Valley National Bancorp Reports Strong Fourth Quarter Net Income Driven by a 21 Percent Increase in Net Interest Income


NEW YORK, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the fourth quarter 2020 of $105.4 million, or $0.25 per diluted common share, as compared to the fourth quarter 2019 earnings of $38.1 million, or $0.10 per diluted common share, and net income of $102.4 million, or $0.25 per diluted common share, for the third quarter 2020. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $113.4 million, or $0.27 per diluted common share, for the fourth quarter 2020, $90.7 million, or $0.24 per diluted common share, for the fourth quarter 2019, and $104.2 million, or $0.25 per diluted common share, for the third quarter 2020. See further details below, including a reconciliation of our adjusted net income in the "Consolidated Financial Highlights" tables.

Key financial highlights for the fourth quarter:

  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $288.8 million for the fourth quarter 2020 increased $4.7 million and $49.2 million as compared to the third quarter 2020 and fourth quarter 2019, respectively. Our net interest margin on a tax equivalent basis increased 5 basis points to 3.06 percent in the fourth quarter 2020 as compared to 3.01 percent for the third quarter 2020. The increases were partially due to a 11 basis point decline in our costs of average interest bearing liabilities caused by the continued downward repricing of our interest bearing deposits, repayment of higher cost borrowings and growth in our non-interest bearing deposits. See the "Net Interest Income and Margin" section below for more details.
  • Loan Portfolio: At December 31, 2020, loans totaled $32.2 billion, an increase of 8.5 percent as compared to one year ago. Total loans decreased $198.5 million as compared to September 30, 2020 largely due to a decrease in the residential mortgage loan portfolio driven by refinance and secondary loan sale activity, as well as tempered demand and our selective underwriting within the commercial loan portfolios during the fourth quarter 2020. Fourth quarter new and refinanced loan originations included approximately $382 million of residential mortgage loans originated for sale rather than investment. Net gains on sales of residential loans were $16.0 million and $13.4 million in the fourth quarter 2020 and third quarter 2020, respectively. See "Loans, Deposits and Other Borrowings" section below for additional information.
  • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $351.4 million and $335.3 million at December 31, 2020 and September 30, 2020, respectively. During the fourth quarter 2020, the provision for credit losses for loans was $19.0 million as compared to $31.0 million and $5.4 million for the third quarter 2020 and fourth quarter 2019, respectively. The reserve build in the fourth quarter 2020 reflects, among other factors, the impact of the internal risk rating downgrades of certain commercial loans largely related to borrowers negatively impacted by the pandemic, lower valuations of collateral securing our non-performing taxi medallion loan portfolio, and, to a lesser extent, changes in the economic forecast component of our reserves at December 31, 2020.
  • Credit Quality: Net loan charge-offs totaled $3.0 million for the fourth quarter 2020, as compared to $15.4 million for the third quarter 2020 and $5.6 million for the fourth quarter 2019. Non-accrual loans represented 0.58 percent and 0.59 percent of total loans at December 31, 2020 and September 30, 2020, respectively. See the "Credit Quality" Section below for more details.
  • Non-Interest Income: Non-interest income decreased $1.7 million to $47.5 million for the fourth quarter 2020 from $49.3 million for the third quarter 2020 largely due to a $8.4 million decrease in swap fee income related to new commercial loan transactions. The fourth quarter decrease in swaps fees was partially offset by increases of $3.7 million and $2.6 million in BOLI income and net gains on sales of residential mortgage loans, respectively, as compared to the third quarter 2020.
  • Loss on Extinguishment of Debt: In mid-December 2020, Valley prepaid $534 million of FHLB borrowings scheduled to mature in 2021 and 2022 with a weighted average effective interest rate of 2.48 percent. The debt prepayment was funded by excess cash liquidity. The transaction was accounted for as an early debt extinguishment resulting in a loss of $9.7 million reported within non-interest expense for the fourth quarter 2020.
  • Non-Interest Expense: Non-interest expense increased $13.0 million to $173.1 million for the fourth quarter 2020 as compared to the third quarter 2020 mainly due to a $7.3 million increase in the loss on extinguishment of debt and additional severance expense of $2.1 million. Telecommunication expense and amortization of tax credit investments also increased $1.4 million and $1.2 million, respectively, during the fourth quarter 2020 as compared to the third quarter 2020.
  • Efficiency Ratio: Our efficiency ratio was 51.61 percent for the fourth quarter 2020 as compared to 48.20 percent and 70.90 percent for the third quarter 2020 and fourth quarter 2019, respectively. Our adjusted efficiency ratio was 46.99 percent for the fourth quarter 2020 as compared to 46.62 percent and 52.43 percent for the third quarter 2020 and fourth quarter 2019, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measure.
  • Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 1.02 percent, 9.20 percent, and 13.45 percent for the fourth quarter 2020, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, were 1.10 percent, 9.90 percent, and 14.48 percent for the fourth quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.

Ira Robbins, CEO and President commented, "Valley reported strong fourth quarter 2020 results, finishing up a chaotic year where we demonstrated the significant earnings power and strength of our franchise and dedicated employees. For the year, we generated approximately $391 million in net income despite our provision for credit losses of $126 million driven by the pandemic and the impact of CECL. Our ability to manage our funding costs, generate loan related gains and fee income and remain laser-focused on our operating expenses, resulted in an adjusted efficiency ratio of approximately 47 percent for both the fourth quarter and the full year of 2020." Robbins continued, "Reflecting on 2020, I am very proud of how our customer facing and back office teams worked together and quickly mobilized to support our customers and communities during the pandemic, and our continued ability to innovate new products, services and technology which we believe will firmly position Valley for the future. We have made significant progress as a firm, and I'm excited to build on Valley's strong foundation and realize its boundless potential for all its stakeholders."

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $288.8 million for the fourth quarter 2020 increased $4.7 million and $49.2 million as compared to the third quarter 2020 and fourth quarter 2019, respectively. The increase compared to the third quarter 2020 was mainly due to lower rates on our deposit products combined with a shift in customer preference towards deposits without stated maturities, as well as a reduction in average short-term and long-term borrowings funded by excess liquidity. Interest expense of $46.1 million for the three months ended December 31, 2020 decreased $8.1 million as compared to the third quarter 2020. Overall, average interest-bearing liabilities decreased $354.6 million and average non-interest bearing deposits increased $323.1 million in the fourth quarter 2020 as compared to the third quarter 2020. Interest income on a tax equivalent basis decreased $3.4 million to $335.0 million for the fourth quarter 2020 as compared to the third quarter 2020 mainly due to a 3 basis point decrease in the yield on average loans, as well as a moderate decline in interest and dividends from investment securities. The decrease was mostly attributable to principal repayments on securities, and a decline in our reinvestment activity within the available for sale investment securities portfolio largely due to the low interest rate environment.

The net interest margin on a tax equivalent basis of 3.06 percent for the fourth quarter 2020 increased 5 basis points as compared to 3.01 percent for the third quarter 2020, and increased 10 basis points from 2.96 percent for the fourth quarter 2019. The yield on average interest earning assets decreased by 4 basis points on a linked quarter basis mostly due to the impact of the lower interest rate environment. The yield on average loans decreased to 3.86 percent for the fourth quarter 2020 from 3.89 percent for the third quarter 2020 largely due to the continued repayment of higher yielding loans, partially offset by a $2.2 million increase in interest and fees from SBA Paycheck Protection Program (PPP) loans. The increase in interest and fees on SBA PPP loans was mostly caused by a moderate level of loan forgiveness activity and acceleration of net unamortized deferred loan fees during the fourth quarter 2020. The overall cost of average interest-bearing liabilities decreased by 11 basis points to 0.69 percent for the fourth quarter 2020 as compared to the linked third quarter 2020 due to the lower rates offered on deposit products and the shift to lower cost deposits as well as lower average short- and long-term borrowing balances with repayments funded by excess liquidity. This includes our prepayment of $534 million in higher cost long-term borrowings during December 2020 that is expected to positively impact our average cost of funds for the full first quarter 2021. Our cost of total average deposits was 0.33 percent for the fourth quarter 2020 as compared to 0.41 percent for the three months ended September 30, 2020.

Loans, Deposits and Other Borrowings

Loans. Loans decreased $198.5 million to approximately $32.2 billion at December 31, 2020 from September 30, 2020 largely due to a $100.9 million decrease in the residential mortgage loan portfolio and principal repayments, including SBA PPP loan forgiveness, outpacing new loan originations in the commercial loan categories. SBA PPP loans reported within commercial and industrial loans decreased $125.3 million to approximately $2.2 billion at December 31, 2020 from September 30, 2020. Auto and other consumer loans increased 4.3 percent and 9.3 percent, respectively, on an annualized basis during the fourth quarter 2020. The decline in residential mortgage loans during the fourth quarter 2020 was mainly due to significant refinance activity and approximately $382 million of new and refinanced loans originated for sale rather than investment during the fourth quarter 2020. Loans held for sale totaled $301.4 million and $209.3 million at December 31, 2020 and September 30, 2020.

Deposits. Total deposits increased $747.6 million, or 2.4 percent, to approximately $31.9 billion at December 31, 2020 from September 30, 2020 driven by increases of $448.3 million and $1.1 billion in the non-interest bearing, and the saving, NOW, money market deposit categories, respectively, which were partially offset by a decrease of $822.9 million in time deposits. The increase in deposits without stated maturities was mainly attributable to higher retail and government deposit balances within our branch network, as well as continued migration of maturing high cost retail CDs to more liquid deposit product categories during the fourth quarter 2020. Total brokered deposits (consisting of both time and money market deposit accounts) were $3.1 billion at December 31, 2020 as compared to $3.3 billion at September 30, 2020. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 29 percent, 50 percent and 21 percent of total deposits as of December 31, 2020, respectively.

Other Borrowings. Short-term borrowings and long term borrowings decreased $282.8 million and $556.9 million to approximately $1.1 billion and $2.3 billion, respectively, at December 31, 2020 as compared to September 30, 2020, as we redeployed excess liquidity from deposit growth to the repayment of borrowings during the fourth quarter 2020. The reduction in long-term borrowings included the December prepayment of $534.0 million of FHLB borrowings with a weighted average interest rate of 2.48 percent. The prepayment resulted in a $9.7 million prepayment penalty charge recognized in non-interest expense during the fourth quarter 2020.

Credit Quality

Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities decreased $9.1 million to $194.6 million at December 31, 2020 compared to $203.6 million at September 30, 2020. The decrease in NPAs was largely due to a $9.0 million decline in non-accrual commercial and industrial loans, which was mainly caused by loan repayments during the fourth quarter 2020. Non-accrual loans represented 0.58 percent of total loans at December 31, 2020 as compared to 0.59 percent of total loans at September 30, 2020.

Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing New York City and Chicago taxi medallion loans totaling $90.6 million and $6.9 million, respectively, within the commercial and industrial loan portfolio at December 31, 2020. At December 31, 2020, non-accrual taxi medallion loans totaling $97.5 million had related reserves of $66.4 million, or 68.1 percent of such loans, within the allowance for loan losses.

Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $15.1 million to $99.0 million, or 0.31 percent of total loans, at December 31, 2020 as compared to $83.9 million, or 0.26 percent of total loans, at September 30, 2020. The higher level of accruing past due loans at December 31, 2020 was partially caused by a $12.3 million matured commercial real estate loan (in the process of restructuring its terms) reported within the 30 to 59 day category, as well as an increase in later stage residential mortgage loan delinquencies. Residential mortgage loans 60 to 89 days past due and 90 or more days past due increased $6.6 million and $2.3 million, respectively, at December 31, 2020 mostly due to a few larger borrowers, including the migration of certain loans reported within the 30 to 59 day category at September 30, 2020.

Forbearance. In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant, when requested by customers. Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days. Any extensions beyond this period were done in accordance with applicable regulatory guidance. As of December 31, 2020, Valley had approximately $361 million of outstanding loans remaining in their payment deferral period under short-term modifications.

Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to specific loan categories and the allocation as a percentage of each loan category (including PCD loans) at December 31, 2020, September 30, 2020, and December 31, 2019:

 December 31, 2020 September 30, 2020 December 31, 2019
   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$131,070  1.91% $130,409  1.89% $104,059  2.22%
Commercial real estate loans:           
Commercial real estate146,009  0.87% 128,699  0.77% 20,019  0.13%
Construction18,104  1.04% 15,951  0.93% 25,654  1.56%
Total commercial real estate loans164,113  0.89% 144,650  0.78% 45,673  0.26%
Residential mortgage loans28,873  0.69% 28,614  0.67% 5,060  0.12%
Consumer loans:           
Home equity4,675  1.08% 5,972  1.31% 459  0.09%
Auto and other consumer11,512  0.51% 15,387  0.69% 6,508  0.28%
Total consumer loans16,187  0.60% 21,359  0.79% 6,967  0.24%
Allowance for loan losses340,243  1.06% 325,032  1.00% 161,759  0.55%
Allowance for unfunded credit commitments11,111    10,296    2,845   
Total allowance for credit losses for loans$351,354    $335,328    $164,604   
Allowance for credit losses as a % of loans  1.09%   1.03%   0.55%
           
* CECL was adopted January 1, 2020. Prior periods reflect the allowance for credit losses for loans under the incurred loss model.
 

Our loan portfolio, totaling $32.2 billion at December 31, 2020, had net loan charge-offs of $3.0 million for the fourth quarter 2020 as compared to $15.4 million and $5.6 million for the third quarter 2020 and the fourth quarter 2019, respectively. Net charge-offs were elevated in the linked third quarter partially due to the full charge-off of a $6.0 million non-performing commercial and industrial loan relationship. Additionally, partial charge-offs of taxi medallions declined to $2.3 million during the fourth quarter 2020 as compared to $6.1 million and $2.9 million for the third quarter 2020 and fourth quarter 2019, respectively.

The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a percentage of total loans was 1.09 percent, 1.03 percent and 0.55 percent at December 31, 2020, September 30, 2020 and December 31, 2019, respectively. During the fourth quarter 2020, we recorded a provision for credit losses totaling $19.0 million as compared to $31.0 million for the third quarter 2020 and $5.4 million for the fourth quarter 2019. The reserve build in the fourth quarter 2020 reflects several factors, including the impact of the internal risk rating downgrades of certain commercial loans largely related to borrowers negatively impacted by the pandemic, lower valuations of collateral securing our non-performing taxi medallion loan portfolio, and, to a lesser extent, changes in the economic forecast component of our reserves at December 31, 2020.

Capital Adequacy

Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, Tier 1 capital, common equity Tier 1 capital and Tier 1 leverage capital ratios were 12.64 percent, 10.66 percent, 9.94 percent and 8.06 percent, respectively, at December 31, 2020.

For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred for a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) for the year ended December 31, 2020 will be phased in over the same time frame.

Investor Conference Call

Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Standard Time, today to discuss the fourth quarter 2020 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432 (Conference ID: 3626439). The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/n3ghj44s and archived on Valley’s website through Monday, March 1, 2021. Investor presentation materials will be made available prior to the conference call at www.valley.com.

About Valley

As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $42 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations across New Jersey, New York, Florida and Alabama, 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 impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;
  • the impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 may arise in our primary markets;
  • potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic or as a result of our actions in response to, or failure to implement or effectively implement, federal, state and local laws, rules or executive orders requiring that we grant forbearances or not act to collect our loans;
  • 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;
  • 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 and Alabama, 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, 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;
  • unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors; and
  • the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019 and in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

-Tables to Follow-

VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

SELECTED FINANCIAL DATA

 Three Months Ended Years Ended
 December 31, September 30, December 31, December 31,
($ in thousands, except for share data)2020 2020 2019 2020 2019
FINANCIAL DATA:         
Net interest income - FTE (1)$288,833  $284,119  $239,615  $1,122,875  $902,679 
Net interest income287,920  283,086  238,541  1,118,904  898,048 
Non-interest income47,533  49,272  38,094  183,032  214,520 
Total revenue335,453  332,358  276,635  1,301,936  1,112,568 
Non-interest expense173,141  160,185  196,146  646,148  631,555 
Pre-provision net revenue162,312  172,173  80,489  655,788  481,013 
Provision for credit losses18,975  30,908  5,418  125,722  24,218 
Income tax expense37,974  38,891  36,967  139,460  147,002 
Net income105,363  102,374  38,104  390,606  309,793 
Dividends on preferred stock3,172  3,172  3,172  12,688  12,688 
Net income available to common stockholders$102,191  $99,202  $34,932  $377,918  $297,105 
Weighted average number of common shares outstanding:         
Basic403,872,459  403,833,469  355,821,005  403,754,356  337,792,270 
Diluted405,799,507  404,788,526  358,864,876  405,046,207  340,117,808 
Per common share data:         
Basic earnings$0.25  $0.25  $0.10  $0.94  $0.88 
Diluted earnings0.25  0.25  0.10  0.93  0.87 
Cash dividends declared0.11  0.11  0.11  0.44  0.44 
Closing stock price - high10.09  8.33  12.07  11.46  12.07 
Closing stock price - low6.90  6.60  10.60  6.29  9.00 
CORE ADJUSTED FINANCIAL DATA: (2)         
Net income available to common shareholders, as adjusted$110,266  $101,002  $87,478  $389,050  $314,170 
Basic earnings per share, as adjusted0.27  0.25  0.25  0.96  0.93 
Diluted earnings per share, as adjusted0.27  0.25  0.24  0.96  0.92 
FINANCIAL RATIOS:        `
Net interest margin3.05% 3.00% 2.95% 3.02% 2.94%
Net interest margin - FTE (1)3.06  3.01  2.96  3.03  2.95 
Annualized return on average assets1.02  0.99  0.43  0.96  0.93 
Annualized return on avg. shareholders' equity9.20  9.04  4.01  8.68  8.71 
Annualized return on avg. tangible shareholders' equity (2)13.45  13.30  5.98  12.82  13.05 
Efficiency ratio (3)51.61  48.20  70.90  49.63  56.77 
CORE ADJUSTED FINANCIAL RATIOS: (2)         
Annualized return on average assets, as adjusted1.10% 1.01% 1.03% 0.99% 0.98%
Annualized return on average shareholders' equity, as adjusted9.90  9.20  9.53  8.93  9.19 
Annualized return on average tangible shareholders' equity, as adjusted14.48  13.53  14.23  13.19  13.77 
Efficiency ratio, as adjusted46.99  46.62  52.43  47.39  53.78 
    
 Three Months Ended Years Ended
 December 31, September 30, December 31, December 31,
($ in thousands, except for share data)2020 2020 2019 2020 2019
AVERAGE BALANCE SHEET ITEMS:         
Assets$41,308,943 $41,356,737  $35,315,682  $40,557,326  $33,442,738 
Interest earning assets37,806,500 37,767,710  32,337,660  37,010,933  30,575,530 
Loans32,570,902 32,515,264  27,968,383  31,785,859  26,235,253 
Interest bearing liabilities26,708,223 27,062,790  24,244,902  26,877,800  22,948,872 
Deposits31,755,838 31,390,693  26,833,714  30,690,382  25,292,397 
Shareholders' equity4,582,329 4,530,671  3,804,902  4,500,067  3,555,483 
              


 As of
BALANCE SHEET ITEMS:December 31, September 30, June 30, March 31, December 31,
(In thousands)2020 2020 2020 2020 2019
Assets$40,686,076  $40,747,492  $41,626,497  $39,089,443  $37,436,020 
Total loans32,217,112  32,415,586  32,314,611  30,428,067  29,699,208 
Deposits31,935,602  31,187,982  31,337,237  28,985,802  29,185,837 
Shareholders' equity4,592,120  4,533,763  4,474,488  4,420,998  4,384,188 
          
LOANS:         
(In thousands)         
Commercial and industrial$6,861,708  $6,903,345  $6,884,689  $4,998,731  $4,825,997 
Commercial real estate:         
Commercial real estate16,724,998  16,815,587  16,571,877  16,390,236  15,996,741 
Construction1,745,825  1,720,775  1,721,352  1,727,046  1,647,018 
Total commercial real estate18,470,823  18,536,362  18,293,229  18,117,282  17,643,759 
Residential mortgage4,183,743  4,284,595  4,405,147  4,478,982  4,377,111 
Consumer:         
Home equity431,553  457,083  471,115  481,751  487,272 
Automobile1,355,955  1,341,659  1,369,489  1,436,734  1,451,623 
Other consumer913,330  892,542  890,942  914,587  913,446 
Total consumer loans2,700,838  2,691,284  2,731,546  2,833,072  2,852,341 
Total loans$32,217,112  $32,415,586  $32,314,611  $30,428,067  $29,699,208 
          
CAPITAL RATIOS:         
Book value per common share$10.85  $10.71  $10.56  $10.43  $10.35 
Tangible book value per common share (2)7.25  7.12  6.96  6.82  6.73 
Tangible common equity to tangible assets (2)7.47% 7.32% 7.00% 7.32% 7.54%
Tier 1 leverage capital8.06  7.89  7.70  8.24  8.76 
Common equity tier 1 capital9.94  9.71  9.51  9.24  9.42 
Tier 1 risk-based capital10.66  10.42  10.23  9.95  10.15 
Total risk-based capital12.64  12.37  12.19  11.53  11.72 
               


 Three Months Ended Years Ended
ALLOWANCE FOR CREDIT LOSSES:December 31, September 30, December 31, December 31,
($ in thousands)2020 2020 2019 2020 2019
Beginning balance - Allowance for credit losses$335,328  $319,723  $164,770  $164,604  $156,295 
Impact of the adoption of ASU 2016-13 (4)      37,989   
Allowance for purchased credit deteriorated (PCD) loans      61,643   
Beginning balance, adjusted335,328  319,723  164,770  264,236  156,295 
Loans charged-off (5):         
Commercial and industrial(3,281) (13,965) (5,378) (34,630) (13,260)
Commercial real estate(1) (695)   (767) (158)
Residential mortgage(250) (7)   (598) (126)
Total Consumer(1,670) (2,458) (2,700) (9,294) (8,671)
Total loans charged-off(5,202) (17,125) (8,078) (45,289) (22,215)
Charged-off loans recovered (5):         
Commercial and industrial160  428  389  1,956  2,397 
Commercial real estate890  60  1,166  1,054  1,237 
Construction372  40    452   
Residential mortgage44  31  53  670  66 
Total Consumer734  1,151  886  3,188  2,606 
Total loans recovered2,200  1,710  2,494  7,320  6,306 
Net charge-offs(3,002) (15,415) (5,584) (37,969) (15,909)
Provision for credit losses for loans19,028  31,020  5,418  125,087  24,218 
Ending balance - Allowance for credit losses$351,354  $335,328  $164,604  $351,354  $164,604 
Components of allowance for credit losses for loans:         
Allowance for loan losses$340,243  $325,032  $161,759  $340,243  $161,759 
Allowance for unfunded credit commitments (6)11,111  10,296  2,845  11,111  2,845 
Allowance for credit losses for loans$351,354  $335,328  $164,604  $351,354  $164,604 
Components of provision for credit losses for loans:         
Provision for credit losses for loans$18,213  $30,833  $5,490  $123,922  $25,809 
Provision for unfunded credit commitments (6)815  187  (72) 1,165  (1,591)
Total provision for credit losses for loans$19,028  $31,020  $5,418  $125,087  $24,218 
          
Annualized ratio of total net charge-offs to average loans0.04% 0.19% 0.08% 0.12% 0.06%
Allowance for credit losses as a % of total loans1.09% 1.03% 0.55% 1.09% 0.55%
               


 As of
ASSET QUALITY: (7)December 31, September 30, June 30, March 31, December 31,
($ in thousands)2020 2020 2020 2020 2019
Accruing past due loans:         
30 to 59 days past due:         
Commercial and industrial$6,393  $6,587  $6,206  $9,780  $11,700 
Commercial real estate35,030  26,038  13,912  41,664  2,560 
Construction315  142    7,119  1,486 
Residential mortgage17,717  22,528  35,263  38,965  17,143 
Total Consumer10,257  8,979  12,962  19,508  13,704 
Total 30 to 59 days past due69,712  64,274  68,343  117,036  46,593 
60 to 89 days past due:         
Commercial and industrial2,252  3,954  4,178  7,624  2,227 
Commercial real estate1,326  610  1,543  15,963  4,026 
Construction      49  1,343 
Residential mortgage10,351  3,760  4,169  9,307  4,192 
Total Consumer1,823  1,352  3,786  2,309  2,527 
Total 60 to 89 days past due15,752  9,676  13,676  35,252  14,315 
90 or more days past due:         
Commercial and industrial9,107  6,759  5,220  4,049  3,986 
Commercial real estate993  1,538    161  579 
Residential mortgage3,170  891  3,812  1,798  2,042 
Total Consumer271  753  2,082  1,092  711 
Total 90 or more days past due13,541  9,941  11,114  7,100  7,318 
Total accruing past due loans$99,005  $83,891  $93,133  $159,388  $68,226 
Non-accrual loans:         
Commercial and industrial$106,693  $115,667  $130,876  $132,622  $68,636 
Commercial real estate46,879  41,627  43,678  41,616  9,004 
Construction84  2,497  3,308  2,972  356 
Residential mortgage25,817  23,877  25,776  24,625  12,858 
Total Consumer5,809  7,441  6,947  4,095  2,204 
Total non-accrual loans185,282  191,109  210,585  205,930  93,058 
Other real estate owned (OREO)5,118  7,746  8,283  10,198  9,414 
Other repossessed assets3,342  3,988  3,920  3,842  1,276 
Non-accrual debt securities (5)815  783  1,365  531  680 
Total non-performing assets$194,557  $203,626  $224,153  $220,501  $104,428 
Performing troubled debt restructured loans$57,367  $58,090  $53,936  $48,024  $73,012 
Total non-accrual loans as a % of loans0.58% 0.59% 0.65% 0.68% 0.31%
Total accruing past due and non-accrual loans as a % of loans0.88% 0.85% 0.94% 1.20% 0.54%
Allowance for loan losses as a % of non-accrual loans183.64% 170.08% 147.03% 137.59% 173.83%
               

NOTES TO SELECTED FINANCIAL DATA

(1)Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
(2)This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.


 Three Months Ended Years Ended
 December 31, September 30, December 31, December 31,
($ in thousands, except for share data)2020 2020 2019 2020 2019
Adjusted net income available to common shareholders:         
Net income, as reported$105,363  $102,374  $38,104  $390,606  $309,793 
Less: Gain on sale leaseback transactions (net of tax)(a)        (56,414)
Add: Losses on extinguishment of debt (net of tax)6,958  1,691  22,992  8,649  22,992 
Add: Net impairment losses on securities (net of tax)        2,104 
Add: (Gains) losses on securities transactions (net of tax)(468) 33  26  (377) 108 
Add: Severance expense (net of tax)(b)1,489      1,489  3,477 
Add: Tax credit investment impairment (net of tax)(c)        1,746 
Add: Merger related expenses (net of tax)(d)96  76  10,861  1,371  11,929 
Add: Income tax expense (benefit)(e)    18,667    31,123 
Net income, as adjusted$113,438  $104,174  $90,650  $401,738  $326,858 
Dividends on preferred stock3,172  3,172  3,172  12,688  12,688 
Net income available to common shareholders, as adjusted$110,266  $101,002  $87,478  $389,050  $314,170 
_____________         
(a) The gain on sale leaseback transactions is included in gains on the sales of assets within other non-interest income.
(b) Severance expenses are included in salary and employee benefits expense.
(c) Impairment is included in the amortization of tax credit investments.
(d) Merger related expenses are primarily within salary and employee benefits expense, professional and legal fees, and other expense.
(e) Income tax expense related to reserves for uncertain tax positions.
          
Adjusted per common share data:         
Net income available to common shareholders, as adjusted$110,266  $101,002  $87,478  $389,050  $314,170 
Average number of shares outstanding403,872,459  403,833,469  355,821,005  403,754,356  337,792,270 
Basic earnings, as adjusted$0.27  $0.25  $0.25  $0.96  $0.93 
Average number of diluted shares outstanding405,799,507  404,788,526  358,864,876  405,046,207  340,117,808 
Diluted earnings, as adjusted$0.27  $0.25  $0.24  $0.96  $0.92 
                    


 Three Months Ended Years Ended
 December 31, September 30, December 31, December 31,
($ in thousands)2020 2020 2019 2020 2019
Adjusted annualized return on average tangible shareholders' equity:         
Net income, as adjusted$113,438  $104,174  $90,650  $401,738  $326,858 
Average shareholders' equity4,582,329  4,530,671  3,804,902  4,500,067  3,555,483 
Less: Average goodwill and other intangible assets1,447,838  1,451,889  1,256,137  1,454,349  1,182,140 
Average tangible shareholders' equity$3,134,491  $3,078,782  $2,548,765  $3,045,718  $2,373,343 
Annualized return on average tangible shareholders' equity, as adjusted14.48% 13.53% 14.23% 13.19% 13.77%
Adjusted annualized return on average assets:         
Net income, as adjusted$113,438  $104,174  $90,650  $401,738  $326,858 
Average assets$41,308,943  $41,356,737  $35,315,682  $40,557,326  $33,442,738 
Annualized return on average assets, as adjusted1.10% 1.01% 1.03% 0.99% 0.98%
Adjusted annualized return on average shareholders' equity:         
Net income, as adjusted$113,438  $104,174  $90,650  $401,738  $326,858 
Average shareholders' equity$4,582,329  $4,530,671  $3,804,902  $4,500,067  $3,555,483 
Annualized return on average shareholders' equity, as adjusted9.90% 9.20% 9.53% 8.93% 9.19%


Annualized return on average tangible shareholders' equity:         
Net income, as reported$105,363  $102,374  $38,104  $390,606  $309,793 
Average shareholders' equity4,582,329  4,530,671  3,804,902  4,500,067  3,555,483 
Less: Average goodwill and other intangible assets1,447,838  1,451,889  1,256,137  1,454,349  1,182,140 
Average tangible shareholders' equity$3,134,491  $3,078,782  $2,548,765  $3,045,718  $2,373,343 
Annualized return on average tangible shareholders' equity13.45% 13.30% 5.98% 12.82% 13.05%
Adjusted efficiency ratio:          
Non-interest expense$173,141  $160,185  $196,146  $646,148  $631,555 
Less: Loss on extinguishment of debt (pre-tax)9,683  2,353  31,995  12,036  31,995 
Less: Severance expense (pre-tax)2,072      2,072  4,838 
Less: Merger-related expenses (pre-tax)133  106  15,110  1,907  16,579 
Less: Amortization of tax credit investments (pre-tax)3,932  2,759  3,971  13,335  20,392 
Non-interest expense, as adjusted157,321  154,967  145,070  616,798  557,751 
Net interest income287,920  283,086  238,541  1,118,904  898,048 
Non-interest income, as reported47,533  49,272  38,094  183,032  214,520 
Add: Net impairment losses on securities (pre-tax)        2,928 
Add: (Gains) losses on securities transactions, net (pre-tax)(651) 46  36  (524) 150 
Less: Gain on sale leaseback transaction (pre-tax)        78,505 
Non-interest income, as adjusted$46,882  $49,318  $38,130  $182,508  $139,093 
Gross operating income, as adjusted$334,802  $332,404  $276,671  $1,301,412  $1,037,141 
Efficiency ratio, as adjusted46.99% 46.62% 52.43% 47.39% 53.78%
               


 As Of
 December 31, September 30, June 30, March 31, December 31,
($ in thousands, except for share data)2020 2020 2020 2020 2019
Tangible book value per common share:         
Common shares outstanding403,858,998  403,878,744  403,795,699  403,744,148  403,278,390 
Shareholders' equity$4,592,120  $4,533,763  $4,474,488  $4,420,998  $4,384,188 
Less: Preferred Stock209,691  209,691  209,691  209,691  209,691 
Less: Goodwill and other intangible assets1,452,891  1,449,282  1,453,330  1,458,095  1,460,397 
Tangible common shareholders' equity$2,929,538  $2,874,790  $2,811,467  $2,753,212  $2,714,100 
Tangible book value per common share$7.25  $7.12  $6.96  $6.82  $6.73 
Tangible common equity to tangible assets:         
Tangible common shareholders' equity$2,929,538  $2,874,790  $2,811,467  $2,753,212  $2,714,100 
Total assets$40,686,076  $40,747,492  $41,626,497  $39,089,443  $37,436,020 
Less: Goodwill and other intangible assets1,452,891  1,449,282  1,453,330  1,458,095  1,460,397 
Tangible assets$39,233,185  $39,298,210  $40,173,167  $37,631,348  $35,975,623 
Tangible common equity to tangible assets7.47% 7.32% 7.00% 7.32% 7.54%


(3)The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income.
(4)The adjustment represents an increase in the allowance for credit losses for loans as a result of the adoption of ASU 2016-13 effective January 1, 2020.
(5)Charge-offs and recoveries presented for periods prior to March 31, 2020 exclude loans formerly known as Purchased Credit-Impaired (PCI) loans.
(6)Periods prior to March 31, 2020 represent allowance and provision for letters of credit only.
(7)Past due loans and non-accrual loans presented in periods prior to March 31, 2020 exclude PCI loans. PCI loans were accounted for on a pool basis and are were not subject to delinquency classification.
   

SHAREHOLDERS RELATIONS
Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valley.com.

VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)

 December 31,
 2020 2019
 (Unaudited)  
Assets   
Cash and due from banks$257,845  $256,264 
Interest bearing deposits with banks1,071,360  178,423 
Investment securities:   
Equity securities29,378  41,410 
Available for sale debt securities1,339,473  1,566,801 
Held to maturity debt securities (net of allowance for credit losses of $1,428 at December 31, 2020)2,171,583  2,336,095 
Total investment securities3,540,434  3,944,306 
Loans held for sale, at fair value301,427  76,113 
Loans32,217,112  29,699,208 
Less: Allowance for loan losses(340,243) (161,759)
Net loans31,876,869  29,537,449 
Premises and equipment, net319,797  334,533 
Lease right of use assets252,053  285,129 
Bank owned life insurance535,209  540,169 
Accrued interest receivable106,230  105,637 
Goodwill1,382,442  1,373,625 
Other intangible assets, net70,449  86,772 
Other assets971,961  717,600 
Total Assets$40,686,076  $37,436,020 
Liabilities   
Deposits:   
Non-interest bearing$9,205,266  $6,710,408 
Interest bearing:   
Savings, NOW and money market16,015,658  12,757,484 
Time6,714,678  9,717,945 
Total deposits31,935,602  29,185,837 
Short-term borrowings1,147,958  1,093,280 
Long-term borrowings2,295,665  2,122,426 
Junior subordinated debentures issued to capital trusts56,065  55,718 
Lease liabilities276,675  309,849 
Accrued expenses and other liabilities381,991  284,722 
Total Liabilities36,093,956  33,051,832 
Shareholders’ Equity   
Preferred stock, no par value; 50,000,000 shares authorized:   
Series A (4,600,000 shares issued at December 31, 2020 and December 31, 2019)111,590  111,590 
Series B (4,000,000 shares issued at December 31, 2020 and December 31, 2019)98,101  98,101 
Common stock (no par value, authorized 650,000,000 shares; issued 403,881,488 shares at December 31, 2020 and 403,322,773 shares at December 31, 2019)141,746  141,423 
Surplus3,637,468  3,622,208 
Retained earnings611,158  443,559 
Accumulated other comprehensive loss(7,718) (32,214)
Treasury stock, at cost (22,490 common shares at December 31, 2020 and 44,383 common shares at December 31, 2019)(225) (479)
Total Shareholders’ Equity4,592,120  4,384,188 
Total Liabilities and Shareholders’ Equity$40,686,076  $37,436,020 
        

VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)

 Three Months Ended Years Ended
 December 31, September 30, December 31, December 31,
 2020 2020 2019 2020 2019
Interest Income         
Interest and fees on loans$313,968  $315,788  $315,313  $1,284,707  $1,198,908 
Interest and dividends on investment securities:         
Taxable14,024  14,845  19,760  70,249  86,926 
Tax-exempt3,339  3,606  4,041  14,563  17,420 
Dividends2,467  2,684  2,883  11,644  12,023 
Interest on federal funds sold and other short-term investments260  420  1,776  2,556  5,723 
Total interest income334,058  337,343  343,773  1,383,719  1,321,000 
Interest Expense         
Interest on deposits:         
Savings, NOW and money market11,706  13,323  34,930  76,169  145,177 
Time14,368  19,028  45,343  106,067  166,693 
Interest on short-term borrowings2,097  2,588  7,500  11,372  47,862 
Interest on long-term borrowings and junior subordinated debentures17,967  19,318  17,459  71,207  63,220 
Total interest expense46,138  54,257  105,232  264,815  422,952 
Net Interest Income287,920  283,086  238,541  1,118,904  898,048 
(Credit) provision for credit losses for held to maturity securities(53) (112)   635   
Provision for credit losses for loans19,028  31,020  5,418  125,087  24,218 
Net Interest Income After Provision for Credit Losses268,945  252,178  233,123  993,182  873,830 
Non-Interest Income         
Trust and investment services3,108  3,068  3,350  12,415  12,646 
Insurance commissions1,972  1,816  2,487  7,398  10,409 
Service charges on deposit accounts5,068  3,952  6,002  18,257  23,636 
Gains (losses) on securities transactions, net651  (46) (36) 524  (150)
Net impairment losses on securities recognized in earnings        (2,928)
Fees from loan servicing2,826  2,551  2,534  10,352  9,794 
Gains on sales of loans, net15,998  13,366  5,214  42,251  18,914 
(Losses) gains on sales of assets, net(2,607) 894  1,336  (1,891) 78,333 
Bank owned life insurance2,422  (1,304) 1,453  10,083  8,232 
Other18,095  24,975  15,754  83,643  55,634 
Total non-interest income47,533  49,272  38,094  183,032  214,520 
Non-Interest Expense         
Salary and employee benefits expense85,335  83,626  90,872  333,221  327,431 
Net occupancy and equipment expense32,228  31,116  31,402  129,002  118,191 
FDIC insurance assessment4,091  4,847  5,560  18,949  21,710 
Amortization of other intangible assets6,117  6,377  4,905  24,645  18,080 
Professional and legal fees9,702  8,762  5,524  32,348  20,810 
Loss on extinguishment of debt9,683  2,353  31,995  12,036  31,995 
Amortization of tax credit investments3,932  2,759  3,971  13,335  20,392 
Telecommunication expense3,490  2,094  2,566  10,737  9,883 
Other18,563  18,251  19,351  71,875  63,063 
Total non-interest expense173,141  160,185  196,146  646,148  631,555 
Income Before Income Taxes143,337  141,265  75,071  530,066  456,795 
Income tax expense37,974  38,891  36,967  139,460  147,002 
Net Income105,363  102,374  38,104  390,606  309,793 
Dividends on preferred stock3,172  3,172  3,172  12,688  12,688 
Net Income Available to Common Shareholders$102,191  $99,202  $34,932  $377,918  $297,105 
          
 Three Months Ended Years Ended
 December 31, September 30, December 31, December 31,
 2020 2020 2019 2020 2019
Earnings Per Common Share:         
Basic$0.25  $0.25  $0.10  $0.94  $0.88 
Diluted0.25  0.25  0.10  0.93  0.87 
Cash Dividends Declared per Common Share0.11  0.11  0.11  0.44  0.44 
Weighted Average Number of Common Shares Outstanding:         
Basic403,872,459  403,833,469  355,821,005  403,754,356  337,792,270 
Diluted405,799,507  404,788,526  358,864,876  405,046,207  340,117,808 
               

VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis

 Three Months Ended
 December 31, 2020 September 30, 2020 December 31, 2019
  Average   Avg.  Average   Avg.  Average   Avg.
($ in thousands) Balance  Interest Rate  Balance  Interest Rate  Balance  Interest Rate
Assets                 
Interest earning assets:                 
Loans (1)(2)$32,570,902  $313,993  3.86% $32,515,264  $315,863  3.89% $27,968,383  $315,313  4.51%
Taxable investments (3)3,204,974  16,491  2.06% 3,354,373  17,529  2.09% 3,322,536  22,643  2.73%
Tax-exempt investments (1)(3)506,748  4,227  3.34% 542,450  4,564  3.37% 608,651  5,115  3.36%
Interest bearing deposits with banks1,523,876  260  0.07% 1,355,623  420  0.12% 438,090  1,776  1.62%
Total interest earning assets37,806,500  334,971  3.54% 37,767,710  338,376  3.58% 32,337,660  344,847  4.27%
Other assets3,502,443      3,589,027      2,978,022     
Total assets$41,308,943      $41,356,737      $35,315,682     
Liabilities and shareholders' equity                 
Interest bearing liabilities:                 
Savings, NOW and money market deposits$15,606,081  $11,706  0.30% $14,542,470  $13,323  0.37% $11,813,261  $34,930  1.18%
Time deposits7,005,804  14,368  0.82% 8,027,346  19,028  0.95% 8,428,153  45,343  2.15%
Short-term borrowings1,316,706  2,097  0.64% 1,533,246  2,588  0.68% 1,625,873  7,500  1.85%
Long-term borrowings (4)2,779,632  17,967  2.59% 2,959,728  19,318  2.61% 2,377,615  17,459  2.94%
Total interest bearing liabilities26,708,223  46,138  0.69% 27,062,790  54,257  0.80% 24,244,902  105,232  1.74%
Non-interest bearing deposits9,143,953      8,820,877      6,592,300     
Other liabilities874,438      942,399      673,578     
Shareholders' equity4,582,329      4,530,671      3,804,902     
Total liabilities and shareholders' equity$41,308,943      $41,356,737      $35,315,682     
Net interest income/interest rate spread (5)  $288,833  2.85%   $284,119  2.78%   $239,615  2.53%
Tax equivalent adjustment  (913)     (1,033)     (1,074)  
Net interest income, as reported  $287,920      $283,086      $238,541   
Net interest margin (6)    3.05%     3.00%     2.95%
Tax equivalent effect    0.01%     0.01%     0.01%
Net interest margin on a fully tax equivalent basis (6)    3.06%     3.01%     2.96%
                     

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

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


Mot-clé