Valley Profit Rises as Lending Expands
Revenue increased to $560.7 million, up $65.7 million from a year earlier.
Valley National Bancorp (VLY), the bank holding company, posted second-quarter net income of $170.9 million, or $0.29 a diluted share, up from $133.2 million, or $0.22 a share, a year earlier.
Profit also advanced from the first quarter, when Valley earned $163.9 million, or $0.28 a share. Adjusted earnings increased to $172.8 million, or $0.30 a share, from $168.9 million, or $0.29 a share, sequentially.
The improvement rested on stronger lending and a wider spread between asset yields and funding costs. Tax-equivalent net interest income rose $15.6 million from the first quarter to $488.4 million as average loans increased and new loans and securities purchases carried better yields. The tax-equivalent net interest margin expanded 3 basis points sequentially and 19 basis points from a year earlier to 3.20%.
Total loans grew $1.6 billion during the quarter to $52.5 billion, a 12.9% annualized pace, led by commercial-and-industrial and commercial-real-estate lending. C&I loans increased at a 30.9% annualized rate to $12.0 billion, while Valley continued to run off transactional and non-relationship, non-owner-occupied loans.
Deposits increased $1.3 billion to $54.1 billion, with time deposits accounting for most of the growth. Their share of total deposits rose to 24% from 22%, while the cost of total average deposits held nearly flat at 2.28% and remained 39 basis points below the year-earlier level.
Fee income and expense control provided additional support. Non-interest income rose $4.9 million sequentially to $73.7 million as capital-markets and wealth-management fees increased, while non-interest expense edged up $1.2 million to $311.1 million. The efficiency ratio improved to 52.11% from 53.10% in the first quarter and 55.20% a year earlier.
Credit measures tempered the operating gains. The provision for loan losses increased to $29.2 million from $21.2 million sequentially, and non-accrual loans rose $30.0 million to $462.6 million after three commercial-real-estate loans moved to non-accrual status. Valley nevertheless reduced its CRE concentration ratio to about 317% from 329%, aided by capital growth and a $200 million increase in Tier 2 risk-based capital, and repurchased 1.5 million shares at an average price of $13.40 during the quarter.