as a
result of large amounts of prepayments, which were partially offset
by Valley's loan origination volume added to the portfolio.
Gains on the sales of loans were $240 thousand for the quarter
ended March 31, 1994 compared to $457 thousand for the same quarter
in 1993. During the quarter ended March 31, 1994 Valley sold 15-
year and 30-year loans as part of its ongoing program to sell
higher interest-rate risk, fixed rate loans. Loans are sold based
upon loan to value ratio and maturity, and are classified as loans
held for sale on the consolidated statement of financial condition.
Due to decreased origination volume it was decided not to continue
to sell 15 year fixed rate loans beginning April 1, 1994 except for
those already scheduled to be sold.
Net gains on securities transactions for both the first quarter in
1994 and 1993 amounted to $3.3 million. The sales during 1994 were
in response to a rising interest rate environment, with the ability
to reinvest the proceeds in higher yields or in other types of
securities.
Non-Interest Expense
Non-interest expense totalled $17.8 million for the first quarter
of 1994, $1.8 million, or 11.0% above the 1993 quarter. The branch
staff and office facilities for the seven branches acquired from
Peoples account for a large portion of the increase in non-interest
expense. The largest component of non-interest expense is salaries
and employee benefit expense which totalled $8.6 million for the
quarter ended March 31, 1994 compared to $7.6 million for the first
quarter in 1993, an increase of $924 thousand or 12.1%. At March
31, 1994, full-time equivalent staff was approximately 1,101
compared to approximately 943 at the March 31, 1993.
Net occupancy and furniture and fixture expense increased to $2.8
million during the first quarter ended March 31, 1994 from $2.4
million during the same quarter in 1993. The increase of $431
thousand or 18.3% represents additional rent, utilities, tax,
maintenance and depreciation expense on facilities acquired due to
the Peoples acquisition.
Amortization of intangible assets decreased to $884 thousand during
the first quarter in 1994 from $958 thousand during the same
quarter in 1993, representing a decrease of $74 thousand, or 7.7%.
This was due to the declining level of amortization on core
deposits and purchased mortgage servicing rights.
- - - 8 -
Income Taxes
Income tax expense as a percentage of pre-tax income rose slightly
to 34.2% in 1994 compared to 33.7% in 1993. This increase was
attributable to the change in the federal income tax rate from 34%
to 35% enacted July 1993 and was offset by a lower tax rate on a
new investment subsidiary and by a reduction in the state of New
Jersey income tax rate due to the elimination of the .375% surtax
exemption.
FUNDS MANAGEMENT
Interest Rate Sensitivity
At March 31, 1994, rate sensitive liabilities exceeded rate
sensitive assets at the 90 day interval and resulted in a negative
gap of $202 million or a ratio of .84:1. Rate sensitive assets
exceeded rate sensitive liabilities at the 91 to 365 day interval
by $20.8 million or a ratio of 1.05:1 and resulted in a small
positive gap. The total negative gap repricing within 365 days as
of March 31, 1994 is $181.0 million or .89:1. In view of the
present economic climate, management does not view these amounts as
presenting an unusually high risk potential, although no assurances
can be given that Valley is not at risk from rate increases or
decreases.
The above gap results take into account repricing and maturities of
assets and liabilities, but fails to consider the interest rate
sensitivities of those asset and liability accounts. Management
has prepared for its use an income simulation model to project
future net interest income streams in light of the current gap
position. Management has also prepared for its use alternative
scenarios to measure levels of net interest income associated with
various changes in interest rates. According to this computer
model, an interest rate increase of 300 basis points and a decrease
of 100 basis points had a minimal impact on Valley's future net
interest income. Management cannot provide any assurance about the
actual effect of changes in interest rates on Valley's net interest
income.
Liquidity
Liquidity measures the ability to satisfy current and future cash
flow needs as they become due. Maintaining a level of liquid funds
through asset-liability management seeks to ensure that these needs
are met at a reasonable cost. On the asset side, liquid funds are
maintained in the form of cash and due from banks, federal funds
sold, investments securities held to maturity maturing within one
year, securities available for sale and loans held for sale. At
March 31, 1994, liquid assets amounted to $731.6 million, as
compared to $1.07 billion at December 31, 1993. This represents
22.6% and 34.3% of earning assets, and 21.3% and 31.2% of total
assets at March 31, 1994 and December 31, 1993, respectively.
On the liability side, the primary source of funds available to
meet liquidity needs is Valley's core deposit base, which generally
excludes certificates of deposit over $100 thousand. Core deposits
averaged $2.50 billion and $2.45 billion at March 31, 1994 and
December 31, 1993, respectively, representing 77.9% and 78.9% of
average earning assets. Short term borrowings and large dollar
certificates of deposit, generally those over $100 thousand, are
used as supplemental funding sources during periods when growth in
the core deposit base does not keep pace with that of earning
assets. Additional liquidity is derived from scheduled loan and
investment payments of principal and interest, as well as
prepayments received. Proceeds from the sales of investment
securities available for sale were $131.1 million, and proceeds of
$100.6 million were generated from investment maturities.
Purchases of investment securities during the same year were $228.2
million. Short term borrowings and certificates of deposit over
$100 thousand amounted to $199.5 million and $170.4 million, on
average, at March 31, 1994 and December 31, 1993, respectively.
- - - 9 -
The parent company's cash requirements consist primarily of
dividends to shareholders. This cash need is routinely satisfied
by dividends collected from its subsidiary bank. Projected cash
flows from this source are expected to be adequate to pay
dividends, given the current capital levels and current profitable
operations of its subsidiary.
Investment Securities
Effective January 1, 1994, Valley adopted Statement of Financial
Accounting Standards No.115 ("SFAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities". The finanical impact
of adoption represented an addition to Shareholders' Equity of $4.5
million, net of taxes. At March 31, 1994, the unrealized loss, net
of deferred taxes, resulted in a decrease to Shareholders' Equity
of $3.9 million. As of March 31, 1994 Valley had $440.3 million of
securities available for sale compared with $441.5 million at
December 31, 1993. As of January 1, 1994, those securities are
recorded at fair value with unrealized gains and losses excluded
from earnings and reported as a separate component of shareholders'
equity.
Total investment securities, including securities classified as
held to maturity and available for sale, decreased $9.0 million
from year-end 1993 to the first quarter of 1994 to $1.37 billion.
Loan Portfolio
Residential mortgage loans, including residential mortgages held
for sale increased by 1.5% or $9.5 million to a total of $623.8
million at March 31, 1994 since December 31, 1993, and represent
33.7% of the loan portfolio. The volume of residential mortgage
loan applications began to decline during the quarter as interest
rates increased. Installment loans, including predominantly
automobile and credit card loans, totalled $542.9 million at March
31, 1994, increasing by $14.3 million over the balance at December
31, 1993 or 2.7% and representing 29.3% of the loan portfolio.
Commercial mortgages increased 3.7% or $14.3 million from December
31,1993 to March 31, 1994, also the result of refinancing activity
due to decreased interest rates.
It is expected that the increase in volume of installment and
commercial mortgage loans will continue into the second quarter of
1994, while residential mortgage loan volume declines due to higher
interest rates causing the recent slow-down in refinancing
activity.
Non-Performing Assets
Non-performing assets include non-accrual loans, other real estate
owned (OREO) and loans past due in excess of 90 days as to the
collection of principal or interest payments. Non-performing
assets were $33.1 million or 1.8% of loans, net of unearned income
at March 31, 1994, compared with $30.2 million, or 1.5% of loans
net of unearned income at December 31, 1993 and $34.1 million, or
1.9% of loans at March 31, 1993. During the quarter ended March
31, 1994 one loan became 90 days past due and still accruing
(subsequently moved to non-accrual during the second quarter)
causing an increase of $6.6 million in non-performing assets over
December 31, 1993 which was partially offset by a decrease in non-
accrual loans of $3.4 million during the same period and a small
decrease in other real estate owned.
In May of 1993, FASB issued Statement of Financial Accounting
Standard No. 114, "Accounting by Creditors for Impairment of a
Loan" which applies to financial statements for fiscal years
beginning after December 15, 1994. This Statement requires that
impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate
or, as a practical expedient, at the loan's observable market price
or at the fair value of the collateral if the loan is collateral
dependent. Valley has not yet determined the impact of this
statement.
- - - 10 -
Asset Quality and Risk Elements
The level of the allowance is the result of an on going analysis by
management and Valley's Board of Directors. This analysis attempts
to take into account various data so as to assess the level of the
allowance. Emphasis is placed on the current economic climate and
the condition of the real estate market in the Northern New Jersey
area. Management addressed these current economic conditions and
applied that information to changes in the composition of the loan
portfolio. The level of non-performing assets, coupled with the
continued recovery of the economy was responsible for the decision
to decrease the provision from $1.5 million in the first quarter of
1993 to $900 thousand in the first quarter of 1994.
Valley's allowance for loan loss increased by $380 thousand since
year-end 1993. At March 31, 1994 the allowance for loan losses
amounted to $35.6 million or 1.92% of loans, including loans held
for sale, net of unearned income, as compared to $35.2 million or
1.95% at year-end 1993.
The allowance is adjusted by provisions charged against income and
loans charged-off, net of recoveries. Net loan charge-offs were
$520 thousand for the quarter ended March 31, 1994 compared with
$451 thousand for the quarter ended March 31, 1993. The ratio of
annualized net charge-offs to average loans amounted to 0.12% for
both quarters ended March 31, 1994 and 1993.
Capital Adequacy
A significant measure of the strength of a financial institution is
its stockholders' equity, which must expand in close proportion to
asset growth. At March 31, 1994, shareholders' equity totalled
$271.0 million, compared with $264.4 million at year-end 1993.
Valley has achieved steady internal capital generation throughout
the past five years.
Risk-based guidelines define a two-tier capital framework. Tier 1
capital consists of common shareholders' equity excluding SFAS 115
net unrealized gains or losses less disallowed intangibles, while
total Tier 1 and Tier 2 capital consists of Tier 1 capital and the
allowance for loan losses up to 1.25% of risk-adjusted assets.
Risk-adjusted assets are determined by assigning various levels of
risk to different categories of assets and off-balance sheet
activities.
Valley's capital position at March 31, 1994 under risk-based
capital guidelines was $268.9 million, or 14.35% of risk-weighted
assets, for Tier 1 capital and $292.4 million, or 15.60% for total
Tier 1 and Tier 2 capital. The comparable ratios at December 31,
1993 were 13.93% for Tier 1 capital and 15.18% for total Tier 1 and
Tier 2 capital. Valley's ratios at March 31, 1993 are above the
risk-based capital standards, which require all bank holding
companies to have Tier 1 capital of at least 4% and total Tier 1
and Tier 2 capital of 8%.
The Federal Reserve Board requires each bank holding company to
maintain a minimum leverage ratio of 3.0% (Tier 1 capital to
average total assets). The minimum 3.0% leverage requirement
applies only to top-rated banking organizations without any
operating, financial or supervisory deficiencies. Other
organizations are expected to hold an additional capital cushion of
at least 100 to 200 basis points of Tier 1 capital. In all cases,
banking organizations should maintain capital commensurate with the
level and nature of all the risks to which they are exposed. At
March 31, 1994 and December 31, 1993, Valley was in compliance
with the leverage requirement having a Tier 1 leverage ratio of
7.92% and 7.62%, respectively.
VNB is also subject to similar but separate capital adequacy
guidelines. VNB is subject to risk-based capital rules and
leverage rules issued by the Comptroller of the Currency. As of
March 31, 1993, VNB's total Tier 1 and Tier 2 capital ratio was
14.24% and its leverage ratio was 7.11%.
- - - 11 -
The primary source of capital growth is through retention of
earnings. Valley's rate of earnings retention, derived by dividing
undistributed earnings by net income was 60.5% at March 31, 1994,
compared to 66.5% at March 31, 1993. Quarterly cash dividends
declared amounted to $.25 per share, equivalent to a dividend
payout ratio of 39.5%, up from the 33.5% for the same quarter in
1993. Valley declared a 10% common stock dividend on March 22,
1994 to shareholders of record on April 15, 1994, payable May 3,
1994. Valley maintained the cash dividend at $1.00 per share per
annum after the payment of the stock dividend. The Board of
Directors during February increased the regular quarterly cash
dividend from $0.20 to $0.25 per share, or from $0.80 to $1.00 per
share per annum, a 25.0% increase, including the stock dividend.
Valley's Board of Directors continues to believe that cash
dividends are an important component of shareholder value and that
at its current level of performance and capital, Valley expects to
continue its current dividend policy of a quarterly distribution of
earnings to its shareholders.
- - - 12 -
PART II
Item 4. Submission of Matters to a Vote of Security Holders
a) On March 22, 1994 the Annual Meeting of Shareholders of
Valley National Bancorp was held. The Shareholders voted
upon the election of 16 persons, named in the Proxy
Statement, to serve as directors of the Corporation for
the ensuing year. All directors were elected and there
was no solicitation in opposition to management's
nominees as listed in the proxy statement. The following
is a list of directors elected at the Annual Meeting with
the number of votes "For" and "Withheld". There were no
abstentions.
Number of Votes
Name For Withheld
Pamela Bronander 17557455 13481
Joseph Coccia, Jr. 17559417 11519
Austin C. Drukker 17561470 9467
Thomas P. Infusino 17561049 9888
Gerald Korde 17561470 9467
Gerald H. Lipkin 17560878 10058
Robert L. Marcalus 17561049 9888
Robert E. McEntee 17561470 9467
Sam P. Pinyuh 17559741 11196
Robert Rachesky 17561470 9467
Barnett Rukin 15560873 10064
Peter Southway 17523234 47702
Richard F. Tice 17561470 9467
Leonard J. Vorcheimer17561470 9467
Joseph L. Vozza 17561470 9467
b) On March 22, 1994 at the Annual Meeting of Shareholders,
the shareholders voted for the approval of amendments to
the Corporation's Long-Term Stock Incentive Plan approved
by the shareholders on March 28, 1989 pursuant to which
the Corporation may issue incentive stock options,
nonqualified stock options, stock appreciation rights and
restricted stock awards for up to 1,577,438 shares of the
Corporation's common stock to officers and key employees
of the Corporation and Valley National Bank.
- - - 13 -
Item 5. Other Matters
a) The Board of Directors approved a ten percent common
stock dividend on March 22, 1994. The new stock was
issued May 3, 1994 to shareholders of record as of April
15, 1994. In conjunction with the announced stock
dividend, the Board of Directors also approved to
maintain the regular quarterly dividend of 25 cents. In
connection with the stock dividend the company filed an
amendment to its Certificate of Incorporation which
increased the authorized common shares to 37,537,500
shares effective April 15, 1994.
Item 6. Exhibits and Reports on Form 8-K
b) Reports on Form 8-K
1) On March 22, 1994 to report a ten percent common stock
dividend issued May 3, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant had duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: May 13, 1994
PETER SOUTHWAY
PRESIDENT & COO
Date: May 13, 1994
ALAN D. ESKOW
SENIOR VICE PRESIDENT
FINANCIAL ADMINSTRATION
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