2. Valley National Bancorp
Shares of Valley National Bancorp ( VLY) of Wayne, N.J., closed at $9.63 Monday, down 14% year-to-date, after a 4% decline during 2011. Based on a quarterly payout of 16.3 cents, the shares have a dividend yield of 6.77%. The shares trade for 1.8 times tangible book value, and for 14 times the consensus 2013 EPS estimate of 71 cents. Valley reported third-quarter earnings of $39.4 million, or 20 cents a share, increasing from $32.8 million, or 17 cents a share, in the second quarter, and $35.4 million, or 20 cents a share, in the third quarter of 2011. During the third quarter, noninterest totaled $40.4 million, increasing from $24.0 million the previous quarter, and $20.2 million a year earlier, with nearly all of that increase happening as "Valley shifted the majority of its residential mortgage production to an 'originate and sell' model during the third quarter." The company booked gains on mortgage loan sales of $25.1 million in the third quarter, increasing from $3.1 million the previous quarter, and $2.9 million a year earlier. The increased noninterest income was partially offset by a higher income tax rate. Valley's third-quarter ROA was 0.99%, increasing from 0.83% in the second quarter, and matching the ROA a year earlier. The company reported a third-quarter return on average tangible equity of 14.86%, increasing from 12.49% in the second quarter, and 14.59% in the third quarter of 2011. KBW analyst Damon DelMonte rates Valley "Market Perform" with a price target of $9.50, and said on Oct. 25 that "we look for sustained mortgage banking activity to buoy earnings as spread income comes under pressure," and lowered his 2013 earnings estimate for the company by a penny to 69 cents a share. DelMonte said that "Valley has processed over $2.7b in residential mortgage applications, of which the bank's approval rating on the applications is roughly 70%," and that "loan pipelines remain extremely strong and fourth-quarter results should be at a similar level to the third quarter." The analyst went on to say that "what's really promising regarding the level of mortgage banking, is that despite the recent success, Valley's recently entered New York markets remain extremely under-penetrated, providing the bank great opportunity to further increase market share." VLY data by YCharts
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