Market Overview

Valley National Bancorp Reports A 28 Percent Increase In Second Quarter Net Income And $22 Million Of Planned Earnings Enhancements

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WAYNE, N.J., July 26, 2017 /PRNewswire/ -- Valley National Bancorp (NYSE: VLY), the holding company for Valley National Bank, today reported net income for the second quarter of 2017 of $50.1 million, or $0.18 per diluted common share, as compared to the second quarter of 2016 earnings of $39.0 million, or $0.15 per diluted common share, and net income of $46.1 million, or $0.17 per diluted common share, for the first quarter of 2017.

Valley also announced in a separate press release today that it is acquiring USAmeriBancorp, Inc. ("USAB"), and its wholly-owned subsidiary, USAmeriBank, headquartered in Clearwater, Florida. USAB has approximately $4.4 billion in assets and maintains a branch network of 30 offices in Florida and Alabama.  The press release is available at www.valleynationalbank.com.

Key financial highlights for the second quarter:

  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $171.1 million for the second quarter of 2017 increased $17.6 million and $6.4 million as compared to the second quarter of 2016 and first quarter of 2017, respectively. Our net interest margin on a tax equivalent basis of 3.20 percent for the second quarter of 2017 increased by 6 basis points as compared to 3.14 percent for both the second quarter of 2016 and first quarter of 2017. The increase in net interest income and margin for the second quarter of 2017 as compared to the linked first quarter was partly caused by a $3.5 million increase in interest income from derivative swap fees. See the "Net Interest Income and Margin" section below for more details.
  • Loan Portfolio: Loans increased by $261.3 million, or 6.0 percent on an annualized basis, to $17.7 billion at June 30, 2017 from March 31, 2017 largely due to a net increase of $259.3 million in total commercial real estate loans. The overall loan growth was partially offset by a decrease of $20.7 million in residential mortgage loans caused by the transfer of approximately $122 million of performing 30-year fixed rate mortgages to loans held for sale at June 30, 2017. The sale of these loans is expected to be completed during the third quarter of 2017 and result in a pre-tax gain of approximately $4 million. See additional information under the "Loans, Deposits and Other Borrowings" section below.
  • Asset Quality: Total accruing past due and non-accrual loans as a percentage of our entire loan portfolio of $17.7 billion decreased to 0.47 percent at June 30, 2017 from 0.61 percent at March 31, 2017 mostly due to a decrease in commercial loans past due 30 to 59 days. Non-performing assets (including non-accrual loans) increased by 5.9 percent to $54.6 million at June 30, 2017 as compared to $51.5 million at March 31, 2017 due to a $3.9 million increase in non-accrual loans, partially offset by a moderate decline in both foreclosed assets and non-accrual debt securities.
  • Provision for Credit Losses: During the second quarter of 2017, we recorded a $3.6 million provision for credit losses as compared to provisions of $2.5 million and $1.4 million for the first quarter of 2017 and second quarter of 2016, respectively. For the second quarter of 2017, we recognized net loan charge-offs totaling $2.7 million as compared to net loan charge-offs of $1.4 million for the first quarter of 2017, and net loan recoveries of $1.3 million for the second quarter of 2016. The increase in net loan charge-offs from the first quarter was largely due to an increase in commercial and industrial loan charge-offs caused by one impaired loan relationship. See further details under the "Credit Quality" section below.
  • Non-Interest Income: Non-interest income decreased $369 thousand, or 1.5 percent, to $24.7 million for the second quarter of 2017 from $25.1 million for the first quarter of 2017 mostly due to decreases in income from bank owed life insurance and insurance commissions, partially offset by an increase in net gains on sales of residential mortgage loans.
  • Non-Interest Expense: Non-interest expense decreased $1.7 million, or 1.4 percent, to $119.2 million for the second quarter of 2017 from the first quarter of 2017 mainly due to a $2.4 million decrease in salaries and employee benefits partly caused by lower stock incentive compensation expense, as well as moderate declines in net occupancy and equipment expense, professional and legal expense, and other non-interest expense. The decreases were partially offset by a $2.4 million increase in the amortization of tax credit investments.
  • Income Tax Expense: Income tax expense totaled $20.7 million for the second quarter of 2017 as compared to $18.1 million and $15.5 million for the first quarter of 2017 and second quarter of 2016, respectively. Our effective tax rate was 29.3 percent, 28.2 percent, and 28.4 percent for the second quarter of 2017, first quarter of 2017, and second quarter of 2016, respectively. For the remainder of 2017, we anticipate that our effective tax rate will range from 28 percent to 31 percent primarily reflecting the impacts of tax-exempt income, tax-advantaged investments and general business credits.
  • Capital Strength: 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 11.99 percent, 9.81 percent, 7.69 percent and 9.18 percent, respectively, at June 30, 2017.

Earnings Enhancement Program

In December 2016, Valley announced a company-wide earnings enhancement initiative called LIFT. The LIFT program is a review of our business practices with goals of improving our overall efficiency, targeting resources to more value-added activities and delivering on the financial banking experience expected by our customers.  During July 2017, we completed the idea generation and approval phase of the LIFT program.  As a result of these efforts, we plan to achieve approximately $22 million in total cost reductions and revenue enhancements on an annualized pre-tax run-rate through a combination of workforce reduction and other efficiency and revenue initiatives.  We estimate that these changes will result in employee severance and other implementation costs of approximately $11 million, the majority of which will be recorded in the third quarter of 2017.  The implementation phase of the initiative enhancements is currently underway and is expected to be fully phased-in over the next 24 months.

Gerald H. Lipkin, Chairman & CEO commented that, "We are pleased with our earnings performance in the second quarter of 2017 which reflected a 8.6 percent increase in net income as compared to the first quarter of 2017 driven by a solid net interest margin of 3.20 percent. Our net income for the second quarter continued to benefit from strong loan growth mainly within the commercial real estate portfolio and our ability to maintain a low overall cost of funds.  The credit quality of our balance sheet remained well-controlled as net loan charge-offs to average loans totaled 0.06 percent for the second quarter of 2017." 

Mr. Lipkin added, "The LIFT program, which resulted from a bottom-up approach, engaged our entire employee base to help generate and develop ideas to enhance process change and lead to improved efficiency. We are delighted with the significant and continuing efforts by our dedicated management team and employees to ultimately make the LIFT program a success for Valley, its customers and shareholders. We fully expect this endeavor, combined with our continued growth strategies, to strongly position Valley to deliver on its future performance goals."

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $171.1 million for the second quarter of 2017 increased $17.6 million as compared to the second quarter of 2016 and increased $6.4 million as compared to the first quarter of 2017.  Interest income on a tax equivalent basis increased $12.0 million to $213.3 million for the second quarter of 2017 as compared to the first quarter of 2017 mainly due to a 16 basis point increase in the yield on average loans, and increases of $388.6 million and $131.4 million in average loans and taxable investments, respectively.  The increase in yield on average loans for the second quarter of 2017 as compared to the linked first quarter was due to higher market interest rates on new loan originations, and a $3.5 million increase in periodic commercial loan fee income related to derivative interest rate swaps executed with customers.  Interest expense of $42.2 million for the second quarter of 2017 increased $5.6 million as compared to the first quarter of 2017.  During the second quarter of 2017, our interest expense on deposits increased by approximately $3.1 million from the linked first quarter largely due to an increase in short-term market interest rates, a $101.7 million decrease in our average low cost brokered money market deposit account balances and one more day during the second quarter.    Interest expense on short-term and long-term borrowings also increased $1.6 million and $840 thousand, respectively, in the second quarter of 2017 as compared to the first quarter of 2017 due, in part, to increases of $274.8 million and $185.4 million in the average balances, respectively.  Average short-term and long-term borrowings increased as compared to the first quarter of 2017 mostly due to new FHLB borrowings used to offset a decline in deposits and fund new loans during the second quarter of 2017.

Our net interest margin on a tax equivalent basis of 3.20 percent for the second quarter of 2017 increased by 6 basis points as compared to both the second quarter of 2016 and first quarter of 2017. The yield on average interest earning assets increased by 14 basis points on a linked quarter basis mostly due to the higher yield on average loans. The yield on average loans increased 16 basis points to 4.20 percent for the second quarter of 2017 and was positively impacted by the aforementioned increases in market interest rates and periodic commercial loan fees as compared to the first quarter of 2017. The yield on average taxable investment securities increased by 6 basis points to 2.84 percent for the second quarter of 2017 from the first quarter of 2017 largely due to a decline in premium amortization expense caused by lower principal repayments on residential mortgage-backed securities.  The overall cost of average interest bearing liabilities increased by 12 basis points to 1.08 percent during the second quarter of 2017 from 0.96 percent in the linked first quarter of 2017.  The increase was due, in part, to higher interest rates on most deposits and short-term borrowings and one more day during the second quarter of 2017, partially offset by a 19 basis point decrease in the cost of long-term borrowings mostly caused by new lower cost FHLB borrowings.  Our cost of total deposits was 0.53 percent for the second quarter of 2017 as compared to 0.45 percent for the first quarter of 2017. 

Loans, Deposits and Other Borrowings

Loans. Loans increased $261.3 million, or 6.0 percent on an annualized basis, to approximately $17.7 billion at June 30, 2017 from March 31, 2017, net of the $122 million of residential mortgage loans transferred to loans held for sale during the second quarter of 2017 and a $113.2 million decline in the PCI loan portion of the portfolio. During the second quarter of 2017, Valley also originated $41.8 million of residential mortgage loans for sale rather than investment. Loans held for sale totaled $139.6 million and $115.1 million at June 30, 2017 and March 31, 2017, respectively.  See additional information regarding our residential mortgage loan activities below.  

Total commercial and industrial loans decreased $11.0 million, or 1.7 percent on an annualized basis, from March 31, 2017 to approximately $2.6 billion at June 30, 2017.  The loan volumes were outpaced by a $30.8 million decline in the PCI loan portion of the portfolio during the second quarter of 2017. Exclusive of the decline in PCI loans, the non-PCI commercial and industrial loan portfolio increased by approximately 3.3 percent on an annualized basis to $2.4 billion at June 30, 2017 from March 31, 2017. The second quarter growth in non-PCI loans was largely due to a secured commercial lending arrangement with a large regional auto retailer. In addition to the PCI loan repayments, the level of loan growth within this portfolio continues to be challenged by strong market competition for both new and existing commercial loan borrowers within our primary markets.

Commercial real estate loans (excluding construction loans) increased $214.1 million from March 31, 2017 to $9.2 billion at June 30, 2017 mostly due to a $250.0 million, or 12.6 percent on an annualized basis, increase in the non-PCI loan portfolio. The increase in non-PCI loans was primarily due to solid organic loan volumes in New York, New Jersey and Florida, particularly amongst our pre-existing long-term customer base, as well as approximately $22 million of loan participations purchased in the second quarter of 2017.  Each purchased participation loan is reviewed by Valley under its normal underwriting criteria and stress-tested to assure its credit quality. The organic loan volumes generated across a broad-based segment of borrowers within the commercial real estate portfolio were partially offset by a $35.9 million decline in the acquired PCI loan portion of the portfolio.  Construction loans increased $45.2 million, or 21.6 percent on an annualized basis, to $881.1 million at June 30, 2017 from March 31, 2017.  The increase was mostly due to advances on existing construction projects.

Total residential mortgage loans decreased $20.7 million, or approximately 3.0 percent on an annualized basis, to approximately $2.7 billion at June 30, 2017 from March 31, 2017 due to the aforementioned mortgage loans transferred to loans held for sale and new loans originated for sale rather than investment during the second quarter of 2017. Valley sold approximately $136.6 million of residential mortgage loans originated for sale (including $115.1 million of loans held for sale at March 31, 2017) during the second quarter of 2017. New and refinanced residential mortgage loan originations totaled approximately $194.4 million for the second quarter of 2017 as compared to $163.7 million and $177.7 million for the first quarter of 2017 and second quarter of 2016, respectively.  Of the $194.4 million in total originations, $23.8 million, or 12.3 percent, represented new Florida residential mortgage loans.

Home equity loans totaling $450.5 million at June 30, 2017 decreased by $8.4 million as compared to March 31, 2017 mostly due to PCI loan repayment activity.  New home equity loan volumes and customer usage of existing home equity lines of credit continue to be weak, despite the relatively favorable low interest rate environment.

Automobile loans increased by $290 thousand, or 0.1 percent on an annualized basis, to $1.2 billion at June 30, 2017 as compared to March 31, 2017.  The auto loan portfolio remained relatively unchanged as new auto loan origination volumes declined as compared to the first quarter of 2017 largely due to slower application activity during the first half of the second quarter of 2017.  Our Florida dealership network contributed over $23 million in auto loan originations, representing approximately 18 percent of Valley's total new auto loan production for the second quarter of 2017 as compared to approximately $24 million, or 17 percent, of Valley's total auto originations for the first quarter of 2017.

Other consumer loans increased $41.7 million, or 27.8 percent on an annualized basis, to $642.2 million at June 30, 2017 as compared to $600.5 million at March 31, 2017 mainly due to continued growth and customer usage of collateralized personal lines of credit. 

Deposits. Total deposits decreased $81.1 million, or 1.9 percent on an annualized basis, to approximately $17.3 billion at June 30, 2017 from March 31, 2017 largely due to a $51.1 million decrease in brokered money market deposit account balances and general period end fluctuations in both commercial and retail customer balances. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 30 percent, 50 percent and 20 percent of total deposits as of June 30, 2017.  The composition of deposits based upon the period end balances remained relatively unchanged at June 30, 2017 as compared to March 31, 2017.  However, time deposits increased $153.9 million to $3.4 billion at June 30, 2017 as compared to March 31, 2017 largely due to new retail customer balances resulting from our current certificate of deposit promotional campaigns which commenced in the second quarter of 2017.

Other Borrowings. Short-term borrowings increased $89.5 million to $1.7 billion at June 30, 2017 as compared to March 31, 2017 largely due to new FHLB advances used as alternate funding for the aforementioned decline in money market deposits, as well as for additional liquidity and loan funding purposes.  Long-term borrowings also increased $185.6 million to $1.8 billion at June 30, 2017 as compared to March 31, 2017 due to new FHLB advances with contractual terms between approximately 13 and 15 months.  

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.  At June 30, 2017, our PCI loan portfolio totaled $1.5 billion, or 8.7 percent, of our total loan portfolio. 

Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned properties and other repossessed assets (foreclosed assets), and non-accrual debt securities increased $3.0 million, or 5.9 percent, to $54.6 million at June 30, 2017 as compared to March 31, 2017 mostly due to an increase in non-accrual loans during the second quarter of 2017.  The increase in non-accrual loans was largely caused by two previously impaired Chicago taxi cab medallion relationships with a combined total of $5.6 million at June 30, 2017.  Non-accrual loans represented 0.24 percent of total loans at June 30, 2017 as compared to 0.22 percent of total loans at March 31, 2017.

Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $26.4 million to $41.8 million, or 0.24 percent of total loans, at June 30, 2017 as compared to $68.1 million, or 0.39 percent of total loans, at March 31, 2017. The lower level of accruing past due loans was primarily caused by decreases of  $27.3 million and $7.8 million in commercial and industrial loans and construction loans past due 30 to 59 days at June 30, 2017, respectively, as compared to March 31, 2017. The decrease in the commercial and industrial loans past due 30 to 59 days was mainly due to $19.2 million of loans collateralized by New York City (NYC) taxi cab medallions at March 31 2017 which were current to their contractual payments at June 30, 2017.  Partially offsetting these decreases, the loans past due 60 to 89 days and loans 90 days or more past due categories increased by $8.8 million and $6.7 million at June 30, 2017, respectively.  The increase in loans past due 60 to 89 days was largely due to one internal classified commercial real estate relationship and a commercial taxi cab medallion relationship totaling $5.9 million and $2.4 million at June 30, 2017, respectively.  The $6.7 million increase in loans 90 days or more past due at June 30, 2017 was mostly due to performing matured loans in the normal process of renewal totaling $5.2 million.  

At June 30, 2017, our entire taxi medallion loan portfolio totaled $140.5 million, consisting of $130.4 million and $10.1 million of NYC and Chicago taxi medallion loans, respectively.  At June 30, 2017, the medallion portfolio included impaired loans of $37.4 million with related reserves of $3.7 million within the allowance for loan losses as compared to impaired loans of $6.3 million with related reserves of $2.6 million at March 31, 2017.  At June 30, 2017, the impaired medallion loans largely consisted of performing troubled debt restructured (TDR) loans and the aforementioned non-accrual Chicago taxi cab medallion loans totaling $5.6 million. Loans past due 30 to 59 days and loans past due 60 to 89 days include $809 thousand and $2.4 million of NYC taxi medallions at June 30, 2017, respectively, which are all outstanding to one borrower. We are currently renegotiating the terms of these past due loans.  Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees and other collateral whenever possible.  However, we continue to closely monitor this portfolio's performance and the potential impact of the changes in market valuation for taxi medallions due to competing car service providers and other factors.

Despite the increase in taxi medallion loans classified as TDR and non-accrual loans during the second quarter of 2017, we believe our overall credit quality metrics continued to reflect our solid underwriting standards at June 30, 2017.  However, we can provide no assurances as to the future level of our loan delinquencies.

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 June 30, 2017, March 31, 2017, and June 30, 2016:



June 30, 2017


March 31, 2017


June 30, 2016





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*

$

53,792



2.04

%


$

53,541



2.03

%


$

50,351



1.99

%

Commercial real estate loans:













Commercial real estate

37,180



0.40

%


38,146



0.42

%


35,869



0.45

%


Construction

18,275



2.07

%


18,156



2.17

%


16,008



2.08

%

Total commercial real estate loans

55,455



0.55

%


56,302



0.57

%


51,877



0.59

%

Residential mortgage loans

4,186



0.15

%


3,592



0.13

%


3,495



0.11

%

Consumer loans:













Home equity

582



0.13

%


433



0.09

%


968



0.20

%


Auto and other consumer

4,606



0.26

%


3,828



0.22

%


3,723



0.23

%

Total consumer loans

5,188



0.23

%


4,261



0.19

%


4,691



0.22

%

Total allowance for credit losses

$

118,621



0.67

%


$

117,696



0.67

%


$

110,414



0.67

%

Allowance for credit losses as a %












of non-PCI loans



0.73

%




0.75

%




0.76

%














* Includes the reserve for unfunded letters of credit.





Our loan portfolio, totaling $17.7 billion at June 30, 2017, had net loan charge-offs of $2.7 million for the second quarter of 2017 as compared to net loan charge-offs of $1.4 million for the first quarter of 2017, and net loan recoveries of $1.3 million for the second quarter of 2016.  The increase in net loan charge-offs as compared to the first quarter of 2017 was mainly due to one charged-off loan relationship totaling $1.9 million within the commercial and industrial loan portfolio during the second quarter of 2017. During the second quarter of 2017, we recorded a $3.6 million provision for credit losses as compared to $2.5 million and $1.4 million for the first quarter of 2017 and the second quarter of 2016, respectively.  The quarter over quarter increase in the provision was due, in part, to solid second quarter loan growth and an increase in allocated reserves for impaired loans at June 30, 2017. 

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 0.67 percent at June 30, 2017, March 31, 2017 and June 30, 2016.  At June 30, 2017, our allowance allocations for losses as a percentage of total loans remained relatively stable in most loan categories as compared to March 31, 2017, but declined 0.10 percent for construction loans largely due to the continued low level of recent loss experience for this portfolio.  There were no construction loan charge-offs during the six months ended months ended June 30, 2017 and the year ended December 31, 2016.

Our allowance for credit losses as a percentage of total non-PCI loans (excluding PCI loans with carrying values totaling approximately $1.5 billion) was 0.73 percent at June 30, 2017, as compared to 0.75 percent and 0.76 percent at March 31, 2017 and June 30, 2016, 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 June 30, 2017, March 31, 2017 and June 30, 2016.

Investor Conference Call

Valley will host a conference call with investors and the financial community at 10:00 AM Eastern Standard Time, today to discuss the 2017 second quarter earnings and other recent developments.  Those wishing to participate in the call may dial toll-free (800) 230-1766.  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 over $23 billion in assets. Its principal subsidiary, Valley National Bank, currently operates over 200 branch locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn, Queens and Long Island, and Florida. Valley National Bank is one of the largest commercial banks headquartered in New Jersey with executive offices in Manhattan and West Palm Beach. Helping communities grow and prosper is the heart of Valley's corporate citizenship philosophy. For more information about Valley National Bank and its products and services, please visit a convenient branch location, www.valleynationalbank.com or call our 24/7 Customer Service Team 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:

  • failure to obtain shareholder or regulatory approval for the merger of USAB with Valley or to satisfy other conditions to the merger on the proposed terms and within the proposed timeframe;
  • delays in closing the merger;
  • the inability to realize expected cost savings and synergies from the merger of USAB with Valley in the amounts or in the timeframe anticipated;
  • changes in the estimate of non-recurring charges;
  • the diversion of management's time on issues relating to the merger;
  • costs or difficulties relating to integration matters might be greater than expected;
  • material adverse changes in Valley's or USAB's operations or earnings;
  • an increase or decrease in the stock price of Valley during the 30 day pricing period prior to the closing of the merger which could cause an adjustment to the exchange ratio or give either Valley or USAB the right to terminate the merger agreement under certain circumstances;
  • the inability to retain USAB's customers and employees;
  • 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;
  • less than expected cost reductions and revenue enhancement from Valley's cost reduction plans including its earnings enhancement program called "LIFT";
  • 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;
  • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in tax laws, regulations and case law;
  • our inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in our capital requirements;
  • 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, 2016.

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


Six Months Ended




June 30,


March 31,


June 30,


June 30,

($ in thousands, except for share data)

2017


2017


2016


2017


2016

FINANCIAL DATA:










Net interest income

$

168,960



$

162,529



$

151,455



$

331,489



$

299,608


Net interest income - FTE (1)

171,086



164,702



153,470



335,788



303,615


Non-interest income

24,690



25,059



24,264



49,749



45,712


Non-interest expense

119,239



120,952



119,803



240,191



238,028


Income tax expense

20,714



18,071



15,460



38,785



29,849


Net income

50,065



46,095



39,027



96,160



75,214


Dividends on preferred stock

1,797



1,797



1,797



3,594



3,594


Net income available to common shareholders

$

48,268



$

44,298



$

37,230



$

92,566



$

71,620


Weighted average number of common shares outstanding:










     Basic

263,958,292



263,797,024



254,381,170



263,878,103



254,228,260


     Diluted

264,778,242



264,546,266



254,771,213



264,662,863



254,575,873


Per common share data:










     Basic earnings

$

0.18



$

0.17



$

0.15



$

0.35



$

0.28


     Diluted earnings

0.18



0.17



0.15



0.35



0.28


     Cash dividends declared

0.11



0.11



0.11



0.22



0.22


Closing stock price - high

12.23



12.76



10.13



12.76



10.13


Closing stock price - low

11.28



11.28



8.55



11.28



8.31


FINANCIAL RATIOS:










Net interest margin

3.16

%


3.10

%


3.10

%


3.13

%


3.07

%

Net interest margin - FTE (1)

3.20



3.14



3.14



3.17



3.11


Annualized return on average assets

0.86



0.80



0.72



0.83



0.69


Annualized return on avg. shareholders' equity

8.27



7.69



6.97



7.98



6.75


Annualized return on avg. tangible shareholders' equity (2)

11.88



11.09



10.38



11.48



10.07


Efficiency ratio (3)

61.57



64.48



68.18



63.00



68.93


AVERAGE BALANCE SHEET ITEMS:









Assets

$

23,396,259



$

22,996,286



$

21,730,377



$

23,197,377



$

21,705,328


Interest earning assets

21,416,671



20,949,464



19,537,572



21,184,358



19,512,522


Loans

17,701,676



17,313,100



16,252,915



17,508,461



16,123,229


Interest bearing liabilities

15,610,935



15,285,171



14,280,956



15,448,953



14,308,328


Deposits

17,288,487



17,366,768



16,453,487



17,327,411



16,417,041


Shareholders' equity

2,420,848



2,399,159



2,238,510



2,410,063



2,229,040


 

 

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS



As Of

BALANCE SHEET ITEMS:

June 30,


March 31,


December 31,


September 30,


June 30,

(In thousands)

2017


2017


2016


2016


2016

Assets

$

23,449,350



$

23,220,456



$

22,864,439



$

22,368,453



$

21,809,738


Total loans

17,710,760



17,449,498



17,236,103



16,634,135



16,499,180


Non-PCI loans

16,169,291



15,794,797



15,464,601



14,777,020



14,523,779


Deposits

17,250,018



17,331,141



17,730,708



16,972,183



16,356,058


Shareholders' equity

2,423,901



2,398,541



2,377,156



2,257,073



2,232,212












LOANS:










(In thousands)










Commercial and industrial

$

2,631,312



$

2,642,319



$

2,638,195



$

2,558,968



$

2,528,749


Commercial real estate:










Commercial real estate

9,230,514



9,016,418



8,719,667



8,313,855



8,018,794


Construction

881,073



835,854



824,946



802,568



768,847


  Total commercial real estate

10,111,587



9,852,272



9,544,613



9,116,423



8,787,641


Residential mortgage

2,724,777



2,745,447



2,867,918



2,826,130



3,055,353


Total Consumer:










Home equity

450,510



458,891



469,009



476,820



485,730


Automobile

1,150,343



1,150,053



1,139,227



1,121,606



1,141,793


Other consumer

642,231



600,516



577,141



534,188



499,914


Total consumer loans

2,243,084



2,209,460



2,185,377



2,132,614



2,127,437


Total loans

$

17,710,760



$

17,449,498



$

17,236,103



$

16,634,135



$

16,499,180












CAPITAL RATIOS:










Book value per common share

$

8.76



$

8.67



$

8.59



$

8.43



$

8.34


Tangible book value per common share (2)

5.98



5.88



5.80



5.55



5.45


Tangible common equity to tangible assets (2)

6.95

%


6.90

%


6.91

%


6.53

%


6.58

%

Tier 1 leverage capital

7.69



7.70



7.74



7.35



7.38


Common equity tier 1 capital

9.18



9.12



9.27



8.73



8.74


Tier 1 risk-based capital

9.81



9.76



9.90



9.36



9.39


Total risk-based capital

11.99



11.96



12.15



11.64



11.69


 

 

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS





Three Months Ended


Six Months Ended

ALLOWANCE FOR CREDIT LOSSES:


June 30,


March 31,


June 30,


June 30,

($ in thousands)


2017


2017


2016


2017


2016

Beginning balance - Allowance for credit losses


$

117,696



$

116,604



$

107,675



$

116,604



$

108,367


Loans charged-off:












Commercial and industrial


(2,910)



(1,714)



(493)



(4,624)



(1,744)



Commercial real estate


(139)



(414)



(414)



(553)



(519)



Construction












Residential mortgage


(229)



(130)



(151)



(359)



(232)



Total Consumer


(1,011)



(1,121)



(697)



(2,132)



(1,771)



Total loans charged-off


(4,289)



(3,379)



(1,755)



(7,668)



(4,266)


Charged-off loans recovered:












Commercial and industrial


312



848



990



1,160



1,516



Commercial real estate


346



142



1,458



488



1,547



Construction


294







294





Residential mortgage


235



448



94



683



109



Total Consumer


395



563



523



958



912



Total loans recovered


1,582



2,001



3,065



3,583



4,084


Net (charge-offs) recoveries


(2,707)



(1,378)



1,310



(4,085)



(182)


Provision for credit losses


3,632



2,470



1,429



6,102



2,229


Ending balance - Allowance for credit losses


$

118,621



$

117,696



$

110,414



$

118,621



$

110,414


Components of allowance for credit losses:












Allowance for loan losses


$

116,446



$

115,443



$

108,088



$

116,446



$

108,088



Allowance for unfunded letters of credit


2,175



2,253



2,326



2,175



2,326


Allowance for credit losses


$

118,621



$

117,696



$

110,414



$

118,621



$

110,414


Components of provision for credit losses:












Provision for loan losses


$

3,710



$

2,402



$

1,363



$

6,112



$

2,092



Provision for unfunded letters of credit


(78)



68



66



(10)



137


Provision for credit losses


$

3,632



$

2,470



$

1,429



$

6,102



$

2,229


Annualized ratio of total net charge-offs (recoveries) to average loans


0.06

%


0.03

%


(0.03)

%


0.05

%


0.00

%

Allowance for credit losses as a % of non-PCI loans


0.73

%


0.75

%


0.76

%


0.73

%


0.76

%

Allowance for credit losses as a % of total loans


0.67

%


0.67

%


0.67

%


0.67

%


0.67

%

 

 

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS



As Of

ASSET QUALITY: (4)

June 30,


March 31,


December 31,


June 30,

($ in thousands)

2017


2017


2016


2016

Accruing past due loans:








30 to 59 days past due:









Commercial and industrial

$

2,391



$

29,734



$

6,705



$

5,187



Commercial real estate

6,983



11,637



5,894



5,076



Construction



7,760



6,077





Residential mortgage

4,677



7,533



12,005



10,177



Total Consumer

4,393



3,740



4,197



2,535


Total 30 to 59 days past due

18,444



60,404



34,878



22,975


60 to 89 days past due:









Commercial and industrial

2,686



341



5,010



5,714



Commercial real estate

8,233



359



8,642



834



Construction

854









Residential mortgage

1,721



4,177



3,564



2,326



Total Consumer

1,007



787



1,147



644


Total 60 to 89 days past due

14,501



5,664



18,363



9,518


90 or more days past due:









Commercial and industrial



405



142



218



Commercial real estate

2,315





474



131



Construction

2,879





1,106





Residential mortgage

3,353



1,355



1,541



314



Total Consumer

275



314



209



139


Total 90 or more days past due

8,822



2,074



3,472



802


Total accruing past due loans

$

41,767



$

68,142



$

56,713



$

33,295


Non-accrual loans:









Commercial and industrial

$

11,072



$

8,676



$

8,465



$

6,573



Commercial real estate

15,514



15,106



15,079



19,432



Construction

1,334



1,461



715



5,878



Residential mortgage

12,825



11,650



12,075



14,866



Total Consumer

1,409



1,395



1,174



1,130


Total non-accrual loans

42,154



38,288



37,508



47,879


Other real estate owned (OREO)(5)

10,182



10,737



9,612



10,903


Other repossessed assets

342



475



384



369


Non-accrual debt securities (6)

1,878



2,007



1,935



2,118


Total non-performing assets

$

54,556



$

51,507



$

49,439



$

61,269


Performing troubled debt restructured loans

$

109,802



$

80,360



$

85,166



$

82,140


Total non-accrual loans as a % of loans

0.24

%


0.22

%


0.22

%


0.29

%

Total accruing past due and non-accrual loans as a % of loans

0.47

%


0.61

%


0.55

%


0.49

%

Allowance for losses on loans as a % of non-accrual loans

276.24

%


301.51

%


305.05

%


225.75

%

Non-performing purchased credit-impaired loans (7)

$

33,715



$

25,857



$

27,011



$

31,275


 

 

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 35 percent federal tax rate.  Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.



(2)

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





As of



June 30,


March 31,


December 31,


September 30,


June 30,


($ in thousands, except for share data)

2017


2017


2016


2016


2016


Tangible book value per common share:











Common shares outstanding

263,971,766



263,842,268



263,638,830



254,461,906



254,362,314



Shareholders' equity

$

2,423,901



$

2,398,541



$

2,377,156



$

2,257,073



$

2,232,212



Less: Preferred stock

(111,590)



(111,590)



(111,590)



(111,590)



(111,590)



Less: Goodwill and other intangible assets

(734,337)



(735,595)



(736,121)



(733,627)



(734,432)



Tangible common shareholders' equity

$

1,577,974



$

1,551,356



$

1,529,445



$

1,411,856



$

1,386,190



    Tangible book value per common share

$5.98



$5.88



$5.80



$5.55



$5.45



Tangible common equity to tangible assets:













Tangible common shareholders' equity

$

1,577,974



$

1,551,356



$

1,529,445



$

1,411,856



$

1,386,190



Total assets

23,449,350



23,220,456



22,864,439



22,368,453



21,809,738



Less: Goodwill and other intangible assets

(734,337)



(735,595)



(736,121)



(733,627)



(734,432)



Tangible assets

$

22,715,013



$

22,484,861



$

22,128,318



$

21,634,826



$

21,075,306



    Tangible common equity to tangible assets

6.95

%


6.90

%


6.91

%


6.53

%


6.58

%







Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,



2017


2017


2016


2017


2016


Annualized return on average tangible shareholders' equity:











($ in thousands)











Net income

$

50,065



$

46,095



$

39,027



$

96,160



$

75,214



Average shareholders' equity

2,420,848



2,399,159



2,238,510



2,410,063



2,229,040



Less: Average goodwill and other intangible assets

(734,616)



(736,178)



(735,115)



(735,393)



(735,276)



    Average tangible shareholders' equity

$

1,686,232



$

1,662,981



$

1,503,395



$

1,674,670



$

1,493,764



Annualized return on average tangible shareholders' equity

11.88

%


11.09

%


10.38

%


11.48

%


10.07

%



(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)

Excludes OREO properties related to FDIC-assisted transactions totaling $558 thousand and $1.2 million at December 31, 2016 and June 30, 2016, respectively.  These assets are covered by the loss-sharing agreements with the FDIC.  There were no covered OREO properties at June 30, 2017 and March 31, 2017.

(6)

Includes other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value (net of unrealized losses totaling $875 thousand, $745 thousand, $817 thousand and $634 thousand at June 30, 2017, March 31, 2017, December 31, 2016 and June 30, 2016, respectively) after recognition of all credit impairments.

(7)

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)



June 30,


December 31,


2017


2016

Assets

 (Unaudited)



Cash and due from banks

$

227,830



$

220,791


Interest bearing deposits with banks

129,959



171,710


Investment securities:




Held to maturity (fair value of $1,828,732 at June 30, 2017 and $1,924,597 at December 31, 2016)

1,822,263



1,925,572


Available for sale

1,464,054



1,297,373


Total investment securities

3,286,317



3,222,945


Loans held for sale (includes fair value of $17,919 at June 30, 2017 and $57,708 at December 31, 2016 for loans originated for sale)

139,576



57,708


Loans

17,710,760



17,236,103


Less: Allowance for loan losses

(116,446)



(114,419)


Net loans

17,594,314



17,121,684


Premises and equipment, net

290,001



291,180


Bank owned life insurance

393,997



391,830


Accrued interest receivable

69,732



66,816


Goodwill

690,637



690,637


Other intangible assets, net

43,700



45,484


Other assets

583,287



583,654


Total Assets

$

23,449,350



$

22,864,439


Liabilities




Deposits:




Non-interest bearing

$

5,197,997



$

5,252,825


Interest bearing:




Savings, NOW and money market

8,683,028



9,339,012


Time

3,368,993



3,138,871


Total deposits

17,250,018



17,730,708


Short-term borrowings

1,734,444



1,080,960


Long-term borrowings

1,819,615



1,433,906


Junior subordinated debentures issued to capital trusts

41,658



41,577


Accrued expenses and other liabilities

179,714



200,132


Total Liabilities

21,025,449



20,487,283


Shareholders' Equity




Preferred stock (no par value, authorized 50,000,000 shares at June 30, 2017; issued 4,600,000 shares at June 30, 2017 and December 31, 2016)

111,590



111,590


Common stock (no par value, authorized 450,000,000 shares at June 30, 2017; issued 263,990,794 shares at June 30, 2017 and 263,804,877 shares at December 31, 2016)

92,423



92,353


Surplus

2,049,613



2,044,401


Retained earnings

207,177



172,754


Accumulated other comprehensive loss

(36,679)



(42,093)


Treasury stock, at cost (19,028 common shares at June 30, 2017 and 166,047 shares at December 31, 2016)

(223)



(1,849)


Total Shareholders' Equity

2,423,901



2,377,156


Total Liabilities and Shareholders' Equity

$

23,449,350



$

22,864,439


 

 

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,


2017


2017


2016


2017


2016

Interest Income










Interest and fees on loans

$

185,860



$

175,014



$

169,426



$

360,874



$

335,497


Interest and dividends on investment securities:










Taxable

18,928



17,589



14,256



36,517



28,255


Tax-exempt

3,943



4,031



3,734



7,974



7,424


Dividends

2,137



2,151



1,316



4,288



2,796


Interest on federal funds sold and other short-term investments

279



331



296



610



653


Total interest income

211,147



199,116



189,028



410,263



374,625


Interest Expense










Interest on deposits:










Savings, NOW and money market

12,714



10,183



9,961



22,897



19,204


Time

10,166



9,553



9,223



19,719



18,808


Interest on short-term borrowings

5,516



3,901



3,120



9,417



4,992


Interest on long-term borrowings and junior subordinated debentures

13,791



12,950



15,269



26,741



32,013


Total interest expense

42,187



36,587



37,573



78,774



75,017


Net Interest Income

168,960



162,529



151,455



331,489



299,608


Provision for credit losses

3,632



2,470



1,429



6,102



2,229


Net Interest Income After Provision for Credit Losses

165,328



160,059



150,026



325,387



297,379


Non-Interest Income










Trust and investment services

2,800



2,744



2,544



5,544



4,984


Insurance commissions

4,358



5,061



4,845



9,419



9,553


Service charges on deposit accounts

5,342



5,236



5,094



10,578



10,197


Gains (losses) on securities transactions, net

22



(23)



(3)



(1)



268


Fees from loan servicing

1,831



1,815



1,561



3,646



3,155


Gains on sales of loans, net

4,791



4,128



3,105



8,919



4,900


Bank owned life insurance

1,701



2,463



1,818



4,164



3,781


Other

3,845



3,635



5,300



7,480



8,874


Total non-interest income

24,690



25,059



24,264



49,749



45,712


Non-Interest Expense










Salary and employee benefits expense

61,338



63,716



56,072



125,054



116,331


Net occupancy and equipment expense

22,609



23,035



22,168



45,644



44,957


FDIC insurance assessment

4,928



5,127



5,095



10,055



10,194


Amortization of other intangible assets

2,562



2,536



2,928



5,098



5,777


Professional and legal fees

4,302



4,695



5,472



8,997



9,367


Amortization of tax credit investments

7,732



5,324



7,646



13,056



14,910


Telecommunication expense

2,707



2,659



2,294



5,366



4,680


Other

13,061



13,860



18,128



26,921



31,812


Total non-interest expense

119,239



120,952



119,803



240,191



238,028


Income Before Income Taxes

70,779



64,166



54,487



134,945



105,063


Income tax expense

20,714



18,071



15,460



38,785



29,849


Net Income

50,065



46,095



39,027



96,160



75,214


Dividends on preferred stock

1,797



1,797



1,797



3,594



3,594


Net Income Available to Common Shareholders

$

48,268



$

44,298



$

37,230



$

92,566



$

71,620


Earnings Per Common Share:










Basic

$

0.18



$

0.17



$

0.15



$

0.35



$

0.28


Diluted

0.18



0.17



0.15



0.35



0.28


Cash Dividends Declared per Common Share

0.11



0.11



0.11



0.22



0.22


Weighted Average Number of Common Shares Outstanding:










Basic

263,958,292



263,797,024



254,381,170



263,878,103



254,228,260


Diluted

264,778,242



264,546,266



254,771,213



264,662,863



254,575,873


 

 

 

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, 2017


March 31, 2017


June 30, 2016



 Average




Avg.


 Average




Avg.


 Average




Avg.

($ in thousands)

 Balance


 Interest


Rate


 Balance


 Interest


Rate


 Balance


 Interest


Rate

Assets


















Interest earning assets
















Loans (1)(2)

$

17,701,676



$

185,863



4.20

%


$

17,313,100



$

175,017



4.04

%


$

16,252,915



$

169,430



4.17

%

Taxable investments (3)

2,967,729



21,065



2.84

%


2,836,300



19,740



2.78

%


2,433,896



15,572



2.56

%

Tax-exempt investments (1)(3)

581,263



6,066



4.17

%


612,946



6,201



4.05

%


585,948



5,745



3.92

%

Federal funds sold and other


















interest bearing deposits

166,003



279



0.67

%


187,118



331



0.71

%


264,813



296



0.45

%

Total interest earning assets

21,416,671



213,273



3.98

%


20,949,464



201,289



3.84

%


19,537,572



191,043



3.91

%

Other assets

1,979,588







2,046,822







2,192,805






Total assets

$

23,396,259







$

22,996,286







$

21,730,377






Liabilities and shareholders' equity


















Interest bearing liabilities:


















Savings, NOW and money market deposits

$

8,803,028



$

12,715



0.58

%


$

9,049,446



$

10,183



0.45

%


$

8,369,553



$

9,961



0.48

%

Time deposits

3,290,407



10,166



1.24

%


3,178,452



9,553



1.20

%


3,070,113



9,223



1.20

%

Short-term borrowings

1,837,809



5,516



1.20

%


1,563,000



3,901



1.00

%


1,218,154



3,120



1.02

%

Long-term borrowings (4)

1,679,691



13,790



3.28

%


1,494,273



12,950



3.47

%


1,623,136



15,269



3.76

%

Total interest bearing liabilities

15,610,935



42,187



1.08

%


15,285,171



36,587



0.96

%


14,280,956



37,573



1.05

%

Non-interest bearing deposits

5,195,052







5,138,870







5,013,821






Other liabilities

169,424







173,086







197,090






Shareholders' equity

2,420,848







2,399,159







2,238,510






Total liabilities and shareholders' equity

$

23,396,259







$

22,996,286







$

21,730,377
























Net interest income/interest rate spread (5)



$

171,086



2.90

%




$

164,702



2.88

%




$

153,470



2.86

%

Tax equivalent adjustment



(2,126)







(2,173)







(2,015)




Net interest income, as reported



$

168,960







$

162,529







$

151,455




Net interest margin (6)





3.16

%






3.10

%






3.10

%

Tax equivalent effect





0.04

%






0.04

%






0.04

%

Net interest margin on a fully tax equivalent basis (6)





3.20

%






3.14

%






3.14

%



(1)

Interest income is presented on a tax equivalent basis using a 35 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.

 

View original content:http://www.prnewswire.com/news-releases/valley-national-bancorp-reports-a-28-percent-increase-in-second-quarter-net-income-and-22-million-of-planned-earnings-enhancements-300494104.html

SOURCE Valley National Bancorp

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