8-K
VALLEY NATIONAL BANCORP (VLY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 28, 2022
Valley National Bancorp
(Exact Name of Registrant as Specified in Charter)
| New Jersey | 1-11277 | 22-2477875 | |||||
|---|---|---|---|---|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (I.R.S. Employer<br><br>Identification Number) | One Penn Plaza, | New York, | New York | 10119 | |
| --- | --- | --- | --- | ||||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (973) 305-8800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of exchange on which registered |
|---|---|---|
| Common Stock, no par value | VLY | The Nasdaq Stock Market LLC |
| Non-Cumulative Perpetual Preferred Stock, Series A, no par value | VLYPP | The Nasdaq Stock Market LLC |
| Non-Cumulative Perpetual Preferred Stock, Series B, no par value | VLYPO | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On July 28, 2022, Valley National Bancorp (“Valley”) issued a press release reporting second quarter 2022 results of operations.
A copy of the press release is attached to this Current Report Form 8-K as Exhibit 99.1.
The information disclosed in this Item 2.02 shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended.
Valley’s second quarter 2022 press release contains certain supplemental financial information, described in the Notes to Selected Financial Data included in Exhibit 99.1, which has been determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”). Management internally reviews each of these non-GAAP financial measures to evaluate performance on a comparative period to period basis. Management believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP.
| Item 7.01 | Regulation FD Disclosure. |
|---|
Valley is furnishing presentation materials included as Exhibit 99.2 to this report pursuant to Item 7.01 of Form 8-K. Valley is not undertaking to update this presentation. The information in this report (including Exhibit 99.2) is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. This report will not be deemed an admission as to the materiality of any information herein (including Exhibit 99.2).
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| Exhibit No. | Description |
| (d) | Exhibits. |
| 99.1 | Press Release dated July 28, 2022. |
| The Press Release disclosed in this Item 9.01 as Exhibit 99.1 shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended. | |
| 99.2 | Valley National Bancorp Presentation materials used in connection with second quarter 2022 conference. |
| The presentation materials disclosed in this Item 9.01 as Exhibit 99.2 shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: July 28, 2022 | VALLEY NATIONAL BANCORP | |
|---|---|---|
| By: | /s/ Michael D. Hagedorn | |
| Michael D. Hagedorn | ||
| Senior Executive Vice President and | ||
| Chief Financial Officer<br><br>(Principal Financial Officer) |
Document
| News Release | ||
|---|---|---|
| FOR IMMEDIATE RELEASE | Contact: | Michael D. Hagedorn |
| --- | --- | --- |
| Senior Executive Vice President and | ||
| Chief Financial Officer | ||
| 973-872-4885 |
VALLEY NATIONAL BANCORP REPORTS SECOND QUARTER 2022 EARNINGS WITH STRONG ORGANIC LOAN GROWTH, NET INTEREST INCOME AND MARGIN
NEW YORK, NY – July 28, 2022 -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the second quarter 2022 of $96.4 million, or $0.18 per diluted common share, as compared to the second quarter 2021 earnings of $120.5 million, or $0.29 per diluted common share, and net income of $116.7 million, or $0.27 per diluted common share, for the first quarter 2022.
Our second quarter 2022 results reflect the impact of the April 1, 2022 acquisition of Bank Leumi USA and include $95.5 million pre-tax ($69.4 million after-tax), or $0.14 per diluted share, of merger-related expenses and initial non-purchased credit deteriorated (non-PCD) provision. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $165.8 million, or $0.32 per diluted common share, for the second quarter 2022, $126.6 million, or $0.30 per diluted common share, for second quarter 2021, and $120.3 million, or $0.28 per diluted common share, for the first quarter 2022. See further details below, including a reconciliation of our non-GAAP adjusted net income in the "Consolidated Financial Highlights" tables.
Key financial highlights for the second quarter:
•Acquisition of Bank Leumi Le-Israel Corporation. On April 1, 2022, Valley completed its acquisition of Bank Leumi Le-Israel Corporation, the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, and collectively referred to as "Bank Leumi USA". At the acquisition date, Bank Leumi USA had approximately $8.1 billion in assets, $5.9 billion of loans and $7.0 billion of deposits, after purchase accounting adjustments. Valley issued approximately 85 million shares of common stock and paid $113.4 million in cash in the transaction. The consideration for the acquisition totaled approximately $1.2 billion, inclusive of the value of stock options. The transaction resulted in $403.2 million of goodwill and $153.4 million of core deposit and other intangible assets subject to amortization.
•Loan Portfolio: Total loans increased $8.2 billion to $43.6 billion at June 30, 2022 from March 31, 2022 primarily due to $5.9 billion of loans acquired from Bank Leumi and strong organic loan growth. Excluding acquired loans from Bank Leumi USA, our loan portfolio increased 26 percent on an annualized basis during the second quarter 2022 as a result of strong commercial loan volumes and a continued uptick in new residential mortgage loans originated for investment rather than sale. We sold approximately $125 million of residential mortgage loans resulting in total pre-tax gains of $3.6 million in the second quarter 2022. See the "Loans, Deposits and Other Borrowings" section below for more details.
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
•Net Interest Income and Margin: Net interest income on a tax equivalent basis of $419.6 million for the second quarter 2022 increased $101.2 million and $117.8 million as compared to the first quarter 2022 and second quarter 2021, respectively, reflecting our acquisition of Bank Leumi USA, continued organic loan growth and a well-positioned balance sheet in the current rising interest rate environment. Our net interest margin on a tax equivalent basis continued to be strong and increased by 27 basis points to 3.43 percent in the second quarter 2022 as compared to 3.16 percent for the first quarter 2022. 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 $491.0 million and $379.3 million at June 30, 2022 and March 31, 2022, respectively, representing 1.13 percent and 1.07 percent of total loans at each respective date. During the second quarter 2022, the provision for credit losses for loans totaled $43.7 million as compared to $3.5 million and $8.8 million for the first quarter 2022 and second quarter 2021, respectively. The second quarter 2022 provision included a $41.0 million related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.
•Credit Quality: Total accruing past due loans decreased $19.3 million to $73.5 million, or 0.17 percent of total loans, at June 30, 2022 as compared to $92.8 million, or 0.26 percent of total loans, at March 31, 2022. Non-accrual loans represented 0.72 percent and 0.65 percent of total loans at June 30, 2022 and March 31, 2022, respectively. See the "Credit Quality" section below for more details.
•Non-Interest Income: Non-interest income increased $19.3 million to $58.5 million for the second quarter 2022 as compared to the first quarter 2022 mainly driven by increases in several categories including wealth management and trust fees, service charges on deposit accounts and other income totaling $4.4 million, $3.9 million and $6.0 million, respectively. These increases were primarily due to the acquisition of Bank Leumi USA. Net gains on sales of residential mortgage loans also increased $2.6 million to $3.6 million for the second quarter 2022 as compared with the first quarter 2022.
•Non-Interest Expense: Non-interest expense increased $102.4 million to $299.7 million for the second quarter 2022 as compared to the first quarter 2022. The increase was largely due to $54.5 million of merger expenses incurred during the second quarter 2022 and our expanded banking operations resulting from the Bank Leumi USA acquisition. Merger expenses were mainly reported within salary and employee benefits, professional and legal fees, and other expense (largely consisting of technology related costs) totaling $28.0 million, $11.2 million and $15.3 million, respectively. Amortization of intangible assets increased $7.0 million as compared to first quarter 2022 mostly due to additional core deposit and other intangible assets resulting from the Bank Leumi USA acquisition.
•Efficiency Ratio: Our efficiency ratio was 50.78 percent for the second quarter 2022 as compared to 53.18 percent and 46.64 percent for the first quarter 2022 and second 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 0.72 percent, 6.18 percent, and 9.33 percent for the second quarter
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
2022, respectively. Annualized ROA, ROE, and tangible ROE, adjusted for non-core charges, were 1.25 percent, 10.63 percent and 16.05 percent for the second quarter 2022, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
Ira Robbins, CEO commented, "Our exceptional commercial loan growth and the acquisition of Bank Leumi USA combined with a supportive interest rate environment propelled our strong core operating results during the quarter. Our net interest margin on a tax equivalent basis increased 27 basis points as compared to the first quarter 2022 reflecting the expected benefit of higher interest rates on our asset sensitive balance sheet and our ability to manage overall funding costs with modest deposit betas during the quarter. On an organic basis, Valley continues to grow existing relationships and attract new clients by offering premier advisory expertise and service across our diverse business lines. Our underwriting criteria remain consistent with the Valley legacy that has driven solid credit metrics across various economic environments.”
Mr. Robbins continued, “We are thrilled with the early returns on the Bank Leumi USA acquisition during the second quarter 2022. Commercial loan growth and synergies from the merged Leumi and Valley banker teams have been strong, and differentiated deposit niches have further enhanced our core funding capabilities. As we continue to integrate this recent acquisition and leverage our combined infrastructure, Valley is poised to remain one of the premier full-service commercial banks in the country.”
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $419.6 million for the second quarter 2022 increased $101.2 million as compared to the first quarter 2022 and increased $117.8 million from the second quarter 2021. Interest income on a tax equivalent basis in the second quarter 2022 increased $113.2 million to $454.4 million as compared to the first quarter 2022. The increase was mostly due to higher average loan balances driven both by acquired and organic loans and increased yields on both new originations and adjustable rate loans in our portfolio. Interest expense of $34.8 million for the second quarter 2022 increased $12.0 million as compared to the first quarter 2022 largely due to a moderate increase in interest rates on both non-maturity deposits and short-term borrowings, as well as interest expense related to deposits and borrowings assumed in the Bank Leumi USA acquisition.
Our net interest margin on a tax equivalent basis of 3.43 percent for the second quarter 2022 increased by 27 basis points and 25 basis points from 3.16 percent and 3.18 percent for the first quarter 2022 and second quarter 2021, respectively. The yield on average interest earning assets increased by 33 basis points on a linked quarter basis mostly due to the aforementioned higher yields on new and adjustable rate loans in the second quarter 2022 as compared to the first quarter 2022. The yield on average loans increased by 24 basis points to 3.91 percent for the second quarter 2022 as compared to the first quarter 2022 largely due to the higher level of market interest rates. The yields on average taxable and non-taxable investments also increased 39 basis points and 67 basis points, respectively, from the first quarter 2022 largely due to interest income, including discount accretion, on investment securities acquired from Bank Leumi USA. The overall cost of average interest bearing liabilities increased 12 basis points to 0.47 percent for the second quarter 2022 as compared to the first quarter 2022. The
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
increase was mainly due to moderately higher pricing of non-maturity deposits combined with greater utilization of brokered deposits and short-term borrowings in our loan funding mix during the second quarter 2022. Our cost of total average deposits only increased to 0.19 percent for the second quarter 2022 from 0.14 percent for the first quarter 2022.
Loans, Deposits and Other Borrowings
Loans. Loans increased $8.2 billion to approximately $43.6 billion at June 30, 2022 from March 31, 2022 largely due to a combination of $5.9 billion of acquired loans from Bank Leumi USA and strong organic loan growth. Excluding the Bank Leumi USA acquired loans, commercial and industrial, total commercial real estate (including construction) and residential mortgage loans increased 26 percent, 26 percent and 25 percent, respectively, on an annualized basis during the second quarter 2022. SBA Paycheck Protection Program (PPP) loans within the commercial and industrial category totaled $136.0 million at June 30, 2022 compared to $203.6 million at March 31, 2022. Strong organic loan production continued to be experienced across most of our geographic footprints and was further strengthened by the Bank Leumi acquisition on April 1, 2022. Residential mortgage loans increased $313.1 million during the second quarter 2022 primarily due to new loan activity in the purchased home market and an increase in such loans originated for investment rather than sale. Residential mortgage loans acquired from Bank Leumi USA were not material. Residential mortgage loans held for sale at fair value totaled $18.3 million and $77.6 million at June 30, 2022 and March 31, 2022, respectively.
Deposits. Total deposits increased $8.2 billion to approximately $43.9 billion at June 30, 2022 from March 31, 2022 mostly due to $7.0 billion of assumed deposits from Bank Leumi USA, continued growth in our commercial niches and our increased utilization of brokered deposits, consisting of money market and time deposit accounts, in our funding mix. Total brokered deposits increased to $2.3 billion at June 30, 2022 as compared to $1.2 billion at March 31, 2022. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 37 percent, 54 percent and 9 percent of total deposits as of June 30, 2022, respectively, as compared to 33 percent, 57 percent and 10 percent of total deposits as of March 31, 2022, respectively.
Other Borrowings. Short-term borrowings increased $1.0 billion to $1.5 billion at June 30, 2022 as compared to March 31, 2022 largely due to additional FHLB advances, including approximately $103.8 million assumed from Bank Leumi USA, partially offset by a $125 million decrease in federal funds purchased at June 30, 2022. Long-term borrowings totaled $1.4 billion at June 30, 2022 and remained relatively unchanged from March 31, 2022.
Credit Quality
Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets increased $82.1 million to $314.7 million at June 30, 2022 as compared to March 31, 2022 mostly due to $70.5 million of acquired non-accrual loans from Bank Leumi USA. Non-accrual commercial and industrial loans include an additional $43.0 million borrower relationship with related reserves of $22.0 million within the allowance for loan losses at June 30, 2022 as compared to March 31, 2022. Non-accrual loans represented 0.72 percent of total loans at June 30, 2022 compared to 0.65 percent at March 31, 2022.
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing taxi medallion loans totaling $80.4 million within the non-accrual commercial and industrial loan category at June 30, 2022. At June 30, 2022, all taxi medallion loans were on non-accrual status and had related reserves of $55.3 million, or 68.8 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) decreased $19.3 million to $73.5 million, or 0.17 percent of total loans, at June 30, 2022 as compared to $92.8 million, or 0.26 percent of total loans at March 31, 2022. Commercial real estate loans past due 30 to 59 days and 60 to 89 days decreased $20.3 million and $5.7 million, respectively, at June 30, 2022 as compared to March 31, 2022. The decreases were mainly due to two loans of $13.2 million and $6.0 million that were included in the respective delinquency categories at March 31, 2022 that were reported as non-accrual and current loans, respectively, as of June 30, 2022. Commercial and industrial loans past due 60 to 89 days also decreased $10.6 million as compared to March 31, 2022, largely due to the migration of loans totaling $8.8 million to the 90 days or more past due category at June 30, 2022. All loans 90 days or more past due and still accruing interest are considered well-secured and in the process of collection.
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 June 30, 2022, March 31, 2022 and June 30, 2021:
| June 30, 2022 | March 31, 2022 | June 30, 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 | 1.70 | % | $ | 101,203 | 1.75 | % | $ | 109,689 | 1.80 | % | ||
| Commercial real estate loans: | ||||||||||||
| Commercial real estate | 227,457 | 0.97 | 189,927 | 0.96 | % | 168,220 | 0.96 | |||||
| Construction | 49,770 | 1.47 | 30,022 | 1.38 | % | 20,919 | 1.19 | |||||
| Total commercial real estate loans | 277,227 | 1.03 | 219,949 | 1.00 | % | 189,139 | 0.98 | |||||
| Residential mortgage loans | 29,889 | 0.60 | 28,189 | 0.60 | % | 25,303 | 0.60 | |||||
| Consumer loans: | ||||||||||||
| Home equity | 3,907 | 0.91 | 3,656 | 0.93 | % | 4,602 | 1.12 | |||||
| Auto and other consumer | 13,257 | 0.49 | 9,513 | 0.37 | % | 10,591 | 0.43 | |||||
| Total consumer loans | 17,164 | 0.55 | 13,169 | 0.45 | % | 15,193 | 0.53 | |||||
| Allowance for loan losses | 468,819 | 1.08 | 362,510 | 1.03 | % | 339,324 | 1.05 | |||||
| Allowance for unfunded credit commitments | 22,144 | 16,742 | 14,400 | |||||||||
| Total allowance for credit losses for loans | $ | 379,252 | $ | 353,724 | ||||||||
| Allowance for credit losses for | ||||||||||||
| loans as a % total loans | 1.13 | % | 1.07 | % | 1.09 | % |
All values are in US Dollars.
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
Our loan portfolio, totaling $43.6 billion at June 30, 2022, had net loan charge-offs totaling $2.3 million (excluding $62.4 million of immediate PCD loan charge-offs related to the Bank Leumi USA acquisition) for the second quarter 2022 as compared to net recoveries of $50 thousand for the first quarter 2022 and net loan charge-offs of $9.4 million for the second quarter 2021. Gross loan charge-offs of taxi medallion loans totaled $2.7 million for the second quarter 2022 as compared to $1.4 million during the second quarter 2021. There were no charge-offs of taxi medallion loans in the first quarter 2022.
During the second quarter 2022, the provision for credit losses for loans totaled $43.7 million as compared to $3.5 million and $8.8 million for the first quarter 2022 and second quarter 2021, respectively. The increase in the second quarter 2022 provision as compared to the first quarter 2022 was primarily due to $41.0 million of provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA. Overall, an increased economic forecast reserve component of our CECL model was largely offset by lower expected quantitative loss experience at June 30, 2022 as compared to March 31, 2022.
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 1.13 percent at June 30, 2022 as compared to 1.07 percent and 1.09 percent at March 31, 2022 and June 30, 2021, respectively. The allowance for credit losses increased $111.7 million at June 30, 2022 as compared to March 31, 2022 due, in large part, to a $70.3 million net allowance for credit losses for loans recorded for PCD loans acquired from Bank Leumi USA at the April 1, 2022 acquisition date and $41.0 million included in our second quarter 2022 provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.
Capital Adequacy
Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 11.53 percent, 9.06 percent, 9.54 percent, and 8.33 percent, respectively, at June 30, 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 second quarter 2022 earnings and related matters.
Those wishing to participate should preregister using this link: https://register.vevent.com/register/BIab2b17746c8a4a81a1ef7f9715060746 to receive the dial-in number and a personal PIN, which are required to access the conference call. Investor presentation materials will be made available prior to the conference call at www.valley.com.
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
About Valley
As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $54 billion in assets. 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, supply chain interruptions 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 and new variants of COVID-19 may arise in our primary markets;
•continued deterioration in general business and economic conditions or turbulence in domestic or global financial 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,
Valley National Bancorp (NASDAQ: VLY)
Second Quarter 2022 Earnings
July 28, 2022
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.
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-Tables to Follow-
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL DATA
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | ||||||||||||
| ($ in thousands, except for share data) | 2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||
| FINANCIAL DATA: | |||||||||||||||
| Net interest income - FTE (1) | $ | 419,565 | $ | 318,363 | $ | 301,787 | $ | 737,927 | $ | 595,371 | |||||
| Net interest income | $ | 418,160 | $ | 317,669 | $ | 300,907 | $ | 735,829 | $ | 593,574 | |||||
| Non-interest income | 58,533 | 39,270 | 43,126 | 97,803 | 74,359 | ||||||||||
| Total revenue | 476,693 | 356,939 | 344,033 | 833,632 | 667,933 | ||||||||||
| Non-interest expense | 299,730 | 197,340 | 171,893 | 497,070 | 332,106 | ||||||||||
| Pre-provision net revenue | 176,963 | 159,599 | 172,140 | 336,562 | 335,827 | ||||||||||
| Provision for credit losses | 43,998 | 3,557 | 8,747 | 47,555 | 17,403 | ||||||||||
| Income tax expense | 36,552 | 39,314 | 42,881 | 75,866 | 82,202 | ||||||||||
| Net income | 96,413 | 116,728 | 120,512 | 213,141 | 236,222 | ||||||||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 6,344 | 6,344 | ||||||||||
| Net income available to common shareholders | $ | 93,241 | $ | 113,556 | $ | 117,340 | $ | 206,797 | $ | 229,878 | |||||
| Weighted average number of common shares outstanding: | |||||||||||||||
| Basic | 506,302,464 | 421,573,843 | 405,963,209 | 464,172,210 | 405,560,146 | ||||||||||
| Diluted | 508,479,206 | 423,506,550 | 408,660,778 | 466,320,683 | 408,152,458 | ||||||||||
| Per common share data: | |||||||||||||||
| Basic earnings | $ | 0.18 | $ | 0.27 | $ | 0.29 | $ | 0.45 | $ | 0.57 | |||||
| Diluted earnings | 0.18 | 0.27 | 0.29 | 0.44 | 0.56 | ||||||||||
| Cash dividends declared | 0.11 | 0.11 | 0.11 | 0.22 | 0.22 | ||||||||||
| Closing stock price - high | 13.04 | 15.02 | 14.63 | 15.02 | 14.63 | ||||||||||
| Closing stock price - low | 10.34 | 12.91 | 12.91 | 10.34 | 9.74 | ||||||||||
| FINANCIAL RATIOS: | |||||||||||||||
| Net interest margin | 3.42 | % | 3.15 | % | 3.18 | % | 3.30 | % | 3.15 | % | |||||
| Net interest margin - FTE (1) | 3.43 | 3.16 | 3.18 | 3.31 | 3.16 | ||||||||||
| Annualized return on average assets | 0.72 | 1.07 | 1.17 | 0.88 | 1.15 | ||||||||||
| Annualized return on avg. shareholders' equity | 6.18 | 9.15 | 10.24 | 7.51 | 10.10 | ||||||||||
| NON-GAAP FINANCIAL DATA AND RATIOS: (3) | |||||||||||||||
| Basic earnings per share, as adjusted | $ | 0.32 | $ | 0.28 | $ | 0.30 | $ | 0.60 | $ | 0.58 | |||||
| Diluted earnings per share, as adjusted | 0.32 | 0.28 | 0.30 | 0.60 | 0.58 | ||||||||||
| Annualized return on average assets, as adjusted | 1.25 | 1.10 | 1.23 | 1.18 | 1.18 | ||||||||||
| Annualized return on average shareholders' equity, as adjusted | 10.63 | % | 9.43 | % | 10.76 | % | 10.09 | % | 10.37 | % | |||||
| Annualized return on avg. tangible shareholders' equity | 9.33 | 13.09 | 14.79 | 11.07 | 14.64 | ||||||||||
| Annualized return on average tangible shareholders' equity, as adjusted | 16.05 | 13.49 | 15.54 | 14.87 | 15.03 | ||||||||||
| Efficiency ratio | 50.78 | 53.18 | 46.64 | 51.81 | 47.59 | ||||||||||
| AVERAGE BALANCE SHEET ITEMS: | |||||||||||||||
| Assets | $ | 53,211,422 | $ | 43,570,251 | $ | 41,161,459 | $ | 48,417,469 | $ | 40,967,174 | |||||
| Interest earning assets | 48,891,230 | 40,283,048 | 37,907,414 | 44,609,968 | 37,648,256 | ||||||||||
| Loans | 42,517,287 | 34,623,402 | 32,635,298 | 38,592,151 | 32,609,034 | ||||||||||
| Interest bearing liabilities | 29,694,271 | 26,147,915 | 25,469,526 | 27,930,890 | 25,710,515 | ||||||||||
| Deposits | 42,896,381 | 35,763,683 | 32,723,175 | 39,349,737 | 32,281,683 | ||||||||||
| Shareholders' equity | 6,238,985 | 5,104,709 | 4,708,797 | 5,673,014 | 4,677,273 |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| As Of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BALANCE SHEET ITEMS: | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||
| (In thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
| Assets | $ | 54,438,807 | $ | 43,551,457 | $ | 43,446,443 | $ | 41,278,007 | $ | 41,274,228 | |||||
| Total loans | 43,560,777 | 35,364,405 | 34,153,657 | 32,606,814 | 32,457,454 | ||||||||||
| Deposits | 43,881,051 | 35,647,336 | 35,632,412 | 33,632,605 | 33,194,774 | ||||||||||
| Shareholders' equity | 6,204,913 | 5,096,384 | 5,084,066 | 4,822,498 | 4,737,807 | ||||||||||
| LOANS: | |||||||||||||||
| (In thousands) | |||||||||||||||
| Commercial and industrial loans: | |||||||||||||||
| Commercial and industrial | $ | 8,378,454 | $ | 5,587,781 | $ | 5,411,601 | $ | 4,761,227 | $ | 4,733,771 | |||||
| Commercial and industrial PPP loans | 136,004 | 203,609 | 435,950 | 874,033 | 1,350,684 | ||||||||||
| Total commercial and industrial | 8,514,458 | 5,791,390 | 5,847,551 | 5,635,260 | 6,084,455 | ||||||||||
| Commercial real estate: | |||||||||||||||
| Commercial real estate | 23,535,086 | 19,763,202 | 18,935,486 | 17,912,070 | 17,512,142 | ||||||||||
| Construction | 3,374,373 | 2,174,542 | 1,854,580 | 1,804,580 | 1,752,838 | ||||||||||
| Total commercial real estate | 26,909,459 | 21,937,744 | 20,790,066 | 19,716,650 | 19,264,980 | ||||||||||
| Residential mortgage | 5,005,069 | 4,691,935 | 4,545,064 | 4,332,422 | 4,226,975 | ||||||||||
| Consumer: | |||||||||||||||
| Home equity | 431,455 | 393,538 | 400,779 | 402,658 | 410,856 | ||||||||||
| Automobile | 1,673,482 | 1,552,928 | 1,570,036 | 1,563,698 | 1,531,262 | ||||||||||
| Other consumer | 1,026,854 | 996,870 | 1,000,161 | 956,126 | 938,926 | ||||||||||
| Total consumer loans | 3,131,791 | 2,943,336 | 2,970,976 | 2,922,482 | 2,881,044 | ||||||||||
| Total loans | $ | 43,560,777 | $ | 35,364,405 | $ | 34,153,657 | $ | 32,606,814 | $ | 32,457,454 | |||||
| CAPITAL RATIOS: | |||||||||||||||
| Book value per common share | $ | 11.84 | $ | 11.60 | $ | 11.57 | $ | 11.32 | $ | 11.15 | |||||
| Tangible book value per common share (2) | 7.71 | 7.93 | 7.94 | 7.78 | 7.59 | ||||||||||
| Tangible common equity to tangible assets (2) | 7.46 | % | 7.96 | % | 7.98 | % | 7.95 | % | 7.73 | % | |||||
| Tier 1 leverage capital | 8.33 | 8.70 | 8.88 | 8.63 | 8.49 | ||||||||||
| Common equity tier 1 capital | 9.06 | 9.67 | 10.06 | 10.06 | 10.04 | ||||||||||
| Tier 1 risk-based capital | 9.54 | 10.27 | 10.69 | 10.73 | 10.73 | ||||||||||
| Total risk-based capital | 11.53 | 12.65 | 13.10 | 13.24 | 13.36 |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ALLOWANCE FOR CREDIT LOSSES: | June 30, | March 31, | June 30, | June 30, | |||||||||||
| ($ in thousands) | 2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Allowance for credit losses for loans | |||||||||||||||
| Beginning balance | $ | 379,252 | $ | 375,702 | $ | 354,313 | $ | 375,702 | $ | 351,354 | |||||
| Allowance for purchased credit deteriorated (PCD) loans, net (2) | 70,319 | — | — | 70,319 | — | ||||||||||
| Loans charged-off: | |||||||||||||||
| Commercial and industrial | (4,540) | (1,571) | (10,893) | (6,111) | (18,035) | ||||||||||
| Commercial real estate | — | (173) | — | (173) | (382) | ||||||||||
| Residential mortgage | (1) | (26) | (1) | (27) | (139) | ||||||||||
| Total consumer | (726) | (825) | (1,480) | (1,551) | (2,618) | ||||||||||
| Total loans charged-off | (5,267) | (2,595) | (12,374) | (7,862) | (21,174) | ||||||||||
| Charged-off loans recovered: | |||||||||||||||
| Commercial and industrial | 1,952 | 824 | 678 | 2,776 | 2,267 | ||||||||||
| Commercial real estate | 224 | 107 | 665 | 331 | 730 | ||||||||||
| Construction | — | — | — | — | 4 | ||||||||||
| Residential mortgage | 74 | 457 | 191 | 531 | 348 | ||||||||||
| Total consumer | 697 | 1,257 | 1,474 | 1,954 | 2,404 | ||||||||||
| Total loans recovered | 2,947 | 2,645 | 3,008 | 5,592 | 5,753 | ||||||||||
| Net (charge-offs) recoveries | (2,320) | 50 | (9,366) | (2,270) | (15,421) | ||||||||||
| Provision for credit losses for loans | 43,712 | 3,500 | 8,777 | 47,212 | 17,791 | ||||||||||
| Ending balance | $ | 490,963 | $ | 379,252 | $ | 353,724 | $ | 490,963 | $ | 353,724 | |||||
| Components of allowance for credit losses for loans: | |||||||||||||||
| Allowance for loan losses | $ | 468,819 | $ | 362,510 | $ | 339,324 | $ | 468,819 | $ | 339,324 | |||||
| Allowance for unfunded credit commitments | 22,144 | 16,742 | 14,400 | 22,144 | 14,400 | ||||||||||
| Allowance for credit losses for loans | $ | 490,963 | $ | 379,252 | $ | 353,724 | $ | 490,963 | $ | 353,724 | |||||
| Components of provision for credit losses for loans: | |||||||||||||||
| Provision for credit losses for loans | $ | 38,310 | $ | 3,258 | $ | 5,810 | $ | 41,568 | $ | 14,502 | |||||
| Provision for unfunded credit commitments | 5,402 | 242 | 2,967 | 5,644 | 3,289 | ||||||||||
| Total provision for credit losses for loans | $ | 43,712 | $ | 3,500 | $ | 8,777 | $ | 47,212 | $ | 17,791 | |||||
| Annualized ratio of total net charge-offs (recoveries) to average loans | 0.02 | % | 0.00 | % | 0.11 | % | 0.01 | % | 0.09 | % | |||||
| Allowance for credit losses for loans as a % of total loans | 1.13 | 1.07 | 1.09 | 1.13 | 1.09 |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSET QUALITY: | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||
| ($ in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
| Accruing past due loans: | |||||||||||||||
| 30 to 59 days past due: | |||||||||||||||
| Commercial and industrial | $ | 7,143 | $ | 6,723 | $ | 6,717 | $ | 2,677 | $ | 3,867 | |||||
| Commercial real estate | 10,516 | 30,807 | 14,421 | 22,956 | 40,524 | ||||||||||
| Construction | 9,108 | 1,708 | 1,941 | — | — | ||||||||||
| Residential mortgage | 12,326 | 9,266 | 10,999 | 9,293 | 8,479 | ||||||||||
| Total consumer | 6,009 | 5,862 | 6,811 | 5,463 | 6,242 | ||||||||||
| Total 30 to 59 days past due | 45,102 | 54,366 | 40,889 | 40,389 | 59,112 | ||||||||||
| 60 to 89 days past due: | |||||||||||||||
| Commercial and industrial | 3,870 | 14,461 | 7,870 | 985 | 1,361 | ||||||||||
| Commercial real estate | 630 | 6,314 | — | 5,897 | 11,451 | ||||||||||
| Construction | 3,862 | 3,125 | — | — | — | ||||||||||
| Residential mortgage | 2,410 | 2,560 | 3,314 | 974 | 1,608 | ||||||||||
| Total consumer | 702 | 554 | 1,020 | 1,617 | 985 | ||||||||||
| Total 60 to 89 days past due | 11,474 | 27,014 | 12,204 | 9,473 | 15,405 | ||||||||||
| 90 or more days past due: | |||||||||||||||
| Commercial and industrial | 15,470 | 9,261 | 1,273 | 2,083 | 2,351 | ||||||||||
| Commercial real estate | — | — | 32 | 1,942 | 1,948 | ||||||||||
| Residential mortgage | 1,188 | 1,746 | 677 | 1,002 | 956 | ||||||||||
| Total consumer | 267 | 400 | 789 | 325 | 463 | ||||||||||
| Total 90 or more days past due | 16,925 | 11,407 | 2,771 | 5,352 | 5,718 | ||||||||||
| Total accruing past due loans | $ | 73,501 | $ | 92,787 | $ | 55,864 | $ | 55,214 | $ | 80,235 | |||||
| Non-accrual loans: | |||||||||||||||
| Commercial and industrial | $ | 148,404 | $ | 96,631 | $ | 99,918 | $ | 100,614 | $ | 102,594 | |||||
| Commercial real estate | 85,807 | 79,180 | 83,592 | 95,843 | 58,893 | ||||||||||
| Construction | 49,780 | 17,618 | 17,641 | 17,653 | 17,660 | ||||||||||
| Residential mortgage | 25,847 | 33,275 | 35,207 | 33,648 | 35,941 | ||||||||||
| Total consumer | 3,279 | 3,754 | 3,858 | 4,073 | 4,924 | ||||||||||
| Total non-accrual loans | 313,117 | 230,458 | 240,216 | 251,831 | 220,012 | ||||||||||
| Other real estate owned (OREO) | 422 | 1,024 | 2,259 | 3,967 | 4,523 | ||||||||||
| Other repossessed assets | 1,200 | 1,176 | 2,931 | 1,896 | 2,060 | ||||||||||
| Total non-performing assets | $ | 314,739 | $ | 232,658 | $ | 245,406 | $ | 257,694 | $ | 226,595 | |||||
| Performing troubled debt restructured loans | $ | 67,274 | $ | 56,538 | $ | 71,330 | $ | 64,832 | $ | 64,080 | |||||
| Total non-accrual loans as a % of loans | 0.72 | % | 0.65 | % | 0.70 | % | 0.77 | % | 0.68 | % | |||||
| Total accruing past due and non-accrual loans as a % of loans | 0.89 | % | 0.91 | % | 0.87 | % | 0.94 | % | 0.93 | % | |||||
| Allowance for losses on loans as a % of non-accrual loans | 149.73 | % | 157.30 | % | 149.53 | % | 136.01 | % | 154.23 | % |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
NOTES TO SELECTED FINANCIAL DATA
| (1) | Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. |
|---|---|
| (2) | Represents the allowance for acquired PCD loans, net of PCD loan charge-offs totaling $62.4 million in the second quarter 2022. |
| (3) | Non-GAAP Reconciliations. This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. The Company believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. |
Non-GAAP Reconciliations to GAAP Financial Measures
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | ||||||||||||
| ($ in thousands, except for share data) | 2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Adjusted net income available to common shareholders (non-GAAP): | |||||||||||||||
| Net income, as reported (GAAP) | $ | 96,413 | $ | 116,728 | $ | 120,512 | $ | 213,141 | $ | 236,222 | |||||
| Add: Loss on extinguishment of debt (net of tax) | — | — | 6,024 | — | 6,024 | ||||||||||
| Add: Losses on available for sale and held to maturity securities transactions (net of tax)(a) | (56) | 6 | 81 | (50) | 166 | ||||||||||
| Add: Provision for credit losses, (net of tax)(b) | 29,282 | — | — | 29,282 | — | ||||||||||
| Add: Merger related expenses (net of tax)(c) | 40,164 | 3,579 | — | 43,743 | — | ||||||||||
| Net income, as adjusted (non-GAAP) | $ | 165,803 | $ | 120,313 | $ | 126,617 | $ | 286,116 | $ | 242,412 | |||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 6,344 | 6,344 | ||||||||||
| Net income available to common shareholders, as adjusted (non-GAAP) | $ | 162,631 | $ | 117,141 | $ | 123,445 | $ | 279,772 | $ | 236,068 | |||||
| __________ | |||||||||||||||
| (a) Included in (losses) gains on securities transactions, net. | |||||||||||||||
| (b) Represents provision for credit losses for non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA. | |||||||||||||||
| (c) Merger related expenses are primarily within salary and employee benefits expense, other expense, and professional and legal fees. | |||||||||||||||
| Adjusted per common share data (non-GAAP): | |||||||||||||||
| Net income available to common shareholders, as adjusted (non-GAAP) | $ | 162,631 | $ | 117,141 | $ | 123,445 | $ | 279,772 | $ | 236,068 | |||||
| Average number of shares outstanding | 506,302,464 | 421,573,843 | 405,963,209 | 464,172,210 | 405,560,146 | ||||||||||
| Basic earnings, as adjusted (non-GAAP) | $ | 0.32 | $ | 0.28 | $ | 0.30 | $ | 0.60 | $ | 0.58 | |||||
| Average number of diluted shares outstanding | 508,479,206 | 423,506,550 | 408,660,778 | 466,320,683 | 408,152,458 | ||||||||||
| Diluted earnings, as adjusted (non-GAAP) | $ | 0.32 | $ | 0.28 | $ | 0.30 | $ | 0.60 | $ | 0.58 | |||||
| Adjusted annualized return on average tangible shareholders' equity (non-GAAP): | |||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 165,803 | $ | 120,313 | $ | 126,617 | $ | 286,116 | $ | 242,412 | |||||
| Average shareholders' equity | $ | 6,238,985 | $ | 5,104,709 | $ | 4,708,797 | 5,673,014 | 4,677,273 | |||||||
| Less: Average goodwill and other intangible assets | 2,105,585 | 1,538,356 | 1,449,388 | 1,823,538 | 1,450,562 | ||||||||||
| Average tangible shareholders' equity | $ | 4,133,400 | $ | 3,566,353 | $ | 3,259,409 | $ | 3,849,476 | $ | 3,226,711 | |||||
| Annualized return on average tangible shareholders' equity, as adjusted (non-GAAP) | 16.05 | % | 13.49 | % | 15.54 | % | 14.87 | % | 15.03 | % | |||||
| Adjusted annualized return on average assets (non-GAAP): | |||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 165,803 | $ | 120,313 | $ | 126,617 | $ | 286,116 | $ | 242,412 | |||||
| Average assets | $ | 53,211,422 | $ | 43,570,251 | $ | 41,161,459 | $ | 48,417,469 | $ | 40,967,174 | |||||
| Annualized return on average assets, as adjusted (non-GAAP) | 1.25 | % | 1.10 | % | 1.23 | % | 1.18 | % | 1.18 | % |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
Non-GAAP Reconciliations to GAAP Financial Measures (Continued)
| Three Months Ended | Six Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||
| ($ in thousands) | 2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Adjusted annualized return on average shareholders' equity (non-GAAP): | |||||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 165,803 | $ | 120,313 | $ | 126,617 | $ | 286,116 | $ | 242,412 | |||||||
| Average shareholders' equity | $ | 6,238,985 | $ | 5,104,709 | $ | 4,708,797 | $ | 5,673,014 | $ | 4,677,273 | |||||||
| Annualized return on average shareholders' equity, as adjusted (non-GAAP) | 10.63 | % | 9.43 | % | 10.76 | % | 10.09 | % | 10.37 | % | |||||||
| Annualized return on average tangible shareholders' equity (non-GAAP): | |||||||||||||||||
| Net income, as reported (GAAP) | $ | 96,413 | $ | 116,728 | $ | 120,512 | $ | 213,141 | $ | 236,222 | |||||||
| Average shareholders' equity | $ | 6,238,985 | $ | 5,104,709 | $ | 4,708,797 | 5,673,014 | 4,677,273 | |||||||||
| Less: Average goodwill and other intangible assets | 2,105,585 | 1,538,356 | 1,449,388 | 1,823,538 | 1,450,562 | ||||||||||||
| Average tangible shareholders' equity | $ | 4,133,400 | $ | 3,566,353 | $ | 3,259,409 | $ | 3,849,476 | $ | 3,226,711 | |||||||
| Annualized return on average tangible shareholders' equity (non-GAAP) | 9.33 | % | 13.09 | % | 14.79 | % | 11.07 | % | 14.64 | % | |||||||
| Efficiency ratio (non-GAAP): | |||||||||||||||||
| Non-interest expense, as reported (GAAP) | $ | 299,730 | $ | 197,340 | $ | 171,893 | $ | 497,070 | $ | 332,106 | |||||||
| Less: Loss on extinguishment of debt (pre-tax) | — | — | 8,406 | — | 8,406 | ||||||||||||
| Less: Merger-related expenses (pre-tax) | 54,496 | 4,628 | — | 59,124 | — | ||||||||||||
| Less: Amortization of tax credit investments (pre-tax) | 3,193 | 2,896 | 2,972 | 6,089 | 5,716 | ||||||||||||
| Non-interest expense, as adjusted (non-GAAP) | $ | 242,041 | $ | 189,816 | $ | 160,515 | $ | 431,857 | $ | 317,984 | |||||||
| Net interest income, as reported (GAAP) | 418,160 | 317,669 | 300,907 | 735,829 | 593,574 | ||||||||||||
| Non-interest income, as reported (GAAP) | 58,533 | 39,270 | 43,126 | 97,803 | 74,359 | ||||||||||||
| Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax) | (78) | 9 | 113 | (69) | 231 | ||||||||||||
| Non-interest income, as adjusted (non-GAAP) | $ | 58,455 | $ | 39,279 | $ | 43,239 | $ | 97,734 | $ | 74,590 | |||||||
| Gross operating income, as adjusted (non-GAAP) | $ | 476,615 | $ | 356,948 | $ | 344,146 | $ | 833,563 | $ | 668,164 | |||||||
| Efficiency ratio (non-GAAP) | 50.78 | % | 53.18 | % | 46.64 | % | 51.81 | % | 47.59 | % | |||||||
| As of | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||
| ($ in thousands, except for share data) | 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||
| Tangible book value per common share (non-GAAP): | |||||||||||||||||
| Common shares outstanding | 506,328,526 | 421,437,068 | 421,437,068 | 407,313,664 | 406,083,790 | ||||||||||||
| Shareholders' equity (GAAP) | $ | 6,204,913 | $ | 5,096,384 | $ | 5,084,066 | $ | 4,822,498 | $ | 4,737,807 | |||||||
| Less: Preferred stock | 209,691 | 209,691 | 209,691 | 209,691 | 209,691 | ||||||||||||
| Less: Goodwill and other intangible assets | 2,090,147 | 1,543,238 | 1,529,394 | 1,444,967 | 1,447,965 | ||||||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 3,905,075 | $ | 3,343,455 | $ | 3,344,981 | $ | 3,167,840 | $ | 3,080,151 | |||||||
| Tangible book value per common share (non-GAAP) | $ | 7.71 | $ | 7.93 | $ | 7.94 | $ | 7.78 | $ | 7.59 | |||||||
| Tangible common equity to tangible assets (non-GAAP): | |||||||||||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 3,905,075 | $ | 3,343,455 | $ | 3,344,981 | $ | 3,167,840 | $ | 3,080,151 | |||||||
| Total assets (GAAP) | $ | 54,438,807 | $ | 43,551,457 | $ | 43,446,443 | $ | 41,278,007 | $ | 41,274,228 | |||||||
| Less: Goodwill and other intangible assets | 2,090,147 | 1,543,238 | 1,529,394 | 1,444,967 | 1,447,965 | ||||||||||||
| Tangible assets (non-GAAP) | $ | 52,348,660 | $ | 42,008,219 | $ | 41,917,049 | $ | 39,833,040 | $ | 39,826,263 | |||||||
| Tangible common equity to tangible assets (non-GAAP) | 7.46 | % | 7.96 | % | 7.98 | % | 7.95 | % | 7.73 | % | SHAREHOLDERS RELATIONS<br>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. | ||||||
| --- |
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
| June 30, | December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| (Unaudited) | ||||
| Assets | ||||
| Cash and due from banks | $ | 481,414 | $ | 205,156 |
| Interest bearing deposits with banks | 906,898 | 1,844,764 | ||
| Investment securities: | ||||
| Equity securities | 41,716 | 36,473 | ||
| Trading debt securities | — | 38,130 | ||
| Available for sale debt securities | 1,382,551 | 1,128,809 | ||
| Held to maturity debt securities (net of allowance for credit losses of $1,508 at June 30, 2022 and $1,165 at December 31, 2021) | 3,718,469 | 2,667,532 | ||
| Total investment securities | 5,142,736 | 3,870,944 | ||
| Loans held for sale, at fair value | 18,348 | 139,516 | ||
| Loans | 43,560,777 | 34,153,657 | ||
| Less: Allowance for loan losses | (468,819) | (359,202) | ||
| Net loans | 43,091,958 | 33,794,455 | ||
| Premises and equipment, net | 360,819 | 326,306 | ||
| Lease right of use assets | 315,820 | 259,117 | ||
| Bank owned life insurance | 714,762 | 566,770 | ||
| Accrued interest receivable | 134,682 | 96,882 | ||
| Goodwill | 1,871,505 | 1,459,008 | ||
| Other intangible assets, net | 218,642 | 70,386 | ||
| Other assets | 1,181,223 | 813,139 | ||
| Total Assets | $ | 54,438,807 | $ | 43,446,443 |
| Liabilities | ||||
| Deposits: | ||||
| Non-interest bearing | $ | 16,139,559 | $ | 11,675,748 |
| Interest bearing: | ||||
| Savings, NOW and money market | 23,547,951 | 20,269,620 | ||
| Time | 4,193,541 | 3,687,044 | ||
| Total deposits | 43,881,051 | 35,632,412 | ||
| Short-term borrowings | 1,522,804 | 655,726 | ||
| Long-term borrowings | 1,403,805 | 1,423,676 | ||
| Junior subordinated debentures issued to capital trusts | 56,587 | 56,413 | ||
| Lease liabilities | 368,920 | 283,106 | ||
| Accrued expenses and other liabilities | 1,000,727 | 311,044 | ||
| Total Liabilities | 48,233,894 | 38,362,377 | ||
| Shareholders’ Equity | ||||
| Preferred stock, no par value; 50,000,000 authorized shares: | ||||
| Series A (4,600,000 shares issued at June 30, 2022 and December 31, 2021) | 111,590 | 111,590 | ||
| Series B (4,000,000 shares issued at June 30, 2022 and December 31, 2021) | 98,101 | 98,101 | ||
| Common stock (no par value, authorized 650,000,000 shares; issued 507,896,910 and 423,034,027 at June 30, 2022 and December 31, 2021) | 178,185 | 148,482 | ||
| Surplus | 4,965,488 | 3,883,035 | ||
| Retained earnings | 982,146 | 883,645 | ||
| Accumulated other comprehensive loss | (108,337) | (17,932) | ||
| Treasury stock, at cost (1,568,384 shares at June 30, 2022 and 1,596,959 common shares at December 31, 2021) | (22,260) | (22,855) | ||
| Total Shareholders’ Equity | 6,204,913 | 5,084,066 | ||
| Total Liabilities and Shareholders’ Equity | $ | 54,438,807 | $ | 43,446,443 |
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
| Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | |||||||
| 2022 | 2022 | 2021 | 2022 | 2021 | ||||||
| Interest Income | ||||||||||
| Interest and fees on loans | $ | 415,577 | $ | 317,365 | $ | 315,314 | $ | 732,942 | $ | 628,495 |
| Interest and dividends on investment securities: | ||||||||||
| Taxable | 27,534 | 18,439 | 12,716 | 45,973 | 25,882 | |||||
| Tax-exempt | 5,191 | 2,517 | 3,216 | 7,708 | 6,572 | |||||
| Dividends | 3,076 | 1,676 | 2,167 | 4,752 | 4,038 | |||||
| Interest on federal funds sold and other short-term investments | 1,569 | 461 | 235 | 2,030 | 459 | |||||
| Total interest income | 452,947 | 340,458 | 333,648 | 793,405 | 665,446 | |||||
| Interest Expense | ||||||||||
| Interest on deposits: | ||||||||||
| Savings, NOW and money market | 17,122 | 9,627 | 11,166 | 26,749 | 22,291 | |||||
| Time | 3,269 | 2,831 | 6,279 | 6,100 | 17,372 | |||||
| Interest on short-term borrowings | 4,083 | 806 | 1,168 | 4,889 | 2,926 | |||||
| Interest on long-term borrowings and junior subordinated debentures | 10,313 | 9,525 | 14,128 | 19,838 | 29,283 | |||||
| Total interest expense | 34,787 | 22,789 | 32,741 | 57,576 | 71,872 | |||||
| Net Interest Income | 418,160 | 317,669 | 300,907 | 735,829 | 593,574 | |||||
| Provision (credit) for credit losses for held to maturity securities | 286 | 57 | (30) | 343 | (388) | |||||
| Provision for credit losses for loans | 43,712 | 3,500 | 8,777 | 47,212 | 17,791 | |||||
| Net Interest Income After Provision for Credit Losses | 374,162 | 314,112 | 292,160 | 688,274 | 576,171 | |||||
| Non-Interest Income | ||||||||||
| Wealth management and trust fees | 9,577 | 5,131 | 3,532 | 14,708 | 6,861 | |||||
| Insurance commissions | 3,463 | 1,859 | 2,637 | 5,322 | 4,195 | |||||
| Service charges on deposit accounts | 10,067 | 6,212 | 5,083 | 16,279 | 10,186 | |||||
| (Losses) gains on securities transactions, net | (309) | (1,072) | 375 | (1,381) | 476 | |||||
| Fees from loan servicing | 2,717 | 2,781 | 3,187 | 5,498 | 6,086 | |||||
| Gains on sales of loans, net | 3,602 | 986 | 10,061 | 4,588 | 13,574 | |||||
| Bank owned life insurance | 2,113 | 2,046 | 2,475 | 4,159 | 4,806 | |||||
| Other | 27,303 | 21,327 | 15,776 | 48,630 | 28,175 | |||||
| Total non-interest income | 58,533 | 39,270 | 43,126 | 97,803 | 74,359 | |||||
| Non-Interest Expense | ||||||||||
| Salary and employee benefits expense | 154,798 | 107,733 | 91,095 | 262,531 | 179,198 | |||||
| Net occupancy and equipment expense | 41,986 | 36,806 | 32,451 | 78,792 | 64,710 | |||||
| FDIC insurance assessment | 5,351 | 4,158 | 3,374 | 9,509 | 6,650 | |||||
| Amortization of other intangible assets | 11,400 | 4,437 | 5,449 | 15,837 | 11,455 | |||||
| Professional and legal fees | 30,409 | 14,749 | 7,486 | 45,158 | 13,758 | |||||
| Loss on extinguishment of debt | — | — | 8,406 | — | 8,406 | |||||
| Amortization of tax credit investments | 3,193 | 2,896 | 2,972 | 6,089 | 5,716 | |||||
| Telecommunication expense | 3,083 | 3,271 | 2,732 | 6,354 | 5,892 | |||||
| Other | 49,510 | 23,290 | 17,928 | 72,800 | 36,321 | |||||
| Total non-interest expense | 299,730 | 197,340 | 171,893 | 497,070 | 332,106 | |||||
| Income Before Income Taxes | 132,965 | 156,042 | 163,393 | 289,007 | 318,424 | |||||
| Income tax expense | 36,552 | 39,314 | 42,881 | 75,866 | 82,202 | |||||
| Net Income | 96,413 | 116,728 | 120,512 | 213,141 | 236,222 | |||||
| Dividends on preferred stock | 3,172 | 3,172 | 3,172 | 6,344 | 6,344 | |||||
| Net Income Available to Common Shareholders | $ | 93,241 | $ | 113,556 | $ | 117,340 | $ | 206,797 | $ | 229,878 |
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
| Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | |||||||
| 2022 | 2022 | 2021 | 2022 | 2021 | ||||||
| Earnings Per Common Share: | ||||||||||
| Basic | $ | 0.18 | $ | 0.27 | $ | 0.29 | $ | 0.45 | $ | 0.57 |
| Diluted | 0.18 | 0.27 | 0.29 | 0.44 | 0.56 | |||||
| Cash Dividends Declared per Common Share | 0.11 | 0.11 | 0.11 | 0.22 | 0.22 | |||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||
| Basic | 506,302,464 | 421,573,843 | 405,963,209 | 464,172,210 | 405,560,146 | |||||
| Diluted | 508,479,206 | 423,506,550 | 408,660,778 | 466,320,683 | 408,152,458 |
VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
| Three Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | March 31, 2022 | June 30, 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) | $ | 42,517,287 | $ | 415,602 | 3.91 | % | $ | 34,623,402 | $ | 317,390 | 3.67 | % | $ | 32,635,298 | $ | 315,339 | 3.87 | % |
| Taxable investments (3) | 4,912,994 | 30,610 | 2.49 | 3,838,468 | 20,115 | 2.10 | 3,159,842 | 14,883 | 1.88 | |||||||||
| Tax-exempt investments (1)(3) | 684,471 | 6,571 | 3.84 | 401,742 | 3,186 | 3.17 | 498,971 | 4,071 | 3.26 | |||||||||
| Interest bearing deposits with banks | 776,478 | 1,569 | 0.81 | 1,419,436 | 461 | 0.13 | 1,613,303 | 235 | 0.06 | |||||||||
| Total interest earning assets | 48,891,230 | 454,352 | 3.72 | 40,283,048 | 341,152 | 3.39 | 37,907,414 | 334,528 | 3.53 | |||||||||
| Other assets | 4,320,192 | 3,287,203 | 3,254,045 | |||||||||||||||
| Total assets | $ | 53,211,422 | $ | 43,570,251 | $ | 41,161,459 | ||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||
| Savings, NOW and money market deposits | $ | 23,027,347 | $ | 17,122 | 0.30 | % | $ | 20,522,629 | $ | 9,627 | 0.19 | % | $ | 17,784,985 | $ | 11,166 | 0.25 | % |
| Time deposits | 3,601,088 | 3,269 | 0.36 | 3,554,520 | 2,831 | 0.32 | 4,609,778 | 6,279 | 0.54 | |||||||||
| Short-term borrowings | 1,603,198 | 4,083 | 1.02 | 594,297 | 806 | 0.54 | 873,927 | 1,168 | 0.53 | |||||||||
| Long-term borrowings (4) | 1,462,638 | 10,313 | 2.82 | 1,476,469 | 9,525 | 2.58 | 2,200,836 | 14,128 | 2.57 | |||||||||
| Total interest bearing liabilities | 29,694,271 | 34,787 | 0.47 | 26,147,915 | 22,789 | 0.35 | 25,469,526 | 32,741 | 0.51 | |||||||||
| Non-interest bearing deposits | 16,267,946 | 11,686,534 | 10,328,412 | |||||||||||||||
| Other liabilities | 1,010,220 | 631,093 | 654,724 | |||||||||||||||
| Shareholders' equity | 6,238,985 | 5,104,709 | 4,708,797 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 53,211,422 | $ | 43,570,251 | $ | 41,161,459 | ||||||||||||
| Net interest income/interest rate spread (5) | $ | 419,565 | 3.25 | % | $ | 318,363 | 3.04 | % | $ | 301,787 | 3.02 | % | ||||||
| Tax equivalent adjustment | (1,405) | (694) | (880) | |||||||||||||||
| Net interest income, as reported | $ | 418,160 | $ | 317,669 | $ | 300,907 | ||||||||||||
| Net interest margin (6) | 3.42 | 3.15 | 3.18 | |||||||||||||||
| Tax equivalent effect | 0.01 | 0.01 | 0.00 | |||||||||||||||
| Net interest margin on a fully tax equivalent basis (6) | 3.43 | % | 3.16 | % | 3.18 | % |
(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.
18
a2q22earningspresentatio
2 Q 2 2 E a r n i n g s P r e s e n t a t i o n J u l y 2 8 , 2 0 2 2 Exhibit 99.2
Forward Looking Statements This presentation 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, supply chain interruptions 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 and new variants of COVID-19 may arise in our primary markets; continued deterioration in general business and economic conditions or turbulence in domestic or global financial 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.
3 2Q22 1Q22 2Q21 2Q22 1Q22 2Q21 Net Income ($mm) $96.4 $116.7 $120.5 $165.8 $120.3 $126.6 Return on Average Assets Annualized 0.72% 1.07% 1.17% 1.25% 1.10% 1.23% Return on Average Assets, ex. PPP 1 Annualized 0.71% 1.03% 1.04% 1.23% 1.06% 1.10% Efficiency Ratio (Non-GAAP) -- -- -- 50.8% 53.2% 46.6% Diluted Earnings Per Share $0.18 $0.27 $0.29 $0.32 $0.28 $0.30 Pre-Provision Net Revenue 2 ($mm) $177.0 $159.6 $172.1 $234.6 $167.1 $183.6 PPNR / Average Assets 2 Annualized 1.33% 1.47% 1.67% 1.76% 1.53% 1.78% GAAP Reported Non-GAAP Adjusted 1 1 Please refer to the Non-GAAP Disclosure Reconciliation on pages 16 – 20. 2 Pre-provision net revenue equals net interest income plus total non-interest income less total non-interest expense; PPNR / Avg. Assets is presented on an annualized basis; Please refer to the Non-GAAP Disclosure Reconciliation on pages 16 - 20 2Q 2022 Highlights Significant increase in adjusted earnings and profitability metrics as a result of organic growth and the acquisition of Bank Leumi USA. 20%+ linked-quarter annualized loan growth reflecting strength across geographies and asset classes. Strong core deposit growth and beneficial funding mix-shift with non-interest deposits increasing to 37% of deposits.
4 Strategic Execution Drives Sustainable Growth 1 37 54 4Q19 2Q22 Total Assets ($bn) 0.55 1.13 4Q19 2Q22 ACL / Loans (%) 7.5 7.5 4Q19 2Q22 TCE / TA (%) 1 Please refer to the Non-GAAP Disclosure Reconciliation on pages 16 - 20 Balanced Execution on Organic and Acquisitive Opportunities — 9% organic loan CAGR since 4Q19 (non-PPP) — 8% organic deposit CAGR — Acquisitions of The Westchester Bank (~$1bn) and Bank Leumi USA (~$8bn) enhance funding based and future growth opportunities. Diverse Balance Sheet With Multiple Growth Engines — Strategically-positioned around the country’s most dynamic commercial markets. — Granular commercial loan portfolio is well-diversified by geography and asset class. — Strategic funding initiatives have contributed to low-cost core account generation. Enhanced Reserve Coverage While Maintaining Stringent Underwriting Standards — Preserving historical underwriting standards that have led to below-peer credit losses across economic cycles. — Significant lending activity with strong and sophisticated clients that are well-known to Valley. Internal Capital Generation Poised to Accelerate Further — Stable TCE / TA supporting $17bn asset growth and approximately $300mm annualized increase in earnings power. — TCE has increased nearly $1.2bn since 4Q19. 30 44 4Q19 2Q22 Gross Loans ($bn) 29 44 4Q19 2Q22 Total Deposits ($bn)
5 Enhancing Profitability Through Execution 1 90.7 165.8 4Q19 2Q22 Adj. Net Income ($mm) 1.03 1.25 4Q19 2Q22 Adj. ROA (%) 52.4 50.8 4Q19 2Q22 Efficiency Ratio (%) 1 Please refer to the Non-GAAP Disclosure Reconciliation on pages 16 - 20 Substantial Acceleration of Earnings Power — 80%+ increase in adjusted earnings (exclusive of non-PCD provision) since 4Q19 equating to approximately $300mm on an annualized basis. — Balance of organic and acquisitive efforts have contributed to the earnings increase. Profitability Ratios Have Become Significantly More Competitive — Annualized ROAA expansion of over 20bps since 4Q19. — Driven by NIM enhancement and strong non-interest income growth. Revenue Growth Justifies Investment Efforts — Efficiency ratio has improved over 150bp since 4Q19. — Industry-leading efficiency ratio with opportunities to improve further.
6 Organic Loan Growth (Annualized) 1 Net Interest Income Non-GAAP Efficiency Ratio 1 Tax Rate Updating Guidance for 2H22 8% - 10% ~$900mm Below 50% 27% - 28% YTD 2Q22 Actual Expected 2H22 21% $736mm 51.8% 26.3% 1 Refer to the appendix on pages 16 – 20 regarding non-GAAP financial measures. Sums may be inconsistent due to rounding.
7 Multifamily 17% Non Owner-Occupied CRE 25% Healthcare CRE 3% Owner-Occupied CRE 9% C&I 19% C&I (PPP) 0%Consumer 7% Residential R.E. 12% Construction 8% CRE 45% C&I 28% Other 27% New Loan Originations ($bn) 1 Balances tied to legacy Leumi as of 6/30/22. 2 Based on acquired loan balances at date of acquisition. 3 Loan classifications according to call report schedule which may not correspond to classifications outlined in earnings release. 3 CRE includes multifamily, non-owner occupied CRE and healthcare CRE; C&I includes owner-occupied CRE and C&I; Other includes construction, residential RE and Consumer Consistent Balance of Organic and Acquired Growth 2Q22 Loan Composition 3, 4 Gross Loans ($bn) $35.4 $37.2 $6.4 $43.6 1Q22 2Q22 Valley Leumi Loan CAGR 2016 – 2Q22 1 Annualized 2Q22 Growth Leumi: +26% Valley: +21% $2.6 $1.9 $2.5 $2.6 $2.8 $0.8 $3.6 3.32% 3.37% 3.23% 3.32% 4.08% 3.87% 3.79% 3.83% 3.67% 3.91% 2Q21 3Q21 4Q21 1Q22 2Q22 Legacy Valley Leumi New Origination Rate Avg. Portfolio Rate 10.1% 18.4% Organic Total
8 Enhanced Deposit Composition and Growth Profile Deposit Balance Trends ($bn) 20.3 23.6 11.9 16.1 3.4 4.2 35.6 43.9 1Q22 2Q22 Savings & Interest Checking Non-Interest Time 10% 33% 57% 9% 37% 54% Deposit Cost Trends (%) 0.21% 0.18% 0.15% 0.14% 0.19% 0.25% 0.23% 0.20% 0.19% 0.30% 0.54% 0.43% 0.36% 0.32% 0.36% 2Q21 3Q21 4Q21 1Q22 2Q22 Total Deposits Savings, NOW, MMA Time Legacy Valley deposits increased approximately $1.5 billion, or over 4% during 2Q22. Non-interest bearing deposits increased $4.2 billion during the quarter, to 37% of total deposits, supported by $3.9 billion from legacy Leumi. Persistent focus on commercial checking growth with legacy Valley accounts up 8% since 2Q21.
9 Net Interest Income Analysis 2Q21 3Q21 4Q21 1Q22 2Q22 Net Interest Income (FTE) 301.8 301.7 316.0 318.4 419.6 PPP Impact 1 (25.7) (16.3) (17.2) (7.1) (4.1) NII ex PPP 276.1 285.5 298.8 311.3 415.5 Earning Asset Analysis 2Q21 3Q21 4Q21 1Q22 2Q22 Avg. Earning Assets 37,907 38,333 39,193 40,283 48,891 PPP Impact 1 (1,986) (1,134) (642) (298) (228) Earning Assets ex PPP 35,922 37,198 38,551 39,985 48,663 NIM Analysis 2Q21 3Q21 4Q21 1Q22 2Q22 NII ex PPP (FTE) 276.1 285.5 298.8 311.3 415.5 Earning Assets 35,922 37,198 38,551 39,985 48,663 NIM ex PPP (FTE) 3.07% 3.07% 3.10% 3.11% 3.42% Reported Net Interest Income ($mm) and Margin Net Interest Margin and PPP Impact Net Interest Income ($mm) and Margin Ex-PPP 1 $355 $65 $302 $302 $316 $318 $420 3.18% 3.15% 3.23% 3.16% 3.43% 2Q21 3Q21 4Q21 1Q22 2Q22 Legacy VLY ($mm) Leumi Contribution ($mm) NIM $276 $286 $299 $311 $416 3.07% 3.07% 3.10% 3.11% 3.42% 2Q21 3Q21 4Q21 1Q22 2Q22 NII ($mm) NIM All metrics are represented on a full tax equivalent basis 1 2Q22 PPP impact includes average balance, interest income, and purchased loan accretion for PPP loans acquired from Bank Leumi. NII +39% year / year NII (ex-Leumi) +16% NII ex-PPP +51% year / year NII ex-PPP, ex-Leumi +29%
10 $19.3 $17.3 $30.8 $7.6 $14.0 $11.1 $6.2 $7.0 $13.0 $10.1 $1.0 $3.6 $43.1 $39.3 $58.5 2Q21 1Q22 2Q22 Other Non-Interest Income Swap Income Trust, Investment & Insurance Gain on Sale Other $18.0 31% Trust, Investment & Insurance $13.0 22% Loan Servicing Fees $2.7 5% Service Charges $10.1 17% Gain-on-Sale of Loans, net $3.6 6% Swap Fees $11.1 19% 2Q22 Non-Interest Income Composition ($mm) Fee Income $58.5mm Non-Interest Income ($mm) Non-Interest Income +36% year / year Adjusted non-interest income 3-year CAGR: +24%. Legacy Valley adjusted non-interest income increased approximately 13% from 1Q22 driven as higher insurance commissions and gain on sale income offset a $3mm reduction in swap fees. Bank Leumi contributed revenue diversity and helped drive adjusted non-interest income to 12.3% of adjusted revenues from 11.0% in 1Q22.
11 1 Refer to the appendix on pages 16 – 20 regarding non-GAAP financial measures. Sums may be inconsistent due to rounding. Non-Interest Expense 189.8 242.0 7.5 57.7 197.3 299.7 1Q22 2Q22 Adjusted Reported Non-Interest Expenses ($mm) Efficiency Ratio Trend 1 53.2% 50.8% 54.3% 51.2% 1Q22 2Q22 1Q22 ex-PPP 2Q22 ex-PPP Operating Leverage 1 35% 17% 28% 14% Q/Q Growth (2Q22 / 1Q22) 4-Year CAGR (2Q22 / 2Q18) Adj. Revenue ex-PPP Adj. Expenses
12 0.68% 0.77% 0.70% 0.65% 0.56% 0.72% 2Q21 3Q21 4Q21 1Q22 2Q22 Legacy VLY Leumi Impact Asset Quality Non-Accrual Loans / Total Loans Loan Loss Provision ($mm) Allowance for Credit Losses for Loans / Total Loans 0.99% 1.03% 1.09% 1.09% 1.10% 1.07% 1.13% 1.14% 1.12% 1.11% 1.08% 1.13% 2Q21 3Q21 4Q21 1Q22 2Q22 ACL / Loans ex. PPP Net Charge-offs ($mm) 1 Excludes $62.4mm of charge-offs related to PCD loans acquired from Leumi and recognized upon completion of the merger in accordance with GAAP. Sums may be inconsistent due to rounding. $9 $0 $(1) $(0) $2 0.11% 0.00% (0.01%) 0.00% 0.02% 2Q21 3Q21 4Q21 1Q22 2Q22 Net Charge-offs NCOs / Avg. Loans $8.8 $3.5 $5.4 $3.5 $2.7 $6.2 $41.0 2Q21 3Q21 4Q21 1Q22 2Q22 Provision Non-PCD 1
13 Equity & Capitalization $7.59 $7.78 $7.94 $7.93 $7.71 $11.15 $11.32 $11.57 $11.60 $11.84 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 TBV per share Book Value per share Book Value and Tangible Book Value per Share 1 Equity Capitalization Level 1 1 Please refer to the Non-GAAP Disclosure Reconciliation on pages 16 - 20 7.73% 7.95% 7.98% 7.96% 7.46% 11.48% 11.68% 11.70% 11.70% 11.40% 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 Tangible Common Equity / Tangible Assets Equity / Assets Holding Company Capital Ratios 6/30/21 3/31/22 6/30/22 Tier 1 Leverage 8.49 8.70 8.33 Common Equity Tier 1 10.04 9.67 9.06 Tier 1 Risk-Based 10.73 10.27 9.54 Total Risk-Based 13.36 12.65 11.53
A p p e n d i x
15 CRE Detail as of 6/30/2022 Portfolio by Collateral Type Apartment & Residential 29% Retail 19% Mixed Use 10% Office 10% Industrial 11% Healthcare 11% Specialty & Other 10% Portfolio by Geography Florida 25.1% New Jersey 20.0% Other 20.2% Other NYC Boroughs 13.9% Manhattan (Multifamily) 5.9% Manhattan (Other) 4.7% New York (ex. NYC) 10.2% Geography Outstanding ($BN) % of Total Wtd. Avg. LTV Wtd. Avg. DSCR Florida $5.9 25.1% 61% 1.79x Other $4.8 20.2% 66% 1.79x New Jersey $4.7 20.0% 61% 1.87x Other NYC Boroughs $3.2 13.9% 53% 1.39x Manhattan $2.5 10.6% 34% (50% ex Co-Ops) 1.68x New York (ex. NYC) $2.4 10.2% 54% 1.82x Total $23.5 100.0% 56% 1.74x $23.5bn $23.5bn Sums may be inconsistent due to rounding.
16 June 30, March 31, June 30, ($ in thousands, except for share data) 2022 2022 2021 Adjusted net income available to common shareholders (Non-GAAP): Net income, as reported (GAAP) $96,413 $116,728 $120,512 Add: Losses on extinguishment of debt (net of tax) — — 6,024 Add: Losses on available for sale and held to maturity securities transactions (net of tax) (a) (56) 6 81 Add: Provision for credit losses for non-PCD loans and HTM securities (net of tax) 29,282 — — Add: Merger related expenses (net of tax) (b) 40,164 3,579 — Net income, as adjusted (Non-GAAP) $165,803 $120,313 $126,617 Dividends on preferred stock 3,172 3,172 3,172 Net income available to common shareholders, as adjusted (Non-GAAP) $162,631 $117,141 $123,445 (a) Included in (losses) / gains on securities transactions, net. (b) Merger related expenses are primarily within salary and employee benefits expense, other expense, and professional and legal fees. Adjusted per common share data (Non-GAAP): Net income available to common shareholders, as adjusted (Non-GAAP) $162,631 $117,141 $123,445 Average number of shares outstanding 506,302,464 421,573,843 405,963,209 Basic earnings, as adjusted (Non-GAAP) $0.32 $0.28 $0.30 Average number of diluted shares outstanding 508,479,206 423,506,550 408,660,778 Diluted earnings, as adjusted (Non-GAAP) $0.32 $0.28 $0.30 Adjusted annualized return on average tangible shareholders' equity (Non-GAAP): Net income, as adjusted (Non-GAAP) $165,803 $120,313 $126,617 Average shareholders' equity 6,238,985 5,104,709 4,708,797 Less: Average goodwill and other intangible assets 2,105,585 1,538,356 1,449,388 Average tangible shareholders' equity 4,133,400 3,566,353 3,259,409 Annualized return on average tangible shareholders' equity, as adjusted (Non-GAAP) 16.05% 13.49% 15.54% Adjusted annualized return on average assets (Non-GAAP): Net income, as adjusted (Non-GAAP) $165,803 $120,313 $126,617 Average assets $53,211,422 $43,570,251 $41,161,459 Annualized return on average assets, as adjusted (Non-GAAP) 1.25% 1.10% 1.23% Adjusted annualized return on average shareholders' equity (Non-GAAP): Net income, as adjusted (Non-GAAP) $165,803 $120,313 $126,617 Average shareholders' equity 6,238,985 5,104,709 4,708,797 Annualized return on average shareholders' equity, as adjusted (Non-GAAP) 10.63% 9.43% 10.76% Three Months Ended Non-GAAP Reconciliations to GAAP Financial Measures
17 June 30, March 31, June 30, ($ in thousands) 2022 2022 2021 Annualized return on average tangible shareholders' equity (Non-GAAP): Net income, as reported (GAAP) $96,413 $116,728 $120,512 Average shareholders' equity 6,238,985 5,104,709 4,708,797 Less: Average goodwill and other intangible assets 2,105,585 1,538,356 1,449,388 Average tangible shareholders' equity 4,133,400 3,566,353 3,259,409 Annualized return on average tangible shareholders' equity (Non-GAAP): 9.33% 13.09% 14.79% Efficiency ratio (Non-GAAP): Non-interest expense, as reported (GAAP) $299,730 $197,340 $171,893 Less: Loss on extinguishment of debt (pre-tax) — — 8,406 Less: Merger-related expenses (pre-tax) 54,496 4,628 — Less: Amortization of tax credit investments (pre-tax) 3,193 2,896 2,972 Non-interest expense, as adjusted (Non-GAAP) $242,041 $189,816 $160,515 Net interest income, as reported (GAAP) 418,160 317,669 300,907 Non-interest income, as reported (GAAP) 58,533 39,270 43,126 Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax) (78) 9 113 Non-interest income, as adjusted (Non-GAAP) $58,455 $39,279 43,239 Gross operating income, as adjusted (Non-GAAP) 476,615 356,948 $344,146 Efficiency ratio (Non-GAAP) 50.78% 53.18% 46.64% Annualized pre-provision net revenue / average assets Net interest income, as reported (GAAP) $418,160 $317,669 $300,907 Non-interest income, as reported (GAAP) 58,533 39,270 43,126 Less: Non-interest expense, as reported (GAAP) 299,730 197,340 171,893 Pre-provision net revenue (GAAP) $176,963 $159,599 $172,140 Average assets $53,211,422 $43,570,251 $41,161,459 Annualized pre-provision net revenue / average assets (GAAP) 1.33% 1.47% 1.67% Annualized pre-provision net revenue / average assets, as adjusted Pre-provision net revenue (GAAP) $176,963 $159,599 $172,140 Add: Loss on extinguishment of debt (pre-tax) — — 8,406 Add: Merger-related expenses (pre-tax) 54,496 4,628 — Add: Amortization of tax credit investments (pre-tax) 3,193 2,896 2,972 Less: Losses on available for sale and held to maturity securities transactions, net (pre-tax) (78) 9 113 Pre-provision net revenue, as adjusted (Non-GAAP) 234,574 167,132 183,631 Average assets $53,211,422 $43,570,251 $41,161,459 Annualized pre-provision net revenue / average assets, as adjusted (Non-GAAP) 1.76% 1.53% 1.78% Three Months Ended Non-GAAP Reconciliations to GAAP Financial Measures
18 June 30, March 31, June 30, ($ in thousands) 2022 2022 2021 Annualized return on average assets, excluding Paycheck Protection Program ("PPP") (Non-GAAP): Net income, as reported (GAAP) $96,413 $116,728 $120,512 Less: PPP loan income (net of tax) 2,954 5,292 18,974 Net income, excluding PPP loan income (Non-GAAP) 93,459 111,436 101,538 Average assets $53,211,422 $43,570,251 $41,161,459 Less: Average PPP loans (Non-GAAP) 227,794 299,534 1,985,653 Average assets, excluding average PPP loans (Non-GAAP) 52,983,628 43,270,717 39,175,806 Annualized return on average assets, excluding PPP (Non-GAAP) 0.71% 1.03% 1.04% Adjusted annualized return on average assets, excluding Paycheck Protection Program ("PPP") (Non-GAAP): Net income, as adjusted (Non-GAAP) $165,803 $120,313 $126,617 Less: PPP loan income (net of tax) 2,954 5,292 18,974 Net income, as adjusted, excluding PPP loan income (Non-GAAP) 162,849 115,021 107,643 Average assets, excluding average PPP loans (Non-GAAP) 52,983,628 43,270,717 39,175,806 Annualized return on average assets, as adjusted, excluding PPP (Non-GAAP) 1.23% 1.06% 1.10% Three Months Ended Non-GAAP Reconciliations to GAAP Financial Measures
19 June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, ($ in thousands, except for share data) 2022 2022 2021 2021 2021 2021 2020 2020 2020 Net interest income, as reported (GAAP) 418,160$ 317,669$ 315,301$ 301,026$ 300,907$ 292,667$ 287,920$ 283,086$ 282,559$ Non-interest income, as reported (GAAP) 58,533 39,270 38,223 42,431 43,126 31,233 47,533 49,272 44,830 Add: Net impairment losses on securities (pre-tax) - - - - - - - - - Add: Branch related asset impairment (pre-tax) - - - - - - - - - Add: Losses / (gains) on available for sale and held to maturity securities transactions, net (pre-tax) (78) 9 12 (788) 113 118 (651) 46 41 Less: Gain on the sale of Visa Class B shares (pre-tax) - - - - - - - - - Less: Gain on sale leaseback transaction (pre-tax) - - - - - - - - - Non-Interest Income, as adjusted (Non-GAAP) 58,455 39,279 38,235 41,643 43,239 31,351 46,882 49,318 44,871 Gross revenue, as adjusted (Non-GAAP) 476,615 356,948 353,536 342,669 344,146 324,018 334,802 332,404 327,430 Less: PPP Loan Income (pre-tax) 4,074 7,075 17,161 16,284 25,726 25,733 17,018 14,772 11,836 Gross revenue, as adjusted, excluding PPP (Non-GAAP) 472,541 349,873 336,375 326,385 318,420 298,285 317,784 317,632 315,594 Non-interest expense, as reported (GAAP) $299,730 $197,340 $184,514 $174,922 $171,893 $160,213 $173,141 $160,185 $157,166 Less: Loss on extinguishment of debt (pre-tax) - - - - 8,406 - 9,683 2,353 - Less: Severance expense (pre-tax) - - - - - - 2,072 - - Less: Litigation reserve - - - 2,100 - - - - - Less: Merger-related expenses (pre-tax) 54,496 4,628 7,613 1,287 - - 133 106 366 Less: Amortization of tax credit investments (pre-tax) 3,193 2,896 2,115 3,079 2,972 2,744 3,932 2,759 3,416 Non-interest expense, as adjusted (Non-GAAP) 242,041 189,816 174,786 168,456 160,515 157,469 157,321 154,967 153,384 Efficiency ratio (Non-GAAP) 50.78% 53.18% 49.44% 49.16% 46.64% 48.60% 46.99% 46.62% 46.84% Efficiency ratio, excluding PPP (Non-GAAP) 51.22% 54.25% 51.96% 51.61% 50.41% 52.79% 49.51% 48.79% 48.60% March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, ($ in thousands, except for share data) 2020 2019 2019 2019 2019 2018 2018 2018 2018 Net interest income, as reported (GAAP) 265,339$ 238,541$ 220,625$ 220,234$ 218,648$ 222,053$ 216,800$ 210,752$ 207,598$ Non-interest income, as reported (GAAP) 41,397 38,094 41,150 27,603 107,673 34,694 29,038 38,069 32,251 Add: Net impairment losses on securities (pre-tax) - - - 2,928 - - - - - Add: Branch related asset impairment (pre-tax) - - - - - - 1,821 - - Add: Losses / (gains) on available for sale and held to maturity securities transactions, net (pre-tax) 40 36 93 (11) 32 1,462 79 36 765 Less: Gain on the sale of Visa Class B shares (pre-tax) - - - - - 6,530 - - - Less: Gain on sale leaseback transaction (pre-tax) - - - - 78,505 - - - - Non-Interest Income, as adjusted (Non-GAAP) 41,437 38,130 41,243 30,520 29,200 29,626 30,938 38,105 33,016 Gross revenue, as adjusted (Non-GAAP) 306,776 276,671 261,868 250,754 247,848 251,679 247,738 248,857 240,614 Less: PPP Loan Income (pre-tax) - - - - - - - - - Gross revenue, as adjusted, excluding PPP (Non-GAAP) 306,776 276,671 261,868 250,754 247,848 251,679 247,738 248,857 240,614 Non-interest expense, as reported (GAAP) $155,656 $196,146 $145,877 $141,737 $147,795 $153,712 $151,681 $149,916 $173,752 Less: Loss on extinguishment of debt (pre-tax) - 31,995 - - - - - - - Less: Severance expense (pre-tax) - - - - 4,838 2,662 - - - Less: Litigation reserve - - - - - - 1,684 - 10,500 Less: Merger-related expenses (pre-tax) 1,302 15,110 1,434 35 - (635) 1,304 3,248 13,528 Less: Amortization of tax credit investments (pre-tax) 3,228 3,971 4,385 4,863 7,173 9,044 5,412 4,470 5,274 Non-interest expense, as adjusted (Non-GAAP) 151,126 145,070 140,058 136,839 135,784 142,641 143,281 142,198 144,450 Efficiency ratio (Non-GAAP) 49.26% 52.43% 53.48% 54.57% 54.79% 56.68% 57.84% 57.14% 60.03% Efficiency ratio, excluding PPP (Non-GAAP) 49.26% 52.43% 53.48% 54.57% 54.79% 56.68% 57.84% 57.14% 60.03% Three Months Ended Three Months Ended Non-GAAP Reconciliations to GAAP Financial Measures
20 June 30, March 31, December 31, September 30, June 30, ($ in thousands, except for share data) 2022 2022 2021 2021 2021 Tangible book value per common share (Non-GAAP): Common shares outstanding 506,328,526 421,437,068 421,437,068 407,313,664 406,083,790 Shareholders' equity $6,204,913 $5,096,384 $5,084,066 $4,822,498 $4,737,807 Less: Preferred Stock 209,691 209,691 209,691 209,691 209,691 Less: Goodwill and other intangible assets 2,090,147 1,543,238 1,529,394 1,444,967 1,447,965 Tangible common shareholders' equity (Non-GAAP) $3,905,075 $3,343,455 $3,344,981 $3,167,840 $3,080,151 Tangible book value per common share (Non-GAAP): $7.71 $7.93 $7.94 $7.78 $7.59 Tangible common equity to tangible assets (Non-GAAP): Tangible common shareholders' equity (Non-GAAP) $3,905,075 $3,343,455 $3,344,981 $3,167,840 $3,080,151 Total assets 54,438,807 43,551,457 43,446,443 41,278,007 41,274,228 Less: Goodwill and other intangible assets 2,090,147 1,543,238 1,529,394 1,444,967 1,447,965 Tangible assets (Non-GAAP) 52,348,660 42,008,219 41,917,049 $39,833,040 $39,826,263 Tangible common equity to tangible assets (Non-GAAP) 7.46% 7.96% 7.98% 7.95% 7.73% As of June 30, December 31, ($ in thousands, except for share data) 2022 2021 Reported Annualized "Organic" Loans and Loan Growth (Non-GAAP) Total Loans, as reported (GAAP) $43,560,777 $34,153,657 27.5% 55.1% Less: Fair Value of Total Loans Acquired from Bank Leumi USA as of April 1, 2022 5,914,389 — — — Total "Organic" Loans (Non-GAAP) 37,646,388 34,153,657 10.2% 20.5% As of, 2Q22 Year-to-Date Growth Non-GAAP Reconciliations to GAAP Financial Measures
21 ▪ Log onto our website: www.valley.com ▪ Email requests to: tlan@valley.com ▪ Call Travis Lan in Investor Relations, at: (973) 686-5007 ▪ Write to: Valley National Bank 1455 Valley Road Wayne, New Jersey 07470 Attn: Travis Lan, FSVP – Director, Corporate Finance & Business Development ▪ Log onto our website above or www.sec.gov to obtain free copies of documents filed by Valley with the SEC For More Information