Regional banking company Valley National Bancorp (NASDAQ: VLY) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 8.5% year on year to $511.1 million. Its non-GAAP profit of $0.28 per share was 9% above analysts’ consensus estimates.

Is now the time to buy VLY? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Valley National Bank’s third quarter results were well received by the market, as management emphasized robust growth in core customer deposits and continued progress in noninterest income streams. CEO Ira Robbins attributed the quarter’s momentum to disciplined expense control, improved credit costs, and strategic investments in technology and talent, especially within commercial and specialty banking. Robbins highlighted, “ongoing growth in core deposits and funding transformation” as key drivers, with indirect deposits falling to their lowest percentage since 2022, reflecting a more stable funding base.

Looking forward, Valley National Bank’s management is focused on leveraging its strengthened balance sheet and new leadership in commercial and consumer banking to accelerate growth in loans and deposits. President of Commercial Banking Gino Martocci outlined expansion into higher-value C&I lending and business banking, while President of Consumer Banking Patrick Smith identified small business and retail deposit growth as core opportunities. CFO Travis Lan noted, “We’re penciling out mid-single-digit loan growth expectation for 2026,” emphasizing ongoing investments in revenue-generating talent and positive operating leverage as central to Valley’s outlook.

Key Insights from Management’s Remarks

Management pointed to several factors behind the bank’s operating momentum, including targeted deposit initiatives, strengthened credit performance, and the impact of new leadership hires.

• Core deposit growth focus: Valley National Bank added nearly 110,000 new deposit accounts over the past year, driving almost 10% core deposit growth and reducing reliance on higher-cost brokered deposits. This was achieved through targeted product, technology, and talent investments, especially in specialty banking lines.

• Expense discipline and reinvestment: The bank undertook an efficiency exercise, reducing headcount by 8.5% since 2023 and reallocating resources to front-office roles. This allowed for flat or marginally higher expenses, even as investments in hiring continued, supporting positive operating leverage.

• Noninterest income momentum: Noninterest income, excluding volatile gains on loan sales, has grown at a 15% annual rate since 2017—three times faster than similar-sized peers. Treasury management and tax credit advisory initiatives contributed $3 million of incremental revenue in the quarter, with upgraded technology platforms driving growth in deposit service charges.

• Credit performance stability: Net charge-offs and provisions declined significantly this quarter, with management attributing this to differentiated underwriting and proactive credit management. Commercial real estate (CRE) loss rates remained well below peers and stress-test projections, supporting confidence in asset quality.

• Leadership transitions: The appointments of Gino Martocci as President of Commercial Banking and Patrick Smith as President of Consumer Banking brought experienced leadership to Valley. Both are actively hiring and restructuring teams, with a particular focus on upmarket C&I lending, business banking, and expanding the bank’s presence in Florida and other growth markets.

Drivers of Future Performance

Valley National Bank’s outlook centers on expanding core deposits, loan growth in targeted segments, and continued margin improvement driven by strategic investments and talent acquisition.

• Expansion in commercial and retail banking: Management is prioritizing organic growth in small business, upmarket C&I, and business banking, particularly in Florida and the Northeast. Newly hired bankers are expected to drive both loan and deposit growth, with a focus on higher-yielding segments and broadening the customer base.

• Margin and efficiency improvements: The bank anticipates further net interest margin (NIM) expansion into 2026, supported by fixed asset repricing and a shift toward lower-cost core deposits. Operating expenses are projected to grow at a low single-digit rate, with continued reinvestment in revenue-generating talent offset by efficiency gains in back-office operations.

• Credit and capital management: Management expects stable credit costs and a gradual decline in CRE concentration, with capital deployment increasingly favoring share repurchases. The target remains a 15% return on tangible common equity by late 2027 or early 2028, with buybacks and organic earnings growth as key levers.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the impact of new hires and leadership on commercial and consumer banking growth, (2) progress in expanding core deposit and loan pipelines, especially in targeted geographies like Florida, and (3) the bank’s ability to enhance net interest margins while maintaining credit quality. Execution on talent-driven growth and efficiency initiatives will be key signposts for Valley’s strategy.

Valley National Bank currently trades at $11.17, up from $10.13 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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