Thank you, Joel. Good morning and welcome to the Valley second quarter 2019 earnings conference call. Leading our call today will be Valley President and CEO, Ira Robbins; also joining our call is Valley, Chief Financial Officer, Alan Eskow, and Valley Chief Banking Officer, Tom Iadanza; and Valley income Chief Financial Officer, Mike Hagedorn. Before we get started, I would like to make everyone aware that you can find our second quarter earnings release and supporting documents on our company website valley.com. Additionally, I would like you to direct you to Slide #2 of our 2Q 2019 earnings presentation with a reminder that comments made during this call may contain forward-looking statements relating to Valley National Bancorp and the banking industry. Valley encourages all participants to refer to our SEC filings, including those found on Form 8-K, 10-Q and 10-K for a complete discussion of forward-looking statements. And now, it’s my pleasure to turn the call over to Ira Robbins.

Thanks, Rick. Good morning and thank you for joining us. We are pleased with the progress we made in the second quarter of 2019, although more work is required to achieve our desired performance metrics. We are delivering on our long-term strategic goals of creating consistent growth, while simultaneously improving operating efficiency. That said, our goal to create greater diversification of revenue to non-spread businesses, absolutely remains a work in progress. The themes that we have highlighted over the past 18 months are taking hold and leading to cultural shifts within the company. The tangible impacts are substantiated by our core operating results this quarter. Despite a very challenging yield curve environment, one that only became more difficult early on the second quarter. We managed to grow our net interest income 4.5% on a quarterly year-over-year basis. While this result is below our full year anticipated range, we are encouraged by the outcome especially in light of the greater inversion of the curve during the entire quarter. Although the operating and interest rate environment remains volatile. We did see average deposit costs both core and CD peak during the month of May and come down in June. This trend has continued to date in the third quarter and we are hopeful the competitive forces will allow the directional improvement to continue over the remainder of the year. Our net interest margin compressed 2 basis points from the previous quarter. This was due to a combination of higher premium amortization in the investment portfolio, spread compression driven by an increase in retail funding costs during the first two months of the quarter, and pressures on loans and swaps tied to LIBOR. As of the end of the second quarter, the balance sheet was negatively gapped by small margin and we are…

Thank you, Ira. Our adjusted expenses exclusive of tax credit amortization were up modestly from the previous quarter. This was driven mostly by higher rent expense, which is yet to be fully offset from salary reductions related to the corporate staff eliminations announced in conjunction with the first quarter 2019 sale leaseback transaction. Aside from that the majority of our adjusted expenses remain flat from the previous quarter. We continue to look for and find ways to reinvest in initiatives that drive positive operating leverage, while maintaining a relatively flat expense base. As a result of our stringent expense management, our adjusted efficiency ratio was 54.6% for the quarter down 21 basis points from first quarter 2019 and below our full year target of 55%. As a reminder, this quarter adjusted efficiency ratio was down 256 basis points from the same period just one year-ago. Our adjusted non-interesting income grew at an annualized rate of 18.1% linked quarter driven by strong swap fee generation and stabilization in wealth management and insurance services. As a percentage of adjusted operating revenue, adjusted fee income remains slightly above 12%, which is a modest improvement from the prior quarter, however, below our long-term goal of 15% to 20%. We remain focused on not only improving the absolute level of these revenues generated, but the profitability of those businesses over time. For example, over the past 12 months, we have implemented a number of changes to drive higher profitability in fee lines. And these include consolidating two title insurers and closing a third, entering into third-party marketing for credit cards and entering into a new subs advisory agreement in wealth management. While these changes may not result in immediate positive impact to levels of fee income, they are necessary to develop a better foundation for profitable growth for the future. From a credit perspective, we continue to experience very strong trends. We saw a lower net charge offs from the prior period as a result of moderating impacts from the taxi medallion portfolio and improve ratings among several credit buckets, including lower levels of substandard loans and unfunded letters of credit. Accordingly, we witnessed a linked quarter decline in our provision for loan losses. Looking at Slide 4 and the second quarter highlights. Valley reported EPS of $0.22, which included the impairment of a previously acquired investment security. Excluding that impairment, our adjusted EPS was $0.23 per share. As previously stated, we are encouraged with many of the underlying trends we witnessed during the quarter such as 6% annualized loan growth net of loan sales relatively flat core expense trends, despite continued growth and reinvestment into the bank and very strong credit quality metrics, exclusive of an isolated security impairment. With that, I’ll now turn the call back over to Ira for some additional commentary.

Thanks, Alan. I’d like to briefly address the recent announcement to merge with Oritani. We are thrilled by the opportunity that lies ahead and hyper-focused on closing and integrating in a timely manner. We remain extremely confident that the proposed transaction will enable Valley to accelerate our strategic initiatives and enhance our balance sheet flexibility through incremental capital. Importantly, we believe this transaction will provide a little distraction from the significant progress that’s been made over the past 18 months and future endeavors currently in the works. That commentary is a good segue into an update on branch transformation which starts on Slide 10 of the earnings presentation. Approximately one year ago, we laid out a foundation of what the transformation of our branch network will look like in the coming years. The purpose of this program is to create a branch infrastructure that’s more reflective of current trends and adaptive to future activity within our present and prospective target markets. We are striving to achieve a more relevant branch network that enhances relative share of our footprint. Our customer experience will place a greater importance on service, sales and advisory and provide a more efficient platform for including – enhancing our digital capabilities. If you remember, the survey analysis originally encompassed every single one of our New Jersey and New York branches and concluded that 74 branches were not meeting their internal defined performance metrics. Twenty of those branches were immediately determined to be closures and consolidations. Accordingly, those 20 branches were closed by March 31 of this year, consistent with the guidance that we provided upon announcement of the initiative. From there we identified 54 branches as being underperformers within our New Jersey and New York footprint. However, these branches initially appeared to be in markets that could…

Thank you, IRA. I just want to express how thrilled I am to be joining an institution in the midst of such an exciting business transition. I look forward to working with all of my new colleagues at Valley and interacting with many of you from the investment community.

Thanks, Mike. With that, I would now like to turn the call over to the operator to begin Q&A. Thank you.

Thank you. [Operator Instructions] Our first question comes from Ken Zerbe with Morgan Stanley. Your line is now open.

Great, thanks. Good morning, everybody.

Good morning Ken.

Good morning.

Maybe starting out just in terms of the margin outlook, if I remember right, I think your outlook was a little more optimistic for second quarter but the world did change, right, industry certainly came down a lot faster than what people expected. When we think about NIM from here, where do you see it going for the rest of 2019, and if you can also kind of lump in any hedging activities you guys have been doing would be helpful?

Again, this is Rick. So, I think we’re really trying to stick to the edges, income guide so obviously, the NIM name is going to be dependent on how much loan growth we have and at what level of yields we can get. I think to your point, the steeper and prolong period of inversion that we saw in second quarter was not in our original forecast and so we’re trying to incorporate that now. What I would say as a positive tailwind that we do expect some relief later on in the year, should the Fed cut rates from the funding pressure. So, you know, CD and wholesale pricing should reprice lower over the course of next six months by anywhere between 15 to 30 basis points, depending on the level of that activity so I’m assuming a 25 to 50 range there. On the hedging side, we we’ve been looking – we’ve been putting on some inverse floaters and bringing in some rates there so that’ll help somewhat, we haven’t done a ton of that a few hundred million dollars so far so – but that’ll incrementally help your wholesale funding costs as well.

Got you. Okay. Perfect. Thank you.

Thanks, Ken.

Thank you. [Operator Instructions]. Our next question comes from Frank Schiraldi with Sandler O’Neill. Your line is now open.

Good morning, Frank

This one is a start – I’ll keep at the NIM for a sec or stay with NII I guess for a second. But just thinking about deposit costs, you guys talk about a tailwind in the back half of the year but just given the – also the commentary about promotional campaign and CDs, and the average balances in the CD book versus and the period, is there a headwind initially going into the third quarter in terms of CD balances as well as average rates?

So, Frank, you had a pretty substantial portion of CDs maturing in July in particular, so now we’re kind of through that it drops off, I would say over the next six months, you’re looking at about – of current CDs, you have about 1.8 billion, they have a weighted average somewhere to 11. And I would say that the new – the current offerings are anywhere between 15 to 25 basis points below that and that does not anticipate what would happen if the Fed cuts and how the market moves lower. So, it could potentially be greater than that.

Okay. I mean, I guess I’m just thinking about the end of period, I think you were at 7.3 billion and average, you are at 7 billion so that incremental 300 million I mean, was that at, though that was at lower rates than the average for the second quarter?

Yeah. It was at a lower than what you’re saying. So, on a period-by-period, I think we mentioned, in the prepared remarks the month, the monthly rates actually came down, they peaked in May, and came down, I want to say about 7 basis points or so in June.

Okay.

Well, Frank, this is IRA. I think one of the other positive trends that we’ve been seeing that that hasn’t shown up in the absolute balances yet, but is the positive headway we’ve made on growing business accounts throughout the organization. In 2019, non-interest bearing checking accounts for the first six months, we opened about 4,200 new ones, which is a 20% increase over the same period last year, a lot of it has to do with the technology investment that we made in changing the corporate treasury so solution, as well as incentivizing our branch staff and retail and commercial staff to understand the importance of deposits throughout the entire organization. We’re in the midst of piloting two new consumer products, one a new online account, consumer opening, as well as adding some additional mobile functionality to our consumer applications as well. So, we are really excited about the opportunity that we see when it comes to deposit growth within the organization, really getting a positive impact from some of the previous technology spend and the underlying growth in these business accounts is exactly what we’ve been focused on.

Understood. And then just on the other side of the balance sheet, in terms of loan replacement rates, I mean, can you share with us what the incremental spread is for C&I coming on the books versus what’s rolling off?

Yeah. Hey, Frank, it’s Tom Iadanza. I think our yields have held up fairly well. The C&I is probably coming on at a pace, I would say of 25 basis points higher than what we’re looking at some of the new real estate loans.

Got you. Okay. And then just finally, a short one, just wondered if you could share with us what – I didn’t see the number, the higher premium and that you talk about the securities book. What did that contribute to the NIM or take away from the NIM model in the quarter?

Yeah. It was 1 basis point.

Okay. All right. Thank you.

Thanks, Frank.

Thank you. And our next question comes from David Chiaverini with Wedbush. Your line is now open.

Hi, thanks. A couple questions for you. I guess, starting with the rent regulation laws, the changes in New York. Your construction portfolio is $1.5 billion. I was curious, how much of that is related to rent stabilized buildings in New York?

Yes. We’re just trying to give you a texture on the New York City multifamily, it’s about $1.1 billion book of business for us. We’ve always underwritten to stringent standards using existing cash flow not future cash flow, and a cap rate of a minimum of 5.5%. Our average loan-to-value in that portfolio is 55%, debt service coverage north of $150. It is not been a major growth factor for us, as you can see from our charts, annualized growth of 0.4%. So, it’s really not been a segment that we have pushed to grow more for return issues going back a couple years than anything else. So, I think, we’re confident, we’re watching closely we do expect values to be sensitive going forward there. But we’re watching it closely, we think we’re in a pretty good spot we don’t rely on it for our growth targets.

Yeah. David, I think, the construction portfolio is less than $100 million.

Yeah. The construction portfolio on multifamily again is less than $100 million, but that would include some out of New York City and some sale business, not all just New York City rental business.

And that less than $100 million is that rent stabilized properties?

Yeah. There is each building in the New York City market will have a component of regulated units in there. We probably 52% of the buildings that we finance have some rent regulated units. So, these, I imagine, would be in the same category. It will be different amount, it could be 10%, it could be a higher percent.

David, the last we looked, I think it was less than $50 million is related to like NCI, if that’s kind of what you’re getting after.

Got it. And how do you feel about kind of your coverage on that $50 million-ish portfolio?

Again, we underwrote these with the expectation of what the rent regulated market would be and what the free market would be. So, we’re pretty confident that it will hold up the standards we underwrote.

Got it. Okay. Thanks for that. And then shifting gears. So, the branch transformation…

David, let me just clarify that $50 million with existing loans that wasn’t part of the quarterly growth in construction that we saw this quarter.

Got it. Got it. Okay. And then, shifting gears to the branch transformation initiative. With the deposit being kind of flattish to down on an end-of-period basis and average basis, how has the attrition been, has it been within your expectations so far?

The overall attrition is pretty much right in line with what we guided to about 90% we’ve been able to retain of those branches that we’ve closed. And I think, we’re looking at the decline or the flatness of deposits, it’s not because unit accounts have really declined within the organization, they’ve actually grown. I think what we’re seeing is a more competitive environment on excess funds and those are funds that from a long-term perspective are going to be volatile and going to be highly sensitive. That said, we are growing core accounts within this organization like we’ve never done before. We’re going business accounts in this organization like we’ve never done before. We’ve invested in technology to support that growth. And we still think, we’re on the right trend, the contraction in the current period was largely attributable to some municipal deposits as well as payments from some of our corporate customers for taxes, all historically in line with what seasonality looks like at our organization, so we are definitely upbeat on where deposits look like and where’s that trajectory heading towards.

Great. And then last one for me is on provision. So, the provision came in lower than the trend over the past five quarters. Just curious on your thoughts looking forward on the provision and then if you could also comment on CECL and any sort of early read as to what you’re expecting with that implementation?

Yeah. Let me start – it’s Alan. Let me start with CECL and say that we’re not prepared to make any comments on CECL until we go public with that. So, we are working through the rules and portfolio and modeling and so forth, but none of that will be ready until sometime after the end of the third quarter. In terms of the provision, I think, I have to bifurcate this as we did in our analysis. You can see that the actual provision came in at $3.7 million, which was about $1 million higher than net charge offs. It was the unfunded letters of credit, which had a movement from – so we had a substandard in there a fairly large amount that moved into a funded status actually through a more substantial borrower and what that did is it moved it from substandard the special mention. So, I think, as we commented before we had a lot of movement from substandard to better quality and we’ve provided for our loan growth. And we – in terms of future, I mean, we’re going to continue to provide for the loan growth, but as long as our credit quality remains good and we don’t have any unusual items. And this quarter, we didn’t really have any taxi medallion issues as well. So that probably caused us to be somewhat lower than what you saw last quarter or the last few. So, from a guidance standpoint, we’re find it someplace between where we are today at $3.7 million as compared to $8 million last quarter, we’re somewhere in that range.

Great. Thanks very much thank.

Thank you. [Operator Instructions] Our next question comes from – and it looks like we have no further questions at this time. I’d now like to turn the call back over to Rick Kraemer for any closing remarks.

Okay. Well, thank you all for joining us for our second quarter earnings. If you have any questions, feel free to reach out to me. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. And you may all disconnect. Everyone have a wonderful day.