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Valley National Bancorp’s VLY first-quarter 2025 adjusted earnings per share of 18 cents missed the Zacks Consensus Estimate by a penny. Also, the bottom line declined 5.3% on a year-over-year basis.
A rise in provisions, lower non-interest income, higher adjusted expenses and a sequential decline in loans and deposit balances hurt the results. Nonetheless, the company’s efforts to bring down funding costs drove net interest income (NII), which acted as a tailwind. This seems to have cheered investors as shares of VLY gained 1.2% in yesterday’s trading session.
Results excluded non-core income and charges. After considering these, net income was $106.1 million, up 10.2% from the year-ago quarter.
Valley National’s Revenues Rise, Adjusted Expenses Up
Quarterly total revenues were $478.4 million, up 5.2% year over year. The top line lagged the Zacks Consensus Estimate of $485.9 million.
NII (fully-taxable-equivalent or FTE basis) was $421.4 million, up 6.7%. Net interest margin (FTE basis) was 2.96%, up 17 basis points (bps).
Non-interest income declined 5.1% to $58.3 million. The fall was mainly due to lower net gains on the sale of assets. On the other hand, adjusted non-interest income grew almost 1%.
Non-interest expenses of $276.6 million declined 1.3%. Meanwhile, adjusted non-interest expenses rose marginally to $267.3 million.
The adjusted efficiency ratio was 55.87%, down from 59.10% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.
VLY’s Loans & Deposits
As of March 31, 2025, total loans were $48.7 billion, down marginally on a sequential basis. The fall was mainly due to repayment activity within commercial real estate (CRE) non-owner occupied and owner-occupied loan categories during the quarter.
As of March 31, 2025, total deposits were $50 billion, down slightly.
Valley National’s Credit Quality Worsens
As of March 31, 2025, total non-performing assets were $356.2 million, up 23.4% year over year. Provision for credit losses for loans was $62.7 million, rising 38.4%.
Allowance for credit losses as a percentage of total loans was 1.22%, up 24 bps from the year-ago quarter.
VLY’s Profitability Ratios Mixed, Capital Ratios Improve
At the end of the first quarter, adjusted annualized return on average assets was 0.69%, up from 0.65% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 5.69%, down from 5.91%.
VLY's tangible common equity to tangible assets ratio was 8.61% as of March 31, 2025, up from 7.62% in the corresponding period of 2024. Tier 1 risk-based capital ratio was 11.53%, up from 9.78%. Also, the common equity tier 1 capital ratio of 10.80% was up from 9.34% as of March 31, 2024.