NYC-Area Banks: Balancing Deposit Growth and CRE Reduction
Thursday, Jan 23, 2025 3:54 pm ET
3min read In the competitive landscape of New York City-area banking, Valley National Bank and Dime Community Bancshares are focusing on two key strategies to drive growth and improve their financial health: deposit growth and commercial real estate (CRE) reduction. These banks, along with others in the Tri-State area, are responding to the ongoing overhaul of Flagstar Financial and the failures of Signature and First Republic Bank by targeting private bank business and deposit gathering to fill potential holes in the market.
Deposit Growth: A Key Priority
Valley National Bank and Dime Community Bancshares are both prioritizing deposit growth as a critical component of their growth plans. Valley aims to leverage its specialty verticals and enhance its commercial customer base to attract deposits, while Dime has been hiring deposit-gathering teams to increase its deposit base. Both banks expect solid deposit growth in 2025, based on their current pipelines.
* Valley National Bank: Leverage specialty verticals and enhance commercial customer base
* Dime Community Bancshares: Hire deposit-gathering teams and continue recruiting in 2025
CRE Reduction: Managing Risk and Improving Financial Health
As the commercial real estate market has shown cracks in recent years, investors and regulators have kept a closer eye on banks with CRE portfolios totaling more than 300% of their capital. Valley National Bank and Dime Community Bancshares have both been working to reduce their CRE loan-to-capital ratios to improve their financial health and regain lost ground with investors.
* Valley National Bank: Reduced ratio from 474% to 362% by the end of 2024
* Dime Community Bancshares: Managed ratio down to about 445% and expects to reduce it to the low 400s
Challenges and Opportunities
While Valley and Dime are optimistic about their prospects for deposit growth and expanding net interest margins, they face potential challenges such as competition for high-yielding deposits, CRE market distress, regulatory scrutiny, and economic uncertainty. These banks must navigate these challenges effectively to achieve their growth goals.
In conclusion, Valley National Bank and Dime Community Bancshares are focusing on deposit growth and CRE reduction to drive their growth plans and improve their financial health. By targeting private bank business and deposit gathering, these banks aim to fill potential holes in the market and expand their customer base. However, they must navigate the competitive landscape and address potential challenges to achieve their goals.
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