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Valley National (VLY) Down on Q4 Earnings Miss, Revenues Up Y/Y
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Valley National Bancorp (VLY - Free Report) tanked 7.9% in response to lower-than-expected fourth-quarter 2021 results. Adjusted earnings per share of 28 cents missed the Zacks Consensus Estimate of 30 cents. The bottom line declined 6.7% from the year-earlier quarter’s number.
Results were aided by a rise in net interest income and lower provisions. Loans and deposit balances witnessed a jump, which was another positive. However, an increase in expenses and a fall in fee income were the major drags.
Net income available to common shareholders (GAAP basis) was $111.9 million or 27 cents per share, up from $102.2 million or 25 cents per share in the year-ago quarter.
In 2021, adjusted earnings of $1.16 per share lagged the consensus estimate of $1.18 but increased 20.8% from the prior year. Net income available to common shareholders (GAAP basis) was $461.2 million or $1.12 per share, up from $377.9 million or 93 cents per share.
Revenues Improve, Expenses Rise
Total revenues in the quarter were $353.5 million, up 5.4% year over year. The top line also surpassed the Zacks Consensus Estimate of $346.3 million.
In 2021, total revenues were up 4.8% from the prior year to $1.36 billion. The top line matched the Zacks Consensus Estimate.
Net interest income (fully-taxable-equivalent or FTE basis) was $316 million, up 9.4% year over year. Net interest margin (FTE basis) grew 17 basis points (bps) to 3.23%.
Non-interest income was $38.2 million, down 19.6%. The decline was mainly due to a fall in other fee income and lower net gains on sales of loans.
Non-interest expenses were $184.5 million, up 6.6% year over year. The rise was due to an increase in almost all cost components, except for FDIC insurance assessment costs and costs related to the amortization of other intangible assets. Also, in the reported quarter, the company did not record any costs related to the loss on extinguishment of debt.
The efficiency ratio was 52.19%, up from 51.61% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Dec 31, 2021, total loans were $34.2 billion, up 4.7% sequentially. As of the same date, total deposits amounted to $34.7 billion, up 3.4%.
Credit Quality: A Mixed Bag
At the end of the reported quarter, total non-performing assets were $245.4 million, up 26.1% year over year. Allowance for credit losses as a percentage of total loans was 1.10%, up from 1.09% recorded in the year-ago quarter.
However, provision for credit losses was $11.7 million, plunging 38.3% year over year.
Profitability & Capital Ratios Improve
At the end of the fourth quarter, annualized return on average assets was 1.08%, up from 1.02% in the year-earlier quarter. Return on annualized average shareholders’ equity was 9.38%, up from 9.20%.
VLY's tangible common equity to tangible assets ratio was 7.98% as of Dec 31, 2021, up from 7.47% in the corresponding period of 2020. Tier 1 risk-based capital ratio was 10.69%, down from 10.66%.
Our Take
Valley National’s organic growth trajectory, strategic acquisitions and digitization efforts will keep supporting financials. Relatively lower interest rates and persistently increasing costs remain major concerns.
Valley National Bancorp Price, Consensus and EPS Surprise
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2021 earnings per share of 94 cents matched the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter.
CBSH’s results primarily benefited from an improvement in non-interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and a fall in net interest income were the major headwinds.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2021 adjusted earnings of $1.51 per share outpaced the Zacks Consensus Estimate of $1.35. The bottom line improved 29% from the prior-year quarter.
HWC’s results benefited from higher non-interest income, fall in non-interest expenses and provision benefit. However, a decline in net interest income, which reflected lower interest rates, was the undermining factor.
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2022 (ended Dec 31) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 69 cents. The figure reflects a year-over-year jump of 39%.
WAFD’s results primarily benefited from increased revenues, decreased provision for credit losses and a robust loan balance. The company’s balance-sheet position remained strong during the quarter. However, an increase in expenses was the undermining factor.
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Valley National (VLY) Down on Q4 Earnings Miss, Revenues Up Y/Y
Valley National Bancorp (VLY - Free Report) tanked 7.9% in response to lower-than-expected fourth-quarter 2021 results. Adjusted earnings per share of 28 cents missed the Zacks Consensus Estimate of 30 cents. The bottom line declined 6.7% from the year-earlier quarter’s number.
Results were aided by a rise in net interest income and lower provisions. Loans and deposit balances witnessed a jump, which was another positive. However, an increase in expenses and a fall in fee income were the major drags.
Net income available to common shareholders (GAAP basis) was $111.9 million or 27 cents per share, up from $102.2 million or 25 cents per share in the year-ago quarter.
In 2021, adjusted earnings of $1.16 per share lagged the consensus estimate of $1.18 but increased 20.8% from the prior year. Net income available to common shareholders (GAAP basis) was $461.2 million or $1.12 per share, up from $377.9 million or 93 cents per share.
Revenues Improve, Expenses Rise
Total revenues in the quarter were $353.5 million, up 5.4% year over year. The top line also surpassed the Zacks Consensus Estimate of $346.3 million.
In 2021, total revenues were up 4.8% from the prior year to $1.36 billion. The top line matched the Zacks Consensus Estimate.
Net interest income (fully-taxable-equivalent or FTE basis) was $316 million, up 9.4% year over year. Net interest margin (FTE basis) grew 17 basis points (bps) to 3.23%.
Non-interest income was $38.2 million, down 19.6%. The decline was mainly due to a fall in other fee income and lower net gains on sales of loans.
Non-interest expenses were $184.5 million, up 6.6% year over year. The rise was due to an increase in almost all cost components, except for FDIC insurance assessment costs and costs related to the amortization of other intangible assets. Also, in the reported quarter, the company did not record any costs related to the loss on extinguishment of debt.
The efficiency ratio was 52.19%, up from 51.61% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Dec 31, 2021, total loans were $34.2 billion, up 4.7% sequentially. As of the same date, total deposits amounted to $34.7 billion, up 3.4%.
Credit Quality: A Mixed Bag
At the end of the reported quarter, total non-performing assets were $245.4 million, up 26.1% year over year. Allowance for credit losses as a percentage of total loans was 1.10%, up from 1.09% recorded in the year-ago quarter.
However, provision for credit losses was $11.7 million, plunging 38.3% year over year.
Profitability & Capital Ratios Improve
At the end of the fourth quarter, annualized return on average assets was 1.08%, up from 1.02% in the year-earlier quarter. Return on annualized average shareholders’ equity was 9.38%, up from 9.20%.
VLY's tangible common equity to tangible assets ratio was 7.98% as of Dec 31, 2021, up from 7.47% in the corresponding period of 2020. Tier 1 risk-based capital ratio was 10.69%, down from 10.66%.
Our Take
Valley National’s organic growth trajectory, strategic acquisitions and digitization efforts will keep supporting financials. Relatively lower interest rates and persistently increasing costs remain major concerns.
Valley National Bancorp Price, Consensus and EPS Surprise
Valley National Bancorp price-consensus-eps-surprise-chart | Valley National Bancorp Quote
Valley National currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2021 earnings per share of 94 cents matched the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter.
CBSH’s results primarily benefited from an improvement in non-interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and a fall in net interest income were the major headwinds.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2021 adjusted earnings of $1.51 per share outpaced the Zacks Consensus Estimate of $1.35. The bottom line improved 29% from the prior-year quarter.
HWC’s results benefited from higher non-interest income, fall in non-interest expenses and provision benefit. However, a decline in net interest income, which reflected lower interest rates, was the undermining factor.
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2022 (ended Dec 31) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 69 cents. The figure reflects a year-over-year jump of 39%.
WAFD’s results primarily benefited from increased revenues, decreased provision for credit losses and a robust loan balance. The company’s balance-sheet position remained strong during the quarter. However, an increase in expenses was the undermining factor.