Valley National Bancorp's Q2 2025: Navigating Key Contradictions in Deposit Pricing and Credit Quality

Deposit pricing and competitive environment, credit quality and stability, deposit growth and strategy, credit quality and nonaccrual levels, and deposit pricing and competitive environment are the key contradictions discussed in Valley National Bancorp's latest 2025Q2 earnings call.



Revenue and Earnings Growth:
- Valley National Bancorp reported net income of $133 million or $0.22 per diluted share and adjusted net income of $134 million or $0.23 per share for Q2 2025, compared to $106 million and $0.18 on both reported and adjusted basis in Q1 2025.
- The growth is attributed to solid momentum in net interest income, noninterest income, and a lower loan loss provision.

Deposit Growth and Transformation:
- Valley added over 105,000 new deposit accounts, contributing to approximately 8% core deposit growth in the past 12 months.
- This resulted in a reduction in indirect deposit reliance from 18% to 13%, accompanied by a 51 basis point reduction in the average cost of deposits.
- The transformation is driven by targeted investments in talent, technology, market penetration, and specialty verticals.

Commercial Loan Diversification:
- Valley's Commercial & Industrial (C&I) portfolio grew at a 19% compound annual rate since 2017, with nearly 15% growth over the last year.
- Growth was driven by disciplined relationship-driven expansion in dynamic markets and specialization in health care and fund finance verticals.

Fee Income Expansion:
- Noninterest income has grown at a 12% annual rate since 2017, more than double the pace of peers.
- The composition of noninterest income has improved, with volatile gain on residential loan sale revenue decreasing from 20% in 2017 to 3% in Q2 2025.
- This is due to strategic focus on capital markets, treasury management, and tax credit advisory offerings.