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| 8-K - 8-K - VALLEY NATIONAL BANCORP | vly8-k20170911investorpres.htm |
© 2017 Valley National Bank®. Member FDIC. Equal Opportunity Lender. All Rights Reserved.
2Q 2017 Investor Presentation
EXHIBIT 99.1
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical
facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products,
acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-
looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements
or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking
statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
failure to obtain shareholder or regulatory approval for the merger of USAmeriBancorp, Inc. ("USAB") with Valley or to satisfy other conditions to the merger on the
proposed terms and within the proposed timeframe; delays in closing the merger; the inability to realize expected cost savings and synergies from the merger of
USAB with Valley in the amounts or in the timeframe anticipated; changes in the estimate of non-recurring charges; the diversion of management’s time on issues
relating to the merger; costs or difficulties relating to integration matters might be greater than expected; material adverse changes in Valley’s or USAB’s operations
or earnings; an increase or decrease in the stock price of Valley during the 30 day pricing period prior to the closing of the merger which could cause an adjustment
to the exchange ratio or give either Valley or USAB the right to terminate the merger agreement under certain circumstances; the inability to retain USAB’s
customers and employees; weakness or a decline in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in
commercial real estate values within our market areas; less than expected cost reductions and revenue enhancement from Valley's cost reduction plans including its
earnings enhancement program called "LIFT"; damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of breach
of fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trade mark infringement, employment related claims, and other
matters; the loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income and net income; cyber attacks,
computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy
data, disable or degrade service, or sabotage our systems; results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the
possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to
reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; changes in accounting policies or accounting standards,
including the new authoritative accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our
allowance for credit losses after adoption on January 1, 2020; higher or lower than expected income tax expense or tax rates, including increases or decreases
resulting from changes in tax laws, regulations and case law; our inability to pay dividends at current levels, or at all, because of inadequate future earnings,
regulatory restrictions or limitations, and changes in our capital requirements; higher than expected loan losses within one or more segments of our loan portfolio;
unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather or
other external events; unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments,
changes in regulatory lending guidance or other factors; and the failure of other financial institutions with whom we have trading, clearing, counterparty and other
financial relationship. 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, 2016 and Quarterly Report on form 10-Q for the period ended June 30, 2017. 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.
2
3
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In
connection with the proposed merger, Valley intends to file a joint proxy statement/prospectus with the Securities and Exchange Commission. INVESTORS
AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the registration statement (when available) and other documents
filed by Valley with the Commission at the Commission’s web site at www.sec.gov. These documents may be accessed and downloaded for free at Valley’s
web site at http://www.valleynationalbank.com/filings.html or by directing a request to Dianne M. Grenz, Executive Vice President, Valley National Bancorp,
at 1455 Valley Road, Wayne, New Jersey 07470, telephone (973) 305-3380.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder of Valley or USAB. However, Valley, USAB, their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of proxies from USAB’s shareholders in respect of the proposed
transaction. Information regarding the directors and executive officers of Valley may be found in its definitive proxy statement relating to its 2017 Annual
Meeting of Shareholders, which was filed with the Commission on March 17, 2017 and can be obtained free of charge from Valley’s website. Other
information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will
be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Valley National Bancorp
2Q 2017 Earnings Highlights
4
Net Income
Q2 2017: $50.1 MM
Q2 2016: $39.0 MM
Diluted Earnings Per Share
Q2 2017: $0.18
Q2 2016: $0.15
Net Interest Margin
Q2 2017: 3.20%
Q2 2016: 3.14%
Return on Avg Assets
Q2 2017: 0.86%
Q2 2016: 0.72%
Operating Efficiency Ratio1
Q2 2017: 57.5%
Q2 2016: 63.8%
Valley National Bancorp
• 2Q 2017 Highlights
– Continued Earnings Improvement
• Project LIFT Results
– Earnings Enhancement Program
• Announced Merger
– USAmeriBancorp, Inc.
Key Metrics
1Refer to the appendix regarding the calculation for certain non-GAAP financial measures 5
6
Financial Highlights
Margin Improvement 2Q 2017 Highlights
3.14
3.20
3.10
3.15
3.20
Q2 2016 Q2 2017
Year over Year Loan Growth1 New Loan Originations2
• Yield on interest earning assets up 6 bps
compared to the same period one year ago
• New volume loan yield up 55 bps to
approximately 4.03% compared to the same
quarter one year ago
• Deposits contracted 2.3% year-to-date and
funding costs have modestly increased
4%
15% 15%
7%
Commercial &
Industrial
CRE Construction Total Loans
+6 bps
1,296
1,076
1,464
979 929
3.48% 3.40% 3.51%
3.75%
4.03%
0
500
1,000
1,500
2,000
2,500
2.00%
2.50%
3.00%
3.50%
4.00%
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Loan Volume Loan Yield (LHS)
1Loan growth is the change from June 30, 2016 to June 30, 2017, excludes loans held for sale
2Includes participations and sold loans
m
illio
n
s
Operating Efficiency
Efficiency Ratio 2Q 2017 Highlights
• Operating Efficiency Ratio
– Improved to 57.5% for the quarter
compared to 63.8% in the same
quarter one year ago1
• Net Interest Income
– Increased $17.5 million year over
year
• Non-Interest Income
– Increased $0.4 million year over year
• Non-Interest Expense
– Declined $0.6 million year over year
1Refer to the appendix regarding the calculation for certain non-GAAP financial measures 7
63.8
57.5
-0.3
-6.0
50
52
54
56
58
60
62
64
66
2Q 2016 Cost Saves Revnue
Enhancements
2Q 2017
Percent
Credit Quality
2Q 2017 Highlights
• Past Due & Non Accrual Loans
– Decreased 14 basis points linked
quarter to 0.47% of total loans
• Non-Performing Assets
– Remained steady at 0.23% of total
assets
• Provision vs. Net Charge-offs
– $3.6 million Provision for Credit
Losses compared to $2.7 million in
Net charge-offs
• Taxi Medallion Portfolio
– Similar to Peers, NYC medallions are
valued under $400k
YTD 2017 Net Charge-Offs1
0
.0
0
%
0
.0
4
%
0
.0
0
%
0
.0
1
%
0
.0
5
%
0
.0
3
%
0
.5
1
%
0
.0
3
%
1
.1
3
%
0
.4
5
%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
CRE C&I 1-4 Family Consumer Total Loans
VLY $10B - $50B Peers
1.22%
0.23%
2013 2014 2015 2016 2017
Non-Performing Assets to Total Assets
1Peer group includes commercial and savings banks between $10 billion and $50 billion in assets at December 31, 2016. Figures are YTD 2017 as of July 24, 2017 from SNL 8
Valley National Bancorp
2020 Vision
9
Strategic Focus to Achieve 2020 Vision
10
66.0%
61.1% 59.5%
< 55%
2015 2016 2017 YTD Long-Term Goal
Efficiency Ratio2
13%
14%
13%
15% - 20%
2015 2016 2017 YTD Long-Term Goal
Non-Int Income / Net Interest Income
plus Total Non-Int Income 13%
7%
6%
8% - 10%
2015 2016 2017
Annualized
Long-Term Goal
Loan Growth Exclusive of Whole Bank
Acquisitions1
1For 2015 and 2016, loan growth is the change in average loans for the year ended for the period indicated compared to the average loans for the prior year
ended; for 2017, loan growth is the change in average loans for the six months ended compared to the average loans for 2016 year ended
2Refer to the appendix regarding the calculation for certain non-GAAP financial measures
Enhance Non-Interest Revenue Growth
Improve Operating Efficiency
Improve
Earnings
Performance
Improve Operating Efficiency
Enhance Non-Interest Revenue
Residential Mortgage
11
Deliver Sustained Performance in Challenging Interest Rate Environments
Creating a Sustainable Gain on Sale Model
Refinance
91%
Purchase
9%
2011 - 2016 Originations
Refinance
38%
Purchase
62%
Q2 2017 Originations
• Valley Trust
• Hallmark Capital Management
• Commercial Purpose Premium Finance
Other
Initiatives
Expand Customer Base
• NJ / NY Market Strategy
– Increase Market Share via
Expansion of Current
Products
• C&I Lending
• Residential Mortgage
Purchase Product
• Florida Market Strategy
– Organic Growth
Opportunities
• 3.0% Real GPD Growth in
2016 (1.8x Greater NYC1)
– Opportunistic Acquisitions
• Gain Scale in Key Geographic
Markets
12
Leveraging Current Infrastructure Across All Three States to Drive Growth
NJ/NY
87%
FL
13%
Loans
NJ/NY
85%
FL
15%
Deposits
1Greater NYC represents NY-NJ-PA MSA, Source U.S. Bureau of Economic Analysis
Improve Operating Efficiency
13
6
7
%
6
6
%
6
7
%
6
4
%
6
5
%
6
4
%
6
0
%
5
6
%
6
2
%
5
7
%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019
Branch Rationalization
$19.5MM
Operating Efficiency Ratio1
Project LIFT
1Refer to the appendix regarding the calculation for certain non-GAAP financial measures
Compensation
69%
IT Contracts
20%
Occupancy
4%
Other
7%
Project LIFT: Impact
14 1Recurring annual pre-tax savings after 2Q 2019, net of severance, consulting fees and implementation expenses
$22MM
Recurring Annual
Pre-Tax Impact1
$19MM
Expense
Reduction
Fee Income
75%
$3MM
Revenue
Enhancement
$475
$480
$488
$491 +$4
($17)
($19)
450
460
470
480
490
500
2016 2017 2018 2019
Non-Interest Expense Projections
Consensus Lift Impact
m
ill
ion
s
Actual
Interest Income
25%
Overview of USAmeriBancorp, Inc.
15
Company Overview Financial Highlights ($ in Millions)
Management Team
USAB Deposit Franchise3
• Founded in 2007
• Headquartered in
Clearwater, FL
• Acquired Alexander
City, AL-based
Aliant Financial
Corporation in 2011
Market Market No. of Deposits
MSA Rank Share (%) Branches ($mm)
Tampa-St. Petersburg-Clearwater, FL 8 3.4% 14 $2,114
Montgomery, AL 7 5.7 6 441
Birmingham-Hoover, AL 14 0.9 5 321
Alexander City, AL 1 52.7 3 289
Auburn-Opelika, AL 13 1.9 1 47
Total: 29 $3,211
Name Title
Joseph V. Chillura President & CEO
Alfred T. Rogers, Jr. Executive VP and Chief Lending Officer
Amanda J. Stevens Executive VP & CFO
Loans2 Deposits2
Non-Interest
Demand
25%
Savings, MMA
& O her
Checking
46%
Retail Time
6%
Jumbo Time
23%
Construction
12%
Residential
R.E.
14%
Commercial
R.E.
54%
Commercial &
Industrial
18%
Consumer &
Other
2%
1Refer to the appendix regarding the calculation for certain non-GAAP financial measures; 2As of June 30, 2017; 3Per SNL Financial, as of June 30, 2016
2016Y 2017Q2
Net Interest Income $126.0 $35.5
Non Interest Income 14.3 5.2
Provision 6.0 (0.0)
Non Interest Expenses 75.9 21.2
Net Income 43.4 12.7
ROAA (%) 1.12% 1.19%
ROACE (%) 14.37 15.19
Net Interest Margin (%) 3.53 3.60
Efficiency Ratio (%) 54.1 52.2
Total Assets $4,153.3 $4,382.9
Gross Loans 3,373.6 3,585.7
Total Deposits 3,478.0 3,530.0
Total Equity 319.7 345.2
TCE / TA (%) (1) 7.2% 7.4%
Loans/ Deposits (%) 97 102
Leverage Ratio (%) 8.0 8.1
Tier 1 Ratio (%) 9.0 9.1
Total Capital Ratio (%) 11.7 12.1
Pr
of
ita
bi
lit
y
Ba
la
nc
e
Sh
ee
t
Ca
pi
ta
l
Ra
tio
s
In
co
m
e
St
at
em
en
t
Pro-Forma Impact Financial Summary
16
Note: Pro-forma impacts presented inclusive of preferred stock capital raise of approximately $75 million; actual preferred stock capital raise was $100 million
Note: Assumes pricing based on VLY closing price of $12.40 as of 7/25/2017
1Estimated financial impact is presented solely for illustrative purposes using mean analyst estimates. Includes purchase accounting marks and cost savings,
as well as approximately $75 million preferred stock capital raise 2See Non-GAAP disclosures in appendix
Key Transaction Impacts to VLY (1)
2018E EPS Accretion ~3%
2019E EPS Accretion ~6%
Initial Tangible Book Value Dilution 5.5%
Tangible Book Value Earnback Period 4.7 years
As of June 30, 2017 Proforma (1)
VLY USAB
As of and for the year ended
December 31, 2017
Balance Sheet (S in Millions)
Total Assets $23,449 $4,383 $29,046
Gross Loans HFI 17,711 3,586 21,766
Deposits 17,250 3,530 21,286
Tangible Common Equity (2) 1,578 323 1,910
Capital Ratios
TCE/TA (2) 6.9% 7.4% 6.9%
Leverage Ratio 7.7% 8.1% 7.9%
Common Equity Tier I Ratio 9.2% 8.4% 9.0%
Tier I Ratio 9.8% 9.1% 10.0%
Total Risk-based Capital Ratio 12.0% 12.1% 12.2%
Loan Concentration Ratios
C&D / Tier 1 + ALLL 47% 108% 58%
CRE / Total Risk-based Capital 433% 367% 417%
Valley National Bancorp
Appendix
17
Valley National Bancorp
1Data as of September 7, 2017
Since the Bank was founded in 1927, Valley has never produced a losing quarter
• Customer centric culture with experienced commercial lenders
• Superior credit quality
• Measured growth strategies
• Seasoned management team
• Operations in three (3) of the most heavily populated states
• Concentrated in affluent geographic markets
• Balanced institutional and retail stock ownership
• More than 288 institutional holders or 64% of all shares1
• Long-term investment approach
• Focus on cash dividends
• Large insider stock ownership including family members, retired
employees and retired directors
Shareholder
Focus
Demographic
Focus
Core
Focus
New York & New Jersey Franchise
178 Branches
Loans Deposits
16 Counties
Core Demographic
Overview
NJ Core
Market1
New York
City2
Long
Island
U.S.A.
Avg. Pop. / Sq. Mile 6,079 40,520 3,147 91
Avg. Household Income $103,362 $91,385 $120,590 $77,135
Avg. Deposits / Branch $120,448 $741,283 $137,345 $113,614
VLY Deposits $8.8 billion $2.3 billion $1.1 billion $16.4 billion
VLY Deposit Market Share 6.34% 0.21% 0.92% 0.15%
1NJ Core Market includes Passaic, Morris, Hudson, Essex and Bergen Counties
2New York City includes Brooklyn, Queens and Manhattan; Demographic and deposit data for 2016
NY & NJ
87%
NY & NJ
85%
Florida Franchise
FL
13%
Loans
FL
15%
Deposits
31 Branches
14 Counties
Core Demographic
Overview
Central
Tampa1
Central
Orlando2
Southeast3 Florida
Avg. Pop. / Sq. Mile 2,219 1,101 1,308 379
Avg. Household Income $69,745 $65,894 $72,350 $67,858
Avg. Deposits / Branch $115,137 $93,911 $146,160 $94,918
VLY Deposits $0.1 billion $0.5 billion $1.4 billion $2.5 billion
VLY Deposit Market Share 0.17% 1.10% 0.62% 0.50%
1Central Tampa includes Pinellas & Hillsborough Counties 2Central Orlando includes Orange, Brevard & Indian River Counties 3Southeast includes Palm Beach,
Broward & Miami-Dade Counties; Demographic and deposit data for 2016
Non-GAAP Disclosure Reconciliations
Calculation for operating efficiency ratio
Three Months Ended
($, thousands) June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30,
2017 2017 2016 2016 2016 2016 2015 2015 2015 2015 2014 2014
Total non-interest expense 119,239 120,952 124,829 113,268 119,803 118,225 174,893 108,652 107,412 108,118 121,267 91,536
Less: Amortization of tax credit investment 7,732 5,324 13,384 6,450 7,646 7,264 13,081 5,224 4,511 4,496 10,048 4,630
Less: Loss on extinquishment of debt 51,129 10,132
Total non-interest expense, adjusted 111,507 115,628 111,445 106,818 112,157 110,961 110,683 103,428 102,901 103,622 101,087 86,906
Net interest income 168,960 162,529 164,395 154,146 151,455 148,153 148,046 133,960 136,177 132,086 128,646 114,668
Total non-interest income 24,690 25,059 32,660 24,853 24,264 21,448 24,038 20,919 20,200 18,645 29,563 14,781
Total net interest income and non-interest income 193,650 187,588 197,055 178,999 175,719 169,601 172,084 154,879 156,377 150,731 158,209 129,449
Less: Change in FDIC loss-share receivable -452 -229 -419 -313 1 -560 54 -55 595 -3,920 -9,182 -3,823
Total net interest income and non-interest income, adjusted 194,102 187,817 197,474 179,312 175,718 170,161 172,030 154,934 155,782 154,651 167,391 133,272
Efficiency ratio 61.57% 64.48% 63.35% 63.28% 68.18% 69.71% 101.63% 70.15% 68.69% 71.73% 76.65% 70.71%
Efficiency ratio, adjusted 57.45% 61.56% 56.44% 59.57% 63.83% 65.21% 64.34% 66.76% 66.05% 67.00% 60.39% 65.21%
21
Non-GAAP Disclosure Reconciliations
Six Months Ended Years Ended
($, thousands) June 30, December 31, December 31,
2017 2016 2015
Total non-interest expense 240,191 476,125 499,075
Less: Amortization of tax credit investment 13,056 34,744 27,312
Less: Loss on extinguishment of debt 51,129
Total non-interest expense, adjusted 227,135 441,381 420,634
Net interest income 331,489 618,149 550,269
Total non-interest income 49,749 103,225 83,802
Total net interest income and non-interest income 381,238 721,374 634,071
Less: Change in FDIC loss-share receivable -681 -1,291 -3,326
Total net interest income and non-interest income, adjusted 381,919 722,665 637,397
Efficiency ratio 63.00% 66.00% 78.71%
Efficiency ratio, adjusted 59.47% 61.08% 65.99%
22
Calculation for operating efficiency ratio (continued)
23
As of
($, millions)
December 31,
2015
December 31,
2016
June 30,
2017
Total Assets 3,632 4,153 4,383
Less: Goodwill & Other Intangibles 13 13 12
Total Tangible Assets (TA) 3,619 4,141 4,371
Total Common Equity 270 310 335
Less: Goodwill & Other Intangibles 13 13 12
Total Tangible Common Equity (TCE) 257 297 323
TCE / TA (%) 7.1 7.2 7.4
1Pro Forma includes estimated purchase accounting adjustments
Financial measures for USAmeriBank
Non-GAAP Disclosure Reconciliations
24
As of
($, millions) June 30, 2017 December 31, 2017
VLY USAB Pro-Forma1
Total Assets 23,449 4,383 29,046
Less: Goodwill & Other Intangibles 734 12 1,235
Total Tangible Assets (TA) 22,715 4,371 27,811
Total Common Equity 2,312 335 3,145
Less: Goodwill & Other Intangibles 734 12 1,235
Total Tangible Common Equity (TCE) 1,578 323 1,910
TCE / TA (%) 6.9 7.4 6.9
1Pro Forma includes estimated purchase accounting adjustments
Financial measures for Valley National Bank and USAmeriBank
Non-GAAP Disclosure Reconciliations
For More Information
Log onto our web site: www.valleynationalbank.com
E-mail requests to: tzarkadas@valleynationalbank.com
Call Shareholder Relations at: (973) 305-3380
Write to: Valley National Bank
1455 Valley Road
Wayne, New Jersey 07470
Attn: Tina Zarkadas, Shareholder Relations Specialist
Log onto our website above or www.sec.gov to obtain free copies of documents
filed by Valley with the SEC
25