VALLEY NATIONAL BANCORP 10-Q

Item 2. Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations The following MD&A should be read in conjunction with the consolidated financial statements and notes thereto appearing in Part I, Item 1 of this report. The MD&A contains supplemental financial information, described in the sections that follow, which has been determined by methods other than GAAP that management uses in its analysis of our performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding our underlying operational performance, our business and performance trends and facilitate comparisons with the performance of others in the financial services industry. These non-GAAP financial measures should not be considered in isolation, as a substitute for or superior to financial measures calculated in accordance with GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. Cautionary Statement Concerning Forward-Looking Statements This Quarterly Report on Form 10-Q, both in the MD&A and elsewhere, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about our business, new and existing programs and products, acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements may be identified by such forward-looking terminology as “intend,” “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “would,” “could,” “typically,” “usually,” “anticipate,” “may,” “estimate,” “outlook,” “project” or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to: 50 • the impact of market interest rates and monetary and fiscal policies of the U.S. federal government and its agencies in connection with prolonged inflationary pressures, which could have a material adverse effect on our clients, our business, our employees, and our ability to provide services to our customers; • the impact of unfavorable macroeconomic conditions or downturns, including instability or volatility in financial markets resulting from the impact of tariffs, any retaliatory actions, related market uncertainty, or other factors; U.S. government debt default or rating downgrade; unanticipated loan delinquencies; loss of collateral; decreased service revenues; increased business disruptions or failures; reductions in employment; and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as new legislation and policy changes under the current U.S. presidential administration, geopolitical instabilities or events, natural and other disasters, including severe weather events, health emergencies, acts of terrorism, or other external events; • the impact of any potential instability within the U.S. financial sector or future bank failures, including the possibility of a run on deposits by a coordinated deposit base, and the impact of the actual or perceived concerns regarding the soundness, or creditworthiness, of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including FDIC insurance assessments, or adverse impact on our stock price, deposits or our ability to borrow or raise capital; • the impact of negative public opinion regarding Valley or banks in general that damages our reputation and adversely impacts business and revenues; • changes in the statutes, regulations, policies, or enforcement priorities of the federal bank regulatory agencies; • the loss of or decrease in lower-cost funding sources within our deposit base; • damage verdicts, settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent, trademark or other intellectual property infringement, misappropriation or other violation, employment related claims, and other matters; • a prolonged downturn and contraction in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio; • higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in uncertain tax position liabilities, tax laws, regulations, and case law; • the inability to grow customer deposits to keep pace with the level of loan growth; • a material change in our allowance for credit losses due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios; • the need to supplement debt or equity capital to maintain or exceed internal capital thresholds; • changes in our business, strategy, market conditions or other factors that may negatively impact the estimated fair value of our goodwill and other intangible assets and result in future impairment charges; • greater than expected technology-related costs due to, among other factors, prolonged or failed implementations, additional project staffing and obsolescence caused by continuous and rapid market innovations; • increased competitive challenges and our ability to stay current with rapid technological changes in the financial services industry, including the use of artificial intelligence, as well as our ability to assess and monitor the effects of, and risks associated with, the implementation and use of such technology; • cyberattacks, ransomware attacks, computer viruses, malware or other cybersecurity incidents that may breach the security of our websites or other systems or networks to obtain unauthorized access to personal, confidential, proprietary or sensitive information, destroy data, disable or degrade service, or sabotage our systems or networks, and the increasing sophistication of such attacks; • results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; 51 • application of the OCC heightened regulatory standards for certain large insured national banks, and the expenses we will incur to develop policies, programs, and systems that comply with the enhanced standards applicable to us; • our inability or determination not to pay dividends at current levels, or at all, because of inadequate earnings, regulatory restrictions or limitations, changes in our capital requirements, or a decision to increase capital by retaining more earnings; • unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events; • our ability to successfully execute our business plan and strategic initiatives; and • unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, risk mitigation strategies, changes in regulatory lending guidance or other factors. A detailed discussion of factors that could affect our results is included in our SEC filings, including Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2024. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Critical Accounting Estimates Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition and results of operations. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions in accordance with these policies 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. At June 30, 2025, we identified our policies on the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Management has reviewed the application of these policies and estimates with the Audit Committee of Valley’s Board. Our critical accounting policies and estimates are described in detail in Part II, Item 7 in Valley’s Annual Report, and there have been no material changes in such policies and estimates since the date of Valley’s Annual Report. New Authoritative Accounting Guidance See Note 4 to the consolidated financial statements for a description of new authoritative accounting guidance, including the dates of adoption and effects on results of operations and financial condition. Executive Summary Company Overview. At June 30, 2025, Valley had consolidated total assets of approximately $62.7 billion, total net loans of $48.8 billion, total deposits of $50.7 billion and total shareholders’ equity of $7.6 billion. Valley operates many convenient branch office locations and commercial banking offices in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, California, Alabama, and Illinois. Of our current 230 branch network, 55 percent, 18 percent, and 18 percent of the branches are located in New Jersey, New York, and Florida, respectively, with the remaining 9 percent of the branches in Alabama, California, and Illinois combined. 52 Financial Condition. During the second quarter 2025, we continued to strengthen our balance sheet to best perform in the current uncertain economic environment, while also prudently managing the overall risk of our loan portfolio. The following items, including key balance sheet initiatives, are highlights at June 30, 2025. • Commercial Real Estate Loan Concentration: Total commercial real estate loans (including construction loans) totaled $28.8 billion, or 58.4 percent of total loans at June 30, 2025, as compared to $29.1 billion, or 59.8 percent of total loans at March 31, 2025. The decrease was mostly due to normal repayment activity and selective originations as we continue to proactively diversify our loan portfolio and focus on the generation of more profitable and holistic banking client relationships. As a result, our CRE loan concentration ratio declined to approximately 349 percent at June 30, 2025 from 353 percent at March 31, 2025. Our current balance sheet goal is a continued gradual reduction of the CRE loan concentration ratio and to maintain the ratio below 350 percent through December 31, 2025. See further details of our loan activities under the “Loan Portfolio” section below. • Allowance for Credit Losses for Loans : The ACL for loans totaled $594.0 million and $594.1 million at June 30, 2025 and March 31, 2025, respectively, representing 1.20 percent and 1.22 percent of total loans at each respective date. The moderate decrease reflects, among other factors, a decline in quantitative reserves in certain loan categories and lower specific reserves associated with collateral dependent loans at June 30, 2025. Given our current projections and credit trends within our loan portfolio, we anticipate the ACL will range between 1.20 percent and 1.25 percent of total loans through December 31, 2025. See the “Allowance for Credit Losses for Loans" section for additional information. • Credit Quality: Net loan charge-offs totaled $37.8 million for the second quarter 2025 as compared to $41.9 million and $36.8 million for the first quarter 2025 and second quarter 2024, respectively. Non-accrual loans totaled $354.4 million, or 0.72 percent of total loans, at June 30, 2025 as compared to $346.5 million, or 0.71 percent of total loans, at March 31, 2025. Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) increased $147.5 million to $199.2 million, or 0.40 percent of total loans, at June 30, 2025 as compared to $51.7 million, or 0.11 percent of total loans, at March 31, 2025. The majority of this increase related to three CRE loans, of which two were no longer past due in July 2025. See the “Non-Performing Assets” section for additional information. • Liquid Assets: Our liquid assets totaled $5.4 billion at June 30, 2025, representing 9.3 percent of interest earning assets, as compared with $5.1 billion, or 9.1 percent of interest earning assets at March 31, 2025. We continue to maintain significant access to readily available, diverse funding sources to fulfill both short-term and long-term funding needs. See the “Bank Liquidity” section for additional information. • Deposits: Total deposit balances increased $759.4 million to $50.7 billion at June 30, 2025 as compared to $50.0 billion at March 31, 2025 mainly due to increases in both direct and indirect (brokered) customer time deposits during the second quarter 2025, partially offset by the outflows of certain indirect customer deposits in the savings, NOW and money market deposit category. Non-interest bearing deposits increased $118.2 million to $11.7 billion at June 30, 2025 from March 31, 2025. See the "Deposits and Other Borrowings" section below for more details. • Subordinated Debt Redemptions: On June 15, 2025, we redeemed in full $115 million of 5.25 percent fixed-to-floating rate subordinated notes issued in June 2020 and due in June 2030. The transaction was accounted for as an early debt extinguishment and resulted in a $922 thousand pre-tax loss reported within non-interest expense for the second quarter 2025. In addition, we repaid $100 million of 4.55 percent fixed rate subordinated notes that matured on June 30, 2025. • Investment Securities: Total investment securities increased $226.1 million to $7.5 billion, or 12.0 percent of total assets, at June 30, 2025 as compared to March 31, 2025 mainly due to targeted purchases of residential mortgage backed securities mostly issued by Ginnie Mae (with a risk-weighting of zero for regulatory capital purposes) that were classified as AFS. See the “Investment Securities Portfolio” section for more details. 53 • Regulatory Capital and Shareholders' Equity: Total shareholders' equity increased $75.5 million to $7.6 billion at June 30, 2025 as compared to March 31, 2025. Valley's total risk-based capital, common equity Tier 1 capital, Tier 1 capital and Tier 1 leverage capital ratios were 13.67 percent, 10.85 percent, 11.57 percent, and 9.49 percent, respectively, at June 30, 2025 as compared to 13.91 percent, 10.80 percent, 11.53 percent and 9.41 percent, respectively, at March 31, 2025. The decline in our total risk-based capital ratio as compared to March 31, 2025 reflects the early redemption of our $115 million of 5.25 percent fixed-to-floating rate subordinated notes, which were previously eligible for full regulatory capital treatment. Currently, we expect that Valley's common equity Tier 1 capital will gradually increase to approximately 11 percent by December 31, 2025 largely through projected growth in our retained earnings and continuous management of the overall regulatory risk weighted asset profile of our balance sheet, including the goal to reduce our commercial real estate loan concentration. See the "Capital Adequacy" section below for more information. Quarterly Results. Net income for the second quarter 2025 was $133.2 million, or $0.22 per diluted common share, as compared to $70.4 million, or $0.13 per diluted common share, for the second quarter 2024. The $62.7 million increase in quarterly net income as compared to the same quarter one year ago was mainly due to the following changes: • a $30.7 million increase in net interest income mainly driven by lower interest rates on most interest bearing deposit products in the second quarter 2025 and additional interest income from investment security purchases, partially offset by lower yields on adjustable-rate loans; • a $44.3 million decrease in our provision for credit losses partly due to a decline in the impact of specific reserves for collateral dependent commercial loans and the change in quantitative reserves on a linked quarter basis; and • an $11.4 million increase in non-interest income that was mainly driven by increases in service charges on deposit accounts, capital markets income, tax credit investment advisory service fees, and bank owned life insurance income. Which were partially offset by: • a $6.6 million increase in non-interest expense primarily due to increases in salary and employee benefits expense, amortization of tax credit investments, and net occupancy expense, partially offset by lower technology, furniture and equipment expense and FDIC insurance assessment fees; and • a $17.0 million increase in income taxes mainly due to higher pre-tax income. See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense” and “Income Taxes” sections below for more details on the impact of the items above and other infrequent non-core items impacting our second quarter 2025 results. U.S. Economic Conditions. During the second quarter 2025, real GDP increased at an estimated annual rate of 3.0 percent as compared to a decrease of 0.5 percent during the first quarter 2025. The second quarter rebound from the first quarter 2025 was mainly driven by a decrease in imports and a modest increase in consumer spending and government expenditures. These movements were partially offset by decreases in gross private domestic investment driven by a reduction in inventory as inventory levels normalized after businesses and consumers stockpiled goods ahead of anticipated tariff increases in the first quarter 2025. While core inflation recently came in slightly below most forecasts, pricing trends did not significantly ease during the second quarter 2025. Overall, the rate of inflation has increased to 2.7 percent in the second quarter 2025 as compared to 2.4 percent for the first quarter 2025. Over the last four months of 2024 at its FOMC meetings, the Federal Reserve lowered the target range for the federal funds rate from 5.25 – 5.50 percent to 4.25 – 4.50 percent and have held the target steady since. The latest projections from the FOMC still indicate two rate cuts are expected during the remainder of 2025. The FOMC also indicated that the Federal Reserve will continue to reduce its Treasury securities, agency debt and agency mortgage- 54 backed securities. The primary concerns of (1) supporting maximum employment and, more specifically, (2) returning inflation to its 2 percent target has led to the FOMC's most recent decision to hold the federal funds target rate steady. The 10-year U.S. Treasury note yield ended the second quarter 2025 at 4.24 percent, or 1 basis point higher as compared to the first quarter 2025, and the 2-year U.S. Treasury note yield ended the second quarter 2025 at 3.72 percent, or 15 basis points lower as compared to the first quarter 2025. The second quarter 2025 economic lookout was weakened by the continued negative impact of volatile U.S. tariff policies and trade negotiations, heightened geopolitical tensions, immigration enforcement, persistent concerns about the government deficit, including the impact of the recently passed OBBBA, and the level of inflation. As a result of these factors, many market analysts have increased the likelihood of a recession in their forecast for the coming year, and foresee an overall challenging bank operating environment. Should these conditions persist or further deteriorate, they may adversely impact our banking clients and our financial results, as highlighted elsewhere in this MD&A. Deposits and Other Borrowings We define cumulative deposit beta as the change in our cost of total deposits relative to the change in the average Fed Funds (upper bound) rate. We differentiate between the cumulative deposit beta during the rate increase cycle, which began in the first quarter of 2022 and ended in the second quarter of 2024, and the cumulative deposit beta during the rate decrease cycle which started in the third quarter of 2024. Our cumulative deposit beta in the interest rate increase cycle (between December 31, 2021 and June 30, 2024) was approximately 58 percent. The Federal Reserve started an interest rate decrease cycle during the third quarter 2024. Our cumulative deposit beta in this current interest rate decrease cycle (between June 30, 2024 and June 30, 2025) was 51 percent as compared to 53 percent (between June 30, 2024 and March 31, 2025) one quarter ago. The relative stabilization of our cumulative deposit beta in the second quarter 2025 was mainly driven by the Federal Reserve's decision to leave the target federal funds rate unchanged in the second quarter of 2025, and our ability to broadly maintain the level of interest rates offered on our interest bearing deposit products. See the "Net Interest Income" section for additional details on the changes in our cost of deposits during the second quarter 2025. Total average deposits increased by $767.8 million to $49.9 billion for the second quarter 2025 as compared to the first quarter 2025. Average time deposit balances increased $548.7 million from the first quarter 2025 largely due to new direct retail customer CDs and our greater use of indirect customer (i.e., brokered) CDs in our funding mix during the second quarter 2025. Average non-interest bearing deposits increased $113.8 million to $11.3 billion for the second quarter 2025 as compared to the first quarter 2025, while average savings, NOW and money market deposits increased $105.4 million to $26.5 billion for the same period. Average non-interest-bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 53 percent, and 24 percent of total deposits for the second quarter 2025, respectively, as compared to 23 percent, 54 percent, and 23 percent of total deposits for the first quarter 2025, respectively . Actual ending balances for deposits increased $759.4 million to $50.7 billion at June 30, 2025 from March 31, 2025 due to increases of $962.9 million and $118.2 million in time deposits and non-interest bearing deposits, respectively, partially offset by a $321.6 million decrease in savings, NOW and money market deposit balances. The increase in time deposit balances was mainly driven by continued deposit inflows from new promotional retail CD offerings and brokered customer CDs during the second quarter 2025. The increase in non-interest bearing deposit balances was mostly due to higher commercial customer deposit inflows in the second quarter 2025. Savings, NOW and money market deposit balances decreased at June 30, 2025 from March 31, 2025 largely due to lower indirect customer deposits, as well as some seasonal runoff in governmental deposits account balances. Total indirect customer deposits (including both brokered money market and time deposits) totaled $6.5 billion and $6.3 billion in June 30, 2025 and March 31, 2025, respectively. Non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 52 percent and 25 percent of total deposits 55 as of June 30, 2025, respectively, as compared to 23 percent, 53 percent and 24 percent of total deposits as of March 31, 2025, respectively. The following table summarizes CDs included in time deposits in excess of the FDIC insurance limit by maturity at June 30, 2025: June 30, 2025 (in thousands) Less than three months $ 1,014,203 Three to six months 512,678 Six to twelve months 757,852 More than twelve months 244,758 Total $ 2,529,491 Total estimated uninsured deposits, excluding collateralized government deposits and intercompany deposits (i.e., deposits eliminated in consolidation), totaled approximately $13.1 billion, or 26 percent of total deposits, at June 30, 2025 as compared to $13.0 billion, or 26 percent of total deposits, at March 31, 2025. While we maintained a diversified commercial and consumer deposit base at June 30, 2025, deposit gathering initiatives and our current direct customer deposit base could be challenged due to market competition, attractive non-deposit investment alternatives in the financial markets and other factors. As a result, we cannot guarantee that we will be able to maintain deposit levels at or near those reported at June 30, 2025. Management continuously monitors liquidity and all available funding sources including non-deposit borrowings discussed below. See the “Liquidity and Cash Requirements” section of this MD&A for additional information. The following table presents average short-term and long-term borrowings for the periods indicated : Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (in thousands) Average short-term borrowings: FHLB advances $ 128,846 $ 241,944 $ 29,396 $ 185,083 $ 750,137 Securities sold under repurchase agreements 61,052 60,693 63,710 60,873 65,355 Federal funds purchased 6,593 5,000 4,396 5,801 2,198 Total $ 196,491 $ 307,637 $ 97,502 $ 251,757 $ 817,690 Average long-term borrowings: FHLB advances $ 2,456,681 $ 2,300,093 $ 2,624,937 $ 2,378,819 $ 2,277,819 Subordinated debt 632,166 648,738 637,019 640,407 637,514 Junior subordinated debentures issued to capital trusts 57,587 57,500 57,239 57,544 57,196 Total $ 3,146,434 $ 3,006,331 $ 3,319,195 $ 3,076,770 $ 2,972,529 Average short-term borrowings for the second quarter 2025 decreased $111.1 million from the first quarter 2025 and increased $99.0 million from the second quarter 2024. The decrease from the first quarter 2025 was mainly due to the maturity and repayment of FHLB advances. The increase from the second quarter 2024 was mostly driven by a greater use of short-term FHLB advances in our mix of funding sources during the second quarter 2025. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) increased $140.1 million as compared to the first quarter 2025 and decreased $172.8 million as compared to t he second quarter 2024. The increase as compared to the first quarter 2025 was mainly due to new issuances of FHLB advances totaling $210.0 million in the second quarter 56 2025. The decrease compared to the second quarter 2024 w as partly due to maturity and repayment of $273.0 million of FHLB advances in January 2025. Actual ending balances of short-term borrowings increased $103.2 million to $162.2 million at June 30, 2025 from March 31, 2025 largely due to the increase in FHLB advances. Long-term borrowings totaled $2.9 billion at June 30, 2025 and remained relatively unchanged compared to March 31, 2025. In June 2025, we fully redeemed $215.0 million of subordinated notes that were mostly offset by the issuance of new long-term FHLB advances during the second quarter 2025. Non-GAAP Financial Measures The table below presents selected performance indicators, their comparative non-GAAP measures and the (non-GAAP) efficiency ratio for the periods indicated. Valley believes that the non-GAAP financial measures provide useful supplemental information to both management and investors in understanding Valley's underlying operational performance, business, and performance trends, and may facilitate comparisons of our current and prior performance with the performance of others in the financial services industry. Management utilizes these measures for internal planning, forecasting, and analysis purposes. Management believes that Valley’s presentation and discussion of this supplemental information, together with the accompanying reconciliations to the GAAP financial measures, also allows investors to view performance in a manner similar to management. These non-GAAP financial measures should not be considered in isolation, as a substitute for or superior to financial measures calculated in accordance with GAAP. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. The following table presents our annualized performance ratios : Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Selected Performance Indicators ($ in thousands) GAAP measures: Net income, as reported $ 133,167 $ 70,424 $ 239,225 $ 166,704 Return on average assets 0.86 % 0.46 % 0.77 % 0.54 % Return on average shareholders’ equity 7.08 4.17 6.39 4.95 Non-GAAP measures: Net income, as adjusted $ 134,415 $ 71,643 $ 240,481 $ 171,091 Return on average assets, as adjusted 0.87 % 0.47 % 0.78 % 0.56 % Return on average shareholders' equity, as adjusted 7.15 4.24 6.42 5.08 Return on average tangible shareholders' equity (ROATE) 9.62 5.95 8.70 7.07 ROATE, as adjusted 9.71 6.05 8.74 7.25 Efficiency ratio, as adjusted 55.20 59.62 55.53 59.36 June 30, 2025 December 31, 2024 Common Equity Per Share Data: Book value per common share (GAAP) $ 12.89 $ 12.67 Tangible book value per common share (non-GAAP) 9.35 9.10 57 Non-GAAP Reconciliations to GAAP Financial Measures Adjusted net income is computed as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) Net income, as reported (GAAP) $ 133,167 $ 70,424 $ 239,225 $ 166,704 Non-GAAP adjustments: Add: Loss on extinguishment of debt 922 — 922 — Add: FDIC special assessment (1) — 1,363 — 8,757 Add: Losses on available for sale and held to maturity debt securities, net (2) — 4 11 11 Less: Restructuring charge (3) 800 334 800 954 Less: Gain on sale of commercial premium finance lending division (4) — — — (3,629) Total non-GAAP adjustments to net income $ 1,722 $ 1,701 $ 1,733 $ 6,093 Income tax adjustments related to non-GAAP adjustments (5) (474) (482) (477) (1,706) Net income, as adjusted (non-GAAP) $ 134,415 $ 71,643 $ 240,481 $ 171,091 (1) Included in the FDIC insurance assessment. (2) Included in (losses) gains on securities transactions, net. (3) Represents severance expense related to workforce reductions within salary and employee benefits expense. (4) Included in other income within non-interest income. (5) Calculated using the appropriate blended statutory tax rate for the applicable period. In addition to the items used to calculate net income, as adjusted, in the table above, our net income is, from time to time, impacted by fluctuations in the overall level of net gains on sales of loans, wealth management and trust fees, and capital markets income. These amounts can vary widely from period to period due to, among other factors, the amount and timing of residential mortgage loans originated for sale, brokerage and tax credit investment advisory activities and commercial loan customer demand for certain interest rate swap products. See the “Non-Interest Income” section below for more details. Adjusted annualized return on average assets is computed by dividing adjusted net income by average assets, as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 ($ in thousands) Net income, as adjusted (non-GAAP) $ 134,415 $ 71,643 $ 240,481 $ 171,091 Average assets (GAAP) $ 62,106,945 $ 61,518,639 $ 61,806,614 $ 61,387,754 Annualized return on average assets, as adjusted (non-GAAP) 0.87 % 0.47 % 0.78 % 0.56 % 58 Adjusted annualized return on average shareholders' equity is computed by dividing adjusted net income by average shareholders' equity, as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 ($ in thousands) Net income, as adjusted (non-GAAP) $ 134,415 $ 71,643 $ 240,481 $ 171,091 Average shareholders' equity (GAAP) $ 7,524,231 $ 6,753,981 $ 7,491,395 $ 6,739,838 Annualized return on average shareholders' equity, as adjusted (non-GAAP) 7.15 % 4.24 % 6.42 % 5.08 % ROATE and adjusted ROATE are computed by dividing net income and adjusted net income, respectively, by average shareholders’ equity less average goodwill and average other intangible assets, as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 ($ in thousands) Net income, as reported (GAAP) $ 133,167 $ 70,424 $ 239,225 $ 166,704 Net income, as adjusted (non-GAAP) $ 134,415 $ 71,643 $ 240,481 $ 171,091 Average shareholders’ equity (GAAP) $ 7,524,231 $ 6,753,981 $ 7,491,395 $ 6,739,838 Less: Average goodwill and other intangible assets (GAAP) 1,987,381 2,016,766 1,990,702 2,020,883 Average tangible shareholders’ equity (non-GAAP) $ 5,536,850 $ 4,737,215 $ 5,500,693 $ 4,718,955 Annualized ROATE (non-GAAP) 9.62 % 5.95 % 8.70 % 7.07 % Annualized ROATE, as adjusted (non-GAAP) 9.71 % 6.05 % 8.74 % 7.25 % The efficiency ratio is computed as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 ($ in thousands) Total non-interest expense, as reported (GAAP) $ 284,122 $ 277,497 $ 560,740 $ 557,807 Less: Loss on extinguishment of debt (pre-tax) 922 — 922 — Less: FDIC special assessment (1) — 1,363 — 8,757 Less: Restructuring charge (2) 800 334 800 954 Less: Amortization of tax credit investments 9,134 5,791 18,454 11,353 Total non-interest expense, as adjusted (non-GAAP) $ 273,266 $ 270,009 $ 540,564 $ 536,743 Net interest income, as reported (GAAP) 432,408 401,685 852,513 795,233 Total non-interest income, as reported (GAAP) 62,604 51,213 120,898 112,628 Add: Losses on available for sale and held to maturity debt securities, net (3) — 4 11 11 Less: Gain on sale of commercial premium finance lending division (4) — — — (3,629) Gross operating income, as adjusted (non-GAAP) $ 495,012 $ 452,902 $ 973,422 $ 904,243 Efficiency ratio (non-GAAP) 55.20 % 59.62 % 55.53 % 59.36 % 59 (1) Included in the FDIC insurance assessment. (2) Represents severance expense related to workforce reductions within salary and employee benefits expense. (3) Included in (losses) gains on securities transactions, net. (4) Included in other income within non-interest income. Tangible book value per common share is computed by dividing shareholders’ equity less preferred stock, goodwill and other intangible assets by common shares outstanding, as follows: June 30, 2025 December 31, 2024 ($ in thousands, except for share data) Common shares outstanding 560,281,821 558,786,093 Shareholders’ equity (GAAP) $ 7,575,421 $ 7,435,127 Less: Preferred stock 354,345 354,345 Less: Goodwill and other intangible assets 1,983,515 1,997,597 Tangible common shareholders’ equity (non-GAAP) $ 5,237,561 $ 5,083,185 Book value per common share (GAAP) $ 12.89 $ 12.67 Tangible book value per common share (non-GAAP) $ 9.35 $ 9.10 Net Interest Income Net interest income on a tax equivalent basis of $433.7 million for the second quarter 2025 increased $12.3 million compared to the first quarter 2025 and increased $30.7 million as compared to the second quarter 2024. Interest income on a tax equivalent basis increased $20.3 million to $806.3 million for the second quarter 2025 as compared to the first quarter 2025. The increase was mostly driven by (i) higher yields on new loan originations, (ii) increased average loan balances driven by new organic loan originations largely within the commercial and industrial loan portfolio, (iii) additional interest income from purchases of taxable investments mainly within the available for sale portfolio during the first half of 2025 and (iv) one additional day in the second quarter 2025. Total interest expense increased $8.0 million to $372.6 million for the second quarter 2025 as compared to the first quarter 2025 largely due to (i) a $548.7 million increase in average time deposit balances, (ii) the increased cost of certain non-maturity deposits and (iii) the aforementioned increase in day count. Average interest earning assets increased $780.7 million to $57.6 billion for the second quarter 2025 as compared to the second quarter 2024 mainly due to a $2.0 billion increase in average taxable investments largely resulting from purchases of residential mortgage-backed securities classified as available for sale over the past 12 months, largely offset by lower average loan balances and to a lesser extent lower excess liquidity held in overnight interest-bearing deposits with banks. Compared to the first quarter 2025, average interest earning assets increased by $661.9 million during the second quarter 2025 . The increase was mainly driven by increases of $377.7 million in average loans, $42.4 million overnight interest bearing cash balances and an increase of $249.8 million in average taxable investments. The increase in average loan balances to $49.0 billion for the second quarter 2025 was mostly due to continued growth in the commercial and industrial loan portfolio. Average interest bearing liabilities increased $337.4 million to $41.9 billion for the second quarter 2025 as compared to the second quarter 2024 primarily due to increases of $411.2 million and $99.0 million in average interest bearing deposits and short-term borrowings, respectively, partially offset by a decrease of $172.8 million in long-term borrowings. As compared to the first quarter 2025, average interest bearing liabilities increased by $683.0 million for the second quarter 2025 largely due to an increase in average time deposit balances. See additional information under “ Deposits and Other Borrowings ” in the Executive Summary section above. Net interest margin on a tax equivalent basis of 3.01 percent for the second quarter 2025 increased by 5 basis points from 2.96 percent for the first quarter 2025 and increased 17 basis points from 2.84 percent for the second quarter 2024. The increase as compared to the first quarter 2025 was mostly due to the 7 basis point increase in the yield on 60 average interest earning assets largely caused by higher interest rates on new loan originations in the second quarter 2025 and higher yielding investment purchases. The overall cost of average interest bearing liabilities increased 2 basis points to 3.56 percent for the second quarter 2025 as compared to the first quarter 2025 mostly due to higher interest rates on certain non-maturity deposit products, partially offset by a lower overall cost of time deposits driven by both new volumes and maturities. Our cost of total average deposits was 2.67 percent for the second quarter 2025 as compared to 2.65 percent and 3.18 percent for the first quarter 2025 and the second quarter 2024, respectively. In Valley's Annual Report, we provided guidance that we anticipated net interest income growth of approximately 9 to 12 percent for the full year of 2025 as compared to $1.6 billion reported for 2024. Based upon our current projections, we now expect the growth of our net interest income for 2025 to fall within a range of 8 to 10 percent range largely due to lower anticipated loan growth of 3 percent for same period. Our forecasts include additional assumptions and, therefore, we cannot provide any assurances that our future net interest income or margin will meet our current estimates or remain near the levels reported for the second quarter 2025. For a detailed discussion on the risks related to interest rates please refer to Part I, Item 1A. “Risk Factors” in Valley's Annual Report. 61 The following table reflects the components of net interest income for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024: Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and Net Interest Income on a Tax Equivalent Basis Three Months Ended June 30, 2025 March 31, 2025 June 30, 2024 Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Average Rate ($ in thousands) Assets Interest earning assets: Loans (1)(2) $ 49,032,637 $ 720,305 5.88 % $ 48,654,921 $ 703,632 5.78 % $ 50,020,901 $ 770,987 6.17 % Taxable investments (3) 7,350,792 72,692 3.96 7,100,958 69,562 3.92 5,379,101 46,801 3.48 Tax-exempt investments (1)(3) 544,302 5,925 4.35 552,291 5,952 4.31 575,272 6,075 4.22 Interest bearing deposits with banks 625,893 7,357 4.70 583,521 6,879 4.72 797,676 10,902 5.47 Total interest earning assets 57,553,624 806,279 5.60 56,891,691 786,025 5.53 56,772,950 834,765 5.88 Allowance for credit losses (593,858) (577,551) (477,373) Cash and due from banks 427,930 418,806 421,026 Other assets 4,863,028 4,950,547 4,972,181 Unrealized losses on securities available for sale, net (143,779) (180,725) (170,145) Total assets $ 62,106,945 $ 61,502,768 $ 61,518,639 Liabilities and Shareholders’ Equity Interest bearing liabilities: Savings, NOW and money market deposits $ 26,451,349 $ 203,390 3.08 % $ 26,345,983 $ 200,221 3.04 % $ 24,848,266 $ 231,597 3.73 % Time deposits 12,119,461 129,324 4.27 11,570,758 125,069 4.32 13,311,381 160,442 4.82 Total interest bearing deposits 38,570,810 332,714 3.45 37,916,741 325,290 3.43 38,159,647 392,039 4.11 Short-term borrowings 196,491 1,736 3.53 307,637 2,946 3.83 97,502 691 2.83 Long-term borrowings (4) 3,146,434 38,154 4.85 3,006,331 36,411 4.84 3,319,195 39,051 4.71 Total interest bearing liabilities 41,913,735 372,604 3.56 41,230,709 364,647 3.54 41,576,344 431,781 4.15 Non-interest bearing deposits 11,336,314 11,222,562 11,223,562 Other liabilities 1,332,665 1,591,320 1,964,752 Shareholders’ equity 7,524,231 7,458,177 6,753,981 Total liabilities and shareholders’ equity $ 62,106,945 $ 61,502,768 $ 61,518,639 Net interest income/interest rate spread (5) $ 433,675 2.04 % $ 421,378 1.99 % $ 402,984 1.73 % Tax equivalent adjustment (1,267) (1,273) (1,299) Net interest income, as reported $ 432,408 $ 420,105 $ 401,685 Net interest margin (6) 3.01 % 2.95 % 2.83 % Tax equivalent effect 0.00 0.01 0.01 Net interest margin on a fully tax equivalent basis (6) 3.01 % 2.96 % 2.84 % 62 The following table reflects the components of net interest income for the six months ended June 30, 2025 and 2024: Six Months Ended June 30, 2025 June 30, 2024 Average Balance Interest Average Rate Average Balance Interest Average Rate ($ in thousands) Assets Interest earning assets: Loans (1)(2) $ 48,844,823 $ 1,423,936 5.83 % $ 50,133,746 $ 1,542,564 6.15 % Taxable investments (3) 7,226,565 142,254 3.94 5,237,040 89,426 3.42 Tax-exempt investments (1)(3) 548,274 11,877 4.33 577,557 12,146 4.21 Interest bearing deposits with banks 604,824 14,236 4.71 747,531 20,584 5.51 Total interest earning assets 57,224,486 1,592,303 5.57 56,695,874 1,664,720 5.87 Allowance for credit losses (585,749) (463,852) Cash and due from banks 423,393 430,101 Other assets 4,906,634 4,888,590 Unrealized losses on securities available for sale, net (162,150) (162,959) Total assets $ 61,806,614 $ 61,387,754 Liabilities and shareholders’ equity Interest bearing liabilities: Savings, NOW and money market deposits $ 26,399,580 $ 403,611 3.06 % $ 24,820,859 $ 464,103 3.74 % Time deposits 11,846,625 254,393 4.29 12,955,388 311,507 4.81 Total interest bearing deposits 38,246,205 658,004 3.44 37,776,247 775,610 4.11 Short-term borrowings 251,757 4,682 3.72 817,690 21,303 5.21 Long-term borrowings (4) 3,076,770 74,565 4.85 2,972,529 69,976 4.71 Total interest bearing liabilities 41,574,732 737,251 3.55 41,566,466 866,889 4.17 Non-interest bearing deposits 11,279,752 11,203,344 Other liabilities 1,460,735 1,878,106 Shareholders’ equity 7,491,395 6,739,838 Total liabilities and shareholders’ equity $ 61,806,614 $ 61,387,754 Net interest income/interest rate spread (5) $ 855,052 2.02 % $ 797,831 1.70 % Tax equivalent adjustment (2,539) (2,598) Net interest income, as reported $ 852,513 $ 795,233 Net interest margin (6) 2.98 % 2.81 % Tax equivalent effect 0.01 — Net interest margin on a fully tax equivalent basis (6) 2.99 % 2.81 % _____________ (1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate. (2) Loans are stated net of unearned income and include non-accrual loans. (3) The yield for securities that are classified as AFS is based on the average historical amortized cost. (4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition. (5) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. (6) Net interest income as a percentage of total average interest earning assets. 63 The following table demonstrates the relative impact on net interest income of changes in the volume of interest earning assets and interest bearing liabilities and changes in rates earned and paid by Valley on such assets and liabilities. Variances resulting from a combination of changes in volume and rates are allocated to the categories in proportion to the absolute dollar amounts of the change in each category. Change in Net Interest Income on a Tax Equivalent Basis Three Months Ended June 30, 2025 Compared to June 30, 2024 Six Months Ended June 30, 2025 Compared to June 30, 2024 Change Due to Volume Change Due to Rate Total Change Change Due to Volume Change Due to Rate Total Change (in thousands) Interest Income: Loans* $ (15,021) $ (35,661) $ (50,682) $ (38,974) $ (79,654) $ (118,628) Taxable investments 18,862 7,029 25,891 37,675 15,153 52,828 Tax-exempt investments* (333) 183 (150) (627) 358 (269) Federal funds sold and other interest bearing deposits (2,149) (1,396) (3,545) (3,605) (2,743) (6,348) Total increase (decrease) in interest income 1,359 (29,845) (28,486) (5,531) (66,886) (72,417) Interest Expense: Savings, NOW and money market deposits 14,237 (42,444) (28,207) 28,127 (88,619) (60,492) Time deposits (13,644) (17,474) (31,118) (25,393) (31,721) (57,114) Short-term borrowings 841 204 1,045 (11,759) (4,862) (16,621) Long-term borrowings and junior subordinated debentures (2,072) 1,175 (897) 2,493 2,096 4,589 Total de crease in interest expense (638) (58,539) (59,177) (6,532) (123,106) (129,638) Total increase in net interest income $ 1,997 $ 28,694 $ 30,691 $ 1,001 $ 56,220 $ 57,221 * Interest income is presented on a tax equivalent basis using 21 percent as the federal tax rate. Non-Interest Income Non-interest income represented 12.6 percent and 11.3 percent of total net interest income plus non-interest income for the three months ended June 30, 2025 and 2024, respectively, and 12.4 percent of total interest income plus non-interest income for both the six months ended June 30, 2025 and 2024, respectively. For the three and six months ended June 30, 2025, non-interest income increased $11.4 million and $8.3 million, respectively, as compared to the same periods in 2024 mainly driven by increases in service charges on deposit accounts, capital markets income and bank owned life insurance income. See further details below. 64 The following table presents the components of non-interest income for the three and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) Wealth management and trust fees $ 14,056 $ 13,136 $ 29,087 $ 31,066 Insurance commissions 3,430 3,958 6,832 6,209 Capital markets 9,767 7,779 16,707 13,449 Service charges on deposit accounts 14,705 11,212 27,431 22,461 (Losses) gains on securities transactions, net (1) 3 45 52 Fees from loan servicing 3,671 2,691 6,886 5,879 Gains on sales of loans, net 2,025 884 4,222 2,502 Bank owned life insurance 6,019 4,545 10,796 7,780 Other 8,932 7,005 18,892 23,230 Total non-interest income $ 62,604 $ 51,213 $ 120,898 $ 112,628 Wealth management and trust fee income decreased $2.0 million for the six months ended June 30, 2025 as compared to the same period in 2024 mainly due to brokerage fees. Brokerage fees decreased $1.8 million to $10.6 million for the six months ended June 30, 2025 as compared to the same period in 2024 due to lower customer trading volume at our broker dealer subsidiary. Capital markets income increased $2.0 million and $3.3 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increase for both periods was mostly due to fee growth from higher volumes of interest rate swap transactions related to commercial lending activities, as well as fees from foreign exchange and loan syndication transactions. Service charges on deposit accounts increased $3.5 million and $5.0 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024 mainly due to additional treasury service related fees for commercial deposit accounts, partially offset by lower overdraft fees. Bank owned life insurance income increased $1.5 million and $3.0 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024 due to higher returns on the underlying investment securities during the respective periods. Other non-interest income increased $1.9 million and decreased $4.3 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increase as compared to the second quarter 2024 was mainly due to a $1.5 million increase in card fee income for three months ended June 30, 2025. The decrease for the six months ended June 30, 2025 was largely as a result of a $3.6 million net gain realized on the sale of our commercial premium finance lending business during the first quarter 2024. Non-Interest Expense Non-interest expense increased $6.6 million and $2.9 million for the three and six months ended June 30, 2025 , respectively, as compared to the same quarter in 2024 mainly due to increases in salary and employee benefits expense, professional and legal fees, amortization of tax credit investments and net occupancy expense. See further details below. 65 The following table presents the components of non-interest expense for the three and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) Salary and employee benefits expense $ 145,422 $ 140,815 $ 288,040 $ 282,646 Net occupancy expense 25,483 24,252 51,371 48,575 Technology, furniture and equipment expense 30,667 35,203 60,563 70,665 FDIC insurance assessment 12,192 14,446 25,059 32,682 Amortization of other intangible assets 7,427 8,568 15,446 17,980 Professional and legal fees 19,970 17,938 35,640 34,403 Loss on extinguishment of debt 922 — 922 — Amortization of tax credit investments 9,134 5,791 18,454 11,353 Other 32,905 30,484 65,245 59,503 Total non-interest expense $ 284,122 $ 277,497 $ 560,740 $ 557,807 Salary and employee benefits expense increased $4.6 million and $5.4 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024 mainly due to annual salary merit increases, cash incentive compensation and increased medical related expenses, partially offset by lower stock-based compensation expense. Net occupancy expense increased $1.2 million and $2.8 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024 mainly due to incremental increases in cleaning and maintenance, rent expense and depreciation expense. Technology, furniture and equipment expense decreased $4.5 million and $10.1 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The decreases were mostly driven by a reduction in software licensing costs, as well as moderately lower depreciation and telecommunication related expenses. FDIC insurance assessment expense decreased $2.3 million and $7.6 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods of 2024. The decreases were primarily due to additional estimated expenses of $1.4 million and $8.8 million recorded during the three and six months ended June 30, 2024, respectively, related to the FDIC special assessment. Amortization of other intangibles decreased $1.1 million and $2.5 million for the three and six months ended June 30, 2025 , respectively, as compared to the same periods in 2024 mainly due to a decline in amortization expense related to core deposits and loan servicing rights. Loss on extinguishment of debt totaling $922 thousand for both the three and six months ended June 30, 2025 related to the June 15, 2025 early redemption of $115 million of 5.25 percent subordinated notes issued in June 2020 which were due in June 2030. Amortization of tax credit investments increased $3.3 million and $7.1 million for the three and six months ended June 30, 2025 , respectively, as compared to the same periods in 2024 mainly due to large purchases of tax-advantaged investments over the last twelve months. See Note 14 for more details regarding our tax credit investments. Other non-interest expense increased $2.4 million and $5.7 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increase for the three months ended June 30, 2025 was mainly due to the fair valuation write-down totaling $2.9 million related to one commercial real estate OREO 66 property recorded during the second quarter 2025 and higher advertising expense. The increase for the six months ended June 30, 2025 was largely due to the aforementioned OREO related charge, a $2.9 million loss from the sale of one commercial real estate OREO property, as well as additional costs related to a loan credit risk transfer transaction, consisting of a credit default swap, executed in June 2024. The premium expense and other transaction costs associated with this credit protection totaled $1.8 million and $3.8 million for the three and six months ended June 30, 2025, respectively. The increases in both 2025 periods were partially offset by incremental increases in other expense categories. Income Taxes Income tax expense totaled $39.9 million for the second quarter 2025 as compared to $33.1 million for the first quarter 2025 and $22.9 million for the second quarter 2024. Our effective tax rate was 23.1 percent, 23.8 percent and 24.5 percent for the second quarter 2025, first quarter 2025 and second quarter 2024, respectively. The decrease in the effective tax rate as compared to the second quarter 2024 was primarily due to a higher level of investment in tax credits. GAAP requires that any change in judgment or change in measurement of a tax position taken in a prior annual period be recognized as a discrete event in the quarter in which it occurs, rather than being recognized as a change in effective tax rate for the current year. Our adherence to these tax guidelines may result in volatile effective income tax rates in future quarterly and annual periods. Factors that could impact management’s judgment include changes in income, tax laws and regulations, and tax planning strategies. On July 4, 2025, the OBBBA was signed into law. The OBBBA extends or reinstates certain provisions of the 2017 Tax Cuts and Jobs Act, includes tax relief measures, modifies certain energy tax credits and sets various limits on tax deductions, among other key provisions. We are currently evaluating the provisions of the OBBBA, but it is not expected to have a material impact on our consolidated financial statements. Based on the current information available, we anticipate that our effective tax rate will be approximately within the 23 to 25 percent range for the remainder of 2025. Operating Segments Valley manages its business operations under operating segments consisting of Consumer Banking and Commercial Banking. Activities not assigned to the operating segments are included in Treasury and Corporate Other. The accounting for each operating segment and Treasury and Corporate Other includes internal accounting policies designed to measure consistent and reasonable financial reporting and may result in income and expense measurements that differ from amounts under GAAP. The financial reporting for each segment contains allocations and reporting in line with Valley’s operations, which may not necessarily be comparable to those of any other financial institution. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. Certain prior period amounts have been reclassified to conform to the current presentation for each operating segment and Treasury and Corporate Other. See Note 1 5 to the consolidated financial statements for additional details. 67 The following tables present the financial data for Valley's operating segments, and Treasury and Corporate Other for the three months ended June 30, 2025 and 2024: Three Months Ended June 30, 2025 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets $ 10,428,625 $ 38,604,012 $ 8,520,987 $ 57,553,624 Interest income $ 130,616 $ 588,422 $ 85,974 $ 805,012 Interest expense 68,915 248,524 55,165 372,604 Net interest income 61,701 339,898 30,809 432,408 Provision for credit losses 717 37,078 4 37,799 Net interest income after provision for credit losses 60,984 302,820 30,805 394,609 Non-interest income 32,192 24,999 5,413 62,604 Non-interest expense Salary and employee benefits expense 32,294 99,173 13,955 145,422 Net occupancy expense 4,772 16,960 3,751 25,483 Technology, furniture, and equipment expense 6,266 20,469 3,932 30,667 FDIC insurance assessment 2,650 9,542 — 12,192 Professional and legal fees 3,344 14,191 2,435 19,970 Loss on extinguishment of debt — — 922 922 Other segment items * 12,021 17,337 20,108 49,466 Total non-interest expense $ 61,347 $ 177,672 $ 45,103 $ 284,122 Income (loss) before income taxes $ 31,829 $ 150,147 $ (8,885) $ 173,091 Return on average interest earning assets (pre-tax) 1.22 % 1.56 % (0.42) % 1.20 % Net interest margin 2.37 % 3.52 % 1.45 % 3.01 % 68 Three Months Ended June 30, 2024 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets $ 9,836,298 $ 40,184,603 $ 6,752,049 $ 56,772,950 Interest income $ 118,537 $ 652,427 $ 62,502 $ 833,466 Interest expense 74,780 305,635 51,366 431,781 Net interest income 43,757 346,792 11,136 401,685 Provision (credit) for credit losses 4,820 77,291 (41) 82,070 Net interest income after provision for credit losses 38,937 269,501 11,177 319,615 Non-interest income 31,568 16,494 3,151 51,213 Non-interest expense Salary and employee benefits expense 29,776 99,422 11,617 140,815 Net occupancy expense 4,262 17,147 2,843 24,252 Technology, furniture, and equipment expense 6,589 24,740 3,874 35,203 FDIC insurance assessment 2,570 10,513 1,363 14,446 Professional and legal fees 2,377 14,256 1,305 17,938 Other segment items * 12,940 11,645 20,258 44,843 Total non-interest expense $ 58,514 $ 177,723 $ 41,260 $ 277,497 Income (loss) before income taxes $ 11,991 $ 108,272 $ (26,932) $ 93,331 Return on average interest earning assets (pre-tax) 0.49 % 1.08 % (1.60) % 0.66 % Net interest margin 1.78 % 3.45 % 0.66 % 2.83 % * Other segment items include amortization of intangible assets, amortization of tax credit investments and other general operating expenses. Consumer Banking Segment The Consumer Banking segment represented 19.6 percent of our loan portfolio at June 30, 2025, and was mainly comprised of residential mortgage loans and automobile loans, and to a lesser extent, home equity loans, secured personal lines of credit and other consumer loans (including credit card loans). The duration of the residential mortgage loan portfolio (which represented 11.5 percent of our loan portfolio at June 30, 2025) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans portfolio (which represented 4.4 percent of total loans at June 30, 2025) is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Banking also includes the Wealth Management and Insurance Services Division, comprised of asset management advisory, brokerage, trust, personal and title insurance, tax credit advisory services, and our international and domestic private banking businesses. Consumer Banking’s average interest earning assets increased $592.3 million to $10.4 billion for t he second quarter 2025 as compared to the same period of 2024 . The increase was mostly due to strong growth in our automobile loan portfolio over the last 12-month period and, to a lesser extent, growth in residential mortgage and home equity loans. See additional details in the "Loan Portfolio" section of this MD&A. Income before income taxes generated by the Consumer Banking segment increased $19.8 million to $31.8 million for the second quarter 2025 as compared to the second quarter 2024. The increase was mainly driven by a combination of higher net interest income and a lower provision for loan losses, partially offset by an increase in non-interest expense. Net interest income for this segment increased $17.9 million mainly due to the aforementioned growth in average loans coupled with lower funding costs. The provision for loan losses decreased $4.1 million for 69 the second quarter 2025 as compared to the second quarter 2024 mainly due to moderately lower allocations of reserves to residential mortgage loans based on the continued high level of credit performance within this portfolio. Non-interest expense increased $2.8 million for the second quarter 2025 due, in part, to normal annual merit salary increases impacting salary and employee benefits expense year over year. Net interest margin on the Consumer Banking portfolio increased 59 basis points to 2.37 percent for the second quarter 2025 as compared to the second quarter 2024 mainly due to a 19 basis point increase in the yield on average loa ns combined with a 40 basis point decrease in the costs associated with our funding sou rces. The 19 basis point increase in loan yield was largely due to higher yielding new loan originations over most of the last 12-month period. The decrease in our funding costs was mainly driven by lower interest rates on most deposit products during the second quarter 2025 and repayment of maturing higher cost time deposits over the last 12-month period. Our cost of total average deposits was 2.67 percent for the second quarter 2025 as compared to 3.18 percent for the second quarter 2024. See the “Net Interest Income” section above for more details on our net interest margin and funding sources. Commercial Banking Segment The Commercial Banking segment is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate characteristics, Commercial Banking is Valley’s operating segment that is most sensitive to movements in market interest rates. Commercial and industrial loans totaled approximately $10.9 billion and represented 22.0 percent of the total loan portfolio at June 30, 2025. Commercial real estate and construction loans totaled $28.8 billion and represented 58.4 percent of the total loan portfolio at June 30, 2025. Average interest earning assets in the Commercial Banking segment decreased $1.6 billion to $38.6 billion for the second quarter 2025 as compared to the second quarter 2024. The decrease was mostly due to the bulk sales of certain performing commercial real estate loans during both late March 2024 and the fourth quarter 2024, as well as continued net commercial real estate loan repayment activity. See additional details in the "Loan Portfolio" section of this MD&A. Income before income taxes for Commercial Banking increased $41.9 million to $150.1 million for the second quarter 2025 as compared to the same period of 2024 mainly due to a decrease in the provision for credit losses and higher non-interest income. The provision for credit losses decreased $40.2 million to $37.1 million as compared to the same period in 2024 mainly due to a decline in quantitative reserves within several loan categories and lower specific reserves associated with collateral dependent loans at June 30, 2025. See more information in the “Allowance for Credit Losses for Loans ” section of this MD&A. Non-interest income increased $8.5 million during the second quarter 2025 mainly due to higher capital markets income and service charges on deposit accounts related to treasury services for commercial customers. See further details in the “Non-Interest Income” section of this MD&A. Net interest income for this segment decreased $6.9 million to $339.9 million for the second quarter 2025 as compared to the same period in 2024 largely due to a decrease in interest income caused by the aforementioned decline in average loan balances that was mostly offset by a decline in funding cost. The net interest margin for this segment increased 7 basis poin ts to 3.52 percent for the second quarter 2025 as compared to the second quarter 2024 due to a 46 basis point decrease in the cost of our funding sources, largely offset by a 39 basis point decrease in the yield on average loans. Treasury and Corporate Other Treasury and Corporate Other largely consists of the Treasury managed HTM debt securities and AFS debt securities portfolios mainly utilized for the liquidity management needs of our lending segments and income and expense items resulting from support functions not directly attributable to a specific segment. Interest income is generated through investments in various types of securities (mainly comprised of fixed rate securities) and interest-bearing deposits with other banks (primarily the Federal Reserve Bank of New York). Expenses related to the branch network, all other components of retail banking, along with the back office departments of the Bank are 70 allocated from Treasury and Corporate Other to operating segments. Other non-interest income items and general expenses are allocated from Treasury and Corporate Other to each operating segment utilizing a methodology that involves an allocation of operating and funding costs based on each segment's respective mix of average interest earning assets outstanding for the period, number of deposits, or direct allocations to the segments based on the nature of income and expense. U nallocated items included in Treasury and Corporate Other mainly consist of net gains and losses on AFS and HTM securities transactions, amortization of tax credit investments, as well as other non-core items, including loss on extinguishment of debt, corporate restructuring charges and the FDIC special assessment. Treasury and Corporate Other's average interest earning assets increased $1.8 billion to $8.5 billion for the second quarter 2025 compared to the second quarter 2024 primarily due to an increase in average taxable investments largely resulting from additional purchases of residential mortgage-backed securities classified as AFS over the last 12-month period. For the second quarter 2025 , loss before income taxes totaled $8.9 million compared to $26.9 million of income before taxes for the same period in 2024. The $18.0 million decrease in the pre-tax loss from the second quarter 2024 was mainly driven by a $19.7 million increase in net interest income primarily resulting from the increase in average taxable investments. Non-interest expense increased $3.8 million to $45.1 million for the second quarter 2025 as compared to the same period in 2024 mainly due to increases in the amortization of tax credit investments and salaries and employee benefits expense. See further details in the “Non-Interest Expense” section of this MD&A. Treasury and Corporate Other's net interest margin increased 79 basis points to 1.45 percent for the second quarter 2025 as compared to the second quarter 2024 due to a 34 basis point increase in the yield on average investments caused by the purchase of the higher yielding new investment securities over the last 12 months coupled with a 45 basis point decrease in the cost of our funding sources. 71 The following tables present the financial data for Valley's operating segments and Treasury and Corporate Other for the six months ended June 30, 2025 and 2024: Six Months Ended June 30, 2025 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets $ 10,428,621 $ 38,416,202 $ 8,379,663 $ 57,224,486 Interest income $ 253,079 $ 1,168,318 $ 168,367 $ 1,589,764 Interest expense 134,357 494,934 107,960 737,251 Net interest income 118,722 673,384 60,407 852,513 (Credit) provision for credit losses (8,016) 108,486 (10) 100,460 Net interest income after provision for credit losses 126,738 564,898 60,417 752,053 Non-interest income 66,546 44,001 10,351 120,898 Non-interest expense Salary and employee benefits expense 64,268 202,163 21,609 288,040 Net occupancy expense 9,477 34,417 7,477 51,371 Technology, furniture, and equipment expense 12,503 40,322 7,738 60,563 FDIC insurance assessment 5,350 19,709 — 25,059 Professional and legal fees 6,243 25,134 4,263 35,640 Loss on extinguishment of debt — — 922 922 Other segment items * 26,307 32,780 40,058 99,145 Total non-interest expense $ 124,148 $ 354,525 $ 82,067 $ 560,740 Income (loss) before income taxes $ 69,136 $ 254,374 $ (11,299) $ 312,211 Return on average interest earning assets (pre-tax) 1.33 % 1.32 % (0.27) % 1.09 % Net interest margin 2.27 % 3.50 % 1.44 % 2.98 % 72 Six Months Ended June 30, 2024 Consumer Banking Commercial Banking Treasury and Corporate Other Total ($ in thousands) Average interest earning assets $ 9,814,532 $ 40,319,214 $ 6,562,128 $ 56,695,874 Interest income $ 232,299 $ 1,310,218 $ 119,605 $ 1,662,122 Interest expense 150,066 616,487 100,336 866,889 Net interest income 82,233 693,731 19,269 795,233 Provision (credit) for credit losses 7,892 119,493 (115) 127,270 Net interest income after provision for credit losses 74,341 574,238 19,384 667,963 Non-interest income 64,733 39,624 8,271 112,628 Non-interest expense Salary and employee benefits expense 58,434 201,280 22,932 282,646 Net occupancy expense 8,530 34,510 5,535 48,575 Technology, furniture, and equipment expense 13,126 50,004 7,535 70,665 FDIC insurance assessment 4,684 19,242 8,756 32,682 Professional and legal fees 5,204 26,337 2,862 34,403 Other segment items * 25,531 24,848 38,457 88,836 Total non-interest expense $ 115,509 $ 356,221 $ 86,077 $ 557,807 Income (loss) before income taxes $ 23,565 $ 257,641 $ (58,422) $ 222,784 Return on average interest earning assets (pre-tax) 0.48 % 1.28 % (1.78) % 0.79 % Net interest margin 1.67 % 3.44 % 0.59 % 2.80 % Consumer Banking Segment The Consumer Banking segment's average interest earning assets increased $614.1 million to $10.4 billion for the six months ended June 30, 2025 as compared to the same period in 2024. The increase was mostly due to strong growth in our automobile loan portfolio over the last 12-month period and, to a lesser extent, higher average residential mortgage and home equity loan balances. These increases were partially offset by a moderate decline in average other consumer loans mainly driven by lower secured personal lines of credit balances. Income before income taxes generated by Consumer Banking increased $45.6 million to $69.1 million for the six months ended June 30, 2025 as compared to the same period in 2024 and was mainly attributable to an increase in net interest income combined with a lower provision for loan losses, partially offset by an increase in non-interest expense. Net interest income for this segment increased $36.5 million largely due to the aforementioned growth in average loans coupled with lower funding costs. The provision for loan losses decreased $15.9 million for the six months ended June 30, 2025 mainly due to lower quantitative reserves within the residential mortgage loan portfolio. Non-interest expense increased $8.6 million for the six months ended June 30, 2025 as compared to the same period in 2024 mostly due to increases in salaries and employee benefits and professional and legal fees. See further details in the “Non-Interest Expense” section of th is MD&A. Net interest margin on the Consumer Banking portfolio increased 60 basis points to 2.27 percent for the six months ended June 30, 2025 as compared to the same period in 2024 mainly due to a 48 basis point decrease in the costs associated with our funding sources coupled with 12 basis point increase in the yield on average loans . The decrease in our fu nding costs w as mainly caused by lower interest rates on most deposit products during the six months ended June 30, 2025, as well as the maturity and repayment of higher cost time deposits. The 12 basis points increase in loan yield was largely due to higher yielding new loan originations and adjustable rate loans in our portfolio. See details in the “Net Interest Income” section above for more details on our net interest margin. The return on average interest earning assets before income taxes for the Consumer Banking segment was 1.33 percent for the six months ended June 30, 2025 compared to 0.48 percent for the same period in 2024. 73 Commercial Banking Segment Average interest earning assets in the Commercial Banking segment decreased $1.9 billion to $38.4 billion for the six months ended June 30, 2025 as compared to the same period in 2024. This decrease was mostly due to the bulk sales of certain performing commercial real estate loans during both late March 2024 and the fourth quarter 2024, as well as continued commercial real estate loan repayment activity. For the six months ended June 30, 2025, income before income taxes for Commercial Banking decreased $3.3 million to $254.4 million as compared to the same period in 2024 mainly driven by a decrease in net interest income, partially offset by a lower provision for loan losses and higher non-interest income. Net interest income for this segment decreased $20.3 million to $673.4 million for the six months ended June 30, 2025 as compared to the same period in 2024 primarily due to lower average loan balances in this segment. The provision for credit losses decreased $11.0 million to $108.5 million during the six months ended June 30, 2025 as compared to the same period in 2024 mainly due to declines in quantitative reserves in certain loan categories and lower specific reserves associated with collateral dependent loans at June 30, 2025. Non-interest income increased $4.4 million as compared to the same period in 2024 mostly due to growth in our capital markets income. See details in the “Allowance for Credit Losses for Loans” and “Non-Interest Income” sections of this MD&A. The net interest margin for this segment increased 6 basis points to 3.50 percent for the six months ended June 30, 2025 as compared to the same period in 2024, mainly due to a 48 basis point decrease in the cost of our funding sources that was mostly offset by a 42 basis point decrease in the yield on average loans. The return on average interest earning assets before income taxes for the commercial banking segment was 1.32 percent for the six months ended June 30, 2025 compared to 1.28 percent for the same period in 2024. Treasury and Corporate Other Treasury and Corporate Other's average interest earning assets increased $1.8 billion during the six months ended June 30, 2025 mainly due to an increase of approximately $2.0 billion in average investments , partially offset by a $142.7 million decline in average interest bearing cash held overnight . The increase in average investments was primarily due to additional purchases of residential mortgage-backed securities classified as AFS over the last 12-month period. The loss before income taxes totaled $11.3 million for the six months ended June 30, 2025 as compared to $58.4 million for the same period in 2024. The $47.1 million decrease in pre-tax loss was mainly driven by an increase in net interest income and, to a lesser extent, a decline in non-interest expense. Net interest income increase d $41.1 million as compared to the same period a year ago largely due to the additional interest income generated by higher average taxable investments. Non-interest expense decreased $4.0 million to $82.1 million for the six months ended June 30, 2025 as compared to the same period in 2024 largely due to a decrease in the FDIC insurance special assessment allocated to our Treasury activities, partially offset by higher OREO related expenses and amortization of tax credit investments. See further details in the “Non-Interest Expense” section of this MD&A. Treasury and Corporate Other's net interest margin increased 85 basis points to 1.44 percent for the six months ended June 30, 2025 as compared to the same period in 2024 due to a 48 basis point decrease in cost of our funding sources coupled with a 37 basis point increase in the yield on average investments. The increase in the yield on average investments as compared to the same period in 2024 was largely driven by the purchases of new higher yielding investments. ASSET/LIABILITY MANAGEMENT Interest Rate Risk Our success is largely dependent upon our ability to manage interest rate risk. Interest rate risk can be defined as the exposure of our interest rate sensitive assets and liabilities to the movement in interest rates. Our Asset/Liability 74 Management Committee is responsible for managing such risks and establishing policies that monitor and coordinate our sources and uses of funds. Asset/Liability management is a continuous process due to the constant change in interest rate risk factors. In assessing the appropriate interest rate risk levels for us, management weighs the potential benefit of each risk management activity within the desired parameters of liquidity, capital levels and management’s tolerance for exposure to income fluctuations. Many of the actions undertaken by management utilize fair value analysis and attempt to achieve consistent accounting and economic benefits for financial assets and their related funding sources. We have predominantly focused on managing our interest rate risk by attempting to match the inherent risk and cash flows of financial assets and liabilities. Specifically, management employs multiple risk management activities, such as optimizing the level of new residential mortgage originations retained in our mortgage portfolio through increasing or decreasing loan sales in the secondary market, product pricing levels, the desired maturity levels for new originations, the composition levels of both our interest earning assets and interest bearing liabilities, as well as several other risk management activities. We use a simulation model to analyze net interest income sensitivity to movements in interest rates. The simulation model projects net interest income based on various interest rate scenarios over a 12-month period. The model is based on the actual maturity and re-pricing characteristics of rate sensitive assets and liabilities. The model incorporates certain assumptions which management believes to be reasonable regarding the impact of changing interest rates, non-maturity deposit betas, and the prepayment assumptions of certain assets and liabilities as of June 30, 2025. The model assumes immediate changes in interest rates without any proactive change in the composition or size of the balance sheet, or other future actions that management might undertake to mitigate this risk. In the model, the forecasted shape of the yield curve remains static as of June 30, 2025. The impact of interest rate derivatives, such as interest rate swaps, is also included in the model. Our simulation model is based on market interest rates and prepayment speeds prevalent in the market as of June 30, 2025. Although the size of Valley’s balance sheet is forecast to remain static as of June 30, 2025, in our model, the composition is adjusted to reflect new interest earning assets and funding originations coupled with rate spreads utilizing our actual originations during the second quarter 2025. The model utilizes an immediate parallel shift in market interest rates at June 30, 2025. The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the table below, due to the frequency and timing of changes in interest rates and changes in spreads between maturity and re-pricing categories. Overall, our net interest income is affected by changes in interest rates and cash flows from our loan and investment portfolios. We actively manage these cash flows in conjunction with our liability mix, duration, and interest rates to optimize the net interest income, while structuring the balance sheet in response to actual or potential changes in interest rates. Additionally, our net interest income is impacted by the level of competition within our marketplace. Competition can negatively impact the level of interest rates attainable on loans and increase the cost of deposits, which may result in downward pressure on our net interest margin in future periods. Other factors, including, but not limited to, the slope of the yield curve and projected cash flows will impact our net interest income results and may increase or decrease the level of asset sensitivity of our balance sheet. Convexity is a measure of how the duration of a financial instrument changes as market interest rates change. Potential movements in the convexity of bonds held in our investment portfolio, as well as the duration of the loan portfolio may have a positive or negative impact on our net interest income in varying interest rate environments. As a result, the increase or decrease in forecast net interest income may not have a linear relationship to the results reflected in the table below. Management cannot provide any assurance about the actual effect of changes in interest rates on our net interest income. The following table reflects management’s expectations of the change in our net interest income over the next 12- month period considering the aforementioned assumptions. While an instantaneous and severe shift in interest rates was used in this simulation model, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest impact than shown in the table below. 75 Estimated Change in Future Net Interest Income Changes in Interest Rates Dollar Change Percentage Change (in basis points) ($ in thousands) +300 $ 98,063 5.31 % +200 67,211 3.64 +100 34,227 1.85 –100 (38,620) (2.09) –200 (82,559) (4.47) –300 (118,377) (6.41) As noted in the table above, a 100 basis point immediate decrease in interest rates combined with a static balance sheet where the size, mix, and proportions of assets and liabilities remain unchanged, is projected to decrease net interest income over the next 12-month period by 2.09 percent. Management believes the interest rate sensitivity of our balance sheet remains within a n expected t olerance range at June 30, 2025. However, the level of net interest income sensitivity may increase or decrease in the future as a result of several factors, including potential changes in our balance sheet strategies, the slope of the yield curve and projected cash flows. Liquidity and Cash Requirements Bank Liquidity Liquidity measures Valley's ability to satisfy its current and future cash flow needs. Our objective is to have liquidity available to fulfill loan demands, repay deposits and other liabilities, and execute balance sheet strategies in all market conditions while adhering to internal controls and income targets. Valley's liquidity program is managed by the Treasury Department and routinely monitored by the Asset and Liability Management Committee and Board Risk Committee. Among other actions, the Treasury Department actively monitors Valley's current liquidity profile, sources and stability of funding, availability of assets for pledging or sale, opportunities to gather additional funds, and anticipated future funding needs, including the level of unfunded commitments. The Bank adheres to certain internal liquidity measures including ratios of loans to deposits below 110 percent and wholesale funding to total funding below 25 percent, as summarized in the table below. Management maintains flexibility to temporarily exceed these internal limits in certain operating environments, but also strives to outperform these limits when possible. The Bank was in compliance with the foregoing policies at June 30, 2025 . The following table presents Valley's loans to deposits and wholesale funding to total funding ratios at June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 Loans to deposits 97.4 % 97.5 % Wholesale funding to total funding 18.0 18.7 Valley's short and long-term cash requirements include contractual obligations under borrowings, deposits, payments related to leases, capital expenditures and other purchase commitments. In the ordinary course of operations, the Bank also enters into various financial obligations, including contractual obligations that may require future cash payments. Management believes the Bank has the ability to generate and obtain adequate amounts of cash to meet its short-term and long-term obligations as they come due by utilizing various cash resources described below. On the asset side of the balance sheet, the Bank has numerous sources of liquid funds in the form of cash and due from banks, interest bearing deposits with banks (including the FRB of New York) and other sources. The following 76 table summarizes Valley's sources of liquid assets: June 30, 2025 December 31, 2024 (in thousands) Cash and due from banks $ 440,870 $ 411,412 Interest bearing deposits with banks 745,547 1,478,713 Held to maturity debt securities (1) 245,067 220,056 Available for sale debt securities (2) 3,896,205 3,369,724 Loans held for sale 28,096 25,681 Total liquid assets $ 5,355,785 $ 5,505,586 (1) Represents securities that are maturing within 90 days or would otherwise qualify as maturities if sold (i.e., 85 percent of original cost basis has been repaid) within the held to maturity debt security portfolio. (2) Includes a pproximately $1.0 billion and $1.8 billion of various investment securities that were pledged to counterparties to support our earning asset funding strategies at June 30, 2025 and December 31, 2024, respectively. Total liquid assets represented 9.3 percent and 9.6 percent of interest earning assets at June 30, 2025 and December 31, 2024, respectively. T he level of cash liquidity on the balance sheet (as shown in the table above) decreased from December 31, 2024 to a more normalized level at June 30, 2025 as part of our liquidity management efforts, including, but not limited to, the repayment of maturing higher cost indirect customer CDs during the first quarter 2025. Other sources of funds on the asset side are derived from scheduled loan payments of principal and interest, as well as prepayments received. At June 30, 2025, estimated cash inflows from total loans are projected to be approximatel y $16.1 billion over the next 12-month period. As a contingency plan for any liquidity constraints, liquidity could also be derived from the sale of conforming residential mortgages from our loan portfolio or alleviated from the temporary curtailment of lending activities. We anticipate the receipt of approximately $1.8 billion in principal payments from securities in the total investment portfolio at June 30, 2025 over the next 12-month period due to normally scheduled principal repayments and expected prepayments of certain securities, primarily residential mortgage-backed securities. On the liability side of the balance sheet, we utilize multiple sources of funds to meet liquidity needs, including commercial and consumer deposits, fully FDIC-insured indirect customer deposits, collateralized municipal deposits, and short-term and long-term borrowings. Our core deposit base, which generally excludes all fully insured indirect customer deposits, as well as retail certificates of deposit over $250 thousand, represents the largest of these source s. Average core deposits totaled approximately $41.5 billion and $39.1 billion for the six months ended June 30, 2025 and for the year ended December 31, 2024, respectively, representing 72.6 percent and 68.3 percent of average interest earning assets for the respective periods. The level of interest bearing deposits is affected by interest rates offered, which is often influenced by our need for funds, rates prevailing in the capital markets, competition, and the need to manage interest rate risk sensitivity. In addition to customer deposits, the Bank has access to readily available borrowing sources to supplement its current and projected funding needs. The following table presents short-term borrowings outstanding at June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 (in thousands) FHLB advances $ 100,000 $ — Securities sold under agreements to repurchase 62,244 72,718 Total short-term borrowings $ 162,244 $ 72,718 77 The following table summarizes the Bank's estimated unused available non-deposit borrowing capacities at June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 (in thousands) FHLB borrowing capacity* $ 5,800,000 $ 5,853,596 Unused FRB discount window* 10,443,000 11,509,000 Unused federal funds lines available from commercial banks 1,610,000 2,140,000 Unencumbered investment securities 4,759,842 3,415,834 Total $ 22,612,842 $ 22,918,430 * Used and unused FHLB and FRB borrowings are collateralized by certain pledged securities, including but not limited to U.S. government and agency mortgage-backed securities and blanket qualifying first lien on certain real estate and residential mortgage secured loans. Corporation Liquidity Valley’s recurring cash requirements primarily consist of dividends to preferred and common shareholders and interest expense on subordinated notes and junior subordinated debentures issued to capital trusts. As part of our ongoing asset/liability management strategies, Valley could also use cash to repurchase shares of its outstanding common stock under its share repurchase program or redeem its callable junior subordinated debentures and subordinated notes (similar to its redemption of $215 million of subordinated notes in June 2025). Valley's cash needs are routinely satisfied by dividends collected from the Bank. Projected cash flows from the Bank are expected to be adequate to pay preferred and common dividends, if declared, and interest expense payable to subordinated note holders and capital trusts, given the current capital levels and current profitable operations of the Bank. In addition to dividends received from the Bank, Valley can satisfy its cash requirements by utilizing its own cash and potential new funds borrowed from outside sources or capital issuances. Valley also has the right to defer interest payments on the junior subordinated debentures, and therefore distributions on its trust preferred securities for consecutive quarterly periods of up to five years, but not beyond the stated maturity dates, and subject to other conditions. Investment Securities Portfolio As of June 30, 2025, we had $77.4 million, $3.9 billion and $3.5 billion in equity, AFS debt and HTM debt securities, respectively. The AFS and HTM debt securities portfolios, which comprise the majority of the securities we own, include: U.S. Treasury securities, U.S. government agency securities, tax-exempt and taxable issuances of states and political subdivisions, residential mortgage-backed securities, single-issuer trust preferred securities principally issued by bank holding companies and high quality corporate bonds. Among other securities, our AFS debt securities include securities such as bank issued and other corporate bonds, as well as municipal special revenue bonds, which may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential negative effect on the future performance of the security issuers. The equity securities consist of two publicly traded mutual funds, CRA investments and several other equity investments that we have made in companies that develop new financial technologies and in partnerships that invest in such companies. Our CRA and other equity investments are a mix of both publicly traded entities and privately held entities. The primary purpose of our AFS and HTM investment portfolios is to provide a source of earnings and liquidity, as well as serve as a tool for managing interest rate risk. The decision to purchase or sell securities is based upon the current assessment of long and short-term economic and financial conditions, including the interest rate environment and other components of statement of financial condition. See additional information under “Interest Rate Risk,” “Liquidity and Cash Requirements” and “Capital Adequacy” sections elsewhere in this MD&A. 78 We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which we are exposed. These evaluations may cause us to change the level of funds we deploy into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments primarily made into the AFS and HTM debt securities portfolios. Allowance for Credit Losses and Impairment Analysis Available for sale debt securities. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value is less than the amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes. We have evaluated all AFS debt securities that are in an unrealized loss position as of June 30, 2025 and December 31, 2024 and determined that the declines in fair value were mainly attributable to interest rates, credit spreads, market volatility and liquidity conditions, not credit quality or other factors . There was no impairment recognized within the AFS debt securities portfolio during the three and six months ended June 30, 2025 and June 30, 2024. Valley does not intend to sell any of its AFS debt securities in an unrealized loss position prior to recovery of our amortized cost basis, and we believe it is more likely than not that Valley will not be required to sell any of its securities prior to recovery of our amortized cost bas is. None of the AFS debt securities w ere past due as of June 30, 2025 and there was no allowance for credit losses for AFS debt securities at June 30, 2025 and December 31, 2024 . Held to maturity debt securities. Valley estimates the expected credit losses on HTM debt securities that have loss expectations using a discounted cash flow model developed by a third party. Valley has a zero-loss expectation for certain securities within the HTM portfolio, including U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds. To measure the expected credit losses on HTM debt securities that have loss expectations, we utilize a third- party discounted cash flow model. The assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. HTM debt securities were carried net of an allowance for credit losses totaling approximately $637 thousand and $647 thousand at June 30, 2025 and December 31, 2024, respectively. There were no net charge-offs of HTM debt securities during the three and six months ended June 30, 2025 and June 30, 2024. Investment grades. The investment grades in the table below reflect the most current independent analysis performed by third parties of each security as of the date presented and not necessarily the investment grades at the date of our purchase of the securities. For many securities, the rating agencies may not have performed an independent analysis of the tranches owned by us, but rather an analysis of the entire investment pool. For this and other reasons, we believe the assigned investment grades may not accurately reflect the actual credit quality of each security and should not be viewed in isolation as a measure of the quality of our investment portfolio. 79 The following table presents the available for sale and held to maturity debt investment securities portfolios by investment grades at June 30, 2025: June 30, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (in thousands) Available for sale investment grades: * AAA/AA/A Rated $ 3,792,853 $ 25,480 $ (149,676) $ 3,668,657 BBB Rated 100,455 121 (1,570) 99,006 Non-investment grade 2,355 — (230) 2,125 Not rated 134,434 369 (8,386) 126,417 Total $ 4,030,097 $ 25,970 $ (159,862) $ 3,896,205 Held to maturity investment grades: * AAA/AA/A Rated $ 3,358,594 $ 6,749 $ (439,206) $ 2,926,137 BBB Rated 6,000 — (116) 5,884 Not rated 166,967 2 (10,589) 156,380 Total $ 3,531,561 $ 6,751 $ (449,911) $ 3,088,401 Allowance for credit losses 637 — — 637 Total, net of allowance for credit losses $ 3,530,924 $ 6,751 $ (449,911) $ 3,087,764 * Rated using external rating agencies. Ratings categories include entire range. For example, “A Rated” includes A+, A, and A-. Split rated securities with two ratings are categorized at the higher of the rating levels. The unrealized losses in the AAA/AA/A rated categories of both the AFS and HTM debt securities portfolios (in the above table) were largely related to residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac and continue to be driven by the higher market interest rate environment. The investment securities AFS and HTM portfolios included investments with carrying values of $126.4 million and $167.0 million, respectively, at June 30, 2025 not rated by the rating agencies with aggregate unrealized losses of $8.4 million and $10.6 million, respectively. The unrealized losses within non-rated AFS debt securities mostly related to several large corporate bonds negatively impacted by rising interest rates and not changes in underlying credit. The unrealized losses within non-rated HTM debt securities included four single-issuer bank trust preferred issuances with a combined amortized cost of $36.1 million with $6.4 million gross unrealized losses and several corporate debt securities that were negatively impacted by rising interest rates, and not changes in their underlying credit. See Note 6 to the consolidated financial statements for additional information regarding our investment securities portfolio. 80 Loan Portfolio The following table reflects the composition of the loan portfolio as of the dates presented: June 30, 2025 March 31, 2025 December 31, 2024 ($ in thousands) Loans Commercial and industrial $ 10,870,036 $ 10,150,205 $ 9,931,400 Commercial real estate: Non-owner occupied 11,747,491 11,945,222 12,344,355 Multifamily (1) 8,434,173 8,420,385 8,299,250 Owner occupied 5,789,397 5,722,014 5,886,620 Total 25,971,061 26,087,621 26,530,225 Construction 2,854,859 3,026,935 3,114,733 Total commercial real estate 28,825,920 29,114,556 29,644,958 Residential mortgage 5,709,971 5,636,407 5,632,516 Consumer: Home equity 634,553 602,161 604,433 Automobile 2,178,841 2,041,227 1,901,065 Other consumer 1,172,099 1,112,572 1,085,339 Total consumer loans 3,985,493 3,755,960 3,590,837 Total loans (2) $ 49,391,420 $ 48,657,128 $ 48,799,711 As a percentage of total loans: Commercial and industrial 22.0 % 20.9 % 20.4 % Commercial real estate: Non-owner occupied 23.8 24.5 25.2 Multifamily 17.1 17.3 17.0 Owner occupied 11.7 11.8 12.1 Construction 5.8 6.2 6.4 Total commercial real estate 58.4 59.8 60.7 Residential mortgage 11.5 11.6 11.5 Consumer loans 8.1 7.7 7.4 Total 100.0 % 100.0 % 100.0 % (1) Includes loans collateralized by properties that are greater than 50 percent rent regulated totaling approximately $606 million, $577 million and $553 million at June 30, 2025, March 31, 2025 and December 31, 2024, respectively. (2) Includes net unearned discount and deferred loan fees of $21.5 million, $30.1 million and $45.3 million at June 30, 2025, March 31, 2025 and December 31, 2024, respectively. Total loans increased $734.3 million, or 6.0 percent on an annualized basis, to $49.4 billion at June 30, 2025 from March 31, 2025 mostly due to organic growth within commercial and industrial loans and, to a lesser extent, automobile and residential mortgage loans during the second quarter 2025. Loans held for sale are presented separately from total loans on the consolidated statements of financial condition and totaled $28.1 million and $27.4 million at June 30, 2025 and March 31, 2025 , respectively. Commercial and industrial loans grew by $719.8 million, or 28.4 percent on an annualized basis, to $10.9 billion at June 30, 2025 from March 31, 2025 largely due to our continued strategic focus on organic growth within this category. New loan volumes continue to be a diverse range of relationship-driven middle market businesses in our primary markets combined with growth from certain specialty nationwide business lines, including healthcare and capital-call facilities in the fund finance market. 81 Commercial real estate loans (excluding construction loans) decreased $116.6 million to $26.0 billion at June 30, 2025 from March 31, 2025. The decrease was largely driven by runoff from repayment activity and our efforts to focus new loan originations on more profitable holistic banking clients. As a result, our CRE loan concentration ratio declined to approximately 349 percent at June 30, 2025 from 353 percent at March 31, 2025. Our current balance sheet goal is a continued gradual reduction of the CRE concentration ratio and maintain the ratio below 350 percent through December 31, 2025. Overall, commercial real estate loans are well-diversified across our footprint areas in Florida, Alabama, New Jersey, New York and Manhattan with a combined weighted average loan to value ratio of 58 percent and debt service coverage ratio of 1.67 at June 30, 2025. Commercial real estate collateralized by office buildings totaled approximately $3.0 billion at June 30, 2025 and was relatively unchanged from March 31, 2025. Our loans collateralized by office buildings had a combined weighted average loan to value rate of 63 percent and debt service coverage ratio of 1.85 at June 30, 2025. Construction loans decreased $172.1 million to $2.9 billion at June 30, 2025 from March 31, 2025 mainly due to the migration of completed projects to permanent financing within the multifamily loan category during the second quarter 2025. Residential mortgage loans increased $73.6 million to $5.7 billion at June 30, 2025 from March 31, 2025 as new loan originations outpaced repayment activity. New and refinanced residential mortgage loan originations totaled $204.1 million for the second quarter 2025 as compared to $132.8 million and $135.4 million for the first quarter 2025 and second quarter 2024, respectively. We retained approximately 78.9 percent and 71.8 percent of the total residential mortgage originations in our held for investment loan portfolio during the second quarter 2025 and first quarter 2025, respectively. Consumer loans increased $229.5 million, or 24.4 percent on an annualized basis, to $4.0 billion at June 30, 2025 as compared to March 31, 2025. Within this portfolio, automobile loans increased by $137.6 million, or 27.0 percent on an annualized basis, to $2.2 billion at June 30, 2025 as compared to March 31, 2025 mainly due to (i) continued efforts to expand our indirect auto dealer network within our market areas, (ii) strong consumer demand generated by our indirect auto dealer network, particularly in April 2025 due to initial tariff pricing fears, and (iii) low levels of prepayment activity within the portfolio during the second quarter 2025. Home equity loans increased $32.4 million from March 31, 2025 to June 30, 2025 mostly due to an uptick in new lines of credit and outstanding balances. Auto loan originations totaled $384.9 million for the second quarter 2025 as compared to $375.5 million for the first quarter 2025. Other consumer loans increased $59.5 million to $1.2 billion at June 30, 2025 as compared to March 31, 2025 primarily due primarily to increased usage of collateralized personal lines of credit. A significant part of our lending is in northern and central Ne w Jersey, New York City, Long Island and Florida. To mitigate our geographic risks , we make efforts to maintain a diversified portfolio as to type of borrower and loan to guard against a potential downward turn in any one economic sector. We continue to proactively diversify our loan portfolio by reducing new originations of certain types of commercial real estate lending, such as non-owner occupied and multifamily loans through highly selective new loan origination. We also remain significantly focused on attracting a high quality customer relationships within the commercial and industrial loan portfolio. In Valley's Annual Report, we provided guidance that we anticipated loan growth for 2025, net of continued runoff from scheduled maturities of commercial real estate non-owner occupied and multifamily loans, in the range of 3 to 5 percent as compared to total loans of $48.8 billion at December 31, 2024. Based upon our current projections, we now expect total loan growth for 2025 to be approximately 3 percent due to the current level of competition for high quality commercial loan relationships, customer demand and other factors. However, there can be no assurance that we will achieve such growth levels given the potential for unforeseen changes in the market and other conditions detailed in our risk factors set forth under Item 1A. Risk Factors of Valley's Annual Report. 82 Non-performing Assets NPAs include non-accrual loans, OREO, and other repossessed assets (which consist of automobiles and taxi medallions) at June 30, 2025. Loans are generally placed on non-accrual status when they become past due in excess of 90 days as to payment of principal or interest and/or the full and timely collection of principal and interest becomes uncertain. Exceptions to the non-accrual policy may be permitted if the loan is sufficiently collateralized and in the process of collection. OREO is acquired through foreclosure on loans secured by land or real estate. OREO and other repossessed assets are reported at lower of cost or fair value, less estimated cost to sell. Our NPAs increased $4.6 million to $360.8 million at June 30, 2025 as compared to March 31, 2025 mainly due to increases in non-accrual commercial real estate loans and residential mortgage loans, largely offset by a decrease in non-accrual commercial and industrial loans and lower OREO balances at June 30, 2025. NPAs as a percentage of total loans and NPAs totaled 0.73 percent at June 30, 2025 and remained unchanged from March 31, 2025 (as shown in the table below). We believe our total NPAs have continued to remain relatively low as a percentage of the total loan portfolio and NPAs, which is reflective of our consistent approach to the loan underwriting criteria for both Valley originated loans and loans purchased from third parties. For additional details, see the “Credit quality indicators” section in Note 7 to the consolidated financial statements. Our lending strategy is based on underwriting standards designed to maintain high credit quality, and we remain optimistic regarding the overall future performance of our loan portfolio. During the six months ended June 30, 2025, the majority of our borrowers continued to demonstrate resilience despite the impact of elevated borrowing costs, inflation, labor costs and other factors. We continue to proactively monitor our commercial loans for potential negative trends/borrower weakness due to the current operating environment, including the potential negative impact of current and future tariff actions, and internally risk rate them accordingly. Based on our most recent portfolio review, we believe that we have relatively modest direct exposure to customer businesses most influenced by changing tariff policies. However, management cannot provide assurance that the NPAs will not increase from the levels reported at June 30, 2025 due to the aforementioned or other factors potentially impacting our lending customers. 83 The following table sets forth by loan category accruing past due and NPAs at the dates indicated in conjunction with our asset quality ratios: June 30, 2025 March 31, 2025 December 31, 2024 ($ in thousands) Accruing past due loans: 30 to 59 days past due: Commercial and industrial $ 10,451 $ 3,609 $ 2,389 Commercial real estate 42,884 170 20,902 Construction 35,000 — — Residential mortgage 21,744 16,747 21,295 Total consumer 12,878 12,887 12,552 Total 30 to 59 days past due 122,957 33,413 57,138 60 to 89 days past due: Commercial and industrial 1,095 420 1,007 Commercial real estate 60,601 — 24,903 Residential mortgage 7,627 7,700 5,773 Total consumer 4,001 2,408 4,484 Total 60 to 89 days past due 73,324 10,528 36,167 90 or more days past due: Commercial and industrial — — 1,307 Residential mortgage 2,062 6,892 3,533 Total consumer 859 864 1,049 Total 90 or more days past due 2,921 7,756 5,889 Total accruing past due loans $ 199,202 $ 51,697 $ 99,194 Non-accrual loans: Commercial and industrial $ 90,973 $ 110,146 $ 136,675 Commercial real estate 193,604 172,011 157,231 Construction 24,068 24,275 24,591 Residential mortgage 41,099 35,393 36,786 Total consumer 4,615 4,626 4,215 Total non-accrual loans 354,359 346,451 359,498 Other real estate owned (OREO) 4,783 7,714 12,150 Other repossessed assets 1,642 2,054 1,681 Total non-performing assets (NPAs) $ 360,784 $ 356,219 $ 373,329 Total non-accrual loans as a % of loans 0.72 % 0.71 % 0.74 % Total NPAs as a % of loans and NPAs 0.73 0.73 0.76 Total accruing past due and non-accrual loans as a % of loans 1.12 0.82 0.94 Allowance for loan losses as a % of non-accrual loans 163.53 166.89 155.45 Loans 30 to 59 days past due increased $89.5 million to $123.0 million at June 30, 2025 as compared to March 31, 2025 due, in large part, to one $39.2 million commercial real estate loan and one $35.0 million construction loan included in this early stage delinquency category at June 30, 2025. The $39.2 million commercial real estate loan 30 to 59 days past due was subsequently paid in full by the borrower in July 2025. Loans 60 to 89 days past due increased $62.8 million to $73.3 million at June 30, 2025 as compared to March 31, 2025 mainly due to a $60.6 million commercial real estate loan. This past due loan was subsequently modified and was brought current to its restructured terms in July 2025. 84 Loans 90 days or more past due and still accruing interest decreased $4.8 million to $2.9 million at June 30, 2025 as compared to March 31, 2025 mainly due to a decrease in residential mortgage loan delinquencies. All loans 90 days or more past due and still accruing interest are well-secured and in the process of collection. Non-accrual loans increased $7.9 million to $354.4 million at June 30, 2025 as compared to $346.5 million at March 31, 2025 mainly because of a net increase in non-performing commercial real estate loans during the second quarter 2025, which was partially offset by a decline in non-performing commercial and industrial loans. Non-accrual commercial and industrial loans decreased largely due to the full charge-offs of four loan relationships totaling $17.4 million during the second quarter 2025. Non-performing taxi medallion loans included in non-accrual commercial and industrial loans totaled $48.6 million at June 30, 2025 and had related reserves of $25.4 million, or 52.2 percent of such loans, within the allowance for loan losses as compared to $49.2 million of loans with related reserves of $25.6 million at March 31, 2025 . Further potential declines in the market valuation of taxi medallions and the current operating environment mainly within New York City may negatively impact the performance of this portfolio. OREO decreased $2.9 million to $4.8 million at June 30, 2025 from March 31, 2025 mostly due to the fair valuation write-down related to one commercial real estate property recorded during the second quarter 2025. See Note 7 to the consolidated financial statements for additional information. Although the timing of collection is uncertain, management believes that the majority of the non-accrual loans at June 30, 2025 are well secured and largely collectable, based in part on our quarterly review of collateral dependent loans and the valuation of the underlying collateral, if applicable. Any estimated shortfall in the net realizable value for collateral dependent loans is charged-off when a loan is 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectable. For performing non-accrual loans, the collateral valuation shortfall may result in an allocation of specific reserves within our allowance for credit losses for loans. Allowance for Credit Losses for Loans The ACL for loans includes the allowance for loan losses and the reserve for unfunded credit commitments. Under CECL, our methodology to establish the allowance for loan losses has two basic components: (i) a collective reserve component for estimated expected credit losses for pools of loans that share common risk characteristics and (ii) an individually evaluated reserve component for loans that do not share risk characteristics, consisting of collateral dependent loans. Valley also maintains a separate allowance for unfunded credit commitments mainly consisting of undisbursed non-cancellable lines of credit, new loan commitments and commercial standby letters of credit. Valley estimates the collective ACL using a current expected credit losses methodology which is based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the loan balances. In estimating the component of the allowance on a collective basis, we use a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by using probability of default and loss given default metrics. The probability of default and loss given default metrics are adjusted using a scaling factor to incorporate a full economic cycle. The expected life of loan loss percentages are determined by analyzing the migration of loans within the commercial and industrial loan categories from performing to loss by credit quality rating or delinquency categories using historical life-of-loan data for each loan portfolio pool, and by assessing the severity of loss based on the aggregate net lifetime losses incurred. The expected credit losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) the impact of the reasonable and supportable economic forecast, relative probability weightings and economic variables under each scenario and reversion period, (ii) other asset specific risks to the extent that they do not exist in the historical loss information, and (iii) net expected recoveries of charged-off loan balances. These adjustments are based on qualitative factors not reflected in the transition matrix but are likely to impact the measurement of estimated credit losses. The expected lifetime loss rate is the life of loan loss percentage from the transition matrix model plus the 85 impact of the adjustments for qualitative factors. The expected credit losses are the product of multiplying the model’s expected lifetime loss rate by the exposure at default at period end on an undiscounted basis. Valley utilizes a two-year reasonable and supportable forecast period followed by a one-year period over which estimated losses revert to historical loss experience on a straight-line basis for the remaining life of the loan. The forecast consists of multi-scenario economic forecasts to estimate future credit losses and are governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. We have identified and selected key variables that most closely correlated to our historical credit performance, which include GDP, unemployment and the Case-Shiller Home Price Index. Valley maintained the majority of its probability weighting used in the economic forecast to the Moody’s Baseline scenario with less emphasis on the S-3 downside and S-1 upside scenarios. The probability weightings were unchanged from March 31, 2025. At June 30, 2025, the standalone Moody's Baseline scenario reflected a moderately weaker outlook as compared to March 31, 2025 in terms of most metrics highlighted below. At June 30, 2025, Moody's Baseline forecast included the following specific assumptions: • GDP expansion of 0.6 percent in the third quarter 2025; • Unemployment of 4.3 percent in the third quarter 2025 and 4.3 percent to 4.8 percent over the remainder of the forecast period ending in the second quarter 2027; • The target federal funds rate range of 4.25 - 4.50 perce nt was unchanged from March 31, 2025 with two possible 25 basis point cuts in September and December 2025; • The inflation rate is projected to grow during the remainder of 2025 through the second quarter 2026 from 2.7 percent in June 30, 2025 and decline to near 2.0 percent in early 2027; and • A decline in business investment due to deceleration in GDP and the potential negative impact of tariffs and other uncertainty related to ongoing international trade matters. See more details regarding our allowance for credit losses for loans in Note 7 to the consolidated financial statements. 86 The table below summarizes the relationship among loans, loans charged-off, loan recoveries, the provision for credit losses and the allowance for credit losses for loans for the periods indicated: Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 ($ in thousands) Allowance for credit losses for loans Beginning balance $ 594,054 $ 573,328 $ 487,269 $ 573,328 $ 465,550 Loans charged-off: Commercial and industrial (25,189) (28,456) (14,721) (53,645) (29,014) Commercial real estate (14,623) (12,260) (22,144) (26,883) (23,348) Construction — (1,163) (212) (1,163) (7,806) Total consumer (2,259) (2,140) (1,262) (4,399) (3,071) Total loans charged-off (42,071) (44,019) (38,339) (86,090) (63,239) Charged-off loans recovered: Commercial and industrial 2,789 810 742 3,599 1,424 Commercial real estate 188 249 150 437 391 Construction 455 — — 455 — Residential mortgage 37 168 5 205 30 Total consumer 773 843 603 1,616 1,000 Total loans recovered 4,242 2,070 1,500 6,312 2,845 Total net loan charge-offs (37,829) (41,949) (36,839) (79,778) (60,394) Provision charged for credit losses 37,795 62,675 82,111 100,470 127,385 Ending balance $ 594,020 $ 594,054 $ 532,541 $ 594,020 $ 532,541 Components of allowance for credit losses for loans: Allowance for loan losses $ 579,500 $ 578,200 $ 519,310 $ 579,500 $ 519,310 Allowance for unfunded credit commitments 14,520 15,854 13,231 14,520 13,231 Allowance for credit losses for loans $ 594,020 $ 594,054 $ 532,541 $ 594,020 $ 532,541 Components of provision for credit losses for loans: Provision for credit losses for loans $ 39,129 $ 61,299 $ 86,901 $ 100,428 $ 133,624 (Credit) provision for unfunded credit commitments (1,334) 1,376 (4,790) 42 (6,239) Total provision for credit losses for loans $ 37,795 $ 62,675 $ 82,111 $ 100,470 $ 127,385 Allowance for credit losses for loans as a % of total loans 1.20 % 1.22 % 1.06 % 1.20 % 1.06 % 87 The following table presents the relationship among net loans charged-off and recoveries, and average loan balances outstanding for the periods indicated: Three Months Ended Six Months Ended June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 ($ in thousands) Net loan (charge-offs) recoveries Commercial and industrial $ (22,400) $ (27,646) $ (13,979) $ (50,046) $ (27,590) Commercial real estate (14,435) (12,011) (21,994) (26,446) (22,957) Construction 455 (1,163) (212) (708) (7,806) Residential mortgage 37 168 5 205 30 Total consumer (1,486) (1,297) (659) (2,783) (2,071) Total $ (37,829) $ (41,949) $ (36,839) $ (79,778) $ (60,394) Average loans outstanding Commercial and industrial $ 10,507,438 $ 9,996,024 $ 9,173,875 $ 10,253,144 $ 9,204,791 Commercial real estate 26,000,837 26,328,971 28,237,513 26,163,998 28,248,606 Construction 2,982,733 3,054,230 3,526,421 3,018,284 3,609,882 Residential mortgage 5,671,792 5,639,313 5,631,214 5,655,642 5,615,675 Total consumer 3,869,837 3,636,383 3,451,878 3,753,755 3,454,792 Total $ 49,032,637 $ 48,654,921 $ 50,020,901 $ 48,844,823 $ 50,133,746 Annualized net loan charge-offs (recoveries) to average loans outstanding Commercial and industrial 0.85% 1.11% 0.61% 0.98% 0.60% Commercial real estate 0.22 0.18 0.31 0.20 0.16 Construction (0.06) 0.15 0.02 0.05 0.43 Residential mortgage 0.00 (0.01) 0.00 (0.01) 0.00 Total consumer 0.15 0.14 0.08 0.15 0.12 Total annualized net loan charge-offs to total average loans outstanding 0.31 0.34 0.29 0.33 0.24 Gross loan charge-offs totaled $42.1 million for the second quarter 2025 and included $23.5 million of partial and full charge-offs related to five non-performing commercial and industrial loan relationships with combined specific reserves of $11.2 million at March 31, 2025. Net loan charge-offs (as presented in the above table) declined from the first quarter 2025 and continued to trend within management's expectations for the credit quality of the loan portfolio at June 30, 2025. 88 The following table summarizes the allocation of the allowance for credit losses for loans to loan portfolio categories and the allocations as a percentage of each loan category: June 30, 2025 March 31, 2025 June 30, 2024 Allowance Allocation Allocation as a % of Loan Category Allowance Allocation Allocation as a % of Loan Category Allowance Allocation Allocation as a % of Loan Category ($ in thousands) Loan Category: Commercial and industrial loans $ 173,415 1.60 % $ 184,700 1.82 % $ 149,243 1.57 % Commercial real estate loans: Commercial real estate 270,937 1.04 266,938 1.02 246,316 0.87 Construction 64,042 2.24 54,724 1.81 54,777 1.54 Total commercial real estate loans 334,979 1.16 321,662 1.10 301,093 0.95 Residential mortgage loans 48,830 0.86 48,906 0.87 47,697 0.85 Consumer loans: Home equity 3,689 0.58 3,401 0.56 3,077 0.54 Auto and other consumer 18,587 0.55 19,531 0.62 18,200 0.63 Total consumer loans 22,276 0.56 22,932 0.61 21,277 0.62 Allowance for loan losses 579,500 1.17 578,200 1.19 519,310 1.03 Allowance for unfunded credit commitments 14,520 15,854 13,231 Total allowance for credit losses for loans $ 594,020 $ 594,054 $ 532,541 Allowance for credit losses for loans as a % of total loans 1.20 % 1.22 % 1.06 % The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 1.20 percent at June 30, 2025, 1.22 percent at March 31, 2025, and 1.06 percent at June 30, 2024. For the second quarter 2025, the provision for credit losses for loans totaled $37.8 million as compared to $62.7 million and $82.1 million for the first quarter 2025 and second quarter 2024, respectively. The second quarter 2025 provision reflects, among other factors, the impact of loan growth mainly within the commercial and industrial loan portfolio, loan charge-offs and a moderate weakening of our economic forecast as compared to March 31, 2025, partially offset by a decline in quantitative reserves in certain loan categories and lower specific reserves associated with collateral dependent loans at June 30, 2025. Capital Adequacy A significant measure of the strength of a financial institution is its shareholders’ equity. At June 30, 2025 and December 31, 2024, shareholders' equity totaled approximately $7.6 billion and $7.4 billion, respectively, which represented 12.1 percent and 11.9 percent of total assets, respectively. During the six months ended June 30, 2025, total shareholders’ equity increased by approximately $140.3 million primarily due to the following: • net income of $239.2 million, • other comprehensive income of $35.4 million, • an $8.8 million increase attributable to the effect of our stock incentive plan, partially offset by • cash dividends declared on common and preferred stock totaling a combined $138.8 million and • repurchases of $4.3 million of our common stock held in treasury stock. Valley and the Bank are subject to the regulatory capital requirements administered by the FRB and the OCC. Quantitative measures established by regulation to ensure capital adequacy require Valley and the Bank to maintain 89 minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets, as defined in the regulations. Valley is required to maintain a common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets ratio of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and a minimum leverage ratio of 4.0 percent, plus a 2.5 percent capital conservation buffer added to the minimum requirements for capital adequacy purposes. As of June 30, 2025 and December 31, 2024, Valley and Valley National Bank exceeded all capital adequacy requirements (see table below). The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under Basel III risk-based capital guidelines at June 30, 2025 and December 31, 2024: Actual Minimum Capital Requirements To Be Well Capitalized Under Prompt Corrective Action Provision Amount Ratio Amount Ratio Amount Ratio ($ in thousands) As of June 30, 2025 Total Risk-based Capital Valley $ 6,764,844 13.67 % $ 5,194,803 10.50 % N/A N/A Valley National Bank 6,713,872 13.58 5,190,308 10.50 $ 4,943,150 10.00 % Common Equity Tier 1 Capital Valley 5,369,700 10.85 3,463,202 7.00 N/A N/A Valley National Bank 6,181,833 12.51 3,460,205 7.00 3,213,048 6.50 Tier 1 Risk-based Capital Valley 5,723,767 11.57 4,205,317 8.50 N/A N/A Valley National Bank 6,181,833 12.51 4,201,678 8.50 3,954,520 8.00 Tier 1 Leverage Capital Valley 5,723,767 9.49 2,412,067 4.00 N/A N/A Valley National Bank 6,181,833 10.26 2,410,209 4.00 3,012,762 5.00 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 Valley's total risk-based capital ratio decreased to 13.67 percent at June 30, 2025 as compared to 13.87 percent at December 31, 2024 which reflects the early redemption of our $115 million of 5.25 percent fixed-to-floating subordinated notes, which were previously eligible for full regulatory capital treatment. 90 Typically, our primary source of capital growth is through retention of earnings. Our rate of earnings retention is derived by dividing undistributed earnings per common share by earnings (or net income available to common shareholders) per common share. Our retention ratio was approximately 45.0 percent for the six months ended June 30, 2025 as compared to 36.2 percent for the full year ended December 31, 2024. The increase in our retention ratio was largely due to the increase in our net income available to common shareholders for the six months ended June 30, 2025 as compared to the same period one year ago. Cash dividends declared amounted to $0.22 per common share for each of the six months ended June 30, 2025 and 2024. The Board is committed to examining and weighing relevant facts and considerations, including its commitment to shareholder value, each time it makes a cash dividend decision. The Federal Reserve has cautioned all bank holding companies about distributing dividends which may reduce the level of capital or not allow capital to grow considering the increased capital levels required under the Basel III rules. Prior to the date of this filing, Valley has received no objection or adverse guidance from the Federal Reserve or the OCC regarding the current level of its quarterly common stock dividend. However, the Federal Reserve has reiterated its long-standing guidance in recent years that banking organizations should consult them before declaring dividends in excess of earnings for the corresponding quarter. See Item 1A. Risk Factors of Valley's Annual Report for additional information. Off-Balance Sheet Arrangements, Contractual Obligations and Other Matters For a discussion of Valley’s off-balance sheet arrangements and contractual obligations see information included in Valley’s Annual Report in the MD&A section “Liquidity and Cash Requirements” and Notes 1 2 and 13 to the consolidated financial statements included in this report. Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, and commodity prices. Valley’s market risk is composed primarily of interest rate risk. See pa ge 74 for a discussion of interest rate risk.