Commercial real estate lending

Valley National Bank and Dime Community Bancshares expect a better balance of deposit costs to help boost their net interest margins in 2025.

The Dallas-based company expects average loan growth to be flat to up 1% from 2024, driven by the ongoing payoffs of commercial real estate loans, executives said.

The Louisiana-based bank reduced its dividend to a penny, the second reduction it has made this year as it tries to bring down expenses and generate more capital.

Median growth among small U.S. lenders was 1.2% for the third quarter. Bankers are hoping lower interest rates will boost demand, but borrowers aren't jumping.

Lower borrowing costs, reduced exposure to the urban office sector and flattening vacancy rates could collectively save lenders from beleaguered corners of the commercial real estate market.

Treasury yields rose the day after President-elect Donald Trump was picked. The short-term result: It's harder for commercial real estate lenders and borrowers to find common ground.

The added capital will help the New Jersey-based regional bank reduce its commercial real estate footprint faster and give it wiggle room to grow elsewhere, analysts said.

The bank, which is rebranding to Flagstar Financial, still expects to meet 2027 earnings goals, despite reduced profit projections for the next couple of years.

The bank cut its dividend, raised capital, hired multiple top executives and vowed to reduce its commercial real estate concentration after a bruising first half of 2024.

The Arkansas bank said CRE is no longer its principal growth driver, yet it is still the bank's most prominent business and a big part of its robust lending activity.