UPDATE: JP Morgan Downgrades Valley National Bancorp to Underweight on Dividend Cut Risk

JP Morgan downgraded its rating on Valley National Bancorp (NYSE: VLY) from Neutral to Underweight and reduced its price target from $11 to $9.50.

JP Morgan commented, "In the forward looking statement section of the press release, a new risk factor was added this quarter which indicated “Valley's inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital requirements (including those resulting from the U.S. implementation of Basel III requirements).” The company has also cited in 10K/Qs that the company must consult with the Fed prior to declaring or paying a dividend which exceeds earnings in a period and that the Fed has also cautioned banks about distributing dividends that reduce capital."

Valley National Bancorp closed at $9.65 on Thursday.

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