Valley National Bancorp’s VLY fourth-quarter 2024 adjusted earnings per share (EPS) of 13 cents missed the Zacks Consensus Estimate of 15 cents. Further, the bottom line plunged 40.9% on a year-over-year basis.

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A substantial rise in provisions on year-over-year basis, lower non-interest income, higher adjusted expenses and a sequential decline in loans and deposit balance affected the results. Nonetheless, a rise in net interest income (NII) supported the results.
 
Results excluded non-core income and charges. After considering these, net income was $115.7 million, up 61.7% from the year-ago quarter.

For 2024, adjusted earnings of 62 cents per share missed the consensus estimate of 64 cents and declined 41.5% year over year. Net income available to common shareholders (GAAP basis) was $358.9 million or 69 cents per share, down from $482.4 million or 95 cents per share in 2023.

Valley National’s Revenues Rise, Adjusted Expenses Up

Quarterly total revenues were $474.2 million, up 5.4% year over year. The top line beat the Zacks Consensus Estimate of $469.5 million.

For 2024, total revenues fell 2% to $1.85 billion. Nonetheless, the top line met the consensus estimate.

NII (fully-taxable-equivalent or FTE basis) was $424.3 million, up 6.4%. Net interest margin (FTE basis) was 2.92%, up 10 basis points (bps).

Non-interest income declined 2.8% to $51.2 million. The fall was due to lower net gains on securities transactions, and net losses on sales of loans alongside a decrease in bank owned life insurance and other income.

Non-interest expenses of $278.6 million declined 18.2%. Meanwhile, adjusted non-interest expenses rose 1.2% to $275.8 million.

The adjusted efficiency ratio was 57.21%, down from 60.70% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.

VLY’s Loans & Deposits

As of Dec. 31, 2024, total loans were $48.8 billion, down 1.1% sequentially. The fall was mainly due to repayment activity within commercial real estate (CRE) non-owner occupied and multifamily loan categories during the quarter.

Further, on Dec. 3, 2024, Valley National sold the abovementioned CRE loans at a nominal discount of roughly 1% to Brookfield Asset Management BAM for about $823 million. Out of these loans sold to BAM, nearly $151 million and $76 million of CRE loans and residential mortgage loans, respectively, were not identified as loans held for sale on Sept. 30, 2024.

As of Dec. 31, 2024, total deposits amounted to $50.1 billion, down marginally from the prior quarter.

Valley National’s Credit Quality Worsens

As of Dec. 31, 2024, total non-performing assets were $373.3 million, up 27.2% year over year. Provision for credit losses for loans was $106.5 million, rising substantially from $20.6 million.

Allowance for credit losses as a percentage of total loans was 1.17%, up 24 bps from the year-ago quarter.

VLY’s Profitability Ratios Deteriorate, Capital Ratios Rise

At the end of the fourth quarter, adjusted annualized return on average assets was 0.48%, down from 0.76% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 4.17%, down from 7.01%.

VLY's tangible common equity to tangible assets ratio was 8.40% as of Dec. 31, 2024, up from 7.58% in the corresponding period of 2023. Tier 1 risk-based capital ratio was 11.55%, up from 9.72%. Also, the common equity tier 1 capital ratio of 10.82% was up from 9.29% as of Dec. 31, 2023.

Our Take on Valley National

Valley National’s organic growth trajectory, strategic acquisitions and solid balance sheet will support its financials. However, persistently increasing costs and weakening asset quality remain major concerns. Further, the company’s huge CRE loan exposure is worrisome.
 

Valley National Bancorp Price, Consensus and EPS Surprise

Valley National Bancorp price-consensus-eps-surprise-chart | Valley National Bancorp Quote

Valley National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of VLY’s Peers

BankUnited, Inc.’s BKU fourth-quarter 2024 earnings of 91 cents per share handily surpassed the Zacks Consensus Estimate of 71 cents. The bottom line compared favorably with 27 cents in the prior-year quarter.

BKU’s results were aided by growth in NII and non-interest income alongside lower non-interest expenses and provisions. Stable deposits were another positive. However, a fall in loan balance and weak asset quality were the undermining factors.

Bank OZK’s OZK fourth-quarter 2024 EPS of $1.56 handily surpassed the Zacks Consensus Estimate of $1.45. The bottom line reflected a rise of 4% from the prior-year quarter’s actual.

Results benefited from a rise in NII, driven by improvement in loans and deposit balances. Lower non-interest expenses and provisions were also positives. However, lower non-interest income and rising funding costs were the undermining factors for OZK.

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