Valley Corporation's Q2 2025 Earnings Discussion Transcript
Valley National Bancorp Reports Strong Deposit Growth and Improved Financial Performance
Valley National Bancorp, a leading financial institution, reported impressive growth in deposits and improved financial performance for the second quarter of 2025. The company's CEO, Ira Robbins, CFO, Travis Lan, and Credit Officer, Mark Sager, led the conference call held on Thursday, July 24, 2025, at 11 a.m. ET.
In the quarter, Valley National Bancorp experienced an 8% year-over-year growth in core deposits, accompanied by the addition of 105,000 new accounts. This strong growth helped reduce the reliance on indirect deposits to 13% and lowered deposit costs by 51 basis points. Total deposits grew by $759.4 million to reach $50.7 billion during the quarter.
Over the past twelve months, over 105,000 new deposit accounts were added, supporting approximately 8% growth in core deposits. The addition of over $1 billion in new deposits in Q2 2025 at a 2.77% blended rate further bolstered the bank's deposit base.
The growth in deposits was primarily driven by specialty verticals, including international, technology, online delivery, and private banking, which now contribute over $12 billion in deposits.
The bank's net income for Q2 2025 was $133 million ($0.22 per diluted share), with adjusted net income at $134 million ($0.23 per share). The noninterest expense growth guidance for 2025 has been revised down to 2%-4%.
Fee income contributed significantly to the noninterest income growth. Key factors included capital markets activity, swap volumes tied to CRE originations, and growth in FX and syndication fees. Notably, the gain on residential loan sale revenue reduced to 3% of total noninterest income in Q2 2025, down from 20% in 2017.
The bank's noninterest income is expected to increase 6%-10% in 2025. The net income for full-year 2025 is expected at approximately $530 million, with adjusted net income at around $536 million.
The net interest margin (NIM) expanded for the fifth consecutive quarter through Q2 2025, resulting in a 3% sequential rise in net interest income. Net interest income growth for 2025 is projected at 8%-10% (full-year guidance).
The commercial and industrial portfolio grew at a 19% compound annual rate since 2017, while consumer accounts expanded by 2%-3% annually under current leadership. Gross loans increased at an annualized pace of 6% as of Q2 2025, led by C&I and indirect auto lending.
The bank's asset quality and reserve trends were illustrated in Slide 18 of the presentation. Non-accrual loans remained generally stable during the quarter, and accruing past dues increased to 40 basis points of total loans. However, this increase was largely due to a few CRE loans that have since resolved.
The total risk-based capital ratio decreased in Q2 2025 due to the $115 million subordinated debt redemption, but other regulatory capital ratios improved. The bank's tangible book value increased due to retained earnings and a favorable OCI impact associated with the available-for-sale securities portfolio.
Management expressed optimism about the bank's future, stating "a lot more flexibility today than we've ever had" regarding capital for potential buybacks. However, they expressed a preference for organic growth opportunities.
[1] Based on the average cost of deposits for 2024. [2] As of the end of Q2 2025.
These sentences follow from the given text:
- The strong growth in deposits and improved financial performance reported by Valley National Bancorp, as well as the addition of over $1 billion in new deposits in Q2 2025, are expected to positively impact the bank's earnings and wealth-management strategies moving forward.
- Fee income, driven by capital markets activity, swap volumes tied to CRE originations, and growth in FX and syndication fees, contributed significantly to the bank's noninterest income growth, signifying a shift in focus towards managing wealth and increasing financial gains.
