UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, ~~2021~~2022


☐			Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-11277

Valley National Bancorp

(Exact name of registrant as specified in its charter)

New Jersey

22-2477875

(State or other jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification Number)

One Penn Plaza

New York,

10119

(Address of principal executive office)

(Zip code)

973-305-8800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of exchange on which registered
Common Stock, no par value	VLY	The Nasdaq Stock Market LLC
Non-Cumulative Perpetual Preferred Stock, Series A, no par value	VLYPP	The Nasdaq Stock Market LLC
Non-Cumulative Perpetual Preferred Stock, Series B, no par value	VLYPO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer

☒

Accelerated filer

☐

Smaller reporting company

☐

Non-accelerated filer

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock (no par value), of which506,356,727 ~~406,953,610 shares~~shares were outstanding as of November ~~5, 2021.~~7, 2022.

TABLE OF CONTENTS


		Page Number
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021	2
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	3
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	5
	Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	8
	Notes to Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4652

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8289

Item 4.	Controls and Procedures	8289

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	8390

Item 1A.	Risk Factors	8390

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8490

Item 5.	Other Items	90

Item 6.	Exhibits	8591

SIGNATURES		8691

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

/VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except for share data)


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Assets	Assets	(Unaudited)				Assets	(Unaudited)
Cash and due from banks	Cash and due from banks	$	304,912	$	257,845	Cash and due from banks	$	431,471	$	205,156
Interest bearing deposits with banks	Interest bearing deposits with banks	1,195,244		1,071,360		Interest bearing deposits with banks	686,877		1,844,764
Investment securities:	Investment securities:					Investment securities:
Equity securities	Equity securities	36,068		29,378		Equity securities	43,318		36,473
Trading debt securities	Trading debt securities	4,797		—		Trading debt securities	4,100		38,130
Available for sale debt securities	Available for sale debt securities	1,208,277		1,339,473		Available for sale debt securities	1,271,854		1,128,809
Held to maturity debt securities (net of allowance for credit losses of $1,075 at September 30, 2021 and $1,428 at December 31, 2020)		2,583,328		2,171,583
Held to maturity debt securities (net of allowance for credit losses of $1,696 at September 30, 2022 and $1,165 at December 31, 2021)						Held to maturity debt securities (net of allowance for credit losses of $1,696 at September 30, 2022 and $1,165 at December 31, 2021)	3,720,324		2,667,532
Total investment securities	Total investment securities	3,832,470		3,540,434		Total investment securities	5,039,596		3,870,944
Loans held for sale, at fair value	Loans held for sale, at fair value	157,084		301,427		Loans held for sale, at fair value	6,073		139,516
Loans	Loans	32,606,814		32,217,112		Loans	45,185,764		34,153,657
Less: Allowance for loan losses	Less: Allowance for loan losses	(342,527)		(340,243)		Less: Allowance for loan losses	(475,744)		(359,202)
Net loans	Net loans	32,264,287		31,876,869		Net loans	44,710,020		33,794,455
Premises and equipment, net	Premises and equipment, net	319,763		319,797		Premises and equipment, net	362,203		326,306
Lease right of use assets	Lease right of use assets	258,180		252,053		Lease right of use assets	314,511		259,117
Bank owned life insurance	Bank owned life insurance	537,301		535,209		Bank owned life insurance	714,649		566,770
Accrued interest receivable	Accrued interest receivable	98,073		106,230		Accrued interest receivable	159,406		96,882
Goodwill	Goodwill	1,382,442		1,382,442		Goodwill	1,871,505		1,459,008
Other intangible assets, net	Other intangible assets, net	62,525		70,449		Other intangible assets, net	208,226		70,386
Other assets	Other assets	865,726		971,961		Other assets	1,422,964		813,139
Total Assets	Total Assets	$	41,278,007	$	40,686,076	Total Assets	$	55,927,501	$	43,446,443
Liabilities	Liabilities					Liabilities
Deposits:	Deposits:					Deposits:
Non-interest bearing	Non-interest bearing	$	10,789,237	$	9,205,266	Non-interest bearing	$	15,420,625	$	11,675,748
Interest bearing:	Interest bearing:					Interest bearing:
Savings, NOW and money market	Savings, NOW and money market	18,883,085		16,015,658		Savings, NOW and money market	23,559,662		20,269,620
Time	Time	3,960,283		6,714,678		Time	6,328,556		3,687,044
Total deposits	Total deposits	33,632,605		31,935,602		Total deposits	45,308,843		35,632,412
Short-term borrowings	Short-term borrowings	783,346		1,147,958		Short-term borrowings	919,283		655,726
Long-term borrowings	Long-term borrowings	1,427,444		2,295,665		Long-term borrowings	1,541,097		1,423,676
Junior subordinated debentures issued to capital trusts	Junior subordinated debentures issued to capital trusts	56,326		56,065		Junior subordinated debentures issued to capital trusts	56,673		56,413
Lease liabilities	Lease liabilities	282,034		276,675		Lease liabilities	367,428		283,106
Accrued expenses and other liabilities	Accrued expenses and other liabilities	273,754		381,991		Accrued expenses and other liabilities	1,460,348		311,044
Total Liabilities	Total Liabilities	36,455,509		36,093,956		Total Liabilities	49,653,672		38,362,377
Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Preferred stock, no par value; 50,000,000 authorized shares:	Preferred stock, no par value; 50,000,000 authorized shares:					Preferred stock, no par value; 50,000,000 authorized shares:
Series A (4,600,000 shares issued at September 30, 2021 and December 31, 2020)		111,590		111,590
Series B (4,000,000 shares issued at September 30, 2021 and December 31, 2020)		98,101		98,101
Common stock (no par value, authorized 650,000,000 shares; issued 407,317,006 shares at September 30, 2021 and 403,881,488 shares at December 31, 2020)		142,976		141,746
Series A (4,600,000 shares issued at September 30, 2022 and December 31, 2021)						Series A (4,600,000 shares issued at September 30, 2022 and December 31, 2021)	111,590		111,590
Series B (4,000,000 shares issued at September 30, 2022 and December 31, 2021)						Series B (4,000,000 shares issued at September 30, 2022 and December 31, 2021)	98,101		98,101
Common stock (no par value, authorized 650,000,000 shares; issued 507,896,910 and 423,034,027 shares at September 30, 2022 and December 31, 2021)						Common stock (no par value, authorized 650,000,000 shares; issued 507,896,910 and 423,034,027 shares at September 30, 2022 and December 31, 2021)	178,185		148,482
Surplus	Surplus	3,672,467		3,637,468		Surplus	4,972,732		3,883,035
Retained earnings	Retained earnings	818,780		611,158		Retained earnings	1,100,838		883,645
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(21,375)		(7,718)		Accumulated other comprehensive loss	(165,557)		(17,932)
Treasury stock, at cost (3,342 common shares at September 30, 2021 and 22,490 common shares at December 31, 2020)		(41)		(225)
Treasury stock, at cost (1,545,408 common shares at September 30, 2022 and 1,596,959 common shares at December 31, 2021)						Treasury stock, at cost (1,545,408 common shares at September 30, 2022 and 1,596,959 common shares at December 31, 2021)	(22,060)		(22,855)
Total Shareholders’ Equity	Total Shareholders’ Equity	4,822,498		4,592,120		Total Shareholders’ Equity	6,273,829		5,084,066
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	41,278,007	$	40,686,076	Total Liabilities and Shareholders’ Equity	$	55,927,501	$	43,446,443

See accompanying notes to consolidated financial statements.

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except for share data)

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Interest Income
Interest and fees on loans $ 309,753 $ 315,788 $ 938,248 $ 970,739
Interest and dividends on investment securities:
Taxable 14,292 14,845 40,174 56,225
Tax-exempt 2,609 3,606 9,181 11,224
Dividends 1,505 2,684 5,543 9,177
Interest on federal funds sold and other short-term investments 642 420 1,101 2,296
Total interest income 328,801 337,343 994,247 1,049,661
Interest Expense
Interest on deposits:
Savings, NOW and money market 10,605 13,323 32,896 64,463
Time 4,394 19,028 21,766 91,699
Interest on short-term borrowings 1,464 2,588 4,390 9,275
Interest on long-term borrowings and junior subordinated debentures 11,312 19,318 40,595 53,240
Total interest expense 27,775 54,257 99,647 218,677
Net Interest Income 301,026 283,086 894,600 830,984
Provision (credit) for credit losses for held to maturity securities 35 (112) (353) 688
Provision for credit losses for loans 3,496 31,020 21,287 106,059
Net Interest Income After Provision for Credit Losses 297,495 252,178 873,666 724,237
Non-Interest Income
Trust and investment services 3,550 3,068 10,411 9,307
Insurance commissions 1,610 1,816 5,805 5,426
Service charges on deposit accounts 5,428 3,952 15,614 13,189
Gains (losses) on securities transactions, net 787 (46) 1,263 (127)
Fees from loan servicing 2,894 2,551 8,980 7,526
Gains on sales of loans, net 6,442 13,366 20,016 26,253
Gains on sales of assets, net 344 894 380 716
Bank owned life insurance 2,018 (1,304) 6,824 7,661
Other 19,358 24,975 47,497 65,548
Total non-interest income 42,431 49,272 116,790 135,499
Non-Interest Expense
Salary and employee benefits expense 93,992 83,626 273,190 247,886
Net occupancy and equipment expense 32,402 31,116 97,112 96,774
FDIC insurance assessment 3,644 4,847 10,294 14,858
Amortization of other intangible assets 5,298 6,377 16,753 18,528
Professional and legal fees 13,492 8,762 27,250 22,646
Loss on extinguishment of debt — 2,353 8,406 2,353
Amortization of tax credit investments 3,079 2,759 8,795 9,403
Telecommunication expense 2,615 2,094 8,507 7,247
Other 20,400 18,251 56,721 53,312
Total non-interest expense 174,922 160,185 507,028 473,007
Income Before Income Taxes 165,004 141,265 483,428 386,729
Income tax expense 42,424 38,891 124,626 101,486
Net Income 122,580 102,374 358,802 285,243
Dividends on preferred stock 3,172 3,172 9,516 9,516
Net Income Available to Common Shareholders $ 119,408 $ 99,202 $ 349,286 $ 275,727


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Interest Income
Interest and fees on loans	$	496,520	$	309,753	$	1,229,462	$	938,248
Interest and dividends on investment securities:
Taxable	28,264		14,292		74,416		40,174
Tax-exempt	5,210		2,609		12,739		9,181
Dividends	2,738		1,505		7,490		5,543
Interest on federal funds sold and other short-term investments	3,996		642		6,026		1,101
Total interest income	536,728		328,801		1,330,133		994,247
Interest Expense
Interest on deposits:
Savings, NOW and money market	50,674		10,605		77,423		32,896
Time	15,174		4,394		21,274		21,766
Interest on short-term borrowings	5,160		1,464		10,049		4,390
Interest on long-term borrowings and junior subordinated debentures	11,728		11,312		31,566		40,595
Total interest expense	82,736		27,775		140,312		99,647
Net Interest Income	453,992		301,026		1,189,821		894,600
Provision (credit) for credit losses for held to maturity securities	188		35		531		(353)
Provision for credit losses for loans	1,835		3,496		49,047		21,287
Net Interest Income After Provision for Credit Losses	451,969		297,495		1,140,243		873,666
Non-Interest Income
Wealth management and trust fees	9,281		3,550		23,989		10,411
Insurance commissions	3,750		1,610		9,072		5,805
Service charges on deposit accounts	10,338		5,428		26,617		15,614
Gains (losses) on securities transactions, net	323		787		(1,058)		1,263
Fees from loan servicing	3,138		2,894		8,636		8,980
Gains on sales of loans, net	922		6,442		5,510		20,016

Bank owned life insurance	1,681		2,018		5,840		6,824
Other	26,761		19,702		75,391		47,877
Total non-interest income	56,194		42,431		153,997		116,790
Non-Interest Expense
Salary and employee benefits expense	134,572		93,992		397,103		273,190
Net occupancy expense	26,486		19,941		70,906		59,171
Technology, furniture and equipment expense	39,365		21,007		115,245		64,956
FDIC insurance assessment	6,500		3,644		16,009		10,294
Amortization of other intangible assets	11,088		5,298		26,925		16,753
Professional and legal fees	17,840		13,492		62,998		27,250

Loss on extinguishment of debt	—		—		—		8,406
Amortization of tax credit investments	3,105		3,079		9,194		8,795
Other	22,683		14,469		60,329		38,213
Total non-interest expense	261,639		174,922		758,709		507,028
Income Before Income Taxes	246,524		165,004		535,531		483,428
Income tax expense	68,405		42,424		144,271		124,626
Net Income	178,119		122,580		391,260		358,802
Dividends on preferred stock	3,172		3,172		9,516		9,516
Net Income Available to Common Shareholders	$	174,947	$	119,408	$	381,744	$	349,286

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (continued)

(in thousands, except for share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Earnings Per Common Share:	Earnings Per Common Share:									Earnings Per Common Share:
Basic	Basic	$	0.29	$	0.25	$	0.86	$	0.68	Basic	$	0.35	$	0.29	$	0.80	$	0.86
Diluted	Diluted	0.29		0.25		0.86		0.68		Diluted	0.34		0.29		0.79		0.86
Cash Dividends Declared per Common Share	Cash Dividends Declared per Common Share	0.11		0.11		0.33		0.33		Cash Dividends Declared per Common Share	0.11		0.11		0.33		0.33
Weighted Average Number of Common Shares Outstanding:	Weighted Average Number of Common Shares Outstanding:									Weighted Average Number of Common Shares Outstanding:
Basic	Basic	406,824,160		403,833,469		405,986,114		403,714,701		Basic	506,342,200		406,824,160		478,383,342		405,986,114
Diluted	Diluted	409,238,001		404,788,526		408,509,767		404,912,126		Diluted	508,690,997		409,238,001		480,625,357		408,509,767

See accompanying notes to consolidated financial statements.

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income	Net income	$	122,580	$	102,374	$	358,802	$	285,243	Net income	$	178,119	$	122,580	$	391,260	$	358,802
Other comprehensive income, net of tax:
Other comprehensive loss, net of tax:										Other comprehensive loss, net of tax:
Unrealized gains and losses on available for sale securities	Unrealized gains and losses on available for sale securities									Unrealized gains and losses on available for sale securities
Net (losses) gains arising during the period		(3,953)		(1,262)		(15,860)		27,819
Less reclassification adjustment for net (gains) losses included in net income		(613)		36		(493)		94
Net losses arising during the period										Net losses arising during the period	(57,242)		(3,953)		(148,403)		(15,860)
Less reclassification adjustment for net gains included in net income										Less reclassification adjustment for net gains included in net income	(12)		(613)		(22)		(493)
Total	Total	(4,566)		(1,226)		(16,353)		27,913		Total	(57,254)		(4,566)		(148,425)		(16,353)

Unrealized gains and losses on derivatives (cash flow hedges)	Unrealized gains and losses on derivatives (cash flow hedges)									Unrealized gains and losses on derivatives (cash flow hedges)
Net (losses) gains on derivatives arising during the period	Net (losses) gains on derivatives arising during the period	(96)		83		(69)		(2,254)		Net (losses) gains on derivatives arising during the period	(85)		(96)		110		(69)
Less reclassification adjustment for net losses included in net income		743		1,127		1,928		1,257
Less reclassification adjustment for net (gains) losses included in net income										Less reclassification adjustment for net (gains) losses included in net income	(13)		743		293		1,928
Total	Total	647		1,210		1,859		(997)		Total	(98)		647		403		1,859
Defined benefit pension plan	Defined benefit pension plan									Defined benefit pension plan

Amortization of actuarial net loss	Amortization of actuarial net loss	279		171		837		515		Amortization of actuarial net loss	132		279		397		837
Total other comprehensive (loss) income		(3,640)		155		(13,657)		27,431
Total other comprehensive loss										Total other comprehensive loss	(57,220)		(3,640)		(147,625)		(13,657)
Total comprehensive income	Total comprehensive income	$	118,940	$	102,529	$	345,145	$	312,674	Total comprehensive income	$	120,899	$	118,940	$	243,635	$	345,145

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the Nine Months Ended September 30, ~~2021~~2022


				Common Stock							Accumulated									Common Stock							Accumulated
		Preferred Stock		Shares	Amount		Surplus		Retained Earnings		Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity			Preferred Stock		Shares	Amount		Surplus		Retained Earnings		Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
		(in thousands)																(in thousands)
Balance - December 31, 2020		$	209,691	403,859	$	141,746	$	3,637,468	$	611,158	$	(7,718)	$	(225)	$	4,592,120
Balance - December 31, 2021																	Balance - December 31, 2021	$	209,691	421,437	$	148,482	$	3,883,035	$	883,645	$	(17,932)	$	(22,855)	$	5,084,066
Net income	Net income	—		—	—		—		115,710		—		—		115,710		Net income	—		—	—		—		116,728		—		—		116,728
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—	—		—		—		(9,287)		—		(9,287)		Other comprehensive loss, net of tax	—		—	—		—		—		(38,166)		—		(38,166)
Cash dividends declared:	Cash dividends declared:																Cash dividends declared:
Preferred stock, Series A, $0.39 per share	Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)		Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share	Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)		Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share	Common stock, $0.11 per share	—		—	—		—		(45,281)		—		—		(45,281)		Common stock, $0.11 per share	—		—	—		—		(46,803)		—		—		(46,803)
Effect of stock incentive plan, net	Effect of stock incentive plan, net	—		1,939	689		14,480		(5,764)		—		175		9,580		Effect of stock incentive plan, net	—		972	—		(10,799)		(5,173)		—		13,220		(2,752)

Balance - March 31, 2021		$	209,691	405,798	142,435		$	3,651,948	$	672,651	$	(17,005)	$	(50)	$	4,659,670
Purchase of treasury stock																	Purchase of treasury stock	—		(1,015)	—		—		—		—		(13,517)		(13,517)
Balance - March 31, 2022																	Balance - March 31, 2022	209,691		421,394	148,482		3,872,236		945,225		(56,098)		(23,152)		5,096,384
Net income	Net income	—		—	—		—		120,512		—		—		120,512		Net income	—		—	—		—		96,413		—		—		96,413
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—	—		—		—		(730)		—		(730)		Other comprehensive loss, net of tax	—		—	—		—		—		(52,239)		—		(52,239)
Cash dividends declared:	Cash dividends declared:																Cash dividends declared:
Preferred stock, Series A, $0.39 per share	Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)		Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share	Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)		Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share	Common stock, $0.11 per share	—		—	—		—		(45,093)		—		—		(45,093)		Common stock, $0.11 per share	—		—	—		—		(56,211)		—		—		(56,211)
Effect of stock incentive plan, net	Effect of stock incentive plan, net	—		286	115		6,688		(130)		—		(53)		6,620		Effect of stock incentive plan, net	—		72	1		5,125		(109)		—		892		5,909

Balance - June 30, 2021		$	209,691	406,084	142,550		$	3,658,636	$	744,768	$	(17,735)	$	(103)	$	4,737,807
Common stock issued in acquisition																	Common stock issued in acquisition	—		84,863	29,702		1,088,127		—		—		—		1,117,829
Balance - June 30, 2022																	Balance - June 30, 2022	209,691		506,329	178,185		4,965,488		982,146		(108,337)		(22,260)		6,204,913
Net income	Net income	—		—	—		—		122,580		—		—		122,580		Net income	—		—	—		—		178,119		—		—		178,119
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—	—		—		—		(3,640)		—		(3,640)		Other comprehensive loss, net of tax	—		—	—		—		—		(57,220)		—		(57,220)
Cash dividends declared:	Cash dividends declared:																Cash dividends declared:
Preferred stock, Series A, $0.39 per share	Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)		Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share	Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)		Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share	Common stock, $0.11 per share	—		—	—		—		(45,228)		—		—		(45,228)		Common stock, $0.11 per share	—		—	—		—		(56,242)		—		—		(56,242)
Effect of stock incentive plan, net	Effect of stock incentive plan, net	—		1,230	426		13,831		(168)		—		62		14,151		Effect of stock incentive plan, net	—		23	—		7,244		(13)		—		200		7,431
Balance - September 30, 2021		$	209,691	407,314	142,976		$	3,672,467	$	818,780	$	(21,375)	$	(41)	$	4,822,498
Balance - September 30, 2022																	Balance - September 30, 2022	$	209,691	506,352	$	178,185	$	4,972,732	$	1,100,838	$	(165,557)	$	(22,060)	$	6,273,829

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) (continued)

For the Nine Months Ended September 30, ~~2020~~2021


				Common Stock							Accumulated									Common Stock							Accumulated
		Preferred Stock		Shares	Amount		Surplus		Retained Earnings		Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity			Preferred Stock		Shares	Amount		Surplus		Retained Earnings		Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
		(in thousands)																(in thousands)
Balance - December 31, 2019		$	209,691	403,278	$	141,423	$	3,622,208	$	443,559	$	(32,214)	$	(479)	$	4,384,188
Adjustment due to the adoption of ASU No. 2016-13		—		—	—		—		(28,187)		—		—		(28,187)
Balance - January 1, 2020		209,691		403,278	141,423		3,622,208		415,372		(32,214)		(479)		4,356,001
Balance - December 31, 2020																	Balance - December 31, 2020	$	209,691	403,859	$	141,746	$	3,637,468	$	611,158	$	(7,718)	$	(225)	$	4,592,120
Net income																	Net income	—		—	—		—		115,710		—		—		115,710
Other comprehensive loss, net of tax																	Other comprehensive loss, net of tax	—		—	—		—		—		(9,287)		—		(9,287)
Cash dividends declared:																	Cash dividends declared:
Preferred stock, Series A, $0.39 per share																	Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share																	Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share																	Common stock, $0.11 per share	—		—	—		—		(45,281)		—		—		(45,281)
Effect of stock incentive plan, net																	Effect of stock incentive plan, net	—		1,939	689		14,480		(5,764)		—		175		9,580

Balance - March 31, 2021																	Balance - March 31, 2021	209,691		405,798	142,435		3,651,948		672,651		(17,005)		(50)		4,659,670
Net income																	Net income	—		—	—		—		120,512		—		—		120,512
Other comprehensive loss, net of tax																	Other comprehensive loss, net of tax	—		—	—		—		—		(730)		—		(730)
Cash dividends declared:																	Cash dividends declared:
Preferred stock, Series A, $0.39 per share																	Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share																	Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share																	Common stock, $0.11 per share	—		—	—		—		(45,093)		—		—		(45,093)
Effect of stock incentive plan, net																	Effect of stock incentive plan, net	—		286	115		6,688		(130)		—		(53)		6,620

Balance - June 30, 2021																	Balance - June 30, 2021	209,691		406,084	142,550		3,658,636		744,768		(17,735)		(103)		4,737,807
Net income	Net income	—		—	—		—		87,268		—		—		87,268		Net income	—		—	—		—		122,580		—		—		122,580
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—	—		—		—		25,648		—		25,648		Other comprehensive income, net of tax	—		—	—		—		—		(3,640)		—		(3,640)
Cash dividends declared:	Cash dividends declared:																Cash dividends declared:
Preferred stock, Series A, $0.39 per share	Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)		Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share	Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)		Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share	Common stock, $0.11 per share	—		—	—		—		(44,979)		—		—		(44,979)		Common stock, $0.11 per share	—		—	—		—		(45,228)		—		—		(45,228)
Effect of stock incentive plan, net	Effect of stock incentive plan, net	—		466	190		1,828		(2,065)		—		279		232		Effect of stock incentive plan, net	—		1,230	426		13,831		(168)		—		62		14,151

Balance - March 31, 2020		$	209,691	403,744	141,613		$	3,624,036	$	452,424	$	(6,566)	$	(200)	$	4,420,998
Net income		—		—	—		—		95,601		—		—		95,601
Other comprehensive income, net of tax		—		—	—		—		—		1,628		—		1,628
Cash dividends declared:
Preferred stock, Series A, $0.39 per share		—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share		—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share		—		—	—		—		(44,750)		—		—		(44,750)
Effect of stock incentive plan, net		—		52	54		4,756		(592)		—		(35)		4,183

Balance - June 30, 2020		$	209,691	403,796	$	141,667	$	3,628,792	$	499,511	$	(4,938)	$	(235)	$	4,474,488
Net income		—		—	—		—		102,374		—		—		102,374
Other comprehensive income, net of tax		—		—	—		—		—		155		—		155
Cash dividends declared:
Preferred stock, Series A, $0.39 per share		—		—	—		—		(1,797)		—		—		(1,797)
Preferred stock, Series B, $0.34 per share		—		—	—		—		(1,375)		—		—		(1,375)
Common stock, $0.11 per share		—		—	—		—		(44,770)		—		—		(44,770)
Effect of stock incentive plan, net		—		83	51		4,529		(117)		—		225		4,688
Balance - September 30, 2020		$	209,691	403,879	$	141,718	$	3,633,321	$	553,826	$	(4,783)	$	(10)	$	4,533,763
Balance - September 30, 2021																	Balance - September 30, 2021	$	209,691	407,314	$	142,976	$	3,672,467	$	818,780	$	(21,375)	$	(41)	$	4,822,498

See accompanying notes to consolidated financial statements.

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	358,802	$	285,243	Net income	$	391,260	$	358,802
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	40,799		43,975		Depreciation and amortization	52,545		40,799
Stock-based compensation	Stock-based compensation	15,852		12,001		Stock-based compensation	20,978		15,852
Provision for credit losses	Provision for credit losses	20,934		106,747		Provision for credit losses	49,578		20,934
Net amortization of premiums and accretion of discounts on securities and borrowings	Net amortization of premiums and accretion of discounts on securities and borrowings	22,145		26,051		Net amortization of premiums and accretion of discounts on securities and borrowings	10,603		22,145
Amortization of other intangible assets	Amortization of other intangible assets	16,753		18,528		Amortization of other intangible assets	26,925		16,753
(Gains) losses on securities transactions, net		(1,263)		127
Losses (gains) on securities transactions, net						Losses (gains) on securities transactions, net	1,058		(1,263)
Proceeds from sales of loans held for sale	Proceeds from sales of loans held for sale	932,274		716,739		Proceeds from sales of loans held for sale	378,216		932,274
Gains on sales of loans, net	Gains on sales of loans, net	(20,016)		(26,253)		Gains on sales of loans, net	(5,510)		(20,016)
Originations of loans held for sale	Originations of loans held for sale	(774,443)		(829,252)		Originations of loans held for sale	(244,441)		(774,443)
Gains on sales of assets, net		(380)		(716)
Losses (gains) on sales of assets, net						Losses (gains) on sales of assets, net	372		(380)
Loss on extinguishment of debt	Loss on extinguishment of debt	8,406		2,353		Loss on extinguishment of debt	—		8,406
Net change in:	Net change in:					Net change in:
Fair value of borrowings hedged by derivative transactions						Fair value of borrowings hedged by derivative transactions	(30,585)		—
Trading debt securities	Trading debt securities	(4,797)		—		Trading debt securities	34,030		(4,797)
Cash surrender value of bank owned life insurance	Cash surrender value of bank owned life insurance	(6,824)		(7,661)		Cash surrender value of bank owned life insurance	(5,840)		(6,824)
Accrued interest receivable	Accrued interest receivable	8,157		(30,421)		Accrued interest receivable	(36,807)		8,157
Other assets	Other assets	97,341		(420,572)		Other assets	(402,391)		97,341
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(130,698)		83,591		Accrued expenses and other liabilities	990,607		(130,698)
Net cash provided by (used in) operating activities		583,042		(19,520)
Net cash provided by operating activities						Net cash provided by operating activities	1,230,598		583,042
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Net loan originations and purchases	Net loan originations and purchases	(405,204)		(2,686,137)		Net loan originations and purchases	(5,114,908)		(405,204)
Equity securities:	Equity securities:					Equity securities:
Purchases	Purchases	(3,163)		(7,616)		Purchases	(4,148)		(3,163)
Sales	Sales	1,227		27,867		Sales	1,725		1,227
Held to maturity debt securities:	Held to maturity debt securities:					Held to maturity debt securities:
Purchases	Purchases	(1,062,202)		(381,606)		Purchases	(666,188)		(1,062,202)

Maturities, calls and principal repayments	Maturities, calls and principal repayments	633,272		532,151		Maturities, calls and principal repayments	410,760		633,272
Available for sale debt securities:	Available for sale debt securities:					Available for sale debt securities:
Purchases	Purchases	(367,866)		(306,071)		Purchases	(49,618)		(367,866)
Sales	Sales	91,978		—		Sales	12,846		91,978
Maturities, calls and principal repayments	Maturities, calls and principal repayments	376,875		374,321		Maturities, calls and principal repayments	192,868		376,875
Death benefit proceeds from bank owned life insurance	Death benefit proceeds from bank owned life insurance	3,850		14,062		Death benefit proceeds from bank owned life insurance	4,680		3,850
Proceeds from sales of real estate property and equipment	Proceeds from sales of real estate property and equipment	4,982		16,136		Proceeds from sales of real estate property and equipment	7,400		4,982
Proceeds from sales of loans held for investment	Proceeds from sales of loans held for investment	4,498		30,020		Proceeds from sales of loans held for investment	—		4,498
Purchases of real estate property and equipment	Purchases of real estate property and equipment	(19,805)		(20,715)		Purchases of real estate property and equipment	(50,511)		(19,805)

Cash and cash equivalent acquired in acquisitions, net						Cash and cash equivalent acquired in acquisitions, net	321,540		—
Net cash used in investing activities	Net cash used in investing activities	(741,558)		(2,407,588)		Net cash used in investing activities	(4,933,554)		(741,558)


VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) (in thousands)	VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) (in thousands)					VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) (in thousands)
											VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) (in thousands)
		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net change in deposits	Net change in deposits	$	1,697,003	$	2,002,145	Net change in deposits	$	2,646,434	$	1,697,003
Net change in short-term borrowings	Net change in short-term borrowings	(364,612)		337,446		Net change in short-term borrowings	159,763		(364,612)
Proceeds from issuance of long-term borrowings, net	Proceeds from issuance of long-term borrowings, net	295,922		838,388		Proceeds from issuance of long-term borrowings, net	147,508		295,922
Repayments of long-term borrowings	Repayments of long-term borrowings	(1,168,465)		(108,446)		Repayments of long-term borrowings	—		(1,168,465)

Cash dividends paid to preferred shareholders	Cash dividends paid to preferred shareholders	(9,516)		(9,516)		Cash dividends paid to preferred shareholders	(9,516)		(9,516)
Cash dividends paid to common shareholders	Cash dividends paid to common shareholders	(134,860)		(133,536)		Cash dividends paid to common shareholders	(148,345)		(134,860)
Purchase of common shares to treasury	Purchase of common shares to treasury	(699)		(4,972)		Purchase of common shares to treasury	(24,013)		(699)
Common stock issued, net	Common stock issued, net	15,199		2,074		Common stock issued, net	106		15,199
Other, net	Other, net	(505)		(451)		Other, net	(553)		(505)
Net cash provided by financing activities	Net cash provided by financing activities	329,467		2,923,132		Net cash provided by financing activities	2,771,384		329,467
Net change in cash and cash equivalents	Net change in cash and cash equivalents	170,951		496,024		Net change in cash and cash equivalents	(931,572)		170,951
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	1,329,205		434,687		Cash and cash equivalents at beginning of year	2,049,920		1,329,205
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,500,156	$	930,711	Cash and cash equivalents at end of period	$	1,118,348	$	1,500,156

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash payments for:	Cash payments for:					Cash payments for:
Interest on deposits and borrowings	Interest on deposits and borrowings	$	109,661	$	229,987	Interest on deposits and borrowings	$	129,504	$	109,661
Federal and state income taxes	Federal and state income taxes	148,674		108,302		Federal and state income taxes	122,170		148,674
Supplemental schedule of non-cash investing activities:	Supplemental schedule of non-cash investing activities:					Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned	Transfer of loans to other real estate owned	$	141	$	3,716	Transfer of loans to other real estate owned	$	—	$	141
Transfer of loans to loans held for sale		—		30,020

Lease right of use assets obtained in exchange for operating lease liabilities	Lease right of use assets obtained in exchange for operating lease liabilities	40,296		10,141		Lease right of use assets obtained in exchange for operating lease liabilities	32,604		40,296

Acquisitions:						Acquisitions:
Non-cash assets acquired:						Non-cash assets acquired:
Equity securities						Equity securities	6,239		—
Investment securities available for sale						Investment securities available for sale	505,928		—
Investment securities held to maturity						Investment securities held to maturity	806,627		—
Loans, net						Loans, net	5,844,070		—
Premises and equipment, net						Premises and equipment, net	38,827		—
Lease right of use assets						Lease right of use assets	49,434		—
Bank owned life insurance						Bank owned life insurance	126,861		—
Accrued interest receivable						Accrued interest receivable	25,717		—
Goodwill						Goodwill	407,522		—
Other intangible assets, net						Other intangible assets, net	159,587		—
Other assets						Other assets	158,352		—
Total non-cash assets acquired						Total non-cash assets acquired	$	8,129,164	$	—
Liabilities assumed:						Liabilities assumed:
Deposits						Deposits	7,029,997		—
Short-term borrowings						Short-term borrowings	103,794		—
Lease liabilities						Lease liabilities	79,844		—
Accrued expenses and other liabilities						Accrued expenses and other liabilities	119,240		—
Total liabilities assumed						Total liabilities assumed	$	7,332,875	$	—
Non-cash net assets acquired						Non-cash net assets acquired	$	796,289	$	—
Net cash and cash equivalents acquired in acquisition						Net cash and cash equivalents acquired in acquisition	$	321,540	$	—
Common stock issued in acquisition						Common stock issued in acquisition	$	1,117,829	$	—

See accompanying notes to consolidated financial statements.

VALLEY NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The unaudited consolidated financial statements of Valley National Bancorp, a New Jersey corporation (Valley), include the accounts of its commercial bank subsidiary, Valley National Bank (the Bank), and all ~~of Valley’s direct or indirect wholly-owned subsidiaries.~~other entities in which Valley has a controlling financial interest. All inter-company transactions and balances have been eliminated. The accounting and reporting policies of Valley conform to U.S. generally accepted accounting principles (U.S. GAAP) and general practices within the financial services industry. In accordance with applicable accounting standards, Valley does not consolidate statutory trusts established for the sole purpose of issuing trust preferred securities and related trust common securities. Certain prior period amounts have been reclassified to conform to the current ~~presentation.~~presentation, including changes to our segment reporting structure, as further discussed in Note 9 and Note 15.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly Valley’s financial position, results of operations, changes in shareholders' equity and cash flows at September 30, ~~2021~~2022 and for all periods presented have been made. The results of operations for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of the results to be expected for the entire fiscal year or any subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP and industry practice have been condensed or omitted pursuant to rules and regulations of the SEC. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Valley’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Significant Estimates. In preparing the unaudited consolidated financial statements in conformity with U.S. GAAP, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated. Material estimates that require application of management’s most difficult, subjective or complex judgment and are particularly susceptible to change include: the allowance for credit losses, the evaluation of goodwill and other intangible assets for impairment, and income taxes. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management uses its best judgment, actual amounts or results could differ significantly from those estimates. The current economic environment has increased the degree of uncertainty inherent in these material estimates. Actual results may differ from those estimates. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

Note 2. Business Combinations

~~The Westchester~~ Bank ~~Holding~~Leumi Le-Israel Corporation. On ~~June 29, 2021,~~April 1, 2022, Valley ~~announced that it will acquire The Westchester Bank Holding Corporation (“Westchester”) and~~completed its ~~principal subsidiary, The Westchester Bank which is headquartered in White Plains, New York. As~~acquisition of ~~June 30, 2021~~, Westchester had total assets of $1.3 billion, total loans of $908 million, and total deposits of $1.1 billion. Westchester maintains a seven branch network in Westchester County, New York. The common shareholders of Westchester will receive 229.645 shares of Valley common stock for each Westchester share they own. Based on Valley’s closing stock price on June 28, 2021, Westchester’s stockholders will receive approximately $210 million in Valley common stock. Existing Westchester options will be cashed out for approximately $10 million in cash. Valley has received all the requisite regulatory approvals to complete the merger which is anticipated to close on December 1, 2021, pending the satisfaction of customary closing conditions.

~~Bank Leumi~~ ~~Le-Israel Corporation~~. ~~On September 23, 2021, Valley announced that it will acquire~~ Bank Leumi Le-Israel Corporation, ~~(“Leumi”),~~ the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, ~~(“Bank Leumi”)~~collectively referred to as "Bank Leumi USA". Bank Leumi ~~maintains~~USA maintained its headquarters in New York City ~~and also has~~with commercial banking offices in Chicago, Los Angeles, Palo Alto, and Aventura, Florida. The common shareholders of Bank Leumi USA received 3.8025 shares of Valley common stock and $5.08 in cash for each Bank Leumi USA common share that they owned. As a result, Valley issued approximately 85 million shares of ~~June~~common stock and paid $113.4 million in cash in the transaction. Based on Valley’s closing stock price on March 31, 2022, the transaction was valued at $1.2 billion, inclusive of the value of options. As a result of the acquisition, Bank Leumi Le-Israel B.M. owned approximately 14 percent of Valley's common stock as of April 1, 2022.

The transaction was accounted for under the acquisition method of accounting and accordingly the results of Bank Leumi USA's operations have been included in Valley's consolidated financial statements for the three and nine months ended September 30, ~~2021, Leumi had total~~2022 from the date of the acquisition.

The following table sets forth assets acquired and liabilities assumed in the Bank Leumi USA acquisition, at their estimated fair values as of ~~$8.4~~the closing date of the transaction:


	April 1, 2022
	(in thousands)
Assets acquired:
Cash and cash equivalents	$	443,588
Equity securities	6,239
Available for sale debt securities	505,928
Held to maturity debt securities	806,627
Loans	5,914,389
Allowance for loan losses	(70,319)
Loans, net	5,844,070
Premises and equipment	38,827
Lease right of use assets	49,273
Bank owned life insurance	126,861
Accrued interest receivable	25,717
Goodwill	403,151
Other intangible assets	153,380
Other assets	158,352
Total assets acquired	$	8,562,013
Liabilities assumed:
Deposits:
Non-interest bearing	$	4,511,537
Interest bearing:
Savings, NOW and money market	2,224,834
Time	293,626
Total deposits	7,029,997
Short-term borrowings	103,794
Lease liabilities	79,683
Accrued expense and other liabilities	117,269
Total liabilities assumed	$	7,330,743
Common stock issued in acquisition	1,117,829
Cash paid in acquisition	113,441

The determination of the fair value of the assets acquired and liabilities assumed required management to make estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and subject to change. The fair value estimates are subject to change for up to one year after the closing date of the transaction if additional information (existing at the date of closing) relative to closing date fair values becomes available.

Fair Value Measurement of Assets Acquired and Liabilities Assumed

Described below are the methods used to determine the fair values of the significant assets acquired and liabilities assumed in the Bank Leumi USA acquisition.

Cash and cash equivalents. The estimated fair values of cash and cash equivalents approximate their stated face amounts, as these financial instruments are either due on demand or have short-term maturities.

Investment securities. The estimated fair value of equity securities, which represents a privately held Community Reinvestment Act (CRA) fund, was measured at net asset value (NAV). Other investment securities acquired from Bank Leumi USA were classified as available for sale and held to maturity debt securities based on Valley's intent at the acquisition date. Their estimated fair values were calculated utilizing Level 2 inputs similar to the valuation techniques used for Valley's investment portfolios detailed in Note 6.

Loans. The acquired loan portfolio was recorded at its estimated fair value based on a discounted cash flow methodology. The acquired loan portfolio was segregated into categories for valuation purposes primarily based on loan type and loan risk rating. The estimated fair value incorporates adjustments related to market loss assumptions and prevailing market interest rates for comparable assets and other market factors such as liquidity from a market participant perspective. Management estimated the cash flows expected to be collected at the acquisition date by using valuation models that incorporated loan contractual characteristics (such as payment type, amortization type, and term to maturity) as well as estimates of key valuation assumptions (such as prepayment speeds, default rates, and loss severity rates).

The expected cash flows from the acquired loan portfolios were discounted to present value based on estimated market rates. The market rates were estimated using a buildup approach based on the following components: funding cost, servicing cost, and consideration of liquidity premium. In addition, coupon rates for recently originated loans and available market data regarding origination rates were also considered in the analysis. The methods used to estimate the Level 3 fair values of loans are sensitive to the assumptions and estimates used. While management attempted to use assumptions and estimates that best reflected the acquired loan portfolios and current market conditions, a greater degree of subjectivity is inherent in these values than in those determined in active markets.

The acquired loans were also evaluated upon acquisition to determine whether they represented purchased credit-deteriorated (PCD) loans, defined as loans which have experienced a more-than-insignificant deterioration in credit quality since origination. Valley considered a variety of factors in assessing loans the PCD classification, including but not limited to risk grades, delinquency, non-performing status, current or previous troubled debt restructurings, watch list credits and other qualitative factors that indicated a deterioration in credit quality since origination.

For PCD loans, an initial allowance was determined based on Valley’s CECL methodology and was added to the acquisition date fair value of each PCD loan to establish its initial amortized cost basis. The difference between the unpaid principal balance of loans and the calculated amortized cost basis resulted in a net non-credit discount totaling $18.8 million. This net discount will be accreted into interest income over the loan's remaining life using the effective interest method.

The following table provides a reconciliation of the unpaid principal balance and fair value of loans identified as PCD acquired from Bank Leumi USA:


	April 1, 2022
	($ in thousands)
Unpaid Principal Balance of PCD loans	$	1,922,272
Allowance for credit losses at acquisition *	(70,319)
Non-credit discount at acquisition	(18,814)
Fair value of acquired PCD loans	$	1,833,139

* Represents the initial reserve for PCD loans, reported net of an additional $62.4 million charge-offs recognized at the date of acquisition in accordance with Valley's charge-off policy.

Other intangible assets. Other intangible assets recorded consist of core deposit intangibles (CDI) and other acquired client relationships. CDI assets are measures of the value of non-maturity checking, savings, NOW and

money market customer deposits that are acquired in a business combination. The fair value for CDI was estimated based on a discounted cash flow methodology considering expected customer attrition rates, net maintenance cost of the deposit base, alternative costs of funds, and the interest costs associated with the customer deposits. The CDI is amortized using an accelerated amortization method over an estimated useful life of 10 years. For other acquired client relationships, fair value is measured using the multi-period excess earnings methodology under the income approach. This method measures the future economic income that can be attributed to the existing client relationships acquired, after considering revenue and expense assumptions, expected client attrition rates, and subtracting returns for other complementary assets that contribute to the income over their expected remaining useful lives. The resulting net cash flows are discounted to present value using an estimated intangible asset discount rate. The other acquired client relationships are amortized using an accelerated amortization method over an estimated remaining useful life of 14 years.

Deposits. The fair values of deposit liabilities with no stated maturity (i.e., non-interest bearing accounts and savings, NOW and money market accounts) are equal to the carrying amounts payable on demand. The fair values of certificates of deposit represent contractual cash flows, discounted to present value using interest rates currently offered on deposits with similar characteristics and remaining maturities.

Supplemental Pro Forma Financial Information (Unaudited). The following table summarizes supplemental pro forma financial information giving effect to the merger as if it had been completed on January 1, 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Net interest income	$	453,992	$	371,178	$	1,261,442	$	1,099,597
Non-interest income	56,194		58,931		175,488		164,458
Net income	178,119		139,666		478,891		351,489

The supplemental pro forma financial information does not necessarily reflect the results of operations that would have occurred had Valley merged with Bank Leumi USA on January 1, 2021. Costs savings and other business synergies related to the merger are not included in the supplemental pro forma financial information.

Other Recent Acquisitions

Landmark Insurance of the Palm Beaches. On February 1, 2022, the Bank's insurance agency subsidiary, Valley Insurance Services, acquired Landmark Insurance of the Palm Beaches Inc. (Landmark) agency. The purchase price included $8.6 million in cash and $1.0 million in contingent consideration. Goodwill and other intangible assets totaled $4.4 million and $6.2 million, respectively. The transaction was accounted for under the acquisition method of accounting and accordingly the results of Landmark's operations have been included in Valley's consolidated financial statements for the three and nine months ended September 30, 2022 from the date of acquisition.

The Westchester Bank Holding Corporation. On December 1, 2021, Valley completed its acquisition of The Westchester Bank Holding Corporation (Westchester) and its principal subsidiary, The Westchester Bank, which was headquartered in White Plains, New York. As of December 1, 2021, Westchester had approximately $1.4 billion ~~total~~in assets, $915.0 million in loans, and $1.2 billion in deposits, after purchase accounting adjustments, and a branch network of ~~$7.1 billion, and gross loans of $5.4 billion.~~seven locations in Westchester County, New York. The common ~~stockholders~~shareholders of ~~Leumi will receive 3.8025~~Westchester received 229.645 shares of Valley common stock ~~and $5.08 in cash (subject to specified adjustments)~~ for each ~~Leumi common~~Westchester share they ~~own. Based on Valley’s closing stock price on~~owned prior to the merger. The total consideration for the merger was $211.1 million, consisting of approximately 15.7 million shares of Valley common stock.

During the nine months ended September ~~22, 2021,~~30, 2022, Valley revised the ~~transaction is valued at an~~ estimated ~~$1.1 billion, inclusive~~fair values of the ~~value of options and upon completion~~acquired assets as of the acquisition ~~Leumi will own approximately 14 percent~~date of Valley's common stock. The acquisition is expected to close in the first half of 2022, subject to standard regulatory approvals, approval of Valley shareholders, as well as other customary closing conditions.

~~Dudley Venture~~s. On October 8, 2021, Valley acquired Arizona-based Dudley Ventures (DV), an advisory firm specializing in the investment and management of tax credits. The transaction includes the acquisition of DV's community development entity, DV Community Investment, as well as DV Fund Advisors and DV Advisory Services. The transaction price included $11.3 million of cash at the closing date, fixed future stock consideration totaling $3.8 million, and contingent cash earn-out paymentsWestchester based upon ~~revenue growth~~additional information obtained that existed as of ~~the acquired entities over a five-year period.~~

~~Merger expenses~~December 1, 2021. The adjustments related to the ~~above acquisitions~~fair value of deferred tax assets and resulted in a $5.0 million increase in goodwill (see Note 9 for more information). If additional information (that existed as of the acquisition date)

becomes available, the fair value estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date.

Merger expenses mainly related to the Bank Leumi USA acquisition above totaled ~~$1.3~~$4.7 million and $63.8 million for the three and nine months ended September 30, ~~2021~~2022, respectively. The merger expenses largely consisted of salaries and ~~primarily consisted of~~benefits expense; technology, furniture and equipment expense; and professional and legal ~~fees.~~fees within non-interest expense on the consolidated statements of income. Valley incurred merger related expenses of $1.3 million during the three and nine months ended September 30, 2021. Incremental merger expenses related to this acquisition are expected to be incurred in future periods, including professional fees, technology and other expenses related to back office consolidation of the Bank operations.

Note 3. Earnings Per Common Share

The following table shows the calculation of both basic and diluted earnings per common share for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(in thousands, except for share data)									(in thousands, except for share data)
Net income available to common shareholders	Net income available to common shareholders	$	119,408	$	99,202	$	349,286	$	275,727	Net income available to common shareholders	$	174,947	$	119,408	$	381,744	$	349,286
Basic weighted average number of common shares outstanding	Basic weighted average number of common shares outstanding	406,824,160		403,833,469		405,986,114		403,714,701		Basic weighted average number of common shares outstanding	506,342,200		406,824,160		478,383,342		405,986,114
Plus: Common stock equivalents	Plus: Common stock equivalents	2,413,841		955,057		2,523,653		1,197,425		Plus: Common stock equivalents	2,348,797		2,413,841		2,242,015		2,523,653
Diluted weighted average number of common shares outstanding	Diluted weighted average number of common shares outstanding	409,238,001		404,788,526		408,509,767		404,912,126		Diluted weighted average number of common shares outstanding	508,690,997		409,238,001		480,625,357		408,509,767
Earnings per common share:	Earnings per common share:									Earnings per common share:
Basic	Basic	$	0.29	$	0.25	$	0.86	$	0.68	Basic	$	0.35	$	0.29	$	0.80	$	0.86
Diluted	Diluted	0.29		0.25		0.86		0.68		Diluted	0.34		0.29		0.79		0.86

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of restricted stock units and common stock options to purchase Valley’s common shares. Common stock options with exercise prices that exceed the average market price per share of Valley’s common stock during the periods presented may have an anti-dilutive effect on the diluted earnings per common share calculation and therefore are excluded from the diluted earnings per share calculation along with restricted stock units. Potential anti-dilutive weighted common shares ~~were~~were immaterial for the three and nine months ended September 30, ~~2021, respectively, as compared to 4.9 million~~2022 and ~~2.2 million shares for the three and nine months ended September 30, 2020, respectively.~~2021.

Note 4. Accumulated Other Comprehensive Loss

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the three and nine months ended September 30, ~~2021:~~2022:


		Components of Accumulated Other Comprehensive Loss						Total Accumulated Other Comprehensive Loss			Components of Accumulated Other Comprehensive Loss						Total Accumulated Other Comprehensive Loss
		Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives		Defined Benefit Pension Plan					Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives		Defined Benefit Pension Plan
		(in thousands)									(in thousands)
Balance at June 30, 2021		$	21,503	$	(2,694)	$	(36,544)	$	(17,735)
Balance at June 30, 2022										Balance at June 30, 2022	$	(81,985)	$	(831)	$	(25,521)	$	(108,337)
Other comprehensive loss before reclassification	Other comprehensive loss before reclassification	(3,953)		(96)		—		(4,049)		Other comprehensive loss before reclassification	(57,242)		(85)		—		(57,327)
Amounts reclassified from other comprehensive (loss) income	Amounts reclassified from other comprehensive (loss) income	(613)		743		279		409		Amounts reclassified from other comprehensive (loss) income	(12)		(13)		132		107
Other comprehensive (loss) income, net	Other comprehensive (loss) income, net	(4,566)		647		279		(3,640)		Other comprehensive (loss) income, net	(57,254)		(98)		132		(57,220)
Balance at September 30, 2021		$	16,937	$	(2,047)	$	(36,265)	$	(21,375)
Balance at September 30, 2022										Balance at September 30, 2022	$	(139,239)	$	(929)	$	(25,389)	$	(165,557)

Components of Accumulated Other Comprehensive Loss Total
Accumulated
Other
Comprehensive
Loss
Unrealized Gains
and Losses on
Available for Sale
(AFS) Securities Unrealized Gains
and Losses on
Derivatives Defined
Benefit
Pension Plan
(in thousands)
Balance at December 31, 2020 $ 33,290 $ (3,906) $ (37,102) $ (7,718)
Other comprehensive loss before reclassification (15,860) (69) — (15,929)
Amounts reclassified from other comprehensive (loss) income (493) 1,928 837 2,272
Other comprehensive (loss) income, net (16,353) 1,859 837 (13,657)
Balance at September 30, 2021 $ 16,937 $ (2,047) $ (36,265) $ (21,375)


	Components of Accumulated Other Comprehensive Loss						Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives		Defined Benefit Pension Plan
	(in thousands)
Balance at December 31, 2021	$	9,186	$	(1,332)	$	(25,786)	$	(17,932)
Other comprehensive (loss) gain before reclassification	(148,403)		110		—		(148,293)
Amounts reclassified from other comprehensive (loss) income	(22)		293		397		668
Other comprehensive (loss) income, net	(148,425)		403		397		(147,625)
Balance at September 30, 2022	$	(139,239)	$	(929)	$	(25,389)	$	(165,557)

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:

Amounts Reclassified from
Accumulated Other Comprehensive Loss
Three Months Ended
September 30, Nine Months Ended September 30,
Components of Accumulated Other Comprehensive Loss 2021 2020 2021 2020 Income Statement Line Item
(in thousands)
Unrealized gains (losses) on AFS securities before tax $ 825 $ (46) $ 663 $ (127) Gains (losses) on securities transactions, net
Tax effect (212) 10 (170) 33
Total net of tax 613 (36) 493 (94)
Unrealized losses on derivatives (cash flow hedges) before tax (1,044) (1,586) (2,708) (1,763) Interest expense
Tax effect 301 459 780 506
Total net of tax (743) (1,127) (1,928) (1,257)
Defined benefit pension plan:
Amortization of actuarial net loss (388) (234) (1,163) (699) *
Tax effect 109 63 326 184
Total net of tax (279) (171) (837) (515)
Total reclassifications, net of tax $ (409) $ (1,334) $ (2,272) $ (1,866)


	Amounts Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended September 30,				Nine Months Ended September 30,
Components of Accumulated Other Comprehensive Loss	2022		2021		2022		2021		Income Statement Line Item
	(in thousands)
Unrealized gains on AFS securities before tax	$	16	$	825	$	30	$	663	Gains (losses) on securities transactions, net
Tax effect	(4)		(212)		(8)		(170)
Total net of tax	12		613		22		493




Unrealized gains (losses) on derivatives (cash flow hedges) before tax	21		(1,044)		(405)		(2,708)		Interest expense
Tax effect	(8)		301		112		780
Total net of tax	13		(743)		(293)		(1,928)
Defined benefit pension plan:
Amortization of actuarial net loss	(183)		(388)		(550)		(1,163)		*

Tax effect	51		109		153		326
Total net of tax	(132)		(279)		(397)		(837)
Total reclassifications, net of tax	$	(107)	$	(409)	$	(668)	$	(2,272)


*			Amortization of actuarial net loss is included in the computation of net periodic pension cost recognized within other non-interest expense.

Note 5. New Authoritative Accounting Guidance

New Accounting Guidance Adopted in ~~2021~~2022

Accounting Standards Update (ASU) No. 2020-08, "Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs" provides clarification and affects the guidance previously issued by ASU No. 2017-08 “Receivables -Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU No. 2020-08 clarifies that an entity should reevaluate whether a debt security with multiple call dates is within the scope of paragraph 310-20-35-33. For each reporting period, to the extent that the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the premium should be amortized to the next call date, unless the guidance to consider estimated prepayments is applied. Valley adopted ASU No. 2020-08 on January 1, 2021 and the new guidance did not have a significant impact on Valley’s consolidated financial statements.

2021-01

~~New Accounting Guidance issued in 2021~~

~~ASU No. 2021-01~~ "Reference Rate Reform (Topic 848)" extends some ofof Accounting Standards Codification Topic 848’s optional expedients to derivative contracts impacted by the discounting transition, including for derivatives that do not reference LIBOR or other reference rates that are expected to be discontinued. ASU No. 2021-01 is effective for all entities immediately upon issuance and may be elected retrospectively to eligible modifications as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications made on or after any date within the interim period including January 7, 2021 and it can be applied through December 31, 2022, similar to the other reference rate reform relief provided under Topic 848. ~~The~~ ASU No. 2021-01 is not expected to have a significant impact on Valley’s consolidated financial statements.

ASU No. 2021-05 "Lessors – Certain Leases with Variable Lease Payments"~~. The ASU No. 2021-05~~ updates guidance in ~~Accounting Standards Codification (ASC)~~ASC 842, Leases and requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an

operating lease at lease commencement if: (i) the lease would have been classified as a sales-type lease or direct financing lease under ASC 842 classification criteria; and (ii) the lessor would have recognized a selling loss at lease commencement. Valley adopted ASU No. 2021-05 on January 1, 2022, and the new guidance did not have a significant impact on Valley’s consolidated financial statements.

New Accounting Guidance Issued in 2022

ASU No. 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging –Portfolio Layer Method” expands and clarifies the current guidance on accounting for fair value hedge basis adjustments under the portfolio layer method for both single-layer and multiple-layer hedges. This method allows entities to designate multiple hedging relationships with a single closed portfolio, and therefore a larger portion of the interest rate risk associated with such a portfolio is eligible to be hedged. ASU No. 2022-01 also clarifies that no assets may be added to a closed portfolio once it is designated in a portfolio layer method hedge. ASU No. 2022-01 will be effective for Valley ~~for fiscal years and interim periods beginning after December 15, 2021, with early adoption permitted. The~~on January 1, 2023. Valley is currently evaluating the impact of ASU No. ~~2021-05~~2022-01 but it is not expected to have a significant impact on ~~Valley’s~~Valley's consolidated financial statements.

ASU No. 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” eliminates the troubled debt restructuring (TDR) accounting model for creditors, such as Valley, that have adopted Topic 326, “Financial Instruments – Credit Losses.” ASU No. 2022-02 will require all loan modifications to be accounted for under the general loan modification guidance in Subtopic 310-20. On a prospective basis, entities will also be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. Public business entities within the scope of the Topic 326 vintage disclosure requirements also will be required to prospectively disclose current-period gross write-off information by vintage. However, gross recoveries will not be required. ASU No. 2022-02 will be effective for Valley on January 1, 2023, with early adoption permitted. Valley is currently evaluating the impact of ASU No. 2022-02 on its consolidated financial statements.

ASU No. 2022-03, "Fair Value Measurement of Equity Securities subject to Contractual Sale Restrictions” updates guidance in ASC 820, Fair Value Measurement and clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities including (i) the nature and remaining duration of the restriction; (ii) the circumstances that could cause a lapse in restrictions; and (iii) the fair value of the securities with contractual sale restrictions. ASU No. 2022-03 will be effective for Valley on January 1, 2024, and it can be applied prospectively, with any adjustments resulting from adoption recognized in earnings on the date of adoption. The adoption of ASU No. 2022-03 is not expected to have a significant impact on Valley's consolidated financial statements.

Note 6. Fair Value Measurement of Assets and Liabilities

ASC Topic 820, “Fair Value Measurements” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

•Level 1 - Unadjusted exchange quoted prices in active markets for identical assets or liabilities, or identical liabilities traded as assets that the reporting entity has the ability to access at the measurement date.

•Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly (i.e., quoted prices on similar assets) for substantially the full term of the asset or liability.

•Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

1316

Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and non-recurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The assets presented under “non-recurring fair value measurements” in the tables below are not measured at fair value on an ongoing basis but are subject to fair value adjustments under certain circumstances (e.g., when an impairment loss is recognized).


		September 30, 2021		Fair Value Measurements at Reporting Date Using:							September 30, 2022		Fair Value Measurements at Reporting Date Using:
				Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)					Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(in thousands)									(in thousands)
Recurring fair value measurements:	Recurring fair value measurements:									Recurring fair value measurements:
Assets	Assets									Assets
Investment securities:	Investment securities:									Investment securities:
Equity securities (1)	Equity securities (1)	$	32,300	$	20,890	$	—	$	—	Equity securities (1)	$	34,942	$	23,917	$	—	$	—
Trading debt securities	Trading debt securities	4,797		—		4,797		—		Trading debt securities	4,100		2,915		1,185		—
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:

U.S. Treasury securities										U.S. Treasury securities	277,902		277,902		—		—
U.S. government agency securities	U.S. government agency securities	21,442		—		21,442		—		U.S. government agency securities	26,821		—		26,821		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	83,149		—		83,149		—		Obligations of states and political subdivisions	141,563		—		141,563		—
Residential mortgage-backed securities	Residential mortgage-backed securities	992,828		—		992,828		—		Residential mortgage-backed securities	646,665		—		646,665		—
Corporate and other debt securities	Corporate and other debt securities	110,858		—		110,858		—		Corporate and other debt securities	178,903		—		178,903		—
Total available for sale debt securities	Total available for sale debt securities	1,208,277		—		1,208,277		—		Total available for sale debt securities	1,271,854		277,902		993,952		—
Loans held for sale (2)	Loans held for sale (2)	157,084		—		157,084		—		Loans held for sale (2)	6,073		—		6,073		—
Other assets (3)	Other assets (3)	215,919		—		215,919		—		Other assets (3)	594,116		—		594,116		—
Total assets	Total assets	$	1,618,377	$	20,890	$	1,586,077	$	—	Total assets	$	1,911,085	$	304,734	$	1,595,326	$	—
Liabilities	Liabilities									Liabilities
Other liabilities (3)	Other liabilities (3)	$	66,733	$	—	$	66,733	$	—	Other liabilities (3)	$	625,656	$	—	$	625,656	$	—
Total liabilities	Total liabilities	$	66,733	$	—	$	66,733	$	—	Total liabilities	$	625,656	$	—	$	625,656	$	—
Non-recurring fair value measurements:	Non-recurring fair value measurements:									Non-recurring fair value measurements:

Collateral dependent loans	Collateral dependent loans	$	68,162	$	—	$	—	$	68,162	Collateral dependent loans	$	73,108	$	—	$	—	$	73,108

Foreclosed assets	Foreclosed assets	2,037		—		—		2,037		Foreclosed assets	1,122		—		—		1,122
Total	Total	$	70,199	$	—	$	—	$	70,199	Total	$	74,230	$	—	$	—	$	74,230

1417


				Fair Value Measurements at Reporting Date Using:									Fair Value Measurements at Reporting Date Using:
		December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(in thousands)									(in thousands)
Recurring fair value measurements:	Recurring fair value measurements:									Recurring fair value measurements:
Assets	Assets									Assets
Investment securities:	Investment securities:									Investment securities:
Equity securities (1)	Equity securities (1)	$	26,379	$	18,600	$	—	$	—	Equity securities (1)	$	32,844	$	21,284	$	—	$	—
Trading debt securities										Trading debt securities	38,130		—		38,130		—
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:
U.S. Treasury securities		51,393		51,393		—		—

U.S. government agency securities	U.S. government agency securities	26,157		—		26,157		—		U.S. government agency securities	20,925		—		20,925		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	79,950		—		79,135		815		Obligations of states and political subdivisions	79,890		—		79,890		—
Residential mortgage-backed securities	Residential mortgage-backed securities	1,090,022		—		1,090,022		—		Residential mortgage-backed securities	904,502		—		904,502		—

Corporate and other debt securities	Corporate and other debt securities	91,951		—		91,951		—		Corporate and other debt securities	123,492		—		123,492		—
Total available for sale		1,339,473		51,393		1,287,265		815
Total available for sale debt securities										Total available for sale debt securities	1,128,809		—		1,128,809		—

Loans held for sale (2)	Loans held for sale (2)	301,427		—		301,427		—		Loans held for sale (2)	139,516		—		139,516		—
Other assets (3)	Other assets (3)	387,452		—		387,452		—		Other assets (3)	181,500		—		181,500		—
Total assets	Total assets	$	2,054,731	$	69,993	$	1,976,144	$	815	Total assets	$	1,520,799	$	21,284	$	1,487,955	$	—
Liabilities	Liabilities									Liabilities
Other liabilities (3)	Other liabilities (3)	$	156,281	$	—	$	156,281	$	—	Other liabilities (3)	$	52,376	$	—	$	52,376	$	—
Total liabilities	Total liabilities	$	156,281	$	—	$	156,281	$	—	Total liabilities	$	52,376	$	—	$	52,376	$	—
Non-recurring fair value measurements:	Non-recurring fair value measurements:									Non-recurring fair value measurements:
Collateral dependent impaired loans		$	35,228	$	—	$	—	$	35,228
Loan servicing rights		15,603		—		—		15,603
Collateral dependent loans										Collateral dependent loans	$	47,871	$	—	$	—	$	47,871
Foreclosed assets	Foreclosed assets	7,387		—		—		7,387		Foreclosed assets	2,931		—		—		2,931
Total	Total	$	58,218	$	—	$	—	$	58,218	Total	$	50,802	$	—	$	—	$	50,802

(1)Includes equity securities measured at net asset value (NAV) per share (or its equivalent) as a practical expedient totaling ~~$11.4~~$11.0 million and ~~$7.8~~$11.6 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. These securities have not been classified in the fair value hierarchy.

(2)Represents residential mortgage loans held for sale that are carried at fair value and had contractual unpaid principal balances totaling approximately ~~$152.4~~$6.2 million and ~~$286.4~~$136.3 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

(3)Derivative financial instruments are included in this category.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following valuation techniques were used for financial instruments measured at fair value on a recurring basis. All the valuation techniques described below apply to the unpaid principal balance, excluding any accrued interest or dividends at the measurement date. Interest income and expense are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.

Equity securities. The fair value of equity securities consists of a publicly traded mutual fund, ~~Community Reinvestment Act (CRA)~~a CRA investment fund and an investment related to the development of new financial technologies that are carried at quoted prices in active markets. Valley also has privately held CRA funds measured at NAV, which are excluded from fair value hierarchy levels in the tables above.

Trading debt securities.~~The fair value of trading~~ Trading debt securities ~~consisting~~consist of U.S Treasury securities and municipal bonds is reported at fair value utilizing Level 1 and Level 2 ~~inputs.~~inputs, respectively. The prices for ~~these investments~~municipal bonds are derived from market quotations and matrix

pricing obtained through an independent pricing service. Management reviews the data and

assumptions used in pricing the securities by its third-party provider to ensure the highest level of significant inputs are derived from market observable data.

Available for sale debt securities. ~~When applicable,~~ U.S. Treasury securities are reported at fair value utilizing Level 1 inputs. The majority of other investment securities are reported at fair value utilizing Level 2 inputs. The prices for these instruments are obtained through an independent pricing service or dealer market participants with whom Valley has historically transacted both purchases and sales of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the data and assumptions used in pricing the securities by its third-party provider to ensure the highest level of significant inputs are derived from market observable data. In addition, Valley reviews the volume and level of activity for all available for sale debt securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume.

Loans held for sale. Residential mortgage loans originated for sale are reported at fair value using Level 2 inputs. The fair values were calculated utilizing quoted prices for similar assets in active markets. The market prices represent a delivery price, which reflects the underlying price each institution would pay Valley for an immediate sale of an aggregate pool of mortgages. Non-performance risk did not materially impact the fair value of mortgage loans held for sale at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 based on the short duration these assets were held, and the credit quality of these loans.

Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The fair values of Valley’s derivatives are determined using third-party prices that are based on discounted cash flow analysis using observed market inputs, such as the LIBOR, Overnight Index Swap and Secured Overnight Financing Rate (SOFR) curves for all cleared derivatives. The fair value of mortgage banking derivatives, consisting of interest rate lock commitments to fund residential mortgage loans and forward commitments for the future delivery of such loans (including certain loans held for sale at September 30, ~~2021~~2022 and December 31, ~~2020)~~2021), is determined based on the current market prices for similar instruments. The fair values of most of the derivatives incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to account for potential nonperformance risk of Valley and its counterparties. The credit valuation adjustments were not significant to the overall valuation of Valley’s derivatives at September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

The following valuation techniques were used for certain non-financial assets measured at fair value on a non-recurring basis, including collateral dependent loans reported at the fair value of the underlying collateral ~~loan servicing rights~~ and foreclosed assets, which are reported at fair value upon initial recognition or subsequent impairment as described below.

Collateral ~~Dependent Loans~~dependent loans. Collateral dependent loans are loans when foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and substantially all of the repayment is expected from the collateral. Collateral dependent loans are reported at the fair value of the underlying collateral. Collateral values are estimated using Level 3 inputs, consisting of individual third-party appraisals that may be adjusted based on certain discounting criteria. Certain real estate appraisals may be discounted based on specific market data by location and property type. At September 30, ~~2021,~~2022, collateral dependent loans were individually re-measured and reported at fair value through direct loan charge-offs to the allowance for loan losses based on the fair value of the underlying collateral. At September 30, ~~2021,~~2022, collateral dependent loans with a total amortized cost of ~~$136.1~~$171.3 million, including our taxi medallion loan portfolio, were reduced by specific allowance for loan losses allocations totaling ~~$67.9~~$98.2 million to a reported total net carrying amount of ~~$68.2~~$73.1 million.

~~Loan servicing rights.~~ Fair values for each risk-stratified group of loan servicing rights are calculated using a fair value model from a third-party vendor that requires inputs that are both significant to the fair value measurement and unobservable (Level 3). The fair value model is based on various assumptions, including but not limited to, prepayment speeds, internal rate of return (discount rate), servicing cost, ancillary income, float rate, tax rate, and inflation. The prepayment speed and the discount rate are considered two of the most significant inputs in the model. At September 30, 2021, the fair value model used a blended prepayment speed (stated as constant prepayment rates) of 13.6 percent and a discount rate of 9.0 percent for the valuation of the loan servicing rights. A significant degree of judgment is involved in valuing the loan servicing rights using Level 3 inputs. The use of different assumptions could have a significant positive or negative effect on the fair value estimate. Impairment charges are recognized on loan servicing rights when the amortized cost of a risk-stratified group of loan servicing rights exceeds the estimated fair value. At September 30, 2021, there was no re-measurement of loan servicing rights at fair value. See Note 9 for additional information.

Foreclosed assets. Certain foreclosed assets (consisting of other real estate owned and other repossessed assets included in other assets), upon initial recognition and transfer from loans, are re-measured and reported at fair value

using Level 3 inputs, consisting of a third-party appraisal less estimated cost to sell. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If further declines in the estimated fair value of the asset occur, an asset is re-measured and reported at fair value through a write-down recorded in non-interest expense. ~~The~~There were no adjustments to the appraisals of foreclosed assets ~~ranged from~~ ~~0.6 percent to 4.6 percent~~at September 30, ~~2021.~~2022.

Other Fair Value Disclosures

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value estimates presented in the following table were based on pertinent market data and relevant information on the financial instruments available as of the valuation date. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire portfolio of financial instruments. Because no market exists for a portion of the financial instruments, fair value estimates may be based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For instance, Valley has certain fee-generating business lines (e.g., its mortgage servicing operation, trust and investment management departments) that were not considered in these estimates since these activities are not financial instruments. In addition, the tax implications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

1720

The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the consolidated statements of financial condition at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		Fair Value Hierarchy	September 30, 2021				December 31, 2020					Fair Value Hierarchy	September 30, 2022				December 31, 2021
			Carrying Amount		Fair Value		Carrying Amount		Fair Value				Carrying Amount		Fair Value		Carrying Amount		Fair Value
			(in thousands)										(in thousands)
Financial assets	Financial assets										Financial assets
Cash and due from banks	Cash and due from banks	Level 1	$	304,912	$	304,912	$	257,845	$	257,845	Cash and due from banks	Level 1	$	431,471	$	431,471	$	205,156	$	205,156
Interest bearing deposits with banks	Interest bearing deposits with banks	Level 1	1,195,244		1,195,244		1,071,360		1,071,360		Interest bearing deposits with banks	Level 1	686,877		686,877		1,844,764		1,844,764
Equity securities (1)	Equity securities (1)	Level 3	3,768		3,768		2,999		2,999		Equity securities (1)	Level 3	8,376		8,376		3,629		3,629
Held to maturity debt securities:	Held to maturity debt securities:										Held to maturity debt securities:
U.S. Treasury securities	U.S. Treasury securities	Level 1	67,716		72,898		68,126		75,484		U.S. Treasury securities	Level 1	67,075		66,030		67,558		71,661
U.S. government agency securities	U.S. government agency securities	Level 2	4,817		5,015		6,222		6,513		U.S. government agency securities	Level 2	259,869		214,314		6,265		6,378
Obligations of states and political subdivisions	Obligations of states and political subdivisions	Level 2	353,406		360,903		470,259		484,506		Obligations of states and political subdivisions	Level 2	471,189		430,134		337,962		344,164
Residential mortgage-backed securities	Residential mortgage-backed securities	Level 2	2,072,700		2,076,597		1,550,306		1,589,655		Residential mortgage-backed securities	Level 2	2,811,582		2,373,581		2,166,142		2,152,301
Trust preferred securities	Trust preferred securities	Level 2	37,014		31,507		37,348		30,033		Trust preferred securities	Level 2	37,038		31,417		37,020		31,916
Corporate and other debt securities	Corporate and other debt securities	Level 2	48,750		49,391		40,750		41,421		Corporate and other debt securities	Level 2	75,267		71,176		53,750		54,185
Total held to maturity debt securities (2)	Total held to maturity debt securities (2)		2,584,403		2,596,311		2,173,011		2,227,612		Total held to maturity debt securities (2)		3,722,020		3,186,652		2,668,697		2,660,605
Net loans	Net loans	Level 3	32,264,287		32,113,934		31,876,869		31,635,060		Net loans	Level 3	44,710,020		41,945,829		33,794,455		33,283,251
Accrued interest receivable	Accrued interest receivable	Level 1	98,073		98,073		106,230		106,230		Accrued interest receivable	Level 1	159,406		159,406		96,882		96,882
Federal Reserve Bank and Federal Home Loan Bank stock (3)	Federal Reserve Bank and Federal Home Loan Bank stock (3)	Level 2	207,701		207,701		250,116		250,116		Federal Reserve Bank and Federal Home Loan Bank stock (3)	Level 2	267,319		267,319		206,450		206,450
Financial liabilities	Financial liabilities										Financial liabilities
Deposits without stated maturities	Deposits without stated maturities	Level 1	29,672,322		29,672,322		25,220,924		25,220,924		Deposits without stated maturities	Level 1	38,980,287		38,980,287		31,945,368		31,945,368
Deposits with stated maturities	Deposits with stated maturities	Level 2	3,960,283		3,957,008		6,714,678		6,639,022		Deposits with stated maturities	Level 2	6,328,556		6,194,389		3,687,044		3,670,113
Short-term borrowings	Short-term borrowings	Level 1	783,346		765,636		1,147,958		1,151,478		Short-term borrowings	Level 1	919,283		883,100		655,726		637,490
Long-term borrowings	Long-term borrowings	Level 2	1,427,444		1,417,368		2,295,665		2,405,345		Long-term borrowings	Level 2	1,541,097		1,424,946		1,423,676		1,404,184
Junior subordinated debentures issued to capital trusts	Junior subordinated debentures issued to capital trusts	Level 2	56,326		46,057		56,065		57,779		Junior subordinated debentures issued to capital trusts	Level 2	56,673		56,543		56,413		46,306
Accrued interest payable (4)	Accrued interest payable (4)	Level 1	8,824		8,824		18,839		18,839		Accrued interest payable (4)	Level 1	16,519		16,519		4,909		4,909

(1)Represents equity securities without a readily determinable fair value measured at cost less impairment, if any.

(2)The carrying amount is presented gross without the allowance for credit losses.

(3)Included in other assets.

(4)Included in accrued expenses and other liabilities.

Note 7. Investment Securities

Equity Securities

Equity securities ~~carried at fair value~~ totaled ~~$36.1~~$43.3 million and ~~$29.4~~$36.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~At September 30, 2021, Valley's~~See Note 6 for further details on equity securities consisted of one publicly traded mutual fund, CRA investments and to a lesser extent, equity investments related to the development of new financial technologies. Our CRA and other equity investments are a mixture of both publicly traded entities and privately held entities without readily determinable fair market values.

securities.

Trading Debt Securities

The fair value of trading debt securities ~~consisting of municipal bonds,~~ totaled ~~$4.8~~$4.1 million and $38.1 million at September 30, ~~2021. We had no trading debt securities at~~2022 and December 31, ~~2020.~~2021, respectively. Net trading gains and losses ~~are~~were included in net gains and losses on securities transactions within non-interest income. We recorded net trading losses of ~~$2 thousand~~$1.2 million and net trading gains of $705 thousand for ~~three and~~the nine months ended September 30, 2022and 2021, respectively. The net trading gains and losses for the three months ended September 30, 2022 and 2021 were not material.

Available for Sale Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of available for sale debt securities at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		(in thousands)									(in thousands)
September 30, 2021

September 30, 2022										September 30, 2022
U.S. Treasury securities										U.S. Treasury securities	$	306,748	$	—	$	(28,846)	$	277,902
U.S. government agency securities	U.S. government agency securities	$	20,408	$	1,041	$	(7)	$	21,442	U.S. government agency securities	29,529		50		(2,758)		26,821
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:									Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	29,752		239		(39)		29,952		Obligations of states and state agencies	12,576		—		(565)		12,011
Municipal bonds	Municipal bonds	53,186		440		(429)		53,197		Municipal bonds	173,574		—		(44,022)		129,552
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	82,938		679		(468)		83,149		Total obligations of states and political subdivisions	186,150		—		(44,587)		141,563
Residential mortgage-backed securities	Residential mortgage-backed securities	973,543		21,761		(2,476)		992,828		Residential mortgage-backed securities	744,547		66		(97,948)		646,665

Corporate and other debt securities	Corporate and other debt securities	107,901		3,262		(305)		110,858		Corporate and other debt securities	197,847		15		(18,959)		178,903
Total	Total	$	1,184,790	$	26,743	$	(3,256)	$	1,208,277	Total	$	1,464,821	$	131	$	(193,098)	$	1,271,854
December 31, 2020
U.S. Treasury securities		$	50,031	$	1,362	$	—	$	51,393
December 31, 2021										December 31, 2021

U.S. government agency securities	U.S. government agency securities	25,067		1,103		(13)		26,157		U.S. government agency securities	$	20,323	$	608	$	(6)	$	20,925
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:									Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	40,861		970		(32)		41,799		Obligations of states and state agencies	26,088		132		(93)		26,127
Municipal bonds	Municipal bonds	37,489		731		(69)		38,151		Municipal bonds	53,530		349		(116)		53,763
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	78,350		1,701		(101)		79,950		Total obligations of states and political subdivisions	79,618		481		(209)		79,890
Residential mortgage-backed securities	Residential mortgage-backed securities	1,050,369		40,426		(773)		1,090,022		Residential mortgage-backed securities	895,279		14,986		(5,763)		904,502

Corporate and other debt securities	Corporate and other debt securities	89,689		2,294		(32)		91,951		Corporate and other debt securities	120,871		3,177		(556)		123,492

Total	Total	$	1,293,506	$	46,886	$	(919)	$	1,339,473	Total	$	1,116,091	$	19,252	$	(6,534)	$	1,128,809

1922

The age of unrealized losses and fair value of the related available for sale debt securities at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		Less than Twelve Months				More than Twelve Months				Total					Less than Twelve Months				More than Twelve Months				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
		(in thousands)													(in thousands)
September 30, 2021

September 30, 2022														September 30, 2022
U.S. Treasury securities														U.S. Treasury securities	$	277,902	$	(28,846)	$	—	$	—	$	277,902	$	(28,846)
U.S. government agency securities	U.S. government agency securities	$	—	$	—	$	1,355��	$	(7)	$	1,355	$	(7)	U.S. government agency securities	22,614		(2,720)		1,142		(38)		23,756		(2,758)
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:													Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	10,344		(39)		—		—		10,344		(39)		Obligations of states and state agencies	4,402		(56)		7,610		(509)		12,012		(565)
Municipal bonds	Municipal bonds	25,100		(429)		—		—		25,100		(429)		Municipal bonds	119,722		(40,475)		9,305		(3,547)		129,027		(44,022)
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	35,444		(468)		—		—		35,444		(468)		Total obligations of states and political subdivisions	124,124		(40,531)		16,915		(4,056)		141,039		(44,587)
Residential mortgage-backed securities	Residential mortgage-backed securities	264,495		(2,138)		12,058		(338)		276,553		(2,476)		Residential mortgage-backed securities	376,683		(39,604)		266,591		(58,344)		643,274		(97,948)

Corporate and other debt securities	Corporate and other debt securities	19,175		(305)		—		—		19,175		(305)		Corporate and other debt securities	160,743		(14,670)		15,145		(4,289)		175,888		(18,959)
Total	Total	$	319,114	$	(2,911)	$	13,413	$	(345)	$	332,527	$	(3,256)	Total	$	962,066	$	(126,371)	$	299,793	$	(66,727)	$	1,261,859	$	(193,098)
December 31, 2020
December 31, 2021														December 31, 2021

U.S. government agency securities	U.S. government agency securities	$	—	$	—	$	1,479	$	(13)	$	1,479	$	(13)	U.S. government agency securities	$	—	$	—	$	1,326	$	(6)	$	1,326	$	(6)
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:													Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	—		—		1,010		(32)		1,010		(32)		Obligations of states and state agencies	10,549		(93)		—		—		10,549		(93)
Municipal bonds	Municipal bonds	6,777		(69)		—		—		6,777		(69)		Municipal bonds	19,100		(116)		—		—		19,100		(116)
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	6,777		(69)		1,010		(32)		7,787		(101)		Total obligations of states and political subdivisions	29,649		(209)		—		—		29,649		(209)
Residential mortgage-backed securities	Residential mortgage-backed securities	41,418		(500)		27,911		(273)		69,329		(773)		Residential mortgage-backed securities	371,256		(4,770)		25,960		(993)		397,216		(5,763)

Corporate and other debt securities	Corporate and other debt securities	12,517		(32)		—		—		12,517		(32)		Corporate and other debt securities	59,039		(556)		—		—		59,039		(556)

Total	Total	$	60,712	$	(601)	$	30,400	$	(318)	$	91,112	$	(919)	Total	$	459,944	$	(5,535)	$	27,286	$	(999)	$	487,230	$	(6,534)

Within the available for sale debt securities portfolio, the total number of security positions in an unrealized loss position was ~~111~~743 and 58139 at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

As of September 30, ~~2021,~~2022, the fair value of available for sale debt securities that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law was ~~$547.5~~$348.1 million.

The contractual maturities of available for sale debt securities at September 30, ~~2021~~2022 are set forth in the following table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.

September 30, 2021
Amortized
Cost Fair
Value
(in thousands)
Due in one year $ 10,183 $ 10,294
Due after one year through five years 31,000 31,750
Due after five years through ten years 84,781 87,587
Due after ten years 85,283 85,818
Residential mortgage-backed securities 973,543 992,828
Total $ 1,184,790 $ 1,208,277


	September 30, 2022
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	8,593	$	8,553
Due after one year through five years	184,748		174,982
Due after five years through ten years	271,404		246,134
Due after ten years	255,529		195,520
Residential mortgage-backed securities	744,547		646,665
Total	$	1,464,821	$	1,271,854

Actual maturities of available for sale debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

The weighted average remaining expected life for residential mortgage-backed securities available for sale was ~~4.9~~6.6 years at September 30, ~~2021.~~2022.

Impairment Analysis of Available For Sale Debt Securities

Valley's available for sale debt securities portfolio includes corporate bonds and revenue bonds, among other securities. These types of securities may pose a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy and its potential negative effect on the future performance of the security issuers, including due to current economic conditions and the ~~economic~~ effects of the COVID-19 pandemic.

Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. Valley has evaluated available for sale debt securities that are in an unrealized loss position as of September 30, ~~2021~~2022 included in the table above and has determined that the declines in fair value are mainly attributable to market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management recognized no impairment during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. There was no allowance for credit losses for available for sale debt securities at September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Held to Maturity Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of debt securities held to maturity at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		(in thousands)									(in thousands)
September 30, 2021
September 30, 2022										September 30, 2022
U.S. Treasury securities	U.S. Treasury securities	$	67,716	$	5,182	$	—	$	72,898	U.S. Treasury securities	$	67,075	$	—	$	(1,045)	$	66,030
U.S. government agency securities	U.S. government agency securities	4,817		198		—		5,015		U.S. government agency securities	259,869		—		(45,555)		214,314
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:									Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	161,929		3,866		(293)		165,502		Obligations of states and state agencies	88,276		16		(5,127)		83,165
Municipal bonds	Municipal bonds	191,477		4,066		(142)		195,401		Municipal bonds	382,913		17		(35,961)		346,969
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	353,406		7,932		(435)		360,903		Total obligations of states and political subdivisions	471,189		33		(41,088)		430,134
Residential mortgage-backed securities	Residential mortgage-backed securities	2,072,700		21,898		(18,001)		2,076,597		Residential mortgage-backed securities	2,811,582		250		(438,251)		2,373,581
Trust preferred securities	Trust preferred securities	37,014		4		(5,511)		31,507		Trust preferred securities	37,038		1		(5,622)		31,417
Corporate and other debt securities	Corporate and other debt securities	48,750		650		(9)		49,391		Corporate and other debt securities	75,267		—		(4,091)		71,176
Total	Total	$	2,584,403	$	35,864	$	(23,956)	$	2,596,311	Total	$	3,722,020	$	284	$	(535,652)	$	3,186,652
December 31, 2020
December 31, 2021										December 31, 2021
U.S. Treasury securities	U.S. Treasury securities	$	68,126	$	7,358	$	—	$	75,484	U.S. Treasury securities	$	67,558	$	4,103	$	—	$	71,661
U.S. government agency securities	U.S. government agency securities	6,222		291		—		6,513		U.S. government agency securities	6,265		113		—		6,378
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:									Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	262,762		8,060		(105)		270,717		Obligations of states and state agencies	141,015		3,065		(312)		143,768
Municipal bonds	Municipal bonds	207,497		6,292		—		213,789		Municipal bonds	196,947		3,536		(87)		200,396
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	470,259		14,352		(105)		484,506		Total obligations of states and political subdivisions	337,962		6,601		(399)		344,164
Residential mortgage-backed securities	Residential mortgage-backed securities	1,550,306		39,603		(254)		1,589,655		Residential mortgage-backed securities	2,166,142		14,599		(28,440)		2,152,301
Trust preferred securities	Trust preferred securities	37,348		50		(7,365)		30,033		Trust preferred securities	37,020		5		(5,109)		31,916
Corporate and other debt securities	Corporate and other debt securities	40,750		672		(1)		41,421		Corporate and other debt securities	53,750		559		(124)		54,185
Total	Total	$	2,173,011	$	62,326	$	(7,725)	$	2,227,612	Total	$	2,668,697	$	25,980	$	(34,072)	$	2,660,605

2125

The age of unrealized losses and fair value of related debt securities held to maturity at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		Less than Twelve Months				More than Twelve Months				Total					Less than Twelve Months				More than Twelve Months				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
		(in thousands)													(in thousands)
September 30, 2021
September 30, 2022														September 30, 2022
U.S. Treasury securities														U.S. Treasury securities	$	66,030	$	(1,045)	$	—	$	—	$	66,030	$	(1,045)
U.S. government agency securities														U.S. government agency securities	213,129		(45,555)		—		—		213,129		(45,555)
Obligations of states and political subdivisions:														Obligations of states and political subdivisions:
Obligations of states and state agencies														Obligations of states and state agencies	69,161		(3,397)		12,403		(1,730)		81,564		(5,127)
Municipal bonds														Municipal bonds	284,323		(34,193)		7,674		(1,768)		291,997		(35,961)
Total obligations of states and political subdivisions														Total obligations of states and political subdivisions	353,484		(37,590)		20,077		(3,498)		373,561		(41,088)
Residential mortgage-backed securities														Residential mortgage-backed securities	1,354,304		(200,314)		1,007,883		(237,937)		2,362,187		(438,251)
Trust preferred securities														Trust preferred securities	—		—		30,416		(5,622)		30,416		(5,622)
Corporate and other debt securities														Corporate and other debt securities	57,181		(3,336)		7,245		(755)		64,426		(4,091)
Total														Total	$	2,044,128	$	(287,840)	$	1,065,621	$	(247,812)	$	3,109,749	$	(535,652)
December 31, 2021														December 31, 2021

Obligations of states and political subdivisions:	Obligations of states and political subdivisions:													Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	$	10,541	$	(218)	$	5,519	$	(75)	$	16,060	$	(293)	Obligations of states and state agencies	$	17,000	$	(254)	$	5,517	$	(58)	$	22,517	$	(312)
Municipal bonds	Municipal bonds	14,917		(142)		—		—		14,917		(142)		Municipal bonds	9,403		(87)		—		—		9,403		(87)
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	25,458		(360)		5,519		(75)		30,977		(435)		Total obligations of states and political subdivisions	26,403		(341)		5,517		(58)		31,920		(399)
Residential mortgage-backed securities	Residential mortgage-backed securities	1,292,965		(17,978)		2,546		(23)		1,295,511		(18,001)		Residential mortgage-backed securities	1,381,405		(22,365)		206,520		(6,075)		1,587,925		(28,440)
Trust preferred securities	Trust preferred securities	—		—		30,503		(5,511)		30,503		(5,511)		Trust preferred securities	—		—		30,912		(5,109)		30,912		(5,109)
Corporate and other debt securities	Corporate and other debt securities	6,991		(9)		—		—		6,991		(9)		Corporate and other debt securities	32,627		(124)		—		—		32,627		(124)
Total	Total	$	1,325,414	$	(18,347)	$	38,568	$	(5,609)	$	1,363,982	$	(23,956)	Total	$	1,440,435	$	(22,830)	$	242,949	$	(11,242)	$	1,683,384	$	(34,072)
December 31, 2020

Obligations of states and state agencies		$	5,546	$	(105)	$	—	$	—	$	5,546	$	(105)

Residential mortgage-backed securities		21,599		(245)		2,470		(9)		24,069		(254)
Trust preferred securities		—		—		28,630		(7,365)		28,630		(7,365)
Corporate and other debt securities		10,749		(1)		—		—		10,749		(1)
Total		$	37,894	$	(351)	$	31,100	$	(7,374)	$	68,994	$	(7,725)

Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 62826 and 13108 at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

As of September 30, ~~2021,~~2022, the fair value of debt securities held to maturity that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law was ~~$955.9~~$619.5 million.

The contractual maturities of investments in debt securities held to maturity at September 30, ~~2021~~2022 are set forth in the table below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.


		September 30, 2021					September 30, 2022
		Amortized Cost		Fair Value			Amortized Cost		Fair Value
		(in thousands)					(in thousands)
Due in one year	Due in one year	$	22,683	$	22,845	Due in one year	$	31,783	$	31,721
Due after one year through five years	Due after one year through five years	231,112		239,893		Due after one year through five years	195,679		191,824
Due after five years through ten years	Due after five years through ten years	66,064		67,333		Due after five years through ten years	86,011		79,844
Due after ten years	Due after ten years	191,844		189,643		Due after ten years	596,965		509,682
Residential mortgage-backed securities	Residential mortgage-backed securities	2,072,700		2,076,597		Residential mortgage-backed securities	2,811,582		2,373,581
Total	Total	$	2,584,403	$	2,596,311	Total	$	3,722,020	$	3,186,652

Actual maturities of held to maturity debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

The weighted-average remaining expected life for residential mortgage-backed securities held to maturity was ~~5.9~~8.8 years at September 30, ~~2021.~~2022.

2227

Credit Quality Indicators

Valley monitors the credit quality of the held to maturity debt securities through the use of the most current credit ratings from external rating agencies. The following table summarizes the amortized cost of held to maturity debt securities by external credit rating at September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


		AAA/AA/A Rated		BBB rated		Non-investment grade rated		Non-rated		Total			AAA/AA/A Rated		BBB rated		Non-investment grade rated		Non-rated		Total
		(in thousands)											(in thousands)
September 30, 2021
September 30, 2022												September 30, 2022
U.S. Treasury securities	U.S. Treasury securities	$	67,716	$	—	$	—	$	—	$	67,716	U.S. Treasury securities	$	67,075	$	—	$	—	$	—	$	67,075
U.S. government agency securities	U.S. government agency securities	4,817		—		—		—		4,817		U.S. government agency securities	259,869		—		—		—		259,869
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:											Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	135,122		—		5,595		21,212		161,929		Obligations of states and state agencies	63,434		—		5,517		19,325		88,276
Municipal bonds	Municipal bonds	150,468		—		—		41,009		191,477		Municipal bonds	348,330		—		—		34,583		382,913
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	285,590		—		5,595		62,221		353,406		Total obligations of states and political subdivisions	411,764		—		5,517		53,908		471,189
Residential mortgage-backed securities	Residential mortgage-backed securities	2,072,700		—		—		—		2,072,700		Residential mortgage-backed securities	2,811,582		—		—		—		2,811,582
Trust preferred securities	Trust preferred securities	—		—		—		37,014		37,014		Trust preferred securities	—		—		—		37,038		37,038
Corporate and other debt securities	Corporate and other debt securities	2,000		6,000		—		40,750		48,750		Corporate and other debt securities	2,000		6,000		—		67,267		75,267
Total	Total	$	2,432,823	$	6,000	$	5,595	$	139,985	$	2,584,403	Total	$	3,552,290	$	6,000	$	5,517	$	158,213	$	3,722,020
December 31, 2020
December 31, 2021												December 31, 2021
U.S. Treasury securities	U.S. Treasury securities	$	68,126	$	—	$	—	$	—	$	68,126	U.S. Treasury securities	$	67,558	$	—	$	—	$	—	$	67,558
U.S. government agency securities	U.S. government agency securities	6,222		—		—		—		6,222		U.S. government agency securities	6,265		—		—		—		6,265
Obligations of states and political subdivisions:	Obligations of states and political subdivisions:											Obligations of states and political subdivisions:
Obligations of states and state agencies	Obligations of states and state agencies	228,286		—		5,650		28,826		262,762		Obligations of states and state agencies	118,368		—		5,576		17,071		141,015
Municipal bonds	Municipal bonds	166,408		—		—		41,089		207,497		Municipal bonds	148,854		—		—		48,093		196,947
Total obligations of states and political subdivisions	Total obligations of states and political subdivisions	394,694		—		5,650		69,915		470,259		Total obligations of states and political subdivisions	267,222		—		5,576		65,164		337,962
Residential mortgage-backed securities	Residential mortgage-backed securities	1,550,306		—		—		—		1,550,306		Residential mortgage-backed securities	2,166,142		—		—		—		2,166,142
Trust preferred securities	Trust preferred securities	—		—		—		37,348		37,348		Trust preferred securities	—		—		—		37,020		37,020
Corporate and other debt securities	Corporate and other debt securities	—		5,000		—		35,750		40,750		Corporate and other debt securities	2,000		6,000		—		45,750		53,750
Total	Total	$	2,019,348	$	5,000	$	5,650	$	143,013	$	2,173,011	Total	$	2,509,187	$	6,000	$	5,576	$	147,934	$	2,668,697

Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations. At September 30, ~~2021,~~2022, most of the obligations of states and political subdivisions were rated investment grade and a large portion of the "non-rated" category included TEMS securities secured by Ginnie Mae securities. Trust preferred securities consist of non-rated single-issuer securities, issued by bank holding companies. Corporate bonds consist of debt primarily issued by banks.

Allowance for Credit Losses for Held to Maturity Debt Securities

Valley has a ~~zero loss~~zero-loss expectation for certain securities within the held to maturity portfolio, and therefore it is not required to estimate an allowance for credit losses related to these securities under the CECL standard. After an evaluation of qualitative factors, Valley identified the following securities types which it believes qualify for this exclusion: U.S. Treasury securities, U.S. government agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds called TEMS.

~~At September 30, 2021, held~~Held to maturity debt securities were carried net of allowance for credit losses totaling ~~$1.1~~$1.7 million at September 30, 2022, and $~~1.4~~1.2 million at December 31, 2021. Valley recorded a provision for credit losses of $188 thousand and $531 thousand for the three and nine months ended September 30, ~~2021~~2022, respectively. Valley recorded

a provision for credit losses of $35 thousand and ~~December 31, 2020, respectively. There were no net charge-offs~~a credit (negative) provision for credit losses of ~~held to maturity debt securities~~$353 thousand for the three and nine months ended September 30, 2021, respectively. There were no charge-offs for all the respective periods of 2022 and ~~2020.~~

2021.

Note 8. Loans and Allowance for Credit Losses for Loans

The detail of the loan portfolio as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 was as follows:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(in thousands)					(in thousands)
Loans:	Loans:					Loans:
Commercial and industrial:	Commercial and industrial:					Commercial and industrial:
Commercial and industrial	Commercial and industrial	$	4,761,227	$	4,709,569	Commercial and industrial	$	8,615,557	$	5,411,601
Commercial and industrial PPP loans *	Commercial and industrial PPP loans *	874,033		2,152,139		Commercial and industrial PPP loans *	85,820		435,950
Total commercial and industrial loans	Total commercial and industrial loans	5,635,260		6,861,708		Total commercial and industrial loans	8,701,377		5,847,551
Commercial real estate:	Commercial real estate:					Commercial real estate:
Commercial real estate	Commercial real estate	17,912,070		16,724,998		Commercial real estate	24,493,445		18,935,486
Construction	Construction	1,804,580		1,745,825		Construction	3,571,818		1,854,580
Total commercial real estate loans	Total commercial real estate loans	19,716,650		18,470,823		Total commercial real estate loans	28,065,263		20,790,066
Residential mortgage	Residential mortgage	4,332,422		4,183,743		Residential mortgage	5,177,128		4,545,064
Consumer:	Consumer:					Consumer:
Home equity	Home equity	402,658		431,553		Home equity	467,135		400,779
Automobile	Automobile	1,563,698		1,355,955		Automobile	1,711,086		1,570,036
Other consumer	Other consumer	956,126		913,330		Other consumer	1,063,775		1,000,161
Total consumer loans	Total consumer loans	2,922,482		2,700,838		Total consumer loans	3,241,996		2,970,976
Total loans	Total loans	$	32,606,814	$	32,217,112	Total loans	$	45,185,764	$	34,153,657

*Represents SBA Paycheck Protection Program (PPP) loans, net of unearned fees totaling ~~$27.6~~$1.4 million and ~~$43.2~~$12.1 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Total loans ~~includes~~include net unearned discounts and deferred loan fees of ~~$73.0~~$136.5 million and ~~$95.8~~$78.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~Net unearned discounts and deferred loan fees include the non-credit discount on purchased credit deterioration (PCD) loans and net unearned fees related to PPP~~The increase in total loans at September 30, ~~2021 and December 31, 2020.~~2022 is partially attributed to $5.9 billion of loans acquired in the Bank Leumi USA acquisition, which was inclusive of a $98.6 million net purchase discount at the acquisition date.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled ~~$83.4~~$139.6 million and ~~$90.2~~$83.7 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is presented ~~separately in~~within total accrued interest receivable on the consolidated statements of financial condition.

~~Valley transferred and sold approximately $30.0 million of residential mortgage loans from the loan portfolio to loans held for sale during the~~ ~~nine months ended September 30, 2020. Excluding the loan transfers, there~~There were no ~~other material~~ sales of loans from the held for investment portfolio during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Credit Risk Management

For all of its loan types, Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk appetite. Management reviews and approves these policies and procedures on a regular basis with subsequent approval by the Board of Directors annually. Credit authority relating to a significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and by the Credit Committee. A reporting system supplements the management review process by providing management with frequent reports concerning loan production, loan quality, internal loan classification, concentrations of credit, loan delinquencies, non-performing, and potential problem loans. Loan portfolio diversification is an important factor utilized by Valley to manage its risk across business sectors and through

cyclical economic circumstances. See Valley’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for further details.

Credit Quality

The following table presents past due, current and non-accrual loans without an allowance for ~~credit~~loan losses by loan portfolio class at September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		Past Due and Non-Accrual Loans																	Past Due and Non-Accrual Loans
		30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Credit Losses			30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Loan Losses
		(in thousands)																	(in thousands)
September 30, 2021
September 30, 2022																		September 30, 2022
Commercial and industrial	Commercial and industrial	$	2,677	$	985	$	2,083	$	100,614	$	106,359	$	5,528,901	$	5,635,260	$	10,407	Commercial and industrial	$	19,526	$	2,188	$	15,072	$	135,187	$	171,973	$	8,529,404	$	8,701,377	$	5,043
Commercial real estate:	Commercial real estate:																	Commercial real estate:
Commercial real estate	Commercial real estate	22,956		5,897		1,942		95,843		126,638		17,785,432		17,912,070		55,621		Commercial real estate	6,196		383		15,082		67,319		88,980		24,404,465		24,493,445		64,260
Construction	Construction	—		—		—		17,653		17,653		1,786,927		1,804,580		—		Construction	—		12,969		—		61,098		74,067		3,497,751		3,571,818		14,941
Total commercial real estate loans	Total commercial real estate loans	22,956		5,897		1,942		113,496		144,291		19,572,359		19,716,650		55,621		Total commercial real estate loans	6,196		13,352		15,082		128,417		163,047		27,902,216		28,065,263		79,201
Residential mortgage	Residential mortgage	9,293		974		1,002		33,648		44,917		4,287,505		4,332,422		21,032		Residential mortgage	13,045		5,947		550		26,564		46,106		5,131,022		5,177,128		14,378
Consumer loans:	Consumer loans:																	Consumer loans:
Home equity	Home equity	606		225		—		3,541		4,372		398,286		402,658		5		Home equity	321		168		312		2,845		3,646		463,489		467,135		123
Automobile	Automobile	4,218		555		233		420		5,426		1,558,272		1,563,698		—		Automobile	4,999		702		109		286		6,096		1,704,990		1,711,086		—
Other consumer	Other consumer	639		837		92		112		1,680		954,446		956,126		—		Other consumer	876		304		—		96		1,276		1,062,499		1,063,775		—
Total consumer loans	Total consumer loans	5,463		1,617		325		4,073		11,478		2,911,004		2,922,482		5		Total consumer loans	6,196		1,174		421		3,227		11,018		3,230,978		3,241,996		123
Total	Total	$	40,389	$	9,473	$	5,352	$	251,831	$	307,045	$	32,299,769	$	32,606,814	$	87,065	Total	$	44,963	$	22,661	$	31,125	$	293,395	$	392,144	$	44,793,620	$	45,185,764	$	98,745

2530


		Past Due and Non-Accrual Loans																	Past Due and Non-Accrual Loans
		30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Credit Losses			30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Loan Losses
		(in thousands)																	(in thousands)
December 31, 2020
December 31, 2021																		December 31, 2021
Commercial and industrial	Commercial and industrial	$	6,393	$	2,252	$	9,107	$	106,693	$	124,445	$	6,737,263	$	6,861,708	$	4,075	Commercial and industrial	$	6,717	$	7,870	$	1,273	$	99,918	$	115,778	$	5,731,773	$	5,847,551	$	9,066
Commercial real estate:	Commercial real estate:																	Commercial real estate:
Commercial real estate	Commercial real estate	35,030		1,326		993		46,879		84,228		16,640,770		16,724,998		32,416		Commercial real estate	14,421		—		32		83,592		98,045		18,837,441		18,935,486		70,719
Construction	Construction	315		—		—		84		399		1,745,426		1,745,825		—		Construction	1,941		—		—		17,641		19,582		1,834,998		1,854,580		—
Total commercial real estate loans	Total commercial real estate loans	35,345		1,326		993		46,963		84,627		18,386,196		18,470,823		32,416		Total commercial real estate loans	16,362		—		32		101,233		117,627		20,672,439		20,790,066		70,719
Residential mortgage	Residential mortgage	17,717		10,351		3,170		25,817		57,055		4,126,688		4,183,743		11,610		Residential mortgage	10,999		3,314		677		35,207		50,197		4,494,867		4,545,064		20,401
Consumer loans:	Consumer loans:																	Consumer loans:
Home equity	Home equity	953		492		—		4,936		6,381		425,172		431,553		50		Home equity	242		98		—		3,517		3,857		396,922		400,779		4
Automobile	Automobile	8,056		1,107		245		338		9,746		1,346,209		1,355,955		—		Automobile	6,391		656		271		240		7,558		1,562,478		1,570,036		—
Other consumer	Other consumer	1,248		224		26		535		2,033		911,297		913,330		—		Other consumer	178		266		518		101		1,063		999,098		1,000,161		—
Total consumer loans	Total consumer loans	10,257		1,823		271		5,809		18,160		2,682,678		2,700,838		50		Total consumer loans	6,811		1,020		789		3,858		12,478		2,958,498		2,970,976		4
Total	Total	$	69,712	$	15,752	$	13,541	$	185,282	$	284,287	$	31,932,825	$	32,217,112	$	48,151	Total	$	40,889	$	12,204	$	2,771	$	240,216	$	296,080	$	33,857,577	$	34,153,657	$	100,190

Credit quality indicators. Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as "Pass," "Special Mention," "Substandard," "Doubtful," and "Loss." Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses, and, therefore, not presented in the table below. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories but pose weaknesses that deserve management’s close attention are deemed Special Mention. ~~Loans~~Pass rated ~~as Pass~~loans do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants.

2631

The following table presents the internal loan classification risk by loan portfolio class by origination year based on the most recent analysis performed at September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		Term Loans																			Term Loans
		Amortized Cost Basis by Origination Year																			Amortized Cost Basis by Origination Year
September 30, 2021		2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
September 30, 2022																				September 30, 2022	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
		(in thousands)																			(in thousands)
Commercial and industrial	Commercial and industrial																			Commercial and industrial
Risk Rating:	Risk Rating:																			Risk Rating:
Pass	Pass	$	1,526,393	$	840,868	$	462,843	$	388,482	$	149,991	$	328,289	$	1,716,736	$	269	$	5,413,871	Pass	$	1,451,283	$	1,193,937	$	663,575	$	352,556	$	279,803	$	395,216	$	4,076,834	$	159	$	8,413,362
Special Mention	Special Mention	1,809		1,558		1,342		10,770		1,930		14,950		59,905		53		92,317		Special Mention	15,224		3,433		20,292		5,246		9,320		3,852		56,973		9		114,349
Substandard	Substandard	4,587		6,507		3,972		7,853		886		2,532		15,066		288		41,691		Substandard	—		2,279		5,285		2,082		4,467		5,312		71,792		—		91,217
Doubtful	Doubtful	—		—		2,736		5		16,364		68,276		—		—		87,381		Doubtful	—		—		—		2,701		2,636		77,112		—		—		82,449

Total commercial and industrial	Total commercial and industrial	$	1,532,789	$	848,933	$	470,893	$	407,110	$	169,171	$	414,047	$	1,791,707	$	610	$	5,635,260	Total commercial and industrial	$	1,466,507	$	1,199,649	$	689,152	$	362,585	$	296,226	$	481,492	$	4,205,599	$	168	$	8,701,377
Commercial real estate	Commercial real estate																			Commercial real estate
Risk Rating:	Risk Rating:																			Risk Rating:
Pass	Pass	$	3,178,182	$	2,936,284	$	2,801,710	$	1,851,162	$	1,498,151	$	4,716,223	$	170,763	$	12,753	$	17,165,228	Pass	$	5,326,845	$	5,193,267	$	3,280,227	$	2,733,365	$	1,553,479	$	5,161,982	$	284,891	$	3,599	$	23,537,657
Special Mention	Special Mention	1,988		45,305		44,596		43,593		51,875		169,460		38,594		—		395,411		Special Mention	102,150		63,572		90,429		43,812		75,328		155,873		15,074		—		546,239
Substandard	Substandard	743		33,817		39,817		40,568		68,190		165,574		2,531		—		351,240		Substandard	17,641		31,910		37,797		40,394		63,254		210,011		8,372		—		409,379
Doubtful	Doubtful	—		—		—		—		—		191		—		—		191		Doubtful	—		—		—		—		—		170		—		—		170

Total commercial real estate	Total commercial real estate	$	3,180,913	$	3,015,406	$	2,886,123	$	1,935,323	$	1,618,216	$	5,051,448	$	211,888	$	12,753	$	17,912,070	Total commercial real estate	$	5,446,636	$	5,288,749	$	3,408,453	$	2,817,571	$	1,692,061	$	5,528,036	$	308,337	$	3,599	$	24,493,445
Construction	Construction																			Construction
Risk Rating:	Risk Rating:																			Risk Rating:
Pass	Pass	$	160,031	$	109,843	$	62,330	$	65,581	$	6,181	$	28,498	$	1,329,163	$	—	$	1,761,627	Pass	$	743,720	$	607,441	$	120,837	$	30,246	$	10,572	$	17,069	$	1,952,786	$	—	$	3,482,671
Special Mention	Special Mention	4,131		—		1,018		—		—		—		9,497		—		14,646		Special Mention	12,917		—		—		—				—		13,084		—		26,001
Substandard	Substandard	—		23		13		646		—		17,842		9,783		—		28,307		Substandard	—		11,376		—		982				17,599		20,183		—		50,140

Doubtful																				Doubtful	—		643		—		—				12,364		—		—		13,006
Total construction	Total construction	$	164,162	$	109,866	$	63,361	$	66,227	$	6,181	$	46,340	$	1,348,443	$	—	$	1,804,580	Total construction	$	756,637	$	619,460	$	120,837	$	31,228	$	10,572	$	47,032	$	1,986,053	$	—	$	3,571,818

2732


		Term Loans																			Term Loans
		Amortized Cost Basis by Origination Year																			Amortized Cost Basis by Origination Year
December 31, 2020		2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
December 31, 2021																				December 31, 2021	2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
		(in thousands)																			(in thousands)
Commercial and industrial	Commercial and industrial																			Commercial and industrial
Risk Rating:	Risk Rating:																			Risk Rating:
Pass	Pass	$	3,058,596	$	605,112	$	556,284	$	212,215	$	162,483	$	337,484	$	1,677,559	$	350	$	6,610,083	Pass	$	1,563,050	$	743,165	$	461,022	$	362,748	$	143,753	$	337,713	$	1,968,513	$	247	$	5,580,211
Special Mention	Special Mention	819		10,236		2,135		9,502		10,228		14,165		49,883		51		97,019		Special Mention	4,182		1,195		3,217		14,143		1,726		9,869		102,145		40		136,517
Substandard	Substandard	5,215		3,876		12,481		1,798		4,215		12,965		18,913		462		59,925		Substandard	8,248		4,823		3,139		7,077		910		408		19,642		109		44,356
Doubtful	Doubtful	—		5,203		1		17,010		2,596		69,871		—		—		94,681		Doubtful	—		—		2,733		—		16,355		67,379		—		—		86,467

Total commercial and industrial	Total commercial and industrial	$	3,064,630	$	624,427	$	570,901	$	240,525	$	179,522	$	434,485	$	1,746,355	$	863	$	6,861,708	Total commercial and industrial	$	1,575,480	$	749,183	$	470,111	$	383,968	$	162,744	$	415,369	$	2,090,300	$	396	$	5,847,551
Commercial real estate	Commercial real estate																			Commercial real estate
Risk Rating:	Risk Rating:																			Risk Rating:
Pass	Pass	$	3,096,549	$	3,052,076	$	2,230,047	$	1,767,528	$	1,798,137	$	3,916,990	$	199,145	$	15,532	$	16,076,004	Pass	$	4,517,917	$	2,983,140	$	2,702,580	$	1,734,922	$	1,474,770	$	4,557,011	$	195,851	$	13,380	$	18,179,571
Special Mention	Special Mention	50,193		68,203		44,336		48,813		66,845		109,295		1,705		—		389,390		Special Mention	7,700		50,019		46,911		44,187		65,623		143,540		50,168		—		408,148
Substandard	Substandard	18,936		17,049		30,997		59,618		11,541		118,725		2,531		—		259,397		Substandard	735		34,655		29,029		41,231		70,941		169,041		1,949		—		347,581
Doubtful	Doubtful	—		—		—		—		—		207		—		—		207		Doubtful	—		—		—		—		—		186		—		—		186

Total commercial real estate	Total commercial real estate	$	3,165,678	$	3,137,328	$	2,305,380	$	1,875,959	$	1,876,523	$	4,145,217	$	203,381	$	15,532	$	16,724,998	Total commercial real estate	$	4,526,352	$	3,067,814	$	2,778,520	$	1,820,340	$	1,611,334	$	4,869,778	$	247,968	$	13,380	$	18,935,486
Construction	Construction																			Construction
Risk Rating:	Risk Rating:																			Risk Rating:
Pass	Pass	$	145,246	$	120,800	$	111,174	$	15,497	$	47,971	$	20,029	$	1,199,034	$	—	$	1,659,751	Pass	$	274,097	$	98,609	$	48,555	$	32,781	$	6,061	$	28,419	$	1,313,555	$	—	$	1,802,077
Special Mention	Special Mention	—		1,043		—		—		9,996		17,414		47,311		—		75,764		Special Mention	4,131		—		1,009		—		—		—		18,449		—		23,589
Substandard	Substandard	—		26		246		2,628		17		380		7,013		—		10,310		Substandard	199		19		6		246		—		17,842		10,602		—		28,914

Total construction	Total construction	$	145,246	$	121,869	$	111,420	$	18,125	$	57,984	$	37,823	$	1,253,358	$	—	$	1,745,825	Total construction	$	278,427	$	98,628	$	49,570	$	33,027	$	6,061	$	46,261	$	1,342,606	$	—	$	1,854,580

2833

For residential mortgages, automobile, home equity and other consumer loan portfolio classes, Valley also evaluates credit quality based on the aging status of the loan ~~which was previously presented,~~ and by payment activity. The following table presents the amortized cost in those loan classes based on payment activity by origination year as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


		Term Loans																			Term Loans
		Amortized Cost Basis by Origination Year																			Amortized Cost Basis by Origination Year
September 30, 2021		2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
September 30, 2022																				September 30, 2022	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
		(in thousands)																			(in thousands)
Residential mortgage	Residential mortgage																			Residential mortgage
Performing	Performing	$	1,084,533	$	661,418	$	619,942	$	467,876	$	405,847	$	1,019,676	$	60,510	$	—	$	4,319,802	Performing	$	1,040,542	$	1,508,300	$	586,418	$	505,502	$	351,579	$	1,113,157	$	63,694	$	—	$	5,169,192
90 days or more past due	90 days or more past due	—		234		2,093		4,072		3,150		3,071		—		—		12,620		90 days or more past due	—		—		129		1,508		2,526		3,773		—		—		7,936
Total residential mortgage	Total residential mortgage	$	1,084,533	$	661,652	$	622,035	$	471,948	$	408,997	$	1,022,747	$	60,510	$	—	$	4,332,422	Total residential mortgage	$	1,040,542	$	1,508,300	$	586,547	$	507,010	$	354,105	$	1,116,930	$	63,694	$	—	$	5,177,128
Consumer loans	Consumer loans																			Consumer loans
Home equity	Home equity																			Home equity
Performing	Performing	$	11,096	$	6,593	$	8,055	$	8,745	$	6,031	$	14,327	$	303,235	$	43,502	$	401,584	Performing	$	36,133	$	12,728	$	4,788	$	5,279	$	5,822	$	15,602	$	346,709	$	39,105	$	466,166
90 days or more past due	90 days or more past due	—		—		—		—		—		68		542		464		1,074		90 days or more past due	—		—		—		—		—		—		424		545		969
Total home equity	Total home equity	11,096		6,593		8,055		8,745		6,031		14,395		303,777		43,966		402,658		Total home equity	36,133		12,728		4,788		5,279		5,822		15,602		347,133		39,650		467,135
Automobile	Automobile																			Automobile
Performing	Performing	611,329		342,584		315,330		182,973		89,463		21,302		—		—		1,562,981		Performing	589,413		570,603		226,848		188,741		95,798		39,039		—		—		1,710,442
90 days or more past due	90 days or more past due	73		52		130		162		179		121		—		—		717		90 days or more past due	75		111		78		167		132		81		—		—		644
Total automobile	Total automobile	611,402		342,636		315,460		183,135		89,642		21,423		—		—		1,563,698		Total automobile	589,488		570,714		226,926		188,908		95,930		39,120		—		—		1,711,086
Other Consumer
Other consumer																				Other consumer
Performing	Performing	6,518		6,794		6,543		7,231		1,017		9,017		918,946		—		956,066		Performing	21,110		2,934		7,262		7,476		7,560		16,546		1,000,795		—		1,063,683
90 days or more past due	90 days or more past due	—		—		—		—		—		—		60		—		60		90 days or more past due	—		—		—		—		—		—		92		—		92
Total other consumer	Total other consumer	6,518		6,794		6,543		7,231		1,017		9,017		919,006		—		956,126		Total other consumer	21,110		2,934		7,262		7,476		7,560		16,546		1,000,887		—		1,063,775
Total consumer	Total consumer	$	629,016	$	356,023	$	330,058	$	199,111	$	96,690	$	44,835	$	1,222,783	$	43,966	$	2,922,482	Total consumer	$	646,731	$	586,376	$	238,976	$	201,663	$	109,312	$	71,268	$	1,348,020	$	39,650	$	3,241,996

2934


		Term Loans																			Term Loans
		Amortized Cost Basis by Origination Year																			Amortized Cost Basis by Origination Year
December 31, 2020		2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
December 31, 2021																				December 31, 2021	2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
		(in thousands)																			(in thousands)
Residential mortgage	Residential mortgage																			Residential mortgage
Performing	Performing	$	730,764	$	778,161	$	684,761	$	582,650	$	380,723	$	943,616	$	64,798	$	—	$	4,165,473	Performing	$	1,448,602	$	635,531	$	572,911	$	425,152	$	368,164	$	1,014,190	$	70,342	$	—	$	4,534,892
90 days or more past due	90 days or more past due	—		3,085		4,212		3,464		4,144		3,365		—		—		18,270		90 days or more past due	—		357		2,627		2,056		2,794		2,338		—		—		10,172
Total residential mortgage	Total residential mortgage	$	730,764	$	781,246	$	688,973	$	586,114	$	384,867	$	946,981	$	64,798	$	—	$	4,183,743	Total residential mortgage	$	1,448,602	$	635,888	$	575,538	$	427,208	$	370,958	$	1,016,528	$	70,342	$	—	$	4,545,064
Consumer loans	Consumer loans																			Consumer loans
Home equity	Home equity																			Home equity
Performing	Performing	$	8,580	$	10,634	$	11,756	$	8,886	$	5,340	$	15,393	$	318,869	$	50,879	$	430,337	Performing	$	13,847	$	5,723	$	6,994	$	7,384	$	5,359	$	13,597	$	303,888	$	42,822	$	399,614
90 days or more past due	90 days or more past due	—		—		—		—		25		83		378		730		1,216		90 days or more past due	—		—		—		—		—		35		536		594		1,165
Total home equity	Total home equity	8,580		10,634		11,756		8,886		5,365		15,476		319,247		51,609		431,553		Total home equity	13,847		5,723		6,994		7,384		5,359		13,632		304,424		43,416		400,779
Automobile	Automobile																			Automobile
Performing	Performing	426,121		438,181		272,075		151,523		50,853		16,550		—		—		1,355,303		Performing	735,446		309,856		278,828		157,450		72,753		15,171		—		—		1,569,504
90 days or more past due	90 days or more past due	19		108		173		223		35		94		—		—		652		90 days or more past due	129		—		78		163		81		81		—		—		532
Total automobile	Total automobile	426,140		438,289		272,248		151,746		50,888		16,644		—		—		1,355,955		Total automobile	735,575		309,856		278,906		157,613		72,834		15,252		—		—		1,570,036
Other Consumer
Other consumer																				Other consumer
Performing	Performing	12,271		5,558		6,815		1,112		1,077		5,314		880,748		—		912,895		Performing	2,949		6,717		6,468		7,017		1,009		14,483		961,027		—		999,670
90 days or more past due	90 days or more past due	—		—		—		—		—		22		5		408		435		90 days or more past due	—		—		—		—		—		—		491		—		491
Total other consumer	Total other consumer	12,271		5,558		6,815		1,112		1,077		5,336		880,753		408		913,330		Total other consumer	2,949		6,717		6,468		7,017		1,009		14,483		961,518		—		1,000,161
Total consumer	Total consumer	$	446,991	$	454,481	$	290,819	$	161,744	$	57,330	$	37,456	$	1,200,000	$	52,017	$	2,700,838	Total consumer	$	752,371	$	322,296	$	292,368	$	172,014	$	79,202	$	43,367	$	1,265,942	$	43,416	$	2,970,976

Troubled debt restructured loans. From time to time, Valley may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a troubled debt restructured loan (TDR).

Generally, the concessions made for TDRs involve lowering the monthly payments on loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. The concessions may also involve payment deferrals but rarely result in the forgiveness of principal or accrued interest. In addition, Valley frequently obtains additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms of the loan and Valley’s underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

Performing TDRs (not reported as non-accrual loans) totaled ~~$64.8~~$69.7 million and ~~$57.4~~$71.3 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Non-performing TDRs totaled ~~$116.7~~$155.7 million and ~~$92.8~~$117.2 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

3035

The following ~~table presents~~tables present the pre- and post-modification amortized cost of loans by loan class modified as TDRs during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. Post-modification amounts are presented as of September 30, ~~2021~~2022 and ~~2020.~~2021.


		Three Months Ended September 30,											Three Months Ended September 30,
		2021					2020						2022					2021
Troubled Debt Restructurings	Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Troubled Debt Restructurings	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)											($ in thousands)
Commercial and industrial	Commercial and industrial	4	$	2,446	$	2,414	28	$	31,237	$	30,938	Commercial and industrial	65	$	54,586	$	54,747	4	$	2,446	$	2,414
Commercial real estate:	Commercial real estate:											Commercial real estate:
Commercial real estate	Commercial real estate	5	14,473		14,539		2	4,249		4,240		Commercial real estate	1	2,187		2,187		5	14,473		14,539
Construction	Construction	2	17,599		17,599		—	—		—		Construction	2	11,025		7,811		2	17,599		17,599
Total commercial real estate	Total commercial real estate	7	32,072		32,138		2	4,249		4,240		Total commercial real estate	3	13,212		9,998		7	32,072		32,138
Residential mortgage	Residential mortgage	4	356		350		1	247		247		Residential mortgage	1	44		44		4	356		350
Consumer		—	—		—		1	72		72

Total	Total	15	$	34,874	$	34,902	32	$	35,805	$	35,497	Total	69	$	67,842	$	64,789	15	$	34,874	$	34,902


		Nine Months Ended September 30,											Nine Months Ended September 30,
		2021					2020						2022					2021
Troubled Debt Restructurings	Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Troubled Debt Restructurings	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)											($ in thousands)
Commercial and industrial	Commercial and industrial	16	$	21,822	$	19,060	33	$	40,537	$	38,204	Commercial and industrial	79	$	109,779	$	105,495	16	$	21,822	$	19,060
Commercial real estate:	Commercial real estate:											Commercial real estate:
Commercial real estate	Commercial real estate	11	26,710		26,730		4	8,996		9,000		Commercial real estate	4	16,259		15,660		11	26,710		26,730
Construction	Construction	2	17,599		17,599		—	—		—		Construction	2	11,025		7,811		2	17,599		17,599
Total commercial real estate	Total commercial real estate	13	44,309		44,329		4	8,996		9,000		Total commercial real estate	6	27,284		23,471		13	44,309		44,329
Residential mortgage	Residential mortgage	12	2,974		2,909		1	247		247		Residential mortgage	9	5,135		5,116		12	2,974		2,909
Consumer	Consumer	1	170		163		1	72		72		Consumer	1	125		123		1	170		163
Total	Total	42	$	69,275	$	66,461	39	$	49,852	$	47,523	Total	95	$	142,323	$	134,205	42	$	69,275	$	66,461

The total TDRs presented in the above ~~table~~tables had allocated allowance for loan losses of ~~$8.2~~$71.5 million and ~~$18.7~~$8.2 million at September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. There were ~~$206 thousand~~$3.8 million and ~~$6.0~~$5.4 million ofin charge-offs related to TDRs for the three and nine months ended September 30, ~~2021, respectively.~~2022. There were ~~$1.9~~charge-offs of $206 thousand and $6.0 million ~~and $5.6 million of charge-offs~~ related to TDRs for the three and nine months ended September 30, ~~2020,~~2021, respectively. Valley did not extend any commitments to lend additional funds to borrowers whose loans have been modified as TDRs during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

3136

Loans modified as TDRs within the previous 12 months and for which there was a payment default (90 or more days past due) for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


		Three Months Ended September 30,							Three Months Ended September 30,
		2021			2020				2022			2021
Troubled Debt Restructurings Subsequently Defaulted	Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
		($ in thousands)							($ in thousands)
Commercial and industrial	Commercial and industrial	—	$	—	30	$	17,496	Commercial and industrial	1	$	42,771	—	$	—

Commercial real estate	Commercial real estate	1	419		—	—		Commercial real estate	2	5,207		1	419

Residential mortgage	Residential mortgage	1	129		—	—		Residential mortgage	1	1,071		1	129

Total	Total	2	$	548	30	$	17,496	Total	4	$	49,049	2	$	548

Nine Months Ended September 30,
2021 2020
Troubled Debt Restructurings Subsequently Defaulted Number of
Contracts Recorded Investment Number of
Contracts Recorded
Investment
($ in thousands)
Commercial and industrial — $ — 35 $ 20,099
Commercial real estate 1 419 — —
Residential mortgage 1 129 — —
Consumer — — 1 18
Total 2 $ 548 36 $ 20,117

~~Forbearance.~~ In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment, when requested by customers, all of which were insignificant. As of September 30, 2021, Valley had approximately ~~$98.6 million~~ of outstanding loans remaining in their payment deferral period under short-term modifications as compared to $361.0 million of loans in deferral at December 31, 2020. Under the applicable guidance, none of these loans were classified as TDRs at September 30, 2021 and December 31, 2020.


	Nine Months Ended September 30,
	2022			2021
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	1	$	42,771	—	$	—

Commercial real estate	2	5,207		1	419


Residential mortgage	1	1,071		1	129

Total	4	$	49,049	2	$	548

Loans in Process of Foreclosure. Other real estate owned (OREO) totaled ~~$4.0 million~~$286 thousand and ~~$5.1~~$2.3 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~OREO included foreclosed~~There were no foreclosed residential real estate properties ~~which wer~~included in OREO~~e immaterial~~ at September 30, ~~2021~~2022 and ~~totaled $1.0 million at~~ December 31, ~~2020.~~2021. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled ~~$3.0~~$1.9 million and ~~$1.9~~$2.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Collateral dependent loans. Loans are collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When Valley determines that foreclosure is probable, the collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process.

The following table presents collateral dependent loans by class as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

September 30,
2021 December 31,
2020
(in thousands)
Commercial and industrial * $ 95,509 $ 106,239
Commercial real estate 117,609 41,562
Residential mortgage 35,047 28,176
Home equity 5 50
Total $ 248,170 $ 176,027


	September 30, 2022		December 31, 2021
	(in thousands)
Collateral dependent loans:
Commercial and industrial *	$	129,776	$	95,335
Commercial real estate:
Commercial real estate	73,862		110,174
Construction	41,726		—
Total commercial real estate loans	115,588		110,174
Residential mortgage	32,487		35,745
Home equity	—		4
Total	$	277,851	$	241,258

* ~~Commercial and industrial~~The majority of the loans are ~~primarily~~ collateralized by taxi ~~medallions.~~medallions for all periods.

Allowance for Credit Losses for Loans

The ~~following table summarizes~~allowance for credit losses (ACL) for loans consists of the allowance for loan losses and the allowance for unfunded credit ~~losses~~commitments. The ACL for loans at September 30, 2022 increased $122.7 million from December 31, 2021 largely reflecting a net ACL of $70.3 million for PCD loans acquired from Bank Leumi USA that was recorded at April 1, 2022 and recognition of a $41.0 million provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA during the three months ended June 30, 2022. Overall, an increased economic forecast reserve component of our CECL model caused by elevated uncertainty in economic conditions was largely offset by lower expected quantitative loss experience at September 30, 2022 as compared to December 31, 2021.

The following table summarizes the ACL for loans at September 30, 2022 and December 31, ~~2020:~~2021:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(in thousands)					(in thousands)
Components of allowance for credit losses for loans:	Components of allowance for credit losses for loans:					Components of allowance for credit losses for loans:
Allowance for loan losses	Allowance for loan losses	$	342,527	$	340,243	Allowance for loan losses	$	475,744	$	359,202
Allowance for unfunded credit commitments	Allowance for unfunded credit commitments	14,400		11,111		Allowance for unfunded credit commitments	22,664		16,500
Total allowance for credit losses for loans	Total allowance for credit losses for loans	$	356,927	$	351,354	Total allowance for credit losses for loans	$	498,408	$	375,702

The following table summarizes the provision for credit losses for loans for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(in thousands)									(in thousands)
Components of provision for credit losses for loans:	Components of provision for credit losses for loans:									Components of provision for credit losses for loans:
Provision for loan losses	Provision for loan losses	$	3,496	$	30,833	$	17,998	$	105,709	Provision for loan losses	$	1,315	$	3,496	$	42,883	$	17,998
Provision for unfunded credit commitments	Provision for unfunded credit commitments	—		187		3,289		350		Provision for unfunded credit commitments	520		—		6,164		3,289
Total provision for credit losses for loans	Total provision for credit losses for loans	$	3,496	$	31,020	$	21,287	$	106,059	Total provision for credit losses for loans	$	1,835	$	3,496	$	49,047	$	21,287

3338

The following table details the activity in the allowance for loan losses by loan portfolio segment for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total			Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
		(in thousands)											(in thousands)
Three Months Ended September 30, 2022												Three Months Ended September 30, 2022
Allowance for loan losses:												Allowance for loan losses:
Beginning balance												Beginning balance	$	144,539	$	277,227	$	29,889	$	17,164	$	468,819

Loans charged-off												Loans charged-off	(5,033)		(4,000)		—		(962)		(9,995)
Charged-off loans recovered												Charged-off loans recovered	13,236		1,729		163		477		15,605
Net recoveries (charge-offs)												Net recoveries (charge-offs)	8,203		(2,271)		163		(485)		5,610
Provision (credit) for loan losses												Provision (credit) for loan losses	1,309		(7,176)		6,105		1,077		1,315
Ending balance												Ending balance	$	154,051	$	267,780	$	36,157	$	17,756	$	475,744
Three Months Ended September 30, 2021	Three Months Ended September 30, 2021											Three Months Ended September 30, 2021
Allowance for loan losses:	Allowance for loan losses:											Allowance for loan losses:
Beginning balance		$	109,689	$	189,139	$	25,303	$	15,193	$	339,324
Loans charged-off		(1,248)		—		—		(771)		(2,019)
Charged-off loans recovered		514		29		228		955		1,726
Net (charge-offs) recoveries		(734)		29		228		184		(293)
(Credit) provision for loan losses		(5,078)		10,553		(799)		(1,180)		3,496
Ending balance		$	103,877	$	199,721	$	24,732	$	14,197	$	342,527
Three Months Ended September 30, 2020
Allowance for losses:
Beginning balance	Beginning balance	$	132,039	$	131,702	$	29,630	$	16,243	$	309,614	Beginning balance	$	109,689	$	189,139	$	25,303	$	15,193	$	339,324

Loans charged-off	Loans charged-off	(13,965)		(695)		(7)		(2,458)		(17,125)		Loans charged-off	(1,248)		—		—		(771)		(2,019)
Charged-off loans recovered	Charged-off loans recovered	428		100		31		1,151		1,710		Charged-off loans recovered	514		29		228		955		1,726
Net (charge-offs) recoveries	Net (charge-offs) recoveries	(13,537)		(595)		24		(1,307)		(15,415)		Net (charge-offs) recoveries	(734)		29		228		184		(293)
Provision (credit) for loan losses		11,907		13,543		(1,040)		6,423		30,833
(Credit) provision for loan losses												(Credit) provision for loan losses	(5,078)		10,553		(799)		(1,180)		3,496
Ending balance	Ending balance	$	130,409	$	144,650	$	28,614	$	21,359	$	325,032	Ending balance	$	103,877	$	199,721	$	24,732	$	14,197	$	342,527

Commercial
and Industrial Commercial
Real Estate Residential
Mortgage Consumer Total
(in thousands)
Nine Months Ended
September 30, 2021
Allowance for loan losses:
Beginning balance $ 131,070 $ 164,113 $ 28,873 $ 16,187 $ 340,243
Loans charged-off (19,283) (382) (139) (3,389) (23,193)
Charged-off loans recovered 2,781 763 576 3,359 7,479
Net (charge-offs) recoveries (16,502) 381 437 (30) (15,714)
(Credit) provision for loan losses (10,691) 35,227 (4,578) (1,960) 17,998
Ending balance $ 103,877 $ 199,721 $ 24,732 $ 14,197 $ 342,527
Nine Months Ended
September 30, 2020
Allowance for losses:
Beginning balance $ 104,059 $ 45,673 $ 5,060 $ 6,967 $ 161,759
Impact of ASU 2016-13 adoption* 15,169 49,797 20,575 6,990 92,531
Beginning balance, adjusted 119,228 95,470 25,635 13,957 254,290
Loans charged-off (31,349) (766) (348) (7,624) (40,087)
Charged-off loans recovered 1,796 244 626 2,454 5,120
Net (charge-offs) recoveries (29,553) (522) 278 (5,170) (34,967)
Provision for loan losses 40,734 49,702 2,701 12,572 105,709
Ending balance $ 130,409 $ 144,650 $ 28,614 $ 21,359 $ 325,032


	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
Nine Months Ended September 30, 2022
Allowance for loan losses:
Beginning balance	$	103,090	$	217,490	$	25,120	$	13,502	$	359,202
Allowance for PCD loans *	33,452		36,618		206		43		70,319
Loans charged-off	(11,144)		(4,173)		(27)		(2,513)		(17,857)
Charged-off loans recovered	16,012		2,060		694		2,431		21,197
Net recoveries (charge-offs)	4,868		(2,113)		667		(82)		3,340
Provision for loan losses	12,641		15,785		10,164		4,293		42,883
Ending balance	$	154,051	$	267,780	$	36,157	$	17,756	$	475,744
Nine Months Ended September 30, 2021
Allowance for loan losses:
Beginning balance	$	131,070	$	164,113	$	28,873	$	16,187	$	340,243


Loans charged-off	(19,283)		(382)		(139)		(3,389)		(23,193)
Charged-off loans recovered	2,781		763		576		3,359		7,479
Net (charge-offs) recoveries	(16,502)		381		437		(30)		(15,714)
(Credit) provision for loan losses	(10,691)		35,227		(4,578)		(1,960)		17,998
Ending balance	$	103,877	$	199,721	$	24,732	$	14,197	$	342,527

* ~~Includes a $61.6 million increase representing~~Represents the ~~estimated expected credit losses~~allowance for acquired PCD loans, ~~as a result~~net of PCD loan charge-offs totaling $62.4 million in the ~~ASU 2016-13 adoption on January 1, 2020.~~second quarter 2022 related to the Bank Leumi USA acquisition.

3439

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the allowance measurement methodology at September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Commercial
and Industrial Commercial
Real Estate Residential
Mortgage Consumer Total
(in thousands)
September 30, 2021
Allowance for loan losses:
Individually evaluated for credit losses $ 62,661 $ 8,093 $ 489 $ 574 $ 71,817
Collectively evaluated for credit losses 41,216 191,628 24,243 13,623 270,710
Total $ 103,877 $ 199,721 $ 24,732 $ 14,197 $ 342,527
Loans:
Individually evaluated for credit losses $ 117,656 $ 143,181 $ 42,441 $ 3,264 $ 306,542
Collectively evaluated for credit losses 5,517,604 19,573,469 4,289,981 2,919,218 32,300,272
Total $ 5,635,260 $ 19,716,650 $ 4,332,422 $ 2,922,482 $ 32,606,814
December 31, 2020
Allowance for loan losses:
Individually evaluated for credit losses $ 73,063 $ 1,338 $ 1,206 $ 264 $ 75,871
Collectively evaluated for credit losses 58,007 162,775 27,667 15,923 264,372
Total $ 131,070 $ 164,113 $ 28,873 $ 16,187 $ 340,243
Loans:
Individually evaluated for credit losses $ 131,057 $ 61,754 $ 35,151 $ 1,631 $ 229,593
Collectively evaluated for credit losses 6,730,651 18,409,069 4,148,592 2,699,207 31,987,519
Total $ 6,861,708 $ 18,470,823 $ 4,183,743 $ 2,700,838 $ 32,217,112


	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
September 30, 2022
Allowance for loan losses:
Individually evaluated for credit losses	$	89,822	$	8,544	$	4,592	$	100	$	103,058
Collectively evaluated for credit losses	64,229		259,236		31,565		17,656		372,686
Total	$	154,051	$	267,780	$	36,157	$	17,756	$	475,744
Loans:
Individually evaluated for credit losses	$	151,415	$	149,775	$	42,911	$	1,507	$	345,608
Collectively evaluated for credit losses	8,549,962		27,915,488		5,134,217		3,240,489		44,840,156
Total	$	8,701,377	$	28,065,263	$	5,177,128	$	3,241,996	$	45,185,764
December 31, 2021
Allowance for loan losses:
Individually evaluated for credit losses	$	64,359	$	6,277	$	470	$	390	$	71,496
Collectively evaluated for credit losses	38,731		211,213		24,650		13,112		287,706
Total	$	103,090	$	217,490	$	25,120	$	13,502	$	359,202
Loans:
Individually evaluated for credit losses	$	119,760	$	134,135	$	42,469	$	2,431	$	298,795
Collectively evaluated for credit losses	5,727,791		20,655,931		4,502,595		2,968,545		33,854,862
Total	$	5,847,551	$	20,790,066	$	4,545,064	$	2,970,976	$	34,153,657

Note 9. Goodwill and Other Intangible Assets

~~Goodwill totaled $1.4 billion at both September 30, 2021 and December 31, 2020. There were no~~The changes toin the carrying ~~amounts~~amount of goodwill as allocated to ~~Valley’s~~Valley's business segments, or reporting units thereof, for goodwill impairment analysis ~~(as reported in Valley’s Annual Report on Form 10-K for the year ended December 31, 2020).~~were:


	Business Segment / Reporting Unit *
	Wealth Management		Consumer Lending		Commercial Lending		Total
	(in thousands)
Balance at December 31, 2021	$	38,851	$	222,390	$	1,197,767	$	1,459,008
Goodwill from business combinations	10,984		62,875		338,638		412,497
Balance at September 30, 2022	$	49,835	$	285,265	$	1,536,405	$	1,871,505

* Valley’s Wealth Management Division is comprised of trust, asset management, brokerage, insurance, and tax credit advisory services. This reporting unit is included in the Consumer Lending segment for financial reporting purposes.

During the second quarter ~~2021,~~2022, Valley performed the annual goodwill impairment test at its normal assessment

date. There wasno impairment of goodwill recognized during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

As discussed in Note 15, Valley made changes to its operating structure and strategy during the second quarter 2022 (and subsequent to the annual goodwill impairment test), which resulted in changes in its operating segments and reporting units to reflect how the CEO, who is the chief operating decision maker, intends to manage Valley, allocate resources and measure performance. Goodwill balances were reallocated across the new operating segments and reporting units (as reflected in the table above) based on their relative fair values using the valuation performed during the second quarter 2022.

3540

The goodwill from business combinations set forth in the above table during the nine months ended September 30, 2022, related to the acquisitions of Bank Leumi USA and Landmark totaled $403.2 million and $4.4 million, respectively. The goodwill from Landmark transaction was allocated entirely to the Wealth Management reporting unit. During the nine months ended September 30, 2022, Valley recorded $5.0 million of additional goodwill reflecting an adjustment to the deferred tax assets acquired from Westchester as of the acquisition date. See Note 2 for details related to these acquisitions.

The following table summarizes other intangible assets as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		Gross Intangible Assets		Accumulated Amortization		Valuation Allowance		Net Intangible Assets			Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
		(in thousands)									(in thousands)
September 30, 2021
September 30, 2022										September 30, 2022
Loan servicing rights	Loan servicing rights	$	111,978	$	(89,039)	$	—	$	22,939	Loan servicing rights	$	119,813	$	(94,956)	$	24,857
Core deposits	Core deposits	101,160		(62,511)		—		38,649		Core deposits	223,670		(84,511)		139,159
Other	Other	3,945		(3,008)		—		937		Other	51,299		(7,089)		44,210
Total other intangible assets	Total other intangible assets	$	217,083	$	(154,558)	$	—	$	62,525	Total other intangible assets	$	394,782	$	(186,556)	$	208,226
December 31, 2020
December 31, 2021										December 31, 2021
Loan servicing rights	Loan servicing rights	$	103,150	$	(80,340)	$	(865)	$	21,945	Loan servicing rights	$	114,636	$	(90,951)	$	23,685
Core deposits	Core deposits	101,160		(53,747)		—		47,413		Core deposits	109,290		(65,488)		43,802
Other	Other	3,945		(2,854)		—		1,091		Other	6,092		(3,193)		2,899
Total other intangible assets	Total other intangible assets	$	208,255	$	(136,941)	$	(865)	$	70,449	Total other intangible assets	$	230,018	$	(159,632)	$	70,386

Loan servicing rights are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets over the period of the economic life of the assets arising from estimated net servicing revenues. On a quarterly basis, Valley stratifies its loan servicing assets into groupings based on risk characteristics and assesses each group for impairment based on fair value. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. There was no net impairment recognized during the three and nine months ended September 30, 2022. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $32 thousand and $864 thousand for the three and nine months ended September 30, 2021, respectively. Valley recorded net impairment charges totaling $188 thousand and $966 thousand for the three and nine months ended September 30, 2020, respectively. See the “Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis” section of Note 6 for additional information regarding the fair valuation.

Core deposits are amortized using an accelerated method ~~and have~~over a ~~weighted average amortization~~ period of ~~8.9~~10 years. Valley recorded $114.4 million of core deposit intangibles resulting from the Bank Leumi USA acquisition.

The line item labeled “Other” included in the table above primarily consists of customer lists, certain financial asset servicing contracts and covenants not to compete, which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of approximately ~~7.6~~13.3 years. Valley recorded $39.0 million and $6.2 million of other intangible assets during the nine months ended September 30, 2022 resulting from the Bank Leumi USA and Landmark acquisitions, respectively.

Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

The following table presents the estimated future amortization expense of other intangible assets for the remainder of ~~2021~~2022 through ~~2025:~~2026:


		Loan Servicing Rights		Core Deposits		Other			Loan Servicing Rights		Core Deposits		Other
		(in thousands)							(in thousands)
2021		$	1,063	$	2,843	$	51
2022	2022	3,705		9,876		191		2022	$	865	$	7,975	$	1,745
2023	2023	3,015		8,146		131		2023	3,195		28,746		6,522
2024	2024	2,473		6,537		117		2024	2,817		24,897		5,951
2025	2025	2,047		4,929		103		2025	2,471		21,048		5,380
2026								2026	2,156		17,223		4,805

Valley recognized amortization expense on other intangible assets ~~including~~(including net ~~(recoveries of)~~recoveries of impairment charges on loan servicing ~~rights,~~rights) totaling approximately ~~$5.3~~$11.1 million and ~~$6.4~~$5.3 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$16.8~~$26.9 million and ~~$18.5~~$16.8 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Note 10. Borrowed Funds

Short-Term Borrowings

Short-term borrowings at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(in thousands)					(in thousands)
FHLB advances	FHLB advances	$	600,000	$	1,000,000	FHLB advances	$	785,767	$	500,000
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	183,346		147,958		Securities sold under agreements to repurchase	133,516		155,726
Total short-term borrowings	Total short-term borrowings	$	783,346	$	1,147,958	Total short-term borrowings	$	919,283	$	655,726

The weighted average interest rate for short-term FHLB advances was ~~0.35~~3.21 percent and ~~0.38~~0.37 percent at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~The interest payments on the FHLB advances totaling $600 million were hedged with interest rate swaps at September 30, 2021. See Note 12 for additional details.~~

Long-Term Borrowings

Long-term borrowings at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(in thousands)					(in thousands)
FHLB advances, net (1)	FHLB advances, net (1)	$	789,185	$	1,592,252	FHLB advances, net (1)	$	788,574	$	789,033
Subordinated debt, net (2)	Subordinated debt, net (2)	638,259		403,413		Subordinated debt, net (2)	752,523		634,643
Securities sold under agreements to repurchase		—		300,000

Total long-term borrowings	Total long-term borrowings	$	1,427,444	$	2,295,665	Total long-term borrowings	$	1,541,097	$	1,423,676


(1)			FHLB advances isare presented net of unamortized ~~prepayment penalties~~premiums totaling $574 thousand and ~~other purchase accounting adjustments totaling $2.6~~$1.0 million ~~at December 31, 2020. The prepayment penalties and other purchase accounting adjustments were fully amortized~~ at September 30, ~~2021.~~2022 and December 31, 2021, respectively.
(2)			Subordinated debt is presented net of unamortized debt issuance costs totaling ~~$6.1~~$7.3 million and ~~$2.7~~$5.8 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

FHLB Advances. Long-term FHLB advances had a weighted average interest rate of 1.88 percent ~~and 2.02 percent~~ at both September 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021. FHLB advances are secured by pledges of certain eligible collateral, including but not limited to, U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgage and commercial real estate loans.

In June 2021, Valley prepaid approximately $248 million of long-term FHLB advances with maturities scheduled through 2025 and a weighted average effective interest rate of 1.82 percent. The transaction was funded with excess cash liquidity and accounted for as an early debt extinguishment resulting in a loss of $8.4 million reported within non-interest expense for the nine months ended September 30, 2021.

The long-term FHLB advances at September 30, ~~2021~~2022 are scheduled for contractual balance repayments as follows:


Year	Amount
	(in thousands)

2023	$	350,000
2024	165,000
2025	273,000

Total long-term FHLB advances	$	788,000

There are no FHLB advances with scheduled repayments in years 2023 and thereafter, reported in the table above, which are callable for early redemption by the FHLB during the next 12 months.

Subordinated debt. On ~~April 1, 2021,~~September 20, 2022, Valley ~~redeemed, at par value, $60~~issued $150 million of ~~its callable~~ 6.25 percent ~~subordinated notes originally due April 1, 2026. No gain or loss was incurred on this transaction.~~

~~On May 25, 2021, Valley issued $300 million of 3.00 percent Fixed-to-Floating Rate~~fixed-to-floating rate subordinated notes due ~~June 15, 2031. The subordinated notes are callable in whole or in part on or after June 15, 2026 or upon the occurrence of certain events.~~September 30, 2032. Interest on the subordinated notes during the initial five year term through ~~June 15, 2026~~September 30, 2027, is payable semi-annually in arrears on ~~June 15~~March 30 and ~~December 15.~~September 30, commencing on March 30, 2023. Thereafter, interest is expected to be set based on three-month Secured Overnight Financing Rate (SOFR) plus ~~236~~278 basis points and paid quarterly through maturity of the notes. At September 30, ~~2021,~~2022, the subordinated notes had a carrying value of ~~$296.2~~$147.5 million, net of unamortized debt issuance costs. ~~During June 2021, Valley entered into an interest rate swap transaction used to hedge the change in the fair value of the $300 million in subordinated notes. See Note 12 for additional details.~~

Valley also had the following subordinated debt outstanding at September 30, ~~2021:~~2022:

•$125 million aggregate principal amount of 5.125 percent subordinated notes due September 27, 2023 with no call dates or prepayments allowed except upon the occurrence of certain events;

•$100 million aggregate principal amount of 4.55 percent subordinated notes due June 30, 2025 with no call dates or prepayments allowed except upon the occurrence of certain events;

•$115 million aggregate principal amount of 5.25 percent fixed-to-floating rate subordinated notes due June 15, 2030 and callable in whole or in part on or after June 15, 2025 or upon the occurrence of certain ~~events.~~events; and

~~Long-term securities sold under agreements to repurchase (repos).~~ •~~The long-term repos had a weighted average interest~~$300 million aggregate principal amount of 3.00 percent fixed-to-floating rate subordinated notes due June 15, 2031 and are callable in whole or in part on or after June 15, 2026 or upon the occurrence of ~~3.37 percent at December 31, 2020. Long-term repos outstanding as of December 31, 2020 were repaid upon their respective contractual maturity dates during the third quarter 2021.~~certain events.

Note 11. Stock–Based Compensation

On April 19, 2021, Valley's shareholders approved the Valley National Bancorp 2021 Incentive Compensation Plan (the 2021 Plan) administered by the Compensation and Human ~~Resources~~Capital Management Committee ~~(the Committee)~~ as appointed by Valley's Board of Directors. The purposes of the 2021 Plan are to provide additional incentives to officers and key employees of Valley and its subsidiaries, whose substantial contributions are essential to the continued growth and success of Valley, and to attract and retain officers, other employees and non-employee directors whose efforts will result in the continued and long-term growth of Valley's business. ~~Upon shareholder approval of the 2021 Plan, Valley ceased granting new awards under the Valley National Bancorp 2016 Long-Term Stock Incentive Plan (the 2016 Plan).~~

Under the 2021 Plan, Valley may issue awards to its officers, employees and non-employee directors in amounts up to 9 million shares of common stock (less 1 share for every share granted after December 31, 2020 under the 2016 Plan) in the form of stock appreciation rights, both incentive and non-qualified stock options, restricted stock and restricted stock units (RSUs). If after December 31, 2020 any award granted under the 2016 Plan is forfeited, expires, settled for cash, withheld for tax obligations, or otherwise does not result in the issuance of all or a portion of the shares subject to such award, the shares will be added to the 2021 Plan's share reserve. As of September 30, ~~2021, 7.4~~2022, 5.1 million shares of common stock were available for issuance under the 2021 Plan. The essential features of each award are described in the award agreement relating to that award. The grant, exercise, vesting, settlement or payment of an award may be based upon the fair value of Valley's common stock on the last sale price reported for Valley's common stock on such date or the last sale price reported preceding such date, except for performance-based awards with a market condition. The grant date fair values of performance-based awards that vest based on a market condition are determined by a third-party specialist using a Monte Carlo valuation model.

On April 1, 2022, Valley issued replacement options for the pre-existing and fully vested stock awards consisting of Bank Leumi USA options for 2.7 million shares of Valley common stock (which all remained outstanding at

3843

September 30, 2022) at a weighted average exercise price of $8.47. The stock plan under which the original Bank Leumi stock awards were issued is no longer active at the acquisition date.

Valley granted 30234 thousand and 2630 thousand of time-based ~~RSUs~~restricted stock units (RSUs) during the three months ended September 30, 2022 and 2021, respectively, and ~~2020, respectively,~~2.3 million and 1.2 million for ~~both~~ the nine months ended September 30, 2022 and 2021, ~~and 2020.~~respectively. Generally, time-based RSUs vest ratably over a three-year period. The average grant date fair value of the RSUs granted during the nine months ended September 30, 2022 and 2021 was $13.31 per share and ~~2020 was~~ $11.98 per share, ~~and $10.41 per share,~~ respectively.

Valley granted ~~604~~619 thousand and ~~589~~604 thousand of performance-based RSUs to certain ~~executive~~ officers for the nine months ended September 30, ~~2021~~2022 and ~~2020, respectively. There were no grants of performance-based RSUs during the three months ended September 30,~~ 2021, ~~and2020,~~ respectively. The performance-based RSU awards include RSUs with vesting conditions based upon certain levels of growth in Valley's tangible book value per share plus dividends and RSUs with vesting conditions based upon Valley's total shareholder return as compared to its peer group. The RSUs “cliff” vest after three years based on the cumulative performance of Valley during that time period. The RSUs earn dividend equivalents (equal to cash dividends paid on Valley's common stock) over the applicable performance period. Dividend equivalents are accumulated and paid to the grantee at the vesting date or forfeited if the performance conditions are not met. The grant date fair value of the performance-based RSUs granted during the nine months ended September 30, 2022 and 2021 ~~and 2020~~ was ~~$11.75~~$14.72 per share and ~~$10.82~~$12.36 per share, respectively.

Valley recorded total stock-based compensation expense of ~~$5.2~~$7.6 million and ~~$4.1~~$5.2 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$15.9~~$21.0 million and ~~$12.3~~$15.9 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The fair values of stock awards are expensed over the shorter of the vesting or required service period. As of September 30, ~~2021,~~2022, the unrecognized amortization expense for all stock-based employee compensation totaled approximately ~~$23.9~~$40.0 million and will be recognized over an average remaining vesting period of approximately ~~two~~2.1 years.

Note 12. Derivative Instruments and Hedging Activities

Valley enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest and currency rates.

Fair Value Hedges of Fixed Rate Assets and Liabilities. Valley is exposed to changes in the fair value of fixed-rate subordinated debt due to changes in interest rates. ~~From time to time,~~ Valley uses interest rate swaps to manage its exposure to changes in fair value on ~~these~~fixed rate debt instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the receipt of variable rate payments from a counterparty in exchange for Valley making fixed rate payments over the life of the agreements without the exchange of the underlying notional amount. For derivatives that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the loss or gain on the hedged item attributable to the hedged risk are recognized in earnings.

In June 2021, Valley entered into a $300 million forward-starting interest rate swap agreement with a notional amount of $300 million, maturing in June 2026, to hedge the change in the fair value of the 3.00 percent subordinated debt issued on May 28, 2021. Under the swap agreement, beginning in January 2022, Valley will receive fixed rate payments and pay variable rate amounts based on SOFR plus 2.187 percent.

Cash Flow Hedges of Interest Rate Risk. Valley’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, Valley uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment of either fixed or variable-rate amounts in exchange for the receipt of variable or fixed-rate amounts from a counterparty, respectively.

Valley had six interest rate swaps with a total notional amount of $700 million that matured during the nine months ended September 30, 2022. These swaps were used to hedge the changes in cash flows associated with certain short-term FHLB advances and brokered deposits.

Non-designated Hedges. Derivatives not designated as hedges ~~may be~~are used to manage Valley’s exposure to interest rate movements, orforeign currency risk, credit risk, and to provide ~~service~~services to customers ~~but~~or for other purposes. These

derivatives do not meet the requirements for hedge accounting under U.S. GAAP. Derivatives not designated as hedges are not entered into for speculative purposes.

Valley executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Valley executes with a third party, such that Valley minimizes its net risk exposure resulting from such transactions. As these interest rate swaps do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

Valley sometimes enters into risk participation agreements with external lenders where the banks are sharing their risk of default on the interest rate swaps on participated loans. Valley either pays or receives a fee depending on the participation type. Risk participation agreements are credit derivatives not designated as hedges. Credit derivatives are not speculative and are not used to manage interest rate risk in assets or liabilities. Changes in the fair value in credit derivatives are recognized directly in earnings. At September 30, ~~2021,~~ 2022, Valley had 2728 credit swaps with an aggregate notional amount of ~~$263.9~~$290.7 million related to risk participation agreements.

At September 30, ~~2021,~~2022, Valley had 2two “steepener” swaps, each with a current notional amount of $10.4 million where the receive rate on the swap mirrors the pay rate on the brokered deposits and the rates paid on these types of hybrid instruments are based on a formula derived from the spread between the long and short ends of the constant maturity swap (CMS) rate curve. Although these types of instruments do not meet the hedge accounting requirements, the change in fair value of both the bifurcated derivative and the stand alone swap tend to move in opposite directions with changes in the three-month LIBOR rate and therefore provide an effective economic hedge.

Valley regularly enters into mortgage banking derivatives which are non-designated hedges. These derivatives include interest rate lock commitments provided to customers to fund certain residential mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. Valley enters into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in interest rate on Valley's commitments to fund the loans as well as on its portfolio of mortgage loans held for sale.

Valley enters foreign currency forward and option contracts, primarily to accommodate our customers, that are not designated as hedging instruments. Upon the origination of a certain foreign currency denominated transactions (including foreign currency holdings and non-U.S. dollar denominated loans) with a client, we enter into a respective hedging contract with a third party financial institution to mitigate the economic impact of foreign currency exchange rate fluctuation.

Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows:


		September 30, 2021						December 31, 2020							September 30, 2022						December 31, 2021
		Fair Value						Fair Value							Fair Value						Fair Value
		Other Assets		Other Liabilities		Notional Amount		Other Assets		Other Liabilities		Notional Amount			Other Assets		Other Liabilities		Notional Amount		Other Assets		Other Liabilities		Notional Amount
		(in thousands)													(in thousands)
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:													Derivatives designated as hedging instruments:
Cash flow hedge interest rate swaps	Cash flow hedge interest rate swaps	$	—	$	273	$	800,000	$	—	$	179	$	1,100,000	Cash flow hedge interest rate swaps	$	—	$	—	$	—	$	—	$	310	$	700,000
Fair value hedge interest rate swaps	Fair value hedge interest rate swaps	—		316		300,000		—		—		—		Fair value hedge interest rate swaps	—		32,566		300,000		—		3,335		300,000
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments	$	—	$	589	$	1,100,000	$	—	$	179	$	1,100,000	Total derivatives designated as hedging instruments	$	—	$	32,566	$	300,000	$	—	$	3,645	$	1,000,000
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:													Derivatives not designated as hedging instruments:
Interest rate swaps and other derivatives *		$	215,046	$	64,623	$	10,296,468	$	387,008	$	154,025	$	8,889,557
Interest rate swaps and other contracts*														Interest rate swaps and other contracts*	$	576,213	$	575,917	$	13,347,157	$	180,701	$	47,044	$	10,179,294
Foreign currency derivatives														Foreign currency derivatives	17,873		17,142		1,205,558		311		233		122,166
Mortgage banking derivatives	Mortgage banking derivatives	873		1,521		327,116		444		2,077		321,486		Mortgage banking derivatives	30		31		1,875		488		1,454		312,428
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments	$	215,919	$	66,144	$	10,623,584	$	387,452	$	156,102	$	9,211,043	Total derivatives not designated as hedging instruments	$	594,116	$	593,090	$	14,554,590	$	181,500	$	48,731	$	10,613,888

* ~~Other derivatives include~~Includes risk participation agreements.

The Chicago Mercantile Exchange and London Clearing House variation margins are classified as a single-unit of account ~~with~~as settlements of the cash flow hedges and ~~over-the-counter (OTC)~~other non-designated derivative instruments. As a result, the fair value of the applicable derivative assets and liabilities are reported net of variation margin at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 in the table above.

Gains (losses) included in the consolidated statements of income and other comprehensive ~~income (loss),~~loss, on a pre-tax basis, ~~related~~elated to interest rate derivatives designated as hedges of cash flows were as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Amount of loss reclassified from accumulated other comprehensive loss to interest expense $ (1,044) $ (1,586) $ (2,708) $ (1,763)
Amount of (loss) gain recognized in other comprehensive income (144) 95 (125) 3,158


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense	$	21	$	(1,044)	$	(405)	$	(2,708)
Amount of (loss) gain recognized in other comprehensive loss	(6)		(144)		435		(125)

The accumulated ~~net~~ after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $~~2.0 million~~929 thousand and ~~$4.0~~$1.3 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Amounts reported in accumulated other comprehensive loss related to cash flow interest rate derivatives are reclassified to interest expense as interest payments are made on the hedged variable interest rate liabilities. Valley estimates that $~~1.8 million~~995 thousand before tax will be reclassified as an increase to interest expense over the next 12 months.

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(in thousands)
Derivative - interest rate swap:	Derivative - interest rate swap:									Derivative - interest rate swap:
Interest income		$	—	$	88	$	—	$	170

Interest expense	Interest expense	(396)		—		(316)		—		Interest expense	$	(989)	$	(396)	$	(383)	$	(316)
Hedged item - subordinated debt and loans:
Interest income		$	—	$	(88)	$	—	$	(170)
Hedged item - subordinated debt										Hedged item - subordinated debt

Interest expense	Interest expense	405		—		322		—		Interest expense	$	325	$	405	$	802	$	322

The changes in the fair value of the hedged item designated as a qualifying hedge are captured as an

adjustment to the carrying amount of the hedged item (basis adjustment). The following table presents the hedged item related to interest rate derivatives designated as fair value hedges and the cumulative basis fair value adjustment included in the net carrying amount of the hedged item at September 30, ~~2021.~~2022.


Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Carrying Amount of the Hedged Liability		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability		Line Item in the Statement of Financial Position in Which the Hedged Item is Included	Carrying Amount of the Hedged Liability		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability
		(in thousands)					(in thousands)
Long-term borrowings	Long-term borrowings	$	(299,678)	$	322	Long-term borrowings	$	267,640	$	(32,360)

The net losses (gains) ~~losses~~ included in the consolidated statements of income related to derivative instruments not designated as hedging instruments were as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Non-designated hedge interest rate swaps and credit derivatives
Other non-interest expense $ 216 $ 600 $ (209) $ 2,105


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Non-designated hedge interest rate swaps and credit derivatives
Other non-interest expense	$	463	$	216	$	(1,191)	$	(209)

Other non-interest income included fee income related to non-designated hedge derivative interest rate swaps (not designated as hedging instruments) executed with commercial loan customers totaling ~~$8.8~~$10.7 million and ~~$19.2~~$8.8 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$22.6~~$35.8 million and ~~$48.1~~$22.6 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Credit Risk Related Contingent Features. By using derivatives, Valley is exposed to credit risk if counterparties to the derivative contracts do not perform as expected. Management attempts to minimize counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral where appropriate. Credit risk exposure associated with derivative contracts is managed at Valley in conjunction with Valley’s consolidated counterparty risk management process. Valley’s counterparties and the risk limits monitored by management are periodically reviewed and approved by the Board of Directors.

Valley has agreements with its derivative counterparties providing that if Valley defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Valley could also be declared in default on its derivative counterparty agreements. Additionally, Valley has an agreement with several of its derivative counterparties that contains provisions that require Valley’s debt to maintain an investment grade credit rating from each of the major credit rating agencies from which it receives a credit rating. If Valley’s credit rating is reduced below investment grade, or such rating is withdrawn or suspended, then the counterparty could terminate the derivative positions and Valley would be required to settle its obligations under the agreements. As of September 30, ~~2021,~~2022, Valley was in compliance with all of the provisions of its derivative counterparty agreements. As of September 30, ~~2021, the fair value of~~2022, there were no derivatives in aan aggregate net liability ~~position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, w~~position. ~~as $60.5 million.~~ Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties.

Note 13. Balance Sheet Offsetting

Certain financial instruments, including certain ~~OTC~~over-the-counter (OTC) derivatives (mostly interest rate swaps) and repurchase agreements (accounted for as secured long-term borrowings), may be eligible for offset in the consolidated statements of financial condition and/or subject to master netting arrangements or similar agreements. OTC derivatives include interest rate swaps executed and settled bilaterally with counterparties without the use of an organized exchange or central clearing house (presented in the table below). The credit risk associated with bilateral OTC derivatives is managed through obtaining collateral and enforceable master netting agreements.

Valley is party to master netting arrangements with its financial institution counterparties; however, Valley does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of cash or marketable investment securities, is posted by the counterparty with net liability positions in accordance with contract thresholds. Master repurchase agreements which include “right of set-off” provisions generally have a legally enforceable right to offset recognized amounts. In such cases, the collateral would be used to settle the fair value of the swap or repurchase agreement should Valley be in default. The total amount of collateral held or pledged cannot exceed the net derivative fair values with the counterparty.

The table below presents information about Valley’s financial instruments eligible for offset in the consolidated statements of financial condition as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Gross Amounts Not Offset
Gross Amounts
Recognized Gross Amounts
Offset Net Amounts
Presented Financial
Instruments
Cash
Collateral (1)
Net
Amount
(in thousands)
September 30, 2021
Assets:
Interest rate swaps $ 215,046 $ — $ 215,046 $ — $ — $ 215,046
Liabilities:
Interest rate swaps $ 65,212 $ — $ 65,212 $ — $ (60,177) $ 5,035
Total $ 65,212 $ — $ 65,212 $ — $ (60,177) $ 5,035
December 31, 2020
Assets:
Interest rate swaps $ 150,487 $ — $ 150,487 $ — $ — $ 150,487
Liabilities:
Interest rate swaps $ 150,487 $ — $ 150,487 $ — $ (150,487) $ —
Repurchase agreements 300,000 — 300,000 (300,000) (2) — —
Total $ 450,487 $ — $ 450,487 $ (300,000) $ (150,487) $ —


							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments		Cash Collateral *		Net Amount
	(in thousands)
September 30, 2022
Assets
Interest rate swaps	$	576,213	$	—	$	576,213	$	(914)	$	(374,030)	$	201,269
Liabilities
Interest rate swaps	$	608,483	$	—	$	608,483	$	(914)	$	(454)	$	607,115


December 31, 2021
Assets
Interest rate swaps	$	180,701	$	—	$	180,701	$	—	$	—	$	180,701
Liabilities
Interest rate swaps	$	50,689	$	—	$	50,689	$	—	$	(44,231)	$	6,458

~~(1)~~* Cash collateral received from or pledged to our counterparties in relation to market value exposures of OTC derivative contacts in a liability position.

~~(2)~~ ~~Represents the fair value of non-cash pledged investment securities.~~

Note 14. Tax Credit Investments

Valley’s tax credit investments are primarily related to investments promoting qualified affordable housing projects, and other investments related to community development and renewable energy sources. Some of these tax-advantaged investments support Valley’s regulatory compliance with the ~~Community Reinvestment Act (CRA).~~CRA. Valley’s investments in these entities generate a return primarily through the realization of federal income tax credits, and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction of income tax expense.

Valley’s tax credit investments are carried in other assets on the consolidated statements of financial condition. Valley’s unfunded capital and other commitments related to the tax credit investments are carried in accrued expenses and other liabilities on the consolidated statements of financial condition. Valley recognizes amortization

of tax credit investments, including impairment losses, within non-interest expense in the consolidated statements of income using the equity method of accounting. After initial measurement, the carrying amounts of tax credit investments with non-readily determinable fair values are increased to reflect Valley's share of income of the investee and are reduced to reflect its share of losses of the investee, dividends received and impairments, if applicable.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(in thousands)					(in thousands)
Other Assets:	Other Assets:					Other Assets:
Affordable housing tax credit investments, net	Affordable housing tax credit investments, net	$	17,231	$	20,074	Affordable housing tax credit investments, net	$	25,139	$	15,343
Other tax credit investments, net	Other tax credit investments, net	46,880		47,301		Other tax credit investments, net	52,749		57,006
Total tax credit investments, net	Total tax credit investments, net	$	64,111	$	67,375	Total tax credit investments, net	$	77,888	$	72,349
Other Liabilities:	Other Liabilities:					Other Liabilities:
Unfunded affordable housing tax credit commitments	Unfunded affordable housing tax credit commitments	$	1,379	$	1,379	Unfunded affordable housing tax credit commitments	$	1,360	$	1,360

Total unfunded tax credit commitments	Total unfunded tax credit commitments	$	1,379	$	1,379	Total unfunded tax credit commitments	$	1,360	$	1,360

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(in thousands)									(in thousands)
Components of Income Tax Expense:	Components of Income Tax Expense:									Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	Affordable housing tax credits and other tax benefits	$	948	$	1,352	$	2,744	$	3,979	Affordable housing tax credits and other tax benefits	$	1,184	$	948	$	3,542	$	2,744
Other tax credit investment credits and tax benefits	Other tax credit investment credits and tax benefits	2,702		1,727		8,130		5,567		Other tax credit investment credits and tax benefits	2,557		2,702		7,647		8,130
Total reduction in income tax expense	Total reduction in income tax expense	$	3,650	$	3,079	$	10,874	$	9,546	Total reduction in income tax expense	$	3,741	$	3,650	$	11,189	$	10,874
Amortization of Tax Credit Investments:	Amortization of Tax Credit Investments:									Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	Affordable housing tax credit investment losses	$	681	$	642	$	1,684	$	1,733	Affordable housing tax credit investment losses	$	598	$	681	$	1,666	$	1,684
Affordable housing tax credit investment impairment losses	Affordable housing tax credit investment impairment losses	387		585		1,159		1,668		Affordable housing tax credit investment impairment losses	266		387		891		1,159
Other tax credit investment losses	Other tax credit investment losses	256		12		780		1,235		Other tax credit investment losses	308		256		1,003		780
Other tax credit investment impairment losses	Other tax credit investment impairment losses	1,755		1,520		5,172		4,767		Other tax credit investment impairment losses	1,933		1,755		5,634		5,172
Total amortization of tax credit investments recorded in non-interest expense	Total amortization of tax credit investments recorded in non-interest expense	$	3,079	$	2,759	$	8,795	$	9,403	Total amortization of tax credit investments recorded in non-interest expense	$	3,105	$	3,079	$	9,194	$	8,795

Note 15. ~~Business~~Operating Segments

Prior to the second quarter 2022, Valley ~~has 4 business segments that it monitors~~operated as four reportable segments: Consumer Lending, Commercial Lending, Investment Management, and ~~reports~~Corporate and Other Adjustments. Valley re-evaluated its segment reporting during the second quarter 2022 to consider the Bank Leumi USA acquisition on ~~to manage Valley’s business operations. These segments are consumer lending, commercial lending, investment management, and corporate and~~April 1, 2022 along with other ~~adjustments. Valley’s reportable segments have been determined based upon its~~factors, including changes in the internal structure of operations, discrete financial information reviewed by key decision-makers, balance sheet management strategies and ~~lines~~personnel. As a result, Valley determined it operated reportable segments consisting of ~~business.~~Consumer Lending, Commercial Lending and Treasury and Corporate Other at June 30, 2022. Treasury and Corporate Other was reorganized to consolidate Treasury and other corporate-wide functions, including the Treasury managed investment securities portfolios and overnight interest earning cash balances formerly reported under Investment Management. The discrete financial information related to the

activities previously reported in the Investment Management segment is no longer provided to Valley's CEO, who is the chief operating decision maker. Each ~~business~~operating segment is reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Valley regularly assesses its strategic plans, operations, and reporting structures to identify its reportable segments. There were no additional changes to Valley's reportable segments at September 30, 2022.

Consumer Lending is mainly comprised of residential mortgages and automobile loans, and to a lesser extent, secured personal lines of credit, home equity loans and other consumer loans. The duration of the residential mortgage loan portfolio is subject to movements in the market level of interest rates and forecasted prepayment speeds. The average weighted life of the automobile loans within the portfolio is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Lending also includes the Wealth Management and Insurance Services Division, comprised of trust, asset management, brokerage, insurance and tax credit advisory services.

Commercial Lending is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate characteristics, commercial lending is Valley’s operating segment that is most sensitive to movements in market interest rates.

Treasury and Corporate Other largely consists of the Treasury managed held to maturity debt securities and available for sale debt securities portfolios mainly utilized in the liquidity management needs of our lending segments and income and expense items resulting from support functions not directly attributable to a specific segment. Interest income is generated through investments in various types of securities (mainly comprised of fixed rate securities) and interest-bearing deposits with other banks (primarily the Federal Reserve Bank of New York). Expenses related to the branch network, all other components of retail banking, along with the back office departments of the Bank are allocated from Treasury and Corporate Other to the ~~corporate~~Consumer Lending and ~~other adjustments segment to each of the other three business~~Commercial Lending segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each ~~business~~operating segment utilizing a transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets ~~and/~~and or liabilities outstanding for the period.

The financial reporting for each segment contains allocations and reporting in line with Valley’s operations, which may not necessarily be comparable to any other financial institution. The accounting for each segment includes internal accounting policies designed to measure consistent and reasonable financial reporting and may result in income and expense measurements that differ from amounts under U.S. GAAP. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. The prior period balances presented in the tables below reflect reclassifications to conform the presentation in those periods to the current operating segment structure. Valley's consolidated results were not impacted by the changes discussed above and remain unchanged for all periods presented.

4450

The following tables represent the financial data for Valley’s ~~4 business~~operating segments for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30, 2021															Three Months Ended September 30, 2022
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,373,897		$	25,324,485		$	5,634,492		$	—	$	38,332,874		Average interest earning assets	$	8,307,993		$	36,033,901		$	6,189,348		$	50,531,242

Interest income	Interest income	$	58,887		$	250,866		$	19,766		$	(718)	$	328,801		Interest income	$	70,590		$	425,930		$	40,208		$	536,728
Interest expense	Interest expense	4,032			13,795			3,228			6,720		27,775			Interest expense	12,288			53,294			17,154			82,736
Net interest income (loss)		54,855			237,071			16,538			(7,438)		301,026
Net interest income																Net interest income	58,302			372,636			23,054			453,992
Provision (credit) for credit losses	Provision (credit) for credit losses	(4,614)			8,110			35			—		3,531			Provision (credit) for credit losses	7,182			(5,347)			188			2,023
Net interest income (loss) after provision for credit losses		59,469			228,961			16,503			(7,438)		297,495
Net interest income after provision for credit losses																Net interest income after provision for credit losses	51,120			377,983			22,866			451,969
Non-interest income	Non-interest income	11,845			11,611			2,018			16,957		42,431			Non-interest income	19,637			23,510			13,047			56,194
Non-interest expense	Non-interest expense	13,520			27,504			(150)			134,048		174,922			Non-interest expense	24,352			31,759			205,528			261,639
Internal transfer expense (income)	Internal transfer expense (income)	20,662			71,141			15,825			(107,628)		—			Internal transfer expense (income)	26,268			113,932			(140,200)			—
Income (loss) before income taxes		$	37,132		$	141,927		$	2,846		$	(16,901)	$	165,004
Income before income taxes																Income before income taxes	$	20,137		$	255,802		$	(29,415)		$	246,524
Return on average interest earning assets (pre-tax)	Return on average interest earning assets (pre-tax)	2.01		%	2.24		%	0.20		%	N/A		1.72		%	Return on average interest earning assets (pre-tax)	0.97		%	2.84		%	(1.90)		%	1.95		%


		Three Months Ended September 30, 2020															Three Months Ended September 30, 2021
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,126,157		$	25,389,107		$	5,252,446		$	—	$	37,767,710		Average interest earning assets	$	7,373,897		$	25,324,485		$	5,634,492		$	38,332,874

Interest income	Interest income	$	63,956		$	251,920		$	22,513		$	(1,046)	$	337,343		Interest income	$	58,887		$	250,866		$	19,048		$	328,801
Interest expense	Interest expense	9,048			33,330			6,728			5,151		54,257			Interest expense	4,032			13,795			9,948			27,775
Net interest income (loss)		54,908			218,590			15,785			(6,197)		283,086
Provision (credit) for credit losses		5,383			25,637			(112)			—		30,908
Net interest income (loss) after provision for credit losses		49,525			192,953			15,897			(6,197)		252,178
Net interest income																Net interest income	54,855			237,071			9,100			301,026
(Credit) provision for credit losses																(Credit) provision for credit losses	(4,614)			8,110			35			3,531
Net interest income after provision for credit losses																Net interest income after provision for credit losses	59,469			228,961			9,065			297,495
Non-interest income	Non-interest income	23,531			20,421			(1,304)			6,624		49,272			Non-interest income	11,845			11,611			18,975			42,431
Non-interest expense	Non-interest expense	19,877			25,633			(186)			114,861		160,185			Non-interest expense	13,520			27,504			133,898			174,922
Internal transfer expense (income)	Internal transfer expense (income)	18,614			66,390			13,713			(98,717)		—			Internal transfer expense (income)	20,662			71,141			(91,803)			—
Income (loss) before income taxes	Income (loss) before income taxes	$	34,565		$	121,351		$	1,066		$	(15,717)	$	141,265		Income (loss) before income taxes	$	37,132		$	141,927		$	(14,055)		$	165,004
Return on average interest earning assets (pre-tax)	Return on average interest earning assets (pre-tax)	1.94		%	1.91		%	0.08		%	N/A		1.50		%	Return on average interest earning assets (pre-tax)	2.01		%	2.24		%	(1.00)		%	1.72		%

4551


		Nine Months Ended September 30, 2021															Nine Months Ended September 30, 2022
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,176,086		$	25,465,276		$	5,261,185		$	—	$	37,902,547		Average interest earning assets	$	7,978,732		$	32,551,062		$	6,075,623		$	46,605,417

Interest income	Interest income	$	179,151		$	759,097		$	58,514		$	(2,515)	$	994,247		Interest income	$	193,186		$	1,036,276		$	100,671		$	1,330,133
Interest expense	Interest expense	15,639			55,497			11,466			17,045		99,647			Interest expense	20,218			84,356			35,738			140,312
Net interest income (loss)		163,512			703,600			47,048			(19,560)		894,600
(Credit) provision for credit losses		(6,538)			27,825			(353)			—		20,934
Net interest income (loss) after provision for credit losses		170,050			675,775			47,401			(19,560)		873,666
Net interest income																Net interest income	172,968			951,920			64,933			1,189,821
Provision for credit losses																Provision for credit losses	14,457			34,590			531			49,578
Net interest income after provision for credit losses																Net interest income after provision for credit losses	158,511			917,330			64,402			1,140,243
Non-interest income	Non-interest income	47,445			29,144			6,824			33,377		116,790			Non-interest income	50,540			54,815			48,642			153,997
Non-interest expense	Non-interest expense	53,161			80,276			1,370			372,221		507,028			Non-interest expense	59,711			81,292			617,706			758,709
Internal transfer expense (income)	Internal transfer expense (income)	60,026			212,931			43,706			(316,663)		—			Internal transfer expense (income)	92,544			371,213			(463,757)			—
Income (loss) before income taxes		$	104,308		$	411,712		$	9,149		$	(41,741)	$	483,428
Income before income taxes																Income before income taxes	$	56,796		$	519,640		$	(40,905)		$	535,531
Return on average interest earning assets (pre-tax)	Return on average interest earning assets (pre-tax)	1.94		%	2.16		%	0.23		%	N/A		1.70		%	Return on average interest earning assets (pre-tax)	0.95		%	2.13		%	(0.90)		%	1.53		%


		Nine Months Ended September 30, 2020															Nine Months Ended September 30, 2021
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,187,839		$	24,334,429		$	5,221,538		$	—	$	36,743,806		Average interest earning assets	$	7,176,086		$	25,465,276		$	5,261,185		$	37,902,547

Interest income	Interest income	$	199,018		$	771,947		$	81,905		$	(3,209)	$	1,049,661		Interest income	$	179,151		$	759,097		$	55,999		$	994,247
Interest expense	Interest expense	40,217			136,156			29,216			13,088		218,677			Interest expense	15,639			55,497			28,511			99,647
Net interest income (loss)		158,801			635,791			52,689			(16,297)		830,984
Provision for credit losses		15,274			90,785			688			—		106,747
Net interest income (loss) after provision for credit losses		143,527			545,006			52,001			(16,297)		724,237
Net interest income																Net interest income	163,512			703,600			27,488			894,600
(Credit) provision for credit losses																(Credit) provision for credit losses	(6,538)			27,825			(353)			20,934
Net interest income after provision for credit losses																Net interest income after provision for credit losses	170,050			675,775			27,841			873,666
Non-interest income	Non-interest income	55,383			52,192			7,661			20,263		135,499			Non-interest income	47,445			29,144			40,201			116,790
Non-interest expense	Non-interest expense	60,188			73,041			843			338,935		473,007			Non-interest expense	53,161			80,276			373,591			507,028
Internal transfer expense (income)	Internal transfer expense (income)	58,355			197,444			42,393			(298,192)		—			Internal transfer expense (income)	60,026			212,931			(272,957)			—
Income (loss) before income taxes	Income (loss) before income taxes	$	80,367		$	326,713		$	16,426		$	(36,777)	$	386,729		Income (loss) before income taxes	$	104,308		$	411,712		$	(32,592)		$	483,428
Return on average interest earning assets (pre-tax)	Return on average interest earning assets (pre-tax)	1.49		%	1.79		%	0.42		%	N/A		1.40		%	Return on average interest earning assets (pre-tax)	1.94		%	2.16		%	(0.83)		%	1.70		%

Item 2. Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations

The following MD&A should be read in conjunction with the consolidated financial statements and notes thereto appearing in Part 1,I, Item 1 of this report. The words "Valley," the "Company," "we," "our" and "us" refer to Valley National Bancorp and its ~~wholly owned~~ subsidiaries, unless we indicate otherwise. Additionally, Valley’s principal subsidiary, Valley National Bank, is commonly referred to as the “Bank” in this MD&A.

The MD&A contains supplemental financial information, described in the sections that follow, which has been determined by methods other than U.S. generally accepted accounting principles (U.S. GAAP) that management uses in its analysis of our performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance, our business and performance trends and facilitate comparisons with the performance of others in the financial services industry. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to

financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies.

Cautionary Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q, both in the MD&A and elsewhere, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic ~~expectations, including the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions.~~expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” ~~“will,”~~ “opportunity,” “allow,” “continues,” “reflects,” “would,” “could,” “typically,” “usually,” “anticipate,” ~~"may," "estimate,"~~“may,” “estimate,” “outlook,” “project,” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and ~~uncertainties and our actual~~uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to:

•~~failure to obtain shareholder or regulatory approval for the acquisition of Bank Leumi USA (Bank Leumi) on the anticipated terms and within the anticipated timeframe;~~

•the inability to realize expected cost savings and synergies from the ~~Westchester and~~ Bank Leumi ~~acquisitions~~USA acquisition in the amounts or ~~in the~~ timeframe anticipated;

•greater than expected costs or difficulties relating to ~~Westchester and~~ Bank Leumi USA integration ~~matters might be greater than expected;~~matters;

•the inability to retain customers and qualified employees of ~~the Westchester and~~ Bank ~~Leumi;~~Leumi USA;

•~~changes in estimates of~~greater than expected non-recurring charges related to ~~Westchester and~~the Bank Leumi ~~acquisitions;~~USA acquisition;

•~~the continued impact of COVID-19 on~~macroeconomic factors in the U.S. and ~~global economies,~~globally due to COVID-19 or otherwise, including business disruptions, reductions in employment, supply chain interruptions, inflation, Federal Reserve actions impacting the level of market interest rates and an increase in business failures, specifically among our clients;

•the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases and new variants of COVID-19 may arise in our primary markets;

•continued deterioration in general business and economic conditions or turbulence in domestic or global financial markets;

•the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral;

•the risks related to the discontinuation of the London Interbank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies;

•damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters;

•a prolonged downturn in the economy, mainly in New Jersey, New York, Florida, Alabama, California, and ~~Alabama,~~Illinois, as well as an unexpected decline in commercial real estate values within our market areas;

•higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations and case law;

•the inability to grow customer deposits to keep pace with loan growth;

•a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;

•the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;

•greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations;

•the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under Valley's branch transformation strategy;

•cyber-attacks, ransomware attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;

•results of examinations by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (CFPB) and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;

•our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;

•unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, the COVID-19 pandemic or other external events; and

•unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020 and Part II, Item 1A~~2021.

We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of ~~this Quarterly Report.~~activity, performance or achievements.

Critical Accounting Policies and Estimates

Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition and results of operations. At September 30, ~~2021,~~2022, we identified our policies on the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Management has reviewed the application of these policies and estimates with the Audit Committee of Valley’s Board of Directors. Our critical accounting policies and estimates are described in detail in Part II, Item 7 in Valley’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, and there have been no material changes in such policies and estimates since the date of such report.

New Authoritative Accounting Guidance

See Note 5 to the consolidated financial statements for a description of new authoritative accounting guidance, including the respective dates of adoption and effects on results of operations and financial condition.

Executive Summary

Company Overview. At September 30, ~~2021,~~2022, Valley had consolidated total assets of approximately ~~$41.3~~$55.9 billion, total net loans of ~~$32.3~~$44.7 billion, total deposits of ~~$33.6~~$45.3 billion and total shareholders’ equity of ~~$4.8~~$6.3 billion. ~~Our commercial bank operations include~~Valley operates many convenient branch office locations and commercial banking offices in northern and central New Jersey, the New York City Boroughs of Manhattan, Brooklyn and Queens, ~~and~~ Long Island, Westchester County, New York, Florida, California, Alabama and ~~Alabama~~.Illinois. Of our current ~~226~~238 branch network, 5855 percent, 1719 percent, 18 ~~percent and 7~~ percent of the branches are in New Jersey, New York and Florida, respectively, with the remaining 8 percent of the branches in Alabama, California, and ~~Alabama, respectively.~~Illinois combined. Despite targeted branch consolidation activity, wewe have significantly grown both in asset size and locations over the past several years ~~primarily~~both through organic efforts and bank ~~acquisitions.~~

~~The Westchester Bank Holding Corporation.~~ ~~On June 29, 2021, Valley announced that it will acquire The Westchester Bank Holding Corporation (“Westchester”) and its principal subsidiary, The Westchester Bank which~~acquisitions. Our most recent bank acquisition is ~~headquartered in White Plains, New York. As of June 30, 2021~~, Westchester had total assets of $1.3 billion, total loans of $908 million, and total deposits of $1.1 billion. Westchester maintains a seven branch network in Westchester County, New York. The common shareholders of Westchester will receive 229.645 shares of Valleydiscussed below.

4854

~~common stock for each Westchester share they own. Based on Valley’s closing stock price on June 28, 2021, Westchester’s stockholders will receive approximately $210 million in~~Bank Leumi Le-Israel Corporation. On April 1, 2022, Valley ~~common stock. Existing Westchester options will be cashed out for approximately $10 million in cash. The~~completed its acquisition ~~is anticipated to close on December 1, 2021, pending the satisfaction~~ of ~~customary closing conditions~~.

Bank Leumi Le-Israel Corporation, ~~Merger.~~ ~~On September 23, 2021, Valley announced a merger with Bank Leumi Le-Israel Corporation (Leumi) whereby Valley will acquire Leumi,~~ the U.S. subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, ~~(Bank Leumi)~~collectively referred to as "Bank Leumi USA". ~~The merger will enable Valley to greatly expand its commercial banking and venture capital banking businesses, as well as help Valley increase its revenue diversity and expand into new geographies.~~At the acquisition date, Bank Leumi ~~has its headquarters~~USA had approximately $8.1 billion in ~~New York City~~assets, $5.9 billion of loans and ~~also operates commercial banking offices~~$7.0 billion of deposits, after purchase accounting adjustments. Valley issued approximately 85 million shares of common stock and paid $113.4 million in Chicago, Los Angeles, Palo Alto, and Aventura, Fl. As of June 30, 2021, Bank Leumi had total assets of $8.4 billion, total deposits of $7.1 billion, and gross loans of $5.4 billion. The acquisition is expected to closecash in the ~~first half~~transaction. The consideration for the acquisition totaled approximately $1.2 billion, inclusive of ~~2022,~~the value of stock options. The transaction resulted in $403.2 million of goodwill and $153.4 million of combined core deposit and other intangible assets subject to ~~standard regulatory approvals, approval of Valley shareholders, as well as other customary closing conditions.~~

~~Dudley Venture~~s ~~Acquisition. On October 8, 2021, Valley acquired Arizona-based Dudley Ventures (DV), an advisory firm specializing in~~amortization. See Note 2 to the ~~investment and management of tax credits. The transaction includes~~consolidated financial statements for additional details regarding the acquisition of ~~DV's community development entity, DV Community Investment, as well as DV Fund Advisors~~Bank Leumi USA and DV Advisory Services. The transaction price included $11.3 million of cash at the closing date, fixed future stock consideration totaling $3.8 million, and contingent cash earn-out payments based upon revenue growth of the acquired entities over a five-year period. Theother recent acquisition ~~of Dudley Ventures is expected to support our efforts to build differentiated sources of non-interest income.~~

activities.

Impact of COVID-19. ~~Economic activity and businesses continued to rebound in~~During the third quarter ~~2021. However,~~2022, worldwide inflationary concerns continued to outweigh the ~~U.S. is experiencing significant~~other negative impacts of COVID-19. Among other factors, China's "zero COVID" policy has created disruption of China's manufacturing industry which could have prolonged negative consequences for the global ~~supply chain disruptions and labor shortages which have also increased inflation.~~economy as China exports up to one-third of the world's intermediate goods. We continue to monitor the impact of COVID-19 including the emergence of new variants closely, including its impact on our employees, customers, communities and results of operations and other government ~~stimulus~~ or Federal Reserve actions. The extent to which the COVID-19 pandemic will impact our operations and financial results during the fourth quarter 2021 and beyond is highly uncertain. We continue to closely monitor local conditions in the areas we serve and will take actions as circumstances warrant and will follow proper protocols designed to ensure safety of our employees and customers. See the "Operating Environment" section of MD&A for more details.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act and additional legislation that followed including the Consolidated Appropriations Act and the American Rescue Plan Act of 2021 provided funding for the SBA's Paycheck Protection Program (PPP) and established rules for qualifying borrowers to receive loan forgiveness by the SBA under this program. Valley extended a total of $3.2 billion PPP loans under the program, of ~~which $2.3~~which $3.1 billion ~~of these loans~~ have received forgiveness from the ~~SBA, including $476.7 million during the third quarter 2021~~SBA. . As of September 30, ~~2021~~2022, we had ~~$874.0~~$85.8 million (including $35.5 million acquired from Bank Leumi USA) of PPP loans still outstanding.

In response to the COVID-19 pandemic and its economic impact on certain customers and in accordance with provisions set forth by the CARES Act, Valley implemented short-term loan modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant, when requested by customers. As of ~~September 30, 2021, Valley had~~ ~~$98.6 million of outstanding loans remaining in their payment deferral period under short-term modifications representing approximately 0.3 percent of our~~ ~~total loan portfolio at September 30, 2021 as compared to $361 million, or 1.1 percent of total loans at December 31, 2020.~~

Quarterly Results. Net income for the third quarter ~~2021~~2022 was $178.1 million, or $0.34 per diluted common share as compared to $122.6 million, or $0.29 per diluted common share, ~~compared to $102.4 million, or $0.25 per diluted common share,~~ for the third quarter ~~2020.~~2021. The ~~$20.2~~$55.5 million increase in quarterly net income as compared to the same quarter one year ago was ~~largely~~mainly due ~~to:~~

to the following changes:

•a ~~$17.9~~$153.0 million increase in net interest income mainly due to ~~(i) lower rates on our deposit products combined with a continued customer shift to deposits without stated maturities, (ii) run-off of~~ higher ~~cost time deposits, (iii) lower~~ average ~~other borrowings and related costs~~loan balances driven by ~~normal maturities of FHLB~~

~~advances~~both acquired and ~~long-term repos, as well as our prepayments of $534 million~~organic loan volumes and ~~$248 million of long-term FHLB borrowings in December 2020~~increased yields on new and ~~June 2021, respectively; and~~

adjustable-rate loans;

•a ~~$27.4~~$13.8 million increase in non-interest income primarily driven by increases in wealth management and trust fees, service charges on deposit accounts and other income totaling $5.7 million, $4.9 million and $7.1 million, respectively, related to additional income resulting from the Bank Leumi USA acquisition, partially offset by lower net gains on sales of residential mortgage loans; and

•a $1.5 million decrease in our provision for credit losses, ~~mainly due to the improved economic forecast component of the reserve as compared to September 30, 2020,~~

partially offset by:

•a $6.8 million decrease in non-interest income mainly due to the combination of lower gains on sales of residential mortgage loans and lower fee income related to derivative interest rate swaps executed with commercial lending customers, partially offset by moderate increases in other fee categories;

•~~a $14.7~~an $86.7 million increase in non-interest expense ~~primarily~~largely due to ~~higher~~increases in salary and employee ~~benefits expenses,~~benefits; technology, furniture and ~~increased professional~~equipment expenses; and ~~legal fees, including an accrual~~net occupancy caused by our expanded banking operations resulting from the acquisitions of ~~$2.1 million for general litigation reserves, partially offset by a $2.4 million decrease in the loss~~Bank Leumi USA on ~~the early extinguishment as compared to the third quarter 2020;~~April 1, 2022 and

The Westchester Bank Holding Corporation (Westchester) on December 1, 2021; and

•a ~~$3.5~~$26.0 million increase in income tax expense ~~mainly~~mostly due to higher pre-tax income ~~before income taxes.~~in the

third quarter 2022.

See the “Net Interest Income”, “Non-Interest Income”, “Non-Interest Expense”, and “Income Taxes” sections below for more details on the impact of the items above ~~impacting~~on our third quarter ~~2021~~2022 results.

Operating Environment. During the third quarter ~~2021,~~of 2022, real gross domestic product ~~expanded 0.5~~increased 2.8 percent compared to ~~6.7~~a decline of 0.6 percent ~~growth~~ in the second quarter ~~2021.~~of 2022. The ~~deceleration~~increase in ~~growth~~economic activity was driven in large part by ~~personal consumption~~household spending on goods and ~~business~~services, and a favorable mix of export activity outpacing imports.

Residential fixed investments declined as mortgage rates increased markedly which weighed on the headline result. Business fixed investment, ~~as inflation remained elevated, partly offset by~~ inventory restocking and government ~~spending.~~spending increased at a tepid rate.

~~The~~During the third quarter 2022, the Federal Reserve continued to maintain an accommodative stance on monetary policy to keep interest rates low and promote liquidity. At their meeting in September 2021, the Federal Open Market Committee (the "Committee") maintainedraised the target range for the federal funds rate ~~between 0.00~~by 150 basis points to a target range of 3.00 percent to 3.25 percent at the end of the third quarter. Following its meeting in November, the Federal Reserve raised the federal fund rate by another 75 basis points to a target range of 3.75 percent to 4.00 percent. In addition, the Federal Reserve has continued to reduce its holdings of Treasury securities and ~~0.25 percent. Additionally,~~agency debt and mortgage-backed securities. Consistent with its previously announced plan, the ~~Committee decided to maintain several programs, including purchasing U.S.~~Federal Reserve targeted a reduction of its Treasury and ~~mortgage backed~~agency securities portfolio by $47.5 billion per month through September 21, 2022 and, effective September 22, 2022, raised its target reduction of securities to ~~support~~$95 billion per month. These actions reflect the ~~flow of credit~~Federal Reserve’s strong commitment to ~~households and businesses in order~~returning inflation to ~~promote~~ its ~~maximum employment and price stability goals. Notwithstanding this, the Committee indicated that a moderation in the pace of asset purchases may soon be warranted.~~2 percent objective.

The 10-year U.S. Treasury note yield ended the third quarter of 2022 at ~~1.52~~3.83 percent, 785 basis points higher as compared ~~with~~to June 30, ~~2021.~~2022. The spread between the 2- and 10-year U.S. Treasury note yields ended the ~~third~~ quarter ~~2021~~ at ~~1.24~~negative 0.39 percent, 4a 45 basis ~~points higher, as compared to the end of the second quarter 2021 and 68 basis points higher, as compared to~~point decline from June 30, ~~2020.~~2022.

For all commercial banks in the U.S., loans and leases increased approximately ~~0.9~~2.5 percent infrom June 30, 2022 to September 30, 2022. While loan growth moderated somewhat during the ~~third~~ quarter, ~~2021, as compared to the previous quarter. For~~survey data from the industry ~~banks reported more relaxed credit standards for most loan types. Additionally, banks~~ reported that demand ~~had firmed or increased during the third quarter which finally translated into stronger~~for most commercial and industrial loan ~~growth. In the third quarter 2021, Valley continued to see strong organic growth~~products increased. Alternatively, demand for most real estate related loans declined, particularly for commercial real estate loans with construction and ~~several~~land development purposes. During the third quarter 2022, Valley’s new loan originations decreased across most product types as compared to the second quarter, but loan growth remained at robust levels partly due to slower paydowns on existing loans due to the rising market interest rate environment. While confident in our commercial loan pipelines, we expect a more challenging overall loan origination environment moving forward, especially in the residential mortgage and consumer loan portfolios, due to the impact of higher market interest rates on customer demand and selective tightening of certain underwriting standards by Valley.

Further expected increases in market interest rates, persistently high inflation, the lingering impact of supply chain issues, tight labor market conditions, and global economic fallout from the Russia-Ukraine war, among other ~~loan types across its geographic footprint. Inflation~~factors, has ~~been~~added a higher level of uncertainty to the future path of the U.S. economy and an elevated ~~which could~~risk of a recession. Should economic conditions deteriorate causing business activity, spending and investment to decline, it would adversely impact ~~companies if they cannot pass along higher input costs to their customers. Should inflation pressures persist, this dynamic, among other external factors, could challenge~~ our ~~business operations~~financial results, as highlighted ~~throughout the remaining~~below in this MD~~&A discussion below.~~

&A.

Loans. Total loans increased ~~$149.4 million~~$1.6 billion to ~~$32.6~~$45.2 billion at September 30, ~~2021~~2022 from June 30, ~~2021 in spite of a $476.7 million decrease in PPP loans within the commercial and industrial~~2022 primarily due to strong organic loan ~~category.~~growth. Our ~~non-PPP~~ loan portfolio increased ~~$626.0 million, or 8.0~~15 percent on an annualized basis ~~to $31.7 billion at September 30, 2021~~during the third quarter 2022 from ~~$31.1 billion at June 30, 2021. The~~the second quarter 2022 as a result of solid commercial loan volumes and a continued increase in non-PPP loans was largely driven by increases of $399.9 million, $51.7 million and $105.4 million in the commercial real estate, construction and residential mortgage categories, respectively. Additionally, our third quarter 2021 new ~~and refinanced loan originations included~~

~~approximately $233 million of~~ residential mortgage loans originated for investment rather than sale. ~~Net gains on sales of residential loans were $6.4 million and $10.1 million in~~During the third quarter ~~2021 and second quarter 2021, respectively.~~2022, we sold only $48 million of residential mortgage loans. See further details on our loan activities under the “Loan Portfolio” ~~section below.~~section.

Asset Quality. Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO), and other repossessed assets increased $31.1 million to $257.7 million at September 30, 2021 as compared to June 30, 2021. Non-accrual loans increased $31.8 million to $251.8 million at September 30, 2021 as compared to June 30, 2021 mainly due to the $33.1 million increase in non-accrual commercial real estate loans from three loan relationships which have $3.7 million of related allowance reserves as of September 30, 2021. Non-accrual loans represented ~~0.77~~0.65 percent and 0.72 percent of total loans at September 30, ~~2021,~~2022 and June 30, 2022, respectively. Net recoveries of loan charge-offs totaled $5.6 million for the third quarter 2022 as compared to ~~0.68 percent at June 30, 2021.~~

net loan charge-offs of $2.3 million for the second quarter 2022. Total accruing past due loans ~~(i.e., loans past due 30 days or more and still accruing interest) decreased $25.0~~increased $25.2 million to ~~$55.2~~$98.7 million, or 0.22 percent of total loans, at September 30, 2022 as compared to $73.5 million, or 0.17 percent of total loans, at ~~September 30, 2021 as compared to $80.2 million, or 0.25 percent of total loans, at~~ June 30, ~~2021. The decrease was driven by the transition of the aforementioned three commercial real estate loan delinquencies from accruing past due loans to non-accrual loan status.~~

2022. See further details in the "Non-performing Assets" section below.

Deposits and Other Borrowings. Overall, average deposits increased by ~~$876.6 million~~$1.9 billion to ~~$33.6~~$44.8 billion for the third quarter ~~2021~~2022 as compared to the second quarter ~~2021~~2022 mostly due to ~~continued~~ growth in ~~both commercial~~our retail and brokered CD portfolios. The retail ~~customer balances.~~growth resulted from strategic CD campaigns, while the brokered CD growth resulted from Avour increased utilization of brokered deposits, as a favorable funding alternative, during the ~~erage non-interest bearing~~third quarter 2022. Average non-interest-bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 3236 percent, 5653 percent and 12 percent of total deposits as of September 30, ~~2021,~~2022, respectively. Our mix of average deposits for the third quarter 2021 also continued to shift away from time deposits into the non-maturity deposit categories as compared to the second quarter 2021, as some funding from maturing retail CDs migrate to the more liquid deposit products and normal growth in such categories.

Actual ending balances for deposits increased ~~$437.8 million~~$1.4 billion to approximately ~~$33.6~~$45.3 billion at September 30, ~~2021~~2022 from June 30, ~~2021~~2022 largely due to ~~increases~~the increased utilization of ~~$524.8 million~~brokered deposits, consisting of both money market and ~~$260.3 million~~time deposit accounts, in the non-maturity interest bearing deposit and non-interest bearing deposit categories, respectively, partially offset by a $347.3 million decrease in time deposits. The decrease of $347.3 million in time deposits was driven by normal run-off of maturing retail CDs with the aforementioned migration of some retail balances to more liquid, lower cost deposit product categories.our funding mix. Total brokered deposits ~~(within money market deposit accounts) decreased approximately $315 million~~increased to ~~$1.7~~$3.7 billion at September 30, ~~2021~~2022 as compared to ~~$2.0~~$2.3 billion at June 30, ~~2021,~~2022. Non-interest bearing deposits decreased $718.9 million at September 30, 2022 as ~~our funding profile has benefited from the surge~~compared to June 30, 2022 largely due to fluctuations in certain commercial customer balances, as well as some migration of both commercial and retail balances to interest bearing deposit balances. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 32 percent, 56 percent and 12 percent of total deposits as of September 30, 2021, respectively.products. While weour overall deposit levels increased during the third quarter 2022, we believe the current operating environment will likely ~~continue to be favorable~~remain very challenging for Valley’s deposit gathering ~~initiatives,~~initiatives. As a result, we cannot guarantee that we will be able to maintain deposit levels at or near those reported at September 30, ~~2021.~~2022.

The following table presents average short-term and long-term borrowings for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30, 2022		June 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	(in thousands)
Average short-term borrowings:
FHLB advances	$	438,267	$	822,913	$	690,217	$	565,222	$	797,070
Securities sold under repurchase agreements	140,777		142,790		170,257		144,019		160,793
Federal funds purchased	437,196		637,495		—		363,550		8,681
Total	$	1,016,240	$	1,603,198	$	860,474	$	1,072,791	$	966,544

Average long-term borrowings:
FHLB advances	$	788,651	$	788,803	$	814,224	$	788,802	$	1,253,785
Subordinated debt	632,627		617,291		638,349		626,997		499,124
Securities sold under repurchase agreements	—		—		86,957		—		228,205
Junior subordinated debentures issued to capital trusts	56,631		56,544		56,284		56,545		56,198

Total	$	1,477,909	$	1,462,638	$	1,595,814	$	1,472,344	$	2,037,312

Average short-term borrowings ~~decreased $13.5~~increased $155.8 million during the third quarter 2022 as compared to ~~$860.5 million for~~ the third quarter 2021 ~~as compared to the second quarter 2021~~mostly due to ~~normal debt maturities funded with excess cash liquidity.~~an increase in the balance of federal funds purchased as a part of our overall funding strategy, partially offset by less utilization of FHLB advances. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) decreased ~~by $605.0~~$117.9 million ~~to $1.6 billion for~~from the third ~~quarter 2021 as compared to the second~~ quarter 2021 largely due to ~~combination of (i)~~ the ~~$248 million of FHLB advances which were prepaid in late June 2021, (ii) repayments upon maturities of FHLB advances and (iii) $300 million~~repayment of long-term repurchase agreements ~~which matured~~ during the third quarter 2021 ~~with these decreases partially offset by (iv)~~and, to a lesser extent, maturities of FHLB advances over the ~~$300 million subordinated notes issued in late May 2021 which were outstanding for the full quarter in third quarter 2021.~~last 12 months.

Actual ending balances for short-term borrowings decreased ~~by $71.0~~$603.5 million to ~~$783.3~~$919.3 million at September 30, ~~2021~~2022 as compared to June 30, ~~2021~~2022 largely ~~due to repayments of FHLB advances. Long-term borrowings decreased by $458.2 million to $1.4 billion at September 30, 2021 as compared to June 30, 2021 mainly~~ due to the maturity of ~~$300 million of long-term repurchase agreements and $158 million of~~ FHLB advances ~~which were repaid with excess liquidity~~ during the third quarter ~~2021.~~ ~~See Note 10~~2022 and our increased utilization of broker deposits, as a favorable alternative funding source, in our funding mix at September 30, 2022. Long-term borrowings increased to approximately $1.5 billion at September 30, 2022 as compared to $1.4 billion at June 30, 2022 primarily due to the ~~consolidated financial statements for additional information.~~

issuance of new subordinated notes during the third quarter 2022. On September 20, 2022, Valley issued $150 million of 6.25 percent fixed-to-floating rate subordinated notes due September 30, 2032. At September 30, 2022, the subordinated notes had a carrying value of $147.5 million, net of unamortized debt issuance costs.

~~Selected Performance Indicators.~~Non-GAAP Financial Measures. The ~~following~~ table below presents ~~our annualized~~selected performance ~~ratios~~indicators, their comparative non-GAAP measures and the (non-GAAP) efficiency ratio for the periods ~~indicated:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Return on average assets 1.18 % 0.99 % 1.16 % 0.94 %
Return on average assets, as adjusted 1.20 1.01 1.19 0.95
Return on average shareholders’ equity 10.23 9.04 10.14 8.50
Return on average shareholders’ equity, as adjusted 10.41 9.20 10.37 8.59
Return on average tangible shareholders’ equity (ROATE) 14.64 13.30 14.63 12.61
ROATE, as adjusted 14.90 13.53 14.97 12.75

~~Adjusted return on average assets, adjusted return on average shareholders' equity, ROATE and adjusted ROATE included in~~indicated. The Company believes that the ~~table above are~~ non-GAAP ~~measures. Management believes these~~financial measures provide useful supplemental information ~~useful~~ to both management and investors in understanding ~~our~~Valley’s underlying operational performance, business, and performance trends, and ~~the measures~~may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry.

Management utilizes these measures for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. ~~The non-GAAP measure reconciliations are presented below.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Selected Performance Indicators	($ in thousands, except for %)
GAAP measures:
Net income, as reported	$	178,119		$	122,580		$	391,260		$	358,802
Return on average assets	1.30		%	1.18		%	1.03		%	1.16		%
Return on average shareholders’ equity	11.39			10.23			8.89			10.14
Non-GAAP measures:
Net income, as adjusted	$	181,455		$	124,727		$	467,571		$	367,139
Return on average assets, as adjusted	1.32		%	1.20		%	1.23		%	1.19		%
Return on average shareholders' equity, as adjusted	11.60			10.41			10.62			10.37
Return on average tangible shareholders' equity (ROATE)	17.21			14.64			13.20			14.63
ROATE, as adjusted	17.54			14.90			15.77			14.97
Efficiency ratio	49.76			49.16			51.03			48.12


	September 30, 2022		December 31, 2021
Common Equity Per Share Data:






Book value per common share (GAAP)	$	11.98	$	11.57
Tangible book value per common share (non-GAAP)	7.87		7.94

Non-GAAP Reconciliations to GAAP Financial Measures

Adjusted net income is computed as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Net income, as reported $ 122,580 $ 102,374 $ 358,802 $ 285,243
Add: Loss on extinguishment of debt (net of tax) — 1,691 6,024 1,691
Add: (Gains) losses on available for sale and held to maturity securities transactions (net of tax) (a)
(565) 33 (399) 91
Add: Merger related expenses (net of tax) (b)
1,207 76 1,207 1,275
Add: Litigation reserves (net of tax) (b)
1,505 — 1,505 —
Net income, as adjusted $ 124,727 $ 104,174 $ 367,139 $ 288,300


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Net income, as reported (GAAP)	$	178,119	$	122,580	$	391,260	$	358,802
Add: Loss on extinguishment of debt (net of tax)	—		—		—		6,024
Less: Gains on available for sale and held to maturity securities transactions (net of tax) (a)	(24)		(565)		(74)		(399)

Add: Provision for credit losses (net of tax) (b)	—		—		29,282		—
Add: Merger related expenses (net of tax) (c)	3,360		1,207		47,103		1,207
Add: Litigation reserves (net of tax) (d)	—		1,505		—		1,505

Net income, as adjusted (non-GAAP)	$	181,455	$	124,727	$	467,571	$	367,139

(a) Included in gains (losses) on securities transactions, net.

(b)Represents the provision for credit losses for non-PCD loans, unfunded credit commitments and held to maturity debt securities acquired from Bank Leumi USA on April 1, 2022.

(c) Merger related expenses are primarily within salary and employee benefits expense, technology, furniture and equipment expense, and professional and legal fees for the nine months ended September 30, 2022.

(d) Included in professional and legal fees.

In addition to the items used to calculate net income, as adjusted, in the table above, our net income is, from time to time, impacted by fluctuations in the level of net gains on sales of loans, wealth management fees, and swap fees recognized from commercial loan customer transactions. These amounts can vary widely from period to period due to, among other factors, the amount of residential mortgage loans originated for sale, loan portfolio sales, brokerage fees, and commercial loan customer demand for certain products. See the “Non-Interest Income” section below for more details.

Adjusted annualized return on average assets is computed by dividing adjusted net income by average assets, as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
($ in thousands)
Net income, as adjusted $ 124,727 $ 104,174 $ 367,139 $ 288,300
Average assets $ 41,543,930 $ 41,356,737 $ 41,144,375 $ 40,304,956
Annualized return on average assets, as adjusted 1.20 % 1.01 % 1.19 % 0.95 %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	($ in thousands)
Net income, as adjusted (non-GAAP)	$	181,455		$	124,727		$	467,571		$	367,139
Average assets	$	54,858,306		$	41,543,930		$	50,588,010		$	41,144,375
Annualized return on average assets, as adjusted (non-GAAP)	1.32		%	1.20		%	1.23		%	1.19		%

Adjusted annualized return on average shareholders' equity is computed by dividing adjusted net income by average shareholders' equity, as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
($ in thousands)
Net income, as adjusted $ 124,727 $ 104,174 $ 367,139 $ 288,300
Average shareholders' equity $ 4,794,843 $ 4,530,671 $ 4,718,960 $ 4,472,447
Annualized return on average shareholders' equity, as adjusted 10.41 % 9.20 % 10.37 % 8.59 %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	($ in thousands)
Net income, as adjusted (non-GAAP)	$	181,455		$	124,727		$	467,571		$	367,139
Average shareholders' equity	$	6,256,767		$	4,794,843		$	5,869,736		$	4,718,960
Annualized return on average shareholders' equity, as adjusted (non-GAAP)	11.60		%	10.41		%	10.62		%	10.37		%

ROATE and adjusted ROATE are computed by dividing net income and adjusted net income, respectively, by average shareholders’ equity less average goodwill and average other intangible assets, as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
($ in thousands)
Net income $ 122,580 $ 102,374 $ 358,802 $ 285,243
Net income, as adjusted 124,727 104,174 $ 367,139 $ 288,300
Average shareholders’ equity $ 4,794,843 $ 4,530,671 $ 4,718,960 $ 4,472,447
Less: Average goodwill and other intangible assets 1,446,760 1,451,889 1,449,285 1,456,536
Average tangible shareholders’ equity $ 3,348,083 $ 3,078,782 $ 3,269,675 $ 3,015,911
Annualized ROATE 14.64 % 13.30 % 14.63 % 12.61 %
Annualized ROATE, as adjusted 14.90 % 13.53 % 14.97 % 12.75 %


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	($ in thousands)
Net income, as reported (GAAP)	$	178,119		$	122,580		$	391,260		$	358,802
Net income, as adjusted (non-GAAP)	181,455			124,727			$	467,571		$	367,139
Average shareholders’ equity	$	6,256,767		$	4,794,843		$	5,869,736		$	4,718,960
Less: Average goodwill and other intangible assets	2,117,818			1,446,760			1,917,217			1,449,285
Average tangible shareholders’ equity	$	4,138,949		$	3,348,083		$	3,952,519		$	3,269,675
Annualized ROATE (non-GAAP)	17.21		%	14.64		%	13.20		%	14.63		%
Annualized ROATE, as adjusted (non-GAAP)	17.54		%	14.90		%	15.77		%	14.97		%

The efficiency ratio is computed as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	($ in thousands)
Total non-interest expense, as reported (GAAP)	$	261,639		$	174,922		$	758,709		$	507,028
Less: Loss on extinguishment of debt (pre-tax)	—			—			—			8,406

Less: Amortization of tax credit investments (pre-tax)	3,105			3,079			9,194			8,795
Less: Merger related expenses (pre-tax) (a)	4,707			1,287			63,831			1,287
Less: Litigation reserve (pre-tax) (b)	—			2,100			—			2,100
Total non-interest expense, as adjusted (non-GAAP)	$	253,827		$	168,456		$	685,684		$	486,440
Net interest income, as reported (GAAP)	$	453,992		$	301,026		$	1,189,821		$	894,600
Total non-interest income, as reported (GAAP)	56,194			42,431			153,997			116,790
Less: Gains on available for sale and held to maturity securities transactions, net (pre-tax) (c)	(33)			(788)			(102)			(557)
Total net interest income and non-interest income, as adjusted (non-GAAP)	$	510,153		$	342,669		$	1,343,716		$	1,010,833

Efficiency ratio (non-GAAP)	49.76		%	49.16		%	51.03		%	48.12		%

(a) Included primarily within salary and employee benefits expense, technology, furniture and equipment expense, and professional and legal fees for the nine months ended September 30, 2022.

(b) Included in professional and legal fees.

Tangible book value per common share is computed by dividing shareholders’ equity less preferred stock, goodwill and other intangible assets by common shares outstanding, as follows:


	September 30, 2022		December 31, 2021
	($ in thousands, except for share data)
Common shares outstanding	506,351,502		421,437,068
Shareholders’ equity	$	6,273,829	$	5,084,066
Less: Preferred stock	209,691		209,691
Less: Goodwill and other intangible assets	2,079,731		1,529,394
Tangible common shareholders’ equity	$	3,984,407	$	3,344,981
Tangible book value per common share (non-GAAP)	$	7.87	$	7.94
Book value per common share (GAAP)	$	11.98	$	11.57

Net Interest Income

Net interest income consists of interest income and dividends earned on interest earning assets, less interest expense on interest bearing liabilities, and represents the main source of income for Valley.

~~Net~~et interest income on a tax equivalent basis totaling ~~$301.7~~$455.3 million for the third quarter ~~2021 decreased $43 thousand as compared to the second quarter 2021 and~~2022 increased ~~$17.6 million from the third quarter 2020. Interest expense of $27.8 million for the third quarter 2021 decreased $5.0~~$35.7 million as compared to the second quarter ~~2021 as we continue to reduce our cost of funding~~2022 and increased $153.6 million from ~~both deposits and our repayment of other borrowings, primarily FHLB advances.~~the third quarter 2021. Interest income on a tax equivalent basis in the third quarter ~~2021 decreased by $5.0~~2022 increased $83.7 million to ~~$329.5~~$538.0 million as compared to the second quarter 2022. The increase was mostly due to higher average loan balances driven by our organic loan growth and increased yields on both new originations and adjustable rate loans in our portfolio. Interest expense of $82.7 million for the third quarter 2022 increased $47.9 million as compared to the second quarter ~~2021~~2022 largely due to higher interest rates on both non-maturity deposits and short-term borrowings, as well as a ~~$9.4 million decline~~$1.5 billion increase in ~~PPP loan related~~average interest ~~and fees caused by lower levels of loan forgiveness (prepayments) in the third quarter 2021 and~~ ~~lower yields on non-PPP new and renewed loans.~~

bearing liabilities.

5360

Average interest earning assets increased ~~$565.2 million~~$12.2 billion to ~~$38.3~~$50.5 billion for the third quarter ~~2021~~2022 as compared to the third quarter ~~2020~~2021 primarily due to ~~higher levels~~the acquisitions of ~~excess liquidity held~~Bank Leumi USA and Westchester on April 1, 2022 and December 1, 2021, respectively, as well as strong organic loan growth over the 12-month period ended September 30, 2022. Compared to the second quarter 2022, average interest earning assets increased by $1.6 billion during the third quarter 2022. The increase was primarily driven by a $1.8 billion increase in ~~overnight investments with banks caused by~~average loan balances due to organic loan growth mainly in the ~~surge~~commercial loan categories, as well as residential mortgage loans.

Average interest bearing liabilities increased $5.9 billion to $31.2 billion for the third quarter 2022 as compared to the third quarter 2021 mainly due to $2.5 billion of interest bearing deposits assumed from Bank Leumi USA, growth in commercial and retail customer deposit balances without stated maturities and ~~fluctuations in the timing~~brokered deposits, and $727 million of ~~loan and investment funding.~~interest bearing deposits assumed from Westchester. As compared to the second quarter ~~2021,~~2022, average interest ~~earning assets~~bearing liabilities increased by ~~$425.5 million from $37.9~~$1.5 billion ~~mostly driven by higher levels of excess overnight liquidity~~in the third quarter 2022 mainly due to growth in our retail and ~~purchases of new taxable investments,~~brokered CD portfolios, partially offset by ~~principal repayments in both~~maturities and less use of short-term borrowings as a funding source. The retail growth resulted from successful targeted CD campaigns, while the ~~taxable and non-taxable investment portfolios.~~

brokered CD growth resulted from
our increased utilization of such deposits as a cost-effective funding alternative.

~~Average interest~~Total average deposits, including non-interest bearing ~~liabilities decreased $1.7~~deposits, increased $1.9 billion to ~~$25.4~~$44.8 billion for the third quarter 2021 as compared to the third quarter 2020 primarily due to the repayment of borrowings with excess cash liquidity over the last 12-month period. As compared to the second quarter 2021, average interest bearing liabilities decreased by $115.4 million in the third quarter 2021 mainly due to repayments of short-term and long-term borrowings, which were largely offset by the surge in both commercial and retail customer deposits. Total average deposits increased $876.6 million to $33.6 billion for the third quarter 20212022 as compared to the second quarter ~~2021.~~2022. See additional information under "Deposits and Other Borrowings" in the Executive Summary section above.

Our net interest margin on a tax equivalent basis of ~~3.15~~3.60 percent for the third quarter ~~2021 decreased~~2022 increased by 317 basis points and ~~increased by 14~~45 basis points from ~~3.18~~3.43 percent and ~~3.01~~3.15 percent for the second quarter ~~2021~~2022 and third quarter ~~2020,~~2021, respectively. The yield on average interest earning assets ~~decreased~~increased by 954 basis points on a linked quarter basis mostly due to the ~~lower yield~~aforementioned higher yields on new and ~~renewed~~adjustable rate loans ~~partially offset by one additional day~~ in the third quarter ~~2021~~2022 as compared to the second quarter ~~2021.~~2022. The yield on average loans ~~decreased~~increased by 857 basis points to ~~3.79~~4.48 percent for the third quarter ~~2021~~2022 as compared to the second quarter ~~2021.~~2022 largely due to the higher level of market interest rates. The yields on average taxable and non-taxable investments also increased 9 basis points and 25 basis points, respectively, from the second quarter 2022 largely due to investment maturities and prepayments redeployed into new higher yielding securities, as well as lower premium amortization expense caused by a decline in prepayments on mortgage-backed securities during the third quarter 2022. Our cost of total average deposits increased to 0.59 percent for the third quarter 2022 from 0.19 percent for the second quarter 2022. The overall cost of average interest bearing liabilities ~~decreased 7~~also increased 59 basis points to ~~0.44~~1.06 percent for the third quarter ~~2021~~2022 as compared to the second quarter ~~2021.~~2022. The ~~decrease~~increased cost of funds was mainly due ~~to: (i) the continued run-off~~to higher interest rates on most of ~~maturing higher cost time deposits, (ii) repayment~~our interest bearing deposit products combined with greater utilization of ~~maturing FHLB advances~~brokered and ~~other borrowings~~retail CDs in our funding mix during the third quarter ~~2021, (iii)~~2022.

The Federal Reserve continued to raise the ~~prepayment~~federal funds rate by 75 basis points after each of ~~$248 million~~their meetings in July, September, and November 2022 resulting in a current target range of ~~long-term FHLB advances~~3.75 percent to 4.00 percent. The higher levels of market interest rates will benefit certain interest earning assets on our balance sheet and are likely to provide us the opportunity to reinvest any excess cash, including normal repayments of loans and investments, at higher rates. Funding costs also increased during the third quarter 2022 and the early stages of the fourth quarter 2022, however at this time, we expect a continued benefit to our net interest income from the immediate repricing of certain earning assets and a degree of lag in ~~June 2021~~higher funding costs due to the current market and ~~(iv)~~our ability to manage the ~~overall lower cost~~balance sheet. While our outlook for our net interest income in the fourth quarter 2022 and beyond is positive, we cannot provide any assurances with respect to the future trajectory of ~~deposits. Our cost of total average deposits was 0.18 percent~~market interest rates or that our net interest margin or income will remain at the levels reported for the third quarter ~~2021 as compared to 0.21 percent for the second quarter 2021.~~

Looking forward, we expect moderate ongoing interest rate pressures on our net interest margin for the fourth quarter 2021 and beyond due to the low level of market rates and the potential negative impact on the overall yield on new and refinanced loan originations. However, we are also encouraged by the continued potential opportunity to selectively redeploy low yielding excess cash liquidity into new loans and investments during the fourth quarter 2021, as well as repay or reprice (at low costs) stated maturity deposits totaling approximately $3.3 billion with an average cost of 31 basis points scheduled to mature over the next 12-month period.2022.

5461

The following table reflects the components of net interest income for the three months ended September 30, ~~2021,~~2022, June 30, ~~2021~~2022 and September 30, ~~2020:~~2021:

Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and

Net Interest Income on a Tax Equivalent Basis


		Three Months Ended																			Three Months Ended
		September 30, 2021						June 30, 2021						September 30, 2020							September 30, 2022						June 30, 2022						September 30, 2021
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
		($ in thousands)																			($ in thousands)
Assets	Assets																			Assets
Interest earning assets:	Interest earning assets:																			Interest earning assets:
Loans (1)(2)	Loans (1)(2)	$	32,698,382	$	309,778	3.79	%	$	32,635,298	$	315,339	3.87	%	$	32,515,264	$	315,863	3.89	%	Loans (1)(2)	$	44,341,894	$	496,545	4.48	%	$	42,517,287	$	415,602	3.91	%	$	32,698,382	$	309,778	3.79	%
Taxable investments (3)	Taxable investments (3)	3,302,803		15,797		1.91		3,159,842		14,883		1.88		3,354,373		17,529		2.09		Taxable investments (3)	4,815,181		31,002		2.58		4,912,994		30,610		2.49		3,302,803		15,797		1.91
Tax-exempt investments (1)(3)	Tax-exempt investments (1)(3)	429,941		3,302		3.07		498,971		4,071		3.26		542,450		4,564		3.37		Tax-exempt investments (1)(3)	635,795		6,501		4.09		684,471		6,571		3.84		429,941		3,302		3.07
Interest bearing deposits with banks	Interest bearing deposits with banks	1,901,748		642		0.14		1,613,303		235		0.06		1,355,623		420		0.12		Interest bearing deposits with banks	738,372		3,996		2.16		776,478		1,569		0.81		1,901,748		642		0.14
Total interest earning assets	Total interest earning assets	38,332,874		329,519		3.44		37,907,414		334,528		3.53		37,767,710		338,376		3.58		Total interest earning assets	50,531,242		538,044		4.26		48,891,230		454,352		3.72		38,332,874		329,519		3.44
Allowance for credit losses	Allowance for credit losses	(346,437)						(350,388)						(309,382)						Allowance for credit losses	(486,747)						(428,193)						(346,437)
Cash and due from banks	Cash and due from banks	213,452						335,083						291,803						Cash and due from banks	426,796						426,187						213,452
Other assets	Other assets	3,314,308						3,237,689						3,558,927						Other assets	4,499,739						4,362,789						3,314,308
Unrealized gains on securities available for sale, net	Unrealized gains on securities available for sale, net	29,733						31,661						47,679						Unrealized gains on securities available for sale, net	(112,724)						(40,591)						29,733
Total assets	Total assets	$	41,543,930					$	41,161,459					$	41,356,737					Total assets	$	54,858,306					$	53,211,422					$	41,543,930
Liabilities and shareholders’ equity	Liabilities and shareholders’ equity																			Liabilities and shareholders’ equity
Interest bearing liabilities:	Interest bearing liabilities:																			Interest bearing liabilities:
Savings, NOW and money market deposits	Savings, NOW and money market deposits	$	18,771,619	$	10,605	0.23	%	$	17,784,985	$	11,166	0.25	%	$	14,542,470	$	13,323	0.37	%	Savings, NOW and money market deposits	$	23,541,694	$	50,674	0.86	%	$	23,027,347	$	17,122	0.30	%	$	18,771,619	$	10,605	0.23	%
Time deposits	Time deposits	4,126,253		4,394		0.43		4,609,778		6,279		0.54		8,027,346		19,028		0.95		Time deposits	5,192,896		15,174		1.17		3,601,088		3,269		0.36		4,126,253		4,394		0.43
Total interest bearing deposits	Total interest bearing deposits	22,897,872		14,999		0.26		22,394,763		17,445		0.31		22,569,816		32,351		0.57		Total interest bearing deposits	28,734,590		65,848		0.92		26,628,435		20,391		0.31		22,897,872		14,999		0.26
Short-term borrowings	Short-term borrowings	860,474		1,464		0.68		873,927		1,168		0.53		1,533,246		2,588		0.68		Short-term borrowings	1,016,240		5,160		2.03		1,603,198		4,083		1.02		860,474		1,464		0.68
Long-term borrowings (4)	Long-term borrowings (4)	1,595,814		11,312		2.84		2,200,836		14,128		2.57		2,959,728		19,318		2.61		Long-term borrowings (4)	1,477,909		11,728		3.17		1,462,638		10,313		2.82		1,595,814		11,312		2.84
Total interest bearing liabilities	Total interest bearing liabilities	25,354,160		27,775		0.44		25,469,526		32,741		0.51		27,062,790		54,257		0.80		Total interest bearing liabilities	31,228,739		82,736		1.06		29,694,271		34,787		0.47		25,354,160		27,775		0.44
Non-interest bearing deposits	Non-interest bearing deposits	10,701,948						10,328,412						8,820,877						Non-interest bearing deposits	16,035,778						16,267,946						10,701,948
Other liabilities	Other liabilities	692,979						654,724						942,399						Other liabilities	1,337,022						1,010,220						692,979
Shareholders’ equity	Shareholders’ equity	4,794,843						4,708,797						4,530,671						Shareholders’ equity	6,256,767						6,238,985						4,794,843
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	41,543,930					$	41,161,459					$	41,356,737					Total liabilities and shareholders’ equity	$	54,858,306					$	53,211,422					$	41,543,930
Net interest income/interest rate spread (5)	Net interest income/interest rate spread (5)			$	301,744	3.00	%			$	301,787	3.02	%			$	284,119	2.78	%	Net interest income/interest rate spread (5)			$	455,308	3.20	%			$	419,565	3.25	%			$	301,744	3.00	%
Tax equivalent adjustment	Tax equivalent adjustment			(718)						(880)						(1,033)				Tax equivalent adjustment			(1,316)						(1,405)						(718)
Net interest income, as reported	Net interest income, as reported			$	301,026					$	300,907					$	283,086			Net interest income, as reported			$	453,992					$	418,160					$	301,026
Net interest margin (6)	Net interest margin (6)					3.14	%					3.18	%					3.00	%	Net interest margin (6)					3.59	%					3.42	%					3.14	%
Tax equivalent effect	Tax equivalent effect					0.01						—						0.01		Tax equivalent effect					0.01						0.01						0.01
Net interest margin on a fully tax equivalent basis (6)	Net interest margin on a fully tax equivalent basis (6)					3.15	%					3.18	%					3.01	%	Net interest margin on a fully tax equivalent basis (6)					3.60	%					3.43	%					3.15	%

5562

The following table reflects the components of net interest income for the nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Nine Months Ended													Nine Months Ended
		September 30, 2021						September 30, 2020							September 30, 2022						September 30, 2021
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
		($ in thousands)													($ in thousands)
Assets	Assets													Assets
Interest earning assets:	Interest earning assets:													Interest earning assets:
Loans (1)(2)	Loans (1)(2)	$	32,641,362	$	938,323	3.83	%	$	31,522,268	$	970,814	4.11	%	Loans (1)(2)	$	40,529,794	$	1,229,536	4.04	%	$	32,641,362	$	938,323	3.83	%
Taxable investments (3)	Taxable investments (3)	3,191,930		45,717		1.91		3,527,823		65,402		2.47		Taxable investments (3)	4,525,323		81,906		2.41	%	3,191,930		45,717		1.91
Tax-exempt investments (1)(3)	Tax-exempt investments (1)(3)	480,599		11,621		3.22		563,459		14,207		3.36		Tax-exempt investments (1)(3)	574,699		16,079		3.73	%	480,599		11,621		3.22
Interest bearing deposits with banks	Interest bearing deposits with banks	1,588,656		1,101		0.09		1,130,257		2,296		0.27		Interest bearing deposits with banks	975,601		6,026		0.82	%	1,588,656		1,101		0.09
Total interest earning assets	Total interest earning assets	37,902,547		996,762		3.51		36,743,807		1,052,719		3.82		Total interest earning assets	46,605,417		1,333,547		3.82	%	37,902,547		996,762		3.51
Allowance for credit losses	Allowance for credit losses	(348,011)						(283,508)						Allowance for credit losses	(428,078)						(348,011)
Cash and due from banks	Cash and due from banks	263,910						318,370						Cash and due from banks	378,819						263,910
Other assets	Other assets	3,290,439						3,492,846						Other assets	4,078,903						3,290,439
Unrealized gains on securities available for sale, net	Unrealized gains on securities available for sale, net	35,490						33,441						Unrealized gains on securities available for sale, net	(47,051)						35,490
Total assets	Total assets	$	41,144,375					$	40,304,956					Total assets	$	50,588,010					$	41,144,375
Liabilities and shareholders’ equity	Liabilities and shareholders’ equity													Liabilities and shareholders’ equity
Interest bearing liabilities:	Interest bearing liabilities:													Interest bearing liabilities:
Savings, NOW and money market deposits	Savings, NOW and money market deposits	$	17,730,438	$	32,896	0.25	%	$	13,834,930	$	64,463	0.62	%	Savings, NOW and money market deposits	$	22,374,949	$	77,423	0.46	%	17,730,438		32,896		0.25	%
Time deposits	Time deposits	4,853,891		21,766		0.60		8,501,949		91,699		1.44		Time deposits	4,122,169		21,274		0.69		4,853,891		21,766		0.60
Total interest bearing deposits	Total interest bearing deposits	22,584,329		54,662		0.32		22,336,879		156,162		0.93		Total interest bearing deposits	26,497,118		98,697		0.50		22,584,329		54,662		0.32
Short-term borrowings	Short-term borrowings	966,544		4,390		0.61		1,723,947		9,275		0.72		Short-term borrowings	1,072,791		10,049		1.25		966,544		4,390		0.61
Long-term borrowings (4)	Long-term borrowings (4)	2,037,312		40,595		2.66		2,873,912		53,240		2.47		Long-term borrowings (4)	1,472,344		31,566		2.86		2,037,312		40,595		2.66
Total interest bearing liabilities	Total interest bearing liabilities	25,588,185		99,647		0.52		26,934,738		218,677		1.08		Total interest bearing liabilities	29,042,253		140,312		0.64		25,588,185		99,647		0.52
Non-interest bearing deposits	Non-interest bearing deposits	10,147,130						7,995,759						Non-interest bearing deposits	14,679,354						10,147,130
Other liabilities	Other liabilities	690,100						902,012						Other liabilities	996,667						690,100
Shareholders’ equity	Shareholders’ equity	4,718,960						4,472,447						Shareholders’ equity	5,869,736						4,718,960
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	41,144,375					$	40,304,956					Total liabilities and shareholders’ equity	$	50,588,010					$	41,144,375
Net interest income/interest rate spread (5)	Net interest income/interest rate spread (5)			$	897,115	2.99	%			$	834,042	2.74	%	Net interest income/interest rate spread (5)			$	1,193,235	3.18	%			$	897,115	2.99	%
Tax equivalent adjustment	Tax equivalent adjustment			(2,515)						(3,058)				Tax equivalent adjustment			(3,414)						(2,515)
Net interest income, as reported	Net interest income, as reported			$	894,600					$	830,984			Net interest income, as reported			$	1,189,821					$	894,600
Net interest margin (6)	Net interest margin (6)					3.15	%					3.02	%	Net interest margin (6)					3.40	%					3.15	%
Tax equivalent effect	Tax equivalent effect					0.01	%					0.01	%	Tax equivalent effect					0.01						0.01
Net interest margin on a fully tax equivalent basis (6)	Net interest margin on a fully tax equivalent basis (6)					3.16	%					3.03	%	Net interest margin on a fully tax equivalent basis (6)					3.41	%					3.16	%

_____________

(1)Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.

(2)Loans are stated net of unearned income and include non-accrual loans.

(3)The yield for securities that are classified as available for sale is based on the average historical amortized cost.

(4)Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated

statements of financial condition.

(5)Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.

(6)Net interest income as a percentage of total average interest earning assets.

5663

The following table demonstrates the relative impact on net interest income of changes in the volume of interest earning assets and interest bearing liabilities and changes in rates earned and paid by us on such assets and liabilities. Variances resulting from a combination of changes in volume and rates are allocated to the categories in proportion to the absolute dollar amounts of the change in each category.

Change in Net Interest Income on a Tax Equivalent Basis


		Three Months Ended September 30, 2021 Compared to September 30, 2020						Nine Months Ended September 30, 2021 Compared to September 30, 2020							Three Months Ended September 30, 2022 Compared to September 30, 2021						Nine Months Ended September 30, 2022 Compared to September 30, 2021
		Change Due to Volume		Change Due to Rate		Total Change		Change Due to Volume		Change Due to Rate		Total Change			Change Due to Volume		Change Due to Rate		Total Change		Change Due to Volume		Change Due to Rate		Total Change
		(in thousands)													(in thousands)
Interest Income:	Interest Income:													Interest Income:
Loans*	Loans*	$	1,771	$	(7,856)	$	(6,085)	$	33,667	$	(66,158)	$	(32,491)	Loans*	$	123,594	$	63,173	$	186,767	$	236,972	$	54,241	$	291,213
Taxable investments	Taxable investments	(266)		(1,466)		(1,732)		(5,809)		(13,876)		(19,685)		Taxable investments	8,660		6,546		15,206		22,185		14,004		36,189
Tax-exempt investments*	Tax-exempt investments*	(889)		(373)		(1,262)		(2,022)		(564)		(2,586)		Tax-exempt investments*	1,891		1,308		3,199		2,474		1,984		4,458
Interest bearing deposits with banks	Interest bearing deposits with banks	182		40		222		697		(1,892)		(1,195)		Interest bearing deposits with banks	(624)		3,978		3,354		(581)		5,506		4,925
Total increase (decrease) in interest income		798		(9,655)		(8,857)		26,533		(82,490)		(55,957)
Total increase in interest income														Total increase in interest income	133,521		75,005		208,526		261,050		75,735		336,785
Interest Expense:	Interest Expense:													Interest Expense:
Savings, NOW and money market deposits	Savings, NOW and money market deposits	3,234		(5,952)		(2,718)		14,669		(46,236)		(31,567)		Savings, NOW and money market deposits	3,323		36,745		40,068		10,350		34,177		44,527
Time deposits	Time deposits	(6,860)		(7,774)		(14,634)		(29,613)		(40,320)		(69,933)		Time deposits	1,392		9,388		10,780		(3,529)		3,037		(492)
Short-term borrowings	Short-term borrowings	(1,144)		20		(1,124)		(3,606)		(1,279)		(4,885)		Short-term borrowings	309		3,387		3,696		531		5,128		5,659
Long-term borrowings and junior subordinated debentures	Long-term borrowings and junior subordinated debentures	(9,548)		1,542		(8,006)		(16,428)		3,783		(12,645)		Long-term borrowings and junior subordinated debentures	(874)		1,290		416		(11,929)		2,900		(9,029)
Total decrease in interest expense		(14,318)		(12,164)		(26,482)		(34,978)		(84,052)		(119,030)
Total increase in net interest income		$	15,116	$	2,509	$	17,625	$	61,511	$	1,562	$	63,073
Total increase (decrease) in interest expense														Total increase (decrease) in interest expense	4,150		50,810		54,960		(4,577)		45,242		40,665
Total increase (decrease) in net interest income														Total increase (decrease) in net interest income	$	129,371	$	24,195	$	153,566	$	265,627	$	30,493	$	296,120

*Interest income is presented on a tax equivalent basis using 21 percent as the federal tax rate.

Non-Interest Income

Non-interest income ~~decreased $6.8~~increased $13.8 million and ~~$18.7~~$37.2 million for the three and nine months ended September 30, ~~2021~~2022, respectively, as compared to the same periods of ~~2020.~~2021. The following table presents the components of non-interest income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Trust and investment services $ 3,550 $ 3,068 $ 10,411 $ 9,307
Insurance commissions 1,610 1,816 5,805 5,426
Service charges on deposit accounts 5,428 3,952 15,614 13,189
Gains (losses) on securities transactions, net 787 (46) 1,263 (127)
Fees from loan servicing 2,894 2,551 8,980 7,526
Gains on sales of loans, net 6,442 13,366 20,016 26,253
Gains on sales of assets, net 344 894 380 716
Bank owned life insurance 2,018 (1,304) 6,824 7,661
Other 19,358 24,975 47,497 65,548
Total non-interest income $ 42,431 $ 49,272 $ 116,790 $ 135,499
2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Wealth management and trust fees	$	9,281	$	3,550	$	23,989	$	10,411
Insurance commissions	3,750		1,610		9,072		5,805
Service charges on deposit accounts	10,338		5,428		26,617		15,614
Gains (losses) on securities transactions, net	323		787		(1,058)		1,263
Fees from loan servicing	3,138		2,894		8,636		8,980
Gains on sales of loans, net	922		6,442		5,510		20,016

Bank owned life insurance	1,681		2,018		5,840		6,824
Other	26,761		19,702		75,391		47,877
Total non-interest income	$	56,194	$	42,431	$	153,997	$	116,790

5764

~~Service charges on deposits accounts~~Wealth management and trust fees income increased by ~~$1.5~~$5.7 million and ~~$2.4~~$13.6 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the same periods in ~~2020,~~2021 mostly due to ~~a decline in waived~~brokerage fees ~~largely related to COVID-19 customer relief efforts during~~resulting from the ~~second~~acquisition of Bank Leumi USA and ~~third quarters of 2020.~~

its wholly owned broker dealer subsidiary now legally named Valley Financial Management, In

~~Net gains on sales of loans decreased $6.9~~c. The brokerage fees totaled $3.9 million and ~~$6.2~~$9.3 million for the three and nine months ended September 30, ~~2021,~~2022, respectively. The increases in both 2022 periods were also supplemented by additional revenues generated by our advisory firm, Dudley Ventures, LLC, specializing in the investment and management of tax credit investments, which we acquired in October 2021.

Insurance commissions increased $2.1 million and $3.3 million for the three and nine months ended September 30, 2022, respectively, as compared to the same periods in 2021 mostly due to stronger business volumes generated by the Bank's insurance agency subsidiary.

Service charges on deposit accounts increased by $4.9 million and $11.0 million for the three and nine months ended September 30, 2022, respectively, as compared to the same periods in 2021 largely related to revenues resulting from deposit accounts acquired from Bank Leumi USA.

Net losses on securities transactions of ~~2020.~~ $1.1 million for the nine months ended September 30, 2022 were mostly due to net trading losses related to our trading municipal bond portfolio.

Net gains on sales of loans for each period are comprised of both gains on sales of residential mortgages and the net change in the mark to market gains and losses on our loans originated for sale and carried at fair value at each reporting period end. ~~The net losses from the change in the fair value~~Net gains on sales of loans ~~held for sale totaled $403 thousand and $10.4 million~~ ~~for the three and nine months ended September 30, 2021, respectively, as compared to net gains of~~ ~~$4.3~~decreased $5.5 million and ~~$8.3~~$14.5 million for the three and nine months ended September 30, ~~2020, respectively. During~~2022, respectively, as compared to the same periods of 2021. The third quarter ~~2021,~~2022 decrease was mostly due to lower loan sale volumes as we sold approximately ~~$234.6~~$48.4 million of residential mortgage loans as compared to ~~$301.2~~$234.6 million during the third quarter ~~2020.~~2021. The mark to market change on loans held for sale at fair value resulted in net losses totaling $116 thousand and $403 thousand for the three months ended September 30, 2022 and2021, respectively, and $3.4 million and $10.4 million for the nine months ended September 30, 2022 and2021, respectively. Our ability to generate net gains on sales of loans could continue to be challenged by a number of factors, including increases in market interest rates, lower customer demand for conforming loan products and our decision to originate certain residential mortgage loans for investment in our loan portfolio rather than sale. See further discussion of our residential mortgage loan origination activity under the “Loan Portfolio” section of this MD&A below.

~~Bank owned life insurance income increased~~$3.3 million for the three months ended September 30, 2021 as compared to the same period in 2020. The increase was attributable to a mortality contingency reserve adjustment recorded in third quarter 2020.

Other non-interest income ~~decreased $5.6~~increased $7.1 million and ~~$18.1~~$27.5 million for the three and nine months ended September 30, ~~2021, respectively,~~2022 as compared to the same periods in ~~2020 primarily~~2021, respectively, partially due to ~~lower~~higher fee income ~~related to~~from derivative interest rate swaps executed with commercial lending customers caused by ~~lower transaction volumes.~~a greater volume of transactions and higher foreign exchange fees. Swap fee ~~income~~income totaled ~~$8.8~~$10.7 million and ~~$19.2~~$8.8 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$22.6~~$35.8 million and ~~$48.1~~$22.6 million for the nine months ended September 30, ~~2021~~2022 and 2021, respectively. While we believe our commercial loan swap based product will remain attractive to borrowers in the current interest rate environment, we can provide no assurance that our swap fees will remain at the level reported for the third quarter 2022. Foreign exchange fees totaled $1.5 million and $4.0 million~~2020,~~ three and nine months ended September 30, 2022, respectively. Foreign exchange fees for the respective reporting periods in 2021 were not material.

~~Non-Interest Expense~~

Non-Interest Expense

Non-interest expense increased ~~$14.7~~$86.7 million and ~~$34.0~~$251.7 million for the three and nine months ended September 30, ~~2021, respectively,~~2022 as compared to the same periods ~~of 2020.~~in 2021, respectively. The following table presents the components of non-interest expense for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Salary and employee benefits expense	$	134,572	$	93,992	$	397,103	$	273,190
Net occupancy expense	26,486		19,941		70,906		59,171
Technology, furniture and equipment expense	39,365		21,007		115,245		64,956
FDIC insurance assessment	6,500		3,644		16,009		10,294
Amortization of other intangible assets	11,088		5,298		26,925		16,753
Professional and legal fees	17,840		13,492		62,998		27,250
Loss on extinguishment of debt	—		—		—		8,406
Amortization of tax credit investments	3,105		3,079		9,194		8,795
Other	22,683		14,469		60,329		38,213
Total non-interest expense	$	261,639	$	174,922	$	758,709	$	507,028

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Salary and employee benefits expense $ 93,992 $ 83,626 $ 273,190 $ 247,886
Net occupancy and equipment expense 32,402 31,116 97,112 96,774
FDIC insurance assessment 3,644 4,847 10,294 14,858
Amortization of other intangible assets 5,298 6,377 16,753 18,528
Professional and legal fees 13,492 8,762 27,250 22,646
Loss on extinguishment of debt — 2,353 8,406 2,353
Amortization of tax credit investments 3,079 2,759 8,795 9,403
Telecommunications expense 2,615 2,094 8,507 7,247
Other 20,400 18,251 56,721 53,312
Total non-interest expense $ 174,922 $ 160,185 $ 507,028 $ 473,007

Salary and employee benefits expense increased ~~$10.4~~$40.6 million and ~~$25.3~~$123.9 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the same periods of ~~2020~~2021. The increases in both 2022 periods were primarily due to strategic increases in our headcount to enhance lending and operations (including additions to staff due to the Bank Leumi USA and Westchester acquisitions), and increases in our branch compensation to preserve staffing and service levels, and to keep pace with the increases in wage demand across the industry. In addition,

~~higher cash~~ salary and ~~stock-based incentive compensation accruals and health insurance costs also contributed to the increases in both periods.~~

~~FDIC insurance assessment~~employee benefits expense ~~decreased $1.2~~included approximately $1.3 million and ~~$4.6 million~~ $29.3 million of merger related expenses for the three and nine months ended September 30, ~~2021,~~2022, respectively. The merger expenses, primarily consisted of change in control and severance payments, related to Bank Leumi USA during the second quarter 2022.

Net occupancy expense increased $6.5 million and $11.7 million for the three and nine months ended September 30, 2022, respectively, as compared to the same periods of ~~2020 mostly~~2021 mainly due to higher lease expense, depreciation expense and repair and maintenance costs, as well as $1.5 million of merger related expense for the ~~Bank's~~ ~~improved capital position~~third quarter 2022.

Technology, furniture and ~~overall risk profile.~~

~~Professional and legal fees~~equipment expense increased ~~$4.7~~$18.4 million and ~~$4.6~~$50.3 million forfor the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the same periods of ~~2020.~~2021. The increases are largely driven by higher data processing costs related to the acquisitions of Bank Leumi USA and Westchester and additional investments in technology and equipment, and higher depreciation expense. Within this expense category, merger related costs totaled $1.8 million and $17.1 million for the three and nine months ended September 30, 2022, respectively.

FDIC insurance assessment expense increased $2.9 million and $5.7 million for the three and nine months ended September 30, 2022, respectively, as compared to the same periods of 2021 mainly due to the Bank Leumi USA acquisition, as well as our balance sheet organic growth.

Amortization of other intangible assets increased $5.8 million and $10.2 million for the three and nine months ended September 30, 2022, respectively, as compared to the same period of 2021 mostly due to additional core deposit and other intangible assets resulting from the Bank Leumi USA acquisition. See Notes 2 and 9 to the consolidated financial statements for additional information.

Professional and legal fees increased $4.3 million and $35.7 million for the three and nine months ended September 30, 2022, respectively, as compared to the same periods of 2021. The increases were ~~largely attributable~~primarily due to ~~a $2.1 million accrual for general litigation reserves, $1.3 million of~~

higher consulting expense mainly related to technology transformation and new product initiatives, and increased managed services. Within this expense category, merger related ~~fees, as~~ ~~well as increased consulting expenses~~ ~~duri~~ngcosts totaled $75 thousand and $11.5 million for the three and nine months ended September 30, ~~2021.~~ ~~Higher consulting expenses mostly related to our technology transformation efforts and new product initiatives.~~2022, respectively.

Loss on extinguishment of debt totaled $8.4 million for the nine months ended September 30, 2021 reflecting the

prepayment of approximately $248 million of long-term FHLB advances during the second quarter 2021. ~~The loss on extinguishment of debt totaling $2.4 million during the three and nine months ended September 30, 2020 was~~

related to the prepayment of $50 million of long-term institutional repo borrowings. All the prepayments were funded by excess cash liquidity at the Bank. See Note 10 to the consolidated financial statements for additional information regarding our borrowed funds.

Other non-interest expense increased ~~$2.1~~$8.2 million and ~~$3.4~~$22.1 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the same periods of ~~2020.~~ 2021. These increases ~~were largely due~~within this expense category mostly related to ~~higher data processing costs, OREO related expenses as well as~~ incrementally higher operating expenses ~~in several categories~~ due to the expansion of our ~~operations.~~

~~See Notes 9~~operations, including acquisitions of Bank Leumi USA and 14Westchester. In addition, the 2022 periods included a $2.0 million contribution to the ~~consolidated financial statements for information regarding the amortization of other intangible assets and tax credit investments, respectively.~~

~~Efficiency Ratio~~

The efficiency ratio measures total non-interest expense as a percentage of net interest income plus total non-interest income. We believe this non-GAAP measure provides a meaningful comparison of our operational performance and facilitates investors’ assessments of business performance and trends in comparison to our peers in the banking industry. Our overall efficiency ratio, and its comparability to some of our peers, is negatively impacted primarily by the amortization of tax credit investments, as well as infrequent charges within non-interest income and expense, including, but not limited to loss on extinguishment of debt, litigation reserves and merger related expenses.

~~The following table presents our efficiency ratio and a reconciliation of the efficiency ratio adjusted for certain items during the three and nine months ended September 30, 2021 and 2020:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
($ in thousands)
Total non-interest expense $ 174,922 $ 160,185 $ 507,028 $ 473,007
Less: Loss on extinguishment of debt (pre-tax) — 2,353 8,406 2,353
Less: Amortization of tax credit investments (pre-tax) 3,079 2,759 8,795 9,403
Less: Litigation reserve (a)
2,100 — 2,100 —
Less: Merger related expenses (pre-tax) (a)
1,287 106 1,287 1,774
Total non-interest expense, adjusted $ 168,456 $ 154,967 $ 486,440 $ 459,477
Net interest income $ 301,026 $ 283,086 $ 894,600 $ 830,984
Total non-interest income 42,431 49,272 116,790 135,499
Add: (Gains) losses on available for sale and held to maturity securities transactions, net (pre-tax) (b)
(788) 46 (557) 127
Total net interest income and non-interest income $ 342,669 $ 332,404 $ 1,010,833 $ 966,610
Efficiency ratio 50.93 % 48.20 % 50.13 % 48.94 %
Efficiency ratio, adjusted 49.16 % 46.62 % 48.12 % 47.53 %

~~(a)~~ ~~Included in professional and legal fees.~~

~~(b)~~ ~~Included in gains on securities transactions, net.~~

Valley Bank Charitable Fund.

Income Taxes

Income tax expense totaled ~~$42.4~~$68.4 million for the third quarter ~~2021~~2022 as compared to ~~$42.9~~$36.6 million and ~~$38.9~~$42.4 million for the second quarter ~~2021~~2022 and third quarter ~~2020, respectively, and $124.6 million and $101.5 million for the nine months ended September 30,~~ 2021, ~~and 2020,~~ respectively. Our effective tax rate was ~~25.7~~27.7 percent, ~~26.2~~27.5 percent and ~~27.5~~25.7 percent for the third quarter ~~2021,~~2022, second quarter ~~2021~~2022 and third quarter ~~2020,~~2021, respectively. The ~~decrease~~increase in the effective tax rate in the third quarter ~~2021~~2022 as compared to the ~~second~~third quarter 2021 ~~and the third quarter 2020~~ was ~~mainly~~partly due to ~~the increase in~~a $3.8 million excess stock compensation ~~benefit.~~

benefit recognized in the 2021 period.

U.S. GAAP requires that any change in judgment or change in measurement of a tax position taken in a prior annual period be recognized as a discrete event in the quarter in which it occurs, rather than being recognized as a change in effective tax rate for the current year. Our adherence to these tax guidelines may result in volatile effective income tax rates in future quarterly and annual periods. Factors that could impact management’s judgment include changes in income, tax laws and regulations, and tax planning strategies. ~~For~~Based on the ~~remainder of 2021,~~current information available, we ~~currently estimate~~anticipate that our effective tax rate will range from 2527 percent to ~~27 percent.~~29 percent for the remainder of 2022, exclusive of pending potential tax rate increases.

~~Business~~Operating Segments

~~We have~~Prior to the second quarter 2022, Valley operated as four ~~business segments that we monitor~~reportable segments: Consumer Lending, Commercial Lending, Investment Management, and ~~report~~Corporate and Other Adjustments. Valley re-evaluated its segment reporting during the second quarter 2022 to consider the Bank Leumi USA acquisition on ~~to manage our business operations. These segments are consumer lending, commercial lending, investment management, and corporate and~~April 1, 2022 along with other ~~adjustments. Our reportable segments have been determined based upon Valley’s~~factors, including changes in the internal structure of operations, discrete financial information reviewed by key decision-makers, balance sheet management strategies and ~~lines~~personnel. As a result, Valley determined it operated reportable segments consisting of ~~business.~~Consumer Lending, Commercial Lending and Treasury and Corporate Other at June 30, 2022. Treasury and Corporate Other was reorganized to consolidate Treasury and other corporate-wide functions, including the Treasury managed investment securities portfolios and overnight interest earning cash balances formerly reported under Investment Management. The discrete financial information related to the activities previously reported in the Investment Management segment is no longer provided to Valley's CEO, who is the chief operating decision maker. Each ~~business~~operating segment is reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Expenses related to the branch network, all other components of retail banking, along with the back office departments of the Bank are allocated from the corporate and other adjustments segment to each of the other three business segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each business segment utilizing a transfer pricing methodology, which

involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets and/or liabilities outstanding for the period. The financial reporting for each segment contains allocationsValley regularly assesses its strategic plans, operations, and reporting ~~in line with our operations, which may not necessarily be comparable~~structures to ~~any other financial institution.~~ identify its reportable segments. There were no additional changes to Valley's reportable segments at September 30, 2022.

The accounting for each segment includes internal accounting policies designed to measure consistent and reasonable financial reporting and may result in income and expense measurements that differ from amounts under U.S. GAAP. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. The prior-period balances reflect reclassifications to conform the presentation in those periods to the current operating segment structure. Valley's consolidated results were not impacted by the changes discussed above and remain unchanged for all periods presented.

The following tables present the financial data for ~~each business segment~~Valley's operating segments for the three months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30, 2021															Three Months Ended September 30, 2022
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,373,897		$	25,324,485		$	5,634,492		$	—	$	38,332,874		Average interest earning assets	$	8,307,993		$	36,033,901		$	6,189,348		$	50,531,242
Income (loss) before income taxes		37,132			141,927			2,846			(16,901)		165,004
Income before income taxes																Income before income taxes	20,137			255,802			(29,415)			246,524
Annualized return on average interest earning assets (before tax)	Annualized return on average interest earning assets (before tax)	2.01		%	2.24		%	0.20		%	N/A		1.72		%	Annualized return on average interest earning assets (before tax)	0.97		%	2.84		%	(1.90)		%	1.95		%


		Three Months Ended September 30, 2020															Three Months Ended September 30, 2021
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,126,157		$	25,389,107		$	5,252,446		$	—	$	37,767,710		Average interest earning assets	$	7,373,897		$	25,324,485		$	5,634,492		$	38,332,874
Income (loss) before income taxes	Income (loss) before income taxes	34,565			121,351			1,066			(15,717)		141,265			Income (loss) before income taxes	37,132			141,927			(14,055)			165,004
Annualized return on average interest earning assets (before tax)	Annualized return on average interest earning assets (before tax)	1.94		%	1.91		%	0.08		%	N/A		1.50		%	Annualized return on average interest earning assets (before tax)	2.01		%	2.24		%	(1.00)		%	1.72		%

See Note 15 to the consolidated financial statements for additional ~~information.~~details.

Consumer Lending

~~This consumer lending segment~~Consumer Lending represented ~~22.3~~18.7 percent of our loan portfolio at September 30, ~~2021,~~2022, and was mainly comprised of residential mortgage loans and automobile loans, and to a lesser extent, home equity loans, secured personal lines of credit and other consumer loans (including credit card loans). The duration of the residential mortgage loan portfolio (which represented ~~13.3~~11.5 percent of our loan portfolio at September 30, ~~2021)~~2022) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans (representing ~~4.8~~3.8 percent of total loans at September 30, ~~2021)~~2022) is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. ~~The consumer lending segment~~Consumer Lending also includes the Wealth Management and Insurance Services Division, comprised of trust, asset management, brokerage, insurance and ~~insurance~~tax credit advisory services.

Average interest earning assets in ~~this segment~~Consumer Lending increased $934.1 million~~$247.7 million~~ to ~~$7.4~~$8.3 billion for the three months ended September 30, ~~2021~~2022 as compared to the third quarter ~~2020.~~2021. The increase was ~~largely~~mostly due to ~~loan growth from origination of~~ new residential mortgage ~~loans and automobile loans~~loan volumes originated for investment rather than sale over ~~most of~~ the last 12-month ~~period.~~

period, as well as growth in automobile loans and secured personal lines of credit. Loans acquired from Bank Leumi USA on April 1, 2022 and Westchester on December 1, 2021 did not materially impact this operating segment.

Income before income taxes generated by ~~the consumer lending segmen~~Consumer Lending ~~t increased $2.6~~decreased $17.0 million to $~~37.1~~20.1 million for the third quarter ~~2021~~2022 as compared to the third quarter ~~2020~~2021 largely due to a ~~$10.0~~$11.8 million ~~decrease~~increase in the provision for loan losses, ~~and lower non-interest expense, partially offset by~~ a ~~$11.7 million decrease in non-interest income~~

~~coupled with a $2.0~~$5.6 million increase in the internal transfer expense and higher non-interest expense. The ~~decrease of $11.7 million~~higher internal transfer expense and non-interest expense was mostly driven by general increases related to organic growth in ~~non-interest income was partly due to a $6.9 million decrease in net gains on sales of loans for~~our retail business and the ~~three months ended September 30, 2021.~~ recent bank acquisitions. The ~~decrease~~increase in the provision for loan losses was mainly due to higher quantitative reserves for residential mortgage loans, loan growth, and qualitative reserve allocations related to Hurricane Ian in this category. The negative impact of these items was partially offset by a $7.8 million increase in non-interest income for the ~~improvement in the economic forecast component of the allowance for loan losses at September 30, 2021~~third quarter 2022 as compared to ~~September 30, 2020. See further details~~the third quarter 2021 largely due to increases in ~~the "Allowance for Credit Losses" section of this MD&A.~~service charges on deposit accounts and brokerage fees within wealth management and trust fees, partially offset by

lower gains on sales of residential mortgage loans. The net interest income also increased by a $3.4 million in the third quarter 2022 as compared to the same quarter in the prior year, mainly driven by higher average loan balances.

The net interest margin on the ~~consumer lending~~Consumer Lending portfolio decreased 1116 basis points to ~~2.97~~2.81 percent for the third quarter ~~2021~~2022 as compared to the third quarter ~~2020~~2021 mainly due to a 4037 basis point ~~decrease in the yield on average loans, partially offset by a 29 basis point decrease~~increase in the costs associated with our funding ~~sources. The 40~~sources, partially offset by a 21 basis point ~~decrease~~increase in ~~loan~~the yield ~~was largely due to lower yielding new loan volumes and normal loan repayments.~~on average loans. The ~~decrease~~increase in our funding costs was mainly due to ~~continued runoff of higher cost time~~the rising market interest rate environment, additional funding sourced through brokered deposits and FHLB advances for loan growth and a shift in some customer ~~migration~~preference to the interest-bearing deposit products from non-interest bearing during the third quarter 2022. The 21 basis point increase in loan yield was largely due to higher yielding new loan volumes and normal repayments of lower ~~cost deposits without stated maturities and lower rates offered on deposit products.~~yielding loans over the last 12-month period. See the "Executive Summary" and the "Net Interest Income" sections above for more details on our net interest margin and funding sources.

Commercial Lending

~~The commercial lending segment~~Commercial Lending is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate characteristics, ~~commercial lending~~Commercial Lending is Valley’s business segment that is most sensitive to movements in market interest rates. Commercial and industrial loans totaled approximately ~~$5.6~~$8.7 billion and represented ~~17.3~~19.2 percent of the total loan portfolio at September 30, ~~2021.~~2022. Commercial real estate loans and construction loans totaled ~~$19.7~~$28.1 billion and represented ~~60.4~~62.1 percent of the total loan portfolio at September 30, ~~2021.~~

2022.

Average interest earning assets in this segment ~~decreased~~increased approximately $~~64.6 million~~10.7 billion to ~~$25.3~~$36.0 billion for the three months ended September 30, ~~2021~~2022 as compared to the third quarter ~~2020~~2021 mostly due to ~~commercial~~acquired loans from Bank Leumi USA and ~~industrial PPP loans which were paid off (forgiven), largely offset by~~Westchester and strong new organic loan originations primarily concentrated in the commercial real estate loan portfolio. The increases were partially offset by continued run-off of commercial and industrial PPP loans, which totaled only $85.8 million at September 30, 2022 as compared to $874.0 million at September 30, 2021, due to SBA loan forgiveness.

~~For~~Income before income taxes for the three months ended September 30, ~~2021, income before income taxes~~2022 for ~~the commercial lending segment~~Commercial Lending increased ~~$20.6~~$113.9 million to ~~$141.9~~$255.8 million as compared to the third quarter ~~2020~~2021. The increase was mainly driven by ~~a $18.5 million increase~~increases in both net interest income and ~~a $17.5 million decrease in the~~ non-interest income and lower provision for loan losses, partially offset by ~~lower non-interest income~~ an increase in the internal~~and higher internal~~ transfer expense.Net interest income for this segment increased $135.6 million to ~~$237.1~~$372.6 million for the third quarter ~~2021~~2022 as compared to the same period in ~~2020~~2021 primarily due to ~~lower funding costs. The provision for~~additional income generated on higher average loan ~~losses decreased by $17.5 million mainly due to the improvement in the economic forecast component of the allowance for~~balances and loan ~~losses as compared to September 30, 2020.~~yield. Non-interest income ~~decreased $8.8~~increased $11.9 million to ~~$11.6~~$23.5 million for the three months ended September 30, ~~2021~~2022 as compared to the third quarter ~~2020 mainly~~2021. The increase was mostly due to ~~a $10.4 million decrease~~general increases in service charges on commercial deposit accounts, swap fee income ~~related to~~from derivative interest rate swaps executed with commercial loan ~~customers.~~customers, foreign exchange fees and fee income from commercial letters of credit. The provision for loan losses decreased by $13.5 million as compared to the second quarter 2021. See details in the "Allowance for Credit Losses for Loans" section of this MD&A. Internal transfer expense increased ~~$4.8~~$42.8 million for the third quarter ~~2021~~2022 as compared to the third quarter ~~2020 partly~~2021 due to general increases related to both organic and acquired growth in our business.

The net interest margin for this segment increased 2840 basis points to ~~3.74~~4.14 percent for the third quarter ~~2021~~2022 as compared to the third quarter ~~2020~~2021 due to a 2977 basis point ~~decrease~~increase in the yield on average loans, partially offset by a 37 basis point increase in the cost of our funding ~~sources, which was marginally offset by a 1 basis point decrease~~sources.

Treasury and Corporate Other

Treasury and Corporate Other largely consists of the Treasury managed held to maturity and available for sale debt securities portfolios mainly utilized in the ~~yield on average loans.~~

I~~nvestment Management~~

~~The investment~~liquidity management ~~segment generates a large portion~~needs of our lending segments and income and expense items resulting from support functions not directly attributable to a specific segment. Interest income is generated through investments in various types of securities (mainly comprised of fixed rate securities) and interest-bearing deposits with other ~~banks. These investments are mainly comprised of fixed rate securities and, depending on our liquid cash position, federal funds sold and interest-bearing deposits with~~ banks (primarily the Federal Reserve Bank of New York) ~~as part~~. Expenses related to the branch network, all other components of ~~our asset/liability management strategies. The fixed~~

~~rate investments are one of Valley’s least sensitive assets to changes in market interest rates. However, a portion~~retail banking, along with the back office departments of the investment portfolio is invested in shorter-duration securities to maintain the overall asset sensitivity of our balance sheet. See the “Asset/Liability Management” section below for further analysis.Bank are

6269

allocated from Treasury and Corporate Other to the Consumer Lending and Commercial Lending segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each business segment utilizing a transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets and/or liabilities outstanding for the period. Other items disclosed in this segment include net gains and losses on available for sale and held to maturity securities transactions, interest expense related to subordinated notes, amortization (and impairment) of tax credit investments, as well as other non-core items, including merger expenses.

Average interest earning assets in this segment increased ~~$382.0~~$554.9 million during the ~~third quarter 2021 as compared to the third quarter 2020~~three months ended September 30, 2022 mainly due to an increase of $1.5 billion in average taxable investment securities, partially offset by lower a ~~$546.1 million~~verage interest bearing deposits with banks. The increase in the average investment securities balance was mainly due to $1.3 billion of investment securities acquired from Bank Leumi USA. Average interest bearing deposits with banks ~~partially offset by a $164.1 million decrease~~decreased $1.2 billion as compared to the same period in ~~average investment securities. The increase in overnight investments and deposits with other banks was largely~~2021 mainly due to ~~our~~continued funding of loan growth, fluctuations in the timing of loan and investment activity and surge deposits from customers that drove higher levels of excess liquidity during the third quarter 2021 as we continued to experience a surge in customer deposits. The decrease in average investment securities was mainly driven by principal repayments on securities with a slower rate of reinvestment activity due to the low interest rate environment and our preference to fund loan growth. However, average investments did increase $73.9 million as compared to the linked second quarter 2021 as we modestly increased our investment purchases in the third quarter 2021.

During the second quarter 2021, income before income taxes for the investment management segment increased $1.8 million to $2.8 million as compared to $1.1 million for the third quarter 2020 mostly due to an increase in both net interest income and non-interest income, partially offset by higher internal transfer expense. The increase in net interest income totaled $753 thousand and was mainly due to the decreased cost of funding, partially offset by lower yields on our investments securities and lower average investment balances. Non-interest income increased $3.3 million in the third quarter 2021 as compared to the third quarter 2020 mainly due to higher bank owned life insurance income. See the "Non-Interest Income" section for more details.

~~The net interest margin~~pre-tax loss for this segment decreased 2 basis points to 1.18 percent for the third quarter 2021 as compared to the same quarter in 2020 largely due to a 31 basis point decrease in the yield on average investments, partially offset by a 29 basis point decrease in our cost of funding. The decrease in the yield on average investments as compared to the third quarter 2020 was largely driven by the lower yielding investment securities and the higher average holdings in low yielding overnight cash investments.

~~Corporate and other adjustments~~

The amounts disclosed as “corporate and other adjustments” represent income and expense items not directly attributable to a specific segment, including net securities gains and losses not reported in the investment management segment above, interest expense related to subordinated notes, amortization and impairment of tax credit investments, as well as non-core items, including merger expenses.

~~The corporate segment recognized~~ ~~pre-tax losses of $16.9 million and $15.7~~totaled $29.4 million for the three months ended September 30, ~~2021 and 2020, respectively.~~2022 as compared to a $14.1 million for the same period in 2021. The ~~$1.2~~$15.4 million increase in the pre-tax loss ~~for~~during the ~~third quarter 2021~~2022 period was mainly ~~driven by the $19.2 million increase~~due to increases in non-interest expense ~~largely caused~~that were partially offset by ~~higher salaries and employee benefits~~an increase in internal transfer income. Non-interest expense ~~and professional and legal fees for~~increased $71.6 million to $205.5 million during the three months ended September 30, ~~2021. These items were partially offset by~~2022 as compared to the same period a year ago largely due to increases ~~of $10.3 million~~in technology, furniture and ~~$8.9 million in non-interest income~~equipment, and ~~internal transfer income, respectively.~~ occupancy expense, as well as higher salaries and employee benefit expenses incurred during the third quarter 2022 and our expanded banking operations resulting from the Bank Leumi USA acquisition. See further details in the "Non-Interest Income" and "Non-Interest Expense" sections of this MD&A. The internal transfer income increased by $48.4 million to $140.2 million for the three months ended September 30, 2022 as compared to the same period a year ago mostly due to general increases related to our growth and recent acquisitions.

The net interest margin for this segment increased 88 basis points to 2.01 percent for the for the third quarter 2022 as compared to the third quarter 2021 due to a 125 basis point increase in the yield on average investments, partially offset by a 37 basis point increase in cost of our funding sources. The increase in the yield on average investments as compared to the third quarter 2021 was largely due to investment maturities and prepayments redeployed into new higher yielding securities, as well as lower premium amortization expense caused by a decline in prepayments on mortgage-backed securities during the third quarter 2022.

The following tables present the financial data for ~~each business~~Valley's operating segment for the nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Nine Months Ended September 30, 2021															Nine Months Ended September 30, 2022
		Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total				Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
		($ in thousands)															($ in thousands)
Average interest earning assets	Average interest earning assets	$	7,176,086		$	25,465,276		$	5,261,185		$	—	$	37,902,547		Average interest earning assets	$	7,978,732		$	32,551,062		$	6,075,623		$	46,605,417
Income (loss) before income taxes		104,308			411,712			9,149			(41,741)		483,428
Income before income taxes																Income before income taxes	56,796			519,640			(40,905)			535,531
Annualized return on average interest earning assets (before tax)	Annualized return on average interest earning assets (before tax)	1.94		%	2.16		%	0.23		%	N/A		1.70		%	Annualized return on average interest earning assets (before tax)	0.95		%	2.13		%	(0.90)		%	1.53		%

Nine Months Ended September 30, 2020
Consumer
Lending Commercial
Lending Investment
Management Corporate
and Other
Adjustments Total
($ in thousands)
Average interest earning assets $ 7,187,839 $ 24,334,429 $ 5,221,538 $ — $ 36,743,806
Income (loss) before income taxes 80,367 326,713 16,426 (36,777) 386,729
Annualized return on average interest earning assets (before tax) 1.49 % 1.79 % 0.42 % N/A 1.40 %


	Nine Months Ended September 30, 2021
	Consumer Lending			Commercial Lending			Treasury and Corporate Other			Total
	($ in thousands)
Average interest earning assets	$	7,176,086		$	25,465,276		$	5,261,185		$	37,902,547
Income (loss) before income taxes	104,308			411,712			(32,592)			483,428
Annualized return on average interest earning assets (before tax)	1.94		%	2.16		%	(0.83)		%	1.70		%

Consumer Lending

~~Average~~Consumer Lending's average interest earning assets ~~in this segment decreased $11.8~~increased $802.6 million to ~~$7.2~~$8.0 billion for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020.~~2021. The ~~decrease~~increase was largely due to ~~runoff from principal repayments with a higher percentage of~~ new ~~and refinanced~~residential mortgage ~~loans~~loan volumes originated for ~~sale~~investment rather than ~~held for investment~~sale over the last ~~12 month period. However,~~12-month period, as well as growth in automobile ~~loan demand, which was tempered during much~~loans and secured personal lines of ~~2020 due to the onset of the COVID-19 pandemic, was strong during the nine months ended September 30, 2021 due to built up demand for auto purchases by consumers.~~credit.

Income before income taxes generated by ~~the consumer lending segment increased $23.9~~Consumer Lending decreased $47.5 million to ~~$104.3~~$56.8 million for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020~~2021 largely due to a ~~lower~~$32.5 million increase in the internal transfer expense coupled with a higher provision for loan losses and higher non-interest ~~expense, and an increase in net interest income.~~expense. The provision for loan losses ~~decreased $21.8 million to a credit (negative) provision of $6.5~~increased $21.0 million for the nine months ended September 30, ~~2021~~2022 from ~~a $15.3~~$6.5 million credit (negative) provision for the same period of ~~2020.~~2021. The ~~lower~~increase in provision was mainly due to ~~the improved economic forecast component of the allowance for~~higher reserves related to residential loan ~~losses as compared to September 30, 2020, as well as better actual loan performance within these loan categories.~~growth. See further details in the "Allowance for Credit Losses" section of this MD&A. Net interest income increased ~~$4.7~~$9.5 million primarily due to ~~the lower funding costs, which were~~additional income generated on higher average loan balances. Non-interest income also increased $3.1 million mostly due to increases in wealth management and trust fees and service charges on deposit accounts caused by our recent acquisitions, partially offset by lower loan yields, as well as the modest decline in average interest earning assets. The higher net interest income was partially offset by a $7.9 million decrease in non-interest income, which was largely attributable to lower net gains on sales of residential mortgage loans for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020.~~2021.

~~The net~~Net interest margin on the ~~consumer lending~~Consumer Lending portfolio ~~increased 10~~decreased 15 basis points to ~~3.04~~2.89 percent for the nine months ended September 30, ~~2021~~2022 as compared to the same period one year ago mainly due to a ~~46 basis point decrease in the costs associated with our funding sources, partially offset by a 36~~10 basis point decrease in the yield on average ~~loans. The decrease~~loans and a 5 basis point increase in the costs associated with our funding ~~costs was mainly due to a greater mix of non-interest bearing deposits, deposits continuing to reprice at lower interest rates and the repayment of maturing higher cost borrowings.~~sources. The 3610 basis point decrease in loan yield was largely due to lower yielding new loan volumes prior to the second quarter 2022 and normal loan repayments.

The increase in our funding costs was mainly
due to higher interest rates on most of our interest bearing deposit products, including brokered deposits, a lower mix of non-interest bearing deposits, and higher cost short-term borrowings due to the rising interest rate environment in 2022.

Commercial Lending

Average interest earning assets in ~~this segment~~Commercial Lending increased ~~$1.1~~$7.1 billion to ~~$25.5~~$32.6 billion for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020.~~2021. This increase was ~~mainly~~primarily due to ~~PPP~~strong organic loan ~~originations during~~growth over the ~~last 12 months,~~12-month period ended September 30, 2022, as well as ~~organic commercial real estate loan growth during the nine months ended September 30, 2021.~~loans acquired from Bank Leumi USA and Westchester.

For the nine months ended September 30, ~~2021,~~2022, income before income taxes for ~~the commercial lending segment~~Commercial Lending increased ~~$85.0~~$107.9 million to ~~$411.7~~$519.6 million as compared to the same period in ~~2020~~2021 mainly driven by ~~an increase in~~increases net interest income and ~~a lower~~ non-interest income, partially offset by higher internal transfer expense and provision for loan losses. Net interest income increased ~~$67.8~~$248.3 million to ~~$703.6~~$951.9 million for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020 largely~~2021 mainly due to ~~lower funding costs and the~~ higher average commercial loan balances and loan yield during the ~~current~~2022 period. The provision for credit losses decreased $63.0 million to $27.8 million during the nine months ended September 30, 2021 as compared to $90.8 million for the same period in 2020. The decrease in the provision for loan losses was mainly due to an improvement in the economic forecast component of the allowance for loan losses and other qualitative factors related to the COVID-19 pandemic as compared to September 30, 2020. See the "Allowance for Credit Losses" section below for further details. The positive impa~~ct of the aforementioned items was partially offset by a decrease in non-interest income, as well as higher non-interest expense and~~ ~~internal transfer expense.~~ Non-interest income ~~decreased $23.0~~increased $25.7 million for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020 primarily~~2021 mainly due to a ~~$25.5~~$13.2 million ~~decrease~~increase in fee income related to derivative interest rate swaps executed with commercial loan ~~customers.~~customers, a $4.0 million increase in foreign exchange fees and higher service charges on commercial deposit accounts. Internal transfer expense increased ~~$15.5~~$158.3 million to ~~$212.9~~ $371.2

million for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020.~~2021 largely due to the significant acquired and organic expansion of our operations over the last 12-month period. The provision for credit losses increased $6.8 million to $34.6 million during the nine months ended September 30, 2022 as compared to $27.8 million for the same period in 2021 mainly due to the provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA on April 1, 2022. See the "Allowance for Credit Losses for Loans" section below for further details.

The net interest margin for this segment increased 2022 basis points to ~~3.68~~3.90 percent for the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020~~2021 due to a 4627 basis point ~~decrease~~increase in yield on average loans, partially offset by a 5 basis point increase in the cost of our funding ~~sources, partially offset by a 26 basis point decrease in yield on average loans.~~sources.

I~~nvestment Management~~

~~Average~~Treasury and Corporate Other

Treasury and Corporate Other's average interest earning assets ~~in this segment~~ increased ~~$39.6~~$814.4 million during the nine months ended September 30, ~~2021~~2022 as compared to the same period in ~~2020.~~2021. Within the category, a ~~$458.4~~$1.3 billion increase in taxable investment securities was partially offset by a $613.1 million ~~increase~~decrease in average interest bearing deposits with ~~banks was largely offset by $418.8 million decrease in average investment securities.~~banks. The increase in ~~our~~average taxable investment securities was mainly due to $1.3 billion of investment securities acquired from Bank Leumi USA. The lower levels of excess liquidity ~~held in overnight interest bearing deposits with banks was~~were mainly ~~caused by~~due to the strong ~~deposits~~organic loan growth over the last 12-month period and ~~management's lower rate~~a reduction in the impact of ~~reinvestment in investment securities for most of~~surge customer deposits as compared to the ~~same~~2021 period.

~~For~~The pre-tax loss for this segment totaled $40.9 million for the nine months ended September 30, ~~2021, income before income taxes~~2022 as compared to $32.6 million for the ~~investment management segment decreased $7.3~~same period in 2021. The $8.3 million increase in pre-tax loss was mainly due to an increase in non-interest expense largely offset by higher in internal transfer income and net interest income. Non-interest expense increased $244.1 million to ~~$9.1~~$617.7 million for the nine months ended September 30, 2022 as compared to the same period in ~~2020 mainly~~2021 partially due to ~~decreases~~a $62.6 million increase in merger related expenses, as well as other additional expenses related to our expanded banking operations and organic business growth. However, the comparative 2021 period also included an $8.4 million pre-tax loss on extinguishment of debt. See further details in the ~~net interest~~"Non-Interest Income" and "Non-Interest Expense" sections of this MD&A. Internal transfer income ~~and non-interest income and a higher internal expense transfer. The negative impact of these items was partially offset by a decline in the provision for credit losses for held~~increased $190.8 million to ~~maturity debt securities from a $688 thousand provision~~$463.8 million for the nine months ended September 30, ~~2020~~2022 as compared to ~~a credit~~the same period in 2021 due to the higher allocation of ~~$353 thousand~~non-interest expense over the same period.

Treasury and Corporate Other's net interest margin increased 74 basis points to 1.87 percent for the nine months ended September 30, ~~2021.~~

~~The net interest margin for this segment decreased~~15~~basis points to 1.19 percentfor the nine months ended September 30, 2021~~2022 as compared to the same period in ~~2020 largely~~2021 due to a 6179 basis point ~~decrease~~increase in the yield on average investments, ~~partially offset by~~and a 465 basis point ~~decrease~~increase in ~~costs associated with~~cost of our funding sources. The ~~decrease~~increase in the yield on average investments as compared to the same period in 2021 was largely driven by new higher yielding investments and lower premium amortization expense caused, in part, by slower principal repayments in the rising interest rate environment of ~~2020 was mainly due to lower yielding investment securities and excess liquidity held in low yielding overnight investments.~~

~~Corporate and other adjustments~~

The pre-tax net loss for the corporate segment totaled $41.7 million for the nine months ended September 30, 2021 as compared to $36.8 million for the same period in 2020. The negative change of $5.0 million was mainly due to an increase in non-interest expense, partially offset by higher internal transfer income and greater non-interest

~~income. Non-interest expense increased $33.3 million to $372.2 million for the nine months ended September 30, 2021 as compared to the same period in 2020 partially due to~~ ~~increases in salaries and employee benefits expenses, professional and legal fees and the~~ l~~oss on extinguishment of debt during the current period as compared to prior.~~ ~~Internal transfer income increased $18.5 million to $316.7 million for the nine months ended September 30, 2021 as compared to the same period in 2020.~~2022.

ASSET/LIABILITY MANAGEMENT

Interest Rate Sensitivity

Our success is largely dependent upon our ability to manage interest rate risk. Interest rate risk can be defined as the exposure of our interest rate sensitive assets and liabilities to the movement in interest rates. Our Asset/Liability Management Committee is responsible for managing such risks and establishing policies that monitor and coordinate our sources and uses of funds. Asset/Liability management is a continuous process due to the constant change in interest rate risk factors. In assessing the appropriate interest rate risk levels for us, management weighs the potential benefit of each risk management activity within the desired parameters of liquidity, capital levels and management’s tolerance for exposure to income fluctuations. Many of the actions undertaken by management utilize fair value analysis and attempt to achieve consistent accounting and economic benefits for financial assets and their related funding sources. We have predominantly focused on managing our interest rate risk by attempting to match the inherent risk and cash flows of financial assets and liabilities. Specifically, management employs multiple risk management activities such as optimizing the level of new residential mortgage originations retained

in our mortgage portfolio through increasing or decreasing loan sales in the secondary market, product pricing levels, the desired maturity levels for new originations, the composition levels of both our interest earning assets and interest bearing liabilities, as well as several other risk management activities.

We use a simulation model to analyze net interest income sensitivity to movements in interest rates. The simulation model projects net interest income based on various interest rate scenarios over a 12-month and 24-month period. The model is based on the actual maturity and re-pricing characteristics of rate sensitive assets and liabilities. The model incorporates certain assumptions which management believes to be reasonable regarding the impact of changing interest rates and the prepayment assumptions of certain assets and liabilities as of September 30, ~~2021.~~2022. The model assumes immediate changes in interest rates without any proactive change in the composition or size of the balance sheet, or other future actions that management might undertake to mitigate this risk. In the model, the forecasted shape of the yield curve remains static as of September 30, ~~2021.~~2022. The impact of interest rate derivatives, such as interest rate swaps, is also included in the model.

Our simulation model is based on market interest rates and prepayment speeds prevalent in the market as of September 30, ~~2021.~~2022. Although the size of Valley’s balance sheet is forecasted to remain static as of September 30, ~~2021~~2022 in our model, the composition is adjusted to reflect new interest earning assets and funding originations coupled with rate spreads utilizing our actual originations during the third quarter ~~2021.~~2022. The model also utilizes an immediate parallel shift in market interest rates at September 30, ~~2021.~~

2022.

The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the table below due to the frequency and timing of changes in interest rates and changes in spreads between maturity and re-pricing categories. Overall, our net interest income is affected by changes in interest rates and cash flows from our loan and investment portfolios. We actively manage these cash flows in conjunction with our liability mix, duration and interest rates to optimize the net interest income, while structuring the balance sheet in response to actual or potential changes in interest rates. Additionally, our net interest income is impacted by the level of competition within our marketplace. Competition can negatively impact the level of interest rates attainable on loans and increase the cost of deposits, which may result in downward pressure on our net interest margin in future periods. Other factors, including, but not limited to, the slope of the yield curve and projected cash flows will impact our net interest income results and may increase or decrease the level of asset sensitivity of our balance sheet.

Convexity is a measure of how the duration of a financial instrument changes as market interest rates change. Potential movements in the convexity of bonds held in our investment portfolio, as well as the duration of the loan portfolio may have a positive or negative impact on our net interest income in varying interest rate environments. As a result, the increase or decrease in forecasted net interest income may not have a linear relationship to the results reflected in the table below. Management cannot provide any assurance about the actual effect of changes in interest rates on our net interest income.

The following table reflects management’s expectations of the change in our net interest income over the next 12- month period considering the aforementioned assumptions. While an instantaneous and severe shift in interest rates was used in this simulation model, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest impact than shown in the table below.

Estimated Change in
Future Net Interest Income
Changes in Interest Rates Dollar
Change Percentage
Change
(in basis points) ($ in thousands)
+200 $ 104,613 8.88 %
+100 52,462 4.45
–100 (54,113) (4.59)
–200 (78,513) (6.66)


	Estimated Change in Future Net Interest Income
Changes in Interest Rates	Dollar Change		Percentage Change
(in basis points)	($ in thousands)
+300	$	343,087	17.72	%
+200	231,412		11.95
+100	117,300		6.06
–100	(109,262)		(5.64)
–200	(233,970)		(12.08)
–300	(378,853)		(19.57)

As noted in the table above, a 100 basis point immediate increase in interest rates combined with a static balance sheet where the size, mix, and proportions of assets and liabilities remain unchanged is projected to increase net interest income over the next ~~12 month~~12-month period by ~~4.45~~6.06 percent. Management believes the interest rate sensitivity of our balance sheet remains within an acceptable tolerance range at September 30, ~~2021.~~2022. However, the level of net interest income sensitivity may increase or decrease in the future as a result of several factors, including potential changes in our balance sheet strategies, the slope of the yield curve and projected cash flows.

Liquidity and Cash Requirements

Bank Liquidity

Liquidity measures the ability to satisfy current and future cash flow needs as they become due. A bank’s liquidity reflects its ability to meet loan demand, to accommodate possible outflows in deposits and to take advantage of interest rate opportunities in the marketplace. Liquidity management is carefully performed and routinely reported by our Treasury Department to two board committees. Among other actions, Treasury reviews historical funding requirements, our current liquidity position, sources and stability of funding, marketability of assets, options for attracting additional funds, and anticipated future funding needs, including the level of unfunded commitments. Our goal is to maintain sufficient liquidity to cover current and potential funding requirements.

The Bank has no required regulatory liquidity ratios to maintain; however, it adheres to an internal liquidity policy. The current policy maintains that we may not have a ratio of loans to deposits in excess of 110 percent or reliance on wholesale funding greater than 25 percent of total funding. The Bank was in compliance with the foregoing policies at September 30, ~~2021.~~

2022.

Valley's short and long-term cash requirements include contractual obligations under borrowings, deposits, payment related to leases, capital expenditures and other purchase commitments. In the ordinary course of operations, the Bank also enters into various financial obligations, including contractual obligations that may require future cash payments. Management believes the Bank has the ability to generate and obtain adequate amounts of cash to meet its short-term and long-term obligations as they come due by utilizing various cash resources described below.

On the asset side of the balance sheet, the Bank has numerous sources of liquid funds in the form of cash and due from banks, interest bearing deposits with banks (including the Federal Reserve Bank of New York), investment

securities held to maturity that are maturing within 90 days or would otherwise qualify as maturities if sold (i.e., 85 percent of original cost basis has been repaid), investment securities classified as trading and available for sale, loans held for sale, and from time to time, federal funds sold and receivables related to unsettled securities transactions. Total liquid assets were approximately ~~$3.0~~$2.6 billion, representing ~~7.9~~5.2 percent of earning assets at September 30, ~~2021~~2022 and ~~$3.1~~$3.5 billion, representing ~~8.3~~8.7 percent of earning assets at December 31, ~~2020.~~2021. Of the ~~$3.0~~$2.6 billion of liquid assets at September 30, ~~2021,~~2022, approximately ~~$547.5~~$348 million of various investment securities were pledged to counterparties to support our earning asset funding strategies. We anticipate the receipt of approximately ~~$747~~$310 million in principal payments from securities in the total investment portfolio at September 30, 2022 over the

next ~~12 month~~12-month period due to normally scheduled principal repayments and expected prepayments of certain securities, primarily residential mortgage-backed securities.

Additional liquidity is derived from scheduled loan payments of principal and interest, as well as prepayments received. Loan principal payments ~~(including~~from total loans and loans held for sale at September 30, ~~2021)~~2022 are projected in accordance with their scheduled contractual terms to be approximately ~~$10.4~~$11.2 billion over the next ~~12 month~~12-month period. As a contingency plan for any liquidity constraints, liquidity could also be derived from the sale of conforming residential mortgages from our loan portfolio or alleviated from the temporary curtailment of lending activities.

On the liability side of the balance sheet, we utilize multiple sources of funds to meet liquidity needs, including retail and commercial deposits, brokered and municipal deposits, and short-term and long-term borrowings. Our core deposit base, which generally excludes fully insured brokered deposits and both retail and brokered certificates of deposit over $250 thousand, represents the largest of these sources. Average core deposits totaled approximately ~~$29.2~~$37.9 billion and ~~$25.8~~$29.4 billion for the nine months ended September 30, ~~2021~~2022 and for the year ended December 31, ~~2020,~~2021, respectively, representing ~~77.6~~81.4 percent and ~~69.8~~78.3 percent of average earning assets for the respective periods. The level of interest bearing deposits is affected by interest rates offered, which is often influenced by our need for funds and the need to match the maturities of assets and liabilities.

Additional funding may be provided through deposit gathering networks and in the form of federal funds purchased through our ~~well established~~well-established relationships with numerous banks. While these lending lines are uncommitted, management believes that the Bank could borrow approximately ~~$1.5~~$2.1 billion from these banks on a collective basis. The Bank is also a member of the Federal Home Loan Bank of New York (FHLB) and has the ability to borrow from them in the form of FHLB advances secured by pledges of certain eligible collateral, including but not limited to U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgage and commercial real estate loans. Additionally, Valley's collateral pledged to the FHLB may be used to obtain Municipal Letters of Credit (MULOC) to collateralize certain municipal deposits held by Valley. At September 30, ~~2021,~~2022, Valley ~~had $1.0~~had $1.6 billion of MULOCs ~~outstanding~~outstanding for this purpose. Furthermore, we can obtain overnight borrowings from the Federal Reserve Bank of New York via the discount window as a contingency for additional liquidity. At September 30, ~~2021,~~2022, our borrowing capacity ~~(excluding added capacity available to us by pledging PPP loans)~~ under the Federal Reserve Bank's discount window was ~~$1.8~~$2.1 billion.

We also have access to other short-term and long-term borrowing sources to support our asset base, such as repos (i.e., securities sold under agreements to repurchase). Short-term borrowings (consisting of FHLB advances, repos, and from time to time, federal funds purchased) ~~decreased~~increased approximately ~~$364.6~~$263.6 million to ~~$783.3~~$919.3 million at September 30, ~~2021~~2022 as compared to December 31, ~~2020~~2021 mainly due ~~to normal~~a higher utilization of FHLB ~~advance repayments.~~advances, partially offset by lower repo balances at September 30, 2022.

Corporation Liquidity

Valley’s recurring cash requirements primarily consist of dividends to preferred and common shareholders and interest expense on subordinated notes and junior subordinated debentures issued to capital trusts. As part of our ~~on-going~~ongoing asset/liability management strategies, Valley could also use cash to repurchase shares of its outstanding common stock under its share repurchase program or redeem its callable junior subordinated debentures and subordinated notes. Valley's cash needs are routinely satisfied by dividends collected from the Bank. Projected cash flows from the Bank are expected to be adequate to pay preferred and common dividends, if declared, and interest

expense payable to subordinated note holders and capital trusts, given the current capital levels and current profitable operations of the Bank. In addition to dividends received from the Bank, Valley can satisfy its cash requirements by utilizing its own cash and potential new funds borrowed from outside sources or capital issuances. Valley also has the right to defer interest payments on the junior subordinated debentures, and therefore distributions on its trust preferred securities for consecutive quarterly periods up to five years, but not beyond the stated maturity dates, and subject to other conditions.

During the second quarter 2021, Valley redeemed $60 million of callable subordinated notes and issued $300 million of 3.00 percent subordinated notes. See Note 10 to the consolidated financial statements for additional information.

Investment Securities Portfolio

As of September 30, ~~2021,~~2022, we had ~~$36.1~~$43.3 million, ~~$4.8 million, $1.2~~$1.3 billion, and ~~$2.6~~$3.7 billion in equity, ~~trading debt,~~ available for sale and held to maturity debt securities, respectively. ~~Our~~There were $4.1 million of trading debt securities ~~portfolio wholly consists~~at September 30, 2022 consisting of investment grade municipal ~~bonds.~~bonds and U.S. Treasury securities. The equity securities consisted of ~~one~~two publicly traded mutual ~~fund,~~funds, CRA investments and several other equity investments we have made in companies that develop new financial technologies and in ~~a partnership~~partnerships that ~~invests~~invest in such companies. Our CRA and other equity investments are a ~~mixture~~mix of both publicly traded entities and privately held entities. ~~Held to maturity and~~The available for sale and held to maturity debt securities portfolios, which comprise the majority of the securities we own, include U.S. Treasury securities, U.S. government agency securities, tax-exempt and taxable issuances of states and political subdivisions, residential mortgage-backed securities, single-issuer trust preferred securities principally issued by bank holding companies, and high quality corporate bonds. Among other securities, our available for sale debt securities include securities such as bank issued and other corporate bonds, as well as municipal special revenue bonds, ~~that~~which may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential negative effect on the future performance of the security issuers.

~~There were no~~We acquired $6.2 million, $505.9 million, and $806.6 million of equity securities, ~~in the name of any one issuer exceeding 10 percent of shareholders’ equity, except~~available for ~~residential mortgage-backed~~sale debt and held to maturity debt securities, ~~issued by Ginnie Mae and Fannie Mae. Certain securities with limited marketability and/or restrictions, such as Federal Home Loan~~respectively, from Bank ~~and Federal Reserve Bank stocks, are carried at cost and are included in other assets.~~Leumi USA on April 1, 2022.

Allowance for Credit Losses and Impairment Analysis

Available for sale debt securities. Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive ~~income,~~loss, net of applicable taxes.

We have evaluated all available for sale debt securities that are in an unrealized loss position as of September 30, 2022 and December 31, 2021 and determined that the declines in fair value ~~are~~were mainly attributable to changes in market volatility, due to factors such as interest rates and spread factors, but not attributable to credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management recognized no impairment charges during the three and nine months ended September 30, ~~2021~~2022 and asthe year ended December 31, 2021. As a result, there was no allowance for credit losses for available for sale debt securities at September 30, ~~2021. There was no allowance for credit losses for available for sale debt securities at~~2022 and December 31, ~~2020.~~

2021.

Held to maturity debt securities. Valley estimates the expected credit losses on held to maturity debt securities that have loss expectations using a discounted cash flow model developed by a third party. Valley has a ~~zero loss~~zero-loss expectation for certain securities within the held to maturity portfolio, including U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and

collateralized municipal ~~bonds, which are excluded from~~bonds. To measure the ~~model.~~expected credit losses on held to maturity debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third party. Assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. Held to maturity debt securities were carried net of an allowance for credit losses totaling ~~$1.1~~approximately $1.7 million and ~~$1.4~~$1.2 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There were no net charge-offs of held to maturity debt securities for the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~

2021.

Investment grades. The investment grades in the table below reflect the most current independent analysis performed by third parties of each security as of the date presented and not necessarily the investment grades at the

date of our purchase of the securities. For many securities, the rating agencies may not have performed an independent analysis of the tranches owned by us, but rather an analysis of the entire investment pool. For this and other reasons, we believe the assigned investment grades may not accurately reflect the actual credit quality of each security and should not be viewed in isolation as a measure of the quality of our investment portfolio.

The following table presents the held to maturity and available for sale debt securities portfolios by investment grades at September 30, ~~2021:~~2022:


		September 30, 2021									September 30, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		(in thousands)									(in thousands)
Available for sale investment grades: *	Available for sale investment grades: *									Available for sale investment grades: *
AAA Rated	AAA Rated	$	1,016,325	$	23,138	$	(2,483)	$	1,036,980	AAA Rated	$	1,116,870	$	116	$	(137,597)	$	979,389
AA Rated	AA Rated	63,001		339		(722)		62,618		AA Rated	152,126		—		(38,172)		113,954
A Rated	A Rated	6,173		89		—		6,262		A Rated	10,066		15		(984)		9,097
BBB Rated	BBB Rated	29,313		891		—		30,204		BBB Rated	84,667		—		(8,132)		76,535
Non-investment grade		4,996		42		—		5,038

Not rated	Not rated	64,982		2,244		(51)		67,175		Not rated	101,092		—		(8,213)		92,879
Total	Total	$	1,184,790	$	26,743	$	(3,256)	$	1,208,277	Total	$	1,464,821	$	131	$	(193,098)	$	1,271,854
Held to maturity investment grades: *	Held to maturity investment grades: *									Held to maturity investment grades: *
AAA Rated	AAA Rated	$	2,260,843	$	30,971	$	(18,015)	$	2,273,799	AAA Rated	$	3,290,361	$	258	$	(498,324)	$	2,792,295
AA Rated	AA Rated	159,468		3,862		(129)		163,201		AA Rated	252,632		7		(25,167)		227,472
A Rated	A Rated	12,512		389		—		12,901		A Rated	9,297		2		(204)		9,095
BBB Rated	BBB Rated	6,000		418		—		6,418		BBB Rated	6,000		—		(317)		5,683
Non-investment grade	Non-investment grade	5,595		—		(75)		5,520		Non-investment grade	5,517		—		(1,061)		4,456
Not rated	Not rated	139,985		224		(5,737)		134,472		Not rated	158,213		17		(10,579)		147,651
Total	Total	$	2,584,403	$	35,864	$	(23,956)	$	2,596,311	Total	$	3,722,020	$	284	$	(535,652)	$	3,186,652
Allowance for credit losses										Allowance for credit losses	1,696		—		—		1,696
Total, net of allowance for credit losses										Total, net of allowance for credit losses	$	3,720,324	$	284	$	(535,652)	$	3,184,956


*			Rated using external rating agencies. Ratings categories include the entire range. For example, “A rated” includes A+, A, and A-. Split rated securities with two ratings are categorized at the higher of the rating levels.

The unrealized losses in the AAA and AA rated ~~category~~categories of both the held to maturity and available for sale debt securities portfolios (in the above table) ~~are~~were mainly related to residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and ~~Fannie Mae.~~Freddie Mac and continued to be driven by the rising interest rate environment during the third quarter 2022. The investment securities held to maturity portfolio included ~~$140.0~~$158.2 million of investments not rated by the rating agencies with aggregate unrealized losses of ~~$5.7~~$10.6 million at September 30, ~~2021~~2022 mostly related to four single-issuer bank trust preferred issuances with a combined amortized cost of $36.0 ~~million.~~million and several corporate and other debt securities.

See Note 7 to the consolidated financial statements for additional information regarding our ~~investments~~investment securities portfolio.

7077

Loan Portfolio

The following table reflects the composition of the loan portfolio as of the dates presented:


		September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020				September 30, 2022			June 30, 2022			December 31, 2021
		($ in thousands)																($ in thousands)
Loans	Loans																Loans
Commercial and industrial:	Commercial and industrial:																Commercial and industrial:
Commercial and industrial	Commercial and industrial	$	4,761,227		$	4,733,771		$	4,784,017		$	4,709,569		$	4,625,880		Commercial and industrial	$	8,615,557		$	8,378,454		$	5,411,601
Commercial and industrial PPP loans	Commercial and industrial PPP loans	874,033			1,350,684			2,364,627			2,152,139			2,277,465			Commercial and industrial PPP loans	85,820			136,004			435,950
Total commercial and industrial *	Total commercial and industrial *	5,635,260			6,084,455			7,148,644			6,861,708			6,903,345			Total commercial and industrial *	8,701,377			8,514,458			5,847,551
Commercial real estate:	Commercial real estate:																Commercial real estate:
Commercial real estate	Commercial real estate	17,912,070			17,512,142			16,923,627			16,724,998			16,815,587			Commercial real estate	24,493,445			23,535,086			18,935,486
Construction	Construction	1,804,580			1,752,838			1,786,331			1,745,825			1,720,775			Construction	3,571,818			3,374,373			1,854,580
Total commercial real estate	Total commercial real estate	19,716,650			19,264,980			18,709,958			18,470,823			18,536,362			Total commercial real estate	28,065,263			26,909,459			20,790,066
Residential mortgage	Residential mortgage	4,332,422			4,226,975			4,060,492			4,183,743			4,284,595			Residential mortgage	5,177,128			5,005,069			4,545,064
Consumer:	Consumer:																Consumer:
Home equity	Home equity	402,658			410,856			409,576			431,553			457,083			Home equity	467,135			431,455			400,779
Automobile	Automobile	1,563,698			1,531,262			1,444,883			1,355,955			1,341,659			Automobile	1,711,086			1,673,482			1,570,036
Other consumer	Other consumer	956,126			938,926			912,863			913,330			892,542			Other consumer	1,063,775			1,026,854			1,000,161
Total consumer loans	Total consumer loans	2,922,482			2,881,044			2,767,322			2,700,838			2,691,284			Total consumer loans	3,241,996			3,131,791			2,970,976
Total loans*	Total loans*	$	32,606,814		$	32,457,454		$	32,686,416		$	32,217,112		$	32,415,586		Total loans*	$	45,185,764		$	43,560,777		$	34,153,657
As a percent of total loans:	As a percent of total loans:																As a percent of total loans:
Commercial and industrial	Commercial and industrial	17.3		%	18.7		%	21.9		%	21.3		%	21.3		%	Commercial and industrial	19.2		%	19.5		%	17.1		%
Commercial real estate	Commercial real estate	60.4			59.4			57.2			57.3			57.2			Commercial real estate	62.1			61.8			60.9
Residential mortgage	Residential mortgage	13.3			13.0			12.4			13.0			13.2			Residential mortgage	11.5			11.5			13.3
Consumer loans	Consumer loans	9.0			8.9			8.5			8.4			8.3			Consumer loans	7.2			7.2			8.7
Total	Total	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	Total	100.0		%	100.0		%	100.0		%

* Includes net unearned discount and deferred loan fees of ~~$73.0~~$136.5 million, ~~$86.1 million, $108.6 million, $95.8~~$141.2 million, and ~~$116.2~~$78.5 million at September 30, ~~2021,~~2022, June 30, ~~2021, March~~2022, and December 31, 2021, respectively. The increases from December 31, ~~2020, and September 30, 2020, respectively. Net unearned discounts and deferred loan fees included $27.6~~2021 were largely due to a $98 million ~~$40.9 million, $57.2 million, $43.2 million and $54.4 million of~~ net ~~unearned fees related~~purchase discount associated with the loans acquired from Bank Leumi USA on April 1, 2022.

Loans increased $1.6 billion to ~~PPP loans~~approximately $45.2 billion at September 30, ~~2021,~~2022 from June 30, ~~2021, March 31, 2021, December 31, 2020,~~2022 largely due to solid organic loan originations and ~~September 30, 2020, respectively.~~

slower paydown activity of existing loans. C
ommercial and industrial, total commercial real estate (including construction) and residential mortgage loans increased 9 percent, 17 percent and 14 percent, respectively, on an annualized basis during the third quarter 2022.

Commercial and industrial loans ~~decreased $449.2~~increased $186.9 million ~~or 29.5 percent on an annualized basis,~~ to ~~$5.6~~$8.7 billion at September 30, ~~2021~~2022 as compared to June 30, ~~2021 mostly due~~ ~~to $476.7 million of~~2022. Excluding PPP loans, ~~that were forgiven (i.e., repaid) during the third quarter 2021. As of~~ ~~September 30, 2021~~, nearly 100 percent of the PPP loan balances from the first two rounds of our funding under the SBA program have been forgiven. Valley expects the majority of the remaining $874 million of PPP loans on September 30, 2021 to qualify for forgiveness under the guidelines of the SBA program, which is expected to negatively impact our ability to grow the commercial and industrial loan ~~portfolio. Non-PPP~~organic growth totaled $237.1 million during the third quarter 2022 mainly due to solid organic loan volumes largely amongst our pre-existing long-term customer base across most of our primary market areas. In addition, the new loan pipeline was driven by direct calling efforts of our commercial ~~and industrial~~lending team. SBA Paycheck Protection Program (PPP) loans ~~modestly increased by~~decreased $50.2 million to $85.8 million at September 30, 2022 compared to $~~27.5~~136.0 million at ~~September 30, 2021 as compared to~~ June 30, ~~2021.~~2022 mainly due to loan forgiveness (repayments).

Commercial real estate loans (excluding construction loans) increased ~~$399.9 million, or 9.1 percent on an annualized basis,~~$1.0 billion to ~~$17.9~~$24.5 billion at September 30, ~~2021~~2022 from June 30, ~~2021~~ ~~reflecting~~2022 driven by solid organic growth mainly ~~due to strong demand for~~in the non-owner occupied ~~loans~~and multifamily loan portfolios. The new loan volumes were generated across most of our geographic ~~footprint driven by low interest rates.~~ footprints. Construction loans increased ~~$51.7~~$197.4 million to ~~$1.8~~$3.6 billion at September 30, ~~2021~~2022 from June 30, ~~2021 partially~~2022 mainly due to ~~higher demand for commercial~~a high volume of advances on new, and ~~residential~~to a lesser extent, pre-existing construction ~~projects.~~projects during the third quarter 2022.

Residential mortgage loans increased ~~$105.4~~$172.1 million, or ~~10.0~~13.8 percent on an annualized basis, during the third quarter ~~2021~~2022 primarily due to ~~continued strong origination of~~ new loan activity in the purchased home market and an increase in such loans originated for investment rather than sale. New and refinanced residential mortgage ~~loans totaling~~loan originations totaled $~~622.1~~342.9 millionfor the third quarter ~~2021~~2022 as compared to ~~$753.2~~$540.7 millionand ~~$540.2~~$622.1 million for the second quarter ~~2021~~2022 and third

quarter ~~2020,~~2021, respectively. Florida originations totaled ~~approximately $163~~$92.1 million and represented 2627 percent of total ~~originations.~~residential mortgage loan originations in the quarter. Of the total originations in the third quarter ~~2021, approximately $232.8~~2022, only $36.7 million of residential mortgage loans were originated for sale rather than held for investment as compared to ~~$253.9~~$61.9 million during the second quarter ~~2021.~~2022. During the third quarter ~~2021~~2022, we retained ~~over 60~~approximately 89 percent of the total residential mortgages originations in our held for investment loan portfolio. We sold approximately ~~$235~~$48.4 million of residential mortgage loans held for sale during the third quarter ~~2021 and~~2022. We may continue to ~~sell~~retain a ~~large portion~~higher percentage of ~~our~~ new ~~fixed rate residential mortgage~~ loan ~~originations~~volumes during the fourth quarter ~~2021 based upon normal~~2022 due to several factors, including consumer demand and preferences for certain mortgage products and our management of the interest rate risk and the mix of the interest earning assets on our balance sheet. Additionally, the volume of both new and refinanced loan applications have continued to decline in the early stages of the fourth quarter 2022 due to the increase in the level of mortgage interest rates and may challenge our ability to grow this loan category.

Home equity loans ~~decreased~~increased by ~~$8.2~~$35.7 million to ~~$402.7~~$467.1 million at September 30, ~~2021 from~~2022 compared to June 30, ~~2021. New~~2022. However, new home equity loan volumes and customer usage of existing home equity lines of credit continue to be modest ~~despite~~and we anticipate growth in this loan category to be challenged by the ~~favorable low~~unfavorable rising interest rate environment.

Automobile loans increased by ~~$32.4~~$37.6 million, or ~~8.5~~9.0 percent on an annualized basis, to ~~$1.6~~$1.7 billion at September 30, ~~2021~~2022 as compared to June 30, ~~2021. Consumer demand seen across the auto industry was solid~~2022 as loan originations volumes continued to outpace loan repayments during the ~~first half of 2021 but started to slow in~~third quarter 2022. However, loan originations slowed significantly during the third quarter ~~2021. We~~2022 as demand for new and used vehicle financing declined due to the higher interest rate environment. We originated ~~$201~~$196.6 million in auto loans through our dealership network during the third quarter ~~2021~~2022 as compared to ~~$251~~$278.2 million in the second quarter ~~2021.~~2022. Of the total originations, our Florida dealership network contributed ~~$30.4~~$33.7 million in auto loan originations, representing approximately 1517 percent of new loans, during the third quarter ~~2021. Strong auto~~2022. Despite increased new automobile inventories available to consumers, we anticipate that the impact of inflation on average new vehicle prices coupled with rising interest rates could have a negative impact on our ability to grow this loan ~~originations experienced in the first half of 2021 slowed~~category during ~~the third quarter 2021 due to inventory and auto part shortages caused by supply chain disruptions affecting auto industry. In the early stages of~~ the fourth quarter ~~2021, vehicle inventories are near record lows, driving prices higher. This trend may negatively impact our auto loan growth in fourth quarter 2021 and beyond.~~2022.

Other consumer loans increased ~~$17.2~~$36.9 million to ~~$956.1 million~~$1.1 billion at September 30, ~~2021 as compared to $938.9 million at~~2022 from June 30, ~~2021~~ ~~mainly due to higher new loan originations and consumer usage of collateralized personal lines of credit.~~2022.

~~Most~~A large part of our lending is in northern and central New Jersey, New York City, Long Island, ~~Florida~~ and ~~Alabama, except for smaller auto and residential mortgage loan portfolios derived from other neighboring states of New Jersey.~~Florida. To mitigate our geographic risks, we make efforts to maintain a diversified portfolio as to type of borrower and loan to guard against a potential downward turn in any one economic sector.

~~For~~

Despite the ~~remainder of 2021, we continue to believe that our non-PPP~~moderate decline in new loan ~~growth will remain strong. In the early stages of the fourth quarter 2021, we are encouraged that our loan origination pipelines remain robust. During~~originations for the third quarter ~~2021, approximately 57 percent of our~~2022, we anticipate solid organic commercial and industrial non-PPP and commercial real estate loan growth ~~came from~~to continue in the ~~New York and New Jersey market area.~~fourth quarter 2022. Based upon current projections, we anticipate a range of 8 to 10 percent annualized loan growth for the fourth quarter 2022. However, there can be no assurance that those positive trends will continue, or balances will not decline from September 30, ~~2021 given~~2022 due to several factors, including, but not limited to persistently high inflation, the ~~effects of the COVID-19 pandemic~~Federal Reserve's rapid monetary policy tightening, and the ~~potential for unforeseen changes in consumer confidence and~~ongoing negative impact of Russia-Ukraine war on the ~~economy,~~global economy. In addition, we anticipate that residential mortgage and other ~~market conditions and supply chain issues. We believe that many of our SBA PPP loans~~consumer loan activity will continue to ~~be forgiven~~slow meaningfully in the fourth quarter ~~2021 in accordance with the rules of this program resulting in further reduction in these loan balances.~~2022.

Non-performing Assets

Non-performing assets (NPA) include non-accrual loans, other real estate owned (OREO), and other repossessed assets (which primarily consists of automobiles and taxi medallions) at September 30, ~~2021.~~2022. Loans are generally placed on non-accrual status when they become past due in excess of 90 days as to payment of principal or interest. Exceptions to the non-accrual policy may be permitted if the loan is sufficiently collateralized and in the process of collection. OREO is acquired through foreclosure on loans secured by land or real estate. OREO and other repossessed assets are reported at the lower of cost or fair value, less estimated cost to sell.

Our NPAs ~~increased $31.1~~decreased $19.9 million to ~~$257.7~~$294.8 million at September 30, ~~2021~~2022 as compared to June 30, ~~2021 mainly~~2022 mostly due to ~~a $37.0 million increase~~declines in non-accrual commercial and industrial and commercial real estate loans ~~(see table below).~~mainly caused by a few large loan repayments, and, to a lesser extent, loan charge-offs during the third quarter 2022. NPAs as a percentage of total loans and NPAs totaled ~~0.78~~0.65 percent and ~~0.69~~0.72 percent at September 30, ~~2021~~2022 and June 30, ~~2021,~~2022, respectively (as shown in the table below). We believe our total NPAs has remained relatively low as a percentage

of the total loan portfolio ~~over~~and the ~~past 12 months, despite the uptick in non-accrual borrowers mainly caused by COVID-19 pandemic. The~~ level of NPAs is reflective of our consistent approach to the loan underwriting criteria for both Valley originated loans and loans purchased from third parties. For additional details, see the "Credit quality indicators" section in Note 8 to the consolidated financial statements.

Our lending strategy is based on underwriting standards designed to maintain high credit quality and we remain

optimistic regarding the overall future performance of our loan portfolio. ~~However, due~~During the nine months ended September 30, 2022, our overall credit trends have remained stable, and our business and borrowers continued to demonstrate resilience and growth despite the ~~potential for future credit deterioration caused by the uncertain path~~challenges of the ~~recovery from~~global supply chain issues, high inflation and overall uncertain economy and the ~~COVID -19 pandemic and some~~ongoing impact of ~~our borrowers that are still performing under forbearance agreements,~~COVID-19. However, management cannot provide assurance that ~~our~~the non-performing assets will not materially increase ~~substantially~~ from the levels reported at September 30, ~~2021.~~2022 due to the aforementioned or other factors potentially impacting our lending customers.

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The following table sets forth by loan category accruing past due and non-performing assets at the dates indicated in conjunction with our asset quality ratios:


		September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020				September 30, 2022			June 30, 2022			March 31, 2021
		($ in thousands)																($ in thousands)
Accruing past due loans:	Accruing past due loans:																Accruing past due loans:
30 to 59 days past due:	30 to 59 days past due:																30 to 59 days past due:
Commercial and industrial	Commercial and industrial	$	2,677		$	3,867		$	3,763		$	6,393		$	6,587		Commercial and industrial	$	19,526		$	7,143		$	6,723
Commercial real estate	Commercial real estate	22,956			40,524			11,655			35,030			26,038			Commercial real estate	6,196			10,516			30,807
Construction	Construction	—			—			—			315			142			Construction	—			9,108			1,708
Residential mortgage	Residential mortgage	9,293			8,479			16,004			17,717			22,528			Residential mortgage	13,045			12,326			9,266
Total Consumer		5,463			6,242			5,480			10,257			8,979
Total consumer																	Total consumer	6,196			6,009			5,862
Total 30 to 59 days past due	Total 30 to 59 days past due	40,389			59,112			36,902			69,712			64,274			Total 30 to 59 days past due	44,963			45,102			54,366
60 to 89 days past due:	60 to 89 days past due:																60 to 89 days past due:
Commercial and industrial	Commercial and industrial	985			1,361			1,768			2,252			3,954			Commercial and industrial	2,188			3,870			14,461
Commercial real estate	Commercial real estate	5,897			11,451			5,455			1,326			610			Commercial real estate	383			630			6,314

Construction																	Construction	12,969			3,862			3,125
Residential mortgage	Residential mortgage	974			1,608			2,233			10,351			3,760			Residential mortgage	5,947			2,410			2,560
Total Consumer		1,617			985			1,021			1,823			1,352
Total consumer																	Total consumer	1,174			702			554
Total 60 to 89 days past due	Total 60 to 89 days past due	9,473			15,405			10,477			15,752			9,676			Total 60 to 89 days past due	22,661			11,474			27,014
90 or more days past due:	90 or more days past due:																90 or more days past due:
Commercial and industrial	Commercial and industrial	2,083			2,351			2,515			9,107			6,759			Commercial and industrial	15,072			15,470			9,261
Commercial real estate	Commercial real estate	1,942			1,948			—			993			1,538			Commercial real estate	15,082			—			—

Residential mortgage	Residential mortgage	1,002			956			2,472			3,170			891			Residential mortgage	550			1,188			1,746
Total Consumer		325			463			417			271			753
Total consumer																	Total consumer	421			267			400
Total 90 or more days past due	Total 90 or more days past due	5,352			5,718			5,404			13,541			9,941			Total 90 or more days past due	31,125			16,925			11,407
Total accruing past due loans	Total accruing past due loans	$	55,214		$	80,235		$	52,783		$	99,005		$	83,891		Total accruing past due loans	$	98,749		$	73,501		$	92,787
Non-accrual loans:	Non-accrual loans:																Non-accrual loans:
Commercial and industrial	Commercial and industrial	$	100,614		$	102,594		$	108,988		$	106,693		$	115,667		Commercial and industrial	$	135,187		$	148,404		$	96,631
Commercial real estate	Commercial real estate	95,843			58,893			54,004			46,879			41,627			Commercial real estate	67,319			85,807			79,180
Construction	Construction	17,653			17,660			71			84			2,497			Construction	61,098			49,780			17,618
Residential mortgage	Residential mortgage	33,648			35,941			33,655			25,817			23,877			Residential mortgage	26,564			25,847			33,275
Total Consumer		4,073			4,924			7,292			5,809			7,441
Total consumer																	Total consumer	3,227			3,279			3,754
Total non-accrual loans	Total non-accrual loans	251,831			220,012			204,010			185,282			191,109			Total non-accrual loans	293,395			313,117			230,458

Other real estate owned (OREO)	Other real estate owned (OREO)	3,967			4,523			4,521			5,118			7,746			Other real estate owned (OREO)	286			422			1,024
Other repossessed assets	Other repossessed assets	1,896			2,060			1,857			3,342			3,988			Other repossessed assets	1,122			1,200			1,176
Non-accrual debt securities		—			—			129			815			783
Total non-performing assets (NPAs)	Total non-performing assets (NPAs)	$	257,694		$	226,595		$	210,517		$	194,557		$	203,626		Total non-performing assets (NPAs)	$	294,803		$	314,739		$	232,658
Performing troubled debt restructured loans	Performing troubled debt restructured loans	$	64,832		$	64,080		$	67,102		$	57,367		$	58,090		Performing troubled debt restructured loans	$	69,748		$	67,274		$	56,538
Total non-accrual loans as a % of loans	Total non-accrual loans as a % of loans	0.77		%	0.68		%	0.62		%	0.58		%	0.59		%	Total non-accrual loans as a % of loans	0.65		%	0.72		%	0.65		%
Total NPAs as a % of loans and NPAs	Total NPAs as a % of loans and NPAs	0.78			0.69			0.64			0.60			0.62			Total NPAs as a % of loans and NPAs	0.65			0.72			0.65
Total accruing past due and non-accrual loans as a % of loans	Total accruing past due and non-accrual loans as a % of loans	0.94			0.93			0.79			0.88			0.85			Total accruing past due and non-accrual loans as a % of loans	0.87			0.89			0.91
Allowance for loan losses as a % of non-accrual loans	Allowance for loan losses as a % of non-accrual loans	136.01			154.23			168.07			183.64			170.08			Allowance for loan losses as a % of non-accrual loans	162.15			149.73			157.30

Loans past due 30 to 59 days decreased ~~$18.7 million~~$139 thousand to ~~$40.4~~$45.0 million at September 30, ~~2021~~2022 as compared to June 30, ~~2021.~~ 2022. Construction loans within this delinquency category decreased $9.1 million due to one loan acquired from Bank Leumi USA included in this category at June 30, 2022 that is reported as 60 to 89 days past due at September 30, 2022. Commercial real estate loans past due 30 to 59 days decreased ~~$17.6~~$4.3 million to ~~$23.0~~$6.2 million at September 30, ~~2021~~2022 as compared to June 30, ~~2021 largely~~2022 mainly due to ~~two~~one loan ~~relationships totaling $22.2 million~~ that ~~migrated~~became current as to ~~non-accrual loan status~~all contractual payments at September 30, ~~2021.~~

2022. These decreases were largely offset by higher commercial and industrial loans

7481

delinquencies mostly driven by matured loans in the process of renewal included in this category at September 30, 2022.

Loans past due 60 to 89 days ~~decreased $5.9~~increased $11.2 million to ~~$9.5~~$22.7 million at September 30, ~~2021~~2022 as compared to June 30, ~~2021.~~ ~~Commercial real estate loans in~~2022 mainly due to the one aforementioned construction loan that migrated to this delinquency category ~~decreased~~ ~~$5.6 million to~~ ~~$5.9 million~~ at September 30, ~~2021 mainly as a result of one $10.9 million loan negatively impacted by the COVID-19 pandemic that migrated to non-accrual status at September 30, 2021, partially offset by the addition of a~~ ~~$5.5 million matured commercial real estate loan in the process of renewal in this delinquency category at~~ ~~September 30, 2021.~~2022.

Loans past due 90 days or more and still accruing interest ~~totaled $5.4~~increased $14.2 million to $31.1 million at September 30, ~~2021~~2022 as compared to ~~$5.7 million at~~ June 30, ~~2021. All of~~2022. The increase was mainly driven by the two commercial real estate loan relationships totaling $9.7 million and $5.4 million, respectively, included in this delinquency category at September 30, 2022. All loans ~~past due~~ 90 days or more past due and still accruing ~~reported at September 30, 2021~~interest are considered ~~to be well secured~~well-secured and in the process of collection.

Non-accrual loans ~~increased $31.8~~decreased $19.7 million to ~~$251.8~~$293.4 million at September 30, ~~2021~~2022 as compared to ~~$220.0~~$313.1 million at June 30, ~~2021 mostly driven by a $37.0 million increase~~2022 mainly due to decreases in ~~the~~ non-performing commercial and industrial and commercial real estate ~~loans. This increase was caused~~loans, partially offset by ~~two~~one construction loan relationship totaling $12.7 million put on non-accrual status at September 30, 2022.

Non-accrual commercial and industrial loans totaled $135.2 million at September 30, 2022 and included non-performing taxi medallion loans totaling ~~$22.2~~$76.3 million. Non-performing taxi medallion loans decreased $4.1 million ~~and one loan totaling $10.9~~from $80.4 million ~~that migrated to non-accrual status from the 30-59 days and 60 to 89 days past due categories reported~~ at June 30, ~~2021, respectively. These non-accrual loans~~2022 mostly due to partial loan charge-offs totaling ~~$33.1~~$3.8 million ~~have allocated reserves of $3.7 million within~~related to one borrower during the third quarter 2022. The partial loan charge-offs were fully reserved for in our allowance for loan losses at June 30, 2022. At September 30, ~~2021.~~

We continue to closely monitor our non-performing New York City and Chicago taxi medallion loans totaling $86.3 million and $577 thousand, respectively, within the commercial and industrial loan category at September 30, 2021.

~~Due to continued negative trends in estimated fair valuations of the underlying taxi medallion collateral, a weak operating environment for ride services and uncertain borrower performance, all of~~2022, the taxi medallion loans ~~are on non-accrual status.~~ ~~At September 30, 2021, the taxi medallion loans totaling $86.9 million~~(primarily collateralized by New York City medallions) had related ~~reserves~~reserves of ~~$58.6~~$51.4 million, or ~~67.4~~67.3 percent of such ~~loans. The related reserves were relatively unchanged as compared to June 30, 2021.~~l

oans.

Potential declines in the market valuation of taxi medallions and the stressed operating environment ~~mainly~~ within New York City due to the COVID-19 pandemic or general deterioration in economic conditions could negatively impact the future performance of this portfolio. For example, a 25 percent ~~further~~ decline in our current estimated market value of the taxi medallions would require additional allocated ~~reserves~~reserves of ~~$5.9~~$4.7 million within the ~~allowance~~allowance for loan losses based upon the taxi medallion loan balances at September 30, ~~2021.~~2022. See the "Allowance for Credit ~~Losses"~~Losses for Loans" section below for further details on our reserves.

OREO properties totaled ~~$4.0 million~~$286 thousand at September 30, ~~2021~~2022 and declined ~~$556~~$136 thousand as compared to June 30, ~~2021. Net losses and gains from~~2022. During the third quarter 2022, OREO activity continues to trend downward as sales of owned properties outpaced new foreclosures. The sales of OREO properties to~~taled a $67 thousand loss and a $268 thousand~~resulted in net ~~gain for the three and nine months ended September 30, 2021, respectively, and net gains totaling $109~~losses of $69 thousand and ~~$540~~$692 thousand for the three and nine months ended September 30, ~~2020,~~2022, respectively, and net losses of $67 thousand and net gains of $268 thousand for the three and nine months ended September 30, 2021, respectively. The residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process ~~totaled $3.0~~totaled $1.9 million and ~~$1.9~~$2.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

TDRs represent loan modifications for customers experiencing financial difficulties where a concession has been granted. Performing TDRs (i.e., TDRs not reported as loans 90 days or more past due and still accruing interest or as non-accrual loans) totaled ~~$64.8~~$69.7 million at September 30, ~~2021~~2022 as compared to ~~$64.1~~$67.3 million at June 30, ~~2021.~~2022. Performing TDRs consisted of 9687 loans at September 30, ~~2021.~~2022. On an aggregate basis, the ~~$64.8~~$69.7 million in performing TDRs at September 30, ~~2021~~2022 had a modified weighted average interest rate of approximately ~~4.36~~4.90 percent as compared to a pre-modification weighted average interest rate of ~~4.60~~4.32 percent.

~~Loan Forbearance. In response to the C~~OVID-19 pandemic and its economic impact on certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment, when requested by customers, all of which were insignificant. ~~Under the applicable guidance, none of these loans were classified as TDRs at September 30, 2021 and December 31, 2020.~~

~~The following table presents the outstanding loan balances and number of loans in an active payment deferral period under short-term modifications as~~ ~~of September 30, 2021:~~

September 30, 2021
Amount Number of loans
($ in thousands)
Commercial and industrial $ 2,579 4
Commercial real estate 64,927 17
Residential mortgage 29,485 63
Consumer 1,603 76
Total $ 98,594 160

As of September 30, 2021, Valley had approximately $98.6 million of outstanding loans remaining in their payment deferral period under short-term modifications as compared to $142.0 million of loans in deferral at June 30, 2021. Commercial real estate forbearances representing approximately 66 percent of the active deferrals at September 30, 2021 decreased $28.6 million from $93.6 million at June 30, 2021 mainly due to loans being returned to normal interest accrual status following the end of their forebearance periods during the third quarter 2021.

Allowance for Credit Losses for Loans

The allowance for credit losses (ACL) for loans includes the allowance for loan losses and the reserve for unfunded credit commitments. Under CECL, our methodology to establish the allowance for loan losses has two basic components: ~~(1)~~(i) a collective reserve component for estimated expected credit losses for pools of loans that share common risk characteristics and ~~(2)~~(ii) an individual reserve component for loans that do not share risk characteristics, consisting of collateral dependent, TDR, and expected TDR loans. Valley also maintains a separate allowance for

unfunded credit commitments mainly consisting of undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of credit.

Valley estimated the collective ACL using a current expected credit losses methodology which is based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the loan balances. In estimating the component of the allowance on a collective basis we use a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by generating probability of default and loss given default metrics. The metrics are based on the migration of loans from performing to loss by credit quality rating or delinquency categories using historical life-of-loan analysis periods for each loan portfolio pool and the severity of loss based on the aggregate net lifetime losses. The model's expected losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) the impact of the reasonable and supportable economic forecast, relative probability weightings and reversion period, (ii) other asset specific risks to the extent they do not exist in the historical loss information, and (iii) net expected recoveries of ~~charged off~~charged-off loan balances. These adjustments are based on qualitative factors not reflected in the quantitative model but are likely to impact the measurement of estimated credit losses. The expected lifetime loss rate is the life of loan loss percentage from the transition matrix model plus the impact of the adjustments for qualitative factors. The expected credit losses are the product of multiplying the model’s expected lifetime loss rate by the exposure at default at period end on an undiscounted basis.

Valley utilizes a two-year reasonable and supportable forecast period followed by a one-year period over which estimated losses revert to historical loss experience for the remaining life of the loan on a straight-line basis. The forecasts consist of a multi-scenario economic forecast model to estimate future credit losses and is governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. We have identified and selected key variables that most closely correlated to our historical credit performance, which include: GDP, unemployment and the Case-Shiller Home Price Index.

For the third quarter ~~2021,~~2022, we ~~continued to incorporate~~incorporated a probability weighted three-scenario economic forecast, including Moody's Baseline, S-3 and ~~S-1~~S-4 scenarios. At September 30, ~~2021,~~2022, Valley ~~maintained the majority of~~moderately increased its

probability weighting to the ~~Moody’s Baseline scenario and modestly reduced its~~ combined ~~emphasis on the Moody’s~~Moody's S-3 downside and ~~S-1 upside~~S-4 (most adverse) scenarios from the Moody's Baseline scenario as compared to with such weighting in the June 30, ~~2021. The Baseline~~2022 ACL analysis. Our scenario weighting and the S-1 scenario reflect the positive economic developments including federal stimulus and increasing vaccination levels that are expected to improve labor market conditions and promote stronger economic growth during the remainder of 2021. However, this positive outlook could still be tempered by, among other factors, the uncertain ongoing impact of the COVID-19 pandemic on the economic recovery,at September 30, 2022, as well as ~~supply chain constrains contributing to inventory shortages~~the standalone Moody's Baseline scenario, reflects a less optimistic outlook than at June 30, 2022 in terms of GDP growth, unemployment levels and ~~longer than anticipated elevated levels of inflation.~~potential near term negative economic impacts, given present uncertain economic conditions.

At September 30, ~~2021,~~2022, the Moody's Baseline forecast included the following specific assumptions:

•GDP expansion by ~~over 7.5~~about 1.6 percent in the fourth quarter ~~2021;~~2022;

•Unemployment of ~~4.5~~3.7 percent in the fourth quarter ~~2021~~2022 and ~~improving~~3.9 to ~~3.4~~4.1 percent byover the remainder of the forecast period ending in the third quarter ~~2022;~~2024; and

•~~Strong~~ U.S. economic growth ~~driven~~continues in 2022; however, it is expected to be challenged by ~~continued~~a strained supply chain, rising interest rates and elevated inflation that will negatively affect consumer ~~spending and congressional passage of another fiscal stimulus package.~~spending.

See more details regarding our allowance for credit losses for loans in Note 8 to the consolidated financial statements.

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The table below summarizes the relationship among loans, loans charged-off, loan recoveries, the provision for credit losses and the allowance for credit losses for loans for the periods indicated.


		Three Months Ended									Nine Months Ended							Three Months Ended									Nine Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020				September 30, 2022			June 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
		($ in thousands)																($ in thousands)
Average loans outstanding	Average loans outstanding	$	32,698,382		$	32,635,298		$	32,515,264		$	32,641,362		$	31,522,268		Average loans outstanding	$	44,341,894		$	42,517,287		$	32,698,382		$	40,529,794		$	32,641,362
Beginning balance - Allowance for credit losses for loans		353,724			354,313			319,723			351,354			164,604
Impact of ASU No. 2016-13 adoption on January 1, 2020 *		—			—			—			—			37,989
Allowance for purchased credit deteriorated (PCD) loans *		—			—			—			—			61,643
Beginning balance, adjusted		353,724			354,313			319,723			351,354			264,236
Allowance for credit losses for loans																	Allowance for credit losses for loans
Beginning balance																	Beginning balance	$	490,963		$	379,252		$	353,724		$	375,702		$	351,354
Allowance for purchased credit deteriorated (PCD) loans (1)																	Allowance for purchased credit deteriorated (PCD) loans (1)	—			70,319			—			70,319			—
Loans charged-off:	Loans charged-off:																Loans charged-off:
Commercial and industrial	Commercial and industrial	(1,248)			(10,893)			(13,965)			(19,283)			(31,349)			Commercial and industrial	(5,033)			(4,540)			(1,248)			(11,144)			(19,283)
Commercial real estate	Commercial real estate	—			—			(695)			(382)			(766)			Commercial real estate	(4,000)			—			—			(4,173)			(382)

Residential mortgage	Residential mortgage	—			(1)			(7)			(139)			(348)			Residential mortgage	—			(1)			—			(27)			(139)
Total consumer	Total consumer	(771)			(1,480)			(2,458)			(3,389)			(7,624)			Total consumer	(962)			(726)			(771)			(2,513)			(3,389)
Total charge-offs	Total charge-offs	(2,019)			(12,374)			(17,125)			(23,193)			(40,087)			Total charge-offs	(9,995)			(5,267)			(2,019)			(17,857)			(23,193)
Charged-off loans recovered:	Charged-off loans recovered:																Charged-off loans recovered:
Commercial and industrial	Commercial and industrial	514			678			428			2,781			1,796			Commercial and industrial	13,236			1,952			514			16,012			2,781
Commercial real estate	Commercial real estate	29			665			60			759			164			Commercial real estate	1,729			224			29			2,060			759
Construction	Construction	—			—			40			4			80			Construction	—			—			—			—			4
Residential mortgage	Residential mortgage	228			191			31			576			626			Residential mortgage	163			74			228			694			576
Total consumer	Total consumer	955			1,474			1,151			3,359			2,454			Total consumer	477			697			955			2,431			3,359
Total recoveries	Total recoveries	1,726			3,008			1,710			7,479			5,120			Total recoveries	15,605			2,947			1,726			21,197			7,479
Net charge-offs		(293)			(9,366)			(15,415)			(15,714)			(34,967)
Net loan recoveries (charge-offs)																	Net loan recoveries (charge-offs)	5,610			(2,320)			(293)			3,340			(15,714)
Provision charged for credit losses	Provision charged for credit losses	3,496			8,777			31,020			21,287			106,059			Provision charged for credit losses	1,835			43,712			3,496			49,047			21,287
Ending balance - Allowance for credit losses for loans		$	356,927		$	353,724		$	335,328		$	356,927		$	335,328
Ending balance																	Ending balance	$	498,408		$	490,963		$	356,927		$	498,408		$	356,927
Components of allowance for credit losses for loans:	Components of allowance for credit losses for loans:																Components of allowance for credit losses for loans:
Allowance for loan losses	Allowance for loan losses	$	342,527		$	339,324		$	325,032		$	342,527		$	325,032		Allowance for loan losses	$	475,744		$	468,819		$	342,527		$	475,744		$	342,527
Allowance for unfunded credit commitments	Allowance for unfunded credit commitments	14,400			14,400			10,296			14,400			10,296			Allowance for unfunded credit commitments	22,664			22,144			14,400			22,664			14,400
Allowance for credit losses for loans	Allowance for credit losses for loans	$	356,927		$	353,724		$	335,328		$	356,927		$	335,328		Allowance for credit losses for loans	$	498,408		$	490,963		$	356,927		$	498,408		$	356,927
Components of provision for credit losses for loans:	Components of provision for credit losses for loans:																Components of provision for credit losses for loans:
Provision for credit losses for loans		$	3,496		$	5,810		$	30,833		$	17,998		$	105,709
Provision for unfunded credit commitments		—			2,967			187			3,289			350
Provision for credit losses for loans (2)																	Provision for credit losses for loans (2)	$	1,315		$	38,310		$	3,496		$	42,883		$	17,998
Provision for unfunded credit commitments (2)																	Provision for unfunded credit commitments (2)	520			5,402			—			6,164			3,289
Total provision for credit losses for loans	Total provision for credit losses for loans	$	3,496		$	8,777		$	31,020		$	21,287		$	106,059		Total provision for credit losses for loans	$	1,835		$	43,712		$	3,496		$	49,047		$	21,287

Annualized ratio of net charge-offs to average loans outstanding		0.00		%	0.11		%	0.19		%	0.06		%	0.15		%
Annualized ratio of net (recoveries) charge-offs to average loans outstanding																	Annualized ratio of net (recoveries) charge-offs to average loans outstanding	(0.05)		%	0.02		%	0.00		%	(0.01)		%	0.06		%

* The adjustment represents an increase in(1) Represents the allowance for ~~credit losses for~~acquired PCD loans, ~~as a result~~net of ~~the adoption of ASU No. 2016-13 effective January 1, 2020.~~

~~Net~~PCD loan charge-offs ~~totaled $293 thousand for the third quarter 2021 as compared to $9.4~~totaling $62.4 million ~~and $15.4 million for~~in the second quarter ~~2021~~2022.

(2) The three months ended June 30, 2022 and ~~third~~nine months ended September 30, 2022 both include $36.3 million and $4.7 million of provision related to non-PCD loans and unfunded credit commitments, respectively, acquired from Bank Leumi USA in the second quarter ~~2020, respectively. The decrease in net loan charge-offs for the third quarter 2021 was mainly due to lower commercial and industrial loan charge-offs. The partial gross charge-offs of~~2022.

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The following table presents the relationship among net loans charged-off and recoveries, and average loan balances outstanding for the indicated:


	Three Months Ended						Nine Months Ended
	September 30, 2022		June 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	($ in thousands)
Net loan recoveries (charge-offs)
Commercial and industrial	$	8,203	$	(2,588)	$	(734)	$	4,868	$	(16,502)
Commercial real estate	(2,271)		224		29		(2,113)		377
Construction	—		—		—		—		4
Residential mortgage	163		73		228		667		437
Total consumer	(485)		(29)		184		(82)		(30)
Total	$	5,610	$	(2,320)	$	(293)	$	3,340	$	(15,714)
Average loans outstanding
Commercial and industrial	$	8,540,485	$	8,304,822	$	5,927,149	$	7,529,507	$	6,572,931
Commercial real estate	24,306,684		23,319,419		17,733,591		22,416,996		17,139,756
Construction	3,186,732		2,925,741		1,663,745		2,604,559		1,752,589
Residential mortgage	5,134,769		4,727,481		4,458,345		4,925,469		4,358,519
Total consumer	3,173,224		3,239,824		2,915,552		3,053,263		2,817,567
Total	$	44,341,894	$	42,517,287	$	32,698,382	$	40,529,794	$	32,641,362
Net loan (recoveries) charge-offs to average loans outstanding
Commercial and industrial	(0.10)%		0.03%		0.01%		(0.06)%		0.25%
Commercial real estate	0.01		0.00		0.00		0.01		0.00
Construction	0.00		0.00		0.00		0.00		0.00
Residential mortgage	0.00		0.00		(0.01)		(0.01)		(0.01)
Total consumer	0.02		0.00		(0.01)		0.00		0.00

Net recoveries of loan charge-offs totaled $5.6 million for the third quarter 2022 as compared to net loan charge-offs of $2.3 million (excluding $62.4 million of Day 1 PCD loan charge-offs related to the Bank Leumi USA acquisition) for the second quarter 2022 and net loan charge-offs of $293 thousand for the third quarter 2021. The net recoveries of loan charge-offs for the third quarter 2022 were largely driven by two commercial and industrial loan relationships totaling $11.2 million in gross recoveries for the period.

Partial loan charge-offs of taxi medallion loans totaled $3.8 million within the commercial and industrial loan category ~~totaled $143 thousand~~ for the third quarter ~~2021~~2022 as compared to ~~$1.4~~$143 thousand and $1.9 million ~~and $6.1 million for~~during the ~~second~~third quarter 2021 and ~~third~~second quarter ~~2020, respectively.~~2022, respectively. The overall level of loan charge-offs (as presented in the above table) continued to remain very low and trend well within management's expectations for the credit quality of the loan portfolio for the third quarter ~~2021.~~2022.

The following table summarizes the allocation of the allowance for credit losses for loans to loan portfolio categories and the allocations as a percentage of each loan category:


		September 30, 2021				June 30, 2021				September 30, 2020					September 30, 2022				June 30, 2022				September 30, 2021
		Allowance Allocation		Allocation as a % of Loan Category		Allowance Allocation		Allocation as a % of Loan Category		Allowance Allocation		Allocation as a % of Loan Category			Allowance Allocation		Allocation as a % of Loan Category		Allowance Allocation		Allocation as a % of Loan Category		Allowance Allocation		Allocation as a % of Loan Category
		($ in thousands)													($ in thousands)
Loan Category:	Loan Category:													Loan Category:
Commercial and Industrial loans		$	103,877	1.84	%	$	109,689	1.80	%	$	130,409	1.89	%
Commercial and industrial loans														Commercial and industrial loans	$	154,051	1.77	%	$	144,539	1.70	%	$	103,877	1.84	%
Commercial real estate loans:	Commercial real estate loans:													Commercial real estate loans:
Commercial real estate	Commercial real estate	178,206		0.99		168,220		0.96		128,699		0.77		Commercial real estate	217,124		0.89		227,457		0.97		178,206		0.99
Construction	Construction	21,515		1.19		20,919		1.19		15,951		0.93		Construction	50,656		1.42		49,770		1.47		21,515		1.19
Total commercial real estate loans	Total commercial real estate loans	199,721		1.01		189,139		0.98		144,650		0.78		Total commercial real estate loans	267,780		0.95		277,227		1.03		199,721		1.01
Residential mortgage loans	Residential mortgage loans	24,732		0.57		25,303		0.60		28,614		0.67		Residential mortgage loans	36,157		0.70		29,889		0.60		24,732		0.57
Consumer loans:	Consumer loans:													Consumer loans:
Home equity	Home equity	4,110		1.02		4,602		1.12		5,972		1.31		Home equity	4,083		0.87		3,907		0.91		4,110		1.02
Auto and other consumer	Auto and other consumer	10,087		0.40		10,591		0.43		15,387		0.69		Auto and other consumer	13,673		0.49		13,257		0.49		10,087		0.40
Total consumer loans	Total consumer loans	14,197		0.49		15,193		0.53		21,359		0.79		Total consumer loans	17,756		0.55		17,164		0.55		14,197		0.49
Total allowance for loan losses		342,527		1.05		339,324		1.05		325,032		1.00
Allowance for loan losses														Allowance for loan losses	475,744		1.05		468,819		1.08		342,527		1.05
Allowance for unfunded credit commitments	Allowance for unfunded credit commitments	14,400				14,400				10,296				Allowance for unfunded credit commitments	22,664				22,144				14,400
Total allowance for credit losses for loans	Total allowance for credit losses for loans	$	356,927			$	353,724			$	335,328			Total allowance for credit losses for loans	$	498,408			$	490,963			$	356,927
Allowance for credit losses for loans as a % loans				1.09	%			1.09	%			1.03	%
Allowance for credit losses for loans as a % total loans														Allowance for credit losses for loans as a % total loans			1.10	%			1.13	%			1.09	%

The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, ~~(including standby letters of credit),~~ as a percentage of total loans was ~~1.09 percent at both September 30, 2021 and June 30, 2021, and 1.03~~1.10 percent at September 30, ~~2020.~~ 2022 as compared to 1.13 percent and 1.09 percent at June 30, 2022 and September 30, 2021, respectively. During the third quarter ~~2021, we recorded a $3.5 million~~2022, the provision for credit losses for loans totaled $1.8 million as compared to ~~$8.8~~$43.7 million and ~~$31.0~~$3.5 million for the second quarter ~~2021~~2022 and ~~the third quarter 2020, respectively. The~~ third quarter 2021, respectively. The second quarter 2022 provision ~~reflects, among other factors, additional~~was largely elevated due to $41 million of provision related to non-PCD loans and unfunded credit commitments acquired from Bank Leumi USA. Overall, an increased economic forecast reserve component of our CECL model (driven by a more pessimistic outlook incorporated into the updated Moody's scenarios) was largely offset by lower expected quantitative loss experience at September 30, 2022.

As part of our CECL model analysis at September 30, 2022, we closely assessed the expected credit losses in our Florida loan portfolio in the wake of Hurricane Ian. As a result, our management adjustment and allocated reserves related to ~~certain segments of our commercial real estate portfolio, an increase in specific reserves, and non-PPP loan growth, largely offset by a decline in~~ the ~~economic forecast component of the reserve~~hurricane were immaterial at September 30, ~~2021~~2022. We will continue to support our impacted customers as ~~compared to June 30, 2021. There was no provision~~they recover from the storm and diligently monitor our loss assessment for ~~unfunded credit commitments for the third quarter 2021 as the overall level of such reserves remained materially unchanged at September 30, 2021 as compared to June 30, 2021.~~material changes.

~~At September 30, 2021, the allowance allocations for credit losses as a percentage of total loans increased in~~ ~~commercial and industrial and~~ ~~commercial real estate loan categories as compared to June 30, 2021.~~ The allocated reserves as a percentage of commercial and industrial loans increased by 4 basis points mainly due to the third quarter 2021 repayments (loan forgiveness) of PPP loans guaranteed by the SBA with no related allowance at September 30, 2021. ~~The allocated reserves as a percentage of commercial real estate loans increased 3 basis points largely due to higher~~ ~~quantitative reserves for the non-owner occupied loan portfolio during the third quarter 2021. The allowance for credit losses as a percentage of total non-PPP loans was~~ ~~1.12 percent, 1.14 percent and 1.11 percent for the third quarter 2021, second quarter 2021 and third quarter 2020, respectively.~~

Capital Adequacy

A significant measure of the strength of a financial institution is its shareholders’ equity. At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, shareholders’ equity totaled approximately ~~$4.8~~$6.3 billion and ~~$4.6~~$5.1 billion, ~~respectively,~~ which represented ~~11.7~~11.2 percent and ~~11.3~~11.7 percent of total assets, respectively. During the nine months ended September 30, ~~2021,~~2022, total shareholders’ equity increased by ~~$230.4 million~~approximately $1.2 billion primarily due to to:

•additional capital of $1.1 billion issued in the Bank Leumi USA acquisition,

•net income of $391.3 million,

•~~$358.8 million~~ ~~and~~ a $~~30.4~~10.6 million i~~increase~~ncrease attributable to the effect of our stock incentive ~~plan. These positive changes were~~plan, partially offset by

•cash dividends declared on common and preferred stock totaling a combined $~~145.1~~168.8 million,

~~and~~ •an ~~increase in~~ other comprehensive loss of ~~$13.7~~$147.6 million, and

•.repurchases of $13.5 million of our common stock with these shares held as treasury stock.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve Bank and the OCC. Quantitative measures established by regulation to ensure capital adequacy require Valley and Valley National Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets, as defined in the regulations.

We are required to maintain common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets ratio of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and minimum leverage ratio of 4.0 percent, plus a 2.5 percent capital conservation buffer added to the minimum requirements for capital adequacy purposes. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, Valley and Valley National Bank exceeded all capital adequacy requirements (see table below).

For regulatory capital purposes, in ~~connection~~accordance with the Federal Reserve Board’s final interim rule as of April 3, 2020, we deferred 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally,plus 25 percent of the reserve build ~~since adoption~~ (i.e., provision for credit losses less net charge-offs) for a two-year period ending January 1, 2022. On January 1, 2022, the deferral amount totaling $47.3 million after-tax started to be phased-in by 25 percent and will ~~be phased in over~~increase 25 percent per year until fully phased-in on January 1, 2025. As of September 30, 2022, approximately $11.8 million of the ~~same time frame.~~$47.3 million deferral amount was recognized as a reduction to regulatory capital and, as a result, decreased our risk-based capital ratios by approximately 3 basis points.

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The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under Basel III risk-based capital guidelines at September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

Actual Minimum Capital
Requirements To Be Well Capitalized
Under Prompt Corrective
Action Provision
Amount Ratio Amount Ratio Amount Ratio

($ in thousands)
As of September 30, 2021
Total Risk-based Capital
Valley $ 4,264,369 13.24 % $ 3,382,946 10.50 % N/A N/A
Valley National Bank 4,368,271 13.55 3,385,194 10.50 $ 3,223,994 10.00 %
Common Equity Tier 1 Capital
Valley 3,241,285 10.06 2,255,297 7.00 N/A N/A
Valley National Bank 4,119,028 12.78 2,256,796 7.00 2,095,596 6.50
Tier 1 Risk-based Capital
Valley 3,456,126 10.73 2,738,575 8.50 N/A N/A
Valley National Bank 4,119,028 12.78 2,740,395 8.50 2,579,195 8.00
Tier 1 Leverage Capital
Valley 3,456,126 8.63 1,602,010 4.00 N/A N/A
Valley National Bank 4,119,028 10.28 1,602,931 4.00 2,003,664 5.00
As of December 31, 2020
Total Risk-based Capital
Valley $ 3,802,223 12.64 % $ 3,159,019 10.50 % N/A N/A
Valley National Bank 3,839,922 12.76 3,158,842 10.50 $ 3,008,421 10.00 %
Common Equity Tier 1 Capital
Valley 2,991,085 9.94 2,106,013 7.00 N/A N/A
Valley National Bank 3,607,625 11.99 2,105,894 7.00 1,955,473 6.50
Tier 1 Risk-based Capital
Valley 3,205,926 10.66 2,557,301 8.50 N/A N/A
Valley National Bank 3,607,625 11.99 2,557,158 8.50 2,406,736 8.00
Tier 1 Leverage Capital
Valley 3,205,926 8.06 1,591,852 4.00 N/A N/A
Valley National Bank 3,607,625 9.07 1,591,457 4.00 1,989,321 5.00

~~Tangible book value per common share is computed by dividing shareholders’ equity less preferred stock, goodwill and other intangible assets by common shares outstanding as follows:~~

September 30,
2021 December 31,
2020
($ in thousands, except for share data)
Common shares outstanding 407,313,664 403,858,998
Shareholders’ equity $ 4,822,498 $ 4,592,120
Less: Preferred stock 209,691 209,691
Less: Goodwill and other intangible assets 1,444,967 1,452,891
Tangible common shareholders’ equity $ 3,167,840 $ 2,929,538
Tangible book value per common share $ 7.78 $ 7.25
Book value per common share $ 11.32 $ 10.85

Management believes the tangible book value per common share ratio provides information useful to management and investors in understanding our underlying operational performance, our business and performance trends and

facilitates comparisons with the performance of others in the financial services industry. This non-GAAP financial measure should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. This non-GAAP financial measure may also be calculated differently from similar measures disclosed by other companies.


	Actual				Minimum Capital Requirements				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	($ in thousands)
As of September 30, 2022
Total Risk-based Capital
Valley	$	5,439,636	11.84	%	$	4,825,155	10.50	%	N/A		N/A
Valley National Bank	5,503,746		11.99		4,820,817		10.50		$	4,591,254	10.00	%
Common Equity Tier 1 Capital
Valley	4,178,402		9.09		3,216,770		7.00		N/A		N/A
Valley National Bank	5,121,353		11.15		3,213,878		7.00		2,984,315		6.50
Tier 1 Risk-based Capital
Valley	4,393,243		9.56		3,906,078		8.50		N/A		N/A
Valley National Bank	5,121,353		11.15		3,902,566		8.50		3,673,004		8.00
Tier 1 Leverage Capital
Valley	4,393,243		8.31		2,114,427		4.00		N/A		N/A
Valley National Bank	5,121,353		9.69		2,114,252		4.00		2,642,815		5.00
As of December 31, 2021
Total Risk-based Capital
Valley	$	4,454,485	13.10	%	$	3,569,144	10.50	%	N/A		N/A
Valley National Bank	4,571,448		13.45		3,567,618		10.50		$	3,397,732	10.00	%
Common Equity Tier 1 Capital
Valley	3,417,930		10.06		2,379,429		7.00		N/A		N/A
Valley National Bank	4,308,734		12.68		2,378,412		7.00		2,208,526		6.50
Tier 1 Risk-based Capital
Valley	3,632,771		10.69		2,889,307		8.50		N/A		N/A
Valley National Bank	4,308,734		12.68		2,888,072		8.50		2,718,185		8.00
Tier 1 Leverage Capital
Valley	3,632,771		8.88		1,635,508		4.00		N/A		N/A
Valley National Bank	4,307,734		10.53		1,636,097		4.00		2,045,121		5.00

Typically, our primary source of capital growth is through retention of earnings. Our rate of earnings retention is derived by dividing undistributed earnings per common share by earnings (or net income available to common shareholders) per common share. Our retention ratio was approximately ~~61.6~~58.2 percent for the nine months ended September 30, ~~2021~~2022 as compared to ~~52.7~~60.7 percent for the year ended December 31, ~~2020.~~2021.

Cash dividends declared amounted to $0.33 per common share for each of the nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. The Board is committed to examining and weighing relevant facts and considerations, including its commitment to shareholder value, each time it makes a cash dividend decision.

Off-Balance Sheet Arrangements, Contractual Obligations and Other Matters

For a discussion of Valley’s off-balance sheet arrangements and contractual obligations see information included in Valley’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 in the MD&A section - “Liquidity and Cash Requirements” and Notes 12 and 13 to the consolidated financial statements included in this report.


Item 3.			Quantitative and Qualitative Disclosures About Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, and commodity prices. Valley’s market risk is composed primarily of interest rate risk. See page 6672 for a discussion of interest rate sensitivity.


Item 4.			Controls and Procedures

(a) Disclosure controls and procedures. Valley maintains disclosure controls and procedures which, consistent with Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), are defined to mean controls and other procedures that are designed to ensure that information required to be disclosed in the reports that Valley files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that such information is accumulated and communicated to Valley’s management, including Valley’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

Valley’s CEO and CFO, with the assistance of other members of Valley’s management, have evaluated the effectiveness of Valley’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, Valley’s CEO and CFO have concluded that Valley’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in internal controls over financial reporting. During the third quarter 2021, we completed the implementation of our SAP S/4HANA general ledger and enterprise resource planning system. The new system was subject to various testing and review procedures before, during and after implementation. As a result of this implementation, we have experienced certain changes to our processes and procedures which, in turn, resulted in changes to our internal control over financial reporting. Valley’s CEO and CFO have also concluded that ~~except for those changes~~ there ~~were no~~have not been any changes in Valley’s internal control over financial reporting in the quarter ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, Valley’s internal control over financial reporting.

Valley has not experienced any material impact to its internal controls over financial reporting due to the fact that most of Valley’s employees responsible for financial reporting are working remotely during the COVID-19

pandemic. Valley is continually monitoring and assessing the impact of the COVID-19 pandemic on Valley’s internal controls over financial reporting to minimize the impact to their design and operating effectiveness.

Valley’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A system of internal control, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the system of internal control are met. The design of a system of internal control reflects resource constraints and the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Valley have been or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of a simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions; over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION


Item 1.			Legal Proceedings

In the normal course of business, we are a party to various outstanding legal proceedings and claims. There have been no material changes in the legal proceedings, if any, previously disclosed under Part I, Item 3 of Valley’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.


Item 1A.			Risk Factors

~~The~~There have been no material changes in the risk factors previously disclosed in the section titled ~~Risk Factors~~"Risk Factors" in Part I, Item 1A of ~~our 2020~~Valley’s Annual Report on Form 10-K ~~includes a discussion of~~for the many risks and uncertainties we face, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity). The information presented below provides an update to, and should be read in conjunction with, the risk factors and other information contained in our 2020 Annual Report on Form 10-K. Except as presented below, there have been no material changes to these risk factors.

Cyber-attacks could compromise our information or result in the data of our customers being improperly divulged or our systems being disrupted which could expose us to liability, losses and escalating operating costs.

Valley regularly collects, processes, transmits and stores confidential information regarding its customers, employees and others for whom it services loans. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on Valley’s behalf. Information security risks have increased because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. Many financial institutions and companies engaged in data processing have reported significant breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, denial-of-service, or sabotage systems, often through the introduction of computer viruses or malware, cyber-attacks and other means. In addition, recently there have been well-publicized “ransomware” attacks against various U.S. companies with the intent to materially disrupt their computer network and services. Valley frequently experiences attempted cybersecurity attacks against its systems. In 2021, there was a breach by a threat actor of a legacy network from an acquired bank. The breach resulted in the unauthorized access of certain data stored on the legacy network. The legacy network was isolated from Valley’s network, which was not affected by the incident. There can be no assurances that Valley will not incur breaches of our systems or that of our vendors which may expose the data of our customers or disrupt our services, exposing us to significant damage, on-going operational costs and/or reputational harm.

Cyber risk exposure will remain elevated or increase in the future due to, among other things, the increasing size and prominence of Valley in the financial services industry, our expansion of Internet and mobile banking tools and new products based on customer needs, and the system and customer account conversions associated with the integration of merger targets. Successful attacks on any one of many our third-party service providers may adversely affect our business and result in the disclosure or misuse of our confidential information or that of our customers. There can be no assurance that we or our third-party service providers will not suffer a cyber-attack that exposes us to significant damages, operational costs, or reputational harm.year ended December 31, 2021.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter, we did not sell any equity securities not registered under the Securities Act of 1933, as amended. Purchases of equity securities by the issuer and affiliated purchasers during the three months ended September 30, ~~2021~~2022 were as follows:

ISSUER PURCHASES OF EQUITY SECURITIES

Period Total Number of
Shares Purchased (1) Average
Price Paid
Per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans (2) Maximum Number of
Shares that May Yet Be
Purchased Under the Plans (2)
July 1, 2021 to July 31, 2021 2,073 $ 13.30 — 4,112,465
August 1, 2021 to August 31, 2021 7,937 12.85 — 4,112,465
September 1, 2021 to September 30, 2021 — — — 4,112,465
Total 10,010 $ 12.95 —


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (2) (3)	Maximum Number of Shares that May Yet Be Purchased Under the Plans (3)
July 1, 2022 to July 31, 2022	1,916	$	10.49	—	25,000,000
August 1, 2022 to August 31, 2022	7,971	11.69		—	25,000,000
September 1, 2022 to September 30, 2022	1,220	11.62		—	25,000,000
Total	11,107	$	11.47	—

(1)~~Represents~~Includes repurchases made in connection with the vesting of employee restricted stock awards.

(2)On January 17, 2007, Valley publicly announced its intention to repurchase up to 4.7 million outstanding common shares in the open market or in privately negotiated transactions. On April 26, 2022, Valley terminated its 2007 stock repurchase plan.

(3)On April 26, 2022, Valley publicly announced a stock repurchase program for up to 25 million shares of Valley common stock. The authorization to repurchase ~~plan has no stated expiration date. No repurchase plans or programs expired or terminated during the three months ended September 30, 2021.~~will expire on April 25, 2024.


Item 5.			Other Items

None.


Item 6.			Exhibits


(3)	Articles of Incorporation and By-laws:
	(3.1)	Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant's Form 10-Q Quarterly Report filed on August 7, 2020.
	(3.2)	By-laws of the Registrant, as amended and restated, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 8-K Current Report filed on October 24, 2018.
(10)	Material Contracts:
	~~(10.2)~~(10.1)	~~Agreement~~ ~~and Plan of Merger~~,Second Supplemental Indenture, dated as of September 22 ~~, 2021,~~20, 2022, by and ~~among~~between Valley National Bancorp and U.S. Bank ~~Leumi Le-Israel Corporation, a New York corporation~~ ~~and Volcano Merger Sub Corporation, a New York corporation and subsidiary of Valley, incorporated herein~~Trust Company, National Association (incorporated by reference to Exhibit ~~1.1~~4.2 to the Registrant’s Current Report on Form 8-K ~~Current Report~~ filed on September 2 7 ~~, 2021.~~20, 2022).

(31.1)	Certification of Ira Robbins, Chairman of the Board ~~President~~ and Chief Executive Officer of the Company, pursuant to Securities Exchange Rule 13a-14(a).*
(31.2)	Certification of Michael D. Hagedorn, Senior Executive Vice President and Chief Financial Officer of the Company, pursuant to Securities Exchange Rule 13a-14(a).*
(32)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Ira Robbins, Chairman of the Board ~~President~~ and Chief Executive Officer of the Company, and Michael D. Hagedorn, Senior Executive Vice President and Chief Financial Officer of the Company.**
(101)	Interactive Data File (XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) **
(104)	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Filed herewith.
**			Furnished herewith

8591

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VALLEY NATIONAL BANCORP

(Registrant)

Date:

/s/ Ira Robbins

November 8, ~~2021~~2022

Ira Robbins

Chairman of the Board ~~President~~and

~~and~~ Chief Executive Officer

(Principal Executive Officer)

Date:

/s/ Michael D. Hagedorn

November 8, ~~2021~~2022

Michael D. Hagedorn

Senior Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

8692


	September 30, 2021
	Amount		Number of loans
	($ in thousands)
Commercial and industrial	$	2,579	4
Commercial real estate	64,927		17
Residential mortgage	29,485		63
Consumer	1,603		76
Total	$	98,594	160