VALLEY NATIONAL(VLYPP) - 2024 Q4 - Annual Report

FORM 10-K General Information Registrant Information Valley National Bancorp is a New Jersey company with total assets of $62.5 billion, total net loans of $48.2 billion, total deposits of $50.1 billion, and total shareholders' equity of $7.4 billion as of December 31, 2024 | Metric | Amount (USD) | | :--- | :--- | | Total Assets as of December 31, 2024 | $62.5 billion | | Total Net Loans as of December 31, 2024 | $48.2 billion | | Total Deposits as of December 31, 2024 | $50.1 billion | | Total Shareholders' Equity as of December 31, 2024 | $7.4 billion | | Security Class | Trading Symbol | Registered Exchange | | :--- | :--- | :--- | | Common Stock, No Par Value | VLY | Nasdaq Stock Market LLC | | Non-Cumulative Perpetual Preferred Stock, Series A, No Par Value | VLYPP | Nasdaq Stock Market LLC | | Non-Cumulative Perpetual Preferred Stock, Series B, No Par Value | VLYPO | Nasdaq Stock Market LLC | | Non-Cumulative Perpetual Preferred Stock, Series C, No Par Value | VLYPN | Nasdaq Stock Market LLC | - The company is a well-known seasoned issuer and a large accelerated filer[6] - As of June 30, 2024, the aggregate market value of voting stock held by non-affiliates was approximately $3.5 billion[6] - As of February 26, 2025, 560,275,784 shares of common stock were outstanding[7] Documents Incorporated by Reference Certain portions of the company's definitive proxy statement for the 2025 Annual Meeting of Shareholders will be incorporated by reference into Part III, to be filed within 120 days after December 31, 2024 - Certain portions of the 2025 Proxy Statement will be incorporated by reference into Part III, expected to be filed within 120 days after December 31, 2024[9] FORM 10-K TABLE OF CONTENTS Glossary of Defined Terms This report defines common terms to ensure readers clearly understand the specialized financial and regulatory terminology used, such as ACL (Allowance for Credit Losses), AFS (Available-for-Sale), CECL (Current Expected Credit Loss model), and Basel III | Term | Definition | | :--- | :--- | | ACL | Allowance for Credit Losses | | AFS | Available-for-Sale | | Basel III | Capital rules under the global regulatory framework developed by the Basel Committee on Banking Supervision | | BHC Act | Bank Holding Company Act of 1956, as amended | | CECL | Current Expected Credit Loss model | | CET1 | Common Equity Tier 1 Capital | | CRA | Community Reinvestment Act | | FDIC | Federal Deposit Insurance Corporation | | HTM | Held-to-Maturity | | SEC | U.S. Securities and Exchange Commission | | Valley | Refers to Valley National Bancorp or its consolidated subsidiaries | PART I Item 1. Business Valley National Bancorp, a New Jersey-based bank holding company, offers comprehensive commercial, private, retail banking, insurance, and wealth management financial services through its main subsidiary, Valley National Bank | Metric | Amount (USD) | | :--- | :--- | | Total Assets as of December 31, 2024 | $62.5 billion | | Total Net Loans as of December 31, 2024 | $48.2 billion | | Total Deposits as of December 31, 2024 | $50.1 billion | | Total Shareholders' Equity as of December 31, 2024 | $7.4 billion | - Valley National Bancorp provides comprehensive commercial, private, retail banking, insurance, and wealth management financial services, including traditional deposits and loans, commercial real estate financing, asset-based lending, small business loans, equipment financing, residential mortgages, home equity loans, and auto financing; it also offers niche financial services such as homeowners' association, cannabis-related business banking, and venture capital banking services[18] - As of June 30, 2024, Valley ranked 10th among 150 FDIC-insured financial institutions in the New York, Northern New Jersey, and Long Island deposit market, and ranked 6th in New Jersey, 29th in New York, 18th in Florida, 17th in Alabama, and 70th in California[23] General Valley National Bancorp, a New Jersey bank holding company established in 1983, provides extensive financial services through its primary subsidiary, Valley National Bank, operating over 200 branches across multiple states - Valley National Bancorp is a New Jersey corporation, incorporated in 1983, registered as a bank holding company and a financial holding company[17] - As of December 31, 2024, the company's consolidated total assets were $62.5 billion, net loans $48.2 billion, deposits $50.1 billion, and shareholders' equity $7.4 billion[17] - The company offers comprehensive banking solutions through Valley National Bank and its subsidiaries, including traditional deposits and loans, commercial real estate financing, asset-based lending, small business loans, equipment financing, insurance and wealth management, residential mortgages, home equity loans, and auto financing[18] - The company also provides niche financial services such as homeowners' association, cannabis-related business banking, and venture capital banking services[18] - The company operates over 200 branches across New Jersey, New York, Florida, Alabama, California, and Illinois[19] Recent Acquisition Valley completed the acquisition of Bank Leumi Le-Israel Corporation (parent of Bank Leumi USA) on April 1, 2022, involving the issuance of approximately 85 million common shares and a cash payment of $113.4 million - On April 1, 2022, Valley completed the acquisition of Bank Leumi Le-Israel Corporation (Bank Leumi USA)[21] - The acquisition resulted in Valley issuing approximately 85 million shares of common stock and paying $113.4 million in cash[21] - As of April 1, 2022, Bank Leumi Le-Israel B.M. held approximately 14% of Valley's common stock[21] Competition for Deposits, Lending and Other Financial Services Valley National Bank, a leading commercial bank in New Jersey, faces intense competition from various financial and non-financial entities, maintaining its edge through superior customer service, innovative products, and strategic acquisitions - Valley National Bank is the largest commercial bank in New Jersey, with primary markets in northern and central New Jersey, the New York metropolitan area, Florida, and Alabama[23] - As of June 30, 2024, Valley ranked 10th among 150 FDIC-insured financial institutions in the New York, Northern New Jersey, and Long Island deposit market[23] - The company faces intense competition from commercial banks, savings banks, credit unions, money market and mutual funds, mortgage companies, fintech companies, and other diverse competitors[25] - The company maintains competitiveness by offering superior relationship banking services and advice, strong innovative financial products and solutions, and continuously enhancing online and mobile banking products through internal resources and external technology partners[25] Operating Segments Valley's operations are structured into Consumer Banking and Commercial Banking segments, with Treasury and Corporate Other managing unallocated activities, and Wealth Management and Insurance Services reported within Consumer Banking - Valley's business operations are divided into two main segments: Consumer Banking and Commercial Banking[28] - Activities not allocated to operating segments are grouped under Treasury and Corporate Other[28] - The Wealth Management and Insurance Services division is a reporting unit within the Consumer Banking segment, offering asset management advisory, brokerage, trust, personal and property insurance, tax credit advisory services, and international and domestic private banking[28][38] Commercial Banking The Commercial Banking segment primarily provides commercial and industrial loans, along with commercial real estate and construction loans, actively adjusting its portfolio to reduce non-owner-occupied and multi-family residential loans | Loan Type | Balance as of December 31, 2024 (thousand USD) | Percentage of Total Loans (%) | | :--- | :--- | :--- | | Commercial and Industrial Loans | 9,931,400 | 20.4 | | Commercial Real Estate Loans | 26,530,225 | 54.3 | | Construction Loans | 3,114,733 | 6.4 | | Total Commercial Loans | 29,644,958 | 60.7 | - The company's strategic goal is to reduce its Commercial Real Estate (CRE) loan concentration ratio from 362% as of December 31, 2024, to below 350% by December 31, 2025[33] - In 2024, the company actively diversified its loan portfolio by reducing new originations of certain commercial real estate loans, such as non-owner-occupied and multi-family residential loans, and by selling $1.2 billion of performing commercial real estate and construction loans[33] - As of December 31, 2024, commercial real estate loans secured by office buildings totaled approximately $3.1 billion, with a weighted average loan-to-value ratio of 62% and a debt service coverage ratio of 1.76[34] Consumer Banking The Consumer Banking segment focuses on residential mortgage and other consumer loans, including auto, life insurance cash value, and home equity loans, with wealth management and insurance services also integrated | Loan Type | Balance as of December 31, 2024 (thousand USD) | Percentage of Total Loans (%) | | :--- | :--- | :--- | | Residential Mortgage Loans | 5,632,516 | 11.5 | | Other Consumer Loans | 3,590,837 | 7.4 | | Of which: Auto Loans | 1,901,065 | - | | Of which: Home Equity Loans | 604,433 | - | - Residential mortgage loans are primarily concentrated in New Jersey, New York, and Florida, with originations adhering to Fannie Mae and Freddie Mac standards[37] - Other consumer loans primarily include direct and indirect auto loans, life insurance cash value collateralized loans, home equity loans, and lines of credit[37] - The Wealth Management and Insurance Services division offers asset management advisory, brokerage, trust, commercial, personal, and title insurance, tax credit advisory services, and international and domestic private banking services[38] Treasury and Corporate Other The Treasury and Corporate Other segment manages held-to-maturity (HTM) and available-for-sale (AFS) debt securities portfolios for liquidity, handling unallocated revenues and expenses, with total investment securities of $7.0 billion and interest-bearing bank deposits of $1.5 billion as of December 31, 2024 - The Treasury and Corporate Other segment primarily manages HTM and AFS debt securities portfolios for liquidity management[40] | Metric | Amount as of December 31, 2024 (USD) | | :--- | :--- | | Total Investment Securities | $7.0 billion | | Interest-Bearing Bank Deposits | $1.5 billion | Changes in Loan Portfolio Composition As of December 31, 2024, Valley's total loans were $48.8 billion, with approximately 73% in commercial real estate (including construction), residential mortgages, and home equity loans, as the company continued to diversify its portfolio - As of December 31, 2024, Valley's total loans were $48.8 billion, with approximately 73% comprised of commercial real estate (including construction loans), residential mortgages, and home equity loans[41] - In 2024, the company continued its strategy to reduce investor commercial real estate (i.e., multi-family and non-owner-occupied) and construction loans, focusing more on the growth of commercial and industrial loans and owner-occupied commercial real estate loan portfolios[41] | State | Commercial & Industrial (%) | Commercial Real Estate (%) | Residential (%) | Consumer (%) | Total Loans (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | New York | 29 | 29 | 29 | 29 | 29 | | Florida | 27 | 27 | 27 | 27 | 27 | | New Jersey | 22 | 22 | 22 | 22 | 22 | | California | 4 | 4 | 4 | 4 | 4 | | Illinois | 2 | 2 | 2 | 2 | 2 | | Alabama | 1 | 1 | 1 | 1 | 1 | | Other | 15 | 15 | 15 | 15 | 15 | | Total | 100 | 100 | 100 | 100 | 100 | Risk Management Valley's board, through its Risk Committee, oversees an enterprise-wide risk management framework to address credit, asset/liability (including interest rate and liquidity), and operational risks, regularly conducting stress tests and refining policies - The company's primary risks include credit risk, asset/liability management risk (interest rate and liquidity risk), and operational risk (information security and cybersecurity risk)[44] - The Board of Directors, through its Risk Committee, performs risk oversight functions, responsible for overseeing the enterprise-wide risk management framework and risk culture[45] - The company regularly conducts capital position stress tests, including climate-related scenarios, and maintains an overall risk management plan based on the test results[47] Credit Risk Management and Underwriting Approach Valley manages credit risk through stringent policies and underwriting standards, aiming to maximize revenue while minimizing risk, prohibiting negative amortization and subprime loans, and requiring thorough due diligence - The company follows credit policies designed to minimize credit risk and maximize revenue, centrally controlled by the Credit Risk Management Department and the Management Credit Committee[49] - The company prohibits payment option adjustable-rate residential mortgage loans that allow for negative amortization and subprime loans[50] - Loan underwriting standards require obtaining and verifying sufficient financial information to determine the creditworthiness, capital support, repayment ability, collateral support, and character of the borrower or guarantor[51] - Commercial loan renewals, refinancings, and other transactions involving new funds or extended amortization periods typically require new or updated appraisals[55] Loan Renewals and Modifications The company renews existing loans under standard underwriting conditions and may extend, restructure, or modify terms on a case-by-case basis to maintain competitiveness, retain customers, or assist financially distressed clients - The company renews loans at maturity as long as the new loan meets standard underwriting conditions[58] - The company may extend, restructure, or modify existing loan terms to remain competitive, retain profitable customers or help customers facing financial difficulties[58] - Modified loans rarely result in principal or accrued interest forgiveness and typically receive additional collateral or guarantee support[58] Extension of Credit to Past Due Borrowers Loans are typically placed on non-accrual status when 90 days past due and full, timely recovery of principal and interest becomes uncertain, with additional funding generally prohibited unless under specific loss mitigation restructuring plans - Loans are typically placed on non-accrual status when 90 days past due and the full and timely recovery of principal and interest becomes uncertain[59] - The company prohibits providing additional funds to non-accrual loans, except under specific restructuring plans designed to mitigate losses[59] Allowance for Credit Losses The company maintains an Allowance for Credit Losses (ACL) for financial assets under the CECL methodology, encompassing loan loss allowances, unfunded loan commitments, and held-to-maturity (HTM) securities, estimated based on historical events, current conditions, and future forecasts - The company maintains an Allowance for Credit Losses (ACL) for financial assets under the CECL methodology, including allowances for loan losses and unfunded loan commitments, as well as credit losses on HTM securities[60] - ACL estimates are based on historical events, current conditions, and reasonable and supportable future forecasts to assess the collectibility of reported amounts[61] - The CECL methodology includes a collective allowance component for pools of loans with shared risk characteristics and an individual allowance component for loans not sharing risk characteristics, such as collateral-dependent loans[61] Loans Originated by Third Parties The company purchases certain commercial loans, loan participations, and residential mortgages originated by other financial institutions to manage liquidity, meet CRA requirements, and execute asset/liability management strategies - The company purchases commercial loans, loan participations, and residential mortgage loans originated by other financial institutions[63] - Decisions to purchase loans are based on current loan origination volumes, market interest rates, excess liquidity, meeting CRA credit needs, and asset/liability management strategies[63] | Loan Type | Amount as of December 31, 2024 (thousand USD) | Percentage of Total Commercial/Residential Mortgage Loans (%) | | :--- | :--- | :--- | | Purchased Commercial Loans | 2,200,000 | 5.3 | | Purchased Residential Mortgage Loans | 516,700 | 9.2 | - As of December 31, 2024, less than 1.0% of third-party originated commercial loans were 30 days or more past due, while 3.4% of residential mortgage loans were 30 days or more past due[65] Human Capital Valley fosters an inclusive, high-performance culture, attracting and retaining talent through competitive compensation, comprehensive benefits, work-life balance support, and continuous career development opportunities - As of December 31, 2024, Valley had 3,732 full-time and part-time employees, with a voluntary turnover rate of 13.5% and an average tenure of 7.1 years[66] - The company offers a competitive total rewards program, including base salary, performance bonuses, equity awards, 401(k) plans, health benefits, paid time off, remote work arrangements, and parental leave[68][70] - The company promotes internal mobility and career development through programs such as Business Resource Groups (BRG Program), leadership development, certifications, and mentorship initiatives[67][71] Corporate Social and Environmental Responsibility Recognizing its societal and environmental impact, Valley established an ESG Committee in 2020 to guide its social responsibility efforts while pursuing long-term strategic goals, with further details to be disclosed in the 2025 Proxy Statement - Valley established an ESG Committee in 2020 to guide how environmental, social, and governance issues impact its ability to achieve long-term strategies and fulfill social responsibilities[72] - Further information regarding the company's human capital management and corporate social and environmental responsibility will be disclosed in the 2025 Proxy Statement[73] Information about our Executive Officers This section lists Valley National Bancorp's executive officers, their ages, tenure, positions, and primary occupations over the past five years as of December 31, 2024 | Name | Age as of December 31, 2024 | Tenure | Position | Principal Occupations for the Past Five Years (Excluding Valley) | | :--- | :--- | :--- | :--- | :--- | | Ira Robbins | 50 | 2009 | Chairman and Chief Executive Officer | - | | Thomas A. Iadanza | 66 | 2015 | President | - | | Russell Barrett | 49 | 2024 | Senior Executive Vice President, Chief Operating Officer | 2013-2020 Managing Director, BNP Paribas | | Joseph V. Chillura | 58 | 2020 | Senior Executive Vice President, President of Commercial Banking | - | | John P. Regan | 61 | 2024 | Senior Executive Vice President, Chief Risk Officer | 2016-2022 Chief Audit Executive, Investors Bancorp, July 2022-March 2024 Chief Audit Executive, Industrial and Commercial Bank of China | | Travis Lan | 40 | 2023 | Executive Vice President, Interim Chief Financial Officer | 2016-2020 Director, Investment Banking, Keefe, Bruyette & Woods, Inc. | | Yvonne M. Surowiec | 64 | 2017 | Senior Executive Vice President, Chief Human Resources Officer | - | | Mitchell L. Crandell | 54 | 2007 | Executive Vice President, Chief Accounting Officer | - | | Mark Saeger | 60 | 2018 | Executive Vice President, Chief Credit Officer | - | Available Information The company provides annual, quarterly, and current reports, along with amendments, codes of conduct, committee charters, and corporate governance guidelines, via the SEC and its own website, which also serves for disclosing material non-public information - The company provides Form 10-K, 10-Q, 8-K reports and amendments on www.sec.gov and **www.valley.com**[76](index=76&type=chunk) - The company's website also provides its Code of Conduct, Audit Committee Charter, Compensation and Human Capital Management Committee Charter, Nominating, Governance and Corporate Sustainability Committee Charter, and Corporate Governance Guidelines[76] - The company uses its website to disseminate corporate information, including as a means of disclosing material non-public information and for complying with Regulation FD[78] SUPERVISION AND REGULATION The banking industry is heavily regulated by federal and state authorities, requiring Valley National Bancorp and its subsidiaries to comply with numerous laws and regulations, including the BHC Act, Basel III, Dodd-Frank, BSA/AML, OFAC, and CFPB, with increasing compliance costs and potential penalties for non-compliance - The banking industry is heavily regulated by federal and state regulatory agencies, primarily to protect FDIC-insured deposits, consumers, the stability of the U.S. banking and financial system, and the health of the national economy[79] - Regulation and supervision increase the operating costs of bank holding companies and limit management's options for deploying assets and maximizing income[80] - Violations of laws and regulations or deficiencies in risk management practices can lead to downgraded regulatory ratings, which may restrict the company's acquisition or expansion activities and increase regulatory scrutiny[80] Bank Holding Company Regulation Valley, as a bank and financial holding company, is supervised by the Federal Reserve Board and subject to the BHC Act, allowing non-banking activities of a financial nature but requiring good capital and management, and CRA compliance - Valley is a bank holding company and a financial holding company as defined by the Bank Holding Company Act (BHC Act), supervised by the Federal Reserve Board[83] - The BHC Act restricts bank holding companies from acquiring voting shares of non-banking companies and engaging in non-banking activities, but financial holding companies can engage in a broader range of financial activities[84][85] - To maintain financial holding company status, Valley and its bank must remain well-capitalized and well-managed, and comply with CRA obligations[85] - Valley is legally required to serve as a source of managerial and financial strength for its bank subsidiaries[87] Regulation of Bank Subsidiary Valley National Bank is supervised by the OCC and adheres to various laws and regulations, including capital requirements, reserve maintenance, lending and investment limits, and consumer protection, with Federal Reserve Act sections 23A and 23B restricting funding to affiliates - Valley National Bank is supervised by the Office of the Comptroller of the Currency (OCC) and is subject to periodic examinations[88] - Laws and regulations applicable to Valley and the Bank impose restrictions and requirements in various areas, including capital requirements, reserve maintenance, establishment of new offices, lending and investments, consumer protection, employment practices, bank acquisitions, and entry into new business types[88] - Sections 23A and 23B of the Federal Reserve Act limit the extent to which the Bank can provide funds to Valley or its non-bank subsidiaries[88] Capital Requirements Valley and its bank must comply with Basel III capital requirements, including minimum ratios for Common Equity Tier 1 (CET1), Tier 1, and Total Capital to risk-weighted assets, plus a 2.5% capital conservation buffer, with all ratios exceeding "well-capitalized" minimums as of December 31, 2024 - Valley and its bank must comply with Basel III rules, including minimum capital ratios for CET1, Tier 1, and Total Capital to risk-weighted assets, as well as a leverage ratio of Tier 1 Capital to average consolidated assets[89][91] - The company must also maintain a 2.5% 'capital conservation buffer', resulting in effective minimum ratios of 7.0% for CET1, 8.5% for Tier 1, and 10.5% for Total Capital to risk-weighted assets[89] | Capital Ratio | Minimum Requirement (%) | | :--- | :--- | | Common Equity Tier 1 (CET1) to Risk-Weighted Assets | 4.5 | | Tier 1 Capital to Risk-Weighted Assets | 6.0 | | Total Capital to Risk-Weighted Assets | 8.0 | | Tier 1 Capital to Average Consolidated Assets (Leverage Ratio) | 4.0 | - As of December 31, 2024, Valley and its bank's capital ratios exceeded the minimum requirements for 'well-capitalized' financial institutions[96] - Under the CECL Day 1 impact deferral provisions, approximately $35.5 million of deferred amounts were recognized as a reduction in regulatory capital as of December 31, 2024, decreasing risk-weighted capital ratios by approximately 9 basis points[94] Prompt Corrective Action The FDICIA mandates federal bank regulators to implement "prompt corrective actions" for FDIC-insured institutions failing capital adequacy standards, including restrictions on capital distributions or asset growth, with Valley National Bank classified as "well-capitalized" in 2024 and 2023 - FDICIA requires federal bank regulators to take 'prompt corrective actions' against FDIC-insured depository institutions that fail to meet capital adequacy standards[95] - Failure to meet 'well-capitalized' or minimum capital requirements can lead to mandatory and discretionary regulatory actions, including restrictions on dividend payments or capital distributions[90][93] - As of December 31, 2024, and 2023, Valley National Bank's capital ratios exceeded the minimum levels required to be considered a 'well-capitalized' financial institution[96] Resolution Planning The FDIC requires insured depository institutions with over $50 billion in total assets to submit periodic resolution plans, with Valley National Bank, under revised 2024 rules, needing to submit an information filing every three years, with its first due by October 1, 2025 - The FDIC requires insured depository institutions with total assets exceeding $50 billion to submit periodic resolution plans[97] - Under rules revised in June 2024, institutions with total assets between $50 billion and $100 billion (including Valley National Bank) must submit an information filing every three years, with supplemental filings updating key information in non-filing years[97] - The final rule became effective on October 1, 2024, and Valley National Bank's first information submission is due by October 1, 2025[97] The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) The Dodd-Frank Act significantly reshaped banking regulation, impacting financial institutions' lending, deposits, investments, and operations, with the Durbin Amendment imposing debit card transaction fee limits and the Federal Reserve proposing further reductions - The Dodd-Frank Act significantly changed the banking regulatory landscape, affecting financial institutions' lending, deposits, investments, trading, and operational activities[98] - Under the Durbin Amendment, banks with assets exceeding $10 billion are subject to maximum interchange fees for debit card transactions, and the Federal Reserve Board has proposed further reducing this fee[99][100] - Although the company is no longer subject to the stress testing requirements of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), it still conducts internal stress tests based on safety and soundness principles[101] Volcker Rule The Volcker Rule prohibits insured depository institutions and their affiliates from engaging in certain short-term "proprietary trading" and restricts investments in or sponsorship of "covered funds," with exemptions for market-making, hedging, and underwriting - The Volcker Rule prohibits insured depository institutions and their affiliates from engaging in certain short-term 'proprietary trading' activities and restricts investments in or sponsorship of certain types of 'covered funds'[102] - The rule includes exemptions for market-making, hedging, underwriting, and trading in U.S. government and agency debt, and permits retaining ownership interests in certain covered funds under specific conditions[102] Incentive Compensation Federal banking agencies have issued joint guidance on incentive compensation to prevent imprudent risk-taking, and while final Dodd-Frank rules are pending, the company ensures its incentive compensation plans do not encourage undue risk - Federal banking agencies have issued joint guidance on incentive compensation, aiming to ensure that banking institutions' incentive compensation policies do not encourage imprudent risk-taking[103] - The Dodd-Frank Act required federal banking agencies to issue incentive compensation rules, but final rules have not been issued as of the date of this report[104] - The company has strived to ensure its incentive compensation plans do not encourage undue risk, in line with the aforementioned principles[104] Dividend Limitations Valley's income primarily derives from its bank subsidiaries' dividends, which are subject to regulatory restrictions, including limits on total annual dividends based on net profits and retained earnings, with regulators empowered to prohibit unsafe or unsound payments - Valley's income primarily comes from dividends from its bank subsidiaries, and bank dividend payments are subject to regulatory restrictions[105] - Under the National Bank Act, without consent, the total dividends declared by a national bank in any year cannot exceed the sum of its net profits for that year and its retained net profits for the preceding two years[105] - Bank regulators have the authority to prohibit the payment of dividends that are unsafe or unsound[105] Transactions by the Bank with Related Parties Valley National Bank extends credit to its directors, executive officers, and 10% shareholders (insiders) and their controlled entities, governed by the National Bank Act, Sarbanes-Oxley Act of 2002, and Federal Reserve Board Regulation O, requiring terms substantially similar to non-affiliated transactions - Valley National Bank extends credit to its directors, executive officers, and 10% shareholders (insiders) and entities they control, subject to the National Bank Act, the Sarbanes-Oxley Act of 2002, and Federal Reserve Board Regulation O[106] - Credit extended to insiders must be on substantially the same terms as non-affiliated transactions and not involve a higher than normal risk of repayment[106] Community Reinvestment The Community Reinvestment Act (CRA) obligates national banks to meet the credit needs of their entire communities, including low- and moderate-income areas, consistent with safe and sound operations, with Valley National Bank receiving an "Outstanding" CRA rating in its 2021 review - Under the CRA, national banks have a continuing and affirmative obligation to meet the credit needs of their entire communities, including low- and moderate-income communities, consistent with safe and sound operations[107] - Valley National Bank in its most recent 2021 review received an 'Outstanding' CRA rating[108] - Federal banking agencies finalized rules in October 2023 to revise CRA implementing regulations, establishing tailored assessment frameworks based on bank size and business model, and implementing separate evaluations for retail lending, retail services and products, community development financing, and community development services for banks with total assets exceeding $10 billion[109] Bank Secrecy Act (BSA)/USA PATRIOT Act Valley National Bank is subject to BSA reporting and record-keeping requirements, necessitating an Anti-Money Laundering (AML) program, with the AML Act of 2020 further expanding regulatory demands, and federal agencies proposing revised AML/CFT program requirements in July 2024 - Valley National Bank is subject to the reporting and record-keeping requirements of the Bank Secrecy Act (BSA) and its implementing regulations, requiring an Anti-Money Laundering (AML) program[110] - The AML Act of 2020 amended the BSA, requiring FinCEN to update and expand regulatory requirements, which may impact banks' compliance obligations[110] - Regulators strictly enforce AML and suspicious activity reporting requirements, and non-compliance can lead to penalties and business restrictions[112] - Federal banking agencies proposed revisions to AML/CFT program requirements in July 2024, and FinCEN extended AML obligations to registered investment advisers in August 2024[113] OFAC Regulation The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign countries and regimes, requiring the company and its bank to freeze accounts, prohibit unauthorized transactions, and report frozen activities - OFAC administers and enforces economic and trade sanctions against targeted foreign countries and regimes[114] - The company and its bank are responsible for freezing accounts and transactions of such targets and countries, prohibiting unauthorized trade and financial transactions, and reporting frozen transactions[115] - Failure to comply with these sanctions can lead to severe legal and reputational consequences, including regulators not approving or prohibiting merger and acquisition transactions[115] Consumer Financial Protection Bureau Supervision Valley National Bank is extensively regulated by the CFPB across various consumer financial products and services, with the CFPB empowered to examine and enforce consumer financial laws, prevent unfair practices, and potentially use disparate impact analysis for anti-discrimination laws - Valley National Bank is subject to extensive regulation by the Consumer Financial Protection Bureau (CFPB), covering deposit products, credit cards, mortgages, auto, student, and other consumer loans, and other consumer financial products and services[116] - The CFPB has the authority to examine and enforce consumer financial laws and prevent unfair, deceptive, or abusive acts or practices[116] - The CFPB may use disparate impact analysis to enforce anti-discrimination lending laws, where even unintentional actions can have adverse effects[117] - In December 2024, the CFPB issued a final rule revising Regulation Z, requiring overdraft credit offered by financial institutions with assets exceeding $10 billion to comply with certain consumer protection provisions, effective October 1, 2025[118] Insurance of Deposit Accounts Valley National Bank's deposits are FDIC-insured up to $250,000 per account ownership type, with FDIC implementing risk-based premiums and a special assessment in November 2023 totaling $59.1 million for Valley National Bank to cover 2023 bank failures - Valley National Bank's deposits are insured by the FDIC, typically up to $250,000 per account ownership type[121] - The FDIC implements a risk-based deposit premium assessment system, determining assessment rates based on supervisory ratings, regulatory capital levels, and other factors[121] - To cover losses from 2023 bank failures, the FDIC implemented a special assessment in November 2023; Valley National Bank's total special assessment was $59.1 million, resulting in pre-tax charges of $50.3 million, $7.4 million, and $1.4 million in the fourth quarter of 2023, first quarter of 2024, and second quarter of 2024, respectively[123] Federal Securities Laws Valley's common stock is registered with the SEC under the Securities Exchange Act, subjecting the company to disclosure, proxy solicitation, insider trading, and other requirements and restrictions - Valley's common stock is registered with the SEC under the Securities Exchange Act[124] - The company must comply with disclosure, proxy solicitation, insider trading, and other requirements and restrictions under the Securities Exchange Act[124] Broker-Dealer and Securities Regulation Valley's broker-dealer subsidiary, VFM, is regulated by federal and state securities laws and self-regulatory organizations like FINRA, covering sales practices, client funds, net capital, record-keeping, and privacy, also adhering to Regulation Best Interest for retail clients - Valley's broker-dealer subsidiary, VFM, is regulated by federal securities laws, state securities commissions, and self-regulatory organizations such as FINRA[125] - VFM must comply with Regulation Best Interest, requiring broker-dealers and investment advisers to act in the 'best interest' of retail customers when providing recommendations[126] - The SEC and FINRA have active enforcement functions and can impose fines, restrict activities, or disqualify individuals for violations[127] Investment Advisers Act VFM and Valley Wealth Managers, Inc., as registered investment advisers, are subject to the Investment Advisers Act and SEC rules, covering record-keeping, operational and marketing requirements, disclosure obligations, fiduciary duties, and prohibitions against fraudulent activities - VFM and Valley Wealth Managers, Inc. are registered investment advisers, subject to the Investment Advisers Act and SEC rules and regulations[128][129] - Regulatory scope includes record-keeping, operational and marketing requirements, disclosure obligations, fiduciary duties, and prohibitions against fraudulent activities[129] - Non-compliance with the Investment Advisers Act or other federal and state securities laws and regulations can lead to investigations, sanctions, fines, and reputational damage[129] Insurance regulation Valley's insurance agency subsidiaries, Valley Insurance Services, Inc. and VFM, are subject to state-level insurance regulation, requiring compliance with multi-state regulatory and licensing requirements, managed through internal monitoring and third-party vendors - Valley's insurance agency subsidiaries, Valley Insurance Services, Inc. and VFM, are subject to state-level insurance regulation, requiring compliance with multi-state regulatory and licensing requirements[130] - The company ensures compliance through internal monitoring and third-party vendors, focusing on relevant requirements and emerging regulatory issues[130] Prohibitions Against Tying Arrangements Banks are prohibited by 12 U.S.C. Section 1972 from certain tying arrangements, meaning a depository institution cannot offer credit or other services conditional on a customer obtaining additional services from it or its affiliates, or not obtaining services from a competitor - Depository institutions are prohibited from offering credit or any other service conditional on a customer obtaining additional services from that institution or its affiliates, or not obtaining services from a competitor[131] Data Privacy and Cybersecurity Regulation The company collects, uses, stores, and discloses personal information, subjecting it to federal, state, and local data privacy and cybersecurity laws, including GLBA and CCPA, with federal regulators requiring reporting of significant cybersecurity incidents within 36 hours - The company is subject to federal, state, and local laws and regulations, including the Gramm-Leach-Bliley Act (GLBA) and the California Consumer Privacy Act (CCPA), concerning data privacy and cybersecurity[132][133] - Federal banking regulators require banking organizations to notify their primary federal regulator within 36 hours of a cybersecurity incident that could materially disrupt or degrade service capabilities, jeopardize critical operations, or affect financial stability[132] - The New York State Department of Financial Services (NYDFS) issued 'Cybersecurity Requirements for Financial Services Companies', requiring regulated entities to establish and maintain cybersecurity programs[134] - The CFPB issued a final rule in October 2024, requiring data providers to make certain transaction, account, and payment information available to consumers and authorized third parties to facilitate 'open banking', with depository institutions having assets between $10 billion and $250 billion required to comply by April 1, 2027[135][136] - The SEC finalized amendments to Regulation S-P in May 2024, requiring broker-dealers, investment companies, and registered investment advisers to develop incident response plans and notify affected individuals within 30 days[137] Item 1A. Risk Factors The company faces diverse risks, including economic shifts (interest rates, inflation, bank failures), business model challenges (CRE concentration, deposit attrition, cannabis business, goodwill impairment, competition), industry-specific issues (AML compliance, credit losses, NPAs, dividend limits), and operational, financial, and regulatory complexities (liquidity, CECL volatility, internal control failures, natural disasters, acquisition risks, compliance costs, consumer protection, accounting changes, litigation) - Changes in the economic environment, including interest rate fluctuations, financial market instability, inflationary pressures, and geopolitical conflicts, can significantly impact the company's loan production, net interest income, securities portfolio value, and allowance for credit losses[140] - A significant portion of the company's loan portfolio is secured by commercial real estate, and adverse events in the real estate market could affect asset quality and profitability[147] - The company faces intense competition from large financial service providers, digital fintech startups, and other competitors with advanced technological capabilities[155][156] - The company is subject to extensive federal and state regulation, incurring high compliance costs, and regulatory changes could adversely affect its business, financial condition, and results of operations[192] - Cybersecurity incidents and information system disruptions could expose the company to liability, losses, and escalating operational costs[199] - The company's use of artificial intelligence (AI) tools and third-party vendors' adoption of AI may increase the risk of errors, omissions, unfair treatment, or fraudulent activities[208] Risks Related to the Operating Environment The company's financial performance is vulnerable to economic shifts like interest rate changes, inflation, and geopolitical instability, as well as the repercussions of bank failures, potentially leading to increased credit losses, reduced interest income, and reputational damage - Changes in the economic environment, including interest rate fluctuations, financial market volatility, geopolitical instability, or conflicts, could adversely affect the company's financial performance and condition[140] - Inflationary pressures and rising market interest rates could lead to a decrease in the value of investment securities and increase business operating costs[141] - The 2023 bank failures led to significant capital market volatility, decreased bank security valuations, and may continue to impact customer confidence in the banking system[143] - The FDIC's special assessment to address recent bank failures resulted in pre-tax charges of $8.8 million and $50.3 million for the company in 2024 and 2023, respectively[145] Risks Associated with Our Business Model The company's business model faces risks from high commercial real estate loan concentration, reduced low-cost deposits, legal and regulatory challenges in cannabis banking, potential goodwill impairment, inability to compete with fintech, and failure to execute growth strategies - As of December 31, 2024, commercial real estate loans (including construction loans) constituted 60.7% of the company's loan portfolio, and adverse events in the real estate market could impact asset quality and profitability[147] - The loss or reduction of low-cost deposit sources, or the inability to achieve deposit retention goals, could adversely affect the company's net interest income and net income[150][151] - The company provides deposit services to the state-licensed cannabis industry, which may expose it to risks of federal prosecution or other regulatory sanctions[152][153] - The company may incur goodwill impairment in the future; as of December 31, 2024, total goodwill was $1.9 billion[154] - The company faces intense competition from large and diversified financial service providers, digital fintech startups, and other competitors with advanced technological capabilities[155][156] - The company's ability to attract, develop, and retain key talent is crucial for its success, and a competitive labor market could lead to talent loss and increased costs[166][167] - ESG matters could adversely affect the company's reputation, business, financial condition, and results of operations, as well as its stock price[168][169] - Climate change and severe weather could adversely affect the company's operations, business, and customers, especially given its primary markets are in coastal regions[170][171] Risks Related to Our Industry The banking industry faces risks from interest rate changes impacting net interest income, AML non-compliance leading to penalties, increased credit losses requiring higher allowances, rising non-performing assets reducing income, and regulatory restrictions on dividend payments - Interest rate changes could reduce the company's net interest income and profitability, as net interest income is the difference between interest earned and interest paid, influenced by economic conditions, competition, and Federal Reserve Board policies[173] - Failure to adequately or timely detect money laundering and other illegal or improper activities could expose the company to additional liabilities and significantly adversely affect it[174][175] - Higher charge-offs and weak credit conditions may require the company to further increase its allowance for credit losses through expense provisions[176][177] - An increase in non-performing assets could reduce the company's interest income and increase net loan charge-offs, loan loss allowances, and operating expenses[178] - The company may need to negotiate with the Federal Reserve Board to declare common stock cash dividends, which could ultimately delay, reduce, or cancel such dividends and adversely affect the market price of common stock[179][180] General Commercial, Operational, Financial and Regulatory Risks The company faces risks including inadequate liquidity management, CECL model volatility, internal control failures, natural disasters, limited acquisition opportunities, rising regulatory costs, accounting policy changes, consumer protection compliance, and litigation claims - The company may be unable to adequately manage liquidity risk, which could affect its ability to meet obligations on time, seize growth opportunities, pay regular common stock dividends, and generate sufficient profitability[181][184] - The CECL model used to determine the allowance for credit losses may increase the volatility of credit loss allowances and profitability[185] - The company's controls and procedures may fail or be circumvented, which could have a significant adverse effect on its business, results of operations, and financial condition[186][187] - Natural disasters, pandemics, acts of terrorism, and other catastrophic events could adversely affect the company's operations, business, and customers[189][190] - The company's ability to pursue opportunistic acquisitions is limited by significant risks, including the risk that regulators may not provide required approvals[191] - Extensive regulation and supervision negatively impact the company's ability to compete cost-effectively and may expose it to significant compliance costs and penalties[192] - The company is subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could result in various sanctions[195] - Changes in accounting policies or accounting standards could cause the company to report its financial performance and condition in an unfavorable manner and may subject it to additional costs and expenses[196][197] - Claims and litigation could result in significant expenses, losses, and reputational damage[198] Technology Risks The company faces cybersecurity incidents and information system disruptions, leading to potential liabilities and rising operational costs, exacerbated by increasingly sophisticated threats and the proliferation of AI, alongside evolving data privacy regulations and AI tool adoption risks - Cybersecurity incidents and information system disruptions could expose the company to liability, losses, and escalating operational costs[199] - Cybersecurity risks are increasing in complexity due to the proliferation of new technologies (including AI) and the activities of threat actors (such as criminal organizations, hacktivists, and nation-states)[199] - The company faces complex and evolving data privacy and cybersecurity laws, regulations, rules, standards, and contractual obligations, which could increase operating costs, compliance risks, and potential liabilities[203] - The company's adoption of artificial intelligence (AI) tools and third-party vendors' adoption of AI may increase the risk of errors, omissions, unfair treatment, or fraudulent activities[208] - The company may need to invest significant resources to comply with the evolving AI legal and regulatory environment and may need to alter products or business practices or limit the use of AI[210] Risks Related to an Investment in Our Securities Investing in the company's securities carries risks, including potential reductions or cancellations of common stock cash dividends, subsidiaries' inability to pay dividends affecting the company's distributions, dilution from future acquisitions, and adverse impacts on stock price from future equity or debt issuances - The company may reduce or cancel common stock cash dividends, which could adversely affect the market price of common stock[211] - If subsidiaries are unable to pay dividends or make distributions to the company, the company may be unable to pay dividends to preferred and common shareholders or interest on long-term borrowings and subordinated debt issued to capital trusts[212] - Future acquisitions could dilute shareholder value, particularly tangible book value per share[213] - Future issuances of common stock, preferred stock, debt, or other securities could adversely affect the market price of the company's stock and dilute existing shareholders' holdings[214] Item 1B. Unresolved Staff Comments There are no unresolved staff comments in this report - No unresolved staff comments[215] Item 1C. Cybersecurity The company implements an enterprise-wide information security program, guided by the NIST framework and overseen by the Board's Risk Committee, to identify, assess, and manage significant cyber and information security risks through threat identification, technical safeguards, third-party risk management, employee training, and incident response - The company implements an enterprise-wide information security program designed to identify, assess, and manage significant cyber and information security risks and threats, utilizing the National Institute of Standards and Technology (NIST) framework[216] - The Board of Directors, through its Risk Committee, has primary oversight responsibility for cyber and information security risks and has established a dedicated Cyber and Technology Risk Subcommittee[217][220] - The company's cyber and information security risk management framework and strategy focus on identifying, protecting, and detecting threats, deploying technical safeguards, managing third-party risks, conducting employee education and awareness training, and developing incident response and recovery plans[223][224][225][226][228] - The company regularly engages external consultants to assess the effectiveness of its cybersecurity measures and reports assessment results to the Risk Committee and the Board of Directors[229] - To date, cybersecurity threats have not had a material impact on the company, but there is no guarantee that future incidents will not occur that could have a significant adverse effect[230] Item 2. Properties The company operates 229 retail banking centers across multiple states, with 96 owned and the remainder leased, primarily concentrated in New Jersey, New York, and Florida, and its headquarters relocated to a leased location in Morristown, New Jersey, in Q3 2023 - The company operates 229 retail banking centers in northern and central New Jersey, Manhattan, Brooklyn, and Queens in New York City, Long Island, Westchester County, New York, Florida, Alabama, California, and Illinois[231] - The company owns 96 banking center facilities and several non-branch operating facilities, with the remaining properties leased[231] | State | Number of Leased Banking Centers | Number of Owned Banking Centers | Total Number of Banking Centers | Percentage of Total (%) | | :--- | :--- | :--- | :--- | :--- | | New Jersey | 68 | 59 | 127 | 55.5 | | New York | 31 | 10 | 41 | 17.9 | | Florida | 26 | 15 | 41 | 17.9 | | Alabama | 4 | 12 | 16 | 7.0 | | California | 3 | — | 3 | 1.3 | | Illinois | 1 | — | 1 | 0.4 | | Total | 133 | 96 | 229 | 100.0 | - The company's headquarters relocated to a leased location in Morristown, New Jersey, in the third quarter of 2023[233] Item 3. Legal Proceedings The company is involved in various legal proceedings and claims in the ordinary course of business, which management believes will not materially impact its financial condition, results of operations, or liquidity - The company is involved in various pending legal proceedings and claims in the ordinary course of business[236] - Management believes that the outcome of these proceedings and claims will not have a material adverse effect on the company's financial condition, results of operations, or liquidity[236] Item 4. Mine and Safety Disclosures This item is not applicable - Not applicable[237] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Global Select Market, with 6,537 registered shareholders as of December 31, 2024, paying a $0.11 quarterly cash dividend in 2024, and a new stock repurchase plan authorizing up to 25 million common shares until April 26, 2026 - The company's common stock trades on the Nasdaq Global Select Market under the symbol 'VLY'[239] - As of December 31, 2024, there were 6,537 registered shareholders[239] - A $0.11 cash dividend was paid quarterly in 2024[240] - The company announced a new stock repurchase plan on February 21, 2024, authorizing the repurchase of up to 25 million shares of common stock, effective until April 26, 2026[245] | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Total Shares Purchased as Part of Publicly Announced Plan | Maximum Number of Shares Remaining to be Purchased Under Plan | | :--- | :--- | :--- | :--- | :--- | | October 1 to October 31, 2024 | 27,552 | 8.93 | — | 25,000,000 | | November 1 to November 30, 2024 | 7,567 | 9.47 | — | 25,000,000 | | December 1 to December 31, 2024 | 6,844 | 10.64 | — | 25,000,000 | | Total | 41,963 | 9.31 | — | - | Item 6. [Reserved] This item is reserved Item 7. Management's Discussion and Analysis (MD&A) of Financial Condition and Results of Operations This section analyzes Valley National Bancorp's financial condition and operating results for the two years ended December 31, 2024