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Business Observer Friday, Dec. 20, 2019 7 months ago

Valley rally: Bank accelerates march into Florida

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Valley National Bank’s CEO keeps one lesson learned close: Stay true to who you are.
by: Mark Gordon Managing Editor

Ira Robbins was a 30-something banker, on the rise at the only bank he ever worked for, New Jersey-based Valley National, when then-CEO Gerald Lipkin taught him a lesson he has never forgotten.

It was in the mid-2000s, when the bank’s growth had slowed. Although it hadn’t posted a losing quarter — it’s never had a losing quarter in its 90-year existence — there was pressure on it to get into the financial product of the day: subprime lending. But at a meeting with analysts and bank officials, Robbins recalls that Lipkin pounded his fist repeatedly on the table. “We will not make a subprime loan because it isn’t right for the communities we operate in,” Lipkin said at the meeting, Robbins says.

The shrewd move to avoid subprime, though it cost the bank customers and profits at first, cushioned the blows Valley took in the recession when it didn’t have has many loan issues. It also taught Robbins, who was named president in 2017 and CEO in early 2018, replacing Lipkin, the fundamental value of sticking to a company’s mission.

“When we say community first, we actually mean it,” says Robbins, 45. “Valley said we will not make one subprime loan because it’s bad for the communities we operate in. No other bank in the country our size did that. It’s different when you have an organization that says they are community focused, but in the end if there is a dollar to be earned, they earn that dollar.”

Robbins was in Sarasota recently for a ribbon-cutting at the bank’s newest branch, in the lobby of the Bold co-work office building downtown. Valley, under New York City-based holding company Valley National Bancorp, has been doing business in Florida since the 1970s and has had a presence on the west coast for five years. Its big move in the region came in January 2018, when it acquired Clearwater-based USAmeriBank. With $4.5 billion in assets and some 30 offices when Valley acquired it, USAmeriBank, founded in 2007, was one of the best Tampa area de novo bank successes ever.

Robbins says Florida now represents about 35% of the bank’s $35.73 billion in assets. At the ribbon-cutting, held Nov. 19, Robbins cited Florida’s population and jobs surge, particularly on the West Coast, as one reason to aggressively target it for more business loan customers. The branch in the Bold building, following another office on Main Street, is its latest step in that direction.  “This is a market we think is ripe for growth,” Robbins says.

 

What do you see in Florida that’s convinced you to open branches and grow your presence in the state?

Florida is growing, and it’s a different type of individual who’s coming. Twenty years ago, it was the senior citizen, or someone looking to retire. Today it’s someone who has a desire to start a better life for themselves. And he or she wants to start businesses down here as well because the environment is more conducive to helping them prosper. That’s the area we want to be in.

How will Valley separate itself from other regional competitors?  

There are only a handful of banks in the country that fit our profile, which would be a midcap regional bank. And there’s a real need for that in the banking space today. There’s about 5,500 banks and 10 or so large banks, [so] most of the banks are in the smaller segment. And while it’s great for small banks to give personalized service, borrowers' needs inevitably grow. And there’s an opening, a void within that middle market space. And for us, staying focused on middle market customers, there’s not much competition there.

There are only 39 banks in the entire country that are between $10 billion and $50 billion in size. When you look at where a middle market customer is going to go today, they are going to end up at a Bank of America, where they are going to be put in a box. And entrepreneurs are never going to be able to grow their businesses and get their financial needs meet if they are put in a box.

How does the bank address other financial services competitors, especially in fintech? The Big Three — Apple, Google and Facebook — are all moving  there quickly, Apple with a credit card and Google with a possible bank.

Most consumers today are being focused and led to toward technology solutions. Technology is great. There’s a lot of opportunity when it comes to technology in the banking space. But the reality is [that] banking is a relationship business, and technology is an enabler of a relationship. It’s not a replacement of a relationship. For our size organization, that’s the glue. That’s what makes the economy move. That’s what will make our numbers move.

What is Valley doing in technology to improve its customer-banker relationship?

‘Unfortunately we are an environment today where we don’t listen to people. We talk and then we listen to hear what we are going to say next — not to what people are actually saying. That’s a problem.’ Ira Robbins, Valley National Bank

JPMorgan spent billions on Finn, and Finn (a digital-only bank aimed at millennials that launched in 2018) went under. We’ve partnered with a bunch of different fintech companies that provide solutions we think enable a better customer experience. There are fintechs we own a little piece of.

But we always start with the customer. What is the customer friction point we are trying to solve? And then how do we enable technology to work with our relationship managers to provide a better banking experience? That is different from I think how most organizations do it. They look at technology and say, ‘Let's throw this technology at this customer because we think it makes sense.’ At our organization, we start with the customer.

How does Valley maintain a strong culture, with more than 3,000 employees in multiple markets?

A valued culture starts with employees. There are five parameters to a good culture: employees, customers, continuous improvement, innovation and risk. That’s consistent with any organization — it’s really how you prioritize it. In our organization, the employee experience and the customer experience drive it. The others are guardrails surrounding what you look at.

We have career ladders. Every single employee has six touch points during the year to make sure that what he or she wants is a focus in the organization. One of my responsibilities is to make sure every one of our employees can achieve what he or she wants in life. And if we’re not providing a solid foundation and a road map for them to achieve that, then I have failed them. And then the bank will never grow.

The banking sector has been under fire from many leading contenders for the Democratic nomination for president in 2020.  How do you and the bank address that threat?

I find it amazing but I don’t think people recognize the contribution banks have to economic growth in their communities. There’s a 95% correlation between loan growth in a community and economic growth within that community. If banks aren’t involved in those communities, then those communities aren’t growing. And if the bank doesn’t understand the community’s need, then it isn’t going to grow, either. It takes a partnership. The challenge in politics today is one side thinks it can do it on their own. And unfortunately, we are in an environment today where we don’t listen to people. We talk, and then we listen to hear what we are going to say next — not to what people are actually saying. That’s a problem.

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