Earnings season is here once again. We're about a week in, but we have already seen some impressive numbers from banking behemoths JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America. While these results are important to those of us that follow the banking sector, my interest lies in some of the smaller banks beyond the behemoths.
The latest regional bank to check in with earnings is Valley National (VLY +0.48%), which will be released before the market opens on Thursday. With that in mind, here are some things I will be watching for in the earnings release.
What analysts are expecting
The previous three quarters have seen Valley National miss earnings expectations, so the bank is looking to turn that around this quarter. Analysts are expecting a increase in revenue and a decrease in earnings from the same quarter last year, with $148.7 million in revenue and $0.17 in earnings per share. Being based in the New York Metropolitan area gives Valley National a large customer base to draw from, which in turn helps drive performance. Though not the largest bank in New York, this large customer base helped drive new residential and commercial mortgage originations during the second quarter, a trend that the bank hopes to continue this quarter and beyond.
Balance sheet improvement
Valley National has done quite well managing its nonperforming loans, with only 1.22% of loans in this category at the end of the previous quarter. And this was even after an increase to total nonperforming assets during the quarter! For a bank of this size, with over $17 billion in assets, this number is pretty impressive. Should it reverse last quarter's trend and get even better, this strong balance sheet will get even stronger.
What else to look for
Valley National garners a lot of attention for its pretty substantial dividend, which currently checks in at a robust $0.65 per year. The subsequent yield near 7% places it in rarefied air among a lot of non-REIT financial companies, and it was one of the reasons my Foolish colleague included Valley National in his list of banks to watch in 2012. Though banks typically use annual earnings reports to increase dividend payouts, you never know when a bank might sneak one in during an "off" quarter.
