Valley National Bancorp · NASDAQ:VLY
Valley National Bancorp — Q1 2023 Earnings Presentation
22 slides from Valley National Bancorp's earnings presentation, Apr 27, 2023
Slide 1: 1Q23 Earnings Presentation
1Q23 Earnings Presentation April 27, 2023
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: Overview of 1Q 2023
3 Overview of 1Q 2023 Balance Sheet Strength Supported by Diversification ▪ Total Deposits Remained Stable Supported by Diverse Sources and Granular Relationships ▪ Excess Loan Growth Reflects Consistent Origination Activity and Modest Payoffs ▪ Substantial Excess Liquidity Available From On- and Of
Slide 4: 1Q 2023 Financial Highlights
4 1Q 2023 Financial Highlights GAAP Reported Non-GAAP Adjusted 1 1Q23 4Q22 1Q22 1Q23 4Q22 1Q22 Net Income ($mm) $146.6 $177.6 $116.7 $154.5 $182.9 $120.3 Return on Average Assets 0.98% 1.25% 1.07% 1.03% 1.29% 1.10% Annualized Efficiency Ratio (Non-GAAP) -- -- -- 53.8% 49.3% 53.2% Diluted Earnings Pe
Slide 5: Total Deposits Remain Stable
5 Total Deposits Remain Stable Deposit Balance Trends ($bn) Avg. Fed Funds vs. Deposit Costs (%) 4.69% 3.82% 47.6 47.6 2.39% 1.96% 1.36% 9.6 20% 0.96% 11.1 23% 0.30% 0.59% 0.25% 0.19% 35.6 0.15% 0.14% 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 10% 3.4 14.5 Total Deposits Average Fed Funds (Upper) 30% 13.6 29% 11
Slide 6: Customer Deposit Base Diversified by Geography and Source
6 Customer Deposit Base Diversified by Geography and Source Total Deposit Breakdown (as of 3/31/23) Uninsured Deposit & Liquidity ($bn, as of 3/31/23) High Quality Available Liquidity 1 Specialized Deposits $20.2 $8.5 31% Cash on Balance Sheet 18% Uninsured Traditional Branch $47.6bn $14.5 Cash & Av
Slide 7: Highly Granular Deposits – 3/31/2023
7 Highly Granular Deposits – 3/31/2023 Deposits % of Total Customer Type ($bn) Deposits 625,000 Commercial $19.6 41% Deposit Customers Consumer $16.3 34% $58,000 Fully FDIC-Insured Indirect $7.1 15% Average Account Size (Commercial & Consumer) Fully-Collateralized Government 1 $4.6 10% 10+ Years Dep
Slide 8: Slower Payoffs Continue to Enhance Loan Growth
8 Slower Payoffs Continue to Enhance Loan Growth Gross Loans ($bn) 3/31/2023 Loan Composition 1, 2 1Q23 Annualized: +14.9% Non Owner-Occupied Healthcare CRE CRE 5% 24% Owner-Occupied CRE 9% Multifamily CRE 17% 46% C&I 28% $48.7 Other $46.9 26% C&I 19% Construction 8% Residential R.E. Consumer 11% 7%
Slide 9: CRE Detail as of 3/31/2023
9 CRE Detail as of 3/31/2023 Portfolio by Collateral Type Portfolio by Geography Retail Florida 19% 25.2% Mixed Use 10% New York (ex. NYC) Apartment & 9.6% New Jersey Residential 20.0% 29% Office Manhattan $27.0bn $27.0bn 10% (Other) Healthcare 4.2% Office Manhattan 1% (Multifamily) 6.2% Industrial
Slide 10: Granular & Diverse Office Portfolio
10 Granular & Diverse Office Portfolio CRE Portfolio Office Portfolio by Geography Florida & Manhattan Alabama $0.2 $1.1 6% 36% $27.0bn Office 10% New York $3.1bn (ex. Manhattan) $0.5 Healthcare 15% Office 1% New Jersey $0.8 Other 26% $0.5 ~20% of Office Portfolio is Owner-Occupied. 17% Geography Ou
Slide 11: Track Record of Below-Peer Net Charge-Offs (“NCOs”)
11 Track Record of Below-Peer Net Charge-Offs (“NCOs”) A proven and prudent risk management culture and rigorous underwriting standards have helped Valley create a strong credit culture, which has allowed Valley to maintain strong credit metrics and outperform the industry in both ordinary business
Slide 12: Net Interest Margin
12 Net Interest Margin Net Interest Income ($mm) and Margin 3.60% 3.57% 3.43% $467 3.16% $455 3.16% $437 $420 $318 1Q22 2Q22 3Q22 4Q22 1Q23 Net Interest Income ($mm) NIM 1Q23 day count and excess liquidity weighed on net interest income by ~$8.5mm. ~40% of sequential decline (or 16b) in net interest
Slide 13: Diverse Fee Income Sources
13 Diverse Fee Income Sources Non-Interest Income ($mm) 1Q23 Non-Interest Income Composition ($mm) Other $17.8 $54.3 33% $52.8 Loan Servicing $2.7 5% $10.5 $10.3 $0.5 Gain-on-Sale of $39.3 $0.9 Wealth, Trust & Loans, net $0.5 $54.3mm Insurance $12.0 $12.0 $6.2 $13.6 1% 22% $1.0 $7.0 $10.9 Service Ch
Slide 14: Seasonal Non-Interest Expense Growth
14 Seasonal Non-Interest Expense Growth Non-Interest Expenses ($mm) 1 Efficiency Ratio Trend 1 266.2 272.2 8.4 10.6 255.7 263.8 53.2% 53.8% 49.3% 4Q22 1Q23 1Q22 4Q22 1Q23 Adjusted Reported Quarterly Expense Waterfall ($mm, Adj.) 1 2.3 ( 1.8 ) 7.6 Seasonal 1Q elevation in payroll taxes. 263.8 Increas
Slide 15: Asset Quality
15 Asset Quality Allowance for Credit Losses for Loans / Total Loans Non-Accrual Loans / Total Loans 1.13% 1.10% 1.07% 1.03% 0.95% 0.65% 0.72% 0.65% 0.57% 0.50% 3/31/2022 6/30/2022 9/30/2022 12/31/22 3/31/23 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 Net Charge-offs ($mm) Loan Loss Provision
Slide 16: Small, High-Quality Securities Portfolio
16 Small, High-Quality Securities Portfolio Our high-quality securities portfolio represents a modest 8% of total assets. We manage our portfolio for liquidity, not income. AFS Securities Portfolio (as of 3/31/23) HTM Securities Portfolio (as of 3/31/23) Resi MBS 49% Municipals Municipals 10% 11% Ob
Slide 17: Equity & Capitalization
17 Equity & Capitalization Book Value and Tangible Book Value per Share 1 Equity Capitalization Level 1 Conservative Liquidity Build Weighed on TCE / TA by ~56bp $12.23 $12.41 11.70% $11.98 11.40% 11.22% 11.14% $11.84 $11.60 $8.36 7.96% 10.12% 7.46% 7.40% 7.45% $8.15 6.82% $7.93 $7.87 $7.71 3/31/202
Slide 18: Appendix
Appendix
Slide 19: Non-GAAP Reconciliations to GAAP Financial Measures
19 Non-GAAP Reconciliations to GAAP Financial Measures Three Months Ended March 31, December 31, March 31, ($ in thousands, except for share data) 2023 2022 2022 Adjusted net income available to common shareholders (Non-GAAP): Net income, as reported (GAAP) $146,551 $177,591 $116,728 Add: Losses (ga
Slide 20: Non-GAAP Reconciliations to GAAP Financial Measures
20 Non-GAAP Reconciliations to GAAP Financial Measures Three Months Ended March 31, December 31, March 31, ($ in thousands) 2023 2022 2022 Annualized return on average tangible shareholders' equity (Non-GAAP): Net income, as reported (GAAP) $146,551 $177,591 $116,728 Average shareholders' equity 6,4
Slide 21: Non-GAAP Reconciliations to GAAP Financial Measures
21 Non-GAAP Reconciliations to GAAP Financial Measures As of March 31, December 31, September 30, June 30, March 31, ($ in thousands, except for share data) 2023 2022 2022 2022 2022 Tangible book value per common share (Non-GAAP): Common shares outstanding 507,762,358 506,374,478 506,351,502 506,328
Slide 22: For More Information
22 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, FSVP – Director, Corporate Finance & Business De
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