Valley National Bancorp Reports Net Income for Third Quarter

WAYNE, N.J., Oct. 17 /PRNewswire-FirstCall/ -- Valley National Bancorp ("Valley"), the holding company for Valley National Bank, announced today its nine months and third quarter results for 2007. Net income for the nine months ended September 30, 2007 was approximately $125.6 million unchanged from the same period in 2006. Adjusted for a five percent common stock dividend issued on May 25, 2007, fully diluted earnings per common share were $1.04 for the nine months ended September 30, 2007, compared to $1.02 per common share for the nine months ended September 30, 2006. All common share data presented below was adjusted to reflect the stock dividend.

Net income for the third quarter of 2007 was $36.5 million compared to $43.9 million for the third quarter of 2006. The net income for the third quarter of 2006 included an $11.2 million reduction in income tax expense (See "Income Tax Expense" section below). Fully diluted earnings per common share were $0.30 for the third quarter of 2007, compared to $0.36 for the third quarter of 2006, inclusive of $0.09 per common share in income tax benefit.

Set forth below are highlights of several significant events that occurred during the third quarter of 2007:

-- Net interest margin on a fully tax equivalent basis was 3.43 percent for the third quarter of 2007, 2 basis points less than the second quarter of 2007, primarily due to higher funding costs related to an increase in average time deposit balances of $157.2 million. -- Loans past due in excess of 30 days were 0.79 percent of total loans at September 30, 2007 compared to 0.80 percent at June 30, 2007. -- Net loan charge-offs were at relatively low levels at $2.9 million for the third quarter of 2007 as compared to $3.1 million for the second quarter of 2007. -- Non-performing assets totaled $32.3 million at September 30, 2007 compared to $30.9 million at June 30, 2007. -- Effective tax rate for the third quarter of 2007 was 23.8 percent compared to zero for the same quarter last year. -- On September 27, 2007, Valley delivered a notice of redemption effective October 29, 2007 for $20.6 million, or 11.1 percent of the contractual principal balance totaling $185.6 million, of its outstanding 7.75 percent junior subordinated debentures due on December 31, 2031. During the second quarter, Valley also redeemed $20.6 million or 10 percent of the contractual principal balance. After October 29, 2007, Valley will have $165 million remaining junior subordinated debentures. -- Valley repurchased approximately 130 thousand of its common shares at an average price per share of $21.96 pursuant to its publicly announced repurchase plan on January 17, 2007. Chairman's Comments

Gerald H. Lipkin, Chairman, President and CEO noted, "The business environment remains a challenge. During this time of uncertainty for so many consumers and mortgage lenders caught in the subprime and mortgage debacle, Valley intends to remain steadfast in its underwriting criteria in its efforts to grow the balance sheet. Our conservative loan underwriting policy has supported our earnings in the face of a housing market slump that has hurt many within the banking industry.

Valley's credit quality continues to outpace its peers and remains the hallmark of our organization. Total loans past due in excess of 30 days were 0.79 percent of total loans at September 30, 2007, an improvement of one basis point over the prior three months ended June 30, 2007. Loans 90 days or more past due declined $1.3 million from the second quarter, however, exclusive of matured loans which were in the normal process of renewal, the balances remained relatively flat for the quarter (See "Credit Quality" section below).

We would like to reaffirm that Valley is and was not a participant in subprime residential mortgage lending, negative amortization loans or collateralized debt obligation markets. Valley's historical risk-based underwriting approach continues to be a key element in producing strong loan performance, as evidenced by Valley's current and historically low delinquency rates.

We are pleased with a recently completed third party evaluation of Valley's first mortgages which comprise the vast majority of $1.9 billion residential mortgage portfolio. The evaluation shows the weighted average loan to collateral value ("LTV") at the origination date of these first mortgages was 60.3 percent while a market analysis, based on recent data, calculates an LTV exposure of just 42.7 percent taking into consideration the amortized outstanding loan balances and statistically adjusting the collateral value based on current market conditions. A current update of FICO scores in Valley's loan portfolio shows a weighted average FICO of 744 across the residential mortgage portfolio. Furthermore, Valley has limited geographic concentrations in states with high foreclosure rates, including Valley's modest mortgage origination activities in Florida which account for less than one percent of the residential mortgage portfolio.

Overall loan volumes improved during the third quarter as compared to the second quarter of 2007 primarily due to continued growth in Valley's dealer auto loan originations which increased $41.4 million, or 11.9 percent on an annualized basis, as well as an increase in residential mortgage loans of $59.4 million, or 12.7 percent on an annualized basis, and an increase in commercial loans due to one $141.1 million short-term loan origination scheduled to mature in the fourth quarter of 2007, which is fully collateralized by a certificate of deposit held by Valley. Much of the increase in auto loans is attributable to Valley's strategic efforts to expand the geographic presence of its indirect auto loan origination franchise throughout New Jersey, Pennsylvania, New York, and Florida. The increase in residential mortgage loans is largely the result of the reduction of liquidity in the secondary markets which has provided increased opportunities for Valley to purchase loans in the "A" grade, jumbo market.

During the nine months ended September 30, 2007, Valley opened its first two de novo branches in Brooklyn and three additional offices in Highlands, Hillsborough and Edison, New Jersey, as Valley continued its focused branch expansion in northern and central New Jersey and New York City. Valley anticipates opening approximately 13 de novo branches over the next 12 month period, including eight locations in Brooklyn and Queens. Our expansion strategy is to find the most attractive building sites and expand our presence in the New Jersey counties and towns neighboring our current office locations, as well as Kings and Queens Counties in New York. New offices generally add franchise value, but the additional operating costs will have a negative impact on non-interest expense and net income for several years."

Net Interest Income and Margin

Net interest income on a tax equivalent basis was $96.6 million for the third quarter of 2007, a $2.5 million decrease from the same quarter of 2006 and a decrease of $733 thousand from the linked quarter ended June 30, 2007. The moderate decline in net interest income during the third quarter of 2007 was mainly a result of lower average interest earning assets as well as higher average time deposits and a 13 basis point increase in the cost of these funds as compared to the second quarter of 2007.

The net interest margin on a tax equivalent basis was 3.43 percent for the third quarter of 2007, compared with 3.45 percent for the linked quarter ended June 30, 2007 and 3.44 percent for the prior year third quarter. The yield on average interest earning assets increased by 8 basis points for the second consecutive quarter mainly due to a 5 basis point increase in yield on average total loans and a 13 basis point increase in the yield on average total investments as compared to the three months ended June 30, 2007. The cost of average interest bearing liabilities also increased 8 basis points from the second quarter of 2007, mainly due to an increase of 13 basis points in the cost of time deposits.

Valley's cost of total deposits remained relatively low by industry standards at 2.63 percent for the third quarter of 2007 compared to 2.51 percent for the three months ended June 30, 2007. The increase of 12 basis points was primarily due to growth in retail time deposits during the quarter.

Non-Interest Income Third quarter of 2007 compared with third quarter of 2006

Non-interest income for the third quarter of 2007 increased $6.5 million, or 47.9 percent from $13.5 million for the quarter ended September 30, 2006 primarily due to a $4.7 million impairment loss taken on $132.0 million in low yielding mortgage-backed securities classified as available for sale in the third quarter of 2006. Service charges on deposit accounts increased $1.4 million mainly due to initiatives implemented during the second quarter of 2007 to increase non-interest income throughout the Bank. Bank owned life insurance income increased $1.2 million primarily due to income generated from an additional investment of $75 million during the second quarter of 2007 to offset rising employee benefit costs. Partially offsetting these increases, Valley recognized net losses on sales of premises and equipment totaling $645 thousand during the third quarter of 2007 mainly due to the closure and consolidation of two leased branch locations in Valley's branch network.

Third quarter of 2007 compared with second quarter of 2007

Non-interest income for the third quarter of 2007 increased $293 thousand, or 1.5 percent from $19.7 million for the quarter ended June 30, 2007. Net gains on trading securities increased $3.2 million from the second quarter of 2007 primarily due to net losses totaling $2.8 million recognized on the sale of $1.0 billion in mortgage-backed securities and the termination of certain derivative transactions during the second quarter. Offsetting the increased trading revenue, net gains on loans held for sale decreased $2.4 million primarily due to the sale of approximately $240 million of residential mortgages during the second quarter of 2007. Net gains on sales of premises and equipment also declined $875 thousand from the second quarter of 2007 mainly due to losses recognized on the closure and consolidation of two leased branch locations during the third quarter of 2007.

Non-Interest Expense Third quarter of 2007 compared with third quarter of 2006

Non-interest expense decreased approximately $1.1 million, or 1.6 percent to $64.6 million for the quarter ended September 30, 2007 from $65.6 million for the quarter ended September 30, 2006. Advertising expense declined $1.7 million from the third quarter of 2006 as Valley decreased name branding promotions in the third quarter of 2007. Professional and legal fees also decreased $1.1 million mainly due to fees related to tax planning recognized during the third quarter of 2006. Offsetting these decreases to non-interest expense, other non-interest expense increased approximately $1.0 million and salary and employee benefits increased $777 thousand mainly due to the addition of eight de novo branches to Valley's branch network over the last twelve month period.

Third quarter of 2007 compared with second quarter of 2007

Non-interest expense increased $3.7 million, or 6.1 percent to $64.6 million for the third quarter of 2007 from $60.9 million for the linked quarter ended June 30, 2007 mainly due to a $3.5 million increase in other non-interest expense. The increase was primarily due to an unrealized gain of $2.7 million on Valley's junior subordinated debentures in the second quarter of 2007.

Income Tax Expense

Income tax expense was $11.4 million for the third quarter of 2007, reflecting an effective tax rate of 23.8 percent, compared with an income tax benefit of $65 thousand for the third quarter of 2006. The income tax benefit realized during the third quarter of 2006 resulted from a reduction in Valley's income tax reserve by $11.2 million. Valley maintains a reserve related to certain tax positions and strategies that management believes contain an element of uncertainty. Periodically, Valley evaluates its tax positions and strategies to determine whether the reserve continues to be appropriate. For the fourth quarter of 2007, Valley anticipates that its effective tax rate for the quarter will be approximately 25 percent, resulting in an overall 26 percent effective rate for the full year. The rate is projected based upon management's judgment regarding future results and could vary due to changes in income, tax planning strategies and federal and state income tax laws.

Loans

During the third quarter, total loans increased $190.3 million, or 9.3 percent on an annualized basis, to $8.4 billion at September 30, 2007 from approximately $8.2 billion at June 30, 2007. The linked quarter growth in loans is mainly comprised of increases in commercial loans, residential mortgage and automobile loans of $148.0 million, $59.4 million and $41.4 million, respectively, partially offset by normal construction loan payments and declines in other consumer loans totaling $61.6 million and $16.9 million, respectively. The commercial loan increase was primarily due to one short- term commercial loan totaling $141.1 million scheduled to mature in the fourth quarter of 2007. The increase in residential mortgage loans is largely the result of the reduction of liquidity in the secondary markets which has provided increased opportunities for Valley to purchase loans in the "A" grade, jumbo market. Automobile loan volumes continue to be strong as Valley has focused efforts to expand the geographic footprint of its indirect auto loan origination franchise. Construction loans declined during the second quarter through normal principal paydown activity and a lack of new loan volume, as the slowdown in home building market continues to negatively impact this category.

Deposits

During the quarter, total deposits increased $107.2 million to $8.4 billion as of September 30, 2007 from $8.3 billion at June 30, 2007. An increase of $228.3 million in time deposits was partially offset by declines in non-interest bearing deposits and savings, NOW, and money market deposits of $101.2 million and $19.8 million, respectively. The increase in time deposits was mainly due to a short-term loan collateralized by a certificate of deposit held by Valley, as well as other normal deposit activities. The decrease in demand deposits reflects seasonal withdrawals from many of Valley's commercial customers.

Credit Quality

Net loan charge-offs for the third quarter of 2007 were approximately $2.9 million compared to $2.0 million for the third quarter of 2006, and $3.1 million for the second quarter of 2007. The provision for credit losses was $2.7 million for the third quarter of 2007 compared to $1.6 million for the third quarter of 2006, and $2.4 million for the second quarter of 2007. Total non-performing assets, consisting of non-accrual loans, other real estate owned and other repossessed assets, totaled $32.3 million, or 0.39 percent of loans at September 30, 2007 up slightly from $30.9 million or 0.38 percent of loans at June 30, 2007.

Loans past due 90 days or more and still accruing at September 30, 2007 were $5.4 million, or 0.06 percent of $8.4 billion of total loans, compared to $2.1 million at September 30, 2006 and $6.7 million at June 30, 2007. Loans past due 90 days or more and still accruing include matured loans in the normal process of renewal which totaled approximately $1.5 million at September 30, 2007, compared to $403 thousand at September 30, 2006 and $3.0 million at June 30, 2007. Total loans past due in excess of 30 days were 0.79 percent of total loans at September 30, 2007 compared with 0.80 percent at June 30, 2007.

Financial Ratios

Valley's annualized return on average shareholders' equity was 15.66 percent and 18.43 percent for the three months ended September 30, 2007 and 2006, respectively. On a comparative basis, adjusting for Valley's goodwill and other intangible assets, the annualized return on average tangible equity was 20.18 percent and 23.77 percent for the same periods. See "Notes to Selected Financial Data" section in the tables that follow for information regarding the computation of these ratios.

For the quarter ended September 30, 2007 and 2006, annualized return on average assets was 1.19 percent and 1.42 percent, respectively.

Valley's risk-based capital ratios were 10.02 percent for Tier 1 capital, 11.87 percent for total capital and 7.87 percent for Tier 1 leverage at September 30, 2007.

Valley National Bancorp is a regional bank holding company with over $12 billion in assets, headquartered in Wayne, New Jersey. Its principal subsidiary, Valley National Bank, currently operates 170 branches in 114 communities serving 13 counties throughout northern and central New Jersey and New York City.

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 from those contemplated by such forward-looking statements include, among others, the following: the impact of management's implementation and interpretation of new accounting pronouncements, unanticipated changes in the direction of interest rates, effective income tax rates, loan and investment prepayments and assumptions, levels of loan quality and origination volume, relationships with major customers, as well as the effects of unanticipated economic conditions and legal and regulatory barriers including compliance issues related to AML/BSA compliance and the development of new tax strategies or the disallowance of prior tax strategies. Valley assumes no obligation for updating any such forward-looking statement at any time.

Valley National Bancorp Consolidated Financial Highlights SELECTED FINANCIAL DATA (in thousands, Three Months Ended Nine Months Ended except for September 30, September 30, share data) 2007 2006 2007 2006 FINANCIAL DATA: Net income $36,454 $43,882 $125,567 $125,579 Net interest income 95,139 97,557 287,092 294,435 Net interest income - FTE (2) 96,650 99,171 291,800 299,388 Weighted Average Number of Shares Outstanding (3): Basic 119,966,530 122,740,540 120,379,910 122,721,452 Diluted 120,300,017 123,369,584 120,799,085 123,237,214 Per share data (3): Basic earnings $0.30 $0.36 $1.04 $1.02 Diluted earnings 0.30 0.36 1.04 1.02 Cash dividends declared 0.21 0.20 0.62 0.61 Book value 7.86 8.00 7.86 8.00 Tangible book value (1) 6.12 6.26 6.12 6.26 Closing stock price - high 23.55 25.71 25.18 25.71 Closing stock price - low 20.94 23.85 20.94 21.01 FINANCIAL RATIOS: Net interest margin 3.37% 3.39% 3.39% 3.42% Net interest margin - FTE (2) 3.43 3.44 3.44 3.47 Annualized return on average assets 1.19 1.42 1.37 1.36 Annualized return on average shareholders' equity 15.66 18.43 18.05 17.70 Annualized return on average tangible shareholders' equity (1) 20.18 23.77 23.31 22.90 Efficiency ratio (4) 56.09 59.09 51.56 54.31 AVERAGE BALANCE SHEET ITEMS: Assets $12,216,419 $12,323,642 $12,190,610 $12,291,372 Interest earning assets 11,284,591 11,522,678 11,301,764 11,493,958 Loans 8,207,941 8,307,228 8,227,047 8,234,559 Interest bearing liabilities 9,380,489 9,446,002 9,332,892 9,387,284 Deposits 8,389,340 8,485,862 8,368,995 8,458,860 Shareholders' equity 931,359 952,212 927,647 946,227 Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands) 2007 2006 2007 2006 ALLOWANCE FOR CREDIT LOSSES: Beginning of period $74,775 $75,696 $74,718 $75,188 Provision for credit losses 2,713 1,618 7,011 6,029 Charge-offs 3,892 2,408 9,680 7,647 Recoveries 1,028 456 2,575 1,792 End of period $74,624 $75,362 $74,624 $75,362 Components: Allowance for loan losses $72,161 $75,362 $72,161 $75,362 Reserve for unfunded letters of credit (5) 2,463 0 2,463 0 Allowance for credit losses $74,624 $75,362 $74,624 $75,362 As of September 30, 2007 2006 BALANCE SHEET ITEMS: Assets $12,439,474 $12,438,555 Loans 8,370,464 8,313,087 Deposits 8,439,695 8,466,870 Shareholders' equity 942,782 978,593 CAPITAL RATIOS: Tier 1 leverage ratio 7.87% 8.24% Risk-based capital - Tier 1 10.02 10.69 Risk-based capital - Total Capital 11.87 12.56 ASSET QUALITY: Non-accrual loans $29,908 $32,117 Other real estate owned 832 1,240 Other repossessed assets 1,511 1,312 Total non-performing assets $32,251 $34,669 Loans past due 90 days or more and still accruing $5,373 $2,068 ASSET QUALITY RATIOS: Non-performing assets to total loans 0.39% 0.42% Allowance for loan losses to total loans 0.86 0.91 Allowance for credit losses to total loans 0.89 0.91 Annualized net charge-offs to average loans 0.12 0.09 NOTES TO SELECTED FINANCIAL DATA (1) This press release contains certain supplemental financial information, described in the following notes, which has been determined by methods other than Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results and facilitates comparisons with the performance of peers within the financial services industry. Tangible book value and return on average tangible equity, which represent non-GAAP measures, are computed as follows: - Tangible book value is computed by dividing total shareholders' equity less goodwill and other intangible assets by shares outstanding. - Return on average tangible equity is computed by dividing net income by average shareholders' equity less average goodwill and average identifiable intangible assets. (Dollars in Three Months Ended Nine Months Ended thousands, except September 30, September 30, for share data) 2007 2006 2007 2006 Common shares outstanding 119,963,392 122,298,406 119,963,392 122,298,406 Shareholders' equity $942,782 $978,593 $942,782 $978,593 Less: Goodwill and other intangible assets 208,061 213,434 208,061 213,434 Tangible shareholders' equity $734,721 $765,159 $734,721 $765,159 Tangible book value $6.12 $6.26 $6.12 $6.26 Net income $36,454 $43,882 $125,567 $125,579 Average shareholders' equity $931,359 $952,212 $927,647 $946,227 Less: Average goodwill and other intangible assets 208,640 213,679 209,513 215,014 Average tangible shareholders' equity $722,719 $738,533 $718,134 $731,213 Annualized return on average tangible shareholders' equity 20.18% 23.77% 23.31% 22.90% (2) Net interest income and net interest margin are presented on a tax equivalent basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. (3) Share data reflects a five percent common stock dividend issued on May 25, 2007. (4) The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income. (5) On January 1, 2007, Valley transferred the portion of the allowance for loan losses related commercial lending letters of credit to other liabilities. SHAREHOLDER RELATIONS

Requests for copies of reports and/or other inquiries should be directed to Dianne Grenz, Director of Shareholder and Public Relations, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 696-2044 or by e-mail at dgrenz@valleynationalbank.com.

VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (in thousands, except for share data) September 30, December 31, 2007 2006 Assets Cash and due from banks $209,016 $236,354 Interest bearing deposits with banks 9,151 7,795 Federal funds sold 73,000 175,000 Investment securities: Held to maturity, fair value of $565,057 at September 30, 2007 and $1,090,883 at December 31, 2006 567,276 1,108,885 Available for sale 1,411,679 1,769,981 Trading securities 909,718 4,655 Total investment securities 2,888,673 2,883,521 Loans held for sale, at fair value as of September 30, 2007 3,066 4,674 Loans 8,370,464 8,331,685 Less: Allowance for loan losses (72,161) (74,718) Net loans 8,298,303 8,256,967 Premises and equipment, net 229,779 209,397 Bank owned life insurance 270,321 189,157 Accrued interest receivable 65,832 63,356 Due from customers on acceptances outstanding 12,209 9,798 Goodwill 181,614 181,497 Other intangible assets, net 26,447 29,858 Other assets 172,063 147,653 Total assets $12,439,474 $12,395,027 Liabilities Deposits: Non-interest bearing $1,841,064 $1,996,237 Interest bearing: Savings, NOW and money market 3,423,813 3,561,807 Time 3,174,818 2,929,607 Total deposits 8,439,695 8,487,651 Short-term borrowings 430,410 362,615 Long-term borrowings (includes fair value of $40,385 for a Federal Home Loan Bank advance at September 30, 2007) 2,276,305 2,278,728 Junior subordinated debentures issued to capital trust, at fair value as of September 30, 2007 186,309 206,186 Bank acceptances outstanding 12,209 9,798 Accrued expenses and other liabilities 151,764 100,459 Total liabilities 11,496,692 11,445,437 Shareholders' Equity* Preferred stock, no par value, authorized 30,000,000 shares; none issued --- --- Common stock, no par value, authorized 181,796,274 shares; issued 122,546,034 shares at September 30, 2007 and 122,658,486 at December 31, 2006 43,217 41,212 Surplus 880,579 881,022 Retained earnings 102,930 97,639 Accumulated other comprehensive loss (19,153) (30,873) Less: Treasury stock, at cost, 2,582,642 common shares at September 30, 2007 and 1,533,355 common shares at December 31, 2006 (64,791) (39,410) Total shareholders' equity 942,782 949,590 Total liabilities and shareholders' equity $12,439,474 $12,395,027 * Share data reflects a five percent common stock dividend issued on May 25, 2007. VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except for share data) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Interest Income Interest and fees on loans $141,177 $140,317 $419,712 $401,417 Interest and dividends on investment securities: Taxable 33,859 35,131 99,384 107,121 Tax-exempt 2,745 2,926 8,552 8,973 Dividends 1,873 1,479 5,903 4,270 Interest on federal funds sold and other short-term investments 3,505 1,312 9,893 2,107 Total interest income 183,159 181,165 543,444 523,888 Interest Expense Interest on deposits: Savings, NOW and money market 19,236 19,886 57,870 55,774 Time 35,891 31,573 100,798 79,389 Interest on short-term borrowings 4,656 4,318 13,156 13,871 Interest on long-term borrowings and junior subordinated debentures 28,237 27,831 84,528 80,419 Total interest expense 88,020 83,608 256,352 229,453 Net Interest Income 95,139 97,557 287,092 294,435 Provision for credit losses 2,713 1,618 7,011 6,029 Net Interest Income After Provision for Credit Losses 92,426 95,939 280,081 288,406 Non-Interest Income Trust and investment services 1,897 1,794 5,518 5,407 Insurance premiums 2,509 2,893 8,273 8,311 Service charges on deposit accounts 7,133 5,771 19,775 17,299 Gains (losses) on securities transactions, net 14 (4,712) 84 (3,205) Gains on trading securities, net 404 324 2,987 1,002 Fees from loan servicing 1,387 1,461 4,171 4,537 Gains on loans held for sale, net 262 179 4,624 1,373 (Losses) gains on sales of premises and equipment, net (645) 59 15,958 68 Bank owned life insurance 3,239 2,053 8,254 6,095 Other 3,772 3,682 11,065 11,382 Total non-interest income 19,972 13,504 80,709 52,269 Non-Interest Expense Salary expense 29,459 28,109 87,139 81,678 Employee benefit expense 7,342 7,915 22,781 21,800 Net occupancy and equipment expense 12,285 12,010 36,999 34,743 Amortization of other intangible assets 1,881 2,165 5,671 6,536 Professional and legal fees 2,003 3,085 5,070 7,083 Advertising 665 2,402 2,407 6,651 Other 10,936 9,940 29,586 29,816 Total non-interest expense 64,571 65,626 189,653 188,307 Income Before Income Taxes 47,827 43,817 171,137 152,368 Income tax expense (benefit) 11,373 (65) 45,570 26,789 Net Income $36,454 $43,882 $125,567 $125,579 Earnings Per Common Share:* Basic $0.30 $0.36 $1.04 $1.02 Diluted 0.30 0.36 1.04 1.02 Cash Dividends Declared Per Common Share* 0.21 0.20 0.62 0.61 Weighted Average Number of Common Shares Outstanding:* Basic 119,966,530 122,740,540 120,379,910 122,721,452 Diluted 120,300,017 123,369,584 120,799,085 123,237,214 * Share data reflects a five percent common stock dividend issued on May 25, 2007. Valley National Bancorp (dollars in thousands) Loan Portfolio For the periods ended 09/30/2007 06/30/2007 03/31/2007 12/31/2006 09/30/2006 Commercial Loans $1,665,169 $1,517,184 $1,447,165 $1,466,862 $1,443,539 Construction 408,969 470,592 493,095 526,318 514,842 Residential Mortgage 1,933,321 1,873,943 1,849,069 2,106,306 2,082,233 Commercial Mortgage 2,282,669 2,262,290 2,281,871 2,309,217 2,354,791 Total Mortgage Loans 4,624,959 4,606,825 4,624,035 4,941,841 4,951,866 Home Equity 554,859 555,306 560,577 571,138 577,587 Credit Card 9,290 9,105 8,498 8,764 8,490 Automobile 1,433,178 1,391,801 1,280,809 1,238,145 1,229,450 Other Consumer 83,009 99,920 119,313 104,935 102,155 Total Consumer Loans 2,080,336 2,056,132 1,969,197 1,922,982 1,917,682 Total Loans $8,370,464 $8,180,141 $8,040,397 $8,331,685 $8,313,087 Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Income on a Tax Equivalent Basis Quarter End - 9/30/07 Average Avg. Balance Interest Rate Assets Interest earning assets: Loans (1)(2) $8,207,941 $141,210 6.88% Taxable investments (3) 2,549,294 35,732 5.61% Tax-exempt investments (1)(3) 260,094 4,223 6.49% Federal funds sold and other interest bearing deposits 267,262 3,505 5.25% Total interest earning assets 11,284,591 184,670 6.55% Other assets 931,828 Total assets $12,216,419 Liabilities and shareholders' equity Interest bearing liabilities: Savings, NOW and money market deposits $3,430,218 $19,236 2.24% Time deposits 3,055,620 35,891 4.70% Short-term borrowings 441,227 4,656 4.22% Long-term borrowings (4) 2,453,424 28,237 4.60% Total interest bearing liabilities 9,380,489 88,020 3.75% Non-interest bearing deposits 1,903,502 Other liabilities 1,069 Shareholders' equity 931,359 Total liabilities and shareholders' equity $12,216,419 Net interest income/interest rate spread (5) 96,650 2.80% Tax equivalent adjustment (1,511) Net interest income, as reported $95,139 Net interest margin (6) 3.37% Tax equivalent effect 0.06% Net interest margin on a fully tax equivalent basis (6) 3.43% Quarter End - 6/30/07 Average Avg. Balance Interest Rate Assets Interest earning assets: Loans (1)(2) $8,181,248 $139,622 6.83% Taxable investments (3) 2,525,972 34,470 5.46% Tax-exempt investments (1)(3) 277,274 4,477 6.46% Federal funds sold and other interest bearing deposits 315,440 4,188 5.31% Total interest earning assets 11,299,934 182,757 6.47% Other assets 895,856 Total assets $12,195,790 Liabilities and shareholders' equity Interest bearing liabilities: Savings, NOW and money market deposits $3,503,061 $19,216 2.19% Time deposits 2,898,393 33,143 4.57% Short-term borrowings 419,937 4,522 4.31% Long-term borrowings (4) 2,483,966 28,494 4.59% Total interest bearing liabilities 9,305,357 85,375 3.67% Non-interest bearing deposits 1,938,035 Other liabilities 17,671 Shareholders' equity 934,727 Total liabilities and shareholders' equity $12,195,790 Net interest income/interest rate spread (5) 97,382 2.80% Tax equivalent adjustment (1,601) Net interest income, as reported $95,781 Net interest margin (6) 3.39% Tax equivalent effect 0.06% Net interest margin on a fully tax equivalent basis (6) 3.45% Quarter End - 3/31/07 Average Avg. Balance Interest Rate Assets Interest earning assets: Loans (1)(2) $8,292,884 $138,983 6.70% Taxable investments (3) 2,580,236 35,085 5.44% Tax-exempt investments (1)(3) 279,176 4,457 6.39% Federal funds sold and other interest bearing deposits 168,873 2,200 5.21% Total interest earning assets 11,321,169 180,725 6.39% Other assets 837,820 Total assets $12,158,989 Liabilities and shareholders' equity Interest bearing liabilities: Savings, NOW and money market deposits $3,559,302 $19,418 2.18% Time deposits 2,894,086 31,764 4.39% Short-term borrowings 371,911 3,978 4.28% Long-term borrowings (4) 2,486,780 27,797 4.47% Total interest bearing liabilities 9,312,079 82,957 3.56% Non-interest bearing deposits 1,924,645 Other liabilities 5,572 Shareholders' equity 916,693 Total liabilities and shareholders' equity $12,158,989 Net interest income/interest rate spread (5) 97,768 2.83% Tax equivalent adjustment (1,596) Net interest income, as reported $96,172 Net interest margin (6) 3.40% Tax equivalent effect 0.05% Net interest margin on a fully tax equivalent basis (6) 3.45% Quarter End - 12/31/06 Average Avg. Balance Interest Rate Assets Interest earning assets: Loans (1)(2) $8,346,362 $143,060 6.86% Taxable investments (3) 2,709,053 35,484 5.24% Tax-exempt investments (1)(3) 281,366 4,482 6.37% Federal funds sold and other interest bearing deposits 152,546 2,063 5.41% Total interest earning assets 11,489,327 185,089 6.44% Other assets 833,424 Total assets $12,322,751 Liabilities and shareholders' equity Interest bearing liabilities: Savings, NOW and money market deposits $3,603,822 $20,048 2.23% Time deposits 2,938,977 33,265 4.53% Short-term borrowings 373,838 4,340 4.64% Long-term borrowings (4) 2,493,764 29,144 4.67% Total interest bearing liabilities 9,410,401 86,797 3.69% Non-interest bearing deposits 1,929,283 Other liabilities 23,404 Shareholders' equity 959,663 Total liabilities and shareholders' equity $12,322,751 Net interest income/interest rate spread (5) 98,292 2.75% Tax equivalent adjustment (1,606) Net interest income, as reported $96,686 Net interest margin (6) 3.37% Tax equivalent effect 0.05% Net interest margin on a fully tax equivalent basis (6) 3.42% Quarter End - 9/30/06 Average Avg. Balance Interest Rate Assets Interest earning assets: Loans (1)(2) $8,307,228 $140,355 6.76% Taxable investments (3) 2,830,076 36,610 5.17% Tax-exempt investments (1)(3) 285,387 4,502 6.31% Federal funds sold and other interest bearing deposits 99,987 1,312 5.25% Total interest earning assets 11,522,678 182,779 6.35% Other assets 800,964 Total assets $12,323,642 Liabilities and shareholders' equity Interest bearing liabilities: Savings, NOW and money market deposits $3,666,485 $19,886 2.17% Time deposits 2,900,781 31,573 4.35% Short-term borrowings 386,034 4,318 4.47% Long-term borrowings (4) 2,492,702 27,831 4.47% Total interest bearing liabilities 9,446,002 83,608 3.54% Non-interest bearing deposits 1,918,596 Other liabilities 6,832 Shareholders' equity 952,212 Total liabilities and shareholders' equity $12,323,642 Net interest income/interest rate spread (5) 99,171 2.81% Tax equivalent adjustment (1,614) Net interest income, as reported $97,557 Net interest margin (6) 3.39% Tax equivalent effect 0.05% Net interest margin on a fully tax equivalent basis (6) 3.44% (1) Interest income is presented on a tax equivalent basis using a 35 percent federal tax rate. (2) Loans are stated net of unearned income and include non-accrual loans. (3) The yield for securities that are classified as available for sale is based on the average historical amortized cost. (4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition. (5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. (6) Net interest income as a percentage of total average interest earning assets.