VALLEY NATIONAL BANCORP 10-K

vly-20241231 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-11277 VALLEY NATIONAL BANCORP (Exact name of registrant as specified in its charter) New Jersey 22-2477875 (State or other jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) One Penn Plaza New York, NY 10119 (Address of principal executive office) (Zip code) 973 - 305-8800 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbols Name of exchange on which registered Common Stock, no par value VLY The Nasdaq Stock Market LLC Non-Cumulative Perpetual Preferred Stock, Series A, no par value VLYPP The Nasdaq Stock Market LLC Non-Cumulative Perpetual Preferred Stock, Series B, no par value VLYPO The Nasdaq Stock Market LLC Non-Cumulative Perpetual Preferred Stock, Series C, no par value VLYPN The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act: Large accelerated filer ☑ Accelerated filer ☐ Smaller reporting company ☐ Non-accelerated filer ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☑ No ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☑ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☑ The aggregate market value of the voting stock held by non-affiliates of the registrant was approximatel y $ 3.5 billion on June 30, 2024. There were 560,275,784 shares of Common Stock outstanding at February 26, 2025 . Documents incorporated by reference: Certain portions of the registrant’s Definitive Proxy Statement (t he “2025 Proxy Statement”) for the 2025 Annual Meeting of Shareholders to be held May 20, 2025 will be incorporated by reference in Par t III. The 2025 Prox y Statement will be filed within 120 days of December 31, 2024. FORM 10-K TABLE OF CONTENTS Page PART I Item 1. Business 5 Item 1A. Risk Factors 23 Item 1B. Unresolved Staff Comments 36 Item 1C. Cybersecurity 36 Item 2. Properties 38 Item 3. Legal Proceedings 39 Item 4. Mine and Safety Disclosures 39 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 40 Item 6. [Reserved] 41 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 81 Item 8. Financial Statements and Supplementary Data: 82 Consolidated Statements of Financial Condition 82 Consolidated Statements of Income 83 Consolidated Statements of Comprehensive Income 84 Consolidated Statements of Changes in Shareholders’ Equity 85 Consolidated Statements of Cash Flows 86 Notes to Consolidated Financial Statements 88 Report of Independent Registered Public Accounting Firm 152 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 155 Item 9A. Controls and Procedures 155 Item 9B. Other Information 158 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 158 PART III Item 10. Directors, Executive Officers and Corporate Governance 158 Item 11. Executive Compensation 158 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 158 Item 13. Certain Relationships and Related Transactions, and Director Independence 158 Item 14. Principal Accountant Fees and Services 158 PART IV Item 15. Exhibits and Financial Statement Schedules 159 Item 16. Form 10-K Summary 162 Signatures 163 Glossary of Defined Terms The following terms may be used throughout this Report, including the consolidated financial statements and related notes. Term Definition ACL Allowance for credit losses AFS Available-for-sale ARG Associate Resource Group ASC Accounting Standards Codification ASU Accounting Standards Update Bank Valley National Bank Basel III Capital rules under a global regulatory framework developed by the Basel Committee on Banking Supervision BHC Act Bank Holding Company Act of 1956, as amended Board Board of Directors of Valley National Bancorp BSA Bank Secrecy Act BSA/AML Procedures designed to assure and monitor compliance with BSA regulatory requirements CD Certificate of deposit CECL Current expected credit loss model CET1 Common equity tier 1 CFPB Consumer Financial Protection Bureau CODM Chief Operating Decision Maker CPI Consumer Price Index CRA Community Reinvestment Act CRE loan concentration ratio Total commercial real estate loans held for investment and held for sale, excluding owner occupied loans, as a percentage of total risk-based capital CRISC Certified in Risk and Information Systems Control DIF Deposit Insurance Fund administered by the FDIC Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 EGRRCPA The 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act ESG Environmental, Social and Governance Exchange Act Securities Exchange Act of 1934, as amended Fannie Mae Federal National Mortgage Association FASB Financial Accounting Standards Board FDIC Federal Deposit Insurance Corporation FDICIA Federal Deposit Insurance Corporation Improvement Act of 1991 Federal Reserve Board of Governors of the Federal Reserve System FRB Federal Reserve Bank FHLB Federal Home Loan Bank FICO Fair Isaac Corporation FinCEN Financial Crimes Enforcement Network FINRA Financial Industry Regulatory Authority, Inc. Fintech Financial technology Freddie Mac Federal Home Loan Mortgage Corporation GAAP U. S. Generally Accepted Accounting Principles GDP Gross domestic product Ginnie Mae Government National Mortgage Association HTM Held to Maturity Term Definition IDIs Insured depository institutions Insiders Valley National Bank's directors, executive officers, and 10 percent shareholders Investment Advisers Act Investment Advisers Act of 1940, as amended IRS Internal Revenue Service Leverage Ratio Tier 1 capital to average consolidated assets as reported on consolidated financial statements LIBOR London Interbank Offered Rate Moody’s Moody’s Investor Services NAV Net asset value OCC Office of the Comptroller of the Currency OFAC U.S. Department of the Treasury’s Office of Foreign Assets Control OREO Other real estate owned Oritani Oritani Financial Corporation OTC Over-the-counter PCAOB Public Company Accounting Oversight Board PCD Purchased credit deteriorated Report This Annual Report on Form 10-K ROATE Return on average tangible shareholders’ equity ROU assets Right of use assets RSU Restricted stock unit S&P Standard and Poor's SEC U.S. Securities and Exchange Commission Securities Act Securities Act of 1933, as amended SERP Supplemental Executive Retirement Income Agreement SOFR Secured Overnight Financing Rate SROs Self-regulatory organizations U.S. United States of America U.S. Treasury United States Department of the Treasury USA PATRIOT Act Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 Valley May refer to Valley National Bancorp individually, Valley National Bancorp and its consolidated subsidiaries, or certain of Valley National Bancorp’s subsidiaries, as the context requires (interchangeable with the "Company," "we," "our" and "us") VFM Valley Financial Management, Inc. PART I Item 1. Business The disclosures set forth in this item are qualified by Item 1A. Risk Factors and the section captioned “Cautionary Statement Concerning Forward-Looking Statements” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") of this Report and other cautionary statements set forth elsewhere in this Report. General Valley National Bancorp, headquartered in Morristown, New Jersey, is a New Jersey corporation organized in 1983 and is registered as a bank holding company and a financial holding company with the Federal Reserve under the BHC Act. At December 31, 2024, Valley had consolidated total assets of $62.5 billion, total net loans of $48.2 billion, total deposits of $50.1 billion and total shareholders’ equity of $7.4 billion. Valley advertises and identifies itself under the trade names “Valley Bank” and “Valley.” Valley’s principal subsidiary, Valley National Bank (commonly referred to as the “Bank” in this Report), has been chartered as a national banking association under the laws of the United States since 1927. Valley, through the Bank and its subsidiaries, offers a full suite of national and regional banking solutions through various commercial, private banking, retail, insurance and wealth management financial services products. Valley provides personalized service and customized solutions to assist its customers with their financial service needs. Our solutions include, but are not limited to, traditional consumer and commercial deposit and lending products, commercial real estate financing, asset-based loans, small business loans, equipment financing, insurance and wealth management solutions, and personal financing solutions, such as residential mortgages, home equity loans and automobile financing. Valley also offers niche financial services, including loan and deposit products for homeowners associations, cannabis-related business banking and venture banking, which we offer nationally. The Bank also provides convenient account access to customers through a number of account management services, including access to more than 200 branch locations across New Jersey, New York, Florida, Alabama, California and Illinois; online, mobile and telephone banking; drive-in and night deposit services; ATMs; remote deposit capture; and safe deposit facilities. In addition, certain international banking services are available to customers, including standby letters of credit, documentary letters of credit and related products, and certain ancillary services, such as foreign exchange transactions, documentary collections, and foreign wire transfers. In addition to the Bank, Valley ’ s consolidated subsidiaries include, but are not limited to: an insurance agency offering property and casualty, life and health insurance; an asset management adviser that is a registered investment adviser with the SEC; a registered securities broker-dealer with the SEC and member of FINRA, which is also licensed as an insurance agency to provide life and health insurance; a title insurance agency in New York, which also provides services in New Jersey; an advisory firm specializing in the investment and management of tax credits; and a subsidiary which specializes in health care equipment lending and other commercial equipment leases. Recent Acquisition Bank Leumi Le-Israel Corporation . 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, 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. The common shareholders of Bank Leumi USA received 3.8025 shares of Valley common stock and $5.08 in cash for each Bank Leumi USA common share that they owned. As a result, Valley issued approximately 85 million shares of common stock and paid $113.4 million in cash in the transaction. As a result of the acquisition, Bank Leumi Le-Israel B.M. owned approximately 14 percent of Valley's common stock as of April 1, 2022. See Note 2 to the consolidated financial statements for further details on the Bank Leumi USA and other acquisitions. Competition for Deposits, Lending and Other Financial Services Valley National Bank is the largest commercial bank headquartered in New Jersey, with its top markets located in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida and Alabama. Valley ranked 10th in competitive ranking and market share based on the deposits reported by 150 FDIC-insured financial institutions in the New York, Northern New Jersey and Long Island deposit markets as of June 30, 2024. The FDIC also ranked Valley 6th, 29th, 18th, 17th and 70th in the states of New Jersey, New York, Florida, Alabama and California, respectively, based on deposit market share as of June 30, 2024. While we believe our FDIC rankings 5 2024 Form 10-K reflect a solid foundation in our primary markets, the market for banking and bank-related services is highly competitive and we face substantial competition in all areas of our operations from a variety of bank and non-bank competitors, some of which are larger and may have more financial resources than Valley . Some of these competitors may have fewer regulatory constraints, or more resources, lending limits and name recognition than Valley. Valley competes with other providers of financial services such as commercial and savings banks, savings and loan associations, credit unions, money market and mutual funds, mortgage companies, fintech companies, title agencies, asset managers, insurance companies, and a large list of other local, regional and national institutions which offer financial services. We believe we remain competitive by offering premier relationship banking service and advice, as well as a robust suite of innovative financial products and solutions to keep pace with evolving customer preferences across our footprint. 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. Fintech and direct bank competitors provide innovative digital solutions to traditional retail banking services and products, and in some cases without the extensive burden associated with being a regulated depository institution. We work to meet these challenges by utilizing internal resources and external technology partners to continually enhance our online and mobile banking products. By combining technology-enabled solutions with our premier relationship-based service model, we continue to compete effectively in the Commercial and Consumer Banking segments of our business. This level of service and commitment is particularly impactful because of our strong community presence with almost 100 years of service, providing us a competitive advantage with such customers over certain competitors that are not traditional banks. Overall, our customers are influenced by the convenience, solution-based service from our knowledgeable staff and personal contacts, as well as the robust availability of our diverse products and services. We provide such convenience through our multi-channel delivery system, including 229 branch offices, an extensive ATM network, and our telephone, on-line and digital banking systems. We continually review our pricing, products, locations, alternative delivery channels and various acquisition prospects, and periodically engage in discussions regarding possible acquisitions to maintain and enhance our competitive position. Operating Segments Our business strategies, operations and reporting structures are reassessed by management, at least on an annual basis, to ensure the proper identification and reporting of our operating segments. In addition to our annual assessment, Valley re-evaluated its segment reporting during the second quarter 2022 to consider the Bank Leumi USA acquisition on April 1, 2022, along with other factors, including changes in the internal structure of operations, discrete financial information reviewed by key decision-makers, balance sheet management strategies and personnel. As a result, Valley currently manages its business operations under operating segments consisting of Consumer Banking and Commercial Banking. Activities not assigned to the operating segments are included in Treasury and Corporate Other. Valley’s Wealth Management and Insurance Services Division, comprised of asset management advisory, brokerage, trust, personal and title insurance, tax credit advisory services, and our international and domestic private banking businesses, is a reporting unit within the Consumer Banking segment. See Note 21 to the consolidated financial statements for additional details, including the financial performance of our operating segments. Commercial Banking Commercial and industrial loans . Commercial and industrial loans totaled approximately $9.9 billion and represented 20.4 percent of the total loan portfolio at December 31, 2024. We make commercial loans to small and middle market businesses most often located in New Jersey, New York, and Florida, as well as lending on a national basis within our specialty lines of business. A significant portion of Valley’s commercial and industrial loan portfolio consists of loans to long-standing customers of proven ability, strong repayment performance, and high character. Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, most of the loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash flows of borrowers, however, may not occur as expected and the collateral securing these loans may fluctuate in value. In the case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers may be impaired. Our loan decisions include consideration of a borrower’s ability to repay debts, collateral coverage, standing in the community and other forms of support. Strong consideration is given to long-term existing customers that have maintained a favorable relationship with the Bank. Commercial loan products offered consist of term loans for equipment purchases, working capital lines of credit that assist our customers’ financing of accounts receivable and inventory, and commercial mortgages for owner occupied properties. Working capital advances are generally used to finance seasonal requirements and are repaid at the end of the cycle. Short-term commercial business loans may be collateralized by a lien on accounts receivable, inventory, or equipment and/or partly 2024 Form 10-K 6 collateralized by real estate. Short-term loans may also be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, we obtain the personal guarantee of the borrower’s principals to potentially help mitigate the risk. Unsecured loans, when made, are generally granted to the Bank’s most creditworthy borrowers. Unsecured commercial and industrial loans totaled $1.4 billion at December 31, 2024. In addition, we provide financing to the health care and industrial equipment leasing market through our leasing subsidiary, Highland Capital Corp. Commercial real estate loans. Commercial real estate and construction loans totaled $29.6 billion and represented 60.7 percent of the total loan portfolio at December 31, 2024. The following table presents the commercial real estate portfolio by loan type and the percent of each loan type to total loans at December 31, 2024 and 2023: 2024 2023 Balance Outstanding Percent of Loan Category to Total Loans Balance Outstanding Percent of Loan Category to Total Loans ($ in thousands) Commercial real estate: Non-owner occupied (1) $ 12,344,355 25.2 % $ 15,078,464 30.0 % Multifamily (2) 8,299,250 17.0 8,860,219 17.7 Owner occupied (1) 5,886,620 12.1 4,304,556 8.6 Total $ 26,530,225 54.3 % $ 28,243,239 56.3 % Construction 3,114,733 6.4 3,726,808 7.4 Total commercial real estate loans $ 29,644,958 60.7 % $ 31,970,047 63.7 % (1) During the second quarter 2024, approximately $1.1 billion of non-owner occupied loans were reclassified to owner occupied loans based upon Valley's re-assessment of such loans under the applicable bank regulatory guidance. (2) Includes loans collateralized by properties that are greater than 50 percent rent regulated totaling approximately $553 million and $531 million at December 31, 2024 and 2023 , respectively . While commercial real estate lending remains a key pillar of the success of our relationship banking model and our lending expertise, we continued to proactively diversify our loan portfolio by reducing new originations of certain types of commercial real estate lending, such as non-owner occupied and multifamily loans, and through the sale of $1.2 billion of performing commercial real estate and construction loans during 2024. Within the commercial banking segment, our loan growth efforts continued to mainly focus on commercial and industrial and owner occupied commercial real estate loans where we have or can compete for an outsized share of the client's banking relationship. As a result, we have a current strategic balance sheet goal to reduce our CRE loan concentration ratio of 362 percent at December 31, 2024 to below 350 percent by December 31, 2025. See the "Executive Summary" section of Part II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for more details. We originate commercial real estate loans that are secured by various diversified property types across the New York metropolitan area (New Jersey, New York and Pennsylvania), Florida and our other primary market footprints. Property types in this portfolio range from multifamily residential properties to non-owner occupied commercial, industrial/warehouse, retail and, to a much lesser extent, commercial office buildings. Commercial real estate loans collateralized by office buildings totaled approximately $3.1 billion at December 31, 2024 with a combined weighted average loan to value ratio of 62 percent and debt service coverage ratio of 1.76. The majority of the office properties collateralizing our portfolio are multi-tenant and dispersed geographically in Florida, Alabama, New Jersey and New York (including approximately $218.1 million of loans with properties located in Manhattan at December 31, 2024). All commercial real estate loans are generally written on an adjustable basis with rates tied to a specifically identified market rate index. Adjustment periods generally range between five to ten years and repayment is generally structured on a fully amortizing basis for terms up to thirty years. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, but generally they involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or the overall economy and accordingly, conservative loan to value ratios are required at origination. Valley also performs regular and comprehensive stress testing of the portfolio to evaluate the potential impact of market changes on loan performance. With respect to loans to developers and builders, we originate and manage construction loans structured on either a revolving or a non-revolving basis, depending on the nature of the underlying development project. Our construction loans are 7 2024 Form 10-K generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Within our construction portfolio, we have a diverse mix of both residential (for sale and rental) and commercial development projects. Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing. Consumer Banking Residential mortgage loans . Residential mortgage loans totaled $5.6 billion and represented 11.5 percent of the total loan portfolio at December 31, 2024. Our residential mortgage loans include fixed and variable interest rate loans located mostly in New Jersey, New York and Florida. Valley’s ability to be repaid on such loans is closely linked to the economic and real estate market conditions in our lending markets. We also make mortgage loans secured by homes beyond this primary geographic area; however, lending outside this primary area is generally conducted in other branch office markets and neighboring states. Our residential mortgage loan portfolio also includes $57.8 million of loans (primarily in California) that are guaranteed by third parties. Mortgage loan originations are based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted through an approved appraisal management company. The appraisal management company is required to adhere to all regulatory requirements. The Bank’s appraisal management policy and procedure complies with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO ® and other proprietary credit scoring models is employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. In deciding whether to originate each residential mortgage, Valley considers the qualifications of the borrower, the value of the underlying property and other factors that we believe are predictive of future loan performance. Valley originated first mortgages include both fixed rate and adjustable rate mortgage products with 10-year to 30-year maturities. The adjustable rate loans have a fixed-rate, fixed payment, introductory period of 5 to 10 years that is selected by the borrower. Additionally, Valley originates jumbo residential mortgage loans, that are mostly fixed-rate with 30-year maturities. At December 31, 2024, fixed and adjustable rate jumbo residential mortgage loans totaled approximately $1.6 billion and $898.8 million, respectively. Interest-only (i.e., non-amortizing) residential mortgage loans within our jumbo portfolio totaled $188.9 million (or 3.35 percent of the total residential mortgage loan portfolio) at December 31, 2024. The Bank services certain residential mortgage portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights related primarily to loans originated and sold by the Bank. See Notes 5 and 8 to the consolidated financial statements for further details. Other consumer loans . Other consumer loans totaled $3.6 billion and represented 7.4 percent of the total loan portfolio at December 31, 2024. Our other consumer loan portfolio is primarily comprised of direct and indirect automobile loans, loans secured by the cash surrender value of life insurance, home equity loans and lines of credit, and to a lesser extent, secured and unsecured other consumer loans (including credit card loans). Valley is an auto lender primarily in New Jersey, New York, Pennsylvania, Florida, Connecticut, Delaware and Alabama offering indirect auto loans secured by either new or used automobiles. During 2024, we modestly expanded of our indirect auto network into Georgia. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Home equity lending consists of both fixed and variable interest rate products mainly to provide home equity loans to our residential m ortgage customers or take a secondary position to another lender’s first lien position within the footprint of our primary lending territories. We generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 80 percent when originating a home equity loan. Other consumer loans include direct consumer term loans, both secured and unsecured, but are largely comprised of personal lines of credit secured by the cash surrender value of life insurance. The product is mainly originated through the Bank’s retail branch network and third party financial advisors. Unsecured consumer loans totaled approximately $90.6 million, including $42.7 million of credit c ard loans, at December 31, 2024. Wealth Management. Our Wealth Management and Insurance Services Division provides asset management advisory, brokerage, trust, commercial, personal and title insurance, tax credit advisory services, and our international and domestic private banking businesses. Asset management advisory services include investment services for individuals and small to medium sized businesses, trusts and investment strategies designed for various investment profiles and objectives. Our brokerage services mainly facilitate the buying and selling of securities for banking and wealth management customers. Trust services include living and testamentary trusts, investment management, custodial and escrow services, and estate administration primarily to individuals. Tax credit advisory services include sourcing, syndication, and structuring federal and 2024 Form 10-K 8 state tax credits for commercial customers and development projects. We also provide personalized private banking and management services for select international and domestic clients. Treasury and Corporate Other Although we are primarily focused on our lending and wealth management services, a large portion of our income is generated through investments in various types of securities. Treasury and Corporate Other largely consists of the Treasury managed HTM and AFS debt securities portfolios mainly utilized in the liquidity management needs of our lending segments and income and expense items resulting from support functions not directly attributable to a specific segment. As of December 31, 2024, our total investment securities and interest bearing deposits with banks were $7.0 billion and $1.5 billion, respectively. See the “Investment Securities Portfolio” section of the MD&A and Note 4 to the consolidated financial statements for additional information concerning our investment securities. Changes in Loan Portfolio Composition At December 31, 2024 and 2023, approximately 73 percent and 76 percent of Valley’s gross loans totaling $48.8 billion and $50.2 billion, respectively, consisted of commercial real estate (including construction loans), residential mortgage and home equity loans. The remaining 27 percent and 24 percent December 31, 2024 and 2023, respectively, consisted of loans not collateralized by real estate. During 2024, we continued to execute on our strategy to reduce investor commercial real estate (i.e., multifamily and non-owner occupied) and construction loans, and maintain greater focus on growth of the commercial and industrial loan and owner-occupied commercial real estate loan portfolios (see more details in the "Commercial real estate loans" section above). We also continue to diversify the types of borrowers within our geographic concentrations in New Jersey, the New York City metropolitan area, including Westchester County, New York, and Florida. Many external factors outlined in Item 1A. Risk Factors, the “Executive Summary” section of Item 7. MD&A, and elsewhere in this Report may impact our ability to maintain the current composition of our loan portfolio. See the “Loan Portfolio” section in Item 7. MD&A in this Report for further discussion of our loan composition and concentration risks. The following table presents the loan portfolio and loans held for sale by state and the percentage of total loans by state at December 31, 2024. Commercial and Industrial Commercial Real Estate Residential Consumer Total Loans % of Total (in thousands) New York $ 2,380,333 $ 9,425,827 $ 1,508,569 $ 1,007,797 $ 14,322,526 29 % Florida 2,846,615 8,411,370 1,475,810 611,301 13,345,096 27 New Jersey 1,858,137 5,947,952 1,888,368 1,159,515 10,853,972 22 California 490,658 1,054,994 96,703 37,190 1,679,545 4 Illinois 447,906 371,281 4,599 14,057 837,843 2 Alabama 69,121 383,678 34,812 92,624 580,235 1 Other 1,838,630 4,058,606 640,586 668,353 7,206,175 15 Total $ 9,931,400 $ 29,653,708 $ 5,649,447 $ 3,590,837 $ 48,825,392 100 % Less: Loans held for sale — 8,750 16,931 — 25,681 Total loan portfolio $ 9,931,400 $ 29,644,958 $ 5,632,516 $ 3,590,837 $ 48,799,711 Risk Management Financial institutions must manage a variety of business risks that can significantly affect their financial performance. Significant risks we confront are credit risks and asset/liability management risks, which include interest rate and liquidity risks. Credit risk is the risk of not collecting payments pursuant to the contractual terms of loan, lease and investment assets. Interest rate risk results from changes in interest rates which may impact the re-pricing of assets and liabilities in different amounts or at different dates. Liquidity risk is the risk that we will be unable to fund obligations to loan customers, depositors or other creditors at a reasonable cost. The Board performs its risk oversight function primarily through several standing committees, including its Risk Committee, all of which report to the Board. The Board regularly engages in discussions of risk management and receives reports on risk factors from our executive management, other members of management and the chair of the Risk Committee. The Risk Committee assists the Board with, among other things, oversight of management's established enterprise-wide risk management framework and risk culture which are intended to align with Valley’s strategic plan and which the Risk Committee deems appropriate for Valley’s capital, business activities, size and risk appetite. Management utilizes the enterprise-wide risk management framework to holistically manage and monitor risks across the organization and to aggregate and manage the risk 9 2024 Form 10-K appetite approved by the Board. As part of the risk management framework, the Risk Committee reviews and recommends to the Board risk tolerances and limits for strategic, credit, interest rate, price, liquidity, compliance, operational (including information security and cybersecurity risk), and reputation risks, oversees risk management within those tolerances and monitors compliance with applicable laws and regulations. With guidance from and oversight by the Risk Committee, management continually refines and enhances its risk management policies, procedures and monitoring programs to be able to adapt to changing risks. Valley continues to internally run stress tests of its capital position that are subject to review by Valley's primary regulators. The Bank’s 2024 Capital Stress Test included a climate related scenario that considered geographical climate events within the Bank’s diverse footprint. The results of the internal stress tests are considered in combination with other risk management and monitoring practices at Valley to maintain an overall risk management program. Information security is also a significant operational risk for Valley. The Board, through its Risk Committee, has primary oversight responsibility for information security and receives regular updates and reporting from management on information security and cybersecurity matters, including material cybersecurity risks and mitigation strategies and information related to any third-party assessments of Valley’s cybersecurity program. See Item 1A. Risk Factors for a further discussion of risks related to cybersecurity and Item 1C. Cybersecurity for a further discussion of risk management strategies and governance processes related to cybersecurity. Credit Risk Management and Underwriting Approach Credit risk management. For all loan types, we adhere to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk appetite. Management reviews and approves these policies and procedures on a regular basis with subsequent approval by the Board annually. Credit authority relating to a significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and by a Management Credit Committee. A reporting system supplements the review process by providing management with frequent reports concerning loan production, loan quality, internal loan classifications, concentrations of credit, loan delinquencies, non-performing and potential problem loans. Loan portfolio diversification is an important factor utilized by us to manage the portfolio’s risk across business sectors, geographic markets and through cyclical economic circumstances. Our historical and current loan underwriting practice prohibits the origination of payment option adjustable residential mortgages which allow for negative interest amortization and subprime loans. Virtually all of our residential mortgage loan originations in recent years have conformed to rules requiring documentation of income, assets sufficient to close the transactions and debt to income ratios that support the borrower’s ability to repay under the loan’s proposed terms and conditions. These rules are applied to all loans originated for retention in our portfolio or for sale in the secondary market. Loan underwriting and loan documentation . Loan approvals are documented in accordance with specific and detailed underwriting policies and verification procedures. General underwriting guidance is consistent across all loan types with possible variations in procedures and due diligence dictated by specific loan requests. Due diligence standards require acquisition and verification of sufficient financial information to determine a borrower’s or guarantor’s credit worthiness, capital support, capacity to repay, collateral support, and character. Credit worthiness is generally verified using personal or business credit reports from independent credit reporting agencies. Capacity to repay the loan is based on verifiable liquidity and earnings capacity as shown on financial statements and/or tax returns, banking activity levels, operating statements, rent rolls or independent verification of employment. Finally, collateral valuation is determined via appraisals from independent, bank-approved, certified or licensed property appraisers, valuation services, or readily available market resources. Types of collateral. Loan collateral, when required, may consist of any one or a combination of the following asset types depending upon the loan type and intended purpose: commercial or residential real estate; general business assets including working assets such as accounts receivable or inventory, or fixed assets such as equipment or rolling stock; marketable securities or other forms of liquid assets such as bank deposits or cash surrender value of life insurance; automobiles; or other assets wherein adequate protective value can be established and/or verified by reliable outside independent appraisers. Valley does not accept cryptocurrency assets as loan collateral. Many times, we will underwrite loans to legal entities formed for the limited purpose of the business which is being financed. Credit granted to these entities and the ultimate repayment of such loans is primarily based on the cash flow generated from the property securing the loan or the business that occupies the property. The underlying real property securing the loans is considered a secondary source of repayment, and normally such loans are also supported by guarantees of the legal entity members. Absent such guarantees or approval by our credit committee, our commercial real estate underwriting guidelines require that the loan to value ratio (at origination) should not exceed 60 percent, except for certain low risk loan categories 2024 Form 10-K 10 where the loan to value ratio requirement may be higher, based on the estimated market value of the property as established by an independent licensed appraiser. Reevaluation of collateral . Commercial loan renewals, re-financings and other subsequent transactions that include the advancement of new funds or result in the extension of the amortization period beyond the original term, require a new or updated appraisal. Renewals, re-financings and other subsequent transactions that do not include the advancement of new funds (other than for reasonable closing costs) or, in the case of commercial loans, the extension of the amortization period beyond the original term, do not require a new appraisal unless management believes there has been a material change in market conditions or the physical aspects of the property which may negatively impact the collectability of our loan. In general, the period of time an appraisal continues to be relevant will vary depending upon the circumstances affecting the property and the marketplace. Examples of factors that could cause material changes to reported values include re-appraisal triggered by events such as credit renewal, modification or loan deterioration; the volatility of the local market; the availability of financing; the inventory of competing properties; new improvements to, or lack of maintenance of; the subject or competing surrounding properties; changes in zoning and environmental contamination. Certain collateral dependent loans are reported at the fair value of the underlying collateral (less estimated selling costs) if repayment is expected solely from the collateral and are commonly referred to as “collateral dependent loans.” Commercial real estate loans are collateralized by real estate and construction loans are generally secured by the real estate to be developed and may also be secured by additional real estate or other collateral to mitigate the risk. Residential and home equity loans are collateralized by residential real estate. Collateral values for such existing loans are typically estimated using individual appraisals performed every 12 months (or 18 months for collateral dependent loans less than $1.0 million with current loan to value ratios not exceeding 75 percent). Between scheduled appraisals, property values are monitored within the commercial portfolio by reference to current trends in commercial property sales as published by leading industry sources. Property values are monitored within the residential mortgage portfolio by reference to available market indicators, including real estate price indices within Valley’s primary lending areas. Refinanced residential mortgage loans to be held in our loan portfolio generally require either a new appraisal or a new evaluation in accordance with our appraisal policy. However, certain residential mortgage loans may be originated for sale and sold without new appraisals when the investor (Fannie Mae or Freddie Mac) accepts a refinance of an existing government sponsored enterprise loan without the benefit of a new appraisal. Additionally, all loan types are assessed for full or partial charge-off when they are between 90 and 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy) based upon their estimated net realizable value. See Note 1 to our consolidated financial statements for additional information concerning our loan portfolio risk elements, credit risk management and our loan charge-off policy. Loan Renewals and Modifications In the normal course of our lending business, we may renew loans to existing customers upon maturity of the existing loan. These renewals are granted provided that the new loan meets our standard underwriting criteria for such loan type. Additionally, on a case-by-case basis, we may extend, restructure, or otherwise modify the terms of existing loans from time to time to remain competitive and retain certain profitable customers, as well as assist customers who may be experiencing financial difficulties. All modified loans are reported as such by type of modification unless the modification results in the creation of a new loan. In certain cases, a modification may be related to loan(s) with an elevated risk profile and/or delinquent payment(s). These modifications rarely result in the forgiveness of principal or accrued interest. In addition, Valley frequently obtains additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and Valley’s underwriting process shows the borrower has the capacity to continue to perform under the modified terms, the loan will continue to accrue interest. Non-accruing modified 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. See Note 1 and Note 5 to our consolidated financial statements for additional information. Extension of Credit to Past Due Borrowers Loans are placed on non-accrual status generally when they become 90 days past due and the full and timely collection of principal and interest becomes uncertain. Valley prohibits the advancement of additional funds on non-accrual loans, except under certain workout plans if such extension of credit is intended to mitigate losses. Allowance for Credit Losses We maintain an ACL for financial assets measured at amortized cost. The ACL consists of the allowance for loan losses and unfunded loan commitments (together, the “allowance of credit losses for loans”), and the allowance for credit losses for HTM securities. The estimate of expected credit losses under the CECL methodology is based on relevant information about the 11 2024 Form 10-K past events, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amounts. Our CECL methodology to estimate the allowance for loan losses has two components: (i) a collective reserve component for estimated lifetime expected credit losses for pools of loans that share common risk characteristics and (ii) an individual reserve component for loans that do not share risk characteristics, consisting of collateral dependent loans. Valley also maintains a separate allowance for unfunded credit commitments mainly consisting of undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of cr edit . The allowance for unfunded credit commitments mainly consists of undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of credit valued using a similar methodology as used for loans. Valley estimated the collective ACL using a current expected credit losses methodology which is based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the loan balances. Management's estimate of expected losses inherent in these off-balance sheet credit exposures also incorporates estimated utilization rate over the commitment's contractual period or an expected pull-through rate for new loan commitments. To measure the expected credit losses on HTM debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third-party. The amount of ACL is based on ongoing, quarterly assessments by management. See Note 1 to the consolidated financial statements for further discussion regarding CECL methodology. Loans Originated by Third Parties The Bank makes purchases of certain types of commercial loans and loan participations and residential mortgage loans originated by, and sometimes serviced by, other financial institutions. We generally do not purchase other types of loans. The loan purchase decision is usually based on several factors, including current loan origination volumes, market interest rates, excess liquidity, our continuous efforts to meet the credit needs of certain borrowers under the CRA, as well as other asset/liability management strategies. Valley purchased approximately $41.3 million an d $25.4 million of 1-4 family loans qualifying for CRA purposes during 2024 and 2023, respectively. All purchased loans are selected using Valley’s normal underwriting criteria at the time of purchase, or in some cases guaranteed by third parties. Purchased commercial and industrial and commercial real estate participation loans are, at times, seasoned loans with expected shorter durations, but generally purchased at inception. Additionally, each purchased participation loan is stress-tested by Valley to assure its credit quality. Purchased commercial loans (including commercial and industrial and commercial real estate participation loans) and residential mortgage loans totaled approximately $2.2 billion and $516.7 million , respectively, at December 31, 2024 representing 5.3 percent and 9.2 percent of our total commercial and residential mortgage loans, respectively. At December 31, 2024, less than 1.0 percent of commercial loans originated by third parties were past due 30 days or more, which represented 1.1 percent of our total commercial loan portfolio delinquencies, and 3.4 percent of residential mortgage loans originated by third parties were past due 30 days or more which represente d 25.8 percent of our total residential mortgage portfolio delinquencies. Human Capital We foster an inclusive and high-performing culture where empowered associates, innovation and collaboration thrive. We are a customer-centric organization committed to our associates, our customers, and our shareholders. As of December 31, 2024, Valley employed 3,732 full and part time employees across our multi-state footprint. During the year 2024, we hired 669 employees, and our voluntary turnover rate was 13.5 percent. Our average tenure was 7.1 years. Our inclusive culture of belonging aims to provide a foundation to fully leverage the rich tapestry of our associates’ unique perspectives and experiences. Our strong and inclusive culture allows us to provide quality service to our customers, the communities in which we operate and each other. We remain focused on our guiding principle — we all belong at Valley. This vision drives associate programming which includes Valley’s Business Resource Group Program (BRG Program), which is open to every associate. We continue to ensure that we strengthen our connections with our communities, enhance our ability to bring new ideas to the table, raise new questions, and innovate our practices and products. We offer competitive total rewards programs to attract, engage, retain, and motivate talent across our footprint. These programs include base wages, performance-based bonus and incentive compensation, stock awards, a 401(k) plan with a competitive company match, healthcare and insurance benefits, voluntary benefits, commuter benefits, a health savings account, flexible spending accounts, tuition and adoption reimbursement, paid time off, disability, family leave, wellness and employee assistance programs. 2024 Form 10-K 12 Valley remains committed to the safety, health and well-being of its associates. Valley provides a benefits and wellness program aimed at promoting healthy lifestyles with the understanding that a healthy workforce contributes to associate productivity. Our employee assistance program was recently enhanced to offer more mental health access to associates and their families at no cost. The Valley wellness program now incentivizes participation by awarding points to associates who engage in the wellness webinars and healthy activities, which can later be redeemed to purchase fitness items. Financial wellness is supported through monthly educational opportunities and resources offered by our 401(k) plan administrator, along with our competitive 401(k) company matching contribution. Our health and welfare plans are designed to promote preventive care and financial protection against catastrophic illnesses. Valley continues to promote work/life balance by offering paid vacation, sick, personal and volunteer days as well as remote work arrangements and flexible work hours for many associates. Our Parental Leave Program provides gender-neutral paid time off to associates who give birth, adopt or foster a child, and financial assistance to those who adopt. In cases of illness, Valley offers paid disability leave and workplace accommodations for associates needing alternative work arrangements due to special medical needs. We continue to maintain alignment with state, local and CDC mandates and guidance related to airborne infectious diseases to promote a healthy workplace. Our Talent Acquisition and Learning & Talent Development teams continue to focus on the attraction, development, and retention of key and top talent – a crucial aspect of Valley's long-term success and strategy. Valley fosters a culture of internal mobility and encourages ongoing career development discussions between associates and their leaders. We actively engage our senior business leaders in reviewing their critical roles in alignment with their strategic talent initiatives through our annual talent review and succession planning process, which has created a broader understanding of our key talent needs. We continue to center our workplace strategies on the people experience, offering a variety of development opportunities, including our flagship leadership development, certifications and mentorship programs, to provide meaningful experiences that challenge our high potential and high performing associates. Our goal is to enhance the core competencies of our top talent in leadership and management skills to prepare them for future roles. We also continue to strengthen Valley’s position as an employer of choice by enhancing our associate onboarding experience and leveraging our engagement and pulse survey results to influence our culture and drive employee satisfaction. Corporate Social and Environmental Responsibility Valley recognizes the social and environmental responsibility that arises from the impact of our activities on peoples’ lives and society as a whole. To comply with this responsibility, we established an ESG Council in 2020 with respect to sustainability issues. The ESG Council helps guide us to consider how environmental, social and governance issues impact Valley’s ability to achieve its long-term strategy while being socially responsible. Additional information regarding Valley's human capital management and corporate social and environmental responsibility can be found under “Sustainability Practices” in our 2025 Proxy Statement when it is filed with the SEC. 13 2024 Form 10-K Information about our Executive Officers Name Age at December 31, 2024 Executive Officer Since Office Principal occupation during last five years other than Valley Ira Robbins 50 2009 Chairman of the Board and Chief Executive Officer of Valley and Valley National Bank Thomas A. Iadanza 66 2015 President of Valley and Valley National Bank Russell Barrett 49 2024 Senior Executive Vice President, Chief Operations Officer of Valley and Valley National Bank 2013 - 2020 Managing Director - BNP Paribas Joseph V. Chillura 58 2020 Senior Executive Vice President of Valley and President, Commercial Banking of Valley National Bank John P. Regan 61 2024 Senior Executive Vice President, Chief Risk Officer of Valley and Valley National Bank 2016 - 2022 Chief Audit Executive at Investors Bancorp, July 2022 - March 2024 Chief Audit Executive at Industrial and Commercial Bank of China Travis Lan 40 2023 Executive Vice President, Interim Chief Financial Officer of Valley and Valley National Bank 2016 - 2020 Director of Investment Banking at Keefe, Bruyette & Woods, Inc. Yvonne M. Surowiec 64 2017 Senior Executive Vice President of Valley and Chief People Officer of Valley National Bank Mitchell L. Crandell 54 2007 Executive Vice President, Chief Accounting Officer of Valley and Valley National Bank Mark Saeger 60 2018 Executive Vice President of Valley and Chief Credit Officer of Valley National Bank All officers serve at the pleasure of the Board. Available Information The SEC maintains a website at www.sec.gov which contains reports and other information filed with the SEC electronically. We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments thereto available on our website at www.valley.com without charge as soon as reasonably practicable after filing or furnishing them to the SEC. Also available on our website are Valley’s Code of Conduct and Ethics that applies to all of our employees, including our executive officers, as well as non-employee directors, Valley’s Audit Committee Charter, Valley’s Compensation and Human Capital Management Committee Charter, Valley’s Nominating, Governance, and Corporate Sustainability Committee Charter, and Valley’s Corporate Governance Guidelines. Additionally, we will provide without charge a copy of our Annual Report on Form 10-K or the Code of Conduct and Ethics to any shareholder by mail. Requests should be sent to Valley National Bancorp, Attention: Shareholder Relations, 70 Speedwell Avenue, Morristown, New Jersey, 07960. We use our website to distribute Company information, including as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. We routinely post and make accessible financial and other information, including ESG information, regarding the Company on our website. Investors should monitor our website, including the Investor Relations portion of our website, in addition to our press releases, SEC filings, public conference calls and webcasts. SUPERVISION AND REGULATION The banking industry is highly regulated, and banking organizations are subject to regulation, supervision, and examination by various federal and state regulators. The statutory and regulatory framework that governs us is intended primarily for the protection of the FDIC-insured deposits and depositors, consumers, the stability of the U.S. banking and financial system, and the health of the national economy, rather than stockholders. Banking laws and regulations, as well as 2024 Form 10-K 14 examination and supervision, increase a bank holding company’s cost of doing business and limit the options of its management to deploy assets and maximize income. The compliance cost for Valley is significant and subject to increase as new governmental regulations are enacted and/or the level and intensity of supervision and of enforcement increases. In particular, Valley employs specialists and retains outside advisors with the expectation that Valley will have sufficient resources to comply with the regulations and supervision to which it is subject. Certain of Valley’s competitors, including credit unions, fintech companies, and others, are not regulated or supervised to the extent that Valley and other banks are, which may place Valley at a competitive disadvantage. Federal and state banking regulators regularly examine Valley and its subsidiaries to evaluate their financial condition and monitor their compliance with laws and regulatory policies. Following those exams, Valley and the Bank are assigned supervisory ratings. These ratings are considered confidential supervisory information and disclosure to third parties is not allowed without permission of the issuing regulator. Violations of laws and regulations or deemed deficiencies in risk management practices may be incorporated into these supervisory ratings. A downgrade in these ratings could limit Valley’s ability to pursue acquisitions or conduct other expansionary activities for a period of time, require new or additional regulatory approvals before engaging in certain other business activities or investments, affect the Bank’s deposit insurance assessment rate, and impose additional recordkeeping and corporate governance requirements, as well as generally increase regulatory scrutiny of Valley. Banking and other financial services statutes, regulations, and policies are frequently under review by Congress, state legislatures, and federal and state regulatory agencies. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters, and similar written guidance applicable to Valley and its subsidiaries. Any change in the statutes, regulations, or regulatory policies applicable to Valley, including changes in their interpretation or implementation, could have a material effect on our business or organization. The scope of the laws and regulations, and the intensity of the supervision to which Valley is subject, have increased in recent years, initially in response to the financial crisis, and more recently in light of other factors, including bank failures in 2023, technological factors, market changes and climate change concerns, and as a result, Valley may face increased scrutiny and possible denials of bank mergers and acquisitions by federal bank regulators. Regulatory enforcement and fines have also increased across the banking and financial services sector. Valley expects that its business will remain subject to extensive regulation and supervision. We expect, however, that the new U.S. presidential administration will seek to implement a regulatory reform agenda that is significantly different than that of the prior administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies, which could, in turn, have a material effect on our business. The following discussion describes certain elements of the comprehensive regulatory framework applicable to Valley and the Bank. These descriptions do not summarize all laws and regulations applicable to Valley, the Bank, or Valley’s other subsidiaries. Bank Holding Company Regulation Valley is a bank holding company and a financial holding company within the meaning of the BHC Act. As a bank holding company, Valley is supervised by the Federal Reserve and is required to file reports with the Federal Reserve and provide such additional information as the Federal Reserve may require. The BHC Act prohibits a bank holding company, with certain exceptions, from acquiring direct or indirect ownership or control of five percent or more of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to subsidiary banks, except that it may, upon application, engage in, and may own shares of companies engaged in, certain businesses found by the Federal Reserve to be so closely related to banking “as to be a proper incident thereto.” As detailed further below, a bank holding company that has elected to be treated as a financial holding company, as Valley has, may engage in a broader range of non-banking activities that are “financial in nature.” The BHC Act requires prior approval by the Federal Reserve of the acquisition by Valley of five percent or more of the voting stock of any other bank. Satisfactory capital ratios, CRA ratings, and anti-money laundering policies as well as the absence of an enforcement action or material supervisory concerns are generally prerequisites to obtaining federal regulatory approval to make acquisitions. Acquisitions through the Bank require approval of the OCC. As a financial holding company, Valley may engage in a broader range of non-banking activities than permitted for bank holding companies and their subsidiaries that have not elected to become financial holding companies. Financial holding companies may engage directly or indirectly, either de novo or by acquisition, in activities that are defined under the BHC Act or determined by the Federal Reserve to be financial in nature or incident to a financial activity, provided that the financial holding company gives the Federal Reserve after-the-fact notice of certain new activities. Activities defined to be financial in nature include, but are not limited to: providing financial or investment advice; underwriting; dealing in or making markets in securities; making merchant banking investments, subject to significant limitations; and any activities previously found by the Federal Reserve to be so closely related to banking as to be a proper incident thereto. In order to maintain our status as a financial holding company, we and the Bank are expected to be well capitalized and well managed, as defined in applicable 15 2024 Form 10-K regulations and determined by the results of examinations, and must comply with CRA obligations. Failure to maintain these standards may result in restrictions on our activities and may ultimately permit the Federal Reserve to take enforcement actions against us and restrict our ability to engage in activities defined to be financial in nature and limits on our ability to engage in new activities that are financial in nature. Valley is required by statute to act as a source of managerial and financial strength to the Bank and to commit resources to support the Bank in circumstances in which it might not do so absent the statutory requirement. Regulation of Bank Subsidiary The Bank is subject to the supervision of, and to regular examination by, the OCC. Various laws and the regulations thereunder applicable to Valley and the Bank impose restrictions and requirements in many areas, including capital requirements, the maintenance of reserves, establishment of new offices, the making of loans and investments, consumer protection, employment practices, bank acquisitions and entry into new types of business. There are various legal limitations, including Sections 23A and 23B of the Federal Reserve Act, which govern the extent to which the Bank may finance or otherwise supply funds to Valley or Valley’s non-bank subsidiaries. Section 22 of the Federal Reserve Act prohibits the Bank from paying to a director, officer, attorney or employee a rate on deposits that is greater than the rate paid to other depositors on similar deposits with the Bank. Regulation W governs and limits transactions between the Bank and Valley. The Bank is also subject to collateral security requirements for any loans or extensions of credit permitted by such exceptions. Capital Requirements The Federal Reserve and the OCC have rules establishing a comprehensive capital framework for U.S. banking organizations, referred to as the Basel III rules. Under Basel III, the minimum capital ratios for Valley and the Bank are as follows: • 4.5 percent CET1 (common equity Tier 1) to risk-weighted assets. • 6.0 percent Tier 1 capital (i.e., CET1 plus Additional Tier 1) to risk-weighted assets. • 8.0 percent Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets. • 4.0 percent Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”). Under Basel III, both Valley and the Bank are required to maintain a 2.5 percent “capital conservation buffer” on top of the minimum risk-weighted asset ratios, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0 percent, (ii) Tier 1 capital to risk-weighted assets of at least 8.5 percent, and (iii) total capital to risk-weighted assets of at least 10.5 percent. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of (i) CET1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall. Basel III also provides for a number of complex deductions from and adjustments to its various capital components. Pursuant to the FDICIA, each federal banking agency has promulgated regulations, specifying the levels at which a financial institution would be considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized,” and to take certain mandatory and discretionary supervisory actions based on the capital level of the institution. To be well capitalized, the bank must maintain the following capital ratios: • Common Equity Tier 1 Capital Ratio of 6.5% or greater; • Tier 1 Capital Ratio of 8.0% or greater; • Total Capital Ratio of 10.0% or greater; and • Tier 1 Leverage Ratio of 5.0% or greater. Failure to be well capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our operations or financial condition. Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on 2024 Form 10-K 16 our ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications. See the “Capital Adequacy” section of the MD&A for additional disclosure on capital adequacy. For regulatory capital purposes, in accordance with the Federal Reserve’s final rule issued on August 26, 2020, we deferred 100 percent of the CECL Day 1 impact to shareholders' equity plus 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) for a two-year period ending January 1, 2022. On January 1, 2022, the deferral amount totaling $47.3 million after-tax started to be phased-in by 25 percent and will increase 25 percent per year until fully phased-in on January 1, 2025. As of December 31, 2024, approximately $35.5 million of the $47.3 million deferral amount was recognized as a reduction to regulatory capital and, as a result, decreased our risk-based capital ratios by approximately 9 basis points. The full deferral amount of $47.3 million was phased-in with a reduction of approximately 12 basis points to the risk-based capital ratios on January 1, 2025. Prompt Corrective Action The FDICIA requires the federal bank regulatory agencies to take “prompt corrective action” regarding FDIC-insured depository institutions that do not meet certain capital adequacy standards. A depository institution’s treatment for purposes of the prompt corrective action provisions depends upon its level of capitalization and certain other factors. An institution that fails to remain well capitalized becomes subject to a series of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a prohibition on capital distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of applications. The FDICIA also provides for enhanced supervisory authority over under capitalized institutions, including authority for the appointment of a conservator or receiver for the institution. In certain instances, a bank holding company may be required to guarantee the performance of an under capitalized subsidiary bank’s capital restoration plan. The Bank’s capital ratios were all above the minimum levels required for it to be considered a “well capitalized” financial institution at December 31, 2024 and 2023, under the “prompt corrective action” regulations. For further discussion of Valley and the Bank’s regulatory capital, see the “Capital Adequacy” section of the MD&A. Resolution Planning The FDIC requires certain insured depository institutions, or IDIs, with more than $50 billion in total consolidated assets to submit to the FDIC periodic plans for resolutions in the event of the institution's failure. In June 2024, the FDIC finalized amendments to the resolution planning requirements for IDIs with $50 billion or more in total assets. The amendments require covered IDIs with between $50 billion and $100 billion in total assets, which includes the Bank, to submit informational filings on a three-year cycle, with an interim supplement updating key information submitted in the off years. The final rule became effective October 1, 2024, and the Bank's first informational submission is due by October 1, 2025. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) The Dodd-Frank Act significantly changed the bank regulatory landscape and impacted the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. Some of the effects are discussed below. Under the Durbin Amendment contained in the Dodd-Frank Act, the Federal Reserve adopted rules applying to banks with more than $10 billion in assets which established a maximum permissible interchange fee equal to no more than 21 cents plus 5 basis points of the transaction value for many types of debit interchange transactions. The Federal Reserve also adopted a rule to allow a debit card issuer to recover 1 cent per transaction for fraud prevention purposes if the issuer complies with certain fraud-related requirements required by the Federal Reserve. The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. Because we exceed $10 billion in assets, we are subject to the interchange fee cap. On October 25, 2023, the Federal Reserve released a notice of proposed rule making that would lower the maximum interchange fee that a large debit card issuer can receive on a debit card transaction. Under the proposal, initially the base component would decrease from 21.0 cents to 14.4 cents, the ad valorem component would decrease from 5.0 basis points to 4 basis points multiplied by the value of the transaction, and the fraud-prevention adjustment would increase from 1.0 cents to 1.3 cents for debit card transactions performed from the effective date of the final rule to June 30, 2025. In addition, the proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered from large debit card issuers. We will continue to monitor the status of the proposed rule and are in the process of evaluating this proposed rule making and assessing the scale of its adverse impact on Valley and the Bank if adopted as proposed. 17 2024 Form 10-K The Dodd-Frank Act also imposed stress testing on Valley and the Bank. However, the EGRRCPA and a joint interagency statement regarding the impact of the EGRRCPA resulted in Valley and the Bank being no longer subject to the stress testing requirements. However, under safety and soundness principles we continue to conduct stress testing of our own design. Volcker Rule The Volcker Rule prohibits an insured depository institution and its affiliates from: (i) engaging in certain short-term “proprietary trading” activities, as defined in the Volcker Rule, and (ii) investing in or sponsoring certain types of “covered funds,” as defined in the Volcker Rule. The Volcker Rule regulation contains exemptions for market-making, hedging, underwriting, trading in U.S. government and agency obligations, and also permits certain ownership interests in certain types of covered funds to be retained. It also permits the offering and sponsoring of covered funds under certain conditions. Incentive Compensation The federal banking agencies have issued joint guidance on incentive compensation designed to ensure that the incentive compensation policies of banking organizations, such as Valley and the Bank, do not encourage imprudent risk taking and are consistent with the safety and soundness of the organization. The Federal Reserve and the OCC review the incentive compensation arrangements of banking organizations as part of their regular risk-focused examination process. These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. The Dodd-Frank Act requires that the federal banking agencies, including the Federal Reserve and the OCC, issue a rule related to incentive-based compensation. No final rule implementing this provision of the Dodd-Frank Act has, as of the date of the filing of this Report, been adopted, but a proposed rule was published in May 2024. The proposed rule is intended to (i) prohibit incentive-based payment arrangements that the banking agencies determine could encourage certain financial institutions to take inappropriate risks by providing excessive compensation or that could lead to material financial loss, (ii) require the board of directors of those financial institutions to take certain oversight actions related to incentive-based compensation, and (iii) require those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate federal regulator. Although a final rule has not been issued, and it is unclear if a final rule will be issued, or if issued, what the timing of issuance would be, Valley and the Bank have undertaken efforts to ensure that their incentive compensation plans do not encourage inappropriate risks, consistent with the principles identified above. Dividend Limitations Valley is a legal entity separate and distinct from its subsidiaries. Valley’s revenues (on a parent company only basis) result in substantial part from dividends paid by the Bank. The Bank’s dividend payments are subject to regulatory limitations. Under the National Bank Act, without consent, a national bank may declare, in any one year, dividends only in an aggregate amount not more than the sum of its net profits for such year and its retained net profits for the preceding two years. In addition, the bank regulatory agencies have the authority to prohibit us from paying dividends if the supervising agency determines that such payment would constitute an unsafe or unsound practice. Among other things, consultation with the Federal Reserve supervisory staff is required in advance of our declaration or payment of a dividend to our shareholders that exceeds our earnings for the trailing four-quarter period in which the dividend is being paid. Transactions by the Bank with Related Parties The Bank’s authority to extend credit to its directors, executive officers and 10 percent shareholders, as well as to entities controlled by such persons (insiders), is governed by the requirements of the National Bank Act, the Sarbanes-Oxley Act of 2002 and Regulation O of the Federal Reserve. Among other things, these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s capital. Community Reinvestment Under the CRA, as implemented and overseen by federal banking regulators, a national bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community. The CRA requires regulators, in connection with its examination of a national bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation 2024 Form 10-K 18 of certain applications by such institution. The CRA also requires all institutions to make public disclosure of their CRA ratings. The Bank received an overall “outstanding” CRA rating in its most recent completed examination for the three-year period ending in 2021. A bank that does not have a CRA program that is deemed "satisfactory" or better by its regulator may be prevented from making acquisitions. On October 24, 2023, the federal banking agencies finalized a rule to amend their regulations implementing the CRA. The final rule would, among other things, establish a tailored framework for CRA evaluations and data collection based on bank size and business models and, for banks with over $2 billion in total assets, implement separate evaluations for retail lending, retail services and products, community development financing, and community development services. The evaluation of retail services and products banks would also cover digital delivery systems, including online banking or mobile banking, for banks with over $10 billion in total assets, such as the Bank. The final rule became effective on April 1, 2024, with staggered compliance dates of January 1, 2026 and January 1, 2027. Bank Secrecy Act (BSA)/USA PATRIOT Act The Bank is subject to the reporting and recordkeeping requirements of the BSA and its implementing regulations. Under the BSA, the Bank is required, among other things, to establish and maintain a BSA/AML Program with procedures reasonably designed to assure and monitor compliance with BSA regulatory requirements. As part of the USA PATRIOT Act, Congress adopted the Anti-Money Laundering Act, which amended the BSA and introduced and expanded certain requirements. For example, the BSA, as amended by the Anti-Money Laundering Act, requires each financial institution to: (i) establish an anti-money laundering program; (ii) establish due diligence policies, procedures and controls that are reasonably designed to detect and report instances of money laundering in United States private banking accounts and correspondent accounts maintained for non-United States persons or their representatives; and (iii) avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, a foreign shell bank that does not have a physical presence in any country. In addition, the BSA, as amended, authorizes the Secretary of the U.S. Treasury, in consultation with the heads of other government agencies, to adopt special measures applicable to financial institutions such as banks, bank holding companies, broker-dealers and insurance companies. In 2021, Congress passed the Anti-Money Laundering Act of 2020, which amended the BSA and requires FinCEN to undertake a number of rulemakings that will update and expand the BSA’s regulatory requirements and may affect the Bank’s compliance obligations. Regulations implementing the BSA, among other things, require covered financial institutions to implement customer identification and customer due diligence programs, including minimum standards to verify customer identity and maintain accurate records; encourage cooperation among financial institutions, federal banking agencies, and law enforcement authorities regarding possible money laundering or terrorist activities; prohibit the anonymous use of “concentration accounts”; require financial institutions to identify and report suspicious transactions; and require all financial institutions to have in place an anti-money laundering compliance program reasonably designed to ensure compliance with the BSA. The OCC, along with other banking agencies and FinCEN, have strictly enforced various anti-money laundering and suspicious activity reporting requirements using formal and informal enforcement tools to cause banks to comply with these provisions. A bank that is issued a formal or informal enforcement requirement with respect to its BSA/AML Program may be prevented from making acquisitions. In July 2024, the federal banking agencies, including the Federal Reserve and the OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism (CFT) programs. The proposed amendments would require supervised institutions to identify, evaluate and document the institution’s money laundering, terrorist financing and other illicit finance activity risks, as well as consider, as appropriate, FinCEN’s published national AML/CFT priorities. In August 2024, FinCEN adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers, which are applicable to certain of our subsidiaries compliance with these programs required beginning on January 1, 2026. OFAC Regulation The U.S. Department of the Treasury’s OFAC administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and issues regulations and implements executive orders that restrict dealings with certain countries and territories. We and the Bank are responsible for, among other things, blocking accounts of, 19 2024 Form 10-K and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Failure to comply with these sanctions could have serious legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. Consumer Financial Protection Bureau Supervision The Bank is subject to a variety of federal and state statutes and regulations designed to protect consumers and promote lending to various sectors of the economy and population. The CFPB has broad rulemaking and supervisory powers under various federal consumer financial protection laws, including the laws and regulations that relate to deposit products, credit card, mortgage, automobile, student, and other consumer loans, and other consumer financial products and services offered. The CFPB also has examination and enforcement authority with respect to consumer financial laws for depository institutions with $10 billion or more in assets, such as the Bank, including the authority to prevent unfair, deceptive or abusive practices in connection with the offering of consumer financial products or services. The CFPB, along with the U.S. Department of Justice and bank regulatory authorities, also seeks to enforce discriminatory lending laws. In such actions, the CFPB and others have used a disparate impact analysis, which measures discriminatory results without regard to intent. Consequently, unintentional actions by Valley could have a material adverse impact on our lending and results of operations if the actions are found to be discriminatory by our regulators. In December 2024, the CFPB issued a final rule that, among other things, amends Regulation Z (otherwise known as the “Truth-In-Lending Act”) and impacts extensions of overdraft credit offered by financial institutions with more than $10 billion in assets. The final rule requires that extensions of overdraft credit, which is defined as generally including consumer credit extended by a financial institution to pay a transaction from a checking or other account held at the financial institution when the consumer has insufficient or unavailable funds in that account, adhere to certain consumer protections required of similarly situated products. If the overdraft fee is at or below the institution’s cost as determined by (i) calculating its own costs and losses using a standard set forth in the rule, or (ii) utilizing a benchmark fee of five dollars, then the charges that exceed costs and losses will become a covered overdraft credit and subject to Regulation Z which will require additional disclosure regarding borrowing costs, rates, and fees. The provisions of the final rule become effective on October 1, 2025. The Bank is subject to federal consumer protection statutes and regulations promulgated under those laws, including, but not limited to the following: • Truth-In-Lending Act and Regulation Z, governing disclosures of credit terms to consumer borrowers; • Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide certain information about home mortgage and refinanced loans; • Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit; • Fair Credit Reporting Act and Regulation V, governing the provision of consumer information to credit reporting agencies and the use of consumer information; and • Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies. Valley National Bank’s deposit operations are also subject to the following federal statutes and regulations, among others: • The Truth in Savings Act and Regulation DD, which requires disclosure of deposit terms to consumers; • Regulation CC, which relates to the availability of deposit funds to consumers; • The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and • Electronic Funds Transfer Act and Regulation E, governing automatic deposits to, and withdrawals from, deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. The CFPB examines Valley National Bank’s compliance with such laws and the regulations under them. 2024 Form 10-K 20 Insurance of Deposit Accounts The Bank’s deposits are insured by the FDIC up to applicable limits, which are generally $250,000 per account ownership type. The FDIC imposes a risk-based deposit premium assessment system that determines assessment rates for an insured depository institution based on an assessment rate calculator, under which insured depository institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors with less risky institutions paying lower assessments on their deposits. The assessment rate is applied to total average assets less tangible equity, as defined under the Dodd-Frank Act. The assessment rate schedule can change from time to time at the discretion of the FDIC, subject to certain limits. Under the current system, premiums are assessed quarterly. The FDIC, as required under the FDIA, established a plan in September 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35 percent within eight years. This plan did not include an increase in the deposit insurance assessment rate. Based on the FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates. In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules by 2 basis points, beginning with the first quarterly assessment period of 2023. The FDIC also concurrently maintained the Designated Reserve Ratio for the DIF at 2 percent. In November 2023, the FDIC issued a final rule to implement a special assessment to recoup losses to the DIF associated with protecting uninsured depositors following the bank failures in the first half of 2023. Under the rule, the assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion of uninsured deposits. In the first quarter 2024, the FDIC started collection of the special assessment at an annual rate of approximately 13.4 basis points over eight quarterly assessment periods. The special assessment for the Bank totaled $59.1 million, adjusted based upon revised loss information received from the FDIC in 2024, and resulted in pre-tax charges of $50.3 million, $7.4 million and $1.4 million to earnings in the fourth quarter 2023, first quarter 2024 and second quarter 2024, respectively. The FDIC retains the right to cease collection early, extend the special assessment collection period, and impose a final shortfall special assessment if actual losses exceed the amounts collected. Refer to the “Non-Interest Expense” section of the MD&A for additional information related to the FDIC’s special assessment. Federal Securities Laws Valley’s common stock is registered with the SEC under the Exchange Act. Valley is subject to the information, proxy solicitation, insider trading and other requirements and restrictions under the Exchange Act. Broker-Dealer and Securities Regulation Our U.S. broker-dealer subsidiary, VFM, is subject to federal securities laws relating to all aspects of their securities business operations, including, but not limited to, sales and trading practices, securities offerings, handling of customer funds, net capital levels, record-keeping, privacy requirements, and the conduct of directors, officers and employees. VFM is also subject to regulation by state securities commissions in those states in which they conduct business. VFM is currently registered as a broker-dealer in most U.S. states, the District of Columbia and Puerto Rico. VFM is a member of the Securities Investor Protection Corporation and is subject to rules of certain SROs, including FINRA and securities exchanges. VFM is subject to various requirements related to sales practices and customer relationships, including Regulation Best Interest, which requires broker-dealers and investment advisers to act in the “best interest” of retail customers at the time a recommendation is made without placing the financial or other interests of the broker-dealer or investment adviser ahead of the interest of the retail customer. Margin lending by our broker-dealers is regulated by the Federal Reserve’s restrictions on lending in connection with purchases and short sales of securities. VFM is also subject to maintenance and other margin requirements imposed under FINRA and other SRO rules. The SEC and FINRA have active enforcement functions that oversee broker-dealers and can bring actions that result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability to rely on certain favorable exemptions. In addition, certain changes in the activities of a broker-dealer require approval from FINRA, and FINRA takes into account a variety of considerations in acting upon applications for such approval, including internal controls, capital levels, management experience and quality, prior enforcement and disciplinary history, and supervisory concerns. Investment Advisers Act VFM and our subsidiary Valley Wealth Managers, Inc. (formerly Hallmark Capital Management, Inc.) are registered investment advisers. In this capacity, VFM and Valley Wealth Managers, Inc. are subject to the Investment Advisers Act, and 21 2024 Form 10-K SEC rules and regulations thereunder, including with respect to record-keeping, operational and marketing requirements, disclosure obligations, fiduciary and other obligations and prohibitions on fraudulent activities. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act, ranging from fines and censure to termination of an investment adviser’s registration. Our investment adviser subsidiaries are also subject to state laws and regulations, including anti-fraud laws, in those states in which they conduct business. Noncompliance with the Investment Advisers Act or other federal and state securities laws and regulations could result in investigations, sanctions, disgorgement, fines and reputational harm. Insurance regulation Valley’s insurance agency subsidiary, Valley Insurance Services, Inc., provides property and casualty insurance, employee benefits, risk management, loss control and claims services to business clients, as well as home, auto, boat and life insurance to individuals. In addition, VFM is licensed as an insurance agency to provide life and health insurance in several states. Regulation of insurance brokerage is generally performed at a state, rather than a national, level. Both Valley’s insurance agency subsidiaries operate in multiple states, and as a result, they and their employees are subject to various state regulatory and licensing requirements. Valley’s insurance agency subsidiaries monitor compliance with the various state insurance regulators, and also have relationships with third party vendors to ensure compliance and awareness among entities and their employees of relevant requirements and changes, and emerging regulatory issues. Prohibitions Against Tying Arrangements Banks are subject to the prohibitions of 12 U.S.C. Section 1972 on certain tying arrangements. A depository institution is prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution. Data Privacy and Cybersecurity Regulation In the course of our operations, we collect, use, store, disclose, transfer and otherwise process personal information of our customers, employees and third parties with whom we conduct business. Accordingly, we are subject to a variety of increasingly stringent federal, state and local laws and regulations relating to data privacy and cybersecurity. For example, at the U.S. federal level, we are subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data privacy and security) and the Gramm Leach Bliley Act (which regulates the confidentiality and security of customer information obtained by financial institutions and certain other types of financial services businesses). Further, in the spring of 2022, federal banking regulators imposed a new cybersecurity-related notification rule that requires banking organizations to notify their primary federal regulator as soon as possible and within 36 hours of incidents that, among other things, have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector. The rule also imposes requirements on bank service providers to notify their affected banking organization customers of certain computer-security incidents. At the state level, we are subject to laws and regulations such as the California Consumer Privacy Act (as amended by the California Privacy Rights Act, collectively, the CCPA), which broadly defines personal information and gives California residents expanded privacy rights and protections, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information. Numerous other states also have enacted, or are in the process of enacting or considering, comprehensive state-level data privacy and cybersecurity laws and regulations that share similarities with the CCPA. Moreover, laws in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach. Additionally, the New York State Department of Financial Services (NYDFS) has issued Cybersecurity Requirements for Financial Services Companies, which took effect in 2017 and were recently amended, and which require banks, insurance companies and other financial services institutions regulated by the NYDFS to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of New York State’s financial services industry. The cybersecurity regulation includes specific requirements for these institutions’ cybersecurity compliance programs and imposes an obligation to conduct ongoing, comprehensive risk assessments. Further, on an annual basis, each institution is required to submit a certification of compliance with these requirements. Recent and ongoing developments may also impact our data privacy- and cybersecurity-related risk profile and internal controls. On October 22, 2024, the CFPB announced a final rule regarding personal financial data rights that is designed to 2024 Form 10-K 22 promote “open banking.” The rule requires, among other things, that data providers, including financial institutions, make available to consumers and certain authorized third parties upon request certain covered transaction, account and payment information. Assuming the rule remains in effect in its current form, compliance is required by April 1, 2027 for depository institutions that hold between $10 billion and $250 billion in assets, subject to the outcome of pending litigation challenging the rule. In May 2024, the SEC finalized amendments to Regulation S-P which requires broker-dealers, investment companies, registered investment advisers, and transfer agents to address the expanded use of technology and corresponding risks that have emerged since Regulation S-P was first adopted by developing, implementing, and maintaining written policies and procedures for an incident response program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information. The amendments also require individuals affected by an incident involving sensitive customer information to be notified within 30 days with details about the incident and other information intended to help affected individuals respond appropriately. If laws and regulations relating to data privacy and cybersecurity are implemented, interpreted or applied in a manner inconsistent with our current or future practices or policies, or if we fail to comply with applicable laws or regulations, we could be subject to investigations, enforcement actions and other proceedings. See Item 1A. Risk Factors—“We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability” for more information regarding other risks related to data privacy and cybersecurity and Item 1C. Cybersecurity for more information regarding our cybersecurity risk management program. Item 1A. Risk Factors An investment in our securities is subject to risks inherent to our business. The material risks and uncertainties that management believes may affect Valley are described below. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this Report. The risks and uncertainties described below are not the only ones facing Valley. Additional risks and uncertainties that management is not aware of or that management currently believes are immaterial may also impair Valley’s business operations. The value or market price of our securities could decline due to any of these identified or other risks, and you could lose all or part of your investment. This Report is qualified in its entirety by these risk factors. Risks Related to the Operating Environment Our financial results and condition may be adversely impacted by changing economic conditions. Financial institutions are affected by changes in the economic environment, which may be impacted by changing interest rates, volatility in financial markets, and geopolitical instability or conflict. Economic conditions, financial markets and monetary policies may be adversely affected by the impact of inflationary pressures, the impact of current or anticipated fiscal and monetary policies or changes thereto, policies of the new U.S. presidential administration (including trade policies and tariffs), the potential for an economic recession, uncertainty regarding the U.S. debt ceiling, government shutdowns, or default by the U.S. government on its obligations, and actual or perceived instability in the U.S. banking system. Changes in global economic conditions and geopolitical matters, including the conflicts between Russia and Ukraine and in the Middle East, foreign currency exchange volatility, volatility in global capital markets, inflationary pressures, and higher interest rates may meaningfully impact loan production, net interest margin, the value of our securities portfolio, 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. Although inflation has slowed dramatically from the levels experienced during 2022 and 2023, possible prolonged inflationary pressures and any increases in market interest rates may cause the value of our investment securities, particularly those with longer maturities, to 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 deposits and/or ability to repay their loans with us. 23 2024 Form 10-K 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 the economic environment has an 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 geopolitical conflicts, inflationary pressure and other changes in economic and political conditions. Our financial results and condition may be adversely impacted by banking failures or any future similar events. Certain events impacting the banking industry, including the bank failures in March and April 2023, resulted in significant disruption and volatility in the capital markets, reduced valuations of bank securities, and decreased confidence in banks among certain depositors, other counterparties and investors during most of 2023. These events occurred in the context of rapidly rising interest rates which, among other things, resulted in unrealized losses in longer duration debt securities and loans held by banks, and increased competition for deposits. These events had, and may continue to have, an adverse impact on the market price of our common stock. While the U.S. Department of the Treasury, the Federal Reserve, and the FDIC took steps to ensure that depositors of the failed banks in early 2023 would have access to their insured and uninsured deposits, and to facilitate sales of certain failed banks, there is no assurance that these or similar actions will restore customer confidence in the banking system, and we may be further impacted by concerns regarding the soundness, real or perceived, of other financial institutions, or other future bank failures or disruptions. The proliferation of social media may increase the likelihood that negative public opinion from any of the real or perceived events discussed above could impact our reputation and business. Any loss of client deposits or changes in our credit ratings could increase the cost of funding, limit access to capital markets or negatively impact our overall liquidity or capitalization. The cost of resolving the recent bank failures has also prompted the FDIC to issue a special assessment to recover costs to the DIF. The special assessment for the Bank (including subsequent estimated shortfall adjustments by the FDIC) resulted in pre-tax charges of $8.8 million and $50.3 million to earnings for the years ended December 31, 2024 and 2023, respectively. Among other things, the FDIC maintains the ability to impose an additional shortfall special assessment based on the difference between actual losses from the bank failures and the amounts collected. For additional information on the FDIC’s special assessment, see Item 1. Business - "Supervision and Regulation.” The extent to which the shortfall special assessment will impact our future deposit insurance expense is currently uncertain, and any future additional special assessments, increases in assessment rates or required prepayments of FDIC insurance premiums, to the extent that they result in increased deposit insurance costs, would reduce our profitability. These events and any future similar events may also result in changes to laws or regulations governing bank holding companies and banks, including higher capital requirements, or the imposition of restrictions through supervisory or enforcement activities, which could materially impact our business. Risks Associated with Our Business Model A significant portion of our loan portfolio is secured by commercial 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. As of December 31, 2024, total commercial real estate loans, including construction loans, represented 60.7 percent of our loan portfolio. These types of loans generally expose a lender to a higher degree of credit risk of non-payment and loss than residential mortgage loans do because of several factors, including dependence on the successful operation of a business or a project for repayment, and loan terms with a balloon payment rather than full amortization over the loan term. In addition, commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one-to-four family residential mortgage loans. The value of the real estate collateral that provides an alternate source of repayment in the event of default by the borrower could deteriorate during the time the credit is extended. Underwriting and portfolio management activities cannot completely eliminate all risks related to these loans. Any significant failure to pay on time by our clients or a significant default by our clients would materially and adversely affect us. Concentrations in commercial real estate are closely monitored by regulatory agencies and subject to especially heightened scrutiny both on a public and confidential basis. Any formal or informal action by our supervisors may require us to increase our reserves on these loans and adversely impact our earnings. 2024 Form 10-K 24 A downturn in the real estate market in our primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality. 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 weakening of the commercial real estate market, particularly certain segments in the New York City market which have struggled in recent years, may increase the likelihood of default on these loans, which could negatively impact our loan portfolio’s performance and asset quality. For example, any declines in 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, may result in increases in delinquencies and losses in our loan portfolios. Unexpected decreases in 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. We also may incur losses on commercial real estate loans due to declines in occupancy rates and rental rates, which may decrease property values and may decrease the likelihood that a borrower may find permanent financing alternatives. Any of these events could increase our costs, require management's time and attention, and materially and adversely affect us, and there can be no assurance that our efforts to reduce commercial real estate loan concentration and expand other areas of commercial lending activity will be successful in eliminating or mitigating these effects. The loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit retention targets within our branch network, 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 strategic consolidation or relocation of our branch offices. Additionally, the adoption of online banking technology could reduce the historical stickiness of our core deposits due to the relative ease with which depositors may transfer deposits to a different depository institution, including in the event that confidence is lost in the Bank. Valley’s vulnerability to a bank run may be heightened by recent trends in depositor behavior. Highly coordinated depositors via social media or other communications can cause unexpectedly high deposit outflows resulting in a liquidity crisis, as happened in the case of the bank failures in early 2023. 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 state licensed cannabis business customers. Businesses engaged in the cultivation, manufacture, distribution, and sale of cannabis 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 marijuana remains a Schedule I drug under the Controlled Substances Act of 1970. In 2014, FinCEN published guidelines for financial institutions servicing state legal cannabis businesses. We have implemented a comprehensive control framework that includes written policies and procedures related to the on-boarding of such businesses and the ongoing monitoring and maintenance of such business accounts that conforms with the FinCEN guidance. 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 where appropriate, 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. In the latter half of 2021, the Bank expanded its cannabis-related business offerings to some limited real estate and other secured lending. The Bank may offer additional banking products and services to such customers in the future. There can be no assurance that compliance with our policies and procedures designed to allow us to operate in 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. 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. 25 2024 Form 10-K We could incur future goodwill impairment. If our estimates of the fair value of our goodwill change as a result of changes in our business or other factors, we may determine a goodwill impairment charge is necessary. 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 2024 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. At December 31, 2024, our goodwill totaled $1.9 billion. 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 services providers, digital fintech start-up firms and other financial services providers that have advanced technological capabilities. The financial services market is undergoing rapid technological changes, and if we are unable to stay current with those changes, we will not be able to effectively compete. 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. Many of these competitors may have fewer regulatory constraints, broader geographic service areas, greater capital, and, in some cases, lower cost structures. Valley competes with other providers of financial services such as commercial and savings banks, savings and loan associations, credit unions, money market and mutual funds, mortgage companies, title agencies, asset managers, insurance companies, and a large list of other local, regional and national institutions which offer financial services. Additionally, the financial services industry is facing a wave of digital disruption from fintech companies and other large financial services providers. These competitors provide innovative web-based solutions to traditional retail banking services and products and tend to have stronger operating efficiencies and fewer regulatory burdens than their traditional bank counterparts, including Valley. 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 and with the use of artificial intelligence, including generative artificial intelligence, machine learning, and similar tools and technologies that collect, aggregate, analyze or generate data or other materials or content (collectively, “AI”). These new technologies may be superior to, or render obsolete, the technologies currently used in our products and services. Regulatory changes may continue to allow new entrants into the markets in which we operate. The result of these regulatory changes will likely cause other non-traditional financial services companies to compete directly with 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. 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. Many of Valley’s competitors have substantially greater resources to invest in technological improvements. Valley may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on Valley’s business and, in turn, Valley’s financial condition and results of operations. See the “Technology Risks” section below in this Item 1A for additional information regarding our risks related to technology and use of AI. Failure to successfully implement our growth strategies could cause us to incur substantial costs and expenses which may not be recouped and adversely affect our future profitability. From time to time, Valley may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. Valley may invest significant time and resources to develop and market new lines of business and/or products and services. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting customer preferences, may also impact the successful implementation of a new line of business or a new product or service. Additionally, any new line of business and/or new 2024 Form 10-K 26 product or service could have a significant impact on the effectiveness of Valley’s system of internal controls. 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 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. 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 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. A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review prior to originating certain commercial real estate loans, as well as before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. We may incur future losses in connection with repurchases and indemnification payments related to mortgages that we have sold into the secondary market. We engage in the origination of residential mortgages for sale into the secondary market, while typically retaining the loan servicing. In connection with such sales, we make representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred in respect of such loans. The aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $3.3 billion at both December 31, 2024 and 2023. Over the past several years, we have experienced a nominal amount of repurchase requests that have actually resulted in repurchases by Valley. During 2024, Valley had no repurchased loans and only 3 loans with aggregate outstanding principal balances of $1.1 million at the repurchase dates during 2023. None of the 2023 loan repurchases resulted in a material loss. As of December 31, 2024, no reserves pertaining to loans sold were established on our financial statements. However, it is possible that our careful loan underwriting and documentation standards may not be sufficient to prevent additional requests to repurchase loans that could occur in the future, and such requests may have a negative financial impact on us. 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 $13.3 million, or 6 percent, and $28.4 million, or 13 percent, of total non-interest income for the years ended December 31, 2024 and 2023, respectively. Several factors, including, but not limited to, the actual and expected level of market interest rates, can impact the decisions of commercial loan customers to use such interest rate swap 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, 2024. We may not be able to attract, develop and retain skilled people. Our success depends, in large part, on our ability to attract, develop and retain key people. 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 retain them, in particular due to an increasingly competitive labor market. We have been impacted by an extremely competitive labor market, including 27 2024 Form 10-K 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. Business of this 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. We are subject to risks relating to 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. For example, there exists increasing anti-ESG sentiment among certain stakeholders and government institutions, and we may face scrutiny, reputational risk, lawsuits or market access restrictions from these parties regarding any such initiatives we have adopted. In addition, corporation diversity, equity and inclusion practices have recently come under increasing scrutiny. We could also face negative publicity or reputational harm based on the identity of those with whom we choose to do business. If we do not successfully manage expectations across varied stakeholder interests, it could erode stakeholder trust, impact our reputation and constrain our investment opportunities. 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 may take 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 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 adversely impact our operations, business, and clients. There is an increasing concern over the risks of climate change and related environmental sustainability matters. Climate change presents (i) physical risks from the direct impacts of changing climate patterns and acute weather events, and (ii) transition risks from changes in regulations, disruptive technologies, and shifting market dynamics towards a lower carbon economy. The physical risks of climate change include discrete events, such as floods, hurricanes, tornadoes, heatwaves, and wildfires, and longer-term shifts in climate patterns, such as higher global average temperatures, extreme heat, sea level rise, and more frequent and prolonged droughts. Examples of transition risks include changes in consumer preferences, additional regulatory requirements or taxes and additional counterparty or client requirements. These risks could have a material adverse impact on asset values and the financial performance of Valley’s businesses, and those of its clients. Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Climate change could also present incremental risks to the execution of Valley’s long-term strategy. 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 do so in response to climate change, which in turn 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. The risk of significant disruption and potential losses from future storm activity exists in all of our primary markets. 2024 Form 10-K 28 In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our clients’ involvement, in certain industries or projects, in the absence of mitigation and/or transition measures, associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change. As climate risk is interconnected with all key risk types, Valley continues to embed climate risk considerations into risk management strategies. Due to uncertainty regarding climate change, the Company’s risk management strategies may not be effective in fully mitigating climate risk exposures. The timing and severity of climate change may not be entirely predictable and our risk management processes may not be effective in mitigating climate risk exposure. 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 the Bank’s 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 will influence not only the interest the Bank receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the Bank’s ability to originate loans and obtain deposits, (ii) the fair value of Valley’s financial assets, including the HTM and AFS 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). For example, a flat or inverted yield curve, where short-term rates are close to, or above, long-term rates, could adversely affect Valley’s financial condition and results of operations. 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. We are required to comply with anti-money laundering, anti-terrorism and other laws and regulations in the United States. These laws and regulations require us, among other things, to adopt and enforce “know-your-customer” policies and procedures and to report suspicious and large transactions to applicable regulatory authorities. These laws 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. The policies and procedures that we have adopted to comply with these requirements and to detect and prevent the use of our banking network for money laundering and related activities may not completely eliminate instances in which we may be used by customers to engage in money laundering and other illegal or improper activities. To the extent we fail to fully comply with applicable laws and regulations, the OCC, along with other banking agencies, have the authority to impose fines and other penalties and sanctions on us. In addition, our business and reputation could suffer if customers use our banking network for money laundering or illegal or improper purposes. Higher charge-offs and weak credit conditions could require us to further increase our allowance for credit losses through a provision charge to earnings. The process for determining the amount of the allowance for credit losses is critical to our financial results and conditions. It requires difficult, subjective and complex judgments about the future, including the impact of national and regional economic conditions on the ability of our borrowers to repay their loans. 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 HTM debt securities portfolios, as well as unfunded credit commitments. Deterioration in economic conditions affecting borrowers, including as a result of inflationary pressures or other macroeconomic factors, 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 29 2024 Form 10-K 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. 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, OREO, and other repossessed assets) totaled $373.3 million at December 31, 2024. Our non-accrual loans represented 0.74 percent of total loans at December 31, 2024 . 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 stress in the commercial real estate markets, primarily in New York City, 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. We may be required to consult with the Federal Reserve 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 the Board 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 uncertain U.S. economic conditions. In July 2020, the Federal Reserve 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 Federal Reserve 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, Financial and Regulatory Risks 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, pay regular dividends on our common stock and generate adequate earnings. Liquidity risk is the potential that a financial institution, like Valley, will be unable to meet its obligations as they come due, capitalize on growth opportunities as they arise, or pay regular dividends on our common stock because of an inability to liquidate assets or obtain adequate funding on a timely basis, at a reasonable cost and within acceptable risk tolerances. Liquidity is required to fund various obligations, including withdrawals by depositors, repayment of borrowings, credit commitments to borrowers, mortgage and other loan originations, dividends to shareholders, operating expenses and capital expenditures. 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; sale, maturity and prepayment of investment securities; net cash provided from operations; and access to other funding sources, such as the FHLB and certain brokered deposit channels established by the Bank. Our access to funding sources, including the FHLB and brokered deposits, in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Unexpected changes to the FHLB’s underwriting guidelines for wholesale borrowings or lending policies may limit or restrict our ability to borrow, and therefore could have a significant adverse impact on our liquidity. Other factors that could have a detrimental impact to our access to liquidity sources include a decrease in the level of our business activity due to persistent weakness, or downturn, in the economy or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not necessarily specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole. In the event of future turmoil in the banking industry or other 2024 Form 10-K 30 idiosyncratic events, there is no guarantee that the U.S. government will invoke the systemic risk exception, create additional liquidity programs, or take any other action to stabilize the banking industry or provide liquidity. Additionally, our inability to access brokered deposits or other funding sources, such as the FHLB, could require us to pay significantly higher interest rates on our direct customer deposits which would have an adverse impact on our net interest income and net income. Valley’s inability to monetize liquid assets or to access short-term funding or capital markets could constrain Valley’s ability to make new loans or meet existing lending commitments, pay its regular common stock dividend, jeopardize Valley’s capitalization, and adversely impact Valley’s net interest income and net income. The CECL model for determining our allowance for credit losses could add volatility to our provision for credit losses and earnings. The CECL model requires the allowance for credit losses for certain financial assets, including loans, HTM 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. 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. Our controls and procedures may fail or be circumvented, which may result in a material adverse effect on our business, results of operations and financial condition. Management periodically reviews and updates our internal control over financial reporting, disclosure controls and procedures, and corporate governance policies. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the 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. We rely on our systems of controls and procedures, and if our system fails, our operations could be disrupted. We face the risk that the design of our controls and procedures, including those to mitigate the risk of fraud by employees or outsiders, may prove to be inadequate or are circumvented, thereby causing delays in detection of errors or inaccuracies in data and information, including personal, confidential, proprietary, and sensitive information. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. 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. We may also be subject to disruptions of our systems or networks 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. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as us) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate. We maintain a system of comprehensive policies and a control framework designed to monitor vendor risks including, among other things, (i) changes in the vendor’s organizational structure or internal controls, (ii) changes in the vendor’s financial condition, (iii) changes in the vendor’s support for existing products and services and (iv) changes in the vendor’s strategic focus. 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 business, financial condition and results of operations could be adversely affected by natural disasters, pandemics, acts of terrorism, and other catastrophic events. The occurrence of natural disasters, extreme weather events, health crises, the occurrence or worsening of disease outbreaks or pandemics, or other catastrophic events, as well as government actions or other restrictions in connection with such events, could adversely affect our financial condition or results of operations. The emergence of widespread health emergencies or pandemics, such as COVID-19, could lead to quarantines, business shutdowns, labor shortages, disruptions to 31 2024 Form 10-K supply chains, and overall economic instability. Additionally, New York City and New Jersey remain central targets for potential acts of terrorism against the United States. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. The occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. Our ability to make opportunistic acquisitions is subject to significant risks, including the risk that regulators will not provide the requisite approvals. We may make opportunistic whole or partial acquisitions of other banks, branches, financial institutions, or related businesses from time to time that we expect may further our business strategy. 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 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. Competition for acquisitions can be intense, and we may not be able to acquire other institutions on attractive terms. There can be no assurance that we will be successful in completing or will even pursue future acquisitions, or if such transactions are completed, that we will be successful in integrating acquired businesses into operations. Our ability to grow may be limited if we choose not to pursue or are unable to successfully make acquisitions in the future. 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, supervision and examination. Banking laws, regulations, and rules are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole. Many laws and regulations affect Valley’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. They encourage Valley to ensure a satisfactory level of lending in defined areas and establish and maintain comprehensive programs relating to anti-money laundering and customer identification. Congress, state legislatures, and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. We expect the new U.S. presidential administration will seek to implement a regulatory reform agenda that is significantly different than that of the prior administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. Any such changes, including with respect to statutes, regulations or regulatory policies and changes in interpretation or implementation thereof, 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 increase the ability of non-banks to offer competing financial services and products, or may impact consumer trust in financial institutions, 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 also anticipate increased regulatory scrutiny—in the course of routine examinations and otherwise—and new regulations designed to respond to negative developments in the banking industry in 2023, all of which may increase our costs of doing business and reduce our profitability. Among other things, there may be increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, brokered deposits, unrealized losses in securities portfolios, liquidity, commercial real estate composition and concentration, and capital and general oversight and control of the foregoing. Valley could face increased scrutiny or be viewed as higher risk by regulators and/or the investor community, which could negatively affect its results of operations and financial condition. Heightened regulatory scrutiny or the results of an investigation or examination may lead to additional regulatory investigations or enforcement actions. Regulatory enforcement and fines have increased across the banking and financial services sector. There is no assurance that those actions will not result in regulatory settlements or other enforcement actions against Valley or the Bank. Furthermore, a single event involving a potential violation of law or regulation may give rise to numerous and overlapping investigations and proceedings by multiple federal and state agencies and officials. In addition, if one or more financial institutions are found to have violated a law or regulation relating to certain business activities, this could lead to investigations by regulators or other governmental agencies of the same or similar activities by other financial institutions, including Valley, and large fines and remedial measures that may have been imposed in resolving earlier investigations for the same or similar activities at other financial institutions may be used as the basis for future settlements. 2024 Form 10-K 32 We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. The CRA, 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 CFPB, the U.S. 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 CRA, 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. Private parties also may challenge an institution’s performance under fair lending laws in litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. Changes in accounting policies or accounting standards could cause us to change the manner in which we report our financial results and condition in adverse ways and could subject us to additional costs and expenses. Valley’s accounting policies are fundamental to understanding its financial results and condition. Some of these policies require the use of estimates and assumptions that may affect the value of Valley’s assets or liabilities and financial results. Valley identified its accounting policies regarding the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. Under each of these policies, it is possible that materially different amounts would be reported under different conditions, using different assumptions, or as new information becomes available. From time to time, the FASB and the SEC change their guidance governing the form and content of Valley’s external financial statements. In addition, accounting standard setters and those who interpret GAAP, such as the FASB, SEC and banking regulators may change or even reverse their previous interpretations or positions on how these standards should be applied. Such changes are expected to continue and may accelerate dependent upon the FASB and International Accounting Standards Board commitments to achieving convergence between GAAP and International Financial Reporting Standards. Changes in GAAP and changes in current interpretations are beyond Valley’s control, can be hard to predict and could materially impact how Valley reports its financial results and condition. In certain cases, Valley could be required to apply new or revised guidance retroactively or apply existing guidance differently (also retroactively) which may result in Valley restating prior period financial statements for material amounts. Additionally, significant changes to GAAP may require costly technology changes, additional training and personnel, and other expenses that will negatively impact our results of operations. Claims and litigation could result in significant expenses, losses and damage to our reputation. From time to time as part of Valley’s normal course of business, customers, bankruptcy trustees, former customers, contractual counterparties, third parties and current and former employees make claims and take legal action against Valley based on actions or inactions of Valley. If such claims and legal actions are not resolved in a manner favorable to Valley, they may result in financial liability and/or adversely affect the market perception of Valley and its products and services. This may also impact customer demand for Valley’s products and services. Any financial liability could have a material adverse effect on Valley’s financial condition and results of operations. Any reputational damage could have a material adverse effect on Valley’s business. Technology Risks Cybersecurity incidents and other disruptions to our information system could expose us to liability, losses and escalating operating costs. Valley regularly collects, transmits, stores and otherwise processes personal, confidential, proprietary or sensitive information regarding its customers, employees and others for whom it services loans. In some cases, this personal, confidential, proprietary or sensitive information is collected, compiled, transmitted, stored or otherwise processed by third parties on Valley’s behalf. Cybersecurity risks have increased because of the proliferation of new technologies, including artificial intelligence, and the increased sophistication and activities of threat actors, including organized criminal groups, “hacktivists,” terrorists, nation states, nation-state supported actors and other external parties. Many financial institutions and companies engaged in data processing have reported significant breaches in the security of their websites or other systems or networks, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, denial-of-service, or sabotage systems or networks, often through, among other things, the introduction of computer viruses or malware, social engineering attacks (including phishing attacks), credential stuffing, account takeovers and other means. 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 33 2024 Form 10-K supported by state actors. In addition, geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, increasing tension with China or the unfolding events in the Middle East, may create a heightened risk of cybersecurity attacks. Cybersecurity risks also may derive from fraud or malice on the part of our employees or third parties, or may result from human error, mistakes in connection with over-the-air updates, software bugs, server malfunctions, software or hardware failure or other technological failure. Such threats may be difficult to detect for long periods of time and also may be further enhanced in frequency or effectiveness through threat actors’ use of artificial intelligence. Valley frequently experiences attempted cybersecurity attacks against its systems and certain attacks have been successful. Valley has also been impacted by cybersecurity breaches of its vendors’ systems. There can be no assurances that Valley will not incur future breaches of our systems or be impacted by breaches of our vendors’ systems, which in either case may expose the data of our customers or disrupt our services, exposing us to significant damage, ongoing operational costs and/or reputational harm. We do not control our vendors and our ability to monitor their cybersecurity is limited, and our cybersecurity diligence on key vendors may not be sufficient to prevent a failure or cybersecurity incident that may impact us or our customers. Some of our vendors may store or have access to our data and we rely on these vendors to implement information security programs commensurate with the relevant risk. We cannot, however, ensure in all circumstances that their efforts will be successful. A vulnerability in our vendors’ software or systems, a failure of our vendors’ safeguards, policies or procedures, or a cyber-attack or other cybersecurity incident affecting any of these third parties could harm our business. We have experienced cybersecurity incidents in the past, including the unauthorized access by a third party of certain Bank customer data resulting from our third party service providers’ use of the MOVEit file transfer software in 2023. While our business has not been materially impacted by any such cybersecurity incidents, similar incidents could have a material adverse effect on our business in the future. Cybersecurity risk exposure will remain elevated or increase in the future due to, among other things, the increasing size and prominence of Valley in the financial services industry, our expansion of internet and mobile banking tools and new products based on customer needs, and the system and customer account conversions associated with the integration of merger targets. Successful attacks on us or any one of our many third-party service providers may adversely affect our business and result in the loss of, unauthorized access to or disclosure of, or the misuse or misappropriation of, our personal, confidential, proprietary or sensitive information or that of our customers. There can be no assurance that we or our third-party service providers will not suffer a cyber-attack or other cybersecurity incident that exposes us to significant damages, operational costs, litigation, regulatory enforcement, investigations, fines, sanctions or other penalties, or reputational harm. We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability. We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations relating to data privacy and the security of the personal information of clients, employees or others, and any failure to comply with these laws, regulations, rules, standards and contractual obligations could expose us to liability and/or reputational damage. The regulatory framework for data privacy and cybersecurity is in considerable flux and evolving rapidly, and these laws and regulations may be interpreted and applied differently over time and from jurisdiction to jurisdiction. As new data privacy and security-related laws, regulations, rules and standards are implemented, the time and resources needed for us to comply with such laws, regulations, rules and standards, as well as our potential liability for non-compliance and reporting obligations in the case of cyber-attacks, information security breaches or other similar incidents, may significantly increase. Compliance with these laws, regulations, rules and standards may require us to change our policies, procedures and technology for information security, which could, among other things, make us more vulnerable to operational failures and to monetary penalties for breach of such laws, regulations, rules and standards. In addition to various data privacy and cybersecurity laws and regulations already in place, U.S. states are increasingly adopting laws and regulations imposing comprehensive data privacy and cybersecurity obligations, which may be more stringent, broader in scope, or offer greater individual rights, with respect to personal information than federal or other state laws and regulations, and such laws and regulations may differ from each other, which may complicate compliance efforts and increase compliance costs. Aspects of federal and state laws and regulations relating to data privacy and cybersecurity, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them. See Item 1. Business—"Supervision and Regulation"—"Data Privacy and Cybersecurity Regulation" for more information regarding applicable data privacy and cybersecurity laws and regulations. Further, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and security. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies and other documentation that provide promises and assurances about data privacy and cybersecurity can subject us to potential government or legal action if they are found to be deceptive, unfair, or misrepresentative of our actual 2024 Form 10-K 34 practices. Any concerns about our data privacy and cybersecurity practices, even if unfounded, could damage our reputation and adversely affect our business. Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and cybersecurity laws, regulations, rules, standards or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing could harm our reputation, distract our management and technical personnel, increase our costs of doing business, adversely affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our business, financial condition and results of operations. Our adoption of artificial intelligence tools and adoption by our third-party vendors and service providers may increase the risk of errors, omissions, unfair treatment or fraudulent behavior by our employees, clients, or counterparties, or other third parties. We have made, and expect to continue to make investments to integrate artificial intelligence tools into our solutions, including generative artificial intelligence, machine learning, and similar tools and technologies that collect, aggregate, analyze or generate data or other contents (collectively, “AI”), and we expect to continue to adopt such tools responsibly and as appropriate. We also expect our third-party vendors and service providers to increasingly develop and incorporate AI into their product offerings faster than we are able to do so independently. There are significant risks involved in utilizing AI, and we cannot assure that our or our third-party vendors’ or service providers’ use of AI will enhance our or our third-party vendors’ or service providers’ products or services or produce the intended results. The adoption and incorporation of these tools can lead to concerns around safety and soundness, fair access to financial services, fair treatment to customers, inaccuracy of results broadly known as "hallucinations" and compliance with applicable laws and regulations. These risks can result from models being poorly designed or faulty and/or biased data being used for training, inadequate model testing or validation, narrow or limited human oversight, inadequate planning or due diligence, inappropriate or controversial data practices by developers or end-users, and other factors adversely affecting public opinion of AI and the acceptance of AI solutions. We have implemented an AI governance, oversight, and strategic facilitation function that includes a risk assessment of internal and vendor AI solutions, due diligence, model validation, and controls, and strict guidelines and policies designed to maintain safety, security, and ethical use of AI. However, given the pace of rapid adoption of these tools by vendors and service providers, we may not be aware of the addition of AI solutions prior to these tools being introduced into our environment. Failure to adequately manage AI risks can result in erroneous results and decisions made by misinformation, unwanted forms of bias, unauthorized access to sensitive, confidential, proprietary or personal information, and violations of applicable laws and regulations, leading to operational inefficiencies, competitive harm, reputational harm, ethical challenges, legal liability, losses, fines, and other adverse impacts on our business and financial results. If we do not have sufficient rights to use the data or other material or content on which the AI tools we use rely, or to use the outputs of such AI tools, we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party. We may be required to expend significant resources to comply with an uncertain legal and regulatory environment governing the use of AI, and we may have to change our product offerings or business practices, or prevent or limit our use of AI. Regulation of AI is rapidly evolving as legislators and regulators are increasingly focused on powerful emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, data privacy and cybersecurity, consumer protection, competition, equal opportunity, and fair lending laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations. AI is the subject of ongoing review by various governmental and regulatory agencies, and various U.S. states are applying, or are considering applying, existing laws and regulations to AI or are considering general legal frameworks for AI. We may not be able to anticipate how to respond to these rapidly evolving frameworks, and we may need to expend resources to adjust our operations or offerings in certain jurisdictions if the legal frameworks are inconsistent across jurisdictions. While we believe we have taken steps to be thoughtful in our development, training, and implementation of AI, it is not guaranteed that regulators will agree with our approach to limiting AI risks or to our compliance more generally. In addition, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to the use of AI. 35 2024 Form 10-K Risks Related to an Investment in Our Securities We may reduce or eliminate the cash dividend on our common stock, which could adversely affect the market price of our common stock. Holders of our common stock are only entitled to receive such cash dividends as the Board may declare out of funds legally available for such payments. We are not required to continue our historical practice of declaring dividends on our common stock and may reduce or eliminate our common stock cash dividend in the future depending upon our results of operations, financial condition or other metrics. This reduction or elimination of our dividend could adversely affect the market price of our common stock. If our subsidiaries are unable to pay dividends or make distributions to us, we may be unable 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. Valley National Bancorp is a separate and distinct legal entity from our banking and non-banking subsidiaries and depends on dividends, distributions, and other payments from the Bank and its non-banking subsidiaries to fund cash dividend payments on our preferred and common stock and to fund most payments on our other obligations. 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. 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. Future acquisitions may dilute shareholder value, especially tangible book value per share. We regularly evaluate opportunities to acquire other financial institutions. Future mergers or acquisitions involving cash, debt, or equity securities may occur at any time. Acquisitions typically involve the payment of a premium over book and market values, and therefore, some dilution of our tangible book value per common share may occur in connection with any future acquisitions. Future offerings of common stock, preferred stock, debt or other securities may adversely affect the market price of our stock and dilute the holdings of existing shareholders. We have increased, and may in the future increase, our capital resources or, if our or the Bank’s actual or projected capital ratios fall below or near the current (Basel III) regulatory required minimums, we or the Bank could be forced to raise additional capital by making additional offerings of common stock, preferred stock or debt securities. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both. 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 holders of our common stock. See Note 18 to the consolidated financial statements for more details on our common and preferred stock, including stock issuances during the second half of 2024. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity We have an enterprise-wide information security program designed to provide controls, technologies and other processes to identify, assess and manage material cyber and information security risks and threats. Our information security program leverages the National Institute of Standards and Technology (NIST) framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover. The Board has primary oversight responsibility for our cyber and information security risk as a key part of its oversight of Valley’s enterprise-wide risk management (ERM) framework, and we employ personnel dedicated to assisting the Board in fulfilling this oversight responsibility. As a general matter, Valley seeks to address cyber and information security risks through a cross-functional approach, as described below, that is focused on identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur. Our information security team reviews ERM-level 2024 Form 10-K 36 cybersecurity risks annually, and key cybersecurity risks are incorporated into the ERM framework, which is periodically reviewed by management throughout the year at its Executive Risk Committee. As part of this framework, we have a set of enterprise-wide policies and procedures concerning cybersecurity matters which go through an internal review process and are approved by appropriate members of senior management or the Board, which include an Information Security Policy, as well as other policies and procedures that directly or indirectly relate to cybersecurity, and practices related to encryption, antivirus protection, remote access, multi factor authentication, the protection of confidential information and the use of the internet, social media, email, and wireless devices. Governance. Having the appropriate governance structure in place is critical to the functioning of our cyber and information security risk framework. As noted above, our Board has primary oversight responsibility for our cyber and information security risk, and it performs this oversight function primarily through its Risk Committee, which reports to the full Board. Additionally, to keep pace with the speed of disruptive innovation and associated cyber risks, the Board has established a dedicated Cyber & Technology Risk Subcommittee (the “Cyber Subcommittee”) that reports to the Risk Committee. The Risk Committee, through the Cyber Subcommittee, oversees the Company’s cybersecurity risk profile, prevalent cybersecurity risks, our enterprise information security program and key enterprise information security initiatives. We also have a team of employees, including at the senior management level, who are dedicated to assisting the Board in fulfilling its oversight responsibility for cyber and information security. Valley’s Chief Information Security Officer (CISO ), who is responsible for developing and implementing our cyber and information security program, has over 24 years of experience leading cyber security oversight and holds a CRISC certification, and others on our information security team have cybersecurity experience or certifications. The CISO and Director of Cyber Risk Management each participate in all meetings of the Cyber Subcommittee. Our Board, through the Risk Committee and the Cyber Subcommittee, receives regular updates and reporting from management on cyber and information security matters, including information related to third-party assessments of Valley’s information security program, as well as a wide range of topics such as recent developments, evolving standards, Valley’s vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to Valley’s peers and third parties. On an annual basis, the Board and its Risk Committee discuss Valley’s approach to cyber and information security risk management. Senior management is briefed by our information security team on cyber and information security matters, preparedness and any incidents requiring the attention of our security incident response team. Risk Management and Strategy Our cyber and information security risk management framework and strategy is focused on the following key areas: Identification, Protection and Detection. Valley maintains a threat team and internal committees to identify any new threats and risks to its information systems. We identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile through various methods including, for example, using manual and automated tools, subscribing to threat intelligence reports and services, analyzing threats and threat actors, conducting scans of the threat environment, evaluating our industry’s risk profile, utilizing internal and external audits and conducting threat and vulnerability assessments. Technical Safeguards . Valley also deploys technical safeguards that are designed to protect Valley’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, continuous scanning of our environments for potential weaknesses, behavioral-based protections against malware and filtering of inbound emails to protect the firm against phishing attacks. The effectiveness of these safeguards is evaluated through vulnerability assessments and cybersecurity threat intelligence with the goal of implementing improvements as needed. Third-Party Risk Management . Valley maintains a risk-based approach to identifying and overseeing cybersecurity risks presented by vendors, service providers and other third parties, as well as the systems of third parties that could adversely impact its business in the event of a cybersecurity incident affecting those third-party systems. We have integrated security reviews into the third-party vendor management program. We assess third-party cybersecurity controls and include security and privacy provisions in our contracts where applicable. However, ultimately, we rely on the third parties we use to implement information security programs commensurate with the relevant risk, and we cannot ensure in all circumstances that their efforts will be successful. Education and Awareness . Valley provides mandatory cybersecurity training at least annually for all employees, which is intended to equip them with tools to identify and address cybersecurity threats, and to communicate Valley’s evolving 37 2024 Form 10-K information security policies, standards, processes and practices. We also require employees in certain roles to complete additional role-based, specialized cyber and information security training. Incident Response and Recovery Planning. Valley maintains incident response and recovery plans that are intended to assist in Valley’s response to a cyber or information security incident, and such plans are evaluated on a regular basis. In the event of an incident, we intend to follow our incident response plan, which outlines the steps to be followed from incident detection to eradication, recovery and notification, including notifying functional areas (e.g., legal), as well as senior management and the Board, as appropriate. As part of these plans, we have also implemented controls and procedures providing for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents, including to regulators and governmental agencies, can be made by management in a timely manner. Outside Consultants. While we have deployed personnel to perform testing and oversight functions internally, we also leverage external consultants and other tools to test the effectiveness of our operating environment and the protection of our data. We engage third parties to perform assessments on our cybersecurity measures, including information security maturity assessments, audits and reviews of our information security control environment and operating effectiveness. These assessment efforts include a wide range of activities such as tabletop exercises, vulnerability testing, and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning. The results of these assessments are reported to the Risk Committee and the Board. Valley adjusts its cyber and information security program as necessary based on the information provided by these assessments, audits and reviews. Impact of Cybersecurity Threats We are regularly subject to cybersecurity attacks. Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not, to date, materially affected or are reasonably likely to affect Valley, including our business strategy, results of operations or financial condition. Notwithstanding the comprehensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. For more information, see Item 1A. Risk Factors for further information about these risks. Item 2. Properties We conduct our business at 229 retail banking centers locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, Alabama, California and Illinois. We own 96 of our banking center facilities and several non-branch operating facilities. The other properties are leased for various terms. Valley considers its properties to be suitable and adequate for its current business needs . The following table summarizes our leased and owned retail banking centers in each state: Leased Owned Number of banking centers % of Total New Jersey Northern 60 40 100 43.7 % Central 8 19 27 11.8 Total New Jersey 68 59 127 55.5 New York Manhattan, Brooklyn and Queens 15 7 22 9.6 Long Island 9 3 12 5.2 Westchester County 7 0 7 3.1 Total New York 31 10 41 17.9 Florida 26 15 41 17.9 Alabama 4 12 16 7.0 California 3 — 3 1.3 Illinois 1 — 1 0.4 Total 133 96 229 100.0 % Our principal executive office is located at One Penn Plaza in New York, New York. Our New York City corporate offices are primarily used as a central hub for New York based lending activities of senior executives and other commercial 2024 Form 10-K 38 lenders. During the third quarter 2023, Valley completed the sale of two corporate office buildings located in Wayne, New Jersey and relocated its headquarters to a new leased location at 70 Speedwell Avenue in Morristown, New Jersey. During 2022 we acquired two leased offices in New York City from Bank Leumi USA that are primarily used for commercial lending and our broker-dealer, VFM. We also lease seven non-bank office facilities in Florida, used for operational, executive and lending purposes. Additional information regarding Valley’s leased locations and owned facilities can be found within Note 6 . “Leases” and Note 7 . “Premises and Equipment, Net,” respectively, in the Notes to the Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data. Item 3. Legal Proceedings In the normal course of business, we are a party to various outstanding legal proceedings and claims. In the opinion of management, our financial condition, results of operations, and liquidity should not be materially affected by the outcome of such legal proceedings and claims. Item 4. Mine and Safety Disclosures Not applicable. 39 2024 Form 10-K PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the NASDAQ Global Select Market under the ticker symbol “VLY.” There were 6,537 shareholders of record as of December 31, 2024. We declared cash dividends of $0.11 per share in each of the first, second, third and fourth quarters of 2024. The declaration and payment of future dividends to holders of our common stock is at the discretion of our Board and depends upon many factors, including our financial condition, earnings, capital requirements, legal requirements, regulatory constraints and other factors that our Board deems relevant. Performance Graph The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2019 in: (a) Valley’s common stock; (b) the KBW Regional Banking Index ("KRX"); and (c) the S&P 500 Stock Index ("S&P 500"). The graph is calculated assuming that all dividends are reinvested during the relevant periods. The graph shows how a $100 investment would increase or decrease in value over time based on dividends (stock or cash) and increases or decreases in the market price of the stock. 12/19 12/20 12/21 12/22 12/23 12/24 Valley $ 100.00 $ 89.94 $ 131.11 $ 111.97 $ 112.74 $ 99.26 KRX 100.00 91.32 124.78 116.15 115.69 130.96 S&P 500 100.00 118.39 152.34 124.73 157.48 196.85 The information under “Performance Graph” is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Section 18 of the Exchange Act, and the information shall not be deemed to be incorporated by reference in any filing by us under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent specifically incorporated by reference into such a filing. 2024 Form 10-K 40 Issuer Repurchase of Equity Securities The following table presents the repurchases of equity securities during the three months ended December 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (2) Maximum Number of Shares that May Yet Be Purchased Under the Plans (2) October 1, 2024 to October 31, 2024 27,552 $ 8.93 — 25,000,000 November 1, 2024 to November 30, 2024 7,567 9.47 — 25,000,000 December 1, 2024 to December 31, 2024 6,844 10.64 — 25,000,000 Total 41,963 $ 9.31 — (1) Includes repurchases made in connection with the vesting of employee restricted stock awards. (2) On February 21, 2024, Valley publicly announced a new stock repurchase program for up to 25 million shares of Valley common stock. The authorization to repurchase under the new repurchase program became effective on April 26, 2024 and will expire on April 26, 2026. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations The purpose of this analysis is to provide the reader with information relevant to understanding and assessing Valley’s results of operations and financial condition for each of the past two years. In order to fully appreciate this analysis, the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing under Item 8 of this Report, and statistical data presented in this document. For comparison of our results of operations for the years ended December 31, 2023 and 2022, please refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024. Cautionary Statement Concerning Forward-Looking Statements This Report, both in MD&A and elsewhere, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “would,” “could,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements in addition to those risk factors listed under Item 1A. Risk Factors of this Report include, but are not limited to: • the impact of market interest rates and monetary and fiscal policies of the U.S. federal government and its agencies in connection with prolonged inflationary pressures, which could have a material adverse effect on our clients, our business, our employees, and our ability to provide services to our customers; • the impact of unfavorable macroeconomic conditions or downturns, including an actual or threatened U.S. government shutdown, debt default or rating downgrade, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as future legislation and policy changes under the new U.S. presidential administration, geopolitical instabilities or events; natural and other disasters, including severe weather events, health emergencies, acts of terrorism; or other external events; • the impact of potential instability within the U.S. financial sector in the aftermath of the banking failures in 2023 and continued volatility thereafter, including the possibility of a run on deposits by a coordinated deposit base, and the impact of the actual or perceived soundness, or concerns about the creditworthiness of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including Federal Deposit Insurance Corporation insurance assessments, or adverse impact on our stock price, deposits or our ability to borrow or raise capital; 41 2024 Form 10-K • the impact of negative public opinion regarding Valley or banks in general that damages our reputation and adversely impacts business and revenues; • changes in the statutes, regulations, policy, or enforcement priorities of the federal bank regulatory agencies; • the loss of or decrease in lower-cost funding sources within our deposit base; • damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent, trademark or other intellectual property infringement, misappropriation or other violation, employment related claims, and other matters; • a prolonged downturn and contraction in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio; • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations, and case law; • the inability to grow customer deposits to keep pace with loan growth; • a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios; • the need to supplement debt or equity capital to maintain or exceed internal capital thresholds; • changes in our business, strategy, market conditions or other factors that may negatively impact the estimated fair value of our goodwill and other intangible assets and result in future impairment charges; • greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations; • increased competitive challenges, including our ability to stay current with rapid technological changes in the financial services industry; • cyberattacks, ransomware attacks, computer viruses, malware or other cybersecurity incidents that may breach the security of our websites or other systems or networks to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, disable or degrade service, or sabotage our systems or networks, and the increasing sophistication of such attacks; • results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; • application of the OCC heightened regulatory standards for certain large insured national banks, and the expenses we will incur to develop policies, programs, and systems that comply with the enhanced standards applicable to us; • our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements, or a decision to increase capital by retaining more earnings; • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events; • our ability to successfully execute our business plan and strategic initiatives; and • unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, risk mitigation strategies, changes in regulatory lending guidance or other factors. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. 2024 Form 10-K 42 Critical Accounting Estimates Our accounting and reporting policies conform, in all material respects, to GAAP. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated. Actual results could differ materially from those estimates. Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition and results of operations. Our significant accounting policies are presented in Note 1 to the consolidated financial statements. We identified our policies for the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Management has reviewed the application of these policies with the Audit Committee of the Board. The judgments and estimates used by management in applying the critical accounting policies discussed below may be affected by significant changes in the economic environment, which may result in changes to future financial results. Specifically, subsequent evaluations of the loan portfolio, in light of the factors then prevailing, may result in material changes in the allowance for credit losses in future periods, and the inability to collect on outstanding loans could result in increased loan losses. Allowance for Credit Losses . Determining the allowance for credit losses for loans has historically been identified as a critical accounting estimate. We estimate and recognize an allowance for lifetime expected credit losses for loans, unfunded credit commitments and HTM debt securities measured at amortized cost. See Notes 1 , 4 and 5 to the consolidated financial statements for further discussion of our accounting policies and methodologies for establishing the allowance for credit losses. The accounting estimate of the allowance for credit losses is a “critical accounting estimate” for the following reasons: • Changes in the provision for credit losses can materially affect our financial results; • Estimates relating to the allowance for credit losses require us to project future borrower performance, delinquencies and charge-offs, along with, when applicable, collateral values, based on a reasonable and supportable forecast period utilizing forward-looking economic scenarios in order to estimate probability of default and loss given default; • The allowance for credit losses is influenced by factors outside of our control such as industry and business trends, geopolitical events and the effects of laws and regulations as well as economic conditions such as trends in GDP, unemployment, housing prices, interest rates, inflation, and energy prices; and • Judgment is required to determine whether the models used to generate the allowance for credit losses produce an estimate that is sufficient to encompass the current view of lifetime expected credit losses. Additionally, management’s determination of the amount of the ACL is a critical accounting estimate because it requires significant reliance on the credit risk we ascribe to individual borrowers, the use of estimates and significant judgment as to the amount and timing of expected future cash flows on individually evaluated loans, significant reliance on historical loss rates on homogenous portfolios, consideration of our quantitative and qualitative evaluation of past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Changes in such estimates could significantly impact our allowance and provision for credit losses. Accordingly, our actual credit loss experience may not be in line with our expectations. Changes in Our Allowance for Credit Losses for Loans Valley considers it difficult to quantify the impact of changes in the economic forecast on its allowance for credit losses for loans. However, management believes the following discussion may enable investors to better understand the variables that drive the allowance for credit losses for loans, which totaled $573.3 million and $465.6 million at December 31, 2024 and 2023, respectivel y. As discussed further in the “Allowance for Credit Losses” section in this MD&A, we incorpo rated a multi-scenario economic forecast for estimating lifetime expected credit losses at December 31, 2024 and 2023. The qualitative economic component of our reserves at December 31, 2024 decreased by $43.8 million to approximately 8 percent of total allowance for credit losses for loans at December 31, 2024 as compared to 19 percent at December 31, 2023 largely due to gradual improvements in most economic indicators, including inflation, during 2024 and a higher level of previously expected losses transitioning as realized losses (i.e., charge-offs) through our ACL model in 2024 . Other qualitative non-economic reserves, largely based upon management judgements about certain inherent factors in acquired loan portfolios not reflected in our 43 2024 Form 10-K quantitative reserves, also decreased $48.0 million to approximately 4 percent of total allowance for credit losses for loans at December 31, 2024 as compared to 16 percent at December 31, 2023. The decline was mostly due to the passage of time and better than expected performance of these portfolios. The net positive developments in these significant judgmental factors during 2024 were more than offset by increases in the quantitative portion of our allowance based upon a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by generating probability of default and loss given default metrics. The allowance for credit losses for loans also included specific reserves totaling $75.9 million and $74.2 million, respectively, at December 31, 2024 and 2023. These reserves are based upon management's valuation of collateral for collateral dependent loans. These specific reserves include $25.8 million and $37.7 million at December 31, 2024 and 2023, respectively, related to New York City tax i medallion loan valuations based on the estimated value of the underlying medallions. See additional details regarding our non-performing taxi medallion loan portfolio under the “Non-performing Assets” section of this MD&A. Goodwill and Other Intangible Assets. We have significant goodwill and other intangible assets related to our acquisitions totaling $1.9 billion and $128.7 million at December 31, 2024, respectively. We record all acquired assets, including goodwill and other intangible assets, and assumed liabilities in purchase acquisitions at fair value as of the acquisition date, and expense all acquisition related costs as incurred as required by ASC Topic 805, “Business Combinations.” The initial recording of goodwill and other intangible assets requires subjective judgments concerning estimates of the fair value of the acquired assets and assumed liabilities. Goodwill is subject to annual tests for impairment or more often, if events or circumstances indicate it may be impaired. Our determination of whether or not goodwill is impaired requires us to make significant judgments and to use significant estimates and assumptions regarding estimated future cash flows. If we change our strategy or if market conditions shift, our judgments may change, which may result in adjustments to the recorded goodwill balance. Other intangible assets are amortized over their estimated useful lives and are subject to impairment tests if events or circumstances indicate a possible inability to realize the carrying amount. Such evaluation of other intangible assets is based on undiscounted cash flow projections. An impairment loss is recognized if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill recorded. We perform our annual goodwill impairment test in the second quarter of each year, or more often if events or circumstances warrant. In addition to the annual impairment test, we assessed the immediate and long-term impact of significant market and bank regulatory changes, if applicable, on the macroeconomic variables and economic forecasts and how those might impact the fair value of our reporting units each quarter end. After consideration of these variables and other possible triggering events or circumstances, as well as our operating results, we determined it was more-likely-than-not that the fair values of our three reporting units, Wealth Management, Consumer Banking, and Commercial Banking, were in excess of their carrying values during 2024. Therefore, we concluded there were no triggering events that would require additional goodwill impairment test of the reporting units during 2024. In 2025, we will continue to monitor and evaluate the overall economic conditions that may impact our market capitalization and any triggering events that may indicate a possible impairment of goodwill allocated to our reporting units. While not expected at this time, we may be required to record a charge to earnings should there be a deficiency in our estimated fair value of one or more of our reporting units during our subsequent annual (or more frequent) impairment tests. See the “Operating Segments” section in this MD&A for more information regarding our business segments/reporting units. Fair value is determined using certain discounted cash flow and market multiple methods. Estimated cash flows may extend far into the future and, by their nature, are difficult to determine over an extended timeframe. Factors that may materially affect the estimates include, among others, macroeconomic conditions such as a deterioration in general economic conditions and economic forecasts, competitive forces, customer behaviors and attrition, changes in revenue growth trends, cost structures and technology, and changes in discount rates, growth rate, terminal values, and specific industry or market sector conditions. Additionally, we perform a market capitalization reconciliation to support the appropriateness of our reporting unit fair values and impairment test results. In performing this reconciliation, we compare the sum of fair value of the reporting units to our market capitalization, adjusted for the present value of estimated synergies which a market participant acquirer could reasonably expect to realize from a hypothetical acquisition of Valley. To assist in assessing the impact of potential goodwill or other intangible assets impairment charges at December 31, 2024, the impact of a five percent impairment charge on these intangible assets would result in a reduction in pre-tax income of approximately $99.9 million. See Note 8 to the consolidated financial statements for additional information regarding goodwill and other intangible assets. 2024 Form 10-K 44 Income Taxes. We are subject to the income tax laws of the U.S., its states and municipalities. The income tax laws of the jurisdictions in which we operate are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws to our business activities, as well as the timing of when certain items may affect taxable income. Our interpretations may be subject to review during examination by taxing authorities and disputes may arise over the respective tax positions. We attempt to resolve these disputes during the tax examination and audit process and ultimately through the court systems when applicable. We monitor relevant tax authorities and revise our estimate of accrued income taxes due to changes in income tax laws and their interpretation by the courts and regulatory authorities on a quarterly basis. Revisions of our estimate of accrued income taxes also may result from our own income tax planning and from the resolution of income tax controversies. Such revisions in our estimates may be material to our operating results for any given quarter. The provision for income taxes is composed of current and deferred taxes. Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. We perform regular reviews to ascertain the realizability of our deferred tax assets. These reviews include management’s estimates and assumptions regarding future taxable income, which also incorporate various tax planning strategies. In connection with these reviews, if we determine that a portion of the deferred tax asset is not realizable, a valuation allowance is established. Management determined it is more likely than not that Valley will realize its net deferred tax assets, except for immaterial valuation allowances, as of December 31, 2024 and 2023. We also maintain, when necessary, a reserve related to certain tax positions that management believes contain an element of uncertainty. An uncertain tax position is measured based on the largest amount of benefit that management believes is more likely than not to be realized. Our income tax expense reflected a decrease of $46.4 million in 2024 and increases of $3.0 million and $1.8 million in 2023 and 2022, respectively, to our tax provision related to reserve for uncertain tax liability positions and/or accrued interest related to such positions at December 31, 2024, 2023 and 2022, respectively. See Notes 1 and 13 to the consolidated financial statements and the “Executive Summary” and “Income Taxes” sections in this MD&A for an additional discussion on the accounting for income taxes. New Authoritative Accounting Guidance. See Note 1 of the consolidated financial statements for a description of recent accounting pronouncements including the dates of adoption and the anticipated effect on our results of operations and financial condition. Executive Summary Company Overview. At December 31, 2024, Valley had consolidated total assets of $62.5 billion, total net loans of $48.2 billion, total deposits of $50.1 billion and total shareholders’ equity of $7.4 billion. Our commercial bank operations include branch office locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, California, Alabama and Illinois. Of our current 229 branch network, 56 percent, 18 percent, and 18 percent of the branches are located in New Jersey, New York, and Florida, respectively, with the remaining 8 percent of the branches in Alabama, California and Illinois combined. Over the past several years, we have grown significantly through organic efforts and our bank acquisition of Bank Leumi USA on April 1, 2022. Weather Related Events . In early January 2025, destructive wildfires broke out in the Pacific Palisades area of Los Angeles, California. At this time, we have minimal direct loan exposure to this area, however, we continue to closely monitor the ongoing impact of these and other regional wildfires on our California client base and, where appropriate, we will work constructively with individual borrowers. We are committed to the greater Los Angeles market, and recently opened a branch location in Beverly Hills in August 2024. At December 31, 2024, approximately $1.7 billion, or 3.5 percent, of our $48.8 billion loan portfolio is located in California and mostly consists of commercial real estate loans. We also have a relatively small amount of California municipal bond issuers within our AFS and HTM investment securities portfolios at December 31, 2024 and we do not expect any impairment of these securities at this time. As of December 31, 2024, the credit quality of our Florida loan portfolio has also remained resilient in the aftermath of Hurricanes Helene and Milton, which hit Florida in September and October 2024, respectively. At this time, there have been relatively few loan concessions (mostly in the form of loan payment deferrals up to 90 days) for distressed borrowers impacted by the hurricanes. At December 31, 2024, the hurricanes did not have a significant impact on the level of reserves or expected loan charge-offs within our allowance for loan losses. As a result, our provision for loan losses for the fourth quarter 2024 was net of an $8.0 million release of qualitative reserves for estimated losses related to the hurricanes in our allowance at September 30, 2024. 45 2024 Form 10-K Financial Condition. During 2024, we continued to strengthen the position of our balance sheet to best perform in the current economic environment, while also prudently managing and reducing the overall risk of our loan portfolio. The following items, including key balance sheet initiatives, are highlights at December 31, 2024 . • Commercial Real Estate Loan Concentration: Total commercial real estate loans (including construction loans) totaled $29.6 billion, or 60.7 percent of total loans at December 31, 2024 as compared to $32.0 billion, or 63.7 percent of total loans at December 31, 2023. While commercial real estate lending remains a key pillar of the success of our relationship banking model and our lending expertise, we continue to proactively diversify our loan portfolio by reducing new originations of certain types of transactional commercial real estate lending, such as non-owner occupied and multifamily loans to single-product borrowers. We remain focused on growing our commercial and industrial, owner occupied commercial real estate, and consumer loan portfolios. As a result, we have a current balance sheet goal to reduce our CRE loan concentration ratio to below 350 percent by December 31, 2025. At December 31, 2024, our CRE loan concentration ratio declined to 362 percent as compared to 421 percent and 474 percent at September 30, 2024 and December 31, 2023, respectively. The decline in the ratio was largely due to (1) bulk sales of commercial real estate and construction loans completed in the first half of 2024 and the fourth quarter 2024, (2) our preferred and common stock issuances in the second half of 2024, and (3) loan repayment activity in 2024, which outpaced new and refinanced loan volumes due to the planned lower production within the non-owner occupied and multifamily loan categories. See further details of our loan activities under the “Loan Portfolio” section below. • Regulatory Capital and Shareholders' Equity: Total shareholders' equity increased $733.7 million to $7.4 billion at December 31, 2024 as compared to December 31, 2023 largely due to net proceeds of $448.9 million and $144.7 million from the issuances of common stock and Series C preferred stock through registered public offerings in November and August 2024, respectively, and retained earnings generated from our 2024 net income. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 13.87 percent, 10.82 percent, 11.55 percent, and 9.16 percent, respectively, at December 31, 2024 as compared to 11.76 percent, 9.29 percent, 9.72 percent and 8.16 percent, respectively, at December 31, 2023. Currently, we expect that Valley's common equity Tier 1 capital will gradually increase to approximately 11 percent by December 31, 2025 largely through projected growth in our retained earnings and continuous management of the overall regulatory risk weighted asset profile of our balance sheet, including the goal to reduce our commercial real estate loan concentration. See the "Capital Adequacy" section below for more information. • Allowance for Credit Losses: The ACL for loans totaled $573.3 million and $465.6 million at December 31, 2024 and December 31, 2023, respectively, representing 1.17 percent and 0.93 percent of total loans at each respective date. The increase reflects, among other factors, an increase in quantitative reserves across most of our commercial loan categories driven by higher net loan charge-offs and nearly 8 percent loan growth in our commercial and industrial loan portfolio in 2024. Given our current projections for continued growth in our commercial and industrial loan portfolio and credit trends within our loan portfolio, we anticipate the ACL will migrate towards approximately 1.25 percent of total loans at December 31, 2025. However, we can provide no assurance that our actual future ACL for loans required under our CECL methodology will not exceed this current projection due to the uncertain nature of our assumptions. See the “Allowance for Credit Losses" section for additional information. • Credit Quality: Non-performing assets (NPAs) as a percentage of total loans and NPAs increased to 0.76 percent at December 31, 2024 as compared to 0.58 percent at December 31, 2023. Total net loan charge-offs to average loans were 0.40 percent for the fourth quarter 2024 as compared with 0.13 percent for the fourth quarter 2023. See the “Non-Performing Assets” section for additional information. • Liquid Assets: Our liquid assets totaled $5.5 billion at December 31, 2024 , representing 9.6 percent of interest earning assets as compared with $2.4 billion, or 4.3 percent of interest earning assets at December 31, 2023. We continue to maintain significant access to readily available, diverse funding sources to fulfill both short-term and long-term funding needs. Currently, we have a strategic goal to maintain a ratio of loans to deposits at or below 97 percent in 2025, which is relatively unchanged as compared with our actual ratio of loans to deposits of 97.5 percent at December 31, 2024. See the “Bank Liquidity” section for additional information. • Deposits: Total deposits increased $833.0 million to $50.1 billion at December 31, 2024 as compared to $49.2 billion at December 31, 2023 mainly due to higher direct commercial customer money market and NOW deposits, partially offset by a decrease in both brokered and retail time deposits. Total indirect customer deposits (including both brokered money market and time deposits) totaled $7.1 billion at December 31, 2024 and declined $397.2 million as compared with December 31, 2023. During the fourth quarter 2024, we used a significant portion of the net proceeds from the sale of commercial real estate loans held for sale to repay maturing indirect customer deposits. See the “Deposits and Other Borrowings” section for more details. 2024 Form 10-K 46 • Investment Securities: Total investment securities increased $1.9 billion to $7.0 billion, or 11.2 percent of total assets, at December 31, 2024 as compared to December 31, 2023 mainly due to targeted purchases of residential mortgage backed securities primarily issued by Ginnie Mae (with a risk-weighting of zero for regulatory capital purposes) in the second half of 2024 that were classified as AFS. See the “Investment Securities Portfolio” section for more details. Annual Results . Net income for the year ended December 31, 2024 was $380.3 million, or $0.69 per diluted common share as compared to $498.5 million, or $0.95 per diluted common share for 2023. The $118.2 million decrease in net income as compared to 2023 was mainly due to the following changes: • a $258.6 million increase in our provision for credit losses driven by higher quantitative reserves for commercial loans; • a $36.8 million decrease in net interest income mostly due to a higher cost of deposits, partially offset by an increase in loan yield; and • a $1.2 million decrease in non-interest income; Which was partially offset by: • a $121.6 million decrease in income tax expense mostly due to lower pre-tax income and a fourth quarter 2024 tax benefit resulting from a $46.4 million total reduction in uncertain tax liability positions and related accrued interest; and • a $56.8 million decrease in non-interest expense mainly due to a $67.1 million decrease in non-core items, including a $41.5 million reduction in the FDIC special assessment expense related to certain bank failures (highlighted in the “—Non-GAAP Financial Measures” section below); See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense,” and “Income Taxes” sections in this MD&A for more details on the items above and other non-core items impacting our 2024 annual results. Operating Environment. Real gross domestic product (GDP) increased at an annual rate of 2.8 percent as compared to 2.9 percent during 2023. The increase in 2024 was primarily driven by gross private domestic investment and personal consumption. The gains were partly offset by decreases in government consumption expenditures and net exports. Inflation continued to modestly improve with the consumer price index on a year over year basis decelerating from 3.3 percent at December 31, 2023 to 2.9 percent at December 31, 2024. Starting in mid-September 2024 at its Federal Open Market Committee meeting, the Federal Reserve began to incrementally lower the target range for the federal funds rate at three consecutive meetings from 5.25 - 5.50 percent to the current target of 4.25 - 4.50 percent in December 2024. In December 2024, the Committee indicated it expects just two 25 basis points cuts in 2025. At its recent meeting in January 2025, the Committee left the current target federal funds rate unchanged largely due to a healthy labor market, elevated inflation and an uncertain economic outlook caused by several factors, including the unknown impact of potential new policies implemented by the U.S. presidential administration. In addition, the Committee indicated it would continue reducing its holdings of Treasury securities and agency debt and mortgage-backed securities, as described in its previously announced plans. The 10-year U.S. Treasury note yield increased to 4.58 at December 31, 2024 from 3.88 percent one year ago, and the 2-year U.S. Treasury note yield ended 2024 increased 2 basis points to 4.25 percent at December 31, 2024 as compared to 2023. Total loans and leases for U.S. commercial banks increased 2.9 percent in 2024 compared to 2.2 percent in 2023. Consumer loans grew by 3.0 percent, while commercial and industrial and commercial real estate loans increased 1.3 percent and 1.2 percent, respectively, from 2023 to 2024. Overall, most banks reported easing of underwriting standards on commercial loans. Throughout the year of 2024, the combination of relatively high mortgage interest rates and tight inventories kept residential mortgage loan activity low. After yield curve inversion of more than two years, the normalization of interest rates in late 2024 should set the stage for a more benign operating environment for banks in 2025. The outlook for economic growth, and general optimism around easing bank regulation in the wake of the U.S. presidential election further supports the expectation for an improved operating environment. However, several other factors, including those recently noted by the Federal Reserve, have made the future direction of the economy uncertain, and should economic conditions deteriorate, causing business activity, spending and investment to decline, these and other factors may adversely impact our financial results, as highlighted in the remaining MD&A discussion below. Deposits and Other Borrowings. We define cumulative deposit beta as the change in our cost of total deposits relative to the change in the average Fed Funds (upper bound) rate. We differentiate between the cumulative deposit beta during the rate 47 2024 Form 10-K increase cycle, which began in the first quarter of 2022 and ended in the second quarter of 2024, and the cumulative deposit beta during the rate decrease cycle which started in the third quarter of 2024. Our cumulative deposit beta in the interest rate increase cycle (between December 31, 2021 and June 30, 2024) was approximately 58 percent. The Federal Reserve started an interest rate decrease cycle during the third quarter 2024. Our cumulative deposit beta in this current interest rate decrease cycle (between June 30, 2024 and December 31, 2024) was 34 percent. Our cumulative deposit beta for the fourth quarter 2024 was 51 percent. The beta in the fourth quarter was mainly driven by a full quarter’s impact of the Federal Reserve's initial rate cut, and our ability to broadly reduce costs of interest bearing deposit products coupled with an overall increase in non-interest bearing deposit balances from customers and a reduction of higher cost, indirect customer CDs. See the "Net Interest Income" section for additional details on the changes in our cost of deposits during the fourth quarter 2024. Total average deposits increased by $1.3 billion to $49.8 billion for the year ended December 31, 2024 as compared to 2023. Average savings, NOW and money market deposit balances increased $1.9 billion largely due to our strong focus on deposit generation from both direct commercial customers and national specialized deposits, as well as continuing to benefit from some inflows from the non-interest bearing deposit category. Average time deposits balances increased $716.5 million primarily due to our increased use of fully insured indirect customer (i.e., brokered) CDs as an alternate and attractively priced funding source (mainly compared to similar term FHLB borrowings) starting in the second quarter 2024. These increases were partially offset by a $1.4 billion decrease in average non-interest bearing deposits caused by the level of market interest rates and a continued shift in customer preference to interest bearing deposit products and other attractive investment alternatives to deposits during most of 2024. Average non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 51 percent and 27 percent of total deposits at December 31, 2024 , respectively, as compared to 26 percent, 48 percent and 26 percent of total deposits at December 31, 2023 , respectively. Actual ending balances for deposits increased $833.0 million to $50.1 billion at December 31, 2024 as compared to 2023 mostly due to an increase of $1.8 billion in savings, NOW and money market deposits, partially offset by decreases of $834.2 million and $110.8 million in time and non-interest bearing deposits, respectively. The increase in savings, NOW and money market deposits was largely due to broad-based direct commercial deposits and, to a lesser extent, consumer customer inflows, as well as increases in digital and national specialized deposit accounts at December 31, 2024. The decrease in time deposits was mostly due to maturity and repayment of both indirect and direct customer CDs, as we elected to pay down these higher cost funding sources with excess cash liquidity during the fourth quarter 2024. As a result, total indirect customer deposits (primarily brokered CDs and, to a lesser extent, money market deposits) decreased to $7.1 billion at December 31, 2024 as compared to $9.1 billion and $7.5 billion at September 30, 2024 and December 31, 2023, respectively. While non-interest bearing balances continued to be challenged by the level of market interest rates and the aforementioned changes in customer behavior during most of 2024, we did experience solid non-interest bearing deposit inflows from both commercial and consumer customers during the fourth quarter 2024 resulting in a $274.9 million increase to $11.4 billion at December 31, 2024 from September 30, 2024 . Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 53 percent and 25 percent of total deposits as of December 31, 2024, respectively, as compared to 23 percent, 50 percent and 27 percent as of December 31, 2023, respectively. The following table summarizes CDs included in time deposits in excess of the FDIC insurance limit by maturity at December 31, 2024: 2024 (in thousands) Less than three months $ 944,311 Three to six months 491,200 Six to twelve months 721,818 More than twelve months 209,319 Total $ 2,366,648 Total estimated uninsured deposits, excluding collateralized government deposits and intercompany deposits (i.e., deposits eliminated in consolidation), totaled approximately $12.6 billion, or 25 percent of total deposits, at December 31, 2024 as compared to $12.2 billion, or 25 percent of total deposits, at December 31, 2023. While we maintained a diversified commercial and consumer deposit base at December 31, 2024, deposit gathering initiatives and our current deposit base could be challenged due to market competition, attractive non-deposit investment alternatives in the financial markets and other factors. As a result, we cannot guarantee that we will be able to maintain deposit levels at or near those reported at December 31, 2024. Management continuously monitors liquidity and all available funding sources including non-deposit borrowings discussed below. See the "Liquidity and Cash Requirements" section of this MD&A for additional information. 2024 Form 10-K 48 The following table presents average short-term and long-term borrowings for the years ended December 31, 2024 and 2023: 2024 2023 (in thousands) Average short-term borrowings: FHLB advances $ 375,505 $ 1,713,448 Securities sold under repurchase agreements 64,946 89,430 Federal funds purchased 4,809 78,822 Total $ 445,260 $ 1,881,700 Average long-term borrowings: FHLB advances $ 2,428,428 $ 1,446,790 Subordinated debt 641,206 723,852 Junior subordinated debentures issued to capital trusts 57,283 56,936 Total $ 3,126,917 $ 2,227,578 Average short-term borrowings decreased $1.4 billion at December 31, 2024 as compared to 2023 mostly due to a shift from the use of short-term FHLB advances to primarily indirect customer money market and time deposits in our average mix of funding sources and $1.0 billion of new long-term FHLB advances issued in the first quarter 2024. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) increased $899.3 million at December 31, 2024 as compared to 2023. The increase was mainly due to the new FHLB advances totaling $1.0 billion issued in early March 2024. The new long-term FHLB borrowings have a weighted average rate of 4.54 percent and a weighted average remaining contractual term of 2.8 years at December 31, 2024. Actual ending balances for short-term borrowings decreased $845.1 million to $72.7 million at December 31, 2024 as compared to 2023 mainly due to a moderate decline in securities sold under repurchase agreements. Long-term borrowings increased $845.8 million to $3.2 billion at December 31, 2024 as compared to $2.3 billion at December 31, 2023 primarily due to the new FHLB advances issued during the first half of 2024. See the “Net Interest Incom e” section below and Note 10 to the consolidated financial state ments for additional details on our borrowed funds. Non-GAAP Financial Measures. The table below presents selected performance indicators, their comparative non-GAAP measures and the (non-GAAP) efficiency ratio for the periods indicated. Valley believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley’s underlying operational performance, business, and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures, on a consolidated basis, for internal planning, forecasting and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view our overall performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation, as a substitute for or superior to financial measures calculated in accordance with GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. 49 2024 Form 10-K The following table presents our annualized performance ratios for the three years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 Selected Performance Indicators ($ in thousands, except for %) GAAP measures: Net income, as reported $ 380,271 $ 498,511 $ 568,851 Return on average assets 0.61 % 0.82 % 1.09 % Return on average shareholders’ equity 5.51 7.60 9.50 Non-GAAP measures: Net income, as adjusted $ 343,559 $ 554,271 $ 650,452 Return on average assets, as adjusted 0.55 % 0.91 % 1.25 % Return on average shareholders’ equity, as adjusted 4.98 8.45 10.87 Return on average tangible shareholders’ equity (ROATE) 7.78 11.05 14.08 ROATE, as adjusted 7.03 12.29 16.10 Efficiency ratio, as adjusted 57.98 % 56.62 % 50.55 % As of December 31, Common Equity Per Share Data: 2024 2023 2022 Book value per common share (GAAP) $ 12.67 $ 12.79 $ 12.23 Tangible book value per common share (non-GAAP) 9.10 8.79 8.15 Non-GAAP Reconciliations to GAAP Financial Measures Adjusted net income for the three years ended December 31, 2024, 2023 and 2022 is computed as follows: 2024 2023 2022 (in thousands) Net income, as reported (GAAP) $ 380,271 $ 498,511 $ 568,851 Non-GAAP adjustments: Add: FDIC Special assessment (1) 8,757 50,297 — Add: Restructuring charge (2) 2,039 9,969 — Add: Provision for credit losses for available for sale securities (3) — 5,000 — Add: Non-PCD provision for credit losses (4) — — 41,012 Add: Merger related expenses (5) — 14,133 71,203 Add: Litigation reserve (6) — 3,540 — Add: Net losses on the sale of commercial real estate loans (7) 13,660 — — Add: Losses (gains) on available for sale and held to maturity debt securities, net (8) 15 (401) (95) Less: Gain on sale of commercial premium finance lending division (9) (3,629) — — Less: Net gains on sales of office buildings (9) — (6,721) — Less: Litigation settlements (10) (7,334) — — Less: Income tax benefit (11) (46,431) — — Total non-GAAP adjustments to net income (32,923) 75,817 112,120 Income tax adjustments related to non-GAAP adjustments (12) (3,789) (20,057) (30,519) Net income, as adjusted (non-GAAP) $ 343,559 $ 554,271 $ 650,452 2024 Form 10-K 50 (1) Included in the FDIC insurance assessment. (2) Represents severance expense related to workforce reductions within salary and employee benefits expense. (3) Included in provision for credit losses for available for sale and held to maturity securities (tax disallowed). (4) Represents provision for credit losses for non-PCD assets and unfunded credit commitments acquired during the period. (5) Primarily represents data processing termination costs within technology, furniture and equipment expense for 2023. Merger related expenses were primarily salary and employee benefits expense for 2022. (6) Represents legal reserves and settlement charges included in professional and legal fees. (7) Represents actual and mark to market losses on commercial real estate loan sales included in (losses) gains on sales of loans, net. (8) Included in gains (losses) on securities transactions, net. (9) Included in gains on sale of assets, net. (10) Represents recoveries from legal settlements included in other income. (11) Represents the income tax benefit from the reduction in uncertain tax liability positions and accrued interest and penalties due to statute of limitation expirations included in income tax expense. (12) Calculated using the appropriate blended statutory tax rate for the applicable period. In addition to the items used to calculate net income, as adjusted, in the table above, our net income is, from time to time, impacted by fluctuations in the overall level of net gains on sales of loans, wealth management and trust fees, and capital markets fees. These amounts can vary widely from period to period due to, among other factors, the amount and timing of residential mortgage loans originated for sale, brokerage and tax credit investment advisory activities and commercial loan customer demand for certain interest rate swap products. See the “Non-Interest Income” section below for more details. Adjusted annualized return on average assets for the three years ended December 31, 2024, 2023 and 2022 is computed by dividing adjusted net income by average assets, as follows: 2024 2023 2022 ($ in thousands) Net income, as adjusted (non-GAAP) $ 343,559 $ 554,271 $ 650,452 Average assets (GAAP) $ 61,973,902 $ 61,065,897 $ 52,182,310 Annualized return on average assets, as adjusted (non-GAAP) 0.55 % 0.91 % 1.25 % Adjusted annualized return on average shareholders' equity for the three years ended December 31, 2024, 2023 and 2022 is computed by dividing adjusted net income by average shareholders' equity, as follows: 2024 2023 2022 ($ in thousands) Net income, as adjusted (non-GAAP) $ 343,559 $ 554,271 $ 650,452 Average shareholders' equity (GAAP) $ 6,900,204 $ 6,558,768 $ 5,985,236 Annualized return on average shareholders' equity, as adjusted (non-GAAP) 4.98 % 8.45 % 10.87 % ROATE and adjusted ROATE for the three years ended December 31, 2024, 2023 and 2022 are computed by dividing net income and adjusted net income, respectively, by average shareholders’ equity less average goodwill and average other intangible assets, as follows: 2024 2023 2022 ($ in thousands) Net income, as reported (GAAP) $ 380,271 $ 498,511 $ 568,851 Net income, as adjusted (non-GAAP) $ 343,559 $ 554,271 $ 650,452 Average shareholders’ equity (GAAP) $ 6,900,204 $ 6,558,768 $ 5,985,236 Less: Average goodwill and other intangible assets (GAAP) 2,012,713 2,047,172 1,944,503 Average tangible shareholders’ equity (non-GAAP) $ 4,887,491 $ 4,511,596 $ 4,040,733 Annualized ROATE (non-GAAP) 7.78 % 11.05 % 14.08 % Annualized ROATE, as adjusted (non-GAAP) 7.03 % 12.29 % 16.10 % 51 2024 Form 10-K The efficiency ratio for the years ended December 31, 2024, 2023 and 2022 is computed as follows: 2024 2023 2022 ($ in thousands) Total non-interest expense, as reported (GAAP) $ 1,105,860 $ 1,162,691 $ 1,024,949 Less: FDIC Special assessment (1) 8,757 50,297 — Less: Restructuring charge (2) 2,039 9,969 — Less: Merger related expenses (3) — 14,133 71,203 Less: Litigation reserve (4) — 3,540 — Less: Amortization of tax credit investments 18,946 18,009 12,407 Total non-interest expense, as adjusted (non-GAAP) 1,076,118 1,066,743 941,339 Net interest income, as reported (GAAP) 1,628,708 1,665,478 1,655,640 Total non-interest income, as reported (GAAP) 224,501 225,729 206,793 Add: Net losses on the sale of commercial real estate loans (5) 13,660 — — Less: Net gains on sales of office buildings (6) — (6,721) — Less: Gain on sale of commercial premium finance lending division (6) (3,629) — — Less: Losses (gains) on available for sale and held to maturity debt securities transactions, net (7) 15 (401) (95) Less: Litigation settlements (8) (7,334) — — Total net interest income and non-interest income, as adjusted (non-GAAP) $ 227,213 $ 218,607 $ 206,698 Gross operating income, as adjusted (non-GAAP) $ 1,855,921 $ 1,884,085 $ 1,862,338 Efficiency ratio, (non-GAAP) 57.98 % 56.62 % 50.55 % (1) Included in the FDIC insurance expense. (2) Represents severance expense related to workforce reductions within salary and employee benefits expense. (3) Primarily represents data processing termination costs within technology, furniture and equipment expense for 2023. Merger related expenses were primarily salary and employee benefits expense for 2022. (4) Included in professional and legal fees. (5) Included in (losses) gains on sales of loans, net. (6) Included in gains on sales of assets, net. (7) Included in gains (losses) on securities transactions, net. (8) Represents recoveries from legal settlements included in other income. Tangible book value per common share is computed by dividing shareholders’ equity less preferred stock, goodwill and other intangible assets by common shares outstanding for the two years ended December 31, 2024 and 2023, as follows: 2024 2023 ($ in thousands, except for share data) Common shares outstanding 558,786,093 507,709,927 Shareholders’ equity (GAAP) $ 7,435,127 $ 6,701,391 Less: Preferred stock 354,345 209,691 Less: Goodwill and other intangible assets 1,997,597 2,029,267 Tangible common shareholders’ equity (non-GAAP) $ 5,083,185 $ 4,462,433 Tangible book value per common share (non-GAAP) $ 9.10 $ 8.79 Book value per common share (GAAP) 12.67 12.79 2024 Form 10-K 52 Net Interest Income Net interest income consists of interest income and dividends earned on interest earning assets less interest expense on interest bearing liabilities and represents the main source of income for Valley. The net interest margin on a fully tax equivalent basis is calculated by dividing tax equivalent net interest income by average interest earning assets and is a key measurement used in the banking industry to measure income from interest earning assets. Annual Period 2024. Net interest income on a tax equivalent basis decreased by $37.1 million to $1.6 billion for 2024 as compared to 2023. Interest income on a tax equivalent basis increased $218.3 million to $3.4 billion for 2024 as compared to 2023. The increase was mostly due to higher yields on both new originations and adjustable rate loans for most of 2024 and a $678.7 million increase in average loan balances driven by organic new loan volumes and, to a lesser extent, a continuation of slower loan prepayments in 2024. The increase in interest income was offset by an increase of $255.4 million in total interest expense to $1.7 billion for 2024 as compared to 2023 mainly due to higher costs on most interest bearing deposit products during the first nine months of 2024 coupled with an increase in average interest bearing deposit balances. Average interest earning assets totaling $57.3 billion for the year ended December 31, 2024 increased $817.4 million, or 1.4 percent, as compared to 2023 mainly due to a $678.7 million increase in average loan balances driven by organic growth concentrated mostly in the commercial and industrial, commercial real estate non-owner occupied and automobile loan categories of our portfolio during 2024. Average taxable investments also increased $750.6 million largely due to additional purchases of residential mortgage-backed securities classified as available for sale during year ended December 31, 2024. These increases were partially offset by a $568.9 million decrease in average interest bearing cash balances as compared to 2023, as we significantly reduced the level of excess cash held overnight in the latter half of 2023 and the full year of 2024. The average interest bearing cash balances were prudently held at elevated levels for an extended period of time during 2023 as part of our liquidity management navigating the fallout from the banking failures in the first half of 2023. Average interest bearing liabilities increased $2.1 billion to $42.1 billion for the year ended December 31, 2024 as compared to 2023 mainly due to increases of $2.6 billion and $899.3 million in average interest bearing deposits and long-term borrowings, respectively, offset by a $1.4 billion decrease in average short-term borrowings. The increase in average interest bearing deposits was largely due to strong inflows from direct commercial customer and specialized national deposits during 2024, as well as greater use of indirect customer CDs as an alternate funding source. Average long-term borrowings increased as compared to 2023 mostly due to new FHLB advances totaling $1.0 billion issued in early March 2024. The decrease in average short-term borrowings was mostly the result of a significant shift from the use of short-term FHLB advances to indirect customer CDs in our mix of liquidity funding sources during 2024. See additional information under "Deposits and Other Borrowings" in the Executive Summary section above. Net interest margin on a tax equivalent basis was 2.85 percent for the year ended December 31, 2024 and decreased 11 basis points as compared to 2023. Th e decrease as compared to 2023 was mostly driven by a 42 basis point increase in the cost of average interest-bearing liabilities which outpaced a 30 basis point increase in the yield on average interest earning assets primarily due to the higher level of short-term market interest rates and a prolonged inverted yield curve during most of 2024. The cost of total average deposits increased 9 basis points to 3.13 percent for 2024 as compared to 2023. The yield on average loans increased 31 basis points to 6.16 percent for 2024 as compared to 5.85 percent in 2023 largely due to higher interest rates on new originations and adjustable rate loans for most of 2024. The yield on average taxable investments increased 50 basis points as compared to 2023 largely due to higher yielding investment securities purchased during 2024. The yield on interest bearing deposits with banks (mainly overnight cash balances held at the FRB of New York) also increased 32 basis points as compared to 2023 due to the high level of short-term interest rates during most of 2024. Fourth Quarter 2024. Net interest income on a tax equivalent basis of $424.3 million for the fourth quarter 2024 increased $12.5 million and $25.7 million as compared to the third quarter 2024 and fourth quarter 2023, respectively. Interest income on a tax equivalent basis decreased $25.7 million to $836.1 million for the fourth quarter 2024 as compared to the third quarter 2024. The decrease was mostly driven by lower interest income on adjustable rate loans caused by downward repricing and lost interest income related to the commercial real estate loan sales during the fourth quarter 2024, partially offset by higher interest income from targeted purchases of taxable investments within the available for sale securities portfolio and higher yields on new and renewed loan originations. Tota l interest expense decreased $38.2 million to $411.8 million for the fourth quarter 2024 as compared to the third quarter 2024 mainly due to lower costs on most interest bearing deposit products and a $702.2 million decrease in average time deposit balances primarily related to the repayment of indirect customer CDs throughout the fourth quarter. Net interest margin on a tax equivalent basis of 2.92 percent for the fourth quarter 2024 increased 6 basis points and 10 basis points from 2.86 percent and 2.82 percent, respectively, for the third quarter 2024 and fourth quarter 2023. The increase as compared to the third quarter 2024 was mostly due to the 31 basis point decline in our cost of total average deposit, partially 53 2024 Form 10-K offset by the lower yield on average interest earning assets. The yield on average interest earning assets decreased by 23 basis points to 5.75 on a linked quarter basis largely due to downward repricing of our adjustable rate loans and a higher amount of our average earning assets held in relatively lower-yielding cash and investment securities, partially offset by higher yielding investment purchases. The overall cost of average interest bearing liabilities decreased by 37 basis points to 3.85 percent for the fourth quarter 2024 as compared to the linked third quarter 2024 largely due to lower interest rates on deposits. Our cos t of total average deposits was 2.94 percent for the fourth quarter 2024 as compared to 3.25 percent and 3.13 percent for the third quarter 2024 and fourth quarter 2023 , respectively. Based upon our latest model estimates, we anticipate net interest income growth of approximately 9 to 12 percent for the full year of 2025 as compared to 2024. While we are optimistic about the projected net interest income for 2025, our forecasts include several uncertain assumptions, including an expected incremental decrease in our funding costs over the next 12-months and stability in yield from our fixed rate loan portfolio. As such, we cannot provide any assurances that our net interest income or margin will remain at the levels reported for the fourth quarter 2024. 2024 Form 10-K 54 The following table reflects the components of net interest income for each of the three years ended December 31, 2024, 2023 and 2022: ANALYSIS OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY AND NET INTEREST INCOME ON A TAX EQUIVALENT BASIS 2024 2023 2022 Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average Rate ($ in thousands) Assets Interest earning assets: Loans (1)(2) $ 50,030,586 $ 3,079,958 6.16 % $ 49,351,861 $ 2,887,026 5.85 % $ 41,930,353 $ 1,828,576 4.36 % Taxable investments (3) 5,741,591 206,898 3.60 4,990,942 154,847 3.10 4,628,353 117,184 2.53 Tax-exempt investments (1)(3) 573,491 24,371 4.25 616,555 25,703 4.17 586,956 22,687 3.87 Interest bearing deposits with banks 972,258 51,482 5.30 1,541,170 76,809 4.98 921,719 13,064 1.42 Total interest earning assets 57,317,926 3,362,709 5.87 56,500,528 3,144,385 5.57 48,067,381 1,981,511 4.12 Allowance for loan losses (502,236) (452,713) (442,068) Cash and due from banks 429,075 395,895 386,399 Other assets 4,882,916 4,805,711 4,254,389 Unrealized gains (losses) on securities available for sale, net (153,779) (183,524) (83,791) Total assets $ 61,973,902 $ 61,065,897 $ 52,182,310 Liabilities and Shareholders’ Equity Interest bearing liabilities: Savings, NOW and money market deposits $ 25,148,637 $ 913,963 3.63 % $ 23,228,453 $ 739,025 3.18 % $ 22,652,502 $ 186,709 0.82 % Time deposits 13,421,273 644,964 4.81 12,704,775 535,749 4.22 5,009,302 69,691 1.39 Total interest bearing deposits 38,569,910 1,558,927 4.04 35,933,228 1,274,774 3.55 27,661,804 256,400 0.93 Short-term borrowings 445,260 22,047 4.95 1,881,700 94,869 5.04 1,024,352 17,453 1.70 Long-term borrowings 3,126,917 147,815 4.73 2,227,578 103,770 4.66 1,504,111 47,190 3.14 Total interest bearing liabilities 42,142,087 1,728,789 4.10 40,042,506 1,473,413 3.68 30,190,267 321,043 1.06 Non-interest bearing deposits 11,208,053 12,558,441 14,789,661 Other liabilities 1,723,558 1,906,182 1,217,146 Shareholders’ equity 6,900,204 6,558,768 5,985,236 Total liabilities and shareholders’ equity $ 61,973,902 $ 61,065,897 $ 52,182,310 Net interest income/interest rate spread (5) 1,633,920 1.77 % 1,670,972 1.89 % 1,660,468 3.06 % Tax equivalent adjustment (5,212) (5,494) (4,828) Net interest income, as reported $ 1,628,708 $ 1,665,478 $ 1,655,640 Net interest margin (6) 2.84 % 2.95 % 3.44 % Tax equivalent effect 0.01 0.01 0.01 Net interest margin on a fully tax equivalent basis (6) 2.85 % 2.96 % 3.45 % (1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate. (2) Loans are stated net of unearned income and include non-accrual loans. (3) The yield for securities that are classified as AFS is based on the average historical amortized cost. (4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition. (5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. (6) Net interest income as a percentage of total average interest earning assets. 55 2024 Form 10-K The following table demonstrates the relative impact on net interest income of changes in the volume of interest earning assets and interest bearing liabilities and changes in rates earned and paid by Valley on such assets and liabilities. Variances resulting from a combination of changes in volume and rates are allocated to the categories in proportion to the absolute dollar amounts of the change in each category. CHANGE IN NET INTEREST INCOME ON A TAX EQUIVALENT BASIS 2024 Compared to 2023 2023 Compared to 2022 Change Due to Volume Change Due to Rate Total Change Change Due to Volume Change Due to Rate Total Change (in thousands) Interest income: Loans* $ 40,137 $ 152,795 $ 192,932 $ 361,377 $ 697,073 $ 1,058,450 Taxable investments 25,103 26,948 52,051 9,714 27,949 37,663 Tax-exempt investments* (1,822) 490 (1,332) 1,179 1,837 3,016 Federal funds sold and other interest bearing deposits (29,868) 4,541 (25,327) 13,437 50,308 63,745 Total increase in interest income 33,550 184,774 218,324 385,707 777,167 1,162,874 Interest expense: Savings, NOW and money market deposits 64,286 110,652 174,938 4,867 547,448 552,315 Time deposits 31,428 77,787 109,215 200,705 265,353 466,058 Short-term borrowings (71,155) (1,667) (72,822) 23,174 54,242 77,416 Long-term borrowings and junior subordinated debentures 42,492 1,553 44,045 28,178 28,402 56,580 Total increase in interest expense 67,051 188,325 255,376 256,924 895,445 1,152,369 (Decrease) increase in net interest income $ (33,501) $ (3,551) $ (37,052) $ 128,783 $ (118,278) $ 10,505 * Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate. Non-Interest Income Non-interest income represented 6.3 percent and 6.7 percent of total interest income plus non-interest income for 2024 and 2023, respectively. For the year ended December 31, 2024, non-interest income decreased $1.2 million as compared to the year ended December 31, 2023. See further details below. The following table presents the components of non-interest income for the years ended December 31, 2024, 2023, and 2022: 2024 2023 2022 (in thousands) Wealth management and trust fees $ 62,616 $ 44,158 $ 34,709 Insurance commissions 12,794 11,116 11,975 Capital markets 27,221 41,489 52,362 Service charges on deposit accounts 48,276 41,306 36,930 Gains (losses) on securities transactions, net 100 1,104 (1,230) Fees from loan servicing 12,393 10,670 11,273 (Losses) gains on sales of loans, net (5,840) 6,054 6,418 Gains on sales of assets, net 3,727 6,809 897 Bank owned life insurance 16,942 11,843 8,040 Other 46,272 51,180 45,419 Total non-interest income $ 224,501 $ 225,729 $ 206,793 2024 Form 10-K 56 Wealth management and trust fees income increased by $18.5 million for the year ended December 31, 2024 as compared to 2023. The increase was mainly driven by stronger fee production from tax credit advisory services and, to a lesser extent, increased brokerage commissions due to stronger customer trading volume at our broker dealer subsidiary during 2024. Brokerage fees totaled $23.4 million and $19.1 million for the years ended December 31, 2024 and 2023, respectively . Capital markets income decreased $14.3 million for the year ended December 31, 2024 as compared to 2023 mainly due to a decline in the volume of interest rate swap transactions executed for commercial customers, as well as a $2.1 million decrease in loan syndication and participation fees. Swap fee income totaled $13.3 million and $28.4 million December 31, 2024 and 2023, respectively . These decreases were partially offset by a $3.4 million increase in foreign exchange fees for the year ended December 31, 2024 as compared to 2023. S ervice charges on deposit accounts increased $7.0 million for the year ended December 31, 2024 as compared to 2023 mainly due to additional treasury service related fees for commercial deposit accounts. In addition, the level of our 2023 service charges on deposit accounts was modestly impacted by waived transactional fees for customers around the time of our core system conversion in October 2023. The net gains on securities transactions for the year ended December 31, 2023 included an $869 thousand gain on the sale of a previously impaired corporate bond issued by Signature Bank and net gains related to municipal bond trading activities. See Note 4 for additional details. Net gains on sales of assets for the year ended December 31, 2024 includes a $3.6 million net gain realized on the sale of our commercial premium finance lending business in the first quarter 2024. Net gains on sales of assets for the year ended December 31, 2023 were mainly attributable to a $6.7 million net gain on the sale of non-branch offices located in Wayne, New Jersey in the third quarter 2023. Net losses on sales of loans were $5.8 million for the year ended December 31, 2024 as compared to net gains of $6.1 million for 2023 mostly due to $13.7 million of realized losses resulting from the sale of performing commercial real estate loans in the fourth quarter 2024. These losses were partially offset by net gains on sales of residential mortgage loans originated for sale and a gain of $944 thousand related to $75.5 million of seasoned residential mortgage loans sold during the fourth quarter 2024. Overall, our ability to generate net gains on sales of residential mortgage loans originated for sale continues to be challenged by several factors, including the higher level of mortgage interest rates, lower customer demand for conforming loan products, and our decision to not originate certain residential mortgage loans for sale. This decision can be influenced by many factors, including our current goal to reduce our commercial real estate loan concentration and further diversify our loan portfolio. See further discussions of our residential mortgage loan origination activity under the “Loan Portfolio” section of this MD&A below. Bank owned life insurance income increased $5.1 million for the year ended December 31, 2024 as compared to 2023 due to income and increases in market value of the underlying investment securities. Other non-interest income decreased $4.9 million for the year ended December 31, 2024 as compared to 2023 largely due to a $2.9 million decrease in the fair value of equity securities and a $1.2 million decrease in credit card fee income. Through organic and acquisitive efforts, we have developed a robust suite of fee income product and service offerings for our growing customer base, including our treasury management services to commercial banking customers expected to help us generate additional fee income and attract new customers. During 2025, we plan to further leverage the investments that we have made in our treasury solutions, foreign exchange and syndication platforms, and continue to focus on growing revenues from interest rate swap transactions and our broker dealer subsidiary. Non-Interest Expense Non-interest expense decreased $56.8 million to $1.1 billion for the year ended December 31, 2024 as compared to 2023 mainly driven by decreases in the FDIC insurance assessment expense, t echnology, furniture and equipment expense and professional and legal fees . See further details below. 57 2024 Form 10-K The following table presents the components of non-interest expense for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands) Salary and employee benefits expense $ 558,595 $ 563,591 $ 526,737 Net occupancy expense 102,124 101,470 94,352 Technology, furniture and equipment expense 135,109 150,708 161,752 FDIC insurance assessment 61,476 88,154 22,836 Amortization of other intangible assets 35,045 39,768 37,825 Professional and legal fees 70,315 80,567 82,618 Amortization of tax credit investments 18,946 18,009 12,407 Other 124,250 120,424 86,422 Total non-interest expense $ 1,105,860 $ 1,162,691 $ 1,024,949 Salary and employee benefits expense decreased $5.0 million for the year ended December 31, 2024 as compared to 2023. The decrease was mainly attributable a $7.9 million reduction in restructuring charges, consisting of severance expense related to workforce reductions, in 2024. Merger costs related to the acquisition of Bank Leumi USA, primarily consisting of severance and retention compensation, totaled $4.1 million during the year ended December 31, 2023. The effect of these items was partially offset by normal increases in labor costs during 2024. Technology, furniture and equipment expense decreased $15.6 million for the year ended December 31, 2024 as compared to 2023 primarily due to decreases in merger related expense, equipment maintenance and repair expense, and telecommunication expense in 2024. Merger expenses related to the termination of certain technology contracts totaled $10 million in 2023. FDIC insurance assessment expense decreased $26.7 million for the year ended December 31, 2024 as compared to 2023 mainly due to $41.5 million decrease in the special assessment applied to us to recover losses in the Deposit Insurance Fund from protecting uninsured depositors following the Silicon Valley Bank and Signature Bank failures. The decrease in the special assessment charge was primarily offset by normal increases in our FDIC assessment due to the overall growth of our balance sheet, as well as an increase in our internally classified loans as compared to 2023. Amortization of other intangibles decreased $4.7 million for the year ended December 31, 2024 as compared to 2023 mainly due to lower amortization expense of core deposits and other intangible assets. See Note 8 to the consolidated financial statements for additional information. Professional and legal fees decreased $10.3 million for the year ended December 31, 2024 as compared to 2023 mainly due to lower technology managed services and consulting expenses. In addition, legal fees included a $3.5 million charge for legal settlements for the year ended December 31, 2023. Other non-interest expense increased $3.8 million for the year ended December 31, 2024 as compared to 2023 was due, in part, to additional costs related to a loan credit risk transfer transaction, consisting of a credit default swap, executed in June 2024. The premium expense and other transaction costs associated with this credit protection totaled $6.8 million for the year ended December 31, 2024. This and other moderate general increases within this category were partially offset by decreases in advertising expense and interest charges on collateral held related to derivative transactions as compared to 2023. Income Taxes Income tax expense was $58.2 million for the years ended December 31, 2024, reflecting an effective tax rate of 13.3 percent, as compared to $179.8 million for the year ended December 31, 2023, reflecting an effective tax rate of 26.5 percent. The decrease in both income tax expense and the effective rate during 2024 was mostly due to a $46.4 million tax benefit realized on the total reduction in our uncertain tax liability positions and related accrued interest due to statute of limitation expirations during the fourth quarter 2024, as well as lower pre-tax income as compared to 2023. The uncertain tax liability positions solely related to certain tax credits and other tax benefits previously recognized by Valley, where subsequently, a third-party fraud was uncovered by the U.S. Department of Justice in 2018. GAAP requires that any change in judgment or change in measurement of a tax position taken in a prior annual period be recognized as a discrete event in the quarter in which it occurs, rather than being recognized as a change in effective tax rate for the current year. Our adherence to these tax guidelines may result in volatile effective income tax rates in future quarterly and 2024 Form 10-K 58 annual periods. Factors that could impact management’s judgment include changes in income, tax laws and regulations, and tax planning strategies. Based on the current information available, we anticipate that our effective tax rate will be approximately within the 23 to 25 percent range for 2025. See additional information regarding our income taxes under our “—Critical Accounting Estimates” section above, as well as Note 13 to the consolidated financial statements. Operating Segments Valley manages its business operations under operating segments consisting of Consumer Banking and Commercial Banking. Activities not assigned to the operating segments are included in Treasury and Corporate Other. The CEO of Valley is the CODM who assesses performance of each operating segment to better understand their cost, opportunity value and impact to Valley's consolidated earnings. Each operating segment is reviewed routinely for its asset growth, contribution to our income before income taxes, 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 segment s. The accounting for each operating segment and Treasury and Corporate Other includes internal accounting policies designed to measure consistent and reasonable financial reporting and may result in income and expense measurements that differ from amounts under GAAP. The financial reporting for each segment contains allocations and reporting in line with Valley’s operations, which may not necessarily be comparable to those of any other financial institution. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. Certain prior period amounts have been reclassified to conform to the current presentation for each operating segment and Treasury and Corporate Other. See Note 21 to the consolidated financial statements for additional information. The following tables present the financial data for Valley's operating segments, and Treasury and Corporate Other for the years ended December 31, 2024 and 2023: 2024 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets $ 9,914,917 $ 40,115,669 $ 7,287,340 $ 57,317,926 Interest income $ 478,680 $ 2,596,066 $ 282,751 $ 3,357,497 Interest expense 299,048 1,209,945 219,796 1,728,789 Net interest income 179,632 1,386,121 62,955 1,628,708 Provision for credit losses 24,561 284,827 (558) 308,830 Net interest income after provision for credit losses 155,071 1,101,294 63,513 1,319,878 Non-interest income 135,331 77,690 11,480 224,501 Non-interest expense Salary and employee benefits expense 118,953 389,622 50,020 558,595 Net occupancy expense 18,003 71,360 12,761 102,124 Technology, furniture, and equipment expense 25,681 93,811 15,617 135,109 FDIC insurance assessment 10,448 42,271 8,757 61,476 Professional and legal fees 11,254 52,666 6,395 70,315 Other segment items * 58,282 54,007 65,952 178,241 Total non-interest expense $ 242,621 $ 703,737 $ 159,502 $ 1,105,860 Income (loss) before income taxes $ 47,781 $ 475,247 $ (84,509) $ 438,519 Return on average interest earning assets (pre-tax) 0.48 % 1.18 % (1.16) % 0.77 % Net interest margin 1.81 % 3.45 % 0.86 % 2.84 % 59 2024 Form 10-K 2023 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets $ 9,620,508 $ 39,731,353 $ 7,148,667 $ 56,500,528 Interest income $ 415,585 $ 2,471,345 $ 251,961 $ 3,138,891 Interest expense 250,882 1,036,109 186,422 1,473,413 Net interest income 164,703 1,435,236 65,539 1,665,478 Provision for credit losses 6,162 39,463 4,559 50,184 Net interest income after provision for credit losses 158,541 1,395,773 60,980 1,615,294 Non-interest income 105,282 93,618 26,829 225,729 Non-interest expense Salary and employee benefits expense 111,748 389,666 62,177 563,591 Net occupancy expense 19,313 69,780 12,377 101,470 Technology, furniture, and equipment expense 25,661 98,716 26,331 150,708 FDIC insurance assessment 7,380 30,477 50,297 88,154 Professional and legal fees 13,016 56,755 10,796 80,567 Other segment items * 48,650 56,188 73,363 178,201 Total non-interest expense $ 225,768 $ 701,582 $ 235,341 $ 1,162,691 Income (loss) before income taxes $ 38,055 $ 787,809 $ (147,532) $ 678,332 Return on average interest earning assets (pre-tax) 0.40 % 1.98 % (2.06) % 1.20 % Net interest margin 1.71 % 3.61 % 0.91 % 2.95 % * Other segment items include amortization of intangible assets, amortization of tax credit investments and other general operating expenses. Consumer Banking Segment. The Consumer Banking segment represented 18.9 percent of the total loan portfolio at December 31, 2024 , and was mainly comprised of residential mortgage loans and automobile loans, and to a lesser extent, home equity loans, secured personal lines of credit and other consumer loans (including credit card loans). The duration of the residential mortgage loan portfolio (which represented 11.5 percent of our total loan portfolio at December 31, 2024) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans portfolio (representing 3.9 percent of total loans at December 31, 2024) is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Banking also includes the Wealth Management and Insurance Services Division, comprised of asset management advisory, brokerage, trust, personal and title insurance, tax credit advisory services, and our international and domestic private banking businesses. Consumer Banking’s average interest earning assets increased $294.4 million to $9.9 billion for the year ended December 31, 2024 as compared to 2023. The increase was largely due to strong origination volumes and steady growth in our indirect automobile loan portfolio over the last 12-month period, new residential mortgage loan volumes originated for investment rather than sale and a moderate uptick in home equity loan balances, partially offset by a decline in secured personal lines of credit balances during 2024. For the year ended December 31, 2024 income before income taxes generated by the Consumer Banking segment increased $9.7 million to $47.8 million for the year ended December 31, 2024 as compared to $38.1 million for the year ended December 31, 2023. Th e increase was mainly driven by higher non-interest income and net interest income, partially offset by higher provision for loan losses and non-interest expense. The non -interest income increased $30.0 million as compared to 2023 mainly due to a higher volume of transaction and other related fees generated by both our tax credit advisory and brokerage subsidiaries, as well as an uptick in service charges on deposit accounts. Net interest income increased $14.9 million as compared to 2023 mainly due to the increase in overall yield of the loan portfolio during 2024. The provision for loan losses increased $18.4 million for the year ended December 31, 2024 from $6.2 million for 2023 mainly due to loan growth in 2024 and higher quantitative reserves at December 31, 2024 . See further details in the “Allowance for Credit Losses” section of this MD&A. Non-interest expense increased $16.9 million to $242.6 million for the year ended December 31, 2024 as compared to 2024 Form 10-K 60 2023 largely driven by increases in salaries and employee benefits, other expense (including $6.8 million of premium fees associated with a credit risk transfer transaction, consisting of a credit default swap, executed in 2024 for a portion of our auto portfolio) and the FDIC insurance assessment during 2024. See more details in the "Non-Interest Expense" section of this MD&A. Net interest margin on the Consumer Banking portfolio increased 10 basis points to 1.81 percent for the year ended December 31, 2024 as compared to 2023 mainly due to a 51 basis point increase in the yield on average loans, partially offset by a 41 basis point increase in the costs associated with our funding sources. The increase in loan yield was largely due to higher yielding new loan volumes and adjustable rate loans (for the majority of 2024) in our portfolio. The increase in our funding costs was mainly driven by higher interest rates on most of our interest bearing deposit products and indirect customer deposits during 2024. See more details in the “Net Interest Income” section of this MD&A. Commercial Banking Segment. The Commercial Banking segment is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate characteristics, Commercial Banking is Valley’s operating segment that is most sensitive to movements in market interest rates. Commercial and industrial loans totaled approximately $9.9 billion and represented 20.4 percent of the total loan portfolio at December 31, 2024. Commercial real estate and construction loans totaled $29.6 billion and represented 60.7 percent of the total loan portfolio at December 31, 2024. Average interest earning assets in Commercial Banking segment increased $384.3 million to $40.1 billion for the year ended December 31, 2024 as compared to the same period in 2023. This increase was due to our continued focus on organic loan growth largely within the commercial and industrial loan portfolio over the 12-month period ended December 31, 2024, partially offset by normal runoff scheduled maturities and sales of certain commercial real estate loans. For the year ended December 31, 2024, income before income taxes for Commercial Banking decreased $312.6 million to $475.2 million as compared to 2023. The decrease was mainly attributable to a $245.4 million increase in the provision for loan losses. The increase in the provision for loan losses was mainly due to higher than expected loan charge-offs, increased quantitative reserves allocated to commercial real estate loans and the reserve build resulting from commercial and industrial loan growth in 2024. See details in the “Allowance for Credit Losses for Loans” section of this MD&A. Net interest income decreased $49.1 million in 2024 as compared to 2023 mainly due to the higher cost of funding, which outpaced the yield on the loan portfolio. Non-interest income decreased $15.9 million in 2024 as compared to 2023 primarily driven by a $15.1 million decrease in swap fees generated in 2024 due to a decline in the volume of interest rate swap transactions executed for commercial loan customers. See further details in the "Non-Interest Income" section of this MD&A. The net interest margin for this segment decreased 16 basis points to 3.45 percent for the year ended December 31, 2024 as compared to the same period in 2023 due to a 41 basis point increase in the cost of our funding sources, partially offset by a 25 basis point increase in the yield on average loans. Treasury and Corporate Other. Treasury and Corporate Other largely consists of the Treasury managed HTM debt securities and AFS debt securities portfolios mainly utilized for the liquidity management needs of our lending segments and income and expense items resulting from support functions not directly attributable to a specific segment. Interest income is generated through investments in various types of securities (mainly comprised of fixed rate securities) and interest-bearing deposits with other banks (primarily the Federal Reserve Bank of New York). Expenses related to the branch network, all other components of retail banking, along with the back office departments of the Bank are allocated from Treasury and Corporate Other to operating segments. Other non-interest income items and general expenses are allocated from Treasury and Corporate Other to each operating segment utilizing a methodology that involves an allocation of operating and funding costs based on each segment's respective mix of average interest earning assets outstanding for the period, number of deposits, or direct allocations to the segments based on the nature of income and expense. U nallocated items included in Treasury and Corporate Other mainly consist of net gains and losses on AFS and HTM securities transactions, amortization of tax credit investments, as well as other non-core items, including merger, restructuring and FDIC special assessment charges and income from litigation settlements. Treasury and Corporate Other's average interest earning assets increased $138.7 million to $7.3 billion for the year ended December 31, 2024 as compared to 2023 primarily due to higher average AFS investment securities balances driven by additional purchases of residential mortgage-backed securities during 2024. The increase in average investment securities was partially offset by a $568.9 million decline in average interest bearing cash held overnight, as our excess liquidity returned to more normalized levels in 2024 after being prudently elevated by management during a portion of 2023 in response to the uncertain operating environment caused by a few large bank failures. For the year ended December 31, 2024, net loss before taxes in this segment totaled $84.5 million for the year ended December 31, 2024 compared to $147.5 million for 2023. The $63.0 million decrease in pre-tax l oss was largely driven by 61 2024 Form 10-K decreases in n on-interest expense and provision for credit losses, partially offset by lower non-interest income. Non-interest expense decreased $75.8 million to $159.5 million for the year ended December 31, 2024 as compared to 2023 largely due to: (i) a $41.5 million decrease in the FDIC insurance special assessment allocated to Treasury and Other, (ii) a $10 million decrease in t echnology, furniture and equipment expense related to the termination of certain technology contracts during 2023, and (iii) a decrease in salaries and employee benefits expense mainly caused by certain 2023 merger expenses related to the acquisition of Bank Leumi USA. Non-interest income decreased $15.3 million for the year ended December 31, 2024 as compared to 2023 mainly due to an aggregate realized net loss of $13.7 million on the sales of commercial real estate loans during 2024. See more details in the "Non-Interest Income" and "Non-Interest Expense" sections of this MD&A. The provision for credit losses decreased $5.1 million in 2024 mainly due to a $5 million charge-off in 2023 related to a corporate bond issued by one failed bank within our AFS debt securities portfolio. Treasury and Corporate Other's net interest margin decreased 5 basis points to 0.86 percent for the year ended December 31, 2024 as compared to the same period in 2023 due to a 41 basis point increase in cost of our funding source, largely offset by a 36 basis point increase in the yield on average investments. The increased yield on average investments as compared to 2023 was largely driven by new higher yielding investments. ASSET/LIABILITY MANAGEMENT Interest Rate Sensitivity Our success is largely dependent upon our ability to manage interest rate risk. Interest rate risk can be defined as the exposure of our interest rate sensitive assets and liabilities to the movement in interest rates. Our Asset/Liability Management Committee is responsible for managing such risks and establishing policies that monitor and coordinate our sources and uses of funds. Asset/Liability management is a continuous process due to the constant change in interest rate risk factors. In assessing the appropriate interest rate risk levels for us, management weighs the potential benefit of each risk management activity within the desired parameters of liquidity, capital levels and management’s tolerance for exposure to income fluctuations. Many of the actions undertaken by management utilize fair value analysis and attempt to achieve consistent accounting and economic benefits for financial assets and their related funding sources. We have predominantly focused on managing our interest rate risk by attempting to match the inherent risk and cash flows of financial assets and liabilities. Specifically, management employs multiple risk management activities, such as optimizing the level of new residential mortgage originations retained in our mortgage portfolio through increasing or decreasing loan sales in the secondary market, product pricing levels, the desired maturity levels for new originations, the composition levels of both our interest earning assets and interest bearing liabilities, as well as several other risk management activities. We use a simulation model to analyze net interest income sensitivity to movements in interest rates. The simulation model projects net interest income based on various interest rate scenarios over a 12-month period. The model is based on the actual maturity and re-pricing characteristics of rate sensitive assets and liabilities. The model incorporates certain assumptions which management believes to be reasonable regarding the impact of changing interest rates, non-maturity deposit betas, and the prepayment assumptions of certain assets and liabilities as of December 31, 2024. The model assumes immediate changes in interest rates without any proactive change in the composition or size of the balance sheet, or other future actions that management might undertake to mitigate this risk. In the model, the forecasted shape of the yield curve remains static as of December 31, 2024. The impact of interest rate derivatives, such as interest rate swaps, is also included in the model. Our simulation model is based on market interest rates and prepayment speeds prevalent in the market as of December 31, 2024. Although the size of Valley’s balance sheet is forecasted to remain static as of December 31, 2024, in our model, the composition is adjusted to reflect new interest earning assets and funding originations coupled with rate spreads utilizing our actual originations during the fourth quarter 2024. The model utilizes an immediate parallel shift in market interest rates at December 31, 2024. The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the table below, due to the frequency and timing of changes in interest rates and changes in spreads between maturity and re-pricing categories. Overall, our net interest income is affected by changes in interest rates and cash flows from our loan and investment portfolios. We actively manage these cash flows in conjunction with our liability mix, duration and interest rates to optimize the net interest income, while structuring the balance sheet in response to actual or potential changes in interest rates. Additionally, our net interest income is impacted by the level of competition within our marketplace. Competition can negatively impact the level of interest rates attainable on loans and increase the cost of deposits, which may result in downward pressure on our net interest margin in future periods. Other factors, including, but not limited to, the slope of the yield curve and projected cash flows will impact our net interest income results and may increase or decrease the level of asset sensitivity of our balance sheet. 2024 Form 10-K 62 Convexity is a measure of how the duration of a financial instrument changes as market interest rates change. Potential movements in the convexity of bonds held in our investment portfolio, as well as the duration of the loan portfolio may have a positive or negative impact on our net interest income in varying interest rate environments. As a result, the increase or decrease in forecasted net interest income may not have a linear relationship to the results reflected in the table below. Management cannot provide any assurance about the actual effect of changes in interest rates on our net interest income. The following table reflects management’s expectations of the change in our net interest income over the next 12-month period considering the aforementioned assumptions. While an instantaneous and severe shift in interest rates was used in this simulation model, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest impact than shown in the table below. Estimated Change in Future Net Interest Income Changes in Interest Rates Dollar Change Percentage Change (in basis points) ($ in thousands) +300 $ 155,505 8.48 % +200 105,300 5.75 +100 53,232 2.90 - 100 (59,207) (3.23) - 200 (120,217) (6.56) - 300 (180,067) (9.82) As noted in the table above, a 100 basis point immediate decrease in interest rates combined with a static balance sheet where the size, mix, and proportions of assets and liabilities remain unchanged is projected to decrease net interest income over the next 12-month period by 3.23 percent. Management believes the interest rate sensitivity of our balance sheet remains within an expected tolerance range at December 31, 2024 . How ever, the level of net interest income sensitivity may increase or decrease in the future as a result of several factors, including potential changes in our balance sheet strategies, the slope of the yield curve and projected cash flows. The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at December 31, 2024. The expected cash flows are categorized based on each financial instrument’s anticipated maturity or interest rate reset date in each of the future periods presented. INTEREST RATE SENSITIVITY ANALYSIS 2025 2026 2027 2028 2029 Thereafter Total Balance ($ in thousands) Interest sensitive assets: Available for sale debt securities $ 540,303 $ 302,276 $ 474,316 $ 246,545 $ 244,718 $ 1,561,566 $ 3,369,724 Held to maturity debt securities 335,887 280,231 207,244 205,392 181,998 2,321,468 3,532,220 Loans and loans held for sale 15,423,061 7,768,632 5,706,127 3,829,515 3,366,178 12,731,879 48,825,392 Interest bearing deposits with banks 1,478,713 — — — — — 1,478,713 Total interest sensitive assets $ 17,777,964 $ 8,351,139 $ 6,387,687 $ 4,281,452 $ 3,792,894 $ 16,614,913 $ 57,206,049 Interest sensitive liabilities: Deposits: Savings, NOW and money market $ 26,304,639 $ — $ — $ — $ — $ — $ 26,304,639 Time 9,240,979 1,781,725 1,257,252 22,548 28,710 11,330 12,342,544 Short-term borrowings 72,718 — — — — — 72,718 Long-term borrowings 373,000 1,528,604 — 822,551 — 450,000 3,174,155 Junior subordinated debentures — — — — — 57,455 57,455 Total interest sensitive liabilities $ 35,991,336 $ 3,310,329 $ 1,257,252 $ 845,099 $ 28,710 $ 518,785 $ 41,951,511 Interest sensitivity gap $ (18,213,372) $ 5,040,810 $ 5,130,435 $ 3,436,353 $ 3,764,184 $ 16,096,128 $ 15,254,538 Ratio of interest sensitive assets to interest sensitive liabilities 0.49:1 2.52:1 5.08:1 5.07:1 132.11:1 32.03:1 1.36:1 The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2024 based on the contractual maturities, adjusted for anticipated prepayments of principal and scheduled rate adjustments. The 63 2024 Form 10-K prepayment experience reflected herein is based on historical experience combined with market consensus expectations derived from independent external sources. The actual repayments of these instruments could vary substantially if future prepayments differ from historical experience or current market expectations. While all non-maturity deposit liabilities are reflected in the year 2025 column in the table above, management controls the re-pricing of the vast majority of the interest-bearing instruments within these liabilities. The total gap re-pricing within one year as of December 31, 2024 wa s a negative $18.2 billion , representing a ratio of interest sensitive assets to interest sensitive liabilities of 0.49:1. The total gap re-pricing position, as reported in the table above, reflects the projected interest rate sensitivity of our principal cash flows based on market conditions as of December 31, 2024. As the market level of interest rates and associated prepayment speeds move, the total gap re-pricing position will change accordingly, but not likely in a linear relationship. Management does not view our one-year gap position as of December 31, 2024 as presenting an unusually high risk potential, although no assurances can be given that we are not at risk from interest rate increases or decreases or liquidity and cash requirements (discussed in the section below). Liquidity and Cash Requirements Bank Liquidity. Liquidity measures Valley’s ability to satisfy its current and future cash flow needs. Our objective is to have liquidity available to fulfill loan demands, repay deposits and other liabilities, and execute balance sheet strategies in all market conditions while adhering to internal controls and income targets. Valley’s liquidity program is managed by the Treasury Department and routinely monitored by the Asset and Liability Management Committee and Board Risk Committee. Among other actions, the Treasury Department actively monitors Valley's current liquidity profile, sources and stability of funding, availability of assets for pledging or sale, opportunities to gather additional funds, and anticipated future funding needs, including the level of unfunded commitments. The Bank adheres to certain internal liquidity measures including ratios of loans to deposits below 110 percent and wholesale funding to total funding below 25 percent, as summarized in the table below. Management maintains flexibility to temporarily exceed these internal limits in certain operating environments, but also strives to outperform these limits when possible. The Bank was in compliance with the foregoing policies at December 31, 2024. The following table presents Valley's loans to deposits and wholesale funding to total funding ratios at December 31, 2024 and 2023: 2024 2023 Loans to deposits 97.5 % 102.0 % Wholesale funding to total funding 18.7 19.5 At December 31, 2024, the Bank had various contractual obligations totaling $16.2 billion and $9.8 billion of maturing liabilities due in 12 months or less and greater than 1 year included in the table below. The following table summarizes maturities of contractual obligations of the Bank at December 31, 2024: One Year or Less One to Three Years Three to Five Years Over Five Years Total (in thousands) Time deposits $ 9,240,979 $ 3,038,977 $ 51,258 $ 11,330 $ 12,342,544 Short-term borrowings 72,718 — — — 72,718 Long-term borrowings 373,000 1,528,604 840,000 450,000 3,191,604 Junior subordinated debentures issued to capital trusts — — — 60,827 60,827 Lease obligations 52,066 99,305 91,351 145,581 388,303 Capital expenditures 21,134 — — — 21,134 Other purchase obligations 51,876 38,487 22,452 337 113,152 Total $ 9,811,773 $ 4,705,373 $ 1,005,061 $ 668,075 $ 16,190,282 In the ordinary course of operations, the Bank enters into various financial obligations, including contractual obligations that may require future cash payments. As a financial services provider, we routinely enter into commitments to extend credit, including loan commitments, standby and commercial letters of credit. Such commitments are subject to the same credit policies and approval process accorded to loans made by the Bank. We enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of 2024 Form 10-K 64 future changes in interest rates on the Bank's commitments to fund the loans, as well as on its portfolio of mortgage loans held for sale. Commitments to extend credit and standby letters of credit are subject to change since many of these commitments are expected to expire unused or only partially used based upon our historical experience; as such, the total amounts of these commitments do not necessarily reflect future cas h requirements. At December 31, 2024, our off-balance sheet commitments totaled $13.1 billion, inclusive of commitments of $7.8 billion with a remaining term of 12 months or less. See Note 15 to the consolidated financial statements for further details. Management believes the Bank has the ability to generate and obtain adequate amounts of cash to meet its short-term and long-term obligations as they come due by utilizing various cash resources described below. On the asset side of the balance sheet, the Bank has numerous sources of liquid funds in the form of cash and due from banks, interest bearing deposits with banks (including the Federal Reserve Bank of New York) and other sources. The following table summarizes Valley's sources of liquid assets at December 31, 2024 and 2023 : 2024 2023 (in thousands) Cash and due from banks $ 411,412 $ 284,090 Interest bearing deposits with banks 1,478,713 607,135 Trading debt securities — 3,973 Held to maturity debt securities (1) 220,056 194,094 Available for sale debt securities (2) 3,369,724 1,296,576 Loans held for sale 25,681 30,640 Total liquid assets $ 5,505,586 $ 2,416,508 (1) Represents securities that are maturing within 90 days or would otherwise qualify as maturities if sold (i.e., 85 percent of original cost basis has been repaid) within the held to maturity debt security portfolio. (2) Includes a pproximately $1.8 billion and $840.3 million of various investment securities that were pledged to counterparties to support our earning asset funding strategies at December 31, 2024 and 2023, respectively. Total liquid assets represented 9.6 percent and 4.3 percent of interest earning assets at December 31, 2024 and 2023, respectively. While not part of our liquidity management strategy, we executed certain asset sales (largely under an initiative to reduce our commercial real estate loan concentration risk and the sale of a small specialized commercial lending business) and the issuance of common and preferred stock in registered public offerings with the primary goal to bolster our regulatory capital. These transactions benefited the Bank's liquidity and cash position during the year ended December 31, 2024, including the following: • net cash proceeds of $1.2 billion related to targeted sales of performing commercial real estate and construction loans to reduce our CRE loan concentration during 2024; • additional capital contributions totaling $545 million to the Bank from Valley during the second half of 2024 related to the combined net cash proceeds of $593.6 million from Valley's issuance of common stock and Series C preferred stock in registered public offerings; • net cash proceeds of $98.1 million from the sale of our commercial premium finance lending division, mostly consisting of commercial and industrial loans, in the first quarter 2024; and • Valley also sold a relatively modest amount of performing residential mortgage loans from the held for investment loan portfolio during the fourth quarter 2024. While not isolated from the mix of our other sources of funds, these discrete transactions contributed to funding primarily used to grow our available for sale debt securities portfolio during the year ended December 31, 2024 and repay higher cost maturing indirect customer CDs during the fourth quarter 2024. At December 31, 2024, the level of cash liquidity on the balance sheet was elevated as compared to one year ago (as noted in the table above) largely due to the timing of certain transactions highlighted above. We anticipate that our cash balances will decline to more normalized levels during the first quarter 2025, as part of our liquidity management, including the level of our wholesale and indirect customer deposit funding sources, and our expected loan growth in 2025 noted elsewhere in this MD&A. 65 2024 Form 10-K Other sources of funds on the asset side are derived from scheduled loan payments of principal and interest, as well as prepayments received. At December 31, 2024 , estimated cash inflows from total loans are projecte d to be approximately $15.2 billion over the next 12-month period. As a contingency plan for any liquidity constraints, liquidity could also be derived from the sale of conforming residential mortgages from our loan portfolio or alleviated from the temporary curtailment of lending activities. We anticipate the receipt of approximately $876.0 million in principal payments from securities in the total investment portfolio at December 31, 2024 over the next 12-month period due to normally scheduled principal repayments and expected prepayments of certain securities, primarily residential mortgage-backed securities. On the liability side of the balance sheet, we utilize multiple sources of funds to meet liquidity needs, including commercial and consumer deposits, fully FDIC-insured indirect customer deposits, collateralized municipal deposits, and short-term and long-term borrowings. Our core deposit base, which generally excludes all fully insured indirect customer deposits, as well as retail certificates of deposit over $250 thousand, represents the largest of these source s. Average core deposits totaled approximately $39.1 billion and $37.6 billion for the years ended December 31, 2024 and 2023, respectively, representing 68.3 percent and 66.6 percent of average interest earning assets for the respective periods. The level of interest bearing deposits is affected by interest rates offered, which is often influenced by our need for funds, rates prevailing in the capital markets, competition, and the need to manage interest rate risk sensitivity. In addition to customer deposits, the Bank has access to readily available borrowing sources to supplement its current and projected funding needs. The following table presents short-term borrowings outstanding at December 31, 2024 and 2023: 2024 2023 (in thousands) FHLB advances $ — $ 850,000 Securities sold under agreements to repurchase 72,718 67,834 Total short-term borrowings $ 72,718 $ 917,834 The following table summarizes the Bank's estimated unused available non-deposit borrowing capacities at December 31, 2024 and 2023: 2024 2023 (in thousands) FHLB borrowing capacity* $ 5,853,596 $ 13,604,000 Unused FRB discount window* 11,509,000 8,530,000 Unused federal funds lines available from commercial banks 2,140,000 2,140,000 Unencumbered investment securities 3,415,834 1,129,000 Total $ 22,918,430 $ 25,403,000 * Used and unused FHLB and FRB borrowings are collateralized by certain pledged securities, including but not limited to U.S. government and agency mortgage-backed securities and blanket qualifying first lien on certain real estate and residential mortgage secured loans. Corporation Liquidity. Valley’s recurring cash requirements primarily consist of dividends to preferred and common shareholders and interest expense on subordinated notes and junior subordinated debentures issued to capital trusts. As part of our ongoing asset/liability management strategies, Valley could also use cash to repurchase shares of its outstanding common stock under its share repurchase program or redeem its callable junior subordinated debentures and subordinated notes. Valley's cash needs are routinely satisfied by dividends collected from the Bank. Projected cash flows from the Bank are expected to be adequate to pay preferred and common dividends, if declared, and interest expense payable to subordinated note holders and capital trusts, given the current capital levels and current profitable operations of the Bank. In addition to dividends received from the Bank, Valley can satisfy its cash requirements by utilizing its own cash and potential new funds borrowed from outside sources or capital issuances, such as the undistributed net proceeds of our common stock and Series C preferred stock offerings in November and August 2024, respectively (see Note 18 to the consolidated financial statements for more details). Valley also has the right to defer interest payments on the junior subordinated debentures, and therefore distributions on its trust preferred securities for consecutive quarterly periods of up to five years, but not beyond the stated maturity dates, and subject to other conditions. 2024 Form 10-K 66 Investment Securities Portfolio As of December 31, 2024, our investment securities portfolio consisted of equity and debt securities, with the debt securities classified as either trading, AFS or HTM. The AFS and HTM debt securities portfolios, which comprise the majority of the securities we own, include U.S. Treasury securities, U.S. government agency securities, tax-exempt and taxable issuances of states and political subdivisions, residential mortgage-backed securities, single-issuer trust preferred securities principally issued by bank holding companies, and high quality corporate bonds. Among other securities, our AFS debt securities include securities such as bank issued and other corporate bonds, as well as municipal special revenue bonds, which may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential negative effect on the future performance of the security issuers. The equity securities consist of two publicly traded mutual funds, CRA investments and several other equity investments that we have made in companies that develop new financial technologies and in partnerships that invest in such companies. Our CRA and other equity investments are a mix of both publicly traded entities and privately held entities. We had no trading securities at December 31, 2024. The primary purpose of our AFS and HTM investment portfolios is to provide a source of earnings and liquidity, as well as serve as a tool for managing interest rate risk. The decision to purchase or sell securities is based upon the current assessment of long and short-term economic and financial conditions, including the interest rate environment and other statement of financial condition components. See additional information under “Interest Rate Sensitivity,” “Liquidity and Cash Requirements” and “Capital Adequacy” sections elsewhere in this MD&A. We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which we are exposed. These evaluations may cause us to change the level of funds we deploy into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments primarily made into the AFS and HTM debt securities portfolios. 67 2024 Form 10-K Investment securities at December 31, 2024 and 2023 were as follows: 2024 2023 (in thousands) Equity securities $ 71,513 $ 64,464 Trading debt securities — 3,973 Available for sale debt securities U.S. Treasury securities 291,549 288,157 U.S. government agency securities 22,543 23,702 Obligations of states and political subdivisions: Obligations of states and state agencies 45,529 47,695 Municipal bonds 146,980 143,995 Total obligations of states and political subdivisions 192,509 191,690 Residential mortgage-backed securities 2,681,076 626,572 Corporate and other debt securities 182,047 166,455 Total available for sale debt securities 3,369,724 1,296,576 Total investment securities (fair value) $ 3,441,237 $ 1,365,013 Held to maturity debt securities U.S. Treasury securities $ 25,480 $ 26,232 U.S. government agency securities 301,315 305,996 Obligations of states and political subdivisions: Obligations of states and state agencies 68,025 88,556 Municipal bonds 304,464 316,914 Total obligations of states and political subdivisions 372,489 405,470 Residential mortgage-backed securities 2,710,642 2,885,303 Trust preferred securities 36,081 37,062 Corporate and other debt securities 86,213 80,350 Total investment securities held to maturity (amortized cost) $ 3,532,220 $ 3,740,413 Allowance for credit losses 647 1,205 Total investment securities held to maturity, net of allowance for credit losses 3,531,573 3,739,208 Total investment securities $ 6,972,810 $ 5,104,221 During the year ended 2024, we purchased approximately $2.5 billion of residential mortgage backed securities mainly issued by Ginnie Mae within the AFS portfolio. The purchases were largely to utilize a portion of our excess cash liquidity partly generated from loan sales, higher average deposits, and issuances of both preferred and common stock, as well as our normal reinvest continued repayments and prepayments within both the available for sale and held to maturity portfolios. Approximately 54.5 percent, 30.0 percent, and 15.5 percent of our total residential mortgage-backed securities portfolio were issued and guaranteed by Ginnie Mae, Fannie Mae, and Freddie Mac, respectively, at December 31, 2024. 2024 Form 10-K 68 The following table presents the weighted-average yields, calculated on a yield-to-maturity basis, on the remaining contractual maturities (unadjusted for expected prepayments) of HTM debt securities at December 31, 2024: 0-1 year 1-5 years 5-10 years Over 10 years Total Held to maturity debt securities U.S. Treasury securities 3.71 % — % — % — % 3.71 % U.S. government agency securities — — 4.45 3.34 3.57 Obligations of states and political subdivisions: (1) Obligations of states and state agencies — — 4.17 4.53 4.46 Municipal bonds 3.81 3.86 3.74 4.31 4.14 Total obligations of states and political subdivisions 3.81 3.86 3.81 4.36 4.20 Residential mortgage-backed securities (2) 2.92 4.78 3.49 2.86 2.88 Trust preferred securities — — 6.75 7.45 7.13 Corporate and other debt securities 4.20 3.69 4.94 — 4.08 Total 3.81 % 3.97 % 4.30 % 3.05 % 3.16 % (1) Average yields on obligations of states and political subdivisions are generally tax-exempt and calculated on a tax-equivalent basis using a statutory federal income tax rate of 21 percent. (2) Residential mortgage-backed securities yields are shown using stated contractual maturity dates. The residential mortgage-backed securities portfolio is a significant source of our liquidity through the monthly cash flow of principal and interest. Mortgage-backed securities, like all securities, are sensitive to changes in the interest rate environment, increasing and decreasing in value as interest rates fall and rise. As interest rates fall, the potential increase in prepayments can reduce the yield on the mortgage-backed securities portfolio and reinvestment of the proceeds will be at lower yields. Conversely, rising interest rates may reduce cash flows from prepayments and extend anticipated duration of these assets. We monitor the changes in interest rates, cash flows and duration, in accordance with our investment policies. Management seeks out investment securities with an attractive spread over our cost of funds. Allowance for Credit Losses and Impairment Analysis Available for sale debt securities. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes. We have evalua ted all AFS debt securities that are in an unrealized loss position as of December 31, 2024 and December 31, 2023 and determined that the declines in fair value are mainly attributable to changes in market volatility, due to factors such as interest rates and spread factors, but not attributable to credit quality or other factors. During the first quarter 2023, Valley recognized a credit related impairment of one corporate bond issued by Signature Bank resulting in both a provision for credit losses and full charge-off of the security totaling $5.0 million b ased on a comparison of the present value of expected cash flows to the amortized cost. The bond was subsequently sold, and the sale resulted in a $869 thousand gain during the fourth quarter 2023. There was no other impairment recognized within the AFS debt securities portfolio during the years ended December 31, 2024, 2023 and 2022. Valley does not intend to sell any of its AFS debt securities in an unrealized loss position prior to recovery of our amortized cost basis, and it is more likely than not that Valley will not be required to sell any of its securities prior to recovery of our amortized cost basis. None of the AFS debt securities were past due as of December 31, 2024 and there was no allowance for credit losses for AFS debt securities at December 31, 2024 and 2023 . Held to maturity debt securities. As discussed further in Note 4 to the consolidated financial statements, Valley estimates the expected credit losses on HTM debt securities that have loss expectations using a discounted cash flow model developed by a third party. Valley has a zero-loss expectation for certain securities within the HTM portfolio, including U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds. To measure the expected credit losses on HTM debt securities that have loss 69 2024 Form 10-K expectations, we utilize a third party discounted cash flow model. The assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. HTM debt securities were carried net of an allowance for credit losses totaling $647 thousand and $1.2 million at December 31, 2024 and 2023, respectively. There were no net charge-offs of HTM debt securities during the years ended December 31, 2024, 2023 and 2022. Investment grades . The investment grades in the table below reflect the most current independent analysis performed by third parties of each security as of the date presented and not necessarily the investment grades at the date of our purchase of the securities. For many securities, the rating agencies may not have performed an independent analysis of the tranches owned by us, but rather an analysis of the entire investment pool. For this and other reasons, we believe the assigned investment grades may not accurately reflect the actual credit quality of each security and should not be viewed in isolation as a measure of the quality of our investment portfolio. The following table presents available for sale and held to maturity debt investment securities by investment grades at December 31, 2024. 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (in thousands) Available for sale investment grades:* AAA/AA/A Rated $ 3,331,220 $ 3,816 $ (173,870) $ 3,161,166 BBB Rated 91,157 — (2,894) 88,263 Not rated 129,896 247 (9,848) 120,295 Total $ 3,552,273 $ 4,063 $ (186,612) $ 3,369,724 Held to maturity investment grades:* AAA/AA/A Rated $ 3,368,128 $ 2,097 $ (493,482) $ 2,876,743 BBB Rated 6,000 — (186) 5,814 Not rated 158,092 10 (12,375) 145,727 Total $ 3,532,220 $ 2,107 $ (506,043) $ 3,028,284 * Rated using external rating agencies. Ratings categories include entire range. For example, “A Rated” includes A+, A, and A-. Split rated securities with two ratings are categorized at the higher of the rating levels. The unrealized losses in the AAA/AA/A rated categories of both the AFS and HTM debt securities portfolios (in the above table) were largely related to residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac and continue to be driven by the higher market interest rate environment. The investment securities AFS and HTM debt securities included $129.9 million and $158.1 million, respectively, of investments not rated by the rating agencies with aggregate unrealized losses of $9.8 million and $12.4 million, respectively, at December 31, 2024. The unrealized losses within non-rated AFS debt securities mostly related to several large corporate bonds negatively impacted by higher interest rates during 2024, and not changes in underlying credit. The unrealized losses within non-rated HTM debt securities mainly related to four single-issuer bank trust preferred issuances with a combined amortized cost of $36.1 million with $6.9 million gross unrealized losses and several corporate debt securities that were negatively impacted by rising interest rates, and not changes in their underlying credit. See Note 4 to the consolidated financial statements for additional information regarding our investment securities portfolio. 2024 Form 10-K 70 Loan Portfolio The following table reflects the composition of the loan portfolio at December 31, 2024 and 2023: 2024 2023 ($ in thousands) Commercial and industrial $ 9,931,400 $ 9,230,543 Commercial real estate: Non-owner occupied (1) 12,344,355 15,078,464 Multifamily (2) 8,299,250 8,860,219 Owner occupied (1) 5,886,620 4,304,556 Total 26,530,225 28,243,239 Construction 3,114,733 3,726,808 Total commercial real estate 29,644,958 31,970,047 Residential mortgage 5,632,516 5,569,010 Consumer: Home equity 604,433 559,152 Automobile 1,901,065 1,620,389 Other consumer 1,085,339 1,261,154 Total consumer loans 3,590,837 3,440,695 Total loans (3) $ 48,799,711 $ 50,210,295 As a percent of total loans: Commercial and industrial 20.4 % 18.4 % Commercial real estate: Non-owner occupied 25.2 30.0 Multifamily 17.0 17.7 Owner occupied 12.1 8.6 Construction 6.4 7.4 Total commercial real estate 60.7 63.7 Residential mortgage 11.5 11.1 Consumer loans 7.4 6.8 Total 100.0 % 100.0 % (1) During the second quarter 2024, approximately $1.1 billion of non-owner occupied loans reclassified to owner occupied loans based upon Valley's re-assessment of such loans under the applicable bank regulatory guidance. (2) Includes loans collateralized by properties that are greater than 50 percent rent regulated totaling approximately $553 million and $531 million at December 31, 2024 and 2023, respectively. (3) Includes net unearned discount and deferred loan fees of $45.3 million and $85.4 million at December 31, 2024 and 2023, respectively. Total loans decreased by $1.4 billion, or 2.8 percent to $48.8 billion at December 31, 2024 from December 31, 2023 mainly as a result of bulk sales of commercial real estate and construction loans completed in the first half of 2024 and the fourth quarter 2024 and commercial real estate loans repayment activity in 2024, which outpaced new and refinanced loan volumes due to the planned lower production within the non-owner occupied and multifamily loan categories. Loans held for sale are presented separately from total loans on the consolidated statements of financial condition totaled $25.7 million and $30.6 million at December 31, 2024 and 2023, respectively. During the year ended December 31, 2024, we transferred and subsequently sold performing commercial real estate and construction loans from the held for investment loan portfolio to loans held for sale. See Note 3 for additional information regarding loans held for sale. Commercial and industrial loans increased $700.9 million to $9.9 billion at December 31, 2024 from December 31, 2023. The organic growth during 2024 was largely due to our continued multi-year strategic initiative to expand new loan production from diverse relationship-driven middle market businesses in our primary markets, as well as nationwide businesses. The increase with this category was partially offset by the sale of $93.6 million of loans associated with the sale of our premium finance lending division in the first quarter 2024, and the subsequent run-off of the vast majority of the retained premium finance loan portfolio. See Note 5 for additional information regarding this transaction. 71 2024 Form 10-K Commercial real estate loans (excluding construction loans) decreased $1.7 billion to $26.5 billion at December 31, 2024 from December 31, 2023 primarily due to our strategic efforts to reduce our CRE loan concentration. As part of these efforts, we sold $64.5 million of multifamily loans and $89.3 million of non-owner occupied loans through loan participation agreements at par value with a related party, Bank Leumi Le-Israel B.M. (BLITA), during the first quarter 2024. During the fourth quarter 2024, we sold $257.5 million of multifamily loans and $662.8 million of non-owner occupied loans to an unrelated party. In addition, we continued to be highly selective with new loan originations, which were outpaced by runoff from normal repayment activity within the non-owner occupied and multifamily loan categories. At December 31, 2024, our CRE loan concentration ratio declined to 362 percent as compared to 421 percent and 474 percent at September 30, 2024 and December 31, 2023, respectively. During the second quarter 2024, we reassessed the loan classification of skilled nursing facility loans based on the qualifying criteria for owner occupied loans outlined in the applicable bank regulatory reporting guidance. As a result, we reclassified loans totaling approximately $1.1 billion from non-owner occupied to owner occupied loans during the second quarter 2024. Overall, commercial real estate loans are well-diversified across our footprint areas in Florida, Alabama, New Jersey, New York and Manhattan with a combined weighted average loan to va lue ratio of 58 percent and debt service coverage ratio of 1.66 at December 31, 2024 as compared to 57 percent and debt service coverage ratio of 1.67 at December 31, 2023. Construction loans decreased $612.1 million to $3.1 billion at December 31, 2024 from December 31, 2023 mostly due to the migration of completed projects to both internal and external permanent financing (mostly owner occupied) and a low level of new advances on existing projects during 2024. We also sold approximately $79.7 million of construction loan participations at par value to BLITA during the first half of 2024, and $14.2 million of construction loans to an unrelated party during fourth quarter 2024. Residential mortgage loans totaled $5.6 billion at December 31, 2024 and increased $63.5 million from December 31, 2023 largely due to lower prepayment activity and continued retention of a higher percentage of new loan volumes for investment rather than for sale. During 2024, we retained approximately 67 percent of the total residential mortgages originations in our held for investment loan portfolio. In addition, d uring 2024, we purchased $41.3 million of 1-4 family residential mortgage loans from an unrelated third party lender for qualifying CRA purposes. Our new and refinanced residential mortgage loan originations totaled $611.7 million for the year ended December 31, 2024 as compared to $649.9 million in 2023. The volume of residential mortgage loan applications remained relatively low during 2024 largely due to the stubbornly high level of mortgage interest rates, as well as declines in new home purchase activity which may continue to challenge our ability to grow this loan category in 2025. Valley also sold $75.5 million of residential mortgage loans during the fourth quarter 2024. Consumer loans increased $150.1 million to $3.6 billion at December 31, 2024 from December 31, 2023 mainly due to increases in automobile and home equity loans, partially offset by lower other consumer loans. Automobile loans increased $280.7 million, or 17.3 percent to $1.9 billion at December 31, 2024 from December 31, 2023 mainly due to continued consumer demand generated by our indirect auto dealer network and low prepayment activity within the portfolio. Home equity loans increased $45.3 million to $604.4 million at December 31, 2024 from $559.2 million at December 31, 2023 largely due to moderate increases in pre-existing line utilization, while new home equity loan originations remain challenged due to the unfavorable high interest rate environment . Other consumer loans decreased $175.8 million to $1.1 billion at December 31, 2024 as compared to 2023 primarily due to the negative impact of high market interest rates on the demand and usage of collateralized personal lines of credit, however, the usage of collateralized personal lines of credit showed a slight increase during the fourth quarter 2024. A significant part of our lending is in northern and central New Jersey, New York City, Long Island and Florida. To mitigate our geographic risks, we make efforts to maintain a diversified portfolio as to type of borrower and loan to guard against a potential downward turn in any one economic sector. Looking forward to 2025, we continue to proactively diversify our loan portfolio by reducing new originations of certain types of commercial real estate lending, such as non-owner occupied and multifamily loans through highly selective new loan origination. We also intend to focus greater efforts on commercial and industrial loan products. For 2025, we expect an overall loan growth, net of continued runoff from scheduled maturities of commercial real estate non-owner occupied and multifamily loans, in the range of 3 to 5 percent based on total loans at December 31, 2024. However, there can be no assurance that we will achieve such levels given the potential for unforeseen changes in the market and other conditions detailed in our risk factors set forth under Item 1A. Risk Factors of this Report. 2024 Form 10-K 72 The following table presents the contractual maturity distribution of loans by category at December 31, 2024: 1 Year or Less 1 to 5 Years 5 to 15 Years Over 15 Years Total (in thousands) Commercial and industrial $ 2,208,501 $ 4,638,823 $ 2,793,268 $ 290,808 $ 9,931,400 Commercial real estate 3,117,541 10,527,207 10,348,661 2,536,816 26,530,225 Construction 1,270,952 1,212,507 403,598 227,676 3,114,733 Residential mortgage 16,893 229,038 435,125 4,951,460 5,632,516 Consumer 103,265 968,457 2,440,404 78,711 3,590,837 Total loans $ 6,717,152 $ 17,576,032 $ 16,421,056 $ 8,085,471 $ 48,799,711 We may renew loans at maturity when requested by a customer. In such instances, we generally conduct a review which includes an analysis of the borrower’s financial condition and, if applicable, a review of the adequacy of collateral via a new appraisal from an independent, bank approved, certified or licensed property appraiser or readily available market resources. A rollover of the loan at maturity may require a principal reduction or other modified terms. The following table presents the contractual maturities after one year for fixed and adjustable rate loans within each loan category at December 31, 2024: Loans Maturing After One Year Fixed Rate Adjustable Rate Total (in thousands) Commercial and industrial $ 2,847,150 $ 4,875,749 $ 7,722,899 Commercial real estate 12,359,346 11,053,338 23,412,684 Construction 274,189 1,569,592 1,843,781 Residential mortgage 4,372,803 1,242,820 5,615,623 Consumer 2,397,017 1,090,555 3,487,572 Total loans $ 22,250,505 $ 19,832,054 $ 42,082,559 Non-performing Assets NPAs include non-accrual loans, OREO, and other repossessed assets (which consist of automobiles and taxi medallions) at December 31, 2024. Loans are generally placed on non-accrual status when they become past due in excess of 90 days as to payment of principal or interest and/or the full and timely collection of principal and interest becomes uncertain. Exceptions to the non-accrual policy may be permitted if the loan is sufficiently collateralized and in the process of collection. OREO is acquired through foreclosure on loans secured by land or real estate. OREO and other repossessed assets are reported at lower of cost or fair value, less estimated cost to sell. Our NPAs increased $79.9 million, or 27.2 percent, to $373.3 million at December 31, 2024 as compared to December 31, 2023 mainly due to higher non-accrual commercial and industrial and commercial real estate loan balances. NPAs as a percentage of total loans and NPAs totaled 0.76 percent and 0.58 percent at December 31, 2024 and 2023, respectively, (as shown in the table below). While our total NPAs have increased from one year ago due, in part, to a few larger commercial loan relationships in our New York market, we believe our total NPAs have remained relatively low as a percentage of the total loan portfolio and NPAs, which is reflective of our consistent approach to the loan underwriting criteria for both Valley originated loans and loans purchased from third parties. For additional details, see the “Credit quality indicators” section in Note 5 to the consolidated financial statements. Our lending strategy is based on underwriting standards designed to maintain high credit quality, and we remain optimistic regarding the overall future performance of our loan portfolio. During the year ended December 31, 2024, the majority of our borrowers continued to demonstrate resilience despite the impact of higher borrowing costs, inflation, labor costs and other factors. We continue to proactively monitor our commercial loans for potential negative trends/borrower weakness due to the current operating environment and internally risk rate them accordingly. However, management cannot provide assurance that the non-performing assets will not increase from the levels reported at December 31, 2024 due to the aforementioned or other factors potentially impacting our lending customers. 73 2024 Form 10-K The following table sets forth by loan category, accruing past due and non-performing assets on the dates indicated in conjunction with our asset quality ratios at December 31, 2024 and 2023: 2024 2023 ($ in thousands) Accruing past due loans 30 to 59 days past due: Commercial and industrial $ 2,389 $ 9,307 Commercial real estate 20,902 3,008 Residential mortgage 21,295 26,345 Total consumer 12,552 20,554 Total 30 to 59 days past due 57,138 59,214 60 to 89 days past due: Commercial and industrial 1,007 5,095 Commercial real estate 24,903 1,257 Residential mortgage 5,773 8,200 Total consumer 4,484 4,715 Total 60 to 89 days past due 36,167 19,267 90 or more days past due: Commercial and industrial 1,307 5,579 Construction — 3,990 Residential mortgage 3,533 2,488 Total consumer 1,049 1,088 Total 90 or more days past due 5,889 13,145 Total accruing past due loans $ 99,194 $ 91,626 Non-accrual loans: Commercial and industrial $ 136,675 $ 99,912 Commercial real estate 157,231 99,739 Construction 24,591 60,851 Residential mortgage 36,786 26,986 Total consumer 4,215 4,383 Total non-accrual loans 359,498 291,871 Other real estate owned (OREO) 12,150 71 Other repossessed assets 1,681 1,444 Total non-performing assets (NPAs) $ 373,329 $ 293,386 Total non-accrual loans as a % of loans 0.74 % 0.58 % Total NPAs as a % of loans and NPAs 0.76 0.58 Total accruing past due and non-accrual loans as a % of loans 0.94 0.76 Allowance for loan losses as a % of non-accrual loans 155.45 152.83 Loans past due 30 to 59 days decreased $2.1 million to $57.1 million at December 31, 2024 as compared to December 31, 2023 due to declines in most loan categories, except for an increase in commercial real estate loans which was largely driven by a $15.1 million loan included in this early stage delinquency category at December 31, 2024. While this commercial real estate loan is internally classified as substandard, management believes it is well secured and in the process of collection. Loans past due 60 to 89 days increased $16.9 million to $36.2 million at December 31, 2024 as compared to December 31, 2023 due to higher commercial real estate loan delinquencies, partially offset by decreases in all other loan types within this delinquency category. Commercial real estate loan delinquencies included an $18.6 million matured performing loan in the process of its renewal. Loans 90 days or more past due and still accruing decreased $7.3 million to $5.9 million at December 31, 2024 as compared to December 31, 2023 largely due to the full repayment of a $4.0 million construction loan that was included in this 2024 Form 10-K 74 delinquency category at December 31, 2023, as well as a decline in commercial and industrial loan delinquencies within this category. All the loans past due 90 days or more and still accruing are considered to be well secured and in the process of collection. Non-accrual loans increased $67.6 million to $359.5 million at December 31, 2024 as compared to December 31, 2023. N on-accrual commercial and industrial loans increased $36.8 million at December 31, 2024 as compared to December 31, 2023 mainly due to a few additional large non-performing loan relationships, including one matured substandard loan totaling $19.6 million with specific reserves of $2.5 million within our allowance for loan losses at December 31, 2024. N on-accrual commercial real estate loans increased $57.5 million at December 31, 2024 as compared to December 31, 2023 driven by additional non-performing loan relationships, including two loan relationships totaling $38.3 million included in this category at December 31, 2024 . Non-accrual construction loans decreased $36.3 million to $24.6 million at December 31, 2024 compared to December 31, 2023 mainly due to full repayments and partial loan charge-offs totaling $23.8 million and $12.2 million, respectively, related to three loan relationships. Non-performing taxi medallion loans included in non-accrual commercial and industrial loans totaled $49.5 million at December 31, 2024 and had related reserves of $25.8 million, or 52.1 percent of such loans, within the allowance for loan losses as comp ared to $63.3 million of loans with related reserves of $37.7 million at December 31, 2023. During 2024, we closely monitored the performance of our taxi medallion loans (primarily collateralized by New York City medallions). Due to the challenging operating environment for ride services and uncertain borrower performance, all of the taxi medallion loans remain on non-accrual status at December 31, 2024. Further potential declines in the market valuation of taxi medallions and the c urrent operating environment mainly within New York City may negatively impact the performance of this portfolio. OREO totaled $12.2 million at December 31, 2024 as compared to $71 thousand at December 31, 2023. The December 31, 2024 balance is primarily comprised of two commercial real estate properties transferred to OREO during 2024. Sales of OREO properties and the related gains or losses were not material for the years ended December 31, 2024 and 2023. The foreclosed residential real estate properties included in OREO totaled $152 thousand and $71 thousand at December 31, 2024 and 2023, respectively. See Notes 1 and 3 to the consolidated financial statements for additional information regarding OREO. Although the timing of collection is uncertain, management believes that the majority of the non-accrual loans at December 31, 2024, are well secured and largely collectible, based in part on our quarterly review of collateral dependent loans and the valuation of the underlying collateral, if applicable. Any estimated shortfall in the net realizable value for collateral dependent loans is charged-off when a loan is 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectible. If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income would have amounted to approximately $32.5 million, $28.8 million and $21.7 million for the years ended December 31, 2024, 2023 and 2022, respectively; none of these amounts were included in interest income during these periods. Asset Concentration and Risk Elements Most of our lendin g is within our primary markets located in northern and central New Jersey, New York City , Long Island, Westchester County, New York and Florida, and, to a lesser extent, Alabama, California and Illinois . As part of our business strategy, we have provided commercial lending to new customers in a few targeted states beyond our geographic footprint. In addition to our primary markets, automobile loans are mostly originated in several other contiguous states. To mitigate our geographic risks, we make efforts to maintain a diversified portfolio as to type of borrower and loan to guard against a potential downward turn in any one economic sector. Due to the level of our underwriting standards applied to all loans, management believes the out of market loans generally present no more risk than those made within the market. However, each loan or group of loans made outside of our primary markets poses different geographic risks based upon the economy of that particular region. For our commercial loan portfolio, comprised of commercial and industrial loans, commercial real estate loans, and construction loans, a separate credit department is responsible for risk assessment and periodically evaluating overall creditworthiness of a borrower. Additionally, efforts are made to limit concentrations of credit to minimize the impact of a downturn in any one economic sector. We believe our loan portfolio is diversified as to type of borrower and loan. However, loans collateralized by either commercial or residential real estate represented approximately 73 percent of total loans at December 31, 2024. Most of the loans collateralized by real estate are in New Jersey, New York and Florida presenting a geographical credit risk if there was significant broad-based deterioration in economic conditions within these regions. See Item 1A. Risk Factors—“Risks Related to the Operating Environment.” Additionally, our commercial real estate portfolio includes credit risk exposures to loans collateralized by office buildings and multifamily properties in Manhattan and other markets. At December 31, 2024, total commercial real estate loans 75 2024 Form 10-K collateralized by office buildings were approxima tely $3.1 billion (including approximately $218.1 million located in Manhattan) of the total $26.5 billion portfolio. The majority of the office space loans are multi-tenant and dispersed geographically in Florida, Alabama, New Jersey and New York. Multifamily loans within the portfolio totaled $8.3 billion at December 31, 2024, and included $553 million of loans exposures to greater than 50 percent rent regulated buildings located mainly in Manhattan. We continue to closely monitor these loan types for elevated risks or weaknesses, and internally risk rate and reserve for them in our allowance for loan losses accordingly. Consumer loans are comprised of residential mortgage loans, home equity loans, automobile loans and other consumer loans. Residential mortgage loans are secured by 1-4 family properties mostly located in New Jersey, New York and Florida. We do provide mortgage loans secured by homes beyond this primary geographic area; however, lending outside this primary area has generally consisted of loans made in support of existing customer relationships, as well as targeted purchases of certain loans guaranteed by third parties. Our mortgage loan originations are comprised of both jumbo (i.e., loans with balances above conventional conforming loan limits) and conventional loans based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. The weighted average loan-to-value ratio of all residential mortgage originations in 2024 was 73.5 percent while FICO ® (independent objective criteria measuring the creditworthiness of a borrower) scores averaged 758. Home equity and automobile loans are secured loans and are made based on an evaluation of the collateral and the borrower’s creditworthiness. Management realizes that some degree of risk must be expected in the normal course of lending activities. Allowances are maintained to absorb such lifetime expected credit losses inherent in the portfolio. See the “Loan Portfolio Risk Elements and Credit Risk Management” section in Note 5 to the consolidated financial statements for additional information. Allowance for Credit Losses The ACL for loans includes the allowance for loan losses and the reserve for unfunded credit commitments. Under CECL, our methodology to establish the allowance for loan losses has two basic components: (i) a collective reserve component for estimated expected credit losses for pools of loans that share common risk characteristics and (ii) an individually evaluated reserve component for loans that do not share risk characteristics, consisting of collateral dependent loans. Valley also maintains a separate allowance for unfunded credit commitments mainly consisting of undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of credit. Valley estimates the collective ACL using a current expected credit losses methodology which is based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the loan balances. In estimating the component of the allowance on a collective basis, we use a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by using probability of default and loss given default metrics. The probability of default and loss given default metrics are adjusted using a scaling factor to incorporate a full economic cycle. The expected life of loan loss percentages are determined by analyzing the migration of loans within the commercial and industrial loan categories from performing to loss by credit quality rating or delinquency categories using historical life-of-loan data for each loan portfolio pool, and by assessing the severity of loss based on the aggregate net lifetime losses incurred. The expected credit losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) the impact of the reasonable and supportable economic forecast, relative probability weightings and economic variables under each scenario and reversion period, (ii) other asset specific risks to the extent that they do not exist in the historical loss information, and (iii) net expected recoveries of charged-off loan balances. These adjustments are based on qualitative factors not reflected in the transition matrix but are likely to impact the measurement of estimated credit losses. The expected lifetime loss rate is the life of loan loss percentage from the transition matrix model plus the impact of the adjustments for qualitative factors. The expected credit losses are the product of multiplying the model’s expected lifetime loss rate by the exposure at default at period end on an undiscounted basis. Valley utilizes a two-year reasonable and supportable forecast period followed by a one-year period over which estimated losses revert to historical loss experience on a straight-line basis for the remaining life of the loan. The forecast consists of multi-scenario economic forecasts to estimate future credit losses and are governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. We have identified and selected key variables that most closely correlated to our historical credit performance, which include GDP, unemployment and the Case-Shiller Home Price Index. 2024 Form 10-K 76 Valley maintained the majority of its probability weighting used in the economic forecast to the Moody’s Baseline scenario with less emphasis on the S-3 downside and S-1 upside scenarios. The probability weightings were unchanged from December 31, 2023. At December 31, 2024, the standalone Moody's Baseline scenario, reflected a more optimistic outlook as compared to December 31, 2023 in terms of most metrics highlighted below. At December 31, 2024, the Moody's Baseline forecast included the following specific assumptions: • GDP expansion by about 2.2 percent in the first quarter 2025 ; • Unemployme nt of 4.1 percent in the first quarter 2025 and over the remainder of the forecast period ending in the fourth quarter 2026; • The Federal Reserve range was 4.25 - 4.50 percent with two possible cuts totaling 0.25 percent in 2025; and • Inflation was at 2.9 percent in the fourth quarter 2024 driven by elevated shelter inflation. The inflation rate is expected to continue decreasing to reach the target rate of 2 percent around 2027. The allowance for credit losses for loans methodology and accounting policy are fully described in Note 1 to the consolidated financial statements. The following table summarizes the relationship among loans, loans charged-off, loan recoveries, the provision for credit losses and the allowance for credit losses for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 Allowance for credit losses for loans ($ in thousands) Beginning balance $ 465,550 $ 483,255 $ 375,702 Impact of the adoption of ASU No. 2022-02 (1) — (1,368) — Allowance for purchased credit deteriorated (PCD) loans (2) — — 70,319 Beginning balance, adjusted 465,550 481,887 446,021 Loans charged-off: Commercial and industrial (68,299) (48,015) (33,250) Commercial real estate (125,858) (11,134) (4,561) Construction (12,637) (11,812) — Residential mortgage (29) (194) (28) Total Consumer (8,289) (4,298) (4,057) Total loan charge-offs (215,112) (75,453) (41,896) Charged-off loans recovered: Commercial and industrial 6,038 11,270 17,081 Commercial real estate 3,595 34 2,073 Construction 1,535 — — Residential mortgage 140 201 711 Total Consumer 2,194 1,986 2,929 Total loans recovered 13,502 13,491 22,794 Total net loan charge-offs (201,610) (61,962) (19,102) Provision for credit losses for loans 309,388 45,625 56,336 Ending balance $ 573,328 $ 465,550 $ 483,255 Components of allowance for credit losses for loans: Allowance for loan losses $ 558,850 $ 446,080 $ 458,655 Allowance for unfunded credit commitments 14,478 19,470 24,600 Allowance for credit losses for loans $ 573,328 $ 465,550 $ 483,255 Components of provision for credit losses for loans: Provision for credit losses for loans $ 314,380 $ 50,755 $ 48,236 (Credit) provision for unfunded credit commitments (4,992) (5,130) 8,100 Total provision for credit losses for loans $ 309,388 $ 45,625 $ 56,336 Allowance for credit losses for loans as a % of total loans 1.17 % 0.93 % 1.03 % 77 2024 Form 10-K (1) Represents the opening adjustment for the adoption of ASU No. 2022-02 effective January 1, 2023. (2) Represents the allowance for acquired PCD loans. For 2022, the allowance for acquired PCD loans is net of PCD loan charge-offs totaling $62.4 million in the second quarter 2022. The following table presents the relationship among net loans charged-off and recoveries, and average loan balances outstanding for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 ($ in thousands) Net loan (charge-offs) recoveries Commercial and industrial $ (62,261) $ (36,745) $ (16,169) Commercial real estate (122,263) (11,100) (2,488) Construction (11,102) (11,812) — Residential mortgage 111 7 683 Total consumer (6,095) (2,312) (1,128) Total $ (201,610) $ (61,962) $ (19,102) Average loans outstanding Commercial and industrial $ 9,448,128 $ 8,999,783 $ 7,691,496 Commercial real estate 27,838,032 27,610,042 23,127,504 Construction 3,642,785 3,849,473 2,977,688 Residential mortgage 5,642,067 5,498,563 4,899,854 Total consumer 3,459,574 3,394,000 3,233,811 Total $ 50,030,586 $ 49,351,861 $ 41,930,353 Net loan charge-offs (recoveries) to average loans outstanding Commercial and industrial 0.66% 0.41% 0.21% Commercial real estate 0.44 0.04 0.01 Construction 0.30 0.31 0.00 Residential mortgage 0.00 0.00 (0.01) Total consumer 0.18 0.07 0.03 Total net loan charge-offs to total average loans outstanding 0.40 0.13 0.05 Net loan charge-offs increased $139.6 million to $201.6 million in 2024 as compared to $62.0 million in 2023 primarily due to higher gross loan charge-offs within commercial loan categories. Gross commercial and industrial loan char ge-offs totaling $68.3 million for the year ended December 31, 2024 included (i) partial charge-offs totaling $9.5 million related to one non-performing taxi medallion loan relationship that was fully reserved for in our allowance for loan losses (ii) an $11.0 million of partial loan charge-offs related to one commercial and industrial loan (with prior reserves within the allowance for loan losses totaling $8.0 million, and (iii) a few larger partial loan charge-offs. Gross commercial real estate loan charge-offs totaling $125.9 million for the year ended December 31, 2024 included (i) full charge-off of $54.1 million non-performing loan relationship, (ii) partial charge-offs of $20.6 million related to a single non-performing commercial real estate loan relationship and (iii) a few larger partial loan charge-offs that had combined specific reserves of $25.9 million within the allowance for loan losses. Gross construction loan charge-offs totaling $12.6 million for the year ended December 31, 2024 included partial charge-offs of four construction loans with total allocated specific reserves of $4.9 million. While elevated as compared with the low levels of net charge-offs experienced in 2023 and 2022, the overall level of net loan charge-offs (as presented in the above table) for the year ended December 31, 2024 continued to largely trend within management's expectations for the credit quality of the loan portfolio during 2024. 2024 Form 10-K 78 The following table summarizes the allocation of the allowance for credit losses to specific loan portfolio categories at December 31, 2024 and 2023: 2024 2023 Allowance Allocation Percent of Loan Category to Total Loans Allowance Allocation Percent of Loan Category to Total Loans ($ in thousands) Loan Category: Commercial and industrial $ 173,002 20.4 % $ 133,359 18.4 % Commercial real estate: Commercial real estate 251,351 54.4 194,820 56.2 Construction 52,797 6.3 54,778 7.4 Total commercial real estate 304,148 60.7 249,598 63.6 Residential mortgage 58,895 11.5 42,957 11.1 Total consumer 22,805 7.4 20,166 6.9 Total allowance for loan losses 558,850 100.0 % 446,080 100.0 % Allowance for unfunded credit commitments 14,478 19,470 Total allowance for credit losses for loans $ 573,328 $ 465,550 The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments (including letters of credit), as a percentage of total loans was 1.17 percent at December 31, 2024 and 0.93 percent at December 31, 2023. The allowance for credit losses for loans increased $107.8 million at December 31, 2024 as compared to December 31, 2023. The provision for credit losses for loans totaled $309.4 million and $45.6 million for the year ended December 31, 2024 and 2023, respectively. The increase in the 2024 provision was mainly due to: (i) higher quantitative reserves related to criticized and classified loans within the commercial real estate, (ii) commercial and industrial loan growth, (iii) additional specific reserves and charge-offs associated with the revaluation of collateral dependent commercial loans (iv) the impact of loan charge-offs, was partially offset by lower economic forecast and other qualitative reserves. As of December 31, 2024, the credit quality of our Florida loan portfolio has also remained resilient in the aftermath of Hurricanes Helene and Milton, which hit Florida in September and October 2024, respectively. At this time, there have been relatively few loan concessions (mostly in the form of loan payment deferrals up to 90 days) for distressed borrowers impacted by the hurricanes. At December 31, 2024, the hurricanes did not have a significant impact on the level of reserves or expected loan charge-offs within our allowance for loan losses. As a result, our provision for loan losses for the fourth quarter 2024 was net of an $8.0 million release of qualitative reserves for estimated losses related to the hurricanes in our allowance at September 30, 2024. We expect our provision for credit losses to decrease from the elevated level experienced in 2024 and increasingly normalize throughout 2025. However, there can be no assurance that we will achieve lower provision levels due to several other factors, including, but not limited to, the impact of future changes in the overall performance of our loan portfolio, potential downgrades in the internal risk classification of commercial loans and the composition of our loan portfolio, including targeted growth in loan categories not secured by real estate such as commercial and industrial loans. See Note 5 to the consolidated financial statements for additional information regarding our allowance for credit losses for loans. Loan Repurchase Contingencies We engage in the origination of residential mortgages for sale into the secondary market. Our sales of residential mortgage loans originated for sale totaled approximately $203.8 million, $202.5 million and $385.5 million for 2024, 2023 and 2022, respectively. The level of loan sales is impacted by several factors, including consumer demand and preferences for certain mortgage products and our management of the interest rate risk and the mix of the interest earning assets on our balance sheet. Residential mortgage loan sales during the last three years were significantly lower than 2021 largely due to a reduction in our conforming new and refinanced loan originations caused by the higher level of mortgage interest rates and reduced consumer demand. 79 2024 Form 10-K In connection with our loan sales, including both residential mortgage loans originated for sale and less frequent transfers and sales from our loans held for investment portfolio, we make representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred due to such loans. However, the performance of our loans sold has been historically strong due to our strict underwriting standards and procedures. Over the past several years, we have experienced a nominal amount of repurchase requests, only a few of which have actually resulted in repurchases by Valley (there were no loan repurchases in 2024 and only three loan repurchases in 2023 ). None of the loan repurchases resulted in material loss. Ac cordingly, no reserves pertaining to loans sold were established on our consolidated financial statements a t December 31, 2024 and 2023. See Item 1A. Risk Factors —“We may incur future losses in connection with repurchases and indemnification payments related to mortgages that we have sold into the secondary market” for additional information. Capital Adequacy A significant measure of the strength of a financial institution is its shareholders’ equity. At December 31, 2024 and 2023, shareholders’ equity totaled approximately $7.4 billion and $6.7 billion, or 11.9 percent and 11.0 percent of total assets, respectively. During 2024, total shareholders’ equity increased by $733.7 million, primarily due to the following: • net proceeds from the issuance of common stock totaling $448.9 million, • net income of $380.3 million, • net proceeds from the issuance of Series C preferred stock of $144.7 million, and • a $22.4 million increase attributable to the effect of share issuances under our stock incentive plan. These positive changes were partially offset by: • cash dividends declared on common and preferred stock totaling a combined $253.6 million, and • other comprehensive loss of $8.9 million. Valley and the Bank are subject to the regulatory capital requirements administered by the Federal Reserve and the OCC. Quantitative measures established by regulation to ensure capital adequacy require Valley and the Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets, as defined in the regulations. The following table presents the capital guidelines and actual ratios applicable to Valley as of December 31, 2024 and 2023: Actual Ratio Minimum Ratio Minimum Ratio plus Capital Conservation Buffer 2024 2023 Total Risk-based Capital 8.0 % 10.5 % 13.87 % 11.76 % Common Equity Tier 1 Capital 4.5 7.0 10.82 9.29 Tier 1 Risk-based Capital 6.0 8.5 11.55 9.72 Tier 1 Leverage Capital 4.0 N/A 9.16 8.16 As of December 31, 2024 and 2023, Valley and the Bank exceeded all capital adequacy requirements. See Note 17 to the consolidated financial statements for Valley’s and the Bank’s regulatory capital positions and capital ratios. The increases in the total risk-based capital, common equity Tier 1 capital, and Tier 1 capital ratios at December 31, 2024 as compared to December 31, 2023 were largely due to several factors, including (1) the net proceeds from Valley's issuances of common stock and Series C preferred stock during the third and fourth quarter 2024, respectively, (2) a credit risk transfer transaction executed in the second quarter 2024 related to a portion of the automobile loan portfolio and (3) our sales of commercial real estate and construction loans during 2024. See Notes 5, 15 and 18 to the consolidated financial statements for more details on loan sales, the credit risk transfer transaction and the common and preferred stock issuances, respectively. For regulatory capital purposes, in accordance with the Federal Reserve’s final rule issued on August 26, 2020, we deferred 100 percent of the CECL Day 1 impact to shareholders' equity plus 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) for a two-year period ending January 1, 2022. On January 1, 2022, the deferral amount totaling $47.3 million after-tax started to be phased-in by 25 percent and will increase 25 percent per year until fully phased-in on January 1, 2025. As of December 31, 2024, approximately $35.5 million of the $47.3 million deferral amount was recognized as a reduction to regulatory capital and, as a result, decreased our risk-based capital ratios by approximately 9 basis 2024 Form 10-K 80 points. The full deferral amount of $47.3 million was phased-in on January 1, 2025 and expected to result in an additional 3 basis point reduction in our risk-based capital ratios during the first quarter 2025. Typically, our primary source of capital growth is through retention of earnings. Our rate of earnings retention is derived by dividing undistributed earnings per common share by earnings (or net income available to common shareholders) per common share. Our retention ratio was 36.2 percent and 53.7 percent for the years ended December 31, 2024 and 2023, respectively. The decline in the retention ratio for 2024 was largely due to the significant increase in our provision for credit losses and the resulting decline in our level of earnings before dividends as compared to the year ended December 31, 2023. Cash dividends declared amounted to $0.44 per common share for both years ended December 31, 2024 and 2023. The Board is committed to examining and weighing relevant facts and considerations, including its commitment to shareholder value, each time it makes a cash dividend decision. The Federal Reserve has cautioned all bank holding companies about distributing dividends which may reduce the level of capital or not allow capital to grow considering the increased capital levels required under the Basel III rules. Prior to the date of this filing, Valley has received no objection or adverse guidance from the Federal Reserve or the OCC regarding the current level of its quarterly common stock dividend. However, the Federal Reserve has reiterated its long-standing guidance in recent years that banking organizations should consult them before declaring dividends in excess of earnings for the corresponding quarter. We may from time to time offer and sell in one or more offerings, individually or in any combination, our common stock, preferred stock and other non-equity securities in order to pursue growth opportunities that may become available in the future and comply with any changes in the regulatory environment that call for increased capital requirements. Valley’s ability, and any decision to issue and sell securities, is subject to market conditions and Valley’s capital needs at such time. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both. Such offerings may be necessary in the future due to several reasons beyond management’s control, including numerous external factors that could negatively impact the strength of the U.S. economy or our ability to maintain or increase the level of our net income. See Note 18 to the consolidated financial statements for additional information on Valley’s common and preferred stock, including new issuances during 2024. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Information regarding Quantitative and Qualitative Disclosures About Market Risk is discussed in the “Interest Rate Sensitivity” section contained in Item 7. MD&A and it is incorporated herein by reference. 81 2024 Form 10-K Item 8. Financial Statements and Supplementary Data VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, 2024 2023 (in thousands except for share data) Assets Cash and due from banks $ 411,412 $ 284,090 Interest bearing deposits with banks 1,478,713 607,135 Investment securities: Equity securities 71,513 64,464 Trading debt securities — 3,973 Available for sale debt securities 3,369,724 1,296,576 Held to maturity debt securities (net of allowance for credit losses of $ 647 at December 31, 2024 and $ 1,205 at December 31, 2023) 3,531,573 3,739,208 Total investment securities 6,972,810 5,104,221 Loans held for sale (includes fair value of $ 16,931 at December 31, 2024 and $ 20,640 at December 31, 2023 for loans originated for sale) 25,681 30,640 Loans 48,799,711 50,210,295 Less: Allowance for loan losses ( 558,850 ) ( 446,080 ) Net loans 48,240,861 49,764,215 Premises and equipment, net 350,796 381,081 Lease right of use assets 328,475 343,461 Bank owned life insurance 731,574 723,799 Accrued interest receivable 239,941 245,498 Goodwill 1,868,936 1,868,936 Other intangible assets, net 128,661 160,331 Other assets 1,713,831 1,421,567 Total Assets $ 62,491,691 $ 60,934,974 Liabilities Deposits: Non-interest bearing $ 11,428,674 $ 11,539,483 Interest bearing: Savings, NOW and money market 26,304,639 24,526,622 Time 12,342,544 13,176,724 Total deposits 50,075,857 49,242,829 Short-term borrowings 72,718 917,834 Long-term borrowings 3,174,155 2,328,375 Junior subordinated debentures issued to capital trusts 57,455 57,108 Lease liabilities 388,303 403,781 Accrued expenses and other liabilities 1,288,076 1,283,656 Total Liabilities 55,056,564 54,233,583 Shareholders’ Equity Preferred stock, no par value; authorized 50,000,000 shares: Series A ( 4,600,000 shares issued at December 31, 2024 and December 31, 2023) 111,590 111,590 Series B ( 4,000,000 shares issued at December 31, 2024 and December 31, 2023) 98,101 98,101 Series C ( 6,000,000 shares issued at December 31, 2024) 144,654 — Common stock ( no par value, authorized 650,000,000 shares; issued 558,786,093 shares at December 31, 2024 and 507,896,910 shares at December 31, 2023) 195,998 178,187 Surplus 5,442,070 4,989,989 Retained earnings 1,598,048 1,471,371 Accumulated other comprehensive loss ( 155,334 ) ( 146,456 ) Treasury stock, at cost ( 186,983 common shares at December 31, 2023) — ( 1,391 ) Total Shareholders’ Equity 7,435,127 6,701,391 Total Liabilities and Shareholders’ Equity $ 62,491,691 $ 60,934,974 See accompanying notes to consolidated financial statements. 2024 Form 10-K 82 VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, 2024 2023 2022 (in thousands, except for share data) Interest Income Interest and fees on loans $ 3,079,864 $ 2,886,930 $ 1,828,477 Interest and dividends on investment securities: Taxable 181,940 130,708 105,716 Tax-exempt 19,253 20,305 17,958 Dividends 24,958 24,139 11,468 Interest on federal funds sold and other short-term investments 51,482 76,809 13,064 Total interest income 3,357,497 3,138,891 1,976,683 Interest Expense Interest on deposits: Savings, NOW and money market 913,963 739,025 186,709 Time 644,964 535,749 69,691 Interest on short-term borrowings 22,047 94,869 17,453 Interest on long-term borrowings and junior subordinated debentures 147,815 103,770 47,190 Total interest expense 1,728,789 1,473,413 321,043 Net Interest Income 1,628,708 1,665,478 1,655,640 (Credit) provision for credit losses for available for sale and held to maturity securities ( 558 ) 4,559 481 Provision for credit losses for loans 309,388 45,625 56,336 Net Interest Income After Provision for Credit Losses 1,319,878 1,615,294 1,598,823 Non-Interest Income Wealth management and trust fees 62,616 44,158 34,709 Insurance commissions 12,794 11,116 11,975 Capital markets 27,221 41,489 52,362 Service charges on deposit accounts 48,276 41,306 36,930 Gains (losses) on securities transactions, net 100 1,104 ( 1,230 ) Fees from loan servicing 12,393 10,670 11,273 (Losses) gains on sales of loans, net ( 5,840 ) 6,054 6,418 Gains on sales of assets, net 3,727 6,809 897 Bank owned life insurance 16,942 11,843 8,040 Other 46,272 51,180 45,419 Total non-interest income 224,501 225,729 206,793 Non-Interest Expense Salary and employee benefits expense 558,595 563,591 526,737 Net occupancy expense 102,124 101,470 94,352 Technology, furniture and equipment expense 135,109 150,708 161,752 FDIC insurance assessment 61,476 88,154 22,836 Amortization of other intangible assets 35,045 39,768 37,825 Professional and legal fees 70,315 80,567 82,618 Amortization of tax credit investments 18,946 18,009 12,407 Other 124,250 120,424 86,422 Total non-interest expense 1,105,860 1,162,691 1,024,949 Income Before Income Taxes 438,519 678,332 780,667 Income tax expense 58,248 179,821 211,816 Net Income 380,271 498,511 568,851 Dividends on preferred stock 21,369 16,135 13,146 Net Income Available to Common Shareholders $ 358,902 $ 482,376 $ 555,705 Earnings Per Common Share: Basic $ 0.70 $ 0.95 $ 1.14 Diluted 0.69 0.95 1.14 See accompanying notes to consolidated financial statements. 83 2024 Form 10-K VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31, 2024 2023 2022 (in thousands) Net income $ 380,271 $ 498,511 $ 568,851 Other comprehensive (loss) income, net of tax: Unrealized losses and gains on available for sale debt securities Net (losses) gains arising during the period ( 18,397 ) 12,950 ( 136,981 ) Amounts reclassified to earnings 1 ( 634 ) ( 23 ) Total ( 18,396 ) 12,316 ( 137,004 ) Unrealized gains and losses on derivatives (cash flow hedges) Net (losses) gains on derivatives arising during the period — ( 757 ) 3,362 Amounts reclassified to earnings ( 869 ) 638 203 Total ( 869 ) ( 119 ) 3,565 Defined benefit pension and postretirement benefit plans Net gains (losses) arising during the period 10,609 5,442 ( 13,175 ) Amortization of prior service cost ( 97 ) ( 90 ) ( 100 ) Amortization of actuarial net (losses) gains ( 125 ) ( 3 ) 644 Total 10,387 5,349 ( 12,631 ) Total other comprehensive (loss) income ( 8,878 ) 17,546 ( 146,070 ) Total comprehensive income $ 371,393 $ 516,057 $ 422,781 See accompanying notes to consolidated financial statements. 2024 Form 10-K 84 VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Common Stock Accumulated Preferred Stock Shares Amount Surplus Retained Earnings Other Comprehensive Loss Treasury Stock Total Shareholders’ Equity ($ in thousands) Balance - December 31, 2021 $ 209,691 421,437 $ 148,482 $ 3,883,035 $ 883,645 $ ( 17,932 ) $ ( 22,855 ) $ 5,084,066 Net income — — — — 568,851 — — 568,851 Other comprehensive loss, net of tax — — — — — ( 146,070 ) — ( 146,070 ) Cash dividends declared: Preferred stock, Series A, $ 1.56 per share — — — — ( 7,188 ) — — ( 7,188 ) Preferred stock, Series B, $ 1.49 per share — — — — ( 5,958 ) — — ( 5,958 ) Common Stock, $ 0.44 per share — — — — ( 215,513 ) — — ( 215,513 ) Effect of stock incentive plan, net — 1,089 1 9,069 ( 5,392 ) — 14,624 18,302 Common stock issued in acquisition — 84,863 29,702 1,088,127 — — — 1,117,829 Common stock repurchased — ( 1,015 ) — — — — ( 13,517 ) ( 13,517 ) Balance - December 31, 2022 209,691 506,374 178,185 4,980,231 1,218,445 ( 164,002 ) ( 21,748 ) 6,400,802 Adjustment due to the adoption of ASU 2022-02 — — — — 990 — — 990 Balance - January 1, 2023 209,691 506,374 178,185 4,980,231 1,219,435 ( 164,002 ) ( 21,748 ) 6,401,792 Net income — — — — 498,511 — — 498,511 Other comprehensive income, net of tax — — — — — 17,546 — 17,546 Cash dividends declared: Preferred stock, Series A, $ 1.56 per share — — — — ( 7,188 ) — — ( 7,188 ) Preferred stock, Series B, $ 2.24 per share — — — — ( 8,947 ) — — ( 8,947 ) Common Stock, $ 0.44 per share — — — — ( 225,779 ) — — ( 225,779 ) Effect of stock incentive plan, net — 1,309 2 9,758 ( 4,011 ) — 18,049 23,798 Common stock issued — 327 — — ( 650 ) — 4,400 3,750 Common stock repurchased — ( 300 ) — — — — ( 2,092 ) ( 2,092 ) Balance - December 31, 2023 209,691 507,710 178,187 4,989,989 1,471,371 ( 146,456 ) ( 1,391 ) 6,701,391 Net income — — — — 380,271 — — 380,271 Other comprehensive loss, net of tax — — — — — ( 8,878 ) — ( 8,878 ) Cash dividends declared: Preferred stock, Series A, $ 1.56 per share — — — ( 7,188 ) — — ( 7,188 ) Preferred stock, Series B, $ 2.29 per share — — — — ( 9,163 ) — — ( 9,163 ) Preferred stock, Series C, $ 0.84 per share — — — — ( 5,018 ) — — ( 5,018 ) Common Stock, $ 0.44 per share — — — — ( 232,225 ) — — ( 232,225 ) Effect of stock incentive plan, net — 1,878 592 20,380 — — 1,391 22,363 Preferred stock issued 144,654 — — — — — — 144,654 Common stock issued — 49,198 17,219 431,701 — — — 448,920 Balance - December 31, 2024 $ 354,345 558,786 $ 195,998 $ 5,442,070 $ 1,598,048 $ ( 155,334 ) $ — $ 7,435,127 See accompanying notes to consolidated financial statements. 85 2024 Form 10-K VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2024 2023 2022 (in thousands) Cash flows from operating activities: Net income $ 380,271 $ 498,511 $ 568,851 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 43,789 43,437 41,620 Stock-based compensation 28,988 33,102 28,788 Provision for credit losses 308,830 50,184 56,817 Net accretion of discounts and amortization of premium on securities and borrowings ( 3,399 ) ( 2,145 ) 10,653 Amortization of other intangible assets 35,045 39,768 37,825 Losses (gains) on available for sale and held to maturity debt securities, net 15 ( 401 ) ( 95 ) Proceeds from sales of loans held for sale 253,749 205,575 389,666 Losses (gains) on sales of loans, net 5,840 ( 6,054 ) ( 6,418 ) Originations of loans held for sale ( 244,710 ) ( 204,686 ) ( 267,158 ) Gains on sales of assets, net ( 3,727 ) ( 6,809 ) ( 897 ) Net deferred income tax (benefit) expense ( 6,139 ) ( 9,359 ) 7,485 Net change in: Fair value of financial instruments hedged by derivative transactions 13,402 4,810 ( 28,907 ) Trading debt securities 3,973 9,465 24,692 Lease right of use assets 18,467 ( 37,125 ) 1,831 Cash surrender value of bank owned life insurance ( 16,942 ) ( 11,843 ) ( 8,040 ) Accrued interest receivable 5,557 ( 48,892 ) ( 74,007 ) Other assets ( 263,375 ) ( 173,512 ) ( 229,107 ) Accrued expenses and other liabilities ( 11,094 ) ( 5,834 ) 874,880 Net cash provided by operating activities 548,540 378,192 1,428,479 Cash flows from investing activities: Net loan originations and purchases ( 137,723 ) ( 3,346,633 ) ( 6,868,735 ) Equity securities: Purchases ( 9,950 ) ( 14,011 ) ( 11,209 ) Sales 1,910 1,850 3,118 Held to maturity debt securities: Purchases ( 103,256 ) ( 302,774 ) ( 838,569 ) Maturities, calls and principal repayments 309,475 379,536 475,327 Available for sale debt securities: Purchases ( 2,387,595 ) ( 112,317 ) ( 54,618 ) Sales — 18,779 12,846 Maturities, calls and principal repayments 296,860 78,588 225,942 Death benefit proceeds from bank owned life insurance 9,121 5,218 4,680 Proceeds from sales of real estate property and equipment 3,199 18,308 10,832 Proceeds from sales of loans not originated for sale 1,226,759 — — Proceeds from sale of commercial premium finance lending division 98,060 — — Purchases of real estate property and equipment ( 16,144 ) ( 76,046 ) ( 68,935 ) Cash and cash equivalents acquired in acquisitions, net — — 321,540 Net cash used in investing activities $ ( 709,284 ) $ ( 3,349,502 ) $ ( 6,787,781 ) 2024 Form 10-K 86 VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years Ended December 31, 2024 2023 2022 (in thousands) Cash flows from financing activities: Net change in deposits $ 830,609 $ 1,605,915 $ 4,974,505 Net change in short-term borrowings ( 845,116 ) 779,105 ( 620,791 ) Proceeds from issuance of long-term borrowings, net 1,001,800 1,251,804 147,508 Repayments of long-term borrowings ( 165,000 ) ( 475,000 ) — Proceeds from issuance of preferred stock, net 144,654 — — Cash dividends paid to preferred shareholders ( 21,369 ) ( 14,338 ) ( 13,146 ) Cash dividends paid to common shareholders ( 228,228 ) ( 225,411 ) ( 205,999 ) Purchase of common shares to treasury ( 8,867 ) ( 11,475 ) ( 24,123 ) Common stock issued, net 451,164 4,006 120 Other, net ( 3 ) ( 18 ) ( 745 ) Net cash provided by financing activities 1,159,644 2,914,588 4,257,329 Net change in cash and cash equivalents 998,900 ( 56,722 ) ( 1,101,973 ) Cash and cash equivalents at beginning of year 891,225 947,947 2,049,920 Cash and cash equivalents at end of year $ 1,890,125 $ 891,225 $ 947,947 Supplemental disclosures of cash flow information: Cash payments for: Interest on deposits and borrowings $ 1,737,721 $ 1,359,534 $ 281,137 Federal and state income taxes 89,701 236,503 172,102 Supplemental schedule of non-cash investing activities: Transfer of loans to other real estate owned, net $ 12,431 $ 974 $ — Transfer of loans to loans held for sale, net 1,042,725 10,000 — Lease right of use assets obtained in exchange for operating lease liabilities 21,501 81,727 32,604 Acquisitions: Non-cash assets acquired: Equity securities $ — $ — $ 6,239 Investment securities available for sale — — 505,928 Investment securities held to maturity — — 806,627 Loans, net — — 5,844,070 Premises and equipment — — 38,827 Lease right of use assets — — 49,434 Bank owned life insurance — — 126,861 Accrued interest receivable — — 25,717 Goodwill — — 409,928 Other intangible assets — — 159,587 Other assets — — 155,945 Total non-cash assets acquired $ — $ — $ 8,129,163 Liabilities assumed: Deposits $ — $ — $ 7,029,997 Short-term borrowings — — 103,794 Lease liabilities — — 79,844 Accrued expenses and other liabilities — — 119,240 Total liabilities assumed $ — $ — $ 7,332,875 Net non-cash assets acquired $ — $ — $ 796,288 Cash and cash equivalents acquired in acquisitions, net $ — $ — $ 321,540 Common stock issued in acquisition $ — $ — $ 1,117,829 See accompanying notes to consolidated financial statements. 87 2024 Form 10-K VALLEY NATIONAL BANCORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Note 1) Business Valley National Bancorp, a New Jersey corporation, is a financial holding company that through its commercial bank subsidiary, Valley National Bank and its subsidiaries, provides a full range of commercial, retail and trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, Alabama, California and Illinois. In addition to the Bank, Valley ’ s consolidated subsidiaries include, but are not limited to: an insurance agency offering property and casualty, life and health insurance; an asset management adviser that is a registered investment adviser with the SEC; a registered securities broker-dealer with the SEC and member of FINRA, which is also licensed as an insurance agency to provide life and health insurance; a title insurance agency in New York, which also provides services in New Jersey; an advisory firm specializing in the investment and management of tax credits; and a subsidiary which specializes in health care equipment lending and other commercial equipment leases. Basis of Presentation The consolidated financial statements of Valley include the accounts of the Bank and all other entities in which Valley has a controlling financial interest. All inter-company transactions and balances have been eliminated. The accounting and reporting policies of Valley conform to GAAP and general practices within the financial services industry. In accordance with GAAP, Valley does not consolidate statutory trusts established for the sole purpose of issuing trust preferred securities and related trust common securities. See Note 11 for more details. Certain prior period amounts have been reclassified to conform to the current presentation. 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 December 31, 2024 and for all periods presented have been made. Significant Estimates. In preparing the consolidated financial statements in conformity with GAAP, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated. Material estimates that require application of management’s most difficult, subjective or complex judgment and are particularly susceptible to change include: the allowance for credit losses, the evaluation of goodwill and other intangible assets for impairment, and income taxes. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management uses its best judgment, actual amounts or results could differ significantly from those estimates. The current economic environment can also increase the degree of uncertainty inherent in these material estimates. Actual results may differ from those estimates. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest bearing deposits in other banks (including the Federal Reserve Bank of New York) and, from time to time, overnight federal funds sold. Federal funds sold essentially represent an uncollateralized loan. Therefore, Valley regularly evaluates the credit risk associated with the other financial institutions to ensure that the Bank does not become exposed to any significant credit risk on these cash equivalents. Investment Securities Debt securities are classified at the time of purchase based on management’s intention, such as securities HTM, securities AFS or trading securities. Investment securities classified as HTM are those that management has the positive intent and ability to hold until maturity. Investment securities HTM are carried at amortized cost, adjusted for amortization of premiums and accretion of discounts using the level-yield method over the contractual term of the securities, adjusted for actual prepayments, or to call date if the security was purchased at premium. Investment securities classified as AFS are carried at fair value with unrealized holding gains and losses reported as a component of other comprehensive income or loss, net of tax. Realized gains 2024 Form 10-K 88 or losses on the AFS securities are recognized by the specific identification method and are included in net gains and losses on securities transactions within non-interest income. Trading debt secu rities are reported at fair value with the unrealized gains or losses due to changes in fair value reported within non-interest income. Net trading gains and losses are included in net gains and losses on securities transactions within non-interest income. Equity securities are presented on the statements of financial condition at fair value with any unrealized and realized gains and losses reported in non-interest income. See Notes 3 and 4 for additional information. Investments in FHLB and FRB stock, which have limited marketability, are carried at cost in other assets. Security transactions are recorded on a trade-date basis. Interest income on investments includes amortization of purchase premiums and discounts. Valley discontinues the recognition of interest on debt securities if the securities meet both of the following criteria: (i) regularly scheduled interest payments have not been paid or have been deferred by the issuer, and (ii) full collection of all contractual principal and interest payments is not deemed to be the most likely outcome. Allowance for Credit Losses for Held to Maturity Debt Securities Valley estimates and recognizes an allowance for credit losses for HTM debt securities using the CECL methodology. Valley has a zero-loss expectation for certain securities within the HTM portfolio, and therefore it is not required to estimate an allowance for credit losses related to these securities under the CECL standard. After an evaluation of qualitative factors, Valley identified the following securities types which it believes qualify for this exclusion: U.S. Treasury securities, U.S. government agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds referred to as TEMS. To measure the expected credit losses on HTM debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third-party. Assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. The model is adjusted for a probability weighted multi-scenario economic foreca