UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 30, 2015
VALLEY NATIONAL BANCORP
(Exact Name of Registrant as Specified in Charter)
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New Jersey | | 1-11277 | | 22-2477875 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification Number) |
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1455 Valley Road, Wayne, New Jersey | | 07470 |
(Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code (973) 305-8800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On April 30, 2015, Valley National Bancorp (“Valley”) issued a press release reporting 2015 first quarter results of operations.
A copy of the press release is attached to this Current Report Form 8-K as Exhibit 99.
The information disclosed in this Item 2.02 shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended.
Valley’s 2015 first quarter press release contains certain supplemental financial information, described in the Notes to Selected Financial Data included in Exhibit 99, which has been determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”). Management internally reviews each of these non-GAAP financial measures to evaluate performance on a comparative period to period basis. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley’s financial results, the impact of such non-GAAP financial measures on Valley’s operating results and financial condition.
Item 9.01 Financial Statements and Exhibits.
Exhibit 99 Press Release dated April 30, 2015.
The Press Release disclosed in this Item 9.01 as Exhibit 99 shall be considered “furnished” but not “filed” for purposes of the Securities Exchange Act of 1934, as amended.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: April 30, 2015 | | VALLEY NATIONAL BANCORP |
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| | By: | | /s/ Alan D. Eskow |
| | | | Alan D. Eskow |
| | | | Senior Executive Vice President and |
| | | | Chief Financial Officer (Principal Financial Officer) |
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Exhibit 99
News Release
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FOR IMMEDIATE RELEASE | Contact: | | Alan D. Eskow |
| | | Senior Executive Vice President and |
| | | Chief Financial Officer |
| | | 973-305-4003 |
VALLEY NATIONAL BANCORP REPORTS FIRST QUARTER EARNINGS
AND SOLID COMMERCIAL LOAN GROWTH
WAYNE, NJ – April 30, 2015 -- Valley National Bancorp (NYSE:VLY), the holding company for Valley National Bank, today reported net income for the first quarter of 2015 of $30.3 million, or $0.13 per diluted common share as compared to net income of $25.1 million, or $0.11 per diluted common share, for the fourth quarter of 2014 and the first quarter of 2014 earnings of $33.8 million, or $0.17 per diluted common share. The first quarter of 2014 earnings per diluted common share included approximately $0.04 per share related to a tax benefit of $8.3 million as a result of a decrease in our reserve for unrecognized tax benefits. See the "Income Tax Expense" section below for more details.
Key financial highlights for the first quarter:
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• | Non-Covered Loans: Total non-covered loans (i.e., loans which are not subject to our loss-sharing agreements with the FDIC) increased by $288.7 million, or 8.7 percent on an annualized basis, to $13.6 billion at March 31, 2015 from December 31, 2014 largely due to solid growth in all loan categories. Higher volumes within commercial and industrial loans, commercial real estate (including construction) loans and residential mortgage loans accounted for the majority of the first quarter growth, as total outstanding balances in these categories increased by $124.7 million, $73.8 million and $70.1 million, or 22.3 percent, 4.5 percent, and 11.1 percent on an annualized basis, respectively. The commercial and industrial loan growth resulted from a significant uptick in new and existing customer demand. During the first quarter of 2015, Valley sold approximately $31.1 million of residential mortgage loans originated for sale. |
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• | Asset Quality: Overall, our non-performing assets decreased by 11.9 percent to $73.2 million at March 31, 2015 as compared to $83.1 million at December 31, 2014 partly due to the sale of a $7.1 million non-performing loan held for sale. Non-accrual loans moderately increased to $57.5 million, or 0.42 percent of our entire loan portfolio of $13.7 billion, at March 31, 2015 as compared to $55.8 million, or 0.41 percent of total loans, at December 31, 2014. See further details under the "Credit Quality" section below. |
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• | Net Interest Income and Margin: Net interest income totaling $132.1 million for the three months ended March 31, 2015 increased $3.4 million as compared to the fourth quarter of 2014, and increased $18.1 million as compared to the first quarter of 2014. On a tax equivalent basis, our net interest margin remained unchanged at 3.20 percent for the first quarter of 2015 as compared to the fourth quarter of 2014, and decreased 1 basis point from 3.21 percent in the first quarter of 2014. See the "Net Interest Income and Margin" section below for more details. |
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• | Provision for Losses on Non-Covered Loans and Unfunded Letters of Credit: During the first quarter of 2015, we recorded no provision for losses on non-covered loans and unfunded |
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
letters of credit as compared to $4.2 million for the fourth quarter of 2014 and a $4.0 million provision for the first quarter of 2014. For the first quarter of 2015, we recognized net non-covered loan recoveries of $278 thousand as compared to net loan charge-offs on non-covered loans totaling $4.2 million and $11.9 million for the fourth quarter of 2014 and first quarter of 2014, respectively. See the "Credit Quality" section below for more details on our provision and allowance for credit losses.
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• | Non-Interest Income: Non-interest income decreased $11.0 million to $18.6 million for the three months ended March 31, 2015 from $29.6 million for the fourth quarter of 2014. The decrease was mostly due to a $17.8 million gain on the sale of a Manhattan branch location during the fourth quarter of 2014. However, while there also was a reduction to non-interest income related to the changes in our FDIC loss-share receivable of $3.9 million during the first quarter of 2015, this was less than the $9.2 million reduction in the fourth quarter of 2014. Net gains on securities transactions increased $1.8 million to $2.4 million (or $1.4 million after taxes) for the first quarter of 2015 as compared to $643 thousand (or $373 thousand after taxes) in the fourth quarter of 2014. See the "Non-Interest Income" section below for additional information. |
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• | Non-Interest Expense: Non-interest expense decreased $13.2 million to $108.1 million for the first quarter of 2015 from $121.3 million for the fourth quarter of 2014 largely due to $10.1 million of prepayment penalties incurred on the extinguishment of $275 million of long-term borrowings in December 2014. Amortization of tax credit investments also decreased by $5.6 million during the first quarter of 2015 as compared to the fourth quarter of 2014 mostly due to new purchases of tax credit investments in the fourth quarter. See the "Non-Interest Expense" section below for additional information. |
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• | Capital Strength: Our regulatory capital ratios continue to reflect Valley’s strong capital position. Valley's total risk-based capital, Tier 1 capital, leverage capital, and Tier 1 common capital ratios were 11.29 percent, 9.39 percent, 7.12 percent and 9.39 percent, respectively, at March 31, 2015. The 2015 ratios reflect the new capital regulation changes required under the Basel III regulatory capital reform. |
Gerald H. Lipkin, Chairman, President and CEO commented that, “Our first quarter of 2015 earnings were positively impacted by annualized non-covered loan growth of nearly 9 percent, strong credit quality and a 15 basis point decline in the cost of average long-term borrowings as compared to the fourth quarter of 2014. While the reduction in our cost of funds positively impacted our net interest income and margin during the first quarter, our ability to smartly grow the loan portfolio helped us mitigate the continuing negative impact of the low interest rate environment on our interest income. Our current commercial loan pipeline, including nearly $170 million from our new Florida division, appears to be solid in the early stages of the second quarter and we are optimistic that we can continue to take advantage of our strong lending markets."
Mr. Lipkin added, “In late February 2015, we completed the full systems integration related to our acquisition of 1st United Bancorp, Inc. ("1st United"). We believe our ability to put this integration quickly behind us will allow our management team to clearly focus on the tremendous lending, deposit, and other financial service expansion opportunities throughout Florida, and fully leverage our 20 branch presence and new advertising campaigns within some of the most attractive urban banking markets in
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
Florida. Additionally, the completed integration has already resulted in many of the expected operating synergies during the second quarter of 2015."
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $134.0 million for the first quarter of 2015 increased $3.4 million and $18.0 million as compared to the fourth quarter of 2014 and first quarter of 2014, respectively. Interest income on a tax equivalent basis was $172.9 million for the first quarter of 2015 and remained relatively unchanged as compared to the fourth quarter of 2014 as a $526.7 million increase in average loans (partially caused by a full quarter of the $1.2 billion of loans acquired from 1st United in November 2014) coupled with loan growth was mostly offset by a 17 basis point decline in the yield on average loans. Interest expense decreased $3.4 million to $38.9 million for the three months ended March 31, 2015. The decrease in interest expense from the fourth quarter of 2014 was primarily driven by the prepayment of $275 million in long-term borrowings, which had a combined weighted average interest rate of 4.52 percent, in late December 2014 and two less days during the first quarter of 2015. The decrease in interest expense on average long-term borrowings was partially offset by additional interest expense resulting from a $241.5 million increase in average time deposits. The increase in average time deposits resulted, in part, from a full quarter of deposits assumed from the 1st United acquisition.
The net interest margin on a tax equivalent basis of 3.20 percent for the first quarter of 2015 was unchanged as compared to linked fourth quarter of 2014, and decreased by 1 basis point from 3.21 percent for the three months ended March 31, 2014. The yield on average interest earning assets decreased by 11 basis points on a linked quarter basis. The lower yield was mainly a result of the aforementioned decrease in the yield on average loans largely caused by new and refinanced loan volumes at current interest rates that remain relatively low compared to the overall yield of our loan portfolio combined with a moderate decline in the accretion related to certain PCI loan pools. The level of yields on new loans was negatively impacted by the low market interest rates caused not only from the Fed's current monetary policy, but also from intense competition in our markets for quality commercial customers. Additionally, our higher yielding PCI loan portfolio declined $72.6 million, or 4.2 percent from December 31, 2014 to approximately $1.6 billion at March 31, 2015 due to normal repayment and prepayment activity. During the first quarter, our yield on total average investment securities also moderately declined primarily due to two less days during the period as compared to the fourth quarter of 2014. The overall cost of average interest bearing liabilities decreased by 13 basis point from 1.37 percent in the linked fourth quarter of 2014 primarily due to a 15 basis point decline in the cost of average long-term borrowing and two less days during the first quarter. Our cost of total deposits was 0.40 percent for the first quarter of 2015 compared to 0.41 percent for the three months ended December 31, 2014.
Potential future loan growth from solid loan demand in our primary markets has continued into the early stages of the second quarter of 2015 and is anticipated to positively impact our future net interest income. However, our margin continues to face the risk of compression in the future due to the relatively low level of interest rates on most interest earning asset alternatives and further repayment of higher yielding interest earning assets. We believe that the maturity of a large percentage of our high interest rate borrowings during the next 36 months will mitigate some of the margin compression risk. In the face of these challenges, we continue to tightly manage our balance sheet and explore ways to reduce our expenses to optimize our returns.
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
Loans, Deposits and Other Borrowings
Non-Covered Loans. Non-covered loans are loans not subject to loss-sharing agreements with the FDIC. Non-covered loans increased $288.7 million, or 8.7 percent on an annualized basis, to approximately $13.6 billion at March 31, 2015 from December 31, 2014, despite loan repayments of $44.5 million in our non-covered PCI loan portion of this portfolio. The increase in total non-covered loans was mainly due to loan origination volumes across several loan portfolios.
Total commercial and industrial loans increased $124.7 million, or 22.3 percent on an annualized basis from December 31, 2014 to approximately $2.4 billion at March 31, 2015 due, in part, to new loan demand from both new and existing customers generally in our New York markets, including a few relatively large loan relationships. While these new loan volumes more than offset our normal repayment and refinance activity, we continued to experience significant market competition for quality credits during the first quarter.
Total commercial real estate loans (excluding construction loans) increased $64.8 million from December 31, 2014 to $6.1 billion at March 31, 2015. Loan origination volumes and demand were seen across many segments of commercial real estate borrowers in the majority of our markets. The continued organic growth within the commercial real estate portfolio was supplemented by our expanded relationships with other financial institutions in our local market and the resulting purchase of participations in multi-family loans (mostly in New York City) totaling $97.1 million during the first quarter. A sizable portion of the purchased loans are expected to qualify for CRA purposes. Construction loans outstanding totaled $538.9 million at March 31, 2015.
Total residential mortgage loans increased $70.1 million to approximately $2.6 billion at March 31, 2015 from December 31, 2014 mostly due to a moderate increase in loan origination volumes as compared to the fourth quarter of 2014, a higher amount of loan originations retained for investment purposes, and $42.8 million in loan purchases from two third party originators during the first quarter of 2015. Residential mortgage loan originations totaled approximately $121.8 million for the first quarter of 2015 as compared to $115.3 million and $64.7 million for the fourth quarter of 2014 and the first quarter of 2014, respectively. During the first quarter of 2015, Valley sold approximately $31.1 million of residential mortgage loans originated for sale.
Automobile loans increased by $18.1 million, or 6.3 percent on an annualized basis, to $1.2 billion at March 31, 2015 as compared to December 31, 2014 as our new organic loan volumes continued to be solid due to the overall strength of the U.S. auto markets. Additionally, Valley has recently added a number of Florida auto dealers to its network and anticipates that this network expansion will supplement the strong origination volumes seen over the past several quarters. Valley has achieved its growth in auto lending portfolio without participation in the subprime auto lending markets.
Home equity loans totaling $482.3 million at March 31, 2015 moderately decreased by $9.5 million as compared to December 31, 2014. New home equity volumes continue to be weak, despite the relatively favorable low interest rate environment. However, other consumer loans increased $11.5 million, or 14.8 percent on an annualized basis, to $321.8 million at March 31, 2015 as compared to $310.3 million at December 31, 2014 mainly due to continued growth and customer usage of collateralized personal lines of credit.
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
Covered Loans. PCI loans for which Valley National Bank will share losses with the FDIC are referred to as “covered loans”. Our covered loans, consisting primarily of commercial real estate loans and residential mortgage loans, decreased to $183.7 million, or 1.3 percent of total loans, at March 31, 2015 as compared to $211.9 million, or 1.6 percent of total loans, at December 31, 2014. The linked quarter decrease was mainly due to normal collection and prepayment activity, as well as the reclassification of approximately $12.3 million in covered loans to non-covered loans due to the December 2014 expiration of a commercial loss sharing agreement acquired from 1st United.
All of our covered loans, as well as non-covered PCI loans, are accounted for on a pool basis. For loan pools with higher cash flows than originally estimated at the acquisition dates, the forecasted increase in cash flows is recorded as a prospective adjustment to our interest income on loans over future periods. Additionally, on a prospective basis, we reduce the FDIC loss-share receivable by the guaranteed portion of the additional cash flows expected to be received from borrowers on those loan pools. During the first quarter of 2015, we reduced our FDIC loss-share receivable by $4.1 million due to the prospective recognition of the effect of additional cash flows from pooled loans with a corresponding reduction in non-interest income for the period, as compared to $7.3 million during the fourth quarter of 2014. We do not expect this specific type of reduction to non-interest income related to the FDIC loss-share receivable during the second quarter of 2015. Our FDIC loss-share receivable totaled $7.6 million at March 31, 2015.
Deposit Mix. Total deposits increased $182.6 million, or 1.3 percent, to approximately $14.2 billion at March 31, 2015 from December 31, 2014 due to generally higher balances in most deposit categories. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 30 percent, 50 percent and 20 percent of total deposits as of March 31, 2015. The composition of deposits based upon the period end balances remained relatively unchanged at March 31, 2015 as compared to December 31, 2014.
Other Borrowings. Both short- and long-term borrowings remained relatively unchanged during the first quarter of 2015 compared to the linked quarter and totaled approximately $133.9 million and $2.5 billion, respectively, at March 31, 2015. As we noted in the past, our long-term borrowings include over $1.7 billion of relatively high cost borrowings (mostly from the Federal Home Loan Bank of New York) that mature in the third quarter of 2015 through the end of 2018. These maturities, with an average cost of 3.89 percent, are expected to substantially decrease the level of our funding costs over such periods, dependent on the level of market interest rates and our ability to obtain similar amounts of debt instruments.
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. In November 2014, we acquired loans totaling $1.2 billion, after purchase accounting adjustments, from the acquisition of 1st United. All of these loans are accounted for as PCI loans.
Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets, and non-accrual debt securities totaled $73.2 million at March 31, 2015 compared to $83.1 million at December 31, 2014 (which also included non-performing loans held for sale). The $9.9 million decrease in NPAs from December 31, 2014 was largely due to the sale of one $7.1
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
million non-performing commercial real estate loan held for sale for an immaterial gain during the first quarter of 2015. Non-accrual debt securities also decreased $2.7 million to $2.0 million at March 31, 2015 as compared to $4.7 million at December 31, 2014. The decline was largely due to the sale of a previously impaired pooled trust preferred security, which resulted in a realized gain of $364 thousand during the first quarter of 2015.
Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $8.4 million to $39.6 million at March 31, 2015 as compared to $31.2 million at December 31, 2014. The increase was mostly due to fluctuations in loans past due 30 to 59 days, partially offset by moderate declines in loans past due 60 days or more. Of the $39.6 million, $7.5 million represented performing matured loans in the normal process of renewal. Although we can provide no assurances as to the future level of our loan delinquencies, we do not believe the increase in accruing past due loans represents a negative trend in the overall credit quality of our non-PCI loan portfolio at March 31, 2015.
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, 2015, December 31, 2014, and March 31, 2014:
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| | March 31, 2015 | | December 31, 2014 | | March 31, 2014 |
| | | | Allocation | | | | Allocation | | | | Allocation |
| | | | as a % of | | | | as a % of | | | | as a % of |
| | Allowance | | Loan | | Allowance | | Loan | | Allowance | | Loan |
| | Allocation | | Category | | Allocation | | Category | | Allocation | | Category |
Loan Category: | | | | | | | | | | | |
Commercial and industrial loans* | $ | 46,657 |
| | 1.98 | % | | $ | 45,440 |
| | 2.03 | % | | $ | 51,965 |
| | 2.57 | % |
Commercial real estate loans: | | | | | | | | | | | |
| Commercial real estate | 26,335 |
| | 0.43 | % | | 27,426 |
| | 0.45 | % | | 22,951 |
| | 0.45 | % |
| Construction | 15,321 |
| | 2.84 | % | | 15,414 |
| | 2.91 | % | | 8,999 |
| | 2.17 | % |
Total commercial real estate loans | 41,656 |
| | 0.63 | % | | 42,840 |
| | 0.65 | % | | 31,950 |
| | 0.58 | % |
Residential mortgage loans | 4,062 |
| | 0.16 | % | | 5,063 |
| | 0.20 | % | | 6,856 |
| | 0.28 | % |
Consumer loans: | | | | | | | | | | | |
| Home equity | 1,588 |
| | 0.33 | % | | 1,200 |
| | 0.24 | % | | 1,047 |
| | 0.24 | % |
| Auto and other consumer | 3,384 |
| | 0.23 | % | | 3,979 |
| | 0.27 | % | | 3,056 |
| | 0.26 | % |
Total consumer loans | 4,972 |
| | 0.25 | % | | 5,179 |
| | 0.27 | % | | 4,103 |
| | 0.25 | % |
Unallocated | 7,018 |
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| | 5,565 |
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| | 7,309 |
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Allowance for non-covered loans | | | | | | | | | | | |
| and unfunded letters of credit | 104,365 |
| | 0.77 | % | | 104,087 |
| | 0.78 | % | | 102,183 |
| | 0.88 | % |
Allowance for covered loans | 200 |
| | 0.11 | % | | 200 |
| | 0.09 | % | | 7,070 |
| | 8.74 | % |
Total allowance for credit losses | $ | 104,565 |
| | 0.76 | % | | $ | 104,287 |
| | 0.77 | % | | $ | 109,253 |
| | 0.93 | % |
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* Includes the reserve for unfunded letters of credit. | | | | | | | | | | |
Our non-covered loan portfolio, totaling $13.6 billion at March 31, 2015, had net loan recoveries of $278 thousand for the first quarter of 2015 as compared to net loan charge-offs of $4.0 million and $11.9 million for the fourth quarter of 2014 and first quarter of 2014, respectively. The net loan recoveries in the first quarter of 2015 were primarily due to a $3.9 million decline in gross loan charge-offs as compared to the
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
fourth quarter of 2014 caused by decreases in most loan categories. During the first quarter of 2015, we recorded no provision for losses on non-covered loans and unfunded letters of credit as compared to a $4.2 million provision for the fourth quarter of 2014 and a $4.0 million provision for the first quarter of 2014.
The allowance for non-covered loans and unfunded letters of credit as a percentage of total non-covered loans was 0.77 percent at March 31, 2015 as compared to 0.78 percent and 0.88 percent at December 31, 2014 and March 31, 2014, respectively. At March 31, 2015, our allowance allocations for losses as a percentage of total loans in most loan categories moderately declined or did not significantly change as compared to December 31, 2014 due to our portfolio's credit quality and favorable economic outlook for our primary markets. Overall, total loan delinquencies and internally classified loans remained at acceptable levels of total loans at March 31, 2015, while we also experienced a low level of loan charge-offs which resulted in a modest net loan recovery during the first quarter of 2015. The first quarter net recoveries continued the positive trend in loan loss experience seen in 2014, where net loan charge-offs were at the lowest level reported since 2007. These items as well as several other factors positively impacted our estimate of the allowance for credit losses at March 31, 2015.
Our allowance for non-covered loans and unfunded letters of credit as a percentage of total non-covered loans (excluding non-covered PCI loans with carrying values totaling approximately $1.5 billion) was 0.86 percent at March 31, 2015 as compared to 0.89 percent at December 31, 2014. PCI loans, including all of the loans recently acquired from 1st United during the fourth quarter of 2014, 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 non-covered PCI loans at March 31, 2015, December 31, 2014 and March 31, 2014.
Non-Interest Income
Non-interest income decreased $11.0 million to $18.6 million for the first quarter of 2015 from $29.6 million for the linked quarter ended December 31, 2014 largely due to a $17.6 million decrease in gains on sales of assets almost entirely related to the sale of a Manhattan branch location in December 2014. However, while there also was a reduction to non-interest income related to the changes in our FDIC loss-share receivable of $3.9 million during the first quarter of 2015, this was less than compared to $9.2 million in the fourth quarter of 2014. The $5.3 million decrease in this item was mostly due to a reduction in the prospective recognition of decreases in the receivable attributable to better than originally estimated cash flows on the loan pools covered by loss-sharing agreements that expired in March 2015. Additionally, we recorded a reduction to non-interest income related to the FDIC's portion of periodic loan recoveries from closed (or "zero-balance") loan pools during the fourth quarter of 2014. Net gains on securities transactions increased $1.8 million to $2.4 million for the first quarter of 2015 as compared to $643 thousand for the quarter ended December 31, 2014 mostly due to the sale of corporate debt securities and trust preferred securities with a total unamortized cost of approximately $34.2 million (primarily due to portfolio re-positioning related to the new Basel III regulatory capital requirements) during 2015.
Non-Interest Expense
Non-interest expense decreased $13.2 million to $108.1 million for the first quarter of 2015 as compared to $121.3 million for the fourth quarter of 2014 largely due to a $10.1 million prepayment penalty paid on the extinguishment of $275 million in long-term borrowings during the fourth quarter. Amortization
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
of tax credit investments decreased by $5.6 million to $4.5 million in the first quarter as compared to the fourth quarter of 2014 mostly due to additional purchases of such investments during the fourth quarter. Other non-interest expense decreased by $2.1 million to $13.5 million mainly due to a decline in losses related to OREO properties, as well as OREO expenses as compared to the fourth quarter of 2014. Professional and legal expense declined $1.8 million to $3.3 million for the three months ended March 31, 2015 as compared to the fourth quarter of 2014 mostly due to a decline in 1st United merger related expenses. Salary and employee benefits expense increased $3.9 million to $56.7 million for the first quarter of 2015 as compared to $52.8 million for the fourth quarter of 2014 primarily due to normal increases in payroll tax expense and stock-based compensation expense, combined with higher salary expenses due to a full quarter of additional staffing expenses related to our acquisition of 1st United on November 1, 2014. Net occupancy and equipment expense increased $3.4 million to $22.2 million for the first quarter of 2015 largely because of an increase in seasonal maintenance costs, such as snow removal services, as well as higher rental expense partly caused by the 1st United acquisition.
Income Tax Expense
Income tax expense was $12.3 million for the three months ended March 31, 2015 reflecting an effective tax rate of 28.8 percent, as compared to $7.8 million for the fourth quarter of 2014 reflecting an effective tax rate of 23.7 percent and $830 thousand for the first quarter of 2014 reflecting an effective tax rate of 2.4 percent. The increase in effective tax rate and tax expense in the first quarter of 2015 compared to the fourth quarter of 2014 was due to higher pre-tax income and a $7.0 million decrease in tax credits during the first quarter, as well as a $2.7 million reduction in our reserve for unrecognized tax benefits which reduced income tax expense for the three months ended December 31, 2014, which was partially offset by a $7.6 million tax charge due to the 1st United merger. The increase in effective tax rate and tax expense as compared to the first quarter of 2014 was primarily due to higher pre-tax income during the first quarter of 2015, as well as a $8.3 million reduction in our reserve for unrecognized tax benefits which reduced income tax expense for the three months ended March 31, 2014.
For the remainder of 2015, we anticipate that our effective tax rate will range from 27 percent to 29 percent primarily reflecting the impacts of tax-exempt income, tax-advantaged investments and general business credits.
About Valley
Valley National Bancorp is a regional bank holding company headquartered in Wayne, New Jersey with approximately $19 billion in assets. Its principal subsidiary, Valley National Bank, currently operates 224 branch locations serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn, Queens and Long Island, and southeast and central Florida. 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 24 hours a day, 7 days a week. For more information about Valley National Bank and its products and services, please visit www.valleynationalbank.com or call our 24/7 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
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
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:
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• | a severe decline in the general economic conditions of New Jersey, the New York Metropolitan area and Florida; |
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• | unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities; |
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• | less than expected cost savings from long-term borrowings that mature from 2015 to 2018; |
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• | government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve; |
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• | claims and litigation pertaining to fiduciary responsibility, contractual issues, environmental laws and other matters; |
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• | our inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital requirements (including those resulting from the U.S. implementation of Basel III requirements); |
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• | higher than expected loan losses within one or more segments of our loan portfolio; |
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• | declines in value in our investment portfolio, including additional other-than-temporary impairment charges on our investment securities; |
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• | unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments or other factors; |
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• | unanticipated credit deterioration in our loan portfolio; |
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• | 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; |
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• | higher than expected tax rates, including increases resulting from changes in tax laws, regulations and case law; |
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• | an unexpected decline in real estate values within our market areas; |
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• | higher than expected FDIC insurance assessments; |
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• | the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships; |
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• | lack of liquidity to fund our various cash obligations; |
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• | unanticipated reduction in our deposit base; |
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• | potential acquisitions that may disrupt our business; |
Valley National Bancorp (NYSE: VLY)
2015 First Quarter Earnings
April 30, 2015
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• | legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations) subject us to additional regulatory oversight which may result in higher compliance costs and/or require us to change our business model; |
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• | changes in accounting policies or accounting standards; |
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• | our inability to promptly adapt to technological changes; |
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• | our internal controls and procedures may not be adequate to prevent losses; |
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• | the inability to realize expected revenue synergies from the 1st United merger in the amounts or in the timeframe anticipated; |
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• | inability to retain customers and employees, including those of 1st United; |
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• | lower than expected cash flows from purchased credit-impaired loans; |
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• | 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; |
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• | future goodwill impairment due to changes in our business, changes in market conditions, or other factors; and |
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• | other unexpected material adverse changes in our operations or earnings. |
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, 2014.
We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
# # #
-Tables to Follow-
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL DATA
|
| | | | | | | | | | | | | | |
| | | Three months ended | |
| | | March 31, | | December 31, | | March 31, | |
($ in thousands, except for share data) | 2015 | | 2014 | | 2014 | |
FINANCIAL DATA: | | | | | | |
Net interest income | $ | 132,086 |
| | $ | 128,646 |
| | $ | 114,024 |
| |
Net interest income - FTE (1) | 134,037 |
| | 130,618 |
| | 116,016 |
| |
Non-interest income | 18,645 |
| | 29,563 |
| | 20,738 |
| |
Non-interest expense | 108,118 |
| | 121,267 |
| | 96,099 |
| |
Income tax expense | 12,272 |
| | 7,827 |
| | 830 |
| |
Net income | 30,341 |
| | 25,135 |
| | 33,835 |
| |
Weighted average number of common shares outstanding: | | | | | | |
| Basic | 232,338,775 |
| | 221,471,635 |
| | 200,128,384 |
| |
| Diluted | 232,341,921 |
| | 221,471,635 |
| | 200,128,384 |
| |
Per common share data: | | | | | | |
| Basic earnings | $ | 0.13 |
| | $ | 0.11 |
| | $ | 0.17 |
| |
| Diluted earnings | 0.13 |
| | 0.11 |
| | 0.17 |
| |
| Cash dividends declared | 0.11 |
| | 0.11 |
| | 0.11 |
| |
Closing stock price - high | 9.77 |
| | 10.04 |
| | 10.41 |
| |
Closing stock price - low | 9.05 |
| | 9.21 |
| | 9.30 |
| |
FINANCIAL RATIOS: | | | | | | |
Net interest margin | 3.16 | % | | 3.15 | % | | 3.15 | % | |
Net interest margin - FTE (1) | 3.20 |
| | 3.20 |
| | 3.21 |
| |
Annualized return on average assets | 0.64 |
| | 0.55 |
| | 0.84 |
| |
Annualized return on average shareholders' equity | 6.49 |
| | 5.65 |
| | 8.76 |
| |
Annualized return on average tangible shareholders' equity (2) | 9.66 |
| | 8.26 |
| | 12.52 |
| |
Efficiency ratio (3) | 71.73 |
| | 76.65 |
| | 71.31 |
| |
AVERAGE BALANCE SHEET ITEMS: | | | | | | |
Assets | $ | 18,850,025 |
| | $ | 18,307,999 |
| | $ | 16,202,159 |
| |
Interest earning assets | 16,738,899 |
| | 16,315,016 |
| | 14,465,622 |
| |
Loans | 13,569,031 |
| | 13,042,303 |
| | 11,617,597 |
| |
Interest bearing liabilities | 12,598,669 |
| | 12,319,782 |
| | 10,838,598 |
| |
Deposits | 14,110,547 |
| | 13,388,911 |
| | 11,244,498 |
| |
Shareholders' equity | 1,869,754 |
| | 1,780,334 |
| | 1,544,640 |
| |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
| | | | | | | | | | | | | | | | | | | |
| As Of |
| March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
($ in thousands) | 2015 | | 2014 | | 2014 | | 2014 | | 2014 |
BALANCE SHEET ITEMS: | | | | | | | | | |
Assets | $ | 18,980,010 |
| | $ | 18,793,855 |
| | $ | 16,726,410 |
| | $ | 16,335,967 |
| | $ | 16,344,464 |
|
Total loans | 13,734,461 |
| | 13,473,913 |
| | 12,165,377 |
| | 11,813,428 |
| | 11,694,594 |
|
Non-covered loans | 13,550,735 |
| | 13,262,022 |
| | 12,119,086 |
| | 11,750,875 |
| | 11,613,664 |
|
Deposits | 14,216,743 |
| | 14,034,116 |
| | 11,861,487 |
| | 11,416,052 |
| | 11,267,985 |
|
Shareholders' equity | 1,867,153 |
| | 1,863,017 |
| | 1,584,198 |
| | 1,573,656 |
| | 1,559,889 |
|
| | | | | | | | | |
LOANS: | | | | | | | | | |
Non-covered Loans | | | | | | | | | |
Commercial and industrial | $ | 2,361,987 |
| | $ | 2,237,298 |
| | $ | 2,076,512 |
| | $ | 2,064,751 |
| | $ | 2,019,099 |
|
Commercial real estate: | | | | | | | | | |
Commercial real estate | 6,097,017 |
| | 6,032,190 |
| | 5,346,818 |
| | 5,100,442 |
| | 5,083,744 |
|
Construction | 538,937 |
| | 529,963 |
| | 457,163 |
| | 413,262 |
| | 413,795 |
|
Total commercial real estate | 6,635,954 |
| | 6,562,153 |
| | 5,803,981 |
| | 5,513,704 |
| | 5,497,539 |
|
Residential mortgage | 2,585,782 |
| | 2,515,675 |
| | 2,436,022 |
| | 2,461,516 |
| | 2,472,180 |
|
Consumer: | | | | | | | | | |
Home equity | 482,265 |
| | 491,745 |
| | 435,450 |
| | 436,360 |
| | 440,006 |
|
Automobile | 1,162,963 |
| | 1,144,831 |
| | 1,091,287 |
| | 1,021,782 |
| | 957,036 |
|
Other consumer | 321,784 |
| | 310,320 |
| | 275,834 |
| | 252,762 |
| | 227,804 |
|
Total consumer loans | 1,967,012 |
| | 1,946,896 |
| | 1,802,571 |
| | 1,710,904 |
| | 1,624,846 |
|
Total non-covered loans | $ | 13,550,735 |
| | $ | 13,262,022 |
| | $ | 12,119,086 |
| | $ | 11,750,875 |
| | $ | 11,613,664 |
|
Covered loans* | 183,726 |
| | 211,891 |
| | 46,291 |
| | 62,553 |
| | 80,930 |
|
Total loans | $ | 13,734,461 |
| | $ | 13,473,913 |
| | $ | 12,165,377 |
| | $ | 11,813,428 |
| | $ | 11,694,594 |
|
_________________________ | | | | | | | | | |
* Loans that Valley National Bank will share losses with the FDIC are referred to as "covered loans". | | |
| | | | | | | | | |
CAPITAL RATIOS: | | | | | | | | | |
Book value | $ | 8.03 |
| | $ | 8.03 |
| | $ | 7.89 |
| | $ | 7.85 |
| | $ | 7.79 |
|
Tangible book value (2) | 5.40 |
| | 5.38 |
| | 5.61 |
| | 5.55 |
| | 5.48 |
|
Tangible common equity to tangible assets (2) | 6.83 | % | | 6.87 | % | | 6.92 | % | | 7.01 | % | | 6.91 | % |
Tier 1 leverage (4) | 7.12 |
| | 7.46 |
| | 7.39 |
| | 7.41 |
| | 7.37 |
|
Tier 1 common capital (4) | 9.39 |
| | N/A |
| | N/A |
| | N/A |
| | N/A |
|
Risk-based capital - Tier 1 (4) | 9.39 |
| | 9.73 |
| | 9.58 |
| | 9.80 |
| | 9.72 |
|
Risk-based capital - Total Capital (4) | 11.29 |
| | 11.42 |
| | 11.44 |
| | 11.89 |
| | 11.85 |
|
_________________________ | | | | | | | | | |
N/A - Not Applicable | | |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
| | | | | | | | | | | | | |
| | | Three months ended |
| | | March 31, | | December 31, | | March 31, |
($ in thousands) | 2015 | | 2014 | | 2014 |
ALLOWANCE FOR CREDIT LOSSES: | | | | | |
Beginning balance - Allowance for credit losses | $ | 104,287 |
| | $ | 104,559 |
| | $ | 117,112 |
|
Loans charged-off: (5) |
| |
| |
|
| Commercial and industrial | (753 | ) | | (916 | ) | | (8,614 | ) |
| Commercial real estate | (77 | ) | | — |
| | (3,851 | ) |
| Construction | (73 | ) | | (2,767 | ) | | (639 | ) |
| Residential mortgage | (49 | ) | | (489 | ) | | (63 | ) |
| Consumer | (714 | ) | | (1,391 | ) | | (1,072 | ) |
| | Total loans charged-off | (1,666 | ) | | (5,563 | ) | | (14,239 | ) |
Charged-off loans recovered: (5) | | | | | |
| Commercial and industrial | 1,051 |
| | 720 |
| | 544 |
|
| Commercial real estate | 23 |
| | 279 |
| | 1,337 |
|
| Construction | 437 |
| | — |
| | — |
|
| Residential mortgage | 114 |
| | 4 |
| | 79 |
|
| Consumer | 319 |
| | 308 |
| | 422 |
|
| | Total loans recovered | 1,944 |
| | 1,311 |
| | 2,382 |
|
Net recoveries (charge-offs) (5) | 278 |
| | (4,252 | ) | | (11,857 | ) |
Provision charged for credit losses | — |
| | 3,980 |
| | 3,998 |
|
Ending balance - Allowance for credit losses | $ | 104,565 |
| | $ | 104,287 |
| | $ | 109,253 |
|
Components of allowance for credit losses: | | | | | |
| Allowance for non-covered loans | $ | 102,431 |
| | $ | 102,153 |
| | $ | 99,639 |
|
| Allowance for covered loans | 200 |
| | 200 |
| | 7,070 |
|
| | Allowance for loan losses | 102,631 |
| | 102,353 |
| | 106,709 |
|
| Allowance for unfunded letters of credit | 1,934 |
| | 1,934 |
| | 2,544 |
|
Allowance for credit losses | $ | 104,565 |
| | $ | 104,287 |
| | $ | 109,253 |
|
Components of provision for credit losses: |
| | | | |
| Provision for losses on non-covered loans | $ | — |
| | $ | 4,368 |
| | $ | 4,949 |
|
| Provision for losses on covered loans | — |
| | (201 | ) | | — |
|
| Provision for unfunded letters of credit | — |
| | (187 | ) | | (951 | ) |
Provision for credit losses | $ | — |
| | $ | 3,980 |
| | $ | 3,998 |
|
Annualized ratio of net charge-offs of | | | | | |
| non-covered loans to average loans | (0.01 | )% | | 0.12 | % | | 0.41 | % |
Annualized ratio of total net charge-offs | | | | | |
| to average loans | (0.01 | )% | | 0.13 | % | | 0.41 | % |
Allowance for non-covered loan losses as | | | | | |
| a % of non-covered loans | 0.76 | % | | 0.77 | % | | 0.86 | % |
Allowance for credit losses as | | | | | |
| a % of total loans | 0.76 | % | | 0.77 | % | | 0.93 | % |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
| | | | | | | | | | | | | |
| | | As Of |
($ in thousands) | March 31, | | December 31, | | March 31, |
ASSET QUALITY: (6) | 2015 | | 2014 | | 2014 |
Accruing past due loans: | | | | | |
30 to 59 days past due: | | | | | |
| Commercial and industrial | $ | 4,472 |
| | $ | 1,630 |
| | $ | 5,689 |
|
| Commercial real estate | 4,775 |
| | 8,938 |
| | 16,169 |
|
| Construction | 6,577 |
| | 448 |
| | 5,616 |
|
| Residential mortgage | 12,498 |
| | 6,200 |
| | 6,238 |
|
| Consumer | 2,875 |
| | 2,982 |
| | 2,685 |
|
Total 30 to 59 days past due | 31,197 |
| | 20,198 |
| | 36,397 |
|
60 to 89 days past due: | | | | | |
| Commercial and industrial | 90 |
| | 1,102 |
| | 599 |
|
| Commercial real estate | 1,883 |
| | 113 |
| | 2,377 |
|
| Construction | — |
| | — |
| | — |
|
| Residential mortgage | 1,782 |
| | 3,575 |
| | 1,721 |
|
| Consumer | 837 |
| | 764 |
| | 613 |
|
Total 60 to 89 days past due | 4,592 |
| | 5,554 |
| | 5,310 |
|
90 or more days past due: | | | | | |
| Commercial and industrial | 208 |
| | 226 |
| | 199 |
|
| Commercial real estate | 2,792 |
| | 49 |
| | 137 |
|
| Construction | — |
| | 3,988 |
| | — |
|
| Residential mortgage | 564 |
| | 1,063 |
| | 1,033 |
|
| Consumer | 262 |
| | 152 |
| | 205 |
|
Total 90 or more days past due | 3,826 |
| | 5,478 |
| | 1,574 |
|
Total accruing past due loans | $ | 39,615 |
| | $ | 31,230 |
| | $ | 43,281 |
|
Non-accrual loans: | | | | | |
| Commercial and industrial | $ | 8,285 |
| | $ | 8,467 |
| | $ | 8,293 |
|
| Commercial real estate | 24,850 |
| | 22,098 |
| | 26,909 |
|
| Construction | 5,144 |
| | 5,223 |
| | 6,569 |
|
| Residential mortgage | 17,127 |
| | 17,760 |
| | 20,720 |
|
| Consumer | 2,138 |
| | 2,209 |
| | 2,149 |
|
Total non-accrual loans | 57,544 |
| | 55,757 |
| | 64,640 |
|
Non-performing loans held for sale | — |
| | 7,130 |
| | 27,329 |
|
Other real estate owned (7) | 13,184 |
| | 14,249 |
| | 16,674 |
|
Other repossessed assets | 477 |
| | 1,232 |
| | 1,995 |
|
Non-accrual debt securities (8) | 2,030 |
| | 4,729 |
| | 3,963 |
|
Total non-performing assets ("NPAs") | $ | 73,235 |
| | $ | 83,097 |
| | $ | 114,601 |
|
Performing troubled debt restructured loans | $ | 100,524 |
| | $ | 97,743 |
| | $ | 114,668 |
|
Total non-accrual loans as a % of loans | 0.42 | % | | 0.41 | % | | 0.55 | % |
Total accruing past due and non-accrual loans |
| |
| | |
| as a % of loans | 0.71 | % | | 0.65 | % | | 0.92 | % |
Allowance for losses on non-covered loans as a % of |
| |
| |
|
| non-accrual loans | 178.00 | % | | 183.21 | % | | 154.14 | % |
Non-performing purchased credit-impaired loans: (9) |
| |
| | |
| Non-covered loans | $ | 35,333 |
| | $ | 32,774 |
| | $ | 15,534 |
|
| Covered loans | 9,586 |
| | 14,939 |
| | 14,243 |
|
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
NOTES TO SELECTED FINANCIAL DATA
| |
(1) | Net interest income and net interest margin are presented on a tax equivalent basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. |
| |
(2) | This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their 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, | | September 30, | | June 30, | | March 31, |
($ in thousands, except for share data) | 2015 | | 2014 | | 2014 | | 2014 | | 2014 |
Tangible book value per common share: | | | | | | | | | |
Common shares outstanding | 232,428,108 |
| | 232,110,975 |
| | 200,674,966 |
| | 200,467,301 |
| | 200,361,014 |
|
Shareholders' equity | $ | 1,867,153 |
| | $ | 1,863,017 |
| | $ | 1,584,198 |
| | $ | 1,573,656 |
| | $ | 1,559,889 |
|
Less: Goodwill and other intangible assets | (612,558 | ) | | (614,667 | ) | | (458,402 | ) | | (460,369 | ) | | (462,420 | ) |
Tangible shareholders' equity | $ | 1,254,595 |
| | $ | 1,248,350 |
| | $ | 1,125,796 |
| | $ | 1,113,287 |
| | $ | 1,097,469 |
|
Tangible book value | $5.40 | | $5.38 | | $5.61 | | $5.55 | | $5.48 |
Tangible common equity to tangible assets: | | | | | | | | |
Tangible shareholders' equity | $ | 1,254,595 |
| | $ | 1,248,350 |
| | $ | 1,125,796 |
| | $ | 1,113,287 |
| | $ | 1,097,469 |
|
Total assets | 18,980,010 |
| | 18,793,855 |
| | 16,726,410 |
| | 16,335,967 |
| | 16,344,464 |
|
Less: Goodwill and other intangible assets | (612,558 | ) | | (614,667 | ) | | (458,402 | ) | | (460,369 | ) | | (462,420 | ) |
Tangible assets | $ | 18,367,452 |
| | $ | 18,179,188 |
| | $ | 16,268,008 |
| | $ | 15,875,598 |
| | $ | 15,882,044 |
|
Tangible common equity to tangible assets | 6.83 | % | | 6.87 | % | | 6.92 | % | | 7.01 | % | | 6.91 | % |
Annualized return on average tangible shareholders' equity: | | | | | | |
Net income | $ | 30,341 |
| | $ | 25,135 |
| | $ | 27,682 |
| | $ | 29,520 |
| | $ | 33,835 |
|
Average shareholders' equity | 1,869,754 |
| | 1,780,334 |
| | 1,581,877 |
| | 1,566,829 |
| | 1,544,640 |
|
Less: Average goodwill and other intangible assets | (613,556 | ) | | (562,497 | ) | | (459,210 | ) | | (461,316 | ) | | (463,266 | ) |
Average tangible shareholders' equity | $ | 1,256,198 |
| | $ | 1,217,837 |
| | $ | 1,122,667 |
| | $ | 1,105,513 |
| | $ | 1,081,374 |
|
Annualized return on average tangible | | | | | | | | | |
shareholders' equity | 9.66 | % | | 8.26 | % | | 9.86 | % | | 10.68 | % | | 12.52 | % |
VALLEY NATIONAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
NOTES TO SELECTED FINANCIAL DATA-CONTINUED
|
| | | | | | | | |
(3) | The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income. See the "Non-Interest Expense" section to this press release for additional information. |
(4) | The 2015 ratios reflect the new capital regulation changes required under the Basel III regulatory capital reform. |
(5) | Includes covered commercial and industrial loan charge-offs of $277 thousand for the three months ended December 31, 2014. There were no covered loan charge-offs during the three months ended March 31, 2015 and 2014. |
(6) | Past due loans and non-accrual loans exclude loans that were acquired as part of FDIC-assisted transactions (covered loans) and, acquired or purchased loans during 2012 and 2014. These 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. |
(7) | Excludes OREO properties related to FDIC-assisted transactions totaling $8.6 million, $9.2 million, and $11.6 million, at March 31, 2015, December 31, 2014, and March 31, 2014, respectively. These assets are covered by the loss-sharing agreements with the FDIC. |
(8) | Includes other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value (net of unrealized losses totaling $723 thousand, $621 thousand, and $1.4 million at March 31, 2015, December 31, 2014 and March 31, 2014, respectively) after recognition of all credit impairments. |
(9) | Represent acquired and purchased 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 Dianne Grenz, EVP, Director of Sales, Shareholder and Public Relations, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-4005, by fax at (973) 305-1364 or by e-mail at dgrenz@valleynationalbank.com. |
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands, except for share data)
|
| | | | | | | |
| March 31, | | December 31, |
| 2015 | | 2014 |
Assets | | | |
Cash and due from banks | $ | 394,002 |
| | $ | 462,569 |
|
Interest bearing deposits with banks | 370,712 |
| | 367,838 |
|
Investment securities: | | | |
Held to maturity (fair value of $1,868,625 at March 31, 2015 and $1,815,976 at December 31, 2014) | 1,825,819 |
| | 1,778,316 |
|
Available for sale | 843,518 |
| | 886,970 |
|
Trading securities | — |
| | 14,233 |
|
Total investment securities | 2,669,337 |
| | 2,679,519 |
|
Loans held for sale, at fair value | 3,648 |
| | 24,295 |
|
Non-covered loans | 13,550,735 |
| | 13,262,022 |
|
Covered loans | 183,726 |
| | 211,891 |
|
Less: Allowance for loan losses | (102,631 | ) | | (102,353 | ) |
Net loans | 13,631,830 |
| | 13,371,560 |
|
Premises and equipment, net | 281,236 |
| | 282,997 |
|
Bank owned life insurance | 377,404 |
| | 375,640 |
|
Accrued interest receivable | 56,590 |
| | 57,333 |
|
Due from customers on acceptances outstanding | 2,881 |
| | 4,197 |
|
FDIC loss-share receivable | 7,608 |
| | 13,848 |
|
Goodwill | 577,534 |
| | 575,892 |
|
Other intangible assets, net | 35,024 |
| | 38,775 |
|
Other assets | 572,204 |
| | 539,392 |
|
Total Assets | $ | 18,980,010 |
| | $ | 18,793,855 |
|
Liabilities | | | |
Deposits: | | | |
Non-interest bearing | $ | 4,329,265 |
| | $ | 4,235,515 |
|
Interest bearing: | | | |
Savings, NOW and money market | 7,115,243 |
| | 7,056,133 |
|
Time | 2,772,235 |
| | 2,742,468 |
|
Total deposits | 14,216,743 |
| | 14,034,116 |
|
Short-term borrowings | 133,866 |
| | 146,781 |
|
Long-term borrowings | 2,529,073 |
| | 2,526,408 |
|
Junior subordinated debentures issued to capital trusts | 41,292 |
| | 41,252 |
|
Bank acceptances outstanding | 2,881 |
| | 4,197 |
|
Accrued expenses and other liabilities | 189,002 |
| | 178,084 |
|
Total Liabilities | 17,112,857 |
| | 16,930,838 |
|
Shareholders’ Equity | | | |
Preferred stock, (no par value, authorized 30,000,000 shares; none issued) | — |
| | — |
|
Common stock, (no par value, authorized 332,023,233 shares; issued 232,616,426 shares at March 31, 2015 and 232,127,098 shares at December 31, 2014) | 81,170 |
| | 81,072 |
|
Surplus | 1,696,834 |
| | 1,693,752 |
|
Retained earnings | 135,571 |
| | 130,845 |
|
Accumulated other comprehensive loss | (44,662 | ) | | (42,495 | ) |
Treasury stock, at cost (188,318 common shares at March 31, 2015 and 16,123 common shares at December 31, 2014) | (1,760 | ) | | (157 | ) |
Total Shareholders’ Equity | 1,867,153 |
| | 1,863,017 |
|
Total Liabilities and Shareholders’ Equity | $ | 18,980,010 |
| | $ | 18,793,855 |
|
VALLEY NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
|
| | | | | | | | | | | |
| Three Months Ended |
| March 31, | | December 31, | | March 31, |
| 2015 | | 2014 | | 2014 |
Interest Income | | | | | |
Interest and fees on loans | $ | 150,482 |
| | $ | 150,296 |
| | $ | 131,079 |
|
Interest and dividends on investment securities: | | | | | |
Taxable | 14,932 |
| | 15,159 |
| | 16,456 |
|
Tax-exempt | 3,612 |
| | 3,650 |
| | 3,686 |
|
Dividends | 1,739 |
| | 1,570 |
| | 1,790 |
|
Interest on federal funds sold and other short-term investments | 220 |
| | 267 |
| | 27 |
|
Total interest income | 170,985 |
| | 170,942 |
| | 153,038 |
|
Interest Expense | | | | | |
Interest on deposits: | | | | | |
Savings, NOW and money market | 5,995 |
| | 6,000 |
| | 4,281 |
|
Time | 7,974 |
| | 7,686 |
| | 6,532 |
|
Interest on short-term borrowings | 94 |
| | 132 |
| | 318 |
|
Interest on long-term borrowings and junior subordinated debentures | 24,836 |
| | 28,478 |
| | 27,883 |
|
Total interest expense | 38,899 |
| | 42,296 |
| | 39,014 |
|
Net Interest Income | 132,086 |
| | 128,646 |
| | 114,024 |
|
Provision for losses on non-covered loans and unfunded letters of credit | — |
| | 4,181 |
| | 3,998 |
|
Provision for losses on covered loans | — |
| | (201 | ) | | — |
|
Net Interest Income After Provision for Credit Losses | 132,086 |
| | 124,666 |
| | 110,026 |
|
Non-Interest Income | | | | | |
Trust and investment services | 2,494 |
| | 2,415 |
| | 2,442 |
|
Insurance commissions | 4,205 |
| | 4,232 |
| | 4,498 |
|
Service charges on deposit accounts | 5,290 |
| | 5,662 |
| | 5,751 |
|
Gains (losses) on securities transactions, net | 2,416 |
| | 643 |
| | (8 | ) |
Fees from loan servicing | 1,603 |
| | 1,751 |
| | 1,670 |
|
Gains on sales of loans, net | 598 |
| | 234 |
| | 913 |
|
Gains (losses) on sales of assets, net | 281 |
| | 17,876 |
| | (148 | ) |
Bank owned life insurance | 1,764 |
| | 1,799 |
| | 1,408 |
|
Change in FDIC loss-share receivable | (3,920 | ) | | (9,182 | ) | | (76 | ) |
Other | 3,914 |
| | 4,133 |
| | 4,288 |
|
Total non-interest income | 18,645 |
| | 29,563 |
| | 20,738 |
|
Non-Interest Expense | | | | | |
Salary and employee benefits expense | 56,712 |
| | 52,806 |
| | 48,088 |
|
Net occupancy and equipment expense | 22,200 |
| | 18,784 |
| | 20,724 |
|
FDIC insurance assessment | 3,792 |
| | 3,837 |
| | 3,287 |
|
Amortization of other intangible assets | 2,393 |
| | 3,021 |
| | 2,351 |
|
Professional and legal fees | 3,341 |
| | 5,188 |
| | 3,678 |
|
Loss on extinguishment of debt | — |
| | 10,132 |
| | — |
|
Amortization of tax credit investments | 4,496 |
| | 10,048 |
| | 3,716 |
|
Advertising | 1,729 |
| | 1,852 |
| | 617 |
|
Other | 13,455 |
| | 15,599 |
| | 13,638 |
|
Total non-interest expense | 108,118 |
| | 121,267 |
| | 96,099 |
|
Income Before Income Taxes | 42,613 |
| | 32,962 |
| | 34,665 |
|
Income tax expense | 12,272 |
| | 7,827 |
| | 830 |
|
Net Income | $ | 30,341 |
| | $ | 25,135 |
| | $ | 33,835 |
|
Earnings Per Common Share: | | | | | |
Basic | $ | 0.13 |
| | $ | 0.11 |
| | $ | 0.17 |
|
Diluted | 0.13 |
| | 0.11 |
| | 0.17 |
|
Cash Dividends Declared per Common Share | 0.11 |
| | 0.11 |
| | 0.11 |
|
Weighted Average Number of Common Shares Outstanding: | | | | | |
Basic | 232,338,775 |
| | 221,471,635 |
| | 200,128,384 |
|
Diluted | 232,341,921 |
| | 221,471,635 |
| | 200,128,384 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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, 2015 | | December 31, 2014 | | March 31, 2014 | |
| | | | Average | | | | Avg. | | Average | | | | Avg. | | Average | | | | Avg. | |
($ in thousands) | Balance | | Interest | | Rate | | Balance | | Interest | | Rate | | Balance | | Interest | | Rate | |
Assets | | | | | | | | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | | | | | | | | |
Loans (1)(2) | $ | 13,569,031 |
| | $ | 150,488 |
| | 4.44 | % | | $ | 13,042,303 |
| | $ | 150,302 |
| | 4.61 | % | | $ | 11,617,597 |
| | $ | 131,086 |
| | 4.51 | % | |
Taxable investments (3) | 2,285,155 |
| | 16,671 |
| | 2.92 | % | | 2,284,183 |
| | 16,729 |
| | 2.93 | % | | 2,218,851 |
| | 18,246 |
| | 3.29 | % | |
Tax-exempt investments (1)(3) | 540,838 |
| | 5,557 |
| | 4.11 | % | | 543,005 |
| | 5,616 |
| | 4.14 | % | | 568,960 |
| | 5,671 |
| | 3.99 | % | |
Federal funds sold and other | | | | | | | | | | | | | | | | | | |
interest bearing deposits | 343,875 |
| | 220 |
| | 0.26 | % | | 445,525 |
| | 267 |
| | 0.24 | % | | 60,214 |
| | 27 |
| | 0.18 | % | |
Total interest earning assets | 16,738,899 |
| | 172,936 |
| | 4.13 | % | | 16,315,016 |
| | 172,914 |
| | 4.24 | % | | 14,465,622 |
| | 155,030 |
|
| 4.29 | % | |
Other assets | 2,111,126 |
| | | | | | 1,992,983 |
| | | | | | 1,736,537 |
| | | | | |
Total assets | $ | 18,850,025 |
| | | | | | $ | 18,307,999 |
| | | | | | $ | 16,202,159 |
| | | | | |
Liabilities and shareholders' equity | | | | | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | |
Savings, NOW and money market deposits | $ | 7,143,643 |
| | $ | 5,995 |
| | 0.34 | % | | $ | 6,799,900 |
| | $ | 6,000 |
| | 0.35 | % | | $ | 5,459,913 |
| | $ | 4,281 |
| | 0.31 | % | |
| Time deposits | 2,757,077 |
| | 7,974 |
| | 1.16 | % | | 2,515,621 |
| | 7,686 |
| | 1.22 | % | | 2,162,365 |
| | 6,532 |
| | 1.21 | % | |
| Short-term borrowings | 128,085 |
| | 94 |
| | 0.29 | % | | 169,396 |
| | 132 |
| | 0.31 | % | | 380,057 |
| | 318 |
| | 0.33 | % | |
| Long-term borrowings (4) | 2,569,864 |
| | 24,836 |
| | 3.87 | % | | 2,834,865 |
| | 28,478 |
| | 4.02 | % | | 2,836,263 |
| | 27,883 |
| | 3.93 | % | |
Total interest bearing liabilities | 12,598,669 |
| | 38,899 |
| | 1.24 | % | | 12,319,782 |
| | 42,296 |
| | 1.37 | % | | 10,838,598 |
| | 39,014 |
| | 1.44 | % | |
Non-interest bearing deposits | 4,209,827 |
| | | | | | 4,073,390 |
| | | | | | 3,622,220 |
| | | | | |
Other liabilities | 171,775 |
| | | | | | 134,493 |
| | | | | | 196,701 |
| | | | | |
Shareholders' equity | 1,869,754 |
| | | | | | 1,780,334 |
| | | | | | 1,544,640 |
| | | | | |
Total liabilities and shareholders' equity | $ | 18,850,025 |
| | | | | | $ | 18,307,999 |
| | | | | | $ | 16,202,159 |
| | | | | |
Net interest income/interest rate spread (5) | | | $ | 134,037 |
| | 2.89 | % | | | | $ | 130,618 |
| | 2.87 | % | | | | $ | 116,016 |
| | 2.85 | % | |
Tax equivalent adjustment | | | (1,951 | ) | | | | | | (1,972 | ) | | | | | | (1,992 | ) | | | |
Net interest income, as reported | | | $ | 132,086 |
| | | | | | $ | 128,646 |
| | | | | | $ | 114,024 |
| | | |
Net interest margin (6) | | | | | 3.16 | % | | | | | | 3.15 | % | | | | | | 3.15 | % | |
Tax equivalent effect | | | | | 0.04 | % | | | | | | 0.05 | % | | | | | | 0.06 | % | |
Net interest margin on a fully tax equivalent basis (6) | | | | | 3.20 | % | | | | | | 3.20 | % | | | | | | 3.21 | % | |
_________________________ | | | | | | | | | | | | | | | | | | |
| |
(1) | Interest income is presented on a tax equivalent basis using a 35 percent federal tax rate. |
| |
(2) | Loans are stated net of unearned income and include non-accrual loans. |
| |
(3) | The yield for securities that are classified as available for sale is based on the average historical amortized cost. |
| |
(4) | Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition. |
| |
(5) | Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. |
| |
(6) | Net interest income as a percentage of total average interest earning assets. |
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