Valley expects strong full-year loan growth despite a second-half slowdown

Valley National Bancorp is expecting its lending business to slow in the second half of the year, but it still predicts that full-year growth will be strong.

The New York City company said Thursday that it anticipates net interest income, which totaled around $1.05 billion in the first half of the year, will come in around $900 million in the second half.

It also projects that organic loan growth, which hit 21% in the second quarter, will be in the 8%-10% range during the back half of the year.

“I think the consumer lending components of our balance sheet are probably going to be a little bit under pressure, based on what we’re seeing in the economic and interest-rate environment today,” CEO Ira Robbins said in an interview after the company’s second-quarter earnings call.

“That said, still putting forth 8%-10% loan growth is significantly better than where the industry is, and we’re excited about what this opportunity will look like for us.” 

Based on its performance in the first and second quarters, Valley says it’s on track to exceed its original full-year estimate of 10%-12% loan growth.

Valley, which now has $54.4 billion of assets, closed its acquisition of the $8.1 billion-asset Bank Leumi USA on April 1. Part of the deal’s appeal was Bank Leumi’s presence in venture capital banking, a business that has recently come under pressure as the valuations of publicly traded technology companies have fallen.

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Robbins said that the market changes are not having a big impact on Valley, which did not have a presence in venture capital banking prior to the Bank Leumi acquisition.

“Valley’s focused on relationship banking, and venture capital and the tech business make up a small percentage of our overall business,” Robbins said. “As a result, I think there’s probably less volatility in our tech and VC customer base than maybe we’re seeing in other organizations.”

During the second quarter, Valley reported net income of $96.4 million, down from $120.5 million in the second quarter of the previous year. Net income was significantly reduced by merger-related expenses, including both integration costs and accounting charges. 

After excluding non-core charges, Valley reported net income of $165.8 million, up 31% from the same period a year earlier.