Vous êtes sur la page 1sur 11

U.S.

Research
Published by Raymond James & Associates

January 28, 2011


Valley National Bancorp
(VLY:NYSE) Company Comment
Anthony Polini, (212) 856-4897, Anthony.Polini@RaymondJames.com Rating _________________________________
Whitney Young, Sr. Res. Assoc., (212) 856-4885, Whitney.Young@RaymondJames.com Outperform 2

Banking_____________________________________________________________ Current and Target Price __________________


Current Price (1/28/2011 11:30 a.m.) $13.78
VLY 4Q10 Snapshot: Another Strong Quarterly Performance Target Price: $16.00
52-Week Range $16.19 - $12.29
Suitability Total Return
Recommendation: We maintain our Outperform rating on VLY. Valley National
reported 4Q10 EPS of $0.24. Excluding a trading loss of $2.1 million ($0.01 per share) Market Data ____________________________
and securities gains of $7.0 million ($0.03 per share), EPS were $0.22 compared to our Shares Out. (mil.) 161
estimate of $0.19 and the Street consensus of $0.21. The beat versus our estimate Market Cap. (mil.) $2,219
was driven by higher-than-expected net gains on loans sales of $7.5 million, which Avg. Daily Vol. (10 day) 812,940
Dividend/Yield $0.72/5.2%
included a $3.9 million gain on an $83 million bulk loan sale. Credit quality was a
Book Value (12/10) $8.02
significant highlight, as net charge-offs (NCOs) decreased 29.3% LQ. We are Tang. BVPS (12/10) $5.89
maintaining 2011E EPS at $0.80 and introducing 2012E EPS at $0.90.
Earnings & Valuation Metrics ______________
♦ Highlights for the quarter included: a 29.3% LQ and 68.4% y/y decrease in NCOs;
2009A 2010A 2011E 2012E
a 43.1% LQ and 51.5% y/y decrease in loans 90 days past due; a 19.1% LQ and
P/E Ratios (Non-GAAP)
21.3% y/y decrease in commercial and industrial (C&I) nonaccruals and a 7.5% LQ
19.1x 17.4x 17.2x 15.3x
decrease in construction nonaccruals; an 8.3% LQ and 2.5% y/y increase in loan
servicing fees; mortgage banking gains of $7.5 million, up from $1.5 million in Company Description_____________________
3Q10 and $1.7 million in 4Q09; and a 4.4% LQ and 9.1% y/y increase in Valley National is a regional bank holding company
noninterest bearing deposits. The company’s capital position remained strong headquartered in Wayne, New Jersey, with $14.1
with a tangible common equity (TCE) ratio of 6.90% at December 31, 2010. billion assets. Valley National Bank operates 198
branches in 14 counties in northern and central New
♦ Lowlights for the quarter included: NIM compression to 3.59% from 3.73% in Jersey, Manhattan, Brooklyn, and Queens. It is the
largest commercial bank headquartered in New Jersey
3Q10; a 3.9% LQ decrease in net interest income; an 18 bp LQ and 13 bp y/y and offers a wide range of loan, deposit, insurance,
decrease in the average loan yield; a $2.1 million trading loss; higher-than- and investment management products and services.
expected core noninterest expense; an increase in troubled debt restructurings At December 31, 2010, it had $9.4 billion loans and
$9.3 billion deposits.
(TDRs); and sluggish balance sheet growth after a pickup in C&I loan activity in
3Q10.
Valuation: Our $16 target price assumes VLY trades at about 16x our projected EPS
power of $1.00 (detailed on page 5), equal to its three-year average P/E.

Non-GAAP Q1 Q2 Q3 Q4 Full GAAP EPS Revenues


EPS Mar Jun Sep Dec Year Full Year (mil.)
2009A $0.17 $0.20 $0.19 $0.16 $0.72 $0.64 $521
Old2010E 0.19A 0.19A 0.21A 0.19 0.78 0.78 534
New2010A 0.19 0.19 0.21 0.22 0.79 0.81 535
Old2011E 0.19 0.19 0.20 0.22 0.80 0.80 545
New2011E 0.20 0.20 0.20 0.21 0.80 0.80 535
Old2012E NA NA NA NA NA NA NA
New2012E 0.21 0.22 0.23 0.24 0.90 0.90 562
Rows may not add due to rounding. Non-GAAP EPS are operating and exclude unusual items.

Please read domestic and foreign disclosure/risk information beginning on page 8 and Analyst Certification on page 8.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

In 4Q10, core revenue decreased 4.3% LQ but increased 0.7% y/y to $130.1 million. Net interest income decreased 3.9% LQ but
increased 1.4% y/y to $113.1 million (87.0% of core revenue). The NIM decreased to 3.59% from 3.73% in 3Q10 and 3.43% in 4Q09.
The NIM was negatively impacted by excess liquidity from loan sales and lower accretion on covered loans. Earning assets increased
2.4% LQ. Core noninterest income decreased 7.0% LQ and 3.6% y/y to $16.9 million (13.0% of core revenue). Trust and investment
fees decreased 0.9% LQ but increased 3.0% y/y to $1.9 million (1.5% of core revenue). Insurance premiums increased 13.9% LQ and
35.7% y/y to $2.9 million (2.2% of core revenue). Deposit account fees decreased 5.5% LQ and 7.5% y/y to $6.2 million (4.8% of core
revenue). Loan servicing fees increased 8.3% LQ and 2.5% y/y to $1.3 million (1.0% of core revenue). Bank owned life insurance
(BOLI) decreased 31.8% LQ and 23.4% y/y to $1.2 million (0.9% of core revenue). Other noninterest income decreased 18.9% LQ and
15.3% y/y to $3.5 million (2.7% of core revenue).
Total revenue, which includes gains on loan sales, trading, securities, asset sales, and other-than-temporary impairment (OTTI)
charges, increased 10.3% LQ and 9.4% y/y. The company had net gains on loan sales of $7.5 million due to strong refinancing
activity. Total revenue was negatively impacted by trading losses of $2.1 million in 4Q10 compared to a loss of $2.6 million in 3Q10
and $1.5 million in 4Q09. Net securities gains were $7.0 million (up from $112,000 in 3Q10). The company also recorded a $6.3
million gain from an FDIC loss-sharing agreement, which offset the $6.4 million provision for covered loans during the quarter.

Five-Quarter Snapshot: Revenue Composition


($MM) % Chg. % Chg.
% 4Q10/ 4Q10/
Total 4Q10 3Q10 2Q10 1Q10 4Q09 3Q10 4Q09
Net Interest Income 87.0 113.1 117.7 117.0 114.9 111.6 (3.9) 1.4
Trust & Investment Fees 1.5 1.9 1.9 1.9 1.9 1.9 (0.9) 3.0
Insurance Premiums 2.2 2.9 2.6 2.7 3.2 2.2 13.9 35.7
Deposit Account Fees 4.8 6.2 6.6 6.7 6.3 6.7 (5.5) (7.5)
Loan Servicing Fees 1.0 1.3 1.2 1.2 1.2 1.3 8.3 2.5
BOLI 0.9 1.2 1.7 1.8 1.5 1.5 (31.8) (23.4)
Other 2.7 3.5 4.3 4.6 3.7 4.1 (18.9) (15.3)
Core Noninterest Income 13.0 16.9 18.2 18.8 17.8 17.6 (7.0) (3.6)
Core Revenue 100.0 130.1 136.0 135.8 132.7 129.1 (4.3) 0.7
Net Gains Loan Sales 7.5 1.5 1.0 2.5 1.7 NM NM
Net Gains Trading (2.1) (2.6) 0.8 (3.0) (1.5) NM NM
Net Gains Securities 7.0 0.1 3.7 0.9 7.8 NM NM
Net Gains Asset Sales 0.2 0.1 0.8 0.1 0.1 NM NM
Nonrecurring/OTTI Charges 6.3 0.0 (2.0) (2.6) (1.0) NM NM
Total Noninterest Income 35.8 17.3 23.1 15.7 24.6 106.9 45.9
Total Revenue 149.0 135.1 140.1 130.5 136.1 10.3 9.4
Net Interest Margin (%) 3.59 3.73 3.68 3.60 3.43 (14) bp 16 bp
Source: Company data.

Credit quality continued to shows signs of improvement and losses remained very low. Excluding the provision for FDIC covered
loans, the provision for loan losses decreased to $8.7 million from $9.3 million in 3Q10 and $12.2 million in 4Q09. NCOs decreased
29.3% LQ and 68.4% y/y to $4.3 million in 4Q10. NCOs were only 0.18% of average loans, down from 0.26% in 3Q10 and 0.58% in
4Q09. The company added $4.4 million to the allowance for loan losses compared to $3.2 million in 3Q10 and $7.2 million in 2Q10.
The allowance-to-total loans ratio increased to 1.33% from 1.21% in 3Q10 and 1.09% in 4Q09.
Nonaccrual loans decreased 0.5% LQ but increased 14.2% y/y to $105.1 million. C&I nonaccruals decreased 19.1% LQ and
construction nonaccruals decreased 7.5% LQ, but commercial real estate (CRE) nonaccruals increased 10.6% LQ, residential
mortgage nonaccruals increased 4.8% LQ, and consumer nonaccruals increased 23.1% LQ.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 2
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

Five-Quarter Snapshot: Credit Quality


($MM) % Chg. % Chg.
4Q10/ 4Q10/
4Q10 3Q10 2Q10 1Q10 4Q09 3Q10 4Q09
Net Charge-Offs (NCOs) 4.3 6.1 5.2 11.0 13.6 (29.3) (68.4)
Allowance for Loan Losses 124.7 113.8 110.6 103.5 102.0 9.6 22.3
Nonaccrual/Restr. Loans 105.1 105.6 103.5 91.6 92.0 (0.5) 14.2
90+ Days 2.5 4.4 6.1 4.1 5.1 (43.1) (51.5)
OREO 12.2 6.5 6.3 7.1 6.4 86.4 89.7
Nonperforming Assets (NPAs) 119.7 116.5 115.9 102.7 103.5 2.8 15.7

Provision/Total Loans (%) 0.64 0.39 0.53 0.53 0.52


Allowance/Total Loans (%) 1.33 1.21 1.17 1.08 1.09
Allowance/Nonaccruals (%) 118.70 107.75 106.89 112.98 110.90
Allowance/NPLs (%) 115.96 103.47 100.96 108.20 105.05
Allowance/NPAs (%) 104.14 97.66 95.48 100.73 98.52
NPAs/Loans+OREO (%) 1.28 1.23 1.23 1.07 1.10
NPAs/Total Assets (%) 0.85 0.83 0.82 0.71 0.72
NCOs/Average Loans (%) 0.18 0.26 0.22 0.47 0.58
Source: Company data.

Total loans decreased 0.7% LQ but were flat y/y at $9.4 billion. Non-covered loans decreased 0.5% LQ and 3.9% y/y to $9.0 billion.
Commercial loans decreased 0.7% LQ and 1.9% y/y to $5.6 billion (60.1% of total loans). Residential mortgages increased 1.9% LQ
but decreased 0.9% y/y to $1.9 billion (20.6% of total loans). Consumer loans decreased 2.7% LQ and 13.8% y/y to $1.5 billion (15.5%
of total loans). Covered loans decreased 5.4% LQ to $357 million (3.8% of total loans).

Five-Quarter Snapshot: Loan Composition


($ MM) % Chg. % Chg.
% 4Q10/ 4Q10/
Total 4Q10 3Q10 2Q10 1Q10 4Q09 3Q10 4Q09

C&I 19.5 1,825 1,824 1,760 1,765 1,801 0.1 1.3


Commercial RE 36.1 3,378 3,406 3,444 3,483 3,500 (0.8) (3.5)
Construction 4.6 428 441 437 434 440 (2.9) (2.7)
Total Commercial 60.1 5,632 5,671 5,641 5,683 5,742 (0.7) (1.9)

Residential RE 20.6 1,925 1,890 1,911 1,893 1,943 1.9 (0.9)


Home Equity 5.5 513 531 546 554 566 (3.5) (9.5)
Automobile 9.1 851 877 866 934 1,030 (3.0) (17.4)
Other Consumer 0.9 89 85 81 81 89 4.6 (0.3)
Total Consumer 15.5 1,452 1,493 1,493 1,569 1,685 (2.7) (13.8)

Total Non-covered Loans 96.2 9,009 9,055 9,046 9,145 9,370 (0.5) (3.9)

Covered Loans 3.8 357 377 385 425 - (5.4) NM

Total Loan 100.0 9,366 9,432 9,431 9,570 9,370 (0.7) (0.0)

Average Yield (%) 5.64 5.82 5.72 5.75 5.77 (18) bp (13) bp
Source: Company data.

Average deposits decreased 0.4% LQ and 1.5% y/y to $9.4 billion. Noninterest bearing deposits increased 4.4% LQ and 9.1% y/y to
$2.5 billion (26.9% of total deposits). Time deposits decreased 2.5% LQ and 14.1% y/y to $2.7 billion (28.6% of total deposits). The
average rate paid on interest bearing deposits decreased to 0.99% in 4Q10 from 1.02% in 3Q10 and 1.32% in 4Q09. The average rate
paid on total deposits decreased to 0.72% in 4Q10 from 0.76% in 3Q10 and 1.00% in 4Q09.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 3
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

Five-Quarter Snapshot: Deposit Composition


($MM, average balances)
% Chg. % Chg.
% 4Q10/ 4Q10/
Total 4Q10 3Q10 2Q10 1Q10 4Q09 3Q10 4Q09

Noninterest Bearing (DDAs) 26.9 2,530 2,423 2,442 2,316 2,319 4.4 9.1

Savings, NOW, & Money Market 44.6 4,199 4,270 4,144 4,072 4,111 (1.7) 2.1
Time Deposits 28.6 2,693 2,761 3,027 3,116 3,135 (2.5) (14.1)
Total Int. Bearing Deposits 73.1 6,892 7,031 7,171 7,188 7,247 (2.0) (4.9)

Average Rate Paid Int. Bearing 0.99 1.02 1.09 1.14 1.32 (3) bp (33) bp

Total Deposits 100.0 9,421 9,454 9,613 9,504 9,565 (0.4) (1.5)

Average Rate Paid (%) 0.72 0.76 0.81 0.86 1.00 (4) bp (28) bp
Source: Company data.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 4
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

Valley National Bancorp EPS Power Projections


($ MM)
2009A 2010A 2011E 2012E 2013P
Balance Sheet
Assets 14,284 14,144 14,369 14,744 15,186
Loans 9,370 9,366 9,441 9,816 10,307
Intangible Assets 321 344 344 340 330
Common Equity 1,253 1,295 1,309 1,339 1,384
Total Equity 1,253 1,295 1,309 1,339 1,384
Tangible Common Equity 932 952 965 999 1,054
Income Statement
Revenue 522 554 544 568 614
Noninterest Expense 306 318 328 336 353
Noninterest Expense/Revenue 59% 57% 60% 59% 58%
Provision 48 49 30 20 21
Provision/Loans 0.51% 0.53% 0.31% 0.20% 0.20%
Allowance/Loans 1.09% 1.33% 1.38% 1.33% 1.31%
Pre-Tax Earnings 168 187 186 213 240
Taxes 52 56 56 66 77
Tax Rate 31% 30% 30% 31% 32%
Net Income 116 131 130 147 163
Preferred Div. 20 0 0 0 0
Net Income to Common 96 131 130 147 163
Avg. Shares Out. 152 161 162 163 164
Period End Shares 161 161 162 162 164
Per Share ($)
EPS Power 0.64 0.81 0.80 0.90 1.00
Common Dividend 0.72 0.72 0.72 0.72 0.72
Payout Ratio 114% 89% 90% 80% 72%
Book Value 7.80 8.02 8.10 8.26 8.44
Tangible Book Value 5.80 5.89 5.97 6.17 6.43
Profitability (%)
ROA 0.81 0.92 0.91 1.00 1.09
ROE 8.62 10.30 10.01 11.11 12.00
ROCE 8.30 10.30 10.01 11.10 12.00
ROTCE 11.46 13.93 13.59 14.96 15.91
TCE Ratio 6.68 6.90 6.88 6.93 7.09
Projected P/B 1.7 2.0 2.2
Projected P/TB 2.4 2.7 2.9
Projected P/E (on 2013E) 14.0 16.0 18.0
Projected Forward P/E 17.3 17.6 18.0
Estimated Fair Value (Year End) $14 $16 $18
Source: Company data and Raymond James.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 5
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research
VLY Deposit Market Share by County
Total Total
Market Deposits in Market
Share Branch Market Share
County Rank Count ($000) (%)
Passaic, NJ 1 30 2,197,653 22.66
Bergen, NJ 6 42 1,921,803 4.99
Essex, NJ 9 26 1,232,259 5.87
New York, NY 27 16 1,202,805 0.25
Morris, NJ 9 21 867,671 4.62
Kings, NY 14 8 408,255 1.18
Hudson, NJ 10 13 394,316 1.64
Monmouth, NJ 14 14 364,385 2.08
Union, NJ 14 10 231,993 1.32
Sussex, NJ 5 6 181,561 7.97
Somerset, NJ 10 5 164,831 1.95
Middlesex, NJ 22 6 131,523 0.61
Queens, NY 36 5 112,897 0.27
Warren, NJ 7 3 99,944 4.47
Source: SNL.
As of June 30, 2010.

VLY Branch Map

Source: SNL.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 6
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

VLY Earnings Model ($ in millions, except per share data)

Balance Sheet 1Q10A 2Q10A 3Q10A 4Q10A 2010A 1Q11E 2Q11E 3Q11E 4Q11E 2011E 1Q12E 2Q12E 3Q12E 4Q12E 2012E
Average Assets 14,127 14,201 14,051 14,100 14,119 14,269 14,319 14,369 14,431 14,347 14,506 14,594 14,694 14,794 14,647
Average Earning Assets 12,747 12,737 12,616 12,621 12,680 12,870 12,920 12,970 13,033 12,948 13,108 13,195 13,295 13,395 13,248
Average Loans 9,422 9,544 9,475 9,458 9,475 9,353 9,328 9,341 9,403 9,356 9,478 9,566 9,666 9,766 9,619
Average Deposits 12,824 12,873 9,345 9,421 11,116 9,389 9,439 9,489 9,539 9,464 9,589 9,651 9,726 9,801 9,692
Average Equity 1,255 1,265 1,275 1,288 1,271 1,297 1,300 1,303 1,307 1,301 1,311 1,317 1,325 1,334 1,322
Total Assets 14,474 14,112 14,088 14,144 14,144 14,194 14,244 14,294 14,369 14,369 14,444 14,544 14,644 14,744 14,744
Total Earning Assets 13,071 12,720 12,443 12,745 12,745 12,795 12,845 12,895 12,970 12,970 13,045 13,145 13,245 13,345 13,345
Total Loans 9,570 9,431 9,432 9,366 9,366 9,341 9,316 9,366 9,441 9,441 9,516 9,616 9,716 9,816 9,816
Total Deposits 9,780 9,420 9,269 9,364 9,364 9,414 9,464 9,514 9,564 9,564 9,614 9,689 9,764 9,839 9,839
Total Common Equity 1,259 1,269 1,278 1,295 1,295 1,298 1,301 1,305 1,309 1,309 1,314 1,321 1,329 1,339 1,339
Preferred Equity - - - - - - - - - - - - - - -
Total Equity 1,259 1,269 1,278 1,295 1,295 1,298 1,301 1,305 1,309 1,309 1,314 1,321 1,329 1,339 1,339
Intangible Assets 333 334 337 344 344 344 344 344 344 344 340 340 340 340 340
Tangible Common Equity 927 935 941 952 952 954 957 961 965 965 974 981 989 999 999
Income Statement 1Q10A 2Q10A 3Q10A 4Q10A 2010A 1Q11E 2Q11E 3Q11E 4Q11E 2010E 1Q12E 2Q12E 3Q12E 4Q12E 2010E
Net Interest Income (FTE) 116.38 118.43 119.21 114.48 468.50 116.80 116.28 116.08 115.99 465.15 117.31 120.08 121.65 123.24 482.28
Tax-Equivalent Adjustment 1.53 1.40 1.48 1.34 5.75 1.34 1.34 1.34 1.34 5.36 1.40 1.40 1.40 1.40 5.60
Provision for Loan Losses 12.61 12.44 9.31 15.10 49.46 8.50 8.00 7.00 6.00 29.50 5.50 5.00 4.50 4.50 19.50
Noninterest Income (NII) 15.68 22.48 17.33 35.85 91.33 20.00 20.75 21.25 21.75 83.75 22.25 22.75 23.00 23.50 91.50
Core Fee Income 17.83 18.79 18.22 16.95 71.79 17.50 18.75 19.25 19.75 75.25 20.50 21.00 21.50 22.00 85.00
Net Gains Loan Sales 2.52 1.02 1.55 7.50 12.59 2.50 2.00 2.00 2.00 8.50 1.75 1.75 1.50 1.50 6.50
Net Gains Trading (3.03) 0.84 (2.63) (2.08) (6.90) - - - - - - - - - -
Net Gains Securities 0.86 3.66 0.11 6.97 11.60 - - - - - - - - - -
Net Gains Asset Sales 0.09 0.22 0.08 0.24 0.62 - - - - - - - - - -
Nonrecurring/OTTI Charges (2.59) (2.05) - 6.27 1.63 - - - - - - - - - -
Core Revenue 132.68 135.82 135.95 130.09 534.54 132.96 133.69 133.99 134.40 535.04 136.41 139.68 141.75 143.84 561.68
Noninterest Expense (NIE) 78.35 79.97 78.95 80.41 317.68 81.25 81.75 82.25 82.75 328.00 83.00 83.50 84.25 85.00 335.75
Core Expense 66.68 66.29 65.59 67.22 265.78 68.25 68.75 69.25 69.75 276.00 70.00 70.50 71.25 72.00 283.75
Amortization 1.70 2.45 2.60 0.97 7.72 1.00 1.00 1.00 1.00 4.00 1.00 1.00 1.00 1.00 4.00
Other 9.98 11.24 10.76 12.21 44.18 12.00 12.00 12.00 12.00 48.00 12.00 12.00 12.00 12.00 48.00
Goodwill Impair./Nonrecu. - - - - - - - - - - - - - - -
Pretax Income 39.56 47.09 46.81 53.48 186.94 45.71 45.94 46.74 47.65 186.04 49.66 52.93 54.50 55.84 212.93
Tax Expense 12.20 14.08 14.17 15.32 55.77 13.71 13.78 14.02 14.30 55.81 15.40 16.41 16.90 17.31 66.01
Net Income 27.36 33.01 32.64 38.16 131.17 31.99 32.16 32.72 33.36 130.23 34.27 36.52 37.61 38.53 146.92
Pref. Div./Warrant Accretion - - - - - - - - - - - - - - -
Net income to Common 27.36 33.01 32.64 38.16 131.17 31.99 32.16 32.72 33.36 130.23 34.27 36.52 37.61 38.53 146.92
After-Tax Unusual Items (3.08) 1.76 (1.61) 3.38 4.59 - - - - - - - - - -
Net Income Common (Op) 30.45 31.25 34.25 34.77 126.58 31.99 32.16 32.72 33.36 130.23 34.27 36.52 37.61 38.53 146.92
Period End Shares 160.81 160.97 161.12 161.46 161.46 161.50 161.50 161.50 161.50 161.50 162.00 162.00 162.00 162.00 162.00
Average Diluted Shares 160.79 160.97 161.12 161.36 161.07 162.00 162.00 162.00 162.00 162.00 162.50 162.50 162.50 162.50 162.50
Credit Quality 1Q10A 2Q10A 3Q10A 4Q10A 2010A 1Q11E 2Q11E 3Q11E 4Q11E 2011E 1Q12E 2Q12E 3Q12E 4Q12E 2012E
Net Charge-Offs (NCOs) 10.98 5.22 6.10 4.31 26.61 6.00 6.00 6.00 6.00 24.00 5.50 5.00 4.50 4.00 19.00
Allowance for Loan Losses 103.49 110.65 113.79 124.70 124.70 127.20 129.20 130.20 130.20 130.20 130.20 130.20 130.20 130.70 130.70
Nonaccrual Loans 91.60 103.51 105.60 105.06 105.06 105.00 95.00 90.00 80.00 80.00 75.00 70.00 65.00 60.00 40.00
90 Days Past Due 4.05 6.08 4.37 2.49 2.49 5.50 5.00 5.00 5.00 5.00 5.00 4.00 3.00 2.00 2.00
OREO + Other 7.09 6.30 6.55 12.21 12.21 7.00 8.00 9.00 8.00 8.00 8.00 7.00 7.00 6.00 6.00
Total NPAs 102.74 115.89 116.52 119.75 119.75 117.50 108.00 104.00 93.00 93.00 88.00 81.00 75.00 68.00 68.00
Provision/Total Loans (%) 0.53 0.53 0.39 0.64 0.53 0.36 0.34 0.30 0.25 0.31 0.23 0.21 0.19 0.18 0.20
Allowance/Total Loans (%) 1.08 1.17 1.21 1.33 1.33 1.36 1.39 1.39 1.38 1.38 1.37 1.35 1.34 1.33 1.33
Allowance/Nonaccruals (%) 112.98 106.89 107.75 118.70 118.70 121.15 136.00 144.67 162.76 162.76 173.61 186.01 200.31 217.84 326.76
Allowance/NPLs (%) 108.20 100.96 103.47 115.96 115.96 115.12 129.20 137.06 153.18 153.18 162.76 175.95 191.48 210.81 311.20
Allowance/NPAs (%) 100.73 95.48 97.66 104.14 104.14 108.26 119.63 125.20 140.00 140.00 147.96 160.75 173.61 192.21 192.21
NPAs/Loans+OREO (%) 1.07 1.23 1.23 1.28 1.28 1.26 1.16 1.11 0.98 0.98 0.92 0.84 0.77 0.69 0.69
NPAs/Total Assets (%) 0.71 0.82 0.83 0.85 0.85 0.83 0.76 0.73 0.65 0.65 0.61 0.56 0.51 0.46 0.46
NCOs/Average Loans (%) 0.47 0.22 0.26 0.18 0.28 0.26 0.26 0.26 0.26 0.26 0.23 0.21 0.19 0.16 0.20
Performance Data 1Q10A 2Q10A 3Q10A 4Q10A 2010A 1Q11E 2Q11E 3Q11E 4Q11E 2011E 1Q12E 2Q12E 3Q12E 4Q12E 2012E
Operating EPS 0.19 0.19 0.21 0.22 0.79 0.20 0.20 0.20 0.21 0.80 0.21 0.22 0.23 0.24 0.90
Reported EPS 0.17 0.21 0.20 0.24 0.81 0.20 0.20 0.20 0.21 0.80 0.21 0.22 0.23 0.24 0.90
Reported Book Value/Sh. 7.83 7.88 7.93 8.02 8.02 8.04 8.06 8.08 8.10 8.10 8.11 8.16 8.21 8.26 8.26
Tangible Book Value/Sh. 5.76 5.81 5.84 5.89 5.89 5.91 5.93 5.95 5.97 5.97 6.01 6.06 6.11 6.17 6.17
Dividends Paid 0.18 0.18 0.18 0.18 0.72 0.18 0.18 0.18 0.18 0.72 0.18 0.18 0.18 0.18 0.72
Operating ROA (%) 0.86 0.88 0.97 0.99 0.93 0.90 0.90 0.91 0.92 0.91 0.94 1.00 1.02 1.04 1.00
Operating ROE (%) 9.70 9.88 10.75 10.80 10.32 9.87 9.90 10.05 10.21 10.01 10.45 11.09 11.35 11.55 11.11
Net Int. Margin (NIM) (%) 3.60 3.68 3.73 3.59 3.69 3.63 3.60 3.58 3.56 3.59 3.58 3.64 3.66 3.68 3.64
Adj. NII/Revenue (FTE) (%) 13.29 13.70 13.26 12.90 13.29 13.03 13.89 14.22 14.55 13.92 14.88 14.89 15.02 15.15 14.98
Adj. NIE/Revenue (FTE) (%) 58.38 58.28 57.45 61.18 58.80 60.50 60.54 60.78 60.96 60.70 60.23 59.19 58.85 58.53 59.19
Av. Loans/Deposits (%) 73.47 74.14 101.39 100.39 85.24 99.62 98.83 98.44 98.58 98.87 98.85 99.12 99.38 99.64 99.25
Av. Lns/Earn. Assets (%) 73.92 74.93 75.10 74.94 74.72 72.67 72.20 72.02 72.15 72.26 72.31 72.49 72.70 72.91 72.61
Total Eq./Total Assets (%) 8.70 8.99 9.07 9.16 9.16 9.15 9.13 9.13 9.11 9.11 9.10 9.08 9.08 9.08 9.08
Tan.Com. Eq./Tan. Ass. (%) 6.55 6.78 6.84 6.90 6.90 6.89 6.89 6.89 6.88 6.88 6.90 6.91 6.92 6.93 6.93
Effective Tax Rate (%) 30.84 29.90 30.27 28.65 29.83 30.00 30.00 30.00 30.00 30.00 31.00 31.00 31.00 31.00 31.00
Effective Tax Rate FTE (%) 33.41 31.93 32.40 30.39 31.93 31.99 31.98 31.95 31.91 31.96 32.89 32.78 32.73 32.69 32.77
Source: Company data and Raymond James.
Anthony Polini (212) 856-4897
© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 7
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

Important Investor Disclosures


Raymond James is the global brand name for Raymond James & Associates (RJA) and its non-US affiliates worldwide. Raymond James &
Associates is located at The Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg, FL 33716, (727) 567-1000. Affiliates include
the following entities, which are responsible for the distribution of research in their respective areas. In Canada, Raymond James Ltd., Suite
2200, 925 West Georgia Street, Vancouver, BC V6C 3L2, (604) 659-8200. In Latin America, Raymond James Latin America, Ruta 8, km 17,500,
91600 Montevideo, Uruguay, 00598 2 518 2033. In Europe, Raymond James European Equities, 40 rue La Boetie, 75008, Paris, France, +33 1
45 61 64 90.
This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in
any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or
regulation. The securities discussed in this document may not be eligible for sale in some jurisdictions. This research is not an offer to sell
or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not
constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of
individual clients. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital
may occur. Investors should consider this report as only a single factor in making their investment decision.
Investing in securities of issuers organized outside of the U.S., including ADRs, may entail certain risks. The securities of non-U.S. issuers may
not be registered with, nor be subject to the reporting requirements of, the U.S. Securities and Exchange Commission. There may be limited
information available on such securities. Investors who have received this report may be prohibited in certain states or other jurisdictions
from purchasing the securities mentioned in this report. Please ask your Financial Advisor for additional details.
The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell
any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such
information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available
to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute
transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication.
Additional information is available on request.

Analyst Information
Registration of Non-U.S. Analysts: The analysts listed on the front of this report who are not employees of Raymond James & Associates,
Inc., are not registered/qualified as research analysts under FINRA rules, are not associated persons of Raymond James & Associates, Inc.,
and are not subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public companies,
and trading securities held by a research analyst account.
Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus
system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success
in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors
may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general
productivity and revenue generated in covered stocks.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part
of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
contained in this research report. In addition, said analyst has not received compensation from any subject company in the last
12 months.

Ratings and Definitions


Raymond James & Associates (U.S.) definitions
Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months.
For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized
over the next 12 months.
Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next 12-18 months. For higher yielding and more
conservative equities, such as REITs and certain MLPs, an Outperform rating is used for securities where we are comfortable with the relative
safety of the dividend and expect a total return modestly exceeding the dividend yield over the next 12-18 months.
Market Perform (MP3) Expected to perform generally in line with the S&P 500 over the next 12 months.
Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold.
Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage
impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. 8
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research
providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should
not be relied upon.
In transacting in any security, investors should be aware that other securities in the Raymond James research coverage universe might carry a
higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available investments.

Raymond James Ltd. (Canada) definitions


Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index
over the next six months.
Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months.
Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and
is potentially a source of funds for more highly rated securities.
Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months
and should be sold.

Raymond James Latin American rating definitions


Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months.
Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months.
Market Perform (MP3) Expected to perform in line with the underlying country index.
Underperform (MU4) Expected to underperform the underlying country index.

Raymond James European Equities rating definitions


Strong Buy (1) Absolute return expected to be at least 10% over the next 12 months and perceived best performer in the sector universe.
Buy (2) Absolute return expected to be at least 10% over the next 12 months.
Fair Value (3) Stock currently trades around its fair price and should perform in the range of -10% to +10% over the next 12 months.
Sell (4) Expected absolute drop in the share price of more than 10% in next 12 months.

Rating Distributions
Out of approximately 821 rated stocks in the Raymond James coverage universe, 53% have Strong Buy or Outperform ratings (Buy), 41% are
rated Market Perform (Hold) and 7% are rated Underperform (Sell). Within those rating categories, 23% of the Strong Buy- or Outperform
(Buy) rated companies either currently are or have been Raymond James Investment Banking clients within the past three years; 12% of the
Market Perform (Hold) rated companies are or have been clients and 16% of the Underperform (Sell) rated companies are or have been
clients.

Suitability Categories (SR)


For stocks rated by Raymond James & Associates only, the following Suitability Categories provide an assessment of potential risk factors for
investors. Suitability ratings are not assigned to stocks rated Underperform (Sell). Projected 12-month price targets are assigned only to
stocks rated Strong Buy or Outperform.
Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal.
Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, possibly a small dividend, and the potential
for long-term price appreciation.
Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less predictable earnings
and acceptable, but possibly more leveraged balance sheets.
High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and competitive issues,
higher price volatility (beta), and risk of principal.
Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated
with success, and a substantial risk of principal.

Raymond James Relationship Disclosures


Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the
next three months.
Company Name Disclosure
Valley National Valley National Bancorp has a joint marketing agreement with Raymond James Financial
Bancorp Services, a subsidiary of Raymond James Financial, Inc.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 9
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research
Stock Charts, Target Prices, and Valuation Methodologies
Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and
quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness;
competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on
overall economic conditions or industry- or company-specific occurrences. Only stocks rated Strong Buy (SB1) or Outperform (MO2) have
target prices and thus valuation methodologies.
Target Prices: The information below indicates our target price and rating changes for VLY stock over the past three years.

Valley National Bancorp (VLY) 3 yr. Stock Performance

Update

Closing

Target

Rating
Price

Price
Date
MO2 $14.51 MO2 $17.14 MO2 $16.00

$17.00 7/23/10 14.09 16.00 2


$16.00 4/23/10 15.95 17.14 2
$15.00 4/3/09 11.19 14.51 2
$14.00
Security Price

$13.00

$12.00

$11.00

$10.00

$9.00
1/28/08

2/26/08

3/26/08

4/23/08

5/21/08

6/19/08

7/18/08

8/15/08

9/15/08

10/13/08

11/10/08

12/9/08

1/8/09

2/6/09

3/9/09

4/6/09

5/1/09

6/1/09

6/29/09

7/27/09

8/24/09

9/22/09

10/20/09

11/16/09

12/15/09

1/14/10

2/11/10

3/12/10

4/12/10

5/7/10

6/7/10

7/6/10

8/2/10

8/30/10

9/28/10

10/25/10

11/20/10

12/17/10

1/14/11
Analyst Recommendations & 12 Month Price Objective
Adjusted for 5% Stock Dividend on 5/6/2009 SB1: Strong Buy NA: Not Applicable
Adjusted for 5% Stock Dividend on 5/5/2010 MO2: Outperform NM: Not Meaningful
MP3: Market Perform UR: Under Review
MU4: Underperform
S: Suspended

Date: 01/26/11
Price Rating Change Target Price Change
Coverage Suspended Target Price and Rating Change Split Adjustment

Valuation Methodology: For VLY, our valuation methodology utilizes a projected P/E multiple based on projected EPS power and takes into
account growth potential, earnings quality and visibility, and risk profile.

Risk Factors
General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on Raymond James research:
(1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected
revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes
toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or
practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major
segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as
currency fluctuations, differing financial accounting standards, and possible political and economic instability.
Specific Investment Risks Related to the Industry or Issuer

Banking Industry Risk Factors


Risks include credit quality deterioration, sudden changes in interest rates, and M&A risk related to deal announcements, as well as
integration risk. Furthermore, competition for loans and deposits could exert downward pressure on revenue growth.
Company-Specific Risk Factors for Valley National Bancorp
We expect nonperforming assets (NPAs) and net charge-offs (NCOs) to increase in 2009 and 2010. However, the company has a long track
record of superior credit quality. In 3Q09, NCOs were on 0.42% of average loans compared to the industry average of more than 2.67% and
NPAs were 1.11% of total loans compared to the industry average of more than 3.98%. Valley has significant late-cycle commercial exposure.
Its loan portfolio is concentrated in the New York/New Jersey metro region and could be negatively impacted by area-specific turmoil.
Additionally, a flat-to-inverted yield curve can narrow lending spreads and have a negative impact on earnings. Net interest margin (NIM)
expansion has been driven by lower funding costs but we expect the impact of lower funding costs to moderate.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability
categories, is available at rjcapitalmarkets.com/SearchForDisclosures_main.asp. Copies of research or Raymond James’ summary
policies relating to research analyst independence can be obtained by contacting any Raymond James & Associates or Raymond James
Financial Services office (please see raymondjames.com for office locations) or by calling 727-567-1000, toll free 800-237-5643 or
th
sending a written request to the Equity Research Library, Raymond James & Associates, Inc., Tower 3, 6 Floor, 880 Carillon Parkway,
St. Petersburg, FL 33716.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 10
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863
Raymond James U.S. Research

For clients in the United Kingdom:


For clients of Raymond James & Associates (RJA) and Raymond James Financial International, Ltd. (RJFI): This report is for distribution
only to persons who fall within Articles 19 or Article 49(2) of the Financial Services and Markets Act (Financial Promotion) Order 2000 as
investment professionals and may not be distributed to, or relied upon, by any other person.
For clients of Raymond James Investment Services, Ltd.: This report is intended only for clients in receipt of Raymond James Investment
Services, Ltd.’s Terms of Business or others to whom it may be lawfully submitted.
For purposes of the Financial Services Authority requirements, this research report is classified as objective with respect to conflict of
interest management. RJA, Raymond James Financial International, Ltd., and Raymond James Investment Services, Ltd. are authorized
and regulated in the U.K. by the Financial Services Authority.
For institutional clients in the European Economic Area (EEA) outside of the United Kingdom:
This document (and any attachments or exhibits hereto) is intended only for EEA institutional clients or others to whom it may lawfully be
submitted.
For Canadian clients:
Review of Material Operations: The Analyst and/or Associate is required to conduct due diligence on, and where deemed appropriate
visit, the material operations of a subject company before initiating research coverage. The scope of the review may vary depending on
the complexity of the subject company’s business operations.
This report is not prepared subject to Canadian disclosure requirements.

Proprietary Rights Notice: By accepting a copy of this report, you acknowledge and agree as follows:
This report is provided to clients of Raymond James only for your personal, noncommercial use. Except as expressly authorized by
Raymond James, you may not copy, reproduce, transmit, sell, display, distribute, publish, broadcast, circulate, modify, disseminate or
commercially exploit the information contained in this report, in printed, electronic or any other form, in any manner, without the prior
express written consent of Raymond James. You also agree not to use the information provided in this report for any unlawful purpose.
releasable research
This is RJA client

This report and its contents are the property of Raymond James and are protected by applicable copyright, trade secret or other
intellectual property laws (of the United States and other countries). United States law, 17 U.S.C. Sec.501 et seq, provides for civil and
criminal penalties for copyright infringement.

© 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved. 11
International Headquarters:
The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863