WAYNE, N.J., July 26, 2017 /PRNewswire/ -- Valley
National Bancorp (NYSE: VLY), the holding company for Valley
National Bank, today reported net income for the second quarter of
2017 of $50.1 million, or
$0.18 per diluted common share, as
compared to the second quarter of 2016 earnings of $39.0 million, or $0.15 per diluted common share, and net income of
$46.1 million, or $0.17 per diluted common share, for the first
quarter of 2017.
Valley also announced in a separate press release today that it
is acquiring USAmeriBancorp, Inc. ("USAB"), and its wholly-owned
subsidiary, USAmeriBank, headquartered in Clearwater, Florida. USAB has approximately
$4.4 billion in assets and maintains
a branch network of 30 offices in Florida and Alabama. The press release
is available at www.valleynationalbank.com.
Key financial highlights for the second quarter:
- Net Interest Income and Margin: Net interest income on a
tax equivalent basis of $171.1
million for the second quarter of 2017 increased
$17.6 million and $6.4 million as compared to the second quarter of
2016 and first quarter of 2017, respectively. Our net interest
margin on a tax equivalent basis of 3.20 percent for the second
quarter of 2017 increased by 6 basis points as compared to 3.14
percent for both the second quarter of 2016 and first quarter of
2017. The increase in net interest income and margin for the second
quarter of 2017 as compared to the linked first quarter was partly
caused by a $3.5 million increase in
interest income from derivative swap fees. See the "Net Interest
Income and Margin" section below for more details.
- Loan Portfolio: Loans increased by $261.3 million, or 6.0 percent on an annualized
basis, to $17.7 billion at
June 30, 2017 from March 31, 2017 largely due to a net increase of
$259.3 million in total commercial
real estate loans. The overall loan growth was partially offset by
a decrease of $20.7 million in
residential mortgage loans caused by the transfer of approximately
$122 million of performing 30-year
fixed rate mortgages to loans held for sale at June 30, 2017. The sale of these loans is
expected to be completed during the third quarter of 2017 and
result in a pre-tax gain of approximately $4
million. See additional information under the "Loans,
Deposits and Other Borrowings" section below.
- Asset Quality: Total accruing past due and non-accrual
loans as a percentage of our entire loan portfolio of $17.7 billion decreased to 0.47 percent at
June 30, 2017 from 0.61 percent at
March 31, 2017 mostly due to a
decrease in commercial loans past due 30 to 59 days. Non-performing
assets (including non-accrual loans) increased by 5.9 percent to
$54.6 million at June 30, 2017 as compared to $51.5 million at March 31,
2017 due to a $3.9 million
increase in non-accrual loans, partially offset by a moderate
decline in both foreclosed assets and non-accrual debt
securities.
- Provision for Credit Losses: During the second quarter
of 2017, we recorded a $3.6 million
provision for credit losses as compared to provisions of
$2.5 million and $1.4 million for the first quarter of 2017 and
second quarter of 2016, respectively. For the second quarter of
2017, we recognized net loan charge-offs totaling $2.7 million as compared to net loan charge-offs
of $1.4 million for the first quarter
of 2017, and net loan recoveries of $1.3
million for the second quarter of 2016. The increase in net
loan charge-offs from the first quarter was largely due to an
increase in commercial and industrial loan charge-offs caused by
one impaired loan relationship. See further details under the
"Credit Quality" section below.
- Non-Interest Income: Non-interest income decreased
$369 thousand, or 1.5 percent, to
$24.7 million for the second quarter
of 2017 from $25.1 million for the
first quarter of 2017 mostly due to decreases in income from bank
owed life insurance and insurance commissions, partially offset by
an increase in net gains on sales of residential mortgage
loans.
- Non-Interest Expense: Non-interest expense decreased
$1.7 million, or 1.4 percent, to
$119.2 million for the second quarter
of 2017 from the first quarter of 2017 mainly due to a $2.4 million decrease in salaries and employee
benefits partly caused by lower stock incentive compensation
expense, as well as moderate declines in net occupancy and
equipment expense, professional and legal expense, and other
non-interest expense. The decreases were partially offset by a
$2.4 million increase in the
amortization of tax credit investments.
- Income Tax Expense: Income tax expense totaled
$20.7 million for the second quarter
of 2017 as compared to $18.1 million
and $15.5 million for the first
quarter of 2017 and second quarter of 2016, respectively. Our
effective tax rate was 29.3 percent, 28.2 percent, and 28.4 percent
for the second quarter of 2017, first quarter of 2017, and second
quarter of 2016, respectively. For the remainder of 2017, we
anticipate that our effective tax rate will range from 28 percent
to 31 percent primarily reflecting the impacts of tax-exempt
income, tax-advantaged investments and general business
credits.
- Capital Strength: Valley's regulatory capital ratios
continue to reflect its strong capital position. Valley's total
risk-based capital, Tier 1 capital, Tier 1 leverage capital, and
common equity Tier 1 capital ratios were 11.99 percent, 9.81
percent, 7.69 percent and 9.18 percent, respectively, at
June 30, 2017.
Earnings Enhancement Program
In December 2016, Valley announced
a company-wide earnings enhancement initiative called LIFT. The
LIFT program is a review of our business practices with goals of
improving our overall efficiency, targeting resources to more
value-added activities and delivering on the financial banking
experience expected by our customers. During July 2017, we completed the idea generation and
approval phase of the LIFT program. As a result of these
efforts, we plan to achieve approximately $22 million in total cost reductions and revenue
enhancements on an annualized pre-tax run-rate through a
combination of workforce reduction and other efficiency and revenue
initiatives. We estimate that these changes will result in
employee severance and other implementation costs of approximately
$11 million, the majority of which
will be recorded in the third quarter of 2017. The
implementation phase of the initiative enhancements is currently
underway and is expected to be fully phased-in over the next 24
months.
Gerald H. Lipkin, Chairman &
CEO commented that, "We are pleased with our earnings performance
in the second quarter of 2017 which reflected a 8.6 percent
increase in net income as compared to the first quarter of 2017
driven by a solid net interest margin of 3.20 percent. Our net
income for the second quarter continued to benefit from strong loan
growth mainly within the commercial real estate portfolio and our
ability to maintain a low overall cost of funds. The credit
quality of our balance sheet remained well-controlled as net loan
charge-offs to average loans totaled 0.06 percent for the second
quarter of 2017."
Mr. Lipkin added, "The LIFT program, which resulted from a
bottom-up approach, engaged our entire employee base to help
generate and develop ideas to enhance process change and lead to
improved efficiency. We are delighted with the significant and
continuing efforts by our dedicated management team and employees
to ultimately make the LIFT program a success for Valley, its
customers and shareholders. We fully expect this endeavor, combined
with our continued growth strategies, to strongly position Valley
to deliver on its future performance goals."
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling
$171.1 million for the second quarter
of 2017 increased $17.6 million as
compared to the second quarter of 2016 and increased $6.4 million as compared to the first quarter of
2017. Interest income on a tax equivalent basis increased
$12.0 million to $213.3 million for the second quarter of 2017 as
compared to the first quarter of 2017 mainly due to a 16 basis
point increase in the yield on average loans, and increases of
$388.6 million and $131.4 million in average loans and taxable
investments, respectively. The increase in yield on average
loans for the second quarter of 2017 as compared to the linked
first quarter was due to higher market interest rates on new loan
originations, and a $3.5 million
increase in periodic commercial loan fee income related to
derivative interest rate swaps executed with customers.
Interest expense of $42.2 million for
the second quarter of 2017 increased $5.6
million as compared to the first quarter of 2017.
During the second quarter of 2017, our interest expense on deposits
increased by approximately $3.1
million from the linked first quarter largely due to an
increase in short-term market interest rates, a $101.7 million decrease in our average low cost
brokered money market deposit account balances and one more day
during the second quarter. Interest expense on
short-term and long-term borrowings also increased $1.6 million and $840
thousand, respectively, in the second quarter of 2017 as
compared to the first quarter of 2017 due, in part, to increases of
$274.8 million and $185.4 million in the average balances,
respectively. Average short-term and long-term borrowings
increased as compared to the first quarter of 2017 mostly due to
new FHLB borrowings used to offset a decline in deposits and fund
new loans during the second quarter of 2017.
Our net interest margin on a tax equivalent basis of 3.20
percent for the second quarter of 2017 increased by 6 basis points
as compared to both the second quarter of 2016 and first quarter of
2017. The yield on average interest earning assets increased by 14
basis points on a linked quarter basis mostly due to the higher
yield on average loans. The yield on average loans increased 16
basis points to 4.20 percent for the second quarter of 2017 and was
positively impacted by the aforementioned increases in market
interest rates and periodic commercial loan fees as compared to the
first quarter of 2017. The yield on average taxable investment
securities increased by 6 basis points to 2.84 percent for the
second quarter of 2017 from the first quarter of 2017 largely due
to a decline in premium amortization expense caused by lower
principal repayments on residential mortgage-backed
securities. The overall cost of average interest bearing
liabilities increased by 12 basis points to 1.08 percent during the
second quarter of 2017 from 0.96 percent in the linked first
quarter of 2017. The increase was due, in part, to higher
interest rates on most deposits and short-term borrowings and one
more day during the second quarter of 2017, partially offset by a
19 basis point decrease in the cost of long-term borrowings mostly
caused by new lower cost FHLB borrowings. Our cost of total
deposits was 0.53 percent for the second quarter of 2017 as
compared to 0.45 percent for the first quarter of 2017.
Loans, Deposits and Other Borrowings
Loans. Loans increased
$261.3 million, or 6.0 percent on an
annualized basis, to approximately $17.7
billion at June 30, 2017 from March 31, 2017, net
of the $122 million of residential
mortgage loans transferred to loans held for sale during the second
quarter of 2017 and a $113.2 million
decline in the PCI loan portion of the portfolio. During the second
quarter of 2017, Valley also originated $41.8 million of residential mortgage loans for
sale rather than investment. Loans held for sale totaled
$139.6 million and $115.1 million at June 30, 2017 and
March 31, 2017, respectively. See additional information
regarding our residential mortgage loan activities
below.
Total commercial and industrial loans decreased $11.0 million, or 1.7 percent on an annualized
basis, from March 31, 2017 to approximately $2.6 billion at June 30, 2017. The
loan volumes were outpaced by a $30.8
million decline in the PCI loan portion of the portfolio
during the second quarter of 2017. Exclusive of the decline in PCI
loans, the non-PCI commercial and industrial loan portfolio
increased by approximately 3.3 percent on an annualized basis to
$2.4 billion at June 30, 2017
from March 31, 2017. The second quarter growth in non-PCI
loans was largely due to a secured commercial lending arrangement
with a large regional auto retailer. In addition to the PCI loan
repayments, the level of loan growth within this portfolio
continues to be challenged by strong market competition for both
new and existing commercial loan borrowers within our primary
markets.
Commercial real estate loans (excluding construction loans)
increased $214.1 million from
March 31, 2017 to $9.2 billion
at June 30, 2017 mostly due to a $250.0
million, or 12.6 percent on an annualized basis, increase in
the non-PCI loan portfolio. The increase in non-PCI loans was
primarily due to solid organic loan volumes in New York, New
Jersey and Florida,
particularly amongst our pre-existing long-term customer base, as
well as approximately $22 million of
loan participations purchased in the second quarter of 2017.
Each purchased participation loan is reviewed by Valley under its
normal underwriting criteria and stress-tested to assure its credit
quality. The organic loan volumes generated across a broad-based
segment of borrowers within the commercial real estate portfolio
were partially offset by a $35.9
million decline in the acquired PCI loan portion of the
portfolio. Construction loans increased $45.2 million, or 21.6 percent on an annualized
basis, to $881.1 million at
June 30, 2017 from March 31, 2017. The increase was
mostly due to advances on existing construction projects.
Total residential mortgage loans decreased $20.7 million, or approximately 3.0 percent on an
annualized basis, to approximately $2.7
billion at June 30, 2017 from March 31, 2017 due
to the aforementioned mortgage loans transferred to loans held for
sale and new loans originated for sale rather than investment
during the second quarter of 2017. Valley sold approximately
$136.6 million of residential
mortgage loans originated for sale (including $115.1 million of loans held for sale at
March 31, 2017) during the second quarter of 2017. New and
refinanced residential mortgage loan originations totaled
approximately $194.4 million for the
second quarter of 2017 as compared to $163.7
million and $177.7 million for
the first quarter of 2017 and second quarter of 2016,
respectively. Of the $194.4
million in total originations, $23.8
million, or 12.3 percent, represented new Florida residential mortgage loans.
Home equity loans totaling $450.5
million at June 30, 2017 decreased by $8.4 million as compared to March 31, 2017
mostly due to PCI loan repayment activity. New home equity
loan volumes and customer usage of existing home equity lines of
credit continue to be weak, despite the relatively favorable low
interest rate environment.
Automobile loans increased by $290
thousand, or 0.1 percent on an annualized basis, to
$1.2 billion at June 30, 2017 as
compared to March 31, 2017. The auto loan portfolio
remained relatively unchanged as new auto loan origination volumes
declined as compared to the first quarter of 2017 largely due to
slower application activity during the first half of the second
quarter of 2017. Our Florida dealership network contributed
over $23 million in auto loan
originations, representing approximately 18 percent of Valley's
total new auto loan production for the second quarter of 2017 as
compared to approximately $24
million, or 17 percent, of Valley's total auto originations
for the first quarter of 2017.
Other consumer loans increased $41.7
million, or 27.8 percent on an annualized basis, to
$642.2 million at June 30, 2017
as compared to $600.5 million at
March 31, 2017 mainly due to continued growth and customer
usage of collateralized personal lines of credit.
Deposits. Total deposits decreased $81.1
million, or 1.9 percent on an annualized basis, to approximately
$17.3 billion at June 30, 2017
from March 31, 2017 largely due to a $51.1 million decrease in brokered money market
deposit account balances and general period end fluctuations in
both commercial and retail customer balances. Non-interest bearing
deposits; savings, NOW, money market deposits; and time deposits
represented approximately 30 percent, 50 percent and 20 percent of
total deposits as of June 30, 2017. The composition of
deposits based upon the period end balances remained relatively
unchanged at June 30, 2017 as compared to March 31,
2017. However, time deposits increased $153.9 million to $3.4
billion at June 30, 2017 as
compared to March 31, 2017 largely
due to new retail customer balances resulting from our current
certificate of deposit promotional campaigns which commenced in the
second quarter of 2017.
Other Borrowings. Short-term borrowings increased
$89.5 million to $1.7 billion at June 30, 2017 as compared to
March 31, 2017 largely due to new FHLB advances used as
alternate funding for the aforementioned decline in money market
deposits, as well as for additional liquidity and loan funding
purposes. Long-term borrowings also increased $185.6 million to $1.8
billion at June 30, 2017 as compared to March 31,
2017 due to new FHLB advances with contractual terms between
approximately 13 and 15 months.
Credit Quality
Non-Performing Assets. Our past due loans and
non-accrual loans discussed further below exclude PCI loans. Under
U.S. GAAP, the PCI loans (acquired at a discount that is due, in
part, to credit quality) are accounted for on a pool basis and are
not subject to delinquency classification in the same manner as
loans originated by Valley. At June 30, 2017, our PCI
loan portfolio totaled $1.5 billion,
or 8.7 percent, of our total loan portfolio.
Total non-performing assets (NPAs), consisting of non-accrual
loans, other real estate owned properties and other repossessed
assets (foreclosed assets), and non-accrual debt securities
increased $3.0 million, or 5.9
percent, to $54.6 million at
June 30, 2017 as compared to March 31, 2017 mostly due to
an increase in non-accrual loans during the second quarter of
2017. The increase in non-accrual loans was largely caused by
two previously impaired Chicago
taxi cab medallion relationships with a combined total of
$5.6 million at June 30, 2017. Non-accrual loans
represented 0.24 percent of total loans at June 30, 2017 as
compared to 0.22 percent of total loans at March 31, 2017.
Total accruing past due loans (i.e., loans past due 30 days or
more and still accruing interest) decreased $26.4 million to $41.8
million, or 0.24 percent of total loans, at June 30,
2017 as compared to $68.1 million, or
0.39 percent of total loans, at March 31, 2017. The lower
level of accruing past due loans was primarily caused by decreases
of $27.3 million and
$7.8 million in commercial and
industrial loans and construction loans past due 30 to 59 days at
June 30, 2017, respectively, as compared to March 31,
2017. The decrease in the commercial and industrial loans past due
30 to 59 days was mainly due to $19.2
million of loans collateralized by New York City (NYC) taxi cab medallions at March 31 2017 which were current to their
contractual payments at June 30,
2017. Partially offsetting these decreases, the loans past
due 60 to 89 days and loans 90 days or more past due categories
increased by $8.8 million and
$6.7 million at June 30, 2017,
respectively. The increase in loans past due 60 to 89 days
was largely due to one internal classified commercial real estate
relationship and a commercial taxi cab medallion relationship
totaling $5.9 million and
$2.4 million at June 30, 2017, respectively. The
$6.7 million increase in loans 90
days or more past due at June 30,
2017 was mostly due to performing matured loans in the
normal process of renewal totaling $5.2
million.
At June 30, 2017, our entire taxi medallion loan portfolio
totaled $140.5 million, consisting of
$130.4 million and $10.1 million of NYC and Chicago taxi medallion loans,
respectively. At June 30, 2017, the medallion portfolio
included impaired loans of $37.4
million with related reserves of $3.7
million within the allowance for loan losses as compared to
impaired loans of $6.3 million with
related reserves of $2.6 million at
March 31, 2017. At June 30, 2017, the impaired medallion loans
largely consisted of performing troubled debt restructured (TDR)
loans and the aforementioned non-accrual Chicago taxi cab medallion loans totaling
$5.6 million. Loans past due 30 to 59
days and loans past due 60 to 89 days include $809 thousand and $2.4
million of NYC taxi
medallions at June 30, 2017, respectively, which are all
outstanding to one borrower. We are currently renegotiating the
terms of these past due loans. Valley's historical taxi
medallion lending criteria has been conservative in regards to
capping the loan amounts in relation to market valuations, as well
as obtaining personal guarantees and other collateral whenever
possible. However, we continue to closely monitor this
portfolio's performance and the potential impact of the changes in
market valuation for taxi medallions due to competing car service
providers and other factors.
Despite the increase in taxi medallion loans classified as TDR
and non-accrual loans during the second quarter of 2017, we believe
our overall credit quality metrics continued to reflect our solid
underwriting standards at June 30, 2017. However, we can
provide no assurances as to the future level of our loan
delinquencies.
Allowance for Credit Losses. The following table
summarizes the allocation of the allowance for credit losses to
specific loan categories and the allocation as a percentage of each
loan category (including PCI loans) at June 30, 2017,
March 31, 2017, and June 30, 2016:
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
|
|
|
Allocation
|
|
|
|
Allocation
|
|
|
|
Allocation
|
|
|
|
|
as a %
of
|
|
|
|
as a %
of
|
|
|
|
as a %
of
|
|
|
Allowance
|
|
Loan
|
|
Allowance
|
|
Loan
|
|
Allowance
|
|
Loan
|
|
Allocation
|
|
Category
|
|
Allocation
|
|
Category
|
|
Allocation
|
|
Category
|
|
($ in
thousands)
|
Loan
Category:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial loans*
|
$
|
53,792
|
|
|
2.04
|
%
|
|
$
|
53,541
|
|
|
2.03
|
%
|
|
$
|
50,351
|
|
|
1.99
|
%
|
Commercial real
estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real
estate
|
37,180
|
|
|
0.40
|
%
|
|
38,146
|
|
|
0.42
|
%
|
|
35,869
|
|
|
0.45
|
%
|
|
Construction
|
18,275
|
|
|
2.07
|
%
|
|
18,156
|
|
|
2.17
|
%
|
|
16,008
|
|
|
2.08
|
%
|
Total commercial real
estate loans
|
55,455
|
|
|
0.55
|
%
|
|
56,302
|
|
|
0.57
|
%
|
|
51,877
|
|
|
0.59
|
%
|
Residential mortgage
loans
|
4,186
|
|
|
0.15
|
%
|
|
3,592
|
|
|
0.13
|
%
|
|
3,495
|
|
|
0.11
|
%
|
Consumer
loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity
|
582
|
|
|
0.13
|
%
|
|
433
|
|
|
0.09
|
%
|
|
968
|
|
|
0.20
|
%
|
|
Auto and other
consumer
|
4,606
|
|
|
0.26
|
%
|
|
3,828
|
|
|
0.22
|
%
|
|
3,723
|
|
|
0.23
|
%
|
Total consumer
loans
|
5,188
|
|
|
0.23
|
%
|
|
4,261
|
|
|
0.19
|
%
|
|
4,691
|
|
|
0.22
|
%
|
Total allowance for
credit losses
|
$
|
118,621
|
|
|
0.67
|
%
|
|
$
|
117,696
|
|
|
0.67
|
%
|
|
$
|
110,414
|
|
|
0.67
|
%
|
Allowance for credit
losses as a %
|
|
|
|
|
|
|
|
|
|
|
|
of non-PCI
loans
|
|
|
0.73
|
%
|
|
|
|
0.75
|
%
|
|
|
|
0.76
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes the
reserve for unfunded letters of credit.
|
|
|
|
|
Our loan portfolio, totaling $17.7
billion at June 30, 2017, had net loan charge-offs of
$2.7 million for the second quarter
of 2017 as compared to net loan charge-offs of $1.4 million for the first quarter of 2017, and
net loan recoveries of $1.3 million
for the second quarter of 2016. The increase in net loan
charge-offs as compared to the first quarter of 2017 was mainly due
to one charged-off loan relationship totaling $1.9 million within the commercial and industrial
loan portfolio during the second quarter of 2017. During the second
quarter of 2017, we recorded a $3.6
million provision for credit losses as compared to
$2.5 million and $1.4 million for the first quarter of 2017 and
the second quarter of 2016, respectively. The quarter over
quarter increase in the provision was due, in part, to solid second
quarter loan growth and an increase in allocated reserves for
impaired loans at June 30, 2017.
The allowance for credit losses, comprised of our allowance for
loan losses and reserve for unfunded letters of credit, as a
percentage of total loans was 0.67 percent at June 30, 2017,
March 31, 2017 and June 30, 2016. At June 30,
2017, our allowance allocations for losses as a percentage of total
loans remained relatively stable in most loan categories as
compared to March 31, 2017, but declined 0.10 percent for
construction loans largely due to the continued low level of recent
loss experience for this portfolio. There were no
construction loan charge-offs during the six months ended months
ended June 30, 2017 and the year ended December 31, 2016.
Our allowance for credit losses as a percentage of total non-PCI
loans (excluding PCI loans with carrying values totaling
approximately $1.5 billion) was 0.73
percent at June 30, 2017, as compared to 0.75 percent and 0.76
percent at March 31, 2017 and June 30, 2016,
respectively. PCI loans are accounted for on a pool basis and
initially recorded net of fair valuation discounts related to
credit which may be used to absorb future losses on such loans
before any allowance for loan losses is recognized subsequent to
acquisition. Due to the adequacy of such discounts, there
were no allowance reserves related to PCI loans at June 30,
2017, March 31, 2017 and June 30, 2016.
Investor Conference Call
Valley will host a conference call with investors and the
financial community at 10:00 AM Eastern
Standard Time, today to discuss the 2017 second quarter
earnings and other recent developments. Those wishing to
participate in the call may dial toll-free (800) 230-1766.
Investor presentation materials will be made available prior to the
conference call at www.valleynationalbank.com.
About Valley
Valley National Bancorp is a regional bank holding company
headquartered in Wayne, New Jersey
with over $23 billion in assets. Its
principal subsidiary, Valley National Bank, currently operates over
200 branch locations in northern and central New Jersey, the New
York City boroughs of Manhattan, Brooklyn, Queens and Long
Island, and Florida. Valley
National Bank is one of the largest commercial banks headquartered
in New Jersey with executive
offices in Manhattan and
West Palm Beach. Helping
communities grow and prosper is the heart of Valley's corporate
citizenship philosophy. For more information about Valley National
Bank and its products and services, please visit a convenient
branch location, www.valleynationalbank.com or call our 24/7
Customer Service Team 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. These
statements may be identified by such forward-looking terminology as
"should," "expect," "believe," "view," "opportunity," "allow,"
"continues," "reflects," "typically," "usually," "anticipate," or
similar statements or variations of such terms. Such
forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from such forward-looking
statements. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking
statements include, but are not limited to:
- failure to obtain shareholder or regulatory approval for the
merger of USAB with Valley or to satisfy other conditions to the
merger on the proposed terms and within the proposed
timeframe;
- delays in closing the merger;
- the inability to realize expected cost savings and synergies
from the merger of USAB with Valley in the amounts or in the
timeframe anticipated;
- changes in the estimate of non-recurring charges;
- the diversion of management's time on issues relating to the
merger;
- costs or difficulties relating to integration matters might be
greater than expected;
- material adverse changes in Valley's or USAB's operations or
earnings;
- an increase or decrease in the stock price of Valley during the
30 day pricing period prior to the closing of the merger which
could cause an adjustment to the exchange ratio or give either
Valley or USAB the right to terminate the merger agreement under
certain circumstances;
- the inability to retain USAB's customers and employees;
- weakness or a decline in the economy, mainly in New Jersey, New
York, Florida and
Alabama, as well as an unexpected
decline in commercial real estate values within our market
areas;
- less than expected cost reductions and revenue enhancement from
Valley's cost reduction plans including its earnings enhancement
program called "LIFT";
- damage verdicts or settlements or restrictions related to
existing or potential litigations arising from claims of breach of
fiduciary responsibility, negligence, fraud, contractual claims,
environmental laws, patent or trade mark infringement, employment
related claims, and other matters;
- the loss of or decrease in lower-cost funding sources within
our deposit base may adversely impact our net interest income and
net income;
- cyber attacks, computer viruses or other malware that may
breach the security of our websites or other systems to obtain
unauthorized access to confidential information, destroy data,
disable or degrade service, or sabotage our systems;
- results of examinations by the OCC, the FRB, the CFPB and other
regulatory authorities, including the possibility that any such
regulatory authority may, among other things, require us to
increase our allowance for credit losses, write-down assets,
require us to reimburse customers, change the way we do business,
or limit or eliminate certain other banking activities;
- changes in accounting policies or accounting standards,
including the new authoritative accounting guidance (known as the
current expected credit loss (CECL) model) which may increase the
required level of our allowance for credit losses after adoption on
January 1, 2020;
- higher or lower than expected income tax expense or tax rates,
including increases or decreases resulting from changes in tax
laws, regulations and case law;
- our inability to pay dividends at current levels, or at all,
because of inadequate future earnings, regulatory restrictions or
limitations, and changes in our capital requirements;
- higher than expected loan losses within one or more segments of
our loan portfolio;
- unanticipated loan delinquencies, loss of collateral, decreased
service revenues, and other potential negative effects on our
business caused by severe weather or other external events;
- unexpected significant declines in the loan portfolio due to
the lack of economic expansion, increased competition, large
prepayments, changes in regulatory lending guidance or other
factors; 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, 2016.
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-
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)
|
2017
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
FINANCIAL
DATA:
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
168,960
|
|
|
$
|
162,529
|
|
|
$
|
151,455
|
|
|
$
|
331,489
|
|
|
$
|
299,608
|
|
Net interest income -
FTE (1)
|
171,086
|
|
|
164,702
|
|
|
153,470
|
|
|
335,788
|
|
|
303,615
|
|
Non-interest
income
|
24,690
|
|
|
25,059
|
|
|
24,264
|
|
|
49,749
|
|
|
45,712
|
|
Non-interest
expense
|
119,239
|
|
|
120,952
|
|
|
119,803
|
|
|
240,191
|
|
|
238,028
|
|
Income tax
expense
|
20,714
|
|
|
18,071
|
|
|
15,460
|
|
|
38,785
|
|
|
29,849
|
|
Net income
|
50,065
|
|
|
46,095
|
|
|
39,027
|
|
|
96,160
|
|
|
75,214
|
|
Dividends on
preferred stock
|
1,797
|
|
|
1,797
|
|
|
1,797
|
|
|
3,594
|
|
|
3,594
|
|
Net income available
to common shareholders
|
$
|
48,268
|
|
|
$
|
44,298
|
|
|
$
|
37,230
|
|
|
$
|
92,566
|
|
|
$
|
71,620
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
263,958,292
|
|
|
263,797,024
|
|
|
254,381,170
|
|
|
263,878,103
|
|
|
254,228,260
|
|
Diluted
|
264,778,242
|
|
|
264,546,266
|
|
|
254,771,213
|
|
|
264,662,863
|
|
|
254,575,873
|
|
Per common share
data:
|
|
|
|
|
|
|
|
|
|
Basic
earnings
|
$
|
0.18
|
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
|
$
|
0.35
|
|
|
$
|
0.28
|
|
Diluted
earnings
|
0.18
|
|
|
0.17
|
|
|
0.15
|
|
|
0.35
|
|
|
0.28
|
|
Cash dividends
declared
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.22
|
|
|
0.22
|
|
Closing stock price -
high
|
12.23
|
|
|
12.76
|
|
|
10.13
|
|
|
12.76
|
|
|
10.13
|
|
Closing stock price -
low
|
11.28
|
|
|
11.28
|
|
|
8.55
|
|
|
11.28
|
|
|
8.31
|
|
FINANCIAL
RATIOS:
|
|
|
|
|
|
|
|
|
|
Net interest
margin
|
3.16
|
%
|
|
3.10
|
%
|
|
3.10
|
%
|
|
3.13
|
%
|
|
3.07
|
%
|
Net interest margin -
FTE (1)
|
3.20
|
|
|
3.14
|
|
|
3.14
|
|
|
3.17
|
|
|
3.11
|
|
Annualized return on
average assets
|
0.86
|
|
|
0.80
|
|
|
0.72
|
|
|
0.83
|
|
|
0.69
|
|
Annualized return on
avg. shareholders' equity
|
8.27
|
|
|
7.69
|
|
|
6.97
|
|
|
7.98
|
|
|
6.75
|
|
Annualized return on
avg. tangible shareholders' equity (2)
|
11.88
|
|
|
11.09
|
|
|
10.38
|
|
|
11.48
|
|
|
10.07
|
|
Efficiency ratio
(3)
|
61.57
|
|
|
64.48
|
|
|
68.18
|
|
|
63.00
|
|
|
68.93
|
|
AVERAGE BALANCE
SHEET ITEMS:
|
|
|
|
|
|
|
|
|
Assets
|
$
|
23,396,259
|
|
|
$
|
22,996,286
|
|
|
$
|
21,730,377
|
|
|
$
|
23,197,377
|
|
|
$
|
21,705,328
|
|
Interest earning
assets
|
21,416,671
|
|
|
20,949,464
|
|
|
19,537,572
|
|
|
21,184,358
|
|
|
19,512,522
|
|
Loans
|
17,701,676
|
|
|
17,313,100
|
|
|
16,252,915
|
|
|
17,508,461
|
|
|
16,123,229
|
|
Interest bearing
liabilities
|
15,610,935
|
|
|
15,285,171
|
|
|
14,280,956
|
|
|
15,448,953
|
|
|
14,308,328
|
|
Deposits
|
17,288,487
|
|
|
17,366,768
|
|
|
16,453,487
|
|
|
17,327,411
|
|
|
16,417,041
|
|
Shareholders'
equity
|
2,420,848
|
|
|
2,399,159
|
|
|
2,238,510
|
|
|
2,410,063
|
|
|
2,229,040
|
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
|
|
As
Of
|
BALANCE SHEET
ITEMS:
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
(In
thousands)
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
Assets
|
$
|
23,449,350
|
|
|
$
|
23,220,456
|
|
|
$
|
22,864,439
|
|
|
$
|
22,368,453
|
|
|
$
|
21,809,738
|
|
Total
loans
|
17,710,760
|
|
|
17,449,498
|
|
|
17,236,103
|
|
|
16,634,135
|
|
|
16,499,180
|
|
Non-PCI
loans
|
16,169,291
|
|
|
15,794,797
|
|
|
15,464,601
|
|
|
14,777,020
|
|
|
14,523,779
|
|
Deposits
|
17,250,018
|
|
|
17,331,141
|
|
|
17,730,708
|
|
|
16,972,183
|
|
|
16,356,058
|
|
Shareholders'
equity
|
2,423,901
|
|
|
2,398,541
|
|
|
2,377,156
|
|
|
2,257,073
|
|
|
2,232,212
|
|
|
|
|
|
|
|
|
|
|
|
LOANS:
|
|
|
|
|
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
2,631,312
|
|
|
$
|
2,642,319
|
|
|
$
|
2,638,195
|
|
|
$
|
2,558,968
|
|
|
$
|
2,528,749
|
|
Commercial real
estate:
|
|
|
|
|
|
|
|
|
|
Commercial real
estate
|
9,230,514
|
|
|
9,016,418
|
|
|
8,719,667
|
|
|
8,313,855
|
|
|
8,018,794
|
|
Construction
|
881,073
|
|
|
835,854
|
|
|
824,946
|
|
|
802,568
|
|
|
768,847
|
|
Total
commercial real estate
|
10,111,587
|
|
|
9,852,272
|
|
|
9,544,613
|
|
|
9,116,423
|
|
|
8,787,641
|
|
Residential
mortgage
|
2,724,777
|
|
|
2,745,447
|
|
|
2,867,918
|
|
|
2,826,130
|
|
|
3,055,353
|
|
Total
Consumer:
|
|
|
|
|
|
|
|
|
|
Home
equity
|
450,510
|
|
|
458,891
|
|
|
469,009
|
|
|
476,820
|
|
|
485,730
|
|
Automobile
|
1,150,343
|
|
|
1,150,053
|
|
|
1,139,227
|
|
|
1,121,606
|
|
|
1,141,793
|
|
Other
consumer
|
642,231
|
|
|
600,516
|
|
|
577,141
|
|
|
534,188
|
|
|
499,914
|
|
Total consumer
loans
|
2,243,084
|
|
|
2,209,460
|
|
|
2,185,377
|
|
|
2,132,614
|
|
|
2,127,437
|
|
Total
loans
|
$
|
17,710,760
|
|
|
$
|
17,449,498
|
|
|
$
|
17,236,103
|
|
|
$
|
16,634,135
|
|
|
$
|
16,499,180
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
RATIOS:
|
|
|
|
|
|
|
|
|
|
Book value per common
share
|
$
|
8.76
|
|
|
$
|
8.67
|
|
|
$
|
8.59
|
|
|
$
|
8.43
|
|
|
$
|
8.34
|
|
Tangible book value
per common share (2)
|
5.98
|
|
|
5.88
|
|
|
5.80
|
|
|
5.55
|
|
|
5.45
|
|
Tangible common
equity to tangible assets (2)
|
6.95
|
%
|
|
6.90
|
%
|
|
6.91
|
%
|
|
6.53
|
%
|
|
6.58
|
%
|
Tier 1 leverage
capital
|
7.69
|
|
|
7.70
|
|
|
7.74
|
|
|
7.35
|
|
|
7.38
|
|
Common equity tier 1
capital
|
9.18
|
|
|
9.12
|
|
|
9.27
|
|
|
8.73
|
|
|
8.74
|
|
Tier 1 risk-based
capital
|
9.81
|
|
|
9.76
|
|
|
9.90
|
|
|
9.36
|
|
|
9.39
|
|
Total risk-based
capital
|
11.99
|
|
|
11.96
|
|
|
12.15
|
|
|
11.64
|
|
|
11.69
|
|
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)
|
|
2017
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Beginning balance -
Allowance for credit losses
|
|
$
|
117,696
|
|
|
$
|
116,604
|
|
|
$
|
107,675
|
|
|
$
|
116,604
|
|
|
$
|
108,367
|
|
Loans
charged-off:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
(2,910)
|
|
|
(1,714)
|
|
|
(493)
|
|
|
(4,624)
|
|
|
(1,744)
|
|
|
Commercial real
estate
|
|
(139)
|
|
|
(414)
|
|
|
(414)
|
|
|
(553)
|
|
|
(519)
|
|
|
Construction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Residential
mortgage
|
|
(229)
|
|
|
(130)
|
|
|
(151)
|
|
|
(359)
|
|
|
(232)
|
|
|
Total
Consumer
|
|
(1,011)
|
|
|
(1,121)
|
|
|
(697)
|
|
|
(2,132)
|
|
|
(1,771)
|
|
|
Total loans
charged-off
|
|
(4,289)
|
|
|
(3,379)
|
|
|
(1,755)
|
|
|
(7,668)
|
|
|
(4,266)
|
|
Charged-off loans
recovered:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
312
|
|
|
848
|
|
|
990
|
|
|
1,160
|
|
|
1,516
|
|
|
Commercial real
estate
|
|
346
|
|
|
142
|
|
|
1,458
|
|
|
488
|
|
|
1,547
|
|
|
Construction
|
|
294
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|
—
|
|
|
Residential
mortgage
|
|
235
|
|
|
448
|
|
|
94
|
|
|
683
|
|
|
109
|
|
|
Total
Consumer
|
|
395
|
|
|
563
|
|
|
523
|
|
|
958
|
|
|
912
|
|
|
Total loans
recovered
|
|
1,582
|
|
|
2,001
|
|
|
3,065
|
|
|
3,583
|
|
|
4,084
|
|
Net (charge-offs)
recoveries
|
|
(2,707)
|
|
|
(1,378)
|
|
|
1,310
|
|
|
(4,085)
|
|
|
(182)
|
|
Provision for credit
losses
|
|
3,632
|
|
|
2,470
|
|
|
1,429
|
|
|
6,102
|
|
|
2,229
|
|
Ending balance -
Allowance for credit losses
|
|
$
|
118,621
|
|
|
$
|
117,696
|
|
|
$
|
110,414
|
|
|
$
|
118,621
|
|
|
$
|
110,414
|
|
Components of
allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses
|
|
$
|
116,446
|
|
|
$
|
115,443
|
|
|
$
|
108,088
|
|
|
$
|
116,446
|
|
|
$
|
108,088
|
|
|
Allowance for
unfunded letters of credit
|
|
2,175
|
|
|
2,253
|
|
|
2,326
|
|
|
2,175
|
|
|
2,326
|
|
Allowance for credit
losses
|
|
$
|
118,621
|
|
|
$
|
117,696
|
|
|
$
|
110,414
|
|
|
$
|
118,621
|
|
|
$
|
110,414
|
|
Components of
provision for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
$
|
3,710
|
|
|
$
|
2,402
|
|
|
$
|
1,363
|
|
|
$
|
6,112
|
|
|
$
|
2,092
|
|
|
Provision for
unfunded letters of credit
|
|
(78)
|
|
|
68
|
|
|
66
|
|
|
(10)
|
|
|
137
|
|
Provision for credit
losses
|
|
$
|
3,632
|
|
|
$
|
2,470
|
|
|
$
|
1,429
|
|
|
$
|
6,102
|
|
|
$
|
2,229
|
|
Annualized ratio of
total net charge-offs (recoveries) to average loans
|
|
0.06
|
%
|
|
0.03
|
%
|
|
(0.03)
|
%
|
|
0.05
|
%
|
|
0.00
|
%
|
Allowance for credit
losses as a % of non-PCI loans
|
|
0.73
|
%
|
|
0.75
|
%
|
|
0.76
|
%
|
|
0.73
|
%
|
|
0.76
|
%
|
Allowance for credit
losses as a % of total loans
|
|
0.67
|
%
|
|
0.67
|
%
|
|
0.67
|
%
|
|
0.67
|
%
|
|
0.67
|
%
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
|
|
As
Of
|
ASSET
QUALITY: (4)
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
June
30,
|
($ in
thousands)
|
2017
|
|
2017
|
|
2016
|
|
2016
|
Accruing past due
loans:
|
|
|
|
|
|
|
|
30 to 59 days past
due:
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
2,391
|
|
|
$
|
29,734
|
|
|
$
|
6,705
|
|
|
$
|
5,187
|
|
|
Commercial real
estate
|
6,983
|
|
|
11,637
|
|
|
5,894
|
|
|
5,076
|
|
|
Construction
|
—
|
|
|
7,760
|
|
|
6,077
|
|
|
—
|
|
|
Residential
mortgage
|
4,677
|
|
|
7,533
|
|
|
12,005
|
|
|
10,177
|
|
|
Total
Consumer
|
4,393
|
|
|
3,740
|
|
|
4,197
|
|
|
2,535
|
|
Total 30 to 59 days
past due
|
18,444
|
|
|
60,404
|
|
|
34,878
|
|
|
22,975
|
|
60 to 89 days past
due:
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
2,686
|
|
|
341
|
|
|
5,010
|
|
|
5,714
|
|
|
Commercial real
estate
|
8,233
|
|
|
359
|
|
|
8,642
|
|
|
834
|
|
|
Construction
|
854
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Residential
mortgage
|
1,721
|
|
|
4,177
|
|
|
3,564
|
|
|
2,326
|
|
|
Total
Consumer
|
1,007
|
|
|
787
|
|
|
1,147
|
|
|
644
|
|
Total 60 to 89 days
past due
|
14,501
|
|
|
5,664
|
|
|
18,363
|
|
|
9,518
|
|
90 or more days past
due:
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
—
|
|
|
405
|
|
|
142
|
|
|
218
|
|
|
Commercial real
estate
|
2,315
|
|
|
—
|
|
|
474
|
|
|
131
|
|
|
Construction
|
2,879
|
|
|
—
|
|
|
1,106
|
|
|
—
|
|
|
Residential
mortgage
|
3,353
|
|
|
1,355
|
|
|
1,541
|
|
|
314
|
|
|
Total
Consumer
|
275
|
|
|
314
|
|
|
209
|
|
|
139
|
|
Total 90 or more days
past due
|
8,822
|
|
|
2,074
|
|
|
3,472
|
|
|
802
|
|
Total accruing past
due loans
|
$
|
41,767
|
|
|
$
|
68,142
|
|
|
$
|
56,713
|
|
|
$
|
33,295
|
|
Non-accrual
loans:
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
11,072
|
|
|
$
|
8,676
|
|
|
$
|
8,465
|
|
|
$
|
6,573
|
|
|
Commercial real
estate
|
15,514
|
|
|
15,106
|
|
|
15,079
|
|
|
19,432
|
|
|
Construction
|
1,334
|
|
|
1,461
|
|
|
715
|
|
|
5,878
|
|
|
Residential
mortgage
|
12,825
|
|
|
11,650
|
|
|
12,075
|
|
|
14,866
|
|
|
Total
Consumer
|
1,409
|
|
|
1,395
|
|
|
1,174
|
|
|
1,130
|
|
Total non-accrual
loans
|
42,154
|
|
|
38,288
|
|
|
37,508
|
|
|
47,879
|
|
Other real estate
owned (OREO)(5)
|
10,182
|
|
|
10,737
|
|
|
9,612
|
|
|
10,903
|
|
Other repossessed
assets
|
342
|
|
|
475
|
|
|
384
|
|
|
369
|
|
Non-accrual debt
securities (6)
|
1,878
|
|
|
2,007
|
|
|
1,935
|
|
|
2,118
|
|
Total non-performing
assets
|
$
|
54,556
|
|
|
$
|
51,507
|
|
|
$
|
49,439
|
|
|
$
|
61,269
|
|
Performing troubled
debt restructured loans
|
$
|
109,802
|
|
|
$
|
80,360
|
|
|
$
|
85,166
|
|
|
$
|
82,140
|
|
Total non-accrual
loans as a % of loans
|
0.24
|
%
|
|
0.22
|
%
|
|
0.22
|
%
|
|
0.29
|
%
|
Total accruing past
due and non-accrual loans as a % of loans
|
0.47
|
%
|
|
0.61
|
%
|
|
0.55
|
%
|
|
0.49
|
%
|
Allowance for losses
on loans as a % of non-accrual loans
|
276.24
|
%
|
|
301.51
|
%
|
|
305.05
|
%
|
|
225.75
|
%
|
Non-performing
purchased credit-impaired loans (7)
|
$
|
33,715
|
|
|
$
|
25,857
|
|
|
$
|
27,011
|
|
|
$
|
31,275
|
|
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 35 percent federal tax rate. Valley believes that
this presentation provides comparability of net interest income and
net interest margin arising from both taxable and tax-exempt
sources and is consistent with industry practice and SEC
rules.
|
|
|
(2)
|
This press release
contains certain supplemental financial information, described in
the Notes below, which has been determined by methods other than
U.S. Generally Accepted Accounting Principles ("GAAP") that
management uses in its analysis of Valley's performance.
Management believes these non-GAAP financial measures provide
information useful to investors in understanding Valley's financial
results. Specifically, Valley provides measures based on what it
believes are its operating earnings on a consistent basis and
excludes material non-core operating items which affect the GAAP
reporting of results of operations. Management utilizes these
measures for internal planning and forecasting purposes. Management
believes that Valley's presentation and discussion, together with
the accompanying reconciliations, provides a complete understanding
of factors and trends affecting Valley's business and allows
investors to view performance in a manner similar to management.
These non-GAAP measures should not be considered a substitute for
GAAP basis measures and results and Valley strongly encourages
investors to review its consolidated financial statements in their
entirety and not to rely on any single financial measure.
Because non-GAAP financial measures are not standardized, it may
not be possible to compare these financial measures with other
companies' non-GAAP financial measures having the same or similar
names.
|
|
|
|
|
As
of
|
|
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
($ in thousands,
except for share data)
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
Tangible book
value per common share:
|
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding
|
263,971,766
|
|
|
263,842,268
|
|
|
263,638,830
|
|
|
254,461,906
|
|
|
254,362,314
|
|
|
Shareholders'
equity
|
$
|
2,423,901
|
|
|
$
|
2,398,541
|
|
|
$
|
2,377,156
|
|
|
$
|
2,257,073
|
|
|
$
|
2,232,212
|
|
|
Less: Preferred
stock
|
(111,590)
|
|
|
(111,590)
|
|
|
(111,590)
|
|
|
(111,590)
|
|
|
(111,590)
|
|
|
Less: Goodwill and
other intangible assets
|
(734,337)
|
|
|
(735,595)
|
|
|
(736,121)
|
|
|
(733,627)
|
|
|
(734,432)
|
|
|
Tangible common
shareholders' equity
|
$
|
1,577,974
|
|
|
$
|
1,551,356
|
|
|
$
|
1,529,445
|
|
|
$
|
1,411,856
|
|
|
$
|
1,386,190
|
|
|
Tangible book value per common share
|
$5.98
|
|
|
$5.88
|
|
|
$5.80
|
|
|
$5.55
|
|
|
$5.45
|
|
|
Tangible common
equity to tangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
shareholders' equity
|
$
|
1,577,974
|
|
|
$
|
1,551,356
|
|
|
$
|
1,529,445
|
|
|
$
|
1,411,856
|
|
|
$
|
1,386,190
|
|
|
Total
assets
|
23,449,350
|
|
|
23,220,456
|
|
|
22,864,439
|
|
|
22,368,453
|
|
|
21,809,738
|
|
|
Less: Goodwill and
other intangible assets
|
(734,337)
|
|
|
(735,595)
|
|
|
(736,121)
|
|
|
(733,627)
|
|
|
(734,432)
|
|
|
Tangible
assets
|
$
|
22,715,013
|
|
|
$
|
22,484,861
|
|
|
$
|
22,128,318
|
|
|
$
|
21,634,826
|
|
|
$
|
21,075,306
|
|
|
Tangible common equity to tangible assets
|
6.95
|
%
|
|
6.90
|
%
|
|
6.91
|
%
|
|
6.53
|
%
|
|
6.58
|
%
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
|
2017
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Annualized return
on average tangible shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
50,065
|
|
|
$
|
46,095
|
|
|
$
|
39,027
|
|
|
$
|
96,160
|
|
|
$
|
75,214
|
|
|
Average shareholders'
equity
|
2,420,848
|
|
|
2,399,159
|
|
|
2,238,510
|
|
|
2,410,063
|
|
|
2,229,040
|
|
|
Less: Average
goodwill and other intangible assets
|
(734,616)
|
|
|
(736,178)
|
|
|
(735,115)
|
|
|
(735,393)
|
|
|
(735,276)
|
|
|
Average tangible shareholders' equity
|
$
|
1,686,232
|
|
|
$
|
1,662,981
|
|
|
$
|
1,503,395
|
|
|
$
|
1,674,670
|
|
|
$
|
1,493,764
|
|
|
Annualized return on
average tangible shareholders' equity
|
11.88
|
%
|
|
11.09
|
%
|
|
10.38
|
%
|
|
11.48
|
%
|
|
10.07
|
%
|
|
|
(3)
|
The efficiency ratio
measures Valley's total non-interest expense as a percentage of net
interest income plus total non-interest income.
|
(4)
|
Past due loans and
non-accrual loans exclude purchased credit-impaired (PCI)
loans. PCI loans are accounted for on a pool basis under U.S.
GAAP and are not subject to delinquency classification in the same
manner as loans originated by Valley.
|
(5)
|
Excludes OREO
properties related to FDIC-assisted transactions totaling $558
thousand and $1.2 million at December 31, 2016 and June 30, 2016,
respectively. These assets are covered by the loss-sharing
agreements with the FDIC. There were no covered OREO
properties at June 30, 2017 and March 31, 2017.
|
(6)
|
Includes
other-than-temporarily impaired trust preferred securities
classified as available for sale, which are presented at carrying
value (net of unrealized losses totaling $875 thousand, $745
thousand, $817 thousand and $634 thousand at June 30, 2017, March
31, 2017, December 31, 2016 and June 30, 2016, respectively) after
recognition of all credit impairments.
|
(7)
|
Represent PCI loans
meeting Valley's definition of non-performing loan (i.e.,
non-accrual loans), but are not subject to such classification
under U.S. GAAP because the loans are accounted for on a pooled
basis and are excluded from the non-accrual loans in the table
above.
|
|
|
SHAREHOLDERS
RELATIONS
Requests for copies of reports and/or other inquiries
should be directed to Tina Zarkadas, Assistant Vice President,
Shareholder Relations Specialist, Valley National Bancorp, 1455
Valley Road, Wayne, New Jersey, 07470, by telephone at (973)
305-3380, by fax at (973) 305-1364 or by e-mail at
tzarkadas@valleynationalbank.com.
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
(in thousands,
except for share data)
|
|
|
June
30,
|
|
December
31,
|
|
2017
|
|
2016
|
Assets
|
(Unaudited)
|
|
|
Cash and due from
banks
|
$
|
227,830
|
|
|
$
|
220,791
|
|
Interest bearing
deposits with banks
|
129,959
|
|
|
171,710
|
|
Investment
securities:
|
|
|
|
Held to maturity
(fair value of $1,828,732 at June 30, 2017 and $1,924,597 at
December 31, 2016)
|
1,822,263
|
|
|
1,925,572
|
|
Available for
sale
|
1,464,054
|
|
|
1,297,373
|
|
Total investment
securities
|
3,286,317
|
|
|
3,222,945
|
|
Loans held for sale
(includes fair value of $17,919 at June 30, 2017 and $57,708 at
December 31, 2016 for loans originated for sale)
|
139,576
|
|
|
57,708
|
|
Loans
|
17,710,760
|
|
|
17,236,103
|
|
Less: Allowance for
loan losses
|
(116,446)
|
|
|
(114,419)
|
|
Net loans
|
17,594,314
|
|
|
17,121,684
|
|
Premises and
equipment, net
|
290,001
|
|
|
291,180
|
|
Bank owned life
insurance
|
393,997
|
|
|
391,830
|
|
Accrued interest
receivable
|
69,732
|
|
|
66,816
|
|
Goodwill
|
690,637
|
|
|
690,637
|
|
Other intangible
assets, net
|
43,700
|
|
|
45,484
|
|
Other
assets
|
583,287
|
|
|
583,654
|
|
Total
Assets
|
$
|
23,449,350
|
|
|
$
|
22,864,439
|
|
Liabilities
|
|
|
|
Deposits:
|
|
|
|
Non-interest
bearing
|
$
|
5,197,997
|
|
|
$
|
5,252,825
|
|
Interest
bearing:
|
|
|
|
Savings, NOW and
money market
|
8,683,028
|
|
|
9,339,012
|
|
Time
|
3,368,993
|
|
|
3,138,871
|
|
Total
deposits
|
17,250,018
|
|
|
17,730,708
|
|
Short-term
borrowings
|
1,734,444
|
|
|
1,080,960
|
|
Long-term
borrowings
|
1,819,615
|
|
|
1,433,906
|
|
Junior subordinated
debentures issued to capital trusts
|
41,658
|
|
|
41,577
|
|
Accrued expenses and
other liabilities
|
179,714
|
|
|
200,132
|
|
Total
Liabilities
|
21,025,449
|
|
|
20,487,283
|
|
Shareholders'
Equity
|
|
|
|
Preferred stock (no
par value, authorized 50,000,000 shares at June 30, 2017; issued
4,600,000 shares at June 30, 2017 and December 31, 2016)
|
111,590
|
|
|
111,590
|
|
Common stock (no par
value, authorized 450,000,000 shares at June 30, 2017; issued
263,990,794 shares at June 30, 2017 and 263,804,877 shares at
December 31, 2016)
|
92,423
|
|
|
92,353
|
|
Surplus
|
2,049,613
|
|
|
2,044,401
|
|
Retained
earnings
|
207,177
|
|
|
172,754
|
|
Accumulated other
comprehensive loss
|
(36,679)
|
|
|
(42,093)
|
|
Treasury stock, at
cost (19,028 common shares at June 30, 2017 and 166,047 shares at
December 31, 2016)
|
(223)
|
|
|
(1,849)
|
|
Total
Shareholders' Equity
|
2,423,901
|
|
|
2,377,156
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
23,449,350
|
|
|
$
|
22,864,439
|
|
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,
|
|
2017
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
|
185,860
|
|
|
$
|
175,014
|
|
|
$
|
169,426
|
|
|
$
|
360,874
|
|
|
$
|
335,497
|
|
Interest and
dividends on investment securities:
|
|
|
|
|
|
|
|
|
|
Taxable
|
18,928
|
|
|
17,589
|
|
|
14,256
|
|
|
36,517
|
|
|
28,255
|
|
Tax-exempt
|
3,943
|
|
|
4,031
|
|
|
3,734
|
|
|
7,974
|
|
|
7,424
|
|
Dividends
|
2,137
|
|
|
2,151
|
|
|
1,316
|
|
|
4,288
|
|
|
2,796
|
|
Interest on federal
funds sold and other short-term investments
|
279
|
|
|
331
|
|
|
296
|
|
|
610
|
|
|
653
|
|
Total interest
income
|
211,147
|
|
|
199,116
|
|
|
189,028
|
|
|
410,263
|
|
|
374,625
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
Interest on
deposits:
|
|
|
|
|
|
|
|
|
|
Savings, NOW and
money market
|
12,714
|
|
|
10,183
|
|
|
9,961
|
|
|
22,897
|
|
|
19,204
|
|
Time
|
10,166
|
|
|
9,553
|
|
|
9,223
|
|
|
19,719
|
|
|
18,808
|
|
Interest on
short-term borrowings
|
5,516
|
|
|
3,901
|
|
|
3,120
|
|
|
9,417
|
|
|
4,992
|
|
Interest on long-term
borrowings and junior subordinated debentures
|
13,791
|
|
|
12,950
|
|
|
15,269
|
|
|
26,741
|
|
|
32,013
|
|
Total interest
expense
|
42,187
|
|
|
36,587
|
|
|
37,573
|
|
|
78,774
|
|
|
75,017
|
|
Net Interest
Income
|
168,960
|
|
|
162,529
|
|
|
151,455
|
|
|
331,489
|
|
|
299,608
|
|
Provision for credit
losses
|
3,632
|
|
|
2,470
|
|
|
1,429
|
|
|
6,102
|
|
|
2,229
|
|
Net Interest
Income After Provision for Credit Losses
|
165,328
|
|
|
160,059
|
|
|
150,026
|
|
|
325,387
|
|
|
297,379
|
|
Non-Interest
Income
|
|
|
|
|
|
|
|
|
|
Trust and investment
services
|
2,800
|
|
|
2,744
|
|
|
2,544
|
|
|
5,544
|
|
|
4,984
|
|
Insurance
commissions
|
4,358
|
|
|
5,061
|
|
|
4,845
|
|
|
9,419
|
|
|
9,553
|
|
Service charges on
deposit accounts
|
5,342
|
|
|
5,236
|
|
|
5,094
|
|
|
10,578
|
|
|
10,197
|
|
Gains (losses) on
securities transactions, net
|
22
|
|
|
(23)
|
|
|
(3)
|
|
|
(1)
|
|
|
268
|
|
Fees from loan
servicing
|
1,831
|
|
|
1,815
|
|
|
1,561
|
|
|
3,646
|
|
|
3,155
|
|
Gains on sales of
loans, net
|
4,791
|
|
|
4,128
|
|
|
3,105
|
|
|
8,919
|
|
|
4,900
|
|
Bank owned life
insurance
|
1,701
|
|
|
2,463
|
|
|
1,818
|
|
|
4,164
|
|
|
3,781
|
|
Other
|
3,845
|
|
|
3,635
|
|
|
5,300
|
|
|
7,480
|
|
|
8,874
|
|
Total non-interest
income
|
24,690
|
|
|
25,059
|
|
|
24,264
|
|
|
49,749
|
|
|
45,712
|
|
Non-Interest
Expense
|
|
|
|
|
|
|
|
|
|
Salary and employee
benefits expense
|
61,338
|
|
|
63,716
|
|
|
56,072
|
|
|
125,054
|
|
|
116,331
|
|
Net occupancy and
equipment expense
|
22,609
|
|
|
23,035
|
|
|
22,168
|
|
|
45,644
|
|
|
44,957
|
|
FDIC insurance
assessment
|
4,928
|
|
|
5,127
|
|
|
5,095
|
|
|
10,055
|
|
|
10,194
|
|
Amortization of other
intangible assets
|
2,562
|
|
|
2,536
|
|
|
2,928
|
|
|
5,098
|
|
|
5,777
|
|
Professional and
legal fees
|
4,302
|
|
|
4,695
|
|
|
5,472
|
|
|
8,997
|
|
|
9,367
|
|
Amortization of tax
credit investments
|
7,732
|
|
|
5,324
|
|
|
7,646
|
|
|
13,056
|
|
|
14,910
|
|
Telecommunication
expense
|
2,707
|
|
|
2,659
|
|
|
2,294
|
|
|
5,366
|
|
|
4,680
|
|
Other
|
13,061
|
|
|
13,860
|
|
|
18,128
|
|
|
26,921
|
|
|
31,812
|
|
Total non-interest
expense
|
119,239
|
|
|
120,952
|
|
|
119,803
|
|
|
240,191
|
|
|
238,028
|
|
Income Before
Income Taxes
|
70,779
|
|
|
64,166
|
|
|
54,487
|
|
|
134,945
|
|
|
105,063
|
|
Income tax
expense
|
20,714
|
|
|
18,071
|
|
|
15,460
|
|
|
38,785
|
|
|
29,849
|
|
Net
Income
|
50,065
|
|
|
46,095
|
|
|
39,027
|
|
|
96,160
|
|
|
75,214
|
|
Dividends on
preferred stock
|
1,797
|
|
|
1,797
|
|
|
1,797
|
|
|
3,594
|
|
|
3,594
|
|
Net Income
Available to Common Shareholders
|
$
|
48,268
|
|
|
$
|
44,298
|
|
|
$
|
37,230
|
|
|
$
|
92,566
|
|
|
$
|
71,620
|
|
Earnings Per
Common Share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.18
|
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
|
$
|
0.35
|
|
|
$
|
0.28
|
|
Diluted
|
0.18
|
|
|
0.17
|
|
|
0.15
|
|
|
0.35
|
|
|
0.28
|
|
Cash Dividends
Declared per Common Share
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.22
|
|
|
0.22
|
|
Weighted Average
Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
263,958,292
|
|
|
263,797,024
|
|
|
254,381,170
|
|
|
263,878,103
|
|
|
254,228,260
|
|
Diluted
|
264,778,242
|
|
|
264,546,266
|
|
|
254,771,213
|
|
|
264,662,863
|
|
|
254,575,873
|
|
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,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
|
Average
|
|
|
|
Avg.
|
|
Average
|
|
|
|
Avg.
|
|
Average
|
|
|
|
Avg.
|
($ in
thousands)
|
Balance
|
|
Interest
|
|
Rate
|
|
Balance
|
|
Interest
|
|
Rate
|
|
Balance
|
|
Interest
|
|
Rate
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
(1)(2)
|
$
|
17,701,676
|
|
|
$
|
185,863
|
|
|
4.20
|
%
|
|
$
|
17,313,100
|
|
|
$
|
175,017
|
|
|
4.04
|
%
|
|
$
|
16,252,915
|
|
|
$
|
169,430
|
|
|
4.17
|
%
|
Taxable investments
(3)
|
2,967,729
|
|
|
21,065
|
|
|
2.84
|
%
|
|
2,836,300
|
|
|
19,740
|
|
|
2.78
|
%
|
|
2,433,896
|
|
|
15,572
|
|
|
2.56
|
%
|
Tax-exempt
investments (1)(3)
|
581,263
|
|
|
6,066
|
|
|
4.17
|
%
|
|
612,946
|
|
|
6,201
|
|
|
4.05
|
%
|
|
585,948
|
|
|
5,745
|
|
|
3.92
|
%
|
Federal funds sold
and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest bearing
deposits
|
166,003
|
|
|
279
|
|
|
0.67
|
%
|
|
187,118
|
|
|
331
|
|
|
0.71
|
%
|
|
264,813
|
|
|
296
|
|
|
0.45
|
%
|
Total interest
earning assets
|
21,416,671
|
|
|
213,273
|
|
|
3.98
|
%
|
|
20,949,464
|
|
|
201,289
|
|
|
3.84
|
%
|
|
19,537,572
|
|
|
191,043
|
|
|
3.91
|
%
|
Other
assets
|
1,979,588
|
|
|
|
|
|
|
2,046,822
|
|
|
|
|
|
|
2,192,805
|
|
|
|
|
|
Total
assets
|
$
|
23,396,259
|
|
|
|
|
|
|
$
|
22,996,286
|
|
|
|
|
|
|
$
|
21,730,377
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and
money market deposits
|
$
|
8,803,028
|
|
|
$
|
12,715
|
|
|
0.58
|
%
|
|
$
|
9,049,446
|
|
|
$
|
10,183
|
|
|
0.45
|
%
|
|
$
|
8,369,553
|
|
|
$
|
9,961
|
|
|
0.48
|
%
|
Time
deposits
|
3,290,407
|
|
|
10,166
|
|
|
1.24
|
%
|
|
3,178,452
|
|
|
9,553
|
|
|
1.20
|
%
|
|
3,070,113
|
|
|
9,223
|
|
|
1.20
|
%
|
Short-term
borrowings
|
1,837,809
|
|
|
5,516
|
|
|
1.20
|
%
|
|
1,563,000
|
|
|
3,901
|
|
|
1.00
|
%
|
|
1,218,154
|
|
|
3,120
|
|
|
1.02
|
%
|
Long-term borrowings
(4)
|
1,679,691
|
|
|
13,790
|
|
|
3.28
|
%
|
|
1,494,273
|
|
|
12,950
|
|
|
3.47
|
%
|
|
1,623,136
|
|
|
15,269
|
|
|
3.76
|
%
|
Total interest
bearing liabilities
|
15,610,935
|
|
|
42,187
|
|
|
1.08
|
%
|
|
15,285,171
|
|
|
36,587
|
|
|
0.96
|
%
|
|
14,280,956
|
|
|
37,573
|
|
|
1.05
|
%
|
Non-interest bearing
deposits
|
5,195,052
|
|
|
|
|
|
|
5,138,870
|
|
|
|
|
|
|
5,013,821
|
|
|
|
|
|
Other
liabilities
|
169,424
|
|
|
|
|
|
|
173,086
|
|
|
|
|
|
|
197,090
|
|
|
|
|
|
Shareholders'
equity
|
2,420,848
|
|
|
|
|
|
|
2,399,159
|
|
|
|
|
|
|
2,238,510
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
23,396,259
|
|
|
|
|
|
|
$
|
22,996,286
|
|
|
|
|
|
|
$
|
21,730,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income/interest rate spread (5)
|
|
|
$
|
171,086
|
|
|
2.90
|
%
|
|
|
|
$
|
164,702
|
|
|
2.88
|
%
|
|
|
|
$
|
153,470
|
|
|
2.86
|
%
|
Tax equivalent
adjustment
|
|
|
(2,126)
|
|
|
|
|
|
|
(2,173)
|
|
|
|
|
|
|
(2,015)
|
|
|
|
Net interest income,
as reported
|
|
|
$
|
168,960
|
|
|
|
|
|
|
$
|
162,529
|
|
|
|
|
|
|
$
|
151,455
|
|
|
|
Net interest margin
(6)
|
|
|
|
|
3.16
|
%
|
|
|
|
|
|
3.10
|
%
|
|
|
|
|
|
3.10
|
%
|
Tax equivalent
effect
|
|
|
|
|
0.04
|
%
|
|
|
|
|
|
0.04
|
%
|
|
|
|
|
|
0.04
|
%
|
Net interest margin
on a fully tax equivalent basis (6)
|
|
|
|
|
3.20
|
%
|
|
|
|
|
|
3.14
|
%
|
|
|
|
|
|
3.14
|
%
|
|
|
(1)
|
Interest income is
presented on a tax equivalent basis using a 35 percent federal tax
rate.
|
(2)
|
Loans are stated net
of unearned income and include non-accrual loans.
|
(3)
|
The yield for
securities that are classified as available for sale is based on
the average historical amortized cost.
|
(4)
|
Includes junior
subordinated debentures issued to capital trusts which are
presented separately on the consolidated statements of
condition.
|
(5)
|
Interest rate spread
represents the difference between the average yield on interest
earning assets and the average cost of interest bearing liabilities
and is presented on a fully tax equivalent basis.
|
(6)
|
Net interest income
as a percentage of total average interest earning
assets.
|
View original
content:http://www.prnewswire.com/news-releases/valley-national-bancorp-reports-a-28-percent-increase-in-second-quarter-net-income-and-22-million-of-planned-earnings-enhancements-300494104.html
SOURCE Valley National Bancorp