EX-99.1 2 exhibit991earningsrelease7.htm EXHIBIT 99.1 Exhibit
EXHIBIT 99.1

valleylogoa12.jpg

 
News Release




FOR IMMEDIATE RELEASE
Contact:
 
Alan D. Eskow
 
 
 
Senior Executive Vice President and
 
 
 
Chief Financial Officer
 
 
 
973-305-4003

VALLEY NATIONAL BANCORP REPORTS INCREASED SECOND QUARTER
NET INCOME AND STRONG COMMERCIAL LOAN GROWTH

NEW YORK, NY – July 25, 2019 -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the second quarter of 2019 of $76.5 million, or $0.22 per diluted common share, as compared to the second quarter of 2018 earnings of $72.8 million, or $0.21 per diluted common share, and net income of $113.3 million, or $0.33 per diluted common share, for the first quarter of 2019. Excluding all non-core charges and income, our adjusted net income was $78.8 million, or $0.23 per diluted common share, for the second quarter of 2019, $75.2 million, or $0.22 per diluted common share, for the second quarter of 2018, and $74.9 million, or $0.22 per diluted common share, for the first quarter of 2019. See further details below, including a reconciliation of our adjusted net income (a non-GAAP measure) in the "Consolidated Financial Highlights" tables.

Key financial highlights for the second quarter:

•
Loan Portfolio: Loans increased $379.0 million, or 6.0 percent on an annualized basis, to approximately $25.8 billion at June 30, 2019 from March 31, 2019. The increase was largely due to strong organic loan growth within the commercial and industrial loan and commercial real estate loan categories. Additionally, we sold approximately $223 million of residential mortgage loans resulting in total pre-tax gains of $3.9 million in the second quarter of 2019.
•
Net Interest Income and Margin: Net interest income on a tax equivalent basis of $221.4 million for the second quarter of 2019 increased $1.5 million as compared to the first quarter of 2019. Our net interest margin on a tax equivalent basis of 2.96 percent for the second quarter of 2019 decreased by 2 basis points from 2.98 percent for the first quarter of 2019. See the "Net Interest Income and Margin" section below for more details.
•
Provision for Credit Losses: The provision for credit losses decreased $5.9 million to $2.1 million for the second quarter of 2019 as compared to $8.0 million for the first quarter of 2019.
•
Credit Quality: Net loan charge-offs totaled $3.0 million for the second quarter of 2019 as compared to $5.3 million for the first quarter of 2019. Non-accrual loans represented 0.37 percent of total loans at both June 30, 2019 and March 31, 2019.
•
Non-interest Income: Non-interest income decreased $80.1 million to $27.6 million for the second quarter of 2019 as compared to the first quarter of 2019 mainly due to a $78.5 million gain on the sale leaseback of 26 locations in the first quarter. Additionally, we recognized net impairment losses on securities of $2.9 million related to one municipal bond (in default of its contractual payments) during the second quarter of 2019.

1


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



•
Non-interest Expense: Non-interest expense decreased $6.1 million to $141.7 million for the second quarter of 2019 as compared to the first quarter of 2019. Overall, non-interest expense declined largely as expected due to infrequent charges related to severance expense and other than temporary impairment of certain tax credit investments totaling $4.8 million and $2.4 million, respectively, recognized during the first quarter of 2019.
•
Efficiency Ratio: Our efficiency ratio was 57.19 percent for the second quarter of 2019 as compared to 45.29 percent and 60.25 percent for the first quarter of 2019 and second quarter of 2018, respectively. Our adjusted efficiency ratio was 54.58 percent for the second quarter of 2019 as compared to 54.79 percent and 57.14 percent for the first quarter of 2019 and second quarter of 2018, respectively.
•
Income Tax Expense: The effective tax rate was 26.5 percent for the second quarter of 2019 as compared to 33.5 percent for the first quarter of 2019. The first quarter of 2019 effective tax rate reflected an additional provision for income taxes of $12.1 million related to uncertain tax liability positions. Our uncertain tax liabilities totaled $12.3 million at June 30, 2019 and relate to renewable energy tax credits and other tax benefits previously recognized from investments in the DC Solar funds. For the remainder of 2019, we currently estimate that our effective tax rate will range from 25 percent to 27 percent.
•
Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 0.94 percent, 8.79 percent, and 13.16 percent for the second quarter of 2019, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, was 0.96 percent, 9.05 percent, and 13.55 percent for the second quarter of 2019, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.

On June 26, 2019, Valley announced that it will acquire Oritani Financial Corp. (“Oritani”) and its principal subsidiary, Oritani Bank, headquartered in Washington Township, New Jersey. The merger will double Valley's market share in demographically attractive Bergen County and enhance its presence in Hudson County. The transaction is expected to close in the fourth quarter of 2019. The merger is subject to a number of pending conditions, including customary regulatory approvals and Valley and Oritani shareholder approvals.

Ira Robbins, CEO and President commented, "We are pleased with our second quarter core earnings and our continued progress towards achieving our long-term operating efficiency goals. During the quarter, we accomplished our loan growth target of six percent, net of mortgage sales, through a mix of new and existing client relationships within our markets. While the margin experienced some compression as compared to the first quarter of 2019, we believe our balance sheet is well positioned for the second half of 2019. Additionally, we are very excited about our recently announced acquisition of Oritani and the strength it will add to our franchise. Both Valley and Oritani employees have already commenced joint integration planning and together are working hard to build the synergies expected from the transaction."
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $221.4 million for the second quarter of 2019 increased $9.1 million as compared to the second quarter of 2018 and increased $1.5 million as compared

2


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



to the first quarter of 2019. The increase as compared to the first quarter of 2019 was largely due to a combination of higher loan yield and average loan balances, partly offset by higher costs of deposits and lower interest income from investment securities mainly caused by higher premium amortization and repayments of higher yielding securities. Interest income on a tax equivalent basis increased $7.4 million to $328.9 million for the second quarter of 2019 as compared to the first quarter of 2019 mainly due to an 8 basis point increase in yield on average loans and a $297.7 million increase in average loans. Interest expense of $107.5 million for the second quarter of 2019 increased $5.9 million as compared to the first quarter of 2019 largely due to higher costs for both money market and certificate of deposit accounts.

Our net interest margin on a tax equivalent basis of 2.96 percent for the second quarter of 2019 decreased by 15 basis points and 2 basis points from 3.11 percent and 2.98 percent for the second quarter of 2018 and first quarter of 2019, respectively, largely due to time deposits repricing at higher market rates in the early stages of the second quarter of 2019 and other increased funding costs. The yield on average interest earning assets increased by 5 basis points on a linked quarter basis mostly due to the increase in the yield on loans. The yield on average loans increased by 8 basis points to 4.65 percent for the second quarter of 2019 as compared to the first quarter of 2019 largely due to higher yield on new loan volumes, accretable yield on PCI loans and a modest increase in loan prepayment penalties in the second quarter of 2019. The overall cost of average interest bearing liabilities increased 11 basis points to 1.93 percent for the second quarter of 2019 as compared to the linked first quarter of 2019 due to 11 and 6 basis point increases in the cost of average interest bearing deposits and long-term borrowings, respectively. The increase in deposit costs was largely due to the aforementioned time deposits repricing in the second quarter of 2019. The increase in the cost of long-term borrowings was mostly caused by the maturity of a few lower cost borrowings. Our cost of total average deposits was 1.27 percent for the second quarter of 2019 as compared to 1.20 percent for the first quarter of 2019.
Branch Transformation and Sale-Leaseback
Approximately one year ago, we established the foundation of what the transformation of our branch network would look like in coming years.  At that time, we identified 74 branches that did not meet certain internal performance measures, including 20 branches that were closed and consolidated by the end of the first quarter of 2019. For the remaining 54 branches, we implemented tailored action plans focused on improving profitability and deposit levels, as well as upgrades in staffing and training, within a defined timeline.

We are pleased to announce that the majority of the 54 branches have seen measurable success in terms of relative cost of deposits, deposit mix and overall balance growth. However, some locations have not met our established performance targets. As such, we expect to close approximately 10 branches by the end of the second quarter of 2020. 

During March 2019, Valley closed a sale-leaseback transaction for 26 of its previously announced 29 properties to be sold. Valley expects to close the sale of the remaining three properties, which remain subject to the buyer's due diligence, during the second half of 2019. The sale of the remaining properties is expected to result in a pre-tax net gain of more than $3 million.


3


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



Loans, Deposits and Other Borrowings
Loans. Loans increased $379 million to approximately $25.8 billion at June 30, 2019 from March 31, 2019. The increase was mainly due to continued strong quarter over quarter organic growth in commercial and industrial loans and commercial real estate loans, as well as an increase in construction loan advances during the second quarter of 2019. During the second quarter of 2019, we originated $111 million of residential mortgage loans for sale rather than held for investment and sold approximately $116 million of pre-existing loans from our residential mortgage loan portfolio. Residential mortgage loans held for sale totaled $36.6 million and $31.9 million at June 30, 2019 and March 31, 2019, respectively.
Deposits. Total deposits decreased $133.6 million to approximately $24.8 billion at June 30, 2019 from March 31, 2019 largely due to a $339.1 million decrease in savings, NOW and money market deposits. Non-interest bearing deposits also decreased by $24.3 million to $6.3 billion at June 30, 2019 from March 31, 2019. Brokered deposits totaling $3.2 billion (consisting of both time and money market deposit accounts) at June 30, 2019 remained relatively unchanged from March 31, 2019. However, time deposits increased $229.9 million to $7.3 billion at June 30, 2019 as compared to March 31, 2019 largely due to new retail customer balances resulted from our successful promotional campaigns in the early stages of the second quarter. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 26 percent, 45 percent and 29 percent of total deposits as of June 30, 2019, respectively.
Other Borrowings. Short-term borrowings and long-term borrowings increased $325.2 million and $300.5 million at June 30, 2019, respectively, as compared to March 31, 2019 largely due to new FHLB borrowings used for loan growth funding and additional liquidity purposes.
Credit Quality
Non-Performing Assets. Our past due loans and non-accrual loans discussed further below exclude PCI loans. 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. Our PCI loan portfolio totaled $3.8 billion, or 14.6 percent, of our total loan portfolio at June 30, 2019.
Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities increased $3.4 million to $106.7 million at June 30, 2019 as compared to March 31, 2019 mainly due to increase of $3.1 million in non-accrual loans during the second quarter of 2019. Non-accrual loans increased largely due to two new non-performing loans within the commercial real estate loan category at June 30, 2019. However, non-accrual loans represented 0.37 percent of total loans at June 30, 2019 which percentage remained unchanged as compared to March 31, 2019.
Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) were $67 million, or 0.26 percent of total loans, at June 30, 2019 as compared to $82 million, or 0.32 percent of total loans, at March 31, 2019. The $15 million decrease from March 31, 2019 was mainly due to a decline in loans 30 to 59 days past due. The decrease in loans 30 to 59 days past due was mostly driven by better performance in the commercial real estate portfolio and the normal renewal of a $15.0 million matured performing loan reported in this delinquency category at March 31, 2019.

4


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



During the second quarter of 2019, we continued to closely monitor our New York City and Chicago taxi medallion loans totaling $113.2 million and $7.8 million, respectively, within the commercial and industrial loan portfolio at June 30, 2019. While most of the taxi medallion loans are currently performing, negative trends in market valuations of the underlying taxi medallion collateral could impact the future performance and internal classification of this portfolio. At June 30, 2019, the taxi medallion portfolio included impaired loans totaling $78.3 million with related reserves of $29.5 million within the allowance for loan losses as compared to impaired loans totaling $79.6 million with related reserves of $29.6 million at March 31, 2019. At June 30, 2019, the impaired taxi medallion loans largely consisted of $67.7 million of non-accrual loans and $10.6 million of performing troubled debt restructured (TDR) loans classified as substandard loans.
Additionally, Valley currently has $13.7 million of performing non-impaired taxi medallion loans which are scheduled to mature in 2019, and $14.0 million that mature between 2023 and 2028. If the loans with 2019 maturities became TDRs upon maturity and renewal, an additional reserve of $5.8 million would be required based on the allowance methodology at June 30, 2019. 
Allowance for Credit Losses. 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 (including PCI loans) at June 30, 2019, March 31, 2019, and June 30, 2018:
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
 
 
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*
$
97,358

 
2.11
%
 
$
99,210

 
2.20
%
 
$
78,649

 
2.05
%
Commercial real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
23,796

 
0.19
%
 
24,261

 
0.19
%
 
33,234

 
0.28
%
 
Construction
25,182

 
1.65
%
 
23,501

 
1.62
%
 
20,578

 
1.49
%
Total commercial real estate loans
48,978

 
0.34
%
 
47,762

 
0.34
%
 
53,812

 
0.40
%
Residential mortgage loans
5,219

 
0.13
%
 
5,139

 
0.13
%
 
4,624

 
0.13
%
Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
505

 
0.10
%
 
523

 
0.10
%
 
604

 
0.12
%
 
Auto and other consumer
6,019

 
0.26
%
 
6,327

 
0.29
%
 
5,465

 
0.26
%
Total consumer loans
6,524

 
0.23
%
 
6,850

 
0.25
%
 
6,069

 
0.23
%
Total allowance for credit losses
$
158,079

 
0.61
%
 
$
158,961

 
0.63
%
 
$
143,154

 
0.62
%
Allowance for credit losses as a %
 
 
 
 
 
 
 
 
 
 
 
of non-PCI loans
 
 
0.72
%
 
 
 
0.74
%
 
 
 
0.77
%
 
 
 
 
 
 
 
 
 
 
 
 
 
* Includes the reserve for unfunded letters of credit.
 
 
 
 
 
 
 
 
Our loan portfolio, totaling $25.8 billion at June 30, 2019, had net loan charge-offs totaling $3.0 million for the second quarter of 2019 as compared to $5.3 million and $692 thousand for the first quarter of 2019 and second quarter of 2018, respectively. Gross loan charge-offs related to taxi medallion loans within the commercial and industrial loan category were $2.3 million and $1.3 million for the second

5


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



quarter of 2019 and first quarter of 2019, respectively. There were no taxi medallion loan charge-offs during the second quarter of 2018.
During the second quarter of 2019, we recorded a $2.1 million provision for credit losses as compared to $8.0 million and $7.1 million for the first quarter of 2019 and the second quarter of 2018, respectively. The second quarter of 2019 provision was largely due to loan growth. The provision declined as compared to the first quarter of 2019 partly due to a $1.6 million decrease in reserves for unfunded letters of credit (reported in the commercial and industrial loans category in the table above) and lower reserves for internally criticized loans, as well as moderate declines in the expected incurred losses in several loan categories.

The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a percentage of total loans was 0.61 percent, 0.63 percent and 0.62 percent at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. At June 30, 2019, the allowance allocations for losses as a percentage of total loans remained relatively stable as compared to March 31, 2019 for most loan categories, however, allocation for commercial and industrial loans declined 0.09 percent partly due to the aforementioned decrease in the reserves for unfunded letters of credit.
Capital Adequacy
Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, Tier 1 capital, Tier 1 leverage capital, and common equity Tier 1 capital ratios were 11.39 percent, 9.43 percent, 7.62 percent and 8.59 percent, respectively, at June 30, 2019.
Investor Conference Call
Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Daylight Time, today to discuss the second quarter of 2019 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432. The teleconference will also be webcast live: https://edge.media-server.com/m6/p/s4ncumwm [edge.media-server.com] and archived on Valley's website through Friday, August 23, 2019. Investor presentation materials will be made available prior to the conference call at www.valley.com.
About Valley
As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $33 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations across New Jersey, New York, Florida and Alabama, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Service Center 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,

6


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



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:
•
failure to obtain shareholder or regulatory approval for the acquisition of Oritani or to satisfy other conditions to the merger on the proposed terms and within the proposed timeframe;
•
the inability to realize expected cost savings and synergies from the Oritani merger in amounts or in the timeframe anticipated;
•
costs or difficulties relating to Oritani integration matters might be greater than expected;
•
material adverse changes in Valley’s or Oritani’s operations or earnings;
•
the inability to retain customers and qualified employees of Oritani;
•
the inability to repay $635 million of higher cost FHLB borrowings in conjunction with the Oritani merger;
•
developments in the DC Solar bankruptcy and federal investigations that could require the recognition of additional tax provision charges related to uncertain tax liability positions;
•
due diligence issues or other matters prevent the expected sale and leaseback of three branch properties or expenses that reduce the additional pre-tax net gain expected to be recognized in the second half of 2019;
•
higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
•
weakness or a decline in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in commercial real estate values within our market areas;
•
the inability to grow customer deposits to keep pace with loan growth;
•
an increase in our allowance for credit losses due to higher than expected loan losses within one or more segments of our loan portfolio;
•
less than expected cost savings from Valley's branch transformation strategy;
•
greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
•
the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley's branch transformation strategy;
•
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, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
•
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 trademark infringement, employment related claims, and other matters;

7


Valley National Bancorp (NASDAQ: VLY)
2019 Second Quarter Earnings
July 25, 2019



•
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;
•
our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
•
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; and
•
the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.
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, 2018.
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. 

# # #
-Tables to Follow-

8



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



SELECTED FINANCIAL DATA
 
Three Months Ended

Six Months Ended
 
June 30,

March 31,

June 30,

June 30,
($ in thousands, except for share data)
2019

2019

2018

2019

2018
FINANCIAL DATA:
 
 
 
 
 
 
 
 
 
Net interest income
$
220,234

 
$
218,648

 
$
210,752

 
$
438,882

 
$
418,350

Net interest income - FTE (1)
221,392

 
219,925

 
212,252

 
441,317

 
421,372

Non-interest income
27,603

 
107,673

 
38,069

 
135,276

 
70,320

Non-interest expense
141,737

 
147,795

 
149,916

 
289,532

 
323,668

Income tax expense
27,532

 
57,196

 
18,961

 
84,728

 
32,145

Net income
76,468

 
113,330

 
72,802

 
189,798

 
114,767

Dividends on preferred stock
3,172


3,172


3,172


6,344


6,344

Net income available to common shareholders
$
73,296

 
$
110,158

 
$
69,630

 
$
183,454

 
$
108,423

Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
331,748,552

 
331,601,260

 
331,318,381

 
331,675,313

 
331,024,531

Diluted
332,959,802

 
332,834,466

 
332,895,483

 
332,929,359

 
332,599,991

Per common share data:
 
 
 
 
 
 
 
 
 
Basic earnings
$
0.22

 
$
0.33

 
$
0.21

 
$
0.55

 
$
0.33

Diluted earnings
0.22

 
0.33

 
0.21

 
0.55

 
0.33

Cash dividends declared
0.11

 
0.11

 
0.11

 
0.22

 
0.22

Closing stock price - high
10.78

 
10.73

 
13.26

 
10.78

 
13.38

Closing stock price - low
9.75

 
9.00

 
11.91

 
9.00

 
11.19

CORE ADJUSTED FINANCIAL DATA: (2)
 
 
 
 
 
 
 
 
 
Net income available to common shareholders, as adjusted
$
75,589

 
$
71,764

 
$
71,982

 
$
147,353

 
$
130,531

Basic earnings per share, as adjusted
0.23


0.22


0.22


0.44


0.39

Diluted earnings per share, as adjusted
0.23


0.22


0.22


0.44


0.39

FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Net interest margin
2.95
%
 
2.96
%
 
3.09
%
 
2.95
%
 
3.10
%
Net interest margin - FTE (1)
2.96

 
2.98

 
3.11

 
2.97

 
3.12

Annualized return on average assets
0.94

 
1.40

 
0.98

 
1.17

 
0.78

Annualized return on avg. shareholders' equity
8.79

 
13.35

 
8.88

 
11.04

 
6.99

Annualized return on avg. tangible shareholders' equity (2)
13.16

 
20.29

 
13.76

 
16.65

 
10.82

Efficiency ratio (3)
57.19

 
45.29

 
60.25

 
50.43

 
66.23

CORE ADJUSTED FINANCIAL RATIOS: (2)
 
 
 
 
 
 
 
 
 
Annualized return on average assets, as adjusted
0.96
%
 
0.93
%
 
1.01
%
 
0.95
%
 
0.93
%
Annualized return on average shareholders' equity, as adjusted
9.05

 
8.83

 
9.17

 
8.94

 
8.33

Annualized return on average tangible shareholders' equity, as adjusted
13.55

 
13.42

 
14.21

 
13.48

 
12.91

Efficiency ratio, as adjusted
54.58

 
54.79

 
57.14

 
54.68

 
58.56

AVERAGE BALANCE SHEET ITEMS:
 
 
 
 
 
 
 
 
Assets
$
32,707,144


$
32,296,070


$
29,778,210


$
32,502,744


$
29,536,301

Interest earning assets
29,877,384

 
29,562,907

 
27,256,959

 
29,721,015

 
27,005,281

Loans
25,552,415

 
25,254,733

 
22,840,235

 
25,404,396

 
22,573,097

Interest bearing liabilities
22,328,544

 
22,344,028

 
20,129,492

 
22,336,243

 
19,911,043

Deposits
24,699,238

 
24,782,759

 
21,846,582

 
24,740,767

 
21,864,210

Shareholders' equity
3,481,519

 
3,394,688


3,279,616


3,438,344


3,284,687


9



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
As Of
BALANCE SHEET ITEMS:
June 30,

March 31,

December 31,

September 30,

June 30,
(In thousands)
2019

2019

2018

2018

2018
Assets
$
33,027,741

 
$
32,476,991

 
$
31,863,088

 
$
30,881,948

 
$
30,182,979

Total loans
25,802,162

 
25,423,118

 
25,035,469

 
24,111,290

 
23,234,716

Non-PCI loans
22,030,205

 
21,418,778

13,802,636

20,845,383

 
19,681,255

13,802.636

18,587,015

Deposits
24,773,929

 
24,907,496

 
24,452,974

 
22,588,272

 
21,640,772

Shareholders' equity
3,504,118

 
3,444,879

 
3,350,454

 
3,302,936

 
3,277,312

 
 
 
 
 
 
 
 
 
 
LOANS:
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
4,615,765

 
$
4,504,927

 
$
4,331,032

 
$
4,015,280

 
$
3,829,525

Commercial real estate:
 
 
 
 
 
 
 
 
 
Commercial real estate
12,798,017

 
12,665,425

 
12,407,275

 
12,251,231

 
11,913,830

Construction
1,528,968

 
1,454,199

 
1,488,132

 
1,416,259

 
1,376,732

 Total commercial real estate
14,326,985

 
14,119,624

 
13,895,407

 
13,667,490

 
13,290,562

Residential mortgage
4,072,450

 
4,071,237

 
4,111,400

 
3,782,972

 
3,528,682

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
501,646

 
513,066

 
517,089

 
521,797

 
520,849

Automobile
1,362,466

 
1,347,759

 
1,319,571

 
1,288,902

 
1,281,735

Other consumer
922,850

 
866,505

 
860,970

 
834,849

 
783,363

Total consumer loans
2,786,962

 
2,727,330

 
2,697,630

 
2,645,548

 
2,585,947

Total loans
$
25,802,162

 
$
25,423,118

 
$
25,035,469

 
$
24,111,290

 
$
23,234,716

 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS:
 
 
 
 
 
 
 
 
 
Book value per common share
$
9.93

 
$
9.75

 
$
9.48

 
$
9.33

 
$
9.26

Tangible book value per common share (2)
6.45

 
6.26

 
5.97

 
5.81

 
5.75

Tangible common equity to tangible assets (2)
6.71
%
 
6.63
%
 
6.45
%
 
6.48
%
 
6.56
%
Tier 1 leverage capital
7.62

 
7.58

 
7.57

 
7.63

 
7.72

Common equity tier 1 capital
8.59

 
8.53

 
8.43

 
8.56

 
8.71

Tier 1 risk-based capital
9.43

 
9.38

 
9.30

 
9.46

 
9.65

Total risk-based capital
11.39

 
11.37

 
11.34

 
11.55

 
11.77





10



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
Three Months Ended
 
Six Months Ended
ALLOWANCE FOR CREDIT LOSSES:
June 30,
 
March 31,
 
June 30,
 
June 30,
($ in thousands)
2019
 
2019
 
2018
 
2019
 
2018
Beginning balance - Allowance for credit losses
$
158,961

 
$
156,295

 
$
136,704

 
$
156,295

 
$
124,452

Loans charged-off:
 
 
 
 
 
 
 
 
 
Commercial and industrial
(3,073
)
 
(4,282
)
 
(642
)
 
(7,355
)
 
(773
)
Commercial real estate
—

 
—

 
(38
)
 
—

 
(348
)
Residential mortgage
—

 
(15
)
 
(99
)
 
(15
)
 
(167
)
Total Consumer
(1,752
)
 
(2,028
)
 
(1,422
)
 
(3,780
)
 
(2,633
)
Total loans charged-off
(4,825
)
 
(6,325
)
 
(2,201
)
 
(11,150
)
 
(3,921
)
Charged-off loans recovered:
 
 
 
 
 
 
 
 
 
Commercial and industrial
1,195

 
483

 
819

 
1,678

 
2,926

Commercial real estate
22

 
21

 
15

 
43

 
384

Residential mortgage
9

 
1

 
180

 
10

 
260

Total Consumer
617

 
486

 
495

 
1,103

 
963

Total loans recovered
1,843

 
991

 
1,509

 
2,834

 
4,533

Net (charge-offs) recoveries
(2,982
)
 
(5,334
)
 
(692
)
 
(8,316
)
 
612

Provision for credit losses
2,100

 
8,000

 
7,142

 
10,100

 
18,090

Ending balance - Allowance for credit losses
$
158,079

 
$
158,961

 
$
143,154

 
$
158,079

 
$
143,154

Components of allowance for credit losses:
 
 
 
 
 
 
 
 
 
Allowance for loan losses
$
155,105

 
$
154,381

 
$
138,762

 
$
155,105

 
$
138,762

Allowance for unfunded letters of credit
2,974

 
4,580

 
4,392

 
2,974

 
4,392

Allowance for credit losses
$
158,079

 
$
158,961

 
$
143,154

 
$
158,079

 
$
143,154

Components of provision for credit losses:
 
 
 
 
 
 
 
 
 
Provision for loan losses
$
3,706

 
$
7,856

 
$
6,592

 
$
11,562

 
$
17,294

Provision for unfunded letters of credit
(1,606
)
 
144

 
550

 
(1,462
)
 
796

Provision for credit losses
$
2,100

 
$
8,000

 
$
7,142

 
$
10,100

 
$
18,090

Annualized ratio of total net charge-offs (recoveries) to average loans
0.05
%
 
0.08
%
 
0.01
%
 
0.07
%
 
(0.01
)%
Allowance for credit losses as a % of non-PCI loans
0.72
%
 
0.74
%
 
0.77
%
 
0.72
%
 
0.77
 %
Allowance for credit losses as a % of total loans
0.61
%
 
0.63
%
 
0.62
%
 
0.61
%
 
0.62
 %

11



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
As of
ASSET QUALITY: (4)
June 30,

March 31,

December 31,

September 30,

June 30,
($ in thousands)
2019

2019

2018

2018

2018
Accruing past due loans:
 
 
 
 
 
 
 
 
 
30 to 59 days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
14,119

 
$
5,120

 
$
13,085

 
$
9,462

 
$
6,780

Commercial real estate
6,202

 
39,362

 
9,521

 
3,387

 
4,323

Construction
—

 
1,911

 
2,829

 
15,576

 
175

Residential mortgage
19,131

 
15,856

 
16,576

 
10,058

 
7,961

Total Consumer
11,932

 
6,647

 
9,740

 
7,443

 
6,573

Total 30 to 59 days past due
51,384

 
68,896

 
51,751

 
45,926

 
25,812

60 to 89 days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
4,135

 
1,756

 
3,768

 
1,431

 
1,533

Commercial real estate
354

 
2,156

 
530

 
2,502

 
—

Construction
1,342

 
—

 
—

 
36

 
—

Residential mortgage
3,635

 
3,635

 
2,458

 
3,270

 
1,978

Total Consumer
1,484

 
990

 
1,386

 
1,249

 
860

Total 60 to 89 days past due
10,950

 
8,537

 
8,142

 
8,488

 
4,371

90 or more days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
3,298

 
2,670

 
6,156

 
1,618

 
560

Commercial real estate
—

 
—

 
27

 
27

 
27

Residential mortgage
1,054

 
1,402

 
1,288

 
1,877

 
2,324

Total Consumer
359

 
523

 
341

 
282

 
198

Total 90 or more days past due
4,711

 
4,595

 
7,812

 
3,804

 
3,109

Total accruing past due loans
$
67,045

 
$
82,028

 
$
67,705

 
$
58,218

 
$
33,292

Non-accrual loans:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
76,216

 
$
76,270

 
$
70,096

 
$
52,929

 
$
53,596

Commercial real estate
6,231

 
2,663

 
2,372

 
7,103

 
7,452

Construction
—

 
378

 
356

 
—

 
1,100

Residential mortgage
12,069

 
11,921

 
12,917

 
16,083

 
19,303

Total Consumer
1,999

 
2,178

 
2,655

 
2,248

 
3,003

Total non-accrual loans
96,515

 
93,410

 
88,396

 
78,363

 
84,454

Other real estate owned (OREO)
7,161

 
7,317

 
9,491

 
9,863

 
11,760

Other repossessed assets
2,358

 
2,628

 
744

 
445

 
864

Non-accrual debt securities (5)
680

 
—

 
—

 
—

 
—

Total non-performing assets
$
106,714

 
$
103,355

 
$
98,631

 
$
88,671

 
$
97,078

Performing troubled debt restructured loans
$
74,385

 
$
73,081

 
$
77,216

 
$
81,141

 
$
83,694

Total non-accrual loans as a % of loans
0.37
%
 
0.37
%
 
0.35
%
 
0.33
%
 
0.36
%
Total accruing past due and non-accrual loans as a % of loans
0.63
%
 
0.69
%
 
0.62
%
 
0.57
%
 
0.51
%
Allowance for losses on loans as a % of non-accrual loans
160.71
%
 
165.27
%
 
171.79
%
 
184.99
%
 
164.30
%
Non-performing purchased credit-impaired loans (6)
$
55,085

 
$
56,182

 
$
56,125

 
$
75,422

 
$
57,311




12



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



NOTES TO SELECTED FINANCIAL DATA
(1)
Net interest income and net interest margin are presented on a tax equivalent basis using a 21 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 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

Six Months Ended
 
June 30,

March 31,

June 30,

June 30,
($ in thousands, except for share data)
2019

2019

2018

2019

2018
Adjusted net income available to common shareholders:
 
 
 
 
 
 
 
 
 
Net income, as reported
$
76,468


$
113,330


$
72,802


$
189,798


$
114,767

Less: Gain on sale leaseback transactions (net of tax)(a)
—

 
(55,707
)
 
—

 
(55,707
)
 
—

Add: Net impairment losses on securities (net of tax)
2,078

 
—

 
—

 
2,078

 
—

Add: (Gains) losses on securities transaction (net of tax)
(8
)
 
23

 
26

 
15

 
574

Add: Severance expense (net of tax)(b)
—

 
3,433

 
—

 
3,433

 
—

Add: Tax credit investment impairment (net of tax)(c)
—

 
1,757

 
—

 
1,757

 
—

Add: Legal expenses (litigation reserve impact only, net of tax)
—

 
—

 
—

 
—

 
7,520

Add: Merger related expenses (net of tax)(d)
—

 
—

 
2,326

 
—

 
12,014

Add: Income tax expense (e)
223

 
12,100

 
—

 
12,323

 
2,000

Net income, as adjusted
$
78,761

 
$
74,936

 
$
75,154

 
$
153,697

 
$
136,875

Dividends on preferred stock
3,172

 
3,172

 
3,172

 
6,344

 
6,344

Net income available to common shareholders, as adjusted
$
75,589

 
$
71,764

 
$
71,982

 
$
147,353

 
$
130,531

__________
 
 
 
 
 
 
 
 
 
(a) The gain on sale leaseback transactions is included in gains on the sales of assets within other non-interest income.
 
 
(b) Severance expense is included in salary and employee benefits expense.
 
 
 
 
(c) Impairment is included in the amortization of tax credit investments.
 
 
 
 
(d) Merger related expenses are primarily within salary and employee benefits and other expense.
 
 
 
 
(e) Income tax expense (benefit) related to reserves for uncertain tax positions in 2019 and USAB and the Tax Act in the 2018 periods.
Adjusted per common share data:
 
 
 
 
 
 
 
 
 
Net income available to common shareholders, as adjusted
$
75,589

 
$
71,764

 
$
71,982

 
$
147,353

 
$
130,531

Average number of shares outstanding
331,748,552

 
331,601,260

 
331,318,381

 
331,675,313

 
331,024,531

Basic earnings, as adjusted
$
0.23

 
$
0.22

 
$
0.22

 
$
0.44

 
$
0.39

Average number of diluted shares outstanding
332,959,802

 
332,834,466

 
332,895,483

 
332,929,359

 
332,599,991

Diluted earnings, as adjusted
$
0.23

 
$
0.22

 
$
0.22

 
$
0.44

 
$
0.39

Adjusted annualized return on average tangible shareholders' equity:
 
 
 
 
 
 
 
 
 
Net income, as adjusted
$
78,761

 
$
74,936

 
$
75,154

 
$
153,697

 
$
136,875

Average shareholders' equity
3,481,519


3,394,688


3,279,616


3,438,344


3,284,687

Less: Average goodwill and other intangible assets
1,156,703


1,160,510


1,163,575


1,158,596


1,163,901

Average tangible shareholders' equity
$
2,324,816

 
$
2,234,178

 
$
2,116,041

 
$
2,279,748

 
$
2,120,786

Annualized return on average tangible shareholders' equity, as adjusted
13.55
%
 
13.42
%
 
14.21
%
 
13.48
%
 
12.91
%
Adjusted annualized return on average assets:
 
 
 
 
 
 
 
 
 
Net income, as adjusted
$
78,761

 
$
74,936

 
$
75,154

 
$
153,697

 
$
136,875

Average assets
$
32,707,144

 
$
32,296,070

 
$
29,778,210

 
$
32,502,744

 
$
29,536,301

Annualized return on average assets, as adjusted
0.96
%
 
0.93
%
 
1.01
%
 
0.95
%
 
0.93
%

13



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
Three Months Ended
 
Six Months Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
($ in thousands)
2019
 
2019
 
2018
 
2019
 
2018
Adjusted annualized return on average shareholders' equity:


 


 


 
 
 
 
Net income, as adjusted
$
78,761

 
$
74,936

 
$
75,154

 
$
153,697

 
$
136,875

Average shareholders' equity
$
3,481,519

 
$
3,394,688

 
$
3,279,616

 
$
3,438,344

 
$
3,284,687

Annualized return on average shareholders' equity, as adjusted
9.05
%
 
8.83
%
 
9.17
%
 
8.94
%
 
8.33
%
Annualized return on average tangible shareholders' equity:
 
 
 
 
 
 
 
 
 
Net income, as reported
$
76,468

 
$
113,330

 
$
72,802

 
$
189,798

 
$
114,767

Average shareholders' equity
3,481,519

 
3,394,688

 
3,279,616

 
3,438,344

 
3,284,687

Less: Average goodwill and other intangible assets
1,156,703

 
1,160,510

 
1,163,575

 
1,158,596

 
1,163,901

Average tangible shareholders' equity
$
2,324,816

 
$
2,234,178

 
$
2,116,041

 
$
2,279,748

 
$
2,120,786

Annualized return on average tangible shareholders' equity
13.16
%
 
20.29
%
 
13.76
%
 
16.65
%
 
10.82
%
Adjusted efficiency ratio:
 
 
 
 
 
 
 
 
 
Non-interest expense, as reported
$
141,737

 
$
147,795

 
$
149,916

 
$
289,532

 
$
323,668

Less: Severance expense (pre-tax)
—

 
4,838

 
—

 
4,838

 
—

Less: Legal expenses (litigation reserve impact only, pre-tax)
—

 
—

 
—

 
—

 
10,500

Less: Merger-related expenses (pre-tax)
—

 
—

 
3,248

 
—

 
16,776

Less: Amortization of tax credit investments (pre-tax)
4,863

 
7,173

 
4,470

 
12,036

 
9,744

Non-interest expense, as adjusted
$
136,874

 
$
135,784

 
$
142,198

 
$
272,658

 
$
286,648

Net interest income
220,234

 
218,648

 
210,752

 
438,882

 
418,350

Non-interest income, as reported
27,603

 
107,673

 
38,069

 
135,276

 
70,320

Add: Net impairment losses on securities (pre-tax)
2,928

 
—

 
—

 
2,928

 
—

Add: (Gains) losses on securities transactions, net (pre-tax)
(11
)
 
32

 
36

 
21

 
801

Less: Gain on sale leaseback transaction (pre-tax)
—

 
78,505

 
—

 
78,505

 
—

Non-interest income, as adjusted
$
30,520

 
$
29,200

 
$
38,105

 
$
59,720

 
$
71,121

Gross operating income, as adjusted
$
250,754

 
$
247,848

 
$
248,857

 
$
498,602

 
$
489,471

Efficiency ratio, as adjusted
54.58
%
 
54.79
%
 
57.14
%
 
54.68
%
 
58.56
%
 
As of
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
($ in thousands, except for share data)
2019
 
2019
 
2018
 
2018
 
2018
Tangible book value per common share:
 
 
 
 
 
 
 
 
 
Common shares outstanding
331,788,149

 
331,732,636

 
331,431,217

 
331,501,424

 
331,454,025

Shareholders' equity
$
3,504,118

 
$
3,444,879

 
$
3,350,454

 
$
3,302,936

 
$
3,277,312

Less: Preferred stock
209,691

 
209,691

 
209,691

 
209,691

 
209,691

Less: Goodwill and other intangible assets
1,155,250

 
1,158,245

 
1,161,655

 
1,166,481

 
1,162,858

Tangible common shareholders' equity
$
2,139,177

 
$
2,076,943

 
$
1,979,108

 
$
1,926,764

 
$
1,904,763

Tangible book value per common share
$
6.45

 
$
6.26

 
$
5.97

 
$
5.81

 
$
5.75

Tangible common equity to tangible assets:
 
 
 
 
 
 
 
 
Tangible common shareholders' equity
$
2,139,177

 
$
2,076,943

 
$
1,979,108

 
$
1,926,764

 
$
1,904,763

Total assets
33,027,741

 
32,476,991

 
31,863,088

 
30,881,948

 
30,182,979

Less: Goodwill and other intangible assets
1,155,250

 
1,158,245

 
1,161,655

 
1,166,481

 
1,162,858

Tangible assets
$
31,872,491

 
$
31,318,746

 
$
30,701,433

 
$
29,715,467

 
$
29,020,121

Tangible common equity to tangible assets
6.71
%
 
6.63
%
 
6.45
%
 
6.48
%
 
6.56
%

14



VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



(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)
Represents an other-than-temporarily impaired municipal bond security classified as available for sale presented at its carrying value at June 30, 2019.
(6)
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@valley.com.


15



VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)


 
June 30,
 
December 31,
 
2019
 
2018
 
 (Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
276,291

 
$
251,541

Interest bearing deposits with banks
178,905

 
177,088

Investment securities:
 
 
 
Held to maturity (fair value of $2,184,792 at June 30, 2019 and $2,034,943 at December 31, 2018)
2,168,236

 
2,068,246

Available for sale
1,679,350

 
1,749,544

Total investment securities
3,847,586

 
3,817,790

Loans held for sale, at fair value
36,641

 
35,155

Loans
25,802,162

 
25,035,469

Less: Allowance for loan losses
(155,105
)
 
(151,859
)
Net loans
25,647,057

 
24,883,610

Premises and equipment, net
312,627

 
341,630

Lease right-of-use assets
283,348

 
—

Bank owned life insurance
442,343

 
439,602

Accrued interest receivable
99,065

 
95,296

Goodwill
1,084,665

 
1,084,665

Other intangible assets, net
70,585

 
76,990

Other assets
748,628

 
659,721

Total Assets
$
33,027,741

 
$
31,863,088

Liabilities
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
6,327,789

 
$
6,175,495

Interest bearing:
 
 
 
Savings, NOW and money market
11,107,952

 
11,213,495

Time
7,338,188

 
7,063,984

Total deposits
24,773,929

 
24,452,974

Short-term borrowings
2,387,784

 
2,118,914

Long-term borrowings
1,800,182

 
1,654,268

Junior subordinated debentures issued to capital trusts
55,544

 
55,370

Lease liabilities
307,405

 
3,125

Accrued expenses and other liabilities
198,779

 
227,983

Total Liabilities
29,523,623

 
28,512,634

Shareholders’ Equity
 
 
 
Preferred stock, no par value; 50,000,000 authorized shares:
 
 
 
Series A (4,600,000 shares issued at June 30, 2019 and December 31, 2018)
111,590

 
111,590

Series B (4,000,000 shares issued at June 30, 2019 and December 31, 2018)
98,101

 
98,101

Common stock (no par value, authorized 450,000,000 shares; issued 332,101,525 shares at June 30, 2019 and 331,634,951 shares at December 31, 2018)
116,571

 
116,240

Surplus
2,804,059

 
2,796,499

Retained earnings
412,190

 
299,642

Accumulated other comprehensive loss
(35,131
)
 
(69,431
)
Treasury stock, at cost (313,376 common shares at June 30, 2019 and 203,734 common shares at December 31, 2018)
(3,262
)
 
(2,187
)
Total Shareholders’ Equity
3,504,118

 
3,350,454

Total Liabilities and Shareholders’ Equity
$
33,027,741

 
$
31,863,088


16



VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)


 
Three Months Ended
 
Six Months Ended
 
June 30,

March 31,

June 30,
 
June 30,
 
2019

2019

2018
 
2019
 
2018
Interest Income
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
296,934

 
$
288,277

 
$
247,690

 
$
585,211

 
$
485,276

Interest and dividends on investment securities:
 
 
 
 
 
 
 
 
 
Taxable
22,489

 
22,876

 
22,222

 
45,365

 
43,545

Tax-exempt
4,356

 
4,804

 
5,639

 
9,160

 
11,360

Dividends
2,795

 
3,174

 
3,728

 
5,969

 
5,667

Interest on federal funds sold and other short-term investments
1,168

 
1,093

 
839

 
2,261

 
1,765

Total interest income
327,742

 
320,224

 
280,118

 
647,966

 
547,613

Interest Expense
 
 
 
 
 
 
 
 
 
Interest on deposits:
 
 
 
 
 
 
 
 
 
Savings, NOW and money market
38,020

 
36,283

 
24,756

 
74,303

 
47,073

Time
40,331

 
38,171

 
16,635

 
78,502

 
31,251

Interest on short-term borrowings
14,860

 
12,549

 
10,913

 
27,409

 
16,645

Interest on long-term borrowings and junior subordinated debentures
14,297

 
14,573

 
17,062

 
28,870

 
34,294

Total interest expense
107,508

 
101,576

 
69,366

 
209,084

 
129,263

Net Interest Income
220,234

 
218,648

 
210,752

 
438,882

 
418,350

Provision for credit losses
2,100

 
8,000

 
7,142

 
10,100

 
18,090

Net Interest Income After Provision for Credit Losses
218,134

 
210,648

 
203,610

 
428,782

 
400,260

Non-Interest Income
 
 
 
 
 
 
 
 
 
Trust and investment services
3,096

 
2,904

 
3,262

 
6,000

 
6,492

Insurance commissions
2,649

 
2,525

 
4,026

 
5,174

 
7,847

Service charges on deposit accounts
5,827

 
5,903

 
6,679

 
11,730

 
13,932

Gains (losses) on securities transactions, net
11

 
(32
)
 
(36
)
 
(21
)
 
(801
)
Other-than-temporary impairment losses on securities
(2,928
)
 
—

 
—

 
(2,928
)
 
—

Portion recognized in other comprehensive income (before taxes)
—

 
—

 
—

 
—

 
—

Net impairment losses on securities recognized in earnings
(2,928
)
 
—

 
—

 
(2,928
)
 
—

Fees from loan servicing
2,367

 
2,430

 
2,045

 
4,797

 
4,268

Gains on sales of loans, net
3,930

 
4,576

 
7,642

 
8,506

 
14,395

(Losses) gains on sales of assets, net
(564
)
 
77,720

 
(125
)
 
77,156

 
(222
)
Bank owned life insurance
2,205

 
1,887

 
2,652

 
4,092

 
4,415

Other
11,010

 
9,760

 
11,924

 
20,770

 
19,994

Total non-interest income
27,603

 
107,673

 
38,069

 
135,276

 
70,320

Non-Interest Expense
 
 
 
 
 
 
 
 
 
Salary and employee benefits expense
76,183

 
83,105

 
78,944

 
159,288

 
172,236

Net occupancy and equipment expense
29,700

 
27,886

 
26,901

 
57,586

 
54,825

FDIC insurance assessment
4,931

 
6,121

 
8,044

 
11,052

 
13,542

Amortization of other intangible assets
4,170

 
4,311

 
4,617

 
8,481

 
8,910

Professional and legal fees
4,145

 
5,271

 
5,337

 
9,416

 
22,384

Amortization of tax credit investments
4,863

 
7,173

 
4,470

 
12,036

 
9,744

Telecommunication expense
2,351

 
2,268

 
3,015

 
4,619

 
6,609

Other
15,394

 
11,660

 
18,588

 
27,054

 
35,418

Total non-interest expense
141,737


147,795


149,916


289,532


323,668

Income Before Income Taxes
104,000

 
170,526

 
91,763

 
274,526

 
146,912

Income tax expense
27,532

 
57,196

 
18,961

 
84,728

 
32,145

Net Income
76,468

 
113,330

 
72,802

 
189,798

 
114,767

Dividends on preferred stock
3,172

 
3,172

 
3,172

 
6,344

 
6,344

Net Income Available to Common Shareholders
$
73,296

 
$
110,158

 
$
69,630

 
$
183,454

 
$
108,423



17



VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)


 
Three Months Ended
 
Six Months Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
Earnings Per Common Share:
 
 
 
 
 
 
 
 
 
Basic
$
0.22

 
$
0.33

 
$
0.21

 
$
0.55

 
$
0.33

Diluted
0.22

 
0.33

 
0.21

 
0.55

 
0.33

Cash Dividends Declared per Common Share
0.11

 
0.11

 
0.11

 
0.22

 
0.22

Weighted Average Number of Common Shares Outstanding:
 
 
 
 
 
 
 
 
 
Basic
331,748,552

 
331,601,260

 
331,318,381

 
331,675,313

 
331,024,531

Diluted
332,959,802

 
332,834,466

 
332,895,483

 
332,929,359

 
332,599,991



18


VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
 
 
Three Months Ended
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 Average
 
 
 
Avg.
 
 Average
 
 
 
Avg.
 
 Average
 
 
 
Avg.
($ in thousands)
 Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)(2)
$
25,552,415

 
$
296,934

 
4.65
%
 
$
25,254,733

 
$
288,277

 
4.57
%
 
$
22,840,235

 
$
247,691

 
4.34
%
Taxable investments (3)
3,453,676

 
25,284

 
2.93
%
 
3,390,609

 
26,050

 
3.07
%
 
3,438,842

 
25,950

 
3.02
%
Tax-exempt investments (1)(3)
658,727

 
5,514

 
3.35
%
 
689,675

 
6,081

 
3.53
%
 
750,896

 
7,138

 
3.80
%
Interest bearing deposits with banks
212,566

 
1,168

 
2.20
%
 
227,890

 
1,093

 
1.92
%
 
226,986

 
839

 
1.48
%
Total interest earning assets
29,877,384

 
328,900

 
4.40
%
 
29,562,907

 
321,501

 
4.35
%
 
27,256,959

 
281,618


4.13
%
Other assets
2,829,760

 
 
 
 
 
2,733,163

 
 
 
 
 
2,521,251

 
 
 
 
Total assets
$
32,707,144

 
 
 
 
 
$
32,296,070

 
 
 
 
 
$
29,778,210

 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings, NOW and money market deposits
$
11,293,885

 
$
38,020

 
1.35
%
 
$
11,450,943

 
$
36,283

 
1.27
%
 
$
10,978,067

 
$
24,756

 
0.90
%
Time deposits
7,047,319

 
40,331

 
2.29
%
 
7,214,863

 
38,171

 
2.12
%
 
4,700,456

 
16,635

 
1.42
%
Short-term borrowings
2,380,294

 
14,860

 
2.50
%
 
2,011,428

 
12,549

 
2.50
%
 
2,166,837

 
10,913

 
2.01
%
Long-term borrowings (4)
1,607,046

 
14,297

 
3.56
%
 
1,666,794

 
14,573

 
3.50
%
 
2,284,132

 
17,062

 
2.99
%
Total interest bearing liabilities
22,328,544

 
107,508

 
1.93
%
 
22,344,028

 
101,576

 
1.82
%
 
20,129,492

 
69,366

 
1.38
%
Non-interest bearing deposits
6,358,034

 
 
 
 
 
6,116,953

 
 
 
 
 
6,168,059

 
 
 
 
Other liabilities
539,047

 
 
 
 
 
440,401

 
 
 
 
 
201,043

 
 
 
 
Shareholders' equity
3,481,519

 
 
 
 
 
3,394,688

 
 
 
 
 
3,279,616

 
 
 
 
Total liabilities and shareholders' equity
$
32,707,144

 
 
 
 
 
$
32,296,070

 
 
 
 
 
$
29,778,210

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income/interest rate spread (5)
 
 
$
221,392

 
2.47
%
 
 
 
$
219,925

 
2.53
%
 
 
 
$
212,252

 
2.75
%
Tax equivalent adjustment
 
 
(1,158
)
 
 
 
 
 
(1,277
)
 
 
 
 
 
(1,500
)
 
 
Net interest income, as reported
 
 
$
220,234

 
 
 
 
 
$
218,648

 
 
 
 
 
$
210,752

 
 
Net interest margin (6)
 
 
 
 
2.95
%
 


 
 
 
2.96
%
 
 
 
 
 
3.09
%
Tax equivalent effect
 
 
 
 
0.01
%
 
 
 
 
 
0.02
%
 
 
 
 
 
0.02
%
Net interest margin on a fully tax equivalent basis (6)
 
 
 
 
2.96
%
 
 
 
 
 
2.98
%
 
 
 
 
 
3.11
%
 
(1)
Interest income is presented on a tax equivalent basis using a 21 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.

19