A drop in fee income and elevated expense levels combined to reduce fourth-quarter profit at Valley National Bancorp in Wayne, N.J. The new tax law also took a bite out of earnings.
The $24 billion-asset Valley said Thursday that it earned $22.9 million, or 9 cents per share, in the fourth quarter after recording an $18.3 million charge to devalue its deferred tax assets
Excluding that one-time charge, which was tied to the passage of the Tax Cuts and Jobs Act, Valley's net income was $46.6 million, down 4% from the same period a year earlier. Its adjusted earnings per share of 18 cents beat by a penny the mean estimate of analysts compiled by FactSet Research Systems.
“Valley made substantial progress towards greater profitability in 2017,” Valley's first-year CEO, Ira Robbins, said in a news release. “Excluding infrequent charges, our adjusted net income for the fourth quarter of 2017 was up over 7% from the third quarter of 2017.” Robbins took over as CEO on Jan. 1 following the retirement of longtime CEO Gerry Lipkin.
Net interest income increased 6% to $169.8 million. Total loans grew 6% to $18.3 billion with increases in all major loan categories except residential mortgage and home equity.
Valley’s portfolio of impaired taxi-medallion loans increased 58% to $63.9 million from the third quarter, representing about half its total taxi loan book. Reserves associated with the impaired loans rose 82% to $9.1 million.
Noninterest income fell 15% to $27.6 million,
Noninterest expense rose 9% to $136.3 million. The increase was attributed to an $11.9 million increase in the amortization of tax credit investments. Valley also booked a $4.3 million charge to cover losses from impairments on tax-advantaged renewable energy and low-income housing investments.
