Exhibit 99.1
 | News Release | |||||||
| FOR IMMEDIATE RELEASE | Contact: | Michael D. Hagedorn | |||||||||
| Senior Executive Vice President and | |||||||||||
| Chief Financial Officer | |||||||||||
| 973-872-4885 | |||||||||||
VALLEY NATIONAL BANCORP REPORTS A 26 PERCENT INCREASE IN SECOND QUARTER NET INCOME AND STRONG NET INTEREST MARGIN AND
NON-PPP LOAN GROWTH
NEW YORK, NY – July 22, 2021 -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the second quarter 2021 of $120.5 million, or $0.29 per diluted common share, as compared to the second quarter 2020 earnings of $95.6 million, or $0.23 per diluted common share, and net income of $115.7 million, or $0.28 per diluted common share, for the first quarter 2021. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $126.6 million, or $0.30 per diluted common share, for the second quarter 2021, $95.9 million, or $0.23 per diluted common share, for second quarter 2020, and $115.8 million, or $0.28 per diluted common share, for the first quarter 2021. See further details below, including a reconciliation of our adjusted net income in the "Consolidated Financial Highlights" tables.
Key financial highlights for the second quarter:
•Net Interest Income and Margin: Net interest income on a tax equivalent basis of $301.8 million for the second quarter 2021 increased $8.2 million and $18.2 million as compared to the first quarter 2021 and second quarter 2020, respectively. Our net interest margin on a tax equivalent basis increased by 4 basis points to 3.18 percent in the second quarter 2021 as compared to 3.14 percent for the first quarter 2021. The increases as compared to the first quarter 2021 were largely due to the continued run-off of maturing higher cost time deposits, lower overall cost of deposits, repayment of FHLB advances, and increased yield on our SBA Paycheck Protection Program (PPP) loan portfolio during the second quarter 2021. See the "Net Interest Income and Margin" section below for more details.
•Loan Portfolio: Total loans decreased $229.0 million to $32.5 billion at June 30, 2021 from March 31, 2021 due to a $1.0 billion decrease in PPP loans within the commercial and industrial loan category. Offsetting this impact, our non-PPP loan portfolio increased $785.0 million, or 10.4 percent on an annualized basis to $31.1 billion at June 30, 2021 from $30.3 billion at March 31, 2021. The increase in non-PPP loans was largely driven by increases of $588.5 million, $166.5 million and $86.4 million in the commercial real estate, residential mortgage and auto loan categories, respectively. Additionally, our second quarter 2021 new and refinanced loan originations included approximately $254 million of residential mortgage loans originated for sale. Net gains on sales of residential loans were $10.1 million and $3.5 million in the second quarter 2021 and first quarter 2021, respectively. See the "Loans, Deposits and Other Borrowings" section below for more details.
Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
•Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $353.7 million and $354.3 million at June 30, 2021 and March 31, 2021, respectively. During the second quarter 2021, we recorded a provision for credit losses for loans of $8.8 million as compared to $9.0 million and $41.1 million for the first quarter 2021 and second quarter 2020, respectively. The $8.8 million second quarter 2021 provision included a $3.0 million provision for unfunded credit commitments largely related to an increase of approximately $375 million in our unfunded construction loan commitments at June 30, 2021 as compared to March 31, 2021.
•Credit Quality: Total accruing past due loans increased $27.5 million to $80.2 million, or 0.25 percent of total loans, at June 30, 2021 as compared to $52.8 million, or 0.16 percent of total loans, at March 31, 2021. Non-accrual loans represented 0.68 percent and 0.62 percent of total loans at June 30, 2021 and March 31, 2021, respectively. Net loan charge-offs totaled $9.4 million for the second quarter 2021 as compared to $6.1 million for the first quarter 2021. The increase in second quarter 2021 net loan charge-offs was primarily related to one $8.0 million commercial and industrial loan that was fully charged-off with related reserves of $4.0 million previously recorded at March 31, 2021. See the "Credit Quality" section below for more details.
•Non-interest Income: Non-interest income increased $11.9 million to $43.1 million for the second quarter 2021 as compared to the first quarter 2021 mainly due to an increase of approximately $6.5 million in net gains on sales of residential mortgage loans, a $1.4 million increase in swap fee income related to certain new commercial loan transactions and an increase of $1.1 million in insurance commissions.
•Non-interest Expense: Non-interest expense increased $11.7 million to $171.9 million for the second quarter 2021 as compared to the first quarter 2021 mainly due to an $8.4 million loss on extinguishment of debt recognized during the second quarter 2021. Additionally, salaries and employee benefits expense increased $3.0 million during the second quarter 2021 as compared to first quarter 2021 primarily due to higher cash incentive compensation accruals, strategic increases in our headcount to enhance lending and operations, and, to a lesser extent, increased residential mortgage commissions expense.
•Loss on Extinguishment of Debt: In late June 2021, we prepaid approximately $248 million of long-term FHLB advances with contractual maturities through 2025 and a combined weighted average effective interest rate of 1.82 percent. The debt prepayment was funded by excess cash liquidity. As a result, the transaction was accounted for as an early debt extinguishment resulting in the aforementioned loss of $8.4 million reported within non-interest expense for the second quarter 2021.
•Efficiency Ratio: Our efficiency ratio was 49.96 percent for the second quarter 2021 as compared to 49.46 percent and 48.01 percent for the first quarter 2021 and second quarter 2020, respectively. Our adjusted efficiency ratio was 46.64 percent for the second quarter 2021 as compared to 48.60 percent and 46.84 percent for the first quarter 2021 and second quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
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Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
•Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 1.17 percent, 10.24 percent, and 14.79 percent for the second quarter 2021, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, were 1.23 percent, 10.76 percent and 15.54 percent for the second quarter 2021, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
On June 29, 2021, Valley announced that it will acquire The Westchester Bank Holding Corporation (Westchester) and its principal subsidiary, The Westchester Bank, which is headquartered in White Plains, New York. The acquisition of this high-performing and growth-oriented commercial bank with total assets of approximately $1.3 billion and a seven branch network will provide Valley with a physical footprint and additional commercial lending expertise in the demographically attractive Westchester County, New York market. The acquisition is expected to close in the fourth quarter 2021, subject to standard regulatory approvals, approval of Westchester stockholders, as well as other customary conditions.
Ira Robbins, CEO and President commented, "Our solid second quarter 2021 core earnings were primarily driven by a net interest margin of 3.18 percent which continued to reflect our ability to lower our cost of funds, while maintaining sound loan pricing discipline in our very competitive markets. Linked quarter non-PPP loan growth was over 10 percent on an annualized basis. This exceptional growth was well-diversified across our consumer and commercial segments, and both our northeast and southeast geographies. "Mr. Robbins continued, “Additionally, we are very excited about our recently announced acquisition. We look forward to welcoming Westchester to Valley and working together to drive our future growth initiatives in the Westchester County market."
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $301.8 million for the second quarter 2021 increased $8.2 million and $18.2 million as compared to the first quarter 2021 and second quarter 2020, respectively. The increase as compared to the first quarter 2021 was mainly due to (i) continued run-off of higher cost time deposits and some account balance migration to lower cost deposits without stated maturities, (ii) repayment of FHLB advances upon their maturity, (iii) the redemption of $60 million of callable 6.25 percent subordinated notes on April 1, 2021 and (iv) a slightly higher yield on the PPP loan portfolio due to the accelerated recognition of unearned loan fees for loans forgiven during the second quarter 2021. Interest expense of $32.7 million for the second quarter 2021 decreased $6.4 million as compared to the first quarter 2021 as we continue to reduce our cost of funding in the low rate environment. Interest income on a tax equivalent basis in the second quarter 2021 increased by $1.8 million to $334.5 million as compared to the first quarter 2021 mainly due to moderately higher earned fees on our loan portfolio driven by the accelerated recognition of unearned loan fees related to PPP loans that were forgiven during the second quarter 2021, partially offset by lower yields on our investment securities portfolio. See the "Loan, Deposit and Other Borrowings" section for more information on PPP loans.
Our net interest margin on a tax equivalent basis of 3.18 percent for the second quarter 2021 increased by 4 basis points and 18 basis points from 3.14 percent and 3.00 percent for the first quarter 2021 and
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Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
second quarter 2020, respectively. The yield on average interest earning assets decreased by 3 basis points on a linked quarter basis, mostly due to the lower yield on our investment securities portfolio, a higher mix of excess cash liquidity held in low yielding overnight investments, and one additional day in the second quarter 2021 as compared to first quarter 2021. The yield on average loans increased by 2 basis points to 3.87 percent for the second quarter 2021 as compared to the first quarter 2021 partially due to the accelerated recognition of unearned PPP loan fees during the second quarter 2021. The overall cost of average interest bearing liabilities decreased 9 basis points to 0.51 percent for the second quarter 2021 as compared to the first quarter 2021 and was largely due to continued runoff of time deposits and the customer shift to lower cost deposits without stated maturities. Additionally, the net interest margin benefited from a 7 basis point decrease in the average cost of short-term borrowings driven by our greater reliance on funding from deposits and the repayment of FHLB advances during the second quarter 2021. Our cost of total average deposits was 0.21 percent for the second quarter 2021 as compared to 0.28 percent for the first quarter 2021.
Loans, Deposits and Other Borrowings
Loans. Loans decreased $229.0 million to approximately $32.5 billion at June 30, 2021 from March 31, 2021 due to a $1.0 billion decrease in PPP loans within the commercial and industrial loan category, partially offset by increases in the commercial real estate, residential mortgage and auto loan portfolios. Commercial real estate loans increased $588.5 million, or 13.9 percent on an annualized basis, to $17.5 billion at June 30, 2021 as compared to March 31, 2021 reflecting strong organic loan growth across our geographic footprint. Automobile loans increased $86.4 million, or 23.9 percent on an annualized basis, during the second quarter 2021 largely due to continued strong consumer demand seen across the auto industry during the period. Residential mortgage loans increased $166.5 million, or 16.4 percent on an annualized basis, during the second quarter 2021 mainly due to the strong new loan activity in the purchased home market, and, to a lesser extent, refinance loan volumes. During the second quarter 2021, we originated approximately $254 million of loans for sale. Residential mortgage loans held for sale at fair value totaled $159.3 million and $232.1 million at June 30, 2021 and March 31, 2021, respectively.
Deposits. Total deposits increased $609.6 million to approximately $33.2 billion at June 30, 2021 from March 31, 2021 due to increases of $1.3 billion and $475.9 million in the non-maturity interest bearing deposit and non-interest bearing deposit categories, respectively, partially offset by a $1.1 billion decrease in time deposits. The decrease in time deposits was driven by normal run-off of maturing retail and brokered CDs with some continued migration of retail balances to more liquid deposit product categories. Total brokered deposits (consisting of both time and money market deposit accounts) decreased approximately $800 million to $2.3 billion at June 30, 2021 as compared to $3.1 billion at March 31, 2021. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 32 percent, 55 percent and 13 percent of total deposits as of June 30, 2021, respectively.
Other Borrowings. Short-term borrowings decreased $230.3 million to $854.4 million at June 30, 2021 as compared to March 31, 2021 largely due to repayments of FHLB borrowings. Long-term borrowings decreased $357.2 million to $1.9 billion at June 30, 2021 as compared to March 31, 2021 mainly due to a combination of the prepayment of approximately $248 million long-term FHLB advances in June 2021, Valley's redemption of $60 million of 6.25 percent subordinated notes on April
4
Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
1, 2021, and other normal repayments of maturing FHLB advances, partially offset by the issuance of $300 million of 3.00 percent subordinated notes.
On May 28, 2021, Valley issued $300 million of 3.00 percent fixed-to-floating rate subordinated notes due June 15, 2031, and callable in whole or in part on or after June 15, 2026 or upon the occurrence of certain events. In June 2021, Valley entered into a forward-starting interest rate swap related to the $300.0 million subordinated notes where Valley receives a fixed rate and pays a variable rate based on the Secured Overnight Financing Rate (SOFR) plus 2.187 percent.
Credit Quality
Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets increased $16.1 million to $226.6 million at June 30, 2021 as compared to March 31, 2021. The increase in NPAs was mainly due to a $17.6 million increase in non-accrual construction loans almost entirely related to one borrower relationship with $3.0 million of related allowance reserves at June 30, 2021. Non-accrual loans represented 0.68 percent of total loans at June 30, 2021 compared to 0.62 percent at March 31, 2021.
Non-performing Taxi Medallion Loan Portfolio. During second quarter 2021, we sold the majority of our Chicago taxi medallion loans for $4.5 million and charged-off $1.3 million of these loans to the reserve for credit losses for loans. We continue to closely monitor our non-performing New York City taxi medallion loans totaling $86.5 million and the remaining $721 thousand of the Chicago taxi medallion portfolio within the commercial and industrial loan category at June 30, 2021. At June 30, 2021, all taxi medallion loans totaling $87.2 million were on non-accrual status and had related reserves of $58.6 million, or 67.2 percent of such loans, within the allowance for loan losses.
Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $27.5 million to $80.2 million, or 0.25 percent of total loans, at June 30, 2021 as compared to $52.8 million, or 0.16 percent of total loans, at March 31, 2021 driven by a $36.8 million increase in the commercial real estate loan delinquencies, partially offset by a $7.5 million improvement in the early stage delinquencies in the residential mortgage loan category. Commercial real estate loans past due 30 to 59 days increased $28.9 million to $40.5 million at June 30, 2021 as compared to March 31, 2021 largely due to three loans totaling $18.7 million related to borrowers negatively impacted by the COVID-19 pandemic. Commercial real estate loans past due 60 to 89 days totaled $11.5 million at June 30, 2021 and largely reflected one $11.2 million loan also negatively impacted by the COVID-19 pandemic.
Forbearance. In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment, when requested by customers, all of which were insignificant. As of June 30, 2021, Valley had approximately $142 million of outstanding loans remaining in their payment deferral period under short-term modifications, as compared to $284 million of loans in deferral at March 31, 2021.
5
Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at June 30, 2021, March 31, 2021 and June 30, 2020:
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||||||||||||||||||||||||||
| Allocation | Allocation | Allocation | ||||||||||||||||||||||||||||||||||||
| as a % of | as a % of | as a % of | ||||||||||||||||||||||||||||||||||||
| Allowance | Loan | Allowance | Loan | Allowance | Loan | |||||||||||||||||||||||||||||||||
| Allocation | Category | Allocation | Category | Allocation | Category | |||||||||||||||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||||||||||||||
| Loan Category: | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial loans | $ | 109,689 | 1.80 | % | $ | 126,408 | 1.77 | % | $ | 132,039 | 1.92 | % | ||||||||||||||||||||||||||
| Commercial real estate loans: | ||||||||||||||||||||||||||||||||||||||
| Commercial real estate | 168,220 | 0.96 | % | 153,680 | 0.91 | % | 117,743 | 0.71 | % | |||||||||||||||||||||||||||||
| Construction | 20,919 | 1.19 | % | 20,556 | 1.15 | % | 13,959 | 0.81 | % | |||||||||||||||||||||||||||||
| Total commercial real estate loans | 189,139 | 0.98 | % | 174,236 | 0.93 | % | 131,702 | 0.72 | % | |||||||||||||||||||||||||||||
| Residential mortgage loans | 25,303 | 0.60 | % | 27,172 | 0.67 | % | 29,630 | 0.67 | % | |||||||||||||||||||||||||||||
| Consumer loans: | ||||||||||||||||||||||||||||||||||||||
| Home equity | 4,602 | 1.12 | % | 4,199 | 1.03 | % | 4,766 | 1.01 | % | |||||||||||||||||||||||||||||
| Auto and other consumer | 10,591 | 0.43 | % | 10,865 | 0.46 | % | 11,477 | 0.51 | % | |||||||||||||||||||||||||||||
| Total consumer loans | 15,193 | 0.53 | % | 15,064 | 0.54 | % | 16,243 | 0.59 | % | |||||||||||||||||||||||||||||
| Allowance for loan losses | 339,324 | 1.05 | % | 342,880 | 1.05 | % | 309,614 | 0.96 | % | |||||||||||||||||||||||||||||
| Allowance for unfunded credit commitments | 14,400 | 11,433 | 10,109 | |||||||||||||||||||||||||||||||||||
| Total allowance for credit losses for loans | $ | 353,724 | $ | 354,313 | $ | 319,723 | ||||||||||||||||||||||||||||||||
| Allowance for credit losses for | ||||||||||||||||||||||||||||||||||||||
| loans as a % loans | 1.09 | % | 1.08 | % | 0.99 | % | ||||||||||||||||||||||||||||||||
Our loan portfolio, totaling $32.5 billion at June 30, 2021, had net loan charge-offs totaling $9.4 million for the second quarter 2021 as compared to $6.1 million and $14.8 million for the first quarter 2021 and second quarter 2020, respectively. Net loan charge-offs increased during the second quarter 2021 mainly due to an $8.0 million full charge-off of a commercial and industrial loan to an insurance carrier in bankruptcy. Gross charge-offs of taxi medallion loans totaled $1.4 million for the second quarter 2021 as compared to $3.3 million and $2.9 million for the first quarter 2021 and second quarter 2020, respectively. Gross charge-offs of taxi medallion loans for the second quarter 2021 were mainly related to partial charge-offs of Chicago taxi medallion loans sold from the loans held for investment portfolio during the period.
The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.09 percent, 1.08 percent and 0.99 percent at June 30, 2021, March 31, 2021 and June 30, 2020, respectively. During the second quarter 2021, we recorded a provision for credit losses for loans of $8.8 million as compared to a provision of $9.0 million and $41.1 million for the first quarter 2021 and second quarter 2020, respectively.
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Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
At June 30, 2021, the allowance allocations for credit losses as a percentage of total loans increased in most loan categories as compared to March 31, 2021. The allocated reserves as a percentage of commercial real estate loans increased 5 basis points mainly due to higher quantitative reserves for non-owner occupied loans, as well as loan growth within this category during the second quarter 2021. The allocated reserves as a percentage of commercial and industrial loans increased by 3 basis points mainly due to repayments (loan forgiveness) of PPP loans guaranteed by the SBA with no related allowance at June 30, 2021. The allowance for credit losses as a percentage of total non-PPP loans was 1.14 percent, 1.17 percent and 1.06 percent for the second quarter 2021, first quarter 2021 and second quarter 2020, respectively.
Capital Adequacy
Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 13.36 percent, 10.04 percent, 10.73 percent and 8.49 percent, respectively, at June 30, 2021.
Investor Conference Call
Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Standard Time, today to discuss the second quarter 2021 earnings. Those wishing to participate in the call may dial toll-free 866-354-0432 Conference ID: 5767419. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/dc2uj3x4 and archived on Valley's website through Friday, August 27, 2021. 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 $41 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 Care 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 our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations, including the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions. 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
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Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
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:
•the continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;
•the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 may arise in our primary markets;
•potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic or as a result of our actions in response to, or failure to implement or effectively implement, federal, state and local laws, rules or executive orders requiring that we grant forbearances or not act to collect our loans;
•the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral;
•the risks related to the discontinuation of the London Interbank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies;
•failure to obtain shareholder or regulatory approval for the acquisition of The Westchester Bank Holding Corporation (Westchester) on the anticipated terms and within the anticipated timeframe;
•the inability to realize expected cost savings and synergies from the Westchester acquisition in amounts or in the timeframe anticipated;
•costs or difficulties relating to Westchester integration matters might be greater than expected;
•the inability to retain customers and qualified employees of Westchester;
•damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters;
•a prolonged downturn 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;
•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;
•the inability to grow customer deposits to keep pace with loan growth;
•a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
•the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
•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;
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Valley National Bancorp (NASDAQ: VLY)
2021 Second Quarter Earnings
July 22, 2021
•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, ransomware 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 Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (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;
•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, the COVID-19 pandemic 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, 2020.
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-
9
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) | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| FINANCIAL DATA: | |||||||||||||||||||||||||||||
Net interest income - FTE (1) | $ | 301,787 | $ | 293,584 | $ | 283,540 | $ | 595,371 | $ | 549,923 | |||||||||||||||||||
| Net interest income | $ | 300,907 | $ | 292,667 | $ | 282,559 | $ | 593,574 | $ | 547,898 | |||||||||||||||||||
| Non-interest income | 43,126 | 31,233 | 44,830 | 74,359 | 86,227 | ||||||||||||||||||||||||
| Total revenue | 344,033 | 323,900 | 327,389 | 667,933 | 634,125 | ||||||||||||||||||||||||
| Non-interest expense | 171,893 | 160,213 | 157,166 | 332,106 | 312,822 | ||||||||||||||||||||||||
| Pre-provision net revenue | 172,140 | 163,687 | 170,223 | 335,827 | 321,303 | ||||||||||||||||||||||||
| Provision for credit losses | 8,747 | 8,656 | 41,156 | 17,403 | 75,839 | ||||||||||||||||||||||||
| Income tax expense | 42,881 | 39,321 | 33,466 | 82,202 | 62,595 | ||||||||||||||||||||||||
| Net income | 120,512 | 115,710 | 95,601 | 236,222 | 182,869 | ||||||||||||||||||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 6,344 | 6,344 | ||||||||||||||||||||||||
| Net income available to common shareholders | $ | 117,340 | $ | 112,538 | $ | 92,429 | $ | 229,878 | $ | 176,525 | |||||||||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 405,963,209 | 405,152,605 | 403,790,242 | 405,560,146 | 403,654,665 | ||||||||||||||||||||||||
| Diluted | 408,660,778 | 407,636,765 | 404,631,845 | 408,152,458 | 405,043,183 | ||||||||||||||||||||||||
| Per common share data: | |||||||||||||||||||||||||||||
| Basic earnings | $ | 0.29 | $ | 0.28 | $ | 0.23 | $ | 0.57 | $ | 0.44 | |||||||||||||||||||
| Diluted earnings | 0.29 | 0.28 | 0.23 | 0.56 | 0.44 | ||||||||||||||||||||||||
| Cash dividends declared | 0.11 | 0.11 | 0.11 | 0.22 | 0.22 | ||||||||||||||||||||||||
| Closing stock price - high | 14.63 | 14.37 | 9.60 | 14.63 | 11.46 | ||||||||||||||||||||||||
| Closing stock price - low | 12.91 | 9.74 | 6.29 | 9.74 | 6.29 | ||||||||||||||||||||||||
CORE ADJUSTED FINANCIAL DATA: (2) | |||||||||||||||||||||||||||||
| Net income available to common shareholders, as adjusted | $ | 123,445 | $ | 112,623 | $ | 92,721 | $ | 236,068 | $ | 177,782 | |||||||||||||||||||
| Basic earnings per share, as adjusted | 0.30 | 0.28 | 0.23 | 0.58 | 0.44 | ||||||||||||||||||||||||
| Diluted earnings per share, as adjusted | 0.30 | 0.28 | 0.23 | 0.58 | 0.44 | ||||||||||||||||||||||||
| FINANCIAL RATIOS: | |||||||||||||||||||||||||||||
| Net interest margin | 3.18 | % | 3.13 | % | 2.99 | % | 3.15 | % | 3.02 | % | |||||||||||||||||||
Net interest margin - FTE (1) | 3.18 | 3.14 | 3.00 | 3.16 | 3.04 | ||||||||||||||||||||||||
| Annualized return on average assets | 1.17 | 1.14 | 0.92 | 1.15 | 0.92 | ||||||||||||||||||||||||
| Annualized return on avg. shareholders' equity | 10.24 | 9.96 | 8.54 | 10.10 | 8.23 | ||||||||||||||||||||||||
Annualized return on avg. tangible shareholders' equity (2) | 14.79 | 14.49 | 12.66 | 14.64 | 12.26 | ||||||||||||||||||||||||
Efficiency ratio (3) | 49.96 | 49.46 | 48.01 | 49.72 | 49.33 | ||||||||||||||||||||||||
CORE ADJUSTED FINANCIAL RATIOS: (2) | |||||||||||||||||||||||||||||
| Annualized return on average assets, as adjusted | 1.23 | % | 1.14 | % | 0.93 | % | 1.18 | % | 0.93 | % | |||||||||||||||||||
| Annualized return on average shareholders' equity, as adjusted | 10.76 | 9.97 | 8.57 | 10.37 | 8.29 | ||||||||||||||||||||||||
| Annualized return on average tangible shareholders' equity, as adjusted | 15.54 | 14.50 | 12.70 | 15.03 | 12.34 | ||||||||||||||||||||||||
| Efficiency ratio, as adjusted | 46.64 | 48.60 | 46.84 | 47.59 | 48.01 | ||||||||||||||||||||||||
10
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||||||||||||||
| ($ in thousands, except for share data) | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| AVERAGE BALANCE SHEET ITEMS: | |||||||||||||||||||||||||||||
| Assets | $ | 41,161,459 | $ | 40,770,731 | $ | 41,429,725 | $ | 40,967,174 | $ | 39,773,288 | |||||||||||||||||||
| Interest earning assets | 37,907,414 | 37,386,219 | 37,778,387 | 37,648,256 | 36,226,232 | ||||||||||||||||||||||||
| Loans | 32,635,298 | 32,582,479 | 32,041,200 | 32,609,034 | 31,020,314 | ||||||||||||||||||||||||
| Interest bearing liabilities | 25,469,526 | 25,954,182 | 27,504,952 | 25,710,515 | 26,870,010 | ||||||||||||||||||||||||
| Deposits | 32,723,175 | 31,835,286 | 30,764,174 | 32,281,683 | 29,797,797 | ||||||||||||||||||||||||
| Shareholders' equity | 4,708,797 | 4,645,400 | 4,477,446 | 4,677,273 | 4,443,016 | ||||||||||||||||||||||||
| As Of | |||||||||||||||||||||||||||||
| BALANCE SHEET ITEMS: | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||
| (In thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||
| Assets | $ | 41,274,228 | $ | 41,178,011 | $ | 40,686,076 | $ | 40,747,492 | $ | 41,626,497 | |||||||||||||||||||
| Total loans | 32,457,454 | 32,686,416 | 32,217,112 | 32,415,586 | 32,314,611 | ||||||||||||||||||||||||
| Deposits | 33,194,774 | 32,585,209 | 31,935,602 | 31,187,982 | 31,337,237 | ||||||||||||||||||||||||
| Shareholders' equity | 4,737,807 | 4,659,670 | 4,592,120 | 4,533,763 | 4,474,488 | ||||||||||||||||||||||||
| LOANS: | |||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Commercial and industrial loans: | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 4,733,771 | $ | 4,784,017 | $ | 4,709,569 | $ | 4,625,880 | $ | 4,670,362 | |||||||||||||||||||
| Commercial and industrial PPP loans | 1,350,684 | 2,364,627 | 2,152,139 | 2,277,465 | 2,214,327 | ||||||||||||||||||||||||
| Total commercial and industrial | 6,084,455 | 7,148,644 | 6,861,708 | 6,903,345 | 6,884,689 | ||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||
| Commercial real estate | 17,512,142 | 16,923,627 | 16,724,998 | 16,815,587 | 16,571,877 | ||||||||||||||||||||||||
| Construction | 1,752,838 | 1,786,331 | 1,745,825 | 1,720,775 | 1,721,352 | ||||||||||||||||||||||||
Total commercial real estate | 19,264,980 | 18,709,958 | 18,470,823 | 18,536,362 | 18,293,229 | ||||||||||||||||||||||||
| Residential mortgage | 4,226,975 | 4,060,492 | 4,183,743 | 4,284,595 | 4,405,147 | ||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||
| Home equity | 410,856 | 409,576 | 431,553 | 457,083 | 471,115 | ||||||||||||||||||||||||
| Automobile | 1,531,262 | 1,444,883 | 1,355,955 | 1,341,659 | 1,369,489 | ||||||||||||||||||||||||
| Other consumer | 938,926 | 912,863 | 913,330 | 892,542 | 890,942 | ||||||||||||||||||||||||
Total consumer loans | 2,881,044 | 2,767,322 | 2,700,838 | 2,691,284 | 2,731,546 | ||||||||||||||||||||||||
| Total loans | $ | 32,457,454 | $ | 32,686,416 | $ | 32,217,112 | $ | 32,415,586 | $ | 32,314,611 | |||||||||||||||||||
| CAPITAL RATIOS: | |||||||||||||||||||||||||||||
| Book value per common share | $ | 11.15 | $ | 10.97 | $ | 10.85 | $ | 10.71 | $ | 10.56 | |||||||||||||||||||
Tangible book value per common share (2) | 7.59 | 7.39 | 7.25 | 7.12 | 6.96 | ||||||||||||||||||||||||
Tangible common equity to tangible assets (2) | 7.73 | % | 7.55 | % | 7.47 | % | 7.32 | % | 7.00 | % | |||||||||||||||||||
| Tier 1 leverage capital | 8.49 | 8.37 | 8.06 | 7.89 | 7.70 | ||||||||||||||||||||||||
| Common equity tier 1 capital | 10.04 | 10.08 | 9.94 | 9.71 | 9.51 | ||||||||||||||||||||||||
| Tier 1 risk-based capital | 10.73 | 10.79 | 10.66 | 10.42 | 10.23 | ||||||||||||||||||||||||
| Total risk-based capital | 13.36 | 12.76 | 12.64 | 12.37 | 12.19 | ||||||||||||||||||||||||
11
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) | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| Allowance for credit losses for loans | |||||||||||||||||||||||||||||
| Beginning balance | $ | 354,313 | $ | 351,354 | $ | 293,361 | $ | 351,354 | $ | 164,604 | |||||||||||||||||||
Impact of the adoption of ASU 2016-13 (4) | — | — | — | — | 37,989 | ||||||||||||||||||||||||
Allowance for purchased credit deteriorated (PCD) loans | — | — | — | — | 61,643 | ||||||||||||||||||||||||
| Beginning balance, adjusted | 354,313 | 351,354 | 293,361 | 351,354 | 264,236 | ||||||||||||||||||||||||
| Loans charged-off: | |||||||||||||||||||||||||||||
| Commercial and industrial | (10,893) | (7,142) | (14,024) | (18,035) | (17,384) | ||||||||||||||||||||||||
| Commercial real estate | — | (382) | (27) | (382) | (71) | ||||||||||||||||||||||||
| Residential mortgage | (1) | (138) | (5) | (139) | (341) | ||||||||||||||||||||||||
| Total consumer | (1,480) | (1,138) | (2,601) | (2,618) | (5,166) | ||||||||||||||||||||||||
| Total loans charged-off | (12,374) | (8,800) | (16,657) | (21,174) | (22,962) | ||||||||||||||||||||||||
| Charged-off loans recovered: | |||||||||||||||||||||||||||||
| Commercial and industrial | 678 | 1,589 | 799 | 2,267 | 1,368 | ||||||||||||||||||||||||
| Commercial real estate | 665 | 65 | 31 | 730 | 104 | ||||||||||||||||||||||||
| Construction | — | 4 | 20 | 4 | 40 | ||||||||||||||||||||||||
| Residential mortgage | 191 | 157 | 545 | 348 | 595 | ||||||||||||||||||||||||
| Total consumer | 1,474 | 930 | 509 | 2,404 | 1,303 | ||||||||||||||||||||||||
| Total loans recovered | 3,008 | 2,745 | 1,904 | 5,753 | 3,410 | ||||||||||||||||||||||||
| Net charge-offs | (9,366) | (6,055) | (14,753) | (15,421) | (19,552) | ||||||||||||||||||||||||
| Provision for credit losses for loans | 8,777 | 9,014 | 41,115 | 17,791 | 75,039 | ||||||||||||||||||||||||
| Ending balance | $ | 353,724 | $ | 354,313 | $ | 319,723 | $ | 353,724 | $ | 319,723 | |||||||||||||||||||
Components of allowance for credit losses for loans: | |||||||||||||||||||||||||||||
| Allowance for loan losses | $ | 339,324 | $ | 342,880 | $ | 309,614 | $ | 339,324 | $ | 309,614 | |||||||||||||||||||
| Allowance for unfunded credit commitments | 14,400 | 11,433 | 10,109 | 14,400 | 10,109 | ||||||||||||||||||||||||
| Allowance for credit losses for loans | $ | 353,724 | $ | 354,313 | $ | 319,723 | $ | 353,724 | $ | 319,723 | |||||||||||||||||||
Components of provision for credit losses for loans: | |||||||||||||||||||||||||||||
| Provision for credit losses for loans | $ | 5,810 | $ | 8,692 | $ | 41,025 | $ | 14,502 | $ | 74,876 | |||||||||||||||||||
| Provision for unfunded credit commitments | 2,967 | 322 | 90 | 3,289 | 163 | ||||||||||||||||||||||||
| Total provision for credit losses for loans | $ | 8,777 | $ | 9,014 | $ | 41,115 | $ | 17,791 | $ | 75,039 | |||||||||||||||||||
Annualized ratio of total net charge-offs to average loans | 0.11 | % | 0.07 | % | 0.18 | % | 0.09 | % | 0.13 | % | |||||||||||||||||||
Allowance for credit losses for loans as a % of total loans | 1.09 | 1.08 | 0.99 | 1.09 | 0.99 | ||||||||||||||||||||||||
12
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| As of | |||||||||||||||||||||||||||||
| ASSET QUALITY: | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||
| ($ in thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||
| Accruing past due loans: | |||||||||||||||||||||||||||||
| 30 to 59 days past due: | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 3,867 | $ | 3,763 | $ | 6,393 | $ | 6,587 | $ | 6,206 | |||||||||||||||||||
| Commercial real estate | 40,524 | 11,655 | 35,030 | 26,038 | 13,912 | ||||||||||||||||||||||||
| Construction | — | — | 315 | 142 | — | ||||||||||||||||||||||||
| Residential mortgage | 8,479 | 16,004 | 17,717 | 22,528 | 35,263 | ||||||||||||||||||||||||
| Total consumer | 6,242 | 5,480 | 10,257 | 8,979 | 12,962 | ||||||||||||||||||||||||
| Total 30 to 59 days past due | 59,112 | 36,902 | 69,712 | 64,274 | 68,343 | ||||||||||||||||||||||||
| 60 to 89 days past due: | |||||||||||||||||||||||||||||
| Commercial and industrial | 1,361 | 1,768 | 2,252 | 3,954 | 4,178 | ||||||||||||||||||||||||
| Commercial real estate | 11,451 | 5,455 | 1,326 | 610 | 1,543 | ||||||||||||||||||||||||
| Construction | — | — | — | — | — | ||||||||||||||||||||||||
| Residential mortgage | 1,608 | 2,233 | 10,351 | 3,760 | 4,169 | ||||||||||||||||||||||||
| Total consumer | 985 | 1,021 | 1,823 | 1,352 | 3,786 | ||||||||||||||||||||||||
| Total 60 to 89 days past due | 15,405 | 10,477 | 15,752 | 9,676 | 13,676 | ||||||||||||||||||||||||
| 90 or more days past due: | |||||||||||||||||||||||||||||
| Commercial and industrial | 2,351 | 2,515 | 9,107 | 6,759 | 5,220 | ||||||||||||||||||||||||
| Commercial real estate | 1,948 | — | 993 | 1,538 | — | ||||||||||||||||||||||||
| Residential mortgage | 956 | 2,472 | 3,170 | 891 | 3,812 | ||||||||||||||||||||||||
| Total consumer | 463 | 417 | 271 | 753 | 2,082 | ||||||||||||||||||||||||
| Total 90 or more days past due | 5,718 | 5,404 | 13,541 | 9,941 | 11,114 | ||||||||||||||||||||||||
| Total accruing past due loans | $ | 80,235 | $ | 52,783 | $ | 99,005 | $ | 83,891 | $ | 93,133 | |||||||||||||||||||
| Non-accrual loans: | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 102,594 | $ | 108,988 | $ | 106,693 | $ | 115,667 | $ | 130,876 | |||||||||||||||||||
| Commercial real estate | 58,893 | 54,004 | 46,879 | 41,627 | 43,678 | ||||||||||||||||||||||||
| Construction | 17,660 | 71 | 84 | 2,497 | 3,308 | ||||||||||||||||||||||||
| Residential mortgage | 35,941 | 33,655 | 25,817 | 23,877 | 25,776 | ||||||||||||||||||||||||
| Total consumer | 4,924 | 7,292 | 5,809 | 7,441 | 6,947 | ||||||||||||||||||||||||
| Total non-accrual loans | 220,012 | 204,010 | 185,282 | 191,109 | 210,585 | ||||||||||||||||||||||||
| Other real estate owned (OREO) | 4,523 | 4,521 | 5,118 | 7,746 | 8,283 | ||||||||||||||||||||||||
| Other repossessed assets | 2,060 | 1,857 | 3,342 | 3,988 | 3,920 | ||||||||||||||||||||||||
| Non-accrual debt securities | — | 129 | 815 | 783 | 1,365 | ||||||||||||||||||||||||
| Total non-performing assets | $ | 226,595 | $ | 210,517 | $ | 194,557 | $ | 203,626 | $ | 224,153 | |||||||||||||||||||
| Performing troubled debt restructured loans | $ | 64,080 | $ | 67,102 | $ | 57,367 | $ | 58,090 | $ | 53,936 | |||||||||||||||||||
| Total non-accrual loans as a % of loans | 0.68 | % | 0.62 | % | 0.58 | % | 0.59 | % | 0.65 | % | |||||||||||||||||||
Total accruing past due and non-accrual loans as a % of loans | 0.93 | % | 0.79 | % | 0.88 | % | 0.85 | % | 0.94 | % | |||||||||||||||||||
Allowance for losses on loans as a % of non-accrual loans | 154.23 | % | 168.07 | % | 183.64 | % | 170.08 | % | 147.03 | % | |||||||||||||||||||
13
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 core 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) | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| Adjusted net income available to common shareholders: | |||||||||||||||||||||||||||||
| Net income, as reported | $ | 120,512 | $ | 115,710 | $ | 95,601 | $ | 236,222 | $ | 182,869 | |||||||||||||||||||
Add: Loss on extinguishment of debt (net of tax) | 6,024 | — | — | 6,024 | — | ||||||||||||||||||||||||
Add: Losses on available for sale and held to maturity securities transactions (net of tax)(a) | 81 | 85 | 29 | 166 | 58 | ||||||||||||||||||||||||
Add: Merger related expenses (net of tax)(b) | — | — | 263 | — | 1,199 | ||||||||||||||||||||||||
| Net income, as adjusted | $ | 126,617 | $ | 115,795 | $ | 95,893 | $ | 242,412 | $ | 184,126 | |||||||||||||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 6,344 | 6,344 | ||||||||||||||||||||||||
| Net income available to common shareholders, as adjusted | $ | 123,445 | $ | 112,623 | $ | 92,721 | $ | 236,068 | $ | 177,782 | |||||||||||||||||||
| __________ | |||||||||||||||||||||||||||||
| (a) Included in gains on securities transactions, net within other non-interest income. | |||||||||||||||||||||||||||||
| (b) Merger related expenses are primarily within professional and legal fees, and other non-interest expense. | |||||||||||||||||||||||||||||
| Adjusted per common share data: | |||||||||||||||||||||||||||||
| Net income available to common shareholders, as adjusted | $ | 123,445 | $ | 112,623 | $ | 92,721 | $ | 236,068 | $ | 177,782 | |||||||||||||||||||
| Average number of shares outstanding | 405,963,209 | 405,152,605 | 403,790,242 | 405,560,146 | 403,654,665 | ||||||||||||||||||||||||
| Basic earnings, as adjusted | $ | 0.30 | $ | 0.28 | $ | 0.23 | $ | 0.58 | $ | 0.44 | |||||||||||||||||||
| Average number of diluted shares outstanding | 408,660,778 | 407,636,765 | 404,631,845 | 408,152,458 | 405,043,183 | ||||||||||||||||||||||||
| Diluted earnings, as adjusted | $ | 0.30 | $ | 0.28 | $ | 0.23 | $ | 0.58 | $ | 0.44 | |||||||||||||||||||
| Adjusted annualized return on average tangible shareholders' equity: | |||||||||||||||||||||||||||||
| Net income, as adjusted | $ | 126,617 | $ | 115,795 | $ | 95,893 | $ | 242,412 | $ | 184,126 | |||||||||||||||||||
| Average shareholders' equity | $ | 4,708,797 | $ | 4,645,400 | $ | 4,477,446 | 4,677,273 | 4,443,016 | |||||||||||||||||||||
| Less: Average goodwill and other intangible assets | 1,449,388 | 1,451,750 | 1,456,781 | 1,450,562 | 1,458,885 | ||||||||||||||||||||||||
| Average tangible shareholders' equity | $ | 3,259,409 | $ | 3,193,650 | $ | 3,020,665 | $ | 3,226,711 | $ | 2,984,131 | |||||||||||||||||||
| Annualized return on average tangible shareholders' equity, as adjusted | 15.54 | % | 14.50 | % | 12.70 | % | 15.03 | % | 12.34 | % | |||||||||||||||||||
| Adjusted annualized return on average assets: | |||||||||||||||||||||||||||||
| Net income, as adjusted | $ | 126,617 | $ | 115,795 | $ | 95,893 | $ | 242,412 | $ | 184,126 | |||||||||||||||||||
| Average assets | $ | 41,161,459 | $ | 40,770,731 | $ | 41,429,725 | $ | 40,967,174 | $ | 39,773,288 | |||||||||||||||||||
| Annualized return on average assets, as adjusted | 1.23 | % | 1.14 | % | 0.93 | % | 1.18 | % | 0.93 | % | |||||||||||||||||||
14
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||||||||||||||
| ($ in thousands) | 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
| Adjusted annualized return on average shareholders' equity: | |||||||||||||||||||||||||||||
| Net income, as adjusted | $ | 126,617 | $ | 115,795 | $ | 95,893 | $ | 242,412 | $ | 184,126 | |||||||||||||||||||
| Average shareholders' equity | $ | 4,708,797 | $ | 4,645,400 | $ | 4,477,446 | $ | 4,677,273 | $ | 4,443,016 | |||||||||||||||||||
| Annualized return on average shareholders' equity, as adjusted | 10.76 | % | 9.97 | % | 8.57 | % | 10.37 | % | 8.29 | % | |||||||||||||||||||
| Annualized return on average tangible shareholders' equity: | |||||||||||||||||||||||||||||
| Net income, as reported | $ | 120,512 | $ | 115,710 | $ | 95,601 | $ | 236,222 | $ | 182,869 | |||||||||||||||||||
| Average shareholders' equity | $ | 4,708,797 | $ | 4,645,400 | $ | 4,477,446 | 4,677,273 | 4,443,016 | |||||||||||||||||||||
| Less: Average goodwill and other intangible assets | 1,449,388 | 1,451,750 | 1,456,781 | 1,450,562 | 1,458,885 | ||||||||||||||||||||||||
| Average tangible shareholders' equity | $ | 3,259,409 | $ | 3,193,650 | $ | 3,020,665 | $ | 3,226,711 | $ | 2,984,131 | |||||||||||||||||||
| Annualized return on average tangible shareholders' equity | 14.79 | % | 14.49 | % | 12.66 | % | 14.64 | % | 12.26 | % | |||||||||||||||||||
| Adjusted efficiency ratio: | |||||||||||||||||||||||||||||
| Non-interest expense, as reported | $ | 171,893 | $ | 160,213 | $ | 157,166 | $ | 332,106 | $ | 312,822 | |||||||||||||||||||
Less: Loss on extinguishment of debt (pre-tax) | 8,406 | — | — | 8,406 | — | ||||||||||||||||||||||||
| Less: Merger-related expenses (pre-tax) | — | — | 366 | — | 1,668 | ||||||||||||||||||||||||
| Less: Amortization of tax credit investments (pre-tax) | 2,972 | 2,744 | 3,416 | 5,716 | 6,644 | ||||||||||||||||||||||||
| Non-interest expense, as adjusted | $ | 160,515 | $ | 157,469 | $ | 153,384 | $ | 317,984 | $ | 304,510 | |||||||||||||||||||
| Net interest income | 300,907 | 292,667 | 282,559 | 593,574 | 547,898 | ||||||||||||||||||||||||
| Non-interest income, as reported | 43,126 | 31,233 | 44,830 | 74,359 | 86,227 | ||||||||||||||||||||||||
| Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax) | 113 | 118 | 41 | 231 | 81 | ||||||||||||||||||||||||
| Non-interest income, as adjusted | $ | 43,239 | $ | 31,351 | $ | 44,871 | $ | 74,590 | $ | 86,308 | |||||||||||||||||||
| Gross operating income, as adjusted | $ | 344,146 | $ | 324,018 | $ | 327,430 | $ | 668,164 | $ | 634,206 | |||||||||||||||||||
| Efficiency ratio, as adjusted | 46.64 | % | 48.60 | % | 46.84 | % | 47.59 | % | 48.01 | % | |||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||
| ($ in thousands, except for share data) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||||||||||
| Tangible book value per common share: | |||||||||||||||||||||||||||||
| Common shares outstanding | 406,083,790 | 405,797,538 | 403,858,998 | 403,878,744 | 403,795,699 | ||||||||||||||||||||||||
| Shareholders' equity | $ | 4,737,807 | $ | 4,659,670 | $ | 4,592,120 | $ | 4,533,763 | $ | 4,474,488 | |||||||||||||||||||
| Less: Preferred stock | 209,691 | 209,691 | 209,691 | 209,691 | 209,691 | ||||||||||||||||||||||||
| Less: Goodwill and other intangible assets | 1,447,965 | 1,450,414 | 1,452,891 | 1,449,282 | 1,453,330 | ||||||||||||||||||||||||
| Tangible common shareholders' equity | $ | 3,080,151 | $ | 2,999,565 | $ | 2,929,538 | $ | 2,874,790 | $ | 2,811,467 | |||||||||||||||||||
| Tangible book value per common share | $ | 7.59 | $ | 7.39 | $ | 7.25 | $ | 7.12 | $ | 6.96 | |||||||||||||||||||
| Tangible common equity to tangible assets: | |||||||||||||||||||||||||||||
| Tangible common shareholders' equity | $ | 3,080,151 | $ | 2,999,565 | $ | 2,929,538 | $ | 2,874,790 | $ | 2,811,467 | |||||||||||||||||||
| Total assets | $ | 41,274,228 | $ | 41,178,011 | $ | 40,686,076 | $ | 40,747,492 | $ | 41,626,497 | |||||||||||||||||||
| Less: Goodwill and other intangible assets | 1,447,965 | 1,450,414 | 1,452,891 | 1,449,282 | 1,453,330 | ||||||||||||||||||||||||
| Tangible assets | $ | 39,826,263 | $ | 39,727,597 | $ | 39,233,185 | $ | 39,298,210 | $ | 40,173,167 | |||||||||||||||||||
| Tangible common equity to tangible assets | 7.73 | % | 7.55 | % | 7.47 | % | 7.32 | % | 7.00 | % | |||||||||||||||||||
(3) | The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income. | |||||||||||||||||||||||||||||||
| (4) | The adjustment represents an increase in the allowance for credit losses for loans as a result of the adoption of ASU 2016-13 effective January 1, 2020. | |||||||||||||||||||||||||||||||
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, | ||||||||||
| 2021 | 2020 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | 329,006 | $ | 257,845 | |||||||
| Interest bearing deposits with banks | 1,515,757 | 1,071,360 | |||||||||
| Investment securities: | |||||||||||
| Equity securities | 33,870 | 29,378 | |||||||||
| Trading debt securities | 21,216 | — | |||||||||
| Available for sale debt securities | 1,075,538 | 1,339,473 | |||||||||
| Held to maturity debt securities (net of allowance for credit losses of $1,040 at June 30, 2021 and $1,428 at December 31, 2020) | 2,532,772 | 2,171,583 | |||||||||
| Total investment securities | 3,663,396 | 3,540,434 | |||||||||
| Loans held for sale, at fair value | 159,256 | 301,427 | |||||||||
| Loans | 32,457,454 | 32,217,112 | |||||||||
| Less: Allowance for loan losses | (339,324) | (340,243) | |||||||||
| Net loans | 32,118,130 | 31,876,869 | |||||||||
| Premises and equipment, net | 327,517 | 319,797 | |||||||||
| Lease right of use assets | 235,165 | 252,053 | |||||||||
| Bank owned life insurance | 535,283 | 535,209 | |||||||||
| Accrued interest receivable | 99,068 | 106,230 | |||||||||
| Goodwill | 1,382,442 | 1,382,442 | |||||||||
| Other intangible assets, net | 65,523 | 70,449 | |||||||||
| Other assets | 843,685 | 971,961 | |||||||||
| Total Assets | $ | 41,274,228 | $ | 40,686,076 | |||||||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Non-interest bearing | $ | 10,528,946 | $ | 9,205,266 | |||||||
| Interest bearing: | |||||||||||
| Savings, NOW and money market | 18,358,279 | 16,015,658 | |||||||||
| Time | 4,307,549 | 6,714,678 | |||||||||
| Total deposits | 33,194,774 | 31,935,602 | |||||||||
| Short-term borrowings | 854,378 | 1,147,958 | |||||||||
| Long-term borrowings | 1,885,690 | 2,295,665 | |||||||||
| Junior subordinated debentures issued to capital trusts | 56,239 | 56,065 | |||||||||
| Lease liabilities | 259,075 | 276,675 | |||||||||
| Accrued expenses and other liabilities | 286,265 | 381,991 | |||||||||
| Total Liabilities | 36,536,421 | 36,093,956 | |||||||||
| Shareholders’ Equity | |||||||||||
| Preferred stock, no par value; 50,000,000 authorized shares: | |||||||||||
| Series A (4,600,000 shares issued at June 30, 2021 and December 31, 2020) | 111,590 | 111,590 | |||||||||
| Series B (4,000,000 shares issued at June 30, 2021 and December 31, 2020) | 98,101 | 98,101 | |||||||||
| Common stock (no par value, authorized 650,000,000 shares; issued 406,090,983 shares at June 30, 2021 and 403,881,488 shares at December 31, 2020) | 142,550 | 141,746 | |||||||||
| Surplus | 3,658,636 | 3,637,468 | |||||||||
| Retained earnings | 744,768 | 611,158 | |||||||||
| Accumulated other comprehensive loss | (17,735) | (7,718) | |||||||||
| Treasury stock, at cost (7,193 common shares at June 30, 2021 and 22,490 common shares at December 31, 2020) | (103) | (225) | |||||||||
| Total Shareholders’ Equity | 4,737,807 | 4,592,120 | |||||||||
| Total Liabilities and Shareholders’ Equity | $ | 41,274,228 | $ | 40,686,076 | |||||||
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, | ||||||||||||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 315,314 | $ | 313,181 | $ | 321,883 | $ | 628,495 | $ | 654,951 | |||||||||||||||||||
| Interest and dividends on investment securities: | |||||||||||||||||||||||||||||
| Taxable | 12,716 | 13,166 | 19,447 | 25,882 | 41,380 | ||||||||||||||||||||||||
| Tax-exempt | 3,216 | 3,356 | 3,692 | 6,572 | 7,618 | ||||||||||||||||||||||||
| Dividends | 2,167 | 1,871 | 3,092 | 4,038 | 6,493 | ||||||||||||||||||||||||
| Interest on federal funds sold and other short-term investments | 235 | 224 | 411 | 459 | 1,876 | ||||||||||||||||||||||||
| Total interest income | 333,648 | 331,798 | 348,525 | 665,446 | 712,318 | ||||||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||||
| Interest on deposits: | |||||||||||||||||||||||||||||
| Savings, NOW and money market | 11,166 | 11,125 | 16,627 | 22,291 | 51,140 | ||||||||||||||||||||||||
| Time | 6,279 | 11,093 | 29,857 | 17,372 | 72,671 | ||||||||||||||||||||||||
| Interest on short-term borrowings | 1,168 | 1,758 | 1,980 | 2,926 | 6,687 | ||||||||||||||||||||||||
| Interest on long-term borrowings and junior subordinated debentures | 14,128 | 15,155 | 17,502 | 29,283 | 33,922 | ||||||||||||||||||||||||
| Total interest expense | 32,741 | 39,131 | 65,966 | 71,872 | 164,420 | ||||||||||||||||||||||||
| Net Interest Income | 300,907 | 292,667 | 282,559 | 593,574 | 547,898 | ||||||||||||||||||||||||
| (Credit) provision for credit losses for held to maturity securities | (30) | (358) | 41 | (388) | 800 | ||||||||||||||||||||||||
| Provision for credit losses for loans | 8,777 | 9,014 | 41,115 | 17,791 | 75,039 | ||||||||||||||||||||||||
| Net Interest Income After Provision for Credit Losses | 292,160 | 284,011 | 241,403 | 576,171 | 472,059 | ||||||||||||||||||||||||
| Non-Interest Income | |||||||||||||||||||||||||||||
| Trust and investment services | 3,532 | 3,329 | 2,826 | 6,861 | 6,239 | ||||||||||||||||||||||||
| Insurance commissions | 2,637 | 1,558 | 1,659 | 4,195 | 3,610 | ||||||||||||||||||||||||
| Service charges on deposit accounts | 5,083 | 5,103 | 3,557 | 10,186 | 9,237 | ||||||||||||||||||||||||
| Gains (losses) on securities transactions, net | 375 | 101 | (41) | 476 | (81) | ||||||||||||||||||||||||
| Fees from loan servicing | 3,187 | 2,899 | 2,227 | 6,086 | 4,975 | ||||||||||||||||||||||||
| Gains on sales of loans, net | 10,061 | 3,513 | 8,337 | 13,574 | 12,887 | ||||||||||||||||||||||||
| Gains (losses) on sales of assets, net | 232 | (196) | (299) | 36 | (178) | ||||||||||||||||||||||||
| Bank owned life insurance | 2,475 | 2,331 | 5,823 | 4,806 | 8,965 | ||||||||||||||||||||||||
| Other | 15,544 | 12,595 | 20,741 | 28,139 | 40,573 | ||||||||||||||||||||||||
| Total non-interest income | 43,126 | 31,233 | 44,830 | 74,359 | 86,227 | ||||||||||||||||||||||||
| Non-Interest Expense | |||||||||||||||||||||||||||||
| Salary and employee benefits expense | 91,095 | 88,103 | 78,532 | 179,198 | 164,260 | ||||||||||||||||||||||||
| Net occupancy and equipment expense | 32,451 | 32,259 | 33,217 | 64,710 | 65,658 | ||||||||||||||||||||||||
| FDIC insurance assessment | 3,374 | 3,276 | 6,135 | 6,650 | 10,011 | ||||||||||||||||||||||||
| Amortization of other intangible assets | 5,449 | 6,006 | 6,681 | 11,455 | 12,151 | ||||||||||||||||||||||||
| Professional and legal fees | 7,486 | 6,272 | 7,797 | 13,758 | 13,884 | ||||||||||||||||||||||||
| Loss on extinguishment of debt | 8,406 | — | — | 8,406 | — | ||||||||||||||||||||||||
| Amortization of tax credit investments | 2,972 | 2,744 | 3,416 | 5,716 | 6,644 | ||||||||||||||||||||||||
| Telecommunication expense | 2,732 | 3,160 | 2,866 | 5,892 | 5,153 | ||||||||||||||||||||||||
| Other | 17,928 | 18,393 | 18,522 | 36,321 | 35,061 | ||||||||||||||||||||||||
| Total non-interest expense | 171,893 | 160,213 | 157,166 | 332,106 | 312,822 | ||||||||||||||||||||||||
| Income Before Income Taxes | 163,393 | 155,031 | 129,067 | 318,424 | 245,464 | ||||||||||||||||||||||||
| Income tax expense | 42,881 | 39,321 | 33,466 | 82,202 | 62,595 | ||||||||||||||||||||||||
| Net Income | 120,512 | 115,710 | 95,601 | 236,222 | 182,869 | ||||||||||||||||||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 6,344 | 6,344 | ||||||||||||||||||||||||
| Net Income Available to Common Shareholders | $ | 117,340 | $ | 112,538 | $ | 92,429 | $ | 229,878 | $ | 176,525 | |||||||||||||||||||
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, | ||||||||||||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
| Earnings Per Common Share: | |||||||||||||||||||||||||||||
| Basic | $ | 0.29 | $ | 0.28 | $ | 0.23 | $ | 0.57 | $ | 0.44 | |||||||||||||||||||
| Diluted | 0.29 | 0.28 | 0.23 | 0.56 | 0.44 | ||||||||||||||||||||||||
| Cash Dividends Declared per Common Share | 0.11 | 0.11 | 0.11 | 0.22 | 0.22 | ||||||||||||||||||||||||
| Weighted Average Number of Common Shares Outstanding: | |||||||||||||||||||||||||||||
| Basic | 405,963,209 | 405,152,605 | 403,790,242 | 405,560,146 | 403,654,665 | ||||||||||||||||||||||||
| Diluted | 408,660,778 | 407,636,765 | 404,631,845 | 408,152,458 | 405,043,183 | ||||||||||||||||||||||||
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, 2021 | March 31, 2021 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | Avg. | Average | Avg. | Average | Avg. | ||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (1)(2) | $ | 32,635,298 | $ | 315,339 | 3.87 | % | $ | 32,582,479 | $ | 313,206 | 3.85 | % | $ | 32,041,200 | $ | 321,883 | 4.02 | % | |||||||||||||||||||||||||||||||||||
Taxable investments (3) | 3,159,842 | 14,883 | 1.88 | 3,111,116 | 15,037 | 1.93 | 3,673,090 | 22,539 | 2.45 | ||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt investments (1)(3) | 498,971 | 4,071 | 3.26 | 513,809 | 4,248 | 3.31 | 562,172 | 4,673 | 3.32 | ||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing deposits with banks | 1,613,303 | 235 | 0.06 | 1,178,815 | 224 | 0.08 | 1,501,925 | 411 | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | 37,907,414 | 334,528 | 3.53 | 37,386,219 | 332,715 | 3.56 | 37,778,387 | 349,506 | 3.70 | ||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 3,254,045 | 3,384,512 | 3,651,338 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 41,161,459 | $ | 40,770,731 | $ | 41,429,725 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings, NOW and money market deposits | $ | 17,784,985 | $ | 11,166 | 0.25 | % | $ | 16,617,762 | $ | 11,125 | 0.27 | % | $ | 13,715,162 | $ | 16,627 | 0.48 | % | |||||||||||||||||||||||||||||||||||
| Time deposits | 4,609,778 | 6,279 | 0.54 | 5,844,524 | 11,093 | 0.76 | 8,585,782 | 29,857 | 1.39 | ||||||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 873,927 | 1,168 | 0.53 | 1,168,617 | 1,758 | 0.60 | 2,317,992 | 1,980 | 0.34 | ||||||||||||||||||||||||||||||||||||||||||||
Long-term borrowings (4) | 2,200,836 | 14,128 | 2.57 | 2,323,279 | 15,155 | 2.61 | 2,886,016 | 17,502 | 2.43 | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 25,469,526 | 32,741 | 0.51 | 25,954,182 | 39,131 | 0.60 | 27,504,952 | 65,966 | 0.96 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 10,328,412 | 9,373,000 | 8,463,230 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 654,724 | 798,149 | 984,097 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 4,708,797 | 4,645,400 | 4,477,446 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 41,161,459 | $ | 40,770,731 | $ | 41,429,725 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income/interest rate spread (5) | $ | 301,787 | 3.02 | % | $ | 293,584 | 2.96 | % | $ | 283,540 | 2.74 | % | |||||||||||||||||||||||||||||||||||||||||
| Tax equivalent adjustment | (880) | (917) | (981) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income, as reported | $ | 300,907 | $ | 292,667 | $ | 282,559 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin (6) | 3.18 | 3.13 | 2.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax equivalent effect | 0.00 | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin on a fully tax equivalent basis (6) | 3.18 | % | 3.14 | % | 3.00 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(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
