JPMorgan analysts upgraded shares of Valley National Bancorp to "overweight," calling commercial real estate headwinds to be "overblown." Yahoo Finance Live breaks the report down.
Video Transcript
JULIE HYMAN: We're also tracking regional bank, Valley National, getting a boost after JP Morgan upgraded the stock to overweight from neutral and raised its price target to $10 a share. Analyst Steven Alexopoulos saying that concerns around commercial real estate are overblown with Valley National's exposure to the market below. Its peers is saying this because Valley National in particular has exposure to Manhattan.
It's interesting the shares aren't moving. They were moving quite a bit in pre-market trading, but now, not so much.
BRAD SMITH: Yeah. One of the quotes from the note specifically saying the Valley office loan exposure is actually different and granular with the average loan size of about $2.2 million that being below peers at 3.1 million well below CMBS loans that were reported to have defaulted. That according to the analysts here.
And also they noted that the commercial real estate market below peers as well. And so that really getting a call out here within this note from JP Morgan analyst with Valley National Bancorp.
It was interesting to track this one pre-market. I think we were seeing a lot more activity, but it got a little bit more diminished as we [INAUDIBLE]
JULIE HYMAN: Well, one of the things that might be affecting it is something that's affecting the banks more broadly today, and that's the story in the Wall Street Journal that talks about some of the new capital requirements that might be put on the banks in the wake of the regional banking crisis.
Basically, the Journal is saying that overall capital requirements are going to go up by 20% on average, which would be a big increase. And that it would affect now banks with market cap of over, I believe, $100 billion in assets from $250 billion in assets. So it would affect more banks here.
And so I don't know off the top of my head what Valley National has in terms of its assets, but nonetheless, there does seem to be some concern in the banking industry. What are they going to have to do to get their capital requirements in order? Again, are we going to have to see some tightening of credit conditions in order for these banks to do that?
BRAD SMITH: Yeah, certainly. We'll keep a close eye on shares of some of those regional banks.
