VALLEY NATIONAL BANCORP

Previous wording

•the impact of monetary and fiscal policies of the federal government and its agencies, including in response to higher inflation, which could have a material adverse effect on our clients, as well as our business, our employees, and our ability to provide services to our customers;

Current wording

•the impact of monetary and fiscal policies of the U.S. federal government and its agencies, including in connection with prolonged inflationary pressures, as well as the impact of the 2024 U.S presidential election, which could have a material adverse effect on our clients, as well as our business, our employees, and our ability to provide services to our customers;

Previous wording

•the impact of unfavorable macroeconomic conditions or downturns, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as geopolitical instabilities or events (including the Israel-Hamas war); natural and other disasters (including severe weather events); health emergencies; acts of terrorism or other external events;

Current wording

•the impact of unfavorable macroeconomic conditions or downturns, including an actual or threatened U.S. government shutdown, debt default or rating downgrade, instability or volatility in financial markets, unanticipated loan delinquencies, loss of collateral, decreased service revenues, increased business disruptions or failures, reductions in employment, and other potential negative effects on our business, employees or clients caused by factors outside of our control, such as geopolitical instabilities or events (including the

Previous wording

•the impact of potential instability within the U.S. financial sector related to bank failures, including the possibility of deposit withdrawals by a coordinated deposit base, and the impact of any concerns about the creditworthiness of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including FDIC insurance premiums, or adverse impact on our stock price, deposits or our ability to borrow or raise capital;

Current wording

•the impact of potential instability within the U.S. financial sector in the aftermath of the banking failures in 2023 and continued volatility thereafter, including the possibility of a run on deposits by a coordinated deposit base, and the impact of the actual or perceived soundness, or concerns about the creditworthiness of other financial institutions, including any resulting disruption within the financial markets, increased expenses, including FDIC insurance assessments, or adverse impact on our stock price, deposits or our ability to borrow or raise capital;

Previous wording

•a prolonged downturn in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio;

Current wording

•a prolonged downturn and contraction in the economy, as well as an unexpected decline in commercial real estate values collateralizing a significant portion of our loan portfolio;

Previous wording

•unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events; and

Current wording

•unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, pandemics or other public health crises, acts of terrorism or other external events;

Previous wording

Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition and results of operations. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions in accordance with these policies that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated. At March 31, 2024, we identified our policies on the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Management has reviewed the application of these policies and estimates with the Audit Committee of Valley’s Board. Our critical accounting policies and estimates are described in detail in Part II, Item 7 in Valley’s Annual Report, and there have been no material changes in such policies and estimates since the date of such report.

Current wording

Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition and results of operations. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions in accordance with these policies that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated. At June 30, 2024, we identified our policies on the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Management has reviewed the application of these policies and estimates with the Audit Committee of Valley’s Board. Our critical accounting policies and estimates are described in detail in Part II, Item 7 in Valley’s Annual Report, and there have been no material changes in such policies and estimates since the date of Valley’s Annual Report.

Previous wording

Company Overview. At March 31, 2024, Valley had consolidated total assets of approximately $61.0 billion, total net loans of $49.5 billion, total deposits of $49.1 billion and total shareholders’ equity of $6.7 billion. Valley operates many convenient branch office locations and commercial banking offices in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New

Current wording

Company Overview. At June 30, 2024, Valley had consolidated total assets of approximately $62.1 billion, total net loans of $49.8 billion, total deposits of $50.1 billion and total shareholders’ equity of $6.7 billion. Valley operates many convenient branch office locations and commercial banking offices in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, California, Alabama and Illinois. Of our current 230 branch network, 55 percent, 18 percent, and 18 percent of the branches are located in New Jersey, New York and Florida, respectively, with the remaining 9 percent of the branches in Alabama, California, and Illinois combined.

Previous wording

Financial Condition. The combination of an inverted yield curve, a high level of competition and economic uncertainty, among other factors, continued to weigh on the banking industry during the first quarter 2024. In the face of these challenges, we have positioned our balance sheet to best mitigate these negative factors, while focused on longer term earnings performance. The following items are key highlights at March 31, 2024.

Current wording

Financial Condition. The combination of an inverted yield curve, a high level of competition and Federal Reserve monetary actions driven by prolonged inflationary pressures, among other factors, continued to weigh on the banking industry during the second quarter 2024. In the face of these challenges, we have positioned our balance sheet to best mitigate these negative factors, while continuing to focus on longer term earnings performance. The following items are key highlights at June 30, 2024.

Previous wording

•Total assets was$61.0 billion at March 31, 2024 and remained relatively unchanged from December 31, 2023. Our liquid assets totaled $2.7 billionat March 31, 2024, representing 4.8 percent of interest earning assets as compared with $2.4 billion, or 4.3 percent of interest earning assets at December 31, 2023. We continue to maintain significant access to readily available, diverse funding sources to fulfill both short-term and long-term funding needs. See the “Bank Liquidity” section for additional information.

Current wording

•Total assets increased to$62.1 billion at June 30, 2024 from $61.0 billion at March 31, 2024. Our liquid assets totaled $3.4 billionat June 30, 2024, representing 6.1 percent of interest earning assets as compared with$2.7 billion, or 4.8 percentof interest earning assets at March 31, 2024. We continue to maintain significant access to readily available, diverse funding sources to fulfill both short-term and long-term funding needs. See the “Bank Liquidity” section for additional information.

Previous wording

•Asset quality continued to reflect our disciplined underwriting and lending practices during the first quarter 2024. Non-performing assets (NPAs) as a percentage of total loans and NPAs totaled 0.58 percent at both March 31, 2024 and December 31, 2023. Total net loan charge-offs to average loans was 0.19 percent for thefirst quarter 2024 as compared with 0.14 percent for the fourth quarter 2023. See the “Non-Performing Assets” section for additional information.

Current wording

•While non-accrual loans and net loan charge-offs increased during the second quarter 2024 mainly due to two commercial loan relationships, overall asset quality remained generally stable across the loan portfolio and continued to reflect our disciplined underwriting and lending practices. Non-performing assets (NPAs) as a percentage of total loans and NPAs increased to 0.62 percent at June 30, 2024 as compared to 0.58 percent at March 31, 2024. Total net loan charge-offs to average loans was 0.29 percent for the second quarter 2024 as compared with 0.19 percent for the first quarter 2024. See the “Non-Performing Assets” section for additional information.

Previous wording

•Total investment securities were $5.2 billion, or 8.6 percent of total assets, at March 31, 2024 and remained relatively unchanged from December 31, 2023. See the “Investment Securities Portfolio” section for more details.

Current wording

•Total investment securities increased $704.6 million to $5.9 billion, or 9.6 percent of total assets, at June 30, 2024 as compared to March 31, 2024 mainly due to purchases of residential mortgage backed securities largely issued by Ginnie Mae that were classified as available for sale. See the “Investment Securities Portfolio” section for more details.

Previous wording

•Capital remained strong with ratios of both Valley and the Bank exceeding all capital adequacy requirements at March 31, 2024. Total shareholders' equity increased $25.7 million to $6.7 billion at March 31, 2024 as compared to December 31, 2023. See the “Capital Adequacy” section for additional details.

Current wording

•Total shareholders' equity increased $10.6 million to $6.7 billion at June 30, 2024 as compared to March 31, 2024. Regulatory capital remained strong with ratios of both Valley and the Bank exceeding all capital adequacy requirements at June 30, 2024. During June 2024, we completed a synthetic credit risk transfer transaction, consisting of a credit default swap, related to approximately $1.5 billion of our $1.8 billion automobile loan portfolio at June 30, 2024. While we retained the auto loans on-balance sheet and the transaction had no impact to our allowance for loan losses, the new credit protection significantly reduced the risk-weighted assets associated with these loans for regulatory capital purposes. As a result, Valley’s total risk-based capital, common equity Tier 1 capital and Tier 1 capital ratios benefited by approximately 20 basis points at June 30, 2024.

Previous wording

Quarterly Results. Net income for the first quarter 2024 was $96.3 million, or $0.18 per diluted common share, as compared to $146.6 million, or $0.28 per diluted common share, for the first quarter 2023. The $50.3 million decrease in quarterly net income as compared to the same quarter one year ago was mainly due to the following changes:

Current wording

Quarterly Results. Net income for the second quarter 2024 was $70.4 million, or $0.13 per diluted common share, as compared to $139.1 million, or $0.27 per diluted common share, for the second quarter 2023. The $68.6 million decrease in quarterly net income as compared to the same quarter one year ago was mainly due to the following changes:

Previous wording

•a $42.5 million decrease in net interest income as higher yields on both new loan originations and adjustable-rate loans were more than offset by an increase in the cost of deposits;

Current wording

•an $18.1 million decrease in net interest income as higher yields on both new loan originations and adjustable-rate loans were more than offset by an increase in the cost of deposits; and

Previous wording

•a $24.0 million decrease in income tax expense mostly due to lower pre-tax income and additional tax credits in thefirst quarter 2024.

Current wording

•a $28.9 million decrease in income tax expense mostly due to lower pre-tax income in the second quarter 2024 and a higher level of investment in tax credits as compared to one year ago; and

Previous wording

See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense” and “Income Taxes” sections below for more details on the impact of the items aboveand other infrequent non-core items impactingour first quarter 2024 results.

Current wording

See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense” and “Income Taxes” sections below for more details on the impact of the items aboveand other infrequent non-core items impactingour second quarter 2024 results.

Previous wording

U.S. Economic Conditions. During the first quarter 2024, real gross domestic product (GDP) increased at an annual rate of 1.6 percent as compared to an increase of 3.4 percent during the fourth quarter 2023. The decrease in real GDP growth was primarily due to a decline in net exports, slower government spending and a decline in nonresidential fixed investments. Inflation slightly picked up to 3.5 percent in the first quarter 2024 as compared to 3.4 percent for thefourth quarter 2023 and was largely attributed to price increases at the beginning of the year.

Current wording

U.S. Economic Conditions. During the second quarter 2024, real gross GDP increased at an annual rate of 2.8 percent as compared to an increase of 1.4 percent during the first quarter 2024. The increase was driven by personal consumption, government spending and nonresidential fixed investment. Alternatively, residential fixed investment and net exports declined. In addition, most measures of inflation continued to reflect a moderation in price pressures during the quarter. Inflation rate declined to 3.0 percent in the second quarter 2024 as compared to 3.5 percent for thefirst quarter 2024.

Previous wording

The 10-year U.S. Treasury note yield ended the first quarter 2024 at 4.20 percent, or 32 basis points higher as compared to thefourth quarter 2023, and the 2-year U.S. Treasury note yield ended the first quarter 2024 at 4.59 percent, or 36 basis points higher as compared to the fourth quarter 2023.

Current wording

The 10-year U.S. Treasury note yield ended the second quarter 2024 at 4.36 percent, or 16 basis points higher as compared to thefirst quarter 2024, and the 2-year U.S. Treasury note yield ended the second quarter 2024 at 4.71 percent, or 12 basis points higher as compared to the first quarter 2024.

Previous wording

Although Federal Reserve efforts to combat inflation are showing signs of success, several factors, including, but not limited to elevated inflation, new and proposed bank regulatory actions, the inverted yield curve, elevated interest rates and geopolitical conflicts have added a higher level of uncertainty to the future path of the U.S. economy and created a challenging bank operating environment. Should these conditions persist or further deteriorate, they may adversely impact our financial results, as highlighted in this MD&A.

Current wording

Although Federal Reserve efforts to combat inflation are showing modest progress, several factors, including, but not limited to new and proposed bank regulatory actions, the inverted yield curve, potential weakening of the labor market, elevated inflation and interest rates, the upcoming U.S. presidential election and geopolitical conflicts have added a higher level of uncertainty to the future path of the U.S. economy and created a challenging bank operating environment. Should these conditions persist or further deteriorate, they may adversely impact our banking clients and our financial results, as highlighted in this MD&A.

Previous wording

Total average deposits decreased by $884.6 million to $48.6 billion for the first quarter 2024 as compared to the fourth quarter 2023 due to decreases of $1.3 billion and $351.7 million in average time and non-interest bearing, deposits, respectively, partially offset by a$802.4 million increase in average savings, NOW and money market deposits. The decrease in average time deposits was primarily due to our intentional run-off of both higher cost indirect customers (i.e., brokered) and government banking time deposits which contractually matured over the last six months. Average non-interest bearing balances modestly declined as compared to the fourth quarter 2023, as some customers continue to closely manage balances and shift funds into other higher-yielding alternatives. The increase in savings, NOW and money market deposits was mostly broad-based, reflecting strong customer inflows from both our physical branch and online delivery channels, as well as our specialized deposit businesses over the last six months. Average non-interest-bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 51 percent and 26 percent of total deposits for the first quarter 2024, respectively as compared to 23 percent, 49 percent and 28 percent of total deposits for thefourth quarter 2023, respectively.

Current wording

Total average deposits increased by $807.2 million to $49.4 billion for the second quarter 2024 as compared to the first quarter 2024 due to increases of $766.8 million and $40.4 million in average interest bearing and non-interest bearing deposits, respectively. Average time deposits balances increased $712.0 million primarily due to our increased use of indirect customer (i.e., brokered) CDs as a funding source in the second quarter 2024. Average non-interest-bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 23 percent, 50 percent and 27 percent of total deposits for the second quarter 2024, respectively as compared to 23 percent, 51 percent and 26 percent of total deposits for thefirst quarter 2024, respectively.

Previous wording

Total estimated uninsured deposits, excluding collateralized government deposits and intercompany deposits (i.e., deposits eliminated in consolidation), totaled approximately $11.5 billion, or 24 percent of total deposits, at March 31, 2024 as compared to $12.2 billion, or 25 percent of total deposits, at December 31, 2023.

Current wording

Total estimated uninsured deposits, excluding collateralized government deposits and intercompany deposits (i.e., deposits eliminated in consolidation), totaled approximately $11.0 billion, or 22 percent of total deposits, at June 30, 2024 as compared to $11.5 billion, or 24 percent of total deposits, at March 31, 2024.

Previous wording

Average short-term borrowings increased $1.1 billion during the first quarter 2024 as compared to thefourth quarter 2023 mostly due to a partial shift from indirect customer CDs and more heavily weighted in short-term FHLB advances in our average mix of funding sources starting in thefourth quarter 2023. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) moderately increased $248.2 million as compared to the fourth quarter 2023 due to $1.0 billion of new FHLB advances issued during early March 2024. The $1.0 billion of new borrowings have a weighted average rate of 4.52 percent and a weighted average remaining contractual term of 3.6 years at March 31, 2024.

Current wording

Average short-term borrowings decreased $1.4 billion during the second quarter 2024 as compared to the first quarter 2024 mostly due to a shift from short-term FHLB advances to indirect customer time deposits in our average mix of funding sources. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) increased $693.3 million as compared to the first quarter 2024 mainly due to new FHLB advances totaling $1.0 billion issued in early March 2024. The new long-term FHLB borrowings have a weighted average rate of 4.54 percent and a weighted average remaining contractual term of 3.3 years at June 30, 2024.

Previous wording

Actual ending balances for short-term borrowings decreased $842.6 million to $75.2 million at March 31, 2024 as compared to December 31, 2023 mainly due to maturities and repayment of FHLB advances. Long-term borrowings increased $934.0 million to $3.3 billion at March 31, 2024 as compared to $2.3 billion at December 31, 2023 due to the new FHLB advances issued in March 2024.

Current wording

Actual ending balances for short-term borrowings decreased $11.5 million to $63.8 million at June 30, 2024 as compared to March 31, 2024 mainly due to a moderate decline in securities sold under repurchase agreements. Long-term borrowings totaled $3.3 billion at June 30, 2024 and also remained relatively unchanged as compared to March 31, 2024.

Previous wording

Average interest earning assets increased $1.3 billion to $56.6 billion for the first quarter 2024 as compared to the first quarter 2023 mainly due to a $2.4 billion increase in average loan balances driven by organic loan growth in the commercial loan categories during most of 2023, partially offset by a $1.1 billion decline in average interest bearing cash held overnight as our excess liquidity returned to more normalized levels in 2024 after being elevated in response to the bank failures in 2023. Compared to the fourth quarter 2023, average interest earning assets increased by $149.3 million during the first quarter 2024. The increase was mainly driven by increases of $207.2 million and$144.2 millionin average loans and taxable investments, respectively, partially offset by a $188.3 million decline in average overnight interest bearing cash balances as compared to the prior linked quarter.

Current wording

Average interest earning assets decreased $578.9 million to $56.8 billion for the second quarter 2024 as compared to the second quarter 2023 mainly due to a $1.4 billion decline in average interest bearing cash held overnight as our excess liquidity returned to more normalized levels in 2024 after being elevated in response to the bank failures in 2023. The decrease in average interest bearing cash was partially offset by a $563.0 million increase in average loan balances mostly driven by organic commercial loan growth since June 30, 2023 and the increase in average investment securities stemming from oursecond quarter 2024 purchase activity in the available for sale portfolio. Compared to the first quarter 2024, average interest earning assets increased by $154.2 million during the second quarter 2024. The increase was mainly driven by increases of $284.1 million and $100.3 million in average taxable investments and average overnight interest bearing cash balances, respectively, as compared to the prior linked quarter, partially offset by a$225.7 million decline in average loan balances. The decline in average loans was largely due to (1) the sale of $196.5 million of commercial real estate and construction loans through loan participation agreements at par value in March 2024, (2) the sale of $93.6 million of commercial and industrial loans associated with the sale of our premium finance lending division in February 2024, and (3) the sale of$34.1 million of construction loans at par during April 2024, partially offset by (4) organic loan growth in thesecond quarter 2024.

Previous wording

Average interest bearing liabilities increased $3.9 billion to $41.6 billion for the first quarter 2024 as compared to the first quarter 2023 mainly due to increases of $4.3 billion and $939.0 million in average time deposits and long-term borrowings, respectively, partially offset by a decrease of $1.3 billion in average short-term borrowings. The increase in average time deposits was largely due to increased usage of fully FDIC-insured indirect customer CDs and successful direct retail CD initiatives during the second half of 2023, while average long-term borrowings increased due to the issuance of new FHLB advances. As compared to the fourth quarter 2023, average interest bearing liabilities increased by $803.3 million for the first quarter 2024 mainly due to a $1.1 billion increase in average short-term borrowings. The increase in short-term borrowings was mostly due to a partial shift from indirect customer CDs to FHLB advances in our average mix of funding sources during most of the first quarter 2024. See additional information under“Deposits and Other Borrowings” in the Executive Summary section above.

Current wording

Average interest bearing liabilities increased $650.6 million to $41.6 billion for the second quarter 2024 as compared to the second quarter 2023 mainly due to increases of $3.5 billion and $979.5 million in average interest bearing deposits and long-term borrowings, respectively, partially offset by a decrease of $3.8 billion in average short-term borrowings. The increase in average time deposits was largely due to increased usage of fully FDIC-insured indirect customer CDs and successful direct retail CD initiatives since June 30, 2023, while average long-term borrowings increased mostly due to several new FHLB advances totaling $1.0 billion in early March 2024. As compared to the first quarter 2024, average interest bearing liabilities increased by only $19.8 million for the second quarter 2024 as increases of $766.8 million and $693.3 million in average interest bearing deposits and long-term borrowings, respectively, were mostly offset by a $1.4 billion decrease in average short-term borrowings. See additional information under“Deposits and Other Borrowings” in the Executive Summary section above.

Previous wording

Net interest margin on a tax equivalent basis of 2.79 percent for the first quarter 2024 decreased by 3 basis points and 37 basis points from 2.82 percent and 3.16 percent, respectively, for the fourth quarter 2023 and first quarter 2023. The decrease as compared to the fourth quarter 2023 was largely driven by the higher cost of interest bearing deposits and short-term borrowings, partially offset by an increase in the yield on average interest earning assets. Our cost of total average deposits was 3.16 percent for the first quarter 2024 as compared to 3.13 percent and 1.96 percent for the fourth quarter 2023 and the first quarter 2023, respectively. The overall cost of average interest bearing liabilities increased 6 basis points to 4.19 percent for the first quarter 2024 as compared to the fourth quarter 2023 primarily driven by the higher level of market interest rates on deposits and short-term borrowings. The yield on average interest earning assets also increased by 6 basis points to 5.86 percent on a linked quarter basis largely due to the increased yield of the loan portfolio. The yield on average loans increased by 4 basis points to 6.14 percent for the first quarter 2024 as compared to the fourth quarter 2023 mostly due to the higher level of market interest rates on new originations and adjustable rate loans.

Current wording

Net interest margin on a tax equivalent basis of 2.84 percent for the second quarter 2024 increased by 5 basis points from 2.79 percent for the first quarter 2024 and decreased 10 basis points from 2.94 percent for the second quarter 2023. The increase as compared to the first quarter 2024 was largely driven by the combination of a higher yield on average interest earning assets and a decline in the cost of average interest bearing liabilities. The yield on average interest earning assets increased by 2 basis points to 5.88 percent on a linked quarter basis largely due to higher yielding investment purchases and new loan originations during the second quarter 2024. The overall cost of average interest bearing liabilities decreased 4 basis points to 4.15 percent for the second quarter 2024 as compared to the first quarter 2024 primarily due to a reduction in both higher cost short-term FHLB borrowings and government banking non-maturity deposit account balances. Our cost of total average deposits was 3.18 percent for the second quarter 2024 as compared to 3.16 percent and 2.45 percent for the first quarter 2024 and the second quarter 2023, respectively.

Previous wording

Based upon our latest model estimates, we anticipate net interest income growth in the range of zero to two percent for the full year ended December 31, 2024 as compared to 2023. While we remain optimistic that our net interest income should continue to stabilize and grow during the remainder of 2024 as compared to the first quarter 2024, our forecasts include several uncertain assumptions, including changes in the level of market interest rates. As such, we cannot provide any assurances that our net interest income or margin will remain at the levels reported for the first quarter 2024. For a detailed discussion on the risks related to interest rates please refer to Part I, Item 1A. “Risk Factors” in our Annual Report.

Current wording

Based upon our latest model estimates, we anticipate net interest income growth in the range of 1.5 to 3.0 percent on a quarterly basis for both the third and fourth quarter 2024 as compared to the second quarter 2024. While we remain optimistic that our net interest income should continue to stabilize and grow during the remainder of 2024 as compared to the second quarter 2024, our forecasts include several uncertain assumptions, including changes in the level of market interest rates. As such, we cannot provide any assurances that our net interest income or margin will remain at the levels reported for the second quarter 2024. For a detailed discussion on the risks related to interest rates please refer to Part I, Item 1A. “Risk Factors” in our Annual Report.

Previous wording

Non-interest income represented 6.9 percent and 7.0 percent of total interest income plus non-interest income for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, non-interest income increased $7.1 million as compared to the same period in 2023 primarily driven by higher wealth management and trust fees and net gains on sales of assets.

Current wording

Non-interest income represented 5.8 percent and 7.1 percent of total interest income plus non-interest income for the three months ended June 30, 2024 and 2023, respectively and 6.3 percent and 7.1 percent of total interest income plus non-interest income for the six months ended June 30, 2024 and 2023, respectively. For the three and six months ended June 30, 2024, non-interest income decreased $8.9 million and $1.7 million as compared to the same periods in 2023.

Previous wording

The following table presents the components of non-interest income for the three months ended March 31, 2024 and 2023:

Current wording

The following table presents the components of non-interest income for the three and six months ended June 30, 2024 and 2023:

Previous wording

Wealth management and trust fees income increased $8.3 million for the three months ended March 31, 2024 as compared to the same period in 2023 mainly due to a higher volume of success fees and other related periodic fees generated by ourtax credit advisory subsidiary. Brokerage fees also increased $1.4 million to $6.2 million for the three months ended March 31, 2024 as compared to the same period in 2023 due to an uptick in customer trading volume at our broker dealer subsidiary.

Current wording

second quarter 2023 was mainly driven by higher brokerage fees. The increase for the six months ended June 30, 2024 was mainly due to a higher volume of success fees and other related periodic revenues generated by our tax credit advisory subsidiary, as well as increased brokerage fees. Brokerage fees increased by $1.2 million to $6.1 million for the second quarter 2024 and increased $2.6 million to $12.3 million for the six months ended June 30, 2024 as compared to the same periods in 2023 due to stronger customer trading volume at our broker dealer subsidiary.

Previous wording

Capital markets income decreased $5.2 million for the three months ended March 31, 2024 as compared to the same period in 2023 mainly due to a decline in the volume of interest rate swap transactions, and resulting fees, related to commercial loan customers.

Current wording

Capital markets income decreased $9.2 million and $14.4 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 mainly due to a decline in the volume of interest rate swap transactions, and resulting fees related to commercial loan customers, as well as lower loan syndication fees.

Previous wording

Net gains on sales of assets increased $3.6 million for the three months ended March 31, 2024 as compared to the same period in 2023 largely due to the net gain on the sale of our commercial premium finance lending business in the first quarter 2024.

Current wording

Net gains on sales of assets increased $3.4 million for the six months ended June 30, 2024 as compared to the same period in 2023 largely due to a $3.6 million net gain on the sale of our commercial premium finance lending business in the first quarter 2024.

Previous wording

Other non-interest income decreased $2.1 million for the three months ended March 31, 2024 as compared to the same period in 2023 mostly due to a $2.7 million litigation recovery in the 2023 period.

Current wording

Other non-interest income decreased $4.5 million and $6.6 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The decrease as compared to the

Previous wording

Non-interest expense increased $8.1 million for the three months ended March 31, 2024 as compared to the same period in 2023 due, in part, toa $9.1 million increase in the FDIC insurance assessment expense. The following table presents the components of non-interest expense for the three months ended March 31, 2024 and 2023:

Current wording

Non-interest expense decreased $5.5 million and increased $2.7 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The following table presents the components of non-interest expense for the three and six months ended June 30, 2024 and 2023:

Previous wording

Income tax expense totaled $33.2 million for the first quarter 2024 as compared to $17.4 million and $57.2 million for the fourth quarter 2023 and first quarter 2023, respectively. Our effective tax rate was 25.6 percent, 19.6 percent and 28.1 percent for the first quarter 2024, fourth quarter 2023 and first quarter 2023, respectively. The increase in the effective tax rate from the fourth quarter 2023 was mainly attributable to larger amount of tax credits recognized during the fourth quarter 2023.

Current wording

Income tax expense totaled $22.9 million for the second quarter 2024 as compared to $33.2 million and $51.8 million for the first quarter 2024 and second quarter 2023, respectively. Our effective tax rate was 24.5 percent, 25.6 percent and 27.1 percent for the second quarter 2024, first quarter 2024 and second quarter 2023, respectively. The decrease in the effective tax rate from the first quarter 2024 and second quarter 2023 was primarily due to lower pre-tax income and larger investments in tax credits.

Previous wording

Valley manages its business operations under operating segments consisting of Consumer Banking and Commercial Banking. Activities not assigned to the operating segments are included in Treasury and Corporate Other. Each operating segment is reviewed routinely for its asset growth, contribution to income before income taxes, return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Valley regularly assesses its strategic plans, operations, and reporting structures to identify its operating segments and no changes to the operating segments were determined necessary during the three months ended March 31, 2024.

Current wording

Valley manages its business operations under operating segments consisting of Consumer Banking and Commercial Banking. Activities not assigned to the operating segments are included in Treasury and Corporate Other. Each operating segment is reviewed routinely for its asset growth, contribution to income before income taxes, return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Valley regularly assesses its strategic plans, operations, and reporting structures to identify its operating segments and no changes to the operating segments were determined necessary during the first half of 2024.

Previous wording

The Consumer Banking segment represented 18.3 percent of our loan portfolio at March 31, 2024, and was mainly comprised of residential mortgage loans and automobile loans, and to a lesser extent, home equity loans, secured personal lines of credit and other consumer loans (including credit card loans). The duration of the residential mortgage loan portfolio (which represented 11.3 percent of our loan portfolio at March 31, 2024) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans portfolio (which represented 3.4 percent of total loans at March 31, 2024) is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Banking also includes the Wealth Management and Insurance Services Division, comprised of trust, asset management, brokerage, insurance and tax credit advisory services.

Current wording

The Consumer Banking segment represented 18.0 percent of our loan portfolio at June 30, 2024, and was mainly comprised of residential mortgage loans and automobile loans, and to a lesser extent, home equity loans, secured personal lines of credit and other consumer loans (including credit card loans). The duration of the residential mortgage loan portfolio (which represented 11.2 percent of our loan portfolio at June 30, 2024) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans portfolio (which represented 3.5 percent of total loans at June 30, 2024) is relatively unaffected by movements in the market level of interest rates. However, the average life may be impacted by new loans as a result of the availability of credit within the automobile marketplace and consumer demand for purchasing new or used automobiles. Consumer Banking also includes the Wealth Management and Insurance Services Division, comprised of trust, asset management, brokerage, insurance and tax credit advisory services.

Previous wording

Consumer Banking’s average interest earning assets increased $319.4 million to $9.8 billion for the three months ended March 31, 2024 as compared to the same period of 2023. The increase was largely due to new residential mortgage loan volumes originated for investment rather than sale over the last 12-month period and, to a lesser extent, an increase in average home equity loans.

Current wording

Consumer Banking’s average interest earning assets increased$201.0 million to $9.8 billion for the three months ended June 30, 2024 as compared to the same period of 2023. The increase was largely due to new residential mortgage loan volumes originated for investment rather than sale over the last 12-month period and, to a lesser extent, an increase in average auto loan balances.

Previous wording

The return on average interest earning assets before income taxes for the Consumer Banking segment was 0.50 percent for the first quarter 2024 compared to 0.52 percent for the first quarter 2023.

Current wording

The return on average interest earning assets before income taxes for the Consumer Banking segment was 0.64 percent for the second quarter 2024 compared to 0.51 percent for the second quarter 2023.

Previous wording

The Commercial Banking segment is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate characteristics, Commercial Banking is Valley’s operating segment that is most sensitive to movements in market interest rates. Commercial and industrial loans totaled approximately $9.1 billion and represented 18.2 percent of the total loan portfolio at March 31, 2024. Commercial real estate loans and construction loans totaled $31.7 billion and represented 63.5 percent of the total loan portfolio at March 31, 2024.

Current wording

The Commercial Banking segment is comprised of floating rate and adjustable rate commercial and industrial loans and construction loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate characteristics, Commercial Banking is Valley’s operating segment that is most sensitive to movements in market interest rates. Commercial and industrial loans totaled approximately $9.5 billion and represented 18.8 percent of the total loan portfolio at June 30, 2024. Commercial real estate loans and construction loans totaled $31.8 billion and represented 63.2 percent of the total loan portfolio at June 30, 2024.