Valley National Raises Net Income to $206.3 Million in Third Quarter
Key Facts
Valley National Bancorp reported on October 22 that net income reached $206.3 million in the third quarter of 2026, or $0.36 per diluted share, compared with $163.4 million and $0.28 per share in the same period of 2025. The increase in earnings coincided with an improvement in net interest margin and growth in loans and deposits. Credit quality indicators, however, showed mixed trends, as net loan charge-offs and nonaccrual loans increased while past-due loans still accruing interest declined. The company said net interest income on a tax-equivalent basis was $506.8 million, up $18.4 million from the second quarter and $59.3 million from the third quarter of 2025. The filing showed the efficiency ratio improved to 49.38%, compared with 52.11% in the second quarter and 53.37% a year earlier.
Net interest margin on a tax-equivalent basis was 3.28% in the third quarter, up 8 basis points from the second quarter and 23 basis points from the same period of 2025. The company attributed the increase in interest income from the previous quarter to repricing of variable-rate loans, higher yields on new loans, an increase in average loans, and one additional business day in the quarter. These factors were partly offset by higher interest expense on deposits. The increase in tax-equivalent interest income was $18.4 million compared with the second quarter and $59.3 million compared with the third quarter of 2025. The figures reflect improved interest income and margin during the period, alongside continued increases in deposit costs.
Deposits rose $1.1 billion to $55.2 billion on September 30, from $54.1 billion on June 30. The company said the increase came primarily from direct customer deposits. These inflows included commercial deposits and retail certificates of deposit promotions. On the asset side, total loans increased $722.7 million during the quarter to $53.2 billion. The quarter's annualized loan growth rate was 5.5%.
A large portion of loan growth was concentrated in commercial and commercial real estate lending. Commercial and industrial loans increased $363.0 million, while commercial real estate loans rose $343.5 million during the quarter. Net loan charge-offs were $37.1 million, compared with $22.0 million in the second quarter and $14.6 million in the third quarter of 2025. Nonaccrual loans also increased to $511.4 million, or 0.96% of total loans, on September 30, from $462.6 million and 0.88% at the end of June. The company attributed the increase primarily to a $30.1 million construction loan moving to nonaccrual status and higher commercial and industrial loans in this category.
By contrast, past-due loans still accruing interest fell to $154.5 million, or 0.29% of total loans, at the end of September, from $180.2 million and 0.34% at the end of June. This decline was a different trend from the increases in nonaccrual loans and net charge-offs during the quarter. The efficiency ratio fell to 49.38% from 52.11% in the previous quarter and 53.37% a year earlier. The company's shares also rose 1.92% in premarket trading on October 22 to $13.27, compared with a previous close of $13.02. The filing did not include a comparison of quarterly results with analyst estimates.
The company expects to complete its pending acquisitions of Providence Financial Corporation and Bluevine in early 2027, subject to regulatory approvals and customary conditions. Management said Providence would strengthen the bank's presence in the Chicagoland area, while Bluevine would expand its digital services for small businesses. The company said its target is to reach a 15% return on average tangible equity by the end of 2027, and said it is on track to achieve or exceed that goal. These steps place geographic expansion and digital services within the company's plans for the next phase. Completion of both acquisitions remains subject to approvals and customary conditions.