We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Valley National (VLY) Stock Up 3.1% Despite Q2 Earnings Miss
Read MoreHide Full Article
Valley National Bancorp’s (VLY - Free Report) second-quarter 2024 adjusted earnings per share of 13 cents lagged the Zacks Consensus Estimate of 20 cents by a considerable margin. The bottom line also plunged 53.6% on a year-over-year basis.
A substantial rise in provisions adversely impacted results. Also, lower net interest income (NII) and non-interest income were undermining factors. However, a sequential increase in loans and deposit balance and a fall in non-interest expenses acted as tailwinds. Perhaps this cheered investors as the VLY stock gained 3.1% yesterday.
Results excluded non-core income and charges. After considering these, net income was $70.4 million, down 49.4% from the year-ago quarter.
Revenues Fall, Expenses Down
Quarterly total revenues were $452.9 million, down 5.6% year over year. Also, the top line missed the Zacks Consensus Estimate of $458.7 million.
NII (fully-taxable-equivalent or FTE basis) was $403 million, declining 4.3%. This was due to higher interest expenses. Net interest margin (FTE basis) was 2.84%, down 10 basis points (bps).
Non-interest income was down 14.8% to $51.2 million. The fall was largely due to a decrease in capital markets and other income.
Non-interest expenses of $277.5 million decreased 1.9%. The fall was attributable to lower salary and employee benefits expenses and professional and legal fees. Meanwhile, adjusted expenses rose 1.2% to $270 million.
The adjusted efficiency ratio was 59.62%, up from 55.59% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Jun 30, 2024, total loans were $50.3 billion, up almost 1% sequentially. As of the same date, total deposits amounted to $50.1 billion, rising 2.1%.
Credit Quality Worsens
As of Jun 30, 2024, total non-performing assets were $312.9 million, up 22.2% year over year. Provision for credit losses for loans was $82.1 million, rising substantially from $6.1 million.
Allowance for credit losses as a percentage of total loans was 1.06%, up 14 bps from the year-ago quarter.
Profitability Ratios Deteriorate, Capital Ratios Solid
At the end of the second quarter, adjusted annualized return on average assets was 0.47%, down from 0.95% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 4.24%, down from 8.99%.
VLY's tangible common equity to tangible assets ratio was 7.52% as of Jun 30, 2024, down from 7.58% in the corresponding period of 2023. Tier 1 risk-based capital ratio was 9.99%, up from 9.72%. Also, the common equity tier 1 capital ratio of 9.55% was up from 9.29% as of Jun 30, 2023.
Our Take
Valley National’s organic growth trajectory, strategic acquisitions and digitization efforts will support financials. However, persistently increasing costs and a challenging macroeconomic backdrop remain major concerns. Further, the company’s huge commercial real estate loan exposure is worrisome. This, along with weakening asset quality, remains a major headwind.
Valley National Bancorp Price, Consensus and EPS Surprise
Zions Bancorporation’s (ZION - Free Report) second-quarter 2024 adjusted net earnings per share of $1.21 surpassed the Zacks Consensus Estimate of $1.10. Moreover, the bottom line increased 9% from the year-ago quarter.
Results were primarily aided by lower provisions and higher NII. Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds for ZION.
East West Bancorp, Inc.’s (EWBC - Free Report) second-quarter 2024 adjusted earnings per share of $2.07 surpassed the Zacks Consensus Estimate of $1.97. However, the bottom line declined 5.9% from the prior-year quarter.
EWBC’s results were primarily aided by an increase in adjusted non-interest income. Also, deposit and loan balances increased sequentially in the quarter. However, lower NII and higher adjusted non-interest expenses and provisions were the undermining factors.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Valley National (VLY) Stock Up 3.1% Despite Q2 Earnings Miss
Valley National Bancorp’s (VLY - Free Report) second-quarter 2024 adjusted earnings per share of 13 cents lagged the Zacks Consensus Estimate of 20 cents by a considerable margin. The bottom line also plunged 53.6% on a year-over-year basis.
A substantial rise in provisions adversely impacted results. Also, lower net interest income (NII) and non-interest income were undermining factors. However, a sequential increase in loans and deposit balance and a fall in non-interest expenses acted as tailwinds. Perhaps this cheered investors as the VLY stock gained 3.1% yesterday.
Results excluded non-core income and charges. After considering these, net income was $70.4 million, down 49.4% from the year-ago quarter.
Revenues Fall, Expenses Down
Quarterly total revenues were $452.9 million, down 5.6% year over year. Also, the top line missed the Zacks Consensus Estimate of $458.7 million.
NII (fully-taxable-equivalent or FTE basis) was $403 million, declining 4.3%. This was due to higher interest expenses. Net interest margin (FTE basis) was 2.84%, down 10 basis points (bps).
Non-interest income was down 14.8% to $51.2 million. The fall was largely due to a decrease in capital markets and other income.
Non-interest expenses of $277.5 million decreased 1.9%. The fall was attributable to lower salary and employee benefits expenses and professional and legal fees. Meanwhile, adjusted expenses rose 1.2% to $270 million.
The adjusted efficiency ratio was 59.62%, up from 55.59% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Jun 30, 2024, total loans were $50.3 billion, up almost 1% sequentially. As of the same date, total deposits amounted to $50.1 billion, rising 2.1%.
Credit Quality Worsens
As of Jun 30, 2024, total non-performing assets were $312.9 million, up 22.2% year over year. Provision for credit losses for loans was $82.1 million, rising substantially from $6.1 million.
Allowance for credit losses as a percentage of total loans was 1.06%, up 14 bps from the year-ago quarter.
Profitability Ratios Deteriorate, Capital Ratios Solid
At the end of the second quarter, adjusted annualized return on average assets was 0.47%, down from 0.95% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 4.24%, down from 8.99%.
VLY's tangible common equity to tangible assets ratio was 7.52% as of Jun 30, 2024, down from 7.58% in the corresponding period of 2023. Tier 1 risk-based capital ratio was 9.99%, up from 9.72%. Also, the common equity tier 1 capital ratio of 9.55% was up from 9.29% as of Jun 30, 2023.
Our Take
Valley National’s organic growth trajectory, strategic acquisitions and digitization efforts will support financials. However, persistently increasing costs and a challenging macroeconomic backdrop remain major concerns. Further, the company’s huge commercial real estate loan exposure is worrisome. This, along with weakening asset quality, remains a major headwind.
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 #4 (Sell).
You can see the complete list of today's Zacks #1 Ranked (Strong Buy) stocks here.
Performance of Other Banks
Zions Bancorporation’s (ZION - Free Report) second-quarter 2024 adjusted net earnings per share of $1.21 surpassed the Zacks Consensus Estimate of $1.10. Moreover, the bottom line increased 9% from the year-ago quarter.
Results were primarily aided by lower provisions and higher NII. Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds for ZION.
East West Bancorp, Inc.’s (EWBC - Free Report) second-quarter 2024 adjusted earnings per share of $2.07 surpassed the Zacks Consensus Estimate of $1.97. However, the bottom line declined 5.9% from the prior-year quarter.
EWBC’s results were primarily aided by an increase in adjusted non-interest income. Also, deposit and loan balances increased sequentially in the quarter. However, lower NII and higher adjusted non-interest expenses and provisions were the undermining factors.