Tax Credit Investments

6 Months Ended

Jun. 30, 2025

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. 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 at June 30, 2025 and December 31, 2024:

	June 30, 2025		December 31, 2024
	(in thousands)
Other assets:
Affordable housing tax credit investments, net	$	27,447	$	22,742
Other tax credit investments, net	352,928		278,468
Total tax credit investments, net	$	380,375	$	301,210

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, 2025 and 2024: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
Components of income tax expense:
Affordable housing tax credits and other tax benefits	$	2,151	$	1,263	$	3,376	$	2,659
Other tax credit investment credits and tax benefits	10,120		6,684		21,009		13,029
Total reduction in income tax expense	$	12,271	$	7,947	$	24,385	$	15,688
Amortization of tax credit investments:
Affordable housing tax credit investment losses	$	1,050	$	876	$	1,750	$	1,751
Affordable housing tax credit investment impairment losses	374		10		739		491
Other tax credit investment losses	3,622		1,680		4,394		2,280
Other tax credit investment impairment losses	4,088		3,225		11,571		6,831
Total amortization of tax credit investments recorded in non-interest expense	$	9,134	$	5,791	$	18,454	$	11,353