GlobeNewswire Inc | Jul 23, 2020 08:00AM EDT

July 23, 2020

NEW YORK, July 23, 2020 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY), the holding company for Valley National Bank, today reported net income for the second quarter 2020 of $95.6 million, or $0.23 per diluted common share, as compared to the second quarter 2019 earnings of $76.5 million, or $0.22 per diluted common share, and net income of $87.3 million, or $0.21 per diluted common share, for the first quarter 2020.

Key financial highlights for the second quarter:

-- Loan Portfolio: Loans increased $1.9 billion to $32.3 billion at June30, 2020 from March31, 2020. The increase was largely due to approximately $2.2 billion of SBA Paycheck Protection Program (PPP) loans originated under the CARES Act to aid small- and medium-sized businesses in the second quarter. We also sold approximately $237 million of residential mortgage loans originated for sale rather than investment, resulting in total pre-tax gains of $8.3 million in the second quarter 2020, as compared to $196 million of residential mortgage loans sold in the linked quarter with total pre-tax gains of $4.6 million. See the "Loans" section below for more details. -- Net Interest Income and Margin: Net interest income on a tax equivalent basis of $283.5 million for the second quarter 2020 increased $17.2 million as compared to the first quarter 2020. The increase was driven by several factors in the second quarter 2020 including, a 46 basis point decline in our funding costs largely resulting from the lower interest rate environment and a $2.0 billion increase in average loan balances mostly due to the PPP loan originations. Our net interest margin on a tax equivalent basis of 3.00 percent for the second quarter 2020 decreased by 7 basis points from 3.07 percent for the first quarter 2020. See the "Net Interest Income and Margin" section below for additional information. -- Allowance and Provision for Credit Losses for Loans: Our allowance for credit losses for loans totaled $319.7 million and $293.4 million at June30, 2020 and March31, 2020, respectively. During the second quarter 2020, the provision for credit losses for loans was $41.1 million as compared to $33.9 million for the first quarter 2020 and a pre-CECL provision of $2.1 million for the second quarter 2019. The reserve build in the second quarter 2020 mainly reflects deterioration in Valley's view of the macroeconomic outlook since the end of the first quarter, higher specific reserves associated with our taxi medallion loan portfolio and additional qualitative management adjustments to reflect the potential for higher levels of credit stress related to COVID-19 impacted borrowers. -- Credit Quality: Net loan charge-offs totaled $14.8 million for the second quarter 2020 as compared to $4.8 million for the first quarter 2020 primarily due to the partial charge-off of one impaired commercial loan relationship and lower collateral valuations related to non-performing taxi medallion loans. Non-accrual loans increased $4.7 million during the second quarter 2020 as compared to the first quarter 2020 and represented 0.65 percent and 0.68 percent of total loans at June30, 2020 and March31, 2020, respectively. See the "Credit Quality" Section below for more details. -- Non-interest Income: Non-interest income increased $3.4 million to $44.8 million for the second quarter 2020 as compared to the first quarter 2020. The increase was largely due to a $3.8 million increase in net gains on sales of residential mortgage loans and a $2.7 million increase in BOLI income, partially offset by a $2.1 million decline in service charges mostly caused by waived fees related to COVID-19 customer relief efforts. -- Non-interest Expense: Non-interest expense increased $1.5 million to $157.2 million for the second quarter 2020 as compared to the first quarter 2020 partly due to moderate increases in technology transformation consulting services, pension, cash incentive compensation and FDIC insurance assessment expenses. Merger related expenses totaled $366 thousand and $1.3 million for the second quarter 2020 and first quarter 2020, respectively. COVID-19 related expenses also totaled $2.2 million and $2.1 million for second quarter 2020 and first quarter 2020, respectively. During the second quarter 2020, these expenses consisted of certain PPP loan costs, such as advertising, additional remote work readiness costs, special cleaning and other COVID-19 safety related costs, while the first quarter 2020 expense was largely a special bonus for hourly employees. -- Efficiency Ratio: Our efficiency ratio was 48.01 percent for the second quarter 2020 as compared to 50.75 percent and 57.19 percent for the first quarter 2020 and second quarter 2019, respectively. Our adjusted efficiency ratio was 46.84 percent for the second quarter 2020 as compared to 49.26 percent and 54.57 percent for the first quarter 2020 and second quarter 2019, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures. -- Performance Ratios: Annualized return on average assets (ROA), average shareholders equity (ROE) and average tangible shareholders' equity (ROTE) were 0.92 percent, 8.54 percent, and 12.66 percent for the second quarter 2020, respectively. Annualized ROA, ROE and ROTE, adjusted for non-core charges, was 0.92 percent, 8.57 percent, and 12.70 percent for the second quarter 2020, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures.

Ira Robbins, CEO and President commented, "While the uncertain economic environment is less than ideal, I am very pleased with our second quarter earnings, especially on a pre-provision net revenue basis, and the quality of our balance sheet. Our second quarter net interest margin and income reflected this quality and our ability to significantly reduce the cost of our funding sources. As a result of the strong performance of our margin and laser-focus on managing operating expenses, the adjusted efficiency ratio was below 50 percent for the second consecutive quarter." Robbins continued, "During the quarter, we remained deeply committed to being a trusted partner and solution provider for our customers, originating over $2 billion in PPP loans, providing loan forbearances and waiving fees when appropriate for those significantly impacted by the COVID-19 pandemic. Im extremely proud of Valley's tireless commitment, flexibility and drive to make a difference for our customers, employees and communities."

Net Interest Income and Margin

Net interest income on a tax equivalent basis totaling $283.5 million for the second quarter 2020 increased $62.1 million as compared to the second quarter 2019 and increased $17.2 million as compared to the first quarter 2020. The increase as compared to the first quarter 2020 was largely driven by our ability to significantly reduce our deposit and other funding costs in the current low interest rate environment and a $2.0 billion increase in average loan balances largely resulting from PPP loan originations. Interest expense of $66.0 million for the second quarter 2020 decreased $32.5 million as compared to the first quarter 2020 largely due to the overall lower cost of funds, partially offset by the interest cost associated with higher average interest-bearing deposits without stated maturities and other borrowings. However, interest income on a tax equivalent basis decreased $15.3 million to $349.5 million for the second quarter 2020 as compared to the first quarter 2020. The decrease was mainly due to overall lower loan yields caused, in part, by normal repayments of higher yielding loans, variable rate loan resets and a $3.1 million decline in loan discount accretion in second quarter 2020 due to lower prepayments for certain loans.

Our net interest margin on a tax equivalent basis of 3.00 percent for the second quarter 2020 increased by 4 basis points from 2.96 percent in second quarter 2019 and decreased by 7 basis from 3.07 percent for the first quarter 2020. The yield on average interest earning assets decreased by 51 basis points on a linked quarter basis mostly due to the impact of the lower interest rate environment. The yield on average loans decreased by 42 basis points to 4.02 percent for the second quarter 2020 as compared to the first quarter 2020 largely due to the repayment of higher yielding loans, lower yielding variable and new loans, including the origination of $2.2 billion of PPP loans in second quarter 2020, and an increase in excess liquidity held in low yield overnight investments. The overall cost of average interest bearing liabilities decreased 54 basis points to 0.96 percent for the second quarter 2020 as compared to the linked first quarter 2020 due to the significantly lower interest rates paid on deposits and borrowings. During the first half of 2020, we also benefited from the prepayment of $635 million high cost FHLB advances in December 2019. Our cost of total average deposits was 0.60 percent for the second quarter 2020 as compared to 1.07 percent for the first quarter 2020.

Loans, Deposits and Other Borrowings

Loans. Loans increased $1.9 billion to approximately $32.3 billion at June30, 2020 from March31, 2020 largely due to approximately $2.2 billion of SBA PPP loan originations within the commercial and industrial loan category during the second quarter 2020. Commercial real estate loans increased $181.6 million, or 4.4 percent on an annualized basis, to $16.6 billion at June30, 2020 as compared to March31, 2020 mainly due to our strong loan commitment pipeline at March31, 2020 and slower repayment activity in the second quarter. Residential mortgage and the consumer loan categories all experienced moderate declines in the second quarter due to the impact of COVID-19 and our normal mortgage banking sales activity. During the second quarter 2020, we originated $296 million of residential mortgage loans for sale rather than held for investment and sold approximately $237 million of these loans. Residential mortgage loans held for sale at fair value totaled $120.6 million and $58.9 million at June30, 2020 and March31, 2020, respectively.

Deposits. Total deposits increased $2.4 billion to approximately $31.4 billion at June30, 2020 from March31, 2020 largely due to increases of $2.0 billion and $666.6 million in non-interest bearing deposits and interest-bearing deposits without stated maturities, respectively. The increases were mostly driven by deposits from PPP loan customers, higher depositor balances due to the uncertain financial markets, as well as a partial shift to more liquid funds for maturing retail CD customers. As a result, time deposits decreased $294.3 million at June30, 2020 as compared to March31, 2020. Total brokered deposits (consisting of both time and money market deposit accounts) were $3.6 billion at June30, 2020 as compared to $3.4 billion at March31, 2020. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 29 percent, 45 percent and 26 percent of total deposits as of June30, 2020, respectively.

Other Borrowings. Long-term borrowings increased $101.9 million to $2.9 billion at June30, 2020 as compared to March31, 2020 mainly due to our recent $115.0 million issuance of 5.25 percent fixed-to-floating rate subordinated notes with a stated maturity of June 15, 2030. Short-term borrowings decreased by $12.8 million to $2.1 billion at June30, 2020 as compared to March31, 2020.

Credit Quality

Non-Performing Assets (NPAs). Total NPAs, consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities increased $3.7 million to $224.2 million at June30, 2020 as compared to March31, 2020 mainly due to a $4.7 million increase in non-accrual loans, partially offset by a decline in OREO during the second quarter 2020. The increase in non-accrual loans was partially due to one commercial real estate loan which moved to non-accrual status during the second quarter 2020, as well as a moderately higher level of non-accrual consumer loans at June30, 2020. Non-accrual loans represented 0.65 percent of total loans at June30, 2020 compared to 0.68 percent at March31, 2020.

Non-performing Taxi Medallion Loan Portfolio. We continue to closely monitor our non-performing New York City and Chicago taxi medallion loans totaling $99.8 million and $7.0 million, respectively, within the commercial and industrial loan portfolio at June30, 2020. At June30, 2020, the non-accrual taxi medallion loans totaling $106.8 million had related reserves of $61.6 million within the allowance for loan losses.

Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $66.3 million to $93.1 million, or 0.29 percent of total loans, at June30, 2020 as compared to $159.4 million, or 0.52 percent of total loans, at March31, 2020 due to a decline in early stage delinquencies for all loan categories. Commercial real estate loans past due 30 to 59 days and 60 to 89 days decreased by $27.8 million and $14.4 million, respectively, as compared to March31, 2020. The improved performance within the 30 to 59 day category was mainly due to restored customer payments delayed by business disruptions caused by COVID-19 related factors at the end of the first quarter 2020. Commercial real estate loans past due 60 to 90 days at June30, 2020 declined primarily due to the normal renewal of a $13.8 million performing matured loan reported in this category at March31, 2020.

Loan Forbearance. In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant, when requested by customers. Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days, for a maximum of 180 days on a cumulative and successive basis. To date, Valley has granted over 10,000 loan forbearances totaling approximately $4.6 billion in support of our customers. Of these, approximately 5,000 loans totaling $1.9 billion have completed the contractual deferral period and returned to regularly scheduled payments.

Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at June30, 2020, March31, 2020, and June30, 2019:

June30, 2020 March31, 2020 June30, 2019 Allocation Allocation Allocation as a % of as a % of as a % of Allowance Loan Allowance Loan AllowanceLoan Allocation* Category Allocation* Category Allocation*Category ($ in thousands)Loan Category: Commercial and $ 132,039 1.92 % $ 127,437 2.55 % $ 94,3842.11%industrial loansCommercial real estate loans: Commercial real 117,743 0.71 % 97,876 0.60 % 23,7960.19% estate Construction 13,959 0.81 % 13,709 0.79 % 25,1821.65%Total commercial 131,702 0.72 % 111,585 0.62 % 48,9780.34%real estate loansResidential 29,630 0.67 % 29,456 0.66 % 5,2190.13%mortgage loansConsumer loans: Home equity 4,766 1.01 % 4,463 0.93 % 5050.10% Auto and other 11,477 0.51 % 10,401 0.44 % 6,0190.26% consumerTotal consumer 16,243 0.59 % 14,864 0.52 % 6,5240.23%loansAllowance for loan 309,614 0.96 % 283,342 0.93 % 155,1050.60%lossesAllowance forunfunded credit 10,109 10,019 2,974commitmentsTotal allowance forcredit losses for $ 319,723 $ 293,361 $ 158,079loansAllowance for credit losses forloans as a % loans 0.99 % 0.96 % 0.61% * CECL was adopted January 1, 2020. Prior periods reflect the allowance for credit losses for loans under the incurred loss model.

Our loan portfolio, totaling $32.3 billion at June30, 2020, had net loan charge-offs totaling $14.8 million for the second quarter 2020 as compared to $4.8 million and $3.0 million for the first quarter 2020 and second quarter 2019, respectively. The increase in net loan charge-offs was largely due to the partial charge-off of one commercial and industrial loan totaling $7.8 million for the second quarter 2020. Additionally, gross loan charge-offs related to taxi medallion loans totaled $3.2 million, $1.3 million and $2.3 million for the second quarter 2020, first quarter 2020 and second quarter 2019, respectively.

During the second quarter 2020, we recorded a $41.1 million provision for credit losses for loans as compared to $33.9 million and $2.1 million for the first quarter 2020 and the second quarter 2019, respectively. The second quarter 2020 provision mainly reflects the reserve build caused by deterioration in Valley's view of the macroeconomic outlook since the end of the first quarter, higher specific reserves associated with our taxi medallion loan portfolio and additional qualitative management adjustments to reflect the potential for higher levels of credit stress for COVID-19 impacted borrowers.

The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 0.99 percent, 0.96 percent and 0.61 percent at June30, 2020, March31, 2020 and June30, 2019, respectively. At June30, 2019, the allowance allocations for credit losses as a percentage of total loans increased for most loan categories as compared to March31, 2020. However, the allocated reserves as a percentage of commercial and industrial loans declined by 0.63 percent due to $2.2 billion of SBA PPP loans with no related allowance at June30, 2020. The allowance for credit losses for loans at June30, 2020 as compared to June30, 2019 increased largely due to the reserves related to PCD loans included in the Day 1 CECL adoption adjustment and the reserve build under CECL during the first six months of 2020 related to the impact of COVID-19 on lifetime expected credit losses.

Capital Adequacy

Valley's regulatory capital ratios continue to reflect its well capitalized position. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 12.19 percent, 9.51 percent, 10.23 percent and 7.70 percent, respectively, at June30, 2020.

For regulatory capital purposes, in connection with the Federal Reserve Boards final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) for the six months ended June 30, 2020 will be phased in over the same time frame.

Investor Conference Call

Valley will host a conference call with investors and the financial community at 11:00 AM Eastern Daylight Time, today to discuss the second quarter 2020 earnings. Those wishing to participate in the call may dial toll-free (866) 354-0432 Conference ID: 2150739. The teleconference will also be webcast live: https://edge.media-server.com/mmc/p/z4qssb75/edge.media-server.comand archived on Valley's website through Friday, August 28, 2020.Investor presentation materials will be made available prior to the conference call at www.valley.com.

About Valley

As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately $42 billion in assets. Valley is committed to giving people and businesses the power to succeed. Valley operates many convenient branch locations across New Jersey, New York, Florida and Alabama, and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. Helping communities grow and prosper is the heart of Valleys corporate citizenship philosophy. To learn more about Valley, go to www.valley.com or call our Customer Service Center 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 managements confidence and strategies and managements expectations about new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations, including the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions. 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:

-- the impact of COVID-19 on theU.S.and the global economies, including business disruptions, reductions in employment and an increase in business failures, specifically the consequences among our commercial and consumer customers; -- the impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 arise in various locations, including Florida and Alabama; -- potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic or as a result of our action, or failure to implement or effectively implement, federal, state and local laws, rules or executive orders requiring that we grant forbearances or not act to collect our loans; -- the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral; -- damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters; -- a prolonged downturn in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected decline in commercial real estate values within our market areas; -- higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law; -- the inability to grow customer deposits to keep pace with loan growth; -- a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios; -- the need to supplement debt or equity capital to maintain or exceed internal capital thresholds; -- greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations; -- the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley's branch transformation strategy; -- 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, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; -- our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings; -- unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, the COVID-19 pandemic or other external events; -- 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; and -- the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.

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 December31, 2019 and in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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.

VALLEY NATIONAL BANCORPCONSOLIDATED FINANCIAL HIGHLIGHTS

SELECTED FINANCIAL DATA

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30,($ inthousands, 2020 2020 2019 2020 2019except forshare data)FINANCIAL DATA:Net interestincome - FTE $ 283,540 $ 266,383 $ 221,392 $ 549,923 $ 441,317 ^(1)Net interest $ 282,559 $ 265,339 $ 220,234 $ 547,898 $ 438,882 incomeNon-interest 44,830 41,397 27,603 86,227 135,276 incomeTotal revenue 327,389 306,736 247,837 634,125 574,158 Non-interest 157,166 155,656 141,737 312,822 289,532 expensePre-provision 170,223 151,080 106,100 321,303 284,626 net revenueProvision for 41,156 34,683 2,100 75,839 10,100 credit lossesIncome tax 33,466 29,129 27,532 62,595 84,728 expenseNet income 95,601 87,268 76,468 182,869 189,798 Dividends onpreferred 3,172 3,172 3,172 6,344 6,344 stockNet incomeavailable to $ 92,429 $ 84,096 $ 73,296 $ 176,525 $ 183,454 commonshareholdersWeightedaveragenumber of common sharesoutstanding:Basic 403,790,242 403,519,088 331,748,552 403,654,665 331,675,313 Diluted 404,631,845 405,424,123 332,959,802 405,043,183 332,929,359 Per common share data:Basic $ 0.23 $ 0.21 $ 0.22 $ 0.44 $ 0.55 earningsDiluted 0.23 0.21 0.22 0.44 0.55 earningsCashdividends 0.11 0.11 0.11 0.22 0.22 declaredClosing stock 9.60 11.46 10.78 11.46 10.78 price - highClosing stock 6.29 6.37 9.75 6.29 9.00 price - lowCORE ADJUSTEDFINANCIAL DATA: ^(2)Net incomeavailable tocommon $ 92,721 $ 85,061 $ 75,614 $ 177,782 $ 147,378 shareholders,as adjustedBasicearnings per 0.23 0.21 0.23 0.44 0.44 share, asadjustedDilutedearnings per 0.23 0.21 0.23 0.44 0.44 share, asadjustedFINANCIAL RATIOS:Net interest 2.99 % 3.06 % 2.95 % 3.02 % 2.95 %marginNet interestmargin - FTE 3.00 3.07 2.96 3.04 2.97 ^(1)Annualizedreturn on 0.92 0.92 0.94 0.92 1.17 averageassetsAnnualizedreturn onavg. 8.54 7.92 8.79 8.23 11.04 shareholders'equityAnnualizedreturn onavg. tangible 12.66 11.84 13.16 12.26 16.65 shareholders'equity ^(2)Efficiency 48.01 50.75 57.19 49.33 50.43 ratio ^(3)CORE ADJUSTEDFINANCIAL RATIOS: ^(2)Annualizedreturn onaverage 0.92 % 0.93 % 0.96 % 0.93 % 0.95 %assets, asadjustedAnnualizedreturn onaverage 8.57 8.01 9.05 8.29 8.94 shareholders'equity, asadjustedAnnualizedreturn onaveragetangible 12.70 11.97 13.56 12.34 13.49 shareholders'equity, asadjustedEfficiencyratio, as 46.84 49.26 54.57 48.01 54.68 adjusted As OfAVERAGEBALANCE SHEET June 30, March 31, December 31, September 30, June 30,ITEMS:(In 2020 2020 2019 2019 2019thousands)Assets $ 41,503,514 $ 38,097,364 $ 32,707,144 $ 39,800,441 $ 32,502,744 Interestearning 37,778,387 34,674,075 29,877,384 36,226,232 29,721,015 assetsLoans 32,041,200 29,999,428 25,552,415 31,020,314 25,404,396 Interestbearing 27,578,741 26,215,578 22,328,544 26,897,161 22,336,243 liabilitiesDeposits 30,837,963 28,811,932 24,699,238 29,824,948 24,740,767 Shareholders' 4,477,446 4,408,585 3,481,519 4,443,016 3,438,344 equity

BALANCE SHEET ITEMS:(In thousands)Assets $ 41,717,265 $ 39,120,629 $ 37,436,020 $ 33,765,539 $ 33,027,741 Total loans 32,314,611 30,428,067 29,699,208 26,567,159 25,802,162 Deposits 31,428,005 29,016,988 29,185,837 25,546,122 24,773,929 Shareholders' 4,474,488 4,420,998 4,384,188 3,558,075 3,504,118 equity LOANS: (In thousands)Commercialand $ 6,884,689 $ 4,998,731 $ 4,825,997 $ 4,695,608 $ 4,615,765 industrialCommercial real estate:Commercial 16,571,877 16,390,236 15,996,741 13,365,454 12,798,017 real estateConstruction 1,721,352 1,727,046 1,647,018 1,537,590 1,528,968 Totalcommercial 18,293,229 18,117,282 17,643,759 14,903,044 14,326,985 real estateResidential 4,405,147 4,478,982 4,377,111 4,133,331 4,072,450 mortgageConsumer: Home equity 471,115 481,751 487,272 489,808 501,646 Automobile 1,369,489 1,436,734 1,451,623 1,436,608 1,362,466 Other 890,942 914,587 913,446 908,760 922,850 consumerTotalconsumer 2,731,546 2,833,072 2,852,341 2,835,176 2,786,962 loansTotal loans $ 32,314,611 $ 30,428,067 $ 29,699,208 $ 26,567,159 $ 25,802,162 CAPITAL RATIOS:Book valueper common $ 10.56 $ 10.43 $ 10.35 $ 10.09 $ 9.93 shareTangible bookvalue per 6.96 6.82 6.73 6.62 6.45 common share^(2)Tangiblecommon equity 6.98 % 7.31 % 7.54 % 6.73 % 6.71 %to tangibleassets ^(2)Tier 1leverage 7.70 8.24 8.76 7.61 7.62 capitalCommon equitytier 1 9.51 9.24 9.42 8.49 8.59 capitalTier 1risk-based 10.23 9.95 10.15 9.30 9.43 capitalTotalrisk-based 12.19 11.53 11.72 11.03 11.39 capital

Three Months Ended Six Months EndedALLOWANCEFOR CREDIT June 30, March 31, June 30, June 30,LOSSES($ in 2020 2020 2019 2020 2019thousands)Allowancefor credit losses forloansBeginning $ 293,361 $ 164,604 $ 158,961 $ 164,604 $ 156,295 balanceImpact ofthe adoption ? 37,989 ? 37,989 ? of ASU2016-13 ^(4)Allowanceforpurchased ? 61,643 ? 61,643 ? creditdeteriorated(PCD) loansBeginningbalance, 293,361 264,236 158,961 264,236 156,295 adjustedLoanscharged-off ^(5):Commercialand (14,024 ) (3,360 ) (3,073 ) (17,384 ) (7,355 )industrialCommercial (27 ) (44 ) ? (71 ) ? real estateResidential (5 ) (336 ) ? (341 ) (15 )mortgageTotal (2,602 ) (2,565 ) (1,752 ) (5,167 ) (3,780 )ConsumerTotal loans (16,658 ) (6,305 ) (4,825 ) (22,963 ) (11,150 )charged-offCharged-offloans recovered^(5):Commercialand 799 569 1,195 1,368 1,678 industrialCommercial 31 73 22 104 43 real estateConstruction 20 20 ? 40 ? Residential 545 50 9 595 10 mortgageTotal 509 794 617 1,303 1,103 ConsumerTotal loans 1,904 1,506 1,843 3,410 2,834 recoveredNet (14,754 ) (4,799 ) (2,982 ) (19,553 ) (8,316 )charge-offsProvisionfor credit 41,116 33,924 2,100 75,040 10,100 losses forloansEnding $ 319,723 $ 293,361 $ 158,079 $ 319,723 $ 158,079 balanceComponentsof allowancefor credit losses forloans:Allowancefor loan $ 309,614 $ 283,342 $ 155,105 $ 309,614 $ 155,105 lossesAllowancefor unfunded 10,109 10,019 2,974 10,109 2,974 creditcommitmentsAllowancefor credit $ 319,723 $ 293,361 $ 158,079 $ 319,723 $ 158,079 losses forloansComponentsof provisionfor credit losses forloans:Provisionfor credit $ 41,026 $ 33,851 $ 3,706 $ 74,877 $ 11,562 losses forloansProvisionfor unfundedcredit 90 73 (1,606 ) 163 (1,462 )commitments^(6)Totalprovisionfor credit $ 41,116 $ 33,924 $ 2,100 $ 75,040 $ 10,100 losses forloansAnnualizedratio oftotal net 0.18 % 0.06 % 0.05 % 0.13 % 0.07 %charge-offsto averageloansAllowancefor creditlosses for 0.99 0.96 0.61 0.99 0.61 loans as a %of totalloans

As ofASSET QUALITY: June 30, March 31, December September June 30,^(7) 31, 30,($ in 2020 2020 2019 2019 2019thousands)Accruing past due loans:30 to 59 days past due:Commercial and $ 6,206 $ 9,780 $ 11,700 $ 5,702 $ 14,119 industrialCommercial 13,912 41,664 2,560 20,851 6,202 real estateConstruction ? 7,119 1,486 11,523 ? Residential 35,263 38,965 17,143 12,945 19,131 mortgageTotal Consumer 12,962 19,508 13,704 13,079 11,932 Total 30 to 59 68,343 117,036 46,593 64,100 51,384 days past due60 to 89 days past due:Commercial and 4,178 7,624 2,227 3,158 4,135 industrialCommercial 1,543 15,963 4,026 735 354 real estateConstruction ? 49 1,343 7,129 1,342 Residential 4,169 9,307 4,192 4,417 3,635 mortgageTotal Consumer 3,786 2,309 2,527 1,577 1,484 Total 60 to 89 13,676 35,252 14,315 17,016 10,950 days past due90 or more days past due:Commercial and 5,220 4,049 3,986 4,133 3,298 industrialCommercial ? 161 579 1,125 ? real estateResidential 3,812 1,798 2,042 1,347 1,054 mortgageTotal Consumer 2,082 1,092 711 756 359 Total 90 ormore days past 11,114 7,100 7,318 7,361 4,711 dueTotal accruing $ 93,133 $ 159,388 $ 68,226 $ 88,477 $ 67,045 past due loansNon-accrual loans:Commercial and $ 130,876 $ 132,622 $ 68,636 $ 75,311 $ 76,216 industrialCommercial 43,678 41,616 9,004 9,560 6,231 real estateConstruction 3,308 2,972 356 356 ? Residential 25,776 24,625 12,858 13,772 12,069 mortgageTotal Consumer 6,947 4,095 2,204 2,050 1,999 Totalnon-accrual 210,585 205,930 93,058 101,049 96,515 loansOther realestate owned 8,283 10,198 9,414 6,415 7,161 (OREO)Otherrepossessed 3,920 3,842 1,276 2,568 2,358 assetsNon-accrualdebt 1,365 531 680 680 680 securitiesTotalnon-performing $ 224,153 $ 220,501 $ 104,428 $ 110,712 $ 106,714 assetsPerformingtroubled debt $ 53,936 $ 48,024 $ 73,012 $ 79,364 $ 74,385 restructuredloansTotalnon-accrual 0.65 % 0.68 % 0.31 % 0.38 % 0.37 %loans as a %of loansTotal accruingpast due andnon-accrual 0.94 % 1.20 % 0.54 % 0.71 % 0.63 %loans as a %of loansAllowance forlosses onloans as a % 147.03 % 137.59 % 173.83 % 160.17 % 160.71 %of non-accrualloans

NOTES TO SELECTED FINANCIAL DATA

Net interest income and net interest margin are presented on a tax equivalent basis using a 21 percent federal tax rate. Valley believes that(1 ) 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. 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.(2 ) 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 Six Months Ended June 30, March 31, June 30, June 30,($ inthousands, 2020 2020 2019 2020 2019except forshare data)Adjusted netincomeavailable to commonshareholders:Net income, $ 95,601 $ 87,268 $ 76,468 $ 182,869 $ 189,798 as reportedLess: Gain onsaleleaseback ? ? ? ? (55,707 )transactions(net of tax)^(a)Add: Netimpairmentlosses on ? ? 2,078 ? 2,078 securities(net of tax)Add: Losses(gains) onsecurities 29 29 (8 ) 58 15 transaction(net of tax)Add:Severance ? ? ? ? 3,433 expense (netof tax)^(b)Add: Taxcreditinvestment ? ? ? ? 1,757 impairment(net of tax)^(c)Add: Mergerrelated 263 936 25 1,199 25 expenses (netof tax)^(d)Add: Incometax expense ^ ? ? 223 ? 12,323 (e)Net income, $ 95,893 $ 88,233 $ 78,786 $ 184,126 $ 153,722 as adjustedDividends onpreferred 3,172 3,172 3,172 6,344 6,344 stockNet incomeavailable tocommon $ 92,721 $ 85,061 $ 75,614 $ 177,782 $ 147,378 shareholders,as adjusted__________ (a) The gain on sale leaseback transactions is included in gains on the sales of assets within other non-interest income.(b) Severance expense is included in salary and employee benefits expense.(c) Impairment is included in the amortization of tax credit investments.(d) Merger related expenses are primarily within salary and employee benefitsexpense, professional and legal fees, and other expense.(e) Income tax expense related to reserves for uncertain tax positions.Adjusted percommon share data:Net incomeavailable tocommon $ 92,721 $ 85,061 $ 75,614 $ 177,782 $ 147,378 shareholders,as adjustedAveragenumber of 403,790,242 403,519,088 331,748,552 403,654,665 331,675,313 sharesoutstandingBasicearnings, as $ 0.23 $ 0.21 $ 0.23 $ 0.44 $ 0.44 adjustedAveragenumber ofdiluted 404,631,845 405,424,123 332,959,802 405,043,183 332,929,359 sharesoutstandingDilutedearnings, as $ 0.23 $ 0.21 $ 0.23 $ 0.44 $ 0.44 adjustedAdjustedannualizedreturn onaverage tangibleshareholders'equity:Net income, $ 95,893 $ 88,233 $ 78,786 $ 184,126 $ 153,722 as adjustedAverageshareholders' 4,477,446 4,408,585 3,481,519 4,443,016 3,438,344 equityLess: Averagegoodwill andother 1,456,781 1,460,988 1,156,703 1,458,885 1,158,596 intangibleassetsAveragetangible $ 3,020,665 $ 2,947,597 $ 2,324,816 $ 2,984,131 $ 2,279,748 shareholders'equityAnnualizedreturn onaveragetangible 12.70 % 11.97 % 13.56 % 12.34 % 13.49 %shareholders'equity, asadjustedAdjustedannualizedreturn on averageassets:Net income, $ 95,893 $ 88,233 $ 78,786 $ 184,126 $ 153,722 as adjustedAverage $ 41,503,514 $ 38,097,364 $ 32,707,144 $ 39,800,441 $ 32,502,744 assetsAnnualizedreturn onaverage 0.92 % 0.93 % 0.96 % 0.93 % 0.95 %assets, asadjusted

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30,($ in 2020 2020 2019 2020 2019thousands)Adjustedannualizedreturn on averageshareholders'equity:Net income, as $ 95,893 $ 88,233 $ 78,786 $ 184,126 $ 153,722 adjustedAverageshareholders' $ 4,477,446 $ 4,408,585 $ 3,481,519 $ 4,443,016 $ 3,438,344 equityAnnualizedreturn onaverage 8.57 % 8.01 % 9.05 % 8.29 % 8.94 %shareholders'equity, asadjustedAnnualizedreturn onaverage tangibleshareholders'equity:Net income, as $ 95,601 $ 87,268 $ 76,468 $ 182,869 $ 189,798 reportedAverageshareholders' 4,477,446 4,408,585 3,481,519 4,443,016 3,438,344 equityLess: Averagegoodwill andother 1,456,781 1,460,988 1,156,703 1,458,885 1,158,596 intangibleassetsAveragetangible $ 3,020,665 $ 2,947,597 $ 2,324,816 $ 2,984,131 $ 2,279,748 shareholders'equityAnnualizedreturn onaverage 12.66 % 11.84 % 13.16 % 12.26 % 16.65 %tangibleshareholders'equityAdjustedefficiency ratio:Non-interestexpense, as $ 157,166 $ 155,656 $ 141,737 $ 312,822 $ 289,532 reportedLess:Severance ? ? ? ? 4,838 expense(pre-tax)Less:Merger-related 366 1,302 35 1,668 35 expenses(pre-tax)Less:Amortizationof tax credit 3,416 3,228 4,863 6,644 12,036 investments(pre-tax)Non-interestexpense, as $ 153,384 $ 151,126 $ 136,839 $ 304,510 $ 272,623 adjustedNet interest 282,559 265,339 220,234 547,898 438,882 incomeNon-interestincome, as 44,830 41,397 27,603 86,227 135,276 reportedAdd: Netimpairmentlosses on ? ? 2,928 ? 2,928 securities(pre-tax)Add: Losses(gains) onsecurities 41 40 (11 ) 81 21 transactions,net (pre-tax)Less: Gain onsale leaseback ? ? ? ? 78,505 transaction(pre-tax)Non-interestincome, as $ 44,871 $ 41,437 $ 30,520 $ 86,308 $ 59,720 adjustedGrossoperating $ 327,430 $ 306,776 $ 250,754 $ 634,206 $ 498,602 income, asadjustedEfficiencyratio, as 46.84 % 49.26 % 54.57 % 48.01 % 54.68 %adjusted

As of June 30, March 31, December 31, September 30, June 30,($ inthousands, 2020 2020 2019 2019 2019except forshare data)Tangible bookvalue per common share:Common shares 403,795,699 403,744,148 403,278,390 331,805,564 331,788,149 outstandingShareholders' $ 4,474,488 $ 4,420,998 $ 4,384,188 $ 3,558,075 $ 3,504,118 equityLess:Preferred 209,691 209,691 209,691 209,691 209,691 stockLess:Goodwill andother 1,453,330 1,458,095 1,460,397 1,152,815 1,155,250 intangibleassetsTangiblecommon $ 2,811,467 $ 2,753,212 $ 2,714,100 $ 2,195,569 $ 2,139,177 shareholders'equityTangible bookvalue per $ 6.96 $ 6.82 $ 6.73 $ 6.62 $ 6.45 common shareTangible common equity to tangible assets:Tangiblecommon $ 2,811,467 $ 2,753,212 $ 2,714,100 $ 2,195,569 $ 2,139,177 shareholders'equityTotal assets 41,717,265 39,120,629 37,436,020 33,765,539 33,027,741 Less:Goodwill andother 1,453,330 1,458,095 1,460,397 1,152,815 1,155,250 intangibleassetsTangible $ 40,263,935 $ 37,662,534 $ 35,975,623 $ 32,612,724 $ 31,872,491 assetsTangiblecommon equity 6.98 % 7.31 % 7.54 % 6.73 % 6.71 %to tangibleassets

(3 ) The efficiency ratio measures Valley's total non-interest expense as a percentage of net interest income plus total non-interest income. The adjustment represents an increase in the allowance for credit losses(4 ) for loans as a result of the adoption of ASU 2016-13 effective January 1, 2020.(5 ) Charge-offs and recoveries presented for periods prior to March 31, 2020 exclude loans formerly known as Purchased Credit-Impaired (PCI) loans.(6 ) Periods prior to March 31, 2020 represent allowance and provision for letters of credit only. Past due loans and non-accrual loans presented in periods prior to March(7 ) 31, 2020 exclude PCI loans. PCI loans were accounted for on a pool basis and are were not subject to delinquency classification.

SHAREHOLDERS RELATIONSRequests for copies of reports and/or other inquiries should be directed toTina Zarkadas, Assistant Vice President, Shareholder Relations Specialist,Valley National Bancorp, 1455 Valley Road, Wayne, New Jersey, 07470, bytelephone at (973) 305-3380, by fax at (973) 305-1364 or by e-mail attzarkadas@valley.com.



VALLEY NATIONAL BANCORPCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(in thousands, except for share data)

June 30, December 31, 2020 2019 (Unaudited) Assets Cash and due from banks $ 388,753 $ 256,264 Interest bearing deposits with banks 1,521,572 178,423 Investment securities: Equity securities 54,379 41,410 Available for sale debt securities 1,689,388 1,566,801 Held to maturity debt securities (net ofallowance for credit losses of $1,593 at June 2,131,834 2,336,095 30, 2020)Total investment securities 3,875,601 3,944,306 Loans held for sale, at fair value 120,599 76,113 Loans 32,314,611 29,699,208 Less: Allowance for loan losses (309,614 ) (161,759 )Net loans 32,004,997 29,537,449 Premises and equipment, net 329,889 334,533 Lease right of use assets 273,811 285,129 Bank owned life insurance 535,383 540,169 Accrued interest receivable 122,807 105,637 Goodwill 1,375,409 1,373,625 Other intangible assets, net 77,921 86,772 Other assets 1,090,523 717,600 Total Assets $ 41,717,265 $ 37,436,020 Liabilities Deposits: Non-interest bearing $ 8,989,818 $ 6,710,408 Interest bearing: Savings, NOW and money market 14,165,415 12,757,484 Time 8,272,772 9,717,945 Total deposits 31,428,005 29,185,837 Short-term borrowings 2,082,880 1,093,280 Long-term borrowings 2,907,535 2,122,426 Junior subordinated debentures issued to 55,891 55,718 capital trustsLease liabilities 299,260 309,849 Accrued expenses and other liabilities 469,206 284,722 Total Liabilities 37,242,777 33,051,832 Shareholders? Equity Preferred stock, no par value; 50,000,000 authorized shares:Series A (4,600,000 shares issued at June 30, 111,590 111,590 2020 and December 31, 2019)Series B (4,000,000 shares issued at June 30, 98,101 98,101 2020 and December 31, 2019)Common stock (no par value, authorized650,000,000 shares; issued 403,823,728 shares 141,667 141,423 at June 30, 2020 and 403,322,773 shares atDecember 31, 2019)Surplus 3,628,792 3,622,208 Retained earnings 499,511 443,559 Accumulated other comprehensive loss (4,938 ) (32,214 )Treasury stock, at cost (28,029 common sharesat June 30, 2020 and 44,383 common shares at (235 ) (479 )December 31, 2019)Total Shareholders? Equity 4,474,488 4,384,188 Total Liabilities and Shareholders? Equity $ 41,717,265 $ 37,436,020

VALLEY NATIONAL BANCORPCONSOLIDATED STATEMENTS OF INCOME (Unaudited)(in thousands, except for share data)

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2020 2020 2019 2020 2019Interest Income Interest and fees on $ 321,883 $ 333,068 $ 296,934 $ 654,951 $ 585,211 loansInterest anddividends on investmentsecurities:Taxable 19,447 21,933 22,489 41,380 45,365 Tax-exempt 3,692 3,926 4,356 7,618 9,160 Dividends 3,092 3,401 2,795 6,493 5,969 Interest on federalfunds sold and other 411 1,465 1,168 1,876 2,261 short-terminvestmentsTotal interest 348,525 363,793 327,742 712,318 647,966 incomeInterest Expense Interest on deposits:Savings, NOW and 16,627 34,513 38,020 51,140 74,303 money marketTime 29,857 42,814 40,331 72,671 78,502 Interest onshort-term 1,980 4,707 14,860 6,687 27,409 borrowingsInterest onlong-term borrowingsand junior 17,502 16,420 14,297 33,922 28,870 subordinateddebenturesTotal interest 65,966 98,454 107,508 164,420 209,084 expenseNet Interest Income 282,559 265,339 220,234 547,898 438,882 Provision for creditlosses for held to 41 759 ? 800 ? maturity securitiesProvision for credit 41,115 33,924 2,100 75,039 10,100 losses for loansNet Interest IncomeAfter Provision for 241,403 230,656 218,134 472,059 428,782 Credit LossesNon-Interest Income Trust and investment 2,826 3,413 3,096 6,239 6,000 servicesInsurance 1,659 1,951 2,649 3,610 5,174 commissionsService charges on 3,557 5,680 5,827 9,237 11,730 deposit accounts(Losses) gains onsecurities (41 ) (40 ) 11 (81 ) (21 )transactions, netOther-than-temporaryimpairment losses on ? ? (2,928 ) ? (2,928 )securitiesFees from loan 2,227 2,748 2,367 4,975 4,797 servicingGains on sales of 8,337 4,550 3,930 12,887 8,506 loans, net(Losses) gains on (299 ) 121 (564 ) (178 ) 77,156 sales of assets, netBank owned life 5,823 3,142 2,205 8,965 4,092 insuranceOther 20,741 19,832 11,010 40,573 20,770 Total non-interest 44,830 41,397 27,603 86,227 135,276 incomeNon-Interest Expense Salary and employee 78,532 85,728 76,183 164,260 159,288 benefits expenseNet occupancy and 33,217 32,441 29,700 65,658 57,586 equipment expenseFDIC insurance 6,135 3,876 4,931 10,011 11,052 assessmentAmortization ofother intangible 6,681 5,470 4,170 12,151 8,481 assetsProfessional and 7,797 6,087 4,145 13,884 9,416 legal feesAmortization of tax 3,416 3,228 4,863 6,644 12,036 credit investmentsTelecommunication 2,866 2,287 2,351 5,153 4,619 expenseOther 18,522 16,539 15,394 35,061 27,054 Total non-interest 157,166 155,656 141,737 312,822 289,532 expenseIncome Before Income 129,067 116,397 104,000 245,464 274,526 TaxesIncome tax expense 33,466 29,129 27,532 62,595 84,728 Net Income 95,601 87,268 76,468 182,869 189,798 Dividends on 3,172 3,172 3,172 6,344 6,344 preferred stockNet Income Availableto Common $ 92,429 $ 84,096 $ 73,296 $ 176,525 $ 183,454 Shareholders

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2020 2020 2019 2020 2019Earnings PerCommon Share:Basic $ 0.23 $ 0.21 $ 0.22 $ 0.44 $ 0.55 Diluted 0.23 0.21 0.22 0.44 0.55 CashDividends 0.11 0.11 0.11 0.22 0.22 Declared perCommon ShareWeightedAverageNumber of CommonSharesOutstanding:Basic 403,790,242 403,519,088 331,748,552 403,654,665 331,675,313 Diluted 404,631,845 405,424,123 332,959,802 405,043,183 332,929,359

VALLEY NATIONAL BANCORPQuarterly Analysis of Average Assets, Liabilities and Shareholders' Equity andNet Interest Income on a Tax Equivalent Basis

Three Months Ended June30, 2020 March31, 2020 June30, 2019 Average Avg. Average Avg. Average Avg.($ in thousands) Balance Interest Rate Balance Interest Rate Balance Interest RateAssets Interest earning assets:Loans ^(1)(2) $ 32,041,200 $ 321,883 4.02 % $ 29,999,428 $ 333,068 4.44 % $ 25,552,415 $ 296,934 4.65 %Taxable investments 3,673,090 22,539 2.45 % 3,557,913 25,334 2.85 % 3,453,676 25,284 2.93 %^(3)Tax-exempt 562,172 4,673 3.32 % 585,987 4,970 3.39 % 658,727 5,514 3.35 %investments ^(1)(3)Interest bearing 1,501,925 411 0.11 % 530,747 1,465 1.10 % 212,566 1,168 2.20 %deposits with banksTotal interest 37,778,387 349,506 3.70 % 34,674,075 364,837 4.21 % 29,877,384 328,900 4.40 %earning assetsOther assets 3,725,127 3,423,289 2,829,760 Total assets $ 41,503,514 $ 38,097,364 $ 32,707,144 Liabilities andshareholders' equityInterest bearing liabilities:Savings, NOW andmoney market $ 13,788,951 $ 16,627 0.48 % $ 13,219,896 $ 34,513 1.04 % $ 11,293,885 $ 38,020 1.35 %depositsTime deposits 8,585,782 29,857 1.39 % 8,897,934 42,814 1.92 % 7,047,319 40,331 2.29 %Short-term 2,317,992 1,980 0.34 % 1,322,699 4,707 1.42 % 2,380,294 14,860 2.50 %borrowingsLong-term 2,886,016 17,502 2.43 % 2,775,049 16,420 2.37 % 1,607,046 14,297 3.56 %borrowings^ (4)Total interest 27,578,741 65,966 0.96 % 26,215,578 98,454 1.50 % 22,328,544 107,508 1.93 %bearing liabilitiesNon-interest 8,463,230 6,694,102 6,358,034 bearing depositsOther liabilities 984,097 779,099 539,047 Shareholders' 4,477,446 4,408,585 3,481,519 equityTotal liabilitiesand shareholders' $ 41,503,514 $ 38,097,364 $ 32,707,144 equity Net interest income/interest rate $ 283,540 2.74 % $ 266,383 2.71 % $ 221,392 2.47 %spread ^(5)Tax equivalent (981 ) (1,044 ) (1,158 ) adjustmentNet interest $ 282,559 $ 265,339 $ 220,234 income, as reportedNet interest margin 2.99 % 3.06 % 2.95 %^(6)Tax equivalent 0.01 % 0.01 % 0.01 %effectNet interest marginon a fully tax 3.00 % 3.07 % 2.96 %equivalent basis ^(6)

(1) Interest income is presented on a tax equivalent basis using a 21 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.

Contact: Michael D. Hagedorn Senior Executive Vice President and Chief Financial Officer 973-872-4885