The Bank Slate


Valley in New York purges $300M of loans from its balance sheet

Valley National Bancorp in New York sold nearly $300 million of loans in the first quarter – with plans to unload more as it looks to reduce its reliance on commercial real estate lending.

The $61 billion-asset company said in a press release that it sold its commercial premium finance lending business in February and $197 million of commercial real estate and construction loans a month later.

Valley recorded a $3.6 million net gain from the sale of the premium finance business, which included $93.6 million of commercial and industrial loans. Valley did not disclose the buyer.

The CRE and construction loans were sold through loan participation agreements at par value. Valley also moved $34.1 million of construction loans to held-for-sale status during the first quarter.

The company plans to lower its ratio of CRE to risk-based capital from 464% on March 31 to 440% by the end of this year and below 400% in the next two years.

“We have proactively slowed loan growth and undertaken modest balance sheet efforts to enhance our financial flexibility,” CEO Ira Robbins said in the release.

Total loans, as a result, fell by 1.5% from Dec. 31, to $49.5 billion.

Valley said its quarterly profit fell by 34% from a year earlier, to $96.3 million.

Net interest income decreased by 10% to $394 million. Noninterest income rose by 13% to $61.4 million, partially reflecting the sale of the premium finance business.

The loan-loss provision jumped to $45 million from $9.5 million a year earlier. Valley had $23.6 million of net chargeoffs in the first quarter, including $9.5 million tied to a nonperforming taxi medallion loan relationship and $7.6 million of partial chargeoffs tied to two construction loans.

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