Valley National Bancorp (NASDAQ: VLY) stock was down 19% and change yesterday. But something we've got to grasp is that even at times of heightened worry about bank stocks - who is going to be the next First Republic, repeat the Silicon Valley experience? - such prices do change for reasonable and non-ruinous reasons.
Or, at least, we've got to keep in mind that even as some banks really do have major problems for some to many others it's just normal times. And some will be doing better than they have, some worse, but this does not mean that every price fall is the presaging of the collase of the bank. So it is - or so it seems to be - with VLY here. The stock down 20% is not because someone's said that it's about to go bust. Nor is there any heightened risk being predicted. It's simply that the business is likely to do a little less well than we all thought before.
Valley National Bancorp stock price from NASDAQ
The particular problem here is: “In the wake of a rising interest rate environment, the company's deposit costs have been climbing, but at an even faster pace than peers, the note said. "We are concerned that deposit costs will continue to increase until the gap with Fed funds narrows further."” Banks live off their interest rate margin. That margin is developing not to Valley National's advantage. This is a deterioration in the bank's performance, sure, but not something threatening in any way. Lower profits perhaps, but not chaos and destruction.
As recent events have shown us there can indeed be times to panic about bank stock prices. But it's also true that there are times not to panic - this is one of those perhaps.