Valley National Offloads Roughly $925M CRE Loans to Brookfield

Valley National Bancorp. VLY announced the completion of the sale of a diverse pool of performing commercial real estate (CRE) mortgage loans to Brookfield Asset Management Ltd. BAM.Details & Rationale Behind VLY’s Loan SaleThe final loan pool sold by Valley National had a contractual balance of roughly $925 million, of which almost $823 million was identified and moved to held for sale as of Sept. 30, 2024. The loan pool has been sold at a discount of roughly 1% to par value to BAM, with VLY retaining customer-facing servicing responsibilities.VLY anticipates recognizing an immaterial incremental net loss related to a 1% discount on loans and traditional transaction-related expenses during the fourth quarter of 2024.This move aligns with Valley National’s efforts to manage the CRE loan portfolio prudently and reduce its exposure to the loan category, thus mitigating concentration risk. As of Sept. 30, 2024, CRE loans accounted for 61.6% of total loans.This loan sale is expected to benefit CRE concentration by roughly 13% and add over 15 basis points of regulatory capital on a pro forma basis. Further, during the announcement of third-quarter 2024 results, management noted plans to utilize the proceeds from the loan sale to repay maturing indirect customer deposits in the fourth quarter. Also, the company stated that this will likely lead to a 1% decline in net interest income sequentially in the ongoing quarter.Ira Robbins, chairman and chief executive officer of Valley National, stated, “The sale of this performing commercial real estate loan pool has helped to accelerate progress towards our strategic balance sheet goals. Throughout the year we have patiently monitored loan sale opportunities in the context of our deep understanding of the intrinsic value of our assets, and the unique dynamics of the markets that we serve.”VLY’s Zacks Rank & Price PerformanceOver the past year, shares of Valley National have risen 8%, underperforming the industry’s growth of 18.2%.Image Source: Zacks Investment ResearchCurrently, VLY carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Restructuring Initiatives by Other BanksLast week, sources with knowledge of the matter reported to Reuters that HSBC Holdings PLC HSBC plans to close its credit card operations in China as it faces challenges to achieve growth and profitability in the region.HSBC has ceased the issuance of new cards and aims to wind down the service offered to a major chunk of China's onshore customers. The closure is taking place following unsuccessful attempts to divest the business.Similarly, Barclays PLC BCS intends to establish a new Private Banking booking center in Singapore, expanding its presence in the Asian region. The center is anticipated to be operational by 2026 to serve the company’s private banking clients.This move reinforces BCS’ emphasis on Asia expansion as it continues to offer specialist investment, banking, lending and wealth advisory services to its ultra-high-net-worth clients and global family office clients.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Barclays PLC (BCS): Free Stock Analysis Report Brookfield Asset Management Ltd. (BAM): Free Stock Analysis Report Valley National Bancorp (VLY): Free Stock Analysis Report HSBC Holdings plc (HSBC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks