Valley National Bancorp Reports Second Quarter 2022 Earnings With Strong Organic Loan Growth, Net Interest Income and Margin
07/28/2022 - 07:00 AM
NEW YORK, July 28, 2022 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY ), the holding company for Valley National Bank, today reported net income for the second quarter 2022 of $96.4 million , or $0.18 per diluted common share, as compared to the second quarter 2021 earnings of $120.5 million , or $0.29 per diluted common share, and net income of $116.7 million , or $0.27 per diluted common share, for the first quarter 2022.
Our second quarter 2022 results reflect the impact of the April 1, 2022 acquisition of Bank Leumi USA and include $95.5 million pre-tax ($69.4 million after-tax), or $0.14 per diluted share, of merger-related expenses and initial non-purchased credit deteriorated (non-PCD) provision. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $165.8 million , or $0.32 per diluted common share, for the second quarter 2022, $126.6 million , or $0.30 per diluted common share, for second quarter 2021, and $120.3 million , or $0.28 per diluted common share, for the first quarter 2022. See further details below, including a reconciliation of our non-GAAP adjusted net income in the "Consolidated Financial Highlights" tables.
Key financial highlights for the second quarter:
Acquisition of Bank Leumi Le-Israel Corporation. On April 1, 2022, Valley completed its acquisition of Bank Leumi Le-Israel Corporation, the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, and collectively referred to as "Bank Leumi USA". At the acquisition date, Bank Leumi USA had approximately $8.1 billion in assets, $5.9 billion of loans and $7.0 billion of deposits, after purchase accounting adjustments. Valley issued approximately 85 million shares of common stock and paid $113.4 million in cash in the transaction. The consideration for the acquisition totaled approximately $1.2 billion , inclusive of the value of stock options. The transaction resulted in $403.2 million of goodwill and $153.4 million of core deposit and other intangible assets subject to amortization.Loan Portfolio: Total loans increased $8.2 billion to $43.6 billion at June 30, 2022 from March 31, 2022 primarily due to $5.9 billion of loans acquired from Bank Leumi and strong organic loan growth. Excluding acquired loans from Bank Leumi USA, our loan portfolio increased 26 percent on an annualized basis during the second quarter 2022 as a result of strong commercial loan volumes and a continued uptick in new residential mortgage loans originated for investment rather than sale. We sold approximately $125 million of residential mortgage loans resulting in total pre-tax gains of $3.6 million in the second quarter 2022. See the "Loans, Deposits and Other Borrowings" section below for more details.Net Interest Income and Margin: Net interest income on a tax equivalent basis of $419.6 million for the second quarter 2022 increased $101.2 million and $117.8 million as compared to the first quarter 2022 and second quarter 2021, respectively, reflecting our acquisition of Bank Leumi USA, continued organic loan growth and a well-positioned balance sheet in the current rising interest rate environment. Our net interest margin on a tax equivalent basis continued to be strong and increased by 27 basis points to 3.43 percent in the second quarter 2022 as compared to 3.16 percent for the first quarter 2022. See the "Net Interest Income and Margin" section below for more details.Allowance and Provision for Credit Losses for Loans : The allowance for credit losses for loans totaled $491.0 million and $379.3 million at June 30, 2022 and March 31, 2022, respectively, representing 1.13 percent and 1.07 percent of total loans at each respective date. During the second quarter 2022, the provision for credit losses for loans totaled $43.7 million as compared to $3.5 million and $8.8 million for the first quarter 2022 and second quarter 2021, respectively. The second quarter 2022 provision included a $41.0 million related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.Credit Quality: Total accruing past due loans decreased $19.3 million to $73.5 million , or 0.17 percent of total loans, at June 30, 2022 as compared to $92.8 million , or 0.26 percent of total loans, at March 31, 2022. Non-accrual loans represented 0.72 percent and 0.65 percent of total loans at June 30, 2022 and March 31, 2022, respectively. See the "Credit Quality" section below for more details.Non-Interest Income: Non-interest income increased $19.3 million to $58.5 million for the second quarter 2022 as compared to the first quarter 2022 mainly driven by increases in several categories including wealth management and trust fees, service charges on deposit accounts and other income totaling $4.4 million , $3.9 million and $6.0 million , respectively. These increases were primarily due to the acquisition of Bank Leumi USA. Net gains on sales of residential mortgage loans also increased $2.6 million to $3.6 million for the second quarter 2022 as compared with the first quarter 2022.Non-Interest Expense: Non-interest expense increased $102.4 million to $299.7 million for the second quarter 2022 as compared to the first quarter 2022. The increase was largely due to $54.5 million of merger expenses incurred during the second quarter 2022 and our expanded banking operations resulting from the Bank Leumi USA acquisition. Merger expenses were mainly reported within salary and employee benefits, professional and legal fees, and other expense (largely consisting of technology related costs) totaling $28.0 million , $11.2 million and $15.3 million , respectively. Amortization of intangible assets increased $7.0 million as compared to first quarter 2022 mostly due to additional core deposit and other intangible assets resulting from the Bank Leumi USA acquisition.Efficiency Ratio: Our efficiency ratio was 50.78 percent for the second quarter 2022 as compared to 53.18 percent and 46.64 percent for the first quarter 2022 and second quarter 2021, 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 0.72 percent, 6.18 percent, and 9.33 percent for the second quarter 2022, respectively. Annualized ROA, ROE, and tangible ROE, adjusted for non-core charges, were 1.25 percent, 10.63 percent and 16.05 percent for the second quarter 2022, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.Ira Robbins, CEO commented, "Our exceptional commercial loan growth and the acquisition of Bank Leumi USA combined with a supportive interest rate environment propelled our strong core operating results during the quarter. Our net interest margin on a tax equivalent basis increased 27 basis points as compared to the first quarter 2022 reflecting the expected benefit of higher interest rates on our asset sensitive balance sheet and our ability to manage overall funding costs with modest deposit betas during the quarter. On an organic basis, Valley continues to grow existing relationships and attract new clients by offering premier advisory expertise and service across our diverse business lines. Our underwriting criteria remain consistent with the Valley legacy that has driven solid credit metrics across various economic environments.”
Mr. Robbins continued, “We are thrilled with the early returns on the Bank Leumi USA acquisition during the second quarter 2022. Commercial loan growth and synergies from the merged Leumi and Valley banker teams have been strong, and differentiated deposit niches have further enhanced our core funding capabilities. As we continue to integrate this recent acquisition and leverage our combined infrastructure, Valley is poised to remain one of the premier full-service commercial banks in the country.”
Net Interest Income and Margin
Net interest income on a tax equivalent basis totaling $419.6 million for the second quarter 2022 increased $101.2 million as compared to the first quarter 2022 and increased $117.8 million from the second quarter 2021. Interest income on a tax equivalent basis in the second quarter 2022 increased $113.2 million to $454.4 million as compared to the first quarter 2022. The increase was mostly due to higher average loan balances driven both by acquired and organic loans and increased yields on both new originations and adjustable rate loans in our portfolio. Interest expense of $34.8 million for the second quarter 2022 increased $12.0 million as compared to the first quarter 2022 largely due to a moderate increase in interest rates on both non-maturity deposits and short-term borrowings, as well as interest expense related to deposits and borrowings assumed in the Bank Leumi USA acquisition.
Our net interest margin on a tax equivalent basis of 3.43 percent for the second quarter 2022 increased by 27 basis points and 25 basis points from 3.16 percent and 3.18 percent for the first quarter 2022 and second quarter 2021, respectively. The yield on average interest earning assets increased by 33 basis points on a linked quarter basis mostly due to the aforementioned higher yields on new and adjustable rate loans in the second quarter 2022 as compared to the first quarter 2022. The yield on average loans increased by 24 basis points to 3.91 percent for the second quarter 2022 as compared to the first quarter 2022 largely due to the higher level of market interest rates. The yields on average taxable and non-taxable investments also increased 39 basis points and 67 basis points, respectively, from the first quarter 2022 largely due to interest income, including discount accretion, on investment securities acquired from Bank Leumi USA. The overall cost of average interest bearing liabilities increased 12 basis points to 0.47 percent for the second quarter 2022 as compared to the first quarter 2022. The increase was mainly due to moderately higher pricing of non-maturity deposits combined with greater utilization of brokered deposits and short-term borrowings in our loan funding mix during the second quarter 2022. Our cost of total average deposits only increased to 0.19 percent for the second quarter 2022 from 0.14 percent for the first quarter 2022.
Loans, Deposits and Other Borrowings
Loans . Loans increased $8.2 billion to approximately $43.6 billion at June 30, 2022 from March 31, 2022 largely due to a combination of $5.9 billion of acquired loans from Bank Leumi USA and strong organic loan growth. Excluding the Bank Leumi USA acquired loans, commercial and industrial, total commercial real estate (including construction) and residential mortgage loans increased 26 percent, 26 percent and 25 percent, respectively, on an annualized basis during the second quarter 2022. SBA Paycheck Protection Program (PPP) loans within the commercial and industrial category totaled $136.0 million at June 30, 2022 compared to $203.6 million at March 31, 2022. Strong organic loan production continued to be experienced across most of our geographic footprints and was further strengthened by the Bank Leumi acquisition on April 1, 2022. Residential mortgage loans increased $313.1 million during the second quarter 2022 primarily due to new loan activity in the purchased home market and an increase in such loans originated for investment rather than sale. Residential mortgage loans acquired from Bank Leumi USA were not material. Residential mortgage loans held for sale at fair value totaled $18.3 million and $77.6 million at June 30, 2022 and March 31, 2022, respectively.
Deposits. $8.2 billion to approximately $43.9 billion at June 30, 2022 from March 31, 2022 mostly due to $7.0 billion of assumed deposits from Bank Leumi USA, continued growth in our commercial niches and our increased utilization of brokered deposits, consisting of money market and time deposit accounts, in our funding mix. Total brokered deposits increased to $2.3 billion at June 30, 2022 as compared to $1.2 billion at March 31, 2022. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 37 percent, 54 percent and 9 percent of total deposits as of June 30, 2022, respectively, as compared to 33 percent, 57 percent and 10 percent of total deposits as of March 31, 2022, respectively.
Other Borrowings. $1.0 billion to $1.5 billion at June 30, 2022 as compared to March 31, 2022 largely due to additional FHLB advances, including approximately $103.8 million assumed from Bank Leumi USA, partially offset by a $125 million decrease in federal funds purchased at June 30, 2022. Long-term borrowings totaled $1.4 billion at June 30, 2022 and remained relatively unchanged from March 31, 2022.
Credit Quality
Non-Performing Assets (NPAs). $82.1 million to $314.7 million at June 30, 2022 as compared to March 31, 2022 mostly due to $70.5 million of acquired non-accrual loans from Bank Leumi USA. Non-accrual commercial and industrial loans include an additional $43.0 million borrower relationship with related reserves of $22.0 million within the allowance for loan losses at June 30, 2022 as compared to March 31, 2022. Non-accrual loans represented 0.72 percent of total loans at June 30, 2022 compared to 0.65 percent at March 31, 2022.
Non-performing Taxi Medallion Loan Portfolio. $80.4 million within the non-accrual commercial and industrial loan category at June 30, 2022. At June 30, 2022, all taxi medallion loans were on non-accrual status and had related reserves of $55.3 million , or 68.8 percent of such loans, within the allowance for loan losses.
Accruing Past Due Loans. $19.3 million to $73.5 million , or 0.17 percent of total loans, at June 30, 2022 as compared to $92.8 million , or 0.26 percent of total loans at March 31, 2022. Commercial real estate loans past due 30 to 59 days and 60 to 89 days decreased $20.3 million and $5.7 million , respectively, at June 30, 2022 as compared to March 31, 2022. The decreases were mainly due to two loans of $13.2 million and $6.0 million that were included in the respective delinquency categories at March 31, 2022 that were reported as non-accrual and current loans, respectively, as of June 30, 2022. Commercial and industrial loans past due 60 to 89 days also decreased $10.6 million as compared to March 31, 2022, largely due to the migration of loans totaling $8.8 million to the 90 days or more past due category at June 30, 2022. All loans 90 days or more past due and still accruing interest are considered well-secured and in the process of collection.
Allowance for Credit Losses for Loans and Unfunded Commitments.
June 30, 2022 March 31, 2022 June 30, 2021 Allocation Allocation Allocation as a % of as a % of as a % of Allowance Loan Allowance Loan Allowance Loan Allocation Category Allocation Category Allocation Category ($ in thousands) Loan Category: Commercial and industrial loans $ 144,539 1.70 % $ 101,203 1.75 % $ 109,689 1.80 % Commercial real estate loans: Commercial real estate 227,457 0.97 189,927 0.96 % 168,220 0.96 Construction 49,770 1.47 30,022 1.38 % 20,919 1.19 Total commercial real estate loans 277,227 1.03 219,949 1.00 % 189,139 0.98 Residential mortgage loans 29,889 0.60 28,189 0.60 % 25,303 0.60 Consumer loans: Home equity 3,907 0.91 3,656 0.93 % 4,602 1.12 Auto and other consumer 13,257 0.49 9,513 0.37 % 10,591 0.43 Total consumer loans 17,164 0.55 13,169 0.45 % 15,193 0.53 Allowance for loan losses 468,819 1.08 362,510 1.03 % 339,324 1.05 Allowance for unfunded credit commitments 22,144 16,742 14,400 Total allowance for credit losses for loans $ 490,963 $ 379,252 $ 353,724 Allowance for credit losses for loans as a % total loans 1.13 % 1.07 % 1.09 %
Our loan portfolio, totaling $43.6 billion at June 30, 2022, had net loan charge-offs totaling $2.3 million (excluding $62.4 million of immediate PCD loan charge-offs related to the Bank Leumi USA acquisition) for the second quarter 2022 as compared to net recoveries of $50 thousand for the first quarter 2022 and net loan charge-offs of $9.4 million for the second quarter 2021. Gross loan charge-offs of taxi medallion loans totaled $2.7 million for the second quarter 2022 as compared to $1.4 million during the second quarter 2021. There were no charge-offs of taxi medallion loans in the first quarter 2022.
During the second quarter 2022, the provision for credit losses for loans totaled $43.7 million as compared to $3.5 million and $8.8 million for the first quarter 2022 and second quarter 2021, respectively. The increase in the second quarter 2022 provision as compared to the first quarter 2022 was primarily due to $41.0 million of provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA. Overall, an increased economic forecast reserve component of our CECL model was largely offset by lower expected quantitative loss experience at June 30, 2022 as compared to March 31, 2022.
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 1.13 percent at June 30, 2022 as compared to 1.07 percent and 1.09 percent at March 31, 2022 and June 30, 2021, respectively. The allowance for credit losses increased $111.7 million at June 30, 2022 as compared to March 31, 2022 due, in large part, to a $70.3 million net allowance for credit losses for loans recorded for PCD loans acquired from Bank Leumi USA at the April 1, 2022 acquisition date and $41.0 million included in our second quarter 2022 provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA.
Capital Adequacy
Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 11.53 percent, 9.06 percent, 9.54 percent, and 8.33 percent, respectively, at June 30, 2022.
Investor Conference Call
Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Daylight Savings Time, today to discuss the second quarter 2022 earnings and related matters.
Those wishing to participate should preregister using this link: https://register.vevent.com/register/BIab2b17746c8a4a81a1ef7f9715060746 www.valley.com
About Valley
As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $54 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations and commercial banking offices across New Jersey, New York, Florida, Alabama, California, and Illinois, 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
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. 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:
the inability to realize expected cost savings and synergies from the Bank Leumi USA acquisition in amounts or in the timeframe anticipated; greater than expected costs or difficulties relating to Bank Leumi USA integration matters; the inability to retain customers and qualified employees of Bank Leumi USA; greater than expected non-recurring charges related to the Bank Leumi USA acquisition; the continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment, supply chain interruptions 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 and new variants of COVID-19 may arise in our primary markets; continued deterioration in general business and economic conditions or turbulence in domestic or global financial 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, Alabama, California, and Illinois, 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, 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.
Contact: Michael D. Hagedorn Senior Executive Vice President and Chief Financial Officer 973-872-4885
VALLEY NATIONAL BANCORP CONSOLIDATED FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL DATA
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, ($ in thousands, except for share data) 2022 2022 2021 2022 2021 FINANCIAL DATA: Net interest income - FTE(1) $ 419,565 $ 318,363 $ 301,787 $ 737,927 $ 595,371 Net interest income $ 418,160 $ 317,669 $ 300,907 $ 735,829 $ 593,574 Non-interest income 58,533 39,270 43,126 97,803 74,359 Total revenue 476,693 356,939 344,033 833,632 667,933 Non-interest expense 299,730 197,340 171,893 497,070 332,106 Pre-provision net revenue 176,963 159,599 172,140 336,562 335,827 Provision for credit losses 43,998 3,557 8,747 47,555 17,403 Income tax expense 36,552 39,314 42,881 75,866 82,202 Net income 96,413 116,728 120,512 213,141 236,222 Dividends on preferred stock 3,172 3,172 3,172 6,344 6,344 Net income available to common shareholders $ 93,241 $ 113,556 $ 117,340 $ 206,797 $ 229,878 Weighted average number of common shares outstanding: Basic 506,302,464 421,573,843 405,963,209 464,172,210 405,560,146 Diluted 508,479,206 423,506,550 408,660,778 466,320,683 408,152,458 Per common share data: Basic earnings $ 0.18 $ 0.27 $ 0.29 $ 0.45 $ 0.57 Diluted earnings 0.18 0.27 0.29 0.44 0.56 Cash dividends declared 0.11 0.11 0.11 0.22 0.22 Closing stock price - high 13.04 15.02 14.63 15.02 14.63 Closing stock price - low 10.34 12.91 12.91 10.34 9.74 FINANCIAL RATIOS: Net interest margin 3.42 % 3.15 % 3.18 % 3.30 % 3.15 % Net interest margin - FTE(1) 3.43 3.16 3.18 3.31 3.16 Annualized return on average assets 0.72 1.07 1.17 0.88 1.15 Annualized return on avg. shareholders' equity 6.18 9.15 10.24 7.51 10.10 NON-GAAP FINANCIAL DATA AND RATIOS: (3) Basic earnings per share, as adjusted $ 0.32 $ 0.28 $ 0.30 $ 0.60 $ 0.58 Diluted earnings per share, as adjusted 0.32 0.28 0.30 0.60 0.58 Annualized return on average assets, as adjusted 1.25 1.10 1.23 1.18 1.18 Annualized return on average shareholders' equity, as adjusted 10.63 % 9.43 % 10.76 % 10.09 % 10.37 % Annualized return on avg. tangible shareholders' equity 9.33 13.09 14.79 11.07 14.64 Annualized return on average tangible shareholders' equity, as adjusted 16.05 13.49 15.54 14.87 15.03 Efficiency ratio 50.78 53.18 46.64 51.81 47.59 AVERAGE BALANCE SHEET ITEMS: Assets $ 53,211,422 $ 43,570,251 $ 41,161,459 $ 48,417,469 $ 40,967,174 Interest earning assets 48,891,230 40,283,048 37,907,414 44,609,968 37,648,256 Loans 42,517,287 34,623,402 32,635,298 38,592,151 32,609,034 Interest bearing liabilities 29,694,271 26,147,915 25,469,526 27,930,890 25,710,515 Deposits 42,896,381 35,763,683 32,723,175 39,349,737 32,281,683 Shareholders' equity 6,238,985 5,104,709 4,708,797 5,673,014 4,677,273
As Of BALANCE SHEET ITEMS: June 30, March 31, December 31, September 30, June 30, (In thousands) 2022 2022 2021 2021 2021 Assets $ 54,438,807 $ 43,551,457 $ 43,446,443 $ 41,278,007 $ 41,274,228 Total loans 43,560,777 35,364,405 34,153,657 32,606,814 32,457,454 Deposits 43,881,051 35,647,336 35,632,412 33,632,605 33,194,774 Shareholders' equity 6,204,913 5,096,384 5,084,066 4,822,498 4,737,807 LOANS: (In thousands) Commercial and industrial loans: Commercial and industrial $ 8,378,454 $ 5,587,781 $ 5,411,601 $ 4,761,227 $ 4,733,771 Commercial and industrial PPP loans 136,004 203,609 435,950 874,033 1,350,684 Total commercial and industrial 8,514,458 5,791,390 5,847,551 5,635,260 6,084,455 Commercial real estate: Commercial real estate 23,535,086 19,763,202 18,935,486 17,912,070 17,512,142 Construction 3,374,373 2,174,542 1,854,580 1,804,580 1,752,838 Total commercial real estate 26,909,459 21,937,744 20,790,066 19,716,650 19,264,980 Residential mortgage 5,005,069 4,691,935 4,545,064 4,332,422 4,226,975 Consumer: Home equity 431,455 393,538 400,779 402,658 410,856 Automobile 1,673,482 1,552,928 1,570,036 1,563,698 1,531,262 Other consumer 1,026,854 996,870 1,000,161 956,126 938,926 Total consumer loans 3,131,791 2,943,336 2,970,976 2,922,482 2,881,044 Total loans $ 43,560,777 $ 35,364,405 $ 34,153,657 $ 32,606,814 $ 32,457,454 CAPITAL RATIOS: Book value per common share $ 11.84 $ 11.60 $ 11.57 $ 11.32 $ 11.15 Tangible book value per common share (2) 7.71 7.93 7.94 7.78 7.59 Tangible common equity to tangible assets (2) 7.46 % 7.96 % 7.98 % 7.95 % 7.73 % Tier 1 leverage capital 8.33 8.70 8.88 8.63 8.49 Common equity tier 1 capital 9.06 9.67 10.06 10.06 10.04 Tier 1 risk-based capital 9.54 10.27 10.69 10.73 10.73 Total risk-based capital 11.53 12.65 13.10 13.24 13.36
Three Months Ended Six Months Ended ALLOWANCE FOR CREDIT LOSSES: June 30, March 31, June 30, June 30, ($ in thousands) 2022 2022 2021 2022 2021 Allowance for credit losses for loans Beginning balance $ 379,252 $ 375,702 $ 354,313 $ 375,702 $ 351,354 Allowance for purchased credit deteriorated (PCD) loans, net (2) 70,319 — — 70,319 — Loans charged-off: Commercial and industrial (4,540 ) (1,571 ) (10,893 ) (6,111 ) (18,035 ) Commercial real estate — (173 ) — (173 ) (382 ) Residential mortgage (1 ) (26 ) (1 ) (27 ) (139 ) Total consumer (726 ) (825 ) (1,480 ) (1,551 ) (2,618 ) Total loans charged-off (5,267 ) (2,595 ) (12,374 ) (7,862 ) (21,174 ) Charged-off loans recovered: Commercial and industrial 1,952 824 678 2,776 2,267 Commercial real estate 224 107 665 331 730 Construction — — — — 4 Residential mortgage 74 457 191 531 348 Total consumer 697 1,257 1,474 1,954 2,404 Total loans recovered 2,947 2,645 3,008 5,592 5,753 Net (charge-offs) recoveries (2,320 ) 50 (9,366 ) (2,270 ) (15,421 ) Provision for credit losses for loans 43,712 3,500 8,777 47,212 17,791 Ending balance $ 490,963 $ 379,252 $ 353,724 $ 490,963 $ 353,724 Components of allowance for credit losses for loans: Allowance for loan losses $ 468,819 $ 362,510 $ 339,324 $ 468,819 $ 339,324 Allowance for unfunded credit commitments 22,144 16,742 14,400 22,144 14,400 Allowance for credit losses for loans $ 490,963 $ 379,252 $ 353,724 $ 490,963 $ 353,724 Components of provision for credit losses for loans: Provision for credit losses for loans $ 38,310 $ 3,258 $ 5,810 $ 41,568 $ 14,502 Provision for unfunded credit commitments 5,402 242 2,967 5,644 3,289 Total provision for credit losses for loans $ 43,712 $ 3,500 $ 8,777 $ 47,212 $ 17,791 Annualized ratio of total net charge-offs (recoveries) to average loans 0.02 % 0.00 % 0.11 % 0.01 % 0.09 % Allowance for credit losses for loans as a % of total loans 1.13 1.07 1.09 1.13 1.09
As of ASSET QUALITY: June 30, March 31, December 31, September 30, June 30, ($ in thousands) 2022 2022 2021 2021 2021 Accruing past due loans: 30 to 59 days past due: Commercial and industrial $ 7,143 $ 6,723 $ 6,717 $ 2,677 $ 3,867 Commercial real estate 10,516 30,807 14,421 22,956 40,524 Construction 9,108 1,708 1,941 — — Residential mortgage 12,326 9,266 10,999 9,293 8,479 Total consumer 6,009 5,862 6,811 5,463 6,242 Total 30 to 59 days past due 45,102 54,366 40,889 40,389 59,112 60 to 89 days past due: Commercial and industrial 3,870 14,461 7,870 985 1,361 Commercial real estate 630 6,314 — 5,897 11,451 Construction 3,862 3,125 — — — Residential mortgage 2,410 2,560 3,314 974 1,608 Total consumer 702 554 1,020 1,617 985 Total 60 to 89 days past due 11,474 27,014 12,204 9,473 15,405 90 or more days past due: Commercial and industrial 15,470 9,261 1,273 2,083 2,351 Commercial real estate — — 32 1,942 1,948 Residential mortgage 1,188 1,746 677 1,002 956 Total consumer 267 400 789 325 463 Total 90 or more days past due 16,925 11,407 2,771 5,352 5,718 Total accruing past due loans $ 73,501 $ 92,787 $ 55,864 $ 55,214 $ 80,235 Non-accrual loans: Commercial and industrial $ 148,404 $ 96,631 $ 99,918 $ 100,614 $ 102,594 Commercial real estate 85,807 79,180 83,592 95,843 58,893 Construction 49,780 17,618 17,641 17,653 17,660 Residential mortgage 25,847 33,275 35,207 33,648 35,941 Total consumer 3,279 3,754 3,858 4,073 4,924 Total non-accrual loans 313,117 230,458 240,216 251,831 220,012 Other real estate owned (OREO) 422 1,024 2,259 3,967 4,523 Other repossessed assets 1,200 1,176 2,931 1,896 2,060 Total non-performing assets $ 314,739 $ 232,658 $ 245,406 $ 257,694 $ 226,595 Performing troubled debt restructured loans $ 67,274 $ 56,538 $ 71,330 $ 64,832 $ 64,080 Total non-accrual loans as a % of loans 0.72 % 0.65 % 0.70 % 0.77 % 0.68 % Total accruing past due and non-accrual loans as a % of loans 0.89 % 0.91 % 0.87 % 0.94 % 0.93 % Allowance for losses on loans as a % of non-accrual loans 149.73 % 157.30 % 149.53 % 136.01 % 154.23 %
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 ) Represents the allowance for acquired PCD loans, net of PCD loan charge-offs totaling $62.4 million in the second quarter 2022. (3 ) Non-GAAP Reconciliations. This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. The Company believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies.
Non-GAAP Reconciliations to GAAP Financial Measures
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, ($ in thousands, except for share data) 2022 2022 2021 2022 2021 Adjusted net income available to common shareholders (non-GAAP): Net income, as reported (GAAP) $ 96,413 $ 116,728 $ 120,512 $ 213,141 $ 236,222 Add: Loss on extinguishment of debt (net of tax) — — 6,024 — 6,024 Add: Losses on available for sale and held to maturity securities transactions (net of tax)(a) (56 ) 6 81 (50 ) 166 Add: Provision for credit losses, (net of tax) (b) 29,282 — — 29,282 — Add: Merger related expenses (net of tax)(c) 40,164 3,579 — 43,743 — Net income, as adjusted (non-GAAP) $ 165,803 $ 120,313 $ 126,617 $ 286,116 $ 242,412 Dividends on preferred stock 3,172 3,172 3,172 6,344 6,344 Net income available to common shareholders, as adjusted (non-GAAP) $ 162,631 $ 117,141 $ 123,445 $ 279,772 $ 236,068 __________ (a) Included in (losses) gains on securities transactions, net. (b) Represents provision for credit losses for non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA. (c) Merger related expenses are primarily within salary and employee benefits expense, other expense, and professional and legal fees. Adjusted per common share data (non-GAAP): Net income available to common shareholders, as adjusted (non-GAAP) $ 162,631 $ 117,141 $ 123,445 $ 279,772 $ 236,068 Average number of shares outstanding 506,302,464 421,573,843 405,963,209 464,172,210 405,560,146 Basic earnings, as adjusted (non-GAAP) $ 0.32 $ 0.28 $ 0.30 $ 0.60 $ 0.58 Average number of diluted shares outstanding 508,479,206 423,506,550 408,660,778 466,320,683 408,152,458 Diluted earnings, as adjusted (non-GAAP) $ 0.32 $ 0.28 $ 0.30 $ 0.60 $ 0.58 Adjusted annualized return on average tangible shareholders' equity (non-GAAP): Net income, as adjusted (non-GAAP) $ 165,803 $ 120,313 $ 126,617 $ 286,116 $ 242,412 Average shareholders' equity $ 6,238,985 $ 5,104,709 $ 4,708,797 5,673,014 4,677,273 Less: Average goodwill and other intangible assets 2,105,585 1,538,356 1,449,388 1,823,538 1,450,562 Average tangible shareholders' equity $ 4,133,400 $ 3,566,353 $ 3,259,409 $ 3,849,476 $ 3,226,711 Annualized return on average tangible shareholders' equity, as adjusted (non-GAAP) 16.05 % 13.49 % 15.54 % 14.87 % 15.03 % Adjusted annualized return on average assets (non-GAAP): Net income, as adjusted (non-GAAP) $ 165,803 $ 120,313 $ 126,617 $ 286,116 $ 242,412 Average assets $ 53,211,422 $ 43,570,251 $ 41,161,459 $ 48,417,469 $ 40,967,174 Annualized return on average assets, as adjusted (non-GAAP) 1.25 % 1.10 % 1.23 % 1.18 % 1.18 %
Non-GAAP Reconciliations to GAAP Financial Measures (Continued)
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, ($ in thousands) 2022 2022 2021 2022 2021 Adjusted annualized return on average shareholders' equity (non-GAAP): Net income, as adjusted (non-GAAP) $ 165,803 $ 120,313 $ 126,617 $ 286,116 $ 242,412 Average shareholders' equity $ 6,238,985 $ 5,104,709 $ 4,708,797 $ 5,673,014 $ 4,677,273 Annualized return on average shareholders' equity, as adjusted (non-GAAP) 10.63 % 9.43 % 10.76 % 10.09 % 10.37 % Annualized return on average tangible shareholders' equity (non-GAAP): Net income, as reported (GAAP) $ 96,413 $ 116,728 $ 120,512 $ 213,141 $ 236,222 Average shareholders' equity $ 6,238,985 $ 5,104,709 $ 4,708,797 5,673,014 4,677,273 Less: Average goodwill and other intangible assets 2,105,585 1,538,356 1,449,388 1,823,538 1,450,562 Average tangible shareholders' equity $ 4,133,400 $ 3,566,353 $ 3,259,409 $ 3,849,476 $ 3,226,711 Annualized return on average tangible shareholders' equity (non-GAAP) 9.33 % 13.09 % 14.79 % 11.07 % 14.64 % Efficiency ratio (non-GAAP): Non-interest expense, as reported (GAAP) $ 299,730 $ 197,340 $ 171,893 $ 497,070 $ 332,106 Less: Loss on extinguishment of debt (pre-tax) — — 8,406 — 8,406 Less: Merger-related expenses (pre-tax) 54,496 4,628 — 59,124 — Less: Amortization of tax credit investments (pre-tax) 3,193 2,896 2,972 6,089 5,716 Non-interest expense, as adjusted (non-GAAP) $ 242,041 $ 189,816 $ 160,515 $ 431,857 $ 317,984 Net interest income, as reported (GAAP) 418,160 317,669 300,907 735,829 593,574 Non-interest income, as reported (GAAP) 58,533 39,270 43,126 97,803 74,359 Add: Losses on available for sale and held to maturity securities transactions, net (pre-tax) (78 ) 9 113 (69 ) 231 Non-interest income, as adjusted (non-GAAP) $ 58,455 $ 39,279 $ 43,239 $ 97,734 $ 74,590 Gross operating income, as adjusted (non-GAAP) $ 476,615 $ 356,948 $ 344,146 $ 833,563 $ 668,164 Efficiency ratio (non-GAAP) 50.78 % 53.18 % 46.64 % 51.81 % 47.59 %
As of June 30, March 31, December 31, September 30, June 30, ($ in thousands, except for share data) 2022 2022 2021 2021 2021 Tangible book value per common share (non-GAAP): Common shares outstanding 506,328,526 421,437,068 421,437,068 407,313,664 406,083,790 Shareholders' equity (GAAP) $ 6,204,913 $ 5,096,384 $ 5,084,066 $ 4,822,498 $ 4,737,807 Less: Preferred stock 209,691 209,691 209,691 209,691 209,691 Less: Goodwill and other intangible assets 2,090,147 1,543,238 1,529,394 1,444,967 1,447,965 Tangible common shareholders' equity (non-GAAP) $ 3,905,075 $ 3,343,455 $ 3,344,981 $ 3,167,840 $ 3,080,151 Tangible book value per common share (non-GAAP) $ 7.71 $ 7.93 $ 7.94 $ 7.78 $ 7.59 Tangible common equity to tangible assets (non-GAAP): Tangible common shareholders' equity (non-GAAP) $ 3,905,075 $ 3,343,455 $ 3,344,981 $ 3,167,840 $ 3,080,151 Total assets (GAAP) $ 54,438,807 $ 43,551,457 $ 43,446,443 $ 41,278,007 $ 41,274,228 Less: Goodwill and other intangible assets 2,090,147 1,543,238 1,529,394 1,444,967 1,447,965 Tangible assets (non-GAAP) $ 52,348,660 $ 42,008,219 $ 41,917,049 $ 39,833,040 $ 39,826,263 Tangible common equity to tangible assets (non-GAAP) 7.46 % 7.96 % 7.98 % 7.95 % 7.73 %
SHAREHOLDERS RELATIONS tzarkadas@valley.com .
VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands, except for share data)
June 30, December 31, 2022 2021 (Unaudited) Assets Cash and due from banks $ 481,414 $ 205,156 Interest bearing deposits with banks 906,898 1,844,764 Investment securities: Equity securities 41,716 36,473 Trading debt securities — 38,130 Available for sale debt securities 1,382,551 1,128,809 Held to maturity debt securities (net of allowance for credit losses of $1,508 at June 30, 2022 and $1,165 at December 31, 2021) 3,718,469 2,667,532 Total investment securities 5,142,736 3,870,944 Loans held for sale, at fair value 18,348 139,516 Loans 43,560,777 34,153,657 Less: Allowance for loan losses (468,819 ) (359,202 ) Net loans 43,091,958 33,794,455 Premises and equipment, net 360,819 326,306 Lease right of use assets 315,820 259,117 Bank owned life insurance 714,762 566,770 Accrued interest receivable 134,682 96,882 Goodwill 1,871,505 1,459,008 Other intangible assets, net 218,642 70,386 Other assets 1,181,223 813,139 Total Assets $ 54,438,807 $ 43,446,443 Liabilities Deposits: Non-interest bearing $ 16,139,559 $ 11,675,748 Interest bearing: Savings, NOW and money market 23,547,951 20,269,620 Time 4,193,541 3,687,044 Total deposits 43,881,051 35,632,412 Short-term borrowings 1,522,804 655,726 Long-term borrowings 1,403,805 1,423,676 Junior subordinated debentures issued to capital trusts 56,587 56,413 Lease liabilities 368,920 283,106 Accrued expenses and other liabilities 1,000,727 311,044 Total Liabilities 48,233,894 38,362,377 Shareholders’ Equity Preferred stock, no par value; 50,000,000 authorized shares: Series A (4,600,000 shares issued at June 30, 2022 and December 31, 2021) 111,590 111,590 Series B (4,000,000 shares issued at June 30, 2022 and December 31, 2021) 98,101 98,101 Common stock (no par value, authorized 650,000,000 shares; issued 507,896,910 and 423,034,027 at June 30, 2022 and December 31, 2021) 178,185 148,482 Surplus 4,965,488 3,883,035 Retained earnings 982,146 883,645 Accumulated other comprehensive loss (108,337 ) (17,932 ) Treasury stock, at cost (1,568,384 shares at June 30, 2022 and 1,596,959 common shares at December 31, 2021) (22,260 ) (22,855 ) Total Shareholders’ Equity 6,204,913 5,084,066 Total Liabilities and Shareholders’ Equity $ 54,438,807 $ 43,446,443
VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except for share data)
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2022 2022 2021 2022 2021 Interest Income Interest and fees on loans $ 415,577 $ 317,365 $ 315,314 $ 732,942 $ 628,495 Interest and dividends on investment securities: Taxable 27,534 18,439 12,716 45,973 25,882 Tax-exempt 5,191 2,517 3,216 7,708 6,572 Dividends 3,076 1,676 2,167 4,752 4,038 Interest on federal funds sold and other short-term investments 1,569 461 235 2,030 459 Total interest income 452,947 340,458 333,648 793,405 665,446 Interest Expense Interest on deposits: Savings, NOW and money market 17,122 9,627 11,166 26,749 22,291 Time 3,269 2,831 6,279 6,100 17,372 Interest on short-term borrowings 4,083 806 1,168 4,889 2,926 Interest on long-term borrowings and junior subordinated debentures 10,313 9,525 14,128 19,838 29,283 Total interest expense 34,787 22,789 32,741 57,576 71,872 Net Interest Income 418,160 317,669 300,907 735,829 593,574 Provision (credit) for credit losses for held to maturity securities 286 57 (30 ) 343 (388 ) Provision for credit losses for loans 43,712 3,500 8,777 47,212 17,791 Net Interest Income After Provision for Credit Losses 374,162 314,112 292,160 688,274 576,171 Non-Interest Income Wealth management and trust fees 9,577 5,131 3,532 14,708 6,861 Insurance commissions 3,463 1,859 2,637 5,322 4,195 Service charges on deposit accounts 10,067 6,212 5,083 16,279 10,186 (Losses) gains on securities transactions, net (309 ) (1,072 ) 375 (1,381 ) 476 Fees from loan servicing 2,717 2,781 3,187 5,498 6,086 Gains on sales of loans, net 3,602 986 10,061 4,588 13,574 Bank owned life insurance 2,113 2,046 2,475 4,159 4,806 Other 27,303 21,327 15,776 48,630 28,175 Total non-interest income 58,533 39,270 43,126 97,803 74,359 Non-Interest Expense Salary and employee benefits expense 154,798 107,733 91,095 262,531 179,198 Net occupancy and equipment expense 41,986 36,806 32,451 78,792 64,710 FDIC insurance assessment 5,351 4,158 3,374 9,509 6,650 Amortization of other intangible assets 11,400 4,437 5,449 15,837 11,455 Professional and legal fees 30,409 14,749 7,486 45,158 13,758 Loss on extinguishment of debt — — 8,406 — 8,406 Amortization of tax credit investments 3,193 2,896 2,972 6,089 5,716 Telecommunication expense 3,083 3,271 2,732 6,354 5,892 Other 49,510 23,290 17,928 72,800 36,321 Total non-interest expense 299,730 197,340 171,893 497,070 332,106 Income Before Income Taxes 132,965 156,042 163,393 289,007 318,424 Income tax expense 36,552 39,314 42,881 75,866 82,202 Net Income 96,413 116,728 120,512 213,141 236,222 Dividends on preferred stock 3,172 3,172 3,172 6,344 6,344 Net Income Available to Common Shareholders $ 93,241 $ 113,556 $ 117,340 $ 206,797 $ 229,878
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2022 2022 2021 2022 2021 Earnings Per Common Share: Basic $ 0.18 $ 0.27 $ 0.29 $ 0.45 $ 0.57 Diluted 0.18 0.27 0.29 0.44 0.56 Cash Dividends Declared per Common Share 0.11 0.11 0.11 0.22 0.22 Weighted Average Number of Common Shares Outstanding: Basic 506,302,464 421,573,843 405,963,209 464,172,210 405,560,146 Diluted 508,479,206 423,506,550 408,660,778 466,320,683 408,152,458
VALLEY NATIONAL BANCORP Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Income on a Tax Equivalent Basis
Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 Average Avg. Average Avg. Average Avg. ($ in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets Interest earning assets: Loans (1)(2) $ 42,517,287 $ 415,602 3.91 % $ 34,623,402 $ 317,390 3.67 % $ 32,635,298 $ 315,339 3.87 % Taxable investments (3) 4,912,994 30,610 2.49 3,838,468 20,115 2.10 3,159,842 14,883 1.88 Tax-exempt investments (1)(3) 684,471 6,571 3.84 401,742 3,186 3.17 498,971 4,071 3.26 Interest bearing deposits with banks 776,478 1,569 0.81 1,419,436 461 0.13 1,613,303 235 0.06 Total interest earning assets 48,891,230 454,352 3.72 40,283,048 341,152 3.39 37,907,414 334,528 3.53 Other assets 4,320,192 3,287,203 3,254,045 Total assets $ 53,211,422 $ 43,570,251 $ 41,161,459 Liabilities and shareholders' equity Interest bearing liabilities: Savings, NOW and money market deposits $ 23,027,347 $ 17,122 0.30 % $ 20,522,629 $ 9,627 0.19 % $ 17,784,985 $ 11,166 0.25 % Time deposits 3,601,088 3,269 0.36 3,554,520 2,831 0.32 4,609,778 6,279 0.54 Short-term borrowings 1,603,198 4,083 1.02 594,297 806 0.54 873,927 1,168 0.53 Long-term borrowings (4) 1,462,638 10,313 2.82 1,476,469 9,525 2.58 2,200,836 14,128 2.57 Total interest bearing liabilities 29,694,271 34,787 0.47 26,147,915 22,789 0.35 25,469,526 32,741 0.51 Non-interest bearing deposits 16,267,946 11,686,534 10,328,412 Other liabilities 1,010,220 631,093 654,724 Shareholders' equity 6,238,985 5,104,709 4,708,797 Total liabilities and shareholders' equity $ 53,211,422 $ 43,570,251 $ 41,161,459 Net interest income/interest rate spread (5) $ 419,565 3.25 % $ 318,363 3.04 % $ 301,787 3.02 % Tax equivalent adjustment (1,405 ) (694 ) (880 ) Net interest income, as reported $ 418,160 $ 317,669 $ 300,907 Net interest margin (6) 3.42 3.15 3.18 Tax equivalent effect 0.01 0.01 0.00 Net interest margin on a fully tax equivalent basis (6) 3.43 % 3.16 % 3.18 %
(1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.
