Valley National Bancorp Reports Fourth Quarter 2023 Results
- None.
- Net income decreased from Q4 2022 to Q4 2023
- Modest loan growth due to elevated market interest rates
- Non-interest expenses increased by $73.3 million
- Total deposits decreased by $642.5 million
- Net interest margin decreased by 9 basis points
- Efficiency ratio was 60.70 percent
Insights
The reported decrease in net income for Valley National Bancorp from the fourth quarter of 2022 to the fourth quarter of 2023 is a significant point of interest. The decline from $177.6 million to $71.6 million, which is more than a 50% drop, could raise concerns among investors regarding the bank's profitability and operational efficiency. However, when adjusted for non-core items, the net income appears more stable, indicating that one-time expenses or revenues may have influenced the reported figures.
Another critical factor is the net interest income reduction and the net interest margin contraction, which suggest pressure on the bank's core revenue-generating activities. This could be attributed to the ongoing repricing of interest-bearing deposits, which has increased interest expenses. The rising interest rates environment may continue to challenge the bank's margin in the short term. The efficiency ratio's increase to 60.70 percent also indicates higher costs relative to revenue, which is a trend that stakeholders should monitor closely.
Valley National Bancorp's loan portfolio growth, particularly in commercial real estate and consumer loans, is modest but positive. This growth indicates resilience in these sectors despite the broader economic challenges and elevated market interest rates. However, the overall loan growth rate of 1.0 percent on an annualized basis could be seen as conservative, especially when compared to the 7.0 percent total loan growth for the year. This might reflect a cautious approach by the bank in an uncertain economic climate.
The decrease in total deposits, particularly the reduction in indirect customer time deposits, could suggest a shift in consumer behavior and preferences for liquidity in a rising rate environment. The bank's strategy to offset this with an increase in direct customer deposits reflects adaptability but also highlights the competitive nature of deposit gathering in the current financial landscape.
The increase in the provision for credit losses for loans from $7.3 million in the fourth quarter of 2022 to $20.7 million in the same quarter of 2023 is a notable development. This increase suggests that the bank is anticipating potential credit quality issues, which could be a result of economic headwinds or specific portfolio vulnerabilities. The slight uptick in non-accrual loans as a percentage of total loans and the increase in accruing past due loans also indicate areas that require ongoing monitoring for potential credit risk exposure.
Valley's regulatory capital ratios, which remain well within the 'well-capitalized' thresholds, provide a cushion against potential losses. This capital adequacy is a positive sign for stakeholders, as it implies that the bank has a buffer to absorb shocks and support growth.
NEW YORK, Jan. 25, 2024 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the fourth quarter 2023 of
Key Financial Highlights for the Fourth Quarter 2023:
- Loan Portfolio: Loan growth in most categories remained at modest levels during the fourth quarter 2023 due to the ongoing impact of elevated market interest rates and other factors. Total loans increased
$112.8 million , or 1.0 percent on an annualized basis, to$50.2 billion at December 31, 2023 from September 30, 2023, mainly as a result of well-controlled organic loan growth in the commercial real estate and consumer loan categories. Annualized loan growth totaled 7.0 percent for the year ended December 31, 2023. See the "Loans" section below for more details. - Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled
$465.6 million and$462.3 million at December 31, 2023 and September 30, 2023, respectively, representing 0.93 percent and 0.92 percent of total loans at each respective date. During the fourth quarter 2023, the provision for credit losses for loans was$20.7 million as compared to$9.1 million and$7.3 million for the third quarter 2023 and fourth quarter 2022, respectively. See the "Credit Quality" section below for more details. - Credit Quality: Net loan charge-offs totaled
$17.5 million for the fourth quarter 2023 as compared to$5.5 million and$22.4 million for the third quarter 2023 and fourth quarter 2022, respectively. The loan charge-offs in the fourth quarter 2023 were primarily due to partial charge-offs of certain non-performing loan relationships in the commercial loan categories. Total accruing past due loans increased$12.1 million to$91.6 million , or 0.18 percent of total loans, at December 31, 2023 as compared to$79.5 million , or 0.16 percent of total loans, at September 30, 2023. Non-accrual loans represented 0.58 percent and 0.52 percent of total loans at December 31, 2023 and September 30, 2023, respectively. See the "Credit Quality" section below for more details. - Deposits: Total deposits decreased
$642.5 million to$49.2 billion at December 31, 2023 as compared to$49.9 billion at September 30, 2023. During the fourth quarter 2023, a$2.4 billion reduction in indirect customer time deposits was partially offset by$1.7 billion of direct customer deposit inflows across the franchise. See the "Deposits" section below for more details. - Net Interest Income and Margin: Net interest income on a tax equivalent basis of
$398.6 million for the fourth quarter 2023 decreased$15.1 million and$68.7 million as compared to the third quarter 2023 and fourth quarter 2022, respectively. Our net interest margin on a tax equivalent basis decreased by 9 basis points to 2.82 percent in the fourth quarter 2023 as compared to 2.91 percent for the third quarter 2023. The decline in both net interest income and margin as compared to the linked third quarter reflects the ongoing repricing of our interest bearing deposits, net of a 7 basis point increase in the yield of average interest earnings assets for the fourth quarter 2023. See the "Net Interest Income and Margin" section below for more details. - Non-Interest Income: Non-interest income decreased
$6.0 million to$52.7 million for the fourth quarter 2023 as compared to the third quarter 2023 mainly due to a$6.8 million decrease in net gains on sales of assets (primarily caused by the net gain on sale of non-branch offices during the third quarter 2023). - Non-Interest Expense: Non-interest expense increased
$73.3 million to$340.4 million for the fourth quarter 2023 as compared to the third quarter 2023 largely due to non-core charges of$50.3 million and$10.0 million related to the FDIC special assessment and the termination of certain technology contracts, respectively, during the fourth quarter 2023. Professional and legal fees increased$8.1 million as compared to the third quarter 2023 due, in part, to elevated consulting expenses related to our new core banking system implemented in early October 2023, as well as additional non-core legal reserves and settlement charges totaling a combined$3.5 million during the fourth quarter 2023. - Income Tax Expense: Our effective tax rate was 19.6 percent for the fourth quarter 2023 as compared to 27.5 percent for the third quarter 2023. The decrease was mostly due to an increase in tax credits caused by additional tax credit investments during the fourth quarter 2023.
- Efficiency Ratio: Our efficiency ratio was 60.70 percent for the fourth quarter 2023 as compared to 56.72 percent and 49.30 percent for the third quarter 2023 and fourth quarter 2022, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
- Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE), and tangible ROE were 0.47 percent, 4.31 percent, and 6.21 percent for the fourth quarter 2023, respectively. Annualized ROA, ROE, and tangible ROE, adjusted for non-core items, were 0.76 percent, 7.01 percent, and 10.10 percent for the fourth quarter 2023, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
In January 2024, we entered an agreement to sell our commercial premium finance lending business and a significant portion of its outstanding loan portfolio. This line of business represented
Ira Robbins, CEO, commented, "The year of 2023 presented significant challenges for most of the banking industry and Valley. That said, I am pleased with our ability to respond to the challenges early in the year, and find opportunities to enhance our funding and capital position as the year progressed. This, along with our asset quality, is a testament to our dedicated associates and diversified business model."
Mr. Robbins continued, "As we look forward to 2024, we will continue our efforts to build the value of our franchise with a focus on our key strategic priorities, including further diversifying our loan portfolio, enhancing our core funding base, and lastly improving our non-interest income sources. We believe that these initiatives, and a continued emphasis on providing premier relationship banking services, will further differentiate Valley as a leading regional bank."
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling
Net interest margin on a tax equivalent basis of 2.82 percent for the fourth quarter 2023 decreased 9 basis points and 75 basis points from 2.91 percent and 3.57 percent, respectively, for the third quarter 2023 and fourth quarter 2022. The decrease as compared to the third quarter 2023 was largely driven by higher interest rates on interest bearing deposits, partially offset by an increase in the yield on average interest earning assets. Our cost of total average deposits was 3.13 percent for the fourth quarter 2023 as compared to 2.94 percent for the third quarter 2023. The overall cost of average interest-bearing liabilities increased by 21 basis points to 4.13 percent for the fourth quarter 2023 as compared to the linked third quarter 2023 primarily driven by the continued rise in market interest rates on deposits. The yield on average interest earning assets increased by 7 basis points to 5.80 basis points on a linked quarter basis largely due to the increased yield of the loan portfolio. The yield on average loans increased to 6.10 percent for the fourth quarter 2023 from 6.03 percent for the third quarter 2023 mostly due to the higher level of market interest rates on new originations and adjustable rate loans.
Loans, Deposits and Other Borrowings
Loans. Total loans modestly increased to approximately
Deposits. Total deposits decreased
Other Borrowings. Short-term borrowings increased
Credit Quality
Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets increased
Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased
Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at December 31, 2023, September 30, 2023, and December 31, 2022:
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||
| 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 | $ | 133,359 | 1.44 | % | $ | 133,988 | 1.44 | % | $ | 139,941 | 1.59 | % | ||||||
| Commercial real estate loans: | ||||||||||||||||||
| Commercial real estate | 194,820 | 0.69 | 191,562 | 0.68 | 200,421 | 0.78 | ||||||||||||
| Construction | 54,778 | 1.47 | 53,485 | 1.40 | 58,987 | 1.59 | ||||||||||||
| Total commercial real estate loans | 249,598 | 0.78 | 245,047 | 0.77 | 259,408 | 0.88 | ||||||||||||
| Residential mortgage loans | 42,957 | 0.77 | 44,621 | 0.80 | 39,020 | 0.73 | ||||||||||||
| Consumer loans: | ||||||||||||||||||
| Home equity | 3,429 | 0.61 | 3,689 | 0.67 | 4,333 | 0.86 | ||||||||||||
| Auto and other consumer | 16,737 | 0.58 | 14,830 | 0.52 | 15,953 | 0.57 | ||||||||||||
| Total consumer loans | 20,166 | 0.59 | 18,519 | 0.55 | 20,286 | 0.61 | ||||||||||||
| Allowance for loan losses | 446,080 | 0.89 | 442,175 | 0.88 | 458,655 | 0.98 | ||||||||||||
| Allowance for unfunded credit commitments | 19,470 | 20,170 | 24,600 | |||||||||||||||
| Total allowance for credit losses for loans | $ | 465,550 | $ | 462,345 | $ | 483,255 | ||||||||||||
| Allowance for credit losses for | ||||||||||||||||||
| loans as a % loans | 0.93 | % | 0.92 | % | 1.03 | % | ||||||||||||
Our loan portfolio, totaling
The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 0.93 percent at December 31, 2023, 0.92 percent at September 30, 2023 and 1.03 percent at December 31, 2022. During the fourth quarter 2023, the provision for credit losses for loans totaled
Capital Adequacy
Valley's regulatory capital ratios continue to reflect its well-capitalized position. Valley's total risk-based capital, Tier 1 capital, common equity Tier 1 capital, and Tier 1 leverage capital ratios were 11.76 percent, 9.72 percent, 9.29 percent, and 8.16 percent, respectively, at December 31, 2023.
Investor Conference Call
Valley will host a conference call with investors and the financial community at 11:00 A.M. Eastern Standard Time, today to discuss the fourth quarter 2023 earnings and related matters. Interested parties should pre-register using this link: https://register.vevent.com/register to receive the dial-in number and a personal PIN, which are required to access the conference call. The teleconference will also be webcast live: https://edge.media-server.com/ and archived on Valley’s website through February 29, 2024.
About Valley
As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
- the impact of monetary and fiscal policies of the federal government and its agencies, including in response to higher inflation, which could have a material adverse effect on our clients, as well as our business, our employees, and our ability to provide services to our customers;
- the impact of a potential U.S. Government shutdown, default by the U.S. government on its debt obligations, or related credit-rating downgrades, on economic activity in the markets in which we operate and, in general, on levels of end market demand in the economy;
- the impact of unfavorable macroeconomic conditions or downturns, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as geopolitical instabilities or events (including the Israel-Hamas war); natural and other disasters (including severe weather events); health emergencies; acts of terrorism or other external events;
- risks associated with our acquisition of Bank Leumi Le-Israel Corporation (Bank Leumi USA), including (i) the inability to realize expected cost savings and synergies from the acquisition in the amounts or timeframe anticipated and (ii) greater than expected costs or difficulties relating to integration as part of Valley's new core banking system implemented in the fourth quarter 2023;
- the impact of potential instability within the U.S. financial sector in the aftermath of the banking failures in 2023, including the possibility of a run on deposits by a coordinated deposit base, and the impact of the actual or perceived soundness, or concerns about the creditworthiness of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including FDIC insurance premiums, or adverse impact on our stock price, deposits or our ability to borrow or raise capital;
- the impact of negative public opinion regarding Valley or banks in general that damages our reputation and adversely impacts business and revenues;
- the loss of or decrease in lower-cost funding sources within our deposit base;
- damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent, trademark or other intellectual property infringement, misappropriation or other violation, employment related claims, and other matters;
- a prolonged downturn in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio;
- higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
- the inability to grow customer deposits to keep pace with loan growth;
- a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
- the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
- greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
- cyberattacks, ransomware attacks, computer viruses, malware or other cybersecurity incidents that may breach the security of our websites or other systems or networks to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, disable or degrade service, or sabotage our systems or networks;
- results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank, the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
- our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
- unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events; and
- unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors.
A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 and in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.
The financial results and disclosures reported in this release are preliminary. Final 2023 financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2023, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.
We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. 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-
SELECTED FINANCIAL DATA
| Three Months Ended | Years Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||
| ($ in thousands, except for share data) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| FINANCIAL DATA: | |||||||||||||||||||
| Net interest income - FTE (1) | $ | 398,581 | $ | 413,657 | $ | 467,233 | $ | 1,670,973 | $ | 1,660,468 | |||||||||
| Net interest income | 397,275 | 412,418 | 465,819 | 1,665,478 | 1,655,640 | ||||||||||||||
| Non-interest income | 52,691 | 58,664 | 52,796 | 225,729 | 206,793 | ||||||||||||||
| Total revenue | 449,966 | 471,082 | 518,615 | 1,891,207 | 1,862,433 | ||||||||||||||
| Non-interest expense | 340,421 | 267,133 | 266,240 | 1,162,691 | 1,024,949 | ||||||||||||||
| Pre-provision net revenue | 109,545 | 203,949 | 252,375 | 728,516 | 837,484 | ||||||||||||||
| Provision for credit losses | 20,580 | 9,117 | 7,239 | 50,184 | 56,817 | ||||||||||||||
| Income tax expense | 17,411 | 53,486 | 67,545 | 179,821 | 211,816 | ||||||||||||||
| Net income | 71,554 | 141,346 | 177,591 | 498,511 | 568,851 | ||||||||||||||
| Dividends on preferred stock | 4,104 | 4,127 | 3,630 | 16,135 | 13,146 | ||||||||||||||
| Net income available to common stockholders | $ | 67,450 | $ | 137,219 | $ | 173,961 | $ | 482,376 | $ | 555,705 | |||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||
| Basic | 507,683,229 | 507,650,668 | 506,359,704 | 507,532,365 | 485,434,918 | ||||||||||||||
| Diluted | 509,714,526 | 509,256,599 | 509,301,813 | 509,245,768 | 487,817,710 | ||||||||||||||
| Per common share data: | |||||||||||||||||||
| Basic earnings | $ | 0.13 | $ | 0.27 | $ | 0.34 | $ | 0.95 | $ | 1.14 | |||||||||
| Diluted earnings | 0.13 | 0.27 | 0.34 | 0.95 | 1.14 | ||||||||||||||
| Cash dividends declared | 0.11 | 0.11 | 0.11 | 0.44 | 0.44 | ||||||||||||||
| Closing stock price - high | 11.10 | 10.30 | 12.92 | 12.59 | 15.02 | ||||||||||||||
| Closing stock price - low | 7.71 | 7.63 | 10.96 | 6.59 | 10.14 | ||||||||||||||
| FINANCIAL RATIOS: | |||||||||||||||||||
| Net interest margin | 2.81 | % | 2.90 | % | 3.56 | % | 2.95 | % | 3.44 | % | |||||||||
| Net interest margin - FTE (1) | 2.82 | 2.91 | 3.57 | 2.96 | 3.45 | ||||||||||||||
| Annualized return on average assets | 0.47 | 0.92 | 1.25 | 0.82 | 1.09 | ||||||||||||||
| Annualized return on avg. shareholders' equity | 4.31 | 8.56 | 11.23 | 7.60 | 9.50 | ||||||||||||||
| NON-GAAP FINANCIAL DATA AND RATIOS: (3) | |||||||||||||||||||
| Basic earnings per share, as adjusted | $ | 0.22 | $ | 0.26 | $ | 0.35 | $ | 1.06 | $ | 1.31 | |||||||||
| Diluted earnings per share, as adjusted | 0.22 | 0.26 | 0.35 | 1.06 | 1.31 | ||||||||||||||
| Annualized return on average assets, as adjusted | 0.76 | % | 0.89 | % | 1.29 | % | 0.91 | % | 1.25 | % | |||||||||
| Annualized return on average shareholders' equity, as adjusted | 7.01 | 8.26 | 11.56 | 8.45 | 10.87 | ||||||||||||||
| Annualized return on avg. tangible shareholders' equity | 6.21 | % | 12.39 | % | 16.70 | % | 11.05 | % | 14.08 | % | |||||||||
| Annualized return on average tangible shareholders' equity, as adjusted | 10.10 | 11.95 | 17.20 | 12.29 | 16.10 | ||||||||||||||
| Efficiency ratio | 60.70 | 56.72 | 49.30 | 56.62 | 50.55 | ||||||||||||||
| AVERAGE BALANCE SHEET ITEMS: | |||||||||||||||||||
| Assets | $ | 61,113,553 | $ | 61,391,688 | $ | 56,913,215 | $ | 61,065,897 | $ | 52,182,310 | |||||||||
| Interest earning assets | 56,469,468 | 56,802,565 | 52,405,601 | 56,500,528 | 48,067,381 | ||||||||||||||
| Loans | 50,039,429 | 50,019,414 | 46,086,363 | 49,351,861 | 41,930,353 | ||||||||||||||
| Interest bearing liabilities | 40,753,313 | 40,829,078 | 33,596,874 | 40,042,506 | 30,190,267 | ||||||||||||||
| Deposits | 49,460,571 | 49,848,446 | 46,234,857 | 48,491,669 | 42,451,465 | ||||||||||||||
| Shareholders' equity | 6,639,906 | 6,605,786 | 6,327,970 | 6,558,768 | 5,985,236 | ||||||||||||||
| As of | |||||||||||||||||||
| BALANCE SHEET ITEMS: | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Assets | $ | 60,934,974 | $ | 61,183,352 | $ | 61,703,693 | $ | 64,309,573 | $ | 57,462,749 | |||||||||
| Total loans | 50,210,295 | 50,097,519 | 49,877,248 | 48,659,966 | 46,917,200 | ||||||||||||||
| Deposits | 49,242,829 | 49,885,314 | 49,619,815 | 47,590,916 | 47,636,914 | ||||||||||||||
| Shareholders' equity | 6,701,391 | 6,627,299 | 6,575,184 | 6,511,581 | 6,400,802 | ||||||||||||||
| LOANS: | |||||||||||||||||||
| (In thousands) | |||||||||||||||||||
| Commercial and industrial | $ | 9,230,543 | $ | 9,274,630 | $ | 9,287,309 | $ | 9,043,946 | $ | 8,804,830 | |||||||||
| Commercial real estate: | |||||||||||||||||||
| Commercial real estate | 28,243,239 | 28,041,050 | 27,793,072 | 27,051,111 | 25,732,033 | ||||||||||||||
| Construction | 3,726,808 | 3,833,269 | 3,815,761 | 3,725,967 | 3,700,835 | ||||||||||||||
| Total commercial real estate | 31,970,047 | 31,874,319 | 31,608,833 | 30,777,078 | 29,432,868 | ||||||||||||||
| Residential mortgage | 5,569,010 | 5,562,665 | 5,560,356 | 5,486,280 | 5,364,550 | ||||||||||||||
| Consumer: | |||||||||||||||||||
| Home equity | 559,152 | 548,918 | 535,493 | 516,592 | 503,884 | ||||||||||||||
| Automobile | 1,620,389 | 1,585,987 | 1,632,875 | 1,717,141 | 1,746,225 | ||||||||||||||
| Other consumer | 1,261,154 | 1,251,000 | 1,252,382 | 1,118,929 | 1,064,843 | ||||||||||||||
| Total consumer loans | 3,440,695 | 3,385,905 | 3,420,750 | 3,352,662 | 3,314,952 | ||||||||||||||
| Total loans | $ | 50,210,295 | $ | 50,097,519 | $ | 49,877,248 | $ | 48,659,966 | $ | 46,917,200 | |||||||||
| CAPITAL RATIOS: | |||||||||||||||||||
| Book value per common share | $ | 12.79 | $ | 12.64 | $ | 12.54 | $ | 12.41 | $ | 12.23 | |||||||||
| Tangible book value per common share (3) | 8.79 | 8.63 | 8.51 | 8.36 | 8.15 | ||||||||||||||
| Tangible common equity to tangible assets (3) | 7.58 | % | 7.40 | % | 7.24 | % | 6.82 | % | 7.45 | % | |||||||||
| Tier 1 leverage capital | 8.16 | 8.08 | 7.86 | 7.96 | 8.23 | ||||||||||||||
| Common equity tier 1 capital | 9.29 | 9.21 | 9.03 | 9.02 | 9.01 | ||||||||||||||
| Tier 1 risk-based capital | 9.72 | 9.64 | 9.47 | 9.46 | 9.46 | ||||||||||||||
| Total risk-based capital | 11.76 | 11.68 | 11.52 | 11.58 | 11.63 | ||||||||||||||
| Three Months Ended | Years Ended | ||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES: | December 31, | September 30, | December 31, | December 31, | |||||||||||||||
| ($ in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Allowance for credit losses for loans | |||||||||||||||||||
| Beginning balance | $ | 462,345 | $ | 458,676 | $ | 498,408 | $ | 483,255 | $ | 375,702 | |||||||||
| Impact of the adoption of ASU No. 2022-02 | — | — | — | (1,368 | ) | — | |||||||||||||
| Allowance for purchased credit deteriorated (PCD) loans, net (2) | — | — | — | — | 70,319 | ||||||||||||||
| Beginning balance, adjusted | 462,345 | 458,676 | 498,408 | 481,887 | 446,021 | ||||||||||||||
| Loans charged-off: | |||||||||||||||||||
| Commercial and industrial | (10,616 | ) | (7,487 | ) | (22,106 | ) | (48,015 | ) | (33,250 | ) | |||||||||
| Commercial real estate | (8,814 | ) | (255 | ) | (388 | ) | (11,134 | ) | (4,561 | ) | |||||||||
| Construction | (1,906 | ) | — | — | (11,812 | ) | — | ||||||||||||
| Residential mortgage | (25 | ) | (20 | ) | (1 | ) | (194 | ) | (28 | ) | |||||||||
| Total consumer | (1,274 | ) | (1,156 | ) | (1,544 | ) | (4,298 | ) | (4,057 | ) | |||||||||
| Total loans charged-off | (22,635 | ) | (8,918 | ) | (24,039 | ) | (75,453 | ) | (41,896 | ) | |||||||||
| Charged-off loans recovered: | |||||||||||||||||||
| Commercial and industrial | 4,655 | 3,043 | 1,069 | 11,270 | 17,081 | ||||||||||||||
| Commercial real estate | 1 | 5 | 13 | 34 | 2,073 | ||||||||||||||
| Residential mortgage | 15 | 30 | 17 | 201 | 711 | ||||||||||||||
| Total consumer | 473 | 362 | 498 | 1,986 | 2,929 | ||||||||||||||
| Total loans recovered | 5,144 | 3,440 | 1,597 | 13,491 | 22,794 | ||||||||||||||
| Total net charge-offs | (17,491 | ) | (5,478 | ) | (22,442 | ) | (61,962 | ) | (19,102 | ) | |||||||||
| Provision for credit losses for loans | 20,696 | 9,147 | 7,289 | 45,625 | 56,336 | ||||||||||||||
| Ending balance | $ | 465,550 | $ | 462,345 | $ | 483,255 | $ | 465,550 | $ | 483,255 | |||||||||
| Components of allowance for credit losses for loans: | |||||||||||||||||||
| Allowance for loan losses | $ | 446,080 | $ | 442,175 | $ | 458,655 | $ | 446,080 | $ | 458,655 | |||||||||
| Allowance for unfunded credit commitments | 19,470 | 20,170 | 24,600 | 19,470 | 24,600 | ||||||||||||||
| Allowance for credit losses for loans | $ | 465,550 | $ | 462,345 | $ | 483,255 | $ | 465,550 | $ | 483,255 | |||||||||
| Components of provision for credit losses for loans: | |||||||||||||||||||
| Provision for credit losses for loans | $ | 21,396 | $ | 11,221 | $ | 5,353 | $ | 50,755 | $ | 48,236 | |||||||||
| (Credit) provision for unfunded credit commitments | (700 | ) | (2,074 | ) | 1,936 | (5,130 | ) | 8,100 | |||||||||||
| Total provision for credit losses for loans | $ | 20,696 | $ | 9,147 | $ | 7,289 | $ | 45,625 | $ | 56,336 | |||||||||
| Annualized ratio of total net charge-offs to average loans | 0.14 | % | 0.04 | % | 0.19 | % | 0.13 | % | 0.05 | % | |||||||||
| Allowance for credit losses as a % of total loans | 0.93 | % | 0.92 | % | 1.03 | % | 0.93 | % | 1.03 | % | |||||||||
| As of | |||||||||||||||||||
| ASSET QUALITY: | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| ($ in thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Accruing past due loans: | |||||||||||||||||||
| 30 to 59 days past due: | |||||||||||||||||||
| Commercial and industrial | $ | 9,307 | $ | 10,687 | $ | 6,229 | $ | 20,716 | $ | 11,664 | |||||||||
| Commercial real estate | 3,008 | 8,053 | 3,612 | 13,580 | 6,638 | ||||||||||||||
| Residential mortgage | 26,345 | 13,159 | 15,565 | 12,599 | 16,146 | ||||||||||||||
| Total consumer | 20,554 | 15,509 | 8,431 | 7,845 | 9,087 | ||||||||||||||
| Total 30 to 59 days past due | 59,214 | 47,408 | 33,837 | 54,740 | 43,535 | ||||||||||||||
| 60 to 89 days past due: | |||||||||||||||||||
| Commercial and industrial | 5,095 | 5,720 | 7,468 | 24,118 | 12,705 | ||||||||||||||
| Commercial real estate | 1,257 | 2,620 | — | — | 3,167 | ||||||||||||||
| Residential mortgage | 8,200 | 9,710 | 1,348 | 2,133 | 3,315 | ||||||||||||||
| Total consumer | 4,715 | 1,720 | 4,126 | 1,519 | 1,579 | ||||||||||||||
| Total 60 to 89 days past due | 19,267 | 19,770 | 12,942 | 27,770 | 20,766 | ||||||||||||||
| 90 or more days past due: | |||||||||||||||||||
| Commercial and industrial | 5,579 | 6,629 | 6,599 | 8,927 | 18,392 | ||||||||||||||
| Commercial real estate | — | — | 2,242 | — | 2,292 | ||||||||||||||
| Construction | 3,990 | 3,990 | 3,990 | 6,450 | 3,990 | ||||||||||||||
| Residential mortgage | 2,488 | 1,348 | 1,165 | 1,668 | 1,866 | ||||||||||||||
| Total consumer | 1,088 | 391 | 1,006 | 747 | 47 | ||||||||||||||
| Total 90 or more days past due | 13,145 | 12,358 | 15,002 | 17,792 | 26,587 | ||||||||||||||
| Total accruing past due loans | $ | 91,626 | $ | 79,536 | $ | 61,781 | $ | 100,302 | $ | 90,888 | |||||||||
| Non-accrual loans: | |||||||||||||||||||
| Commercial and industrial | $ | 99,912 | $ | 87,655 | $ | 84,449 | $ | 78,606 | $ | 98,881 | |||||||||
| Commercial real estate | 99,739 | 83,338 | 82,712 | 67,938 | 68,316 | ||||||||||||||
| Construction | 60,851 | 62,788 | 63,043 | 68,649 | 74,230 | ||||||||||||||
| Residential mortgage | 26,986 | 21,614 | 20,819 | 23,483 | 25,160 | ||||||||||||||
| Total consumer | 4,383 | 3,545 | 3,068 | 3,318 | 3,174 | ||||||||||||||
| Total non-accrual loans | 291,871 | 258,940 | 254,091 | 241,994 | 269,761 | ||||||||||||||
| Other real estate owned (OREO) | 71 | 71 | 824 | 1,189 | 286 | ||||||||||||||
| Other repossessed assets | 1,444 | 1,314 | 1,230 | 1,752 | 1,937 | ||||||||||||||
| Total non-performing assets | $ | 293,386 | $ | 260,325 | $ | 256,145 | $ | 244,935 | $ | 271,984 | |||||||||
| Total non-accrual loans as a % of loans | 0.58 | % | 0.52 | % | 0.51 | % | 0.50 | % | 0.57 | % | |||||||||
| Total accruing past due and non-accrual loans as a % of loans | 0.76 | % | 0.68 | % | 0.63 | % | 0.70 | % | 0.77 | % | |||||||||
| Allowance for losses on loans as a % of non-accrual loans | 152.83 | % | 170.76 | % | 171.76 | % | 180.54 | % | 170.02 | % | |||||||||
NOTES TO SELECTED FINANCIAL DATA
| (1 | ) | Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. |
| (2 | ) | Represents the allowance for acquired PCD loans, net of PCD loan charge-offs totaling |
| (3 | ) | Non-GAAP Reconciliations. This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. The Company believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. |
Non-GAAP Reconciliations to GAAP Financial Measures
| Three Months Ended | Years Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||
| ($ in thousands, except for share data) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Adjusted net income available to common shareholders (non-GAAP): | |||||||||||||||||||
| Net income, as reported (GAAP) | $ | 71,554 | $ | 141,346 | $ | 177,591 | $ | 498,511 | $ | 568,851 | |||||||||
| Add: FDIC Special assessment (net of tax)(a) | 36,053 | — | — | 36,053 | — | ||||||||||||||
| Less: Net (gains) losses on available for sale and held to maturity securities transactions (net of tax)(b) | (629 | ) | 318 | 5 | (288 | ) | (69 | ) | |||||||||||
| Add: Restructuring charge (net of tax)(c) | (386 | ) | (484 | ) | — | 7,145 | — | ||||||||||||
| Add: Provision for credit losses for available for sale securities (d) | — | — | — | 5,000 | — | ||||||||||||||
| Add: Non-PCD provision for credit losses (net of tax)(e) | — | — | — | — | 29,282 | ||||||||||||||
| Add: Merger related expenses (net of tax)(f) | 7,168 | — | 5,285 | 10,130 | 52,388 | ||||||||||||||
| Less: Net gains on sales of office buildings (net of tax)(g) | — | (4,817 | ) | — | (4,817 | ) | — | ||||||||||||
| Add: Litigation reserve (net of tax)(h) | 2,537 | — | — | 2,537 | — | ||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 116,297 | $ | 136,363 | $ | 182,881 | $ | 554,271 | $ | 650,452 | |||||||||
| Dividends on preferred stock | 4,104 | 4,127 | 3,630 | 16,135 | 13,146 | ||||||||||||||
| Net income available to common shareholders, as adjusted (non-GAAP) | $ | 112,193 | $ | 132,236 | $ | 179,251 | $ | 538,136 | $ | 637,306 | |||||||||
| _____________ | |||||||||||||||||||
| (a) Included in FDIC insurance assessment. | |||||||||||||||||||
| (b) Included in gains (losses) on securities transactions, net. | |||||||||||||||||||
| (c) Represents severance (credit adjustments) expense related to workforce reductions within salary and employee benefits expense. | |||||||||||||||||||
| (d) Included in provision for credit losses for available for sale and held to maturity securities (tax disallowed). | |||||||||||||||||||
| (e) Represents provision for credit losses for non-PCD assets and unfunded credit commitments acquired during the period. | |||||||||||||||||||
| (f) Represents data processing termination costs within technology, furniture and equipment expense and severance within salary and employee benefits expense for the 2023 periods. The merger related expense for the 2022 periods were mainly salary and employee benefits expense. | |||||||||||||||||||
| (g) Included in net (losses) gains on sale of assets within non-interest income. | |||||||||||||||||||
| (h) Represents legal reserves and settlement charges included in professional and legal fees. | |||||||||||||||||||
| Adjusted per common share data (non-GAAP): | |||||||||||||||||||
| Net income available to common shareholders, as adjusted (non-GAAP) | $ | 112,193 | $ | 132,236 | $ | 179,251 | $ | 538,136 | $ | 637,306 | |||||||||
| Average number of shares outstanding | 507,683,229 | 507,650,668 | 506,359,704 | 507,532,365 | 485,434,918 | ||||||||||||||
| Basic earnings, as adjusted (non-GAAP) | $ | 0.22 | $ | 0.26 | $ | 0.35 | $ | 1.06 | $ | 1.31 | |||||||||
| Average number of diluted shares outstanding | 509,714,526 | 509,256,599 | 509,301,813 | 509,245,768 | 487,817,710 | ||||||||||||||
| Diluted earnings, as adjusted (non-GAAP) | $ | 0.22 | $ | 0.26 | $ | 0.35 | $ | 1.06 | $ | 1.31 | |||||||||
| Adjusted annualized return on average tangible shareholders' equity (non-GAAP): | |||||||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 116,297 | $ | 136,363 | $ | 182,881 | $ | 554,271 | $ | 650,452 | |||||||||
| Average shareholders' equity | 6,639,906 | 6,605,786 | 6,327,970 | 6,558,768 | 5,985,236 | ||||||||||||||
| Less: Average goodwill and other intangible assets | 2,033,656 | 2,042,486 | 2,074,367 | 2,047,172 | 1,944,503 | ||||||||||||||
| Average tangible shareholders' equity | $ | 4,606,250 | $ | 4,563,300 | $ | 4,253,603 | $ | 4,511,596 | $ | 4,040,733 | |||||||||
| Annualized return on average tangible shareholders' equity, as adjusted (non-GAAP) | 10.10 | % | 11.95 | % | 17.20 | % | 12.29 | % | 16.10 | % | |||||||||
Non-GAAP Reconciliations to GAAP Financial Measures (Continued)
| Three Months Ended | Years Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||
| ($ in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Adjusted annualized return on average assets (non-GAAP): | |||||||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 116,297 | $ | 136,363 | $ | 182,881 | $ | 554,271 | $ | 650,452 | |||||||||
| Average assets | 61,113,553 | 61,391,688 | 56,913,215 | 61,065,897 | 52,182,310 | ||||||||||||||
| Annualized return on average assets, as adjusted (non-GAAP) | 0.76 | % | 0.89 | % | 1.29 | % | 0.91 | % | 1.25 | % | |||||||||
| Adjusted annualized return on average shareholders' equity (non-GAAP): | |||||||||||||||||||
| Net income, as adjusted (non-GAAP) | $ | 116,297 | $ | 136,363 | $ | 182,881 | $ | 554,271 | $ | 650,452 | |||||||||
| Average shareholders' equity | 6,639,906 | 6,605,786 | 6,327,970 | 6,558,768 | 5,985,236 | ||||||||||||||
| Annualized return on average shareholders' equity, as adjusted (non-GAAP) | 7.01 | % | 8.26 | % | 11.56 | % | 8.45 | % | 10.87 | % | |||||||||
| Annualized return on average tangible shareholders' equity (non-GAAP): | |||||||||||||||||||
| Net income, as reported (GAAP) | $ | 71,554 | $ | 141,346 | $ | 177,591 | $ | 498,511 | $ | 568,851 | |||||||||
| Average shareholders' equity | 6,639,906 | 6,605,786 | 6,327,970 | 6,558,768 | 5,985,236 | ||||||||||||||
| Less: Average goodwill and other intangible assets | 2,033,656 | 2,042,486 | 2,074,367 | 2,047,172 | 1,944,503 | ||||||||||||||
| Average tangible shareholders' equity | $ | 4,606,250 | $ | 4,563,300 | $ | 4,253,603 | $ | 4,511,596 | $ | 4,040,733 | |||||||||
| Annualized return on average tangible shareholders' equity (non-GAAP) | 6.21 | % | 12.39 | % | 16.70 | % | 11.05 | % | 14.08 | % | |||||||||
| Efficiency ratio (non-GAAP): | |||||||||||||||||||
| Non-interest expense, as reported (GAAP) | $ | 340,421 | $ | 267,133 | $ | 266,240 | $ | 1,162,691 | $ | 1,024,949 | |||||||||
| Less: FDIC Special assessment (pre-tax) | 50,297 | — | — | 50,297 | — | ||||||||||||||
| Less: Restructuring charge (pre-tax) | (538 | ) | (675 | ) | — | 9,969 | — | ||||||||||||
| Less: Merger-related expenses (pre-tax) | 10,000 | — | 7,372 | 14,133 | 71,203 | ||||||||||||||
| Less: Amortization of tax credit investments (pre-tax) | 4,547 | 4,191 | 3,213 | 18,009 | 12,407 | ||||||||||||||
| Less: Litigation reserve (pre-tax) | 3,540 | — | — | 3,540 | — | ||||||||||||||
| Non-interest expense, as adjusted (non-GAAP) | 272,575 | 263,617 | 255,655 | 1,066,743 | 941,339 | ||||||||||||||
| Net interest income, as reported (GAAP) | 397,275 | 412,418 | 465,819 | 1,665,478 | 1,655,640 | ||||||||||||||
| Non-interest income, as reported (GAAP) | 52,691 | 58,664 | 52,796 | 225,729 | 206,793 | ||||||||||||||
| Less: Net (gains) losses on available for sale and held to maturity securities transactions, net (pre-tax) | (877 | ) | 443 | 7 | (401 | ) | (95 | ) | |||||||||||
| Less: Net gains on sales of office buildings (pre-tax) | — | (6,721 | ) | — | (6,721 | ) | — | ||||||||||||
| Non-interest income, as adjusted (non-GAAP) | $ | 51,814 | $ | 52,386 | $ | 52,803 | $ | 218,607 | $ | 206,698 | |||||||||
| Gross operating income, as adjusted (non-GAAP) | $ | 449,089 | $ | 464,804 | $ | 518,622 | $ | 1,884,085 | $ | 1,862,338 | |||||||||
| Efficiency ratio (non-GAAP) | 60.70 | % | 56.72 | % | 49.30 | % | 56.62 | % | 50.55 | % | |||||||||
| As of | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| ($ in thousands, except for share data) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Tangible book value per common share (non-GAAP): | |||||||||||||||||||
| Common shares outstanding | 507,709,927 | 507,660,742 | 507,619,430 | 507,762,358 | 506,374,478 | ||||||||||||||
| Shareholders' equity (GAAP) | $ | 6,701,391 | $ | 6,627,299 | $ | 6,575,184 | $ | 6,511,581 | $ | 6,400,802 | |||||||||
| Less: Preferred stock | 209,691 | 209,691 | 209,691 | 209,691 | 209,691 | ||||||||||||||
| Less: Goodwill and other intangible assets | 2,029,267 | 2,038,202 | 2,046,882 | 2,056,107 | 2,066,392 | ||||||||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 4,462,433 | $ | 4,379,406 | $ | 4,318,611 | $ | 4,245,783 | $ | 4,124,719 | |||||||||
| Tangible book value per common share (non-GAAP) | $ | 8.79 | $ | 8.63 | $ | 8.51 | $ | 8.36 | $ | 8.15 | |||||||||
| Tangible common equity to tangible assets (non-GAAP): | |||||||||||||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 4,462,433 | $ | 4,379,406 | $ | 4,318,611 | $ | 4,245,783 | $ | 4,124,719 | |||||||||
| Total assets (GAAP) | $ | 60,934,974 | $ | 61,183,352 | $ | 61,703,693 | $ | 64,309,573 | $ | 57,462,749 | |||||||||
| Less: Goodwill and other intangible assets | 2,029,267 | 2,038,202 | 2,046,882 | 2,056,107 | 2,066,392 | ||||||||||||||
| Tangible assets (non-GAAP) | $ | 58,905,707 | $ | 59,145,150 | $ | 59,656,811 | $ | 62,253,466 | $ | 55,396,357 | |||||||||
| Tangible common equity to tangible assets (non-GAAP) | 7.58 | % | 7.40 | % | 7.24 | % | 6.82 | % | 7.45 | % | |||||||||
| December 31, | |||||||
| 2023 | 2022 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Cash and due from banks | $ | 284,090 | $ | 444,325 | |||
| Interest bearing deposits with banks | 607,135 | 503,622 | |||||
| Investment securities: | |||||||
| Equity securities | 64,464 | 48,731 | |||||
| Trading debt securities | 3,973 | 13,438 | |||||
| Available for sale debt securities | 1,296,576 | 1,261,397 | |||||
| Held to maturity debt securities (net of allowance for credit losses of | 3,739,208 | 3,827,338 | |||||
| Total investment securities | 5,104,221 | 5,150,904 | |||||
| Loans held for sale (includes fair value of | 30,640 | 18,118 | |||||
| Loans | 50,210,295 | 46,917,200 | |||||
| Less: Allowance for loan losses | (446,080 | ) | (458,655 | ) | |||
| Net loans | 49,764,215 | 46,458,545 | |||||
| Premises and equipment, net | 381,081 | 358,556 | |||||
| Lease right of use assets | 343,461 | 306,352 | |||||
| Bank owned life insurance | 723,799 | 717,177 | |||||
| Accrued interest receivable | 245,498 | 196,606 | |||||
| Goodwill | 1,868,936 | 1,868,936 | |||||
| Other intangible assets, net | 160,331 | 197,456 | |||||
| Other assets | 1,421,567 | 1,242,152 | |||||
| Total Assets | $ | 60,934,974 | $ | 57,462,749 | |||
| Liabilities | |||||||
| Deposits: | |||||||
| Non-interest bearing | $ | 11,539,483 | $ | 14,463,645 | |||
| Interest bearing: | |||||||
| Savings, NOW and money market | 24,526,622 | 23,616,812 | |||||
| Time | 13,176,724 | 9,556,457 | |||||
| Total deposits | 49,242,829 | 47,636,914 | |||||
| Short-term borrowings | 917,834 | 138,729 | |||||
| Long-term borrowings | 2,328,375 | 1,543,058 | |||||
| Junior subordinated debentures issued to capital trusts | 57,108 | 56,760 | |||||
| Lease liabilities | 403,781 | 358,884 | |||||
| Accrued expenses and other liabilities | 1,283,656 | 1,327,602 | |||||
| Total Liabilities | 54,233,583 | 51,061,947 | |||||
| Shareholders’ Equity | |||||||
| Preferred stock, no par value; authorized 50,000,000 shares authorized: | |||||||
| Series A (4,600,000 shares issued at December 31, 2023 and December 31, 2022) | 111,590 | 111,590 | |||||
| Series B (4,000,000 shares issued at December 31, 2023 and December 31, 2022) | 98,101 | 98,101 | |||||
| Common stock (no par value, authorized 650,000,000 shares; issued 507,896,910 shares at December 31, 2023 and December 31, 2022) | 178,187 | 178,185 | |||||
| Surplus | 4,989,989 | 4,980,231 | |||||
| Retained earnings | 1,471,371 | 1,218,445 | |||||
| Accumulated other comprehensive loss | (146,456 | ) | (164,002 | ) | |||
| Treasury stock, at cost (186,983 common shares at December 31, 2023 and 1,522,432 common shares at December 31, 2022) | (1,391 | ) | (21,748 | ) | |||
| Total Shareholders’ Equity | 6,701,391 | 6,400,802 | |||||
| Total Liabilities and Shareholders’ Equity | $ | 60,934,974 | $ | 57,462,749 | |||
| Three Months Ended | Years Ended | |||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Interest Income | ||||||||||||||||||
| Interest and fees on loans | $ | 762,894 | $ | 753,638 | $ | 599,015 | $ | 2,886,930 | $ | 1,828,477 | ||||||||
| Interest and dividends on investment securities: | ||||||||||||||||||
| Taxable | 34,117 | 32,383 | 31,300 | 130,708 | 105,716 | |||||||||||||
| Tax-exempt | 4,820 | 4,585 | 5,219 | 20,305 | 17,958 | |||||||||||||
| Dividends | 6,138 | 5,299 | 3,978 | 24,139 | 11,468 | |||||||||||||
| Interest on federal funds sold and other short-term investments | 10,215 | 17,113 | 7,038 | 76,809 | 13,064 | |||||||||||||
| Total interest income | 818,184 | 813,018 | 646,550 | 3,138,891 | 1,976,683 | |||||||||||||
| Interest Expense | ||||||||||||||||||
| Interest on deposits: | ||||||||||||||||||
| Savings, NOW and money market | 221,501 | 201,916 | 109,286 | 739,025 | 186,709 | |||||||||||||
| Time | 165,351 | 164,336 | 48,417 | 535,749 | 69,691 | |||||||||||||
| Interest on short-term borrowings | 5,524 | 5,189 | 7,404 | 94,869 | 17,453 | |||||||||||||
| Interest on long-term borrowings and junior subordinated debentures | 28,533 | 29,159 | 15,624 | 103,770 | 47,190 | |||||||||||||
| Total interest expense | 420,909 | 400,600 | 180,731 | 1,473,413 | 321,043 | |||||||||||||
| Net Interest Income | 397,275 | 412,418 | 465,819 | 1,665,478 | 1,655,640 | |||||||||||||
| (Credit) provision for credit losses for available for sale and held to maturity securities | (116 | ) | (30 | ) | (50 | ) | 4,559 | 481 | ||||||||||
| Provision for credit losses for loans | 20,696 | 9,147 | 7,289 | 45,625 | 56,336 | |||||||||||||
| Net Interest Income After Provision for Credit Losses | 376,695 | 403,301 | 458,580 | 1,615,294 | 1,598,823 | |||||||||||||
| Non-Interest Income | ||||||||||||||||||
| Wealth management and trust fees | 11,978 | 11,417 | 10,720 | 44,158 | 34,709 | |||||||||||||
| Insurance commissions | 3,221 | 2,336 | 2,903 | 11,116 | 11,975 | |||||||||||||
| Capital Markets | 6,489 | 7,141 | 10,120 | 41,489 | 52,362 | |||||||||||||
| Service charges on deposit accounts | 9,336 | 10,952 | 10,313 | 41,306 | 36,930 | |||||||||||||
| Gains (losses) on securities transactions, net | 907 | (398 | ) | (172 | ) | 1,104 | (1,230 | ) | ||||||||||
| Fees from loan servicing | 2,616 | 2,681 | 2,637 | 10,670 | 11,273 | |||||||||||||
| Gains on sales of loans, net | 2,302 | 2,023 | 908 | 6,054 | 6,418 | |||||||||||||
| (Losses) gains on sales of assets, net | (129 | ) | 6,653 | 1,269 | 6,809 | 897 | ||||||||||||
| Bank owned life insurance | 4,107 | 2,709 | 2,200 | 11,843 | 8,040 | |||||||||||||
| Other | 11,864 | 13,150 | 11,898 | 51,180 | 45,419 | |||||||||||||
| Total non-interest income | 52,691 | 58,664 | 52,796 | 225,729 | 206,793 | |||||||||||||
| Non-Interest Expense | ||||||||||||||||||
| Salary and employee benefits expense | 131,719 | 137,292 | 129,634 | 563,591 | 526,737 | |||||||||||||
| Net occupancy expense | 27,590 | 24,675 | 23,446 | 101,470 | 94,352 | |||||||||||||
| Technology, furniture and equipment expense | 44,404 | 37,320 | 46,507 | 150,708 | 161,752 | |||||||||||||
| FDIC insurance assessment | 60,627 | 7,946 | 6,827 | 88,154 | 22,836 | |||||||||||||
| Amortization of other intangible assets | 9,696 | 9,741 | 10,900 | 39,768 | 37,825 | |||||||||||||
| Professional and legal fees | 25,238 | 17,109 | 19,620 | 80,567 | 82,618 | |||||||||||||
| Amortization of tax credit investments | 4,547 | 4,191 | 3,213 | 18,009 | 12,407 | |||||||||||||
| Other | 36,600 | 28,859 | 26,093 | 120,424 | 86,422 | |||||||||||||
| Total non-interest expense | 340,421 | 267,133 | 266,240 | 1,162,691 | 1,024,949 | |||||||||||||
| Income Before Income Taxes | 88,965 | 194,832 | 245,136 | 678,332 | 780,667 | |||||||||||||
| Income tax expense | 17,411 | 53,486 | 67,545 | 179,821 | 211,816 | |||||||||||||
| Net Income | 71,554 | 141,346 | 177,591 | 498,511 | 568,851 | |||||||||||||
| Dividends on preferred stock | 4,104 | 4,127 | 3,630 | 16,135 | 13,146 | |||||||||||||
| Net Income Available to Common Shareholders | $ | 67,450 | $ | 137,219 | $ | 173,961 | $ | 482,376 | $ | 555,705 | ||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||
| Average | Avg. | Average | Avg. | Average | Avg. | ||||||||||||||||||||||||
| ($ in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||
| Loans (1)(2) | $ | 50,039,429 | $ | 762,918 | 6.10 | % | $ | 50,019,414 | $ | 753,662 | 6.03 | % | $ | 46,086,363 | $ | 599,040 | 5.20 | % | |||||||||||
| Taxable investments (3) | 4,950,773 | 40,255 | 3.25 | 4,915,778 | 37,682 | 3.07 | 4,934,084 | 35,278 | 2.86 | ||||||||||||||||||||
| Tax-exempt investments (1)(3) | 593,577 | 6,101 | 4.11 | 620,439 | 5,800 | 3.74 | 623,322 | 6,608 | 4.24 | ||||||||||||||||||||
| Interest bearing deposits with banks | 885,689 | 10,215 | 4.61 | 1,246,934 | 17,113 | 5.49 | 761,832 | 7,038 | 3.70 | ||||||||||||||||||||
| Total interest earning assets | 56,469,468 | 819,489 | 5.80 | 56,802,565 | 814,257 | 5.73 | 52,405,601 | 647,964 | 4.95 | ||||||||||||||||||||
| Other assets | 4,644,085 | 4,589,123 | 4,507,614 | ||||||||||||||||||||||||||
| Total assets | $ | 61,113,553 | $ | 61,391,688 | $ | 56,913,215 | |||||||||||||||||||||||
| Liabilities and shareholders' equity | |||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||
| Savings, NOW and money market deposits | $ | 23,991,093 | $ | 221,500 | 3.69 | % | $ | 23,016,737 | $ | 201,916 | 3.51 | % | $ | 23,476,111 | $ | 109,286 | 1.86 | % | |||||||||||
| Time deposits | 13,934,683 | 165,351 | 4.75 | 14,880,311 | 164,336 | 4.42 | 7,641,769 | 48,417 | 2.53 | ||||||||||||||||||||
| Short-term borrowings | 449,831 | 5,524 | 4.91 | 436,518 | 5,189 | 4.75 | 880,615 | 7,404 | 3.36 | ||||||||||||||||||||
| Long-term borrowings (4) | 2,377,706 | 28,533 | 4.80 | 2,495,512 | 29,159 | 4.67 | 1,598,379 | 15,624 | 3.91 | ||||||||||||||||||||
| Total interest bearing liabilities | 40,753,313 | 420,908 | 4.13 | 40,829,078 | 400,600 | 3.92 | 33,596,874 | 180,731 | 2.15 | ||||||||||||||||||||
| Non-interest bearing deposits | 11,534,795 | 11,951,398 | 15,116,977 | ||||||||||||||||||||||||||
| Other liabilities | 2,185,539 | 2,005,426 | 1,871,394 | ||||||||||||||||||||||||||
| Shareholders' equity | 6,639,906 | 6,605,786 | 6,327,970 | ||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 61,113,553 | $ | 61,391,688 | $ | 56,913,215 | |||||||||||||||||||||||
| Net interest income/interest rate spread (5) | $ | 398,581 | 1.67 | % | $ | 413,657 | 1.81 | % | $ | 467,233 | 2.80 | % | |||||||||||||||||
| Tax equivalent adjustment | (1,305 | ) | (1,239 | ) | (1,414 | ) | |||||||||||||||||||||||
| Net interest income, as reported | $ | 397,276 | $ | 412,418 | $ | 465,819 | |||||||||||||||||||||||
| Net interest margin (6) | 2.81 | % | 2.90 | % | 3.56 | % | |||||||||||||||||||||||
| Tax equivalent effect | 0.01 | 0.01 | 0.01 | ||||||||||||||||||||||||||
| Net interest margin on a fully tax equivalent basis (6) | 2.82 | % | 2.91 | % | 3.57 | % | |||||||||||||||||||||||
(1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
(2) Loans are stated net of unearned income and include non-accrual loans.
(3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
(4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial 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.
| 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, 70 Speedwell Avenue, Morristown, New Jersey, 07960, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valley.com. |
| Contact: | Michael D. Hagedorn | |
| Senior Executive Vice President and | ||
| Chief Financial Officer | ||
| 973-872-4885 |
FAQ
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