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10 Buy-Rated Bank Stocks With Highest Dividend Yields


2. Valley National Bancorp

Shares of Valley National Bancorp (VLY) of Wayne, N.J., closed at $10.03 Thursday, returning 8% year-to-date, following a decline of 16% during 2012. The shares trade for 1.9 times tangible book value and for 15.4 times the consensus 2014 EPS estimate of $0.65. The consensus 2013 EPS estimate is $0.70.

Based on a quarterly payout of $0.1625, the shares have a dividend yield of 6.48%.

Valley National is rated a B-minus (Good) by TheStreet Ratings.

The company had $16.0 billion in total assets as of Dec. 31 and reported 2012 net income of $143.6 million, or $0.73 a share, compared to $132.5 million, or $0.74 a share in 2011. Valley's earnings-per-share declined because the company issued 17 million shares as part of its acquisition of State Bancorp of Jericho, N.Y., in January 2012.

The company's 2012 ROA was 0.91%, declining slightly from 0.94% in 2011.

Guggenheim analyst David Darst has a neutral rating on Valley National Bancorp, estimating the company will earn $0.70 a share this year and also in 2014. Darst said in a report on Jan. 30 that the company's fourth-quarter results reflected "strong mortgage banking activity, which appears to be a much broader effort relative to peers." Darst also said he was still "modeling a slight decline in revenues in 2013."

Valley's net interest margin narrowed to 3.41% in the fourth quarter, from 3.74% a year earlier. Darst wrote that "both NIM pressure and balance sheet declines are creating headwinds relative to mortgage income growth. Additionally, while mortgage banking is an area of expansion, we are not certain VLY's production growth will counter expected cyclical volume decline in 2013."

Still, the analyst expects that a decline in credit costs and some strength in Valley's mortgage business "should provide an opportunity for earnings stability and allow VLY to maintain the dividend and build regulatory capital."

VLY Chart VLY data by YCharts

Interested in more on Valley National Bancorp? See TheStreet Ratings' report card for this stock.

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