Ladies and gentlemen, thank you for standing by, and welcome to the Valley National Bancorp first quarter 2008 earnings release conference call. At this time, all lines are in a listen-only mode. Later, there will be an opportunity for questions and instructions will be given at that time. (Operator Instructions). And as a reminder, this conference is being recorded. I'll now turn the conference over to your host, Gerald Lipkin, Chairman, President and CEO. Please go ahead, sir.

Thank you. And good morning and welcome to our first quarter 2008 earnings conference call. I'd like to turn the call over to Dianne Grenz now to read our forward-looking statements.

Today's presentation may contain forward-looking statements regarding the financial condition, results of operation and business of Valley. Those statements are not historical facts, and may include expressions about Valley's confidence, strategies, and management's expectations about earnings. These forward-looking statements involve certain risks and uncertainties that may cause the actual results to differ materially from the results the forward-looking statements contemplate includes, but are not limited to, unanticipated changes in the direction of interest rates; effective tax rate; new and existing programs and products, relationships, opportunities, technology, the economy, market conditions, the impact of management's adoption, interpretation and implementation of new or pre-existing accounting pronouncements, and failure to obtain shareholder or regulatory approval for the merger of Greater Community with Valley or to satisfy other conditions to the merger on the proposed terms and within the proposed timeframe. Written information concerning factors that could cause results to differ materially from the results the forward-looking statements contemplate can be found in Valley's press release for today's conference call, Valley's Form 10-K for the year ending December 31, 2007, as well as in Valley's other recent SEC filings. Valley assumes no obligation for updating these forward-looking statements.

Thank you, Dianne. Net income for the first quarter was $31.6 million compared to 49.4 million in the same period one year ago. Current period earnings were negatively impacted by approximately $3.7 million of pretax mark-to-market losses of financial instruments carried at fair value. Also, the first quarter of 2007 net income included aftertax mark-to-market gains of nearly $5.3 million. Additionally, in 2007, Valley recorded a $10.3 million aftertax gain on the sale of a building in Manhattan. Alan Eskow will discuss the financial results in more detail shortly. I am most pleased to report that credit quality continues to remain strong at Valley. While not totally immune to the widespread credit deterioration unfolding throughout the economy, the balance sheet, management strategies and constraints in asset generation employed by Valley over the past few years continues to pay immense dividends. The matter in which an institution underwrites each credit should be uniform irrespective of the credit cycle. If you recall, during the third quarter of 2006, nearly one-and-a-half years ago, we announced Valley's aggressive actions to encourage over $50 million of commercial borrowers to move their banking relationship elsewhere, although at the time each credit facility was current and performing. At Valley, credit underwriting is not conducted to meet market competition. As a result, subprime residential mortgages never made their way into either our loan or investment portfolios. For the quarter, Valley's annualized net charge-offs was 0.18% of average loans, while for the same period the non-performing asset to total loan ratio remained flat from the prior period at 0.38%. Total loans past due 30 days decreased from the prior period from 1% to 0.93%. A recent study conducted by the International Monetary Fund identified potential losses of nearly 565 to $1 billion within residential mortgage, home equity, and related…

Thank you, Gerry. My comments this morning reflect the 5% stock dividend declared on April 7, 2008. This May 23, 2008 as all of our share and per share amounts has been adjusted. Reported net income for the quarter of 31.6 million or $0.25 per share included approximately $0.02 of aftertax non-recurring charges. The quarter was negatively impacted by mark-to-market adjustments on various financial instruments carried at fair value, net of gain realized from the mandatory partial redemption of Visa stock. Valley's mark-to-market fair value adjustments reflect a loss within the investment portfolio of 900,000 reported in non-interest income and a loss of 2.8 million on long-term borrowings and junior subordinated debentures reported in other expense. Additionally, the linked quarter increase in salary and benefit expense is partially attributable to higher payroll taxes during the period of 1.2 million as the annual limits for FICA and 401(K) expenses had been met for many in the fourth quarter. Additionally, during the period, Valley accelerated its stock award expense of approximately $900,000, mainly attributable for the age of employees as required under FAS 123(R). As a result of these expenses, we anticipate operating expenses within this category to decline and normalize throughout the remainder of 2008. Valley's expansion strategy continues to impact of direct operating expenses as well as indirectly net interest income. On a linked quarter basis, direct operating expenses increased over $1 million due to the hiring of new commercial lenders and increased branch operating expenses. We have allocated over 75 million of free capital to the branch expansion initiative within the last 24 months, which on a comparative basis could have been used to fund loan growth or reduce borrowing costs. While we believe we will see a long-term increase in net income, currently operating revenue, net income, earnings…

Thank you, Alan. Does anybody have any questions?

(Operator instructions). And our first question is from Sandy Osborn with KBW. Please go ahead.

Good morning guys.

Good morning Sandy.

Quickly first, are you still projecting a 28% effective tax rate for the year?

It should be in that general range. Yes.

Okay. Thanks. An could you please go on to the factors influencing the net interest margin in future quarter in terms of the rates on deposits and any change in asset you anticipate?

I think going back over what I started to say before we saw the Fed drop dramatically between the end of '07 and early into 2008. We expected deposit of course will continue to decline as a result of that, but as I said it takes time for certainly the certificates of deposit to decline. They have begun to do so, but as they adjust downwards, it just takes a matter of time. Obviously, there is still some pricing pressure on the loan side relative to our competition. So depending on where competition goes that will really tend to direct to some extent where our yields go. We have seen an increase in the yield curve, so to that extent we are seeing some increase in some of our longer-term assets.

Okay. And the 80% of the CDs that you are expecting to be priced in the next 12 months, can you discuss what kind of spread improvement you are expecting there, what do you think those are going to be?

Yeah, they are going to be tied to mostly shorter-term CDs. I mean, CDs were pricing up to as high as 5% early on what were back in 2007 and those are pricing down into the 3% level and some even lower. So depending on how long it takes, where the Fed’s next action is, what competition does, we expect to see that to continue to price downwards.

Okay. But generally you expect the margin to see some improvement in the next few quarters, is that correct?

Some improvement, yes.

Okay. And on the expense side, I am trying to get to an appropriate run rate for the second quarter. I guess the stock grants to retirement eligible employees are going to drop off and also obviously the mark-to-market after adding that, does that look appropriate for 2Q?

Well, those are certainly two of the major items and we also talked about the FICA and 401(K) expense that is also going to begin to drop off quarterly as we move through the year. So, the highest expense is in the first quarter. Each quarter from there on will continue to drop off.

Okay. And for full year expense growth with your branch plans, what are you looking at there. Is there any of offsetting initiatives such as cost saves from Greater Community?

Yeah, but even so, we don't expect the closing of Greater Community to occur until probably in the middle or early part of the third quarter. That being the case, the cost saves can't begin to occur until after that time. Those cost saves will impact theoretically their numbers, not our numbers, so it will really help in any reduction in immediate dilution and help on the accretiveness of the transaction going forward, but you can't count that in our numbers in the next quarter or so.

Okay. Alright. Thank you guys.

You are welcome.

Our next question is from Peyton Green with FTN Midwest Securities. Go ahead please.

Yes. Good morning. I was wondering if you could comment, one, on the branch outlook… Endo …on the branch outlook, do you expect to open nine more or total of nine in the balance of ’08?

It will be a total of 10 for the year.

Okay. And so five are already opened.

No, nine more

Okay, nine more, okay. Alright, great. And then in terms of the indirect auto business, Gerry, I was wondering if you can talk kind of about the ROE and the ROA of the business and how it's doing versus what you would expect to do over the long run?

Let's put it this way, Peyton. At the moment rates are still holding up fairly decent and loan losses had not been dramatically impacted as we've seen in many other institutions. So the ROA is obviously dropping to some extent as the margin drops, so to that extent it's going to negatively impact our margin and our return on equity as the rest of the industry. You are speaking specifically about the overall?

Just the indirect auto book, yeah.

The indirect auto book at Valley has a relatively consistent in its returns to Valley over the last several years. It has grown in volume and I am sitting next to Al Engel, who I will call out in a second to discus a little bit of that, but we have been very tight on our credit quality and I think that’s the key to this business. You hear about other people who get into the business and they try to buy their way into it. We try to void that approach. Maybe Al, why don’t you make some make comment on it?

Sure. What we have seen over the last years is a lot of a rational competition in the indirect auto segment and we have forgone a lot of volume attempting to compete on rate or compete on credit terms that we felt would be problematic in the future. As a result of some of the dysfunction that has arisen in the capital markets lenders who originate these loans and need to access the capital markets to sell that have had to pull back in some cases retreat from the market, allowing us more opportunities to see our kind of credit and be able to decision that; meaning, the kind of quality that we like to see at rate and terms that assist us in meeting our yield objectives. So we see this as opportunistic for us what has been going on, but this is the time to receive some paybacks with the investment we have made over the years in quality and in credit restrain.

Okay. And I guess what I am to trying to get out is this the ROA higher than the overall ROA say in’07 of one in a quarter, are you doing better than the indirect book or a little lower than that?

Well, we might be doing about one in a quarter. We expect it to be going off, I mean if anything it would level out.

Okay, but it's not going to diffract from the overall ROA?

No.

Okay, great. Thank you very much

Okay.

Thank you. (Operator Instructions). Mr. Lipkin, we have no further questions.

Well, we thank everybody for tuning in. We will speak to you in three months. Everybody have a nice day.

Thank you. And ladies and gentlemen, this conference will be available for replay after 1 pm today through midnight Tuesday, May 1st. You may access the AT&T Executive Playback Service at any time by dialing 1800-475-6701 and entering the access code 915229. That does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.