Operating Segments

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Operating Segments

OPERATING SEGMENTS (Note 21)

Prior to the second quarter 2022, Valley had three operating segments: Consumer Lending, Commercial Lending, and Investment Management. Valley re-evaluated its segment reporting during the second quarter 2022 to consider the Bank Leumi USA acquisition on April 1, 2022 along with other factors, including changes in the internal structure of operations, discrete financial information reviewed by key decision-makers, balance sheet management strategies and personnel. Since its re-evaluation in 2022, Valley has managed 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. Each operating segment is reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Valley regularly assesses its strategic plans, operations and reporting structures to identify its operating segments and no additional changes to Valley's operating segments were determined necessary at December 31, 2023.

The Consumer Banking segment is mainly comprised of residential mortgages and automobile loans, and to a lesser extent, secured personal lines of credit, home equity loans and other consumer loans. The duration of the residential mortgage loan portfolio is subject to movements in the market level of interest rates and forecasted prepayment speeds. The average weighted life of the automobile loans within the portfolio is relatively unaffected by movements in the market level of interest

rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Banking also includes the Wealth Management and Insurance Services Division, comprised of trust, asset management, brokerage, insurance and tax credit advisory services.

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.

Treasury and Corporate Other largely consists of the Treasury managed HTM debt securities and AFS debt securities portfolios mainly utilized in the liquidity management needs of our lending segments and income and expense items resulting from support functions not directly attributable to a specific segment. Interest income is generated through investments in various types of securities (mainly comprised of fixed rate securities) and interest-bearing deposits with other banks (primarily the Federal Reserve Bank of New York). Expenses related to the branch network, all other components of retail banking, along with the back office departments of the Bank are allocated from Treasury and Corporate Other to the Consumer and Commercial Banking segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each operating segment utilizing a transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average interest earning assets and or liabilities outstanding for the period.

The accounting for each segment and Treasury and Corporate Other includes internal accounting policies designed to measure consistent and reasonable financial reporting and may result in income and expense measurements that differ from amounts under GAAP. The financial reporting for each segment contains allocations and reporting in line with Valley’s operations, which may not necessarily be comparable to any other financial institution. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. The prior period balances presented in the tables below reflect reclassifications to conform the presentation in those periods to the current operating segment structure. Valley’s consolidated results were not impacted by the changes discussed above and remain unchanged for all periods presented.

The following tables represent the financial data for Valley’s operating segments, and Treasury and Corporate Other for the years ended December 31, 2023, 2022 and 2021:

	Year Ended December 31, 2023
	Consumer Banking			Commercial Banking			Treasury and Corporate Other			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	8,892,563		$	40,459,298		$	7,148,667		$	56,500,528
Interest income	$	367,986		$	2,518,988		$	251,917		$	3,138,891
Interest expense	223,819			1,018,328			231,266			1,473,413
Net interest income	144,167			1,500,660			20,651			1,665,478
Provision for credit losses	6,162			39,463			4,559			50,184
Net interest income after provision for credit losses	138,005			1,461,197			16,092			1,615,294
Non-interest income	86,743			51,909			87,077			225,729
Non-interest expense	82,557			141,029			939,105			1,162,691
Internal transfer expense (income)	107,639			480,593			(588,232)			—
Income before income taxes	$	34,552		$	891,484		$	(247,704)		$	678,332
Return on average interest earning assets (pre-tax) (unaudited)	0.39		%	2.20		%	(3.47)		%	1.20		%

	Year Ended December 31, 2022
	Consumer Banking			Commercial Banking			Treasury and Corporate Other			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	8,133,665		$	33,796,688		$	6,137,028		$	48,067,381
Interest income	$	272,295		$	1,556,182		$	148,206		$	1,976,683
Interest expense	48,843			202,948			69,252			321,043
Net interest income	223,452			1,353,234			78,954			1,655,640
Provision for credit losses	20,880			35,456			481			56,817
Net interest income after provision for credit losses	202,572			1,317,778			78,473			1,598,823
Non-interest income	56,506			79,695			70,592			206,793
Non-interest expense	73,105			118,919			832,925			1,024,949
Internal transfer expense (income)	121,220			491,507			(612,727)			—
Income (loss) before income taxes	$	64,753		$	787,047		$	(71,133)		$	780,667
Return on average interest earning assets (pre-tax) (unaudited)	0.80		%	2.33		%	(1.16)		%	1.62		%

	Year Ended December 31, 2021
	Consumer Banking			Commercial Banking			Treasury and Corporate Other			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	7,262,808		$	25,554,177		$	5,410,830		$	38,227,815
Interest income	$	238,715		$	1,018,674		$	76,837		$	1,334,226
Interest expense	19,117			67,265			37,943			124,325
Net interest income	219,598			951,409			38,894			1,209,901
(Credit) provision for credit losses	(6,807)			39,703			(263)			32,633
Net interest income after provision for credit losses	226,405			911,706			39,157			1,177,268
Non-interest income	72,063			35,600			47,350			155,013
Non-interest expense	78,853			108,577			504,112			691,542
Internal transfer expense (income)	81,423			286,335			(367,758)			—
Income (loss) before income taxes	$	138,192		$	552,394		$	(49,847)		$	640,739
Return on average interest earning assets (pre-tax) (unaudited)	1.90		%	2.16		%	(0.92)		%	1.68		%