WAYNE, N.J., April 26, 2018 /PRNewswire/ -- Valley National
Bancorp (NYSE:VLY), the holding company for Valley National
Bank, today reported net income for the first quarter of 2018 of
$42.0 million, or $0.12 per diluted common share, as compared to
the first quarter of 2017 earnings of $46.1
million, or $0.17 per diluted
common share, and net income of $26.1
million, or $0.09 per diluted
common share, for the fourth quarter of 2017. Net income for
first quarter of 2018 included infrequent charges totaling
$25.9 million ($19.1 million after-tax) which mainly consisted
of $13.4 million of merger expenses
related to our acquisition of USAmeriBancorp, Inc. ("USAB")
effective January 1, 2018 and a
$10.5 million increase in litigation
reserves. The fourth quarter of 2017 results included
infrequent charges of $21.1 million
($19.7 million after-tax) mainly due
to the impact of the Tax Cuts and Jobs Act ("the Tax Act") and, to
a much lesser extent, USAB merger expenses. Excluding these charges
and other non-core items, our adjusted net income was $61.5 million, or $0.18 per diluted common share, for the first
quarter of 2018, and $45.8 million,
or $0.16 per diluted common share,
for the fourth quarter of 2017. See further details below,
including the "Consolidated Financial Highlights" tables.
Key financial highlights for the first quarter:
- Acquisition of USAmeriBancorp, Inc.: On January 1, 2018 Valley completed its acquisition
of USAB and its wholly-owned subsidiary, USAmeriBank, headquartered
in Clearwater, Florida. USAB had
approximately $5.1 billion in assets,
$3.7 billion in loans and
$3.6 billion in deposits, after
purchase accounting adjustments, and a branch network of 29
offices. The acquisition represents a significant addition to
Valley's Florida franchise, specifically in the
Tampa Bay market. The acquisition
also brought Valley to the
Birmingham, Montgomery, and Tallapoosa areas in Alabama, where Valley now operates 15 branch office
locations. The common shareholders of USAB received 6.1 shares of
Valley common stock for each USAB share they owned. The total
consideration for the acquisition was approximately $737 million, and the transaction resulted in
$388 million of goodwill and
$46 million of core deposit
intangible assets subject to amortization. Full systems integration
is expected to be completed in the second quarter of 2018.
- Loan Portfolio: Loans increased $4.2 billion to approximately $22.6 billion at March 31,
2018 from December 31, 2017
largely due to $3.7 billion in
acquired loans from USAB. The remaining increase was largely due to
strong quarter over quarter organic growth in total commercial real
estate loans, commercial and industrial loans and residential
mortgage loans. Additionally, we sold $234.2
million of residential mortgage loans resulting in pre-tax
gains of $6.8 million during the
first quarter of 2018. See additional information under the "Loans,
Deposits and Other Borrowings" section below.
- Credit Quality: Net loan recoveries totaled $1.3 million for the first quarter of 2018, and
represented our third consecutive quarter of net recoveries.
Non-accrual loans represented 0.27 percent of total loans at
March 31, 2018 compared to 0.26
percent at December 31, 2017.
- Net Interest Income: Net interest income on a tax
equivalent basis of $209.1 million
for the first quarter of 2018 increased $45.1 million and $37.7
million as compared to the first quarter of 2017 and fourth
quarter of 2017, respectively, largely due to acquired and
organic loan growth.
- Provision for Credit Losses: During the first quarter of
2018, we recorded a $10.9 million
provision for credit losses as compared to $2.5 million and $2.2
million for the first quarter of 2017 and fourth quarter of
2017, respectively. The increased provision was mainly due to
higher specific reserves allocated to impaired taxi medallion loans
at March 31, 2018, as well as the
organic loan growth during the first quarter of 2018.
- Net Interest Margin: Our net interest margin on a tax
equivalent basis of 3.13 percent for the first quarter of 2018
remained unchanged as compared to both the first quarter of 2017
and fourth quarter of 2017. See the "Net Interest Income and
Margin" section below for more details.
- Efficiency Ratio: Our efficiency ratio was 72.44 percent
for the first quarter of 2018 as compared to 68.30 percent and
64.48 percent for the fourth quarter of 2017 and first quarter of
2017, respectively. Excluding litigation reserve expense, merger
expense and amortization of tax credit investments included in
non-interest expense, our adjusted efficiency ratio was 60.29
percent for the first quarter of 2018 as compared to 57.44 percent
and 61.64 percent for the fourth quarter of 2017 and first quarter
of 2017, respectively. See the "Consolidated Financial Highlights"
tables below for additional information regarding this non-GAAP
measure.
- Income Tax Expense: The effective tax rate was 23.9
percent for the first quarter of 2018 reflecting the reduction of
the federal corporate income tax rate from 35 percent to 21 percent
by the Tax Act. Income tax expense totaled $13.2 million for the first quarter of 2018 and
included a $2 million charge related
to effect of the USAB acquisition on our state deferred tax
assets.
Ira Robbins, CEO and President
commented, "Our first quarter of 2018 reflected improved operating
performance highlighting Valley's
tremendous potential. The organic loan and deposit growth we
originated illustrates just some of the prospects that remain in
front of us. Despite several unusual items during the
quarter, our core earnings are headed in the right direction.
I look forward to focusing on enhancing the operating leverage and
demonstrating the true earnings power of this growing franchise. We
continue to transform Valley into
a preeminent financial institution that delivers strong financial
performance while establishing relevancy in both the near and long
term. Additionally, I would like to thank all of our employees that
are working tirelessly to ensure the success of our upcoming
systems integration of USAmeriBank."
Net Interest Income and Margin
Net interest income consists of interest income and dividends
earned on interest earning assets less interest expense on interest
bearing liabilities and represents the main source of income for
Valley. During the first
quarter of 2018, Valley elected to
reclassify fee income related to derivative interest rate swaps
executed with commercial loan customers totaling $3.3 million from interest and fees on loans to
other non-interest income within the presentation of our
consolidated statements of income and net interest margin (included
in the "Consolidated Financial Highlights" tables below). The
applicable prior period amounts have also been reclassified to
conform to this current presentation. See further discussion
of the swap fees in the "Non-Interest Income" section below.
Net interest income on a tax equivalent basis totaling
$209.1 million for the first quarter
of 2018 increased $45.1 million and
$37.7 million as compared to the
first quarter of 2017 and fourth quarter of 2017, respectively,
largely due to the USAB acquisition. Interest income on a tax
equivalent basis increased $49.1
million to $269.0 million for
the first quarter of 2018 as compared to the fourth quarter of 2017
mainly due to a $4.1 billion increase
in average loans, partially offset by a lower yield on average
investment securities. The decrease in yield on average investments
for the first quarter of 2018 as compared to the linked fourth
quarter was due, in part, to a lower tax equivalent yield on
non-taxable securities caused by the Tax Act. Interest expense of
$59.9 million for the first quarter
of 2018 increased $11.4 million as
compared to the fourth quarter of 2017 largely driven by the
interest bearing liabilities assumed from USAB and organic growth
from our current deposit gathering initiatives.
Our net interest margin on a tax equivalent basis of 3.13
percent for the first quarter of 2018 remained unchanged as
compared to both the first quarter of 2017 and fourth quarter of
2017. The yield on average interest earning assets increased
by 1 basis point on a linked quarter basis mostly due to an
increase in the yield on average loans, partially offset by a
decline in yield on average investment securities and two less days
during the first quarter of 2018. The yield on average loans
increased by 4 basis points to 4.26 percent for the first quarter
of 2018 as compared to the fourth quarter of 2017 due to the high
volume of new loan originations, but was partially offset by
somewhat elevated repayments of high yielding loans over the last
six month period, as well as moderately lower accretion on the
pre-existing purchased credit-impaired ("PCI") loan portfolio
(i.e., exclusive of recently acquired USAB loans). The yield on
average taxable and non-taxable investment securities in the first
quarter of 2018 decreased by 14 basis points and 37 basis points,
respectively, as compared to the fourth quarter of 2017. The
overall cost of average interest bearing liabilities was 1.22
percent for the first quarter of 2018 and remained unchanged as
compared to the linked fourth quarter of 2017. Our cost of total
deposits was 0.68 percent for the first quarter of 2018 as compared
to 0.65 percent for the fourth quarter of 2017 due to a slight
shift in average non-interest bearing deposits within the mix of
total average deposits.
Non-Interest Income
Non-interest income increased $2.1
million, or 6.9 percent, to $32.3
million for the first quarter of 2018 from $30.2 million for the fourth quarter of 2017
mostly due to higher service charges on deposit accounts driven by
the acquisition of USAB on January 1,
2018. Other non-interest income included fee income related
to derivative interest rate swaps executed with commercial loan
customers totaling $3.3 million and
$2.6 million for first quarter of
2018 and fourth quarter of 2017, respectively.
Non-Interest Expense
Non-interest expense increased $37.4
million, or 27.5 percent, to $173.8
million for the first quarter of 2018 from the fourth
quarter of 2017 mainly due to increases of $28.7 million and $11.3
million in salary and employee benefits and professional and
legal fees, respectively. The increase in salary and employee
benefits was due, in part, to the additional staffing costs and
$9.6 million of change in control,
severance and retention expenses related to the USAB acquisition,
mostly normal increases in payroll and stock-based compensation
expense, and, to a lesser extent, expansion of our home mortgage
consultant team as compared to the fourth quarter.
Professional and legal fees included a $10.5
million charge related to an increase in our litigation
reserves during the first quarter of 2018. Total USAB merger
related expenses were $13.4 million
(including the $9.6 million of
aforementioned salary and employee benefit expenses) and
$1.4 million for the first quarter of
2018 and fourth quarter of 2017, respectively. Amortization
of tax credit investments decreased $15.0
million to $5.3 million for
the first quarter of 2018 as compared to fourth quarter of 2017
largely due to the timing of tax credits and a fourth quarter
impairment charge of $4.3 million
related to the Tax Act.
Income Tax Expense
Income tax expense totaled $13.2
million for the first quarter of 2018 as compared to
$35.0 million and $18.1 million for the fourth quarter of 2017 and
first quarter of 2017, respectively. Our effective tax rate
was 23.9 percent, 57.3 percent and 28.2 percent for the first
quarter of 2018, fourth quarter of 2017, and first quarter of 2017,
respectively. The higher income tax expense and effective tax
rate for the fourth quarter of 2017 reflect a $15.4 million charge resulting from the
re-measurement of Valley's
estimated net deferred tax assets as of December 31, 2017 under the provisions of the Tax
Act. For the remainder of 2018, we currently estimate that our
effective tax rate will range from 20 percent to 22 percent
primarily reflecting the impacts of the Tax Act, tax-exempt income,
tax-advantaged investments and general business credits.
Loans, Deposits and Other Borrowings
Loans. Loans increased
$4.2 billion to approximately
$22.6 billion at March 31, 2018
from December 31, 2017 largely due to $3.7 billion in acquired PCI loans from USAB on
January 1, 2018. The remaining
increase was mainly due to strong quarter over quarter organic
growth in total commercial real estate loans, commercial and
industrial loans and residential mortgage loans. During the
first quarter of 2018, Valley also
originated $228 million of
residential mortgage loans for sale rather than held for
investment. Residential mortgage loans held for sale totaled
$8.4 million and $15.1 million at March 31, 2018 and
December 31, 2017, respectively.
Total commercial and industrial loans increased $890.2 million from December 31, 2017 to
approximately $3.6 billion at
March 31, 2018 mostly due to $721.6
million in PCI loans acquired from USAB and strong organic
growth largely within the newly expanded Florida markets.
Commercial real estate loans (excluding construction loans)
increased $2.2 billion from
December 31, 2017 to $11.7
billion at March 31, 2018 mostly due to $2.0 billion in PCI loans acquired from USAB. The
non-PCI loans increased $242.9
million, or 11.3 percent on an annualized basis, due to
solid organic loan volumes in our primary markets, including
approximately $129 million of loans
from the new Florida markets.
Construction loans increased $521.4
million to $1.4 billion at
March 31, 2018 from December 31, 2017 largely due to
$384.5 million of PCI loans acquired
from USAB. The remaining net increase was mainly driven by organic
growth in the new Florida markets,
as well as advances on existing construction projects.
Total residential mortgage loans increased $462.5 million to approximately $3.3 billion at March 31, 2018 from
December 31, 2017 mostly due to $365.9
million in PCI loans acquired from USAB and new and
refinanced loan originations held for investment. Our growing team
of home mortgage consultants continued to produce strong
origination volumes during the first quarter. New and refinanced
residential mortgage loan originations totaled approximately
$372 million for the first quarter of
2018 as compared to $291 million and
$164 million for the fourth quarter
of 2017 and first quarter of 2017, respectively.
Home equity loans totaling $549.3
million at March 31, 2018 increased by $103.0 million as compared to December 31,
2017 due to $109.8 million of PCI
loans acquired from USAB. Exclusive of the acquired loans,
new home equity loan volumes and customer usage of existing home
equity lines of credit continues to be weak. We believe this
trend may continue in 2018 due to many factors, including the
recent Tax Act changes that limit the deductibility of mortgage
interest expense for homeowners.
Automobile loans increased by $13.8
million, or 4.6 percent on an annualized basis, to
$1.2 billion at March 31, 2018
as compared to December 31, 2017. However, the overall
new auto loan origination volumes decreased approximately 12.9
percent during the first quarter of 2018 as compared to the fourth
quarter of 2017 mainly due to the impact of inclement weather on
auto sales in the Northeast region. Our Florida dealership network contributed over
$35 million in auto loan
originations, representing approximately 24 percent of Valley's total new auto loan production during
the first quarter of 2018 and was relatively consistent with the
linked fourth quarter of 2017.
Other consumer loans increased $20.8
million to $748.8 million at
March 31, 2018 as compared to $728.1
million at December 31, 2017 partly due to $10.6 million of PCI loans acquired from USAB and
continued growth and customer usage of collateralized personal
lines of credit.
Deposits. Total deposits increased $3.8 billion to approximately $22.0 billion at March 31, 2018 from
December 31, 2017 largely due to $3.6
billion in deposits assumed in the USAB acquisition. The
remaining increase is largely due to the continued success of our
time deposit and other interest bearing deposit initiatives
commencing in 2017. Non-interest bearing deposits; savings, NOW,
money market deposits; and time deposits represented approximately
28 percent, 50 percent and 22 percent of total deposits as of
March 31, 2018, respectively.
Other Borrowings. Short-term borrowings increased
$869.8 million to approximately
$1.6 billion at March 31, 2018
as compared to December 31, 2017 largely due to $650.0 of borrowings assumed in the USAB
acquisition, consisting of FHLB borrowings and securities sold
under agreements to repurchase. The remaining increase was
mostly due to new FHLB advances used for normal loan funding
activity and liquidity purposes during the first quarter of
2018. Long-term borrowings increased $37.7
million to $2.4 billion at
March 31, 2018 as compared to December 31, 2017 mostly
due to subordinated notes assumed in the USAB acquisition.
Credit Quality
Non-Performing Assets. Our past due loans and
non-accrual loans discussed further below exclude PCI loans. Under
U.S. GAAP, the PCI loans (acquired at a discount that is due, in
part, to credit quality) are accounted for on a pool basis and are
not subject to delinquency classification in the same manner as
loans originated by Valley. Our
PCI loan portfolio totaled $4.9
billion, or 21.8 percent, of our total loan portfolio at
March 31, 2018 and included all of the loans acquired from
USAB on January 1, 2018.
Total non-performing assets (NPAs), consisting of non-accrual
loans, other real estate owned (OREO) and other repossessed assets
increased $17.5 million to
$75.0 million at March 31, 2018
as compared to December 31, 2017 mainly due to increases in
non-accrual loans and OREO during the first quarter of 2018.
OREO totaled $13.8 million at
March 31, 2018 and included
$4.1 million of acquired OREO from
USAB.
Total accruing past due loans (i.e., loans past due 30 days or
more and still accruing interest) decreased $47.3 million to $33.2
million, or 0.15 percent of total loans, at March 31,
2018 as compared to $80.5 million, or
0.44 percent of total loans, at December 31, 2017. The lower
level of accruing past due loans was primarily caused by decreases
of $27.6 million and $21.0 million in the loans 30 to 59 days past due
and 60 to 89 days past due loan categories at March 31, 2018,
respectively, as compared to December 31, 2017. These
decreases were largely caused by the renewal of matured performing
loans and the improved performance of several loan relationships
previously reported within the commercial real estate and
construction loan delinquency categories at December 31,
2017.
During the first quarter of 2018, we continued to closely
monitor our NYC and Chicago taxi medallion loans within the
commercial and industrial loan portfolio. While the vast
majority of the taxi medallion loans are currently performing,
negative trends in the market valuations of the underlying taxi
medallion collateral could impact the future performance and
internal classification of this portfolio. At March 31, 2018,
the NYC and Chicago taxi medallion loans totaling
$126.8 million and $9.3 million, respectively, were largely
classified as substandard and special mention loans. The
criticized loan classifications are primarily due to the elevated
general risk associated with the current medallion market. At
March 31, 2018, the medallion portfolio included impaired
loans totaling $65.0 million with
related reserves of $19.9 million
within the allowance for loan losses as compared to impaired loans
totaling $63.9 million with related
reserves of $9.1 million at
December 31, 2017. At March 31, 2018, the impaired
medallion loans largely consisted of performing troubled debt
restructured (TDR) loans classified as substandard loans, as well
as $13.9 million of non-accrual taxi
cab medallion loans classified as doubtful loans.
Valley's historical taxi
medallion lending criteria had been conservative in regards to
capping the loan amounts in relation to market valuations, as well
as obtaining personal guarantees and other collateral in certain
instances. However, the severe decline in the market valuation of
taxi medallions has adversely affected the estimated fair valuation
of these loans and, as a result, increased the level of our
allowance for loan losses at March 31,
2018 (see further discussion below). Potential further
declines in the market valuation of taxi medallions could also
negatively impact the future performance of this portfolio.
Allowance for Credit Losses. The following table
summarizes the allocation of the allowance for credit losses to
specific loan categories and the allocation as a percentage of each
loan category (including PCI loans) at March 31, 2018,
December 31, 2017, and March 31, 2017:
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
|
|
|
Allocation
|
|
|
|
Allocation
|
|
|
|
Allocation
|
|
|
|
|
as a %
of
|
|
|
|
as a %
of
|
|
|
|
as a %
of
|
|
|
Allowance
|
|
Loan
|
|
Allowance
|
|
Loan
|
|
Allowance
|
|
Loan
|
|
Allocation
|
|
Category
|
|
Allocation
|
|
Category
|
|
Allocation
|
|
Category
|
|
($ in
thousands)
|
Loan
Category:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial loans*
|
$
|
70,388
|
|
|
1.94
|
%
|
|
$
|
60,828
|
|
|
2.22
|
%
|
|
$
|
53,541
|
|
|
2.03
|
%
|
Commercial real
estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real
estate
|
36,109
|
|
|
0.31
|
%
|
|
36,293
|
|
|
0.38
|
%
|
|
38,146
|
|
|
0.42
|
%
|
|
Construction
|
20,570
|
|
|
1.50
|
%
|
|
18,661
|
|
|
2.19
|
%
|
|
18,156
|
|
|
2.17
|
%
|
Total commercial real
estate loans
|
56,679
|
|
|
0.43
|
%
|
|
54,954
|
|
|
0.53
|
%
|
|
56,302
|
|
|
0.57
|
%
|
Residential mortgage
loans
|
4,100
|
|
|
0.12
|
%
|
|
3,605
|
|
|
0.13
|
%
|
|
3,592
|
|
|
0.13
|
%
|
Consumer
loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity
|
547
|
|
|
0.10
|
%
|
|
579
|
|
|
0.13
|
%
|
|
433
|
|
|
0.09
|
%
|
|
Auto and other
consumer
|
4,990
|
|
|
0.25
|
%
|
|
4,486
|
|
|
0.23
|
%
|
|
3,828
|
|
|
0.22
|
%
|
Total consumer
loans
|
5,537
|
|
|
0.22
|
%
|
|
5,065
|
|
|
0.21
|
%
|
|
4,261
|
|
|
0.19
|
%
|
Total allowance for
credit losses
|
$
|
136,704
|
|
|
0.61
|
%
|
|
$
|
124,452
|
|
|
0.68
|
%
|
|
$
|
117,696
|
|
|
0.67
|
%
|
Allowance for credit
losses as a %
|
|
|
|
|
|
|
|
|
|
|
|
of non-PCI
loans
|
|
|
0.78
|
%
|
|
|
|
0.73
|
%
|
|
|
|
0.75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes the
reserve for unfunded letters of credit.
|
|
|
|
|
|
|
|
|
|
|
Our loan portfolio, totaling $22.6 billion at March 31, 2018, had net
recoveries of loan charge-offs totaling $1.3
million and $772 thousand for
the first quarter of 2018 and the fourth quarter of 2017,
respectively, as compared to net loan charge-offs of $1.4 million for the first quarter of 2017. The
net loan recoveries during the first quarter of 2018 was mainly due
to one commercial and industrial loan charge-off recovery totaling
$1.6 million and the continued low
level of loan charge-offs. During the first quarter of 2018,
we recorded a $10.9 million provision
for credit losses as compared to $2.2
million and $2.5 million for
the fourth quarter of 2017 and the first quarter of 2017,
respectively. The quarter over quarter increase in the provision
was mainly due to higher specific reserves allocated to impaired
taxi medallion loans at March 31,
2018, as well as non-PCI loan growth during the first
quarter of 2018.
The allowance for credit losses, comprised of our
allowance for loan losses and reserve for unfunded letters of
credit, as a percentage of total loans was 0.61 percent, 0.68
percent and 0.67 percent at March 31, 2018, December 31,
2017 and March 31, 2017, respectively. At March 31,
2018, our allowance allocations for losses as a percentage of total
loans decreased across most loan categories as compared to
December 31, 2017 mainly due to higher loan balances resulting
from the USAB acquisition on January 1,
2018 and the prolonged low level of net loan charge-offs in
the portfolio.
Our allowance for credit losses as a percentage
of total non-PCI loans (excluding PCI loans with carrying values
totaling approximately $4.9 billion)
was 0.78 percent, 0.73 percent and 0.75 percent March 31,
2018, December 31, 2017 and March 31, 2017,
respectively. PCI loans are accounted for on a pool basis and
initially recorded net of fair valuation discounts related to
credit which may be used to absorb future losses on such loans
before any allowance for loan losses is recognized subsequent to
acquisition. Due to the adequacy of such discounts, there
were no allowance reserves related to PCI loans at March 31,
2018, December 31, 2017 and March 31, 2017.
Capital Adequacy
Valley's regulatory capital
ratios continue to reflect its strong capital position.
Valley's total risk-based capital,
Tier 1 capital, Tier 1 leverage capital, and common equity Tier 1
capital ratios were 11.94 percent, 9.78 percent, 7.75 percent and
8.82 percent, respectively, at March 31, 2018.
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 2018 earnings. Those wishing to
participate in the call may dial toll-free (800) 230-1085.
Investor presentation materials will be made available prior to the
conference call at www.valleynationalbank.com.
About Valley
Valley National Bancorp is a regional bank holding company
headquartered in Wayne, New Jersey
with $29.5 billion in assets,
reflecting the recent acquisition of USAB. Its principal
subsidiary, Valley National Bank, currently operates over 230
branch locations in northern and central New Jersey, the New
York City boroughs of Manhattan, Brooklyn, Queens and Long
Island, Florida and
Alabama. Valley National Bank is
one of the largest commercial banks headquartered in New Jersey and is committed to providing the
most convenient service, the latest in product innovations and an
experienced and knowledgeable staff with a high priority on
friendly customer service. For more information about Valley
National Bank and its products and services, please visit
www.valleynationalbank.com or call our Customer Service Center at
800-522-4100.
Forward Looking Statements
The foregoing contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are not historical facts and include
expressions about management's confidence and strategies and
management's expectations about new and existing programs and
products, acquisitions, relationships, opportunities, taxation,
technology, market conditions and economic expectations. 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:
- weakness or a decline 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;
- the risk that the businesses of Valley and USAB may not be combined
successfully, or such combination may take longer or be more
difficult, time-consuming or costly to accomplish than
expected;
- the diversion of management's time on issues relating to merger
integration; the inability to realize expected cost savings and
synergies from the merger of USAB with Valley in the amounts or in the timeframe
anticipated;
- the inability to retain USAB's customers and employees;
- less than expected cost reductions and revenue enhancement from
Valley's cost reduction plans
including its earnings enhancement program called "LIFT";
- higher or lower than expected income tax expense or tax rates,
including increases or decreases resulting from the impact of the
Tax Act and other changes in tax laws, regulations and case
law;
- damage verdicts or settlements or restrictions related to
existing or potential litigations arising from claims of breach of
fiduciary responsibility, negligence, fraud, contractual claims,
environmental laws, patent or trade mark infringement, employment
related claims, and other matters;
- the loss of or decrease in lower-cost funding sources within
our deposit base may adversely impact our net interest income and
net income;
- cyber attacks, computer viruses or other malware that may
breach the security of our websites or other systems to obtain
unauthorized access to confidential information, destroy data,
disable or degrade service, or sabotage our systems;
- results of examinations by the OCC, the FRB, the CFPB and other
regulatory authorities, including the possibility that any such
regulatory authority may, among other things, require us to
increase our allowance for credit losses, write-down assets,
require us to reimburse customers, change the way we do business,
or limit or eliminate certain other banking activities;
- changes in accounting policies or accounting standards,
including the new authoritative accounting guidance (known as the
current expected credit loss (CECL) model) which may increase the
required level of our allowance for credit losses after adoption on
January 1, 2020;
- our inability or determination not to pay dividends at current
levels, or at all, because of inadequate future earnings,
regulatory restrictions or limitations, changes in our capital
requirements or a decision to increase capital by retaining more
earnings;
- higher than expected loan losses within one or more segments of
our loan portfolio;
- unanticipated loan delinquencies, loss of collateral, decreased
service revenues, and other potential negative effects on our
business caused by severe weather 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, 2017.
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
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
($ in thousands,
except for share data)
|
2018
|
|
2017
|
|
2017
|
FINANCIAL
DATA:
|
|
|
|
|
|
Net interest
income
|
$
|
207,598
|
|
|
$
|
169,414
|
|
|
$
|
161,868
|
|
Net interest income -
FTE (1)
|
209,120
|
|
|
171,394
|
|
|
164,041
|
|
Non-interest
income
|
32,251
|
|
|
30,159
|
|
|
25,720
|
|
Non-interest
expense
|
173,752
|
|
|
136,317
|
|
|
120,952
|
|
Income tax
expense
|
13,184
|
|
|
34,958
|
|
|
18,071
|
|
Net income
|
41,965
|
|
|
26,098
|
|
|
46,095
|
|
Dividends on
preferred stock
|
3,172
|
|
|
3,172
|
|
|
1,797
|
|
Net income available
to common shareholders
|
$
|
38,793
|
|
|
$
|
22,926
|
|
|
$
|
44,298
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
Basic
|
330,727,416
|
|
|
264,332,895
|
|
|
263,797,024
|
|
Diluted
|
332,465,527
|
|
|
265,288,067
|
|
|
264,546,266
|
|
Per common share
data:
|
|
|
|
|
|
Basic
earnings
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.17
|
|
Diluted
earnings
|
0.12
|
|
|
0.09
|
|
|
0.17
|
|
Cash dividends
declared
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
Closing stock price -
high
|
13.38
|
|
|
12.17
|
|
|
12.76
|
|
Closing stock price -
low
|
11.19
|
|
|
11.00
|
|
|
11.28
|
|
CORE ADJUSTED
FINANCIAL DATA: (2)
|
|
|
|
|
|
Net income available
to common shareholders, as adjusted
|
$
|
58,334
|
|
|
$
|
42,591
|
|
|
$
|
44,311
|
|
Basic earnings per
share, as adjusted
|
|
0.18
|
|
|
|
0.16
|
|
|
|
0.17
|
|
Diluted earnings per
share, as adjusted
|
0.18
|
|
|
0.16
|
|
|
0.17
|
|
FINANCIAL
RATIOS:
|
|
|
|
|
|
Net interest
margin
|
3.10
|
%
|
|
3.09
|
%
|
|
3.09
|
%
|
Net interest margin -
FTE (1)
|
3.13
|
|
|
3.13
|
|
|
3.13
|
|
Annualized return on
average assets
|
0.57
|
|
|
0.44
|
|
|
0.80
|
|
Annualized return on
avg. shareholders' equity
|
5.10
|
|
|
4.07
|
|
|
7.69
|
|
Annualized return on
avg. tangible shareholders' equity (2)
|
7.90
|
|
|
5.71
|
|
|
11.09
|
|
Efficiency ratio
(3)
|
72.44
|
|
|
68.30
|
|
|
64.48
|
|
CORE ADJUSTED
FINANCIAL RATIOS: (2)
|
|
|
|
|
|
Annualized return on
average assets, as adjusted
|
0.84
|
%
|
|
0.77
|
%
|
|
0.80
|
%
|
Annualized return on
average shareholders' equity, as adjusted
|
7.48
|
|
|
7.14
|
|
|
7.69
|
|
Annualized return on
average tangible shareholders' equity, as adjusted
|
11.57
|
|
|
10.00
|
|
|
11.09
|
|
Efficiency ratio, as
adjusted
|
60.29
|
|
|
57.44
|
|
|
61.64
|
|
AVERAGE BALANCE
SHEET ITEMS:
|
|
|
|
|
Assets
|
$
|
29,291,703
|
|
|
$
|
23,907,011
|
|
|
$
|
22,996,286
|
|
Interest earning
assets
|
26,750,806
|
|
|
21,932,517
|
|
|
20,949,464
|
|
Loans
|
22,302,991
|
|
|
18,242,690
|
|
|
17,313,100
|
|
Interest bearing
liabilities
|
19,690,165
|
|
|
15,919,382
|
|
|
15,285,171
|
|
Deposits
|
21,882,034
|
|
|
17,812,343
|
|
|
17,366,768
|
|
Shareholders'
equity
|
3,289,815
|
|
|
2,562,326
|
|
|
2,399,159
|
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
|
|
As
Of
|
BALANCE SHEET
ITEMS:
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
(In
thousands)
|
2018
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
Assets
|
$
|
29,464,357
|
|
|
$
|
24,002,306
|
|
|
$
|
23,780,661
|
|
|
$
|
23,449,350
|
|
|
$
|
23,220,456
|
|
Total
loans
|
22,552,767
|
|
|
18,331,580
|
|
|
18,201,462
|
|
|
17,710,760
|
|
|
17,449,498
|
|
Non-PCI
loans
|
17,636,934
|
|
|
16,944,365
|
|
|
16,729,607
|
|
|
16,169,291
|
|
|
15,794,797
|
|
Deposits
|
21,959,846
|
|
|
18,153,462
|
|
|
17,312,766
|
|
|
17,250,018
|
|
|
17,331,141
|
|
Shareholders'
equity
|
3,245,003
|
|
|
2,533,165
|
|
|
2,537,984
|
|
|
2,423,901
|
|
|
2,398,541
|
|
|
|
|
|
|
|
|
|
|
|
LOANS:
|
|
|
|
|
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
3,631,597
|
|
|
$
|
2,741,425
|
|
|
$
|
2,706,912
|
|
|
$
|
2,631,312
|
|
|
$
|
2,642,319
|
|
Commercial real
estate:
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
11,706,228
|
|
|
9,496,777
|
|
|
9,351,068
|
|
|
9,230,514
|
|
|
9,016,418
|
|
Construction
|
1,372,508
|
|
|
851,105
|
|
|
903,640
|
|
|
881,073
|
|
|
835,854
|
|
Total
commercial real estate
|
13,078,736
|
|
|
10,347,882
|
|
|
10,254,708
|
|
|
10,111,587
|
|
|
9,852,272
|
|
Residential
mortgage
|
3,321,560
|
|
|
2,859,035
|
|
|
2,941,435
|
|
|
2,724,777
|
|
|
2,745,447
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
Home
equity
|
549,329
|
|
|
446,280
|
|
|
448,842
|
|
|
450,510
|
|
|
458,891
|
|
Automobile
|
1,222,721
|
|
|
1,208,902
|
|
|
1,171,685
|
|
|
1,150,343
|
|
|
1,150,053
|
|
Other
consumer
|
748,824
|
|
|
728,056
|
|
|
677,880
|
|
|
642,231
|
|
|
600,516
|
|
Total consumer
loans
|
2,520,874
|
|
|
2,383,238
|
|
|
2,298,407
|
|
|
2,243,084
|
|
|
2,209,460
|
|
Total
loans
|
$
|
22,552,767
|
|
|
$
|
18,331,580
|
|
|
$
|
18,201,462
|
|
|
$
|
17,710,760
|
|
|
$
|
17,449,498
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
RATIOS:
|
|
|
|
|
|
|
|
|
|
Book value per common
share
|
$
|
9.16
|
|
|
$
|
8.79
|
|
|
$
|
8.81
|
|
|
$
|
8.76
|
|
|
$
|
8.67
|
|
Tangible book value
per common share (2)
|
5.65
|
|
|
6.01
|
|
|
6.04
|
|
|
5.98
|
|
|
5.88
|
|
Tangible common
equity to tangible assets (2)
|
6.61
|
%
|
|
6.83
|
%
|
|
6.92
|
%
|
|
6.95
|
%
|
|
6.90
|
%
|
Tier 1 leverage
capital
|
7.75
|
|
|
8.03
|
|
|
8.13
|
|
|
7.69
|
|
|
7.70
|
|
Common equity tier 1
capital
|
8.82
|
|
|
9.22
|
|
|
9.22
|
|
|
9.18
|
|
|
9.12
|
|
Tier 1 risk-based
capital
|
9.78
|
|
|
10.41
|
|
|
10.42
|
|
|
9.81
|
|
|
9.76
|
|
Total risk-based
capital
|
11.94
|
|
|
12.61
|
|
|
12.61
|
|
|
11.99
|
|
|
11.96
|
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
|
|
Three Months
Ended
|
ALLOWANCE FOR
CREDIT LOSSES:
|
March
31,
|
|
December
31,
|
|
March
31,
|
($ in
thousands)
|
2018
|
|
2017
|
|
2017
|
Beginning balance -
Allowance for credit losses
|
$
|
124,452
|
|
|
$
|
121,480
|
|
|
$
|
116,604
|
|
Loans
charged-off:
|
|
|
|
|
|
Commercial and
industrial
|
(131)
|
|
|
(532)
|
|
|
(1,714)
|
|
Commercial real
estate
|
(310)
|
|
|
(6)
|
|
|
(414)
|
|
Construction
|
—
|
|
|
—
|
|
|
—
|
|
Residential
mortgage
|
(68)
|
|
|
(42)
|
|
|
(130)
|
|
Total
Consumer
|
(1,211)
|
|
|
(1,097)
|
|
|
(1,121)
|
|
Total loans
charged-off
|
(1,720)
|
|
|
(1,677)
|
|
|
(3,379)
|
|
Charged-off loans
recovered:
|
|
|
|
|
|
Commercial and
industrial
|
2,107
|
|
|
1,256
|
|
|
848
|
|
Commercial real
estate
|
369
|
|
|
22
|
|
|
142
|
|
Construction
|
—
|
|
|
579
|
|
|
—
|
|
Residential
mortgage
|
80
|
|
|
113
|
|
|
448
|
|
Total
Consumer
|
468
|
|
|
479
|
|
|
563
|
|
Total loans
recovered
|
3,024
|
|
|
2,449
|
|
|
2,001
|
|
Net recoveries
(charge-offs)
|
1,304
|
|
|
772
|
|
|
(1,378)
|
|
Provision for credit
losses
|
10,948
|
|
|
2,200
|
|
|
2,470
|
|
Ending balance -
Allowance for credit losses
|
$
|
136,704
|
|
|
$
|
124,452
|
|
|
$
|
117,696
|
|
Components of
allowance for credit losses:
|
|
|
|
|
|
Allowance for loan
losses
|
$
|
132,862
|
|
|
$
|
120,856
|
|
|
$
|
115,443
|
|
Allowance for
unfunded letters of credit
|
3,842
|
|
|
3,596
|
|
|
2,253
|
|
Allowance for credit
losses
|
$
|
136,704
|
|
|
$
|
124,452
|
|
|
$
|
117,696
|
|
Components of
provision for credit losses:
|
|
|
|
|
|
Provision for loan
losses
|
$
|
10,702
|
|
|
$
|
1,118
|
|
|
$
|
2,402
|
|
Provision for
unfunded letters of credit
|
246
|
|
|
1,082
|
|
|
68
|
|
Provision for credit
losses
|
$
|
10,948
|
|
|
$
|
2,200
|
|
|
$
|
2,470
|
|
Annualized ratio of
total net (recoveries) charge-offs to average loans
|
(0.02)
|
%
|
|
(0.02)
|
%
|
|
0.03
|
%
|
Allowance for credit
losses as a % of non-PCI loans
|
0.78
|
%
|
|
0.73
|
%
|
|
0.75
|
%
|
Allowance for credit
losses as a % of total loans
|
0.61
|
%
|
|
0.68
|
%
|
|
0.67
|
%
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
|
|
As
of
|
ASSET
QUALITY: (4)
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
($ in
thousands)
|
2018
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
Accruing past due
loans:
|
|
|
|
|
|
|
|
|
|
30 to 59 days past
due:
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
5,405
|
|
|
$
|
3,650
|
|
|
$
|
1,186
|
|
|
$
|
2,391
|
|
|
$
|
29,734
|
|
Commercial real
estate
|
3,699
|
|
|
11,223
|
|
|
4,755
|
|
|
6,983
|
|
|
11,637
|
|
Construction
|
532
|
|
|
12,949
|
|
|
—
|
|
|
—
|
|
|
7,760
|
|
Residential
mortgage
|
6,460
|
|
|
12,669
|
|
|
7,942
|
|
|
4,677
|
|
|
7,533
|
|
Total
Consumer
|
5,244
|
|
|
8,409
|
|
|
5,205
|
|
|
4,393
|
|
|
3,740
|
|
Total 30 to 59 days
past due
|
21,340
|
|
|
48,900
|
|
|
19,088
|
|
|
18,444
|
|
|
60,404
|
|
60 to 89 days past
due:
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
804
|
|
|
544
|
|
|
3,043
|
|
|
2,686
|
|
|
341
|
|
Commercial real
estate
|
—
|
|
|
—
|
|
|
626
|
|
|
8,233
|
|
|
359
|
|
Construction
|
1,099
|
|
|
18,845
|
|
|
2,518
|
|
|
854
|
|
|
—
|
|
Residential
mortgage
|
4,081
|
|
|
7,903
|
|
|
1,604
|
|
|
1,721
|
|
|
4,177
|
|
Total
Consumer
|
1,489
|
|
|
1,199
|
|
|
1,019
|
|
|
1,007
|
|
|
787
|
|
Total 60 to 89 days
past due
|
7,473
|
|
|
28,491
|
|
|
8,810
|
|
|
14,501
|
|
|
5,664
|
|
90 or more days past
due:
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
653
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
405
|
|
Commercial real
estate
|
27
|
|
|
27
|
|
|
389
|
|
|
2,315
|
|
|
—
|
|
Construction
|
—
|
|
|
—
|
|
|
—
|
|
|
2,879
|
|
|
—
|
|
Residential
mortgage
|
3,361
|
|
|
2,779
|
|
|
1,433
|
|
|
3,353
|
|
|
1,355
|
|
Total
Consumer
|
372
|
|
|
284
|
|
|
301
|
|
|
275
|
|
|
314
|
|
Total 90 or more days
past due
|
4,413
|
|
|
3,090
|
|
|
2,248
|
|
|
8,822
|
|
|
2,074
|
|
Total accruing past
due loans
|
$
|
33,226
|
|
|
$
|
80,481
|
|
|
$
|
30,146
|
|
|
$
|
41,767
|
|
|
$
|
68,142
|
|
Non-accrual
loans:
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
25,112
|
|
|
$
|
20,890
|
|
|
$
|
11,983
|
|
|
$
|
11,072
|
|
|
$
|
8,676
|
|
Commercial real
estate
|
8,679
|
|
|
11,328
|
|
|
13,870
|
|
|
15,514
|
|
|
15,106
|
|
Construction
|
732
|
|
|
732
|
|
|
1,116
|
|
|
1,334
|
|
|
1,461
|
|
Residential
mortgage
|
22,694
|
|
|
12,405
|
|
|
12,974
|
|
|
12,825
|
|
|
11,650
|
|
Total
Consumer
|
3,104
|
|
|
1,870
|
|
|
1,844
|
|
|
1,409
|
|
|
1,395
|
|
Total non-accrual
loans
|
60,321
|
|
|
47,225
|
|
|
41,787
|
|
|
42,154
|
|
|
38,288
|
|
Other real estate
owned (OREO)
|
13,773
|
|
|
9,795
|
|
|
10,770
|
|
|
10,182
|
|
|
10,737
|
|
Other repossessed
assets
|
858
|
|
|
441
|
|
|
480
|
|
|
342
|
|
|
475
|
|
Non-accrual debt
securities (5)
|
—
|
|
|
—
|
|
|
2,115
|
|
|
1,878
|
|
|
2,007
|
|
Total non-performing
assets
|
$
|
74,952
|
|
|
$
|
57,461
|
|
|
$
|
55,152
|
|
|
$
|
54,556
|
|
|
$
|
51,507
|
|
Performing troubled
debt restructured loans
|
$
|
116,414
|
|
|
$
|
117,176
|
|
|
$
|
113,677
|
|
|
$
|
109,802
|
|
|
$
|
80,360
|
|
Total non-accrual
loans as a % of loans
|
0.27
|
%
|
|
0.26
|
%
|
|
0.23
|
%
|
|
0.24
|
%
|
|
0.22
|
%
|
Total accruing past
due and non-accrual loans as a
% of loans
|
0.41
|
%
|
|
0.70
|
%
|
|
0.40
|
%
|
|
0.47
|
%
|
|
0.61
|
%
|
Allowance for losses
on loans as a % of non-
accrual loans
|
220.26
|
%
|
|
255.92
|
%
|
|
284.70
|
%
|
|
276.24
|
%
|
|
301.51
|
%
|
Non-performing
purchased credit-impaired loans (6)
|
$
|
62,857
|
|
|
$
|
38,088
|
|
|
$
|
25,413
|
|
|
$
|
33,715
|
|
|
$
|
25,857
|
|
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 and 35 percent federal tax rate for periods ending in
2018 and 2017, respectively. 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
|
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
($ in thousands,
except for share data)
|
2018
|
|
2017
|
|
2017
|
|
Adjusted net
income available to common shareholders:
|
|
|
|
|
|
|
Net income, as
reported
|
$
|
41,965
|
|
|
$
|
26,098
|
|
|
$
|
46,095
|
|
|
Add: Losses on
securities transactions (net of tax)
|
446
|
|
|
15
|
|
|
13
|
|
|
Add: Legal
expenses (litigation reserve impact only, net of tax)
|
7,520
|
|
|
—
|
|
|
—
|
|
|
Add: Merger
related expenses (net of tax)*
|
9,575
|
|
|
1,073
|
|
|
—
|
|
|
Add: Amortization of
tax credit investments (Tax Act impact only, net of
tax)
|
—
|
|
|
3,136
|
|
|
|
—
|
|
|
Add: Income Tax
Expense (USAB charge and Tax Act impacts only)
|
2,000
|
|
|
15,441
|
|
|
|
—
|
|
|
Net income, as
adjusted
|
$
|
61,506
|
|
|
$
|
45,763
|
|
|
$
|
46,108
|
|
|
Dividends on
preferred stock
|
3,172
|
|
|
3,172
|
|
|
1,797
|
|
|
Net income available
to common shareholders, as adjusted
|
$
|
58,334
|
|
|
$
|
42,591
|
|
|
$
|
44,311
|
|
|
|
|
|
|
|
|
|
* Merger
related expenses are primarily within salary and employee benefits
and professional and legal fees.
|
|
Adjusted per
common share data:
|
|
|
|
|
|
|
Net income available
to common shareholders, as adjusted
|
$
|
58,334
|
|
|
$
|
42,591
|
|
|
$
|
44,311
|
|
|
Average number of
shares outstanding
|
330,727,416
|
|
|
264,332,895
|
|
|
263,797,024
|
|
|
Basic earnings, as
adjusted
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.17
|
|
|
Average number of
diluted shares outstanding
|
332,465,527
|
|
|
265,288,067
|
|
|
264,546,266
|
|
|
Diluted earnings, as
adjusted
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.17
|
|
|
Adjusted
annualized return on average tangible shareholders'
equity:
|
|
|
|
|
|
|
Net income, as
adjusted
|
$
|
61,506
|
|
|
$
|
45,763
|
|
|
$
|
46,108
|
|
|
Average shareholders'
equity
|
3,289,815
|
|
|
2,562,326
|
|
|
2,399,159
|
|
|
Less: Average
goodwill and other intangible assets
|
(1,164,230)
|
|
|
(732,604)
|
|
|
(736,178)
|
|
|
Average tangible
shareholders' equity
|
$
|
2,125,585
|
|
|
$
|
1,829,722
|
|
|
$
|
1,662,981
|
|
|
Annualized return on
average tangible shareholders' equity
|
11.57
|
%
|
|
10.00
|
%
|
|
11.09
|
%
|
|
Adjusted
annualized return on average assets:
|
|
|
|
|
|
|
Net income, as
adjusted
|
$
|
61,506
|
|
|
$
|
45,763
|
|
|
$
|
46,108
|
|
|
Average
assets
|
$
|
29,291,703
|
|
|
$
|
23,907,011
|
|
|
$
|
22,996,286
|
|
|
Annualized return on
average assets, as adjusted
|
0.84
|
%
|
|
0.77
|
%
|
|
0.80
|
%
|
|
Adjusted
annualized return on average shareholders' equity:
|
|
|
|
|
|
|
Net income, as
adjusted
|
$
|
61,506
|
|
|
$
|
45,763
|
|
|
$
|
46,108
|
|
|
Average shareholders'
equity
|
$
|
3,289,815
|
|
|
$
|
2,562,326
|
|
|
$
|
2,399,159
|
|
|
Annualized return on
average shareholders' equity, as adjusted
|
7.48
|
%
|
|
7.14
|
%
|
|
7.69
|
%
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
($ in
thousands)
|
2018
|
|
2017
|
|
2017
|
Annualized return
on average tangible shareholders' equity:
|
|
|
|
|
|
Net income, as
reported
|
$
|
41,965
|
|
|
$
|
26,098
|
|
|
$
|
46,095
|
|
Average shareholders'
equity
|
3,289,815
|
|
|
2,562,326
|
|
|
2,399,159
|
|
Less:
Average goodwill and other intangible assets
|
(1,164,230)
|
|
|
(732,604)
|
|
|
(736,178)
|
|
Average tangible
shareholders' equity
|
$
|
2,125,585
|
|
|
$
|
1,829,722
|
|
|
$
|
1,662,981
|
|
Annualized return on
average tangible shareholders' equity, as adjusted
|
7.90
|
%
|
|
5.71
|
%
|
|
11.09
|
%
|
Adjusted
efficiency ratio:
|
|
|
|
|
|
Non-interest
expense
|
$
|
173,752
|
|
|
$
|
136,317
|
|
|
$
|
120,952
|
|
Less: Legal expenses (litigation reserve impact only,
pre-tax)
|
10,500
|
|
|
—
|
|
|
—
|
|
Less: Merger-related expenses (pre-tax)
|
13,369
|
|
|
1,378
|
|
|
—
|
|
Less: Amortization of tax credit investments
(pre-tax)
|
5,274
|
|
|
20,302
|
|
|
5,324
|
|
Non-interest expense,
as adjusted
|
$
|
144,609
|
|
|
$
|
114,637
|
|
|
$
|
115,628
|
|
Net interest
income
|
207,598
|
|
|
169,414
|
|
|
161,868
|
|
Non-interest
income
|
32,251
|
|
|
30,159
|
|
|
25,720
|
|
Gross operating
income
|
$
|
239,849
|
|
|
$
|
199,573
|
|
|
$
|
187,588
|
|
Efficiency ratio, as
adjusted
|
60.29
|
%
|
|
57.44
|
%
|
|
61.64
|
%
|
|
As
of
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
($ in thousands,
except for share data)
|
2018
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
Tangible book
value per common share:
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding
|
331,189,859
|
|
|
264,468,851
|
|
|
264,197,172
|
|
|
263,971,766
|
|
|
263,842,268
|
|
Shareholders'
equity
|
$
|
3,245,003
|
|
|
$
|
2,533,165
|
|
|
$
|
2,537,984
|
|
|
$
|
2,423,901
|
|
|
$
|
2,398,541
|
|
Less:
Preferred stock
|
(209,691)
|
|
|
(209,691)
|
|
|
(209,691)
|
|
|
(111,590)
|
|
|
(111,590)
|
|
Less:
Goodwill and other intangible assets
|
(1,165,379)
|
|
|
(733,144)
|
|
|
(733,498)
|
|
|
(734,337)
|
|
|
(735,595)
|
|
Tangible common
shareholders' equity
|
$
|
1,869,933
|
|
|
$
|
1,590,330
|
|
|
$
|
1,594,795
|
|
|
$
|
1,577,974
|
|
|
$
|
1,551,356
|
|
Tangible book value
per common share
|
$
|
5.65
|
|
|
$
|
6.01
|
|
|
$
|
6.04
|
|
|
$
|
5.98
|
|
|
$
|
5.88
|
|
Tangible common
equity to tangible assets:
|
|
|
|
|
|
|
|
|
Tangible common
shareholders' equity
|
$
|
1,869,933
|
|
|
$
|
1,590,330
|
|
|
$
|
1,594,795
|
|
|
$
|
1,577,974
|
|
|
$
|
1,551,356
|
|
Total
assets
|
29,464,357
|
|
|
24,002,306
|
|
|
23,780,661
|
|
|
23,449,350
|
|
|
23,220,456
|
|
Less:
Goodwill and other intangible assets
|
(1,165,379)
|
|
|
(733,144)
|
|
|
(733,498)
|
|
|
(734,337)
|
|
|
(735,595)
|
|
Tangible
assets
|
$
|
28,298,978
|
|
|
$
|
23,269,162
|
|
|
$
|
23,047,163
|
|
|
$
|
22,715,013
|
|
|
$
|
22,484,861
|
|
Tangible common
equity to tangible assets
|
6.61
|
%
|
|
6.83
|
%
|
|
6.92
|
%
|
|
6.95
|
%
|
|
6.90
|
%
|
|
|
(3)
The efficiency ratio measures Valley's
total non-interest expense as a percentage of net interest income
plus total non-interest income.
|
(4)
Past due loans and non-accrual loans
exclude purchased credit-impaired (PCI) loans. PCI loans are
accounted for on a pool basis under U.S. GAAP and are not subject
to
delinquency classification in the
same manner as loans originated by Valley.
|
(5)
Includes other-than-temporarily impaired
trust preferred securities classified as available for sale, which
are presented at carrying value (net of unrealized losses totaling
$637
thousand, $875 thousand and $745
thousand at September 30, 2017, June 30, 2017 and March 31, 2017,
respectively) after recognition of all credit impairments.
There were
no non-accrual debt securities at
March 31, 2018 and December 31, 2017.
|
(6)
Represent PCI loans meeting Valley's
definition of non-performing loan (i.e., non-accrual loans), but
are not subject to such classification under U.S. GAAP because the
loans are
accounted for on a pooled basis and
are excluded from the non-accrual loans in the table
above.
|
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@valleynationalbank.com.
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
(in thousands,
except for share data)
|
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash and due from
banks
|
$
|
222,311
|
|
|
$
|
243,310
|
|
Interest bearing
deposits with banks
|
274,349
|
|
|
172,800
|
|
Investment
securities:
|
|
|
|
Held to maturity
(fair value of $2,014,954 at March 31, 2018 and $1,837,620 at
December 31,
2017)
|
2,048,583
|
|
|
1,842,691
|
|
Available for
sale
|
1,843,514
|
|
|
1,493,905
|
|
Total investment
securities
|
3,892,097
|
|
|
3,336,596
|
|
Loans held for sale,
at fair value
|
8,449
|
|
|
15,119
|
|
Loans
|
22,552,767
|
|
|
18,331,580
|
|
Less: Allowance for
loan losses
|
(132,862)
|
|
|
(120,856)
|
|
Net loans
|
22,419,905
|
|
|
18,210,724
|
|
Premises and
equipment, net
|
346,700
|
|
|
287,705
|
|
Bank owned life
insurance
|
436,334
|
|
|
386,079
|
|
Accrued interest
receivable
|
86,804
|
|
|
73,990
|
|
Goodwill
|
1,078,892
|
|
|
690,637
|
|
Other intangible
assets, net
|
86,487
|
|
|
42,507
|
|
Other
assets
|
612,029
|
|
|
542,839
|
|
Total
Assets
|
$
|
29,464,357
|
|
|
$
|
24,002,306
|
|
Liabilities
|
|
|
|
Deposits:
|
|
|
|
Non-interest
bearing
|
$
|
6,124,256
|
|
|
$
|
5,224,928
|
|
Interest
bearing:
|
|
|
|
Savings, NOW and
money market
|
11,077,789
|
|
|
9,365,013
|
|
Time
|
4,757,801
|
|
|
3,563,521
|
|
Total
deposits
|
21,959,846
|
|
|
18,153,462
|
|
Short-term
borrowings
|
1,618,416
|
|
|
748,628
|
|
Long-term
borrowings
|
2,353,548
|
|
|
2,315,819
|
|
Junior subordinated
debentures issued to capital trusts
|
55,109
|
|
|
41,774
|
|
Accrued expenses and
other liabilities
|
232,435
|
|
|
209,458
|
|
Total
Liabilities
|
26,219,354
|
|
|
21,469,141
|
|
Shareholders'
Equity
|
|
|
|
Preferred stock, no
par value; 50,000,000 shares authorized:
|
|
|
|
Series A (4,600,000
shares issued at March 31, 2018 and December 31, 2017)
|
111,590
|
|
|
111,590
|
|
Series B (4,000,000
shares issued at March 31, 2018 and December 31, 2017)
|
98,101
|
|
|
98,101
|
|
Common stock (no par
value, authorized 450,000,000 shares; issued 331,202,537 shares
at
March 31, 2018 and 264,498,643 shares at
December 31, 2017)
|
115,824
|
|
|
92,727
|
|
Surplus
|
2,784,194
|
|
|
2,060,356
|
|
Retained
earnings
|
199,555
|
|
|
216,733
|
|
Accumulated other
comprehensive loss
|
(64,103)
|
|
|
(46,005)
|
|
Treasury stock, at
cost (12,678 common shares at March 31, 2018 and 29,792
common
shares at December 31,
2017)
|
(158)
|
|
|
(337)
|
|
Total
Shareholders' Equity
|
3,245,003
|
|
|
2,533,165
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
29,464,357
|
|
|
$
|
24,002,306
|
|
VALLEY NATIONAL
BANCORP
|
CONSOLIDATED
STATEMENTS OF INCOME (Unaudited)
|
(in thousands,
except for share data)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
2018
|
|
2017
|
|
2017
|
Interest
Income
|
|
|
|
|
|
Interest and fees on
loans
|
$
|
237,586
|
|
|
$
|
192,537
|
|
|
$
|
174,353
|
|
Interest and
dividends on investment securities:
|
|
|
|
|
|
Taxable
|
21,323
|
|
|
18,237
|
|
|
17,589
|
|
Tax-exempt
|
5,721
|
|
|
3,673
|
|
|
4,031
|
|
Dividends
|
1,939
|
|
|
2,867
|
|
|
2,151
|
|
Interest on federal
funds sold and other short-term investments
|
926
|
|
|
637
|
|
|
331
|
|
Total interest
income
|
267,495
|
|
|
217,951
|
|
|
198,455
|
|
Interest
Expense
|
|
|
|
|
|
Interest on
deposits:
|
|
|
|
|
|
Savings, NOW and
money market
|
22,317
|
|
|
16,762
|
|
|
10,183
|
|
Time
|
14,616
|
|
|
11,975
|
|
|
9,553
|
|
Interest on
short-term borrowings
|
5,732
|
|
|
3,456
|
|
|
3,901
|
|
Interest on long-term
borrowings and junior subordinated debentures
|
17,232
|
|
|
16,344
|
|
|
12,950
|
|
Total interest
expense
|
59,897
|
|
|
48,537
|
|
|
36,587
|
|
Net Interest
Income
|
207,598
|
|
|
169,414
|
|
|
161,868
|
|
Provision for credit
losses
|
10,948
|
|
|
2,200
|
|
|
2,470
|
|
Net Interest
Income After Provision for Credit Losses
|
196,650
|
|
|
167,214
|
|
|
159,398
|
|
Non-Interest
Income
|
|
|
|
|
|
Trust and investment
services
|
3,230
|
|
|
2,932
|
|
|
2,744
|
|
Insurance
commissions
|
3,821
|
|
|
4,218
|
|
|
5,061
|
|
Service charges on
deposit accounts
|
7,253
|
|
|
5,393
|
|
|
5,236
|
|
Losses on securities
transactions, net
|
(765)
|
|
|
(25)
|
|
|
(23)
|
|
Fees from loan
servicing
|
2,223
|
|
|
1,843
|
|
|
1,815
|
|
Gains on sales of
loans, net
|
6,753
|
|
|
6,375
|
|
|
4,128
|
|
Bank owned life
insurance
|
1,763
|
|
|
1,633
|
|
|
2,463
|
|
Other
|
7,973
|
|
|
7,790
|
|
|
4,296
|
|
Total non-interest
income
|
32,251
|
|
|
30,159
|
|
|
25,720
|
|
Non-Interest
Expense
|
|
|
|
|
|
Salary and employee
benefits expense
|
93,292
|
|
|
64,560
|
|
|
65,927
|
|
Net occupancy and
equipment expense
|
27,924
|
|
|
23,843
|
|
|
23,035
|
|
FDIC insurance
assessment
|
5,498
|
|
|
5,163
|
|
|
5,127
|
|
Amortization of other
intangible assets
|
4,293
|
|
|
2,420
|
|
|
2,536
|
|
Professional and
legal fees
|
17,047
|
|
|
5,727
|
|
|
4,695
|
|
Amortization of tax
credit investments
|
5,274
|
|
|
20,302
|
|
|
5,324
|
|
Telecommunication
expense
|
3,594
|
|
|
2,091
|
|
|
2,659
|
|
Other
|
16,830
|
|
|
12,211
|
|
|
11,649
|
|
Total non-interest
expense
|
173,752
|
|
|
136,317
|
|
|
120,952
|
|
Income Before
Income Taxes
|
55,149
|
|
|
61,056
|
|
|
64,166
|
|
Income tax
expense
|
13,184
|
|
|
34,958
|
|
|
18,071
|
|
Net
Income
|
41,965
|
|
|
26,098
|
|
|
46,095
|
|
Dividends on
preferred stock
|
3,172
|
|
|
3,172
|
|
|
1,797
|
|
Net Income
Available to Common Shareholders
|
$
|
38,793
|
|
|
$
|
22,926
|
|
|
$
|
44,298
|
|
Earnings Per
Common Share:
|
|
|
|
|
|
Basic
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.17
|
|
Diluted
|
0.12
|
|
|
0.09
|
|
|
0.17
|
|
Cash Dividends
Declared per Common Share
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
Weighted Average
Number of Common Shares Outstanding:
|
|
|
|
|
|
Basic
|
330,727,416
|
|
|
264,332,895
|
|
|
263,797,024
|
|
Diluted
|
332,465,527
|
|
|
265,288,067
|
|
|
264,546,266
|
|
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,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
Average
|
|
|
|
Avg.
|
|
Average
|
|
|
|
Avg.
|
|
Average
|
|
|
|
Avg.
|
($ in
thousands)
|
Balance
|
|
Interest
|
|
Rate
|
|
Balance
|
|
Interest
|
|
Rate
|
|
Balance
|
|
Interest
|
|
Rate
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
(1)(2)
|
$
|
22,302,991
|
|
|
$
|
237,587
|
|
|
4.26
|
%
|
|
$
|
18,242,690
|
|
|
$
|
192,539
|
|
|
4.22
|
%
|
|
$
|
17,313,100
|
|
|
$
|
174,356
|
|
|
4.03
|
%
|
Taxable investments
(3)
|
3,401,743
|
|
|
23,262
|
|
|
2.74
|
%
|
|
2,931,144
|
|
|
21,104
|
|
|
2.88
|
%
|
|
2,836,300
|
|
|
19,740
|
|
|
2.78
|
%
|
Tax-exempt
investments (1)(3)
|
741,001
|
|
|
7,242
|
|
|
3.91
|
%
|
|
528,681
|
|
|
5,651
|
|
|
4.28
|
%
|
|
612,946
|
|
|
6,201
|
|
|
4.05
|
%
|
Federal funds sold
and other interest
bearing
deposits
|
305,071
|
|
|
926
|
|
|
1.21
|
%
|
|
230,002
|
|
|
637
|
|
|
1.11
|
%
|
|
187,118
|
|
|
331
|
|
|
0.71
|
%
|
Total interest
earning assets
|
26,750,806
|
|
|
269,017
|
|
|
4.02
|
%
|
|
21,932,517
|
|
|
219,931
|
|
|
4.01
|
%
|
|
20,949,464
|
|
|
200,628
|
|
|
3.83
|
%
|
Other
assets
|
2,540,897
|
|
|
|
|
|
|
1,974,494
|
|
|
|
|
|
|
2,046,822
|
|
|
|
|
|
Total
assets
|
$
|
29,291,703
|
|
|
|
|
|
|
$
|
23,907,011
|
|
|
|
|
|
|
$
|
22,996,286
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW and
money market
deposits
|
$
|
11,175,982
|
|
|
$
|
22,317
|
|
|
0.80
|
%
|
|
$
|
9,085,986
|
|
|
$
|
16,762
|
|
|
0.74
|
%
|
|
$
|
9,049,446
|
|
|
$
|
10,183
|
|
|
0.45
|
%
|
Time
deposits
|
4,594,368
|
|
|
14,616
|
|
|
1.27
|
%
|
|
3,478,046
|
|
|
11,975
|
|
|
1.38
|
%
|
|
3,178,452
|
|
|
9,553
|
|
|
1.20
|
%
|
Short-term
borrowings
|
1,487,272
|
|
|
5,732
|
|
|
1.54
|
%
|
|
1,011,130
|
|
|
3,456
|
|
|
1.37
|
%
|
|
1,563,000
|
|
|
3,901
|
|
|
1.00
|
%
|
Long-term
borrowings (4)
|
2,432,543
|
|
|
17,232
|
|
|
2.83
|
%
|
|
2,344,220
|
|
|
16,344
|
|
|
2.79
|
%
|
|
1,494,273
|
|
|
12,950
|
|
|
3.47
|
%
|
Total interest
bearing liabilities
|
19,690,165
|
|
|
59,897
|
|
|
1.22
|
%
|
|
15,919,382
|
|
|
48,537
|
|
|
1.22
|
%
|
|
15,285,171
|
|
|
36,587
|
|
|
0.96
|
%
|
Non-interest bearing
deposits
|
6,111,684
|
|
|
|
|
|
|
5,248,311
|
|
|
|
|
|
|
5,138,870
|
|
|
|
|
|
Other
liabilities
|
200,039
|
|
|
|
|
|
|
176,992
|
|
|
|
|
|
|
173,086
|
|
|
|
|
|
Shareholders'
equity
|
3,289,815
|
|
|
|
|
|
|
2,562,326
|
|
|
|
|
|
|
2,399,159
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
29,291,703
|
|
|
|
|
|
|
$
|
23,907,011
|
|
|
|
|
|
|
$
|
22,996,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income/interest rate spread (5)
|
|
|
$
|
209,120
|
|
|
2.80
|
%
|
|
|
|
$
|
171,394
|
|
|
2.79
|
%
|
|
|
|
$
|
164,041
|
|
|
2.87
|
%
|
Tax equivalent
adjustment
|
|
|
(1,522)
|
|
|
|
|
|
|
(1,980)
|
|
|
|
|
|
|
(2,173)
|
|
|
|
Net interest
income, as reported
|
|
|
$
|
207,598
|
|
|
|
|
|
|
$
|
169,414
|
|
|
|
|
|
|
$
|
161,868
|
|
|
|
Net interest margin
(6)
|
|
|
|
|
3.10
|
%
|
|
|
|
|
|
3.09
|
%
|
|
|
|
|
|
3.09
|
%
|
Tax equivalent
effect
|
|
|
|
|
0.03
|
%
|
|
|
|
|
|
0.04
|
%
|
|
|
|
|
|
0.04
|
%
|
Net interest margin
on a fully tax
equivalent basis (6)
|
|
|
|
|
3.13
|
%
|
|
|
|
|
|
3.13
|
%
|
|
|
|
|
|
3.13
|
%
|
|
|
(1)
Interest
income is presented on a tax equivalent basis using a 21 percent
and 35 percent federal tax rate for 2018 and 2017,
respectively.
|
(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.
|
View original
content:http://www.prnewswire.com/news-releases/valley-national-bancorp-reports-first-quarter-net-income-and-strong-organic-loan-growth-300636881.html
SOURCE Valley National Bancorp