VALLEY NATIONAL(VLYPP) - 2025 Q2 - Quarterly Report

Financial Performance - The net income for the second quarter of 2025 was $133.2 million, or $0.22 per diluted common share, compared to $70.4 million, or $0.13 per diluted common share, for the same quarter in 2024, reflecting a $62.7 million increase[170]. - Net interest income increased by $30.7 million, primarily due to lower interest rates on deposit products in Q2 2025[173]. - Non-interest income rose by $11.4 million, driven by higher service charges, capital markets income, and bank-owned life insurance income[173]. - Adjusted net income for Q2 2025 was $134.415 million, up from $71.643 million in Q2 2024, representing an increase of 88%[187]. - The effective tax rate for the second quarter of 2025 was 23.1%, a decrease from 24.5% in the second quarter of 2024, primarily due to a higher level of investment in tax credits[223]. Asset and Loan Metrics - As of June 30, 2025, the company reported total assets of approximately $62.7 billion, total net loans of $48.8 billion, total deposits of $50.7 billion, and total shareholders' equity of $7.6 billion[167]. - Total commercial real estate loans amounted to $28.8 billion, representing 58.4% of total loans, down from 59.8% in the previous quarter, with a goal to maintain the ratio below 350% through December 31, 2025[169]. - Total loans charged-off amounted to $42.071 million for the second quarter of 2025, with commercial and industrial loans contributing $25.189 million and commercial real estate loans contributing $14.623 million[315]. - The allowance for loan losses was $579.500 million, representing 1.17% of total loans as of June 30, 2025[318]. - The total loans increased by $734.3 million, or 6.0%, to $49.4 billion from March 31, 2025, primarily due to organic growth in commercial and industrial loans[287]. Deposit and Funding - Total deposit balances increased by $759.4 million to $50.7 billion, driven by increases in both direct and indirect customer time deposits[169]. - Average non-interest-bearing deposits increased by $113.8 million to $11.3 billion in Q2 2025[178]. - Total estimated uninsured deposits were approximately $13.1 billion, or 26 percent of total deposits, as of June 30, 2025[180]. - The loans to deposits ratio is 97.4%, and wholesale funding to total funding ratio is 18.0%[267]. - Average core deposits totaled approximately $41.5 billion for the six months ended June 30, 2025, representing 72.6% of average interest-earning assets[271]. Credit Quality and Loss Provisions - The allowance for credit losses for loans was $594.0 million, or 1.20% of total loans, with expectations to remain between 1.20% and 1.25% through December 31, 2025[169]. - Non-accrual loans totaled $354.4 million, or 0.72% of total loans, with total accruing past due loans increasing to $199.2 million, or 0.40% of total loans[169]. - The provision for credit losses for loans was $37.795 million in the second quarter of 2025, down from $62.675 million in the first quarter of 2025 and $82.111 million in the second quarter of 2024[318]. - The allowance for loan losses as a percentage of non-accrual loans was 163.53% at June 30, 2025[306]. - Non-performing assets (NPAs) increased by $4.6 million to $360.8 million at June 30, 2025, with NPAs as a percentage of total loans remaining at 0.73%[296]. Capital and Ratios - The company's total risk-based capital ratio was 13.67% at June 30, 2025, down from 13.91% in the previous quarter, influenced by the early redemption of subordinated notes[170]. - Shareholders' equity increased to approximately $7.6 billion as of June 30, 2025, representing 12.1% of total assets, up from 11.9% at December 31, 2024[319]. - The common equity Tier 1 capital to risk-weighted assets ratio was maintained at 4.5% as of June 30, 2025, exceeding regulatory requirements[322]. - Valley's total risk-based capital was $6,713,872, with a ratio of 13.58% as of June 30, 2025[323]. - The retention ratio for Valley was approximately 45.0% for the six months ended June 30, 2025, compared to 36.2% for the full year ended December 31, 2024, reflecting an increase in net income available to common shareholders[324]. Economic Environment - The U.S. real GDP increased at an estimated annual rate of 3.0% in the second quarter of 2025, compared to a decrease of 0.5% in the first quarter, with inflation rising to 2.7%[172]. - Moody's Baseline forecast at June 30, 2025 included a GDP expansion of 0.6 percent in Q3 2025 and an unemployment rate of 4.3 percent[313]. - The inflation rate is projected to grow from 2.7 percent in June 30, 2025, declining to near 2.0 percent in early 2027[313].