Valley National Bancorp Reports Second Quarter 2022 Earnings With Strong Organic Loan Growth, Net Interest Income and Margin


NEW YORK, July 28, 2022 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the second quarter 2022 of $96.4 million, or $0.18 per diluted common share, as compared to the second quarter 2021 earnings of $120.5 million, or $0.29 per diluted common share, and net income of $116.7 million, or $0.27 per diluted common share, for the first quarter 2022.

Our second quarter 2022 results reflect the impact of the April 1, 2022 acquisition of Bank Leumi USA and include $95.5 million pre-tax ($69.4 million after-tax), or $0.14 per diluted share, of merger-related expenses and initial non-purchased credit deteriorated (non-PCD) provision. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $165.8 million, or $0.32 per diluted common share, for the second quarter 2022, $126.6 million, or $0.30 per diluted common share, for second quarter 2021, and $120.3 million, or $0.28 per diluted common share, for the first quarter 2022. See further details below, including a reconciliation of our non-GAAP adjusted net income in the "Consolidated Financial Highlights" tables.

Key financial highlights for the second quarter:

  • Acquisition of Bank Leumi Le-Israel Corporation. On April 1, 2022, Valley completed its acquisition of Bank Leumi Le-Israel Corporation, the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, and collectively referred to as "Bank Leumi USA". At the acquisition date, Bank Leumi USA had approximately $8.1 billion in assets, $5.9 billion of loans and $7.0 billion of deposits, after purchase accounting adjustments. Valley issued approximately 85 million shares of common stock and paid $113.4 million in cash in the transaction. The consideration for the acquisition totaled approximately $1.2 billion, inclusive of the value of stock options. The transaction resulted in $403.2 million of goodwill and $153.4 million of core deposit and other intangible assets subject to amortization.
  • Loan Portfolio: Total loans increased $8.2 billion to $43.6 billion at June 30, 2022 from March 31, 2022 primarily due to $5.9 billion of loans acquired from Bank Leumi and strong organic loan growth. Excluding acquired loans from Bank Leumi USA, our loan portfolio increased 26 percent on an annualized basis during the second quarter 2022 as a result of strong commercial loan volumes and a continued uptick in new residential mortgage loans originated for investment rather than sale. We sold approximately $125 million of residential mortgage loans resulting in total pre-tax gains of $3.6 million in the second quarter 2022. See the "Loans, Deposits and Other Borrowings" section below for more details.
  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $419.6 million for the second quarter 2022 increased $101.2 million and $117.8 million as compared to the first quarter 2022 and second quarter 2021, respectively, reflecting our acquisition of Bank Leumi USA, continued organic loan growth and a well-positioned balance sheet in the current rising interest rate environment. Our net interest margin on a tax equivalent basis continued to be strong and increased by 27 basis points to 3.43 percent in the second quarter 2022 as compared to 3.16 percent for the first quarter 2022. See the "Net Interest Income and Margin" section below for more details.
  • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $491.0 million and $379.3 million at June 30, 2022 and March 31, 2022, respectively, representing 1.13 percent and 1.07 percent of total loans at each respective date. During the second quarter 2022, the provision for credit losses for loans totaled $43.7 million as compared to $3.5 million and $8.8 million for the first quarter 2022 and second quarter 2021, respectively. The second quarter 2022 provision included a $41.0 million related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.
  • Credit Quality: Total accruing past due loans decreased $19.3 million to $73.5 million, or 0.17 percent of total loans, at June 30, 2022 as compared to $92.8 million, or 0.26 percent of total loans, at March 31, 2022. Non-accrual loans represented 0.72 percent and 0.65 percent of total loans at June 30, 2022 and March 31, 2022, respectively. See the "Credit Quality" section below for more details.
  • Non-Interest Income: Non-interest income increased $19.3 million to $58.5 million for the second quarter 2022 as compared to the first quarter 2022 mainly driven by increases in several categories including wealth management and trust fees, service charges on deposit accounts and other income totaling $4.4 million, $3.9 million and $6.0 million, respectively. These increases were primarily due to the acquisition of Bank Leumi USA. Net gains on sales of residential mortgage loans also increased $2.6 million to $3.6 million for the second quarter 2022 as compared with the first quarter 2022.
  • Non-Interest Expense: Non-interest expense increased $102.4 million to $299.7 million for the second quarter 2022 as compared to the first quarter 2022. The increase was largely due to $54.5 million of merger expenses incurred during the second quarter 2022 and our expanded banking operations resulting from the Bank Leumi USA acquisition. Merger expenses were mainly reported within salary and employee benefits, professional and legal fees, and other expense (largely consisting of technology related costs) totaling $28.0 million, $11.2 million and $15.3 million, respectively. Amortization of intangible assets increased $7.0 million as compared to first quarter 2022 mostly due to additional core deposit and other intangible assets resulting from the Bank Leumi USA acquisition.
  • Efficiency Ratio: Our efficiency ratio was 50.78 percent for the second quarter 2022 as compared to 53.18 percent and 46.64 percent for the first quarter 2022 and second quarter 2021, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
  • Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 0.72 percent, 6.18 percent, and 9.33 percent for the second quarter 2022, respectively. Annualized ROA, ROE, and tangible ROE, adjusted for non-core charges, were 1.25 percent, 10.63 percent and 16.05 percent for the second quarter 2022, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.

Ira Robbins, CEO commented, "Our exceptional commercial loan growth and the acquisition of Bank Leumi USA combined with a supportive interest rate environment propelled our strong core operating results during the quarter. Our net interest margin on a tax equivalent basis increased 27 basis points as compared to the first quarter 2022 reflecting the expected benefit of higher interest rates on our asset sensitive balance sheet and our ability to manage overall funding costs with modest deposit betas during the quarter. On an organic basis, Valley continues to grow existing relationships and attract new clients by offering premier advisory expertise and service across our diverse business lines. Our underwriting criteria remain consistent with the Valley legacy that has driven solid credit metrics across various economic environments.”

Mr. Robbins continued, “We are thrilled with the early returns on the Bank Leumi USA acquisition during the second quarter 2022. Commercial loan growth and synergies from the merged Leumi and Valley banker teams have been strong, and differentiated deposit niches have further enhanced our core funding capabilities. As we continue to integrate this recent acquisition and leverage our combined infrastructure, Valley is poised to remain one of the premier full-service commercial banks in the country.”

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $419.6 million for the second quarter 2022 increased $101.2 million as compared to the first quarter 2022 and increased $117.8 million from the second quarter 2021. Interest income on a tax equivalent basis in the second quarter 2022 increased $113.2 million to $454.4 million as compared to the first quarter 2022. The increase was mostly due to higher average loan balances driven both by acquired and organic loans and increased yields on both new originations and adjustable rate loans in our portfolio. Interest expense of $34.8 million for the second quarter 2022 increased $12.0 million as compared to the first quarter 2022 largely due to a moderate increase in interest rates on both non-maturity deposits and short-term borrowings, as well as interest expense related to deposits and borrowings assumed in the Bank Leumi USA acquisition.

Our net interest margin on a tax equivalent basis of 3.43 percent for the second quarter 2022 increased by 27 basis points and 25 basis points from 3.16 percent and 3.18 percent for the first quarter 2022 and second quarter 2021, respectively. The yield on average interest earning assets increased by 33 basis points on a linked quarter basis mostly due to the aforementioned higher yields on new and adjustable rate loans in the second quarter 2022 as compared to the first quarter 2022. The yield on average loans increased by 24 basis points to 3.91 percent for the second quarter 2022 as compared to the first quarter 2022 largely due to the higher level of market interest rates. The yields on average taxable and non-taxable investments also increased 39 basis points and 67 basis points, respectively, from the first quarter 2022 largely due to interest income, including discount accretion, on investment securities acquired from Bank Leumi USA. The overall cost of average interest bearing liabilities increased 12 basis points to 0.47 percent for the second quarter 2022 as compared to the first quarter 2022. The increase was mainly due to moderately higher pricing of non-maturity deposits combined with greater utilization of brokered deposits and short-term borrowings in our loan funding mix during the second quarter 2022. Our cost of total average deposits only increased to 0.19 percent for the second quarter 2022 from 0.14 percent for the first quarter 2022.

Loans, Deposits and Other Borrowings

Loans. Loans increased $8.2 billion to approximately $43.6 billion at June 30, 2022 from March 31, 2022 largely due to a combination of $5.9 billion of acquired loans from Bank Leumi USA and strong organic loan growth. Excluding the Bank Leumi USA acquired loans, commercial and industrial, total commercial real estate (including construction) and residential mortgage loans increased 26 percent, 26 percent and 25 percent, respectively, on an annualized basis during the second quarter 2022. SBA Paycheck Protection Program (PPP) loans within the commercial and industrial category totaled $136.0 million at June 30, 2022 compared to $203.6 million at March 31, 2022. Strong organic loan production continued to be experienced across most of our geographic footprints and was further strengthened by the Bank Leumi acquisition on April 1, 2022. Residential mortgage loans increased $313.1 million during the second quarter 2022 primarily due to new loan activity in the purchased home market and an increase in such loans originated for investment rather than sale. Residential mortgage loans acquired from Bank Leumi USA were not material. Residential mortgage loans held for sale at fair value totaled $18.3 million and $77.6 million at June 30, 2022 and March 31, 2022, respectively.

Deposits. Total deposits increased $8.2 billion to approximately $43.9 billion at June 30, 2022 from March 31, 2022 mostly due to $7.0 billion of assumed deposits from Bank Leumi USA, continued growth in our commercial niches and our increased utilization of brokered deposits, consisting of money market and time deposit accounts, in our funding mix. Total brokered deposits increased to $2.3 billion at June 30, 2022 as compared to $1.2 billion at March 31, 2022. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 37 percent, 54 percent and 9 percent of total deposits as of June 30, 2022, respectively, as compared to 33 percent, 57 percent and 10 percent of total deposits as of March 31, 2022, respectively.

Other Borrowings. Short-term borrowings increased $1.0 billion to $1.5 billion at June 30, 2022 as compared to March 31, 2022 largely due to additional FHLB advances, including approximately $103.8 million assumed from Bank Leumi USA, partially offset by a $125 million decrease in federal funds purchased at June 30, 2022. Long-term borrowings totaled $1.4 billion at June 30, 2022 and remained relatively unchanged from March 31, 2022.

Credit Quality

Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets increased $82.1 million to $314.7 million at June 30, 2022 as compared to March 31, 2022 mostly due to $70.5 million of acquired non-accrual loans from Bank Leumi USA. Non-accrual commercial and industrial loans include an additional $43.0 million borrower relationship with related reserves of $22.0 million within the allowance for loan losses at June 30, 2022 as compared to March 31, 2022. Non-accrual loans represented 0.72 percent of total loans at June 30, 2022 compared to 0.65 percent at March 31, 2022.

Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing taxi medallion loans totaling $80.4 million within the non-accrual commercial and industrial loan category at June 30, 2022. At June 30, 2022, all taxi medallion loans were on non-accrual status and had related reserves of $55.3 million, or 68.8 percent of such loans, within the allowance for loan losses.

Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $19.3 million to $73.5 million, or 0.17 percent of total loans, at June 30, 2022 as compared to $92.8 million, or 0.26 percent of total loans at March 31, 2022. Commercial real estate loans past due 30 to 59 days and 60 to 89 days decreased $20.3 million and $5.7 million, respectively, at June 30, 2022 as compared to March 31, 2022. The decreases were mainly due to two loans of $13.2 million and $6.0 million that were included in the respective delinquency categories at March 31, 2022 that were reported as non-accrual and current loans, respectively, as of June 30, 2022. Commercial and industrial loans past due 60 to 89 days also decreased $10.6 million as compared to March 31, 2022, largely due to the migration of loans totaling $8.8 million to the 90 days or more past due category at June 30, 2022. All loans 90 days or more past due and still accruing interest are considered well-secured and in the process of collection.

Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at June 30, 2022, March 31, 2022 and June 30, 2021:

  June 30, 2022 March 31, 2022 June 30, 2021
    Allocation   Allocation   Allocation
    as a % of   as a % of   as a % of
  Allowance Loan Allowance Loan Allowance Loan
 Allocation Category Allocation Category Allocation Category
 ($ in thousands)
Loan Category:           
Commercial and industrial loans$144,539 1.70% $101,203 1.75% $109,689 1.80%
Commercial real estate loans:           
 Commercial real estate 227,457 0.97   189,927 0.96%  168,220 0.96 
 Construction 49,770 1.47   30,022 1.38%  20,919 1.19 
Total commercial real estate loans 277,227 1.03   219,949 1.00%  189,139 0.98 
Residential mortgage loans 29,889 0.60   28,189 0.60%  25,303 0.60 
Consumer loans:           
 Home equity 3,907 0.91   3,656 0.93%  4,602 1.12 
 Auto and other consumer 13,257 0.49   9,513 0.37%  10,591 0.43 
Total consumer loans 17,164 0.55   13,169 0.45%  15,193 0.53 
Allowance for loan losses 468,819 1.08   362,510 1.03%  339,324 1.05 
Allowance for unfunded credit commitments 22,144    16,742    14,400  
Total allowance for credit losses for loans$490,963   $379,252   $353,724  
Allowance for credit losses for           
loans as a % total loans  1.13%   1.07%   1.09%

Our loan portfolio, totaling $43.6 billion at June 30, 2022, had net loan charge-offs totaling $2.3 million (excluding $62.4 million of immediate PCD loan charge-offs related to the Bank Leumi USA acquisition) for the second quarter 2022 as compared to net recoveries of $50 thousand for the first quarter 2022 and net loan charge-offs of $9.4 million for the second quarter 2021. Gross loan charge-offs of taxi medallion loans totaled $2.7 million for the second quarter 2022 as compared to $1.4 million during the second quarter 2021. There were no charge-offs of taxi medallion loans in the first quarter 2022.

During the second quarter 2022, the provision for credit losses for loans totaled $43.7 million as compared to $3.5 million and $8.8 million for the first quarter 2022 and second quarter 2021, respectively. The increase in the second quarter 2022 provision as compared to the first quarter 2022 was primarily due to $41.0 million of provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA. Overall, an increased economic forecast reserve component of our CECL model was largely offset by lower expected quantitative loss experience at June 30, 2022 as compared to March 31, 2022.

The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.13 percent at June 30, 2022 as compared to 1.07 percent and 1.09 percent at March 31, 2022 and June 30, 2021, respectively. The allowance for credit losses increased $111.7 million at June 30, 2022 as compared to March 31, 2022 due, in large part, to a $70.3 million net allowance for credit losses for loans recorded for PCD loans acquired from Bank Leumi USA at the April 1, 2022 acquisition date and $41.0 million included in our second quarter 2022 provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.

Capital Adequacy

Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 11.53 percent, 9.06 percent, 9.54 percent, and 8.33 percent, respectively, at June 30, 2022.

Investor Conference Call

Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Daylight Savings Time, today to discuss the second quarter 2022 earnings and related matters.

Those wishing to participate should preregister using this link: https://register.vevent.com/register/BIab2b17746c8a4a81a1ef7f9715060746 to receive the dial-in number and a personal PIN, which are required to access the conference call. Investor presentation materials will be made available prior to the conference call at www.valley.com

About Valley

As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $54 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations and commercial banking offices across New Jersey, New York, Florida, Alabama, California, and Illinois, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Care Center at 800-522-4100.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

  • the inability to realize expected cost savings and synergies from the Bank Leumi USA acquisition in amounts or in the timeframe anticipated;
  • greater than expected costs or difficulties relating to Bank Leumi USA integration matters;
  • the inability to retain customers and qualified employees of Bank Leumi USA;
  • greater than expected non-recurring charges related to the Bank Leumi USA acquisition;
  • the continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment, supply chain interruptions and an increase in business failures, specifically among our clients;
  • the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases and new variants of COVID-19 may arise in our primary markets;
  • continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets;
  • the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral;
  • the risks related to the discontinuation of the London Interbank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies;
  • damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters;
  • a prolonged downturn in the economy, mainly in New Jersey, New York, Florida, Alabama, California, and Illinois, as well as an unexpected decline in commercial real estate values within our market areas;
  • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
  • the inability to grow customer deposits to keep pace with loan growth;
  • a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
  • the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
  • greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
  • the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley's branch transformation strategy;
  • cyber-attacks, ransomware attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;
  • results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
  • our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
  • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, the COVID-19 pandemic or other external events; and
  • unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2021.

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

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


-Tables to Follow-

VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

SELECTED FINANCIAL DATA

 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
($ in thousands, except for share data) 2022   2022   2021   2022   2021 
FINANCIAL DATA:         
Net interest income - FTE(1)$419,565  $318,363  $301,787  $737,927  $595,371 
Net interest income$418,160  $317,669  $300,907  $735,829  $593,574 
Non-interest income 58,533   39,270   43,126   97,803   74,359 
Total revenue 476,693   356,939   344,033   833,632   667,933 
Non-interest expense 299,730   197,340   171,893   497,070   332,106 
Pre-provision net revenue 176,963   159,599   172,140   336,562   335,827 
Provision for credit losses 43,998   3,557   8,747   47,555   17,403 
Income tax expense 36,552   39,314   42,881   75,866   82,202 
Net income 96,413   116,728   120,512   213,141   236,222 
Dividends on preferred stock 3,172   3,172   3,172   6,344   6,344 
Net income available to common shareholders$93,241  $113,556  $117,340  $206,797  $229,878 
Weighted average number of common shares outstanding:         
Basic 506,302,464   421,573,843   405,963,209   464,172,210   405,560,146 
Diluted 508,479,206   423,506,550   408,660,778   466,320,683   408,152,458 
Per common share data:         
Basic earnings$0.18  $0.27  $0.29  $0.45  $0.57 
Diluted earnings 0.18   0.27   0.29   0.44   0.56 
Cash dividends declared 0.11   0.11   0.11   0.22   0.22 
Closing stock price - high 13.04   15.02   14.63   15.02   14.63 
Closing stock price - low 10.34   12.91   12.91   10.34   9.74 
FINANCIAL RATIOS:         
Net interest margin 3.42%  3.15%  3.18%  3.30%  3.15%
Net interest margin - FTE(1) 3.43   3.16   3.18   3.31   3.16 
Annualized return on average assets 0.72   1.07   1.17   0.88   1.15 
Annualized return on avg. shareholders' equity 6.18   9.15   10.24   7.51   10.10 
NON-GAAP FINANCIAL DATA AND RATIOS:(3)         
Basic earnings per share, as adjusted$0.32  $0.28  $0.30  $0.60  $0.58 
Diluted earnings per share, as adjusted 0.32   0.28   0.30   0.60   0.58 
Annualized return on average assets, as adjusted 1.25   1.10   1.23   1.18   1.18 
Annualized return on average shareholders' equity, as adjusted 10.63%  9.43%  10.76%  10.09%  10.37%
Annualized return on avg. tangible shareholders' equity 9.33   13.09   14.79   11.07   14.64 
Annualized return on average tangible shareholders' equity, as adjusted 16.05   13.49   15.54   14.87   15.03 
Efficiency ratio 50.78   53.18   46.64   51.81   47.59 
          
AVERAGE BALANCE SHEET ITEMS:         
Assets$53,211,422  $43,570,251  $41,161,459  $48,417,469  $40,967,174 
Interest earning assets 48,891,230   40,283,048   37,907,414   44,609,968   37,648,256 
Loans 42,517,287   34,623,402   32,635,298   38,592,151   32,609,034 
Interest bearing liabilities 29,694,271   26,147,915   25,469,526   27,930,890   25,710,515 
Deposits 42,896,381   35,763,683   32,723,175   39,349,737   32,281,683 
Shareholders' equity 6,238,985   5,104,709   4,708,797   5,673,014   4,677,273 


 As Of
BALANCE SHEET ITEMS:June 30, March 31, December 31, September 30, June 30,
(In thousands) 2022   2022   2021   2021   2021 
Assets$        54,438,807  $        43,551,457  $        43,446,443  $        41,278,007  $        41,274,228 
Total loans         43,560,777           35,364,405           34,153,657           32,606,814           32,457,454 
Deposits         43,881,051           35,647,336           35,632,412           33,632,605           33,194,774 
Shareholders' equity         6,204,913           5,096,384           5,084,066           4,822,498           4,737,807 
          
LOANS:         
(In thousands)         
Commercial and industrial loans:         
Commercial and industrial$        8,378,454  $        5,587,781  $        5,411,601  $        4,761,227  $        4,733,771 
Commercial and industrial PPP loans         136,004           203,609           435,950           874,033           1,350,684 
Total commercial and industrial         8,514,458           5,791,390           5,847,551           5,635,260           6,084,455 
Commercial real estate:         
Commercial real estate         23,535,086           19,763,202           18,935,486           17,912,070           17,512,142 
Construction         3,374,373           2,174,542           1,854,580           1,804,580           1,752,838 
Total commercial real estate         26,909,459           21,937,744           20,790,066           19,716,650           19,264,980 
Residential mortgage         5,005,069           4,691,935           4,545,064           4,332,422           4,226,975 
Consumer:         
Home equity         431,455           393,538           400,779           402,658           410,856 
Automobile         1,673,482           1,552,928           1,570,036           1,563,698           1,531,262 
Other consumer         1,026,854           996,870           1,000,161           956,126           938,926 
Total consumer loans         3,131,791           2,943,336           2,970,976           2,922,482           2,881,044 
Total loans$        43,560,777  $        35,364,405  $        34,153,657  $        32,606,814  $        32,457,454 
          
CAPITAL RATIOS:         
Book value per common share$11.84  $11.60  $11.57  $11.32  $11.15 
Tangible book value per common share (2) 7.71   7.93   7.94   7.78   7.59 
Tangible common equity to tangible assets (2) 7.46%  7.96%  7.98%  7.95%  7.73%
Tier 1 leverage capital 8.33   8.70   8.88   8.63   8.49 
Common equity tier 1 capital 9.06   9.67   10.06   10.06   10.04 
Tier 1 risk-based capital 9.54   10.27   10.69   10.73   10.73 
Total risk-based capital 11.53   12.65   13.10   13.24   13.36 


 Three Months Ended Six Months Ended
ALLOWANCE FOR CREDIT LOSSES:June 30, March 31, June 30, June 30,
($ in thousands) 2022   2022   2021   2022   2021 
Allowance for credit losses for loans         
Beginning balance$        379,252  $        375,702  $        354,313  $        375,702  $        351,354 
Allowance for purchased credit deteriorated (PCD) loans, net (2)         70,319           —           —           70,319           — 
Loans charged-off:         
Commercial and industrial         (4,540)          (1,571)          (10,893)          (6,111)          (18,035)
Commercial real estate         —           (173)          —           (173)          (382)
Residential mortgage         (1)          (26)          (1)          (27)          (139)
Total consumer         (726)          (825)          (1,480)          (1,551)          (2,618)
Total loans charged-off         (5,267)          (2,595)          (12,374)          (7,862)          (21,174)
Charged-off loans recovered:         
Commercial and industrial         1,952           824           678           2,776           2,267 
Commercial real estate         224           107           665           331           730 
Construction         —           —           —           —           4 
Residential mortgage         74           457           191           531           348 
Total consumer         697           1,257           1,474           1,954           2,404 
Total loans recovered         2,947           2,645           3,008           5,592           5,753 
Net (charge-offs) recoveries         (2,320)          50           (9,366)          (2,270)          (15,421)
Provision for credit losses for loans         43,712           3,500           8,777           47,212           17,791 
Ending balance$        490,963  $        379,252  $        353,724  $        490,963  $        353,724 
Components of allowance for credit losses for loans:         
Allowance for loan losses$        468,819  $        362,510  $        339,324  $        468,819  $        339,324 
Allowance for unfunded credit commitments         22,144           16,742           14,400           22,144           14,400 
Allowance for credit losses for loans$        490,963  $        379,252  $        353,724  $        490,963  $        353,724 
Components of provision for credit losses for loans:         
Provision for credit losses for loans$38,310  $3,258  $5,810  $41,568  $14,502 
Provision for unfunded credit commitments 5,402   242   2,967   5,644   3,289 
Total provision for credit losses for loans$43,712  $3,500  $8,777  $47,212  $17,791 
Annualized ratio of total net charge-offs (recoveries) to average loans 0.02%  0.00%  0.11%  0.01%  0.09%
Allowance for credit losses for loans as a % of total loans 1.13   1.07   1.09   1.13   1.09 


 As of
ASSET QUALITY:June 30, March 31, December 31, September 30, June 30,
($ in thousands) 2022   2022   2021   2021   2021 
Accruing past due loans:         
30 to 59 days past due:         
Commercial and industrial$7,143  $6,723  $6,717  $2,677  $3,867 
Commercial real estate 10,516   30,807   14,421   22,956   40,524 
Construction 9,108   1,708   1,941       
Residential mortgage 12,326   9,266   10,999   9,293   8,479 
Total consumer 6,009   5,862   6,811   5,463   6,242 
Total 30 to 59 days past due 45,102   54,366   40,889   40,389   59,112 
60 to 89 days past due:         
Commercial and industrial 3,870   14,461   7,870   985   1,361 
Commercial real estate 630   6,314      5,897   11,451 
Construction 3,862   3,125          
Residential mortgage 2,410   2,560   3,314   974   1,608 
Total consumer 702   554   1,020   1,617   985 
Total 60 to 89 days past due 11,474   27,014   12,204   9,473   15,405 
90 or more days past due:         
Commercial and industrial 15,470   9,261   1,273   2,083   2,351 
Commercial real estate       32   1,942   1,948 
Residential mortgage 1,188   1,746   677   1,002   956 
Total consumer 267   400   789   325   463 
Total 90 or more days past due 16,925   11,407   2,771   5,352   5,718 
Total accruing past due loans$73,501  $92,787  $55,864  $55,214  $80,235 
Non-accrual loans:         
Commercial and industrial$148,404  $96,631  $99,918  $100,614  $102,594 
Commercial real estate 85,807   79,180   83,592   95,843   58,893 
Construction 49,780   17,618   17,641   17,653   17,660 
Residential mortgage 25,847   33,275   35,207   33,648   35,941 
Total consumer 3,279   3,754   3,858   4,073   4,924 
Total non-accrual loans 313,117   230,458   240,216   251,831   220,012 
Other real estate owned (OREO) 422   1,024   2,259   3,967   4,523 
Other repossessed assets 1,200   1,176   2,931   1,896   2,060 
Total non-performing assets$314,739  $232,658  $245,406  $257,694  $226,595 
Performing troubled debt restructured loans$67,274  $56,538  $71,330  $64,832  $64,080 
Total non-accrual loans as a % of loans 0.72%  0.65%  0.70%  0.77%  0.68%
Total accruing past due and non-accrual loans as a % of loans 0.89%  0.91%  0.87%  0.94%  0.93%
Allowance for losses on loans as a % of non-accrual loans 149.73%  157.30%  149.53%  136.01%  154.23%

NOTES TO SELECTED FINANCIAL DATA

(1)Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
(2)Represents the allowance for acquired PCD loans, net of PCD loan charge-offs totaling $62.4 million in the second quarter 2022.
(3)Non-GAAP Reconciliations. This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. The Company believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies.

Non-GAAP Reconciliations to GAAP Financial Measures

 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
($ in thousands, except for share data) 2022   2022   2021   2022   2021 
Adjusted net income available to common shareholders (non-GAAP):         
Net income, as reported (GAAP)$96,413  $116,728  $120,512  $213,141  $236,222 
Add: Loss on extinguishment of debt (net of tax)       6,024      6,024 
Add: Losses on available for sale and held to maturity securities transactions (net of tax)(a) (56)  6   81   (50)  166 
Add: Provision for credit losses, (net of tax) (b) 29,282         29,282    
Add: Merger related expenses (net of tax)(c) 40,164   3,579      43,743    
Net income, as adjusted (non-GAAP)$165,803  $120,313  $126,617  $286,116  $242,412 
Dividends on preferred stock 3,172   3,172   3,172   6,344   6,344 
Net income available to common shareholders, as adjusted (non-GAAP)$162,631  $117,141  $123,445  $279,772  $236,068 
__________         
(a) Included in (losses) gains on securities transactions, net.  
(b) Represents provision for credit losses for non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.
(c) Merger related expenses are primarily within salary and employee benefits expense, other expense, and professional and legal fees.
          
Adjusted per common share data (non-GAAP):         
Net income available to common shareholders, as adjusted (non-GAAP)$162,631  $117,141  $123,445  $279,772  $236,068 
Average number of shares outstanding 506,302,464   421,573,843   405,963,209   464,172,210   405,560,146 
Basic earnings, as adjusted (non-GAAP)$0.32  $0.28  $0.30  $0.60  $0.58 
Average number of diluted shares outstanding 508,479,206   423,506,550   408,660,778   466,320,683   408,152,458 
Diluted earnings, as adjusted (non-GAAP)$0.32  $0.28  $0.30  $0.60  $0.58 
Adjusted annualized return on average tangible shareholders' equity (non-GAAP):         
Net income, as adjusted (non-GAAP)$165,803  $120,313  $126,617  $286,116  $242,412 
Average shareholders' equity$6,238,985  $5,104,709  $4,708,797   5,673,014   4,677,273 
Less: Average goodwill and other intangible assets 2,105,585   1,538,356   1,449,388   1,823,538   1,450,562 
Average tangible shareholders' equity$4,133,400  $3,566,353  $3,259,409  $3,849,476  $3,226,711 
Annualized return on average tangible shareholders' equity, as adjusted (non-GAAP) 16.05%  13.49%  15.54%  14.87%  15.03%
Adjusted annualized return on average assets (non-GAAP):         
Net income, as adjusted (non-GAAP)$165,803  $120,313  $126,617  $286,116  $242,412 
Average assets$53,211,422  $43,570,251  $41,161,459  $48,417,469  $40,967,174 
Annualized return on average assets, as adjusted (non-GAAP) 1.25%  1.10%  1.23%  1.18%  1.18%

Non-GAAP Reconciliations to GAAP Financial Measures (Continued)

 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
($ in thousands) 2022   2022   2021   2022   2021 
Adjusted annualized return on average shareholders' equity (non-GAAP):         
Net income, as adjusted (non-GAAP)$165,803  $120,313  $126,617  $286,116  $242,412 
Average shareholders' equity$6,238,985  $5,104,709  $4,708,797  $5,673,014  $4,677,273 
Annualized return on average shareholders' equity, as adjusted (non-GAAP) 10.63%  9.43%  10.76%  10.09%  10.37%
Annualized return on average tangible shareholders' equity (non-GAAP):         
Net income, as reported (GAAP)$96,413  $116,728  $120,512  $213,141  $236,222 
Average shareholders' equity$6,238,985  $5,104,709  $4,708,797   5,673,014   4,677,273 
Less: Average goodwill and other intangible assets 2,105,585   1,538,356   1,449,388   1,823,538   1,450,562 
Average tangible shareholders' equity$4,133,400  $3,566,353  $3,259,409  $3,849,476  $3,226,711 
Annualized return on average tangible shareholders' equity (non-GAAP) 9.33%  13.09%  14.79%  11.07%  14.64%
Efficiency ratio (non-GAAP):         
Non-interest expense, as reported (GAAP)$299,730  $197,340  $171,893  $497,070  $332,106 
Less: Loss on extinguishment of debt (pre-tax)       8,406      8,406 
Less: Merger-related expenses (pre-tax) 54,496   4,628      59,124    
Less: Amortization of tax credit investments (pre-tax) 3,193   2,896   2,972   6,089   5,716 
Non-interest expense, as adjusted (non-GAAP)$242,041  $189,816  $160,515  $431,857  $317,984 
Net interest income, as reported (GAAP) 418,160   317,669   300,907   735,829   593,574 
Non-interest income, as reported (GAAP) 58,533   39,270   43,126   97,803   74,359 
Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax) (78)  9   113   (69)  231 
Non-interest income, as adjusted (non-GAAP)$58,455  $39,279  $43,239  $97,734  $74,590 
Gross operating income, as adjusted (non-GAAP)$476,615  $356,948  $344,146  $833,563  $668,164 
Efficiency ratio (non-GAAP) 50.78%  53.18%  46.64%  51.81%  47.59%


 As of
 June 30, March 31, December 31, September 30, June 30,
($ in thousands, except for share data) 2022   2022   2021   2021   2021 
Tangible book value per common share (non-GAAP):         
Common shares outstanding 506,328,526   421,437,068   421,437,068   407,313,664   406,083,790 
Shareholders' equity (GAAP)$6,204,913  $5,096,384  $5,084,066  $4,822,498  $4,737,807 
Less: Preferred stock 209,691   209,691   209,691   209,691   209,691 
Less: Goodwill and other intangible assets 2,090,147   1,543,238   1,529,394   1,444,967   1,447,965 
Tangible common shareholders' equity (non-GAAP)$3,905,075  $3,343,455  $3,344,981  $3,167,840  $3,080,151 
Tangible book value per common share (non-GAAP)$7.71  $7.93  $7.94  $7.78  $7.59 
Tangible common equity to tangible assets (non-GAAP):         
Tangible common shareholders' equity (non-GAAP)$3,905,075  $3,343,455  $3,344,981  $3,167,840  $3,080,151 
Total assets (GAAP)$54,438,807  $43,551,457  $43,446,443  $41,278,007  $41,274,228 
Less: Goodwill and other intangible assets 2,090,147   1,543,238   1,529,394   1,444,967   1,447,965 
Tangible assets (non-GAAP)$52,348,660  $42,008,219  $41,917,049  $39,833,040  $39,826,263 
Tangible common equity to tangible assets (non-GAAP) 7.46%  7.96%  7.98%  7.95%  7.73%


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


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

 June 30, December 31,
  2022   2021 
  (Unaudited)  
Assets   
Cash and due from banks$481,414  $205,156 
Interest bearing deposits with banks 906,898   1,844,764 
Investment securities:   
Equity securities 41,716   36,473 
Trading debt securities    38,130 
Available for sale debt securities 1,382,551   1,128,809 
Held to maturity debt securities (net of allowance for credit losses of $1,508 at June 30, 2022 and $1,165 at December 31, 2021) 3,718,469   2,667,532 
Total investment securities 5,142,736   3,870,944 
Loans held for sale, at fair value 18,348   139,516 
Loans 43,560,777   34,153,657 
Less: Allowance for loan losses (468,819)  (359,202)
Net loans 43,091,958   33,794,455 
Premises and equipment, net 360,819   326,306 
Lease right of use assets 315,820   259,117 
Bank owned life insurance 714,762   566,770 
Accrued interest receivable 134,682   96,882 
Goodwill 1,871,505   1,459,008 
Other intangible assets, net 218,642   70,386 
Other assets 1,181,223   813,139 
Total Assets$54,438,807  $43,446,443 
Liabilities   
Deposits:   
Non-interest bearing$16,139,559  $11,675,748 
Interest bearing:   
Savings, NOW and money market 23,547,951   20,269,620 
Time 4,193,541   3,687,044 
Total deposits 43,881,051   35,632,412 
Short-term borrowings 1,522,804   655,726 
Long-term borrowings 1,403,805   1,423,676 
Junior subordinated debentures issued to capital trusts 56,587   56,413 
Lease liabilities 368,920   283,106 
Accrued expenses and other liabilities 1,000,727   311,044 
Total Liabilities 48,233,894   38,362,377 
Shareholders’ Equity   
Preferred stock, no par value; 50,000,000 authorized shares:   
Series A (4,600,000 shares issued at June 30, 2022 and December 31, 2021) 111,590   111,590 
Series B (4,000,000 shares issued at June 30, 2022 and December 31, 2021) 98,101   98,101 
Common stock (no par value, authorized 650,000,000 shares; issued 507,896,910 and 423,034,027 at June 30, 2022 and December 31, 2021) 178,185   148,482 
Surplus 4,965,488   3,883,035 
Retained earnings 982,146   883,645 
Accumulated other comprehensive loss (108,337)  (17,932)
Treasury stock, at cost (1,568,384 shares at June 30, 2022 and 1,596,959 common shares at December 31, 2021) (22,260)  (22,855)
Total Shareholders’ Equity 6,204,913   5,084,066 
Total Liabilities and Shareholders’ Equity$54,438,807  $43,446,443 


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

 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
  2022   2022   2021   2022   2021 
Interest Income         
Interest and fees on loans$415,577  $317,365  $315,314  $732,942  $628,495 
Interest and dividends on investment securities:         
Taxable 27,534   18,439   12,716   45,973   25,882 
Tax-exempt 5,191   2,517   3,216   7,708   6,572 
Dividends 3,076   1,676   2,167   4,752   4,038 
Interest on federal funds sold and other short-term investments 1,569   461   235   2,030   459 
Total interest income 452,947   340,458   333,648   793,405   665,446 
Interest Expense         
Interest on deposits:         
Savings, NOW and money market 17,122   9,627   11,166   26,749   22,291 
Time 3,269   2,831   6,279   6,100   17,372 
Interest on short-term borrowings 4,083   806   1,168   4,889   2,926 
Interest on long-term borrowings and junior subordinated debentures 10,313   9,525   14,128   19,838   29,283 
Total interest expense 34,787   22,789   32,741   57,576   71,872 
Net Interest Income 418,160   317,669   300,907   735,829   593,574 
Provision (credit) for credit losses for held to maturity securities 286   57   (30)  343   (388)
Provision for credit losses for loans 43,712   3,500   8,777   47,212   17,791 
Net Interest Income After Provision for Credit Losses 374,162   314,112   292,160   688,274   576,171 
Non-Interest Income         
Wealth management and trust fees 9,577   5,131   3,532   14,708   6,861 
Insurance commissions 3,463   1,859   2,637   5,322   4,195 
Service charges on deposit accounts 10,067   6,212   5,083   16,279   10,186 
(Losses) gains on securities transactions, net (309)  (1,072)  375   (1,381)  476 
Fees from loan servicing 2,717   2,781   3,187   5,498   6,086 
Gains on sales of loans, net 3,602   986   10,061   4,588   13,574 
Bank owned life insurance 2,113   2,046   2,475   4,159   4,806 
Other 27,303   21,327   15,776   48,630   28,175 
Total non-interest income 58,533   39,270   43,126   97,803   74,359 
Non-Interest Expense         
Salary and employee benefits expense 154,798   107,733   91,095   262,531   179,198 
Net occupancy and equipment expense 41,986   36,806   32,451   78,792   64,710 
FDIC insurance assessment 5,351   4,158   3,374   9,509   6,650 
Amortization of other intangible assets 11,400   4,437   5,449   15,837   11,455 
Professional and legal fees 30,409   14,749   7,486   45,158   13,758 
Loss on extinguishment of debt       8,406      8,406 
Amortization of tax credit investments 3,193   2,896   2,972   6,089   5,716 
Telecommunication expense 3,083   3,271   2,732   6,354   5,892 
Other 49,510   23,290   17,928   72,800   36,321 
Total non-interest expense 299,730   197,340   171,893   497,070   332,106 
Income Before Income Taxes 132,965   156,042   163,393   289,007   318,424 
Income tax expense 36,552   39,314   42,881   75,866   82,202 
Net Income 96,413   116,728   120,512   213,141   236,222 
Dividends on preferred stock 3,172   3,172   3,172   6,344   6,344 
Net Income Available to Common Shareholders$93,241  $113,556  $117,340  $206,797  $229,878 


 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
  2022  2022  2021  2022  2021
Earnings Per Common Share:         
Basic$0.18 $0.27 $0.29 $0.45 $0.57
Diluted 0.18  0.27  0.29  0.44  0.56
Cash Dividends Declared per Common Share 0.11  0.11  0.11  0.22  0.22
Weighted Average Number of Common Shares Outstanding:         
Basic 506,302,464  421,573,843  405,963,209  464,172,210  405,560,146
Diluted 508,479,206  423,506,550  408,660,778  466,320,683  408,152,458


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

 Three Months Ended
 June 30, 2022 March 31, 2022 June 30, 2021
  Average   Avg.  Average   Avg.  Average   Avg.
($ in thousands) Balance Interest Rate  Balance Interest Rate  Balance Interest Rate
Assets                 
Interest earning assets:               
Loans (1)(2)$42,517,287 $415,602  3.91% $34,623,402 $317,390  3.67% $32,635,298 $315,339  3.87%
Taxable investments (3) 4,912,994  30,610  2.49   3,838,468  20,115  2.10   3,159,842  14,883  1.88 
Tax-exempt investments (1)(3) 684,471  6,571  3.84   401,742  3,186  3.17   498,971  4,071  3.26 
Interest bearing deposits with banks 776,478  1,569  0.81   1,419,436  461  0.13   1,613,303  235  0.06 
Total interest earning assets 48,891,230  454,352  3.72   40,283,048  341,152  3.39   37,907,414  334,528  3.53 
Other assets 4,320,192      3,287,203      3,254,045    
Total assets$53,211,422     $43,570,251     $41,161,459    
Liabilities and shareholders' equity                 
Interest bearing liabilities:                 
Savings, NOW and money market deposits$23,027,347 $17,122  0.30% $20,522,629 $9,627  0.19% $17,784,985 $11,166  0.25%
Time deposits 3,601,088  3,269  0.36   3,554,520  2,831  0.32   4,609,778  6,279  0.54 
Short-term borrowings 1,603,198  4,083  1.02   594,297  806  0.54   873,927  1,168  0.53 
Long-term borrowings (4) 1,462,638  10,313  2.82   1,476,469  9,525  2.58   2,200,836  14,128  2.57 
Total interest bearing liabilities 29,694,271  34,787  0.47   26,147,915  22,789  0.35   25,469,526  32,741  0.51 
Non-interest bearing deposits 16,267,946      11,686,534      10,328,412    
Other liabilities 1,010,220      631,093      654,724    
Shareholders' equity 6,238,985      5,104,709      4,708,797    
Total liabilities and shareholders' equity$53,211,422     $43,570,251     $41,161,459    
                  
Net interest income/interest rate spread (5)  $419,565  3.25%   $318,363  3.04%   $301,787  3.02%
Tax equivalent adjustment   (1,405)      (694)      (880)  
Net interest income, as reported  $418,160      $317,669      $300,907   
Net interest margin (6)    3.42      3.15      3.18 
Tax equivalent effect    0.01      0.01      0.00 
Net interest margin on a fully tax equivalent basis (6)    3.43%     3.16%     3.18%


 

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