Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Valley National Bancorp Q1 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Lan, conference Head like speaker to now Travis today, of would hand over the your I Investor Relations. is floor the yours. Travis,

Travis Lan

Good of Valley's call. morning Iadanza; and Ira to XXXX Officer, Tom and conference Mike Financial earnings Hagedorn. Robbins; first President, Presenting today Valley quarter behalf Chief are CEO, on welcome

discussing release refer company would can be documents for non-GAAP I begin, everyone measures. website we non-GAAP exclude from supporting valley.com. to make certain we earnings of aware reconciliations reported refer on and our our that measures, which Before results. these like release our to to at When quarterly results, earnings items found today's Please

forward-looking during to Valley encourages and two and I that differ our X-K, that and industry. all earnings statements. a complete to this on participants like to Valley from refer the contain of Forms and banking SEC presentation filings, made you found results XX-K to call for cause statements those actual statements forward-looking National highlight Additionally, including may would Bancorp the relating XX-Q slide of those our remind comments discussion to could the factors

Robbins. I'll call the that, to over With Ira turn

Ira Robbins

results the Thank And deposit response results. to of you, the call. more and loan time will on discuss in quarter's we'll those detail. Travis. to will Mike This discuss have to you And I then on morning, events. financial the welcome Valley's recent provide then insight

adjusted EPS of ROA million, $X.XX, an X.XX%. $X.XX and the million, non-core Exclusive of first XXXX, of respectively. net share X.XX% and In earnings annualized per net income, of $XXX reported items, $XXX quarter were and Valley ROA income of

income to expenses. impacted factors related and was by performance negatively net financial quarter's operating This seasonal interest

in said, a turmoil to our sheet Net interest and position by recent That sheet balance To and other entered be of liquidity conservative operating the period from capital extremely we strength. clear, compression our stress. proud the balance headwinds. exhibited this of leverage partially strength I'm build margin of related

low Our granular the balances, extremely and and supported diverse deposit quarter. structurally funding during contributed our to uninsured deposit our base stability

have Our customer In business a continued benefit strong. the accounts, in remained worth accounts opened which of geographic we over well new niches in to flows and new and X,XXX from normal positioned account full times. weeks recent represented us last footprint deposit to March, three quarter's disruption. fund, acquisitions These

OCI Valley of a we From capital to underwriting impact. characteristics, stress. securities period benefit perspective, well our track as during our associated this portfolio differentiated from clearly have continue modest strong as and These record,

teams differentiates As bank the and organization crisis, always, in touch of indicative culture have recent failure the we that client premier service-oriented our our is built. during approach high This further direct were their and proactive, communications. consistent

managers space. top of strong quality, are risk culture. as set the External We our of apart but one tend the equally also are banking to of Enterprise Risk components stakeholders our the record focus credit proud we other of on entire in track

the interest our differentiated management positively For risk example, risk rate Valley liquidity during crisis. and

and approach thoughtful compelling confidence our strategically was that the were Valley proposal to structured on As able in financially bid We our Valley. management and Silicon sophisticated of sheet, result Bank. risk for a and balance a strong we former

explore up are came to While our that positioned the opportunities and disciplined future bid just in end, emerge. we prepared short may

only opportunities and only the our niche serve as our of banks of there current are handful exponentially further as size in country. landscape strong, void a the banking is client the will in The entire the commercial fills evolves. expand we banking Valley today, industry

diverse crisis. navigated successfully last XX-years, the a Over has of our organization variety

not of management history. risk sacrifice the on the on we and diversity and credit and path laser focused are remain in strategic sides granularity which our will throughout has collective confident set apart vision, us our high we both While approach, balance standards, forward, sheet

We continue over expertise their time. financial in assist to this provide goals. achieving value and We will communities clients our long-term industry-leading and shareholder approach service drive to believe that

I call to that Tom will over to and financial quarter's the growth Mike and turn With the results. discuss

Tom Iadanza

Slide Ira. quarter. you, five our stable Thank for illustrates balances deposit the

rates We over to are the performance relationships, the a which Signature of corporate of Precious larger Silicon few increased. very Valley experience generally closures with we last been our managing pleased have months. contained and actively few base deposit the following as were

the and openings well lower earlier. decline drove fully account Our total experienced during runoff Technology and quarter. of a only FDIC-insured in remain Ira the significant extremely path costs balances. amount in the of crisis, combination team higher our for cost, mentioned betas year. general, The higher the continued cost to a during deposits Banking with and business modest that This new performed of customer the In utilization line projected balances indirect contributed

from Slide the network. our stable six branch our come of Roughly deposit highlights of diversity deposits two-thirds our portfolio.

funding from deposits provide than are to channel, industry. the across for international, cannabis our disruption banking, capitalize technology, opportunity of our on diversity Just sources to less verticals of significant available specialized XX% of continues The and like and private online segments. Valley

further. deposit uninsured exposure cash and balances. of excess provides of Most liquidity significant importantly, to variety we Our continue in tools favorably utilize reduce compares to and available our peers, to uninsured a our coverage this robust

of granularity and diversity our base. illustrates deposit further seven Slide

extensive deposits commercial provide base has to footprint going deposit opportunities spread should and our a forward. of diversity variety This across our are in growth discrete critical continue geographic Our defending and been industries.

also can statistics base. and some client the our on see You breadth depth of

tenure We have over XXX,XXX beyond with average deposit customers XX-years. an

$XX,XXX. account average an has base deposit size below granular Our

to eight. loan on Turning the slide portfolio

overview see growth and portfolio's composition. the You an of can

is loan decline, elevated depressed. net growth originations continue as to quarterly payoff remains While activity

extremely and portfolio both increase. is to across origination and classes, diverse asset portfolio continue geographies yields and Our

commercial estate and Slide geography. nine collateral illustrates diversity type of our portfolio real by

our is compare rates. times. favorably is As peers believe average have loan loan $X X.X average conservatively an weighted and have metric these a consistently reminder, higher service weighted granular of as metrics extremely XX%, roughly coverage a to we million. with our We average to size portfolio we an debt and From perspective, loan-to-value underwritten approximately cap

cushion activity been underwriting. given positive, baked we refinancing existing the past experience with into has recent Our had

Slide XX portfolio. and modest provides our detail granular office on additional

Our care owner-occupied commercial comprises of office portfolio, approximately of includes office. a modest XXX XX% million estate. real office including health This

$X.X multi-tenant with perform but million. loan diverse small geographically immaterial with is is metrics recent Important, Manhattan. believe any and well. size over understand portfolio exposure we experienced losses not our positioned portfolio largely the collateral We in to of office to are Our very concerns strong, only portfolio the history. extremely The portfolio is this a average in our credit general, have on

times periods utilized various We believe been ordinary We going this forward. have and stress, XX credit in losses of the industry culture. this We and at in will continue strong manifestation credit past. the well illustrates below times Valley's of both slide consistent anticipate In ultimate have our levels.

Mike I over call to insight to the turn will additional With the on that, financials. Hagedorn quarter's provide

Mike Hagedorn

Thank trends. the the declined you, $XX income to quarter. interest and the approximately million recent reduction income interest margin combined $X.X linked Tom. Slide XX quarterly illustrates was We from Net Valley's of million related impacts higher that net products the day added in result and lower in liquidity into cost competitive increasing the The is dynamics. of and costs mix excess shift of pressure deposit March. of remaining quarter, the continued reflecting deposit drag the count estimate

of funding. fourth margin XX incremental in costs X.XX% result drag higher from is was with associated sequential points count XX associated liquidity day quarter of and the largely excess to net basis equivalent interest Our declined of Remaining of Approximately compression XXXX. basis fully the reduction the with tax March. the points

in As the saw deposit you increased on in five, quarter. from fourth XX% slide to quarter cumulative XX% beta the

While the to count cost net to be anticipate margin excess net impacts XX% income to XX% likely the growth of day closer to the yields and will dynamic liquidity. expected continuing are absent provided We higher, the decline interest our now from reprice to asset year, throughout funding XX% range previously. that XX% result XXXX will interest in

XX. and of to for other growth offset $XX.X as the trust, in to generated the result of seasonally fourth primarily lower and which Moving income compared $XX.X income the This from insurance. higher slide quarter, capital quarter. income, was million wealth, sequential markets revenue We million non-interest

can approximately and the and higher adjusted the from adjusted see other were for in slide expenses largely that non-interest Expenses expenses our million were or increase $XXX you related million FDIC fourth The quarter basis. fourth an approximately in taxes On the from on the quarter controlled $XXX payroll quarter. XX, well to assessment. expenses were declined elevated seasonally modestly categories

and the year. quarter payroll elevated We're associated watermark high As first revising traditionally efficiency represents rate for for our of taxes, non-interest seasonal result growth our guided expenses. day not with a the currently count factors ratio

efficiency growth our guidance However, net ratio expectations. will our revised income impact interest negatively

XX% around improve is reasonable. throughout year, the efficiency a will believe we estimate full-year more While

Turning last XX, for to quality can you asset quarters. slide trends the our see five

charge-offs discussed net the were elevated reserved These result further loan write-down and credits addressed. single development last XXXX strong. quarter project. Underlying proactively quarter's for a the credit of substantially were of each remain and metrics first a The C&I

was Our substantial X.XX% X.XX% in specific charge-offs. result the to from preexisting of fourth losses loans sequential the the The with allowance for quarter's largely credit declined reserves quarter. decline of associated

our ratio Day of X.XX%. higher than ratio still is our reminder, X.XX% X a coverage CECL As allowance of

the XXX% nonaccrual XX, a XX, XXXX. increased for at loan from XXX% loans, to December of allowance March XXXX, As at percent losses

our aggregate, page our In assets. total added response In disclosure to of around recent environmental securities a on turmoil, represent X% we securities modest portfolio XX.

is conservatively for not managed a tool. profitability portfolio Our is and liquidity ongoing

in for our result earnings equity during modest On This improvement that securities was slide X.XX% quarter. see increased impact to quarter. available-for-sale associated assets the the book portfolio. approximately declined value with XX, retained of X.X% Tangible tangible and OCI common you tangible the to a our can the

position reduction at If is would XXXX, from approximately been our March common sequential equity ratio excess of stable had X.XX%. XX. held primarily tangible remained result our the have XX, liquidity December cash The

Our the relatively capital quarter. were during stable risk-based ratios

impact given can you only else see, a on all regulatory OCI portfolio, our securities ratios, have equal. would minor As our modest

the turn Q&A. call that, you. operator Thank the back I'll With to to begin

Operator

question-and-answer will Thank time yours. question session. floor you. from a Instructions] first Steve James. we comes [Operator Moss Steve Raymond the Our At this is conduct with

Steve Moss

just loan starting growth here. Good Maybe off morning. with

loan in growth saw the You quarter. strong

Just the as kind there and dynamic of about as you're curious thinking how pricing to well. loan

A - Tom Iadanza

it’s range below above as gave at saw, at by for year. $XX think the such annualized growth. balanced I type, We we're out still balanced it’s X% of on million just Steve, Yes, Iadanza. the million originations. diverse we'll $X be a CRE in by of end way or our slightly very was, you balanced XX% previously about high portfolio had XXXX. granular averaging and X% region, C&I to as want originations that of Hey, a I've to the We range mentioned. size, end by a diverse, balanced, our how and It's Yes. we Tom point it’s

a loyal customer very have relationship-driven, of from that in business relationship a our strong very base, base. base. We comes priced a customer way. XX% It's customer it's

We the are opportunistically across board. raising we spreads wherever can

Steve Moss

Okay.

raising just X% these Or about relative And you index, any you spreads still so marginal terms kind that if costs guys you're seems It raising kind around of of can how curious, in funding dynamic. thinking tight to are of give pretty help spreads, whatever days? just that? with

Tom Iadanza

do, the Yes, mind, vary. with of types we will the spreads sure. in the diversity Keep of loans

active We the very have risk will it's spreads use. and profitability model, Again, of vary type which on relationship-driven. we a loans. based The

will give over a have you spread. it's that XX spreads you, figure But basis on hard up I average, to So points. gone on probably really tell

Steve Moss

And credit. then for maybe one on just me

the in here could XX-day, are delinquencies how going forward? if in C&I color and projects ratio increase reserve an XX-day around and in those buckets. some curious CRE you think Kind guys you have about give did of You

Tom Iadanza

that you're bucket performing to up. I the think accruals, slightly referring there nonaccruals or Steve, Yes, picked performing

Valley insurance went down by one XX function XX, in performing Our at $XX the but that's or accrual slightly once that's life points to cash fully million. about nonaccruals basis a that customer up, from of secured of

that bucket declined. That's out, of take both You the getting that also current. process

Steve Moss

color I That’s appreciate Okay. the helpful. and I’ll Thanks. here all step back.

Tom Iadanza

Steve. Thanks,

Operator

Frank is Piper [Operator yours. Frank, the Schiraldi with Sandler. floor next Instructions] from call Our comes

Frank Schiraldi

on a that But your the brokered about that are reasonable this for a in Can where alternative here? you Or the you like, are like think talk bringing limited how talk in now fund little room it in the broker, bit do mean, general balances seems there deposit terms funding to of environment higher? growth, funding. in side. I about you opportunity seems about

Ira Robbins

dollar here speak start to me we about think, obviously of what think with the loan let incremental think growth But will Tom, I think funding overall. in perspective that then And at of, comes cost and Maybe is. a from it's obviously, just probably how to X%. every funding some incorrect I demands

During the a non-specific as of the that deem X.XX%. million, quarter, we raised what cost I and over blended funding, was would $XXX broker core

impacts basically strong When across We to and funding of some the entire XX.X% allow growth the vehicle the of declining funding definitely think plug have will environment a really incremental comes And organization, that to need we the anticipate have. bit, diversity some attributable to the when obviously granularity today. referenced, wholesale that about annualized that obviously, very loan which data. that as a Tom it we you in we impact funding the that the little the costs,

Tom Iadanza

Just that, from of XX% our base. to mentioned, customer new Frank, comes add to as I existing business our

consistently economic cycles supported them have We at all times. in all

that. continue do We will to

loans be if in our recall. experiencing slide are you've importantly, down pipeline XX% on approved closed QX. since our to probably eight, But decline I more as We a originations is seen of

in as our forward reducing are projects of our that, seeing customers are reduction of not And part demand. on that our and work we in-process to piece. choosing that move So pull-through loan

one when deposit, go And that have if our the back verticals at component, we deposit look other side, years, you ditches the and didn't you have today. we three

came referenced deposits that that that some those programs to we So billion of from there's $X.X slide. of specialty

Frank Schiraldi

okay. Alright,

the which the small of overall you some relatively terms of verticals, the I a mentioned deposits, technology guess, in of -- So pie. the piece still,

down you also But modestly. they think, were that opportunity I side. talked said about Tom, on you

and openings. So account are those --

both loan on there of the from talk there? deposit they deposit you are balances clarification near-term a world, drive now Valley, the side, couple those names Silicon So in actually opportunity, I give a that the wonder can have the if the opportunity about Or where signatures And growth. specifically to of specifically bit then technology the could more up and with were? just you little the

Mike Hagedorn

something a the last been that it's diverse on base I five-ish commenting we we've years. we've driving for entire granular deposit on. something is across focused the Having and And think been and have organization

that mentioned, is average existed X.XX% that $X.X that referencing As on The right? five of Tom billion six, of zero we're years ago, slide today. that cost

which coming I think we've few good able alternative So of different over fruition. based we've last deposit job years, a I the initiated initiatives to being growth think on now done to very that originate is

create point, have our curve October that well. last I will platform bank. of billion, And balance been rotate our $X.X treasury deposits think those expectation There's accounts X the back those is have an of sheet balance able that still that we've since on here some had of from change. year. moved one you At sheet We don't begins though Historically, would been deposits the inverted things see $X left the off-balance to on some into into platforms the that to sheet. as the as about obviously billion would

from we perspective. years but the diversity So work about five been, perspective, from off-balance an we've the an feel good on-balance last really the all done in position not just diversity over creating sheet we've sheet

opportunity think XX% you continued some that. slide cannabis the continue and There we And entire six, quarter, platform. technology during see technology growth in There's that the to on deposits accounts significant interesting. growth deposits bit is The still across saw X.X. I little in bucket for chunkier expansion a obviously in we is about see there. the Those of business,

within activities based those to unique of some those deposits, flow And on having clients. individual

went the very clients, of public. that a large of percentage actually One

result deposits a quarter. as some of And lost of those the during we that,

a is here of which lot are deposit Over of other from noninterest-bearing, different organizations sticky as technology in Valley, XX% So very, well. I it is base. think the very deposits a

about for segments. these the excited really in growth continued are we opportunities So

Frank Schiraldi

point a six the guys from on And then those just are page uninsured you slide deposit clarification of When collateralized mentioned deck. the the XX% just uninsured in of X.X%? that fully the number, inclusive -- six, there number, Okay. that deposits, lastly, is

Mike Hagedorn

Yes, they are.

Frank Schiraldi

Thank you. great. Okay,

Operator

Our next from Hovde with question coming is the David, floor. have you Bishop David Group.

David Bishop

the of off. during guys that quarter notes release rolled eEarnings The morning. good has funding Yes, that you some the short-term added

quarter Just already or down paid redeemed how much has since ends? curious, been the

Mike Hagedorn

This is Mike.

I'm from the $X see Reserve sit the to And excess the our or $X.X the about As peak at other we in cash at time, can X.XX. is it billion. and of X.X you today, that at release, during peak, and cash billion. Federal cash was talking earnings from equivalents any At as balance

So post is March it remarkably was down. just be come to this, existed done caution And an environment that clear specifically this for about the of given X. abundance

David Bishop

regarding sort in I'm SEDARs did IVF the advantage then of curious, take system. but the terms disclosures a deposits, the of of And lot of it. customers Got

of there? you Just terms curious flows what in saw

Mike Hagedorn

Yes.

just in billion. sit had be there, The or million prior today reciprocal balance March one whether you the as program, we $X.X reciprocal X, put in So it's And one-way that little $XXX billion. $X.X is a to if over that ways. we

not I would think. have up. Once goes there difference has those but to to usage, various that So the we that the been as you probably about in again, opportunities resiliency would back say and comments verticals Ira's it much make as

Tom Iadanza

David, it's Tom again.

as of in example, commercial very our discussing Valley. in place and faith customers verticals ensure to a and -- all chose their And point reference Just we confidence deposit a proactive not were of to, customer I largest will variety some deposits. of

David Bishop

And question. one final Got then it.

the down payoffs think noted zero quarter. to preamble, in I you were this

this were Just versus curious last? what quarter they

Tom Iadanza

higher quarters, not Yes. business. I really don't consistent pretty that these rates keeping refinance -- in any been they've last the of mind interest few type

So three deviated quarters. two in they or haven't last really the

David Bishop

Thank you. Great.

Tom Iadanza

Thanks, David.

Operator

go Manan, with from your next Manan Gosalia question comes question. Our Stanley. Morgan ahead of please

Manan Gosalia

morning. good Hi,

Ira Robbins

morning. Good

Manan Gosalia

how Based so. guidance? to that where basis within on that day to the about trajectory embedded XX are the liquidity. of points you balances guess, last question decline $X.X wanted was we think cash to related on in down I and your that, NIM mentioned you noted or the count should So NIM follow-up I billion back excess

starting in we or a the expect should in the the NIM basis then point is that And slow through about Should So year? XX of decline NIM? how for we good quarter, that X.XX think quarter, go points. saw about the last as core decline you second so about to we

Mike Hagedorn

This take the stab I'll at first this. is Mike.

the billion that go the have that I liquidity be bias the you to to rightly margin as prepared points in will immediate as abate. crisis, forward, was sheet pointed want my least we XX margin But remarks, crisis the today, the it we sit that balance March adjusted out that X.XX%. only think it's would at the for liquidity put $X.X I out, the the the In think X.XX% as on excess impact clearly you quarter. lower point I basis look important, as First, for against we of see for at

So see compression. that of starting we're to already some

And as Ira compression out essentially, from continued is of alluded places. non-interest-bearing accounts, and Tom that One, coming two to, interest-bearing rotation a and both.

mix very take be don't Our tend hold and need to a that the liquid as so noninterest-bearing. savvy, of advantage much they to clients customers, can of as they fact

second increased causing government with And is deposit short our the well. securities competition, as end curve, curve on especially we're then reason also and the against inverted the is the competing clients of

they're the savvy family side news that. Some treasuries. ones are Valley on into within moving The is of good do the more to still staying that

So of rotate to a those environment, interest different or securities deposits. expect rate into deposits in back those we some

Manan Gosalia

it. Got

going and year-end? the into how about As mix balances, deposit IB you think about NIB think we of that should

Mike Hagedorn

mid-XXs. to we the in the trough. can't now, trough what quarter it's the expect you going happen Yes. think to expect we tell I but somewhere I be in, Right

expect So rotation. we do continued

Manan Gosalia

And a there. quick follow-up maybe just

CDs were quarters books, the next back. maturity of up you coming we CDs so? that maturities longer-dated think the couple on recall the while putting In on about How over or should terms your of of a I

Mike Hagedorn

latter longer-dated see on of the putting roughly year, No, and we that least we're been ‘XX. year, all not that high-end, you'll due have in come half specials on, at in the XX CDs. been -- ‘XX actually We've at actually early of the put last months this some we in

Manan Gosalia

Got Thank it. Very helpful. you.

Mike Hagedorn

Thanks. Yes.

Operator

Switzer KBW. Tim Our next the you with comes from have Tim, question Instructions] floor. [Operator

Tim Switzer

we over Mike you could into And for that, good Hey, thank various on deposit ones year various Perito. you. you and I'm categories do and you about very you industries talk niches, have. which enter be think XXXX? have the your a all rest the and the of strongest across Could possibly of pie on the as

Ira Robbins

we of them, And a I afforded obviously, diversity and really mentioned us. has in think there, that bunch

pie, So individual it's that that a not excuse just individual slide pie niches there individual really are focused it's but that. on comprise specialized of lot one or me, on

pie last over We think obviously, amount just of associate with there's first been disruption the about X,XXX opened in technology slide that. weeks As itself the the of in there, a industry the accounts up significant you with in the quarter. X

up accounts X,XXX to business the done that's metric have X can Another in XXXX. you what And the is opened months XXXX. in quarter see we in fourth we equal of in first quarter, would back

a entire activity footprint Valley. there's So across been amount of the significant of

able there's space. the And quarter some to we an in When million $XXX grow to it does the diversity. to I of million, rate a at blended the were first deposits think overall of opportunity reflect of continue expand $XXX specialized

an down growth. think think we loan incremental funding on I cost bit, blend about a little basis slowing will the come as

you really on a cumulative type the levels today, reflect deposit generated we a on growth based little we having our see the of think are haven't I sort lot have. lot loan to of a that beta measure deposit organic a hard have of a try that's where we basis of growth XX% peers to bit when versus it growth, at really same So that loan

really growth that data believe a So relative continue we will as a on to improve the and basis bit. do subsides little we'll perform, that, loan probably

Tim Switzer

what if the or little of like? to on from you have still there discussions But out are customers cautious just investment people given a I'm bit loan slowing maintain the growth, you are guidance your guess not become demand, of kind is with signs more any my heard wondering And loan just uncertainty, starting there. Okay.

Ira Robbins

Yes.

wait in see bucket months. mentioned certainly earlier, down over to -- start XX next going XX% the to to by quality. to base than the seeing not market self-induced in to created the closed a of customers lot us. interest it see have desire to wait A by what's They're more a deterioration the the any we their of our customers. happens pipeline. a credit What slowed reduction That's are seeing projects. it rate we're in so is our what customer we is is by As XX Customers, just and

Tim Switzer

has standards environment caused Okay. And at the you guys all? to tighten lending your

Ira Robbins

I question. didn't get that I'm sorry.

Tim Switzer

Has to standards at your the lending environment you tighten caused all?

Ira Robbins

Again, with, underwriting to we a in Yes. standards buckets to portfolio. look we're our very conservative begin especially but of certain tighten,

do So consistently throughout cycle. that we every

Tim Switzer

all you. from that’s me. Okay, Thank

Ira Robbins

Thanks, Tim.

Operator

Matthew Stephens. Breese Our next with question. your from comes question ahead Matthew, go with

Matthew Breese

Good morning, everybody.

Ira Robbins

morning, Good Matt.

Matthew Breese

in higher being cycle the to that deposit Is this past, up and this the know stage, beta end for playing cumulative provided through past is see that somewhat XX%. kind betas the of the quarters, a outlook deposit closer how I range. all safe we've At of XX% end, out? in will to you discussed say to it you

Mike Hagedorn

be Yes. the beta cumulative think This Mike. XX%. that deposit We is through-the-cycle will clearly around

Ira Robbins

inverter obviously betas curve really are the changes. external pressure of the things obviously, a on an And Is time, put curve. environments in banking we've That different as in just well. sort right to seen, environment variables Matt, what back is, that long and what now, go you've betas a inversion are you think, like happens. the One alternative what pass inverted seeing of obviously, until we're for been of I function

mentioned, sitting and are. the competition our sure Mike Travis based lot today where corner. today. competition of in seeing banks Most others sits they as around I'm treasury of the So on a the of peer today Most that mentioned, isn't are are

So as that a in beta get environment, normalized curve come believe, we betas is back down. going this back stay I really once the as think long But of deposit to a will elevated, inverted sort I deposit normalized to in we're curve.

Mike Hagedorn

is This Mike, again.

quarter. for month X.XX%. was it and that deposits around the the March, see can our that deposits cost core disclosure X.XX% of originating around the But we're in for You was public new of X.XX%

back by incremental a around, think I something rate we because closer funded to So also X.XX%. in that earlier now every brokerage comment right think Ira that is the is at have to on made don't which I X%, our space, Internet being the promo dollar

I that deposits, the will beta blended competition So going earlier, we're definitely due as go is the but said especially the seeing for X. in the March rate up, post to to marketplace come down,

Matthew Breese

And how have deposit Has And continued? quarter up flows mix gone balances shift are ex-brokered? end? down, the or post

Ira Robbins

shift in our has of been examples couple be of tech would really Yes. The good. good pretty that A business. actually

early the and of out one Only pointed in reduction of Ira XX% March. those, up As deposits on, tech X% however, at our they're customer were to gone. made were of half unrelated only crisis,

So good relative we feel pretty about where is that to the industry. overall

people that our our a branch that payments, well, branch fact you March X post tax when bright the in deposits would even are consider be very making spot held Another in deposits, environment.

prepared think So mentioned slowed, an so example, remarks, accounts flows just the his this the of the haven't good. are I as We I in flows March. opened new X,XXX month in

good. sheer been a balance obviously, growth flows XX% by broker we loans, increases. the going you're percentage higher sheet in of that But number to those because just have funded average being have have or So of of the the

Matthew Breese

other opportunities of the any Have seen banks? some customers stemming of dislocation you from Signature and nearby or hiring

Tom Iadanza

standards. add to It's Hey, credit our strategy Tom. Matt. our to teams follows it We're long be opportunistic as and people always as relationship-driven of going

yes, see So that we is do to the opportunities. short answer

Matthew Breese

one last for me. then And

real that come value, particularly seven-year real in fixed on pre-COVID. Just at, What in on in particularly transaction commercial or five resetting are appraisals involved new seeing commercial rate. is those you're loans, loans that new the either a of ultimate or estate into kind for a estate change office

Ira Robbins

Sure.

in increasing We're million office so We in office. board we have as and Manhattan, are the and the that rates, seen more industry office have of would in industrial. multifamily seeing XXX especially expect, retail Manhattan across we major cap you not players,

NOIs the -- we're down. So are

have rates drive increased we more seen expect would to that's not drive deterioration. material we So so to values. the any those values cap the have But going than

of one fact, matter on a nonaccrual, only that's loan we have office, $XXX,XXX. As

Travis Lan

Yes.

of what one underwriting think I was. the Matt, look is really things our at, day X to

the sort example, day in X.XX%, environment were cap on right? an you where us, look for As multifamily we of X. how of underwrote rates at the And sort when that, reflects, is

rates So that us. are others of changes have interest rates, think on seeing change are going less impact of cap based I an some the to on really in and

might very have to And back a really business your in line I the that of asked doing? time. very first here. long very our just going base fortunate client clients We're think they're question been to that has for knowledgeable have the sort strong, Tim And are what a maybe of defense

I with away there walked had they were other a from a they and thought on they that the client work just $X deposit were project that because opportunities to other going out was day, the million happen. economics didn't actually now, a

environment. going get a going They I look didn't they in continue for base opportunities there's they've three, to help are to the to our astute us at be time. in and think So into ability that market support to very client are just real or years for of estate long five a been very ago, this come economic about four lot as them,

Mike Hagedorn

final a just Matt, And Yes. this. on point

average our real loan-to-value office -- portfolio, it's on our Our on our portfolio XX%. XX% is weighted average estate

previous had Ira cushion tremendous our as standards, underwriting So there in is mentioned.

Matthew Breese

for my taking all That’s questions. had. it. appreciate I I Thanks Great.

Mike Hagedorn

Matt. Thanks,

Operator

Our comes RBC Arfstrom go Markets. next Jon, ahead. Jon question with Capital from

Jon Arfstrom

efficiency kind ratio morning. and of Good you thinking overall go I growth? again, the writing what expense Can guide you're on fast. was Mike, Alright. over

Mike Hagedorn

Sure.

with that you first would see to efficiency were the the of So left an started XX back you place. to ratio as the to decimal a quarter 'XX, of if reminder, also go

of based to XX expenses, associated the quarter, compensation-related of for So the the on largest expenses. being not taxes at unusual. first of It's that in be with our us payroll the seasonality it being some various portion

well. the increase side, in in drove on want point increased, expense that increase is annual second And which basis point is rate, that our I thing also that that a $X.X a to the in FDIC as X assessment increase large million impact the out expenses rates

back reasonable we've XX% back a now talked the out for you that said you previously, you NIM right out, over ratio. think consider it efficiency those might as be goal is compression about the of XX% the bias those seems ‘XX. remainder that our have below past, and we've slightly to to when When in So the long-term

Jon Arfstrom

Okay.

from saying for the ‘XX, of you're remainder So here?

Mike Hagedorn

Yes.

So what Yes. high, that I'm is I'm the terribly, XX, be talking over XX, way, saying wouldn't something seasonally is I XX XX, think by XX about XX. talking and not we're that

Jon Arfstrom

your call piece the in drivers or Okay. equation? And about of how there? the fee anything Any of terms expectations to out

Mike Hagedorn

there, the I It the else things at look the I two the first negative second quarter. there fee that Leumi are one have came you and quarter. legacy to lost when quarter. doesn't over business pretty strong. that's the and good was come actually the and get that's think important. everything back One, income Valley come FX up seasonality their it expect in going and the that, recognizes Yes, drivers is Those will hope to And we to in really And of then in our into is we're on, was us fourth selling the business, from swap that Dudley FX the revenue, some were back, that. base customer

income. feel pretty good I about So fee

Jon Arfstrom

and opportunities then bigger you opportunities to on way Ira, seeing talked been open that what up do you sense brought make And are of you're deal, the a have would more a And strategic? might you guys? to or in any for but about bit SBB, you less something how

Ira Robbins

opportunities I of We've a the function a already of of going today have sheet. more identified to within strategic the there's it’s available I lot be initiatives our and balance years. we last a think granularity I would diversity four for us. couple that And say think to three,

One of them was on focused diversity.

them income alternative some of business lines specialized increase, sources. alternative focused some continuing to of help organization, the sources, expand the One noninterest to continuing build was as sort the to concentration well funding to across as reduce of identify on of

believe going to do us. out be there's I opportunities there So for

I said, perspective. That critical. really think it strategic that's has really us, from to for And a align

and go lot else. a that something internal and it incremental us, ahead are to have look opportunities us of really be for and at We to organic will tremendous really

be going think there's other opportunities. I So do to

It very us. sort sense able both we'll be disciplined we to think for we'll sense I for SBB think there. make well us, I were of strategic at them. look has be as to But like as the economic on

years One a five proud and over last than very done for focused we've basis, the when of five sometimes tangible think our think book on years. the you better tangible things relative that of I'm the on much I've been is And sure value growth book our that peers making value grows. very, last I

mind that's something me. top sort that remains So of to of

Jon Arfstrom

it. Alright. okay. you Yes, Thank appreciate

Ira Robbins

Thank, Jon.

Operator

our I'd closing Robbins back to turn now it over to Q&A. remarks. concludes That like Ira for

Ira Robbins

you to I'd the quarter. for and we like look us to to time to forward today, next thank taking talking join everyone

Operator

Thank your program. conclude participation in conference. you today's the This for does

You disconnect. now may

Valley National Bancorp (VLY) 27 Apr 232023 Q1 Earnings call transcript