Valley National Bank Adheres to Sound, Conservative Lending Principles
Thursday, March 7, 2013 • 5:55pm
People don’t usually associate “fun” and “banking,” but the phrases come naturally to Gerald H. Lipkin, the president and chief executive officer of Valley National Bank.
When the Wayne-based financial institution closed out 2012, it posted net income for the year of $143.6 million, up from $132.5 million in 2011. Valley also closed a record number of mortgages in the fourth quarter of 2012, even as reports circulated that some other banks were hesitant to offer loans.
“While other banks continue to struggle with credit issues, excessive cost cutting, foreclosure-related challenges and other financial difficulties, we continue to serve the borrowing needs of the communities we serve by adhering to our sound and conservative lending principles,” says Lipkin, 72. Although the bank has a succession plan in place, he has no plans to retire in the near future.
“Valley never participated in the subprime residential mortgage lending fiasco that led to the financial crisis of 2008,” Lipkin explains. “We choose to pursue a more prudent course of action, instead of taking on riskier lending opportunities in pursuit of short-term gains.”
The strategy enabled Valley, which has about $16 billion in assets, to weather the storm of the financial crisis and gave it confidence in closing loans while expanding its footprint. Valley currently fields 210 branches in 146 communities throughout northern and central New Jersey, Manhattan, Brooklyn, Queens and Long Island.
“Our conservative lending culture has proven to be the fundamental philosophy that has enabled Valley National Bank to remain a reliable and trusted financial institution for 85 years,” says Lipkin. “As we grow, we have also maintained a personal touch by reinforcing this concept in all of our sales and service strategies. Other banks
provide service based on the size of the relationship, but at Valley, we deliver the same exceptional service to every customer, regardless of relationship size. We understand the importance of delivering personalized customer service to the individuals and businesses we serve, and provide big bank resources and small bank customer service to every customer. That’s what we call “the perfect fit” and it’s a concept we embrace passionately in everything we do.”
Under Lipkin’s leadership, Valley has expanded considerably, with transactions like the January 2012 acquisition of State Bank of Long Island. He says that one advantage of acquiring an established institution, instead of building branches from the ground up, is that adding a “known and respected entity to your organization” gives Valley an existing market share, and often involves a bank that share’s Valley’s corporate philosophy.
“Valley has become accustomed to these acquisitions and our experienced professionals are able to integrate these new banks onto our system efficiently and seamlessly,” he explains. “Although we started in New Jersey, we saw a number of opportunities in expanding the Valley National Bank brand into new markets such as Manhattan, Brooklyn, Queens and Long Island. We felt that we can be successful in these markets because of the financial character of the areas and by offering a wide range of innovative financial solutions along with the personalized customer service we have become known for.”
But it’s not all roses, as Lipkin says that “over-regulation” is one of the most important challenges facing the banking industry.
“Community and regional banks, such as Valley National Bank which played no role in creating the financial crisis, are being unnecessarily burdened by an overwhelming number of costly regulations,” he says. “In an effort to mitigate the risk posed by a number of investment banks that pushed us into this crisis in the first place,
Washington, D.C. has deemed it necessary to add an overabundance of regulatory reforms. These reforms are costly and prohibitive to conducting business in today’s banking industry."
Still, Lipkin is confident about the bank’s future.
“We are always exploring opportunities to grow the bank outside of our footprint to maintain long-term shareholder value,” he says. “And we plan to continue to grow commercial loans and residential mortgage business.”