Valley National Shares Jump 5.3% as Q3 Earnings Meet Estimates
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Shares of Valley National Bancorp VLY gained 5.3% in response to third-quarter 2024 results. Its adjusted earnings per share of 18 cents met the Zacks Consensus Estimate. However, the bottom line plunged 30.8% on a year-over-year basis.
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Higher non-interest income and a sequential increase in deposit balances support the results. On the other hand, a substantial rise in provisions, lower net interest income (NII) and loan balance and a slight rise in expenses act as spoilsports.
Results excluded non-core income and charges. After considering these, net income was $97.9 million, down 30.8% from the year-ago quarter.
Valley National’s Revenues Stable, Expenses Up Marginally
Quarterly total revenues were $471.2 million, relatively stable year over year. The top line beat the Zacks Consensus Estimate of $467.9 million.
NII (fully-taxable-equivalent or FTE basis) was $411.8 million, declining marginally. Net interest margin (FTE basis) was 2.86%, down 5 basis points (bps).
Non-interest income grew 3.4% to $60.7 million. The rise was driven by increase in all almost components.
Non-interest expenses of $269.5 million increased slightly. Meanwhile, adjusted non-interest expenses were stable at $263.6 million.
The adjusted efficiency ratio was 56.13%, down from 56.72% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.
VLY’s Loans & Deposits
As of Sept. 30, 2024, total loans were $49.4 billion, down 1.9% sequentially. The fall was mainly due to the transfer of commercial real estate (CRE) loans worth $823.1 million, net of unearned fees, to loans held for sale (HFS) and normal repayment activity mainly within CRE non-owner occupied and multi-family loans.
Further, on Oct. 23, 2024, Valley National agreed to sell the above-mentioned CRE loans at a nominal discount of roughly 1% to a single investor. The transaction is expected to close in the ongoing quarter.
As of Sept. 30, 2024, total deposits amounted to $50.4 billion, up almost 1% from the prior quarter.
Valley National’s Credit Quality Worsens
As of Sept. 30, 2024, total non-performing assets were $305.1 million, up 17.2% year over year. Provision for credit losses for loans was $75 million, rising substantially from $9.1 million.
Allowance for credit losses as a percentage of total loans was 1.14%, up 22 bps from the year-ago quarter.
VLY’s Profitability Ratios Deteriorate, Capital Ratios Rise
At the end of the third quarter, adjusted annualized return on average assets was 0.62%, down from 0.89% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 5.64%, down from 8.26%.
VLY's tangible common equity to tangible assets ratio was 7.68% as of Sept. 30, 2024, up from 7.40% in the corresponding period of 2023. Tier 1 risk-based capital ratio was 10.29%, up from 9.64%. Also, the common equity tier 1 capital ratio of 9.57% was up from 9.21% as of Sept. 30, 2023.