Financial Performance - The company's net income for the third quarter 2024 was $97.9 million, or $0.18 per diluted common share, a decrease of $43.5 million compared to $141.3 million, or $0.27 per diluted common share, for the same quarter in 2023[183]. - Net income for Q3 2024 was reported at $97.856 million, a decrease of 30.7% compared to $141.346 million in Q3 2023[201]. - Adjusted net income for Q3 2024 was $96.754 million, down from $136.363 million in Q3 2023, reflecting a decline of 29%[202]. - Return on average assets for Q3 2024 was 0.63%, down from 0.92% in Q3 2023[201]. - Return on average shareholders' equity for Q3 2024 was 5.70%, compared to 8.56% in Q3 2023[201]. - Efficiency ratio for Q3 2024 was 56.13%, slightly improved from 56.72% in Q3 2023[205]. Asset and Loan Portfolio - As of September 30, 2024, the company reported 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[176]. - The total commercial real estate loans amounted to $30.4 billion, representing 61.6% of total loans, down from 63.2% at June 30, 2024, indicating a strategic reduction in commercial real estate loan concentration[181]. - The company aims to reduce its commercial real estate loan concentration ratio to approximately 400% and 375% by December 31, 2024, and 2025, respectively[181]. - Average loan balances increased by $106.1 million to $50.1 billion for Q3 2024, mainly due to organic loan growth[208]. - The total loan portfolio decreased by $956.4 million, or 7.6%, to $49.4 billion from June 30, 2024, primarily due to the transfer of $823.1 million of commercial real estate loans to loans held for sale[304]. Credit Quality and Allowance for Loan Losses - The company's allowance for loan losses included an $8.0 million qualitative reserve for estimated losses due to Hurricane Helene, with potential increases expected from Hurricane Milton[178]. - Allowance for Credit Losses (ACL) for loans increased to $564.7 million, representing 1.14% of total loans as of September 30, 2024, with projections to rise to approximately 1.20% and 1.25% by December 31, 2024, and 2025, respectively[184]. - The allowance for credit losses stood at $1.1 million, reflecting the company's proactive approach to managing credit risk[301]. - The total provision for credit losses remained elevated due to higher reserves allocated to commercial real estate loans and an $8.0 million qualitative reserve related to Hurricane Helene[336]. - The allowance for credit losses for loans as a percentage of total loans was 1.14% as of September 30, 2024, compared to 1.06% at June 30, 2024, and 0.92% at September 30, 2023[336]. Deposits and Funding - Total deposits increased by $283.8 million to $50.4 billion at September 30, 2024, driven by higher direct commercial customer deposits[194]. - Average deposits increased by $1.0 billion to $50.4 billion for the third quarter 2024 compared to the second quarter 2024[193]. - Cumulative deposit beta remained stable at 60% as of September 30, 2024, reflecting a modest increase in the cost of interest-bearing deposits[192]. - The loans to deposits ratio is 97.9%, down from 102.0% at December 31, 2023[281]. Interest Income and Expense - Net interest income for Q3 2024 was $411.8 million, an increase of $8.8 million from Q2 2024, but a decrease of $1.8 million from Q3 2023[206]. - Total interest expense for Q3 2024 increased to $450.1 million, up $18.3 million from Q2 2024, primarily due to higher average time deposit balances[207]. - The yield on average interest earning assets increased by 10 basis points to 5.98% for Q3 2024, attributed to higher yielding investment purchases and new loan originations[210]. - The overall cost of average interest bearing liabilities increased to 4.22% for Q3 2024, up 7 basis points from Q2 2024[210]. Capital and Shareholder Equity - Total shareholders' equity increased by $234.6 million to $7.0 billion at September 30, 2024, primarily due to net proceeds from the issuance of Series C preferred stock and net income for the third quarter[182]. - The common equity Tier 1 capital increased to $4,723.2 million (9.57%) as of September 30, 2024, from $4,623.5 million (9.29%) as of December 31, 2023[343]. - Valley is required to maintain a common equity Tier 1 capital to risk-weighted assets ratio of 4.5%, and as of September 30, 2024, it exceeded all capital adequacy requirements[340]. Economic Outlook - The company expects GDP to expand by approximately 2.0% in Q4 2024, with unemployment projected at 4.0 to 4.1% through Q3 2026[331]. - The Federal Reserve has lowered the federal funds rate to a range of 4.75 - 5.00%, with potential further cuts of 0.50% anticipated in Q4 2024[331].
Valley National Bancorp Series C Pfd(VLYPN) - 2024 Q3 - Quarterly Report