Valley National Q2 Earnings Beat on Y/Y Revenue Rise, Stock Slips 1.8%

Valley National Bancorp’s VLY second-quarter 2025 adjusted earnings per share of 23 cents surpassed the Zacks Consensus Estimate by a penny. Also, the bottom line increased 76.9% on a year-over-year basis.

Results were primarily aided by increased net interest income (NII) and non-interest income. A decline in provisions was another tailwind. However, higher expenses hurt the results to some extent. This seems to have disappointed investors as shares of VLY lost 1.8% in yesterday’s trading session.

Results excluded non-core income and charges. After considering these, net income was $133.2 million, surging 89.1% from the year-ago quarter.

Valley National’s Revenues Improve, Expenses Rise

Total revenues (fully-taxable-equivalent or FTE basis) were $496.3 million, up 9.3% year over year. The top line beat the Zacks Consensus Estimate of $493.2 million.

NII (FTE basis) was $433.7 million, up 7.6% year over year. The net interest margin (FTE basis) was 3.01%, which expanded 17 basis points (bps).

Non-interest income increased 22.2% year over year to $62.6 million. The rise was driven by an increase in almost all fee income components, except for insurance commissions.

Non-interest expenses of $284.1 million increased 2.4% year over year. Meanwhile, adjusted non-interest expenses rose 1.2% to $273.3 million.

The adjusted efficiency ratio was 55.20%, down from 59.62% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.

VLY’s Loans & Deposits Rise

As of June 30, 2025, total loans were $49.4 billion, up 1.5% on a sequential basis. Total deposits were $50.7 billion, up 1.5% from the previous quarter.

Valley National’s Credit Quality: A Mixed Bag

As of June 30, 2025, total non-performing assets were $360.8 million, up 15.3% year over year. Allowance for credit losses as a percentage of total loans was 1.20%, up 14 bps from the year-ago quarter.

However, provision for credit losses was $37.8 million, down 53.9% year over year.

VLY’s Profitability & Capital Ratios Improve

At the end of the second quarter, adjusted annualized return on average assets was 0.87%, up from 0.47% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 7.15%, up from 4.24%.

VLY's tangible common equity to tangible assets ratio was 8.63% as of June 30, 2025, up from 7.52% in the corresponding period of 2024. Tier 1 risk-based capital ratio was 11.57%, up from 9.98%. Also, the common equity tier 1 capital ratio of 10.85% was up from 9.55% as of June 30, 2024.

Our Take on Valley National

VLY’s organic growth trajectory, strategic acquisitions and solid balance sheet will support its financials. However, persistently increasing costs and deteriorating asset quality are major concerns. The company’s huge CRE loan exposure is worrisome.

Valley National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of VLY’s Peers

Zions Bancorporation’s ZION second-quarter 2025 adjusted earnings per share of $1.58 beat the Zacks Consensus Estimate of $1.31. Moreover, the bottom line rallied 30.6% from the year-ago quarter.

Zions’ results were primarily aided by higher net interest income and non-interest income, alongside a provision benefit. Higher loan amounts were another positive. However, a rise in adjusted non-interest expenses acted as a major headwind.

Bank OZK’s OZK second-quarter 2025 earnings per share of $1.58 surpassed the Zacks Consensus Estimate of $1.51. Moreover, the bottom line reflected a rise of 3.9% from the prior-year quarter.

Overall, the results benefited from a rise in NII and non-interest income and lower provisions. Higher loans and deposit balances were other positives. However, higher non-interest expenses acted as spoilsports for Bank OZK.

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