Spotlight On: Mark Biedermann, SVP & Division Head, PA, Valley Bank

Spotlight On: Mark Biedermann, SVP & Division Head, PA, Valley Bank

2022-08-02T14:16:17-04:00August 2nd, 2022|Philadelphia, Spotlight On, Transportation|

3 min read August 2022In an interview with Invest:, Mark Biedermann, senior vice president and division head for Valley Bank, talked about the bank’s unique place in the Philadelphia market, the impact of the Federal Reserve’s rate increases and how technology has become “the equalizer in our industry.”

What have been some highlights for Valley Bank over the last 12 months? 

We continue to grow as an organization both organically and through mergers and acquisitions. We are growing regionally and adding to our size and product development. Most recently, we acquired Bank Leumi USA. That has positioned us to have more of a national footprint in Chicago, Palo Alto and suburban Los Angeles. We have also integrated teams in New York and Southern Florida. This is a big change as we integrate and adopt their best practices, which we can pass on to our clients. Best practices are not just about the people but the markets they serve and the technology they utilize. We are integrating these things right now into our existing platform. 

How have changing rates impacted your operations? 

I expect more rate increases because the Fed’s primary goal is to achieve full employment and to manage inflation. Everyone has been caught off guard by the rapid increase in rates, with the Fed funds and prime rate increasing by almost 150 basis points since year-end. That policy by the Fed is meant to curtail inflation. The economy is managing through it right now in terms of our business clients. Demand is so strong that it will take some time for it to take effect. I would expect more Fed intervention throughout the year, as inflation continues to be above targeted levels of 2-3%. 

The effects are beginning to be seen in the residential housing construction market, where some consumers are leaving that market and demand will probably level off. Everyone would have preferred if the Fed acted earlier and less aggressively to build in the rate increases. No one likes surprises and the last increase was high by historical measures. It is meant to dampen demand, specifically in the housing market. There will probably be some sort of economic softening but I see that as coming a year or more from now. The Treasury yield curve is still rather steep going out five to seven years. Consumer demand is still strong, which is largely driven by full employment, so it will take some time for those trends to soften. We are expecting a softening, where overall demand decreases and unemployment may go up in certain regions. 

What have been some changes in your products and services over the last year? 

We expect to have a more robust presence in the Philadelphia market at some point in the near future. We occupy a unique space in this market. Philadelphia has a number of smaller community banks that have a $5-6 billion balance sheet. Then it has larger multinational banks that are in multiple markets and with balance sheets well over $100 billion. Valley Bank is a $50 billion bank, which gives us a unique opportunity because there is no bank of our size in the Philadelphia area. This allows us to go up and down the market in terms of credit exposure. We aren’t tied to smaller businesses or bigger companies; we can do both. 

The broader acceptance of technology brought businesses to adopt new services and have less reliance on a physical bank branch. This was brought on by the pandemic and even though this technology has existed for some time, it was adopted much faster during this period. This enabled us to have a lot of success in this market with no physical retail presence. Everything has become more digitized and these tools have become more widespread since the lockdown of 2020. 

Technology requires continuous investment and we can make it more user friendly and widespread. We also tend to adopt technology from acquisitions and we have integrated when it serves our purposes. Technology is the equalizer in our industry because it makes us more efficient. Customers can choose to bank from the mobile app instead of making a trip to their local branch.  They can manage their payments, check their balance, initiate their own wire transfers and send ACH payments. All of that is offered by a bank of our size because we have the critical mass to adopt this technology. Also, it is making it user-friendly and affordable for small businesses, which makes our clients more efficient in managing payments and liquidity. 

How is commercial real estate doing in Philadelphia? 

I see it growing and expanding. The Fed’s action hasn’t dampened that activity, even though it is aimed at doing so in all markets. It hasn’t had an effect yet and the commercial real estate in the area continues to be robust. Industrial properties are also going for very high values. 

Philadelphia also continues to expand its housing in terms of multifamily units and in terms of new neighborhoods that are integrating this product. Philadelphia is experiencing increases and is a desirable place to live and to start a business. It will probably level off at some point, as the economy may soften 24 months out. In the suburban market, there appears to be a slowing down as building permits are decreasing a bit. 

What are some characteristics of the city that make this growth possible? 

Philadelphia is unique because it is positioned between New York and Washington, D.C. It has a relatively affordable rental and housing market compared to our neighbor cities. The city government has acted on the wage tax, so it is not punitive to live here from a tax standpoint. The regional economic stability has benefitted from the relative access to employment because there are many medical and education institutions that provide a lot of opportunity. The life sciences, in particular, have been a huge driver in this market in terms of creating new employment and demand for office space.  

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