VLY

Valley National Bank’s second quarter was marked by robust commercial loan growth and significant core deposit expansion, which management cited as central to its ongoing strategy. Despite a year-on-year rise in revenue and stable non-GAAP profitability, the market reacted negatively, reflecting concerns around funding costs and the durability of recent growth. CEO Ira Robbins emphasized the bank’s focus on relationship-driven commercial lending and fee income diversification, highlighting progress in capital markets and tax credit advisory. The quarter’s mixed sentiment stemmed from both operational gains and industry-wide pressures on deposit competition and credit quality. Is now the time to buy VLY? Find out in our full research report (it’s free). Revenue: $562 million vs analyst estimates of $558.3 million (13.3% year-on-year growth, 0.7% beat) Adjusted EPS: $0.30 vs analyst estimates of $0.31 (in line) Market Capitalization: $7.90 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Feddie Strickland (J.P. Morgan) asked about the sustainability of fee income and whether recent capital markets results were repeatable. CFO Travis Lan clarified that while some swap income was elevated, core fee lines like treasury services and loan syndications should see continued growth. Christopher McGratty (KBW) questioned the balance between loan growth and funding pressures. Lan responded that core deposit growth has kept pace with loan expansion, with management confident that maturing brokered deposits will be replaced by lower-cost core funding. David Smith (Morgan Stanley) pressed on the timing mismatch between loan and deposit growth. Lan explained that deposits typically lag loan originations by three to six months, but expects the gap to close over subsequent quarters as new commercial relationships mature. Matthew Breese (Raymond James) inquired about long-term net interest margin prospects and the impact of fixed asset repricing. Lan projected continued margin expansion through 2027, citing low-yielding fixed rate loans maturing and structural funding advantages. Sun Young Lee (Deutsche Bank) asked about expense trends and AI’s impact on the efficiency ratio. Lan indicated that professional fees should decline as transformation projects wind down, while ongoing AI investments are expected to support further efficiency improvements. Looking ahead, the StockStory team will be monitoring (1) the pace and sustainability of core deposit growth to replace brokered funding, (2) the bank’s ability to deliver further improvements in the efficiency ratio as technology initiatives transition from investment to savings, and (3) ongoing trends in commercial loan quality and diversification. Progress on fee income growth and AI-driven operational improvements will also be important indicators of execution. Valley National Bank currently trades at $14.29, down from $14.52 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by a deliberate shift toward relationship-based C&I and owner-occupied CRE, which management views as higher-value than transactional CRE. Strong deposit growth of $1.1 billion was anchored by nearly $300 million in noninterest-bearing balances, reflecting the success of the bank's treasury platform and commercial talent expansion. Management attributes the 6% increase in adjusted pre-provision net revenue to diverse loan growth and expanding fee income from capital markets and tax credit advisory. The bank is leveraging structural advantages, including its relationship with Bank Leumi and Valley Ventures, to embed AI into its operating model for productivity and risk management. Strategic positioning focuses on winning commercial relationships based on service and capability rather than competing solely on deposit rates. The reduction in the CRE concentration ratio to 317% was achieved through organic capital generation and a successful subordinated debt issuance. Management raised the 2026 outlook for gross loan growth to the high end of the range, citing strong pipelines in New York, Florida, and specialty verticals. The bank expects the efficiency ratio to reach 50% or lower by the end of 2026, with a long-term potential for a 500-basis-point improvement driven by AI adoption. Net interest margin is projected to expand to the low-to-mid 3.30s by year-end 2026, supported by the repricing of $1.4 billion in low-yielding fixed-rate loans. Guidance assumes a 3-to-6-month lag for new C&I loans to fully generate their expected deposit balances, which should facilitate the reduction of brokered deposits. The 2026 fee income growth target was narrowed toward the high end of the 6% to 9% range due to sustained momentum in capital markets and wealth management. Criticized and classified assets declined to 7.3% of total loans, which management interprets as a sign of improving underlying trends within the CRE portfolio. The bank utilized $200 million in incremental brokered deposits to bridge a temporary timing mismatch between exceptional loan growth and core deposit funding. A $2 million headwind to net interest income occurred due to the cost of carrying excess subordinated debt between a new issuance and the redemption of callable notes. Management noted a modest uptick in nonaccrual loans but emphasized that 50% of these assets continue to pay interest and are well-collateralized. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects continued growth despite slightly elevated interest rate swap income in Q2, which was tied to a pull-forward of CRE originations. Growth is expected to be sustained by diverse contributors including loan syndications, tax credit advisory, and insurance. The projected 500-basis-point efficiency improvement is expected to be driven 65% by expense reductions and 35% by revenue enhancements from better data analytics. Management clarified that while AI supports the path to a 15% ROTCE by 2028, the target is not solely reliant on AI success. Excluding promotional CDs, the bank originated $1.3 billion in core deposits at 1.66%, which is 12 basis points lower than the previous quarter's rate. Management intends to reduce brokered deposits to support a 'loans to non-brokered deposits' ratio of 100%, though brokered funds will remain a tool for rate risk management. Upgrades out of criticized categories were driven by properties in transition reaching lease-up milestones with strong sponsor support. Management expressed no concern over specific nonaccrual office assets, citing strong appraisal values and continued payment activity.

Valley National Bancorp's VLY  second-quarter 2026 adjusted earnings per share of 30 cents missed the Zacks Consensus Estimate by a penny. However, the bottom line compared favorably with earnings of 23 cents in the year-ago quarter.Results were hampered by higher non-interest expenses. Higher net interest income (NII), increased non-interest income, lower provisions for credit losses, and growth in loan and deposit balances acted as tailwinds. Results excluded certain non-core charges. Including those, net income available to common shareholders was $163.6 million, which jumped 29.6% from the year-ago quarter. Total revenues (on an FTE basis) were $562.1 million, up 13.3% year over year. The top line beat the Zacks Consensus Estimate of $552.02 million.NII (FTE basis) was $488.4 million, up 12.6% year over year. The net interest margin (FTE basis) was 3.2%, which expanded 19 basis points (bps).Non-interest income jumped 17.7% to $73.7 million. The rise was driven by an increase in almost all fee income components, except fees from loan servicing, net gains on sale of loans, and bank-owned life insurance.Non-interest expenses of $311.1 million increased 9.5% year over year. The rise was due to an increase in almost all cost components, except for FDIC insurance assessment costs and amortization of other intangible assets. Additionally, no loss on extinguishment of debt was reported this quarter.The efficiency ratio was 52.11%, down from 55.20% in the prior-year quarter. A decline in the efficiency ratio indicates an improvement in profitability. As of June 30, 2026, total loans were $52.5 billion, up 6.2% year over year. This increase was driven by growth across all loan categories. Total deposits were $54.1 billion, up 6.7% year over year. As of June 30, 2026, total non-performing assets were $467.8 million, up 6.4% year over year, primarily due to higher non-accrual loans, partially offset by other real estate owned (OREO), and other repossessed assets.However, allowance for credit losses as a percentage of total loans was 1.16%, down 4 bps year over year. In the second quarter of 2026, VLY reported total provision for credit losses of $29.2 million, a 22.8% year-over-year decline. At the end of the second quarter, adjusted annualized return on average assets was 1.05%, up from 0.87% in the year-earlier quarter. Adjusted annualized return on average shareholders’ equity was 8.75%, up from 7.15%.As of June 30, 2026, the tangible common equity to tangible assets ratio was 8.71%, up from 8.63% in the corresponding period of 2025. Tier 1 risk-based capital ratio was 11.37%, down from 11.57%. Also, the common equity tier 1 capital ratio of 10.71% was down from 10.85% as of June 30, 2025. In the reported quarter, VLY repurchased 1.5 million shares at an average price of $13.4 under its ongoing stock buyback program. Robust loan growth, stabilizing funding costs, and efforts to enhance fee income are expected to keep supporting Valley National’s top-line growth. However, elevated expenses and significant exposure to commercial real estate loans remain near-term headwinds. 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. Hancock Whitney Corp.’s HWC second-quarter 2026 earnings per share of $1.55 matched the Zacks Consensus Estimate. The bottom line rose 17.4% from the year-ago quarter.HWC’s results were primarily aided by higher NII and non-interest income along with a decline in provisions. Also, a sequential increase in loans and deposit balances was positive. However, higher expenses were the undermining factor.BankUnited, Inc.’sBKU second-quarter 2026 earnings of 97 cents per share missed the Zacks Consensus Estimate of $1.02. However, the bottom line rose 6.6% from the prior-year quarter.Results were primarily hurt by a rise in non-interest expenses. Also, sequential declines in loans and deposits were negatives. However, higher NII and fee income, along with lower provisions, provided some support to BKU’s performance. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Valley National Bancorp (VLY) : Free Stock Analysis Report BankUnited, Inc. (BKU) : Free Stock Analysis Report Hancock Whitney Corporation (HWC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 23, 2026 at 8:30 a.m. ET Investor Relations - Andrew Jianette Chief Executive Officer - Ira Robbins Chief Financial Officer - Travis Lan Executive Vice President and Chief Credit Officer - Mark Saeger Operator: Good day, and thank you for standing by. Welcome to Q2 2026 Valley National Bancorp Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to Andrew Jianette. Please go ahead. Andrew Jianette: Good morning, and welcome to Valley's Second Quarter 2026 Earnings Conference Call. I am joined today by CEO, Ira Robbins; and CFO, Travis Lan. Our quarterly earnings release and supporting documents are available at valley.com. Reconciliations of any non-GAAP measures mentioned on the call can be found in today's earnings release and presentation. Please also note Slide 2 of our earnings presentation and remember that comments made today may include forward-looking statements about Valley National Bancorp and the banking industry, and actual results may differ from those statements. For more information on these forward-looking statements and associated risk factors, please refer to our SEC filings, including Forms 8-K, 10-Q and 10-K. With that, I'll turn the call over to Ira Robbins. Ira Robbins: Thank you, Andrew. Our second quarter results illustrate continued progress against our strategic growth priorities. We delivered strong customer deposit growth, including meaningful growth in noninterest-bearing balances. We generated diverse loan growth concentrated in C&I and owner-occupied commercial real estate. And we continue to expand fee income in both absolute dollars and as a percentage of revenue. We remain focused on strengthening our value proposition by scaling our relationship-oriented commercially focused model across our markets and business lines. While the quarter's growth was encouraging, our focus remains on the quality, durability and strategic value of the relationships that we attract. We believe continued execution against these priorities will support stronger returns over time. This execution translated into strong financial performance for the quarter. Net income was approximately $171 million or $0.29 per diluted share. Excluding certain noncore items, adjusted net income was approximately $173 million or $0.30 per diluted share. Adjusted pre-provision net revenue increased 6% from the prior quarter and at 1.64% of average assets reached its highest level since the fourth quarter of 2022. Deposit growth remains central to our strategy. We believe that our diversified commercial and consumer funding channels are increasingly critical as deposit competition intensifies across the industry. By expanding our commercial banking talent and driving greater adoption of our treasury platform, we expect to continue to win relationships based on service, capability and value, not simply based on rates. These efforts directly contributed to nearly $300 million of noninterest-bearing deposit growth during the quarter. On the asset side, our focus in C&I and owner-occupied commercial real estate continues to drive strong loan growth and greater portfolio diversification. C&I growth was broad-based during the quarter with contributions from New York, Florida, Chicago and our specialty health care and fund finance verticals. These efforts also support our noninterest-bearing deposit growth as we continue to target disciplined, well-funded commercial relationships that can contribute to our sustained profitability improvement. Fee income was another area of strength. Sequential growth was driven by high-quality, sustainable businesses, including capital markets and tax credit advisory. Within capital markets, we continue to see a strong pipeline of Valley-led syndication opportunities, while swap activity has benefited from higher commercial real estate origination volumes. These fee-based capabilities are an important part of our commercial value proposition. And based on performance to date, we remain on track to achieve our 2026 growth objectives. As we discussed a bit last quarter, technology and artificial intelligence are becoming increasingly important to our ability to further scale our franchise. From a macro perspective, we believe that banks can effectively adopt AI have the potential to structurally shift their efficiency ratios lower by around 500 basis points. At Valley, we intend to be an industry leader, and we are excited about the progress that we have made to date. As shown on Slide 9 of the deck, we believe that Valley has several structural advantages that support our AI strategy, including Valley Ventures, our international and technology banking business and our relationship with Bank Leumi in Israel. Valley Ventures give us direct exposure to the start-up ecosystem and access to emerging talent and technologies. Our international and technology banking team provides deep relationships with venture capital funds and early-stage technology companies, including businesses expanding from Israel into the United States. Additionally, our relationship with Bank Leumi gives us additional visibility into leading practices in cyber, fraud and risk management. We have a robust team of AI practitioners focused on sourcing use cases and aligning solutions from these relationships that I just mentioned. Importantly, our AI strategy is embedded in our broader operating model and is intended to support productivity, risk management, client experience and scalable growth. As we look ahead, our priorities remain consistent and clear: continue to grow core deposits, deepen commercial relationships, generate more diversified loan and fee income growth and improve operating efficiency to translate our progress into stronger returns. We expect our continued commitment to these areas to drive further shareholder value over time. With that overview, I will now turn the call over to Travis to walk through the financial results and our outlook in more detail. Travis Lan: Thank you, Ira. Based on our first half results and the continued momentum that we are seeing, we are maintaining our strong outlook for 2026. We now expect gross loan growth at or somewhat above the high end of our range and believe that fee income will also migrate towards the high end of our expected range. Our outlook for deposit growth and net interest income is unchanged from the upwards revision announced on last quarter's call. We expect continued earnings growth and profitability improvement throughout the remainder of the year and into 2027. Turning to capital deployment. We continue to balance organic growth, capital returns and balance sheet flexibility during the quarter. We returned approximately $81 million to shareholders in the form of common dividends and the repurchase of 1.5 million shares. The quarter's reduced buyback activity was the product of our exceptional loan growth, and we will continue to toggle our buyback appetite in the context of near-term loan growth expectations. We remain very comfortable with our regulatory capital ratios. Our ability to support substantial loan growth repurchase shares and reduce our regulatory CRE as a percentage of risk-based capital by another 12 percentage points during the quarter demonstrates our flexibility and the value of our accelerating organic capital generation. Slide 14 illustrates the quarter's strong deposit growth. Direct customer deposits increased $1.1 billion during the quarter, including nearly $300 million of noninterest deposit growth, $200 million of interest-bearing nonmaturity deposits and $600 million of retail CDs. While core deposit growth remained extremely strong during the quarter, we did utilize $200 million of incremental brokered deposits to fund the temporary timing mismatch resulting from our high-quality loan growth. We also strategically rotated nearly $700 million of floating rate NOW balances to brokered CDs within our indirect deposit portfolio. Total deposit costs were effectively unchanged from the first quarter and remained meaningfully lower than 2.67% a year ago. We remain focused on growing high-quality direct deposits and continuing to improve our funding profile over time. Slide 17 details the $1.6 billion increase in loans during the quarter, equating to around 13% on an annualized basis. Incremental growth continues to be focused in our C&I and owner-occupied CRE portfolios. And as Ira mentioned, we saw specific strength in the New York, Florida and Illinois markets and our health care vertical during the quarter. Regulatory CRE, which excludes owner-occupied loans, grew less than $100 million during the quarter. As a result of our strong organic capital accretion and our successful subordinated debt issuance in May 2026, our CRE concentration ratio declined to approximately 317% at June 30 from 329% at March 31. In general, our loan portfolio continues to evolve in line with our strategic priorities as we replace low-value transactional CRE with relationship-based C&I and owner-occupied CRE loans, which are contributing deposits to the bank. Net interest income on a tax equivalent basis increased to $488 million, up approximately $16 million from the first quarter and $55 million from the year ago period. Net interest margin on a tax equivalent basis expanded 3 basis points linked quarter to 3.2% and was up 19 basis points from the second quarter of 2025. The linked quarter increase in net interest income reflected higher average loan balances and higher yields on new loan originations and investment securities. These benefits were mitigated somewhat by the cost of carrying excess subordinated debt between our issuance of $500 million in May and the redemption of our $300 million callable notes in June. We estimate that this dynamic weighed on net interest income by around $2 million during the quarter. Noninterest income increased $4.9 million to $73.7 million and contributed over 13% of our total revenue during the quarter. The linked quarter increase was driven primarily by a $2.6 million increase in capital markets revenue and a $1.6 million increase in wealth management and trust fees. The fee growth reflected higher transaction volumes within loan participations and syndications and tax credit advisory services. We continue to view fee income as an important part of our business model evolution. Our enhanced treasury management platform, capital markets capabilities, tax credit advisory activity and broader commercial product set are giving us more ways to deepen relationships and generate additional high-quality and sustainable noninterest income. As mentioned earlier, we now expect 2026 fee income growth to be towards the higher end of our previously announced 6% to 9% range. Reported noninterest expense was $311 million, up approximately $1 million from the first quarter. Adjusted noninterest expense increased by $5 million as lower compensation costs were offset by higher FDIC expense, third-party spend associated with our operational transformation efforts and incremental costs related to the quarter's strong growth in fee income results. Our efficiency ratio improved to 52.1% from 53.1% in the first quarter and 55.2% a year ago, and expenses as a percent of average assets remains well below peer levels. As Ira mentioned, we remain focused on driving positive operating leverage, including through the continued use of technology and AI tools to support productivity, improve process consistency and reallocate capacity towards higher-value activities. We expect our efficiency ratio will continue to improve as we drive additional revenue growth and control operating expenses in the remainder of 2026 and beyond. Despite a modest uptick in nonaccrual and past due loans during the quarter, we saw a significant reduction in criticized and classified assets on both a sequential quarter and year-over-year basis. As detailed on Slide 25, criticized and classified assets now stand at 7.3% of total loans versus 8.1% a quarter ago and 9% last year. The continued improvement reflects improving underlying trends within our CRE portfolio, which has led to upgrades out of special mention and substandard classifications in addition to traditional payoff activity. Net charge-offs totaled $22 million or 17 basis points of average loans compared with $18 million or 14 basis points last quarter. The provision for credit losses for loans was $29 million compared to $21 million in the first quarter. The higher provision was due in part to the strong loan growth, particularly within the C&I category. Our allowance for credit losses for loans declined to 1.16% of total loans from 1.18% at March 31. This modest allowance coverage reduction is reflective of the criticized and classified asset reduction I just mentioned. For the remainder of 2026, we continue to expect charge-offs and provisions in line with our prior guidance. Tangible book value increased nearly 8% on an annualized basis. Our CET1 ratio of 10.7% remains within our previously stated target range and our successful issuance of new subordinated notes net of redemptions bolstered total risk-based capital during the quarter. Our current capital levels provide appropriate flexibility to support our growth and capital return aspirations going forward. In summary, the second quarter demonstrated continued progress against the strategic priorities we have outlined: stronger core deposits, more diversified relationship-based loan growth, improving net interest income and margin, sustainable fee income growth, expense discipline and balanced capital deployment. We are pleased with the momentum in the business and remain focused on delivering continued profitability improvement through the remainder of the year. With that, I will turn the call back to the operator to begin Q&A. Thank you. Feddie Strickland: Just wanted to touch on fee income. It seems like a really strong quarter there, and the guide seems pretty positive. If we continue at this level, it looks like you probably exceed the guide. Is the expectation that some of the more volatile lines like capital markets likely step down from the high point in the second quarter? Travis Lan: Yes, Feddie, this is Travis. No, I think there's good consistency and continued growth opportunity. The one element that you kind of referenced within capital markets is our interest rate swap income, which is heavily tied to commercial real estate originations. As you saw, the second quarter loan growth was extremely strong and included some pull forward from things that we may have expected to have closed in the third quarter. So I do think the swap income element was slightly elevated. Maybe that equates to $1 million or $2 million in aggregate. But other than that, I mean, I think you still see continued growth in deposit service charges, loan syndications were strong. Tax credit advisory was strong as well and insurance picked up. So I think there are other elements, but I do think the interest rate swaps is the one that may have been slightly elevated during the quarter. Feddie Strickland: All right. Great. And if I could just switch gears to credit. Great to see the criticized and classifieds start to decline again. You mentioned some positive trends in CRE driving some of that. Can you provide any more detail on maybe what some of those trends are and really what you're seeing to drive some of these upgrades? Mark Saeger: Absolutely, Feddie. It's Mark Saeger. So in general, right, the feel of our CRE clients is that the market continues to be robust in all asset classes for the most part, including office, we're starting to see positive progress in lease-up in office. Our portfolio upgrades and payoffs, primarily associated with some assets that were in transition and in lease-up and were downgraded. We had strong sponsor support. We had expected those properties to perform and lease up, and we are seeing that, and that's attributing to our payoffs, our upgrades. And again, we feel that there's room in portfolio to continue to see that positive trend in criticized. Feddie Strickland: Great. If I could squeeze in one more on credit. Can you just talk about the agentic AI for underwriting? Just curious if you have any example of kind of how that works? And what parts of the process you see the most opportunity to speed up maybe underwriting without compromising on the quality of the underwriting? Mark Saeger: Sure, absolutely. And to be clear, for us, we're in exploration and examination phase. We don't have agentic in our core analysis right now, but traditional proven financial statement spreading, rent roll population within our core systems, those we are employing right now. But we're highly invested in examination to continue to expand those capabilities, although not employed. Travis Lan: This is Travis. I would just add, Feddie, that I think like most AI use cases, right, the manual work can be automated, but it doesn't change the oversight and approval and governance that's around those AI efforts. So elements, to Mark's point, have already been embedded, but it's not like that's occurring in a vacuum with no human oversight. It's just shifting the roles and responsibilities somewhat. Christopher McGratty: Travis, the focus on a lot of the mid-caps this quarter in the regionals has been the accelerating loan growth, but a little bit of funding pressures. Interested in kind of where -- how you're thinking about that dynamic growth versus margin as you go into the back half of next year? And then secondarily, do you have the spot price on the deposits? Travis Lan: Yes. So I think that's fair. Look, the expectation for rates has changed somewhat since we came into the year. We've talked about being effectively neutral to the front end of the curve from a rate sensitivity perspective. I think we still see that playing out. So I mean, for us, I think we have some differentiated opportunities because we still have $5 billion of brokered deposits. Over the last 12 months, we've generated about $4.5 billion of new core deposits. That's $8 billion over the last 8 quarters. So we're seeing the core deposit growth trend be consistent and expanding. We have in the next -- in the remainder of this year, we have $2 billion of brokered CDs coming off at a rate of 4.1% and $1.4 billion of fixed rate loans at 4.7%. So when you think about the repricing benefits of both of those items, it gives us good confidence in the margin outlook. I don't think there's any argument that deposit competition is heating up, but I do think that's occurring more on the consumer side. And a lot of our focus has been on commercial deposit growth opportunities. This quarter, we originated exclusive of CDs, $1.3 billion of new deposits at a blended rate of 1.66%. Last quarter, excluding CDs, that number would have been $800 million at 1.7% -- so we had some CD promos out there that helped us generate volume. But exclusive of that, we're actually seeing our ability to generate new deposits at lower rates. And I think all that's supportive of our margin guidance for sure through the rest of the year. From a spot deposit perspective, the rate was 2.29% as we exited June. A part of that was elevated from March by 2 or 3 basis points because of the CD promos that we had out in the market. Christopher McGratty: Okay. Great color. And Ira, I want to make sure I heard the AI discussion right. I think the comment was 500 basis points. I think that was either operating leverage or an efficiency comment. I guess I'm more interested in how the role of AI plus the role of capital smarter regulation is going to impact perhaps that mid-teens ROE that you've been talking about for some time. Ira Robbins: Yes. Thanks for the question. I think there's tremendous opportunity on both sides of the balance sheet when we think about the AI implications to it. When we think about how much or what the composition of that 500 basis points is going to be, in my mind, it's more along the efficiency ratio, but it's really driven probably around 65% coming from expenses and around 35% coming from revenue. And as we think about resource deployment, whether it be capital or human as to how we're thinking about extracting that actual benefit, that's probably where those allocations come from. On the expense side, we think about gearing ratios and what the implications of those are going to be across frontline and support areas. We're already seeing the elimination of certain software across the organization. So reduction in specific expenses and just an improvement in efficiency. On the revenue side, we do believe that we're going to be able to get a larger share of wallet based on some of the enhancements we're doing with the data and the analytics and the ability to really provide some critical value-add information to our clients, and we believe that's going to be differentiating for us and give us additional revenue opportunities as well. So we're definitely looking at deploying capital associated with it. I think for the year-to-date, we've seen about $15 million, plus or minus, Travis, correct? Travis Lan: Yes. All in, we have $15 million of saves in the expense run rate against about $3 million or $4 million of AI associated expenses that are new, whether it's headcount or vendor spend. Ira Robbins: So for us, it's not just in an exploratory phase. There's actually a real ROI that's already coming from it, and we think that it's going to be enhanced, and that will help us get to the 10% ROTCE that we targeted. But I think as Travis has talked about before, there's not a reliance upon the ROTCE on the AI to get to the 15% ROTCE number. David Smith: Could you talk a little bit more about your loan and deposit pipelines and how you're thinking about the timing and drivers of growth over the rest of the year? I guess the guidance implies deposits outgrowing loans by about $400 million for the full year. But through the first half, I think it's kind of the opposite. Loans have been about $400 million ahead of deposits. So I don't know if there's any seasonality or timing for either of those lines that we should be thinking about? And then secondly, as core deposits catch up to loans, should we expect meaningful improvement in deposit costs as you're running brokered down? Travis Lan: Yes. David, this is Travis. On the loan growth, I mean we're running 9% on an annualized basis. But if you look back over the last 12 months, I mean, I think it's hit kind of exactly what we've said, which is around 10% growth in C&I and mid-single-digit aggregate loan growth. So I would expect the second half of the year looks more like what we've done over the last 12 months than what we did this quarter, which was exceptional. We've been talking for the last 12 to 15 months about hiring efforts on the commercial side. Those efforts resulted in a growing pipeline coming into the second quarter, we saw very strong pull-through. So the pipeline is down about $1 billion from March 31 to June 30, but remains a couple of hundred million dollars ahead of where it was coming into the year. I think seasonally, the third quarter is typically a little bit slower with summer vacations and things like that. And you see acceleration then in the fourth quarter and towards year-end. So when we revised the loan growth guidance higher, we said kind of at or somewhat above the high end of the 4% to 6% range. I think that's accurate. I also think that because of the timing expectation, it's probably not a material change relative to our average loan expectations for the year. On the deposit side, I mean, we continue to see, as I said earlier, very consistent growth. I mean we've been growing about $1 billion a quarter in core deposits. One thing we'observed, obviously, is as we put on C&I loans, there is somewhat of a lag to achieve the deposit expectations that come with those loans. So we look back at just as an example, loans we originated in January, as of March, they had generated about 10% of the deposits that they had expected. We looked again in June, that was up to 80%. So there's a 3- to 6-month lag in terms of getting all the deposit opportunity achieved. So that's why I think we highlighted something of a timing mismatch this quarter. The loan growth was exceptional. The deposit growth was exceptional. But over the next 2 quarters, I do expect that, that gap will certainly close. And we'll continue to see the brokered deposits come down. Again, the broker that we have for the remainder of the year, about $2 billion of brokered CDs coming off at a rate of 4.1%. On a blended basis, this quarter, I kind of gave you what the new origination for deposits was well below that. And I think that's part of what drives the structural tailwind that we have and that differentiates us from a lot of peers. David Smith: Got it. Any change to your NIM outlook for the fourth quarter? Travis Lan: No. We still think exiting low to mid-3.30s is what we've talked about. There's no change to that. Timur Braziler: Going back to the expense conversation and some of the expected benefits from AI. I guess any color you can provide on potential time line there? I know that there's some potential learnings from Leumi as well, Leumi as well. Maybe just talk us through kind of the expense side of the equation. when we can actually start seeing some of those benefits minimizing some of the more recent expense growth? Travis Lan: Yes. This is Travis. I think, again, as Ira mentioned, yes, some of it's already in. And obviously, we continue to execute on opportunities there. I wouldn't let some of the expense items this quarter kind of cloud that message. And when I say that, I mean, when you look at the expense growth this quarter, $5 million sequentially, $1 million of that is from higher FDIC expenses. We just talked about the amount of deposit growth that we've seen. We had exceptional growth this quarter in loans and fee income. There are certain incentives that are associated with that, that get tied into your expense number. And then we've used third parties to help us operationalize some of our transformation efforts, which, in some cases, includes AI, but not in all cases. I think that in the professional service line, you'll see come down. There will be some follow-up transition, though, as we continue to optimize our onshore headcount, you'll see a transition where compensation costs should continue to come down or stabilize and you'll see some professional fees offsetting that. Overall, that's a positive trade for our expenses and our efficiency ratio. But there's always a lot of moving pieces in every quarter, and I feel very good about the AI efficiencies that we're getting and that there's more to come. But I wouldn't take too much, again, from the sequential change in expenses. I kind of gave you some of those items that are very unrelated to the AI discussion that we're having. Timur Braziler: Okay. Great. And then maybe looking at the loan growth this quarter, we saw multifamily get reengaged. You called out some strong growth in the health care vertical for CRE. I'm just wondering the kind of the mix of future loan growth and maybe talk through some of the spread dynamics within the CRE bucket versus what you're putting on... Travis Lan: Yes, for sure. Within -- Sorry, you cut out there at the end, Timur. Maybe repeat whatever you said after asking about loan spreads. Timur Braziler: Yes. Just if that spread persists, is that going to have a meaningful change on loan yields going forward? Travis Lan: Yes. Got you. Within commercial real estate, again, the majority of our growth is coming from the owner-occupied portfolio. You did call out multifamily was higher this quarter, but you'll see construction was down. So a good amount of that multifamily growth was construction loans that went into perm. So it's effectively neutral to your regulatory CRE ratio. From a spread perspective, obviously, we're hearing a lot in the market about spread compression, and we see volatility on a monthly basis. But in general, it's been fairly stable for us. Part of this, to your point, is C&I loan originations have picked up and our spreads are hanging in better there than in CRE. And so that loan origination growth in C&I has offset some spread compression in CRE. So we were conservative coming into the year, assuming that the spreads were tighter. Nothing that we've seen is candidly out of line with the expectations that we had. So we feel good about that. But yes, it remains competitive out there, particularly in CRE. Unknown Analyst: This is [ Frank ] on for [ Dave ]. On asset repricing, loan yields came in, I believe, 3 basis points higher quarter-over-quarter. And you guys called out the new originations coming in at a higher rate. Can you just provide any color about how much fixed asset repricing that we still have going into the second half of the year and maybe anything into 2027? Travis Lan: Yes, for sure. So for the remainder of this year, we have $1.4 billion of fixed rate loans that are maturing at a rate of 4.67%. So that's, call it, 150 basis points lower than where new originations are. For the first half of next year, there should be an additional -- just doing some quick math, an additional $1 billion at a rate of about 4.75% that matures. So I think that provides some of the tailwind that we're talking about on the loan side. Unknown Analyst: Great. And just last one for me on capital. How are you guys prioritizing capital between, I guess, loan growth, buybacks and potential CRE concentration bring down from here? Travis Lan: Yes. I don't think there's been any change in the way we think about capital deployment. We continue to see our focus primarily is on well-funded high-quality loan growth and secondarily, on the buyback. So this quarter, obviously, we had more significant loan growth, and we toggled back on the buyback. But next quarter, should loan growth lighten up a little bit, then we'd be more active on the buyback. So I think we've been pretty consistent with how we approach that. CET1 is right in the middle of our guidance range. There's no change to those expectations. And then I forget the last part of your question. Unknown Analyst: The CRE concentration. Travis Lan: Yes. I mean that's -- you've seen it come down consistently. I mean this quarter, I think, is a very good example where it came down 12 percentage points, 9% -- 9 of those 12% was because of the excess sub debt, but the remaining 3% was due to organic capital accretion. I mean we still grew regulatory CRE by $100 million, and we're able to drive that ratio lower by effectively 3% on an organic basis. Unknown Analyst: This is [ Mike ] on for Tony. I'll start on credit quality. You guys saw some migration in and out of the 30- to 59-day bucket in nonaccruals. You attributed that to some CRE loan. Could you, I mean, share a little bit more on that and sort of latest thoughts on how you're feeling about credit quality overall into the second half of the year? Mark Saeger: Absolutely, Mike. This is Mark Saeger again. For the migration into nonaccrual, 2 of the 3 loans that moved into that category today are appraised extremely strongly. We're covered by value, a unique scenario, one office portfolio where we could not come to terms with a continuation and are looking to exit. So that's matured. We're continuing to receive payments on that, and it's well collateralized. The other loan has been wavering between hovering at the 60-day bucket. It did go beyond 90 days. We moved into nonaccrual. They did make a payment and are running closer to 60 days on that one as well, very well collateralized. We're not concerned about the value and do continue to expect to get payments on that. I'd point out in our nonaccrual portfolio, we continue to have approximately 50% of our nonaccruals continuing to pay interest. So we really look at the overall trends and the large reduction in criticized as more of an indication of where the portfolio is going, and we're seeing really solid trends there. Unknown Analyst: Awesome. And then on the ACL ratio, it fell a few basis points quarter-over-quarter, but you guys reiterated the provision expense outlook. Do you still think you could be able to get back up to the 120 by the end of this year? Travis Lan: I don't think we have a hard and fast target of 120%. I think it's well within a range that we're very comfortable with. If you look on a year-over-year basis, it's down 2 basis points, the allowance coverage despite a 15 percentage point reduction in our criticized and classified. And so as criticized and classified continues to come down, it would imply a lower ACL. It's then offset by the C&I loan growth that we're putting on, which is obviously carrying a higher allowance with it. So I think everything is playing out kind of as we expect. We say general stability each quarter, but we always note that it will move around a couple of basis points just given the economic assumptions in the model and other things. But I think generally, this has been pretty stable now for a long period of time. Matthew Breese: Travis, I want to go back to funding. Considering the competitive dynamics for deposits now and -- but kind of against the maturing brokered, what are your expectations for deposit cost increases from here? And then how much of the $5 billion in brokered do you think can or do you want to replace with core? I'm assuming there's some residual that's there on an ongoing basis. I'm curious what that number is. Travis Lan: Yes. On the deposit cost, I mean, we continue to -- I think the way -- the easiest way to think about it is the level of competition has the potential impact of raising core deposit costs. However, we have the offset from the brokered. So when we look at that in aggregate, I mean, our model currently has, call it, 4 or 5 basis points of deposit cost expansion in the next 2 quarters. And I say that noting that in aggregate, we think margin will be improving 5 to 7 basis points for each of the next 2 quarters as well. So you're getting enough offsets on the earning asset side. Within brokered, I don't think it's ever going to get to 0. I mean brokered deposits serve a very important purpose from an interest rate risk management perspective. But as we've said, our goal is to get loans to nonbrokered to 100%. And I think we can certainly do that. I mean there have been periods when you look back over the last 8 or 10 quarters where it's been very chunky in terms of the brokered reduction. So again, the core deposit growth has been very consistent. I think it's something we're very proud of. I think our ability to grow core deposits without relying solely on rate has been differentiated, and we'll continue to make good progress there. But to your point, I don't think brokered goes to 0. I think there's a reasonable level where it's helping to support our interest rate risk management strategy and securities. Matthew Breese: Yes. Yes. Okay. And then you touched on it a little bit, but just thinking about the NIM longer term, obviously, we're in this period now where there's a lot of kind of fixed asset repricing benefits. But if I look back to like 2023 when loan yields started to spike for the industry, assuming some of that rolls off in 2028, I'm just curious, do you start to see from your model, the NIM kind of level off as we exit '27 and into 2028 because of that? I'm curious just kind of your longer-term NIM thoughts, I guess. Travis Lan: Yes. I mean I'll get you through to the end of 2027, which is we expect continued expansion between now and the end of '27. It's not like it teeters out at any point during the next year. And I would expect that there is continued tailwinds beyond 2027. I think the thing to keep in mind for us is given our CRE concentration entering '23 and '24, we weren't originating a lot of fixed rate CRE loans when rates were highest. And so for that reason, we don't have kind of what I would call the repricing headwind of higher fixed rate loans coming off. The fixed rate loans that we have coming off remain pretty low yielding. And so I think, a, that gives us an opportunity; and b, helps us to kind of like others may have seen more volatility in prepayment activity. We haven't really seen that because, again, we weren't putting on a lot of CRE loans when rates were highest. Ira Robbins: Matt, I would just add to that. I think we've made a lot of structural changes across the organization since then as well. As you think about the investments that we've made within the treasury solution product that we have, the C&I teams that we brought in, the deemphasis of some of the commercial real estate assets, which obviously have a lower relationship and compensating balance associated with it. So I think Travis speaks to sort of what the model lays out. I think we've made a lot of progress as to how we think about what Valley is going to look like in '28 versus maybe what it looked like in '23. And the structural funding advantages, we think, will definitely have a lot of tailwind associated with that as well. Matthew Breese: Got it. Okay. Ira, maybe while I got you, we talked about that mid-teens ROTCE outlook. When do you think you can hit that based on what you know today? Ira Robbins: I mean I think we've given guidance towards beginning of '28, I think, is sort of where we said some of this ROTCE to 15% was going to be. I still think we see a lot of tailwind in where the margin is going. I know we talked about the deposit pressure that we're seeing from an industry perspective, but we feel pretty confident about where that is and a lot of positive operating leverage is going to come as we think about where the expenses are headed across the organization as well. So I think the guidance that we've given in my mind really hasn't changed at this point. Sun Young Lee: On expenses, can we assume that the professional and legal fees are trending down in the second half of '26 and through 2027? I believe this line item has been elevated because of the transformation efforts that have been ongoing for the past few years. And also, you're talking of a lot of AI benefits and the positive impact on efficiency ratio and positive operating leverage plus your expectations on NIM expansion through 2027. How should we think about how that's impacting the efficiency ratio target? You've talked about sub-50%-ish by the end of '26. How should we think about it beyond 2026, if you could comment on it? Travis Lan: Yes. Maybe I'll start with the second one. There's no change to our expectation that the efficiency ratio should be 50% or lower as we exit 2026. And I think Ira made a comment that industry-wide AI longer term should give people a potential opportunity to enhance their efficiency ratios by, call it, 500 basis points, and I don't think we feel any differently at Valley's. So if you're going to exit '26 at or below 50%, I think there's an additional opportunity to continue to drive it lower. I mean, for us, a lot of the revenue tailwinds that we're benefiting from in '26 continue into '27 as we've talked about. So our expectation is our efficiency ratio continues to drive lower I think there's a good opportunity to do that as we continue to drive net interest income and fee income growth and keep expense growth much lower than the pace of revenue. So I think that plays out. From an expense perspective, you asked about the professional fee line. I agree with your comment. I think this will be close to the peak or the peak in professional fees as we kind of now begin to offboard some of the third parties that have been here to help us from a transformation perspective. So I agree with your comment. Sun Young Lee: Okay. And sorry if I missed, but are the new deposits that are coming into the bank on the core side, including NIB, are they coming in around 2.5%, which is, I believe, what was quoted about a quarter or 2 ago or maybe slightly higher than that? Or maybe you could give an updated number? Travis Lan: Yes, for sure. So I'm going to give a lot of numbers here, so I apologize, and hopefully, it plays out right in the transcript. But in the first quarter, in aggregate, we originated $1.4 billion of new core deposits at a rate of 2.55%. This quarter, we originated $2.5 billion in aggregate at a rate of 2.71%. So to your point, it's slightly higher. However, this quarter's originations include about $600 million of retail CD promos at a rate of 4%. If you were to exclude CDs from both quarters, we originated in the first quarter $800 million at 1.78% and in the second quarter, $1.3 billion at 1.66%. So exclusive of CDs, we originated $500 million of more core deposits at a rate that was 12 basis points lower than the first quarter. David Smith: I just wanted to clarify, I don't know if you had mentioned the Fed interest rate assumptions for the NII guide. Could you confirm those, please? And apologies if I just missed it. Ira Robbins: Yes, no worries. At this point, we have one hike assumed for 2026. And I think another half hike, bizarre that sounds, for 2027. We've talked about, David, being effectively neutral to the front end of the curve. And so that continues to be our balance sheet positioning. Effectively, our floating rate loans, which is about 40% of our loan portfolio, balances the amount of deposits when you adjust for beta that would also float on the front end. So whether there's 2 cuts or 2 hikes or no hikes or cuts, it doesn't materially change our NII outlook. We're more exposed to the belly of the curve, and we've seen some good expansion there since the beginning of the year. David Smith: And remind us, is that on a constant size balance sheet? Or does that include like a presumed like slowdown in balance sheet growth if rates are a little bit higher? Ira Robbins: Well, as we have gotten -- as we do more C&I, the amount of loans that float on the front end of the curve would increase. At the same time, that's effectively where our deposit growth is coming as well. So it's -- the statement is made with our balance sheet today. But given the growth that we're seeing, I think it would be consistent going forward. To the degree there would be any change in our sensitivities, we'll be willing to use hedges to make sure that we're keeping our sensitivity within ranges that we're highly comfortable with. David Smith: I meant more along the lines that like higher rates can weigh on like loan growth, for example. Travis Lan: Got you. No, I think we're far away from that. I mean we've done -- we've added a lot of talent. We're in the right markets. We're in the right specialty verticals to continue to grow. I don't think that we expect that it would materially change our loan growth outlook with some reasonable expansion in longer-term rates. Ira Robbins: I just want to once again thank everyone for taking the time to join us this quarter. Obviously, we're very excited about the results and what we're looking for, for the rest of the year and looking forward to talk to you again after the Q3. Thank you. Operator: This concludes today's program. We thank you for joining. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Valley National Bancorp (VLY) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Valley National Bancorp? Here are five stocks we like better. Valley National delivered solid Q2 2026 results, with net income of about $171 million and adjusted EPS of $0.30. Net interest income rose to $488 million and net interest margin expanded to 3.20%, helped by stronger loan balances and yields. Deposits and loans both grew strongly, with customer deposits up $1.1 billion and loans up $1.6 billion in the quarter. Growth was concentrated in commercial and industrial lending and owner-occupied CRE, while the bank kept deposit costs stable and reduced its CRE concentration ratio. Management said it remains positive on the 2026 outlook, expecting loan growth near the high end of guidance and fee income toward the high end of its range. The bank also highlighted improving efficiency, with the ratio down to 52.1%, and said AI and technology investments are already producing savings. 3 high-yielding, small banks to buy on the dip Valley National Bancorp (NASDAQ:VLY) reported second-quarter 2026 earnings that management said reflected continued progress in deposit gathering, relationship-based lending, fee income growth and operating efficiency. Chief Executive Officer Ira Robbins said the bank generated “strong customer deposit growth,” including meaningful gains in non-interest-bearing balances, while loan growth remained concentrated in commercial and industrial lending and owner-occupied commercial real estate. The company reported net income of approximately $171 million, or $0.29 per diluted share. Excluding certain non-core items, adjusted net income was approximately $173 million, or $0.30 per diluted share. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? S&P Downgrades 5 Banks: What Does It Mean For The Market? Robbins said adjusted pre-provision net revenue rose 6% from the prior quarter and reached 1.64% of average assets, which he said was the highest level since the fourth quarter of 2022. Chief Financial Officer Travis Lan said direct customer deposits increased $1.1 billion during the quarter. That included nearly $300 million of non-interest-bearing deposit growth, $200 million of interest-bearing non-maturity deposits and $600 million of retail certificates of deposit. → 3 Photonics Companies Making Quantum Tech Possible Analysts Remain Bullish On These 3 Regional Banks Lan said Valley also used $200 million of incremental brokered deposits to fund a temporary timing mismatch tied to strong loan growth. The company also rotated nearly $700 million of floating-rate NOW balances into brokered CDs within its indirect deposit portfolio. Total deposit costs were effectively unchanged from the first quarter and remained below the 2.67% level from a year earlier, according to Lan. Loans increased $1.6 billion during the quarter, or about 13% on an annualized basis. Lan said growth continued to focus on C&I and owner-occupied CRE loans, with strength in New York, Florida and Illinois, as well as the company’s healthcare vertical. Regulatory CRE, which excludes owner-occupied loans, grew less than $100 million during the quarter. → AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off Valley’s CRE concentration ratio declined to approximately 317% at June 30 from 329% at March 31. Lan attributed the decline to organic capital generation and the company’s May 2026 subordinated debt issuance. Net interest income on a tax-equivalent basis increased to $488 million, up approximately $16 million from the first quarter and $55 million from the year-earlier period. Net interest margin expanded three basis points from the prior quarter to 3.20% and was up 19 basis points from the second quarter of 2025. Lan said the increase reflected higher average loan balances and higher yields on new loan originations and investment securities. Those benefits were partly offset by the cost of carrying excess subordinated debt between Valley’s issuance of $500 million in May and the redemption of $300 million of callable notes in June, which he estimated reduced net interest income by about $2 million. Non-interest income increased $4.9 million to $73.7 million and represented more than 13% of total revenue. The sequential increase was driven primarily by a $2.6 million rise in capital markets revenue and a $1.6 million increase in wealth management and trust fees. Lan said fee growth reflected higher transaction volumes in loan participations and syndications, as well as tax credit advisory services. Management said fee income is expected to move toward the higher end of Valley’s previously announced 6% to 9% growth range for 2026. During the question-and-answer session, Lan said interest rate swap income within capital markets was “slightly elevated” in the quarter due to strong commercial real estate originations, potentially by $1 million to $2 million, but said other fee categories continued to show growth opportunities. Reported non-interest expense was $311 million, up approximately $1 million from the first quarter. Adjusted non-interest expense increased by $5 million, as lower compensation costs were offset by higher FDIC expense, third-party spending tied to operational transformation efforts and incremental costs related to growth and fee income results. Valley’s efficiency ratio improved to 52.1% from 53.1% in the first quarter and 55.2% a year earlier. Lan said management expects the efficiency ratio to continue improving as revenue grows and expenses remain controlled. Robbins highlighted technology and artificial intelligence as priorities for scaling the franchise. He said banks that effectively adopt AI could potentially lower efficiency ratios by around 500 basis points over time. Robbins pointed to Valley Ventures, the company’s international and technology banking business, and its relationship with Bank Leumi in Israel as structural advantages supporting its AI strategy. In response to an analyst question, Robbins said Valley is already seeing returns from AI-related efforts. Lan said the company has generated about $15 million of savings in the expense run rate against approximately $3 million to $4 million of new AI-associated expenses, including headcount and vendor spending. Lan also said Valley continues to expect its efficiency ratio to be 50% or lower as it exits 2026, with further improvement possible beyond that. Robbins said the company’s guidance for reaching a 15% return on tangible common equity around the beginning of 2028 remains unchanged and does not rely on AI benefits to achieve that target. Valley reported a modest increase in non-accrual and past due loans during the quarter, but management emphasized improvement in criticized and classified assets. Lan said criticized and classified assets declined to 7.3% of total loans from 8.1% in the prior quarter and 9.0% a year earlier. Mark Saeger, executive vice president and chief credit officer, said improvements in CRE reflected upgrades and payoffs tied to assets that had been in transition or lease-up. He said the company is seeing positive progress in office lease-up and that Valley expects continued positive movement in criticized assets. Net charge-offs totaled $22 million, or 17 basis points of average loans, compared with $18 million, or 14 basis points, in the first quarter. The provision for credit losses on loans was $29 million, up from $21 million in the prior quarter. Lan said the higher provision was due in part to strong loan growth, particularly in C&I loans. The allowance for credit losses declined to 1.16% of total loans from 1.18% at March 31. Lan said Valley is maintaining its “strong outlook” for 2026 based on first-half results and continued business momentum. The bank now expects gross loan growth at or somewhat above the high end of its range, while fee income is expected to trend toward the high end of its prior range. Deposit growth and net interest income guidance were unchanged from the upward revision provided on the prior quarter’s call. Valley returned approximately $81 million to shareholders during the quarter through common dividends and the repurchase of 1.5 million shares. Lan said buyback activity was lower because of exceptional loan growth and that the company will continue to adjust repurchases based on near-term loan growth expectations. Robbins said Valley’s priorities remain focused on growing core deposits, deepening commercial relationships, generating more diversified loan and fee income growth, and improving operating efficiency. He said management expects continued execution in those areas to support stronger returns over time. Valley National Bancorp (NASDAQ: VLY) is a regional bank holding company headquartered in Wayne, New Jersey, offering a comprehensive suite of commercial and consumer banking products and services. Through its banking subsidiary, Valley National Bank, the company provides deposit accounts, residential and commercial lending, mortgage services, treasury and cash management, foreign exchange and trade finance solutions. Complementary wealth management and insurance offerings round out its financial services platform, catering to individual, small-business and corporate clients. Tracing its roots to the establishment of Wayne National Bank in 1927, Valley has grown into one of the largest banks in New Jersey by both assets and deposit share. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Valley National Bancorp Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

For the quarter ended June 2026, Valley National (VLY) reported revenue of $562.1 million, up 13.3% over the same period last year. EPS came in at $0.30, compared to $0.23 in the year-ago quarter. The reported revenue represents a surprise of +1.83% over the Zacks Consensus Estimate of $552.02 million. With the consensus EPS estimate being $0.31, the EPS surprise was -3.23%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Valley National performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Interest Margin: 3.2% versus 3.2% estimated by four analysts on average. Annualized ratio of total net charge-offs to total average loans: 0.2% versus the four-analyst average estimate of 0.2%. Efficiency Ratio: 52.1% versus the four-analyst average estimate of 52.7%. Average Balance - Total interest earning assets: $61.06 billion compared to the $60.69 billion average estimate based on four analysts. Total risk-based capital ratio: 13.8% compared to the 13.6% average estimate based on two analysts. Tier 1 risk-based capital ratio: 11.4% compared to the 11.6% average estimate based on two analysts. Total non-accrual loans: $462.63 million compared to the $430.49 million average estimate based on two analysts. Total Non-performing Assets: $467.78 million versus $437.47 million estimated by two analysts on average. Service charges on deposit accounts: $18.73 million versus $18.12 million estimated by four analysts on average. Bank owned life insurance: $5.91 million versus the four-analyst average estimate of $5.31 million. Gains on sales of loans, net: $1.74 million compared to the $2.79 million average estimate based on four analysts. Wealth management and trust fees: $17.66 million versus $16.27 million estimated by four analysts on average. View all Key Company Metrics for Valley National here>>> Shares of Valley National have returned -0.6% over the past month versus the Zacks S&P 500 composite's +0.4% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Valley National Bancorp (VLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Valley National (VLY) came out with quarterly earnings of $0.3 per share, missing the Zacks Consensus Estimate of $0.31 per share. This compares to earnings of $0.23 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -3.23%. A quarter ago, it was expected that this holding company for Valley National Bank would post earnings of $0.27 per share when it actually produced earnings of $0.29, delivering a surprise of +7.41%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Valley National, which belongs to the Zacks Banks - Northeast industry, posted revenues of $562.1 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.83%. This compares to year-ago revenues of $496.28 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Valley National shares have added about 24.3% since the beginning of the year versus the S&P 500's gain of 9.6%. While Valley National has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Valley National was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.34 on $570.28 million in revenues for the coming quarter and $1.30 on $2.27 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, The Bancorp (TBBK), is yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This holding company for The Bancorp Bank is expected to post quarterly earnings of $1.36 per share in its upcoming report, which represents a year-over-year change of +7.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. The Bancorp's revenues are expected to be $166.7 million, down 8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Valley National Bancorp (VLY) : Free Stock Analysis Report The Bancorp, Inc. (TBBK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

NEW YORK, July 23, 2026 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ: VLY), the holding company for Valley National Bank, today reported net income for the second quarter 2026 of $170.9 million, or $0.29 per diluted common share, as compared to the first quarter 2026 net income of $163.9 million, or $0.28 per diluted common share, and net income of $133.2 million, or $0.22 per diluted common share, for the second quarter 2025. Excluding all non-core charges, our adjusted net income (a non-GAAP measure) was $172.8 million, or $0.30 per diluted common share, for the second quarter 2026, $168.9 million, or $0.29 per diluted common share, for the first quarter 2026, and $134.4 million, or $0.23 per diluted common share, for the second quarter 2025. See further details below, including a reconciliation of our non-GAAP adjusted net income, in the "Consolidated Financial Highlights" tables. Ira Robbins, CEO, commented, "This quarter's strong results reflect the continued execution of our strategic vision. Despite continued competition across our geographies and business lines, our relationship-led value proposition has resulted in strong non-interest bearing deposit and C&I loan growth." Mr. Robbins continued, "At the same time, we remain focused on operational efficiency and the re-allocation of resources from manual processing to franchise-enhancing customer acquisition areas. We anticipate further financial improvement through the remainder of the year and we look forward to continuing to create long-term value for our shareholders." Key financial highlights for the second quarter 2026: Net Interest Margin and Income: Our net interest margin on a tax equivalent basis of 3.20 percent for the second quarter 2026 increased 3 basis points and 19 basis points from the first quarter 2026 and second quarter 2025, respectively. Net interest income on a tax equivalent basis of $488.4 million for the second quarter 2026 increased $15.6 million and $54.7 million compared to the first quarter 2026 and second quarter 2025, respectively. The increase in net interest income from the first quarter 2026 was mainly driven by an increase in average loans, higher yields on new loan originations and investment securities purchased, as well as one additional day during the second quarter 2026. These tailwinds were partially offset by the cost of carrying excess subordinated notes between the time of our successful issuance of $500 million of new notes in May 2026 and the redemption of $300 million of callable notes in June 2026. See additional details in the "Net Interest Income and Margin" and "Other Borrowings" sections below. Deposits: Total deposit balances increased $1.3 billion to $54.1 billion at June 30, 2026 as compared to $52.9 billion at March 31, 2026. Direct customer deposits increased $1.1 billion during the second quarter 2026 mainly due to inflows from retail CD offerings and growth in our commercial customer deposits. Non-interest bearing deposits increased $298.6 million reflecting continued expansion of relationships with commercial banking customers during the second quarter 2026. See the "Deposits" section below for more details. Loan Portfolio: Total loans increased $1.6 billion, or 12.9 percent on an annualized basis, to $52.5 billion at June 30, 2026 from March 31, 2026 mostly due to increases of $857.2 million and $638.9 million in commercial and industrial (C&I) loans and total commercial real estate (CRE) loans, respectively. Loan originations from a range of relationship-driven small to midsize clients continued to drive the growth in C&I loans during the second quarter 2026, while new owner occupied and select multifamily loan originations were the primary contributors to the growth in the CRE loan portfolio at June 30, 2026. Our CRE loan concentration ratio (defined as total CRE loans held for investment and held for sale, excluding owner occupied loans, as a percentage of total risk-based capital) continued to decline to approximately 317 percent at June 30, 2026 from 329 percent at March 31, 2026 largely due to organic capital accretion and a $200 million increase in (Tier 2) total risk-based capital during the quarter. See the "Loans" section below for more details. Allowance and Provision for Credit Losses for Loans: The allowance for credit losses for loans totaled $606.9 million and $599.8 million at June 30, 2026 and March 31, 2026, respectively, representing 1.16 percent and 1.18 percent of total loans at each respective date. During the second quarter 2026, we recorded a provision for credit losses for loans of $29.2 million as compared to $21.2 million and $37.8 million for the first quarter 2026 and second quarter 2025, respectively. See the "Credit Quality" section below for more details. Credit Quality: Net loan charge-offs totaled $22.0 million for the second quarter 2026 as compared to $17.5 million and $37.8 million for the first quarter 2026 and second quarter 2025, respectively. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $52.3 million to $180.2 million, or 0.34 percent of total loans, at June 30, 2026 as compared to $127.9 million, or 0.25 percent of total loans, at March 31, 2026. The increase was mainly due to a few larger CRE loans within the 30 to 59 days past due delinquency category. Non-accrual loans totaled $462.6 million, or 0.88 percent of total loans, at June 30, 2026 as compared to $432.6 million, or 0.85 percent of total loans, at March 31, 2026. See the "Credit Quality" section below for more details. Non-Interest Income: Non-interest income increased $4.9 million to $73.7 million for the second quarter 2026 as compared to the first quarter 2026 mainly driven by $2.6 million and $1.6 million increases in capital markets, and wealth management and trust fees, respectively. The fee increases were largely due to increased transaction volumes within loan participations and syndications and tax credit advisory services during the second quarter 2026. Non-Interest Expense: Non-interest expense increased $1.2 million to $311.1 million for the second quarter 2026 as compared to the first quarter 2026. The increase was largely driven by a $4.4 million increase in professional and legal fees mostly due to higher third-party managed services and consulting fees related to our operational transformation efforts, as well as incremental increases in technology and FDIC assessment expenses. These items were partially offset by a $5.3 million decrease in salary and employee benefits expense during the second quarter 2026 largely resulting from our continued focus on resource optimization, as well as the normal seasonal decline in payroll taxes from the first quarter 2026. Efficiency Ratio: Our efficiency ratio was 52.11 percent for the second quarter 2026 as compared to 53.10 percent and 55.20 percent for the first quarter 2026 and second quarter 2025, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures. Performance Ratios: Annualized return on average assets (ROA), shareholders’ equity (ROE) and tangible common shareholders' equity (ROTCE) were 1.04 percent, 8.65 percent and 11.91 percent for the second quarter 2026, respectively. Annualized ROA, ROE, and ROTCE, adjusted for non-core income and charges, were 1.05 percent, 8.75 percent and 12.05 percent for the second quarter 2026, respectively. See the "Consolidated Financial Highlights" tables below for additional information regarding our non-GAAP measures. Net Interest Income and Margin Net interest income on a tax equivalent basis of $488.4 million for the second quarter 2026 increased $15.6 million and $54.7 million compared to the first quarter 2026 and the second quarter 2025, respectively. Interest income on a tax equivalent basis increased $26.7 million to $830.7 million for the second quarter 2026 as compared to the first quarter 2026. The increase was mostly due to (i) increased average loan balances largely driven by growth in C&I and owner occupied CRE loans during the first half of 2026, (ii) additional interest income from purchases of higher-yielding taxable investments and (iii) one additional day in the second quarter 2026. Total interest expense increased $11.2 million to $342.4 million for the second quarter 2026 as compared to the first quarter 2026. The increase was mainly the result of (i) higher average time deposits and short-term borrowings balances during the second quarter 2026, (ii) the higher cost of certain non-maturity deposit products and short-term borrowings, (iii) the cost of carrying excess subordinated debt for a portion of the quarter, as well as (iv) the aforementioned increase in day count as compared to the first quarter 2026. See the "Deposits" and "Other Borrowings" sections below for more details. Net interest margin on a tax equivalent basis of 3.20 percent for the second quarter 2026 increased 3 basis points from 3.17 percent for the first quarter 2026 and 19 basis points from 3.01 percent for the second quarter 2025. The yield on average interest earning assets increased by 5 basis points to 5.44 percent on a linked quarter basis largely due to higher yields on new loan originations and investment securities purchased during the second quarter 2026. The overall cost of average interest bearing liabilities increased by 4 basis points to 3.10 percent for the second quarter 2026 as compared to the first quarter 2026 largely due to the higher cost of non-maturity deposits and short-term borrowings, as well as the cost of carrying excess subordinated debt for a portion of the quarter. Our cost of total average deposits was 2.28 percent for the second quarter 2026 as compared to 2.27 percent and 2.67 percent for the first quarter 2026 and second quarter 2025, respectively. Loans, Deposits and Other Borrowings Loans. Total loans increased $1.6 billion, or 12.9 percent on an annualized basis, to $52.5 billion at June 30, 2026 from March 31, 2026. C&I loans increased by $857.2 million, or 30.9 percent on an annualized basis, to $12.0 billion at June 30, 2026 from March 31, 2026 largely driven by new originations from a range of relationship-driven small to midsize clients as a result of our continued focus on expansion of new loan production within this category. Total CRE (including construction) loans increased $638.9 million to $30.3 billion at June 30, 2026 from March 31, 2026 mostly due to solid customer demand and loan originations largely within our healthcare vertical of the owner occupied loan category. Non-owner occupied loans decreased $357.2 million from March 31, 2026 mainly due to our continued targeted runoff of transactional/non-relationship loans, which outpaced limited new originations in this category during the second quarter 2026. Residential mortgage loans increased $113.9 million from March 31, 2026 mainly due to continued retention of most new loan origination activity and modest levels of prepayments. Total consumer loans increased $28.5 million from March 31, 2026 primarily due to the combined growth in home equity loans and other collateralized personal lines of credit, partially offset by a $48.0 million decrease in automobile loans as repayments outpaced consumer demand. Deposits. Actual ending balances for deposits increased $1.3 billion to $54.1 billion at June 30, 2026 from March 31, 2026 mainly due to increases of $1.5 billion and $298.6 million in time and non-interest bearing deposits, respectively, partially offset by a $506.1 million decline in the savings, NOW and money market deposit category. The increase in time deposits was largely driven by our targeted retail CD offerings and higher indirect customer CD balances. The increase in non-interest bearing deposits was mainly due to continued deposit inflows from commercial banking customers during the second quarter 2026. The decrease in savings, NOW and money market deposits from March 31, 2026 was mainly driven by lower brokered and governmental account balances at June 30, 2026. Total indirect customer deposits (consisting of both brokered time and money market deposits) totaled $5.3 billion and $5.1 billion at June 30, 2026 and March 31, 2026, respectively. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 53 percent and 24 percent of total deposits at June 30, 2026 as compared to 23 percent, 55 percent and 22 percent at March 31, 2026. Other Borrowings. Short-term borrowings increased $369.6 million to $433.5 million at June 30, 2026 from March 31, 2026 due to $375 million of short-term FHLB advances outstanding at June 30, 2026, partially offset by a modest decline in securities sold under repurchase agreements. Long-term borrowings totaled $2.6 billion at June 30, 2026 and increased $46.3 million as compared to March 31, 2026. The increase was mainly attributable to $500 million of 6.219 percent fixed-to-floating rate subordinated notes issued in May 2026 due June 1, 2036, partially offset by the full early redemption of our $300 million of 3.00 percent fixed-to-floating rate subordinated notes originally due June 15, 2031, as well as normal repayments of maturing FHLB advances. No gain or loss was recognized on the early redemption of the subordinated notes during the second quarter 2026. Credit Quality Non-Performing Assets (NPAs). NPAs, consisting of non-accrual loans, other real estate owned (OREO) and other repossessed assets, increased $28.2 million to $467.8 million at June 30, 2026 from March 31, 2026. Non-accrual loans increased $30.0 million to $462.6 million, or 0.88 percent of total loans, at June 30, 2026 as compared to $432.6 million, or 0.85 percent of total loans, at March 31, 2026. The increase was mainly attributable to three CRE loans that migrated from the 30 to 59 days past due delinquency category at March 31, 2026 to non-accrual loans during the second quarter of 2026. These three collateral dependent non-accrual CRE loans totaled $49.6 million, net of partial charge-offs of $1.3 million during the second quarter 2026, and had no related allocated reserves within our allowance for credit losses for loans at June 30, 2026. Accruing Past Due Loans. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $52.3 million to $180.2 million, or 0.34 percent of total loans, at June 30, 2026 as compared to $127.9 million, or 0.25 percent of total loans, at March 31, 2026. Loans 30 to 59 days past due increased $42.6 million to $151.0 million at June 30, 2026 as compared to March 31, 2026 mainly due to a few larger CRE loans, partially offset by the migration of the aforementioned CRE loans to non-accrual loans during the second quarter 2026. Loans 60 to 89 days past due increased $4.3 million to $13.1 million at June 30, 2026 as compared to March 31, 2026 mainly due to moderate increases in the residential mortgage and C&I loan categories. Loans 90 days or more past due and still accruing interest increased $5.4 million to $16.1 million at June 30, 2026 as compared to March 31, 2026 primarily due to the second quarter 2026 migration of a $5.5 million CRE loan previously reported in the 30 to 59 days past due delinquency category at March 31, 2026. All loans 90 days or more past due and still accruing interest are well-secured and in the process of collection. Allowance for Credit Losses for Loans and Unfunded Commitments. The following table summarizes the allocation of the allowance for credit losses to loan categories and the allocation as a percentage of each loan category at June 30, 2026, March 31, 2026, and June 30, 2025: Our loan portfolio, totaling $52.5 billion at June 30, 2026, had net loan charge-offs totaling $22.0 million for the second quarter 2026 as compared to $17.5 million and $37.8 million for the first quarter 2026 and the second quarter 2025, respectively. Gross loan charge-offs totaled $27.6 million for the second quarter 2026 and were largely due to partial charge-offs of non-performing CRE and C&I loans. The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.16 percent at June 30, 2026, 1.18 percent at March 31, 2026, and 1.20 percent at June 30, 2025. For the second quarter 2026, the provision for credit losses for loans totaled $29.2 million as compared to $21.2 million and $37.8 million for the first quarter 2026 and second quarter 2025, respectively. The second quarter 2026 provision was mainly impacted by (i) higher specific reserves associated with collateral dependent loans, (ii) an increase in the economic forecast component of our reserve and (iii) strong commercial loan growth, partially offset by a decline in quantitative reserves largely within certain CRE loan categories at June 30, 2026. Capital Adequacy Valley's total risk-based capital, Tier 1 capital, common equity tier 1 capital, and Tier 1 leverage capital ratios were 13.77 percent, 11.37 percent, 10.71 percent and 9.49 percent, respectively, at June 30, 2026 as compared to 13.66 percent, 11.60 percent, 10.91 percent and 9.56 percent, respectively, at March 31, 2026. During the second quarter 2026, we repurchased 1.5 million shares of our common stock at an average price of $13.40 under our current stock repurchase plan. Investor Conference Call Valley’s CEO, Ira Robbins, will host a conference call on Thursday, July 23, 2026 at 8:30 AM (ET) to discuss Valley’s second quarter 2026 earnings and related matters. Interested parties should pre-register using this link: https://register-conf.media-server.com/register to receive the dial-in number and a personal PIN, which are required to access the conference call. The teleconference will also be webcast live: https://edge.media-server.com/ and archived on Valley’s website through Monday, August 24, 2026. Investor presentation materials will be made available prior to the conference call at www.valley.com. About Valley As the principal subsidiary of Valley National Bancorp (NASDAQ: VLY), Valley National Bank is a regional financial institution with over $66 billion in assets. Founded in 1927, Valley has more than 220 branch locations and commercial offices nationwide and serves clients across New Jersey, New York, Florida, Alabama, California, Illinois, Pennsylvania and Arizona. Valley delivers a full range of consumer, commercial, and wealth management solutions designed to support everything from homeownership and business growth to long-term financial planning. Big enough to support complex financial needs and small enough to stay deeply connected, Valley is grounded in a relationship-led approach focused on understanding people first. That same relationship-led approach guides Valley’s commitment to community investment and responsible corporate citizenship. To learn more, visit www.valley.com or call the Valley Customer Care Center at 800-522-4100. Forward-Looking Statements The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by forward-looking terminology such as “intend,” “should,” “expect,” “believe,” “position,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “would,” “could,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated in these forward-looking statements include, but are not limited to: the impact of market interest rates and monetary and fiscal policies of the U.S. federal government and its agencies in connection with prolonged inflationary pressures, which could have a material adverse effect on our clients, our business, our employees, and our ability to provide services to our customers; the impact of unfavorable macroeconomic conditions or downturns, including instability or volatility in financial markets resulting from the impact of tariffs/import fees and other trade policies and practices, any retaliatory actions, changes in energy commodity prices, related market uncertainty, or other factors; U.S. government debt default or rating downgrade; unanticipated loan delinquencies; loss of collateral; decreased service revenues; increased business disruptions or failures; reductions in employment; and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as new legislation and policy changes under the current U.S. presidential administration, any shutdown of the U.S federal government, geopolitical instabilities or events, including ongoing conflicts in the Middle East, natural and other disasters, including severe weather events and other climate-related risks, health emergencies, acts of terrorism, or other external events; the impact of any potential instability within the U.S. financial sector or future bank failures, including the possibility of a run on deposits by a coordinated deposit base, and the impact of any actual or perceived concerns regarding the soundness, or creditworthiness, of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including FDIC insurance assessments, or adverse impact on our stock price, deposits or our ability to borrow or raise capital; the impact of negative public opinion regarding Valley or banks in general that damages our reputation and adversely impacts business and revenues; changes in the statutes, regulations, policies, enforcement priorities, or composition of the federal bank regulatory agencies; the loss of or decrease in lower-cost funding sources within our deposit base; investigations, damage verdicts, settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent, trademark or other intellectual property infringement, misappropriation or other violation, employment-related claims, and other matters; a prolonged downturn and contraction in the economy, as well as any decline in commercial real estate values collateralizing a significant portion of our loan portfolio; higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations, and case law; the inability to grow customer deposits to keep pace with the level of loan growth; a material change in our allowance for credit losses due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios; the need to supplement debt or equity capital to maintain or exceed internal capital thresholds; changes in our business, strategy, market conditions or other factors that may negatively impact the estimated fair value of our goodwill and other intangible assets and result in future impairment charges; greater than expected technology-related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations; increased competitive challenges and competitive pressure on pricing of our products and services; our ability to stay current with rapid technological changes and evolving legal and regulatory requirements in the financial services industry, including developments relating to the use of artificial intelligence, blockchain, and related regulatory developments, as well as our ability to effectively assess and monitor the effects of, and risks associated with, the implementation and use of such technology; cyberattacks, ransomware attacks, computer viruses, malware or other cybersecurity incidents that may breach the security of our or our third-party service providers’ websites or other systems or networks to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, disable or degrade service, or sabotage our systems or networks, and the increasing sophistication of such attacks and use of targeted tactics against the financial services industry; any disruption of our systems and network, or those of our third-party service providers, resulting from events that are wholly or partially beyond our control, including, for example, electrical, telecommunications, or other major service outages, or actions by employees, which may give rise to financial loss or liability; results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank, the Consumer Financial Protection Bureau and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; application of heightened regulatory standards for certain large insured national banks, and the expenses we will incur to develop policies, programs, and systems that comply with the enhanced standards applicable to us; our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements, or a decision to increase capital by retaining more earnings; unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather and other climate-related risks, pandemics or other public health crises, acts of terrorism or other external events; our ability to successfully execute our business plan and strategic initiatives; and unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, risk mitigation strategies, changes in regulatory lending guidance or other factors. A detailed discussion of factors that could affect our results is included in our SEC filings, including Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. -Tables to Follow- VALLEY NATIONAL BANCORPCONSOLIDATED FINANCIAL HIGHLIGHTS SELECTED FINANCIAL DATA NOTES TO SELECTED FINANCIAL DATA _____________________ (1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.(2) Loans are stated net of unearned income and include non-accrual loans.(3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.(4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition.(5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.(6) Net interest income as a percentage of total average interest earning assets.

This article first appeared on GuruFocus. Net Income: Approximately $171 million or $0.29 per diluted share. Adjusted Net Income: Approximately $173 million or $0.30 per diluted share. Adjusted Pre-Provision Net Revenue: Increased 6% from the prior quarter, reaching 1.64% of average assets. Noninterest-Bearing Deposit Growth: Nearly $300 million during the quarter. Loan Growth: $1.6 billion increase, around 13% on an annualized basis. Net Interest Income: Increased to $488 million, up approximately $16 million from the first quarter. Net Interest Margin: Expanded 3 basis points linked quarter to 3.2%. Noninterest Income: Increased $4.9 million to $73.7 million, contributing over 13% of total revenue. Efficiency Ratio: Improved to 52.1% from 53.1% in the first quarter. Net Charge-Offs: Totaled $22 million or 17 basis points of average loans. Provision for Credit Losses: $29 million compared to $21 million in the first quarter. Allowance for Credit Losses: Declined to 1.16% of total loans from 1.18% at March 31. Tangible Book Value: Increased nearly 8% on an annualized basis. CET1 Ratio: 10.7%, within the previously stated target range. Warning! GuruFocus has detected 7 Warning Signs with VLY. Is VLY fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Valley National Bancorp (NASDAQ:VLY) reported strong customer deposit growth, including nearly $300 million in noninterest-bearing deposits. The company achieved diverse loan growth, particularly in C&I and owner-occupied commercial real estate, contributing to portfolio diversification. Fee income increased, driven by sustainable businesses such as capital markets and tax credit advisory, supporting revenue growth. Valley National Bancorp (NASDAQ:VLY) is leveraging technology and AI to improve efficiency, with a focus on productivity, risk management, and client experience. The company maintained a strong financial outlook for 2026, expecting continued earnings growth and profitability improvement. Deposit competition is intensifying across the industry, posing challenges for Valley National Bancorp (NASDAQ:VLY) in maintaining its growth momentum. There was a modest uptick in nonaccrual and past due loans during the quarter, indicating potential credit quality concerns. The provision for credit losses increased due to strong loan growth, particularly within the C&I category. The company's efficiency ratio, while improved, still requires further reduction to meet long-term targets. Valley National Bancorp (NASDAQ:VLY) faces challenges in balancing organic growth, capital returns, and maintaining regulatory capital ratios amidst exceptional loan growth. Q: Can you provide more detail on the strong fee income this quarter and expectations for its sustainability? A: Travis Lan, CFO, noted that while interest rate swap income was slightly elevated due to strong commercial real estate originations, other areas like deposit service charges, loan syndications, tax credit advisory, and insurance showed consistent growth. He expects continued growth opportunities in these areas. Q: What trends are driving the decline in criticized and classified assets, particularly in CRE? A: Mark Saeger, Chief Credit Officer, explained that the market remains robust across asset classes, including office spaces. Improvements in lease-up and strong sponsor support have led to upgrades and payoffs, contributing to the decline in criticized assets. Q: How is AI being utilized in underwriting, and what are the potential benefits? A: Mark Saeger mentioned that while AI is not yet fully integrated into core analysis, traditional financial statement spreading and rent roll population are being automated. Travis Lan added that AI helps automate manual work but does not replace oversight and governance, enhancing productivity without compromising quality. Q: How is Valley National Bancorp balancing loan growth with funding pressures, and what is the outlook for deposit costs? A: Travis Lan stated that despite increased deposit competition, especially on the consumer side, Valley National has been successful in growing core deposits at competitive rates. The bank expects a slight increase in deposit costs but anticipates margin improvement due to repricing benefits from brokered CDs and fixed-rate loans. Q: What is the expected impact of AI on efficiency ratios and return on equity (ROE)? A: Ira Robbins, CEO, highlighted that AI could potentially lower efficiency ratios by 500 basis points, with 65% of the benefit from expenses and 35% from revenue. The bank is already seeing a return on investment from AI, contributing to its goal of achieving a mid-teens ROE by 2028. For the complete transcript of the earnings call, please refer to the full earnings call transcript.