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Loans and Allowance for Credit Losses for Loans
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses for Loans Loans and Allowance for Credit Losses for Loans
The detail of the loan portfolio as of March 31, 2023 and December 31, 2022 was as follows: 
 March 31, 2023December 31, 2022
 (in thousands)
Loans:
Commercial and industrial$9,043,946 $8,804,830 
Commercial real estate:
Commercial real estate27,051,111 25,732,033 
Construction3,725,967 3,700,835 
Total commercial real estate loans30,777,078 29,432,868 
Residential mortgage5,486,280 5,364,550 
Consumer:
Home equity516,592 503,884 
Automobile1,717,141 1,746,225 
Other consumer1,118,929 1,064,843 
Total consumer loans3,352,662 3,314,952 
Total loans$48,659,966 $46,917,200 
Total loans include net unearned discounts and deferred loan fees of $125.4 million and $120.5 million at March 31, 2023 and December 31, 2022, respectively.
Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $192.6 million and $175.9 million at March 31, 2023 and December 31, 2022, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.
There were no sales of loans from the held for investment portfolio during the three months ended March 31, 2023 and 2022.
Credit Risk Management
For all of its loan types, 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. See Valley’s Annual Report on Form 10-K for the year ended December 31, 2022 for further details.
Credit Quality
The following table presents past due, current and non-accrual loans without an allowance for loan losses by loan portfolio class at March 31, 2023 and 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)
March 31, 2023
Commercial and industrial
$20,716 $24,118 $8,927 $78,606 $132,367 $8,911,579 $9,043,946 $6,675 
Commercial real estate:
Commercial real estate
13,580 — — 67,938 81,518 26,969,593 27,051,111 66,587 
Construction— — 6,450 68,649 75,099 3,650,868 3,725,967 15,791 
Total commercial real estate loans13,580 — 6,450 136,587 156,617 30,620,461 30,777,078 82,378 
Residential mortgage12,599 2,133 1,668 23,483 39,883 5,446,397 5,486,280 18,694 
Consumer loans:
Home equity412 287 48 2,965 3,712 512,880 516,592 — 
Automobile4,598 502 282 262 5,644 1,711,497 1,717,141 — 
Other consumer2,835 730 417 91 4,073 1,114,856 1,118,929 — 
Total consumer loans7,845 1,519 747 3,318 13,429 3,339,233 3,352,662 — 
Total$54,740 $27,770 $17,792 $241,994 $342,296 $48,317,670 $48,659,966 $107,747 
 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 LoansNon-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 estate6,638 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 loans6,638 3,167 6,282 142,546 158,633 29,274,235 29,432,868 82,186 
Residential mortgage16,146 3,315 1,866 25,160 46,487 5,318,063 5,364,550 14,224 
Consumer loans:
Home equity955 254 — 2,810 4,019 499,865 503,884 117 
Automobile5,974 630 1 271 6,876 1,739,349 1,746,225 — 
Other consumer2,158 695 46 93 2,992 1,061,851 1,064,843 — 
Total consumer loans9,087 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 

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.
The following table presents the internal loan classification risk by loan portfolio class by origination year based on the most recent analysis performed at March 31, 2023 and December 31, 2022, as well as the gross loan charge-offs by year of origination for the three months ended March 31, 2023:
 Term Loans  
Amortized Cost Basis by Origination Year
March 31, 202320232022202120202019Prior to 2019Revolving Loans Amortized Cost BasisRevolving Loans Converted to Term LoansTotal
 (in thousands)
Commercial and industrial
Risk Rating:
Pass$435,733 $1,418,804 $1,021,874 $549,408 $304,137 $628,117 $4,450,850 $130 $8,809,053 
Special Mention1,573 27,386 2,591 19,260 3,658 7,443 61,455 7 123,373 
Substandard10 517 2,832 2,617 1,203 6,904 25,847 — 39,930 
Doubtful— 777 1,552 — 2,683 63,707 2,871 — 71,590 
Total commercial and industrial$437,316 $1,447,484 $1,028,849 $571,285 $311,681 $706,171 $4,541,023 $137 $9,043,946 
Commercial real estate
Risk Rating:
Pass$1,607,961 $6,740,087 $5,201,027 $3,287,689 $2,520,271 $6,316,475 $490,136 $3,407 $26,167,053 
Special Mention26,512 55,889 46,317 63,647 71,474 251,353 6,720 — 521,912 
Substandard— 33,613 35,924 30,090 34,765 219,838 7,916 — 362,146 
Total commercial real estate$1,634,473 $6,829,589 $5,283,268 $3,381,426 $2,626,510 $6,787,666 $504,772 $3,407 $27,051,111 
Construction
Risk Rating:
Pass$120,282 $928,489 $415,212 $70,371 $15,502 $36,863 $2,079,911 $— $3,666,630 
Substandard— 13 12,290 — 964 17,600 7,351 — 38,218 
Doubtful447 8,341 670 11,661 — — — — 21,119 
Total construction$120,729 $936,843 $428,172 $82,032 $16,466 $54,463 $2,087,262 $— $3,725,967 
Gross loan charge-offs $— $6,035 $20,286 $123 $72 $1,636 $3,593 $— $31,745 
 Term Loans  
Amortized Cost Basis by Origination Year
December 31, 202220222021202020192018Prior to 2018Revolving Loans Amortized Cost BasisRevolving Loans Converted to Term LoansTotal
 (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 Mention31,557 3,367 19,492 4,732 4,369 3,558 51,021 7 118,103 
Substandard288 1,734 4,121 1,412 4,256 4,879 31,698 — 48,388 
Doubtful886 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 Mention93,286 48,007 60,169 45,447 62,111 125,414 8,188 — 442,622 
Substandard15,088 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 
Substandard12,969 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 
For residential mortgages, automobile, home equity and other consumer loan portfolio classes, Valley also evaluates credit quality based on the aging status of the loan and by payment activity. The following table presents the amortized cost in those loan classes based on payment activity, by origination year as of March 31, 2023 and December 31, 2022, as well as the gross loan charge-offs by year of origination for the three months ended March 31, 2023:
 Term Loans  
Amortized Cost Basis by Origination Year
March 31, 202320232022202120202019Prior to 2019Revolving Loans Amortized Cost BasisRevolving Loans Converted to Term LoansTotal
 (in thousands)
Residential mortgage
Performing$222,494 $1,317,372 $1,521,543 $572,064 $478,014 $1,300,107 $66,947 $— $5,478,541 
90 days or more past due— 1,473 1,754 — 499 4,013 — — 7,739 
Total residential mortgage $222,494 $1,318,845 $1,523,297 $572,064 $478,513 $1,304,120 $66,947 $— $5,486,280 
Consumer loans
Home equity
Performing$7,251 $46,566 $12,085 $4,448 $4,891 $18,499 $383,948 $37,984 $515,672 
90 days or more past due— — — — — — 285 635 920 
Total home equity7,251 46,566 12,085 4,448 4,891 18,499 384,233 38,619 516,592 
Automobile
Performing141,743 687,328 480,634 181,994 144,130 80,995 — — 1,716,824 
90 days or more past due— 1 51 19 105 141 — — 317 
Total automobile141,743 687,329 480,685 182,013 144,235 81,136 — — 1,717,141 
Other consumer
Performing4,898 23,313 9,056 8,020 7,374 2,615 1,063,356 — 1,118,632 
90 days or more past due— 28 — 2 — 38 229 — 297 
Total other consumer4,898 23,341 9,056 8,022 7,374 2,653 1,063,585 — 1,118,929 
Total consumer$153,892 $757,236 $501,826 $194,483 $156,500 $102,288 $1,447,818 $38,619 $3,352,662 
Gross loan charge-offs $— $146 $109 $4 $170 $388 $11 $— $828 
 Term Loans  
Amortized Cost Basis by Origination Year
December 31, 202220222021202020192018Prior to 2018Revolving Loans Amortized Cost BasisRevolving Loans Converted to Term LoansTotal
 (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 equity47,084 12,432 4,592 5,024 5,581 13,007 376,884 39,280 503,884 
Automobile
Performing724,557 525,017 204,578 166,103 80,012 45,415 — — 1,745,682 
90 days or more past due38 116 36 180 101 72 — — 543 
Total automobile724,595 525,133 204,614 166,283 80,113 45,487 — — 1,746,225 
Other consumer
Performing24,140 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 consumer24,140 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 

Loan modifications to borrowers experiencing financial difficulty. From time to time, Valley may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. Prior to 2023, a loan was classified as a troubled debt restructuring (TDR) if the borrower was experiencing financial difficulties and a concession has been made at the time of such modification.
Effective January 1, 2023, Valley adopted ASU No. 2022-02 which eliminated the accounting guidance for TDR loans while enhancing disclosure requirements for certain loan modifications by creditors when a borrower is experiencing financial difficulty. Valley adopted ASU No. 2022-02 using the modified retrospective transition method. At the date of adoption, Valley was no longer required to utilize a loan-level discounted cash flow approach for determining the allowance for certain modified loans previously classified as TDR loans. As a result, Valley elected to utilize its collective reserve methodology for pools of loans that share common risk characteristic for determining the reserves for the modified loans formerly classified as TDR loans. This change resulted in the recognition of a cumulative-effect adjustment which decreased the allowance for loan losses with an offsetting entry to retained earnings, net of deferred taxes, at January 1, 2023.
The following table shows the amortized cost basis of loans to borrowers experiencing financial difficulty at March 31, 2023 that were modified during the three months ended March 31, 2023, disaggregated by class of financing receivable and type of modification. Each of the types of modifications was less than one percent of their respective loan categories.
Three Months Ended March 31,
Term extensionTerm extension and interest rate reductionTotal
 ($ in thousands)
Commercial and industrial$1,281 $523 $1,804 
Commercial real estate46,328 — 46,328 
Residential mortgage213 — 213 
Consumer60 — 60 
Total$47,882 $523 $48,405 
The following table describes the types of modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2023:
Types of Modifications
Commercial and industrial
12 month term extensions; and 12 month term extensions combined with interest rate reductions from 2.11 percent to 1 percent
Commercial real estate
6 - 36 month term extensions
Residential mortgage
12 month term extensions
Consumer
60 month term extensions
Valley closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of modification efforts. All loans to borrowers experiencing financial difficulty that have been modified during the three months ended March 31, 2023 were current to their contractual payments as of March 31, 2023.
Valley did not extend any commitments to lend additional funds to borrowers experiencing financial difficulty whose loans had been modified during the three months ended March 31, 2023.
Troubled debt restructured loans. The following tables present the pre- and post-modification amortized cost of TDR loans by loan class during the three months ended March 31, 2022. Post-modification amounts are presented as of March 31, 2022 using the allowance methodology for TDRs prior to the adoption of ASU 2022-02.
Three Months Ended March 31, 2022
Troubled Debt RestructuringsNumber
of
Contracts		Pre-Modification
Outstanding Recorded Investment		Post-Modification
Outstanding Recorded Investment
 ($ in thousands)
Commercial and industrial11 $9,684 $9,662 
Commercial real estate2 5,260 5,251 
Residential mortgage1 121 117 
Total14 $15,065 $15,030 
The total TDRs presented in the above tables had allocated allowance for loan losses of $7.8 million at March 31, 2022. There were no charge-offs related to TDRs for the three months ended March 31, 2022. Valley did not extend any commitments to lend additional funds to borrowers whose loans have been modified as TDRs during the three months ended March 31, 2022.
Performing TDRs (not reported as non-accrual loans) and non-performing TDRs totaled $56.5 million and $104.7 million as of March 31, 2022.
Loans modified as TDRs within the previous 12 months and for which there was a payment default (90 or more days past due) for the three months ended March 31, 2022 were as follows:
 Three Months Ended March 31, 2022
Troubled Debt Restructurings Subsequently DefaultedNumber of
Contracts		Recorded
Investment
 ($ in thousands)
Commercial and industrial2 $1,850 
Construction2 17,599 
Total4 $19,449 
Loans in process of foreclosure. Other real estate owned (OREO) totaled $1.2 million and $286 thousand at March 31, 2023 and December 31, 2022, respectively. There were no foreclosed residential real estate properties included in OREO at March 31, 2023 and December 31, 2022. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $1.5 million and $2.6 million at March 31, 2023 and December 31, 2022, respectively.

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.
The following table presents collateral dependent loans by class as of March 31, 2023 and December 31, 2022:
 March 31,
2023		December 31,
2022
 (in thousands)
Collateral dependent loans:
Commercial and industrial *$74,481 $94,433 
Commercial real estate144,892 130,199 
Residential mortgage18,694 33,865 
Home equity— 195 
Total $238,067 $258,692 
* Commercial and industrial loans presented in the table above are primarily collateralized by taxi medallions.
Allowance for Credit Losses for Loans
The allowance for credit losses (ACL) for loans consists of the allowance for loan losses and the allowance for unfunded credit commitments. The ACL for loans decreased $22.3 million at March 31, 2023 as compared to December 31, 2022.
The following table summarizes the ACL for loans at March 31, 2023 and December 31, 2022: 
March 31,
2023		December 31,
2022
 (in thousands)
Components of allowance for credit losses for loans:
Allowance for loan losses$436,898 $458,655 
Allowance for unfunded credit commitments24,071 24,600 
Total allowance for credit losses for loans$460,969 $483,255 
The following table summarizes the provision for credit losses for loans for the periods indicated:
 Three Months Ended
March 31,
 20232022
 (in thousands)
Components of provision for credit losses for loans:
Provision for loan losses$9,979 $3,258 
(Credit) provision for unfunded credit commitments(529)242 
Total provision for credit losses for loans$9,450 $3,500 
The following table details the activity in the allowance for loan losses by loan portfolio segment for the three months ended March 31, 2023 and 2022: 
Commercial
and Industrial		Commercial
Real Estate		Residential
Mortgage		ConsumerTotal
 (in thousands)
Three Months Ended
March 31, 2023
Allowance for loan losses:
Beginning balance$139,941 $259,408 $39,020 $20,286 $458,655 
Impact of the adoption of ASU No. 2022-02 *
(739)(589)(12)(28)(1,368)
Beginning balance, adjusted$139,202 $258,819 $39,008 $20,258 $457,287 
Loans charged-off(26,047)(5,698)— (828)(32,573)
Charged-off loans recovered 1,399 24 21 761 2,205 
Net (charge-offs) recoveries(24,648)(5,674)21 (67)(30,368)
Provision (credit) for loan losses13,438 (9,813)2,679 3,675 9,979 
Ending balance$127,992 $243,332 $41,708 $23,866 $436,898 
Three Months Ended
March 31, 2022
Allowance for loan losses:
Beginning balance$103,090 $217,490 $25,120 $13,502 $359,202 
Loans charged-off (1,571)(173)(26)(825)(2,595)
Charged-off loans recovered 824 107 457 1,257 2,645 
Net (charge-offs) recoveries(747)(66)431 432 50 
(Credit) provision for loan losses(1,140)2,525 2,638 (765)3,258 
Ending balance$101,203 $219,949 $28,189 $13,169 $362,510 
The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the allowance measurement methodology at March 31, 2023 and December 31, 2022.
Commercial and IndustrialCommercial
Real Estate		Residential
Mortgage		ConsumerTotal
 (in thousands)
March 31, 2023
Allowance for loan losses:
Individually evaluated for credit losses$46,151 $13,445 $34 $— $59,630 
Collectively evaluated for credit losses81,841 229,887 41,674 23,866 377,268 
Total$127,992 $243,332 $41,708 $23,866 $436,898 
Loans:
Individually evaluated for credit losses$74,625 $144,892 $12,028 $6,929 $238,474 
Collectively evaluated for credit losses8,969,321 30,632,186 5,474,252 3,345,733 48,421,492 
Total$9,043,946 $30,777,078 $5,486,280 $3,352,662 $48,659,966 
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 losses71,196 246,234 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 losses8,687,186 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