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.

Ira Robbins, promoted to CEO at Valley National in first week of November 2017
Ira Robbins took over as CEO on Jan. 1 following the retirement of longtime CEO Gerry Lipkin.

“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, reflecting an industrywide trend among regional banks. Gains on the sale of loans fell by almost half to $6.4 million. Deposit service charges and insurance commissions both declined.

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.

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Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.