Valley National Bancorp(US:VLY)2023-03-01 01:48Financial Overview - As of December 31, 2022, Valley National Bancorp had consolidated total assets of $57.5 billion, total net loans of $46.5 billion, total deposits of $47.6 billion, and total shareholders' equity of $6.4 billion[12]. - As of December 31, 2022, the total investment securities and interest-bearing deposits with banks amounted to $5.2 billion and $503.6 million, respectively[30]. - The total loan portfolio as of December 31, 2022, was $46.9 billion, with commercial real estate loans accounting for 62.7% of the total[33]. Loan Portfolio Composition - Commercial and industrial loans totaled approximately $8.8 billion, representing 18.8% of the total loan portfolio at December 31, 2022, with $2.4 billion acquired from Bank Leumi USA during 2022[23]. - Commercial real estate and construction loans amounted to $29.4 billion, accounting for 62.7% of the total loan portfolio at December 31, 2022, including $3.1 billion acquired from Bank Leumi USA[25]. - Residential mortgage loans totaled $5.4 billion, representing 11.4% of the total loan portfolio at December 31, 2022[27]. - Other consumer loans reached $3.3 billion, making up 7.1% of the total loan portfolio at December 31, 2022[28]. - At December 31, 2022, approximately 75% of Valley's gross loans, totaling $46.9 billion, consisted of commercial real estate, residential mortgage, and home equity loans[31]. - The loan portfolio by state shows New York at 32%, Florida at 26%, and New Jersey at 23% of total loans[33]. Acquisitions - Valley National Bancorp completed the acquisition of Bank Leumi Le-Israel Corporation on April 1, 2022, valued at $1.2 billion, issuing approximately 85 million shares and paying $113.4 million in cash[17]. - The acquisition of The Westchester Bank Holding Corporation was completed on December 1, 2021, with total consideration of $211.1 million, consisting of approximately 15.7 million shares of Valley common stock[19]. Credit Risk Management - Valley's credit risk management policies are designed to minimize credit risk while maximizing income, with significant oversight from the Credit Risk Management Division[40]. - The company conducts internal stress tests of its capital position, including climate-related scenarios, to assess risk management effectiveness[36]. - Loans are placed on non-accrual status when they become 90 days past due, with no additional funds advanced on such loans[51]. - The company prohibits the origination of payment option adjustable residential mortgages and subprime loans, adhering to strict underwriting practices[41]. - Concessions for troubled debt restructured loans (TDRs) typically involve extending loan terms or lowering monthly payments without principal forgiveness[50]. - The allowance for credit losses (ACL) includes an estimated lifetime expected credit loss for pools of loans, with management's ongoing quarterly assessments determining the ACL amount[52]. - 2.7% of commercial loans and residential mortgage loans originated by third parties were past due 30 days or more, representing 9.5% and 28.2% of total delinquencies in their respective portfolios[55]. Employee and Corporate Governance - Valley employed 3,826 full and part-time employees as of December 31, 2022, with a voluntary turnover rate of 22% and an average tenure of 7.8 years[63]. - The company established the Environmental, Social and Governance (ESG) Council in 2020 to address social and environmental responsibilities, issuing its first ESG report in 2021[70]. - Valley continues to review pricing, products, locations, and acquisition prospects to enhance its competitive position[60]. Regulatory Compliance - Valley National Bank's capital ratios were all above the minimum levels required for it to be considered a "well capitalized" financial institution at December 31, 2022[85]. - Under Basel III, Valley and Valley National Bank are required to maintain a CET1 ratio of at least 7.0%, Tier 1 capital ratio of at least 8.5%, and total capital ratio of at least 10.5%[82]. - Valley National Bank is subject to regulatory limitations on dividend payments, which can only be declared up to the sum of net profits for the current year and retained net profits for the preceding two years[95]. - Valley National Bank must comply with Community Reinvestment Act obligations to maintain its status as a financial holding company[79]. - The Volcker Rule prohibits Valley National Bank from engaging in certain proprietary trading and investing in certain types of funds[92]. - Valley National Bank is supervised by the Consumer Financial Protection Bureau (CFPB) due to having over $10 billion in assets, focusing on consumer protection and compliance with federal financial laws[105]. Market Position and Competition - Valley ranked 16th in competitive ranking and market share based on deposits reported by 162 FDIC-insured financial institutions in key markets as of June 30, 2022[57]. - The company faces significant competition from various financial service providers, including fintech companies, which may have fewer regulatory constraints and greater resources[58]. Insurance and Securities Compliance - The bank's insurance agency subsidiary provides various insurance services, including property and casualty insurance, and is subject to state regulatory requirements[126]. - Valley's broker-dealer subsidiaries must comply with the SEC's financial stability rules, including maintaining minimum net capital requirements[121]. - The bank's broker-dealer subsidiaries operate under SEC Rule 15c3-3(k)(2)(i) & (ii), ensuring customer protection by not holding customer funds directly[119]. - The SEC and other regulatory organizations impose rules that require notification when net capital falls below certain thresholds, impacting business expansion[122]. - Valley's insurance agency subsidiaries monitor compliance with various state insurance regulators and maintain relationships with third-party vendors for regulatory awareness[126].