
	June 30, 2023		December 31, 2022
	(in thousands)
Loans:



Commercial and industrial	$	9,287,309	$	8,804,830
Commercial real estate:
Commercial real estate	27,793,072		25,732,033
Construction	3,815,761		3,700,835
Total commercial real estate loans	31,608,833		29,432,868
Residential mortgage	5,560,356		5,364,550
Consumer:
Home equity	535,493		503,884
Automobile	1,632,875		1,746,225
Other consumer	1,252,382		1,064,843
Total consumer loans	3,420,750		3,314,952
Total loans	$	49,877,248	$	46,917,200

During the three months ended June 30, 2023, Valley transferred a non-performing construction loan totaling $10.0 million, net of $4.2 million charge-offs from the held for investment loan portfolio to loans held for sale. See Note 6 for further details. There were no sales of loans from the held for investment portfolio during the three and six months ended June 30, 2023 and 2022.

For all of its loan types, Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk appetite. Management reviews and approves these policies and procedures on a regular basis with subsequent approval by the Board of Directors annually. Credit authority relating to a

significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and by the Credit Committee. A reporting system supplements the management review process by providing management with frequent reports concerning loan production, loan quality, internal loan classification, concentrations of credit, loan delinquencies, non-performing, and potential problem loans. Loan portfolio diversification is an important factor utilized by Valley to manage its risk across business sectors and through cyclical economic circumstances. Additionally, Valley does not accept crypto assets as loan collateral for any of its loan portfolio classes. See Valley’s Annual Report on Form 10-K for the year ended December 31, 2022 for further details.


	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Loan Losses
	(in thousands)
June 30, 2023
Commercial and industrial	$	6,229	$	7,468	$	6,599	$	84,449	$	104,745	$	9,182,564	$	9,287,309	$	8,221
Commercial real estate:
Commercial real estate	3,612		—		2,242		82,712		88,566		27,704,506		27,793,072		76,438
Construction	—		—		3,990		63,043		67,033		3,748,728		3,815,761		15,476
Total commercial real estate loans	3,612		—		6,232		145,755		155,599		31,453,234		31,608,833		91,914
Residential mortgage	15,565		1,348		1,165		20,819		38,897		5,521,459		5,560,356		16,151
Consumer loans:
Home equity	959		46		—		2,737		3,742		531,751		535,493		—
Automobile	5,963		568		332		248		7,111		1,625,764		1,632,875		—
Other consumer	1,509		3,512		674		83		5,778		1,246,604		1,252,382		—
Total consumer loans	8,431		4,126		1,006		3,068		16,631		3,404,119		3,420,750		—
Total	$	33,837	$	12,942	$	15,002	$	254,091	$	315,872	$	49,561,376	$	49,877,248	$	116,286


	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Loan Losses
	(in thousands)
December 31, 2022
Commercial and industrial	$	11,664	$	12,705	$	18,392	$	98,881	$	141,642	$	8,663,188	$	8,804,830	$	5,659
Commercial real estate:
Commercial real estate	6,638		3,167		2,292		68,316		80,413		25,651,620		25,732,033		66,066
Construction	—		—		3,990		74,230		78,220		3,622,615		3,700,835		16,120
Total commercial real estate loans	6,638		3,167		6,282		142,546		158,633		29,274,235		29,432,868		82,186
Residential mortgage	16,146		3,315		1,866		25,160		46,487		5,318,063		5,364,550		14,224
Consumer loans:
Home equity	955		254		—		2,810		4,019		499,865		503,884		117
Automobile	5,974		630		1		271		6,876		1,739,349		1,746,225		—
Other consumer	2,158		695		46		93		2,992		1,061,851		1,064,843		—
Total consumer loans	9,087		1,579		47		3,174		13,887		3,301,065		3,314,952		117
Total	$	43,535	$	20,766	$	26,587	$	269,761	$	360,649	$	46,556,551	$	46,917,200	$	102,186

Credit quality indicators. Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as "Pass," "Special Mention," "Substandard," "Doubtful," and "Loss." Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses, and, therefore, not presented in the table below. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories but pose weaknesses that deserve management’s close attention are deemed Special Mention. Pass rated loans do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants.


	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2023	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Commercial and industrial
Risk Rating:
Pass	$	978,383	$	1,233,039	$	987,984	$	490,159	$	267,719	$	565,910	$	4,420,712	$	306	$	8,944,212
Special Mention	16,582		43,260		3,257		19,948		4,125		7,005		131,677		1,488		227,342
Substandard	6,056		754		3,288		1,706		1,703		2,819		25,681		—		42,007
Doubtful	1,500		669		2,768		—		2,674		63,427		2,710		—		73,748

Total commercial and industrial	$	1,002,521	$	1,277,722	$	997,297	$	511,813	$	276,221	$	639,161	$	4,580,780	$	1,794	$	9,287,309
Commercial real estate
Risk Rating:
Pass	$	3,006,116	$	6,675,372	$	4,997,069	$	3,073,019	$	2,453,918	$	6,040,604	$	542,644	$	3,310	$	26,792,052
Special Mention	86,078		52,939		51,208		111,268		100,524		205,971		6,621		—		614,609
Substandard	10,972		30,664		35,577		27,280		36,320		237,578		7,830		—		386,221
Doubtful	—		—		—		190		—		—		—		—		190

Total commercial real estate	$	3,103,166	$	6,758,975	$	5,083,854	$	3,211,757	$	2,590,762	$	6,484,153	$	557,095	$	3,310	$	27,793,072
Construction
Risk Rating:
Pass	$	390,550	$	702,031	$	342,403	$	32,129	$	18,878	$	20,230	$	2,251,552	$	—	$	3,757,773

Substandard	8,538		12,969		7,427		—		955		17,668		3,501		—		51,058
Doubtful	—		6,930		—		—		—		—		—		—		6,930
Total construction	$	399,088	$	721,930	$	349,830	$	32,129	$	19,833	$	37,898	$	2,255,053	$	—	$	3,815,761
Gross loan charge-offs	$	—	$	7,288	$	24,658	$	6,479	$	908	$	2,524	$	26	$	—	$	41,883

For residential mortgages, automobile, home equity and other consumer loan portfolio classes, Valley also evaluates credit quality based on the aging status of the loan and by payment activity. The following table presents the amortized cost in those loan classes based on payment activity, by origination year as of June 30, 2023 and December 31, 2022, as well as the gross loan charge-offs by year of origination for the six months ended June 30, 2023:


	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2023	2023		2022		2021		2020		2019		Prior to 2019		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	369,607	$	1,304,327	$	1,524,988	$	562,263	$	455,463	$	1,263,659	$	73,983	$	—	$	5,554,290
90 days or more past due	—		178		—		—		797		5,091		—		—		6,066
Total residential mortgage	$	369,607	$	1,304,505	$	1,524,988	$	562,263	$	456,260	$	1,268,750	$	73,983	$	—	$	5,560,356
Consumer loans
Home equity
Performing	$	19,442	$	45,601	$	11,873	$	4,326	$	4,660	$	17,396	$	392,898	$	38,391	$	534,587
90 days or more past due	—		—		—		—		—		—		263		643		906
Total home equity	19,442		45,601		11,873		4,326		4,660		17,396		393,161		39,034		535,493
Automobile
Performing	205,170		633,269		437,528		161,245		123,616		71,682		—		—		1,632,510
90 days or more past due	47		105		73		—		9		131		—		—		365
Total automobile	205,217		633,374		437,601		161,245		123,625		71,813		—		—		1,632,875
Other consumer
Performing	17,973		20,979		(1,549)		3,729		8,720		12,707		1,189,191		—		1,251,750
90 days or more past due	—		—		—		—		—		38		594		—		632
Total other consumer	17,973		20,979		(1,549)		3,729		8,720		12,745		1,189,785		—		1,252,382
Total consumer	$	242,632	$	699,954	$	447,925	$	169,300	$	137,005	$	101,954	$	1,582,946	$	39,034	$	3,420,750
Gross loan charge-offs	$	11	$	226	$	206	$	90	$	428	$	953	$	103	$	—	$	2,017


	Term Loans
	Amortized Cost Basis by Origination Year
December 31, 2022	2022		2021		2020		2019		2018		Prior to 2018		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	1,302,279	$	1,502,622	$	571,390	$	500,197	$	338,062	$	1,073,995	$	66,706	$	—	$	5,355,251
90 days or more past due	—		197		217		1,835		2,876		4,174		—		—		9,299
Total residential mortgage	$	1,302,279	$	1,502,819	$	571,607	$	502,032	$	340,938	$	1,078,169	$	66,706	$	—	$	5,364,550
Consumer loans
Home equity
Performing	$	47,084	$	12,432	$	4,592	$	5,024	$	5,581	$	13,007	$	376,608	$	38,570	$	502,898
90 days or more past due	—		—		—		—		—		—		276		710		986
Total home equity	47,084		12,432		4,592		5,024		5,581		13,007		376,884		39,280		503,884
Automobile
Performing	724,557		525,017		204,578		166,103		80,012		45,415		—		—		1,745,682
90 days or more past due	38		116		36		180		101		72		—		—		543
Total automobile	724,595		525,133		204,614		166,283		80,113		45,487		—		—		1,746,225
Other consumer
Performing	24,140		10,144		8,206		7,435		7,406		15,736		991,737		—		1,064,804
90 days or more past due	—		—		—		—		—		38		1		—		39
Total other consumer	24,140		10,144		8,206		7,435		7,406		15,774		991,738		—		1,064,843
Total consumer	$	795,819	$	547,709	$	217,412	$	178,742	$	93,100	$	74,268	$	1,368,622	$	39,280	$	3,314,952

Loan modifications to borrowers experiencing financial difficulty. From time to time, Valley may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. Prior to 2023, a loan was classified as a troubled debt restructuring (TDR) if the borrower was experiencing financial difficulties and a concession has been made at the time of such modification.

Effective January 1, 2023, Valley adopted ASU No. 2022-02 which eliminated the accounting guidance for TDR loans while enhancing disclosure requirements for certain loan modifications by creditors when a borrower is experiencing financial difficulty. Valley adopted ASU No. 2022-02 using the modified retrospective transition method. At the date of adoption, Valley was no longer required to utilize a loan-level discounted cash flow approach for determining the allowance for certain modified loans previously classified as TDR loans. As a result, Valley elected to utilize its collective reserve methodology for pools of loans that share common risk characteristic for determining the reserves for the modified loans formerly classified as TDR loans. This change resulted in the recognition of a cumulative-effect adjustment which decreased the allowance for loan losses with an offsetting entry to retained earnings, net of deferred taxes, at January 1, 2023.

The following table shows the amortized cost basis of loans to borrowers experiencing financial difficulty at June 30, 2023 that were modified during the three and six months ended June 30, 2023, disaggregated by class of financing receivable and type of modification. Each of the types of modifications was less than one percent of their respective loan categories.


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
	Term extension			Term extension and interest rate reduction		Total		Term extension		Term extension and interest rate reduction		Total
	($ in thousands)
Commercial and industrial	$	37,762		$	1,482	$	39,244	$	39,033	$	2,003	$	41,036
Commercial real estate	3,512			3,754		7,266		49,617		3,754		53,371
Residential mortgage	578			—		578		790		—		790
Consumer	—			—		—		53		—		53
Total	$	41,852		$	5,236	$	47,088	$	89,493	$	5,757	$	95,250

Types of Modifications

Commercial and industrial

12 month term extensions; and one 12 month term extension combined with a reduction in interest rate from 9.38 percent to 6.50 percent

Commercial real estate

6 to 36 month term extensions and one term extension combined with a reduction in interest rate from 8.75 percent to 6.00 percent

Residential mortgage

12 month term extensions

Consumer

60 month term extensions

Valley closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of modification efforts. All loans to borrowers experiencing financial difficulty that have been modified during the three and six months ended June 30, 2023 were current to their contractual payments as of June 30, 2023.

Troubled debt restructured loans. The following tables present the pre- and post-modification amortized cost of TDR loans by loan class during the three and six months ended June 30, 2022. Post-modification amounts are presented as of June 30, 2022 using the allowance methodology for TDRs prior to the adoption of ASU 2022-02.


	Three Months Ended June 30, 2022
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial	49	$	82,120	$	78,051

Commercial real estate	1	8,811		8,735


Residential mortgage	7	4,970		4,969
Consumer	1	125		124
Total	58	$	96,026	$	91,879


	Six Months Ended June 30, 2022
Troubled Debt Restructurings			Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)
Commercial and industrial			60	$	91,804	$	87,685

Commercial real estate			3	14,072		13,986


Residential mortgage			8	5,090		5,087
Consumer			1	125		124
Total			72	$	111,091	$	106,882

The total TDRs presented in the above tables had allocated allowance for loan losses of $56.0 million at June 30, 2022. There were $1.5 million in charge-offs related to TDRs for the three and six months ended June 30, 2022. Valley did not extend any commitments to lend additional funds to borrowers whose loans have been modified as TDRs during the three and six months ended June 30, 2022.

Loans in process of foreclosure. Other real estate owned (OREO) totaled $824 thousand and $286 thousand at June 30, 2023 and December 31, 2022, respectively. There were no foreclosed residential real estate properties included in OREO at June 30, 2023 and December 31, 2022. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $454 thousand and $2.6 million at June 30, 2023 and December 31, 2022, respectively.

Collateral dependent loans. Loans are collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When Valley determines that foreclosure is probable, the collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(in thousands)
Components of provision for credit losses for loans:
Provision for loan losses	$	8,159	$	38,310	$	18,138	$	41,568
(Credit) provision for unfunded credit commitments	(1,827)		5,402		(2,356)		5,644
Total provision for credit losses for loans	$	6,332	$	43,712	$	15,782	$	47,212


	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
Three Months Ended June 30, 2023
Allowance for loan losses:
Beginning balance	$	127,992	$	243,332	$	41,708	$	23,866	$	436,898


Loans charged-off	(3,865)		(6,273)		(149)		(1,040)		(11,327)
Charged-off loans recovered	2,173		4		135		390		2,702
Net charge-offs	(1,692)		(6,269)		(14)		(650)		(8,625)
Provision for loan losses	1,945		2,632		2,459		1,123		8,159
Ending balance	$	128,245	$	239,695	$	44,153	$	24,339	$	436,432
Three Months Ended June 30, 2022
Allowance for loan losses:
Beginning balance	$	101,203	$	219,949	$	28,189	$	13,169	$	362,510
Allowance for purchased credit deteriorated (PCD) loans *	33,452		36,618		206		43		70,319

Loans charged-off	(4,540)		—		(1)		(726)		(5,267)
Charged-off loans recovered	1,952		224		74		697		2,947
Net (charge-offs) recoveries	(2,588)		224		73		(29)		(2,320)
Provision for loan losses	12,472		20,436		1,421		3,981		38,310
Ending balance	$	144,539	$	277,227	$	29,889	$	17,164	$	468,819



Six Months Ended June 30, 2023
Allowance for loan losses:
Beginning balance	$	139,941	$	259,408	$	39,020	$	20,286	$	458,655
Impact of the adoption of ASU No. 2022-02	(739)		(589)		(12)		(28)		(1,368)
Beginning balance, adjusted	$	139,202	$	258,819	$	39,008	$	20,258	$	457,287
Loans charged-off	(29,912)		(11,971)		(149)		(1,868)		(43,900)
Charged-off loans recovered	3,572		28		156		1,151		4,907
Net (charge-offs) recoveries	(26,340)		(11,943)		7		(717)		(38,993)
Provision (credit) for loan losses	15,383		(7,181)		5,138		4,798		18,138
Ending balance	$	128,245	$	239,695	$	44,153	$	24,339	$	436,432
Six Months Ended June 30, 2022
Allowance for loan losses:
Beginning balance	$	103,090	$	217,490	$	25,120	$	13,502	$	359,202
Allowance for PCD loans *	33,452		36,618		206		43		70,319

Loans charged-off	(6,111)		(173)		(27)		(1,551)		(7,862)
Charged-off loans recovered	2,776		331		531		1,954		5,592
Net (charge-offs) recoveries	(3,335)		158		504		403		(2,270)
Provision for loan losses	11,332		22,961		4,059		3,216		41,568
Ending balance	$	144,539	$	277,227	$	29,889	$	17,164	$	468,819


	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
June 30, 2023
Allowance for loan losses:
Individually evaluated for credit losses	$	54,311	$	6,749	$	34	$	—	$	61,094
Collectively evaluated for credit losses	73,934		232,946		44,119		24,339		375,338
Total	$	128,245	$	239,695	$	44,153	$	24,339	$	436,432
Loans:
Individually evaluated for credit losses	$	77,364	$	138,032	$	16,151	$	—	$	231,547
Collectively evaluated for credit losses	9,209,945		31,470,801		5,544,205		3,420,750		49,645,701
Total	$	9,287,309	$	31,608,833	$	5,560,356	$	3,420,750	$	49,877,248
December 31, 2022
Allowance for loan losses:
Individually evaluated for credit losses	$	68,745	$	13,174	$	337	$	4,338	$	86,594
Collectively evaluated for credit losses	71,196		246,234		38,683		15,948		372,061
Total	$	139,941	$	259,408	$	39,020	$	20,286	$	458,655
Loans:
Individually evaluated for credit losses	$	117,644	$	213,522	$	28,869	$	14,058	$	374,093
Collectively evaluated for credit losses	8,687,186		29,219,346		5,335,681		3,300,894		46,543,107
Total	$	8,804,830	$	29,432,868	$	5,364,550	$	3,314,952	$	46,917,200