Valley National Bank is holding firm with underwriting guidelines, despite competitive pressure to loosen standards.

Since June 2008, Valley National’s portfolio has plunged 44% to $850.8 million as demand for new and used cars declined. Though car sales are slowly rebounding, competition is heating up quickly. Low-rate financing by other banks and captives has Wayne, N.J.-based Valley National on guard.

"We like the auto business," Valley National's CEO Gerald Lipkin said last week during a conference call with industry analysts. But "when the competition sometimes creates an environment where we are unable to generate a return above our cost of capital, our volume will remain constrained," he added.

Lenders I talk to constantly vow to avoid the irrational lending that contributed to high delinquency rates and poor performance of loans originated in 2006 and 2007, yet I’ve seen the cycle before and I will likely see it again.

Kudos to Valley National for standing strong.