Form 8-K VALLEY NATIONAL BANCORP For: Feb 08
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) | February 8, 2017 |
VALLEY NATIONAL BANCORP
(Exact Name of Registrant as Specified in Charter)
New Jersey | 1-11277 | 22-2477875 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||
1455 Valley Road, Wayne, New Jersey | 07470 | |
(Address of Principal Executive Offices) | (Zip Code) | |
Registrant’s telephone number, including area code (973) 305-8800 | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
INFORMATION TO BE INCLUDED IN THE REPORT
Item 7.01 | Regulation FD Disclosure |
Valley National Bancorp (the “Company”) is furnishing presentation materials included as Exhibit 99.1 to this report pursuant to Item 7.01 of Form 8-K. The Company is not undertaking to update this presentation. The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. This report will not be deemed an admission as to the materiality of any information herein (including Exhibit 99.1).
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits | |
99.1 | Valley National Bancorp presentation materials used for investor meetings during the first quarter of 2017. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 8, 2017 | VALLEY NATIONAL BANCORP | ||
By: | /s/ Ira D. Robbins | ||
Ira D. Robbins | |||
Senior Executive Vice President | |||
EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Valley National Bancorp presentation materials used for investor meetings during the first quarter of 2017. |
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender. © 2017 Valley National Bank®. Member FDIC. Equal Opportunity Lender. All Rights Reserved.
Investor Presentation
EXHIBIT 99.1
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
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 new and existing programs and
products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. 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: weakness or a decline in the U.S. economy, in particular in New Jersey, New York Metropolitan area
(including Long Island) and Florida as well as an unexpected decline in commercial real estate values within our market areas; less than expected cost savings
and revenue enhancement from Valley's cost reduction plans including its earnings enhancement program called "LIFT"; damage verdicts or settlements or
restrictions related to existing or potential litigations arising from claims of breach of fiduciary responsibility, negligence, fraud, contractual claims,
environmental laws, patent or trade mark infringement, and other matters; cyber 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 OCC, the FRB, the 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, require us to reimburse customers, change the way we do
business, or limit or eliminate certain other banking activities; changes in accounting policies or accounting standards, including the new authoritative
accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our allowance for credit losses after
adoption on January 1, 2020; higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in tax
laws, regulations and case law; government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies
and laws, including the interest rate policies of the Federal Reserve; unexpected changes in market interest rates for interest earning assets and/or interest
bearing liabilities; changes in investor sentiment or consumer spending savings behavior; our inability to pay dividends at current levels, or at all, because of
inadequate future earnings, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital
requirements (including those resulting from the U.S. implementation of Basel III requirements); less than expected cost savings from the maturity,
modification or prepayment of long-term borrowings that mature through 2022; further prepayment penalties related to the early extinguishment of high
cost borrowings; higher than expected loan losses within one or more segments of our loan portfolio; lower than expected cash flows from purchased credit-
impaired loans; unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused
by severe weather or other external events; 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; the failure of other financial institutions with whom we have
trading, clearing, counterparty and other financial relationships; and inability to retain and attract customers and qualified employees. 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, 2015. 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.
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Valley National Bancorp
• Traded on the New York
Stock Exchange (NYSE: VLY)
• Regional Bank Holding
Company
• Headquartered in Wayne,
New Jersey
• Founded in 1927
Overview of Valley National
Bancorp
Branches 209
ATMs 225
*Total employees reflects the full-time equivalent as of the date shown
Average Balance
Sheet & Other Items 4Q 2016
4Q 2015
Assets $22.7 billion $20.3 billion
Interest Earning Assets $20.4 billion $18.2 billion
Loans $16.8 billion $15.3 billion
Deposits $17.4 billion $15.5 billion
Shareholders’ Equity $2.3 billion $2.1 billion
Total Employees* 2,828 2,929
Branch Count 209 227
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Valley National Bancorp
*Data as of January 26, 2017
Since the Bank was founded in 1927, Valley has never produced a losing quarter
• Customer centric culture with experienced commercial lenders
• Superior credit quality
• Measured growth strategies
• Seasoned management team
• Operations in three (3) of the most heavily populated states
• Concentrated in affluent geographic markets
• Balanced institutional and retail stock ownership
• More than 246 institutional holders or 54% of all shares*
• Long-term investment approach
• Focus on cash dividends
• Large insider stock ownership including family members, retired
employees and retired directors
Shareholder
Focus
Demographic
Focus
Core
Focus
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Our 2020 Vision
5
NJ NY FL
Vision Statement
• A premier commercial banking franchise
with a diversified balance sheet
• Asset generator in three (3) of the best
markets on the East Coast
Strategic Focus
• Enhance noninterest revenue to deliver
solid performance in a challenging
environment
• Reduce operating expenses by utilizing
technology to enhance and streamline the
operations and delivery channels
• Expand the customer base by leveraging
current infrastructure with emphasis on
Florida to drive growth
Bank Profile
• Asset Size: Mid-Size Bank ($10 to 50 billion)
• Footprint: NJ / NY / FL
• Growth: Organic / Opportunistic
Acquisitions
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
New York & New Jersey Franchise
178 Branches
Loans Deposits
16 Counties
Core Demographic
Overview
NJ Core
Market(1)
New York
City(2)
Long
Island
U.S.A.
Avg. Pop. / Sq. Mile 6,079 40,520 3,147 91
Avg. Household Income $103,362 $91,385 $120,590 $77,135
Avg. Deposits / Branch $120,448 $741,283 $137,345 $113,614
VLY Deposits $8.8 billion $2.3 billion $1.1 billion $16.4 billion
VLY Deposit Market Share 6.34% 0.21% 0.92% 0.15%
(1)NJ Core Market includes Passaic, Morris, Hudson, Essex and Bergen Counties
(2)New York City includes Brooklyn, Queens and Manhattan; Demographic and deposit data for 2016
NY & NJ
89%
NY & NJ
85%
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Florida Franchise
FL
11%
Loans
FL
15%
Deposits
31 Branches
14 Counties
Core Demographic
Overview
Central
Tampa(1)
Central
Orlando(2)
Southeast(3) Florida
Avg. Pop. / Sq. Mile 2,219 1,101 1,308 379
Avg. Household Income $69,745 $65,894 $72,350 $67,858
Avg. Deposits / Branch $115,137 $93,911 $146,160 $94,918
VLY Deposits $0.1 billion $0.5 billion $1.4 billion $2.5 billion
VLY Deposit Market Share 0.17% 1.10% 0.62% 0.50%
(1)Central Tampa includes Pinellas & Hillsborough Counties (2)Central Orlando includes Orange, Brevard & Indian River Counties (3)Southeast includes Palm Beach, Broward &
Miami-Dade Counties; Demographic and deposit data for 2016
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender. 8
Valley’s 4Q 2016 Highlights
Loan Growth for Select Portfolios(1) Financial Highlights
• Net interest income of $166.6 million increased $10.3
million from the previous quarter
• Net interest margin of 3.27 percent up 13 bps from the
previous quarter
• Cost of funds declined 3 bps to 0.73 percent in the
quarter partly due to previous modifications of high-
cost borrowings
• Loans increased $602.0 million or 14.5 percent on an
annualized basis from the previous quarter
• Noninterest income increased 31 percent or $7.8
million to $32.7 million compared to the prior quarter
Operating Efficiency
• Efficiency ratio improved further to ~59 percent3
• Announced LIFT – an earnings enhancement initiative
to identify additional expense reduction opportunities
Credit Quality
• NPAs decreased 3.1 percent to $49.4 million from the
prior quarter
• Recognized $110 thousand in net loan charge-offs
4%
17%
9%
7%
Commercial &
Industrial
CRE Construction Total Loans
1.22%
0.22%
2013 2014 2015 2016
Non-Performing Assets to Total Assets(2)
(1)Loan growth is the change from December 31, 2015 to December 31, 2016; (2)Excludes purchase credit impaired loans
(3) Refer to the disclosure in the appendix regarding the calculation for the efficiency ratio
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender. 9
Diversified Funding Sources
Deposit Growth Trend ($, in billions)
11.4
14.3
16.3
17.7
2013 2014 2015 2016
Interest Bearing Non-Interest Bearing
16% CAGR
Betas & Change in Duration Indicate Less Sensitivity to Increase in Rates
Other
Deposits
30%
Continued focus on maintaining an attractive, stable funding base with less sensitivity to changes in rates
Attractive Deposit Composition (4Q 2016)
Business
Non-Interest
21%
Retail Non-Interest, 9%
Retail MMDA, 8%
Business MMDA, 11%
Beta
Duration (in years)
No Change +100bps +200bps
Business MMDA 0.240 5.38 5.23 5.05
Retail MMDA 0.488 5.43 5.25 5.06
Savings & IRA 0.125 5.77 5.61 5.44
NOW ex Government 0.312 8.15 7.93 7.70
Non-interest bearing 0.000 6.25 6.10 5.92
Total (weighted avg) 0.160 6.11 5.95 5.77
NOW ex Government, 11%
Savings & IRA, 11%
Note: Figures may not total to one hundred percent due to rounding
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender. 10
LIFT: Earnings Enhancement Program
ROAA: Improving our operating results Program Highlights
Remain focused on our efficiency ratio(1) 2017 Key Milestones
• Leveraging industry respected consultant
EHS Partners LLC
– Prior experience with major financial services
companies
• Scope of engagement
– Identify additional areas for operating
expense reduction
– Seek revenue enhancement opportunities
• Announced LIFT program in December 2016
• Planning & discovery phase of the process
has commenced and scheduled for
completion in 1H 2017
• Implementation phase will begin soon
thereafter
• Recognize majority of benefits beginning
in 2018
0.53
0.76
2015 2016 2017 2018 2019 Long-Term
Goal
66
62
2015 2016 2017 2018 2019 Long-Term
Goal
(1)Refer to the disclosure in the appendix regarding the calculation for the efficiency ratio
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Average Net Charge-Offs to Loans by Category
0.07%
0.47%
0.26%
0.06% 0.07%
0.42%
0.19%
0.29%
1.15%
1.59%
0.45%
0.52%
1.37%
0.71%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
CRE C&I C&D Residential Home Equity Consumer Total
Valley National Bancorp
Peer Group ($10 to $50 billion in assets)
Data as of January 27, 2017
Peer group inc udes banks between $10 billion and $50 billion in assets
Average net charge-offs from 2003 through 2016 well anchored below peers
demonstrating Valley’s prudent risk management practices
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Capital Strength
1
0
8
.4
1
0
7.
7
1
1
0
.4
1
1
2
.9
1
1
6
.6
1
1
7
.0
1
1
4
.2
1
1
0
.5
1
0
6
.3
9
9
.3
50
60
70
80
90
100
110
120
12/31/15 3/31/16 6/30/16 9/30/16 12/31/16
Allowance for Credit Loss Fair Value Adjustment
Millions
0.68% 0.67% 0.67% 0.68% 0.68%
0.73% 0.71% 0.67% 0.64% 0.58%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
12/31/15 3/31/16 6/30/16 9/30/16 12/31/16
Allowance for Credit Loss Fair Value Adjustment
1
2
.4
3
%
1
2
.0
2
%
1
1
.79
%
1
1
.6
9
%
1
1
.6
4
%
1
2
.1
5
%
9
.9
3
%
9
.7
2
%
9
.4
6
%
9
.3
9
%
9.3
6
%
9
.9
0
%
9
.1
8
%
9
.0
1
%
8
.8
1
%
8
.7
4
%
8
.7
3
%
9
.2
7
%
4%
6%
8%
10%
12%
9/30/15 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16
Total RBC Tier 1 CET1
• Raised $106.4 million in secondary
offering in December 2016
• Net proceeds will be used to support
continued strong loan growth
PCI Fair Value Adjustment & ACL* PCI FVA & ACL as Percent of Total Loans
Bancorp Regulatory Capital Ratios Capital Highlights
*Allowance for credit losses (ACL)
Purchased credit impaired (PCI) loans; Fair value adjustment (FVA); Allocated by pool and cannot be utilized across pools
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Valley National Bancorp
Appendix
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Diversified Portfolio
Commercial
Real Estate,
51%
Residential
Mortgages,
17%
Commercial
Loans, 15% Auto Loans,
7%
Other
Consumer,
6%
Construction,
5%
(1)Capital is defined as regulatory tier I capital at the Bank plus the allowance for loan and lease losses
Loan Portfolio as a Percent of Capital Composition of Loan Portfolio ($17.2 billion)
Loan Portfolio
Percent of
Capital, % (1)
Commercial Real Estate 454
Residential Mortgage 149
Commercial 137
Automobile 59
Other Consumer 30
Construction 43
Note: Figures may not total to one hundred percent due to rounding
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Total Commercial Real Estate - $8.7 Billion
(Includes both Covered and Non-Covered Loans)
19%
13%
12%
11%
12%
4%
4%
3%
2% 1%
19%
-Average LTV based on current balances and most recent appraised value.
-The total CRE loan balance is based on Valley’s internal loan hierarchy structure and does not reflect loan classifications reported in Valley’s SEC and bank regulatory reports.
-The chart above does not include $737 Million in Construction loans. Construction composition displayed separately in presentation.
Commercial Real Estate
15
As of December 31, 2016
Primary Property Type
$ Amount
(Millions) % of Total
Avg
2012 4Q
Avg LTV LTV
Retail 1,661 19% 53% 50%
Apartments 1,636 19% 60% 37%
Mixed Use 1,119 13% 54% 44%
Coop Mortgages 1,043 12% 11% N/A
Industrial 984 11% 53% 51%
Office 1,017 12% 54% 50%
Healthcare 365 4% 53% 59%
Specialty 340 4% 46% 49%
Other 225 3% 45% 40%
Residential 204 2% 56% 51%
Land Loans 116 1% 60% 64%
Total $8,710 100% 50%
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Total Retail Property Types - $1.7 Billion
28%
27%
23%
7%
6%
5%
3%
1%
-Average LTV based on current balances and most recent appraised value
-The chart above excludes construction loans. Construction composition displayed separately in presentation
Composition of CRE Retail
16
As of December 31, 2016
Retail Property Type
% of Avg
2012 4Q
Avg LTV Total LTV
Single Tenant 28% 53% 51%
Multi-Tenanted - Anchor 27% 54% 51%
Multi-Tenanted – No
Anchor
23% 55% 53%
Auto Dealership 7% 50% 49%
Other 6% N/A N/A
Food Establishments 5% 53% 54%
Entertainment Facilities 3% 47% 54%
Auto Servicing 1% 48% 48%
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
33%
21%
14%
17%
7%
3%
3%
2%
Composition of Construction
17
Total Construction Loans - $737 Million
-Construction loan balance is based on Valley’s internal loan hierarchy structure and does not reflect loan
classifications reported in Valley’s SEC and bank regulatory reports.
As of December 31, 2016
Primary Property Type $ Amount
(Millions)
% of
Total
2012 4Q
% of Total
Apartments 241 33% 16%
Mixed Use 155 21% 10%
Land Loans 100 14% 12%
Residential 124 17% 32%
Retail 50 7% 19%
Healthcare 25 3% 3%
Other 23 3% 5%
Specialty 19 2% 3%
Total $737 100%
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
Operating Efficiency
Calculation for efficiency ratio
Three Months Ended Twelve Months Ended
($, thousands)
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
December 31,
2015
December 31,
2016
December 31,
2015
Net Interest Income 164,395 154,146 151,455 148,153 148,046 618,149 550,269
Noninterest Revenue 32,660 24,853 24,264 21,448 24,039 103,225 83,803
less: net gain on sale of residential mortgages 7,500
-
-
-
- 7,500
-
Net Revenue 189,555 178,999 175,719 169,601 172,085 713,874 634,072
Noninterest Expense 124,829 113,268 119,803 118,225 174,893 476,125 499,075
less: amortiziaton of tax credits 13,384 6,450 7,646 7,264 13,081 34,744 27,312
less: loss on extinguishment of debt
-
-
-
- 51,129
315 51,129
Total Noninterest Expense 111,445 106,818 112,157 110,961 110,683 441,066 420,634
Efficiency Ratio 58.79% 59.68% 63.83% 65.42% 64.32% 61.78% 66.34%
© 2010 Valley National Bank. Member FDIC. Equal Opportunity Lender.
For More Information
Log onto our web site: www.valleynationalbank.com
E-mail requests to: [email protected]
Call Shareholder Relations at: (973) 305-3380
Write to: Valley National Bank
1455 Valley Road
Wayne, New Jersey 07470
Attn: Tina Cortes, Shareholder Relations Specialist
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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