Valley National Bancorp

The stable outlook reflects S&P Global Ratings' view that Valley will continue to generate solid core earnings while maintaining strong asset quality measures and adequate capital and funding for at least the next two years. We expect the company will successfully integrate BLUSA and will gradually improve its revenue mix by adding its business lines. Although we could see some upticks in NPAs or NCOs in the CRE portfolio as recent government support programs expire, we expect any increases to be modest and in line with Valley's history of strong loan performance. If, however, the company's asset quality deteriorates meaningfully, its large exposure to CRE loans increases as a percentage of total loans or total capital, or core funding measures

...Our ratings on Valley National Bancorp reflect its established franchise in its competitive home market of northern New Jersey and metropolitan New York City and its newer presence in Florida and Alabama. That said, Valley's business is concentrated geographically and by product type, in our view, which could leave its performance vulnerable to shifts within those markets. Valley's earnings rely heavily on net interest income, with limited revenue diversity. Although pending acquisitions, including that of Bank Leumi USA (BLUSA), will incrementally improve business diversification, this concentration risk remains a factor in our ratings. We view Valley's high exposure to commercial real estate (CRE) loans, which measure about 49% of its loan portfolio, as a vulnerability for the rating. Our ratings acknowledge the bank's conservative credit culture and its history of good asset quality, with loan losses consistently below those of peers. The company's asset quality remains strong, with...

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