Valley National Bancorp Reports A 25 Percent Increase In Third Quarter 2020 Net Income And Strong Net Interest Income And Margin


NEW YORK, Oct. 22, 2020 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the third quarter 2020 of $102.4 million, or $0.25 per diluted common share, as compared to the third quarter 2019 earnings of $81.9 million, or $0.24 per diluted common share, and net income of $95.6 million, or $0.23 per diluted common share, for the second quarter 2020.

Key financial highlights for the third quarter:

  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $284.1 million for the third quarter 2020 increased $579 thousand as compared to the second quarter 2020. The increase was largely due to a 13 basis point decline in our funding costs caused by the continued downward repricing of our interest bearing deposits, partially offset by lower yields on new loan volumes and increased premium amortization expense related to mortgage-backed investment securities. Our net interest margin on a tax equivalent basis of 3.01 percent for the third quarter 2020 increased by 1 basis point from 3.00 percent for the second quarter 2020. See the "Net Interest Income and Margin" section below for additional information.
  • Loan Portfolio: Loans increased $101.0 million, to $32.4 billion at September 30, 2020 from June 30, 2020. The increase was largely due to controlled growth in our commercial real estate loan portfolio and a $63 million increase in SBA Paycheck Protection Program (PPP) loans classified as commercial and industrial loans during the third quarter. Third quarter new and refinanced loan originations included approximately $386 million of residential mortgage loans originated for sale rather than investment as compared to $296 million of such loans in the second quarter 2020. Net gains on sales of residential loans were $13.4 million and $8.3 million in the third quarter 2020 and second quarter 2020, respectively. See the "Loans" section below for more details.
  • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $335.3 million and $319.7 million at September 30, 2020 and June 30, 2020, respectively. During the third quarter 2020, the provision for credit losses for loans was $31.0 million as compared to $41.1 million and $8.7 million for the second quarter 2020 and third quarter 2019, respectively. The reserve build in the third quarter 2020 reflects several factors, including deterioration in Valley's macroeconomic outlook since the end of the second quarter, additional qualitative management adjustments to reflect the potential for higher levels of credit stress related to COVID-19 impacted borrowers, and the impact of lower valuations of collateral securing our non-performing taxi medallion loan portfolio. 
  • Credit Quality: Net loan charge-offs totaled $15.4 million for the third quarter 2020 as compared to $14.8 million for the second quarter 2020. Net charge-offs remained slightly elevated in the third quarter due to the full charge-off of a $6.0 million non-performing commercial and industrial loan relationship, as well as the partial charge-off of several taxi medallion loans negatively impacted by lower collateral valuations at September 30, 2020. Non-accrual loans decreased $19.5 million during the third quarter 2020 as compared to the second quarter 2020 mostly due to the loan charge-offs, and represented 0.59 percent and 0.65 percent of total loans at September 30, 2020 and June 30, 2020, respectively. See the "Credit Quality" Section below for more details.
  • Non-interest Income: Non-interest income increased $4.4 million to $49.3 million for the third quarter 2020 as compared to the second quarter 2020. The increase was mainly due to increases of $5.0 million, $4.5 million and $1.2 million in net gains on sales of residential mortgage loans, swap fee income related to new commercial loan transactions and net gains on sales of assets, respectively. BOLI income decreased $7.1 million as compared to the second quarter 2020 largely due to periodic death benefits received in the second quarter 2020 and a related credit adjustment to the mortality contingency reserves component of our BOLI assets recognized during the third quarter 2020.
  • Loss on Extinguishment of Debt: In late September 2020, we prepaid $50 million of long-term institutional repo borrowings with an interest rate of 3.70 percent and an original contractual maturity date in January 2022. The debt prepayment was funded by excess cash liquidity. The transaction was accounted for as an early debt extinguishment resulting in a loss, reported within non-interest expense, of $2.4 million for the third quarter 2020.
  • Non-interest Expense: Non-interest expense increased $3.0 million to $160.2 million for the third quarter 2020 as compared to the second quarter 2020 mainly due to a $5.1 million increase in salaries and employee benefits expense and the $2.4 million loss on extinguishment of debt recognized during the third quarter 2020. Salary and employee benefits increased due to several factors, including higher cash incentive accruals, increased medical and employer 401k expenses and a decline in compensation-based deferred loan origination costs caused by lower new loan volumes as compared to the second quarter 2020. The negative impact of these items were partially offset by decreases in net occupancy and equipment, the FDIC insurance assessment and COVID-19 related expenses. COVID-19 related expenses totaled $1.2 million and $2.2 million for third quarter 2020 and second quarter 2020, respectively.
  • Efficiency Ratio: Our efficiency ratio was 48.20 percent for the third quarter 2020 as compared to 48.01 percent and 55.73 percent for the second quarter 2020 and third quarter 2019, respectively. Our adjusted efficiency ratio was 46.62 percent for the third quarter 2020 as compared to 46.84 percent and 53.48 percent for the second quarter 2020 and third quarter 2019, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
  • Performance Ratios: Annualized return on average assets (ROA), average shareholders’ equity (ROE) and average tangible shareholders' equity (ROTE) were 0.99 percent, 9.04 percent, and 13.30 percent for the third quarter 2020, respectively. Annualized ROA, ROE and ROTE, adjusted for non-core charges, were 1.01 percent, 9.20 percent, and 13.53 percent for the third quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.

Ira Robbins, CEO and President commented, "I'm pleased to note that our third quarter earnings reflect the strength of our balance sheet and Valley's ability to perform in a stressed economic environment. As a result of the strong performance of our margin, loan related gain and fee income and controlled operating expenses, the adjusted efficiency ratio was below 47 percent for the second consecutive quarter." Robbins continued, "During the quarter, we witnessed signs of improved financial health for many customers initially impacted by the COVID-19 pandemic and other positive trends from the reopening of certain markets, particularly in Florida. However, we continued to work closely with other customers requiring hardship relief, including loan forbearance, waived fees and other accommodations, when appropriate. While we face a difficult and uncertain road ahead, I remain confident that Valley's strong fundamentals and commitment to its customers, employees and communities will continue to standout in the future."

Net Interest Income and Margin 

Net interest income on a tax equivalent basis totaling $284.1 million for the third quarter 2020 increased $62.4 million as compared to the third quarter 2019 and increased $579 thousand as compared to the second quarter 2020. Our third quarter 2020 net interest income results benefited from the prudent management of the level of interest rates offered on our deposits products, as well as a shift in customer preference towards deposits without stated maturities. Interest expense of $54.3 million for the third quarter 2020 decreased $11.7 million as compared to the second quarter 2020 largely due to the maturity and run-off of higher cost time deposits, reduced interest rates on all deposit products and a reduction in average short-term borrowings within our funding mix during the third quarter.  Interest income in the third quarter 2020 decreased by $11.1 million as compared to the second quarter 2020 driven by (i) a $6.0 million decrease in interest income from our loan portfolio largely caused by new and refinanced loan originations at lower current interest rates and a moderate decline in discount accretion related to purchased credit deteriorated loans, and (ii) a $5.1 million decrease in interest and dividends from investment securities due to normal repayments of higher yielding securities and the acceleration of premium amortization expense related to the increased prepayment of mortgage-backed securities. 

Our net interest margin on a tax equivalent basis of 3.01 percent for the third quarter 2020 increased by 1 basis point and 10 basis points from 3.00 percent and 2.91 percent for the second quarter 2020 and third quarter 2019, respectively. The yield on average interest earning assets decreased by 12 basis points on a linked quarter basis, mostly due to the impact of the lower interest rate environment. The yield on average loans decreased by 13 basis points to 3.89 percent for the third quarter 2020 as compared to the second quarter 2020 largely due to the continued repayment of higher yielding loans and the lower yield on new loans. The overall cost of average interest bearing liabilities decreased 16 basis points to 0.80 percent for the third quarter 2020 as compared to the linked second quarter 2020 due to the lower rates offered on deposit products, maturing time deposits and a decrease in average short-term borrowings. Our cost of total average deposits was 0.41 percent for the third quarter 2020 as compared to 0.60 percent for the second quarter 2020.

Loans, Deposits and Other Borrowings

Loans. Loans increased $101.0 million to approximately $32.4 billion at September 30, 2020 from June 30, 2020 largely due to commercial real estate loan growth and a $63 million increase in SBA PPP loans within the commercial and industrial loan category during the third quarter 2020. Commercial real estate loans increased $244 million, or 5.9 percent on an annualized basis, to $16.8 billion at September 30, 2020 as compared to June 30, 2020 mainly due to our solid loan commitment pipeline at June 30, 2020 and slower repayment activity in the third quarter. The residential mortgage and most consumer loan categories experienced moderate declines in the third quarter due to the impact of COVID-19, including a higher level of residential mortgage loans originated for sale due to current interest rate risk management strategies. During the third quarter 2020, we originated $386 million of residential mortgage loans for sale rather than held for investment. Residential mortgage loans held for sale at fair value totaled $209.3 million and $120.6 million at September 30, 2020 and June 30, 2020, respectively.

Deposits. Total deposits decreased $132.2 million to approximately $31.3 billion at September 30, 2020 from June 30, 2020 largely due to decreases of $735.2 million and $232.9 million in time deposits and non-interest bearing deposits, respectively, which were mostly offset by an increase of $835.9 million in the money market, NOW and savings account category. The decrease in time deposits was driven by maturing high cost retail CDs and partial migration to more liquid deposit product categories, while the decline in non-interest bearing balances was partially caused by normal period end fluctuations and lower deposit balances with PPP loan customers. Total brokered deposits (consisting of both time and money market deposit accounts) totaled $3.3 billion at September 30, 2020 as compared to $3.6 billion at June 30, 2020. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 28 percent, 48 percent and 24 percent of total deposits as of September 30, 2020, respectively.

Other Borrowings. Short-term borrowings decreased by $652.2 million to $1.4 billion at September 30, 2020 as compared to June 30, 2020 due to a decline in overnight borrowings, comprised mainly of federal funds purchased, and corresponding reduction in our excess liquidity levels which were prudently elevated by management in the first half of 2020. Long-term borrowings decreased by $55.0 million to $2.9 billion at September 30, 2020 as compared to June 30, 2020 mainly due to the prepayment of a $50 million institutional repo borrowing with a stated interest rate of 3.7 percent. The prepayment resulted in a $2.4 million prepayment penalty charge recognized in non-interest expense during the third 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 $20.5 million to $203.6 million at September 30, 2020 as compared to June 30, 2020. The decrease in NPAs was mainly due to a $19.5 million decrease in non-accrual loans caused by loan charge-offs within the commercial and industrial loan category. Non-accrual loans represented 0.59 percent of total loans at September 30, 2020 compared to 0.65 percent at June 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 $93.1 million and $7.0 million, respectively, within the commercial and industrial loan portfolio at September 30, 2020. At September 30, 2020, the non-accrual taxi medallion loans totaling $100.1 million had related reserves of $60.4 million 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 $9.2 million to $83.9 million, or 0.26 percent of total loans, at September 30, 2020 as compared to $93.1 million, or 0.29 percent of total loans, at June 30, 2020 mainly due to a decline in residential mortgage and consumer loans in all delinquency categories. The decrease in the residential and consumer delinquencies was largely due to improved customer performance, including CARES Act qualifying forbearance loans that resumed their scheduled monthly payments during the third quarter 2020. Commercial real estate loans past due 30 to 59 days increased by $12.1 million as compared to June 30, 2020 mainly due to three loan relationships with a combined total of $20.3 million reported in this delinquency category at September 30, 2020.  While the three loan relationships are internally classified as substandard, management believes they are well-secured and are currently in the process of collection.

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, for a maximum of 180 days on a cumulative and successive basis. As of September 30, 2020, Valley had approximately $1.1 billion 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 loan categories and the allocation as a percentage of each loan category at September 30, 2020, June 30, 2020, and September 30, 2019:

  September 30, 2020 June 30, 2020 September 30, 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$130,409  1.89% $132,039  1.92% $101,002  2.15%
Commercial real estate loans:           
 Commercial real estate128,699  0.77% 117,743  0.71% 23,044  0.17%
 Construction15,951  0.93% 13,959  0.81% 25,727  1.67%
Total commercial real estate loans144,650  0.78% 131,702  0.72% 48,771  0.33%
Residential mortgage loans28,614  0.67% 29,630  0.67% 5,302  0.13%
Consumer loans:           
 Home equity5,972  1.31% 4,766  1.01% 487  0.10%
 Auto and other consumer15,387  0.69% 11,477  0.51% 6,291  0.27%
Total consumer loans21,359  0.79% 16,243  0.59% 6,778  0.24%
Allowance for loan losses325,032  1.00% 309,614  0.96% 161,853  0.61%
Allowance for unfunded credit commitments10,296    10,109    2,917   
Total allowance for credit losses for loans$335,328    $319,723    $164,770   
Allowance for credit losses for           
loans as a % loans  1.03%   0.99%   0.62%
             
*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 $32.4 billion at September 30, 2020, had net loan charge-offs totaling $15.4 million for the third quarter 2020 as compared to $14.8 million and $2.0 million for the second quarter 2020 and third quarter 2019, respectively. During the third quarter 2020, net loan charge-offs were mainly driven by the full charge-off of a $6.0 million non-performing commercial and industrial loan relationship, which was fully reserved for in our allowance for loan losses at June 30, 2020.  The commercial and industrial loan category also included partial charge-offs of taxi medallion loans totaling $6.1 million for the third quarter 2020 as compared to $3.2 million for the second quarter 2020. There were no taxi medallion loan charge-offs during the third quarter 2019.

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 1.03 percent, 0.99 percent and 0.62 percent at September 30, 2020, June 30, 2020 and September 30, 2019, respectively. During the third quarter 2020, we recorded a $31.0 million provision for credit losses for loans as compared to $41.1 million and $8.7 million for the second quarter 2020 and the third quarter 2019, respectively. The reserve build in the third quarter 2020 reflects several factors, including deterioration in Valley's macroeconomic outlook since the end of the second quarter, additional qualitative management adjustments to reflect the potential for higher levels of credit stress related to COVID-19 impacted borrowers, and the impact of lower valuations of collateral securing our non-performing taxi medallion loan portfolio. 

At September 30, 2020, the allowance allocations for credit losses as a percentage of total loans increased for most loan categories as compared to June 30, 2020.  However, the allocated reserves as a percentage of commercial and industrial loans declined by 0.03 percent largely due to the aforementioned net loan charge-offs in the third quarter 2020, as well as moderate growth within the guaranteed PPP loan portfolio which had no related allowance at September 30, 2020 and June 30, 2020.

Capital Adequacy

Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 12.36 percent, 9.70 percent, 10.41 percent and 7.87 percent, respectively, at September 30, 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 nine months ended September 30, 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 Daylight Time, today to discuss the third quarter 2020 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432 Conference ID: 4969514. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/27hm6386 [ edge.media-server.com ] and archived on Valley's website through Friday, November 27, 2020. 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 $41 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 Service 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 new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations, including the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions. 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 the global economies, including business disruptions, reductions in employment and an increase in business failures, specifically the consequences among our commercial and consumer customers;
  • 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 action, 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 OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, 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 June 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 Nine Months Ended
 September 30, June 30, September 30, September 30,
($ in thousands, except for share data)2020 2020 2019 2020 2019
FINANCIAL DATA:         
Net interest income - FTE (1)$284,119  $283,540  $221,747  $834,042  $663,064 
Net interest income$283,086  $282,559  $220,625  $830,984  $659,507 
Non-interest income49,272  44,830  41,150  135,499  176,426 
Total revenue332,358  327,389  261,775  966,483  835,933 
Non-interest expense160,185  157,166  145,877  473,007  435,409 
Pre-provision net revenue172,173  170,223  115,898  493,476  400,524 
Provision for credit losses30,908  41,156  8,700  106,747  18,800 
Income tax expense38,891  33,466  25,307  101,486  110,035 
Net income102,374  95,601  81,891  285,243  271,689 
Dividends on preferred stock3,172  3,172  3,172  9,516  9,516 
Net income available to common shareholders$99,202  $92,429  $78,719  $275,727  $262,173 
Weighted average number of common shares outstanding:         
Basic403,833,469  403,790,242  331,797,982  403,714,701  331,716,652 
Diluted404,788,526  404,631,845  333,405,196  404,912,126  333,039,436 
Per common share data:         
Basic earnings$0.25  $0.23  $0.24  $0.68  $0.79 
Diluted earnings0.25  0.23  0.24  0.68  0.79 
Cash dividends declared0.11  0.11  0.11  0.33  0.33 
Closing stock price - high8.33  9.60  11.21  11.46  11.21 
Closing stock price - low6.60  6.29  10.04  6.29  9.00 
CORE ADJUSTED FINANCIAL DATA: (2)         
Net income available to common shareholders, as adjusted$101,002  $92,721  $79,962  $278,784  $227,340 
Basic earnings per share, as adjusted0.25  0.23  0.24  0.69  0.69 
Diluted earnings per share, as adjusted0.25  0.23  0.24  0.69  0.68 
FINANCIAL RATIOS:         
Net interest margin3.00% 2.99% 2.89% 3.02% 2.93%
Net interest margin - FTE (1)3.01  3.00  2.91  3.03  2.95 
Annualized return on average assets0.99  0.92  0.98  0.94  1.10 
Annualized return on avg. shareholders' equity9.04  8.54  9.26  8.50  10.44 
Annualized return on avg. tangible shareholders' equity (2)13.30  12.66  13.75  12.61  15.65 
Efficiency ratio (3)48.20  48.01  55.73  48.94  52.09 
CORE ADJUSTED FINANCIAL RATIOS: (2)         
Annualized return on average assets, as adjusted1.01% 0.92% 1.00% 0.95% 0.96%
Annualized return on average shareholders' equity, as adjusted9.20  8.57  9.40  8.59  9.10 
Annualized return on average tangible shareholders' equity, as adjusted13.53  12.70  13.96  12.75  13.65 
Efficiency ratio, as adjusted46.62  46.84  53.48  47.53  54.27 
               
               
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
               
 Three Months Ended Nine Months Ended
AVERAGE BALANCE SHEET ITEMS:September 30, June 30, September 30, September 30,
(In thousands)2020 2020 2019 2020 2019
Assets$41,457,515  $41,503,514  $33,419,137  $40,356,828  $32,811,565 
Interest earning assets37,767,710  37,778,387  30,494,569  36,743,807  29,981,699 
Loans32,515,264  32,041,200  26,136,745  31,522,268  25,651,195 
Interest bearing liabilities27,163,568  27,578,741  22,858,121  26,986,611  22,512,114 
Deposits31,491,471  30,837,963  24,836,349  30,384,511  24,772,979 
Shareholders' equity4,530,671  4,477,446  3,536,528  4,472,447  3,471,432 


 As Of
BALANCE SHEET ITEMS:September 30, June 30, March 31, December 31, September 30,
(In thousands)2020 2020 2020 2019 2019
Assets$40,855,333  $41,717,265  $39,120,629  $37,436,020  $33,765,539 
Total loans32,415,586  32,314,611  30,428,067  29,699,208  26,567,159 
Deposits31,295,823  31,428,005  29,016,988  29,185,837  25,546,122 
Shareholders' equity4,533,763  4,474,488  4,420,998  4,384,188  3,558,075 
          
LOANS:         
(In thousands)         
Commercial and industrial$6,903,345  $6,884,689  $4,998,731  $4,825,997  $4,695,608 
Commercial real estate:         
Commercial real estate16,815,587  16,571,877  16,390,236  15,996,741  13,365,454 
Construction1,720,775  1,721,352  1,727,046  1,647,018  1,537,590 
Total commercial real estate18,536,362  18,293,229  18,117,282  17,643,759  14,903,044 
Residential mortgage4,284,595  4,405,147  4,478,982  4,377,111  4,133,331 
Consumer:         
Home equity457,083  471,115  481,751  487,272  489,808 
Automobile1,341,659  1,369,489  1,436,734  1,451,623  1,436,608 
Other consumer892,542  890,942  914,587  913,446  908,760 
Total consumer loans2,691,284  2,731,546  2,833,072  2,852,341  2,835,176 
Total loans$32,415,586  $32,314,611  $30,428,067  $29,699,208  $26,567,159 
          
CAPITAL RATIOS:         
Book value per common share$10.71  $10.56  $10.43  $10.35  $10.09 
Tangible book value per common share (2)7.12  6.96  6.82  6.73  6.62 
Tangible common equity to tangible assets (2)7.30% 6.98% 7.31% 7.54% 6.73%
Tier 1 leverage capital7.87  7.70  8.24  8.76  7.61 
Common equity tier 1 capital9.70  9.51  9.24  9.42  8.49 
Tier 1 risk-based capital10.41  10.23  9.95  10.15  9.30 
Total risk-based capital12.36  12.19  11.53  11.72  11.03 
               


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

 Three Months Ended Nine Months Ended
ALLOWANCE FOR CREDIT LOSSES September 30, June 30, September 30, September 30,
($ in thousands)2020 2020  2019  2020 2019 
Allowance for credit losses for loans         
Beginning balance$319,723   $293,361  $158,079  $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, adjusted319,723   293,361  158,079  264,236   156,295 
Loans charged-off (5):         
Commercial and industrial(13,965)  (14,024) (527) (31,349)  (7,882)
Commercial real estate(695)  (27) (158) (766)  (158)
Residential mortgage(7)  (5) (111) (348)  (126)
Total Consumer(2,458)  (2,601) (2,191) (7,624)  (5,971)
Total loans charged-off(17,125)  (16,657) (2,987) (40,087)  (14,137)
Charged-off loans recovered (5):         
Commercial and industrial428   799  330  1,796   2,008 
Commercial real estate60   31  28  164   71 
Construction40   20    80    
Residential mortgage31   545  3  626   13 
Total Consumer1,151   509  617  2,454   1,720 
Total loans recovered1,710   1,904  978  5,120   3,812 
Net charge-offs(15,415)  (14,753) (2,009) (34,967)  (10,325)
Provision for credit losses for loans31,020   41,115  8,700  106,059   18,800 
Ending balance$335,328   $319,723  $164,770  $335,328   $164,770 
Components of allowance for credit losses for loans:         
Allowance for loan losses$325,032   $309,614  $161,853  $325,032   $161,853 
Allowance for unfunded credit commitments10,296   10,109  2,917  10,296   2,917 
Allowance for credit losses for loans$335,328   $319,723  $164,770  $335,328   $164,770 
Components of provision for credit losses for loans:         
Provision for credit losses for loans$30,833   $41,025  $8,757  $105,709   $20,319 
Provision for unfunded credit commitments (6)187   90  (57) 350   (1,519)
Total provision for credit losses for loans$31,020   $41,115  $8,700  $106,059   $18,800 
Annualized ratio of total net charge-offs to average loans0.19 %  0.18%  0.03% 0.15 %  0.05%
Allowance for credit losses for loans as a % of total loans1.03    0.99   0.62  1.03    0.62 


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

 As of
ASSET QUALITY: (7)September 30, June 30, March 31, December 31, September 30,
($ in thousands)2020 2020 2020 2019 2019
Accruing past due loans:         
30 to 59 days past due:         
Commercial and industrial$6,587  $6,206  $9,780  $11,700  $5,702 
Commercial real estate26,038  13,912  41,664  2,560  20,851 
Construction142    7,119  1,486  11,523 
Residential mortgage22,528  35,263  38,965  17,143  12,945 
Total Consumer8,979  12,962  19,508  13,704  13,079 
Total 30 to 59 days past due64,274  68,343  117,036  46,593  64,100 
60 to 89 days past due:         
Commercial and industrial3,954  4,178  7,624  2,227  3,158 
Commercial real estate610  1,543  15,963  4,026  735 
Construction    49  1,343  7,129 
Residential mortgage3,760  4,169  9,307  4,192  4,417 
Total Consumer1,352  3,786  2,309  2,527  1,577 
Total 60 to 89 days past due9,676  13,676  35,252  14,315  17,016 
90 or more days past due:         
Commercial and industrial6,759  5,220  4,049  3,986  4,133 
Commercial real estate1,538    161  579  1,125 
Residential mortgage891  3,812  1,798  2,042  1,347 
Total Consumer753  2,082  1,092  711  756 
Total 90 or more days past due9,941  11,114  7,100  7,318  7,361 
Total accruing past due loans$83,891  $93,133  $159,388  $68,226  $88,477 
Non-accrual loans:         
Commercial and industrial$115,667  $130,876  $132,622  $68,636  $75,311 
Commercial real estate41,627  43,678  41,616  9,004  9,560 
Construction2,497  3,308  2,972  356  356 
Residential mortgage23,877  25,776  24,625  12,858  13,772 
Total Consumer7,441  6,947  4,095  2,204  2,050 
Total non-accrual loans191,109  210,585  205,930  93,058  101,049 
Other real estate owned (OREO)7,746  8,283  10,198  9,414  6,415 
Other repossessed assets3,988  3,920  3,842  1,276  2,568 
Non-accrual debt securities783  1,365  531  680  680 
Total non-performing assets$203,626  $224,153  $220,501  $104,428  $110,712 
Performing troubled debt restructured loans$58,090  $53,936  $48,024  $73,012  $79,364 
Total non-accrual loans as a % of loans0.59% 0.65% 0.68% 0.31% 0.38%
Total accruing past due and non-accrual loans as a % of loans0.85% 0.94% 1.20% 0.54% 0.71%
Allowance for losses on loans as a % of non-accrual loans170.08% 147.03% 137.59% 173.83% 160.17%
               


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)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 Nine Months Ended
 September 30, June 30, September 30, September 30,
($ in thousands, except for share data)2020 2020 2019 2020 2019
Adjusted net income available to common shareholders:         
Net income, as reported$102,374  $95,601  $81,891  $285,243  $271,689  
Less: Gain on sale leaseback transactions (net of tax)(a)        (55,707) 
Add: Loss on extinguishment of debt (net of tax)1,691      1,691    
Add: Net impairment losses on securities (net of tax)        2,078  
Add: Losses on securities transaction (net of tax)33  29  67  91  82  
Add: Severance expense (net of tax)(b)        3,433  
Add: Tax credit investment impairment (net of tax)(c)        1,757  
Add: Merger related expenses (net of tax)(d)76  263  1,043  1,275  1,068  
Add: Income tax expense (e)    133    12,456  
Net income, as adjusted$104,174  $95,893  $83,134  $288,300  $236,856  
Dividends on preferred stock3,172  3,172  3,172  9,516  9,516  
Net income available to common shareholders, as adjusted$101,002  $92,721  $79,962  $278,784  $227,340  
__________         
(a)  The gain on sale leaseback transactions is included in gains on the sales of assets within other non-interest income.  
(b)  Severance expense is 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$101,002  $92,721  $79,962  $278,784  $227,340  
Average number of shares outstanding403,833,469  403,790,242  331,797,982  403,714,701  331,716,652  
Basic earnings, as adjusted$0.25  $0.23  $0.24  $0.69  $0.69  
Average number of diluted shares outstanding404,788,526  404,631,845  333,405,196  404,912,126  333,039,436  
Diluted earnings, as adjusted$0.25  $0.23  $0.24  $0.69  $0.68  
Adjusted annualized return on average tangible shareholders' equity:         
Net income, as adjusted$104,174  $95,893  $83,134  $288,300  $236,856  
Average shareholders' equity4,530,671  4,477,446  3,536,528  4,472,447  3,471,432  
Less: Average goodwill and other intangible assets1,451,889  1,456,781  1,154,462  1,456,536  1,157,203  
Average tangible shareholders' equity$3,078,782  $3,020,665  $2,382,066  $3,015,911  $2,314,229  
Annualized return on average tangible shareholders' equity, as adjusted13.53% 12.70% 13.96% 12.75% 13.65 %
Adjusted annualized return on average assets:         
Net income, as adjusted$104,174  $95,893  $83,134  $288,300  $236,856  
Average assets$41,457,515  $41,503,514  $33,419,137  $40,356,828  $32,811,565  
Annualized return on average assets, as adjusted1.01% 0.92% 1.00% 0.95% 0.96 %
                


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
($ in thousands)2020 2020 2019 2020 2019
Adjusted annualized return on average shareholders' equity:         
Net income, as adjusted$104,174  $95,893  $83,134  $288,300  $236,856 
Average shareholders' equity$4,530,671  $4,477,446  $3,536,528  $4,472,447  $3,471,432 
Annualized return on average shareholders' equity, as adjusted9.20% 8.57% 9.40% 8.59% 9.10%
Annualized return on average tangible shareholders' equity:         
Net income, as reported$102,374  $95,601  $81,891  $285,243  $271,689 
Average shareholders' equity4,530,671  4,477,446  3,536,528  4,472,447  3,471,432 
Less: Average goodwill and other intangible assets1,451,889  1,456,781  1,154,462  1,456,536  1,157,203 
Average tangible shareholders' equity$3,078,782  $3,020,665  $2,382,066  $3,015,911  $2,314,229 
Annualized return on average tangible shareholders' equity13.30% 12.66% 13.75% 12.61% 15.65%
Adjusted efficiency ratio:          
Non-interest expense, as reported$160,185  $157,166  $145,877  $473,007  $435,409 
Less: Loss on extinguishment of debt (pre-tax)2,353      2,353   
Less: Severance expense (pre-tax)        4,838 
Less: Merger-related expenses (pre-tax)106  366  1,434  1,774  1,469 
Less: Amortization of tax credit investments (pre-tax)2,759  3,416  4,385  9,403  16,421 
Non-interest expense, as adjusted$154,967  $153,384  $140,058  $459,477  $412,681 
Net interest income283,086  282,559  220,625  830,984  659,507 
Non-interest income, as reported49,272  44,830  41,150  135,499  176,426 
Add: Net impairment losses on securities (pre-tax)        2,928 
Add: Losses on securities transactions, net (pre-tax)46  41  93  127  114 
Less: Gain on sale leaseback transaction (pre-tax)        78,505 
Non-interest income, as adjusted$49,318  $44,871  $41,243  $135,626  $100,963 
Gross operating income, as adjusted$332,404  $327,430  $261,868  $966,610  $760,470 
Efficiency ratio, as adjusted46.62% 46.84% 53.48% 47.53% 54.27%
               


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

 As of
 September 30, June 30, March 31, December 31, September 30,
($ in thousands, except for share data)2020 2020 2020 2019 2019
Tangible book value per common share:         
Common shares outstanding403,878,744  403,795,699  403,744,148  403,278,390  331,805,564 
Shareholders' equity$4,533,763  $4,474,488  $4,420,998  $4,384,188  $3,558,075 
Less: Preferred stock209,691  209,691  209,691  209,691  209,691 
Less: Goodwill and other intangible assets1,449,282  1,453,330  1,458,095  1,460,397  1,152,815 
Tangible common shareholders' equity$2,874,790  $2,811,467  $2,753,212  $2,714,100  $2,195,569 
Tangible book value per common share$7.12  $6.96  $6.82  $6.73  $6.62 
Tangible common equity to tangible assets:        
Tangible common shareholders' equity$2,874,790  $2,811,467  $2,753,212  $2,714,100  $2,195,569 
Total assets40,855,333  41,717,265  39,120,629  37,436,020  33,765,539 
Less: Goodwill and other intangible assets1,449,282  1,453,330  1,458,095  1,460,397  1,152,815 
Tangible assets$39,406,051  $40,263,935  $37,662,534  $35,975,623  $32,612,724 
Tangible common equity to tangible assets7.30% 6.98% 7.31% 7.54% 6.73%


(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)

 September 30, December 31,
 2020 2019
  (Unaudited)  
Assets   
Cash and due from banks$383,961  $256,264 
Interest bearing deposits with banks654,591  178,423 
Investment securities:   
Equity securities29,026  41,410 
Available for sale debt securities1,526,564  1,566,801 
Held to maturity debt securities (net of allowance for credit losses of $1,481 at September 30, 2020)2,168,995  2,336,095 
Total investment securities3,724,585  3,944,306 
Loans held for sale, at fair value209,250  76,113 
Loans32,415,586  29,699,208 
Less: Allowance for loan losses(325,032) (161,759)
Net loans32,090,554  29,537,449 
Premises and equipment, net323,056  334,533 
Lease right of use assets265,599  285,129 
Bank owned life insurance533,768  540,169 
Accrued interest receivable136,058  105,637 
Goodwill1,375,409  1,373,625 
Other intangible assets, net73,873  86,772 
Other assets1,084,629  717,600 
Total Assets$40,855,333  $37,436,020 
Liabilities   
Deposits:   
Non-interest bearing$8,756,924  $6,710,408 
Interest bearing:   
Savings, NOW and money market15,001,318  12,757,484 
Time7,537,581  9,717,945 
Total deposits31,295,823  29,185,837 
Short-term borrowings1,430,726  1,093,280 
Long-term borrowings2,852,569  2,122,426 
Junior subordinated debentures issued to capital trusts55,978  55,718 
Lease liabilities290,441  309,849 
Accrued expenses and other liabilities396,033  284,722 
Total Liabilities36,321,570  33,051,832 
Shareholders’ Equity   
Preferred stock, no par value; 50,000,000 authorized shares:   
Series A (4,600,000 shares issued at September 30, 2020 and December 31, 2019)111,590  111,590 
Series B (4,000,000 shares issued at September 30, 2020 and December 31, 2019)98,101  98,101 
Common stock (no par value, authorized 650,000,000 shares; issued 403,880,132 shares at September 30, 2020 and 403,322,773 shares at December 31, 2019)141,718  141,423 
Surplus3,633,321  3,622,208 
Retained earnings553,826  443,559 
Accumulated other comprehensive loss(4,783) (32,214)
Treasury stock, at cost (1,388 common shares at September 30, 2020 and 44,383 common shares at December 31, 2019)(10) (479)
Total Shareholders’ Equity4,533,763  4,384,188 
Total Liabilities and Shareholders’ Equity$40,855,333  $37,436,020 
        


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

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
 2020 2020 2019 2020 2019
Interest Income         
Interest and fees on loans$315,788  $321,883  $298,384  $970,739  $883,595 
Interest and dividends on investment securities:         
Taxable14,845  19,447  21,801  56,225  67,166 
Tax-exempt3,606  3,692  4,219  11,224  13,379 
Dividends2,684  3,092  3,171  9,177  9,140 
Interest on federal funds sold and other short-term investments420  411  1,686  2,296  3,947 
Total interest income337,343  348,525  329,261  1,049,661  977,227 
Interest Expense         
Interest on deposits:         
Savings, NOW and money market13,323  16,627  35,944  64,463  110,247 
Time19,028  29,857  42,848  91,699  121,350 
Interest on short-term borrowings2,588  1,980  12,953  9,275  40,362 
Interest on long-term borrowings and junior subordinated debentures19,318  17,502  16,891  53,240  45,761 
Total interest expense54,257  65,966  108,636  218,677  317,720 
Net Interest Income283,086  282,559  220,625  830,984  659,507 
Provision for credit losses for held to maturity securities(112) 41    688   
Provision for credit losses for loans31,020  41,115  8,700  106,059  18,800 
Net Interest Income After Provision for Credit Losses252,178  241,403  211,925  724,237  640,707 
Non-Interest Income         
Trust and investment services3,068  2,826  3,296  9,307  9,296 
Insurance commissions1,816  1,659  2,748  5,426  7,922 
Service charges on deposit accounts3,952  3,557  5,904  13,189  17,634 
Losses on securities transactions, net(46) (41) (93) (127) (114)
Other-than-temporary impairment losses on securities        (2,928)
Fees from loan servicing2,551  2,227  2,463  7,526  7,260 
Gains on sales of loans, net13,366  8,337  5,194  26,253  13,700 
Gains (losses) on sales of assets, net894  (299) (159) 716  76,997 
Bank owned life insurance(1,304) 5,823  2,687  7,661  6,779 
Other24,975  20,741  19,110  65,548  39,880 
Total non-interest income49,272  44,830  41,150  135,499  176,426 
Non-Interest Expense         
Salary and employee benefits expense83,626  78,532  77,271  247,886  236,559 
Net occupancy and equipment expense31,116  33,217  29,203  96,774  86,789 
FDIC insurance assessment4,847  6,135  5,098  14,858  16,150 
Amortization of other intangible assets6,377  6,681  4,694  18,528  13,175 
Professional and legal fees8,762  7,797  5,870  22,646  15,286 
Loss on extinguishment of debt2,353      2,353   
Amortization of tax credit investments2,759  3,416  4,385  9,403  16,421 
Telecommunication expense2,094  2,866  2,698  7,247  7,317 
Other18,251  18,522  16,658  53,312  43,712 
Total non-interest expense160,185  157,166  145,877  473,007  435,409 
Income Before Income Taxes141,265  129,067  107,198  386,729  381,724 
Income tax expense38,891  33,466  25,307  101,486  110,035 
Net Income102,374  95,601  81,891  285,243  271,689 
Dividends on preferred stock3,172  3,172  3,172  9,516  9,516 
Net Income Available to Common Shareholders$99,202  $92,429  $78,719  $275,727  $262,173 
                    


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

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
 2020 2020 2019 2020 2019
Earnings Per Common Share:         
Basic$0.25  $0.23  $0.24  $0.68  $0.79 
Diluted0.25  0.23  0.24  0.68  0.79 
Cash Dividends Declared per Common Share0.11  0.11  0.11  0.33  0.33 
Weighted Average Number of Common Shares Outstanding:         
Basic403,833,469  403,790,242  331,797,982  403,714,701  331,716,652 
Diluted404,788,526  404,631,845  333,405,196  404,912,126  333,039,436 
               


VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
 
 Three Months Ended
 September 30, 2020 June 30, 2020 September 30, 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)$32,515,264  $315,863  3.89% $32,041,200  $321,883  4.02% $26,136,745  $298,384  4.57%
Taxable investments (3)3,354,373  17,529  2.09  3,673,090  22,539  2.45  3,411,330  24,972  2.93 
Tax-exempt investments (1)(3)542,450  4,564  3.37  562,172  4,673  3.32  632,709  5,341  3.38 
Interest bearing deposits with banks1,355,623  420  0.12  1,501,925  411  0.11  313,785  1,686  2.15 
Total interest earning assets37,767,710  338,376  3.58  37,778,387  349,506  3.70  30,494,569  330,383  4.33 
Other assets3,689,805      3,725,127      2,924,568     
Total assets$41,457,515      $41,503,514      $33,419,137     
Liabilities and shareholders' equity                 
Interest bearing liabilities:                 
Savings, NOW and money market deposits$14,643,248  $13,323  0.36% $13,788,951  $16,627  0.48% $11,065,959  $35,944  1.30%
Time deposits8,027,346  19,028  0.95  8,585,782  29,857  1.39  7,383,202  42,848  2.32 
Short-term borrowings1,533,246  2,588  0.68  2,317,992  1,980  0.34  2,265,528  12,953  2.29 
Long-term borrowings (4)2,959,728  19,318  2.61  2,886,016  17,502  2.43  2,143,432  16,891  3.15 
Total interest bearing liabilities27,163,568  54,257  0.80  27,578,741  65,966  0.96  22,858,121  108,636  1.90 
Non-interest bearing deposits8,820,877      8,463,230      6,387,188     
Other liabilities942,399      984,097      637,300     
Shareholders' equity4,530,671      4,477,446      3,536,528     
Total liabilities and shareholders' equity$41,457,515      $41,503,514      $33,419,137     
                  
Net interest income/interest rate spread (5)  $284,119  2.78%   $283,540  2.74%   $221,747  2.43%
Tax equivalent adjustment  (1,033)     (981)     (1,122)  
Net interest income, as reported  $283,086      $282,559      $220,625   
Net interest margin (6)    3.00      2.99      2.89 
Tax equivalent effect    0.01      0.01      0.02 
Net interest margin on a fully tax equivalent basis (6)    3.01%     3.00%     2.91%


____________
(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

 



Tags