Valley National Q4 Earnings Miss Estimates on Higher Provisions Y/Y

Core Viewpoint - Valley National Bancorp's fourth-quarter 2024 adjusted earnings per share (EPS) of 13 cents missed the Zacks Consensus Estimate of 15 cents, reflecting a significant year-over-year decline of 40.9% [1] Financial Performance - The company's total revenues for the fourth quarter were $474.2 million, representing a year-over-year increase of 5.4% and exceeding the Zacks Consensus Estimate of $469.5 million [4] - For the full year 2024, total revenues decreased by 2% to $1.85 billion, but still met the consensus estimate [4] - Net interest income (NII) for the fourth quarter was $424.3 million, up 6.4%, with a net interest margin of 2.92%, an increase of 10 basis points [4] Income and Expenses - Non-interest income fell by 2.8% to $51.2 million due to lower net gains on securities transactions and net losses on sales of loans [5] - Non-interest expenses decreased by 18.2% to $278.6 million, while adjusted non-interest expenses rose by 1.2% to $275.8 million [5] - The adjusted efficiency ratio improved to 57.21%, down from 60.70% in the prior-year quarter, indicating enhanced profitability [5] Loans and Deposits - As of December 31, 2024, total loans were $48.8 billion, down 1.1% sequentially, primarily due to repayment activity in commercial real estate [6] - Total deposits amounted to $50.1 billion, showing a slight decline from the previous quarter [7] Credit Quality - Total non-performing assets increased by 27.2% year-over-year to $373.3 million, with provisions for credit losses rising significantly to $106.5 million from $20.6 million [8] - The allowance for credit losses as a percentage of total loans was 1.17%, up 24 basis points from the year-ago quarter [8] Profitability and Capital Ratios - Adjusted annualized return on average assets was 0.48%, down from 0.76% in the prior-year quarter, while adjusted annualized return on average shareholders' equity decreased to 4.17% from 7.01% [9] - The tangible common equity to tangible assets ratio improved to 8.40% from 7.58% year-over-year, and the Tier 1 risk-based capital ratio rose to 11.55% from 9.72% [10] Strategic Outlook - The company's organic growth trajectory, strategic acquisitions, and solid balance sheet are expected to support its financials, although rising costs and weakening asset quality pose significant concerns [11]