

	2022		2021
	(in thousands)
Loans:
Commercial and industrial:
Commercial and industrial	$	8,771,250	$	5,411,601
Commercial and industrial PPP loans *	33,580		435,950
Total commercial and industrial loans	8,804,830		5,847,551
Commercial real estate:
Commercial real estate	25,732,033		18,935,486
Construction	3,700,835		1,854,580
Total commercial real estate loans	29,432,868		20,790,066
Residential mortgage	5,364,550		4,545,064
Consumer:
Home equity	503,884		400,779
Automobile	1,746,225		1,570,036
Other consumer	1,064,843		1,000,161
Total consumer loans	3,314,952		2,970,976
Total loans	$	46,917,200	$	34,153,657

Total loans include net unearned discounts and deferred loan fees of $120.5 million and $78.5 million at December 31, 2022 and 2021, respectively. The increase in total loans at December 31, 2022 is partially attributed to $5.9 billion of loans acquired in the Bank Leumi USA acquisition, which was inclusive of a $98.6 million net purchase discount at the acquisition date. Net unearned discounts and deferred loan fees include the non-credit discount on acquired PCD loans and net unearned fees related to PPP loans at December 31, 2022 and 2021.

In the ordinary course of business, Valley has granted loans to certain directors, executive officers and their affiliates (collectively referred to as “related parties”). These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons and do not involve more than normal risk of collectability. All loans to related parties are performing as of December 31, 2022.

Credit risk management. For all loan types discussed below, Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk appetite. Management reviews and approves these policies and procedures on a regular basis with subsequent approval by the Board of Directors annually. Credit authority relating to a significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and by the Credit Committee. A reporting system supplements the management review process by providing management with frequent reports concerning loan production, loan quality, internal loan classification, concentrations of credit, loan delinquencies, non-performing, and potential problem loans. Loan portfolio diversification is an important factor utilized by Valley to manage its risk across business sectors and through cyclical economic circumstances. Additionally, Valley does not accept crypto assets as loan collateral for any of its loan portfolio classes discussed further below.

Commercial and industrial loans. A significant portion of Valley’s commercial and industrial loan portfolio is granted to long standing customers of proven ability, strong repayment performance, and high character. Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, a significant number of the loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Short-term loans may be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, Valley will obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured loans, when made, are generally granted to the Bank’s most creditworthy borrowers. Unsecured commercial and industrial loans totaled $555.3 million and $1.0 billion at December 31, 2022 and 2021, respectively (including $33.6 million and $436.0 million of SBA guaranteed PPP loans, respectively). The commercial portfolio also includes taxi medallion loans totaling approximately $66.5 million with related reserves of $42.2 million at December 31, 2022. All of these loans are on non-accrual status due to ongoing weakness exhibited in the taxi industry caused by strong competition from alternative ride-sharing services and the economic stress caused by the COVID-19 pandemic and other factors.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans but generally they involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.

Construction loans. With respect to loans to developers and builders, Valley originates and manages construction loans structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Residential mortgages. Valley originates residential, first mortgage loans based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO® and other proprietary credit scoring models are employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. Residential mortgage loans include fixed and variable interest rate loans secured by one to four family homes mostly located in northern and central New Jersey, the New York City metropolitan area, and Florida. Valley’s ability to be repaid on such loans is closely linked to the economic and real estate market conditions in these regions. In deciding whether to originate each residential mortgage, Valley considers the qualifications of the borrower as well as the value of the underlying property.

Home equity loans. Home equity lending consists of both fixed and variable interest rate products. Valley mainly provides home equity loans to its residential mortgage customers within the footprint of its primary lending territory. Valley generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 80 percent when originating a home equity loan.

Automobile loans. Valley uses both judgmental and scoring systems in the credit decision process for automobile loans. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Automotive collateral is generally a depreciating asset and there are times in the life of an automobile loan where the amount owed on a vehicle may exceed its collateral value. Additionally, automobile charge-offs will vary based on the strength or weakness of the used vehicle market, original advance rate, when in the life cycle of a loan a default occurs and the condition of the collateral being liquidated. Where permitted by law, and subject to the limitations of the bankruptcy code, deficiency judgments are sought and acted upon to ultimately collect all money owed, even when a default resulted in a loss at collateral liquidation. Valley uses a third party to actively track collision and comprehensive risk insurance required of the borrower on the automobile and this third party provides coverage to Valley in the event of an uninsured collateral loss.

Other consumer loans. Valley’s other consumer loan portfolio includes direct consumer term loans, both secured and unsecured. The other consumer loan portfolio includes exposures in personal lines of credit (mainly those secured by cash surrender value of life insurance), credit card loans and personal loans. Unsecured consumer loans totaled approximately $63.8 million and $54.0 million, including $16.8 million and $12.8 million of credit card loans, at December 31, 2022 and 2021, respectively. Management believes the aggregate risk exposure to unsecured loans and lines of credit was not significant at December 31, 2022.


	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Loan Losses
	(in thousands)
December 31, 2022
Commercial and industrial	$	11,664	$	12,705	$	18,392	$	98,881	$	141,642	$	8,663,188	$	8,804,830	$	5,659
Commercial real estate:
Commercial real estate	6,638		3,167		2,292		68,316		80,413		25,651,620		25,732,033		66,066
Construction	—		—		3,990		74,230		78,220		3,622,615		3,700,835		16,120
Total commercial real estate loans	6,638		3,167		6,282		142,546		158,633		29,274,235		29,432,868		82,186
Residential mortgage	16,146		3,315		1,866		25,160		46,487		5,318,063		5,364,550		14,224
Consumer loans:
Home equity	955		254		—		2,810		4,019		499,865		503,884		117
Automobile	5,974		630		1		271		6,876		1,739,349		1,746,225		—
Other consumer	2,158		695		46		93		2,992		1,061,851		1,064,843		—
Total consumer loans	9,087		1,579		47		3,174		13,887		3,301,065		3,314,952		117
Total	$	43,535	$	20,766	$	26,587	$	269,761	$	360,649	$	46,556,551	$	46,917,200	$	102,186


	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Loan Losses
	(in thousands)
December 31, 2021
Commercial and industrial	$	6,717	$	7,870	$	1,273	$	99,918	$	115,778	$	5,731,773	$	5,847,551	$	9,066
Commercial real estate:
Commercial real estate	14,421		—		32		83,592		98,045		18,837,441		18,935,486		70,719
Construction	1,941		—		—		17,641		19,582		1,834,998		1,854,580		—
Total commercial real estate loans	16,362		—		32		101,233		117,627		20,672,439		20,790,066		70,719
Residential mortgage	10,999		3,314		677		35,207		50,197		4,494,867		4,545,064		20,401
Consumer loans:
Home equity	242		98		—		3,517		3,857		396,922		400,779		4
Automobile	6,391		656		271		240		7,558		1,562,478		1,570,036		—
Other consumer	178		266		518		101		1,063		999,098		1,000,161		—
Total consumer loans	6,811		1,020		789		3,858		12,478		2,958,498		2,970,976		4
Total	$	40,889	$	12,204	$	2,771	$	240,216	$	296,080	$	33,857,577	$	34,153,657	$	100,190

Credit quality indicators. Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as “Pass,” “Special Mention,” “Substandard,” “Doubtful,” and “Loss.” Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses, and, therefore, not presented in the table below. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories but pose weaknesses that deserve management’s close attention are deemed Special Mention. Pass rated loans do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants.


	Term Loans
	Amortized Cost Basis by Origination Year
December 31, 2022	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Commercial and industrial
Risk Rating:
Pass	$	1,600,747	$	1,089,386	$	590,406	$	322,564	$	250,031	$	386,085	$	4,307,163	$	144	$	8,546,526
Special Mention	31,557		3,367		19,492		4,732		4,369		3,558		51,021		7		118,103
Substandard	288		1,734		4,121		1,412		4,256		4,879		31,698		—		48,388
Doubtful	886		20,844		—		2,692		—		64,158		3,233		—		91,813

Total commercial and industrial	$	1,633,478	$	1,115,331	$	614,019	$	331,400	$	258,656	$	458,680	$	4,393,115	$	151	$	8,804,830
Commercial real estate
Risk Rating:
Pass	$	6,815,115	$	5,168,127	$	3,246,885	$	2,672,223	$	1,536,327	$	5,027,128	$	452,461	$	3,504	$	24,921,770
Special Mention	93,286		48,007		60,169		45,447		62,111		125,414		8,188		—		442,622
Substandard	15,088		34,475		32,630		34,622		59,337		183,341		7,986		—		367,479
Doubtful	—		—		—		—		—		162		—		—		162

Total commercial real estate	$	6,923,489	$	5,250,609	$	3,339,684	$	2,752,292	$	1,657,775	$	5,336,045	$	468,635	$	3,504	$	25,732,033
Construction
Risk Rating:
Pass	$	942,380	$	512,046	$	61,131	$	22,845	$	8,676	$	20,599	$	2,040,866	$	—	$	3,608,543
Special Mention	—		—		—		—		—		—		14,268		—		14,268
Substandard	12,969		12,601		—		974		—		17,599		20,138		—		64,281
Doubtful	—		—		—		—		—		13,743		—		—		13,743
Total construction	$	955,349	$	524,647	$	61,131	$	23,819	$	8,676	$	51,941	$	2,075,272	$	—	$	3,700,835


	Term Loans
	Amortized Cost Basis by Origination Year
December 31, 2022	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	1,302,279	$	1,502,622	$	571,390	$	500,197	$	338,062	$	1,073,995	$	66,706	$	—	$	5,355,251
90 days or more past due	—		197		217		1,835		2,876		4,174		—		—		9,299
Total residential mortgage	$	1,302,279	$	1,502,819	$	571,607	$	502,032	$	340,938	$	1,078,169	$	66,706	$	—	$	5,364,550
Consumer loans
Home equity
Performing	$	47,084	$	12,432	$	4,592	$	5,024	$	5,581	$	13,007	$	376,608	$	38,570	$	502,898
90 days or more past due	—		—		—		—		—		—		276		710		986
Total home equity	47,084		12,432		4,592		5,024		5,581		13,007		376,884		39,280		503,884
Automobile
Performing	724,557		525,017		204,578		166,103		80,012		45,415		—		—		1,745,682
90 days or more past due	38		116		36		180		101		72		—		—		543
Total automobile	724,595		525,133		204,614		166,283		80,113		45,487		—		—		1,746,225
Other consumer
Performing	24,140		10,144		8,206		7,435		7,406		15,736		991,737		—		1,064,804
90 days or more past due	—		—		—		—		—		38		1		—		39
Total other consumer	24,140		10,144		8,206		7,435		7,406		15,774		991,738		—		1,064,843
Total consumer	$	795,819	$	547,709	$	217,412	$	178,742	$	93,100	$	74,268	$	1,368,622	$	39,280	$	3,314,952


	Term Loans
	Amortized Cost Basis by Origination Year
December 31, 2021	2021		2020		2019		2018		2017		Prior to 2017		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	1,448,602	$	635,531	$	572,911	$	425,152	$	368,164	$	1,014,190	$	70,342	$	—	$	4,534,892
90 days or more past due	—		357		2,627		2,056		2,794		2,338		—		—		10,172
Total residential mortgage	$	1,448,602	$	635,888	$	575,538	$	427,208	$	370,958	$	1,016,528	$	70,342	$	—	$	4,545,064
Consumer loans
Home equity
Performing	$	13,847	$	5,723	$	6,994	$	7,384	$	5,359	$	13,597	$	303,888	$	42,822	$	399,614
90 days or more past due	—		—		—		—		—		35		536		594		1,165
Total home equity	13,847		5,723		6,994		7,384		5,359		13,632		304,424		43,416		400,779
Automobile
Performing	735,446		309,856		278,828		157,450		72,753		15,171		—		—		1,569,504
90 days or more past due	129		—		78		163		81		81		—		—		532
Total automobile	735,575		309,856		278,906		157,613		72,834		15,252		—		—		1,570,036
Other consumer
Performing	2,949		6,717		6,468		7,017		1,009		14,483		961,027		—		999,670
90 days or more past due	—		—		—		—		—		—		491		—		491
Total other consumer	2,949		6,717		6,468		7,017		1,009		14,483		961,518		—		1,000,161
Total consumer	$	752,371	$	322,296	$	292,368	$	172,014	$	79,202	$	43,367	$	1,265,942	$	43,416	$	2,970,976

Troubled debt restructured loans. From time to time, Valley may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a troubled debt restructured loan (TDR).

Generally, the concessions made for TDRs involve lowering the monthly payments on loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. The concessions may also involve payment deferrals but rarely result in the forgiveness of principal or accrued interest. In addition, Valley frequently obtains additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms of the loan and Valley’s underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.


Troubled Debt Restructurings	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)
December 31, 2022
Commercial and industrial	95	$	117,429	$	90,259
Commercial real estate:
Commercial real estate	5	26,375		25,608
Construction	2	11,025		9,077
Total commercial real estate	7	37,400		34,685
Residential mortgage	9	3,206		3,209
Consumer	1	125		116
Total	112	$	158,160	$	128,269
December 31, 2021
Commercial and industrial	70	$	52,790	$	48,764
Commercial real estate:
Commercial real estate	12	29,480		29,313
Construction	3	22,049		18,418
Total commercial real estate	15	51,529		47,731
Residential mortgage	14	9,663		9,578
Consumer	1	170		161
Total	100	$	114,152	$	106,234

The total TDRs presented in the table above had allocated a specific allowance for loan losses that totaled $63.0 million and $29.1 million at December 31, 2022 and 2021, respectively. There were $26.2 million and $6.0 million of charge-offs related to TDRs for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the commercial and industrial loan category in the above table mostly consisted of non-accrual TDR taxi medallion loans classified as substandard and doubtful. Valley did not extend any commitments to lend additional funds to borrowers whose loans have been modified as TDRs during the year ended December 31, 2022.


	Years Ended December 31,
	2022			2021
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	1	$	20,844	—	$	—
Commercial real estate:
Commercial real estate	2	5,207		1	10,261
Construction	—	—		2	17,599
Total commercial real estate	2	5,207		3	27,860
Residential mortgage	1	1,071		—	—

Total	4	$	27,122	3	$	27,860

Collateral dependent loans. Loans are collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When Valley determines that foreclosure is probable, the collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process.


	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
December 31, 2022
Allowance for loan losses:
Beginning balance	$	103,090	$	217,490	$	25,120	$	13,502	$	359,202
Allowance for PCD loans (1)	33,452		36,618		206		43		70,319
Loans charged-off	(33,250)		(4,561)		(28)		(4,057)		(41,896)
Charged-off loans recovered	17,081		2,073		711		2,929		22,794
Net (charge-offs) recoveries	(16,169)		(2,488)		683		(1,128)		(19,102)
Provision for loan losses	19,568		7,788		13,011		7,869		48,236
Ending balance	$	139,941	$	259,408	$	39,020	$	20,286	$	458,655
December 31, 2021
Allowance for loan losses:
Beginning balance	$	131,070	$	164,113	$	28,873	$	16,187	$	340,243
Allowance for PCD loans (2)	3,528		2,953		57		4		6,542

Loans charged-off	(21,507)		(382)		(140)		(4,303)		(26,332)
Charged-off loans recovered	3,934		2,557		676		4,075		11,242
Net (charge-offs) recoveries	(17,573)		2,175		536		(228)		(15,090)
(Credit) provision for loan losses	(13,935)		48,249		(4,346)		(2,461)		27,507
Ending balance	$	103,090	$	217,490	$	25,120	$	13,502	$	359,202


	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
December 31, 2022
Allowance for loan losses:
Individually evaluated for credit losses	$	68,745	$	13,174	$	337	$	4,338	$	86,594
Collectively evaluated for credit losses	71,196		246,234		38,683		15,948		372,061

Total	$	139,941	$	259,408	$	39,020	$	20,286	$	458,655
Loans:
Individually evaluated for credit losses	$	117,644	$	213,522	$	28,869	$	14,058	$	374,093
Collectively evaluated for credit losses	8,687,186		29,219,346		5,335,681		3,300,894		46,543,107
Total	$	8,804,830	$	29,432,868	$	5,364,550	$	3,314,952	$	46,917,200
December 31, 2021
Allowance for loan losses:
Individually evaluated for credit losses	$	64,359	$	6,277	$	470	$	390	$	71,496
Collectively evaluated for credit losses	38,731		211,213		24,650		13,112		287,706
Total	$	103,090	$	217,490	$	25,120	$	13,502	$	359,202
Loans:
Individually evaluated for credit losses	$	119,760	$	134,135	$	42,469	$	2,431	$	298,795
Collectively evaluated for credit losses	5,727,791		20,655,931		4,502,595		2,968,545		33,854,862
Total	$	5,847,551	$	20,790,066	$	4,545,064	$	2,970,976	$	34,153,657