VALLEY NATIONAL BANCORP
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
VLY$14.08+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000714310-24-000151
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000714310-24-000164
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (43)
Current report
Impacts of Hurricanes Helene and Milton. In the early stages of the fourth quarter 2024, the credit quality of our Florida loan portfolio has remained resilient in the aftermath of Hurricane Helene, which hit Florida in late September 2024, and Hurricane Milton, which made landfall on October 9, 2024. At this time, there have been relatively few loan concessions (mostly in the form of loan payment deferrals up to 90 days) for distressed borrowers impacted by the hurricanes. However, we continue to assess the impact of the hurricanes on our Florida client base and, where appropriate, we will work constructively with individual borrowers. At September 30, 2024, our allowance for loan losses included an $8.0 million qualitative reserve for estimated losses resulting from Hurricane Helene. While not anticipated based on information currently available, Hurricane Milton and greater than expected losses from Hurricane Helene at September 30, 2024 could result in a significant increase to the current hurricane related reserves within the allowance, loan charge-offs and our provision for the fourth quarter 2024.
Current report
In an effort to support our associates who have been directly impacted by Hurricane Helene, we are offering various disaster assistance, including low interest rate personal and automobile loans with terms ranging from 12 to 60 months.
Current report
Subsequent Event. On November 12, 2024, Valley issued and sold 49,197,860 shares of its common stock in a registered public offering, including 6,417,112 shares purchased under an over-allotment option exercised in full by the underwriters at the public offering price of $9.35 per share. The net proceeds of the offering, after deducting underwriting discounts and commissions and offering expenses payable by Valley, were $448.9 million and are expected to be used for general corporate purposes and investments in the Bank as regulatory capital.
Current report
Financial Condition. During the third quarter 2024, we continued to strengthen the position of our balance sheet to best perform in the current economic environment, while also prudently managing and reducing the overall risk of our loan portfolio. The following items, including key balance sheet initiatives, are highlights at September 30, 2024.
Current report
•Commercial Real Estate Loan Concentration: Total commercial real estate loans (including construction loans) totaled $30.4 billion, or 61.6 percent of total loans at September 30, 2024 as compared to $31.8 billion, or 63.2 percent of total loans at June 30, 2024. While commercial real estate lending remains a key pillar of the success of our relationship banking model and our lending expertise, we continue to proactively diversify our loan portfolio by reducing new originations of certain types of commercial real estate lending, such as non-owner occupied and multifamily loans. We remain focused on growing our commercial and industrial, owner occupied commercial real estate, and consumer loan portfolios. As a result, we currently have a strategic balance sheet goal to reduce our CRE loan concentration ratio (defined as total commercial real estate loans held for investment and held for sale, excluding owner occupied loans, as a percentage of total risk-based capital) to approximately 400 percent and 375 percent by December 31, 2024 and 2025, respectively. At September 30, 2024, our CRE loan concentration ratio declined to 421 percent as compared to 442 percent and 474 percent at June 30, 2024 and December 31, 2023, respectively. The decline in the ratio from June 30, 2024 was largely due to repayment activity during the third quarter 2024, which outpaced new and refinanced loan volumes due to the planned lower production within the non-owner occupied and multifamily loan categories. During the third quarter 2024, we also transferred performing commercial real estate loans totaling $823.1 million, net of unearned fees, to loans held for sale at September 30, 2024. These loans are currently under an agreement to sell to an unrelated third-party in the fourth quarter 2024. The combined impact of this pending loan sale and the aforementioned common stock issuance on November 12, 2024 would have reduced our CRE concentration ratio of 421 percent at September 30, 2024 to 380 percent on an as adjusted basis. See further details of our loan activities under the “Loan Portfolio” section below.
Current report
•Regulatory Capital and Shareholders' Equity: Total shareholders' equity increased $234.6 million to $7.0 billion at September 30, 2024 as compared to June 30, 2024 largely due to net proceeds of $144.7 million from the issuance of our Series C preferred stock in August 2024 and net income and net other comprehensive income for the third quarter 2024. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 12.56 percent, 9.57 percent, 10.29 percent, and
Current report
8.40 percent, respectively, at September 30, 2024 as compared to 12.17 percent, 9.55 percent, 9.98 percent and 8.19 percent, respectively, at June 30, 2024. Currently, we have a strategic goal to increase Valley's common equity Tier 1 capital to 9.8 percent and 10 percent (or higher) by December 31, 2024 and 2025, respectively, largely through growth in our retained earnings and continuous management of the overall regulatory risk weighted asset profile of our balance sheet, including the goal to reduce our commercial real estate loan concentration. We expect our regulatory capital ratios to benefit by approximately 100 basis points as a result of the combined impact of the commercial real estate loan sale expected to close during the fourth quarter 2024 and the common stock issuance in November 2024. See the "Capital Adequacy" section below for more information.
Current report
•Allowance for Credit Losses: The ACL for loans totaled $564.7 million and $532.5 million at September 30, 2024 and June 30, 2024, respectively, representing 1.14 percent and 1.06 percent of total loans at each respective date. The increase reflects, among other factors, the aforementioned qualitative reserve of $8.0 million related to the estimated impact of Hurricane Helene at September 30, 2024. Given our current projections for continued growth in our commercial and industrial loan portfolio and credit trends within our loan portfolio, including the expected impact of Hurricane Milton, we anticipate a future reserve build in the ACL to approximately 1.20 percent and 1.25 percent of total loans at December 31, 2024 and 2025, respectively. However, we can provide no assurance that our actual future ACL for loans required under our CECL methodology will not exceed these current projections at each of the respective reporting dates. See the “Allowance for Credit Losses" section for additional information.
Current report
•Deposits: Total deposits increased $283.8 million to $50.4 billion at September 30, 2024 as compared to $50.1 billion at June 30, 2024 mainly due to higher direct commercial customer money market and non-interest bearing deposits, partially offset by a decline in time deposits. During the third quarter 2024, we added roughly 25 thousand new deposit accounts, including nearly 11 thousand accounts that are non-interest bearing deposits. Total indirect customer deposits (including both brokered money market and time deposits) totaled $9.1 billion at September 30, 2024 and remained relatively unchanged compared to June 30, 2024. We intend to use a significant portion of the net proceeds from the expected sale of commercial real estate loans held for sale to repay maturing indirect customer deposits in the fourth quarter 2024. See the “Deposits and Other Borrowings” section for more details.
Current report
•a $2.3 million increase in non-interest expense mainly due to higher FDIC assessment fees, largely offset by lower technology and consulting related expenses; and
Current report
•a $2.0 million increase in non-interest income that was mainly driven by increases in other income, tax advisory fees (within wealth management and trust fees) and bank owned life insurance income, partially offset by a mark-to-market loss on loans transferred to loans held for sale in the third quarter 2024 and a decline in net gains on the sales of assets.
Current report
At its Federal Open Market Committee meeting in September, the Federal Reserve implemented a 0.50 percent rate cut resulting in a federal funds target rate range of 4.75 percent to 5.00 percent. The rate cut represented the first interest rate change in a year and the first rate cut in more than four years. On November 7, 2024, the Federal Reserve cut the federal funds target rate another 0.25 percent to a current range of 4.50 percent to 4.75 percent. The Federal Reserve's projections released in September 2024 signal that they may cut the federal funds target rate by another 0.25 percent at their next meeting in mid-December 2024.
Current report
Our cumulative deposit beta remained generally stable at 60 percent as of September 30, 2024 from 58 percent at June 30, 2024 and 57 percent at December 31, 2023. The slight uptick from each comparable period was driven by a modestly higher cost of interest-bearing customer deposits and mix-shift from non-interest to interest-bearing deposit products. We define cumulative deposit beta as the change in our cost of total deposits relative to the change in the Fed Funds rate during the current rising interest rate cycle which began in the first quarter of 2022. See the "Net Interest Income" section for additional details on the changes in our cost of deposits during the third quarter 2024.
Current report
Average short-term borrowings decreased by $16.3 million and $355.3 million during the third quarter 2024 as compared to the second quarter 2024 and third quarter 2023, respectively, mostly due to a shift from the use of short-term FHLB advances to primarily indirect customer money market and time deposits in our average mix of funding sources.
Current report
Average interest earning assets increased $849.1 million to $57.7 billion for the third quarter 2024 as compared to the third quarter 2023 mainly due to a $1.1 billion increase inaverage taxable investments largely resulting from purchases of residential mortgage-backed securities classified as available for sale during the nine months ended September 30, 2024. Compared to the second quarter 2024, average interest earning assets increased by $878.7 million. The increase was mainly driven by increases of $598.1 million and $176.7 million in average taxable investments and average overnight interest bearing cash balances, respectively, as compared to the prior linked quarter. Theaverage loan balances also increased by $106.1 million to$50.1 billion for thethird quarter 2024 mostly due to organic loan growth in the latter half of thesecond quarter 2024.
Current report
Service charges on deposit accounts income increased $1.9 million and $3.3 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 mainly due to additional treasury service related fees for commercial deposit accounts.
Current report
Net gains on sales of loans decreased $5.7 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 mainly due to a $5.8 million mark-to- market loss recognized on the transfer of performing commercial real estate loans to loans held for sale at September 30, 2024 reported within this line item. Overall, our ability to generate net gains on sales of residential mortgage loans originated for sale continues to be challenged by several factors, including the historically higher level of mortgage interest rates, lower customer demand for conforming loan products, and our decision to not originate certain residential mortgage loans for sale. This decision can be influenced by many factors, including our current goal to reduce our commercial real estate loan concentration and further diversify our loan portfolio.
Current report
Other non-interest income increased $5.1 million for the three months ended September 30, 2024 as compared to the same period in 2023 largely due to income from litigation settlements totaling $7.3 million for the third quarter 2024.
Current report
Non-interest expense increased $2.3 million and $5.0 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023.
Current report
Net occupancy expense increased $2.3 million for the three months ended September 30, 2024 compared to the same period in 2023 mainly due to an increase in property tax expense, as well as incremental increases in rent and repairs expense on buildings.
Current report
FDIC insurance assessment expense increased $6.8 million and $19.9 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods of 2023 partly due to the overall growth of our balance sheet as well as an increase in internally classified loans (see the "Credit Quality Indicators" section under Note 7 to the consolidated financial statements for more details). The increase for the nine months ended September 30, 2024 was also dueto $8.8 million expense related to the FDIC special assessment accruals recorded during the first six months of 2024.
Current report
Average interest earning assets in Commercial Banking segment decreased $140.8 million to $40.2 billion for the three months ended September 30, 2024 as compared to the third quarter 2023 mainlydue to our strategic initiatives in 2024, including loan sales and low new loan volumes outpaced by repayment activity, to reduce our commercial real estate loan concentration as a percentage of regulatory capital.
Current report
The return on average interest earning assets before income taxes for the commercial banking segment was 1.33 percent for the three months ended September 30, 2024 compared to 2.08 percent for the same period in 2023.
Current report
Non-interest expense also increased largely due to $4.7 million of premium fees associated with credit risk transfer swaps executed in June 2024 for a portion of our auto portfolio.
Current report
The return on average interest earning assets before income taxes for the commercial banking segment was 1.35 percent for the nine months ended September 30, 2024 compared to 2.14 percent for the same period in 2023.
Current report
While not part of ourliquidity management strategy, we executed certain asset sales (largely under an initiative to reduce our commercial real estate loan concentration risk and the sale of a small specialized commercial lending business) and a preferred stock offering with the primary goal to bolster our regulatory capital, which also benefited the Bank's liquidity and cash position during the nine months ended September 30, 2024, including the following:
Current report
•an additional capital contribution of $95 million to the Bank from Valley in the third quarter 2024 related to net cash proceeds of $144.7 million from Valley's issuance of Series C preferred stock;
Current report
•net cash proceeds of $230.7 million related to the sales of commercial real estate and construction loans during the first half of 2024; and
Current report
•net cash proceeds of $98.1 million from the sale of our commercial premium finance lending division, mostly consisting of commercial and industrial loans, in the first quarter 2024.
Current report
While not isolated from the mix of our other sources of funds, these discrete transactions contributed to funding primarily used to grow our available for sale debt securities portfolio during the nine months ended September 30, 2024, while we maintained a relatively consistent level of cash liquidity on the balance sheet (as noted in the table above). As noted in the "Executive Summary" section and elsewhere in this MD&A, we also expect to complete the sale of approximately $823.1 million of commercial real estate loans held for sale in the fourth quarter 2024 and use a significant portion of net cash proceeds to repay maturing indirect customer deposits.
Current report
On November 12, 2024, Valley issued and sold 49,197,860 shares of its common stock in a registered public offering. The net proceeds of the offering were $448.9 million and are expected to be used for general corporate purposes and investments in the Bank as regulatory capital. See the "Executive Summary" and "Capital Adequacy" sections and Note 1 to the consolidated financial statements for more details.
Current report
Total loans decreased $956.4 million, or 7.6 percent on an annualized basis, to $49.4 billion at September 30, 2024 from June 30, 2024 mostly due tothe transferof performing commercial real estate loans totaling $823.1 million, net of unearned fees, to loans held for sale at September 30, 2024 and normal repayment activity mainly within commercial real estate non-owner occupied and multi-family loans, as we continue to actively reduce these loan categories. Loans held for sale are presented separately from total loans on the consolidated statements of financial condition and totaled $843.2 million and $19.9 million at September 30, 2024 and June 30, 2024, respectively.
Current report
Commercial and industrial loans increased $320.1 million to $9.8 billion at September 30, 2024 from June 30, 2024 largely due to our continued multi-year strategic initiative to expand new loan production within this category. The solid organic growth during thethird quarter 2024 remained broad-based mainly from relationship-driven middle market businesses in our primary markets.
Current report
Loans 30 to 59 days past due increased $69.1 million to $115.1 million at September 30, 2024 as compared to June 30, 2024 mainly due to a $74.5 million increase in commercial real estate loans, partially offset by a $7.0 million decline in consumer loan delinquencies. The increase in commercial real estate loans 30 to 59 days past due was mostly due to one new delinquent loan totaling $40.9 million, which is expected to be fully repaid, subject to the borrower's pending sale of certain collateral, as well as a few smaller new loan delinquencies.
Current report
Loans 60 to 89 days past due increased $42.9 million to $54.8 million at September 30, 2024 as compared to June 30, 2024 mostly due to one well-secured commercial real estate loan totaling $43.9 million currently in the process of loan modification.
Current report
Non-accrual loans decreased $7.0 million to $296.3 million at September 30, 2024 as compared to $303.3 million at June 30, 2024. Non-accrual construction and commercial real estate loans decreased $20.7 million and $9.3 million, respectively, to $24.7 million and $113.8 million, respectively, at September 30, 2024 as compared to June 30, 2024 mainly due to loan payoffs during the third quarter 2024. The decreases in these loan categories were partially offset by two new non-accrual commercial and industrial loans totaling $19.0 million, as well as moderate increases in non-accrual residential mortgage and consumer loans at September 30, 2024.
Current report
•The Federal Reserve lowered the federal funds rate by 50 pts to a range of 4.75 - 5.00 percent with potential rate cut of an additional 0.50 percent during the fourth quarter of 2024.
Current report
Net loan charge-offs totaled $42.9 million for the third quarter 2024 as compared to $36.8 million and $5.5 million for the second quarter 2024 and third quarter 2023, respectively. Gross loan charge-offs for the third quarter 2024 included partial charge-offs totaling $30.1 million related to two non-performing commercial real estate loan relationships that had combined specific reserves of $25.9 million within the allowance for loan losses at June 30, 2024, and partial charge-offs of two construction loans totaling $4.8 million. One of the two partially charged-off construction loans had specific reserves of $1.7 million at June 30, 2024.
Current report
The allowance for unfunded credit commitments increased to $16.3 million at September 30, 2024 from $13.2 million at June 30, 2024 mainly due to increases in both non-cancellable construction commitments and commercial and industrial standby letters of credit.
Current report
•net income of $264.6 million,
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Previous report
Financial Condition. The combination of an inverted yield curve, a high level of competition and Federal Reserve monetary actions driven by prolonged inflationary pressures, among other factors, continued to weigh on the banking industry during the second quarter 2024. In the face of these challenges, we have positioned our balance sheet to best mitigate these negative factors, while continuing to focus on longer term earnings performance. The following items are key highlights at June 30, 2024.
Previous report
•Total deposits increased $1.0 billion to $50.1 billion at June 30, 2024 as compared to $49.1 billion at March 31, 2024 mainly due to higher indirect customer CD balances. See the “Deposits and Other Borrowings” section for more details.
Previous report
•Total loans increased $389.7 million, or 3.1 percent on an annualized basis, to $50.3 billion at June 30, 2024 from March 31, 2024 mainly as a result of our focus on new commercial and industrial loan production during the second quarter 2024. Strong indirect automobile loan originations from our dealer network, as well as modest organic commercial real estate loan volumes also contributed to the growth in total loans during the second quarter 2024. Loans held for sale decreased$41.9 millionto$19.9 millionat June 30, 2024 from March 31, 2024 mostly due to the previously disclosed sale of $34.1 million of construction loans at par during April 2024. See further details on our loan activities under the “Loan Portfolio” section below.
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•Total shareholders' equity increased $10.6 million to $6.7 billion at June 30, 2024 as compared to March 31, 2024. Regulatory capital remained strong with ratios of both Valley and the Bank exceeding all capital adequacy requirements at June 30, 2024. During June 2024, we completed a synthetic credit risk transfer transaction, consisting of a credit default swap, related to approximately $1.5 billion of our $1.8 billion automobile loan portfolio at June 30, 2024. While we retained the auto loans on-balance sheet and the transaction had no impact to our allowance for loan losses, the new credit protection significantly reduced the risk-weighted assets associated with these loans for regulatory capital purposes. As a result, Valley’s total risk-based capital, common equity Tier 1 capital and Tier 1 capital ratios benefited by approximately 20 basis points at June 30, 2024.
Previous report
Subsequent Event. On August 5, 2024, Valley issued 6.0 million shares of its 8.250 percent Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C, no par value per share, with a liquidation preference of $25 per share. Net proceeds to Valley after deducting underwriting discounts, commissions and offering expenses were $144.7 million. See Note 1 to the consolidated financial statements and the "Capital Adequacy" section below for more details.
Previous report
•an $8.9 million decrease in non-interest income that was primarily driven by a decrease in swap fees related to commercial loan transactions (within capital market fees) and lower other income, partially offset by an increase in bank owned life insurance income.
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•a $5.5 million decrease in non-interest expense largely due to $10.8 million decline in restructuring charges within salary and employee benefits expense, partially offset by higher FDIC assessment fees.
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In June 2024, the Federal Reserve noted that economic activity was solid, job gains remained strong, and that inflation, while it remains elevated, has continued to decelerate at a modest pace. As a result, the Federal Reserve decided to maintain the target range for the federal funds rate between 5.25 and 5.50 percent. Additionally, the Federal Reserve released its updated summary of economic projections which indicated that the median participant’s expectation for the federal funds rate by the end of 2024 was 5.1 percent. However, a softer than expected job report in July 2024 has increased market participant expectations for potential rate cuts by the Federal Reserve, including at their next committee meeting in September 2024.
Previous report
Average interest earning assets decreased $578.9 million to $56.8 billion for the second quarter 2024 as compared to the second quarter 2023 mainly due to a $1.4 billion decline in average interest bearing cash held overnight as our excess liquidity returned to more normalized levels in 2024 after being elevated in response to the bank failures in 2023. The decrease in average interest bearing cash was partially offset by a $563.0 million increase in average loan balances mostly driven by organic commercial loan growth since June 30, 2023 and the increase in average investment securities stemming from oursecond quarter 2024 purchase activity in the available for sale portfolio. Compared to the first quarter 2024, average interest earning assets increased by $154.2 million during the second quarter 2024. The increase was mainly driven by increases of $284.1 million and $100.3 million in average taxable investments and average overnight interest bearing cash balances, respectively, as compared to the prior linked quarter, partially offset by a$225.7 million decline in average loan balances. The decline in average loans was largely due to (1) the sale of $196.5 million of commercial real estate and construction loans through loan participation agreements at par value in March 2024, (2) the sale of $93.6 million of commercial and industrial loans associated with the sale of our premium finance lending division in February 2024, and (3) the sale of$34.1 million of construction loans at par during April 2024, partially offset by (4) organic loan growth in thesecond quarter 2024.
Previous report
Wealth management and trust fees income increased $2.0 million and $10.3 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The increase as compared to the
Previous report
second quarter 2023 was due, in part, to net losses related to the decline in the valuation of certain equity method investments at June 30, 2024. The decrease for the six months ended June 30, 2024 was mainly attributable to a $2.7 million litigation recovery in the same period in 2023, and to a lesser extent, the decline in the valuation of certain equity method investments.
Previous report
Net occupancy expense decreased$1.7 million for thethree months ended June 30, 2024 compared to the same period in 2023 mainly due to lower building repair and utilities expenses.
Previous report
FDIC insurance assessment expense increased $4.0 million and $13.1 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods of 2023 due, in part, to additional estimated expenses of $1.4 million and $8.8 million recorded during the three and six months ended June 30, 2024, respectively, related to the FDIC special assessment.
Previous report
The return on average interest earning assets before income taxes for the commercial banking segment was 1.30 percent for the three months ended June 30, 2024 compared to 2.32 percent for the same period in 2023.
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The return on average interest earning assets before income taxes for the commercial banking segment was 1.44 percent for the six months ended June 30, 2024 compared to 2.36 percent for the same period in 2023.
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Total loans increased $389.7 million, or 3.1 percent on an annualized basis, to $50.3 billion at June 30, 2024 from March 31, 2024 mainly as a result of our focus on new commercial and industrial loan production during the second quarter 2024. Loans held for sale decreased $41.9 million to $19.9 million at June 30, 2024 from March 31, 2024 mostly due to the previously disclosed sale of $34.1 million of construction loans at par during April 2024. Loans held for sale are presented separately from total loans on the consolidated statements of financial condition totaling $19.9 million and $61.8 million at June 30, 2024 and March 31, 2024, respectively.
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Commercial and industrial loans increased $375.0 million to $9.5 billion at June 30, 2024 from March 31, 2024 mainly as a result of our focus on new loan production from specialized industries and organic loan growth during the second quarter 2024.
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Loans 30 to 59 days past due decreased $851 thousand to $46.0 million at June 30, 2024 as compared to March 31, 2024 mainly due to improved performance across the most loan categories, largely offset by higher personal lines of credit delinquencies within consumer loans.
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Loans 60 to 89 days past due decreased $2.3 million to $11.9 million at June 30, 2024 as compared to March 31, 2024 mostly due to a commercial real estate loan relationship totaling $3.7 million at March 31, 2024 that migrated from this past due category to non-accrual loans during the second quarter 2024.
Previous report
Non-accrual loans increased $16.0 million to $303.3 million at June 30, 2024 as compared to $287.3 million at March 31, 2024. Non-accrual commercial real estate loans increased $23.0 million to $123.0 million at June 30, 2024 as compared to March 31, 2024 mainly due to two additional non-performing loan relationships totaling a combined $24.1 million which were placed on non-accrual status during the second quarter 2024. Non-accrual construction loans decreased $6.5 million to $45.4 million at June 30, 2024 as compared to March 31, 2024 mainly due to the repayment of one loan totaling $5.2 million during the second quarter 2024.
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•The Federal Reserve continues to pause with the federal funds rate at 5.25 - 5.50 percent and two potential rate cuts totaling 0.50 percent during the remainder of 2024.
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Net loan charge-offs totaled $36.8 million for the second quarter 2024 as compared to $23.6 million and $8.6 million forthe first quarter 2024 andsecond quarter 2023, respectively. Gross loan charge-offs for the second quarter 2024 incl uded (i) partial charge-offs totaling $20.6 million related to a single non-performing commercial real estate loan relationship and (ii) $11.0 million of partial loan charge-offs related to one commercial and industrial loan (with prior reserves within the allowance for loan losses totaling $8.0 million at March 31, 2024).
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The allowance for unfunded credit commitments declined to $13.2 million at June 30, 2024 mainly due to a continued decline in the level of our commercial real estate loan commitments pipeline.
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•net income of $166.7 million, and
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•other comprehensive loss of $16.2 million.
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On August 5, 2024, Valley issued 6.0 million shares of its 8.250 percent Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C, no par value per share, with a liquidation preference of $25 per share. Net proceeds to Valley after deducting underwriting discounts, commissions and offering expenses were $144.7 million and are expected to enhance our regulatory capital and ratios reported at September 30, 2024. Valley intends to use the proceeds for general corporate purposes and investments in Valley National Bank for future growth.
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•the impact of monetary and fiscal policies of the U.S. federal government and its agencies, including in connection with prolonged inflationary pressures, as well as the impact of the 2024 U.S presidential election, which could have a material adverse effect on our clients, as well as our business, our employees, and our ability to provide services to our customers;
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•the impact of market interest rates and monetary and fiscal policies of the U.S. federal government and its agencies in connection with the prolonged inflationary pressures, which could have a material adverse effect on our clients, our business, our employees, and our ability to provide services to our customers;
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•the impact of unfavorable macroeconomic conditions or downturns, including an actual or threatened U.S. government shutdown, debt default or rating downgrade, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as geopolitical instabilities or events (including the
Current wording
•the impact of unfavorable macroeconomic conditions or downturns, including an actual or threatened U.S. government shutdown, debt default or rating downgrade, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as future policies and legislation under the new U.S. presidential administration, geopolitical instabilities or events (including the Israel-Hamas war and the escalation and regional expansion thereof); natural and other disasters (including severe weather events, such as Hurricanes Helene and Milton in late September and early October 2024, respectively); health emergencies; acts of terrorism; or other external events;
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•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, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
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•results of examinations by the Office of 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, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
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•our ability to successfully execute our business plan and strategic initiatives; and
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•our ability to successfully execute our business plan and strategic initiatives, including our goals to reduce the commercial real estate loan concentration on our balance sheet and expand other areas of commercial lending activity; and
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•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.
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•unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, risk mitigation strategies, changes in regulatory lending guidance or other factors.
Previous wording
Company Overview. At June 30, 2024, Valley had consolidated total assets of approximately $62.1 billion, total net loans of $49.8 billion, total deposits of $50.1 billion and total shareholders’ equity of $6.7 billion. Valley operates many convenient branch office locations and commercial banking offices in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, California, Alabama and Illinois. Of our current 230 branch network, 55 percent, 18 percent, and 18 percent of the branches are located in New Jersey, New York and Florida, respectively, with the remaining 9 percent of the branches in Alabama, California, and Illinois combined.
Current wording
Company Overview. At September 30, 2024, Valley had consolidated total assets of approximately $62.1 billion, total net loans of $48.8 billion, total deposits of $50.4 billion and total shareholders’ equity of $7.0 billion. Valley operates many convenient branch office locations and commercial banking offices in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, California, Alabama and Illinois. Of our current 228 branch network, 56 percent, 18 percent, and 18 percent of the branches are located in New Jersey, New York and Florida, respectively, with the remaining 8 percent of the branches in Alabama, California, and Illinois combined.
Previous wording
•While non-accrual loans and net loan charge-offs increased during the second quarter 2024 mainly due to two commercial loan relationships, overall asset quality remained generally stable across the loan portfolio and continued to reflect our disciplined underwriting and lending practices. Non-performing assets (NPAs) as a percentage of total loans and NPAs increased to 0.62 percent at June 30, 2024 as compared to 0.58 percent at March 31, 2024. Total net loan charge-offs to average loans was 0.29 percent for the second quarter 2024 as compared with 0.19 percent for the first quarter 2024. See the “Non-Performing Assets” section for additional information.
Current wording
•Credit Quality: Non-performing assets (NPAs) as a percentage of total loans and NPAs decreased to 0.61 percent at September 30, 2024 as compared to 0.62 percent at June 30, 2024. Total net loan charge-offs to average loans were 0.34 percent for the third quarter 2024 as compared with 0.29 percent for the second quarter 2024. See the “Non-Performing Assets” section for additional information.
Previous wording
•Total assets increased to$62.1 billion at June 30, 2024 from $61.0 billion at March 31, 2024. Our liquid assets totaled $3.4 billionat June 30, 2024, representing 6.1 percent of interest earning assets as compared with$2.7 billion, or 4.8 percentof interest earning assets at March 31, 2024. We continue to maintain significant access to readily available, diverse funding sources to fulfill both short-term and long-term funding needs. See the “Bank Liquidity” section for additional information.
Current wording
•Liquid Assets: Our liquid assets totaled $4.7 billion at September 30, 2024, representing 8.2 percent of interest earning assets as compared with $3.4 billion, or 6.1 percent of interest earning assets at June 30, 2024. We continue to maintain significant access to readily available, diverse funding sources to fulfill both short-term and long-term funding needs. See the “Bank Liquidity” section for additional information.
Previous wording
•Total investment securities increased $704.6 million to $5.9 billion, or 9.6 percent of total assets, at June 30, 2024 as compared to March 31, 2024 mainly due to purchases of residential mortgage backed securities largely issued by Ginnie Mae that were classified as available for sale. See the “Investment Securities Portfolio” section for more details.
Current wording
•Investment Securities: Total investment securities increased $317.7 million to $6.3 billion, or 10.1 percent of total assets, at September 30, 2024 as compared to June 30, 2024 mainly due to targeted purchases of residential mortgage backed securities primarily issued by Ginnie Mae (with a risk-weighting of zero for regulatory capital purposes) that were classified as available for sale. See the “Investment Securities Portfolio” section for more details.
Previous wording
Quarterly Results. Net income for the second quarter 2024 was $70.4 million, or $0.13 per diluted common share, as compared to $139.1 million, or $0.27 per diluted common share, for the second quarter 2023. The $68.6 million decrease in quarterly net income as compared to the same quarter one year ago was mainly due to the following changes:
Current wording
Quarterly Results. Net income for the third quarter 2024 was $97.9 million, or $0.18 per diluted common share, as compared to $141.3 million, or $0.27 per diluted common share, for the third quarter 2023. The $43.5 million decrease in quarterly net income as compared to the same quarter one year ago was mainly due to the following changes:
Previous wording
•a $76.0 million increase in our provision for credit losses mainly due to higher quantitative reserves allocated to commercial real estate loans, commercial and industrial loan growth, and additional specific reserves and charge-offs associated with the revaluation of collateral dependent commercial loans at June 30, 2024;
Current wording
•a $65.9 million increase in our provision for credit losses mainly due to higher quantitative reserves allocated to commercial real estate loans, commercial and industrial loan growth, and the additional qualitative reserve related to the estimated impact of Hurricane Helene at September 30, 2024;
Previous wording
•an $18.1 million decrease in net interest income as higher yields on both new loan originations and adjustable-rate loans were more than offset by an increase in the cost of deposits; and
Current wording
•a $1.9 million decrease in net interest income as higher yields on both new and adjustable-rate loans and additional interest income from investment security purchases were more than offset by an increase in the overall cost of average interest bearing liabilities.
Previous wording
•a $28.9 million decrease in income tax expense mostly due to lower pre-tax income in the second quarter 2024 and a higher level of investment in tax credits as compared to one year ago; and
Current wording
•a $24.7 million decrease in income tax expense mostly due to lower pre-tax income in the third quarter 2024 and a higher level of investment in tax credits as compared to one year ago; and
Previous wording
See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense” and “Income Taxes” sections below for more details on the impact of the items aboveand other infrequent non-core items impactingour second quarter 2024 results.
Current wording
See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense” and “Income Taxes” sections below for more details on the impact of the items aboveand other infrequent non-core items impactingour third quarter 2024 results.
Previous wording
U.S. Economic Conditions. During the second quarter 2024, real gross GDP increased at an annual rate of 2.8 percent as compared to an increase of 1.4 percent during the first quarter 2024. The increase was driven by personal consumption, government spending and nonresidential fixed investment. Alternatively, residential fixed investment and net exports declined. In addition, most measures of inflation continued to reflect a moderation in price pressures during the quarter. Inflation rate declined to 3.0 percent in the second quarter 2024 as compared to 3.5 percent for thefirst quarter 2024.
Current wording
U.S. Economic Conditions. During the third quarter 2024, real gross GDP increased at an annual rate of 2.8 percent as compared to an increase of 3.0 percent during the second quarter 2024. The increase was driven by government spending, residential & nonresidential fixed investment and net exports. In addition, most measures of inflation continued to reflect a moderation in price pressures during the third quarter 2024. The rate of inflation declined to 2.4 percent in the third quarter 2024 as compared to 3.0 percent for thesecond quarter 2024.
Previous wording
The 10-year U.S. Treasury note yield ended the second quarter 2024 at 4.36 percent, or 16 basis points higher as compared to thefirst quarter 2024, and the 2-year U.S. Treasury note yield ended the second quarter 2024 at 4.71 percent, or 12 basis points higher as compared to the first quarter 2024.
Current wording
The 10-year U.S. Treasury note yield ended the third quarter 2024 at 3.81 percent, or 55 basis points lower as compared to thesecond quarter 2024, and the 2-year U.S. Treasury note yield ended the third quarter 2024 at 3.66 percent, or 105 basis points lower as compared to the second quarter 2024.
Previous wording
For all commercial banks in the U.S., total loans and leases grew 0.6 percent from March 31, 2024 to June 30, 2024. Commercial and industrial lending increased 1.3 percent while commercial real estate lending declined 0.3 percent during the same period. For the second quarter of 2024, banks reported some easing to underwriting standards for most commercial loan products which may support loan growth in future months. However, banks continued to report that demand for both commercial and industrial and commercial real estate loans remained weak.
Current wording
For all commercial banks in the U.S., total loans and leases grew 0.4 percent from June 30, 2024 to September 30, 2024. Commercial and industrial lending and commercial real estate lending increased 0.2 percent and 0.3 percent, respectively, during the same period. For the third quarter of 2024, banks reported continued easing of underwriting standards for most commercial and industrial loan products to large and middle-market companies. Banks reported stronger demand for commercial and industrial loans as the majority of customer demand transitioned from commercial real estate loans.
Previous wording
Although Federal Reserve efforts to combat inflation are showing modest progress, several factors, including, but not limited to new and proposed bank regulatory actions, the inverted yield curve, potential weakening of the labor market, elevated inflation and interest rates, the upcoming U.S. presidential election and geopolitical conflicts have added a higher level of uncertainty to the future path of the U.S. economy and created a challenging bank operating environment. Should these conditions persist or further deteriorate, they may adversely impact our banking clients and our financial results, as highlighted in this MD&A.
Current wording
Although Federal Reserve efforts to combat inflation are showing continued, but modest progress, several factors, including, but not limited to, new and proposed bank regulatory actions, potential weakening of the labor market, elevated inflation and interest rates, future policies and legislation under the new U.S. presidential administrationand geopolitical conflicts have contributed to uncertainty to the future path of the U.S. economy and created a challenging bank operating environment. Should these conditions persist or further deteriorate, they may adversely impact our banking clients and our financial results, as highlighted in this MD&A.
Previous wording
Total average deposits increased by $807.2 million to $49.4 billion for the second quarter 2024 as compared to the first quarter 2024 due to increases of $766.8 million and $40.4 million in average interest bearing and non-interest bearing deposits, respectively. Average time deposits balances increased $712.0 million primarily due to our increased use of indirect customer (i.e., brokered) CDs as a funding source in the second quarter 2024. Average non-interest-bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 50 percent and 27 percent of total deposits for the second quarter 2024, respectively as compared to 23 percent, 51 percent and 26 percent of total deposits for thefirst quarter 2024, respectively.
Current wording
Total average deposits increased by $1.0 billion to $50.4 billion for the third quarter 2024 as compared to the second quarter 2024. Average time deposits balances increased $921.8 million primarily due to our increased use of indirect customer (i.e., brokered) CDs as an alternate and attractively priced funding source (mainly compared to similar term FHLB borrowings) starting in the second quarter 2024. Average non-interest-bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 22 percent, 50 percent and 28 percent of total deposits for the third quarter 2024, respectively as compared to 23 percent, 50 percent and 27 percent of total deposits for the second quarter 2024, respectively.
Previous wording
Actual ending balances for deposits increased $1.0 billion to $50.1 billion at June 30, 2024 from March 31, 2024 mainly due to an increase of $1.5 billion in time deposits, partially offset by a decrease of $349.8 million in savings, NOW and money market deposits and a decrease of $155.6 million in non-interest bearing deposits. The increase in time deposits was mainly due to a $1.7 billion increase in indirect customer CDs. Non-interest bearing deposit and savings, NOW and money market deposit balances declined at June 30, 2024 from March 31, 2024 partly due to period-end fluctuations within certain direct commercial customer deposit accounts. During the second quarter 2024, management entered into fair value swap transactions with a combined notional value of approximately $400 million that will effectively convert a portion of its fixed rate indirect CD portfolio to variable interest rates starting in the first quarter 2025 (See Note 12 to the consolidated financial statements for more details). Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 22 percent, 49 percent and 29 percent of total deposits as of June 30, 2024, respectively, as compared to 23 percent, 51 percent and 26 percent of total deposits as of March 31, 2024, respectively.
Current wording
Actual ending balances for deposits increased $283.8 million to $50.4 billion at September 30, 2024 from June 30, 2024 mainly due to an increase of $358.3 million in savings, NOW and money market deposits and an increase of $36.0 million in non-interest bearing deposits, partially offset by a decrease of $110.5 million in time deposits. Non-interest bearing deposit and savings, NOW and money market deposit balances increased at September 30, 2024 from June 30, 2024 mostly due to increases in national specialized deposits and higher direct commercial customer deposit accounts. Total indirect customer deposits (including both brokered money market and time deposits) totaled $9.1 billion in both September 30, 2024 and June 30, 2024. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 22 percent, 50 percent and 28 percent of total deposits as of September 30, 2024, respectively, as compared to 22 percent, 49 percent and 29 percent of total deposits as of June 30, 2024, respectively.
Previous wording
Total estimated uninsured deposits, excluding collateralized government deposits and intercompany deposits (i.e., deposits eliminated in consolidation), totaled approximately $11.0 billion, or 22 percent of total deposits, at June 30, 2024 as compared to $11.5 billion, or 24 percent of total deposits, at March 31, 2024.
Current wording
Total estimated uninsured deposits, excluding collateralized government deposits and intercompany deposits (i.e., deposits eliminated in consolidation), totaled approximately $11.6 billion, or 23 percent of total deposits, at September 30, 2024 as compared to $11.0 billion, or 22 percent of total deposits, at June 30, 2024.
Previous wording
While we maintained a diversified commercial and consumer deposit base at June 30, 2024, deposit gathering initiatives and our current deposit base could remain challenged due to market competition, attractive investment alternatives, such as U.S. Treasury securities, and other factors. As a result, we cannot guarantee that we will be able to maintain deposit levels at or near those reported at June 30, 2024. Management continuously monitors liquidity and all available funding sources including non-deposit borrowings discussed below. See the “Liquidity and Cash Requirements” section of this MD&A for additional information.
Current wording
While we maintained a diversified commercial and consumer deposit base at September 30, 2024, deposit gathering initiatives and our current deposit base could remain challenged due to market competition, attractive non-deposit investment alternatives in the financial markets and other factors. As a result, we cannot guarantee that we will be able to maintain deposit levels at or near those reported at September 30, 2024. Management continuously monitors liquidity and all available funding sources including non-deposit borrowings discussed below. See the “Liquidity and Cash Requirements” section of this MD&A for additional information.
Previous wording
Average short-term borrowings decreased $1.4 billion during the second quarter 2024 as compared to the first quarter 2024 mostly due to a shift from short-term FHLB advances to indirect customer time deposits in our average mix of funding sources. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) increased $693.3 million as compared to the first quarter 2024 mainly due to new FHLB advances totaling $1.0 billion issued in early March 2024. The new long-term FHLB borrowings have a weighted average rate of 4.54 percent and a weighted average remaining contractual term of 3.3 years at June 30, 2024.
Current wording
Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) increased $5.8 million and $829.5 million as compared to the second quarter 2024 and third quarter 2023, respectively. The increase as compared to the third quarter 2023 was mainly due to new FHLB advances totaling $1.0 billion issued in early March 2024. The new long-term FHLB borrowings have a weighted average rate of 4.54 percent and a weighted average remaining contractual term of 3.1 years at September 30, 2024.
Previous wording
Actual ending balances for short-term borrowings decreased $11.5 million to $63.8 million at June 30, 2024 as compared to March 31, 2024 mainly due to a moderate decline in securities sold under repurchase agreements. Long-term borrowings totaled $3.3 billion at June 30, 2024 and also remained relatively unchanged as compared to March 31, 2024.
Current wording
Actual ending balances for short-term borrowings decreased $5.5 million to $58.3 million at September 30, 2024 as compared to June 30, 2024 mainly due to a moderate decline in securities sold under repurchase agreements. Long-term borrowings totaled $3.3 billion at September 30, 2024 and remained relatively unchanged as compared to June 30, 2024.
Previous wording
Net interest income on a tax equivalent basis of $403.0 million for the second quarter 2024 increased $8.1 million compared to the first quarter 2024 and decreased $18.3 million as compared to the second quarter 2023. Interest income on a tax equivalent basis increased $4.8 million to $834.8 million for the second quarter 2024 as compared to the first quarter 2024 mostly due to additional interest income from targeted investment purchases within the available for sale securities portfolio, as well as higher average overnight interest bearing deposits with banks during the second quarter 2024. A higher yield on average loans also contributed to the increase in interest income but was more than offset by the impact of lower average loan balances during the second quarter 2024 mostly caused by the sale of certain commercial loans in the first quarter 2024 and April 2024. Total interest expense decreased $3.3 million to $431.8 million for the second quarter 2024 as compared to the first quarter 2024 mainly due to greater utilization of long-term FHLB borrowings and indirect customer time deposits as liquidity funding sources and a reduction in higher cost short-term FHLB borrowings starting in March 2024.
Current wording
Net interest income on a tax equivalent basis of$411.8 million for the third quarter 2024 increased $8.8 million compared to the second quarter 2024 anddecreased $1.8 million as compared to the third quarter 2023. Interest income on a tax equivalent basis increased $27.1 million to $861.9 million for the third quarter 2024 as compared to the second quarter 2024. The increase was mostly due to higher yields on both new loan originations and adjustable rate loans, as well as higher yields and additional interest income from targeted purchases of taxable investments within the available for sale securities portfolio during the second and third quarter 2024. Total interest expense increased $18.3 million to $450.1 million for the third quarter 2024 as compared to the second quarter 2024 mainly due to an increase in average time deposit balances coupled with higher costs on most interest bearing deposit products. See the "Deposits" and "Other Borrowings" sections below for more details.
Previous wording
Average interest bearing liabilities increased $650.6 million to $41.6 billion for the second quarter 2024 as compared to the second quarter 2023 mainly due to increases of $3.5 billion and $979.5 million in average interest bearing deposits and long-term borrowings, respectively, partially offset by a decrease of $3.8 billion in average short-term borrowings. The increase in average time deposits was largely due to increased usage of fully FDIC-insured indirect customer CDs and successful direct retail CD initiatives since June 30, 2023, while average long-term borrowings increased mostly due to several new FHLB advances totaling $1.0 billion in early March 2024. As compared to the first quarter 2024, average interest bearing liabilities increased by only $19.8 million for the second quarter 2024 as increases of $766.8 million and $693.3 million in average interest bearing deposits and long-term borrowings, respectively, were mostly offset by a $1.4 billion decrease in average short-term borrowings. See additional information under“Deposits and Other Borrowings” in the Executive Summary section above.
Current wording
Average interest bearing liabilities increased $1.8 billion to $42.7 billion for the third quarter 2024 as compared to the third quarter 2023 primarily due to increases of $1.4 billion and $829.5 million in average interest bearing deposits and long-term borrowings, respectively, partially offset by a decrease of $355.3 million in average short-term borrowings. The increase in average interest bearing deposits was largely due to increased NOW deposit balances, while average long-term borrowings increased mostly due to several new FHLB advances totaling $1.0 billion in early March 2024. The $355.3 million decrease in average short-term borrowings was mostly the result of a shift from the use of short-term FHLB advances to indirect customer time deposits in our mix of liquidity funding sources. As compared to the second quarter 2024, average interest bearing liabilities increased by $1.1 billion for the third quarter 2024 largely due to an increase in average indirect customer time deposit balances. See additional information under“Deposits and Other Borrowings” in the Executive Summary section above.
Previous wording
Net interest margin on a tax equivalent basis of 2.84 percent for the second quarter 2024 increased by 5 basis points from 2.79 percent for the first quarter 2024 and decreased 10 basis points from 2.94 percent for the second quarter 2023. The increase as compared to the first quarter 2024 was largely driven by the combination of a higher yield on average interest earning assets and a decline in the cost of average interest bearing liabilities. The yield on average interest earning assets increased by 2 basis points to 5.88 percent on a linked quarter basis largely due to higher yielding investment purchases and new loan originations during the second quarter 2024. The overall cost of average interest bearing liabilities decreased 4 basis points to 4.15 percent for the second quarter 2024 as compared to the first quarter 2024 primarily due to a reduction in both higher cost short-term FHLB borrowings and government banking non-maturity deposit account balances. Our cost of total average deposits was 3.18 percent for the second quarter 2024 as compared to 3.16 percent and 2.45 percent for the first quarter 2024 and the second quarter 2023, respectively.
Current wording
Net interest margin on a tax equivalent basis of 2.86 percent for the third quarter 2024 increased by 2 basis points from 2.84 percent for the second quarter 2024 and decreased 5 basis points from 2.91 percent for the third quarter 2023. The increase as compared to the second quarter 2024 was largely driven by higher yield on average interest earning assets largely offset by an increase in the cost of average interest bearing liabilities. The yield on average interest earning assets increased by 10 basis points to 5.98 percent on a linked quarter basis largely due to higher yielding investment purchases and new loan originations during the second and third quarter 2024. The overall cost of average interest bearing liabilities increased 7 basis points to 4.22 percent for the third quarter 2024 as compared to the second quarter 2024 largely due to higher interest rates on deposits. Our cost of total average deposits was 3.25 percent for the third quarter 2024 as compared to 3.18 percent and 2.94 percent for the second quarter 2024 and the third quarter 2023, respectively.
Previous wording
Based upon our latest model estimates, we anticipate net interest income growth in the range of 1.5 to 3.0 percent on a quarterly basis for both the third and fourth quarter 2024 as compared to the second quarter 2024. While we remain optimistic that our net interest income should continue to stabilize and grow during the remainder of 2024 as compared to the second quarter 2024, our forecasts include several uncertain assumptions, including changes in the level of market interest rates. As such, we cannot provide any assurances that our net interest income or margin will remain at the levels reported for the second quarter 2024. For a detailed discussion on the risks related to interest rates please refer to Part I, Item 1A. “Risk Factors” in our Annual Report.
Current wording
Based upon our latest model estimates, we anticipate net interest income to decline approximately one percent for the fourth quarter 2024 as compared to the third quarter 2024. The projected decline is largely due to lower forecasted interest income resulting from the expected sale of the commercial real estate loans transferred to loans held for sale during the third quarter 2024. Exclusive of this, we would have forecasted net interest income for the fourth quarter 2024 to be slightly higher relative to the third quarter 2024 as a result of modest loan growth and lower funding costs in the wake of the 50 basis point reduction to the federal funds target rate in September 2024. Our forecasts include several other uncertain assumptions, including changes in the level of market interest rates and the interest sensitivity of our balance sheet. As such, we cannot provide any assurances that our future net interest income or margin will meet our current estimates or remain near the levels reported for the third quarter 2024. For a detailed discussion on the risks related to interest rates please refer to Part I, Item 1A. “Risk Factors” in our Annual Report.
Previous wording
Non-interest income represented 5.8 percent and 7.1 percent of total interest income plus non-interest income for the three months ended June 30, 2024 and 2023, respectively and 6.3 percent and 7.1 percent of total interest income plus non-interest income for the six months ended June 30, 2024 and 2023, respectively. For the three and six months ended June 30, 2024, non-interest income decreased $8.9 million and $1.7 million as compared to the same periods in 2023.
Current wording
Non-interest income represented 6.6 percent and 6.7 percent of total interest income plus non-interest income for the three months ended September 30, 2024 and 2023, respectively and 6.4 percent and 6.9 percent of total interest income plus non-interest income for the nine months ended September 30, 2024 and 2023, respectively. For the three and nine months ended September 30, 2024, non-interest income increased $2.0 million and $261.0 thousand as compared to the same periods in 2023.
Previous wording
The following table presents the components of non-interest income for the three and six months ended June 30, 2024 and 2023:
Current wording
The following table presents the components of non-interest income for the three and nine months ended September 30, 2024 and 2023:
Previous wording
second quarter 2023 was mainly driven by higher brokerage fees. The increase for the six months ended June 30, 2024 was mainly due to a higher volume of success fees and other related periodic revenues generated by our tax credit advisory subsidiary, as well as increased brokerage fees. Brokerage fees increased by $1.2 million to $6.1 million for the second quarter 2024 and increased $2.6 million to $12.3 million for the six months ended June 30, 2024 as compared to the same periods in 2023 due to stronger customer trading volume at our broker dealer subsidiary.
Current wording
Wealth management and trust fees income increased $3.7 million and $14.0 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. Increases in both periods as compared to the same periods in 2023 were mainly driven by stronger fee production from tax credit advisory services. Brokerage fees also increased $2.7 million to $17.5 million for the nine months ended September 30, 2024 as compared to the same period in 2023 due to stronger customer trading volume at our broker dealer subsidiary during the first half of 2024.
Previous wording
Capital markets income decreased $9.2 million and $14.4 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 mainly due to a decline in the volume of interest rate swap transactions, and resulting fees related to commercial loan customers, as well as lower loan syndication fees.
Current wording
Capital markets income decreased $15.2 million for the nine months ended September 30, 2024 as compared to the same period in 2023 mainly due to a decline in the volume of interest rate swap transac tions, and resulting fees related to commercial loan customers.
Previous wording
Other non-interest income decreased $4.5 million and $6.6 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The decrease as compared to the
Current wording
Net gains on sales of assets decreased $6.6 million and$3.2 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. The decrease as compared to the
Previous wording
Net gains on sales of assets increased $3.4 million for the six months ended June 30, 2024 as compared to the same period in 2023 largely due to a $3.6 million net gain on the sale of our commercial premium finance lending business in the first quarter 2024.
Current wording
third quarter 2023 was mainly attributable to a $6.7 million net gain on the sale of non-branch offices located in Wayne, New Jersey in the third quarter 2023. The decrease for the nine months ended September 30, 2024 was net of a $3.6 million net gain realized on the sale of our commercial premium finance lending business in the first quarter 2024.
Previous wording
Bank owned life insurance income increased $2.1 million and $2.8 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 due to improved performance of the underlying investment securities.
Current wording
Bank owned life insurance income increased $2.7 million and $5.4 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 due to improved performance of the underlying investment securities.
Previous wording
Non-interest expense decreased $5.5 million and increased $2.7 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The following table presents the components of non-interest expense for the three and six months ended June 30, 2024 and 2023:
Current wording
The following table presents the components of non-interest expense for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Salary and employee benefits expense decreased $8.8 million and $11.9 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. The decreases in both 2024 periods were largely attributable to restructuring charges of $11.2 million recognized in the second quarter 2023, consisting of severance expense related to workforce reductions, partially offset by normal increases in labor costs and a decline in deferred compensation. The net decrease for the six months ended June 30, 2024 was also dueto merger related costs, primarily consisting of severance and retention compensation, totaling $4.1 million for thesix months ended June 30, 2023.
Current wording
Salary and employee benefits expense decreased $10.4 million for thenine months ended September 30, 2024 compared to the same period in 2023 largely due to restructuring severance charges of $10.5 million and merger related costs, primarily consisting of severance and retention compensation, totaling $4.1 million for thenine months ended September 30, 2023. These items were partially offset by normal increases in labor costsfor thenine months ended September 30, 2024.
Previous wording
Technology, furniture and equipment expense increased $2.7 million and $1.7 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods of 2023 mostly due to higher investments in technology, partially offset by decreases in equipment maintenance and repair expense.
Current wording
Technology, furniture and equipment expense decreased $8.4 million and $6.7 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods of 2023 mostly due to a decrease in software licensing costs, as well as lower telecommunication related expense.
Previous wording
Professional and legal fees decreased $3.5 million and $3.8 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The decreases in both periods were largely attributable to lower technology managed services and consulting expenses, partially offset by higher legal fees.
Current wording
Professional and legal fees decreased $3.0 million and $6.8 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 largely due to lower technology managed services and consulting expenses.
Previous wording
Other non-interest expense increased $2.2 million and $4.5 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 mainly due toincreased interest charges on collateral related to derivative transactions and thecosts related to the loan credit risk transfer transaction, consisting of a credit default swap, executed in June 2024. Total transaction costs included $400 thousand of one-time charges and $1.1 million of premium expense recorded in other expense during the second quarter 2024. The premium expense associated with the credit protection is estimated to be approximately $6.0 million for the remainder of 2024.
Current wording
Other non-interest expense increased $2.4 million and $6.9 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 mainly due to additional costs related to the loan credit risk transfer transaction, consisting of a credit default swap, executed in June 2024. The premium expense and other transaction costs associated with the credit protection totaled $3.2 million and $4.7 million for the three and nine months ended September 30, 2024. The increase for the nine months ended September 30, 2024 was also attributable to increased interest charges on collateral held related to derivative transactions.
Showing the first 40 of 106 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
2023 due to slightly higher allocations of the overhead expense to the Consumer Banking and Commercial Banking segments.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Israel-Hamas war); natural and other disasters (including severe weather events); health emergencies; acts of terrorism; or other external events;
Previous report — wording carried elsewhere
Average interest earning assets in Commercial Banking segment increased $362.0 million to $40.2 billion for the three months ended June 30, 2024 as compared to the second quarter 2023 primarily due to organic loan growth over the last 12 month period largely within the commercial real estate loan portfolio.
Previous report — wording carried elsewhere
See Note 1 to the consolidated financial statements for more details on the Series C preferred stock.