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alley National Bank has significantly reduced its exposure to the real estate sector by selling nearly $1 billion worth of property loans to Brookfield Asset Management. The sale, which was announced in a release, resulted in a contractual balance of $925 million on the loan portfolio. Valley Bank had previously identified and transferred all but about $100 million of these loans for potential sale by the end of the third quarter.

    The bank will continue to handle customer-facing servicing duties on the remaining loans. According to CEO Iran Robbins, Valley Bank has been monitoring loan-sale opportunities throughout the year and expects to recognize an incremental net loss in the fourth quarter due to transaction costs.

    Valley National Bank is a regional bank with over $62 billion in assets, operating in New York, New Jersey, Florida, and other areas. The bank had emerged as a critical lending lifeline in New York City, particularly for midsized landlords and institutional players. However, its exposure to real estate became a concern, with its commercial real estate loan-to-capital ratio exceeding the recommended threshold of 300 percent by December 2022.

    Valley Bank's decision to reduce its exposure to real estate comes as other banks are also scaling back their involvement in this sector. Deutsche Bank recently sold $1 billion in U.S. commercial real estate loans, while Canadian Imperial Bank of Commerce sold $316 million of office loans earlier this year.