VALLEY NATIONAL BANCORP 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 forecast to estimate future credit losses. Valley uses a two-year reasonable and supportable forecast period, followed by a one-year period over which estimated losses revert to historical loss experience for the remaining life of investment security. The economic forecast methodology and governance for debt securities is aligned with Valley's economic forecast used for the loan portfolio. Accrued interest receivable is excluded from the estimate of credit losses. See Note 4 for additional information. Impairment of Available for Sale Debt Securities The impairment model for AFS debt securities differs from the CECL methodology applied to HTM debt securities because the AFS debt securities are measured at fair value rather than amortized cost. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. In performing an assessment of whether any decline in fair value is due to a credit loss, Valley considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level, such as credit deterioration of the issuer or collateral underlying the security. In assessing the impairment, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. Valley also assesses the intent to sell the securities (as well as the likelihood of a near-term recovery). If Valley intends to sell an AFS debt security or it is more likely than not that Valley will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged to the debt security’s fair value at the reporting date with any incremental impairment reported in earnings. See Note 4 for additional information. Loans Held for Sale Loans held for sale generally consist of residential mortgage loans originated and intended for sale in the secondary market and are carried at their estimated fair value on an instrument-by-instrument basis as permitted by the fair value option election under GAAP. Changes in fair value are recognized in non-interest income in the accompanying consolidated statements of income as a component of net gains on sales of loans. Origination fees and costs related to loans originated for sale (and carried at fair value) are recognized as earned and as incurred. Loans held for sale are generally sold with loan 89 2024 Form 10-K servicing rights retained by Valley. Gains recognized on loan sales include the value assigned to the rights to service the loan. See the “Loan Servicing Rights” section below. Occasionally, Valley may elect to transfer certain loans at the lower of unamortized cost or fair market value to loans held for sale from the held for investment loan portfolio. At December 31, 2024 , loans held for sale consisted of several residential mortgage loans originated for sale and one non-performing commercial real estate loan with a carrying value of $ 8.8 million . Loans and Loan Fees Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans and premium or discounts on purchased loans, except for PCD loans recorded at the purchase price, including non-credit discounts, plus the allowance for credit losses expected at the time of acquisition. Loan origination and commitment fees, net of related costs are deferred and amortized as an adjustment of loan yield over the estimated life of the loans approximating the effective interest method. Loans are deemed to be past due when the contractual principal and interest payments have not been received as they become due. Loans are placed on non-accrual status generally, when they become 90 days past due and/or the full and timely collection of principal and interest becomes uncertain. When a loan is placed on non-accrual status, interest accruals cease, and uncollected accrued interest is reversed and charged against current income. Cash collections from non-accrual loans are generally credited to the loan balance, and no interest income is recognized on these loans until the principal balance has been determined to be fully collectible. A loan in which the borrowers’ obligation has not been released in bankruptcy courts may be restored to an accruing basis when it becomes well secured and is in the process of collection, or all past due amounts become current under the loan agreement and collectability is no longer doubtful. Loans classified as PCD loans are acquired loans, mainly through bank acquisitions, where there is evidence of more than insignificant credit deterioration since their origination. We consider various factors in connection with this determination, including past due or non-accrual status, credit risk rating declines, and any write downs recorded based on the collectability of the asset, among other factors. PCD loans are recorded at their purchase price plus an allowance estimated at the time of acquisition, which represents the amortized cost basis of the asset. The difference between this amortized cost basis and the par value of the loan is the non-credit discount or premium, which is amortized into interest income over the life of the loan. Subsequent increases and decreases in the allowance for credit losses related to purchased loans is recorded as provision expense. Allowance for Credit Losses for Loans Valley uses the CECL methodology to estimate an ACL for loans. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Provisions for credit losses for loans and recoveries on loans previously charged-off by Valley are added back to the allowance. The ACL for loans includes the allowance for loan losses and the reserve for unfunded credit commitments. Under CECL, Valley's methodology to establish the allowance for loan losses has two basic components: (i) a collective reserve component for estimated lifetime 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 common risk characteristics, consisting of collateral dependent loans. Valley also maintains a separate allowance for unfunded credit commitments mainly consisting of reserves for credit losses on undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of credit. Reserves for loans that share common risk characteristics. 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, Valley uses 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 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, probability weightings and economic variables under each scenario and reversion period, (ii) other asset specific risks to the extent they do not exist in the historical loss information, and (iii) net expected recoveries of charged off 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 2024 Form 10-K 90 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 that is governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. Valley has identified and selected key variables that most closely correlated to its historical credit performance, which include GDP, unemployment and the Case-Shiller Home Price Index. The loan credit quality data utilized in the transition matrix model is based on an internal credit risk rating system for the commercial and industrial loan and commercial real estate loan portfolio segments and delinquency aging status for the residential and consumer loan portfolio segments. Loans are risk-rated based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial and industrial loans, and commercial real estate loans, which are evaluated by the Loan Review Department on a test basis. Loans with a grade below a “Pass” grade are adversely classified. Once a loan becomes adversely classified, it automatically transitions from the “Pass” segment of the model to the corresponding adversely rated pool segment. Within the transition matrix model, each adverse classification or segment (Special Mention, Substandard, Doubtful, and Loss) has its own lifetime expected credit loss rate derived from loan-level historical transitions between the different loan risk ratings categories. Reserves for loans that do not share common risk characteristics. Valley measures specific reserves for individual loans that do not share common risk characteristics with other loans, consisting of collateral dependent loans based on the amount of lifetime expected credit losses calculated on those loans and charge-offs of those amounts determined to be uncollectible. Certain individually evaluated loans where substantially all the repayment is expected from the collateral, are deemed collateral dependent, and the related expected credit losses are determined based on the fair value of the underlying collateral (less selling costs, if repayment or satisfaction of the loan depends on the sale of the collateral). Any amount deemed uncollectible related to a collateral dependent loan is immediately charged off to the allowance. Valley elected to exclude accrued interest on loans from the amortized cost of loans held for investment. The accrued interest is presented separately in the consolidated statements of financial condition. Allowance for Unfunded Credit Commitments. The allowance for unfunded credit commitments consists of reserves for credit losses on undisbursed non-cancellable lines of credit, new loan commitments and commercial letters of credit valued using a similar CECL methodology as used for loans. Management's estimate of expected losses inherent in these off-balance sheet credit exposures also incorporates estimated utilization rate over the commitment's contractual period or an expected pull-through rate for new loan commitments. The allowance for unfunded credit commitments is included in accrued expenses and other liabilities on the consolidated statements of financial condition. Loan charge-offs. Loans rated as “loss” within Valley's internal rating system are charged-off. Commercial loans are generally assessed for full or partial charge-off to the net realizable value for collateral dependent loans when a loan is between 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectable. Residential loans and home equity loans are generally charged-off to net realizable value when the loan is 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy). Automobile loans are fully charged-off when the loan is 120 days past due or partially charged-off to the net realizable value of collateral, if the collateral is recovered prior to such time. Unsecured consumer loans are generally fully charged-off when the loan is 150 days past due. See Note 5 for a discussion of Valley’s loan credit quality and additional allowance for credit losses. Leases Lessee Leasing Arrangements. Valley's lessee arrangements predominantly consist of operating leases for premises and equipment. The majority of the operating leases include one or more options to renew that can significantly extend the lease terms. Valley’s leases have a wide range of lease expirations through the year 2062. Operating and finance leases are recognized as ROU assets and lease liabilities in the consolidated statements of financial position. The ROU assets represent the right to use underlying assets for the lease terms and lease liabilities represent Valley’s obligations to make lease payments arising from the lease. The ROU assets include any prepaid lease payments and initial 91 2024 Form 10-K direct costs, less any lease incentives. At the commencement dates of leases, ROU assets and lease liabilities are initially recognized based on their net present values with the lease terms including options to extend or terminate the lease when Valley is reasonably certain that the options will be exercised to extend. ROU assets are amortized into net occupancy and equipment expense over the expected lives of the leases. Lease liabilities are discounted to their net present values on the balance sheet based on incremental borrowing rates as determined at the lease commencement dates using quoted interest rates for readily available borrowings, such as fixed rate FHLB borrowings, with similar terms as the lease obligations. Lease liabilities are reduced by actual lease payments. Lessor Leasing Arrangements. Valley's lessor arrangements primarily consist of direct financing and sales-type leases for equipment included in the commercial and industrial loan portfolio. Direct financing and sales-type leases are carried at the aggregate of lease payments receivable plus estimated residual value of the leased assets, net of unearned income, charge-offs and unamortized deferred costs of origination. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term. See Note 6 for additional information on Valley's lease related assets and obligations. Premises and Equipment, Net Premises and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives range from 3 years for capitalized software to up to 40 years for buildings. Leasehold improvements are amortized over the term of the lease or estimated useful life of the as set, whichever is shorter. Major improvements are capitalized, while repairs and maintenance costs are charged to operations as incurred. Upon retirement or disposition, any gain or loss is credited or charged to operations. See Note 7 for further details. Bank Owned Life Insurance Valley owns bank owned life insurance to help offset the cost of employee benefits. Bank owned life insurance is recorded at its cash surrender value. Valley’s bank owned life insurance is invested primarily in U.S. Treasury securities and residential mortgage-backed securities issued by government sponsored enterprises and Ginnie Mae. The change in the cash surrender value is included as a component of non-interest income and is exempt from federal and state income taxes as long as the policies are held until the death of the insured individuals. Other Real Estate Owned Valley acquires OREO through foreclosure on loans secured by real estate. OREO is reported at the lower of cost or fair value, as established by a current appraisal (less estimated costs to sell) and it is included in other assets. Any write-downs at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred to maintain these properties, unrealized losses resulting from valuation write-downs after the date of foreclosure, and realized gains and losses upon sale of the properties are included in other non-interest expense. OREO, including residential real estate properties, was not material at December 31, 2024 and 2023. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process t otaled $ 4.6 million and $ 1.6 million at December 31, 2024 and 2023, respectively. Goodwill Intangible assets resulting from acquisitions under the acquisition method of accounting consist of goodwill and other intangible assets (see “Other Intangible Assets” below). Goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired and is not amortized. 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 not amortized and is subject, at a minimum, to an annual impairment assessment, or more often, if events or circumstances indicate it may be impaired. 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 allocated to the unit. Goodwill is allocated to Valley's reporting unit, which is an operating segment or one level below, at the date goodwill is recorded. Under current accounting guidance, Valley may choose to perform an optional qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test for one or more reporting units each annual period. Valley reviews goodwill for impairment annually during the second quarter using a quantitative test, or more frequently if a triggering event indicates impairment may have occurred. Valley's determination of whether or not goodwill is impaired requires it to make judgments and use significant estimates and assumptions regarding estimated future cash flows. As part of the annual impairment test, Valley also performs a market capitalization reconciliation to support the appropriateness of its 2024 Form 10-K 92 results. In performing this reconciliation, Valley compares the sum of fair value of its reporting units to Valley’s market capitalization, adjusted for the presented value of estimated synergies which a market participant acquirer could reasonably expect to realize from a hypothetical acquisition of Valley. If Valley changed its strategy or if market conditions shifted, Valley's judgments may change, which may result in adjustments to the recorded goodwill balance. Other Intangible Assets Other intangible assets primarily consist of loan servicing rights (largely generated from loan servicing retained by the Bank on residential mortgage loan originations sold in the secondary market to government sponsored enterprises), core deposits (the portion of an acquisition purchase price which represents value assigned to the existing deposit base) and, to a much lesser extent, various other types of intangibles obtained through acquisitions. Other intangible assets are amortized using various methods over their estimated lives and are periodically evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impairment is deemed to exist, an adjustment is recorded to earnings in the current period for the difference between the fair value of the asset and its carrying amount. See further details regarding loan servicing rights below. Loan Servicing Rights Loan servicing rights are recorded when originated mortgage loans are sold with servicing rights retained, or when servicing rights are purchased. Valley initially records the loan servicing rights at fair value. Subsequently, the loan servicing rights are carried at the lower of unamortized cost or market (i.e., fair value). The fair values of the loan servicing rights for each risk-stratified group of loan servicing rights are calculated using a fair value model from a third party vendor that uses various inputs and assumptions, including but not limited to, prepayment speeds, internal rate of return (discount rate), servicing cost, ancillary income, float rate, tax rate, and inflation. The prepayment speed and the discount rate are considered two of the most significant inputs in the model. Unamortized costs associated with acquiring loan servicing rights, net of any valuation allowances, are included in other intangible assets in the consolidated statements of financial condition and are accounted for using the amortization method. Valley amortizes the loan servicing assets in proportion to and over the period of estimated net servicing revenues. On a quarterly basis, Valley stratifies its loan servicing assets into groupings based on risk characteristics and assesses each group for impairment based on fair value. A valuation allowance is established through an impairment charge to earnings to the extent the unamortized cost of a stratified group of loan servicing rights exceeds its estimated fair value. Increases in the fair value of impaired loan servicing rights are recognized as a reduction of the valuation allowance, but not in excess of such allowance. The amortization of loan servicing rights is recorded in non-interest income. Stock-Based Compensation Compensation expense for RSUs, restricted stock and stock option awards (i.e., non-vested stock awards) is based on the fair value of the award on the date of the grant and is recognized ratably over the service period of the award. Valley's long-term incentive compensation plan includes a service period requirement for award grantees who are eligible for retirement pursuant to which an award will vest at one-twelfth per month after the grant date and requires the grantees to continue service with Valley for one year in order for the award to fully vest. Compensation expense for these awards is amortized monthly over a one year period after the grant date. The service period for non-retirement eligible employees is the shorter of the stated vesting period of the award or the period until the employee’s retirement eligibility date. The fair value of each option granted is estimated using a binomial option pricing model. The fair value of RSUs and awards is based upon the last sale price reported for Valley’s common stock on the date of grant or the last sale price reported preceding such date, except for performance-based stock awards with a market condition. The grant date fair value of a performance-based stock award that vests based on a market condition is determined by a third-party specialist using a Monte Carlo valuation model. There have been no changes to any of the key model characteristics, assumptions and parameters. See Note 12 for additional information. Business Combinations Business combinations are accounted for under the acquisition method of accounting. Acquired assets, including separately identifiable intangible assets, and assumed liabilities are recorded at their acquisition-date estimated fair values. The excess of the cost of acquisition over these fair values is recognized as goodwill. During the measurement period, which cannot exceed one year from the acquisition date, changes to estimated fair values are recognized as an adjustment to goodwill. Certain transaction costs are expensed as incurred. See Note 2 for additional information. 93 2024 Form 10-K Fair Value Measurements In general, fair values of financial instruments are based upon quoted market prices, where available. When observable market prices and parameters are not fully available, management uses valuation techniques based upon internal and third party models requiring more management judgment to estimate the appropriate fair value measurements. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, including adjustments based on internal cash flow model projections that utilize assumptions similar to those incorporated by market participants. Other adjustments may include amounts to reflect counterparty credit quality and Valley’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. See Note 3 for additional information. Revenue From Contracts With Customers Certain revenues included in Valley's non-interest income relate to fee-based income from contracts with customers. Revenue from contracts with customers within the scope of ASC Topic 606 is recognized when performance obligations, under the terms of the contract, are satisfied. This income is measured as the amount of consideration expected to be received in exchange for providing services. Contracts with customers can include multiple services, which are accounted for as separate “performance obligations” if they are determined to be distinct. Valley's revenue contracts generally have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable, or distinct from other obligations within the contracts. Valley does not have a material amount of long-term customer agreements that include multiple performance obligations requiring price allocation and differences in the timing of revenue recognition. The following describes revenue within scope of ASC Topic 606: Wealth management and trust fees . Wealth management and trust fees include brokerage fees and fees from investment management, investment advisory, trust, custody and other products. Brokerage fees are commissions related to the execution of market trades. Brokerage fee revenue is recognized on trade date, as the performance obligation is satisfied when the trade is executed. Trust and investment management fee income is received for providing wealth management and investment advisory services and is typically calculated based on a percentage of client assets under management and recognized over the term of the investment management agreement as services are provided to the client. Certain investment advisory success fees are earned when the related performance criteria have been satisfied, and it is probable that the fees will be earned. Insurance commissions. Insurance c ommissions are received on insurance product sales. Valley acts in the capacity of an agent between Valley's customer and the insurance carrier. Valley's performance obligation is satisfied over the term of the insurance policy. Service charges on deposit accounts. Service charges on deposit accoun ts include maintenance fees, overdraft fees, and other account related charges. Deposit account related fees are typically recognized at the time these services are performed for the customer, or on a monthly basis. Other income. Revenue within the other category of non-interest income that is within the scope of ASC Topic 606 includes credit card and interchange fees, fees from wire transfers, ACH, and various other products and services income. These fees are either recognized immediately at the transaction date or over the period in which the related service is provided. Revenue from capital markets transactions (including interest rate swap fees, foreign exchange fees and loan syndication fees), net gains and losses on securities transactions, fees from loan servicing, net gains on sales of loans, bank owned life insurance income, and certain fees within other income are excluded from the scope of ASC Topic 606 and are recognized under other applicable accounting guidance. Income Taxes Valley uses the asset and liability method to provide income taxes on all transactions recorded in the consolidated financial statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the enacted tax rates that will be in effect when the underlying items of income and expense are expected to be realized. Valley’s expense for income taxes includes the current and deferred portions of that expense. Deferred tax assets are recognized if, in management's judgment, their realizability is determined to be more likely than not. A valuation allowance is established to reduce deferred tax assets to the amount we expect to realize. Deferred income tax expense or benefit results from 2024 Form 10-K 94 differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. Valley may maintain 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. Periodically, Valley evaluates each of its tax positions and strategies to determine whether a reserve is appropriate. See Note 13 for additional information. Comprehensive Income Comprehensive income or loss is defined as the change in equity of a business entity during a period due to transactions and other events and circumstances, excluding those resulting from investments by and distributions to shareholders. Comprehensive income consists of net income and other comprehensive income or loss. Valley’s components of other comprehensive income or loss, net of deferred tax, include: (1) unrealized gains and losses on AFS debt securities; (2) unrealized gains and losses on derivatives used in cash flow hedging relationships; and (3) the benefit adjustment for the unfunded portion of its various employee, officer, and director pension plans and other post-employment benefits. Income tax effects are released from accumulated other comprehensive income on an individual unit of account basis. Valley presents comprehensive income and its components in the consolidated statements of comprehensive income for all periods presented. See Note 19 for additional information. Earnings Per Common Share In Valley's computation of the earnings per common share, the numerator of both the basic and diluted earnings per common share is net income available to common shareholders (which is equal to net income less dividends on preferred stock). The weighted average number of common shares outstanding is used in the denominator for basic earnings per common share which is increased to determine the denominator used for diluted earnings per common share by the effect of potentially dilutive common stock equivalents utilizing the treasury stock method. The following table shows the calculation of both basic and diluted earnings per common share for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands, except for share data) Net income available to common shareholders $ 358,902 $ 482,376 $ 555,705 Basic weighted-average number of common shares outstanding 515,755,365 507,532,365 485,434,918 Plus: Common stock equivalents 2,236,436 1,713,403 2,382,792 Diluted weighted-average number of common shares outstanding 517,991,801 509,245,768 487,817,710 Earnings per common share: Basic $ 0.70 $ 0.95 $ 1.14 Diluted 0.69 0.95 1.14 Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of RSUs and common stock options to purchase Valley’s common shares. Common stock options and RSUs with exercise prices that exceed the average market price of Valley’s common stock during the periods presented may have an anti-dilutive effect on the diluted earnings per common share calculation and therefore are excluded from the diluted earnings per share calculation. Potential anti-dilutive weighted common shares totaled approximately 3.5 million, 2.4 million and 188 thousand for the years ended December 31, 2024, 2023 and 2022, respectively. Preferred and Common Stock Dividends Valley issued 4.6 million, 4.0 million and 6.0 million shares of non-cumulative perpetual preferred stock in June 2015, August 2017 and August 2024 respectively, which were initially recorded at fair value. See Note 18 for additional details on the preferred stock issuances. The preferred shares are senior to Valley common stock, whereas the current year's dividends must be paid before Valley can pay dividends to its common shareholders. Preferred dividends declared are deducted from net income for computing income available to common shareholders and earnings per common share computations. Cash dividends to both preferred and common shareholders are payable and accrued when declared by the Board. 95 2024 Form 10-K Treasury Stock Treasury stock is recorded using the cost method and accordingly is presented as a reduction of shareholders’ equity. Derivative Instruments and Hedging Activities As part of its asset/liability management strategies and to accommodate commercial borrowers, Valley has used interest rate swaps to hedge variability in cash flows or fair values caused by changes in interest rates. Valley also uses derivatives not designated as hedges for non-speculative purposes to (1) manage its exposure to interest rate movements related to a service for commercial lending customers, (2) share the risk of default on the interest rate swaps related to certain purchased or sold loan participations through the use of risk participation agreements, (3) manage the interest rate risk of mortgage banking activities with customer interest rate lock commitments and forward contracts to sell residential mortgage loans, (4) manage the exposure of foreign currency exchange rate fluctuation with foreign currency forward and option contracts primarily to accommodate our customers and (5) manage the credit risk of a select pool of automobile loans to enhance the risk profile of these assets for regulatory capital purposes. Valley also has hybrid instruments, consisting of market linked certificates of deposit with an embedded swap contract. Valley records all derivatives including embedded derivatives as assets or liabilities at fair value on the consolidated statements of financial condition. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Cash Flow Hedges. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income or loss and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. Fair Value Hedges. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. Valley calculates the credit valuation adjustments to the fair value of derivatives designated as fair value hedges on a net basis by counterparty portfolio, as an accounting policy election. On a quarterly basis, Valley assesses the effectiveness of each hedging relationship by comparing the changes in cash flows or fair value of the derivative hedging instrument with the changes in cash flows or fair value of the designated hedged item or transaction. If a hedging relationship is terminated due to ineffectiveness, and the derivative instrument is not re-designated to a new hedging relationship, the subsequent change in fair value of such instrument is charged directly to earnings. Interest Rate Contracts and Other Non-designated Hedges. Derivatives not designated as hedges do not meet the hedge accounting requirements under GAAP. Contracts in an asset position are included in other assets and contracts in a liability position are included in other liabilities. Changes in fair value of derivatives not designated in hedging relationships are recorded directly in earnings within other non-interest expense. See Notes 15 and 16 for additional information on our derivative instruments. New Authoritative Accounting Guidance New Accounting Guidance Adopted in 2024 . ASU No. 2023-02, “Investments –Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method,” is intended to improve the accounting and disclosures for investments in certain tax credit structures. ASU No. 2023-02 allows the option to apply the proportional amortization method to account for investments made primarily for the purpose of receiving income tax credits and other income tax benefits when certain requirements are met. ASU No. 2023-02 became effective on January 1, 2024 and did not have a significant impact on Valley's consolidated financial statements. Under the new guidance, Valley did not elect to apply the proportional amortization method as an accounting policy for its eligible tax credit investments and, as a result, there were no adjustments from adoption recognized in earnings on the date of adoption. See additional disclosures regarding Valley's tax credit investments in Note 14 . ASU No. 2022-03, “Fair Value Measurement of Equity Securities subject to Contractual Sale Restrictions,” updates guidance in ASC Topic 820, Fair Value Measurement and clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities including (i) the nature and remaining duration of the restriction; (ii) the circumstances that could cause a lapse in restrictions; and (iii) the fair value of the securities with 2024 Form 10-K 96 contractual sale restrictions. ASU No. 2022-03 became effective on January 1, 2024 and Valley's adoption did not have a significant impact on its consolidated financial statements. ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” requires public entities to disclose detailed information about a reportable segment’s expenses on both an annual and interim basis. The amendments in ASU No. 2023-07 should be applied retrospectively to all periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. ASU No. 2023-07 became effective on December 31, 2024 and Valley's adoption did not have a significant impact on its consolidated financial statements, other than enhanced disclosures included in Note 21. New Accounting Guidance Issued in 2024. ASU No. 2024-03, "Income Statement—Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU No. 2024-03 does not change the expense captions an entity presents on the face of the income statement. ASU No. 2024-03 can be applied prospectively, and it is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption and retrospective application are permitted. Valley is currently evaluating the impact of ASU No. 2024-03 on its consolidated financial statements. BUSINESS COMBINATIONS (Note 2) Acquisitions 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. Based on Valley’s closing stock price on March 31, 2022, the transaction was valued at $ 1.2 billion, inclusive of the value of options. As a result of the acquisition, Bank Leumi Le-Israel B.M. owned approximately 14 percent of Valley's common stock as of April 1, 2022. The transaction was accounted for under the acquisition method of accounting and accordingly the results of Bank Leumi USA's operations have been included in Valley's consolidated financial statements for the year ended December 31, 2022 from the date of acquisition. The following table summarizes unaudited supplemental pro forma financial information giving effect to the Bank Leumi USA merger as if it had been completed on January 1, 2021: December 31, 2022 (in thousands) Net interest income $ 1,729,034 Non-interest income 228,284 Net income 623,052 Landmark Insurance of the Palm Beaches . On February 1, 2022, the Bank's insurance agency subsidiary, Valley Insurance Services, acquired Landmark Insurance of the Palm Beaches Inc. (“Landmark”) agency. The purchase price included $ 8.6 million in cash and $ 1.0 million in contingent consideration. Goodwill and other intangible assets totaled $ 4.4 million and $ 6.2 million, respectively. The transaction was accounted for under the acquisition method of accounting and accordingly the results of Landmark's operations have been included in Valley's consolidated financial statements for the year ended December 31, 2022 from the date of acquisition. Merger expenses for all acquisition related activities totaled $ 14.1 million and $ 71.2 million for the years ended December 31, 2023 and December 31, 2022, respectively. The merger expenses largely consisted of technology costs, salaries and employee benefits expense, and professional and legal fees within non-interest expense on the consolidated statements of income. 97 2024 Form 10-K FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Note 3) ASC Topic 820, “Fair Value Measurement” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: • Level 1 - Unadjusted exchange quoted prices in active markets for identical assets or liabilities, or identical liabilities traded as assets that the reporting entity has the ability to access at the measurement date. • Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly (i.e., quoted prices on similar assets) for substantially the full term of the asset or liability. • Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Assets and Liabilities Measured at Fair Value on a Recurring Basis and Non-Recurring Basis The following tables present the assets and liabilities that are measured at fair value on a recurring and non-recurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at December 31, 2024 and 2023. The assets presented under “non-recurring fair value measurements” in the table below are not measured at fair value on an ongoing basis but are subject to fair value adjustments under certain circumstances (e.g., when an impairment loss is recognized). Fair Value Measurements at Reporting Date Using: 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in thousands) Recurring fair value measurements: Assets Investment securities: Equity securities $ 23,642 $ 23,642 $ — $ — Equity securities at net asset value (NAV) 11,000 — — — Available for sale debt securities: U.S. Treasury securities 291,549 291,549 — — U.S. government agency securities 22,543 — 22,543 — Obligations of states and political subdivisions 192,509 — 192,509 — Residential mortgage-backed securities 2,681,076 — 2,681,076 — Corporate and other debt securities 182,047 — 182,047 — Total available for sale debt securities 3,369,724 291,549 3,078,175 — Loans held for sale (1) 16,931 — 16,931 — Other assets (2) 444,263 — 444,263 — Total assets $ 3,865,560 $ 315,191 $ 3,539,369 $ — Liabilities Other liabilities (2) $ 454,200 $ — $ 454,200 $ — Total liabilities $ 454,200 $ — $ 454,200 $ — Non-recurring fair value measurements: Non-performing loans held for sale (3) $ 8,750 $ — $ 8,750 $ — Collateral dependent loans 139,424 — — 139,424 Foreclosed assets 13,852 — — 13,852 Total $ 162,026 $ — $ 8,750 $ 153,276 2024 Form 10-K 98 Fair Value Measurements at Reporting Date Using: 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in thousands) Recurring fair value measurements: Assets Investment securities: Equity securities $ 23,307 $ 23,307 $ — $ — Equity securities at net asset value (NAV) 12,126 — — — Trading debt securities 3,973 3,973 — — Available for sale debt securities: U.S. Treasury securities 288,157 288,157 — — U.S. government agency securities 23,702 — 23,702 — Obligations of states and political subdivisions 191,690 — 191,690 — Residential mortgage-backed securities 626,572 — 626,572 — Corporate and other debt securities 166,455 — 166,455 — Total available for sale debt securities 1,296,576 288,157 1,008,419 — Loans held for sale (1) 20,640 — 20,640 — Other assets (2) 466,227 — 466,227 — Total assets $ 1,822,849 $ 315,437 $ 1,495,286 $ — Liabilities Other liabilities (2) $ 488,103 $ — $ 488,103 $ — Total liabilities $ 488,103 $ — $ 488,103 $ — Non-recurring fair value measurements: Non-performing loans held for sale (3) $ 10,000 $ — $ 10,000 $ — Collateral dependent loans 90,580 — — 90,580 Foreclosed assets 1,444 — — 1,444 Total $ 102,024 $ — $ 10,000 $ 92,024 (1) Represents residential mortgage loans held for sale that are carried at fair value and had contractual unpaid principal balances totaling $ 16.8 million and $ 20.1 million at December 31, 2024 and 2023, respectively. (2) Derivative financial instruments are included in this category. (3) Reported at lower of cost or fair value. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following valuation techniques were used for financial instruments measured at fair value on a recurring basis. All of the valuation techniques described below apply to the unpaid principal balance, excluding any accrued interest or dividends at the measurement date. Interest income and expense are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium. Equity securities. The equity securities consisted of two publicly traded mutual funds, CRA investments and a publicly traded financial technology company. These investments are reported at fair value utilizing Level 1 inputs. Equity securities at NAV . Valley also has privately held CRA funds and investments in limited liability companies and partnerships at fair value measured at NAV using the most recently available financial information from the investee. Certain equity investments without readily determinable fair values are measured at NAV per share (or its equivalent) as a practical expedient, which are excluded from fair value hierarchy levels in the tables above. 99 2024 Form 10-K Trading debt securities . The fair value of trading debt securities, consisting of U.S. Treasury securities, are reported at fair value utilizing Level 1 inputs at December 31, 2023. Management reviews the data and assumptions used in pricing the securities by its third-party provider to ensure the highest level of significant inputs are derived from market observable data. Available for sale debt securities. U.S. Treasury securities are reported at fair value utilizing Level 1 inputs. The majority of other investment securities are reported at fair value utilizing Level 2 inputs. The prices for these instruments are obtained through an independent pricing service or dealer market participants with whom Valley has historically transacted both purchases and sales of investment securities. Prices obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Management reviews the data and assumptions used in pricing the securities by its third-party provider to ensure the highest level of significant inputs are derived from market observable data. In addition, Valley reviews the volume and level of activity for all AFS debt securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume. Loans held for sale. Residential mortgage loans originated for sale are reported at fair value using Level 2 inputs. The fair values were calculated utilizing quoted prices for similar assets in active markets. The market prices represent a delivery price, which reflects the underlying price each institution would pay Valley for an immediate sale of an aggregate pool of mortgages. Non-performance risk did not materially impact the fair value of mortgage loans held for sale at December 31, 2024 and 2023 based on the short duration these assets were held and their credit quality. Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The fair values of Valley’s derivatives are determined using third party prices that are based on discounted cash flow analysis using observed market inputs, such as the SOFR curve at December 31, 2024 and 2023. The fair value of mortgage banking derivatives, consisting of interest rate lock commitments to fund residential mortgage loans and forward commitments for the future delivery of such loans (including certain loans held for sale at December 31, 2024 and 2023), is determined based on the current market prices for similar instruments. The fair value of a credit default swap related to a portion of Valley's automobile loan portfolio is based on estimated discounted cash flows that incorporate market data for auto credit loss forecasts and anticipated cash outflows for the instrument's premium payments. The fair value of most of the derivatives incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to account for potential nonperformance risk of Valley and its counterparties. The credit valuation adjustments were not significant to the overall valuation of Valley’s derivatives at December 31, 2024 and 2023. See Note 1 5 for additional details on Valley's derivatives. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis The following valuation techniques were used for certain non-financial assets measured at fair value on a non-recurring basis, including collateral dependent loans reported at the fair value of the underlying collateral and foreclosed assets, which are reported at fair value upon initial recognition or subsequent impairment as described below. Non-performing commercial real estate loan held for sale. During the year ended December 31, 2023 , Valley transferred a non-performing construction loan totaling $ 10.0 million, net of charge-offs of $ 4.2 million to the allowance for loan losses, to loans held for sale. The fair value of the loan was determined using Level 2 inputs, including bids from a third party broker engaged to solicit interest from potential purchasers. The broker coordinated loan level due diligence with interested parties and established a formal bidding process in which each participant was required to provide an indicative non-binding bid. Fair value was determined based on a non-binding sale agreement selected by Valley during the bidding process. During the year ended December 31, 2024, an additional $ 1.2 million write-down was recorded to earnings to reflect the loan's current estimated fair value of $ 8.8 million at December 31, 2024. Collateral dependent loans. Collateral dependent loans are loans where foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and substantially all the repayment is expected from the collateral. Collateral dependent loans are reported at the fair value of the underlying collateral when the fair value is lower than the recorded investment in the loan. Collateral values are estimated using Level 3 inputs, consisting of individual third-party appraisals that may be adjusted based on certain discounting criteria. Certain real estate appraisals may be discounted based on specific market data by location and property type. At December 31, 2024, collateral dependent loans were individually re-measured and reported at fair value through direct loan charge-offs to the allowance for loan losses based on the fair value of the underlying collateral. Collateral dependent loans with a total amortized cost of $ 215.2 million and $ 164.8 million at December 31, 2024 and 2023, respectively, (including taxi medallion loans totaling $ 49.5 million and $ 62.3 million at December 31, 2024 and 2023, respectively) were reduced by specific allowance for loan losses allocations totaling $ 75.8 2024 Form 10-K 100 million and $ 74.2 million to a reported total net carrying amount of $ 139.4 million and $ 90.6 million at December 31, 2024 and 2023, respectively . Foreclosed assets. Certain foreclosed assets (consisting of other real estate owned and other repossessed assets included in other assets), upon initial recognition and transfer from loans, are re-measured and reported at fair value using Level 3 inputs, consisting of a third-party appraisal less estimated cost to sell. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If further declines in the estimated fair value of an asset occur, the asset is re-measured and reported at fair value through a write-down recorded in non-interest expense. There were no adjustments to the appraisals of foreclosed assets at December 31, 2024 and 2023. Other Fair Value Disclosures ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The fair value estimates presented in the following table were based on pertinent market data and relevant information on the financial instruments available as of the valuation date. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire portfolio of financial instruments. Because no market exists for a portion of the financial instruments, fair value estimates may be based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For instance, Valley has certain fee-generating business lines (e.g., its mortgage servicing operations or Wealth Management reporting unit) that were not considered in these estimates since these activities are not financial instruments. In addition, the tax implications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. 101 2024 Form 10-K The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the consolidated statements of financial condition at December 31, 2024 and 2023 were as follows: 2024 2023 Fair Value Hierarchy Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Financial assets Cash and due from banks Level 1 $ 411,412 $ 411,412 $ 284,090 $ 284,090 Interest bearing deposits with banks Level 1 1,478,713 1,478,713 607,135 607,135 Equity securities (1) Level 3 36,871 36,871 29,031 29,031 Held to maturity debt securities: U.S. Treasury securities Level 1 25,480 25,461 26,232 25,978 U.S. government agency securities Level 2 301,315 252,302 305,996 261,555 Obligations of states and political subdivisions Level 2 372,489 346,361 405,470 387,527 Residential mortgage-backed securities Level 2 2,710,642 2,292,148 2,885,303 2,521,926 Trust preferred securities Level 2 36,081 29,145 37,062 30,650 Corporate and other debt securities Level 2 86,213 82,867 80,350 74,676 Total held to maturity debt securities (2) 3,532,220 3,028,284 3,740,413 3,302,312 Net loans Level 3 48,240,861 46,634,654 49,764,215 47,981,499 Accrued interest receivable Level 1 239,941 239,941 245,498 245,498 FRB and FHLB stock (3) Level 2 328,497 328,497 320,727 320,727 Financial liabilities Deposits without stated maturities Level 1 37,733,313 37,733,313 36,066,105 36,066,105 Deposits with stated maturities Level 2 12,342,544 12,363,365 13,176,724 13,103,381 Short-term borrowings Level 2 72,718 68,032 917,834 901,617 Long-term borrowings Level 2 3,174,155 3,109,622 2,328,375 2,256,997 Junior subordinated debentures issued to capital trusts Level 2 57,455 54,957 57,108 47,374 Accrued interest payable (4) Level 1 150,564 150,564 159,496 159,496 (1) Represents equity securities without a readily determinable fair value, which are measured based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. Total changes in the valuation of equity securities for the year ended December 31, 2024 and 2023, respectively, were immaterial. (2) The carrying amount is presented gross without the allowance for credit losses. (3) Included in other assets. (4) Included in accrued expenses and other liabilities. INVESTMENT SECURITIES (Note 4) Equity Securities Equity securities totaled $ 71.5 million and $ 64.5 million at December 31, 2024 and 2023, respectively. See Note 3 for further details on equity securities. Trading Debt Securities Valley had no trading debt securities at December 31, 2024. The fair value of trading debt securities totaled $ 4.0 million at December 31, 2023. Net trading gains are included in net gains and losses on securities transactions within non-interest income. See the “Realized Gains and Losses” section below. 2024 Form 10-K 102 Available for Sale Debt Securities The amortized cost, gross unrealized gains and losses and fair value of AFS debt securities at December 31, 2024 and 2023 were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (in thousands) December 31, 2024 U.S. Treasury securities $ 319,551 $ — $ ( 28,002 ) $ 291,549 U.S. government agency securities 24,636 20 ( 2,113 ) 22,543 Obligations of states and political subdivisions: Obligations of states and state agencies 46,211 — ( 682 ) 45,529 Municipal bonds 179,284 — ( 32,304 ) 146,980 Total obligations of states and political subdivisions 225,495 — ( 32,986 ) 192,509 Residential mortgage-backed securities 2,784,895 3,796 ( 107,615 ) 2,681,076 Corporate and other debt securities 197,696 247 ( 15,896 ) 182,047 Total $ 3,552,273 $ 4,063 $ ( 186,612 ) $ 3,369,724 December 31, 2023 U.S. Treasury securities $ 313,772 $ — $ ( 25,615 ) $ 288,157 U.S. government agency securities 25,967 19 ( 2,284 ) 23,702 Obligations of states and political subdivisions: Obligations of states and state agencies 48,283 — ( 588 ) 47,695 Municipal bonds 170,260 — ( 26,265 ) 143,995 Total obligations of states and political subdivisions 218,543 — ( 26,853 ) 191,690 Residential mortgage-backed securities 703,875 728 ( 78,031 ) 626,572 Corporate and other debt securities 192,282 — ( 25,827 ) 166,455 Total $ 1,454,439 $ 747 $ ( 158,610 ) $ 1,296,576 Accrued interest on investments , which is excluded from the amortized cost of AFS debt securities, totaled $ 13.1 million and $ 5.9 million at December 31, 2024 and 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition. 103 2024 Form 10-K The age of unrealized losses and fair value of related AFS debt securities at December 31, 2024 and 2023 were as follows: Less than Twelve Months More than Twelve Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) December 31, 2024 U.S. Treasury securities $ — $ — $ 291,549 $ ( 28,002 ) $ 291,549 $ ( 28,002 ) U.S. government agency securities — — 21,281 ( 2,113 ) 21,281 ( 2,113 ) Obligations of states and political subdivisions: Obligations of states and state agencies — — 6,208 ( 682 ) 6,208 ( 682 ) Municipal bonds — — 139,216 ( 32,304 ) 139,216 ( 32,304 ) Total obligations of states and political subdivisions — — 145,424 ( 32,986 ) 145,424 ( 32,986 ) Residential mortgage-backed securities 1,483,442 ( 22,242 ) 501,858 ( 85,373 ) 1,985,300 ( 107,615 ) Corporate and other debt securities — — 166,800 ( 15,896 ) 166,800 ( 15,896 ) Total $ 1,483,442 $ ( 22,242 ) $ 1,126,912 $ ( 164,370 ) $ 2,610,354 $ ( 186,612 ) December 31, 2023 U.S. Treasury securities $ — $ — $ 288,156 $ ( 25,615 ) $ 288,156 $ ( 25,615 ) U.S. government agency securities — — 22,364 ( 2,284 ) 22,364 ( 2,284 ) Obligations of states and political subdivisions: Obligations of states and state agencies — — 8,276 ( 588 ) 8,276 ( 588 ) Municipal bonds 1,019 ( 4 ) 142,976 ( 26,261 ) 143,995 ( 26,265 ) Total obligations of states and political subdivisions 1,019 ( 4 ) 151,252 ( 26,849 ) 152,271 ( 26,853 ) Residential mortgage-backed securities 9,010 ( 3 ) 569,629 ( 78,028 ) 578,639 ( 78,031 ) Corporate and other debt securities 4,977 ( 23 ) 161,478 ( 25,804 ) 166,455 ( 25,827 ) Total $ 15,006 $ ( 30 ) $ 1,192,879 $ ( 158,580 ) $ 1,207,885 $ ( 158,610 ) Within the AFS debt securities portfolio, the total number of security positions in an unrealized loss position was 726 and 687 at December 31, 2024 and 2023, respectively. As of December 31, 2024, the fair value of securities AFS that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $ 1.8 billion. Contractual Maturities The contractual maturities of AFS debt securities at December 31, 2024 are set forth in the following table. Contractual maturities may differ from actual maturities as borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Residential mortgage-backed securities are not included in the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without penalties. 2024 Form 10-K 104 December 31, 2024 Amortized Cost Fair Value (in thousands) Due in one year $ 177,290 $ 174,474 Due after one year through five years 123,053 117,533 Due after five years through ten years 174,490 157,526 Due after ten years 292,545 239,115 Residential mortgage-backed securities 2,784,895 2,681,076 Total $ 3,552,273 $ 3,369,724 The weighted-average remaining expected life for residential mortgage-backed securities AFS was 8.23 years at December 31, 2024. Impairment Analysis of Available for Sale Debt Securities Valley’s AFS debt securities portfolio includes corporate bonds and revenue bonds, among other securities. These types of securities may pose a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy, and their potential negative effect on the future performance of the security issuers. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. See Note 1 for further information regarding Valley's accounting policy. Valley also evaluated AFS debt securities that were in an unrealized loss position as of December 31, 2024 included in the tables above and has determined that the declines in fair value are mainly attributable to interest rates, credit spreads, market volatility and liquidity conditions, not 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 security totaling $ 5.0 million. The credit-related impairment was based 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 impairment recognized during years ended December 31, 2024 and 2022. Valley does not intend to sell any of its AFS debt securities in an unrealized loss position prior to recovery of their 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 their amortized cost basis. None of the AFS debt securities were past due as of December 31, 2024. As a result, there was no allowance for credit losses for AFS debt securities at December 31, 2024 and 2023. 105 2024 Form 10-K Held to Maturity Debt Securities The amortized cost, gross unrealized gains and losses and fair value of HTM debt securities at December 31, 2024 and 2023 were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Allowance for Credit Losses Net Carrying Value (in thousands) December 31, 2024 U.S. Treasury securities $ 25,480 $ — $ ( 19 ) $ 25,461 $ — $ 25,480 U.S. government agency securities 301,315 — ( 49,013 ) 252,302 — 301,315 Obligations of states and political subdivisions: Obligations of states and state agencies 68,025 — ( 5,335 ) 62,690 2 68,023 Municipal bonds 304,464 9 ( 20,802 ) 283,671 48 304,416 Total obligations of states and political subdivisions 372,489 9 ( 26,137 ) 346,361 50 372,439 Residential mortgage-backed securities 2,710,642 2,088 ( 420,582 ) 2,292,148 — 2,710,642 Trust preferred securities 36,081 — ( 6,936 ) 29,145 414 35,667 Corporate and other debt securities 86,213 10 ( 3,356 ) 82,867 183 86,030 Total $ 3,532,220 $ 2,107 $ ( 506,043 ) $ 3,028,284 $ 647 $ 3,531,573 December 31, 2023 U.S. Treasury securities $ 26,232 $ — $ ( 254 ) $ 25,978 $ — $ 26,232 U.S. government agency securities 305,996 — ( 44,441 ) 261,555 — 305,996 Obligations of states and political subdivisions: Obligations of states and state agencies 88,556 552 ( 4,155 ) 84,953 395 88,161 Municipal bonds 316,914 40 ( 14,380 ) 302,574 49 316,865 Total obligations of states and political subdivisions 405,470 592 ( 18,535 ) 387,527 444 405,026 Residential mortgage-backed securities 2,885,303 6,059 ( 369,436 ) 2,521,926 — 2,885,303 Trust preferred securities 37,062 — ( 6,412 ) 30,650 506 36,556 Corporate and other debt securities 80,350 — ( 5,674 ) 74,676 255 80,095 Total $ 3,740,413 $ 6,651 $ ( 444,752 ) $ 3,302,312 $ 1,205 $ 3,739,208 Accrued interest on investments , which is excluded from the amortized cost of HTM debt securities, totaled $ 13.0 million and $ 13.9 million at December 31, 2024 and 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition. HTM debt securities are carried net of an allowance for credit losses (as shown in the table above). 2024 Form 10-K 106 The age of unrealized losses and fair value of related HTM debt securities at December 31, 2024 and 2023 were as follows: Less than Twelve Months More than Twelve Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) December 31, 2024 U.S. Treasury securities $ 25,461 $ ( 19 ) $ — $ — $ 25,461 $ ( 19 ) U.S. government agency securities 22,621 ( 75 ) 229,143 ( 48,938 ) 251,764 ( 49,013 ) Obligations of states and political subdivisions: Obligations of states and state agencies 20,632 ( 517 ) 42,058 ( 4,818 ) 62,690 ( 5,335 ) Municipal bonds 36,766 ( 440 ) 210,723 ( 20,362 ) 247,489 ( 20,802 ) Total obligations of states and political subdivisions 57,398 ( 957 ) 252,781 ( 25,180 ) 310,179 ( 26,137 ) Residential mortgage-backed securities 216,651 ( 2,687 ) 1,917,644 ( 417,895 ) 2,134,295 ( 420,582 ) Trust preferred securities — — 29,145 ( 6,936 ) 29,145 ( 6,936 ) Corporate and other debt securities 5,977 ( 23 ) 63,879 ( 3,333 ) 69,856 ( 3,356 ) Total $ 328,108 $ ( 3,761 ) $ 2,492,592 $ ( 502,282 ) $ 2,820,700 $ ( 506,043 ) December 31, 2023 U.S. Treasury securities $ — $ — $ 25,978 $ ( 254 ) $ 25,978 $ ( 254 ) U.S. government agency securities 43,664 ( 151 ) 216,759 ( 44,290 ) 260,423 ( 44,441 ) Obligations of states and political subdivisions: Obligations of states and state agencies 10,700 ( 102 ) 48,149 ( 4,053 ) 58,849 ( 4,155 ) Municipal bonds 11,958 ( 121 ) 207,520 ( 14,259 ) 219,478 ( 14,380 ) Total obligations of states and political subdivisions 22,658 ( 223 ) 255,669 ( 18,312 ) 278,327 ( 18,535 ) Residential mortgage-backed securities 57,085 ( 505 ) 2,164,704 ( 368,931 ) 2,221,789 ( 369,436 ) Trust preferred securities 938 ( 63 ) 29,712 ( 6,349 ) 30,650 ( 6,412 ) Corporate and other debt securities 12,575 ( 426 ) 59,102 ( 5,248 ) 71,677 ( 5,674 ) Total $ 136,920 $ ( 1,368 ) $ 2,751,924 $ ( 443,384 ) $ 2,888,844 $ ( 444,752 ) Within the HTM securities portfolio, the total number of security positions in an unrealized loss position was 798 and 762 at December 31, 2024 and 2023, respectively. As of December 31, 2024, the fair value of debt securities HTM that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law was $ 1.2 billion. Contractual Maturities The contractual maturities of investments in HTM debt securities at December 31, 2024 are set forth in the table below. Contractual maturities may differ from actual maturities as borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Residential mortgage-backed securities are not included in the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without penalties. 107 2024 Form 10-K December 31, 2024 Amortized Cost Fair Value (in thousands) Due in one year $ 59,345 $ 59,271 Due after one year through five years 65,022 63,861 Due after five years through ten years 173,753 163,055 Due after ten years 523,458 449,949 Residential mortgage-backed securities 2,710,642 2,292,148 Total $ 3,532,220 $ 3,028,284 The weighted-average remaining expected life for residential mortgage-backed securities HTM was 9.41 years at December 31, 2024. Credit Quality Indicators Valley monitors the credit quality of the HTM debt securities utilizing the most current credit ratings from external rating agencies. The following table summarizes the amortized cost of HTM debt securities by external credit rating at December 31, 2024 and 2023. AAA/AA/A Rated BBB rated Non-investment grade rated Non-rated Total (in thousands) December 31, 2024 U.S. Treasury securities $ 25,480 $ — $ — $ — $ 25,480 U.S. government agency securities 301,315 — — — 301,315 Obligations of states and political subdivisions: Obligations of states and state agencies 52,770 — — 15,255 68,025 Municipal bonds 277,921 — — 26,543 304,464 Total obligations of states and political subdivisions 330,691 — — 41,798 372,489 Residential mortgage-backed securities 2,710,642 — — — 2,710,642 Trust preferred securities — — 36,081 36,081 Corporate and other debt securities — 6,000 — 80,213 86,213 Total $ 3,368,128 $ 6,000 $ — $ 158,092 $ 3,532,220 December 31, 2023 U.S. Treasury securities $ 26,232 $ — $ — $ — $ 26,232 U.S. government agency securities 305,996 — — — 305,996 Obligations of states and political subdivisions: Obligations of states and state agencies 66,502 — 5,330 16,724 88,556 Municipal bonds 283,441 — — 33,473 316,914 Total obligations of states and political subdivisions 349,943 — 5,330 50,197 405,470 Residential mortgage-backed securities 2,885,303 — — — 2,885,303 Trust preferred securities — — — 37,062 37,062 Corporate and other debt securities — 6,000 — 74,350 80,350 Total $ 3,567,474 $ 6,000 $ 5,330 $ 161,609 $ 3,740,413 Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations. At December 31, 2024, most of the obligations of states and political subdivisions were rated investment grade and a large portion of the “non-rated” category included municipal bonds secured by Ginnie Mae securities. Trust preferred securities consist of non-rated single-issuer securities issued by bank holding companies. Corporate bonds consist of debt primarily issued by banks. 2024 Form 10-K 108 Allowance for Credit Losses for Held to Maturity Debt Securities Valley has 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 security 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. 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. See Note 1 for further details. HTM debt securities are carried net of an allowance for credit losses. The following table details the activity in the allowance for credit losses for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands) Beginning balance $ 1,205 $ 1,646 $ 1,165 (Credit) provision for credit losses ( 558 ) ( 441 ) 481 Ending balance $ 647 $ 1,205 $ 1,646 There were no net charge-offs of HTM debt securities in the respective periods presented in the table above. Realized Gains and Losses Gross gains and losses realized on sales, maturities and other securities transactions related to AFS securities and net gains and losses on trading debt securities included in earnings for the years ended December 31, 2024, 2023 and 2022 were as follows: 2024 2023 2022 (in thousands) Sales transactions: Gross gains $ — $ 869 $ — Total — 869 — Maturities and other securities transactions: Gross gains 3 21 171 Gross losses ( 18 ) ( 488 ) ( 76 ) Total ( 15 ) ( 467 ) 95 Net gains (losses) on trading debt securities 115 702 ( 1,325 ) Gains (losses) on securities transactions, net $ 100 $ 1,104 $ ( 1,230 ) The gross gains on sales transactions for the year ended December 31, 2023 resulted from the sale of a previously impaired and fully charged-off corporate bond issued by Signature Bank. 109 2024 Form 10-K LOANS AND ALLOWANCE FOR CREDIT LOSSES FOR LOANS (Note 5) The detail of the loan portfolio as of December 31, 2024 and 2023 was as follows: 2024 2023 (in thousands) Loans: Commercial and industrial $ 9,931,400 $ 9,230,543 Commercial real estate: Commercial real estate 26,530,225 28,243,239 Construction 3,114,733 3,726,808 Total commercial real estate loans 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 $ 48,799,711 $ 50,210,295 Total loans include net unearned discounts and deferred loan fees of $ 45.3 million and $ 85.4 million at December 31, 2024 and 2023, respectively. Accrued interest on loans , which is excluded from the amortized cost of loans held for investment, totaled $ 208.9 million and $ 222.2 million at December 31, 2024 and 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition. Loans Portfolio Sales and Transfers to Loans Held for Sale Valley sells residential mortgage loans originated for sale (at fair value) primarily to Fannie Mae and Freddie Mac in the normal course of business. Under certain circumstances, Valley may decide to sell loans that were not originated with the intent to sell. During 2024, Valley sold $ 75.5 million of performing residential mortgage loans not originated for sale resulting in a modest net gain. In February 2024, Valley completed the sale of its commercial premium finance lending business for $ 96.8 million. This asset sale included $ 95.5 million of assets, mainly consisting of $ 93.6 million of loans, and $ 2.8 million of related liabilities. The transaction generated a $ 3.6 million net gain for the year ended December 31, 2024. During 2024, Valley transferred from the held for investment portfolio $ 151.0 million and $ 79.7 million of performing commercial real estate and construction loans, respectively, and sold them at par value through loan participation agreements with a related party, Bank Leumi Le-Israel B.M. Valley also transferred another pool of performing commercial real estate loans totaling $ 933.0 million, net of unearned fees, to loans held for sale in 2024. These performing loans were sold to an unrelated party during the fourth quarter 2024 and resulted in a $ 13.7 million net loss (due to transaction costs and a net market discount) for the year ended December 31, 2024. During the year ended December 31, 2023, Valley transferred from the held for investment loan portfolio a non-performing construction loan totaling $ 10.0 million, net of $ 4.2 million in charge-offs at the transfer date. The non-performing loan held for sale had a carrying value of $ 8.8 million, net of a $ 1.2 million valuation allowance, at December 31, 2024. See Note 3 for further details. Related Party Loans In the ordinary course of business, Valley has granted loans to certain directors, executive officers and their affiliates (collectively referred to as “related parties”). These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons and do not involve more than normal risk of collectibility. All loans to related parties are performing as of December 31, 2024. 2024 Form 10-K 110 The following table summarizes the changes in the total outstanding balances of loans and advances to the related parties during the year ended December 31, 2024: 2024 (in thousands) December 31, 2023 $ 216,303 New loans and advances 30,420 Repayments ( 22,029 ) December 31, 2024 $ 224,694 Loan Portfolio Risk Elements and Credit Risk Management Credit risk management. Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk appetite. Management reviews and approves these policies and procedures on a regular basis with subsequent approval by the Board annually. Credit authority relating to a significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and by the Credit Committee. Loan portfolio diversification is an important factor utilized by Valley to manage its risk across business sectors and through cyclical economic circumstances. Additionally, Valley does not accept crypto assets as loan collateral for any of its loan portfolio classes discussed further below. Commercial and industrial loans. While a focused area for growth in the percentage mix of our total loan portfolio, 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 for both existing and new customers are based on cash flow from the operations of the business. While such recurring cash flow serves as the primary source of repayment, a significant number of the loans are secured by collateral such as business equipment, inventory, and real estate. Short-term loans may be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, Valley will obtain the personal guarantee of the borrower’s principals to potentially help mitigate the risk. Commercial real estate loans . 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 in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets. Construction loans . Valley originates and manages construction loans to developers and builders structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. 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. Residential mortgages. Valley originates residential, first mortgage loans based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. In deciding whether to originate each residential mortgage, Valley considers the qualifications of the borrower as well as the value of the underlying property. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from valuation services and not through appraisal management companies. Credit scoring, using FICO ® and other proprietary credit scoring models are employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Residential mortgage loans include fixed and variable interest rate loans secured by one to four family homes. 111 2024 Form 10-K Consumer loans. The consumer loan portfolio consists of a home equity, automobile and other consumer loans. Home equity lending consists of both fixed and variable interest rate products. Valley mainly provides home equity loans to its residential mortgage customers within the footprint of its primary lending territory. Valley generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio o f 80 percent when originating a home equity loan. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Automotive collateral is generally a depreciating asset and there are times in the life of an automobile loan where the amount owed on a vehicle may exceed its collateral value. Additionally, automobile charge-offs will vary based on the strength or weakness of the used vehicle market, original advance rate, when in the life cycle of a loan a default occurs, and the condition of the collateral being liquidated. Where permitted by law, and subject to the limitations of the bankruptcy code, deficiency judgments are sought and acted upon to ultimately collect all money owed, even when a default resulted in a loss at collateral liquidation. Valley uses a third party to actively track collision and comprehensive risk insurance required of the borrower on the automobile and this third party provides coverage to Valley in the event of an uninsured collateral loss. Valley’s other consumer loan portfolio includes direct consumer term loans, both secured and unsecured. The other consumer loan portfolio includes exposures in personal lines of credit (mainly those secured by cash surrender value of life insurance), credit card loans and personal loans. Credit Quality The following table presents past due, current and non-accrual loans without an allowance for loan losses by loan portfolio class at December 31, 2024 and 2023: Past Due and Non-Accrual Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 Days or More Past Due Loans Non-Accrual Loans Total Past Due Loans Current Loans Total Loans Non-Accrual Loans Without Allowance for Loan Losses (in thousands) December 31, 2024 Commercial and industrial $ 2,389 $ 1,007 $ 1,307 $ 136,675 $ 141,378 $ 9,790,022 $ 9,931,400 $ 15,947 Commercial real estate: Commercial real estate 20,902 24,903 — 157,231 203,036 26,327,189 26,530,225 91,095 Construction — — — 24,591 24,591 3,090,142 3,114,733 5,002 Total commercial real estate loans 20,902 24,903 — 181,822 227,627 29,417,331 29,644,958 96,097 Residential mortgage 21,295 5,773 3,533 36,786 67,387 5,565,129 5,632,516 23,543 Consumer loans: Home equity 1,651 181 — 3,961 5,793 598,640 604,433 1,341 Automobile 8,583 1,346 407 230 10,566 1,890,499 1,901,065 — Other consumer 2,318 2,957 642 24 5,941 1,079,398 1,085,339 — Total consumer loans 12,552 4,484 1,049 4,215 22,300 3,568,537 3,590,837 1,341 Total $ 57,138 $ 36,167 $ 5,889 $ 359,498 $ 458,692 $ 48,341,019 $ 48,799,711 $ 136,928 2024 Form 10-K 112 Past Due and Non-Accrual Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 Days or More Past Due Loans Non-Accrual Loans Total Past Due Loans Current Loans Total Loans Non-Accrual Loans Without Allowance for Loan Losses (in thousands) December 31, 2023 Commercial and industrial $ 9,307 $ 5,095 $ 5,579 $ 99,912 $ 119,893 $ 9,110,650 $ 9,230,543 $ 6,594 Commercial real estate: Commercial real estate 3,008 1,257 — 99,739 104,004 28,139,235 28,243,239 81,282 Construction — — 3,990 60,851 64,841 3,661,967 3,726,808 12,007 Total commercial real estate loans 3,008 1,257 3,990 160,590 168,845 31,801,202 31,970,047 93,289 Residential mortgage 26,345 8,200 2,488 26,986 64,019 5,504,991 5,569,010 14,654 Consumer loans: Home equity 1,687 613 — 3,539 5,839 553,313 559,152 — Automobile 11,850 1,855 576 212 14,493 1,605,896 1,620,389 — Other consumer 7,017 2,247 512 632 10,408 1,250,746 1,261,154 589 Total consumer loans 20,554 4,715 1,088 4,383 30,740 3,409,955 3,440,695 589 Total $ 59,214 $ 19,267 $ 13,145 $ 291,871 $ 383,497 $ 49,826,798 $ 50,210,295 $ 115,126 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. Credit quality indicators . Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as “Pass,” “Special Mention,” “Substandard,” “Doubtful,” and “Loss.” Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses and, therefore, not presented in the table below. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories but pose weaknesses that deserve management’s close attention are deemed Special Mention. Pass rated loans do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants. 113 2024 Form 10-K The following table presents the internal loan classification risk by loan portfolio class by origination year based on the most recent analysis performed at December 31, 2024 and 2023, as well as the gross loan charge-offs by year of origination for the years ended December 31, 2024 and 2023: Term Loans Amortized Cost Basis by Origination Year December 31, 2024 2024 2023 2022 2021 2020 Prior to 2020 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans Total (in thousands) Commercial and industrial Risk Rating: Pass $ 1,769,585 $ 828,087 $ 703,962 $ 476,091 $ 246,992 $ 392,834 $ 4,804,095 $ 6,006 $ 9,227,652 Special Mention 30,755 3,553 59,434 11,646 270 72,514 147,254 10,762 336,188 Substandard 24,613 13,479 9,415 4,296 2,813 7,382 201,053 39,011 302,062 Doubtful — 8,911 4 928 — 52,064 3,591 — 65,498 Total commercial and industrial $ 1,824,953 $ 854,030 $ 772,815 $ 492,961 $ 250,075 $ 524,794 $ 5,155,993 $ 55,779 $ 9,931,400 Commercial real estate Risk Rating: Pass $ 2,097,314 $ 2,941,270 $ 5,310,807 $ 3,883,333 $ 2,302,480 $ 6,086,608 $ 597,266 $ 78,621 $ 23,297,699 Special Mention 156,394 380,852 289,669 192,614 55,739 327,732 141,164 — 1,544,164 Substandard 84,410 107,944 387,638 288,906 236,927 520,858 11,167 — 1,637,850 Doubtful — 3,060 — 35,756 9,813 1,883 — — 50,512 Total commercial real estate $ 2,338,118 $ 3,433,126 $ 5,988,114 $ 4,400,609 $ 2,604,959 $ 6,937,081 $ 749,597 $ 78,621 $ 26,530,225 Construction Risk Rating: Pass $ 545,597 $ 680,260 $ 334,899 $ 92,765 $ 17,955 $ 45,161 $ 1,224,698 $ 58,644 $ 2,999,979 Special Mention 13,278 — 664 5,069 — 2,504 16,691 — 38,206 Substandard 9,835 — 8,950 4,942 — — 43,474 — 67,201 Doubtful — — 2,074 — 7,273 — — — 9,347 Total construction $ 568,710 $ 680,260 $ 346,587 $ 102,776 $ 25,228 $ 47,665 $ 1,284,863 $ 58,644 $ 3,114,733 Gross loan charge-offs $ 706 $ 31,809 $ 7,523 $ 44,610 $ 66,632 $ 49,436 $ 3,930 $ 2,148 $ 206,794 2024 Form 10-K 114 Term Loans Amortized Cost Basis by Origination Year December 31, 2023 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans Total (in thousands) Commercial and industrial Risk Rating: Pass $ 1,494,417 $ 1,047,513 $ 765,335 $ 377,047 $ 211,504 $ 523,430 $ 4,382,361 $ 29,798 $ 8,831,405 Special Mention 70,807 73,423 15,296 358 1,870 915 99,981 139 262,789 Substandard 3,100 1,837 2,629 1,714 1,221 5,900 29,569 4,225 50,195 Doubtful 11,658 595 1,166 ( 22 ) 2,653 57,817 12,287 — 86,154 Total commercial and industrial $ 1,579,982 $ 1,123,368 $ 784,426 $ 379,097 $ 217,248 $ 588,062 $ 4,524,198 $ 34,162 $ 9,230,543 Commercial real estate Risk Rating: Pass $ 4,088,835 $ 6,630,322 $ 4,791,190 $ 2,789,275 $ 2,329,385 $ 5,385,809 $ 618,056 $ 104,839 $ 26,737,711 Special Mention 125,296 82,917 248,900 184,720 69,949 358,059 26 183 1,070,050 Substandard 58,115 25,709 12,122 48,506 70,439 214,095 4,415 2,077 435,478 Total commercial real estate $ 4,272,246 $ 6,738,948 $ 5,052,212 $ 3,022,501 $ 2,469,773 $ 5,957,963 $ 622,497 $ 107,099 $ 28,243,239 Construction Risk Rating: Pass $ 753,759 $ 655,198 $ 267,336 $ 10,318 $ 40,584 $ 43,560 $ 1,762,890 $ 139,599 $ 3,673,244 Substandard 6,721 — 9,276 — — 17,668 — — 33,665 Doubtful — 19,899 — — — — — — 19,899 Total construction $ 760,480 $ 675,097 $ 276,612 $ 10,318 $ 40,584 $ 61,228 $ 1,762,890 $ 139,599 $ 3,726,808 Gross loan charge-offs $ 307 $ 12,919 $ 28,438 $ 6,946 $ 5,031 $ 13,446 $ 3,729 $ 145 $ 70,961 115 2024 Form 10-K For residential mortgages, home equity, automobile and other consumer loan portfolio classes, Valley evaluates credit quality based on the aging status of the loan and by payment activity. The following table presents the amortized cost in those loan classes based on payment activity by origination year as of December 31, 2024 and 2023, as well as the gross loan charge-offs by year of origination for the years ended December 31, 2024 and 2023: Term Loans Amortized Cost Basis by Origination Year December 31, 2024 2024 2023 2022 2021 2020 Prior to 2020 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans Total (in thousands) Residential mortgage Performing $ 428,138 $ 413,528 $ 1,282,524 $ 1,420,835 $ 494,430 $ 1,490,512 $ 75,479 $ 954 $ 5,606,400 90 days or more past due 530 771 1,030 1,533 5,286 16,285 — 681 26,116 Total residential mortgage $ 428,668 $ 414,299 $ 1,283,554 $ 1,422,368 $ 499,716 $ 1,506,797 $ 75,479 $ 1,635 $ 5,632,516 Consumer loans Home equity Performing $ 22,947 $ 29,445 $ 38,774 $ 10,302 $ 3,340 $ 50,613 $ 438,817 $ 9,061 $ 603,299 90 days or more past due — 48 51 1 — 855 — 179 1,134 Total home equity 22,947 29,493 38,825 10,303 3,340 51,468 438,817 9,240 604,433 Automobile Performing $ 863,281 $ 343,203 $ 363,901 $ 211,294 $ 59,288 $ 59,512 $ — $ — $ 1,900,479 90 days or more past due 71 122 140 70 2 181 — — 586 Total automobile 863,352 343,325 364,041 211,364 59,290 59,693 — — 1,901,065 Other consumer Performing $ 15,164 $ 25,884 $ 15,787 $ 1,588 $ 337 $ 53,917 $ 956,339 $ 15,917 $ 1,084,933 90 days or more past due — 59 61 — — 38 — 248 406 Total other consumer 15,164 25,943 15,848 1,588 337 53,955 956,339 16,165 1,085,339 Total consumer $ 901,463 $ 398,761 $ 418,714 $ 223,255 $ 62,967 $ 165,116 $ 1,395,156 $ 25,405 $ 3,590,837 Gross loan charge-offs $ 1,014 $ 1,883 $ 1,511 $ 1,015 $ 519 $ 2,245 $ — $ 131 $ 8,318 2024 Form 10-K 116 Term Loans Amortized Cost Basis by Origination Year December 31, 2023 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans Total (in thousands) Residential mortgage Performing $ 467,178 $ 1,304,026 $ 1,505,133 $ 538,853 $ 435,669 $ 1,244,986 $ 57,052 $ 1,771 $ 5,554,668 90 days or more past due — 1,968 1,681 1,357 3,391 5,945 — — 14,342 Total residential mortgage $ 467,178 $ 1,305,994 $ 1,506,814 $ 540,210 $ 439,060 $ 1,250,931 $ 57,052 $ 1,771 $ 5,569,010 Consumer loans Home equity Performing $ 40,599 $ 44,893 $ 14,948 $ 4,096 $ 4,850 $ 46,274 $ 396,960 $ 4,608 $ 557,228 90 days or more past due — 51 13 — — 1,132 — 728 1,924 Total home equity 40,599 44,944 14,961 4,096 4,850 47,406 396,960 5,336 559,152 Automobile Performing $ 468,152 $ 531,728 $ 356,144 $ 121,658 $ 86,147 $ 34,504 $ 20,227 $ 763 $ 1,619,323 90 days or more past due 90 284 54 92 237 309 — — 1,066 Total automobile 468,242 532,012 356,198 121,750 86,384 34,813 20,227 763 1,620,389 Other consumer Performing $ 32,662 $ 20,376 $ 2,986 $ 1,722 $ 10,381 $ 52,659 $ 1,120,863 $ 18,655 $ 1,260,304 90 days or more past due 10 79 — — — 628 — 133 850 Total other consumer 32,672 20,455 2,986 1,722 10,381 53,287 1,120,863 18,788 1,261,154 Total consumer $ 541,513 $ 597,411 $ 374,145 $ 127,568 $ 101,615 $ 135,506 $ 1,538,050 $ 24,887 $ 3,440,695 Gross loan charge-offs $ 296 $ 903 $ 357 $ 232 $ 752 $ 1,921 $ 31 $ — $ 4,492 Loan modifications to borrowers experiencing financial difficulty . From time to time, Valley may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. 117 2024 Form 10-K The following table shows the amortized cost basis of loans to borrowers experiencing financial difficulty at December 31, 2024 and 2023 that were modified during the years ended December 31, 2024 and 2023, disaggregated by class of financing receivable and type of modification. Each of the types of modifications was less than one percent of their respective loan categories. Interest Rate Reduction Term Extension Term Extension and Interest Rate Reduction Other Than Insignificant Payment Delay Total % of Total Loan Class ($ in thousands) 2024 Commercial and industrial $ 825 $ 111,998 $ — $ — $ 112,823 1.14 % Commercial real estate 3,223 82,206 16,198 173,780 275,407 1.04 Construction — — — 2,505 2,505 0.08 Residential mortgage — 1,041 — 1,136 2,177 0.04 Home equity — — — 44 44 0.01 Total $ 4,048 $ 195,245 $ 16,198 $ 177,465 $ 392,956 0.81 2023 Commercial and industrial $ 2,967 $ 58,287 $ 2,500 $ — $ 63,754 0.69 % Commercial real estate — 123,838 3,690 — 127,528 0.45 Residential mortgage — 568 — — 568 0.01 Home equity — 31 — — 31 0.01 Consumer — 43 — — 43 — Total $ 2,967 $ 182,767 $ 6,190 $ — $ 191,924 0.17 The following table describes the types of modifications made to borrowers experiencing financial difficulty during the years ended December 31, 2024 and 2023: Weighted Average Interest Rate Reduction Weighted Average Term Extension (in months) Weighted Average Payment Deferral (in months) 2024 Commercial and industrial 3.10 % 10 — Commercial real estate 0.91 12 10 Construction — — 43 Residential mortgage — 145 7 Home equity — 120 5 2023 Commercial and industrial 2.16 % 12 — Commercial real estate 2.75 17 — Residential mortgage — 43 — Home equity — 120 — Consumer — 60 — 2024 Form 10-K 118 Valley closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of modification efforts. The following table presents the aging analysis of loans that have been modified within the previous 12 months at December 31, 2024 and 2023. Current 30-89 Days Past Due 90 Days Or More Past Due Total ($ in thousands) December 31, 2024 Commercial and industrial $ 110,761 $ 2,062 $ — $ 112,823 Commercial real estate 275,361 — 46 275,407 Construction 2,505 — — 2,505 Residential mortgage 1,898 184 95 * 2,177 Home equity — 44 — 44 Total $ 390,525 $ 2,290 $ 141 $ 392,956 December 31, 2023 Commercial and industrial $ 45,169 $ 3,697 $ 14,888 * $ 63,754 Commercial real estate 124,958 2,570 — 127,528 Residential mortgage 207 361 — 568 Home equity 31 — — 31 Consumer 43 — — 43 Total $ 170,408 $ 6,628 $ 14,888 $ 191,924 * Indicates non-accrual loans. The following table provides the amortized cost basis of financing receivables that had a payment default during the years ended December 31, 2024 and 2023 and were modified in the 12 months before default to borrowers experiencing financial difficulty. Term Extension Other than Insignificant Payment Delay ($ in thousands) 2024 Commercial real estate $ 46 $ — Residential mortgage 868 95 Total $ 914 $ 95 2023 Commercial and industrial $ 14,888 $ — Total $ 14,888 $ — Valley did not extend any commitments to lend additional funds to borrowers experiencing financial difficulty whose loans had been modified during the year ended December 31, 2024 and 2023. Collateral dependent loans. Loans are collateral dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When Valley determines that repayment or satisfaction of the loan depends on the sale of the collateral, the collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process. 119 2024 Form 10-K The following table presents collateral dependent loans by class as of December 31, 2024 and 2023: 2024 2023 (in thousands) Collateral dependent loans: Commercial and industrial * $ 131,898 $ 96,827 Commercial real estate 156,825 98,785 Construction 15,841 46,634 Total commercial real estate loans 172,666 145,419 Residential mortgage 23,797 21,843 Home equity 1,341 — Consumer — 589 Total $ 329,702 $ 264,678 * Includes non-accrual loans collateralized by taxi medallions totaling $ 49.5 million and $ 62.3 million at December 31, 2024 and 2023, respectively. Allowance for Credit Losses for Loans The following table summarizes the allowance for credit losses for loans at December 31, 2024 and 2023: 2024 2023 (in thousands) Components of allowance for credit losses for loans: Allowance for loan losses $ 558,850 $ 446,080 Allowance for unfunded credit commitments 14,478 19,470 Total allowance for credit losses for loans $ 573,328 $ 465,550 The following table summarizes the provision for credit losses for loans for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands) Components of provision for credit losses for loans: Provision for loan losses $ 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 2024 Form 10-K 120 The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2024 and 2023: Commercial and Industrial Commercial Real Estate Residential Mortgage Consumer Total (in thousands) December 31, 2024 Allowance for loan losses: Beginning balance $ 133,359 $ 249,598 $ 42,957 $ 20,166 $ 446,080 Loans charged-off ( 68,299 ) ( 138,495 ) ( 29 ) ( 8,289 ) ( 215,112 ) Charged-off loans recovered 6,038 5,130 140 2,194 13,502 Net (charge-offs) recoveries ( 62,261 ) ( 133,365 ) 111 ( 6,095 ) ( 201,610 ) Provision for loan losses 101,904 187,915 15,827 8,734 314,380 Ending balance $ 173,002 $ 304,148 $ 58,895 $ 22,805 $ 558,850 December 31, 2023 Allowance for loan losses: Beginning balance $ 139,941 $ 259,408 $ 39,020 $ 20,286 $ 458,655 Impact of the adoption of ASU No. 2022-02 ( 739 ) ( 589 ) ( 12 ) ( 28 ) ( 1,368 ) Beginning balance, adjusted 139,202 258,819 39,008 20,258 457,287 Loans charged-off ( 48,015 ) ( 22,946 ) ( 194 ) ( 4,298 ) ( 75,453 ) Charged-off loans recovered 11,270 34 201 1,986 13,491 Net (charge-offs) recoveries ( 36,745 ) ( 22,912 ) 7 ( 2,312 ) ( 61,962 ) Provision for loan losses 30,902 13,691 3,942 2,220 50,755 Ending balance $ 133,359 $ 249,598 $ 42,957 $ 20,166 $ 446,080 The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the allowance measurement methodology for the years ended December 31, 2024 and 2023. Commercial and Industrial Commercial Real Estate Residential Mortgage Consumer Total (in thousands) December 31, 2024 Allowance for loan losses: Individually evaluated for credit losses $ 59,603 $ 16,225 $ 27 $ — $ 75,855 Collectively evaluated for credit losses 113,399 287,923 58,868 22,805 482,995 Total $ 173,002 $ 304,148 $ 58,895 $ 22,805 $ 558,850 Loans: Individually evaluated for credit losses $ 131,898 $ 172,666 $ 23,797 $ 1,341 $ 329,702 Collectively evaluated for credit losses 9,799,502 29,472,292 5,608,719 3,589,496 48,470,009 Total $ 9,931,400 $ 29,644,958 $ 5,632,516 $ 3,590,837 $ 48,799,711 December 31, 2023 Allowance for loan losses: Individually evaluated for credit losses $ 55,993 $ 17,987 $ 235 $ — $ 74,215 Collectively evaluated for credit losses 77,366 231,611 42,722 20,166 371,865 Total $ 133,359 $ 249,598 $ 42,957 $ 20,166 $ 446,080 Loans: Individually evaluated for credit losses $ 96,827 $ 145,419 $ 21,843 $ 589 $ 264,678 Collectively evaluated for credit losses 9,133,716 31,824,628 5,547,167 3,440,106 49,945,617 Total $ 9,230,543 $ 31,970,047 $ 5,569,010 $ 3,440,695 $ 50,210,295 121 2024 Form 10-K LEASES (Note 6) The following table presents the components of the ROU assets and lease liabilities in the consolidated statements of financial condition by lease type at December 31, 2024 and 2023. 2024 2023 (in thousands) ROU assets: Operating leases $ 324,975 $ 343,442 Finance leases 3,500 19 Total $ 328,475 $ 343,461 Lease liabilities: Operating leases $ 384,745 $ 403,766 Finance leases 3,558 15 Total $ 388,303 $ 403,781 During 2023, Valley recognized an operating lease ROU asset and related lease liability totaling $ 58.3 million and $ 66.4 million, respectively, related to its new headquarters located in Morristown, New Jersey. The ROU asset was reduced by construction allowance incentives totaling $ 8.2 million, which are amortized over the lease term. The following table presents the components by lease type, of total lease cost recognized in the consolidated statements of income for the years ended December 31, 2024, 2023, and 2022: 2024 2023 2022 (in thousands) Finance lease cost: Amortization of ROU assets $ 53 $ 16 $ 379 Interest on lease liabilities 12 — 30 Operating lease cost 49,875 48,241 42,268 Short-term lease cost 1,498 1,930 874 Variable lease cost 201 177 4,647 Sublease income ( 3,316 ) ( 3,303 ) ( 2,982 ) Total lease cost (primarily included in net occupancy expense) $ 48,323 $ 47,061 $ 45,216 The following table presents supplemental cash flow information related to leases for the years ended December 31, 2024, 2023, and 2022: 2024 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 51,581 $ 49,007 $ 43,768 Operating cash flows from finance leases — — 30 Financing cash flows from finance leases 3 18 745 2024 Form 10-K 122 The following table presents supplemental information related to leases at December 31, 2024 and 2023: 2024 2023 Weighted-average remaining lease term Operating leases 11.9 years 12.5 years Finance leases 5.1 years 2.6 years Weighted-average discount rate Operating leases 3.88 % 3.76 % Finance leases 4.33 % 1.49 % The following table presents a maturity analysis of lessor and lessee arrangements outstanding as of December 31, 2024: Lessor Lessee Direct Financing and Sales-Type Leases Operating Leases Finance Leases (in thousands) 2025 $ 268,502 $ 51,338 $ 728 2026 223,569 50,392 794 2027 160,288 47,327 792 2028 99,590 45,561 792 2029 55,076 44,207 791 Thereafter 19,661 255,136 66 Total lease payments 826,686 493,961 3,963 Less: present value discount ( 80,226 ) ( 109,216 ) ( 405 ) Total $ 746,460 $ 384,745 $ 3,558 The total net investment in direct financing and sales-type leases was $ 746.5 million and $ 797.4 million at December 31, 2024 and 2023, respectively, comprised of $ 741.0 million and $ 793.3 million in lease receivables and $ 5.5 million and $ 4.1 million in non-guaranteed residuals, respectively. Total lease income was $ 39.8 million, $ 40.1 million and $ 34.4 million for the years ended December 31, 2024, 2023, and 2022, respectively. PRE MISES AND EQUIPMENT, N ET (Note 7) At December 31, 2024 and 2023, premises and equipment, net consisted of: 2024 2023 (in thousands) Land $ 79,919 $ 80,349 Buildings 196,801 197,961 Leasehold improvements 170,500 165,878 Furniture and equipment 174,035 172,414 Total premises and equipment 621,255 616,602 Accumulated depreciation and amortization ( 270,459 ) ( 235,521 ) Total premises and equipment, net $ 350,796 $ 381,081 Depreciation and amortization of premises and equipment included in net occupancy expense for the years ended December 31, 2024, 2023 and 2022 was approximately $ 43.7 million, $ 43.4 million, and $ 41.2 million, respectively. 123 2024 Form 10-K GOODWILL AND OTHER INTANGIBLE ASSETS (Note 8) The following table presents carrying amounts of goodwill allocated to Valley's reporting units at December 31, 2024 and 2023. Reporting Unit (*) Wealth Management Consumer Banking Commercial Banking Total (in thousands) Goodwill $ 78,142 $ 349,646 $ 1,441,148 $ 1,868,936 * The Wealth Management and Consumer Banking reporting units are both components of the overall Consumer Banking operating segment, which is further described in Note 21 . During the second quarter 2024, Valley performed the annual goodwill impairment test at its normal assessment date. During the year ended December 31, 2024, there were no triggering events that would more likely than not reduce the fair value of any reporting unit below its carrying amount. There was no impairment of goodwill recognized during the years ended December 31, 2024, 2023 and 2022. The following tables summarize other intangible assets at December 31, 2024 and 2023: Gross Intangible Assets Accumulated Amortization Net Intangible Assets (in thousands) December 31, 2024 Loan servicing rights $ 125,961 $ ( 104,833 ) $ 21,128 Core deposits 215,620 ( 138,080 ) 77,540 Other 50,393 ( 20,400 ) 29,993 Total other intangible assets $ 391,974 $ ( 263,313 ) $ 128,661 December 31, 2023 Loan servicing rights $ 122,586 $ ( 100,636 ) $ 21,950 Core deposits 215,620 ( 113,183 ) 102,437 Other 50,393 ( 14,449 ) 35,944 Total other intangible assets $ 388,599 $ ( 228,268 ) $ 160,331 Core deposits are amortized using an accelerated method over a period of 10.0 years. The line item labeled “Other” included in the table above primarily consists of customer lists, certain financial asset servicing contracts and covenants not to compete, which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of 13.5 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the years ended December 31, 2024, 2023 and 2022. The following table summarizes the change in loan servicing rights during the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands) Beginning balance $ 21,950 $ 23,807 $ 23,685 Origination of loan servicing rights 3,375 2,643 5,307 Amortization expense ( 4,197 ) ( 4,500 ) ( 5,185 ) Ending balance $ 21,128 $ 21,950 $ 23,807 Loan servicing rights are accounted for using the amortization method. There was no valuation allowance at December 31, 2024, 2023 and 2022 and no net impairment recognized during the years ended December 31, 2024, 2023 and 2022. 2024 Form 10-K 124 The Bank services residential mortgage loan portfolios and it is compensated for loan administrative services performed for mortgage servicing rights of loans originated and sold by the Bank, and to a lesser extent, purchased mortgage servicing rights. 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 and $ 3.5 billion at December 31, 2022. The outstanding balance of loans serviced for others is not included in the consolidated statements of financial condition. Valley recognized amortization expense on other intangible assets of $ 35.0 million, $ 39.8 million and $ 37.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. The following table presents the estimated amortization expense of other intangible assets over the next five-year period: Year Loan Servicing Rights Core Deposits Other (in thousands) 2025 $ 2,584 $ 21,048 $ 5,380 2026 2,322 17,223 4,805 2027 2,051 13,544 4,205 2028 1,805 10,117 3,633 2029 1,596 7,500 3,081 DEPOSITS (Note 9) The scheduled maturities of time deposits as of December 31, 2024 were as follows: Year Amount (in thousands) 2025 $ 9,240,979 2026 1,781,725 2027 1,257,252 2028 22,548 2029 28,710 Thereafter 11,330 Total time deposits $ 12,342,544 The following table presents additional information about deposits at December 31, 2024 and 2023 : 2024 2023 (in thousands) Certificates of deposits in excess of the FDIC limit included in time deposits $ 2,366,648 $ 2,587,535 Deposits from certain directors, executives, and other affiliates 67,835 81,902 BORROWED FUNDS (Note 10) Short-Term Borrowings Short-term borrowings at December 31, 2024 and 2023 consisted of the following: 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 weighted average interest rate for short-term FHLB advances was 5.62 percent for the year ended December 31, 2023. 125 2024 Form 10-K Long-Term Borrowings Long-term borrowings at December 31, 2024 and 2023 consisted of the following: 2024 2023 (in thousands) FHLB advances, net * $ 2,526,608 $ 1,690,013 Subordinated debt, net * 647,547 638,362 Total long-term borrowings $ 3,174,155 $ 2,328,375 * FHLB advances and subordinated debt are reported net of unamortized premiums and debt issuance costs, respectively, that were immaterial at both December 31, 2024 and 2023. FHLB Advances. Long-term FHLB advances had a weighted average interest rate of 4.20 percent and 3.75 percent at December 31, 2024 and 2023, respectively. FHLB advances are secured by pledges of certain eligible collateral, including but not limited to, U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgage and commercial real estate loans. Long-Term Borrowings The long-term FHLB advances at December 31, 2024 are scheduled for contractual balance repayments as follows: Year Amount (in thousands) 2025 $ 273,000 2026 601,804 2027 926,800 2028 475,000 2029 250,000 Total long-term FHLB advances $ 2,526,604 The FHLB advances reported in the table above are not callable for early redemption. Subordinated Debt. At December 31, 2024, Valley had the following subordinated debt outstanding by its maturity date: • $ 100 million of 4.55 percent subordinated debentures (notes) issued in June 2015 and due June 30, 2025 with no call dates or prepayments allowed unless certain conditions exist. Interest on the subordinated notes is payable semi-annually in arrears on June 30 and December 30 of each year. The subordinated notes had a net carrying value of $ 99.9 million and $ 99.8 million at December 31, 2024 and 2023, respectively. • $ 115 million of 5.25 percent Fixed-to-Floating Rate subordinated notes issued in June 2020 and due June 15, 2030 callable in whole or in part on or after June 15, 2025 or upon the occurrence of certain events. Interest on the subordinated notes during the initial five-year term through June 15, 2025 is payable semi-annually on June 15 and December 15. Thereafter, interest is expected to be set based on three-month Term SOFR p lus 514 basis poin ts and paid quarterly through maturity of the notes. The subordinated notes had a net carrying value of $ 114.0 million and $ 113.8 million at December 31, 2024 and 2023, respectively. • $ 300 million of 3.00 percent Fixed-to-Floating Rate subordinated notes issued in May 2021 and due June 15, 2031. The subordinated notes are callable in whole or in part on or after June 15, 2026 or upon the occurrence of certain events. Interest on the subordinated notes during the initial five-year term through June 15, 2026 is payable semi-annually on June 15 and December 15. Thereafter, interest is expected to be set based on three-month Term SOFR plus 236 basis points and paid quarterly through maturity of the notes. The subordinated notes had a carrying value of $ 285.0 million and $ 276.6 million, net of unamortized debt issuance costs and fair value of hedging adjustment at December 31, 2024 and 2023, respectivel y. In June 2021, Valley executed an interest rate swap to hedge the change in the fair value of the $ 300 million in subordinated notes. See Note 15 for additional details. • $ 150 million of 6.25 percent fixed-to-floating rate subordinated notes issued on September 20, 2022 and due September 30, 2032. Interest on the subordinated notes during the initial five year term through September 30, 2027, is payable semi-annually in arrears on March 30 and September 30, commencing on March 30, 2023. Thereafter, interest 2024 Form 10-K 126 will be set based on three-month Term SOFR plus 278 basis points and paid quarterly through maturity of the notes. The subordinated notes had a net carrying va lue of $ 148.6 million and $ 148.2 million at December 31, 2024 and 2023, respectivel y. Pledged Securities. The fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit, FHLB advances and for other purposes required by law approximate d $ 3.0 billion and $ 3.5 billion for December 31, 2024 and 2023, respectively. JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 11) All of the statutory trusts presented in the table below were acquired in bank acquisitions. These trusts were established for the sole purpose of issuing trust preferred securities and related trust common securities. The proceeds from such issuances were used by the trust to purchase an equivalent amount of junior subordinated debentures issued by the acquired bank, and assumed by Valley. The junior subordinated debentures, the sole assets of the trusts, are unsecured obligations of Valley, and are subordinate and junior in right of payment to all present and future senior and subordinated indebtedness and certain other financial obligations of Valley. Valley does not consolidate its capital trusts based on GAAP but wholly owns all of the common securities of each trust. The table below summarizes the outstanding callable junior subordinated debentures and the related trust preferred securities issued by each trust as of December 31, 2024 and 2023: GCB Capital Trust III State Bancorp Capital Trust I State Bancorp Capital Trust II Aliant Statutory Trust II ($ in thousands) Junior Subordinated Debentures: December 31, 2024 Carrying value (1) $ 24,743 $ 9,525 $ 9,122 $ 14,065 Contractual principal balance 24,743 10,310 10,310 15,464 Annual interest rate (2) 3-mo. SOFR+spread adj.+ 1.4 % 3-mo. SOFR+spread adj.+ 3.45 % 3-mo. SOFR+ spread adj.+ 2.85 % 3-mo.SOFR+spread adj.+ 1.8 % December 31, 2023 Carrying value (1) $ 24,743 $ 9,425 $ 8,991 $ 13,949 Contractual principal balance 24,743 10,310 10,310 15,464 Annual interest rate 3-mo. SOFR+spread adj.+ 1.4 % 3-mo. SOFR+spread adj.+ 3.45 % 3-mo. SOFR+spread adj.+ 2.85 % 3-mo. SOFR+spread adj.+ 1.8 % Stated maturity date July 30, 2037 November 7, 2032 January 23, 2034 December 15, 2036 Trust Preferred Securities: December 31, 2024 and 2023 Face value $ 24,000 $ 10,000 $ 10,000 $ 15,000 Annual distribution rate (2) 3-mo. SOFR+spread adj.+ 1.4 % 3-mo. SOFR+ spread adj.+ 3.45 % 3-mo. SOFR+ spread adj.+ 2.85 % 3-mo. SOFR+ spread adj.+ 1.8 % Issuance date July 2, 2007 October 29, 2002 December 19, 2003 December 14, 2006 Distribution dates (3) Quarterly Quarterly Quarterly Quarterly (1) The carrying values include unamortized purchase accounting adjustments at December 31, 2024 and 2023. (2) The 3-month Term SOFR rate is adjusted for the 0.26161 percent spread. (3) All cash distributions are cumulative. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at the stated maturity date or upon early redemption. The trusts’ ability to pay amounts due on the trust preferred securities is solely dependent upon Valley making payments on the related junior subordinated debentures. Valley’s obligation under the junior subordinated debentures and other relevant trust agreements, in aggregate, constitutes a full and unconditional guarantee by Valley of the trusts’ obligations under the trust preferred securities issued. Under the junior subordinated debenture agreements, Valley has the right to defer payment of interest on the debentures and, therefore, distributions on the trust preferred securities, for up to five years , but not beyond the stated maturity dates in the table above. Currently, Valley has no intention to exercise its right to defer interest payments on the debentures. The trust preferred securities are included in Valley’s total risk-based capital (as Tier 2 capital) for regulatory purposes at December 31, 2024 and 2023. 127 2024 Form 10-K BENEFIT PLANS (Note 12) Defined Benefit Pension and Postretirement Benefit Plans The Bank had offered a qualified non-contributory defined benefit plan and a non-qualified supplemental retirement plan to eligible employees and key executives who met certain age and service requirements, as well as a non-qualified directors' retirement plan. The qualified and non-qualified plans were frozen effective December 31, 2013. Consequently, participants in each plan will not accrue further benefits and their pension benefits were immediately vested and determined based on their compensation and service as of December 31, 2013. On April 1, 2022, Valley assumed a qualified non-contributory defined benefit pension plan (frozen to both benefits and new participants) covering certain former employees of Bank Leumi USA. Valley also assumed Other post-employment medical and life insurance benefit ("OPEB") plans from Bank Leumi USA mostly covering retired former employees. The OPEB plans are active, but closed to new participants. Collectively, all qualified and non-qualified plans are referred to as the “Pension” in the tables below unless indicated otherwise. The following table sets forth the change in the projected benefit obligation, the change in fair value of plan assets and the funded status and amounts recognized in Valley’s consolidated financial statements for the Pension and OPEB plans at December 31, 2024 and 2023, if applicable: Pension OPEB 2024 2023 2024 2023 (in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 179,918 $ 175,496 $ 5,451 $ 5,981 Interest cost 8,542 8,923 245 279 Actuarial (loss) gain ( 6,017 ) 7,604 178 ( 161 ) Benefits paid ( 11,920 ) ( 12,105 ) ( 721 ) ( 648 ) Projected benefit obligation at end of year $ 170,523 $ 179,918 $ 5,153 $ 5,451 Change in fair value of plan assets: Fair value of plan assets at beginning of year $ 302,860 $ 275,406 $ — $ — Actual return on plan assets 30,595 37,993 — — Employer contributions 30,188 1,566 721 648 Benefits paid ( 11,920 ) ( 12,105 ) ( 721 ) ( 648 ) Fair value of plan assets at end of year * $ 351,723 $ 302,860 $ — $ — Funded status of the plan Assets (liabilities) recognized $ 181,200 $ 122,942 $ ( 5,153 ) $ ( 5,451 ) Accumulated benefit obligation 170,523 179,918 $ 5,153 $ 5,451 * Pension assets include accrued interest receivables of $ 986 thousand and $ 826 thousand as of December 31, 2024 and 2023, respectively. 2024 Form 10-K 128 Amounts recognized as a component of accumulated other comprehensive loss at end of year that have not been recognized as a component of the net periodic pension expense for Valley’s Pension and OPEB plans are presented in the following table: Pension OPEB 2024 2023 2024 2023 (in thousands) Net actuarial loss (gain) $ 31,227 $ 45,746 $ ( 749 ) $ ( 988 ) Prior service cost 180 216 — — Deferred tax (benefit) expense ( 8,630 ) ( 12,697 ) 206 273 Total $ 22,777 $ 33,265 $ ( 543 ) $ ( 715 ) The non-qualified plans presented within Pension in the tables above had a projected benefit obligation, a ccumulated benefit obligation, and fair value of plan assets at December 31, 2024 and 2023 as follows: 2024 2023 (in thousands) Projected benefit obligation $ 13,418 $ 14,571 Accumulated benefit obligation 13,418 14,571 Fair value of plan assets — — In determining the discount rate assumptions, management looks to current rates on fixed-income corporate debt securities that receive a rating of AA or higher from either Moody’s or S&P with durations equal to the expected benefit payments streams required of each plan. The weighted average discount rate used in determining the actuarial present value of benefit obligations for the Pension plans was 5.57 percent and 5.00 percent as of December 31, 2024 and 2023, respectively, and 5.51 percent and 4.97 percent for the OPEB plans as of December 31, 2024 and 2023, respectively. The net periodic benefit (income) cost for the Pension and OPEB plans were reported within other non-interest expense included the following components for the years ended December 31, 2024, 2023 and 2022: Pension OPEB 2024 2023 2022 2024 2023 2022 (in thousands) Interest cost $ 8,542 $ 8,923 $ 5,373 $ 245 $ 279 $ 174 Expected return on plan assets ( 22,327 ) ( 22,792 ) ( 20,858 ) — — — Amortization of net loss (gain) 234 58 1,000 ( 60 ) ( 54 ) ( 95 ) Amortization of prior service cost 135 135 135 — — — Net periodic benefit (income) cost $ ( 13,416 ) $ ( 13,676 ) $ ( 14,350 ) $ 185 $ 225 $ 79 Valley estimated the interest cost component of net periodic benefit (income) cost (as shown in the table above) using a spot rate approach for the plans by applying the specific spot rates along the yield curve to the relevant projected cash flows. Valley believes this provides a better estimate of interest costs than a single weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the applicable period. Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss for the years ended December 31, 2024 and 2023 were as follows: Pension OPEB 2024 2023 2024 2023 (in thousands) Net actuarial (gain) loss $ ( 14,285 ) $ ( 7,596 ) $ 178 $ ( 161 ) Amortization of prior service cost ( 135 ) ( 135 ) — — Amortization of actuarial (loss) gain ( 234 ) ( 58 ) 60 54 Total recognized in other comprehensive loss $ ( 14,654 ) $ ( 7,789 ) $ 238 $ ( 107 ) Total recognized in net periodic benefit (income) cost and other comprehensive (income) loss (before tax) $ ( 28,070 ) $ ( 21,465 ) $ 423 $ 118 129 2024 Form 10-K The benefit payments, which reflect expected future service, (as appropriate) expected to be paid in future years, are presented in the following table: Year Pension OPEB (in thousands) 2025 $ 12,868 $ 342 2026 12,801 337 2027 13,074 339 2028 13,306 340 2029 13,391 328 Thereafter 64,991 1,618 The weighted average assumptions used to determine net periodic benefit (income) cost for the years ended December 31, 2024, 2023 and 2022 were as follows: Pension OPEB 2024 2023 2022 2024 2023 2022 Discount rate - projected benefit obligation 5.00 % 5.31 % 2.85 % 4.96 % 5.29 % 2.85 % Discount rate - interest cost 4.92 % 5.23 % 2.49 % 4.96 % 5.29 % 2.85 % Expected long-term return on plan assets 7.25 % 7.50 % 6.79 % N/A N/A N/A Assumed healthcare cost trend rate * N/A N/A N/A 7.00 % 5.50 % 5.75 % * The assumed healthcare cost trend rate used to measure the expected cost of benefits covered by the OPEB plans for 2025 is 7 percent. The rate to which the healthcare cost trend rate is assumed to decline (ultimate trend rate) along with the year that the ultimate trend rate will be reached is 4.5 percent in 2035. The expected long-term rate of return on qualified plan assets is the average rate of return expected to be realized on funds invested or expected to be invested to provide for the benefits included in the benefit obligation. The expected long-term rate of return on plan assets is established at the beginning of the year based upon historical and projected returns for each asset category. The expected rate of return on plan assets assumption is based on the concept that it is a long-term assumption independent of the current economic environment and changes would be made in the expected return only when long-term inflation expectations change, asset allocations chang e materially or when asset class returns are expected to change for the long-term. The Bank Retirement Plans Committee, assisted by an independent non-discretionary investment consulting firm, (1) determines the qualified plans’ investment goals, objectives and risk parameters, (2) directs the diversification of the investments into various suitable investment options and asset types, and (3) regularly monitors the performance of the assets. Individual asset managers are granted full discretion to buy, sell, invest and reinvest the portions of the asset portfolio assigned to them consistent with the Bank Retirement Plans Committee’s policy and guidelines. The long-term strategic assets allocation targets reflect investment return requirements and risk tolerances specific to each plan. The asset allocation targets are generally divided into approximately equal weightings (50 percent) of growth assets, including U.S. and International marketable equity securities, and fixed income assets, largely comprised of high-quality U.S. bonds of both intermediate and long duration plus cash equivalents. The plans’ investments are well-diversified in terms of industry, economic sector, market capitalization and asset type. Although much depends upon market conditions, the absolute investment objective for the equity portion is to earn at least a mid-to-high single digit return, after adjustment by the CPI, over rolling five-year periods. Relative performance should be above the median of a suitable grouping of other equity portfolios and a suitable index over rolling three-year periods. For the fixed income portion of the plan assets, the absolute objective is to earn a positive annual real return, after adjustment by the CPI, over rolling five-year periods. 2024 Form 10-K 130 The following tables present the weighted-average asset allocations by asset category for the defined benefit pension plans that are measured at fair value by level within the fair value hierarchy at December 31, 2024 and 2023. See Note 3 for further details regarding the fair value hierarchy. Fair Value Measurements at Reporting Date Using: % of Total Investments December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) ($ in thousands) Assets: Investments: Mutual funds 31 % $ 109,951 $ 109,951 $ — $ — Corporate bonds 21 73,599 — 73,599 — Equity securities 17 58,474 58,474 — — U.S. Treasury securities 14 50,573 50,573 — — Commingled fund 12 41,277 — 41,277 — U.S. government agency securities 3 9,780 — 9,780 — Cash and money market funds 2 7,083 7,083 — — Total investments 100 % $ 350,737 $ 226,081 $ 124,656 $ — Fair Value Measurements at Reporting Date Using: % of Total Investments December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) ($ in thousands) Assets: Investments: Mutual funds 30 % $ 91,000 $ 91,000 $ — $ — Equity securities 20 60,918 60,918 — — Corporate bonds 19 56,267 — 56,267 — U.S. Treasury securities 18 54,234 54,234 — — Commingled fund 8 25,115 — 25,115 — U.S. government agency securities 4 10,580 — 10,580 — Cash and money market funds 1 3,920 3,920 — — Total investments 100 % $ 302,034 $ 210,072 $ 91,962 $ — The following is a description of the valuation methodologies used for assets measured at fair value: Equity securities, U.S. Treasury securities and cash and money market funds are valued at fair value in the tables above utilizing Level 1 inputs. Mutual funds are measured at their respective net asset values, which represent fair values of the securities held in the funds based on Level 1 inputs. Corporate bonds and U.S. government agency securities are reported at fair value utilizing Level 2 inputs. The prices for these investments are derived from market quotations and matrix pricing obtained through an independent pricing service. Such fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Commingled funds are valued based on the NAV as reported by the trustee of the funds. The funds' underlying investments, which primarily comprise fixed-income debt securities and open-end mutual funds, are valued using quoted market prices in active markets or unobservable inputs for similar assets. Therefore, commingled funds are classified as Level 2 within the fair value hierarchy. Transactions may occur daily within the fund. Based upon actuarial estimates, Valley does not expect to make any contributions to the defined benefit pension plans. Funding requirements for subsequent years are uncertain and will significantly depend on whether the plans' actuary changes 131 2024 Form 10-K any assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plans, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes, Valley may increase, accelerate, decrease or delay contributions to the plans to the extent permitted by law. Other Non-Qualified Plans Valley maintains separate non-qualified plans for former directors and senior management of Merchants Bank of New York acquired in January of 2001. At December 31, 2024 and 2023, the remaining obligations under these plans were $ 811 thousand and $ 962 thousand, respectively. Valley's accrued expense related to these plans totaled $ 195 thousand and $ 246 thousand at December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, all of the obligations were included in other liabilities and $ 447 thousand (net of a $ 170 thousand tax benefit) and $ 519 thousand (net of a $ 198 thousand tax benefit), respectively, were recorded in accumulated other comprehensive loss. The $ 617 thousand pre-tax in accumulated other comprehensive loss will be reclassified to expense on a straight-line basis over the remaining benefit periods of these non-qualified plans. Valley assumed, in the Oritani acquisition on December 1, 2019, certain obligations under non-qualified retirement plans, including a SERP for the former Chief Executive Officer of Oritani. The SERP is a retirement benefit with a minimum payment period of 20 years upon death, disability, normal retirement, early retirement or separation from service after a change in control. Distributions from the plan began on July 1, 2020. The funded obligation under the SERP totaled $ 10.8 million and $ 11.6 million at December 31, 2024 and 2023, respectively. The SERP is secured by investments in money market mutual funds which are held in a trust and classified as equity securities on the consolidated statements of financial condition at both December 31, 2024 and 2023. Valley recorded net benefit income of $ 1.3 million, $ 1.5 million and $ 1.8 million related to the valuation of the SERP for the years ended December 31, 2024, 2023 and 2022, respectively. Bonus Plan Valley National Bank and its subsidiaries may award cash incentive and merit bonuses to its officers and employees based upon a percentage of the covered employees’ compensation as determined by the achievement of certain performance objectives. Amounts charged to salary expense for cash incentive awards were $ 54.5 million, $ 57.4 million and $ 54.6 million during 2024, 2023 and 2022, respectively. Savings and Investment Plan Valley National Bank maintains a 401(k) plan that covers eligible employees of the Bank and its subsidiaries and allows employees to contribute a percentage of their salary, with the Bank matching a certain percentage of the employee contribution in cash invested in accordance with each participant’s investment elections. The Bank recorded $ 15.7 million, $ 16.0 million and $ 14.0 million in expense for contributions to the plan for the years ended December 31, 2024, 2023 and 2022, respectively. Deferred Compensation Plan Valley has a non-qualified, unfunded deferred compensation plan maintained for the purpose of providing deferred compensation for selected employees participating in the 401(k) plan whose contributions are limited as a result of the limitations under Section 401(a)(17) of the Internal Revenue Code. Each participant in the plan is permitted to defer per calendar year, up to five percent of the portion of the participant’s salary and cash bonus above the limit in effect under the Company's 401(k) plan and receive employer matching contributions that become fully vested after two years of participation in the plan. Plan participants also receive an annual interest crediting on their balances held as of December 31 each year. Benefits are generally paid to a participant in a single lump sum following the participant’s separation from service with Valley. Valley recorded plan expenses of $ 770 thousand, $ 747 thousand and $ 447 thousand for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024 and 2023, Valley had an unsecured general liability of $ 4.8 million and $ 3.6 million, respectively, included in accrued expenses and other liabilities in connection with this plan. Stock Based Compensation Valley maintains an incentive compensation plan to provide additional long-term incentives to officers, employees and non-employee directors whose contributions are essential to the continued growth and success of Valley. Under the plan, Valley may issue awards in amounts up to 14.5 million shares, subject to certain adjustments. As of December 31, 2024, 9.6 million shares of common stock were available for issuance under the plan. Valley recorded total stock-based compensation expense of $ 29.0 million, $ 33.1 million and $ 28.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. The stock-based compensation expense included $ 3.0 million for 2024 2024 Form 10-K 132 and $ 2.3 million for both 2023 and 2022 related to stock awards granted to retirement eligible employees. Compensation expense for awards to retirement eligible employees is amortized monthly over a one year required service period after the grant date. The fair values of all other stock awards are expensed over the shorter of the vesting or required service period. As of December 31, 2024, the unrecognized amortization expense for all stock-based compensation totaled approximately $ 29.1 million and will be recognized over an average remaining vesting period of approximately 1.8 years. RSUs. RSUs are awarded as performance-based RSUs and time-based RSUs. Performance based RSUs vest based on (i) growth in tangible book value per share plus dividends and (ii) total shareholder return as compared to our peer group. The performance based RSUs “cliff” vest after three years based on the cumulative performance of Valley during that time period. Generally, time-based RSUs vest ratably in one-third increments each year over a three-year vesting period. The RSUs earn dividend equivalents (equal to cash dividends paid on Valley's common shares) over the applicable performance or service period. Dividend equivalents, per the terms of the agreements, are accumulated and paid to the grantee at the vesting date, or forfeited if the applicable performance or service conditions are not met. The table below summarizes average grant date fair values of RSUs for the years ended December 31, 2024, 2023, and 2022: Restricted Stock Units Average Grant Date Fair Values 2024 2023 2022 Average grant date fair value per share: Performance-based RSUs $ 7.88 $ 12.80 $ 14.72 Time-based RSUs $ 8.46 $ 11.25 $ 13.22 The following table sets forth the changes in RSUs outstanding for the years ended December 31, 2024, 2023 and 2022: Restricted Stock Units Outstanding 2024 2023 2022 Outstanding at beginning of year 5,694,330 5,196,609 3,889,756 Granted 4,573,601 2,944,837 3,426,181 Vested ( 2,616,787 ) ( 2,110,120 ) ( 1,833,739 ) Forfeited ( 828,589 ) ( 336,996 ) ( 285,589 ) Outstanding at end of year 6,822,555 5,694,330 5,196,609 Restricted Stock. A restricted stock award is a grant of shares of Valley common stock subject to certain vesting and other restrictions. Compensation expense is measured based on the grant-date fair value of the shares. The following table sets forth the changes in restricted stock awards outstanding for the years ended December 31, 2023 and 2022. There were no restricted stock awards outstanding during the year ended December 31, 2024. Restricted Stock Awards Outstanding 2023 2022 Outstanding at beginning of year 5,245 213,908 Vested ( 5,245 ) ( 208,663 ) Outstanding at end of year — 5,245 Stock Options . The fair value of each option granted on the date of grant is estimated using a binomial option pricing model. The fair values are estimated using assumptions for dividend yield based on the annual dividend rate; the stock volatility, based on Valley’s historical and implied stock price volatility; the risk-free interest rates, based on the U.S. Treasury constant maturity bonds, in effect on the actual grant dates, with a remaining term approximating the expected term of the options; and expected exercise term calculated based on Valley’s historical exercise experience. On April 1, 2022, Valley issued replacement options for the pre-existing and fully vested stock option awards of Bank Leumi USA for 2.7 million shares of Valley common stock at a weighted average exercise price of $ 8.47 . The stock plan under which the original Bank Leumi stock awards were issued is no longer active at the acquisition date. 133 2024 Form 10-K The following table summarizes stock option activity as of December 31, 2024, 2023 and 2022 and changes during the years ended on those dates: 2024 2023 2022 Weighted Average Exercise Weighted Average Exercise Weighted Average Exercise Stock options Shares Price Shares Price Shares Price Outstanding at beginning of year 2,914,829 $ 8 2,927,031 $ 8 217,555 $ 7 Acquired in business combinations — — — — 2,726,113 8 Exercised ( 259,709 ) 8 ( 12,202 ) 6 ( 16,637 ) 6 Forfeited or expired ( 32,000 ) 10 — — — — Outstanding at end of year 2,623,120 8 2,914,829 8 2,927,031 8 Exercisable at year-end 2,623,120 8 2,914,829 8 2,927,031 8 The following table summarizes information about stock options outstanding and exercisable at December 31, 2024: Options Outstanding and Exercisable Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price $ 4 - 6 42,352 1.2 $ 6 6 - 8 84,767 2.2 7 8 - 10 2,470,401 0.9 8 10 - 12 25,600 3.7 10 2,623,120 1.0 8 INCOME TAXES (Note 13) Income tax expense for the years ended December 31, 2024, 2023 and 2022 consisted of the following: 2024 2023 2022 (in thousands) Current expense: Federal $ 26,308 $ 123,569 $ 132,060 State 38,079 65,611 72,271 64,387 189,180 204,331 Deferred (benefit) expense: Federal ( 6,966 ) ( 8,035 ) 7,263 State 827 ( 1,324 ) 222 ( 6,139 ) ( 9,359 ) 7,485 Total income tax expense $ 58,248 $ 179,821 $ 211,816 2024 Form 10-K 134 The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2024 and 2023 were as follows: 2024 2023 (in thousands) Deferred tax assets: Allowance for credit losses $ 157,629 $ 128,717 Employee benefits 41,808 41,190 Investment securities 48,652 42,361 Net operating loss carryforwards 9,078 11,037 Purchase accounting 42,637 53,980 FDIC special assessment 10,673 13,894 Other 23,744 24,362 Total deferred tax assets 334,221 315,541 Deferred tax liabilities: Pension plans 52,783 37,194 Depreciation 12,314 20,963 Other investments 17,088 11,175 Core deposit intangibles 21,287 28,237 Other 25,876 22,319 Total deferred tax liabilities 129,348 119,888 Valuation allowance 1,263 424 Net deferred tax asset (included in other assets) $ 203,610 $ 195,229 Valley's federal net operating loss carryforwards totaled $ 31.8 million at December 31, 2024, and expire during the period from 2029 through 2034. State net operating loss carryforwards totaled $ 55.3 million at December 31, 2024, and expire during the period from 2029 through 2038. Valley's capital loss carryforwards totaled $ 4.8 million, net of a valuation allowance of $ 1.3 million at December 31, 2024, and expire during the period from 2028 to 2029. Based upon taxes paid and projections of future taxable income over the periods in which the net deferred tax assets are deductible, management believes that it is more likely than not that Valley will realize the benefits of these deductible differences and loss carryforwards. Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 21 percent for the years ended December 31, 2024, 2023, and 2022 were as follows: 2024 2023 2022 Amount Percent Amount Percent Amount Percent (in thousands) U.S. federal statutory tax rate $ 92,089 21.0 % $ 142,450 21.0 % $ 163,940 21.0 % Increase (decrease) due to: State income tax expense, net of federal tax effect * 30,736 7.0 % 50,787 7.5 % 57,276 7.3 % Tax credits ( 32,104 ) ( 7.3 ) % ( 23,008 ) ( 3.4 ) % ( 12,872 ) ( 1.6 ) % Nontaxable or non-deductible items Disallowed FDIC Insurance Premiums 11,071 2.5 % 7,950 1.2 % 4,796 0.6 % Other nontaxable or non-deductible ( 1,075 ) ( 0.2 ) % ( 1,291 ) ( 0.2 ) % 156 — % Changes in unrecognized tax benefits ( 46,431 ) ( 10.6 ) % — — % — — % Other adjustments 3,962 0.9 % 2,933 0.4 % ( 1,480 ) ( 0.2 ) % Income tax expense $ 58,248 13.3 % $ 179,821 26.5 % $ 211,816 27.1 % * State taxes in New York, New York City, and New Jersey made up the majority (greater than 50 percent) of the tax effect in this category. 135 2024 Form 10-K Valley had $ 30.4 million in reserve for tax liability positions at December 31, 2023 and 2022 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. During the fourth quarter 2024, the statute of limitations with respect to the matter expired and the tax authority closed its examination resulting in no changes to the originally filed tax returns. Based on the timing of the events and expiration of the statute of limitations during the fourth quarter 2024, Valley reassessed its positions and fully reduced its previous balance of unrecognized tax benefits. A reconciliation of Valley’s gross unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 is presented in the table below: 2024 2023 2022 (in thousands) Beginning balance $ 30,359 $ 30,359 $ 30,359 Reductions due to expiration of statute of limitations ( 30,359 ) — — Ending balance $ — $ 30,359 $ 30,359 The entire balance of unrecognized tax benefits was recognized and had a favorable effect on Valley's effective income tax rate for the year ended December 31, 2024. Valley’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley accrued approximately $ 13.4 million and $ 10.5 million of interest expense associated with Valley's uncertain tax positions at December 31, 2023 and 2022, respectively. Valley monitors its tax positions for the underlying facts, circumstances, and information available including changes in tax laws, case law, and regulations that may necessitate subsequent de-recognition of previous tax benefits. The following table presents income taxes paid for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands) Federal taxes paid $ 54,227 $ 162,502 $ 121,000 State and city taxes paid: New York 12,447 25,718 18,626 New Jersey 7,475 19,006 12,010 New York City 8,407 13,307 12,141 Other 7,145 15,970 8,325 Total state and city taxes paid 35,474 74,001 51,102 Total income taxes paid $ 89,701 $ 236,503 $ 172,102 Valley files income tax returns in U.S. federal and various state jurisdictions. With few exceptions, Valley is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2018. Valley is under examination by the IRS and also under routine examination by various state jurisdictions, and we expect the examinations to be completed within the next 12 months. Valley has considered, for all open audits, any potential adjustments in establishing our reserve for unrecognized tax benefits as of December 31, 2024. TAX CREDIT INVESTMENTS (Note 14) Valley’s tax credit investments are primarily related to investments promoting qualified affordable housing projects, and other investments related to community development and renewable energy sources. Some of these tax-advantaged investments support Valley’s regulatory compliance with the CRA. Valley’s investments in these entities generate a return primarily through the realization of federal income tax credits, and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction of income tax expense. Valley’s tax credit investments are carried in other assets on the consolidated statements of financial condition. Valley’s unfunded capital and other commitments related to the tax credit investments are carried in accrued expenses and other liabilities on the consolidated statements of financial condition. Valley recognizes amortization of tax credit investments, including impairment losses, within non-interest expense in the consolidated statements of income using the equity method of accounting. After initial measurement, the carrying amounts of tax credit investments with non-readily determinable fair values 2024 Form 10-K 136 are increased to reflect Valley's share of income of the investee and are reduced to reflect its share of losses of the investee, dividends received and impairments, if applicable. See the “Impairment Analysis” section below. The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at December 31, 2024 and 2023: 2024 2023 (in thousands) Other assets: Affordable housing tax credit investments, net $ 22,742 $ 22,158 Other tax credit investments, net 278,468 117,659 Total tax credit investments, net $ 301,210 $ 139,817 Other liabilities: Unfunded affordable housing tax credit commitments $ — $ 1,305 Total unfunded tax credit commitments $ — $ 1,305 The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the years ended December 31, 2024, 2023 and 2022: 2024 2023 2022 (in thousands) Components of income tax expense: Affordable housing tax credits and other tax benefits $ 5,319 $ 5,872 $ 4,748 Other tax credit investment credits and tax benefits 32,091 20,069 11,617 Total reduction in income tax expense $ 37,410 $ 25,941 $ 16,365 Amortization of tax credit investments: Affordable housing tax credit investment losses $ 3,501 $ 3,198 $ 2,311 Affordable housing tax credit investment impairment losses 983 2,466 1,187 Other tax credit investment losses 5,143 1,266 1,254 Other tax credit investment impairment losses 9,319 11,079 7,655 Total amortization of tax credit investments recorded in non-interest expense $ 18,946 $ 18,009 $ 12,407 Impairment Analysis An impairment loss is recognized when the fair value of the tax credit investment is less than its carrying value. The determination of whether a decline in value of a tax credit investment is other-than-temporary requires significant judgment and is performed separately for each investment. The tax credit investments are reviewed for impairment quarterly, or whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. These circumstances can include, but are not limited to, the following factors: • Evidence that Valley does not have the ability to recover the carrying amount of the investment; • The inability of the investee to sustain earnings; • A current fair value of the investment based upon cash flow projections that is less than the carrying amount; and • Change in the economic or technological environment that could adversely affect the investee’s operations. On a periodic basis, Valley obtains financial reporting on its underlying tax credit investment assets for each fund. The financial reporting is reviewed for deterioration in the financial condition of the fund, the level of cash flows and any significant losses or impairment charges. Valley also regularly reviews the condition and continuing prospects of the underlying operations of the investment with the fund manager, including any observations from site visits and communications with the Fund Sponsor, if available. Annually, Valley obtains the audited financial statements prepared by an independent accounting firm for each investment, as well as the annual tax returns. Generally, none of the aforementioned review factors are individually conclusive and the relative importance of each factor varies based on facts and circumstances. However, the longer the expected period of recovery, the stronger and more objective the positive evidence needs to be in order to overcome the presumption that 137 2024 Form 10-K the impairment is other than temporary. If management determines that a decline in value is other than temporary as a result of its quarterly and annual reviews, including current probable cash flow projections, the applicable tax credit investment is written down to its estimated fair value through an impairment charge to earnings, which establishes the new cost basis of the investment. COMMITMENTS AND CONTINGENCIES (Note 15) Financial Instruments with Off-balance Sheet Risk In the ordinary course of business, meeting the financial needs of its customers, Valley, through its subsidiary Valley National Bank, is a party to various financial instruments, which are not reflected in the consolidated financial statements. These financial instruments include standby and commercial letters of credit, unused portions of lines of credit and commitments to extend various types of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated financial statements. The commitment or contract amount of these instruments is an indicator of the Bank’s level of involvement in each type of instrument as well as the exposure to credit loss in the event of non-performance by the other party to the financial instrument. The Bank seeks to limit any exposure of credit loss by applying the same credit policies in making commitments as it does for on-balance sheet lending facilities. The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2024 and 2023: 2024 2023 (in thousands) Commitments under commercial loans and lines of credit $ 10,303,607 $ 10,727,162 Home equity and other revolving lines of credit 1,913,626 1,681,431 Standby letters of credit 524,108 478,954 Outstanding residential mortgage loan commitments 111,696 175,269 Commitments under unused lines of credit - credit card 146,832 138,564 Commitments to sell loans 28,561 24,418 Commercial letters of credit 26,639 28,817 Total $ 13,055,069 $ 13,254,615 Obligations to advance funds under commitments to extend credit, including commitments under unused lines of credit, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have specified expiration dates, which may be extended upon request, or other termination clauses and generally require payment of a fee. These commitments do not necessarily represent future cash requirements, as it is anticipated that many of these commitments will expire without being fully drawn upon. The Bank’s lending activity for outstanding loan commitments is primarily to customers within the states of New Jersey, New York, and Florida. Standby letters of credit represent the guarantee by the Bank of the obligations or performance of the bank customer in the event of the default of payment or nonperformance to a third party beneficiary. Loan sale commitments represent contracts for the sale of residential mortgage loans to third parties in the ordinary course of the Bank’s business. These commitments require the Bank to deliver loans within a specific period to the third party. The risk to the Bank is its non-delivery of loans required by the commitment, which could lead to financial penalties. The Bank has not defaulted on its loan sale commitments. Derivative Instruments and Hedging Activities Valley is exposed to certain risks arising from both its business operations and economic conditions. Valley principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. Valley manages economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of its assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, Valley enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Valley’s derivative financial instruments are used to manage differences in the amount, timing, and duration of Valley’s known or expected cash receipts and its known or expected cash payments related to assets and liabilities as outlined below. Cash Flow Hedges of Interest Rate Risk. Valley’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, Valley has used 2024 Form 10-K 138 interest rate swaps, from time to time, as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment of either fixed or variable-rate amounts in exchange for the receipt of variable or fixed-rate amounts from a counterparty, respectively. During the second quarter 2023, Valley terminated six interest rate swaps with a total notional amount of $ 600 million. The terminated swaps, originally maturing from November 2024 to November 2026, were used to hedge the changes in cash flows associated with certain variable rate loans. The transaction resulted in a pre-tax gain totaling $ 3.6 million reported in accumulated other comprehensive loss within shareholders' equity that will be amortized to interest income over the life of the previously hedged loans. Fair Value Hedges of Fixed Rate Assets and Liabilities. Valley is exposed to changes in the fair value of certain fixed-rate assets and liabilities due to changes in interest rates and interest rate swaps to manage its exposure to changes in fair value. For derivatives that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. During the third quarter 2024, Valley terminated interest rate swaps with a total notional amount of $ 500 million used to hedge the fair value of certain fixed rate residential loans. The terminated swaps had original maturity dates in the fourth quarter 2025. The carrying amount of the hedged assets included an immaterial cumulative loss adjustment at the date of termination that will be amortized to earnings through the fourth quarter 2025. During 2024, Valley entered into 11 forward-starting interest rate swap agreements with notional amounts totaling $ 480.3 million to hedge the changes in fair value of certain fixed rate brokered time deposits. Commencing in first quarter of 2025, Valley will receive fixed rate amounts ranging from approximately 4.12 percent to 4.65 percent, in exchange for variable-rate payments based on the Floating SOFR Overnight Indexed Swap compound rate. The swaps have expiration dates ranging from April 2026 to June 2027. During 2021, Valley entered into a $ 300 million forward-starting interest rate swap agreement with a notional amount of $ 300 million, maturing in June 2026, to hedge the change in the fair value of the 3 percent subordinated debt issued on May 28, 2021. Under the swap agreement, beginning in January 2022, Valley receives fixed rate payments and pays variable rate amounts based on SOFR plus 2.187 percent. Non-designated Hedges. Derivatives not designated as hedges may be used to manage Valley’s exposure to interest rate movements or to provide a service to customers but do not meet the requirements for hedge accounting under GAAP. Derivatives not designated as hedges are not entered into for speculative purposes. Valley executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Valley executes with a third- party, such that Valley minimizes its net risk exposure resulting from such transactions. As these interest rate swaps do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. Valley sometimes enters into risk participation agreements with external lenders where the banks are sharing their risk of default on the interest rate swaps on participated loans. Valley either pays or receives a fee depending on the type of participation. Risk participation agreements are credit derivatives not designated as hedges. Credit derivatives are not speculative and are not used to manage interest rate risk in assets or liabilities. Changes in the fair value in credit derivatives are recognized directly in earnings. At December 31, 2024, Valley had 58 credit swaps with an aggregate notional amount of $ 822.0 million related to risk participation agreements. At December 31, 2024, Valley h a d two “steepener” swaps, each with a current notional amount of $ 10.4 million where the receive rate on the swap mirrors the pay rate on the brokered deposits and the rates paid on these types of hybrid instruments are based on a formula derived from the spread between the long and short ends of the Constant Maturity Swap rate curve. Although these types of instruments do not meet the hedge accounting requirements, the change in fair value of both the bifurcated derivative and the stand alone swap tend to move in opposite directions with changes in the three-month Term SOFR rate and, therefore, provide an effective economic hedge. Valley regularly enters into mortgage banking derivatives which are non-designated hedges. These derivatives include interest rate lock commitments provided to customers to fund certain residential mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. Valley enters into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in interest rates on Valley's commitments to fund the loans as well as on its portfolio of mortgage loans held for sale. 139 2024 Form 10-K Valley enters into foreign currency forward and option contracts, primarily to accommodate our customers, that are not designated as hedging instruments. Upon the origination of certain foreign currency denominated transactions (including foreign currency holdings and non-U.S. dollar denominated loans) with a client, we enter into a respective hedging contract with a third party financial institution to mitigate the economic impact of foreign currency exchange rate fluctuation. During June 2024, Valley entered into a credit default swap related to $ 1.5 billion in automobile loans primarily to enhance the risk profile of these assets for regulatory capital purposes. The covered loans have a total remaining balance of approximately $ 1.1 billion within Valley's $ 1.9 billion automobile loan portfolio at December 31, 2024. The credit default swap is a freestanding contract measured at fair value with resulting gains or losses recognized in non-interest expense. The premium amortization expense and other transaction costs associated with the credit protection totaled $ 6.8 million for the year ended December 31, 2024 and were recorded in other expense reported in non-interest expense. Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows at December 31, 2024 and 2023: 2024 2023 Fair Value Fair Value Other Assets Other Liabilities Notional Amount Other Assets Other Liabilities Notional Amount (in thousands) Derivatives designated as hedging instruments: Fair value hedge interest rate swaps $ 2,419 $ 13,993 $ 780,322 $ — $ 21,460 $ 800,000 Total derivatives designated as hedging instruments $ 2,419 $ 13,993 $ 780,322 $ — $ 21,460 $ 800,000 Derivatives not designated as hedging instruments: Interest rate swaps and other contracts * $ 423,683 $ 423,492 $ 16,209,499 $ 458,129 $ 457,885 $ 16,282,279 Foreign currency derivatives 18,011 16,488 1,688,338 8,024 8,286 1,557,167 Mortgage banking derivatives 150 192 45,752 74 472 38,797 Credit default swap — 35 1,142,026 — — — Total derivatives not designated as hedging instruments $ 441,844 $ 440,207 $ 19,085,615 $ 466,227 $ 466,643 $ 17,878,243 Total derivative financial instruments $ 444,263 $ 454,200 $ 19,865,937 $ 466,227 $ 488,103 $ 18,678,243 * Other derivative contracts include risk participation agreements. Gains (losses) included in the consolidated statements of income and in other comprehensive income (loss), on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows: 2024 2023 2022 (in thousands) Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense $ 1,204 $ ( 891 ) $ ( 274 ) Amount of (loss) gain recognized in other comprehensive income (loss) — ( 1,093 ) 4,683 The accumulated net after-tax gains and losses related to effective cash flow hedges included in accumulated other comprehensive loss were $ 1.2 million and $ 2.1 million at December 31, 2024 and 2023, respectively. Amounts reported in accumulated other comprehensive loss related to cash flow interest rate derivatives are reclassified to interest income and expense as interest payments are received and paid on the hedged variable interest rate assets and liabilities. The reclassification amount for the year ended December 31, 2024 represents amortization of a gain recognized from the termination of six interest rate swaps during the second quarter 2023. Valley estimates that $ 1.1 million (before tax) will be reclassified as an increase to interest income in 2025. 2024 Form 10-K 140 Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value for the years ended December 31, 2024, 2023, and 2022 were as follows: 2024 2023 2022 (in thousands) Derivative—interest rate swaps: Interest income $ 3,170 $ ( 3,877 ) $ — Interest expense 9,765 8,473 ( 466 ) Hedged items - loans, time deposits and subordinated debt: Interest income $ ( 3,396 ) $ 3,877 $ — Interest expense ( 10,005 ) ( 8,687 ) 741 The changes in the fair value of the hedged item designated as a qualifying hedge are captured as an adjustment to the carrying amount of the hedged item (basis adjustment). The following table presents the hedged items related to interest rate derivatives designated as fair value hedges and the cumulative basis fair value adjustment included in the net carrying amount of the hedged items at December 31, 2024 and 2023: Line Item in the Statement of Financial Condition in Which the Hedged Item is Included Net Carrying Amount of the Hedged Asset/Liability Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset/Liability 2024 2024 (in thousands) December 31, 2024 Time deposits $ 482,723 $ 2,419 Long-term borrowings * 284,966 ( 13,859 ) December 31, 2023 Loans $ 503,877 $ 3,877 Long-term borrowings * 276,572 ( 21,445 ) * Net carrying amount includes unamortized debt issuance costs of $ 1.2 million and $ 2.0 million at December 31, 2024 and 2023, respectively. The net (losses) gains included in the consolidated statements of income related to derivative instruments not designated as hedging instruments for the years ended December 31, 2024, 2023, and 2022 were as follows: 2024 2023 2022 (in thousands) Non-designated hedge interest rate and credit derivatives Other non-interest expense $ ( 4,796 ) $ ( 1,590 ) $ 1,392 Capital markets income reported in non-interest income included fee income related to non-designated hedge derivative interest rate swaps executed with commercial loan customers and foreign exchange contracts (not designated as hedging instruments) with a combined total of $ 23.5 million, $ 35.7 million and $ 48.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. Collateral Requirements and Credit Risk Related Contingency Features. By using derivatives, Valley is exposed to credit risk if counterparties to the derivative contracts do not perform as expected. Management attempts to minimize counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral where appropriate. Credit risk exposure associated with derivative contracts is managed at Valley in conjunction with Valley’s consolidated counterparty risk management process. Valley’s counterparties and the risk limits monitored by management are periodically reviewed and approved by the Board. Valley has agreements with its derivative counterparties providing that if Valley defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Valley could also be declared in default on its derivative counterparty agreements. Additionally, Valley has an agreement with several of its derivative counterparties that contains provisions that require Valley’s debt to maintain an investment grade credit rating from each of the major credit rating agencies from which it receives a credit rating. If Valley’s credit rating is reduced below 141 2024 Form 10-K investment grade, or such rating is withdrawn or suspended, then the counterparties could terminate the derivative positions, and Valley would be required to settle its obligations under the agreements. As of December 31, 2024, Valley was in compliance with all of the provisions of its derivative counterparty agreements. The ag gregate fair value of all derivative financial instruments with credit risk-related contingent features was in a net asset position at December 31, 2024. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties. BALANCE SHEET OFFSETTING (Note 16) Certain financial instruments, including certain OTC derivatives (mostly interest rate swaps) and repurchase agreements (accounted for as secured long-term borrowings), may be eligible for offset in the consolidated statements of financial condition and/or subject to master netting arrangements or similar agreements. OTC derivatives include interest rate swaps executed and settled bilaterally with counterparties without the use of an organized exchange or central clearing house (presented in the table below). The credit risk associated with bilateral OTC derivatives is managed through obtaining collateral and enforceable master netting agreements. Valley is party to master netting arrangements with its financial institution counterparties; however, Valley does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of cash or marketable investment securities, is posted by or received from the counterparty with net liability or asset positions, respectively, in accordance with contract thresholds. Master repurchase agreements which include “right of set-off” provisions generally have a legally enforceable right to offset recognized amounts. In such cases, the collateral would be used to settle the fair value of the swap or repurchase agreement should Valley be in default. Total amount of collateral held or pledged cannot exceed the net derivative fair values with the counterparty. The table below presents information about Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of December 31, 2024 and 2023. Gross Amounts Not Offset Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral * Net Amount (in thousands) December 31, 2024 Assets: Interest rate swaps and other contracts $ 426,102 $ — $ 426,102 $ 32,571 $ ( 358,520 ) $ 100,153 Liabilities: Interest rate swaps and other contracts $ 437,485 $ — $ 437,485 $ ( 32,571 ) $ — $ 404,914 Total liabilities $ 437,485 $ — $ 437,485 $ ( 32,571 ) $ — $ 404,914 December 31, 2023 Assets: Interest rate swaps and other contracts $ 458,129 $ — $ 458,129 $ 53,780 $ ( 302,180 ) $ 209,729 Liabilities: Interest rate swaps and other contracts $ 479,345 $ — $ 479,345 $ ( 53,780 ) $ — $ 425,565 Total liabilities $ 479,345 $ — $ 479,345 $ ( 53,780 ) $ — $ 425,565 * Cash collateral received from or pledged to our counterparties in relation to market value exposures of OTC derivative contracts in an asset/liability position. 2024 Form 10-K 142 REGULATORY AND CAPITAL REQUIREMENTS (Note 17) Valley’s primary source of cash is dividends from the Bank. Valley National Bank, a national banking association, is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. In addition, the dividends declared cannot be in excess of the amount which would cause the subsidiary bank to fall below the minimum required for capital adequacy purposes. Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve and the OCC. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct significant impact on Valley’s consolidated financial statements. Under capital adequacy guidelines Valley and Valley National Bank must meet specific capital guidelines that involve quantitative measures of Valley’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require Valley and Valley National Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets, as defined in the regulations. Valley is required to maintain a common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and minimum leverage ratio of 4.0 percent, plus a 2.5 percent capital conservation buffer added to the minimum requirements for capital adequacy purposes. As of December 31, 2024 and 2023, Valley and Valley Nationa l Bank exceeded all capital adequacy requirements (see table below). For regulatory capital purposes, in accordance with the Federal Reserve’s final rule issued August 26, 2020, w e 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 by 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. 143 2024 Form 10-K The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under the Basel III risk-based capital guidelines at December 31, 2024 and 2023: Actual Minimum Capital Requirements To Be Well Capitalized Under Prompt Corrective Action Provision Amount Ratio Amount Ratio Amount Ratio ($ in thousands) As of December 31, 2024 Total Risk-based Capital Valley $ 6,703,186 13.87 % $ 5,076,004 10.50 % N/A N/A Valley National Bank 6,535,892 13.53 5,071,696 10.50 $ 4,830,187 10.00 % Common Equity Tier 1 Capital Valley 5,230,632 10.82 3,384,002 7.00 N/A N/A Valley National Bank 6,041,434 12.51 3,381,131 7.00 3,139,621 6.50 Tier 1 Risk-based Capital Valley 5,584,699 11.55 4,109,146 8.50 N/A N/A Valley National Bank 6,041,434 12.51 4,105,659 8.50 3,864,149 8.00 Tier 1 Leverage Capital Valley 5,584,699 9.16 2,438,649 4.00 N/A N/A Valley National Bank 6,041,434 9.91 2,438,511 4.00 3,048,139 5.00 As of December 31, 2023 Total Risk-based Capital Valley $ 5,855,633 11.76 % $ 5,228,447 10.50 % N/A N/A Valley National Bank 5,794,213 11.64 5,228,403 10.50 $ 4,979,431 10.00 % Common Equity Tier 1 Capital Valley 4,623,473 9.29 3,485,631 7.00 N/A N/A Valley National Bank 5,420,894 10.89 3,485,602 7.00 3,236,630 6.50 Tier 1 Risk-based Capital Valley 4,838,314 9.72 4,232,552 8.50 N/A N/A Valley National Bank 5,420,894 10.89 4,232,517 8.50 3,983,545 8.00 Tier 1 Leverage Capital Valley 4,838,314 8.16 2,372,129 4.00 N/A N/A Valley National Bank 5,420,894 9.14 2,372,322 4.00 2,965,403 5.00 COMMON AND PREFERRED STOCK (Note 18) Repurchase Plan. Purchases of Valley’s common shares may be made from time to time in the open market or in privately negotiated transactions generally not exceeding prevailing market prices. Repurchased shares are held in treasury and are expected to be used for general corporate purposes. In February 2024, Valley publicly announced its current stock repurchase program for up to 25 million shares of Valley common stock. The authorization to repurchase shares under the repurchase program became effective on April 26, 2024 and will expire on April 26, 2026. There were no repurchases of Valley's common shares under the plan during the year ended December 31, 2024. During 2023 and 2022, Valley repurchased 300 thousand and 1.0 million common shares, respectively, on the open market at average prices of $ 6.97 and $ 13.32 per share, respectively, under previously announced stock repurchase plans that are now terminated. Other Stock Repurchases. Valley purchases shares directly from its employees in connection with employee elections to withhold taxes related to the vesting of stock awards. During the years ended December 31, 2024, 2023 and 2022, Valley purchased approximately 998 thousand, 814 thousand and 761 thousand shares, respectively, of its outstanding common stock at an average price of $ 8.88 , $ 11.53 and $ 13.93 , respectively, for such purpose. 2024 Form 10-K 144 Common Stock Common Stock Issuance. On November 12, 2024, Valley issued and sold 49,197,860 shares of its common stock in a registered public offering, including 6,417,112 shares purchased under an over-allotment option exercised in full by the underwriters at the public offering price of $ 9.35 per share. The net proceeds of the offering, after deducting underwriting discounts and commissions and offering expenses payable by Valley, were $ 448.9 million and were used for additional investment in the Bank as regulatory capital during the fourth quarter 2024. Preferred Stock Series A Issuance. On June 19, 2015, Valley issued 4.6 million shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $ 25 per share. Dividends on the preferred stock accrue and are payable quarterly in arrears, at a fixed rate per annum equal to 6.25 percent from the original issue date to, but excluding, June 30, 2025, and thereafter at a floating rate per annum equal to three-month SOFR plus an adjustment of 0.26161 percent plus a spread of 3.85 percent. The net proceeds from the preferred stock offering totaled $ 111.6 million. Commencing June 30, 2025, Valley may redeem the preferred shares at the liquidation preference plus accrued and unpaid dividends, subject to certain conditions. Series B Issuance. On August 3, 2017, Valley issued 4.0 million shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B, no par value per share, with a liquidation preference of $ 25 per share. Dividends on the preferred stock will accrue and be payable quarterly in arrears, at a fixed rate per annum equal to 5.50 percent from the original issuance date to, but excluding, September 30, 2022, and thereafter at a floating rate per annum equal to three-month SOFR plus an adjustment of 0.26161 percent plus a spread of 3.578 percent. The net proceeds from the preferred stock offering totaled $ 98.1 million. Valley may redeem the preferred shares at the liquidation preference plus accrued and unpaid dividends, subject to certain conditions. Series C Issuance. On August 5, 2024, Valley issued 6.0 million shares of its Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C, no par value per share, with a liquidation preference of $ 25 per share. Dividends on the preferred stock will accrue and be payable quarterly in arrears, at a fixed rate per annum equal to 8.25 percent from the date of original issue to, but excluding September 30, 2029, and thereafter at a rate per annum equal to the five-year U.S. treasury rate as of the most recent dividend payment date plus a spread of 4.182 percent. Net proceeds from the preferred stock offering totaled $ 144.7 million. Commencing September 30, 2029, Valley may redeem the preferred shares at the liquidation preference plus accrued and unpaid dividends, subject to certain conditions. Preferred stock is included in Valley's (additional) Tier 1 capital and total risk-based capital at December 31, 2024 and 2023. 145 2024 Form 10-K OTHER COMPREHENSIVE INCOME (Note 19) The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2024, 2023 and 2022. Components of other comprehensive income (loss) include changes in net unrealized gains and losses on debt securities AFS; unrealized gains and losses on derivatives used in cash flow hedging relationships; and the defined benefit pension and postretirement benefit plan adjustments for the unfunded portion of various employee, officer and director benefit plans. 2024 2023 2022 Before Tax Tax Effect After Tax Before Tax Tax Effect After Tax Before Tax Tax Effect After Tax (in thousands) Unrealized gains and losses on available for sale debt securities Net (losses) gains arising during the period $ ( 24,687 ) $ 6,290 $ ( 18,397 ) $ 19,514 $ ( 6,564 ) $ 12,950 $ ( 189,201 ) $ 52,220 $ ( 136,981 ) Amounts reclassified to earnings (1) 1 — 1 ( 863 ) 229 ( 634 ) ( 31 ) 8 ( 23 ) Net change ( 24,686 ) 6,290 ( 18,396 ) 18,651 ( 6,335 ) 12,316 ( 189,232 ) 52,228 ( 137,004 ) Unrealized gains and losses on derivatives (cash flow hedges) Net (losses) gains arising during the period — — — ( 1,093 ) 336 ( 757 ) 4,683 ( 1,321 ) 3,362 Amounts reclassified to earnings (2) ( 1,204 ) 335 ( 869 ) 891 ( 253 ) 638 274 ( 71 ) 203 Net change ( 1,204 ) 335 ( 869 ) ( 202 ) 83 ( 119 ) 4,957 ( 1,392 ) 3,565 Defined benefit pension and postretirement benefit plans Net gains (losses) arising during the period 14,725 ( 4,116 ) 10,609 8,035 ( 2,593 ) 5,442 ( 18,531 ) 5,356 ( 13,175 ) Amortization of prior service (cost) credit (3) ( 135 ) 38 ( 97 ) ( 135 ) 45 ( 90 ) ( 135 ) 35 ( 100 ) Amortization of net loss (3) ( 174 ) 49 ( 125 ) ( 4 ) 1 ( 3 ) 905 ( 261 ) 644 Net change 14,416 ( 4,029 ) 10,387 7,896 ( 2,547 ) 5,349 ( 17,761 ) 5,130 ( 12,631 ) Total other comprehensive (loss) income $ ( 11,474 ) $ 2,596 $ ( 8,878 ) $ 26,345 $ ( 8,799 ) $ 17,546 $ ( 202,036 ) $ 55,966 $ ( 146,070 ) (1) Included in gains (losses) on securities transactions, net. (2) Included in interest expense or interest income depending on hedged item. (3) Included in the computation of net periodic pension cost. See Note 12 for details. 2024 Form 10-K 146 The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive (loss) income for the years ended December 31, 2024, 2023 and 2022: Components of Accumulated Other Comprehensive Loss Total Accumulated Other Comprehensive Loss Unrealized Gains and Losses on AFS Securities Unrealized Gains and Losses on Derivatives Defined benefit pension and postretirement benefit plans (in thousands) Balance-December 31, 2021 $ 9,186 $ ( 1,332 ) $ ( 25,786 ) $ ( 17,932 ) Other comprehensive (loss) income before reclassifications ( 136,981 ) 3,362 ( 13,175 ) ( 146,794 ) Amounts reclassified to earnings ( 23 ) 203 544 724 Other comprehensive (loss) income, net ( 137,004 ) 3,565 ( 12,631 ) ( 146,070 ) Balance-December 31, 2022 ( 127,818 ) 2,233 ( 38,417 ) ( 164,002 ) Other comprehensive income (loss) before reclassifications 12,950 ( 757 ) 5,442 17,635 Amounts reclassified to earnings ( 634 ) 638 ( 93 ) ( 89 ) Other comprehensive income (loss), net 12,316 ( 119 ) 5,349 17,546 Balance-December 31, 2023 ( 115,502 ) 2,114 ( 33,068 ) ( 146,456 ) Other comprehensive (loss) income before reclassifications ( 18,397 ) — 10,609 ( 7,788 ) Amounts reclassified to earnings 1 ( 869 ) ( 222 ) ( 1,090 ) Other comprehensive (loss) income, net ( 18,396 ) ( 869 ) 10,387 ( 8,878 ) Balance-December 31, 2024 $ ( 133,898 ) $ 1,245 $ ( 22,681 ) $ ( 155,334 ) PARENT COMPANY INFORMATION (Note 20) Condensed Statements of Financial Condition December 31, 2024 2023 (in thousands) Assets Cash $ 277,072 $ 193,248 Equity securities 37,076 29,404 Investments in and receivables due from subsidiaries 7,905,565 7,290,923 Other assets 8,306 12,473 Total Assets $ 8,228,019 $ 7,526,048 Liabilities and Shareholders’ Equity Dividends payable to shareholders $ 64,917 $ 60,918 Long-term borrowings 647,547 638,362 Junior subordinated debentures issued to capital trusts 57,455 57,108 Accrued expenses and other liabilities 22,973 68,269 Shareholders’ equity 7,435,127 6,701,391 Total Liabilities and Shareholders’ Equity $ 8,228,019 $ 7,526,048 147 2024 Form 10-K Condensed Statements of Income Years Ended December 31, 2024 2023 2022 (in thousands) Income Dividends from subsidiary $ 300,000 $ 425,000 $ 420,000 Net (losses) gains on equity securities ( 1,581 ) 1,036 ( 1,136 ) Other income and interest 7,360 5,730 82 Total Income 305,779 431,766 418,946 Total Expenses 53,147 56,072 48,104 Income before income tax and equity in undistributed earnings of subsidiary 252,632 375,694 370,842 Income tax benefit ( 54,017 ) ( 10,961 ) ( 13,098 ) Income before equity in undistributed earnings of subsidiary 306,649 386,655 383,940 Equity in undistributed earnings of subsidiary 73,622 111,856 184,911 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 2024 Form 10-K 148 Condensed 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: Equity in undistributed earnings of subsidiaries ( 73,622 ) ( 111,856 ) ( 184,911 ) Stock-based compensation 28,988 33,104 28,788 Net amortization of premiums and accretion of discounts on borrowings 1,947 2,058 1,741 Losses (gains) on equity securities, net 1,581 ( 1,036 ) 1,136 Net change in: Other assets 4,167 13,472 ( 9,206 ) Accrued expenses and other liabilities ( 37,661 ) ( 8,501 ) 5,851 Net cash provided by operating activities 305,671 425,752 412,250 Cash flows from investing activities: Purchases of equity securities ( 9,253 ) ( 11,261 ) ( 10,424 ) Cash and cash equivalents paid in acquisitions, net — — ( 113,244 ) Capital contributions to subsidiary ( 550,000 ) ( 20 ) ( 125,055 ) Other, net 52 5,098 — Net cash used in investing activities ( 559,201 ) ( 6,183 ) ( 248,723 ) Cash flows from financing activities: Proceeds from issuance of long-term borrowings, net — — 147,508 Repayment of long-term borrowings — ( 125,000 ) — Proceeds from issuance of preferred stock, net 144,654 — — Dividends paid to preferred shareholders ( 21,369 ) ( 14,338 ) ( 13,146 ) 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 Net cash provided by (used in) financing activities 337,354 ( 372,218 ) ( 95,640 ) Net change in cash and cash equivalents 83,824 47,351 67,887 Cash and cash equivalents at beginning of year 193,248 145,897 78,010 Cash and cash equivalents at end of year $ 277,072 $ 193,248 $ 145,897 OPERATING SEGMENTS (Note 21) 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 Consumer Banking segment is mainly comprised of residential mortgages and automobile loans, and to a lesser extent, secured personal lines of credit, home equity loans and other consumer loans. The duration of the residential mortgage loan portfolio is subject to movements in the market level of interest rates and forecasted prepayment speeds. The average weighted life of the automobile loans within the portfolio is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Banking also includes the Wealth 149 2024 Form 10-K Management and Insurance Services Division, comprised of asset management advisory, brokerage, trust, personal and title insurance, tax credit advisory services, and international and domestic private banking businesses. The Commercial Banking segment is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as adjustable and 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. Treasury and Corporate Other largely consists of the Treasury managed HTM debt securities 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. 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 allocation to the segments based on the nature of income and expense. U nallocated items included in Treasury and Corporate Other 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. 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 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. The foll owing tables represent the financial data for Valley’s operating segments, and Treasury and Corporate Other for the years ended December 31, 2024, 2023 and 2022: 2024 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets (unaudited) $ 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) (unaudited) 0.48 % 1.18 % ( 1.16 ) % 0.77 % Net interest margin 1.81 % 3.45 % 0.86 % 2.84 % 2024 Form 10-K 150 2023 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets (unaudited) $ 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) (unaudited) 0.40 % 1.98 % ( 2.06 ) % 1.20 % Net interest margin 1.71 % 3.61 % 0.91 % 2.95 % 2022 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets (unaudited) $ 8,615,542 $ 33,314,811 $ 6,137,028 $ 48,067,381 Interest income $ 290,289 $ 1,533,458 $ 152,936 $ 1,976,683 Interest expense 57,543 222,511 40,989 321,043 Net interest income 232,746 1,310,947 111,947 1,655,640 Provision for credit losses 20,880 35,456 481 56,817 Net interest income after provision for credit losses 211,866 1,275,491 111,466 1,598,823 Non-interest income 98,678 102,530 5,585 206,793 Non-interest expense Salary and employee benefits expense 104,405 344,689 77,643 526,737 Net occupancy expense 18,948 62,829 12,575 94,352 Technology, furniture, and equipment expense 26,796 94,671 40,285 161,752 FDIC insurance assessment 4,692 18,144 — 22,836 Professional and legal fees 12,441 50,314 19,863 82,618 Other segment items * 47,919 43,534 45,201 136,654 Total non-interest expense $ 215,201 $ 614,181 $ 195,567 $ 1,024,949 Income (loss) before income taxes $ 95,343 $ 763,840 $ ( 78,516 ) $ 780,667 Return on average interest earning assets (pre-tax) (unaudited) 1.11 % 2.29 % ( 1.28 ) % 1.62 % Net interest margin 2.70 % 3.93 % 1.82 % 3.44 % * Other segment items include amortization of intangible assets, amortization of tax credit investments and other general operating expenses. 151 2024 Form 10-K Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors Valley National Bancorp: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial condition of Valley National Bancorp and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Allowance for loan losses As discussed in Notes 1 and 5 to the consolidated financial statements, the Company’s total allowance for loan losses (the ALL) as of December 31, 2024 was $558.9 million, of which $483.0 million related to the loans collectively evaluated for credit losses (the collective ALL) and $75.9 million related to individually evaluated loans (individually evaluated ALL). The collective ALL includes the measure of expected credit losses on a collective basis for those loans that share similar risk characteristics. In estimating the collective ALL, the Company uses a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by using probability of default (PD) and loss given default (LGD) metrics. The PD and LGD 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 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 are adjusted for qualitative factors not reflected in the transition matrix model but are likely to impact the measurement of estimated credit losses. The qualitative factors include 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 which are assigned relative probability weightings and projects economic variables under each scenario. 2024 Form 10-K 152 The expected lifetime loss rates are the life of loan loss percentages from the transition matrix model plus the impact of the adjustments for the qualitative factors. The expected credit losses are the product of multiplying the model’s lifetime loss rates by the exposure at default at period end. In addition, certain individually evaluated loans, where substantially all the repayment is expected from the collateral, are deemed collateral dependent and the related expected credit losses are determined based on the fair value of the underlying collateral. We identified the assessment of the ALL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the ALL due to estimation uncertainty. Specifically, the assessment of the collective ALL encompassed the evaluation of the collective ALL methodology and the transition matrix model used to estimate the expected life of loan loss percentages and its significant assumptions, including credit quality ratings and scaling factor. The assessment of the collective ALL also included an evaluation of the conceptual soundness and performance of the transition matrix model utilized to derive the expected life of loan loss percentages. In addition, the assessment also encompassed the conceptual soundness of the methodology utilized to estimate the qualitative factors and their related significant assumptions, including the selection of the multi-scenario economic forecasts and economic variables and related weightings. For the individually evaluated ALL, the assessment included an evaluation of the fair value of the underlying collateral for those loans deemed collateral dependent. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the ALL estimate, including controls over the: • development of the ALL methodology • continued use and appropriateness of the transition matrix model • performance monitoring of the transition matrix model • identification and determination of the significant assumptions used in the transition matrix model • identification of qualitative factors and development of the qualitative framework, including the significant assumptions used in the measurement of the qualitative factors • appropriateness of third-party appraisals • analysis of the collective ALL results, trends and ratios. We evaluated the Company’s process to develop the ALL estimate by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in: For the collective ALL: • evaluating the Company’s collective ALL methodology for compliance with U.S. generally accepted accounting principles • evaluating the judgments made by the Company relative to the assessment and performance monitoring of the transition matrix model used to calculate the expected life of loan loss percentages by comparing them to Company-specific metrics and trends and the applicable industry and regulatory practices • testing the conceptual soundness and performance of the transition matrix model by inspecting the model documentation to determine whether the model is suitable for the intended use • testing individual credit quality ratings for a selection of commercial loans by evaluating the financial performance of the borrower, sources of repayment and any relevant guarantees or underlying collateral • evaluating the judgments made by management relative to the Company’s scaling factor by inspecting documentation to determine whether the assumption is suitable to incorporate a full economic cycle • evaluating the selection of the multi-scenario economic forecasts and economic variables and related weightings by comparing them to the Company’s business environment and relevant industry practices • evaluating the methodology used to develop the qualitative factors and their significant assumptions and the effect of those factors on the collective ALL by comparing to the specific portfolio risk characteristics, trends and relevant industry practices and identified limitations of the underlying quantitative models. 153 2024 Form 10-K For the individually evaluated ALL: • testing of individual fair value of collateral for a selection of borrower relationships by evaluating methods and assumptions used by the third-party appraiser. We also assessed the sufficiency of the audit evidence obtained related to the ALL estimate by evaluating the cumulative results of the audit procedures, qualitative aspects of the Company’s accounting practices and potential bias in the accounting estimate. Goodwill impairment assessment of the Company’s reporting units As discussed in Notes 1 and 8 to the consolidated financial statements, the carrying value of the Company’s goodwill balance is $1.9 billion as of December 31, 2024. The Company’s goodwill is not amortized but is subject to annual testing for impairment in the second quarter, or more often, if events or circumstances indicate it may be impaired. The Company elected to perform a quantitative impairment test for its annual assessment in the second quarter which compared the fair value of each of the reporting units with their respective carrying amounts, including goodwill. If the fair value of each of the reporting units exceeded its carrying amounts, the goodwill of the reporting unit was not impaired. An impairment loss is recognized if the carrying value of the net assets, including goodwill, assigned to the reporting units exceeds the fair value, with the impairment charge not to exceed the amount of goodwill recorded. Fair value is determined using market multiples and certain discounted cash flow methods. Factors that may materially affect the fair value estimate include, among others, changes in discount rates, terminal value growth rates, and specific industry or market sector conditions. Additionally, the Company performed a market capitalization reconciliation to support the appropriateness of the reporting units’ fair values and impairment test results, which included comparing the sum of the fair value of the reporting units to the Company’s market capitalization, adjusted for the present value of estimated synergies which a market participant acquirer could reasonably expect to realize from a hypothetical acquisition the Company. We identified the Company’s annual goodwill impairment assessment as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgement was involved in performing procedures over 1) the individual reporting unit estimated cash flows and related key assumptions, which included the discount rate used in the discounted cash flow methods and 2) the present value of estimated synergies used in the market capitalization reconciliation and resulting control premium. The key assumptions were challenging to test as they represented subjective determinations of future market and economic conditions that were also more sensitive to variation. Minor changes in these assumptions could have had a significant effect on the Company’s measurement of the fair value of the reporting units and the impairment assessment of the carrying value of the goodwill. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s determination of the estimated fair value of the reporting units in the annual goodwill impairment assessment, including controls over the selection and development of key assumptions used in the discounted cash flow analyses and market capitalization reconciliation. We involved valuation professionals with specialized skill and knowledge, who assisted in: • evaluating the Company’s fair value methodology for the reporting units for compliance with U.S. generally accepted accounting principles • evaluating the Company’s discount rate by comparing it against a discount rate range that was independently developed using publicly available data for comparable entities • evaluating the total fair value of the Company’s reporting units through comparison to the Company’s market capitalization adjusted for expected synergies as of the measurement date by evaluating the reasonableness of the estimated synergies and resulting control premium for alignment with industry comparables, standards and market conditions. /s/ KPMG LLP We have served as the Company’s auditor since 2008. Short Hills, New Jersey February 27, 2025 2024 Form 10-K 154 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.