Regulatory and Capital Requirements

12 Months Ended

Dec. 31, 2022

Financial Services, Banking and Thrift [Abstract]

Regulatory and Capital Requirements

REGULATORY AND CAPITAL REQUIREMENTS (Note 17)

Valley’s primary source of cash is dividends from the Bank. Valley National Bank, a national banking association, is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. In addition, the dividends declared cannot be in excess of the amount which would cause the subsidiary bank to fall below the minimum required for capital adequacy purposes.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve Bank and the OCC. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct significant impact on Valley’s consolidated financial statements. Under capital adequacy guidelines Valley and Valley National Bank must meet specific capital guidelines that involve quantitative measures of Valley’s assets, liabilities and certain off-balance sheet items as calculated under regulatory

accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require Valley and Valley National Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets, as defined in the regulations.

Valley is required to maintain a common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and minimum leverage ratio of 4.0 percent, plus a 2.5 percent capital conservation buffer added to the minimum requirements for capital adequacy purposes. As of December 31, 2022 and 2021, Valley and Valley National Bank exceeded all capital adequacy requirements (see table below).

For regulatory capital purposes, in accordance with the Federal Reserve Board’s final interim rule as of April 3, 2020, we deferred 100 percent of the CECL Day 1 impact to shareholders' equity plus 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) for a two-year period ending January 1, 2022. On January 1, 2022, the deferral amount totaling $47.3 million after-tax started to be phased-in by 25 percent and will increase by 25 percent per year until fully phased-in on January 1, 2025. As of December 31, 2022, approximately $11.8 million of the $47.3 million deferral amount was recognized as a reduction to regulatory capital and, as a result, decreased our risk based capital ratios by approximately 3 basis points.

The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under the Basel III risk-based capital guidelines at December 31, 2022 and 2021:

	Actual				Minimum Capital Requirements				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	($ in thousands)
As of December 31, 2022
Total Risk-based Capital
Valley	$	5,569,639	11.63	%	$	5,026,621	10.50	%	N/A		N/A
Valley National Bank	5,659,511		11.84		5,018,129		10.50		$	4,779,170	10.00	%
Common Equity Tier 1 Capital
Valley	4,315,659		9.01		3,351,080		7.00		N/A		N/A
Valley National Bank	5,284,372		11.06		3,345,419		7.00		3,106,461		6.50
Tier 1 Risk-based Capital
Valley	4,530,500		9.46		4,069,169		8.50		N/A		N/A
Valley National Bank	5,284,372		11.06		4,062,295		8.50		3,823,336		8.00
Tier 1 Leverage Capital
Valley	4,530,500		8.23		2,200,822		4.00		N/A		N/A
Valley National Bank	5,284,372		9.60		2,200,891		4.00		2,751,114		5.00
As of December 31, 2021
Total Risk-based Capital
Valley	$	4,454,485	13.10	%	$	3,569,144	10.50	%	N/A		N/A
Valley National Bank	4,571,448		13.45		3,567,618		10.50		$	3,397,732	10.00	%
Common Equity Tier 1 Capital
Valley	3,417,930		10.06		2,379,429		7.00		N/A		N/A
Valley National Bank	4,308,734		12.68		2,378,412		7.00		2,208,526		6.50
Tier 1 Risk-based Capital
Valley	3,632,771		10.69		2,889,307		8.50		N/A		N/A
Valley National Bank	4,308,734		12.68		2,888,072		8.50		2,718,185		8.00
Tier 1 Leverage Capital
Valley	3,632,771		8.88		1,635,508		4.00		N/A		N/A
Valley National Bank	4,308,734		10.53		1,636,097		4.00		2,045,121		5.00