Valley National Bancorp · NASDAQ:VLY
Valley National Bancorp — Debt Investor Presentation (May 2020)
38 slides from Valley National Bancorp's debt investor presentation, May 29, 2020
Slide 1: Fixed Income Investor Presentation May 2020
Fixed Income Investor Presentation May 2020 Exhibit 99.1
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: Additional Information and Where to Find It
Additional Information and Where to Find It 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 registra
Slide 4: Preliminary Term Sheet
Preliminary Term Sheet Issuer: Valley National Bancorp (NASDAQ: VLY) Security Offered: Holding Company Fixed-to-Floating Rate Subordinated Debt Due 2030 Expected Ratings 1: BBB / BBB- / BBBH (Kroll Bond Rating Agency / S&P / DBRS) Format: SEC Registered Term: 10 Years Call Date: 5 Years 1 A rating i
Slide 5: Experienced Executive Leadership
Experienced Executive Leadership Ira Robbins President & CEO Mr. Robbins has been President and 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 previously served as EVP and Treas
Slide 6: Overview of Valley
Overview of Valley Company Overview Financial Highlights as of 3/31/20 Ticker: VLY (Nasdaq) Founded: 1927 Bank Operations Headquarters 1: Wayne, NJ Valley operates 235 branches serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Florida
Slide 7: Established business model with a 90+ year track record of success
Established business model with a 90+ year track record of success Conservative operating philosophy Profitable since inception Diverse commercially-focused franchise operating in high quality markets Strong management team with skills developed internally and through experience with other large reg
Slide 8: Recent History
Recent History 2001 Initiated New York City expansion 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 9: Significant Scale in Attractive Markets
Significant Scale in Attractive Markets 1 Deposit market share rank data per S&P Global Market Intelligence, data as of 6/30/19 as adjusted for acquisitions to the extent discernable. Rank includes banks with less than $100 billion in total assets and US subsidiaries of foreign banks. 2 Includes MSA
Slide 10: Comprehensive COVID-19 Response
Comprehensive COVID-19 Response Employees & Operations Business Continuity Plan, daily Pandemic Planning Team meetings, weekly company-wide Town Hall meetings Employees mandated to work from home if possible; ~93% of our non-branch employees are working remotely 34% (80) of our branches are closed,
Slide 11: Paycheck Protection Program
Paycheck Protection Program – Phases 1 & 2 500+ Valley employees dedicated to assisting our customers take advantage of Paycheck Protection Program ~80% of SBA-approved borrowers had an existing Valley relationship; however this is an opportunity to prove Valley’s strength to new clients providing f
Slide 12: 1Q20 Results Highlights
1Q20 4Q19 1Q19 1Q20 4Q19 1Q19 Return on Average Assets 0.92% 0.43% 1.40% 0.93% 1.03% 0.93% Efficiency Ratio 50.7% 70.9% 45.3% 49.3% 52.4% 54.8% Pre-Provision Net Revenue 2 ($mm) $151.1 $80.5 $178.5 $155.7 $131.6 $112.1 PPNR / Average Assets 2 1.59% 0.91% 2.21% 1.63% 1.49% 1.39% Diluted Earnings Per
Slide 13: Net Interest Income and Margin
Net Interest Income and Margin All metrics are represented on full tax equivalent basis Linked quarter net interest margin positively impacted by deposit cost reductions and higher acquired loan discount accretion Linked quarter net interest income (FTE) growth of 11% driven in part by a full quarte
Slide 14: Interest Rate Positioning
Interest Rate Positioning 1 Represents the estimated cumulative cash flows from dollar value of earning assets that are repricing within one year and the estimated cumulative cash flows from dollar value of interest-bearing liabilities that will reprice within one year based on the balance sheet at
Slide 15: Non-Interest Expense and Efficiency
Five Quarter Operating Expense Trends ($mm) Efficiency Ratio (%) 1 1 Please refer to the Non-GAAP Disclosure Reconciliation on pages 35-37 Totals may not sum due to rounding 1Q20 Adjusted Operating Expenses ($mm) 1 Non-Interest Expense and Efficiency 2 1 Includes merger related charges and debt exti
Slide 16: Non-Interest Income
1Q20 Adjusted Non-Interest Income ($mm) 1, 2 1Q19 reported non-interest income includes pre-tax gain on sale leaseback of $78.5mm 9% linked-quarter increase in adjusted non-interest income driven by strong swap fee generation Balanced fee income streams represent almost 14% of total revenue without
Slide 17: Loans & Loan Growth
New Loan Originations ($bn) / Yields vs Portfolio Yields 1 Loan classifications according to call report schedule which may not correspond to classification outlined in earnings release. Loans & Loan Growth 1Q20 Loan Composition 1 $30.4bn Total Loans ($bn) Total CAGR: 19% Organic CAGR: 10% Total Loa
Slide 18: Relationship-Based Commercial Lending
Relationship-Based Commercial Lending Commercial Loan Balances ($bn) Commercial Loans by Geography Underwriting metrics as of 3/31/2020 CRE C&I Commercial Real Estate Consistent and conservative underwriting across markets Focus on dense, highly-populated markets Granular portfolio with average loan
Slide 19: COVID-19 Exposed Loan Segments
COVID-19 Exposed Loan Segments Approximately 70% of at-risk balances are secured by real estate, with a weighted average debt service coverage ratio of 2.0x and LTV at origination of 65% Totals may not sum due to rounding. 1 Borrower industry based on NAICS and SIC codes
Slide 20: Forbearance Detail
Forbearance Detail 1 Reflects residential mortgage loans held in portfolio 2 Expected deferral period not to exceed 6 months Of $3.0 billion commercial loans outstanding where deferrals were approved, $1.6 billion of those balances were approved for principal and interest deferral and $1.0 billion w
Slide 21: Taxi Medallion and Asset Quality
Taxi Medallion 12/31/19 3/31/20 Related Reserves as a % of Total Exposure 30.9% 51.7% Total Exposure $115 mil $110 mil Taxi medallions as a % of Total Loans 0.39% 0.36% $113 million non-accrual loan increase primarily driven by: PCD re-classification ($74 million) and taxi medallions ($37 million) A
Slide 22: CECL Implementation
CECL Implementation Total Allowance for Credit Losses for Loans ($mm) Day 1 Adjustments 1Q20 provision reflects Moody’s forecasts inclusive of COVID-19 and a shift towards more conservative recession scenarios Day 1 equity reduction of $28mm reflecting CECL allowance for non-PCI loans and unfunded c
Slide 23: ACL Roll-Forward with CECL Adoption
ACL Roll-Forward with CECL Adoption ACL by Loan Type Utilized a multi-scenario model based on Moody’s economic forecasts to estimate future credit losses Economic Forecast Committee meets regularly to determine which economic scenarios will be incorporated, as well as the relative weightings of thes
Slide 24: Deposits and Funding
Total Deposits ($bn) and Rate (%) Trends Deposit Composition ($bn) Brokered deposits decreased by $0.9bn Retail time deposits decreased by $0.2bn Noninterest bearing increased by $0.3bn Savings, Now & MMA increased by $0.7bn Total Liabilities 3/31/2020 Deposits & Funding $34.7bn 1 Includes junior su
Slide 25: Liquidity & Securities
Liquidity & Securities Liquidity Position & Sources (as of 3/31/2020) Source $bn Cash & Equivalents $1.0 FHLB Borrowing Capacity $3.1 FRB Discount Window Availability $1.6 Unencumbered Securities $1.7 Uncommitted Fed Funds Lines $0.7 Total $8.1 Sophisticated funding expertise with access to diverse
Slide 26: Equity & Capitalization
Equity & Capitalization Book Value and Tangible Book Value per Share 1 Equity Capitalization Level 1 Please refer to the Non-GAAP Disclosure Reconciliation on pages 35-37 2 Assumes $100 million offering of Tier 2 holding company subordinated debt 9% year-over-year tangible book value growth +68b bas
Slide 27: Appendix
Appendix
Slide 28: Franchise Highlights
Franchise Highlights Scale Across Dynamic East Coast Geographies 1 New Jersey: #1 rank among locally-headquartered regional banks New York City MSA: #3 rank among locally-headquartered regional banks Florida: Top market share positions in Tampa (#7), Miami (#22) and Orlando (#15) Who We Are $39 bill
Slide 29: Historical Financial Highlights
Source: Company filings 1 Efficiency ratio measures total non-interest expense as a percentage of net interest income plus total non-interest income. Historical Financial Highlights
Slide 30: Loan Segment Granularity
Loan Segment Granularity CRE by Collateral Type (as of 3/31/2020) C&I by Borrower Industry 1, 2 (as of 3/31/2020) 1 Borrower industry based on NAICS and SIC codes 2 Totals may not equal 100% due to rounding Additional ~$500 million of equipment finance loans from Highland Capital subsidiary with pri
Slide 31: Proven Acquisition Track Record
Proven Acquisition Track Record Oritani Strategic Rationale Bolstered capital (~80bp improvement to TCE / TA in Q4 2019 vs. Q3 2019) to support future growth opportunities, while being neutral to EPS Low risk, in-market merger with significant branch overlap (100% overlap within 3 miles) Enhanced pr
Slide 32: Technology Transformation & Digital Trends
Technology Transformation & Digital Trends Differentiated customer experience using leading technology solutions to support the human element of relationship banking. The COVID-19 pandemic and associated lockdowns have further accelerated growing customer preference for digital and mobile delivery c
Slide 33: Credit Ratings Profile
Credit Ratings Profile Kroll Ratings 1 Kroll Bond Rating Agency (5/11/2020), S&P Global Ratings (5/5/2020) and DBRS (5/28/2020) Entity Type Rating 1 Outlook Valley National Bancorp Senior Unsecured Debt BBB+ Stable Subordinated Debt BBB Stable Short-Term Debt K2 N/A Valley National Bank Senior Unsec
Slide 34: Historical Interest Coverage & Double Leverage
Historical Interest Coverage & Double Leverage Source: S&P Global Market Intelligence 1 Assumes offering of $100mm and interest rate of 5.25%, or $5.25mm annually, $2.625mm quarterly 2 2 Assumes 85% of the net proceeds from the offering downstreamed to the bank as equity 1 (Dollars in millions) For
Slide 35: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation
Slide 36: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation
Slide 37: Non-GAAP Disclosure Reconciliation
Non-GAAP Disclosure Reconciliation
Slide 38: 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 Log onto our website above
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