Valley National Bancorp · NASDAQ:VLY
Valley National Bancorp — IPO Roadshow (May 2021)
37 slides from Valley National Bancorp's IPO roadshow presentation, May 25, 2021
Slide 1: Subordinated Debt Offering Investor Presentation May 2021
Issuer Free Writing Prospectus Filed pursuant to Rule 433 Dated May 25, 2021 Registration No. 333-254696 Subordinated Debt O ffe ri n g I nv est o r P r esent a t i o n May 2021Issuer Free Writing Prospectus Filed pursuant to Rule 433 Dated May 25, 2021 Registration No. 333-254696 Subordinated Debt
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: Disclaimer
Disclaimer This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the subordinated notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the s
Slide 4: Preliminary Term Sheet
Preliminary Term Sheet 4 Issuer: Valley National Bancorp (Nasdaq: VLY) Security Offered: Fixed-to-Floating Rate Subordinated Debt Due 2031 1 Expected Ratings : BBB / BBB- / BBBH (Kroll Bond Rating Agency / S&P / DBRS) Format: SEC Registered Term: 10 Years Call Date: 5 Years General corporate purpose
Slide 5: Experienced Executive Leadership
Experienced Executive Leadership 5 Michael D. Hagedorn Ira Robbins Senior EVP & CFO President & CEO Years at Valley: 2 / Years in Banking: 34 Years at Valley: 25 / Years in Banking: 25 Mr. Hagedorn joined Valley in 2019. Previously he Mr. Robbins has been CEO of Valley since 2018 and served as Presi
Slide 6: Overview of Valley
Overview of Valley 6 Company Overview Financial Highlights as of 3/31/21 Ticker: VLY (Nasdaq) $5.9 Billion Return on Average Assets: 1.14% 2 Market Capitalization Founded: 1927 Net Interest Margin: 3.14% 1 Bank Operations Headquarters : Wayne, NJ $41.2 Billion Efficiency Ratio: 49.5% Total Assets Di
Slide 7: Key Investor Highlights
Key Investor Highlights 7 Valley focuses on leveraging technology to service the diverse financial needs of its commercial and retail clients Established business model with a 90+ year track record of success Conservative operating philosophy Consistent profitability since inception Diverse commerci
Slide 8: Recent History
Recent History 8 Conservative Organic Growth and a Disciplined Acquisition Strategy Have Helped Valley Create a Relevant and Substantial Regional Bank Operating In Some of the East Coast’s Most Desirable Markets 2001 • Initiated New York City expansion via acquisition of Merchants New York Bancorp,
Slide 9: Significant Scale in Attractive Markets
Significant Scale in Attractive Markets 9 #1 Regional bank in 3 counties (Passaic, 1 Bergen and Morris) #1 $19.9B #2 New Jersey rank among New Jersey states by median HHI Deposit Market In-market deposits (~$90,000) ² Share for Regional as of 3/31/21 $635 Billion estimated GDP in 3 1 2019 Banks 131
Slide 10: 1Q 2021 Highlights
1Q 2021 Highlights 10 1 Reported Adjusted 1Q21 4Q20 1Q20 1Q21 4Q20 1Q20 Return on Average Assets 1.14% 1.02% 0.92% 1.14% 1.10% 0.93% Annualized Efficiency Ratio 49.5% 51.6% 50.8% 48.6% 47.0% 49.3% Net Income ($mm) $115.7 $105.4 $87.3 $115.8 $113.4 $88.2 2 Pre-Provision Net Revenue $163.7 $162.3 $151
Slide 11: Net Interest Margin, Profitability & Operating Leverage
Net Interest Margin, Profitability & Operating Leverage 11 1 Net Interest Income and Margin Pre-Provision Net Revenue ($mm) Unadjusted Adjusted Net interest margin stability & Year-over-year quarterly NII growth of 10% (FTE) 1.72% 1.63% 1.61% 1.63% $293.6 1.59% $288.8 1.57% $283.5 $284.1 $177.5 $266
Slide 12: Interest Rate Positioning
Interest Rate Positioning 12 12-Month Forward Maturity Schedule ($bn) $1.7 Continue to reduce non-maturity deposit costs $1.5 $1.3 $1.2 Selected opportunities to reprice maturing CDs and borrowings lower and mitigate asset yield headwinds $0.5 $0.5 $0.4 Intend to selectively take advantage $0.2 $0.2
Slide 13: Non-Interest Expense and Efficiency
Non-Interest Expense and Efficiency 13 5 Quarter Operating Expense Trends ($ in millions) Efficiency Ratio (%) 173.1 160.2 160.2 157.2 155.7 157.3 157.5 51.6 155.0 50.8 153.4 49.5 49.3 151.1 2 48.6 47.0 1Q20 4Q20 1Q21 1Q20 4Q20 1Q21 Reported Reported Reported Adjusted ¹ Adjusted ¹ Adjusted ¹ 1Q20 2Q
Slide 14: Branch Network Evolution
Branch Network Evolution 14 We constantly analyze our branch network and individual branch performance to optimize our delivery channels from a productivity and efficiency perspective VLY Branch Count 26 29 56 227 226 12/31/15 USAB Acquisition ORIT Acquisition Branch Closures 12/31/20 3/31/21 Deposi
Slide 15: Loans & Loan Growth
Loans & Loan Growth 15 1 1Q21 Loan Composition Total Loans ($bn) Multifamily Residential R.E. Since 2017 Loan CAGR: 19.5% 15% 12% $32.7 $32.2 Owner-Occupied $29.7 CRE 10% $25.0 $32.7bn Non Owner- Occupied CRE C&I 26% 15% $18.3 Construction Consumer C&I (PPP) 6% 9% 7% 2017 2018 2019 2020 Q121 2 New L
Slide 16: Relationship-Based Commercial Lending
Relationship-Based Commercial Lending 16 Commercial Real Estate Commercial Loan Balances ($bn) 78.6% 79.1% 80. 0% 75.7% Consistent and conservative underwriting across $30 .0 72.8% 71.4% markets $25.9 $25.3 70. 0% $25 .0 $1.8 $22.5 $1.7 Sophisticated high net worth borrowers supported by 60. 0% $1.6
Slide 17: Paycheck Protection Program
17 Paycheck Protection Program Round 3 Rounds 1 & 2 SBA-approved volume ~$860mm SBA-approved volume $2.3bn SBA-approved loans Loan applications ~13,000 7,500 + Average loan size Average loan size $180k $130k Average processing fee Median loan size ~4% $42k Average processing fee ~3% Majority of loan
Slide 18: Outstanding Loan Deferrals
Outstanding Loan Deferrals 18 Active Deferrals / Total Loans 1Q21 Deferral Information as of 3/31/2021 11.6% Balance Active Active Deferral / ($MM) Deferral ($MM) 1Q21 Loan Balance 8.4% ~90% decline in Commercial Loans & Leases $25,859 $250 1.0% deferrals since 1 $4,470 $31 0.7% Residential & Home E
Slide 19: COVID-19 Exposed Loan Segments
COVID-19 Exposed Loan Segments 19 Non-PPP Loan Balance (3/31/21) Deferrals / Loans 1 Borrower Industry ($MM) % of non-PPP Loans 3/31/21 12/31/20 9/30/20 7/10/20 5/6/20 Primary Exposure Doctor & Surgery $494 1.6% 2.6% 0.9% 4.9% 16.5% 29.9% Retail Trade 585 1.9% 2.7% 2.7% 3.5% 21.2% 32.4% Hotels & Hos
Slide 20: Asset Quality
Asset Quality 20 Allowance for Credit Losses for Loans / Total Loans Non-Accrual Loans / Total Loans 1.17% 1.17% 1.11% 1.06% 1.09% 1.08% 1.03% 0.99% 0.96% 0.68% 0.65% 0.62% 0.59% 0.58% 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 ACL / Loans ex. PPP ACL by Loan Segment Net Charge-offs & Provisi
Slide 21: Track Record of Below-Peer Credit Losses
Track Record of Below-Peer Credit Losses 21 Prudent risk management and rigorous underwriting standards have helped Valley create a strong credit culture, which has allowed Valley to maintain strong credit metrics compared to peers 1 2 Net Charge-offs of Non-Covered Loans / Average Loans Relative to
Slide 22: Deposits & Funding
Deposits & Funding 22 Deposit Composition ($bn) Total Liabilities 3/31/2021 ¹ Since 12/31/2019 Since 2017 Deposit $32.6 Deposit Trends Non-interest CAGR: 20% $31.9 bearing $10.1 Time deposits decreased $29.2 5.5 by $4.2bn from 12/31/19 6.7 Other Time Deposits $0.5 Savings, NOW $36.5BN decreased from
Slide 23: Technology Evolution & Digital Trends
Technology Evolution & Digital Trends 23 Opportunity to drive increased digital product adoption across expanding client base Online Banking Net Promoter Scores (“NPS”) % of Households Actively Using Online Banking for Business and Retail customers exceed other NPS across the organization ~125k acti
Slide 24: Fee Income
Fee Income 24 Non-Interest Income ($mm) 1Q21 Non-Interest Income ($mm) Other $47.5 28% $41.4 $16.0 $4.6 $31.2 Trust, Investment & Insurance $14.2 $3.5 16% $10.9 $31.2mm $6.2 Swap Fees Loan Servicing 20% Fees 9% $22.6 $21.5 $20.7 Gain-on-Sale of Service Charges Loans, net 16% 11% 1Q20 4Q20 1Q21 Other
Slide 25: Liquidity & Securities
Liquidity & Securities 25 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 Obligations of States Capacity Uncommitted Fed & Political 45% Funds Lines 11% 14% $10.9bn $2.4bn U.S. Treasury 3% Corporate
Slide 26: Equity & Capitalization
Equity & Capitalization 26 Robust Capital with Strong Organic Generation Equity Capitalization Level Book Value and Tangible Book Value per Share $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% 11.32% 11.28% 11.
Slide 27: Franchise Highlights
Franchise Highlights 27 • $41 billion commercial bank operating 226 full-service branches throughout northern New Jersey, New York City, Long Island and Florida Who We Are • High-performing institution with strong asset quality leveraging technology to service the diverse financial needs of our comm
Slide 28: Appendix
A p p e n d i xA p p e n d i x
Slide 29: Historical Financial Highlights
Historical Financial Highlights 29 As of or for the Quarter As of or for the Years Ended December 31, Ended March 31, ($ 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 $ 842,4
Slide 30: Impact of PPP
Impact of PPP ($mm) 30 PPP Loan Balance Net Interest Margin (FTE) End of Period Avg. Balance 2,365 2,358 3.05% 3.06% 3.03% 2,277 2,247 2,214 2,202 2,152 2.99% 3.00% 3.01% 3.06% 3.14% 1,452 2Q20 3Q20 4Q20 1Q21 Reported NIM NIM ex. PPP 2Q20 3Q20 4Q20 1Q21 Round 1 & 2 Forgiveness Update ($mm) 57% of PP
Slide 31: Loan Segment Granularity
Loan Segment Granularity 31 1, 2 CRE by Collateral Type (as of 3/31/2021) C&I by Borrower Industry (as of 3/31/2021) Apartment & Finance & Insurance Residential Real Estate 14% 27% 19% Retail Other 20% 10% Specialty & Healthcare Other 11% 11% Professional Services 3% Accommodation & Food Services Wh
Slide 32: Proven Acquisition Track Record
Proven Acquisition Track Record 32 1 Year Target State Assets Oritani Strategic Rationale 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 2018 USAmeriBancorp, In
Slide 33: Credit Ratings Profile
Credit Ratings Profile 33 Kroll Ratings 1 Entity Type Rating Outlook Valley National Bancorp Senior Unsecured Debt BBB+ Stable Subordinated Debt BBB Stable Short-Term K2 N/A Debt Valley National Bank Senior Unsecured Debt A- Stable Subordinated Debt BBB+ Stable Short-Term Deposit K2 N/A Short-Term D
Slide 34: Historical Interest Coverage & Double Leverage
Historical Interest Coverage & Double Leverage 34 (Dollars in Millions) Quarter PF for $300M For the Years Ended, Ended, Sub Debt Raise 12/31/2017 12/31/2018 12/31/2019 12/31/2020 3/31/2021 3/31/2021 Double Leverage Ratio Investment in Subsidiaries $2,739 $3,610 $4,672 $4,999 $5,078 $5,314 Consolida
Slide 35: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation 35 Three Months Ended Years Ended March 31, December 31, September 30, June 30, March 31, December 31, December 31, December 31, ($ in thousands, except for share data) 2021 2020 2020 2020 2020 2020 2019 2018 Adjusted net income available to common shareholders: Ne
Slide 36: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation 36 Three Months Ended Years Ended March 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 repo
Slide 37: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation 37 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 4 05,797,538 403,