Earnings call transcript: Valley National Bancorp Q1 2025 misses EPS forecast

Valley National Bancorp reported its Q1 2025 earnings, revealing a slight miss on its earnings per share (EPS) forecast. The company reported an EPS of $0.18, falling short of the $0.19 forecast. Revenue came in at $478.4 million, also below the expected $482.3 million. InvestingPro data shows that 4 analysts have revised their earnings downward for the upcoming period, though the company maintains a strong track record with 52 consecutive years of dividend payments. The immediate market reaction was muted, with Valley National’s stock price increasing by 0.58% in pre-market trading, closing at $8.63.

Key Takeaways

• Valley National’s Q1 2025 EPS was $0.18, missing the $0.19 forecast.
• Revenue for the quarter was $478.4 million, below the $482.3 million forecast.
• The net interest margin increased for the fourth consecutive quarter.
• Core customer deposits grew by $600 million, while brokered deposits decreased by $700 million.
• The stock price rose 0.58% in pre-market trading.

Company Performance

Valley National Bancorp demonstrated resilience in Q1 2025 despite missing analyst expectations for EPS and revenue. The bank’s net income was $106 million, down from $116 million in the previous quarter. Trading at a P/E ratio of 12.27 and offering a 5.1% dividend yield, the bank presents an attractive value proposition. The company continued to benefit from a stable revenue base, reduced operating expenses, and a smaller loan loss provision. The net interest margin saw an increase for the fourth consecutive quarter, indicating effective financial management amid challenging market conditions. For deeper insights into Valley National’s financial health and valuation metrics, access the comprehensive Pro Research Report available on InvestingPro.

Financial Highlights

• Revenue: $478.4 million, below the forecasted $482.3 million.
• Earnings per share: $0.18, missing the $0.19 forecast.
• Net income: $106 million, compared to $116 million in the previous quarter.
• Core customer deposits: Increased by $600 million.
• Brokered deposits: Reduced by $700 million.

Earnings vs. Forecast

Valley National Bancorp’s Q1 2025 EPS of $0.18 fell short of the $0.19 forecast, representing a 5.3% miss. Revenue of $478.4 million was also below the expected $482.3 million. The results show a slight deviation from the company’s previous performance, where it had consistently met or exceeded expectations.

Market Reaction

Despite the earnings miss, Valley National’s stock price saw a modest increase of 0.58% in pre-market trading. According to InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels, with a beta of 1.09 indicating moderate market sensitivity. This movement suggests that investors may have been reassured by other positive aspects of the earnings report, such as the increase in net interest margin and the growth in core deposits. The stock’s current price of $8.63 remains within its 52-week range of $6.47 to $11.1, with analysts maintaining price targets between $9.50 and $12.00.

Outlook & Guidance

Looking ahead, Valley National Bancorp expects loan growth at the lower end of the 3-5% range for the remainder of 2025. The company anticipates net interest margin to reach $310 million by year-end. Management remains focused on optimizing deposit costs and expects lower charge-offs and provisions compared to 2024. With an overall Financial Health Score of FAIR from InvestingPro and analysts projecting profitability for the year, the bank appears well-positioned to maintain its operational momentum.

Executive Commentary

CEO Ira Robbins highlighted the bank’s diversification efforts, stating, "We are a much more diverse bank today than when I took over as CEO." He also emphasized the opportunities created by the bank’s evolution into new business lines and geographies. Financial Executive Travis Lam expressed confidence in the bank’s strategic direction, saying, "We feel pretty confident about where we stand and about the path forward for us organically."

Risks and Challenges

• Tariff uncertainty and rising inflation expectations could impact commercial lending.
• Increased competition in the lending market, particularly from other banks.
• Economic volatility may affect the bank’s commercial real estate portfolio.
• Managing deposit costs in a fluctuating interest rate environment.
• Potential credit quality issues as market conditions evolve.

Q&A

During the earnings call, analysts inquired about the impact of tariffs on commercial customers and the compression of loan yields and spreads. Executives addressed concerns about credit quality and emphasized the resilience of small business customers, reinforcing confidence in the bank’s risk management strategies.

Full transcript - Valley National Bancorp (VLY) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Q1 twenty twenty five Valley National Bancorp Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Travis Lam. Please go ahead.

Travis Lam, Financial Executive, Valley National Bancorp: Good morning, and welcome to Valley’s First Quarter twenty twenty five Earnings Conference Call. I’m joined today by CEO, Ira Robbins and Chief Credit Officer, Mark Sager. Before we begin, I would like to make everyone aware that our quarterly earnings release and supporting documents can be found on our company website at valley.com. When discussing our results, we refer to non GAAP measures, which exclude certain items from reported results. Please refer to today’s earnings release for reconciliations of these non GAAP measures.

Additionally, I would like to highlight Slide two of our earnings presentation and remind you that comments made during this call may contain forward looking statements relating to Valley National Bancorp and the banking industry. Valley encourages all participants to refer to our SEC filings, including those found on Forms eight ks, 10 Q and 10 ks for a complete discussion of forward looking statements and the factors that could cause actual results to differ from those statements. With that, I’ll turn the call over to Ira Robbins.

Ira Robbins, CEO, Valley National Bancorp: Thank you, Travis. During the first quarter of twenty twenty five, net income on both reported and adjusted basis was approximately $106,000,000 or $0.18 per diluted share. This compared to $116,000,000 and $0.20 on a reported basis or $76.13 on an adjusted basis a quarter ago. The sequential growth in adjusted earnings reflects revenue stability, lower operating expenses and a smaller loan loss provision. Clearly, much has changed since we spoke to you three months ago.

Tariff uncertainty has driven most economic growth estimates lower, while inflation expectations are rising. Volatility in the interest rate and equity markets has increased and the market now anticipates more cuts during the year. Despite this backdrop, we feel well positioned to improve further on this quarter’s results. While our commercial real estate exposure has been a focus over the last eighteen months, this sizable portfolio is relatively insulated from potential tariff disruption and our ongoing CRE credit improvement should continue. More broadly, our commercial customers remain generally resolute with little direct exposure to the import and export business expected to be impacted by changing tariff policy.

From a growth perspective, our consistent C and I expansion has primarily come from small and middle market businesses where demand continues to percolate. While increased competition has resulted in incremental spread compression, we are optimistic that we have sufficient opportunity to grow profitability throughout the year. As such, there are no changes to our return expectations on Slide five. On Slide six, we do provide a more granular directional update to the 2025 guidance items that we presented a few months ago. We anticipate that both loan growth and net interest income will be at the lower end of our expected range for 2025.

However, this should be mostly offset by non interest expenses coming in towards the low end as well. There is no meaningful adjustment to our expectations for annual fee income or our tax rate. While charge offs and provisions were both somewhat elevated during the quarter, there is no change to our full year expectations for a roughly 50% decline in each metric from 2024. Slide seven illustrates the long term value that we continue to create for our stakeholders. Our tangible book value inclusive of dividends has now doubled in the last seven years, and our rate of growth continues to outpace peers.

We remain focused on organic customer acquisition in both the commercial and consumer areas. These customers represent longer term revenue opportunities and will contribute meaningfully to the future performance of our institution. As we have continually discussed, we are a much more diverse bank today than when I took over as CEO. Our evolution into new business lines and geographies has created opportunities that were previously unavailable to us. We continue to evolve with an internal focus on optimizing our operations, customer network and balance sheet to become a better, more profitable bank for our employees, our clients and our shareholders.

While economic uncertainty may present incremental headwinds for the industry, I am confident that Vale is well positioned to navigate this most recent period of disruption as we continue to execute on our strategic imperatives. With that, I will turn the call back to Travis to discuss the quarter’s financial highlights. After Travis concludes his remarks, Mark, Travis and I will be available for your questions.

Travis Lam, Financial Executive, Valley National Bancorp: Thank you, Ira. Slide eight illustrates the quarter’s deposit growth and rate trends. Core customer deposits increased 600,000,000 which enabled the repayment of $700,000,000 of higher cost brokered balances. This is in addition to the $2,000,000,000 of brokered deposits, which matured and were repaid during the fourth quarter. Non interest deposit balances increased for the third consecutive quarter and now stand at the highest level since September of twenty twenty three.

In addition to our strong growth, we continue to successfully reprice deposit costs lower. During the quarter, our average cost of deposits declined by 29 basis points. Our repricing actions have driven a total deposit beta of 53 since the Federal Reserve started reducing the Fed funds target rate in September of twenty twenty four. The quarter’s net interest margin improvement was largely the result of our ability to reduce deposit costs and incrementally improve our funding mix. Slide 10 illustrates the components of the quarter’s lending activity.

We continue to manage the runoff of certain transactional investor CRE and construction loans, which contributed to a $350,000,000 decline in regulatory CRE during the quarter. As of 03/31/2025, our CRE concentration ratio was 353% versus three sixty two percent a quarter ago and 474% at the end of twenty twenty three. We anticipate that CRE originations will begin to pick up, which should slow the pace of runoff throughout the remainder of the year. While the first quarter tends to be seasonally slow, we are pleased with the 9% annualized C and I growth that we achieved. Similarly, we saw strong results within our prime indirect auto lending business.

We expect the continued growth in these lending lines will support low single digit loan growth for the year. Slide 11 highlights the quarter’s net interest income and net interest margin results. Net interest income declined modestly as a result of lower day count during the quarter. We estimate that the lower day count represented an approximate $9,000,000 headwind on the quarter’s net interest income. Net interest margin increased for the fourth consecutive quarter, bolstered by the positive deposit composition and cost trends described earlier.

As Ira mentioned, we now expect to be towards the lower end of our 9% to 12% net interest income growth range for 2025. While the interest rate environment remains generally in line with our expectations, lower loan growth and continued lending spread compression represent modest headwinds to our initial forecast. That said, we continue to expect that net interest margin will increase throughout the year as funding costs decline and the fixed rate asset repricing tailwind helps to mitigate potential asset exposure to lower interest rates. The next slide illustrates the quarter’s stability in adjusted non interest income. Lower wealth and trust fees reflect a modest slowdown in tax credit advisory revenue.

Within capital markets, swap activity moderated somewhat, while FX and syndication fees both grew sequentially. We continue to believe that the midpoint of our 6% to 10% guided growth range remains reasonable for 2025. On Slide 13, you can see that adjusted non interest expenses of $267,000,000 were 3% lower than the fourth quarter and virtually flat as compared to a year ago. The sequential decline was mainly driven by lower technology, consulting and marketing expenses, which were partially offset by the seasonal uptick in payroll taxes. We remain focused on managing future expense growth to ensure that incremental revenue gains generate positive operating leverage and support our profitability improvement over time.

As Ira mentioned, we believe that 2025 expense growth will likely fall to the lower end of our initial guidance range. Slide 14 illustrates our asset quality and reserve trends. Non accrual loans decreased modestly during the quarter. Accruing past due loans declined to 11 basis points as a pair of CRE loans, which had previously been delinquent for idiosyncratic reasons, became current again. There were no new material additions to accruing past due loans during the quarter.

Net loan charge offs and loan loss provision both declined meaningfully from the fourth quarter with the provision falling to the lowest level in the last twelve months. Given our current expectations for the credit environment, we anticipate that net charge offs and provision will continue to compare favorably to 2024 throughout the remainder of the year. During the quarter, our allowance coverage ratio increased five basis points to 1.22% and stands at the highest level of the past five years. We anticipate general stability in our allowance coverage going forward, all else equal. Turning to Slide 15.

Tangible book value increased as a result of retained earnings and a favorable OCI impact associated with our available for sale portfolio. Our regulatory capital ratios at 03/31/2025 were generally stable as compared to 12/31/2024. As Ira mentioned, we are extremely well positioned from a capital perspective have the financial flexibility to support our profitability goals throughout the year. With that, I will turn the call back to the operator to begin Q and A. Thank you.

Conference Operator: Thank Our first question is going to come from the line of Frank Schiraldi with Piper Sandler. Your line is open. Please go ahead.

Frank Schiraldi, Analyst, Piper Sandler: Thanks. Good morning.

Ira Robbins, CEO, Valley National Bancorp: Good morning, Frank.

Frank Schiraldi, Analyst, Piper Sandler: Just last quarter, think you guys were talking about, if I’m not mistaken, commercial loan originations coming on in the 7% range. Just wondered if you can maybe talk about how that’s progressed, where that is, where the back book’s repricing currently?

Travis Lam, Financial Executive, Valley National Bancorp: Yes, Frank. New originations this quarter were slightly lower than the 7% level. I think on average, we were about six eighty. I think it’s a combination of obviously lower benchmark rates and some compression in spreads that’s pretty consistent with what we’re seeing across the industry.

Frank Schiraldi, Analyst, Piper Sandler: Okay. And then obviously, you made a lot of progress on the CRE concentration levels over the last twelve months. You’re basically at that three fifty threshold here. I think you talked about maybe the compression or the contraction slowing over this year. Just curious if you could talk about kind of longer term target?

And where do you think that non or when do you think that non owner occupied, pre balances, sort of stabilize here? And within that, just wondered if you talk about, the pickup in growth to offset that if you still think you can get, close to that double digit C and I growth this year.

Ira Robbins, CEO, Valley National Bancorp: Yeah, think let me start with just the C and I. Think we’re definitely real positive about what we’ve seen there. The continued double digit growth is something that we anticipate to continue throughout the organization. We laid a really strong foundation for that over the last few years based on hirings and different industries that we’ve entered into. So that will definitely help as we think about the moderation of the CRE concentration that sits within the entire organization.

I think that said, we are getting generally pretty comfortable with where we are today. And some of the significant reductions that we’ve seen in the CRE portfolio are probably going to begin to stabilize, as we begin to see a little bit more uptick in some of the originations on that CRE book. So over a long period of time, the CRE concentration will definitely come down. But it’d be largely more attributable to growth in other areas, outside of us really reducing what we’re seeing in that CRE portfolio.

Frank Schiraldi, Analyst, Piper Sandler: Great. Okay. I appreciate the color. Thanks.

Conference Operator: Thank you. And one moment for our next question. Our next question comes from the line of Chris McGratty with KBW. Travis,

Chris McGratty, Analyst, KBW: on the expense guide, you did great this quarter. To get to the updated guide it would imply a bit of a ramp. So I’m interested in your thoughts there or are you just being conservative at this point? It feels like low end or even a touch below might be in play. Thanks.

Travis Lam, Financial Executive, Valley National Bancorp: Yes, I think that’s pretty reasonable. I think we’ve been consistently conservative with respect to our expense guide to give ourselves the flexibility to invest in revenue generating opportunities that we identify. I would say this quarter, we would anticipate obviously payroll taxes will normalize about $4,000,000 in the second quarter. But I do think that will be offset by higher kind of marketing and business development spend as the year goes on. And then professional fees were also fairly low this quarter and we managed that very tightly, but some opportunity there for that to be higher as the year goes on too.

So I agree with your general sentiment, but those are some of the moving pieces. And all that said, mean, expenses remain very well controlled in general and certainly expect further positive operating leverage as the year goes on and further efficiency gains.

Chris McGratty, Analyst, KBW: Awesome. And then in terms of deposit growth, interesting kind of what your updated thoughts are for the rest of the year and ultimately trying to land it, what you’re going do with the bond portfolio and cash, those levels? Thanks.

Travis Lam, Financial Executive, Valley National Bancorp: Yes, sure. I think, look, we had very strong core customer deposit growth this quarter. Anticipate the momentum there will continue throughout the year, enabling us. I think first, our focus would be to pay off some amount of brokered, continue that positive trend that we’ve seen in the last two or three quarters. I think the cash position is in a pretty good place here.

Obviously, some room for to put additional funds to work. But again, our priority would be improvement of the brokered deposit portfolio. And then from a securities perspective, I think still going to grow a couple of hundred million dollars a quarter likely. The portfolio is at 12% of the balance sheet today. Over time, that trend is higher.

But the toggle there will be loan growth. So if loan growth doesn’t necessarily materialize, then we have more flexibility for the securities portfolio.

Matthew Breese, Analyst, Stephens Inc.: Great. Thanks, Ben.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Manan Gosalia with Morgan Stanley. Your line is open. Please go ahead.

Manan Gosalia, Analyst, Morgan Stanley: Hi, good morning. Ira, you noted that your CRE portfolio is insulated from tariff disruptions. Can you talk a little bit more about that? And also how you’re thinking about which industries or which sectors might be under a little bit more stress here?

Ira Robbins, CEO, Valley National Bancorp: Yes, definitely. I think having a CRE concentration as we continue to move forward some of the volatility might not be the worst thing in the world. Obviously, it’s not a place we want to manage with the concentration by any means. But that said, I think when we think about the asset classes that are going to be impacted, if rates do come down on the long end, that would be a positive for us as we think about where we sit with the criticized assets, where we sit with the reserve coverage ratios, etcetera. So generally, the commercial clients that we have are more sensitive to interest rates than where they are on tariffs.

As we think about building and some of the development that comes into it, the two factors that really impact development on the CRE side are really interest rates and labor. And both of those seem to be a little bit more controlled versus where they were before. So the tariff conversations, as we think about steel and some of the other things for the size borrowers that we do and for the projects that they have, really would have less of an impact as other ones. Obviously, there’s industries that are going to be potentially more impacted than others based off of what we’re seeing with the tariffs and some of the uncertainty. That said, we feel really strong about what our positions are.

The equipment leasing business that we have on the industrial space is pretty small. The size of the clients are pretty small as well. So generally speaking, we think we’re pretty insulated on an aggregate basis.

Manan Gosalia, Analyst, Morgan Stanley: Great. That’s very helpful. And maybe one for you, Travis. I think you noted spread compression a couple of times. It sounds like you’re seeing more competition.

I guess question there is, where is that coming from? And, are you expecting more spread compression in your guide?

Travis Lam, Financial Executive, Valley National Bancorp: Yes. So the guide does expect a little bit more spread compression than what we’ve seen. I think actually it was fairly benign at the end of twenty twenty four and we’ve seen some incremental pressure in the first quarter here. So that I think you do see competition for our high quality commercial deals in particular, something that we’re not unfamiliar with. And we do have a variety of levers to pull depending on where the competition is greatest and where we view the opportunity to be.

So whether that’s the geographic diversity that we have between the Northeast and the Southeast or some of the nationwide businesses. Mean, mentioned equipment leasing, our healthcare business as well, fund finance. So we have a variety of levers to pull to make sure that we can continue to grow profitably in a more competitive world.

Manan Gosalia, Analyst, Morgan Stanley: Is that coming more from the banks or from private credit?

Travis Lam, Financial Executive, Valley National Bancorp: On the commercial side, I would say it’s more from the banks. On CRE, I think private credit has gotten more active. As noted by the transaction we put on last year, there’s still demand for CRE assets moving into private credit. But what we’re talking about in general is more on the C and I side.

Manan Gosalia, Analyst, Morgan Stanley: Got it. Thank you.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Anthony Ilian with JPMorgan. Your line is open. Please go ahead.

Anthony Ilian, Analyst, JPMorgan: Hi, everyone. You reiterated the loan guide of up 3% to 5%, but you expect the low end now. I’m wondering, Travis, can 2Q actually be a loan growth quarter? Or will most of that growth you expect to

Chris McGratty, Analyst, KBW: be in the back half of the year?

Travis Lam, Financial Executive, Valley National Bancorp: No, I think the second quarter can absolutely be a loan growth quarter. I mean, you look at what we did this quarter, I think the kind of headwind that we faced was pre originations were a little bit lighter than what we had anticipated. Payoffs were generally in line and then the growth we saw in C and I and consumer was in line with our strong expectations. So I think there’s consistency and momentum in those last two areas being C and I and consumer. And then as CRE originations pick up, which we’re beginning to see and we’ve seen an uptick in the pipeline on both the CRE and C and I side, we feel pretty good about growth here in the second and third quarter.

Maybe just to give you a

Ira Robbins, CEO, Valley National Bancorp: little bit more clarity on what that pipeline is, just in the commercial space, when you look at all components of where the pipeline sits, whether it’s an approved or pre approved, we were sitting around $2,000,000,000 at last quarter end. Today, we’re north of $2,700,000,000 Now obviously, we don’t pull through all of that, but generally a lot more activity. And the anticipation is to have strong growth as we think about Q2, Q3 and Q4.

Anthony Ilian, Analyst, JPMorgan: Thank you. And then my follow-up for Mark. Last quarter, you called out some large loan relationships that drove the increase in fourth quarter commercial real estate and C and I non performers. I’m just wondering if you could provide us with an update on those loans. Thank you.

Mark Sager, Chief Credit Officer, Valley National Bancorp: I’m sure. All of those loans have been written down and taken care of and no lingering on any of those fourth quarter issues. The charge offs this quarter were associated with two C and I credits predominantly making up the bulk of that portfolio. We are very comfortable with the guidance that we’re giving on both provision and charge offs for the remaining portion of the year.

Matthew Breese, Analyst, Stephens Inc.: Thank you.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese with Stephens Inc. Your line is open. Please go ahead.

Travis Lam, Financial Executive, Valley National Bancorp: Hey, good morning. Good morning, Matt.

Matthew Breese, Analyst, Stephens Inc.: I was hoping you could talk a bit about funding and core deposit growth expectations for the year. I’m also curious what’s left on broker deposits to run off.

Ira Robbins, CEO, Valley National Bancorp: Yes. Maybe just let me start. I think just how we think about funding in general, Matt. And it’s great to talk about the liability side of the balance sheet, but to talk about it in isolation without what we’re doing on the asset side, I think, would probably be a little bit of a miss here. And one of the things we’ve been having to do across the entire organization is how we think about growth, right?

And we’ve seen organic growth on the loan side around double digits on a year over year basis. So obviously, as we grow the loan book between the 3% to 5%, there’s a far less demand that’s required from deposit originations. So some of the consistency that we’ve had in deposit originations will now provide a larger funding base for what we’re doing on the loan side. In addition to that, obviously, we spent a lot of time thinking about some of the systems across the organization. We did a significant core conversion in October of twenty twenty three, which enabled us to put on a very large treasury platform here.

That’s now up and running. So we think we have a strong foundation and capabilities to continue to grow the funding side of the book, which will really support more on at least a one for one basis what we’re doing on the loan side. But know Chad should have a bit more details on that.

Travis Lam, Financial Executive, Valley National Bancorp: Yes, for sure. Mean, Matt, coming into the year, our expectation for core customer deposit growth was 6%. This quarter was 5.5% on an annualized basis. So feel pretty good about being on track with those expectations. We do put in the investor deck on the page, I think Slide 11, the bottom right illustrates maturing CDs and FHLB borrowings.

We still have a pool of $6,000,000,000 of brokered CDs, the majority of which are maturing over the next twelve months and create an opportunity to refinance lower into core customer deposits. And that’s benefited the funding cost of the deposit betas so far as rates have come down and anticipate that, that will continue.

Matthew Breese, Analyst, Stephens Inc.: Got it. Okay. And then the other one is just on loan yields. The movement this quarter relative to Fed funds just struck me as quite a bit. So could you maybe help us out with the extent of spread compression?

Because without it, the decline suggests there’s just a really significant move lower in fixed or adjustable loan yields and just trying to suss that out.

Travis Lam, Financial Executive, Valley National Bancorp: Yes. I think part of the impact for the first quarter on margin and then within that asset yields and deposit costs is the fewer days. So with two fewer days, right, you’re accreting less interest income, which has an impact on the way the yield presents itself. While we’ve talked about spreads tightening somewhat here, I don’t think it’s sufficient enough to create a meaningful move in the loan yield this quarter.

Matthew Breese, Analyst, Stephens Inc.: Got it. Okay. If I could sneak in

Travis Lam, Financial Executive, Valley National Bancorp: one more. Do you have the end of

Matthew Breese, Analyst, Stephens Inc.: period or most recent cost of deposits just to help us out directionally?

Travis Lam, Financial Executive, Valley National Bancorp: I don’t in front of me, Matt. I could follow-up. It’s I don’t in front of me. Got it. Thank you.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Jared Shaw with Barclays. Your line is open. Please go ahead.

Jared Shaw, Analyst, Barclays: Thanks. Good morning. I guess maybe sticking with the yield and cost, as we look at margin moving through the year, do you still feel that at the end of the year we can be at or exceeding the $310,000,000 level?

Travis Lam, Financial Executive, Valley National Bancorp: Yes. Jared, we absolutely do. And I think that’s reiterated in some of the guidance pages that we provided here. I think for the full year, we’re looking at a margin today of around $3.00 5,000,000 give or take. Obviously, that’s dragged down by the first quarter at 2.96%.

So by the time we get to the end of the year, we do anticipate 3.1%. I think the key drivers there, as we’ve talked about, is continued rotation on the funding side out of brokered into lower cost core, the opportunity to potentially reprice deposits again. And then the fixed rate asset repricing tailwind on the loan side. So those factors kind of coming together is what support that guidance.

Jared Shaw, Analyst, Barclays: Okay. Thanks. And then on the credit discussion, just the build of the allowance this quarter, did you is that more qualitative overlay that you added to the allowance? Or is that did you actually use a more a change from the baseline Moody’s assumption or more adverse So

Mark Sager, Chief Credit Officer, Valley National Bancorp: predominantly the direction there, if you saw again, our CRE portfolio strength slightly, C and I increased. We’ve mentioned in the past that our reserve coverage for C and I is higher than for CRE and that directionally led to the build. We did keep our outlook from Moody’s scenario similar to the prior year. And that’s predominantly because all of the Moody’s scenarios did take into account the tariff environment and expectations of tariffs going into place. So with that, we continue to keep our weightings the same, noting that we have a higher weighting on downside scenario than upside scenario in our model.

Jared Shaw, Analyst, Barclays: Okay. All right. Thanks. And then just finally, I guess, what’s the appetite for any additional CRE loan sales from here? You referenced sort of the strength of private equity, private capital.

Is there an opportunity to do any more loan sales? Are you comfortable with sort of normal attrition from here?

Travis Lam, Financial Executive, Valley National Bancorp: I think we’re pretty comfortable with where the portfolio stands today. There’s a lot of dialogue and a lot of inbound inquiries given the strength of our portfolio. But the reality is, I think we feel pretty confident about where we stand and about the path forward for us organically. And I think

Ira Robbins, CEO, Valley National Bancorp: just adding to that, when you look at the guidance we gave on that CRE concentration number, we feel pretty comfortable with operating around that number for a period of time. So we’re pretty much right there, right now. And I think similarly, just going back to where the reserve coverage is, I think you’ll notice we didn’t adjust any of the guidance numbers targets for the reserve for the creep quarters this year, excuse me, this quarter versus in prior years. So, we’ve pretty much already met what that CECL number looks like for us for the year or where we think that the ACL coverage is. So obviously, we’re expecting a lot less of a build as we move into the rest of the year.

Jared Shaw, Analyst, Barclays: Great. Thank you very much.

Conference Operator: Thank you. One moment for our next question. Our next question is going to be from the line of Steve Moss with Raymond James. Your line is open. Please go ahead.

Matthew Breese, Analyst, Stephens Inc.: Good morning. Morning. Maybe just following up on credit here. Know, just kind of curious where are your criticizing class sides as of March 31?

Mark Sager, Chief Credit Officer, Valley National Bancorp: So as of March, we had a slight increase in migration, but still at a reduced level from what we saw in 2024. And we expect that trend of modest increase or reduction to go forward into 2025. During the quarter, we actually got repaid on $160,000,000 of criticized assets. All of those transactions were done at par and paid in full. I think we’ve mentioned in the past that primary driver of migration in portfolio had been our treatment of guarantor and how that impacts on the risk rating.

So in spite of the elevated level of criticized, we show very strong metrics with an improvement in non accrual numbers and at 11 basis points of the thirty to ninety day delinquency being one of the lowest levels that we’ve had in the ten years that I’ve been at the bank anyway, which shows that the portfolio is in a very strong performance standpoint.

Matthew Breese, Analyst, Stephens Inc.: Okay. And then, I guess, given the charge off guide implies lower charge offs going forward here. I guess I’m struck by you continue to have some commercial real estate formation, not performing formation. You still have elevated C and I loans kind of like what gives you a comfort just given where NPLs are that charge offs still remain at this higher level versus the guidance?

Mark Sager, Chief Credit Officer, Valley National Bancorp: Yes. And I think I would point to that early stage delinquency number as really an important number about the overall performance in the portfolio and the modest decline that we’re seeing on the non accrual side. In addition, just in general, in the CRE environment, as was mentioned with the spread, we’re seeing much more activity in the market today with more options for real estate owners to sell properties at competitive prices, more refinance options than we saw in 2024.

Ira Robbins, CEO, Valley National Bancorp: Let me just add to that. I think as Mark said, some of what you’re seeing in those criticized and classified numbers were a function of, as Mark alluded to, the guarantee as opposed to the underlying conditions of the individual asset. So some of those do migrate into non performing numbers. And there are some of those non performing numbers that are current to payment.

Matthew Breese, Analyst, Stephens Inc.: Great. Okay. To hear that, especially on the activity side as well. And then, I guess, terms of okay, and just in terms of the C and I charge offs here for the quarter, just give a little more color as to what type C and I loans were charged off?

Mark Sager, Chief Credit Officer, Valley National Bancorp: Yeah, two unique situations, both of them. The charge off amount was almost entirely related to events of fraud in this situations, unique situations on the two credits and not something systemic that we could point to any other softness in the portfolio. So, unique to these two opportunities.

Matthew Breese, Analyst, Stephens Inc.: Okay, great. Appreciate all the color there. Thanks.

Conference Operator: You. And one moment for our next question. Next question comes from the line of Jon Arfstrom with RBC Capital Markets. Your line is open. Please go ahead.

Matthew Breese, Analyst, Stephens Inc.: Thanks. Good morning. Good morning, John.

Travis Lam, Financial Executive, Valley National Bancorp0: Ira, can can we go back to the pipeline and can you talk a little bit about how it’s changed maybe over the last four or five weeks? And are you seeing any kind of, I guess, fading in some of the uncertainty and the pause by borrowers?

Ira Robbins, CEO, Valley National Bancorp: So no, it hasn’t changed. We’ve obviously had a lot of conversations with our borrowers based on their perspective. I’ve listened to a lot of calls over the last couple of days just to hear what other CEOs are seeing in from their sentiment as they’ve talked to their clients. For us, it’s been a pretty significant range. We have almost an equal number of clients that are positive and excited about what the long term implications are from a tariff perspective versus others that are obviously uncertain based on what’s going to happen.

I would say, largely speaking, I’m not quite sure that we’re giving enough credit to some of these small and entrepreneurial businesses, the ones that we bank, as to their ability to be resilient towards this actual environment. I spoke to one this morning. He was talking about his ability to already have total ability to reduce any potential increase based on expense reductions. And he had a document on his desk from his team earlier in the week. And other ones sat there and told me that they just put out their COVID playbook and they’re ready to actually move forward.

So I think we’re hearing a little bit of uncertainty on an absolute basis. I would say though for many of our borrowers, they felt like they’ve had to operate in that environment since what we saw with COVID. But we aren’t seeing anything from a fundamental perspective that will lead pipelines to really decline at this point. So we’ll see whether perspective really comes up different than behavior this time.

Travis Lam, Financial Executive, Valley National Bancorp0: Okay, fair enough. Anything you guys would call out on non interest income in terms of the drivers of the outlook? And then just curious how you’re feeling about wealth and the outlook for growth there?

Travis Lam, Financial Executive, Valley National Bancorp: Yes, John, thank you. Look, I think there’s a strong outlook for wealth, particularly when you factor in tax credit advisory revenue that hits that line. First quarter was a little bit softer, but the pipeline for deals there is building and should benefit us in the second and third quarter. And then on the capital markets side, I mean, FX continues to be a strong growth driver, although in aggregate, it’s a relatively small contributor, but still very good trends there. And then as CRE originations pick up, we would expect to see some additional swap activity as well supporting the capital markets line.

So I think there’s some good trends there on the deposit service charge side. Again, increased the pricing in the middle of last year. Full year benefit of that in 2025 will be another supporter of the outlook. So feel good about some of the opportunities and momentum that we have on the fee side.

Matthew Breese, Analyst, Stephens Inc.: Okay. Thank you. Thanks, John.

Conference Operator: Thank you. And I would like to hand the conference back over to Ira Robbins for further remarks.

Ira Robbins, CEO, Valley National Bancorp: I just want to thank everyone for taking the time to listen to us today, and we look forward to reporting you positive results for next quarter. Thank you.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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