Valley National Bancorp
) slumped 2.3% following its fourth-quarter 2013 earnings release
before the opening bell on Jan 30. The company reported earnings
per share of 20 cents, which surpassed the Zacks Consensus
Estimate of 15 cents. Moreover, results compared favorably with
the year-ago quarter earnings of 19 cents per share.
For full-year 2013, Valley National Bancorp recorded earnings per
share of 66 cents versus 73 cents in 2012. However, earnings for
the year surpassed the Zacks Consensus Estimate of 64 cents.
In the reported quarter, the company recorded nearly 11.0% rise
in commercial real estate (CRE) loans. However, investors are
acquainted with the inherent risks associated with these loans.
Moreover, the rise in non-interest income includes a one-time
gain of $11.3 million from certain lease termination. Therefore,
the bearish stance of the investors is justified.
Moreover, the overall market depicted a decline during the
mentioned time frame and that could be responsible for the stock
Results benefited from top-line improvement, partially offset by
higher expenses. Growth in loans and deposits were the tailwinds
of the quarter. Further, while capital ratios deteriorated,
profitability ratios improved. Credit quality was a mixed bag.
Net income for the reported quarter came in at $39.6 million, up
7.6% from $36.8 million in the year-ago period. However, for the
full year, net income came in at $132.0 million, declining 8.1%
from $143.6 million in 2012.
Valley National Bancorp's total revenue came in at $158.2
million, up 3.8% year over year. Moreover, total revenue
surpassed the Zacks Consensus Estimate of $144.0 million.
For 2013, total revenue came in at $576.4 million, down 5.6% from
$610.8 million in 2012. Moreover, total revenue lagged the Zacks
Consensus Estimate of $587.0 million.
Net interest income declined 2.0% year over year to $116.1
million, driven by a decline in interest income partially offset
by lower interest expenses. Moreover, net interest margin
contracted 14 basis points (bps) from the prior-year quarter to
Non-interest income increased 24.4% from the prior-year quarter
to $42.1 million. The increase was primarily driven by a
substantial rise in gains on securities as well as gains on sales
of assets. These positives were partially offset by a decline in
gains on sales of loans and trading gains.
Non-interest expense increased slightly (0.5%) year over year to
$96.1 million. The increase mainly resulted from rise in salary
and employee benefits, Federal Deposit Insurance Corporation
assessments and other costs. These negatives were partially
offset by a fall in net occupancy and equipment expense,
amortization of other intangible assets, advertising
expenditures, professional and legal fees.
Asset quality, apart from the ratio of net charge-offs to average
loans, reflected improvement in the reported quarter. Total
non-performing assets were $124.9 million as of Dec 31, 2013,
down 36.1% from Dec 31, 2012.
Total non-accrual loans were $95.1 million, down 27.9% year over
year. However, the ratio of net charge-offs to average loans was
0.19% as of Dec 31, 2013, up 4 bps from 0.15% as of Dec 31, 2012.
Nevertheless, compared with the prior quarter, the ratio declined
Allowance for credit losses as a percentage of total loans was
1.01%, compared with 1.20% as of Dec 31, 2012.
Loans and Deposits
As of Dec 31, 2013, total loans were $11.6 billion, up 6.3% from
$10.9 billion as of Dec 31, 2012.
Total deposits were $11.31 billion, up marginally from $11.26
billion as of Dec 31, 2012.
Profitability and Capital Ratios
In the reported quarter, while Valley National Bancorp's capital
ratios deteriorated, profitability ratios improved. As of Dec 31,
2013, Tier 1 leverage ratio was 7.27%, compared with 8.09% as of
Dec 31, 2012. Tier 1 risk-based capital ratio was 9.65%, compared
with 10.87% as of Dec 31, 2012. Total risk-based capital ratio
came in at 11.87% versus 12.38% as of Dec 31, 2012.
The return on average assets came in at 0.98%, improving from
0.93% as of Dec 31, 2012. As of Sep 30, 2013, return on average
stockholder equity came in at 10.35%, increasing from 9.71% as of
Dec 31, 2012.
Performance of Other Regional Banks
) earnings per share were in line with the Zacks Consensus
Estimate in the same quarter. Improvement seen in net interest
income and core fee revenues were the tailwinds of the quarter.
Synovus Financial Corporation
) net income per share was also in line with the Zacks Consensus
Estimate. Results were primarily impacted by a slump in mortgage
business which partially offset lower expenses.
Commerce Bancshares, Inc.
) earnings missed the Zacks Consensus Estimate due to a decline
in net interest income and higher operating expense.
Though Valley National Bancorp's real estate loan portfolio
reflected improvement in this quarter, we remain skeptical about
the sustainability of the profits being generated from the
highly-volatile real estate market. Further, the low interest
rate scenario will continue to weigh on interest income as well
as margins. However, disciplined expense management will support
the company's financials going forward.
Valley National Bancorp currently carries a Zacks Rank #3
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VALLEY NATL BCP (VLY): Free Stock Analysis
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