VLY - Earnings call transcript Q3 2018 | Valley National Bancorp

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Operator

Good day ladies and gentlemen, and welcome to Valley National Bancorp's Earnings Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will follow at that time. [Operator Instructions]. I will now turn the conference over to your host, Rick Kraemer, Investor Relations Officer.

sir. begin, may You

Rick Kraemer

Robbins; Good Officer quarter welcome Leading XXXX be as CEO, today Nicole. Alan Financial National as Iadanza. Eskow, our the Bancorp will well Ira and President third earnings Chief Valley our morning you, Chief to Officer, Banking and our Valley call and Tom Thank conference call.

to our additionally, earnings everyone Valley during Bancorp can complete filings, find you relating over contain would SEC we now, started, release to Ira banking Form supporting refer including point turn statements those slide Before and that may everyone get And pleasure comments found presentation I participants forward-looking XQ two call aware XX-Q want of a and website documents it's to like a to of National for made forward-looking on my third reminder and call that I XX-K to XXXX to on quarter our valley.com. with industry. make to And to the statements. this X-K, our discussion all earnings Valley Robbins. encourages our the

Ira Robbins

Thank you. us morning. joining you Good thank and for this morning

importantly support we identified not bank,, relying lines. can profitability more more that utilization Growth, for Over years through business internal we sake the and beginning enhanced purchases function efficiency we we year but the how a positive throughout add just of and the diversified a of initiatives a technology effective have not towards to improve scale on originations, come. is but our demonstrating infrastructure the revenue through the products direct the stream deliver balance future. tremendous sheet, the goals the for we presently the cost growth of of path Valley increasing that progress In operating Since size each the creating leverage only infrastructure. would in profile might shown control past believe is Greater Valley. infrastructure have manner of several organic that repeatable I not year for the of and on more to we services, asset

We our USAmeriBank welcome to the work continue clients acquisition. to tirelessly from

than While customer the anticipated have We've and also experienced with cost some are thrilled higher growth we actual incurred we integration retention initiatives. begun major several execute we have absolute to-date. other to

first will previously For upgraded create closed an count front have impairment a strategy announced, greater XX we of from that the quarter, we On example, staffing only combination branch addressing our branches reduced greater this a incurring efficiencies announced transformation alone revenue XX generation model. and all closures. modest branch of X from while charge

while rehiring model believe examining, We implementing delivering time, deposit dedicated addition this a growth. our headcount branch simultaneously in reduction begun and have in initiative core to expanded network. universal result should We banker

business intelligence are of add the we part improving the all model a Valley's midst of platform. might analysis staffing large also I Additionally, implementation branch investment targeted new at rolling of driven the subsequent level in employees. out platform in and quantitative by brand was new the efficiency

product we're Moving over Having upon. one aligned plan grew was a into our will markets lenders combination sales to new only supported underwrite growth C&I my to the targeted is in we which move ability are a to The industry and the career all projects successful compensation software the real-time an spent under lines, past over through streamline are balance data, greater entire decisions stringent to Valley there through drivers enhanced of pipeline loan. built opinion of my practices the quarter. behind and and achieving sheet, growth more a bank. giving in and These the and hires our The access way to efforts lenders more structured year, our further at practice, a portfolio. technologies the provides in continue diversify our each new annualized fashion. the enter which that to informed XX% underwriting loans more same Valley loan were this at enabling make

a I back cost. to like landscape. enterprise over systems for empower our existing the turn inform While changing improve technology and an Valley are the Services we and management $X office the technology future such enterprise times. very million initiatives. an from banking in in sales we approval capacity and overall better interact, perspective, have tracking operate spent that Encino, digital of adds our to enthusiastic experience data own and strategic about my about never have as excitement employees facing allowed Each those force, all during have like in investment Year-to-date markets our from before, products product functions Valley administrative is from is us to internal witnessed and our dramatically associates There never able creating direction like customers. I interest whom and information other institutions speak of we're tenure. seem hub

X% currently the processes to we technology X% have the company roughly far on This direct path. a annualized historically had initiatives. efficiencies employed improved manual the that are revenue more undoubtedly of scalable of This to spending compares are approximately We lead allocated. combination our in indirect will and

vision and the Finally going shape we to logo new to our rebrand, month give forward. which unveil this

bank, and in witnessed moving on As we the our it's presentation There year our my have is simultaneously XX during associates the and will move to of continues innovative the banking to to our while three the our excitement highlights some changes earnings a delivering necessary evolve, these I'm an company cover forward. services, for quarter. to all of that commitment brand embracing walls time within to legacy. I celebrating that With slide reflects additional landscape of so proud not that thought the develop at Valley we

million share There penny same a earnings on XX% per which adjusted of reported an just $X.XX. telling one $X.X several the Included For earnings in period this the not diluted which year represents approximately per XXXX, other were our or reflected per Valley share quarter, the million. of quarter basis, basis. in with items On was after ago. number of are third the pre-tax $X.X tax posted share notable growth several in $X.XX, over items approximately

cumuli Specifically, and quarter. we expenses continue telephone to packages Within software saving for overlapping by platforms run dual we customers. treasury have over that Further, utilizing commercial $XXX,XXX we monitoring our our are management software. redundant AML, are per in broadband risk

Additionally, related forward spent were to business we level recent rates consciously run and practices. our we of normal Further, quarter commissions technology greater related due mortgages during third $X.X the million finally incur of million to in approximately residential over $XXX,XXX higher origination. facing severance versus to $X.X

begin medallion portfolio, in our costs CFO these couple It large penny to the equaled additional a will is which the by trends client of was was quarters. Alan many once of cover share. income Eskow noting regarding part an and in that few worth per of expense some our again provision next additional earnings loss expect slides during isolated quarter. With We taxi that, loan driven the our to quarterly

Alan Eskow

linked Please turn quarter income interest four. to Thank annualized XX% you, net an on by Ira. We basis. grew slide

we point expansion Our significant relatively impact to funding net expect margin net interest stable. rising basis linked X combined remain the margin quarter offset our of costs. of help the growth near-term, interest with loan In

our growth Bank deposits to Home our closer Federal opposed sub-XXX%. we advances Additionally, goal of to move to with deposit loan and expect as fund loan to future ratio our Loan

decline amount the decline closures. Turning quarterly XX $X.X quarter's linked This to branches meaningful was consolidate, due assets non-interest on on the branch taken covers call. quarter income, we million we approximately related did to experience described of a expected to impairments rather last to

of swing FDIC income. Another share contributing loss factor quarterly was $X the approximate in earning million

reminder, a of positive this a second the number negative this a $X.X was As in quarter. $XXX,XXX versus million XXXX quarter

related on to mortgage $X.X delta decline in previous was flow experienced million mortgage, quarters, bulk to been to the jumbo have residential based a gain consistently million addition Finally, our from closing the In sales, which conforming largest quarter-over-quarter. income business. $X.X we sale

in quarters. be additional We we to sale close transactions future are will hopeful, bulk able

remains market than However, sales. predictable conforming mortgage traditional secondary outlets that less for

During $X.X gain the quarter, approximately pre-tax sold X.X%. of a or million we of for loans $XXX million

operating slide to expense. and on five Moving

have to second quarter the the to we We benefit You believe on annualized our initiative. end related we achieve achieved of the pace full will of over the XX% that XXXX. annualized remain LIFT notice through amount

reported Our related frequent merger $XXX.X million of included and charges outstanding items legal in operating to million $X expenses of of related matters. reserve approximately

Additionally, tax was $X.X million. expense credit amortization

commissions, for made operating adjusted in approximately run-rate. was considered there all quarter. that than level of the million nature the expense largest mortgage The higher quarter, quarter's from we items, expense That progress said, our second the up $XXX.X previous onetime the were not quarter. during items are marginally the several $X.X cloud these million to was Excluding

our efficiency like Chief income stable, software by related to costs modestly that, telecommunications. In level fourth turn originally servants with Another Officer higher are our into company takes and ratio of expense, Banking to adjusted associated $X solutions, specifically balance costs and a to and remain very cover said, expect than of mortgage sale With fourth Iadanza, consideration increasing infrastructure treasury the AML costs to to had to related mentioned call level That XXXX We and on improving duplicated adjusted we quarter gain advertising sheet we previously XXXX, range levels lower quarter the our credit This million would on to a efficiency normal over than focused rebrand. XX%. Tom primarily of rebranding highlights. our remain we potentially driven of some to efforts. expense projected XX% the management long-term. I our

Thomas Iadanza

slide Thank six. you, Alan. Please to turn

this mind, The sold the posted It we of Keep among for we the to important growth of initiatives diversified residential mortgages of which growth increases especially classes. a XX.X% Though As million have different bank. pleased profile is are by organic in implemented. function quarter. that the quarter. you validating growth approximately not at during see, we dramatically can the is the emphasize a $XXX risk we annualized is was loan in also all asset C&I impressive

million greatest is of average our of of Valley CRE This diversified of loan it million. consists base. geographies, customers size $X.X the XX,XXX loyal commercial over possesses multiple across $X.X and average One loan differentiators approximately an size C&I borrower

loan. per of million approximately size top-XX is average the fact $XX In loans our

manner. loan continue a diversified which future. with promote and combined and foreseeable fuel to the with to new very relationships, to greater meaningful quarters, strong incentive acquire grow continue build we industry for should contribute beginning the recent growth aligned are This to continue to to plans significant We opportunities originations. talent experience In in our

constant quarter. marginally from done loans albeit strong Our remain prior we geographic mix and the originations to see of continue

which points loans, was We help mix to in should up rate moving interest portfolio higher continue to loans At or net percent a a of place great future. percentage margin XX%, over months benchmarks total several the to emphasis the percentage year. of quarter-end, on tie us course maintain less the the a of variable three consistent

are bodes well Additionally, current spreads to new greater than for coming future at net which origination levels our margin, in interest equal stability.

growth, our Finally result of will X% as guidance announced growth loan net a of quarter's we previously exceed believe sales. to XX% annual we this of

it slide turn please will to you seven. If

will You increase experienced our quarter $XXX balances deposit million. the approximately of notice linked

Bank on wholesale During improvement mix core and Home with the rely came substantial shift in allowing we Loan Federal less This of use funding a deposits us of costs. the increased brokered mix through quarter, a to CDs, advances.

cost effort an and continue will in We opportunistically to duration. wholesale improve act our to

While climb has our of along with that continues on the of with are pace quarter increase. and funds most deposit pleased keeping industry, cost to our beta we the been up trailing other recent loan betas

approximately under flat bring at Additionally, remains quarter our from back loan the XXX%. ratio remained a level goal to XXX%. down near-term deposit prior to It that

products we suggested growing As emphasis lower business are on force increased we our middle prior And cost markets that focused industry solely dependent market not placing deposits and on and business specific growing creating accounts. mobile our upgrading finally, for customers sales supported said, strong. and are That an solution treasury attracting expanding on rate. are by In deposits competition are we on quarters banking. the management in we remain particular, an focused upgraded in operating platforms

of continue perspective, a source technology our the deposits our over to Additionally, consumer increasing million $XX date. we enhance customers' in year deposits to digital of business residential an From accumulating and mortgage continues be necessary making commercial strategic to investments both a experience. retail

further are encouraged is we of increased balances trended deposit bearing the quarter. that and evidence non-interest-bearing enhanced are in While the in growth growth non-interest eight. gaining during Please stages, deposits with early personal and average account to highest few X.X% our traction. has past over slide net our the positively and account Furthermore, annualized turn that service our quarters rates. seeing This differentiate non-maturity efforts products net business some

we quarter, about have provision share. negatively equaled $XXX,XXX third $X.X the decline which would down the a loan taxi medallion the of During million, quarter loss continued approximately quarter provision of recorded lounge, per $X.XX was valuation linked impacting

Following this taxi stands our continues at quarter's of percentage a medallion of reserves loan and related exposure portfolio. XX% to now build the provision, level as close to of

the Our this current transfer average is reach on level to books and approximately $XXX,XXX per model aligned price values York to medallion activity. New City a more medallion, our closely of

to monitor We meaningful positions any continue the the changes market. closely to reflect to

current related past approximately loan $ since to considered The linked current payments, has accruing that quarter. remaining XX noticed which third represent now a Approximately million with of due by payment. to purposes number generally was approximate million losses is $XXX,XXX have higher single remained for and a charge-offs all of $XX may our You net $XX our in total that smaller the million this of due quarter. increased administrative somewhat of loans, that loans status. past loan by benign back provision, credit current at moved Despite most for are a level

outlook percentage our Our million call X.XX%. for comments. levels of ratio as of our loans loans from closing non-accruals prior like the of regarding the I to to discussion and a declined now turn approximately would back is non-accrual $X Ira a near-term total and quarter

Ira Robbins

Tom. Thanks,

outlook seen we we date, believe year given of nine, net growth X% full previously our portfolio the to have slide announced will loan exceed growth to we of to sales. XX% year Turning

a improved that quality we standards without yield hallmark credit the and the been of Furthermore, We witnessing mix, have with underwriting from rate the are pleased tangible this are growth believe achieving portfolio duration achievements growth, perspective. the we in we Valley. loan and sacrificing always are

within terms plus In for neutral the margin, interest of quarter of to points. remain expect basis X fourth minus or we net the NIM range the

near-term Additionally, loan-to-deposit our we expect continue move goal our to of to sub-XXX%. to closer ratio

quarter the with as Alan of achieved environment secondary transactions, to Finally, improve face on we short-term ratio to XX% raising are goals. short-term we previously income line fourth pressure inflated on quarter advertising XX% to adjusted we the expect the related efficiency not in should expectations, could third rebrand with goal sale guidance our expense of a previously gain similar mortgage be for from believe quarter. to those place could combined Valley's mentioned, In we efficiency of range our what better. the levels fourth in announced market XX% or That

level of distribution expense we of quarters is quarter's assumed one than recent numbers. it recognize. are areas reported expenses the The remained elevated reflective to important originally operating within in more not and While improvement always had

for which environment. long-term geography, to to us strides interest all important sheet importantly of by by asset interest balance making the is any not building product, are irrespective manage allows net duration, over the asset We income of diversifying and class, rate effectively mix in a hazard that by one more

Our is diverse. and customer base robust

XX,XXX We core access customers diversity XXX,XXX commercial customers. retail funding economic in varying have the demand supports This long-term future over well over and conditions. over loan to and

customers, entire are an bank a our can into to infrastructure building the grow the and that driver compete organization. We technology core efficient through implementing a the well is future, scalable with

operating redeployment questions. expenses them talent through beyond. higher upgrading positive XXXX believe the line world-class of that growth generating With should to risk-adjusted into with sources all please in and revenue efforts sustainable lead these delivering on for supporting and leverage We laser-focused are We open capital of technologies. and operator, greater and

Operator

our Instructions] Schiraldi Frank first from Sandler from O'Neill. you. Thank [Operator question comes And

open. now is line Your

Frank Schiraldi

morning. Good

Ira Robbins

Good Frank. morning,

Frank Schiraldi

you now Ira, this just level - of year feeling on you're increased be growth have about first how wondering I your guys TCE you're feeling couple comfortable ratio. beat to that the able And about times internally capital you'll expectations. here, know Just levels here.

Ira Robbins

question, good a Frank. It's

that continue believe of today. I XX%. to growth think our north position we're to going generate that's where We is capital definitely comfortable with loan don't we're

long-term is internal our is digits, are. supports where we that current capital high-single expectation generation growth sheet Our have which of expectations the balance that the

quarter growth bulk we'll execute forecasting. a we During came our sale. And get inability to to the growth that we numbers believe bit the jumbo little originally had loan a of back from

Frank Schiraldi

on you growth, about you of sort put And can exceed them this to Okay. seems margins. you'll it like think while or down XX% as feel here, the loan the near-term the you X% I defending but guess

just about you could So more I funding. little bit if wondered a talk

past, pie the the into maybe of guess excluding the over of may the deposit here kind said think you I is look a brokered. about out talked still a expectation the bank. pretty of of coming in noninterest think that bringing even balances, you as piece I And reasonable good bearing you're sort a you've But third quarters? I being

Alan Eskow

Frank, it's absolutely. Alan. so Yes, Yes,

bearing, do. more are much of of So on first all on noninterest a type we are that result funds C&I on our lending us with the again as deposit working noninterest capital that bearing

even the a quarter, up. though saw average if point-to-point decline is So we slight during balance the

so And because companies the their for take capital working use needs various quarter. money it these and that's during

the going So, about very to number which that running is we're comfortable continue XX% that is near-term. to in close

Secondly, type or two noninterest especially and in the in money last our many and seen of growth, market the we in have other both accounts. bearing quarter unit savings

we one, up our So see going we we're not growth forward. the day across very that's seeing come may and are relative all units thinking dollars deposit open Even positively to though in core markets.

nicely, And move and program making so growth there. penetrated forward we is some seeing are a digital very we've our

think I question. which comfortable very on brokered ask That so being we're with you that. side, the So said, the

on like can we fund nationwide type a of than using the that are platform today We're lower bank a home that, digital bank advances. are using that's the funding basis. loan bank the on levels We using any

as all we great Bank. less are do they're for wholesale in with brokerage than as While core at purposes, certain across market our moment, can the the deposits well deposits Federal coming Loan Home the our in

duration bank defended realize on, the of accounts and can and it's But money we moment other also the accounts, overnight way growth which name a monitor additional we'll very that. help amount see not watching the and And in and and put maturities we margin to bank. but types we've are fair continue this at brokered. So We well just of in fund as fund result a we can continuing obviously to in not that's an market method just we the that.

we So brokered deposits margin switch costs point. funding to went made fairly other a the significant basis the up and quarter. X And during again,

loans comfortable one of we're mentioned So are sure, balance sheet the these the I'm That of the trying one sheet the our very which and think putting we're is movement and interest rates protect to have the thing guys on, by of it. on may I that of regardless been balance way Ira structured the funding that diversification types the side. not same we

all sense not it's in to various it's to relative buckets. make sure in make And coming the trying durations one So we're on. bucket, the assets

Frank Schiraldi

I terms replacing just what brokered pickup the was a quarter, one, of in quick borrowings with Okay. the in what the or is the mean, pickup product?

Rick Kraemer

Rick. it's Frank, Hey,

these duration basis So a it where on we on, comparable XX basis point brokered versus net about FHLB. a advantage funding of was put

Frank Schiraldi

points. basis now exists XX that the And

Rick Kraemer

existing existing is It still believe I now. it was and then,

Frank Schiraldi

Okay.

Okay, thank you.

Ira Robbins

before. clarify me mentioned point let word the and more just just Frank, duration one I

from of the Home had lot overnight funding. been the funding Bank Loan a So

the around rate basis So duration funding that's XX points running we're that on seven putting we're we're getting months. rates at overnight cheaper and than

So the both to term. shorter future protect term that's and the against think helping moves on we longer

Frank Schiraldi

Okay.

XX getting basis you're and points? you're So the duration getting

Ira Robbins

Yes. Absolutely.

Frank Schiraldi

Okay, great. you. Thank

Alan Eskow

Thanks, Frank.

Operator

Thank you.

JP comes from Morgan. question Steven next Our Alexopoulos from

is Your line open. now

Steven Alexopoulos

good everybody. Hey, morning,

Ira Robbins

Steve. Good morning,

Steven Alexopoulos

start want I a up… first to follow with

Alan Eskow

Steve. said [indiscernible]

Steven Alexopoulos

can be start Do the in to to XQ? you strong that through there's XX this quarter. pickup would how walk want increase beta - the deposit seem I period bigger than saw loan offset So in bps increased yield that's coming follow-up strong quarter? on for the okay, you a you in Alan, higher time first deposit the we very particularly growth was end It that expect XQ.

Alan Eskow

rates yield certainly beta on that in in I going of all about, already kind terms being of us talking The again to increased during the on only although is coming theoretically a year. though moving what that up but hike necessarily, of deposits deposit think do a hike at we'll you're a moved during handle number Remember see will we even they're of level Not advance is it's allow this they don't Fed rate The the of get as we'll move in see in moving We've to in amount costs that small while and in when that put substantial quarter. that think it think is amount that the Fed we time not the put quarter. end built come we coming you're higher a that of to rates. the I that margin. that's still the we expect

Ira Robbins

asset And real basis, regarding you yields we margin on including and generating marginal a that I where to put originated the in positive were today. funding think the we're on the think loan we that yields, at to quickly look the we quarter those Steve, still if in and yields addition is the CDs that Tom I that, highlighted

compression. don't significantly anticipate So we

the think we're having benefit I diversified that's a get many on you marketplace. York beginning think balance New beta and that the And and Alan a duration, asset into of presentation finally I what than see duration greater to in than beta Tom put peers that's not an have is. we to some and sheet long-term as our really alluded deposit focused the but shorter of can both

Steven Alexopoulos

say loan on growth quarter I tough how so and is questions is with a across really C&I talking in would posted. you loan categorize you weak you at to is don't it fair C&I guys look understand about of the you color, is Can growth this which the board, I just obviously the successful competition Right, the strong environment. were okay. give When Then quarter. the very side, a couple which

Thomas Iadanza

When months were bringing different a Tom. in Sure, it's back look business. with started hey going lenders teams XX back Frank, to C&I of we in experienced you XX book geographies that

So benefiting to have and continue they what contributed we're from they bring what in.

to we right our mainly upgrading staff always focusing the While add the side. continue on C&I people

We That's low Our it to and of year that north C&I and company middle Furthermore $XXX small out and hell year all leasing of just in local ago. coupon after started hit market. average to end a of at off created C&I to out We've million target we We're us loans a of on Property a is we products. Company niches. with go added and few about that. our really small the million We ticket growth below of loan our X%. continue cross-sell Casualty business. $XX,XXX Premium out we'll that size about of see starting $XXX average see equipment people growth of our Finance

targeted while pockets, that kind and market different having small in we've growth a company regions. middle us on effort give our of identified niches focusing calling and in So that

in So a factors combination growth approximately us XX% a got of to annualized say I'd about C&I. those

Steven Alexopoulos

just by given if from going came strong pricing and you about the being growth you too? talk you talk that, what maybe market which Can look bad about with pretty keep real very doing. commercial to also. non-banks described at Can Thanks. are is estate what had, And we pricing is there the the that

Thomas Iadanza

to with use in who very estate the alluded we're are loyal customers again had growth probably some pretty a now to previously long-term their we fashion a bigger they've side and real comfortable merger, sheet. USAB with this strong balance able the where on it's Sure,

real coming of market. around York in have that Fortunately we New out premium Florida get a we better estate

active are of New They on growing annualized Our New about pace to probably estate. York, New area. X%, York of an group be continues real Jersey

multi-family that haven't rates thin a getting that done us. we're the of just it's We of for out too because lot of

but little couple our giving on base truly will a right we're ability the get we're customer in to are of done. the may using of in premium and growing we our the on be be us some where than business We market competitive bit the where picking We USAB by we respond getting properly loyal are from and get estate seen a But a want rate is where better it's to doing multi-family quarters do. a and get here is we customer that that still recent sheet business base. up active doing be right others, better still because with real on things industrial, construction we what that and and things those choosing larger of again balance customers. existing premium, our existing is today most we a Florida

Steven Alexopoulos

Okay, that's good color. Thanks a lot.

Thomas Iadanza

you. Thank

Operator

you. our from question Austin next Thank Stephens. comes Nicholas from And

is now line Your open.

Austin Nicholas

Hey, guys. Good morning.

Ira Robbins

Good morning, Austin.

Austin Nicholas

margin? was help the better margin, quantify impact maybe Maybe the to on the cash the than us what can you from expected flows on PCI pool loan

Alan Eskow

with volume rates got and as the huge indicate. not majority not two came really interest I that quarter so mean, row. dramatic such volume had in we from maybe material income a And growth our on new of document seem as all we've coming in to volume. this we've it's think fact good net it the I Yes, really a increased is honestly, that the really had in quarters

you about PCI the amounts really if it's to anything huge over portfolio, it think really from So something adds talked change loan and I it it of has always that history to I of while period grown of us really the and not we're past gives interest the It's most that basic it period. will Ira mean, numbers, recognizing. most is

level the did the see interest not income increase quarter. what made income we really or for some So the it's them interest move net in

Ira Robbins

to and on of addition tried think that new betas sheet. Austin we're and at stabilize the we've in I loans deposit the can to really Ira a rate up our that that basis on sensitivity this And the is flow the that's some we which asset reinvested originated new showing margin helping you balance is what cash And higher see just on flat margins. put at that of have reinforce the or versus to we earlier, short-term the communicate deposits we in least on asset betas. a based marginal

in of stability from the So PCI the the a no function by portfolio. margin original means cash flows is

Alan Eskow

think floating again lot that much brought is swaps, addition put in the our we And last other USAmeriBank years well on to And that I loans. been we've that's in the type loan rate on as base point betas. reflective using couple over a more the prime of us have loans of

about of a a short margin sheet even helping that's period seeing So really one such has cost. them the we're in move time $X that higher as think relatively short I now reprice direction, balance and funding of day as our some in though obviously that right got we've of billion assets

Austin Nicholas

Understood, can helpful. or side, maybe out call to looked can to of sub-XX% coming both it more that? more and down as efficiency that of XXXX - that revenue is it that really or of it the next the XX%? is maybe little down walk kind driving targeted on side it call gets XX% that thanks XX%, help what - to you or the you understand is Is the us it you help or you specifically so, two maybe of years? Is expense bit it the just And that's us maybe over

Alan Eskow

bit think I little look to a it Yes, at the way is both. of

going a of going lot help quarter of So out not lot yet the one we us see that technology $X here of about technology forward Well, a like that this lot the on. was talked was added We've saves going right about a we lot facing is costs, is now. we yielding we've things a on would have to of people, was future. a million the on added and in of the lot to it we call pointed have things of cost that just

So not see benefit we're for period time. the of to going that some of

for one, In new addition systems we've cost implemented when as we've on not old fully new still one. the got you're you're add pointed for you're because paying if duplicated paying also the out going you

not happened. there have is that going save yet there well to happen as So are

say us basically I'm board save side, that alluded of forms to and of technology to say them that happen come doing. I as and to many the not - new also say to staffing those those that's revenue things going and new down And to we've are So going help in things this as going branch addition added people, overnight. on lot is to in to we're road, higher. a is of driven the that on I that would products the technology revenue the get we're Tom other going transformation driving will

is much do term say benefits likes but in would place derive nature just will to combination but will it's expect overnight, of that and I everybody that. I a events by from know look happen longer this in So this we lot and can't and be quarter-to-quarter, some of XXXX of

Austin Nicholas

Got it.

Okay, tax state next the that's And changes one, last helpful. will look on year, effective rate Appreciate given it. code? you one comments maybe for how the of just tax the Jersey have any maybe then New some do on in that

Alan Eskow

X% by off from went up X.X% went XXXX rate tax Jersey in and - New the then by they to it and so increased it little bit. a XX.X% starts drop XXXX to Yes,

increase expect an really we during XXXX don't of rates. in much So

So one so. to upon that are in turnaround is year rate period two assets or reasons the of get based that the going deferred next for higher our tax that revalued

X.X% higher So XXXX are go a higher see bit XXXX that that the to In and fact and both start offsetting these and they're are rate, really changes that all and we higher account. We do go of then that going little a these go about rates about There that that lower. and again into into XXXX some XX% We've X% going any rates. that reverse themselves. about year going takes three XX% say stay expect down. based XXXX on is the to rate to a and XXXX kind we're and down then to might in increase probably high of into given of XXXX see guidance I'd and going these talks

Austin Nicholas

it. Got

questions. my for Thanks great. Okay,

Alan Eskow

Austin. Thanks,

Operator

our comes from from Ken next And Morgan question Zerbe you. Thank Stanley.

line Your now open. is

Ken Zerbe

time your I maybe of terms of was CDs CDs? first more versus in just from deposits thanks. brokered terms how clarification much traditional of of customer Great, quick, retail question guess, the in end solely really period

Alan Eskow

were the a little did brokered probably start beginning during spread over We kind We quarter more was it on. quarter probably little of quarter. out moved of the the think as I later on. it a the we quarter went deposits of I average as it further the off don't $XXX brokered got of top into We did about raised the million during but have and head, my on. come the

- itself the of a first the built quarter. at started and to little of end the the maybe So end it month probably

include did CDs. month one really So maybe those brokered not

Ken Zerbe

ratio more And you, - think that to your loan basis? XXX% thinking fair growing XXX% different you guys brokered that then you that in also getting a way down a to on Got understood. about or is is of it deposit assume CDs good below are when

Alan Eskow

thinking are No, balances part I of know absolutely the earlier our but of I own it said if other increase on have well the and so all money number were types seen we've one, call, we as market and don't seen we think balances we as increase, that. of CDs

pick that's or brokered pay to whatever. side, have it wait and rate look choose outlet or necessarily the in and door thing. do better willing are we On that that for much to digital got not walk and at to a I the much we're and people order to in We've able the the advertising like nice to see very bank very doing same a the duration

in weighted I rate, the running about office a costs but at duration cheaper. cheaper lot slightly But is these However it's it's they've maybe average got and think back months. seven don't a on

about coming to So we we're et loans interest our cetera. on make and the thoughts future picking sense choosing and books, relative rates think durations that

us will well again So it's very I help think worked think control I margin. our that and

Ken Zerbe

to understand FHLB are presumably the understood. are in borrowings. rate this of some is I funding core and like term term I to let's point on about the brokered longer or I it, Got there vehicle a coming obviously you? spiked. short-term that like funding how value or a this cheaper And brokered the Because think like, definitely as I guess you'd not just is in for or of that remained be market some strategy? than fact replace these disruption you something think mean like do assume question we last more going ultimately at CDs appreciate longer all that guess, brokered, appreciate I the

Ira Robbins

Ken, So is this Ira.

tactical noninterest where branch here very well. many we our accounts, interest in core in accounts, it's quarters, in as significant think I haven't investments positive in we've Alan we nature witnessed think something internally And transformation. in real I seen bearing bearing as are in today. unit mentioned growth We're making accounts

We went investment that as have upgrading believe us to or individual core So any recently we technology I significant run be any are don't the assets lending an the sure loan platform. growth. deposits compete more sustainable funds. make generating wholesale, equal it's help organization of that the think through attract by in and corporate that We solution it Tom have we with. need wholesale mentioned, means We off deposits of to wholesale our to relationships that treasury that commercial whether already to will

growth make deposits are there we support perspective, are the today core short-term a have. we initiatives place from tactical that grow So taking here to sure able to are to loan that of that amount significant

Ken Zerbe

All right, thank Sounds much. you very good.

Operator

from Breese And you. from Matthew Piper comes next Thank question our Jaffray.

Your line open. is now

Matthew Breese

Good morning everybody.

Ira Robbins

morning Good Matt.

Alan Eskow

Matt. morning, Good

Matthew Breese

expenses, this So $XXX million, guidance you'd commentary basis XQ million. done at earlier compares be you're run in now $XXX year I year-to-date previously million analyze is rate closer that an $XXX in the and year million. at to on and annualized rate your you've below $XXX run the a of If expense to on roughly what

after I you there's much we opportunities laying the my in spend lower question are is the would execute? meaningfully cost how and So wide seen here. savings why And some time to pretty work progress we base deltas so guess where out haven't the expense

Ira Robbins

think some Yes, some briefly integration deal. the I regards to USAB and we Matt, now is additionally alluded expenses expenses And are it that of real we've on incurring some that technology additional to that allocation merger spent I the some with in that incurred of costs. as we opposed additional to those it's of we've the time executing driving had that also but anticipated focusing in

need think throughout a done efficiency should outlaying ratio get the So still said, we probably initiatives with it's we've level the guidance a that improve expenses offset it. don't it's associated the we our cost been though, I by that the to entire little been with guidance. of and have was are job delayed believe that able organization to saves to we're mortgage be in Part well, sense. That execute going a commissions makes to we better we initial that, that the to as But still initially. bit that present, significant outlined understand being

Rick Kraemer

pull of this quarter also the Matt, Yes. is of And are as last moved efficiency, side seeing on reason from we revenue because we actual into forget a kind Rick. operating Don't away right. a faster dollars through more well,

efficiencies are efficiency to Growing So important the down important. are driving while equally greater revenues side. also important are and costs

on focus tried last from everybody away we something move was absolute the kind the quarter. So dollar of to

Matthew Breese

Understood.

we… if So

Rick Kraemer

sorry, go - suggesting not It's ahead.

Matthew Breese

If you focus on the pieces here.

that much greater is would my investments just So and that initiative reduce And seems tech where tech headcount. about cost implement LIFT save the the But you've is a side. thought, was understanding the spend was would that on tech like you accurate? one, a talked of lot you driven it than tech

Alan Eskow

wasn't call I think that tech additional within to today there's LIFT. we that incorporated spend alluded the in

I to to we're think of provided, be we're we LIFT, longer. XX% still an the just there's up that identify within is what it we've expectation and a number going to that little bit get to going

I resources for specific on think year allocated originally overall based towards more the being thought the that what had maybe conversion. we

absolute think we can that expecting LIFT gave to provided initial drive we basis that think also that I was stream. wasn't talent on seeing I we growth when significant think we're forecasts. maybe think And right, here, also certain around opportunity is those a guidance first revenue some Rick on tremendous revenue I

to demonstrate been the now that is streams we've going able but think that costs. to be revenue higher, also I

and number. sustainable, growth net - positive better probably there. in what loan revenue job said, efficiency able there's should do as ratio have were we a around we Rick guidance to opposed growth, guidance income, come mean giving that to interest real So going as I done from that's but look you an an around to and giving our are at overall pretty absolute

Matthew Breese

the gain on is on elasticity be of in mortgage gain if expect lower, little part, Should in a to a side The I'm achieve sale? we other expected on too. bit quarters going going would not forward if the we're equation sale the little confused expense greater to is the the in that I

Alan Eskow

Absolutely.

Matthew Breese

about the be Okay. And heard to be higher of hit are able target I ROA haven't and going to then, anything you expenses if that. do to When expect X.XX.

Thomas Iadanza

unchanged. remains That

XXXX. So we're still pointing point in some towards

Alan Eskow

Right.

Matthew Breese

understood. all Okay, I had. That's

Alan Eskow

Matt. Thanks,

Operator

comes from our And you. KBW. Collyn next Gilbert from question Thank

is line now open. Your

Collyn Gilbert

good morning everyone. Thanks,

quarter what did Just the loan on discussion, C&I rates this do the growth to utilization line the side?

Alan Eskow

probably XX%. slightly It it went should always around dramatic up hover around XX% be not increase a

Collyn Gilbert

new you Okay. the in growth versus customers much have of are do put know of loan tracking then current you on here How Valley you now that's couple And from customers? quarters. guys that or is the been of last

Ira Robbins

Absolutely.

better new to Valley. a it's side, C&I customer the of existing On mix

cross us that estate the gives and that of is we treasury the C&I would real solutions the best C&I recognizing side, absolutely opportunities customer. On sale I predominant But focus it's that to growth. on the say that track Valley

Collyn Gilbert

you're Okay, a incremental adding the business the on what's Ira the you on of margin said better had point - balance than And couple that's times the making then the sheet. helpful. that is of

blended in this a yields you if on what those versus the basis, terms say what loan are origination funding were quarter? of What the at we quarter just rough So each last are? cost look and would

Ira Robbins

on little were X.XX% basis. close X.XX% net. blend of to The were they So loan a north yields a

Alan Eskow

also. include residential Collyn, of higher the of due Because that lack real level sale. quick to a

think of around X.XX%, north is I So coming X.XX%. the side commercial around

Collyn Gilbert

what now? yielding lowest And And the that then right bucket loan what book is your yield carrying? Okay. within

Thomas Iadanza

resi carrying be about X.X% the That yields. it's would a

Collyn Gilbert

the Do duration by Okay. that you have on Tom chance?

Thomas Iadanza

you. to back get I'll

Collyn Gilbert

yielding conversely what just highest then bucket? is the And Okay.

Ira Robbins

X.XX% estate a originations. real It's commercial this quarter on our about about new on

Collyn Gilbert

sorry origination yields How - book portfolio, book? on the not lowest on clear. I'm if your what's mean wasn't the the then and current - what more your highest about not what's I about the curious the

Thomas Iadanza

The be the real still the estate. book is is resi. on commercial highest Lowest on the book

Collyn Gilbert

what that still Okay. that carrying the what X.X% originations overall book And is new or is were? is

Thomas Iadanza

actually X.X%, around higher are originations new that, close the X.X%. That's to originations than new

Collyn Gilbert

helpful. amortization the you in credit coming curious give will quarters think line Okay, about any tax what guidance be you can think that? how should just guys or us then that's And on we

Alan Eskow

think past quarter. pretty would the fourth XQ, I the Collyn, And XQ. you've steady the or then it it's about to years, similarly trends seen into XQ, double in so roughly

Ira Robbins

taxes. offsetting Within

Alan Eskow

Correct.

Collyn Gilbert

Okay.

quarter but assumes then the - that So number tax fourth your fourth the a guidance for that's in higher quarter.

Alan Eskow

(inaudible) everything. It takes Correct. found

Collyn Gilbert

had very good. thanks Okay. guys. I all That's right All

Alan Eskow

you. Thank

Operator

you. Thank from Wedbush last our Securities. And comes question from David Chiaverini

line now open. is Your

David Chiaverini

efficiency ratio. on Follow-up thanks. Hi, the

mentioned you some was salesforce.com. on is there revenue tech also? spent in up XXX% of spending in on So it or mentioned just Encino, of you're from how on are being is the earlier how tech curious software about spend X% people previously. you being I call that spent X% X% revenue And

Ira Robbins

cost, people created of people long-term are just software number. roughly we've think us, data migrating is looking save have there we the but million, in our think to is think I only business lot get will about cost, a software at that is which for we $X a not centers, are that there intelligence we a I There to

software So it's across well board people. the in as as

David Chiaverini

what that well? it. is that years of as envision And you kind X%, Got and for quarter coming

Ira Robbins

today. definitely us, I think it's a for target

not to any intend we are the seeing out that the today are think of I get of negative the not benefit it. we seeing of that efficiencies we is

the have as a associated you offset spent progress it, going get that be fuller you to always previously. if and continue from you that to it's with think I spend you by look efficiencies future, the

significant is that's you For that you entire from a improvement within profitability To it's a an sort technology me the think going what quarters on us organization. income later. to spend, expense we take FIFO, benefit. of interest and to like that going have get the it's you to investment are important I drive loan like think are few it's for That today a didn't we but book the when us the said, going provision

David Chiaverini

XXXX? to sub-XX% Okay, for the no thanks that. was change for target there and efficiency

Alan Eskow

Correct.

David Chiaverini

just by question, housekeeping I Okay. expenses the was one-time changes noninterest then that receivable. last decrease item? one, income wondering share a is net $X a million the income other loss in in in is roughly FDIC driven was And to a there related

Alan Eskow

had we be a shares, and gain. Well, we normal of a we bunch closed of reason in as that that result is last The a gain had quarter and a a number. was category, had about gain a loss that out we gain negative The $XXX,XXX odd. would

I would numbers about million I of see number that's probably forward, think say going the to we will show costs, had you Going this $X.X quarter, we forward. closer the

David Chiaverini

thanks it, Got much. very

Alan Eskow

You are welcome.

Rick Kraemer

you. Thank

Operator

Officer showing I'm time. at Rick further now and for any to you back turn the would further remarks. questions Kramer, I this Relations Thank Investor no call

Rick Kraemer

All thank right. our taking for third you like to in call. conference quarter all part earnings I'd

any Have you you questions Eskow. reach additional If have a day. out or can Alan to good myself

Operator

Ladies program. This and gentlemen, thank you participation in for your conference. today's today's concludes

all Everyone may day. great You disconnect. a have

Valley National Bancorp (VLY) 25 Oct 182018 Q3 Earnings call transcript