Banks in New York City Area Forecast Increased Profitability in 2025



New York City, NY - March 10, 2023

Banks in the New York City area are projecting a surge in profitability in 2025 as they continue to bolster their balance sheets and address market disruptions. Valley National Bank and Dime Community Bancshares reported strengthened capital positions and plans to expand net interest margins.

Enhanced Balance Sheets

Valley National Bank and Dime Community Bancshares have shed underwater bonds and built capital cushions, reducing their exposure to commercial real estate. Valley's commercial real estate exposure ratio has declined to 362%, while Dime's stands at 445%.

Deposit Growth Strategy

Banks are focusing on accumulating cheaper deposits to offset rising funding costs. Valley plans to leverage its specialty verticals and enhance its commercial customer base. Dime has increased its core deposits by $513.4 million and expects continued growth in 2025.

Market Opportunity

The recent failures of Signature Bank and First Republic Bank, coupled with the ongoing restructuring of Flagstar Financial, have created opportunities for banks in the Tri-State area. Valley and Dime, along with other regional banks, are targeting private bank business and deposit gathering.

Strategic Capital Raises

Both Valley and Dime raised capital in 2023 to fund these initiatives. Valley raised $400 million, while Dime raised $136 million. These funds have been used to sell low-yielding holdings and enhance their balance sheets.

Earnings Outlook

Valley National Bank reported net income of $115.7 million in its fourth quarter, boosted by a tax benefit. Dime Community Bancshares reported earnings per share of 42 cents, below analyst estimates. Both banks remain optimistic about their earnings prospects in 2025.