Valley National Bancorp · NASDAQ:VLY
Valley National Bancorp — Investor Presentation (May 2021)
35 slides from Valley National Bancorp's investor presentation, May 21, 2021
Slide 1: Investor Presentation May 2021
Investor Presentation May 2021
Slide 2: Forward Looking Statements
Forward Looking Statements The presentation 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 abou
Slide 3: Experienced Executive Leadership
3 Experienced Executive Leadership Ira Robbins President & CEO Years at Valley: 25 / Years in Banking: 25 Mr. Robbins has been CEO of Valley since 2018 and Chairman since 2019. He was named President in 2017. Mr. Robbins joined Valley in 1996 as part of Valley’s Management Associate Program, and pre
Slide 4: Overview of Valley
4 Overview of Valley Company Overview Financial Highlights as of 3/31/21 Ticker: VLY (Nasdaq) Founded: 1927 Bank Operations Headquarters 1: Wayne, NJ Diverse Market Presence:Valley operates 226 branches serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Qu
Slide 5: Established business model with a 90+ year track record of success
5 Established business model with a 90+ year track record of success Conservative operating philosophy Consistent profitability since inception Diverse commercially-focused franchise operating in dynamic, high-quality markets Deep and experienced management team with skills developed internally and
Slide 6: Recent History
6 Recent History 2001 Initiated New York Cityexpansion via acquisition of Merchants New York Bancorp, Inc. ($1.4bn assets) 2005 -2008 Additional New Jersey acquisitions: Shrewsbury State Bank ($425mm assets), NorCrown Bank ($622mm assets), and Greater Community Bank ($976mm assets) Began de novo exp
Slide 7: Significant Scale in Attractive Markets
7 Significant Scale in Attractive Markets 1Deposit market share rank data per S&P Global Market Intelligence, data as of 6/30/20 as adjusted for acquisitions to the extent discernable. Rank includes banks with less than $100 billion in total assets and US subsidiaries of foreign banks. 2Source: S&P
Slide 8: 1Q 2021 Highlights
8 1Q 2021 Highlights1Q21 4Q20 1Q20 1Q21 4Q20 1Q20 Return on Average Assets Annualized 1.14% 1.02% 0.92% 1.14% 1.10% 0.93% Efficiency Ratio 49.5% 51.6% 50.8% 48.6% 47.0% 49.3% Net Income ($mm) $115.7 $105.4 $87.3 $115.8 $113.4 $88.2 Pre-Provision Net Revenue 2 ($mm) $163.7 $162.3 $151.1 $166.5 $177.5
Slide 9: Net Interest Margin, Profitability & Operating Leverage
9 Net Interest Margin, Profitability & Operating Leverage Net Interest Income and Margin Pre-Provision Net Revenue ($mm) 1 Net interest margin stability & Unadjusted Adjusted Year-over-year quarterly NII growth of 10% (FTE) 1.72% 1.61% 1.63% $293.6 1.63% $288.8 1.59% 1.57% $283.5 $284.1 $177.5 $266.
Slide 10: Interest Rate Positioning
10 Interest Rate Positioning Continue to reduce non-maturity deposit costs Selected opportunities to reprice maturing CDs and borrowings lower and mitigate asset yield headwinds Intend to selectively take advantage of lower-cost wholesale funding and extend liability duration 12-Month Forward Maturi
Slide 11: Quarter Operating Expense Trends
11 5 Quarter Operating Expense Trends ($ in millions) Efficiency Ratio (%) Adjusted expenses consistent with 4Q20 levels Adjusted efficiency ratio increased as a result of non-interest income pressure Over $700k of seasonal snow removal expenses 1Q21 Operating Expenses ($ in millions) Non-Interest E
Slide 12: Branch Network Evolution
12227 226 29 26 56 12/31/15 USAB Acquisition ORIT Acquisition Branch Closures 12/31/20 3/31/21 VLY Branch Count We constantly analyze our branch network and individual branch performance to optimize our delivery channels from a productivity and efficiency perspective $72MM $144MM 49.5% Deposits / Br
Slide 13: Loans & Loan Growth
13 $1.4 $0.9 $1.0 $1.4 $1.6 3.90% 3.27% 3.26% 3.35% 3.32% 4.44% 4.02% 3.89% 3.86% 3.85% 1Q20 2Q20 3Q20 4Q20 1Q21 Origination Volume (Gross) New Origination Rate Avg. Portfolio Rate New Loan Originations ($bn) / Yields (%) vs Portfolio Yields (%) 2 Loans & Loan Growth 1Q21 Loan Composition 1 Resident
Slide 14: Relationship-Based Commercial Lending
14 New York36% New Jersey24% Florida26% Other14% Relationship-Based Commercial Lending Commercial Loan Balances ($bn)$2.7 $4.3 $4.8 $6.9 $7.1 $9.5 $12.4 $16.0 $16.7 $16.9 $0.9 $1.5 $1.6 $1.7 $1.8 $13.1 $18.2 $22.5 $25.3 $25.9 71.4% 72.8% 75.7% 78.6% 79.1% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% $0
Slide 15: Paycheck Protection Program
15 Rounds 1 & 2 $2.3bn SBA-approved volume ~13,000 SBA-approved loans $180k Average loan size $42k Median loan size ~3% Average processing fee Valley’s Net Promoter Score (“NPS”) was above 80 for PPP service ~25% of SBA-approved borrowers were new customers to Valley ~30% of PPP loans were provided
Slide 16: Outstanding Loan Deferrals
16 Outstanding Loan Deferrals ~60% of active commercial deferrals are current on interest payments Deferrals in categories identified as COVID-19 exposed stand at 2.3% Weighted average LTV of active commercial deferrals: ~60% Over 93% of previously deferred commercial loans have exited deferral and
Slide 17: Exposure to primary COVID-19 exposed loan segments
17 Exposure to primary COVID-19 exposed loan segments has remained stable at roughly 7% of non-PPP loans Active loan deferrals in “Primary Exposure” categories were stable from December 31, 2020 at 2.3% Active loan deferrals in previously disclosed “Secondary Exposure” categories 2are immaterial at
Slide 18: Asset Quality
18 0.68% 0.65% 0.59% 0.58% 0.62% 1Q20 2Q20 3Q20 4Q20 1Q21 Asset Quality Non-Accrual Loans / Total Loans Net Charge-offs & Provision ($mm) $5 $15 $15 $3 $6 $34 $41 $31 $19 $9 0.06% 0.18% 0.19% 0.04% 0.07% 1Q20 2Q20 3Q20 4Q20 1Q21 Net Charge-offs Provision for Loans NCOs / Avg. Loans Allowance for Cre
Slide 19: Track Record of Below-Peer Credit Losses
19 0.05% 0.12% 0.14% 0.21% 0.40% 0.28% 0.30% 0.22% 0.28% 0.11% 0.03% 0.02% 0.01% 0.00% 0.06% 0.12% 0.07% 0.09% 0.12% 0.18% 0.45% 1.13% 1.06% 0.70% 0.38% 0.25% 0.13% 0.12% 0.18% 0.16% 0.17% 0.16% 0.18% 0.11% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q121 VLY Non-
Slide 20: Deposits & Funding
20 Non-interest bearing$10.1 Savings, NOW & MMA$17.1 Time$5.5 Short-term borrowings$1.1 Long-term borrowings$2.2 Other$0.5 Savings, Now & MMA increasedby $4.3bn from 12/31/19 Savings, Now & MMA increasedfrom 44% of deposits to 52% of deposits Time deposits decreasedby $4.2bn from 12/31/19 Time Depos
Slide 21: Technology Evolution & Digital Trends
21 Opportunity to drive increased digital product adoption across expanding client base % of Households Actively Using Online Banking Online Banking Net Promoter Scores (“NPS”) for Business and Retail customers exceed other NPS across the organization Enhanced back-end infrastructure to support evol
Slide 22: Fee Income
SLIDE 22 Fee Income Non-Interest Income ($mm) $47.5 $41.4 $4.6 $16.0 $31.2 $14.2 $3.5 $10.9 $6.2 $22.6 $21.5 $20.7 1Q20 4Q20 1Q21 Other Non-Interest Income Swap Income Gain on Sale 1Q21 Non-Interest Income ($mm) Other 28% Trust, Investment & Insurance $31.2mm 16% Swap Fees 20% Loan Servicing Fees 9%
Slide 23: Liquidity & Securities
23 Liquidity & Securities Liquidity Position & Sources (as of 3/31/21) HTM Securities Portfolio (as of 3/31/21) Cash & Equivalents 14% Municipal Resi MBS 8% 75% FHLB Borrowing Capacity Obligations of States Uncommitted Fed 45% & Political Funds Lines 11% 14% $10.9bn U.S. Treasury $2.4bn 3% Corporate
Slide 24: Equity & Capitalization
24 Equity & Capitalization Robust Capital with Strong Organic Generation Book Value and Tangible Book Value per Share Equity Capitalization Level $2.4BN PPP loans reduce Equity / Assets by ~69 bp in 1Q21 $2.4BN PPP loans reduce TCE / TA by ~48 bp in 1Q21 $10.97 $10.85 $10.71 11.31% 11.28% 11.32% $10
Slide 25: Franchise Highlights
25 Franchise Highlights $41 billion commercial bank operating 226 full-service branches throughout northern New Jersey, New York City, Long Island and Florida Who We Are High-performing institution with strong asset quality leveraging technology to service the diverse financial needs of our commerci
Slide 26: Appendix
A p p e n d i x
Slide 27: Historical Financial Highlights
SLIDE 27 Historical Financial Highlights As of or for the Quarter Ended March 31, As of or for the Years Ended December 31, ($ in thousands, except for share data) 2021 2020 2019 2018 2017 2016 Summary of Operations Interest income—tax equivalent basis $ 332,715 $ 1,387,690 $ 1,325,631 $ 1,164,967 $
Slide 28: Impact of PPP
28 Impact of PPP ($mm) PPP Loan Balance Net Interest Margin (FTE) End of Period Avg. Balance 2,365 2,358 3.03% 3.05% 3.06% 2,277 2,247 2,214 2,202 2,152 2.99% 3.00% 3.01% 3.06% 3.14% 1,452 2Q20 3Q20 4Q20 1Q21 Reported NIM NIM ex. PPP 2Q20 3Q20 4Q20 1Q21 Round 1 & 2 Forgiveness Update ($mm) 57% of PP
Slide 29: Loan Segment Granularity
29 Loan Segment Granularity CRE by Collateral Type (as of 3/31/2021) C&I by Borrower Industry 1, 2 (as of 3/31/2021) Apartment & Residential Real Estate Finance & Insurance 27% 19% 14% Retail Other 20% Specialty & 10% Healthcare Other 11% 11% Professional Services 3% Accommodation Healthcare & Food
Slide 30: Proven Acquisition Track Record
30 Proven Acquisition Track Record Oritani Strategic Rationale Year Target State Assets 1 Bolstered capital (~115bp improvement to Equity / 2019 Oritani Financial Corp. NJ $4.1 billion Assets and ~80bp improvement to TCE / TA ² in Q4 2019 vs. Q3 2019) to support future growth opportunities, while be
Slide 31: Historical Interest Coverage & Double Leverage
31 Historical Interest Coverage & Double Leverage (Dollars in Millions) Quarter For the Years Ended, Ended, 12/31/2017 12/31/2018 12/31/2019 12/31/2020 3/31/2021 Double Leverage Ratio Investment in Subsidiaries $2,739 $3,610 $4,672 $4,999 $5,078 Consolidated Equity $2,533 $3,350 $4,384 $4,592 $4,660
Slide 32: Non-GAAP Disclosure Reconciliation
32March 31, December 31, September 30, June 30, March 31, December 31, December 31, December 31, ($ in thousands, except for share data) 2021 2020 2020 2020 2020 2020 2019 2018 Adjusted net income available to common shareholders: Net income, as reported $115,710 $105,363 $102,374 $95,601 $87,268 $3
Slide 33: Non-GAAP Disclosure Reconciliation
33 Non-GAAP Disclosure ReconciliationMarch 31, December 31, September 30, June 30, March 31, December 31, December 31, December 31, ($ in thousands) 2021 2020 2020 2020 2020 2020 2019 2018 Annualized return on average tangible shareholders’ equity: Net income, as reported $115,710 $105,363 $102,374
Slide 34: Non-GAAP Disclosure Reconciliation
34 Non-GAAP Disclosure Reconciliation As of March 31, December 31, September 30, June 30, March 31, December 31, December 31, December 31, ($ in thousands, except for share data) 2021 2020 2020 2020 2020 2020 2019 2018 Tangible book value per common share: Common shares outstanding 405,797,538 403,8
Slide 35: For More Information
35 For More Information Log onto our website: www.valley.com Email requests to: tlan@valley.com Call Travis Lan in Investor Relations, at: (973) 686-5007 Write to: Valley National Bank 1455 Valley Road Wayne, New Jersey 07470 Attn: Travis Lan, SVP – Director, Corporate Finance & Business Development
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