VLY Stock Rallies 3.3% as Q4 Earnings Beat on Higher NII & Fee Income

Shares of Valley National Bancorp VLY rallied 3.3% in yesterday’s trading session on better-than-expected quarterly results. Its fourth-quarter 2025 adjusted earnings per share of 31 cents surpassed the Zacks Consensus Estimate of 29 cents. The bottom line also compared favorably with 13 cents in the year-ago quarter.

Results were primarily aided by increased net interest income (NII) and non-interest income, along with lower provision. Higher loan and deposit balances were another tailwind. However, elevated expenses remained as the undermining factor.

Quarterly results excluded non-core income and charges. After considering these, net income was $195.4 million, which surged 68.9% from the year-ago quarter.

For 2025, adjusted earnings per share (EPS) of 99 cents beat the Zacks Consensus Estimate of 97 cents. The figure represented a rise of 59.7% from the previous year. Net income (GAAP basis) was $598 million, up 57.3% year over year.

Valley National’s Revenues Improve, Expenses Rise

Quarterly total revenues (fully-taxable-equivalent or FTE basis) were $542.5 million, up 14.1% year over year. The top line beat the Zacks Consensus Estimate of $524.7 million.

For 2025, total revenues (fully-taxable-equivalent or FTE basis) were $2.03 billion, up 9.3%. The top line surpassed the Zacks Consensus Estimate of $2.01 billion.

NII (FTE basis) was $466.1 million, up 9.9% year over year. The net interest margin (FTE basis) was 3.17%, which expanded 25 basis points (bps).

Non-interest income jumped 49.1% to $76.3 million. The rise was driven by an increase in almost all fee income components, except Insurance commissions, fees from loan servicing and higher net loss on sale of assets.
    
Non-interest expenses of $299.4 million increased 7.5% year over year. Meanwhile, adjusted non-interest expenses rose 5% to $289.5 million.

The adjusted efficiency ratio was 53.49%, down from 57.21% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability.

VLY’s Loans & Deposits Rise

As of Dec. 31, 2025, total loans were $50.1 billion, up 1.8% from the previous quarter. Total deposits were $52.2 billion, up 2%.

Valley National’s Credit Quality: A Mixed Bag

As of Dec. 31, 2025, total non-performing assets were $439.8 million, up 17.8% year over year. Allowance for credit losses as a percentage of total loans was 1.19%, up 2 bps.

In the fourth quarter of 2025, VLY reported provision for credit losses of $20.1 million, which decreased 81.1% from the prior-year quarter.

VLY’s Profitability & Capital Ratios Improve

At the end of the fourth quarter, adjusted annualized return on average assets was 1.14%, up from 0.48% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 9.33%, up from 4.17%.

As of Dec. 31, 2025, the tangible common equity to tangible assets ratio was 8.82%, up from 8.40% in the corresponding period of 2024. Tier 1 risk-based capital ratio was 11.69%, up from 11.55%. Also, the common equity tier 1 capital ratio of 10.99% was up from 10.82% as of Dec. 31, 2024.

Valley National’s Share Repurchase Update

In the reported quarter, VLY repurchased 4.3 million shares at an average price of $10.93 under its ongoing stock buyback program.

Our Take on Valley National

VLY’s effort to strengthen fee income, higher NII, solid loans and deposit growth and strategic expansion initiatives are expected to support its financials. However, persistently rising costs and weak asset quality are major concerns. Additionally, the company’s meaningful exposure to commercial real estate loans poses a risk.
 

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 #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 fourth-quarter 2025 adjusted EPS of $1.75 beat the Zacks Consensus Estimate of $1.57. Moreover, the bottom line surged 30.5% from the year-ago quarter.

Zions’ results were primarily aided by higher NII and non-interest income. Growth in loan and deposit balances further supported performance. However, a rise in non-interest expenses was a headwind.

Bank OZK’s OZK fourth-quarter 2025 EPS of $1.53 missed the Zacks Consensus Estimate of $1.56. The bottom line also declined 1.9% year over year. 

OZK’s results were primarily hurt by higher provisions for credit losses and a rise in operating expenses. Nevertheless, solid NII and non-interest income growth acted as tailwinds. Healthy year-over-year growth in loans and deposits was another positive.

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This article originally published on Zacks Investment Research (zacks.com).

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