Valley National Bancorp Reports Increased Fourth Quarter

NEW YORK, Jan. 27, 2022 (GLOBE NEWSWIRE) — Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the fourth quarter 2021 of $115.0 million, or $0.27 per diluted common share, as compared to the fourth quarter 2020 earnings of $105.4 million, or $0.25 per diluted common share, and net income of $122.6 million, or $0.29 per diluted common share, for the third quarter 2021. Our fourth quarter 2021 core earnings included provision expense of $6.2 million ($0.01 per common share) recorded for purchased non-credit deteriorated (non-PCD) loans and unfunded credit commitments acquired during the quarter. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $120.5 million, or $0.28 per diluted common share, for the fourth quarter 2021, $113.4 million, or $0.27 per diluted common share, for the fourth quarter 2020, and $124.7 million, or $0.30 per diluted common share, for the third quarter 2021. See further details below, including a reconciliation of our adjusted net income in the “Consolidated Financial Highlights” tables.

Key financial highlights for the fourth quarter:

  • Acquisition of The Westchester Bank Holding Corp.: On December 1, 2021, Valley completed its acquisition of The Westchester Bank Holding Corporation (Westchester) and its wholly-owned subsidiary, The Westchester Bank. Westchester had approximately $1.4 billion in assets, $915 million in loans, $1.2 billion in deposits, after purchase accounting adjustments, and a branch network of seven locations in Westchester County, New York. The common shareholders of Westchester received 229.645 shares of Valley common stock for each Westchester share that they owned. The total consideration for the acquisition was $211.1 million and the transaction resulted in $63.5 million of goodwill and $8.1 million of core deposit intangible assets subject to amortization.
  • Loan Portfolio: Total loans increased $1.5 billion to $34.2 billion at December 31, 2021 from September 30, 2021 largely due to $915 million in acquired loans from Westchester and strong organic loan growth, partially offset by a $438 million decline in SBA Paycheck Protection Program (PPP) loans. Excluding the Westchester and PPP loans, our non-PPP loan portfolio increased approximately $1.1 billion, or 13 percent on an annualized basis, during the fourth quarter 2021. See the “Loans, Deposits and Other Borrowings” section below for additional information.
  • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $316.0 million for the fourth quarter 2021 increased $14.3 million and $27.2 million as compared to the third quarter 2021 and fourth quarter 2020, respectively. Our net interest margin on a tax equivalent basis increased 8 basis points to 3.23 percent in the fourth quarter 2021 as compared to 3.15 percent for the third quarter 2021. The increases were largely due to higher loan yields partially driven by increased PPP and other periodic loan fees, and both acquired and organic loan growth. Our costs of average interest bearing liabilities also decreased 5 basis points from the third quarter 2021 due to repricing of deposits, continued run-off of maturing higher cost time deposits and repayments of borrowings. See the “Net Interest Income and Margin” section below for more details.
  • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $375.7 million and $356.9 million at December 31, 2021 and September 30, 2021, respectively, representing 1.10 percent and 1.09 percent of total loans at each respective date. During the fourth quarter 2021, the provision for credit losses for loans was $11.6 million as compared to $3.5 million and $19.0 million for the third quarter 2021 and fourth quarter 2020, respectively. The increased fourth quarter 2021 provision as compared to the third quarter 2021 was largely due to the $6.2 million of provision related to the non-PCD loans and unfunded credit commitments acquired from Westchester.
  • Credit Quality: We recorded net recoveries of loan charge-offs totaling $624 thousand for the fourth quarter 2021, as compared to net loan charge-offs of $293 thousand and $3.0 million for the third quarter 2021 and fourth quarter 2020, respectively. Non-accrual loans represented 0.70 percent and 0.77 percent of total loans at December 31, 2021 and September 30, 2021, respectively. See the “Credit Quality” Section below for more details.
  • Non-Interest Income: Non-interest income decreased $4.2 million to $38.2 million for the fourth quarter 2021 from $42.4 million for the third quarter 2021 primarily due to a $4.5 million decrease in swap fee income derived from certain new commercial loan transactions.
  • Non-Interest Expense: Non-interest expense increased $9.6 million to $184.5 million for the fourth quarter 2021 as compared to the third quarter 2021 mainly due to $7.6 million of merger expenses (primarily consisting of change in control and severance expense related to the Westchester acquisition), higher cash incentive compensation expense and incremental additions to operating expenses related to new infrastructure and the Westchester acquisition, partially offset by a $2.3 million decrease in professional and legal fees.
  • Efficiency Ratio: Our efficiency ratio was 52.19 percent for the fourth quarter 2021 as compared to 50.93 percent and 51.61 percent for the third quarter 2021 and fourth quarter 2020, respectively. Our adjusted efficiency ratio was 49.44 percent for the fourth quarter 2021 as compared to 49.16 percent and 46.99 percent for the third quarter 2021 and fourth quarter 2020, 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 1.08 percent, 9.38 percent, and 13.44 percent for the fourth quarter 2021, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, were 1.14 percent, 9.83 percent, and 14.08 percent for the fourth quarter 2021, respectively. See the “Consolidated Financial Highlights” tables below for additional information regarding our non-GAAP measures.

Ira Robbins, CEO commented, “Valley’s strong fourth quarter 2021 core results demonstrate the significant earnings power of our evolving franchise. In 2021, we generated net income of approximately $474 million, which represents a 21 percent increase from the prior year. We continue to build out low-cost funding channels in support of our strong and diverse organic loan production which was robust throughout the year. These efforts resulted in strong net interest margin performance and an adjusted efficiency ratio below 49 percent for the second consecutive year.” Mr. Robbins continued, “In December 2021, we also completed the Westchester acquisition and welcomed their customers and knowledgeable staff to Valley. Prior to and after the merger, our dedicated employees have been hard at work to ensure the acquisition is a complete success. Due to these efforts, we expect the full systems integration of the Westchester operations to be completed in the latter part of the first quarter 2022.”

Mr. Robbins added, “2021 was an exciting and transformative year for our organization. We identified a pair of value-enhancing bank partners which we believe will accelerate our future organic growth capabilities and further diversify our business offerings. We simultaneously invested in our fee income capabilities through the acquisition of Dudley Ventures. These partnerships complement the significant progress that we have made to innovate with new products, services, and technologies to add value for our clients and stakeholders. I am extremely excited about the growth opportunities that exist for Valley as we remain well-positioned for success in the ever-changing banking landscape.”

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $316.0 million for the fourth quarter 2021 increased $14.3 million and $27.2 million as compared to the third quarter 2021 and fourth quarter 2020, respectively. Interest income on a tax equivalent basis increased $11.2 million to $340.7 million for the fourth quarter 2021 as compared to the third quarter 2021 due to (i) increases of $639.7 million and $248.7 million in average loans and investment securities, respectively, (ii) a $2.4 million increase in periodic non-PPP loan fees and interest recovery income, and (iii) an $877 thousand increase in PPP loan related interest and fees caused by loan forgiveness in the fourth quarter 2021. Interest expense of $24.7 million for the fourth quarter 2021 decreased $3.1 million as compared to the third quarter 2021 as we continue to reduce our cost of funding from both deposits and the repayment of other borrowings, primarily FHLB advances.

The net interest margin on a tax equivalent basis of 3.23 percent for the fourth quarter 2021 increased 8 basis points as compared to 3.15 percent for the third quarter 2021, and increased 17 basis points from 3.06 percent for the fourth quarter 2020. The yield on average interest earning assets increased by 4 basis points on a linked quarter basis mostly due to the higher yield on average loans. The yield on average loans increased to 3.83 percent for the fourth quarter 2021 from 3.79 percent for the third quarter 2021 largely due to the increases in non-PPP loan fees, interest recovery income, and PPP interest and fees combined with a $493 million decline in average PPP loans during the fourth quarter 2021. The overall cost of average interest-bearing liabilities decreased by 5 basis points to 0.39 percent for the fourth quarter 2021 as compared to the linked third quarter 2021 due to the continued customer shift to lower cost deposits, as well as lower average short and long-term borrowings caused by normal repayments funded by excess liquidity. Our cost of total average deposits was 0.15 percent for the fourth quarter 2021 as compared to 0.18 percent for the third quarter 2021.

Loans, Deposits and Other Borrowings

Loans. Loans increased $1.5 billion to $34.2 billion at December 31, 2021 from September 30, 2021 largely due to a combination of $915 million in acquired loans from Westchester and strong organic loan growth, partially offset by a decline in PPP loans. The PPP loans included within the commercial and industrial loan category decreased $438.1 million to $436.0 million (net of $12.1 million in unearned fees) at December 31, 2021 from September 30, 2021 mainly driven by SBA loan forgiveness activity. Excluding the Westchester acquired loans and PPP loans, commercial and industrial, residential mortgage, commercial real estate loans increased 30 percent, 17 percent, and 10 percent on an annualized basis, respectively, during the fourth quarter 2021. New and refinanced loan originations also included approximately $229 million of residential mortgage loans originated for sale rather than investment. Loans held for sale totaled $139.5 million and $157.1 million at December 31, 2021 and September 30, 2021. Net gains on sales of residential loans were $6.7 million and $6.4 million in the fourth quarter 2021 and third quarter 2021, respectively.

Deposits. Total deposits increased $2.0 billion, or 5.9 percent, to approximately $35.6 billion at December 31, 2021 from September 30, 2021 driven by $1.2 billion of assumed deposits from Westchester and continued organic non-maturity deposit growth from both commercial and retail customers. Time deposits decreased $273.2 million to $3.7 billion at December 31, 2021 from September 30, 2021 largely due to normal run-off of maturing retail CDs with some continued migration to the more liquid deposit product categories. Total brokered deposits (mainly consisting of money market deposit accounts) were $1.4 billion at December 31, 2021 as compared to $1.7 billion at September 30, 2021. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 33 percent, 57 percent and 10 percent of total deposits as of December 31, 2021, respectively.

Other Borrowings. Short-term borrowings decreased $127.6 million to approximately $655.7 million at December 31, 2021 as compared to September 30, 2021 largely due to the maturity and repayment of an FHLB advance during the fourth quarter 2021. Long-term borrowings of $1.4 billion remained relatively unchanged at December 31, 2021 as compared to September 30, 2021.

Credit Quality

Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities decreased $12.3 million to $245.4 million at December 31, 2021 compared to $257.7 million at September 30, 2021. The decrease in NPAs was mostly due to a $12.3 million decline in non-accrual commercial real estate loans mainly caused by the full repayment of three non-performing loans totaling $11.4 million during the fourth quarter 2021. Non-accrual loans represented 0.70 percent of total loans at December 31, 2021 as compared to 0.77 percent of total loans at September 30, 2021.

Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing New York City and Chicago taxi medallion loans totaling $85.4 million and $576 thousand, respectively, within the commercial and industrial loan portfolio at December 31, 2021. At December 31, 2021, all taxi medallion loans were on non-accrual status and had related reserves of $58.5 million, or 68.0 percent of such loans, within the allowance for loan losses.

Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $650 thousand to $55.9 million, or 0.16 percent of total loans, at December 31, 2021 as compared to $55.2 million, or 0.17 percent of total loans, at September 30, 2021. Commercial and industrial and residential mortgage loans 60 to 89 days past due increased $6.9 million and $2.3 million, respectively, at December 31, 2021 as compared to September 30, 2021. Partially offsetting these increases, commercial real estate loans 60 to 89 days past due decreased $5.9 million mostly due to the payoff of one performing matured loan previously included in this delinquency category at September 30, 2021. Loans 90 or more days past due also decreased $2.6 million largely due to lower delinquencies reported in the commercial loan categories at December 31, 2021.

Forbearance. In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant, when requested by customers. Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days. Any extensions beyond this period were done in accordance with applicable regulatory guidance. As of December 31, 2021, Valley had approximately $33 million of outstanding loans remaining in their payment deferral period under short-term modifications as compared to $99 million of loans in deferral at September 30, 2021.

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, 2021, September 30, 2021, and December 31, 2020:

    December 31, 2021   September 30, 2021   December 31, 2020
        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 $ 103,090   1.76 %   $ 103,877   1.84 %   $ 131,070   1.91 %
Commercial real estate loans:                      
  Commercial real estate   193,258   1.02 %     178,206   0.99 %     146,009   0.87 %
  Construction   24,232   1.31 %     21,515   1.19 %     18,104   1.04 %
Total commercial real estate loans   217,490   1.05 %     199,721   1.01 %     164,113   0.89 %
Residential mortgage loans   25,120   0.55 %     24,732   0.57 %     28,873   0.69 %
Consumer loans:                      
  Home equity   3,889   0.97 %     4,110   1.02 %     4,675   1.08 %
  Auto and other consumer   9,613   0.37 %     10,087   0.40 %     11,512   0.51 %
Total consumer loans   13,502   0.45 %     14,197   0.49 %     16,187   0.60 %
Allowance for loan losses   359,202   1.05 %     342,527   1.05 %     340,243   1.06 %
Allowance for unfunded credit commitments   16,500         14,400         11,111    
Total allowance for credit losses for loans $ 375,702       $ 356,927       $ 351,354    
Allowance for credit losses for                      
loans as a % loans     1.10 %       1.09 %       1.09 %
                             

Our loan portfolio, totaling $34.2 billion at December 31, 2021, had net recoveries of loan charge-offs totaling $624 thousand for the fourth quarter 2021 as compared to net loan charge-offs of $293 thousand and $3.0 million for the third quarter 2021 and the fourth quarter 2020, respectively.

During the fourth quarter 2021, we recorded a provision for credit losses for loans totaling $11.6 million as compared to $3.5 million for the third quarter 2021 and $19.0 million for the fourth quarter 2020. The increase in the fourth quarter 2021 provision as compared to the third quarter 2021 was largely due to a $6.2 million provision recorded for non-PCD loans and unfunded credit commitments acquired from Westchester.

The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.10 percent, 1.09 percent and 1.09 percent at December 31, 2021, September 30, 2021 and December 31, 2020, respectively. The allowance for credit losses at December 31, 2021 was impacted by (i) the total provision for credit losses for loans during the fourth quarter 2021, (ii) a $6.5 million allowance for credit losses for loans recorded for PCD loans acquired from Westchester at the acquisition date, and (iii) the net recoveries of loan charge-offs during the fourth quarter 2021.

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 13.10 percent, 10.69 percent, 10.06 percent and 8.88 percent, respectively, at December 31, 2021.

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 fourth quarter 2021 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432 (Conference ID: 2858424). The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/x7tpu9r2 and archived on Valley’s website through Monday, February 28, 2022. Investor presentation materials will be made available prior to the conference call at www.valley.com.

About Valley

As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $43 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations across New Jersey, New York, Florida and Alabama, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Care Center at 800-522-4100.

Forward Looking Statements

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

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

A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020 and in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.

Final 2021 financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2021, 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. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

-Tables to Follow-

VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS

SELECTED FINANCIAL DATA

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,   December 31,
($ in thousands, except for share data)   2021       2021       2020       2021       2020  
FINANCIAL DATA:                  
Net interest income – FTE (1) $ 316,000     $ 301,744     $ 288,833     $ 1,213,115     $ 1,122,875  
Net interest income   315,301       301,026       287,920       1,209,901       1,118,904  
Non-interest income   38,223       42,431       47,533       155,013       183,032  
Total revenue   353,524       343,457       335,453       1,364,914       1,301,936  
Non-interest expense   184,514       174,922       173,141       691,542       646,148  
Pre-provision net revenue   169,010       168,535       162,312       673,372       655,788  
Provision for credit losses   11,699       3,531       18,975       32,633       125,722  
Income tax expense   42,273       42,424       37,974       166,899       139,460  
Net income   115,038       122,580       105,363       473,840       390,606  
Dividends on preferred stock   3,172       3,172       3,172       12,688       12,688  
Net income available to common stockholders $ 111,866     $ 119,408     $ 102,191     $ 461,152     $ 377,918  
Weighted average number of common shares outstanding:                  
Basic   411,775,590       406,824,160       403,872,459       407,445,379       403,754,356  
Diluted   414,472,820       409,238,001       405,799,507       410,018,328       405,046,207  
Per common share data:                  
Basic earnings $ 0.27     $ 0.29     $ 0.25     $ 1.13     $ 0.94  
Diluted earnings   0.27       0.29       0.25       1.12       0.93  
Cash dividends declared   0.11       0.11       0.11       0.44       0.44  
Closing stock price – high   14.82       13.61       10.09       14.82       11.46  
Closing stock price – low   13.04       11.80       6.90       9.74       6.29  
CORE ADJUSTED FINANCIAL DATA: (2)                  
Net income available to common shareholders, as adjusted $ 117,366     $ 121,555     $ 110,266     $ 474,989     $ 389,050  
Basic earnings per share, as adjusted   0.29       0.30       0.27       1.17       0.96  
Diluted earnings per share, as adjusted   0.28       0.30       0.27       1.16       0.96  
FINANCIAL RATIOS:                  
Net interest margin   3.22 %     3.14 %     3.05 %     3.16 %     3.02 %
Net interest margin – FTE (1)   3.23       3.15       3.06       3.17       3.03  
Annualized return on average assets   1.08       1.18       1.02       1.14       0.96  
Annualized return on avg. shareholders’ equity   9.38       10.23       9.20       9.98       8.68  
Annualized return on avg. tangible shareholders’ equity (2)   13.44       14.64       13.45       14.40       12.82  
Efficiency ratio (3)   52.19       50.93       51.61       50.67       49.63  
CORE ADJUSTED FINANCIAL RATIOS: (2)                  
Annualized return on average assets, as adjusted   1.14 %     1.20 %     1.10 %     1.18 %     0.99 %
Annualized return on average shareholders’ equity, as adjusted   9.83       10.41       9.90       10.27       8.93  
Annualized return on average tangible shareholders’ equity, as adjusted   14.08       14.90       14.48       14.82       13.19  
Efficiency ratio, as adjusted   49.44       49.16       46.99       48.46       47.39  
       
       
  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,   December 31,
($ in thousands, except for share data)   2021       2021       2020       2021       2020  
AVERAGE BALANCE SHEET ITEMS:                  
Assets $ 42,473,828     $ 41,543,930     $ 41,308,943     $ 41,475,682     $ 40,557,326  
Interest earning assets   39,193,014       38,332,874       37,806,500       38,227,815       37,010,933  
Loans   33,338,128       32,698,382       32,570,902       32,816,985       31,785,859  
Interest bearing liabilities   25,582,956       25,354,160       26,708,223       25,586,867       26,877,800  
Deposits   34,746,786       33,599,820       31,755,838       33,239,432       30,690,382  
Shareholders’ equity   4,905,343       4,794,843       4,582,329       4,747,745       4,500,067  
  As of
BALANCE SHEET ITEMS: December 31,   September 30,   June 30,   March 31,   December 31,
(In thousands)   2021       2021       2021       2021       2020  
Assets $ 43,446,443     $ 41,278,007     $ 41,274,228     $ 41,178,011     $ 40,686,076  
Total loans   34,153,657       32,606,814       32,457,454       32,686,416       32,217,112  
Deposits   35,632,412       33,632,605       33,194,774       32,585,209       31,935,602  
Shareholders’ equity   5,084,066       4,822,498       4,737,807       4,659,670       4,592,120  
                   
LOANS:                  
(In thousands)                  
Commercial and industrial loans:                  
Commercial and industrial $ 5,411,601     $ 4,761,227     $ 4,733,771     $ 4,784,017     $ 4,709,569  
Commercial and industrial PPP loans   435,950       874,033       1,350,684       2,364,627       2,152,139  
Total commercial and industrial   5,847,551       5,635,260       6,084,455       7,148,644       6,861,708  
Commercial real estate:                  
Commercial real estate   18,935,486       17,912,070       17,512,142       16,923,627       16,724,998  
Construction   1,854,580       1,804,580       1,752,838       1,786,331       1,745,825  
Total commercial real estate   20,790,066       19,716,650       19,264,980       18,709,958       18,470,823  
Residential mortgage   4,545,064       4,332,422       4,226,975       4,060,492       4,183,743  
Consumer:                  
Home equity   400,779       402,658       410,856       409,576       431,553  
Automobile   1,570,036       1,563,698       1,531,262       1,444,883       1,355,955  
Other consumer   1,000,161       956,126       938,926       912,863       913,330  
Total consumer loans   2,970,976       2,922,482       2,881,044       2,767,322       2,700,838  
Total loans $ 34,153,657     $ 32,606,814     $ 32,457,454     $ 32,686,416     $ 32,217,112  
                   
CAPITAL RATIOS:                  
Book value per common share $ 11.57     $ 11.32     $ 11.15     $ 10.97     $ 10.85  
Tangible book value per common share (2)   7.94       7.78       7.59       7.39       7.25  
Tangible common equity to tangible assets (2)   7.98 %     7.95 %     7.73 %     7.55 %     7.47 %
Tier 1 leverage capital   8.88       8.63       8.49       8.37       8.06  
Common equity tier 1 capital   10.06       10.06       10.04       10.08       9.94  
Tier 1 risk-based capital   10.69       10.73       10.73       10.79       10.66  
Total risk-based capital   13.10       13.24       13.36       12.76       12.64  
                                       
  Three Months Ended   Years Ended
ALLOWANCE FOR CREDIT LOSSES: December 31,   September 30,   December 31,   December 31,
($ in thousands)   2021       2021       2020       2021       2020  
Allowance for credit losses for loans                  
Beginning balance $ 356,927     $ 353,724     $ 335,328     $ 351,354     $ 164,604  
Impact of the adoption of ASU 2016-13 (4)                           37,989  
Allowance for purchased credit deteriorated (PCD) loans   6,542                   6,542       61,643  
Beginning balance, adjusted   363,469       353,724       335,328       357,896       264,236  
Loans charged-off:                  
Commercial and industrial   (2,224 )     (1,248 )     (3,281 )     (21,507 )     (34,630 )
Commercial real estate               (1 )     (382 )     (767 )
Residential mortgage   (1 )           (250 )     (140 )     (598 )
Total consumer   (914 )     (771 )     (1,670 )     (4,303 )     (9,294 )
Total loans charged-off   (3,139 )     (2,019 )     (5,202 )     (26,332 )     (45,289 )
Charged-off loans recovered:                  
Commercial and industrial   1,153       514       160       3,934       1,956  
Commercial real estate   1,794       29       890       2,553       1,054  
Construction               372       4       452  
Residential mortgage   100       228       44       676       670  
Total consumer   716       955       734       4,075       3,188  
Total loans recovered   3,763       1,726       2,200       11,242       7,320  
Net recoveries (charge-offs)   624       (293 )     (3,002 )     (15,090 )     (37,969 )
Provision for credit losses for loans   11,609       3,496       19,028       32,896       125,087  
Ending balance $ 375,702     $ 356,927     $ 351,354     $ 375,702     $ 351,354  
Components of allowance for credit losses for loans:                  
Allowance for loan losses $ 359,202     $ 342,527     $ 340,243     $ 359,202     $ 340,243  
Allowance for unfunded credit commitments   16,500       14,400       11,111       16,500       11,111  
Allowance for credit losses for loans $ 375,702     $ 356,927     $ 351,354     $ 375,702     $ 351,354  
Components of provision for credit losses for loans:                  
Provision for credit losses for loans $ 9,509     $ 3,496     $ 18,213     $ 27,507     $ 123,922  
Provision for unfunded credit commitments   2,100             815       5,389       1,165  
Total provision for credit losses for loans $ 11,609     $ 3,496     $ 19,028     $ 32,896     $ 125,087  
                   
Annualized ratio of total net (recoveries) charge-offs to average loans (0.01)%     0.00 %     0.04 %     0.05 %     0.12 %
Allowance for credit losses as a % of total loans   1.10 %     1.09 %     1.09 %     1.10 %     1.09 %
                                       
  As of
ASSET QUALITY: December 31,   September 30,   June 30,   March 31,   December 31,
($ in thousands)   2021       2021       2021       2021       2020  
Accruing past due loans:                  
30 to 59 days past due:                  
Commercial and industrial $ 6,717     $ 2,677     $ 3,867     $ 3,763     $ 6,393  
Commercial real estate   14,421       22,956       40,524       11,655       35,030  
Construction   1,941                         315  
Residential mortgage   10,999       9,293       8,479       16,004       17,717  
Total consumer   6,811       5,463       6,242       5,480       10,257  
Total 30 to 59 days past due   40,889       40,389       59,112       36,902       69,712  
60 to 89 days past due:                  
Commercial and industrial   7,870       985       1,361       1,768       2,252  
Commercial real estate         5,897       11,451       5,455       1,326  
Residential mortgage   3,314       974       1,608       2,233       10,351  
Total consumer   1,020       1,617       985       1,021       1,823  
Total 60 to 89 days past due   12,204       9,473       15,405       10,477       15,752  
90 or more days past due:                  
Commercial and industrial   1,273       2,083       2,351       2,515       9,107  
Commercial real estate   32       1,942       1,948             993  
Residential mortgage   677       1,002       956       2,472       3,170  
Total consumer   789       325       463       417       271  
Total 90 or more days past due   2,771       5,352       5,718       5,404       13,541  
Total accruing past due loans $ 55,864     $ 55,214     $ 80,235     $ 52,783     $ 99,005  
Non-accrual loans:                  
Commercial and industrial $ 99,918     $ 100,614     $ 102,594     $ 108,988     $ 106,693  
Commercial real estate   83,592       95,843       58,893       54,004       46,879  
Construction   17,641       17,653       17,660       71       84  
Residential mortgage   35,207       33,648       35,941       33,655       25,817  
Total consumer   3,858       4,073       4,924       7,292       5,809  
Total non-accrual loans   240,216       251,831       220,012       204,010       185,282  
Other real estate owned (OREO)   2,259       3,967       4,523       4,521       5,118  
Other repossessed assets   2,931       1,896       2,060       1,857       3,342  
Non-accrual debt securities                     129       815  
Total non-performing assets $ 245,406     $ 257,694     $ 226,595     $ 210,517     $ 194,557  
Performing troubled debt restructured loans $ 71,330     $ 64,832     $ 64,080     $ 67,102     $ 57,367  
Total non-accrual loans as a % of loans   0.70 %     0.77 %     0.68 %     0.62 %     0.58 %
Total accruing past due and non-accrual loans as a % of loans   0.87 %     0.94 %     0.93 %     0.79 %     0.88 %
Allowance for losses on loans as a % of non-accrual loans   149.53 %     136.01 %     154.23 %     168.07 %     183.64 %
                                       

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 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
(2 ) This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”) that management uses in its analysis of Valley’s performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley’s financial results. Specifically, Valley provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley’s presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley’s business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,   December 31,
($ in thousands, except for share data)   2021     2021       2020       2021       2020  
Adjusted net income available to common shareholders:                  
Net income, as reported $ 115,038   $ 122,580     $ 105,363     $ 473,840     $ 390,606  
Add: Losses on extinguishment of debt (net of tax)             6,958       6,024       8,649  
Add: Losses (gains) on available for sale and held to maturity securities transactions (net of tax)(a)   9     (565 )     (468 )     (390 )     (377 )
Add: Severance expense (net of tax)(b)             1,489             1,489  
Add: Merger related expenses (net of tax)(c)   5,491     1,207       96       6,698       1,371  
Add: Litigation reserve (net of tax)(d)       1,505             1,505        
Net income, as adjusted $ 120,538   $ 124,727     $ 113,438     $ 487,677     $ 401,738  
Dividends on preferred stock   3,172     3,172       3,172       12,688       12,688  
Net income available to common shareholders, as adjusted $ 117,366   $ 121,555     $ 110,266     $ 474,989     $ 389,050  
_____________                  
(a) Included in gains on securities transactions, net.
(b) Severance expenses are included in salary and employee benefits expense.
(c) Merger related expenses are primarily within salary and employee benefits expense, professional and legal fees, and other expense.
(d) Litigation reserve included in professional and legal fees.
                   
Adjusted per common share data:                  
Net income available to common shareholders, as adjusted $ 117,366   $ 121,555     $ 110,266     $ 474,989     $ 389,050  
Average number of shares outstanding   411,775,590     406,824,160       403,872,459       407,445,379       403,754,356  
Basic earnings, as adjusted $ 0.29   $ 0.30     $ 0.27     $ 1.17     $ 0.96  
Average number of diluted shares outstanding   414,472,820     409,238,001       405,799,507       410,018,328       405,046,207  
Diluted earnings, as adjusted $ 0.28   $ 0.30     $ 0.27     $ 1.16     $ 0.96  
                                     
  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,   December 31,
($ in thousands)   2021       2021       2020       2021       2020  
Adjusted annualized return on average tangible shareholders’ equity:                  
Net income, as adjusted $ 120,538     $ 124,727     $ 113,438     $ 487,677     $ 401,738  
Average shareholders’ equity   4,905,343       4,794,843       4,582,329       4,747,745       4,500,067  
Less: Average goodwill and other intangible assets   1,481,951       1,446,760       1,447,838       1,457,519       1,454,349  
Average tangible shareholders’ equity $ 3,423,392     $ 3,348,083     $ 3,134,491     $ 3,290,226     $ 3,045,718  
Annualized return on average tangible shareholders’ equity, as adjusted   14.08 %     14.90 %     14.48 %     14.82 %     13.19 %
Adjusted annualized return on average assets:                  
Net income, as adjusted $ 120,538     $ 124,727     $ 113,438     $ 487,677     $ 401,738  
Average assets $ 42,473,828     $ 41,543,930     $ 41,308,943     $ 41,475,682     $ 40,557,326  
Annualized return on average assets, as adjusted   1.14 %     1.20 %     1.10 %     1.18 %     0.99 %
Adjusted annualized return on average shareholders’ equity:                  
Net income, as adjusted $ 120,538     $ 124,727     $ 113,438     $ 487,677     $ 401,738  
Average shareholders’ equity $ 4,905,343     $ 4,794,843     $ 4,582,329     $ 4,747,745     $ 4,500,067  
Annualized return on average shareholders’ equity, as adjusted   9.83 %     10.41 %     9.90 %     10.27 %     8.93 %
                                       
Annualized return on average tangible shareholders’ equity:                  
Net income, as reported $ 115,038     $ 122,580     $ 105,363     $ 473,840     $ 390,606  
Average shareholders’ equity   4,905,343       4,794,843       4,582,329       4,747,745       4,500,067  
Less: Average goodwill and other intangible assets   1,481,951       1,446,760       1,447,838       1,457,519       1,454,349  
Average tangible shareholders’ equity $ 3,423,392     $ 3,348,083     $ 3,134,491     $ 3,290,226     $ 3,045,718  
Annualized return on average tangible shareholders’ equity   13.44 %     14.64 %     13.45 %     14.40 %     12.82 %
Adjusted efficiency ratio:                  
Non-interest expense $ 184,514     $ 174,922     $ 173,141     $ 691,542     $ 646,148  
Less: Loss on extinguishment of debt (pre-tax)               9,683       8,406       12,036  
Less: Severance expense (pre-tax)               2,072             2,072  
Less: Merger-related expenses (pre-tax)   7,613       1,287       133       8,900       1,907  
Less: Amortization of tax credit investments (pre-tax)   2,115       3,079       3,932       10,910       13,335  
Less: Litigation reserve (pre-tax)         2,100             2,100        
Non-interest expense, as adjusted   174,786       168,456       157,321       661,226       616,798  
Net interest income   315,301       301,026       287,920       1,209,901       1,118,904  
Non-interest income, as reported   38,223       42,431       47,533       155,013       183,032  
Add: Losses (gains) on available for sale and held to maturity securities transactions, net (pre-tax)   12       (788 )     (651 )     (545 )     (524 )
Non-interest income, as adjusted $ 38,235     $ 41,643     $ 46,882     $ 154,468     $ 182,508  
Gross operating income, as adjusted $ 353,536     $ 342,669     $ 334,802     $ 1,364,369     $ 1,301,412  
Efficiency ratio, as adjusted   49.44 %     49.16 %     46.99 %     48.46 %     47.39 %
                                       
  As Of
  December 31,   September 30,   June 30,   March 31,   December 31,
($ in thousands, except for share data)   2021       2021       2021       2021       2020  
Tangible book value per common share:                  
Common shares outstanding   421,437,068       407,313,664       406,083,790       405,797,538       403,858,998  
Shareholders’ equity $ 5,084,066     $ 4,822,498     $ 4,737,807     $ 4,659,670     $ 4,592,120  
Less: Preferred Stock   209,691       209,691       209,691       209,691       209,691  
Less: Goodwill and other intangible assets   1,529,394       1,444,967       1,447,965       1,450,414       1,452,891  
Tangible common shareholders’ equity $ 3,344,981     $ 3,167,840     $ 3,080,151     $ 2,999,565     $ 2,929,538  
Tangible book value per common share $ 7.94     $ 7.78     $ 7.59     $ 7.39     $ 7.25  
Tangible common equity to tangible assets:                  
Tangible common shareholders’ equity $ 3,344,981     $ 3,167,840     $ 3,080,151     $ 2,999,565     $ 2,929,538  
Total assets $ 43,446,443     $ 41,278,007     $ 41,274,228     $ 41,178,011     $ 40,686,076  
Less: Goodwill and other intangible assets   1,529,394       1,444,967       1,447,965       1,450,414       1,452,891  
Tangible assets $ 41,917,049     $ 39,833,040     $ 39,826,263     $ 39,727,597     $ 39,233,185  
Tangible common equity to tangible assets   7.98 %     7.95 %     7.73 %     7.55 %     7.47 %
(3 ) The efficiency ratio measures Valley’s total non-interest expense as a percentage of net interest income plus total non-interest income.
(4 ) The adjustment represents an increase in the allowance for credit losses for loans as a result of the adoption of ASU 2016-13 effective January 1, 2020.

SHAREHOLDERS RELATIONS

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

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

  December 31,
    2021       2020  
  (Unaudited)    
Assets      
Cash and due from banks $ 205,156     $ 257,845  
Interest bearing deposits with banks   1,844,764       1,071,360  
Investment securities:      
Equity securities   36,473       29,378  
Trading debt securities   38,130        
Available for sale debt securities   1,128,809       1,339,473  
Held to maturity debt securities (net of allowance for credit losses of $1,165 at December 31, 2021 and $1,428 at December 31, 2020)   2,667,532       2,171,583  
Total investment securities   3,870,944       3,540,434  
Loans held for sale, at fair value   139,516       301,427  
Loans   34,153,657       32,217,112  
Less: Allowance for loan losses   (359,202 )     (340,243 )
Net loans   33,794,455       31,876,869  
Premises and equipment, net   326,306       319,797  
Lease right of use assets   259,117       252,053  
Bank owned life insurance   566,770       535,209  
Accrued interest receivable   96,882       106,230  
Goodwill   1,459,008       1,382,442  
Other intangible assets, net   70,386       70,449  
Other assets   813,139       971,961  
Total Assets $ 43,446,443     $ 40,686,076  
Liabilities      
Deposits:      
Non-interest bearing $ 11,675,748     $ 9,205,266  
Interest bearing:      
Savings, NOW and money market   20,269,620       16,015,658  
Time   3,687,044       6,714,678  
Total deposits   35,632,412       31,935,602  
Short-term borrowings   655,726       1,147,958  
Long-term borrowings   1,423,676       2,295,665  
Junior subordinated debentures issued to capital trusts   56,413       56,065  
Lease liabilities   283,106       276,675  
Accrued expenses and other liabilities   311,044       381,991  
Total Liabilities   38,362,377       36,093,956  
Shareholders’ Equity      
Preferred stock, no par value; 50,000,000 shares authorized:      
Series A (4,600,000 shares issued at December 31, 2021 and December 31, 2020)   111,590       111,590  
Series B (4,000,000 shares issued at December 31, 2021 and December 31, 2020)   98,101       98,101  
Common stock (no par value, authorized 650,000,000 shares; issued 423,034,027 shares at December 31, 2021 and 403,881,488 shares at December 31, 2020)   148,482       141,746  
Surplus   3,883,035       3,637,468  
Retained earnings   883,645       611,158  
Accumulated other comprehensive loss   (17,932 )     (7,718 )
Treasury stock, at cost (1,596,959 common shares at December 31, 2021 and 22,490 common shares at December 31, 2020)   (22,855 )     (225 )
Total Shareholders’ Equity   5,084,066       4,592,120  
Total Liabilities and Shareholders’ Equity $ 43,446,443     $ 40,686,076  
               

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

  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,   December 31,
    2021     2021     2020       2021       2020  
Interest Income                  
Interest and fees on loans $ 319,141   $ 309,753   $ 313,968     $ 1,257,389     $ 1,284,707  
Interest and dividends on investment securities:                  
Taxable   15,852     14,292     14,024       56,026       70,249  
Tax-exempt   2,535     2,609     3,339       11,716       14,563  
Dividends   1,814     1,505     2,467       7,357       11,644  
Interest on federal funds sold and other short-term investments   637     642     260       1,738       2,556  
Total interest income   339,979     328,801     334,058       1,334,226       1,383,719  
Interest Expense                  
Interest on deposits:                  
Savings, NOW and money market   9,983     10,605     11,706       42,879       76,169  
Time   3,328     4,394     14,368       25,094       106,067  
Interest on short-term borrowings   984     1,464     2,097       5,374       11,372  
Interest on long-term borrowings and junior subordinated debentures   10,383     11,312     17,967       50,978       71,207  
Total interest expense   24,678     27,775     46,138       124,325       264,815  
Net Interest Income   315,301     301,026     287,920       1,209,901       1,118,904  
Provision (credit) for credit losses for held to maturity securities   90     35     (53 )     (263 )     635  
Provision for credit losses for loans   11,609     3,496     19,028       32,896       125,087  
Net Interest Income After Provision for Credit Losses   303,602     297,495     268,945       1,177,268       993,182  
Non-Interest Income                  
Trust and investment services   4,499     3,550     3,108       14,910       12,415  
Insurance commissions   2,005     1,610     1,972       7,810       7,398  
Service charges on deposit accounts   5,810     5,428     5,068       21,424       18,257  
Gains on securities transactions, net   495     787     651       1,758       524  
Fees from loan servicing   2,671     2,894     2,826       11,651       10,352  
Gains on sales of loans, net   6,653     6,442     15,998       26,669       42,251  
Gains (losses) on sales of assets, net   521     344     (2,607 )     901       (1,891 )
Bank owned life insurance   1,993     2,018     2,422       8,817       10,083  
Other   13,576     19,358     18,095       61,073       83,643  
Total non-interest income   38,223     42,431     47,533       155,013       183,032  
Non-Interest Expense                  
Salary and employee benefits expense   102,675     93,992     85,335       375,865       333,221  
Net occupancy and equipment expense   34,986     32,402     32,228       132,098       129,002  
FDIC insurance assessment   3,889     3,644     4,091       14,183       18,949  
Amortization of other intangible assets   5,074     5,298     6,117       21,827       24,645  
Professional and legal fees   11,182     13,492     9,702       38,432       32,348  
Loss on extinguishment of debt           9,683       8,406       12,036  
Amortization of tax credit investments   2,115     3,079     3,932       10,910       13,335  
Telecommunication expense   2,902     2,615     3,490       11,409       10,737  
Other   21,691     20,400     18,563       78,412       71,875  
Total non-interest expense   184,514     174,922     173,141       691,542       646,148  
Income Before Income Taxes   157,311     165,004     143,337       640,739       530,066  
Income tax expense   42,273     42,424     37,974       166,899       139,460  
Net Income   115,038     122,580     105,363       473,840       390,606  
Dividends on preferred stock   3,172     3,172     3,172       12,688       12,688  
Net Income Available to Common Shareholders $ 111,866   $ 119,408   $ 102,191     $ 461,152     $ 377,918  
                   
  Three Months Ended   Years Ended
  December 31,   September 30,   December 31,   December 31,
    2021     2021     2020       2021       2020  
Earnings Per Common Share:                  
Basic $ 0.27   $ 0.29   $ 0.25     $ 1.13     $ 0.94  
Diluted   0.27     0.29     0.25       1.12       0.93  
Cash Dividends Declared per Common Share   0.11     0.11     0.11       0.44       0.44  
Weighted Average Number of Common Shares Outstanding:                  
Basic   411,775,590     406,824,160     403,872,459       407,445,379       403,754,356  
Diluted   414,472,820     409,238,001     405,799,507       410,018,328       405,046,207  
                                   
VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and
Net Interest Income on a Tax Equivalent Basis
 
  Three Months Ended
  December 31, 2021   September 30, 2021   December 31, 2020
  Average       Avg.   Average       Avg.   Average       Avg.
($ in thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
Assets                                  
Interest earning assets:                                  
Loans (1)(2) $ 33,338,128   $ 319,165     3.83 %   $ 32,698,382   $ 309,778     3.79 %   $ 32,570,902   $ 313,993     3.86 %
Taxable investments (3)   3,563,329     17,667     1.98       3,302,803     15,797     1.91       3,204,974     16,491     2.06  
Tax-exempt investments (1)(3)   418,049     3,209     3.07       429,941     3,302     3.07       506,748     4,227     3.34  
Interest bearing deposits with banks   1,873,508     636     0.14       1,901,748     642     0.14       1,523,876     260     0.07  
Total interest earning assets   39,193,014     340,677     3.48       38,332,874     329,519     3.44       37,806,500     334,971     3.54  
Other assets   3,280,814             3,211,056             3,502,443        
Total assets $ 42,473,828           $ 41,543,930           $ 41,308,943        
Liabilities and shareholders’ equity                                  
Interest bearing liabilities:                                  
Savings, NOW and money market deposits $ 19,685,730   $ 9,983     0.20 %   $ 18,771,619   $ 10,605     0.23 %   $ 15,606,081   $ 11,706     0.30 %
Time deposits   3,744,792     3,328     0.36       4,126,253     4,394     0.43       7,005,804     14,368     0.82  
Short-term borrowings   670,433     983     0.59       860,474     1,464     0.68       1,316,706     2,097     0.64  
Long-term borrowings (4)   1,482,001     10,383     2.80       1,595,814     11,312     2.84       2,779,632     17,967     2.59  
Total interest bearing liabilities   25,582,956     24,677     0.39       25,354,160     27,775     0.44       26,708,223     46,138     0.69  
Non-interest bearing deposits   11,316,264             10,701,948             9,143,953        
Other liabilities   669,265             692,979             874,438        
Shareholders’ equity   4,905,343             4,794,843             4,582,329        
Total liabilities and shareholders’ equity $ 42,473,828           $ 41,543,930           $ 41,308,943        
Net interest income/interest rate spread (5)     $ 316,000     3.09 %       $ 301,744     3.00 %       $ 288,833     2.85 %
Tax equivalent adjustment       (699 )             (718 )             (913 )    
Net interest income, as reported     $ 315,301             $ 301,026             $ 287,920      
Net interest margin (6)         3.22 %           3.14 %           3.05 %
Tax equivalent effect         0.01             0.01             0.01  
Net interest margin on a fully tax equivalent basis (6)         3.23 %           3.15 %           3.06 %
____________
   
   
   
   
   
   
(1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
   
   
   
   
   
   
(2) Loans are stated net of unearned income and include non-accrual loans.
   
   
   
   
   
   
(3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
   
   
   
   
   
   
(4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
   
   
   
   
   
   
(5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
   
   
   
   
   
   
(6) Net interest income as a percentage of total average interest earning assets.
   
Contact:   Michael D. Hagedorn
    Senior Executive Vice President and
    Chief Financial Officer
    973-872-4885

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