Valley National (VLY) is trading at is best levels since October today after reporting an in line second-quarter earnings per share (EPS) of $0.23 vs. $0.22. Much of this was driven by the company’s cost reduction efforts. Other metrics were good overall, with loan growth up 6% and credit costs very subdued. The only negative was a very slight decline in the net interest margin to 2.96% from 2.98%.

We have forged a close to a 9% gain on VLY over the past two years since my recommendation. Much of this was due to dividends and, VLY’s yield remains attractive at 4.13%. The recent decline in long-term rates could have implications for the company’s margins in the long-term.

Over the short-term, funding costs will decline faster than borrowing rates and the net interest margin could improve over the next several quarters.

If the market gains confidence in next year’s $1.00 EPS estimate, my $12 target is achievable. The stock remains a buy on market pullbacks that push it below $10.