Business Segments

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Business Segments

Business Segments

Valley has four business segments that it monitors and reports on to manage Valley’s business operations. These segments are consumer lending, commercial lending, investment management, and corporate and other adjustments. Valley’s reportable segments have been determined based upon its internal structure of operations and lines of business. Each business segment is reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Expenses related to the branch network, all other components of retail banking, along with the back office departments of the Bank are allocated from the corporate and other adjustments segment to each of the other three business segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each business segment utilizing a transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets and/or liabilities outstanding for the period. The financial reporting for each segment contains allocations and reporting in line with Valley’s operations, which may not necessarily be comparable to any other financial institution. The accounting for each segment includes internal accounting policies designed to measure consistent and reasonable financial reporting and may result in income and expense measurements that differ from amounts under U.S. GAAP. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data.

The following tables represent the financial data for Valley’s four business segments for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total
	($ in thousands)
Average interest earning assets	$	7,126,157		$	25,389,107		$	5,252,446		$	—	$	37,767,710
Interest income	$	63,956		$	251,920		$	22,513		$	(1,046)	$	337,343
Interest expense	9,048			33,330			6,728			5,151		54,257
Net interest income (loss)	54,908			218,590			15,785			(6,197)		283,086
Provision for credit losses	5,383			25,637			(112)			—		30,908
Net interest income (loss) after provision for credit losses	49,525			192,953			15,897			(6,197)		252,178
Non-interest income	23,531			20,421			(1,304)			6,624		49,272
Non-interest expense	19,877			25,633			(186)			114,861		160,185
Internal expense transfer	18,614			66,390			13,713			(98,717)		—
Income (loss) before income taxes	$	34,565		$	121,351		$	1,066		$	(15,717)	$	141,265
Return on average interest earning assets (pre-tax)	1.94		%	1.91		%	0.08		%	N/A		1.50		%

	Three Months Ended September 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total
	($ in thousands)
Average interest earning assets	$	6,858,216		$	19,278,529		$	4,357,824		$	—	$	30,494,569
Interest income	$	68,253		$	230,183		$	31,999		$	(1,174)	$	329,261
Interest expense	23,552			66,209			14,965			3,910		108,636
Net interest income (loss)	44,701			163,974			17,034			(5,084)		220,625
Provision for credit losses	2,003			6,697			—			—		8,700
Net interest income (loss) after provision for credit losses	42,698			157,277			17,034			(5,084)		211,925
Non-interest income	15,108			15,057			2,687			8,298		41,150
Non-interest expense	19,748			25,161			381			100,587		145,877
Internal expense transfer	19,758			55,544			12,559			(87,861)		—
Income (loss) before income taxes	$	18,300		$	91,629		$	6,781		$	(9,512)	$	107,198
Return on average interest earning assets (pre-tax)	1.07		%	1.90		%	0.62		%	N/A		1.41		%

	Nine Months Ended September 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total
	($ in thousands)
Average interest earning assets	$	7,187,839		$	24,334,429		$	5,221,538		$	—	$	36,743,806
Interest income	$	199,018		$	771,947		$	81,905		$	(3,209)	$	1,049,661
Interest expense	40,217			136,156			29,216			13,088		218,677
Net interest income (loss)	158,801			635,791			52,689			(16,297)		830,984
Provision for credit losses	15,274			90,785			688			—		106,747
Net interest income (loss) after provision for credit losses	143,527			545,006			52,001			(16,297)		724,237
Non-interest income	55,383			52,192			7,661			20,263		135,499
Non-interest expense	60,188			73,041			843			338,935		473,007
Internal expense transfer	58,355			197,444			42,393			(298,192)		—
Income (loss) before income taxes	$	80,367		$	326,713		$	16,426		$	(36,777)	$	386,729
Return on average interest earning assets (pre-tax)	1.49		%	1.79		%	0.42		%	N/A		1.40		%

	Nine Months Ended September 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total
	($ in thousands)
Average interest earning assets	$	6,812,001		$	18,839,194		$	4,330,504		$	—	$	29,981,699
Interest income	$	203,897		$	679,833		$	97,189		$	(3,692)	$	977,227
Interest expense	69,504			192,221			44,185			11,810		317,720
Net interest income (loss)	134,393			487,612			53,004			(15,502)		659,507
Provision for credit losses	4,986			13,814			—			—		18,800
Net interest income (loss) after provision for credit losses	129,407			473,798			53,004			(15,502)		640,707
Non-interest income	41,927			29,527			7,365			97,607		176,426
Non-interest expense	56,845			76,729			684			301,151		435,409
Internal expense transfer	58,476			161,803			37,245			(257,524)		—
Income (loss) before income taxes	$	56,013		$	264,793		$	22,440		$	38,478	$	381,724
Return on average interest earning assets (pre-tax)	1.10		%	1.87		%	0.69		%	N/A		1.70		%