Valley National (NYSE: VLY) reported Q2 EPS of $0.21, $0.01 worse than the analyst estimate of $0.22. Revenue for the quarter came in at $210.75 million versus the consensus estimate of $244.38 million.

Key financial highlights for the second quarter:

• Loan Portfolio: Loans increased $681.9 million, or 12.1 percent on an annualized basis, to approximately $23.2 billion at June 30, 2018 from March 31, 2018. The increase was largely due to solid organic loan growth within most loan categories. Additionally, we sold approximately $195 million of residential mortgage loans resulting in pre-tax gains of $7.6 million during the second quarter of 2018.
• Net Interest Income: Net interest income on a tax equivalent basis of $212.3 million for the second quarter of 2018 increased $3.1 million as compared to the first quarter of 2018 largely due to our new loan volumes and growth through the first six months of 2018.
• Provision for Credit Losses: The provision for credit losses declined $3.8 million to $7.1 million for the second quarter of 2018 as compared to the first quarter of 2018. For the second quarter of 2018, the level of the provision was mainly driven by the organic loan growth and a $3.3 million increase in reserves related to impaired taxi medallion loans at June 30, 2018.
• Credit Quality: Net loan charge-offs totaled only $692 thousand for the second quarter of 2018 as compared to net recoveries in the three consecutive prior quarters. Net recoveries totaled $612 thousand for the six months ended June 30, 2018. Non-accrual loans represented 0.36 percent of total loans at June 30, 2018.
• Net Interest Margin: Our net interest margin on a tax equivalent basis of 3.11 percent for the second quarter of 2018 decreased by 2 basis points from 3.13 percent for the first quarter of 2018. See the \"Net Interest Income and Margin\" section below for more details.
• Non-interest Income: Non-interest income increased $5.8 million, or 18.0 percent, to $38.1 million for the second quarter of 2018 as compared to the first quarter of 2018 largely due to increased fee income from derivative interest rate swaps executed with commercial loan customers and higher net gains on sales of loans.
• Non-interest Expense: Non-interest expense decreased $23.8 million, or 13.7 percent, to $149.9 million for the second quarter of 2018 as compared to the first quarter of 2018 primarily due to lower merger charges and litigation reserve related expenses.
• Performance Ratios: Annualized return on average assets (ROA), shareholders\' equity (ROE) and tangible ROE were 0.98 percent, 8.88 percent and 13.76 percent for the second quarter of 2018, respectively. Annualized ROA, ROE and tangible ROE, adjusted for infrequent charges, was 1.01 percent, 9.17 percent and 14.21 percent for the second quarter of 2018, respectively.
• Efficiency Ratio: Our efficiency ratio was 60.25 percent for the second quarter of 2018 as compared to 72.44 percent and 61.57 percent for the first quarter of 2018 and second quarter of 2017, respectively. Excluding merger expense, amortization of tax credit investments and litigation reserve expense, if applicable, included in non-interest expense, our adjusted efficiency ratio was 57.15 percent for the second quarter of 2018 as compared to 60.23 percent and 57.58 percent for the first quarter of 2018 and second quarter of 2017, respectively. See the \"Consolidated Financial Highlights\" tables below for additional information regarding this non-GAAP measure.
• Income Tax Expense: The effective tax rate was 20.7 percent for the second quarter of 2018 as compared to 23.9 percent for the first quarter of 2018. The decline in the effective tax rate was largely attributable to a $2 million charge included in income tax expense for the first quarter of 2018 related to effect of the USAB acquisition on our state deferred tax assets. For the remainder of 2018, we currently estimate that our effective tax rate will range from 21 percent to 23 percent.

Ira Robbins, CEO and President commented, "We continue to make significant progress towards reshaping the future of Valley. Our many efforts to enhance growth at the Bank are taking hold and we are seeing greater traction in obtaining new clientele and talent alike. We successfully completed the USAB systems conversion during the quarter and fully integrated the USAmeriBank operations into Valley National Bank. I am proud of the incredible amount of progress that Valley and its employees have achieved over the past six months, and I look forward to what the future brings."

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