Wednesday, March 1, 2017

Valley National's Slow Climb Back Up The Mountain

Banks that rely on spread income, and particularly those with expensive funding sources, have had their challenges in recent years and that includes Valley National (NYSE:VLY). On the plus side, this conservatively-run bank has a well-deserved reputation for strong underwriting and a willingness to turn over rocks and sift through the couch cushions to find ways to cut costs without compromising the long-term viability of the franchise. What's more, this company has shown that it can (and will) do deals, and it pays a healthy dividend relative to its peer group.

In this new operating environment for banks, "fairly valued" is the new cheap, and Valley National doesn't look all that overpriced to me. That said, the company is not exactly flush with capital at the moment, and I think it's fair to be concerned that future M&A could be more dilutive. Likewise, I have some concerns about the bank's positioning with respect to its loan book and its capital, but tailwinds like a lower tax rate and a less stringent regulatory environment could both help.

Read more here:
Valley National's Slow Climb Back Up The Mountain

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