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Valley National Bancorp's Mortgage Refinance Program Propels Solid Third Quarter Earnings

   Valley National Bancorp's Mortgage Refinance Program Propels Solid Third
                               Quarter Earnings

PR Newswire

WAYNE, N.J., Oct. 25, 2012

WAYNE, N.J., Oct. 25, 2012 /PRNewswire/ -- Valley National Bancorp (NYSE:
VLY), the holding company for Valley National Bank, today reported net income
for the third quarter of 2012 of $39.4 million, or $0.20 per diluted common
share as compared to the third quarter of 2011 earnings of $35.4 million, or
$0.20 per diluted common share and second quarter of 2012 earnings of $32.8
million, or $0.17 per diluted common share. All common share data presented
in this press release, including the earnings per diluted common share data
above, were adjusted for a five percent stock dividend issued on May 25, 2012.

Key highlights for the third quarter:

  oMortgage Banking Activities: Residential mortgage loan origination
    volumes remained strong during the period due to the historically low
    market interest rates and the continued success of Valley's low
    fixed-price refinance programs. Valley shifted the majority of its
    residential mortgage production to an "originate and sell" model during
    the third quarter of 2012. As a result, Valley's gains on sales of
    residential mortgage loans (originated for sale) totaled $25.1 million for
    the third quarter of 2012 as compared to $3.1 million for the second
    quarter of 2012 and $2.9 million for the third quarter of 2011. See the
    "Loans and Deposits" section below for more details.
  oAsset Quality: Non-performing assets declined 5.2 percent from the second
    quarter of 2012 as total non-accrual loans decreased to $121.4 million, or
    1.09 percent of our entire loan portfolio of $11.1 billion, at September
    30, 2012, compared to $126.2 million, or 1.10 percent, at June 30, 2012.
    At September 30, 2012, our non-performing assets included 27 performing
    residential mortgage and home equity loans totaling $3.0 million that were
    reclassified to non-accrual status due to the implementation of newly
    issued Office of the Comptroller of the Currency (OCC) guidance. Loan
    charge-offs related to the reclassified loans were immaterial for the
    third quarter of 2012. At September 30, 2012, residential mortgage and
    home equity loans delinquent 30 days or more totaled $52.9 million, or
    1.77 percent of approximately $3.0 billion in total loans within these
    categories. Commercial real estate (excluding construction) loans
    delinquent 30 days or more decreased to 1.46 percent of the loan portfolio
    at September 30, 2012 as compared to 1.65 percent at June 30, 2012. See
    "Credit Quality" section below for more details.
  oProvision for Losses on Non-Covered Loans and Unfunded Letters of Credit:
    The provision for losses on non-covered loans and unfunded letters of
    credit was $7.3 million for the third quarter of 2012 as compared to $7.4
    million for the second quarter of 2012 and $7.8 million for the third
    quarter of 2011. Net loan charge-offs on non-covered loans decreased to
    $5.9 million for the third quarter of 2012 compared to $8.7 million for
    the second quarter of 2012 and increased from $4.8 million for the third
    quarter of 2011. At September 30, 2012, our allowance for losses on
    non-covered loans and unfunded letters of credit totaled $122.1 million
    and was 1.12 percent of non-covered loans, as compared to 1.08 percent and
    1.34 percent at June 30, 2012 and September 30, 2011, respectively.
  oProvision for Losses on Covered Loans: We recorded no provision for
    losses on covered loans (i.e., loans subject to our loss-sharing
    agreements with the FDIC) related to additional credit impairment of the
    loan pools during the third quarter of 2012, second quarter of 2012 and
    third quarter of 2011. Net charge-offs of covered loans totaled $2.3
    million, $1.8 million and $6.1 million for the third quarter of 2012,
    second quarter of 2012 and third quarter of 2011, respectively. Our
    allowance for losses on covered loans totaled $9.5 million, $11.8 million,
    and $12.6 million at September 30, 2012, June 30, 2012 and September 30,
    2011, respectively.
  oNet Interest Income and Margin: Net interest income totaling $121.8
    million for the three months ended September 30, 2012 remained relatively
    unchanged as compared to both the second quarter of 2012 and the third
    quarter of 2011. On a tax equivalent basis, our net interest margin
    decreased 6 basis points to 3.46 percent in the third quarter of 2012 as
    compared to 3.52 percent for the second quarter of 2012, and decreased 40
    basis points from 3.86 percent for the third quarter of 2011. The
    decrease in margin as compared to the linked second quarter of 2012 was
    mainly due to lower yields on new investment securities and loans caused
    by the current low level of market interest rates, partially offset by
    higher accretion recognized on purchased credit impaired (PCI) loans
    during the third quarter of 2012. See the "Net Interest Income and Margin"
    section below for more details.
  oLoans: Total non-covered loans (i.e., loans which are not subject to our
    loss-sharing agreements with the FDIC) decreased by $255.9 million, or 9.1
    percent on an annualized basis, to $10.9 billion at September 30, 2012
    from June 30, 2012 largely due to our decision to sell the majority of our
    new and refinanced residential mortgage loans, some large repayments
    within the commercial loan portfolios, as well as continued strong
    competition for high quality commercial borrowers. However, our
    commercial real estate (including construction) loans and automobile loan
    portfolios experienced organic growth of $28.6 million and $11.1 million,
    or 2.4 percent and 5.7 percent on an annualized basis, respectively,
    during the third quarter of 2012. Total covered loans (i.e., loans subject
    to our loss-sharing agreements with the FDIC) decreased to $207.5 million,
    or 1.9 percent of our total loans, at September 30, 2012 as compared to
    $226.5 million at June 30, 2012, mainly due to normal payment activity.
  oInvestments: Other-than-temporary impairment charges recognized in
    earnings totaled $4.7 million ($2.7 million after taxes, or $0.01 per
    common share) during the third quarter of 2012 and related to previously
    impaired trust preferred securities issued by one bank holding company and
    one previously impaired private label mortgage-backed security. We
    recorded net gains on securities transactions totaling $1.5 million ($937
    thousand after taxes, or less than $0.01 per common share) in the third
    quarter of 2012 as compared to $1.2 million ($754 thousand after taxes, or
    less than $0.01 per common share) and $863 thousand ($541 thousand after
    taxes, or less than $0.01 per common share) during the second quarter of
    2012 and third quarter of 2011, respectively. The net gains in the third
    quarter of 2012 mainly relate to the gains on sales of $100.2 million in
    U.S. government and agency mortgage-backed securities and $19.4 million of
    corporate debt securities classified as available for sale, as well as net
    gains recognized due to the early issuer redemption of $75.7 million in
    trust preferred securities.
  oTrading Mark to Market: Net trading gains and losses mainly represent
    non-cash mark to market gains and losses on our junior subordinated
    debentures carried at fair value. Net trading gains recognized for the
    third quarter of 2012 were immaterial and decreased $1.6 million and $770
    thousand from the second quarter of 2012 and the third quarter of 2011,
    respectively.
  oIncome Tax Expense: Our effective tax rate increased to 36.2 percent for
    the third quarter of 2012 as compared to 30.4 percent for the second
    quarter of 2012, and 27.9 percent for the third quarter of 2011. The
    increase from these prior periods was largely due to the increase in
    pre-tax income for the third quarter of 2012 and its impact on the
    projected income and tax rate for the full year of 2012.
  oCapital Strength: Our regulatory capital ratios continue to reflect
    Valley's strong capital position. The Company's total risk-based capital,
    Tier 1 capital, and leverage capital were 12.36 percent, 10.87 percent,
    and 8.07 percent, respectively, at September 30, 2012.

Gerald H. Lipkin, Chairman, President and CEO commented that "We are pleased
to report the solid earnings growth for the third quarter of 2012, which was
led by the strength of our residential mortgage refinance program, as well as
the overall credit quality of our balance sheet. Our mortgage banking
business continues to experience significant application inflows mainly
through our low fixed-price refinance programs. Widening loan spreads and the
current Federal Reserve monetary policies contributed to our increased focus
on mortgage banking revenues during the quarter, while still maintaining the
acceptable interest rate risk and mix of the loan categories within our $11.1
billion loan portfolio. During the fourth quarter of 2012 and into 2013, we
expect the application pipeline and sales of new and refinanced mortgage loans
to continue at a brisk pace as long as interest rates remain at current
levels." Mr. Lipkin added, "We have the operating capacity and a knowledgeable
team in place to continue to take full advantage of the mortgage origination
opportunities within our markets."

Net Interest Income and Margin

Net interest income on a tax equivalent basis was $123.7 million for the third
quarter of 2012 and remained relatively unchanged as compared to the second
quarter of 2012 and the third quarter of 2011. Interest income on a tax
equivalent basis increased $493 thousand from the second quarter of 2012
mainly due to a $121.3 million increase in average loans and higher accretion
on PCI loans, partially offset by a $246.2 million decline in average taxable
investment securities. The increase in interest income was more than offset
by a $621 thousand increase in interest expense, which was mostly driven by a
3 basis point increase in the cost of average savings, NOW, and money market
deposits and a $74.4 million increase in average time deposits.

The net interest margin on a tax equivalent basis was 3.46 percent for the
third quarter of 2012, a decrease of 6 basis points from 3.52 percent in the
linked second quarter of 2012, and a 40 basis point decline from 3.86 percent
for the quarter ended September 30, 2011. The yield on average interest
earning assets decreased by five basis points on a linked quarter basis mainly
as a result of lower yields on average investment securities caused by the
current low market yields on new securities, and calls and sales of higher
yielding securities. The yield on average loans increased 3 basis points to
5.12 percent for the three months ended September 30, 2012 from the second
quarter of 2012. However, interest income on loans included $2.1 million in
accelerated interest accretion recognized on certain PCI loan pools that were
fully repaid during the third quarter of 2012. Additionally, the repayment
volume of higher yielding non-PCI loans remained elevated for the third
quarter of 2012 and negatively impacted the overall yield on average loans.
The cost of average interest bearing liabilities declined only one basis point
from 1.63 percent in the second quarter of 2012 mainly due to a 4 basis point
decline in the cost of average time deposits mainly resulting from the run-off
of maturing higher rate certificates of deposit. The matured time deposits
were largely replaced by lower rate retail certificates of deposit obtained
through promotional campaigns in the third quarter. The cost of average
savings, NOW and money market deposits increased 3 basis points from 0.37
percent in the second quarter of 2012 due, in part, to additional interest
expense related to interest rate swaps hedging certain prime rate money market
deposits. The swaps, with payments commencing in July 2012, require pay
fixed/receive variable-rate amounts and have an aggregate notional amount of
$100 million. The cost of short-term borrowings also increased 5 basis points
to 0.44 percent for the third quarter of 2012 primarily due to the slightly
higher costs of average short-term FHLB advances as compared to the second
quarter of 2012. Our cost of total deposits was 0.52 percent for the third
quarter of 2012 compared to 0.51 percent for the three months ended June 30,
2012.

We believe our margin may continue to face the risk of compression into the
foreseeable future due to the current low level of interest rates on most
interest earning asset alternatives. However, we continue to tightly manage
our balance sheet and our cost of funds to optimize our returns.

Credit Quality

Total loan delinquencies (including loans past due 30 days or more and
non-accrual loans) as a percentage of total loans were 1.53 percent at
September 30, 2012 as compared to 1.38 percent at June 30, 2012 and 1.73
percent at September 30, 2011. Our past due loans and non-accrual loans
discussed below exclude PCI loans. Valley's PCI loans consist of loans that
were acquired as part of FDIC-assisted transactions (the "covered loans") in
2010 and loans subsequently acquired or purchased by Valley, primarily
consisting of loans acquired from State Bancorp on January 1, 2012. Under
U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to
credit quality) are accounted for on a pool basis and are not subject to
delinquency classification in the same manner as loans originated by Valley.

Loans past due 30 to 89 days increased $17.1 million to $47.1 million at
September 30, 2012 compared to June 30, 2012 mainly due to higher
delinquencies within commercial and industrial loans and residential mortgage
loans. Within this past due category, commercial and industrial loans
increased $15.2 million to $17.5 million at September 30, 2012 due, in part,
to an $8.9 million impaired loan with $3.7 million in related specific
reserves included in our total allowance for loan losses and a $4.6 million
matured performing loan in the normal process of renewal. Residential
mortgage loans past due 30 to 89 days also increased $7.0 million to $17.1
million at September 30, 2012. Valley believes the mortgage loans in this past
due category are well secured, in the process of collection and do not
represent a material negative trend within the residential mortgage portfolio.

Loans past due 90 days or more and still accruing increased $1.0 million to
$2.5 million, or 0.02 percent of total loans, at September 30, 2012 compared
to $1.5 million, or 0.01 percent at June 30, 2012. The increase was mainly
due to one matured performing construction loan in the normal process of
renewal that totaled approximately $1.0 million at September 30, 2012.

Total non-performing assets ("NPAs"), consisting of non-accrual loans, other
real estate owned (OREO), other repossessed assets and non-accrual debt
securities, totaled $185.3 million at September 30, 2012 compared to $195.4
million at June 30, 2012. The $10.1 million decrease in NPAs from June 30,
2012 was largely due to a $4.8 million decline in non-accrual loans, mainly
within the commercial real estate and construction loan categories caused, in
part, by several full payoffs of impaired loans, as well as a $5.1 million
decrease in the estimated fair value of non-accrual debt securities
(consisting of other-than-temporarily impaired trust preferred securities
classified as available for sale) totaling $40.8 million at September 30,
2012. The non-accrual debt securities had total combined unrealized losses
(non-credit impairment) of $6.4 million and $5.8 million at September 30, 2012
and June 30, 2012, respectively. Of the $4.7 million in other-than-temporary
impairment charges recognized in earnings during the third quarter of 2012,
$4.5 million related to trust preferred securities within the non-accrual debt
securities category.

Non-accrual loans decreased $4.8 million to $121.4 million at September 30,
2012 as compared to $126.2 million at June 30, 2012 mainly due to the
aforementioned declines in the commercial real estate and construction loan
categories, and despite the addition of $3.0 million of reclassified
performing residential and home equity loans to non-accrual status due to the
implementation of new OCC guidance during the third quarter of 2012. Although
the timing of collection is uncertain, management believes that most of the
non-accrual loans are well secured and largely collectible based on, in part,
our quarterly review of impaired loans. Our impaired loans, mainly consisting
of non-accrual and troubled debt restructured commercial and commercial real
estate loans, totaled $200.3 million at September 30, 2012 and had $23.9
million in related specific reserves included in our total allowance for loan
losses. OREO (which consists of 27 commercial and residential properties) and
other repossessed assets, excluding OREO subject to loss-sharing agreements
with the FDIC, totaled $15.4 million and $7.7 million, respectively, at
September 30, 2012 as compared to $14.7 million and $8.5 million,
respectively, at June 30, 2012. Loan foreclosure transfers to OREO totaled
approximately $2.6 million (net of partial charge-offs to the allowance for
loan losses totaling $494 thousand) during the third quarter of 2012.

Troubled debt restructured loans ("TDRs") represent loan modifications for
customers experiencing financial difficulties where a concession has been
granted. Performing TDRs (i.e., TDRs not reported as loans 90 days or more
past due and still accruing or as non-accrual loans) totaled $109.3 million 
at September 30, 2012 and consisted of 84 loans (primarily in the commercial
and industrial loan and commercial real estate portfolios) as compared to 85
loans totaling $113.6 million at June 30, 2012. On an aggregate basis, the
$109.3 million in performing TDRs at September 30, 2012 had a modified
weighted average interest rate of approximately 4.85 percent as compared to a
pre-modification weighted average interest rate of 5.64 percent.

With a non-covered loan portfolio totaling $10.9 billion, net loan charge-offs
on non-covered loans for the third quarter of 2012 totaled $5.9 million as
compared to $8.7 million for the second quarter of 2012 and $4.8 million for
the third quarter of 2011. The decrease from the second quarter of 2012 was
largely due to a decline in the partial charge-offs related to collateral
valuations of impaired loans. There were $2.3 million in charge-offs on loans
in our impaired covered loan pools for the third quarter of 2012 as compared
to $1.8 million and $6.1 million of charge-offs in the second quarter of 2012
and the third quarter of 2011, respectively. Charge-offs on impaired covered
loan pools are substantially covered by loss-sharing agreements with the FDIC.

The following table summarizes the allocation of the allowance for credit
losses to specific loan categories and the allocation as a percentage of each
loan category at September 30, 2012, June 30, 2012 and September 30, 2011:

                                                              
              September 30, 2012      June 30, 2012
                                                              September 30, 2011
                          Allocation              Allocation              Allocation
                          as a % of               as a % of               as a % of
              Allowance   Loan        Allowance   Loan        Allowance   Loan
              Allocation  Category    Allocation  Category    Allocation  Category
Loan
Category:
Commercial
and           $60,463     2.85%       $63,521     2.93%       $62,717     3.44%
Industrial
loans*
Commercial
real estate
loans:
 Commercial   25,872      0.58%       20,900      0.47%       20,079      0.58%
 real estate
 Construction 13,373      3.07%       12,632      3.07%       14,614      3.53%
Total
commercial    39,245      0.80%       33,532      0.69%       34,693      0.89%
real estate
loans
Residential
mortgage      9,795       0.39%       10,678      0.39%       10,158      0.47%
loans
Consumer
loans:
 Home equity  1,666       0.34%       1,872       0.37%       2,794       0.58%
 Auto and
 other        3,997       0.42%       3,937       0.42%       7,297       0.79%
 consumer
Total
consumer      5,663       0.39%       5,809       0.41%       10,091      0.72%
loans
Unallocated   6,939       -           7,225       -           7,455       -
Allowance for
non-covered
loans
 and unfunded
 letters of   122,105     1.12%       120,765     1.08%       125,114     1.34%
 credit
Allowance for 9,492       4.57%       11,771      5.20%       12,587      4.08%
covered loans
Total
allowance for $131,597    1.18%       $132,536    1.16%       $137,701    1.44%
credit losses
* Includes the reserve for unfunded
letters of credit.

The allowance for non-covered loans and unfunded letters of credit as a
percentage of total non-covered loans was 1.12 percent at September 30, 2012
as compared to 1.08 percent and 1.34 percent at June 30, 2012 and September
30, 2011, respectively. The allocation percentages for the commercial and
industrial loan category shown in the table above declined from the second
quarter of 2012 as loss experience and the outlook for the portfolio improved
during the third quarter of 2012, while allocations for commercial real estate
loans increased mainly due to higher charge-off activity. The allocation
percentage in both the commercial and commercial real estate loan categories
decreased from September 30, 2011 largely due to non-covered PCI loans
acquired from State Bancorp on January 1, 2012 and commercial real estate
loans purchased from another financial institution in March 2012. The PCI
loans were recorded at fair value upon acquisition based on an initial
estimate of expected cash flows, including a reduction for estimated credit
losses and, in the case of State Bancorp, without carryover of the loan
portfolio's historical allowance for loan losses. The PCI loans are accounted
for on a pool basis and were initially recorded net of fair valuation
discounts related to credit which may be used to absorb potential future
losses on such loans before any allowance for loan losses is recognized
subsequent to acquisition. The remaining credit discount that may be used for
future losses totaled $52.9 million for non-covered PCI loans with carrying
amounts of $1.1 billion at September 30, 2012. Additionally, the allocated
reserves for auto and other consumer loans declined from September 30, 2011 as
loss experience and the outlook for the automobile portfolio continued to
improve throughout 2012. Our allowance for non-covered loans and unfunded
letters of credit as a percentage of total non-covered loans (excluding
non-covered PCI loans with carrying values totaling approximately $1.1
billion) was 1.24 percent at September 30, 2012 as compared to 1.20 percent at
June 30, 2012.

Loans and Deposits

Non-Covered Loans. Non-covered loans are loans not subject to loss-sharing
agreements with the FDIC. Non-covered loans decreased $255.9 million to
approximately $10.9 billion at September 30, 2012 from June 30, 2012 mainly
due to refinance activity within the residential mortgage loan portfolio.
Residential mortgage loans decreased $245.5 million from June 30, 2012 mostly
due to a large amount of refinance activity within our loans held for
investment portfolio during the third quarter, of which many of the new loans
were either sold in the secondary market or held for sale at September 30,
2012. Loans held for sale carried at fair value increased to $149.1 million
(with $141.4 million in unpaid contractual balances) at September 30, 2012 as
compared to $30.0 million (with $28.7 million in unpaid contractual balances)
at June 30, 2012. Our residential origination mortgage pipeline has remained
very robust mainly due to the continued success of our low fixed-price
refinance programs and the current low level of market interest rates. During
the third quarter of 2012, we originated over $451 million in new and
refinanced residential mortgage loans and only retained approximately 18
percent of these loans in our loan portfolio at September 30, 2012. Loan
servicing rights recognized for the retained servicing of the loans sold
during the third quarter totaled $4.4 million at September 30, 2012. We
expect to continue an "originate and sell" model for a large portion of our
mortgage loan originations during the fourth quarter and into 2013 assuming
that market conditions do not adversely change. During the early part of the
fourth quarter of 2012, application volume continues to be very strong. Our
residential mortgage refinance activity in New York is beginning to take hold
and we are optimistic that the refinance volume should remain strong at least
into the foreseeable future. Commercial and industrial loans decreased $46.8
million from June 30, 2012 mainly due to soft loan demand, full loan
repayments from a few large borrowers, including loans which were internally
criticized, as well as the continued impact of strong market competition for
quality credits on our ability to achieve growth in this loan category. Home
equity loans declined $7.4 million from June 30, 2012 as origination volumes
continued to be outpaced by normal loan payments and prepayments. Commercial
real estate loans (including construction loans) increased $28.6 million, or
2.4 percent on an annualized basis, from June 30, 2012 to $4.9 billion at
September 30, 2012. The quarter over quarter growth in this loan category is
largely a product of improved single-family housing and apartment building
construction loan demand within certain areas of our New Jersey market.
Automobile loans also increased by $11.1 million, or 5.7 percent on an
annualized basis, to $789.2 million at September 30, 2012 as compared to June
30, 2012 due, in part, to $12.4 million in purchased loans during the third
quarter. From time to time, the Bank purchases automobile loans originated
by, and sometimes serviced by, other financial institutions based on several
factors, including current loan origination volumes, market interest rates,
excess liquidity and other asset/liability management strategies. All of the
purchased automobile loans are selected using Valley's normal underwriting
criteria at the time of purchase.

Covered Loans. PCI loans for which Valley National Bank will share losses with
the FDIC are referred to as "covered loans," and consist of loans acquired
from LibertyPointe Bank and The Park Avenue Bank as a part of FDIC-assisted
transactions during 2010. Our covered loans consist primarily of commercial
real estate loans and commercial and industrial loans and totaled $207.5
million at September 30, 2012 as compared to $226.5 million at June 30, 2012.
Consistent with our PCI loans acquired and purchased during the first quarter
of 2012, all of our covered loans are PCI loans accounted for on a pool
basis. For loan pools with better than originally expected cash flows, the
forecasted increase in cash flows is recorded as a prospective adjustment to
our interest income on loans over future periods. Additionally, on a
prospective basis, we reduce the FDIC loss-share receivable by the guaranteed
portion of the additional cash flows expected to be received from borrowers on
those loan pools. During the third quarter of 2012, we reduced our FDIC
loss-share receivable by $2.1 million due to the prospective recognition of
the effect of additional cash flows from pooled loans with a corresponding
reduction in non-interest income for the period, as compared to $2.2 million
during the second quarter of 2012. 

Deposits. Total deposits increased $49.1 million to approximately $10.9
billion at September 30, 2012 from June 30, 2012 mostly due to higher time
deposit balances. Valley's time deposits totaling $2.7 billion at September
30, 2012 increased $73.6 million as compared to June 30, 2012 largely due to
the success of retail promotional campaigns for short-term certificates of
deposit, partially offset by the continued run-off of maturing higher cost
certificates of deposit. Valley's non-interest bearing deposits totaling $3.2
billion at September 30, 2012 moderately declined by $25.4 million from June
30, 2012 partly due to the better short-term time deposit rates offered by
Valley. Savings, NOW and money market accounts remained relatively unchanged
at September 30, 2012 as compared to June 30, 2012.

Non-Interest Income

Non-interest income for the third quarter of 2012 increased $16.5 million from
$24.0 million for the linked quarter ended June 30, 2012 largely due to a
$21.9 million increase in net gains on sales of residential mortgage loans.
The increase was primarily due to a higher level of loan originations for
sale, resulting strong mortgage loan demand due to the current low level of
interest rates, our success with low fixed-price refinance programs, and our
shift to an "originate and sell" model during the third quarter of 2012. See
"Loans and Deposits" section above for more details. The reduction in
non-interest income attributable to the change in the FDIC loss-share
receivable was $390 thousand compared to $7.0 million for the second quarter
of 2012. The smaller reduction in non-interest income was primarily due to the
reversal of the FDIC loss-share receivable related to the expiration of unused
lines of credit covered under loss-sharing agreements during the second
quarter of 2012. Other non-interest income decreased $7.0 million from $11.3
million for the three months ended June 30, 2012 largely due to the reversal
of $7.4 million in liabilities related to these same expired and unused lines
of credit assumed in FDIC-assisted transactions during the second quarter of
2012. Partially offsetting these increases in non-interest income, net
impairment losses on securities increased $4.1 million from $550 thousand in
the second quarter of 2012 and net trading gains decreased $1.6 million to $6
thousand for the third quarter of 2012 compared to the second quarter of 2012.

Non-Interest Expense

Non-interest expense increased by $1.7 million from $91.5 million for the
linked quarter ended June 30, 2012 mainly due to a $2.2 million increase in
other non-interest expense caused, in part, by higher OREO expenses during the
third quarter of 2012, as well as increases in several general expense
categories. The FDIC insurance assessment and net occupancy and equipment
expenses also increased $707 thousand and $563 thousand, respectively, as
compared to the linked quarter. Partially offsetting the increases to
non-interest expense, salary and employee benefit expense decreased $1.9
million from $51.2 million for the second quarter of 2012 mainly due to lower
payroll taxes and cash incentive compensation accruals.

Income Tax Expense

Income tax expense was $22.4 million and $13.7 million for the three months
ended September 30, 2012 and 2011, respectively. The effective tax rate
increased by 8.3 percent to 36.2 percent for the third quarter of 2012 as
compared to 27.9 percent for the third quarter of 2011 largely due to the
significant increase in pre-tax income during the third quarter of 2012 and
its impact on the projected income and tax rate for the full year of 2012.

Income tax expense was $52.0 million and $56.0 million for the nine months
ended September 30, 2012 and 2011, respectively. The effective tax rate
decreased by 1.2 percent to 32.8 percent for the nine months ended September
30, 2012 as compared to 34.0 percent for the same period of 2011 mainly due to
an $8.5 million incremental tax provision in 2011 related to a change in state
tax law, partially offset by the aforementioned increase in pre-tax income
during the third quarter of 2012.

For the fourth quarter of 2012, we anticipate that our effective tax rate will
approximate 33 percent. 

About Valley

Valley National Bancorp is a regional bank holding company headquartered in
Wayne, New Jersey with approximately $15.8 billion in assets. Its principal
subsidiary, Valley National Bank, currently operates 210 branches in 147
communities serving 16 counties throughout northern and central New Jersey,
Manhattan, Brooklyn, Queens and Long Island. Valley National Bank is one of
the largest commercial banks headquartered in New Jersey and is committed to
providing the most convenient service, the latest in product innovations and
an experienced and knowledgeable staff with a high priority on friendly
customer service 24 hours a day, 7 days a week. For more information about
Valley National Bank and its products and services, please visit
www.valleynationalbank.com or call Customer Service, 24/7 at 800-522-4100.

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, acquisitions, relationships, opportunities, taxation, technology,
market conditions and economic expectations. These statements may be
identified by such forward-looking terminology as "should," "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 materially from
those contemplated by such forward-looking statements include, but are not
limited to:

  oa severe decline in the general economic conditions of New Jersey and the
    New York Metropolitan area;
  odeclines in value in our investment portfolio, including additional
    other-than-temporary impairment charges on our investment securities;
  ounanticipated deterioration in our loan portfolio;
  oan unanticipated reduction in our "originate and sell" residential
    mortgage strategy or a slowdown in residential mortgage loan refinance
    activity;
  oValley's inability to pay dividends at current levels, or at all, because
    of inadequate future earnings, regulatory restrictions or limitations, and
    changes in the composition of qualifying regulatory capital and minimum
    capital requirements (including those resulting from the U.S.
    implementation of Basel III requirements);
  ohigher than expected increases in our allowance for loan losses;
  ohigher than expected increases in loan lossesor in the level of
    nonperforming loans;
  ounexpected changes in interest rates;
  ohigher than expected tax rates, including increases resulting from changes
    in tax laws, regulations and case law;
  oan unexpected decline in real estate values within our market areas;
  ocharges against earnings related to the change in fair value of our junior
    subordinated debentures;
  ohigher than expected FDIC insurance assessments;
  othe failure of other financial institutions with whom we have trading,
    clearing, counterparty and other financial relationships;
  olack of liquidity to fund our various cash obligations;
  ounanticipated reduction in our deposit base;
  opotential acquisitions that may disrupt our business;
  ogovernment intervention in the U.S. financial system and the effects of
    and changes in trade and monetary and fiscal policies and laws, including
    the interest rate policies of the Federal Reserve;
  olegislative and regulatory actions (including the impact of the Dodd-Frank
    Wall Street Reform and Consumer Protection Act andrelated regulations)
    subject us to additional regulatory oversight which mayresult in
    increased compliance costs and/or require us to change our business model;
  ochanges in accounting policies or accounting standards;
  oour inability to promptly adapt to technological changes;
  oour internal controls and procedures may not be adequate to prevent
    losses;
  oclaims and litigation pertaining to fiduciary responsibility,
    environmental laws and other matters;
  othe inability to realize expected cost savings and revenue synergies from
    the merger of State Bancorp with Valley in the amounts or in the timeframe
    anticipated;
  oinability to retain State Bancorp's customers and employees;
  olower than expected cash flows from purchased credit impaired loans; and
  oother unexpected material adverse changes in our operations or earnings.

A detailed discussion of factors that could affect our results is included in
our SEC filings, including the "Risk Factors" section of our Annual Report on
Form 10-K for the year ended December 31, 2011.

We undertake no duty to update any forward-looking statement to conform the
statement to actual results or changes in our expectations. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
performance or achievements.



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED
FINANCIAL
DATA
              Three Months Ended                        Nine Months Ended
              September     June 30,      September     September 30,
              30,                         30,
($ in
thousands,    2012          2012          2011          2012          2011
except for
share data)
FINANCIAL
DATA:
Net interest  $ 121,822     $ 122,071     $ 121,935     $ 371,352     $ 356,497
income
Net interest
income - FTE  123,706       123,834       123,611       376,689       360,833
^(4)
Non-interest  40,496        24,030        20,203        87,121        98,525
income ^(2)
Non-interest  93,219        91,510        85,302        279,277       252,211
expense
Income tax    22,402        14,366        13,696        52,046        56,004
expense
Net income    39,447        32,820        35,357        106,798       108,836
Weighted
average
number of
common shares
outstanding:
^(5)
 Basic     197,437,988   197,246,322   178,507,769   197,205,865   178,333,952
 Diluted   197,437,988   197,250,168   178,508,382   197,206,303   178,338,310
Per common
share data:
^(5)
 Basic     $ 0.20        $ 0.17        $ 0.20        $ 0.54        $ 0.61
earnings
 Diluted   0.20          0.17          0.20          0.54          0.61
earnings
 Cash
dividends     0.16          0.16          0.16          0.49          0.49
declared
Book value    7.67          7.62          7.32          7.67          7.32
Tangible book 5.39          5.35          5.42          5.39          5.42
value ^(1)
Tangible
common equity 6.94        % 6.78        % 6.96        % 6.94        % 6.96        %
to tangible
assets ^(1)
Closing stock $ 10.93       $ 12.44       $ 13.42       $ 12.59       $ 13.52
price - high
Closing stock 9.17          10.28         9.42          9.17          9.42
price - low
CORE ADJUSTED
FINANCIAL
DATA: ^(1)
Net income,   $ 42,171      $ 33,139      $ 35,357      $ 109,841     $ 109,353
as adjusted
Basic
earnings per  0.21          0.17          0.20          0.56          0.61
share, as
adjusted
Diluted
earnings per  0.21          0.17          0.20          0.56          0.61
share, as
adjusted
FINANCIAL                                                             `
RATIOS:
Net interest  3.41        % 3.47        % 3.80        % 3.51        % 3.71        %
margin
Net interest
margin - FTE  3.46          3.52          3.86          3.56          3.76
^(4)
Annualized
return on     0.99          0.83          0.99          0.90          1.02
average
assets
Annualized
return on
average       10.45         8.75          10.74         9.52          11.07
shareholders'
equity
Annualized
return on
average
tangible

shareholders' 14.86         12.49         14.52         13.60         14.99
equity ^(1)
Efficiency    57.43         62.63         60.01         60.91         55.43
ratio ^(6)
CORE ADJUSTED
FINANCIAL
RATIOS: ^(1)
Annualized
return on
average       1.05        % 0.84        % 0.99        % 0.92        % 1.02        %
assets, as
adjusted
Annualized
return on
average
shareholders'
 equity as 11.18         8.84          10.74         9.79          11.12
adjusted
Annualized
return on
average
tangible

shareholders' 15.89         12.61         14.52         13.98         15.07
equity, as
adjusted
Efficiency
ratio, as     55.81         62.40         60.01         60.23         55.33
adjusted
AVERAGE
BALANCE SHEET
ITEMS:
Assets        $             $             $             $             $
              15,994,973    15,791,048    14,283,783    15,833,646    14,258,029
Interest
earning       14,283,862    14,078,025    12,821,312    14,107,866    12,803,553
assets
Loans         11,419,251    11,297,942    9,642,366     11,225,330    9,574,183
Interest
bearing       11,213,688    11,018,929    10,295,144    11,091,621    10,331,193
liabilities
Deposits      11,028,027    10,930,351    9,788,550     10,985,273    9,705,926
Shareholders' 1,509,403     1,499,516     1,316,733     1,495,734     1,310,750
equity



                        As Of
                        September    June 30,      December 31,   September
                        30,                                       30,
($ in thousands)        2012         2012          2011           2011
BALANCE SHEET ITEMS:
Assets                  $           $            $             $ 
                        15,771,134   16,018,244   14,244,507     14,231,155
Total loans             11,148,938   11,423,852    9,799,641      9,600,087
Non-covered loans       10,941,405   11,197,315    9,527,797      9,317,691
Deposits                10,920,800   10,871,679    9,673,102      9,620,339
Shareholders' equity    1,513,323    1,503,073     1,266,248      1,307,102
CAPITAL RATIOS:
Tier 1 leverage ratio   8.07       % 8.10        % 8.07         % 8.10       %
Risk-based capital -    10.87        10.53         10.92          10.82
Tier 1
Risk-based capital -    12.36        12.16         12.75          12.65
Total Capital



                   Three Months Ended                  Nine Months Ended
                   September   June 30,    September   September 30,
                   30,                     30,
($ in thousands)   2012        2012        2011        2012        2011
ALLOWANCE FOR
CREDIT LOSSES:
Beginning balance  $        $       $        $        $   
- Allowance for    132,536    135,576     140,893    136,185    126,504
credit losses
Loans charged-off:
^(3)
  Commercial and   (3,649)     (5,406)     (9,297)     (13,862)    (19,025)
  industrial
  Commercial real  (3,214)     (4,895)     (719)       (8,679)     (5,173)
  estate
  Construction     (522)       (484)       (520)       (1,516)     (520)
  Residential      (870)       (583)       (269)       (2,629)     (1,495)
  mortgage
  Consumer         (1,111)     (1,015)     (1,251)     (3,609)     (4,364)
    Total loans    (9,366)     (12,383)    (12,056)    (30,295)    (30,577)
    charged-off
Charged-off loans
recovered:
  Commercial and   601         1,304       559         2,910       1,748
  industrial
  Commercial real  16          66          2           202         28
  estate
  Construction     -           50          -           50          197
  Residential      13          111         16          638         106
  mortgage
  Consumer         547         407         504         1,555       1,724
    Total loans    1,177       1,938       1,081       5,355       3,803
    recovered
Net charge-offs    (8,189)     (10,445)    (10,975)    (24,940)    (26,774)
Provision charged  7,250       7,405       7,783       20,352      37,971
for credit losses
Ending balance -   $        $       $        $        $   
Allowance for      131,597    132,536     137,701    131,597    137,701
credit losses
Components of
allowance for
credit losses:
  Allowance for    $        $       $        $        $   
  non-covered      119,755    118,083     122,775    119,755    122,775
  loans
  Allowance for    9,492       11,771      12,587      9,492       12,587
  covered loans
    Allowance for  129,247     129,854     135,362     129,247     135,362
    loan losses
  Allowance for
  unfunded letters 2,350       2,682       2,339       2,350       2,339
  of credit
Allowance for      $        $       $        $        $   
credit losses      131,597    132,536     137,701    131,597    137,701
Components of
provision for
credit losses:
  Provision for
  losses on        $       $       $       $       $    
  non-covered       7,582      7,429    7,711    20,385     19,338
  loans
  Provision for
  losses on        -           -           -           -           18,094
  covered loans
  Provision for
  unfunded letters (332)       (24)        72          (33)        539
  of credit
Provision for      $       $       $       $       $    
credit losses       7,250      7,405    7,783    20,352     37,971
Annualized ratio
of net charge-offs
of
  non-covered
  loans to average 0.21      % 0.31      % 0.20      % 0.25      % 0.21      %
  loans
Annualized ratio
of total net
charge-offs
  to average loans 0.29        0.37        0.46        0.30        0.37
Allowance for
non-covered loan
losses as
  a % of
  non-covered      1.09        1.05        1.32        1.09        1.32
  loans
Allowance for
credit losses as
  a % of total     1.18        1.16        1.43        1.18        1.43
  loans



                            As Of
($ in thousands)            September     June 30,   December    September
                            30,                      31,         30,
ASSET QUALITY: ^(7)         2012          2012       2011        2011
Accruing past due loans:
30 to 89 days past due:
    Commercial and          $        $        $       $     
    industrial              17,459        2,275       4,347     9,866
    Commercial real estate  6,236         11,483     13,115      22,220
    Construction            -             270        2,652       -
    Residential mortgage    16,961        10,148     8,496       12,556
    Consumer                6,463         5,872      8,975       9,456
Total 30 to 89 days past    47,119        30,048     37,585      54,098
due
90 or more days past due:
    Commercial and          -             512        657         164
    industrial
    Commercial real estate  221           -          422         268
    Construction            1,024         -          1,823       2,216
    Residential mortgage    1,051         727        763         721
    Consumer                197           246        351         483
Total 90 or more days past  2,493         1,485      4,016       3,852
due
Total accruing past due     $        $         $       $     
loans                       49,612        31,533     41,601     57,950
Non-accrual loans:
    Commercial and          $        $         $       $     
    industrial              12,296        12,652     26,648     16,737
    Commercial real estate  58,541        61,864     42,186      41,453
    Construction            15,139        16,502     19,874      14,449
    Residential mortgage    31,564        32,045     31,646      31,401
    Consumer                3,831         3,165      3,910       3,645
Total non-accrual loans     121,371       126,228    124,264     107,685
Other real estate owned     15,403        14,724     15,227      14,091
^(8)
Other repossessed assets    7,733         8,548      796         822
Non-accrual debt            40,779        45,921     27,151      -
securities ^(9)
Total non-performing        $         $          $        $    
assets ("NPAs")             185,286       195,421    167,438    122,598
Performing troubled debt    $         $          $        $    
restructured loans          109,282       113,610    100,992    103,690
Total non-accrual loans as  1.09        % 1.10     % 1.27      % 1.12        %
a % of loans
Total accruing past due and
non-accrual loans
    as a % of loans         1.53          1.38       1.69        1.73
Allowance for losses on
non-covered loans as a %
of
    non-accrual loans       98.67         93.55      96.79       114.01
Non-performing purchased
credit-impaired loans:
^(10)
                            $        $         $       $     
    Non-covered loans       19,124        19,827                 -
                                                     -
    Covered loans           59,526        66,571     76,701      83,676



NOTES TO SELECTED FINANCIAL DATA
     This press release contains certain supplemental financial
     information, described in Notes (1) - (4), which has been determined
     by methods other than U.S. 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. Specifically, Valley provides measures based on
     what it believes are its operating earnings on a consistent basis and
     excludes non-core operating items which affect the GAAP reporting of
     results of operations. Management utilizes these measures for
     internal planning and forecasting purposes. Management believes that
^(1) Valley's presentation and discussion, together with the accompanying
     reconciliations, provides a complete understanding of factors and
     trends affecting Valley's business and allows investors to view
     performance in a manner similar to management. These non-GAAP
     measures should not be considered Valley's business and allows
     investors to view performance in a manner similar to management.
     These non-GAAP measures should not be considered a substitute for
     GAAP basis measures and results and Valley strongly encourages
     investors to review its consolidated financial statements in their
     entirety and not to rely on any single financial measure. Because
     non-GAAP financial measures are not standardized, it may not be
     possible to compare these financial measures with other companies'
     non-GAAP financial measures having the same or similar names.

                      Three Months Ended                     Nine Months Ended
                      September    June 30,     September    September 30,
                      30,                       30,
      ($ in
      thousands,      2012         2012         2011         2012         2011
      except for
      share data)
      Tangible book
      value per
      common share:
      Common shares   197,429,718  197,259,926  178,526,632  197,429,718  178,526,632
      outstanding
      Shareholders'   $         $          $           $          $  
      equity         1,513,323   1,503,073    1,307,102   1,513,323    1,307,102
      Less: Goodwill
      and other       (449,315)    (447,260)    (339,850)    (449,315)    (339,850)
      intangible
      assets
      Tangible        $         $          $         $          $   
      shareholders'   1,064,008   1,055,813    967,252      1,064,008    967,252
      equity
       Tangible    $5.39        $5.35        $5.42        $5.39        $5.42
      book value
      Tangible common
      equity to
      tangible
      assets:
      Tangible        $         $          $         $          $   
      shareholders'   1,064,008   1,055,813    967,252      1,064,008    967,252
      equity
      Total assets    15,771,134   16,018,244   14,231,155   15,771,134   14,231,155
      Less: Goodwill
      and other       (449,315)    (447,260)    (339,850)    (449,315)    (339,850)
      intangible
      assets
      Tangible assets $          $           $            $           $ 
                      15,321,819  15,570,984   13,891,305  15,321,819   13,891,305
       Tangible
       common equity  6.94%        6.78%        6.96%        6.94%        6.96%
       to tangible
       assets
      Annualized
      return on
      average
      tangible
      equity:
      Net income     $       $        $        $         $   
                       39,447     32,820      35,357       106,798     108,836
      Average
      shareholders'   1,509,403    1,499,516    1,316,733    1,495,734    1,310,750
      equity
      Less: Average
      goodwill and
      other           (447,622)    (448,451)    (342,506)    (448,449)    (342,996)
      intangible
      assets
       Average
       tangible       $         $          $         $          $   
       shareholders'  1,061,781   1,051,065    974,227      1,047,285    967,754
       equity
       Annualized
       return on
       average        14.86%       12.49%       14.52%       13.60%       14.99%
       tangible
       shareholders'
       equity
      Adjusted net
      income
      available to
      common
      stockholders:
      Net income, as  $       $        $        $         $   
      reported         39,447     32,820      35,357       106,798     108,836
      Net impairment
      losses on
      securities      2,724        319          -            3,043        517
      recognized in
      earnings (net
      of tax)
      Net income, as  42,171       33,139       35,357       109,841      109,353
      adjusted
      Adjusted per
      common share
      data:
      Net income, as  $       $        $        $         $   
      adjusted         42,171     33,139      35,357       109,841     109,353
      Average number
      of basic shares 197,437,988  197,246,322  178,507,769  197,205,865  178,333,952
      outstanding
       Basic          $       $       $       $       $     
       earnings, as      0.21    0.17       0.20        0.56       0.61
       adjusted
      Average number
      of diluted      197,437,988  197,250,168  178,508,382  197,206,303  178,338,310
      shares
      outstanding
       Diluted        $       $       $       $       $     
       earnings, as      0.21    0.17       0.20        0.56       0.61
       adjusted
      Adjusted
      annualized
      return on
      average assets:
      Net income, as  $       $        $        $         $   
      adjusted         42,171     33,139      35,357       109,841     109,353
      Average assets  15,994,973   15,791,048   14,283,783   15,833,646   14,258,029
       Annualized
       return on
       average        1.05%        0.84%        0.99%        0.92%        1.02%
       assets, as
       adjusted
      Adjusted
      annualized
      return on
      average
      shareholders'
      equity:
      Net income, as  $       $        $        $         $   
      adjusted         42,171     33,139      35,357       109,841     109,353
      Average
      shareholders'   1,509,403    1,499,516    1,316,733    1,495,734    1,310,750
      equity
       Annualized
       return on
       average        11.18%       8.84%        10.74%       9.79%        11.12%
       shareholders'
       equity, as
       adjusted
      Adjusted
      annualized
      return on
      average
      tangible
      shareholders'
      equity:
      Net income, as  $       $        $        $         $   
      adjusted         42,171     33,139      35,357       109,841     109,353
      Average
      tangible        1,061,781    1,051,065    974,227      1,047,285    967,754
      shareholders'
      equity
       Annualized
       return on
       average
       tangible       15.89%       12.61%       14.52%       13.98%       15.07%
       shareholders'
       equity, as
       adjusted
      Adjusted
      efficiency
      ratio:
      Non-interest    $       $        $        $         $   
      expense          93,219     91,510      85,302       279,277     252,211
      Net interest    121,822      122,071      121,935      371,352      356,497
      income
      Non-interest    40,496       24,030       20,203       87,121       98,525
      income
      Add: Net
      impairment
      losses on       4,697        550          -            5,247        825
      securities
      recognized in
      earnings
       Gross
       operating      $       $         $         $         $   
       income, as     167,015      146,651     142,138      463,720     455,847
       adjusted
       Efficiency
       ratio, as      55.81%       62.40%       60.01%       60.23%       55.33%
       adjusted
      Non-interest
^(2)  income includes
      net trading
      gains (losses):
       Trading        $       $       $       $       $     
       securities         65   (151)      136         166        523
       Junior
       subordinated   (59)         1,760        640          461          2,587
       debentures
        Total       $       $       $       $       $     
       trading gains          1,609        776         627      3,110
       (losses), net  6
      Total loans
      charged-off
^(3)  includes the
      following
      covered loan
      charge-offs:
      Commercial and  $       $       $        $       $    
      industrial       (2,278)    (1,273)      (6,131)      (3,551)      (11,736)
      Commercial real -            -            -            -            (38)
      estate
      Construction    -            (484)        -            (484)        -
      Residential     -            -            -            -            (110)
      mortgage
        Total       $       $       $        $       $    
       covered loans   (2,278)    (1,757)      (6,131)      (4,035)      (11,884)
       charged-off
      Net interest income and net interest margin are presented on a tax
^(4)  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.
^(5)  Share data reflects the five percent common stock
      dividend issued on May 25, 2012.
      The efficiency ratio measures Valley's total
^(6)  non-interest expense as a percentage of net interest
      income plus total non-interest income.
      Past due loans and non-accrual loans exclude loans
      that were acquired as part of FDIC-assisted
^(7)  transactions (covered loans) and acquired or purchased
      loans during 2012. These loans are accounted for on a
      pool basis under U.S. GAAP and are not subject to
      delinquency classification in the same manner as loans
      originated by Valley.
      Excludes OREO properties related to FDIC-assisted
      transactions totaling $11.2 million at September 30,
^(8)  2012 and June 30, 2012, and $6.4 million and $6.2
      million at December 31, 2011 and September 30, 2011,
      respectively. These assets are covered by the
      loss-sharing agreements with the FDIC.
      Includes other-than-temporarily impaired trust
      preferred securities classified as available for sale,
^(9)  which are presented at carrying value (net of

      unrealized losses totaling $6.4 million, $5.8 million,
      and $24.6 million) at September 30, 2012, June 30,
      2012, and December 31, 2011, respectively, after
      recognition of all credit impairments.
      Represent acquired and purchased loans meeting
      Valley's definition of non-performing loan (i.e.,
^(10) non-accrual loans), but are not subject to such
      classification under U.S. GAAP because the loans are
      accounted for on a pooled basis and are excluded from
      the non-accrual loans in the table above.
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)
                                            September30,     December31,
                                            2012              2011
Assets
Cash and due from banks                     $    412,895  $    372,566
Interest bearing deposits with banks        192,364           6,483
Investment securities:
   Held to maturity, fair value of
   $1,689,413 at September 30, 2012 and     1,624,575         1,958,916
   $2,027,197 at December 31, 2011
   Available for sale                       673,911           566,520
   Trading securities                       22,104            21,938
               Total investment securities  2,320,590         2,547,374
Loans held for sale, at fair value          149,067           25,169
Non-covered loans                           10,941,405        9,527,797
Covered loans                               207,533           271,844
   Less: Allowance for loan losses          (129,247)         (133,802)
               Net loans                    11,019,691        9,665,839
Premises and equipment, net                 276,071           265,475
Bank owned life insurance                   338,286           303,867
Accrued interest receivable                 55,548            52,527
Due from customers on acceptances           4,474             5,903
outstanding
FDIC loss-share receivable                  51,938            74,390
Goodwill                                    420,443           317,962
Other intangible assets, net                28,872            20,818
Other assets                                500,895           586,134
               Total Assets                 $  15,771,134    $  14,244,507
Liabilities
Deposits:
   Non-interest bearing                     $   3,206,283   $   2,781,597
   Interest bearing:
       Savings, NOW and money market        4,992,748         4,390,121
       Time                                 2,721,769         2,501,384
               Total deposits               10,920,800        9,673,102
Short-term borrowings                       288,865           212,849
Long-term borrowings                       2,698,403         2,726,099
Junior subordinated debentures issued to
capital trusts (includes fair value of
$149,708
   at September 30, 2012 and $160,478 at
   December 31, 2011 for VNB Capital Trust  190,594           185,598
   I)
Bank acceptances outstanding                4,474             5,903
Accrued expenses and other liabilities      154,675           174,708
               Total Liabilities            14,257,811        12,978,259
Shareholders' Equity*
Preferred stock, no par value, authorized   -                 -
30,000,000 shares; none issued
Common stock, no par value, authorized
232,023,233 shares; issued 197,446,137
shares
    at September 30, 2012 and 178,717,806  69,402            59,955
   shares at December 31, 2011
Surplus                                     1,387,895         1,179,135
Retained earnings                           100,253           90,011
Accumulated other comprehensive loss        (44,063)          (62,441)
Treasury stock, at cost (16,419 common
shares at September 30, 2012 and 34,776
   common shares at December 31, 2011)      (164)             (412)
               Total Shareholders' Equity   1,513,323         1,266,248
               Total Liabilities and        $  15,771,134    $  14,244,507
               Shareholders' Equity
____________
   Share data reflects the five percent
* common stock dividend issued on May 25,
   2012.



VALLEY NATIONAL
BANCORP
CONSOLIDATED
STATEMENTS OF INCOME  Three Months Ended                   Nine Months Ended
(Unaudited)
(in thousands,        September               September
except for share      30,         June 30,    30,          September 30,
data)
                      2012        2012        2011         2012        2011
Interest Income
Interest and fees on  $      $      $       $      $     
loans                 146,011     143,812     140,303      438,283     409,010
Interest and
dividends on
investment
securities:
 Taxable          15,733      18,114      26,552       54,598      84,734
 Tax-exempt       3,424       3,227       3,109        9,770       8,043
 Dividends        1,866       1,674       1,565        5,291       5,212
Interest on federal
funds sold and other  196         31          110          282         253
short-term
investments
 Total            167,230     166,858     171,639      508,224     507,252
interest income
Interest Expense
Interest on
deposits:
 Savings,
NOW and money         5,051       4,690       4,961        15,095      14,722
market
 Time             9,226       9,276       12,424       28,687      37,206
Interest on
short-term            556         369         293          1,178       910
borrowings
Interest on
long-term borrowings
and junior            30,575      30,452      32,026       91,912      97,917
subordinated
debentures
 Total
interest              45,408      44,787      49,704       136,872     150,755
expense
Net Interest Income   121,822     122,071     121,935      371,352     356,497
Provision for losses
on non-covered loans  7,250       7,405       7,783        20,352      19,877
and unfunded letters
of credit
Provision for losses  -           -           -            -           18,094
on covered loans
Net Interest Income
After Provision for   114,572     114,666     114,152      351,000     318,526
Credit Losses
Non-Interest Income
Trust and investment  1,947       1,984       1,769        5,705       5,744
services
Insurance             3,228       3,283       3,416        11,947      11,496
commissions
Service charges on    6,513       6,086       5,616        18,545      16,908
deposit accounts
Gains on securities   1,496       1,204       863          2,543       20,034
transactions, net
Other-than-temporary
impairment losses on  -           -           -            -           -
securities
 Portion
recognized in other   (4,697)     (550)       -            (5,247)     (825)
comprehensive income
(before taxes)
 Net impairment
losses on securities  (4,697)     (550)       -            (5,247)     (825)
recognized in
earnings
Trading gains, net    6           1,609       776          627         3,110
Fees from loan        1,173       1,149       989          3,481       3,356
servicing
Gains on sales of     25,055      3,141       2,890        31,362      8,060
loans, net
Gains on sales of     195         256         179          483         382
assets, net
Bank owned life       1,674       1,632       1,989        5,265       5,575
insurance
Change in FDIC
loss-share            (390)       (7,022)     (1,577)      (7,502)     11,989
receivable
Other                 4,296       11,258      3,293        19,912      12,696
 Total
non-interest          40,496      24,030      20,203       87,121      98,525
income
Non-Interest Expense
Salary and employee   49,267      51,214      45,125       151,507     133,359
benefits expense
Net occupancy and     17,466      16,903      15,656       51,731      48,309
equipment expense
FDIC insurance        3,915       3,208       2,993        10,742      9,624
assessment
Amortization of
other intangible      2,696       2,532       3,351        7,186       7,109
assets
Professional and      3,471       3,345       3,666        10,440      10,459
legal fees
Advertising           1,723       1,841       2,185        5,252       6,370
Other                 14,681      12,467      12,326       42,419      36,981
 Total
non-interest          93,219      91,510      85,302       279,277     252,211
expense
Income Before Income  61,849      47,186      49,053       158,844     164,840
Taxes
Income tax expense   22,402      14,366      13,696       52,046      56,004
Net Income            $      $      $       $      $     
                       39,447     32,820     35,357     106,798     108,836
Earnings Per Common
Share*:
 Basic            $      $      $       $      $     
                         0.20     0.17     0.20      0.54     0.61
 Diluted          0.20        0.17        0.20         0.54        0.61
Cash Dividends
Declared per Common   0.16        0.16        0.16         0.49        0.49
Share*
Weighted Average
Number of Common
Shares Outstanding*:
 Basic            197,437,988 197,246,322 178,507,769  197,205,865 178,333,952
 Diluted          197,437,988 197,250,168 178,508,382  197,206,303 178,338,310
____________
* Share data reflects the five percent
common stock dividend issued on May 25, 2012.



VALLEY NATIONAL BANCORP
LOAN PORTFOLIO
(in thousands)
                    9/30/2012   6/30/2012   3/31/2012   12/31/2011  09/30/2011
Non-covered Loans
Commercial and      $          $          $          $          $ 
industrial          2,118,870   2,165,656   2,170,378   1,878,387   1,833,211
Commercial real
estate:
   Commercial real  4,445,338   4,441,026   4,347,542   3,574,089   3,524,891
   estate
   Construction     435,939     411,639     430,906     411,003     401,166
Total commercial   4,881,277   4,852,665   4,778,448   3,985,092   3,926,057
real estate
Residential         2,499,554   2,745,101   2,531,166   2,285,590   2,172,601
mortgage
Consumer:
   Home equity      492,338     499,749     507,560     469,604     477,517
   Automobile       789,248     778,181     764,082     772,490     785,443
   Other consumer   160,118     155,963     145,703     136,634     122,862
Total consumer     1,441,704   1,433,893   1,417,345   1,378,728   1,385,822
loans
Total non-covered   $           $           $           $          $ 
loans               10,941,405  11,197,315  10,897,337  9,527,797   9,317,691
Covered loans*      207,533     226,537     252,185     271,844     282,396
Total loans         $           $           $           $          $ 
                    11,148,938  11,423,852  11,149,522  9,799,641   9,600,087
____________
*  Loans that Valley National Bank will share losses with the FDIC are
   referred to as "covered loans".



                Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
                Net Interest Income on a Tax Equivalent Basis
                Quarter End - 09/30/2012        Quarter End - 6/30/2012         Quarter End - 3/31/2012         Quarter End - 12/31/2011       Quarter End - 09/30/2011
                Average                Avg.   Average                Avg.   Average                Avg.   Average               Avg.   Average               Avg.
($ in           Balance    Interest  Rate   Balance    Interest  Rate   Balance    Interest  Rate   Balance   Interest  Rate   Balance   Interest  Rate
thousands)
Assets
Interest
earning assets
Loans (1)(2)    $           $ 146,051   5.12%  $           $ 143,837   5.09%  $           $ 148,470   5.42%  $         $ 138,356   5.70%  $         $ 140,305   5.82%
                11,419,251                     11,297,942                     10,956,666                     9,710,251                     9,642,366
Taxable         2,016,878    17,599      3.49%  2,263,054    19,788      3.50%  2,469,057    22,502      3.65%  2,406,927   24,838      4.13%  2,537,173   28,117      4.43%
investments (3)
Tax-exempt
investments     505,010      5,268       4.17%  464,681      4,965       4.27%  439,927      4,799       4.36%  477,841     4,970       4.16%  464,873     4,783       4.12%
(1)(3)
Federal funds
sold and other
     interest
     bearing    342,723      196         0.23%  52,348       31          0.24%  94,127       55          0.23%  250,912     149         0.24%  176,900     110         0.25%
     deposits
Total interest  14,283,862   169,114     4.74%  14,078,025   168,621     4.79%  13,959,777   175,826     5.04%  12,845,931  168,313     5.24%  12,821,312  173,315     5.41%
earning assets
Other assets    1,711,111                       1,713,023                       1,753,368                       1,460,742                      1,462,471
Total assets    $                               $                               $                               $                              $
                15,994,973                      15,791,048                      15,713,145                      14,306,673                     14,283,783
Liabilities and
shareholders'
equity
Interest
bearing
liabilities:
     Savings,
     NOW and    $          $                $          $                $          $                $         $                $         $  
     money      5,079,279   5,051       0.40%  5,064,315   4,690       0.37%  5,072,431   5,354       0.42%  4,463,682  5,154       0.46%  4,395,239  4,961       0.45%
     market
     deposits
     Time       2,736,233    9,226       1.35%  2,661,794    9,276       1.39%  2,812,582    10,185      1.45%  2,584,980   11,085      1.72%  2,782,254   12,424      1.79%
     deposits
     Short-term 502,016      556         0.44%  376,150      369         0.39%  237,676      253         0.43%  185,091     244         0.53%  175,636     293         0.67%
     borrowings
     Long-term
     borrowings 2,896,160    30,575      4.22%  2,916,670    30,452      4.18%  2,918,216    30,885      4.23%  2,911,526   31,775      4.37%  2,942,015   32,026      4.35%
     (4)
Total interest
bearing         11,213,688   45,408      1.62%  11,018,929   44,787      1.63%  11,040,905   46,677      1.69%  10,145,279  48,258      1.90%  10,295,144  49,704      1.93%
liabilities
Non-interest
bearing         3,212,515                       3,204,242                       3,111,959                       2,786,865                      2,611,057
deposits
Other           59,367                          68,361                          82,148                          63,031                         60,849
liabilities
Shareholders'   1,509,403                       1,499,516                       1,478,133                       1,311,498                      1,316,733
equity
Total
liabilities and $                               $                               $                               $                              $
shareholders'   15,994,973                      15,791,048                      15,713,145                      14,306,673                     14,283,783
equity
Net interest
income/interest              $ 123,706   3.12%               $ 123,834   3.16%               $ 129,149   3.35%              $ 120,055   3.34%              $ 123,611   3.48%
rate spread (5)
Tax equivalent               (1,884)                         (1,763)                         (1,690)                        (1,741)                        (1,676)
adjustment
Net interest
income, as                   $ 121,822                       $ 122,071                       $ 127,459                      $ 118,314                      $ 121,935
reported
Net interest                             3.41%                           3.47%                           3.65%                          3.68%                          3.80%
margin (6)
Tax equivalent                           0.05%                           0.05%                           0.05%                          0.06%                          0.06%
effect
Net interest
margin on a
fully tax                                3.46%                           3.52%                           3.70%                          3.74%                          3.86%
equivalent
basis (6)
^(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.



SOURCE Valley National Bancorp

Website: http://www.valleynationalbank.com
Contact: Alan D. Eskow, Senior Executive Vice President and Chief Financial
Officer, +1-973-305-4003