What Lies Ahead for Valley National After Solid 2025 Revenue Growth?

Valley National Bancorp VLY reported a 9.3% year-over-year increase in 2025 total revenues to $2.03 billion. The growth was primarily driven by a substantial increase in net interest income (NII), supported by higher average loan balances and a notable expansion in the net interest margin (NIM) (on a tax-equivalent or TE basis). Additionally, improved fee-based income contributed meaningfully to the overall top-line performance.

VLY’s peers reflected a similar trend. BankUnited, Inc. BKU reported net revenues of $1.09 billion in 2025, up 7.9% year over year, while Hilltop Holdings Inc. HTH posted a 7.8% rise in net revenues to $1.28 billion. The revenue growth for both companies was driven by NII and improved non-interest income.

Key Drivers Behind VLY’s Revenue Growth in 2025

For VLY, NII has remained the primary revenue growth driver. In 2025, its NII (TE) increased 8.2% year over year to $1.77 billion, supported by lower deposit costs and higher interest income from growth in average loans and taxable investments. A favorable shift toward higher-yielding earning assets further bolstered NII. Over the five-year period ended 2025, Valley National recorded solid NII growth, witnessing a 9.5% CAGR.

VLY’s net revenue also benefited from improved margin performance. After declining in 2023 and 2024, NIM (TE) rebounded resoundingly in 2025, expanding 20 basis points year over year to 3.05%. This was driven by disciplined liability management, lower funding costs and growth in non-interest-bearing deposits. 

Similarly, Hilltop Holdings experienced margin pressure in 2024, but its NIM expanded by 17 basis points in 2025 to 3.00%.

In addition to NII, VLY’s non-interest income contributed significantly to revenue growth. In 2025, non-interest income increased 16.8% year over year to $262.1 million, driven by higher fee income from capital markets, wealth management services and deposit-related activities. This growth strengthened total revenues and supported a more diversified and stable revenue mix.

Overall, Valley National delivered steady revenue growth in 2025. Its net revenues witnessed a compound annual growth rate (CAGR) of 9.2% over the last five years (2020-2025). Similarly, BKU recorded a net revenue CAGR of 4.3% over the five years ended 2025, while HTH posted a negative net revenue CAGR of 9.5% during the same period.

Valley National’s Revenue Prospects in 2026

Valley National is well-positioned for steady revenue growth, supported by improving margins, disciplined deposit management, and continued loan expansion. Lower funding costs, favorable repricing and growth in fee-based businesses are expected to support both NII and non-interest income. 

For 2026, management expects solid revenue growth. Gross loan growth is expected to be in the range of 4-6% and commercial and industrial loans are anticipated to increase approximately 10%. Deposits are also expected to rise 5-7%, providing stable, low-cost funding. Assuming two rate cuts, NII is projected to rise 11-13%, with 15-20 basis points of NIM expansion by the fourth quarter of 2026, supported by favorable repricing and balance-sheet growth. Non-interest income is also expected to increase 6-9%, aided by steady deposit service charges and normalization in capital markets activity.

VLY shares have surged 20.1% in the past three months, compared with the industry’s growth of 16%.
 

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

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

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