VALLEY NATIONAL BANCORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.2 - EXHIBIT 99.2 - VALLEY NATIONAL BANCORP	investorpresentationq320.htm
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EXHIBIT 99.1



		News Release



FOR IMMEDIATE RELEASE	Contact:	Alan D. Eskow
		Senior Executive Vice President and
		Chief Financial Officer
		973-305-4003

VALLEY NATIONAL BANCORP REPORTS THIRD QUARTER NET INCOME, STRONG LOAN GROWTH AND SOLID CREDIT QUALITY

WAYNE, NJ – October 25, 2017 -- Valley National Bancorp (NYSE:VLY), the holding company for Valley National Bank, today reported net income for the third quarter of 2017 of $39.6 million, or $0.14 per diluted common share, as compared to the third quarter of 2016 earnings of $42.8 million, or $0.16 per diluted common share, and net income of $50.1 million, or $0.18 per diluted common share, for the second quarter of 2017. Net income for the third quarter of 2017 included infrequent charges totaling $11.1 million ($6.8 million after-tax) that mostly consist of professional fees and employee severance expense related to our LIFT earnings enhancement program, and, to a lesser extent, merger expenses related to the proposed acquisition of USAmeriBancorp, Inc. ("USAB"). Excluding the infrequent charges, our adjusted net income was $46.4 million, or $0.17 per diluted common share, for the third quarter of 2017. See further details below.

Key financial highlights for the third quarter:

•

Loan Portfolio: Loans increased by $490.7 million, or 11.1 percent on an annualized basis, to $18.2 billion at September 30, 2017 from June 30, 2017 largely due to net increases of $216.7 million, $143.1 million and $75.6 million in residential mortgage loans, total commercial real estate loans and commercial and industrial loans, respectively. The residential mortgage loan growth was largely driven by solid loan production from our expanding internal team of mortgage consultants covering New Jersey, New York and Florida. Additionally, during the third quarter of 2017, we sold $176 million of residential mortgage loans (including approximately $139 million of loans held for sale at June 30, 2017) resulting in pre-tax gains of $5.5 million. See additional information under the "Loans, Deposits and Other Borrowings" section below.

•

Earnings Enhancement Program: In July 2017, we completed the idea generation and approval phase of the our company-wide earning enhancement initiative called LIFT. As a result of these efforts, we plan to achieve approximately $22 million in total cost reductions and revenue enhancements on an annualized pre-tax run-rate through a combination of workforce reduction and other efficiency and revenue initiatives. We estimate that these changes will result in employee severance and other implementation costs of approximately $11 million, of which the vast majority was recognized in the third quarter of 2017. The implementation phase of the initiative enhancements is expected to be fully phased-in by June 30, 2019. During the third quarter of 2017, Valley implemented several enhancements that we anticipate will result in cost reductions of $9 million on an annualized pre-tax basis beginning in the fourth quarter of 2017.


•	Efficiency Ratio: Our efficiency ratio was 69.43 percent for the third quarter of 2017 compared to 63.28 percent and 61.57 percent for the third quarter of 2016 and second quarter of 2017, respectively. Excluding the aforementioned $11.1 million of infrequent charges and amortization

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

of tax credit investments included in non-interest expense, our adjusted efficiency ratio was 59.21 percent for the third quarter of 2017 as compared to 59.68 percent and 57.58 percent for the third quarter of 2016 and second quarter of 2017, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding this non-GAAP measure.

•

Net Interest Income and Margin: Net interest income on a tax equivalent basis of $166.9 million for the third quarter of 2017 increased $10.6 million as compared to the third quarter of 2016 and decreased $4.2 million from the second quarter of 2017. Our net interest margin on a tax equivalent basis of 3.08 percent for the third quarter of 2017 decreased by 6 basis points and 12 basis points as compared to the third quarter of 2016 and second quarter of 2017, respectively. The decrease in net interest income and margin for the third quarter of 2017 as compared to the linked second quarter was partly caused by a combined decrease of $4.1 million in commercial loan interest rate swap fees and interest income recoveries from non-performing loans, as well as an increase in interest expense on deposits. See the "Net Interest Income and Margin" section below for more details.

Gerald H. Lipkin, Chairman & CEO commented that, “Our net income continued to benefit from strong new loan volumes mainly within residential mortgage and commercial real estate loans during the third quarter. Additionally, the credit quality of our balance sheet remained well-controlled as reflected in the decrease in accruing loans past due to 0.17 percent of total loans and net recoveries of loan charge-offs totaling $1.2 million for the third quarter of 2017."

The acquisition of USAB, and its wholly owned subsidiary, USAmeriBank, is expected to close in the first quarter of 2018, and Valley has received all necessary banking regulatory approvals to complete the merger. However, the merger is still subject to a number of conditions, including shareholder approval. Valley has filed an S-4 registration containing a joint proxy statement with the Securities Exchange Commission (“SEC”). When the SEC process allows the registration statement to become effective, Valley and USAB will announce the dates of their shareholder meetings that are expected to be held in December 2017.

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $166.9 million for the third quarter of 2017 increased $10.6 million as compared to the third quarter of 2016 and decreased $4.2 million from the second quarter of 2017. Interest income on a tax equivalent basis increased $401 thousand to $213.7 million for the third quarter of 2017 as compared to the second quarter of 2017 mainly due to a $304.6 million increase in average loans, partially offset by a 5 basis point decrease in the yield on average loans. The decrease in yield on average loans for the third quarter of 2017 as compared to the linked second quarter was largely due to a combined decrease of $4.1 million in periodic commercial loan fee income related to derivative interest rate swaps executed with customers and interest income recoveries from non-performing loans. Interest expense of $46.8 million for the third quarter of 2017 increased $4.6 million as compared to the second quarter of 2017. During the third quarter of 2017, our interest expense on deposits increased by approximately $3.6 million from the linked second quarter largely due to an increase in short-term market interest rates on interest bearing deposits without stated maturities and one more day during the third quarter compared to the second quarter. Interest expense on long-term borrowings also increased $1.4 million in the third quarter of 2017 as compared to the second quarter of 2017 due, in part, to an increase of $352.4 million in the average balances. Average long-term borrowings increased as compared to the

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

second quarter of 2017 mostly due to new long-term FHLB borrowings replacing short-term FHLB advances that matured during the second and third quarters of 2017. As a result, both the interest expense on short-term borrowings and average balances declined by $355 thousand and $300.2 million, respectively, during the third quarter of 2017 as compared to the second quarter of 2017.

Our net interest margin on a tax equivalent basis of 3.08 percent for the third quarter of 2017 decreased by 6 basis points and 12 basis points as compared to the third quarter of 2016 and second quarter of 2017, respectively. The yield on average interest earning assets decreased by 3 basis points on a linked quarter basis mostly due to the aforementioned decline in commercial loan swap fees and interest income recoveries which negatively impacted the yield by 8 basis points. The yield on average loans also decreased 5 basis points to 4.15 percent for the third quarter of 2017 as compared to the second quarter of 2017 due to the aforementioned decreases which negatively impacted the loan yield by approximately 9 basis points. The yield on average taxable and non-taxable investment securities also moderately decreased by 1 basis point and 2 basis points, respectively, as compared to the second quarter of 2017. The overall cost of average interest bearing liabilities increased by 11 basis points to 1.19 percent during the third quarter of 2017 from 1.08 percent in the linked second quarter of 2017. The increase was due, in part, to higher interest rates on most deposits and short-term borrowings, a shift in the overall mix of borrowings from short-term to more long-term FHLB advances (with maturities less than two years), as well as one more day during the third quarter of 2017 compared to the second quarter. Our cost of total deposits was 0.61 percent for the third quarter of 2017 as compared to 0.53 percent for the second quarter of 2017.

Non-Interest Income

Non-interest income increased $1.4 million, or 5.7 percent, to $26.1 million for the third quarter of 2017 from $24.7 million for the second quarter of 2017 mostly due to an increase in net gains on sales of residential mortgage loans caused by higher sales volume.

Non-Interest Expense

Non-interest expense increased $13.3 million, or 11.2 percent, to $132.6 million for the third quarter of 2017 from the second quarter of 2017 mainly due to increases of $6.8 million and $5.7 million in professional and legal fees and salary and employee benefits, respectively. For the third quarter of 2017, these expense categories included charges of $7.1 million and $3.8 million, respectively, related to our LIFT initiative and proposed USAB merger. Other non-interest expense also included $266 thousand of USAB merger related expenses during the third quarter of 2017.

Income Tax Expense

Income tax expense totaled $17.1 million for the third quarter of 2017 as compared to $20.7 million and $17.0 million for the second quarter of 2017 and third quarter of 2016, respectively. Our effective tax rate was 30.1 percent, 29.3 percent, and 28.5 percent for the third quarter of 2017, second quarter of 2017, and third quarter of 2016, respectively. For the remainder of 2017, we anticipate that our effective tax rate will range from 28 percent to 31 percent primarily reflecting the impacts of tax-exempt income, tax-advantaged investments and general business credits.

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

Loans, Deposits and Other Borrowings

Loans. Loans increased $490.7 million, or 11.1 percent on an annualized basis, to approximately $18.2 billion at September 30, 2017 from June 30, 2017, net of $69.6 million decline in the PCI loan portion of the portfolio. Residential mortgage loans held for sale totaled $13.3 million and $139.6 million at September 30, 2017 and June 30, 2017, respectively. See additional information regarding our residential mortgage loan activities below.

Total commercial and industrial loans increased $75.6 million, or 11.5 percent on an annualized basis, from June 30, 2017 to approximately $2.7 billion at September 30, 2017 due to a $86.7 million, or 14.3 percent on an annualized basis, increase in the non-PCI loan portfolio, partially offset by normal run-off in the PCI loan portfolio.

Commercial real estate loans (excluding construction loans) increased $120.6 million from June 30, 2017 to $9.4 billion at September 30, 2017 mostly due to a $158.6 million, or 7.7 percent on an annualized basis, increase in the non-PCI loan portfolio. The increase in non-PCI loans was primarily due to solid organic loan volumes in New York, New Jersey and Florida, particularly amongst our pre-existing long-term customer base during the third quarter of 2017. Construction loans increased $22.6 million, or 10.2 percent on an annualized basis, to $903.6 million at September 30, 2017 from June 30, 2017. The increase was mostly due to advances on existing construction projects.

Total residential mortgage loans increased $216.7 million, or approximately 31.8 percent on an annualized basis, to approximately $2.9 billion at September 30, 2017 from June 30, 2017 due to strong loan volumes generated by our new and expanding internal team of mortgage consultants covering our primary markets and a high level of such loans originated for portfolio investment rather than sale during the third quarter of 2017. New and refinanced residential mortgage loan originations totaled approximately $307 million for the third quarter of 2017 as compared to $194 million and $258 million for the second quarter of 2017 and third quarter of 2016, respectively.

Home equity loans totaling $448.8 million at September 30, 2017 decreased by $1.7 million as compared to June 30, 2017 mostly due to PCI loan repayment activity. New home equity loan volumes and customer usage of existing home equity lines of credit continue to be weak, despite a relatively attractive interest rate environment.

Automobile loans increased by $21.3 million, or 7.4 percent on an annualized basis, to $1.2 billion at September 30, 2017 as compared to June 30, 2017. New auto loan origination volumes increased approximately 12.9 percent during the third quarter of 2017 as compared to the second quarter of 2017 largely due to stronger application activity. Our Florida dealership network contributed over $25 million in auto loan originations, representing approximately 17 percent of Valley's total new auto loan production for the third quarter of 2017 as compared to approximately $23.2 million, or 18 percent, of Valley's total auto originations for the second quarter of 2017.

Other consumer loans increased $35.6 million, or 22.2 percent on an annualized basis, to $677.9 million at September 30, 2017 as compared to $642.2 million at June 30, 2017 mainly due to continued growth and customer usage of collateralized personal lines of credit.

Deposits. Total deposits increased $62.7 million, or 1.5 percent on an annualized basis, to approximately $17.3 billion at September 30, 2017 from June 30, 2017 largely due to increases in the Savings, NOW, and money market accounts, as well as time deposits resulting from ongoing retail and business account

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

initiatives in 2017. However, non-interest bearing deposits and brokered money market account balances declined $98.6 million and $96.2 million at September 30, 2017, respectively, as compared to June 30, 2017. Non-interest bearing deposits; savings, NOW, money market deposits; and time deposits represented approximately 29 percent, 51 percent and 20 percent of total deposits as of September 30, 2017. The composition of deposits based upon the period end balances remained relatively unchanged at September 30, 2017 as compared to June 30, 2017.

Other Borrowings. Short-term borrowings decreased $251.7 million to approximately $1.5 billion at September 30, 2017 as compared to June 30, 2017 largely due to the maturity of several FHLB advances. Long-term borrowings increased $395.6 million to $2.2 billion at September 30, 2017 as compared to June 30, 2017 mostly due to new FHLB advances with contractual terms less than two years utilized to replace the matured short-term advances and provide additional liquidity for loan growth during the third quarter of 2017.

Credit Quality

Hurricane Irma. The credit quality of our Florida loan portfolio has remained resilient in the aftermath of Hurricane Irma, which hit Florida in mid-September. Through our loan customer outreach efforts, we offered loan payment deferrals up to 90 days to distressed borrowers. Under the deferral program, we have currently granted 53 loan deferral requests with a combined outstanding balance of approximately $37.6 million. At this time, no material loan losses are expected as a result of the hurricane.

Non-Performing Assets. Our past due loans and non-accrual loans discussed further below exclude PCI loans. Under U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are not subject to delinquency classification in the same manner as loans originated by Valley. Our PCI loan portfolio totaled $1.5 billion, or 8.1 percent, of our total loan portfolio at September 30, 2017.

Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned properties and other repossessed assets (foreclosed assets), and non-accrual debt securities increased $596 thousand, or 1.1 percent, to $55.2 million at September 30, 2017 as compared to June 30, 2017 mainly due to a moderate increase in foreclosed assets during the third quarter of 2017.

Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $11.6 million to $30.1 million, or 0.17 percent of total loans, at September 30, 2017 as compared to $41.8 million, or 0.24 percent of total loans, at June 30, 2017. The lower level of accruing past due loans was primarily caused by decreases of $6.6 million and $5.7 million in the loans past due 90 or more days and loans past due 60 to 89 days categories at September 30, 2017, respectively, as compared to June 30, 2017. The decreases were largely caused by the third quarter renewal of matured performing loans and the improved performance of one internally classified loan relationship previously reported in the respective delinquency categories at June 30, 2017.

At September 30, 2017, our commercial and industrial loan portfolio included NYC and Chicago taxi medallion loans totaling $129.3 million and $10.0 million, respectively. At September 30, 2017, the medallion portfolio included impaired loans of $40.5 million with related reserves of $5.0 million within the allowance for loan losses as compared to impaired loans of $37.4 million with related reserves of $3.7 million at June 30, 2017. At September 30, 2017, the impaired medallion loans largely consisted of performing troubled debt restructured (TDR) loans, as well as $5.6 million of non-accrual Chicago

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

taxi cab medallion loans. At September 30, 2017, loans past due 60 to 89 days included $2.2 million of matured performing NYC taxi medallions. We are currently renegotiating the terms of these past due loans. In addition, $18.2 million of performing NYC taxi medallion loans have contractual maturity dates in the fourth quarter of 2017. Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees and other collateral whenever possible. However, we continue to closely monitor this portfolio's performance and the potential impact of the changes in market valuation for taxi medallions due to competing car service providers and other factors.

Despite the increase in performing taxi medallion loans classified as impaired TDR loans, we believe our overall credit quality metrics continued to reflect our solid underwriting standards at September 30, 2017. However, we can provide no assurances as to the future level of our loan delinquencies.

Allowance for Credit Losses. The following table summarizes the allocation of the allowance for credit losses to specific loan categories and the allocation as a percentage of each loan category (including PCI loans) at September 30, 2017, June 30, 2017, and September 30, 2016:



		September 30, 2017				June 30, 2017				September 30, 2016
				Allocation				Allocation				Allocation
				as a % of				as a % of				as a % of
		Allowance		Loan		Allowance		Loan		Allowance		Loan
		Allocation		Category		Allocation		Category		Allocation		Category
		($ in thousands)
Loan Category:
Commercial and industrial loans*		$	57,203	2.11	%	$	53,792	2.04	%	$	52,969	2.07	%
Commercial real estate loans:
	Commercial real estate	36,626		0.39	%	37,180		0.40	%	35,513		0.43	%
	Construction	18,673		2.07	%	18,275		2.07	%	16,947		2.11	%
Total commercial real estate loans		55,299		0.54	%	55,455		0.55	%	52,460		0.58	%
Residential mortgage loans		3,892		0.13	%	4,186		0.15	%	3,378		0.12	%
Consumer loans:
	Home equity	592		0.13	%	582		0.13	%	796		0.17	%
	Auto and other consumer	4,494		0.24	%	4,606		0.26	%	3,311		0.20	%
Total consumer loans		5,086		0.22	%	5,188		0.23	%	4,107		0.19	%
Total allowance for credit losses		$	121,480	0.67	%	$	118,621	0.67	%	$	112,914	0.68	%
Allowance for credit losses as a %
of non-PCI loans				0.73	%			0.73	%			0.76	%

* Includes the reserve for unfunded letters of credit.

Our loan portfolio, totaling $18.2 billion at September 30, 2017, had net recoveries of loan charge-offs totaling $1.2 million for the third quarter of 2017 as compared to net loan charge-offs of $2.7 million and $3.3 million for the second quarter of 2017 and the third quarter of 2016, respectively. The improvement in net loan charge-offs as compared to the second quarter of 2017 was mainly due to one large commercial and industrial loan recovery totaling $1.8 million during the third quarter of 2017 and a decline in charge-offs within the same loan category mainly due to an unrelated charged-off loan relationship totaling $1.9 million in the second quarter of 2017. During the third quarter of 2017, we recorded a $1.6 million

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

provision for credit losses as compared to $3.6 million and $5.8 million for the second quarter of 2017 and the third quarter of 2016, respectively. The quarter over quarter decrease in the provision was due, in part, to our aforementioned net recoveries of loan charge-offs and the moderate levels of actual and estimated loss experience across the majority of the loan portfolio which is reflective of both Valley's underwriting standards and current economic conditions. Additionally, our analysis of the adequacy of the allowance for loan losses included an assessment of the impact of Hurricane Irma on our Florida loan portfolio at September 30, 2017. As result of the assessment, we do not expect a material amount of loan losses related to Hurricane Irma.

The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a percentage of total loans was 0.67 percent at both September 30, 2017 and June 30, 2017 and 0.68 percent at September 30, 2016. At September 30, 2017, our allowance allocations for losses as a percentage of total loans remained relatively stable in most loan categories as compared to June 30, 2017, but increased 0.07 percent for commercial and industrial loans. The increase was partly attributable to an increase in specific and qualitative reserves related to the collateral valuation of taxi medallion loans.

Our allowance for credit losses as a percentage of total non-PCI loans (excluding PCI loans with carrying values totaling approximately $1.5 billion) was 0.73 percent at both September 30, 2017 and June 30, 2017 as compared to 0.76 percent at September 30, 2016. PCI loans are accounted for on a pool basis and initially recorded net of fair valuation discounts related to credit which may be used to absorb future losses on such loans before any allowance for loan losses is recognized subsequent to acquisition. Due to the adequacy of such discounts, there were no allowance reserves related to PCI loans at September 30, 2017, June 30, 2017 and September 30, 2016.

Capital Adequacy

Valley's regulatory capital ratios continue to reflect its strong capital position. Valley's total risk-based capital, Tier 1 capital, Tier 1 leverage capital, and common equity Tier 1 capital ratios were 12.61 percent, 10.42 percent, 8.13 percent and 9.22 percent, respectively, at September 30, 2017. On August 3, 2017, Valley issued $100 million of 5.50 percent (fixed-to-floating rate) non-cumulative perpetual preferred stock (Series B) which was included in Valley's Tier 1 capital and total risk-based capital at September 30, 2017. Net proceeds to Valley after deducting underwriting discounts, commissions and offering expenses were approximately $98.1 million.

Investor Conference Call

Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Standard Time, today to discuss the 2017 third quarter earnings. Those wishing to participate in the call may dial toll-free (800) 230-1093. Investor presentation materials will be made available prior to the conference call at www.valleynationalbank.com.

About Valley

Valley National Bancorp is a regional bank holding company headquartered in Wayne, New Jersey with nearly $24 billion in assets. Its principal subsidiary, Valley National Bank, currently operates over 200 branch locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn, Queens and Long Island, and Florida. Valley National Bank is one of the largest commercial banks

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017

headquartered in New Jersey with executive offices in Manhattan and West Palm Beach. Helping communities grow and prosper is the heart of Valley’s corporate citizenship philosophy. For more information about Valley National Bank and its products and services, please visit a convenient branch location, www.valleynationalbank.com or call our 24/7 Customer Service Team at 800-522-4100.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:


•	weakness or a decline in the economy, mainly in New Jersey, New York and Florida, 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 or determination not to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;


•	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;

Valley National Bancorp (NYSE: VLY)

2017 Third Quarter Earnings

October 25, 2017


•	unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors;


•	the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.


•	failure to close the merger with USAB for any reason, including the failure to obtain shareholder approval for the merger within the proposed timeframe or the stock price of Valley during the 30 day pricing period prior to the closing of the merger gives either Valley or USAB the right to terminate the merger agreement;


•	the risk that the businesses of Valley and USAB may not be combined successfully, or such combination may take longer or be more difficult, time-consuming or costly to accomplish than expected;


•	the diversion of management's time on issues relating to 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; and


•	the inability to retain USAB’s customers and employees.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 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.

# # #

-Tables to Follow-

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS

SELECTED FINANCIAL DATA



		Three Months Ended									Nine Months Ended
		September 30,			June 30,			September 30,			September 30,
($ in thousands, except for share data)		2017			2017			2016			2017			2016
FINANCIAL DATA:
Net interest income		$	164,854		$	168,960		$	154,146		$	496,343		$	453,754
Net interest income - FTE ⁽¹⁾		166,878			171,086			156,315			502,666			459,930
Non-interest income		26,088			24,690			24,853			75,837			70,565
Non-interest expense		132,565			119,239			113,268			372,756			351,296
Income tax expense		17,088			20,714			17,049			55,873			46,898
Net income		39,649			50,065			42,842			135,809			118,056
Dividends on preferred stock		2,683			1,797			1,797			6,277			5,391
Net income available to common shareholders		$	36,966		$	48,268		$	41,045		$	129,532		$	112,665
Weighted average number of common shares outstanding:
	Basic	264,058,174			263,958,292			254,473,994			263,938,786			254,310,769
	Diluted	264,936,220			264,778,242			254,940,307			264,754,845			254,698,593
Per common share data:
	Basic earnings	$	0.14		$	0.18		$	0.16		$	0.49		$	0.44
	Diluted earnings	0.14			0.18			0.16			0.49			0.44
	Cash dividends declared	0.11			0.11			0.11			0.33			0.33
Closing stock price - high		12.40			12.23			9.80			12.76			10.13
Closing stock price - low		10.71			11.28			8.86			10.71			8.31
CORE ADJUSTED FINANCIAL DATA: ⁽²⁾
Net income available to common shareholders, as adjusted		$	43,762		$	48,268		$	41,045		$	136,329		$	112,665
Basic earnings per share, as adjusted		$	0.17		$	0.18		$	0.16		$	0.52		$	0.44
Diluted earnings per share, as adjusted		0.17			0.18			0.16			0.51			0.44
FINANCIAL RATIOS:
Net interest margin		3.05		%	3.16		%	3.10		%	3.10		%	3.08		%
Net interest margin - FTE ⁽¹⁾		3.08			3.20			3.14			3.14			3.12
Annualized return on average assets		0.67			0.86			0.78			0.78			0.72
Annualized return on avg. shareholders' equity		6.34			8.27			7.61			7.42			7.04
Annualized return on avg. tangible shareholders' equity ⁽²⁾		8.96			11.88			11.29			10.61			10.48
Efficiency ratio ⁽³⁾		69.43			61.57			63.28			65.15			67.00
CORE ADJUSTED FINANCIAL RATIOS: ⁽²⁾
Annualized return on average assets, as adjusted		0.79		%	0.86		%	0.78		%	0.81		%	0.72		%
Annualized return on average shareholders' equity, as adjusted		7.42			8.27			7.61			7.79			7.04
Annualized return on average tangible shareholders' equity, as adjusted		10.50			11.88			11.29			11.14			10.48
Efficiency ratio, as adjusted		59.21			57.58			59.68			59.46			62.93
AVERAGE BALANCE SHEET ITEMS:
Assets		$	23,604,252		$	23,396,259		$	22,081,470		$	23,334,491		$	21,831,622
Interest earning assets		21,642,846			21,416,671			19,896,832			21,338,866			19,641,559
Loans		18,006,274			17,701,676			16,570,723			17,676,222			16,273,482
Interest bearing liabilities		15,737,738			15,610,935			14,550,002			15,546,272			14,389,474
Deposits		17,353,099			17,288,487			16,668,925			17,336,068			16,501,615
Shareholders' equity		2,502,538			2,420,848			2,251,461			2,441,227			2,236,569

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS



	As Of
BALANCE SHEET ITEMS:	September 30,			June 30,			March 31,			December 31,			September 30,
(In thousands)	2017			2017			2017			2016			2016
Assets	$	23,780,661		$	23,449,350		$	23,220,456		$	22,864,439		$	22,368,453
Total loans	18,201,462			17,710,760			17,449,498			17,236,103			16,634,135
Non-PCI loans	16,729,607			16,169,291			15,794,797			15,464,601			14,777,020
Deposits	17,312,766			17,250,018			17,331,141			17,730,708			16,972,183
Shareholders' equity	2,537,984			2,423,901			2,398,541			2,377,156			2,257,073

LOANS:
(In thousands)
Commercial and industrial	$	2,706,912		$	2,631,312		$	2,642,319		$	2,638,195		$	2,558,968
Commercial real estate:
Commercial real estate	9,351,068			9,230,514			9,016,418			8,719,667			8,313,855
Construction	903,640			881,073			835,854			824,946			802,568
Total commercial real estate	10,254,708			10,111,587			9,852,272			9,544,613			9,116,423
Residential mortgage	2,941,435			2,724,777			2,745,447			2,867,918			2,826,130
Total Consumer:
Home equity	448,842			450,510			458,891			469,009			476,820
Automobile	1,171,685			1,150,343			1,150,053			1,139,227			1,121,606
Other consumer	677,880			642,231			600,516			577,141			534,188
Total consumer loans	2,298,407			2,243,084			2,209,460			2,185,377			2,132,614
Total loans	$	18,201,462		$	17,710,760		$	17,449,498		$	17,236,103		$	16,634,135

CAPITAL RATIOS:
Book value per common share	$	8.81		$	8.76		$	8.67		$	8.59		$	8.43
Tangible book value per common share ⁽²⁾	6.04			5.98			5.88			5.80			5.55
Tangible common equity to tangible assets ⁽²⁾	6.92		%	6.95		%	6.90		%	6.91		%	6.53		%
Tier 1 leverage capital	8.13			7.69			7.70			7.74			7.35
Common equity tier 1 capital	9.22			9.18			9.12			9.27			8.73
Tier 1 risk-based capital	10.42			9.81			9.76			9.90			9.36
Total risk-based capital	12.61			11.99			11.96			12.15			11.64

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS



		Three Months Ended									Nine Months Ended
ALLOWANCE FOR CREDIT LOSSES:		September 30,			June 30,			September 30,			September 30,
($ in thousands)		2017			2017			2016			2017			2016
Beginning balance - Allowance for credit losses		$	118,621		$	117,696		$	110,414		$	116,604		$	108,367
Loans charged-off:
	Commercial and industrial	(265		)	(2,910		)	(3,763		)	(4,889		)	(5,507		)
	Commercial real estate	—			(139		)	—			(553		)	(519		)
	Construction	—			—			—			—			—
	Residential mortgage	(129		)	(229		)	(518		)	(488		)	(750		)
	Total Consumer	(1,335		)	(1,011		)	(782		)	(3,467		)	(2,553		)
	Total loans charged-off	(1,729		)	(4,289		)	(5,063		)	(9,397		)	(9,329		)
Charged-off loans recovered:
	Commercial and industrial	2,320			312			902			3,480			2,418
	Commercial real estate	42			346			34			530			1,581
	Construction	—			294			10			294			10
	Residential mortgage	220			235			495			903			604
	Total Consumer	366			395			282			1,324			1,194
	Total loans recovered	2,948			1,582			1,723			6,531			5,807
Net recoveries (charge-offs)		1,219			(2,707		)	(3,340		)	(2,866		)	(3,522		)
Provision for credit losses		1,640			3,632			5,840			7,742			8,069
Ending balance - Allowance for credit losses		$	121,480		$	118,621		$	112,914		$	121,480		$	112,914
Components of allowance for credit losses:
	Allowance for loan losses	$	118,966		$	116,446		$	110,697		$	118,966		$	110,697
	Allowance for unfunded letters of credit	2,514			2,175			2,217			2,514			2,217
Allowance for credit losses		$	121,480		$	118,621		$	112,914		$	121,480		$	112,914
Components of provision for credit losses:
	Provision for loan losses	$	1,301		$	3,710		$	5,949		$	7,413		$	8,041
	Provision for unfunded letters of credit	339			(78		)	(109		)	329			28
Provision for credit losses		$	1,640		$	3,632		$	5,840		$	7,742		$	8,069
Annualized ratio of total net (recoveries) charge-offs to average loans		(0.03		)%	0.06		%	0.08		%	0.02		%	0.03		%
Allowance for credit losses as a % of non-PCI loans		0.73		%	0.73		%	0.76		%	0.73		%	0.76		%
Allowance for credit losses as a % of total loans		0.67		%	0.67		%	0.68		%	0.67		%	0.68		%

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS



		As of
ASSET QUALITY: ⁽⁴⁾		September 30,			June 30,			March 31,			December 31,			September 30,
($ in thousands)		2017			2017			2017			2016			2016
Accruing past due loans:
30 to 59 days past due:
	Commercial and industrial	$	1,186		$	2,391		$	29,734		$	6,705		$	4,306
	Commercial real estate	4,755			6,983			11,637			5,894			9,385
	Construction	—			—			7,760			6,077			—
	Residential mortgage	7,942			4,677			7,533			12,005			9,982
	Total Consumer	5,205			4,393			3,740			4,197			3,146
Total 30 to 59 days past due		19,088			18,444			60,404			34,878			26,819
60 to 89 days past due:
	Commercial and industrial	3,043			2,686			341			5,010			788
	Commercial real estate	626			8,233			359			8,642			4,291
	Construction	2,518			854			—			—			—
	Residential mortgage	1,604			1,721			4,177			3,564			2,733
	Total Consumer	1,019			1,007			787			1,147			1,234
Total 60 to 89 days past due		8,810			14,501			5,664			18,363			9,046
90 or more days past due:
	Commercial and industrial	125			—			405			142			145
	Commercial real estate	389			2,315			—			474			478
	Construction	—			2,879			—			1,106			1,881
	Residential mortgage	1,433			3,353			1,355			1,541			590
	Total Consumer	301			275			314			209			226
Total 90 or more days past due		2,248			8,822			2,074			3,472			3,320
Total accruing past due loans		$	30,146		$	41,767		$	68,142		$	56,713		$	39,185
Non-accrual loans:
	Commercial and industrial	$	11,983		$	11,072		$	8,676		$	8,465		$	7,875
	Commercial real estate	13,870			15,514			15,106			15,079			14,452
	Construction	1,116			1,334			1,461			715			1,136
	Residential mortgage	12,974			12,825			11,650			12,075			14,013
	Total Consumer	1,844			1,409			1,395			1,174			965
Total non-accrual loans		41,787			42,154			38,288			37,508			38,441
Other real estate owned (OREO) ⁽⁵⁾		10,770			10,182			10,737			9,612			10,257
Other repossessed assets		480			342			475			384			307
Non-accrual debt securities ⁽⁶⁾		2,115			1,878			2,007			1,935			2,025
Total non-performing assets		$	55,152		$	54,556		$	51,507		$	49,439		$	51,030
Performing troubled debt restructured loans		$	113,677		$	109,802		$	80,360		$	85,166		$	81,093
Total non-accrual loans as a % of loans		0.23		%	0.24		%	0.22		%	0.22		%	0.23		%
Total accruing past due and non-accrual loans as a % of loans		0.40		%	0.47		%	0.61		%	0.55		%	0.47		%
Allowance for losses on loans as a % of non-accrual loans		284.70		%	276.24		%	301.51		%	305.05		%	287.97		%
Non-performing purchased credit-impaired loans ⁽⁷⁾		$	25,413		$	33,715		$	25,857		$	27,011		$	30,055

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS

NOTES TO SELECTED FINANCIAL DATA



(1)	Net interest income and net interest margin are presented on a tax equivalent basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.
(2)	This press release contains certain supplemental financial information, described in the Notes below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Valley's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Valley's financial results. Specifically, Valley provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-core operating items which affect the GAAP reporting of results of operations. Management utilizes these measures for internal planning and forecasting purposes. Management believes that Valley's presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Valley's business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Valley strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.



	Three Months Ended										Nine Months Ended
	September 30,			June 30,				September 30,			September 30,
($ in thousands, except for share data)	2017			2017				2016			2017			2016
Adjusted net income available to common shareholders:
Net income, as reported	$	39,649		$	50,065			$	42,842		$	135,809		$	118,056
Add: LIFT program expenses (net of tax)*	5,753			—				—			5,753			—
Add: Merger related expenses (net of tax)**	1,043			—				—			1,044			—
Net income, as adjusted	$	46,445		$	50,065			$	42,842		$	142,606		$	118,056
Dividends on preferred stock	2,683			1,797			1,797	1,797			6,277			5,391
Net income available to common shareholders, as adjusted	$	43,762		$	48,268			$	41,045		$	136,329		$	112,665
__________
* LIFT program expenses are primarily within professional and legal fees, and salary and employee benefits expense.
** Merger related expenses are primarily within professional and legal fees.
Adjusted per common share data:
Net income available to common shareholders, as adjusted	$	43,762		$	48,268			$	41,045		$	136,329		$	112,665
Average number of shares outstanding	264,058,174			263,958,292				254,473,994			263,938,786			254,310,769
Basic earnings, as adjusted	$	0.17		$	0.18			$	0.16		$	0.52		$	0.44
Average number of diluted shares outstanding	264,936,220			264,778,242				254,940,307			264,754,845			254,698,593
Diluted earnings, as adjusted	$	0.17		$	0.18			$	0.16		$	0.51		$	0.44
Annualized return on average tangible shareholders' equity:
Net income	$	39,649		$	50,065			$	42,842		$	135,809		$	118,056
Average shareholders' equity	2,502,538			2,420,848				2,251,461			2,441,227			2,236,569
Less: Average goodwill and other intangible assets	(733,450		)	(734,616		)		(733,830		)	(734,738		)	(734,791		)
Average tangible shareholders' equity	$	1,769,088		$	1,686,232			$	1,517,631		$	1,706,489		$	1,501,778
Annualized return on average tangible
shareholders' equity	8.96		%	11.88		%		11.29		%	10.61		%	10.48		%
Adjusted annualized return on average assets:
Net income, as adjusted	$	46,445		$	50,065			$	42,842		$	142,606		$	118,056
Average assets	$	23,604,252		$	23,396,259			$	22,081,470		$	23,334,491		$	21,831,622
Annualized return on average assets, as adjusted	0.79		%	0.86		%		0.78		%	0.81		%	0.72		%
Adjusted annualized return on average shareholders' equity:
Net income, as adjusted	$	46,445		$	50,065			$	42,842		$	142,606		$	118,056
Average shareholders' equity	$	2,502,538		$	2,420,848			$	2,251,461		$	2,441,227		$	2,236,569
Annualized return on average shareholders' equity, as adjusted	7.42		%	8.27		%		7.61		%	7.79		%	7.04		%

VALLEY NATIONAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS



	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
($ in thousands, except for share data)	2017			2017			2016			2017			2016
Adjusted annualized return on average tangible shareholders' equity:
Net income, as adjusted	$	46,445		$	50,065		$	42,842		$	142,606		$	118,056
Average tangible shareholders' equity	$	1,769,088		$	1,686,232		$	1,517,631		$	1,706,489		$	1,501,778
Annualized return on average tangible shareholders' equity, as adjusted	10.50		%	11.88		%	11.29		%	11.14		%	10.48		%
Adjusted efficiency ratio:
Non-interest expense	$	132,565		$	119,239		$	113,268		$	372,756		$	351,296
Less: LIFT program expenses (pre-tax)	9,875			—			—			9,875			—
Less: Merger-related expenses (pre-tax)	1,241			—			—			1,242			—
Less: Amortization of tax credit investments (pre-tax)	8,389			7,732			6,450			21,445			21,360
Non-interest expense, as adjusted	$	113,060		$	111,507		$	106,818		$	340,194		$	329,936
Net interest income	164,854			168,960			154,146			496,343			453,754
Non-interest income	26,088			24,690			24,853			75,837			70,565
Gross operating income	190,942			193,650			178,999			572,180			524,319
Efficiency ratio, as adjusted	59.21		%	57.58		%	59.68		%	59.46		%	62.93		%



	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
($ in thousands, except for share data)	2017			2017			2017			2016			2016
Tangible book value per common share:
Common shares outstanding	264,197,172			263,971,766			263,842,268			263,638,830			254,461,906
Shareholders' equity	$	2,537,984		$	2,423,901		$	2,398,541		$	2,377,156		$	2,257,073
Less: Preferred stock	(209,691		)	(111,590		)	(111,590		)	(111,590		)	(111,590		)
Less: Goodwill and other intangible assets	(733,498		)	(734,337		)	(735,595		)	(736,121		)	(733,627		)
Tangible common shareholders' equity	$	1,594,795		$	1,577,974		$	1,551,356		$	1,529,445		$	1,411,856
Tangible book value per common share	$6.04			$5.98			$5.88			$5.80			$5.55
Tangible common equity to tangible assets:
Tangible common shareholders' equity	$	1,594,795		$	1,577,974		$	1,551,356		$	1,529,445		$	1,411,856
Total assets	23,780,661			23,449,350			23,220,456			22,864,439			22,368,453
Less: Goodwill and other intangible assets	(733,498		)	(734,337		)	(735,595		)	(736,121		)	(733,627		)
Tangible assets	$	23,047,163		$	22,715,013		$	22,484,861		$	22,128,318		$	21,634,826
Tangible common equity to tangible assets	6.92		%	6.95		%	6.90		%	6.91		%	6.53		%



(3)	The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income.
(4)	Past due loans and non-accrual loans exclude purchased credit-impaired (PCI) loans. PCI loans are accounted for on a pool basis under U.S. GAAP and are not subject to delinquency classification in the same manner as loans originated by Valley.
(5)	Excludes OREO properties related to FDIC-assisted transactions totaling $558 thousand and $1.0 million at December 31, 2016 and September 30, 2016, respectively. These assets are covered by the loss-sharing agreements with the FDIC. There were no covered OREO properties at September 30, 2017, June 30, 2017 and March 31, 2017.
(6)	Includes other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value (net of unrealized losses totaling $637 thousand, $875 thousand, $745 thousand, $817 thousand and $728 thousand at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016 and September 30, 2016, respectively) after recognition of all credit impairments.
(7)	Represent PCI loans meeting Valley's definition of non-performing loan (i.e., non-accrual loans), but are not subject to such classification under U.S. GAAP because the loans are accounted for on a pooled basis and are excluded from the non-accrual loans in the table above.
SHAREHOLDERS RELATIONS Requests for copies of reports and/or other inquiries should be directed to Tina Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, by telephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail at tzarkadas@valleynationalbank.com.

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except for share data)



	September 30,			December 31,
	2017			2016
Assets	(Unaudited)
Cash and due from banks	$	215,600		$	220,791
Interest bearing deposits with banks	128,226			171,710
Investment securities:
Held to maturity (fair value of $1,831,145 at September 30, 2017 and $1,924,597 at December 31, 2016)	1,823,622			1,925,572
Available for sale	1,447,737			1,297,373
Total investment securities	3,271,359			3,222,945
Loans held for sale, at fair value	13,321			57,708
Loans	18,201,462			17,236,103
Less: Allowance for loan losses	(118,966		)	(114,419		)
Net loans	18,082,496			17,121,684
Premises and equipment, net	289,153			291,180
Bank owned life insurance	386,874			391,830
Accrued interest receivable	72,063			66,816
Goodwill	690,637			690,637
Other intangible assets, net	42,861			45,484
Other assets	588,071			583,654
Total Assets	$	23,780,661		$	22,864,439
Liabilities
Deposits:
Non-interest bearing	$	5,099,376		$	5,252,825
Interest bearing:
Savings, NOW and money market	8,792,734			9,339,012
Time	3,420,656			3,138,871
Total deposits	17,312,766			17,730,708
Short-term borrowings	1,482,709			1,080,960
Long-term borrowings	2,215,219			1,433,906
Junior subordinated debentures issued to capital trusts	41,716			41,577
Accrued expenses and other liabilities	190,267			200,132
Total Liabilities	21,242,677			20,487,283
Shareholders’ Equity
Preferred stock, no par value; 50,000,000 shares authorized:
Series A (4,600,000 shares issued at September 30, 2017 and December 31, 2016)	111,590			111,590
Series B (4,000,000 shares issued at September 30, 2017)	98,101			—
Common stock (no par value, authorized 450,000,000 shares; issued 264,197,172 shares at September 30, 2017 and 263,804,877 shares at December 31, 2016)	92,569			92,353
Surplus	2,054,843			2,044,401
Retained earnings	214,981			172,754
Accumulated other comprehensive loss	(34,100		)	(42,093		)
Treasury stock, at cost (166,047 shares at December 31, 2016)	—			(1,849		)
Total Shareholders’ Equity	2,537,984			2,377,156
Total Liabilities and Shareholders’ Equity	$	23,780,661		$	22,864,439

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except for share data)



	Three Months Ended							Nine Months Ended
	September 30,		June 30,		September 30,			September 30,
	2017		2017		2016			2017		2016
Interest Income
Interest and fees on loans	$	186,773	$	185,860	$	171,143		$	547,647	$	506,640
Interest and dividends on investment securities:
Taxable	17,922		18,928		14,232			54,439		42,487
Tax-exempt	3,752		3,943		4,023			11,726		11,447
Dividends	2,657		2,137		1,612			6,945		4,408
Interest on federal funds sold and other short-term investments	546		279		193			1,156		846
Total interest income	211,650		211,147		191,203			621,913		565,828
Interest Expense
Interest on deposits:
Savings, NOW and money market	15,641		12,714		10,165			38,538		29,369
Time	10,852		10,166		9,412			30,571		28,220
Interest on short-term borrowings	5,161		5,516		3,545			14,578		8,537
Interest on long-term borrowings and junior subordinated debentures	15,142		13,791		13,935			41,883		45,948
Total interest expense	46,796		42,187		37,057			125,570		112,074
Net Interest Income	164,854		168,960		154,146			496,343		453,754
Provision for credit losses	1,640		3,632		5,840			7,742		8,069
Net Interest Income After Provision for Credit Losses	163,214		165,328		148,306			488,601		445,685
Non-Interest Income
Trust and investment services	3,062		2,800		2,628			8,606		7,612
Insurance commissions	4,519		4,358		4,580			13,938		14,133
Service charges on deposit accounts	5,558		5,342		5,263			16,136		15,460
Gains (losses) on securities transactions, net	6		22		(10		)	5		258
Fees from loan servicing	1,895		1,831		1,598			5,541		4,753
Gains on sales of loans, net	5,520		4,791		4,823			14,439		9,723
Bank owned life insurance	1,541		1,701		1,683			5,705		5,464
Other	3,987		3,845		4,288			11,467		13,162
Total non-interest income	26,088		24,690		24,853			75,837		70,565
Non-Interest Expense
Salary and employee benefits expense	67,062		61,338		58,107			192,116		174,438
Net occupancy and equipment expense	22,756		22,609		20,658			68,400		65,615
FDIC insurance assessment	4,603		4,928		4,804			14,658		14,998
Amortization of other intangible assets	2,498		2,562		2,675			7,596		8,452
Professional and legal fees	11,110		4,302		4,031			20,107		13,398
Amortization of tax credit investments	8,389		7,732		6,450			21,445		21,360
Telecommunication expense	2,464		2,707		2,459			7,830		7,139
Other	13,683		13,061		14,084			40,604		45,896
Total non-interest expense	132,565		119,239		113,268			372,756		351,296
Income Before Income Taxes	56,737		70,779		59,891			191,682		164,954
Income tax expense	17,088		20,714		17,049			55,873		46,898
Net Income	39,649		50,065		42,842			135,809		118,056
Dividends on preferred stock	2,683		1,797		1,797			6,277		5,391
Net Income Available to Common Shareholders	$	36,966	$	48,268	$	41,045		$	129,532	$	112,665
Earnings Per Common Share:
Basic	$	0.14	$	0.18	$	0.16		$	0.49	$	0.44
Diluted	0.14		0.18		0.16			0.49		0.44
Cash Dividends Declared per Common Share	0.11		0.11		0.11			0.33		0.33
Weighted Average Number of Common Shares Outstanding:
Basic	264,058,174		263,958,292		254,473,994			263,938,786		254,310,769
Diluted	264,936,220		264,778,242		254,940,307			264,754,845		254,698,593



VALLEY NATIONAL BANCORP
Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and
Net Interest Income on a Tax Equivalent Basis

	Three Months Ended
	September 30, 2017							June 30, 2017							September 30, 2016
	Average					Avg.		Average					Avg.		Average					Avg.
($ in thousands)	Balance		Interest			Rate		Balance		Interest			Rate		Balance		Interest			Rate
Assets
Interest earning assets
Loans ⁽¹⁾⁽²⁾	$	18,006,274	$	186,776		4.15	%	$	17,701,676	$	185,863		4.20	%	$	16,570,723	$	171,146		4.13	%
Taxable investments ⁽³⁾	2,905,400		20,579			2.83	%	2,967,729		21,065			2.84	%	2,531,202		15,844			2.50	%
Tax-exempt investments ⁽¹⁾⁽³⁾	556,061		5,773			4.15	%	581,263		6,066			4.17	%	628,951		6,189			3.94	%
Federal funds sold and other
interest bearing deposits	175,111		546			1.25	%	166,003		279			0.67	%	165,956		193			0.47	%
Total interest earning assets	21,642,846		213,674			3.95	%	21,416,671		213,273			3.98	%	19,896,832		193,372			3.89	%
Other assets	1,961,406							1,979,588							2,184,638
Total assets	$	23,604,252						$	23,396,259						$	22,081,470
Liabilities and shareholders' equity
Interest bearing liabilities:
Savings, NOW and money market deposits	$	8,799,955	$	15,641		0.71	%	$	8,803,028	$	12,715		0.58	%	$	8,509,793	$	10,165		0.48	%
Time deposits	3,368,153		10,852			1.29	%	3,290,407		10,166			1.24	%	3,082,100		9,412			1.22	%
Short-term borrowings	1,537,562		5,161			1.34	%	1,837,809		5,516			1.20	%	1,439,352		3,545			0.99	%
Long-term borrowings⁽⁴⁾	2,032,068		15,142			2.98	%	1,679,691		13,790			3.28	%	1,518,757		13,935			3.67	%
Total interest bearing liabilities	15,737,738		46,796			1.19	%	15,610,935		42,187			1.08	%	14,550,002		37,057			1.02	%
Non-interest bearing deposits	5,184,991							5,195,052							5,077,032
Other liabilities	178,985							169,424							202,975
Shareholders' equity	2,502,538							2,420,848							2,251,461
Total liabilities and shareholders' equity	$	23,604,252						$	23,396,259						$	22,081,470

Net interest income/interest rate spread ⁽⁵⁾			$	166,878		2.76	%			$	171,086		2.90	%			$	156,315		2.87	%
Tax equivalent adjustment			(2,024		)					(2,126		)					(2,169		)
Net interest income, as reported			$	164,854						$	168,960						$	154,146
Net interest margin ⁽⁶⁾						3.05	%						3.16	%						3.10	%
Tax equivalent effect						0.03	%						0.04	%						0.04	%
Net interest margin on a fully tax equivalent basis ⁽⁶⁾						3.08	%						3.20	%						3.14	%


(1)	Interest income is presented on a tax equivalent basis using a 35 percent federal tax rate.


(2)	Loans are stated net of unearned income and include non-accrual loans.


(3)	The yield for securities that are classified as available for sale is based on the average historical amortized cost.


(4)	Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.


(5)	Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.


(6)	Net interest income as a percentage of total average interest earning assets.

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