EX-99.1 2 exhibit991earningsrele.htm EXHIBIT 99.1 Exhibit
EXHIBIT 99.1

valleylogoa26.jpg

 
News Release




FOR IMMEDIATE RELEASE
Contact:
 
Michael D. Hagedorn
 
 
 
Senior Executive Vice President and
 
 
 
Chief Financial Officer
 
 
 
973-872-4885

VALLEY NATIONAL BANCORP REPORTS FIRST QUARTER 2020
NET INCOME, STRONG LOAN GROWTH AND NET INTEREST MARGIN

NEW YORK, NY – April 30, 2020 -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the first quarter 2020 of $87.3 million, or $0.21 per diluted common share, as compared to the first quarter 2019 earnings of $113.3 million, or $0.33 per diluted common share, and net income of $38.1 million, or $0.10 per diluted common share, for the fourth quarter 2019. Excluding all non-core charges, our adjusted net income was $88.2 million, or $0.21 per diluted common share, for the first quarter 2020, $74.9 million, or $0.22 per diluted common share, for the first quarter 2019, and $90.7 million, or $0.24 per diluted common share, for the fourth quarter 2019. See further details below, including a reconciliation of our adjusted net income (a non-GAAP measure) in the "Consolidated Financial Highlights" tables.

Valley adopted the Current Expected Credit Loss (“CECL”) accounting standard effective January 1, 2020 and recorded in first quarter 2020 a provision for credit losses of $34.7 million pre-tax, or $0.06 per share after-tax, including a reserve build under CECL of $29.9 million, or $0.05 per share after-tax, largely tied to COVID-19 impacts and loan growth.

Ira Robbins, CEO and President commented, "During these uncertain and challenging times, I am pleased to say that Valley remains one of the strongest and most reliable banks in the country, and we are more focused than ever before on serving the needs of our customers, associates and communities." Robbins continued, "In response to the COVID-19 pandemic, we have spent many tireless weeks supporting the implementation of the CARES Act and providing special assistance for customers. We are also actively providing additional support for our associates, including a special cash bonus to all hourly associates. I’m extremely proud of the commitment, flexibility and drive that our team has demonstrated to make a difference for our customers and communities. We are deeply committed to being a trusted partner and solution provider for our customers."

Valley is offering special financial assistance to support customers who are experiencing financial hardships related to the COVID-19 pandemic. Through April 26, 2020, Valley has processed approximately 3,600 consumer payment deferral requests, including approximately 750 related to residential mortgage loans. In addition, Valley has processed requests for approximately 1,100 mortgage loans serviced for others. From a commercial customer perspective, Valley has processed approximately 2,600 payment deferral requests. Valley is also a certified SBA lender and has dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the new Paycheck Protection Program, obtain SBA approval and receive funding as quickly as possible. Through the initial loan submission period ending on April 16, 2020, Valley facilitated $1.6 billion in assistance to its customers through this program.

1



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



Key financial highlights for the first quarter:

Loan Portfolio: Loans increased $728.9 million, or 9.8 percent on an annualized basis, to approximately $30.4 billion at March 31, 2020 from December 31, 2019. The increase was largely due to strong organic loan growth within the commercial real estate, commercial and industrial and residential loan categories. Additionally, we sold approximately $196 million of residential mortgage loans, including $30 million of pre-existing loans sold from our residential mortgage loan portfolio resulting in total pre-tax gains of $4.6 million in the first quarter 2020.
Net Interest Income and Margin: Net interest income on a tax equivalent basis of $266.4 million for the first quarter 2020 increased $26.8 million as compared to the fourth quarter 2019 largely due to a decline in our funding costs, a full quarter of margin results including our acquisition of Oritani Financial Corp. on December 1, 2019 and higher loan discount accretion partially caused by increased repayments. Our net interest margin on a tax equivalent basis of 3.07 percent for the first quarter 2020 increased by 11 basis points from 2.96 percent for the fourth quarter 2019. See the "Net Interest Income and Margin" section below for more details.
Provision for Credit Losses: During the first quarter 2020, the provision for credit losses for loans was $33.9 million. Approximately 50 percent of the provision reflects the adverse economic conditions impacting Valley's economic forecast, including uncertainty regarding the benefits of government stimulus enacted, since the initial CECL adoption. The remainder of the first quarter 2020 provision for credit losses for loans was primarily driven by loan growth and higher specific reserves associated with our taxi medallion loan portfolio. Additionally, Valley recorded a $759 thousand provision for credit losses for held to maturity debt securities during the first quarter 2020.
Credit Quality: Net loan charge-offs totaled $4.8 million for the first quarter 2020 as compared to $5.6 million for the fourth quarter 2019. Non-accrual loans represented 0.68 percent and 0.31 percent of total loans at March 31, 2020 and December 31, 2019, respectively. The increase in non-accrual loans reported at March 31, 2020 was largely related to non-performing purchased credit-impaired (PCI) loans which are now required to be reported as delinquent loans under the CECL accounting guidance effective January 1, 2020. See the "Credit Quality" Section below for more details.
Non-interest Income: Non-interest income increased $3.3 million to $41.4 million for the first quarter 2020 as compared to the fourth quarter 2019 mainly due to an increase of $4.2 million in swap fee income from commercial loan customer transactions. Swap fee income totaled $14.2 million and $10.0 million within other income for the first quarter 2020 and fourth quarter 2019, respectively.
Non-interest Expense: Non-interest expense decreased $40.5 million to $155.7 million for the first quarter 2020 as compared to the fourth quarter 2019 mainly due to the $32.0 million loss on extinguishment of debt recognized during the fourth quarter 2019 and a decline in Oritani merger related expenses. Merger related expenses totaled $1.3 million and $15.1 million for the first quarter 2020 and fourth quarter 2019, respectively. The first quarter 2020 also included approximately $2.1 million of COVID-19 related expenses that largely consisted of the cash bonus accrual for hourly employees.

2



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



Efficiency Ratio: Our efficiency ratio was 50.75 percent for the first quarter 2020 as compared to 70.90 percent and 45.29 percent for the fourth quarter 2019 and first quarter 2019, respectively. Our adjusted efficiency ratio was 49.26 percent for the first quarter 2020 as compared to 52.43 percent and 54.79 percent for the fourth quarter 2019 and first quarter 2019, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
Income Tax Expense: The effective tax rate was 25.0 percent for the first quarter 2020 as compared to 49.2 percent for the fourth quarter 2019. The decrease was mainly due to an $18.7 million provision for income taxes related to uncertain tax liability positions during the fourth quarter 2019.
Performance Ratios: Annualized return on average assets (ROA), average shareholders’ equity (ROE) and average tangible shareholders' equity (ROTE) were 0.92 percent, 7.92 percent, and 11.84 percent for the first quarter 2020, respectively. Annualized ROA, ROE and ROTE, adjusted for non-core charges, was 0.93 percent, 8.01 percent, and 11.97 percent for the first quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $266.4 million for the first quarter 2020 increased $46.5 million as compared to the first quarter 2019 and increased $26.8 million as compared to the fourth quarter 2019. The increase as compared to the fourth quarter 2019 was largely due to higher average loan balances and lower costs of interest-bearing liabilities, partly offset by lower yielding loans. Interest income on a tax equivalent basis increased $20.0 million to $364.8 million for the first quarter 2020 as compared to the fourth quarter 2019 mainly due to a $2.0 billion increase in average loans and higher loan discount accretion partially caused by repayments. Interest expense of $98.5 million for the first quarter 2020 decreased $6.8 million as compared to the fourth quarter 2019 largely due to the overall lower cost of funds, partially offset by the interest cost associated with higher average balances of interest-bearing deposits and long-term borrowings. In December 2019, we prepaid $635.0 million of long-term FHLB advances with a combined weighted average interest rate of 3.93 percent.

Our net interest margin on a tax equivalent basis of 3.07 percent for the first quarter 2020 increased by 9 basis points and 11 basis points from 2.98 percent and 2.96 percent for the first quarter 2019 and fourth quarter 2019, respectively. The yield on average interest earning assets decreased by 6 basis points on a linked quarter basis mostly due to a decrease in the yield on loans. The yield on average loans decreased by 7 basis points to 4.44 percent for the first quarter 2020 as compared to the fourth quarter 2019 largely due to the repayment of higher yielding loans, partly offset by a $7.7 million increase in loan discount accretion in the first quarter 2020. The overall cost of average interest bearing liabilities decreased 24 basis points to 1.50 percent for the first quarter 2020 as compared to the linked fourth quarter 2019 due to both deposits and borrowings continuing to reprice at lower interest rates and the prepayment of the $635 million high cost FHLB advances in December 2019. Our cost of total average deposits was 1.07 percent for the first quarter 2020 as compared to 1.20 percent for the fourth quarter 2019.

3



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



Loans, Deposits and Other Borrowings
Loans. Loans increased $728.9 million to approximately $30.4 billion at March 31, 2020 from December 31, 2019. The increase was mainly due to continued strong quarter over quarter organic growth in commercial real estate and commercial and industrial loans, as well as stronger residential loan volumes during the first quarter 2020. During the first quarter 2020, we originated $148 million of residential mortgage loans for sale rather than held for investment and sold approximately $196 million, including $30 million pre-existing loans, from our residential mortgage loan portfolio. Residential mortgage loans held for sale totaled $58.9 million and $76.1 million at March 31, 2020 and December 31, 2019, respectively.
Deposits. Total deposits decreased $168.8 million to approximately $29.0 billion at March 31, 2020 from December 31, 2019 largely due to a $1.2 billion net decrease in time deposits. The decline in time deposits was mostly driven by an $825 million decrease in brokered CDs due to maturities during the first quarter and lower use of such deposits in our liquidity and loan funding management at March 31, 2020. Savings, NOW and money market deposits and non-interest bearing deposits increased by $741.3 million and $240.7 million at March 31, 2020 from December 31, 2019, respectively. These increases were due to higher depositor balances most likely driven by the uncertainty in the financial markets, as well as a partial shift to more liquid funds for maturing retail CD customers. Total brokered deposits (consisting of both time and money market deposit accounts) were $3.4 billion at March 31, 2020 as compared to $4.1 billion at December 31, 2019. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 24 percent, 47 percent and 29 percent of total deposits as of March 31, 2020, respectively.
Other Borrowings. Short-term borrowings and long-term borrowings increased by $1.0 billion and $683.2 million, to $2.1 billion and $2.8 billion, respectively at March 31, 2020 as compared to December 31, 2019. The increase in both short- and long-term borrowings was primarily driven by our plan to increase our liquidity levels as an abundance of caution in the face of the escalating economic crisis created by the COVID-19 pandemic. As of March 31, 2020, the short-term borrowings mainly consisted of FHLB advances totaling $1.5 billion with weighted interest rates well below 1.0 percent and federal funds purchased totaling $457 million with a weighted average rate of 0.17 percent. Of the $1.5 billion in FHLB advances, $600 million were hedged with cash flow interest rate swaps as part of our interest rate risk management strategies during the first quarter 2020. In addition, during the first quarter 2020 Valley obtained $723 million of new long-term FHLB advances with maturities between three and five years at a combined weighted average rate of approximately 1.89 percent.
Credit Quality
Non-Performing Assets. Prior to our adoption of the CECL standard on January 1, 2020, our past due loans and non-accrual loans discussed further below excluded purchased credit-impaired (PCI) loans. Under previous U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) were accounted for on a pool basis and not subject to delinquency classification in the same manner as loans originated by Valley. Under the new CECL standard, Valley's PCI loan pools are accounted for as purchased credit deteriorated (PCD) loans on a loan level basis and, if applicable, reported in our past due and non-accrual loans at March 31, 2020.
Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities increased $116.1 million to $220.5 million at

4



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



March 31, 2020 as compared to December 31, 2019 largely due to an increase in non-accrual loans. Non-accrual loans increased $112.9 million to $205.9 million at March 31, 2020 as compared to December 31, 2019 largely due to non-accrual PCD loans totaling approximately $74.4 million being added to this category. The remaining increase was largely due to additional taxi medallion loans within the commercial and industrial category. Non-accrual loans represented 0.68 percent of total loans at March 31, 2020.
Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $91.2 million to $159.4 million, or 0.52 percent of total loans, at March 31, 2020 as compared to $68.2 million, or 0.23 percent of total loans, at December 31, 2019 largely due to an increase in early stage delinquencies in most loan categories. The increase was partly due to a few large commercial real estate loans, an uptick in residential mortgage delinquencies and PCD loans past due totaling approximately $18.2 million at March 31, 2020 being added to this category. Valley has worked with borrowers impacted by COVID-19 on forbearance, and as of April 26, 2020 had approximately 6,200 consumers and commercial borrowers in forbearance. Valley will continue to work with customers seeking flexibility on loan terms and conditions due to the pandemic in accordance with prudent banking principles and bank regulatory guidance. In addition, Valley was proactive in securing financing through the SBA Paycheck Protection Program for its small business customers.
During the first quarter 2020, we continued to closely monitor our New York City and Chicago taxi medallion loans totaling $102.8 million and $7.0 million, respectively, within the commercial and industrial loan portfolio at March 31, 2020. Due to continued negative trends in market valuations of the underlying taxi medallion collateral, a weak operating environment and uncertain borrower performance, the remainder of our previously accruing taxi medallion loans were placed on non-accrual status during the first quarter 2020. At March 31, 2020, the non-accrual taxi medallion loans totaling $109.8 million had related reserves of $56.8 million within the allowance for loan losses.
CECL Adoption. Valley adopted the CECL accounting standard effective January 1, 2020 and recorded an $100.4 million increase to its allowance for credit losses, including reserves of $61.6 million related to PCD loans. For PCD loans, the allowance for credit losses recorded is recognized through a gross-up that increases the amortized cost basis of loans with a corresponding increase to the allowance for credit losses, and therefore results in no impact to shareholders' equity. The remaining increase to the allowance for credit losses of $38.8 million is offset in shareholders' equity and deferred tax assets.
For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the first quarter 2020 reserve build (i.e., provision for credit losses less net charge-offs) will be phased in over the same time frame. See the "Capital Adequacy" section below for more information regarding our capital ratios.

5



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



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 March 31, 2020, December 31, 2019, and March 31, 2019:
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
 
 
 
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
$
127,437

 
2.55
%
 
$
104,059

 
2.22
%
 
$
94,630

 
2.20
%
Commercial real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
97,876

 
0.60
%
 
20,019

 
0.13
%
 
24,261

 
0.19
%
 
Construction
13,709

 
0.79
%
 
25,654

 
1.56
%
 
23,501

 
1.62
%
Total commercial real estate loans
111,585

 
0.62
%
 
45,673

 
0.26
%
 
47,762

 
0.34
%
Residential mortgage loans
29,456

 
0.66
%
 
5,060

 
0.12
%
 
5,139

 
0.13
%
Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
4,463

 
0.93
%
 
459

 
0.09
%
 
523

 
0.10
%
 
Auto and other consumer
10,401

 
0.44
%
 
6,508

 
0.28
%
 
6,327

 
0.29
%
Total consumer loans
14,864

 
0.52
%
 
6,967

 
0.24
%
 
6,850

 
0.25
%
Allowance for loan losses
283,342

 
0.93
%
 
161,759

 
0.55
%
 
154,381

 
0.63
%
Allowance for unfunded credit commitments
10,019

 
 
 
2,845

 
 
 
4,580

 
 
Total allowance for credit losses for loans
$
293,361

 
 
 
$
164,604

 
 
 
$
158,961

 
 
Allowance for credit losses for
 
 
 
 
 
 
 
 
 
 
 
loans as a % loans
 
 
0.96
%
 
 
 
0.55
%
 
 
 
0.63
%
 
 
 
 
 
 
 
 
 
 
 
 
 
*
CECL was adopted January 1, 2020. Prior periods reflect the allowance for credit losses for loans under the incurred loss model.
Our loan portfolio, totaling $30.4 billion at March 31, 2020, had net loan charge-offs totaling $4.8 million for the first quarter 2020 as compared to $5.6 million and $5.3 million for the fourth quarter 2019 and first quarter 2019, respectively. Gross loan charge-offs related to taxi medallion loans totaled $1.3 million, $2.9 million and $1.3 million for the first quarter 2020, fourth quarter 2019 and first quarter 2019, respectively.
During the first quarter 2020, we recorded a $33.9 million provision for credit losses for loans as compared to $5.4 million and $8.0 million for the fourth quarter 2019 and the first quarter 2019, respectively. The increase in the first quarter 2020 provision as compared to the fourth quarter 2019 was mainly due to higher reserves recorded under CECL due to forecasted credit deterioration due to the impact of the COVID-19 pandemic and loan growth, as well as higher specific reserves for non-accrual taxi medallion loans.
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 0.96 percent, 0.55 percent and 0.63 percent at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The increase at March 31, 2020 was largely due to the reserves related to PCD loans included in the Day 1 CECL adoption adjustment to the allowance

6



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



for credit losses for loans and the reserve build under CECL during the first quarter 2020 related to the impact of COVID-19.
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 11.53 percent, 9.95 percent, 8.24 percent and 9.24 percent, respectively, at March 31, 2020. Valley's capital ratios at March 31, 2020 reflect the five-year transition provision to delay recognition of the full impact of the CECL Day 1 shareholders' equity adjustment and 25 percent of the first quarter reserve build under CECL for two years, followed by a three-year transition period.
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 first quarter 2020 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432 Conference ID: 7135108. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/qajw8rkk [edge.media-server.com] and archived on Valley's website through Friday, May 29, 2020. 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 $39 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, 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 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 impact of COVID-19 on the U.S. and the global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;
the impact of COVID-19 on our employees and our ability to provide services to our clients and respond to their needs;

7



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



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 action, 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;
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;
the inability to realize expected cost savings and synergies from the Oritani merger in amounts or in the timeframe anticipated;
the inability to retain Oritani customers;
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;
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;
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.

8



Valley National Bancorp (NASDAQ: VLY)
2020 First Quarter Earnings
April 30, 2020



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, 2019.
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
 
March 31,

December 31,

March 31,
($ in thousands, except for share data)
2020

2019

2019
FINANCIAL DATA:
 
 
 
 
 
Net interest income
$
265,339

 
$
238,541

 
$
218,648

Net interest income - FTE (1)
266,383

 
239,615

 
219,925

Non-interest income
41,397

 
38,094

 
107,673

Non-interest expense
155,656

 
196,146

 
147,795

Income tax expense
29,129

 
36,967

 
57,196

Net income
87,268

 
38,104

 
113,330

Dividends on preferred stock
3,172


3,172


3,172

Net income available to common shareholders
$
84,096

 
$
34,932

 
$
110,158

Weighted average number of common shares outstanding:
 
 
 
 
 
Basic
403,519,088

 
355,821,005

 
331,601,260

Diluted
405,424,123

 
358,864,876

 
332,834,466

Per common share data:
 
 
 
 
 
Basic earnings
$
0.21

 
$
0.10

 
$
0.33

Diluted earnings
0.21

 
0.10

 
0.33

Cash dividends declared
0.11

 
0.11

 
0.11

Closing stock price - high
11.46

 
12.07

 
10.73

Closing stock price - low
6.37

 
10.60

 
9.00

CORE ADJUSTED FINANCIAL DATA: (2)
 
 
 
 
 
Net income available to common shareholders, as adjusted
$
85,061

 
$
87,478

 
$
71,764

Basic earnings per share, as adjusted
0.21


0.25


0.22

Diluted earnings per share, as adjusted
0.21


0.24


0.22

FINANCIAL RATIOS:
 
 
 
 
 
Net interest margin
3.06
%
 
2.95
%
 
2.96
%
Net interest margin - FTE (1)
3.07

 
2.96

 
2.98

Annualized return on average assets
0.92

 
0.43

 
1.40

Annualized return on avg. shareholders' equity
7.92

 
4.01

 
13.35

Annualized return on avg. tangible shareholders' equity (2)
11.84

 
5.98

 
20.29

Efficiency ratio (3)
50.75

 
70.90

 
45.29

CORE ADJUSTED FINANCIAL RATIOS: (2)
 
 
 
 
 
Annualized return on average assets, as adjusted
0.93
%
 
1.03
%
 
0.93
%
Annualized return on average shareholders' equity, as adjusted
8.01

 
9.53

 
8.83

Annualized return on average tangible shareholders' equity, as adjusted
11.97

 
14.23

 
13.42

Efficiency ratio, as adjusted
49.26

 
52.43

 
54.79

AVERAGE BALANCE SHEET ITEMS:
 
 
 
 
Assets
$
38,097,364


$
35,315,682


$
32,296,070

Interest earning assets
34,674,075

 
32,337,660

 
29,562,907

Loans
29,999,428

 
27,968,383

 
25,254,733

Interest bearing liabilities
26,215,578

 
24,244,902

 
22,344,028

Deposits
28,811,932

 
26,833,714

 
24,782,759

Shareholders' equity
4,408,585

 
3,804,902


3,394,688


10




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
As Of
BALANCE SHEET ITEMS:
March 31,

December 31,

September 30,

June 30,

March 31,
(In thousands)
2020

2019

2019

2019

2019
Assets
$
39,120,629

 
$
37,436,020

 
$
33,765,539

 
$
33,027,741

 
$
32,476,991

Total loans
30,428,067

 
29,699,208

 
26,567,159

 
25,802,162

 
25,423,118

Deposits
29,016,988

 
29,185,837

 
25,546,122

 
24,773,929

 
24,907,496

Shareholders' equity
4,420,998

 
4,384,188

 
3,558,075

 
3,504,118

 
3,444,879

 
 
 
 
 
 
 
 
 
 
LOANS:
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
4,998,731

 
$
4,825,997

 
$
4,695,608

 
$
4,615,765

 
$
4,504,927

Commercial real estate:
 
 
 
 
 
 
 
 
 
Commercial real estate
16,390,236

 
15,996,741

 
13,365,454

 
12,798,017

 
12,665,425

Construction
1,727,046

 
1,647,018

 
1,537,590

 
1,528,968

 
1,454,199

 Total commercial real estate
18,117,282

 
17,643,759

 
14,903,044

 
14,326,985

 
14,119,624

Residential mortgage
4,478,982

 
4,377,111

 
4,133,331

 
4,072,450

 
4,071,237

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
481,751

 
487,272

 
489,808

 
501,646

 
513,066

Automobile
1,436,734

 
1,451,623

 
1,436,608

 
1,362,466

 
1,347,759

Other consumer
914,587

 
913,446

 
908,760

 
922,850

 
866,505

 Total consumer loans
2,833,072

 
2,852,341

 
2,835,176

 
2,786,962

 
2,727,330

Total loans
$
30,428,067

 
$
29,699,208

 
$
26,567,159

 
$
25,802,162

 
$
25,423,118

 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS:
 
 
 
 
 
 
 
 
 
Book value per common share
$
10.43

 
$
10.35

 
$
10.09

 
$
9.93

 
$
9.75

Tangible book value per common share (2)
6.82

 
6.73

 
6.62

 
6.45

 
6.26

Tangible common equity to tangible assets (2)
7.31
%
 
7.54
%
 
6.73
%
 
6.71
%
 
6.63
%
Tier 1 leverage capital
8.24

 
8.76

 
7.61

 
7.62

 
7.58

Common equity tier 1 capital
9.24

 
9.42

 
8.49

 
8.59

 
8.53

Tier 1 risk-based capital
9.95

 
10.15

 
9.30

 
9.43

 
9.38

Total risk-based capital
11.53

 
11.72

 
11.03

 
11.39

 
11.37





11




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
Three Months Ended
ALLOWANCE FOR CREDIT LOSSES
March 31,
 
December 31,
 
March 31,
($ in thousands)
2020
 
2019
 
2019
Allowance for credit losses for loans
 
 
 
 
 
Beginning balance
$
164,604

 
$
164,770

 
$
156,295

Impact of the adoption of ASU 2016-13 (4)
37,989

 

 

Allowance for purchased credit deteriorated (PCD) loans
61,643

 

 

Beginning balance, adjusted
264,236

 
164,770

 
156,295

Loans charged-off (5):
 
 
 
 
 
Commercial and industrial
(3,360
)
 
(5,378
)
 
(4,282
)
Commercial real estate
(44
)
 

 

Residential mortgage
(336
)
 

 
(15
)
Total Consumer
(2,565
)
 
(2,700
)
 
(2,028
)
Total loans charged-off
(6,305
)
 
(8,078
)
 
(6,325
)
Charged-off loans recovered(5):
 
 
 
 
 
Commercial and industrial
569

 
389

 
483

Commercial real estate
73

 
1,166

 
21

Construction
20

 

 

Residential mortgage
50

 
53

 
1

Total Consumer
794

 
886

 
486

Total loans recovered
1,506

 
2,494

 
991

Net charge-offs
(4,799
)
 
(5,584
)
 
(5,334
)
Provision for credit losses for loans
33,924

 
5,418

 
8,000

Ending balance
$
293,361

 
$
164,604

 
$
158,961

Components of allowance for credit losses for loans:
 
 
 
 
 
Allowance for loan losses
283,342

 
161,759

 
154,381

Allowance for unfunded credit commitments
10,019

 
2,845

 
4,580

Allowance for credit losses for loans
$
293,361

 
$
164,604

 
$
158,961

Components of provision for credit losses for loans:
 
 
 
 
 
Provision for credit losses for loans
$
33,851

 
$
5,490

 
$
7,856

Provision for unfunded credit commitments (6)
73

 
(72
)
 
144

Total provision for credit losses for loans
$
33,924

 
$
5,418

 
$
8,000

Annualized ratio of total net charge-offs to average loans
0.06
%
 
0.08
%
 
0.08
%
Allowance for credit losses for loans as a % of total loans
0.96

 
0.55

 
0.63


12




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
As of
ASSET QUALITY: (7)
March 31,

December 31,

September 30,

June 30,

March 31,
($ in thousands)
2020

2019

2019

2019

2019
Accruing past due loans:
 
 
 
 
 
 
 
 
 
30 to 59 days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
9,780

 
$
11,700

 
$
5,702

 
$
14,119

 
$
5,120

Commercial real estate
41,664

 
2,560

 
20,851

 
6,202

 
39,362

Construction
7,119

 
1,486

 
11,523

 

 
1,911

Residential mortgage
38,965

 
17,143

 
12,945

 
19,131

 
15,856

Total Consumer
19,508

 
13,704

 
13,079

 
11,932

 
6,647

Total 30 to 59 days past due
117,036

 
46,593

 
64,100

 
51,384

 
68,896

60 to 89 days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
7,624

 
2,227

 
3,158

 
4,135

 
1,756

Commercial real estate
15,963

 
4,026

 
735

 
354

 
2,156

Construction
49

 
1,343

 
7,129

 
1,342

 

Residential mortgage
9,307

 
4,192

 
4,417

 
3,635

 
3,635

Total Consumer
2,309

 
2,527

 
1,577

 
1,484

 
990

Total 60 to 89 days past due
35,252

 
14,315

 
17,016

 
10,950

 
8,537

90 or more days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
4,049

 
3,986

 
4,133

 
3,298

 
2,670

Commercial real estate
161

 
579

 
1,125

 

 

Residential mortgage
1,798

 
2,042

 
1,347

 
1,054

 
1,402

Total Consumer
1,092

 
711

 
756

 
359

 
523

Total 90 or more days past due
7,100

 
7,318

 
7,361

 
4,711

 
4,595

Total accruing past due loans
$
159,388

 
$
68,226

 
$
88,477

 
$
67,045

 
$
82,028

Non-accrual loans:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
132,622

 
$
68,636

 
$
75,311

 
$
76,216

 
$
76,270

Commercial real estate
41,616

 
9,004

 
9,560

 
6,231

 
2,663

Construction
2,972

 
356

 
356

 

 
378

Residential mortgage
24,625

 
12,858

 
13,772

 
12,069

 
11,921

Total Consumer
4,095

 
2,204

 
2,050

 
1,999

 
2,178

Total non-accrual loans
205,930

 
93,058

 
101,049

 
96,515

 
93,410

Other real estate owned (OREO)
10,198

 
9,414

 
6,415

 
7,161

 
7,317

Other repossessed assets
3,842

 
1,276

 
2,568

 
2,358

 
2,628

Non-accrual debt securities (8)
531

 
680

 
680

 
680

 

Total non-performing assets
$
220,501

 
$
104,428

 
$
110,712

 
$
106,714

 
$
103,355

Performing troubled debt restructured loans
$
48,024

 
$
73,012

 
$
79,364

 
$
74,385

 
$
73,081

Total non-accrual loans as a % of loans
0.68
%
 
0.31
%
 
0.38
%
 
0.37
%
 
0.37
%
Total accruing past due and non-accrual loans as a % of loans
1.20
%
 
0.54
%
 
0.71
%
 
0.63
%
 
0.69
%
Allowance for losses on loans as a % of non-accrual loans
137.59
%
 
173.83
%
 
160.17
%
 
160.71
%
 
165.27
%



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 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
 
March 31,

December 31,

March 31,
($ in thousands, except for share data)
2020

2019

2019
Adjusted net income available to common shareholders:
 
 
 
 
 
Net income, as reported
$
87,268


$
38,104


$
113,330

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

 

 
(55,707
)
Add: Loss on extinguishment of debt (net of tax)

 
22,992

 

Add: Losses on securities transaction (net of tax)
29

 
26

 
23

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

 

 
3,433

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

 

 
1,757

Add: Merger related expenses (net of tax)(d)
936

 
10,861

 

Add: Income tax expense (e)

 
18,667

 
12,100

Net income, as adjusted
$
88,233

 
$
90,650

 
$
74,936

Dividends on preferred stock
3,172

 
3,172

 
3,172

Net income available to common shareholders, as adjusted
$
85,061

 
$
87,478

 
$
71,764

__________
 
 
 
 
 
(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 expense, professional and legal fees, and other expense.
(e) Income tax expense related to reserves for uncertain tax positions.
Adjusted per common share data:
 
 
 
 
 
Net income available to common shareholders, as adjusted
$
85,061

 
$
87,478

 
$
71,764

Average number of shares outstanding
403,519,088

 
355,821,005

 
331,601,260

Basic earnings, as adjusted
$
0.21

 
$
0.25

 
$
0.22

Average number of diluted shares outstanding
405,424,123

 
358,864,876

 
332,834,466

Diluted earnings, as adjusted
$
0.21

 
$
0.24

 
$
0.22

Adjusted annualized return on average tangible shareholders' equity:
 
 
 
 
 
Net income, as adjusted
$
88,233

 
$
90,650

 
$
74,936

Average shareholders' equity
4,408,585


3,804,902


3,394,688

Less: Average goodwill and other intangible assets
1,460,988


1,256,137


1,160,510

Average tangible shareholders' equity
$
2,947,597

 
$
2,548,765

 
$
2,234,178

Annualized return on average tangible shareholders' equity, as adjusted
11.97
%
 
14.23
%
 
13.42
%
Adjusted annualized return on average assets:
 
 
 
 
 
Net income, as adjusted
$
88,233

 
$
90,650

 
$
74,936

Average assets
$
38,097,364

 
$
35,315,682

 
$
32,296,070

Annualized return on average assets, as adjusted
0.93
%
 
1.03
%
 
0.93
%

14




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
($ in thousands)
2020
 
2019
 
2019
Adjusted annualized return on average shareholders' equity:


 


 


Net income, as adjusted
$
88,233

 
$
90,650

 
$
74,936

Average shareholders' equity
$
4,408,585

 
$
3,804,902

 
$
3,394,688

Annualized return on average shareholders' equity, as adjusted
8.01
%
 
9.53
%
 
8.83
%
Annualized return on average tangible shareholders' equity:
 
 
 
 
 
Net income, as reported
$
87,268

 
$
38,104

 
$
113,330

Average shareholders' equity
4,408,585

 
3,804,902

 
3,394,688

Less: Average goodwill and other intangible assets
1,460,988

 
1,256,137

 
1,160,510

Average tangible shareholders' equity
$
2,947,597

 
$
2,548,765

 
$
2,234,178

Annualized return on average tangible shareholders' equity
11.84
%
 
5.98
%
 
20.29
%
Adjusted efficiency ratio:
 
 
 
 
 
Non-interest expense, as reported
$
155,656

 
$
196,146

 
$
147,795

Less: Loss on extinguishment of debt (pre-tax)

 
31,995

 

Less: Severance expense (pre-tax)

 

 
4,838

Less: Merger-related expenses (pre-tax)
1,302

 
15,110

 

Less: Amortization of tax credit investments (pre-tax)
3,228

 
3,971

 
7,173

Non-interest expense, as adjusted
$
151,126

 
$
145,070

 
$
135,784

Net interest income
265,339

 
238,541

 
218,648

Non-interest income, as reported
41,397

 
38,094

 
107,673

Add: Losses on securities transactions, net (pre-tax)
40

 
36

 
32

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

 

 
78,505

Non-interest income, as adjusted
$
41,437

 
$
38,130

 
$
29,200

Gross operating income, as adjusted
$
306,776

 
$
276,671

 
$
247,848

Efficiency ratio, as adjusted
49.26
%
 
52.43
%
 
54.79
%
 
As of
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
($ in thousands, except for share data)
2020
 
2019
 
2019
 
2019
 
2019
Tangible book value per common share:
 
 
 
 
 
 
 
 
 
Common shares outstanding
403,744,148

 
403,278,390

 
331,805,564

 
331,788,149

 
331,732,636

Shareholders' equity
$
4,420,998

 
$
4,384,188

 
$
3,558,075

 
$
3,504,118

 
$
3,444,879

Less: Preferred stock
209,691

 
209,691

 
209,691

 
209,691

 
209,691

Less: Goodwill and other intangible assets
1,458,095

 
1,460,397

 
1,152,815

 
1,155,250

 
1,158,245

Tangible common shareholders' equity
$
2,753,212

 
$
2,714,100

 
$
2,195,569

 
$
2,139,177

 
$
2,076,943

Tangible book value per common share
$
6.82

 
$
6.73

 
$
6.62

 
$
6.45

 
$
6.26

Tangible common equity to tangible assets:
 
 
 
 
 
 
 
 
Tangible common shareholders' equity
$
2,753,212

 
$
2,714,100

 
$
2,195,569

 
$
2,139,177

 
$
2,076,943

Total assets
39,120,629

 
37,436,020

 
33,765,539

 
33,027,741

 
32,476,991

Less: Goodwill and other intangible assets
1,458,095

 
1,460,397

 
1,152,815

 
1,155,250

 
1,158,245

Tangible assets
$
37,662,534

 
$
35,975,623

 
$
32,612,724

 
$
31,872,491

 
$
31,318,746

Tangible common equity to tangible assets
7.31
%
 
7.54
%
 
6.73
%
 
6.71
%
 
6.63
%

15




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)
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.
(5)
Charge-offs and recoveries presented for periods prior to March 31, 2020 exclude loans formerly known as Purchased Credit-Impaired (PCI) loans.
(6)
Periods prior to March 31, 2020, represent allowance and provision for letters of credit only.
(7)
Past due loans and non-accrual loans presented in periods prior to March 31, 2020 exclude PCI loans. PCI loans were accounted for on a pool basis and are were not subject to delinquency classification.
(8)
Represents impaired municipal bond security classified as available for sale presented at its carrying value.
 
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.


16




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


 
March 31,
 
December 31,
 
2020
 
2019
 
 (Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
286,755

 
$
256,264

Interest bearing deposits with banks
718,260

 
178,423

Investment securities:
 
 
 
Equity securities
49,701

 
41,410

Available for sale debt securities
1,749,842

 
1,566,801

Held to maturity debt securities (net of allowance for credit losses of $1,552 at March 31, 2020)
2,315,481

 
2,336,095

Total investment securities
4,115,024

 
3,944,306

Loans held for sale, at fair value
58,868

 
76,113

Loans
30,428,067

 
29,699,208

Less: Allowance for loan losses
(283,342
)
 
(161,759
)
Net loans
30,144,725

 
29,537,449

Premises and equipment, net
332,503

 
334,533

Lease right of use assets
278,080

 
285,129

Bank owned life insurance
542,127

 
540,169

Accrued interest receivable
107,353

 
105,637

Goodwill
1,375,409

 
1,373,625

Other intangible assets, net
82,686

 
86,772

Other assets
1,078,839

 
717,600

Total Assets
$
39,120,629

 
$
37,436,020

Liabilities
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
6,951,073

 
$
6,710,408

Interest bearing:
 
 
 
Savings, NOW and money market
13,498,830

 
12,757,484

Time
8,567,085

 
9,717,945

Total deposits
29,016,988

 
29,185,837

Short-term borrowings
2,095,655

 
1,093,280

Long-term borrowings
2,805,639

 
2,122,426

Junior subordinated debentures issued to capital trusts
55,805

 
55,718

Lease liabilities
303,096

 
309,849

Accrued expenses and other liabilities
422,448

 
284,722

Total Liabilities
34,699,631

 
33,051,832

Shareholders’ Equity
 
 
 
Preferred stock, no par value; 50,000,000 authorized shares:
 
 
 
Series A (4,600,000 shares issued at March 31, 2020 and December 31, 2019)
111,590

 
111,590

Series B (4,000,000 shares issued at March 31, 2020 and December 31, 2019)
98,101

 
98,101

Common stock (no par value, authorized 450,000,000 shares; issued 403,765,978 shares at March 31, 2020 and 403,322,773 shares at December 31, 2019)
141,613

 
141,423

Surplus
3,624,036

 
3,622,208

Retained earnings
452,424

 
443,559

Accumulated other comprehensive loss
(6,566
)
 
(32,214
)
Treasury stock, at cost (21,830 common shares at March 31, 2020 and 44,383 common shares at December 31, 2019)
(200
)
 
(479
)
Total Shareholders’ Equity
4,420,998

 
4,384,188

Total Liabilities and Shareholders’ Equity
$
39,120,629

 
$
37,436,020


17




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


 
Three Months Ended
 
March 31,

December 31,

March 31,
 
2020

2019

2019
Interest Income
 
 
 
 
 
Interest and fees on loans
$
333,068

 
$
315,313

 
$
288,277

Interest and dividends on investment securities:
 
 
 
 
 
Taxable
21,933

 
19,760

 
22,876

Tax-exempt
3,926

 
4,041

 
4,804

Dividends
3,401

 
2,883

 
3,174

Interest on federal funds sold and other short-term investments
1,465

 
1,776

 
1,093

Total interest income
363,793

 
343,773

 
320,224

Interest Expense
 
 
 
 
 
Interest on deposits:
 
 
 
 
 
Savings, NOW and money market
34,513

 
34,930

 
36,283

Time
42,814

 
45,343

 
38,171

Interest on short-term borrowings
4,707

 
7,500

 
12,549

Interest on long-term borrowings and junior subordinated debentures
16,420

 
17,459

 
14,573

Total interest expense
98,454

 
105,232

 
101,576

Net Interest Income
265,339

 
238,541

 
218,648

Provision for credit losses for held to maturity securities
759

 

 

Provision for credit losses for loans
33,924

 
5,418

 
8,000

Net Interest Income After Provision for Credit Losses
230,656

 
233,123

 
210,648

Non-Interest Income
 
 
 
 
 
Trust and investment services
3,413

 
3,350

 
2,904

Insurance commissions
1,951

 
2,487

 
2,525

Service charges on deposit accounts
5,680

 
6,002

 
5,903

Losses on securities transactions, net
(40
)
 
(36
)
 
(32
)
Fees from loan servicing
2,748

 
2,534

 
2,430

Gains on sales of loans, net
4,550

 
5,214

 
4,576

Gains on sales of assets, net
121

 
1,336

 
77,720

Bank owned life insurance
3,142

 
1,453

 
1,887

Other
19,832

 
15,754

 
9,760

Total non-interest income
41,397

 
38,094

 
107,673

Non-Interest Expense
 
 
 
 
 
Salary and employee benefits expense
85,728

 
90,872

 
83,105

Net occupancy and equipment expense
32,441

 
31,402

 
27,886

FDIC insurance assessment
3,876

 
5,560

 
6,121

Amortization of other intangible assets
5,470

 
4,905

 
4,311

Professional and legal fees
6,087

 
5,524

 
5,271

Loss on extinguishment of debt

 
31,995

 

Amortization of tax credit investments
3,228

 
3,971

 
7,173

Telecommunication expense
2,287

 
2,566

 
2,268

Other
16,539

 
19,351

 
11,660

Total non-interest expense
155,656


196,146


147,795

Income Before Income Taxes
116,397

 
75,071

 
170,526

Income tax expense
29,129

 
36,967

 
57,196

Net Income
87,268

 
38,104

 
113,330

Dividends on preferred stock
3,172

 
3,172

 
3,172

Net Income Available to Common Shareholders
$
84,096

 
$
34,932

 
$
110,158



18




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


 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2020
 
2019
 
2019
Earnings Per Common Share:
 
 
 
 
 
Basic
$
0.21

 
$
0.10

 
$
0.33

Diluted
0.21

 
0.10

 
0.33

Cash Dividends Declared per Common Share
0.11

 
0.11

 
0.11

Weighted Average Number of Common Shares Outstanding:
 
 
 
 
 
Basic
403,519,088

 
355,821,005

 
331,601,260

Diluted
405,424,123

 
358,864,876

 
332,834,466



19



</
VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
 
 
Three Months Ended
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
 Average
 
 
 
Avg.
 
 Average
 
 
 
Avg.
 
 Average
 
 
 
Avg.
($ in thousands)
 Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)(2)
$
29,999,428

 
$
333,068

 
4.44
%
 
$
27,968,383

 
$
315,313

 
4.51
%
 
$
25,254,733

 
$
288,277

 
4.57
%
Taxable investments (3)
3,557,913

 
25,334

 
2.85
%
 
3,322,536

 
22,643

 
2.73
%
 
3,390,609

 
26,050

 
3.07
%
Tax-exempt investments (1)(3)
585,987

 
4,970

 
3.39
%
 
608,651

 
5,115

 
3.36
%
 
689,675

 
6,081

 
3.53
%
Interest bearing deposits with banks
530,747

 
1,465

 
1.10
%
 
438,090

 
1,776

 
1.62
%
 
227,890

 
1,093

 
1.92
%
Total interest earning assets
34,674,075

 
364,837

 
4.21
%
 
32,337,660

 
344,847

 
4.27
%
 
29,562,907

 
321,501


4.35
%
Other assets
3,423,289

 
 
 
 
 
2,978,022

 
 
 
 
 
2,733,163

 
 
 
 
Total assets
$
38,097,364

 
 
 
 
 
$
35,315,682

 
 
 
 
 
$
32,296,070

 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings, NOW and money market deposits
$
13,219,896

 
$
34,513

 
1.04
%
 
$
11,813,261

 
$
34,930

 
1.18
%
 
$
11,450,943

 
$
36,283

 
1.27
%
Time deposits
8,897,934

 
42,814

 
1.92
%
 
8,428,153

 
45,343

 
2.15
%
 
7,214,863

 
38,171

 
2.12
%
Short-term borrowings
1,322,699

 
4,707

 
1.42
%
 
1,625,873

 
7,500

 
1.85
%
 
2,011,428

 
12,549

 
2.50
%
Long-term borrowings (4)
2,775,049

 
16,420

 
2.37
%
 
2,377,615

 
17,459

 
2.94
%
 
1,666,794

 
14,573

 
3.50
%
Total interest bearing liabilities
26,215,578

 
98,454

 
1.50
%
 
24,244,902

 
105,232

 
1.74
%
 
22,344,028

 
101,576

 
1.82
%
Non-interest bearing deposits
6,694,102

 
 
 
 
 
6,592,300

 
 
 
 
 
6,116,953