Valley National's Positive CRE Developments Are Priced In (Downgrade)

Summary

• Valley National Bank shares have risen 23% over the past year, with a 5% boost from solid Q3 earnings, but valuation is now less attractive.
• The bank's de-risking plan is ahead of schedule, with an $800 million CRE loan sale reducing exposure and mitigating downside risk.
• Deposit performance is resilient, with a $300 million sequential increase and lower customer deposit costs expected to benefit Q4 margins.
• While there is a secure 4.8% dividend, shares appear fairly valued at 10x forward earnings, leading to my revised rating of "hold."

GrandviewGraphics

While shares of Valley National Bank (NASDAQ:VLY) are up 23% over the past year, that gain hides a roller-coaster ride for investors with shares falling considering in H1 amid fears around commercial real estate in the New York City

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.