Earnings at Valley National Bancorp in Wayne, N.J., fell significantly in the fourth quarter, largely because of costs to pay off debt.
The $22 billion-asset company's profit fell 89% to $2.9 million, compared to a year earlier. Earnings per share fell 91% to 1 cent.
The quarter included a $51.1 million loss on the elimination of $845 million in high-cost debt, a move that had been previously announced.
Net interest income increased 15.9%, after the provision for loan losses, to $144.5 million. The net interest margin increased 10 basis points to 3.25%. Both improvements were largely due to a reduction in interest expense related to the debt extinguishment.
Valley also benefited in the quarter from an $11 million credit on income taxes.
Total loans rose 19% to $16 billion. All lending categories posted year-over-year gains, including commercial real estate, Valley's largest loan category, which rose 20% to $7.4 billion.
Noninterest income fell 18.9% to $24 million on lower gains on securities transactions and deposit service charges. Valley said the year-over-year comparisons were unfavorable because the bank sold Manhattan branches in the fourth quarter of 2014, which generated a pre-tax gain of $17.8 million.
Noninterest expense rose 44% to $174.9 million, primarily due to the debt extinguishment. Additionally, about $1.5 million of costs related to Valley's acquisition of CNLBancshares increased expenses. Valley closed the CNL acquisition on Dec. 1.
Several other items contributed to the higher expense line. Valley recorded a $7.9 million increase in the amortization of tax credit investments. It incurred $2.6 million of additional costs for lease obligation expenses in advance of its plan to close 15 branches this year. Valley also booked $850,000 of severance costs to terminate employees. The bank's efficiency ratio worsened to 101.6% from 76.7%.