Valley National Bancorp Announces Adoption Of Share Repurchase Program
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Insights
Valley National Bancorp's announcement of a new stock repurchase program represents a strategic financial maneuver that is often used by companies to manage their capital structure. By repurchasing up to 25 million shares, Valley is signaling a confidence in its current valuation, suggesting that management believes the stock is undervalued or that it is an opportune time to return value to shareholders.
From a financial perspective, this buyback can lead to an increase in the earnings per share (EPS) metric, as the total number of outstanding shares decreases. This could potentially make the stock more attractive to investors by artificially inflating the EPS, even if the actual earnings do not change. Additionally, the repurchase program may provide a floor for the stock price, as it shows the company is willing to invest in itself.
However, it is critical to evaluate the opportunity cost of such a program. The funds used for stock repurchases could alternatively be invested in growth opportunities or used to pay down debt. Investors should consider whether this capital allocation aligns with the company’s long-term strategy and whether it could impact future liquidity needs.
Stock repurchase programs are often received positively by the market as they can be interpreted as a sign of a company's robust financial health and a management team that is actively working to enhance shareholder value. In the case of Valley National Bancorp, the market's response to this announcement will likely depend on the perceived rationale behind the buyback and the overall market conditions at the time of the repurchases.
It is important to monitor the sector's performance and investor sentiment towards banking stocks, as these factors can significantly influence the effectiveness of the repurchase program. If the banking sector is facing headwinds due to economic downturns or regulatory changes, the repurchase program might not yield the expected positive impact on the stock price.
Furthermore, the repurchase program's flexibility, allowing for the buyback to occur over a two-year period and the ability to suspend or discontinue the program, provides Valley with the agility to respond to changing market conditions. This strategic flexibility is a crucial aspect for investors to consider, as it reflects management's commitment to adapt to the dynamic financial environment.
NEW YORK, Feb. 21, 2024 (GLOBE NEWSWIRE) -- Valley National Bancorp (NASDAQ:VLY) (“Valley”) today announced that its Board of Directors approved a stock repurchase program authorizing the purchase of up to 25 million shares of Valley common stock. Valley’s current stock repurchase program, unless terminated sooner, is set to expire on April 25, 2024. The authorization to repurchase under the new repurchase program will be effective on April 26, 2024 and expire on April 26, 2026. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.
Under the new repurchase program, repurchases can be made from time to time using a variety of methods, including open market purchases, all in compliance with the rules of the Securities and Exchange Commission (SEC) and other applicable legal requirements. The program does not obligate Valley to acquire any particular amount of shares and may be suspended or discontinued at any time at Valley’s discretion.
About Valley
As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with approximately
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:
- the impact of monetary and fiscal policies of the federal government and its agencies, including in response to higher inflation, which could have a material adverse effect on our clients, as well as our business, our employees, and our ability to provide services to our customers;
- the impact of a potential U.S. Government shutdown, default by the U.S. government on its debt obligations, or related credit-rating downgrades, on economic activity in the markets in which we operate and, in general, on levels of end market demand in the economy;
- the impact of unfavorable macroeconomic conditions or downturns, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as geopolitical instabilities or events (including the Israel-Hamas war); natural and other disasters (including severe weather events); health emergencies; acts of terrorism or other external events;
- the impact of potential instability within the U.S. financial sector in the aftermath of the banking failures in 2023, including the possibility of a run on deposits by a coordinated deposit base, and the impact of the actual or perceived soundness, or concerns about the creditworthiness of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including FDIC insurance premiums, or adverse impact on our stock price, deposits or our ability to borrow or raise capital;
- the impact of negative public opinion regarding Valley or banks in general that damages our reputation and adversely impacts business and revenues;
- greater than expected costs or difficulties related to Valley's new core banking system implemented in the fourth quarter 2023 and continued enhancements to processes and systems under Valley's current technology roadmap;
- the loss of or decrease in lower-cost funding sources within our deposit base;
- damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent, trademark or other intellectual property infringement, misappropriation or other violation, employment related claims, and other matters;
- a prolonged downturn in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio;
- higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;
- the inability to grow customer deposits to keep pace with loan growth;
- a material change in our allowance for credit losses under the Current Expected Credit Losses (CECL) methodology due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;
- the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;
- greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;
- cyberattacks, ransomware attacks, computer viruses, malware or other cybersecurity incidents that may breach the security of our websites or other systems or networks to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, disable or degrade service, or sabotage our systems or networks;
- results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;
- our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;
- unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events; and
- unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors.
A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 and in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.
We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
| Contact: | Michael D. Hagedorn |
| Senior Executive Vice President and | |
| Chief Financial Officer | |
| 973-872-4885 |
FAQ
What did Valley National Bancorp announce regarding stock repurchase?
When does the current stock repurchase program expire?
When will the new repurchase program be effective?
What factors will determine the timing and number of shares repurchased?
What methods can be used for repurchases under the new program?
