VALLEY NATIONAL BANCORP Q1 FY2025 earnings call

• Net income on reported and adjusted basis was ~$106 million or $0.18 per diluted share, contrasting with prior quarter. • Economic environment has tariff uncertainty, rising inflation expectations, increased market volatility, and more cuts anticipated. • Confident in improving on current quarter's results, with commercial real estate exposure relatively insulated from tariff disruption and ongoing CRE credit improvement. • Growth perspective: consistent C&I expansion from small and middle market businesses despite spread compression. • 2025 guidance update: loan growth and net interest income expected at lower end of range, non-interest expenses likely at low end, no meaningful change to fee income or tax rate. • Continues to create long-term value with tangible book value doubling in seven years. • Focus on organic customer acquisition in commercial and consumer areas for long-term revenue opportunities. • Focus on optimizing operations, customer network, and balance sheet to be a better, more profitable bank.

During the first quarter of 2025, net income on both reported and adjusted basis was approximately $106 million or $0.18 per diluted share. Core customer deposits increased $600 million, enabling repayment of $700 million of higher-cost brokered balances. Non-interest deposit balances reached the highest level since September 2023. Average cost of deposits declined by 29 basis points. Net interest income declined modestly due to lower day count, but net interest margin increased for the fourth consecutive quarter. Adjusted non-interest income saw lower wealth and trust fees but growth in FX and syndication fees. Adjusted non-interest expenses of $267 million were 3% lower than the fourth quarter. Non-accrual loans decreased modestly, accruing past due loans fell to eleven basis points, net loan charge-offs and loan loss provision declined meaningfully, and allowance coverage ratio increased to 1.22%.

• Anticipates loan growth and net interest income will be at the lower end of 2025 expected range. • Non-interest expenses expected to come in towards the low end. • No meaningful adjustment to expectations for annual fee income or tax rate. • Believes 2025 expense growth will likely fall to the lower end of initial guidance range. • Full year expectations for roughly 50% decline in charges and provisions from 2024 remain unchanged.

• Tariff uncertainty has driven most economic growth estimates lower. • Inflation expectations are rising. • Volatility in the interest rate and equity markets has increased. • Market now anticipates more cuts during the year. • Commercial real estate exposure related risks if not managed properly.

Q: Last quarter, talked about commercial loan originations in 7% range, where are they now?

A: New originations this quarter were slightly lower than 7% level, average around 6.80, a combination of lower benchmark rates and spread compression.

Q: CRE concentration levels, longer-term target and C&I growth?

A: Positive about C&I double-digit growth continuing. CRE concentration will likely stabilize as originations pick up, coming down more from growth in other areas than reducing CRE portfolio.

Q: On expense guide, thoughts on ramp or conservatism?

A: Been conservative with expense guide for flexibility in revenue-generating opportunities. Payroll tax to normalize, but marketing and business development spend may increase, professional fees also have potential to be higher.

Q: Deposit growth thoughts for rest of year and bond portfolio?

A: Core customer deposit growth momentum to continue, focus on paying off broker deposits, cash position good, securities portfolio likely to grow as loan growth picks up.

Q: CRE portfolio insulation from tariffs?

A: Commercial clients more sensitive to interest rates than tariffs. Tariff conversations have less impact on size borrowers and projects. Equipment leasing and small clients in industrial space limit impact. Generally insulated on aggregate basis.

Q: Spread compression source and expectation?

A: Competition for high-quality commercial deals, have variety of levers like geographic diversity, nationwide businesses, different business lines to pull to grow profitably in competitive world.

Q: Loan growth expectations for rest of year?

A: C&I and consumer growth consistent and momentum, CRE originations picking up with pipeline over $2.7 billion, expect strong growth in Q2, Q3, Q4.

Q: Update on large loan relationships for CRE and C&I non-performers?

A: All those loans written down and taken care of, charge-offs this quarter associated with two C&I credits, comfortable with provision and charge-off guidance for remaining year.

Q: Funding and core deposit growth expectations, remaining broker deposits?

A: Core customer deposit growth on track with 6% expectation, 5.5% annualized this quarter. Have $6 billion of brokered CDs maturing over next twelve months to refinance into core deposits.

Q: Loan yields spread compression extent?

A: First quarter impact due to fewer days, spreads tightening somewhat but not sufficient to cause meaningful move in loan yield this quarter.

Q: End of period cost of deposits?

A: Don't have exact number in front, but anticipate continued benefit from maturing brokered CDs.

Q: Allowance build, Moody's scenarios?

A: CRE portfolio shrank, C&I reserve coverage higher, kept outlook from Moody's scenarios similar to prior year, higher weighting on downside than upside scenario in model.

Q: Appetite for additional CRE loan sales?

A: Comfortable with current portfolio, lot of inbound inquiries but feel confident on organic path forward, guidance on CRE concentration number met, expecting less build in reserve coverage for rest of year.

Q: Credit criticizing class sides, C&I charge-off details?

A: Slight increase in migration but reduced from 2024, repaid $160 million of criticized assets at par. C&I charge-offs this quarter related to two unique fraud-related credits, not systemic.

Q: Pipeline change, non-interest income drivers?

A: Pipeline has increased from north of $2 billion last quarter end to over $2.7 billion today. Wealth tax credit advisory revenue pipeline building, FX growth driver, CRE originations pick up supporting capital markets, deposit service charge increase in 2025 also a supporter.