Tax Credit Investments

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Tax Credit Investments

Tax Credit Investments

Valley’s tax credit investments are primarily related to investments promoting qualified affordable housing projects, and other investments related to community development and renewable energy sources. Some of these tax-advantaged investments support Valley’s regulatory compliance with the CRA. Valley’s investments in these entities generate a return primarily through the realization of federal income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction of income tax expense.

Valley’s tax credit investments are carried in other assets on the consolidated statements of financial condition. Valley’s unfunded capital and other commitments related to the tax credit investments are carried in accrued expenses and other liabilities on the consolidated statements of financial condition. Valley recognizes amortization of tax credit investments, including impairment losses, within non-interest expense in the consolidated statements of income using the equity method of accounting. After initial measurement, the carrying amounts of tax credit investments with non-readily determinable fair values are increased to reflect Valley's share of income of the investee and are reduced to reflect its share of losses of the investee, dividends received and impairments, if applicable.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	20,161	$	22,158
Other tax credit investments, net	206,941		117,659
Total tax credit investments, net	$	227,102	$	139,817
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	—	$	1,305
Total unfunded tax credit commitments	$	—	$	1,305

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the three and six months ended June 30, 2024 and 2023: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	1,263	$	1,460	$	2,659	$	2,919
Other tax credit investment credits and tax benefits	6,684		3,430		13,029		6,651
Total reduction in income tax expense	$	7,947	$	4,890	$	15,688	$	9,570
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	876	$	938	$	1,751	$	1,875
Affordable housing tax credit investment impairment losses	10		448		491		896
Other tax credit investment losses	1,680		719		2,280		725
Other tax credit investment impairment losses	3,225		2,913		6,831		5,775
Total amortization of tax credit investments recorded in non-interest expense	$	5,791	$	5,018	$	11,353	$	9,271