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VALLEY NATIONAL BANCORP (VLY)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered the strongest profitability since 2022: diluted EPS of $0.28 vs $0.22 in Q2 and $0.18 in Q3’24, with NIM up to 3.05% and efficiency ratio down to 53.37% as credit costs fell sharply; management flagged continued NIM expansion into Q4 and 2026 .
  • EPS beat S&P Global consensus ($0.28 vs $0.257*) while revenue was mixed depending on definition: company “total revenue” was $511.1M vs $510.8M* consensus, but S&P’s “revenue” actual registered $483.8M*, implying a miss on that basis; we explain the definitional gap below. Bold catalysts: margin expansion, lower provisions/charge-offs, core deposit growth, and capital deployment (buybacks) .
  • Core funding momentum continued: core deposits +$1B in Q3 enabling paydown of ~$700M brokered; brokered/indirect deposits fell to 11% of total (lowest since Q3’22), with spot deposit costs declining through quarter-end and into Q4 .
  • Strategic execution: balance sheet remix (CRE concentration down to ~337%), hiring of new Commercial and Consumer Banking leaders, and technology partnerships (Infinant) support fee growth, treasury management wins, and upmarket C&I push into 2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Margin and NII momentum: NIM rose to 3.05% (sixth straight quarterly improvement), and management expects NII to grow another ~3% sequentially in Q4; “on track to achieve our above 3.1% NIM target for Q4 2025” .
    • Credit costs improved: provision fell to $19.2M (from $37.8M in Q2, $75.0M in Q3’24) and net charge-offs dropped to $14.6M; CFO anticipates general stability in Q4 with normalized charge-offs (~15 bps) in 2026 .
    • Core funding remix: core deposits +$1B in Q3 enabled payoff of ~$700M brokered; brokered share to 11% and spot deposit costs declined into Q4, positioning for further margin tailwinds .

  • What Went Wrong

    • Non-accruals increased: non-accrual loans rose to $421.5M (0.86% of loans) due to three CRE/construction credits; management expects resolution on a large land loan and noted ~50% of non-accruals are paying .
    • Commercial loan balances contracted: total loans decreased $118.6M QoQ with targeted runoff in transactional CRE and commodities C&I; pipeline rebuilt but growth weighted to later periods .
    • Professional fees elevated: non-interest expense included higher consulting/legal costs tied to operating model enhancements; management expects professional fees to remain modestly elevated through at least 1H26 .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total revenue ($USD Thousands)471,169 478,399 495,012 511,111
Net interest income – FTE ($USD Thousands)411,812 421,378 433,675 447,473
Diluted EPS ($)0.18 0.18 0.22 0.28
Net interest margin – FTE (%)2.86 2.96 3.01 3.05
Efficiency ratio (%)56.13 55.87 55.20 53.37
Annualized ROA (%)0.63 0.69 0.86 1.04
Provision for credit losses ($USD Thousands)75,024 62,661 37,799 19,171

Estimates vs. Actuals (Q3 2025)

  • EPS (diluted): Consensus $0.25698* vs Actual $0.28 → bold beat (+$0.02302) .
  • Revenue (S&P definition): Consensus $510.83M* vs S&P Actual $483.79M* → bold miss (-$27.04M). Company-reported “Total revenue” was $511.11M, which is slightly above consensus but differs methodologically from S&P’s revenue definition .
    Values retrieved from S&P Global.*

KPIs and Balance/Credit Trends

KPIQ1 2025Q2 2025Q3 2025
Total deposits ($000s)49,965,844 50,725,284 51,175,758
Total loans ($000s)48,657,128 49,391,420 49,272,823
Non-interest-bearing deposits ($000s)11,628,578 11,746,770 11,659,725
Indirect/brokered deposits ($000s)~6,300,000 ~6,500,000 ~5,800,000
Net charge-offs ($000s)41,949 37,829 14,587
Non-accrual loans ($000s)346,451 354,359 421,489
Non-accrual loans as % of loans (%)0.71 0.72 0.86
ACL for loans as % of loans (%)1.22 1.20 1.21
CET1 capital ratio (%)10.80 10.85 11.00
NIM – FTE (%)2.96 3.01 3.05

Non-GAAP note: Adjusted diluted EPS was $0.28 in Q3 (same as GAAP), reflecting minor adjustments (e.g., severance, litigation reserve, FDIC special assessment credit) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NIM (FTE)Q4 2025“Target above 3.1%” (company target) On track to be above 3.1% in Q4 2025 Maintained/affirmed
Net interest incomeQ4 2025N/AExpect ~+3% sequential growth Introduced/updated
Fee incomeQ4 2025N/A“Generally stable” within last two quarters’ range Introduced
Non-interest expenseQ4 2025N/AFlat to marginally higher vs Q3; professional fees modestly elevated into 2026 (at least 1H) Introduced
Deposit costsQ4 2025 and into 2026N/ABack-book repricing to drive down costs; spot down ~6 bps in Q3 and ~7 bps QTD since 9/30 Introduced
Loan growthFY 2026N/AMid-single-digit (4–6%) Introduced
CRE concentrationThrough 2026/27N/AFrom ~337% now toward ~300% by end-2026/early-2027 De-risking trajectory
Loan-to-deposit ratioMulti-yearN/AFrom 96.4% toward ~90% over time De-risking trajectory
Capital returnMulti-yearN/ABuyback to be increasing source of deployment; repurchased 1.3M shares in Q3 at $9.38 Introduced
DividendQ4 declared$0.11 (prior quarter) $0.11 common declared (unchanged) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Funding remix & deposit costsQ1: Core deposits up; indirect brokered down; cost of deposits fell; focus on online and commercial inflows . Q2: Continued core growth; brokered used tactically; cost of deposits ~2.67% .Core deposits +$1B; brokered ~11% (lowest since Q3’22); spot costs down into Q4 and expected to continue falling into 2026 .Improving
NIM/NII trajectoryQ1: NIM rose to 2.96% ; Q2: NIM to 3.01%; NII up 3% QoQ .NIM to 3.05%; on track >3.1% Q4; NII seen +3% QoQ in Q4; 2026 normalized NIM ~3.20%–3.40% .Improving
Credit costs & asset qualityQ1: Provision down QoQ; non-accruals/past dues improved . Q2: Provision lower; past dues elevated by idiosyncratic CRE but resolved in July .Provision/charge-offs down; non-accruals up on a few CRE/construction loans; 50% of non-accruals are paying; expect stability .Stabilizing
CRE concentration & growth mixQ1/Q2: CRE concentration reduced; tilt to C&I and auto .CRE concentration ~337%; target ~300% by end-2026/early-2027; growth to favor C&I and diversified geographies .De-risking
Talent & upmarket C&IN/A (Q1/Q2 emphasized strategy execution) .New Commercial and Consumer Banking leaders; building upmarket C&I banker teams and SMB bankers; deposit-led growth focus .Investing for growth
Technology/partner bankingN/A in Q1/Q2 results.Infinant partnership to scale embedded finance/partner banking capabilities .Modernizing

Management Commentary

  • CEO framing: “This quarter’s results reflect Valley’s strong momentum… profitability improvement is catching up to the balance sheet strengthening that has occurred since the beginning of 2024.”
  • Strategy and positioning: “Our unique ability to combine the robust suite of… a large bank with the high-touch service… of a community bank position us extremely well to capitalize on the significant opportunities… in the rest of 2025 and into 2026 and beyond.”
  • Execution highlights (CEO): Ongoing core deposit growth, fee momentum (treasury/tax credit advisory), and reduced credit costs underpin ROA > 1% in Q3 .
  • CFO outlook: “We are on track to achieve our above 3.1% NIM target for the fourth quarter of 2025” and “expect the net interest income will grow another 3% sequentially in the fourth quarter.”
  • Credit risk context (Chief Credit/Management): Large land loan migration drove non-accrual increase; value adequate; ~50% of non-accruals are paying; criticized assets improved QoQ .

Q&A Highlights

  • Deposit costs and competition: Spot deposit costs fell ~6 bps during Q3 and ~7 bps since 9/30; back-book repricing expected to lower costs further into 2026, despite competitive environment for new relationships .
  • Capital deployment: CET1 ~11%; buyback historically to offset grants, but now “an increasing source of capital deployment”; Q3 buybacks: 1.3M shares at ~$9.38 .
  • CRE concentration path: ~337% now; target ~300% by end-2026/early-2027 via capital build and diversified growth (C&I) .
  • Growth pipeline and yields: Pipeline ~$3.3B split ~50/50 CRE/C&I; new origination yields ~6.8% (slightly lower with rate moves); syndication platform to support upmarket relationship strategy .
  • Operating expenses: Professional fees elevated due to consulting/legal tied to efficiency/operating model; expected to remain at current level into at least 1H26; otherwise expenses flat to marginally higher in Q4 .

Estimates Context

  • EPS: $0.28 vs S&P Global consensus $0.25698* → bold beat of ~$0.02. Values retrieved from S&P Global.*
  • Revenue: S&P “Revenue” consensus $510.83M* vs S&P Actual $483.79M* → miss by ~$27M; however, company-reported “Total revenue” (NII + non-interest income) was $511.11M, modestly above the consensus level but based on a different definition. Values retrieved from S&P Global.*

Given the company’s definition and disclosure practices, we anchor to EPS beats for trading implications and note the methodological discrepancy on revenue when comparing to consensus.

Key Takeaways for Investors

  • Positive operating leverage inflects: NIM expansion, lower provisions/charge-offs, and stable-to-lower deposit costs support continued EPS momentum into Q4 and 2026 .
  • Core funding and mix shift are durable tailwinds: brokered deposits down to ~11%, spot costs falling, treasury management fee growth supporting deposit-led franchise gains .
  • Credit normalization underway: provision and NCOs stepped down; non-accruals elevated on specific CRE/construction items but well-collateralized with expected resolutions .
  • Strategic growth capacity: strengthened capital (CET1 11.0%), active buybacks, and hiring of experienced bankers (upmarket C&I/SMB) provide levers for balanced growth and returns .
  • 2026 framework looks constructive: mid-single-digit loan growth (4–6%), normalized NIM 3.20–3.40%, stable fee income growth, low single-digit expense growth, normalized credit costs (~15 bps) .
  • De-risking path intact: CRE concentration trending from ~337% toward ~300% by end-2026/early-2027; loan-to-deposit ratio targeted from ~96% toward ~90% over time .
  • Watch list into Q4: execution on NII +3% QoQ, deposit cost declines, professional fee plateau, resolution of identified non-accruals, and continued treasury/fee momentum .

Sources & Document Coverage

  • Q3 2025 earnings press release (full): Valley National Bancorp Announces Third Quarter 2025 Results –.
  • Q3 2025 earnings call transcript (full): Q3 2025 –.
  • Q2 2025 earnings press release: July 24, 2025 –.
  • Q1 2025 earnings press release: April 24, 2025 –.
  • Other relevant Q3 press releases: Preferred/common dividend declaration (Oct 21, 2025) ; Infinant partnership (Oct 27, 2025) .
  • Note: An 8‑K 2.02 filing was not separately listed in the document index for this period; the company’s Q3 2025 results press release served as the primary source for earnings details .

Values retrieved from S&P Global.*