Valley Bank is tightening spending but keeping an open mind toward investments that expand capabilities and deliver measurable gains.

THE BIG PICTURE: The $62 billion bank today reported first-quarter noninterest expense of $276.6 million, down 0.7% quarter over quarter and 1.3% year over year. Valley attributed the drop in part to reductions in technology, furniture and equipment expense, which was down 15.8% sequentially and annually to $30 million.

Valley’s gains from previous strategic technology investments are enabling the bank to cut costs now, Russell Barrett, executive vice president and chief operating officer at Valley, told Bank Automation News.

“The declines in technology spend are mostly due to the elevated previous year expense related to our completed core conversion, accompanied with continued benefits derived from our investments in technology optimization and cloud adoption.”

— Russell Barrett, EVP and COO, Valley Bank

Valley Bank plans to continue its conservative spending approach in Q2, while allowing itself “the flexibility to invest in revenue-generating opportunities,” Chief Executive Ira Robbins said today during the bank’s first-quarter earnings call.

Despite its reduction in tech spend, Valley benefited from digital capabilities. The bank reported $26.4 billion in savings, negotiable order of withdrawal and money market savings deposits, up 8.6% QoQ and up 5.4% YoY, which Valley attributed to new deposits from its online savings offerings.

BY THE NUMBERS: Valley Bank in Q1 also reported:

• $478.4 million in revenue, up 0.9% QoQ and up 5.2% YoY;
• $106.1 million in net income, down 8.3% QoQ and up 10.2% YoY;
• An efficiency ratio of 55.9, compared with 57.2 in Q4 2024 and 59.1 in Q1 2024.

OF NOTE: While the bank reduced its tech spend, it remains steadfast on its tech initiatives. Valley during the quarter tapped integrated debt capital software provider Finley Technologies’ post-origination loan platform to automate its portfolio operations, Valley announced Feb. 25.

The Morristown, N.J.-based bank plans a digital expansion to move beyond its regional status, aided by its fintech venture fund, CEO Robbins hinted at CBA Live 2025 last month.

Even on conservative budgets or with smaller internal development teams, banks can expand digitally through fintech partnerships, Barrett said this month during a BAN webinar.

“Fintechs offer an opportunity to give a little bit more diversity and independence in solving complex problems in organizations that don’t have the muscle to do that,” Barrett said.

The bank is on pace to move 100% of its applications to the cloud by 2026, he previously told BAN.

Valley is also exploring new AI use cases to increase efficiency this year after successfully deploying AI and machine learning for AML screening, Chris Phillips, director of anti-money laundering compliance at Valley Bank, told BAN in January.

MARKET REACTION: Shares of Valley Bank (NASDAQ: VLY) were up 1.6% from market open to $8.77 as of market close today. Valley has a market capitalization of $4.9 billion.