What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-02-26 · 200 added, 150 removed, 369 unchanged (49% of the section changed)

The disclosures set forth in this item are qualified by Item 1A—Risk Factors and the section captioned “Cautionary Statement Concerning Forward-Looking Statements” in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K (referred to as this "report") and other cautionary statements set forth elsewhere in this report.

Valley National Bancorp, headquartered in Wayne, New Jersey, is a New Jersey corporation organized in 1983 and is registered as a bank holding company with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended (“Holding Company Act”).

The disclosures set forth in this item are qualified by Item 1A.—Risk Factors and the section captioned “Cautionary Statement Concerning Forward-Looking Statements” in Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) of this Annual Report on Form 10-K (referred to as this "report") and other cautionary statements set forth elsewhere in this report.

Valley National Bancorp, headquartered in Wayne, New Jersey, is a New Jersey corporation organized in 1983 and is registered as a bank holding company and a financial holding company with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended (“Holding Company Act”).

The words “Valley,” “the Company,” “we,” “our” and “us” refer to Valley National Bancorp and its wholly owned subsidiaries, unless we indicate otherwise.

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Valley advertises and identifies itself under the trade names "Valley Bank" and "Valley".

Valley National Bank is a national banking association chartered in 1927 under the laws of the United States.

Currently, the Bank has 226 branches serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Florida and Alabama.

The Bank offers a full suite of banking solutions through various commercial, retail, insurance and wealth management financial services products.

These products include, but are not limited to, traditional commercial and industrial lending, commercial real estate financing, small business loans, equipment, basic consumer and commercial deposit products, personal financing solutions such as residential mortgages, home equity loans and automobile financing, as well as solutions for homeowners associations and a full service line of cash management solutions.

The Bank provides a variety of banking services including automated teller machines, telephone and internet banking, remote deposit capture, overdraft facilities, drive-in and night deposit services, and safe deposit facilities.

Valley National Bank has been chartered as a national banking association under the laws of the United States since 1927.

Valley offers a full suite of national and regional banking solutions through various commercial, retail, insurance and wealth management financial services products.

Valley provides personalized service and customized solutions to assist its customers with their financial service needs.

Our solutions include, but are not limited to, traditional consumer and commercial deposit and lending products, commercial real estate financing, small business loans, equipment financing, insurance and wealth management financial services products, cash management solutions, and personal financing solutions, such as residential mortgages, home equity loans and automobile financing.

Valley also offers niche financial services, including loan and deposit products for homeowners associations, insurance premium financing and cannabis-related business banking which we offer nationally.

The Bank provides convenient account access to customers through a number of account management services, including access to more than 200 branch locations across New Jersey, New York, Florida and Alabama;

online and mobile banking;

drive-in and night deposit services;

telephone banking;

automated teller machines;

remote deposit capture;

and safe deposit facilities.

In addition, certain international banking services are available to customers, including standby letters of credit, documentary letters of credit and related products, and certain ancillary services, such as foreign exchange transactions, documentary collections, foreign wire transfers, as well as transaction accounts for non-resident aliens.

Our primary focus is to build and develop profitable customer relationships across all lines of business and create a convenient and innovative omni-channel customer experience beyond our traditional branch footprint, including through the use and promotion of our mobile and online service offerings, such as our ValleyDirect on-line savings account.

Valley National Bank’s subsidiaries are all included in the consolidated financial statements of Valley (See Exhibit 21 at Part IV, Item 15 for a list of subsidiaries).

Valley and the Bank's subsidiaries, excluding trusts, are all included in the consolidated financial statements of Valley (See Exhibit 21 at Part IV, Item 15 for a list of subsidiaries).

These subsidiaries include, but are not limited to:

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• a title insurance agency in New York which also provides services in New Jersey;

• an advisory firm specializing in the investment and management of tax credits;

• subsidiaries which hold, maintain and manage investment assets for the Bank;

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• a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the "REIT" subsidiaries), which own real estate related investments and a REIT subsidiary, which owns some of the real estate utilized by the Bank and related real estate investments.

Except for Valley’s REIT subsidiaries and Valley's insurance agency (10% of which is owned by the insurance agency's co-CEOs), all subsidiaries mentioned above are directly or indirectly wholly owned by the Bank.

Because each REIT must have 100 or more shareholders to qualify as a REIT, each REIT has issued less than 20 percent of its outstanding non-voting preferred stock to individuals, most of whom are current and former Bank employees.

The Bank owns the remaining preferred stock and all the common stock of the REITs.

The Bank’s subsidiaries also include real estate investment trust subsidiaries ("REIT" subsidiaries), which own real estate related investments and a REIT subsidiary, which owns some of the real estate utilized by the Bank and related real estate investments.

Because each REIT must have 100 or more shareholders to qualify as a REIT, each REIT subsidiary has issued less than 20 percent of its

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outstanding non-voting preferred stock to individuals, most of whom are current or former Bank employees.

The Bank owns the remaining preferred stock and all the common stock of the REIT subsidiaries.

Recent Acquisitions

Valley has grown significantly in the past several years primarily through bank acquisitions that expanded our branch footprint in New Jersey and Florida.

Recent bank transactions are discussed further below.

Valley has grown significantly in the past several years both through organic efforts and through bank acquisitions that expanded our business footprint in New Jersey, Florida and New York.

Recent transactions are discussed further below.

The Westchester Bank Holding Corporation.

On D ecember 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 in a ssets, $915.0 million in loans, and $1.2 billion in deposits after purchase accounting adjustments and a branch network of seven locations in Westchester County, New York.

The acquisition represented a significant addition to Valley's New York franchise, and enabled Valley to expand into the Westchester County, New York market.

The common shareholders of Westchester received 229.645 shares of Valley common stock for each Westchester share they owned prior to the merger.

Full systems integration was completed in February 2022 with minimal disruption to our customers.

However, some normal post-systems integration matters involving back-office and other functions were still underway at the filing date of this report.

Dudley Ventures.

On October 8, 2021, Valley acquired certain subsidiaries of Arizona-based Dudley Ventures (DV), an advisory firm specializing in the investment and management of tax credits.

The transaction included the acquisition of DV Fund Advisors and DV Advisory Services which were both subsequently merged and renamed Dudley Ventures, as well as DV's community development entity, DV Community Investment.

On November 16, 2021, Valley also acquired DV Financial Services, a registered broker-dealer regulated by FINRA, which is largely inactive.

The DV related acquisitions are expected to support our efforts to build differentiated sources of non-interest income.

Oritani Financial Corp.

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The total consideration for the acquisition was approximately $835 million, consisting of approximately 71.1 million shares of Valley common stock and the outstanding Oritani stock-based awards.

USAmeriBancorp, Inc.

On January 1, 2018, Valley completed its acquisition of USAmeriBancorp, Inc.

(USAB) headquartered in Clearwater, Florida.

USAB, largely through its wholly-owned subsidiary, USAmeriBank, had approximately $5.1 billion in assets, $3.7 billion in net loans and $3.6 billion in deposits, after purchase accounting adjustments, and maintained a branch network of 29 offices.

The acquisition represented a significant addition to Valley’s Florida presence, primarily in the Tampa Bay market.

The acquisition also brought Valley to the Birmingham, Montgomery, and Tallapoosa areas in Alabama, where USAB maintained 15 of its branches.

The common shareholders of USAB received 6.1 shares of Valley common stock for each USAB share they owned prior to merger.

The total consideration for the acquisition was approximately $737 million, consisting of 64.9 million shares of Valley common stock and the outstanding USAB stock based awards.

Pending Acquisition

Bank Leumi Le-Israel Corporation .

On September 23, 2021, Valley announced that it will acquire Bank Leumi Le-Israel Corporation, the U.S.

subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, referred to as "Bank Leumi USA".

Bank Leumi USA maintains its headquarters in New York City and also has commercial banking offices in Chicago, Los Angeles, Palo Alto, and Aventura, Florida.

As of December 31, 2021, Bank Leumi USA had total assets of $8.3 billion, total deposits of $7.1 billion, and gross loans of $5.8 billion.

Valley has received regulatory approval from the Federal Reserve Bank of New York (FRB) and the Office of the Comptroller of the Currency (OCC), as well as Valley shareholder approval of the issuance of Valley common stock in connection with the acquisition.

The acquisition remains subject to regulatory approval by the New York State Department of Financial Services, as well as other customary closing conditions.

The acquisition is anticipated to close in the second quarter of 2022.

See Note 2 to the consolidated financial statements for further details on the above acquisitions.

Impact of COVID-19

Valley's primary market areas within New Jersey, New York, Florida and Alabama have all experienced significant outbreaks and resurgences of the disease caused by the novel coronavirus (COVID-19) and disruptions from the pandemic.

The COVID-19 pandemic and any preventative or protective actions that Valley or its customers have taken or may take in response resulted and may continue to result in extended periods of disruption to Valley, its customers, service providers, and third parties.

The full extent and duration of the adverse impacts of COVID-19 pandemic on Valley's business, financial position, results of operations, and prospects are currently unknown, but could be significant.

As of the date of this report, the banking and financial services industries have been deemed essential businesses in the jurisdictions in which Valley operates.

Although our branches are now open, we continue to implement various protocols and practices imposed to safeguard the health and wellness of customers and employees and to comply with applicable government directives.

However, the imposition and the extent of any further restrictions on our operations, and compliance therewith could have a material effect on Valley’s business.

Valley cannot predict whether and to what extent governmental and nongovernmental authorities will continue to implement policy measures or further legislative relief to assist Valley and its customers and the failure to do so could have adverse effects on Valley's business.

The Paycheck Protection Program (PPP) provided for in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as supplemented by the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act), was designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks.

These loans were intended to offset payroll and other costs to help those businesses remain viable and allow their workers to pay their bills.

Valley National Bank is a certified Small Business Administration (SBA) lender and facilitated approximately 13,000 SBA-approved PPP loans with balances totaling $2.2 billion as of December 31, 2020.

While difficult to accurately predict, we expect the majority of these loans to be forgiven in accordance with rules, application and documentation requirements for this program.

During 2021, the novel coronavirus (COVID-19) pandemic continued to have a severe disruptive impact on the U.S.

and global economy, particularly due to supply chain disruptions and labor shortages.

While the U.S.

has experienced an economic rebound during 2021 following large scale vaccinations efforts, the current economic outlook still maintains a high level of uncertainty.

During the fourth quarter 2021 and early stages of 2022, Valley's primary market areas within New Jersey, New York, Florida and Alabama have all experienced significant resurgences of the disease due to the Omicron variant.

As the pandemic is ongoing and dynamic in nature with new potential variants, like Omicron, emerging, we continue to monitor the impact of COVID-19 very closely, including its impact on our employees, customers, vendors, communities, and actions of other governmental and nongovernmental authorities or the Federal Reserve.

The extent to which the COVID-19 pandemic will impact our operations and financial results during the first quarter 2022 and beyond is highly uncertain.

As of the date of this report, our branches are all open;

however lobby services may require scheduled appointments in order to reduce occupancy rates in our facilities and reduce risks to our employees and customers.

At this time, many of our staff in various administrative and support offices maintain hybrid work from home/office

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or remote work schedules.

Overall, staffing issues could emerge due to elevated levels of employee absenteeism caused by illness.

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 and to comply with applicable government directives.

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 2020 provided funding for the Small Business Administration (SBA) Paycheck Protection Program (PPP) designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks.

These loans were intended to offset payroll and other costs to help those businesses remain viable, keep their workers on the payroll and fund specified operating expenses.

Qualifying borrowers could receive loan forgiveness by the SBA under this program.

Subsequent legislation extended the authority of the SBA to guaranty loans under the PPP through August 8, 2020.

In December 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act reauthorized the SBA to guarantee loans under the PPP through March 31, 2021, and the PPP Extension Act of 2021 extended that authorization through June 30, 2021 for applications received by the SBA prior to June 1, 2021.

Valley National Bank is a certified SBA lender and facilitated approximately 21,500 SBA-approved PPP loans with balances totaling $3.2 billion.

As of December 31, 2021, we had $436.0 million of PPP loans still outstanding.

While difficult to accurately predict, we expect the majority of these loans remaining on our books to be forgiven during 2022 in accordance with the rules, application and documentation requirements for this program.

Business Segments

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commercial lending, consumer lending, investment management, and corporate and other adjustments.

Valley’s Wealth Management Division comprised of trust, asset management and insurance services, is included in the consumer lending segment.

Valley’s Wealth Management Division comprised of trust, asset management, insurance and tax credit advisory services, is included in the consumer lending segment.

See Note 21 to the consolidated financial statements for details of the financial performance of our business segments.

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Commercial and industrial loans totaled approximately $5.8 billion and represented 17.1 percent of the total loan portfolio at December 31, 2021.

We make commercial loans to small and middle market

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businesses most often located in New Jersey, New York, Florida and Alabama.

Loans originated from Florida accounted for approximately 28 percent of total commercial and industrial loans at both, December 31, 2020 and 2019.

We make commercial loans to small and middle market businesses most often located in New Jersey, New York, Florida and Alabama.

Loans originated from Florida accounted for approximately 26 percent of total commercial and industrial loans at December 31, 2021 as compared to 28 percent of such loans at December 31, 2020.

A significant proportion of Valley’s commercial and industrial loan portfolio is granted to long-standing customers of proven ability, strong repayment performance, and high character.

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Unsecured loans, when made, are generally granted to the Bank’s most creditworthy borrowers.

Unsecured commercial and industrial loans totaled $2.7 billion (including $2.2 billion of SBA guaranteed PPP loans) at December 31, 2020.

Unsecured commercial and industrial loans totaled $1.0 billion (including $436 million of SBA guaranteed PPP loans) at December 31, 2021.

In addition, we provide financing to the health care and industrial equipment leasing market through our leasing subsidiary, Highland Capital Corp.

The commercial portfolio also includes approximately $90.6 million and $6.9 million of New York City and Chicago taxi medallion loans at December 31, 2020, respectively.

The commercial portfolio also includes approximately $85.4 million and $576 thousand of New York City and Chicago taxi medallion loans at December 31, 2021, respectively.

All of these loans are on non-accrual status due to ongoing weakness exhibited in the taxi industry caused by strong competition from alternative ride-sharing services and the economic stress caused by COVID-19.

At December 31, 2020, the non-accrual taxi medallion loans totaling $97.5 million had related reserves of $66.4 million, or 68.1 percent of such loans, within the allowance for loan losses.

At December 31, 2021, the non-accrual taxi medallion loans had related reserves of $58.5 million, or

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68.0 percent of such loans, within the allowance for loan losses.

We continue to closely monitor this portfolio and negative trends in the market valuations of the underlying taxi medallion collateral and a decline in borrower cash flows, among other factors, could result in additional charges to increase the reserves associated with this loan portfolio.

See the “Non-performing Assets” section of “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) for additional information regarding our taxi medallion loans.

Commercial real estate loans.

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Property types in this portfolio range from multi-family residential properties to non-owner occupied commercial, industrial/warehouse and retail.

Loans originated from Florida lending represented 26 percent of the total commercial real estate loans at December 31, 2020 as compared to 25 percent of such loans at December 31, 2019.

Loans originated from Florida lending represented 26 percent of the total commercial real estate loans at both December 31, 2021 and 2020.

Loans are generally written on an adjustable basis with rates tied to a specifically identified market rate index.

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These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

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Consumer Lending Segment

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Additionally, Valley originates jumbo residential mortgage loans, which are mostly fixed-rate with 30-year maturities.

At December 31, 2020, fixed and adjustable rate jumbo residential mortgage loans totaled approximately $2.5 billion.

Interest-only (i.e., non-amortizing) residential mortgage loans within our jumbo portfolio tota led $39.4 million (or 0.94 percent of the total residential mortgage loan portfolio) at December 31, 2020.

The Bank is also a servicer of residential mortgage portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights related primarily to loans originated and sold by the Bank.

See Note 5 to the consolidated financial statements for further details.

At December 31, 2021, fixed and adjustable rate jumbo residential mortgage loans totaled approximately $2.0 billion and $854 million, respectively.

Interest-only (i.e., non-amortizing) residential mortgage loans within our jumbo portfolio totaled $19.5 million (or 0.43 percent of the total residential mortgage loan portfolio) at December 31, 2021.

The Bank services certain residential mortgage portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights related primarily to loans originated and sold by the Bank.

See Notes 5 and 8 to the consolidated financial statements for further details.

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Other consumer loans .

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Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers.

Valley acquired an immaterial amount of automobile loans from its bank acquisitions in Florida since 2014, as auto lending was not a focus of the acquired operations.

However, we implemented our indirect auto lending model in Florida in 2015, and in Alabama in 2018 using our New Jersey based underwriting and loan servicing platform.

The relatively new Florida auto dealer network generated approximately $85 million and $169 million of auto loans in 2020 and 2019, respectively, while the auto loans originated from Alabama totaled $22 million in 2020 as compared to $39 million in 2019.

Home equity lending consists of both fixed and variable interest rate produc ts mainly to provide home equity loans to our residential mortgage customers or take a secondary position to another lender’s first lien position within the footprint of our primary lending territories.

We implemented our indirect auto lending model in Florida and Alabama during 2015 and 2018, respectively, using our New Jersey based underwriting and loan servicing platform.

The Florida auto dealer network generated approximate ly $143.6 million and $84.6 million of auto loans in 2021 and 2020, respectively, while the auto loans originated from Alabama totaled $49.4 million in 2021 as compared to $22.0 million in 2020.

Home equity lending consists of both fixed and variable interest rate products mainly to provide home equity loans to our residential mortgage customers or take a secondary position to another lender’s first lien position within the footprint of our primary lending territories.

We generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 80 percent when originating a home equity loan.

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Wealth Management.

Our Wealth Management and Insurance Services Division provides asset management advisory services, trust services, commercial and personal insurance products, and title insurance.

Our Wealth Management and Insurance Services Division provides asset management advisory services, trust services, commercial and personal insurance products, title insurance, and tax credit advisory services.

Asset management advisory services include investment services for individuals and small to medium sized businesses, trusts and custom-tailored investment strategies designed for various types of retirement plans.

Trust services include living and testamentary trusts, investment management, custodial and escrow services, and estate administration, primarily to individuals.

Tax credit advisory services include sourcing, syndication, and structuring federal and state tax credits for commercial customers and development projects.

Investment Management Segment

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See the “Investment Securities Portfolio” section of the MD&A and Note 4 to the consolidated financial statements for additional information concerning our investment securities.

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Changes in Loan Portfolio Composition

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Valley has no internally planned changes that would significantly impact the current composition of our loan portfolio by loan type.

However, we have continued to diversify the geographic concentrations in the New Jersey and New York City Metropolitan area within our loan portfolio primarily through our bank acquisitions and expanded lending teams in Florida since 2014, including our acquisition of USAB on January 1, 2018.

However, we have continued to diversify the types of borrowers within our geographic concentrations in New Jersey, the New York City metropolitan area, including Westchester County, New York, and Florida.

Many external factors outlined in Item 1A.

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MD&A in this report for further discussion of our loan composition and concentration risks.

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The following table presents the loan portfolio segments by state as an approximate percentage of each applicable segment and our percentage of total loans by state at December 31, 2021.

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The full Board regularly engages in discussions of risk management and receives reports on risk factors from our executive management, other Company officers and the chairman of the Risk Committee.

The Risk Committee assists the Board by, among other things, establishing an enterprise-wide risk management framework and risk culture that is aligned with Valley’s strategic plan and is appropriate for Valley’s capital, business activities, size and risk appetite.

Management applies the enterprise-wide risk management framework to holistically manage and monitor risks across the organization and to aggregate and manage the risk appetite approved by the board.

As part of the risk management framework, the Risk Committee reviews and recommends to the Board appropriate risk tolerances and limits for strategic, credit, interest rate, price, liquidity, compliance, operational (including cyber and information security risk), and reputation risks, oversees that risks are managed within those tolerances, and monitors compliance with applicable laws and regulations.

The Risk Committee assists the Board with among other things, oversight of management's established enterprise-wide risk management framework and risk culture which are intended to align with Valley’s strategic plan and which the Risk Committee deems appropriate for Valley’s capital, business activities, size and risk appetite.

Management utilizes the enterprise-wide risk management framework to holistically manage and monitor risks across the organization and to aggregate and manage the risk appetite approved by the board.

As part of the risk management framework, the Risk Committee reviews and recommends to the Board risk tolerances and limits for strategic, credit, interest rate, price, liquidity, compliance, operational (including cyber and information security risk), and reputation risks, oversees risk management within those tolerances and monitors compliance with applicable laws and regulations.

With guidance from and oversight by the Risk Committee, management continually refines and enhances its risk management policies, procedures and monitoring programs to be able to adapt to changing risks.

In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) was signed into law.

On July 6, 2018, the Board of Governors of the Federal Reserve System (FRB), Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) issued a joint interagency statement regarding the impact of the

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As a result of this statement and the EGRRCPA, Valley and the Bank are no longer subject to Dodd-Frank Act stress testing requirements.

While Valley is no longer required to publish company-run annual stress tests, it continues to internally run stress tests of its capital position that are subject to review by Valley's primary regulators.

Additionally, the results of the internal stress tests are considered in combination with other risk management and monitoring practices at Valley to maintain an effective risk management program.

While Valley is no longer required to publish company-run annual stress tests under the Dodd-Frank Act, it continues to internally run stress tests of its capital position that are subject to review by Valley's primary regulators.

The Bank’s 2021 Capital Stress Test included a climate related scenario that considered geographical climate events within the Bank’s diverse footprint.

The results of the internal stress tests are considered in combination with other risk management and monitoring practices at Valley to maintain an overall risk management program.

Cyber Security

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Information security includes the risk of losses resulting from cyber attacks.

Valley frequently experiences attempted cyber security attacks against its systems.

However, to date, none of these incidents have resulted in material losses, known breaches of customer data or significant disruption of services to our customers.

Within the past few years, we have significantly increased the resources dedicated to cyber security.

We believe that further increases are likely to be required in the future, in anticipation of increases in the sophistication and persistency of cyber-attacks.

We employ personnel dedicated to overseeing the infrastructure and systems necessary to defend against cyber security incidents.

Valley frequently experiences attempted cyber security attacks against its systems, including a 2021 breach by a threat actor of a legacy network from an acquired bank as described in Item 1A.

Risk Factors below.

However, to date, none of these incidents have resulted in material losses or significant disruption of services to our customers.

Over the last several years, we have continued to significantly increase the resources dedicated to cyber security.

We believe that further increases are likely to be required in the future, in anticipation of increases in the sophistication and persistence of cyber attacks.

We employ personnel dedicated to overseeing the infrastructure and systems necessary to defend against cyber security

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Senior management is briefed on information and cyber security matters, preparedness and any incidents requiring a response.

Valley’s Board, through its Risk Committee, has primary oversight responsibility for information security and receives regular updates and reporting from management on information and cyber security matters, including information related to any third-party assessments of Valley’s cyber program.

The Risk Committee periodically approves Valley’s information security policies.

We may be required to expend significant additional resources to modify our protective measures, to investigate and remediate vulnerabilities or other exposures and if we experienced a cyber security breach of customer data, to make required notifications to customers and disclosure to government officials.

Management regularly updates Valley’s information security policies to address these matters and are presented to the Risk Committee for approval.

We may be required to expend significant additional resources to modify our protective measures, to investigate and remediate vulnerabilities or other exposures and if we experience a cyber security breach of customer data, to make required notifications to customers and disclosure to government officials.

As a result, cyber security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access is a high priority for us.

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or other assets wherein adequate protective value can be established and/or verified by reliable outside independent appraisers.

In addition to

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these types of collateral, we, in many cases, will obtain the personal guarantee of the borrower’s principals or an affiliated corporate entity to mitigate the risk of certain commercial and industrial loans and commercial real estate loans.

In addition to these types of collateral, we, in many cases, will obtain the personal guarantee of the borrower’s principals or an affiliated corporate entity to mitigate the risk of certain commercial and industrial loans and commercial real estate loans.

Many times, we will underwrite loans to legal entities formed for the limited purpose of the business which is being financed.

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Absent such guarantees or approval by our credit committee, our commercial real estate underwriting guidelines require that the loan to value ratio (at origination) should not exceed 60 percent, except for certain low risk loan categories where the loan to value ratio requirement may be higher, based on the estimated market value of the property as established by an independent licensed appraiser.

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Reevaluation of collateral values .

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Residential and home equity loans are collateralized by residential real estate.

Collateral values for such loans are typically estimated using individual appraisals performed every 12 months (or 18 months for impaired loans no greater than $1.0 million with current loan to value ratios less than 75 percent).

Collateral values for such existing loans are typically estimated using individual appraisals performed every 12 months (or 18 months for collateral dependent loans no greater than $1.0 million with current loan to value ratios less than 75 percent).

Between scheduled appraisals, property values are monitored within the commercial portfolio by reference to recent trends in commercial property sales as published by leading industry sources.

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All refinanced residential mortgage loans to be held in our loan portfolio require either a new appraisal or a new evaluation in accordance with our appraisal policy.

However, certain residential mortgage loans may be originated for sale and sold without new appraisals when the investor (Fannie Mae or Freddie Mac) presents a refinance of an existing government sponsored enterprise loan without the benefit of a new appraisal.

However, certain residential mortgage loans may be originated for sale and sold without new appraisals when the investor (Fannie Mae or Freddie Mac) accepts a refinance of an existing government sponsored enterprise loan without the benefit of a new appraisal.

Additionally, all loan types are assessed for full or partial charge-off when they are between 90 and 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy) based upon their estimated net realizable value.

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Additionally, on a case-by-case basis, we may extend, restructure, or otherwise modify the terms of existing loans from time to time to remain competitive and retain certain profitable customers, as well as assist 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), except as explained below.

The majority of the concessions made for TDRs involve an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, lowering the monthly payments on loans through either a reduction in interest rate below a market rate or a combination of these two methods.

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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.

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CARES Act Loan Modifications

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These modifications complied with the CARES Act to provide temporary payment relief to those borrowers directly impacted by the COVID-19 pandemic who were not more than 30 days past due as of December 31, 2019.

Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days.

Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley could extend for an additional 90 days.

Any extensions beyond this period were made in accordance with applicable regulatory guidance.

As of December 31, 2020, Valley had approximately $361 million of outstanding loans remaining in their payment deferral period under short-term modifications.

Under the CARES Act and the Enhancement Act and other applicable guidance, none of these loans were considered TDRs as of December 31, 2020.

Valley had approximately $28 million of outstanding loans remaining in their payment deferral period under short-term modifications as of December 31, 2021, as compared to approximately $361 million as of December 31, 2020.

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CARES Act and the Enhancement Act and other applicable guidance, none of these loans were considered TDRs as of December 31, 2021 and 2020.

Extension of Credit to Past Due Borrowers

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(i) a collective reserve component for estimated lifetime expected credit losses for pools of loans that share common risk characteristics and (ii) an individual reserve component for loans that do not share common risk characteristics.

The allowance for unfunded credit commitments mainly consists of undisbursed non-cancellable lines of credit, new loan commitments and commercial letters of credit valued using a similar methodology as used for loans.

The allowance for unfunded credit commitments mainly consists of undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of credit valued using a similar methodology as used for loans.

Management's estimate of expected losses inherent in these off-balance sheet credit exposures also incorporates estimated utilization rate over the commitment's contractual period or an expected pull-through rate for new loan commitments.

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From time to time, the Bank makes purchases of commercial real estate loans and loan participations, residential mortgage loans, automobile loans, and other loan types, originated by, and sometimes serviced by, other financial institutions.

The purchase decision is usually based on several factors, including current loan origination volumes, market interest rates, excess liquidity, our continuous efforts to meet the credit needs of certain borrowers under the Community Reinvestment Act (CRA), as well as other asset/liability management strategies.

The purchase decision is usually based on several factors, including current loan origination volumes, market interest rates, excess liquidity, our continuous efforts to meet the credit needs of certain borrowers under the Community Rein vestment Act (CRA), as well as other asset/liability management strategies.

Valley purchased approximately $58.3 million and $24.3 million of 1-4 family loans, qualifying for CRA purposes during 2021 and 2020, respectively.

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Purchased commercial loans (including commercial and industrial and commercial real estate loans) and residential mortgage loans totaled approximately $666.0 million and $543.0 million, respectively, at December 31, 2021 representing 3.54 percent, and 11.95 percent of our total commercial and residential mortgage loans, respectively.

At December 31, 2020, 5.66 percent of commercial loans originated by third parties were past due 30 days or more, which represented 0.88 percent of our total commercial loan portfolio, and 9.16 percent of residential mortgage loans originated by third parties were past due 30 days or more which represented 1.36 percent of our total residential mortgage portfolio.

Additionally, Valley has performed credit due diligence on the majority of the loans acquired in our bank acquisitions (disclosed under the "Recent Acquisitions" section above) in determining the estimated cash flows receivable from such loans.

At December 31, 2021, 4.38 percent of commercial loans originated by third parties were past due 30 days or more, which represented 0.16 percent of our total commercial loan portfolio delinquencies, and 3.00 percent of residential mortgage loans originated by third parties were past due 30 days or more which represented 0.33 percent of our total residential mortgage portfolio delinquencies.

Additionally, Valley has performed credit due diligence on the majority of the loans acquired in its bank acquisitions (disclosed under the "Recent Acquisitions" section above) in determining their fair value as of the acquisition date.

See the "Loan Portfolio" section of our MD&A of this report below for additional information.

2020 Form 10-K 10

Valley National Bank is one of the largest commercial banks headquartered in New Jersey, with its primary markets located in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Florida and Alabama.

Valley ranked 16th in competitive ranking and market share based on the deposits reported by 173 FDIC-insured financial institutions in the New York, Northern New Jersey and Long Island deposit markets as of June 30, 2021.

The FDIC also ranked Valley 6th, 38th, 21st, and 18th in the states of New Jersey, New York, Florida, and Alabama, respectively, based on deposit market share as of June 30, 2020.

While our FDIC rankings reflect a solid foundation in our primary markets, the market for banking and bank-related services is highly competitive and we face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources than Valley to deal with the potential negative changes in the financial markets and regulatory landscape.

The FDIC also ranked Valley 6th, 36th, 19th, and 18th in the states of New Jersey, New York, Florida, and Alabama, respectively, based on deposit market share as of June 30, 2021.

While our FDIC rankings reflect a solid foundation in our primary markets, the market for banking and bank-related services is highly competitive and we face

2021 Form 10-K

substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources than Valley to deal with the potential negative changes in the financial markets and regulatory landscape.

Many of these competitors may have fewer regulatory constraints, broader geographic service areas, greater capital, and, in some cases, lower cost structures.

Valley competes with other providers of financial services such as commercial and savings banks, savings and loan associations, credit unions, money market and mutual funds, mortgage companies, title agencies, asset managers, insurance companies, and a large list of other local, regional and national institutions which offer financial services.

Additionally, the financial services industry is facing a wave of digital disruption from fintech companies and other large financial services providers.

We compete by offering quality products and innovative services at competitive prices, and by maintaining our products and services offerings to keep pace with customer preferences in the market areas in which we operate.

Further, the financial services industry is facing a wave of digital disruption from financial technology (fintech) companies and other large financial services providers.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new, technology-driven products and services which increases efficiency and enables financial institutions to better serve customers and to reduce costs.

These competitors provide innovative web-based solutions to traditional retail banking services and products.

Fintech companies tend to have stronger operating efficiencies and fewer regulatory burdens than their traditional bank counterparts, including Valley.

Within our markets, we also compete with some of the largest financial institutions in the world that have greater human and financial resources and are able to offer a large range of products and services at competitive rates and prices.

In addition, we face an intense competition among direct banks because online banking provides customers the ability to rapidly deposit and withdraw funds and open and close accounts in favor of products and services offered by competitors.

Nevertheless, we believe we can compete effectively as a result of utilizing various strategies including our long history of local customer service and convenience as part of a relationship management culture, in conjunction with the pricing of loans and deposits.

Our customers are influenced by the convenience, quality of service from our knowledgeable staff, personal contacts and attention to customer needs, as well as availability of products and services and related pricing.

We provide such convenience through our banking network of 226 branches, an extensive ATM network, and our telephone and on-line banking systems.

Our competitive advantage also lies in our strong community presence with over 90 years of service.

This longevity is especially appealing to customers seeking a strong, stable and service-oriented bank.

These competitors provide innovative digital solutions to traditional retail banking services and products.

Additionally, fintech companies tend to have stronger operating efficiencies and fewer regulatory burdens than their traditional bank counterparts, including Valley.

We also face intense competition from direct banks because online banking provides customers the ability to rapidly deposit and withdraw funds and open and close accounts making the transaction experience more efficient.

Nevertheless, we believe we can compete effectively by utilizing various strategies and product offerings including our long history of local, solutions-based customer service.

This level of service and commitment is particularly impactful because of our strong community presence with over 90 years of service, providing us a competitive advantage with such customers over certain non-traditional bank competitors.

Overall, our customers are influenced by the convenience, solution-based service from our knowledgeable staff and personal contacts, as well as availability of products and services.

We provide such convenience through our multi-channel delivery system, including more than 200 branch offices, an extensive ATM network, and our telephone, on-line and digital banking systems.

We continually review our pricing, products, locations, alternative delivery channels and various acquisition prospects, and periodically engage in discussions regarding possible acquisitions to maintain and enhance our competitive position.

Human Capital

At Valley, our goal is to give people and businesses the power to succeed.

We strive to build an inclusive, diverse, and high-performing culture where empowered associates, innovation and collaboration thrive.

We are a customer-centric organization committed to our associates, our customers, and our shareholders.

Demographics.

At December 31, 2020, Valley National Bank and its subsidiaries employed 3,155 full-time equivalent persons across our multi-state footprint.

Management considers relations with its employees to be satisfactory.

As of December 31, 2021, Valley National Bank and its subsidiaries employed 3,370 full and part time employees across our multi-state footprint.

During the year 2021, we hired 887 employees and our voluntary turnover rate was 20 percent.

Our average tenure was approximately 8.6 years.

Our average tenure was 7.9 years.

Diversity, Equity and Inclusion.

We believe that the diversity of our associates helps us to become stronger.

We believe that the diversity of our associates makes us stronger.

Thus, we strive to foster a strong and inclusive culture that is committed to providing the quality service to our customers, the communities in which we operate and each other.

We encourage everyone to expand their points of view, to be open-minded and to seek to understand our individual differences.

Valley embraces and values the unique perspective each employee brings to the workplace.

2021 Form 10-K 12

As of December 31, 2020, the population of our workforce broken down by gender and diversity was as follows:

As of December 31, 2021, the population of our workforce broken down by gender and diversity was as follows, based on information voluntarily provided by our workforce:

In comparison to the percentages shown in the tables above, the population of our workforce was approximately 59 percent and 41 percent White and People of Color, respectively, and 65 percent and 35 percent Female and Male, respectively, as of December 31, 2020.

Total Rewards.

We offer market competitive compensation programs to attract, engage, retain, and motivate talent across our footprint.

These programs include base wages, performance-based bonus and incentive compensation, stock awards, a 401(k) Plan with a company match, healthcare and insurance benefits, voluntary benefits, commuter benefits, health savings account, flexible spending accounts, tuition reimbursement, paid time off, disability, family leave, wellness and employee assistance programs.

We offer competitive total rewards programs to attract, engage, retain, and motivate talent across our footprint.

These programs include base wages, performance-based bonus and incentive compensation, stock awards, a 401(k) Plan with a very competitive company match, healthcare and insurance benefits, voluntary benefits, commuter benefits, health savings account, flexible spending accounts, tuition reimbursement, paid time off, disability, family leave, wellness and employee assistance programs.

Health and Safety.

We are committed to the health, safety and wellbeing of our associates.

In 2020, we embraced safety protocols that have become the new way of life in this pandemic era.

Maintaining alignment with state and local COVID-19 mandates and recommendations, Valley implemented remote work, where functional roles allowed, moving approximately 90 percent of our non-retail associates from the office until safety strategies could be implemented.

Return to the workplace protocols and tools have allowed us to return critical workers to Valley facilities.

We are committed to the safety and well-being of our associates.

Since the onset of the COVID-19 pandemic, we have endeavored to provide an environment aligned with a positive customer experience while embracing safety protocols that have become a way of life.

Maintaining alignment with state, local and CDC COVID-19 mandates and recommendations, Valley implemented work rules and protocols within our facilities that have created an environment where essential work can be done.

Remote work allows many of our Associates to provide service to the Bank and our customers while providing business resiliency through location differentiation.

Within both our Talent Acquisition and Talent Development teams, our goal of attracting, developing, and retaining the most qualified people is crucial to all aspects of Valley's activities and long-term success and is central to our long-term strategy.

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Our annual Talent Review and Succession Planning process has created a broader understanding of our key talent and our flagship Leadership Development programs provide meaningful development and experiences that challenge our high potential associates.

Additional information regarding Valley's human capital management can be found under Item 1:

Election of Directors of its 2021 Proxy Statement.

Corporate Social and Environmental Responsibility

Valley recognizes the social and environmental responsibility that arises from the impact of our activities on peoples’ lives and society as a whole.

To comply with this responsibility, we established the Environmental, Social and Governance (ESG) Council in 2020 with respect to ESG issues.

The Council helps guide us to consider how environmental, social and governmental issues impact Valley’s ability to achieve its long-term strategy while being socially responsible.

Additional information regarding Valley's human capital management and corporate social and environmental responsibility can be found under “Environmental, Social and Governance (ESG) Matters” in our 2022 Proxy Statement when it is issued.

2021 Form 10-K

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Since Office Principal occupation during last five years other than Valley

Ira Robbins 46 2009 Chairman of the Board, President, and Chief Executive Officer of Valley and Valley National Bank

Hagedorn 54 2019 Senior Executive Vice President, Chief Financial Officer of Valley and Valley National Bank 2015 - 2018 Vice Chairman, UMB Financial Corporation, President and CEO, UMB Bank n.a.

Iadanza 62 2015 Senior Executive Vice President of Valley and Chief Banking Officer of Valley National Bank

Joseph Chillura 54 2020 Senior Executive Vice President of Valley and Chief Customer Officer of Valley National Bank

Janis 72 2017 Senior Executive Vice President, General Counsel, and Corporate Secretary of Valley and Valley National Bank 1992 - 2016 Partner, SEC, Banking and Merger & Acquisitions, Day Pitney LLP

Bardusch 55 2016 Senior Executive Vice President of Valley and Chief Operating Officer of Valley National Bank 2014 - 2016 Executive Vice President, Chief Information Officer, Head of Technology and Operations, MVB Financial Corp.

Scofield 61 2015 Executive Vice President of Valley and Chief Risk Officer of Valley National Bank

Surowiec 60 2017 Senior Executive Vice President of Valley and Chief People Officer of Valley National Bank 2014 - 2016 Executive Vice President and Chief Human Resources Officer, CDK Global

Ira Robbins 47 2009 Chairman of the Board and Chief Executive Officer of Valley and Valley National Bank

Iadanza 63 2015 President of Valley and Valley National Bank

Hagedorn 55 2019 Senior Executive Vice President, Chief Financial Officer, and interim Chief Risk Officer of Valley and Valley National Bank 2015 - 2018 Vice Chairman, UMB Financial Corporation, President and CEO, UMB Bank n.a.

Chillura 55 2020 Senior Executive Vice President of Valley and Valley National Bank, Commercial Banking

Janis 73 2017 Senior Executive Vice President, General Counsel, and Corporate Secretary of Valley and Valley National Bank

Surowiec 61 2017 Senior Executive Vice President of Valley and Chief People Officer of Valley National Bank

Mark Saeger 57 2018 Executive Vice President of Valley and Chief Credit Officer of Valley National Bank

Crandell 50 2007 Executive Vice President, Chief Accounting Officer of Valley and Valley National Bank

Crandell 51 2007 Executive Vice President and Chief Accounting Officer of Valley and Valley National Bank

All officers serve at the pleasure of the Board of Directors.

Bardusch ceased serving as Senior Executive Vice President of Valley and Chief Operating Officer of the Bank effective February 16, 2022.

Available Information

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We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments thereto available on our website at www.valley.com without charge as soon as reasonably practicable after filing or furnishing them to the SEC.

Also available on our website are Valley’s Code of Conduct and Ethics that applies to all of our employees including our executive officers and directors, Valley’s Audit Committee Charter, Valley’s Compensation and Human Resources Committee Charter, Valley’s Nominating and Corporate Governance Committee Charter, and Valley’s Corporate Governance Guidelines.

Also available on our website, are Valley’s Code of Conduct and Ethics that applies to all of our employees, including our executive officers and directors, Valley’s Audit Committee Charter, Valley’s Compensation and Human Capital Management Committee Charter, Valley’s Nominating and Corporate Governance Committee Charter, and Valley’s Corporate Governance Guidelines.

Additionally, we will provide without charge a copy of our Annual Report on Form 10-K or the Code of Conduct and Ethics to any shareholder by mail.

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Shareholder Relations, 1455 Valley Road, Wayne, NJ 07470.

2020 Form 10-K

SUPERVISION AND REGULATION

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Statutory and regulatory controls increase a bank holding company’s cost of doing business and limit the options of its management to deploy assets and maximize income.

The compliance cost for Valley is significant and subject to increase as new governmental regulations are enacted and/or the level of enforcement of those regulators increases.

In particular, Valley employs specialists and retains outside advisors to ensure that Valley has sufficient resources to comply with the regulations to which it is subject.

The compliance cost for Valley is significant and subject to increase as new governmental regulations are enacted and/or the level of enforcement of those regulations increases.

In particular, Valley employs specialists and retains outside advisors with the expectation that Valley will have sufficient resources to comply with the regulations to which it is subject.

Certain of Valley's competitors, including credit unions, fintech companies, and others, are not regulated to the extent that Valley and other banks are, which may place Valley at a competitive disadvantage.

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It is intended only to briefly summarize some material provisions.

2021 Form 10-K 14

Bank Holding Company Regulation

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As a bank holding company, Valley is supervised by the FRB and is required to file reports with the FRB and provide such additional information as the FRB may require.

In July 2021, Valley elected to be treated as a financial holding company.

The Holding Company Act prohibits Valley, with certain exceptions, from acquiring direct or indirect ownership or control of five percent or more of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to subsidiary banks, except that it may, upon application, engage in, and may own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking “as to be a proper incident thereto.” The Holding Company Act requires prior approval by the FRB of the acquisition by Valley of five percent or more of the voting stock of any other bank.

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The Holding Company Act does not place territorial restrictions on the activities of non-bank subsidiaries of bank holding companies.

The Gramm-Leach-Bliley Act, discussed below, allows Valley to expand into insurance, securities and other activities that are financial in nature if Valley elects to become a financial holding company.

As a financial holding company, Valley may engage in a broader range of non-banking activities than permitted for bank holding companies and their subsidiaries that have not elected to become financial holding companies.

Financial holding companies may engage directly or indirectly, either de novo or by acquisition, in activities that are defined by the Federal Reserve to be financial in nature, provided that the financial holding company gives the Federal Reserve after-the-fact notice of certain new activities.

Activities defined to be financial in nature include, but are not limited to:

providing financial or investment advice;

underwriting;

dealing in or making markets in securities;

making merchant banking investments, subject to significant limitations;

and any activities previously found by the Federal Reserve to be closely related to banking.

In order to maintain our status as a financial holding company, we and the Bank are expected to be well capitalized and well managed, as defined in applicable regulations and determined in part by the results of regulatory examinations, and must comply with Community Reinvestment Act obligations.

Failure to maintain these standards may result in restrictions on our activities and may ultimately permit the Federal Reserve to take enforcement actions against us and restrict our ability to engage in activities defined to be financial in nature.

Regulation of Bank Subsidiary

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There are various legal limitations, including Sections 23A and 23B of the Federal Reserve Act, which govern the extent to which a bank subsidiary may finance or otherwise supply funds to its holding company or its holding company’s non-bank subsidiaries.

Under federal law, no bank subsidiary may, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, its parent or the non-bank subsidiaries of its parent (other than direct subsidiaries of such bank which are not financial subsidiaries) or take their securities as collateral for loans to any borrower.

Under federal law, no bank subsidiary may, subject to limited exceptions, make loans or extensions of credit to, or investments in the securities of, its parent or the non-bank subsidiaries of its parent (other than direct subsidiaries of such bank which are not financial subsidiaries) or take their securities as collateral for loans to any borrower.

Each bank subsidiary is also subject to collateral security requirements for any loans or extensions of credit permitted by such exceptions.

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• 8.0 percent Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets.

2020 Form 10-K 14

• 4.0 percent Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).

2021 Form 10-K

Under Basel III, both Valley and Valley National Bank are required to maintain a 2.5 percent “capital conservation buffer” on top of the minimum risk-weighted asset ratios, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0 percent, (ii) Tier 1 capital to risk-weighted assets of at least 8.5 percent, and (iii) total capital to risk-weighted assets of at least 10.5 percent.

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Similar categories apply to bank holding companies.

On January 1, 2019, the capital conservation buffer was fully phased in, and as a result, the capital ratios applicable to depository institutions under Basel III now exceed the ratios to be considered well-capitalized under the prompt corrective action regulations.

Valley National Bank’s capital ratios were all above the minimum levels required for it to be considered a “well capitalized” financial institution at December 31, 2021, under the “prompt corrective action” regulations.

For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred for 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, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) for the year ended December 31, 2020 will be phased in over the same time frame.

For regulatory capital purposes, in accordance with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax was deferred for a two-year period ending January 1, 2022, and will be phased in on a pro-rata basis over a three-year period ending January 1, 2025.

Additionally, 25 percent, or $19.1 million on an after tax basis of the reserve build (i.e., provision for credit losses less net charge-offs) since CECL adoption through December 31, 2021 is being phased in over the same time frame.

We estimate these deferrals when fully phased in will reduce our risk based capital ratios by approximately 14 basis points.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act)

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Because we exceed $10 billion in assets, we are subject to the interchange fee cap.

2020 Form 10-K

The Dodd-Frank Act also imposed stress testing on Valley and the Bank.

However, the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) and a joint interagency statement regarding the impact of the EGRRCPA resulted in Valley and the Bank being no longer subject to the stress testing requirements.

However, under safety and soundness principles we will continue to conduct stress testing of our own design.

However, under safety and soundness principles we continues to conduct stress testing of our own design.

2021 Form 10-K 16

The Volcker Rule (contained in the Dodd-Frank Act) prohibits an insured depository institution and its affiliates from:

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The Rule also effectively prohibits most short-term trading strategies investments and prohibits the use of some hedging strategies.

In 2021, the Volcker Rule was amended to exempt certain qualifying venture capital funds from the definition of Covered Funds.

We identified no investments held as of December 31, 2021 that meet the definition of Covered Funds.

Valley has invested in venture capital funds consistent with the exemption requirements.

Incentive Compensation

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Transactions by the Bank with Related Parties

Valley National Bank’s authority to extend credit to its directors, executive officers and 10 percent shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of the National Bank Act, Sarbanes-Oxley Act and Regulation O of the FRB thereunder.

Valley National Bank’s authority to extend credit to its directors, executive officers and 10 percent shareholders, as well as to entities controlled by such persons (insiders), is currently governed by the requirements of the National Bank Act, Sarbanes-Oxley Act and Regulation O of the FRB thereunder.

Among other things, these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s capital.

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The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community.

The CRA requires the OCC, in connection with its examination of a national bank, to assess the association’s record of meeting the credit needs of its community and to take such record into account in its

2020 Form 10-K 16

evaluation of certain applications by such association.

The CRA also requires all institutions to make public disclosure of their CRA ratings.

Valley National Bank received an overall “outstanding” CRA rating in its most recent examination.

Valley National Bank received an overall “outstanding” CRA rating in its most recent completed examination for the three-year period ending in 2018.

Valley National Bank is due for another examination in 2022 covering the three-year period ending in 2021.

2021 Form 10-K

A bank which does not have a CRA program that is deemed satisfactory or better by its regulator may be prevented from making acquisitions.

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• Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit;

2020 Form 10-K

• Fair Credit Reporting Act and Regulation V, governing the provision of consumer information to credit reporting agencies and the use of consumer information;

2021 Form 10-K 18

• Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies.

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Central banks around the world, including the FRB, have commissioned working groups of market participants and official sector representatives with the goal of finding suitable replacements for the London Interbank Offered Rate (LIBOR) based on observable market transactions because of the phase out of LIBOR.

Most tenors of LIBOR are expected to cease being published on June 30, 2023 with some tenors expected to cease being published earlier.

The FRB has stated that financial institutions should stop writing contacts using LIBOR by the end of 2021 at the latest.

This change away from LIBOR and transition to other benchmarks may have an adverse impact on the value of, return on and trading markets for a broad array of financial products, including any LIBOR-based securities, loans and derivatives that are included in our financial assets and liabilities.

A transition away from LIBOR also requires extensive changes to the contracts that govern these LIBOR-based products, as well as our systems and processes.

In the U.S., these working groups recommended the Secured Overnight Financing Rate (SOFR) as the replacement for LIBOR.

Most tenors of LIBOR will cease being published on June 30, 2023, although some tenors ceased at the end of 2021.

federal banking agencies issued guidance essentially requiring banking organizations to cease using LIBOR as a reference rate in new contracts by the end of 2021.

The change away from LIBOR may have an adverse impact on the value of, return on and trading markets for a broad array of financial products, including any LIBOR-based securities, loans and derivatives that are included in our financial assets and liabilities.

The transition away from LIBOR also required extensive changes to the contracts that govern these LIBOR-based products, as well as our systems and processes.

On April 6, 2021, the State of New York enacted legislation which provides that any contract governed by New York law and which references LIBOR and which does not contain effective “fallback provisions” will be deemed to be replaced by the “recommended benchmark replacement.” Under the statute the “recommended benchmark replacement” is based on SOFR.

Similar legislation, which would cover all U.S.

contracts, was passed by the U.S.

House of Representatives in December 2021.

A number of the Bank's commercial loans, certain residential mortgage loans, derivative positions, trust preferred securities issued to our capital trusts, and the reset provisions for our preferred stock issuances are based upon LIBOR.

The Bank will also be subject to changes to models and systems that currently use LIBOR reference rates, as well as market and strategic risks that could arise from the use of alternative reference rates.

The Bank has established a working group to identify and prepare fall back language and replacement provisions, as well as ensure our systems readiness for a change in reference rate.

The Bank established a working group to identify and prepare fall back language and replacement provisions, as well as ensure our systems readiness for a change in reference rate.

As of December 31, 2021, Valley ceased originating any LIBOR based products.

Regulators have expressed concern about litigation that could arise due to the change from LIBOR to another rate.

2021 Form 10-K

Prohibitions Against Tying Arrangements

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Section 1972 on certain tying arrangements.

A depository institution is prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the

2020 Form 10-K 18

consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

A depository institution is prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business