Valley National Bancorp (VLYPP) Earnings

Management highlights

- Valley delivered record earnings in 2025 with net income and adjusted net income up from prior year. - Strong core deposit growth, up nearly $4B or 9% year over year. - Loan growth was strong, with commercial real estate and C&I growing, and strong pipelines for 2026. - Investments in talent, technology, and operating model have deepened customer engagement and productivity. - Focus on geographic and business line diversification, and strategic investments in treasury management and specialty funding niches.

Guidance

- Expect mid single digit loan growth in 2026, with C&I growth around 10%, low single digit CRE growth, and mid single digit consumer/residential growth. - Anticipate deposit growth will outpace loans, reducing loan-to-deposit ratio. - Net interest income expected to grow 11-13% in 2026. - High single digit fee income growth expected in 2026. - Expect further credit cost improvement, with loan loss provision around $100M. - Capital deployment strategy balances organic growth with capital returns, with CET1 expected to remain in 10.5%-11% range.

Segment performance

Valley National Bancorp delivered record earnings in 2025. Net income was approximately $195,000,000 or $0.33 per diluted share. Excluding certain non-core items, adjusted net income was $180,000,000 or $0.31 per diluted share. Adjusted return on average assets was 1.14%, the highest since 2022. For the full year 2025, net income was $598,000,000 and adjusted net income was $585,000,000. Core deposits grew by nearly $4,000,000,000 or 9% year over year. Total loans grew about $800,000,000 or 7% annualized, with commercial real estate and C&I contributing. Net interest income increased 4% quarter over quarter or 10% year over year, margin expanded to 3.17%.

Risks & headwinds

- Seasonal headwinds in the first quarter, including lower day count, elevated payroll taxes, and potential moderation of late-year fee income and noninterest deposits. - Regulatory changes could impact the banking industry, though no specific client base impact highlighted. - Competition in loan spreads and structure could affect margins.

Analyst Q&A

• Q: Talk about drivers behind 15-20 basis points NIM expansion from 4Q 2025 to 4Q 2026.

  A: Benefits balanced between loan and deposit sides. Deposit side: lower customer deposit rates, replacing higher cost brokered with lower cost core, and replacing FHLB advances. Loan side: replacing low-yielding fixed rate loans with higher-yielding originations.

• Q: How to think about NIM cadence through the year?

  A: First quarter margin comes down from 3.17% due to day count headwind and late December spikes moderating, then grows back to mid-30s by fourth quarter.

• Q: Implications of declining classified assets on credit costs?

  A: If economy stays, trend of declining classified assets to continue in 2026 and beyond, driven by payoffs and net upgrades.

• Q: Update on 15% ROE target timeline?

  A: No update, but feel well on way to achieving 15% target with tailwinds in 2026.

• Q: Expense outlook for 1Q 2026?

  A: Elevated items in fourth quarter normalize, and payroll tax headwind in first quarter roughly balances out, leading to general stability in operating expenses.

• Q: Impact of no rate cuts on NIM expansion?

  A: Slight headwind from NII, but offset by other rate dynamics and structural neutrality to front end of curve.

• Q: Pace of buyback?

  A: CET1 growth, dividend payout, and excess CET1 suggest $150M-$200M of stock repurchase, consistent with 4Q pace.

• Q: Geographic expansion plans?

  A: Successful in markets like Chicago, Los Angeles, Philadelphia; focused on adjacent markets and opportunistic team acquisitions.

• Q: Loan pipeline and growth upside?

  A: Strong pipeline, with $1B+ growth since 2024, geographically distributed, and CRE/C&I balanced. Excludes $500M runoff in Tier three transactional CRE, suggesting upside to loan growth guidance.

• Q: Reserve settlement and credit trends?

  A: Directionally, reserve could decline as criticized/classified assets fall, but offset by increasing C&I portfolio; allowance coverage ratio expected to be generally stable.

• Q: CRE growth and pipeline?

  A: Strong originations in 2025, with $1.5B new Tier 1 and Tier 2 CRE expected in 2026, offset by $500M runoff in transactional CRE, netting to $1B growth.

• Q: Commercial banker recruiting and branding investments?

  A: Aggressive recruiting to capitalize on unique value proposition, focusing on not bloating expenses; branding campaign to support customer acquisition and experience, complementing talent efforts.

• Q: Deposit growth mix and beta?

  A: Total deposit growth expected at midpoint 6%, with 5% NIB growth, assuming 50% total deposit cost beta. First quarter EOP NIB expected to be at average level.

• Q: M&A scenario?

  A: M&A considered if aligns with strategic objectives, shareholder value, and financial constraints, but organic growth is strong and prioritized.

• Q: Brokered deposits and funding cost?

  A: Brokered CDs and FHLB advances play role in interest rate risk management, not expected to go to zero but to a lower level over time.

• Q: Regulatory impact on client base?

  A: Reduced regulation driving confidence in entrepreneurial borrowers, but no specific industry-focused impact highlighted