Standing Firm

A year ago, Valley National Bank said it wouldn’t cave to irrational pricing. Apparently, the bank has stood its ground.

The bank’s loan portfolio dropped 9% last year ― to $772.5 million from $850.8 million ― in part, because of competition. From the Wayne, N.J. bank’s yearend 2011 earnings release:

“In an attempt to build marketshare, some large competitors continue to offer rates and terms that we have elected not to match. These factors may continue to constrain the levels of our auto loan originations during the first quarter of 2012 and the foreseeable future.”

Valley National also cited its “high credit standards, acceptable loan to collateral value levels, and high unemployment levels” as reasons for the declining volume.

Tags: competition, earnings, valley national

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Comment by Michael Smitka on January 26, 2012 at 1:51pm: Hmmm ... and if the headwinds in the EU blow stronger, there may be even more institutions wanting to build up auto-related paper in the US. What's been happening to loan terms? -- lower rates eat into up-front profits, looser terms eat into them only down the road (and ideally on someone else's watch...).

Comment by Chas Roscow on January 30, 2012 at 5:58am: Valley National is facing the same challenge that has existed ever since GMAC was formed to help sell GM vehicles on time sales. They should be admired for avoiding the lazy lender's strategy of lowering the rate and buying deeper - the path of least resistance and a path that leads to a profitless portfolio. But there are two moves Valley could make to bolster auto volume even in a crowded and competitive market. So simple that I love teaching lenders these two tricks that have worked for many. They involve an innovative product and savvy marketing.