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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1993
[ ] 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 22-2477875
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1445 Valley Road, Wayne, New Jersey 07470
(Address of principal executive offices)
Registrant's telephone number including area code (201) 305-8800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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 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 [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock (based upon the closing price
of these shares as quoted by NYSE) held by non-affiliates of the registrant
was approximately $649,811,000 on February 18, 1994.
There were 24,427,274 shares of Common Stock outstanding at February 18, 1994.
VALLEY NATIONAL BANCORP
DOCUMENTS INCORPORATED BY REFERENCE
PARTS I AND II: Certain portions of the Annual Report to Shareholders for
the year ended December 31, 1993 as referenced on the pages
listed below.
PART III: Certain portions of the Proxy Statement for the Annual
Meeting of Shareholders to be held March 22, 1994 as
referenced on the pages listed below.
PART IV: Certain exhibits from the registrant's FORM 10-K Annual
Report for the fiscal periods ended December 31, 1990,
December 31, 1991 and December 31, 1992.
Page(s) in
Form 10-K Heading(s) in Annual Report to Annual
Item No. Shareholders for Year Ended December 31, 1993 Report*
1. Business Analysis of Average Assets, Liabilities, and
Shareholders' Equity and Net Interest Earnings
on a Tax Equivalent Basis...........................22
Change in Interest Income and Expense on a Tax
Equivalent Basis....................................23
Maturity Distribution of Investment Securities......24
Selected Consolidated Financial Data - Financial
Ratios..............................................45
2. Properties Commitments and Contingencies.......................40-41
5. Market for the Dividends...................................41
Registrant's Selected Consolidated Financial Data......45
Common Equity Price Range of Common Stock................45
and Related
Stockholder
Matters
6. Selected Selected Consolidated Financial Data........45
Financial Data
7. Management's Management's Discussion and Analysis of Financial
Discussion and Condition and Results of Operations.......17-25
Analysis of
Financial
Condition and
Results of
Operations
8. Financial Consolidated Statements of Financial Condition...26
Statements and Consolidated Statements of Income................27
Supplementary Consolidated Statements of Changes in Shareholders'
Data Equity...........................28
Consolidated Statements of Cash Flows...........29
Notes to Consolidated Financial Statements.....30-43
Independent Auditors' Report....................44
*Page numbers refer to pages in non-edgar version of Annual Report and Proxy
Statement.
Heading(s) in Proxy Statement for Annual Pages(s)in
Form 10-K Meeting of Shareholders to be held Proxy
Item No. March 22, 1994 Statement*
10. Directors and Election of Directors..................... 2-4
Executive
Officers of the
Registrant
11. Executive Executive Compensation................... 6-11
Compensation Compensation Committee Report........... 11-13
12. Security Stock Ownership of Management and Principal
Ownership of Shareholders........................... 4-6
Certain
Beneficial
Owners and
Management
13. Certain Certain Transactions with Management.......14
Relationships
and Related
Transactions
*Page numbers refer to pages in non-edgar version of Annual Report and Proxy
Statement.
TABLE OF CONTENTS
Item Page
PART I. 1. Business
a) General Description of Business........................ 5 - 7
b) Statistical Information and Analysis................... 8 - 12
2.Properties............................................. 12
3.Legal Proceeding....................................... 12
4.Submission of Matters to a Vote of Security Holders.... 12
PART II. 5. Market for the Registrant's Common Equity and Related
Shareholder Matters.......................................13
6.Selected Financial Data..................................... 13
7.Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................13
8.Financial Statements and Supplementary Data................. 13
9.Changes in or Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 13
PART III. 10. Directors and Executive Officers of the Registrant. 13 - 14
11.Executive Compensation............................ 14
12.Security Ownership of Certain Beneficial Owners and
Managers..................................................14
13.Certain Relationships and Related Transactions.............. 14
PART IV. 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.................................................. 14 - 16
SIGNATURES........................................................ 17 - 18
*Page numbers correspond to non-edgar version of Form 10-K.
PART I
Item 1. BUSINESS
a) GENERAL DESCRIPTION OF BUSINESS
VALLEY NATIONAL BANCORP
Valley National Bancorp (Valley) is a bank holding company organized on
May 2, 1983, under the laws of the State of New Jersey and registered with
the Board of Governors of the Federal Reserve System under the Bank Holding
Company Act of 1956. Its principal business activities are restricted to
those permissible by Bank Holding Companies under the Bank
Act of 1956, as amended, and include the management and control of Valley
National Bank (VNB).
As of December 31, 1993, Valley's subsidiaries operated 59 full service
banking branches located throughout northern New Jersey.
RECENT DEVELOPMENTS
On June 18, 1993, Valley issued approximately 421,000 shares of its
common stock at a cost of $10,962,000 in exchange for approximately
661,000 shares of common stock of PeoplesBancorp ("Peoples") of
Fairfield, New Jersey, a New Jersey Corporation and a registered bank
holding company of Peoples Bank, National Association, a banking
association. The merger was accounted for under the purchase method of
accounting.
The acquisition of Peoples resulted in the following statement of condition
increases as of the acquisition date:
Investment securities.............................................$ 47,472,000
Loans, net of unearned income.....................................$138,459,000
Total deposits....................................................$204,825,000
SUBSIDIARIES
VNB, a wholly-owned subsidiary of Valley, is a national association
established in 1927 under the laws of the United States. VNB provides a full
range of commercial and retail bank services, including the acceptance of
demand, savings and time deposits; extension of
consumer, real estate, S.B.A. and other commercial credits; and offers full
personal and corporate trust services, as well as pension and other fiduciary
services. VNB operates 59 full service branch offices in five (5) New Jersey
Counties.
Valley Investment Corporation, a wholly-owned subsidiary of VNB, was
organized on December 27, 1984, under the laws of the State of Delaware. Its
business activities include holding, maintaining, and managing tangible
investment assets. These assets include a tax-exempt
money market fund, state and municipal bonds, U.S. Treasury Notes, U.S. Agency
Bonds,mortgage-backed securities and mortgages secured by real estate
situated outside of the State of Delaware.
VNB Mortgage Services, Inc., a wholly-owned subsidiary of VNB, was organized
on March 28,1989, under the laws of the State of New Jersey. Its primary
business activities include servicing residential mortgage loan portfolios for
VNB and various investors.
BNV Realty Incorporated, a wholly-owned subsidiary of VNB, was organized on
August 16, 1991, under the laws of the state of New Jersey. Its primary
business activities are limited to holding and disposing of real estate VNB
may acquire as other real estate owned.
VN Investment Inc., a wholly-owned subsidiary of VNB, was organized on
October 28, 1993,under the laws of the State of New Jersey. Its business
activities include holding,maintaining, and managing tangible investment
assets. These assets include U.S. Agency Bonds
and mortgage-backed securities.
Mayflower Financial Corporation ("Mayflower") is a savings and loan holding
company for Mayflower Savings Bank, S.L.A., (MSB) a New Jersey-chartered
stock savings bank, which operated two (2) full-service offices located in
Livingston, New Jersey. Mayflower was incorporated in April 1988, under the
laws of the State of Delaware, as a stock corporation,at the direction of
the Board of Directors of MSB for the purpose of becoming
company which would own all of the outstanding capital stock of MSB upon its
conversion from the mutual-to-stock form of organization.
MSB was organized in 1921 as a New Jersey chartered mutual savings and loan
association. MSB converted to the stock form of organization and sold all of
its outstanding capital stock to Mayflower in August 1988. Valley acquired
Mayflower and MSB as of December 31, 1990. As of
the close of business, January 31, 1993, Mayflower Financial Corporation
("Mayflower") and its wholly-owned savings and loan subsidiary, Mayflower
Savings Bank ("MSB") were merged into
Valley and VNB, respectively.
COMPETITION
Vigorous competition for loans and deposit accounts exists in all the major
areas where Valley, or any of its subsidiary companies are presently engaged
in business. Competition for banking services is based on price, product
type, service quality and convenience of
location. VNB and its subsidiaries compete with other commercial banks, other
financial institutions such as savings banks, savings and loan associations,
mortgage companies, leasing companies, finance companies and a variety of
financial service and advisory companies.
EMPLOYEES
At year-end 1993, VNB and its subsidiaries employed 1,081 full-time equivalent
persons.Management considers relations with employees to be satisfactory.
SUPERVISION AND REGULATION
Valley and VNB are subject to regulation and supervision by federal bank
regulatory agencies. Valley is regulated and examined by the Federal
Reserve Board and VNB is regulated and
examined by the Comptroller of the Currency. There are a variety of
statutory and regulatory restrictions governing the relations among
Valley and VNB.
The payment of dividends by VNB to Valley is restricted under the National Bank
Act. The approval of the Comptroller of the Currency is required if the
dividends for the year exceed the net profits, as defined in the Act, of
that year plus the retained net profits for the
preceding two years. In addition, a national bank's capital surplus must be
equal to or exceed the stated capital for its common stock, or else the bank
must make certain transfers from retained earnings to capital surplus.
The Banking Affiliates Act of 1982 severely restricts loans and extensions
of credit by VNB to Valley and its affiliates (except affiliates which are
banks). In general, such loans
must be secured by collateral having a market value ranging from 100% to 130%
of the loan, depending upon the type of collateral.
Furthermore, the aggregate of all loans from VNB to Valley and its affiliates in
the aggregate may not exceed 20% of VNB's capital stock and surplus and,
singly to Valley or any affiliate, may not exceed 10% of VNB's capital stock
and surplus. Similarly, the Banking Affiliates Act of 1982 also restricts
VNB in the purchase of securities issued by, the
acceptance as loan collateral of securities issued by, the purchase of assets
from, and the issuance of a guarantee or standby letter-of-credit on behalf of,
Valley or any of its affiliates.
Under the Bank Holding Company Act, Valley may not acquire directly or
indirectly more than
5% of the voting shares of, or substantially all of the assets of, any bank
without the prior
approval of the Federal Reserve Board. Valley cannot acquire any bank located
outside New
Jersey unless the law of such other state specifically permits the acquisition.
As of January 1, 1988, New Jersey law permits New Jersey banking organizations
to acquire or
be acquired by banking organizations in other states on a "reciprocal" basis
(i.e., provided
the other state's laws permit New Jersey banking organizations to acquire
banking
organizations in that state on substantially the same terms and conditions
applicable to
banking acquisitions solely within the state).
Generally, the Bank Holding Company Act limits the business of a bank holding
company and its
affiliates to banking, managing or controlling banks, and furnishing or
performing services
for banks controlled by the holding company. The major exception to this rule
is that a bank
holding company directly or through a subsidiary may engage in non-banking
activities which
the Federal Reserve Board has determined to be so closely related to banking or
managing or
controlling banks so as to be a proper incident thereto. The Federal Reserve
under its
Regulation "Y" has restricted such activities to things such as lease financing,
mortgage
banking, investment advice, certain data processing services and discount
brokerage services
and ownership of a savings and loan association.
The Federal Reserve Board, the Office of the Comptroller of the Currency ("OCC")
and the FDIC
have issued risk-based capital guidelines for U.S. banking organizations. The
objective of
these efforts was to provide a more uniform capital framework that is
sensitive to
differences in risk profiles among banking companies. Below is a list of such
requirements
and shows Valley and VNB's ratios as of December 31, 1993.
Valley regulatory VNB regulatory
capital capital Regulatory
($ in thousands) Amount Percent(1) Amount Percent(1) capital percent(2)
Risk based capital:
Tier-one capital $258,622 13.93% $231,709 12.57% 6.00%
Tier-one & Tier
two capital $281,918 15.18% $254,904 13.83% 10.00%
Tier-one leverage $260,269 7.62% $232,328 6.86% 3.00-5.00%
(1) Ratio of qualifying capital to consolidated total risk-adjusted assets.
(2) For qualification as a well-capitalized institution.
On August 9, 1989, the Financial Institutions Reform, Recovery and Enforcement
Act of 1989
("FIRREA") was enacted. FIRREA established new capital standards and enhanced
regulatory
oversight of the thrift industry. Under FIRREA, banks are now permitted to
acquire all
thrifts and may convert such acquired thrifts into commercial bank branches.
In such a
conversion the thrift may have to pay insurance fund exit and entrance fees to
the FDIC.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") was
enacted in
December 1991. FDICIA identifies the following capital standard categories for
financial
institutions: well capitalized, adequately capitalized, undercapitalized,
significantly
undercapitalized and critically undercapitalized. FDICIA imposes progressively
more
restrictive constraints on operations, management and capital distributions
depending on the
category in which an institution is classified. Pursuant to FDICIA,
undercapitalized
institutions must submit recapitalization plans, and a company controlling a
failing
institution must guarantee such institutions's compliance with its plan.
FDICIA also
required the various regulatory agencies to prescribe certain non-capital
standards for
safety and soundness relating generally to operations and management, asset
quality and
executive compensation and permits regulatory action against a financial
institution that
does not meet such standards. The FDIC has adopted many of these regulations.
The deposits of VNB are insured up to applicable limits by the FDIC.
Accordingly, VNB is
subject to deposit insurance assessments to maintain the Bank Insurance Fund
(the "BIF") of
the FDIC. Pursuant to FDICIA, the FDIC established a risk-based insurance
assessment system.
This approach is designed to ensure that a banking institution's insurance
assessment is
based on three factors: the probability that the applicable insurance fund
will incur a loss
from the institution; the likely amount of the loss; and the revenue needs of
the insurance
fund.
Under the risk-based assessment system, each BIF member institution is assigned
to one of
nine assessment risk classifications based on its capital ratios and supervisory
evaluations.
The lowest risk institutions presently pay deposit insurance at a rate of .23%
of domestic
deposits while the highest risk institutions are assessed at the rate of .31% of
domestic
deposits. Each institution's classification under the system is reexamined
semiannually.
In addition, the FDIC is authorized to increase or decrease such rates on a
semiannual basis.
The Bank presently pays a premium of .23%.
b) STATISTICAL INFORMATION AND ANALYSIS
The following information is being presented pursuant to requirements of
SEC Guide 3,
"Statistical Disclosure by Bank Holding Companies".
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST RATES
AND INTEREST
DIFFERENTIAL
A. AVERAGE BALANCE SHEETS - are incorporated by reference under the caption
"Analysis
of Average Assets, Liabilities and Shareholders' Equity and Net Interest
Earnings on
a Tax Equivalent Basis" on page 22 of the 1993 Annual Report to
Shareholders.
B. NET INTEREST EARNINGS AND INTEREST RATE ANALYSIS - are incorporated by
reference
under the caption "Analysis of Average Assets, Liabilities and
Shareholders' Equity
and Net Interest Earnings on a Tax Equivalent Basis" on page 22 of the
1993 Annual
Report to Shareholders.
C. ANALYSIS OF NET INTEREST EARNINGS, VOLUME AND RATE VARIANCE - are
incorporated by
reference under the caption "Change in Interest Income and Expense on a
Tax
Equivalent Basis" on page 23 of the 1993 Annual Report to
Shareholders.
II. INVESTMENT PORTFOLIO
A. BOOK VALUE - The following tables set forth the book value of Valley's
different
types of investment securities over the last three years:
INVESTMENT SECURITIES HELD TO MATURITY December 31
($ in thousands) 1993 1992 1991
Government agencies and corporations... $ 75,106 $ 118,778 $ 353,645
Obligations of state and political
subdivisions......................... 283,805 222,396 184,856
Mortgage-backed securities............. 579,839 744,625 667,364
Other securities....................... 1,243 1,954 10,223
INVESTMENT SECURITIES AVAILABLE FOR SALE December 31
($ in thousands)
1993 1992 1991
U.S. Treasury securities and other
government agencies and corporations....$ 184,019 $ 305,118 $ --
Mortgage-backed securities............... 256,417 24,783 --
Equity securities...................... 1,046 871 --
B. MATURITIES AND AVERAGE WEIGHTED YIELDS - are incorporated by reference under
the
caption "Maturity Distribution of Investment Securities" on page 24 of the
1993
Annual Report to Shareholders.
C. SECURITIES OF A SINGLE ISSUER EXCEEDING TEN PERCENT OF SHAREHOLDERS'
EQUITY - As of
December 31, 1993, there were no securities, in the name of any one
issuer, exceeding
10% of shareholders' equity, except for securities issued by the United
States and
its political subdivisions and agencies.
III. LOAN PORTFOLIO
A. TYPES OF LOANS - The following table sets forth Valley's different types
of loans
over the past five years:
($ in thousands) 1993 1992 1991 1990 1989
Commercial, financial and
agricultural.............. $209,657 $ 218,789 $ 251,781 $ 320,778 $ 314,323
Real estate - construction.. 63,096 58,077 76,327 90,333 101,299
Real estate - commercial....387,503 306,167 290,038 262,848 262,970
Real estate - residential...597,423 508,308 373,884 368,676 269,620
Loans to individuals........528,616 428,828 389,293 410,443 404,684
1,786,295 1,520,169 1,381,323 1,453,078 1,352,896
Loans held for sale......... 16,905 -- -- -- --
Less: Unearned income...... (1,200) (226) (987) (1,339) (812)
Loans, net of unearned
income.............. 1,802,000 1,519,943 1,380,336 1,451,739 1,352,084
Less: Allowance for
possible loan losses. (35,205) (28,772) (21,937) (15,921) (8,925)
$1,766,795 $1,491,171 $1,358,399 $1,435,818 $1,343,159
Efforts are made to maintain a diversified portfolio as to type
of borrower and loan to
guard against a downward turn in any one economic sector.
B. MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES - The
following
table sets forth Valley's commercial loans and real estate construction
loans as of
December 31, 1993:
1 Yr. Over 1 Over
($ in thousands) or less to 5 Yrs. 5 Yrs. Total
Commercial, financial &
agricultural-fixed rate....... $ 3,911 $ 27,545 $ 13,438 $ 44,894
Commercial, financial &
agricultural-adjustable rate.. 64,054 32,422 68,287 164,763
Real estate construction -
fixed rate.................... -- 194 -- 194
Real estate construction -
adjustable rate............... 35 884 21,665 5,353 62,902
The majority of payments due after 1 year represent loans with floating
interest rates.
Prior to maturity of each loan, Valley generally conducts a review which
normally includes an analysis of the borrower's financial condition and, if
applicable, a
review of the adequacy of collateral. A rollover of the loan at maturity may
require a principal paydown.
C. RISK ELEMENTS
1.NON ACCRUAL, PAST DUE AND RESTRUCTURED LOANS - The following table sets
forth Valley's problem loans for each of the past five years:
($ in thousands) 1993 1992 1991 1990 1989
Loans on non-accrual basis...$ 18,535 $ 21,371 $ 25,837 $ 19,713 $ 2,414
Loans past due in excess of
90 days and still accruing. 8,498 11,096 10,506 7,640 6,205
$ 27,033 $ 32,467 $ 36,343 $ 27,353 $ 8,619
The amount of interest income that would have been recorded on non-accrual
loans in 1993 had payments remained in accordance with the original
contractual terms approximated $2,158,000, while the actual amount of
interest income recorded on these
types of assets in 1993 totalled $439,000, resulting in lost interest
income of $1,719,000.
Loans are generally placed on a non-accrual status when they become past due in
excess of 90 days as to payment of principal or interest. Exceptions may be
made if
the loan is sufficiently collaterized and in the process of collection.
Additionally, loans may be transferred to non-accrual before they are past due
more
than 90 days if, in management's judgment, the ultimate collectiblity of the
interest
is doubtful. A loan may only be restored to an accruing basis when it again
becomes
well secured and in the process of collection and all past due amounts have been
collected. Generally, all accrued but unpaid interest at the date a loan is
placed on a non-accrual status is reversed against current earnings unless
the aggregate amount of the principal outstanding and accrued interest on the
loan is sufficiently supported by the value of the underlying
collateral. Subsequent payments received
on non-accrual loans are applied as a reduction of principal amounts
outstanding.
2. POTENTIAL PROBLEM LOANS - Although substantially all risk elements at
December 31, 1993 have been disclosed in the categories presented above,
Management believes that the current economic conditions may affect the
ability of certain borrowers to comply with the contractual repayment terms
on certain real estate and commercial loans. As part of the analysis of
the loan portfolio by
management, it has been determined that there are approximately $46.8 million in
potential problem loans at December 31, 1993 which have not been classified as
non-accrual, past due or restructured. Potential problem loans are defined as
performing loans for which management believes that the borrower's ability to
repay the loan may be impaired. Of this total $5.3 million of loans were
acquired in the Peoples merger. $38.0 million of these loans are considered to
be adequately collaterized and supported by personal guarantees. Approximately
$3.1 million has been provided for in the allowance for loan losses for these
potential problem loans. There can be no assurance that Valley has identified
all of its problem loans. At December 31, 1992, Valley had identified
approximately $30.7 million of problems loans.
3. FOREIGN OUTSTANDINGS - None.
4. LOAN CONCENTRATIONS - There were no loan concentrations at December 31, 1993
other than those disclosed in section III A. above. Valley's lending activities
are primarily concentrated within the northern section of New Jersey. For
additional information, see Loan Portfolio on page 25 of the 1993 Annual Report
to Shareholders.
D. OTHER INTEREST BEARING ASSETS - None.
IV.SUMMARY OF LOAN LOSS EXPERIENCE - The following table sets forth the
relationship amongloans, loans charged-off and loan recoveries,
the provision for loan losses and the
allowance for loan losses for the past five years:
($ in thousands) Years Ended December 31,
1993 1992 1991 1990
1989
Average loans outstanding,..... $1,665,545 $1,441,320 $1,405,446 $1,347,475
$1,256,571
Beginning balance - Allowance
for loan losses.............. $ 28,772 $ 21,937 $ 15,921 $ 8,925
$ 8,339
Balance from acquisition....... 4,466 -- -- 355
--
Loans charged-off:
Commercial................... 1,430 5,751 3,001 3,396
686
Construction................. 441 813 300 400
--
Mortgage-Commercial.......... 784 -- -- --
--
Mortgage-Residential......... 191 79 105 4
4
Installment.................. 2,496 3,676 4,052 2,507
1,429
5,342 10,319 7,458 6,307
2,119
Charge-off loans recovered:
Commercial................... 438 238 511 171
244
Construction................. -- -- -- --
--
Mortgage-Commercial.......... -- -- -- --
--
Mortgage-Residential......... 1 -- -- --
--
Installment.................. 870 916 963 552
436
1,309 1,154 1,474 723
680
Net charge-offs................ 4,033 9,165 5,984 5,584
1,439
Provision charged to
operations................... 6,000 16,000 12,000 12,225
2,025
Ending Balance - Allowance
for loan losses.............. $ 35,205 $ 28,772 $ 21,937 $ 15,921
$ 8,925
Ratio of net charge offs
during the period to average
loans outstanding during the
period....................... .24% .64% .43% .41%
.11%
The allowance for possible loan losses is maintained at a level necessary to
absorb potential loan losses and other credit risk related charge-offs.
It is the result of an analysis which relates outstanding balances to
expected reserve levels required to
absorb future credit losses. Current economic problems are addressed
through management's assessment of anticipated changes in the regional
economic climate, changes in composition and volume of the loan portfolio
and variances in levels of classified loans, non-performing assets and
other past due amounts. Additional factors
include consideration of exposure to loss including size of credit,
existence and
nature of collateral, credit record, profitability and general economic
conditions.
The following table summarizes the allocation of the allowance for loan
losses to specific loan categories for the past five years:
($ in thousands) Years Ended December 31,
1993 1992 1991
Percent Percent Pecent
of Loans of Loans of Loans
Category Category Category
Allowance to Total Allowance to Total Allowance to Total
Allocation Loans Allocation Loans Allocation Loans
Loan category:
Commercial, financial
and agricultural......
$ 10,352 16.9% $ 8,364 14.3% $ 9,850 18.1%
Real estate.............
6,312 47.6% 5,054 57.4% 4,681 53.6%
Consumer................
6,562 35.5% 4,916 28.3% 3,967 28.3%
Unallocated...............
11,979 N/A 10,438 N/A 3,439 N/A
$ 35,205 100.0% $ 28,772 100.0% $ 21,937 100.0%
1990 1989
Percent Percent
of Loan of Loan
Category Category
Allowance to Total Allowance to Total
Allocation Loans Allocation Loans
Loan category:
Commercial, financial
and agricultural......$ 7,791 22.1% $ 5,015 23.2%
Real estate............. 3,679 49.6% 793 46.9%
Consumer................ 2,749 28.3% 1,715 29.9%
Unallocated............... 1,702 N/A 1,402 N/A
$ 15,921 100.0% $ 8,925 100.0%
For additional information, see Asset Quality and Risk Elements on
page 20 of the 1993
Annual Report to Shareholders.
Net charge-offs decreased during 1993 as a result of improved current
economic
conditions. The amount of anticipated charge-offs for 1994 is estimated
to be
consistent with 1993.
V. DEPOSITS - The classification of average deposits is incorporated by
reference under
the caption "Analysis of Average Assets, Liabilities and Shareholders'
Equity and Net
Interest Earnings on a Tax Equivalent Basis" on page 22 of the 1993
Annual Report to
Shareholders.
The following table lists, by maturity, all certificates of deposit of $100,000
and over at December 31, 1993. These certificates of deposit are generated
primarily from core deposit customers and are not brokered funds.
($ in thousands)
Less than three months................................ $ 74,986
Three to six months................................... 21,708
Six to twelve months.................................. 16,083
More than twelve months............................... 22,821
VI.RETURN ON EQUITY AND ASSETS - The key ratios including return on equity
and assets are
incorporated by reference under the caption "Selected Financial Data"
on page 45 of the
1993 Annual Report to Shareholders. The following table presents the
ratio of average
" on page 45 of the
1993 Annual Report to Shareholders. The following table presents the
ratio of average
equity to assets of Valley for each of the past three years.
1993 1992 1991
Average shareholders' equity as a
% of average total assets.......... 7.46% 6.97% 8.28%
VII. SHORT TERM BORROWINGS - Not applicable
Item 2. Properties
At present Valley owns no real property, but utilizes the offices and space
provided by VNB at 615 Main Avenue, Passaic, New Jersey and 1445 Valley
Road, Wayne, New Jersey.
VNB operates from its administrative headquarters and three other locations, 59
branch offices and two warehouses. VNB owns the warehouses and 28 banking
offices, including its main office and leases 31 branch offices,
including the administrative
headquarters. During 1993 VNB acquired a 62,000 square foot office
building adjacent
to its administrative headquarters in Wayne, New Jersey. As space
becomes available,
VNB will begin using the building, as early as 1994, to consolidate
sections of its operations.
OWNED PROPERTIES:
County Square Feet
Passaic 154,500
Bergen 94,260
Essex 67,959
Hudson 23,870
Morris --
340,589
LEASED PROPERTIES:
County Square Feet
Passaic 90,435
Bergen 23,090
Essex 29,595
Hudson 2,520
Morris 10,800
156,440
Item 3. Legal Proceedings
There were no material pending legal proceedings to which Valley, the subsidiary
banks or companies were a party, other than ordinary routine litigations
incidental to business and which had no material effect on the presentation
of the financial statements contained in this report.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters Market information is incorporated by reference under
the caption "Price Range of
Common Stock" on page 45 of the 1993 Annual Report to Shareholders.
Supervisory regulations regarding the maximum amount of cash
dividends that VNB may declare annually are covered under the
caption "Dividend Restrictions" on page 41 of the 1993 Annual Report to
Shareholders.
Cash dividends declared during the two year period ended December 31, 1993 are
incorporated by reference under the caption "Consolidated Quarterly Financial
Data" on page 42 of the 1993 Annual Report to Shareholders.
Valley had approximately 4,406 shareholders of record at February 18, 1994.
Valley's Board of Directors continues to believe that cash dividends are an
important component of shareholder value and that if the current level of
performance and capital strength continue, Valley expects to be able to continue
its current dividend policy of a quarterly distribution of earnings to its
shareholders.
Item 6. Selected Financial Data
Selected Financial Data for the past five years is incorporated by reference
under the caption "Selected Consolidated Financial Data", on
page 45 of the 1993 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - is incorporated by reference under the
caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations", reported
on pages 17 through 25 of the 1993 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements, notes to consolidated
financial statements,
and Independent Auditors' Report thereon are incorporated by
reference on pages 26
through 44 of the 1993 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There was neither a change in accountants nor disagreement with
accountants on accounting and financial disclosure during 1993.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors of the registrant are incorporated
by reference to the sections included under the primary heading
" Proposal 1 -Election of Directors" on pages 2, 3 and 4 of the Proxy
Statement for the Annual Meeting of Shareholders to be held on
March 22, 1994 except for certain information on Executive Officers of
the Registrant which is included in Part I of this report.
Executive Officers of the Registrant
AGE AT IN OFFICE
NAMES 12/31/93 SINCE OFFICE
Gerald H. Lipkin 52 1989 Chairman of the Board and
Chief Executive Officer
Peter Southway 59 1987 President and
Chief Operating Officer
Sam P. Pinyuh 61 1990 Executive Vice President
Peter Crocitto 36 1992 First Senior Vice President
Robert E. Farrell 47 1992 First Senior Vice President
Richard P. Garber 50 1992 First Senior Vice President
Robert Mulligan 46 1993First Senior Vice President
Peter John Southway 33 1992 First Senior Vice President
Jack M. Blackin 51 1993 Senior Vice President
Ernest Bozzo 50 1992 Senior Vice President
Stephen P. Cosgrove 49 1993 Senior Vice President
Alan D. Eskow 45 1993 Senior Vice President
Robert Farnon 55 1992 Senior Vice President
John Harris 41 1993 Senior Vice President
William O'B Kelly 63 1977 Senior Vice President
Lucinda P. Long 47 1992 Senior Vice President
Garret G. Nieuwenhuis 53 1983 Senior Vice President
John H. Prol 56 1992 Senior Vice President
Peter G. Verbout 50 1992 Senior Vice President
All officers serve at the pleasure of the Board of Directors.
Item 11. Executive Compensation - is incorporated by reference to the
sections included under the primary headings "Executive Compensation" on
pages 6 through 11 and "Compensation Committee Report" on pages 11 through
13 of the Proxy Statement for the Annual Meeting of Shareholders to be held
March 22, 1994.
Item 12. Security Ownership of Certain Beneficial Owners and Management - is
incorporated by reference under the primary heading "Stock Ownership of
Management and Principal Shareholders" on pages 4 through 6 of the Proxy
Statement for the Annual Meeting
of Shareholders to be held March 22, 1994.
Item 13. Certain Relationships and Related Transactions - is incorporated by
reference under the secondary heading "Certain Transactions with
Management" on page 14 of the Proxy Statement for the Annual
Meeting of Shareholders to be held March 22, 1994.
The percentage of loans to directors, executive officers, and their
affiliates as a percentage of shareholders' equity was 7.75
percent at December 31, 1993.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements:
Consolidated Statements of Financial Condition -
December 31, 1993 and 1992
Consolidated Statements of Income - for years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in Shareholders' Equity -
for years ended December 1993, 1992 and 1991
Consolidated Statements of Cash Flows -
for years ended December 1993, 1992 and 1991
Notes to Consolidated Financial Statements
Independent Auditors' Report
These statements are incorporated herein by reference to the Registrant's
Annual Report to Shareholders for the year ended December 31, 1993, as noted
on page 2 of this Form 10-K Annual Report.
2. Financial Statement Schedules:
All schedules are omitted because they are either inapplicable or not
required, or because the required information is included in the Consolidated
Financial Statements or notes thereto.
3. Exhibits (numbered in accordance with Item 601 of Regulation S-K):
(3) Articles of incorporation and bylaws:
A.Restated Certificate of Incorporation of the registrant dated March 22,
1994.
B.By-Laws of the Registrant adopted as of March 14, 1989 and amended
March 19, 1991.
(10) Material Contracts:
*** A."Employment Agreements" dated June 6, 1986 between Valley, VNB and
Gerald H. Lipkin and Sam P. Pinyuh.
**** B."The Valley National Bancorp Long-term Stock Incentive Plan" dated
January 18, 1994.
* C.Warrant Agreement by and between Valley National Bancorp and Valley
National Bank, Trust Department governing the terms of 450,000 warrants
to purchase Valley National Bancorp common stock dated as of December
31, 1990.
** D.Amendment to "Employee Agreements" between Valley, VNB and Gerald H.
Lipkin and Sam P. Pinyuh dated December 10, 1991.
** E."Employee Agreement" dated December 10, 1991 between Valley, VNB and
Peter Southway.
** F."Severance Agreements" dated December 10, 1991 between Valley, VNB
and Gerald H. Lipkin, Peter Southway, and Sam P. Pinyuh.
* This document is incorporated herein by reference from the Registrant's
Form 10-K Annual Report for the fiscal period ending December 31, 1990.
** This document is incorporated herein by reference from the Registrant's
Form 10-K Annual Report for the fiscal period ending December 31, 1991.
*** This document is incorporated herein by reference from the Registrant's
Form 10-K Annual Report for the fiscal period ending December 31, 1992.
****This document is incorporated herein by reference from the Registrant's
Notice of Annual Meeting of Shareholders and Proxy dated March 1, 1994.
(13) 1993 Annual Report to Shareholders
(21) List of Subsidiaries:
(a) Subsidiary of Valley:
Percentage of Voting
Jurisdiction of Securities Owned by
Name Incorporation the Parent
Valley National Bank (VNB) United States 100%
(b) Subsidiaries of VNB:
Valley Investment Corp. Delaware 100%
VNB Mortgage Services, Inc. New Jersey 100%
BNV Realty Incorporated New Jersey 100%
VN Investment, Inc. New Jersey 100%
(22) Published Report Regarding Matters Submitted to Vote of Security Holders
Notice of Annual Meeting of Shareholders to be held Tuesday, March 22, 1994
Proxy Statement dated March 1, 1994
(23) Consents of Experts and Counsel
Consent of KPMG Peat Marwick dated March 22, 1994.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by Valley during the last quarter of
the period covered by this report.
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
VALLEY NATIONAL BANCORP
By:/s/Gerald H. Lipkin
Gerald H. Lipkin, Chairman
of the Board and Chief
Executive Officer
Dated: March 22, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and
on the date indicated.
/s/Gerald H. Lipkin Chairman of the Board and March 22, 1994
GERALD H. LIPKIN Chief Executive Officer
and Director
/s/Peter Southway President and March 22, 1994
PETER SOUTHWAY Chief Operating Officer
(Principal Financial Officer)
and Director
/s/Alan D. Eskow Senior Vice President March 22, 1994
ALAN D. ESKOW Financial Administration
(Principal Accounting Officer)
/s/Pamela Bronander Director March 22, 1994
PAMELA BRONANDER
/s/Joseph Coccia, Jr. Director March 22, 1994
JOSEPH COCCIA, JR.
/s/Austin C. Drukker Director March 22, 1994
AUSTIN C. DRUKKER
/s/Thomas P. Infusino Director March 22, 1994
THOMAS P. INFUSINO
/s/Gerald Korde Director March 22, 1994
GERALD KORDE
/s/Robert L. Marcalus Director March 22, 1994
ROBERT L. MARCALUS
/s/Robert E. McEntee Director March 22, 1994
ROBERT E. McENTEE
/s/Sam P. Pinyuh Executive Vice President March 22, 1994
SAM P. PINYUH and Director
/s/Rubin Rabinowitz Director March 22, 1994
RUBIN RABINOWITZ
/s/Robert Rachesky Director March 22, 1994
ROBERT RACHESKY
/s/Barnett Rukin Director March 22, 1994
BARNETT RUKIN
/s/Richard F. Tice Director March 22, 1994
RICHARD F. TICE
/s/Leonard Vorcheimer Director March 22, 1994
LEONARD VORCHEIMER
/s/Joseph L. Vozza Director March 22, 1994
JOSEPH L. VOZZA