Valley National Bancorp Reports a 33 Percent Increase in First Quarter Net Income and Strong Net Interest Margin

Wayne, New Jersey, UNITED STATES


NEW YORK, April 29, 2021 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the first quarter 2021 of $115.7 million, or $0.28 per diluted common share, as compared to the first quarter 2020 earnings of $87.3 million, or $0.21 per diluted common share, and net income of $105.4 million, or $0.25 per diluted common share, for the fourth quarter 2020.

Key financial highlights for the first quarter:

  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $293.6 million for the first quarter 2021 increased $4.8 million and $27.3 million as compared to the fourth quarter 2020 and first quarter 2020, respectively. Our net interest margin on a tax equivalent basis increased by 8 basis points to 3.14 percent in the first quarter 2021 as compared to 3.06 percent for the fourth quarter 2020. The increases as compared to the fourth quarter 2020 were largely due to a $8.7 million increase in interest and fees related to our SBA Paycheck Protection Program (PPP) loan portfolio, a 9 basis point reduction in our costs of average interest bearing liabilities, as well as the prepayment of certain long-term borrowings in December 2020. See the "Net Interest Income and Margin" section below for additional information.
  • Loan Portfolio: Loans increased $469.3 million to $32.7 billion at March 31, 2021, or 6 percent on an annualized basis from December 31, 2020. The increase was largely due to new loan volumes within the commercial and industrial, commercial real estate and automobile loan portfolios in the first quarter 2021. Within commercial and industrial loans, PPP loans increased $212.5 million to approximately $2.4 billion at March 31, 2021 from December 31, 2020. Our first quarter new and refinanced loan originations included approximately $288 million of residential mortgage loans originated for sale rather than investment. Net gains on sales of residential loans were $3.5 million and $16.0 million in the first quarter 2021 and fourth quarter 2020, respectively. See the "Loans, Deposits and Other Borrowings" section below for more details.
  • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $354.3 million and $351.4 million at March 31, 2021 and December 31, 2020, respectively. During the first quarter 2021, we recorded a provision for credit losses for loans of $9.0 million as compared to $19.0 million and $33.9 million for the fourth quarter 2020 and first quarter 2020, respectively. The moderate increase in our allowance at March 31, 2021 reflects, among other factors, additional reserves related to non-PPP loan growth and certain segments of our commercial real estate portfolio, partially offset by the lower qualitative reserves for customers impacted by the pandemic and the improvement in our economic forecast component of the reserve as compared to December 31, 2020.
  • Credit Quality: Total accruing past due loans decreased $46.2 million to $52.8 million, or 0.16 percent of total loans, at March 31, 2021 as compared to $99.0 million, or 0.31 percent of total loans, at December 31, 2020. Non-accrual loans represented 0.62 percent and 0.58 percent of total loans at March 31, 2021 and December 31, 2020, respectively. Net loan charge-offs totaled $6.1 million for the first quarter 2021 as compared to $3.0 million for the fourth quarter 2020. See the "Credit Quality" Section below for more details.
  • Non-interest Income: Non-interest income decreased $16.3 million to $31.2 million for the first quarter 2021 as compared to the fourth quarter 2020 mainly due to a decrease of $12.5 million in net gains on sales of residential mortgage loans, as well as a $4.7 million decline in swap fee income related to new commercial loan transactions. The decrease in net gains on loan sales was primarily due to a decline in the mark to market gain component related to our residential loans originated for sale portfolio (and carried at fair value) at March 31, 2021 as compared to such loans held for sale at December 31, 2020. The $4.7 million decrease in swap fee income as compared to the fourth quarter 2020 was largely due to lower transaction volumes.
  • Non-interest Expense: Non-interest expense decreased $12.9 million to $160.2 million for the first quarter 2021 as compared to the fourth quarter 2020 mainly due to a $9.7 million loss on extinguishment of debt recognized during the fourth quarter 2020 and a $3.4 million decrease in professional fees largely associated with our technology transformation efforts.
  • Efficiency Ratio: Our efficiency ratio was 49.46 percent for the first quarter 2021 as compared to 51.61 percent and 50.75 percent for the fourth quarter 2020 and first quarter 2020, respectively. Our adjusted efficiency ratio was 48.60 percent for the first quarter 2021 as compared to 46.99 percent and 49.26 percent for the fourth quarter 2020 and first quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
  • Performance Ratios: Annualized return on average assets, shareholders’ equity and tangible shareholders' equity were 1.14 percent, 9.96 percent, and 14.49 percent for the first quarter 2021, respectively, as compared to 1.02 percent, 9.20 percent and 13.45 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, "I'm pleased with the first quarter 2021 results and overall demonstrated strengths of our balance sheet and credit quality during the pandemic. I believe our measured approach to loan origination activities, ability to manage our funding costs, and keen focus on operating efficiencies and the adoption of new technologies has positioned Valley for continued success in 2021."

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $293.6 million for the first quarter 2021 increased $4.8 million and $27.2 million as compared to the fourth quarter 2020 and first quarter 2020, respectively. The increase as compared to the fourth quarter 2020 was mainly due to (i) increased interest and fee income from PPP loans, (ii) continued run-off of higher cost time deposits, (iii) the prepayment of $534 million of long-term FHLB advances with a combined weighted average interest rate of 2.48 percent in December 2020, and (iv) lower rates on our deposit products combined with a continued customer shift to deposits without stated maturities. Interest expense of $39.1 million for the first quarter 2021 decreased $7.0 million as compared to the fourth quarter 2020. Interest income on a tax equivalent basis in the first quarter 2021 decreased by $2.3 million to $332.7 million as compared to the fourth quarter 2020 mainly due to lower overall yields on average taxable investment securities and loans and a decline in average balances within the investment portfolio due to normal repayment activity, partially offset by a $8.7 million increase in interest and fees on PPP loans caused by recognition of fee income on loans forgiven by the SBA during the first quarter 2021. See the "Loan, Deposit and Other Borrowings" section for more information on PPP loans.

Our net interest margin on a tax equivalent basis of 3.14 percent for the first quarter 2021 increased by 8 basis points and 7 basis points from 3.06 percent and 3.07 percent for the first quarter 2020 and fourth quarter 2020, respectively. The yield on average interest earning assets increased by 2 basis points on a linked quarter basis, mostly due to the higher yield on the PPP loan portfolio and reduced excess liquidity held in overnight investments. The yield on average loans decreased by 1 basis point to 3.85 percent for the first quarter 2021 as compared to the fourth quarter 2020. This decrease was mainly due to new and refinanced loan originations at lower market interest rates and two less days during the first quarter 2021, which were mostly offset by the increased yield on our PPP loan portfolio. The overall cost of average interest bearing liabilities decreased 9 basis points to 0.60 percent for the first quarter 2021 as compared to the linked fourth quarter 2020 and was largely due to the lower rates offered on deposit products, maturing time deposits and a 4 basis point decrease in the average cost of short-term borrowings. Our cost of total average deposits was 0.28 percent for the first quarter 2021 as compared to 0.33 percent for the fourth quarter 2020.

Loans, Deposits and Other Borrowings

Loans. Loans increased $469.3 million to approximately $32.7 billion at March 31, 2021 from December 31, 2020. The increase was mainly due to organic growth in the commercial and industrial, commercial real estate, and automobile loan portfolios during the first quarter 2021. Commercial and industrial loans increased $286.9 million, or 16.7 percent on an annualized basis, to $7.1 billion at March 31, 2021 as compared to December 31, 2020 mostly due to a $212.5 million increase in PPP loans, which was net of over $630 million of PPP loans forgiven by the SBA during the first quarter 2021. Commercial real estate loans increased $198.6 million, or 4.8 percent on an annualized basis, to $16.9 billion at March 31, 2021 as compared to December 31, 2020 reflecting the recovery of our loan commitment pipeline near the end of 2020, particularly in our Florida markets. Automobile loans increased $88.9 million, or 26.2 percent on an annualized basis, during first quarter 2021 due to strong consumer demand seen across the auto industry during the period. Residential mortgage loans declined $123.3 million, or 11.8 percent on an annualized basis, during the first quarter 2021 mainly due to continued refinance activity and $288 million of loans originated for sale rather than held for investment in the first quarter 2021. Residential mortgage loans held for sale at fair value totaled $232.1 million and $301.4 million at March 31, 2021 and December 31, 2020, respectively.

Deposits. Total deposits increased $649.6 million to approximately $32.6 billion at March 31, 2021 from December 31, 2020 largely due to increases of $847.8 million and $1.1 billion in the non-interest bearing and non-maturity interest bearing deposit categories, respectively, partially offset by a $1.3 billion decrease in time deposits. The decrease in time deposits was driven by normal run-off of maturing retail and brokered CDs with some continued migration of retail balances to more liquid deposit product categories. Total brokered deposits (consisting of both time and money market deposit accounts) decreased approximately $800 million to $2.3 billion at March 31, 2021 as compared to $3.1 billion at December 31, 2020. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 31 percent, 52 percent and 17 percent of total deposits as of March 31, 2021, respectively.

Other Borrowings. Short-term and long-term borrowings decreased $63.3 million and $52.7 million to $1.1 billion and $2.2 billion, respectively, at March 31, 2021 as compared to December 31, 2020. The decreases in both categories were largely attributable to the normal maturities of FHLB borrowings.

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 increased $16.0 million to $210.5 million at March 31, 2021 as compared to December 31, 2020. The increase in NPAs was mainly due to a $18.7 million increase in non-accrual loans driven by one $8.4 million commercial real estate loan and a $7.8 million increase in non-accrual residential mortgage loans partially caused by the migration of loans previously reported in the 60-89 days past due category at December 31, 2020. Non-accrual loans represented 0.62 percent of total loans at March 31, 2021 compared to 0.58 percent at December 31, 2020.

Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing New York City and Chicago taxi medallion loans totaling $87.2 million and $6.6 million, respectively, within the commercial and industrial loan portfolio at March 31, 2021. At March 31, 2021, all taxi medallion loans totaling $93.8 million were on non-accrual status and had related reserves of $63.2 million, or 67.2 percent of such loans, within the allowance for loan losses.

Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $46.2 million to $52.8 million, or 0.16 percent of total loans, at March 31, 2021 as compared to $99.0 million, or 0.31 percent of total loans, at December 31, 2020 driven by declines in early stage delinquencies for most loan categories. Commercial real estate loans past due 30 to 59 days decreased $23.4 million to $11.7 million at March 31, 2021 as compared to December 31, 2020. The decrease was largely due to a $12.3 million matured loan (in the process of restructuring its terms) reported in this delinquency category at December 31, 2020 and the aforementioned $8.4 million loan placed on non-accrual status at March 31, 2021. Commercial and industrial loans past due 90 or more days decreased $6.6 million at March 31, 2021 primarily due to premium finance loans (related to two insurance carriers) totaling $6.1 million reclassified to non-accrual status during the first quarter 2021. Residential loans past due 60 to 89 days decreased by $8.1 million as compared to December 31, 2020 mainly due to loans migrating to non-accrual status.

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 March 31, 2021, Valley had approximately $284 million of outstanding loans remaining in their payment deferral period under short-term modifications, as compared to $361 million of loans in deferral at December 31, 2020.

Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at March 31, 2021, December 31, 2020, and March 31, 2020:

                  
  March 31, 2021  December 31, 2020  March 31, 2020 
     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$126,408  2.64%$131,070  1.91%$127,437 2.55%
Commercial real estate loans:                 
Commercial real estate 153,680  0.91% 146,009  0.87% 97,876 0.60%
Construction 20,556  1.15% 18,104  1.04% 13,709 0.79%
Total commercial real estate loans 174,236  0.93% 164,113  0.89% 111,585 0.62%
Residential mortgage loans 27,172  0.67% 28,873  0.69% 29,456 0.66%
Consumer loans:                 
Home equity 4,199  1.03% 4,675  1.08% 4,463 0.93%
Auto and other consumer 10,865  0.46% 11,512  0.51% 10,401 0.44%
Total consumer loans 15,064  0.54% 16,187  0.60% 14,864 0.52%
Allowance for loan losses 342,880  1.13% 340,243  1.06% 283,342 0.93%
Allowance for unfunded credit commitments 11,433     11,111     10,019   
Total allowance for credit losses for loans$354,313    $351,354    $293,361   
Allowance for credit losses for loans as a % loans    1.08%    1.09%   0.96%

Our loan portfolio, totaling $32.7 billion at March 31, 2021, had net loan charge-offs totaling $6.1 million for the first quarter 2021 as compared to $3.0 million and $4.8 million for the fourth quarter 2020 and first quarter 2020, respectively. Net loan charge-offs increased during the first quarter 2021 mainly due to partial charge-offs of certain taxi medallion loans and a full charge-off of a $1.9 million unsecured, non-performing commercial and industrial loan relationship. Gross charge-offs of taxi medallion loans totaled $3.3 million for the first quarter 2021 as compared to $2.3 million and $1.3 million for the fourth quarter 2020 and first quarter 2020, respectively.

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 1.08 percent, 1.09 percent and 0.96 percent at March 31, 2021, December 31, 2020 and March 31, 2020, respectively. During the first quarter 2021, we recorded a provision for credit losses for loans of $9.0 million as compared to a provision of $19.0 million and $33.9 million for the fourth quarter 2020 and first quarter 2020, respectively.

At March 31, 2021, the allowance allocations for credit losses as a percentage of total loans increased in the commercial real estate and construction loan categories while decreasing in the other loan categories as compared to December 31, 2020. The allocated reserves as a percentage of commercial and industrial loans declined by 14 basis points partially due to the loan charge-offs in the first quarter 2021 within this loan category, as well as the increase in PPP loans guaranteed by the SBA with no related allowance at March 31, 2021.

Capital Adequacy

Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk- based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 12.76 percent, 10.08 percent, 10.79 percent and 8.37 percent, respectively, at March 31, 2021.

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 first quarter 2021 earnings. Those wishing to participate in the call may dial toll-free (855) 638-5437 Conference ID: 1474989. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/5gkztcw5 and archived on Valley's website through Monday, May 31, 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 $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 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 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 continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;
  • the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 may arise in our primary markets;
  • 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;
  • the risks related to the discontinuation of the London Interbank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies;
  • damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters;
  • a prolonged downturn in the economy, mainly in New Jersey, New York, Florida 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, 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

($ in thousands, except for share data)
March 31,
2021
December 31,
2020
March 31,
2020
FINANCIAL DATA:   
Net interest income - FTE (1)$293,584  $288,833  $266,383 
Net interest income$292,667  $287,920  $265,339 
Non-interest income 31,233   47,533   41,397 
Total revenue 323,900   335,453   306,736 
Non-interest expense 160,213   173,141   155,656 
Pre-provision net revenue 163,687   162,312   151,080 
Provision for credit losses 8,656   18,975   34,683 
Income tax expense 39,321   37,974   29,129 
Net income 115,710   105,363   87,268 
Dividends on preferred stock 3,172   3,172   3,172 
Net income available to common shareholders$112,538  $102,191  $84,096 
Weighted average number of common shares outstanding:   
Basic 405,152,605   403,872,459   403,519,088 
Diluted 407,636,765   405,799,507   405,424,123 
Per common share data:   
Basic earnings$0.28  $0.25  $0.21 
Diluted earnings 0.28   0.25   0.21 
Cash dividends declared 0.11   0.11   0.11 
Closing stock price - high 14.37   10.09   11.46 
Closing stock price - low 9.74   6.90   6.37 
CORE ADJUSTED FINANCIAL DATA: (2)   
Net income available to common shareholders, as adjusted$112,623  $110,266  $85,061 
Basic earnings per share, as adjusted 0.28   0.27   0.21 
Diluted earnings per share, as adjusted 0.28   0.27   0.21 
FINANCIAL RATIOS:   
Net interest margin 3.13%  3.05 % 3.06%
Net interest margin - FTE (1) 3.14   3.06   3.07 
Annualized return on average assets 1.14   1.02   0.92 
Annualized return on avg. shareholders' equity 9.96   9.20   7.92 
Annualized return on avg. tangible shareholders' equity (2) 14.49   13.45   11.84 
Efficiency ratio (3) 49.46   51.61   50.75 
CORE ADJUSTED FINANCIAL RATIOS: (2)   
Annualized return on average assets, as adjusted 1.14%  1.10 % 0.93%
Annualized return on average shareholders' equity, as adjusted 9.97   9.90   8.01 
Annualized return on average tangible shareholders' equity, as adjusted 14.50   14.48   11.97 
Efficiency ratio, as adjusted 48.60   46.99   49.26 
AVERAGE BALANCE SHEET ITEMS:   
Assets$40,770,731  $41,308,943  $38,116,850 
Interest earning assets 37,386,219   37,806,500   34,674,075 
Loans 32,582,479   32,570,902   29,999,428 
Interest bearing liabilities 25,954,182   26,708,223   26,235,064 
Deposits 31,835,286   31,755,838   28,831,418 
Shareholders' equity 4,645,400   4,582,329   4,408,585 
            
            


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
 As Of
BALANCE SHEET ITEMS:March 31,December 31,September 30,June 30,March 31,
(In thousands)20212020202020202020
Assets$41,178,011 $40,686,076 $40,747,492 $41,626,497 $39,089,443 
Total loans 32,686,416  32,217,112  32,415,586  32,314,611  30,428,067 
Deposits 32,585,209  31,935,602  31,187,982  31,337,237  28,985,802 
Shareholders' equity 4,659,670  4,592,120  4,533,763  4,474,488  4,420,998 
      
LOANS:     
(In thousands)     
Commercial and industrial loans:     
Commercial and industrial$4,784,017 $4,709,569 $4,625,880 $4,670,362 $4,998,731 
Commercial and industrial PPP loans 2,364,627  2,152,139  2,277,465  2,214,327   
Total commercial and industrial 7,148,644  6,861,708  6,903,345  6,884,689  4,998,731 
Commercial real estate:     
Commercial real estate 16,923,627  16,724,998  16,815,587  16,571,877  16,390,236 
Construction 1,786,331  1,745,825  1,720,775  1,721,352  1,727,046 
Total commercial real estate 18,709,958  18,470,823  18,536,362  18,293,229  18,117,282 
Residential mortgage 4,060,492  4,183,743  4,284,595  4,405,147  4,478,982 
Consumer:     
Home equity 409,576  431,553  457,083  471,115  481,751 
Automobile 1,444,883  1,355,955  1,341,659  1,369,489  1,436,734 
Other consumer 912,863  913,330  892,542  890,942  914,587 
Total consumer loans 2,767,322  2,700,838  2,691,284  2,731,546  2,833,072 
Total loans$32,686,416 $32,217,112 $32,415,586 $32,314,611 $30,428,067 
                
CAPITAL RATIOS:               
Book value per common share$10.97 $10.85 $10.71 $10.56 $10.43 
Tangible book value per common share (2) 7.39  7.25  7.12  6.96  6.82 
Tangible common equity to tangible assets (2) 7.55% 7.47% 7.32% 7.00% 7.32%
Tier 1 leverage capital 8.37  8.06  7.89  7.70  8.24 
Common equity tier 1 capital 10.08  9.94  9.71  9.51  9.24 
Tier 1 risk-based capital 10.79  10.66  10.42  10.23  9.95 
Total risk-based capital 12.76  12.64  12.37  12.19  11.53 
                
                


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
 Three Months Ended
ALLOWANCE FOR CREDIT LOSSES:March 31,
December 31,
March 31,
($ in thousands)2021
2020
2020
Allowance for credit losses for loans         
Beginning balance$351,354 $335,328 $164,604 
Impact of the adoption of ASU 2016-13 (4)     37,989 
Allowance for purchased credit deteriorated (PCD) loans     61,643 
Beginning balance, adjusted 351,354  335,328  264,236 
Loans charged-off:   
Commercial and industrial (7,142) (3,281) (3,360)
Commercial real estate (382) (1) (44)
Residential mortgage (138) (250) (336)
Total consumer (1,138) (1,670) (2,565)
Total loans charged-off (8,800) (5,202) (6,305)
Charged-off loans recovered:   
Commercial and industrial 1,589  160  569 
Commercial real estate 65  890  73 
Construction 4  372  20 
Residential mortgage 157  44  50 
Total consumer 930  734  794 
Total loans recovered 2,745  2,200  1,506 
Net charge-offs (6,055) (3,002) (4,799)
Provision for credit losses for loans 9,014  19,028  33,924 
Ending balance$354,313 $351,354 $293,361 
Components of allowance for credit losses for loans:   
Allowance for loan losses$342,880 $340,243 $283,342 
Allowance for unfunded credit commitments 11,433  11,111  10,019 
Allowance for credit losses for loans$354,313 $351,354 $293,361 
Components of provision for credit losses for loans:   
Provision for credit losses for loans$8,692 $18,213 $33,851 
Provision for unfunded credit commitments 322  815  73 
Total provision for credit losses for loans$9,014 $19,028 $33,924 
Annualized ratio of total net charge-offs to average loans 0.07% 0.04% 0.06%
Allowance for credit losses for loans as a % of total loans 1.08  1.09  0.96 
          
          


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
 As of
ASSET QUALITY:March 31,December 31,September 30,June 30,March 31,
($ in thousands) 2021  2020  2020  2020  2020 
Accruing past due loans:     
30 to 59 days past due:     
Commercial and industrial$3,763 $6,393 $6,587 $6,206 $9,780 
Commercial real estate 11,655  35,030  26,038  13,912  41,664 
Construction   315  142    7,119 
Residential mortgage 16,004  17,717  22,528  35,263  38,965 
Total consumer 5,480  10,257  8,979  12,962  19,508 
Total 30 to 59 days past due 36,902  69,712  64,274  68,343  117,036 
60 to 89 days past due:     
Commercial and industrial 1,768  2,252  3,954  4,178  7,624 
Commercial real estate 5,455  1,326  610  1,543  15,963 
Construction         49 
Residential mortgage 2,233  10,351  3,760  4,169  9,307 
Total consumer 1,021  1,823  1,352  3,786  2,309 
Total 60 to 89 days past due 10,477  15,752  9,676  13,676  35,252 
90 or more days past due:     
Commercial and industrial 2,515  9,107  6,759  5,220  4,049 
Commercial real estate   993  1,538    161 
Residential mortgage 2,472  3,170  891  3,812  1,798 
Total consumer 417  271  753  2,082  1,092 
Total 90 or more days past due 5,404  13,541  9,941  11,114  7,100 
Total accruing past due loans$52,783 $99,005 $83,891 $93,133 $159,388 
Non-accrual loans:     
Commercial and industrial$108,988 $106,693 $115,667 $130,876 $132,622 
Commercial real estate 54,004  46,879  41,627  43,678  41,616 
Construction 71  84  2,497  3,308  2,972 
Residential mortgage 33,655  25,817  23,877  25,776  24,625 
Total consumer 7,292  5,809  7,441  6,947  4,095 
Total non-accrual loans 204,010  185,282  191,109  210,585  205,930 
Other real estate owned (OREO) 4,521  5,118  7,746  8,283  10,198 
Other repossessed assets 1,857  3,342  3,988  3,920  3,842 
Non-accrual debt securities 129  815  783  1,365  531 
Total non-performing assets$210,517 $194,557 $203,626 $224,153 $220,501 
Performing troubled debt restructured loans$67,102 $57,367 $58,090 $53,936 $48,024 
Total non-accrual loans as a % of loans 0.62% 0.58% 0.59% 0.65% 0.68%
Total accruing past due and non-accrual loans as a % of loans 0.79% 0.88% 0.85% 0.94% 1.20%
Allowance for losses on loans as a % of non- accrual loans 168.07% 183.64% 170.08% 147.03% 137.59%
                
                

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

($ in thousands, except for share data)
March 31,
2021
December 31,
2020
March 31,
2020
Adjusted net income available to common shareholders:   
Net income, as reported$115,710 $105,363 $87,268 
Add: Loss on extinguishment of debt (net of tax)   6,958   
Add: Losses (gains) on securities transaction (net of tax) 85  (468) 29 
Add: Severance expense (net of tax)(a)   1,489   
Add: Merger related expenses (net of tax)(b)   96  936 
Net income, as adjusted$115,795 $113,438 $88,233 
Dividends on preferred stock 3,172  3,172  3,172 
Net income available to common shareholders, as adjusted$112,623 $110,266 $85,061 
_____________   
 
(a) Severance is included in salary and employee benefits expense.
(b) Merger related expenses are primarily within professional and legal fees, and other non-interest expense.         
          
 
    
    
    
Adjusted per common share data:   
Net income available to common shareholders, as adjusted$112,623 $110,266 $85,061 
Average number of shares outstanding 405,152,605  403,872,459  403,519,088 
Basic earnings, as adjusted$0.28 $0.27 $0.21 
Average number of diluted shares outstanding 407,636,765  405,799,507  405,424,123 
Diluted earnings, as adjusted$0.28 $0.27 $0.21 
Adjusted annualized return on average tangible shareholders' equity:   
Net income, as adjusted$115,795 $113,438 $88,233 
Average shareholders' equity$4,645,400 $4,582,329 $4,408,585 
Less: Average goodwill and other intangible assets 1,451,750  1,447,838  1,460,988 
Average tangible shareholders' equity$3,193,650 $3,134,491 $2,947,597 
Annualized return on average tangible shareholders' equity, as adjusted 14.50% 14.48% 11.97%
Adjusted annualized return on average assets:   
Net income, as adjusted$115,795 $113,438 $88,233 
Average assets$40,770,731 $41,308,943 $38,116,850 
Annualized return on average assets, as adjusted 1.14% 1.10% 0.93%
          
 Three Months Ended

($ in thousands)
March 31,
2021
December 31,
2020
March 31,
2020
Adjusted annualized return on average shareholders' equity:   
Net income, as adjusted$115,795 $113,438 $88,233 
Average shareholders' equity$4,645,400 $4,582,329 $4,408,585 
Annualized return on average shareholders' equity, as adjusted 9.97% 9.90% 8.01%
Annualized return on average tangible shareholders' equity:   
Net income, as reported$115,710 $105,363 $87,268 
Average shareholders' equity$4,645,400 $4,582,329 $4,408,585 
Less: Average goodwill and other intangible assets 1,451,750  1,447,838  1,460,988 
Average tangible shareholders' equity$3,193,650 $3,134,491 $2,947,597 
Annualized return on average tangible shareholders' equity 14.49% 13.45% 11.84%
          
          


VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
Adjusted efficiency ratio: 
Non-interest expense, as reported$160,213 $173,141 $155,656 
Less: Loss on extinguishment of debt (pre-tax)   9,683   
Less: Severance expense (pre-tax)   2,072   
Less: Merger-related expenses (pre-tax)   133  1,302 
Less: Amortization of tax credit investments (pre-tax) 2,744  3,932  3,228 
Non-interest expense, as adjusted$157,469 $157,321 $151,126 
Net interest income 292,667  287,920  265,339 
Non-interest income, as reported 31,233  47,533  41,397 
Add: Losses (gains) on securities transactions, net (pre-tax) 118  (651) 40 
Non-interest income, as adjusted$31,351 $46,882 $41,437 
Gross operating income, as adjusted$324,018 $334,802 $306,776 
Efficiency ratio, as adjusted 48.60% 46.99% 49.26%


   As of  

($ in thousands, except for share data)
March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Tangible book value per common share:     
Common shares outstanding 405,797,538  403,858,998  403,878,744  403,795,699  403,744,148 
Shareholders' equity$4,659,670 $4,592,120 $4,533,763 $4,474,488 $4,420,998 
Less: Preferred stock 209,691  209,691  209,691  209,691  209,691 
Less: Goodwill and other intangible assets 1,450,414  1,452,891  1,449,282  1,453,330  1,458,095 
Tangible common shareholders' equity$2,999,565 $2,929,538 $2,874,790 $2,811,467 $2,753,212 
Tangible book value per common share$        7.39 $        7.25 $        7.12 $        6.96 $        6.82 
Tangible common equity to tangible assets:     
Tangible common shareholders' equity$2,999,565 $2,929,538 $2,874,790 $2,811,467 $2,753,212 
Total assets 41,178,011  40,686,076  40,747,492  41,626,497  39,089,443 
Less: Goodwill and other intangible assets 1,450,414  1,452,891  1,449,282  1,453,330  1,458,095 
Tangible assets$39,727,597 $39,233,185 $39,298,210 $40,173,167 $37,631,348 
Tangible common equity to tangible assets 7.55% 7.47% 7.32% 7.00% 7.32%


 

(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.
  

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)
 
 March 31,
2021
 December 31,
2020
(Unaudited)  
Assets   
Cash and due from banks$280,915  $257,845 
Interest bearing deposits with banks 1,352,918   1,071,360 
Investment securities:   
Equity securities 32,973   29,378 
Available for sale debt securities 1,116,221   1,339,473 
Held to maturity debt securities (net of allowance for credit losses of $1,070 at March 31, 2021 and $1,428 at December 31, 2020) 2,389,956   2,171,583 
Total investment securities 3,539,150   3,540,434 
Loans held for sale, at fair value 232,068   301,427 
Loans 32,686,416   32,217,112 
Less: Allowance for loan losses (342,880)  (340,243)
Net loans 32,343,536   31,876,869 
Premises and equipment, net 323,841   319,797 
Lease right of use assets 242,190   252,053 
Bank owned life insurance 535,620   535,209 
Accrued interest receivable 107,790   106,230 
Goodwill 1,382,442   1,382,442 
Other intangible assets, net 67,972   70,449 
Other assets 769,569   971,961 
Total Assets$41,178,011  $40,686,076 
Liabilities       
Deposits:       
Non-interest bearing$10,053,026  $9,205,266 
Interest bearing:       
Savings, NOW and money market 17,081,105   16,015,658 
Time 5,451,078   6,714,678 
Total deposits 32,585,209   31,935,602 
Short-term borrowings 1,084,666   1,147,958 
Long-term borrowings 2,242,931   2,295,665 
Junior subordinated debentures issued to capital trusts 56,152   56,065 
Lease liabilities 266,407   276,675 
Accrued expenses and other liabilities 282,976   381,991 
Total Liabilities 36,518,341   36,093,956 
Shareholders’ Equity       
Preferred stock, no par value; 50,000,000 authorized shares:       
Series A (4,600,000 shares issued at March 31, 2021 and December 31, 2020) 111,590   111,590 
Series B (4,000,000 shares issued at March 31, 2021 and December 31, 2020) 98,101   98,101 
Common stock (no par value, authorized 650,000,000 shares; issued 405,801,304 shares at March 31, 2021 and 403,881,488 shares at December 31, 2020) 142,435   141,746 
Surplus 3,651,948   3,637,468 
Retained earnings 672,651   611,158 
Accumulated other comprehensive loss (17,005)  (7,718)
Treasury stock, at cost (3,766 common shares at March 31, 2021 and 22,490 common shares at December 31, 2020) (50)  (225)
Total Shareholders’ Equity 4,659,670   4,592,120 
Total Liabilities and Shareholders’ Equity$41,178,011  $40,686,076 
        
        


 
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
 
 Three Months Ended
 March 31,
2021
December 31,
2020
March 31,
2020
Interest Income   
Interest and fees on loans$313,181 $313,968 $333,068 
Interest and dividends on investment securities:   
Taxable 13,166  14,024  21,933 
Tax-exempt 3,356  3,339  3,926 
Dividends 1,871  2,467  3,401 
Interest on federal funds sold and other short-term investments 224  260  1,465 
Total interest income 331,798  334,058  363,793 
Interest Expense         
Interest on deposits:   
Savings, NOW and money market 11,125  11,706  34,513 
Time 11,093  14,368  42,814 
Interest on short-term borrowings 1,758  2,097  4,707 
Interest on long-term borrowings and junior subordinated debentures 15,155  17,967  16,420 
Total interest expense 39,131  46,138  98,454 
Net Interest Income 292,667  287,920  265,339 
(Credit) provision for credit losses for held to maturity securities (358) (53) 759 
Provision for credit losses for loans 9,014  19,028  33,924 
Net Interest Income After Provision for Credit Losses 284,011  268,945  230,656 
Non-Interest Income   
Trust and investment services 3,329  3,108  3,413 
Insurance commissions 1,558  1,972  1,951 
Service charges on deposit accounts 5,103  5,068  5,680 
(Losses) gains on securities transactions, net (118) 651  (40)
Fees from loan servicing 2,899  2,826  2,748 
Gains on sales of loans, net 3,513  15,998  4,550 
(Losses) gains on sales of assets, net (196) (2,607) 121 
Bank owned life insurance 2,331  2,422  3,142 
Other 12,814  18,095  19,832 
Total non-interest income 31,233  47,533  41,397 
Non-Interest Expense   
Salary and employee benefits expense 88,103  85,335  85,728 
Net occupancy and equipment expense 32,259  32,228  32,441 
FDIC insurance assessment 3,276  4,091  3,876 
Amortization of other intangible assets 6,006  6,117  5,470 
Professional and legal fees 6,272  9,702  6,087 
Loss on extinguishment of debt   9,683   
Amortization of tax credit investments 2,744  3,932  3,228 
Telecommunication expense 3,160  3,490  2,287 
Other 18,393  18,563  16,539 
Total non-interest expense 160,213  173,141  155,656 
Income Before Income Taxes 155,031  143,337  116,397 
Income tax expense 39,321  37,974  29,129 
Net Income 115,710  105,363  87,268 
Dividends on preferred stock 3,172  3,172  3,172 
Net Income Available to Common Shareholders$112,538 $102,191 $84,096 


 
 
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
 
  Three Months Ended
 March 31,
2021
December 31,
2020
March 31,
2020
Earnings Per Common Share:   
Basic$0.28$0.25$0.21
Diluted 0.28 0.25 0.21
Cash Dividends Declared per Common Share 0.11 0.11 0.11
Weighted Average Number of Common Shares Outstanding:      
Basic 405,152,605 403,872,459 403,519,088
Diluted 407,636,765 405,799,507 405,424,123
       
       


 
VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Income on a Tax Equivalent Basis
 
 Three Months Ended
        
 March 31, 2021
 December 31, 2020 March 31, 2020 
  Average    Avg. Average    Avg.Average
 Avg.
($ in thousands) Balance  Interest Rate Balance  Interest RateBalance
InterestRate
Assets                    
Interest earning assets:                    
Loans (1)(2)$32,582,479 $313,206 3.85% $32,570,902 $313,993 3.86% $29,999,428$333,068 4.44%
Taxable investments (3) 3,111,116  15,037 1.93   3,204,974  16,491 2.06   3,557,913 25,334 2.85 
Tax-exempt investments (1)(3) 513,809  4,248 3.31   506,748  4,227 3.34   585,987 4,970 3.39 
Interest bearing deposits with banks 1,178,815  224 0.08   1,523,876  260 0.07   530,747 1,465 1.10 
Total interest earning assets 37,386,219  332,715 3.56   37,806,500  334,971 3.54   34,674,075 364,837 4.21 
Other assets 3,384,512      3,502,443      3,442,775    
Total assets$40,770,731     $41,308,943     $38,116,850    
Liabilities and shareholders' equity                  
Interest bearing liabilities:                  
Savings, NOW and money market                  
deposits$16,617,762 $11,125 0.27% $15,606,081 $11,706 0.30% $13,239,382$34,513 1.04%
Time deposits 5,844,524  11,093 0.76   7,005,804  14,368 0.82   8,897,934 42,814 1.92 
Short-term borrowings 1,168,617  1,758 0.60   1,316,706  2,097 0.64   1,322,699 4,707 1.42 
Long-term borrowings (4) 2,323,279  15,155 2.61   2,779,632  17,967 2.59   2,775,049 16,420 2.37 
Total interest bearing liabilities 25,954,182  39,131 0.60   26,708,223  46,138 0.69   26,235,064 98,454 1.50 
Non-interest bearing deposits 9,373,000   9,143,953        6,694,102    
Other liabilities 798,149   874,438        779,099    
Shareholders' equity 4,645,400   4,582,329        4,408,585    
Total liabilities and shareholders' equity$40,770,731  $41,308,943       $38,116,850    
                 
Net interest income/interest rate spread (5)  $293,584 2.96%   $288,833 2.85%  $266,383 2.71%
Tax equivalent adjustment   (917)    (913)     (1,044) 
Net interest income, as reported  $292,667    $287,920     $265,339  
                    
Net interest margin (6)     3.13       3.05      3.06 
Tax equivalent effect     0.01       0.01      0.01 
Net interest margin on a fully tax equivalent basis (6)     3.14%      3.06%     3.07%

_____________

(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