What changed in this filing

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Item 1. Financial Statements

2022-11-08 compared with 2022-08-09 · 303 added, 201 removed, 1386 unchanged (27% of the section changed)

3 unchanged sentences

(in thousands, except for share data)

September 30,

2022 December 31,

6 unchanged sentences

Available for sale debt securities 1,271,854 1,128,809

Held to maturity debt securities (net of allowance for credit losses of $ 1,508 at June 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

26 unchanged sentences

50,000,000 authorized shares:

Series A ( 4,600,000 shares issued at June 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 June 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 June 30, 2022 and December 31, 2021)

issued 507,896,910 and 423,034,027 shares at September 30, 2022 and December 31, 2021)

178,185 148,482

2 unchanged sentences

Accumulated other comprehensive loss ( 165,557 ) ( 17,932 )

Treasury stock, at cost ( 1,568,384 common shares at June 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 )

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

22 unchanged sentences

Service charges on deposit accounts 10,338 5,428 26,617 15,614

(Losses) gains on securities transactions, net ( 309 ) 375 ( 1,381 ) 476

Gains (losses) on securities transactions, net 323 787 ( 1,058 ) 1,263

Fees from loan servicing 3,138 2,894 8,636 8,980

23 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

Net losses arising during the period ( 57,242 ) ( 3,953 ) ( 148,403 ) ( 15,860 )

Less reclassification adjustment for net losses (gains) included in net income — 76 ( 10 ) 120

Less reclassification adjustment for net gains included in net income ( 12 ) ( 613 ) ( 22 ) ( 493 )

Total ( 57,254 ) ( 4,566 ) ( 148,425 ) ( 16,353 )

9 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Common Stock Accumulated

33 unchanged sentences

Balance - June 30, 2022 209,691 506,329 178,185 4,965,488 982,146 ( 108,337 ) ( 22,260 ) 6,204,913

For the Six Months Ended June 30, 2021

Net income — — — — 178,119 — — 178,119

Other comprehensive loss, net of tax — — — — — ( 57,220 ) — ( 57,220 )

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

— — — — ( 56,242 ) — — ( 56,242 )

Effect of stock incentive plan, net

— 23 — 7,244 ( 13 ) — 200 7,431

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, 2021

Common Stock Accumulated

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Balance - June 30, 2021 209,691 406,084 142,550 3,658,636 744,768 ( 17,735 ) ( 103 ) 4,737,807

Net income — — — — 122,580 — — 122,580

Other comprehensive income, net of tax — — — — — ( 3,640 ) — ( 3,640 )

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

— — — — ( 45,228 ) — — ( 45,228 )

Effect of stock incentive plan, net — 1,230 426 13,831 ( 168 ) — 62 14,151

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.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

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(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from financing activities:

46 unchanged sentences

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.

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 other entities in which Valley has a controlling financial interest.

All inter-company transactions and balances have been eliminated.

4 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current 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 June 30, 2022 and for all periods presented have been made.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year or any subsequent interim period.

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, 2022 and for all periods presented have been made.

The results of operations for the three and nine months ended September 30, 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.

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On April 1, 2022, Valley completed its acquisition of Bank Leumi Le-Israel Corporation, the U.S.

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

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

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

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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 six months ended June 30, 2022 from the date of the acquisition .

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, 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 the closing date of the transaction:

April 1, 2022

(in thousands)

Assets acquired:

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

11 unchanged sentences

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 six months ended June 30, 2022 from the date of acquisition.

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.

3 unchanged sentences

The total consideration for the merger was $ 211.1 million, consisting of approximately 15.7 million shares of Valley common stock.

During the six months ended June 30, 2022, Valley revised the estimated fair values of the acquired assets as of the acquisition date of Westchester based upon additional information obtained that existed as of December 1, 2021.

During the nine months ended September 30, 2022, Valley revised the estimated fair values of the acquired assets as of the acquisition date of Westchester based upon additional information obtained that existed as of December 1, 2021.

The adjustments related to the 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 the Bank Leumi USA acquisition ab ove totaled $ 54.5 million and $ 58.9 million for the three and six months ended June 30, 2022, respectively.

The merger expenses largely consisted of salaries and benefits expense, professional and legal fees, and other expense (largely consisting of technology related costs) within non-interest expense on the consolidated statements of income.

Valley incurred no merger related expenses during the three and six months ended June 30, 2021.

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 ab ove totaled $ 4.7 million and $ 63.8 million for the three and nine months ended September 30, 2022, respectively.

The merger expenses largely consisted of salaries and benefits expense;

technology, furniture and equipment expense;

and professional and legal 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.

Earnings Per Common Share

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

11 unchanged sentences

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 immaterial fo r the three and six months ended June 30, 2022 and 2021.

Potential anti-dilutive weighted common shares w ere immaterial for the three and nine months ended September 30, 2022 and 2021.

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 six months ended June 30, 2022:

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, 2022:

Components of Accumulated Other Comprehensive Loss Total

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(in thousands)

Balance at March 31, 2022 $ ( 29,716 ) $ ( 728 ) $ ( 25,654 ) $ ( 56,098 )

Balance at June 30, 2022 $ ( 81,985 ) $ ( 831 ) $ ( 25,521 ) $ ( 108,337 )

Other comprehensive loss before reclassification ( 57,242 ) ( 85 ) — ( 57,327 )

1 unchanged sentence

Other comprehensive (loss) income, net ( 57,254 ) ( 98 ) 132 ( 57,220 )

Balance at June 30, 2022 $ ( 81,985 ) $ ( 831 ) $ ( 25,521 ) $ ( 108,337 )

Balance at September 30, 2022 $ ( 139,239 ) $ ( 929 ) $ ( 25,389 ) $ ( 165,557 )

Components of Accumulated Other Comprehensive Loss Total

11 unchanged sentences

Other comprehensive (loss) income, net ( 148,425 ) 403 397 ( 147,625 )

Balance at June 30, 2022 $ ( 81,985 ) $ ( 831 ) $ ( 25,521 ) $ ( 108,337 )

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 six months ended June 30, 2022 and 2021:

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, 2022 and 2021:

Amounts Reclassified from

1 unchanged sentence

Three Months Ended

June 30, Six 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 (losses) gains on AFS securities before tax $ — $ ( 103 ) $ 14 $ ( 162 ) (Losses) gains on securities transactions, net

Unrealized gains on AFS securities before tax $ 16 $ 825 $ 30 $ 663 Gains (losses) on securities transactions, net

Tax effect ( 4 ) ( 212 ) ( 8 ) ( 170 )

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2021-01 is not expected to have a significant impact on Valley’s consolidated financial statements.

2021-05 "Lessors – Certain Leases with Variable Lease Payments" updates guidance in 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:

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;

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2022-01 also clarifies that no assets may be added to a closed portfolio once it is designated in a portfolio layer method hedge.

2022-01 will be effective for Valley on January 1, 2023, and it is not expected to have a significant impact on Valley's consolidated financial statements.

2022-01 will be effective for Valley on January 1, 2023.

Valley is currently evaluating the impact of ASU No.

2022-01 but it is not expected to have a significant impact on Valley's consolidated financial statements.

2022-02, “Financial Instruments – Credit Losses (Topic 326):

11 unchanged sentences

and (iii) the fair value of the securities with contractual sale restrictions.

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.

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.

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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 June 30, 2022 and December 31, 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,

2022 Fair Value Measurements at Reporting Date Using:

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$ 34,942 $ 23,917 $ — $ —

Trading debt securities 4,100 2,915 1,185 —

Available for sale debt securities:

48 unchanged sentences

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 $ 11.2 million and $ 11.6 million at June 30, 2022 and December 31, 2021, respectively.

(1) Includes equity securities measured at net asset value (NAV) per share (or its equivalent) as a practical expedient totaling $ 11.0 million and $ 11.6 million at September 30, 2022 and December 31, 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 $ 18.3 million and $ 136.3 million at June 30, 2022 and December 31, 2021, respectively.

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

(3) Derivative financial instruments are included in this categor y.

6 unchanged sentences

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.

Trading debt securities consist of U.S Treasury securities and municipal bonds reported at fair value utilizing Level 1 and Level 2 inputs, respectively.

The prices for 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.

1 unchanged sentence

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.

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.

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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 June 30, 2022 and December 31, 2021 based on the short duration these assets were held, and the credit quality of these loans.

Non-performance risk did not materially impact the fair value of mortgage loans held for sale at September 30, 2022 and December 31, 2021 based on the short duration these assets were held, and the credit quality of these loans.

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 June 30, 2022 and December 31, 2021), is determined based on the current market prices for similar instruments.

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, 2022 and December 31, 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 June 30, 2022 and December 31, 2021.

The credit valuation adjustments were not significant to the overall valuation of Valley’s derivatives at September 30, 2022 and December 31, 2021.

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

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Certain real estate appraisals may be discounted based on specific market data by location and property type.

At June 30, 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 June 30, 2022, collateral dependent loans with a total amortized cost of $ 144.6 million, including our taxi medallion loan portfolio, were reduced by specific allowance for loan losses allocations totaling $ 78.5 million to a reported total net carrying amount of $ 66.1 million.

At September 30, 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, 2022, collateral dependent loans with a total amortized cost of $ 171.3 million, including our taxi medallion loan portfolio, were reduced by specific allowance for loan losses allocations totaling $ 98.2 million to a reported total net carrying amount of $ 73.1 million.

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.

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.

There were no adjustments to the appraisals of foreclosed assets at June 30, 2022.

There were no adjustments to the appraisals of foreclosed assets at September 30, 2022.

Other Fair Value Disclosures

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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.

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 June 30, 2022 and December 31, 2021 were as follows:

Hierarchy June 30, 2022 December 31, 2021

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, 2022 and December 31, 2021 were as follows:

Hierarchy September 30, 2022 December 31, 2021

Amount Fair Value Carrying

34 unchanged sentences

Equity Securities

Equity securities totaled $ 41.7 million and $ 36.5 million at June 30, 2022 and December 31, 2021, respectively.

Equity securities totaled $ 43.3 million and $ 36.5 million at September 30, 2022 and December 31, 2021, respectively.

See Note 6 for further details on equity securities.

Trading Debt Securities

The fair value of trading debt securities, wholly consisting of municipal bonds, totaled $ 38.1 million at December 31, 2021.

There were no trading debt securities at June 30, 2022.

The fair value of trading debt securities totaled $ 4.1 million and $ 38.1 million at September 30, 2022 and December 31, 2021, respectively.

Net trading gains and losses were included in net gains and losses on securities transactions within non-interest income.

We recorded net trading losses of $ 387 thousand and $ 1.4 million for three and six months ended June 30, 2022, respectively.

Net trading gains totaled $ 489 thousand and $ 707 thousand for the three and six months ended June 30, 2021, respectively.

We recorded net trading losses of $ 1.2 million and net trading gains of $ 705 thousand for the nine months ended September 30, 2022 and 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 June 30, 2022 and December 31, 2021 were as follows:

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

Losses Fair Value

(in thousands)

June 30, 2022

September 30, 2022

Treasury securities $ 306,748 $ — $ ( 28,846 ) $ 277,902

16 unchanged sentences

Total $ 1,116,091 $ 19,252 $ ( 6,534 ) $ 1,128,809

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

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

Twelve Months More than

4 unchanged sentences

(in thousands)

June 30, 2022

September 30, 2022

Treasury securities $ 277,902 $ ( 28,846 ) $ — $ — $ 277,902 $ ( 28,846 )

20 unchanged sentences

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 655 and 139 at June 30, 2022 and December 31, 2021, respectively.

As of June 30, 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 $ 446.4 million.

The contractual maturities of available for sale debt securities at June 30, 2022 are set forth in the following table.

Within the available for sale debt securities portfolio, the total number of security positions in an unrealized loss position was 743 and 139 at September 30, 2022 and December 31, 2021, respectively.

As of September 30, 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 $ 348.1 million.

The contractual maturities of available for sale debt securities at September 30, 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.

June 30, 2022

September 30, 2022

(in thousands)

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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 5.3 years at June 30, 2022.

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

Impairment Analysis of Available For Sale Debt Securities

3 unchanged sentences

Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis.

Val ley has evaluated available for sale debt securities that are in an unrealized loss position as of June 30, 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 six months ended June 30, 2022 and 2021.

There was no allowance for credit losses for available for sale debt securities at June 30, 2022 and December 31, 2021.

Val ley has evaluated available for sale debt securities that are in an unrealized loss position as of September 30, 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, 2022 and 2021.

There was no allowance for credit losses for available for sale debt securities at September 30, 2022 and December 31, 2021.

Held to Maturity Debt Securities

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

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

Losses Fair Value

(in thousands)

June 30, 2022

September 30, 2022

Treasury securities $ 67,075 $ — $ ( 1,045 ) $ 66,030

19 unchanged sentences

Total $ 2,668,697 $ 25,980 $ ( 34,072 ) $ 2,660,605

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

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

Twelve Months More than

4 unchanged sentences

(in thousands)

June 30, 2022

September 30, 2022

Treasury securities $ 66,030 $ ( 1,045 ) $ — $ — $ 66,030 $ ( 1,045 )

23 unchanged sentences

Total $ 1,440,435 $ ( 22,830 ) $ 242,949 $ ( 11,242 ) $ 1,683,384 $ ( 34,072 )

Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 717 and 108 at June 30, 2022 and December 31, 2021, respectively.

As of June 30, 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 $ 892.6 million.

The contractual maturities of investments in debt securities held to maturity at June 30, 2022 are set forth in the table below.

Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 826 and 108 at September 30, 2022 and December 31, 2021, respectively.

As of September 30, 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 $ 619.5 million.

The contractual maturities of investments in debt securities held to maturity at September 30, 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.

June 30, 2022

September 30, 2022

(in thousands)

6 unchanged sentences

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 7.7 years at June 30, 2022.

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

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 June 30, 2022 and December 31, 2021.

The following table summarizes the amortized cost of held to maturity debt securities by external credit rating at September 30, 2022 and December 31, 2021.

AAA/AA/A Rated BBB rated Non-investment grade rated Non-rated Total

(in thousands)

June 30, 2022

September 30, 2022

Treasury securities $ 67,075 $ — $ — $ — $ 67,075

22 unchanged sentences

Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations.

At June 30, 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.

At September 30, 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.

5 unchanged sentences

government agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds called TEMS.

H eld to maturity debt securities were carried net of allowance for credit losses totaling $ 1.5 million at June 30, 2022 and $ 1.2 million at December 31, 2021.

Valley recorded a provision for credit losses of $ 286 thousand and $ 343

thousand for the three and six months ended June 30, 2022, respectively, and a credit (negative) provision for credit losses of $ 30 thousand and $ 388 thousand, respectively, for the three and six months ended June 30, 2021.

Held to maturity debt securities were carried net of allowance for credit losses totaling $ 1.7 million at September 30, 2022, and $ 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, 2022, respectively.

Valley recorded

a provision for credit losses of $ 35 thousand and a credit (negative) provision for credit losses of $ 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 2021.

Loans and Allowance for Credit Losses for Loans

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

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

(in thousands)

13 unchanged sentences

Total loans $ 45,185,764 $ 34,153,657

* Represents SBA Paycheck Protection Program (PPP) loans, net of unearned fees totaling $ 2.5 million and $ 12.1 million at June 30, 2022 and December 31, 2021, respectively.

Total loans includes net unearned discounts and deferre d loan fees of $ 141.2 million an d $ 78.5 million at June 30, 2022 and December 31, 2021, respectively.

The increase in total loans at June 30, 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 $ 115.7 million and $ 83.7 million at June 30, 2022 and December 31, 2021, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition .

There were no sales of loans from the held for investment portfolio during the three and six months ended June 30, 2022 and 2021.

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

Total loans include net unearned discounts and deferre d loan fees of $ 136.5 million an d $ 78.5 million at September 30, 2022 and December 31, 2021, respectively.

The increase in total loans at September 30, 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 $ 139.6 million and $ 83.7 million at September 30, 2022 and December 31, 2021, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition .

There were no sales of loans from the held for investment portfolio during the three and nine months ended September 30, 2022 and 2021.

Credit Risk Management

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Credit Quality

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

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

Past Due and Non-Accrual Loans

6 unchanged sentences

(in thousands)

June 30, 2022

September 30, 2022

Commercial and industrial

40 unchanged sentences

Risk ratings are updated any time the situation warrants.

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

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, 2022 and December 31, 2021:

Amortized Cost Basis by Origination Year

June 30, 2022 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans Total

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)

36 unchanged sentences

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 and by payment activity.

The following table presents the amortized cost in those loan classes based on payment activity by origination year as of June 30, 2022 and December 31, 2021.

The following table presents the amortized cost in those loan classes based on payment activity by origination year as of September 30, 2022 and December 31, 2021.

Amortized Cost Basis by Origination Year

June 30, 2022 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans Total

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)

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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 — — — — — — 92 — 92

Total other consumer 21,110 2,934 7,262 7,476 7,560 16,546 1,000,887 — 1,063,775

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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.

Performing TDRs (not reported as non-accrual loans) totaled $ 67.3 million and $ 71.3 million as of June 30, 2022 and December 31, 2021, respectively.

Non-performing TDRs totaled $ 154.4 million and $ 117.2 million as of June 30, 2022 and December 31, 2021, respectively.

The following table presents the pre- and post-modification amortized cost of loans by loan class modified as TDRs during the three and six months ended June 30, 2022 and 2021.

Post-modification amounts are presented as of June 30, 2022 and 2021.

Three Months Ended June 30,

Performing TDRs (not reported as non-accrual loans) totaled $ 69.7 million and $ 71.3 million as of September 30, 2022 and December 31, 2021, respectively.

Non-performing TDRs totaled $ 155.7 million and $ 117.2 million as of September 30, 2022 and December 31, 2021, respectively.

The following 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, 2022 and 2021.

Post-modification amounts are presented as of September 30, 2022 and 2021.

Three Months Ended September 30,

Troubled Debt Restructurings Number

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Commercial real estate:

Commercial real estate 1 2,187 2,187 5 14,473 14,539

Construction 2 11,025 7,811 2 17,599 17,599

Total commercial real estate

3 13,212 9,998 7 32,072 32,138

Residential mortgage 1 44 44 4 356 350

Consumer 1 125 124 — — —

Total 69 $ 67,842 $ 64,789 15 $ 34,874 $ 34,902

Six Months Ended June 30,

Nine Months Ended September 30,

Troubled Debt Restructurings Number

8 unchanged sentences

Commercial real estate:

Commercial real estate 4 16,259 15,660 11 26,710 26,730

Construction 2 11,025 7,811 2 17,599 17,599

Total commercial real estate

6 27,284 23,471 13 44,309 44,329

Residential mortgage 9 5,135 5,116 12 2,974 2,909

1 unchanged sentence

Total 95 $ 142,323 $ 134,205 42 $ 69,275 $ 66,461

The total TDRs presented in the above table had allocated allowance for loan losses of $ 56.0 million and $ 4.5 million at June 30, 2022 and 2021, respectively.

There were $ 1.5 million in charge-offs related to TDRs for the three and six months ended June 30, 2022.

There were charge-offs of $ 697 thousand and $ 5.8 million related to TDRs for the three and six months ended June 30, 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 six months ended June 30, 2022 and 2021.

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 six months ended June 30, 2022 and 2021 were as follows:

Three Months Ended June 30,

The total TDRs presented in the above tables had allocated allowance for loan losses of $ 71.5 million and $ 8.2 million at September 30, 2022 and 2021, respectively.

There were $ 3.8 million and $ 5.4 million in charge-offs related to TDRs for the three and nine months ended September 30, 2022.

There were charge-offs of $ 206 thousand and $ 6.0 million related to TDRs for the three and nine months ended September 30, 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, 2022 and 2021.

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, 2022 and 2021 were as follows:

Three Months Ended September 30,

Troubled Debt Restructurings Subsequently Defaulted Number of

2 unchanged sentences

($ in thousands)

Construction 2 $ 17,599 — $ —

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

Six Months Ended June 30,

Nine Months Ended September 30,

Troubled Debt Restructurings Subsequently Defaulted Number of

3 unchanged sentences

Commercial and industrial 1 $ 42,771 — $ —

Construction 2 17,599 — —

Commercial real estate 2 5,207 1 419

Residential mortgage 1 1,071 1 129

1 unchanged sentence

Loans in Process of Foreclosure.

Other real estate owned (OREO) totaled $ 422 thousand and $ 2.3 million at June 30, 2022 and December 31, 2021, respectively.

There were no forec losed residential real estate properties included in OREO at June 30, 2022 and at December 31, 2021.

Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $ 2.0 million and $ 2.5 million at June 30, 2022 and December 31, 2021, respectively.

Other real estate owned (OREO) totaled $ 286 thousand and $ 2.3 million at September 30, 2022 and December 31, 2021, respectively.

There were no forec losed residential real estate properties included in OREO at September 30, 2022 and December 31, 2021.

Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $ 1.9 million and $ 2.5 million at September 30, 2022 and December 31, 2021, respectively.

Collateral dependent loans.

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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 June 30, 2022 and December 31, 2021:

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

September 30,

2022 December 31,

12 unchanged sentences

The allowance for credit losses (ACL) for loans consists of the allowance for loan losses and the allowance for unfunded credit commitments.

The ACL for loans increased $ 115.3 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 June 30, 2022 as compared to December 31, 2021.

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

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.

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

September 30,

2022 December 31,

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Total provision for credit losses for loans $ 1,835 $ 3,496 $ 49,047 $ 21,287

The following table details the activity in the allowance for loan losses by loan portfolio segment for the three and six months ended June 30, 2022 and 2021:

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, 2022 and 2021:

and Industrial Commercial

3 unchanged sentences

Three Months Ended

June 30, 2022

September 30, 2022

Allowance for loan losses:

Beginning balance $ 144,539 $ 277,227 $ 29,889 $ 17,164 $ 468,819

Allowance for purchased credit deteriorated (PCD) loans * 33,452 36,618 206 43 70,319

Loans charged-off ( 5,033 ) ( 4,000 ) — ( 962 ) ( 9,995 )

Charged-off loans recovered 13,236 1,729 163 477 15,605

Net (charge-offs) recoveries ( 2,588 ) 224 73 ( 29 ) ( 2,320 )

Provision for loan losses 12,472 20,436 1,421 3,981 38,310

Net recoveries (charge-offs) 8,203 ( 2,271 ) 163 ( 485 ) 5,610

Provision (credit) for loan losses 1,309 ( 7,176 ) 6,105 1,077 1,315

Ending balance $ 154,051 $ 267,780 $ 36,157 $ 17,756 $ 475,744

Three Months Ended

June 30, 2021

Allowance for losses:

September 30, 2021

Allowance for loan losses:

Beginning balance $ 109,689 $ 189,139 $ 25,303 $ 15,193 $ 339,324

8 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2022

Allowance for loan losses:

3 unchanged sentences

Charged-off loans recovered 16,012 2,060 694 2,431 21,197

Net (charge-offs) recoveries ( 3,335 ) 158 504 403 ( 2,270 )

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

Six Months Ended

June 30, 2021

Allowance for losses:

Nine Months Ended

September 30, 2021

Allowance for loan losses:

Beginning balance $ 131,070 $ 164,113 $ 28,873 $ 16,187 $ 340,243

4 unchanged sentences

Ending balance $ 103,877 $ 199,721 $ 24,732 $ 14,197 $ 342,527

* Represents the allowance for acquired PCD loans, net of PCD loan charge-offs totaling $ 62.4 million in the second quarter 2022.

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 June 30, 2022 and December 31, 2021.

* Represents the allowance for acquired PCD loans, net of PCD loan charge-offs totaling $ 62.4 million in the second quarter 2022 related to the Bank Leumi USA acquisition.

and Industrial Commercial

2 unchanged sentences

(in thousands)

June 30, 2022

September 30, 2022

Allowance for loan losses:

30 unchanged sentences

Goodwill from business combinations 10,984 62,875 338,638 412,497

Balance at June 30, 2022 $ 51,963 $ 284,451 $ 1,535,091 $ 1,871,505

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.

1 unchanged sentence

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

The results of the 2022 annual impairment test resulted in no i mpairment.

There was no i mpairment of goodwill recognized during the three and nine months ended September 30, 2022 and 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.

The goodwill from business combinations set forth in the above table during the six months ended June 30, 2022, related to the acquisitions of Bank Leumi USA and Landmark totaled $ 403.2 million and $ 4.4 million, respectively.

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 six months ended June 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.

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 June 30, 2022 and December 31, 2021:

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

Assets Accumulated

1 unchanged sentence

(in thousands)

June 30, 2022

September 30, 2022

Loan servicing rights $ 119,813 $ ( 94,956 ) $ 24,857

11 unchanged sentences

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 six months ended June 30, 2022.

Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $ 42 thousand and $ 833 thousand for the three and six months ended June 30, 2021.

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.

Core deposits are amortized using an accelerated method over a period of 10 years.

1 unchanged sentence

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 13.3 years.

Valley recorded $ 39.0 million and $ 6.2 million of other intangible assets during the six months ended June 30, 2022 resulting from the Bank Leumi USA and Landmark acquisitions, respectively.

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 six months ended June 30, 2022 and 2021.

No impairment was recognized during the three and nine months ended September 30, 2022 and 2021.

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

7 unchanged sentences

2026 2,156 17,223 4,805

Valley recognized amortization expense on other intangible assets totaling approximately $ 11.4 million and $ 5.4 million (including net recoveries of impairment charges on loan servicing rights) for the three months ended June 30, 2022 and 2021, respectively, and $ 15.8 million and $ 11.5 million for the six months ended June 30, 2022 and 2021, respectively.

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

Borrowed Funds

Short-Term Borrowings

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

September 30, 2022 December 31, 2021

(in thousands)

FHLB advances $ 785,767 $ 500,000

Securities sold under agreements to repurchase 133,516 155,726

Total short-term borrowings $ 919,283 $ 655,726

The weighted average interest rate for short-term FHLB advances was 3.21 percent and 0.37 percent at September 30, 2022 and December 31, 2021, respectively.

Long-Term Borrowings

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

September 30, 2022 December 31, 2021

(in thousands)

FHLB advances, net (1)

$ 788,574 $ 789,033

Subordinated debt, net (2)

752,523 634,643

Total long-term borrowings $ 1,541,097 $ 1,423,676

(1) FHLB advances are presented net of unamortized premiums totaling $ 574 thousand and $ 1.0 million at September 30, 2022 and December 31, 2021, respectively.

(2) Subordinated debt is presented net of unamortized debt issuance costs totaling $ 7.3 million and $ 5.8 million at September 30, 2022 and December 31, 2021, respectively.

FHLB Advances.

Long-term FHLB advances had a weighted average interest rate of 1.88 percent at both September 30, 2022 and December 31, 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.

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

(in thousands)

2023 $ 350,000

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 September 20, 2022, Valley issued $ 150 million of 6.25 percent fixed-to-floating rate subordinated notes due September 30, 2032.

Interest on the subordinated notes during the initial five year term through September 30, 2027, is payable semi-annually in arrears on March 30 and September 30, commencing on March 30, 2023.

Thereafter, interest is expected to be set based on three-month Secured Overnight Financing Rate (SOFR) plus 278 basis points and paid quarterly through maturity of the notes.

At September 30, 2022, the subordinated notes had a carrying value of $ 147.5 million, net of unamortized debt issuance costs.

Valley also had the following subordinated debt outstanding at September 30, 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;

• $ 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 certain events.

Stock–Based Compensation

1 unchanged sentence

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.

As of June 30, 2022 , 5.2 million shares of common stock were available for issuance under the 2021 Plan.

As of September 30, 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.

1 unchanged sentence

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 June 30, 2022) at a weighted average exercise price of $ 8.47 .

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 937 thousand and 109 thousand of time-based restricted stock units (RSUs) during the three months ended June 30, 2022 and 2021, respectively, and 2.1 million and 1.2 million for the six months ended June 30, 2022 and 2021, respectively.

Valley granted 234 thousand and 30 thousand of time-based restricted stock units (RSUs) during the three months ended September 30, 2022 and 2021, respectively, and 2.3 million and 1.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Generally, time-based RSUs vest ratably over a three-year period.

The average grant date fair value of the RSUs granted during the six months ended June 30, 2022 and 2021 was $ 13.51 per share and $ 11.63 per share, respectively.

Valley granted 619 thousand and 604 thousand of performance-based RSUs to certain officers for the six months ended June 30, 2022 and 2021, respectively.

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 $ 11.98 per share, respectively.

Valley granted 619 thousand and 604 thousand of performance-based RSUs to certain officers for the nine months ended September 30, 2022 and 2021, 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.

2 unchanged sentences

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 six months ended June 30, 2022 and 2021 was $ 14.72 per share and $ 12.36 per share, respectively.

Valley recorded total stock-based compensation expense of $ 6.2 million and $ 5.2 million for the three months ended June 30, 2022 and 2021, respectively, and $ 13.4 million and $ 10.7 million for the six months ended June 30, 2022 and 2021, respectively.

The grant date fair value of the performance-based RSUs granted during the nine months ended September 30, 2022 and 2021 was $ 14.72 per share and $ 12.36 per share, respectively.

Valley recorded total stock-based compensation expense of $ 7.6 million and $ 5.2 million for the three months ended September 30, 2022 and 2021, respectively, and $ 21.0 million and $ 15.9 million for the nine months ended September 30, 2022 and 2021, respectively.

The fair values of stock awards are expensed over the shorter of the vesting or required service period.

As of June 30, 2022, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $ 43.3 million and will be recognized over an average remaining vesting period of approximately 2.18 years .

As of September 30, 2022, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $ 40.0 million and will be recognized over an average remaining vesting period of approximately 2.1 years.

Derivative Instruments and Hedging Activities

9 unchanged sentences

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 five interest rate swaps with a total notional amount of $ 500 million that matured during the six months ended June 30, 2022.

These swaps were used to hedge the changes in cash flows associated with certain short-term Federal Home Loan Bank of New York (FHLB) advances.

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 are used to manage Valley’s exposure to interest rate movements, foreign currency risk, credit risk, and to provide services to customers or for other purposes.

These derivatives do not meet the requirements for hedge accounting under U.S.

derivatives do not meet the requirements for hedge accounting under U.S.

Derivatives not designated as hedges are not entered into for speculative purposes.

7 unchanged sentences

Changes in the fair value in credit derivatives are recognized directly in earnings.

At June 30, 2022, Valley had 26 credit swaps with an aggregate notional amount of $ 243.9 million related to risk participation agreements.

At June 30, 2022, Valley had two “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.

At September 30, 2022, Valley had 28 credit swaps with an aggregate notional amount of $ 290.7 million related to risk participation agreements.

At September 30, 2022, Valley had two “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.

5 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Fair Value Fair Value

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$ 594,116 $ 593,090 $ 14,554,590 $ 181,500 $ 48,731 $ 10,613,888

* Other derivatives include risk participation agreements.

* I ncludes risk participation agreements.

The Chicago Mercantile Exchange and London Clearing House variation margins are classified as a single-unit of account as settlements of the cash flow hedges and 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 June 30, 2022 and December 31, 2021 in the table above .

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

As a result, the fair value of the applicable derivative assets and liabilities are reported net of variation margin at September 30, 2022 and December 31, 2021 in the table above .

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

1 unchanged sentence

Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense $ 21 $ ( 1,044 ) $ ( 405 ) $ ( 2,708 )

Amount of gain (loss) recognized in other comprehensive loss 121 ( 158 ) 441 19

The accumulated after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $ 831 thousand and $ 1.3 million at June 30, 2022 and December 31, 2021, respectively.

Amount of (loss) gain recognized in other comprehensive loss ( 6 ) ( 144 ) 435 ( 125 )

The accumulated after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $ 929 thousand and $ 1.3 million at September 30, 2022 and December 31, 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 $ 730 thousand will be reclassified as an increase to interest expense over the next 12 months.

Valley estimates that $ 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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands)

Derivative - interest rate swap:

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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 June 30, 2022.

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

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

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 $ 11.1 million and $ 7.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 25.1 million and $ 13.8 million for the six months ended June 30, 2022 and 2021, respectively.

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 $ 10.7 million and $ 8.8 million for the three months ended September 30, 2022 and 2021, respectively, and $ 35.8 million and $ 22.6 million for the nine months ended September 30, 2022 and 2021, respectively.

Credit Risk Related Contingent Features.

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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 June 30, 2022, Valley was in compliance with all of the provisions of its derivative counterparty agreements.

As of June 30, 2022, there were no derivatives in an aggregate net liability position.

As of September 30, 2022, Valley was in compliance with all of the provisions of its derivative counterparty agreements.

As of September 30, 2022, there were no derivatives in an aggregate net liability position.

Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties.

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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 June 30, 2022 and December 31, 2021.

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

Gross Amounts Not Offset

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(in thousands)

June 30, 2022

September 30, 2022

Interest rate swaps $ 576,213 $ — $ 576,213 $ ( 914 ) $ ( 374,030 ) $ 201,269

3 unchanged sentences

Interest rate swaps $ 50,689 $ — $ 50,689 $ — $ ( 44,231 ) $ 6,458

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

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

Tax Credit Investments

5 unchanged sentences

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.

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 June 30, 2022 and December 31, 2021:

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, 2022 and December 31, 2021:

September 30,

2022 December 31,

8 unchanged sentences

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 six months ended June 30, 2022 and 2021:

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, 2022 and 2021:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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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.

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 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.

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Valley's consolidated results were not impacted by the changes discussed above and remain unchanged for all periods presented.

The following tables represent the financial data for Valley’s operating segments for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 2022

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

Three Months Ended September 30, 2022

Lending Commercial

6 unchanged sentences

Net interest income 58,302 372,636 23,054 453,992

Provision for credit losses 5,402 38,310 286 43,998

Provision (credit) for credit losses 7,182 ( 5,347 ) 188 2,023

Net interest income after provision for credit losses 51,120 377,983 22,866 451,969

2 unchanged sentences

Internal transfer expense (income) 26,268 113,932 ( 140,200 ) —

Income (loss) before income taxes $ 13,678 $ 127,007 $ ( 7,720 ) $ 132,965

Income before income taxes $ 20,137 $ 255,802 $ ( 29,415 ) $ 246,524

Return on average interest earning assets (pre-tax)

0.97 % 2.84 % ( 1.90 ) % 1.95 %

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Lending Commercial

6 unchanged sentences

Net interest income 54,855 237,071 9,100 301,026

Provision (credit) for credit losses 711 8,066 ( 30 ) 8,747

(Credit) provision for credit losses ( 4,614 ) 8,110 35 3,531

Net interest income after provision for credit losses 59,469 228,961 9,065 297,495

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2.01 % 2.24 % ( 1.00 ) % 1.72 %

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Lending Commercial

5 unchanged sentences

Interest expense 20,218 84,356 35,738 140,312

Net interest income (loss) 114,666 579,284 41,879 735,829

Net interest income 172,968 951,920 64,933 1,189,821

Provision for credit losses 14,457 34,590 531 49,578

Net interest income (loss) after provision for credit losses

107,391 539,347 41,536 688,274

Net interest income after provision for credit losses 158,511 917,330 64,402 1,140,243

Non-interest income 50,540 54,815 48,642 153,997

1 unchanged sentence

Internal transfer expense (income) 92,544 371,213 ( 463,757 ) —

Income (loss) before income taxes $ 36,659 $ 263,838 $ ( 11,490 ) $ 289,007

Income before income taxes $ 56,796 $ 519,640 $ ( 40,905 ) $ 535,531

Return on average interest earning assets (pre-tax)

0.95 % 2.13 % ( 0.90 ) % 1.53 %

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Lending Commercial

15 unchanged sentences

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-Q

Item 1. Financial Statements