Valley National Bancorp(US:VLY) Yahoo Finance·2025-10-23 19:13Core Insights - Valley National Bancorp reported strong third-quarter results with net income of approximately $163 million, or $0.28 per diluted share, marking a significant increase from $133 million, or $0.22, in the previous quarter, representing the highest quarterly profitability since 2022 [3] - The company has seen robust core customer deposit growth, with nearly 110,000 new deposit accounts added over the past twelve months, contributing to a nearly 10% growth in core deposits [4] - Valley's balance sheet remains strong, with a disciplined approach to expense control and a meaningful reduction in credit costs, achieving many profitability goals ahead of schedule, including an annualized return on average assets above 1% [3][4] Leadership Changes - Pratchett Smith joined as president of the consumer bank, bringing experience from Santander and Capital One, and will oversee retail, consumer, and small business sectors [1] - Gina Martucci was appointed president of commercial banking, contributing extensive experience from M&T Bank to support the development of Valley's commercial franchise [2] Deposit Growth and Management - The company gathered about $1 billion in core deposits during the quarter, allowing for the payoff of approximately $700 million in maturing brokered deposits, reducing brokered deposits to 11% of the total deposit base, the lowest level since 2022 [10] - The average cost of deposits has decreased by 56 basis points since 2024, with expectations for continued benefits from lower deposit costs into 2026 [4][10] Noninterest Income and Fee Growth - Noninterest income has grown at an annual rate of 15% since 2017, significantly outpacing publicly traded peers, with treasury management and tax credit advisory initiatives contributing approximately $3 million in incremental revenue during the third quarter [5] - The treasury management platform has generated nearly $16 million in incremental deposit service charge revenue on an annualized basis since 2024 [5] Credit Performance - Valley experienced a significant reduction in net charge-offs and provisions during the third quarter, with expectations to sustain these levels into the fourth quarter [6] - Cumulative commercial real estate (CRE) charge-off rates have remained low, with aggregate losses limited to just 57 basis points of average CRE loans over the last seven quarters [6][15] Strategic Focus and Future Growth - The company is targeting growth in traditional small business and middle market opportunities, particularly in healthcare C&I and capital call lines, with no losses recorded on Valley-originated loans in these areas [7] - Valley aims to enhance its retail banking presence and has identified opportunities for organic growth in small business and retail deposits [38][39] Financial Outlook - Valley anticipates net interest income growth of another 3% sequentially in the fourth quarter, supported by fixed-rate asset repricing and a favorable interest rate backdrop [13] - The company is targeting a return on tangible common equity (ROTCE) of 15% by late 2027 or early 2028, with expectations for mid-single-digit loan growth and continued margin expansion [64]