- Raymond James analyst Steve Moss downgraded Valley National Bancorp VLY to Market Perform from Strong Buy.
- The analyst is bearish on increasing revenue challenges risk due to VLY's rate-sensitive deposit base and rapidly rising funding costs for the industry.
- Moss notes that VLY's deposit cost has increased faster than its peers and is concerned that it will continue to grow until the gap with Fed funds further narrows.
- The analyst thinks that VLY's ability to reprice existing loans to rates to support net interest income (NII) growth is difficult without a significant increase in problem credits.
- Although Moss expects strong loan growth, he is concerned that VLY will have to fund loans closer to Fed funds amid a higher rates environment and projects new loans not to be accretive to NII.
- Moss decreased adjusted EPS estimates to $1.17 from $1.36 for 2023 and $1.07 from $1.25 for 2024.
- Price Action: VLY shares are trading lower by 17.6% at $7.73 on the last check Monday.
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