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Valley National Bancorp targeting a 'LIFT' in efficiency

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Valley National Bancorp targeting a 'LIFT' in efficiency

Valley National Bancorp is looking to utilize its LIFT earnings enhancement program to improve its efficiency ratio to the mid 50s or lower within the next one or two years.

"I think we like to strive to mid 50s or lower if we can," said Chief Lending Officer Tom Iadanza, according to a transcript of the Wayne, N.J.-based company's fourth-quarter 2016 earnings.

Iadanza was referring to the company's LIFT program. The plan, which will be guided by consulting firm EHS Partners LLC, was announced in December 2016 and aims to cut operating expenses and increase revenue.

Alan Eskow, senior executive vice president and CFO, further explained that the efficiency ratio target does not take into account amortization from the tax credits.

"[B]ecause efficiency is supposed to measure the efficiency of what it costs you to produce revenue. It's a tax-related item. And it's only because of the way the accounting requires us to account for it that it's not included down below in the tax line. So it's included up above. That being said, it has an impact on the tax line; it has no impact on the rest of the operations," he said.

The company has tapped 19 of its "best and brightest" for its LIFT project, all of whom will work full time on the project. The initiative is composed out of two phases -- the first will be the idea identification generation, valuation, and approval-of-idea period; the second phase, or the implementation period, is scheduled to begin on June 1. Management also revealed that a particular focus of the initiative will be the company's individual branch network.

On future earnings, the company said that it expects its net interest margin to see a contraction this year.

Valley National Bancorp reported fourth-quarter 2016 net income available to common stockholders of $48.3 million, or 19 cents per share, compared to $41.0 million, or 16 cents per share for the period ended Sept. 30, 2016, and $2.9 million or 1 cent per share for the fourth quarter of 2015.

Full-year 2016 net income available to common stockholders was $161.0 million, or 63 cents per share, compared to 2015 full-year net income available to common stockholders of $99.1 million or 42 cents per share.