Valley National Bancorp · NASDAQ:VLY
Valley National Bancorp — Q1 2024 Earnings Presentation
29 slides from Valley National Bancorp's earnings presentation, Apr 25, 2024
Slide 1: 1Q24 Earnings Presentation
1Q24 Earnings Presentation April 25, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements This 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 abo
Slide 3: 1Q 2024 Financial Highlights
3 1Q 2024 Financial Highlights GAAP Reported Non-GAAP Adjusted 1 1Q24 4Q23 1Q23 1Q24 4Q23 1Q23 Net Income ($mm) $96.3 $71.6 $146.6 $99.4 $116.3 $154.5 Return on Average Assets 0.63% 0.47% 0.98% 0.65% 0.76% 1.03% Annualized Efficiency Ratio (Non-GAAP) -- -- -- 59.1% 60.7% 53.8% Diluted Earnings Per S
Slide 4: Quarterly Balance Sheet Highlights
4 Quarterly Balance Sheet Highlights Prudently Managing Asset Growth ▪ Sold commercial premium finance lending business and $94 million of associated loans for a slight gain (~$35 million of additional maturities post-close leaving $146 million remaining and expected to mature over the next year) ▪
Slide 5: Balance Sheet Goals
5 Balance Sheet Goals Near-Term Expectation Intermediate-Term Expectation Metric (Year End 2024) (Next 12 - 24 Months) CET 1 / RWA ~9.8% 10% + CRE / TRBC ~440% < 400% ACL / Loans Above 1.00% ~1.10% Loans / Deposits ~100% < 100% ▪ We expect to continue to accelerate our strategic shift towards the we
Slide 6: 2024 Outlook & Expectations
6 2024 Outlook & Expectations 2024 Metric Prior Guidance Updated Guidance Gross Loans 5% - 7% Growth 0% - 4% Growth Net Interest Income 3% - 5% Growth 0% - 2% Growth Adj. Non-Interest 5% - 7% Growth High End of Range Income Non-Interest Expense (ex 2023 Merger-Related 4% - 6% Growth Below Low-End of
Slide 7: Net Interest Income Commentary
7 Net Interest Income Commentary ▪ Management Base Case Scenario — Downward revision relative to prior guidance reflects slower loan growth and modest funding mix-shift experienced in 1Q24 — Forward rate projections include 3 Fed Fund cuts occurring in July, September, and November — 50% downside be
Slide 8: Driving Long-Term Value Despite Near-Term Headwinds
8 Driving Long-Term Value Despite Near-Term Headwinds Shareholder Value Creation vs. Peers 1 Deposit Accounts (000s) Reported TBV Growth Post-2017 Cumulative Dividends Post-2017 +103% +23% 91% 131 539 440 70% 44% 65 32% 47% 38% 12/31/17 3/31/24 12/31/17 3/31/24 Peer Median VLY Commercial Consumer Co
Slide 9: Stable Deposit Balances with Slowing Beta
9 Stable Deposit Balances with Slowing Beta Deposits by Product ($bn) Avg. Fed Funds vs. Deposit Costs (%) 5.43% 5.50% 5.50% $49.2 $49.1 5.16% 4.69% 3.82% 27% 13.2 12.7 26% 3.13% 3.16% 2.94% 2.45% 1.96% 11.5 11.3 23% 23% 1.36% 0.25% 24.5 25.1 51% 50% 0.15% 4Q21 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 12/31/20
Slide 10: Customer Deposit Base Diversified by Geography and Source
10 Customer Deposit Base Diversified by Geography and Source Total Deposit Breakdown ($bn, as of 3/31/24) Specialized Deposits by Business Line ($bn, as of 3/31/24) Nat'l Deposits, International Specialized Deposits Cannabis & Corporate $9.8 Online $0.8 20% $3.6 Technology Traditional Branch $49.1bn
Slide 11: Methodically Managing Loan Growth
11 Methodically Managing Loan Growth Gross Loans ($mm) 3/31/2024 Loan Composition 1 Non Owner-Occupied CRE 26% Healthcare CRE 50,210 ( 129 ) 4% ( 151 ) Owner-Occupied CRE Multifamily CRE 9% ( 80 ) 72 18% 48% 49,922 C&I Other 27% 25% C&I 12/31/23 Premium CRE Particip. Construction Other Growth, 3/31/
Slide 12: CRE Detail as of 3/31/24
12 CRE Detail as of 3/31/24 Portfolio by Collateral Type Portfolio by Geography Retail Florida 17% Mixed Use 26% 11% Co-Ops New York (ex. NYC) 7% 8% New Jersey Office 22% 10% Manhattan Apartment & $28.1bn (Other) $28.1bn Residential Healthcare 4% 24% Office Manhattan 2% (Multifamily) 5% Industrial 1
Slide 13: Multifamily Portfolio Details
13 Multifamily Portfolio Details Multifamily Portfolio by Sub-Asset Class ($bn) Non Co-Op Multifamily by Geography ($bn) Florida & Alabama 16% New Jersey 22% Manhattan 7% Co-Op $8.8bn Non Co-Op $6.8bn $2.0 $6.8 New York (ex. Manhattan) 27% Other 28% New York City by % Rent Regulated Units Geography
Slide 14: Granular & Diverse Office Portfolio
14 Granular & Diverse Office Portfolio Office Portfolio by Tenancy Office Portfolio by Geography ($bn) Florida & Multi Tenant Multi Tenant Alabama $1.8 Manhattan w/ Anchor $1.1 55% $0.3 $0.3 34% 9% 9% $3.3bn $3.3bn Healthcare Office New York $0.5 (ex. Manhattan) 15% $0.5 15% New Jersey Single Tenant
Slide 15: Commercial Real Estate by Contractual Maturity
15 Commercial Real Estate by Contractual Maturity ($mm) Outcome for Maturing CRE Loans in 1Q24 $mm Renewed at Contracted Terms $975 Paid Off & Left $229 9,968 Modified 1 $0 Total $1,204 2,900 2,832 2,481 2,647 1,965 1,362 725 793 912 583 636 337 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 2026 2027 2028 2029
Slide 16: Net Interest Margin
16 Net Interest Margin Net Interest Income ($mm) and Margin Net Interest Income Commentary Sequential decline in net interest income reflects one less day in 1Q24 versus 4Q23 Have lowered deposit costs by ~40bp on nearly 3.16% $10 billion of deposits which meaningfully slowed 2.94% deposit cost incr
Slide 17: Diverse Fee Income Sources
17 Diverse Fee Income Sources Non-Interest Income ($mm) 1 1Q24 Adjusted Non-Interest Income ($mm) 1 Adjusted Reported Adj. Non-Interest Income / Revenue Loan Servicing $3.2 12.8% 6% Other Gain-on-Sale of $15.9 Loans, net 27% 11.5% $1.6 11.1% 61.4 3% Service Charges $57.8mm $11.2 19% Wealth, Trust &
Slide 18: Non-Interest Expense
18 Non-Interest Expense Non-Interest Expenses ($mm) 1 Efficiency Ratio Trend 1 Reported Adjusted 340.4 280.3 272.2 60.7% 59.1% 53.8% 263.8 272.6 266.7 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 Adj. Non-Interest Expenses 1 / Avg. Assets 2.27% Compensation costs were well-controlled despite the 2.16% seasonal upt
Slide 19: Key Pillars of Valley's Credit Risk Management
19 Key Pillars of Valley’s Credit Risk Management Customer Selection Loan Structuring Disciplined Approach to Customer Acquisition Strategic and Balanced Methodology ✓ Deep institutional knowledge of real estate markets guides ✓ Various Risk Acceptance Criteria approved by credit oversight and targe
Slide 20: Consistent Relationship-Focus Supports Credit Strength
20 Consistent Relationship-Focus Supports Credit Strength Competitors Multi-national or nationwide developers, operators, asset managers Firm Type: Local / regional sponsors and developers; often owner-operators typically publicly traded Active investor providing capital and industry expertise to op
Slide 21: Stable and Consistent Asset Quality
21 Stable and Consistent Asset Quality Non-Accrual Loans / Total Loans Accruing Past Due Loans / Total Loans 30-59 PD 60-89 PD 90+ PD 1.03% 0.70% 0.30% 0.58% 0.57% 0.58% 0.58% 0.17% 0.20% 0.18% 0.99% 0.15% 12/31/20 12/31/21 12/31/22 12/31/23 3/31/24 12/31/20 12/31/21 12/31/22 12/31/23 3/31/24 Allowa
Slide 22: Low Loss Content Supports Reserve Coverage
22 Low Loss Content Supports Reserve Coverage Net Loan Charge-offs ($mm) Loan Loss Provision ($mm) 1Q24 non-taxi net charge-offs were $14mm or 0.11% of avg. loans Net Charge-offs NCOs / Avg. Loans $30 0.19% 0.14% $24 0.25% 1.03% 0.07% $17 0.04% $45.3 $9 0.99% $6 $20.7 $9.5 $6.3 $9.1 1Q23 2Q23 3Q23 4
Slide 23: Historical Net Charge-Offs / Loans
23 Historical Net Charge-Offs / Loans Prudent risk management and rigorous underwriting standards continue to support Valley’s strong and consistent credit quality metrics and limited historical losses. VLY Peer Median 2006Y 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 201
Slide 24: Equity & Capitalization
24 Equity & Capitalization Book Value and Tangible Book Value per Share 1 Equity Capitalization Level 1 $12.79 $12.81 10.83% 11.00% 11.02% $12.64 10.66% $12.54 10.12% $12.41 $8.79 $8.84 7.58% 7.62% 7.24% 7.40% $8.63 6.82% $8.51 $8.36 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 3/31/2023 6/30/
Slide 25: Appendix
Appendix
Slide 26: Non-GAAP Reconciliations to GAAP Financial Measures
26 Non-GAAP Reconciliations to GAAP Financial Measures Three Months E nded March 31, December 31, March 31, ($ in thousands, except for share data) 2024 2023 2023 Adj usted net i ncome avai l abl e to common sharehol ders (Non-GAAP): Net income, as reported (GAAP) $96,280 $71,554 $146,551 Add: FDIC
Slide 27: Non-GAAP Reconciliations to GAAP Financial Measures
27 Non-GAAP Reconciliations to GAAP Financial Measures Three Months E nded March 31, December 31, March 31, ($ in thousands) 2024 2023 2023 Annual i zed return on average tangi bl e sharehol ders' equi ty (Non-GAAP): Net income, as reported (GAAP) $96,280 $71,554 $146,551 Average shareholders' equit
Slide 28: Non-GAAP Reconciliations to GAAP Financial Measures
28 Non-GAAP Reconciliations to GAAP Financial Measures As of March 31, December 31, September 30, June 30, March 31, December 31, ($ in thousands, except for share data) 2024 2023 2023 2023 2023 2017 Tangi bl e book val ue per common share (Non-GAAP): Common shares outstanding 508,893,059 507,709,92
Slide 29: For More Information
29 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 ▪ Log onto our website above or www.sec.gov to obtain free copies of documents filed by Valley with the SEC
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