New Jersey | 1-11277 | 22-2477875 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
1455 Valley Road, Wayne, New Jersey | 07470 | |
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Dated: April 26, 2017 | VALLEY NATIONAL BANCORP | ||
By: | /s/ Alan D. Eskow | ||
Alan D. Eskow | |||
Senior Executive Vice President and | |||
Chief Financial Officer (Principal Financial Officer) |
News Release |
FOR IMMEDIATE RELEASE | Contact: | Alan D. Eskow | |
Senior Executive Vice President and | |||
Chief Financial Officer | |||
973-305-4003 |
• | Net Interest Income and Margin: Net interest income on a tax equivalent basis of $164.7 million for the first quarter of 2017 increased $14.6 million as compared to the first quarter of 2016, and decreased $1.9 million as compared to the fourth quarter of 2016. Our net interest margin on a tax equivalent basis of 3.14 percent for the first quarter of 2017 increased by 6 basis points as compared to the first quarter of 2016, and decreased 13 basis points from the fourth quarter of 2016. The decrease in net interest income and margin for the first quarter of 2017 as compared to the linked fourth quarter was mainly caused by a combined $5.9 million decline in interest income from derivative swap and loan prepayment fees. See the "Net Interest Income and Margin" section below for more details. |
• | Loan Portfolio: Loans increased by $213.4 million, or 5.0 percent on an annualized basis, to $17.4 billion at March 31, 2017 from December 31, 2016 largely due to a $307.7 million net increase in total commercial real estate loans. The overall loan growth was partially offset by a decrease of $122.5 million in residential mortgage loans caused, in part, by the transfer of approximately $104 million of performing 30-year fixed rate mortgages to loans held for sale at March 31, 2017. The sale of these loans is expected to be completed during the second quarter of 2017 and result in a pre-tax gain greater than $3 million. Total new organic loan originations, excluding new lines of credit and purchased loans, totaled approximately $740 million mostly within the commercial loan categories during the first quarter of 2017. See additional information under the "Loans, Deposits and Other Borrowings" section below. |
• | Asset Quality: Non-performing assets (including non-accrual loans) increased by 4.2 percent to $51.5 million at March 31, 2017 as compared to $49.4 million at December 31, 2016 due to moderate increases in both non-accrual loans and other real estate owned. Total accruing past due and non-accrual loans as a percentage of our entire loan portfolio of $17.4 billion increased to 0.61 percent at March 31, 2017 from 0.55 percent at December 31, 2016 mostly due to an increase in commercial loans past due 30 to 59 days. |
• | Provision for Credit Losses: During the first quarter of 2017, we recorded a $2.5 million provision for credit losses as compared to a provision of $3.8 million and $800 thousand for the fourth quarter of 2016 and first quarter of 2016, respectively. For the first quarter of 2017, we recognized net loan charge-offs totaling $1.4 million as compared to $110 thousand and $1.5 million for the fourth quarter of 2016 and first quarter of 2016, respectively. The increase in net loan charge-offs from the fourth quarter was largely due to an increase in commercial and industrial loan charge-offs. See further details under the "Credit Quality" section below. |
• | Non-Interest Income: Non-interest income decreased $7.6 million, or 23.3 percent, to $25.1 million for the first quarter of 2017 from $32.7 million for the fourth quarter of 2016 mostly due to an $8.2 million decrease in net gains on sales of residential mortgage loans caused by the aforementioned sale of $170 million of residential mortgage loans during the linked fourth quarter. This decline in non-interest income was partially offset by a $1.2 million increase in non-interest income from bank owned life insurance which was largely related to death benefits received in the first quarter of 2017. |
• | Non-Interest Expense: Non-interest expense decreased $3.9 million, or 3.1 percent, to $121.0 million for the first quarter of 2017 from the fourth quarter of 2016 mainly due to a $8.1 million decrease in the amortization of tax credit investments. The decrease was partially offset by (i) a $2.3 million increase in salary and employee benefit expense largely driven by normal increases in payroll taxes and stock-based compensation expense and (ii) a $1.5 million increase in net occupancy and equipment expense mostly due to seasonal maintenance expense. |
• | Income Tax Expense: Income tax expense totaled $18.1 million for the first quarter of 2017 and remained relatively stable as a percentage of pre-tax income as compared to the linked quarter. Our effective tax rate was 28.2 percent, 26.8 percent, and 28.5 percent for the first quarter of 2017, fourth quarter of 2016, and first quarter of 2016, respectively. For the remainder of 2017, we anticipate that our effective tax rate will range from 28 percent to 31 percent primarily reflecting the impacts of tax-exempt income, tax-advantaged investments and general business credits. |
• | Capital Strength: Valley's regulatory capital ratios continue to reflect its strong capital position. Valley's total risk-based capital, Tier 1 capital, Tier 1 leverage capital, and Tier 1 common capital ratios were 11.96 percent, 9.76 percent, 7.70 percent and 9.12 percent, respectively, at March 31, 2017. |
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||||||||
Allocation | Allocation | Allocation | |||||||||||||||||||
as a % of | as a % of | as a % of | |||||||||||||||||||
Allowance | Loan | Allowance | Loan | Allowance | Loan | ||||||||||||||||
Allocation | Category | Allocation | Category | Allocation | Category | ||||||||||||||||
($ in thousands) | |||||||||||||||||||||
Loan Category: | |||||||||||||||||||||
Commercial and industrial loans* | $ | 53,541 | 2.03 | % | $ | 53,005 | 2.01 | % | $ | 50,677 | 2.00 | % | |||||||||
Commercial real estate loans: | |||||||||||||||||||||
Commercial real estate | 38,146 | 0.42 | % | 36,405 | 0.42 | % | 31,812 | 0.42 | % | ||||||||||||
Construction | 18,156 | 2.17 | % | 19,446 | 2.36 | % | 16,642 | 2.14 | % | ||||||||||||
Total commercial real estate loans | 56,302 | 0.57 | % | 55,851 | 0.59 | % | 48,454 | 0.58 | % | ||||||||||||
Residential mortgage loans | 3,592 | 0.13 | % | 3,702 | 0.13 | % | 4,209 | 0.14 | % | ||||||||||||
Consumer loans: | |||||||||||||||||||||
Home equity | 433 | 0.09 | % | 486 | 0.10 | % | 1,061 | 0.22 | % | ||||||||||||
Auto and other consumer | 3,828 | 0.22 | % | 3,560 | 0.21 | % | 3,274 | 0.20 | % | ||||||||||||
Total consumer loans | 4,261 | 0.19 | % | 4,046 | 0.19 | % | 4,335 | 0.20 | % | ||||||||||||
Total allowance for credit losses | $ | 117,696 | 0.67 | % | $ | 116,604 | 0.68 | % | $ | 107,675 | 0.67 | % | |||||||||
Allowance for credit losses as a % | |||||||||||||||||||||
of non-PCI loans | 0.75 | % | 0.75 | % | 0.77 | % | |||||||||||||||
* Includes the reserve for unfunded letters of credit. |
• | weakness or a decline in the U.S. economy, in particular in New Jersey, New York Metropolitan area (including Long Island) and Florida as well as an unexpected decline in commercial real estate values within our market areas; |
• | less than expected cost savings and revenue enhancement from Valley's cost reduction plans including its earnings enhancement program called "LIFT"; |
• | damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of breach of fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trade mark infringement, employment related claims, and other matters; |
• | the loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income and net income; |
• | cyber attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems; |
• | results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; |
• | changes in accounting policies or accounting standards, including the new authoritative accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our allowance for credit losses after adoption on January 1, 2020; |
• | higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in tax laws, regulations and case law; |
• | our inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in our capital requirements; |
• | higher than expected loan losses within one or more segments of our loan portfolio; |
• | unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events; |
• | unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors; |
• | the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships; and |
• | inability to retain and attract customers and qualified employees. |
Three Months Ended | |||||||||||||
March 31, | December 31, | March 31, | |||||||||||
($ in thousands, except for share data) | 2017 | 2016 | 2016 | ||||||||||
FINANCIAL DATA: | |||||||||||||
Net interest income | $ | 162,529 | $ | 164,395 | $ | 148,153 | |||||||
Net interest income - FTE (1) | 164,702 | 166,601 | 150,144 | ||||||||||
Non-interest income | 25,059 | 32,660 | 21,448 | ||||||||||
Non-interest expense | 120,952 | 124,829 | 118,225 | ||||||||||
Income tax expense | 18,071 | 18,336 | 14,389 | ||||||||||
Net income | 46,095 | 50,090 | 36,187 | ||||||||||
Dividends on preferred stock | 1,797 | 1,797 | 1,797 | ||||||||||
Net income available to common shareholders | $ | 44,298 | $ | 48,293 | $ | 34,390 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||
Basic | 263,797,024 | 256,422,437 | 254,075,349 | ||||||||||
Diluted | 264,546,266 | 256,952,036 | 254,347,420 | ||||||||||
Per common share data: | |||||||||||||
Basic earnings | $ | 0.17 | $ | 0.19 | $ | 0.14 | |||||||
Diluted earnings | 0.17 | 0.19 | 0.14 | ||||||||||
Cash dividends declared | 0.11 | 0.11 | 0.11 | ||||||||||
Closing stock price - high | 12.76 | 11.97 | 9.67 | ||||||||||
Closing stock price - low | 11.28 | 9.46 | 8.31 | ||||||||||
FINANCIAL RATIOS: | |||||||||||||
Net interest margin | 3.10 | % | 3.23 | % | 3.04 | % | |||||||
Net interest margin - FTE (1) | 3.14 | 3.27 | 3.08 | ||||||||||
Annualized return on average assets | 0.80 | 0.88 | 0.67 | ||||||||||
Annualized return on average shareholders' equity | 7.69 | 8.70 | 6.52 | ||||||||||
Annualized return on average tangible shareholders' equity (2) | 11.09 | 12.76 | 9.75 | ||||||||||
Efficiency ratio (3) | 64.48 | 63.35 | 69.71 | ||||||||||
AVERAGE BALANCE SHEET ITEMS: | |||||||||||||
Assets | $ | 22,996,286 | $ | 22,679,991 | $ | 21,680,278 | |||||||
Interest earning assets | 20,949,464 | 20,388,486 | 19,487,470 | ||||||||||
Loans | 17,313,100 | 16,779,765 | 15,993,543 | ||||||||||
Interest bearing liabilities | 15,285,171 | 14,928,160 | 14,335,698 | ||||||||||
Deposits | 17,366,768 | 17,428,646 | 16,380,594 | ||||||||||
Shareholders' equity | 2,399,159 | 2,304,208 | 2,219,570 |
As Of | |||||||||||||||||||
BALANCE SHEET ITEMS: | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||
Assets | $ | 23,220,456 | $ | 22,864,439 | $ | 22,368,453 | $ | 21,809,738 | $ | 21,727,523 | |||||||||
Total loans | 17,449,498 | 17,236,103 | 16,634,135 | 16,499,180 | 16,135,987 | ||||||||||||||
Non-PCI loans | 15,794,797 | 15,464,601 | 14,777,020 | 14,523,779 | 14,020,566 | ||||||||||||||
Deposits | 17,331,141 | 17,730,708 | 16,972,183 | 16,356,058 | 16,408,426 | ||||||||||||||
Shareholders' equity | 2,398,541 | 2,377,156 | 2,257,073 | 2,232,212 | 2,219,602 | ||||||||||||||
LOANS: | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Commercial and industrial | $ | 2,642,319 | $ | 2,638,195 | $ | 2,558,968 | $ | 2,528,749 | $ | 2,537,545 | |||||||||
Commercial real estate: | |||||||||||||||||||
Commercial real estate | 9,016,418 | 8,719,667 | 8,313,855 | 8,018,794 | 7,585,139 | ||||||||||||||
Construction | 835,854 | 824,946 | 802,568 | 768,847 | 776,057 | ||||||||||||||
Total commercial real estate | 9,852,272 | 9,544,613 | 9,116,423 | 8,787,641 | 8,361,196 | ||||||||||||||
Residential mortgage | 2,745,447 | 2,867,918 | 2,826,130 | 3,055,353 | 3,101,814 | ||||||||||||||
Consumer: | |||||||||||||||||||
Home equity | 458,891 | 469,009 | 476,820 | 485,730 | 491,555 | ||||||||||||||
Automobile | 1,150,053 | 1,139,227 | 1,121,606 | 1,141,793 | 1,188,063 | ||||||||||||||
Other consumer | 600,516 | 577,141 | 534,188 | 499,914 | 455,814 | ||||||||||||||
Total consumer loans | 2,209,460 | 2,185,377 | 2,132,614 | 2,127,437 | 2,135,432 | ||||||||||||||
Total loans | $ | 17,449,498 | $ | 17,236,103 | $ | 16,634,135 | $ | 16,499,180 | $ | 16,135,987 | |||||||||
CAPITAL RATIOS: | |||||||||||||||||||
Book value | $ | 8.67 | $ | 8.59 | $ | 8.43 | $ | 8.34 | $ | 8.29 | |||||||||
Tangible book value per common share (2) | 5.88 | 5.80 | 5.55 | 5.45 | 5.40 | ||||||||||||||
Tangible common equity to tangible assets (2) | 6.90 | % | 6.91 | % | 6.53 | % | 6.58 | % | 6.54 | % | |||||||||
Tier 1 leverage capital | 7.70 | 7.74 | 7.35 | 7.38 | 7.32 | ||||||||||||||
Common equity tier 1 capital | 9.12 | 9.27 | 8.73 | 8.74 | 8.81 | ||||||||||||||
Tier 1 risk-based capital | 9.76 | 9.90 | 9.36 | 9.39 | 9.46 | ||||||||||||||
Total risk-based capital | 11.96 | 12.15 | 11.64 | 11.69 | 11.79 |
Three Months Ended | |||||||||||||
ALLOWANCE FOR CREDIT LOSSES: | March 31, | December 31, | March 31, | ||||||||||
($ in thousands) | 2017 | 2016 | 2016 | ||||||||||
Beginning balance - Allowance for credit losses | $ | 116,604 | $ | 112,914 | $ | 108,367 | |||||||
Loans charged-off: | |||||||||||||
Commercial and industrial | (1,714 | ) | (483 | ) | (1,251 | ) | |||||||
Commercial real estate | (414 | ) | (131 | ) | (105 | ) | |||||||
Construction | — | — | — | ||||||||||
Residential mortgage | (130 | ) | (116 | ) | (81 | ) | |||||||
Total Consumer | (1,121 | ) | (911 | ) | (1,074 | ) | |||||||
Total loans charged-off | (3,379 | ) | (1,641 | ) | (2,511 | ) | |||||||
Charged-off loans recovered: | |||||||||||||
Commercial and industrial | 848 | 435 | 526 | ||||||||||
Commercial real estate | 142 | 466 | 89 | ||||||||||
Construction | — | — | — | ||||||||||
Residential mortgage | 448 | 171 | 15 | ||||||||||
Total Consumer | 563 | 459 | 389 | ||||||||||
Total loans recovered | 2,001 | 1,531 | 1,019 | ||||||||||
Net charge-offs | (1,378 | ) | (110 | ) | (1,492 | ) | |||||||
Provision for credit losses | 2,470 | 3,800 | 800 | ||||||||||
Ending balance - Allowance for credit losses | $ | 117,696 | $ | 116,604 | $ | 107,675 | |||||||
Components of allowance for credit losses: | |||||||||||||
Allowance for loan losses | $ | 115,443 | $ | 114,419 | $ | 105,415 | |||||||
Allowance for unfunded letters of credit | 2,253 | 2,185 | 2,260 | ||||||||||
Allowance for credit losses | $ | 117,696 | $ | 116,604 | $ | 107,675 | |||||||
Components of provision for credit losses: | |||||||||||||
Provision for loan losses | $ | 2,402 | $ | 3,832 | $ | 729 | |||||||
Provision for unfunded letters of credit | 68 | (32 | ) | 71 | |||||||||
Provision for credit losses | $ | 2,470 | $ | 3,800 | $ | 800 | |||||||
Annualized ratio of total net charge-offs to average loans | 0.03 | % | 0.00 | % | 0.04 | % | |||||||
Allowance for credit losses as a % of non-PCI loans | 0.75 | % | 0.75 | % | 0.77 | % | |||||||
Allowance for credit losses as a % of total loans | 0.67 | % | 0.68 | % | 0.67 | % |
As Of | |||||||||||||
ASSET QUALITY: (4) | March 31, | December 31, | March 31, | ||||||||||
($ in thousands) | 2017 | 2016 | 2016 | ||||||||||
Accruing past due loans: | |||||||||||||
30 to 59 days past due: | |||||||||||||
Commercial and industrial | $ | 29,734 | $ | 6,705 | $ | 8,395 | |||||||
Commercial real estate | 11,637 | 5,894 | 1,389 | ||||||||||
Construction | 7,760 | 6,077 | 1,326 | ||||||||||
Residential mortgage | 7,533 | 12,005 | 14,628 | ||||||||||
Total Consumer | 3,740 | 4,197 | 3,200 | ||||||||||
Total 30 to 59 days past due | 60,404 | 34,878 | 28,938 | ||||||||||
60 to 89 days past due: | |||||||||||||
Commercial and industrial | 341 | 5,010 | 613 | ||||||||||
Commercial real estate | 359 | 8,642 | 120 | ||||||||||
Construction | — | — | — | ||||||||||
Residential mortgage | 4,177 | 3,564 | 3,056 | ||||||||||
Total Consumer | 787 | 1,147 | 731 | ||||||||||
Total 60 to 89 days past due | 5,664 | 18,363 | 4,520 | ||||||||||
90 or more days past due: | |||||||||||||
Commercial and industrial | 405 | 142 | 221 | ||||||||||
Commercial real estate | — | 474 | 131 | ||||||||||
Construction | — | 1,106 | — | ||||||||||
Residential mortgage | 1,355 | 1,541 | 2,613 | ||||||||||
Total Consumer | 314 | 209 | 66 | ||||||||||
Total 90 or more days past due | 2,074 | 3,472 | 3,031 | ||||||||||
Total accruing past due loans | $ | 68,142 | $ | 56,713 | $ | 36,489 | |||||||
Non-accrual loans: | |||||||||||||
Commercial and industrial | $ | 8,676 | $ | 8,465 | $ | 11,484 | |||||||
Commercial real estate | 15,106 | 15,079 | 26,604 | ||||||||||
Construction | 1,461 | 715 | 5,978 | ||||||||||
Residential mortgage | 11,650 | 12,075 | 16,747 | ||||||||||
Total Consumer | 1,395 | 1,174 | 1,807 | ||||||||||
Total non-accrual loans | 38,288 | 37,508 | 62,620 | ||||||||||
Other real estate owned (OREO)(5) | 10,737 | 9,612 | 12,368 | ||||||||||
Other repossessed assets | 475 | 384 | 495 | ||||||||||
Non-accrual debt securities (6) | 2,007 | 1,935 | 2,102 | ||||||||||
Total non-performing assets | $ | 51,507 | $ | 49,439 | $ | 77,585 | |||||||
Performing troubled debt restructured loans | $ | 80,360 | $ | 85,166 | $ | 80,506 | |||||||
Total non-accrual loans as a % of loans | 0.22 | % | 0.22 | % | 0.39 | % | |||||||
Total accruing past due and non-accrual loans as a % of loans | 0.61 | % | 0.55 | % | 0.61 | % | |||||||
Allowance for losses on loans as a % of non-accrual loans | 301.51 | % | 305.05 | % | 168.34 | % | |||||||
Non-performing purchased credit-impaired loans (7) | $ | 25,857 | $ | 27,011 | $ | 32,987 |
(1) | Net interest income and net interest margin are presented on a tax equivalent basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. |
(2) | This press release contains certain supplemental financial information, described in the Notes below, 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 material 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 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 a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their 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. |
As of | |||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
($ in thousands, except for share data) | 2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||
Tangible book value per common share: | |||||||||||||||||||
Common shares outstanding | 263,842,268 | 263,638,830 | 254,461,906 | 254,362,314 | 254,285,434 | ||||||||||||||
Shareholders' equity | $ | 2,398,541 | $ | 2,377,156 | $ | 2,257,073 | $ | 2,232,212 | $ | 2,219,602 | |||||||||
Less: Preferred stock | (111,590 | ) | (111,590 | ) | (111,590 | ) | (111,590 | ) | (111,590 | ) | |||||||||
Less: Goodwill and other intangible assets | (735,595 | ) | (736,121 | ) | (733,627 | ) | (734,432 | ) | (735,744 | ) | |||||||||
Tangible common shareholders' equity | $ | 1,551,356 | $ | 1,529,445 | $ | 1,411,856 | $ | 1,386,190 | $ | 1,372,268 | |||||||||
Tangible book value per common share | $5.88 | $5.80 | $5.55 | $5.45 | $5.40 | ||||||||||||||
Tangible common equity to tangible assets: | |||||||||||||||||||
Tangible common shareholders' equity | $ | 1,551,356 | $ | 1,529,445 | $ | 1,411,856 | $ | 1,386,190 | $ | 1,372,268 | |||||||||
Total assets | 23,220,456 | 22,864,439 | 22,368,453 | 21,809,738 | 21,727,523 | ||||||||||||||
Less: Goodwill and other intangible assets | (735,595 | ) | (736,121 | ) | (733,627 | ) | (734,432 | ) | (735,744 | ) | |||||||||
Tangible assets | $ | 22,484,861 | $ | 22,128,318 | $ | 21,634,826 | $ | 21,075,306 | $ | 20,991,779 | |||||||||
Tangible common equity to tangible assets | 6.90 | % | 6.91 | % | 6.53 | % | 6.58 | % | 6.54 | % |
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
Annualized return on average tangible shareholders' equity: | 2017 | 2016 | 2016 | ||||||||
($ in thousands) | |||||||||||
Net income | $ | 46,095 | $ | 50,090 | $ | 36,187 | |||||
Average shareholders' equity | 2,399,159 | 2,304,208 | 2,219,570 | ||||||||
Less: Average goodwill and other intangible assets | (736,178 | ) | (733,714 | ) | (735,438 | ) | |||||
Average tangible shareholders' equity | $ | 1,662,981 | $ | 1,570,494 | $ | 1,484,132 | |||||
Annualized return on average tangible shareholders' equity | 11.09 | % | 12.76 | % | 9.75 | % |
(3) | The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income. | |||||||||
(4) | Past due loans and non-accrual loans exclude purchased credit-impaired (PCI) loans. PCI 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. | |||||||||
(5) | Excludes OREO properties related to FDIC-assisted transactions totaling $558 thousand and $2.4 million at December 31, 2016 and March 31, 2016, respectively. These assets are covered by the loss-sharing agreements with the FDIC. There were no covered OREO properties at March 31, 2017. | |||||||||
(6) | Includes other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value (net of unrealized losses totaling $745 thousand, $817 thousand and $651 thousand at March 31, 2017, December 31, 2016 and March 31, 2016, respectively) after recognition of all credit impairments. | |||||||||
(7) | Represent PCI loans meeting Valley's definition of non-performing loan (i.e., 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. | |||||||||
SHAREHOLDERS RELATIONS Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valleynationalbank.com. |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | (Unaudited) | ||||||
Cash and due from banks | $ | 225,443 | $ | 220,791 | |||
Interest bearing deposits with banks | 111,283 | 171,710 | |||||
Investment securities: | |||||||
Held to maturity (fair value of $1,904,523 at March 31, 2017 and $1,924,597 at December 31, 2016) | 1,902,329 | 1,925,572 | |||||
Available for sale | 1,454,331 | 1,297,373 | |||||
Total investment securities | 3,356,660 | 3,222,945 | |||||
Loans held for sale (includes fair value of $11,184 at March 31, 2017 and $57,708 at December 31, 2016 for loans originated for sale) | 115,067 | 57,708 | |||||
Loans | 17,449,498 | 17,236,103 | |||||
Less: Allowance for loan losses | (115,443 | ) | (114,419 | ) | |||
Net loans | 17,334,055 | 17,121,684 | |||||
Premises and equipment, net | 289,426 | 291,180 | |||||
Bank owned life insurance | 392,295 | 391,830 | |||||
Accrued interest receivable | 68,245 | 66,816 | |||||
Goodwill | 690,637 | 690,637 | |||||
Other intangible assets, net | 44,958 | 45,484 | |||||
Other assets | 592,387 | 583,654 | |||||
Total Assets | $ | 23,220,456 | $ | 22,864,439 | |||
Liabilities | |||||||
Deposits: | |||||||
Non-interest bearing | $ | 5,213,451 | $ | 5,252,825 | |||
Interest bearing: | |||||||
Savings, NOW and money market | 8,902,596 | 9,339,012 | |||||
Time | 3,215,094 | 3,138,871 | |||||
Total deposits | 17,331,141 | 17,730,708 | |||||
Short-term borrowings | 1,644,964 | 1,080,960 | |||||
Long-term borrowings | 1,634,008 | 1,433,906 | |||||
Junior subordinated debentures issued to capital trusts | 41,617 | 41,577 | |||||
Accrued expenses and other liabilities | 170,185 | 200,132 | |||||
Total Liabilities | 20,821,915 | 20,487,283 | |||||
Shareholders’ Equity | |||||||
Preferred stock (no par value, authorized 30,000,000 shares; issued 4,600,000 shares at March 31, 2017 and December 31, 2016) | 111,590 | 111,590 | |||||
Common stock (no par value, authorized 332,023,233 shares; issued 263,990,791 shares at March 31, 2017 and 263,804,877 shares at December 31, 2016) | 92,370 | 92,353 | |||||
Surplus | 2,047,357 | 2,044,401 | |||||
Retained earnings | 188,089 | 172,754 | |||||
Accumulated other comprehensive loss | (39,086 | ) | (42,093 | ) | |||
Treasury stock, at cost (148,523 common shares at March 31, 2017 and 166,047 shares at December 31, 2016) | (1,779 | ) | (1,849 | ) | |||
Total Shareholders’ Equity | 2,398,541 | 2,377,156 | |||||
Total Liabilities and Shareholders’ Equity | $ | 23,220,456 | $ | 22,864,439 |
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2017 | 2016 | 2016 | |||||||||
Interest Income | |||||||||||
Interest and fees on loans | $ | 175,014 | $ | 179,271 | $ | 166,071 | |||||
Interest and dividends on investment securities: | |||||||||||
Taxable | 17,589 | 15,656 | 13,999 | ||||||||
Tax-exempt | 4,031 | 4,090 | 3,690 | ||||||||
Dividends | 2,151 | 1,798 | 1,480 | ||||||||
Interest on federal funds sold and other short-term investments | 331 | 280 | 357 | ||||||||
Total interest income | 199,116 | 201,095 | 185,597 | ||||||||
Interest Expense | |||||||||||
Interest on deposits: | |||||||||||
Savings, NOW and money market | 10,183 | 10,418 | 9,243 | ||||||||
Time | 9,553 | 9,555 | 9,585 | ||||||||
Interest on short-term borrowings | 3,901 | 3,485 | 1,872 | ||||||||
Interest on long-term borrowings and junior subordinated debentures | 12,950 | 13,242 | 16,744 | ||||||||
Total interest expense | 36,587 | 36,700 | 37,444 | ||||||||
Net Interest Income | 162,529 | 164,395 | 148,153 | ||||||||
Provision for credit losses | 2,470 | 3,800 | 800 | ||||||||
Net Interest Income After Provision for Credit Losses | 160,059 | 160,595 | 147,353 | ||||||||
Non-Interest Income | |||||||||||
Trust and investment services | 2,744 | 2,733 | 2,440 | ||||||||
Insurance commissions | 5,061 | 4,973 | 4,708 | ||||||||
Service charges on deposit accounts | 5,236 | 5,419 | 5,103 | ||||||||
(Losses) gains on securities transactions, net | (23 | ) | 519 | 271 | |||||||
Fees from loan servicing | 1,815 | 1,688 | 1,594 | ||||||||
Gains on sales of loans, net | 4,128 | 12,307 | 1,795 | ||||||||
Bank owned life insurance | 2,463 | 1,230 | 1,963 | ||||||||
Other | 3,635 | 3,791 | 3,574 | ||||||||
Total non-interest income | 25,059 | 32,660 | 21,448 | ||||||||
Non-Interest Expense | |||||||||||
Salary and employee benefits expense | 63,716 | 61,415 | 60,259 | ||||||||
Net occupancy and equipment expense | 23,035 | 21,525 | 22,789 | ||||||||
FDIC insurance assessment | 5,127 | 5,102 | 5,099 | ||||||||
Amortization of other intangible assets | 2,536 | 2,875 | 2,849 | ||||||||
Professional and legal fees | 4,695 | 4,357 | 3,895 | ||||||||
Amortization of tax credit investments | 5,324 | 13,384 | 7,264 | ||||||||
Telecommunication expense | 2,659 | 2,882 | 2,386 | ||||||||
Other | 13,860 | 13,289 | 13,684 | ||||||||
Total non-interest expense | 120,952 | 124,829 | 118,225 | ||||||||
Income Before Income Taxes | 64,166 | 68,426 | 50,576 | ||||||||
Income tax expense | 18,071 | 18,336 | 14,389 | ||||||||
Net Income | 46,095 | 50,090 | 36,187 | ||||||||
Dividends on preferred stock | 1,797 | 1,797 | 1,797 | ||||||||
Net Income Available to Common Shareholders | $ | 44,298 | $ | 48,293 | $ | 34,390 | |||||
Earnings Per Common Share: | |||||||||||
Basic | $ | 0.17 | $ | 0.19 | $ | 0.14 | |||||
Diluted | 0.17 | 0.19 | 0.14 | ||||||||
Cash Dividends Declared per Common Share | 0.11 | 0.11 | 0.11 | ||||||||
Weighted Average Number of Common Shares Outstanding: | |||||||||||
Basic | 263,797,024 | 256,422,437 | 254,075,349 | ||||||||
Diluted | 264,546,266 | 256,952,036 | 254,347,420 |
VALLEY NATIONAL BANCORP | |||||||||||||||||||||||||||||||||
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and | |||||||||||||||||||||||||||||||||
Net Interest Income on a Tax Equivalent Basis | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||||||||||||||||||||
Average | Avg. | Average | Avg. | Average | Avg. | ||||||||||||||||||||||||||||
($ in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Interest earning assets | |||||||||||||||||||||||||||||||||
Loans (1)(2) | $ | 17,313,100 | $ | 175,017 | 4.04 | % | $ | 16,779,765 | $ | 179,275 | 4.27 | % | $ | 15,993,543 | $ | 166,075 | 4.15 | % | |||||||||||||||
Taxable investments (3) | 2,836,300 | 19,740 | 2.78 | % | 2,680,175 | 17,454 | 2.60 | % | 2,497,986 | 15,479 | 2.48 | % | |||||||||||||||||||||
Tax-exempt investments (1)(3) | 612,946 | 6,201 | 4.05 | % | 632,011 | 6,292 | 3.98 | % | 569,265 | 5,677 | 3.99 | % | |||||||||||||||||||||
Federal funds sold and other | |||||||||||||||||||||||||||||||||
interest bearing deposits | 187,118 | 331 | 0.71 | % | 296,535 | 280 | 0.38 | % | 426,676 | 357 | 0.33 | % | |||||||||||||||||||||
Total interest earning assets | 20,949,464 | 201,289 | 3.84 | % | 20,388,486 | 203,301 | 3.99 | % | 19,487,470 | 187,588 | 3.85 | % | |||||||||||||||||||||
Other assets | 2,046,822 | 2,291,505 | 2,192,808 | ||||||||||||||||||||||||||||||
Total assets | $ | 22,996,286 | $ | 22,679,991 | $ | 21,680,278 | |||||||||||||||||||||||||||
Liabilities and shareholders' equity | |||||||||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||||||||
Savings, NOW and money market deposits | $ | 9,049,446 | $ | 10,183 | 0.45 | % | $ | 9,034,605 | $ | 10,418 | 0.46 | % | $ | 8,334,289 | $ | 9,243 | 0.44 | % | |||||||||||||||
Time deposits | 3,178,452 | 9,553 | 1.20 | % | 3,137,057 | 9,555 | 1.22 | % | 3,127,842 | 9,585 | 1.23 | % | |||||||||||||||||||||
Short-term borrowings | 1,563,000 | 3,901 | 1.00 | % | 1,266,311 | 3,485 | 1.10 | % | 1,061,011 | 1,872 | 0.71 | % | |||||||||||||||||||||
Long-term borrowings (4) | 1,494,273 | 12,950 | 3.47 | % | 1,490,187 | 13,242 | 3.55 | % | 1,812,556 | 16,744 | 3.70 | % | |||||||||||||||||||||
Total interest bearing liabilities | 15,285,171 | 36,587 | 0.96 | % | 14,928,160 | 36,700 | 0.98 | % | 14,335,698 | 37,444 | 1.04 | % | |||||||||||||||||||||
Non-interest bearing deposits | 5,138,870 | 5,256,984 | 4,918,463 | ||||||||||||||||||||||||||||||
Other liabilities | 173,086 | 190,639 | 206,547 | ||||||||||||||||||||||||||||||
Shareholders' equity | 2,399,159 | 2,304,208 | 2,219,570 | ||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 22,996,286 | $ | 22,679,991 | $ | 21,680,278 | |||||||||||||||||||||||||||
Net interest income/interest rate spread (5) | $ | 164,702 | 2.88 | % | $ | 166,601 | 3.01 | % | $ | 150,144 | 2.81 | % | |||||||||||||||||||||
Tax equivalent adjustment | (2,173 | ) | (2,206 | ) | (1,991 | ) | |||||||||||||||||||||||||||
Net interest income, as reported | $ | 162,529 | $ | 164,395 | $ | 148,153 | |||||||||||||||||||||||||||
Net interest margin (6) | 3.10 | % | 3.23 | % | 3.04 | % | |||||||||||||||||||||||||||
Tax equivalent effect | 0.04 | % | 0.04 | % | 0.04 | % | |||||||||||||||||||||||||||
Net interest margin on a fully tax equivalent basis (6) | 3.14 | % | 3.27 | % | 3.08 | % |
(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. |
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