Valley National Bancorp (NASDAQ:VLY) reported record fourth-quarter 2025 earnings and outlined an outlook for continued profitability improvement in 2026, supported by funding mix gains, balance sheet repricing, and improving credit trends, according to executives on the company’s earnings conference call.
Record fourth-quarter results and full-year improvement
CEO Ira Robbins said Valley delivered record earnings in the fourth quarter of 2025, posting net income of approximately $195 million, or $0.33 per diluted share. Excluding “certain non-core items,” adjusted net income was $180 million, or $0.31 per diluted share, up from $0.28 in the third quarter on both a reported and adjusted basis.
Deposit growth and funding mix highlighted as key driver
Management repeatedly emphasized core deposit growth as central to the profitability gains. Robbins said Valley grew core deposits by nearly $4 billion, or 9%, year over year, driven by deeper customer engagement and operating account wins tied to prior investments in talent and technology.
CFO Travis Lan said core deposits rose about $1.5 billion during the quarter, helping the bank pay off nearly $500 million of maturing higher-cost brokered deposits. He added that non-interest deposits increased more than 15% on an annualized basis, though late-quarter activity benefited results and is expected to moderate early in 2026.
Lan said total deposit costs fell 24 basis points sequentially, implying a 55% quarterly deposit beta. He also provided a “spot” view of deposit costs, saying the total portfolio spot deposit rate was 2.32% compared with a 2.45% average for the quarter, with core deposits around 2.10% and brokered deposits around 4.20%.
In discussing the path to further margin gains, Lan cited additional funding repricing opportunities, including $600 million of Federal Home Loan Bank advances at about 4.7% that come due in 2026 and are expected to be replaced at lower rates.
Loan growth, pipelines, and margin trajectory
Valley reported fourth-quarter total loan growth of about $800 million, or 7% on an annualized basis, which Lan said reflected accelerating commercial real estate originations, continued C&I momentum, and complementary residential and consumer growth. Robbins highlighted that total CRE loans grew sequentially for the first time since the second quarter of 2024, led by owner-occupied categories and partially funded by a strategic runoff of “non-relationship” CRE balances.
Management characterized pipelines as strong entering 2026. Robbins said immediate and late-stage pipelines were up more than $1 billion, or nearly 70%, from a year earlier, driven by a $600 million increase in C&I and a $700 million increase in CRE. During the Q&A, executive Gino Martocci said the pipeline was geographically distributed and split between CRE and C&I with a “slight concentration” in C&I; he also said the healthcare vertical remained a strong contributor.
Lan said net interest income increased 4% quarter over quarter and 10% year over year, and net interest margin expanded to 3.17%, above management’s prior fourth-quarter target of above 3.1%. Looking ahead, Valley guided to an additional 15–20 basis points of margin expansion from the fourth quarter of 2025 to the fourth quarter of 2026, “all else equal.” Lan told analysts that the benefit is expected to be “fairly balanced” between loan and deposit sides, including repricing of $1.8 billion of fixed-rate loans maturing in 2026 at around 4.7% that he said would reprice 150–200 basis points higher.
However, he cautioned that first-quarter 2026 margin is likely to dip from the fourth quarter before building through the year, citing day-count impacts and moderation in late-December non-interest-bearing deposit spikes. Lan said each day contributes roughly $5 million of net interest income, making the two fewer days in the first quarter a headwind.
2026 guidance: growth, capital, expenses, and credit
On slide 9 of the presentation, Lan said Valley expects mid-single-digit loan growth in 2026, including roughly 10% C&I growth, low single-digit CRE growth, and mid-single-digit consumer and residential growth. Management expects deposits to outpace loan growth throughout the year, reducing the loan-to-deposit ratio.
Valley guided to 2026 net interest income growth of 11%–13%, with its forecast assuming two rate cuts in 2026. Lan added that if there were no rate cuts, the company would see a “very slight” headwind to net interest income of roughly 0.5%–1%, while noting the forward curve’s longer points are more impactful to Valley’s margins.
Fee income and expenses were also discussed in the context of normalization from a strong fourth quarter. Lan said non-interest income grew 18% during the quarter, with about two-thirds of sequential growth from swap fees and unrealized gains on certain fintech investments—items he described as episodic and “not likely to recur.” He said quarterly fee income in the mid- to high-$60 million range is a “reasonable starting point” for 2026, with expected growth over the year.
On expenses, Lan said adjusted expenses in the fourth quarter included discrete items including a new branding campaign and a performance-based accrual tied to operational milestones. Even with those items, full-year expenses increased 2.6%, below the company’s 9% revenue growth. For 2026, the company projected low single-digit expense growth and said it expects the efficiency ratio to continue declining toward 50%.
On capital, Lan said Valley generated $188 million of net income to common shareholders in the fourth quarter and returned $109 million through dividends and share repurchases. He said earnings generated about 38 basis points of CET1 in the quarter, with about half used to support loan growth and the other half returned to shareholders while keeping capital ratios within the targeted 10.5%–11% CET1 range. Lan also said Valley repurchased over 6 million shares in 2025, including 4 million in the fourth quarter.
Credit trends improving; provision outlook given
Management pointed to improving asset quality metrics. Lan said criticized and classified loans declined by more than $350 million, or 8%, during the quarter, while nonaccrual loans as a percentage of total loans were “effectively unchanged.” Net charge-offs were 18 basis points of average loans in the quarter, bringing 2025 net charge-offs to 24 basis points versus 40 basis points in 2024.
Executives said they expect further normalization of credit costs in 2026. Lan guided to a 2026 loan loss provision of around $100 million, “give or take,” and said the company anticipates general stability in its allowance coverage ratio alongside normalization in net charge-offs.
During Q&A, executives provided additional color on credit. Mark Saeger said the decline in criticized and classified loans reflected both payoffs and net upgrades and, assuming economic conditions remain stable, he expects the trend to continue into 2026 and 2027. Saeger also said an increase in C&I nonperforming loans was driven primarily by one larger syndicated credit that had been in the portfolio for more than 10 years and was moved to nonaccrual following a loan modification, with a specific reserve established.
About Valley National Bancorp (NASDAQ:VLY)
Valley National Bancorp (NASDAQ: VLY) is a regional bank holding company headquartered in Wayne, New Jersey, offering a comprehensive suite of commercial and consumer banking products and services. Through its banking subsidiary, Valley National Bank, the company provides deposit accounts, residential and commercial lending, mortgage services, treasury and cash management, foreign exchange and trade finance solutions. Complementary wealth management and insurance offerings round out its financial services platform, catering to individual, small-business and corporate clients.
Tracing its roots to the establishment of Wayne National Bank in 1927, Valley has grown into one of the largest banks in New Jersey by both assets and deposit share.
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