EXHIBIT 99.1
vlylogoa01a16.gif
 
News Release




FOR IMMEDIATE RELEASE
Contact:
 
Alan D. Eskow
 
 
 
Senior Executive Vice President and
 
 
 
Chief Financial Officer
 
 
 
973-305-4003

VALLEY NATIONAL BANCORP REPORTS FIRST QUARTER NET INCOME
AND STRONG ORGANIC LOAN GROWTH

WAYNE, NJ – April 26, 2018 -- Valley National Bancorp (NYSE:VLY), the holding company for Valley National Bank, today reported net income for the first quarter of 2018 of $42.0 million, or $0.12 per diluted common share, as compared to the first quarter of 2017 earnings of $46.1 million, or $0.17 per diluted common share, and net income of $26.1 million, or $0.09 per diluted common share, for the fourth quarter of 2017. Net income for first quarter of 2018 included infrequent charges totaling $25.9 million ($19.1 million after-tax) which mainly consisted of $13.4 million of merger expenses related to our acquisition of USAmeriBancorp, Inc. ("USAB") effective January 1, 2018 and a $10.5 million increase in litigation reserves. The fourth quarter of 2017 results included infrequent charges of $21.1 million ($19.7 million after-tax) mainly due to the impact of the Tax Cuts and Jobs Act ("the Tax Act") and, to a much lesser extent, USAB merger expenses. Excluding these charges and other non-core items, our adjusted net income was $61.5 million, or $0.18 per diluted common share, for the first quarter of 2018, and $45.8 million, or $0.16 per diluted common share, for the fourth quarter of 2017. See further details below, including the "Consolidated Financial Highlights" tables.
Key financial highlights for the first quarter:
Acquisition of USAmeriBancorp, Inc.: On January 1, 2018 Valley completed its acquisition of USAB and its wholly-owned subsidiary, USAmeriBank, headquartered in Clearwater, Florida. USAB had approximately $5.1 billion in assets, $3.7 billion in loans and $3.6 billion in deposits, after purchase accounting adjustments, and a branch network of 29 offices. The acquisition represents a significant addition to Valley’s Florida franchise, specifically in the Tampa Bay market. The acquisition also brought Valley to the Birmingham, Montgomery, and Tallapoosa areas in Alabama, where Valley now operates 15 branch office locations. The common shareholders of USAB received 6.1 shares of Valley common stock for each USAB share they owned. The total consideration for the acquisition was approximately $737 million, and the transaction resulted in $388 million of goodwill and $46 million of core deposit intangible assets subject to amortization. Full systems integration is expected to be completed in the second quarter of 2018.
Loan Portfolio: Loans increased $4.2 billion to approximately $22.6 billion at March 31, 2018 from December 31, 2017 largely due to $3.7 billion in acquired loans from USAB. The remaining increase was largely due to strong quarter over quarter organic growth in total commercial real estate loans, commercial and industrial loans and residential mortgage loans. Additionally, we sold $234.2 million of residential mortgage loans resulting in pre-tax gains of $6.8 million during the first quarter of 2018. See additional information under the "Loans, Deposits and Other Borrowings" section below.

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



Credit Quality: Net loan recoveries totaled $1.3 million for the first quarter of 2018, and represented our third consecutive quarter of net recoveries. Non-accrual loans represented 0.27 percent of total loans at March 31, 2018 compared to 0.26 percent at December 31, 2017.
Net Interest Income: Net interest income on a tax equivalent basis of $209.1 million for the first quarter of 2018 increased $45.1 million and $37.7 million as compared to the first quarter of 2017 and fourth quarter of 2017, respectively, largely due to acquired and organic loan growth.
Provision for Credit Losses: During the first quarter of 2018, we recorded a $10.9 million provision for credit losses as compared to $2.5 million and $2.2 million for the first quarter of 2017 and fourth quarter of 2017, respectively. The increased provision was mainly due to higher specific reserves allocated to impaired taxi medallion loans at March 31, 2018, as well as the organic loan growth during the first quarter of 2018.
Net Interest Margin: Our net interest margin on a tax equivalent basis of 3.13 percent for the first quarter of 2018 remained unchanged as compared to both the first quarter of 2017 and fourth quarter of 2017. See the "Net Interest Income and Margin" section below for more details.
Efficiency Ratio: Our efficiency ratio was 72.44 percent for the first quarter of 2018 as compared to 68.30 percent and 64.48 percent for the fourth quarter of 2017 and first quarter of 2017, respectively. Excluding litigation reserve expense, merger expense and amortization of tax credit investments included in non-interest expense, our adjusted efficiency ratio was 60.29 percent for the first quarter of 2018 as compared to 57.44 percent and 61.64 percent for the fourth quarter of 2017 and first quarter of 2017, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding this non-GAAP measure.
Income Tax Expense: The effective tax rate was 23.9 percent for the first quarter of 2018 reflecting the reduction of the federal corporate income tax rate from 35 percent to 21 percent by the Tax Act. Income tax expense totaled $13.2 million for the first quarter of 2018 and included a $2 million charge related to effect of the USAB acquisition on our state deferred tax assets.
Ira Robbins, CEO and President commented, “Our first quarter of 2018 reflected improved operating performance highlighting Valley's tremendous potential.  The organic loan and deposit growth we originated illustrates just some of the prospects that remain in front of us.  Despite several unusual items during the quarter, our core earnings are headed in the right direction.  I look forward to focusing on enhancing the operating leverage and demonstrating the true earnings power of this growing franchise. We continue to transform Valley into a preeminent financial institution that delivers strong financial performance while establishing relevancy in both the near and long term. Additionally, I would like to thank all of our employees that are working tirelessly to ensure the success of our upcoming systems integration of USAmeriBank."
Net Interest Income and Margin
Net interest income consists of interest income and dividends earned on interest earning assets less interest expense on interest bearing liabilities and represents the main source of income for Valley. During the first quarter of 2018, Valley elected to reclassify fee income related to derivative interest rate swaps executed with commercial loan customers totaling $3.3 million from interest and fees on loans to other non-interest income within the presentation of our consolidated statements of income and net interest

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



margin (included in the "Consolidated Financial Highlights" tables below). The applicable prior period amounts have also been reclassified to conform to this current presentation. See further discussion of the swap fees in the "Non-Interest Income" section below.

Net interest income on a tax equivalent basis totaling $209.1 million for the first quarter of 2018 increased $45.1 million and $37.7 million as compared to the first quarter of 2017 and fourth quarter of 2017, respectively, largely due to the USAB acquisition. Interest income on a tax equivalent basis increased $49.1 million to $269.0 million for the first quarter of 2018 as compared to the fourth quarter of 2017 mainly due to a $4.1 billion increase in average loans, partially offset by a lower yield on average investment securities. The decrease in yield on average investments for the first quarter of 2018 as compared to the linked fourth quarter was due, in part, to a lower tax equivalent yield on non-taxable securities caused by the Tax Act. Interest expense of $59.9 million for the first quarter of 2018 increased $11.4 million as compared to the fourth quarter of 2017 largely driven by the interest bearing liabilities assumed from USAB and organic growth from our current deposit gathering initiatives.

Our net interest margin on a tax equivalent basis of 3.13 percent for the first quarter of 2018 remained unchanged as compared to both the first quarter of 2017 and fourth quarter of 2017. The yield on average interest earning assets increased by 1 basis points on a linked quarter basis mostly due to an increase in the yield on average loans, partially offset by a decline in yield on average investment securities and two less days during the first quarter of 2018. The yield on average loans increased by 4 basis points to 4.26 percent for the first quarter of 2018 as compared to the fourth quarter of 2017 due to the high volume of new loan originations, but was partially offset by somewhat elevated repayments of high yielding loans over the last six month period, as well as moderately lower accretion on the pre-existing purchased credit-impaired ("PCI") loan portfolio (i.e., exclusive of recently acquired USAB loans). The yield on average taxable and non-taxable investment securities in the first quarter of 2018 decreased by 14 basis points and 37 basis points, respectively, as compared to the fourth quarter of 2017. The overall cost of average interest bearing liabilities was 1.22 percent for the first quarter of 2018 and remained unchanged as compared to the linked fourth quarter of 2017. Our cost of total deposits was 0.68 percent for the first quarter of 2018 as compared to 0.65 percent for the fourth quarter of 2017 due to a slight shift in average non-interest bearing deposits within the mix of total average deposits.
Non-Interest Income
Non-interest income increased $2.1 million, or 6.9 percent, to $32.3 million for the first quarter of 2018 from $30.2 million for the fourth quarter of 2017 mostly due to higher service charges on deposit accounts driven by the acquisition of USAB on January 1, 2018. Other non-interest income included fee income related to derivative interest rate swaps executed with commercial loan customers totaling $3.3 million and $2.6 million for first quarter of 2018 and fourth quarter of 2017, respectively.
Non-Interest Expense
Non-interest expense increased $37.4 million, or 27.5 percent, to $173.8 million for the first quarter of 2018 from the fourth quarter of 2017 mainly due to increases of $28.7 million and $11.3 million in salary and employee benefits and professional and legal fees, respectively. The increase in salary and employee benefits was due, in part, to the additional staffing costs and $9.6 million of change in control, severance and retention expenses related to the USAB acquisition, mostly normal increases in payroll and stock-

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



based compensation expense, and, to a lesser extent, expansion of our home mortgage consultant team as compared to the fourth quarter. Professional and legal fees included a $10.5 million charge related to an increase in our litigation reserves during the first quarter of 2018. Total USAB merger related expenses were $13.4 million (including the $9.6 million of aforementioned salary and employee benefit expenses) and $1.4 million for the first quarter of 2018 and fourth quarter of 2017, respectively. Amortization of tax credit investments decreased $15.0 million to $5.3 million for the first quarter of 2018 as compared to fourth quarter of 2017 largely due to the timing of tax credits and a fourth quarter impairment charge of $4.3 million related to the Tax Act.
Income Tax Expense
Income tax expense totaled $13.2 million for the first quarter of 2018 as compared to $35.0 million and $18.1 million for the fourth quarter of 2017 and first quarter of 2017, respectively. Our effective tax rate was 23.9 percent, 57.3 percent and 28.2 percent for the first quarter of 2018, fourth quarter of 2017, and first quarter of 2017, respectively. The higher income tax expense and effective tax rate for the fourth quarter of 2017 reflect a $15.4 million charge resulting from the re-measurement of Valley's estimated net deferred tax assets as of December 31, 2017 under the provisions of the Tax Act. For the remainder of 2018, we currently estimate that our effective tax rate will range from 20 percent to 22 percent primarily reflecting the impacts of the Tax Act, tax-exempt income, tax-advantaged investments and general business credits.
Loans, Deposits and Other Borrowings
Loans. Loans increased $4.2 billion to approximately $22.6 billion at March 31, 2018 from December 31, 2017 largely due to $3.7 billion in acquired PCI loans from USAB on January 1, 2018. The remaining increase was mainly due to strong quarter over quarter organic growth in total commercial real estate loans, commercial and industrial loans and residential mortgage loans. During the first quarter of 2018, Valley also originated $228 million of residential mortgage loans for sale rather than held for investment. Residential mortgage loans held for sale totaled $8.4 million and $15.1 million at March 31, 2018 and December 31, 2017, respectively.
Total commercial and industrial loans increased $890.2 million from December 31, 2017 to approximately $3.6 billion at March 31, 2018 mostly due to $721.6 million in PCI loans acquired from USAB and strong organic growth largely within the newly expanded Florida markets.
Commercial real estate loans (excluding construction loans) increased $2.2 billion from December 31, 2017 to $11.7 billion at March 31, 2018 mostly due to $2.0 billion in PCI loans acquired from USAB. The non-PCI loans increased $242.9 million, or 11.3 percent on an annualized basis, due to solid organic loan volumes in our primary markets, including approximately $129 million of loans from the new Florida markets. Construction loans increased $521.4 million to $1.4 billion at March 31, 2018 from December 31, 2017 largely due to $384.5 million of PCI loans acquired from USAB. The remaining net increase was mainly driven by organic growth in the new Florida markets, as well as advances on existing construction projects.
Total residential mortgage loans increased $462.5 million to approximately $3.3 billion at March 31, 2018 from December 31, 2017 mostly due to $365.9 million in PCI loans acquired from USAB and new and refinanced loan originations held for investment. Our growing team of home mortgage consultants continued to produce strong origination volumes during the first quarter. New and refinanced residential

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



mortgage loan originations totaled approximately $372 million for the first quarter of 2018 as compared to $291 million and $164 million for the fourth quarter of 2017 and first quarter of 2017, respectively.
Home equity loans totaling $549.3 million at March 31, 2018 increased by $103.0 million as compared to December 31, 2017 due to $109.8 million of PCI loans acquired from USAB. Exclusive of the acquired loans, new home equity loan volumes and customer usage of existing home equity lines of credit continues to be weak. We believe this trend may continue in 2018 due to many factors, including the recent Tax Act changes that limit the deductibility of mortgage interest expense for homeowners.
Automobile loans increased by $13.8 million, or 4.6 percent on an annualized basis, to $1.2 billion at March 31, 2018 as compared to December 31, 2017. However, the overall new auto loan origination volumes decreased approximately 12.9 percent during the first quarter of 2018 as compared to the fourth quarter of 2017 mainly due to the impact of inclement weather on auto sales in the Northeast region. Our Florida dealership network contributed over $35 million in auto loan originations, representing approximately 24 percent of Valley's total new auto loan production during the first quarter of 2018 and was relatively consistent with the linked fourth quarter of 2017.
Other consumer loans increased $20.8 million to $748.8 million at March 31, 2018 as compared to $728.1 million at December 31, 2017 partly due to $10.6 million of PCI loans acquired from USAB and continued growth and customer usage of collateralized personal lines of credit.
Deposits. Total deposits increased $3.8 billion to approximately $22.0 billion at March 31, 2018 from December 31, 2017 largely due to $3.6 billion in deposits assumed in the USAB acquisition. The remaining increase is largely due to the continued success of our time deposit and other interest bearing deposit initiatives commencing in 2017. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 28 percent, 50 percent and 22 percent of total deposits as of March 31, 2018, respectively.
Other Borrowings. Short-term borrowings increased $869.8 million to approximately $1.6 billion at March 31, 2018 as compared to December 31, 2017 largely due to $650.0 of borrowings assumed in the USAB acquisition, consisting of FHLB borrowings and securities sold under agreements to repurchase. The remaining increase was mostly due to new FHLB advances used for normal loan funding activity and liquidity purposes during the first quarter of 2018. Long-term borrowings increased $37.7 million to $2.4 billion at March 31, 2018 as compared to December 31, 2017 mostly due to subordinated notes assumed in the USAB acquisition.
Credit Quality
Non-Performing Assets. Our past due loans and non-accrual loans discussed further below exclude PCI loans. Under U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are not subject to delinquency classification in the same manner as loans originated by Valley. Our PCI loan portfolio totaled $4.9 billion, or 21.8 percent, of our total loan portfolio at March 31, 2018 and included all of the loans acquired from USAB on January 1, 2018.
Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets increased $17.5 million to $75.0 million at March 31, 2018 as compared to December 31, 2017 mainly due to increases in non-accrual loans and OREO during the first quarter of

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



2018. OREO totaled $13.8 million at March 31, 2018 and included $4.1 million of acquired OREO from USAB.
Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $47.3 million to $33.2 million, or 0.15 percent of total loans, at March 31, 2018 as compared to $80.5 million, or 0.44 percent of total loans, at December 31, 2017. The lower level of accruing past due loans was primarily caused by decreases of $27.6 million and $21.0 million in the loans 30 to 59 days past due and 60 to 89 days past due loan categories at March 31, 2018, respectively, as compared to December 31, 2017. These decreases were largely caused by the renewal of matured performing loans and the improved performance of several loan relationships previously reported within the commercial real estate and construction loan delinquency categories at December 31, 2017.
During the first quarter of 2018, we continued to closely monitor our NYC and Chicago taxi medallion loans within the commercial and industrial loan portfolio. While the vast majority of the taxi medallion loans are currently performing, negative trends in the market valuations of the underlying taxi medallion collateral could impact the future performance and internal classification of this portfolio. At March 31, 2018, the NYC and Chicago taxi medallion loans totaling $126.8 million and $9.3 million, respectively, were largely classified as substandard and special mention loans. The criticized loan classifications are primarily due to the elevated general risk associated with the current medallion market. At March 31, 2018, the medallion portfolio included impaired loans totaling $65.0 million with related reserves of $19.9 million within the allowance for loan losses as compared to impaired loans totaling $63.9 million with related reserves of $9.1 million at December 31, 2017. At March 31, 2018, the impaired medallion loans largely consisted of performing troubled debt restructured (TDR) loans classified as substandard loans, as well as $13.9 million of non-accrual taxi cab medallion loans classified as doubtful loans.
Valley's historical taxi medallion lending criteria had been conservative in regards to capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees and other collateral in certain instances. However, the severe decline in the market valuation of taxi medallions has adversely affected the estimated fair valuation of these loans and, as a result, increased the level of our allowance for loan losses at March 31, 2018 (see further discussion below). Potential further declines in the market valuation of taxi medallions could also negatively impact the future performance of this portfolio.

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



Allowance for Credit Losses. The following table summarizes the allocation of the allowance for credit losses to specific loan categories and the allocation as a percentage of each loan category (including PCI loans) at March 31, 2018, December 31, 2017, and March 31, 2017:
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
 
 
 
 
Allocation
 
 
 
Allocation
 
 
 
Allocation
 
 
 
 
as a % of
 
 
 
as a % of
 
 
 
as a % of
 
 
Allowance
 
Loan
 
Allowance
 
Loan
 
Allowance
 
Loan
 
Allocation
 
Category
 
Allocation
 
Category
 
Allocation
 
Category
 
($ in thousands)
Loan Category:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial loans*
$
70,388

 
1.94
%
 
$
60,828

 
2.22
%
 
$
53,541

 
2.03
%
Commercial real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
36,109

 
0.31
%
 
36,293

 
0.38
%
 
38,146

 
0.42
%
 
Construction
20,570

 
1.50
%
 
18,661

 
2.19
%
 
18,156

 
2.17
%
Total commercial real estate loans
56,679

 
0.43
%
 
54,954

 
0.53
%
 
56,302

 
0.57
%
Residential mortgage loans
4,100

 
0.12
%
 
3,605

 
0.13
%
 
3,592

 
0.13
%
Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
547

 
0.10
%
 
579

 
0.13
%
 
433

 
0.09
%
 
Auto and other consumer
4,990

 
0.25
%
 
4,486

 
0.23
%
 
3,828

 
0.22
%
Total consumer loans
5,537

 
0.22
%
 
5,065

 
0.21
%
 
4,261

 
0.19
%
Total allowance for credit losses
$
136,704

 
0.61
%
 
$
124,452

 
0.68
%
 
$
117,696

 
0.67
%
Allowance for credit losses as a %
 
 
 
 
 
 
 
 
 
 
 
of non-PCI loans
 
 
0.78
%
 
 
 
0.73
%
 
 
 
0.75
%
 
 
 
 
 
 
 
 
 
 
 
 
 
* Includes the reserve for unfunded letters of credit.
 
 
 
 
 
 
 
 
 
 

Our loan portfolio, totaling $22.6 billion at March 31, 2018, had net recoveries of loan charge-offs totaling $1.3 million and $772 thousand for the first quarter of 2018 and the fourth quarter of 2017, respectively, as compared to net loan charge-offs of $1.4 million for the first quarter of 2017. The net loan recoveries during the first quarter of 2018 was mainly due to one commercial and industrial loan charge-off recovery totaling $1.6 million and the continued low level of loan charge-offs. During the first quarter of 2018, we recorded a $10.9 million provision for credit losses as compared to $2.2 million and $2.5 million for the fourth quarter of 2017 and the first quarter of 2017, respectively. The quarter over quarter increase in the provision was mainly due to higher specific reserves allocated to impaired taxi medallion loans at March 31, 2018, as well as non-PCI loan growth during the first quarter of 2018.

The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a percentage of total loans was 0.61 percent, 0.68 percent and 0.67 percent at March 31, 2018, December 31, 2017 and March 31, 2017, respectively. At March 31, 2018, our allowance allocations for losses as a percentage of total loans decreased across most loan categories as compared to December 31, 2017 mainly due to higher loan balances resulting from the USAB acquisition on January 1, 2018 and the prolonged low level of net loan charge-offs in the portfolio.

Our allowance for credit losses as a percentage of total non-PCI loans (excluding PCI loans with carrying values totaling approximately $4.9 billion) was 0.78 percent, 0.73 percent and 0.75 percent March 31,

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



2018, December 31, 2017 and March 31, 2017, respectively. PCI loans are accounted for on a pool basis and initially recorded net of fair valuation discounts related to credit which may be used to absorb future losses on such loans before any allowance for loan losses is recognized subsequent to acquisition. Due to the adequacy of such discounts, there were no allowance reserves related to PCI loans at March 31, 2018, December 31, 2017 and March 31, 2017.
Capital Adequacy
Valley's regulatory capital ratios continue to reflect its strong capital position. Valley's total risk-based capital, Tier 1 capital, Tier 1 leverage capital, and common equity Tier 1 capital ratios were 11.94 percent, 9.78 percent, 7.75 percent and 8.82 percent, respectively, at March 31, 2018.
Investor Conference Call
Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Standard Time, today to discuss the first quarter 2018 earnings. Those wishing to participate in the call may dial toll-free (800) 230-1085. Investor presentation materials will be made available prior to the conference call at www.valleynationalbank.com.
About Valley
Valley National Bancorp is a regional bank holding company headquartered in Wayne, New Jersey with $29.5 billion in assets, reflecting the recent acquisition of USAB. Its principal subsidiary, Valley National Bank, currently operates over 230 branch locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn, Queens and Long Island, Florida and Alabama. Valley National Bank is one of the largest commercial banks headquartered in New Jersey and is committed to providing the most convenient service, the latest in product innovations and an experienced and knowledgeable staff with a high priority on friendly customer service. For more information about Valley National Bank and its products and services, please visit www.valleynationalbank.com or call our Customer Service Center at 800-522-4100.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
weakness or a decline in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in commercial real estate values within our market areas;
the risk that the businesses of Valley and USAB may not be combined successfully, or such combination may take longer or be more difficult, time-consuming or costly to accomplish than expected;

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Valley National Bancorp (NYSE: VLY)
2018 First Quarter Earnings
April 26, 2018



the diversion of management's time on issues relating to merger integration; the inability to realize expected cost savings and synergies from the merger of USAB with Valley in the amounts or in the timeframe anticipated;
the inability to retain USAB’s customers and employees;
less than expected cost reductions and revenue enhancement from Valley's cost reduction plans including its earnings enhancement program called "LIFT";
higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from the impact of the Tax Act and other changes in tax laws, regulations and case law;
damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of breach of fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trade mark infringement, employment related claims, and other matters;
the loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income and net income;
cyber attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;
results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
changes in accounting policies or accounting standards, including the new authoritative accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our allowance for credit losses after adoption on January 1, 2020;
our inability or determination not to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
higher than expected loan losses within one or more segments of our loan portfolio;
unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or other external events;
unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors; and
the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.
A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2017.
We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. 
# # #
-Tables to Follow-

9




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



SELECTED FINANCIAL DATA
 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
($ in thousands, except for share data)
2018
 
2017
 
2017
FINANCIAL DATA:
 
 
 
 
 
Net interest income
$
207,598

 
$
169,414

 
$
161,868

Net interest income - FTE (1)
209,120

 
171,394

 
164,041

Non-interest income
32,251

 
30,159

 
25,720

Non-interest expense
173,752

 
136,317

 
120,952

Income tax expense
13,184

 
34,958

 
18,071

Net income
41,965

 
26,098

 
46,095

Dividends on preferred stock
3,172

 
3,172

 
1,797

Net income available to common shareholders
$
38,793

 
$
22,926

 
$
44,298

Weighted average number of common shares outstanding:
 
 
 
 
 
Basic
330,727,416

 
264,332,895

 
263,797,024

Diluted
332,465,527

 
265,288,067

 
264,546,266

Per common share data:
 
 
 
 
 
Basic earnings
$
0.12

 
$
0.09

 
$
0.17

Diluted earnings
0.12

 
0.09

 
0.17

Cash dividends declared
0.11

 
0.11

 
0.11

Closing stock price - high
13.38

 
12.17

 
12.76

Closing stock price - low
11.19

 
11.00

 
11.28

CORE ADJUSTED FINANCIAL DATA: (2)
 
 
 
 
 
Net income available to common shareholders, as adjusted
$
58,334

 
$
42,591

 
$
44,311

Basic earnings per share, as adjusted
0.18

 
0.16

 
0.17

Diluted earnings per share, as adjusted
0.18

 
0.16

 
0.17

FINANCIAL RATIOS:
 
 
 
 
 
Net interest margin
3.10
%
 
3.09
%
 
3.09
%
Net interest margin - FTE (1)
3.13

 
3.13

 
3.13

Annualized return on average assets
0.57

 
0.44

 
0.80

Annualized return on avg. shareholders' equity
5.10

 
4.07

 
7.69

Annualized return on avg. tangible shareholders' equity (2)
7.90

 
5.71

 
11.09

Efficiency ratio (3)
72.44

 
68.30

 
64.48

CORE ADJUSTED FINANCIAL RATIOS: (2)
 
 
 
 
 
Annualized return on average assets, as adjusted
0.84
%
 
0.77
%
 
0.80
%
Annualized return on average shareholders' equity, as adjusted
7.48

 
7.14

 
7.69

Annualized return on average tangible shareholders' equity, as adjusted
11.57

 
10.00

 
11.09

Efficiency ratio, as adjusted
60.29

 
57.44

 
61.64

AVERAGE BALANCE SHEET ITEMS:
 
 
 
 
Assets
$
29,291,703

 
$
23,907,011

 
$
22,996,286

Interest earning assets
26,750,806

 
21,932,517

 
20,949,464

Loans
22,302,991

 
18,242,690

 
17,313,100

Interest bearing liabilities
19,690,165

 
15,919,382

 
15,285,171

Deposits
21,882,034

 
17,812,343

 
17,366,768

Shareholders' equity
3,289,815

 
2,562,326

 
2,399,159





10




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS




 
As Of
BALANCE SHEET ITEMS:
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(In thousands)
2018
 
2017
 
2017
 
2017
 
2017
Assets
$
29,464,357

 
$
24,002,306

 
$
23,780,661

 
$
23,449,350

 
$
23,220,456

Total loans
22,552,767

 
18,331,580

 
18,201,462

 
17,710,760

 
17,449,498

Non-PCI loans
17,636,934

 
16,944,365

 
16,729,607

 
16,169,291

 
15,794,797

Deposits
21,959,846

 
18,153,462

 
17,312,766

 
17,250,018

 
17,331,141

Shareholders' equity
3,245,003

 
2,533,165

 
2,537,984

 
2,423,901

 
2,398,541

 
 
 
 
 
 
 
 
 
 
LOANS:
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
3,631,597

 
$
2,741,425

 
$
2,706,912

 
$
2,631,312

 
$
2,642,319

Commercial real estate:
 
 
 
 
 
 
 
 
 
Commercial real estate
11,706,228

 
9,496,777

 
9,351,068

 
9,230,514

 
9,016,418

Construction
1,372,508

 
851,105

 
903,640

 
881,073

 
835,854

 Total commercial real estate
13,078,736

 
10,347,882

 
10,254,708

 
10,111,587

 
9,852,272

Residential mortgage
3,321,560

 
2,859,035

 
2,941,435

 
2,724,777

 
2,745,447

Consumer:
 
 
 
 
 
 
 
 
 
Home equity
549,329

 
446,280

 
448,842

 
450,510

 
458,891

Automobile
1,222,721

 
1,208,902

 
1,171,685

 
1,150,343

 
1,150,053

Other consumer
748,824

 
728,056

 
677,880

 
642,231

 
600,516

Total consumer loans
2,520,874

 
2,383,238

 
2,298,407

 
2,243,084

 
2,209,460

Total loans
$
22,552,767

 
$
18,331,580

 
$
18,201,462

 
$
17,710,760

 
$
17,449,498

 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS:
 
 
 
 
 
 
 
 
 
Book value per common share
$
9.16

 
$
8.79

 
$
8.81

 
$
8.76

 
$
8.67

Tangible book value per common share (2)
5.65

 
6.01

 
6.04

 
5.98

 
5.88

Tangible common equity to tangible assets (2)
6.61
%
 
6.83
%
 
6.92
%
 
6.95
%
 
6.90
%
Tier 1 leverage capital
7.75

 
8.03

 
8.13

 
7.69

 
7.70

Common equity tier 1 capital
8.82

 
9.22

 
9.22

 
9.18

 
9.12

Tier 1 risk-based capital
9.78

 
10.41

 
10.42

 
9.81

 
9.76

Total risk-based capital
11.94

 
12.61

 
12.61

 
11.99

 
11.96





11




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
Three Months Ended
ALLOWANCE FOR CREDIT LOSSES:
March 31,
 
December 31,
 
March 31,
($ in thousands)
2018
 
2017
 
2017
Beginning balance - Allowance for credit losses
$
124,452

 
$
121,480

 
$
116,604

Loans charged-off:
 
 
 
 
 
Commercial and industrial
(131
)
 
(532
)
 
(1,714
)
Commercial real estate
(310
)
 
(6
)
 
(414
)
Construction

 

 

Residential mortgage
(68
)
 
(42
)
 
(130
)
Total Consumer
(1,211
)
 
(1,097
)
 
(1,121
)
Total loans charged-off
(1,720
)
 
(1,677
)
 
(3,379
)
Charged-off loans recovered:
 
 
 
 
 
Commercial and industrial
2,107

 
1,256

 
848

Commercial real estate
369

 
22

 
142

Construction

 
579

 

Residential mortgage
80

 
113

 
448

Total Consumer
468

 
479

 
563

Total loans recovered
3,024

 
2,449

 
2,001

Net recoveries (charge-offs)
1,304

 
772

 
(1,378
)
Provision for credit losses
10,948

 
2,200

 
2,470

Ending balance - Allowance for credit losses
$
136,704

 
$
124,452

 
$
117,696

Components of allowance for credit losses:
 
 
 
 
 
Allowance for loan losses
$
132,862

 
$
120,856

 
$
115,443

Allowance for unfunded letters of credit
3,842

 
3,596

 
2,253

Allowance for credit losses
$
136,704

 
$
124,452

 
$
117,696

Components of provision for credit losses:
 
 
 
 
 
Provision for loan losses
$
10,702

 
$
1,118

 
$
2,402

Provision for unfunded letters of credit
246

 
1,082

 
68

Provision for credit losses
$
10,948

 
$
2,200

 
$
2,470

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

(0.02
)%
 
(0.02
)%
 
0.03
%
Allowance for credit losses as a % of non-PCI loans

0.78
%
 
0.73
 %
 
0.75
%
Allowance for credit losses as a % of total loans

0.61
%
 
0.68
 %
 
0.67
%

12




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



 
As of
ASSET QUALITY: (4)
March 31,
 
December 31,
 
September 30,
 
June, 30
 
March 31,
($ in thousands)
2018
 
2017
 
2017
 
2017
 
2017
Accruing past due loans:
 
 
 
 
 
 
 
 
 
30 to 59 days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
5,405

 
$
3,650

 
$
1,186

 
$
2,391

 
$
29,734

Commercial real estate
3,699

 
11,223

 
4,755

 
6,983

 
11,637

Construction
532

 
12,949

 

 

 
7,760

Residential mortgage
6,460

 
12,669

 
7,942

 
4,677

 
7,533

Total Consumer
5,244

 
8,409

 
5,205

 
4,393

 
3,740

Total 30 to 59 days past due
21,340

 
48,900

 
19,088

 
18,444

 
60,404

60 to 89 days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
804

 
544

 
3,043

 
2,686

 
341

Commercial real estate

 

 
626

 
8,233

 
359

Construction
1,099

 
18,845

 
2,518

 
854

 

Residential mortgage
4,081

 
7,903

 
1,604

 
1,721

 
4,177

Total Consumer
1,489

 
1,199

 
1,019

 
1,007

 
787

Total 60 to 89 days past due
7,473

 
28,491

 
8,810

 
14,501

 
5,664

90 or more days past due:
 
 
 
 
 
 
 
 
 
Commercial and industrial
653

 

 
125

 

 
405

Commercial real estate
27

 
27

 
389

 
2,315

 

Construction

 

 

 
2,879

 

Residential mortgage
3,361

 
2,779

 
1,433

 
3,353

 
1,355

Total Consumer
372

 
284

 
301

 
275

 
314

Total 90 or more days past due
4,413

 
3,090

 
2,248

 
8,822

 
2,074

Total accruing past due loans
$
33,226

 
$
80,481

 
$
30,146

 
$
41,767

 
$
68,142

Non-accrual loans:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
25,112

 
$
20,890

 
$
11,983

 
$
11,072

 
$
8,676

Commercial real estate
8,679

 
11,328

 
13,870

 
15,514

 
15,106

Construction
732

 
732

 
1,116

 
1,334

 
1,461

Residential mortgage
22,694

 
12,405

 
12,974

 
12,825

 
11,650

Total Consumer
3,104

 
1,870

 
1,844

 
1,409

 
1,395

Total non-accrual loans
60,321

 
47,225

 
41,787

 
42,154

 
38,288

Other real estate owned (OREO)
13,773

 
9,795

 
10,770

 
10,182

 
10,737

Other repossessed assets
858

 
441

 
480

 
342

 
475

Non-accrual debt securities (5)

 

 
2,115

 
1,878

 
2,007

Total non-performing assets
$
74,952

 
$
57,461

 
$
55,152

 
$
54,556

 
$
51,507

Performing troubled debt restructured loans
$
116,414

 
$
117,176

 
$
113,677

 
$
109,802

 
$
80,360

Total non-accrual loans as a % of loans
0.27
%
 
0.26
%
 
0.23
%
 
0.24
%
 
0.22
%
Total accruing past due and non-accrual loans as a % of loans
0.41
%
 
0.70
%
 
0.40
%
 
0.47
%
 
0.61
%
Allowance for losses on loans as a % of non-accrual loans
220.26
%
 
255.92
%
 
284.70
%
 
276.24
%
 
301.51
%
Non-performing purchased credit-impaired loans (6)
$
62,857

 
$
38,088

 
$
25,413

 
$
33,715

 
$
25,857




13




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS



NOTES TO SELECTED FINANCIAL DATA
(1)
Net interest income and net interest margin are presented on a tax equivalent basis using a 21 and 35 percent federal tax rate for periods ending in 2018 and 2017, respectively. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
(2)
This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
($ in thousands, except for share data)
2018
 
2017
 
2017
Adjusted net income available to common shareholders:
 
 
 
 
 
Net income, as reported
$
41,965

 
$
26,098

 
$
46,095

Add: Losses on securities transactions (net of tax)
446

 
15

 
13

Add: Legal expenses (litigation reserve impact only, net of tax)
7,520

 

 

Add: Merger related expenses (net of tax)*
9,575

 
1,073

 

Add: Amortization of tax credit investments (Tax Act impact only, net of tax)

 
3,136

 

Add: Income Tax Expense (USAB charge and Tax Act impacts only)
2,000

 
15,441

 

Net income, as adjusted
$
61,506

 
$
45,763

 
$
46,108

Dividends on preferred stock
3,172

 
3,172

1,797

1,797

Net income available to common shareholders, as adjusted
$
58,334

 
$
42,591

 
$
44,311

 
 
 
 
 
 
* Merger related expenses are primarily within salary and employee benefits and professional and legal fees.
Adjusted per common share data:
 
 
 
 
 
Net income available to common shareholders, as adjusted
$
58,334

 
$
42,591

 
$
44,311

Average number of shares outstanding
330,727,416

 
264,332,895

 
263,797,024

Basic earnings, as adjusted
$
0.18

 
$
0.16

 
$
0.17

Average number of diluted shares outstanding
332,465,527

 
265,288,067

 
264,546,266

Diluted earnings, as adjusted
$
0.18

 
$
0.16

 
$
0.17

Adjusted annualized return on average tangible shareholders' equity:
 
 
 
 
 
Net income, as adjusted
$
61,506

 
$
45,763

 
$
46,108

Average shareholders' equity
3,289,815

 
2,562,326

 
2,399,159

Less: Average goodwill and other intangible assets
(1,164,230
)
 
(732,604
)
 
(736,178
)
Average tangible shareholders' equity
$
2,125,585

 
$
1,829,722

 
$
1,662,981

Annualized return on average tangible shareholders' equity

11.57
%
 
10.00
%
 
11.09
%
Adjusted annualized return on average assets:
 
 
 
 
 
Net income, as adjusted
$
61,506

 
$
45,763

 
$
46,108

Average assets
$
29,291,703

 
$
23,907,011

 
$
22,996,286

Annualized return on average assets, as adjusted
0.84
%
 
0.77
%
 
0.80
%
Adjusted annualized return on average shareholders' equity:
 
 
 
 
 
Net income, as adjusted
$
61,506

 
$
45,763

 
$
46,108

Average shareholders' equity
$
3,289,815

 
$
2,562,326

 
$
2,399,159

Annualized return on average shareholders' equity, as adjusted
7.48
%
 
7.14
%
 
7.69
%






14




VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS





 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
($ in thousands)
2018
 
2017
 
2017
Annualized return on average tangible shareholders' equity:
 
 
 
 
 
Net income, as reported
$
41,965

 
$
26,098

 
$
46,095

Average shareholders' equity
3,289,815

 
2,562,326

 
2,399,159

Less: Average goodwill and other intangible assets
(1,164,230
)
 
(732,604
)
 
(736,178
)
Average tangible shareholders' equity
$
2,125,585

 
$
1,829,722

 
$
1,662,981

Annualized return on average tangible shareholders' equity, as adjusted
7.90
%
 
5.71
%
 
11.09
%
Adjusted efficiency ratio:
 
 
 
 
 
Non-interest expense
$
173,752

 
$
136,317

 
$
120,952

Less: Legal expenses (litigation reserve impact only, pre-tax)
10,500

 

 

Less: Merger-related expenses (pre-tax)
13,369

 
1,378

 

Less: Amortization of tax credit investments (pre-tax)
5,274

 
20,302

 
5,324

Non-interest expense, as adjusted
$
144,609

 
$
114,637

 
$
115,628

Net interest income
207,598

 
169,414

 
161,868

Non-interest income
32,251

 
30,159

 
25,720

Gross operating income
$
239,849

 
$
199,573

 
$
187,588

Efficiency ratio, as adjusted
60.29
%
 
57.44
%
 
61.64
%
 
As of
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
($ in thousands, except for share data)
2018
 
2017
 
2017
 
2017
 
2017
Tangible book value per common share:
 
 
 
 
 
 
 
 
 
Common shares outstanding
331,189,859

 
264,468,851

 
264,197,172

 
263,971,766

 
263,842,268

Shareholders' equity
$
3,245,003

 
$
2,533,165

 
$
2,537,984

 
$
2,423,901

 
$
2,398,541

Less: Preferred stock
(209,691
)
 
(209,691
)
 
(209,691
)
 
(111,590
)
 
(111,590
)
Less: Goodwill and other intangible assets
(1,165,379
)
 
(733,144
)
 
(733,498
)
 
(734,337
)
 
(735,595
)
Tangible common shareholders' equity
$
1,869,933

 
$
1,590,330

 
$
1,594,795

 
$
1,577,974

 
$
1,551,356

Tangible book value per common share
$
5.65

 
$
6.01

 
$
6.04

 
$
5.98

 
$
5.88

Tangible common equity to tangible assets:
 
 
 
 
 
 
 
 
Tangible common shareholders' equity
$
1,869,933

 
$
1,590,330

 
$
1,594,795

 
$
1,577,974

 
$
1,551,356

Total assets
29,464,357

 
24,002,306

 
23,780,661

 
23,449,350

 
23,220,456

Less: Goodwill and other intangible assets
(1,165,379
)
 
(733,144
)
 
(733,498
)
 
(734,337
)
 
(735,595
)
Tangible assets
$
28,298,978

 
$
23,269,162

 
$
23,047,163

 
$
22,715,013

 
$
22,484,861

Tangible common equity to tangible assets
6.61
%
 
6.83
%
 
6.92
%
 
6.95
%
 
6.90
%
(3)
The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income.
(4)
Past due loans and non-accrual loans exclude purchased credit-impaired (PCI) loans. PCI loans are accounted for on a pool basis under U.S. GAAP and are not subject to delinquency classification in the same manner as loans originated by Valley.
(5)
Includes other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value (net of unrealized losses totaling $637 thousand, $875 thousand and $745 thousand at September 30, 2017, June 30, 2017 and March 31, 2017, respectively) after recognition of all credit impairments. There were no non-accrual debt securities at March 31, 2018 and December 31, 2017.
(6)
Represent PCI loans meeting Valley's definition of non-performing loan (i.e., non-accrual loans), but are not subject to such classification under U.S. GAAP because the loans are accounted for on a pooled basis and are excluded from the non-accrual loans in the table above.
SHAREHOLDERS RELATIONS
Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valleynationalbank.com.


15




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


 
March 31,
 
December 31,
 
2018
 
2017
 
 (Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
222,311

 
$
243,310

Interest bearing deposits with banks
274,349

 
172,800

Investment securities:
 
 
 
Held to maturity (fair value of $2,014,954 at March 31, 2018 and $1,837,620 at December 31, 2017)
2,048,583

 
1,842,691

Available for sale
1,843,514

 
1,493,905

Total investment securities
3,892,097

 
3,336,596

Loans held for sale, at fair value
8,449

 
15,119

Loans
22,552,767

 
18,331,580

Less: Allowance for loan losses
(132,862
)
 
(120,856
)
Net loans
22,419,905

 
18,210,724

Premises and equipment, net
346,700

 
287,705

Bank owned life insurance
436,334

 
386,079

Accrued interest receivable
86,804

 
73,990

Goodwill
1,078,892

 
690,637

Other intangible assets, net
86,487

 
42,507

Other assets
612,029

 
542,839

Total Assets
$
29,464,357

 
$
24,002,306

Liabilities
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
6,124,256

 
$
5,224,928

Interest bearing:
 
 
 
Savings, NOW and money market
11,077,789

 
9,365,013

Time
4,757,801

 
3,563,521

Total deposits
21,959,846

 
18,153,462

Short-term borrowings
1,618,416

 
748,628

Long-term borrowings
2,353,548

 
2,315,819

Junior subordinated debentures issued to capital trusts
55,109

 
41,774

Accrued expenses and other liabilities
232,435

 
209,458

Total Liabilities
26,219,354

 
21,469,141

Shareholders’ Equity
 
 
 
Preferred stock, no par value; 50,000,000 shares authorized:
 
 
 
Series A (4,600,000 shares issued at March 31, 2018 and December 31, 2017)
111,590

 
111,590

Series B (4,000,000 shares issued at March 31, 2018 and December 31, 2017)
98,101

 
98,101

Common stock (no par value, authorized 450,000,000 shares; issued 331,202,537 shares at March 31, 2018 and 264,498,643 shares at December 31, 2017)
115,824

 
92,727

Surplus
2,784,194

 
2,060,356

Retained earnings
199,555

 
216,733

Accumulated other comprehensive loss
(64,103
)
 
(46,005
)
Treasury stock, at cost (12,678 common shares at March 31, 2018 and 29,792 common shares at December 31, 2017)
(158
)
 
(337
)
Total Shareholders’ Equity
3,245,003

 
2,533,165

Total Liabilities and Shareholders’ Equity
$
29,464,357

 
$
24,002,306


16




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


 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2018
 
2017
 
2017
Interest Income
 
 
 
 
 
Interest and fees on loans
$
237,586

 
$
192,537

 
$
174,353

Interest and dividends on investment securities:
 
 
 
 
 
Taxable
21,323

 
18,237

 
17,589

Tax-exempt
5,721

 
3,673

 
4,031

Dividends
1,939

 
2,867

 
2,151

Interest on federal funds sold and other short-term investments
926

 
637

 
331

Total interest income
267,495

 
217,951

 
198,455

Interest Expense
 
 
 
 
 
Interest on deposits:
 
 
 
 
 
Savings, NOW and money market
22,317

 
16,762

 
10,183

Time
14,616

 
11,975

 
9,553

Interest on short-term borrowings
5,732

 
3,456

 
3,901

Interest on long-term borrowings and junior subordinated debentures
17,232

 
16,344

 
12,950

Total interest expense
59,897

 
48,537

 
36,587

Net Interest Income
207,598

 
169,414

 
161,868

Provision for credit losses
10,948

 
2,200

 
2,470

Net Interest Income After Provision for Credit Losses
196,650

 
167,214

 
159,398

Non-Interest Income
 
 
 
 
 
Trust and investment services
3,230

 
2,932

 
2,744

Insurance commissions
3,821

 
4,218

 
5,061

Service charges on deposit accounts
7,253

 
5,393

 
5,236

Losses on securities transactions, net
(765
)
 
(25
)
 
(23
)
Fees from loan servicing
2,223

 
1,843

 
1,815

Gains on sales of loans, net
6,753

 
6,375

 
4,128

Bank owned life insurance
1,763

 
1,633

 
2,463

Other
7,973

 
7,790

 
4,296

Total non-interest income
32,251

 
30,159

 
25,720

Non-Interest Expense
 
 
 
 
 
Salary and employee benefits expense
93,292

 
64,560

 
65,927

Net occupancy and equipment expense
27,924

 
23,843

 
23,035

FDIC insurance assessment
5,498

 
5,163

 
5,127

Amortization of other intangible assets
4,293

 
2,420

 
2,536

Professional and legal fees
17,047

 
5,727

 
4,695

Amortization of tax credit investments
5,274

 
20,302

 
5,324

Telecommunication expense
3,594

 
2,091

 
2,659

Other
16,830

 
12,211

 
11,649

Total non-interest expense
173,752

 
136,317

 
120,952

Income Before Income Taxes
55,149

 
61,056

 
64,166

Income tax expense
13,184

 
34,958

 
18,071

Net Income
41,965

 
26,098

 
46,095

Dividends on preferred stock
3,172

 
3,172

 
1,797

Net Income Available to Common Shareholders
$
38,793

 
$
22,926

 
$
44,298

Earnings Per Common Share:
 
 
 
 
 
Basic
$
0.12

 
$
0.09

 
$
0.17

Diluted
0.12

 
0.09

 
0.17

Cash Dividends Declared per Common Share
0.11

 
0.11

 
0.11

Weighted Average Number of Common Shares Outstanding:
 
 
 
 
 
Basic
330,727,416

 
264,332,895

 
263,797,024

Diluted
332,465,527

 
265,288,067

 
264,546,266


17



VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis
 
 
Three Months Ended
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
 
 Average
 
 
 
Avg.
 
 Average
 
 
 
Avg.
 
 Average
 
 
 
Avg.
($ in thousands)
 Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
 
 Balance
 
Interest
 
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)(2)
$
22,302,991

 
$
237,587

 
4.26
%
 
$
18,242,690

 
$
192,539

 
4.22
%
 
$
17,313,100

 
$
174,356

 
4.03
%
Taxable investments (3)
3,401,743

 
23,262

 
2.74
%
 
2,931,144

 
21,104

 
2.88
%
 
2,836,300

 
19,740

 
2.78
%
Tax-exempt investments (1)(3)
741,001

 
7,242

 
3.91
%
 
528,681

 
5,651

 
4.28
%
 
612,946

 
6,201

 
4.05
%
Federal funds sold and other interest
bearing deposits
305,071

 
926

 
1.21
%
 
230,002

 
637

 
1.11
%
 
187,118

 
331

 
0.71
%
Total interest earning assets
26,750,806

 
269,017

 
4.02
%
 
21,932,517

 
219,931

 
4.01
%
 
20,949,464

 
200,628


3.83
%
Other assets
2,540,897

 
 
 
 
 
1,974,494

 
 
 
 
 
2,046,822

 
 
 
 
Total assets
$
29,291,703

 
 
 
 
 
$
23,907,011

 
 
 
 
 
$
22,996,286

 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings, NOW and money market deposits
$
11,175,982

 
$
22,317

 
0.80
%
 
$
9,085,986

 
$
16,762

 
0.74
%
 
$
9,049,446

 
$
10,183

 
0.45
%
Time deposits
4,594,368

 
14,616

 
1.27
%
 
3,478,046

 
11,975

 
1.38
%
 
3,178,452

 
9,553

 
1.20
%
Short-term borrowings
1,487,272

 
5,732

 
1.54
%
 
1,011,130

 
3,456

 
1.37
%
 
1,563,000

 
3,901

 
1.00
%
Long-term borrowings (4)
2,432,543

 
17,232

 
2.83
%
 
2,344,220

 
16,344

 
2.79
%
 
1,494,273

 
12,950

 
3.47
%
Total interest bearing liabilities
19,690,165

 
59,897

 
1.22
%
 
15,919,382

 
48,537

 
1.22
%
 
15,285,171

 
36,587

 
0.96