Valley National Bancorp (VLY) Q4 2024 earnings summary

Executive summary

• Q4 2024 net income was $116 million ($0.20/diluted share), up from $98 million in Q3 and $71.6 million in Q4 2023, driven by a tax reserve reversal and partially offset by higher loan loss provisions; adjusted net income was $75.7 million.

• Pre-tax pre-provision earnings remained stable, reflecting strong net interest income growth and offsetting discrete expenses.

• Strategic focus in 2024 included strengthening the balance sheet, reducing CRE concentration, and enhancing commercial deposit growth.

• Treasury Solutions and FX enhancements led to significant fee income growth, with deposit service revenue up 27% and FX fees up over 50% year-over-year in H2 2024.

• Customer acquisition and diversification across business lines and geographies remain key priorities.

Financial highlights

• Net interest income grew 3% sequentially and 6% year-over-year, reaching $424 million, marking the third consecutive quarter of growth.

• Deposit costs reduced by 31 basis points in Q4, with average cost at 2.87% in December.

• Non-interest deposit balances rose to 23% of total deposits, up from 22% in Q3.

• Adjusted non-interest income for H2 2024 was $236 million, up 13% from H2 2023; non-interest income for Q4 2024 was $51.2 million.

• Adjusted non-interest expenses were $276 million, up 4.5% from Q3 and 1% from Q4 2023; efficiency ratio was 57.2%.

Outlook and guidance

• 2025 guidance anticipates 9%-12% net interest income growth, with upside if rates remain elevated.

• Net interest margin expected to expand as funding costs decline and asset repricing benefits materialize; 2025 NIM (FTE) estimated at 3.00–3.10%.

• Provision and net charge-offs projected to decline significantly through 2025, with annual net charge-offs forecasted at $75–$125 million and provision at $120–$160 million.

• Reserve ratio target for year-end 2025 set at 1.2%-1.25%, reflecting a slowdown in criticized asset migration.

• ROA expected to exceed 1% by year-end 2025, with long-term ROE targets above 15%.