Valley National Bancorp: EPS Surpasses Expectations in 2024

Valley National Bancorp (NASDAQ: VLY) reported its full-year 2024 earnings on March 5, 2025, with earnings per share (EPS) surpassing analyst estimates by 9.1%. The company's revenue was in line with analyst estimates, totaling $1.52 billion. This article will delve into the key financial indicators, revenue drivers, and strategic initiatives that contributed to Valley National Bancorp's earnings performance in 2024.



Key Financial Indicators:
Valley National Bancorp's earnings in 2024 were driven by several key financial indicators:

1. Net Interest Margin (NIM): Valley National Bancorp's NIM in 2024 was 2.85%, down from 2.96% in 2023. The decrease in NIM was primarily due to lower interest income from commercial real estate (CRE) loan sales. However, the company's strategic initiatives, such as optimizing its funding base and managing interest rate environments, contributed to higher yields from securities and lower deposit costs.
2. Cost-to-Income Ratio: Valley National Bancorp's cost-to-income ratio in 2024 was 58.0%, up from 56.6% in 2023. This increase reflects higher expenses related to strategic initiatives and technology investments. Despite the increase, the company's efficiency ratio improved to 57.21% from 60.70% in the same quarter last year, indicating better cost management.
3. Non-Performing Loans (NPLs): Valley National Bancorp's NPLs in 2024 were 0.74%, up from 0.58% in 2023. The increase in NPLs reflects higher provisions for credit losses, particularly in the commercial real estate sector. However, the company's allowance for credit losses increased to 1.17% of total loans, reflecting higher reserves for commercial real estate loans and a conservative stance on potential credit deterioration.

Revenue Drivers:
The primary drivers behind Valley National Bancorp's revenue growth in 2024 were the Commercial Banking segment and the increase in net interest income. The Commercial Banking segment contributed a total revenue of US$1.18 billion, which was 78% of the company's total revenue. This segment's growth was driven by the company's strategic initiatives to strengthen its financial position, such as the expansion of its nationwide footprint and the launch of new credit management systems. Additionally, the increase in net interest income was primarily driven by the company's ability to manage interest rate environments and optimize its funding base, leading to higher yields from securities and lower deposit costs.

Strategic Initiatives:
Valley National Bancorp's earnings performance in 2024 was also driven by its strategic initiatives to improve its financial position and regulatory positioning. The company executed significant CRE loan sales, reducing its CRE concentration ratio from 421% to 362% of total risk-based capital. This strategic move resulted in some losses on sales but improved the company's regulatory positioning. Additionally, the company's focus on core deposit growth and lower-cost funding contributed to margin expansion and improved profitability.



In conclusion, Valley National Bancorp's earnings performance in 2024 was driven by a combination of strategic initiatives, effective cost management, and improved net interest income. Despite challenges in the commercial real estate sector and higher provisions for credit losses, the company's EPS surpassed analyst estimates by 9.1%. As Valley National Bancorp continues to execute its strategic plans and adapt to the evolving financial landscape, investors should monitor the company's progress and assess its potential for future growth.