Core Insights - Valley National Bancorp (NASDAQ: VLY) has shown strong performance over the past year, with a stock price increase of 30%, reaching a 52-week high [1] Group 1: Company Performance - The company has successfully raised capital, built reserves, and reduced exposure to commercial real estate (CRE) [1]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements and accompanying notes detail the company's financial condition and performance [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets grew to $62.71 billion, reflecting increases in investment securities, loans, and total deposits | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $62,705,358 | $62,491,691 | | Total Investment Securities | $7,504,537 | $6,972,810 | | Net Loans | $48,811,920 | $48,240,861 | | Total Deposits | $50,725,284 | $50,075,857 | | Total Liabilities | $55,129,937 | $55,056,564 | | Total Shareholders' Equity | $7,575,421 | $7,435,127 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income significantly increased year-over-year, driven by higher net interest income and lower credit loss provisions | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Interest Income | $805,012 | $833,466 | $1,589,764 | $1,662,122 | | Total Interest Expense| $372,604 | $431,781 | $737,251 | $866,889 | | Net Interest Income | $432,408 | $401,685 | $852,513 | $795,233 | | Provision for Credit Losses (Loans) | $37,795 | $82,111 | $100,470 | $127,385 | | Total Non-Interest Income | $62,604 | $51,213 | $120,898 | $112,628 | | Total Non-Interest Expense| $284,122 | $277,497 | $560,740 | $557,807 | | Net Income | $133,167 | $70,424 | $239,225 | $166,704 | | Diluted EPS | $0.22 | $0.13 | $0.40 | $0.31 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income substantially increased, driven by higher net income and unrealized gains on AFS securities | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $133,167 | $70,424 | $239,225 | $166,704 | | Unrealized gains (losses) on AFS securities, net | $8,496 | $(5,592) | $35,708 | $(15,797) | | Total Comprehensive Income | $141,530 | $64,659 | $274,670 | $150,547 | [Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased due to net income and other comprehensive income, partially offset by dividends and stock repurchases | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Total Shareholders' Equity | $7,435,127 | $7,575,421 | | Net Income | N/A | $239,225 | | Other Comprehensive Income, net | N/A | $35,445 | | Cash Dividends Declared (Preferred) | N/A | $(13,903) | | Cash Dividends Declared (Common) | N/A | $(125,248) | | Common Stock Repurchased | N/A | $(4,326) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) A net decrease in cash resulted from significant cash used in investing activities, partially offset by operating and financing inflows | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $142,032 | $313,512 | | Net Cash Used in Investing Activities | $(1,156,594) | $(1,015,243) | | Net Cash Provided by Financing Activities | $310,854 | $819,579 | | Net Change in Cash and Cash Equivalents | $(703,708) | $117,848 | | Cash and Cash Equivalents at End of Period | $1,186,417 | $1,009,073 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, estimates, and specific financial statement line items [Note 1. Basis of Presentation](index=12&type=section&id=Note%201.%20Basis%20of%20Presentation) Financial statements conform to GAAP, with critical estimates for credit losses, goodwill, and taxes subject to economic uncertainty - Valley's financial statements conform to GAAP, consolidating Valley National Bank and its controlled entities[26](index=26&type=chunk) - Material estimates include the **allowance for credit losses**, **goodwill and other intangible assets impairment**, and **income taxes**, which are subject to significant judgment and economic uncertainty[29](index=29&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) is **not expected to have a material impact** on Valley's consolidated financial statements[30](index=30&type=chunk) [Note 2. Earnings Per Common Share](index=13&type=section&id=Note%202.%20Earnings%20Per%20Common%20Share) Basic and diluted earnings per share increased year-over-year, reflecting improved net income available to common shareholders | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income Available to Common Shareholders (in thousands) | $126,219 | $66,316 | $225,322 | $158,477 | | Basic Weighted Average Common Shares Outstanding | 560,336,610 | 509,141,252 | 559,976,939 | 508,740,986 | | Diluted Weighted Average Common Shares Outstanding | 562,312,330 | 510,338,502 | 563,431,390 | 510,437,959 | | Basic Earnings Per Common Share | $0.23 | $0.13 | $0.40 | $0.31 | | Diluted Earnings Per Common Share | $0.22 | $0.13 | $0.40 | $0.31 | - Common stock equivalents, representing dilutive effects of RSUs and stock options, are included in diluted EPS calculations, with anti-dilutive shares excluded[31](index=31&type=chunk) [Note 3. Accumulated Other Comprehensive Loss](index=13&type=section&id=Note%203.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss decreased significantly due to net unrealized gains on available-for-sale securities | Component (in thousands) | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :---------------- | :------------ | | Unrealized Gains and Losses on AFS Securities | $(133,898) | $(98,190) | | Unrealized Gains and Losses on Derivatives | $1,245 | $806 | | Defined Benefit Pension and Postretirement Benefit Plans | $(22,681) | $(22,505) | | Total Accumulated Other Comprehensive Loss | $(155,334) | $(119,889) | - Net other comprehensive income for the six months ended June 30, 2025, was **$35.4 million**, a significant improvement from a loss of $16.2 million in the prior year, mainly driven by AFS securities[33](index=33&type=chunk) - Amounts reclassified from AOCL to earnings for the six months ended June 30, 2025, totaled **$263 thousand**, primarily from derivatives and defined benefit plans[33](index=33&type=chunk) [Note 4. New Authoritative Accounting Guidance](index=14&type=section&id=Note%204.%20New%20Authoritative%20Accounting%20Guidance) ASU No 2024-03, requiring expense disaggregation in footnotes, will be effective for annual periods after December 15, 2026 - ASU No 2024-03 requires disaggregation of certain income statement expense captions in footnotes, not on the face of the income statement[34](index=34&type=chunk) - The effective date for public business entities is annual reporting periods beginning after **December 15, 2026**, and interim periods within fiscal years beginning after December 15, 2027, with early adoption allowed[34](index=34&type=chunk)[35](index=35&type=chunk) - Valley is currently evaluating the potential impact of ASU No 2024-03 on its consolidated financial statements[35](index=35&type=chunk) [Note 5. Fair Value Measurement of Assets and Liabilities](index=15&type=section&id=Note%205.%20Fair%20Value%20Measurement%20of%20Assets%20and%20Liabilities) Assets and liabilities are categorized into a three-level hierarchy based on input observability for fair value measurement [Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis](index=15&type=section&id=Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value%20on%20a%20Recurring%20and%20Non-Recurring%20Basis) Fair value measurements are categorized into Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs) | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | **Recurring Fair Value Measurements:** | | | | Total Assets | $4,171,242 | $3,865,560 | | Total Liabilities | $234,175 | $454,200 | | **Non-Recurring Fair Value Measurements:** | | | | Total Assets | $167,938 | $162,026 | - **Level 1** inputs are unadjusted quoted prices in active markets for identical assets or liabilities[38](index=38&type=chunk) - **Level 2** inputs are quoted prices in non-active markets or observable inputs, directly or indirectly, for substantially the full term[38](index=38&type=chunk) - **Level 3** inputs are unobservable and significant to the fair value measurement[38](index=38&type=chunk) [Assets and Liabilities Measured at Fair Value on a Recurring Basis](index=17&type=section&id=Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value%20on%20a%20Recurring%20Basis) Recurring fair value measurements primarily use Level 1 inputs for equities and Level 2 inputs for debt securities and derivatives - Equity securities are reported at fair value using **Level 1** inputs for publicly traded funds and NAV for privately held funds[43](index=43&type=chunk)[44](index=44&type=chunk) - Available-for-sale debt securities, excluding U.S Treasury securities (Level 1), are primarily valued using **Level 2** inputs from independent pricing services or dealer market participants[45](index=45&type=chunk) - Loans held for sale (residential mortgages) and derivatives are reported at fair value using **Level 2** inputs, based on quoted prices for similar assets or discounted cash flow analysis[46](index=46&type=chunk)[47](index=47&type=chunk) [Assets and Liabilities Measured at Fair Value on a Non-recurring Basis](index=18&type=section&id=Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value%20on%20a%20Non-recurring%20Basis) Non-recurring measurements for impaired assets use Level 2 or Level 3 inputs like broker bids or appraisals - Non-performing commercial real estate loans held for sale are valued using **Level 2** inputs, based on bids from third-party brokers[49](index=49&type=chunk)[50](index=50&type=chunk) - Collateral-dependent loans are reported at the fair value of the underlying collateral, estimated using **Level 3** inputs from third-party appraisals, which may be discounted[51](index=51&type=chunk) - Foreclosed assets are re-measured at fair value using **Level 3** inputs (third-party appraisal less estimated cost to sell), with subsequent declines recognized in non-interest expense[52](index=52&type=chunk) [Other Fair Value Disclosures](index=19&type=section&id=Other%20Fair%20Value%20Disclosures) Fair value estimates for instruments not measured at fair value are subjective and based on market data and judgments | Financial Instrument (in thousands) | Fair Value Hierarchy | June 30, 2025 Carrying Amount | June 30, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :---------------------------------- | :------------------- | :------------------------------ | :----------------------- | :-------------------------------- | :----------------------- | | Cash and due from banks | Level 1 | $440,870 | $440,870 | $411,412 | $411,412 | | Net loans | Level 3 | $48,811,920 | $47,085,699 | $48,240,861 | $46,634,654 | | Deposits without stated maturities | Level 1 | $37,838,403 | $37,838,403 | $37,733,313 | $37,733,313 | | Deposits with stated maturities | Level 2 | $12,886,881 | $12,929,115 | $12,342,544 | $12,363,365 | - Fair value estimates are based on pertinent market data and relevant information, but are **subjective and involve significant judgment**, with actual results potentially differing[54](index=54&type=chunk) - Estimates do not reflect premiums/discounts from selling the entire portfolio, the value of anticipated future business, or tax implications of unrealized gains/losses[54](index=54&type=chunk)[55](index=55&type=chunk) [Note 6. Investment Securities](index=20&type=section&id=Note%206.%20Investment%20Securities) The investment portfolio includes equity, AFS, and HTM debt securities, with unrealized losses primarily due to interest rate changes [Equity Securities](index=20&type=section&id=Equity%20Securities) Equity securities held by Valley increased to $77.4 million at June 30, 2025 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Equity Securities | $77,408 | $71,513 | [Available for Sale Debt Securities](index=21&type=section&id=Available%20for%20Sale%20Debt%20Securities) The AFS debt securities portfolio grew to $3.90 billion, with unrealized losses attributed to interest rates, not credit quality | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Amortized Cost | $4,030,097 | $3,552,273 | | Gross Unrealized Gains| $25,970 | $4,063 | | Gross Unrealized Losses| $(159,862) | $(186,612) | | Fair Value | $3,896,205 | $3,369,724 | - The total number of AFS security positions in an unrealized loss position **decreased from 726 to 661** at June 30, 2025[61](index=61&type=chunk) - Unrealized losses are mainly attributable to **interest rates, credit spreads, market volatility, and liquidity conditions**, not credit quality[66](index=66&type=chunk) [Contractual Maturities](index=23&type=section&id=Contractual%20Maturities) A significant portion of AFS debt securities matures after ten years, excluding residential mortgage-backed securities | Maturity Period | Amortized Cost (in thousands) | Fair Value (in thousands) | | :---------------------- | :---------------------------- | :------------------------ | | Due in one year | $179,139 | $177,670 | | Due after one year through five years | $140,847 | $137,361 | | Due after five years through ten years | $175,717 | $162,664 | | Due after ten years | $291,276 | $229,697 | | Residential mortgage-backed securities | $3,243,118 | $3,188,813 | | Total | $4,030,097 | $3,896,205 | - The weighted average remaining expected life for AFS residential mortgage-backed securities was **8.39 years** at June 30, 2025[64](index=64&type=chunk) [Impairment Analysis of Available For Sale Debt Securities](index=23&type=section&id=Impairment%20Analysis%20of%20Available%20For%20Sale%20Debt%20Securities) No credit impairment was recognized for AFS securities as fair value declines were attributed to market conditions, not credit quality - AFS debt securities in unrealized loss positions are evaluated quarterly for credit losses by comparing the present value of expected cash flows to amortized cost[66](index=66&type=chunk) - As of June 30, 2025, declines in fair value were mainly due to **interest rates, credit spreads, market volatility, and liquidity**, with no impairment recognized[66](index=66&type=chunk) - Valley **does not intend to sell** AFS debt securities in an unrealized loss position prior to recovery of their amortized cost basis[67](index=67&type=chunk) [Held to Maturity Debt Securities](index=24&type=section&id=Held%20to%20Maturity%20Debt%20Securities) The HTM debt securities portfolio remained stable at $3.53 billion, with most obligations rated investment grade | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Amortized Cost | $3,531,561 | $3,532,220 | | Gross Unrealized Gains| $6,751 | $2,107 | | Gross Unrealized Losses| $(449,911) | $(506,043) | | Fair Value | $3,088,401 | $3,028,284 | | Allowance for Credit Losses | $637 | $647 | | Net Carrying Value | $3,530,924 | $3,531,573 | - The total number of HTM security positions in an unrealized loss position **decreased from 798 to 737** at June 30, 2025[69](index=69&type=chunk) - Most obligations of states and political subdivisions within the HTM portfolio were **rated investment grade**, with a large portion of 'non-rated' municipal bonds secured by Ginnie Mae securities[75](index=75&type=chunk) [Contractual Maturities](index=26&type=section&id=Contractual%20Maturities) A significant portion of HTM debt securities matures after ten years, excluding residential mortgage-backed securities | Maturity Period | Amortized Cost (in thousands) | Fair Value (in thousands) | | :---------------------- | :---------------------------- | :------------------------ | | Due in one year | $63,269 | $63,061 | | Due after one year through five years | $49,356 | $48,874 | | Due after five years through ten years | $164,449 | $156,160 | | Due after ten years | $522,690 | $449,745 | | Residential mortgage-backed securities | $2,731,797 | $2,370,561 | | Total | $3,531,561 | $3,088,401 | - The weighted-average remaining expected life for HTM residential mortgage-backed securities was **9.13 years** at June 30, 2025[72](index=72&type=chunk) [Credit Quality Indicators](index=27&type=section&id=Credit%20Quality%20Indicators) The majority of the HTM portfolio is rated AAA/AA/A, with credit quality monitored using external ratings | Investment Grade (in thousands) | June 30, 2025 Amortized Cost | December 31, 2024 Amortized Cost | | :------------------------------ | :--------------------------- | :------------------------------- | | AAA/AA/A Rated | $3,358,594 | $3,368,128 | | BBB Rated | $6,000 | $6,000 | | Non-rated | $166,967 | $158,092 | | Total | $3,531,561 | $3,532,220 | - Most obligations of states and political subdivisions were investment grade, with non-rated municipal bonds secured by Ginnie Mae securities[75](index=75&type=chunk) - Trust preferred securities are non-rated single-issuer securities from bank holding companies, and corporate bonds are primarily issued by banks[75](index=75&type=chunk) [Allowance for Credit Losses for Held to Maturity Debt Securities](index=27&type=section&id=Allowance%20for%20Credit%20Losses%20for%20Held%20to%20Maturity%20Debt%20Securities) The allowance for credit losses for HTM securities was $637 thousand, with no net charge-offs - Valley has a **zero-loss expectation** for U.S Treasury, U.S government agency, residential mortgage-backed (Ginnie Mae, Fannie Mae, Freddie Mac), and collateralized municipal bonds within the HTM portfolio[76](index=76&type=chunk) - Expected credit losses on HTM debt securities with loss expectations are estimated using a **third-party discounted cash flow model**[76](index=76&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Beginning Balance | $633 | $1,131 | $647 | $1,205 | | Provision (credit) for Credit Losses | $4 | $(41) | $(10) | $(115) | | Ending Balance | $637 | $1,090 | $637 | $1,090 | [Note 7. Loans and Allowance for Credit Losses for Loans](index=28&type=section&id=Note%207.%20Loans%20and%20Allowance%20for%20Credit%20Losses%20for%20Loans) This note details the loan portfolio composition, credit risk management, credit quality indicators, and the allowance for credit losses [Loans Portfolio Sales and Transfers to Loans Held for Sale](index=28&type=section&id=Loans%20Portfolio%20Sales%20and%20Transfers%20to%20Loans%20Held%20for%20Sale) Valley primarily sells residential mortgage loans and transferred a $10.2 million non-performing construction loan to held for sale - Valley sells residential mortgage loans originated for sale primarily to **Fannie Mae and Freddie Mac**[80](index=80&type=chunk) - A non-performing construction loan totaling **$10.2 million** (net of $638 thousand charge-offs) was transferred from the held-for-investment portfolio to loans held for sale during the six months ended June 30, 2025[81](index=81&type=chunk) - During the six months ended June 30, 2024, Valley sold its commercial premium finance lending business for **$96.8 million**, resulting in a $3.6 million net gain[81](index=81&type=chunk) [Credit Risk Management](index=29&type=section&id=Credit%20Risk%20Management) Credit policy aims to minimize risk while maximizing income through portfolio diversification and centralized oversight - Valley's credit policy is designed to **minimize credit risk while generating maximum income**, with regular review and approval by management and the Board[83](index=83&type=chunk) - Credit authority for a significant portion of the portfolio is centralized under the **Credit Risk Management Division and Credit Committee**[83](index=83&type=chunk) - Loan portfolio diversification across business sectors and through economic cycles is an important risk management factor, and **crypto assets are not accepted as loan collateral**[83](index=83&type=chunk) [Credit Quality](index=29&type=section&id=Credit%20Quality) Total loans increased to $49.39 billion, with credit quality assessed by aging status and internal risk ratings | Loan Category (in thousands) | June 30, 2025 Total Loans | December 31, 2024 Total Loans | | :--------------------------- | :------------------------ | :---------------------------- | | Commercial and industrial | $10,870,036 | $9,931,400 | | Commercial real estate | $28,825,920 | $29,644,958 | | Residential mortgage | $5,709,971 | $5,632,516 | | Consumer loans | $3,985,493 | $3,590,837 | | Total Loans | $49,391,420 | $48,799,711 | | Loan Category (in thousands) | June 30, 2025 Past Due Loans | June 30, 2025 Non-Accrual Loans | | :--------------------------- | :--------------------------- | :------------------------------ | | Commercial and industrial | $102,519 | $90,973 | | Commercial real estate | $356,157 | $217,672 | | Residential mortgage | $72,532 | $41,099 | | Consumer loans | $22,353 | $4,615 | | Total | $553,561 | $354,359 | - Valley uses an internal loan classification system (**Pass, Special Mention, Substandard, Doubtful, Loss**) for commercial loan portfolio classes, with risk ratings updated as warranted[85](index=85&type=chunk) [Loan modifications to borrowers experiencing financial difficulty](index=35&type=section&id=Loan%20modifications%20to%20borrowers%20experiencing%20financial%20difficulty) Total modified loans were $51.5 million for the first six months of 2025, with most remaining current | Loan Class (in thousands) | 3 Months Ended June 30, 2025 Total | 6 Months Ended June 30, 2025 Total | | :------------------------ | :--------------------------------- | :--------------------------------- | | Commercial and industrial | $8,306 | $15,914 | | Commercial real estate | $7,028 | $35,577 | | Residential mortgage | N/A | N/A | | Total | $15,334 | $51,491 | | Modification Type | 6 Months Ended June 30, 2025 | | :---------------- | :--------------------------- | | Term extension (weighted average in months) | 17 (Commercial & Industrial), 26 (Commercial Real Estate) | | Interest rate reduction (weighted average %) | — (Commercial & Industrial), 5.50 (Commercial Real Estate) | | Principal forgiveness (in thousands) | $17,500 (Commercial Real Estate) | | Payment deferral (weighted average in months) | 6 (Commercial & Industrial), 6 (Commercial Real Estate) | | Loan Class (in thousands) | June 30, 2025 Current | June 30, 2025 90 Days or More Past Due | | :------------------------ | :-------------------- | :----------------------------------- | | Commercial and industrial | $75,699 | $0 | | Commercial real estate | $250,109 | $0 | | Residential mortgage | $1,187 | $95 | | Home equity | $40 | $0 | | Total | $327,035 | $95 | [Loans in process of foreclosure](index=37&type=section&id=Loans%20in%20process%20of%20foreclosure) The OREO balance decreased to $4.8 million, and loans in foreclosure declined to $3.7 million | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | OREO Balance | $4,800 | $12,200 | | Loans in Foreclosure | $3,700 | $4,600 | [Collateral dependent loans](index=37&type=section&id=Collateral%20dependent%20loans) Total collateral-dependent loans were $327.0 million, including $48.6 million in taxi medallion loans - Collateral-dependent loans are written down to the estimated current fair value of the underlying collateral (less estimated selling costs), resulting in an **immediate charge-off** to the allowance for loan losses[101](index=101&type=chunk) | Loan Class (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Commercial and industrial | $114,302 | $131,898 | | Commercial real estate | $177,569 | $156,825 | | Construction | $4,477 | $15,841 | | Residential mortgage | $29,317 | $23,797 | | Home equity | $1,323 | $1,341 | | Total | $326,988 | $329,702 | - Collateral-dependent commercial and industrial loans include **$48.6 million** in non-accrual taxi medallion loans at June 30, 2025[102](index=102&type=chunk) [Allowance for Credit Losses for Loans](index=38&type=section&id=Allowance%20for%20Credit%20Losses%20for%20Loans) The total Allowance for Credit Losses for loans was $594.0 million, with a significantly lower provision compared to the prior year | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Allowance for Loan Losses | $579,500 | $558,850 | | Allowance for Unfunded Credit Commitments | $14,520 | $14,478 | | Total ACL for Loans | $594,020 | $573,328 | | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Provision for Loan Losses | $39,129 | $86,901 | $100,428 | $133,624 | | (Credit) Provision for Unfunded Credit Commitments | $(1,334) | $(4,790) | $42 | $(6,239) | | Total Provision for Credit Losses for Loans | $37,795 | $82,111 | $100,470 | $127,385 | | Loan Category (in thousands) | 6 Months Ended June 30, 2025 Net Charge-offs | 6 Months Ended June 30, 2024 Net Charge-offs | | :--------------------------- | :------------------------------------------- | :------------------------------------------- | | Commercial and industrial | $(50,046) | $(27,590) | | Commercial real estate | $(27,154) | $(30,763) | | Construction | $159 | $30 | | Residential mortgage | $(2,737) | $(2,071) | | Total | $(79,778) | $(60,394) | [Note 8. Goodwill and Other Intangible Assets](index=40&type=section&id=Note%208.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill remained unchanged at $1.87 billion with no impairment, while other intangible assets totaled $114.6 million | Reporting Unit (in thousands) | June 30, 2025 Goodwill | December 31, 2024 Goodwill | | :---------------------------- | :--------------------- | :------------------------- | | Consumer Banking | $78,142 | $78,142 | | Wealth Management | $349,646 | $349,646 | | Commercial Banking | $1,441,148 | $1,441,148 | | Total Goodwill | $1,868,936 | $1,868,936 | - **No goodwill impairment** was recognized during the three and six months ended June 30, 2025, or 2024[109](index=109&type=chunk) | Other Intangible Asset (in thousands) | June 30, 2025 Net | December 31, 2024 Net | | :------------------------------------ | :---------------- | :-------------------- | | Loan servicing rights | $20,640 | $21,128 | | Core deposits | $66,696 | $77,540 | | Other | $27,243 | $29,993 | | Total Other Intangible Assets | $114,579 | $128,661 | [Note 9. Deposits](index=42&type=section&id=Note%209.%20Deposits) Time deposits over $250 thousand increased to $2.5 billion, with the majority of all time deposits maturing in 2025 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Certificates of Deposit over $250k | $2,500,000 | $2,400,000 | | Year | Amount (in thousands) | | :--- | :-------------------- | | 2025 | $6,804,638 | | 2026 | $3,926,972 | | 2027 | $1,529,902 | | 2028 | $578,914 | | 2029 | $28,774 | | Thereafter | $17,681 | | Total Time Deposits | $12,886,881 | [Note 10. Borrowed Funds](index=42&type=section&id=Note%2010.%20Borrowed%20Funds) Short-term borrowings increased while long-term borrowings decreased following the redemption of $115 million in subordinated notes | Borrowing Type (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | **Short-Term Borrowings:** | | | | FHLB advances | $100,000 | $0 | | Securities sold under agreements to repurchase | $62,244 | $72,718 | | Total Short-Term Borrowings | $162,244 | $72,718 | | **Long-Term Borrowings:** | | | | FHLB advances, net | $2,463,604 | $2,526,608 | | Subordinated debt, net | $439,487 | $647,547 | | Total Long-Term Borrowings | $2,903,091 | $3,174,155 | - Valley redeemed **$115 million** of 5.25% fixed-to-floating rate subordinated notes and repaid **$100 million** of 4.55% fixed rate subordinated notes in June 2025[119](index=119&type=chunk) - The early redemption of subordinated notes resulted in a **$922 thousand pre-tax loss** reported in non-interest expense for the second quarter 2025[119](index=119&type=chunk) [Note 11. Stock–Based Compensation](index=43&type=section&id=Note%2011.%20Stock%E2%80%93Based%20Compensation) Total stock-based compensation expense was $13.6 million for the first half of 2025, with $49.6 million in unrecognized expense remaining - Valley's incentive plan allows for awards up to 14.5 million shares, with **6.8 million shares available** as of June 30, 2025[121](index=121&type=chunk) - Performance-based RSUs vest after three years based on tangible book value growth plus dividends and total shareholder return relative to peers; time-based RSUs vest ratably over three years[122](index=122&type=chunk) | Metric (in thousands, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Performance-based RSUs Granted | 0 | 93 | 742 | 958 | | Time-based RSUs Granted | 193 | 571 | 3,077 | 2,987 | | Stock-based Compensation Expense | $6,800 | $7,600 | $13,600 | $15,700 | [Note 12. Derivative Instruments and Hedging Activities](index=44&type=section&id=Note%2012.%20Derivative%20Instruments%20and%20Hedging%20Activities) Derivatives are used to manage interest rate and currency exposures through cash flow, fair value, and non-designated hedges - Valley uses interest rate swaps as **cash flow hedges** to stabilize interest expense and manage interest rate exposure[126](index=126&type=chunk) - **Fair value hedges** are used to manage exposure to changes in the fair value of fixed-rate assets and liabilities, with gains/losses recognized in earnings[127](index=127&type=chunk) | Derivative Type (in thousands) | June 30, 2025 Fair Value (Assets) | June 30, 2025 Fair Value (Liabilities) | June 30, 2025 Notional Amount | | :----------------------------- | :-------------------------------- | :----------------------------------- | :---------------------------- | | Fair value hedge interest rate swaps | $6,469 | $8,830 | $780,322 | | Non-designated interest rate swaps & other contracts | $196,937 | $196,646 | $16,982,940 | | Foreign currency derivatives | $28,616 | $28,445 | $1,942,724 | | Mortgage banking derivatives | $101 | $204 | $44,783 | | Credit default swap | $0 | $50 | $874,898 | | Total Derivative Financial Instruments | $232,123 | $234,175 | $20,625,667 | [Note 13. Balance Sheet Offsetting](index=47&type=section&id=Note%2013.%20Balance%20Sheet%20Offsetting) Master netting arrangements for derivatives and repurchase agreements are in place but not used for financial statement offsetting - Valley is party to **master netting arrangements** for OTC derivatives and repurchase agreements, allowing for single net settlement in case of default[145](index=145&type=chunk) - Despite eligibility, Valley **does not offset assets and liabilities** under these arrangements for financial statement presentation purposes[145](index=145&type=chunk) | Financial Instrument (in thousands) | Gross Amounts Recognized | Net Amounts Presented | Financial Instruments | Cash Collateral * | Net Amount | | :---------------------------------- | :----------------------- | :-------------------- | :-------------------- | :---------------- | :--------- | | **June 30, 2025 Assets:** | | | | | | | Interest rate swaps and other contracts | $203,406 | $203,406 | $92,986 | $(241,945) | $54,447 | | **June 30, 2025 Liabilities:** | | | | | | | Interest rate swaps and other contracts | $205,476 | $205,476 | $(92,986) | $0 | $112,490 | [Note 14. Tax Credit Investments](index=48&type=section&id=Note%2014.%20Tax%20Credit%20Investments) Tax credit investments increased to $380.4 million, generating federal income tax credits and deductions - Valley's tax credit investments, mainly for affordable housing and community development, generate **federal income tax credits and deductions**, reducing income tax expense[148](index=148&type=chunk) | Investment Type (in thousands) | June 30, 2025 Net | December 31, 2024 Net | | :----------------------------- | :---------------- | :-------------------- | | Affordable housing tax credit investments | $27,447 | $22,742 | | Other tax credit investments | $352,928 | $278,468 | | Total Tax Credit Investments | $380,375 | $301,210 | | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Reduction in Income Tax Expense | $12,271 | $7,947 | $24,385 | $15,688 | | Total Amortization of Tax Credit Investments | $9,134 | $5,791 | $18,454 | $11,353 | [Note 15. Operating Segments](index=49&type=section&id=Note%2015.%20Operating%20Segments) Valley operates through Consumer Banking and Commercial Banking segments, with performance assessed by the CEO - Valley manages its business operations under **Consumer Banking and Commercial Banking** segments, with unassigned activities in Treasury and Corporate Other[151](index=151&type=chunk) - The CEO, as CODM, routinely reviews each segment's asset growth, contribution to income before taxes, return on average interest earning assets, and impairment[152](index=152&type=chunk) | Segment (in thousands) | 3 Months Ended June 30, 2025 Income (Loss) Before Income Taxes | 3 Months Ended June 30, 2024 Income (Loss) Before Income Taxes | 6 Months Ended June 30, 2025 Income (Loss) Before Income Taxes | 6 Months Ended June 30, 2024 Income (Loss) Before Income Taxes | | :--------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | | Consumer Banking | $31,829 | $11,991 | $69,136 | $23,565 | | Commercial Banking | $150,147 | $108,272 | $254,374 | $257,641 | | Treasury and Corporate Other | $(8,885) | $(26,932) | $(11,299) | $(58,422) | | Total | $173,091 | $93,331 | $312,211 | $222,784 | [Item 2. Management's Discussion and Analysis (MD&A) of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20(MD&A)%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on financial condition, results of operations, risk factors, and capital adequacy [Cautionary Statement Concerning Forward-Looking Statements](index=52&type=section&id=Cautionary%20Statement%20Concerning%20Forward-Looking%20Statements) Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from expectations - Forward-looking statements are identified by terms like 'intend,' 'expect,' 'believe,' and 'anticipate,' and are not historical facts[161](index=161&type=chunk) - Actual results may differ materially due to factors including **market interest rates, macroeconomic downturns, U.S financial sector instability, regulatory changes, and cybersecurity incidents**[162](index=162&type=chunk) - Valley undertakes **no duty to update** forward-looking statements, and cannot guarantee future results, levels of activity, performance, or achievements[164](index=164&type=chunk) [Critical Accounting Estimates](index=54&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates for credit losses, goodwill, and income taxes involve subjective and complex judgments - Critical accounting policies include the **allowance for credit losses, goodwill and other intangible assets, and income taxes**[165](index=165&type=chunk) - These estimates require subjective and complex judgments due to inherent uncertainties, with potential for materially different amounts under different conditions or assumptions[165](index=165&type=chunk) - **No material changes** in critical accounting policies and estimates have occurred since the date of Valley's Annual Report[165](index=165&type=chunk) [New Authoritative Accounting Guidance](index=54&type=section&id=New%20Authoritative%20Accounting%20Guidance) Note 4 of the consolidated financial statements provides details on new authoritative accounting guidance - Refer to Note 4 of the consolidated financial statements for information on new authoritative accounting guidance, including adoption dates and effects on financial condition and results of operations[166](index=166&type=chunk) [Executive Summary](index=54&type=section&id=Executive%20Summary) Valley strengthened its balance sheet, reduced CRE concentration, and reported significantly increased net income for Q2 2025 | Metric | June 30, 2025 | March 31, 2025 | | :------------------------------------ | :------------ | :------------- | | Total Assets | $62.7 billion | N/A | | Total Net Loans | $48.8 billion | N/A | | Total Deposits | $50.7 billion | $50.0 billion | | Total Shareholders' Equity | $7.6 billion | $7.5 billion | | Commercial Real Estate Loan Concentration Ratio | 349% | 353% | | Allowance for Credit Losses for Loans (% of total loans) | 1.20% | 1.22% | | Liquid Assets | $5.4 billion | $5.1 billion | | Net Income (Q2) | $133.2 million| N/A | | Diluted EPS (Q2) | $0.22 | N/A | - Valley aims for a continued gradual reduction of the CRE loan concentration ratio, maintaining it **below 350%** through December 31, 2025[169](index=169&type=chunk) - The increase in Q2 2025 net income was mainly due to a **$30.7 million increase in net interest income** and a **$44.3 million decrease in provision for credit losses**[170](index=170&type=chunk)[173](index=173&type=chunk) [Deposits and Other Borrowings](index=57&type=section&id=Deposits%20and%20Other%20Borrowings) The cumulative deposit beta stabilized at 51%, while average total deposits increased, driven by time and non-interest bearing deposits - Cumulative deposit beta in the interest rate decrease cycle (June 30, 2024, to June 30, 2025) was **51%**, stabilizing due to the Federal Reserve's decision to hold the target federal funds rate unchanged[177](index=177&type=chunk) | Metric (in thousands) | Q2 2025 Average | Q1 2025 Average | Q2 2024 Average | | :-------------------- | :-------------- | :-------------- | :-------------- | | Total Average Deposits| $49,900,000 | $49,132,200 | N/A | | Average Time Deposits | $12,119,461 | $11,570,758 | $13,311,381 | | Average Non-Interest Bearing Deposits | $11,336,314 | $11,222,562 | $11,223,562 | | Average Short-Term Borrowings | $196,491 | $307,637 | $97,502 | | Average Long-Term Borrowings | $3,146,434 | $3,006,331 | $3,319,195 | - Actual ending deposit balances **increased $759.4 million to $50.7 billion** at June 30, 2025, driven by new promotional retail CD offerings and brokered customer CDs[179](index=179&type=chunk) [Non-GAAP Financial Measures](index=59&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted non-GAAP measures show improvements in profitability and efficiency for the periods ended June 30, 2025 | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income, as reported (GAAP) | $133,167 | $70,424 | $239,225 | $166,704 | | Net Income, as adjusted (non-GAAP) | $134,415 | $71,643 | $240,481 | $171,091 | | Return on Average Assets, as adjusted | 0.87% | 0.47% | 0.78% | 0.56% | | ROATE, as adjusted | 9.71% | 6.05% | 8.74% | 7.25% | | Efficiency Ratio, as adjusted | 55.20% | 59.62% | 55.53% | 59.36% | | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Book Value Per Common Share (GAAP) | $12.89 | $12.67 | | Tangible Book Value Per Common Share (non-GAAP) | $9.35 | $9.10 | - Non-GAAP financial measures provide useful supplemental information for understanding operational performance and facilitating comparisons, but should not be considered in isolation from GAAP measures[185](index=185&type=chunk) [Net Interest Income](index=62&type=section&id=Net%20Interest%20Income) Net interest income and margin improved in Q2 2025, but the full-year growth forecast was revised down to 8-10% | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended March 31, 2025 | 3 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :---------------------------- | :--------------------------- | | Net Interest Income (Tax Equivalent Basis) | $433,675 | $421,378 | $402,984 | | Net Interest Margin (Tax Equivalent Basis) | 3.01% | 2.96% | 2.84% | | Cost of Total Average Deposits | 2.67% | 2.65% | 3.18% | - Net interest income **increased $12.3 million from Q1 2025 and $30.7 million from Q2 2024**, primarily due to higher yields on new loan originations and investment purchases, partially offset by increased interest expense on deposits[191](index=191&type=chunk) - Valley revised its full-year 2025 net interest income growth forecast to **8-10%** (from 9-12%) due to lower anticipated loan growth of 3%[196](index=196&type=chunk) [Quarterly Analysis of Average Assets, Liabilities and Shareholders' Equity and Net Interest Income on a Tax Equivalent Basis](index=64&type=section&id=Quarterly%20Analysis%20of%20Average%20Assets,%20Liabilities%20and%20Shareholders'%20Equity%20and%20Net%20Interest%20Income%20on%20a%20Tax%20Equivalent%20Basis) Average interest-earning assets increased to $57.6 billion in Q2 2025, driven by growth in loans and taxable investments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended March 31, 2025 | 3 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :---------------------------- | :--------------------------- | | Average Interest Earning Assets | $57,553,624 | $56,891,691 | $56,772,950 | | Average Loans | $49,032,637 | $48,654,921 | $50,020,901 | | Average Taxable Investments | $7,350,792 | $7,100,958 | $5,379,101 | | Average Interest Bearing Liabilities | $41,913,735 | $41,230,709 | $41,576,344 | | Average Savings, NOW and Money Market Deposits | $26,451,349 | $26,345,883 | $24,848,266 | | Average Time Deposits | $12,119,461 | $11,570,758 | $13,311,381 | - Average interest earning assets **increased by $661.9 million** in Q2 2025 compared to Q1 2025, mainly due to increases in average loans and taxable investments[192](index=192&type=chunk) - Average interest bearing liabilities **increased by $683.0 million** in Q2 2025 compared to Q1 2025, largely due to an increase in average time deposit balances[193](index=193&type=chunk) [Non-Interest Income](index=66&type=section&id=Non-Interest%20Income) Non-interest income grew year-over-year, driven by higher service charges, capital markets, and BOLI income | Component (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Wealth management and trust fees | $14,056 | $13,136 | $29,087 | $31,066 | | Capital markets | $9,767 | $7,779 | $16,707 | $13,449 | | Service charges on deposit accounts | $14,705 | $11,212 | $27,431 | $22,461 | | Bank owned life insurance| $6,019 | $4,545 | $10,796 | $7,780 | | Total Non-Interest Income| $62,604 | $51,213 | $120,898 | $112,628 | - Capital markets income increased due to **higher volumes of interest rate swap transactions, foreign exchange, and loan syndication transactions**[209](index=209&type=chunk) - Other non-interest income for the six months ended June 30, 2025, decreased by $4.3 million, largely due to a **$3.6 million net gain** from the sale of the commercial premium finance lending business in Q1 2024[212](index=212&type=chunk) [Non-Interest Expense](index=67&type=section&id=Non-Interest%20Expense) Non-interest expense increased year-over-year due to higher salary, professional, and occupancy costs | Component (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Salary and employee benefits expense | $145,422 | $140,815 | $288,040 | $282,646 | | Net occupancy expense | $25,483 | $24,252 | $51,371 | $48,575 | | Technology, furniture and equipment expense | $30,667 | $35,203 | $60,563 | $70,665 | | FDIC insurance assessment| $12,192 | $14,446 | $25,059 | $32,682 | | Amortization of tax credit investments | $9,134 | $5,791 | $18,454 | $11,353 | | Loss on extinguishment of debt | $922 | $0 | $922 | $0 | | Total Non-Interest Expense | $284,122 | $277,497 | $560,740 | $557,807 | - Salary and employee benefits expense increased due to **annual salary merit increases, cash incentive compensation, and increased medical-related expenses**[214](index=214&type=chunk) - Technology, furniture and equipment expense decreased due to a **reduction in software licensing costs** and moderately lower depreciation and telecommunication expenses[216](index=216&type=chunk) [Income Taxes](index=69&type=section&id=Income%20Taxes) The effective tax rate for Q2 2025 decreased to 23.1% due to higher investment in tax credits | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Income Tax Expense | $39,924 | $33,100 | $22,907 | | Effective Tax Rate | 23.1% | 23.8% | 24.5% | - The decrease in the effective tax rate compared to Q2 2024 was primarily due to a **higher level of investment in tax credits**[223](index=223&type=chunk) - The recently enacted OBBBA is not expected to have a material impact on Valley's consolidated financial statements, and the effective tax rate is anticipated to be within the **23-25% range** for the remainder of 2025[225](index=225&type=chunk) [Operating Segments](index=69&type=section&id=Operating%20Segments) Consumer Banking and Treasury segments saw increased income, while Commercial Banking experienced a slight decrease - Valley's operating segments are **Consumer Banking and Commercial Banking**, with unassigned activities grouped under Treasury and Corporate Other[226](index=226&type=chunk) - Segment financial reporting uses internal accounting policies and allocations, which may not be comparable to other financial institutions[226](index=226&type=chunk) | Segment (in thousands) | 6 Months Ended June 30, 2025 Income (Loss) Before Income Taxes | 6 Months Ended June 30, 2024 Income (Loss) Before Income Taxes | | :--------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | | Consumer Banking | $69,136 | $23,565 | | Commercial Banking | $254,374 | $257,641 | | Treasury and Corporate Other | $(11,299) | $(58,422) | | Total | $312,211 | $222,784 | [Consumer Banking Segment](index=71&type=section&id=Consumer%20Banking%20Segment) The segment's income before taxes increased significantly due to higher net interest income and a lower provision for loan losses - Consumer Banking's average interest earning assets **increased $614.1 million** for the six months ended June 30, 2025, primarily due to strong growth in automobile, residential mortgage, and home equity loans[246](index=246&type=chunk) - Income before income taxes for Consumer Banking **increased $45.6 million to $69.1 million** for the six months ended June 30, 2025, driven by higher net interest income and a lower provision for loan losses[247](index=247&type=chunk) - The net interest margin for Consumer Banking **increased 60 basis points to 2.27%** for the six months ended June 30, 2025, due to lower funding costs and higher loan yields[248](index=248&type=chunk) [Commercial Banking Segment](index=72&type=section&id=Commercial%20Banking%20Segment) The segment's income before taxes decreased slightly as a decline in net interest income offset a lower credit loss provision - Average interest earning assets in Commercial Banking **decreased $1.9 billion** for the six months ended June 30, 2025, mainly due to bulk sales of commercial real estate loans and continued repayment activity[250](index=250&type=chunk) - Income before income taxes for Commercial Banking **decreased $3.3 million to $254.4 million** for the six months ended June 30, 2025, primarily due to a decrease in net interest income[251](index=251&type=chunk) - The net interest margin for Commercial Banking **increased 6 basis points to 3.50%** for the six months ended June 30, 2025, driven by a decrease in funding costs, largely offset by a decrease in loan yields[252](index=252&type=chunk) [Treasury and Corporate Other](index=72&type=section&id=Treasury%20and%20Corporate%20Other) The segment's pre-tax loss decreased significantly, driven by increased net interest income from higher investment balances - Average interest earning assets in Treasury and Corporate Other **increased $1.8 billion** for the six months ended June 30, 2025, primarily due to additional purchases of AFS residential mortgage-backed securities[254](index=254&type=chunk) - The pre-tax loss **decreased by $47.1 million to $11.3 million** for the six months ended June 30, 2025, mainly due to a $41.1 million increase in net interest income[255](index=255&type=chunk) - The net interest margin for Treasury and Corporate Other **increased 85 basis points to 1.44%** for the six months ended June 30, 2025, due to a decrease in funding costs and an increase in average investment yields[256](index=256&type=chunk) [ASSET/LIABILITY MANAGEMENT](index=76&type=section&id=ASSET/LIABILITY%20MANAGEMENT) Interest rate risk is actively managed, with a 100 basis point rate decrease projected to reduce net interest income by 2.09% - Valley's Asset/Liability Management Committee manages interest rate risk by matching inherent risk and cash flows of financial assets and liabilities, using strategies like optimizing mortgage originations, product pricing, and balance sheet composition[258](index=258&type=chunk) - A simulation model projects net interest income sensitivity to interest rate movements over a 12-month period, incorporating assumptions on non-maturity deposit betas and prepayment speeds[259](index=259&type=chunk) | Changes in Interest Rates (in basis points) | Estimated Change in Future Net Interest Income (Dollar Change in thousands) | Percentage Change | | :------------------------------------------ | :---------------------------------------------------------- | :---------------- | | +300

Financial Performance - Valley National Bank beat top and bottom line in earnings [1] - Valley National Bank has approximately $63 billion in assets [1] Market Trends & Opportunities - The banking industry is seeing opportunities in stable coins and AI [2] - AI is expected to fundamentally change the entire banking space and consumer behavior [3] - There is an unbelievable amount of opportunity in the banking space and corporate America in general [4] - Loan demand is unbelievably high [4][5] - New loan volume was around 6.78% - 6.80% for the quarter [6] - There is absolute demand for general working capital lines of credit [6] AI Investment & Strategy - Valley National Bank is investing dollars in people to work on AI [4] - Technology partner selection is critical for AI integration [4] - Valley National Bank aims to proactively reach out to customers regarding transactions to improve customer experience [4] Loan Growth - Valley National Bank had $700 million in CNI (Commercial and Industrial) growth in the last quarter, nearly 20% on an annualized basis [5] - Valley National Bank's commercial and industrial loan pipeline is 30% higher [5]

Core Viewpoint - Valley National Bancorp reported strong second-quarter 2025 adjusted earnings per share of 23 cents, exceeding estimates and reflecting a significant year-over-year increase of 76.9% [1][9]. Financial Performance - The company's total revenues reached $496.3 million, marking a 9.3% increase year-over-year and surpassing the Zacks Consensus Estimate of $493.2 million [3][9]. - Net interest income (NII) was $433.7 million, up 7.6% year-over-year, with a net interest margin of 3.01%, expanding by 17 basis points [3]. - Non-interest income rose 22.2% year-over-year to $62.6 million, driven by increases in most fee income components [4]. - Non-interest expenses increased by 2.4% year-over-year to $284.1 million, with adjusted non-interest expenses rising 1.2% to $273.3 million [4]. Asset Quality and Credit Metrics - Total loans as of June 30, 2025, were $49.4 billion, up 1.5% sequentially, while total deposits increased to $50.7 billion, also up 1.5% [5]. - Total non-performing assets were $360.8 million, reflecting a 15.3% year-over-year increase, with the allowance for credit losses as a percentage of total loans at 1.20%, up 14 basis points [6]. Profitability and Capital Ratios - Adjusted annualized return on average assets improved to 0.87%, up from 0.47% in the prior year, while the return on average shareholders' equity rose to 7.15% from 4.24% [7]. - The tangible common equity to tangible assets ratio was 8.63%, an increase from 7.52% year-over-year, and the Tier 1 risk-based capital ratio improved to 11.57% from 9.98% [8].

Core Insights - Valley National Bancorp reported strong earnings for Q2 2025, with both non-GAAP earnings and GAAP revenue exceeding Wall Street estimates, indicating steady momentum in its strategic initiatives [1][5] - The bank's focus on diversifying its lending portfolio away from commercial real estate (CRE) is a key strategic shift aimed at improving risk-adjusted returns [4][6] Financial Performance - Adjusted diluted EPS (non-GAAP) was $0.23, surpassing the expected $0.22, and up 76.9% from Q2 2024 [2][5] - GAAP revenue reached $495.0 million, exceeding estimates by $2.3 million and reflecting a 9.3% increase year-over-year [2][5] - Net interest income rose to $432.4 million, with a net interest margin of 3.01%, up from 2.83% in the previous year [2][5] Loan Portfolio and Growth - Commercial and industrial (C&I) loans grew by $719.8 million, reaching $10.87 billion, representing a 28.4% annualized growth rate [6] - Automobile loans increased by $137.6 million, while commercial real estate loans declined by $288.6 million, reducing their share of the loan portfolio to 58.4% [6][12] Deposits and Funding - Total deposits increased by $759.4 million to $50.7 billion, driven by growth in time deposits [7] - The deposit mix consisted of 23% non-interest bearing accounts, 52% savings and money market products, and 25% time deposits [7] Credit Quality and Risks - There was a notable increase in accruing past due loans, totaling $199.2 million, attributed mainly to three commercial real estate credits [8] - The allowance for credit losses remained steady at $594.0 million, or 1.20% of total loans, while non-accrual loans rose slightly to $354.4 million [8] Efficiency and Capital Position - The bank's efficiency ratio improved to 55.2%, indicating better operating expense efficiency [9] - Capital and regulatory ratios remained strong, even after an early redemption of subordinated notes [9] Strategic Focus and Future Outlook - Valley National Bancorp aims to further diversify its lending portfolio and maintain credit quality stability while managing funding costs [13] - The bank forecasts a net interest margin trend toward 3.05% for the year, with potential increases by Q4 [13]

Valley National (VLY) reported $496.28 million in revenue for the quarter ended June 2025, representing a year-over-year increase of 9.3%. EPS of $0.24 for the same period compares to $0.13 a year ago.The reported revenue represents a surprise of +0.62% over the Zacks Consensus Estimate of $493.23 million. With the consensus EPS estimate being $0.22, the EPS surprise was +9.09%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determ ...

Financial Data and Key Metrics Changes - The company reported net income of $133 million or $0.22 per diluted share, with adjusted net income of $134 million or $0.23 per share, compared to $106 million and $0.18 in the previous quarter, reflecting solid momentum in net interest income and non-interest income [5][15] - Profitability ratios, including return on average assets and return on tangible shareholders' equity, continue to trend higher and are on track to meet full year guidance [6][12] - The company expects approximately 3% loan growth for the year, with net interest income growth estimated at 8% to 10% [15] Business Line Data and Key Metrics Changes - Core deposit growth was $600 million, driven by growth in commercial non-interest bearing deposits and promotional CD offerings [16] - Commercial loan diversification has seen the C&I portfolio grow at a 19% compound annual rate since 2017, with nearly 15% growth over the last twelve months [9][12] - Non-interest income has grown at a 12% annual rate since 2017, with a significant improvement in the composition of that income [11][21] Market Data and Key Metrics Changes - The company added over 105,000 new deposit accounts, contributing to approximately 8% core deposit growth [7] - C&I loan growth was particularly robust, fueled by activity in fund finance and healthcare verticals, contributing roughly 60% of the quarter's net growth in C&I [18][48] - The CRE concentration ratio has declined to 349% from 474% at the end of 2023, surpassing year-end targets ahead of schedule [19] Company Strategy and Development Direction - The company is focused on deposit growth and funding transformation, with a significant reduction in reliance on indirect deposits [7][12] - Strategic imperatives include building durable high-quality fee income and enhancing treasury management offerings [11][12] - The company aims to close the valuation gap through continued execution of its strategy, despite recognizing a disconnect between franchise quality and share valuation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of credit quality and anticipates further normalization in credit metrics [23][36] - The company remains optimistic about the long-term growth potential in its markets, particularly in the healthcare and fund finance sectors [12][40] - Management highlighted the importance of maintaining a balance between organic growth opportunities and potential share buybacks [62] Other Important Information - The company has seen a 51 basis point reduction in average cost of deposits compared to the same period in 2024 [7] - Non-interest expenses grew modestly due to merit-based salary increases and higher incentive accruals, but the efficiency ratio improved to 55.2, the best level since Q1 2023 [22] Q&A Session Summary Question: Can you speak to the ability to maintain deposit pricing given competitive nature and growth outlook? - Management anticipates margin will increase as the year progresses, driven by asset repricing tailwinds and stability on the deposit side [29] Question: What drove the increase in past dues this quarter? - The increase in delinquencies was driven by three credits, with two already cleared and the remaining expected to be resolved soon [50] Question: How is the company adapting to the competitive landscape in the technology and software sector? - The company has built infrastructure and acquired a team to leverage opportunities in the technology sector, particularly with strong connectivity to the Israeli market [39] Question: What is the outlook for loan growth in 2026? - While specific guidance for 2026 has not been provided, management anticipates low single-digit growth in CRE and overall loan growth could be closer to 5% [74]

Financial Data and Key Metrics Changes - The company reported net income of $133 million or $0.22 per diluted share, compared to $106 million and $0.18 in the previous quarter, reflecting solid momentum in net interest income and non-interest income [4] - Adjusted net income was $134 million or $0.23 per share, up from $106 million on both reported and adjusted basis a quarter ago [4] - Profitability ratios, including return on average assets and return on tangible shareholders' equity, continue to trend higher and are on track to meet full year guidance [5] Business Line Data and Key Metrics Changes - Core deposit growth was $600 million, driven by growth in commercial non-interest bearing deposits and promotional CD offerings [14] - Non-interest income has grown at a 12% annual rate since 2017, more than double the pace of peers, with a significant improvement in the composition of that income [9][20] - C&I loan growth was particularly strong, with over $700 million growth, primarily from fund finance and healthcare verticals [50] Market Data and Key Metrics Changes - The company has added over 105,000 new deposit accounts, contributing to approximately 8% core deposit growth [6] - The geographic footprint combined with specialty verticals like healthcare and fund finance has provided flexibility and scale [8] - The CRE concentration ratio has declined to 349% from 474% at the end of 2023, surpassing year-end targets ahead of schedule [17] Company Strategy and Development Direction - The company is focused on deposit growth and funding transformation, with a deliberate investment in talent, technology, and targeted market penetration [6][10] - The strategic imperatives aim to transform Valley into a more diversified, efficient, and valuable institution, with a focus on capital markets, treasury management, and tax credit advisory offerings [10] - The company recognizes a disconnect between the quality of its franchise and the valuation of its shares, believing that continued execution of its strategy will close that gap over time [11] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued net interest margin expansion driven by asset repricing and stable deposit pricing [27][28] - The outlook for loan growth is approximately 3% for the year, with net interest income growth estimates refined to a range of 8% to 10% [13] - Management expressed confidence in the credit outlook, expecting further normalization and a decline in provision and charge-offs throughout the year [22] Other Important Information - The company has grown cumulative tangible book value with dividends over 105% during the CEO's tenure, approximately 15% greater than the peer median [11] - The company remains extremely well capitalized relative to its risk profile, with ample flexibility to support strategic objectives [23] Q&A Session Summary Question: Can you speak to the ability to maintain deposit pricing given competitive nature and growth outlook? - Management anticipates margin will increase as the year progresses, driven by asset repricing and stability on the deposit side [27][28] Question: Can you provide comments about new non-accrual formation in the quarter? - The increase in delinquencies was driven by three credits, with two already cleared and the remaining expected to be resolved soon [51][52] Question: How is the competitive landscape in the technology and software sector affecting the company? - The company has built infrastructure to leverage its position in the technology sector, particularly through the acquisition of a team with strong market connections [39][40] Question: What are the expectations for loan growth in 2026? - While specific guidance for 2026 has not been provided, management anticipates low single-digit growth in CRE and overall loan growth could be closer to 5% [77]

Financial Performance - GAAP reported net income was $1332 million in 2Q25, compared to $1061 million in 1Q25 and $704 million in 2Q24[3] - Non-GAAP adjusted net income was $1344 million in 2Q25, compared to $1061 million in 1Q25 and $716 million in 2Q24[3] - Adjusted pre-provision net revenue (PPNR) increased by 5% quarter-over-quarter and 21% year-over-year[5] - Net Interest Margin (NIM) increased to 301% in 2Q25[13] - The company's efficiency ratio (Non-GAAP) was 552% in 2Q25, compared to 559% in 1Q25 and 596% in 2Q24[3] Balance Sheet Strength - The company is aiming for a Commercial Real Estate (CRE) / Total Risk-Based Capital (TRBC) ratio of less than 350% by the end of 2025[7] - The company is aiming for an Allowance for Credit Losses (ACL) / Loans ratio between 120% and 125% by the end of 2025[8] - The company is aiming for a Loans / Deposits ratio of less than 97% by the end of 2025[10] Strategic Initiatives and Guidance - The company is focused on growing core deposits, further diversifying the loan portfolio, and driving sustainable fee revenue[5] - The company expects gross loan growth of approximately 3% in 2025[21] - The company expects net interest income growth of 8%-10% in 2025, based on a 2024 figure of $1629 million[21]

Valley National (VLY) came out with quarterly earnings of $0.23 per share, beating the Zacks Consensus Estimate of $0.22 per share. This compares to earnings of $0.13 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +4.55%. A quarter ago, it was expected that this holding company for Valley National Bank would post earnings of $0.19 per share when it actually produced earnings of $0.18, delivering a surprise of -5.26%.Over the ...