• Valley National Bancorp Reports a 20 Percent Increase in Third Quarter Net Income, Solid Net Interest Margin and Non-PPP Loan Growth

    Source: Nasdaq GlobeNewswire / 28 Oct 2021 08:00:04   America/New_York

    NEW YORK, Oct. 28, 2021 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the third quarter 2021 of $122.6 million, or $0.29 per diluted common share, as compared to the third quarter 2020 earnings of $102.4 million, or $0.25 per diluted common share, and net income of $120.5 million, or $0.29 per diluted common share, for the second quarter 2021. Excluding non-core charges, our adjusted net income (a non-GAAP measure) was $124.7 million, or $0.30 per diluted common share, for the third quarter 2021, $104.2 million, or $0.25 per diluted common share, for third quarter 2020, and $126.6 million, or $0.30 per diluted common share, for the second quarter 2021. See further details below, including a reconciliation of our adjusted net income in the "Consolidated Financial Highlights" tables.

    Key financial highlights for the third quarter:

    • Net Interest Income and Margin: Net interest income on a tax equivalent basis of $301.7 million for the third quarter 2021 decreased $43 thousand as compared to the second quarter 2021 and increased $17.6 million from the third quarter 2020. Net interest income remained relatively unchanged as compared to the second quarter 2021, despite a $9.4 million decrease in interest and fee income from our SBA Paycheck Protection Program (PPP) loan portfolio during the third quarter 2021. Our net interest margin on a tax equivalent basis decreased by 3 basis points to 3.15 percent in the third quarter 2021 as compared to 3.18 percent for the second quarter 2021. The decrease in the margin as compared to the second quarter 2021 was due to a 9 basis point decline in the yield of average earning assets caused by the lower interest rates on new and renewed loans, partially offset by the continued run-off of maturing higher cost time deposits, repayments of borrowings, and the overall lower cost of deposits driven by growth in non-maturity deposits. See the "Net Interest Income and Margin" section below for more details.
    • Loan Portfolio: Total loans increased $149.4 million to $32.6 billion at September 30, 2021 from June 30, 2021, in spite of a $476.7 million decrease in PPP loans within the commercial and industrial loan category. Our non-PPP loan portfolio increased $626.0 million, or 8.0 percent on an annualized basis. The increase was largely driven by growth in the total commercial real estate and residential mortgage loan categories. Additionally, our third quarter 2021 new and refinanced loan originations included approximately $233 million of residential mortgage loans originated for sale. Net gains on sales of residential loans were $6.4 million and $10.1 million in the third quarter 2021 and second quarter 2021, respectively. See the "Loans, Deposits and Other Borrowings" section below for more details.
    • Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $356.9 million and $353.7 million at September 30, 2021 and June 30, 2021, respectively. During the third quarter 2021, we recorded a provision for credit losses for loans of $3.5 million as compared to $8.8 million and $31.0 million for the second quarter 2021 and third quarter 2020, respectively.
    • Credit Quality: Total accruing past due loans decreased $25.0 million to $55.2 million, or 0.17 percent of total loans, at September 30, 2021 as compared to $80.2 million, or 0.25 percent of total loans, at June 30, 2021. Non-accrual loans represented 0.77 percent and 0.68 percent of total loans at September 30, 2021 and June 30, 2021, respectively. Net loan charge-offs totaled $293 thousand for the third quarter 2021 as compared to $9.4 million for the second quarter 2021. See the "Credit Quality" section below for more details.
    • Non-interest Income: Non-interest income decreased $695 thousand to $42.4 million for the third quarter 2021 as compared to the second quarter 2021. The moderate overall decline was largely due to decreases of $3.6 million and $1.0 million in net gains on sales of residential mortgage loans and insurance commissions, respectively, partially offset by a $3.8 million increase in other non-interest income. The increase in other income was partly driven by a $1.2 million increase in swap fee income related to certain new commercial loan transactions and other moderate increases during third quarter 2021.
    • Non-interest Expense: Non-interest expense increased $3.0 million to $174.9 million for the third quarter 2021 as compared to the second quarter 2021 mainly due to higher professional and legal fees and salaries and employee benefits expense, partially offset by a decrease of $8.4 million in the loss on extinguishment of debt due to the prepayment of $248 million of FHLB borrowings in the second quarter 2021. During the third quarter 2021, professional and legal fees included a $2.1 million accrual for general litigation reserves, $1.3 million of merger expenses related to our previously announced pending bank acquisitions, as well as increased consulting expenses related to our technology transformation efforts.
    • Efficiency Ratio: Our efficiency ratio was 50.93 percent for the third quarter 2021 as compared to 49.96 percent and 48.20 percent for the second quarter 2021 and third quarter 2020, respectively. Our adjusted efficiency ratio was 49.16 percent for the third quarter 2021 as compared to 46.64 percent and 46.62 percent for the second quarter 2021 and third quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.
    • Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible ROE were 1.18 percent, 10.23 percent, and 14.64 percent for the third quarter 2021, respectively. Annualized ROA, ROE and tangible ROE, adjusted for non-core charges, were 1.20 percent, 10.41 percent and 14.90 percent for the third quarter 2021, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.

    On September 23, 2021, Valley announced that it will acquire Bank Leumi Le-Israel Corporation (Leumi), the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA (Bank Leumi). The merger will enable Valley to greatly expand its commercial banking and venture capital banking businesses, as well as help Valley increase its revenue diversity and expand into new geographies. Bank Leumi maintains its headquarters in New York City and also operates commercial banking offices in Chicago, Los Angeles, Palo Alto, and Aventura, Florida. As of June 30, 2021, Leumi had total assets of $8.4 billion, total deposits of $7.1 billion, and gross loans of $5.4 billion. The acquisition is expected to close in the first half of 2022, subject to standard regulatory approvals, approval of Valley shareholders, as well as other customary conditions.

    On October 13, 2021, Valley also announced its acquisition of Arizona-based Dudley Ventures, an advisory firm specializing in the investment and management of tax credits. Over its plus 20-year history, Dudley Ventures and its affiliates have invested over $2.0 billion in tax credit transactions, leading to deep community impact.

    Ira Robbins, CEO and President commented, "Our third quarter 2021 earnings continue to reflect the strength and quality of our balance sheet, disciplined loan pricing and the ability to manage our net interest margin in a very challenging market rate environment. Linked quarter non-PPP loan growth was 8 percent, and remained well-diversified in the third quarter." Mr. Robbins continued, “Additionally, we are very excited about our pending acquisitions of Bank Leumi and The Westchester Bank Holding Corporation, and our recent acquisition of Dudley Ventures. Integration of these businesses will offer unparalleled opportunities for us to expand our capabilities, cross sell services, broaden our reach into new markets and further our ability to positively impact our clients and communities."

    Net Interest Income and Margin

    Net interest income on a tax equivalent basis totaling $301.7 million for the third quarter 2021 decreased $43 thousand as compared to the second quarter 2021 and increased $17.6 million from the third quarter 2020. Interest expense of $27.8 million for the third quarter 2021 decreased $5.0 million as compared to the second quarter 2021 as we continue to reduce our cost of funding from both deposits and the repayment of other borrowings, primarily FHLB advances. Interest income on a tax equivalent basis in the third quarter 2021 decreased by $5.0 million to $329.5 million as compared to the second quarter 2021 largely due to a $9.4 million decline in PPP loan related interest and fees caused by lower levels of loan forgiveness (prepayments) in the third quarter 2021 and lower yields on non-PPP new and renewed loans. See the "Loan, Deposit and Other Borrowings" section for more information on PPP loans.

    Our net interest margin on a tax equivalent basis of 3.15 percent for the third quarter 2021 decreased by 3 basis points and increased by 14 basis points from 3.18 percent and 3.01 percent for the second quarter 2021 and third quarter 2020, respectively. The yield on average interest earning assets decreased by 9 basis points on a linked quarter basis mostly due to the lower yield on new and renewed loans, partially offset by one additional day in the third quarter 2021 as compared to second quarter 2021. The yield on average loans decreased by 8 basis points to 3.79 percent for the third quarter 2021 as compared to the second quarter 2021. The overall cost of average interest bearing liabilities decreased 7 basis points to 0.44 percent for the third quarter 2021 as compared to the second quarter 2021. The decrease was mainly due to (i) the continued run-off of maturing higher cost time deposits, (ii) repayment of maturing FHLB advances and other borrowings during the third quarter 2021, (iii) the prepayment of $248 million of long-term FHLB advances in June 2021 and (iv) the overall lower cost of deposits. Our cost of total average deposits was 0.18 percent for the third quarter 2021 as compared to 0.21 percent for the second quarter 2021.

    Loans, Deposits and Other Borrowings

    Loans. Loans increased $149.4 million to approximately $32.6 billion at September 30, 2021 from June 30, 2021 primarily due to growth in the commercial real estate, construction and residential mortgage loan categories, largely offset by a $476.7 million decrease in PPP loans within the commercial and industrial loan category. Commercial real estate loans increased $399.9 million, or 9.1 percent on an annualized basis, to $17.9 billion at September 30, 2021 as compared to June 30, 2021 reflecting continued strong organic loan growth across our geographic footprints. Construction loans increased $51.7 million, or 11.8 percent on an annualized basis, during the third quarter 2021 largely due to a higher volume of advances on pre-existing loan projects. Residential mortgage loans increased $105.4 million, or 10.0 percent on an annualized basis, during the third quarter 2021 mainly due to new loan activity in the purchased home market, and, to a lesser extent, refinance loan volumes. During the third quarter 2021, we originated approximately $233 million of residential mortgage loans for sale. Residential mortgage loans held for sale at fair value totaled $157.1 million and $159.3 million at September 30, 2021 and June 30, 2021, respectively.

    Deposits. Total deposits increased $437.8 million to approximately $33.6 billion at September 30, 2021 from June 30, 2021 due to increases of $524.8 million and $260.3 million in non-maturity interest bearing and non-interest bearing deposit categories, respectively, partially offset by a $347.3 million decrease in time deposits. The decrease in time deposits was driven by normal run-off of maturing retail CDs with some continued migration to the more liquid deposit product categories. Total brokered deposits (consisting of both time and money market deposit accounts) decreased approximately $315 million to $1.7 billion at September 30, 2021 as compared to $2.0 billion at June 30, 2021 as our funding mix continues to shift to our commercial and retail deposit customers. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 32 percent, 56 percent and 12 percent of total deposits as of September 30, 2021, respectively.

    Other Borrowings. Short-term borrowings decreased $71.0 million to $783.3 million at September 30, 2021 as compared to June 30, 2021 largely due to repayments of FHLB advances. Long-term borrowings decreased $458.2 million to $1.4 billion at September 30, 2021 as compared to June 30, 2021 also due to normal repayments of maturities, including FHLB advances, and $300 million of long-term repurchase agreements with a weighted average cost of approximately 3.4 percent.

    Credit Quality

    Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets increased $31.1 million to $257.7 million at September 30, 2021 as compared to June 30, 2021 mainly due to a $37.0 million increase in non-accrual commercial real estate loans. This increase was caused by two loans totaling $22.2 million and one loan totaling $10.9 million that migrated to non-accrual status from the 30-59 days and 60 to 89 days past due categories reported at June 30, 2021, respectively. These non-accrual loans totaling $33.1 million have allocated reserves of $3.7 million within our allowance for loan losses at September 30, 2021. Non-accrual loans represented 0.77 percent of total loans at September 30, 2021 compared to 0.68 percent at June 30, 2021.

    Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing New York City and Chicago taxi medallion loans totaling $86.3 million and $577 thousand, respectively, within the commercial and industrial loan category at September 30, 2021. At September 30, 2021, all taxi medallion loans were on non-accrual status and had related reserves of $58.6 million, or 67.4 percent of such loans, within the allowance for loan losses.

    Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $25.0 million to $55.2 million, or 0.17 percent of total loans, at September 30, 2021 as compared to $80.2 million, or 0.25 percent of total loans at June 30, 2021. Commercial real estate loans past due 30 to 59 days and 60 to 89 days decreased $17.6 million and $5.6 million, respectively, to $23.0 million and $5.9 million, respectively at September 30, 2021 as compared to June 30, 2021 mainly due to the aforementioned loans migrating to non-accrual loan status at September 30, 2021.

    Forbearance. In response to the COVID-19 pandemic and its economic impact on certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment, when requested by customers, all of which were insignificant. As of September 30, 2021, Valley had approximately $98.6 million of outstanding loans remaining in their payment deferral period under short-term modifications, as compared to $142.0 million of loans in deferral at June 30, 2021.

    Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at September 30, 2021, June 30, 2021 and September 30, 2020:

     September 30, 2021 June 30, 2021 September 30, 2020
       Allocation   Allocation   Allocation
       as a % of   as a % of   as a % of
     Allowance Loan Allowance Loan Allowance Loan
     Allocation Category Allocation Category Allocation Category
     ($ in thousands)
    Loan Category:           
    Commercial and industrial loans$103,877  1.84% $109,689  1.80% $130,409  1.89%
    Commercial real estate loans:           
    Commercial real estate178,206  0.99% 168,220  0.96% 128,699  0.77%
    Construction21,515  1.19% 20,919  1.19% 15,951  0.93%
    Total commercial real estate loans199,721  1.01% 189,139  0.98% 144,650  0.78%
    Residential mortgage loans24,732  0.57% 25,303  0.60% 28,614  0.67%
    Consumer loans:           
    Home equity4,110  1.02% 4,602  1.12% 5,972  1.31%
    Auto and other consumer10,087  0.40% 10,591  0.43% 15,387  0.69%
    Total consumer loans14,197  0.49% 15,193  0.53% 21,359  0.79%
    Allowance for loan losses342,527  1.05% 339,324  1.05% 325,032  1.00%
    Allowance for unfunded credit commitments14,400    14,400    10,296   
    Total allowance for credit losses for loans$356,927    $353,724    $335,328   
    Allowance for credit losses for loans as a % loans  1.09%   1.09%   1.03%
                   

    Our loan portfolio, totaling $32.6 billion at September 30, 2021, had net loan charge-offs totaling $293 thousand for the third quarter 2021 as compared to $9.4 million and $15.4 million for the second quarter 2021 and third quarter 2020, respectively. The decrease in net loan charge-offs for the third quarter 2021 as compared to the second quarter 2021 was mainly due to lower commercial and industrial loan charge-offs. During the third quarter 2021, the partial gross charge-offs of taxi medallion loans totaled $143 thousand as compared to $1.4 million and $6.1 million for the second quarter 2021 and third quarter 2020, respectively.

    The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.09 percent at both September 30, 2021 and June 30, 2021, and 1.03 percent at September 30, 2020. During the third quarter 2021, we recorded a provision for credit losses for loans of $3.5 million as compared to a provision of $8.8 million and $31.0 million for the second quarter 2021 and third quarter 2020, respectively. There was no provision for unfunded credit commitments for the third quarter 2021.

    At September 30, 2021, the allowance allocations for credit losses as a percentage of total loans increased in commercial and industrial and commercial real estate loan categories as compared to June 30, 2021. The allocated reserves as a percentage of commercial and industrial loans increased by 4 basis points mainly due to the third quarter 2021 repayments (loan forgiveness) of PPP loans guaranteed by the SBA with no related allowance at September 30, 2021. The allocated reserves as a percentage of commercial real estate loans increased 3 basis points mainly due to higher quantitative reserves for non-owner occupied loans during the third quarter 2021. The allowance for credit losses as a percentage of total non-PPP loans was 1.12 percent, 1.14 percent and 1.11 percent for the third quarter 2021, second quarter 2021 and third quarter 2020, respectively.

    Capital Adequacy

    Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 13.24 percent, 10.06 percent, 10.73 percent and 8.63 percent, respectively, at September 30, 2021.

    Investor Conference Call

    Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Standard Time, today to discuss the third quarter 2021 earnings. Those wishing to participate in the call may dial toll-free 855-638-5437 Conference ID: 6339087. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/3jdwo8xv and archived on Valley's website through Monday, November 29, 2021. Investor presentation materials will be made available prior to the conference call at www.valley.com.

    About Valley

    As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $41 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations across New Jersey, New York, Florida and Alabama, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Care Center at 800-522-4100.

    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 our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations, including the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

    • failure to obtain shareholder or regulatory approval for the acquisitions of The Westchester Bank Holding Corporation (Westchester) and Bank Leumi USA (Bank Leumi) on the anticipated terms and within the anticipated timeframe;
    • the inability to realize expected cost savings and synergies from the Westchester and Bank Leumi acquisitions in amounts or in the timeframe anticipated;
    • costs or difficulties relating to Westchester and Bank Leumi integration matters might be greater than expected;
    • the inability to retain customers and qualified employees of Westchester and Bank Leumi;
    • changes in estimates of non-recurring charges related to the Westchester and Bank Leumi acquisitions;
    • the continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;
    • the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 may arise in our primary markets;
    • the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral;
    • the risks related to the discontinuation of the London Interbank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies;
    • damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters;
    • a prolonged downturn in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in commercial real estate values within our market areas;
    • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
    • the inability to grow customer deposits to keep pace with loan growth;
    • a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
    • the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
    • greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
    • the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley's branch transformation strategy;
    • cyber-attacks, ransomware attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;
    • results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
    • our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
    • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, the COVID-19 pandemic or other external events; and
    • unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors.

    A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Report on Form 10-Q for the three months ended June 30, 2021.

    We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. 

    -Tables to Follow-

    VALLEY NATIONAL BANCORP
    CONSOLIDATED FINANCIAL HIGHLIGHTS

    SELECTED FINANCIAL DATA

     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30,
    ($ in thousands, except for share data)2021 2021 2020 2021 2020
    FINANCIAL DATA:         
    Net interest income - FTE (1)$301,744  $301,787  $284,119  $897,115  $834,042 
    Net interest income$301,026  $300,907  $283,086  $894,600  $830,984 
    Non-interest income42,431  43,126  49,272  116,790  135,499 
    Total revenue343,457  344,033  332,358  1,011,390  966,483 
    Non-interest expense174,922  171,893  160,185  507,028  473,007 
    Pre-provision net revenue168,535  172,140  172,173  504,362  493,476 
    Provision for credit losses3,531  8,747  30,908  20,934  106,747 
    Income tax expense42,424  42,881  38,891  124,626  101,486 
    Net income122,580  120,512  102,374  358,802  285,243 
    Dividends on preferred stock3,172  3,172  3,172  9,516  9,516 
    Net income available to common shareholders$119,408  $117,340  $99,202  $349,286  $275,727 
    Weighted average number of common shares outstanding:         
    Basic406,824,160  405,963,209  403,833,469  405,986,114  403,714,701 
    Diluted409,238,001  408,660,778  404,788,526  408,509,767  404,912,126 
    Per common share data:         
    Basic earnings$0.29  $0.29  $0.25  $0.86  $0.68 
    Diluted earnings0.29  0.29  0.25  0.86  0.68 
    Cash dividends declared0.11  0.11  0.11  0.33  0.33 
    Closing stock price - high13.61  14.63  8.33  14.63  11.46 
    Closing stock price - low11.80  12.91  6.60  9.74  6.29 
    CORE ADJUSTED FINANCIAL DATA: (2)         
    Net income available to common shareholders, as adjusted$121,555  $123,445  $101,002  $357,623  $278,784 
    Basic earnings per share, as adjusted0.30  0.30  0.25  0.88  0.69 
    Diluted earnings per share, as adjusted0.30  0.30  0.25  0.88  0.69 
    FINANCIAL RATIOS:         
    Net interest margin3.14% 3.18% 3.00% 3.15% 3.02%
    Net interest margin - FTE (1)3.15  3.18  3.01  3.16  3.03 
    Annualized return on average assets1.18  1.17  0.99  1.16  0.94 
    Annualized return on avg. shareholders' equity10.23  10.24  9.04  10.14  8.50 
    Annualized return on avg. tangible shareholders' equity (2)14.64  14.79  13.30  14.63  12.61 
    Efficiency ratio (3)50.93  49.96  48.20  50.13  48.94 
    CORE ADJUSTED FINANCIAL RATIOS: (2)         
    Annualized return on average assets, as adjusted1.20% 1.23% 1.01% 1.19% 0.95%
    Annualized return on average shareholders' equity, as adjusted10.41  10.76  9.20  10.37  8.59 
    Annualized return on average tangible shareholders' equity, as adjusted14.90  15.54  13.53  14.97  12.75 
    Efficiency ratio, as adjusted49.16  46.64  46.62  48.12  47.53 
                   
     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30,
    ($ in thousands, except for share data)2021 2021 2020 2021 2020
    AVERAGE BALANCE SHEET ITEMS:         
    Assets$41,543,930  $41,161,459  $41,356,737  $41,144,375  $40,304,956 
    Interest earning assets 38,332,874   37,907,414   37,767,710   37,902,547   36,743,807 
    Loans 32,698,382   32,635,298   32,515,264   32,641,362   31,522,268 
    Interest bearing liabilities 25,354,160   25,469,526   27,062,790   25,588,185   26,934,738 
    Deposits 33,599,820   32,723,175   31,390,693   32,731,459   30,332,638 
    Shareholders' equity 4,794,843   4,708,797   4,530,671   4,718,960   4,472,447 
                        


     As Of
    BALANCE SHEET ITEMS:September 30, June 30, March 31, December 31, September 30,
    (In thousands)2021 2021 2021 2020 2020
    Assets$41,278,007  $41,274,228  $41,178,011  $40,686,076  $40,747,492 
    Total loans32,606,814  32,457,454  32,686,416  32,217,112   32,415,586 
    Deposits33,632,605  33,194,774  32,585,209  31,935,602   31,187,982 
    Shareholders' equity4,822,498  4,737,807  4,659,670  4,592,120   4,533,763 
                    
    LOANS:               
    (In thousands)               
    Commercial and industrial loans:               
    Commercial and industrial$4,761,227  $4,733,771  $4,784,017  $4,709,569  $4,625,880 
    Commercial and industrial PPP loans874,033  1,350,684  2,364,627  2,152,139   2,277,465 
    Total commercial and industrial5,635,260  6,084,455  7,148,644  6,861,708   6,903,345 
    Commercial real estate:               
    Commercial real estate17,912,070  17,512,142  16,923,627  16,724,998   16,815,587 
    Construction1,804,580  1,752,838  1,786,331  1,745,825   1,720,775 
    Total commercial real estate19,716,650  19,264,980  18,709,958  18,470,823   18,536,362 
    Residential mortgage4,332,422  4,226,975  4,060,492  4,183,743   4,284,595 
    Consumer:               
    Home equity402,658  410,856  409,576  431,553   457,083 
    Automobile1,563,698  1,531,262  1,444,883  1,355,955   1,341,659 
    Other consumer956,126  938,926  912,863  913,330   892,542 
    Total consumer loans2,922,482  2,881,044  2,767,322  2,700,838   2,691,284 
    Total loans$32,606,814  $32,457,454  $32,686,416  $32,217,112  $32,415,586 
                  
    CAPITAL RATIOS:             
    Book value per common share$11.32  $11.15  $10.97  $10.85  $10.71 
    Tangible book value per common share (2)7.78  7.59  7.39  7.25  7.12 
    Tangible common equity to tangible assets (2)7.95% 7.73% 7.55% 7.47% 7.32%
    Tier 1 leverage capital8.63  8.49  8.37  8.06  7.89 
    Common equity tier 1 capital10.06  10.04  10.08  9.94  9.71 
    Tier 1 risk-based capital10.73  10.73  10.79  10.66  10.42 
    Total risk-based capital13.24  13.36  12.76  12.64  12.37 
                   


     Three Months Ended Nine Months Ended
    ALLOWANCE FOR CREDIT LOSSES:September 30, June 30, September 30, September 30,
    ($ in thousands)2021 2021 2020 2021 2020
    Allowance for credit losses for loans         
    Beginning balance$353,724  $354,313  $319,723  $351,354  $164,604 
    Impact of the adoption of ASU 2016-13 (4)—  —  —  —  37,989 
    Allowance for purchased credit deteriorated (PCD) loans—  —  —  —  61,643 
    Beginning balance, adjusted353,724  354,313  319,723  351,354  264,236 
    Loans charged-off:         
    Commercial and industrial(1,248) (10,893) (13,965) (19,283) (31,349)
    Commercial real estate—  —  (695) (382) (766)
    Residential mortgage—  (1) (7) (139) (348)
    Total consumer(771) (1,480) (2,458) (3,389) (7,624)
    Total loans charged-off(2,019) (12,374) (17,125) (23,193) (40,087)
    Charged-off loans recovered:         
    Commercial and industrial514  678  428  2,781  1,796 
    Commercial real estate29  665  60  759  164 
    Construction—  —  40  4  80 
    Residential mortgage228  191  31  576  626 
    Total consumer955  1,474  1,151  3,359  2,454 
    Total loans recovered1,726  3,008  1,710  7,479  5,120 
    Net charge-offs(293) (9,366) (15,415) (15,714) (34,967)
    Provision for credit losses for loans3,496  8,777  31,020  21,287  106,059 
    Ending balance$356,927  $353,724  $335,328  $356,927  $335,328 
    Components of allowance for credit losses for loans:         
    Allowance for loan losses$342,527  $339,324  $325,032  $342,527  $325,032 
    Allowance for unfunded credit commitments14,400  14,400  10,296  14,400  10,296 
    Allowance for credit losses for loans$356,927  $353,724  $335,328  $356,927  $335,328 
    Components of provision for credit losses for loans:         
    Provision for credit losses for loans$3,496  $5,810  $30,833  $17,998  $105,709 
    Provision for unfunded credit commitments—  2,967  187  3,289  350 
    Total provision for credit losses for loans$3,496  $8,777  $31,020  $21,287  $106,059 
    Annualized ratio of total net charge-offs to average loans 0.00%  0.11%  0.19%  0.06%  0.15%
    Allowance for credit losses for loans as a % of total loans 1.09   1.09   1.03   1.09   1.03 
                        


     As of
    ASSET QUALITY:September 30, June 30, March 31, December 31, September 30,
    ($ in thousands)2021 2021 2021 2020 2020
    Accruing past due loans:         
    30 to 59 days past due:         
    Commercial and industrial$2,677  $3,867  $3,763  $6,393  $6,587 
    Commercial real estate22,956  40,524  11,655  35,030  26,038 
    Construction—  —  —  315  142 
    Residential mortgage9,293  8,479  16,004  17,717  22,528 
    Total consumer5,463  6,242  5,480  10,257  8,979 
    Total 30 to 59 days past due40,389  59,112  36,902  69,712  64,274 
    60 to 89 days past due:         
    Commercial and industrial985  1,361  1,768  2,252  3,954 
    Commercial real estate5,897  11,451  5,455  1,326  610 
    Construction—  —  —  —  — 
    Residential mortgage974  1,608  2,233  10,351  3,760 
    Total consumer1,617  985  1,021  1,823  1,352 
    Total 60 to 89 days past due9,473  15,405  10,477  15,752  9,676 
    90 or more days past due:         
    Commercial and industrial2,083  2,351  2,515  9,107  6,759 
    Commercial real estate1,942  1,948  —  993  1,538 
    Residential mortgage1,002  956  2,472  3,170  891 
    Total consumer325  463  417  271  753 
    Total 90 or more days past due5,352  5,718  5,404  13,541  9,941 
    Total accruing past due loans$55,214  $80,235  $52,783  $99,005  $83,891 
    Non-accrual loans:         
    Commercial and industrial$100,614  $102,594  $108,988  $106,693  $115,667 
    Commercial real estate95,843  58,893  54,004  46,879  41,627 
    Construction17,653  17,660  71  84  2,497 
    Residential mortgage33,648  35,941  33,655  25,817  23,877 
    Total consumer4,073  4,924  7,292  5,809  7,441 
    Total non-accrual loans251,831  220,012  204,010  185,282  191,109 
    Other real estate owned (OREO)3,967  4,523  4,521  5,118  7,746 
    Other repossessed assets1,896  2,060  1,857  3,342  3,988 
    Non-accrual debt securities—  —  129  815  783 
    Total non-performing assets$257,694  $226,595  $210,517  $194,557  $203,626 
    Performing troubled debt restructured loans$64,832  $64,080  $67,102  $57,367  $58,090 
    Total non-accrual loans as a % of loans0.77% 0.68% 0.62% 0.58% 0.59%
    Total accruing past due and non-accrual loans as a % of loans0.94% 0.93% 0.79% 0.88% 0.85%
    Allowance for losses on loans as a % of non-accrual loans136.01% 154.23% 168.07% 183.64% 170.08%
                   

    NOTES TO SELECTED FINANCIAL DATA

    (1) Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
    (2) This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides measures based on what it believes are its core operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.


     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30,
    ($ in thousands, except for share data)2021 2021 2020 2021 2020
    Adjusted net income available to common shareholders:         
    Net income, as reported$122,580  $120,512  $102,374  $358,802  $285,243 
    Add: Loss on extinguishment of debt (net of tax)—  6,024  1,691  6,024  1,691 
    Add: (Gains) losses on available for sale and held to maturity securities transactions (net of tax)(a)(565) 81  33  (399) 91 
    Add: Merger related expenses (net of tax)(b)1,207  —  76  1,207  1,275 
    Add: Litigation reserve (net of tax)(b)1,505  —  —  1,505  — 
    Net income, as adjusted$124,727  $126,617  $104,174  $367,139  $288,300 
    Dividends on preferred stock3,172  3,172  3,172  9,516  9,516 
    Net income available to common shareholders, as adjusted$121,555  $123,445  $101,002  $357,623  $278,784 
    __________         
    (a) Included in gains on securities transactions, net.  
    (b) Included in professional and legal fees.
     
    Adjusted per common share data:         
    Net income available to common shareholders, as adjusted$121,555  $123,445  $101,002  $357,623  $278,784 
    Average number of shares outstanding406,824,160  405,963,209  403,833,469  405,986,114  403,714,701 
    Basic earnings, as adjusted$0.30  $0.30  $0.25  $0.88  $0.69 
    Average number of diluted shares outstanding409,238,001  408,660,778  404,788,526  408,509,767  404,912,126 
    Diluted earnings, as adjusted$0.30  $0.30  $0.25  $0.88  $0.69 
    Adjusted annualized return on average tangible shareholders' equity:         
    Net income, as adjusted$124,727  $126,617  $104,174  $367,139  $288,300 
    Average shareholders' equity$4,794,843  $4,708,797  $4,530,671  4,718,960  4,472,447 
    Less: Average goodwill and other intangible assets1,446,760  1,449,388  1,451,889  1,449,285  1,456,536 
    Average tangible shareholders' equity$3,348,083  $3,259,409  $3,078,782  $3,269,675  $3,015,911 
    Annualized return on average tangible shareholders' equity, as adjusted14.90% 15.54% 13.53% 14.97% 12.75%
    Adjusted annualized return on average assets:         
    Net income, as adjusted$124,727  $126,617  $104,174  $367,139  $288,300 
    Average assets$41,543,930  $41,161,459  $41,356,737  $41,144,375  $40,304,956 
    Annualized return on average assets, as adjusted1.20% 1.23% 1.01% 1.19% 0.95%
                   


     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30,
    ($ in thousands)2021 2021 2020 2021 2020
    Adjusted annualized return on average shareholders' equity:         
    Net income, as adjusted$124,727  $126,617  $104,174  $367,139  $288,300 
    Average shareholders' equity$4,794,843  $4,708,797  $4,530,671  $4,718,960  $4,472,447 
    Annualized return on average shareholders' equity, as adjusted10.41% 10.76% 9.20% 10.37% 8.59%
    Annualized return on average tangible shareholders' equity:         
    Net income, as reported$122,580  $120,512  $102,374  $358,802  $285,243 
    Average shareholders' equity$4,794,843  $4,708,797  $4,530,671  4,718,960  4,472,447 
    Less: Average goodwill and other intangible assets1,446,760  1,449,388  1,451,889  1,449,285  1,456,536 
    Average tangible shareholders' equity$3,348,083  $3,259,409  $3,078,782  $3,269,675  $3,015,911 
    Annualized return on average tangible shareholders' equity14.64% 14.79% 13.30% 14.63% 12.61%
    Adjusted efficiency ratio:          
    Non-interest expense, as reported$174,922  $171,893  $160,185  $507,028  $473,007 
    Less: Loss on extinguishment of debt (pre-tax)—  8,406  2,353  8,406  2,353 
    Less: Merger-related expenses (pre-tax)1,287  —  106  1,287  1,774 
    Less: Amortization of tax credit investments (pre-tax)3,079  2,972  2,759  8,795  9,403 
    Less: Litigation reserve (pre-tax)2,100  —  —  2,100  — 
    Non-interest expense, as adjusted$168,456  $160,515  $154,967  $486,440  $459,477 
    Net interest income301,026  300,907  283,086  894,600  830,984 
    Non-interest income, as reported42,431  43,126  49,272  116,790  135,499 
    Add: (Gains) losses on available for sale and held to maturity securities transactions, net (pre-tax)(788) 113  46  (557) 127 
    Non-interest income, as adjusted$41,643  $43,239  $49,318  $116,233  $135,626 
    Gross operating income, as adjusted$342,669  $344,146  $332,404  $1,010,833  $966,610 
    Efficiency ratio, as adjusted49.16% 46.64% 46.62% 48.12% 47.53%
                   


     As of
     September 30, June 30, March 31, December 31, September 30,
    ($ in thousands, except for share data)2021 2021 2021 2020 2020
    Tangible book value per common share:         
    Common shares outstanding407,313,664  406,083,790  405,797,538  403,858,998  403,878,744 
    Shareholders' equity$4,822,498  $4,737,807  $4,659,670  $4,592,120  $4,533,763 
    Less: Preferred stock209,691  209,691  209,691  209,691  209,691 
    Less: Goodwill and other intangible assets1,444,967  1,447,965  1,450,414  1,452,891  1,449,282 
    Tangible common shareholders' equity$3,167,840  $3,080,151  $2,999,565  $2,929,538  $2,874,790 
    Tangible book value per common share$7.78  $7.59  $7.39  $7.25  $7.12 
    Tangible common equity to tangible assets:        
    Tangible common shareholders' equity$3,167,840  $3,080,151  $2,999,565  $2,929,538  $2,874,790 
    Total assets$41,278,007  $41,274,228  $41,178,011  $40,686,076  $40,747,492 
    Less: Goodwill and other intangible assets1,444,967  1,447,965  1,450,414  1,452,891  1,449,282 
    Tangible assets$39,833,040  $39,826,263  $39,727,597  $39,233,185  $39,298,210 
    Tangible common equity to tangible assets7.95% 7.73% 7.55% 7.47% 7.32%


    (3) The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income.
    (4) The adjustment represents an increase in the allowance for credit losses for loans as a result of the adoption of ASU 2016-13 effective January 1, 2020.
       

    SHAREHOLDERS RELATIONS
    Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valley.com.

    VALLEY NATIONAL BANCORP
    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    (in thousands, except for share data)

     September 30, December 31,
     2021 2020
      (Unaudited)  
    Assets   
    Cash and due from banks$304,912  $257,845 
    Interest bearing deposits with banks1,195,244  1,071,360 
    Investment securities:   
    Equity securities36,068  29,378 
    Trading debt securities4,797  — 
    Available for sale debt securities1,208,277  1,339,473 
    Held to maturity debt securities (net of allowance for credit losses of $1,075 at September 30, 2021 and $1,428 at December 31, 2020)2,583,328  2,171,583 
    Total investment securities3,832,470  3,540,434 
    Loans held for sale, at fair value157,084  301,427 
    Loans32,606,814  32,217,112 
    Less: Allowance for loan losses(342,527) (340,243)
    Net loans32,264,287  31,876,869 
    Premises and equipment, net319,763  319,797 
    Lease right of use assets258,180  252,053 
    Bank owned life insurance537,301  535,209 
    Accrued interest receivable98,073  106,230 
    Goodwill1,382,442  1,382,442 
    Other intangible assets, net62,525  70,449 
    Other assets865,726  971,961 
    Total Assets$41,278,007  $40,686,076 
    Liabilities   
    Deposits:   
    Non-interest bearing$10,789,237  $9,205,266 
    Interest bearing:   
    Savings, NOW and money market18,883,085  16,015,658 
    Time3,960,283  6,714,678 
    Total deposits33,632,605  31,935,602 
    Short-term borrowings783,346  1,147,958 
    Long-term borrowings1,427,444  2,295,665 
    Junior subordinated debentures issued to capital trusts56,326  56,065 
    Lease liabilities282,034  276,675 
    Accrued expenses and other liabilities273,754  381,991 
    Total Liabilities36,455,509  36,093,956 
    Shareholders’ Equity   
    Preferred stock, no par value; 50,000,000 authorized shares:   
    Series A (4,600,000 shares issued at September 30, 2021 and December 31, 2020)111,590  111,590 
    Series B (4,000,000 shares issued at September 30, 2021 and December 31, 2020)98,101  98,101 
    Common stock (no par value, authorized 650,000,000 shares; issued 407,317,006 shares at September 30, 2021 and 403,881,488 shares at December 31, 2020)142,976  141,746 
    Surplus3,672,467  3,637,468 
    Retained earnings818,780  611,158 
    Accumulated other comprehensive loss(21,375) (7,718)
    Treasury stock, at cost (3,342 common shares at September 30, 2021 and 22,490 common shares at December 31, 2020)(41) (225)
    Total Shareholders’ Equity4,822,498  4,592,120 
    Total Liabilities and Shareholders’ Equity$41,278,007  $40,686,076 
            

    VALLEY NATIONAL BANCORP
    CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
    (in thousands, except for share data)

     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30,
     2021 2021 2020 2021 2020
    Interest Income         
    Interest and fees on loans$309,753  $315,314  $315,788  $938,248  $970,739 
    Interest and dividends on investment securities:         
    Taxable14,292  12,716  14,845  40,174  56,225 
    Tax-exempt2,609  3,216  3,606  9,181  11,224 
    Dividends1,505  2,167  2,684  5,543  9,177 
    Interest on federal funds sold and other short-term investments642  235  420  1,101  2,296 
    Total interest income328,801  333,648  337,343  994,247  1,049,661 
    Interest Expense         
    Interest on deposits:         
    Savings, NOW and money market10,605  11,166  13,323  32,896  64,463 
    Time4,394  6,279  19,028  21,766  91,699 
    Interest on short-term borrowings1,464  1,168  2,588  4,390  9,275 
    Interest on long-term borrowings and junior subordinated debentures11,312  14,128  19,318  40,595  53,240 
    Total interest expense27,775  32,741  54,257  99,647  218,677 
    Net Interest Income301,026  300,907  283,086  894,600  830,984 
    Provision (credit) for credit losses for held to maturity securities35  (30) (112) (353) 688 
    Provision for credit losses for loans3,496  8,777  31,020  21,287  106,059 
    Net Interest Income After Provision for Credit Losses297,495  292,160  252,178  873,666  724,237 
    Non-Interest Income         
    Trust and investment services3,550  3,532  3,068  10,411  9,307 
    Insurance commissions1,610  2,637  1,816  5,805  5,426 
    Service charges on deposit accounts5,428  5,083  3,952  15,614  13,189 
    Gains (losses) on securities transactions, net787  375  (46) 1,263  (127)
    Fees from loan servicing2,894  3,187  2,551  8,980  7,526 
    Gains on sales of loans, net6,442  10,061  13,366  20,016  26,253 
    Gains on sales of assets, net344  232  894  380  716 
    Bank owned life insurance2,018  2,475  (1,304) 6,824  7,661 
    Other19,358  15,544  24,975  47,497  65,548 
    Total non-interest income42,431  43,126  49,272  116,790  135,499 
    Non-Interest Expense         
    Salary and employee benefits expense93,992  91,095  83,626  273,190  247,886 
    Net occupancy and equipment expense32,402  32,451  31,116  97,112  96,774 
    FDIC insurance assessment3,644  3,374  4,847  10,294  14,858 
    Amortization of other intangible assets5,298  5,449  6,377  16,753  18,528 
    Professional and legal fees13,492  7,486  8,762  27,250  22,646 
    Loss on extinguishment of debt—  8,406  2,353  8,406  2,353 
    Amortization of tax credit investments3,079  2,972  2,759  8,795  9,403 
    Telecommunication expense2,615  2,732  2,094  8,507  7,247 
    Other20,400  17,928  18,251  56,721  53,312 
    Total non-interest expense174,922  171,893  160,185  507,028  473,007 
    Income Before Income Taxes165,004  163,393  141,265  483,428  386,729 
    Income tax expense42,424  42,881  38,891  124,626  101,486 
    Net Income122,580  120,512  102,374  358,802  285,243 
    Dividends on preferred stock3,172  3,172  3,172  9,516  9,516 
    Net Income Available to Common Shareholders$119,408  $117,340  $99,202  $349,286  $275,727 
                        


     Three Months Ended Nine Months Ended
     September 30, June 30, September 30, September 30,
     2021 2021 2020 2021 2020
    Earnings Per Common Share:         
    Basic$0.29  $0.29  $0.25  $0.86  $0.68 
    Diluted0.29  0.29  0.25  0.86  0.68 
    Cash Dividends Declared per Common Share0.11  0.11  0.11  0.33  0.33 
    Weighted Average Number of Common Shares Outstanding:         
    Basic406,824,160  405,963,209  403,833,469  405,986,114  403,714,701 
    Diluted409,238,001  408,660,778  404,788,526  408,509,767  404,912,126 
                   

    VALLEY NATIONAL BANCORP
    Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
    Net Interest Income on a Tax Equivalent Basis

     Three Months Ended
     September 30, 2021 June 30, 2021 September 30, 2020
      Average   Avg.  Average   Avg.  Average   Avg.
    ($ in thousands) Balance Interest Rate  Balance Interest Rate  Balance Interest Rate
    Assets                 
    Interest earning assets:               
    Loans (1)(2)$32,698,382  $309,778  3.79% $32,635,298  $315,339  3.87% $32,515,264  $315,863  3.89%
    Taxable investments (3)3,302,803  15,797  1.91  3,159,842  14,883  1.88  3,354,373  17,529  2.09 
    Tax-exempt investments (1)(3)429,941  3,302  3.07  498,971  4,071  3.26  542,450  4,564  3.37 
    Interest bearing deposits with banks1,901,748  642  0.14  1,613,303  235  0.06  1,355,623  420  0.12 
    Total interest earning assets38,332,874  329,519  3.44  37,907,414  334,528  3.53  37,767,710  338,376  3.58 
    Other assets3,211,056      3,254,045      3,589,027     
    Total assets$41,543,930      $41,161,459      $41,356,737     
    Liabilities and shareholders' equity                 
    Interest bearing liabilities:                 
    Savings, NOW and money market deposits$18,771,619  $10,605  0.23% $17,784,985  $11,166  0.25% $14,542,470  $13,323  0.37%
    Time deposits4,126,253  4,394  0.43  4,609,778  6,279  0.54  8,027,346  19,028  0.95 
    Short-term borrowings860,474  1,464  0.68  873,927  1,168  0.53  1,533,246  2,588  0.68 
    Long-term borrowings (4)1,595,814  11,312  2.84  2,200,836  14,128  2.57  2,959,728  19,318  2.61 
    Total interest bearing liabilities25,354,160  27,775  0.44  25,469,526  32,741  0.51  27,062,790  54,257  0.80 
    Non-interest bearing deposits10,701,948      10,328,412      8,820,877     
    Other liabilities692,979      654,724      942,399     
    Shareholders' equity4,794,843      4,708,797      4,530,671     
    Total liabilities and shareholders' equity$41,543,930      $41,161,459      $41,356,737     
                      
    Net interest income/interest rate spread (5)  $301,744  3.00%   $301,787  3.02%   $284,119  2.78%
    Tax equivalent adjustment  (718)     (880)     (1,033)  
    Net interest income, as reported  $301,026      $300,907      $283,086   
    Net interest margin (6)    3.14      3.18      3.00 
    Tax equivalent effect    0.01      0.00      0.01 
    Net interest margin on a fully tax equivalent basis (6)    3.15%     3.18%     3.01%
                         

    _______________
    (1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
    (2) Loans are stated net of unearned income and include non-accrual loans.
    (3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
    (4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
    (5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
    (6) Net interest income as a percentage of total average interest earning assets.

    Contact:   Michael D. Hagedorn
    Senior Executive Vice President and
    Chief Financial Officer
    973-872-4885
       

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