Valley National Bancorp Reports Strong Organic Loan Growth
Valley National Bancorp Reports Strong Organic Loan Growth

NEW YORK, April 28, 2022 (GLOBE NEWSWIRE) — Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the first quarter 2022 of $116.7 million, or $0.27 per diluted common share, as compared to the first quarter 2021 earnings of $115.7 million, or $0.28 per diluted common share, and net income of $115.0 million, or $0.27 per diluted common share, for the fourth quarter 2021. Excluding non-core charges, our adjusted net income (a non-GAAP measure) was $120.3 million, or $0.28 per diluted common share, for the first quarter 2022, $115.8 million, or $0.28 per diluted common share, for first quarter 2021, and $120.5 million, or $0.28 per diluted common share, for the fourth quarter 2021. See further details below, including a reconciliation of our adjusted net income in the “Consolidated Financial Highlights” tables.

Key financial highlights for the first quarter:

  • Loan Portfolio: Total loans increased $1.2 billion to $35.4 billion at March 31, 2022 from December 31, 2021, despite a $232.3 million decrease in SBA Paycheck Protection Program (PPP) loans within the commercial and industrial loan category. Our non-PPP loan portfolio increased $1.4 billion, or 17.1 percent on an annualized basis, largely due to well-balanced commercial loan production across our primary markets and an uptick in new residential mortgage loans originated for investment rather than sale. See the “Loans, Deposits and Other Borrowings” section below for more details.
  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $318.4 million for the first quarter 2022 increased $2.4 million and $24.8 million as compared to the fourth quarter 2021 and first quarter 2021, respectively. Our net interest margin on a tax equivalent basis decreased by 7 basis points to 3.16 percent in the first quarter 2022 as compared to 3.23 percent for the fourth quarter 2021. The lower margin as compared to the fourth quarter 2021 was largely driven by a $10.1 million decrease in PPP loan related interest and fees. Our costs of average interest bearing liabilities decreased 4 basis points from the fourth quarter 2021 mainly due to continued run-off of maturing higher cost time deposits and lower cost of other borrowings. See the “Net Interest Income and Margin” section below for more details.
  • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $379.3 million and $375.7 million at March 31, 2022 and December 31, 2021, respectively, representing 1.07 percent and 1.10 percent of total loans at each respective date. During the first quarter 2022, we recorded a provision for credit losses for loans of $3.5 million as compared to $11.6 million and $9.0 million for the fourth quarter 2021 and first quarter 2021, respectively. Net recoveries of charged-off loans totaled $50 thousand for the first quarter 2022 as compared to net recoveries of $624 thousand for the fourth quarter 2021. The moderate first quarter 2022 provision and increase in our allowance at March 31, 2022 largely reflects additional reserves required due to the strong loan growth during the first quarter 2022, partially offset by lower expected credit losses mainly within the commercial real estate portfolio.
  • Credit Quality: Non-accrual loans represented 0.65 percent and 0.70 percent of total loans at March 31, 2022 and December 31, 2021, respectively. Total accruing past due loans increased $36.9 million to $92.8 million, or 0.26 percent of total loans, at March 31, 2022 as compared to $55.9 million, or 0.16 percent of total loans, at December 31, 2021. See the “Credit Quality” section below for more details.
  • Non-Interest Income: Non-interest income increased $1.0 million to $39.3 million for the first quarter 2022 as compared to the fourth quarter 2021 mainly due to a $9.6 million increase in swap fee income related to new commercial loan transactions, largely offset by decreases in net gains on sales of residential mortgage loans and securities transactions totaling $5.7 million and $1.6 million, respectively. The decrease in net gains on sales of loans was mainly due to mark to market losses on loans held for sale (at fair value) and, to a lesser extent, lower volumes of residential mortgage sales during the first quarter 2022 as compared with the fourth quarter 2021.
  • Non-Interest Expense: Non-interest expense increased $12.8 million to $197.3 million for the first quarter 2022 as compared to the fourth quarter 2021. The overall increase in non-interest expense was mostly due to normal seasonal increases within salary and employee benefits and net occupancy expense, increased consulting and managed service fees within the professional and legal fees category, as well as incrementally higher operating expenses related to the acquisition of The Westchester Bank Holding Corporation on December 1, 2021. Merger related expenses (mainly reported within salary and employee benefits) totaled $4.6 million and $7.6 million for the first quarter 2022 and fourth quarter 2021, respectively.
  • Efficiency Ratio: Our efficiency ratio was 55.29 percent for the first quarter 2022 as compared to 52.19 percent and 49.46 percent for the fourth quarter 2021 and first quarter 2021, respectively. Our adjusted efficiency ratio was 53.18 percent for the first quarter 2022 as compared to 49.44 percent and 48.60 percent for the fourth quarter 2021 and first quarter 2021, respectively. See the “Consolidated Financial Highlights” tables below for additional information regarding our non-GAAP measures.
  • Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 1.07 percent, 9.15 percent, and 13.09 percent for the first quarter 2022, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, were 1.10 percent, 9.43 percent and 13.49 percent for the first quarter 2022, respectively. See the “Consolidated Financial Highlights” tables below for additional information regarding our non-GAAP measures.

Ira Robbins, CEO and President commented, “Our first quarter results were highlighted by robust commercial loan growth, strong credit metrics, and a stable core net interest margin. The continued momentum on the lending side reflects our ability to attract and service new clients while simultaneously deepening our existing relationships. Excluding PPP loans, our net interest margin would have increased slightly from the fourth quarter despite the seasonal overhang of fewer days in the first quarter. Funding costs continued to decline, and we benefited from liquidity deployment into higher-yielding loans. For the third consecutive quarter, we recognized net recoveries or de minimis loan charge-offs. Valley’s credit quality remains a differentiating characteristic and reflects our strong underwriting standards.”

Mr. Robbins continued, “On April 1, 2022, we closed our acquisition of Bank Leumi USA. Leveraging Bank Leumi’s core business relationships is expected to provide additional differentiated growth opportunities for Valley. Bank Leumi further solidifies Valley as one of the nation’s premier full-service commercial banks. I am extremely excited about what the future holds for our associates and clients.”

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $318.4 million for the first quarter 2022 increased $2.4 million as compared to the fourth quarter 2021 and increased $24.8 million from the first quarter 2021. Interest income on a tax equivalent basis in the first quarter 2022 increased $475 thousand to $341.2 million as compared to the fourth quarter 2021. The increase was mainly due to increases in average loans and taxable investments totaling $1.3 billion and $275.1 million, respectively, largely offset by a $10.1 million decrease in PPP loan related interest and fees during the first quarter 2022 caused by the significant wind down of our remaining PPP loan portfolio over the last several quarters. Interest expense of $22.8 million for the first quarter 2022 decreased $1.9 million as compared to the fourth quarter 2021 as we reduced our cost of funding from deposits and borrowings.

Our net interest margin on a tax equivalent basis of 3.16 percent for the first quarter 2022 decreased by 7 basis points and increased by 2 basis points from 3.23 percent and 3.14 percent for the fourth quarter 2021 and first quarter 2021, respectively. The yield on average interest earning assets decreased by 9 basis points on a linked quarter basis mostly due to the lower yield on loans and two less days in the first quarter 2022 as compared to the fourth quarter 2021. The yield on average loans decreased by 16 basis points to 3.67 percent for the first quarter 2022 as compared to the fourth quarter 2021 largely due to the decrease in PPP loan related interest and fees. The overall cost of average interest bearing liabilities decreased 4 basis points to 0.35 percent for the first quarter 2022 as compared to the fourth quarter 2021. The decrease was mainly due to a 22 basis point decrease in the cost of average long-term borrowings, the continued runoff of maturing higher cost time deposits, and the moderately lower costs of our average non-maturity interest bearing deposits. Our cost of total average deposits was 0.14 percent for the first quarter 2022 as compared to 0.15 percent for the fourth quarter 2021.

Loans, Deposits and Other Borrowings

Loans. Loans increased $1.2 billion to approximately $35.4 billion at March 31, 2022 from December 31, 2021 primarily due to growth in the commercial real estate, construction, non-PPP commercial and industrial and residential mortgage loan categories, despite a $232.3 million decrease in commercial and industrial PPP loans. Total commercial real estate loans (including construction loans) increased $1.1 billion, or 22.1 percent on an annualized basis, to $21.9 billion at March 31, 2022 as compared to December 31, 2021 reflecting continued strong organic loan production across most of our geographic footprints. Commercial and industrial non-PPP loans increased $176.2 million, or 13.0 percent on an annualized basis, during the first quarter 2022 mainly resulting from the solid new loan pipeline in most of our markets driven by direct calling efforts of our growing commercial lending team. Residential mortgage loans increased $146.9 million, or 12.9 percent on an annualized basis, during the first quarter 2022 mainly due to new loan activity in the purchased home market, and, to a lesser extent, refinance loan volumes. Additionally, we originated approximately $144 million of residential mortgage loans for sale rather than investment during the first quarter 2022 as compared to $229 million in the fourth quarter 2021. Residential mortgage loans held for sale at fair value totaled $77.6 million and $139.5 million at March 31, 2022 and December 31, 2021, respectively.

Deposits. Total deposits increased $14.9 million to approximately $35.6 billion at March 31, 2022 from December 31, 2021 due to increases of $271.3 million and $16.3 million in the non-interest bearing and non-maturity interest bearing deposit categories, respectively, mostly offset by a $272.7 million decrease in time deposits. The decrease in time deposits was driven by normal run-off of maturing retail CDs with some continued migration to the more liquid deposit product categories. Total brokered deposits (consisting of money market deposit accounts) decreased approximately $203 million to $1.2 billion at March 31, 2022 as compared to $1.4 billion at December 31, 2021 as our funding mix continued to shift to our commercial and retail deposit customers. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 33 percent, 57 percent and 10 percent of total deposits as of March 31, 2022, respectively.

Other Borrowings. Short-term borrowings decreased $171.5 million to $484.2 million at March 31, 2022 as compared to December 31, 2021 largely due to normal repayments of FHLB advances, partially offset by $125 million of federal funds purchased at March 31, 2022. Long-term borrowings totaled $1.4 billion at March 31, 2022 and remained relatively unchanged from December 31, 2021.

Credit Quality

Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets decreased $12.7 million to $232.7 million at March 31, 2022 as compared to December 31, 2021 mainly due to a $9.8 million decrease in non-accrual loans. Non-accrual loans decreased largely due to loan payoffs net of new activity in several loan categories during the first quarter 2022. Non-accrual loans represented 0.65 percent of total loans at March 31, 2022 compared to 0.70 percent at December 31, 2021.

Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing taxi medallion loans totaling $85.3 million within the non-accrual commercial and industrial loan category at March 31, 2022. At March 31, 2022, all taxi medallion loans were on non-accrual status and had related reserves of $58.2 million, or 68.2 percent of such loans, within the allowance for loan losses.

Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $36.9 million to $92.8 million, or 0.26 percent of total loans, at March 31, 2022 as compared to $55.9 million, or 0.16 percent of total loans at December 31, 2021. Commercial real estate loans past due 30 to 59 days and 60 to 89 days increased $16.4 million and $6.3 million, respectively, to $30.8 million and $6.3 million, respectively at March 31, 2022 as compared to December 31, 2021 mainly due to two loans totaling $13.2 million and $6.0 million included in these respective delinquency categories at March 31, 2022. Commercial and industrial loans past due 60 to 89 days and 90 days or more increased $6.6 million and $8.0 million, respectively, as compared to December 31, 2021 mainly due to a few additional loans that are considered well-secured and in the process of collection.

Forbearance. In response to the COVID-19 pandemic and its economic impact on certain customers, Valley implemented short-term loan modifications under the CARES Act such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment, when requested by customers. At March 31, 2022, Valley had approximately $23 million of outstanding loans remaining in their payment deferral period under short-term modifications, as compared to $28 million of loans in deferral at December 31, 2021.

Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at March 31, 2022, December 31, 2021 and March 31, 2021:

    March 31, 2022   December 31, 2021   March 31, 2021
        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 $ 101,203   1.75 %   $ 103,090   1.76 %   $ 126,408   1.77 %
Commercial real estate loans:                      
  Commercial real estate   189,927   0.96       193,258   1.02 %     153,680   0.91  
  Construction   30,022   1.38       24,232   1.31 %     20,556   1.15  
Total commercial real estate loans   219,949   1.00       217,490   1.05 %     174,236   0.93  
Residential mortgage loans   28,189   0.60       25,120   0.55 %     27,172   0.67  
Consumer loans:                      
  Home equity   3,656   0.93       3,889   0.97 %     4,199   1.03  
  Auto and other consumer   9,513   0.37       9,613   0.37 %     10,865   0.46  
Total consumer loans   13,169   0.45       13,502   0.45 %     15,064   0.54  
Allowance for loan losses   362,510   1.03       359,202   1.05 %     342,880   1.05  
Allowance for unfunded credit commitments   16,742         16,500         11,433    
Total allowance for credit losses for loans $ 379,252       $ 375,702       $ 354,313    
Allowance for credit losses for                      
loans as a % total loans     1.07 %       1.10 %       1.08 %

Our loan portfolio, totaling $35.4 billion at March 31, 2022, had net recoveries of loan charge-offs totaling $50 thousand for the first quarter 2022 as compared to net recoveries of $624 thousand for the fourth quarter 2021 and net loan charge-offs of $6.1 million for the first quarter 2021. There were charge-offs of taxi medallion loans of $206 thousand in the first quarter 2022 as compared to $3.3 million during the first quarter 2021. There were no charge-offs of taxi medallion loans in the fourth quarter 2021.

The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.07 percent at March 31, 2022 as compared to 1.10 percent and 1.08 percent at December 31, 2021 and March 31, 2021, respectively. During the first quarter 2022, we recorded a provision for credit losses for loans of $3.5 million as compared to a provision of $11.6 million and $9.0 million for the fourth quarter 2021 and first quarter 2021, respectively. The allocated reserves as a percentage of commercial real estate loans decreased 6 basis points to 0.96 percent at March 31, 2021 from December 31, 2021 mainly due to lower quantitative reserves for non-owner occupied loans caused by improvement in the expected loss rates at March 31, 2021.

Capital Adequacy

Valley’s regulatory capital ratios continue to reflect its well capitalized position. Valley’s total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 12.65 percent, 9.67 percent, 10.27 percent and 8.70 percent, respectively, at March 31, 2022.

Investor Conference Call

Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Daylight Savings Time, today to discuss the first quarter 2022 earnings. Those wishing to participate in the call may dial toll-free 866-354-0432 Conference Id: 3674992. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/8n68sc23 and archived on Valley’s website through Monday, May 30, 2022. 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 $50 billion in assets, including our recent acquisition of Bank Leumi USA. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations and commercial banking offices across New Jersey, New York, Florida, Alabama, California, and Illinois, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Care Center at 800-522-4100.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. 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 inability to realize expected cost savings and synergies from the Bank Leumi USA acquisition in amounts or in the timeframe anticipated;
  • greater than expected costs or difficulties relating to Bank Leumi USA integration matters;
  • the inability to retain customers and qualified employees of Bank Leumi USA;
  • greater than expected non-recurring charges related to the Bank Leumi USA acquisition;
  • the continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;
  • the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 may arise in our primary markets;
  • the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral;
  • the risks related to the discontinuation of the London Interbank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies;
  • 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, Alabama, California, and Illinois, as well as an unexpected decline in commercial real estate values within our market areas;
  • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
  • the inability to grow customer deposits to keep pace with loan growth;
  • a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
  • the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
  • greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
  • the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley’s branch transformation strategy;
  • cyber-attacks, ransomware attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;
  • results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
  • our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
  • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, the COVID-19 pandemic or other external events; and
  • 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.

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, 2021.

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-

SELECTED FINANCIAL DATA

  Three Months Ended
  March 31,   December 31,   March 31,
($ in thousands, except for share data)   2022       2021       2021  
FINANCIAL DATA:          
Net interest income – FTE (1) $ 318,363     $ 316,000     $ 293,584  
Net interest income $ 317,669     $ 315,301     $ 292,667  
Non-interest income   39,270       38,223       31,233  
Total revenue   356,939       353,524       323,900  
Non-interest expense   197,340       184,514       160,213  
Pre-provision net revenue   159,599       169,010       163,687  
Provision for credit losses   3,557       11,699       8,656  
Income tax expense   39,314       42,273       39,321  
Net income   116,728       115,038       115,710  
Dividends on preferred stock   3,172       3,172       3,172  
Net income available to common shareholders $ 113,556     $ 111,866     $ 112,538  
Weighted average number of common shares outstanding:          
Basic   421,573,843       411,775,590       405,152,605  
Diluted   423,506,550       414,472,820       407,636,765  
Per common share data:          
Basic earnings $ 0.27     $ 0.27     $ 0.28  
Diluted earnings   0.27       0.27       0.28  
Cash dividends declared   0.11       0.11       0.11  
Closing stock price – high   15.02       14.82       14.37  
Closing stock price – low   12.91       13.04       9.74  
CORE ADJUSTED FINANCIAL DATA: (2)          
Net income available to common shareholders, as adjusted $ 117,141     $ 117,366     $ 112,623  
Basic earnings per share, as adjusted   0.28       0.29       0.28  
Diluted earnings per share, as adjusted   0.28       0.28       0.28  
FINANCIAL RATIOS:          
Net interest margin   3.15 %     3.22 %     3.13 %
Net interest margin – FTE (1)   3.16       3.23       3.14  
Annualized return on average assets   1.07       1.08       1.14  
Annualized return on avg. shareholders’ equity   9.15       9.38       9.96  
Annualized return on avg. tangible shareholders’ equity (2)   13.09       13.44       14.49  
Efficiency ratio (3)   55.29       52.19       49.46  
CORE ADJUSTED FINANCIAL RATIOS: (2)          
Annualized return on average assets, as adjusted   1.10 %     1.14 %     1.14 %
Annualized return on average shareholders’ equity, as adjusted   9.43       9.83       9.97  
Annualized return on average tangible shareholders’ equity, as adjusted   13.49       14.08       14.50  
Efficiency ratio, as adjusted   53.18       49.44       48.60  
           
AVERAGE BALANCE SHEET ITEMS:          
Assets $ 43,570,251     $ 42,473,828     $ 40,770,731  
Interest earning assets   40,283,048       39,193,014       37,386,219  
Loans   34,623,402       33,338,128       32,582,479  
Interest bearing liabilities   26,147,915       25,582,956       25,954,182  
Deposits   35,763,683       34,746,786       31,835,286  
Shareholders’ equity   5,104,709       4,905,343       4,645,400  
  As Of
BALANCE SHEET ITEMS: March 31,   December 31,   September 30,   June 30,   March 31,
(In thousands)   2022       2021       2021       2021       2021  
Assets $ 43,551,457     $ 43,446,443     $ 41,278,007     $ 41,274,228     $ 41,178,011  
Total loans   35,364,405       34,153,657       32,606,814       32,457,454       32,686,416  
Deposits   35,647,336       35,632,412       33,632,605       33,194,774       32,585,209  
Shareholders’ equity   5,096,384       5,084,066       4,822,498       4,737,807       4,659,670  
                   
LOANS:                  
(In thousands)                  
Commercial and industrial loans:                  
Commercial and industrial $ 5,587,781     $ 5,411,601     $ 4,761,227     $ 4,733,771     $ 4,784,017  
Commercial and industrial PPP loans   203,609       435,950       874,033       1,350,684       2,364,627  
Total commercial and industrial   5,791,390       5,847,551       5,635,260       6,084,455       7,148,644  
Commercial real estate:                  
Commercial real estate   19,763,202       18,935,486       17,912,070       17,512,142       16,923,627  
Construction   2,174,542       1,854,580       1,804,580       1,752,838       1,786,331  
Total commercial real estate   21,937,744       20,790,066       19,716,650       19,264,980       18,709,958  
Residential mortgage   4,691,935       4,545,064       4,332,422       4,226,975       4,060,492  
Consumer:                  
Home equity   393,538       400,779       402,658       410,856       409,576  
Automobile   1,552,928       1,570,036       1,563,698       1,531,262       1,444,883  
Other consumer   996,870       1,000,161       956,126       938,926       912,863  
Total consumer loans   2,943,336       2,970,976       2,922,482       2,881,044       2,767,322  
Total loans $ 35,364,405     $ 34,153,657     $ 32,606,814     $ 32,457,454     $ 32,686,416  
                   
CAPITAL RATIOS:                  
Book value per common share $ 11.60     $ 11.57     $ 11.32     $ 11.15     $ 10.97  
Tangible book value per common share (2)   7.93       7.94       7.78       7.59       7.39  
Tangible common equity to tangible assets (2)   7.96 %     7.98 %     7.95 %     7.73 %     7.55 %
Tier 1 leverage capital   8.70       8.88       8.63       8.49       8.37  
Common equity tier 1 capital   9.67       10.06       10.06       10.04       10.08  
Tier 1 risk-based capital   10.27       10.69       10.73       10.73       10.79  
Total risk-based capital   12.65       13.10       13.24       13.36       12.76  
  Three Months Ended
ALLOWANCE FOR CREDIT LOSSES: March 31,   December 31,   March 31,
($ in thousands)   2022       2021       2021  
Allowance for credit losses for loans          
Beginning balance $ 375,702     $ 356,927     $ 351,354  
Allowance for purchased credit deteriorated (PCD) loans         6,542        
Loans charged-off:          
Commercial and industrial   (1,571 )     (2,224 )     (7,142 )
Commercial real estate   (173 )           (382 )
Residential mortgage   (26 )     (1 )     (138 )
Total consumer   (825 )     (914 )     (1,138 )
Total loans charged-off   (2,595 )     (3,139 )     (8,800 )
Charged-off loans recovered:          
Commercial and industrial   824       1,153       1,589  
Commercial real estate   107       1,794       65  
Construction               4  
Residential mortgage   457       100       157  
Total consumer   1,257       716       930  
Total loans recovered   2,645       3,763       2,745  
Net recoveries (charge-offs)   50       624       (6,055 )
Provision for credit losses for loans   3,500       11,609       9,014  
Ending balance $ 379,252     $ 375,702     $ 354,313  
Components of allowance for credit losses for loans:          
Allowance for loan losses $ 362,510     $ 359,202     $ 342,880  
Allowance for unfunded credit commitments   16,742       16,500       11,433  
Allowance for credit losses for loans $ 379,252     $ 375,702     $ 354,313  
Components of provision for credit losses for loans:          
Provision for credit losses for loans $ 3,258     $ 9,509     $ 8,692  
Provision for unfunded credit commitments   242       2,100       322  
Total provision for credit losses for loans $ 3,500     $ 11,609     $ 9,014  
Annualized ratio of total net (recoveries) charge-offs to average loans   0.00 %     (0.01 )%     0.07 %
Allowance for credit losses for loans as a % of total loans   1.07       1.10       1.08  
  As of
ASSET QUALITY: March 31,   December 31,   September 30,   June 30,   March 31,
($ in thousands)   2022       2021       2021       2021       2021  
Accruing past due loans:                  
30 to 59 days past due:                  
Commercial and industrial $ 6,723     $ 6,717     $ 2,677     $ 3,867     $ 3,763  
Commercial real estate   30,807       14,421       22,956       40,524       11,655  
Construction   1,708       1,941                    
Residential mortgage   9,266       10,999       9,293       8,479       16,004  
Total consumer   5,862       6,811       5,463       6,242       5,480  
Total 30 to 59 days past due   54,366       40,889       40,389       59,112       36,902  
60 to 89 days past due:                  
Commercial and industrial   14,461       7,870       985       1,361       1,768  
Commercial real estate   6,314             5,897       11,451       5,455  
Construction   3,125                          
Residential mortgage   2,560       3,314       974       1,608       2,233  
Total consumer   554       1,020       1,617       985       1,021  
Total 60 to 89 days past due   27,014       12,204       9,473       15,405       10,477  
90 or more days past due:                  
Commercial and industrial   9,261       1,273       2,083       2,351       2,515  
Commercial real estate         32       1,942       1,948        
Residential mortgage   1,746       677       1,002       956       2,472  
Total consumer   400       789       325       463       417  
Total 90 or more days past due   11,407       2,771       5,352       5,718       5,404  
Total accruing past due loans $ 92,787     $ 55,864     $ 55,214     $ 80,235     $ 52,783  
Non-accrual loans:                  
Commercial and industrial $ 96,631     $ 99,918     $ 100,614     $ 102,594     $ 108,988  
Commercial real estate   79,180       83,592       95,843       58,893       54,004  
Construction   17,618       17,641       17,653       17,660       71  
Residential mortgage   33,275       35,207       33,648       35,941       33,655  
Total consumer   3,754       3,858       4,073       4,924       7,292  
Total non-accrual loans   230,458       240,216       251,831       220,012       204,010  
Other real estate owned (OREO)   1,024       2,259       3,967       4,523       4,521  
Other repossessed assets   1,176       2,931       1,896       2,060       1,857  
Non-accrual debt securities                           129  
Total non-performing assets $ 232,658     $ 245,406     $ 257,694     $ 226,595     $ 210,517  
Performing troubled debt restructured loans $ 56,538     $ 71,330     $ 64,832     $ 64,080     $ 67,102  
Total non-accrual loans as a % of loans   0.65 %     0.70 %     0.77 %     0.68 %     0.62 %
Total accruing past due and non-accrual loans as a % of loans   0.91 %     0.87 %     0.94 %     0.93 %     0.79 %
Allowance for losses on loans as a % of non-accrual loans   157.30 %     149.53 %     136.01 %     154.23 %     168.07 %

NOTES TO SELECTED FINANCIAL DATA

(1 ) Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
(2 ) This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”) that management uses in its analysis of Valley’s performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley’s financial results. Specifically, Valley provides measures based on what it believes are its core operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley’s presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley’s business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
  Three Months Ended
  March 31,   December 31,   March 31,
($ in thousands, except for share data)   2022       2021       2021  
Adjusted net income available to common shareholders:          
Net income, as reported $ 116,728     $ 115,038     $ 115,710  
Add: Losses on available for sale and held to maturity securities transactions (net of tax)(a)   6       9       85  
Add: Merger related expenses (net of tax)(b)   3,579       5,491        
Net income, as adjusted $ 120,313     $ 120,538     $ 115,795  
Dividends on preferred stock   3,172       3,172       3,172  
Net income available to common shareholders, as adjusted $ 117,141     $ 117,366     $ 112,623  
__________          
(a) Included in (losses) gains on securities transactions, net.
(b) Merger related expenses are primarily within salary and employee benefits expense, professional and legal fees and other expense.
 
Adjusted per common share data:          
Net income available to common shareholders, as adjusted $ 117,141     $ 117,366     $ 112,623  
Average number of shares outstanding   421,573,843       411,775,590       405,152,605  
Basic earnings, as adjusted $ 0.28     $ 0.29     $ 0.28  
Average number of diluted shares outstanding   423,506,550       414,472,820       407,636,765  
Diluted earnings, as adjusted $ 0.28     $ 0.28     $ 0.28  
Adjusted annualized return on average tangible shareholders’ equity:          
Net income, as adjusted $ 120,313     $ 120,538     $ 115,795  
Average shareholders’ equity $ 5,104,709     $ 4,905,343     $ 4,645,400  
Less: Average goodwill and other intangible assets   1,538,356       1,481,951       1,451,750  
Average tangible shareholders’ equity $ 3,566,353     $ 3,423,392     $ 3,193,650  
Annualized return on average tangible shareholders’ equity, as adjusted   13.49 %     14.08 %     14.50 %
Adjusted annualized return on average assets:          
Net income, as adjusted $ 120,313     $ 120,538     $ 115,795  
Average assets $ 43,570,251     $ 42,473,828     $ 40,770,731  
Annualized return on average assets, as adjusted   1.10 %     1.14 %     1.14 %
  Three Months Ended
  March 31,   December 31,   March 31,
($ in thousands)   2022       2021       2021  
Adjusted annualized return on average shareholders’ equity:          
Net income, as adjusted $ 120,313     $ 120,538     $ 115,795  
Average shareholders’ equity $ 5,104,709     $ 4,905,343     $ 4,645,400  
Annualized return on average shareholders’ equity, as adjusted   9.43 %     9.83 %     9.97 %
Annualized return on average tangible shareholders’ equity:          
Net income, as reported $ 116,728     $ 115,038     $ 115,710  
Average shareholders’ equity $ 5,104,709     $ 4,905,343     $ 4,645,400  
Less: Average goodwill and other intangible assets   1,538,356       1,481,951       1,451,750  
Average tangible shareholders’ equity $ 3,566,353     $ 3,423,392     $ 3,193,650  
Annualized return on average tangible shareholders’ equity   13.09 %     13.44 %     14.49 %
Adjusted efficiency ratio:          
Non-interest expense, as reported $ 197,340     $ 184,514     $ 160,213  
Less: Merger-related expenses (pre-tax)   4,628       7,613        
Less: Amortization of tax credit investments (pre-tax)   2,896       2,115       2,744  
Non-interest expense, as adjusted $ 189,816     $ 174,786     $ 157,469  
Net interest income   317,669       315,301       292,667  
Non-interest income, as reported   39,270       38,223       31,233  
Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax)   9       12       118  
Non-interest income, as adjusted $ 39,279     $ 38,235     $ 31,351  
Gross operating income, as adjusted $ 356,948     $ 353,536     $ 324,018  
Efficiency ratio, as adjusted   53.18 %     49.44 %     48.60 %
  As of
  March 31,   December 31,   September 30,   June 30,   March 31,
($ in thousands, except for share data)   2022       2021       2021       2021       2021  
Tangible book value per common share:                  
Common shares outstanding   421,394,277       421,437,068       407,313,664       406,083,790       405,797,538  
Shareholders’ equity $ 5,096,384     $ 5,084,066     $ 4,822,498     $ 4,737,807     $ 4,659,670  
Less: Preferred stock   209,691       209,691       209,691       209,691       209,691  
Less: Goodwill and other intangible assets   1,543,238       1,529,394       1,444,967       1,447,965       1,450,414  
Tangible common shareholders’ equity $ 3,343,455     $ 3,344,981     $ 3,167,840     $ 3,080,151     $ 2,999,565  
Tangible book value per common share $ 7.93     $ 7.94     $ 7.78     $ 7.59     $ 7.39  
Tangible common equity to tangible assets:                
Tangible common shareholders’ equity $ 3,343,455     $ 3,344,981     $ 3,167,840     $ 3,080,151     $ 2,999,565  
Total assets $ 43,551,457     $ 43,446,443     $ 41,278,007     $ 41,274,228     $ 41,178,011  
Less: Goodwill and other intangible assets   1,543,238       1,529,394       1,444,967       1,447,965       1,450,414  
Tangible assets $ 42,008,219     $ 41,917,049     $ 39,833,040     $ 39,826,263     $ 39,727,597  
Tangible common equity to tangible assets   7.96 %     7.98 %     7.95 %     7.73 %     7.55 %
   
(3 ) The efficiency ratio measures Valley’s total non-interest expense as a percentage of net interest income plus total non-interest income.
   
  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.
  March 31,   December 31,
    2022       2021  
  (Unaudited)    
Assets      
Cash and due from banks $ 424,035     $ 205,156  
Interest bearing deposits with banks   306,885       1,844,764  
Investment securities:      
Equity securities   35,992       36,473  
Trading debt securities   11,739       38,130  
Available for sale debt securities   1,015,034       1,128,809  
Held to maturity debt securities (net of allowance for credit losses of $1,222 at March 31, 2022 and $1,165 at December 31, 2021)   3,071,983       2,667,532  
Total investment securities   4,134,748       3,870,944  
Loans held for sale, at fair value   77,632       139,516  
Loans   35,364,405       34,153,657  
Less: Allowance for loan losses   (362,510 )     (359,202 )
Net loans   35,001,895       33,794,455  
Premises and equipment, net   337,479       326,306  
Lease right of use assets   258,512       259,117  
Bank owned life insurance   566,440       566,770  
Accrued interest receivable   102,667       96,882  
Goodwill   1,468,354       1,459,008  
Other intangible assets, net   74,884       70,386  
Other assets   797,926       813,139  
Total Assets $ 43,551,457     $ 43,446,443  
Liabilities      
Deposits:      
Non-interest bearing $ 11,947,001     $ 11,675,748  
Interest bearing:      
Savings, NOW and money market   20,285,967       20,269,620  
Time   3,414,368       3,687,044  
Total deposits   35,647,336       35,632,412  
Short-term borrowings   484,181       655,726  
Long-term borrowings   1,409,142       1,423,676  
Junior subordinated debentures issued to capital trusts   56,500       56,413  
Lease liabilities   282,437       283,106  
Accrued expenses and other liabilities   575,477       311,044  
Total Liabilities   38,455,073       38,362,377  
Shareholders’ Equity      
Preferred stock, no par value; 50,000,000 authorized shares:      
Series A (4,600,000 shares issued at March 31, 2022 and December 31, 2021)   111,590       111,590  
Series B (4,000,000 shares issued at March 31, 2022 and December 31, 2021)   98,101       98,101  
Common stock (no par value, authorized 650,000,000 shares; issued 423,034,027 at March 31, 2022 and December 31, 2021)   148,482       148,482  
Surplus   3,872,236       3,883,035  
Retained earnings   945,225       883,645  
Accumulated other comprehensive loss   (56,098 )     (17,932 )
Treasury stock, at cost (1,639,750 shares at March 31, 2022 and 1,596,959 common shares at December 31, 2021)   (23,152 )     (22,855 )
Total Shareholders’ Equity   5,096,384       5,084,066  
Total Liabilities and Shareholders’ Equity $ 43,551,457     $ 43,446,443  
  Three Months Ended
  March 31,   December 31,   March 31,
    2022       2021     2021  
Interest Income          
Interest and fees on loans $ 317,365     $ 319,141   $ 313,181  
Interest and dividends on investment securities:          
Taxable   18,439       15,852     13,166  
Tax-exempt   2,517       2,535     3,356  
Dividends   1,676       1,814     1,871  
Interest on federal funds sold and other short-term investments   461       637     224  
Total interest income   340,458       339,979     331,798  
Interest Expense          
Interest on deposits:          
Savings, NOW and money market   9,627       9,983     11,125  
Time   2,831       3,328     11,093  
Interest on short-term borrowings   806       984     1,758  
Interest on long-term borrowings and junior subordinated debentures   9,525       10,383     15,155  
Total interest expense   22,789       24,678     39,131  
Net Interest Income   317,669       315,301     292,667  
Provision (credit) for credit losses for held to maturity securities   57       90     (358 )
Provision for credit losses for loans   3,500       11,609     9,014  
Net Interest Income After Provision for Credit Losses   314,112       303,602     284,011  
Non-Interest Income          
Trust and investment services   5,131       4,499     3,329  
Insurance commissions   1,859       2,005     1,558  
Service charges on deposit accounts   6,212       5,810     5,103  
(Losses) gains on securities transactions, net   (1,072 )     495     101  
Fees from loan servicing   2,781       2,671     2,899  
Gains on sales of loans, net   986       6,653     3,513  
Bank owned life insurance   2,046       1,993     2,331  
Other   21,327       14,097     12,399  
Total non-interest income   39,270       38,223     31,233  
Non-Interest Expense          
Salary and employee benefits expense   107,733       102,675     88,103  
Net occupancy and equipment expense   36,806       34,986     32,259  
FDIC insurance assessment   4,158       3,889     3,276  
Amortization of other intangible assets   4,437       5,074     6,006  
Professional and legal fees   14,749       11,182     6,272  
Amortization of tax credit investments   2,896       2,115     2,744  
Telecommunication expense   3,271       2,902     3,160  
Other   23,290       21,691     18,393  
Total non-interest expense   197,340       184,514     160,213  
Income Before Income Taxes   156,042       157,311     155,031  
Income tax expense   39,314       42,273     39,321  
Net Income   116,728       115,038     115,710  
Dividends on preferred stock   3,172       3,172     3,172  
Net Income Available to Common Shareholders $ 113,556     $ 111,866   $ 112,538  
  Three Months Ended
  March 31,   December 31,   March 31,
  2022   2021   2021
Earnings Per Common Share:          
Basic $ 0.27   $ 0.27   $ 0.28
Diluted   0.27     0.27     0.28
Cash Dividends Declared per Common Share   0.11     0.11     0.11
Weighted Average Number of Common Shares Outstanding:          
Basic   421,573,843     411,775,590     405,152,605
Diluted   423,506,550     414,472,820     407,636,765
  Three Months Ended
  March 31, 2022   December 31, 2021   March 31, 2021
  Average       Avg.   Average       Avg.   Average       Avg.
($ in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
Assets                                  
Interest earning assets:                              
Loans (1)(2) $ 34,623,402   $ 317,390   3.67 %   $ 33,338,128   $ 319,165   3.83 %   $ 32,582,479   $ 313,206   3.85 %
Taxable investments (3)   3,838,468     20,115   2.1       3,563,329     17,667   1.98       3,111,116     15,037   1.93  
Tax-exempt investments (1)(3)   401,742     3,186   3.17       418,049     3,209   3.07       513,809     4,248   3.31  
Interest bearing deposits with banks   1,419,436     461   0.13       1,873,508     636   0.14       1,178,815     224   0.08  
Total interest earning assets   40,283,048     341,152   3.39       39,193,014     340,677   3.48       37,386,219     332,715   3.56  
Other assets   3,287,203             3,280,814             3,384,512        
Total assets $ 43,570,251           $ 42,473,828           $ 40,770,731        
Liabilities and shareholders’ equity                                  
Interest bearing liabilities:                                  
Savings, NOW and money market deposits $ 20,522,629   $ 9,627   0.19 %   $ 19,685,730   $ 9,983   0.20 %   $ 16,617,762   $ 11,125   0.27 %
Time deposits   3,554,520     2,831   0.32       3,744,792     3,328   0.36       5,844,524     11,093   0.76  
Short-term borrowings   594,297     806   0.54       670,433     983   0.59       1,168,617     1,758   0.6  
Long-term borrowings (4)   1,476,469     9,525   2.58       1,482,001     10,383   2.8       2,323,279     15,155   2.61  
Total interest bearing liabilities   26,147,915     22,789   0.35       25,582,956     24,677   0.39       25,954,182     39,131   0.6  
Non-interest bearing deposits   11,686,534             11,316,264             9,373,000        
Other liabilities   631,093             669,265             798,149        
Shareholders’ equity   5,104,709             4,905,343             4,645,400        
Total liabilities and shareholders’ equity $ 43,570,251           $ 42,473,828           $ 40,770,731        
                                   
Net interest income/interest rate spread (5)     $ 318,363   3.04 %       $ 316,000   3.09 %       $ 293,584   2.96 %
Tax equivalent adjustment       (694           (699           (917  
Net interest income, as reported     $ 317,669           $ 315,301           $ 292,667    
Net interest margin (6)         3.15             3.22             3.13  
Tax equivalent effect         0.01             0.01             0.01  
Net interest margin on a fully tax equivalent basis (6)         3.16 %           3.23 %           3.14 %

 

_____________
(1)   Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
(2)   Loans are stated net of unearned income and include non-accrual loans.
(3)   The yield for securities that are classified as available for sale is based on the average historical amortized cost.
(4)   Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
(5)   Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
(6)   Net interest income as a percentage of total average interest earning assets.

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

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