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Item 1A. Risk Factors

2023-03-01 compared with 2022-02-28 · 172 added, 247 removed, 204 unchanged (67% of the section changed)

6 unchanged sentences

This report is qualified in its entirety by these risk factors.

Risks Related to our Pending Merger with Bank Leumi USA

Valley is expected to incur significant costs related to the merger and integration.

Valley has incurred and expects to incur certain non-recurring costs associated with the pending merger.

These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs and other related costs.

Some of these costs are payable by Valley regardless of whether or not the merger is completed.

Valley is expected to incur substantial costs in connection with the integration of Valley and Bank Leumi USA.

There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, including purchasing, accounting and finance, payroll, compliance, treasury management, vendor management, risk management, lines of business, pricing and benefits.

Risks Related to the Operating Environment and the COVID-19 Pandemic

Our financial results and condition may be adversely impacted by changing economic conditions.

Financial institutions can be affected by changing conditions in the real estate and financial markets.

The lingering effects of the COVID-19 pandemic, geopolitical instability, including the conflict between Russia and Ukraine, foreign currency exchange volatility, volatility in global capital markets, inflationary pressures, and higher interest rates may meaningfully impact loan production, income levels, and the measurement of certain significant estimates such as the allowance for credit losses.

Moreover, in a period of economic contraction, we may experience elevated levels of credit losses, reduced interest income, impairment of goodwill and other financial assets, diminished access to capital markets and other funding sources, and reduced demand for our products and services.

Volatility in the housing markets, real estate values and unemployment levels results in significant write-downs of asset values by financial institutions.

The majority of Valley’s lending is in northern and central New Jersey, the New York City metropolitan area and Florida.

As a result of this geographic concentration, a significant broad-based deterioration in economic conditions in these areas could have a material adverse impact on the quality of Valley’s loan portfolio, results of operations and future growth potential.

An unexpected COVID-19 pandemic resurgence due to new variants could cause us to experience higher credit losses in our lending portfolio, additional increases in our allowance for credit losses, impairment of our goodwill and other financial assets, diminished access to capital markets and other funding sources, further reduced demand for our products and services, and other negative impacts on our financial position, results of operations.

During 2022, the Federal Reserve took unprecedented action during the year to restrain inflation and improve the stability of the economy by raising the target federal funds rate several times from 25 basis points in the beginning of the year to 75 basis points toward the end of the year and brought the benchmark interest rates up by a collective 4.25 percent.

As inflation increases and market interest rates rise, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.

In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expenses.

Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

Any of these effects, if sustained, may impair our capital and liquidity positions, require us to take capital actions, prevent us from satisfying our minimum regulatory capital ratios and other supervisory requirements, or result in downgrades in our credit ratings and the reduction or elimination of our common stock dividend in future periods.

The extent to which current economic environment has a further impact on our business, results of operations, and financial condition, as well as the regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the current economic environment and actions taken by governmental authorities and other third parties in response to the geopolitical conflict, and inflationary pressure.

Risks Related to our Merger with Bank Leumi USA

Valley has incurred and is expected to incur significant costs related to the merger and integration.

Valley has incurred certain non-recurring costs associated with the initial merger, including legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs and other related costs.

Valley has also incurred and is expected to incur substantial costs in connection with the integration of Valley and Bank Leumi USA.

There are a large number of processes, policies, procedures, operations, technologies and systems integrations that are still ongoing.

Valley has assumed that a certain level of costs will be incurred, however, there are many factors beyond Valley’s control that could affect the total amount or the timing of the integration costs.

Moreover, many of the costs that will be incurred are, by their nature, difficult to estimate accurately.

These integration costs may result in Valley taking charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present.

While Valley provided an assumption about the amount and timing of "cost synergies" when it announced the merger, those assumptions have not been updated and the amount of actual cost synergies may differ from amounts previously disclosed.

These integration costs may result in Valley taking charges against

2022 Form 10-K

earnings, and the amount and timing of such charges are uncertain at present.

Valley incurred total merger-related expenses of $71.2 million and $8.9 million for the years ended December 31, 2022 and 2021, respectively.

Combining Valley and Bank Leumi USA may be more difficult, costly or time consuming than expected and Valley may fail to realize the anticipated benefits of the merger.

To realize the anticipated benefits and synergies from the merger, Valley and Bank Leumi USA must successfully integrate and combine their businesses in a manner that permits those synergies to be realized.

If Valley and Bank Leumi USA are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

To realize the anticipated benefits and synergies from the merger, Valley must successfully integrate the Bank Leumi USA business in a manner that permits those synergies to be realized.

If Valley is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

In addition, the actual synergies and anticipated benefits of the merger could be less than anticipated, and integration may result in additional unforeseen expenses.

Valley and Bank Leumi USA have operated and, until the completion of the merger, will continue to operate, independently.

The success of the merger will depend, in part, on Valley’s ability to successfully combine and integrate the businesses of both companies in a manner that does not materially disrupt existing customer relations or result in decreased revenue or reputational harm.

Prior to the merger, Valley and Bank Leumi USA operated independently.

The success of the merger depends, in part, on Valley’s ability to successfully complete the ongoing integration of the businesses of both companies in a manner that does not materially disrupt existing customer relations or result in decreased revenue or reputational harm.

It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses, difficulties in integrating operations and systems, including communications systems, administrative and information technology infrastructure and financial reporting and internal control systems, or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.

Any disruption to either company’s business could cause its customers to remove their accounts and move their business to a competing financial institution.

Integration efforts between the two companies may also divert management attention and resources.

These integration matters could have an adverse effect on each of Valley and Bank Leumi USA during this transition period and for an undetermined period after completion of the merger on Valley.

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Valley may be unable to retain Valley or Bank Leumi USA personnel successfully while the merger is pending or after the merger is completed.

The success of the merger will depend in part on Valley’s ability to retain the talents and dedication of key employees currently employed by Valley and Bank Leumi USA.

It is possible that these employees may decide not to remain with Valley or Bank Leumi USA, as applicable, while the merger is pending or with Valley after the merger is consummated.

If Valley and Bank Leumi USA are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, Valley and Bank Leumi USA could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.

In addition, if key employees terminate their employment, Valley’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Valley and Bank Leumi USA to hiring suitable replacements, all of which may cause Valley’s or Bank Leumi USA’s businesses to suffer.

In addition, Valley and Bank Leumi USA may not be able to locate or retain suitable replacements for any key employees who leave either company.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on Valley following the merger.

Various consents, approvals and authorizations must be obtained from certain governmental authorities, as a condition to closing of the merger.

These approvals could be delayed or not obtained at all, including due to any or all of the following:

an adverse development in either party’s or its affiliates’ regulatory standing, or any other factors considered by regulators in granting such approvals;

governmental, political or community group inquiries, investigations or opposition;

or changes in legislation or the political environment, including as a result of changes in regulatory agency leadership.

Even if the specified regulatory approvals are granted, they may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of Valley’s business or require changes to the terms of the transactions contemplated by the merger agreement.

There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger Agreement, imposing additional material costs on or materially limiting the revenues of Valley following the merger or otherwise reduce the anticipated benefits of the merger if the merger were consummated successfully within the expected timeframe.

In addition, there can be no assurance that any such conditions, limitations, obligations or restrictions will not result in the delay or abandonment of the merger.

The market price of Valley Common Stock after the merger may be affected by factors different from those affecting the shares of Valley Common Stock currently.

Valley’s business differs from that of Bank Leumi USA.

Accordingly, the results of operations of Valley and the market price of Valley Common Stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Valley and Bank Leumi USA.

The future results of Valley following the merger may suffer if Valley does not effectively manage its expanded operations.

Following the merger, the size of the business of Valley will increase beyond its current size.

Valley’s future success will depend, in part, upon its ability to manage this expanded business, which may pose challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

Valley may also face increased scrutiny from governmental authorities as a result of the increase in the size of its business.

There can be no assurances that Valley will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements or other benefits currently anticipated from the merger.

Bank Leumi USA is subject to regulatory risks in connection with its international private banking business, and these risks may adversely affect Valley after completion of the merger.

Bank Leumi USA operates a private banking business with domestic clients and international clients primarily domiciled in Latin America.

The risk of noncompliance with the USA PATRIOT Act, the Bank Secrecy Act and other anti-money laundering laws and regulations (collectively, “AML laws”) and the rules of the U.S.

Treasury Department’s Office of Foreign Assets Control (“OFAC”) can be heightened for financial institutions that have a significant number of international customers, and can be particularly acute for financial institutions that have a significant number of customers from, or do business in, Latin America.

AML laws and OFAC rules and regulations have become increasingly complex and detailed, require improved systems and sophisticated monitoring and compliance personnel and have become the subject of enhanced government supervision.

2021 Form 10-K

Following the completion of the merger, Valley will be responsible for maintaining a compliance program that is effective in combating the increased legal and regulatory risks associated with Bank Leumi USA’s international private banking business.

Valley will evaluate on an ongoing basis whether enhancements are appropriate so that Valley continues to maintain an effective compliance program following the completion of the merger, Valley may not be able to eliminate all attempts by customers to use Valley to engage in money laundering and other illegal or improper activities.

If Valley’s policies, procedures and systems are deemed deficient or fail to prevent violations of applicable laws or regulations, the OCC, along with other banking agencies, have the authority to impose fines and other penalties and sanctions on Valley, and Valley’s business and reputation could suffer.

Failure to successfully manage these risks could have a material adverse effect on Valley’s business, results of operations and financial condition.

Bank Leumi USA and its subsidiaries are currently involved in a number of legal proceedings, the results of which could have an adverse effect on Valley after completion of the merger.

Bank Leumi USA and its subsidiaries are currently involved in a number of legal proceedings and may from time to time be involved in government and regulatory investigations and inquiries, relating to matters that arise in connection with the conduct of their businesses.

For example, Bank Leumi USA is a defendant in a lawsuit filed in the United States District Court for the District of Columbia, captioned Bassem Al-Tamimi, et al v.

Sheldon Adelson, et al., Docket No.

1:16-cv-00445.

The plaintiffs, both Palestinian nationals and Palestinian Americans, generally allege that the defendants engaged in a conspiracy to expel all non-Jews from a territory in the Middle East.

Bank Leumi USA believes that this lawsuit is without merit and intends to defend against this action vigorously.

However, the ultimate outcome of this matter, any future similar matters, and any other legal proceedings in which Bank Leumi USA is or may become involved cannot be predicted with certainty.

Adverse judgments, fines or penalties in one or more of the legal proceedings in which Bank Leumi USA and its subsidiaries are or may become involved could have a material adverse effect on Valley’s business, financial condition, or results of operations.

Risks Related to the COVID-19 Pandemic

We anticipate that the COVID-19 pandemic will continue to adversely affect us and our customers, counterparties, employees, and third-party service providers.

The full extent and duration of the adverse impacts on our business, financial position, results of operations, and prospects are currently unknown and could be significant.

The spread of COVID-19 has created a global public-health crisis that has resulted in widespread volatility and deterioration in business, economic, and market conditions and household incomes, including in the states of New Jersey, New York, Florida and Alabama where we conduct nearly all of our business.

The extent of the continuing impact of the COVID-19 pandemic on our capital and liquidity, and on our business, results of operations, financial position and prospects generally will depend on a number of evolving factors, including:

T he duration, extent, and severity of the pandemic .

COVID-19 has not yet been contained and could affect significantly more households and businesses.

The duration and severity of the pandemic, future resurgences of COVID-19 (including the Delta and Omicron variants and any future variants) in our primary market areas, the efficacy of vaccines and the timing of the distribution and public acceptance of such vaccines or other treatments, continue to be impossible to predict.

There remains substantial uncertainty surrounding the pace of economic recovery and the return of business and consumer confidence.

The response of governmental and nongovernmental authorities.

While many responsive measures, such as curtailing household and business activity to contain COVID-19 and deploying fiscal- and monetary-policy measures to partially mitigate the adverse effects on individual households and businesses, have been eliminated or curtailed due to the availability of vaccines, we cannot predict whether such measures will be reintroduced.

Furthermore, vaccine and mask mandates throughout our market areas are inconsistent and may inhibit our ability to attract and retain qualified personnel.

These measures are not always coordinated or consistent across jurisdictions.

We cannot predict whether and to what extent governmental and nongovernmental authorities will continue to implement policy measures to assist us and our customers and the failure to do so could have adverse effects on our business.

The effect on our customers, counterparties, employees, and third-party service providers.

COVID-19 and its associated consequences and uncertainties, including inflationary pressure, supply chain challenges, unemployment, labor market shortages and vaccine mandates, are affecting individuals, households, and businesses differently and unevenly and we anticipate will continue to do so.

As a result, our credit, operational, and other risks have generally increased and, for the foreseeable future, are expected to remain elevated or increase further.

The effect on economies and markets.

Whether current and/or future actions of governmental and nongovernmental authorities will be successful in mitigating the adverse effects of COVID-19 in the future is unclear.

National, regional, and local economies (including the local economies in the markets areas which we serve) recovered in 2021 but could deteriorate in

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2022 and beyond due to the Delta and Omicron variants and any future variants.

Markets could suffer disruptions that are lasting.

Governmental actions could adversely affect our results of operations and financial condition.

We can provide no assurance that governmental or non-governmental mitigation efforts will continue or be effective in the future.

In 2021, our provision expense for credit losses decreased significantly as compared to 2020.

However, with recent increases in COVID-19 infection rates in our market areas, the level of our provision expense remains subject to meaningful uncertainty.

Governments have taken unprecedented steps to partially mitigate the adverse effects of their containment measures.

For example, on March 27, 2020, the CARES Act was enacted to inject more than $2 trillion of financial assistance into the U.S.

The FRB has taken decisive and sweeping actions as well.

Since March 15, 2020, these have included a reduction in the target range for the federal funds rate to 0 to 0.25 percent, a program to purchase an indeterminate amount of Treasury securities and agency mortgage-backed securities, and numerous facilities to support the flow of credit to households and businesses.

However, given the increase in inflation in 2021, it is expected that the FRB will raise interest rates and wind down U.S.

Treasury securities purchases in 2022.

While there is evidence that our actions and those of governments and others have assisted our customers, counterparties, and third-party service providers and advanced our business and the economy generally it is uncertain what the effect will be once those policies are discontinued.

For example, while the FRB’s monetary policy may benefit us to some degree by supporting economic activity among our customers, this policy and sudden shifts may inhibit our ability to grow or sustain net interest income and effectively manage interest rate risk.

In order to safeguard the health and wellness of our customers and employees, and to comply with applicable government directives, we modified our business practices.

While many of these restrictions were lifted in 2021, we still have not lifted all safeguards and we may choose, or be required, to implement new restrictions in the future including vaccine and mask mandates.

These measures, and further actions we may take as required by government authorities or that we otherwise determine are in the best interests of our customers and employees, could increase certain risks, including cybersecurity risks, impair our ability to perform critical functions and adversely impact our results of operations.

We are unable to estimate the near-term and ultimate impacts of COVID-19 on our business and operations at this time.

The pandemic could cause us to experience higher credit losses in our lending portfolio, additional increases in our allowance for credit losses, impairment of our goodwill and other financial assets, diminished access to capital markets and other funding sources, further reduced demand for our products and services, and other negative impacts on our financial position, results of operations, and prospects.

In addition, sustained adverse effects may impair our capital and liquidity positions, require us to take capital actions, prevent us from satisfying our minimum regulatory capital ratios and other supervisory requirements, result in downgrades in our credit ratings, and the reduction or elimination of our common stock dividend in future periods.

We may be required to consult with the Federal Reserve Bank (FRB) before declaring cash dividends on our common stock, which ultimately may delay, reduce, or eliminate such dividends and adversely affect the market price of our common stock.

Holders of our common stock are only entitled to receive such cash dividends as our Board of Directors may declare out of funds legally available for such payments.

Although we have historically declared cash dividends on our common stock, we are not required to do so.

We may reduce or eliminate our common stock cash dividend in the future depending upon our results of operations, financial condition or other metrics which could be adversely impacted by the ultimate impact of the COVID-19 pandemic, which remains unknown.

In July 2020, the FRB updated its supervisory guidance to provide greater clarity regarding the situations in which bank holding companies, like Valley, may expect an expedited consultation in connection with the declaration of dividends that exceed quarterly earnings.

To qualify, amongst other criteria, total commercial real estate loan concentrations cannot represent 300 percent or more of total capital and the outstanding balance of the commercial real estate loan portfolio cannot increase by 50 percent or more during the prior 36 months.

Currently, we believe that Valley does not meet the standard for expedited consultation and approval of its dividend, should it be required.

As a result, Valley could be subject to a lengthier and possibly more burdensome review process by the FRB when considering paying dividends that exceed quarterly earnings.

The delay, reduction or elimination of our quarterly dividend could adversely affect the market price of our common stock.

See additional information regarding our quarterly cash dividend and the current rate of earnings retention in the "Capital Adequacy" section of the MD&A.

2021 Form 10-K

Integration efforts may also divert management attention and resources.

These integration matters could have an adverse effect on Valley.

Valley may be unable to retain Valley or Bank Leumi USA personnel successfully.

The success of the merger depends in part on Valley’s ability to retain the talents and dedication of key employees employed prior to the merger by Valley and Bank Leumi USA.

It is possible that these employees may decide not to remain with Valley.

If Valley is unable to retain key employees, including management, who are critical to the successful integration of the companies and future operations, Valley could face disruptions in operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.

In addition, Valley may not be able to locate or retain suitable replacements for any key employees who leave.

Risks Associated with Our Business Model

Our investments in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on our results of operations.

We invest in certain tax-advantaged investments that support qualified affordable housing projects, community development and, prior to 2019, renewable energy resources.

Our investments in these projects are designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods.

Third parties perform diligence on these investments for us on which we rely both at inception and on an on-going basis.

We are subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, may fail to meet certain government compliance requirements and may not be able to be realized.

The possible inability to realize these tax credits and other tax benefits may have a negative impact on our financial results.

The risk of not being able to realize the tax credits and other tax benefits depends on many factors outside our control, including changes in the applicable tax code and the ability of the projects to be completed.

We previously invested in mobile solar generators sold and leased back by DC Solar and its affiliates (DC Solar).

DC Solar had its assets frozen in December 2018 by the U.S.

Department of Justice.

DC Solar and related entities are in Chapter 7 bankruptcy.

A group of investors who purchased mobile solar generators from, and leased them back to, DC Solar, including us received tax credits for making these renewable resource investments.

During the fourth quarter 2019, several of the co-conspirators pleaded guilty to fraud in the on-going federal investigation.

Based upon this new information, Valley deemed that its tax positions related to the DC Solar funds did not meet the more likely than not recognition threshold in Valley's tax reserve assessment at December 31, 2019.

As a result, our net income for the year ended December 31, 2019, included an increase to our provision for income taxes of $31.1 million, reflecting the reserve for uncertain tax liability positions related to tax credits and other tax benefits previously recognized from the investments in the DC Solar funds plus interest.

The principals pled guilty to fraud in early 2020.

During 2021, the Internal Revenue Service commenced an audit connected with our investment in DC Solar.

While we believe that Valley was fully reserved for the tax positions related to DC Solar at December 31, 2021, we continue to evaluate all our existing tax positions each quarter under U.S.

We recently implemented new deposit services for businesses in the state licensed cannabis industry which could expose us to additional liabilities and regulatory compliance costs.

The loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets under our branch transformation strategy, may adversely impact our net interest income and net income.

Checking and savings, NOW, and money market deposit account balances and other forms of customer deposits can decrease when customers perceive alternative investments, such as the stock market, U.S.

Treasury securities, and money market or fixed income mutual funds, as providing a better risk/return trade-off.

Additionally, our customers largely bank with us because of our local customer service and convenience.

For certain customers, this convenience could be negatively impacted by continued branch consolidation activity undergone as part of our branch transformation strategy.

If customers move money out of bank deposits and into other investments, Valley could lose a low-cost source of funds, increasing its funding costs and reducing Valley’s net interest income and net income.

Our deposit services for businesses in the state licensed cannabis industry could expose us to liabilities and regulatory compliance costs.

In 2020, we implemented specialized deposit services intended for a limited number of state licensed medical-use cannabis business customers.

Medical use cannabis, as well as recreational use businesses are legal in numerous states and the District of Columbia, including our primary markets of New Jersey, New York, and Florida.

However, such businesses are not legal at the federal level and cannabis remains a Schedule I drug under the Controlled Substances Act of 1970.

However, such businesses are not legal at the federal level and marijuana remains a Schedule I drug under the Controlled Substances Act of 1970.

In 2014, the U.S.

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Additionally, our policies call for due diligence review of the cannabis business before the business is on-boarded, including confirmation that the business is properly licensed and maintains the license in good standing in the applicable state.

Throughout the relationship, our policies call for continued monitoring of the business, including site visits, to determine if the business continues to meet our requirements, including maintenance of required licenses and calls for undertaking periodic financial reviews of the business.

Throughout the relationship, our policies call for continued monitoring of

2022 Form 10-K

the business, including site visits, to determine if the business continues to meet our requirements, including maintenance of required licenses and calls for undertaking periodic financial reviews of the business.

The Bank’s program originally was limited to offering depository products to medical cannabis businesses.

Deposit transactions are monitored for compliance with the applicable state medical program rules and other regulations before approval and acceptance by the Bank’s BSA/AML Department.

More recently, the Bank has agreed to limited lending on real estate and expanded to licensed recreational dispensaries.

Deposit transactions are monitored for compliance with the applicable state medical program rules and other regulations.

In the latter half of 2021, the Bank expanded its cannabis-related business offerings to some limited lending on real estate and deposit services to licensed recreational dispensaries.

The Bank may offer additional banking products and services to such customers in the future.

While we believe our policies and procedures will allow us to operate in compliance with the FinCEN guidelines, there can be no assurance that compliance with the FinCEN guidelines will protect us from federal prosecution or other regulatory sanctions.

While we believe our policies and procedures allow us to operate in compliance with the FinCEN guidelines, there can be no assurance that compliance with the FinCEN guidelines will protect us from federal prosecution or other regulatory sanctions.

Federal prosecutors have significant discretion and there can be no assurance that the federal prosecutors will not choose to strictly enforce the federal laws governing cannabis.

Any change in the federal government’s enforcement position could potentially subject us to criminal prosecution and other regulatory sanctions.

While we also believe our BSA/AML policies and programs for this new business are sufficient, the medical and recreational cannabis business is considered high-risk, thus increasing the risk of a regulatory action against our BSA/AML program that has adverse consequences, including but not limited to, preventing us from undertaking mergers, acquisitions and other expansion activities.

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Checking and savings, NOW, and money market deposit account balances and other forms of customer deposits can decrease when customers perceive alternative investments, such as the stock market or money market or fixed income mutual funds, as providing a better risk/return trade-off.

Additionally, our customers largely bank with us because of our local customer service and convenience.

For certain customers, this convenience could be negatively impacted by recent branch consolidation activity undergone as part of our branch transformation strategy.

As a general matter, the medical and recreational cannabis business is considered high-risk, thus increasing the risk of a regulatory action against our BSA/AML program that has adverse consequences, including but not limited to, preventing us from undertaking mergers, acquisitions and other expansion activities.

A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could adversely affect our asset quality and profitability for those loans secured by real property and increase the number of defaults and the level of losses within our loan portfolio.

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If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected.

Any declines in home or commercial real estate prices in the New Jersey, New York and Florida markets we primarily serve, along with the unpredictable long-term impact and path of the economic recovery from the COVID-19 pandemic, also may result in increases in delinquencies and losses in our loan portfolios.

Any declines in home or commercial real estate prices in the New Jersey, New York and Florida markets we primarily serve, along with the unpredictable long-term path of the economy, also may result in increases in delinquencies and losses in our loan portfolios.

Unexpected decreases in home or commercial real estate prices coupled with slow economic growth and elevated levels of unemployment could drive losses beyond those which are provided for in our allowance for loan losses.

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Estimates of the fair value of goodwill are determined using several factors and assumptions, including, but not limited to, industry pricing multiples and estimated cash flows.

Based upon Valley’s 2021 goodwill impairment testing, the fair values of its four reporting units, wealth management, consumer lending, commercial lending, and investment management, were in excess of their carrying values.

Based upon Valley's 2022 goodwill impairment testing, the fair values of its three reporting units, wealth management, consumer banking, and commercial banking, were in excess of their carrying values .

No assurance can be given that we will not record an impairment loss on goodwill in the future and any such impairment loss could have a material adverse effect on our results of operations and financial condition.

1 unchanged sentence

See Note 8 to the consolidated financial statements for additional information.

Our market share and income may be adversely affected by our inability to successfully compete against larger and more diverse financial service providers, digital fintech start-up firms and other financial services providers which have advanced technological capabilities.

Valley faces substantial competition in all areas of its 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.

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Additionally, the financial services industry is facing a wave of digital disruption from 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.

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

These competitors provide innovative web-based solutions to traditional retail

2022 Form 10-K

banking services and products.

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

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The result of these regulatory changes will likely cause other non-traditional financial services companies to compete directly with Valley.

2021 Form 10-K

of the companies have stronger operating efficiencies and fewer regulatory burdens than their traditional bank counterparts, including Valley.

Many of the companies have stronger operating efficiencies and fewer regulatory burdens than their traditional bank counterparts, including Valley.

Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations.

As a result of COVID-19, customers have become more reliant on, and their expectations have increased with respect to, this technology.

As a result of COVID-19, many customers have become more reliant on, and their expectations have increased with respect to, this technology.

We may not be able to effectively implement new, technology-driven products and services or be successful in marketing these products and services to our customers and service interruptions, transaction processing errors and system conversion delays and may cause us to fail to comply with applicable laws.

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Failure to successfully manage these risks could have a material adverse effect on Valley’s business, results of operations and financial condition.

Our investments in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on our results of operations.

We invest in certain tax-advantaged investments that support qualified affordable housing projects, community development and, prior to 2019, renewable energy resources.

Our investments in these projects are designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods.

Third parties perform diligence on these investments for us on which we rely both at inception and on an ongoing basis.

The possible inability to realize these tax credits and other tax benefits may have a negative impact on our financial results.

We previously invested in mobile solar generators sold and leased back by DC Solar and its affiliates (DC Solar).

DC Solar had its assets frozen in December 2018 by the U.S.

Department of Justice.

DC Solar and related entities are in Chapter 7 bankruptcy.

A group of investors who purchased mobile solar generators from, and leased them back to, DC Solar, including us received tax credits for making these renewable resource investments.

During the fourth quarter 2019, several of the co-conspirators pleaded guilty to fraud in the ongoing federal investigation.

The principals pled guilty to fraud in early 2020.

During 2021, the Internal Revenue Service commenced an audit connected with our investment in DC Solar and the audit remains open at this time.

While we believe that Valley was fully reserved for the tax positions related to DC Solar at December 31, 2022, we continue to evaluate all our existing tax positions each quarter under U.S.

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We are subject to environmental liability risk associated with lending activities which could have a material adverse effect on our financial condition and results of operations.

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The aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $3.5 billion and $3.6 billion at December 31, 2022 and 2021, respectively.

Over the past several years, we have experienced a nominal amount of repurchase requests, and only a few of which have actually resulted in repurchases by Valley (only five and two loan repurchases in 2021 and 2020, respectively).

Over the past several years, we have experienced a nominal amount of repurchase requests, and only a few of which have actually resulted in repurchases by Valley (nine and five loan repurchases in 2022 and 2021, respectively).

None of the loan repurchases resulted in a material loss.

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While we currently believe our repurchase risk remains low based upon our careful loan underwriting and documentation standards, it is possible that requests to repurchase loans could occur in the future, and such requests may have a negative financial impact on us.

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Net gains on sales of residential mortgage loans are a significant component of our non-interest income and could fluctuate in future periods.

Net gains on sales of residential mortgage loans represented approximately 17 percent and 23 percent of our non-interest income for the years ended December 31, 2021 and 2020, respectively.

Our net gains on sales of loans for each period are comprised of both gains on sales of residential mortgages and the net change in the mark to market gains and losses on our loans held for sale carried at fair value at each period end.

Our ability or decision to sell a portion of our mortgage loan production in the secondary market is dependent upon, amongst other factors, the levels of market interest rates, consumer demand marketable loans, our sales and pricing strategies, the economy and our need to maintain the appropriate level of interest rate risk on our balance sheet.

A change in one or more of these or other factors could significantly impact our ability to sell mortgage loans in the future and adversely impact the level of our non-interest income and financial results.

Interest rate swap fees within capital markets income are a significant component of our non-interest income and could fluctuate in future periods.

Valley executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies .

Interest rate swap fees reported within capital markets income totaled approximately $43.1 million, or 21 percent, and $26.9 million, or 17 percent, of total non-interest income for the years ended December 31, 2022 and 2021, respectively.

While we believe our commercial loan customers will continue to use interest rate swap for managing interest rate risk, several factors, including, but not limited to, the actual and expected level of market interest rates, can impact their decision to use such products.

As a result, we can provide no assurance that our interest rate swap fees will remain at the level reported for the year ended December 31, 2022.

We may not be able to attract and retain skilled people.

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Competition for the best people in most activities in which we engage can be intense and we may not be able to hire people or to retain them, in particular due to an increasingly competitive labor market.

The labor market continues to experience elevated levels of turnover in the aftermath of the COVID-19 pandemic, and we have been impacted by an extremely competitive labor market, including increased competition for talent across all aspects of our business, as well as increased competition with non-traditional competitors, such as fintech companies.

Employers are offering increased compensation and opportunities to work with greater flexibility, including remote work, on a permanent basis.

These can be important factors in a current associate’s decision to leave us as well as in a prospective associate’s decision to join us.

As competition for skilled professionals remains intense, we may have to devote significant resources to attract and retain qualified personnel, which could negatively impact earnings.

The unexpected loss of services of one or more of our key personnel, including, but not limited to, the executive officers disclosed in Item 1 of this Annual Report, could have a material adverse impact on our business because we would lose the employees’ skills, knowledge of the market, and years of industry experience and may have difficulty promptly finding qualified replacement personnel.

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We are subject to risks relating to environmental, social and governance (“ESG”) matters that could adversely affect our reputation, business, financial condition and results of operations, as well as the price of our common and preferred stock.

We are subject to a variety of risks, including reputational risk, associated with ESG matters.

The public holds diverse and often conflicting views on these matters.

We have multiple stakeholders, including our shareholders, clients, associates, federal and state regulatory authorities, and the communities in which we operate, and these stakeholders will often have differing priorities and expectations regarding ESG issues.

If we take action in conflict with one or another of those stakeholders’ expectations, we could experience an increase in client complaints, a loss of business, or reputational harm.

We could also face negative publicity or reputational harm based on the identity of those with whom we choose to do business.

Any adverse publicity in connection with ESG issues could damage our reputation, ability to attract and retain clients and associates, compete effectively, and grow our business.

In addition, proxy advisory firms and certain institutional investors who manage investments in public companies are increasingly integrating ESG factors into their investment analysis.

The consideration of ESG factors in making investment and voting decisions is relatively new.

Accordingly, the frameworks and methods for assessing ESG policies are not fully developed, vary considerably among the investment community, and will likely continue to evolve over time.

Moreover, the subjective nature of methods used by various stakeholders to assess a company with respect to ESG criteria could result in erroneous perceptions or a misrepresentation of our actual ESG policies and practices.

Organizations that provide ratings information to investors on ESG matters may also assign unfavorable ratings to us.

Certain of our clients might also require that we implement additional ESG procedures or standards in order to continue to do business with them.

If we fail to comply with specific ESG-related investor or client expectations and standards, or to provide the disclosure relating to ESG issues that any third parties may believe is necessary or appropriate (regardless of whether there is a legal requirement to do so), our reputation, business, financial condition, and/or results of operations, as well as the price of our common and preferred stock could be negatively impacted.

Climate change and severe weather could significantly impact our ability to conduct our business.

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Additionally, transitioning to a low-carbon economy may entail extensive policy, legal, technology and market initiatives.

A significant portion of our primary markets is located near coastal waters which could generate naturally occurring severe weather, or in response to climate change, that could have a significant impact on our ability to conduct business.

Many areas in New Jersey, New York, Florida and Alabama in which our branches operate are subject to severe flooding from time to time and significant disruptions related to the weather may become common events in the future.

A significant portion of our primary markets is located near coastal waters which could generate naturally occurring severe weather, or in response to climate change, which could have a significant impact on our ability to conduct business.

Many areas in New Jersey, New York, Florida and Alabama in which the vast majority of our branches and offices operate are subject to severe flooding from time to time and significant disruptions related to the weather may become common events in the future.

Heavy storms and hurricanes can also cause severe property damage and result in business closures, negatively impacting both the financial health of retail and commercial customers and our ability to operate our business.

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Risks Related to Our Industry

Changes in interest rates could reduce our net interest income and earnings.

Valley’s earnings and cash flows are largely dependent upon its net interest income.

Net interest income is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds.

Interest rates are sensitive to many factors that are beyond Valley’s control, including general economic conditions, competition, and policies of various governmental and regulatory agencies and, in particular, the policies of the Federal Reserve.

Changes in interest rates driven by such factors could influence not only the interest Valley receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) Valley’s ability to originate loans and obtain deposits, (ii) the fair value of Valley’s financial assets, including the held to maturity and available for sale investment securities portfolios, and (iii) the average duration of Valley’s interest-earning assets and liabilities.

This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rate indices underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk).

The Federal Reserve maintained the target range for the federal funds rate between 0.00 and 0.25 percent during 2021.

Beginning in March 2022, the Federal Reserve

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significantly increased the target federal funds rate incrementally through 2022 resulting in a target range between 4.25 and 4.50 percent at December 31, 2022, effectively increasing interest rates.

During the first quarter 2023, the Federal Reserve increased the target federal funds rate another 0.25 percent and may further increase the target federal funds rate in 2023 in an attempt to reduce inflation.

Any substantial or unexpected change in market interest rates could have a material adverse effect on Valley’s financial condition and results of operations.

See additional information in the “Net Interest Income” and “Interest Rate Sensitivity” sections of our MD&A.

We may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose us to additional liability and could have a material adverse effect on us.

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In addition, our business and reputation could suffer if customers use our banking network for money laundering or illegal or improper purposes.

Changes in interest rates could reduce our net interest income and earnings.

Valley’s earnings and cash flows are largely dependent upon its net interest income.

Net interest income is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on

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interest-bearing liabilities, such as deposits and borrowed funds.

The FRB has maintained the target range for the federal funds rate between 0.00 and 0.25 percent during 2021.

Although, the FRB is expected to increase the target federal funds rate and effectively increase interest rates in 2022, we can give no assurances that market interest rates will increase, decrease or remain unchanged.

Any substantial or unexpected change in market interest rates could have a material adverse effect on Valley’s financial condition and results of operations.

See additional information in the “Net Interest Income” and “Interest Rate Sensitivity” sections of our MD&A.

The replacement of the LIBOR benchmark interest rate may have an impact on Valley’s business, financial condition or results of operations.

Certain loans made by us and financing extended to us are made at variable rates that use LIBOR as a benchmark for establishing the interest rate.

In addition, we also have investments, interest rate derivatives and borrowings that reference LIBOR.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

Subsequently, on November 30, 2020, the ICE Benchmark Administration announced its plan to extend the date most U.S.

dollar LIBOR values would cease being computed to June 30, 2023.

On the same date, the FRB, FDIC and OCC issued a joint statement instructing banks to cease entering into new LIBOR-based loan agreements by no later than December 31, 2021.

In the United States, efforts to identify a set of alternative U.S.

dollar reference interest rates are ongoing, and the Alternative Reference Rate Committee (ARRC) has recommended the use of a SOFR.

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” should be based on the SOFR.

Similar legislation, which would cover all U.S.

contracts, was passed by the U.S.

House of Representatives in December 2021.

SOFR is different from LIBOR in that it is a backward-looking secured rate rather than a forward-looking unsecured rate.

These differences could lead to a greater disconnect between the Bank's costs to raise funds for SOFR as compared to LIBOR.

The implementation of a substitute index or indices for the calculation of interest rates under our loan agreements with our borrowers may cause us to incur significant expenses in effecting the transition, may result in reduced loan balances if borrowers do not accept the substitute index or indices, and may result in disputes or litigation with customers over the appropriateness or comparability to LIBOR of the substitute index or indices, any of which could have an adverse effect on our results of operations.

These reforms may cause new methods of calculating LIBOR to be established or the establishment of multiple alternative reference rates.

These consequences cannot be entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us.

The Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”), is a Federal law that was passed March 15, 2022, to permit financing agreements that contain a LIBOR-based benchmark without inadequate “fallback provisions” to be automatically replaced, once LIBOR ceases, by a benchmark replacement recommended by the Federal Reserve.

On December 16, 2022, the Federal Reserve adopted a final rule implementing the LIBOR Act that, among other things, identifies the applicable SOFR-based benchmark replacements under the LIBOR Act.

The LIBOR Act pre-empts similar state laws such as the New York State statute providing for recommended benchmark replacements for contracts governed by New York law without adequate fallback provisions.

US Dollar LIBOR rates will continue to be published until June 30, 2023, to allow adequate time for legacy LIBOR based financing to move to an alternate reference interest rate.

SOFR is considered to be a risk free rate and LIBOR was a risk weighted rate.

Thus, SOFR tends to be a lower rate than LIBOR because it does not contain a risk component.

The difference may negatively impact Valley's interest rate margin utilizing SOFR as compared to LIBOR.

We no longer use LIBOR as an index for any new loan originations and commenced its changeover of legacy LIBOR based financing to alternate indexes.

The implementation of a substitute index or indices for the calculation of interest rates under loan agreements with borrowers may cause us to incur expenses related to the transition, may result in reduced loan interest income.

Borrowers may dispute substitute index, indices or equalization credit spread adjustments.

Some disputes with borrowers over the appropriateness or comparability to LIBOR of the substitute index or indices may result in litigation.

The interest rate differences, costs associated with the indices changeover from LIBOR to SOFR and the limited potential for litigation related to the cessation of LIBOR may have an adverse impact to Valley.

These consequences cannot be entirely predicted and may impact the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us.

Higher charge-offs and weak credit conditions could require us to further increase our allowance for credit losses through a provision charge to earnings.

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If our judgment proves to be incorrect, our allowance for credit losses may not be sufficient to cover the lifetime credit losses inherent in our loan and held to maturity debt securities portfolios, as well as unfunded credit commitments.

Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses.

Deterioration in economic conditions affecting borrowers, including as a result of inflationary pressures or other macroeconomic factors resulting from the COVID-19 pandemic or otherwise, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses.

Additionally, bank regulators review the classification of our loans in their examination of us and we may be required in the future to change the internal classification on certain loans, which may require us to increase our provision for credit losses or loan charge-offs.

If actual net charge-offs were to exceed Valley’s allowance, its earnings would be negatively impacted by additional provisions for credit losses.

Any increase in our allowance for credit losses or loan charge-offs as required by the OCC or otherwise could have an adverse effect on our results of operations or financial condition.

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increase in our allowance for credit losses or loan charge-offs as required by the OCC or otherwise could have an adverse effect on our results of operations or financial condition.

An increase in our non-performing assets may reduce our interest income and increase our net loan charge-offs, provision for loan losses, and operating expenses.

Non-performing assets (including non-accrual loans, other real estate owned, and other repossessed assets) totaled $272.0 million at December 31, 2022.

Our non-accrual loans increased from 0.26 percent of total loans at December 31, 2016 to 0.70 percent of total loans at December 31, 2021 partially due to a significant increase in non-accrual taxi medallion loans within our commercial and industrial loan portfolio.

Due to continued negative trends in estimated fair valuations of the underlying taxi medallion collateral, a weak operating environment for ride services and uncertain borrower performance, the remainder of our previously accruing taxi medallion loans were placed on non-accrual status during the first quarter 2020.

At December 31, 2021, the non-accrual taxi medallion loans totaling $86.0 million had related reserves of $58.5 million, or 68.0 percent of such loans, within the allowance for loan losses.

Our non-accrual loans represented 0.57 percent of total loans at December 31, 2022 and included non-accrual taxi medallion loans totaling $66.5 million with related reserves of $42.2 million, or 63.5 percent of such loans, within the allowance for loan losses.

These non-performing assets can adversely affect our net income mainly through decreased interest income and increased operating expenses incurred to maintain such assets or loss charges related to subsequent declines in the estimated fair value of foreclosed assets.

Adverse changes in the value of our non-performing assets, or the underlying collateral, or in the borrowers’ performance or financial conditions could adversely affect our business, results of operations and financial condition.

Potential further declines in the market valuation of taxi medallions and the stressed operating environment within both New York City and Chicago due to the COVID-19 pandemic could also negatively impact the future performance of this portfolio.

Potential further declines in the market valuation of taxi medallions and the stressed operating environment within New York City due to the COVID-19 pandemic, increases in crime or other factors could also negatively impact the future performance of this portfolio.

There can be no assurance that we will not experience increases in non-performing loans in the future, or that our non-performing assets will not result in lower financial returns in the future.

Holders of our common stock are only entitled to receive such cash dividends as our Board of Directors may declare out of funds legally available for such payments.

Although we have historically declared cash dividends on our common stock, we are not required to do so.

We may reduce or eliminate our common stock cash dividend in the future depending upon our results of operations, financial condition or other metrics, which could be adversely impacted by the factors described in this Item 1A, including the potential ongoing impact of the COVID-19 pandemic and the uncertain U.S.

economic conditions.

Currently, we believe that Valley does not meet the standard for expedited consultation and approval of its dividend, should it be required.

As a result, Valley could be subject to a lengthier and possibly more burdensome review process by the FRB when considering paying dividends that exceed quarterly earnings.

The delay, reduction or elimination of our quarterly dividend could adversely affect the market price of our common stock.

See additional information regarding our quarterly cash dividend and the current rate of earnings retention in the “Capital Adequacy” section of the MD&A.

General Commercial, Operational and Financial and Regulatory Risks

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Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

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We may also be subject to disruptions of our systems arising from events that are wholly or partially beyond our control (including, for example, electrical or telecommunications outages), which may give rise to losses in service to customers and to financial loss or liability.

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While we believe these policies and procedures help to mitigate risk, the failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements could be disruptive to our operations, which could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Our financial results and condition may be adversely impacted by changing economic conditions.

Financial institutions can be affected by changing conditions in the real estate and financial markets.

Weak economic conditions could result in financial stress on our borrowers that would adversely affect our financial condition and results of operations.

Volatility in the housing markets, real estate values and unemployment levels could result in significant write-downs of asset values by financial institutions.

The majority of Valley’s lending is in northern and central New Jersey, the New

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York City metropolitan area, Florida and Alabama.

Adverse economic conditions in our market areas can reduce our rate of growth, affect our customers’ ability to repay loans and adversely impact our financial condition and earnings.

General economic conditions, including inflation, unemployment and money supply fluctuations, also may adversely affect our profitability.

Our business, financial condition and results of operations could be adversely affected by the outbreak of pandemic disease, acts of terrorism, and other external events.

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Any possible acquisition will be subject to regulatory approval, and there can be no assurance that we will be able to obtain such approval in a timely manner or at all.

Even if we obtain regulatory approval, these acquisitions, including our recent acquisition of The Westchester Bank and pending acquisition of Bank Leumi USA, could involve numerous risks, including lower than expected performance or higher than expected costs, difficulties related to integration, diversion of management's attention from other business activities, changes in relationships with customers, and the potential loss of key employees.

Even if we obtain regulatory approval, these acquisitions could involve numerous risks, including lower than expected performance or higher than expected costs, difficulties related to integration, diversion of management's attention from other business activities, changes in relationships with customers, and the potential loss of key employees.

In addition, we may not be successful in identifying acquisition candidates, integrating acquired institutions, or preventing deposit erosion or loan quality deterioration at acquired institutions.

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Ability to grow may be limited if we choose not to pursue or are unable to successfully make acquisitions in the future.

The future impact of changes to the Internal Revenue Code is uncertain and may adversely affect our business .

Congress passed significant reform of the Internal Revenue Code, known as the Tax Cuts and Jobs Act of 2017 (Tax Act) at the end of 2017.

While the decline in the federal corporate tax rate from 35 percent to 21 percent lowered Valley’s income tax expense as a percentage of its taxable income in 2018 and subsequent years, other provisions of the Tax Act negatively impacted Valley's consolidated financial statements and it may adversely affect Valley in the future.

For example, under the provisions of the Tax Act, the $2.5 million, $3.3 million and $2.5 million of the Bank's total FDIC insurance assessment for the years ended December 31, 2021, 2020 and 2019, respectively, was non-tax deductible based upon the asset size of the Bank.

If Valley's total assets were to exceed $50 billion at any year-end which is likely at the end of 2022 due to the pending acquisition of Bank Leumi USA, its entire FDIC insurance assessment would be non-tax deductible in that fiscal year.

The future impact of the Tax Act or subsequent amendments to the tax rates and laws on our business may be adverse.

Our adoption of the CECL model for determining our allowance for credit losses has added volatility and could add additional volatility, to our provision for credit losses and earnings.

Effective January 1, 2020, Valley adopted the FASB's new accounting guidance on the impairment of financial instruments, commonly known as the current expected credit loss (CECL) model.

The CECL model requires the allowance for credit losses for certain financial assets, including loans, held to maturity securities and certain off-balance sheet credit exposures, to be calculated based on current expected credit losses over the lives of the assets rather than incurred losses as of a point in time.

The CECL model for determining our allowance for credit losses could add volatility to our provision for credit losses and earnings.

The current expected credit loss (CECL) model requires the allowance for credit losses for certain financial assets, including loans, held to maturity securities and certain off-balance sheet credit exposures, to be calculated based on current expected credit losses over the lives of the assets rather than incurred losses as of a point in time.

Our estimation process is subject to risks and uncertainties, including a reliance on historical loss and trend information that may not be representative of current conditions and indicative of future performance.

Changes in such estimates could significantly impact our allowance and provision for credit losses.

Accordingly, our actual allowance for credit losses may be materially different than the amounts reported due to the inherent uncertainty in the estimation process, including future loss

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estimates based upon our reasonable and supportable economic forecasts.

Also, the future amount could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

Accordingly, our actual lifetime credit losses may be materially different than the amounts reported in the allowance due to the inherent uncertainty in the estimation process, including future loss estimates based upon our reasonable and supportable economic forecasts.

Also, future credit losses could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

Changes in such estimates could significantly impact our allowance, provision for credit losses and earnings.

We may be unable to adequately manage our liquidity risk, which could affect our ability to meet our obligations as they become due, capitalize on growth opportunities, or pay regular dividends on our common stock.

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Liquidity is required to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital expenditures.

Liquidity is derived primarily from retail deposit growth and retention;

Liquidity is derived primarily from commercial and retail deposit growth and retention;

principal and interest payments on loans;

principal and interest payments on investment securities;

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and interest payments on investment securities;

sale, maturity and prepayment of investment securities;

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Many financial institutions and companies engaged in data processing have reported significant breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, denial-of-service, or sabotage systems, often through the introduction of computer viruses or malware, cyber attacks and other means.

In addition, recently there have been well-publicized “ransomware” attacks against various U.S.

In addition, there have been well-publicized “ransomware” attacks against various U.S.

companies with the intent to materially disrupt their computer network and services.

Globally, cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors.

In addition, geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine or increasing tension with China, may create a heightened risk of cybersecurity attacks.

Valley frequently experiences attempted cybersecurity attacks against its systems.

In 2021, there was a breach by a threat actor of a legacy network from an acquired bank.

The breach resulted in the unauthorized access of certain data stored on the legacy network.

The legacy network was isolated from Valley’s network, which was not affected by the incident.

There can be no assurances that Valley will not incur breaches of our systems or that of our vendors which may expose the data of our customers or disrupt our services, exposing us to significant damage, on-going operational costs and/or reputational harm.

Cyber risk exposure will remain elevated or increase in the future due to, among other things, the increasing size and prominence of Valley in the financial services industry, our expansion of internet and mobile banking tools and new products based on customer needs, and the system and customer account conversions associated with the integration of merger targets.

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There can be no assurance that we or our third-party service providers will not suffer a cyber attack that exposes us to significant damages, operational costs, or reputational harm.

Extensive regulation and supervision have a negative impact on our ability to compete in a cost-effective manner and may subject us to material compliance costs and penalties.

Extensive regulation and supervision have a negative impact on our ability to compete in a cost-effective manner and may subject us to material compliance costs and penalties, and changes in regulation could adversely affect our business, financial condition and results of operations.

Valley, primarily through its principal subsidiary and certain non-bank subsidiaries, is subject to extensive federal and state regulation and supervision.

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Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect Valley in substantial and unpredictable ways.

Such changes could subject Valley to additional costs, limit the types of financial services and products it may offer and/or

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increase the ability of non-banks to offer competing financial services and products, among other things.

Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on Valley’s business, financial condition and results of operations.

Valley’s compliance with certain of these laws will be considered by banking regulators when reviewing bank merger and bank holding company acquisitions.

In addition, we may be subject to increased regulatory scrutiny from the current presidential and congressional administrations as compared to prior administrations.

Changes in key personnel at our federal regulators may result in differing interpretations of existing rules and guidelines and potentially more stringent enforcement and more severe penalties than was previously the case.

Such changes could subject Valley to additional costs, limit the types of financial services and products it may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things.

Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputational damage, which could have a material adverse effect on Valley’s business, financial condition and results of operations.

Valley’s compliance with certain of these laws will also be considered by banking regulators when reviewing bank merger and bank holding company acquisitions.

We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose community investment and nondiscriminatory lending requirements on financial institutions.

The Consumer Financial Protection Bureau, the Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.

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Consumer Financial Protection Bureau, the Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.

A successful regulatory challenge to an institution’s performance under the Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act or other fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions, restrictions on expansion and restrictions on entering new business lines.

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Any reputation damage could have a material adverse effect on Valley’s business.

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Risks Related to an Investment in our Securities

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Regulations relating to capital requirements affect the ability of the Bank to pay dividends and other distributions to us and to make loans to us.

Additionally, if our subsidiaries’ earnings are not sufficient to make dividend payments to us while maintaining adequate capital levels, we may not be able to make dividend payments to our preferred and common shareholders or interest payments on our long-term borrowings and junior subordinated debentures issued to capital trusts.

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borrowings and junior subordinated debentures issued to capital trusts.

Furthermore, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.

Valley’s shareholders will have a reduced ownership and voting interest in and will exercise less influence over management of Valley after the acquisition of Bank Leumi USA.

Valley’s shareholders currently have the right to vote in the election of the Valley board and on other matters affecting Valley.

Upon completion of the merger, Valley anticipates that shares of Valley common stock held by former Bank Leumi USA shareholders will represent approximately 16.8 percent of the outstanding shares of Valley common stock expected to be issued and outstanding as of immediately following and giving effect to the completion of the merger, with Bank Leumi Le-Israel B.M.

and its subsidiaries beneficially owning approximately 14.2 percent of the outstanding shares of Valley common stock expected to be issued and outstanding as of immediately following and giving effect to the completion of the merger, and the shares of Valley common stock held by existing Valley shareholders will represent approximately 83.2 percent of the outstanding shares of Valley common stock expected to be issued and outstanding as of immediately following and giving effect to the completion of the merger, in each case based on the number of shares outstanding as of December 31, 2021.

Accordingly, Valley’s shareholders may have less influence on the management and policies of Valley after completion of the merger than they now have on the management and policies of Valley.

The Bank Leumi USA acquisition, and future acquisitions, may dilute shareholder value, especially tangible book value per share.

Future acquisitions may dilute shareholder value, especially tangible book value per share.

We regularly evaluate opportunities to acquire other financial institutions.

If the Bank Leumi USA acquisition is completed, we will issue approximately 84.9 million shares of Valley common stock.

While there are many variables, we anticipate that tangible book value will be diluted by 1 percent with an earn back period expected to be approximately one year or longer depending on the speed of achieving cost savings and the amount of savings.

Future mergers or acquisitions involving cash, debt, or equity securities may occur at any time.

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Holders of our common stock are not entitled to preemptive rights or other protections against dilution.

Upon liquidation, holders of our debt securities and shares of preferred stock, and lenders with respect to other borrowings will receive distributions of our available assets prior to the

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holders of our common stock.

Upon liquidation, holders of our debt securities and shares of preferred stock, and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our common stock.

See Note 18 to the consolidated financial statements for more details on our common and preferred stock.

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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 1A. Risk Factors