• Valley National Bancorp Reports Strong Organic Loan Growth and Solid Net Interest Income and Margin

    ソース: Nasdaq GlobeNewswire / 28 4 2022 07:00:03   America/New_York

    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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