Valley National Bancorp · NASDAQ:VLY
Valley National Bancorp — Q3 2020 Earnings Presentation
21 slides from Valley National Bancorp's earnings presentation, Oct 22, 2020
Slide 1: 3Q20 Earnings Presentation
3Q20 Earnings Presentation October 22, 2020
Slide 2: Forward Looking Statements
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 n
Slide 3: 3Q 2020 Highlights
3 3Q 2020 Highlights Reported Adjusted 1 3Q20 2Q20 3Q19 3Q20 2Q20 3Q19 Return on Average Assets 0.99% 0.92% 0.98% 1.01% 0.92% 1.00% Annualized Efficiency Ratio 48.2% 48.0% 55.7% 46.6% 46.8% 53.5% Pre-Provision Net Revenue 2 ($mm) $172.2 $170.2 $115.9 $177.4 $174.0 $121.8 PPNR / Average Assets 2 1.66
Slide 4: Outstanding Loan Deferrals
4 Outstanding Loan Deferrals 3Q20 Deferral Information as of 9/30/20 Previously Disclosed Balance Active Active Deferral / Active Deferrals / Loan Balance ($MM) Deferral ($MM) 3Q20 Loan Balance 7/10/2020 5/6/2020 Commercial Loans & Leases $25,440 $793 3.1% 8.6% 12.9% Residential & Home Equity 1 $4,7
Slide 5: Net Interest Margin, Profitability & Operating Leverage
5 Net Interest Margin, Profitability & Operating Leverage Net Interest Income and Margin Pre-Provision Net Revenue ($mm) 1 Year-over-year NII growth of 28% (FTE) Reported Adjusted 1.64% 1.66% 1.68% 1.71% 1.39% 1.46% $170.2 $172.2 $174.0 $177.4 $283.5 $284.1 $266.4 $115.9 $121.8 $239.6 $221.7 3.07% 3
Slide 6: Interest Rate Positioning
6 Interest Rate Positioning 1 12-Month Forward Cumulative Cash Flow Gap ($bn) 12-Month Forward Maturity Schedule ($bn) 4Q20 1Q21 2Q21 3Q21 Maturing CD Rates 0.97% 1.14% 0.93% 0.92% $6.0 Cumulative Cash Flow Gap $1.0 Maturing Borrowing Rates 0.43% 1.13% 2.27% 2.73% $0.1 $(0.2) Maturing BCD Rates 0.74
Slide 7: Deposits, Funding & Liquidity
7 Deposits, Funding & Liquidity Quarterly Deposit Trends ($BN) Total Liabilities 9/30/2020 Non-interest $31.4 $31.3 bearing $8.8 Time 8.3 7.5 Savings, NOW Other PPP: (-$0.4BN) & MMA Noninterest $0.7 9.0 8.8 Non-PPP: +$0.2BN $36.3BN $15.0 Bearing Long-term borrowings $2.9 1 Savings, Now & 14.2 15.0 M
Slide 8: Loans & Loan Growth
8 Loans & Loan Growth 3Q20 Loan Composition 1 Year-to-Date Loan Growth (Ann.) 1 Multifamily Residential R.E. 16% +$720mm 13% Non-Owner Occupied CRE 12.7% Owner- Construction 6.0% +$74mm Occupied CRE Owner-Occupied CRE 4.4% +$105mm 10% ($6mm) Non Owner- $32.4bn Multi-family (0.2%) Occupied CRE Res. M
Slide 9: CRE Detail as of 9/30/2020
9 CRE Detail as of 9/30/2020 Portfolio by Collateral Type Portfolio by Geography Apartment & Florida Residential 25% 28% New York (ex. NYC) Retail 11% New Jersey Specialty & 20% 25% Other 11% $16.8bn Manhattan $16.8bn (Other) 5% Healthcare Manhattan 8% (Multifamily) 7% Mixed Use Industrial 11% Other
Slide 10: Fee Income
10 Fee Income Adjusted Non-Interest Income ($MM) 1 3Q20 Adjusted Non-Interest Income ($MM) 1 Trust, Investment & Loan Servicing Insurance 10% Fees Other 5% 11% Service Charges 8% $49.3 $49.3MM $44.9 Gain-on-Sale of $41.2 Loans, net Swap Fees 27% 39% 3Q19 2Q20 3Q20 Adjusted non-interest income increa
Slide 11: Non-Interest Expense
11 Non-Interest Expense 5 Quarter Operating Expense Trends ($ in millions) Efficiency Ratio (%) 1 196.1 Includes materially higher merger related charges 2020 Goal: and debt extinguishment 51.0% 157.2 160.2 155.7 145.9 2 55.7 155.0 53.5 151.1 153.4 145.1 48.0 48.2 140.1 46.8 46.6 3Q19 4Q19 1Q20 2Q20
Slide 12: Branch Network Evolution
12 Branch Network Evolution We anticipate closing 9 branches by year-end 2020 and 1 branch in January of 2021 VLY Branch Count 26 29 46 236 227 10 226 12/31/15 USAB Acquisition ORIT Acquisition Branch Closures 9/30/20 Pending Closures Pro Forma $72MM Deposits / Branch $133MM 66.0% Adj. Efficiency Ra
Slide 13: Asset Quality
13 Asset Quality Allowance for Credit Losses for Loans / Total Loans Non-Accrual Loans / Total Loans 1.06% 1.11% 0.96% 0.99% 1.03% 0.62% 0.68% 0.65% 0.55% 0.59% 0.38% 0.31% 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 ACL / Loans ex. PPP Net Change in Allowance for Credit Losses for Loans ($MM)
Slide 14: Equity & Capitalization
14 Equity & Capitalization Book Value and Tangible Book Value per Share 1 Equity Capitalization Level 8% year-over-year tangible book value growth $2.3BN PPP loans reduce TCE / TA by ~45 bp in 3Q20 11.71% $10.71 11.30% $10.43 $10.56 11.10% $10.35 10.73% $10.09 $7.12 10.54% 7.54% $6.96 7.31% 7.30% $6
Slide 15: Appendix
Appendix
Slide 16: Paycheck Protection Program
16 Paycheck Protection Program 500+ Valley employees dedicated to assisting our customers take $2.3bn SBA-approved volume advantage of Paycheck Protection Program ~75% of SBA-approved borrowers had an existing Valley relationship ~30% of PPP loans were provided to minority-owned businesses, non- pro
Slide 17: COVID-19 Exposed Loan Segments
17 COVID-19 Exposed Loan Segments Non-PPP Loan Balance (9/30/20) Active Deferrals as of 9/30/20 Prev. Disclosed Deferrals / Loans 1 Borrower Industry ($MM) % of non-PPP Loans ($MM) % of Industry 7/10/20 5/6/20 Primary Exposure Doctor & Surgery $527 1.7% $26 4.9% 16.5% 29.9% Retail Trade 592 2.0% 21
Slide 18: Non-GAAP Disclosure Reconciliation
18 Non-GAAP Disclosure Reconciliation Three Months E nded September 30, June 30, September 30, ($ in thousands, except for share data) 2020 2020 2019 Adj usted net i ncome avai l abl e to common sharehol ders: Net income, as reported $102,374 $95,601 $81,891 Add: Losses on extinguishment of debt (ne
Slide 19: Non-GAAP Disclosure Reconciliation
19 Non-GAAP Disclosure Reconciliation Three Months E nded September 30, June 30, September 30, ($ in thousands) 2020 2020 2019 Annual i zed return on average tangi bl e sharehol ders' equi ty: Net income, as reported $102,374 $95,601 $81,891 Average shareholders' equity 4,530,397 4,477,446 3,536,528
Slide 20: Non-GAAP Disclosure Reconciliation
20 Non-GAAP Disclosure Reconciliation As of September 30, June 30, March 31, December 31, September 30, ($ in thousands, except for share data) 2020 2020 2020 2019 2019 Tangi bl e book val ue per common share: Common shares outstanding 403,878,744 403,795,599 403,744,148 403,278,390 331,805,564 Shar
Slide 21: For More Information
21 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 Dev
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