Valley National Bancorp Annual Report 2017

FY2017 Annual Report · Valley National Bancorp

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ANNUAL
ANNUAL
REPORT
REPORT

20172017

Form 10-K and Proxy Statement
Form 10-K and Proxy Statement

®®

“We remain committed to delivering shareholder value while
embracing the same core values and guiding principles that built
our bank.”

Ira Robbins
President & CEO

LETTER TO OUR
SHAREHOLDERS

Ira Robbins
President & CEO

The Path to Relevance in Our Evolving Industry

2017 marked Valley National Bank’s 90th anniversary, a milestone
we were proud to celebrate with our communities, customers and
employees. As we reflect on nine decades of steady performance
and consistent financial results, we understand that to remain
relevant in our industry and community we must embrace change.

In the year ahead, you will hear about how change is redefining
Valley and what that means for our customers and the communities
we serve. We are committed to creating a financial services
organization that is stronger, faster, more efficient and responsive.
This vision is our way forward as we continue to build on what has
already made Valley a solid financial institution.

Remaining relevant is one of the greatest challenges we face
today as customer needs and preferences continue to evolve in
an ever-increasing digital and mobile world. That’s why we are
focused on equipping our banking professionals with the tools
and resources they need to provide a level of service that we hope
exceeds customer expectations every day.

When we entered 2017 our strategic plan was filled with
many ambitions. One of which was to enhance our customers’
experience. Another was to improve our efficiency with an
expansive implementation of our technology roadmap. In July,
we announced our largest acquisition ever and the expected results
from our LIFT earnings enhancement program which encompassed
savings in our expense structure and new revenue opportunities.
To say monumental shifts occurred at Valley during the past year
would be an understatement.

The foundation we laid in 2017 is expected to lead to significant
improvements in growth, efficiency and profitability for years to
come. We are investing heavily into our future, and are confident
the actions we take today will help us stay relevant for years to come.

The Year in Review

For the full year 2017, we reported net income of $161.9 million,
or $0.58 per share as compared to $168.1 million, or $0.63 per

VALLEY NATIONAL BANCORP

share for 2016. The 2017 net income was significantly reduced by
after-tax charges of $31.1 million (an $0.11 per share reduction in
earnings) related to the estimated impact of the Tax Cuts and Jobs
Act, a reduction in realizable state deferred tax assets, LIFT, and
merger related expenses. Exclusive of such charges, net income
and earnings per share reflected solid year-over-year improvement
and the strength of our balance sheet.

Our overall earnings were largely driven by our net interest income
which grew over 8 percent from 2016. Our non-interest income
was essentially unchanged from 2016, while non-interest expense
increased 6.9 percent from 2016. The higher non-interest expense
was largely a product of impaired tax credit investments (related
to tax reform), LIFT and merger expense, and, exclusive of such
charges, non-interest expense remained relatively in-line with
the prior year and well-controlled given our current growth and
efficiency initiatives in their initial implementation phase.

Loan growth over the course of the year was strong, ending 2017 up
6.4 percent from 2016. That number, adding back residential loan
sales, would have been an excess of 8 percent for the same period.
Drilling down further, we saw growth in most loan categories,
except for residential mortgage and home equity. This growth
was driven by our strategy to continue to diversify the bank’s
overall portfolio.

On the surface, our 2017 deposit strategy was less successful
showing total deposit growth of 2.3 percent as compared to
December 31, 2016. However, we managed to reduce our reliance
on short-term borrowings, allowing more flexibility and less
correlation to future Federal Reserve interest rate moves. This
should have a positive impact to our net interest margin over the
foreseeable future. Ultimately, our focus is on retaining a greater
level of no-cost and low-cost deposits to fund our future growth.

A staple of our performance has always been phenomenal credit
metrics, and 2017 proved to be no different. Non-accrual loans as
a percentage of total loans finished the year at 0.26 percent, while
net charge-offs were an impressive 0.01 percent of average loans.
Our allowance for credit losses as a percentage of nonperforming
loans stood at 0.68 percent at December 31, 2017. We will continue
to work diligently to maintain our historical underwriting standards.

Ira Robbins

President & CEO

Finally, our capital levels, as measured by several metrics, remain
at levels that put us safely above the fully phased-in regulatory
requirements. Our common equity tier 1 capital ratio ended the
year at 9.12 percent, down 0.15 percent from the prior year-
end. Coinciding with the announced acquisition of USAmeriBank,
we raised approximately $100 million in a fixed-to-floating non-
cumulative perpetual preferred stock offering. We should begin to
build capital more quickly via retained earnings primarily due to both
announced tax reform and our anticipation of greater profitability.

Investing in the Future

We are committed to excellence and relevance in the banking
industry, and to achieve that we have to invest in our infrastructure,
processes and people.

In 2017, we set forth on a path to accomplish just that by initiating
our technology roadmap — a three-year plan to overhaul many of
our internal operating systems, infrastructure, digital and mobile
offerings and automate our data processes. We are reinvesting
heavily in the Company, and strongly believe the additional costs
to be incurred over the course of the next couple of years will reap
great rewards for our customers and in-turn, our shareholders.
While still early in the process, we are recognizing substantial
cost saves because of our enhanced technology, keeping us on
the path to achieve our long-term operating efficiency ratio goal
of less than 55 percent.

We are now in the beginning phases of implementing and testing
new commercial and residential loan origination platforms that
will allow us to, not only go paperless in those business lines, but
enhance turnaround times for credit decisions and improve the
client experience. We continue to use greater cloud technology
that will enable us to lower costs through less physical infrastructure
maintenance and bring new and better products to our customers
in a timely manner.

Efficiency is Cultural

Our long-term efficiency targets are, in large part, based upon
embracing new technology to simplify our processes and lower
our operating expenses over time.

In July, we took an important step on our path to greater core
profitability when we began the implementation phase of our
company-wide earnings enhancement initiative called LIFT. The
concept behind LIFT was to identify revenue enhancements and
cost saves that would have little disruption to our overall company.
The findings of LIFT were an estimated annual pre-tax cost savings
run-rate of $19 million and additional revenues of $3 million, for
a total improvement in pre-tax operating efficiency of $22 million
annually. I’m pleased to announce that after the first six months
of implementation, we believe we’re on track to deliver on our
targets within the planned two-year time frame.

The changing landscape of the banking industry offers many
great challenges and opportunities. Historically, we have been a
significant brick and mortar retail presence in our markets. As retail
banking continues to evolve in a mobile and digital direction, we’re
updating our means of product delivery. This translates to greater
automation of channels through which we provide banking access,
and expanding our markets beyond our current physical footprint.
This will allow us to continue to focus on branch optimization in the
years to come, while reinvigorating and modifying the branches
that remain. Not only does this create lower operating expenses,

but it gives Valley the opportunity to recreate a branch system
that is more targeted, focused and ultimately more relevant to
our customers.

Efficiency can appear in many forms, from gathering core deposits
with minimal cost of acquisition via social media to empowering
employees with analytics and allowing them to target client needs
more effectively. It can also take shape in a company’s balance
sheet. As part of our strategic vision, we are taking steps to ensure
the optimization of our balance sheet in the most efficient manner.
This will include tougher return hurdles and targets for future uses
of capital and the addition of non-earning assets will face greater
scrutiny.

There is no denying that LIFT and our three-year technology
roadmap are a great beginning on the longer road to consistent
operating efficiency. Our team is embracing new opportunities
to enhance the customer experience and the response has been
overwhelmingly positive. We are confident we’ll see a positive
impact to our earnings and capital over the coming years.

Investing in Our People

Internally, Valley looks very different than it did just one year ago.
While we’ve made great strides reducing redundancy in the Bank,
we recognize the need to support growth with experienced talent.
That’s why we made several key hires to help diversify our revenue
streams, enhance our product offerings and build a management
team that can lead well into the future.

At our executive level, Robert Bardusch, former Chief Information
Officer, and the architect behind the Valley technology roadmap,
celebrated his first full year at the Bank and has recently been
named Chief Operating Officer.

Kevin Chittenden, Chief Residential Lending Officer, joined Valley
in late 2016 and has swiftly built the Company’s residential lending
capabilities into a recognized participant in the home purchase
mortgage market.

In October of 2017, we welcomed Yvonne Surowiec, Chief Human
Resources Officer. Yvonne will not only lead Valley’s efforts to acquire
the best talent possible in the markets we serve, but work to more
closely align incentive compensation with shareholder returns.

In January of 2018, Valley promoted Mark Saeger to Executive Vice
President and Chief Credit Officer. Mark has been a tremendous
leader within our organization and will continue to maintain a credit
underwriting environment that has long been a hallmark of Valley.

In addition to the USAmeriBank team, we’re gaining the experience
of Joseph Chillura, who will serve as Valley’s Regional President
of the Florida West Coast and Alabama Divisions. Joe’s energy,
experience and vision for those markets will be invaluable in
coming years.

In December of 2017, we announced the retirement and succession
of our long-standing CEO, Gerald H. Lipkin. Gerry spent 29 years
as the CEO of Valley National Bancorp and managed the bank
through several credit cycles. He has provided valuable counsel
and insight over his tenure and I look forward to continuing our
relationship as he continues his role as Chairman of the Board.
Additionally, we announced the retirement of Rudy Schupp,
President of Valley National Bancorp. Rudy first joined us in 2014
upon the closing of our 1st United Bancorp, Inc. acquisition. His

VALLEY NATIONAL BANCORP 3

contributions to Valley have been instrumental to our Florida
franchise, and helped improve our overall efficiencies with his
thoughtful contributions to the LIFT initiative.

On January 1, 2018, after holding several positions within the
Company over the past 21 years, it is a great honor and privilege
that I, Ira Robbins, assumed the duty of President and CEO, leading
Valley into a new era.

Moving on to a new period of leadership within the Company, we
must always recognize the successes and failures that have brought
us to this point. The industry we operate in is constantly evolving
and we must anticipate and adapt to provide the exceptional service
our clients have become accustomed to over our proud history.

Giving Back

As we continue to improve growth, efficiency and profitability, there
is one very important constant — to always recognize the well-being
of the communities we serve. In 2017, we invested over $1 billion in
our communities. Some of the highlights consist of over $240 million
in loans to affordable housing and economic development geared
towards revitalizing low and moderate-income communities. We
also lent approximately $287 million in mortgage loans to further
our commitment to lower income housing, and created in excess of
$440 million of small business loans focused on similar geographies.

Our product development has evolved with the needs of our
communities as well. We introduced and expanded several products
directed towards low and moderate-income households, such as
our VNB® Community Advantage Home Mortgage and Mortgage
Plus program; Non-profit Checking; FHA, VA, USDA, and Alternative
Checking.

In recognition of our commitment to pursuing greater prosperity
for everyone in our markets, Valley was awarded $3.5 million in
Affordable Housing Program subsidies from the Federal Home
Loan Bank of New York to fund four projects in New Jersey that will
result in 268 affordable rental units, representing over $36 million
in housing and community development investments.

many converted thrifts to invest their capital quickly has driven risk-
adjusted returns to levels that Valley is increasingly less comfortable
with. Diversifying a portion of our Company to Florida has given us
access to lower-cost, lower-beta deposits. From a lending perspective
we fill the absence of a true middle-market commercial bank while
providing better risk-adjusted yields to our portfolio. Additionally,
we believe the long-term growth prospects of our Florida markets
are almost double those of New Jersey and New York.

We have reached the scale necessary for Florida’s higher growth
markets to be impactful to Valley’s financial returns. Our focus in
the coming year lies on successful integration of USAmeriBank and
the growth trajectory for our Florida operations, while maintaining
a substantial presence in our legacy New Jersey and New York
markets. We are confident that Valley can achieve its profitability
goals via organic outlets.

Translation to Performance

We recognize the price performance and total return of our common
stock has underperformed that of our peers in recent history. The
acquisitions we have closed, while making great strategic sense,
have resulted in tangible book value growth that has trailed the
industry. Delayed adoption of scalable technology, combined with
less efficient uses of capital have restricted growth in years past.

I believe we are working toward a future that will hold a much
different outcome for our shareholders. We’re laser-focused on
building a better platform for our customers and enhancing our
lending capabilities to accelerate more diversified and responsible
growth. These efforts combined with our efficiency goals should
result in greater profitability over the course of the next few years.
That’s why I am confident our relative and absolute shareholder
returns will improve.

On behalf of our Board of Directors, Valley Executives and our
trusted associates, I thank you for your trust, patience, confidence
and support.

Another fact I am proud to share is that Valley and its employees
donated approximately $1.7 million to community development
programs. Our employees also donated significant time hosting
community workshops targeted towards financial education, fraud
awareness, and small-businesses.

Ira Robbins
President & CEO

Our dedication to the communities we serve will remain at the
forefront of everything we do.

Expanding Our Horizons

As we move closer to $30 billion in total assets, our approach to
growth and consolidation in the banking industry must adapt.
Economies of scale are important in banking. Achieving that
scale through whole bank acquisitions is a strategy that Valley
has historically pursued. In fact, we have closed three bank
mergers in the past four years alone. The strategic reasons for
those deals are significant, as all three allowed us to diversify
almost 30 percent of our loans and deposits to Florida.
Over the years, our legacy markets of New Jersey and New York
have become more saturated because of many irrational market
participants flushed with significant amounts of capital. The need for

VALLEY NATIONAL BANCORP

VALLEY NATIONAL BANCORP 5

SENIOR EXECUTIVE MANAGEMENT TEAM

ALAN D. ESKOW

Senior Executive Vice President
Chief Financial Officer & Secretary

DIANNE M. GRENZ

Senior Executive Vice President
Chief Consumer Banking Officer

THOMAS A. IADANZA

Senior Executive Vice President
Chief Lending Officer

RONALD H. JANIS

Senior Executive Vice President
General Counsel

VALLEY NATIONAL BANCORP

EXECUTIVE MANAGEMENT TEAM

ROBERT J. BARDUSCH

ANDREA T. ONORATO

Executive Vice President

Chief Operating Officer

Executive Vice President

Chief Administrative Officer

JOSEPH V. CHILLURA

Executive Vice President
Regional President of the
Florida West Coast & Alabama Division

MARK SAEGER

Executive Vice President
Chief Credit Officer

KEVIN CHITTENDEN

MELISSA F. SCOFIELD

Executive Vice President

Chief Residential Lending Officer

Executive Vice President

Chief Risk Officer

BERNADETTE M. MUELLER

YVONNE SUROWIEC

Executive Vice President
Corporate Social Responsibility &
Community Reinvestment Act Officer

Executive Vice President

Chief Human Resources Officer

VALLEY NATIONAL BANCORP 7

GERALD H. LIPKIN
Chairman of the Board

We would like to extend a very special thank you to Gerald H. Lipkin
for his many years of service at Valley National Bank. Over the past
four decades, Gerry’s dedication to the Company has gone unrivaled.
The insight, leadership, and friendship he has provided throughout
his tenure have been invaluable. We wish him well in retirement.

VALLEY NATIONAL BANCORP

OUR COMMITMENT TO COMMUNITY

At Valley National Bank, corporate social responsibility is more than just a philosophy,
it’s an enterprise-wide vision that underscores our daily approach to being a responsible
bank and citizen. We’re proud of the progress we’ve made, and together we intend to
fulfill our commitment to build a brighter future for the communities we serve.

VALLEY NATIONAL BANCORP 9

2017
BY THE

$243million

in community development loans

$117

million
in community development investments

1,890

Employees

participated in community development services

1,411

community development events

$ 1.7

10 VALLEY NATIONAL BANCORP

million

in total charitable giving

VALLEY IN THE

in community development loans

We hosted our ninth annual breast cancer walk on Saturday, October 14th and raised nearly $100,000 for breast cancer
research. Over the past nine years, we have raised approximately $900,000 in support of finding a cure for breast cancer.

Our employees have given an unprecedented amount of
mentorship hours, sharing their time and talents with some
of New Jersey’s most underserved youth by partnering
with Junior Achievement of New Jersey (JANJ).

We helped build homes in Paterson, New Jersey as part
of Paterson Habitat for Humanity’s Corporate Challenge.

VALLEY NATIONAL BANCORP 11

SHAREHOLDER RELATIONS

CORPORATE HEADQUARTERS

Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
(973) 305-8800

FORM 10-K
You may obtain a copy
of Valley National Bancorp’s
2017 Annual Report on Form 10-K
by submitting a request in writing to:

Tina Zarkadas

Assistant Vice President
Shareholder Relations Specialist
Valley National Bank
1455 Valley Road
Wayne, NJ 07470
tzarkadas@valleynationalbank.com

Shareholder Inquiries,
Dividend Reinvestment Plan, and
Registrar and Transfer Agent

For information regarding shareholder
accounts of common stock or Valley’s
Dividend Reinvestment Plan, please
contact the Registrar and Transfer Agent or
Valley National Bancorp:

American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Attn: Shareholder Relations Dept.
(877) 681-8028
Dividend Reinvestment Plan
(800) 278-4353

Valley National Bancorp
Attn: Shareholder Relations Dept.
(800) 522-4100, extension 3380
(973) 305-3380

FINANCIAL INFORMATION
Investors, security analysts and others seeking
financial information should submit a request in
writing to:

STOCK LISTING

Valley National Bancorp common
stock is traded on the New York
Stock Exchange under the symbol VLY.

Rick Kraemer

First Senior Vice President,
Investor Relations Officer
Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
rkraemer@valleynationalbank.com

ANNUAL MEETING
April 20, 2018
9:00 am

Valley National Bancorp
100 Furler Street
Totowa, New Jersey 07512

12 VALLEY NATIONAL BANCORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-11277
VALLEY NATIONAL BANCORP

(Exact name of registrant as specified in its charter)

New Jersey
(State or other jurisdiction of
Incorporation or Organization)
1455 Valley Road Wayne, NJ
(Address of principal executive office)

22-2477875
(I.R.S. Employer
Identification Number)
07470
(Zip code)

973-305-8800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, no par value
Non-Cumulative Perpetual Preferred Stock, Series A, no par value
Non-Cumulative Perpetual Preferred Stock, Series B, no par value
Warrants to purchase Common Stock

Name of exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive

Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files.) Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be

contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act (check one):

Large accelerated filer
Non-accelerated filer

(Do not check if a smaller reporting company)

Accelerated filer
Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $3.0 billion on June 30, 2017.

There were 330,817,221 shares of Common Stock outstanding at February 28, 2018.

Documents incorporated by reference:

Certain portions of the registrant’s Definitive Proxy Statement (the “2018 Proxy Statement”) for the 2018 Annual Meeting of

Shareholders to be held April 20, 2018 will be incorporated by reference in Part III. The 2018 Proxy Statement will be filed within 120 days
of December 31, 2017.

PART I

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

PART II

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

TABLE OF CONTENTS

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures about Market Risk

Financial Statements and Supplementary Data:
Valley National Bancorp and Subsidiaries:

Consolidated Statements of Financial Condition

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.

Item 9B.

Controls and Procedures

Other Information

PART III

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

PART IV

Item 15.

Item 16.

Directors, Executive Officers and Corporate Governance

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder

Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accountant Fees and Services

Exhibits and Financial Statement Schedules

Form 10-K Summary

Signatures

Page

141

142

145

150

151

PART I

Item 1.

Business

The disclosures set forth in this item are qualified by Item 1A—Risk Factors and the section captioned “Cautionary Statement
Concerning Forward-Looking Statements” in Item 7—Management’s Discussion and Analysis of Financial Condition and Results
of Operations of this report and other cautionary statements set forth elsewhere in this report.

Valley National Bancorp, headquartered in Wayne, New Jersey, is a New Jersey corporation organized in 1983 and is
registered as a bank holding company with the Board of Governors of the Federal Reserve System under the Bank Holding
Company Act of 1956, as amended (“Holding Company Act”). The words “Valley,” “the Company,” “we,” “our” and “us” refer
to Valley National Bancorp and its wholly owned subsidiaries, unless we indicate otherwise. At December 31, 2017, Valley had
consolidated total assets of $24.0 billion, total net loans of $18.2 billion, total deposits of $18.2 billion and total shareholders’
equity of $2.5 billion. In addition to its principal subsidiary, Valley National Bank (commonly referred to as the “Bank” in this
report), Valley owns all of the voting and common shares of GCB Capital Trust III and State Bancorp Capital Trusts I and II at
December 31, 2017 through which trust preferred securities were issued. These trusts are not consolidated subsidiaries. See Note
11 to the consolidated financial statements.

Valley National Bank is a national banking association chartered in 1927 under the laws of the United States. Currently, the
Bank has 237 branches serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens,
Long Island, Florida and Alabama. The Bank offers a full range of commercial, retail, insurance and wealth management financial
services products. The Bank also provides a variety of banking services including automated teller machines, telephone and internet
banking, remote deposit capture, overdraft facilities, drive-in and night deposit services, and safe deposit facilities. In addition,
certain international banking services are available to customers including standby letters of credit, documentary letters of credit
and related, products, and certain ancillary services such as foreign exchange transactions, documentary collections, foreign wire
transfers and the maintenance of foreign bank accounts, as well as transaction accounts for non-resident aliens.

Valley National Bank’s wholly-owned subsidiaries are all included in the consolidated financial statements of Valley (See

Exhibit 21 at Part IV, Item 15 for a list of subsidiaries). These subsidiaries include, but are not limited to:

•

an all-line insurance agency offering property and casualty, life and health insurance;

an asset management adviser that is a registered investment adviser with Securities and Exchange Commission (SEC);

title insurance agencies in New Jersey, New York and Florida;

subsidiaries which hold, maintain and manage investment assets for the Bank;

a subsidiary which owns and services auto loans;

a subsidiary which specializes in health care equipment lending and other commercial equipment leases; and

a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the REIT subsidiaries) which own real estate
related investments and a REIT subsidiary, which owns some of the real estate utilized by the Bank and related real estate
investments. Except for Valley’s REIT subsidiaries, all subsidiaries mentioned above are directly or indirectly wholly owned by
the Bank. Because each REIT must have 100 or more shareholders to qualify as a REIT, each REIT has issued less than 20 percent
of their outstanding non-voting preferred stock to individuals, most of whom are current and former (non-executive officer) Bank
employees. The Bank owns the remaining preferred stock and all the common stock of the REITs.

Recent Acquisitions

Valley has grown significantly in the past five years primarily through bank acquisitions that expanded our branch footprint

into Florida. Recent bank transactions are discussed further below.

USAmeriBancorp, Inc. On January 1, 2018, Valley completed its acquisition of USAmeriBancorp, Inc. (USAB)
headquartered in Clearwater, Florida. USAB, largely through its wholly-owned subsidiary, USAmeriBank, had approximately
$4.7 billion in assets, $3.8 billion in net loans and $3.6 billion in deposits, and maintained a branch network of 29 offices at
December 31, 2017. The acquisition will expand Valley’s Florida presence, primarily in the Tampa Bay market and establish a
presence in the Birmingham, Montgomery, and Tallapoosa areas in Alabama, where USAB maintained 15 of its branches. The
common shareholders of USAB received 6.1 shares of Valley common stock for each USAB share they own. Full systems integration

2017 Form 10-K

is expected to be completed in the second quarter of 2018. The total consideration for the acquisition was approximately $737
million.

CNLBancshares, Inc. On December 1, 2015, Valley completed its acquisition of CNLBancshares, Inc. (CNL) and its
wholly-owned subsidiary, CNLBank, headquartered in Orlando, Florida, a commercial bank with approximately $1.6 billion in
assets, $825 million in loans, $1.2 billion in deposits and 16 branch offices on the date of its acquisition by Valley. The acquired
branches allowed us to service Florida's west coast markets of Naples, Bonita Springs, Fort Myers and Sarasota. We also added
three offices in the Jacksonville area and expanded our presence in the Orlando market. The common shareholders of CNL received
0.705 of a share of Valley common stock for each CNL share they owned prior to the merger. The total consideration for the
acquisition was approximately $230 million, consisting of 20.6 million shares of Valley common stock.

1st United Bancorp, Inc. On November 1, 2014, Valley acquired 1st United Bancorp, Inc. (1st United) and its wholly-
owned subsidiary, 1st United Bank, a commercial bank with approximately $1.7 billion in assets, $1.2 billion in loans, and $1.4
billion in deposits, after purchase accounting adjustments. The 1st United acquisition gave Valley its first Florida branch network
consisting of 20 branch offices covering some of the most attractive urban banking markets in Florida, including locations
throughout southeast Florida, the Treasure Coast, central Florida and central Gulf Coast regions. The common shareholders of 1st
United received 0.89 of a share of Valley common stock for each 1st United share they owned prior to the merger. The total
consideration for the acquisition was approximately $300 million, consisting of 30.7 million shares of Valley common stock and
$8.9 million of cash consideration paid to 1st United stock option holders.

In connection with the 1st United acquisition, we acquired loans and other real estate owned subject to Federal Deposit
Insurance Corporation (FDIC) loss-share agreements (referred to as “covered loans” and “covered OREO”, together “covered
assets”). The FDIC loss-share agreements relate to three previous FDIC-assisted acquisitions completed by 1st United from 2009
to 2011. The Bank shares losses on covered assets in accordance with provisions of each loss-share agreement. The vast majority
of Valley's covered loans totaling $38.7 million, or 0.2 percent of total loans, at December 31, 2017 are covered by consumer
related loan loss sharing agreements acquired from 1st United that will expire between 2018 and 2021.

Business Segments

Our business segments are reassessed by management, at least on an annual basis, to ensure the proper identification and
reporting of our operating segments. Valley currently reports the results of its operations and manages its business through four
business segments: commercial lending, consumer lending, investment management, and corporate and other adjustments. Valley’s
Wealth Management Division comprised of trust, asset management and insurance services, is included in the consumer lending
segment. See Note 22 to the consolidated financial statements for details of the financial performance of our business segments.
We offer a variety of products and services within the commercial and consumer lending segments as described below.

Commercial Lending Segment

Commercial and industrial loans. Commercial and industrial loans totaled approximately $2.7 billion and represented
15.0 percent of the total loan portfolio at December 31, 2017. We make commercial loans to small and middle market businesses
most often located in the New Jersey and New York area, as well as Florida which accounted for approximately 7 percent of the
$2.7 billion in commercial and industrial loans at December 31, 2017. A significant proportion of Valley’s commercial and industrial
loan portfolio is granted to long-standing customers of proven ability, strong repayment performance, and high character.
Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt
service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, most of the
loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated
cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the
case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Our loan
decisions include consideration of a borrower’s willingness to repay debts, collateral coverage, standing in the community and
other forms of support. Strong consideration is given to long-term existing customers that have maintained a favorable relationship
with the Bank. Commercial loan products offered consist of term loans for equipment purchases, working capital lines of credit
that assist our customers’ financing of accounts receivable and inventory, and commercial mortgages for owner occupied properties.
Working capital advances are generally used to finance seasonal requirements and are repaid at the end of the cycle. Short-term
commercial business loans may be collateralized by a lien on accounts receivable, inventory, equipment and/or partly collateralized
by real estate. Short-term loans may also be made on an unsecured basis based on a borrower’s financial strength and past
performance. Whenever possible, we obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured
loans, when made, are generally granted to the Bank’s most creditworthy borrowers. Unsecured commercial and industrial loans
totaled $401.8 million at December 31, 2017. In addition, we provide financing to the medical equipment leasing market through
our leasing subsidiary, Highland Capital Corp.

2017 Form 10-K

The commercial portfolio also includes approximately $127.7 million and $9.6 million of New York City and Chicago taxi
medallion loans, respectively, that are largely classified as substandard and special mention loans at December 31, 2017. While
the vast majority of the taxi medallion loans were performing at December 31, 2017, continued negative trends in the market
valuations of the underlying taxi medallion collateral caused by competing car service providers and other factors could impact
the future performance and internal classification of this portfolio. Valley's historical lending criteria has been conservative in
regard to capping both the loan amounts and market valuations for taxi medallions, as well as obtaining personal guarantees and
other collateral in certain instances. However, potential further declines in the market valuation of taxi medallions could negatively
impact the future performance of this portfolio.

Commercial real estate loans. Commercial real estate and construction loans totaled $10.3 billion and represented 56.4
percent of the total loan portfolio at December 31, 2017. We originate commercial real estate loans that are largely secured by
multi-unit residential property and non-owner occupied commercial, industrial, and retail property within New Jersey, New York,
Pennsylvania and Florida. Loans originated from our Florida lending operations represented 14 percent of the $10.3 billion in
total commercial real estate loans at December 31, 2017. Loans are generally written on an adjustable basis with rates tied to a
specifically identified market rate index. Adjustment periods generally range between five to ten years and repayment is generally
structured on a fully amortizing basis for terms up to thirty years. Commercial real estate loans are subject to underwriting standards
and processes similar to commercial and industrial loans but generally they involve larger principal balances and longer repayment
periods as compared to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans
and secondarily as loans secured by real property. Repayment of most loans is dependent upon the cash flow generated from the
property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected
by conditions in the real estate markets or in the general economy and accordingly, conservative loan to value ratios are required
at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties
securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.
With respect to loans to developers and builders, we originate and manage construction loans structured on either a revolving or
a non-revolving basis, depending on the nature of the underlying development project. Our construction loans totaling
approximately $851.1 million at December 31, 2017 are generally secured by the real estate to be developed and may also be
secured by additional real estate to mitigate the risk. Non-revolving construction loans often involve the disbursement of
substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the
project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of
developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving
construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon
the presale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher
risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation
of real property, general economic conditions and the availability of long-term financing.

Consumer Lending Segment

Residential mortgage loans. Residential mortgage loans totaled $2.9 billion and represented 15.6 percent of the total loan
portfolio at December 31, 2017. We offer a full range of residential mortgage loans for the purpose of purchasing or refinancing
one-to-four family residential properties. Our residential mortgage loans include fixed and variable interest rate loans generally
located in counties where we have a branch presence in New Jersey, New York and Florida, as well as contiguous counties, if
applicable, including eastern Pennsylvania. Valley’s ability to be repaid on such loans is closely linked to the economic and real
estate market conditions in our lending markets. We occasionally make mortgage loans secured by homes beyond this primary
geographic area; however, lending outside this primary area is generally made in support of existing customer relationships.
Mortgage loan originations are based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac
requirements. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from
valuation services and not through appraisal management companies. The Bank’s appraisal management policy and procedure is
in accordance with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO®
and other proprietary, credit scoring models is employed in the ultimate, judgmental credit decision by Valley’s underwriting staff.
Valley does not use third party contract underwriting services. In deciding whether to originate each residential mortgage, Valley
considers the qualifications of the borrower, the value of the underlying property and other factors that we believe are predictive
of future loan performance. Valley originated first mortgages are generally fixed-rate amortizing loans with 10-year to 30-year
maturities. However in 2017, Valley began to originate interest-only (i.e., non-amortizing) residential mortgage loans due to
demand for this type of loan product in New York City and northern New Jersey markets. Valley's interest-only residential mortgage
loans have 15-year to 30-year maturities and totaled $39.9 million (or 1.4 percent of the total residential mortgage loan portfolio)
at December 31, 2017.

The Bank is also a servicer of residential mortgage portfolios, and it is compensated for loan administrative services performed
for mortgage servicing rights related primarily to loans originated and sold by the Bank. See Note 8 to the consolidated financial
statements for further details.

2017 Form 10-K

Other consumer loans. Other consumer loans totaled $2.4 billion and represented 13.0 percent of the total loan portfolio
at December 31, 2017. Our other consumer loan portfolio is primarily comprised of direct and indirect automobile loans, home
equity loans and lines of credit, loans secured by the cash surrender value of life insurance, and to a lesser extent, secured and
unsecured other consumer loans (including credit card loans). Valley is an auto lender in New Jersey, New York, Pennsylvania,
Florida, Connecticut and Delaware offering indirect auto loans secured by either new or used automobiles. Automobile originations
(including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile
dealers. Valley acquired an immaterial amount of automobile loans from both the CNL and 1st United acquisitions in 2015 and
2014, respectively, as auto lending was not a focus of the acquired operations. However, we implemented our indirect auto lending
model in Florida during 2015 using our New Jersey based underwriting and loan servicing platform. The new Florida auto dealer
network generated over $106 million and $36 million of auto loans in 2017 and 2016, respectively. Home equity lending consists
of both fixed and variable interest rate products mainly to provide home equity loans to our residential mortgage customers or
take a secondary position to another lender’s first lien position within the footprint of our primary lending territory. We generally
will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 75 percent when originating a home equity
loan. Other consumer loans include direct consumer term loans, both secured and unsecured. From time to time, the Bank will
also purchase prime consumer loans originated by and serviced by other financial institutions based on several factors, including
current secondary market rates, excess liquidity and other asset/liability management strategies. Unsecured consumer loans totaled
approximately $18.1 million, including $8.2 million of credit card loans, at December 31, 2017.

Wealth Management. Our Wealth Management and Insurance Services Division provides coordinated and integrated
delivery of investment management advisory, trust services, commercial and personal insurance products, and title insurance.
Asset management advisory services include investment services for individuals and small to medium sized businesses, trusts and
custom -tailored investment strategies designed for various types of retirement plans. Trust services include living and testamentary
trusts, investment management, custodial and escrow services, and estate administration, primarily to individuals.

Investment Management Segment

Although we are primarily focused on our lending and wealth management services, a large portion of our income is generated
through investments in various types of securities, and depending on our liquid cash position, federal funds sold and interest-
bearing deposits with banks (primarily the Federal Reserve Bank of New York), as part of our asset/liability management strategies.
As of December 31, 2017, our total investment securities and interest bearing deposits with banks were $3.3 billion and $172.8
million, respectively. See the “Investment Securities Portfolio” section of “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations” (MD&A) and Note 4 to the consolidated financial statements for additional
information concerning our investment securities.

Changes in Loan Portfolio Composition

At December 31, 2017, approximately 74 percent of Valley’s gross loans totaling $18.3 billion consisted of commercial real
estate (including construction loans), residential mortgage, and home equity loans as compared to 75 percent at December 31,
2016. The remaining 26 percent and 25 percent at December 31, 2017 and 2016, respectively, consisted of loans not collateralized
by real estate. Valley has no internally planned changes that would significantly impact the current composition of our loan portfolio
by loan type. However, we have continued to diversify the geographic concentrations in the New Jersey and New York City
Metropolitan area within our loan portfolio primarily through our bank acquisitions in Florida since 2014, including our recent
acquisition of USAB on January 1, 2018. Many external factors outlined in “Item 1A. Risk Factors”, the “Executive Summary”
section of our MD&A, and elsewhere in this report may impact our ability to maintain the current composition of our loan portfolio.
See the “Loan Portfolio” section of our MD&A in this report for further discussion of our loan composition and concentration
risks.

2017 Form 10-K

The following table presents the loan portfolio segments by state as an approximate percentage of each applicable segment

and our percentage of total loans by state at December 31, 2017.

New Jersey
New York
Florida
Pennsylvania
California
Connecticut
Other

Total

Percentage of Loan Portfolio Segment:

Commercial
and
Industrial

Commercial
Real Estate

Residential

Consumer

% of Total
Loans

40%
34
14

2
1
9
100%

42%
41
13
1
1

2
100%

56%
19
13
2
6
1
3
100%

41%
30
10
11
1
2
5
100%

43%
35
13
2
2
1
4
100%

Represents less than one percent of the loan portfolio segment.

Risk Management

Effective risk management is critical to our success. Financial institutions must manage a variety of business risks that can
significantly affect their financial performance. Significant risks we confront are credit risks and asset/liability management risks,
which include interest rate and liquidity risks. Credit risk is the risk of not collecting payments pursuant to the contractual terms
of loan, lease and investment assets. Interest rate risk results from changes in interest rates which may impact the re-pricing of
assets and liabilities in different amounts or at different dates. Liquidity risk is the risk that we will be unable to fund obligations
to loan customers, depositors or other creditors at a reasonable cost.

Valley’s Board performs its risk oversight function primarily through several standing committees, including the Risk
Committee, all of which report to the full Board. The Risk Committee assists the Board by, among other things, establishing an
enterprise-wide risk management framework that is appropriate for Valley’s capital, business activities, size and risk appetite. The
Risk Committee also reviews and recommends to the Board appropriate risk tolerances and limits for credit, compliance, interest
rate, liquidity, operational, strategic and price risk (and ensures that risk is managed within those tolerances), and monitors
cybersecurity risk management and compliance with laws and regulations. With guidance from and oversight by the Risk
Committee, management continually refines and enhances its risk management policies and procedures to maintain effective risk
management programs and processes.

Additionally, The Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") requires
federal banking agencies to issue regulations that require banks with total consolidated assets of more than $10.0 billion to conduct
and publish company-run annual stress tests to assess the potential impact of different scenarios on the consolidated earnings and
capital of each bank and certain related items over a nine-quarter forward-looking planning horizon, taking into account all relevant
exposures and activities. The Federal Reserve Board (FRB), Office of the Comptroller of the Currency (OCC), and Federal Deposit
Insurance Corporation (FDIC) issued final supervisory guidance for these stress tests. The guidance provides supervisory
expectations for stress test practices, examples of practices that would be consistent with those expectations, and details about
stress test methodologies. It also emphasizes the importance of stress testing as an ongoing risk management practice.

On July 27, 2017, we submitted our latest stress testing results, utilizing data as of December 31, 2016, to the FRB. The full
disclosure of the stress testing results, including the results for Valley National Bank, a summary of the supervisory severely
adverse scenario and additional information regarding the methodologies used to conduct the stress test may be found under
"Regulatory Disclosures" within the Shareholder Information section of our website at www.valleynationalbank.com. Through
the stress testing program that has been implemented and reviewed by the Risk Committee, Valley complies with current regulations.
The results of stress testing activities are considered in combination with other risk management and monitoring practices to
maintain an effective risk management program.

Credit Risk Management and Underwriting Approach

Credit risk management. For all loan types, we adhere to a credit policy designed to minimize credit risk while generating
the maximum income given the level of risk. Management reviews and approves these policies and procedures on a regular basis

2017 Form 10-K

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 a Credit Committee. A reporting
system supplements the review process by providing management with frequent reports concerning loan production, loan quality,
concentrations of credit, loan delinquencies, non-performing, and potential problem loans. Loan portfolio diversification is an
important factor utilized by us to manage the portfolio’s risk across business sectors and through cyclical economic circumstances.

Our historical and current loan underwriting practice prohibits the origination of payment option adjustable residential
mortgages which allow for negative interest amortization and subprime loans. Virtually all of our residential mortgage loan
originations in recent years have conformed to rules requiring documentation of income, assets sufficient to close the transactions
and debt to income ratios that support the borrower’s ability to repay under the loan’s proposed terms and conditions. These rules
are applied to all loans originated for retention in our portfolio or for sale in the secondary market.

Loan underwriting and loan documentation. Loans are well documented in accordance with specific and detailed
underwriting policies and verification procedures. General underwriting guidance is consistent across all loan types with possible
variations in procedures and due diligence dictated by specific loan requests. Due diligence standards require acquisition and
verification of sufficient financial information to determine a borrower’s or guarantor’s credit worthiness, capital support, capacity
to repay, collateral support, and character. Credit worthiness is generally verified using personal or business credit reports from
independent credit reporting agencies. Capital support is determined by acquisition of independent verifications of deposits,
investments or other assets. Capacity to repay the loan is based on verifiable liquidity and earnings capacity as shown on financial
statements and/or tax returns, banking activity levels, operating statements, rent rolls or independent verification of
employment. Finally, collateral valuation is determined via appraisals from independent, bank-approved, certified or licensed
property appraisers, valuation services, or readily available market resources.

Types of collateral. Loan collateral, when required, may consist of any one or a combination of the following asset types
depending upon the loan type and intended purpose: commercial or residential real estate; general business assets including working
assets such as accounts receivable, inventory, or fixed assets such as equipment or rolling stock; marketable securities or other
forms of liquid assets such as bank deposits or cash surrender value of life insurance; automobiles; or other assets wherein adequate
protective value can be established and/or verified by reliable outside independent appraisers. In addition to these types of collateral,
we, in many cases, will obtain the personal guarantee of the borrower’s principals to mitigate the risk of certain commercial and
industrial loans and commercial real estate loans.

Many times, we will underwrite loans to legal entities formed for the limited purpose of the business which is being financed.
Credit granted to these entities and the ultimate repayment of such loans is primarily based on the cash flow generated from the
property securing the loan or the business that occupies the property. The underlying real property securing the loans is considered
a secondary source of repayment, and normally such loans are also supported by guarantees of the legal entity members. Absent
such guarantees or approval by our credit committee, our policy requires that the loan to value ratio (at origination) should not
exceed 60 percent, except for certain low risk loan categories where the loan to value ratio requirement may be higher, based on
the estimated market value of the property as established by an independent licensed appraiser.

Reevaluation of collateral values. Commercial loan renewals, refinancing and other subsequent transactions that include
the advancement of new funds or result in the extension of the amortization period beyond the original term, require a new or
updated appraisal. Renewals, refinancing and other subsequent transactions that do not include the advancement of new funds
(other than for reasonable closing costs) or, in the case of commercial loans, the extension of the amortization period beyond the
original term, do not require a new appraisal unless management believes there has been a material change in market conditions
or the physical aspects of the property which may negatively impact collectability of our loan. In general, the period of time an
appraisal continues to be relevant will vary depending upon the circumstances affecting the property and the marketplace. Examples
of factors that could cause material changes to reported values include the passage of time, the volatility of the local market, the
availability of financing, the inventory of competing properties, new improvements to, or lack of maintenance of, the subject or
competing surrounding properties, changes in zoning and environmental contamination.

Certain impaired loans are reported at the fair value of the underlying collateral (less estimated selling costs) if repayment
is expected solely from the collateral and are commonly referred to as “collateral dependent impaired loans.” Collateral values
for such loans are typically estimated using individual appraisals performed every 12 months (or 18 months for impaired loans
no greater than $1 million with current loan to value ratios less than 75 percent). Between scheduled appraisals, property values
are monitored within the commercial portfolio by reference to recent trends in commercial property sales as published by leading
industry sources. Property values are monitored within the residential mortgage portfolio by reference to available market indicators,
including real estate price indices within Valley’s primary lending areas.

All refinanced residential mortgage loans require new appraisals for loans held in our loan portfolio. However, certain
residential mortgage loans may be originated for sale and sold without new appraisals when the investor (Fannie Mae or Freddie

2017 Form 10-K

Mac) presents a refinance of an existing government sponsored enterprise loan without the benefit of a new appraisal. Additionally,
all loan types are assessed for full or partial charge-off when they are between 90 and 120 days past due (or sooner when the
borrowers’ obligation has been released in bankruptcy) based upon their estimated net realizable value. See Note 1 to our
consolidated financial statements for additional information concerning our loan portfolio risk elements, credit risk management
and our loan charge-off policy.

Loan Renewals and Modifications

In the normal course of our lending business, we may renew loans to existing customers upon maturity of the existing loan.
These renewals are granted provided that the new loan meets our standard underwriting criteria for such loan type. Additionally,
on a case-by-case basis, we may extend, restructure, or otherwise modify the terms of existing loans from time to time to remain
competitive and retain certain profitable customers, as well as assist customers who may be experiencing financial difficulties. If
the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is
classified as a troubled debt restructured loan (TDR).

The majority of the concessions made for TDRs involve lowering the monthly payments on loans through either a reduction
in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium
reflected in the interest rate, or a combination of these two methods. The concessions rarely result in the forgiveness of principal
or accrued interest. In addition, Valley frequently obtains additional collateral or guarantor support when modifying such loans.
If the borrower has demonstrated performance under the previous terms and Valley’s underwriting process shows the borrower
has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing
restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally
six consecutive months of payments) and both principal and interest are deemed collectible.

Extension of Credit to Past Due Borrowers

Loans are placed on non-accrual status generally when they become 90 days past due and the full and timely collection of
principal and interest becomes uncertain. Valley’s historic and current policy prohibits the advancement of additional funds on
non-accrual and TDR loans, except under certain workout plans if such extension of credit is intended to mitigate losses.

Loans Originated by Third Parties

From time to time, the Bank makes purchases of commercial real estate loans and loan participations, residential mortgage
loans, automobile loans, and other loan types, originated by, and sometimes serviced by, other financial institutions. The purchase
decision is usually based on several factors, including current loan origination volumes, market interest rates, excess liquidity, our
continuous efforts to meet the credit needs of certain borrowers under Community Reinvestment Act, as well as other asset/liability
management strategies. All of the purchased loans are selected using Valley’s normal underwriting criteria at the time of purchase,
or in some cases guaranteed by third parties. Purchased commercial real estate participation loans are generally seasoned loans
with expected shorter durations. Additionally, each purchased participation loan is stress-tested by Valley to assure its credit quality.

Purchased commercial real estate loans, residential mortgage loans and automobile loans totaled approximately $1.9 billion,
$899.3 million and $1.4 million, respectively, at December 31, 2017 representing 21.98 percent, 33.09 percent and 0.11 percent
of our total commercial real estate, residential mortgage and automobile loan portfolios, respectively. At December 31, 2017, the
commercial real estate loans originated by third parties had loans past due 30 days or more totaling 0.53 percent of these loans as
compared to 0.13 percent for our total commercial real estate portfolio, including all delinquencies. Residential mortgage loans
originated by third parties had loans past due 30 days or more totaling 2.59 percent of these loans at December 31, 2017 as compared
to 0.86 percent for our total residential mortgage portfolio. The purchased automobile portfolio had loans past due 30 days or more
totaling 1.37 percent of these loans at December 31, 2017 as compared to 0.58 percent for our total automobile loan portfolio.

Additionally, Valley has performed credit due diligence on the majority of the loans acquired in our bank acquisitions
(disclosed under the "Recent Acquisitions" section above) in determining the estimated cash flows receivable from such loans.
See the "Loan Portfolio" section of Item 7—Management’s Discussion and Analysis of Financial Condition and Results of
Operations of this report below for additional information.

Competition

Valley National Bank is one of the largest commercial banks headquartered in New Jersey, with its primary markets located
in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Florida and
Alabama. Valley ranked 18th in competitive ranking and market share based on the deposits reported by 210 FDIC-insured financial
institutions in the New York, Northern New Jersey and Long Island deposit market as of June 30, 2017. The FDIC also ranked
Valley 7th, 39th and 32th in the states of New Jersey, New York and Florida, respectively, based on deposit market share as of
June 30, 2017. While our FDIC rankings reflect a solid foundation in our primary markets, the market for banking and bank-

2017 Form 10-K

related services is highly competitive and we face substantial competition in all phases of our operations. In addition to the FDIC-
insured commercial banks in our principal metropolitan markets, we also compete with other providers of financial services such
as savings institutions, credit unions, mutual funds, captive finance companies, mortgage companies, title agencies, asset managers,
insurance companies and a growing list of other local, regional and national companies which offer various financial services.
Many of these competitors may have fewer regulatory constraints, broader geographic service areas, greater capital, and, in some
cases, lower cost structures.

In addition, competition has further intensified as a result of recent changes in regulation, and advances in technology and
product delivery systems. We face strong competition for our borrowers, depositors, and other customers from financial technology
(fintech) companies that provide innovative web-based solutions to traditional retail banking services and products. Fintech
companies tend to have stronger operating efficiencies and less regulatory burdens than their traditional bank counterparts, including
Valley. Within our markets, we also compete with some of the largest financial institutions in the world that have greater human
and financial resources and are able to offer a large range of products and services at competitive rates and prices. Nevertheless,
we believe we can compete effectively as a result of utilizing various strategies including our long history of local customer service
and convenience as part of a relationship management culture, in conjunction with the pricing of loans and deposits. Our customers
are influenced by the convenience, quality of service from our knowledgeable staff, personal contacts and attention to customer
needs, as well as availability of products and services and related pricing. We provide such convenience through our banking
network of 237 branches, an extensive ATM network of 255 locations, and our telephone and on-line banking systems. Our
competitive advantage also lies in our strong community presence with 2017 marking 90 years of service. This longevity is
especially appealing to customers seeking a strong, stable and service-oriented bank.

We continually review our pricing, products, locations, alternative delivery channels and various acquisition prospects, and

periodically engage in discussions regarding possible acquisitions to maintain and enhance our competitive position.

Personnel

At December 31, 2017, Valley National Bank and its subsidiaries employed 2,842 full-time equivalent persons. Management

considers relations with its employees to be satisfactory.

Executive Officers

Name

Ira Robbins

Alan D. Eskow

Dianne M. Grenz

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

Kevin Chittenden

Bernadette M. Mueller

Andrea T. Onorato

Melissa F. Scofield

Yvonne M. Surowiec

Mark Seager

Mitchell L. Crandell

Age at
December 31,
2017
43

Executive
Officer
Since
2009

1993

2014

2015

2017

2016

2009

2014

2015

2017

2018

2007

Office

President and Chief Executive Officer of Valley and Valley National
Bank
Senior Executive Vice President, Chief Financial Officer and Corporate
Secretary of Valley and Valley National Bank
Senior Executive Vice President of Valley and Chief Consumer Banking
Officer of Valley National Bank
Senior Executive Vice President of Valley and Chief Lending Officer of
Valley National Bank
Senior Executive Vice President and General Counsel of Valley and
Valley National Bank
Executive Vice President of Valley and Chief Operating Officer of
Valley National Bank
Executive Vice President of Valley and Chief Residential Lending
Officer of Valley National Bank
Executive Vice President of Valley and Community Reinvestment Act
Officer of Valley National Bank
Executive Vice President of Valley and Chief Administrative Officer of
Valley National Bank
Executive Vice President of Valley and Chief Risk Officer of Valley
National Bank
Executive Vice President of Valley and Chief Human Resources Officer
of Valley National Bank
Executive Vice President of Valley Chief Credit Officer of Valley
National Bank
First Senior Vice President, Chief Accounting Officer of Valley and
Valley National Bank

2017 Form 10-K

All officers serve at the pleasure of the Board of Directors.

Available Information

We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
amendments thereto available on our website at www.valleynationalbank.com without charge as soon as reasonably practicable
after filing or furnishing them to the SEC. Also available on the website are Valley’s Code of Conduct and Ethics that applies to
all of our employees including our executive officers and directors, Valley’s Audit Committee Charter, Valley’s Compensation
and Human Resources Committee Charter, Valley’s Nominating and Corporate Governance Committee Charter, and Valley’s
Corporate Governance Guidelines.

Additionally, we will provide without charge a copy of our Annual Report on Form 10-K or the Code of Conduct and Ethics
to any shareholder by mail. Requests should be sent to Valley National Bancorp, Attention: Shareholder Relations, 1455 Valley
Road, Wayne, NJ 07470.

SUPERVISION AND REGULATION

The banking industry is highly regulated. Statutory and regulatory controls increase a bank holding company’s cost of doing
business and limit the options of its management to deploy assets and maximize income. The following discussion is not intended
to be a complete list of all the activities regulated by the banking laws or of the impact of such laws and regulations on Valley or
Valley National Bank. It is intended only to briefly summarize some material provisions.

Bank Holding Company Regulation

Valley is a bank holding company within the meaning of the Holding Company Act. As a bank holding company, Valley is
supervised by the FRB and is required to file reports with the FRB and provide such additional information as the FRB may
require.

The Holding Company Act prohibits Valley, with certain exceptions, from acquiring direct or indirect ownership or control
of more than five percent of the voting shares of any company which is not a bank and from engaging in any business other than
that of banking, managing and controlling banks or furnishing services to subsidiary banks, except that it may, upon application,
engage in, and may own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking
“as to be a proper incident thereto.” The Holding Company Act requires prior approval by the FRB of the acquisition by Valley
of more than five percent of the voting stock of any other bank. Satisfactory capital ratios, Community Reinvestment Act ratings,
and anti-money laundering policies are generally prerequisites to obtaining federal regulatory approval to make acquisitions. The
policy of the FRB provides that a bank holding company is expected to act as a source of financial strength to its subsidiary bank
and to commit resources to support the subsidiary bank in circumstances in which it might not do so absent that policy. Acquisitions
through the Bank require approval of the OCC. The Holding Company Act does not place territorial restrictions on the activities
of non-bank subsidiaries of bank holding companies. The Gramm-Leach-Bliley Act, discussed below, allows Valley to expand
into insurance, securities and other activities that are financial in nature if Valley elects to become a financial holding company.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 enables bank holding companies to acquire banks
in states other than its home state and to open branches in other states, subject to certain restrictions. The Dodd-Frank Act, discussed
below, authorized interstate de novo branching regardless of state law.

Regulation of Bank Subsidiary

Valley National Bank is subject to the supervision of, and to regular examination by, the OCC. Various laws and the regulations
thereunder applicable to Valley and its bank subsidiary impose restrictions and requirements in many areas, including capital
requirements, the maintenance of reserves, establishment of new offices, the making of loans and investments, consumer protection,
employment practices, bank acquisitions and entry into new types of business. There are various legal limitations, including
Sections 23A and 23B of the Federal Reserve Act, which govern the extent to which a bank subsidiary may finance or otherwise
supply funds to its holding company or its holding company’s non-bank subsidiaries. Under federal law, no bank subsidiary may,
subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, its parent or the
non-bank subsidiaries of its parent (other than direct subsidiaries of such bank which are not financial subsidiaries) or take their
securities as collateral for loans to any borrower. Each bank subsidiary is also subject to collateral security requirements for any
loans or extensions of credit permitted by such exceptions.

2017 Form 10-K

Capital Requirements

Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), each federal banking agency
has promulgated regulations, specifying the levels at which a financial institution would be considered “well capitalized,”
“adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized,” and to take certain
mandatory and discretionary supervisory actions based on the capital level of the institution. To qualify to engage in financial
activities under the Gramm-Leach-Bliley Act, all depository institutions must be “well capitalized.” The financial holding company
of a national bank will be put under directives to raise its capital levels or divest its activities if the depository institution falls from
that level.

In July 2013, the FRB and the OCC published final rules establishing a new comprehensive capital framework for U.S.
banking organizations, referred to herein as the Basel III rules. Basel III rules implement the Basel Committee’s December 2010
framework, commonly referred to as Basel III, for strengthening international capital standards as well as certain provisions of
the Dodd-Frank Act. Basel III substantially revised the risk-based capital requirements applicable to bank holding companies and
depository institutions, including Valley and Valley National Bank. Basel III became effective for us on January 1, 2015 (subject
to phase-in periods for certain components).

Basel III (i) introduced a new capital measure called “Common Equity Tier 1,” or CET1, (ii) specified that Tier 1 capital
consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) applied most deductions/
adjustments to regulatory capital measures to CET1 and not to the other components of capital, thus potentially requiring higher
levels of CET1 in order to meet minimum ratios, and (iv) expanded the scope of the reductions/adjustments from capital as
compared to existing regulations.

Under Basel III, the minimum capital ratios for us and Valley National Bank are as follows:

•

4.5 percent CET1 to risk-weighted assets.

6.0 percent Tier 1 capital (i.e., CET1 plus Additional Tier 1) to risk-weighted assets.

8.0 percent Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets.

4.0 percent Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known
as the “leverage ratio”).

When fully phased in on January 1, 2019, Basel III also requires us and Valley National Bank to maintain a 2.5 percent
“capital conservation buffer”, composed entirely of CET1, on top of the minimum risk-weighted asset ratios, effectively resulting
in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0 percent, (ii) Tier 1 capital to risk-weighted assets of at least
8.5 percent, and (iii) total capital to risk-weighted assets of at least 10.5 percent. The capital conservation buffer is designed to
absorb losses during periods of economic stress. Banking institutions with a ratio of (i) CET1 to risk-weighted assets, (ii) Tier 1
capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital
conservation buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers
based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625
percent level and will increase by 0.625 percent on each subsequent January 1st, until it reaches 2.5 percent on January 1, 2019.
As of January 1, 2018, we and the Bank were required to maintain a capital conservation buffer of 1.875 percent.

Basel III provides for a number of deductions from and adjustments to CET1. These include, for example, the requirement
that mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in common
equity issued by nonconsolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10
percent of CET1 or all such categories in the aggregate exceed 15 percent of CET1. The deductions and other adjustments to
CET1 are being phased in incrementally between January 1, 2015 and January 1, 2018. In November 2017, banking regulators
announced that the phase in of certain of these adjustments for non-advanced approaches banking organizations such as Valley
was frozen.

Under current capital standards, the effects of accumulated other comprehensive income items included in capital are excluded
for the purposes of determining regulatory capital ratios. Under Basel III, the effects of certain accumulated other comprehensive
items are not excluded; however, non-advanced approaches banking organizations, including Valley and Valley National Bank,
were permitted to make a one-time permanent election to continue to exclude these items effective as of January 1, 2015. We made
this one-time election in the applicable bank regulatory reports as of March 31, 2015.

Basel III, with respect to us, required that our trust preferred securities be eliminated from Tier 1 capital by January 1, 2016.

Accordingly, none of Valley’s trust preferred securities were included in Tier 1 capital during 2017 and 2016.

With respect to Valley National Bank, Basel III also revised the “prompt corrective action” regulations pursuant to Section
38 of the FDICIA, by (i) introducing a CET1 ratio requirement at each capital quality level (other than critically undercapitalized);
(ii) increasing the minimum Tier 1 capital ratio requirement for each category; and (iii) requiring a leverage ratio of 5 percent to
be well-capitalized. The OCC’s regulations implementing these provisions of FDICIA provide that an institution will be classified

2017 Form 10-K

as “well capitalized” if it (i) has a total risk-based capital ratio of at least 10.0 percent, (ii) has a Tier 1 risk-based capital ratio of
at least 8.0 percent, (iii) has a CET1 ratio of at least 6.5 percent, (iv) has a Tier 1 leverage ratio of at least 5.0 percent, and (v) meets
certain other requirements. An institution will be classified as “adequately capitalized” if it meets the aforementioned minimum
capital ratios under Basel III. An institution will be classified as "undercapitalized" if it (i) has a total risk-based capital ratio of
less than 8.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 6.0 percent, (iii) has a CET1 ratio of less than 4.5 percent
or (iv) has Tier 1 leverage ratio of less than 4.0 percent. An institution will be classified as “significantly undercapitalized” if it
(i) has a total risk-based capital ratio of less than 6.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 4.0 percent, (iii)
has a CET1 ratio of less than 3.0 percent or (iv) has a Tier 1 leverage ratio of less than 3.0 percent. An institution will be classified
as “critically undercapitalized” if it has a tangible equity to total assets ratio that is equal to or less than 2.0 percent. An insured
depository institution may be deemed to be in a lower capitalization category if it receives an unsatisfactory examination rating.
Similar categories apply to bank holding companies. When the capital conservation buffer is fully phased in, the capital ratios
applicable to depository institutions under Basel III will exceed the ratios to be considered well-capitalized under the prompt
corrective action regulations.

Basel III prescribes a standardized approach for calculating risk-weighted assets that expand the risk-weighting categories
from the four Basel I-derived categories (0 percent, 20 percent, 50 percent and 100 percent) to a much larger and more risk-
sensitive number of categories, depending on the nature of the assets.

Valley National Bank’s capital ratios were all above the minimum levels required for it to be considered a “well capitalized”
financial institution at December 31, 2017 under the “prompt corrective action” regulations in effect as of such date. We believe
that, as of December 31, 2017, Valley and Valley National Bank would meet all capital adequacy requirements under Basel III on
a fully phased-in basis if such requirements were currently effective.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

The Dodd-Frank Act was signed into law on July 21, 2010. The Dodd-Frank Act significantly changed the bank regulatory
landscape and has impacted the lending, deposit, investment, trading and operating activities of financial institutions and their
holding companies. Some of the effects are discussed below.

The Dodd-Frank Act-mandated covered banks and bank holding companies with more than $10 billion in total consolidated

assets (such as Valley) to conduct annual company-run stress tests.

The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB) and shifted most of the federal consumer
protection rules applicable to banks and the enforcement power with respect to such rules to the CFPB. The CFPB has issued a
series of final rules related to mortgage loan origination and mortgage loan servicing. The CFPB issued a rule amending Regulation
Z to implement certain amendments to the Truth in Lending Act. The CFPB also issued a rule implementing amendments to the
Truth in Lending Act and the Real Estate Settlement Procedures Act.

In addition, the CFPB amended Regulation B to implement changes to the Equal Credit Opportunity Act. The CFPB also
amended Regulation Z to implement requirements and restrictions to the Truth in Lending Act concerning loan originator
compensation, qualifications of, and registration or licensing of loan originators, compliance procedures for depository institutions,
mandatory arbitration, and the financing of single-premium credit insurance.

Finally, the CFPB issued rules to implement the new ability-to-repay and qualified mortgage provisions provided for by the
Dodd-Frank Act which became effective in January 2014. The ability-to-repay provision requires creditors to make reasonable,
good faith determinations that borrowers are able to repay their mortgages before extending the credit based on a number of factors
and consideration of financial information about the borrower from reasonably reliable third-party documents.

The CFPB has continued to issue final rules regarding mortgages, including amendments to certain mortgage servicing rules
regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under
Regulation X and prompt crediting and periodic statement requirements under Regulation Z. Valley cannot assure that existing
or future regulations will not have a material adverse impact on our residential mortgage loan business or the housing markets in
which we participate.

In 2017, several bills were proposed in Congress which would modify or repeal certain provisions of the Dodd-Frank Act,
including the provision which currently requires Valley to undergo annual stress testing. It is uncertain at this time whether these
bills will be approved by Congress. To the effect the Dodd-Frank Act remains in place, it is likely to continue to increase our cost
of doing business, limit our permissible activities, and affect the competitive balance within our industry and market areas.

Volcker Rule

The Volcker Rule (contained in section 619 of the Dodd-Frank Act) prohibits an insured depository institution and its affiliates
from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain types of funds (Covered Funds) subject to
certain limited exceptions. The rule also effectively prohibits short-term trading strategies by any U.S. banking entity if those

2017 Form 10-K

strategies involve instruments other than those specifically permitted for trading and prohibits the use of some hedging strategies.
We identified no investments held as of December 31, 2017 that meet the definition of Covered Funds. Congress is currently
considering modifying certain aspects of the Volcker Rule.

Incentive Compensation

The Dodd-Frank Act requires the federal bank regulatory agencies and the SEC to establish joint regulations or guidelines
prohibiting incentive-based payment arrangements at specified regulated entities with at least $1 billion in total assets, such as
Valley and the Bank, that encourage inappropriate risks by providing an executive officer, employee, director or principal
shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity. In addition,
these agencies must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation
arrangements. The agencies proposed such regulations in April 2011 and subsequently proposed revised regulations in May 2016,
but the revised regulations have not been finalized. If the revised regulations are adopted in the form proposed, they will impose
limitations on the manner in which Valley may structure compensation for its executives and employees.

In 2010, the FRB, OCC and FDIC issued comprehensive final guidance on incentive compensation policies intended to
ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such
organizations by encouraging excessive risk-taking. The guidance, which covers all employees that have the ability to materially
affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking
organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the
organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk
management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s
board of directors. These three principles are incorporated into the proposed joint compensation regulations under the Dodd-Frank
Act.

The FRB will review, as part of its regular, risk-focused examination process, the incentive compensation arrangements of
banking organizations, such as Valley, that are not “large, complex banking organizations.” These reviews will be tailored to each
organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation
arrangements. The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be
incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take
other actions. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or
related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and the organization
is not taking prompt and effective measures to correct the deficiencies.

Dividend Limitations

Valley is a legal entity separate and distinct from its subsidiaries. Valley’s revenues (on a parent company only basis) result
in substantial part from dividends paid by the Bank. The Bank’s dividend payments, without prior regulatory approval, are subject
to regulatory limitations. Under the National Bank Act, dividends may be declared only if, after payment thereof, capital would
be unimpaired and remaining surplus would equal 100 percent of capital. Moreover, a national bank may declare, in any one year,
dividends only in an amount aggregating not more than the sum of its net profits for such year and its retained net profits for the
preceding two years. However, declared dividends in excess of net profits in either of the preceding two years can be offset by
retained net profits in the third and fourth years preceding the current year when determining the Bank’s dividend limitation. In
addition, the bank regulatory agencies have the authority to prohibit the Bank from paying dividends or otherwise supplying funds
to Valley if the supervising agency determines that such payment would constitute an unsafe or unsound banking practice. Among
other things, consultation with the FRB supervisory staff is required in advance of our declaration or payment of a dividend that
exceeds our earnings for the trailing four-quarter period in which the dividend is being paid.

Loans to Related Parties

Valley National Bank’s authority to extend credit to its directors, executive officers and 10 percent shareholders, as well as
to entities controlled by such persons, is currently governed by the requirements of the National Bank Act, Sarbanes-Oxley Act
and Regulation O of the FRB thereunder. Among other things, these provisions require that extensions of credit to insiders (i) be
made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those
prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment
or present other unfavorable features and (ii) not exceed certain limitations on the amount of credit extended to such persons,
individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s capital. In addition, extensions of
credit in excess of certain limits must be approved by the Bank’s Board of Directors. Under the Sarbanes-Oxley Act, Valley and
its subsidiaries, other than the Bank under the authority of Regulation O, may not extend or arrange for any personal loans to its
directors and executive officers.

2017 Form 10-K

Community Reinvestment

Under the Community Reinvestment Act (CRA), as implemented by OCC regulations, a national bank has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including
low and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial
institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited
to its particular community. The CRA requires the OCC, in connection with its examination of a national bank, to assess the
association’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain
applications by such association. The CRA also requires all institutions to make public disclosure of their CRA ratings. Valley
National Bank received an overall “satisfactory” CRA rating in its most recent examination.

The OCC approvals of the most recent acquisitions of CNL and USAB in December 2015 and January 2018 were
unconditional, the OCC will continue to monitor the Bank's progress with the CRA plan, and any necessary enhancements based
upon new markets or otherwise, through its normal supervisory reviews. Valley National Bank's CRA plan is available for review
on its website at www.valleynationalbank.com.

A bank which does not have a CRA program that is deemed satisfactory by its regulator will be prevented from making

acquisitions.

Corporate Governance

The Sarbanes-Oxley Act of 2002 added new legal requirements for public companies affecting corporate governance,
accounting and corporate reporting, to increase corporate responsibility and to protect investors. Among other things, the Sarbanes-
Oxley Act of 2002:

•

required our management to evaluate our disclosure controls and procedures and our internal control over financial
reporting, and required our auditors to issue a report on our internal control over financial reporting;

imposed on our chief executive officer and chief financial officer additional responsibilities with respect to our
external financial statements, including certification of financial statements within the Annual Report on Form
10-K and Quarterly Reports on Form 10-Q by the chief executive officer and the chief financial officer;

established independence requirements for audit committee members and outside auditors;

created the Public Company Accounting Oversight Board which oversees public accounting firms; and

increased various criminal penalties for violations of securities laws.

The New York Stock Exchange (NYSE), where Valley common stock is listed, has corporate governance listing standards,
including rules strengthening director independence requirements for boards, as well as the audit committee and the compensation
committee, and requiring the adoption of charters for the nominating, corporate governance, compensation and audit committees.

USA PATRIOT Act

As part of the USA PATRIOT Act, Congress adopted the International Money Laundering Abatement and Financial Anti-
Terrorism Act of 2001 (the “Anti Money Laundering Act”). The Anti Money Laundering Act authorizes the Secretary of the U.S.
Treasury, in consultation with the heads of other government agencies, to adopt special measures applicable to financial institutions
such as banks, bank holding companies, broker-dealers and insurance companies. Among its other provisions, the Anti Money
Laundering Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence
policies, procedures and controls that are reasonably designed to detect and report instances of money laundering in United States
private banking accounts and correspondent accounts maintained for non-United States persons or their representatives; and (iii) to
avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, a
foreign shell bank that does not have a physical presence in any country.

Regulations implementing the due diligence requirements require minimum standards to verify customer identity and
maintain accurate records, encourage cooperation among financial institutions, federal banking agencies, and law enforcement
authorities regarding possible money laundering or terrorist activities, prohibit the anonymous use of “concentration accounts,”
and require all covered financial institutions to have in place an anti-money laundering compliance program.

The OCC, along with other banking agencies, have strictly enforced various anti-money laundering and suspicious activity

reporting requirements using formal and informal enforcement tools to cause banks to comply with these provisions.

A bank which is issued a formal or informal enforcement requirement with respect to its Anti Money Laundering program

will be prevented from making acquisitions.

2017 Form 10-K

Consumer Financial Protection Bureau Supervision

As a financial institution with more than $10 billion in assets, Valley National Bank is supervised by the CFPB for consumer
protection purposes. The CFPB’s regulation of Valley National Bank is focused on risks to consumers and compliance with the
federal consumer financial laws and includes regular examinations of the Bank. The CFPB, along with the Department of Justice
and bank regulatory authorities also seek to enforce discriminatory lending laws. In such actions, the CFPB and others have used
a disparate impact analysis, which measures discriminatory results without regard to intent. Consequently, unintentional actions
by Valley could have a material adverse impact on our lending and results of operations if the actions are found to be discriminatory
by our regulators.

Valley National Bank is subject to federal consumer protection statutes and regulations promulgated under those laws,

including, but not limited to the following:

•

Truth-In-Lending Act and Regulation Z, governing disclosures of credit terms to consumer borrowers;

Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide certain information
about home mortgage and refinanced loans;

Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, creed, or other
prohibited factors in extending credit;

Fair Credit Reporting Act and Regulation V, governing the provision of consumer information to credit reporting
agencies and the use of consumer information; and

Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies.

Valley National Bank’s deposit operations are also subject to the following federal statutes and regulations, among others:

•

The Truth in Savings Act and Regulation DD, which requires disclosure of deposit terms to consumers;

Regulation CC, which relates to the availability of deposit funds to consumers;

The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial
records and prescribes procedures for complying with administrative subpoenas of financial records; and

Electronic Funds Transfer Act and Regulation E, governing automatic deposits to, and withdrawals from, deposit
accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic
banking services.

The CFPB examines Valley National Bank's compliance with such laws and the regulations under them. Various members of
Congress and the Trump administration have suggested that the CFPB be reorganized and its powers significantly reduced. In
November 2017, President Trump appointed a new interim director of the CFPB who has significantly changed the approach of
the CFPB.

Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Financial Modernization Act of 1999 (Gramm-Leach-Bliley Act) became effective in early 2000.
The Gramm-Leach-Bliley Act allowed bank holding companies meeting management, capital and CRA standards to become
financial holding companies and thereby to engage in a substantially broader range of non-banking activities than was previously
permissible, including insurance underwriting and securities underwriting.

The OCC adopted rules to allow national banks to form subsidiaries to engage in financial activities allowed for financial
holding companies, subject to certain restrictions. While Valley National Bank may elect to create financial subsidiaries, Valley
has not elected to become a financial holding company.

Insurance of Deposit Accounts

The Bank’s deposits are insured up to applicable limits by the FDIC. Under the FDIC’s risk-based system, insured institutions
are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors
with less risky institutions paying lower assessments on their deposits.

As required by the Dodd-Frank Act, the FDIC has adopted rules that revise the assessment base to consist of average
consolidated total assets during the assessment period minus the average tangible equity during the assessment period. In addition,
the rules eliminated the adjustment for secured borrowings, including Federal Home Loan Bank (FHLB) advances, and made
certain other changes to the impact of unsecured borrowings and brokered deposits on an institution’s deposit insurance assessment.
The rules also revised the assessment rate schedule to provide initial base assessment rates ranging from 5 to 35 basis points and

2017 Form 10-K

total base assessment rates ranging from 2.5 to 45 basis points after adjustment. The Dodd-Frank Act made permanent a $250
thousand limit for federal deposit insurance.

In 2016, the FDIC added a surcharge to the insurance assessments for banks with over $10 billion in assets, which became
effective in July 2016 and which will continue until the FDIC reserve ratio reaches 1.35 percent or the end of 2018, whichever
comes first.

The FDIC has authority to further increase insurance assessments. A significant increase in insurance premiums may have
an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance
assessment rates will be in the future.

Item 1A.

Risk Factors

An investment in our securities is subject to risks inherent to our business. The material risks and uncertainties that
management believes may affect Valley are described below. Before making an investment decision, you should carefully consider
the risks and uncertainties described below together with all of the other information included or incorporated by reference in this
report. The risks and uncertainties described below are not the only ones facing Valley. Additional risks and uncertainties that
management is not aware of or that management currently believes are immaterial may also impair Valley’s business operations.
The value or market price of our securities could decline due to any of these identified or other risks, and you could lose all or part
of your investment. This report is qualified in its entirety by these risk factors.

We may fail to realize all of the anticipated benefits of the merger with USAmeriBancorp.

On January 1, 2018, Valley’s significantly expanded its Florida franchise and enhanced its presence in the Tampa Bay market
through the acquisition of USAmeriBancorp, Inc (USAB) headquartered in Clearwater, Florida. The acquisition of USAB and its
wholly-owned subsidiary, USAmeriBank, also brought Valley to the Birmingham, Montgomery, and Tallapoosa areas in Alabama,
The success of the USAB acquisition will depend, in part, on our ability to realize anticipated cost savings and to combine the
businesses of Valley and USAB in a manner that permits growth opportunities to be realized and does not materially disrupt the
existing customer relationships of USAB nor result in decreased revenues due to any loss of customers. However, to realize these
anticipated benefits, the businesses of Valley and USAB must be successfully combined. If the combined company is not able to
achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than
expected.

The anticipated cost savings from the merger are largely expected to derive from the absorption by Valley of many of USAB
back-office administrative functions and the conversion of USAB's operating platform to Valley’s systems. It is possible that the
integration process could result in the loss of key employees, as well as the disruption of each company’s ongoing businesses or
inconsistencies in standards, controls, procedures and policies, any or all of which could adversely affect Valley’s ability to maintain
relationships with clients, customers, depositors and employees after the merger or to achieve the anticipated benefits of the merger.
Integration efforts between the two companies will also divert management attention and resources. A failure to successfully
navigate the complicated integration process could have an adverse effect on the combined company.

Another anticipated benefit from the merger is increased revenues of the combined company from sales of Valley’s wide
variety of financial products and increased lending utilizing Valley’s substantially larger capital base in the USAB markets. An
inability to successfully market Valley’s products to the USAB customer base could cause the earnings of the combined company
to be less than anticipated.

Changes in interest rates could reduce our net interest income and earnings.

Valley’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference
between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on
interest-bearing liabilities, such as deposits and borrowed funds. Interest rates are sensitive to many factors that are beyond Valley’s
control, including general economic conditions, competition, and policies of various governmental and regulatory agencies and,
in particular, the policies of the FRB. Changes in interest rates driven by such factors could influence not only the interest Valley
receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could
also affect (i) Valley’s ability to originate loans and obtain deposits, (ii) the fair value of Valley’s financial assets, including the
held to maturity and available for sale investment securities portfolios, and (iii) the average duration of Valley’s interest-earning
assets and liabilities. This also includes the risk that interest-earning assets may be more responsive to changes in interest rates
than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rate indices underlying
various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis
risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability
maturities (yield curve risk). Any substantial or unexpected change in market interest rates could have a material adverse effect

2017 Form 10-K

on Valley’s financial condition and results of operations. See additional information at the “Net Interest Income” and “Interest
Rate Sensitivity” sections of our MD&A.

Our financial results and condition may be adversely impacted by changing economic conditions.

While the economy and real estate market conditions have significantly improved in recent years, a return to a recessionary
economy could result in financial stress on our borrowers that would adversely affect our financial condition and results of
operations. Financial institutions can be affected by changing conditions in the real estate and financial markets. Volatility in the
housing markets, real estate values and unemployment levels could result in significant write-downs of asset values by financial
institutions. The majority of Valley’s lending is in northern and central New Jersey, the New York City metropolitan area, Florida
and Alabama. As a result of this geographic concentration, a significant broad-based deterioration in economic conditions in these
areas could have a material adverse impact on the quality of Valley’s loan portfolio, results of operations and future growth potential.
Adverse economic conditions in our market areas can reduce our rate of growth, affect our customers’ ability to repay loans and
adversely impact our financial condition and earnings. General economic conditions, including inflation, unemployment and money
supply fluctuations, also may adversely affect our profitability.

The future impact of changes to the Internal Revenue Code is uncertain and may adversely affect our business.

The U.S. Congress passed significant reform of the Internal Revenue Code, known as the Tax Cuts and Jobs Act of 2017
(Tax Act) at the end of 2017. While the decline in the federal corporate tax rate from 35 percent to 21 percent will lower Valley’s
income tax expense as a percentage of its taxable income in 2018, other provisions of the Tax Act negatively impacted Valley's
consolidated financial statements and it may adversely affect Valley in the future.

The Tax Act imposes higher limitations on the deductibility of interest and property tax expenses which may adversely impact
the property values of real estate used to secure loans and create an additional tax burden for many borrowers, particularly in high
tax jurisdictions such as New Jersey and New York where Valley operates. These and other federal tax changes could significantly
impact the financial health of our customers, potentially resulting in, among other things, an inability to repay loans or maintain
deposits at Valley in states where Valley operates, especially New York and New Jersey. Any negative financial impact to our
customers resulting from tax reform could adversely impact our financial condition and earnings.

The ultimate impact of the Tax Act on our business, customers and shareholders is uncertain and could be adverse.

Claims and litigation could result in significant expenses, losses and damage to our reputation.

From time to time as part of Valley’s normal course of business, customers, bankruptcy trustees, former customers, contractual
counterparties, third parties and former employees make claims and take legal action against Valley based on actions or inactions
of Valley. If such claims and legal actions are not resolved in a manner favorable to Valley, they may result in financial liability
and/or adversely affect the market perception of Valley and its products and services. This may also impact customer demand for
Valley’s products and services. Any financial liability could have a material adverse effect on Valley’s financial condition and
results of operations. Any reputation damage could have a material adverse effect on Valley’s business.

Valley currently has two significant pending lawsuits. See the "Litigation" section under Note 15 to the consolidated financial

statements for additional information and significant pending lawsuits.

Cyber-attacks and information security breaches could compromise our information or result in the data of our customers

being improperly divulged, which could expose us to liability, losses and escalating operating costs.

Many financial institutions and companies engaged in data processing have reported significant breaches in the security of
their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized
access to confidential information, destroy data, denial-of-service, or sabotage systems, often through the introduction of computer
viruses or malware, cyber-attacks and other means. Although we frequently experience attempted cybersecurity attacks against
our systems, to date, none of these incidents have resulted in material losses, known breaches of customer data or significant
disruption of services to our customers. However, there can be no assurance that we will not incur such issues in the future, exposing
us to significant on-going operational costs and reputational harm. Additionally, risk exposure to cyber security matters will remain
elevated or increase in the future due to, among other things, the increasing size and prominence of Valley in the financial services
industry, our expansion of Internet and mobile banking tools and products based on customer needs, and the system and customer
account conversions associated with the integration of merger targets.

2017 Form 10-K

A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market
could adversely affect our asset quality and profitability for those loans secured by real property and increase the number of
defaults and the level of losses within our loan portfolio.

A significant portion of our loan portfolio is secured by real estate. As of December 31, 2017, approximately 74 percent of
our total loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides
an alternate source of repayment in the event of default by the borrower and could deteriorate in value during the time the credit
is extended. A downturn in the real estate market in our primary market areas could result in an increase in the number of borrowers
who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse
effect on our profitability and asset quality. If we are required to liquidate the collateral securing a loan to satisfy the debt during
a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected. The declines in home or
commercial real estate prices in the New Jersey, New York and Florida markets we primarily serve, along with the reduced
availability of mortgage credit, also may result in increases in delinquencies and losses in our loan portfolios. Unexpected decreases
in home or commercial real estate prices coupled with slow economic growth and elevated levels of unemployment could drive
losses beyond that which is provided for in our allowance for loan losses. In that event, our earnings could be adversely affected.

The secondary market for residential mortgage loans, for the most part, is limited to conforming Fannie Mae and Freddie
Mac loans. The effects of this limited mortgage market combined with another correction in residential real estate market prices
and reduced levels of home sales, could result in price reductions in single-family home values, adversely affecting the value of
collateral securing mortgage loans held, mortgage loan originations and gains on sale of mortgage loans. Declines in real estate
values and home sales volumes, and financial stress on borrowers as a result of job losses or other factors, could have further
adverse effects on borrowers that result in higher delinquencies and greater charge-offs in future periods, which could adversely
affect our financial condition or results of operations. For additional risks related to our sales of residential mortgages in the
secondary market, see the “We may incur future losses in connection with repurchases and indemnification payments related to
mortgages that we have sold into the secondary market” risk factor below.

Net gains on sales of residential mortgage loans are a significant component of our non-interest income and could fluctuate

in future periods.

Net gains on sales of residential mortgage loans represented over 20 percent of our non-interest income for the years ended
December 31, 2017 and 2016. Our ability or decision to sell a portion of our mortgage loan production in the secondary market
is dependent upon, amongst other factors, the levels of market interest rates, consumer demand marketable loans, our sales and
pricing strategies, the economy and our need to maintain the appropriate level of interest rate risk on our balance sheet. A change
in one or more of these or other factors could significantly impact our ability to sell mortgage loans in the future and adversely
impact the level of our non-interest income and financial results.

Higher charge-offs and weak credit conditions could require us to increase our allowance for credit losses through a provision

charge to earnings.

We maintain an allowance for credit losses based on our assessment of credit losses inherent in our loan portfolio (including
unfunded credit commitments). The process for determining the amount of the allowance is critical to our financial results and
conditions. It requires difficult, subjective and complex judgments about the future, including the impact of national and regional
economic conditions on the ability of our borrowers to repay their loans. If our judgment proves to be incorrect, our allowance for
loan losses may not be sufficient to cover losses inherent in our loan portfolio. Deterioration in economic conditions affecting
borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and
outside of our control, may require an increase in the allowance for loan losses. Additionally, bank regulators review the classification
of our loans in their examination of us and we may be required in the future to change the classification on certain of our loans,
which may require us to increase our provision for loan losses or loan charge-offs. If actual net charge-offs were to exceed Valley’s
allowance, its earnings would be negatively impacted by additional provisions for loan losses. Any increase in our allowance for
loan losses or loan charge-offs as required by the OCC or otherwise could have an adverse effect on our results of operations or
financial condition.

Proposed revenue enhancements and efficiency improvements may not be achieved.

In December 2016, Valley announced a company-wide earnings enhancement initiative called LIFT to improve earnings and
reach certain financial targets. While we have completed certain phases of the LIFT program, there may be changes in the scope
or assumptions underlying the initiative, delays in the anticipated timing of activities related to the initiative and higher than
expected or unanticipated costs to implement them, and some benefits may not be fully achieved. Even if the LIFT program is
successful, many factors can influence our financial results, some of which are not wholly in our control.

2017 Form 10-K

We may be required to increase our allowance for credit losses as a result of changes to an accounting standard.

In 2016, the FASB released a new standard for determining the amount of the allowance for credit losses. The new standard
will be effective for Valley for reporting periods beginning January 1, 2020. The new credit loss model will be a significant change
from the standard in place today, as it requires the allowance for credit losses to be calculated based on current expected credit
losses (commonly referred to as the "CECL model") rather than losses inherent in the portfolio as of a point in time. When adopted,
the CECL model will likely increase our allowance for credit losses, which could materially affect our financial condition and
future results of operations. The extent of the increase and its impact to our financial condition is under evaluation, but will
ultimately depend upon the nature and characteristics of Valley's portfolio at the adoption date, and the macroeconomic conditions
and forecasts at that date; therefore, the potential financial impact is currently unknown.

We may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which

could expose us to additional liability and could have a material adverse effect on us.

We are required to comply with anti-money laundering, anti-terrorism and other laws and regulations in the United States.
These laws and regulations require us, among other things, to adopt and enforce “know-your-customer” policies and procedures
and to report suspicious and large transactions to applicable regulatory authorities. These laws and regulations have become
increasingly complex and detailed, require improved systems and sophisticated monitoring and compliance personnel and have
become the subject of enhanced government supervision.

While we have adopted policies and procedures aimed at detecting and preventing the use of our banking network for money
laundering and related activities, those policies and procedures may not completely eliminate instances in which we may be used
by customers to engage in money laundering and other illegal or improper activities. To the extent we fail to fully comply with
applicable laws and regulations, the OCC, along with other banking agencies, have the authority to impose fines and other penalties
and sanctions on us. In addition, our business and reputation could suffer if customers use our banking network for money laundering
or illegal or improper purposes.

Our controls and procedures may fail or be circumvented, which may result in a material adverse effect on our business,

results of operations and financial condition.

Management periodically reviews and updates our internal controls, disclosure controls and procedures, and corporate
governance policies. Any system of controls, however well designed and operated, is based in part on certain assumptions and can
provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the
controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse
effect on our business, results of operations and financial condition.

As disclosed in “Item 9A - Controls and Procedures,” a material weakness was identified in our internal control over financial
reporting resulting from Valley not assigning the appropriate levels of responsibility and authority to its Ethics and Compliance
group to identify and evaluate the severity and financial reporting implications of allegations of non-compliance with laws and
regulations, Company policies and procedures and other complaints. Additionally, Valley did not establish controls over required
communications of such matters to senior management or others within the organization and to those charged with governance to
enable them to conduct or monitor the investigation and resolution of such matters on a timely basis. Based on this material
weakness, management concluded that our disclosure controls and procedures were not effective as of December 31, 2017. A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is
a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented
or detected on a timely basis. The material weakness did not result in any misstatement of the Company’s consolidated financial
statements for any period presented and we are implementing remedial measures intended to address the material weakness and
related disclosure controls. However, if the remedial measures we are implementing are insufficient, or if additional material
weaknesses or significant deficiencies in our internal control over financial reporting or in our disclosure controls occur in the
future, our future consolidated financial statements or other information filed with the SEC may contain material misstatements.
Failure to maintain effective controls or to timely implement any necessary improvement of our internal and disclosure controls
could, among other things, result in losses from errors, harm our reputation, or cause investors to lose confidence in the reported
financial information, all of which could have a material adverse effect on our business results of operations and financial condition.

We could incur future goodwill impairment.

If our estimates of the fair value of our goodwill change as a result of changes in our business or other factors, we may
determine a goodwill impairment charge is necessary. Estimates of the fair value of goodwill are determined using several factors
and assumptions, including, but not limited to, industry pricing multiples and estimated cash flows. Based upon Valley’s 2017
and 2016 goodwill impairment testing, the fair values of its four reporting units, wealth management, consumer lending, commercial
lending, and investment management, were in excess of their carrying values. If the fair values of the four reporting units were

2017 Form 10-K

less than their book value of the total common shareholders’ equity for an extended period of time, Valley would consider this and
other factors, including the anticipated cash flows of each of the reporting units, to determine whether goodwill is impaired. No
assurance can be given that we will not record an impairment loss on goodwill in the future and any such impairment loss could
have a material adverse effect on our results of operations and financial condition. At December 31, 2017, our goodwill totaled
$690.6 million. See Note 2 to the consolidated financial statements for additional information.

We may reduce or eliminate the cash dividend on our common stock, which could adversely affect the market price of our

common stock.

Holders of our common stock are only entitled to receive such cash dividends as our Board of Directors may declare out of
funds legally available for such payments. Although we have historically declared cash dividends on our common stock, we are
not required to do so and may reduce or eliminate our common stock cash dividend in the future depending upon our results of
operations, financial condition or other metrics. This could adversely affect the market price of our common stock. Additionally,
as a bank holding company, our ability to declare and pay dividends is dependent on federal regulatory policies and regulations
including the supervisory policies and guidelines of the OCC and the FRB regarding capital adequacy and dividends. Among other
things, consultation of the FRB supervisory staff is required in advance of our declaration or payment of a dividend that exceeds
our earnings for a four-quarter period in which the dividend is being paid.

If our subsidiaries are unable to make dividends and distributions to us, we may be unable to make dividend payments to
our preferred and common shareholders or interest payments on our long-term borrowings and junior subordinated debentures
issued to capital trusts.

We are a separate and distinct legal entity from our banking and non-banking subsidiaries and depend on dividends,
distributions, and other payments from the Bank and its non-banking subsidiaries to fund cash dividend payments on our preferred
and common stock and to fund most payments on our other obligations. Regulations relating to capital requirements affect the
ability of the Bank to pay dividends and other distributions to us and to make loans to us. Additionally, if our subsidiaries’ earnings
are not sufficient to make dividend payments to us while maintaining adequate capital levels, we may not be able to make dividend
payments to our preferred and common shareholders or interest payments on our long-term borrowings and junior subordinated
debentures issued to capital trusts. Furthermore, our right to participate in a distribution of assets upon a subsidiary’s liquidation
or reorganization is subject to the prior claims of the subsidiary’s creditors.

The required accounting treatment of purchased credit-impaired (PCI) loans, including loans acquired through business
combinations, FDIC-assisted transactions, or bulk loan purchases could result in higher net interest margins and interest
income in current periods and lower net interest margins and interest income in future periods.

Under U.S. GAAP, we record loans acquired at a discount (that is due, in part, to credit,) at fair value which may underestimate
the actual performance of such loans. As a result, if these loans outperform our original fair value estimates, the difference between
our original estimate and the actual performance of the loan (the “discount”) is accreted into net interest income. Thus, our net
interest margins may initially appear higher. We expect the yields on our loans to decline as our acquired loan portfolio pays down
or matures and we expect downward pressure on our interest income to the extent that the runoff on our acquired loan portfolio
is not replaced with comparable high-yielding loans. This could result in higher net interest margins and interest income in current
periods and lower net interest rate margin and lower interest income in future periods. See the “Loan Portfolio” section of our
MD&A and Note 5 to the consolidated financial statements for additional analysis and discussion of our PCI loans.

An increase in our non-performing assets may reduce our interest income and increase our net loan charge-offs, provision

for loan losses, and operating expenses.

Our non-accrual loans decreased from 0.82 percent at December 31, 2013 to 0.22 percent and 0.26 percent of total loans at
December 31, 2016 and 2017, respectively. Although the economy continued to gradually improve during 2017, a downturn in
economic or real estate market conditions could result in increased charge-offs to our allowance for loan losses and lost interest
income relating to non-performing loans. Additionally, our loan portfolio includes taxi medallion loans that are largely classified
loans at December 31, 2017 and continued negative trends in the market valuations of the underlying taxi medallion collateral
caused by ride-sharing services could impact the future performance of such loans, the level of our loan charge-offs and the
provision for loan loans.

Non-performing assets (including non-accrual loans, other real estate owned, and other repossessed assets) totaled $57.5
million at December 31, 2017. These non-performing assets can adversely affect our net income mainly through decreased interest
income and increased operating expenses incurred to maintain such assets or loss charges related to subsequent declines in the
estimated fair value of foreclosed assets. Adverse changes in the value of our non-performing assets, or the underlying collateral,
or in the borrowers’ performance or financial conditions could adversely affect our business, results of operations and financial

2017 Form 10-K

condition. There can be no assurance that we will not experience increases in non-performing loans in the future, or that our non-
performing assets will not result in lower financial returns in the future.

Extensive regulation and supervision has a negative impact on our ability to compete in a cost-effective manner and may

subject us to material compliance costs and penalties.

Valley, primarily through its principal subsidiary and certain non-bank subsidiaries, is subject to extensive federal and state
regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds
and the banking system as a whole. Many laws and regulations affect Valley’s lending practices, capital structure, investment
practices, dividend policy and growth, among other things. They encourage Valley to ensure a satisfactory level of lending in
defined areas, and establish and maintain comprehensive programs relating to anti-money laundering and customer identification.
Congress, state legislatures, and federal and state regulatory agencies continually review banking laws, regulations and policies
for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation
of statutes, regulations or policies, could affect Valley in substantial and unpredictable ways. Such changes could subject Valley
to additional costs, limit the types of financial services and products it may offer and/or increase the ability of non-banks to offer
competing financial services and products, among other things. Failure to comply with laws, regulations or policies could result
in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect
on Valley’s business, financial condition and results of operations. Valley’s compliance with certain of these laws will be considered
by banking regulators when reviewing bank merger and bank holding company acquisitions.

We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending

laws, and failure to comply with these laws could lead to a wide variety of sanctions.

The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and
regulations impose community investment and nondiscriminatory lending requirements on financial institutions. The Consumer
Financial Protection Bureau, the Department of Justice and other federal agencies are responsible for enforcing these laws and
regulations. A successful regulatory challenge to an institution’s performance under the Community Reinvestment Act, the Equal
Credit Opportunity Act, the Fair Housing Act or other fair lending laws and regulations could result in a wide variety of sanctions,
including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions, restrictions on expansion
and restrictions on entering new business lines. Private parties also may challenge an institution’s performance under fair lending
laws in litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations.

Future acquisitions may dilute shareholder value, especially tangible book value per share.

We regularly evaluate opportunities to acquire other financial institutions. As a result, merger and acquisition discussions
and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt, or equity securities may
occur at any time. Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some
dilution of our tangible book value per common share may occur in connection with any future acquisitions.

Future offerings of common stock, preferred stock, debt or other securities may adversely affect the market price of our

stock and dilute the holdings of existing shareholders.

In the future, we may increase our capital resources or, if our or the Bank’s actual or projected capital ratios fall below or
near the current (Basel III) regulatory required minimums, we or the Bank could be forced to raise additional capital by making
additional offerings of common stock, preferred stock or debt securities. Additional equity offerings may dilute the holdings of
our existing shareholders or reduce the market price of our common stock, or both. Holders of our common stock are not entitled
to preemptive rights or other protections against dilution. Upon liquidation, holders of our debt securities and shares of preferred
stock, and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our
common stock. In June 2015, Valley issued 4.6 million shares of non-cumulative perpetual preferred stock with a dividend at
issuance of 6.25 percent and a liquidation preference of $25 per share. In December 2016, Valley issued 9.24 million shares of
common stock with the intention to use the proceeds for continued growth in the Bank’s loan portfolio, as well as other general
corporate purposes. In August 2017, Valley issued 4.0 million shares of non-cumulative perpetual stock with a dividend at issuance
of 5.50 percent and a liquidation preference of $25 per share. See Note 18 to the consolidated financial statements for more details
on our common and preferred stock.

Changes in accounting policies or accounting standards could cause us to change the manner in which we report our

financial results and condition in adverse ways and could subject us to additional costs and expenses.

Valley’s accounting policies are fundamental to understanding its financial results and condition. Some of these policies
require the use of estimates and assumptions that may affect the value of Valley’s assets or liabilities and financial results. Valley
identified its accounting policies regarding the allowance for loan losses, security valuations and impairments, goodwill and other

2017 Form 10-K

intangible assets, and income taxes to be critical because they require management to make difficult, subjective and complex
judgments about matters that are inherently uncertain. Under each of these policies, it is possible that materially different amounts
would be reported under different conditions, using different assumptions, or as new information becomes available.

From time to time, the FASB and the SEC change their guidance governing the form and content of Valley’s external financial
statements. In addition, accounting standard setters and those who interpret U.S. generally accepted accounting principles (U.S.
GAAP), such as the FASB, SEC, banking regulators and Valley’s independent registered public accounting firm, may change or
even reverse their previous interpretations or positions on how these standards should be applied. Such changes are expected to
continue, and may accelerate dependent upon the FASB and International Accounting Standards Board commitments to achieving
convergence between U.S. GAAP and International Financial Reporting Standards. Changes in U.S. GAAP and changes in current
interpretations are beyond Valley’s control, can be hard to predict and could materially impact how Valley reports its financial
results and condition. In certain cases, Valley could be required to apply a new or revised guidance retroactively or apply existing
guidance differently (also retroactively) which may result in Valley restating prior period financial statements for material amounts.
Additionally, significant changes to U.S. GAAP may require costly technology changes, additional training and personnel, and
other expenses that will negatively impact our results of operations.

We may be unable to adequately manage our liquidity risk, which could affect our ability to meet our obligations as they

become due, capitalize on growth opportunities, or pay regular dividends on our common stock.

Liquidity risk is the potential that Valley will be unable to meet its obligations as they come due, capitalize on growth
opportunities as they arise, or pay regular dividends on our common stock because of an inability to liquidate assets or obtain
adequate funding in a timely basis, at a reasonable cost and within acceptable risk tolerances.

Liquidity is required to fund various obligations, including credit commitments to borrowers, mortgage and other loan
originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital
expenditures. Liquidity is derived primarily from retail deposit growth and retention; principal and interest payments on loans;
principal and interest payments on investment securities; sale, maturity and prepayment of investment securities; net cash provided
from operations, and access to other funding sources.

Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us
specifically or the financial services industry in general. Factors that could have a detrimental impact to our access to liquidity
sources include a decrease in the level of our business activity due to persistent weakness, or downturn, in the economy or adverse
regulatory action against us. Our ability to borrow could also be impaired by factors that are not necessarily specific to us, such
as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services
industry as a whole.

The loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income

and net income.

Checking and savings, NOW, and money market deposit account balances and other forms of customer deposits can decrease
when customers perceive alternative investments, such as the stock market or money market or fixed income mutual funds, as
providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investments, Valley could
lose a low cost source of funds, increasing its funding costs and reducing Valley’s net interest income and net income.

Our market share and income may be adversely affected by our inability to successfully compete against larger and more

diverse financial service providers and digital fintech start-up firms.

Valley faces substantial competition in all areas of its operations from a variety of different competitors, many of which are
larger and may have more financial resources than Valley to deal with the potential negative changes in the financial markets and
regulatory landscape. Valley competes with other providers of financial services such as commercial and savings banks, savings
and loan associations, credit unions, money market and mutual funds, mortgage companies, title agencies, asset managers, insurance
companies, and a large list of other local, regional and national institutions which offer financial services. Additionally, the financial
services industry is facing a wave of digital disruption from fintech companies that provide innovative web-based solutions to
traditional retail banking services and products. Fintech companies tend to have stronger operating efficiencies and less regulatory
burdens than their traditional bank counterparts, including Valley.

Mergers and acquisitions of financial institutions within New Jersey, the New York Metropolitan area and Florida may also
occur given the current difficult banking environment and add more competitive pressure to a substantial portion of our marketplace.
Our profitability depends upon our continued ability to successfully compete in our market area. If Valley is unable to compete
effectively, it may lose market share and its income generated from loans, deposits, and other financial products may decline.

2017 Form 10-K

Failure to successfully implement our growth strategies could cause us to incur substantial costs and expenses which may

not be recouped and adversely affect our future profitability.

From time to time, Valley may implement new lines of business or offer new products and services within existing lines of
business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are
not fully developed. Valley may invest significant time and resources to develop and market new lines of business and/or products
and services. Initial timetables for the introduction and development of new lines of business and/or new products or services may
not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations,
competitive alternatives, and shifting customer preferences, may also impact the successful implementation of a new line of
business or a new product or service. Additionally, any new line of business and/or new product or service could have a significant
impact on the effectiveness of Valley’s system of internal controls. Failure to successfully manage these risks could have a material
adverse effect on Valley’s business, results of operations and financial condition.

We may not keep pace with technological change within the financial services industry, negatively affecting our ability to

remain competitive and profitable.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new
technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions
to better serve customers and to reduce costs. Valley’s future success depends, in part, upon its ability to address the needs of its
customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional
efficiencies in Valley’s operations. Many of Valley’s competitors have substantially greater resources to invest in technological
improvements. Valley may not be able to effectively implement new technology-driven products and services or be successful in
marketing these products and services to its customers. Failure to successfully keep pace with technological change affecting the
financial services industry could have a material adverse impact on Valley’s business and, in turn, Valley’s financial condition and
results of operations.

We rely on our systems, employees and certain service providers, and if our system fails, our operations could be disrupted.

We face the risk that the design of our controls and procedures, including those to mitigate the risk of fraud by employees
or outsiders, may prove to be inadequate or are circumvented, thereby causing delays in detection of errors or inaccuracies in data
and information. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance
policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and
can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of
our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse
effect on our business, results of operations and financial condition.

We may also be subject to disruptions of our systems arising from events that are wholly or partially beyond our control
(including, for example, electrical or telecommunications outages), which may give rise to losses in service to customers and to
financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual
obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as us) and to the risk
that our (or our vendors’) business continuity and data security systems prove to be inadequate. We maintain a system of
comprehensive policies and a control framework designed to monitor vendor risks including, among other things, (i) changes in
the vendor’s organizational structure or internal controls, (ii) changes in the vendor’s financial condition, (iii) changes in the
vendor’s support for existing products and services and (iv) changes in the vendor’s strategic focus. While we believe these policies
and procedures help to mitigate risk, the failure of an external vendor to perform in accordance with the contracted arrangements
under service level agreements could be disruptive to our operations, which could have a material adverse impact on our business
and, in turn, our financial condition and results of operations.

We may not be able to attract and retain skilled people.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most
activities in which we engage can be intense and we may not be able to hire people or to retain them. The unexpected loss of
services of one or more of our key personnel, including, but not limited to, the executive officers disclosed in Item 1 of this Annual
Report, could have a material adverse impact on our business because we would lose the employees’ skills, knowledge of the
market, and years of industry experience and may have difficulty promptly finding qualified replacement personnel.

Severe weather, acts of terrorism and other external events could significantly impact our ability to conduct our business.

A significant portion of our primary markets is located near coastal waters which could generate naturally occurring severe
weather, or in response to climate change, that could have a significant impact on our ability to conduct business. Many areas in
New Jersey, New York and Florida in which our branches operate are subject to severe flooding from time to time and significant
weather related disruptions may become common events in the future. Heavy storms and hurricanes can also cause severe property

2017 Form 10-K

damage and result in business closures, negatively impacting both the financial health of retail and commercial customers and our
ability to operate our business. The risk of significant disruption and potential losses from future storm activity exists in all of our
primary markets.

Additionally, New York City and New Jersey remain central targets for potential acts of terrorism against the United States.
Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the
value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional
expenses. Although we have established and regularly test disaster recovery policies and procedures, the occurrence of any such
event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on
our financial condition and results of operations.

We are subject to environmental liability risk associated with lending activities which could have a material adverse effect

on our financial condition and results of operations.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may
foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could
be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for
personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce
the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent
interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although
we have policies and procedures to perform an environmental review prior to originating certain commercial real estate loans, as
well as before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential
environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could
have a material adverse effect on our financial condition and results of operations.

We may incur future losses in connection with repurchases and indemnification payments related to mortgages that we have

sold into the secondary market.

We engage in the origination of residential mortgages for sale into the secondary market. In connection with such sales, we
make representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or
indemnify the purchasers of such loans for actual losses incurred in respect of such loans. The substantial decline in residential
real estate values and the standards used by some originators has resulted in more repurchase requests to many secondary market
participants from secondary market purchasers. Since January 1, 2006, we have originated and sold approximately 24,000 individual
residential mortgages totaling approximately $5.1 billion. Of the $5.1 billion in originations, approximately $9.2 million in unpaid
principal balances remain outstanding from the origination years 2006 through 2008. These particular years are considered to be
‘high risk’ years in the mortgage industry due to the escalation in housing prices, and subsequent decline during the financial crisis.
However, these potentially higher risk loans in our retained mortgage loan servicing portfolio continued to outperform Fannie
Mae’s overall portfolio performance (for each applicable origination year) at December 31, 2017. Over the past several years, we
have experienced a nominal amount of repurchase requests, and only a few of which have actually resulted in repurchases by
Valley (only two and one loan repurchase(s) in 2017 and 2016, respectively). None of the loan repurchases resulted in material
loss. As of December 31, 2017, no reserves pertaining to loans sold were established on our financial statements. While we currently
believe our repurchase risk remains low based upon our careful loan underwriting and documentation standards, it is possible that
requests to repurchase loans could occur in the future and such requests may have a negative financial impact on us.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

We conduct our business at 237 retail banking centers locations in northern and central New Jersey, the New York City
boroughs of Manhattan, Brooklyn and Queens, Long Island, Florida and Alabama. We own 120 of our banking center facilities
and several non-branch operating facilities. The other properties are leased for various terms.

2017 Form 10-K

The following table summarizes our retail banking centers in each state:

Number of banking
centers

% of Total

New Jersey
Northern
Central

Total New Jersey

New York

Manhattan
Long Island
Brooklyn
Queens

Total New York

Florida
Alabama

Total

113
26
139

12
12
9
5
38
45
15
237

47.6
11.0
58.6

5.1
5.1
3.8
2.1
16.1
19.0
6.3
100.0%

Our principal business office is located at 1455 Valley Road, Wayne, New Jersey. Including our principal business office,
we own five office buildings in Wayne, New Jersey and one building in Chestnut Ridge, New York, which are used for various
operations of Valley National Bank and its subsidiaries. Our New York City corporate headquarters are located at One Penn Plaza
in Manhattan and are primarily used as a central hub for New York based lending activities of senior executives and other commercial
lenders. We also lease six non-bank office facilities in Florida, used for operational, executive and lending purposes.

In the second quarter of 2015, we disclosed a branch efficiency plan to "right-size" our branch network. We, like many in
the banking industry, have experienced a significant decline in branch foot traffic as the emergence of self-service technology
continues to reshape the banking industry. In response to these shifts in customer preference we have invested in new delivery
channels and systems that will modernize the branch banking experience. Mobile banking, remote deposit, enhanced ATMs, online
account opening, cash recyclers and complementary online services are part of our modernization plan and will redefine the
traditional banking experience at Valley. As a result of our reviews and the evolution of banking in general, our plan included the
closure and consolidation of 31 branch locations based upon our continuous evaluation of customer delivery channel preferences,
branch usage patterns, and other factors. Of the 31 branches, 30 branches were closed by September 30, 2016. The remaining
branch, with its deposits totaling approximately $13 million, located in Sebastian, Florida, was sold to another financial institution
during the fourth quarter of 2016 and resulted in an immaterial gain for the year ended December 31, 2016. The majority of the
closed branches were located in New Jersey, and consisted of both leased and owned properties.

On January 1, 2018, the acquisition of USAB added 14 banking centers in Florida, mostly in the Tampa Bay area, and 15

banking centers in the Birmingham, Montgomery and Tallapoosa areas of Alabama.

The total net book value of our premises and equipment (including land, buildings, leasehold improvements and furniture
and equipment) was $287.7 million at December 31, 2017. We believe that all of our properties and equipment are well maintained,
in good operating condition and adequate for all of our present and anticipated needs.

Item 3.

Legal Proceedings

In the normal course of business, we may be a party to various outstanding legal proceedings and claims. In the opinion of
management, our financial condition, results of operations, and liquidity should not be materially affected by the outcome of such
legal proceedings and claims. See Note 15 to the consolidated financial statements for further details.

2017 Form 10-K

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

Our common stock is traded on the NYSE under the ticker symbol “VLY”. The following table sets forth for each quarter
period indicated the high and low sales prices for our common stock, as reported by the NYSE, and the cash dividends declared
per common share for each quarter. The amounts shown in the table below have been adjusted for all stock dividends and stock
splits.

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

High

12.82
12.39
12.43
12.29

2017
Low

Dividend

High

2016
Low

Dividend

11.19
11.11
10.61
10.84

0.11
0.11
0.11
0.11

9.76
10.20
9.86
12.14

8.31
8.49
8.73
9.36

0.11
0.11
0.11
0.11

There were 7,434 shareholders of record as of December 31, 2017.

Restrictions on Dividends

The timing and amount of cash dividends paid depend on our earnings, capital requirements, financial condition and other
relevant factors. The primary source for dividends paid to our common stockholders is dividends paid to us from Valley National
Bank. Federal laws and regulations contain restrictions on the ability of national banks, like Valley National Bank, to pay dividends.
For more information regarding the restrictions on the Bank’s dividends, see “Item 1. Business—Supervision and Regulation—
Dividend Limitations” and “Item 1A. Risk Factors—We May Reduce or Eliminate the Cash Dividend on Our Common Stock”
above, and the “Liquidity” section of our MD&A of this Annual Report. In accordance with our outstanding non-cumulative
preferred stock, we cannot issue dividends on our common stock if we do not pay dividends on the preferred stock. In addition,
under the terms of the trust preferred securities issued by our capital trusts, we cannot pay dividends on our common stock if we
defer payments on the junior subordinated debentures which provide the cash flow for the payments on the related trust preferred
securities.

Performance Graph

The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2012
in: (a) Valley’s common stock; (b) the KBW Regional Banking Index (KRX); (c) Valley's custom peer group of 17 U.S. Banks
(Valley Peer 17) in the States located in the Northeast, Mid-Atlantic, Florida and other metropolitan areas with total assets ranging
from approximately $9.1 billion to $49.1 billion (see below for details); and (d) the Standard and Poor’s (S&P) 500 Stock Index.
The graph is calculated assuming that all dividends are reinvested during the relevant periods. The graph shows how a $100
investment would increase or decrease in value over time based on dividends (stock or cash) and increases or decreases in the
market price of the stock.

From time to time, certain banks within the Valley Peer 17 (included in the table below) may enter into merger agreements
to be acquired, or announce or complete acquisitions of other institutions. These pending or completed transactions may impact
the overall performance of the common stock of this peer group as compared to Valley’s common stock. Commencing with this
Annual Report on Form 10-K Valley elected to include the KBW Regional Banking Index in the performance graph. In accordance
with SEC rules, both the KRX and Valley Peer 17 are included in the performance graph this year. Next year we will not include
the Valley Peer 17. The Peer Group has proved difficult to track properly due to acquisitions and the KBW Index is an established
peer group which management believes provides a better comparison for our shareholders than Valley Peer 17. Over the past five
years the KBW Index out performed Valley Peer 17.

2017 Form 10-K

Valley
KBW Regional Banking Index (KRX)
Valley Peer 17*
S&P 500

100.00 $
100.00
100.00
100.00

115.52 $
146.80
144.18
132.36

115.84 $
150.35
146.26
150.43

122.84 $
159.37
160.68
152.51

151.71 $
221.57
209.15
170.70

151.81
225.57
206.73
207.92

12/12

12/13

12/14

12/15

12/16

12/17

* The Valley peer group index (Valley Peer 17) was comprised of the following 17 banks in 2017: Banc of California, Bank United, Inc.,
Community Bank System, Inc., EverBank Financial Corp., FNB Corporation, Fulton Financial Corporation, Investors Bancorp, Inc., MB
Financial, NBT Bancorp Inc., New York Community Bancorp, Inc., People's United Financial, Inc., Prosperity Bancshares, Provident Financial
Services, Inc., Signature Bank, Sterling Bancorp, Texas Capital Bancshares and Webster Financial Corporation.

Issuer Repurchase of Equity Securities

The following table presents the purchases of equity securities by the issuer and affiliated purchasers during the three months

ended December 31, 2017:

Period
October 1, 2017 to October 31, 2017
November 1, 2017 to November 30, 2017
December 1, 2017 to December 31, 2017

Total

Total Number of
Shares Purchased (1)
1,312
1,425
27,683
30,420

Average Price
Paid Per
Share

11.84
11.41
11.89

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans(2)
—
—
—
—

Maximum Number of
Shares that May
Yet Be Purchased
Under the Plans (2)
4,112,465
4,112,465
4,112,465

(1) Represents repurchases made in connection with the vesting of employee stock awards.
(2) On January 17, 2007, Valley publicly announced its intention to repurchase up to 4.7 million outstanding common shares in the open
market or in privately negotiated transactions. The repurchase plan has no stated expiration date. No repurchase plans or programs
expired or terminated during the three months ended December 31, 2017.

Equity Compensation Plan Information

The information set forth in Item 12 of Part III of this Annual Report under the heading “Equity Compensation Plan

Information” is incorporated by reference herein.

2017 Form 10-K

Item 6.

Selected Financial Data

The following selected financial data should be read in conjunction with Valley’s consolidated financial statements and

the accompanying notes thereto presented herein in response to Item 8 of this Annual Report.

Summary of Operations:

Interest income—tax equivalent basis

(1)

Interest expense
Net interest income—tax equivalent basis

(1)

Less: tax equivalent adjustment

Net interest income

Provision for credit losses

Net interest income after provisions for credit losses

Non-interest income:

(Losses) gains on securities transactions, net

Gains on sales of loans, net

(Losses) gains on sales of assets, net

Other non-interest income

Total non-interest income

Non-interest expense:

Loss on extinguishment of debt

Amortization of tax credit investments

Other non-interest expense

Total non-interest expense

Income before income taxes

Income tax expense

Net income

Dividends on preferred stock

2017

As of or for the Years Ended December 31,
2014
2015
2016
($ in thousands, except for share data)

2013

850,722

775,305

714,889

644,536

623,986

174,107
676,615

8,303

668,312

9,942

658,370

(20)

20,814

(95)

82,742

103,441

—

41,747

467,326

509,073

252,738

90,831

161,907

9,449

148,774
626,531

8,382

618,149

11,869

606,280

777

22,030

1,358

79,060

103,225

315

34,744

441,066

476,125

233,380

65,234

168,146

7,188

156,754
558,135

7,866

550,269

8,101

542,168

2,487

4,245

2,776

74,294

83,802

51,129

27,312

420,634

499,075

126,895

23,938

102,957

3,813

161,846
482,690

7,933

474,757

1,884

472,873

745

1,731

18,087

57,053

77,616

10,132

24,196

368,927

403,255

147,234

31,062

116,172

—

168,377
455,609

7,889

447,720

16,095

431,625

14,678

33,695

10,947

69,333

128,653

—

14,352

366,986

381,338

178,940

46,979

131,961

—

Net income available to common shareholders

152,458

160,958

99,144

116,172

131,961

Per Common Share:
Earnings per share:
Basic
Diluted
Dividends declared
Book value
Tangible book value (2)
Weighted average shares outstanding:

Basic

Diluted

Ratios:
Return on average assets

Return on average shareholders’ equity

Return on average tangible shareholders’ equity

(3)

Average shareholders’ equity to average assets
(4)

Tangible common equity to tangible assets
Efficiency ratio (5)
Dividend payout
Tier 1 leverage capital (6)
Common equity Tier 1 capital (6)
Tier 1 risk-based capital (6)
Total risk-based capital (6)
Financial Condition:
Assets

Net loans

Deposits

Shareholders’ equity

0.58
0.58
0.44
8.79
6.01

0.63
0.63
0.44
8.59
5.80

0.42
0.42
0.44
8.26
5.36

0.56
0.56
0.44
8.03
5.38

0.66
0.66
0.60
7.72
5.39

264,038,123

254,841,571

234,405,909

205,716,293

199,309,425

264,889,007

255,268,336

234,437,000

205,716,293

199,309,425

0.69%

0.76%

0.53%

0.69%

6.55

9.32

10.53

6.83

65.96

75.86

8.03

9.22

10.41

12.61

7.46

11.07

10.08

6.91

66.00

69.80

7.74

9.27

9.90

12.15

5.26

7.66

10.08

6.52

78.71

105.00

7.90

9.01

9.72

12.02

7.18

10.26

9.62

6.87

73.00

78.40

7.46

N/A

9.73

11.42

0.83%

8.69

12.51%

9.51

6.86

66.16

90.90

7.27

N/A

9.65

11.87

$ 24,002,306

$ 22,864,439

$ 21,612,616

$ 18,792,491

$ 16,154,929

18,210,724

18,153,462

2,533,165

17,121,684

17,730,708

2,377,156

15,936,929

16,253,551

2,207,091

13,371,560

14,034,116

1,863,017

11,453,995

11,319,262

1,541,040

See Notes to the Selected Financial Data that follow.

2017 Form 10-K

Notes to Selected Financial Data

(1)

(2)

In this report a number of amounts related to net interest income and net interest margin are presented on a tax equivalent
basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income
and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC
rules. Effective January 1, 2018, Valley's federal tax rate decreased to 21 percent under the Tax Cuts and Jobs Act.
This Annual Report on Form 10-K contains supplemental financial information which has been determined by methods
other than U.S. GAAP that management uses in its analysis of our performance. Management believes these non-GAAP
financial measures provide information useful to investors in understanding our underlying operational performance, our
business and performance trends, and facilitates comparisons with the performance of others in the financial services industry.
These non-GAAP financial measures should not be considered in isolation or as a substitute for or superior to financial
measures calculated in accordance with U.S. GAAP.

Tangible book value per common share, which is a non-GAAP measure, is computed by dividing shareholders’ equity less
goodwill and other intangible assets by common shares outstanding as follows:

2017

2016

At December 31,
2015
($ in thousands, except for share data)

2014

2013

Common shares outstanding

Shareholders’ equity

Less: Preferred stock

Less: Goodwill and other intangible assets

Tangible common shareholders’ equity

Tangible book value per common share

264,468,851

263,638,830

253,787,561

232,110,975

199,593,109

2,533,165

2,377,156

2,207,091

1,863,017

1,541,040

209,691

733,144

1,590,330

6.01

111,590

736,121

1,529,445

5.80

111,590

735,221

1,360,280

5.36

—

614,667

1,248,350

5.38

—

464,364

1,076,676

5.39

(3) Return on average tangible shareholders’ equity, which is a non-GAAP measure, is computed by dividing net income by

average shareholders’ equity less average goodwill and average other intangible assets, as follows:

Net income

Average shareholders’ equity

Less: Average goodwill and other intangible

assets

Average tangible shareholders’ equity

2017

2016

Years Ended December 31,
2015
($ in thousands)

2014

2013

161,907

2,471,751

168,146

2,253,570

102,957

1,958,757

116,172

1,618,965

131,961

1,519,299

734,200

734,520

614,084

486,769

464,085

1,737,551

1,519,050

1,344,673

1,132,196

1,055,214

Return on average tangible shareholders’ equity

9.32%

11.07%

7.66%

10.26%

12.51%

(4) Tangible common shareholders’ equity to tangible assets, which is a non-GAAP measure, is computed by dividing tangible

shareholders’ equity (shareholders’ equity less goodwill and other intangible assets) by tangible assets, as follows:

2017

2016

At December 31,
2015

($ in thousands)

2014

2013

Tangible common shareholders’ equity

1,590,330

1,529,445

1,360,280

1,248,350

1,076,676

Total assets

$ 24,002,306

$ 22,864,439

$ 21,612,616

$ 18,792,491

$ 16,154,929

Less: Goodwill and other intangible assets

733,144

736,121

735,221

614,667

464,364

Tangible assets

$ 23,269,162

$ 22,128,318

$ 20,877,395

$ 18,177,824

$ 15,690,565

Tangible common shareholders’ equity to tangible

assets

6.83%

6.91%

6.52%

6.87%

6.86%

(5) The efficiency ratio measures total non-interest expense as a percentage of net interest income plus total non-interest income.
(6) Capital positions and ratios as of December 31, 2017, 2016 and 2015 were calculated under Basel III rules which became

effective January 1, 2015.

2017 Form 10-K

Item 7.

Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations

The purpose of this analysis is to provide the reader with information relevant to understanding and assessing Valley’s results
of operations for each of the past three years and financial condition for each of the past two years. In order to fully appreciate
this analysis, the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing
under Item 8 of this report, and statistical data presented in this document.

Cautionary Statement Concerning Forward-Looking Statements

This Annual Report on Form 10-K, both in the MD&A and elsewhere, contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions
about management’s confidence and strategies and management’s expectations about new and existing programs and products,
acquisitions, relationships, opportunities, taxation, technology, market conditions and economic expectations. These statements
may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,”
“continues,” “reflects,” “typically,” “usually,” “anticipate,” or similar statements or variations of such terms. Such forward-looking
statements involve certain risks and uncertainties and our actual results may differ materially from such forward-looking statements.
Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements in addition
to those risk factors listed under the “Risk Factors” section in Part1, Item 1A of this Annual Report on Form 10-K include, but
are not limited to:

• weakness or a decline in the economy, mainly in New Jersey, New York, Florida and Alabama, as well as an unexpected

decline in commercial real estate values within our market areas;
less than expected cost reductions and revenue enhancement from Valley's cost reduction plans including its earnings
enhancement program called "LIFT";

higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from the impact
of the Tax Cuts and Jobs Act and other changes in tax laws, regulations and case law;

damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of breach of
fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trade mark infringement,
employment related claims, and other matters;

the loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income
and net income;

cyber attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain
unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;

results of examinations by the OCC, the FRB, the CFPB and other regulatory authorities, including the possibility that any
such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets,
require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;

changes in accounting policies or accounting standards, including the new authoritative accounting guidance (known as
the current expected credit loss (CECL) model) which may increase the required level of our allowance for credit losses
after adoption on January 1, 2020;

our inability or determination not to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory
restrictions or limitations, changes in our capital requirements or a decision to increase capital by retaining more earnings;

higher than expected loan losses within one or more segments of our loan portfolio;

unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our
business caused by severe weather or other external events;

unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large
prepayments, changes in regulatory lending guidance or other factors;

the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships.

the risk that the businesses of Valley and USAB may not be combined successfully, or such combination may take longer
or be more difficult, time-consuming or costly to accomplish than expected;

the diversion of management's time on issues relating to merger integration; the inability to realize expected cost savings
and synergies from the merger of USAB with Valley in the amounts or in the timeframe anticipated; and

the inability to retain USAB’s customers and employees.

•

2017 Form 10-K

Critical Accounting Policies and Estimates

Our accounting and reporting policies conform, in all material respects, to U.S. GAAP. In preparing the consolidated financial
statements, management has made estimates, judgments and assumptions 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. Actual results
could differ materially from those estimates.

Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition
and results of operations. Our significant accounting policies are presented in Note 1 to the consolidated financial statements. We
identified our policies for the allowance for loan losses, security valuations and impairments, goodwill and other intangible assets,
and income taxes to be critical 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 with the Audit Committee of Valley’s Board of
Directors.

The judgments used by management in applying the critical accounting policies discussed below may be affected by
significant changes in the economic environment, which may result in changes to future financial results. Specifically, subsequent
evaluations of the loan portfolio, in light of the factors then prevailing, may result in material changes in the allowance for loan
losses in future periods, and the inability to collect on outstanding loans could result in increased loan losses. In addition, the
valuation of certain securities (including debt security valuations based on the expected future cash flows of their underlying
collateral) in our investment portfolio could be negatively impacted by illiquidity or dislocation in marketplaces, resulting in
depressed market prices, thus leading to further impairment losses.

Allowance for Loan Losses. The allowance for credit losses includes the allowance for loan losses and the reserve for
unfunded commercial letters of credit and represents management’s estimate of credit losses inherent in the loan portfolio at the
balance sheet date. The determination of the appropriate level of the allowance is based on periodic evaluations of the loan
portfolios. There are numerous components that enter into the evaluation of the allowance for loan losses, which includes a
quantitative analysis, as well as a qualitative review of its results. The qualitative review is subjective and requires a significant
amount of judgment. Various banking regulators, as an integral part of their examination process, also review the allowance for
loan losses. Such regulators may require, based on their judgments about information available to them at the time of their
examination, that certain loan balances be charged off or require that adjustments be made to the allowance for loan losses when
their credit evaluations differ from those of management. Additionally, our allowance for credit losses methodology includes loan
portfolio evaluations at the portfolio segment level, which consists of the commercial and industrial, commercial real estate,
construction, residential mortgage, home equity, automobile and other consumer loan portfolios.

The allowance for loan losses consists of the following:

specific reserves for individually impaired loans;

reserves for adversely classified loans, and higher risk rated loans that are not impaired loans;

reserves for other loans that are not impaired; and, if applicable,

reserves for impairment of purchased credit-impaired (PCI) loans subsequent to their acquisition date.

•

Our reserves on classified and non-classified loans also include reserves based on general economic conditions and other
qualitative risk factors both internal and external to Valley, including changes in loan portfolio volume, the composition and
concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing.

Reserves for PCI loans within the Allowance for Loan Losses

We evaluated the acquired PCI loans and elected to account for them in accordance with Accounting Standards Codification
(ASC) Subtopic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality,” since all of these loans were
acquired at a discount attributable, at least in part, to credit quality. The PCI loans are initially recorded at their estimated fair
values segregated into pools of loans sharing common risk characteristics. The fair values include estimates related to expected
prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.

The PCI loans are subject to our internal credit review. If and when unexpected credit deterioration occurs at the loan pool
level subsequent to the acquisition date, a provision for credit losses for the PCI loans will be charged to earnings for the full
amount of the decline in expected cash flows for the pool. Under the accounting guidance of ASC Subtopic 310-30, for acquired
credit impaired loans, the allowance for loan losses on (or reserves for) PCI loans is measured at each financial reporting date
based on future expected cash flows. This assessment and measurement is performed at the pool level and not at the individual
loan level. Accordingly, decreases in expected cash flows resulting from further credit deterioration on a pool of acquired PCI

2017 Form 10-K

loan pools as of such measurement date compared to those originally estimated are recognized by recording a provision and
allowance for loan losses on PCI loans. Subsequent increases in the expected cash flows of the loans in that pool would first reduce
any allowance for loan losses on PCI loans; and any excess will be accreted for prospectively as a yield adjustment. Any portion
of the additional estimated losses related to covered PCI loans that is reimbursable from the FDIC under the loss-sharing agreements
is recorded in non-interest income and increases the FDIC loss-share receivable asset included in other assets in our consolidated
financial statements. Valley had no allowance reserves related to PCI loans at December 31, 2017 and 2016.

Note 1 to the consolidated financial statements describes the methodology used to determine the allowance for loan losses

and a discussion of the factors driving changes in the amount of the allowance for loan losses is included in this MD&A.

Changes in Our Allowance for Loan Losses

Valley considers it difficult to quantify the impact of changes in forecast on its allowance for loan losses. However,
management believes the following discussion may enable investors to better understand the variables that drive the allowance
for loan losses, which amounted to $120.9 million at December 31, 2017.

For impaired credits, if the present value of expected cash flows were 10 percent higher or lower, the allowance would have
decreased $3.5 million or increased $4.6 million, respectively, at December 31, 2017. If the fair value of the collateral (for collateral
dependent loans) was 10 percent higher or lower, the allowance would have decreased $4.7 million or increased $4.9 million,
respectively, at December 31, 2017.

The internal risk rating assigned to each non-classified credit is an important variable in determining the allowance. If each
non-classified credit were rated one grade worse (special mention rate), the allowance would have increased by approximately
$111.4 million as of December 31, 2017. Additionally, if the loss factors used to calculate the allowance for non-classified loans
were 10 percent higher or lower, the allowance would have increased or decreased by approximately $9.9 million, respectively,
at December 31, 2017. Moreover, if the expected loss rate applied to classified loans were to increase or decrease by 10 percent,
the allowance would have been $660 thousand higher or lower, respectively, at December 31, 2017.

Security Valuations and Impairments. Management utilizes various inputs to determine the fair value of its investment
portfolio. To the extent they exist, unadjusted quoted market prices in active markets (Level 1) or quoted prices on similar assets
(Level 2) are utilized to determine the fair value of each investment in the portfolio. In the absence of quoted prices and liquid
markets, valuation techniques would be used to determine fair value of any investments that require inputs that are both significant
to the fair value measurement and unobservable (Level 3). Valuation techniques are based on various assumptions, including, but
not limited to, cash flows, discount rates, rate of return, adjustments for nonperformance and liquidity, and liquidation values. A
significant degree of judgment is involved in valuing investments using Level 3 inputs. The use of different assumptions could
have a positive or negative effect on our consolidated financial condition or results of operations. See Note 3 to the consolidated
financial statements for more details on our security valuation techniques.

Management must periodically evaluate if unrealized losses (as determined based on the securities valuation methodologies
discussed above) on individual securities classified as held to maturity or available for sale in the investment portfolio are considered
to be other-than-temporary. The analysis of other-than-temporary impairment requires the use of various assumptions, including,
but not limited to, the length of time an investment’s book value is greater than fair value, the severity of the investment’s decline,
any credit deterioration of the investment, whether management intends to sell the security, and whether it is more likely than not
that we will be required to sell the security prior to recovery of its amortized cost basis. Debt investment securities deemed to be
other-than-temporarily impaired are written down by the impairment related to the estimated credit loss and the non-credit related
impairment is recognized in other comprehensive income or loss. Other-than-temporarily impaired equity securities are written
down to fair value and a non-cash impairment charge is recognized in the period of such evaluation. See the “Investment Securities”
section of this MD&A and Note 4 to the consolidated financial statements for additional analysis and discussion of our other-than-
temporary impairment charges.

Goodwill and Other Intangible Assets. We record all assets, liabilities, and non-controlling interests in the acquiree in
purchase acquisitions, including goodwill and other intangible assets, at fair value as of the acquisition date, and expense all
acquisition related costs as incurred as required by ASC Topic 805, “Business Combinations.” Goodwill totaling $690.6 million
at December 31, 2017 is not amortized but is subject to annual tests for impairment or more often, if events or circumstances
indicate it may be impaired. Other intangible assets totaling $42.5 million at December 31, 2017 are amortized over their estimated
useful lives and are subject to impairment tests if events or circumstances indicate a possible inability to realize the carrying
amount. Such evaluation of other intangible assets is based on undiscounted cash flow projections. The initial recording of goodwill
and other intangible assets requires subjective judgments concerning estimates of the fair value of the acquired assets and assumed
liabilities.

2017 Form 10-K

Currently, the goodwill impairment analysis is generally a two-step test. During 2017, Valley elected to perform step one
of the two-step goodwill impairment test for all of its reporting units but may choose to perform an optional qualitative assessment
allowable for one or more units in the future periods to determine whether it is necessary to perform the two-step quantitative
goodwill impairment test. Step one compares the fair value of the reporting unit with its carrying amount, including goodwill. If
the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however,
if the carrying amount of the reporting unit exceeds its fair value, an additional step must be performed. That additional step
compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value
of goodwill is determined in a manner similar to the amount of goodwill calculated in a business combination, i.e., by measuring
the excess of the estimated fair value of the reporting unit, as determined in the first step above, over the aggregate estimated fair
values of the individual assets, liabilities, and identifiable intangibles, as if the reporting unit was being acquired in a business
combination at the impairment test date. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds
its implied fair value. The loss establishes a new basis in the goodwill and subsequent reversal of goodwill impairment losses is
not permitted.

Fair value may be determined using: market prices, comparison to similar assets, market multiples, discounted cash flow
analysis and other determinants. Estimated cash flows may extend far into the future and, by their nature, are difficult to determine
over an extended timeframe. Factors that may materially affect the estimates include, among others, competitive forces, customer
behaviors and attrition, changes in revenue growth trends, cost structures and technology, and changes in discount rates, terminal
values, and specific industry or market sector conditions. To assist in assessing the impact of potential goodwill or other intangible
assets impairment charges at December 31, 2017, the impact of a five percent impairment charge on these intangible assets would
result in a reduction in pre-tax income of approximately $36.7 million. See Note 8 to the consolidated financial statements for
additional information regarding goodwill and other intangible assets.

Income Taxes. We are subject to the income tax laws of the U.S., its states and municipalities. The income tax laws of the
jurisdictions in which we operate are complex and subject to different interpretations by the taxpayer and the relevant government
taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the
application of these inherently complex tax laws to our business activities, as well as the timing of when certain items may affect
taxable income.

Our interpretations may be subject to review during examination by taxing authorities and disputes may arise over the
respective tax positions. We attempt to resolve these disputes during the tax examination and audit process and ultimately through
the court systems when applicable. We monitor relevant tax authorities and revise our estimate of accrued income taxes due to
changes in income tax laws and their interpretation by the courts and regulatory authorities on a quarterly basis. Revisions of our
estimate of accrued income taxes also may result from our own income tax planning and from the resolution of income tax
controversies. Such revisions in our estimates may be material to our operating results for any given quarter.

The provision for income taxes is composed of current and deferred taxes. Deferred taxes arise from differences between
assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in
management’s judgment, their realizability is determined to be more likely than not. We perform regular reviews to ascertain the
realizability of our deferred tax assets. These reviews include management’s estimates and assumptions regarding future taxable
income, which also incorporates various tax planning strategies. In connection with these reviews, if we determine that a portion
of the deferred tax asset is not realizable, a valuation allowance is established. As of December 31, 2017 and 2016, management
determined it is more likely than not that Valley will realize its net deferred tax assets and therefore a valuation allowance was not
established. However, in the fourth quarter of 2017 we re-measured and reduced our deferred tax assets by $15.4 million for the
estimated impact of the Tax Act, which decreased our federal income tax rate from 35 percent to 21 percent effective January 1,
2018. In 2015, we reduced our deferred tax assets by $3.1 million due to the expiration of certain state tax net operating loss
carryforwards. In addition to our judgments regarding the realizable amount of our deferred tax assets, we are required to adjust
our state deferred tax assets for the impact of our expansion outside of our traditional markets, specifically New Jersey. During
the fourth quarters of 2017 and 2015, we reduced our state deferred tax assets by $4.5 million and $3.3 million, respectively, to
reflect the effect of our organic and acquisition-based expansion primarily in Florida on our existing state deferred tax assets. The
$18.5 million and $6.4 million in total reductions were reflected as charges to our income tax expense for 2017 and 2015,
respectively. During 2016, the charge to our income tax expense related to the reduction of such deferred tax assets was immaterial.
Currently, we expect to reduce our state deferred tax assets by approximately $1.8 million during the first quarter of 2018 due to
the USAB acquisition, which became effective January 1, 2018. Additional adjustments to our state deferred tax assets may be
required, dependent on any significant changes in the nature, location and composition of our income producing assets in the
future.

We maintain a reserve related to certain tax positions that management believes contain an element of uncertainty. We adjust
our unrecognized tax benefits as necessary when additional information becomes available. Uncertain tax positions that meet the
more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position

2017 Form 10-K

is measured based on the largest amount of benefit that management believes is more likely than not to be realized. It is possible
that the reassessment of our unrecognized tax benefits may have a material impact on our effective tax rate in the period in which
the reassessment occurs.

See Notes 1 and 13 to the consolidated financial statements and the “Income Taxes” section in this MD&A for an additional

discussion on the accounting for income taxes.

New Authoritative Accounting Guidance. See Note 1 of the consolidated financial statements for a description of recent
accounting pronouncements including the dates of adoption and the anticipated effect on our results of operations and financial
condition.

Executive Summary

Company Overview. At December 31, 2017, Valley had consolidated total assets of $24.0 billion, total net loans of $18.2
billion, total deposits of $18.2 billion and total shareholders’ equity of $2.5 billion. Our commercial bank operations after the
acquisition of USAmeriBancorp, Inc (see below) include branch office locations in northern and central New Jersey, the New
York City boroughs of Manhattan, Brooklyn and Queens, Long Island Florida and Alabama. Of our current 237-branch network,
59 percent, 16 percent, 19 percent and 6 percent of the branches are located in New Jersey, New York, Florida and Alabama,
respectively. Despite significant branch consolidation activity mainly in 2016, we have grown both in asset size and locations
significantly over the past several years primarily through bank acquisitions.

USAmeriBancorp, Inc. On January 1, 2018 Valley completed its acquisition of USAmeriBancorp, Inc. (USAB)
headquartered in Clearwater, Florida. USAB largely through its wholly-owned subsidiary, USAmeriBank. As of December 31,
2017, USAB had approximately $4.7 billion in assets, $3.8 billion in net loans and $3.6 billion in deposits, and maintained a
branch network of 29 offices. The acquisition represents a significant addition to Valley’s Florida franchise, and meaningfully
enhanced its presence in the Tampa Bay market, which is Florida’s second largest metropolitan area by population. The acquisition
also brought Valley to the Birmingham, Montgomery, and Tallapoosa areas in Alabama, where Valley now operates 15 branch
office locations. The common shareholders of USAB received 6.1 shares of Valley common stock for each USAB share they own.
Full systems integration is expected to be completed in the second quarter of 2018. The total consideration for the acquisition was
approximately $737 million.

Earnings Enhancement Program. In December 2016, Valley announced a company-wide earnings enhancement initiative
called LIFT. The LIFT program is a review of our business practices with goals of improving our overall efficiency, targeting
resources to more value-added activities and delivering on the financial banking experience expected by our customers. In July
2017, we completed the idea generation and approval phase of the LIFT program. As a result of these efforts, we currently expect
to achieve approximately $22 million in total cost reductions and revenue enhancements on an annualized pre-tax run-rate after
fully phased-in by June 30, 2019.

Implementation of the LIFT program resulted in employee severance and other costs totaling approximately $9.9 million
($5.8 million after-tax) during both the third quarter and the year ended December 31, 2017. We estimate an additional $1.1
million of costs will be incurred during the planned implementation phase of the initiative enhancements through June 30, 2019.
Mostly during the second half of 2017, Valley implemented several enhancements that resulted in pre-tax cost reductions of $5.6
million. These enhancements are expected to result in cost reductions of approximately $11.4 million on an annualized pre-tax
basis beginning in the first quarter of 2018.

As part of the on-going review of our business, we also regularly evaluate the operational efficiency of our entire branch
network. This review will ensure the optimal performance of our retail operations, in conjunction with several other factors,
including our customers’ delivery channel preferences, branch usage patterns, and the potential opportunity to move existing
customer relationships to another branch location without imposing a negative impact on their banking experience.

Tax Cuts and Jobs Act. During the fourth quarter of 2017, we incurred a $18.5 million charge due the impact of the Tax
Cuts and Jobs Act (Tax Act) signed into law by the President on December 22, 2017. Of the $18.5 million, $15.4 million relates
to the estimated tax expense from the re-measurement of net deferred tax assets and the remaining $3.1 million is after-tax losses
from adjustments to low income housing and tax-advantaged renewable energy investments included in non-interest expense.
Effective January 1, 2018, our Federal income tax rate decreased from 35 percent to 21 percent under the Tax Act. See the "Non-
Interest Expense" and "Income Taxes" sections below for more details.

Annual Results. Net income totaled $161.9 million, or $0.58 per diluted common share, for the year ended December 31,
2017 compared to $168.1 million in 2016, or $0.63 per diluted common share. The decrease in net income was largely due to: (i)
a $32.9 million, or 6.9 percent, increase in total non-interest expense partly caused by pre-tax charges related to the LIFT program,
additional impairment of tax credit investments (due to the Tax Act), and USAB merger expenses totaling $9.9 million, $4.3 million

2017 Form 10-K

and $2.6 million, respectively, as well as general increases in salary and employee benefits expense and consulting fees due to
increased investment in human capital and technology, (ii) a $25.6 million increase in income tax expense largely due to a $15.4
million charge related to the re-measurement of net deferred tax assets under the new provisions of the Tax Act, a $4.5 million
reduction in state deferred tax assets mostly due to expansion of our bank operations outside of New Jersey and higher pre-tax
income, partially offset by (iii) a $1.9 million decline in our provision for credit losses and (iv) a $50.2 million, or 8.1 percent,
increase in our net interest income driven by a $1.4 billion increase in average loan balances, partially offset by interest expense
related to a $1.1 billion increase in average interest bearing liabilities as compared to 2016. See the “Net Interest Income,” “Non-
Interest Income,” “Non-Interest Expense,” and “Income Taxes” sections below for more details on the items above impacting our
2017 annual results.

Economic Overview and Indicators. U.S. economic growth accelerated in 2017. Real gross domestic product expanded
2.3 percent in 2017 compared to 1.5 percent in 2016. Business investment increased notably compared to the prior year while the
labor market tightened further and measures on the housing market reflected positively. On average, long-term interest rates were
modestly higher in 2017 as compared to 2016 and have continued to gradually rise in the early stages of 2018.

Labor market conditions improved further during 2017 with solid job gains and a lower unemployment rate as compared
with the end of 2016. Wage growth, on average, decelerated modestly. In 2017, non-farm payrolls added approximately 2.1 million
jobs compared to 2.2 million and 2.7 million in 2016 and 2015, respectively. The unemployment rate ended the fourth quarter of
2017 at 4.1 percent, 60 basis points lower than compared to December 31, 2016.

Business investment, which includes investment in structures, equipment and software, increased notably compared to the
prior year. Private nonresidential fixed investment advanced 4.7 percent in 2017 compared to a decline of 0.6 percent in 2016.
Alternatively, investment in residential structures decelerated, largely attributed to lower levels of new construction for multifamily
housing units. Private residential fixed investment increased 1.7 percent in 2017 compared to 5.5 percent in 2016 as investment
in multifamily structures slowed from 9.0 percent to 1.7 percent over the same timeframe.

Measures of consumer confidence, on average, were higher than the levels experienced in 2016 which supported household
spending. Personal consumption expenditures increased 2.7 percent in both 2017 and 2016. However, household spending appeared
to come at the expense of saving as the personal saving rate, on average, declined compared to 2016.

Housing starts, new home sales and prices increased compared to 2016. The sale for new single family houses increased
from 2.9 million in 2016 to 3.3 million in 2017, led by sales in the South Census Region. Nationally, prices continued to climb as
inventories remained low and activity increased. Additionally, housing starts increased from 1.17 million in the prior year to 1.20
million in 2017.

The Federal Reserve’s Open Market Committee (FOMC) increased the target range for the federal funds rate to 1.25 to 1.50
percent in the December 2017 meeting. During the year, the FOMC increased the target range for the federal funds rate by 75
basis points in three occurrences. Additionally, in October 2017, the FOMC began implementing a balance sheet normalization
program. The program will gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal
payments from those securities. The FOMC has continued to emphasize that changes in monetary policy will be data dependent.

On average, the 10-year U.S. Treasury note yield was 50 basis points higher in 2017 as compared to 2016 and ended the
fourth quarter of 2017 at 2.40 percent, or 7 basis points higher than the third quarter of 2017. However, the spread between the
2-year and 10-year U.S. Treasury note yields ended the fourth quarter of 2017 at 0.51 percent, 35 basis points lower than September
30, 2017 and 74 basis points lower compared with December 31, 2016.

We are currently witnessing a mix of interest rates on pending loan originations, that are on average higher than our overall
loan portfolio yield, during the early stages of the first quarter of 2018. However, we do see some offset potentially coming in the
form of higher deposit and borrowing costs in our primary markets. To that end, despite solid loan demand, particularly in
commercial real estate and residential mortgage lending, our business operations and results could be challenged in the future due
to several external factors, including, but not limited to, the decline in the spread between short- and long-term market interest
rates and/or slower than expected economic activity within our markets.

Loans. Total loans increased by $1.1 billion, or 6.4 percent, to $18.3 billion at December 31, 2017 from December 31,
2016, net of residential mortgage loans sold during 2017. Total commercial real estate loans of $10.3 billion at December 31,
2017 grew by $803.3 million, or 8.4 percent, as compared to December 31, 2016 and were supplemented by normal loan and loan
participation purchase activity totaling approximately $411 million during the year ended December 31, 2017. At December 31,
2017, other consumer loans totaled $728.1 million and increased by $150.9 million from December 31, 2016 largely due to
continued growth and customer usage of collateralized personal lines of credit. Commercial and industrial loans totaled $2.7
billion at December 31, 2017 and increased by $103.2 million, or 3.9 percent, from December 31, 2016 largely due to organic
loan growth from broad-based new customer activity in the second half of 2017. Automobile loans increased $69.7 million, or 6.1

2017 Form 10-K

percent, to $1.2 billion at December 31, 2017 from December 31, 2016 primarily due to strong indirect auto application activity
during the third and fourth quarters of 2017. Residential mortgage loans totaled $2.9 billion at December 31, 2017 and decreased
$8.9 million, or 0.3 percent, from December 31, 2016 due, in part, to the sale of approximately $752 million of loans (both new
originations and seasoned loans) that were largely a function of our normal secondary mortgage banking activity and interest rate
risk management of the balance sheet during 2017. Home equity loans totaled $446.3 million at December 31, 2017 and decreased
$22.7 million from December 31, 2016 due to normal net repayment activity in 2017.

Our residential mortgage loan origination activity increased in 2017 as compared to 2016 largely due to the success of our
growing team of Valley home mortgage consultants and our home purchase and refinance programs, as well as relatively favorable
long-term market interest rates during 2017. Our new and refinanced residential mortgage loan originations increased 7.3 percent
to $955.7 million for the year ended December 31, 2017 as compared to $891.0 million in 2016. During 2017, Valley sold $800.9
million of residential mortgage loans (including $57.7 million of residential mortgage loans held for sale at December 31, 2016),
as compared to approximately $558.1 million of mortgages sold during the year ended December 31, 2016. However, net gains
on sales of residential mortgage loans decreased to $20.8 million for the year ended December 31, 2017 as compared to $22.0
million in 2016 largely due to narrower spreads on the interest rates of loans sold. Our residential mortgage production was
relatively stable in the fourth quarter of 2017 as compared to the linked third quarter of 2017, and we have continued to see solid
loan application volumes in the early stages of the first quarter of 2018. Additionally, we expect to continue our growth model
for residential mortgage lending during 2018 and increase the Valley home consultant team primarily in the Florida markets during
2018.

For 2018, we have established a goal to grow our overall loan portfolio in the range of 8 to 10 percent, adjusted for the recent
USAB acquisition. However, there can be no assurance that we will achieve such levels given the potential for unforeseen changes
in the market and other conditions. See further details on our loan activities under the “Loan Portfolio” section below.

Asset Quality. Our past due loans and non-accrual loans, discussed further below, exclude PCI loans. Under U.S. GAAP,
the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are not subject to
delinquency classification in the same manner as loans originated by Valley. At December 31, 2017, our PCI loan portfolio totaled
$1.4 billion, or 7.6 percent of our total loan portfolio, and includes all of the loans acquired from CNL on December 1, 2015.

Total non-PCI loan portfolio delinquencies (including loans past due 30 days or more and non-accrual loans) as a percentage
of total loans were 0.70 percent and 0.55 percent at December 31, 2017 and 2016, respectively. Total accruing past due loans
increased to $80.5 million at December 31, 2017 from $56.7 million at December 31, 2016 mostly due to normal period-end
fluctuations in early stage delinquencies and a few large matured performing commercial real estate and construction loans in the
normal process of renewal at December 31, 2017. Non-accrual loans totaled $47.2 million, or 0.26 percent of our entire loan
portfolio of $18.3 billion, at December 31, 2017 as compared to $37.5 million, or 0.22 percent of total loans, at December 31,
2016. Overall, our non-performing assets increased by 16.2 percent to $57.5 million at December 31, 2017 as compared to $49.4
million at December 31, 2016 largely due to an increase in non-accrual commercial and industrial loans, partially offset by a $1.9
million decline in non-accrual debt securities.

Our lending strategy is based on underwriting standards designed to maintain high credit quality and we remain optimistic
regarding the overall future performance of our loan portfolio. However, due to the potential for future credit deterioration caused
by the unpredictable future strength of the U.S. economy and the housing and labor markets, management cannot provide assurance
that our non-performing assets will remain at, or increase from, the levels reported as of December 31, 2017. See the “Non-
performing Assets” section below for further analysis of our asset quality.

Investments. During the year ended December 31, 2017, we recognized net losses on securities transactions of $20 thousand
as compared to net gains totaling $777 thousand and $2.5 million in 2016 and 2015, respectively. Valley recognized no other-than-
temporary impairment charges attributable to credit on investment securities during the years ended December 31, 2017, 2016
and 2015. See further details in the “Investment Securities Portfolio” section below and Note 4 to the consolidated financial
statements.

Deposits and Other Borrowings. The mix of total deposits remained relatively unchanged during 2017 as compared to
2016. Non-interest bearing deposits represented approximately 29 percent of total average deposits for the year ended December 31,
2017, while savings, NOW and money market accounts were 52 percent and time deposits were 19 percent. Average non-interest
bearing deposits increased $125.0 million to approximately $5.2 billion for the year ended December 31, 2017 as compared to
2016 due, in part, to our continuous efforts to encourage new loan borrowers to maintain deposit accounts at Valley. Average
savings, NOW and money market account balances and time deposit balances increased $371.1 million and $225.4 million to $8.9
billion and $3.3 billion in 2017, respectively, largely due to second half of 2017 retail and business account initiatives used to fund
our loan growth and other liquidity needs.

2017 Form 10-K

Average short-term borrowings increased $239.2 million to $1.5 billion for 2017 as compared to 2016. Within this category,
average FHLB advances increased $328.0 million to $1.2 billion, partially offset by moderate declines in repos with commercial
counterparties, federal funds purchased and customer (deposit sweep) repos as compared to 2016. The increase in average FHLB
advance balances for 2017 was largely due to loan growth and balancing the appropriate mix of short- and long-term funding in
the current interest rate environment.

Average long-term borrowings increased $279.7 million to approximately $1.9 billion for 2017 as compared to 2016 largely
due to an increase in average FHLB advances also due to strong loan growth during 2017. See further discussion of our average
interest bearing liabilities under the “Net Interest Income” section below.

Borrowing Strategy. As part of its funding and asset/liability management strategies, Valley periodically assesses the
viability of the prepayment or modification of various levels of debt on its balance sheet, including the remaining portion of its
relatively high cost borrowings (mostly from the Federal Home Loan Bank of New York) that contractually mature in 2021 and
2022. As time moves closer to such maturity dates, the cash charge (or the "prepayment penalty") related to the early repayment
of these borrowings, while substantial, may decline and become a more advantageous option to Valley dependent upon the current
level of market interest rates for similar or alternate funding sources.

In August 2016, we elected to prepay $405 million of FHLB borrowings with various maturity dates in 2018. The prepaid
borrowings with a total average cost of 3.69 percent were funded with a new fixed-rate five-year FHLB advance totaling $405
million. The transaction was accounted for as a debt modification under U.S. GAAP. As a result, the new advance has an adjusted
annual interest rate of 2.51 percent, after amortization of prepayment penalties totaling $20.0 million paid to the FHLB. During
2016, we also repaid borrowings of $182 million with an average cost of 4.69 percent that matured in March and April 2016, and
another $75 million of borrowings with a cost of 5.00 percent matured in July 2016. In 2013, we entered into forward starting
interest rate swaps, including $182 million (hedging the changes in market interest rates prior to the maturity of our borrowings)
with an average fixed rate of 2.74 percent that became effective in March and April 2016 and have maturity dates ranging from
March 2019 to September 2020.

Additionally, in August 2016 Valley terminated an interest rate swap with a notional amount of $125 million and September
2023 maturity. The terminated swap was used to hedge the change in the fair value of Valley’s 5.125 percent subordinated notes
issued in September 2013. The transaction resulted in an adjusted fixed annual interest rate of 3.32 percent on the subordinated
notes, after amortization of the derivative valuation adjustment recorded at the termination date. See Note 15 to the consolidated
financial statements for additional information regarding our derivative transactions.

Similar to the 2016 debt prepayments, we elected to prepay $845 million of our borrowings during the fourth quarter of
2015. The prepaid borrowings had maturities in 2017 and 2018, and a total average cost of 3.72 percent. The settlement of such
borrowings resulted in the recognition of pre-tax prepayment penalty charges of $51.1 million ($29.8 million after-tax) for the
year ended December 31, 2015. Funding for the transaction was obtained from new sources consisting of both brokered money
market deposits and securities sold under agreements to repurchase (repos) totaling $800 million, as well as a portion of our low
yielding excess liquidity.

While not considered part of the higher cost borrowings portfolio, we also prepaid $87 million of FHLB advances assumed
in the acquisition of CNL during May 2016. The $87 million prepayment of FHLB borrowings was entirely funded by cash balances
that were held as collateral at the FHLB of Atlanta, and resulted in the recognition of a $315 thousand loss on extinguishment of
debt for the year ended December 31, 2016.

Moving forward, we will continue to evaluate all of our remaining high cost borrowings for future opportunities, including
potential prepayments, to enhance our net interest income and margin. Our ability to take action is dependent on the level of
market interest rates, our ability to obtain similar amounts of debt instruments, as well as other factors. See Note 10 to the
consolidated financial statements for more details on our borrowed funds.

Net Interest Income

Net interest income consists of interest income and dividends earned on interest earning assets less interest expense on
interest bearing liabilities and represents the main source of income for Valley. The net interest margin on a fully tax equivalent
basis is calculated by dividing tax equivalent net interest income by average interest earning assets and is a key measurement used
in the banking industry to measure income from interest earning assets.

Annual Period 2017. Net interest income on a tax equivalent basis increased by $50.1 million to $676.6 million for 2017
compared with $626.5 million for 2016. The increase was mainly driven by a $1.4 billion increase in average loan balances,

2017 Form 10-K

partially offset by interest expense related to a $1.1 billion increase in average interest bearing liabilities as compared to 2016.
See further discussion of the changes in our average interest earning assets and interest bearing liabilities below.

The net interest margin on a tax equivalent basis was 3.15 percent for the year ended December 31, 2017, a decrease of 1
basis point as compared to 3.16 percent for 2016. The decrease was largely due to a 9 basis point increase in the cost of interest
bearing liabilities to 1.11 percent for 2017. The increase in the overall cost as compared to 2016 was mainly driven by an increase
of 16 basis points in our cost of average savings, NOW and money market deposit accounts, and a 25 basis point increase in the
cost of average short-term borrowings. Both increases were largely due to a gradual increase in short-term market interest rates
during 2017 that were influenced by four individual increases of 0.25 percent in the federal funds target rate from mid-December
2016 to mid-December 2017 by the FOMC. The federal funds target rate ended 2017 at a range of 1.25 percent to 1.50 percent as
compared to a range of 0.25 percent to 0.50 percent for the vast majority of 2016. The cost of average time deposits also increased
6 basis points due, in part, to the new deposit gathering initiatives in the second half of 2017. Partially offsetting these increases,
the cost of average long-term borrowings declined by 60 basis points partly due to the prepayment of high cost borrowings of
$405 million in the third quarter of 2016 and new FHLB borrowings with interest rates lower than the average rate of our pre-
existing borrowings. Largely mitigating the higher cost of funding, the yield on interest earning assets increased 5 basis points
mainly attributable to the increased yield on average investment securities and overnight interest bearing balances. Our average
taxable investment portfolio yield increased 29 basis points during 2017 as compared to one year ago largely due to lower
prepayments and premium amortization on residential mortgage-backed securities. The yield on average loans decreased 1 basis
points to 4.17 percent for 2017 as compared to 4.18 percent in 2016 partly due to declines of $2.9 million and $1.2 million in
interest income recoveries and prepayment penalty fees, respectively, as well as a $1.8 million decline in fee income related to
derivative interest rate swaps executed with customers as compared to 2016. The decline in these periodic interest and fee income
sources was mostly mitigated by improved yields on new and refinanced loans during 2017.

Our earning asset portfolio is comprised of both fixed-rate and adjustable-rate loans and investments. Many of our earning
assets are priced based upon the prevailing treasury rates, the Valley prime rate (set by Valley management based on various
internal and external factors) or on the U.S. prime interest rate as published in The Wall Street Journal. On average, the 10 year
treasury rate increased from 1.83 percent in 2016 to 2.33 percent in 2017, positively impacting our yield on average loans as new
and renewed fixed-rate loans originated in 2017. Additionally, the U.S. prime rate increased to 4.50 percent from 4.25 percent in
mid-December 2017 and has increased four times since mid-December 2016 in conjunction with the increase in the targeted federal
funds rate. The higher U.S. prime rate, and our increase in the Valley prime rate to 5.50 percent from 5.25 percent during December
2017, will have an immediate positive impact on the yield of our U.S. and Valley prime rate based loan portfolios for 2018 as
compared to 2017. Should the treasury rates remain at or increase above current levels, this will also have a positive, but more
gradual, effect on our interest income based on our ability to originate new and renewed fixed rate loans.

Average interest earning assets totaling $21.5 billion for the year ended December 31, 2017 increased $1.7 billion, or 8.4
percent, as compared to 2016. Average loan balances increased $1.4 billion to $17.8 billion in 2017 and drove the $56.8 million
increase in the interest income on a tax equivalent basis for loans as compared to 2016. The growth in average loans during 2017
was fueled mostly by solid demand for commercial real estate loans and secured personal lines of credit throughout the year,
supplemented by $411 million of purchased loans primarily consisting of participations in multi-family loans and whole 1-4 family
loans that were a mix of qualifying and non-qualifying CRA loans. Average investment securities increased $339.5 million to
approximately $3.5 billion in 2017 due to moderate expansion of the taxable portfolio mostly within the residential mortgage-
backed securities classified as available for sale category. Average federal funds sold and other interest bearing deposits decreased
$98.5 million to $189.6 million for the year ended December 31, 2017 as compared to 2016 mostly due to lower levels of overnight
liquidity held primarily caused by fluctuations in the timing of new loan originations and loan purchases.

Average interest bearing liabilities increased $1.1 billion to $15.6 billion for the year ended December 31, 2017 from the
same period in 2016 due to increases in several funding categories. Average savings, NOW and money market accounts increased
$371.1 million mostly due to retail money market account gathering initiatives during the second half of 2017 partially offset by
slightly lower utilization of brokered money market account balances in our loan growth funding strategy and other liquidity needs
in 2017. Average time deposits increased $225.4 million to $3.3 billion for 2017 as compared to 2016 mainly due to similar retail
certificate of deposit strategies executed in the second half of 2017. Average short-term and long-term borrowings increased $239.2
million and $279.7 million in 2017, respectively, as compared to 2016 due, in part, to a higher level of FHLB borrowings used to
fund new loan and investment activities, partially offset by declines in both short and long-term securities sold under agreements
to repurchase ("repos"). See the "Fourth Quarter of 2017" section below for more information regarding changes in our interest
bearing liabilities during 2017.

Fourth Quarter of 2017. Net interest income on a tax equivalent basis totaling $173.9 million for the fourth quarter of 2017
increased $7.1 million and $7.3 million as compared to the third quarter of 2017 and fourth quarter of 2016, respectively. Interest
income on a tax equivalent basis increased $8.8 million to $222.5 million for the fourth quarter of 2017 as compared to the third
quarter of 2017 largely due to a 13 basis point increase in the yield on average loans and an increase of $236.4 million in average

2017 Form 10-K

loans. The increase in loan yield was supplemented by a combined increase of $2.2 million in periodic commercial loan fee income
related to derivative interest rate swaps executed with customers and loan prepayment penalty fees as compared to the third quarter
of 2017, as well as higher interest accretion on certain acquired PCI loan pools caused by improvements in forecasted cash flows.
Interest expense of $48.5 million for the three months ended December 31, 2017 increased $1.7 million and $11.8 million from
the third quarter of 2017 and fourth quarter of 2016, respectively. During the fourth quarter of 2017, our interest expense on
deposits increased by $2.2 million from the linked third quarter largely due to higher rates on certain retail money market and
time deposit offerings. Interest expense on long-term borrowings also increased $1.2 million in the fourth quarter of 2017 as
compared to the third quarter of 2017 due to an increase of $312.2 million in the average balances. Average long-term borrowings
in the fourth quarter of 2017 increased as compared to the third quarter of 2017 mostly due to new long-term FHLB borrowings
replacing a portion of our short-term borrowings that matured during the third and fourth quarters of 2017. Both the interest expense
on short-term borrowings and average balances declined by $1.7 million and $526.4 million, respectively, during the fourth quarter
of 2017 as compared to the third quarter of 2017 due to the partial shift to longer term funding and a reduction in borrowings due
to the success of our deposit gathering initiatives in the second half of 2017.

The net interest margin on a tax equivalent basis was 3.17 percent for the fourth quarter of 2017, an increase of 9 basis points
from 3.08 percent in the linked third quarter of 2017 and a 10 basis point decrease from 3.27 percent for the fourth quarter of 2016.
The yield on average interest earning assets increased by 11 basis points on a linked quarter basis. The higher yield was mainly
a result of the 13 basis point increase in the yield on average loans to 4.28 percent for the fourth quarter of 2017. The overall cost
of average interest bearing liabilities increased by 3 basis points from 1.19 percent in the linked third quarter of 2017. The increase
was primarily due to a 4 basis point increase in the cost of deposits. Our cost of deposits totaled 0.65 percent for the fourth quarter
of 2017 as compared to 0.61 percent for the three months ended September 30, 2017.

Looking forward, our net interest margin for the first quarter of 2018 may decline as compared to the fourth quarter of 2017
due to a multitude of conditional, and sometimes unpredictable, factors that can impact our actual margin results. For example,
our margin may continue to face the risk of compression in the future due to, among other factors, the relatively low level of long-
term market interest rates, further repayment of higher yielding interest earning assets, and the re-pricing risk related to interest
bearing deposits and short-term borrowings due to a rise in short-term market interest rates. Additionally, our investment portfolios
include a large number of residential mortgage-backed securities purchased at a premium. The amortization of such premiums,
which impacts both the yield and interest income recognized on such securities, may increase or decrease depending upon the
level of principal prepayments and market interest rates. To manage these risks, we continuously explore ways to maximize our
mix of interest earning assets on our balance sheet, while maintaining a low cost of funds to optimize our net interest margin and
overall returns. The increase in both the U.S. and Valley prime rates (to 4.50 percent and 5.50 percent, respectively) in response
to the Federal Reserve's 25 basis point increase in the targeted federal funds rate in mid-December 2017 may more fully benefit
both our future net interest income and margin in the first quarter as compared to the fourth quarter as we close additional new
variable loans at these rates.

2017 Form 10-K

The following table reflects the components of net interest income for each of the three years ended December 31, 2017,

2016 and 2015:

ANALYSIS OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY AND

NET INTEREST INCOME ON A TAX EQUIVALENT BASIS

Total interest earning assets

21,488,498

850,722

2017

2016

2015

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

($ in thousands)

$ 17,819,003

$ 742,750

4.17% $ 16,400,745

$ 685,927

4.18% $ 14,447,020

$ 633,220

4.38%

2,910,390

82,488

569,469

23,691

189,636

1,793

2.83

4.16

0.95

3.96

2,536,197

64,349

604,188

23,903

288,182

1,126

19,829,312

775,305

2.54

3.96

0.39

3.91

2,161,094

58,607

546,129

22,413

271,261

649

17,425,504

714,889

2.71

4.10

0.24

4.10

(117,529)

236,297

1,886,035

(14,503)

$ 23,478,798

(109,084)

291,021

2,032,704

921

$ 22,044,874

(105,126)

311,732

1,809,504

(3,559)

$ 19,438,055

$ 8,934,335

$ 55,300

0.62% $

8,563,208

$ 39,787

0.46% $

7,259,838

$ 24,824

0.34%

3,329,693

12,264,028

1,486,001

42,546

97,846

18,034

1,890,288

58,227

1.28

0.80

1.21

3.08

1.11

3,104,307

11,667,515

1,246,790

37,775

77,562

12,022

1,610,576

59,190

14,524,881

148,774

1.22

0.66

0.96

3.68

1.02

2,953,689

10,213,527

243,192

35,432

60,256

919

2,450,628

95,579

12,907,347

156,754

1.20

0.59

0.38

3.90

1.21

5,192,087

174,643

2,471,751

5,067,124

199,299

2,253,570

4,396,331

175,620

1,958,757

$ 23,478,798

$ 22,044,874

$ 19,438,055

676,615

2.85%

626,531

2.89%

558,135

2.89%

(8,303)

$ 668,312

(8,382)

$ 618,149

(7,866)

$ 550,269

3.11%

0.04

3.15%

3.12%

0.04

3.16%

0.04%

3.20%

Assets

Interest earning assets:

(1)(2)

Loans

Taxable investments

(3)

Tax-exempt investments

(1)(3)

Federal funds sold and other
interest bearing deposits

Allowance for loan losses

Cash and due from banks

Other assets

Unrealized losses on securities

available for sale, net

Total assets

Liabilities and Shareholders’

Equity

Interest bearing liabilities:

Savings, NOW and money

market deposits

Time deposits

Total interest bearing deposits

Short-term borrowings

Long-term borrowings

(4)

Non-interest bearing deposits

Other liabilities

Shareholders’ equity

Total liabilities and

shareholders’ equity

Net interest income/interest rate

spread (5)

Tax equivalent adjustment

Net interest income, as

reported

Net interest margin

(6)

Tax equivalent effect

Net interest margin on a fully tax

equivalent basis (6)

Total interest bearing liabilities

15,640,317

174,107

(1)

Interest income is presented on a tax equivalent basis using a 35 percent federal tax rate. Effective January 1, 2018, Valley's federal tax
rate decreased from 35 percent to 21 percent under the Tax Act.

(2) Loans are stated net of unearned income and include non-accrual loans.
(3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.
(4)

(5)

Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of condition.
Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest
bearing liabilities and is presented on a fully tax equivalent basis.

(6) Net interest income as a percentage of total average interest earning assets.

2017 Form 10-K

The following table demonstrates the relative impact on net interest income of changes in the volume of interest earning
assets and interest bearing liabilities and changes in rates earned and paid by Valley on such assets and liabilities. Variances resulting
from a combination of changes in volume and rates are allocated to the categories in proportion to the absolute dollar amounts of
the change in each category.

CHANGE IN NET INTEREST INCOME ON A TAX EQUIVALENT BASIS

Years Ended December 31,

2017 Compared to 2016
Change
Due to
Rate

Change
Due to
Volume

Total
Change

2016 Compared to 2015
Change
Due to
Rate

Change
Due to
Volume

Total
Change

(in thousands)

Interest income:

Loans*

Taxable investments

Tax-exempt investments*

Federal funds sold and other interest bearing

deposits

Total increase (decrease) in interest income

Interest expense:

Savings, NOW and money market deposits

Time deposits

Short-term borrowings

Long-term borrowings and junior

subordinated debentures

Total (decrease) increase in interest expense

59,125

(2,302) $

56,823

82,703

(29,996) $

52,707

10,114

(1,411)

(491)

67,337

1,790

2,824

2,561

9,418

16,593

8,025

1,199

1,158

8,080

13,723

1,947

3,451

18,139

(212)

667

75,417

15,513

4,771

6,012

9,695

2,319

(3,953)

(829)

434

94,760

(34,344)

4,990

1,827

8,069

9,973

516

3,034

5,742

1,490

477

60,416

14,963

2,343

11,103

(10,381)

8,740

(963)

25,333

(31,145)

(16,259)

(5,244)

8,279

(36,389)

(7,980)

Increase (decrease) in net interest income

50,744

(660) $

50,084

111,019

(42,623) $

68,396

Interest income is presented on a fully tax equivalent basis using a 35 percent federal tax rate. Effective January 1, 2018, Valley's federal
tax rate decreased from 35 percent to 21 percent under the Tax Act.

Non-Interest Income

Non-interest income represented 10.9 percent and 11.9 percent of total interest income plus non-interest income for 2017
and 2016, respectively. For the year ended December 31, 2017, non-interest income increased $216 thousand compared with 2016.
The following table presents the components of non-interest income for the years ended December 31, 2017, 2016, and 2015:

Trust and investment services
Insurance commissions
Service charges on deposit accounts
(Losses) gains on securities transactions, net
Fees from loan servicing
Gains on sales of loans, net
Bank owned life insurance
Other

Total non-interest income

2017

Years Ended December 31,
2016
(in thousands)

2015

11,538
18,156
21,529
(20)
7,384
20,814
7,338
16,702
103,441

10,345
19,106
20,879
777
6,441
22,030
6,694
16,953
103,225

10,020
17,233
21,176
2,487
6,641
4,245
6,815
15,185
83,802

2017 Form 10-K

Trusts and investment services income increased $1.2 million for the year ended December 31, 2017 as compared to 2016
mainly due to higher investment and advisory fees resulting from increased assets under management during 2017. The increase
in assets under management was largely due to higher market valuations and asset appreciation during 2017.

Insurance commissions decreased $950 thousand for the year ended December 31, 2017 from $19.1 million in 2016 mainly

due to lower volumes of business generated by the Bank's insurance agency subsidiary.

Fees from loan servicing increased $943 thousand for the year ended December 31, 2017 as compared to $6.4 million in
2016 mainly due to the high volume of loans originated for sale and significantly higher sales volumes during 2017 (as discussed
further below). Valley retains loan servicing on the vast majority of its loans originated and sold in the secondary market.

Net gains on sales of loans decreased $1.2 million for the year ended December 31, 2017 as compared to 2016 largely due
to lower spreads (or margins) on individual loan sales despite a higher volume of residential mortgage loans sold during 2017.
Residential mortgage loan originations (including both new and refinanced loans) increased 7.3 percent to $955.7 million for the
year ended December 31, 2017 as compared to $891.0 million in 2016. During 2017, we sold $800.9 million of residential
mortgages originated for sale (including $57.7 million of residential mortgage loans held for sale at December 31, 2016), as
compared to $558.1 million of residential mortgage loans sold during 2016. Our net gains on sales of loans for each period are
comprised of both gains on sales of residential mortgages and the net change in the mark to market gains and losses on our loans
held for sale carried at fair value at each period end. The net change in the fair value of loans held for sale totaled a net loss of
$782 in 2017 as compared to a net loss of $4 thousand in 2016. During the fourth quarter of 2017, we recognized net gains totaling
approximately $6.4 million. While we expect net gains on sales of loans to remain at or near this level in the first quarter of 2018,
our intention and ability to sell mortgage loans are dependent on many factors, including, but not limited, to the level of interest
rates, consumer demand, the economy and interest rate risk strategies maintained for our balance sheet. See further discussions
of our residential mortgage loan origination activity under “Loans” in the "Executive Summary" section of this MD&A above and
the fair valuation of our loans held for sale at Note 3 of the consolidated financial statements.

Non-Interest Expense

Non-interest expense increased $32.9 million to $509.1 million for the year ended December 31, 2017 as compared to 2016.

The following table presents the components of non-interest expense for the years ended December 31, 2017, 2016 and 2015:

Salary and employee benefits expense
Net occupancy and equipment expense
FDIC insurance assessment
Amortization of other intangible assets
Professional and legal fees
Loss on extinguishment of debt
Amortization of tax credit investments
Telecommunication expense
Other

Total non-interest expense

2017

Years Ended December 31,
2016
(in thousands)

2015

254,569
92,243
19,821
10,016
25,834
—
41,747
9,921
54,922
509,073

235,853
87,140
20,100
11,327
17,755
315
34,744
10,021
58,870
476,125

221,765
90,521
16,867
9,169
18,945
51,129
27,312
8,259
55,108
499,075

Salary and employee benefits expense increased by $18.7 million for the year ended December 31, 2017 due to increased
salaries and cash incentive compensation (both paid and accrued) for the year ended December 31, 2017. The increases were
largely due to normal increases in annual compensation and incentives, expansion of our technology and home mortgage consultant
teams, as well as severance costs totaling $3.8 million related to our LIFT initiative recognized during the third quarter of 2017.
Health insurance expenses, which can be volatile due to self-funding of a large portion of our insurance plan, increased by $2.0
million for the year ended December 31, 2017 as compared with the same period in 2016. The increase in salary and employee
benefits during the year ended December 31, 2017 was also attributable to a $1.8 million increase in stock-based compensation
expense as compared to the same period of 2016. During the first quarter of 2018, Valley's salary and employee benefits expense
is expected to include appropriately $9.0 million of USAB merger expenses, consisting of change in control agreement, severance
and stay bonus expenses related to former USAB officers and employees.

Net occupancy and equipment expenses increased $5.1 million for the year ended December 31, 2017 as compared to 2016

largely due to higher technology equipment related expense.

2017 Form 10-K

Amortization of intangible assets decreased $1.3 million for the year ended December 31, 2017 as compared to 2016 mainly
due to net recoveries of impairment charges on certain loan servicing rights during 2017 as well as a normal decrease in the
amortization expense of certain core deposit intangibles. Valley recognized net recoveries of impairment charges on its loan
servicing rights totaling $429 thousand for the year ended December 31, 2017 as compared to net impairment charges totaling
$611 thousand for 2016. The positive effect of these items was partially offset by higher amortization expense of loan servicing
rights caused, in part, by additional loan servicing rights recorded over the last twelve-month period.

Professional and legal fees increased $8.1 million for the year ended December 31, 2017 as compared to 2016 largely due

to advisory and legal fees related to our LIFT program and the acquisition of USAB during 2017.

Amortization of tax credit investments increased $7.0 million for the year ended December 31, 2017 as compared to 2016
mostly due to a $4.3 million charge related to the impairment of tax credit investments caused by the Tax Act, as well as normal
differences in the timing and amount of such investments and recognition of the related tax credits. Tax credit investments, while
negatively impacting the level of our operating expenses and efficiency ratio, directly reduce our income tax expense and effective
tax rate. See Note 14 to the consolidated financial statements for additional information.

Other non-interest expense decreased $3.9 million for the year ended December 31, 2017 as compared to 2016 mainly due
to declines in both bank operating losses and branch closing costs and a $1.2 million increase in net gains on other real estate
owned. Other significant components of other expense include postage, stationary and printing, insurance, debit card and ATM
expenses.

Efficiency Ratio. The efficiency ratio measures total non-interest expense as a percentage of net interest income plus total
non-interest income. We believe this non-GAAP measure provides a meaningful comparison of our operational performance and
facilitates investors’ assessments of business performance and trends in comparison to our peers in the banking industry. Our
overall efficiency ratio, and its comparability to some of our peers, is negatively impacted by the amortization of tax credit
investments, charges related to the LIFT program, merger related expenses and the loss on extinguishment of debt within non-
interest expense.

The following table presents our efficiency ratio and a reconciliation of the efficiency ratio adjusted for such items during the
years ended December 31, 2017, 2016 and 2015:

Total non-interest expense

Less: Amortization of tax credit investments (pre-tax)
Less: LIFT program expenses (pre-tax) (1)
Less: Merger related expenses (pre-tax) (2)
Loss on extinguishment of debt

Total non-interest expense, adjusted

Net interest income

Total non-interest income

Total net interest income and non-interest income

Efficiency ratio

Efficiency ratio, adjusted

Years Ended December 31,

2017

2016

2015

($ in thousands)

$ 509,073

$ 476,125

$ 499,075

41,747

9,875

2,620

—

34,744

—

315

27,312

—

1,806

51,129

$ 454,831
$ 668,312

$ 441,066
$ 618,149

$ 418,828
$ 550,269

103,441

103,225

83,802

$ 771,753

$ 721,374

$ 634,071

65.96%

58.93%

66.00%

61.14%

78.71%

66.05%

(1) LIFT program expenses are primarily within professional and legal fees and salary and employee benefits expense.
(2) Merger related expenses are primarily within professional and legal fees.

See the “Results of Operations—2016 Compared to 2015” section later in this MD&A for the discussion and analysis of

changes in our non-interest expense from 2015 to 2016.

Income Taxes

Income tax expense was $90.8 million for the year ended December 31, 2017, reflecting an effective tax rate of 35.9 percent,
as compared to $65.2 million for the year ended 2016, reflecting an effective tax rate of 28.0 percent. The increase in both income

2017 Form 10-K

tax expense and the effective tax rate in 2017 was primarily caused by the estimated impact of the Tax Act, consisting of an $15.4
million charge resulting from the re-measurement of Valley's estimated net deferred tax asset as of December 31, 2017. Excluding
the $15.4 million charge and after-tax impairment of tax credit investments totaling $3.1 million related to the Tax Act, the adjusted
effective tax rate would be 28.6 percent for the year ended December 31, 2017.

U.S. GAAP requires that any change in judgment or change in measurement of a tax position taken in a prior annual period
be recognized as a discrete event in the quarter in which it occurs, rather than being recognized as a change in effective tax rate
for the current year. Our adherence to these tax guidelines may result in volatile effective income tax rates in future quarterly and
annual periods. Factors that could impact management’s judgment include changes in income, tax laws and regulations, and tax
planning strategies. Based on the current information available, we anticipate that our effective tax rate will range from 21 percent
to 23 percent for 2018, primarily reflecting the estimated impacts of the Tax Act, tax-exempt income, tax-advantaged investments
and general business credits, exclusive of any potential future tax reform measures or other unanticipated changes in tax laws and
regulations.

See additional information regarding our income taxes under our “Critical Accounting Policies and Estimates” section above,

as well as Note 13 to the consolidated financial statements.

Business Segments

We have four business segments that we monitor and report on to manage our business operations. These segments are
consumer lending, commercial lending, investment management, and corporate and other adjustments. Our reportable segments
have been determined based upon Valley’s internal structure of operations and lines of business. Each business segment is reviewed
routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and
impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Expenses related to the branch
network, all other components of retail banking, along with the back office departments of our subsidiary bank are allocated from
the corporate and other adjustments segment to each of the other three business segments. Interest expense and internal transfer
expense (for general corporate expenses) are allocated to each business segment utilizing a “pool funding” methodology, which
involves the allocation of uniform funding cost based on each segments’ average earning assets outstanding for the period. The
financial reporting for each segment contains allocations and reporting in line with our operations, which may not necessarily be
comparable to any other financial institution. The accounting for each segment includes internal accounting policies designed to
measure consistent and reasonable financial reporting, and may result in income and expense measurements that differ from
amounts under U.S. GAAP. Furthermore, changes in management structure or allocation methodologies and procedures may result
in changes in reported segment financial data. See Note 22 to the consolidated financial statements for the segments’ financial
data.

Consumer lending. The consumer lending segment is mainly comprised of residential mortgage loans, automobile loans
and home equity loans and represented in the aggregate 28.6 percent of the total loan portfolio at December 31, 2017. The duration
of the residential mortgage loan portfolio (which represented 15.6 percent of our total loan portfolio at December 31, 2017) is
subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the
automobile loans (representing 6.6 percent of total loans at December 31, 2017) 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. The consumer lending segment
also includes the Wealth Management Division, comprised of trust, asset management, insurance services, and asset-based lending
support services.

Average interest earning assets in this segment increased $84.4 million to $5.2 billion for the year ended December 31, 2017
as compared to 2016. The increase was largely attributable to continued organic growth in secured personal lines of credit and, to
a lesser extent, auto loans over the last 12-month period, partially offset by a decline in average residential mortgage loans and
home equity loans. The decline in residential mortgage loans was largely driven by normal repayment activity, a high percentage
of loans originated for sale (rather than held for investment), and the transfer and sale of approximately $313 million of performing
fixed rate mortgages from the loans held for investment portfolio during 2017.

Income before income taxes generated by the consumer lending segment decreased $6.5 million to $63.5 million for the
year ended December 31, 2017 as compared to $70.0 million in 2016. This decrease was largely attributable to increases of $9.5
million and $2.3 million in non-interest expense and the provision for loan losses, respectively, as compared to 2016. The increase
in non-interest expense was due, in part, to higher salary and employee benefits expense which included charges related to LIFT
and additional compensation related to our growing home mortgage consultant team. The increase in the provision for loan losses
was mainly due to the aforementioned loan growth within the non-real estate loan portion of this segment and slightly higher net
charge-offs in 2017. The negative impact of these items was partially offset by an increase in net interest income of $1.7 million
and a decrease of $3.6 million in internal transfer expense for the year ended December 31, 2017 as compared to 2016. The increase
in net interest income was mainly due to a combination of higher loan yields and average interest earnings assets.

2017 Form 10-K

The net interest margin on the consumer lending portfolio decreased 2 basis points to 2.77 percent for the year ended
December 31, 2017 as compared to 2016 due to a 7 basis point increase in the costs associated with our funding sources that was
partially offset by a 5 basis point increase in the yield on average loans. The increase in our cost of funds was primarily due to
increased short-term interest rates resulting from the Federal Reserve's gradual increase in short-term market interest rates during
2017. The federal funds target rate ended 2017 at a range of 1.25 percent to 1.50 percent as compared to a range of 0.25 percent
to 0.50 percent for the vast majority of 2016.

The return on average interest earning assets before income taxes for the consumer lending segment was 1.23 percent for

2017 compared to 1.38 percent for 2016.

Commercial lending. The commercial lending segment is mainly comprised of floating rate and adjustable rate commercial
and industrial loans, as well as fixed rate owner occupied and commercial real estate loans. Due to the portfolio’s interest rate
characteristics, commercial lending is Valley’s business segment that is most sensitive to movements in market interest rates.
Commercial and industrial loans totaled approximately $2.7 billion and represented 15.0 percent of the total loan portfolio at
December 31, 2017. Commercial real estate loans and construction loans totaled $10.3 billion and represented 56.4 percent of the
total loan portfolio at December 31, 2017.

Average interest earning assets in this segment increased $1.3 billion to $12.7 billion for the year ended December 31, 2017
as compared to 2016. The increase was primarily attributable to solid organic commercial real estate loan volumes in New York,
New Jersey and Florida, supplemented by approximately $301 million of purchased loans partly consisting of participations in
multi-family loans during the last 12 months.

For the year ended December 31, 2017, income before income taxes for the commercial lending segment increased $30.3
million to $223.3 million as compared to 2016 mostly due to an increase in net interest income and a decrease in the provision
for credit losses, partially offset by increases in both non-interest expense and internal transfer expense. Net interest income
increased $34.0 million to $465.0 million for the year ended December 31, 2017 as compared to 2016 largely due to the
aforementioned increase in average loan balances. The provision for credit losses decreased $4.2 million to $6.7 million for the
year ended December 31, 2017 as compared to 2016 (See details in the "Allowance for Credit Losses" section of this MD&A).
The internal transfer expense and non-interest expense increased $6.6 million and $1.1 million, respectively, for the year ended
December 31, 2017 as compared to 2016.

The net interest margin for this segment decreased 14 basis points to 3.67 percent during 2017 as a result of a 7 basis point
decrease in the yield on average loans and 7 basis point increase in the cost of our funding sources as compared to 2016. The
decrease in the yield on average loans was partly due to declines in interest income recoveries and prepayment penalty fees as
well as a decline in fee income related to derivative interest rate swaps executed with customers as compared to 2016. The decline
in these periodic interest and fee income sources was mostly mitigated by improved yields on new and refinanced loans during
2017.

The return on average interest earning assets before income taxes for this segment was 1.77 percent for 2017 compared to

1.71 percent for the prior year period.

Investment management. The investment management segment generates a large portion of our income through
investments in various types of securities and interest-bearing deposits with other banks. These investments are mainly comprised
of fixed rate securities, and depending on our liquid cash position, federal funds sold and interest-bearing deposits with banks
(primarily the FRB of New York), as part of our asset/liability management strategies. The fixed rate investments are one of
Valley’s least sensitive assets to changes in market interest rates. However, a portion of the investment portfolio is invested in
shorter-duration securities to maintain the overall asset sensitivity of our balance sheet. See the “Asset/Liability Management”
section below for further analysis.

Average interest earning assets increased $240.9 million to $3.7 billion for the year ended December 31, 2017 as compared
to 2016 mostly due to moderate expansion of the taxable portfolio mostly within the residential mortgage-backed securities
classified as available for sale category. Average federal funds sold and other interest bearing deposits decreased $98.5 million
to $189.6 million for the year ended December 31, 2017 as compared to 2016 mostly due to lower levels of overnight liquidity
held primarily caused by fluctuations in the timing of new loan originations and loan and investment purchases.

For the year ended December 31, 2017, income before income taxes for the investment management segment increased
$15.8 million to $38.4 million as compared to 2016 primarily due to a $14.6 million increase in net interest income. The increase
in net interest income was mainly driven by the growth in the investment portfolio and higher yield on average investments during
the year ended December 31, 2017 as compared to 2016.

2017 Form 10-K

The net interest margin for this segment increased 26 basis points to 2.18 percent during the year ended December 31, 2017
as compared to 2016 as a result of a 33 basis point increase in the yield on average investments, partially offset by a 7 basis point
increase in costs associated with our funding sources. The higher yield was caused by a 29 basis point increase in yield on average
taxable investment portfolio during 2017 as compared to one year ago partly due to lower prepayments and premium amortization
on residential mortgage-backed securities during 2017.

The return on average interest earning assets before income taxes for this segment was 1.05 percent for 2017 compared to

0.66 percent for 2016.

Corporate and other adjustments. The amounts disclosed as “corporate and other adjustments” represent income and
expense items not directly attributable to a specific segment, including net securities gains and losses not reported in the investment
management segment above, losses on the extinguishment of debt, interest expense related to subordinated notes, as well as income
and expense from derivative financial instruments.

The pre-tax net loss for the corporate segment increased $20.3 million for the year ended December 31, 2017 to $72.5 million
as compared to 2016. The increase in the net loss for this segment was mainly due to a increase in non-interest expense, partially
offset by an increase in internal transfer income. The non-interest expense increased $22.5 million to $364.5 million for the year
ended December 31, 2017 as compared to 2016 largely due to higher salary and employee benefits expense, and professional and
legal fees caused by charges related to the LIFT program and USAB acquisition recognized in the second half of 2017. See further
details in the "Non-Interest Expense" section in this MD&A. Internal transfer income increased $3.0 million to $283.2 million for
the year ended December 31, 2017 as compared to the prior year.

Interest Rate Sensitivity

ASSET/LIABILITY MANAGEMENT

Our success is largely dependent upon our ability to manage interest rate risk. Interest rate risk can be defined as the exposure
of our interest rate sensitive assets and liabilities to the movement in interest rates. Our Asset/Liability Management Committee is
responsible for managing such risks and establishing policies that monitor and coordinate our sources and uses of funds. Asset/
Liability management is a continuous process due to the constant change in interest rate risk factors. In assessing the appropriate
interest rate risk levels for us, management weighs the potential benefit of each risk management activity within the desired
parameters of liquidity, capital levels and management’s tolerance for exposure to income fluctuations. Many of the actions
undertaken by management utilize fair value analysis and attempts to achieve consistent accounting and economic benefits for
financial assets and their related funding sources. We have predominately focused on managing our interest rate risk by attempting
to match the inherent risk and cash flows of financial assets and liabilities. Specifically, management employs multiple risk
management activities such as optimizing the level of new residential mortgage originations retained in our mortgage portfolio
through increasing or decreasing loan sales in the secondary market, product pricing levels, the desired maturity levels for new
originations, the composition levels of both our interest earning assets and interest bearing liabilities, as well as several other risk
management activities.

We use a simulation model to analyze net interest income sensitivity to movements in interest rates. The simulation model
projects net interest income based on various interest rate scenarios over a 12-month and 24-month period. The model is based on
the actual maturity and re-pricing characteristics of rate sensitive assets and liabilities. The model incorporates certain assumptions
which management believes to be reasonable regarding the impact of changing interest rates and the prepayment assumptions of
certain assets and liabilities as of December 31, 2017. The model assumes changes in interest rates without any proactive change
in the composition or size of the balance sheet by management. In the model, the forecasted shape of the yield curve remains static
as of December 31, 2017. The impact of interest rate derivatives, such as interest rate swaps and caps, is also included in the model.

Our simulation model is based on market interest rates and prepayment speeds prevalent in the market as of December 31,
2017. Although the size of Valley’s balance sheet is forecasted to remain static as of December 31, 2017 in our model, the composition
is adjusted to reflect new interest earning assets and funding originations coupled with rate spreads utilizing our actual originations
during 2017. The model utilizes an immediate parallel shift in the market interest rates at December 31, 2017.

The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly
from those presented in the table above, due to the frequency and timing of changes in interest rates, and changes in spreads between
maturity and re-pricing categories. Overall, our net interest income is affected by changes in interest rates and cash flows from our
loan and investment portfolios. We actively manage these cash flows in conjunction with our liability mix, duration and interest
rates to optimize the net interest income, while structuring the balance sheet in response to actual or potential changes in interest
rates. Additionally, our net interest income is impacted by the level of competition within our marketplace. Competition can
negatively impact the level of interest rates attainable on loans and increase the cost of deposits, which may result in downward
pressure on our net interest margin in future periods. Other factors, including, but not limited to, the slope of the yield curve and

2017 Form 10-K

projected cash flows will impact our net interest income results and may increase or decrease the level of asset sensitivity of our
balance sheet.

Convexity is a measure of how the duration of a financial instrument changes as market interest rates change. Potential
movements in the convexity of bonds held in our investment portfolio, as well as the duration of the loan portfolio may have a
positive or negative impact on our net interest income in varying interest rate environments. As a result, the increase or decrease
in forecasted net interest income may not have a linear relationship to the results reflected in the table above. Management cannot
provide any assurance about the actual effect of changes in interest rates on our net interest income.

The following table reflects management’s expectations of the change in our net interest income over the next 12-month
period in light of the aforementioned assumptions. While an instantaneous and severe shift in interest rates was used in this simulation
model, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest
impact than shown in the table below.

Changes in Interest Rates
(in basis points)
+200
+100
- 100

Estimated Change in
Future Net Interest Income

Dollar
Change

Percentage
Change

($ in thousands)
(9,336)
(2,349)
(32,643)

(1.37)%
(0.35)
(4.81)

As noted in the table above, a 100 basis point immediate increase in interest rates combined with a static balance sheet where
the size, mix, and proportions of assets and liabilities remain unchanged is projected to decrease net interest income over the next
12 months by 0.35 percent. The sensitivity of our balance sheet to such a move in interest rates at December 31, 2017 decreased
as compared to December 31, 2016 (which was an increase of 0.03 percent in net interest income over a 12-month period). However,
the interest rate sensitivity of our balance sheet remains within our current objectives for generating net interest income. In addition,
we believe the balance sheet remains well-positioned to respond positively to actual changes in the market interest rate environment.
Our current asset sensitivity to a 100 basis point immediate increase in interest rates is impacted by, among other factors, asset cash
flow and repricing characteristics, complemented by a funding structure that provides for very stable earnings and low volatility.
Future changes including, but not limited to, the slope of the yield curve and projected cash flows will affect our net interest income
results and may increase or decrease the level of net interest income sensitivity.

Our interest rate swaps and cap designated as cash flow hedging relationships are designed to protect us from upward
movements in interest rates on certain deposits and other borrowings based on the three-month LIBOR rate or the prime rate (as
reported by The Wall Street Journal). Our cash flow interest rate swaps had a total notional value of $482 million at December 31,
2017 and currently pay fixed and receive floating rates. We also utilize fair value and non-designated hedge interest rate swaps to
effectively convert fixed rate loans, and a much smaller amount of certain brokered certificates of deposit, to floating rate instruments.
The cash flow hedges are expected to benefit our net interest income in a rising interest rate environment. However, due to the
relatively low level of market interest rates and the strike rate of these instruments, the cash flow hedge interest rate swaps and cap
negatively impacted our net interest income during 2017. This negative trend will likely continue based upon the current market
expectations regarding the Federal Reserve’s monetary policies which are designed to impact the level of market interest rates. See
Note 15 to the consolidated financial statements for further details on our derivative transactions.

2017 Form 10-K

The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at
December 31, 2017 and their associated fair values. The expected cash flows are categorized based on each financial instrument’s
anticipated maturity or interest rate reset date in each of the future periods presented.

INTEREST RATE SENSITIVITY ANALYSIS

Rate

2018

2019

2020

2021

2022

Thereafter

Total
Balance

Fair
Value

($ in thousands)

Interest sensitive assets:

Interest bearing deposits with

banks

Investment securities held to

maturity

Investment securities
available for sale

Loans held for sale, at fair

value

Loans

1.40% $

172,800

— $

172,800

3.33

2.52

3.47

4.14

445,235

249,653

240,977

227,551

153,312

525,963

1,842,691

1,837,620

225,974

193,944

187,451

150,656

185,222

550,658

1,493,905

15,119

—

15,119

7,111,895

2,279,383

2,066,443

1,865,928

1,625,817

3,382,114

18,331,580

17,562,153

Total interest sensitive assets

3.94% $ 7,971,023

$ 2,722,980

$ 2,494,871

$ 2,244,135

$ 1,964,351

$ 4,458,735

$ 21,856,095

$ 21,081,597

Interest sensitive liabilities:

Deposits:

Savings, NOW and
money market

Time

Short-term borrowings

Long-term borrowings

Junior subordinated

debentures

Total interest sensitive

liabilities

Interest sensitivity gap

Ratio of interest sensitive

assets to interest sensitive
liabilities

0.71% $ 9,365,013

— $

— $ 9,365,013

$ 9,365,013

1.38

1.36

2.56

6.19

1,921,365

747,513

316,089

221,351

183,836

173,367

3,563,521

3,465,373

748,628

669,038

—

100,000

24,743

—

748,628

679,316

840,000

250,000

456,781

2,315,819

2,453,797

—

17,031

41,774

37,289

0.87% $12,728,787

847,513

316,089

$ 1,061,351

433,836

647,179

$ 16,034,755

$ 16,000,788

$(4,757,764) $ 1,875,467

$ 2,178,782

$ 1,182,784

$ 1,530,515

$ 3,811,556

$ 5,821,340

$ 5,080,809

0.63:1

3.21:1

7.89:1

2.11:1

4.53:1

6.89:1

1.36:1

1.32:1

The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2017 on the
basis of contractual maturities, adjusted for anticipated prepayments of principal (including anticipated call dates on long-term
borrowings and junior subordinated debentures), and scheduled rate adjustments. The prepayment experience reflected herein is
based on historical experience combined with market consensus expectations derived from independent external sources. The actual
repayments of these instruments could vary substantially if future prepayments differ from historical experience or current market
expectations. While all non-maturity deposit liabilities are reflected in the 2018 column in the table above, management controls
the re-pricing of the vast majority of the interest-bearing instruments within these liabilities.

Our cash flow derivatives are designed to protect us from upward movement in interest rates on certain deposits and other
borrowings. The interest rate sensitivity table reflects the sensitivity at current interest rates. As a result, the notional amount of our
derivatives is not included in the table. We use various assumptions to estimate fair values. See Note 3 of the consolidated financial
statements for further discussion of fair value measurements.

The total gap re-pricing within one year as of December 31, 2017 was a negative $4.8 billion, representing a ratio of interest
sensitive assets to interest sensitive liabilities of 0.63:1. The total gap re-pricing position, as reported in the table above, reflects
the projected interest rate sensitivity of our principal cash flows based on market conditions as of December 31, 2017. As the market
level of interest rates and associated prepayment speeds move, the total gap re-pricing position will change accordingly, but not
likely in a linear relationship. Management does not view our one year gap position as of December 31, 2017 as presenting an
unusually high risk potential, although no assurances can be given that we are not at risk from interest rate increases or decreases.

2017 Form 10-K

Liquidity

Bank Liquidity. Liquidity measures the ability to satisfy current and future cash flow needs as they become due. A bank’s
liquidity reflects its ability to meet loan demand, to accommodate possible outflows in deposits and to take advantage of interest
rate opportunities in the marketplace. Liquidity management is monitored by our Asset/Liability Management Committee and the
Investment Committee of the Board of Directors of Valley National Bank, which review historical funding requirements, current
liquidity position, sources and stability of funding, marketability of assets, options for attracting additional funds, and anticipated
future funding needs, including the level of unfunded commitments. Our goal is to maintain sufficient liquidity to cover current
and potential funding requirements.

The Bank has no required regulatory liquidity ratios to maintain; however, it adheres to an internal liquidity policy. The
current policy maintains that we may not have a ratio of loans to deposits in excess of 125 percent or reliance on wholesale funding
greater than 25 percent of total funding. The Bank was in compliance with the foregoing policies at December 31, 2017.

On the asset side of the balance sheet, the Bank has numerous sources of liquid funds in the form of cash and due from
banks, interest bearing deposits with banks (including the Federal Reserve Bank of New York), investment securities held to
maturity that are maturing within 90 days or would otherwise qualify as maturities if sold (i.e., 85.0 percent of original cost basis
has been repaid), investment securities available for sale, loans held for sale, and, from time to time, federal funds sold and
receivables related to unsettled securities transactions. These liquid assets totaled approximately $2.0 billion, representing 9.3
percent of earning assets, at December 31, 2017 and $1.8 billion, representing 8.9 percent of earning assets, at December 31, 2016.
Of the $2.0 billion of liquid assets at December 31, 2017, approximately $775.6 million of various investment securities were
pledged to counterparties to support our earning asset funding strategies. We anticipate the receipt of approximately $447 million
in principal from securities in the total investment portfolio over the next 12 months due to normally scheduled principal repayments
and expected prepayments of certain securities, primarily residential mortgage-backed securities.

Additional liquidity is derived from scheduled loan payments of principal and interest, as well as prepayments received.
Loan principal payments (including loans held for sale at December 31, 2017) are projected to be approximately $4.2 billion over
the next 12 months. As a contingency plan for significant funding needs, liquidity could also be derived from the sale of conforming
residential mortgages from our loan portfolio, or from the temporary curtailment of lending activities.

On the liability side of the balance sheet, we utilize multiple sources of funds to meet liquidity needs, including retail and
commercial deposits, brokered and municipal deposits, and short-term and long-term borrowings. Our core deposit base, which
generally excludes fully insured brokered deposits and both retail and brokered certificates of deposit over $250 thousand, represents
the largest of these sources. Core deposits averaged approximately $15.4 billion and $14.7 billion for the years ended December 31,
2017 and 2016, respectively, representing 71.8 percent and 73.9 percent of average earning assets at December 31, 2017 and 2016,
respectively. The level of interest bearing deposits is affected by interest rates offered, which is often influenced by our need for
funds and the need to match the maturities of assets and liabilities.

The following table lists, by maturity, all certificates of deposit of $250 thousand and over at December 31, 2017:

Less than three months
Three to six months
Six to twelve months
More than twelve months

Total

2017
(in thousands)

140,525
161,365
88,430
256,958
647,278

Additional funding may be provided from short-term liquidity borrowings through deposit gathering networks and in the
form of federal funds purchased obtained through our well established relationships with several correspondent banks. While there
are no firm lending commitments currently in place, management believes that we could borrow approximately $727 million for
a short time from these banks on a collective basis. The Bank is also a member of the Federal Home Loan Bank of New York and
has the ability to borrow from them in the form of FHLB advances secured by pledges of certain eligible collateral, including but
not limited to U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage
loans, consisting of both residential mortgage and commercial real estate loans. In addition to the FHLB advances, the Bank has
pledged such assets to collateralize a $100 million letter of credit issued by the FHLB on Valley’s behalf to secure certain public
deposits at December 31, 2017. Furthermore, we are able to obtain overnight borrowings from the Federal Reserve Bank via the
discount window as a contingency for additional liquidity. At December 31, 2017, our borrowing capacity under the Federal
Reserve Bank's discount window was approximately $1.1 billion.

2017 Form 10-K

We also have access to other short-term and long-term borrowing sources to support our asset base. Short-term borrowings
include securities sold under repos, federal funds purchased and FHLB advances. Our short-term borrowings decreased $332.4
million to $748.6 million at December 31, 2017 as compared to $1.1 billion at December 31, 2016 mainly due to a decrease in
FHLB advances partially offset by an increase of $22.7 million in repo balances. The change in short-term borrowings is generally
driven by the levels of loan originations (including residential mortgages originated for sale), repayments of long-term borrowings,
and our use of time deposits, fully insured brokered deposits and other short-term funding in our current liquidity/funding strategies.

During 2017 and 2016, average short-term FHLB advances exceeded 30 percent of total shareholders' equity at December 31,
2017 and 2016, respectively. The following table sets forth information regarding Valley’s short-term FHLB advances at the dates
and for the years ended December 31, 2017 and 2016:

FHLB advances:

Average balance outstanding
Maximum outstanding at any month-end during the period
Balance outstanding at end of period
Weighted average interest rate during the period
Weighted average interest rate at the end of the period

2017

2016

($ in thousands)

1,196,507
1,907,000
427,000

868,541
1,163,000
782,000

1.07%
1.34

1.19%
0.80

Corporation Liquidity. Valley’s recurring cash requirements primarily consist of quarterly dividend payments to preferred
and common shareholders and interest expense payments on subordinated notes and junior subordinated debentures issued to
capital trusts. As part of our on-going asset/liability management strategies, Valley could also use cash to repurchase shares of its
outstanding common stock under its share repurchase program or redeem its callable junior subordinated debentures. These cash
needs are routinely satisfied by dividends collected from the Bank. Projected cash flows from the Bank are expected to be adequate
to pay preferred and common dividends, if declared, and interest expense payable to subordinated note holders and capital trusts,
given the current capital levels and current profitable operations of the bank subsidiary. In addition to dividends received from
the Bank, Valley can satisfy its cash requirements by utilizing its own cash and potential new funds borrowed from outside sources
or capital issuances. Valley also has the right to defer interest payments on the junior subordinated debentures, and therefore
distributions on its trust preferred securities for consecutive quarterly periods up to five years, but not beyond the stated maturity
dates, and subject to other conditions.

Investment Securities Portfolio

The primary purpose of the investment portfolio is to provide a source of earnings, be a source of liquidity, and serve as a
tool for managing interest rate risk. The decision to purchase or sell securities is based upon the current assessment of long and
short-term economic and financial conditions, including the interest rate environment and other statement of financial condition
components. See additional information under "Interest Rate Sensitivity", "Liquidity" and "Capital Adequacy" sections elsewhere
in this MD&A.

As of December 31, 2017, our investment portfolio was comprised of U.S. Treasury securities, U.S. government agencies,
taxable and tax-exempt issues of states and political subdivisions, residential mortgage-backed securities (including 9 private label
mortgage-backed securities), single-issuer trust preferred securities principally issued by bank holding companies, high quality
corporate bonds and perpetual preferred equity securities issued by banks. There were no securities in the name of any one issuer
exceeding 10 percent of shareholders’ equity, except for residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae
and Freddie Mac. Securities with limited marketability and/or restrictions, such as Federal Home Loan Bank and Federal Reserve
Bank stocks, are carried at cost and are included in other assets.

Among other securities, our investments in the private label mortgage-backed securities, trust preferred securities, perpetual
preferred securities and bank issued corporate bonds may pose a higher risk of future impairment charges to us as a result of the
uncertain economic environment and its potential negative effect on the future performance of the security issuers and, if applicable,
the underlying mortgage loan collateral of the security.

2017 Form 10-K

Investment securities at December 31, 2017, 2016 and 2015 were as follows:

Held to maturity

U.S. Treasury securities
U.S. government agency securities
Obligations of states and political subdivisions:
Obligations of states and state agencies
Municipal bonds

Total obligations of states and political subdivisions
Residential mortgage-backed securities
Trust preferred securities
Corporate and other debt securities

Total investment securities held to maturity (amortized cost)

Available for sale

U.S. Treasury securities
U.S. government agency securities
Obligations of states and political subdivisions:
Obligations of states and state agencies
Municipal bonds

Total obligations of states and political subdivisions
Residential mortgage-backed securities
Trust preferred securities
Corporate and other debt securities

Total debt securities

Equity securities

Total investment securities available for sale (fair value)

Total investment securities

$
$

2017

2016

(in thousands)

2015

138,676
9,859

138,830
11,329

138,978
12,859

244,272
221,606
465,878
1,131,945
49,824
46,509
1,842,691

49,642
42,505

38,219
74,665
112,884
1,223,295
3,214
51,164
1,482,704
11,201
1,493,905
3,336,596

$
$

252,185
314,405
566,590
1,112,460
59,804
36,559
1,925,572

49,591
23,041

40,342
79,425
119,767
1,015,542
8,009
60,565
1,276,515
20,858
1,297,373
3,222,945

$
$

194,547
310,318
504,865
852,289
59,785
27,609
1,596,385

549,473
29,963

44,414
80,552
124,966
696,428
8,404
77,552
1,486,786
20,075
1,506,861
3,103,246

As of December 31, 2017, total investments increased $113.7 million or 3.5 percent as compared to 2016 largely due to an
increase in residential mortgage-backed securities classified as held for maturity and available for sale totaling a combined $227.2
million, partially offset by a $100.7 million decrease in obligations of states and state agencies classified as held to maturity.

At December 31, 2017, we had $1.1 billion and $1.2 billion of residential mortgage-backed securities classified as held to
maturity and available for sale, respectively. Approximately 72 percent and 77 percent of these residential mortgage-backed
securities, respectively, were issued and guaranteed by Ginnie Mae. The residential mortgage-backed securities also include $8.4
million of private label mortgage-backed securities almost entirely classified available for sale at December 31, 2017. The remainder
of our outstanding residential mortgage-backed security balances at December 31, 2017 were issued by either Freddie Mac or
Fannie Mae.

2017 Form 10-K

The following table presents the remaining contractual maturities (unadjusted for any expected prepayments) with the

corresponding weighted-average yields of held to maturity and available for sale debt securities at December 31, 2017:

0-1 year

1-5 years

5-10 years

Over 10 years

Total

Amount
(1)

Yield
(2)

Amount
(1)

Yield
(2)

Amount
(1)

Yield
(2)

Amount
(1)

Yield
(2)

Amount
(1)

Yield
(2)

($ in thousands)

—

—% $ 68,798

2.92% $ 69,878

2.96% $

—

—% $ 138,676

2.94%

—

9,859

3.17

9,859

3.17

—

16,776

—

3.98

40,923

100,616

3.77

5.06

132,899

100,524

4.75

4.43

70,450

3,690

2.79

4.59

244,272

221,606

4.02

4.69

16,776

3.98

141,539

4.69

233,423

4.61

74,140

2.88

465,878

4.34

148

—

4.26

—

8.40

—

13,000

—

2.68

15,396

510

18,250

3.11

8.00

4.63

1,116,401

49,314

2.65

4.84

—

1,131,945

49,824

46,509

2.66

4.87

5.32

$ 32,174

6.08% $ 223,337

4.03% $ 337,457

4.21% $1,249,723

2.75% $ 1,842,691

3.23%

—

350

—% $ 49,642

1.60% $

—

—% $

49,642

1.60%

2.95

2,940

(0.40)

2,017

2.29

37,198

2.79

42,505

2.55

Corporate and other debt securities

15,250

Held to maturity

U.S. Treasury securities

U.S. government agency securities

Obligations of states and political

subdivisions: (3)

Obligations of states and state

agencies

Municipal bonds

Total obligations of states and

political subdivisions

Residential mortgage-backed

securities (4)

Trust preferred securities

Total

Available for sale

U.S. Treasury securities

U.S. government agency securities

Obligations of states and political

subdivisions: (3)

Obligations of states and state

agencies

Municipal bonds

Total obligations of states and

political subdivisions

Residential mortgage-backed

securities (4)

Trust preferred securities

—

3.80

—

1.44

12,244

33,598

3.76

2.91

19,835

28,951

3.98

4.39

6,140

12,116

4.74

4.90

38,219

74,665

4.03

3.81

45,842

3.14

48,786

4.22

18,256

4.85

112,884

3.88

11,166

—

17,165

3.25

—

3.67

74,139

—

23,785

2.86

—

4.24

1,137,923

3,214

2.50

2.10

—

1,223,295

3,214

51,164

2.53

2.10

3.49

Corporate and other debt securities

10,212

Total (5)

$ 10,629

1.50% $ 126,755

2.54% $ 148,727

3.52% $1,196,593

2.55% $ 1,482,704

2.64%

(1) Held to maturity amounts are presented at amortized costs, stated at cost less principal reductions, if any, and adjusted for accretion of

discounts and amortization of premiums. Available for sale amounts are presented at fair value.

(2) Average yields are calculated on a yield-to-maturity basis.
(3) Average yields on obligations of states and political subdivisions are generally tax-exempt and calculated on a tax-equivalent basis using
a statutory federal income tax rate of 35 percent. Effective January 1, 2018, Valley's federal income tax rate decreased to 21 percent under
the Tax Act.

(4) Residential mortgage-backed securities are shown using stated final maturity.
(5) Excludes equity securities, which do not have maturities.

The residential mortgage-backed securities portfolio is a significant source of our liquidity through the monthly cash flow
of principal and interest. Mortgage-backed securities, like all securities, are sensitive to change in the interest rate environment,
increasing and decreasing in value as interest rates fall and rise. As interest rates fall, the potential increase in prepayments can
reduce the yield on the mortgage-backed securities portfolio, and reinvestment of the proceeds will be at lower yields. Conversely,
rising interest rates may reduce cash flows from prepayments and extend anticipated duration of these assets. We monitor the
changes in interest rates, cash flows and duration, in accordance with our investment policies. Management seeks out investment
securities with an attractive spread over our cost of funds.

Other-Than-Temporary Impairment Analysis

We may be required to record impairment charges on our investment securities if they suffer a decline in value that is
considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities, absence
of reliable pricing information for investment securities, adverse changes in business climate, adverse actions by regulators, or
unanticipated changes in the competitive environment could have a negative effect on our investment portfolio and may result in

2017 Form 10-K

other-than temporary impairment on our investment securities in future periods. For debt securities, the primary consideration in
determining whether impairment is other-than-temporary is whether or not Valley expects to collect all contractual cash flows.

The investment grades in the table below reflect the most current independent analysis performed by third parties of each
security as of the date presented and not necessarily the investment grades at the date of our purchase of the securities. For many
securities, the rating agencies may not have performed an independent analysis of the tranches owned by us, but rather an analysis
of the entire investment pool. For this and other reasons, we believe the assigned investment grades may not accurately reflect the
actual credit quality of each security and should not be viewed in isolation as a measure of the quality of our investment portfolio.

The following table presents the held to maturity and available for sale investment securities portfolios by investment grades

at December 31, 2017.

Held to maturity investment grades:*

AAA Rated
AA Rated
A Rated
Non-investment grade
Not rated

Total investment securities held to maturity

Available for sale investment grades:*

AAA Rated
AA Rated
A Rated
BBB Rated
Non-investment grade
Not rated

Total investment securities available for sale $

Amortized
Cost

December 31, 2017

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair Value

1,428,753
231,977
41,750
3,510
136,701
1,842,691

1,373,360
54,500
20,872
23,232
7,885
31,185
1,511,034

17,064
6,950
1,050
189
166
25,419

2,315
175
—
458
1,418
663
5,029

(18,744) $
(78)
—
(25)
(11,643)
(30,490) $

(19,716) $
(388)
(114)
(81)
(1,146)
(713)
(22,158) $

1,427,073
238,849
42,800
3,674
125,224
1,837,620

1,355,959
54,287
20,758
23,609
8,157
31,135
1,493,905

* Rated using external rating agencies (primarily S&P and Moody’s). Ratings categories include entire range. For example, “A Rated” includes

A+, A, and A-. Split rated securities with two ratings are categorized at the higher of the rating levels.

The held to maturity portfolio includes $136.7 million in investments not rated by the rating agencies with aggregate unrealized
losses of $11.6 million at December 31, 2017. The unrealized losses for this category mainly relate to 4 single-issuer bank trust
preferred issuances with a combined amortized cost of $35.9 million. All single-issuer bank trust preferred securities classified as
held to maturity, including the aforementioned four securities, are paying in accordance with their terms and have no deferrals of
interest or defaults. Additionally, we analyze the performance of each issuer on a quarterly basis, including a review of performance
data from the issuer’s most recent bank regulatory report to assess the company’s credit risk and the probability of impairment of
the contractual cash flows of the applicable security. Based upon our quarterly review at December 31, 2017, all of the issuers
appear to meet the regulatory capital minimum requirements to be considered a “well-capitalized” financial institution and/or have
maintained performance levels adequate to support the contractual cash flows of the security.

There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its
securities during the years ended December 31, 2017, 2016 and 2015 as the collateral supporting much of the investment securities
has improved or performed as expected. See “Other-Than-Temporary Impairment Analysis” section of Note 4 to the consolidated
financial statements for additional information regarding our quarterly impairment analysis by security type.

2017 Form 10-K

Loan Portfolio

The following table reflects the composition of the loan portfolio for the years indicated.

Commercial and industrial
Commercial real estate:

Commercial real estate
Construction

Total commercial real estate
Residential mortgage
Consumer:

Home equity
Automobile
Other consumer
Total consumer loans
Total loans *
As a percent of total loans:
Commercial and industrial
Commercial real estate
Residential mortgage
Consumer loans
Total

2017

2016

2,741,425

2,638,195

At December 31,
2015
($ in thousands)
2,540,491
$

2014

2013

2,251,111

2,021,333

9,496,777
851,105
10,347,882
2,859,035

8,719,667
824,946
9,544,613
2,867,918

7,424,636
754,947
8,179,583
3,130,541

6,160,881
533,134
6,694,015
2,576,372

5,043,169
429,231
5,472,400
2,507,588

446,280
1,208,902
728,056
2,383,238
$ 18,331,580

469,009
1,139,227
577,141
2,185,377
$ 17,236,103

511,203
1,239,313
441,976
2,192,492
$ 16,043,107

497,247
1,144,831
310,337
1,952,415
$ 13,473,913

449,292
901,399
215,600
1,566,291
$ 11,567,612

15.0%
56.4
15.6
13.0
100%

15.3%
55.4
16.6
12.7
100%

15.8%
51.0
19.5
13.7
100%

16.7%
49.7
19.1
14.5
100%

17.5%
47.3
21.7
13.5
100%

* Total loans are net of unearned premiums and deferred loan costs of $22.2 million, $15.3 million and $3.5 million at December 31, 2017,
2015 and 2016, respectively, as compared to unearned discounts and deferred loan fees of $9.0 million and $5.6 million at December 31,
2014 and 2013, respectively.

Total loans increased $1.1 billion to approximately $18.3 billion at December 31, 2017 from December 31, 2016. Our loan
portfolio includes PCI loans, which are loans acquired at a discount that is due, in part, to credit quality. At December 31, 2017,
our PCI loan portfolio decreased $384.3 million to $1.4 billion as compared to December 31, 2016 primarily due to larger loan
repayments, of which some resulted from continued efforts by management to encourage borrower prepayment. The non-PCI loan
portion of the loan portfolio increased $1.5 billion at December 31, 2017 as compared to December 31, 2016 largely due to organic
commercial real estate growth, purchased loans and loan participations with other banks that largely consisted of multi-family and
1-4 family mortgage loans, and organic growth in several other loan categories in 2017 discussed further below. During 2017,
Valley also originated $441.8 million of residential mortgage loans for sale rather than investment. Loans held for sale totaled
$15.1 million and $57.7 million at December 31, 2017 and 2016, respectively. See additional information regarding our residential
mortgage loan activities below.

Commercial and industrial loans totaled $2.7 billion at December 31, 2017 and increased by $103.2 million from
December 31, 2016 mainly due to a $192.0 million increase from December 31, 2016 in the non-PCI loan portfolio, partially offset
by normal run-off in the PCI loan portfolio. The growth in non-PCI loans was due, in part, to new customer business experienced
in our community lending and middle market lending portfolios mainly in the second half of 2017, combined with increased
business investment by existing customers during 2017. While we are optimistic about the first quarter of 2018 growth and current
loan pipeline, the portfolio growth continues to be challenged by strong market competition for quality borrowers, as well as PCI
loan repayments.

Commercial real estate loans (excluding construction loans) increased $777.1 million to $9.5 billion at December 31, 2017
from December 31, 2016 largely due to a $933.5 million increase from December 31, 2016 in the non-PCI loan portfolio. The
increase in non-PCI loans was primarily due to solid organic loan volumes in New York, New Jersey and Florida, particularly
amongst our pre-existing long-term customer base during 2017. The organic loan growth was supplemented by $272 million of
loan participations with other financial institutions during 2017. The purchased participation loans are seasoned loans with expected
shorter durations. Each purchased participation loan is reviewed under Valley's normal underwriting criteria and stress-tested by
Valley to assure its credit quality. The positive impact of these items was partially offset by a $156.4 million decline in the acquired

2017 Form 10-K

PCI loan portion of the portfolio. Construction loans totaled $851.1 million at December 31, 2017 and increased $26.2 million
from December 31, 2016 mostly due to advances on existing construction projects.

Residential mortgage loans totaled $2.9 billion at December 31, 2017 and decreased by $8.9 million from December 31,
2016 mostly due to a large percentage of new loans originated for sale rather than investment during 2017 and the transfer and
sale of approximately $313 million in performing residential mortgage loans from the loans held for investment portfolio during
2017. Our new and refinanced residential mortgage loan originations increased 7.3 percent to $955.7 million for the year ended
December 31, 2017 as compared to $891.0 million in 2016. Of the $955.7 million in total originations, $73.5 million represented
Florida residential mortgage loans. During 2017, Valley sold $800.9 million of residential mortgages originated for sale (including
$57.7 million of residential mortgage loans held for sale at December 31, 2016) as compared to approximately $558.1 million of
mortgages sold during the year ended December 31, 2016. We retain mortgage originations based on credit criteria and loan to
value levels, the composition of our interest earning assets and interest bearing liabilities and our ability to manage the interest
rate risk associated with certain levels of these instruments. From time to time, we purchase residential mortgage loans originated
by, and sometimes serviced by, other financial institutions based on several factors, including current loan origination volumes,
market interest rates, excess liquidity, CRA and other asset/liability management strategies. Purchased residential mortgage loans
are generally selected using Valley’s normal underwriting criteria at the time of purchase and are sometimes partially or fully
guaranteed by third parties or insured by government agencies such as the Federal Housing Administration (FHA). During 2017,
Valley purchased approximately $110 million of 1-4 family loans, of which a large portion of the loans qualify for CRA purposes.

Our residential mortgage production was relatively stable in the fourth quarter of 2017 as compared to the linked third
quarter of 2017, and we have continued to see solid loan application volumes in the early stages of the first quarter of 2018.
Additionally, we plan to continue our growth model for residential mortgage lending during 2018 with a primary focus on expanding
our Valley home consultant team in Florida, particularly in the Tampa Bay market due to our recent USAB acquisition.

Consumer loans totaled $2.4 billion at December 31, 2017 and increased $197.9 million from December 31, 2016 mainly
due to increases in both automobile and other consumer loans, partially offset by a decline in home equity loans. Automobile loans
increased $69.7 million to $1.2 billion at December 31, 2017 from December 31, 2016 primarily due to elevated indirect auto
application activity during the second half of 2017. Additionally, our Florida dealership network contributed over $106 million
in auto loan originations, representing approximately 19 percent of Valley's total new auto loan production for 2017 as compared
to $36 million, or 10 percent, of total originations in 2016. While we're optimistic that this positive trend in new loan production
will continue into the first quarter of 2018, we can provide no assurance that our auto loans will not decline in future periods.
Other consumer loans increased $150.9 million to $728.1 million at December 31, 2017 as compared to 2016 largely due to
continued strong growth and customer usage of collateralized personal lines of credit that allow the customer to manage their
liquidity needs by accessing the cash value of their whole life insurance policy. Home equity loans decreased $22.7 million in
2017 from $469.0 million at December 31, 2016 primarily due to a $20.1 million decrease in the PCI loan portion of the portfolio
caused by normal repayment activity. New home equity loan volumes and customer usage of existing home equity lines of credit
were weak during 2017 and this trend may continue in 2018 due to many factors, including recent changes to the federal tax laws
limiting the deductibility of mortgage interest expense for homeowners.

We are optimistic that both commercial and consumer lending activity will continue to be brisk in 2018, despite the expectation
for a gradual increase in market interest rates and, while not anticipated, any potential setbacks that could occur in the residential
mortgage and indirect automobile loan volumes. For 2018, we have established a goal to grow our overall loan portfolio in the
range of 8 to 10 percent, adjusted for the recent USAB acquisition. However, there can be no assurance that we will achieve such
levels given the potential for unforeseen changes in consumer confidence, the economy and other market conditions, or that the
overall loan portfolio balance will not decline from December 31, 2017.

Most of our lending is in northern and central New Jersey, New York City, Long Island and Florida, with the exception of
smaller auto and residential mortgage loan portfolios derived from the other neighboring states of New Jersey, which could present
a geographic and credit risk if there was another significant broad based economic downturn within these regions. We are witnessing
new loan activity across Valley's entire geographic footprint, including new loans and solid loan pipelines from our Florida lending
operations. However, the New Jersey and New York Metropolitan markets continue to account for a disproportionately larger
percentage of our lending activity. To mitigate these risks, we are making efforts to maintain a diversified portfolio as to type of
borrower and loan to guard against a potential downward turn in any one economic sector. Geographically, we may make further
inroads into the Florida lending market through bank acquisitions, such as our recent acquisition of USAB, as well as select de
novo branch efforts or adding lending staff.

2017 Form 10-K

The following table reflects the contractual maturity distribution of the commercial and industrial and construction loans

within our loan portfolio as of December 31, 2017:

Commercial and industrial—fixed-rate
Commercial and industrial—adjustable-rate
Construction—fixed-rate
Construction—adjustable-rate

One Year or
Less

One to
Five Years

Over Five
Years

Total

453,078
201,673
52,332
428,500
1,135,583

(in thousands)

658,720
293,208
25,461
208,476
1,185,865

785,227
349,519
14,838
121,498
1,271,082

1,897,025
844,400
92,631
758,474
3,592,530

We may renew loans at maturity when requested by a customer. In such instances, we generally conduct a review which
includes an analysis of the borrower’s financial condition and, if applicable, a review of the adequacy of collateral via a new
appraisal from an independent, bank approved, certified or licensed property appraiser or readily available market resources. A
rollover of the loan at maturity may require a principal reduction or other modified terms.

Purchased Credit-Impaired Loans (Including Covered Loans)

PCI loans totaling $1.4 billion and $1.8 billion at December 31, 2017 and 2016, respectively, mostly consist of loans acquired
in business combinations subsequent to 2011 and, to a much lesser extent, covered loans in which the Bank will share losses with
the FDIC under loss-sharing agreements. Our covered loans, consisting of residential mortgage and other consumer loans totaled
$38.7 million at December 31, 2017.

As required by U.S. GAAP, all of our PCI loans are accounted for under ASC Subtopic 310-30. This accounting guidance
requires the PCI loans to be aggregated and accounted for as pools of loans based on common risk characteristics. A pool is
accounted for as one asset with a single composite interest rate, aggregate fair value and expected cash flows. For PCI loan pools
accounted for under ASC Subtopic 310-30, the difference between the contractually required payments due and the cash flows
expected to be collected, considering the impact of prepayments, is referred to as the non-accretable difference. The contractually
required payments due represent the total undiscounted amount of all uncollected principal and interest payments. Contractually
required payments due may increase or decrease for a variety of reasons, e.g. when the contractual terms of the loan agreement
are modified, when interest rates on variable rate loans change, or when principal and/or interest payments are received. The Bank
estimates the undiscounted cash flows expected to be collected by incorporating several key assumptions including probability of
default, loss given default, and the amount of actual prepayments after the acquisition dates. The non-accretable difference, which
is neither accreted into income nor recorded on our consolidated balance sheet, reflects estimated future credit losses and
uncollectable contractual interest expected to be incurred over the life of the loans. The excess of the undiscounted cash flows
expected at the acquisition date over the carrying amount (fair value) of the PCI loans is referred to as the accretable yield. This
amount is accreted into interest income over the remaining life of the loans, or pool of loans, using the level yield method. The
accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment assumptions, and
changes in expected principal and interest payments over the estimated lives of the loans. Prepayments affect the estimated life
of PCI loans and could change the amount of interest income, and possibly principal, expected to be collected. Reclassifications
of the non-accretable difference to the accretable yield may occur subsequent to the loan acquisition dates due to increases in
expected cash flows of the loan pools.

At acquisition, we use a third party service provider to assist with our assessment of the contractual and estimated cash
flows. During subsequent, annual evaluation periods, Valley uses a third party software application to assess the contractual and
estimated cash flows. Using updated loan-level information derived from Valley’s main operating system, contractually required
loans payments and expected cash flows for each pool level, the software reforecasts both the contractual cash flows and cash
flows expected to be collected. The loan-level information used to reforecast the cash flows was subsequently aggregated on a
pool basis. The expected payment data, discount rates, impairment data and changes to the accretable yield were reviewed by
Valley to determine whether this information is accurate and the resulting financial statement effects are reasonable.

Similar to contractual cash flows, we reevaluate expected cash flows on a quarterly basis. Unlike contractual cash flows
which are determined based on known factors, significant management assumptions are necessary in forecasting the estimated
cash flows. We attempt to ensure the forecasted expectations are reasonable based on the information currently available; however,
due to the uncertainties inherent in the use of estimates, actual cash flow results may differ from our forecast and the differences
may be significant. To mitigate such differences, we carefully prepare and review the assumptions utilized in forecasting estimated
cash flows.

On a quarterly basis, Valley analyzes the actual cash flow versus the forecasts at the loan pool level and variances are reviewed
to determine their cause. In re-forecasting future estimated cash flow, Valley will adjust the credit loss expectations for loan pools,

2017 Form 10-K

as necessary. These adjustments are based, in part, on actual loss severities recognized for each loan type, as well as changes in
the probability of default. For periods in which Valley does not reforecast estimated cash flows, the prior reporting period’s estimated
cash flows are adjusted to reflect the actual cash received and credit events which transpired during the current reporting period.

The following tables summarize the changes in the carrying amounts of PCI loans and the accretable yield on these loans

for the years ended December 31, 2017 and 2016.

2017

2016

Carrying
Amount

Accretable
Yield

Carrying
Amount

Accretable
Yield

Balance, beginning of the period

Accretion
Payments received
Net increase (decrease) in expected cash flows

Transfers to other real estate owned
Other, net

Balance, end of the period

1,771,502
89,770
(470,523)
—
(3,534)
—
1,387,215

(in thousands)

294,514
(89,770)
—
77,265
—
—
282,009

2,240,471
107,482
(572,081)
—
(1,176)
(3,194)
1,771,502

415,179
(107,482)
—
(9,989)
—
(3,194)
294,514

The net increase (decrease) in expected cash flows for certain pools of loans (included in the table above) is recognized
prospectively as an adjustment to the yield over the estimated remaining life of the individual pools. The net increase in the expected
cash flows totaling approximately $77.3 million for the year ended December 31, 2017 was largely due to a decrease in the expected
losses for certain PCI loan pools during the fourth quarter of 2017. Conversely, the net decrease of approximately $10.0 million
for 2016 was largely due to accelerated cash flows caused by higher actual loan repayments within certain loan pools which reduced
the remaining reforecasted accretable yield during the fourth quarter of 2016. For the pools with better than expected cash flows,
the forecasted increase is recorded as a prospective adjustment to our interest income on these loan pools over future periods.

The receivable arising from the loss-sharing agreements with the FDIC is measured separately from the covered loan portfolio
because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose
of the covered loans. The FDIC loss-share receivable (which is included in other assets on Valley's consolidated statements of
financial condition) totaled $6.3 million and $7.2 million at December 31, 2017 and 2016, respectively. The aggregate effects of
changes in the FDIC loss-share receivable was a reduction in non-interest income of $2.4 million, $1.3 million and $3.3 million
for the years ended December 31, 2017, 2016 and 2015, respectively.

Non-performing Assets

Non-performing assets (NPAs), which exclude non-performing PCI loans, include non-accrual loans, other real estate owned
(OREO) and other repossessed assets (which consist of automobiles) at December 31, 2017. Loans are generally placed on non-
accrual status when they become past due in excess of 90 days as to payment of principal or interest. Exceptions to the non-
accrual policy may be permitted if the loan is sufficiently collateralized and in the process of collection. OREO is acquired through
foreclosure on loans secured by land or real estate. OREO and other repossessed assets are reported at the lower of cost or fair
value, less cost to sell at the time of acquisition and at the lower of fair value, less estimated costs to sell, or cost thereafter. The
non-performing assets increased 16.2 percent over the last 12-month period (as shown in the table below) primarily due to higher
non-accrual loans balances within the commercial and industrial loan category. Non-performing assets as a percentage of total
loans and non-performing assets totaled 0.31 percent and 0.29 percent at December 31, 2017 and 2016, respectively. Overall, we
believe the total non-performing assets has remained relatively low as a percentage of the total loan portfolio and non-performing
assets over the past five years and is reflective of our consistent approach to the loan underwriting criteria for both Valley originated
loans and loans purchased from third parties. Past due loans and non-accrual loans in the table below exclude PCI loans. Under
U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are
not subject to delinquency classification in the same manner as loans originated by Valley. For details regarding performing and
non-performing PCI loans, see the "Credit quality indicators" section in Note 5 to the consolidated financial statements.

2017 Form 10-K

The following table sets forth by loan category, accruing past due and non-performing assets on the dates indicated in

conjunction with our asset quality ratios:

Accruing past due loans (1)
30 to 59 days past due

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total 30 to 59 days past due
60 to 89 days past due

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total 60 to 89 days past due
90 or more days past due

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total 90 or more days past due
Total accruing past due loans
Non-accrual loans (1)

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer
Total non-accrual loans
Non-performing loans held for sale
Other real estate owned (OREO) (2)
Other repossessed assets
Non-accrual debt securities
Total non-performing assets

Performing troubled debt restructured loans

Total non-accrual loans as a % of loans

Total NPAs as a % of loans and NPAs
Total accruing past due and non-accrual loans as a

% of loans

Allowance for loan losses as a % of non-accrual

loans

2017

2016

At December 31,
2015

($ in thousands)

2014

2013

3,650
11,223
12,949
12,669
8,409
48,900

544
—
18,845
7,903
1,199
28,491

—
27
—
2,779
284
3,090
80,481

20,890
11,328
732
12,405
1,870
47,225
—
9,795
441
—

57,461

117,176

0.26%
0.31

6,705
5,894
6,077
12,005
4,197
34,878

5,010
8,642
—
3,564
1,147
18,363

142
474
1,106
1,541
209
3,472
56,713

8,465
15,079
715
12,075
1,174
37,508
—
9,612
384
1,935

49,439

85,166

3,920
2,684
1,876
6,681
3,348
18,509

524
—
2,799
1,626
626
5,575

213
131
—
1,504
208
2,056
26,140

10,913
24,888
6,163
17,930
2,206
62,100
—
13,563
437
2,142

78,242

77,627

1,630
8,938
448
6,200
2,982
20,198

1,102
113
—
3,575
764
5,554

226
49
3,988
1,063
152
5,478
31,230

8,467
22,098
5,223
17,760
2,209
55,757
7,130
14,249
1,232
4,729

83,097

6,398
9,142
1,186
6,595
3,792
27,113

571
2,442
4,577
1,939
784
10,313

233
7,591
—
1,549
118
9,491
46,917

21,029
43,934
8,116
19,949
2,035
95,063
—
19,580
6,447
3,771

$ 124,861

97,743

$ 107,037

0.22%
0.29

0.39%
0.49

0.41%
0.61

0.82%
1.07

0.70

0.55

0.65

1.23

255.92

305.05

170.98

183.57

119.52

2017 Form 10-K

(1) Past due loans and non-accrual loans exclude PCI loans that are accounted for on a pool basis.
(2) This table excludes covered OREO properties subject to loss-sharing agreements with the FDIC totaling $558 thousand, $5.0 million,
$9.2 million, and $12.3 million at December 31, 2016, 2015, 2014 and 2013, respectively. There were no covered OREO properties at
December 31, 2017.

Loans past due 30 to 59 days increased $14.0 million to $48.9 million at December 31, 2017 compared to $34.9 million at
December 31, 2016 mostly due to increases in both commercial real estate and construction loan delinquencies. Commercial real
estate loans past due 30 to 59 days increased $5.3 million at December 31, 2017 as compared to December 31, 2016 largely due
to 3 performing matured loans (in the normal process of renewal) with a total combined balance of $7.6 million at December 31,
2017. Construction loans within this delinquency category increased $6.9 million to $12.9 million at December 31, 2017 as
compared to one year ago mainly due to two loan relationships at December 31, 2017 which were subsequently brought current
to their contractual terms.

Loans past due 60 to 89 days increased $10.1 million to $28.5 million at December 31, 2017 as compared to December 31,
2016 largely due to higher construction loan delinquencies, partially offset by a decline in commercial real estate loans. Construction
loans increased $18.8 million at December 31, 2017 from no delinquencies in this past due category at December 31, 2016 mainly
due to a few loan relationships that are now either current to contractual terms or, if matured, in the normal process of renewal or
collection. Therefore, we do not believe the increase in this past due category at December 31, 2017 represents a material negative
trend within our total loan portfolio.

Loans 90 days or more past due and still accruing decreased $382 thousand to $3.1 million at December 31, 2017 as compared
to December 31, 2016. All of the loans past due 90 days or more and still accruing are considered to be well secured and in the
process of collection.

Non-accrual loans increased $9.7 million to $47.2 million at December 31, 2017 as compared to December 31, 2016 mainly
due to an increase in taxi medallion loans within the commercial and industrial loan category. Non-accrual taxi medallion loans
increased $12.7 million to $14.2 million at December 31, 2017 as compared to $1.5 million at December 31, 2016. See further
discussion of our taxi medallion loan portfolio below.

Although the timing of collection is uncertain, management believes that most of the non-accrual loans at December 31,
2017 are well secured and largely collectible based on, in part, our quarterly review of impaired loans and the valuation of the
underlying collateral, if applicable. Our impaired loans (mainly consisting of non-accrual commercial and industrial loans and
commercial real estate loans over $250 thousand and all troubled debt restructured loans) totaled $164.2 million at December 31,
2017 and had $14.6 million in related specific reserves included in our total allowance for loan losses. If interest on non-accrual
loans had been accrued in accordance with the original contractual terms, such interest income would have amounted to
approximately $2.5 million, $2.1 million and $3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively;
none of these amounts were included in interest income during these periods.

During 2017, we continued to closely monitor the performance of our New York City (NYC) and Chicago taxi medallion
loans within the commercial and industrial loan portfolio. While the vast majority of the taxi medallion loans are currently
performing, continued negative trends in the market valuations of the underlying taxi medallion collateral due to competing car
service providers and other external factors could impact the future performance and internal classification of this portfolio. At
December 31, 2017, the NYC and Chicago taxi medallion loans totaling $127.7 million and $9.6 million, respectively, were largely
classified as substandard and special mention loans. At December 31, 2017, the medallion portfolio included impaired loans of
$63.9 million with related reserves of $9.1 million within the allowance for loan losses as compared to impaired loans of $6.4
million with related reserves of $2.7 million at December 31, 2016. At December 31, 2017, the impaired taxi medallions loans
largely consisted of performing troubled debt restructured loans classified as substandard loans, as well as $14.2 million of non-
accrual taxi cab medallion loans classified as doubtful. Our non-accrual taxi medallion loans increased from $1.5 million at
December 31, 2016 primarily due to weakened levels of cash flow, collateral and guarantor support in relation to some medallion
borrowers, and not due to actual loan performance.

Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation
to market valuations, as well as obtaining personal guarantees and other collateral in certain instances. However, potential further
declines in the market valuation of tax medallions could negatively impact the future performance of this portfolio.

OREO (which consists of 20 commercial and residential properties), excluding OREO subject to loss-sharing agreements
with the FDIC, if applicable, decreased $183 thousand to $9.8 million at December 31, 2017 as compared to $9.6 million at
December 31, 2016. See additional information regarding OREO and other repossessed assets, including our foreclosed asset
activity, in Notes 1 and 3 to the consolidated financial statements.

2017 Form 10-K

Our non-accrual debt securities decreased $1.9 million from December 31, 2016 due to the sale of one other-than-temporarily

impaired security during fourth quarter of 2017 resulting in an immaterial loss.

Troubled debt restructured loans (TDRs) represent loan modifications for customers experiencing financial difficulties where
a concession has been granted. Performing TDRs (i.e., TDRs not reported as loans 90 days or more past due and still accruing or
as non-accrual loans) increased $32 million to $117.2 million at December 31, 2017 as compared to $85.2 million at December 31,
2016 mainly due to the taxi medallion loans that were restructured and classified as TDRs during 2017. Performing TDRs consisted
of 141 loans and 96 loans (primarily in the commercial and industrial loan and commercial real estate portfolios) at December 31,
2017 and 2016, respectively. On an aggregate basis, the $117.2 million in performing TDRs at December 31, 2017 had a modified
weighted average interest rate of approximately 4.48 percent as compared to a pre-modification weighted average interest rate of
5.67 percent. See Note 5 to the consolidated financial statements for additional disclosures regarding our TDRs.

Despite the increase in impaired TDRs, we believe our overall credit quality metrics continued to reflect our solid underwriting
standards at December 31, 2017. However, we can provide no assurances as to the future level of our loan delinquencies, including
potential increases in past due loans related to currently performing TDRs.

Potential Problem Loans

Although we believe that substantially all risk elements at December 31, 2017 have been disclosed in the categories presented
above, it is possible that for a variety of reasons, including economic conditions, certain borrowers may be unable to comply with
the contractual repayment terms on certain real estate and commercial loans. As part of the analysis of the loan portfolio, management
determined that there were approximately $146.0 million and $131.4 million in potential problem loans (consisting mostly of
commercial and industrial loans) at December 31, 2017 and 2016, respectively. Potential problem loans were not classified as
non-accrual loans in the non-performing asset table above. Potential problem loans are defined as performing loans for which
management has concerns about the ability of such borrowers to comply with the loan repayment terms and which may result in
a non-performing loan. Our decision to include performing loans in potential problem loans does not necessarily mean that
management expects losses to occur, but that management recognizes potential problem loans carry a higher probability of
default. At December 31, 2017, the potential problem loans consisted of various types of performing commercial credits internally
risk rated substandard because the loans exhibited well-defined weaknesses and required additional attention by management. See
further discussion regarding our internal loan classification system at Note 5 to the consolidated financial statements. There can
be no assurance that Valley has identified all of its potential problem loans at December 31, 2017.

Asset Quality and Risk Elements

Lending is one of the most important functions performed by Valley and, by its very nature, lending is also the most
complicated, risky and profitable part of our business. For our commercial loan portfolio, comprised of commercial and industrial
loans, commercial real estate loans, and construction loans, a separate credit department is responsible for risk assessment and
periodically evaluating overall creditworthiness of a borrower. Additionally, efforts are made to limit concentrations of credit so
as to minimize the impact of a downturn in any one economic sector. We believe our loan portfolio is diversified as to type of
borrower and loan. However, loans collateralized by real estate, including $1.2 billion of PCI loans, represent approximately 74
percent of total loans at December 31, 2017. Most of the loans collateralized by real estate are in northern and central New Jersey,
New York City and Florida presenting a geographical credit risk if there was a further significant broad-based deterioration in
economic conditions within these regions (see Part I, Item 1A. Risk Factors - "Our financial results and condition may be adversely
impacted by changing economic conditions").

Consumer loans are comprised of residential mortgage loans, home equity loans, automobile loans and other consumer
loans. Residential mortgage loans are secured by 1-4 family properties generally located in counties where we have a branch
presence in New Jersey, New York and Florida, as well as counties contiguous thereto, if applicable, including eastern Pennsylvania.
We do provide mortgage loans secured by homes beyond this primary geographic area; however, lending outside this primary area
is generally made in support of existing customer relationships. Residential mortgage loan underwriting policies based on Fannie
Mae and Freddie Mac guidelines are adhered to for loan requests of conforming and non-conforming amounts. The weighted
average loan-to-value ratio of all residential mortgage originations in 2017 was 66 percent while FICO® (independent objective
criteria measuring the creditworthiness of a borrower) scores averaged 758. Home equity and automobile loans are secured loans
and are made based on an evaluation of the collateral and the borrower’s creditworthiness. In addition to our primary markets,
automobile loans are mostly originated in several other contiguous states. Due to the level of our underwriting standards applied
to all loans, management believes the out of market loans generally present no more risk than those made within the market.
However, each loan or group of loans made outside of our primary markets poses different geographic risks based upon the
economy of that particular region.

2017 Form 10-K

Management realizes that some degree of risk must be expected in the normal course of lending activities. Allowances are
maintained to absorb such loan losses inherent in the portfolio. The allowance for credit losses and related provision are an
expression of management’s evaluation of the credit portfolio and economic climate.

Allowance for Credit Losses

The allowance for credit losses includes the allowance for loan losses and the reserve for unfunded commercial letters of
credit. Management maintains the allowance for credit losses at a level estimated to absorb probable losses inherent in the loan
portfolio and unfunded letter of credit commitments at the balance sheet dates, based on ongoing evaluations of the loan portfolio.
Our methodology for evaluating the appropriateness of the allowance for loan losses includes:

•

segmentation of the loan portfolio based on the major loan categories, which consist of commercial, commercial real
estate (including construction), residential mortgage and other consumer loans (including automobile and home equity
loans);

tracking the historical levels of classified loans and delinquencies;

assessing the nature and trend of loan charge-offs;

providing specific reserves on impaired loans; and

evaluating the PCI loan pools for additional credit impairment subsequent to the acquisition dates.

Additionally, the qualitative factors, such as the volume of non-performing loans, concentration risks by size, type, and
geography, new markets, collateral adequacy, credit policies and procedures, staffing, underwriting consistency, loan review and
economic conditions are taken into consideration when evaluating the adequacy of the allowance for credit losses.

The allowance for loan losses consists of four elements: (i) specific reserves for individually impaired credits, (ii) reserves
for adversely classified, or higher risk rated, loans that are not impaired, (iii) reserves for other loans based on historical loss factors
(using the appropriate loss look-back and loss emergence periods) adjusted for both internal and external qualitative risk factors
to Valley, including the aforementioned factors, as well as changes in both organic and purchased loan portfolio volumes, the
composition and concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing,
and (iv) an allowance for PCI loan pools impaired subsequent to the acquisition date, if applicable.

The Credit Risk Management Department individually evaluates non-accrual (non-homogeneous) loans within the
commercial and industrial loan and commercial real estate loan portfolio segments over $250 thousand and troubled debt
restructured loans within all the loan portfolio segments for impairment based on the underlying anticipated method of payment
consisting of either the expected future cash flows or the related collateral. If payment is expected solely based on the underlying
collateral, an appraisal is completed to assess the fair value of the collateral. Collateral dependent impaired loan balances are
written down to the current fair value (less estimated selling costs) of each loan’s underlying collateral 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. (See the “Assets and Liabilities Measured at Fair Value on Non-recurring Basis” section of Note 3 to the consolidated
financial statements for further details). If repayment is based upon future expected cash flows, the present value of the expected
future cash flows discounted at the loan’s original effective interest rate is compared to the carrying value of the loan, and any
shortfall is recorded as a specific valuation allowance in the allowance for credit losses. At December 31, 2017, a $14.6 million
specific valuation allowance was included in the allowance for credit losses related to $164.2 million of impaired loans that had
such an allowance. See Note 5 to the consolidated financial statements for more details regarding impaired loans.

The allowance allocations for non-classified loans within all of our loan portfolio segments are calculated by applying
historical loss factors by specific loan types to the applicable outstanding loans and unfunded commitments. Loss factors are based
on the Bank’s historical loss experience over a look-back period determined to provide the appropriate amount of data to accurately
estimate expected losses as of period end. Additionally, management assesses the loss emergence period for the expected losses
of each loan segment and adjusts each historical loss factor accordingly. The loss emergence period is the estimated time from
the date of a loss event (such as a personal bankruptcy) to the actual recognition of the loss (typically via the first full or partial
loan charge-off), and is determined based upon a study of our past loss experience by loan segment. The loss factors may also be
adjusted for significant changes in the current loan portfolio quality that, in management’s judgment, affect the collectability of
the portfolio as of the evaluation date.

2017 Form 10-K

The following table summarizes the relationship among loans, loans charged-off, loan recoveries, the provision for credit

losses and the allowance for credit losses for the years indicated:

Average loans outstanding

$ 17,819,003

$ 16,400,745

$ 14,447,020

$ 12,081,683

$ 11,187,968

2017

Years Ended December 31,
2015

2016

2014

2013

($ in thousands)

Beginning balance—Allowance for credit

losses

Loans charged-off: (1)

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total loan charge-offs

Charged-off loans recovered: (2)
Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total loan recoveries

Net charge-offs (1)(2)
Provision charged for credit losses
Ending balance—Allowance for credit

losses

Components of allowance for credit

losses:

116,604

108,367

104,287

117,112

132,495

(5,421)
(559)
—
(530)
(4,564)
(11,074)

4,736
552
873
1,016
1,803
8,980

(2,094)
9,942

(5,990)
(650)
—
(866)
(3,463)
(10,969)

2,852
2,047
10
774
1,654
7,337

(3,632)
11,869

(7,928)
(1,864)
(926)
(813)
(3,441)
(14,972)

7,233
846
913
421
1,538
10,951

(4,021)
8,101

(12,722)
(4,894)
(4,576)
(1,004)
(3,702)
(26,898)

6,874
2,198
912
248
1,957
12,189

(14,709)
1,884

(19,837)
(7,060)
(3,786)
(4,446)
(5,120)
(40,249)

4,219
816
929
768
2,039
8,771

(31,478)
16,095

124,452

116,604

108,367

104,287

117,112

Allowance for loan losses (3)
Allowance for unfunded letters of credit

Allowance for credit losses
Components of provision for credit losses:

Provision for loan losses (4)
Provision for unfunded letters of credit

Provision for credit losses

120,856
3,596
124,452

8,531
1,411
9,942

114,419
2,185
116,604

11,873
(4)
11,869

106,178
2,189
108,367

7,846
255
8,101

102,353
1,934
104,287

3,445
(1,561)
1,884

113,617
3,495
117,112

14,895
1,200
16,095

Ratio of net charge-offs during the period to

average loans outstanding

Allowance for credit losses as a % of non-

PCI loans

Allowance for credit losses as a % of total

loans

0.01%

0.02%

0.03%

0.12%

0.28%

0.73

0.68

0.75

0.68

0.79

0.68

0.89

0.77

1.09

1.01

(1)

(2)

(3)

(4)

Includes covered loans charge-offs totaling $200 thousand, $1.5 million, and $146 thousand during 2015, 2014 and 2013, respectively. There were no
covered loans charge-offs during 2017 and 2016.
Includes charged-off covered loan recoveries totaling $462 thousand during 2014. There were no recoveries of charged-off covered loans during 2017,
2016, 2015 and 2013.
Includes reserve allocations related to covered loans totaling $200 thousand and $7.1 million at December 31, 2014 and 2013, respectively. There were
no allocated reserves related to covered loans at December 31, 2017, 2016 and 2015.
Includes a negative (credit) provision for covered loans totaling $5.9 million and $2.3 million for 2014 and 2013, respectively. There was no provision for
covered loans in 2017, 2016 and 2015.

Our net loan charge-offs decreased $1.5 million to $2.1 million in 2017 as compared to $3.6 million in 2016. The improvement
in net loan charge-offs as compared to the year ended December 31, 2016 was due, in part, to one commercial and industrial loan

2017 Form 10-K

recovery totaling $1.8 million during the third quarter of 2017. Gross recoveries were also slightly elevated in several other loan
categories, except for the commercial real estate, as compared to 2016 (as shown in the table above).

Net charge-offs significantly declined in the last three years and have remained relatively low over the last five years as
compared to many of our peers, despite the moderate pace of economic growth over most of the period. During this five-year
period, our net charge-offs were at a high of 0.28 percent of average loans during 2013 and a low of 0.01 percent during 2017.
The lower level of our net loan charge-offs during 2017 was largely as a result of the continued solid performance of our loan
portfolio, strong collections and the improving economic environment. While we have a positive outlook for the future performance
of the loan portfolio and the economy, there can be no assurance that our levels of net-charge-offs will continue to improve during
2018, and not deteriorate in the future.

The provision for credit losses decreased $1.9 million to $9.9 million in 2017 as compared to 2016 due, in part, to our low
level of loss experience over the last five years, the prolonged economic cycle used to estimate the look-back period to calculate
our historical loss factors and a shorter estimated loss emergence period (LEP) for commercial and industrial loans based upon
the annual study performed in 2017. The LEP assumption represents the estimated average amount of time from the point at which
a loss is incurred to the point at which a loss is confirmed, typically by a charge-off. A longer LEP assumption will increase the
level of the allowance for loan losses, and conversely, a shorter LEP will reduce the level of such reserves. The aforementioned
shorter LEP for the commercial and industrial loan portfolio and the other positively impacting our provision were partially offset
by increased general reserves related to loan growth, higher reserves for impaired and adversely classified loans and unfunded
letters of credit, as well as other qualitative risk factors.

The following table summarizes the allocation of the allowance for credit losses to specific loan portfolio categories for the

past five years:

2017

2016

2015

2014

2013

Percent
of Loan
Category
to total
loans

Allowance
Allocation

Percent
of Loan
Category
to total
loans

Allowance
Allocation

($ in thousands)

Percent
of Loan
Category
to total
loans

Allowance
Allocation

Percent
of Loan
Category
to total
loans

Allowance
Allocation

Loan Category:

Commercial and
industrial*

Commercial real

estate:

Commercial real

estate

Construction

Residential mortgage

Total Consumer

Unallocated

Total allowance for
credit losses

60,828

15.0% $

53,005

15.3% $

50,956

15.8% $

45,610

16.7 % $

55,046

17.5%

36,293

18,661

3,605

5,065

—

51.8

4.6

15.6

13.0

—

36,405

19,446

3,702

4,046

—

50.6

4.8

16.6

12.7

—

32,037

15,969

4,625

4,780

—

46.3

4.7

19.5

13.7

27,426

15,414

5,093

5,179

5,565

45.7

4.0

19.1

14.5

—

32,002

10,341

7,786

4,356

7,581

43.6

3.7

21.7

13.5

—

$ 124,452

100% $ 116,604

100% $ 108,367

100% $ 104,287

100 % $

117,112

100%

* Includes the allowance for unfunded letters of credit.

The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a
percentage of total loans was 0.68 percent at both December 31, 2017 and 2016. Our allowance allocations for losses at
December 31, 2017 mostly increased within the commercial and industrial loans category (see table above) as compared to
December 31, 2016. The increase was partly attributable to an increase in specific and qualitative reserves related to the collateral
valuation of taxi medallion loans and an increase in the allowance for unfunded letters of credit. Additionally, our estimate of the
allowance for credit losses at December 31, 2017 was impacted by the growth of our loan portfolio, level of net charge-offs and
internally classified loans, assumptions based on the current economic environment, as well as other qualitative factors.

Our allowance for credit losses as a percentage of total non-PCI loans (excluding PCI loans with carrying values totaling
approximately $1.4 billion) was 0.73 percent at December 31, 2017 as compared to 0.75 percent at December 31, 2016. PCI loans,
largely acquired through prior bank acquisitions, are accounted for on a pool basis and initially recorded net of fair valuation
discounts related to credit which may be used to absorb future losses on such loans before any allowance for loan losses is recognized
subsequent to acquisition. Due to the adequacy of such discounts, there were no allowance reserves related to PCI loans at
December 31, 2017 and 2016. See Notes 1 and 6 to the consolidated financial statements for additional information regarding
our allowance for loan losses.

2017 Form 10-K

Prior to December 31, 2015, the allowance also contained reserves identified as the unallocated portion in the table above
to cover inherent losses within a given loan category which have not been otherwise reviewed or measured on an individual basis.
Such reserves represented management’s attempt to ensure that the overall allowance reflected a margin for imprecision and the
uncertainty that is inherent in estimates of probable credit losses. During 2015, Valley refined and enhanced its assessment of the
adequacy of the allowance for loan losses. As a result, Valley no longer has an “unallocated” segment in its allowance for credit
losses, as the risks and uncertainties meant to be captured by the unallocated allowance have been included in the qualitative
framework for the respective portfolios at December 31, 2017, 2016 and 2015. As such, the unallocated allowance has in essence
been reallocated to the certain portfolios based on the risks and uncertainties it was meant to capture.

Loan Repurchase Contingencies

We engage in the origination of residential mortgages for sale into the secondary market. Such loan sales were a significant
portion of our mortgage loan production from the third quarter of 2012 until late in the second quarter of 2013 when market interest
rates were at historical lows and consumer demand was robust. During 2016, loan sales increased significantly from 2015 and
2014 as refinance activity once again strengthened due to a favorably low interest rate environment for most of the year. While
refinance activity declined in 2017, Valley expanded its efforts in the purchased home loan market and expanded its team of home
mortgage consultants. As a result of these efforts and an increase in portfolio loans transferred and sold, loan sales totaled
approximately $801 million for 2017 as compared to $558 million for 2016.

In connection with loan sales, we make representations and warranties, which, if breached, may require us to repurchase
such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred due to such loans. However,
the performance of our loans sold has been historically strong due to our strict underwriting standards and procedures. Over the
past several years, we have experienced a nominal amount of repurchase requests, only a few of which have actually resulted in
repurchases by Valley (only two loan repurchases in 2017 and one loan repurchase in 2016). None of the loan repurchases resulted
in material loss. Accordingly, no reserves pertaining to loans sold were established on our consolidated financial statements at
December 31, 2017 and 2016. See “Item 1A. Risk Factors - We may incur future losses in connection with repurchases and
indemnification payments related to mortgages that we have sold into the secondary market” of this Annual Report for additional
information.

Capital Adequacy

A significant measure of the strength of a financial institution is its shareholders’ equity. At December 31, 2017 and 2016,
shareholders’ equity totaled approximately $2.5 billion and $2.4 billion, or 10.6 percent and 10.4 percent of total assets, respectively.
During 2017, total shareholders’ equity increased by $156.0 million primarily due to (i) net income of $161.9 million, (ii) net
proceeds of $98.1 million from the issuance of our Series B preferred stock, (iii) a $9.6 million increase attributable to the effect
of our stock incentive plan, (iv) net proceeds of $8.2 million from the reissuance of treasury stock and issuance of authorized
common shares issued under our dividend reinvestment plan totaling 713 thousand shares and (v) $4.0 million of other
comprehensive income. These increases were partially offset by cash dividends declared on common and preferred stock totaling
a combined $125.8 million for the year ended December 31, 2017.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve
Bank and the OCC. Quantitative measures established by regulation to ensure capital adequacy require Valley and Valley National
Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets,
and Tier 1 capital to average assets, as defined in the regulations.

Effective January 1, 2015, Valley implemented the Basel III regulatory capital framework and related Dodd-Frank Wall
Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Basel III final rules require a new common equity Tier 1 capital
to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted
assets of 8.0 percent, and minimum leverage ratio of 4.0 percent. The new rule changes included the implementation of a new
capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation
buffer is subject to a three year phase-in period that started on January 1, 2016, at 0.625 percent of risk-weighted assets and
increases each subsequent year by 0.625 percent until reaching its final level of 2.5 percent when fully phased-in on January 1,
2019. As of December 31, 2017 and 2016, Valley and Valley National Bank exceeded all capital adequacy requirements with the
capital conservation buffer under the Basel III Capital Rules. See Note 17 for Valley’s and Valley National Bank’s regulatory
capital positions and capital ratios at December 31, 2017 and 2016.

The Dodd-Frank Act requires federal banking agencies to issue regulations that require banks with total consolidated assets
of more than $10.0 billion to conduct and publish company-run annual stress tests to assess the potential impact of different
scenarios on the consolidated earnings and capital of each bank and certain related items over a nine-quarter forward-looking
planning horizon, taking into account all relevant exposures and activities. The FRB, OCC, and FDIC issued final supervisory
guidance for these stress tests. the guidance provides supervisory expectations for stress test practices, examples of practices that

2017 Form 10-K

would be consistent with those expectations, and details about stress test methodologies. It also emphasizes the importance of
stress testing as an ongoing risk management practice.

Typically, our primary source of capital growth is through retention of earnings. Our rate of earnings retention is derived by
dividing undistributed earnings per common share by earnings (or net income available to common stockholders) per common
share. Our retention ratio was 24.1 percent and 30.2 percent for the years ended December 31, 2017 and 2016, respectively. Our
rate of earnings retention decreased from the year ended December 31, 2016 mostly due to total charges of $18.5 million from
the estimated impact of the Tax Act, $9.9 million of expenses related to our LIFT program, a $4.5 million charge to reduce our
state deferred tax assets and $2.6 million of USAB merger related expenses for the year ended December 31, 2017. Our retention
ratio is expected to improve in 2018 due to, among other factors, the expected lower effective tax rate, solid loan growth, synergies
from the USAB acquisition and incremental earnings improvement from LIFT initiatives completed during 2017.

Cash dividends declared amounted to $0.44 per common share for both years ended December 31, 2017 and 2016. The
Board is committed to examining and weighing relevant facts and considerations, including its commitment to shareholder value,
each time it makes a cash dividend decision. The Federal Reserve has cautioned all bank holding companies about distributing
dividends which may reduce the level of capital or not allow capital to grow in light of the increased capital levels as required
under the Basel III rules. Prior to the date of this filing, Valley has received no objection or adverse guidance from the FRB or
the OCC regarding the current level of its quarterly common stock dividend.

Valley maintains an effective shelf registration statement with the SEC that allows us to periodically offer and sell in one
or more offerings, individually or in any combination, of our common stock, preferred stock and other non-equity securities. The
shelf registration statement provides Valley with capital raising flexibility and enables Valley to promptly access the capital markets
in order to pursue growth opportunities that may become available in the future or permits Valley to comply with any changes in
the regulatory environment that call for increased capital requirements. Valley’s ability, and any decision to issue and sell securities
pursuant to the shelf registration statement, is subject to market conditions and Valley’s capital needs at such time. Additional
equity offerings, may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both.
Such offerings may be necessary in the future due to several reasons beyond management’s control, including numerous external
factors that could negatively impact the strengthening of the U.S. economy or our ability to maintain or increase the level of our
net income. See Note 18 to the consolidated financial statements for additional information on Valley’s common and preferred
stock issuances, as well as activity within its dividend reinvestment plan. Valley terminated its dividend reinvestment plan on
February 12, 2018.

Off-Balance Sheet Arrangements

Contractual Obligations and Commitments. In the ordinary course of operations, Valley enters into various financial
obligations, including contractual obligations that may require future cash payments. As a financial services provider, we routinely
enter into commitments to extend credit, including loan commitments, standby and commercial letters of credit. Such commitments
are subject to the same credit policies and approval process accorded to loans made by the Bank. See Note 15 of the consolidated
financial statements for additional information.

The following table summarizes Valley’s contractual obligations and other commitments to make future payments as of
December 31, 2017. Payments for deposits, borrowings and debentures do not include interest. Payments related to leases, capital
expenditures, other purchase obligations and commitments to sell loans are based on actual payments specified in the underlying
contracts. Commitments to extend credit and standby letters of credit are presented at contractual amounts; however, since many
of these commitments are expected to expire unused or only partially used based upon our historical experience, the total amounts
of these commitments do not necessarily reflect future cash requirements.

2017 Form 10-K

Contractual obligations:
Time deposits
Long-term borrowings (1)
Junior subordinated debentures
issued to capital trusts (1)

Operating leases

Capital expenditures
Other purchase obligations (2)

Total

Other commitments:
Commitments to extend credit

Standby letters of credit

Commitments to sell loans

Total

Note to
Financial
Statements

One Year
or Less

One to
Three Years

Three to
Five Years

Over Five
Years

Total

(in thousands)

Note 9

$ 1,920,543

$ 1,064,114

419,736

159,128

$ 3,563,521

Note 10

750,000

255,000

840,000

475,000

2,320,000

Note 11

Note 15

—

26,535

27,228

46,647

—

52,193

—

748

—

49,972

—

260

45,363

257,986

—

45,363

386,686

27,228

47,655

$ 2,770,953

$ 1,372,055

$ 1,309,968

Note 15

$ 3,335,668

658,316

201,520

Note 15

168,763

57,405

50,149

—

31,491

—

937,477

$ 6,390,453

462,184

$ 4,657,688

133

—

250,536

57,405

$ 3,561,836

708,465

233,011

462,317

$ 4,965,629

(1) Amounts presented consist of the contractual principal balances. Carrying values and call dates are set forth in Notes 10 and 11 to the
consolidated financial statements for long-term borrowings and junior subordinated debentures issued to capital trusts, respectively.

(2) This category primarily consists of contractual obligations for communication and technology costs.

Valley also has obligations under its pension benefit plans, not included in the above table, as further described in Note 12

of the consolidated financial statements.

Derivative Instruments and Hedging Activities. We are exposed to certain risks arising from both our business operations
and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through
management of our core business activities. We manage economic risks, including interest rate and liquidity risks, primarily by
managing the amount, sources, and duration of our assets and liabilities and, from time to time, the use of derivative financial
instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities
that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our
derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash
receipts and our known or expected cash payments mainly related to certain variable-rate borrowings and fixed-rate loan assets.
Valley also enters into mortgage banking derivatives which are non-designated hedges. These derivatives include interest rate lock
commitments provided to customers to fund certain residential mortgage loans to be sold into the secondary market and forward
commitments for the future delivery of such loans. Valley enters into forward commitments for the future delivery of residential
mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future changes
in interest rates on Valley’s commitments to fund the loans as well as on its portfolio of mortgage loans held for sale.

See Note 15 to the consolidated financial statements for quantitative information on our derivative financial instruments

and hedging activities.

Trust Preferred Securities. In addition to the commitments and derivative financial instruments of the types described
above, our off-balance sheet arrangements include a $1.4 million ownership interest in the common securities of our statutory
trusts to issue trust preferred securities at December 31, 2017.

See “Capital Adequacy” section above and Note 11 of the consolidated financial statements.

2017 Form 10-K

Results of Operations—2016 Compared to 2015

Net interest income on a tax equivalent basis increased by $68.4 million to $626.5 million for 2016 compared with $558.1
million for 2015. The increase was mainly driven by a $2.0 billion increase in average loan balances and a $840.1 million decrease
in average long-term borrowings and an increase of $1.1 billion in average short-term borrowings as compared to 2015 as Valley
shifted into a higher proportion of short-term debt in its financing strategy. These items were also offset by higher interest costs
on deposits which were on average $1.5 billion higher in 2016 as compared to 2015.

Average interest earning assets totaling $19.8 billion for the year ended December 31, 2016 increased $2.4 billion, or 13.8
percent, as compared to 2015. Average loan balances increased $2.0 billion to $16.4 billion in 2016 and drove all of the $52.7
million increase in the interest income on a tax equivalent basis for loans as compared to 2015, which was partially offset by the
low interest rates on new and renewed loans. The growth in average loans during 2016 was fueled mostly by solid demand for
commercial real estate loans and secured personal lines of credit throughout the year, $892.8 million of purchased loans consisting
of participation in multi-family loans and whole 1-4 family loans (that were a mix of qualifying and non-qualifying CRA loans
with adjustable and fixed rates) and $825.5 million in loans acquired from CNL on December 1, 2015. Average investment securities
increased $433.2 million to approximately $3.1 billion in 2016 primarily due to $327.3 million of investment securities acquired
from CNL, and moderate expansion of our investment portfolio as compared to 2015 largely due to higher levels of available
liquidity and low cost funding during the second half of 2016. Average federal funds sold and other interest bearing deposits
increased $16.9 million to $288.2 million for the year ended December 31, 2016 as compared to 2015 mostly caused by higher
levels of overnight liquidity held primarily due to the timing of new loan originations and loan purchases.

Average interest bearing liabilities increased $1.6 billion to $14.5 billion for the year ended December 31, 2016 from the
same period in 2015 mainly due to a $1.3 billion increase in average savings, NOW, and money market accounts mostly due to
increased use of brokered money market account balances in our loan growth funding strategy and other liquidity needs (including
the funding of a portion of the prepaid borrowings in the fourth quarter of 2015). Average time deposits also increased $150.6
million to $3.1 billion for 2016 as compared to 2015 mainly due to $103.9 million in time deposits assumed from CNL and organic
growth from retail time deposit campaigns mostly during the third quarter of 2016. Average short-term borrowings increased $1.0
billion to $1.2 billion for 2016 as compared to 2015 due, in part, to the combination of new borrowings in the fourth quarter of
2015, which included $526 million of FHLB advances and $235 million in repos with commercial counterparties, and general
increases in our customer repo account balances and FHLB advances in 2016. Average long-term borrowings decreased to $840.1
million from approximately $1.6 billion for 2016 as compared to 2015 largely due to the aforementioned prepayment of $845
million in the fourth quarter of 2015.

Non-interest income represented 11.9 percent and 10.6 percent of total interest income plus non-interest income for both
2016 and 2015, respectively. For the year ended December 31, 2016, non-interest income increased $19.4 million compared with
2015 mainly due to an increases in net gains on sales of loans and net gains on securities transactions, a decrease in the negative
impact on non-interest income from the change of the FDIC loss-share receivable.

Net gains on sales of loans decreased $17.8 million for the year ended December 31, 2016 as compared to 2015 largely due
to an increase in loan volumes combined with a higher percentage of residential mortgage loans originated for sale during 2016.
The increased volume was caused by the continued success of our low fixed-cost mortgage refinance programs and the low level
of market interest rates for the majority of 2016.

Net gains on securities transactions increased $1.7 million to $777 thousand for the year ended December 31, 2016 as
compared to $2.5 million in 2015 due to an immaterial amount of investment securities sold during 2016. Net gains during 2015
related to the sale of corporate debt securities and trust preferred securities with a total unamortized cost of approximately $34.2
million, including one corporate debt security classified as held to maturity with amortized cost of $9.8 million.

The aggregate effect of changes in the FDIC loss-share receivable amounted to a $1.3 million net reduction in non-interest
income for the year ended December 31, 2016 as compared to $3.3 million for 2015. The majority of the reduction in both the
receivable and non-interest income during both 2016 and 2015 relates to the prospective adjustment to the receivable related to
better than originally estimated cash flows on certain pools of covered loans since the acquisition date.

Non-interest expense decreased $23.0 million to $476.1 million for the year ended December 31, 2016 from $499.1 million
for 2015. The decrease was mainly attributable to the significant loss on the extinguishment of debt in 2015, partially offset by
various increases caused by the acquisition of CNL on December 31, 2015 as well as an increase in the amortization of tax credit
investments.

The loss on extinguishment of debt decreased $50.8 million for the year ended December 31, 2016 as compared to 2015
primarily due to the prepayment penalties incurred in connection with the early prepayment of $845 million in high cost long-
term borrowings during the fourth quarter of 2015. The 2016 losses related to the prepayment of $87 million of FHLB advances

2017 Form 10-K

assumed in the acquisition of CNL. In addition, net occupancy and equipment expenses decreased $3.4 million for the year ended
December 31, 2016 as compared to 2015 mainly due to a reduction in branch rental expense caused by branch closures in 2016,
as well as branch closures commencing in the second half of 2015, the reversal of an accrued lease obligation of a terminated lease
for a previously closed branch location during the third quarter of 2016 and lower repairs and maintenance expenses during 2016
as compared to 2015. Salary and employee benefits expense increased by $14.1 million for the year ended December 31, 2016
largely due to the additional staffing expenses related to our acquisition of CNL on December 1, 2015, a $1.7 million increase in
medical health insurance expense, and moderately higher stock and cash incentive compensation expense as compared to 2015.
These increases were partially offset by a $1.2 million increase in net periodic pension income from our frozen qualified and non-
qualified benefit plans as compared to 2015. Amortization of tax credit investments also increased $7.4 million for the year ended
December 31, 2016 as compared to 2015 primarily due to continued impairment of maturing tax credit investments in renewable
energy sources.

Income tax expense was $65.2 million for the year ended December 31, 2016, reflecting an effective tax rate of 28.0 percent,
as compared to $23.9 million for the year ended 2015, reflecting an effective tax rate of 18.9 percent. The increase in both income
tax expense and the effective tax rate in 2016 was primarily the result of the higher pre-tax income caused, in part, by the absence
of the $51.1 million pre-tax loss on extinguishment of debt recognized in 2015 and a $3.8 million decline in tax credits as compared
to 2015. The 2015 income tax expense also included $6.4 million in charges to our state income tax expenses related to both the
expiration of certain net operating loss carryforwards and a reduction in our deferred taxes.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

For information regarding Quantitative and Qualitative Disclosures About Market Risk, see Part II, Item 7, “Management’s

Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Sensitivity.”

2017 Form 10-K

Item 8.

Financial Statements and Supplementary Data

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

Assets
Cash and due from banks
Interest bearing deposits with banks
Investment securities:

Held to maturity (fair value of $1,837,620 at December 31, 2017 and $1,924,597

at December 31, 2016)

Available for sale

Total investment securities

Loans held for sale, at fair value
Loans

Less: Allowance for loan losses

Net loans
Premises and equipment, net
Bank owned life insurance
Accrued interest receivable
Goodwill
Other intangible assets, net
Other assets

Total Assets

Liabilities
Deposits:

Non-interest bearing
Interest bearing:

Savings, NOW and money market
Time

Total deposits

Short-term borrowings
Long-term borrowings
Junior subordinated debentures issued to capital trusts
Accrued expenses and other liabilities

Total Liabilities

Shareholders’ Equity
Preferred stock, no par value; 50,000,000 shares authorized:

Series A (4,600,000 shares issued at December 31, 2017 and December 31, 2016)

Series B (4,000,000 shares issued at December 31, 2017)

Common stock (no par value, authorized 450,000,000 shares; issued 264,498,643
shares at December 31, 2017 and 263,804,877 shares at December 31, 2016)

Surplus
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost (29,792 common shares at December 31, 2017 and 166,047

common shares at December 31, 2016)
Total Shareholders’ Equity

December 31,

2017

2016

(in thousands except for share data)

243,310
172,800

220,791
171,710

1,842,691
1,493,905
3,336,596
15,119
18,331,580
(120,856)
18,210,724
287,705
386,079
73,990
690,637
42,507
542,839
24,002,306

1,925,572
1,297,373
3,222,945
57,708
17,236,103
(114,419)
17,121,684
291,180
391,830
66,816
690,637
45,484
583,654
22,864,439

5,224,928

5,252,825

9,365,013
3,563,521
18,153,462
748,628
2,315,819
41,774
209,458
21,469,141

111,590

98,101

92,727
2,060,356
216,733
(46,005)

(337)
2,533,165

9,339,012
3,138,871
17,730,708
1,080,960
1,433,906
41,577
200,132
20,487,283

111,590

—

92,353
2,044,401
172,754
(42,093)

(1,849)
2,377,156

Total Liabilities and Shareholders’ Equity

24,002,306

22,864,439

See accompanying notes to consolidated financial statements.

2017 Form 10-K

CONSOLIDATED STATEMENTS OF INCOME

2017

Years Ended December 31,
2016
(in thousands, except for share data)

2015

Interest Income
Interest and fees on loans
Interest and dividends on investment securities:

Taxable
Tax-exempt
Dividends

Interest on federal funds sold and other short-term investments

Total interest income

Interest Expense
Interest on deposits:

Savings, NOW and money market
Time

Interest on short-term borrowings
Interest on long-term borrowings and junior subordinated debentures

Total interest expense

Net Interest Income
Provision for credit losses
Net Interest Income After Provision for Credit Losses
Non-Interest Income
Trust and investment services
Insurance commissions
Service charges on deposit accounts
(Losses) gains on securities transactions, net
Fees from loan servicing
Gains on sales of loans, net
Bank owned life insurance
Other

Total non-interest income

Non-Interest Expense
Salary and employee benefits expense
Net occupancy and equipment expense
FDIC insurance assessment
Amortization of other intangible assets
Professional and legal fees
Loss on extinguishment of debt
Amortization of tax credit investments
Telecommunication expenses
Other
Total non-interest expense
Income Before Income Taxes
Income tax expense
Net Income
Dividends on preferred stock
Net Income Available to Common Shareholders
Earnings Per Common Share:

Basic
Diluted

Cash Dividends Declared Per Common Share
Weighted Average Number of Common Shares Outstanding:

Basic
Diluted

742,739

685,911

633,199

72,676
15,399
9,812
1,793
842,419

55,300
42,546
18,034
58,227
174,107
668,312
9,942
658,370

11,538
18,156
21,529
(20)
7,384
20,814
7,338
16,702
103,441

254,569
92,243
19,821
10,016
25,834
—
41,747
9,921
54,922
509,073
252,738
90,831
161,907
9,449
152,458

0.58
0.58
0.44

58,143
15,537
6,206
1,126
766,923

39,787
37,775
12,022
59,190
148,774
618,149
11,869
606,280

10,345
19,106
20,879
777
6,441
22,030
6,694
16,953
103,225

235,853
87,140
20,100
11,327
17,755
315
34,744
10,021
58,870
476,125
233,380
65,234
168,146
7,188
160,958

0.63
0.63
0.44

52,050
14,568
6,557
649
707,023

24,824
35,432
919
95,579
156,754
550,269
8,101
542,168

10,020
17,233
21,176
2,487
6,641
4,245
6,815
15,185
83,802

221,765
90,521
16,867
9,169
18,945
51,129
27,312
8,259
55,108
499,075
126,895
23,938
102,957
3,813
99,144

0.42
0.42
0.44

264,038,123
264,889,007

254,841,571
255,268,336

234,405,909
234,437,000

See accompanying notes to consolidated financial statements.

2017 Form 10-K

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income

161,907

168,146

102,957

2017

Years Ended December 31,
2016
(in thousands)

2015

Other comprehensive income (loss), net of tax:
Unrealized gains and losses on securities available for sale

Net losses arising during the period

Less reclassification adjustment for net losses (gains) included

in net income

Total

Non-credit impairment losses on available for sale and held to

maturity securities

Net change in non-credit impairment losses on securities

Less reclassification adjustment for accretion of credit

impairment losses included in net income

Total

Unrealized gains and losses on derivatives (cash flow hedges)

Net losses on derivatives arising during the period

Less reclassification adjustment for net losses included in net

income

Total

Defined benefit pension plan

Net (losses) gains arising during the period

Amortization of prior service cost

Amortization of net loss

Total

Total other comprehensive income (loss)

352

363

498

(167)
331

576

5,028

5,604

(2,722)
191

248
(2,283)
4,015

(4,293)

(465)
(4,758)

417

(539)
(122)

(2,461)

7,641

5,180

3,298
(181)
185

3,302

3,602

Total comprehensive income

165,922

171,748

See accompanying notes to consolidated financial statements.

(2,000)

(1,446)
(3,446)

(241)

(424)
(665)

(7,239)

4,127
(3,112)

3,444

117

462

4,023
(3,200)
99,757

2017 Form 10-K

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Common Stock

Preferred
Stock

Amount

Surplus

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Treasury
Stock

Total
Shareholders’
Equity

($ in thousands)

Balance - December 31, 2014

— 232,111

$ 81,072

$1,693,752

$130,845

(42,495) $

(157) $ 1,863,017

Net income

Other comprehensive loss,

net of tax

Preferred stock issued

Cash dividends declared on

preferred stock

Cash dividends declared on

common stock

Effect of stock incentive plan, net

Common stock issued

—

111,590

—

500

—

190

— 102,957

—

(3,813)

— (104,753)

—

(3,200)

—

Balance - December 31, 2015

111,590

253,788

88,626

1,927,399

125,171

21,177

7,364

226,494

7,153

(30)

(35)

— (2,598)

—

2,755

—

365

9,794

3,362

— 168,146

—

(7,188)

— (113,212)

10,737

106,265

(143)

(20)

(45,695)

—

3,602

—

— (3,894)

—

2,045

102,957

(3,200)

111,590

(3,813)

(104,753)

4,715

236,578

2,207,091

168,146

3,602

(7,188)

(113,212)

7,065

111,652

111,590

263,639

92,353

2,044,401

172,754

(42,093)

(1,849)

2,377,156

—

98,101

—

117

713

—

229

145

—

7,927

— 161,907

—

(9,449)

— (116,332)

11,297

4,658

(18)

(56)

(7,927)

4,015

—

— (1,948)

—

3,460

—

161,907

4,015

98,101

(9,449)

(116,332)

9,560

8,207

Net income

Other comprehensive income,

net of tax

Cash dividends declared on

preferred stock

Cash dividends declared on

common stock

Effect of stock incentive plan, net

Common stock issued

Balance - December 31, 2016

Reclassification due to the

adoption of ASU No. 2018-02

Net income

Other comprehensive income,

net of tax

Preferred stock issued

Cash dividends declared on

preferred stock

Cash dividends declared on

common stock

Effect of stock incentive plan, net

Common stock issued

Balance - December 31, 2017

209,691

264,469

$ 92,727

$2,060,356

$216,733

(46,005) $

(337) $ 2,533,165

See accompanying notes to consolidated financial statements.

2017 Form 10-K

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization
Stock-based compensation
Provision for credit losses
Net amortization of premiums and accretion of discounts on securities

and borrowings

Amortization of other intangible assets
Losses (gains) on securities transactions, net
Proceeds from sales of loans held for sale
Gains on sales of loans, net
Originations of loans held for sale
Losses (gains) on sales of assets, net
Net deferred income tax expense

Net change in:

Trading securities
Fair value of borrowings hedged by derivative transactions
Cash surrender value of bank owned life insurance
Accrued interest receivable
Other assets
Accrued expenses and other liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Net loan originations and purchases
Investment securities held to maturity:

Purchases
Sales
Maturities, calls and principal repayments

Investment securities available for sale:

Purchases
Sales
Maturities, calls and principal repayments

Death benefit proceeds from bank owned life insurance
Proceeds from sales of real estate property and equipment
Purchases of real estate property and equipment
Cash and cash equivalents acquired in acquisitions

Net cash used in investing activities

Years Ended December 31,

2017

2016

2015

(in thousands)

161,907

168,146

102,957

24,845
12,204
9,942

46,346
10,016
20
813,855
(20,814)
(444,290)
95
76,848

—
—
(7,338)
(7,174)
(57,353)
121
619,230

24,431
10,032
11,869

24,310
11,327
(777)
572,439
(22,030)
(425,713)
(1,358)
27,154

—
6,158
(6,694)
(3,262)
47,458
(24,313)
419,177

21,082
7,575
8,101

22,080
9,169
(2,487)
144,790
(4,245)
(134,328)
(2,776)
16,453

14,233
1,473
(6,815)
(2,480)
(71,263)
31,410
154,929

(1,418,073)

(1,379,431)

(1,754,689)

(220,356)
—
290,929

(411,788)
2,727
204,684
13,089
9,357
(18,117)
—
(1,547,548)

(669,157)
—
325,766

(679,530)
4,782
867,998
2,406
20,560
(20,707)
—
(1,527,313)

(239,608)
11,666
402,485

(594,327)
140,640
142,588
—
23,861
(34,040)
201,025
(1,700,399)

2017 Form 10-K

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

Years Ended December 31,

2017

2016

2015

(in thousands)

Cash flows from financing activities:

Net change in deposits
Net change in short-term borrowings
Proceeds from issuance of long-term borrowings, net
Repayments of long-term borrowings
Proceeds from issuance of preferred stock, net
Cash dividends paid to preferred shareholders
Cash dividends paid to common shareholders
Purchase of common shares to treasury
Common stock issued, net

Net cash provided by financing activities

Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Supplemental disclosures of cash flow information:
Cash payments for:

Interest on deposits and borrowings
Federal and state income taxes

Supplemental schedule of non-cash investing activities:

Transfer of loans to other real estate owned
Loans transferred to loans held for sale

Acquisition:

Non-cash assets acquired:

Investment securities available for sale
Loans
Premises and equipment
Bank owned life insurance
Accrued interest receivable
Goodwill
Other intangible assets
Other assets

Total non-cash assets acquired

Liabilities assumed:

Deposits
Short-term borrowings
Long-term borrowings
Accrued expenses and other liabilities
Total liabilities assumed

Net non-cash assets acquired

Net cash and cash equivalents acquired in acquisition
Common stock issued in acquisition

$
$
$

422,754
(332,332)
1,065,000
(185,000)
98,101
(6,277)
(115,881)
(2,645)
8,207
951,927
23,609
392,501
416,110

170,614
29,013

7,301
313,201

1,477,157
3,969
385,000
(769,182)
—
(7,188)
(111,813)
(3,191)
112,085
1,086,837
(21,299)
413,800
392,501

151,209
26,564

8,089
174,501

— $
—
—
—
—
—
—
—
—

—
—
—
—
—
— $
— $
— $

— $
—
—
—
—
—
—
—
—

—
—
—
—
—
— $
— $
— $

1,051,660
873,123
162,792
(970,000)
111,590
(3,813)
(102,279)
(2,108)
7,898
1,128,863
(416,607)
830,407
413,800

159,170
50,027

8,828
—

327,152
822,716
8,550
5,090
3,741
113,587
18,616
49,831
1,349,283

1,167,725
57,087
90,738
5,156
1,320,706
28,577
201,025
229,602

See accompanying notes to consolidated financial statements.

2017 Form 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Note 1)

Business

Valley National Bancorp, a New Jersey Corporation (Valley), is a bank holding company whose principal wholly-owned
subsidiary is Valley National Bank (the “Bank”), a national banking association providing a full range of commercial, retail and
trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, the New
York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Florida and Alabama. The Bank is subject to intense
competition from other financial services companies and is subject to the regulation of certain federal and state agencies and
undergoes periodic examinations by certain regulatory authorities.

Valley National Bank’s subsidiaries are all included in the consolidated financial statements of Valley. These subsidiaries

include, but are not limited to:

•

an all-line insurance agency offering property and casualty, life and health insurance;

an asset management adviser that is a registered investment adviser with Securities and Exchange Commission (SEC);

title insurance agencies in New Jersey, New York and Florida;

subsidiaries which hold, maintain and manage investment assets for the Bank;

a subsidiary which owns and services auto loans;

a subsidiary which specializes in health care equipment lending and other commercial equipment leases; and

a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the “REIT” subsidiaries) which own real estate
related investments and a REIT subsidiary which owns some of the real estate utilized by the Bank and related real estate investments.
Except for Valley’s REIT subsidiaries, all subsidiaries mentioned above are directly or indirectly wholly-owned by the Bank.
Because each REIT subsidiary must have 100 or more shareholders to qualify as a REIT, each REIT subsidiary has issued less
than 20 percent of its outstanding non-voting preferred stock to individuals, most of whom are non-senior management Bank
employees. The Bank owns the remaining preferred stock and all the common stock of the REITs.

Basis of Presentation

The consolidated financial statements of Valley include the accounts of its commercial bank subsidiary, Valley National
Bank and all of Valley’s direct or indirect wholly-owned subsidiaries. All inter-company transactions and balances have been
eliminated. The accounting and reporting policies of Valley conform to U.S. generally accepted accounting principles (U.S. GAAP)
and general practices within the financial services industry. In accordance with applicable accounting standards, Valley does not
consolidate statutory trusts established for the sole purpose of issuing trust preferred securities and related trust common securities.
See Note 11 for more details. Certain prior period amounts have been reclassified to conform to the current presentation.

In preparing the consolidated financial statements in conformity with U.S. GAAP, management has made estimates and
assumptions 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. Material estimates that are particularly susceptible to change are: the
allowance for loan losses; the evaluation of goodwill and other intangible assets, and investment securities for impairment; fair
value measurements of assets and liabilities; and income taxes. Estimates and assumptions are reviewed periodically and the effects
of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management
uses its best judgment, actual amounts or results could differ significantly from those estimates. The current economic environment
has increased the degree of uncertainty inherent in these material estimates.

Effective January 1, 2018, Valley acquired USAmeriBancorp, Inc. and its wholly-owned subsidiary, USAmeriBank. See

Note 2 for further details regarding this acquisition.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest
bearing deposits in other banks (including the Federal Reserve Bank of New York) and, from time to time, overnight federal funds
sold. The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank based on a percentage
of deposits. These reserve balances totaled $122.0 million and $113.8 million at December 31, 2017 and 2016, respectively.

2017 Form 10-K

Investment Securities

Investment securities are classified at the time of purchase based on management’s intention, as securities held-to-maturity
or securities available-for-sale securities. Investment securities classified as held-to-maturity are those that management has the
positive intent and ability to hold until maturity. Investment securities held-to-maturity are carried at amortized cost, adjusted for
amortization of premiums and accretion of discounts using the level-yield method over the contractual term of the securities,
adjusted for actual prepayments, or to call date if the security was purchased at premium. Investment securities classified as
available-for-sale are carried at fair value with unrealized holding gains and losses reported as a component of other comprehensive
income or loss, net of tax. Realized gains or losses on the sale of available for sale are recognized by the specific identification
method and are included in net gains on securities transactions. Security transactions are recorded on a trade-date basis. Investments
in Federal Home Loan Bank and Federal Reserve Bank stock, which have limited marketability, are carried at cost in other assets.

Quarterly, Valley evaluates its investment securities classified as held to maturity and available for sale for other-than-
temporary impairment. Valley's evaluation of other-than-temporary impairment considers factors that include, among others, the
causes of the decline in fair value, such as credit problems, interest rate fluctuations, or market volatility; the severity and duration
of the decline. For debt securities, the primary consideration in determining whether impairment is other-than-temporary is whether
or not it is probable that current and/or future contractual cash flows have been or may be impaired. Valley also assesses the intent
and ability to hold the securities (as well as the likelihood of a near-term recovery), and the intent to sell the securities and whether
it is more likely than not that we will be required to sell the securities before the recovery of their amortized cost basis. In assessing
the level of other-than-temporary impairment attributable to credit loss, Valley compares the present value of cash flows expected
to be collected with the amortized cost basis of the security. If a determination is made that a debt security is other-than-temporarily
impaired, Valley will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related
factors. The credit related component will be recognized as an other-than-temporary impairment charge in non-interest income.
The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income (loss), net of
tax. When a debt security becomes other-than-temporarily impaired, its amortized cost basis is reduced to reflect the portion of
the total impairment related to credit loss. There was no other-than-temporary impairment recognized in earnings as a result of
Valley's impairment analysis of its securities during 2017, 2016 and 2015. See the “Other-Than-Temporary Impairment Analysis”
section of Note 4 for further discussion.

Interest income on investments includes amortization of purchase premiums and discounts. Valley discontinues the
recognition of interest on debt securities if the securities meet both of the following criteria: (i) regularly scheduled interest payments
have not been paid or have been deferred by the issuer, and (ii) full collection of all contractual principal and interest payments
is not deemed to be the most likely outcome, resulting in the recognition of other-than-temporary impairment of the security.

Loans Held for Sale

Loans held for sale generally consist of conforming residential mortgage loans originated and intended for sale in the
secondary market and are carried at their estimated fair value on an instrument-by-instrument basis as permitted by the fair value
option election under U.S. GAAP. Changes in fair value are recognized in non-interest income in the accompanying consolidated
statements of income as a component of net gains on sales of loans. Origination fees and costs related to loans originated for sale
(and carried at fair value) are recognized as earned and as incurred. Loans held for sale are generally sold with loan servicing
rights retained by Valley. Gains recognized on loan sales include the value assigned to the rights to service the loan. See “Loan
Servicing Rights” section below.

Loans and Loan Fees

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, unamortized deferred
fees and costs on originated loans and premium or discounts on purchased loans, except for purchased credit-impaired loans. Loan
origination and commitment fees, net of related costs are deferred and amortized as an adjustment of loan yield over the estimated
life of the loans approximating the effective interest method.

Loans are deemed to be past due when the contractually required principal and interest payments have not been received as
they become due. Loans are placed on non-accrual status generally, when they become 90 days past due and the full and timely
collection of principal and interest becomes uncertain. When a loan is placed on non-accrual status, interest accruals cease and
uncollected accrued interest is reversed and charged against current income. Payments received on non-accrual loans are generally
applied against principal. A loan in which the borrowers’ obligation has not been released in bankruptcy courts may be restored
to an accruing basis when it becomes well secured and is in the process of collection, or all past due amounts become current
under the loan agreement and collectability is no longer doubtful.

2017 Form 10-K

Purchased Credit-Impaired Loans

Purchased credit-impaired (PCI) loans are loans acquired at a discount (that is due, in part, to credit quality). Valley's PCI
loan portfolio primarily consists of loans acquired in business combinations subsequent to 2011 and $38.7 million of residential
mortgage and consumer (covered) loans subject to loss sharing agreements with the FDIC. The PCI loans are initially recorded
at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Interest income
on PCI loans has been accounted for based on the acquired loans’ expected cash flows. The PCI loans may be aggregated and
accounted for as a pool of loans if the loans being aggregated have common risk characteristics. A pool is accounted for as a single
asset with a single composite interest rate and an aggregate expectation of cash flow.

The difference between the undiscounted cash flows expected at acquisition and the investment in the loans, or the “accretable
yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments
for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are
not recognized as a yield adjustment or as a loss accrual or an allowance for loan losses. Increases in expected cash flows subsequent
to the acquisition are recognized prospectively through adjustment of the yield on the pool over its remaining life, while decreases
in expected cash flows are recognized as impairment through a loss provision and an increase in the allowance for loan losses.
Therefore, the allowance for loan losses on these impaired pools reflect only losses incurred after the acquisition (representing
the present value of all cash flows that were expected at acquisition but currently are not expected to be received). Valley had no
allowance reserves related to PCI loans at December 31, 2017 and 2016.

The Bank periodically evaluates the remaining contractual required payments due and estimates of cash flows expected to
be collected for the underlying loans of each PCI loan pool. These evaluations, performed at least annually, require the continued
use of key assumptions and estimates, similar to the initial estimate of fair value. Changes in the contractual required payments
due and estimated cash flows expected to be collected may result in changes in the accretable yield and non-accretable difference
or reclassifications between accretable yield and the non-accretable difference. For the pools with better than expected cash flows,
the forecasted increase is recorded as an additional accretable yield that is recognized as a prospective increase to our interest
income on loans and the FDIC loss-share receivable, if applicable, is prospectively reduced by the guaranteed portion of the
additional cash flows expected to be received, with a corresponding reduction to non-interest income. See Note 5 for additional
information.

PCI loans that may have been classified as non-performing loans by an acquired bank are no longer classified as non-
performing because these loans are accounted for on a pooled basis. Management’s judgment is required in classifying loans in
pools as performing loans, and is dependent on having a reasonable expectation about the timing and amount of the pool cash
flows to be collected, even if certain loans within the pool are contractually past due.

FDIC Loss-Share Receivable

The FDIC loss-share receivable arising from the loss-share agreements is measured separately from the covered loan pools
because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose
of the covered loans. At the date of acquisition, the FDIC loss-share receivable was measured at its fair value based on expected
future cash flows covered by the loss share agreements. In addition, the asset is based on the credit adjustments estimated for each
loan pool and the loss-share percentages. The difference between the present value and the undiscounted cash flow expected to
be collected from the FDIC is accreted into non-interest income over the life of the FDIC loss-share receivable. Our FDIC loss-
share receivable totaled $6.3 million and $7.2 million at December 31, 2017 and 2016, respectively, and is included in other assets.
Although this asset represents a contractual receivable from the FDIC, there is no contractual interest rate associated with the
asset.

Allowance for Credit Losses

The allowance for credit losses (the “allowance”) is increased through provisions charged against current earnings and
additionally by crediting amounts of recoveries received, if any, on previously charged-off loans. The allowance is reduced by
charge-offs on loans or unfunded letters of credit which are determined to be a loss, in accordance with established policies, when
all efforts of collection have been exhausted.

The allowance is maintained at a level estimated to absorb probable credit losses inherent in the loan portfolio as well as
other credit risk related charge-offs. The allowance is based on ongoing evaluations of the probable estimated losses inherent in
the non-PCI loan portfolio and off-balance sheet unfunded letters of credit, as well as reserves for impairment of PCI loans
subsequent to their acquisition date. As discussed under the “Purchased Credit-Impaired Loans” section above, Valley had no
allowance reserves related to PCI loans at December 31, 2017 and 2016. The Bank’s methodology for evaluating the appropriateness
of the allowance includes grouping the non-covered loan portfolio into loan segments based on common risk characteristics,
tracking the historical levels of classified loans and delinquencies, estimating the appropriate loss look-back and loss emergence

2017 Form 10-K

periods related to historical losses for each loan segment, providing specific reserves on impaired loans, and assigning incremental
reserves where necessary based upon qualitative and economic outlook factors including numerous variables, such as the nature
and trends of recent loan charge-offs. Additionally, the volume of non-performing loans, concentration risks by size, type, and
geography, new markets, collateral adequacy, credit policies and procedures, staffing, underwriting consistency, loan review and
economic conditions are taken into consideration.

The Credit Risk Management Department individually evaluates non-accrual (non-homogeneous) commercial and industrial
loans and commercial real estate loans over $250 thousand and all troubled debt restructured loans. The value of an impaired loan
is measured based upon the underlying anticipated method of payment consisting of either the present value of expected future
cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent, and
its payment is expected solely based on the underlying collateral. If the value of an impaired loan is less than its carrying amount,
impairment is recognized through a provision to the allowance for loan losses. Collateral dependent impaired loan balances are
written down to the estimated current fair value (less estimated selling costs) of each loan’s underlying collateral 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. If repayment is based upon future expected cash flows, the present value of the expected future cash flows
discounted at the loan’s original effective interest rate is compared to the carrying value of the loan, and any shortfall is recorded
as a specific valuation allowance in the allowance for loan losses. Accrual of interest is discontinued on an impaired loan when
management believes, after considering collection efforts and other factors, the borrower’s financial condition is such that collection
of interest is doubtful. Cash collections from non-accrual loans are generally credited to the loan balance, and no interest income
is recognized on these loans until the principal balance has been determined to be fully collectible. Residential mortgage loans
and consumer loans usually consist of smaller balance homogeneous loans that are collectively evaluated for impairment, and are
specifically excluded from the impaired loan portfolio, except where the loan is classified as a troubled debt restructured loan.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of the loans.
Loans are evaluated based on an internal credit risk rating system for the commercial and industrial loan and commercial real
estate loan portfolio segments and non-performing loan status for the residential and consumer loan portfolio segments. Loans
are risk-rated based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay;
(ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis
is performed at the relationship manager level for all commercial and industrial loans and commercial real estate loans, and
evaluated by the Loan Review Department on a test basis. Loans with a grade that is below “Pass” grade are adversely classified.
See Note 5 for details. Any change in the credit risk grade of adversely classified performing and/or non-performing loans affects
the amount of the related allowance. Once a loan is adversely classified, the assigned relationship manager and/or a special assets
officer in conjunction with the Credit Risk Management Department analyzes the loan to determine whether the loan is impaired
and, if impaired, the need to specifically assign a valuation allowance for loan losses to the loan. Specific valuation allowances
are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the
loan and economic conditions affecting the borrower’s industry, among other things. Loans identified as losses by management
are charged-off. Commercial loans are generally assessed for full or partial charge-off to the net realizable value for collateral
dependent loans when a loan is between 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectable.
Residential loans and home equity loans are generally charged-off to net realizable value when the loan is 120 days past due (or
sooner when the borrowers’ obligation has been released in bankruptcy). Automobile loans are fully charged-off when the loan is
120 days past due or partially charged-off to the net realizable value of collateral, if the collateral is recovered prior to such
time. Unsecured consumer loans are generally fully charged-off when the loan is 150 days past due.

The allowance allocations for other loans (i.e., risk rated loans that are not adversely classified and loans that are not risk
rated) are calculated by applying historical loss factors for each loan portfolio segment to the applicable outstanding loan portfolio
balances. Loss factors are calculated using statistical analysis supplemented by management judgment. The statistical analysis
considers historical default rates, historical loss severity in the event of default, and the average loss emergence period for each
loan portfolio segment. The management analysis includes an evaluation of loan portfolio volumes, the composition and
concentrations of credit, credit quality and current delinquency trends.

See Notes 5 and 6 for Valley’s loan credit quality and additional allowance disclosures.

2017 Form 10-K

Premises and Equipment, Net

Premises and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the
estimated useful lives of the related assets. Estimated useful lives range from 3 years for capitalized software to up to 40 years for
buildings. Leasehold improvements are amortized over the term of the lease or estimated useful life of the asset, whichever is
shorter. Major improvements are capitalized, while repairs and maintenance costs are charged to operations as incurred. Upon
retirement or disposition, any gain or loss is credited or charged to operations. See Note 7 for further details.

Bank Owned Life Insurance

Valley owns bank owned life insurance (BOLI) to help offset the cost of employee benefits. BOLI is recorded at its cash
surrender value. Valley’s BOLI is invested primarily in U.S. Treasury securities and residential mortgage-backed securities issued
by government sponsored enterprises and Ginnie Mae. The majority of the underlying investment portfolio is managed by one
independent investment firm. The change in the cash surrender value is included as a component of non-interest income and is
exempt from federal and state income taxes as long as the policies are held until the death of the insured individuals.

Other Real Estate Owned

Valley acquires other real estate owned (OREO) through foreclosure on loans secured by real estate. OREO is reported at
the lower of cost or fair value, as established by a current appraisal (less estimated costs to sell), and is included in other assets.
Any write-downs at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred to maintain these
properties, unrealized losses resulting from valuation write-downs after the date of foreclosure, and realized gains and losses upon
sale of the properties are included in other non-interest expense. OREO totaled $9.8 million and $10.2 million at December 31,
2017 and 2016, respectively. At December 31, 2016, OREO included $588 thousand of OREO properties related to the FDIC-
assisted transactions, which are subject to the loss-sharing agreements. OREO included foreclosed residential real estate properties
totaling $7.3 million and $1.6 million at December 31, 2017 and 2016, respectively. Residential mortgage and consumer loans
secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $3.8 million and $7.1
million at December 31, 2017 and 2016, respectively.

Goodwill

Intangible assets resulting from acquisitions under the acquisition method of accounting consist of goodwill and other
intangible assets (see “Other Intangible Assets” below). Goodwill is not amortized and is subject to an annual assessment for
impairment. Currently, the goodwill impairment analysis is generally a two-step test. However, Valley may choose to perform an
optional qualitative assessment to determine whether it is necessary to perform the two-step quantitative goodwill impairment test
for one or more units in future periods. During 2017 and 2016, Valley elected to perform step one of the two-step goodwill
impairment test for all of its reporting units.

Goodwill is allocated to Valley’s reporting unit, which is a business segment or one level below, at the date goodwill is
actually recorded. If the carrying value of a reporting unit exceeds its estimated fair value, a second step in the analysis is performed
to determine the amount of impairment, if any. The second step compares the implied fair value of the reporting unit’s goodwill
with the carrying amount of that goodwill. If the carrying value of a reporting unit exceeds the implied fair value of the goodwill,
an impairment charge is recorded equal to the excess amount in the current period earnings. Valley reviews goodwill annually or
more frequently if a triggering event indicates impairment may have occurred, to determine potential impairment by determining
if the fair value of the reporting unit has fallen below the carrying value.

Other Intangible Assets

Other intangible assets primarily consist of loan servicing rights (largely generated from loan servicing retained by the Bank
on residential mortgage loan originations sold in the secondary market to government sponsored enterprises), core deposits (the
portion of an acquisition purchase price which represents value assigned to the existing deposit base), customer lists, and covenants
not to compete obtained through acquisitions. Other intangible assets are amortized using various methods over their estimated
lives and are periodically evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of
the assets may not be recoverable from future undiscounted cash flows. If impairment is deemed to exist, an adjustment is recorded
to earnings in the current period for the difference between the fair value of the asset and its carrying amount. See further details
regarding loan servicing rights below.

Loan Servicing Rights

Loan servicing rights are recorded when originated mortgage loans are sold with servicing rights retained, or when servicing
rights are purchased. Valley initially records the loan servicing rights at fair value. Subsequently, the loan servicing rights are
carried at the lower of unamortized cost or market (i.e., fair value). The fair values of the loan servicing rights are determined

2017 Form 10-K

using a method which utilizes servicing income, discount rates, prepayment speeds and default rates specifically relative to Valley’s
portfolio for originated mortgage servicing rights.

The unamortized costs associated with acquiring loan servicing rights, net of any valuation allowances, are included in other
intangible assets in the consolidated statements of financial condition and are accounted for using the amortization method. Under
this method, Valley amortizes the loan servicing assets in proportion to and over the period of estimated net servicing revenues.
On a quarterly basis, Valley stratifies its loan servicing assets into groupings based on risk characteristics and assesses each group
for impairment based on fair value. A valuation allowance is established through an impairment charge to earnings to the extent
the unamortized cost of a stratified group of loan servicing rights exceeds its estimated fair value. Increases in the fair value of
impaired loan servicing rights are recognized as a reduction of the valuation allowance, but not in excess of such allowance. The
amortization of loan servicing rights is recorded in non-interest income.

Stock-Based Compensation

Compensation expense for stock options and restricted stock awards (i.e., non-vested stock awards) is based on the fair value
of the award on the date of the grant and is recognized ratably over the service period of the award. Under Valley’s long-term
incentive compensation plans, award grantees that are eligible for retirement do not have a service period requirement.
Compensation expense for these awards is recognized immediately in earnings. The service period for non-retirement eligible
employees is the shorter of the stated vesting period of the award or the period until the employee’s retirement eligibility date.
The fair value of each option granted is estimated using a binomial option pricing model. The fair value of restricted stock awards
is based upon the last sale price reported for Valley’s common stock on the date of grant or the last sale price reported preceding
such date, except for performance-based restricted stock and restricted stock unit awards with a market condition. The grant date
fair value of a performance-based restricted stock or restricted stock unit award that vests based on a market condition is determined
by a third party specialist using a Monte Carlo valuation model. See Note 12 for additional information.

Fair Value Measurements

In general, fair values of financial instruments are based upon quoted market prices, where available. When observable
market prices and parameters are not fully available, management uses valuation techniques based upon internal and third party
models requiring more management judgment to estimate the appropriate fair value measurements. Valuation adjustments may
be made to ensure that financial instruments are recorded at fair value, including adjustments based on internal cash flow model
projections that utilize assumptions similar to those incorporated by market participants. Other adjustments may include amounts
to reflect counterparty credit quality and Valley’s creditworthiness, among other things, as well as unobservable parameters. Any
such valuation adjustments are applied consistently over time. See Note 3 for additional information.

Income Taxes

Valley uses the asset and liability method to provide income taxes on all transactions recorded in the consolidated financial
statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between
the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each
temporary difference is determined based on the enacted tax rates that will be in effect when the underlying items of income and
expense are expected to be realized.

Valley’s expense for income taxes includes the current and deferred portions of that expense. Deferred tax assets are
recognized if, in management's judgment, their realizability is determined to be more likely than not. A valuation allowance is
established to reduce deferred tax assets to the amount we expect to realize. Deferred income tax expense or benefit results from
differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The effect on deferred
taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. See Note 13 for
details regarding the impact of the Tax Cuts and Jobs Act enacted by the U.S. government on December 22, 2017.

Valley maintains a reserve related to certain tax positions that management believes contain an element of uncertainty. An
uncertain tax position is measured based on the largest amount of benefit that management believes is more likely than not to be
realized. Periodically, Valley evaluates each of its tax positions and strategies to determine whether the reserve continues to be
appropriate.

Comprehensive Income

Comprehensive income or loss is defined as the change in equity of a business entity during a period due to transactions
and other events and circumstances, excluding those resulting from investments by and distributions to shareholders.
Comprehensive income consists of net income and other comprehensive income or loss. Valley’s components of other
comprehensive income or loss, net of deferred tax, include: (i) unrealized gains and losses on securities available for sale (including

2017 Form 10-K

the non-credit portion of other-than-temporary impairment charges relating to these securities); (ii) unrealized gains and losses on
derivatives used in cash flow hedging relationships; and (iii) the pension benefit adjustment for the unfunded portion of its various
employee, officer, and director pension plans. Income tax effects are released from accumulated other comprehensive income on
an individual unit of account basis. Valley presents comprehensive income and its components in the consolidated statements of
comprehensive income for all periods presented. See Note 19 for additional disclosures.

Earnings Per Common Share

In Valley's computation of the earnings per common share, the numerator of both the basic and diluted earnings per common
share is net income available to common shareholders (which is equal to net income less dividends on preferred stock). The
weighted average number of common shares outstanding used in the denominator for basic earnings per common share is increased
to determine the denominator used for diluted earnings per common share by the effect of potentially dilutive common stock
equivalents utilizing the treasury stock method.

The following table shows the calculation of both basic and diluted earnings per common share for the years ended

December 31, 2017, 2016 and 2015:

Net income available to common shareholders

Basic weighted-average number of common shares

outstanding

Plus: Common stock equivalents

Diluted weighted-average number of common shares

outstanding

Earnings per common share:

Basic

Diluted

2017

2016
(in thousands, except for share data)

2015

152,458

160,958

99,144

264,038,123

254,841,571

234,405,909

850,884

426,765

31,091

264,889,007

255,268,336

234,437,000

0.58

0.63

0.42

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or
exercise, if applicable, of performance-based restricted stock units, common stock options and warrants to purchase Valley’s
common shares. Common stock options and warrants with exercise prices that exceed the average market price of Valley’s common
stock during the periods presented have an anti-dilutive effect on the diluted earnings per common share calculation and therefore
are excluded from the diluted earnings per share calculation. Anti-dilutive common stock options and warrants equaled
approximately 3.1 million, 4.0 million, and 4.7 million of common shares for the years ended December 31, 2017, 2016, and 2015,
respectively.

Preferred and Common Stock Dividends

Valley issued 4.6 million shares and 4.0 million shares of non-cumulative perpetual preferred stock in June 2015 and August
2017, respectively, which were initially recorded at fair value (see Note 18 for additional details on the preferred stock issuances).
The preferred shares are senior to Valley common stock, whereas the current year dividends must be paid before Valley can pay
dividends to its common stockholders. Preferred dividends declared are deducted from net income for computing income available
to common stockholders and earnings per common share computations.

Cash dividends to both preferred and common stockholders are payable and accrued when declared by Valley's Board of

Directors.

Treasury Stock

Treasury stock is recorded using the cost method and accordingly is presented as a reduction of shareholders’ equity.

Derivative Instruments and Hedging Activities

As part of its asset/liability management strategies and to accommodate commercial borrowers, Valley has used interest rate
swaps and caps to hedge variability in cash flows or fair values caused by changes in interest rates. Valley also uses derivatives
not designated as hedges for non-speculative purposes to manage its exposure to interest rate movements related to a service for
commercial lending customers, mortgage banking activities consisting of customer interest rate lock commitments and forward
contracts to sell residential mortgage loans, and hybrid instruments, consisting of market linked certificates of deposit with an
embedded swap contract. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of

2017 Form 10-K

forecasted transactions, are considered cash flow hedges. Derivatives used to hedge the exposure to changes in the fair value of
an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value
hedges. Valley records all derivatives as assets or liabilities at fair value on the consolidated statements of financial condition.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially
reported in other comprehensive income or loss and subsequently reclassified to earnings when the hedged transaction affects
earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. For derivatives
designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are
recognized in earnings. On a quarterly basis, Valley assesses the effectiveness of each hedging relationship by comparing the
changes in cash flows or fair value of the derivative hedging instrument with the changes in cash flows or fair value of the designated
hedged item or transaction. If a hedging relationship is terminated due to ineffectiveness, and the derivative instrument is not re-
designated to a new hedging relationship, the subsequent change in fair value of such instrument is charged directly to earnings.
Derivatives not designated as hedges do not meet the hedge accounting requirements under U.S. GAAP. Changes in fair value of
derivatives not designated in hedging relationships are recorded directly in earnings. Valley calculates the credit valuation
adjustments to the fair value of derivatives on a net basis by counterparty portfolio, as an accounting policy election under the
provisions of ASU No. 2011-04.

New Authoritative Accounting Guidance

New Accounting Guidance Adopted in 2017

Accounting Standards Update (ASU) No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220):
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" was issued to address a narrow-scope
financial reporting issue that arose as a consequence of the change in the tax law. On December 22, 2017, the U.S. federal
government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution
on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act of 2017). The ASU No. 2018-02 permits a reclassification from
accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the newly enacted federal
corporate income tax rate. The amount of the reclassification would be the difference between the historical corporate income tax
rate of 35 percent and the newly enacted 21 percent corporate income tax rate. The ASU No. 2018-02 is effective for all entities
for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted,
including adoption in any interim period, for (i) public business entities for reporting periods for which financial statements have
not yet been issued and (ii) all other entities for reporting periods for which financial statements have not yet been made available
for issuance. Valley early adopted ASU No.2018-02, which resulted in the reclassification of stranded tax effects from accumulated
other comprehensive income to retained earnings totaling $7.9 million, reflected in the Consolidated Statements of Changes in
Shareholders' Equity. See also Note 19 for further details.

ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment
Accounting" simplifies several aspects of the stock compensation guidance in Topic 718 and other related guidance. The
amendments focus on income tax accounting upon vesting or exercise of share-based payments, award classification, liability
classification exception for statutory tax withholding requirements, recognition methods for forfeitures within stock compensation
expense, and the cash flow presentation. Amendments related to the presentation of employee taxes paid on the statement of cash
flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied
retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the
practical expedient for estimating expected term should be applied prospectively. ASU No. 2016-09 became effective for Valley
for reporting periods after January 1, 2017 and did not have a significant impact on Valley's consolidated financial statements. At
adoption, Valley elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows
using the prospective transition method. Valley also elected to continue to estimate the forfeitures of stock awards as a component
of total stock compensation expense based on the number of awards that are expected to vest.

New Accounting Guidance to be Adopted in the First Quarter of 2018

ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities"
amends the hedge accounting recognition and presentation requirements to better align a company’s financial reporting for hedging
activities with the economic objectives of those activities. ASU No. 2017-12 is effective for the annual and interim reporting
periods beginning January 1, 2019 with early adoption permitted. ASU No. 2017-12 requires a modified retrospective method to
be used at adoption with a cumulative-effect adjustment to opening retained earnings to eliminate the separate measurement of
ineffectiveness form accumulated comprehensive income. Valley elected to early adopt ASU No. 2017-12 for annual and interim
reporting periods beginning January 1, 2018. The adoption of ASU No. 2017-12 will not have a significant impact on Valley's
consolidated financial statements.

2017 Form 10-K

ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement Benefit Cost" requires service cost to be reported in the same financial statement line item(s)
as other current employee compensation costs. All other components of expense must be presented separately from service cost,
and outside any subtotal of income from operations. Only the service cost component of expense is eligible to be capitalized. ASU
No. 2017-07 should be applied retrospectively for the presentation of the service cost component and the other components of net
periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the
effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement
benefit in assets. ASU No. 2017-07 is effective for Valley for its annual and interim reporting periods beginning January 1, 2018
with early adoption permitted. ASU No. 2017-07 will not have a significant impact on the presentation of Valley's consolidated
financial statements.

ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory”. Under current
GAAP, the tax effects of intercompany sales are deferred until the transferred asset is sold to a third party or otherwise recovered
through amortization. This is an exception to the accounting for income taxes that generally requires recognition of current and
deferred income taxes. The new guidance eliminates the exception for intercompany sales of assets. ASU No. 2016-16 is effective
for Valley on January 1, 2018 and it should be applied using the modified retrospective method. As a result, Valley expects to
record a $15.4 million cumulative effect adjustment that will reduce retained earnings effective January 1, 2018.

ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments"
clarifies on how certain cash receipts and cash payments should be classified and presented in the statement of cash flows. The
ASU No. 2016-15 includes guidance on eight specific cash flow issues with the objective of reducing the existing diversity in
practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No.
2016-15 is effective for Valley for annual and interim reporting periods beginning January 1, 2018 and it should be applied using
a retrospective transition method to each period presented. ASU No. 2016-15 will not have a significant impact on the presentation
of Valley's consolidated statements of cash flows.

ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities” requires that: (i) equity investments with readily determinable fair values must be measured at fair value
with changes in fair value recognized in net income, (ii) equity investments without readily determinable fair values must be
measured at either fair value or at cost adjusted for changes in observable prices minus impairment with changes in value under
either of these methods recognized in net income, (iii) entities that record financial liabilities at fair value due to a fair value option
election must recognize changes in fair value in other comprehensive income if it is related to instrument-specific credit risk, and
(iv) entities must assess whether a valuation allowance is required for deferred tax assets related to available-for-sale debt securities.
ASU No. 2016-01 is effective for Valley for reporting periods beginning January 1, 2018 and will not have a material effect on
Valley’s consolidated financial statements.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)" and subsequent related updates modifies the
guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of non-financial
assets, unless those contracts are within the scope of other guidance. The updates also require new qualitative and quantitative
disclosures, including disaggregation of revenues and descriptions of performance obligations. Valley adopted the guidance on
January 1, 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. The
guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for
under other U.S. GAAP. Accordingly, the new revenue recognition standard was not expected to have a material impact on Valley’s
consolidated financial statements. Valley has completed its review of non-interest income revenue streams within the scope of the
guidance and an assessment of its revenue contracts and, as a result, did not identify material changes related to the timing or
amount of revenue recognition. Therefore, Valley does not expect an adjustment to opening retained earnings at January 1, 2018
due to the adoption of this standard. Valley has also concluded that additional disaggregation of revenue categories (as reported
in the consolidated financial statements for December 31, 2017) that are within the scope of the new guidance will not be necessary.
However, Valley will provide additional qualitative disclosures regarding such revenues as required by the new guidance.

New Accounting Guidance Not Yet Adopted

ASU No. 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on
Purchased Callable Debt Securities" shortens the amortization period for certain callable debt securities held at a premium. ASU
No. 2017-08 requires the premium to be amortized to the earliest call date. The accounting for securities held at a discount does
not change and the discount continues to be amortized as an adjustment to yield over the contractual life (to maturity) of the
instrument. ASU No. 2017-08 is effective for Valley for the annual and interim reporting periods beginning January 1, 2019 with
early adoption permitted, and is to be applied using modified retrospective method. Additionally, in the period of adoption, entities
should provide disclosures about a change in accounting principle. ASU No. 2017-08 is not expected to have a significant impact
on Valley's consolidated financial statements.

2017 Form 10-K

ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" eliminates
the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the current goodwill impairment test guidance) to
measure a goodwill impairment charge. Instead, an entity will be required to record an impairment charge based on the excess of
a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on Step 1 of the current guidance). In addition,
ASU No. 2017-04 eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative
assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. However, an entity will be required
to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity
still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is
necessary. ASU No. 2017-04 is effective for Valley for its annual or any interim goodwill impairment tests in fiscal years beginning
January 1, 2020 and is not expected to have a significant impact on the presentation of Valley's consolidated financial statements.
Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments" amends the accounting guidance on the impairment of financial instruments. The ASU No. 2016-13 adds to U.S.
GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on all expected losses over
the lives of the assets rather than incurred losses. Under the new guidance, an entity is required to measure all expected credit
losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. ASU No. 2016-13 is effective for Valley for reporting periods beginning January 1, 2020. Management is
currently evaluating the impact of the ASU on Valley’s consolidated financial statements. Valley expects that the new guidance
will result in an increase in its allowance for credit losses due to several factors, including: (i) the allowance related to Valley loans
will increase to include credit losses over the full remaining expected life of the portfolio, and will consider expected future changes
in macroeconomic conditions, (ii) the nonaccretable difference (as defined in Note 5) on PCI loans will be recognized as an
allowance, offset by an increase in the carrying value of the related loans, and (iii) an allowance will be established for estimated
credit losses on investment securities classified as held to maturity. The extent of the increase is under evaluation, but will depend
upon the nature and characteristics of Valley's loan and investment portfolios at the adoption date, and the economic conditions
and forecasts at that date.

ASU No. 2016-02, “Leases (Topic 842)” requires the recognition of a right of use asset and related lease liability by lessees
for leases classified as operating leases under current GAAP. Topic 842, which replaces the current guidance under Topic 840,
retains a distinction between finance leases and operating leases. The recognition, measurement, and presentation of expenses and
cash flows arising from a lease by a lessee also will not significantly change from current GAAP. For leases with a term of 12
months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right of
use assets and lease liabilities. Topic 842 will be effective for Valley for reporting periods beginning January 1, 2019, with an
early adoption permitted. Valley must apply a modified retrospective transition approach for the applicable leases existing at, or
entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective
approach would not require any transition accounting for leases that expired before the earliest comparative period presented.
Management is currently evaluating the impact of Topic 842 on Valley’s consolidated financial statements by reviewing its existing
lease contracts and service contracts that may include embedded leases. Valley expects a gross-up of its consolidated statements
of financial condition as a result of recognizing lease liabilities and right of use assets; the extent of such gross-up is under
evaluation. Valley does not expect material changes to the recognition of operating lease expense in its consolidated statements
of income.

BUSINESS COMBINATIONS (Note 2)

USAmeriBancorp, Inc.

On January 1, 2018, Valley completed its acquisition of USAmeriBancorp, Inc. (USAB) headquartered in Clearwater, Florida.
USAB, largely through its wholly-owned subsidiary, USAmeriBank, had approximately $4.7 billion in assets, $3.8 billion in net
loans and $3.6 billion in deposits, and maintained a branch network of 29 offices at December 31, 2017. The acquisition will
expand Valley’s Florida presence, primarily in the Tampa Bay market, and establish a presence in the Birmingham, Montgomery,
and Tallapoosa areas in Alabama, where USAB maintained 15 of its branches. The common shareholders of USAB received 6.1
shares of Valley common stock for each USAB share they own. Full systems integration is expected to be completed in the second
quarter of 2018. The total consideration for the acquisition was approximately $737 million.

Merger expenses totaled $2.6 million for the year ended December 31, 2017, which largely related to professional and legal

fees included in non-interest expense on the consolidated statements of income.

2017 Form 10-K

Masters Coverage Corp.

On January 4, 2016, Masters Coverage Corp., an all-line insurance agency that is a wholly-owned subsidiary of the Bank,
acquired certain assets of an independent insurance agency located in New York. The purchase price totaled approximately $1.4
million in combined cash and future cash consideration.

CNLBancshares, Inc.

On December 1, 2015, Valley completed its acquisition of CNLBancshares, Inc. (CNL) and its wholly-owned subsidiary,
CNLBank, headquartered in Orlando, Florida, a commercial bank with approximately $1.6 billion in assets, $825 million in loans,
$1.2 billion in deposits and 16 Florida branch offices at the date of its acquisition by Valley. The CNL acquisition increased Valley's
Florida branch network to a total of 31 branches (after 5 branch closures mostly resulting from branch efficiency efforts during
2016) covering most major markets in central and southern Florida. The common shareholders of CNL received 0.705 of a share
of Valley common stock for each CNL share they owned prior to the merger. The total consideration for the acquisition was
approximately $230 million, consisting of 20.6 million shares of Valley common stock.

Merger expenses totaled $1.8 million for the year ended December 31, 2015, which largely related to professional and legal
fees included in non-interest expense on the consolidated statements of income. Valley also recorded a $3.3 million charge within
income tax expense during 2015, which mostly related to the effect of the CNL acquisition on the valuation of our deferred tax
assets.

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Note 3)

Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurements and Disclosures,” establishes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1

Level 2

Level 3

Unadjusted exchange quoted prices in active markets for identical assets or liabilities, or identical
liabilities traded as assets that the reporting entity has the ability to access at the measurement date.

Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly
(i.e., quoted prices on similar assets), for substantially the full term of the asset or liability.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement
and unobservable (i.e., supported by little or no market activity).

2017 Form 10-K

Assets and Liabilities Measured at Fair Value on a Recurring Basis and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and non-recurring basis
by level within the fair value hierarchy as reported on the consolidated statements of financial condition at December 31, 2017
and 2016. The assets presented under “non-recurring fair value measurements” in the table below are not measured at fair value
on an ongoing basis but are subject to fair value adjustments under certain circumstances (e.g., when an impairment loss is
recognized).

December 31,
2017

Fair Value Measurements at Reporting Date Using:

Quoted Prices
in Active Markets
for Identical
Assets (Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(in thousands)

Recurring fair value measurements:
Assets
Investment securities:
Available for sale:

U.S. Treasury securities
U.S. government agency securities
Obligations of states and political

subdivisions

Residential mortgage-backed securities
Trust preferred securities
Corporate and other debt securities
Equity securities

Total available for sale

Loans held for sale (1)
Other assets (2)
Total assets

Liabilities
Other liabilities (2)
Total liabilities

Non-recurring fair value measurements:
Collateral dependent impaired loans (3)
Loan servicing rights

Foreclosed assets

Total

$
$

49,642
42,505

49,642
—

— $

42,505

112,884
1,223,295
3,214
51,164
11,201

1,493,905

15,119

26,417
1,535,441

24,330
24,330

48,373

5,350

3,472
57,195

$
$

—
—
—
7,783
1,382

58,807

—

—
58,807

— $
— $

— $

—

—
— $

—
—

—
7,360
—
—
—

7,360

—

—
7,360

—
—

112,884
1,215,935
3,214
43,381
9,819

1,427,738

15,119

26,417
1,469,274

24,330
24,330

$
$

— $

—

—
— $

48,373

5,350

3,472
57,195

2017 Form 10-K

Fair Value Measurements at Reporting Date Using:

December 31,
2016

Quoted Prices
in Active Markets
for Identical
Assets (Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(in thousands)

Recurring fair value measurements:
Assets
Investment securities:
Available for sale:

U.S. Treasury securities
U.S. government agency securities
Obligations of states and political

subdivisions

Residential mortgage-backed securities
Trust preferred securities
Corporate and other debt securities
Equity securities

Total available for sale

Loans held for sale (1)
Other assets (2)

Total assets

Liabilities
Other liabilities (2)

Total liabilities

Non-recurring fair value measurements:
Collateral dependent impaired loans (3)
Loan servicing rights

Foreclosed assets

Total

$
$

49,591
23,041

49,591
—

— $

23,041

119,767
1,015,542
8,009
60,565
20,858
1,297,373

57,708

29,055

1,384,136

44,077
44,077

5,385
6,489

4,532
16,406

$
$

—
—
—
8,064
1,306
58,961

—

119,767
1,005,589
6,074
52,501
19,552
1,226,524

57,708

29,055

58,961

1,313,287

$
$

44,077
44,077

— $
—

—
— $

— $
— $

— $
—

—
— $

—
—

—
9,953
1,935
—
—
11,888

—

11,888

—
—

5,385
6,489

4,532
16,406

(1) Represents residential mortgage loans held for sale that are carried at fair value and had contractual unpaid principal

balances totaling approximately $14.8 million and $58.2 million at December 31, 2017 and 2016, respectively.

(2) Derivative financial instruments are included in this category.
(3) Excludes PCI loans.

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2017, 2016 and

2015 are summarized below:

Balance, beginning of the period

Net losses included in other comprehensive income
Sales
Settlements, net

Balance, end of the period

2017

Available For Sale Securities
2016
(in thousands)
13,793
(203)
—
(1,702)
11,888

11,888
(251)
(1,935)
(2,342)
7,360

2015

19,309
(1,072)
(2,674)
(1,770)
13,793

Transfers into and out of Level 3 assets are generally made in response to a decrease or an increase, respectively, in the
availability of observable market data used in the securities’ pricing obtained primarily through independent pricing services or
dealer market participants. See further details regarding the valuation techniques used for the fair value measurement of the financial
instruments below. There were no transfers of assets into and out of Level 3, or between Level 1 and Level 2 during 2017 and
2016.

2017 Form 10-K

There have been no material changes in the valuation methodologies used at December 31, 2017 from December 31, 2016.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following valuation techniques were used for financial instruments measured at fair value on a recurring basis. All of
the valuation techniques described below apply to the unpaid principal balance excluding any accrued interest or dividends at the
measurement date. Interest income and expense are recorded within the consolidated statements of income depending on the nature
of the instrument using the effective interest method based on acquired discount or premium.

Available for sale securities. All U.S. Treasury securities, certain corporate and other debt securities, and certain common
and preferred equity securities are reported at fair value utilizing Level 1 inputs. The majority of other investment securities are
reported at fair value utilizing Level 2 inputs. The prices for these instruments are obtained through an independent pricing service
or dealer market participants with whom Valley has historically transacted both purchases and sales of investment securities. Prices
obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements
consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading
levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among
other things. Management reviews the data and assumptions used in pricing the securities by its third party provider to ensure the
highest level of significant inputs are derived from market observable data. For certain securities, the inputs used by either dealer
market participants or an independent pricing service may be derived from unobservable market information (Level 3 inputs). In
these instances, Valley evaluates the appropriateness and quality of the assumption and the resulting price. In addition, Valley
reviews the volume and level of activity for all available for sale securities and attempts to identify transactions which may not
be orderly or reflective of a significant level of activity and volume. For securities meeting these criteria, the quoted prices received
from either market participants or an independent pricing service may be adjusted, as necessary, to estimate fair value and this
results in fair values based on Level 3 inputs. In determining fair value, Valley utilizes unobservable inputs which reflect Valley’s
own assumptions about the inputs that market participants would use in pricing each security. In developing its assertion of market
participant assumptions, Valley utilizes the best information that is both reasonable and available without undue cost and effort.

In calculating the fair value for the available for sale securities under Level 3, Valley prepared present value cash flow models
for certain private label mortgage-backed securities. The cash flows for the residential mortgage-backed securities incorporated
the expected cash flow of each security adjusted for default rates, loss severities and prepayments of the individual loans
collateralizing the security.

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities

at December 31, 2017:

Security Type
Private label mortgage-backed securities

Valuation
Technique

Unobservable
Input

Discounted cash flow Prepayment rate

Default rate
Loss severity

Range

11.5 - 27.3%
0.9 - 38.9
45.0 - 62.6

Weighted
Average

19.1%
8.3
57.1

Significant increases or decreases in any of the unobservable inputs in the table above in isolation would result in a significantly
lower or higher fair value measurement of the securities. Generally, a change in the assumption used for the default rate is
accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in
the assumption used for prepayment rates.

For the Level 3 available for sale residential mortgage-backed securities (consisting of 4 private label securities), cash flow
assumptions incorporated independent third party market participant data based on vintage year for each security. The discount
rate utilized in determining the present value of cash flows for the mortgage-backed securities was arrived at by combining the
yield on orderly transactions for similar maturity government sponsored mortgage-backed securities with (i) the historical average
risk premium of similar structured private label securities, (ii) a risk premium reflecting current market conditions, including
liquidity risk, and (iii) if applicable, a forecasted loss premium derived from the expected cash flows of each security. The estimated
cash flows for each private label mortgage-backed security were then discounted at the aforementioned effective rate to determine
the fair value. The quoted prices received from either market participants or independent pricing services are weighted with the
internal price estimate to determine the fair value of each instrument.

For the Level 3 available for sale trust preferred securities (consisting of one pooled security), the resulting estimated future
cash flows were discounted at a yield determined by reference to similarly structured securities for which observable orderly
transactions occurred. The discount rate for each security was applied using a pricing matrix based on credit, security type and
maturity characteristics to determine the fair value. The fair value calculation is received from an independent valuation adviser.

2017 Form 10-K

In validating the fair value calculation from an independent valuation adviser, Valley reviews the accuracy of the inputs and the
appropriateness of the unobservable inputs utilized in the valuation to ensure the fair value calculation is reasonable from a market
participant perspective.

Loans held for sale. The conforming residential mortgage loans originated for sale are reported at fair value using Level
2 inputs. The fair values were calculated utilizing quoted prices for similar assets in active markets. To determine these fair values,
the mortgages held for sale are put into multiple tranches, or pools, based on the coupon rate and maturity of each mortgage. The
market prices for each tranche are obtained from both Fannie Mae and Freddie Mac. The market prices represent a delivery price,
which reflects the underlying price each institution would pay Valley for an immediate sale of an aggregate pool of mortgages.
The market prices received from Fannie Mae and Freddie Mac are then averaged and interpolated or extrapolated, where required,
to calculate the fair value of each tranche. Depending upon the time elapsed since the origination of each loan held for sale, non-
performance risk and changes therein were addressed in the estimate of fair value based upon the delinquency data provided to
both Fannie Mae and Freddie Mac for market pricing and changes in market credit spreads. Non-performance risk did not materially
impact the fair value of mortgage loans held for sale at December 31, 2017 and 2016 based on the short duration these assets were
held and the high credit quality of these loans.

Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The fair value of Valley’s derivatives are
determined using third party prices that are based on discounted cash flow analyses using observed market inputs, such as the
LIBOR and Overnight Index Swap rate curves. The fair value of mortgage banking derivatives, consisting of interest rate lock
commitments to fund residential mortgage loans and forward commitments for the future delivery of such loans (including certain
loans held for sale at December 31, 2017 and 2016), is determined based on the current market prices for similar instruments
provided by Freddie Mac and Fannie Mae. The fair values of most of the derivatives incorporate credit valuation adjustments,
which consider the impact of any credit enhancements to the contracts, to account for potential nonperformance risk of Valley and
its counterparties. The credit valuation adjustments were not significant to the overall valuation of Valley’s derivatives at
December 31, 2017 and 2016.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

The following valuation techniques were used for certain non-financial assets measured at fair value on a non-recurring
basis, including impaired loans reported at the fair value of the underlying collateral, loan servicing rights and foreclosed assets,
which are reported at fair value upon initial recognition or subsequent impairment as described below.

Impaired loans. Certain impaired loans are reported at the fair value of the underlying collateral if repayment is expected
solely from the collateral and are commonly referred to as “collateral dependent impaired loans.” Collateral values are estimated
using Level 3 inputs, consisting of individual appraisals that are significantly adjusted based on customized discounting criteria.
At December 31, 2017, certain appraisals may be discounted based on specific market data by location and property type. During
2017 and 2016, collateral dependent impaired loans were individually re-measured and reported at fair value through direct loan
charge-offs to the allowance for loan losses and/or a specific valuation allowance allocation based on the fair value of the underlying
collateral. The collateral dependent loan charge-offs to the allowance for loan losses totaled $2.1 million and $4.3 million for the
years ended December 31, 2017 and 2016, respectively. These collateral dependent impaired loans with a total recorded investment
of $57.5 million and $8.4 million at December 31, 2017 and 2016, respectively, were reduced by specific valuation allowance
allocations totaling $9.1 million and $3.0 million to a reported total net carrying amount of $48.4 million and $5.4 million at
December 31, 2017 and 2016, respectively.

Loan servicing rights. Fair values for each risk-stratified group of loan servicing rights are calculated using a fair value
model from a third party vendor that requires inputs that are both significant to the fair value measurement and unobservable
(Level 3). The fair value model is based on various assumptions, including but not limited to, prepayment speeds, internal rate of
return (“discount rate”), servicing cost, ancillary income, float rate, tax rate, and inflation. The prepayment speed and the discount
rate are considered two of the most significant inputs in the model. At December 31, 2017, the fair value model used prepayment
speeds (stated as constant prepayment rates) from 0 percent up to 22 percent and a discount rate of 8 percent for the valuation of
the loan servicing rights. A significant degree of judgment is involved in valuing the loan servicing rights using Level 3 inputs.
The use of different assumptions could have a significant positive or negative effect on the fair value estimate. Impairment charges
are recognized on loan servicing rights when the amortized cost of a risk-stratified group of loan servicing rights exceeds the
estimated fair value. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $429 thousand for
the year ended December 31, 2017 as compared to net impairment charges of $611 thousand for the year ended December 31,
2016.

Foreclosed assets. Certain foreclosed assets (consisting of other real estate owned and other repossessed assets), upon
initial recognition and transfer from loans, are re-measured and reported at fair value through a charge-off to the allowance for
loan losses based upon the fair value of the foreclosed assets. The fair value of a foreclosed asset, upon initial recognition, is

2017 Form 10-K

typically estimated using Level 3 inputs, consisting of an appraisal that is adjusted based on customized discounting criteria,
similar to the criteria used for impaired loans described above. There were no adjustments to the appraisals of foreclosed assets
at December 31, 2017. During the years ended December 31, 2017 and 2016, foreclosed assets measured at fair value upon initial
recognition or subsequent re-measurement totaled $3.5 million and $4.5 million, respectively. The charge-offs of foreclosed assets
to the allowance for loan losses totaled $1.9 million and $1.7 million for the years ended December 31, 2017 and 2016, respectively.
The re-measurement of foreclosed assets at fair value subsequent to their initial recognition resulted in losses of $361 thousand,
$1.0 million and $2.0 million included in non-interest expense for the years ended December 31, 2017, 2016 and 2015, respectively.

Other Fair Value Disclosures

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities,
including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or
non-recurring basis.

The fair value estimates presented in the following table were based on pertinent market data and relevant information on
the financial instruments available as of the valuation date. These estimates do not reflect any premium or discount that could
result from offering for sale at one time the entire portfolio of financial instruments. Because no market exists for a portion of the
financial instruments, fair value estimates may be based on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that are not considered financial instruments. For instance, Valley
has certain fee-generating business lines (e.g., its mortgage servicing operation, trust and investment management departments)
that were not considered in these estimates since these activities are not financial instruments. In addition, the tax implications
related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been
considered in any of the estimates.

2017 Form 10-K

The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the

consolidated statements of financial condition at December 31, 2017 and 2016 were as follows:

December 31,

2017

2016

Fair Value
Hierarchy

Carrying
Amount

Fair Value

Carrying
Amount

Fair Value

(in thousands)

Financial assets
Cash and due from banks

Interest bearing deposits with banks

Investment securities held to maturity:

U.S. Treasury securities

U.S. government agency securities

Obligations of states and political

subdivisions

Residential mortgage-backed securities
Trust preferred securities

Corporate and other debt securities

Total investment securities held to maturity
Net loans

Accrued interest receivable

Federal Reserve Bank and Federal Home Loan

Bank stock (1)
Financial liabilities
Deposits without stated maturities

Deposits with stated maturities

Short-term borrowings

Long-term borrowings

Junior subordinated debentures issued to

capital trusts

Accrued interest payable (2)

Level 1

243,310

220,791

Level 1

172,800

171,710

220,791

171,710

147,495

11,464

577,826
1,102,802
47,290

37,720
1,924,597
16,756,655

Level 1

Level 2

Level 2
Level 2
Level 2

Level 2

Level 3

Level 1

138,676

9,859

145,257

9,981

138,830

11,329

465,878
1,131,945
49,824

46,509
1,842,691
18,210,724

477,479
1,118,044
40,088

46,771
1,837,620
17,562,153

566,590
1,112,460
59,804

36,559
1,925,572
17,121,684

73,990

66,816

Level 1

178,668

147,127

Level 1

Level 2

Level 1

Level 2

Level 1

14,589,941

14,591,837

3,563,521

3,465,373

748,628

679,316

2,315,819

2,453,797

41,774

14,161

37,289

14,161

3,138,871

1,080,960

1,433,906

41,577

10,675

3,160,572

1,081,751

1,523,386

45,785

10,675

(1)

(2)

Included in other assets.
Included in accrued expenses and other liabilities.

The following methods and assumptions were used to estimate the fair value of other financial assets and financial liabilities

in the table above:

Cash and due from banks and interest bearing deposits with banks. The carrying amount is considered to be a reasonable

estimate of fair value because of the short maturity of these items.

Investment securities held to maturity. Fair values are based on prices obtained through an independent pricing service
or dealer market participants with whom Valley has historically transacted both purchases and sales of investment securities. Prices
obtained from these sources include prices derived from market quotations and matrix pricing. The fair value measurements
consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading
levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among
other things (Level 2 inputs). Additionally, Valley reviews the volume and level of activity for all classes of held to maturity
securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume.
For securities meeting these criteria, the quoted prices received from either market participants or an independent pricing service
may be adjusted, as necessary. If applicable, the adjustment to fair value is derived based on present value cash flow model
projections prepared by Valley utilizing assumptions similar to those incorporated by market participants.

Loans. Fair values of loans are estimated by discounting the projected future cash flows using market discount rates that
reflect the credit and interest-rate risk inherent in the loan. The discount rate is a product of both the applicable index and credit

2017 Form 10-K

spread, subject to the estimated current new loan interest rates. The credit spread component is static for all maturities and may
not necessarily reflect the value of estimating all actual cash flows repricing. Projected future cash flows are calculated based
upon contractual maturity or call dates, projected repayments and prepayments of principal. Fair values estimated in this manner
do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for
comparable loans.

Accrued interest receivable and payable. The carrying amounts of accrued interest approximate their fair value due to

the short-term nature of these items.

Federal Reserve Bank and Federal Home Loan Bank stock. Federal Reserve Bank and FHLB stock are non-marketable

equity securities and are reported at their redeemable carrying amounts, which approximate the fair value.

Deposits. The carrying amounts of deposits without stated maturities (i.e., non-interest bearing, savings, NOW, and money
market deposits) approximate their estimated fair value. The fair value of time deposits is based on the discounted value of
contractual cash flows using estimated rates currently offered for alternative funding sources of similar remaining maturity.

Short-term and long-term borrowings. The carrying amounts of certain short-term borrowings, including securities sold
under agreement to repurchase and FHLB borrowings (and from time to time, federal funds purchased) approximate their fair
values because they frequently re-price to a market rate. The fair values of other short-term and long-term borrowings are estimated
by obtaining quoted market prices of the identical or similar financial instruments when available. When quoted prices are
unavailable, the fair values of the borrowings are estimated by discounting the estimated future cash flows using current market
discount rates of financial instruments with similar characteristics, terms and remaining maturity.

Junior subordinated debentures issued to capital trusts. The fair value of debentures issued to capital trusts not carried
at fair value is estimated utilizing the income approach, whereby the expected cash flows, over the remaining estimated life of the
security, are discounted using Valley’s credit spread over the current yield on a similar maturity of U.S. Treasury security or the
three-month LIBOR for the variable rate indexed debentures (Level 2 inputs). The credit spread used to discount the expected
cash flows was calculated based on the median current spreads for all fixed and variable publicly traded trust preferred securities
issued by banks.

2017 Form 10-K

INVESTMENT SECURITIES (Note 4)

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31,

2017 and 2016 were as follows:

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair Value

— $

—

(1,653)
(28)

(1,681)
(18,743)
(9,796)
(270)
(30,490) $

— $

—

(1,428)
(466)

(1,894)
(18,090)
(12,554)
(29)
(32,567) $

145,257

9,981

249,702

227,777

477,479

1,118,044

40,088

46,771

1,837,620

147,495

11,464

257,449

320,377

577,826

1,102,802

47,290

37,720

1,924,597

December 31, 2017
U.S. Treasury securities

U.S. government agency securities

Obligations of states and political subdivisions:

Obligations of states and state agencies

Municipal bonds

Total obligations of states and political

subdivisions

Residential mortgage-backed securities

Trust preferred securities

Corporate and other debt securities

Total investment securities held to maturity

December 31, 2016
U.S. Treasury securities

U.S. government agency securities

Obligations of states and political subdivisions:

Obligations of states and state agencies

Municipal bonds

Total obligations of states and political

subdivisions

Residential mortgage-backed securities

Trust preferred securities

Corporate and other debt securities

138,676

6,581

9,859

244,272

221,606

465,878

1,131,945

49,824

46,509

1,842,691

138,830

11,329

252,185

314,405

566,590

1,112,460

59,804

36,559

122

7,083

6,199

13,282

4,842

532

25,419

8,665

135

6,692

6,438

13,130

8,432

1,190

Total investment securities held to maturity

1,925,572

31,592

2017 Form 10-K

The age of unrealized losses and fair value of related securities held to maturity at December 31, 2017 and 2016 were as

follows:

Less than
Twelve Months

More than
Twelve Months

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

(in thousands)

December 31, 2017
Obligations of states and political

subdivisions:

Obligations of states and state

agencies

Municipal bonds

Total obligations of states and
political subdivisions
Residential mortgage-backed

securities

Trust preferred securities

Corporate and other debt securities

6,342

4,644

10,986

344,216

—

9,980

Total

365,182

(50) $
(25)

53,034

561

(1,603) $
(3)

59,376

5,205

(1,653)
(28)

(75)

53,595

(1,606)

64,581

(1,681)

(2,357)
—
(270)
(2,702) $

570,969

38,674

—

663,238

(16,386)
(9,796)
—

9,980
(27,788) $ 1,028,420

915,185

38,674

(18,743)
(9,796)
(270)
(30,490)

December 31, 2016
Obligations of states and political

subdivisions:

Obligations of states and state

agencies

Municipal bonds

Total obligations of states and
political subdivisions
Residential mortgage-backed

securities

Trust preferred securities

Corporate and other debt securities

Total

98,114

27,368

(1,428) $
(466)

125,482

(1,894)

— $

98,114

27,368

(1,428)
(466)

—

125,482

(1,894)

692,108

—

2,971

820,561

(14,420)
—
(29) $
(16,343) $

114,505

45,898

(3,670)
(12,554)

— $

160,403

— $
(16,224) $

806,613

45,898

2,971

980,964

(18,090)
(12,554)
(29)
(32,567)

The unrealized losses on investment securities held to maturity are primarily due to changes in interest rates (including, in
certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security
positions in the securities held to maturity portfolio in an unrealized loss position at December 31, 2017 was 152 as compared to
132 at December 31, 2016.

The unrealized losses existing for more than twelve months within the residential mortgage-backed securities category of
the held to maturity portfolio at December 31, 2017 mostly related to investment grade securities issued by Ginnie Mae and Fannie
Mae.

The unrealized losses existing for more than twelve months for trust preferred securities at December 31, 2017 primarily
related to four non-rated single-issuer securities, issued by bank holding companies. All single-issuer trust preferred securities
classified as held to maturity are paying in accordance with their terms, have no deferrals of interest or defaults and, if applicable,
the issuers meet the regulatory capital requirements to be considered “well-capitalized institutions” at December 31, 2017.

As of December 31, 2017, the fair value of investments held to maturity that were pledged to secure public deposits, repurchase

agreements, lines of credit, and for other purposes required by law was $1.1 billion.

2017 Form 10-K

The contractual maturities of investments in debt securities held to maturity at December 31, 2017 are set forth in the table
below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages
underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included
in the maturity categories in the following summary.

Due in one year
Due after one year through five years
Due after five years through ten years
Due after ten years
Residential mortgage-backed securities

Total investment securities held to maturity

December 31, 2017

Amortized Cost

Fair Value

(in thousands)

32,026
223,337
322,061
133,322
1,131,945
1,842,691

32,320
228,738
335,740
122,778
1,118,044
1,837,620

Actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the

right to call or prepay the obligation prior to scheduled maturity without penalty.

The weighted-average remaining expected life for residential mortgage-backed securities held to maturity was 7.3 years at

December 31, 2017.

Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of investment securities available for sale at December 31,

2017 and 2016 were as follows:

December 31, 2017
U.S. Treasury securities
U.S. government agency securities
Obligations of states and political subdivisions:
Obligations of states and state agencies
Municipal bonds

Total obligations of states and political subdivisions
Residential mortgage-backed securities
Trust preferred securities*
Corporate and other debt securities
Equity securities

Total investment securities available for sale

December 31, 2016
U.S. Treasury securities
U.S. government agency securities
Obligations of states and political subdivisions:
Obligations of states and state agencies
Municipal bonds

Total obligations of states and political subdivisions
Residential mortgage-backed securities
Trust preferred securities*
Corporate and other debt securities
Equity securities

Total investment securities available for sale

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair
Value

50,997
42,384

— $
158

(1,355) $
(37)

49,642
42,505

38,435
74,752
113,187
1,239,534
3,726
50,701
10,505
1,511,034

51,020
22,815

40,696
80,045
120,741
1,029,827
10,164
60,651
20,505
1,315,723

158
477
635
2,423
—
623
1,190
5,029

6
232

70
147
217
2,061
—
436
1,114
4,066

(374)
(564)
(938)
(18,662)
(512)
(160)
(494)
(22,158) $

38,219
74,665
112,884
1,223,295
3,214
51,164
11,201
1,493,905

(1,435) $
(6)

49,591
23,041

(424)
(767)
(1,191)
(16,346)
(2,155)
(522)
(761)
(22,416) $

40,342
79,425
119,767
1,015,542
8,009
60,565
20,858
1,297,373

2017 Form 10-K

Includes one and two pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies
at December 31, 2017 and 2016, respectively.

The age of unrealized losses and fair value of related securities available for sale at December 31, 2017 and 2016 were as

follows:

Less than
Twelve Months

More than
Twelve Months

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

(in thousands)

916
31,177

(2) $
(37)

48,726
—

(1,353) $
—

49,642
31,177

(1,355)
(37)

13,337

31,669

45,006

406,940

—
5,855
—

489,894

48,660
2,530

28,628

42,573

71,201

(131)
(256)

(387)

(2,461)
—
(45)
—
(2,932) $

7,792

12,133

19,925

599,167

3,214
15,115
5,150

691,297

(243)
(308)

(551)

21,129

43,802

64,931

1,006,107

(16,201)
(512)
(115)
(494)

3,214
20,970
5,150
(19,226) $ 1,181,191

(1,435) $
(4)

— $

4,034

— $
(2)

48,660
6,564

(374)
(564)

(938)

(18,662)
(512)
(160)
(494)
(22,158)

(1,435)
(6)

(404)
(506)

(910)

753

11,081

11,834

(20)
(261)

(281)

29,381

53,654

(424)
(767)

83,035

(1,191)

788,030

(11,889)

132,718

32,292
—
942,713

(294)
—
(14,532) $

8,009

15,192
14,883
186,670

920,748

8,009

(4,457)
(2,155)
(228)
(761)

47,484
14,883
(7,884) $ 1,129,383

(16,346)
(2,155)
(522)
(761)
(22,416)

December 31, 2017
U.S. Treasury securities

U.S. government agency securities
Obligations of states and political

subdivisions:

Obligations of states and state

agencies

Municipal bonds

Total obligations of states and
political subdivisions
Residential mortgage-backed

securities

Trust preferred securities

Corporate and other debt securities
Equity securities

Total

December 31, 2016
U.S. Treasury securities

U.S. government agency securities
Obligations of states and political

subdivisions:

Obligations of states and state

agencies

Municipal bonds

Total obligations of states and
political subdivisions
Residential mortgage-backed

securities

Trust preferred securities

Corporate and other debt securities

Equity securities

Total

The unrealized losses on investment securities available for sale are primarily due to changes in interest rates (including, in
certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security
positions in the securities available for sale portfolio in an unrealized loss position at December 31, 2017 was 327 as compared to
298 at December 31, 2016.

The unrealized losses more than twelve months for the residential mortgage-backed securities category of the available for
sale portfolio at December 31, 2017 largely related to several investment grade securities mainly issued by Ginnie Mae, Fannie
Mae, and Freddie Mac.

2017 Form 10-K

Management does not believe that any individual unrealized loss as of December 31, 2017 included in the table above
represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes in interest rates
and market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the
amortized cost, management believes there are no credit losses on these securities.

As of December 31, 2017, the fair value of securities available for sale that were pledged to secure public deposits, repurchase

agreements, lines of credit, and for other purposes required by law, was $775.6 million.

The contractual maturities of investments securities available for sale at December 31, 2017 are set forth in the following
table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying
the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the
maturity categories in the following summary.

Due in one year
Due after one year through five years
Due after five years through ten years
Due after ten years
Residential mortgage-backed securities
Equity securities

Total investment securities available for sale

December 31, 2017

Amortized Cost

Fair Value

(in thousands)

10,595
117,072
74,154
59,174
1,239,534
10,505
1,511,034

10,562
115,589
74,588
58,670
1,223,295
11,201
1,493,905

Actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the

right to call or prepay the obligation prior to scheduled maturity without penalty.

The weighted-average remaining expected life for residential mortgage-backed securities available for sale at December 31,

2017 was 8.0 years.

Other-Than-Temporary Impairment Analysis

Valley records impairment charges on its investment securities when the decline in fair value is considered other-than-
temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities; decline in the creditworthiness
of the issuer; absence of reliable pricing information for investment securities; adverse changes in business climate; adverse actions
by regulators; prolonged decline in value of equity investments; or unanticipated changes in the competitive environment could
have a negative effect on Valley’s investment portfolio and may result in other-than-temporary impairment on certain investment
securities in future periods. Valley's investment portfolios include private label mortgage-backed securities, trust preferred securities
(including one pooled security at December 31, 2017) and corporate bonds (some issued by banks). These investments may pose
a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy and its potential
negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the
security.

For residential mortgage-backed securities, Valley estimates loss projections for each security by stressing the cash flows
from the individual loans collateralizing the security using expected default rates, loss severities, and prepayment speeds, in
conjunction with the underlying credit enhancement (if applicable) for each security. Based on collateral and origination vintage
specific assumptions, a range of possible cash flows is identified to determine whether other-than-temporary impairment exists.

For the single-issuer trust preferred securities and corporate and other debt securities, Valley reviews each portfolio to
determine if all the securities are paying in accordance with their terms and have no deferrals of interest or defaults. A deferral
event by a bank holding company for which Valley holds trust preferred securities may require the recognition of an other-than-
temporary impairment charge if Valley determines that it is more likely than not that all contractual interest and principal cash
flows may not be collected. Among other factors, the probability of the collection of all interest and principal determined by Valley
in its impairment analysis declines if there is an increase in the estimated deferral period of the issuer. Additionally, a FDIC
receivership for any single-issuer would result in an impairment and significant loss. Including the other factors outlined above,
Valley analyzes the performance of the issuers on a quarterly basis, including a review of performance data from the issuers’ most
recent bank regulatory report, if applicable, to assess their credit risk and the probability of impairment of the contractual cash
flows of the applicable security. All of the issuers had capital ratios at December 31, 2017 that were at or above the minimum

2017 Form 10-K

amounts to be considered a “well-capitalized” financial institution, if applicable, and/or have maintained performance levels
adequate to support the contractual cash flows of the trust preferred securities.

At December 31, 2017, approximately 49 percent of the $578.8 million carrying value of obligations of states and political
subdivisions were issued by the states of (or municipalities within) New Jersey, New York, Utah and Maryland. The obligations
of states and political subdivisions mainly consist of general obligation bonds and, to a much lesser extent, special revenue bonds
which had an aggregated amortized cost and fair value of $20.1 million and $20.8 million, respectively, at December 31, 2017.
The special revenue bonds were mainly issued by the Port Authorities of New York and New Jersey, as well as various school
districts. As part of Valley’s pre-purchase analysis and on-going quarterly assessment of impairment of the obligations of states
and political subdivisions, our Credit Risk Management Department conducts a financial analysis and risk rating assessment of
each security issuer based on the issuer’s most recently issued financial statements and other publicly available information.
Substantially all of these investments are investment grade. As of December 31, 2017, these securities are expected to perform in
accordance with their contractual terms and, as a result, Valley expects to recover the entire amortized cost basis of these securities.

For the one pooled trust preferred security, Valley evaluated the projected cash flows from its tranches to determine if they
are adequate to support the future contractual principal and interest payments. Valley assessed the credit risk and probability of
impairment of the contractual cash flows by projecting the default rates over the life of the security. Higher projected default rate
will decrease the expected future cash flows from the security. If the projected decrease in cash flows affects the cash flows
projected for the tranche held by Valley, the security would be considered to be other-than-temporarily impaired.

Other-Than-Temporarily Impaired Securities

There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its
securities during 2017, 2016 and 2015. At December 31, 2017, four previously impaired private label mortgage-backed securities
had a combined amortized cost of $7.9 million and fair value of $7.4 million. During the fourth quarter of 2017, one previously
impaired pooled trust preferred security was sold for an immaterial loss.

The following table presents the changes in the credit loss component of cumulative other-than-temporary impairment losses
on debt securities classified as either held to maturity or available for sale that Valley has recognized in earnings, for which a
portion of the impairment loss (non-credit factors) was recognized in other comprehensive income or loss for the years ended
December 31, 2017, 2016 and 2015:

Balance, beginning of period

Accretion of credit loss impairment due to an increase in

expected cash flows

Sales

Balance, end of period

2017

2016
(in thousands)

2015

4,916

5,837

8,947

(284)
(1,317)
3,315

(921)
—

4,916

(728)
(2,382)
5,837

The credit loss component of the impairment loss represents the difference between the present value of expected future
cash flows and the amortized cost basis of the security prior to considering credit losses. The beginning balance represents the
credit loss component for debt securities for which other-than-temporary impairment occurred prior to each period presented. The
credit loss component increases if other-than-temporary impairments (initial and subsequent) are recognized in earnings for credit
impaired debt securities. The credit loss component is reduced if (i) Valley receives cash flows in excess of what it expected to
receive over the remaining life of the credit impaired debt security, (ii) the security matures, (iii) the security is fully written down,
or (iv) Valley sells, intends to sell or believes it will be required to sell previously credit impaired debt securities.

2017 Form 10-K

Realized Gains and Losses

Gross gains and losses realized on sales, maturities and other securities transactions included in earnings for the years ended

December 31, 2017, 2016 and 2015 were as follows:

Sales transactions:

Gross gains

Gross losses

Maturities and other securities transactions:

Gross gains

Gross losses

(Losses) gains on securities transactions, net

2017

2016
(in thousands)

2015

— $
(25)
(25) $

43
(38)
$
5
(20) $

271
(58)
213

615
(51)
564

777

3,274
(947)
2,327

293
(133)
160

2,487

LOANS (Note 5)

The detail of the loan portfolio as of December 31, 2017 and 2016 was as follows:

December 31, 2017

December 31, 2016

Non-PCI
Loans

PCI
Loans*

Total

Non-PCI
Loans

PCI
Loans*

Total

(in thousands)

$ 2,549,065

192,360

$ 2,741,425

$ 2,357,018

281,177

$ 2,638,195

8,561,851

809,964

9,371,815

2,717,744

373,631

1,208,804

723,306

2,305,741

934,926

41,141

976,067

141,291

9,496,777

7,628,328

1,091,339

8,719,667

851,105

710,266

114,680

824,946

10,347,882

2,859,035

8,338,594

2,684,195

1,206,019

183,723

9,544,613

2,867,918

72,649

446,280

376,213

1,208,902

1,139,082

728,056

569,499

92,796

145

7,642

469,009

1,139,227

577,141

2,383,238

2,084,794

100,583

2,185,377

4,750

77,497

$ 16,944,365

$ 1,387,215

$ 18,331,580

$ 15,464,601

$ 1,771,502

$ 17,236,103

Loans:
Commercial and industrial

Commercial real estate:

Commercial real estate

Construction

Total commercial real estate

loans

Residential mortgage

Consumer:

Home equity

Automobile

Other consumer

Total consumer loans

Total loans

PCI loans include covered loans (mostly consisting of residential mortgage loans) totaling $38.7 million and $70.4 million at December 31,
2017 and 2016, respectively.

Total loans (excluding PCI covered loans) include net of unearned premiums and deferred loan costs totaling $22.2 million
and $15.3 million at December 31, 2017 and 2016, respectively. The outstanding balances (representing contractual balances owed
to Valley) for PCI loans totaled $1.5 billion and $1.9 billion at December 31, 2017 and 2016, respectively.

Valley transferred $313.2 million and $174.5 million of residential mortgage loans from the loan portfolio to loans held for
sale in 2017 and 2016, respectively. These loans were sold resulting in net gains totaling $8.8 million and $7.3 million for the
years ended December 31, 2017 and 2016, respectively. Exclusive of such transfers, there were no other sales or transfers of loans
from the held for investment portfolio during 2017 and 2016.

2017 Form 10-K

100

Purchased Credit-Impaired Loans

PCI loans are accounted for in accordance with ASC Subtopic 310-30 and are initially recorded at fair value (as determined
by the present value of expected future cash flows) with no valuation allowance (i.e., the allowance for loan losses), and aggregated
and accounted for as pools of loans based on common risk characteristics. The difference between the undiscounted cash flows
expected at acquisition and the initial carrying amount (fair value) of the PCI loans, or the “accretable yield,” is recognized as
interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal
that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield
adjustment, as a loss accrual or a valuation allowance. Reclassifications of the non-accretable difference to the accretable yield
may occur subsequent to the loan acquisition dates due to increases in expected cash flows of the loan pools. See Note 1 for
additional information.

The following table presents changes in the accretable yield for PCI loans for the years ended December 31, 2017 and 2016:

Balance, beginning of period

Accretion
Net increase (decrease) in expected cash flows
Other, net

Balance, end of period

2017

2016

(in thousands)

294,514
(89,770)
77,265
—
282,009

415,179
(107,482)
(9,989)
(3,194)
294,514

Related Party Loans

In the ordinary course of business, Valley has granted loans to certain directors, executive officers and their affiliates
(collectively referred to as “related parties”). These loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons and do not involve more than
normal risk of collectability.

The following table summarizes the changes in the total amounts of loans and advances to the related parties during the year

ended December 31, 2017:

Outstanding at beginning of year
New loans and advances
Repayments

Outstanding at end of year

2017
(in thousands)

165,320
7,307
(21,362)
151,265

All loans to related parties are performing as of December 31, 2017.

Loan Portfolio Risk Elements and Credit Risk Management

Credit risk management. For all of its loan types discussed below, Valley adheres to a credit policy designed to minimize
credit risk while generating the maximum income given the level of risk. 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, 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.

101

2017 Form 10-K

Commercial and industrial loans. A significant proportion of Valley’s commercial and industrial loan portfolio is granted
to long standing customers of proven ability, strong repayment performance, and high character. Underwriting standards are
designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans
granted. While such recurring cash flow serves as the primary source of repayment, a significant number of the loans are
collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash
flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the case
of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Short-term loans
may be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, Valley
will obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured loans, when made, are generally
granted to the Bank’s most credit worthy borrowers. Unsecured commercial and industrial loans totaled $401.8 million and $455.5
million at December 31, 2017 and 2016, respectively.

The commercial portfolio also includes taxi medallion loans, most of which consist of loans to fleet owners of New York
City medallions. At December 31, 2017, the taxi medallion loans totaled $137.3 million and were largely classified as substandard
and special mention loans. While the vast majority of these loans are performing at December 31, 2017, continued negative trends
in the market valuations of the underlying taxi medallions could impact the future performance and internal classification of this
portfolio. Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation
to market valuations, as well as obtaining personal guarantees and other collateral in certain instances. We continue to closely
monitor this portfolio's performance and the potential impact of the changes in market valuations for taxi medallions due to
competing car service providers and other factors.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to
commercial and industrial loans but generally they involve larger principal balances and longer repayment periods as compared
to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans
secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan
or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real
estate markets or in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as
stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial
real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.

Construction loans. With respect to loans to developers and builders, Valley originates and manages construction loans
structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These
loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk.
Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially
dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be
from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley
until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential
construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely
monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment
being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability
of long-term financing.

Residential mortgages. Valley originates residential, first mortgage loans based on underwriting standards that generally
comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly
with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal
management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary
regulator. Credit scoring, using FICO® and other proprietary credit scoring models is employed in the ultimate, judgmental credit
decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. Residential mortgage loans
include fixed and variable interest rate loans secured by one to four family homes generally located in northern and central New
Jersey, the New York City metropolitan area, Florida and eastern Pennsylvania. Valley’s ability to be repaid on such loans is closely
linked to the economic and real estate market conditions in these regions. In deciding whether to originate each residential mortgage,
Valley considers the qualifications of the borrower as well as the value of the underlying property.

Home equity loans. Home equity lending consists of both fixed and variable interest rate products. Valley mainly provides
home equity loans to its residential mortgage customers within the footprint of its primary lending territory. Valley generally will
not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 80 percent when originating a home equity loan.

Automobile loans. Valley uses both judgmental and scoring systems in the credit decision process for automobile loans.
Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated
through approved automobile dealers. Automotive collateral is generally a depreciating asset and there are times in the life of an

2017 Form 10-K

102

automobile loan where the amount owed on a vehicle may exceed its collateral value. Additionally, automobile charge-offs will
vary based on the strength or weakness of the used vehicle market, original advance rate, when in the life cycle of a loan a default
occurs and the condition of the collateral being liquidated. Where permitted by law, and subject to the limitations of the bankruptcy
code, deficiency judgments are sought and acted upon to ultimately collect all money owed, even when a default resulted in a loss
at collateral liquidation. Valley uses a third party to actively track collision and comprehensive risk insurance required of the
borrower on the automobile and this third party provides coverage to Valley in the event of an uninsured collateral loss.

Other consumer loans. Valley’s other consumer loan portfolio includes direct consumer term loans, both secured and
unsecured. The other consumer loan portfolio includes exposures in personal lines of credit (including those secured by cash
surrender value of life insurance), credit card loans and personal loans. Unsecured consumer loans totaled approximately $18.1
million and $20.6 million, including $8.2 million and $7.0 million of credit card loans, at December 31, 2017 and 2016, respectively.
Valley believes the aggregate risk exposure to unsecured loans and lines of credit was not significant at December 31, 2017.

Credit Quality

The following tables present past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a

pool basis) by loan portfolio class at December 31, 2017 and 2016:

Past Due and Non-Accrual Loans

30-59 Days
Past Due
Loans

60-89 Days
Past Due
Loans

Accruing
Loans
90 Days Or
More
Past Due

Non-
Accrual
Loans

Total
Past Due
Loans

Current
Non-PCI
Loans

Total
Non-PCI
Loans

(in thousands)

December 31, 2017
Commercial and industrial $
Commercial real estate:

Commercial real estate

Construction

Total commercial real

estate loans

Residential mortgage

Consumer loans:

Home equity

Automobile

Other consumer

Total consumer loans

3,650

544

— $ 20,890

25,084

$ 2,523,981

$ 2,549,065

11,223

12,949

24,172

12,669

1,009

5,707

1,693

8,409

—

18,845

7,903

987

118

1,199

—

2,779

—

271

284

11,328

732

12,060

12,405

1,777

22,578

32,526

55,104

35,756

2,880

7,038

1,844

8,539,273

8,561,851

777,438

809,964

9,316,711

2,681,988

9,371,815

2,717,744

370,751

373,631

1,201,766

1,208,804

721,462

723,306

1,870

11,762

2,293,979

2,305,741

Total

48,900

28,491

3,090

$ 47,225

$ 127,706

$ 16,816,659

$ 16,944,365

103

2017 Form 10-K

Past Due and Non-Accrual Loans

30-59 Days
Past Due
Loans

60-89 Days
Past Due
Loans

Accruing
Loans
90 Days Or
More
Past Due

Non-
Accrual
Loans

Total
Past Due
Loans

Current
Non-PCI
Loans

Total
Non-PCI
Loans

(in thousands)

December 31, 2016
Commercial and industrial $
Commercial real estate:

Commercial real estate

Construction

Total commercial real

estate loans

Residential mortgage

Consumer loans:

Home equity

Automobile

Other consumer

Total consumer loans

6,705

5,010

142

8,465

20,322

$ 2,336,696

$ 2,357,018

5,894

6,077

11,971

12,005

929

3,192

4,197

8,642

—

8,642

3,564

415

723

1,147

474

1,106

1,580

1,541

—

188

209

15,079

715

15,794

12,075

1,028

146

—

1,174

30,089

7,898

37,987

29,185

2,372

4,249

106

6,727

7,598,239

7,628,328

702,368

710,266

8,300,607

2,655,010

8,338,594

2,684,195

373,841

376,213

1,134,833

1,139,082

569,393

569,499

2,078,067

2,084,794

Total

34,878

18,363

3,472

$ 37,508

94,221

$ 15,370,380

$ 15,464,601

If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income
would have amounted to approximately $2.5 million, $2.1 million, and $3.5 million for the years ended December 31, 2017, 2016
and 2015, respectively; none of these amounts were included in interest income during these periods.

Impaired loans. Impaired loans, consisting of non-accrual commercial and industrial loans and commercial real estate
loans over $250 thousand and all loans which were modified in troubled debt restructurings, are individually evaluated for
impairment. PCI loans are not classified as impaired loans because they are accounted for on a pool basis.

2017 Form 10-K

104

The following table presents the information about impaired loans by loan portfolio class at December 31, 2017 and 2016:

Recorded
Investment
With No
Related
Allowance

Recorded
Investment
With
Related
Allowance

Total
Recorded
Investment
(in thousands)

Unpaid
Contractual
Principal
Balance

Related
Allowance

9,946

75,553

85,499

90,269

11,044

28,709
1,904
30,613
5,654

3,096
3,096
49,309

3,609

21,318
1,618
22,936
8,398

1,182
1,182
36,125

29,771
467
30,238
8,402

664
664
114,857

27,031

36,974
2,379
39,353
9,958

2,352
2,352
78,694

58,480
2,371
60,851
14,056

3,760
3,760
164,166

30,640

58,292
3,997
62,289
18,356

62,286
2,394
64,680
15,332

4,917
4,917
175,198

35,957

60,267
3,997
64,264
19,712

3,534
3,534
114,819

3,626
3,626
123,559

2,718
17
2,735
718

64
64
14,561

5,864

3,612
260
3,872
725

70
70
10,531

December 31, 2017
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction
Total commercial real estate loans

Residential mortgage
Consumer loans:
Home equity
Total consumer loans

Total

December 31, 2016
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction
Total commercial real estate loans

Residential mortgage
Consumer loans:
Home equity
Total consumer loans

Total

Interest income recognized on a cash basis for impaired loans classified as non-accrual was not material for the years ended

December 31, 2017, 2016 and 2015.

The following table presents, by loan portfolio class, the average recorded investment and interest income recognized on

impaired loans for the years ended December 31, 2017, 2016 and 2015:

2017

2016

2015

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

(in thousands)

80,974

1,459

36,552

1,045

28,451

893

54,799

3,258

58,057

15,451

4,295

1,908

1,994

760

160

59,633

5,790

65,423

21,340

2,626

2,122

182

2,304

874

77,154

16,399

93,553

24,435

3,852

2,380

534

2,914

728

111

158,777

4,373

125,941

4,291

150,291

4,646

Commercial and industrial

Commercial real estate:

Commercial real estate

Construction

Total commercial real estate

loans
Residential mortgage

Consumer loans:

Home equity

Total consumer loans

Total

105

2017 Form 10-K

Troubled debt restructured loans. 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. If the borrower is experiencing financial difficulties and a concession has been made
at the time of such modification, the loan is classified as a troubled debt restructured loan (TDR). Valley’s PCI loans are excluded
from the TDR disclosures below because they are evaluated for impairment on a pool by pool basis. When an individual PCI loan
within a pool is modified as a TDR, it is not removed from its pool. All TDRs are classified as impaired loans and are included in
the impaired loan disclosures above.

The majority of the concessions made for TDRs involve lowering the monthly payments on loans through either a reduction
in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium
reflected in the interest rate, or a combination of these two methods. The concessions rarely result in the forgiveness of principal
or accrued interest. In addition, Valley frequently obtains additional collateral or guarantor support when modifying such loans.
If the borrower has demonstrated performance under the previous terms of the loan and Valley’s underwriting process shows the
borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-
accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance
(generally six consecutive months of payments) and both principal and interest are deemed collectible.

Performing TDRs (not reported as non-accrual loans) totaled $117.2 million and $85.2 million as of December 31, 2017 and
2016, respectively. Non-performing TDRs totaled $27.0 million and $10.6 million as of December 31, 2017 and 2016, respectively.

The following table presents non-PCI loans by loan class modified as TDRs during the years ended December 31, 2017 and
2016. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the
loan carrying amounts immediately prior to the modification and the carrying amounts at December 31, 2017 and 2016, respectively.

Troubled Debt
Restructurings

December 31, 2017
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction

Total commercial real estate
Residential mortgage
Total

December 31, 2016
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction

Total commercial real estate
Residential mortgage
Consumer
Total

Number of
Contracts

Pre-Modification
Outstanding
Recorded Investment

Post-Modification
Outstanding
Recorded Investment

($ in thousands)

75,894

6
3
9
7
106

4
3
7
7
1
34

23,781
1,188
24,969
1,769
102,632

18,186

8,325
2,922
11,247
1,867
54
31,354

69,020

23,548
932
24,480
1,727
95,227

16,277

7,092
3,626
10,718
1,826
51
28,872

The total TDRs presented in the table above had allocated specific reserves for loan losses that totaled $8.7 million and $4.8
million at December 31, 2017 and 2016, respectively. These specific reserves are included in the allowance for loan losses for
loans individually evaluated for impairment disclosed in Note 6. There were no loan charge-offs related to loans modified as TDRs
during 2017 and 2016. At December 31, 2017, the commercial and industrial loan category in the above table largely consisted of
performing TDR taxi cab medallion loans classified as substandard and non-accrual doubtful loans.

2017 Form 10-K

106

The non-PCI loans modified as TDRs within the previous 12 months and for which there was a payment default (90 or more

days past due) for the years ended December 31, 2017 and 2016 were as follows:

Troubled Debt Restructurings Subsequently Defaulted

Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

Years Ended December 31,

2017

2016

Commercial and industrial

Commercial real estate
Residential mortgage
Consumer
Total

7
1
5
—
13

($ in thousands)
5,841
165
1,125
—
7,131

— $
2
—
4
6

—
357
—
853
1,210

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. Loans rated as Pass 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.

The following table presents the credit exposure by internally assigned risk rating by class of loans (excluding PCI loans)

based on the most recent analysis performed at December 31, 2017 and 2016.

Credit exposure—
by internally assigned risk rating

Pass

Special
Mention

Substandard
(in thousands)

Doubtful

Total Non-PCI
Loans

December 31, 2017
Commercial and industrial
Commercial real estate
Construction
Total

December 31, 2016
Commercial and industrial
Commercial real estate
Construction
Total

2,375,689
8,447,865
808,091
$ 11,631,645

2,246,457
7,486,469
708,070
$ 10,440,996

62,071
48,009
360
110,440

44,316
57,591
200
102,107

96,555
65,977
1,513
164,045

64,649
84,268
1,996
150,913

14,750
—
—
14,750

2,549,065
8,561,851
809,964
$ 11,920,880

1,596
—
—
1,596

2,357,018
7,628,328
710,266
$ 10,695,612

At December 31, 2017, the commercial and industrial loans rated substandard and doubtful in the above table partly consisted

of performing TDR taxi medallion loans and non-accrual taxi cab medallion loans, respectively.

107

2017 Form 10-K

For residential mortgages, automobile, home equity and other consumer loan portfolio classes (excluding PCI loans), Valley
also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The
following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2017 and
2016:

Credit exposure—
by payment activity

December 31, 2017
Residential mortgage
Home equity
Automobile
Other consumer
Total

December 31, 2016
Residential mortgage
Home equity
Automobile
Other consumer
Total

Performing
Loans

Non-Performing
Loans
(in thousands)

Total Non-PCI
Loans

2,705,339
371,854
1,208,731
723,286
5,009,210

2,672,120
375,185
1,138,936
569,499
4,755,740

12,405
1,777
73
20
14,275

12,075
1,028
146
—
13,249

2,717,744
373,631
1,208,804
723,306
5,023,485

2,684,195
376,213
1,139,082
569,499
4,768,989

Valley evaluates the credit quality of its PCI loan pools based on the expectation of the underlying cash flows of each pool,
derived from the aging status and by payment activity of individual loans within the pool. The following table presents the recorded
investment in PCI loans by class based on individual loan payment activity as of December 31, 2017 and 2016:

Credit exposure—
by payment activity

December 31, 2017
Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Consumer

Total

December 31, 2016
Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Consumer

Total

Performing
Loans

Non-Performing
Loans
(in thousands)

Total
PCI Loans

172,105
924,574
39,802
135,745
76,901
1,349,127

272,483
1,080,376
113,370
179,793
98,469
1,744,491

20,255
10,352
1,339
5,546
596
38,088

8,694
10,963
1,310
3,930
2,114
27,011

192,360
934,926
41,141
141,291
77,497
1,387,215

281,177
1,091,339
114,680
183,723
100,583
1,771,502

2017 Form 10-K

108

ALLOWANCE FOR CREDIT LOSSES (Note 6)

The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded letters of credit.
Management maintains the allowance for credit losses at a level estimated to absorb probable loan losses of the loan portfolio and
unfunded letter of credit commitments at the balance sheet date. The allowance for loan losses is based on ongoing evaluations
of the probable estimated losses inherent in the loan portfolio, including unexpected additional credit impairment of PCI loan
pools subsequent to acquisition. There was no allowance allocation for PCI loan losses at December 31, 2017 and 2016.

The following table summarizes the allowance for credit losses at December 31, 2017 and 2016:

Components of allowance for credit losses:
Allowance for loan losses
Allowance for unfunded letters of credit
Total allowance for credit losses

December 31,

2017

2016

(in thousands)

120,856
3,596
124,452

114,419
2,185
116,604

The following table summarizes the provision for credit losses for the years ended December 31, 2017, 2016 and 2015:

Components of provision for credit losses:

Provision for loan losses

Provision for unfunded letters of credit

Total provision for credit losses

2017

2016
(in thousands)

2015

8,531

1,411

9,942

11,873
(4)
11,869

7,846

255

8,101

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31,

2017 and 2016:

December 31, 2017
Allowance for loan losses:

Beginning balance

Loans charged-off

Charged-off loans recovered
Net (charge-offs) recoveries

Provision for loan losses

Ending balance
December 31, 2016
Allowance for loan losses:

Beginning balance

Loans charged-off

Charged-off loans recovered
Net (charge-offs) recoveries

Provision for loan losses

Commercial
and Industrial

Commercial
Real Estate

Residential
Mortgage

Consumer

Total

(in thousands)

50,820

55,851

3,702

4,046

$ 114,419

(5,421)

4,736
(685)
7,097

57,232

(559)

1,425

866
(1,763)
54,954

(530)

1,016

486
(583)
3,605

(4,564)

1,803
(2,761)
3,780

(11,074)

8,980
(2,094)
8,531

5,065

$ 120,856

48,767

48,006

4,625

4,780

$ 106,178

(5,990)
2,852
(3,138)
5,191

(650)
2,057

1,407

6,438

(866)
774
(92)
(831)
3,702

(3,463)
1,654
(1,809)
1,075

(10,969)
7,337
(3,632)
11,873

4,046

$ 114,419

109

2017 Form 10-K

Ending balance

50,820

55,851

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment
disaggregated based on the impairment methodology for the years ended December 31, 2017 and 2016. Loans individually evaluated
for impairment represent Valley’s impaired loans. Loans acquired with discounts related to credit quality represent Valley’s PCI
loans.

Commercial
and Industrial
(in thousands)

Commercial
Real Estate

Residential
Mortgage

Consumer

Total

December 31, 2017
Allowance for loan losses:

Individually evaluated for impairment

Collectively evaluated for impairment

Total

Loans:

Individually evaluated for impairment

Collectively evaluated for impairment

Loans acquired with discounts related to

credit quality

Total

December 31, 2016
Allowance for loan losses:

Individually evaluated for impairment

Collectively evaluated for impairment

Total

Loans:

Individually evaluated for impairment

Collectively evaluated for impairment

Loans acquired with discounts related to

credit quality

Total

11,044

46,188
57,232

85,499

2,735

52,219
54,954

60,851

718

2,887
3,605

14,056

5,001
5,065

3,760

14,561

106,295
120,856

164,166

2,463,566

9,310,964

2,703,688

2,301,981

16,780,199

192,360
2,741,425

976,067
$10,347,882

141,291
$ 2,859,035

77,497
$ 2,383,238

1,387,215
$ 18,331,580

5,864

44,956
50,820

30,640

3,872

51,979
55,851

62,289

725

2,977
3,702

18,356

3,976
4,046

3,534

10,531

103,888
114,419

114,819

2,326,378

8,276,305

2,665,839

2,081,260

15,349,782

281,177
2,638,195

1,206,019
$ 9,544,613

183,723
$ 2,867,918

100,583
$ 2,185,377

1,771,502
$ 17,236,103

PREMISES AND EQUIPMENT, NET (Note 7)

At December 31, 2017 and 2016, premises and equipment, net consisted of:

Land
Buildings
Leasehold improvements
Furniture and equipment

Total premises and equipment

Accumulated depreciation and amortization
Total premises and equipment, net

2017

2016

(in thousands)

77,235
210,335
79,217
255,189
621,976
(334,271)
287,705

78,116
210,012
73,405
240,424
601,957
(310,777)
291,180

Depreciation and amortization of premises and equipment included in non-interest expense for the years ended December 31,

2017, 2016 and 2015 was approximately $24.8 million, $24.4 million, and $21.1 million, respectively.

2017 Form 10-K

110

GOODWILL AND OTHER INTANGIBLE ASSETS (Note 8)

The changes in the carrying amount of goodwill as allocated to our business segments, or reporting units thereof, for goodwill

impairment analysis were:

Business Segment / Reporting Unit*

Wealth
Management

Consumer
Lending

Commercial
Lending

(in thousands)

Investment
Management

Total

Balance at December 31, 2015

Goodwill from business combinations

Balance at December 31, 2016

Balance at December 31, 2017

20,517

701

21,218

199,119

984

200,103

314,260

1,998

316,258

152,443

615

153,058

686,339

4,298

690,637

* Valley’s Wealth Management Division is comprised of trust, asset management and insurance services. This reporting unit is included in

the Consumer Lending segment for financial reporting purposes.

There were no changes to the carrying amounts of goodwill allocated to Valley's business segments during 2017. During
2016, goodwill from business combinations primarily related to the effect of the combined adjustments to the estimated fair values
of the acquired assets and liabilities as of the acquisition date of CNL, as well as $701 thousand of goodwill from the acquisition
of certain assets from an independent insurance agency during the first quarter of 2016. The adjustments mostly related to the
fair value of certain PCI loans, core deposit intangibles and time deposits which, resulted in an increase in goodwill totaling $3.6
million (see Note 2 for further details). There was no impairment of goodwill during the years ended December 31, 2017, 2016
and 2015.

The following tables summarize other intangible assets as of December 31, 2017 and 2016:

December 31, 2017
Loan servicing rights
Core deposits
Other

Total other intangible assets

December 31, 2016
Loan servicing rights
Core deposits
Other

Total other intangible assets

Gross
Intangible
Assets

Accumulated
Amortization

Valuation
Allowance

(in thousands)

Net
Intangible
Assets

79,138
43,396
4,087
126,621

73,002
61,504
4,087
138,593

(57,054) $
(24,297)
(2,292)
(83,643) $

(52,634) $
(37,562)
(2,013)
(92,209) $

(471) $
—
—
(471) $

(900) $
—
—
(900) $

21,613
19,099
1,795
42,507

19,468
23,942
2,074
45,484

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 11 years. The
line item labeled “Other” included in the table above primarily consists of customer lists and covenants not to compete, which are
amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of 20
years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment
was recognized during the years ended December 31, 2017, 2016 and 2015.

111

2017 Form 10-K

The following table summarizes the change in loan servicing rights during the years ended December 31, 2017, 2016 and

2015:

Loan servicing rights

Balance at beginning of year
Origination of loan servicing rights
Amortization expense
Balance at end of year

Valuation allowance

Balance at beginning of year
Impairment adjustment
Balance at end of year
Balance at end of year, net of valuation allowance

2017

2016
(in thousands)

2015

$
$

20,368
7,039
(5,323)
22,084

(900) $
429
(471) $
$

21,613

16,681
8,479
(4,792)
20,368

(289) $
(611)
(900) $
$

19,468

20,446
1,696
(5,461)
16,681

(592)
303
(289)
16,392

Loan servicing rights are accounted for using the amortization method (see Note 1 for more details).

The Bank is a servicer of residential mortgage loan portfolios, and it is compensated for loan administrative services performed
for mortgage servicing rights of loans originated and sold by the Bank, and to a lesser extent, purchased mortgage servicing rights.
The aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $2.8 billion, $2.5
billion and $2.1 billion at December 31, 2017, 2016 and 2015, respectively. The outstanding balance of loans serviced for others
is not included in the consolidated statements of financial condition.

Valley recognized amortization expense on other intangible assets, including recoveries and net impairment charges on loan
servicing rights (reflected in the table above), of $10.0 million, $11.3 million and $9.2 million for the years ended December 31,
2017, 2016 and 2015, respectively.

The following table presents the estimated amortization expense of other intangible assets over the next five-year period:

Year

2018
2019
2020
2021
2022

DEPOSITS (Note 9)

Loan Servicing
Rights

Core
Deposits
(in thousands)

Other

5,180
4,160
3,331
2,554
2,039

4,215
3,671
3,127
2,582
2,038

249
235
220
206
191

Included in time deposits are certificates of deposit over $250 thousand totaling $647.3 million and $550.2 million at
December 31, 2017 and 2016, respectively. Interest expense on time deposits of $250 thousand or more totaled approximately
$1.3 million, $1.1 million, and $2.3 million in 2017, 2016 and 2015, respectively.

The scheduled maturities of time deposits as of December 31, 2017 are as follows:

Year

2018
2019
2020
2021
2022
Thereafter

Total time deposits

2017 Form 10-K

112

Amount
(in thousands)

1,920,543
747,876
316,238
221,472
198,264
159,128
3,563,521

Deposits from certain directors, executive officers and their affiliates totaled $77.7 million and $85.6 million at December 31,

2017 and 2016, respectively.

BORROWED FUNDS (Note 10)

Short-Term Borrowings

Short-term borrowings at December 31, 2017 and 2016 consisted of the following:

Securities sold under agreements to repurchase
FHLB advances

Total short-term borrowings

2017

2016

(in thousands)

321,628
427,000
748,628

298,960
782,000
1,080,960

The weighted average interest rate for short-term borrowings was 1.05 percent and 0.65 percent at December 31, 2017 and

2016, respectively.

Long-Term Borrowings

Long-term borrowings at December 31, 2017 and 2016 consisted of the following:

FHLB advances, net (1)
Securities sold under agreements to repurchase
Subordinated debt, net (2)
Other

Total long-term borrowings

2017

2016

(in thousands)

1,980,666
100,000
235,153
—

2,315,819

1,031,666
165,000
236,731
509

1,433,906

(1)

(2)

FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $14.3 million
and $18.3 million at December 31, 2017 and 2016, respectively.
Subordinated debt is presented net of unamortized debt issuance costs totaling $1.7 million and $1.9 million at December 31, 2017 and
2016, respectively.

In 2016, Valley prepaid $355 million and $50 million of the long-term FHLB advances and securities sold under agreements
to repurchase, respectively. These prepaid borrowings, which had contractual maturity dates in 2018 and a total average interest
rate of 3.69 percent, were funded with a new fixed-rate five-year FHLB advance totaling $405.0 million. The transaction was
accounted for as a debt modification under U.S. GAAP. As a result, the new advance has an adjusted annual interest rate of 2.51
percent, after amortization of prepayment penalties totaling $20.0 million paid to the FHLB.

In 2016, Valley also prepaid $87 million of FHLB advances assumed in the acquisition of CNL. The prepayment was entirely
funded by cash balances that were held as a collateral at the FHLB of Atlanta and resulted in the recognition of a $315 thousand
loss on extinguishment of debt for the year ended December 31, 2016.

In December 2015, Valley prepaid $625 million and $220 million of the long-term FHLB advances and securities sold under
agreements to repurchase, respectively, These prepaid borrowings had had a combined weighted average interest rate of 3.72
percent. The debt extinguishment resulted in a loss, consisting of prepayment penalties, totaling approximately $51.1 million for
the year ended December 31, 2015.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 2.52 percent and 3.37 percent at
December 31, 2017 and 2016, respectively. These FHLB advances are secured by pledges of certain eligible collateral, including
but not limited to, U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien
mortgage loans, consisting of both residential mortgage and commercial real estate loans.

113

2017 Form 10-K

The long-term FHLB advances at December 31, 2017 are scheduled for contractual balance repayments as follows:

Year

2018
2019
2021
2022

Total long-term FHLB advances

Amount
(in thousands)

700,000
255,000
840,000
200,000
1,995,000

There are no FHLB advances which are callable for early redemption by the FHLB in the table above.

Long-term borrowings for securities sold under agreements. The long-term borrowings for securities sold under
agreements had a weighted average interest rate of 3.37 percent and 2.41 percent at December 31, 2017 and 2016, respectively.

The long-term repos at December 31, 2017 are scheduled for contractual balance repayments as follows:

Year

2018
2022

Total long-term securities sold under agreements to repurchase

Amount
(in thousands)

50,000
50,000

100,000

Subordinated Debt. In June 2015, Valley issued $100 million of 4.55 percent subordinated debentures (notes) due July 30,
2025 with no call dates or prepayments allowed unless certain conditions exist. Interest on the subordinated notes is payable semi-
annually in arrears on June 30 and December 30 of each year. The subordinated notes had a net carrying value of $99.2 million
and $99.0 million at December 31, 2017 and 2016, respectively.

In September 2013, Valley issued $125 million of its 5.125 percent subordinated notes due September 27, 2023 with no call
dates or prepayments allowed, unless certain conditions exist. Interest on the subordinated debentures is payable semi-annually
in arrears on March 27 and September 27 of each year. In conjunction with the issuance, Valley entered into an interest rate swap
transaction used to hedge the change in the fair value of the subordinated notes. In August 2016, the fair value interest rate swap
with a notional amount of $125 million was terminated resulting in an adjusted fixed annual interest rate of 3.32 percent on the
subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date. The subordinated
notes had a net carrying value of $136.0 million and $137.7 million at December 31, 2017 and 2016, respectively.

Pledged Securities. The fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit,
FHLB advances and for other purposes required by law approximated $1.8 billion and $1.5 billion for December 31, 2017 and
2016, respectively.

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 11)

Valley acquired GCB Capital Trust III, State Bancorp Capital Trust I, and State Bancorp Capital Trust II in past bank
acquisitions. These statutory trusts were established for the sole purpose of issuing trust preferred securities and related trust
common securities. The proceeds from such issuances were used by the trust to purchase an equivalent amount of junior subordinated
debentures issued by the acquired bank, and now assumed by Valley. The junior subordinated debentures, the sole assets of the
trusts, are unsecured obligations of Valley, and are subordinate and junior in right of payment to all present and future senior and
subordinated indebtedness and certain other financial obligations of Valley. Valley does not consolidate its capital trusts based on
U.S. GAAP but wholly owns all of the common securities of each trust.

2017 Form 10-K

114

The table below summarizes the outstanding junior subordinated debentures and the related trust preferred securities issued

by each trust as of December 31, 2017 and 2016:

Junior Subordinated Debentures:

December 31, 2017
Carrying value (1)
Contractual principal balance

December 31, 2016
Carrying value (1)
Contractual principal balance

Annual interest rate (2)
Stated maturity date
Initial call date
Trust Preferred Securities:
December 31, 2017 and 2016
Face value
Annual distribution rate (2)
Issuance date
Distribution dates (3)

GCB
Capital Trust III

State Bancorp
Capital Trust I
($ in thousands)

State Bancorp
Capital Trust II

24,743
24,743

24,777

24,743

8,824
10,310

8,724

10,310

8,207
10,310

8,076

10,310

3-month LIBOR+1.4%
July 30, 2037
July 30, 2017

3-month LIBOR+3.45%
November 7, 2032
November 7, 2007

3-month LIBOR+2.85%
January 23, 2034
January 23, 2009

24,000

10,000

3-month LIBOR+1.4%
July 2, 2007

3-month LIBOR+3.45%
October 29, 2002

3-month LIBOR+2.85%
December 19, 2003

Quarterly

(1) The carrying values include unamortized purchase accounting adjustments at December 31, 2017 and 2016.
(2)

Interest on GCB Capital Trust III was fixed at an annual rate of 6.96 percent until July 30, 2017, then it reset to a 3-month LIBOR plus 1.4 percent. The
annual interest rate for all of the junior subordinated debentures and related trust preferred securities excludes the effect of the purchase accounting
adjustments.

(3) All cash distributions are cumulative.

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior
subordinated debentures at the stated maturity date or upon early redemption. The trusts’ ability to pay amounts due on the trust
preferred securities is solely dependent upon Valley making payments on the related junior subordinated debentures. Valley’s
obligation under the junior subordinated debentures and other relevant trust agreements, in aggregate, constitutes a full and
unconditional guarantee by Valley of the trusts’ obligations under the trust preferred securities issued. Under the junior subordinated
debenture agreements, Valley has the right to defer payment of interest on the debentures and, therefore, distributions on the trust
preferred securities, for up to five years, but not beyond the stated maturity dates in the table above. Currently, Valley has no
intention to exercise its right to defer interest payments on the debentures.

The trust preferred securities are included in Valley’s total risk-based capital (as Tier 2 capital) for regulatory purposes at

December 31, 2017 and 2016.

BENEFIT PLANS (Note 12)

Pension Plan

The Bank has a non-contributory defined benefit plan (qualified plan) covering most of its employees. The qualified plan
benefits are based upon years of credited service and the employee’s highest average compensation as defined. Additionally, the
Bank has a supplemental non-qualified, non-funded retirement plan, which is designed to supplement the pension plan for key
officers, and Valley has a non-qualified, non-funded directors’ retirement plan (both of these plans are referred to as the “non-
qualified plans” below).

Effective December 31, 2013 the benefits earned under the qualified and non-qualified plans were frozen. As a result, Valley
re-measured the projected benefit obligation of the affected plans and the funded status of each plan at June 30, 2013. Consequently,
participants in each plan will not accrue further benefits and their pension benefits will be determined based on the compensation
and service as of December 31, 2013. Plan benefits will not increase for any compensation or service earned after such date. All
participants were immediately vested in their frozen accrued benefits if they were employed by the Bank as of December 31, 2013.

115

2017 Form 10-K

The following table sets forth the change in the projected benefit obligation, the change in fair value of plan assets and the
funded status and amounts recognized in Valley’s consolidated financial statements for the qualified and non-qualified plans at
December 31, 2017 and 2016:

Change in projected benefit obligation:
Projected benefit obligation at beginning of year

Interest cost
Actuarial loss
Benefits paid

Projected benefit obligation at end of year
Change in fair value of plan assets:
Fair value of plan assets at beginning of year

Actual return on plan assets
Employer contributions
Benefits paid

Fair value of plan assets at end of year*

Funded status of the plan
Asset recognized
Accumulated benefit obligation

2017

2016

(in thousands)

161,306
5,713
10,148
(6,601)
170,566

206,639
21,468
618
(6,601)
222,124

51,558
170,566

157,661
6,681
2,047
(5,546)
161,306

189,414
22,424
347
(5,546)
206,639

45,333
161,306

Includes accrued interest receivable of $993 thousand and $606 thousand as of December 31, 2017 and 2016, respectively.

Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized
as a component of the net periodic pension expense for Valley’s qualified and non-qualified plans are presented in the following
table. Valley expects to recognize approximately $628 thousand of the net actuarial loss reported in the following table as of
December 31, 2017 as a component of net periodic pension expense during 2018.

Net actuarial loss
Deferred tax benefit

Total

2017

2016

(in thousands)

33,602
(14,044)
19,558

30,140
(12,647)
17,493

The non-qualified plans had a projected benefit obligation, accumulated benefit obligation, and fair value of plan assets as

follows:

Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

2017

2016

(in thousands)

20,175
20,175
—

18,286
18,286
—

In determining discount rate assumptions, management looks to current rates on fixed-income corporate debt securities that
receive a rating of AA or higher from either Moody’s or S&P with durations equal to the expected benefit payments streams
required of each plan. The weighted average discount rate used in determining the actuarial present value of benefit obligations
for the qualified and non-qualified plans were 3.69 percent and 4.12 percent as of December 31, 2017 and 2016, respectively.

2017 Form 10-K

116

The net periodic pension income for the qualified and non-qualified plans included the following components for the years

ended December 31, 2017, 2016 and 2015:

Interest cost
Expected return on plan assets
Amortization of net loss

Total net periodic pension income

2017

2016
(in thousands)

2015

5,713
(15,163)
381
(9,069) $

6,681
(14,539)
294
(7,564) $

6,889
(14,023)
790
(6,344)

At the end of 2016, Valley changed the method utilized to estimate the interest cost component of net periodic pension costs
for our qualified and non-qualified plans. Historically, Valley estimated the interest cost component (and the service cost component
when it was applicable) using a single weighted average discount rate derived from the yield curve used to measure the benefit
obligation at the beginning of the period. At December 31, 2016, Valley elected to use a spot rate approach for the plans in the
estimation of these components of benefit cost by applying the specific spot rates along the yield curve to the relevant projected
cash flows, as Valley believes this provides a better estimate of service and interest costs. Valley considers this a change in estimate
and, accordingly, accounted for it prospectively starting in 2017. This change does not affect the measurement of the total benefit
obligation. For 2017, the change in estimate when compared to the prior approach accounted for a large portion of the decline in
interest cost from 2016 to 2017 as shown in the table above.

Other changes in the qualified and non-qualified plan assets and benefit obligations recognized in other comprehensive

income/loss for the years ended December 31, 2017 and 2016 were as follows:

2017

2016

Net loss (gain)
Prior service cost
Amortization of prior service cost
Amortization of actuarial loss

Total recognized in other comprehensive income

Total recognized in net periodic pension income and other comprehensive

income/loss (before tax)

(in thousands)
3,843
—
(35)
(381)
3,427

(5,837)
462
—
(294)
(5,669)

(5,607) $

(13,233)

The benefit payments, which reflect expected future service, as appropriate, expected to be paid in future years are presented

in the following table:

Year

2018
2019
2020
2021
2022
Thereafter

Amount
(in thousands)

7,472
7,957
8,267
8,602
8,781
47,032

The weighted average discount rate, expected long-term rate of return on assets and rate of compensation increase used in

determining Valley’s pension expense for the years ended December 31, 2017, 2016 and 2015 were as follows:

Discount rate
Expected long-term return on plan assets
Rate of compensation increase

2017

2016

2015

4.12%
7.50%
N/A

4.33%
7.50%
N/A

4.02%
7.50%
N/A

The expected rate of return on plan assets assumption is based on the concept that it is a long-term assumption independent
of the current economic environment and changes would be made in the expected return only when long-term inflation expectations
change, asset allocations change materially or when asset class returns are expected to change for the long-term.

117

2017 Form 10-K

In accordance with Section 402 (c) of ERISA, the qualified plan’s investment managers are granted full discretion to buy,
sell, invest and reinvest the portions of the portfolio assigned to them consistent with the Bank’s Pension Committee’s policy and
guidelines. The target asset allocation set for the qualified plan are equity securities ranging from 25 percent to 65 percent and
fixed income securities ranging from 35 percent to 75 percent. The absolute investment objective for the equity portion is to earn
at least 7 percent cumulative annualized real return, after adjustment by the Consumer Price Index (CPI), over rolling five-year
periods, while the relative objective is to earn returns above the S&P 500 Index over rolling three-year periods. For the fixed
income portion, the absolute objective is to earn at least a 3 percent cumulative annual real return, after adjustment by the CPI
over rolling five-year periods with a relative objective of earning returns above the Merrill Lynch Intermediate Government/
Corporate Index over rolling three-year periods. Cash equivalents will be invested in money market funds or in other high quality
instruments approved by the Trustees of the qualified plan.

The exposure of the plan assets of the qualified plan to a concentration of credit risk is limited by the Bank’s Pension
Committee’s diversification of the investments into various investment options with multiple asset managers. The Pension
Committee engages an investment management advisory firm that regularly monitors the performance of the asset managers and
ensures they are within compliance of the policies adopted by the Trustees. If the risk profile and overall return of assets managed
are not in line with the risk objectives or expected return benchmarks for the qualified plan, the advisory firm may recommend
the termination of an asset manager to the Pension Committee.

In general, the plan assets of the qualified plan are investment securities that are well-diversified in terms of industry,
capitalization and asset class. The following table presents the qualified plan weighted-average asset allocations by asset category
that are measured at fair value on a recurring basis by level within the fair value hierarchy under ASC Topic 820. Financial assets
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 3 for
further details regarding the fair value hierarchy.

% of Total
Investments

December 31,
2017

Fair Value Measurements at Reporting Date Using:
Significant
Quoted Prices
Unobservable
in Active Markets
Inputs
for Identical
(Level 3)
Assets (Level 1)

Significant
Other
Observable Inputs
(Level 2)

($ in thousands)

38% $
22
23
13
4

*
100% $

84,791
47,471
48,814
28,671
9,522
1,862
221,131

84,791
—
48,814
28,671
9,522
—
171,798

— $

47,471
—
—
—
1,862
49,333

—
—
—
—
—
—
—

% of Total
Investments

December 31,
2016

Fair Value Measurements at Reporting Date Using:
Significant
Quoted Prices
Unobservable
in Active Markets
Inputs
for Identical
(Level 3)
Assets (Level 1)

Significant
Other
Observable Inputs
(Level 2)

($ in thousands)

43% $
21
19
12
5

*
100% $

88,250
43,152
38,975
24,910
10,402
344
206,033

88,250
—
38,975
24,910
10,402
—
162,537

— $

43,152
—
—
—
344
43,496

—
—
—
—
—
—
—

Assets:
Investments:

Equity securities
Corporate bonds
Mutual funds
U.S. Treasury securities
Cash and money market funds
U.S. government agency securities

Total investments

Assets:
Investments:

Equity securities
Corporate bonds
Mutual funds
U.S. Treasury securities
Cash and money market funds
U.S. government agency securities

Total investments

Represents less than one percent of total investments.

2017 Form 10-K

118

The following is a description of the valuation methodologies used for assets measured at fair value:

Equity securities, U.S. Treasury securities and cash and money market funds are valued at fair value in the table above
utilizing exchange quoted prices in active markets for identical instruments (Level 1 inputs). Mutual funds are measured at their
respective net asset values, which represents fair values of the securities held in the funds based on exchange quoted prices available
in active markets (Level 1 inputs).

Corporate bonds and U.S. government agency securities are reported at fair value utilizing Level 2 inputs. The prices for
these investments are derived from market quotations and matrix pricing obtained through an independent pricing service. Such
fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury
yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms
and conditions, among other things.

Based upon actuarial estimates, Valley does not expect to make any contributions to the qualified plan. Funding requirements
for subsequent years are uncertain and will significantly depend on whether the plan’s actuary changes any assumptions used to
calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any
legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management
or cost reduction purposes, Valley may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by
law.

Other Non-Qualified Plans

Valley maintains other non-qualified plans for former directors of banks acquired, as well as a non-qualified plan for former
senior management of Merchants Bank of New York acquired in January of 2001. Valley did not merge these plans into its existing
non-qualified plans. Collectively, at December 31, 2017 and 2016, the remaining obligations under these plans were $2.1 million
and $2.7 million, respectively, of which $682 thousand and $1.1 million, respectively, were funded by Valley.

As of December 31, 2017 and 2016, all of the obligations were included in other liabilities and $818 thousand (net of a
$577 thousand tax benefit) and $951 thousand (net of a $674 thousand tax benefit), respectively, were recorded in accumulated
other comprehensive loss. The $818 thousand in accumulated other comprehensive loss will be reclassified to expense on a straight-
line basis over the remaining benefit periods of these non-qualified plans.

Bonus Plan

Valley National Bank and its subsidiaries may award cash incentive and merit bonuses to its officers and employees based
upon a percentage of the covered employees’ compensation as determined by the achievement of certain performance objectives.
Amounts charged to salary expense were $10.8 million, $10.5 million and $9.0 million during 2017, 2016 and 2015, respectively.

Savings and Investment Plan

Valley National Bank maintains a KSOP, which is defined as a 401(k) plan with an employee stock ownership feature. This
plan covers eligible employees of the Bank and its subsidiaries and allows employees to contribute a percentage of their salary,
with the Bank matching a certain percentage of the employee contribution in cash and invested in accordance with each participant’s
investment elections. The Bank recorded $7.1 million, $6.7 million and $7.1 million in expense for contributions to the plan for
the years ended December 31, 2017, 2016 and 2015, respectively.

Effective January 1, 2016, Valley amended the benefits under the Bank’s 401(k) plan. Under the amendment, Valley’s
matching contribution increased to 100 percent of the first 4 percent of compensation contributed by an employee each pay period,
and 50 percent of the next 2 percent of compensation contributed, for a maximum matching contribution of 5 percent with an
annual limit of $13,500 in 2017. During 2015, Valley's matching contribution was dollar-for-dollar up to 6 percent of compensation
contributed by an employee each pay period.

Stock-Based Compensation

Valley currently has one active employee stock incentive plan, the 2016 Long-Term Stock Incentive Plan (the “2016 Stock
Plan”), adopted by Valley’s Board of Directors on January 29, 2016 and approved by its shareholders on April 28, 2016. The 2016
Stock Plan is administered by the Compensation and Human Resources Committee (the “Committee”) appointed by Valley’s
Board of Directors. The Committee can grant awards to officers and key employees of Valley. The purpose of the 2016 Stock Plan
is to provide additional incentive to officers and key employees of Valley and its subsidiaries, whose substantial contributions are
essential to the continued growth and success of Valley, and to attract and retain competent and dedicated officers and other key
employees whose efforts will result in the continued and long-term growth of Valley’s business.

119

2017 Form 10-K

Under the 2016 Stock Plan, Valley may award shares of common stock in the form of stock appreciation rights, both incentive
and non-qualified stock options, restricted stock and restricted stock units (RSUs) to its employees and non-employee directors.
As of December 31, 2017, 7.3 million shares of common stock were available for issuance under the 2016 Stock Plan. The essential
features of each award are described in the award agreement relating to that award. The grant, exercise, vesting, settlement or
payment of an award may be based upon the fair value of Valley’s common stock on the last sale price reported for Valley’s
common stock on such date or the last sale price reported preceding such date, except for performance-based awards with a market
condition. The grant date fair values of performance-based awards that vest based on a market condition are determined by a third
party specialist using a Monte Carlo valuation model. The maximum term to exercise an incentive stock option is ten years from
the date of grant and is subject to a vesting schedule.

Valley recorded total stock-based compensation expense, primarily for restricted stock awards, totaling $12.2 million, $10.0
million and $8.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. The stock-based compensation
expense for 2017, 2016 and 2015 included $4.3 million, $3.5 million and $2.6 million, respectively, related to stock awards granted
to retirement eligible employees and was immediately recognized. The fair values of all other stock awards are expensed over the
shorter of the vesting or required service period. As of December 31, 2017, the unrecognized amortization expense for all stock-
based compensation totaled approximately $11.6 million and will be recognized over an average remaining vesting period of
approximately 2 years.

Restricted Stock. Restricted stock is awarded to key employees providing for the immediate award of our common stock
subject to certain vesting and restrictions under the 2016 Stock Plan. Compensation expense is measured based on the grant-date
fair value of the shares.

The following table sets forth the changes in restricted stock awards (RSAs) outstanding for the years ended December 31,

2017, 2016 and 2015:

Outstanding at beginning of year

Granted
Vested
Forfeited

Outstanding at end of year

Restricted Stock Awards Outstanding
2016

2015

2017

2,100,816
608,786
(736,575)
(201,325)
1,771,702

2,755,138
544,307
(1,050,293)
(148,336)
2,100,816

2,574,616
886,427
(559,958)
(145,947)
2,755,138

The RSAs granted in 2017 have vesting periods ranging from one to three years. The average grant date fair value of RSAs
granted during the year ended December 31, 2017 was $11.70 per share. Included in the RSAs granted (in the table above) during
2017, 45 thousand shares were issued to Valley directors. In 2017, each non-management director received a $50 thousand RSA
as part of their annual retainer. The RSAs were granted on the date of the 2017 annual shareholders’ meeting with the number of
RSAs determined using the closing market price on the date prior to grant. The RSAs vest on the earlier of the next annual
shareholders’ meeting or the first anniversary of the grant date, with acceleration upon a change in control, death or disability, but
not resignation from the Board of Directors.

During 2014, 240 thousand shares of performance-based RSAs were made to executive officers and vested based on the
same performance measures for the RSU grants discussed below. A portion of the RSAs vested based on the total shareholder
return of Valley during that time period with an opportunity for earlier vesting of a portion of the shares based on growth in tangible
book value per share plus dividends. During 2017, 2016 and 2015, 85 thousand, 53 thousand and 50 thousand restricted shares,
respectively, of the performance-based RSAs vested. The total remaining unvested performance-based RSAs were forfeited during
2017 due to failure to meet the performance and market conditions at the final year of vesting.

Restricted Stock Units. Valley granted 371 thousand, 431 thousand and 313 thousand shares of performance-based RSUs
to certain executive officers for the year ended December 31, 2017, 2016 and 2015, respectively. The RSUs vest based on (i)
growth in tangible book value per share plus dividends (75 percent of performance shares) and (ii) total shareholder return as
compared to our peer group (25 percent of performance shares). The RSUs "cliff" vest after three years based on the cumulative
performance of Valley during that time period. The RSUs earn dividend equivalents (equal to cash dividends paid on Valley's
common share) over the applicable performance period. Dividend equivalents and accrued interest, per the terms of the agreements,
are accumulated and paid to the grantee at the vesting date, or forfeited if the performance conditions are not met. The grant date
fair value of the RSUs was $11.05, $8.32 and $8.98 per share for the years ended December 31, 2017, 2016, and 2015, respectively.
Compensation costs related to RSUs totaled $3.8 million, $2.8 million and $2.3 million, and were included in total stock-based
compensation expense for the years ended December 31, 2017, 2016 and 2015, respectively.

2017 Form 10-K

120

17
11
18
16

12
14
16
13

Stock Options. The fair value of each option granted on the date of grant is estimated using a binomial option pricing
model. The fair values are estimated using assumptions for dividend yield based on the annual dividend rate; the stock volatility,
based on Valley’s historical and implied stock price volatility; the risk-free interest rates, based on the U.S. Treasury constant
maturity bonds, in effect on the actual grant dates, with a remaining term approximating the expected term of the options; and
expected exercise term calculated based on Valley’s historical exercise experience.

The following table summarizes stock options activity as of December 31, 2017, 2016 and 2015 and changes during the

years ended on those dates:

Stock Options
Outstanding at beginning of year

Granted
Forfeited or expired
Outstanding at end of year
Exercisable at year-end

2017

2016

2015

Weighted
Average
Exercise
Price

14
—
16
13

732,489
—
(285,509)
446,980

446,980

Weighted
Average
Exercise
Price

16
—
18
14

Shares
1,383,365
—
(650,876)
732,489

632,489

Shares
1,828,591
100,000
(545,226)
1,383,365

1,283,365

Weighted
Average
Exercise
Price

The following table summarizes information about stock options outstanding and exercisable at December 31, 2017:

Range of Exercise Prices
$10-14
14-15
15-17

Options Outstanding and Exercisable

Number of Options

Weighted Average
Remaining Contractual
Life in Years

Weighted Average
Exercise Price

227,100
217,963
1,917
446,980

2.9
0.4
0.4
1.7

Director Restricted Stock Plan. The Director Restricted Stock Plan provides the non-employee members of the Board of
Directors with the opportunity to forgo some or their entire annual cash retainer and meeting fees in exchange for shares of Valley
restricted stock. On January 29, 2014, the Director Restricted Stock Plan was amended to provide that no additional fees may be
exchanged for Valley’s restricted stock effective April 1, 2014. The Director Restricted Stock Plan will terminate after April 2018
when the remaining restricted stock under the plan vests and is delivered, or is forfeited pursuant to such plan.

The following table sets forth the changes in director’s restricted stock awards outstanding for the years ended December 31,

2017, 2016 and 2015:

Outstanding at beginning of year

Vested

Outstanding at end of year

Restricted Stock Awards Outstanding
2016

2015

2017

55,510
(37,625)
17,885

80,117
(24,607)
55,510

98,086
(17,969)
80,117

121

2017 Form 10-K

INCOME TAXES (Note 13)

The U.S. Tax Cuts and Jobs Act (the "Tax Act") was enacted on December 22, 2017 and introduces significant changes to

U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent.

In response to the Tax Act, the SEC staff issued guidance on accounting for the tax effects of the Tax Act. The guidance
provides a one-year measurement period for companies to complete the accounting. Valley reflected the income tax effects of
those aspects of the Tax Act for which the accounting is complete. To the extent Valley’s accounting for certain income tax effects
of the Tax Act is incomplete but it can determine a reasonable estimate, Valley recorded a provisional estimate in the financial
statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to
apply the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, Valley has made
reasonable estimates of the effects and recorded provisional amounts in its financial statements as of December 31, 2017. As Valley
collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department,
the IRS, and other standard-setting bodies, Valley may adjust the provisional amounts. Information needed to adjust provisional
amounts are the completion of all 2017 tax returns. The potential adjustments may materially impact Valley’s provision for income
taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will
be completed in 2018.

Income tax expense for the years ended December 31, 2017, 2016 and 2015 consisted of the following:

Current expense (benefit):

Federal
State

Deferred expense (benefit):

Federal
State

Total income tax expense

2017

2016
(in thousands)

2015

8,483
5,500
13,983

49,169
27,679
76,848
90,831

25,176
12,904
38,080

10,658
16,496
27,154
65,234

7,978
(493)
7,485

(7,539)
23,992
16,453
23,938

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as

of December 31, 2017 and 2016 are as follows:

Deferred tax assets:

Allowance for loan losses
Depreciation
Employee benefits
Investment securities, including other-than-temporary impairment losses
Net operating loss carryforwards
Purchase accounting
Other

Total deferred tax assets

Deferred tax liabilities:
Pension plans
Other investments
Deferred income
Other

Total deferred tax liabilities

Net deferred tax asset (included in other assets)

2017 Form 10-K

122

2017

2016

(in thousands)

34,885
8,336
10,596
5,021
30,658
18,819
21,930
130,245

18,912
13,234
37,952
12,651
82,749
47,496

47,485
12,432
16,121
17,272
46,667
33,172
22,183
195,332

24,575
20,831
—
20,418
65,824
129,508

Valley's federal net operating loss carryforwards totaled approximately $71.6 million at December 31, 2017 and expire
during the period from 2029 through 2034. State net operating loss carryforwards totaled approximately $405 million at
December 31, 2017 and expire during the period from 2029 through 2037. Valley’s state alternative minimum tax credit
carryforward was approximately $2.9 million at December 31, 2017 and can be carried forward indefinitely. Within the "Other"
category of deferred tax assets in the table above, Valley has $6.1 million of tax credit carryforwards which expire in 2037.

Based upon taxes paid and projections of future taxable income over the periods in which the net deferred tax assets are
deductible, management believes that it is more likely than not that Valley will realize the benefits of these deductible differences
and loss carryforwards.

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income
before taxes by the statutory federal income tax rate of 35 percent for the years ended December 31, 2017, 2016 and 2015 were
as follows:

2017

2016

(in thousands)

2015

Federal income tax at expected statutory rate

88,458

81,683

44,413

Increase (decrease) due to:

State income tax expense, net of federal tax effect

21,046

19,197

15,274

Tax-exempt interest, net of interest incurred to carry tax-

exempt securities

Bank owned life insurance

Tax credits from securities and other investments

Impact of the Tax Act

Other, net

Income tax expense

(5,245)
(2,568)
(27,037)
15,441

736

90,831

(5,308)
(2,343)
(25,954)
—
(2,041)
65,234

(4,864)
(2,385)
(28,988)
—

488

23,938

A reconciliation of Valley’s gross unrecognized tax benefits for 2017, 2016 and 2015 are presented in the table below:

Beginning balance

Additions based on tax positions related to prior years
Settlements with taxing authorities
Reductions due to expiration of statute of limitations

Ending balance

2017

2016
(in thousands)

2015

16,144
1,121
(13,027)
—
4,238

19,892
3,958
(4,820)
(2,886)
16,144

18,647
1,245
—
—
19,892

The entire balance of unrecognized tax benefits, if recognized, would favorably affect our effective income tax rate. It is
reasonably possible that the liability for unrecognized tax benefits could increase or decrease in the next twelve months due to
completion of tax authorities’ exams or the expiration of statutes of limitations. Management estimates that the liability for
unrecognized tax benefits could decrease by $4.2 million within the next 12 months.

Valley’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley
has accrued approximately $1.8 million and $4.6 million of interest associated with Valley’s uncertain tax positions at December 31,
2017 and 2016, respectively.

Valley files income tax returns in the U.S. federal and various state jurisdictions. With few exceptions, Valley is no longer
subject to U.S. federal and state income tax examinations by tax authorities for years before 2013. Valley is under examination
by the IRS and also currently under routine examination by various state jurisdictions, and we expect the examinations to be
completed within the next 12 months. Valley has considered, for all open audits, any potential adjustments in establishing our
reserve for unrecognized tax benefits as of December 31, 2017.

123

2017 Form 10-K

TAX CREDIT INVESTMENTS (Note 14)

Valley’s tax credit investments are primarily related to investments promoting qualified affordable housing projects, and
other investments related to community development and renewable energy sources. Some of these tax-advantaged investments
support Valley’s regulatory compliance with the Community Reinvestment Act. Valley’s investments in these entities generate a
return primarily through the realization of federal income tax credits, and other tax benefits, such as tax deductions from operating
losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction of income
tax expense.

Valley’s tax credit investments are carried in other assets on the consolidated statements of financial condition. Valley’s
unfunded capital and other commitments related to the tax credit investments are carried in accrued expenses and other liabilities
on the consolidated statements of financial condition. Valley recognizes amortization of tax credit investments, including
impairment losses, within non-interest expense of the consolidated statements of income using the equity method of accounting.
An impairment loss is recognized when the fair value of the tax credit investment is less than its carrying value.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments,

and related unfunded commitments at December 31, 2017 and 2016:

Other Assets:

Affordable housing tax credit investments, net

Other tax credit investments, net

Total tax credit investments, net

Other Liabilities:

Unfunded affordable housing tax credit commitments

Unfunded other tax credit commitments

Total unfunded tax credit commitments

December 31,

2017

2016

(in thousands)

22,135

42,015

64,150

3,690

15,020

18,710

29,567

44,763

74,330

4,850

7,276

12,126

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax

credit investments for the years ended December 31, 2017, 2016 and 2015:

Components of Income Tax Expense:

Affordable housing tax credits and other tax benefits

Other tax credit investment credits and tax benefits

Total reduction in income tax expense
Amortization of Tax Credit Investments:

Affordable housing tax credit investment losses

Affordable housing tax credit investment impairment losses*

Other tax credit investment losses

Other tax credit investment impairment losses*

Total amortization of tax credit investments recorded in

non-interest expense

2017

2016

2014

(in thousands)

7,383

35,530

42,913

2,748

4,684

2,866

31,449

5,013

33,294

38,307

2,077

450

790

31,427

41,747

34,744

4,709

23,877

28,586

2,594

1,321

1,079

22,318

27,312

* As a result of the Tax Act, Valley incurred additional impairment of $2.2 million and $2.1 million related to affordable housing tax credit

investments and other tax credit investments, respectively, during the fourth quarter of 2017.

2017 Form 10-K

124

COMMITMENTS AND CONTINGENCIES (Note 15)

Lease Commitments

Certain bank facilities are occupied under non-cancelable long-term operating leases, which expire at various dates through
2058. Certain lease agreements provide for renewal options and increases in rental payments based upon increases in the consumer
price index or the lessors’ cost of operating the facility. Minimum aggregate lease payments for the remainder of the lease terms
are as follows:

Year

2018
2019
2020
2021
2022
Thereafter

Total lease commitments

Gross Rents

Sublease
Rents
(in thousands)

Net Rents

26,535
26,043
26,150
25,413
24,559
257,986
386,686

2,259
2,123
2,077
2,009
1,891
8,130
18,489

24,276
23,920
24,073
23,404
22,668
249,856
368,197

Net occupancy expense for years ended December 31, 2017, 2016, and 2015 included net rental expense of $27.7 million,
$27.7 million, and $31.7 million, respectively, net of rental income of $3.9 million, $4.0 million, and $3.8 million, respectively,
for leased bank facilities.

Financial Instruments With Off-balance Sheet Risk

In the ordinary course of business in meeting the financial needs of its customers, Valley, through its subsidiary Valley
National Bank, is a party to various financial instruments, which are not reflected in the consolidated financial statements. These
financial instruments include standby and commercial letters of credit, unused portions of lines of credit and commitments to
extend various types of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts
recognized in the consolidated financial statements. The commitment or contract amount of these instruments is an indicator of
the Bank’s level of involvement in each type of instrument as well as the exposure to credit loss in the event of non-performance
by the other party to the financial instrument. The Bank seeks to limit any exposure of credit loss by applying the same credit
policies in making commitments, as it does for on-balance sheet lending facilities.

The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2017 and

2016:

Commitments under commercial loans and lines of credit
Home equity and other revolving lines of credit
Standby letters of credit
Outstanding residential mortgage loan commitments
Commitments to sell loans
Commitments under unused lines of credit—credit card
Commercial letters of credit

2017

2016

(in thousands)

3,401,653
1,006,329
250,536
192,685
57,405
54,906
2,115

3,416,255
904,999
217,695
108,063
147,250
49,715
4,960

Obligations to advance funds under commitments to extend credit, including commitments under unused lines of credit, are
agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally
have specified expiration dates, which may be extended upon request, or other termination clauses and generally require payment
of a fee. These commitments do not necessarily represent future cash requirements as it is anticipated that many of these
commitments will expire without being fully drawn upon. The Bank’s lending activity for outstanding loan commitments is
primarily to customers within the states of New Jersey, New York and Florida.

Standby letters of credit represent the guarantee by the Bank of the obligations or performance of the bank customer in the

event of the default of payment or nonperformance to a third party beneficiary.

Loan sale commitments represent contracts for the sale of residential mortgage loans to third parties in the ordinary course
of the Bank’s business. These commitments require the Bank to deliver loans within a specific period to the third party. The risk

125

2017 Form 10-K

to the Bank is its non-delivery of loans required by the commitment, which could lead to financial penalties. The Bank has not
defaulted on its loan sale commitments.

Litigation

In the normal course of business, Valley is a party to various outstanding legal proceedings and claims. In the opinion of
management, the financial condition, results of operations and liquidity of Valley should not be materially affected by the outcome
of such legal proceedings and claims. However, in the event of an adverse outcome or settlement in one or more of our legal
proceedings, operating results for a particular period may be negatively impacted. Disclosure is required when a risk of material
loss in a litigation or claim is more than remote. Disclosure is also required of the estimate of the reasonably possible loss or range
of loss, unless an estimate cannot be made.

Although there can be no assurance as to the ultimate outcome, Valley has generally denied, or believes it has a meritorious
defense and will deny liability in litigation pending against Valley and claims made, including the matters described below. Valley
intends to defend vigorously each case against it. Liabilities are established for legal claims when payments associated with the
claims become probable and the possible losses related to the matter can be reasonably estimated.

Merrick Bank Corporation v. Valley National Bank and American Express Travel Related Services v. Valley National Bank.
For about a decade, Valley served as the depository bank for various charter operators under regulations of the Department of
Transportation (DOT) and contracts entered into with charter operators under those regulations. The purported intent of the
regulations is to afford some protection to the customers of the charter operators. A charter operator has several options with
regard to fulfilling its obligations under the regulations, with one option requiring the charter operator to deposit the proceeds of
tickets purchased for a charter flight into an FDIC insured bank account. The funds for a flight are released when the charter
operator certifies that the flight has been completed. Valley stopped serving as a depository bank for the charter business due to
the narrow profit in that business combined with the legal expenses incurred to defend itself in a prior case in which Valley was
completely successful and the anticipated legal expenses from the following similar cases that are still pending.

Valley served as the depository bank for Myrtle Beach Direct Air (Direct Air) under a contract between Direct Air and Valley
approved by the DOT under the DOT regulations. Direct Air, a charter operator, commenced operations in 2007 but in March
2012 Direct Air ceased operations and filed for bankruptcy. Thereafter the United States Justice Department charged three of the
principals of Direct Air with criminal fraud; that case is expected to go to trial in March 2018. Merrick Bank Corp. (Merrick) was
the merchant bank for Direct Air and processed credit card purchases for Direct Air. Following the bankruptcy of Direct Air,
Merrick incurred chargebacks in the approximate amount of $26.2 million when the Direct Air customers whose flights had been
canceled obtained a credit from their card issuing banks for the cost of the ticket or other item purchased from Direct Air. Merrick
was not able to recover the chargebacks from Direct Air. Direct Air’s depository account at Valley contained approximately $1.0
million at the time Direct Air ceased operations.

Merrick filed an action against Valley with ten counts in December 2013. Valley moved to dismiss five of the counts and,
in March 2015, the court dismissed four of the five counts. American Express Travel Related Services (American Express) filed
a similar action against Valley claiming about $3.0 million in chargebacks. Five of American Express’ eleven counts have been
dismissed. The two cases have now been consolidated in the Federal District Court of New Jersey.

In April 2017, Valley filed summary judgment motions on all of the remaining counts in both the Merrick and American
Express cases. Merrick and American Express also filed summary judgment motions against Valley. In an opinion in December
2017, the Court denied in their entirety the summary judgment motions filed by Merrick and American Express. The Court granted
Valley summary judgment on four of the six remaining counts against Valley. The Court did not grant Valley summary judgment
on the negligence and contract counts in the complaints. On December 14, 2017, Valley moved to have the court reconsider its
decision not to grant summary judgment on those two counts. On January 29, 2018, the Court denied Valley’s motion for
reconsideration. A final pretrial conference is scheduled for March 8, 2018 and the Court has set a Trial Date for April 10, 2018.

Maritza Gaston and George Gallart v. Valley National Bancorp and Valley National Bank. On April 6, 2017, Valley was
served with a Class and Collective Action Complaint, filed in the Eastern District of New York, alleging that Valley had violated
both Federal and State wage and hour laws and the Fair Labor Standards Act and seeking to recover overtime compensation on
behalf of a class of Valley employees. While Branch Service Managers are classified by Valley as “exempt” employees and do
not receive overtime pay, plaintiff’s counsel claims that Branch Service Managers perform non-exempt duties, should therefore
be classified as non-exempt hourly employees and should have been paid overtime for any time worked in excess of 40 hours per
week. Valley’s outside employment counsel filed an Answer on behalf of Valley disputing Plaintiffs’ allegations. Plaintiffs filed
a formal Notice for Conditional Certification of the Class, which was granted by the Federal Magistrate on December 6, 2017.
On January 5, 2018, Valley filed an Objection Brief requesting that the Federal Judge assigned to this case overturn the Federal
Magistrate’s Order for Certification. The Court has not acted on that request at the time of preparation of this report. The exact
number of employees that may be part of the Class has not yet been determined and the plaintiff’s counsel has not yet asserted
the amount of damages claimed. Plaintiffs and Valley have agreed to enter into non-binding mediation which is scheduled for
March 27, 2018.

2017 Form 10-K

126

At December 31, 2017, Valley could not estimate an amount or range of reasonably possible losses related to both matters
described above. Based upon information currently available and advice of counsel, Valley believes that the eventual outcome of
such claims will not have a material adverse effect on Valley’s consolidated financial position. However, it is possible that the
ultimate resolution of the matters, if unfavorable, may be material to Valley’s results of operations for a particular period.

Derivative Instruments and Hedging Activities

Valley is exposed to certain risks arising from both its business operations and economic conditions. Valley principally
manages its exposure to a wide variety of business and operational risks through management of its core business activities. Valley
manages economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of
its assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, Valley enters into derivative
financial instruments to manage exposures that arise from business activities that result in the payment of future known and
uncertain cash amounts, the value of which are determined by interest rates. Valley’s derivative financial instruments are used to
manage differences in the amount, timing, and duration of Valley’s known or expected cash receipts and its known or expected
cash payments related to assets and liabilities as outlined below.

Cash Flow Hedges of Interest Rate Risk. Valley’s objectives in using interest rate derivatives are to add stability to interest
expense and to manage its exposure to interest rate movements. To accomplish this objective, Valley uses interest rate swaps and
caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the payment
of either fixed or variable-rate amounts in exchange for the receipt of variable or fixed-rate amounts from a counterparty. Interest
rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise
above the strike rate on the contract in exchange for an up-front premium.

At December 31, 2017, Valley had the following cash flow hedge derivatives:

• One interest rate cap with a total notional amount of $125 million with a strike rate of 7.44 percent and a maturity date
of September 27, 2023 used to hedge the total change in cash flows associated with prime-rate indexed deposits, consisting
of consumer and commercial money market deposit accounts, which have variable interest rates indexed to the prime
rate.

• Three forward starting interest rate swaps with a total notional amount of $300 million to hedge the changes in cash flows
associated with certain brokered money market deposits. Starting in November 2015, the interest rate swaps required
Valley to pay fixed-rate amounts ranging from approximately 2.57 percent to 2.97 percent, in exchange for the receipt
of variable-rate payments at the three-month LIBOR rate. The three swaps have expiration dates ranging from November
2018 to November 2020.

•

Four forward starting interest rate swaps with a total notional amount of $182 million to hedge the changes in cash flows
associated with borrowed funds. Starting in March and April 2016, the interest rate swaps required Valley to pay fixed-
rate amounts ranging from approximately 2.51 percent to 2.88 percent, in exchange for the receipt of variable-rate payments
at the three-month LIBOR rate. The four swaps have expiration dates ranging from March 2019 to September 2020.

Fair Value Hedges of Fixed Rate Assets and Liabilities. Valley is exposed to changes in the fair value of certain of its
fixed rate assets or liabilities due to changes in benchmark interest rates based on one-month LIBOR. From time to time, Valley
uses interest rate swaps to manage its exposure to changes in fair value. Interest rate swaps designated as fair value hedges involve
the receipt of variable rate payments from a counterparty in exchange for Valley making fixed rate payments over the life of the
agreements without the exchange of the underlying notional amount. For derivatives that are designated and qualify as fair value
hedges, the gain or loss on the derivative as well as the loss or gain on the hedged item attributable to the hedged risk are recognized
in earnings. Valley includes the gain or loss on the hedged items in the same income statement line item as the loss or gain on the
related derivatives.

At December 31, 2017, Valley had one interest rate swap with a notional amount of approximately $7.8 million used to

hedge the change in the fair value of a commercial loan.

Non-designated Hedges. Derivatives not designated as hedges may be used to manage Valley’s exposure to interest rate
movements or to provide service to customers but do not meet the requirements for hedge accounting under U.S. GAAP. Derivatives
not designated as hedges are not entered into for speculative purposes. Under a program, Valley executes interest rate swaps with
commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers
are simultaneously offset by interest rate swaps that Valley executes with a third party, such that Valley minimizes its net risk
exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge
accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in
earnings.

127

2017 Form 10-K

In the fourth quarter of 2017, Valley entered into risk participation agreements with external lenders where banks are sharing
their risk of default on the interest rate swaps on participated loans. Valley would either pay or receive a fee depending on the
participation type. Risk participation agreements are credit derivatives not designated as hedges. Credit derivatives are not
speculative and are not used to manage interest rate risk in assets or liabilities. Changes in the fair value in credit derivatives are
recognized directly in earnings. At December 31, 2017, Valley had 7 credit swaps with an aggregate notional amount of $40.6
million related to risk participation agreements.

At December 31, 2017, Valley had one "steepener" swap with a total current notional amount of $14.5 million where the

receive rate on the swap mirrors the pay rate on the brokered deposits. The rate paid on these types of hybrid instruments are
based on a formula derived from the spread between the long and short ends of the constant maturity swap (CMS) rate curve.
Although these types of instruments do not meet the hedge accounting requirements, the change in fair value of both the
bifurcated derivative and the stand alone swap tend to move in opposite directions with changes in three-month LIBOR rate
and therefore provide an effective economic hedge.

Valley regularly enters into mortgage banking derivatives which are non-designated hedges. These derivatives include
interest rate lock commitments provided to customers to fund certain residential mortgage loans to be sold into the secondary
market and forward commitments for the future delivery of such loans. Valley enters into forward commitments for the future
delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the
effect of future changes in interest rates on Valley’s commitments to fund the loans as well as on its portfolio of mortgage loans
held for sale.

Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial

instruments were as follows:

December 31, 2017

December 31, 2016

Fair Value

Other
Assets

Other
Liabilities

Notional
Amount

Other
Assets

Other
Liabilities

Notional
Amount

(in thousands)

Derivatives designated as hedging

instruments:

Cash flow hedge interest rate caps

and swaps

Fair value hedge interest rate swaps
Total derivatives designated as

hedging instruments

Derivatives not designated as hedging

instruments:

Interest rate swaps, and embedded
and credit derivatives

Mortgage banking derivatives

Total derivatives not designated

as hedging instruments

650
—

81 * $ 607,000
7,775
637

802
—

15,641
986

$ 707,000
7,999

650

718

$ 614,775

802

16,627

$ 714,999

25,696
71

23,494 * $ 1,687,005
113,233

118

25,285
2,968

25,284
2,166

$ 1,075,722
246,583

25,767

23,612

$ 1,800,238

28,253

27,450

$ 1,322,305

* The fair value for the Chicago Mercantile Exchange cleared derivative positions is inclusive of accrued interest payable and the portion of

the cash collateral representing the variation margin posted with (or by) the applicable counterparties.

Chicago Mercantile Exchange (CME) amended their rules to legally characterize the variation margin posted between
counterparties to be classified as settlements of the outstanding derivative contracts instead of cash collateral. Effective January
1, 2017, Valley adopted the new rule on a prospective basis to classify its CME variation margin as a single-unit of account with
the fair value of certain cash flow and non-designated derivative instruments. As a result, the fair value of the designated cash
flow derivatives and non-designated interest rate swaps cleared with the CME were offset by variation margins totaling $9.5
million and $951 thousand, respectively, and reported in the table above on a net basis at December 31, 2017.

2017 Form 10-K

128

Gains (losses) included in the consolidated statements of income and in other comprehensive income (loss), on a pre-tax

basis, related to interest rate derivatives designated as hedges of cash flows were as follows:

2017

2016
(in thousands)

2015

Amount of loss reclassified from accumulated other comprehensive loss to

interest expense

Amount of gain (loss) recognized in other comprehensive income

(8,579) $
1,005

(13,034) $
(4,035)

(7,075)
(12,360)

The net gains or losses related to cash flow hedge ineffectiveness were immaterial during the years ended December 31,
2017, 2016 and 2015. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other
comprehensive loss were $8.3 million and $12.5 million at December 31, 2017 and 2016, respectively.

Amounts reported in accumulated other comprehensive loss related to cash flow interest rate derivatives are reclassified to
interest expense as interest payments are made on the hedged variable interest rate liabilities. Valley estimates that $4.8 million
will be reclassified as an increase to interest expense in 2018.

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of

fair value were as follows:

Derivative—interest rate swaps:

Interest income
Interest expense

Hedged item—loans, deposits and long-term borrowings:

Interest income
Interest expense

2017

2016
(in thousands)

2015

348
—

(348) $
—

320
6,670

(320) $

(6,645)

176
1,400

(176)
(1,473)

During the years ended December 31, 2017, 2016 and 2015, the amounts recognized in non-interest expense related to the

ineffectiveness of fair value hedges were immaterial.

Net (losses) gains included in the consolidated statements of income related to derivative instruments not designated as

hedging instruments were as follows:

2017

2016
(in thousands)

2015

Non-designated hedge interest rate and credit derivatives

Other non-interest expense

(744) $

690

158

Collateral Requirements and Credit Risk Related Contingency Features. By using derivatives, Valley is exposed to
credit risk if counterparties to the derivative contracts do not perform as expected. Management attempts to minimize counterparty
credit risk through credit approvals, limits, monitoring procedures and obtaining collateral where appropriate. Credit risk exposure
associated with derivative contracts is managed at Valley in conjunction with Valley’s consolidated counterparty risk management
process. Valley’s counterparties and the risk limits monitored by management are periodically reviewed and approved by the Board
of Directors.

Valley has agreements with its derivative counterparties providing that if Valley defaults on any of its indebtedness,
including default where repayment of the indebtedness has not been accelerated by the lender, then Valley could also be declared
in default on its derivative counterparty agreements. Additionally, Valley has an agreement with several of its derivative
counterparties that contains provisions that require Valley’s debt to maintain an investment grade credit rating from each of the
major credit rating agencies from which it receives a credit rating. If Valley’s credit rating is reduced below investment grade, or
such rating is withdrawn or suspended, then the counterparty could terminate the derivative positions and Valley would be required
to settle its obligations under the agreements. As of December 31, 2017, Valley was in compliance with all of the provisions of
its derivative counterparty agreements. As of December 31, 2017, the fair value of derivatives in a net liability position, which
includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $9.2 million.
Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties. At
December 31, 2017, Valley had $41.9 million in collateral posted with its counterparties, net of CME variation margin.

129

2017 Form 10-K

BALANCE SHEET OFFSETTING (Note 16)

Certain financial instruments, including derivatives (consisting of interest rate caps and swaps) and repurchase agreements
(accounted for as secured long-term borrowings), may be eligible for offset in the consolidated balance sheet and/or subject to
master netting arrangements or similar agreements. Valley is party to master netting arrangements with its financial institution
counterparties; however, Valley does not offset assets and liabilities under these arrangements for financial statement presentation
purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in
the event of default on, or termination of, any one contract. Collateral, usually in the form of cash or marketable investment
securities, is posted by the counterparty with net liability positions in accordance with contract thresholds. Master repurchase
agreements which include “right of set-off” provisions generally have a legally enforceable right to offset recognized amounts.
In such cases, the collateral would be used to settle the fair value of the repurchase agreement should Valley be in default.

The table below presents information about Valley’s financial instruments that are eligible for offset in the consolidated

statements of financial condition as of December 31, 2017 and 2016.

Gross Amounts
Recognized

Gross Amounts
Offset

Net Amounts
Presented

Financial
Instruments

Cash
Collateral

Net
Amount

Gross Amounts Not Offset

December 31, 2017
Assets:

Interest rate caps and swaps $

26,346

Liabilities:

Interest rate caps and swaps $
Repurchase agreements

Total

24,212
200,000
224,212

December 31, 2016
Assets:

Interest rate caps and swaps $

26,087

Liabilities:

Interest rate caps and swaps $
Repurchase agreements

Total

41,911
165,000
206,911

(in thousands)

— $

26,346

— $
—
— $

24,212
200,000
224,212

— $

26,087

— $
—
— $

41,911
165,000
206,911

(5,376) $

—

20,970

(5,376) $
—

(8,141) (1) $

(200,000) (2)

(5,376) $ (208,141)

10,695
—
10,695

(5,268) $

—

20,819

(5,268) $ (36,643) (1) $

—

(165,000) (2)

(5,268) $ (201,643)

—
—
—

(1)

(2)

Represents the amount of collateral posted with counterparties that offsets net liabilities. Actual cash collateral posted with counterparties
totaled $51.4 million and $52.4 million at December 31, 2017 and 2016, respectively.
Represents the fair value of non-cash pledged investment securities.

REGULATORY AND CAPITAL REQUIREMENTS (Note 17)

Valley’s primary source of cash is dividends from the Bank. Valley National Bank, a national banking association, is subject
to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. In addition, the dividends
declared cannot be in excess of the amount which would cause the subsidiary bank to fall below the minimum required for capital
adequacy purposes.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve
Bank and the OCC. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have a direct significant impact on Valley’s consolidated financial
statements. Under capital adequacy guidelines Valley and Valley National Bank must meet specific capital guidelines that involve
quantitative measures of Valley’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting
practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk
weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require Valley and Valley National Bank to
maintain minimum amounts and ratios of common equity Tier 1 capital, total and Tier 1 capital to risk-weighted assets, and Tier
1 capital to average assets, as defined in the regulations.

2017 Form 10-K

130

to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted
assets of 8.0 percent, and minimum leverage ratio of 4.0 percent. The new rule changes included the implementation of a new
capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation
buffer is subject to a three year phase-in period that started on January 1, 2016, at 0.625 percent of risk-weighted assets and
increases each subsequent year by 0.625 percent until reaching its final level of 2.5 percent when fully phased-in on January 1,
2019. As of January 1, 2018, Valley and Valley National Bank are required to maintain a capital conservation buffer of 1.875
percent. As of December 31, 2017 and 2016, Valley and Valley National Bank exceeded all capital adequacy requirements with
the capital conservation buffer required to be phased in at these dates under the Basel III Capital Rules (see table below).

The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under the Basel III risk-

based capital guidelines at December 31, 2017 and 2016:

Actual

Minimum Capital
Requirements

To Be Well
Capitalized Under
Prompt Corrective
Action Provision

Amount

Ratio

Amount

Ratio

Amount

Ratio

($ in thousands)

$ 2,258,044
2,185,967

12.61% $ 1,656,575
1,653,088
12.23

9.250%
9.250

N/A
$ 1,787,122

N/A
10.00%

1,651,849
1,961,316

1,864,279
1,961,316

9.22
10.97

10.41
10.97

8.03
8.47

1,029,763
1,027,595

1,298,397
1,295,663

928,484
926,459

5.750
5.750

7.250
7.250

4.00
4.00

N/A
1,161,629

N/A
1,429,698

N/A
1,158,074

N/A

6.50

N/A

8.00

N/A

5.00

$ 2,084,531
2,023,857

12.15% $ 1,480,006
1,476,767
11.82

8.625%
8.625

N/A
$ 1,712,193

N/A
10.00%

1,590,825
1,807,201

1,698,767
1,807,201

9.27
10.55

9.90
10.55

7.74
8.25

879,424
877,499

1,136,816
1,134,328

878,244
876,026

5.125
5.125

6.625
6.625

4.00
4.00

N/A
1,112,926

N/A
1,369,755

N/A
1,095,032

N/A

6.50

N/A

8.00

N/A

5.00

As of December 31, 2017

Total Risk-based Capital

Valley
Valley National Bank
Common Equity Tier 1 Capital

Valley
Valley National Bank
Tier 1 Risk-based Capital

Valley
Valley National Bank

Tier 1 Leverage Capital

Valley
Valley National Bank

As of December 31, 2016

Total Risk-based Capital

Valley
Valley National Bank
Common Equity Tier 1 Capital

Valley
Valley National Bank
Tier 1 Risk-based Capital

Valley
Valley National Bank

Tier 1 Leverage Capital

Valley
Valley National Bank

131

2017 Form 10-K

COMMON AND PREFERRED STOCK (Note 18)

Common Stock

Common Stock Issuance. In December 2016, Valley issued and sold 9.24 million shares of its common stock in a registered
public offering. The net proceeds of the offering totaled $106.4 million and were used to, among other things, support loan growth
at the Bank during 2017.

Dividend Reinvestment Plan. As part of Valley's dividend reinvestment plan (DRIP), Valley may issue authorized and
previously unissued or treasury shares of Valley common stock for purchases. Under the DRIP, a shareholder may choose to have
future cash dividends automatically invested in Valley common stock and make voluntary optional cash payments of up to $100
thousand per quarter to purchase shares of Valley common stock. Shares purchased under this plan were issued directly from
Valley. During 2017, 2016 and 2015, 713 thousand, 554 thousand, and 713 thousand common shares, respectively, were reissued
from treasury stock or issued from authorized common shares under the DRIP for net proceeds totaling $8.2 million, $5.2 million
and $7.0 million, respectively. The DRIP was terminated effective February 12, 2018.

Common Stock Warrants. On January 1, 2012, Valley assumed in the acquisition of State Bancorp, Inc. a warrant issued
(in connection with State Bancorp's redeemed preferred stock issuance) to the U.S. Treasury in December 2008. The ten-year
warrant to purchase up to 489 thousand of Valley common shares has an exercise price of $11.30 per share, and is exercisable on
a net exercise basis. During May 2015, the U.S. Treasury sold the warrant shares individually through a public action, in which
Valley did not receive any of the proceeds. All of the warrants, which will expire on December 5, 2018, remained outstanding and
unexercised at December 31, 2017.

In connection with the issuance of senior preferred shares in 2008 under the TARP program, Valley issued to the U.S. Treasury
a ten-year warrant to purchase up to approximately $2.5 million of Valley common shares. During 2010, the U.S. Treasury sold
the warrant shares individually through a public auction, in which Valley did not receive any of the proceeds. The warrants are
currently traded on the New York Stock Exchange under the ticker symbol “VLY WS”. Each warrant entitles the holder to purchase
approximately 1.103 Valley common shares at $16.12 per share and is exercisable through the expiration date of November 14,
2018.

Repurchase Plan. In 2007, Valley’s Board of Directors approved the repurchase of up to $4.7 million of common shares.
Purchases of Valley’s common shares may be made from time to time in the open market or in privately negotiated transactions
generally not exceeding prevailing market prices. Repurchased shares are held in treasury and are expected to be used for general
corporate purposes or issued under the dividend reinvestment plan. Under the repurchase plan, Valley made no purchases of its
outstanding shares during the years ended December 31, 2017, 2016 and 2015.

Other Stock Repurchases. Valley also purchases shares directly from its employees in connection with employee elections
to withhold taxes related to the vesting of stock awards, including vested stock options exchanged for Valley common stock in
the CNL acquisition. During the years ended December 31, 2017, 2016 and 2015, Valley purchased approximately 218 thousand,
328 thousand and 387 thousand shares, respectively, of its outstanding common stock at an average price of $12.12, $9.73 and
$9.95, respectively, for such purpose.

Preferred Stock

Series A Issuance. On June 19, 2015, Valley issued 4.6 million shares of its Fixed-to-Floating Rate Non-Cumulative
Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $25 per share. Dividends on the
preferred stock accrue and are payable quarterly in arrears, at a fixed rate per annum equal to 6.25 percent from the original issue
date to, but excluding, June 30, 2025, and thereafter at a floating rate per annum equal to three-month LIBOR plus a spread of
3.85 percent. The net proceeds from the preferred stock offering totaled $111.6 million. Commencing June 30, 2025, Valley may
redeem the preferred shares at the liquidation preference plus accrued and unpaid dividends, subject to certain conditions.

Series B Issuance. On August 3, 2017, Valley issued 4.0 million shares of its Fixed-to-Floating Rate Non-Cumulative
Perpetual Preferred Stock, Series B, no par value per share, with a liquidation preference of $25 per share. Dividends on the
preferred stock will accrue and be payable quarterly in arrears, at a fixed rate per annum equal to 5.50 percent from the original
issuance date to, but excluding, September 30, 2022, and thereafter at a floating rate per annum equal to three-month LIBOR plus
a spread of 3.578 percent. The net proceeds from the preferred stock offering totaled $98.1 million. Commencing September 30,
2022, Valley may redeem the preferred shares at the liquidation preference plus accrued and unpaid dividends, subject to certain
conditions.

Preferred stock is included in Valley's Additional Tier 1 capital and total risk-based capital at December 31, 2017 and 2016.

2017 Form 10-K

132

OTHER COMPREHENSIVE INCOME (Note 19)

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the years
ended December 31, 2017, 2016 and 2015. Components of other comprehensive income (loss) include changes in net unrealized
gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges
relating to certain securities during the period); unrealized gains and losses on derivatives used in cash flow hedging relationships;
and the pension benefit adjustment for the unfunded portion of various employee, officer and director pension plans.

Before
Tax

2017

Tax
Effect

After
Tax

Before
Tax

2016

Tax
Effect

(in thousands)

After
Tax

Before
Tax

2015

Tax
Effect

After
Tax

Unrealized gains and losses on

available for sale (AFS) securities

Net gains (losses) arising during the

period

Less reclassification adjustment for
net losses (gains) included in net
income (1)
Net change

Non-credit impairment losses on

securities available for sale and held
to maturity
Net change in non-credit impairment

losses on securities

Less reclassification adjustment for
accretion of credit impairment
losses included in net income (2)

Net change

Unrealized gains and losses on

derivatives (cash flow hedges)

Net gains (losses) arising during the

period

Less reclassification adjustment for

net losses included in net income (3)

Net change

Defined benefit pension plan

Net (losses) gains arising during the

period

Amortization of prior service credit

(cost )(4)

Amortization of net loss (4)
Net change

Total other comprehensive income

(loss)

636

(284) $

352

$ (7,294) $

3,001

$ (4,293) $ (3,458) $

1,458

$ (2,000)

656

(9)

(293)

363

(777)

312

(465)

(2,487)

(8,071)

3,313

(4,758)

(5,945)

1,041

2,499

(1,446)

(3,446)

849

(351)

498

719

(302)

417

(416)

175

(241)

(284)

565

117

(234)

(167)

331

(921)

(202)

382

(539)

(122)

(728)

(1,144)

304

479

(424)

(665)

1,005

(429)

576

(4,035)

1,574

(2,461)

(12,360)

5,121

(7,239)

8,579

9,584

(3,551)

(3,980)

5,028

5,604

13,034

8,999

(5,393)

(3,819)

7,641

5,180

7,075

(2,948)

4,127

(5,285)

2,173

(3,112)

(3,843)

1,121

(2,722)

5,837

(2,539)

3,298

6,030

(2,586)

3,444

268

381

(3,194)

(77)

(133)

911

191

248

(300)

294

119

(109)

(181)

185

206

790

(89)

(328)

117

462

(2,283)

5,831

(2,529)

3,302

7,026

(3,003)

4,023

7,611

$ (3,596) $

4,015

6,557

$ (2,955) $

3,602

$ (5,348) $

2,148

$ (3,200)

(1) Included in gains on securities transactions, net.
(2) Included in interest and dividends on investment securities (taxable).
(3) Included in interest expense.
(4) Included in the computation of net periodic pension cost. See Note 12 for details.

133

2017 Form 10-K

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive

loss for the years ended December 31, 2017, 2016 and 2015:

Components of Accumulated Other Comprehensive Loss

Unrealized
Gains
and Losses
on AFS
Securities

Non-credit
Impairment
Losses on
Securities

Unrealized
Gains
and Losses
on
Derivatives

Defined
Benefit
Pension
Plan

Total
Accumulated
Other
Comprehensive
Loss

Balance-December 31, 2014

(1,890) $

145

(in thousands)
(14,532) $

(26,218) $

(42,495)

Other comprehensive (loss) income before

reclassifications

Amounts reclassified from other comprehensive

(loss) income

Other comprehensive (loss) income, net

Balance-December 31, 2015

Other comprehensive (loss) income before

reclassifications

Amounts reclassified from other comprehensive

(loss) income

Other comprehensive (loss) income, net

Balance-December 31, 2016

Other comprehensive income (loss) before

reclassifications

Amounts reclassified from other comprehensive

income (loss)

Other comprehensive income (loss), net

Reclassification due to the adoption of ASU No.

2018-02

Balance-December 31, 2017

(2,000)

(1,446)

(3,446)

(5,336)

(4,293)

(465)
(4,758)
(10,094)

352

363

(241)

(424)
(665)
(520)

(7,239)

3,444

(6,036)

4,127
(3,112)
(17,644)

579

4,023
(22,195)

2,836
(3,200)
(45,695)

417

(2,461)

3,298

(3,039)

(539)
(122)
(642)

498

(167)

331

7,641
5,180
(12,464)

576

5,028

5,604

4
3,302
(18,893)

(2,722)

439

(2,283)

6,641
3,602
(42,093)

(1,296)

5,311

4,015

(2,273)

(12,004) $

(69)
(380) $

(1,478)
(8,338) $

(4,107)
(25,283) $

(7,927)
(46,005)

2017 Form 10-K

134

QUARTERLY FINANCIAL DATA (UNAUDITED) (Note 20)

Interest income

Interest expense

Net interest income

Provision for credit losses

Non-interest income:

Gains on sales of loans, net

Other non-interest income

Non-interest expense:

Amortization of tax credit investments

Other non-interest expense

Income before income taxes
Income tax expense

Net income

Dividend on preferred stock

Net income available to common shareholders

Earnings per common share:

Basic

Diluted

Cash dividends declared per common share

Weighted average number of common shares outstanding:

Quarters Ended 2017

March 31

June 30

September 30

December 31

(in thousands, except for share data)

199,116

211,147

211,650

220,506

36,587

162,529

2,470

4,128

20,931

5,324

115,628

64,166
18,071

46,095

1,797

44,298

42,187

168,960

3,632

4,791

19,899

7,732

111,507

70,779
20,714

50,065

1,797

48,268

46,796

164,854

1,640

5,520

20,568

8,389

124,176

56,737
17,088

39,649

2,683

36,966

0.17

0.11

0.18

0.11

0.14

0.11

48,537

171,969

2,200

6,375

21,229

20,302

116,015

61,056
34,958

26,098

3,172

22,926

0.09

0.11

Basic

Diluted

263,797,024

263,958,292

264,058,174

264,332,895

264,546,266

264,778,242

264,936,220

265,288,067

135

2017 Form 10-K

Interest income

Interest expense

Net interest income

Provision for credit losses

Non-interest income:

Gains on sales of loans, net

Other non-interest income

Non-interest expense:

Amortization of tax credit investments

Other non-interest expense

Income before income taxes

Income tax expense

Net income

Dividend on preferred stock

Net income available to common shareholders

Earnings per common share:

Basic

Diluted

Cash dividends declared per common share

Weighted average number of common shares outstanding:

Quarters Ended 2016

March 31

June 30

September 30

December 31

(in thousands, except for share data)

185,597

189,028

191,203

201,095

37,444

148,153

800

1,795

19,653

7,264

110,961

50,576

14,389

36,187

1,797

34,390

37,573

151,455

1,429

3,105

21,159

7,646

112,157

54,487

15,460

39,027

1,797

37,230

37,057

154,146

5,840

4,823

20,030

6,450

106,818

59,891

17,049

42,842

1,797

41,045

0.14

0.11

0.15

0.11

0.16

0.11

36,700

164,395

3,800

12,307

20,353

13,384

111,445

68,426

18,336

50,090

1,797

48,293

0.19

0.11

Basic

Diluted

254,075,349

254,381,170

254,473,994

256,422,437

254,347,420

254,771,213

254,940,307

256,952,036

2017 Form 10-K

136

PARENT COMPANY INFORMATION (Note 21)

Condensed Statements of Financial Condition

Assets
Cash

Interest bearing deposits with banks

Investment securities available for sale

Investments in and receivables due from subsidiaries

Other assets

Total Assets

Liabilities and Shareholders’ Equity
Dividends payable to shareholders

Long-term borrowings

Junior subordinated debentures issued to capital trusts

Accrued expenses and other liabilities

Shareholders’ equity

December 31,

2017

2016

(in thousands)

90,807

68,927

—

254

2,738,700

36,277

2,866,038

33,100

235,153

41,774

22,846

2,533,165

239

2,591,982

36,188

2,697,418

29,477

236,731

41,577

12,477

2,377,156

2,697,418

Total Liabilities and Shareholders’ Equity

2,866,038

Condensed Statements of Income

Income
Dividends from subsidiary

Income from subsidiary

Gains on securities transactions, net

Other interest and income

Total Income

Total Expenses

Income before income tax benefit and equity in undistributed earnings

(losses) of subsidiary

Income tax benefit

Income before equity in undistributed earnings (losses) of subsidiary

Equity in undistributed earnings (losses) of subsidiary
Net Income

Dividends on preferred stock
Net Income Available to Common Shareholders

Years Ended December 31,
2016

2017

2015

(in thousands)

122,000

90,000

4,550

—

135

126,685

39,621

87,064
(30,179)
117,243

44,664

161,907

9,449

4,550

239

94,823

33,604

61,219
(23,349)
84,568

83,578

168,146

7,188

152,458

160,958

110,000

2,363

—

211

112,574

20,578

91,996
(21,939)
113,935
(10,978)
102,957

3,813

99,144

137

2017 Form 10-K

Condensed Statements of Cash Flows

Cash flows from operating activities:
Net Income

Adjustments to reconcile net income to net cash provided by

operating activities:

Equity in undistributed (earnings) losses of subsidiary

Stock-based compensation

Net amortization of premiums and accretion of discounts on

securities

Gains on securities transactions, net

Net change in:

Other assets

Accrued expenses and other liabilities

Net cash provided by operating activities

Cash flows from investing activities:
Investment securities available for sale:

Sales

Cash and cash equivalents acquired in acquisitions

Capital contributions to subsidiary

Subordinated debt issued by subsidiary

Net cash (used in) provided by investing activities

Cash flows from financing activities:
Proceeds from issuance of long-term borrowings, net

Proceeds from issuance of preferred stock, net

Dividends paid to preferred shareholders

Dividends paid to common shareholders

Purchase of common shares to treasury

Common stock issued, net

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

BUSINESS SEGMENTS (Note 22)

Years Ended December 31,
2016

2015

2017

(in thousands)

161,907

168,146

102,957

(44,664)
12,204

197

—

(89)
8,737

138,292

—

—
(98,000)
—
(98,000)

—

98,101
(6,277)
(115,881)
(2,644)
8,207
(18,494)
21,798

69,009

(83,578)
10,032

163
(239)

8,007

18,381

120,912

739

—
(106,000)
—
(105,261)

—

—
(7,188)
(111,813)
(3,191)
112,085
(10,107)
5,544

63,465

90,807

69,009

10,978

7,575

162

—

(41,452)
9,604

89,824

109
(115,000)
(100,000)
(214,842)

98,897

111,590
(3,813)
(102,279)
(2,108)
7,898

110,185
(14,833)
78,298

63,465

Valley has four business segments that it monitors and reports on to manage Valley’s business operations. These segments
are consumer lending, commercial lending, investment management, and corporate and other adjustments. Valley’s reportable
segments have been determined based upon its internal structure of operations and lines of business. Each business segment is
reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets
and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Expenses related to the
branch network, all other components of retail banking, along with the back office departments of our subsidiary bank are allocated
from the corporate and other adjustments segment to each of the other three business segments. Interest expense and internal
transfer expense (for general corporate expenses) are allocated to each business segment utilizing a “pool funding” methodology,
which involves the allocation of uniform funding cost based on each segments’ average earning assets outstanding for the period.
The financial reporting for each segment contains allocations and reporting in line with Valley’s operations, which may not
necessarily be comparable to any other financial institution. The accounting for each segment includes internal accounting policies
designed to measure consistent and reasonable financial reporting, and may result in income and expense measurements that differ

2017 Form 10-K

138

from amounts under U.S. GAAP. Furthermore, changes in management structure or allocation methodologies and procedures may
result in changes in reported segment financial data.

The consumer lending segment is mainly comprised of residential mortgages and automobile loans, and to a lesser extent,
home equity loans, secured personal lines of credit and other consumer loans. The duration of the residential mortgage loan portfolio
is subject to movements in the market level of interest rates and forecasted prepayment speeds. The average weighted life of the
automobile loans within the portfolio 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 lending segment also includes the Wealth Management Division,
comprised of trust, asset management and insurance services.

The commercial lending segment is mainly 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 lending is Valley’s business segment that is most sensitive to movements in market interest rates.

The investment management segment generates a large portion of Valley’s income through investments in various types of
securities and interest-bearing deposits with other banks. These investments are mainly comprised of fixed rate securities and
depending on Valley's liquid cash position, federal funds sold and interest-bearing deposits with banks (primarily the Federal
Reserve Bank of New York), as part of its asset/liability management strategies. The fixed rate investments are among of Valley’s
assets that are least sensitive to changes in market interest rates. However, a portion of the investment portfolio is invested in
shorter-duration securities to maintain the overall asset sensitivity of Valley’s balance sheet.

The amounts disclosed as “corporate and other adjustments” represent income and expense items not directly attributable
to a specific segment, including net gains and losses on securities not reported in the investment management segment above,
interest expense related to subordinated notes, as well as income and expense from derivative financial instruments.

The following tables represent the financial data for Valley’s four business segments for the years ended December 31,

2017, 2016 and 2015:

Year Ended December 31, 2017

Average interest earning assets

(unaudited)

Interest income

Interest expense

Net interest income (loss)

Provision for credit losses

Net interest income (loss) after
provision for credit losses

Non-interest income

Non-interest expense

Internal expense transfer

Income (loss) before income taxes

Return on average interest earning
assets (pre-tax) (unaudited)

Consumer
Lending

Commercial
Lending

Investment
Management

($ in thousands)

$ 5,166,171

$ 12,652,832

$ 3,669,495

182,508

560,562

107,972

39,018

143,490

3,197

140,293

63,375

72,207

68,007

63,454

95,562

465,000

6,745

458,255

3,149

71,216

166,847

223,341

27,714

80,258

—

80,258

7,745

1,193

48,393

38,417

Corporate
and Other
Adjustments

Total

— $ 21,488,498

(8,623) $
11,813
(20,436)
—

(20,436)
29,172

364,457
(283,247)
(72,474) $

842,419

174,107

668,312

9,942

658,370

103,441

509,073

—

252,738

1.23%

1.77%

1.05%

N/A

1.18%

139

2017 Form 10-K

Year Ended December 31, 2016

Consumer
Lending

Commercial
Lending

Investment
Management

($ in thousands)

$ 5,081,798

$ 11,318,947

$ 3,428,567

176,929

509,376

Average interest earning assets

(unaudited)

Interest income
Interest expense

Net interest income (loss)

Provision for credit losses
Net interest income (loss) after
provision for credit losses

Non-interest income

Non-interest expense
Internal expense transfer

Income (loss) before income taxes

Return on average interest earning
assets (pre-tax) (unaudited)

35,175

141,754

905

140,849

63,443

62,721

71,578

69,993

78,347

431,029

10,964

420,065

3,292

70,145

160,198

193,014

Consumer
Lending

Commercial
Lending

Investment
Management

($ in thousands)

$ 4,764,306

$ 9,682,714

$ 2,978,484

170,569

463,062

39,787

130,782

1,153

129,629

45,306

59,794

72,441

42,700

80,861

382,201

6,948

375,253

744

68,156

146,463

161,378

Average interest earning assets

(unaudited)

Interest income

Interest expense

Net interest income (loss)

Provision for credit losses

Net interest income (loss) after
provision for credit losses

Non-interest income

Non-interest expense

Internal expense transfer

Income (loss) before income taxes

Return on average interest earning
assets (pre-tax) (unaudited)

Corporate
and Other
Adjustments

Total

— $ 19,829,312

(8,760) $
11,520
(20,280)
—

(20,280)
29,796

341,978
(280,251)
(52,211) $

766,923

148,774

618,149

11,869

606,280

103,225

476,125

—

233,380

Corporate
and Other
Adjustments

Total

— $ 17,425,504

(8,277) $
11,233
(19,510)
—

(19,510)
30,937

370,051
(264,364)
(94,260) $

707,023

156,754

550,269

8,101

542,168

83,802

499,075

—

126,895

89,378

23,732

65,646

—

65,646

6,694

1,281

48,475

22,584

81,669

24,873

56,796

—

56,796

6,815

1,074

45,460

17,077

1.38%

1.71%

0.66%

N/A

1.18%

Year Ended December 31, 2015

0.90%

1.67%

0.57%

N/A

0.73%

2017 Form 10-K

140

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Valley National Bancorp:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of Valley National Bancorp and subsidiaries
(the Company) as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, changes
in shareholders’ equity, and cash flows for each of the years in the three year period ended December 31, 2017, and the related
notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations
and its cash flows for each of the years in the three year period ended December 31, 2017, in conformity with U.S. generally
accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated March 1, 2018 expressed an adverse opinion on the effectiveness of the Company’s internal
control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP
We have served as the Company’s auditor since 2008.

Short Hills, New Jersey
March 1, 2018

141

2017 Form 10-K

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Disclosure Controls and Procedures

Valley maintains disclosure controls and procedures which, consistent with Rule 13a-15(e) under the Securities Exchange
Act of 1934, as amended, is defined to mean controls and other procedures that are designed to ensure that information required
to be disclosed in the reports that Valley files or submits under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms, and to ensure that such information is accumulated and communicated to Valley’s management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Valley’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of Valley’s disclosure controls and procedures. Based on such evaluation, Valley’s Chief Executive Officer and Chief
Financial Officer have concluded that such disclosure controls and procedures were not effective as of December 31, 2017 (the
end of the period covered by this Annual Report on Form 10-K), based on the material weakness discussed in Management’s
Report on Internal Control over Financial Reporting described below.

Valley’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure
controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A system of internal
control, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the system
of internal control are met. The design of a system of internal control reflects resource constraints and the benefits of controls
must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud, if any, within Valley have been or will be detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because
of a simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the control. The design of any system of internal control is based in part upon certain
assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated
goals under all future conditions; over time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.

Management’s Report on Internal Control over Financial Reporting

Valley’s management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Valley’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors
of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

As of December 31, 2017, management assessed the effectiveness of Valley’s internal control over financial reporting based
on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework (2013),
issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Management’s assessment included
an evaluation of the design of Valley’s internal control over financial reporting and testing of the operating effectiveness of its
internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee.

2017 Form 10-K

142

Based on this assessment, management determined that, as of December 31, 2017, Valley’s internal control over financial
reporting was not effective because of the material weakness described below. A material weakness is a deficiency, or combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. Management’s
assessment identified the following:

• Valley did not assign appropriate levels of responsibility and authority to its Ethics and Compliance group to identify and
evaluate the severity and financial reporting implications of allegations of non-compliance with laws and regulations,
Company policies and procedures and other complaints. Additionally, Valley did not establish controls over required
communications of such matters to senior management or others within the organization and to those charged with
governance to enable them to conduct or monitor the investigation and resolution of such matters on a timely basis.

Although no material misstatements were identified in our consolidated financial statements, these control deficiencies
created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or
detected on a timely basis.

KPMG LLP, the independent registered public accounting firm that audited Valley’s December 31, 2017 consolidated
financial statements included in this Annual Report on Form 10-K, has issued an adverse opinion on the effectiveness of Valley’s
internal control over financial reporting as of December 31, 2017. The report is included in this item under the heading “Report
of Independent Registered Public Accounting Firm.”

Remediation Plan

During the first quarter of 2018, as a result of the material weakness described above, Valley initiated remediation efforts to
ensure that the deficiencies that resulted in the material weakness will be remediated. Valley has reviewed the design and operation
of the controls and has made enhancements to ensure the proper identification of allegations of non-compliance with laws and
regulations, Company policies and procedures and other complaints that require the attention of senior management and those
charged with governance. The enhancements include direct communications of such complaints to the Ethics Officer, Chief Risk
Officer and Chief Human Resources Officer, among others within the Human Resources Department of Valley. In addition, at a
minimum, matters related to executive management, financial reporting, fraud, and criminal complaints must be timely escalated
to senior management or those charged with governance.

Changes in Internal Control over Financial Reporting

Except as related to the material weakness described above, there have been no changes in Valley’s internal control over
financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially
affect, Valley’s internal control over financial reporting.

143

2017 Form 10-K

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Valley National Bancorp:

Opinion on Internal Control Over Financial Reporting

We have audited Valley National Bancorp’s and subsidiaries (the Company) internal control over financial reporting as of December
31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness, described below, on
the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial
reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2017 and 2016, the related
consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-
year period ended December 31, 2017, and the related notes (collectively, the consolidated financial statements), and our report
dated March 1, 2018 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented
or detected on a timely basis. A material weakness related to the ineffective assignment of responsibility and authority to its Ethics
and Compliance group to identify and evaluate the severity and financial reporting implications of allegations of non-compliance
with laws and regulations, Company policies and procedures and other complaints and ineffective controls over required
communications of such matters to senior management or others within the organization and to those charged with governance to
enable them to conduct or monitor the investigation and resolution of such matters on a timely basis. The material weakness was
considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2017 consolidated financial
statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Short Hills, New Jersey
March 1, 2018

2017 Form 10-K

144

Item 9B.

Other Information

Not applicable.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

Certain information regarding executive officers is included under the section captioned “Executive Officers” in Item 1 of
this Annual Report on Form 10-K. The information set forth under the captions “Director Information”, “Corporate Governance”,
and “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2018 Proxy Statement is incorporated herein by reference.

Item 11.

Executive Compensation

The information set forth under the captions “Director Compensation”, “Compensation Committee Interlocks and Insider

Participation” and “Executive Compensation” in the 2018 Proxy Statement is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information set forth under the captions “Equity Compensation Plan Information” and “Stock Ownership of Management

and Principal Shareholders” in the 2018 Proxy Statement is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

The information set forth under the captions “Compensation Committee Interlocks and Insider Participation”, “Certain
Transactions with Management” and “Corporate Governance” in the 2018 Proxy Statement is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

The information set forth under the caption “Ratification of Appointment of Independent Registered Public Accounting

Firm” in the 2018 Proxy Statement is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

(a) Financial Statements and Schedules:

The following Financial Statements and Supplementary Data are filed as part of this annual report:

Consolidated Statements of Financial Condition
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm

Page
70
71
72
73
74
76
141

All financial statement schedules are omitted because they are either inapplicable or not required, or because the

required information is included in the Consolidated Financial Statements or notes thereto.

145

2017 Form 10-K

(b) Exhibits (numbered in accordance with Item 601 of Regulation S-K):

(2) Plan of acquisition, reorganization, arrangement, liquidation or succession:

Agreement and Plan of Merger, dated July 26, 2017, by and between Valley National Bancorp and
USAmeriBancorp, Inc., incorporated herein by reference to Exhibit 2.1 to the Registrant’s Form 8-
K Current Report filed on July 28, 2017.

(3) Articles of Incorporation and By-laws:

Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to Exhibit
3.1 to the Registrant’s Form 10-Q Quarterly Report filed on November 7, 2017.

By-laws of the Registrant, as amended and restated, incorporated herein by reference to Exhibit 3.1
to the Registrant’s Form 8-K Current Report filed on December 7, 2016.

(4) Instruments Defining the Rights of Security Holders:

Indenture, dated as of September 27, 2013, by and between Valley and The Bank of New York Mellon
Trust Company, N.A., as Trustee, incorporated herein by reference to Exhibit 4.1 to the Registrant’s
Form 8-K Current Report filed on September 27, 2013. (Valley 5.125% sub debt due September 27,
2023).

First Supplemental Indenture, dated as of September 27, 2013, by and between Valley and The Bank
of New York Mellon Trust Company, N.A., as Trustee, including the form of the Notes attached as
Exhibit A thereto, incorporated herein by reference to Exhibit 4.2 to the Registrant’s Form 8-K Current
Report filed on September 27, 2013 (Valley 5.125% sub debt due September 27, 2023).

Warrant to purchase Common Stock of Valley National Bancorp, incorporated herein by reference
to Exhibit 4.1 to the Registrant’s Form 8-K Current Report filed on January 3, 2012 (No. 001-11277)
(Warrants to purchase at $11.87, exercisable until December 5, 2018).

Form of Warrant for the purchase of Valley Common Stock, incorporated herein by reference to
Exhibit A of Exhibit 4.1 to the Registrant’s Form 8-A filed on May 18, 2010 (No. 001-11277).

Indenture, dated as of June 19, 2015, by and between Valley and The Bank of New York Mellon Trust
Company, N.A., as Trustee, incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form
8-K Current Report filed on June 19, 2015. (Valley 4.55% sub debt due July 30, 2025).

First Supplemental Indenture, dated as of June 19, 2015, by and between Valley and The Bank of
New York Mellon Trust Company, N.A., as Trustee, including the form of the Notes attached as
Exhibit A thereto, incorporated herein by reference to Exhibit 4.2 to the Registrant’s Form 8-K
Current Report filed on June 19, 2015 (Valley 4.55% sub debt due July 30, 2025).

Agreement to provide SEC with Indentures not filed. (Item 601(b)(4)(iii)(A)).*

(10) Material Contracts:

Amended and Restated Change in Control Agreements among Valley National Bank, Valley and
Gerald H. Lipkin and Alan D. Eskow, dated June 22, 2011, incorporated herein by reference to Exhibits
10.A and 10.C to the Registrant’s Form 10-Q Quarterly Report filed on August 9, 2011 (No.
001-11277).+

Severance Agreement dated January 24, 2017 between Valley, Valley National Bank and Gerald H.
Lipkin, which replaced in full all predecessor severance and guaranteed retirement agreements,
incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed
on January 26, 2017.+

2017 Form 10-K

146

Term Sheet about Gerald H. Lipkin’s retirement as CEO, incorporated herein by reference to Exhibit
10.1 to the Registrant’s Form 8-K Current Report filed on November 15, 2017. +

Severance Agreement dated January 22, 2008 between Valley, Valley National Bank and Alan D.
Eskow, incorporated herein by reference to Exhibit 10.7 to the Registrant’s Form 8-K Current Report
filed on January 28, 2008 (No. 001-11277).+

Form of Amended and Restated Change in Control Agreement applicable to Executive Vice Presidents
of Valley National Bank and Valley, incorporated herein by reference to Exhibit 10.E to the
Registrant’s Form 10-Q Quarterly Report filed on August 9, 2011 (No. 001-11277).+

Valley National Bancorp 2010 Executive Incentive Plan, incorporated herein by reference to Exhibit
10 to the Registrant’s Form 8-K Current Report filed on April 19, 2010 (No. 001-11277).+

The Valley National Bancorp Benefit Equalization Plan, as Amended and Restated, incorporated
herein by reference to Exhibit 10 to the Registrant’s Form 10-Q Quarterly Report filed on November
6, 2015.+

Form of Participant Agreement for the Benefit Equalization Plan, incorporated herein by reference
to Exhibit 10.J to the Registrant's Form 10-K Annual Report for the year ended December 31, 2011
(No. 001-11277).+

The Valley National Bancorp 2004 Director Restricted Stock Plan, as amended, incorporated herein
by reference to Exhibit 10.L to the Registrant’s Form 10-K Annual Report for the year ended December
31, 2013.+

Form of Restricted Stock Award Agreement used in connection with Valley National Bancorp 2004
Director Restricted Stock Plan, incorporated herein by reference to Exhibit 10.M to the Registrant’s
Form 10-K Annual Report for the year ended December 31, 2010 (No. 001-11277).+

Valley National Bancorp 2009 Long-Term Stock Incentive Plan, as amended, incorporated herein by
reference to Exhibit 10.P to the Registrant’s Form 10-K Annual Report for the year ended December
31, 2014.+

Form of Valley National Bancorp Incentive Stock Option Agreement used in connection with Valley
National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit
10.1 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277).+

Form of Valley National Bancorp Non-Qualified Stock Option Agreement used in connection with
Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to
Exhibit 10.2 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277).+

Form of Valley National Bancorp Restricted Stock Award Agreement used in connection with Valley
National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit
10.3 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277).+

Form of Valley National Bancorp Escrow Agreement for Restricted Stock Award used in
connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated
herein by reference to Exhibit 10.4 to the Registrant’s Form 8-K Current Report filed on May 27,
2009 (No. 001-11277)+

Form of Valley National Bancorp Agreement for Performance Based Restricted Stock Unit Award
used in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan,
incorporated herein by reference to Exhibit 10.V to the Registrant's Form 10-K Annual Report for
the year ended December 31, 2014.+

Valley National Bancorp 2016 Long-Term Stock Incentive Plan, as amended, incorporated herein by
reference to Exhibit 10.1 to the Registrant’s Form 10-Q Quarterly Report filed on May 8, 2017.+

147

2017 Form 10-K

AA.

BB.

CC.

DD.

EE.

FF.

Form of Valley National Bancorp Agreement for Performance Based Restricted Stock Unit Award,
incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K Current Report filed
on May 2, 2016.+

Form of Valley National Bancorp Restricted Stock Award Agreement, incorporated herein by
reference to Exhibit 10.2 to the Registrant’s Form 10-Q Quarterly Report filed on May 8, 2017.+

Form of Valley National Bancorp Director Restricted Stock Award Agreement, incorporated herein
by reference to Exhibit 10.3 to the Registrant’s Form 10-Q Quarterly Report filed on May 8, 2017.+

Valley National Bancorp Deferred Compensation Plan, dated as of January 1, 2017, incorporated
herein by reference to Exhibit 10.S to the Registrant’s Form 10-K Annual Report for the year ended
December 31, 2016.+

Employment Agreement, dated as of May 7, 2014, by and among Rudy Schupp, Valley and Valley
National Bank, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current
Report filed on May 8, 2014.+

Amendment to the Employment Agreement, dated as of September 23, 2016, by and among Rudy
Schupp, Valley and Valley National Bank, incorporated herein by reference to Exhibit 10.1 to the
Registrant’s Form 10-Q Quarterly Report filed on November 8, 2016.+

Second Amendment to the Employment Agreement, dated as of October 31, 2017, by and among
Rudy Schupp, Valley and Valley National Bank, incorporated herein by reference to Exhibit 10.1
to the Registrant’s Form 8-K Current Report filed on November 2, 2017.+

Change in Control Agreement between Valley, Valley National Bank and Robert Bardusch dated
April 18, 2016, incorporated herein by reference to Exhibit 10.3 to the Registrant's Form 10-Q
Quarterly Report filed on August 8, 2016. +

Change in Control Severance Plan applicable to First Senior Vice Presidents and Senior Vice
Presidents who previously had or were eligible for change in control agreements, incorporated
herein by reference to Exhibit 10.4 to the Registrant’s Form 10-Q Quarterly Report filed on August
8, 2016.+

Severance Letter Agreement, dated as of September 21, 2016, between Valley National Bank,
Valley and Ira Robbins, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form
8-K Current Report filed on September 27, 2016.+

Amended and Restated Change in Control Agreement, dated as of September 21, 2016, among Valley
National Bank, Valley and Ira Robbins, incorporated herein by reference to Exhibit 10.2 to the
Registrant’s Form 8-K Current Report filed on September 27, 2016.+

Form of Change in Control Agreements for First Senior Vice Presidents and Senior Vice Presidents
who have not yet been brought into the Change in Control Plan, incorporated herein by reference to
Exhibit 10.AA to the Registrant’s Form 10-K Annual Report for the year ended December 31, 2016.+

Severance Letter Agreement, dated as of September 21, 2016, between Valley National Bank,
Valley and Thomas A. Iadanza, incorporated herein by reference to Exhibit 10.3 to the Registrant’s
Form 8-K Current Report filed on September 27, 2016.+

Amended and Restated Change in Control Agreement, dated as of September 21, 2016, among
Valley National Bank, Valley and Thomas A. Iadanza, incorporated herein by reference to Exhibit
10.4 to the Registrant’s Form 8-K Current Report filed on September 27, 2016.+

Severance Letter Agreement, dated as of January 3, 2017, between Valley, Valley National Bank
and Ronald H. Janis, incorporated herein by reference to Exhibit 10.DD to the Registrant’s Form
10-K Annual Report for the year ended December 31, 2016.+

2017 Form 10-K

148

GG.

HH.

II.

JJ.

KK.

LL.

Change in Control Agreement, dated as of January 3, 2017, between Valley, Valley National Bank
and Ronald H. Janis, incorporated herein by reference to Exhibit 10.EE to the Registrant’s Form
10-K Annual Report for the year ended December 31, 2016.+

Amended and Restated Change in Control Agreement dated June 28, 2017 between Valley, Valley
National Bank and Diane M. Grenz, incorporated herein by reference to Exhibit 10.2 to the
Registrant’s Form 10-Q Quarterly Report filed on August 7, 2017. +

Severance Agreement dated June 28, 2017 between Valley, Valley National Bank and Diane M.
Grenz, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 10-Q Quarterly
Report filed on August 7, 2017.+

USAmeriBancorp, Inc. 2006 Stock Option and Restricted Stock Plan, as amended, incorporated herein
by reference to Exhibit 99.1 to the Registrant’s Form S-8 Current Report filed on December 29,
2017.+

USAmeriBancorp, Inc. 2015 Long-Term Incentive Plan, incorporated herein by reference to Exhibit
99.2 to the Registrant’s Form S-8 Current Report filed on December 29, 2017.+

Form of Valley National Bancorp 2018 Performance Restricted Stock Unit Award Agreement used
in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan. +*

(12.1) Computation of Ratios of Earnings to Fixed Charges.*

(12.2) Computation of Ratios of Earnings to Fixed Charges Including Preferred Stock.*

(21) List of Subsidiaries:

149

2017 Form 10-K

(a)

Name
Subsidiaries of Valley:
Valley National Bank
GCB Capital Trust III
State Bancorp Capital Trust I
State Bancorp Capital Trust II

(b) Subsidiaries of Valley National Bank:

Hallmark Capital Management, Inc.
Highland Capital Corp.
Intracoastal Title Services of Florida, Inc.
Masters Coverage Corp.
New York Metro Title Agency, Inc.
Valley Commercial Capital, LLC
Valley National Title Services, Inc.
Valley Securities Holdings, LLC
VNB Loan Services, Inc.
VNB New York, LLC

Life Line Planning, Inc.
RISC One, Inc.
Subsidiaries of Valley Securities Holdings, LLC:
Shrewsbury Capital Corporation
Valley Investments, Inc.
VNB Realty, Inc.
Subsidiary of Shrewsbury Capital Corporation:
GCB Realty, LLC
Subsidiary of VNB Realty, Inc.:
VNB Capital Corp.

(d)

(e)

(f)

Jurisdiction of
Incorporation

Percentage of Voting
Securities Owned by the Parent
Directly or Indirectly

United States

Delaware
Delaware
Delaware

New Jersey
New Jersey
Florida
New York
New York
New Jersey
New Jersey
New Jersey
New York
New York

New York
New York

New Jersey
New Jersey
New Jersey

New Jersey

New York

100%
100%
100%
100%

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

100%
100%

100%
100%
100%

100%

(23)
(24)
(31.1) Certification of Ira Robbins, President and Chief Executive Officer of the Company, pursuant to Securities

Consent of KPMG LLP.*
Power of Attorney of Certain Directors and Officers of Valley.*

Exchange Rule 13a-14(a).*

(31.2) Certification of Alan D. Eskow, Senior Executive Vice President and Chief Financial Officer of the Company,

(32)

(101)

pursuant to Securities Exchange Rule 13a-14(a).*
Certification, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, signed by Ira Robbins, President and Chief Executive Officer of the Company and Alan D.
Eskow, Senior Executive Vice President and Chief Financial Officer of the Company.*
Interactive Data File. *

Filed herewith.

Management contract and compensatory plan or arrangement.

Item 16.

Form 10-K Summary

Not applicable.

2017 Form 10-K

150

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly

caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

VALLEY NATIONAL BANCORP

By:

/s/ IRA ROBBINS
Ira Robbins, President
and Chief Executive Officer

/s/ ALAN D. ESKOW
Alan D. Eskow,
Senior Executive Vice President
and Chief Financial Officer

Dated: March 1, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the Registrant and in the capacities indicated:

Signature

/S/ IRA ROBBINS

Ira Robbins

/S/ ALAN D. ESKOW
Alan D. Eskow

/S/ MITCHELL L. CRANDELL
Mitchell L. Crandell

GERALD H. LIPKIN*
Gerald H. Lipkin

ANDREW B. ABRAMSON*
Andrew B. Abramson

PETER J. BAUM*
Peter J. Baum

PAMELA R. BRONANDER*
Pamela R. Bronander

ERIC P. EDELSTEIN*
Eric P. Edelstein

MARY J. STEELE GUILFOILE*
Mary J. Steele Guilfoile

Title

Date

President and Chief Executive Officer

March 1, 2018

Senior Executive Vice President,
Chief Financial Officer
(Principal Financial Officer) and
Corporate Secretary

First Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)

Chairman of the Board and
Director

Director

March 1, 2018

151

2017 Form 10-K

Signature

GRAHAM O. JONES*
Graham O. Jones

GERALD KORDE*
Gerald Korde

MICHAEL L. LARUSSO*
Michael L. LaRusso

MARC J. LENNER*
Marc J. Lenner

SURESH L. SANI*
Suresh L. Sani

JENNIFER W. STEANS*
Jennifer W. Steans

JEFFREY S. WILKS*
Jeffrey S. Wilks

Director

/S/ ALAN D. ESKOW

Alan D. Eskow, attorney-in fact.

Title

Date

March 1, 2018

2017 Form 10-K

152

1455 VALLEY ROAD
WAYNE, NEW JERSEY 07470
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD, FRIDAY, APRIL 20, 2018

To Our Shareholders:

We invite you to the Annual Meeting of Shareholders of Valley National Bancorp ("Valley") to be held at 100 Furler Street,
Totowa, NJ on Friday, April 20, 2018 at 9:00 a.m., local time to vote on the following matters:

1. Election of 14 directors;

2. Ratification of the appointment of KPMG LLP as Valley's independent registered public accounting firm for

the fiscal year ending December 31, 2018;

3. An advisory vote on executive compensation; and
4. A shareholder proposal if properly presented at the Annual Meeting.

We provide access to our proxy materials to certain of our shareholders via the Internet instead of mailing paper copies of the
materials. This reduces both the amount of paper necessary to produce the materials and the costs associated with printing and
mailing the materials to all shareholders. The Notice of Internet Availability of Proxy Materials ("E-Proxy Notice"), which
contains instructions on how to access the notice of annual meeting, proxy statement and annual report on the Internet and how
to execute your proxy, is first being mailed to holders of our common stock on or about March 9, 2018. This notice also contains
instructions on how to request a paper copy of the proxy materials.

Only shareholders of record at the close of business on Tuesday, February 20, 2018 are entitled to notice of, and to vote at the
meeting. Your vote is very important. Whether or not you plan to attend the meeting, please vote in accordance with the
instructions provided in the E-Proxy Notice. If you receive paper copies of the proxy materials, please execute and return the
enclosed proxy card in the envelope provided or submit your proxy by telephone or the Internet as instructed on the enclosed
proxy card. The prompt return of your proxy will save Valley the expense of further requests for proxies.

Attendance at the meeting is limited to shareholders or their proxy holders and Valley guests. Only shareholders or their valid
proxy holders may address the meeting. Please allow ample time for the admission process. See information on page 3 –
"Annual Meeting Attendance."

If you accessed this proxy statement through the Internet after receiving an E-Proxy Notice, you may cast your vote by
telephone or over the Internet by following the instructions in that Notice. If you received this proxy statement by mail,
you may cast your vote by mail, by telephone or over the Internet by following the instructions on the enclosed proxy
card.

We appreciate your participation and interest in Valley.

Sincerely,

Alan D. Eskow
Corporate Secretary

Gerald H. Lipkin
Chairman

Wayne, New Jersey
March 9, 2018

Important notice regarding the availability of proxy materials for the 2018 Annual Meeting of Shareholders: This Proxy
Statement for the 2018 Annual Meeting of Shareholders, our 2017 Annual Report to Shareholders and the proxy card
or voting instruction form are available on our website at: http://www.valleynationalbank.com/filings.html.

2018 Proxy Statement

TABLE OF CONTENTS

PAGE

General Proxy Statement Information
Item 1 – Election of Directors
Item 2 – Ratification of the Appointment of Independent Registered Public Accounting Firm
Report of Audit Committee
Corporate Governance

Tenure and Refreshment
Board Leadership Structure and the Board’s Role in Risk Oversight
Director Independence
Executive Sessions of Non-Management Directors
Shareholder and Interested Parties Communications with Directors
Committees of the Board of Directors; Board of Directors Meetings
Compensation Consultants
Compensation as it Relates to Risk Management
Availability of Committee Charters
Nomination of Directors
Code of Conduct and Ethics and Corporate Governance Guidelines

Director Compensation
Stock Ownership of Management and Principal Shareholders
Executive Compensation

Compensation Discussion and Analysis ("CD&A")
Compensation Committee Report and Certification
Equity Compensation Plan Information
Summary Compensation Table
2017 Grants of Plan-Based Awards
Outstanding Equity Awards at Fiscal Year-End
2017 Stock Vested
2017 Pension Benefits
2017 Nonqualified Deferred Compensation
Other Potential Post-Employment Payments
CEO Pay Ratio

Item 3 – Advisory Vote on Executive Compensation
Compensation Committee Interlocks and Insider Participation
Certain Transactions with Management

Policy and Procedures for Review, Approval or Ratification of Related Person Transactions
Transactions

Section 16(a) Beneficial Ownership Reporting Compliance
Item 4 – Shareholder Proposal
Shareholder Proposals
Other Matters
Appendix A

2018 Proxy Statement

1
4
9
10
11
11
11
11
13
13
13
15
15
15
15
17
18
19
22
22
31
31
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46
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48
49
50

VALLEY NATIONAL BANCORP
1455 Valley Road
Wayne, New Jersey 07470

PROXY STATEMENT

GENERAL INFORMATION

We are providing this proxy statement in connection with the
solicitation of proxies by the Board of Directors of Valley
National Bancorp ("Valley," the "Company," "we," "our" and
"us") for use at Valley’s 2018 Annual Meeting of
Shareholders (the "Annual Meeting") and at any adjournment
or postponement of the meeting. You are cordially invited to
attend the meeting, which will be held at 100 Furler Street,
Totowa, NJ, on Friday, April 20, 2018 at 9:00 a.m., local time.
This proxy statement is first being made available to
shareholders on or about March 9, 2018.

E-PROXY

Pursuant to the rules of the Securities and Exchange
Commission ("SEC"), we are furnishing our proxy materials
to certain shareholders over the Internet. Most shareholders
are receiving by mail a Notice of Internet Availability of
Proxy Materials ("E-Proxy Notice"), which provides general
information about the annual meeting, the matters to be voted
on at the annual meeting, the website on which our proxy
statement and annual report are available for review, printing
and downloading, and instructions on how to submit proxy
votes. The E-Proxy Notice also provides instructions on how
to request a paper copy of the proxy materials and how to
elect to receive a paper copy of the proxy materials or
electronic copy of the proxy materials by e-mail for future
meetings.

Shareholders who are current employees of Valley or who
have elected to receive proxy materials via electronic delivery
will receive via e-mail the proxy statement, annual report and
instructions on how to vote. Shareholders who elect to
receive paper copies of the proxy materials will receive these
materials by mail.

The 2018 notice of annual meeting of shareholders, this proxy
statement, the Company’s 2017 annual report to shareholders
and the proxy card or voting instruction form are referred to
as our "proxy materials", and are available electronically at
the following website: http://www.valleynationalbank.com/
filings.html.

SHAREHOLDERS ENTITLED TO VOTE

The record date for the meeting is Tuesday, February 20,
2018. Only holders of common stock of record at the close
of business on that date are entitled to vote at the meeting.

On the record date there were 330,804,046 shares of common
stock outstanding. Each share is entitled to one vote on each
matter properly brought before the meeting.

HOUSEHOLDING

shareholders. Similarly, brokers

When more than one holder of our common stock shares the
same address, we may deliver only one E-Proxy Notice or
set of proxy materials, as applicable, to that address unless
we have received contrary instructions from one or more of
those
and other
intermediaries holding shares of Valley common stock in
"street name" for more than one beneficial owner with the
same address may deliver only one E-Proxy Notice or set of
proxy materials, as applicable, to that address if they have
received consent from the beneficial owners of the stock.

We will deliver promptly upon written or oral request a
separate copy of the E-Proxy Notice or set of proxy materials,
as applicable, to any shareholder of record at a shared address
to which a single copy of those documents was delivered. To
receive these additional copies, you may write or call Tina
Zarkadas, Assistant Vice President, Shareholder Relations
Specialist, Valley National Bancorp, at 1455 Valley Road,
Wayne, NJ 07470, telephone (973) 305-3380 or e-mail her
at tzarkadas@valleynationalbank.com. If your shares are
held in "street name", you should contact the broker or other
intermediary who holds the shares on your behalf to request
an additional copy of the E-Proxy Notice or set of proxy
materials.

If you are a shareholder of record and are either receiving
multiple E-Proxy Notices or multiple paper copies of the
proxy materials, as applicable, and wish to request future
delivery of a single copy or are receiving a single E-Proxy
Notice or copy of the proxy materials, as applicable, and wish
to request future delivery of multiple copies, please contact
Ms. Zarkadas at the address or telephone number above. If
your shares are held in "street name", you should contact the
broker or other intermediary who holds the shares on your
behalf.

PROXIES AND VOTING PROCEDURES

Your vote is important and you are encouraged to vote your
shares promptly. Each proxy submitted will be voted as
directed. However, if a proxy solicited by the Board of
Directors does not specify how it is to be voted, it will be
voted as the Board recommends—that is:

2018 Proxy Statement

•

Item 1 – FOR the election of each of the 14 nominees
for director named in this proxy statement;

Item 2 – FOR the ratification of the appointment of
KPMG LLP;

Item 3 – FOR the approval, on an advisory basis, of
the compensation of our named executive officers;
and

•

Item 4 – AGAINST the shareholder proposal.

We are offering you three alternative ways to vote your
shares:

BY INTERNET. If you wish to vote using the Internet, you
can access the web page at www.voteproxy.com and follow
the on-screen instructions or scan the QR code on your E-
Proxy Notice or proxy card with your smartphone. Have your
proxy card available when you access the web page.

BY TELEPHONE. If you wish to vote by telephone, call
toll-free 1-800-PROXIES (1-800-776-9437) in the United
States or 1-718-921-8500 from foreign countries from any
touch-tone telephone and follow instructions. Have your E-
Proxy Notice or proxy card available when you call.

BY MAIL. To vote your proxy by mail, please sign your
name exactly as it appears on your proxy card, date, and mail
your proxy card in the envelope provided as soon as possible.

Regardless of the method that you use to vote, you will be
able to vote in person or revoke your earlier proxy if you
follow the instructions provided below in the sections entitled
"Voting in Person" and "Revoking Your Proxy". If you are
a participant in the Company’s Dividend Reinvestment Plan,
the shares that are held in your dividend reinvestment account
will be voted in the same manner as your other shares, whether
you vote by mail, by telephone or by Internet.

If you are an employee or former employee of the Company,
and participate in our Savings and Investment Plan (a 401(k)
plan with an employee stock ownership feature—"KSOP"),
you will receive a separate proxy card representing the total
shares you own through this plan. The proxy card will serve
as a voting instruction form for the plan trustee. The plan
trustee will vote plan shares for which voting instructions are
not received in the same proportion as the shares for which
instructions were received under the plan.

VOTING IN PERSON. The method by which you vote will
not limit your right to vote at the meeting if you later decide
to attend in person. If your shares are held in the name of a
bank, broker or other holder of record, you must obtain a
proxy executed in your favor from the holder of record to be
able to vote at the meeting. If you submit a proxy and then
wish to change your vote or vote in person at the meeting,
you will need to revoke the proxy that you have submitted,
as described below.

2018 Proxy Statement

REVOKING YOUR PROXY

You can revoke your proxy at any time before it is exercised
by:

• Delivery of a properly executed, later-dated proxy;

• A written revocation of your proxy.

A later-dated proxy or written revocation must be received
before the meeting by the Corporate Secretary of the
Company, Alan D. Eskow, Valley National Bancorp, at 1455
Valley Road, Wayne, NJ 07470, or it must be delivered to
the Corporate Secretary at the meeting before proxies are
voted. You may also revoke your proxy by submitting a new
proxy via telephone or the Internet. You will be able to change
your vote as many times as you wish prior to the Annual
Meeting and the last vote received chronologically will
supersede any prior votes.

QUORUM REQUIRED TO HOLD THE ANNUAL
MEETING

The presence, in person or by proxy, of the holders of a
majority of the shares entitled to vote generally for the
election of directors is necessary to constitute a quorum at
the meeting. Abstentions and broker "non-votes" are counted
as present and entitled to vote for purposes of determining a
quorum. A broker "non-vote" occurs when a broker holding
shares for a beneficial owner does not vote on a particular
proposal because the broker does not have discretionary
power to vote with respect to that item and has not received
voting instructions from the beneficial owner. Brokers do
not have discretionary power to vote on the following items
absent instructions from the beneficial owner: the election of
directors, the advisory vote on executive compensation, or
the shareholder proposal.

REQUIRED VOTE

voted

• To be elected to a new term, directors must receive
a majority of the votes cast (the number of shares
voted "FOR" a nominee must exceed the number of
shares
nominee).
"AGAINST"
Abstentions and broker non-votes are not counted
as votes cast and have no effect on the election of a
director. If there is a contested election (which is not
the case in 2018), directors would be elected by a
plurality of votes cast at the Annual Meeting.

the

• The ratification of the appointment of KPMG LLP
will be approved if a majority of the votes cast are
voted FOR the proposal. Abstentions and broker
non-votes are not counted as votes cast and will have
no impact on the outcome.

• The advisory vote on executive compensation will
be approved if a majority of the votes cast are voted
FOR the proposal. Abstentions and broker non-

votes are not counted as votes cast and will have no
effect on the outcome.

• The shareholder proposal will be approved if a
majority of the votes cast are voted FOR the
proposal. Abstentions and broker non-votes are not
counted as votes cast and will have no impact on the
outcome.

ANNUAL MEETING ATTENDANCE

Only shareholders or their proxy holders and Valley guests
may attend the Annual Meeting. For registered shareholders
receiving paper copies or the proxy materials, an admission
ticket is attached to your proxy card. Please detach and bring
the admission ticket with you to the meeting. For other
registered shareholders, please bring your E-Proxy Notice to
be admitted to the meeting.

If your shares are held in street name, you must bring to the
meeting evidence of your stock ownership indicating that you
beneficially owned the shares on the record date for voting
and a valid form of photo identification to be allowed access.
If you wish to vote at the meeting, you must bring a proxy
executed in your favor from the holder of record.

METHOD AND COST OF PROXY SOLICITATION

This proxy solicitation is being made by our Board of
Directors and we will pay the cost of soliciting proxies.
Proxies may be solicited by officers, directors and employees
of the Company in person, by mail, telephone, facsimile or
other electronic means. We will not specially compensate
those persons for their solicitation activities. In accordance
with the regulations of the SEC and the New York Stock
Exchange ("NYSE"), we will reimburse brokerage firms and
other custodians, nominees and fiduciaries for their expense
incurred in sending proxies and proxy materials to their
customers who are beneficial owners of Valley common
stock. We are paying Laurel Hill Advisory Group, LLC - US
a fee of $8,500 plus out of pocket expenses to assist with
solicitation of proxies.

2018 Proxy Statement

ITEM 1

ELECTION OF DIRECTORS

DIRECTOR INFORMATION

Gerald H. Lipkin, 77

Chairman of the Board
Director since: 1986
Other directorships: Federal
Reserve Bank of New York
(FRBNY); Federal Home Loan
Bank of New York (FHLBNY)

Mr. Lipkin began his career at Valley in 1975 as a Senior
Vice President and lending officer, and has spent his entire
business career directly in the banking industry. He became
CEO and Chairman of Valley in 1989. Prior to joining Valley,
he spent 13 years in various positions with the Comptroller
of the Currency as a bank examiner and then Deputy Regional
Administrator for the New York region. Mr. Lipkin was
elected a Class A director to the Federal Reserve Bank of
New York in 2013. He serves on the Federal Home Loan
Bank of New York’s Board as a Member Director
representing New Jersey for a four year term that commenced
on January 1, 2018. Mr. Lipkin is a graduate of Rutgers
University where he earned a Bachelor’s Degree in
Economics. He received a Master’s Degree in Business
Administration in Banking and Finance from New York
University. He is also a graduate of the Stonier School of
Banking. Mr. Lipkin’s education, his over 52 years of
experience
in
conjunction with his leadership ability make him a valuable
member of our Board of Directors.

lending and commercial banking

We are asking you to vote for the election of directors. Under
our by-laws, the Board of Directors (the “Board”) fixes the
exact number of directors, with a minimum of 5 and a
maximum of 25. The number of directors has been fixed by
the Board at 14.

The persons named as proxies intend to vote the proxies FOR
the election of the 14 persons named below (unless the
shareholder otherwise directs). If, for any reason, any nominee
becomes unavailable for election and the Board selects a
substitute nominee, the proxies will be voted for the substitute
nominee selected by the Board. The Board has no reason to
believe that any of the named nominees is not available or will
not serve if elected. The Board retains the right to reduce the
number of directors to be elected if any nominee is not
available to be elected.

Each candidate for director has been nominated to serve a one-
year term until our 2019 annual meeting and thereafter until
the person’s successor has been duly elected and qualified. In
considering a candidate for director, the Board seeks to ensure
that the Board is composed of members whose particular
experience, qualifications, attributes and skills, as a whole, can
responsibilities effectively. To
satisfy
accomplish this, guidelines are set by the Nominating and
Corporate Governance Committee, further discussed below
under the Corporate Governance section.

its supervision

Set forth below are the names and ages of the Board’s nominees
for election; the nominees’ position with the Company (if any);
the principal occupation or employment of each nominee for
at least the past five years; the period during which each
nominee has served as our director; any other directorships
during the past five years held by the nominee with companies
registered pursuant to Section 12 of the Exchange Act of 1934,
as amended (the "Exchange Act") or subject to the
requirements of Section 15(d) of the Securities Exchange Act
or registered as an investment company under the Investment
Company Act of 1940; and other biographical information for
each individual director. In addition, described below is each
director nominee’s particular experience, qualification,
attributes or skills that has led the Board to conclude that the
person should serve as a director of Valley.

2018 Proxy Statement

Ira Robbins, 43

Mr. Abramson is a licensed real estate broker in the States
of New Jersey and New York. He graduated from Cornell
University with a Bachelor’s Degree, and a Master’s Degree,
both in Civil Engineering. With 38 years as a business owner,
an investor and developer in real estate, he brings
management, financial, and real estate market experience
and expertise to Valley’s Board of Directors.

President and Chief Executive
Officer of Valley National
Bancorp and Valley National
Bank.

Director since: 2018

Peter J. Baum, 62

Mr. Robbins joined Valley in 1996 as part of the Bank's
Management Associate Program and has held several key
positions throughout the Bank for over 20 years. In 2009, he
was awarded the title of First Senior Vice President and
Treasurer and he was promoted to Executive Vice President
in 2013. In 2016, Mr. Robbins was recognized for his
invaluable contributions to the Bank’s growth with a
promotion to Senior Executive Vice President. In 2017, he
was appointed as President of Valley National Bank and
assumed the role of CEO in 2018. Mr. Robbins serves as a
board member for the Jewish Vocational Service of
MetroWest NJ (JVS) and is also a member of the Morris
Habitat for Humanity Leadership Council. He is an active
supporter of several other philanthropic organizations
throughout the community as well. Mr. Robbins received a
Bachelor of Science Degree in Finance and Economics from
Susquehanna University and received his Masters of
Business Administration Degree in Finance from Pace
University. He is also a graduate of the Stonier Graduate
School of Banking. Mr. Robbins' education, his over 20 years
of experience in banking in conjunction with his leadership
ability make him a valuable member of our Board of
Directors.

Andrew B. Abramson, 64

Chief Financial Officer and
Chief Operating Officer, Essex
Manufacturing, Inc.
(manufacturer, importer and
distributor of consumer
products).

Director since: 2012

Mr. Baum joined Essex Manufacturing, Inc. in 1978 as an
Asian sourcing manager. Essex Manufacturing, Inc. has been
in business over 55 years and imports various consumer
products from Asia. Essex distributes these products to large
retail customers in the U.S. and globally. Mr. Baum graduated
from The Wharton School at the University of Pennsylvania
in 1978 with a B.S. in Economics. Mr. Baum brings over 36
years of business experience including as a business owner
for 20 years. Mr. Baum also brings financial experience and
expertise to Valley’s Board of Directors.

Pamela R. Bronander, 61

Vice President, KMC
Mechanical, Inc.; President,
Kaye Mechanical Contractors
LLC (mechanical contractor).

Director since: 1993

President and Chief Executive
Officer, Value Companies, Inc.
(a real estate development and
property management firm).

Director since: 1994

Ms. Bronander has full managerial responsibility for the
financial, operational, human resources, and legal aspects of
two mechanical contracting companies: K.M.C. Mechanical,
Inc. and Kaye Mechanical Contractors, LLC that serve the
Tristate area. Ms. Bronander was formerly an officer of
Scandia Packaging Machinery Company. She graduated
with a Bachelor’s Degree in Economics from Lafayette
College. Ms. Bronander brings years of general business,
managerial and small business financial expertise to Valley’s
Board of Directors.

2018 Proxy Statement

Eric P. Edelstein, 68

Consultant.

Director since: 2003

Mr. Edelstein is a former Director of Aeroflex, Incorporated
and Computer Horizon Corp.; former Executive Vice
President and Chief Financial Officer of Griffon Corporation
(a diversified manufacturing and holding company), and a
former Managing Partner at Arthur Andersen LLP (an
accounting firm). Mr. Edelstein was employed by Arthur
Andersen LLP for 30 years and held various roles in the
accounting and audit division, as well as the management
consulting division. He received his Bachelor’s Degree in
Business Administration and his Master’s Degree in
Professional Accounting from Rutgers University. With 31
years of experience as a practicing CPA and as a management
consultant, Mr. Edelstein brings in-depth knowledge of
generally accepted accounting and auditing standards as well
as a wide range of business expertise to our Board. He has
worked with audit committees and boards of directors in the
past and provides Valley’s Board of Directors with extensive
experience
in auditing and preparation of financial
statements.

Mary J. Steele Guilfoile, 64

Chairman of MG Advisors, Inc.
(financial services merger and
acquisition advisory and
consulting firm).

Director since: 2003

Other directorships:
Interpublic Group of
Companies, Inc., CH Robinson
Worldwide

Ms. Guilfoile is the former Executive Vice President and
Corporate Treasurer of J.P. Morgan Chase & Co. (a global
financial services firm) and a former Partner, Chief Financial
Officer and Chief Operating Officer of The Beacon Group, LLC
(a private equity, strategic advisory and wealth management
partnership). Ms. Guilfoile is Chairman of MG Advisors, Inc.
and is also a Partner of The Beacon Group L.P. (a private
investment group), a CPA, Chairman of the Audit Committee
of Interpublic Group of Companies, Inc., and was Chairman of
the Audit Committee of Viasys Healthcare, Inc. She received
her Bachelor’s Degree in Accounting from Boston College
Carroll School of Management and her Master’s Degree in
Business Administration with concentrations in strategic
marketing and finance from Columbia University Graduate
School of Business. With her wide range of professional
experience and knowledge, Ms. Guilfoile brings a variety of
business experience in corporate governance, risk management,
accounting, auditing, investment and management expertise to
Valley’s Board of Directors.

Graham O. Jones, 73

Partner and Attorney, law firm
of Jones & Jones.
Director since: 1997

Mr. Jones has been practicing law since 1969, with an
emphasis on banking law since 1980. He has been a Partner
of Jones & Jones since 1982 and served as the former
President and Director of Hoke, Inc., (manufacturer and
distributor of fluid control products). He was a Director and
General Counsel for 12 years at Midland Bancorporation,
Inc. and Midland Bank & Trust Company. Mr. Jones was a
partner at Norwood Associates II for 10 years and was a
President and Director for Adwildon Corporation (bank
holding company). Mr. Jones received his Bachelor’s
Degree from Brown University and his Juris Doctor Degree
from the University of North Carolina School of Law. With
his business and banking affiliations, including partnerships
and directorships, as well as professional and civic
affiliations, he brings a long history of banking law expertise
and a variety of business experience and professional
achievements to Valley’s Board of Directors.

2018 Proxy Statement

Gerald Korde, 74

Marc J. Lenner, 52

President, Birch Lumber
Company, Inc. (wholesale and
retail lumber distribution
company).
Director since: 1989

Mr. Korde is the owner of Birch Lumber Company, Inc. and
has various business
including real estate
interests
investment projects with Chelsea Senior Living and
Inglemoor Care Center of Livingston. He earned a
Bachelor’s Degree in Finance from the University of
Cincinnati. Mr. Korde’s years of general business and
managerial expertise, including his background as a former
owner and manager of motels, provides a long history of
entrepreneurship and managerial knowledge that brings
value to Valley’s Board of Directors.

Michael L. LaRusso, 72

Financial Consultant.

Director since: 2004

Mr. LaRusso is a former Executive Vice President and a
Director of Corporate Monitoring Group at Union Bank of
California. He held various positions as a federal bank
regulator with the Comptroller of the Currency for 23 years
and assumed a senior bank executive role for 15 years in
large regional and/or multinational banking companies
(including Wachovia, Citicorp and Union Bank of
California). He holds a Bachelor’s Degree in Finance from
Seton Hall University and he is also a graduate of the Stonier
School of Banking. Mr. LaRusso’s extensive management
and leadership experience with these financial institutions
positions him well to serve on Valley’s Board of Directors.

Chief Executive Officer and
Chief Financial Officer of
Lester M. Entin Associates (a
real estate development and
management company).
Director since: 2007

Mr. Lenner became the Chief Executive Officer and Chief
Financial Officer at Lester M. Entin Associates in January
2000 after serving in various other executive positions within
the company. He has experience in multiple areas of
commercial real estate markets throughout the country (with
a focus in the New York tri-state area), including
management, acquisitions, financing, development and
leasing. Mr. Lenner is the Co-Director of a charitable
foundation where he manages a multi-million dollar equity
and bond portfolio. Prior to Lester M. Entin Associates, he
was employed by Hoberman Miller Goldstein and Lesser,
P.C., an accounting firm. He attended Muhlenberg College
where he earned a Bachelor’s Degree in both Business
Administration and Accounting. With Mr. Lenner’s financial
and professional background, he provides management,
finance and real estate experience to Valley’s Board of
Directors.

Suresh L. Sani, 53

President, First Pioneer
Properties, Inc. (a commercial
real estate management
company).

Director since: 2007

Mr. Sani is a former associate at the law firm of Shea &
Gould. As president of First Pioneer Properties, Inc., he is
responsible for the acquisition, financing, developing,
leasing and managing of real estate assets. He has over 26
years of experience in managing and owning commercial
real estate in Valley’s lending market area. Mr. Sani
received his Bachelor’s Degree from Harvard College and
a Juris Doctor Degree from the New York University
School of Law. He brings a legal background, small
business network management and real estate expertise to
Valley’s Board of Directors.

2018 Proxy Statement

Jennifer W. Steans, 54

Jeffrey S. Wilks, 58

President and CEO, Financial
Investments Corporation,
("FIC"), a private asset
management firm.

Director since: 2018

Other directorships: MB
Financial, Inc.
USAmeriBancorp, Inc.

Ms. Steans is the President and CEO of Financial
Investments Corporation
(“FIC”), a private asset
management firm, where she oversees private equity
investments and the Steans Family Office operations. Ms.
Steans served as the Chairman of USAmeriBancorp, Inc.,
from its organization in 2006 until it was acquired by Valley
on January 1, 2018. Ms. Steans also served as a director of
MB Financial, Inc. (MBFI) a publicly traded regional bank
holding company located in Chicago, from August 2014 until
January 1, 2018 when she resigned to become a director of
Valley. From 2008 until it was acquired by MB Financial
in August 2014, Ms. Steans served as a director of Cole
Taylor Bank and Taylor Capital. She is a director of a
variety of privately held entities including Provest Holdings,
LLC, Centerline Solutions, and Catastrophe Solutions
International. In addition, she serves on the Advisory Board
for Carlyle Asia Growth Partners III, LP, Laramar Multi-
Family Value Fund, Resource Land Fund, and Siena Capital
Partners. Ms. Steans also serves on a number of nonprofit
entities, including the Chicago Foundation for Women,
Kellogg Advisory Board, and RUSH University Medical
Center. Ms. Steans received a BS from Davidson College
and an MBA from The Kellogg School of Management at
Northwestern University. Ms. Steans brings to the Board a
strong financial background, experience and knowledge
about banking strategy from serving on the boards of other
bank holding companies and diverse business experience
from her service as a director of private companies.

Principal and Executive Vice
President of Spiegel Associates
(a real estate ownership and
development company).

Director since: 2012

Other directorships: State
Bancorp, Inc.

Mr. Wilks served as a director of State Bancorp, Inc. from
2001 to 2011 and was appointed to Valley’s Board of
Directors in connection with Valley’s acquisition of State
Bancorp, Inc., effective January 1, 2012. From 1992 to 1995
Mr. Wilks was an Associate Director of Sandler O’Neill, an
investment bank specializing in the banking industry. Prior
to that, Mr. Wilks was a Vice President of Corporate Finance
at NatWest USA and Vice President of NatWest USA Capital
Corp. and NatWest Equity Corp., each an investment affiliate
of NatWest USA. Mr. Wilks serves on the board of directors
of the New Cassell Business Association, is a member of the
Board of Trustees of Central Synagogue, New York, is a
member of the board of the Museum at Eldridge Street, and
is a member of the Board of City Parks Foundation. Mr.
Wilks served as Director of the Banking and Finance
Committee of the UJA - Federation of New York from 1991
to 2001. Mr. Wilks earned his BSBA in Accounting and
Finance from Boston University. Mr. Wilks brings
experience in banking, finance and investments to Valley’s
Board of Directors.

RECOMMENDATION ON ITEM 1

THE VALLEY BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE NOMINATED
SLATE OF DIRECTORS.

2018 Proxy Statement

ITEM 2

RECOMMENDATION ON ITEM 2

THE VALLEY BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” RATIFICATION
OF THE APPOINTMENT OF KPMG AS VALLEY’S
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2018.

RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

The Audit Committee has appointed KPMG LLP ("KPMG")
as our independent registered public accounting firm to audit
Valley’s financial statements for 2018. We are asking you to
ratify that appointment.

KPMG audited our books and records for the years ended
December 31, 2017, 2016 and 2015. The fees billed for
services rendered to us by KPMG for the years ended
December 31, 2017 and 2016 were as follows:

Audit fees
Audit-related fees (1)
Tax fees (2)
All other fees (3)
Total

2017
$ 1,352,750
330,000
15,724
0

2016
$ 1,332,750
291,000
6,345
0

$ 1,698,474

$ 1,630,095

__________
(1) Fees paid for benefit plan audits and a review of Form S-4

registration statements and related expert consents.

(2) Includes fees rendered in connection with tax services relating to

state and local matters.

(3) KPMG did not provide "other services" during 2016 or 2017.

The Audit Committee maintains a formal policy concerning
the pre-approval of audit and non-audit services to be
provided by its independent registered public accountants to
Valley. The policy requires that all services to be performed
by KPMG, including audit services, audit-related services
and permitted non-audit services, be pre-approved by the
Audit Committee. Specific services being provided by the
independent accountants are
in
accordance with the pre-approval policy. At each subsequent
Audit Committee meeting, the Audit Committee receives
updates on the services actually provided by the independent
registered public accountants, and management may also
present additional services for pre-approval.

reviewed

regularly

All services rendered by KPMG are permissible under
applicable laws and regulations, and the Audit Committee
pre-approved all audit, audit-related and non-audit services
performed by KPMG during fiscal 2017. Representatives of
KPMG will be available at the annual meeting and will have
the opportunity to make a statement and answer appropriate
questions from shareholders.

2018 Proxy Statement

During the course of 2017, management regularly discussed
the internal control review and assessment process with the
Audit Committee, including the framework used to evaluate
the effectiveness of such internal control, and at regular
intervals updated the Audit Committee on the status of this
process and actions taken by management to respond to issues
identified during this process. The Audit Committee also
this process with KPMG. Management’s
discussed
assessment report and the auditor’s attestation report are
included as part of the 2017 Annual Report on Form 10-K.

Eric P. Edelstein, Chairman
Andrew B. Abramson
Peter J. Baum
Gerald Korde
Michael L. LaRusso
Suresh L. Sani
Jeffrey S. Wilks

REPORT OF THE AUDIT COMMITTEE

February 26, 2018

To the Board of Directors of Valley National Bancorp:

Management is responsible for the preparation, presentation
and integrity of the Company’s financial statements,
accounting and financial reporting principles, internal
controls, and procedures designed to ensure compliance with
accounting standards, applicable laws and regulations. The
Company’s independent registered public accounting firm,
KPMG LLP ("KPMG"), performs an annual independent
audit of the financial statements and expresses an opinion on
the conformity of those financial statements with U.S.
generally accepted accounting principles.

The following is the report of the Audit Committee with
respect to the audited financial statements for fiscal year
2017. With respect to fiscal year 2017, the Audit Committee
has:

•

reviewed and discussed Valley’s audited financial
statements with management and KPMG;

discussed with KPMG the scope of its services,
including its audit plan;

reviewed Valley’s internal control procedures;

discussed with KPMG the matters required to be
discussed by Auditing Standard No. 1301, adopted
by the Public Company Accounting Oversight
Board;

received the written disclosures and the letter from
KPMG required by applicable requirements of the
Public Company Accounting Oversight Board
regarding KPMG’s communications with the Audit
Committee
and
discussed with KPMG their independence from
management and Valley; and

independence,

concerning

•

approved the audit and non-audit services provided
during fiscal year 2017 by KPMG.

Based on the foregoing review and discussions, the Audit
Committee approved the audited financial statements to be
included in our Annual Report on Form 10-K for fiscal year
2017.

to Section 404 of

the Sarbanes-Oxley Act,
Pursuant
management is required to prepare as part of the Company’s
2017 Annual Report on Form 10-K, a report by management
on its assessment of the Company’s internal control over
financial reporting, including management’s assessment of
the effectiveness of such internal control. KPMG is also
required by Section 404 to prepare and include as part of the
Company’s 2017 Annual Report on Form 10-K, the auditors’
attestation report on management’s assessment.

2018 Proxy Statement

CORPORATE GOVERNANCE

Our business and affairs are managed under the direction of
the Board of Directors. Members of the Board are kept
informed of Valley’s business through discussions with the
Chairman and our other officers, by reviewing materials
provided to them and by participating in meetings of the
Board and its committees. All members of the Board also
serve as directors of our subsidiary bank, Valley National
Bank (the “Bank”). It is our policy that all directors attend
the annual meeting absent a compelling reason, such as
family or medical emergencies. In 2017, all directors then
serving attended our annual meeting.

Our Board of Directors believes that the purpose of corporate
governance is to ensure that we maximize shareholder value
in a manner consistent with legal requirements and safe and
sound banking principles. The Board has adopted corporate
governance practices which
the Board and senior
management believe promote this purpose. Periodically,
these governance practices, as well as the rules and listing
standards of the NYSE and the regulations of the SEC, are
reviewed by senior management, legal counsel and the Board.

TENURE AND REFRESHMENT

The Board believes its policies provide for refreshment and
tenure limits. With respect to refreshment, Ms. Steans and
Mr. Robbins were added in 2018, Messrs. Wilks and Baum
were added in 2012, and Messrs. Sani and Lenner were added
in 2007. Mr. Barnett Rukin retired from the Board in 2017.
In measuring appropriate tenure and refreshment, the Board
takes into account that in most cases it takes a significant
number of years for new directors to become familiar with
bank regulatory issues, longer than in non-regulated
industries.

BOARD LEADERSHIP STRUCTURE AND THE
BOARD’S ROLE IN RISK OVERSIGHT

Chairman and CEO Roles. During 2017, our Board was led
by Gerald H. Lipkin, who was the Chairman of the Board
and CEO, and Andrew B. Abramson, who is our Lead
Director. Effective January 1, 2018, Mr. Lipkin retired as our
CEO and Ira Robbins was named our President and CEO and
became a member of our Board. Mr. Lipkin continues to serve
as our Chairman of the Board (in a non-executive capacity
commencing upon his retirement as CEO).

Our Board is currently comprised of 14 directors, of whom
ten are independent under NYSE guidelines. The Board has
three standing independent committees with separate
chairpersons - an Audit Committee, a Nominating and
Corporate Governance Committee, and a Compensation and
Human Resources Committee. We also have a Risk
Committee which is responsible for overseeing risk
management. In addition, our Audit Committee engages in
oversight of financial statement risk exposures and our full

Board regularly engages in discussions of risk management
and receives reports on risk factors from our executive
management, other Company officers and the chairman of
the Risk Committee.

Lead Director. The Board created the position of Lead
Director and each year since 2014 has appointed Mr.
Abramson as its Lead Director. In accordance with our
corporate governance guidelines, our non-management
directors meet in executive session regularly and our
independent directors meet in executive session at least twice
a year. These meetings are chaired by Mr. Abramson in his
role as Lead Director.

In planning for the succession of Mr. Lipkin as CEO, the
Board carefully reviewed the Board’s leadership structure
and determined that it would be appropriate to separate the
roles of the Chairman of the Board and CEO, effective upon
Mr. Lipkin’s retirement. The Board believes that maintaining
Mr. Lipkin’s continuing service as non-executive Chairman
of the Board following his retirement as Chief Executive
Officer provides the most effective leadership model for our
Board and our Company. In making this determination, the
Board considered the advantages to the Company of
maintaining the continuity of Mr. Lipkin’s effective
leadership as Chairman of the Board based on, among other
factors, his leadership skills, his extensive knowledge and
experience in lending and commercial banking, as well as his
ability to promote communication between our Board and
our senior management. The Board also believes this revised
leadership structure continues
to ensure significant
independent oversight of management as Mr. Robbins is the
only member of the Board who is also an employee of the
Company, and Mr. Lipkin, Mr. Robbins, Mr. Jones and Ms.
Guilfoile are the only members of the Board who do not meet
in our director
the
independence guidelines and the independence guidelines
established by the NYSE.

independence criteria set forth

DIRECTOR INDEPENDENCE

The Board has determined that a majority of the directors and
all current members of the Nominating and Corporate
Governance, Compensation and Human Resources, and
Audit Committees are “independent” for purposes of the
independence standards of the NYSE, and that all of the
members of the Audit Committee are also “independent” for
purposes of Section 10A(m)(3) of Exchange Act. The Board
based these determinations primarily on a review of the
responses of the directors to questions regarding employment
and transaction history, affiliations and family and other
relationships and on discussions with the directors. Our
independent directors are: Andrew B. Abramson, Peter J.
Baum, Pamela R. Bronander, Eric P. Edelstein, Gerald Korde,
Michael L. LaRusso, Marc J. Lenner, Suresh L. Sani,
Jennifer W. Steans and Jeffrey S. Wilks.

2018 Proxy Statement

To assist in making determinations of independence, the
Board has concluded that the following relationships are
immaterial and that a director whose only relationships with
the Company fall within these categories is independent:

• A loan made by the Bank to a director, his or her
immediate family or an entity affiliated with a
director or his or her immediate family, or a loan
personally guaranteed by such persons if such loan
(i) complies with federal regulations on insider
loans, where applicable; and (ii) is not classified by
the Bank’s credit risk department or independent
loan review department, or by any bank regulatory
agency which supervises the Bank;

• A deposit, trust, insurance brokerage, investment
advisory, securities brokerage or similar customer
relationship between Valley or its subsidiaries and
a director, his or her immediate family or an affiliate
of his or her immediate family if such relationship
is on customary and usual market terms and
conditions;

• The employment by Valley or its subsidiaries of any
immediate family member of the director if the
family member serves below the level of a senior
vice president;

• Annual contributions by Valley or its subsidiaries to
any charity or non-profit corporation with which a
director is affiliated if the contributions do not
exceed an aggregate of $100,000 in any calendar
year;

•

Purchases of goods or services by Valley or any of
its subsidiaries from a business in which a director
or his or her spouse or minor children is a partner,
shareholder or officer, if the director, his or her
spouse and minor children own five percent (5%) or
less of the equity interests of that business and do
not serve as an executive officer of the business; or

Purchases of goods or services by Valley, or any of
its subsidiaries, from a director or a business in
which the director or his or her spouse or minor
children is a partner, shareholder or officer if the
annual aggregate purchases of goods or services
from the director, his or her spouse or minor children
or such business in the last calendar year does not
exceed the greater of $120,000 or five percent
(5%) of the gross revenues of the business.

The Board considered the following categories of items for each director it determined was independent together with the
information set forth under "Certain Transactions with Management":

Trust Services/
Assets
Under Management

Banking Relationship with
VNB

Professional
Services to
Valley

Name

Loans*

Andrew B. Abramson

Peter J. Baum

Commercial and Residential
Mortgages, Personal and Commercial
Line of Credit

Commercial and Personal
Mortgage

Pamela R. Bronander

Eric P. Edelstein

Gerald Korde

Commercial and Personal Line of
Credit, Home Equity

Residential Mortgage

Commercial, Commercial Mortgage
and Personal Line of Credit

Michael L. LaRusso

Personal Line of Credit

Trust Services

None

Commercial Mortgage, Residential
Mortgage, Personal Line of Credit
and Home Equity

Trust Services

Commercial Mortgage

None

Commercial Mortgage, Personal Line
of Credit

None

Marc J. Lenner

Suresh L. Sani

Jennifer W. Steans

Jeffrey S. Wilks

____________

* In compliance with Regulation O.

2018 Proxy Statement

Checking, Savings,
Certificate of
Deposit

Checking

Checking, Savings,
Certificate of
Deposit

Checking

Checking, Money
Market

Checking, Money
Market, Certificate
of Deposit, IRA

Checking, Money
Market

Money Market

Checking

None

EXECUTIVE SESSIONS OF NON-MANAGEMENT
DIRECTORS

Valley’s Corporate Governance Guidelines require the Board
to hold separate executive sessions for both independent and
non-management directors. The Board holds an executive
session at least twice a year with only independent directors
and regularly holds an executive session with only non-
management directors. In each instance the Lead Director is
the presiding director for the session.

SHAREHOLDER AND INTERESTED PARTIES
COMMUNICATIONS WITH DIRECTORS

The Board of Directors has established the following
party
procedures
communications with the Board of Directors or with the Lead
Director of the Board:

shareholder

interested

for

•

Shareholders or interested parties wishing to
communicate with the Board of Directors, the non-
management or independent directors, or with the
Lead Director should send any communication to
Valley National Bancorp, c/o Alan D. Eskow,
Corporate Secretary, at 1455 Valley Road, Wayne,
NJ 07470. Any such communication should state
the number of shares owned by the shareholder.

• The Corporate Secretary will forward such
communication to the Board of Directors or, as
appropriate, to the particular committee chairman
or to the Lead Director, unless the communication
is a personal or similar grievance, a shareholder
proposal or related communication, an abusive or
inappropriate communication, or a communication
not related to the duties or responsibilities of the
Board of Directors in which case the Corporate
Secretary has the authority to determine the
appropriate disposition of the communication. All
such communications will be kept confidential to
the extent possible.

• The Corporate Secretary will maintain a log and
copies of all such communications for inspection
and review by any Board member or by the Lead
Director, and will regularly review all such
communications with the Board or the appropriate
committee chairman or with the Lead Director at the
next meeting.

COMMITTEES OF THE BOARD OF DIRECTORS;
BOARD OF DIRECTORS MEETINGS

In 2017, the Board of Directors maintained an Audit
Committee, a Nominating and Corporate Governance
Committee, and a Compensation and Human Resources
Committee. Only independent directors serve on these
committees. In addition to these committees, the Company
and the Bank also maintain a number of committees to

oversee other areas of Valley’s operations. These include an
Executive Committee, Community Reinvestment Act
("CRA") Committee, Investment Committee, Pension/
Savings & Investment Trustees Committee, Risk Committee,
Strategic Planning Committee and a Trust Committee, all of
which have both independent and non-independent directors,
as permitted by the SEC and the NYSE.

Each director attended at least 76% or more of the meetings
of the Board of Directors and of each committee on which
he or she served for the year ended December 31, 2017. Our
Board met 10 times during 2017 and the Bank’s Board met
10 times during 2017.

The following table presents 2017 membership information
for each of our Audit, Nominating and Corporate
Governance, and Compensation and Human Resources
Committees.

Name

Audit

Nominating
and
Corporate
Governance

Compensation
and
Human
Resources

Andrew B. Abramson

Peter J. Baum

Pamela R. Bronander

Eric P. Edelstein

Gerald Korde

Michael L. LaRusso

Marc J. Lenner

Suresh L. Sani

Jeffrey S. Wilks

2017 Number of
Meetings*

____________

(Chair)

* Includes telephonic meetings.

AUDIT COMMITTEE. The Audit Committee formally
met 5 times during 2017. In addition, the Committee
Chairman and Risk Committee Chairman met with the Chief
Audit Executive and Chief Risk Officer of Valley monthly
for the purpose of communicating closely with those officers
and receiving updates on significant developments. The
Board of Directors has determined that each member of the
Audit Committee is financially literate and that more than
one member of the Audit Committee has the accounting or
related financial management expertise required by the
NYSE. The Board of Directors has also determined that
Mr. Edelstein, Mr. LaRusso and Mr. Wilks meet the SEC
criteria of an “Audit Committee Financial Expert.” The
charter for the Audit Committee can be viewed at our website
www.valleynationalbank.com/charters. The charter gives the
Audit Committee the authority and responsibility for the
appointment, retention, compensation and oversight of our
independent registered public accounting firm, including pre-
approval of all audit and non-audit services to be performed
by our independent registered public accounting firm. Each

2018 Proxy Statement

member of the Audit Committee is independent under the
NYSE listing rules. Other responsibilities of the Audit
Committee pursuant to the charter include:

• Reviewing the scope and results of the audit with
Valley’s independent registered public accounting
firm;

• Reviewing with management and Valley’s
independent registered public accounting firm
Valley’s interim and year-end operating results
including SEC periodic reports and press releases;

• Considering the appropriateness of the internal
accounting and auditing procedures of Valley;

• Considering

the

independence of Valley’s

independent registered public accounting firm;

• Overseeing the internal audit function;

• Reviewing

the

and
significant
recommended action plans prepared by the internal
audit
together with management’s
response and follow-up; and

function,

findings

• Reporting to the full Board on significant matters
coming to the attention of the Audit Committee.

NOMINATING AND CORPORATE GOVERNANCE
COMMITTEE. The Nominating
and Corporate
Governance Committee met 7 times during 2017. This
Committee reviews qualifications of and recommends to the
Board candidates for election as director of Valley, considers
the composition of the Board, and recommends committee
assignments. The Nominating and Corporate Governance
Committee also reviews and as appropriate approves all
related party transactions in accordance with our Related
Party Policy. The Nominating and Corporate Governance
Committee is responsible for approving and recommending
to the Board our corporate governance guidelines which
include:

• Director qualifications and standards;

• Director responsibilities;

• Director orientation and continuing education;

• Limitations on Board members serving on other

boards of directors;

• Director access to management and records;

• Criteria for the annual self-assessment of the Board,

and its effectiveness; and

• Responsibilities of the Lead Director.

The Nominating and Corporate Governance Committee
reviews recommendations from shareholders regarding

2018 Proxy Statement

corporate governance and director candidates. The procedure
for submitting recommendations of director candidates is set
forth below under the caption “Nomination of Directors.”
Each member of the Nominating and Corporate Governance
Committee is independent under NYSE listing rules. The
charter for the Nominating and Corporate Governance
our website
Committee
www.valleynationalbank.com/charters.

viewed

can

compensation,

determines CEO

COMPENSATION AND HUMAN RESOURCES
COMMITTEE. The Compensation and Human Resources
Committee formally met 6 times during 2017. This
Committee
sets
compensation levels for directors and sets compensation for
named executive officers ("NEOs") and other executive
officers. It also administers our Executive Incentive Plan and
the 2016 Long-Term Stock Incentive Plan, and makes awards
pursuant to those plans. The charter for the Committee can
be viewed on our website at www.valleynationalbank.com/
charters. Each member of the Compensation and Human
Resources Committee is independent under NYSE listing
rules.

The Board has delegated the responsibility for executive
compensation matters to the Compensation and Human
Resources Committee. The minutes of the Committee
meetings are provided at Board meetings and the chairman
of the Committee reports to the Board significant issues dealt
with by the Committee.

In January 2018, in undertaking its responsibilities, the
Committee received from the CEO recommendations (except
those that relate to his compensation) for salary, non-equity
incentive awards, restricted stock and restricted stock unit
awards for NEOs and other executive officers. After
considering the possible payments and discussing the
recommendations with the CEO, the Committee met in
executive session to make the final decisions on these
elements of compensation.

Under authority delegated by the Committee, all other
employee salaries and non-equity compensation are
determined by executive management. For stock awards,
based on operational considerations, prior awards and staff
numbers, a block of shares is allocated by the Committee.
The individual restricted stock and restricted stock unit
awards are then allocated by the CEO and his executive staff
to these non-executive officers and employees.

Under authority delegated by the Committee, during the year,
the CEO is authorized, within certain numerical limits, to
make stock awards in specific circumstances: special
incentive awards for non-officers, retention awards, awards
to new employees and grants on completion of advanced
degrees.

All awards not specifically approved in advance by the
Committee, but awarded under the authority delegated, are

reported to the Committee at its next meeting at which time
the Committee ratifies the action taken.

COMPENSATION CONSULTANTS

In 2017 the Committee in its sole discretion engaged Fredrick
W. Cook & Co. ("FW Cook") as its compensation consultant.
FW Cook was engaged to review compensation and
performance data of a peer group of comparable financial
organizations that had been selected by the Committee upon
the recommendation of FW Cook and in relation to this data,
provide an overview and comments on Valley’s executive
compensation and director compensation. Also, FW Cook
was requested to provide information relating to market
trends in executive compensation matters. FW Cook has
reviewed and provided comments on the compensation
disclosures contained in this proxy statement. FW Cook also
was requested to and provided market trends and advice on
executive succession planning.

COMPENSATION AS IT RELATES TO RISK
MANAGEMENT

The Chief Risk Officer evaluated all incentive-based
compensation for all employees of the Company and reported
to the Compensation and Human Resources Committee that
none of our incentive-based awards individually, or taken
together, was reasonably likely to have a material adverse
effect on Valley. None of the other forms of compensation
or incentives for Valley employees were considered as
encouraging undue or unwarranted risk. The Compensation
and Human Resources Committee accepted the Chief Risk
Officer’s report.

AVAILABILITY OF COMMITTEE CHARTERS

The Audit Committee, Nominating and Corporate
Governance Committee, and Compensation and Human
Resources Committee each operate pursuant to a separate
written charter adopted by the Board. Each committee
reviews its charter at least annually. All of the committee
charters
website
viewed
www.valleynationalbank.com/charters. Each charter is also
available in print to any shareholder who requests it. The
information contained on the website is not incorporated by
reference or otherwise considered a part of this document.

can

our

NOMINATION OF DIRECTORS

Nominations of directors for election to the Board may only
be made at an annual meeting of shareholders, or at any
special meeting of shareholders called for the purpose of
electing directors by our Board of Directors, or, as described
in more detail below, by any shareholder of the Company
who meets the eligibility and notice requirements set forth in
our By-laws, as amended in December 2016.

Shareholder Nominations Not for Inclusion in our Proxy
Statement. Under our By-laws, to be eligible to submit a
director nomination not for inclusion in our proxy materials

but instead to be presented directly at the annual meeting, the
shareholder must be a shareholder of record on both (i) the
date the shareholder submits the notice of the director
nomination to the Company and (ii) the record date for the
annual meeting. The notice must be in proper written form
and be timely received by the Company. To be in proper
written form, the notice must meet all of the requirements
specified in Article I, Section 3 of our By-laws, including
specified information regarding the shareholder making the
nomination and the proposed nominee. To be timely for our
2019 annual meeting, the notice must be received by our
Secretary at our Wayne, New Jersey office no later than
December 21, 2018 nor earlier than November 21, 2018. If
the annual meeting is called for a date that is not within 30
days before or after the anniversary date of our 2018 annual
meeting date, notice will be timely if it is received by the
Secretary no later than the close of business on the 10th day
following the date on which public announcement of the
annual meeting is first made by the Company.

Shareholder Nominations for Inclusion in our Proxy
Statement. Our By-laws provide that if certain requirements
are met, an eligible shareholder or group of eligible
shareholders may include their director nominees in the
Company’s annual meeting proxy materials. This is
commonly referred to as proxy access.

The proxy access provisions of our By-Laws provide, among
other things, that a shareholder or group of up to twenty
shareholders seeking to include director nominees in our
proxy materials must own 3% or more of our outstanding
common stock continuously for at least three years. The
number of proxy access nominees appearing in any annual
meeting proxy statement cannot exceed the greater of two or
20% of the number of directors then serving on the Board.
If 20% is not a whole number, the maximum number of proxy
access nominees would be the closest whole number below
20%. A nominee who is included in our proxy materials but
withdraws from or becomes ineligible or unavailable for
election at the annual meeting, or does not receive at least
25% of the votes cast for his or her election, will not be eligible
for nomination by a shareholder for the next two annual
meetings. The nominating shareholder or group of
shareholders also must deliver the information required by
our By-laws, and each nominee must meet the qualifications
required by our By-laws.

Requests to include director nominees in our proxy materials
for our 2019 annual meeting must be received by our
Secretary at our Wayne, New Jersey office no earlier than
October 10, 2018 and no later than November 9, 2018. If the
annual meeting is called for a date that is not within 30 days
before or after the anniversary date of our 2018 annual
meeting date, notice will be timely if it is received by the
Secretary no later than the close of business on the 10th day
following the date on which public announcement of the
annual meeting is first made by the Company.

2018 Proxy Statement

Director Qualifications. The Board of Directors has
established criteria for members of the Board. These include:

their financial dealings with Valley, the Bank and
the community;

• The maximum age for an individual to join the
Board is age 60, except that such limitation is
inapplicable to a person who, when elected or
appointed, is a member of senior management, or
who was serving as a member of the Board of
Directors of another company at the time of its
acquisition by Valley;

• A director is eligible for reelection if the director has
not attained age 76 before the time of the annual
meeting of the Company’s shareholders. However,
the Board in its discretion may extend this age limit
for not more than one year at a time for any director,
if the Board determines that the director’s service
for an additional year will sufficiently benefit the
Company;

• Each Board member must demonstrate that he or
she is able to contribute effectively regardless of
age;

• Each Board member must be a U.S. citizen and
comply with all qualifications set forth in 12 USC
§72;

• A majority of the Board members must maintain
their principal residences in New Jersey, New York,
Florida or 100 miles from the Bank's principal
office;

• Each Board member must own a minimum of
20,000 shares of our common stock of which 5,000
shares must be in his or her own name (or jointly
with the director’s spouse) and none of these 20,000
shares may be pledged or hypothecated;

• Unless there are mitigating circumstances (such as
medical or family emergencies), any Board member
who attends less than 85% of the Board and assigned
committee meetings for two consecutive years, will
not be nominated for re-election;

• Each Board member must prepare for meetings by
reading information provided prior to the meeting.
Each Board member should participate in meetings,
for example, by asking questions and by inquiring
about policies, procedures or practices of Valley;

• Each Board member should be available for
continuing education opportunities throughout the
year;

• Each Board member is expected to be above
reproach in their personal and professional lives and

2018 Proxy Statement

•

If a Board member (a) has his or her integrity
challenged by a governmental agency (indictment
or conviction), (b) files for personal or business
bankruptcy, (c) materially violates Valley’s Code of
Conduct and Ethics, or (d) has a loan made to or
guaranteed by the director classified as doubtful, the
Board member shall resign upon the request of the
Board. If a loan made to a director or guaranteed
by a director is classified as substandard and not
repaid within six months, the Board may ask the
director to resign;

• No Board member may serve on the board of any
other bank or financial institution or on more than
two boards of other public companies while a
member of Valley’s Board without the approval of
Valley’s Board of Directors;

• Board members should understand basic financial
principles and represent a variety of areas of
expertise and diversity in personal and professional
backgrounds and experiences;

• Each Board member should be an advocate for the

Bank within the community; and

•

It is expected that the Bank will be utilized by the
Board member for his or her personal and business
affiliations.

the

provide

shareholder must

The Nominating and Corporate Governance Committee has
adopted a policy regarding director candidates recommended
by shareholders. The Nominating and Corporate Governance
Committee will consider nominations recommended by
shareholders. In order for a shareholder to recommend a
nomination,
the
recommendation along with the additional information and
supporting materials to our Corporate Secretary no earlier
than 180 days and no later than 150 days prior to the
anniversary of the date of the preceding year’s mailing of the
proxy statement for the annual meeting. The shareholder
wishing to propose a candidate for consideration by the
Nominating and Corporate Governance Committee must
own at least 1% of Valley’s outstanding common stock. In
addition,
the Nominating and Corporate Governance
Committee has the right to require any additional background
or other information from any director candidate or the
recommending shareholder as it may deem appropriate. For
Valley’s annual meeting in 2019, we must receive this notice
on or after September 10, 2018, and on or before October 10,
2018.

The following factors, at a minimum, are considered by the
Nominating and Corporate Governance Committee as part
of its review of all director candidates and in recommending
potential director candidates to the Board:

shareholder who requests it. We will disclose any substantive
amendments to or waiver from provisions of the Code of
Conduct and Ethics made with respect to the chief executive
officer, principal financial officer or principal accounting
officer or any other executive officer or a director on that
website.

We have also adopted Corporate Governance Guidelines,
which are intended to provide guidelines for the governance
by the Board and its committees. The Corporate Governance
at
Guidelines
www.valleynationalbank.com/charters. The Corporate
Governance Guidelines are also available in print to any
shareholder who requests them.

our website

available

are

• Appropriate mix of educational background,
professional background and business experience to
make a significant contribution to the overall
composition of the Board;

•

If the Nominating and Corporate Governance
Committee deems it applicable, whether the
candidate would be considered a financial expert or
financially literate as described in SEC and NYSE
rules;

If the Nominating and Corporate Governance
Committee deems it applicable, whether the
candidate would be considered independent under
NYSE rules and the Board’s additional guidelines
set forth in the Company’s Corporate Governance
Guidelines;

• Demonstrated character and reputation, both
personal and professional, consistent with that
required for a bank director;

• Willingness to apply sound and independent

business judgment;

• Ability to work productively with the other

members of the Board;

• Availability

for

the substantial duties and

responsibilities of a Valley director; and

• Meets the additional criteria set forth in Valley’s

Corporate Governance Guidelines.

Diversity is one of the factors that the Nominating and
Corporate Governance Committee considers in identifying
nominees for a director. In selecting director nominees the
Nominating and Corporate Governance Committee
considers, among other factors, (1) the competencies and
skills that the candidate possesses and the candidate’s areas
of qualification and expertise that would enhance the
composition of the Board, and (2) how the candidate would
contribute to the Board’s overall balance of expertise,
perspectives, backgrounds and experiences in substantive
matters pertaining
the Company’s business. The
Nominating and Corporate Governance Committee has not
adopted a formal diversity policy with regard to the selection
of director nominees.

CODE OF CONDUCT AND ETHICS AND
CORPORATE GOVERNANCE GUIDELINES

We have adopted a Code of Conduct and Ethics which applies
to our chief executive officer, principal financial officer,
principal accounting officer and to all of our other directors,
officers and employees. The Code of Conduct and Ethics is
available and can be viewed on our website at
www.valleynationalbank.com/charters. The Code
of
Conduct and Ethics is also available in print to any

2018 Proxy Statement

COMPENSATION OF DIRECTORS

DIRECTOR COMPENSATION

The total 2017 compensation of our non-employee directors is shown in the following table. Each of these compensation
components is described in detail below.

2017 DIRECTOR COMPENSATION

Name

Andrew B. Abramson (1)
Peter J. Baum

Pamela R. Bronander
Eric P. Edelstein (1)
Mary J. Steele Guilfoile

Graham O. Jones
Gerald Korde (1)
Michael L. LaRusso
Marc J. Lenner (1)
Suresh L. Sani

Jeffrey S. Wilks
____________

Fees Earned
or Paid in
Cash (2)

Stock
Awards (3)

221,250 $

50,000 $

140,250

129,250

168,750

130,500

154,250

170,250

141,250

144,000

163,750

138,750

50,000

Change in Pension
Value and Non-
Qualified
Deferred
Compensation
Earnings (4)

All Other
Compensation (5)
5,474

22,179 $

2,210

22,100

10,897

11,091

17,215

24,711

9,303

6,184

6,253

2,178

1,352

3,413

1,352

3,413

Total

298,903

193,812

202,702

230,999

192,943

222,817

246,313

203,966

201,536

221,355

194,341

(1) Lead Director or Bancorp Committee Chairman (see Committees of the Board on page 13 in this Proxy Statement).

(2)

Includes annual retainer, meeting fees and committee fees and fees for serving as lead director and chairing board committees earned and paid for 2017.

(3) Valley National Bancorp's 2016 Long-Term Stock Incentive Plan (the “2016 Plan”) provides for non-employee directors to be eligible recipients of
limited equity awards. Commencing with Valley's 2017 annual meeting, each non-employee director received a $50,000 restricted stock award (“RSAs”)
as part of their annual retainer, granted on the date of the annual shareholders’ meeting. The number of RSAs were determined using the closing market
price on the date prior to grant and vest on the earlier of the next annual shareholders’ meeting or the first anniversary of the grant date, with acceleration
upon a change in control, death or disability, but not resignation from the board.

(4) Represents the change in the present value of pension benefits year to year under the Directors Retirement Plan for 2017 taking into account the age

of each director, a present value factor, an interest discount factor and time remaining until retirement. As disclosed below, the Board of Directors
pension plan was frozen for purposes of benefit accrual in 2013. The annual change in the present value of the accumulated benefits was a net
increase of $134,321 in total from the present value reported as of December 31, 2016. This increase is attributable to the passage of time and the
decrease in the discount rate from 4.11% to 3.69%.

(5) This column reflects only the cash dividend and interest on deferred dividends earned on outstanding restricted stock, under the 2004 Directors Restricted
Stock Plan in 2017 and the deferred dividends earned in 2017 on the restricted stock that is part of the directors annual retainer, granted on the date of
the annual shareholders’ meeting.

ANNUAL BOARD RETAINER

Non-employee directors received an annual cash retainer of
$25,000 per year, paid quarterly, plus an equity award of
$50,000 (see below).

This retainer is paid to recognize expected ongoing dialogue
of Board members with our executives and employees, for
being available to provide their professional expertise as
needed, for attending various Bank functions, for undertaking
continuing education, and for interfacing with customers as
appropriate.

BOARD MEETING FEES

In recognition of the preparation time, travel time, attendance
and providing professional expertise at the Board meetings,

non-employee directors receive a Board meeting fee of
$4,250 for each meeting attended of the Bank and Bancorp
combined attended in person, by video conference or
conference call. Our non-employee directors are paid
meeting fees for attendance by telephone or in person board
and committee meetings for no more than one meeting per
year.

BOARD COMMITTEE FEES AND COMMITTEE
CHAIRMEN RETAINER

The Chairman of the Audit Committee receives an annual
retainer of $20,000. The Chairman of the Compensation and
Human Resources Committee receives an annual retainer of
$20,000. The Chairman of the Nominating and Corporate
Governance Committee receives an annual retainer of

2018 Proxy Statement

$12,500. The Lead Director receives an annual retainer of
$50,000. These retainers are to recognize the extensive time
that is devoted to serve as Committee Chairman or Lead
Director and to attend to committee matters, including
meetings with management, auditors, attorneys and
consultants and preparing committee agendas.

All members of these committees are paid for attending each
committee meeting as follows: $2,500 for Audit, $2,500 for
Compensation and Human Resources, and $2,500 for
Nominating and Corporate Governance.

The Company and the Bank also have a number of
committees (in addition to the corporate governance
committees listed on page 13). These committees generally
deal with oversight of various operating matters. Valley’s
Risk Committee Chairman receives a $20,000 retainer. All
other committee chairmen receive a retainer of $7,500. There
is an attendance fee of $2,500 for each committee meeting.

DIRECTOR EQUITY AWARDS

Our 2016 Long-Term Stock Incentive Plan (the “2016 Plan”)
provides for our non-employee directors to be eligible
recipients of equity awards limited to not more than $300,000
annually per director. The 2016 Plan was approved by our
shareholders.

After our 2017 annual meeting, each non-management
director received a $50,000 restricted stock award (“RSA”)
as part of their annual retainer. The RSAs were granted on
the date of the Annual Shareholders meeting, with the number
of RSAs determined using the closing market price on the
date prior to grant. The RSAs vest on the earlier of the next
Annual Shareholders meeting or the first anniversary of the
grant date, with acceleration upon a change in control, death
or disability, but not resignation from the board.

The Compensation Committee approved a $10,000 increase
in the equity award to be made to non-management directors
following the Annual Meeting.

DIRECTORS RETIREMENT PLAN

We maintain a retirement plan for non-employee directors
which was frozen to new participants and for additional
benefit accruals in 2013. The plan provides 10 years of annual
benefits to participating directors with five or more years of
service. The benefits commence after a director has retired
from the Board and reached age 65. The annual benefit is
equal to the director’s years of service, multiplied by 5%,
multiplied by the final annual retainer paid to the director at
the time of retirement. In the event of the death of the director
prior to receipt of all benefits, the payments continue to the
director’s beneficiary or estate. As a result of amendments
to the plan adopted in 2013, participants no longer accrue
further benefits.

STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS

STOCK OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS. The following table contains
information about the beneficial ownership of our common
stock at February 1, 2018 by each director and by each of our
named executive officers ("NEOs") named in this proxy
statement, and by directors and all executive officers as a
group. The information is obtained partly from each director
and by each NEO and partly from Valley.

Number of
Shares
Beneficially
Owned (1)

249,580 (3)
44,355 (4)
38,363 (5)
32,476 (6)
352,075 (7)
355,690 (8)
38,083 (9)
967,755 (10)

2,333,235 (11)
47,673 (12)
216,971 (13)
891,514 (14)
120,402 (15)
62,439 (16)
206,036 (17)
4,592,716 (18)
424,596 (19)

Percent of
Class (2)

0.08%

0.01

0.11

0.01

0.29

0.71

0.01

0.07

0.27

0.04

0.02

0.06

1.39

0.13

11,401,391 (20)

3.45

Name of Beneficial Owner
Directors and Named
Executive Officers:

Andrew B. Abramson

Peter J. Baum

Pamela R. Bronander

Eric P. Edelstein

Alan D. Eskow

Mary J. Steele Guilfoile

Ronald H. Janis
Graham O. Jones

Gerald Korde

Michael L. LaRusso

Marc J. Lenner

Gerald H. Lipkin

Ira Robbins

Suresh L. Sani

Rudy E. Schupp

Jennifer W. Steans
Jeffrey S. Wilks

Directors and Executive
Officers as a group (27
persons)

____________

(1) Beneficially owned shares include shares over which the named
person exercises either sole or shared voting power or sole or shared
investment power. It also includes shares owned (i) by a spouse,
minor children or by relatives sharing the same home, (ii) by entities
owned or controlled by the named person, and (iii) by the named
person if he or she has the right to acquire such shares within 60
days by the exercise of any right or option. Unless otherwise noted,
all shares are owned of record and beneficially by the named person.

(2) For purposes of calculating these percentages, there were
330,219,322 shares of our common stock outstanding as of February
1, 2018. For purposes of calculating each individual’s percentage
of the class owned, the number of shares underlying stock options
held by that individual are also taken into account to the extent such
options were exercisable within 60 days.*

(3) This total includes 14,604 shares held by Mr. Abramson’s wife,
12,914 shares held by his wife in trust for his children, 9 shares held
by a family trust of which Mr. Abramson is a trustee, 40,157 shares
held by a family foundation, 10,401 shares held in self-directed IRA,

2018 Proxy Statement

2,636 shares in a self-directed IRA held by his wife and 4,088
restricted shares and 8,943 pursuant to the director restricted stock
plan. Mr. Abramson disclaims beneficial ownership of shares held
by his wife and shares held for his children.

(17) This total includes 12,814 shares held in Mr. Schupp's IRA, 1,780
shares held by Mr. Schupp's wife's IRA and 20,684 restricted shares.
Outstanding performance based restricted stock units are not
included.

(18) This total includes 141,459 shares held in Ms. Steans' IRA, 729,700
shares held by Ms. Steans' spouse, 211,468 shares held by her spouse
in a trust, 33,842 shares held in Ms. Steans' spouse's Roth IRA,
868,890 shares held in a family trust of which Ms. Steans is a trustee,
445,049 shares held by a partnership of which Ms. Steans is one of
three partners and 347,418 shares held in custody for her child. Ms.
Steans has 20,000 shares in her own name, 141,459 shares in her
Roth IRA and 33,842 shares held in her spouse's Roth IRA and
347,418 shares in her child's trust which are not pledged as security
for loans. The remaining 4,049,997 shares are pledged as security
for loans.

(19) This total includes 74,026 shares held by Mr. Wilks’ wife, 10,058
shares held by his wife in trust for one of their children, 2,747 shares
held jointly with his wife for a family foundation, 20,346 shares as
trustee for the benefit of their children, 12,187 shares as trustee for
the benefit of his wife, 266,804 shares held by the estates of his
mother and father-in-law, of which Mr. Wilks' wife is a beneficiary
and is one of three executors. This total also includes Mr. Wilks’
4,088 restricted shares and 4,471 restricted shares pursuant to the
director restricted stock plan. Mr. Wilks disclaims beneficial
ownership of shares held by his mother and father-in-law’s estates.

(20) This total includes 427,432 shares owned by 10 executive officers
who are not directors or named executive officers, which total
includes 7,799 shares in KSOP and/or IRA, 149 indirect shares,
157,066 restricted shares and 15,111* shares purchasable pursuant
to stock options exercisable within 60 days. The total does not
include shares held by the Bank’s trust department in fiduciary
capacity for third parties.

__________
* See the Outstanding Equity Awards table below for each of the NEO’s
outstanding awards. As of the record date of February 20, 2018, some
exercisable options outstanding have exercise prices that are higher than
Valley’s market price.

(4) This total includes 6,150 shares held by a trust for the benefit of
Mr. Baum’s children of which Mr. Baum is the trustee and 4,088
restricted shares.

(5) This total includes 5,992 shares held by Ms. Bronander’s children,
and of this total, 972 shares are pledged as security by her adult son;
and 4,088 restricted shares.

(6) This total includes 4,088 restricted shares.

(7) This total includes 51,796 shares held by Mr. Eskow’s wife, 5,555
shares held in Mr. Eskow’s KSOP, 10,578 shares held in his Roth
IRA, 1,527 shares held in his IRA, 6,249 shares held jointly with
his wife, 1,489 shares in an IRA held by his wife, 40,062 restricted
shares, and 42,229 shares purchasable pursuant to stock options
exercisable within 60 days. Outstanding performance based
restricted stock units are not included.

(8) This total includes 96,971 shares held by Ms. Guilfoile’s spouse and

4,088 restricted shares.

(9) This total includes 10,205 shares held by Mr. Janis wife.

(10) This total includes 7,124 shares owned by trusts for the benefit of
Mr. Jones’ children of which his wife is co-trustee and 4,088
restricted shares.

(11) This total includes 72,133 shares held jointly with Mr. Korde’s wife,
342,697 shares held in the name of Mr. Korde’s wife, 893,352 shares
held by his wife as custodian for his children, 315,378 shares held
by a trust of which Mr. Korde is a trustee, 126,438 shares held in
Mr. Korde’s self-directed IRA and 4,088 restricted shares.

(12) This total includes 21,660 shares held jointly with Mr. LaRusso’s
wife, 4,088 restricted shares and 4,471 restricted shares pursuant to
the director restricted stock plan.

(13) This total includes 19,399 shares held in a retirement pension, 589
shares held by Mr. Lenner’s wife, 30,187 shares held by his children,
122,150 shares held by a trust of which Mr. Lenner is 50% trustee
(Mr. Lenner is an indirect beneficiary of only 25% of the trust and
disclaims any pecuniary interest in the ownership of the other portion
of the trust), 19,084 shares held by a charitable foundation and 4,088
restricted shares.

(14) This total includes 444,760 shares held in the name of Mr. Lipkin’s
wife, 6,946 shares held in Mr. Lipkin’s wife’s Roth IRA, 154 shares
held jointly with his wife, 68,889 shares held in a Roth IRA, 57
shares held in his KSOP, and 44,819 shares held by a family
charitable foundation of which Mr. Lipkin is a co-trustee. This total
also includes Mr. Lipkin’s 81,142 restricted shares and 88,684*
shares purchasable pursuant to stock options exercisable within 60
days. Outstanding performance based restricted stock units are not
included.

(15) This total includes 2,000 shares held by Mr. Robbins' wife, 288
shares held in trusts for benefit of Mr. Robbins' nieces, 56,406
restricted shares and 1,216* shares purchasable pursuant to stock
options exercisable within 60 days. Outstanding performance based
restricted stock units are not included.

(16) This total includes 5,705 shares held in Mr. Sani’s Keogh Plan, 5,705
shares held in trusts for benefit of his children, 44,390 shares held
in pension trusts of which Mr. Sani is co-trustee and 4,088 restricted
shares.

2018 Proxy Statement

PRINCIPAL SHAREHOLDERS. The following table
contains information about the beneficial ownership at
December 31, 2017 by persons or groups that beneficially
own 5% or more of our common stock.

Name and Address of
Beneficial Owner

BlackRock, Inc.(2)
55 East 52nd Street,
New York, NY 10055

Dimensional Fund
Advisors LP(3)
Building One
6300 Bee Cave Road
Austin, Texas, 78746

State Street Corporation(4)
One Lincoln Street
Boston, MA 02111
The Vanguard Group(5)
100 Vanguard Blvd.,
Malvern, PA 19355

____________

Number of
Shares
Beneficially
Owned

Percent of
Class(1)

32,104,862

9.72%

13,470,786

4.08

15,213,652

4.61

22,348,096

6.77

(1) For purposes of calculating these percentages, there were
330,219,322 shares of our common stock outstanding as of February
1, 2018.

(2) Based on a Schedule 13G/A Information Statement filed January 18,
2018 by BlackRock, Inc. The Schedule 13G/A discloses that
BlackRock has sole voting power as to 31,476,076 shares and sole
dispositive power as to 32,104,862 shares, and 0 shares as to shared
voting power and shared dispositive power.

(3) Based on a Schedule 13G Information Statement filed February 9,
2018 by Dimensional Fund Advisors LP. The Schedule 13G
discloses that Dimensional Fund Advisors LP has sole voting power
as to 13,076,153 shares, sole dispositive power as to 13,470,786
shares and; 0 as to shared voting power and shared dispositive power.

(4) Based on a Schedule 13G Information Statement filed February 14,
2018 by State Street Corporation. The Schedule 13G discloses that
State Street Corporation has 0 shares as to sole voting power and
sole dispositive power and; 15,213,652 as to shared voting power
and 15,213,652 shares as to shared dispositive power.

(5) Based on a Schedule 13G/A Information Statement filed February 9,
2018 by The Vanguard Group. The Schedule 13G/A discloses that
The Vanguard Group has sole voting power as to 285,926 shares,
shared voting power as to 27,730 shares, sole dispositive power as
to 22,056,340 shares, and shared dispositive power as to 291,756
shares.

2018 Proxy Statement

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS ("CD&A")

EXECUTIVE SUMMARY

Say-on-Pay Vote

At the 2017 Annual Meeting of Shareholders, approximately
97% of the votes cast were in favor of the advisory vote to
approve executive compensation. This result is an increase
from the results of both the 2016 Annual Meeting and the
2015 Annual Meeting at which 94% and 91% of the votes
were cast in favor of the advisory vote, respectively. We
believe that our recent “say-on-pay” results reflect our
commitment to providing our executives with compensation
that is in alignment with our shareholders’ short and long term
interests. The results also favorably reflected our outreach
program to our large institutional shareholders and the
changes that we made to our compensation program as a
result of those conversations.

In January 2018, the Compensation and Human Resources
Committee (the “Committee”) made compensation decisions
based on 2017 results considering the input we received from
our shareholder engagement. In addition, the Committee
reviewed the reports of major proxy advisory firms on the
say on pay vote and again asked the Committee’s independent
compensation consultant, Frederic W. Cook & Co., Inc. (“FW
Cook”), to provide an analysis of the executive compensation
program.

Key Compensation Decisions and Actions

As discussed below under “Our Company’s Performance”
we believe that our management made meaningful strides in
moving the Company forward in 2017. This was reflected in
a significant improvement for 2017 in the performance of our
share price relative to our peers after significantly trailing our
peers in the prior two years. Net income for the year
ended December 31, 2017 was $161.9 million, or $0.58 per
diluted common share, compared to 2016 earnings of $168.1
million, or $0.63 per diluted common share. Our 2017 results
were adversely impacted by (i) $23.0 million of total charges
from the impact of the Tax Cuts and Jobs Act (the “2017 Tax
Act”) and the writedown of State deferred tax assets, (ii) $9.9
million ($5.7 million after-tax) in charges related to our
“LIFT” earnings enhancement program, and (iii) and $2.6
million ($2.3 million after-tax) of expenses related to our
acquisition of USAmeriBancorp, Inc. (“USAB”). Excluding
these charges, our adjusted net income was $193.0 million,
or $0.69 per diluted common share, for the year ended
December 31, 2017, representing increases of $24.8 million,
or 14.8%, in net income and $0.06, or 9.5%, in diluted
earnings per share compared to 2016 results. We also moved
forward with executive succession. In November 2017, our
CEO, Gerald H. Lipkin, announced his retirement effective
December 31, 2017. At the same time, Rudy E. Schupp, our

2018 Proxy Statement

President and Chief Banking Officer, also announced his
retirement effective January 15, 2018. With the support
of our two retiring executives, the Board at the same time
appointed Ira D. Robbins, previously the President of Valley
National Bank, as CEO and a director, effective January 1,
2018. Mr. Robbins immediately set to work on a strategic
plan intended to bring the bank forward and increase
earnings. In light of these changes and the important
achievements
final
compensation decisions for Mr. Lipkin and set Mr. Robbins’
cash and equity bonus for 2017 and his base salary in line
with his new role as CEO.

the Committee made

in 2017,

The following is a summary of how we approached our
compensation program based on 2017 results:

•

Increased Mr. Lipkin’s total direct compensation
(salary,
awards)
approximately 2.8% over 2016 levels in recognition
of his 2017 accomplishments;

cash bonus

equity

and

• Modestly increased Mr. Lipkin’s cash bonus by
$50,000 from last year in light of Valley’s overall
financial performance, including the strengthening
of our core earnings, our strong asset quality
performance and his role in the USAB merger;

•

Increased Mr. Lipkin’s
compensation modestly ($50,000) from last year;

time-based

equity

Increased the base salary of Mr. Robbins in 2018
by $100,000 to reflect his promotion to CEO but left
it significantly below that of Mr. Lipkin;

total direct
Set Mr. Robbins’ 2018
to
compensation at $2,695,000, compared
$3,723,500 total direct compensation paid to Mr.
Lipkin in 2017;

target

• Continued to provide the majority of compensation
in the form of short and long-term incentive
compensation, and the majority of long term
incentive compensation in the form of performance-
based equity awards;

•

For 2018 (granted in early 2019), the performance
based nature of the compensation program will be
further modified as senior executive equity awards
will increase from 2/3 to 3/4 performance equity
awards and the relative TSR component will
increase from 25% to 40% to better align realized
pay with shareholder value creation;

• Continued to grant performance equity awards that
cliff vest at the end of three years based on our
growth in tangible book value and relative TSR;

• Continued to limit the maximum payout on the TSR
portion of the performance equity awards to target
if the relative TSR is negative;

•

Increased the measurement period for the TSR
award from the last 20 trading days of the year to
the last 90 days of the year to allow a more
representative period in which to measure the
Company's stock performance against peers; and

• As a result of the 2017 Tax Act reducing the marginal
corporate tax rate from 35% to 21%, the Committee
increased the levels necessary to achieve the
Threshold, Target and Maximum payout for the new
Growth in Tangible Book Value awards and agreed,
with respect to outstanding awards, to deduct from
the reported increase in Tangible Book Value an
amount attributable to a reduction in the tax rate.

The Company’s “TSR” refers to the Company’s share price
performance (and dividends) ranked relative
the
performance of our peer group during the relevant period. In
reviewing compensation, the Committee did not take into
consideration, and the preceding bullet points exclude the
change, in the pension value and “all other compensation”
which is included in the compensation for each NEO as
determined under SEC rules and set forth in the Summary
Compensation Table on page 32. To highlight the difference,
the Summary Compensation Table shows all our NEOs’ total
compensation both with and without the change in pension
value.

Our Company’s Performance

Valley’s net income in 2017 was $161.9 million, or $0.58 per
diluted common share, compared to 2016 net income of
$168.1 million, or $0.63 per diluted common share, which
represented a decrease of 3.7% and 7.9%, respectively, over
2016 amounts. The primary reasons for these declines were
the charges as a direct result of the 2017 Tax Act and the
writedown of State deferred tax assets, the “LIFT” program
and the USAB merger. The “LIFT” program is designed to
create savings in our expense structure and new revenue
opportunities. Implementation of the “LIFT” program began
in 2017. Excluding these charges, net income and diluted
earnings per share would have increased 14.8% and 9.5%,
respectively, in 2017 compared to 2016. While the
Committee believes that our core earnings were reflective of
good performance, it still believes that there is ample room
to improve many areas of the Company’s business. However,
the Committee acknowledges that each of the items that
reduced the Company’s earnings in 2017 will be of substantial
benefit to its performance in upcoming years. The Company
anticipates that the 2017 Tax Act charges will be recovered

in future years through a lower tax rate, thereby increasing
net income. The “LIFT” program is designed to improve the
the Company and management
future efficiency of
anticipates that the USAB acquisition will strengthen the
Company’s earnings platform in the Tampa area within the
high growth State of Florida.

Other highlights of 2017 include:

• The strategic design and beginning implementation
of our “LIFT” earning enhancement program;

• The design of a strategic plan to target technology
resources to more value-added activities and deliver
on the financial banking experience expected by our
customers;

• The acquisition of USAmeriBancorp, Inc., which
was completed effective January 1, 2018, was the
the
largest acquisition ever undertaken by
Company;

• An 8.1% increase in net interest income in 2017

compared to 2016; and

• A total shareholder return in 2017 of 2.19%, which
was the 49th percentile of our peer group, compared
to 22.9%, or the 14th percentile in our peer group,
in 2016.

Key Governance Features

We have implemented the following governance features:

Independent compensation consultant. FW Cook, our
compensation consultant, reports directly to the Committee
and provides no services to Valley or management.

Risk management. We focus on risk management and
design and monitor our plans to discourage unnecessary or
excessive risk taking.

No hedging or pledging. We do not allow hedging or
pledging of Valley securities by executive officers.

Clawback policy. We have a clawback policy that allows
for the recovery of unvested cash and equity-based incentive
compensation in the event of a material financial restatement
or material misconduct by an executive and recovery of both
vested and unvested awards in the event of intentional fraud
or intentional misconduct by an executive. Our equity awards
to executives include other clawback provisions.

2018 Proxy Statement

Hold-past termination. If an NEO terminates employment
for any reason and such termination results in the acceleration
of equity awards, 50% of the shares of common stock
underlying the equity awards must be held for a period of 18
months following the date of termination.

Stock ownership guidelines. We impose significant stock
ownership requirements on our executives.

OUR COMPENSATION PHILOSOPHY

We believe that Valley’s executive compensation should be
structured to balance the expectations of our shareholders,
our regulators and our executives. We have adopted a
compensation philosophy that seeks to achieve this balance
by taking into consideration the following:

Pay-for-Performance: Rewarding qualitative achievements
by management which contribute to our operational and
strategic performance;

Benchmarking: Making compensation awards after
considering the executive compensation programs and
practices of our peer group; and

Balanced Pay Mix: Providing a mixture of short-term and
long-term financial rewards to our executives.

The Committee uses a balanced approach in making
compensation-related decisions. The important factors the
Committee considered this year include:

• Management’s focus on our “LIFT” earnings

enhancement program;

• Our year over year increase in core earnings per

share;

• Our increase in percentile rank in 2017 TSR relative
to our peer companies from the 14th percentile in
2016 to the 49th percentile in 2017;

• Management’s successful acquisition of USAB;

• Maintaining Valley’s strong commitment to credit

quality;

• Development of a long term strategic plan which

supports Valley’s franchise growth;

• Maintaining Valley’s dividend;

• Meeting or exceeding regulatory requirements,
including regulatory capital requirements, in all
facets of our business; and

• Training and developing staff for succession
planning purposes and for maintaining business
continuity.

2018 Proxy Statement

OUR COMPENSATION PROCESS

Our Committee sets the compensation of our CEO and all
our NEOs, as well as all executive officers. We met six times
during 2017 and early 2018 to discuss NEO compensation
for 2017. At Committee meetings the Committee holds in-
independent
depth executive sessions at which our
compensation consultant is present and provides advice.

The Committee has the authority to directly retain the services
of independent compensation consultants and other experts
to assist in fulfilling its responsibilities. The Committee
engaged the services of FW Cook, a national executive
compensation consulting firm, to review and provide
recommendations concerning all the components of the
Company’s executive compensation program. FW Cook
performs services solely on behalf of the Committee and has
no relationship with the Company or management except as
it may relate to performing such services. FW Cook assists
the Committee in defining Valley’s peer companies for
executive compensation and practices and in benchmarking
our executive compensation program against the peer group.
FW Cook also assists the Committee with all aspects of the
design of our executive and director compensation programs.
The Committee assessed the independence of FW Cook and
concluded that no conflict of interest exists that prevents FW
Cook from independently representing the Committee.

A representative of FW Cook was present and provided
advice at our meetings, including executive sessions. Pre-
meetings were held with the Chairman of the Committee to
establish the agenda for each meeting. The compensation
consultant attended the pre-meetings.
Mr. Lipkin, our CEO until December 31, 2017 and Mr.
Robbins, our current CEO, and other NEOs attended portions
of the meetings. Mr. Lipkin and Mr. Robbins presented and
discussed with the Committee their recommendations for
compensation for the NEOs and the executive team without
the other NEOs present. Neither made a recommendation to
the Committee about his own compensation and neither was
present when his compensation was discussed or set by the
Committee. The Committee also sought input from internal
and external counsel. The Committee sets executive
compensation with only Committee members, consultants,
the director of Human Resources and external counsel
present.

OUR PEER GROUP

In setting compensation for our executives, we compare total
compensation, each compensation element, and Valley’s
financial performance to a peer group. For purposes of
determining 2017 compensation, our peer group consisted of
17 bank holding companies, each with assets within a
reasonable range above and below Valley’s asset size. 10 of
these companies are in the NY/NJ/CT metropolitan area and
Florida and the 7 other bank holding companies are located
throughout the country and have sizes and business models

similar to Valley. The Committee believes that this peer group
is an appropriate group for comparison with Valley for two
primary reasons:

• The companies in the peer group are located in our
market areas or comparable metropolitan locations;
and

• The companies in the peer group are, on average,

similar in size and complexity to Valley.

Appendix A, on page 50, lists all financial institutions in the
peer group. The peer group consists of companies with assets

between $9 billion and $49 billion and market capitalization
between $1.0 billion and $7.5 billion. Valley ranked in the
44th and 25th percentile in asset size and market capitalization,
respectively, against the peer group.

The Committee compares the salaries, equity compensation
and non-equity incentive compensation we pay to our NEOs
with the same compensation elements paid to executives of
the peer group companies available from public data. The
Committee refers to this peer group information when setting
our CEO compensation and that of our other NEOs and
generally targets setting CEO and NEO total compensation
at levels that are at the median of our peer group.

ELEMENTS OF PAY

The following table summarizes the key components of our compensation program for our NEOs and the purpose of each
component:

Component

Salary

EIP Cash Awards

Key features
Certain cash payment based on position,
responsibilities and experience.

Annual cash awards which are tied to
achievement of both company and
individual goals.

EIP Time Vested Equity Awards

Equity incentives earned based on time.

2016 Stock Plan Performance Equity
Awards

Equity incentives earned based upon
meeting performance targets.

Purpose

Offers a stable source of income.

Intended to motivate and reward
executives for achievements of short-
term (one year) company and individual
goals.

Intended to create alignment with
shareholders and promote retention.

Intended to focus on achievement of
company performance objectives,
relative TSR and growth in tangible
book value (as defined below).

Salary

Salaries are determined by an evaluation of individual NEO
responsibilities, compensation history, as well as peer
comparison.

Executive Incentive Plan (EIP)

The Executive Incentive Plan (“EIP”) provides for awards,
payable in cash and time vested restricted stock awards, from
a pool equal to 5% of our net income before income taxes.
Allocations of the percentages under the EIP among the
NEOs from the 5% pool (discussed below) are made by the
Committee within the first 90 days of each calendar year with
respect to the current year. EIP awards are determined after
the year-end financial results are finalized. The Committee
awards less than the entire amount of the 5% pool as permitted
by the EIP.

EIP Cash Awards

We award the cash bonus under the EIP in January or
February.

Time Vested Equity Awards

We award time vested restricted stock awards under the EIP
in January or February. Awards granted in January or
February 2018 vest pro rata on an annual basis over a three-
year period.

Performance Based Equity Awards

The Company’s 2016 Long-Term Stock Incentive Plan (the
“2016 Stock Plan”) includes provisions for performance
awards.

We awarded performance based restricted stock unit awards
under the Company’s 2016 Stock Plan. The 2016 Stock Plan
provides for certain performance based awards, which were
intended to allow these awards to be qualified under Internal
Revenue Code Section 162(m) for
tax deductibility
regardless of whether the aggregate value of the awards is
greater than the $1 million limitation contained in the Code.
As a result of the 2017 Tax Act, all compensation over $1
million will not be deductible by the Company unless it is
covered by a grandfathered contract (the awards granted in
2018 for 2017 performance will not be grandfathered).

2018 Proxy Statement

Consistent with prior years, the performance based awards
granted in 2018 vest based on the Company’s adjusted
in Tangible Book Value and relative TSR
Growth
performance.

OVERALL DESIGN AND MIX OF EQUITY GRANTS

Consistent with 2016 and 2017 awards, the following table summarizes the overall design and mix of our annual long-term
equity incentives granted for 2018:

Percentage of Total
Target Equity
Award Value for
Mr. Lipkin
27.8%

Percentage of Total
Target Equity
Award Value for
Other NEOs
33.1%

54.2%

50.2%

18.0%

16.7%

Form of Award
Time Vested Award
(time-vested restricted
stock)

Growth in Tangible
Book Value
Performance Award
(restricted stock units)

TSR Performance
Award (restricted
stock units)

The percentage mixes described in the chart above are based
on the dollar value of the awards granted. The dollar value is
translated into number of shares using the closing price the
day before the effective date of the grant.

In 2018, the Committee determined the dollar amount of the
awards at its meeting in late January and set the grant date of
the award as of February 1, 2018. The Committee intends in
the future to make all equity grants effective on February 1
with the dollar amount of the grant determined prior to that
date and dollar value translated into the number of shares
using the closing price the day before the grant date.

2017 TIME VESTED AWARDS

For Mr. Lipkin, 27.8% of the aggregate dollar value of his
target annual equity awards granted for 2017 was in the form
of time-based vesting restricted stock awards. For the other
NEOs, 33.1% of the aggregate dollar value of their target
annual equity awards granted for 2017 was in the form of
time-based vesting restricted stock awards. Once granted, the
awards vest based solely on continued service with the

Company, with one third vesting on each anniversary of the
grant date.

2017 GROWTH IN TANGIBLE BOOK VALUE
AWARDS

Growth in Tangible Book Value, when used in this CD&A,
means year over year growth in tangible book value, plus
dividends on common stock declared during the year,
excluding other comprehensive income (“OCI”) recorded

Purpose

Encourages retention.
Fosters shareholder
mentality among the
executive team.

Encourages retention and
ties executive
compensation to our
operational performance.

Encourages retention and
ties executive
compensation to our
long-term market
performance.

Performance
Measured
N/A

Growth in Tangible
Book Value (as defined)

Relative TSR

Earned and Vesting
Periods
Vests on the first,
second, and third
anniversaries of the
grant date.

Earned and vests after
three-year performance
period based on Growth
in Tangible Book Value.

Earned and vests after
three-year performance
period based on TSR.

during the year. The Committee chose Growth in Tangible
Book Value over a three-year period because it believes that

this metric is a good indicator of the performance of a
commercial bank. The adjustment for dividends allows the
Committee to compare our performance to our peers which
pay different amounts of dividends. The exclusion of OCI
avoids changes in tangible book value not viewed as related
to financial performance. Consistent with the terms of the
award agreements for the restricted stock and the 2016 Stock
Plan, the Committee has the authority to adjust the calculation
of the Growth in Tangible Book Value for certain items. The
Committee uses this authority to avoid either penalizing or
rewarding executives for decisions which may adversely or
positively affect tangible book value growth. When it
determined the amounts earned with respect to awards which
vested on January 30, 2018, the Committee adjusted the
calculation of the Growth in Tangible Book Value for several
items, including the effects of the Tax Act and the writedown
of State deferred tax assets, the LIFT program, expenses
related to the USAB acquisition, and the issuance of our
preferred stock in 2017.

For Mr. Lipkin, 54.2% of the aggregate dollar value of his
equity awards granted for 2017 were in the form of
performance restricted stock units (“RSUs”) to be earned
based upon Growth in Tangible Book Value (each, a Growth
in Tangible Book Value Performance Award). For the other
NEOs, 50.2% of the aggregate dollar value of our NEOs’
target equity awards granted for 2017 were in the form of
Growth in Tangible Book Value Performance Awards. The
Growth in Tangible Book Value Performance Awards are
earned based on average annual Growth in Tangible Book

2018 Proxy Statement

Value during the years 2018 through 2020. Earned Growth
in Tangible Book Value Performance Awards vest at the end
of the 3-year performance period and will be settled as soon
as administratively feasible thereafter following Committee
certification of performance results. The number of shares
that can be earned may range from 0% to 150% of the target,
depending on performance (with linear interpolation between
performance levels) as follows:

Average Annual Growth in Tangible
Book Value 2018-2020

Percentage of Target
Shares Earned

Below 10.35%

10.35% (Threshold)

12.0% (Target)

13.65% or higher (Maximum)

None

50%

100%

150%

Growth in Tangible Book Value Performance Awards are
settled in the form of common stock with cash for any
dividend equivalents accrued during the performance period
to the extent earned. The increase in Threshold, Target and
Maximum were determined by the Committee with the
advice of the Compensation Consultant after reviewing the
effective state and federal tax rate in the past and the effect
of the 2017 Tax Act on 2018 and future year results.
Moreover, the Committee determined that a negative
adjustment would be made to existing awards to reflect the
unanticipated positive impact on growth in tangible book
value arising from the new lower corporate tax rates.

The table below shows the status of the performance based
equity awards subject to vesting based on Growth in Tangible
Book Value, reflecting the adjustments described above,
granted in 2015 (for 2014 performance), in 2016 (for 2015
performance) and in 2017 (for 2016 performance) based on
fiscal 2017 financial performance. Prior to 2018, the
Threshold was 9.5%, the Target was 11% and the Maximum
was 12.5%. Note that the status reported in the below tables
for other than 2015 awards is not necessarily indicative of
what will ultimately be paid out to our NEOs as these awards
are based on cumulative performance results for the
respective full three-year performance periods. The 2015
awards vested in January 2018 at above Target performance
(127% payout) due to the three-year Growth in Tangible Book
Value of 11.81%.

Growth in Tangible Book Value

Grant
Date

Performance
in 2015

Performance
in 2016

Performance
in 2017

1/30/2015

11.28%

1/28/2016

1/24/2017

N/A

12.51%

N/A

11.63%

Cumulative
Perfor-
mance
Measured
to Date

11.81%

12.07%

11.63%

2017 RELATIVE TSR PERFORMANCE AWARDS

For Mr. Lipkin, 18.0% of the aggregate dollar value of his
target annual equity awards granted for 2017 was in the form
of RSUs to be earned based on the Company’s relative TSR
for the 3-year performance period from January 2018 through
December 2020 against the KRX (a TSR Performance
Award). For the other NEOs, 16.7% of the aggregate dollar
value of our NEOs’ target annual equity awards granted for
2017 was in the form of a TSR Performance Award. The KRX
is used instead of our compensation peer group to provide a
broader indication of Valley’s relative market performance
and because similar size and geography are less relevant
criteria
than
performance
compensation comparisons. Earned TSR Performance
Awards vest at the end of the 3-year performance period and
will be settled as soon as administratively feasible thereafter
following Committee certification of performance results.
The number of shares that may be earned may range from
0% to 150% of the target, depending on performance (with
linear interpolation between performance levels) as follows:

comparisons

for TSR

TSR

Below 25th percentile of peer group
25th percentile of peer group (Threshold)
50th percentile of peer group (Target)
75th percentile of peer group (Maximum)

Percentage of
Target Shares
Earned
None

50%

100%

150%

If the Company has a negative TSR on an absolute basis at
the end of the three-year performance period, then the
maximum number of shares that could be earned, regardless
of the Company’s TSR relative to its peer group, would be
100% of target. TSR Performance Awards will settle in the
form of common stock with any dividend equivalents accrued
during the performance period, to the extent earned.

The Company’s cumulative TSR was 34.41% for the three-
year period ended December 31, 2017. The percentile rank
against Valley’s peer group was 13.5% for that time period.
Accordingly, none of the NEOs’ 2015 TSR Performance
Awards vested in 2018.

In reviewing the variation in the TSR during the year, the
Committee determined to extend the end of the year
measurement period of relative TSR from the last 20 trading
days of the year to the last 90 calendar days.

PAY DETERMINATIONS

Summary

increased Mr. Lipkin’s

total direct
The Committee
compensation by $100,000, or approximately 2.8%, from last
year. More specifically, the Committee made the following
compensation determinations with respect to Mr. Lipkin:

2018 Proxy Statement

• Maintained his salary of $1,123,500 for the seventh

EIP Cash Awards

consecutive year;

Increased his total equity awards to $1,800,000 from
$1,750,000 for 2016;

Named Executive
Officer

2017 Base
Salary

EIP Cash
Awards
for 2017

EIP Cash
Award as
% of 2017
Base Salary

Gerald H. Lipkin

$ 1,123,500 $ 800,000

Alan D. Eskow

Ira Robbins

Rudy E. Schupp

Ronald H. Janis

575,000

750,000

500,000

250,000

450,000

200,000

71.2%

43.5

The cash EIP award for Mr. Lipkin was higher than last year’s
award by a modest $50,000. The cash award for Mr. Eskow
was also a modest $50,000 higher than last year. The cash
awards for Messrs. Robbins and Schupp were $200,000
higher than last year. The Committee believed that Messrs.
Robbins and Schupp were instrumental in increasing Valley’s
profits and overall financial performance, as well as
implementing the “LIFT” program and orchestrating the
USAB acquisition, and thus were deserving of a substantially
increased EIP cash award.

EIP - Time Vested Equity Awards

As of February 1, 2018, the Committee granted equity awards
to our NEOs under the EIP. These awards consisted of time-
vested shares of restricted stock. The time vested awards are
granted under the EIP and the 2016 Stock Plan. The following
table shows the time-vested restricted stock issued to our
NEOs in 2018 and the grant date fair value of each award.

Time Based
Restricted
Shares

Value of Shares
at Grant Date

39,777

17,900

33,015

20,684

15,911

500,000

225,000

415,000

260,000

200,000

Named Executive
Officer

Gerald H. Lipkin

Alan D. Eskow

Ira Robbins

Rudy E. Schupp

Ronald H. Janis

Total EIP Awards

The table below shows the maximum EIP awards permitted
for 2017 as well as negative discretion applied to determine
the actual cash, time vested equity and total EIP award made
to each NEO for 2017 performance.

•

Increased his EIP cash award to $800,000 for 2017
from $750,000 for 2016.

The Committee believes that, as Chairman and CEO, Mr.
Lipkin’s compensation, more than any other NEO, should
reflect the overall performance of the Company rather than
individual achievements. The Committee believes that the
compensation determination that it made reflects the
Company’s financial performance in 2017. Although the
Company’s reported financial results in 2017 were less than
those in 2016, given the 14.8% improvement in the
Company’s earnings, excluding the impact of the 2017 Tax
Act, LIFT expenses and USAB merger expenses, compared
to 2016, the Committee believed it appropriate to increase
Mr. Lipkin’s compensation modestly, or by approximately
2.8%.

Discussion

Salaries. For the seventh consecutive year, the Committee
determined not to increase the base salary for Mr. Lipkin. Mr.
Lipkin will retire as an employee of the Company effective
on the date of the Annual Meeting. Mr. Robbins’ base salary
increased to $850,000 from $750,000 in recognition of his
appointment to CEO effective January 1, 2018. Mr. Eskow’s
salary in 2018 also did not increase. Mr. Janis received a
modest increase in base salary of $15,000 from $500,000 in
2017. Mr. Schupp retired in January 2018.

EIP Cash Awards. Under the EIP, Valley may pay incentive
compensation to its NEOs in an aggregate amount equal to
5% of its net income before taxes for the calendar year with
the exact amounts to be determined by the Committee. In
January 2017, the Committee began the process of
determining awards under the EIP by identifying the NEOs
as the EIP participants and allocating a share of the EIP pool
to each participant, as shown in the first column of the table
“EIP Awards for 2017”.

In January 2018, the Committee certified the amount of the
2017 pool as $12,636,900, which was 5% of 2017 net income
before taxes. Based on Valley’s 2017 financial results and the
2017 goals accomplished by each NEO, the Committee
granted cash awards to the NEOs.

The following table shows the EIP cash awards for each NEO
and as a percentage of base salary.

2018 Proxy Statement

EIP Awards for 2017

Allo-
cation
of
EIP
Pool

Maximum
Permitted
Aggregate
EIP Award

Cash
Award
Paid

Time
Vested
Equity
Award
Granted

Total Aggr-
egate
Award
Granted

NEO

Lipkin

30% $ 3,791,070 $ 800,000 $ 500,000 $ 1,300,000

Eskow

20%

2,527,380

250,000

225,000

Robbins

20%

2,527,380

450,000

415,000

Schupp

Janis

20%

10%

2,527,380

450,000

260,000

1,263,690

200,000

475,000

865,000

710,000

400,000

$12,636,900 $2,150,000 $ 1,600,000 $ 3,750,000

The aggregate total EIP award (both cash and equity) to all
NEOs was $3,750,000, or approximately 29.7% of the total
maximum amount available for grant under the EIP to the
five NEOs. Mr. Lipkin received a total award of $1,300,000,
or approximately 34.3% of his maximum award under the
EIP.

Performance Based Equity Awards

In January 2018, the Committee granted performance based restricted stock units to our NEOs under our 2016 Stock Plan. Of
these performance based units, 75% are subject to vesting based on the attainment of adjusted Growth in Tangible Book Value
and the remaining 25% are based on relative total shareholder return, or TSR, as discussed in more detail above under “Overall
Design and Mix of Equity Grants.” The following table shows the performance based equity awards that were made under the
2016 Stock Plan:

Performance Based Stock Awards at Target

Performance Based Stock Awards at Maximum

Named Executive Officer

Gerald H. Lipkin

Alan D. Eskow

Ira Robbins

Rudy E. Schupp

Ronald H. Janis

Based on
TSR

Based on
Growth in
TBV

Total

Based on
TSR

325,000

975,000

$ 1,300,000

487,500

112,500

208,750

135,000

100,000

337,500

626,250

405,000

300,000

450,000

835,000

540,000

400,000

168,750

313,125

202,500

150,000

Based on
Growth in
TBV

$ 1,462,500

506,250

939,375

607,500

450,000

Total

$ 1,950,000

675,000

1,252,500

810,000

600,000

Pension and Other Compensation

On January 24, 2017, we entered into an amended and
restated severance letter agreement with Mr. Lipkin. The
amended letter agreement clarifies Mr. Lipkin’s pension
benefit by conforming the actuarial conversion factor that is
used to determine his annuity to the Company’s qualified
pension plan. The result was an estimated increase in the
present value of Mr. Lipkin’s pension benefit of $460,662 as
of December 31, 2016. Our retirement plans for NEOs are
described in more detail in “2017 Pension Benefits - Pension
Plan” and “2017 Pension Benefits - Benefit Equalization
Plan”.

As of January 1, 2017, we established a deferred
compensation plan for our NEOs and other selected
executives. The deferral plan is intended to provide a

retirement savings program for earnings above the limits of
the qualified 401(k) Plan. The deferral plan has a similar
employer match to the 401(k) Plan. Under the deferral plan,
if for the calendar year the executive contributes the
maximum to the 401(k) Plan, he or she may elect to defer up
to 5% of his or her salary and bonus above the 401(k) limits
and the Company will match the executive’s deferral amount
up to the 5% limit. The deferral plan is described in more
detail in “2017 Nonqualified Deferred Compensation -
Deferral Compensation Plan”.

We also provide perquisites to all senior officers. We offer
them the use of a company-owned automobile, and in limited
instances, use of a driver, primarily for business use. The
automobile facilitates NEO travel between our offices, to
business meetings with customers and vendors and to

2018 Proxy Statement

investor presentations. NEOs may use the automobile for
personal transportation. Personal use of the automobile or
driver, if not reimbursed by the NEO, results in taxable
income to the NEO, and we include this in the amounts of
income we report to the NEO and the Internal Revenue
Service. Commencing in 2017, the Committee determined
that new executives will receive a car stipend, not use of a
company owned car, and this may be applied to existing
executives as their cars come up for replacement.

We also support and encourage our NEOs to hold a
membership in a local country club for which we pay
admission costs, dues and other business related expenses.
We find that the club membership is an effective means of
obtaining business as it allows NEOs to interact with present
informal
and prospective customers
environment. We require that any personal use of the country
club facilities for golf or food be paid directly by the NEO.
Because the club memberships are used at our expense only
for business entertainment, we do not include them as
perquisites in our Summary Compensation Table.

relaxed,

in a

We also provide change in control agreements and severance
agreements to our NEOs. The change in control agreements
provide for “double trigger” cash payments in the event of a
change of control of Valley. These benefits provide the NEOs
with a reasonable range of income protection in the event
employment is terminated without cause following a change
in control, support our executive retention goals and
encourage their independence and objectivity in considering
potential change in control transactions. The severance
agreements provide benefits to our NEOs in the form of lump
sum cash payments if they are terminated by Valley without
cause. The terms of these agreements are described more
fully in this Proxy Statement under “Other Potential Post-
Employment Payments.”

On November 2, 2017, the Company announced the
retirement of Mr. Lipkin as CEO effective as of December
31, 2017. In November 2017 the Committee approved a term
sheet setting forth the clarifications and expectations
regarding post-retirement arrangements for Mr. Lipkin which
is described more fully in this Proxy Statement under “Other
Potential Post-Employment Payments.”

OTHER PROGRAM FEATURES

Hold Past Termination: If an NEO terminates employment
for any reason and such termination results in the acceleration
of equity awards, 50% of the shares of common stock
underlying those equity awards must be held for a period of
18 months following the date of termination.

Clawback: Under our “clawback” policy, if there is a
material restatement of our financial statements, or material
misconduct by the executive which harms the Company
financially, the Committee may “clawback” unvested equity
awards and unpaid cash bonus awards and in the event of

2018 Proxy Statement

intentional fraud or misconduct by the executive, previously
paid or vested awards, as well as unvested awards may be
clawed back. Our equity grants to executive officers include
another “clawback” provision that allows recapture of the
award for certain reasons within specified time periods.

No Hedging or Pledging: Valley adopted a policy
prohibiting executive officers from entering into hedging and
pledging transactions involving Valley’s common stock. The
Board believes that such transactions, which have the effect
of mitigating the risks and rewards of ownership, may result
in the interests of management and shareholders of Valley
being misaligned.

Stock Ownership: To better align the interests of our NEOs
with those of our common shareholders, we require each
NEO to own a minimum number of shares of our common
stock. Officers are given a five-year window to meet the
requirements. Currently, Messrs. Lipkin, Schupp and Eskow
meet the requirements. Due to Mr. Robbins’ recent promotion
and Mr. Janis’ recent hiring, these executives do not currently
meet the requirements but intend to do so during the five-
year window. The table below shows the minimum holdings
required of each NEO.

NEO Minimum Stock Ownership Requirements

Title (Name)

CEO

CFO

Senior EVP
____________

Minimum Required
Common Stock
Ownership

250,000

75,000

35,000

INCOME TAX CONSIDERATIONS

Our federal income tax deduction for non-performance based
compensation paid to certain of our NEOs is limited by
Section 162(m) of the Internal Revenue Code (IRC) to $1
million annually. Until 2018, compensation paid to any of
them exceeding $1 million was non-deductible for federal
income tax purposes unless paid under a performance based
plan pre-approved by our shareholders. At our annual
shareholders meeting in 2010, the EIP was adopted, which
allows the Committee to grant awards under the EIP which
are intended to comply with the restrictions of Section
162(m). In addition, the 2016 Stock Plan allows the
Committee to grant awards which are also intended to comply
with the restrictions of Section 162(m) and the Committee
has granted performance based equity awards under the 2016
Stock Plan.

As a result of the 2017 Tax Act, compensation over $1 million
paid to any person who is or was an NEO will not be
deductible by the Company regardless of whether it is paid
under a shareholder pre-approved performance based plan.
Except for a small portion of Mr. Lipkin’s salary, we believe

that all compensation paid or granted to our NEOs in 2017
was deductible for federal income tax purposes.

COMPENSATION COMMITTEE REPORT AND
CERTIFICATION

The Compensation and Human Resources Committee has
reviewed and discussed the Compensation Discussion and
Analysis with management and, based on that review and
those discussions, it has recommended to the Board of
Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement.

Gerald Korde, Committee Chairman

Andrew B. Abramson

Pamela R. Bronander

Eric P. Edelstein

Michael L. LaRusso
Marc J. Lenner

Suresh L. Sani

EQUITY COMPENSATION PLAN INFORMATION

Weighted
average
exercise
price
on out-
standing
options
and
rights

Number of shares
remaining
available for future
issuance under
equity
compensation
plans (excluding
shares
reflected in the
first column)

Number of
shares to
be issued
upon
exercise of
outstanding
options and
rights*

2,119,424 $

13.01

7,271,037

—

2,119,424 $

13.01

7,271,037

Plan Category

Equity
compensation plans
approved by
security holders

Equity
compensation plans
not approved by
security holders

Total

____________

* Amount includes 446,980 options outstanding with a weighted
average exercise price of $13.01 and 1,672,444 performance-based
restricted stock units measured at maximum vesting at December 31,
2017. Amount does not include 1,771,702 outstanding restricted
shares.

2018 Proxy Statement

SUMMARY COMPENSATION TABLE

The following table summarizes all compensation in 2017, 2016 and 2015 earned by our chief executive officer, chief financial
officer and the three most highly paid executive officers (NEOs) for services performed in all capacities for Valley and its
subsidiaries.

Non-
Equity
Incentive
Plan
Compen-
sation(2)

Stock

Awards(1)

Change in
Pension
Value and
Non-
Qualified
Deferred
Compen-
sation
Earnings(3)

All Other
Compen-
sation(4)

Total Without
Change in
Pension Value*

Total

Name and Principal
Position

Year

Salary

Gerald H. Lipkin(5)

Chairman of the

Board and CEO

Ira Robbins

Senior EVP, Valley and
President, Valley National
Bank

Alan D. Eskow

Senior EVP, CFO and

Corporate Secretary

Rudy E. Schupp(6)

President, Valley and Chief
Banking Officer, Valley
National Bank
Ronald H. Janis(7)

Senior EVP, Valley and
General Counsel

___________

2017 $

1,123,500 $ 1,800,000 $

800,000 $

825,168 $

296,170 $

4,844,838 $

2016

2015

2017

2016

2017

2016

2015

2017

2016

2017

1,123,500

1,750,000

1,123,500

1,526,500

750,000

600,000

750,000

1,250,000

450,000

525,000

575,000

545,750

750,000

675,000

800,000

250,000

200,000

450,000

525,000

500,000

750,000

800,000

250,000

909,924

513,382

80,405

45,718

15,279

45,342

188,536

156,389

4,721,960

3,919,771

142,745

2,673,150

77,757

1,648,475

156,701

118,714

107,034

159,688

1,671,980

1,539,464

1,573,126

2,159,688

69,392

50,131

1,594,392

1,600,131

4,019,670

3,812,036

3,406,389

2,592,745

1,602,757

1,656,701

1,539,464

1,527,784

2,159,688

1,594,392

1,600,131

* The amounts reported in this column differ, in certain cases substantially, from the amounts reported in the “Total” column required under

SEC rules and should not be considered a substitute for the “Total” column of the Summary Compensation Table.

(1) Stock awards reported in 2017 reflect the grant date fair value of the restricted stock and performance based restricted stock unit awards under Accounting
Standards Codification Topic No. 718, Compensation-Stock Compensation ("ASC Topic 718") granted by the Compensation Committee based on 2017
results. The grant date fair value of time based restricted stock awards reported in this column for each of our NEOs was as follows: Mr. Lipkin, $500,000;
Mr. Eskow, $225,000; Mr. Robbins, $415,000; Mr. Schupp, $260,000 and Mr. Janis $200,000. The amount reported for Mr. Janis also includes his
$200,000 sign-on restricted grant. Restrictions on time based restricted stock awards lapse at the rate of 33% per year. The grant date fair value of
performance based restricted stock units reported in this column for each of our NEOs is the target value. Restrictions on performance based awards
lapse based on achievement of the performance goals set forth in the performance restricted stock unit award agreement. Any shares earned based on
achievement of the specific performance goals vest when the Compensation Committee certifies the payout level as a result of such performance
achievement following the three-year performance period. The value on grant date of the performance based restricted stock unit awards based upon
performance goal achievement at target and maximum would be as follows:

Name
Gerald H. Lipkin(5)

Ira Robbins

Alan D. Eskow
Rudy E. Schupp(6)

Ronald H. Janis

Target Value at Grant Date Maximum Value at Grant Date

1,300,000 $

835,000

450,000

540,000

400,000

1,950,000

1,252,500

675,000

810,000

600,000

(2) Non-Equity awards earned for the years ending before 2017 were distributed as follows: 50% of the non-equity award was paid on award and the

remaining balance was paid in eight equal quarterly installments.

(3) Represents the change in the present value of pension benefits from year to year, taking into account the age of each NEO, a present value factor, and
interest discount factor based on their remaining time until retirement. The increase in pension value is attributable to the following sources: 1) passage
of time, 2) a decrease in the discount rate from 4.11% to 3.69%, and for Mr. Lipkin, 3) actuarial increases received for late retirement past age 70 ½.

(4) All other compensation includes perquisites and other personal benefits paid in 2017 including automobile and driver (if applicable), accrued dividends
on nonvested restricted stock, 401(k) contribution payments, 401(k) SERP contribution payments by Valley (including interest earned) and group term
life insurance (see table below).

2018 Proxy Statement

Accrued
Dividends &
Interest Earned on
Nonvested Stock
Awards(2)

Auto(1)

401(k)(3)

401(k)
SERP(4)

GTL(5)

Other

Total

11,519 $

183,394 $

13,250 $

88,007 $

0 $

296,170

10,541

15,122

5,204

19,933

70,997

82,749

70,997

3,783

13,250

46,817

31,102

46,817

21,931

1,140

14,478

4,484

8,942

142,745

156,701

159,688

50,131

Name

Gerald H. Lipkin

Ira Robbins

Alan D. Eskow

Rudy E. Schupp

Ronald H. Janis

____________

(1) Auto represents the cost to the Company of the portion of personal use of a company-owned vehicle by the NEO and, driving

services and parking (if applicable), during 2017.

(2) Accrued dividends and interest on non-vested time and performance based restricted stock awards and performance based

restricted stock units until such time as the vesting takes place. Dividends and interest on performance based awards and units
are accrued at target and are only paid to the extent the underlying award vests.

(3) After one year of employment, the Company provides to all full time employees in the plan including our NEOs, up to 100%
of the first 4% of pay contributed 50% of the next 2% of pay contributed. An employee must save at least 6% to get the full
match (5%) under the 401(k) Plan.

(4) Effective January 1, 2017, Valley established the Valley National Bancorp Deferred Compensation Plan for the benefit of certain
eligible employees, see Deferred Compensation Plan under the 2017 Pension Benefits below. If the NEO utilizes the 401(k) to
the maximum, for amounts over the maximum compensation amount allowed under the 401(k), the NEO may elect to defer 5%
of the excess and the Company will match that deferral compensation.

(5) GTL or Group Term Life Insurance represents the taxable amount for over $50,000 of life insurance for benefits equal to two
times salary. This benefit is provided to all full time employees. Mr. Lipkin has a $50,000 life insurance policy with the Company
and is not subject to a taxable amount.

(5)

In 2017, Mr. Lipkin notified the Company of his intention to retire as CEO effective December 31, 2017 and as an employee effective as of April 2018.

(6) Mr. Schupp retired on January 15, 2018.
(7)

In joining the Company on January 2, 2017, Mr. Janis received a sign on bonus of $200,000 of restricted stock which vested after six months and a
$50,000 cash bonus. His awards for service in 2017 were a $200,000 cash bonus and a $600,000 equity award.

2018 Proxy Statement

2017 GRANTS OF PLAN-BASED AWARDS

The following table represents the grants of awards to the NEOs in 2018 for 2017 performance under the Executive Incentive
Plan and Long-Term Stock Incentive Plan.

Estimated Possible Payouts Under
Non-Equity Incentive Plan
Awards(1)

Estimated Possible Payouts
Under Equity Incentive Plan
Awards (#)(1)

All Other
Stock
Awards:
Number of
Shares of
Stock(1)

Grant Date
Fair Value of
Stock
Awards(2)

Threshold

Target Maximum Threshold Target Maximum

561,750 $

1,123,500

51,711

103,421

155,132

1,300,000

262,500

525,000

33,214

66,428

99,642

201,250

402,500

17,900

35,800

53,700

262,500

525,000

21,480

42,959

64,439

125,000

250,000

15,911

31,822

47,733

39,777

33,015

17,900

20,684

15,911

17,182

500,000

835,000

415,000

450,000

225,000

540,000

260,000

400,000

200,000

Name
Gerald H. Lipkin

Ira Robbins

Alan D. Eskow

Rudy E. Schupp

Ronald H. Janis

____________

Grant
Date

2/1/2018

1/3/2017

(1) As discussed in the Compensation Discussion and Analysis, in January 2017, the Compensation Committee assigned a percentage share of the 2017 EIP
bonus pool of 5% of our 2017 net income before income taxes to each of our NEOs. The EIP permits the Compensation Committee to determine to pay
earned awards, in whole or in part, in the form of cash or equity awards granted under our Long-Term Stock Incentive Plan. For 2017, the Compensation
Committee determined that any cash awards that may be earned under the EIP bonus pool would be limited to a pre-established range set as a percentage
of the particular NEO’s base salary. Each NEO could earn between 0% to 200% of his target cash award as reported under “Estimated Possible Payouts
Under Non-Equity Incentive Plan Awards” above. See table (“EIP Cash Award”) in the Compensation Discussion and Analysis for information regarding
the salary amount used to determine the range of each NEO’s potential cash awards under the 2017 EIP bonus pool. The Compensation Committee
awarded each NEO the cash amount reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for 2017.
The Compensation Committee also granted each NEO an award of time-based restricted stock out of the 2017 EIP bonus pool (reported above under
“All Other Stock Awards: Number of Shares of Stock”). The Compensation Committee also made grants to the NEOs under the 2017 Long-Term Incentive
Stock Plan in the form of performance based restricted stock units (reported above under “Estimated Possible Payouts Under Equity Incentive Plan
Awards”). The threshold amounts reported above for the performance based restricted stock unit awards represent the number of shares that would be
earned based on achievement of threshold amounts under both the growth in tangible book value and relative TSR performance metrics measured over
the cumulative three-year performance period. The January 3, 2017 award reflects Mr. Janis's sign-on restricted stock grant. See our Compensation
Discussion and Analysis for information regarding these time-based restricted stock and performance based restricted stock unit awards.

(2) See grant date fair value details under footnote (1) of the Summary Compensation Table above.

Restrictions on performance based awards lapse based on achievement of the performance goals set forth in the performance
restricted stock unit award agreement. Any shares earned based on achievement of the specific performance goals vest when
the Compensation Committee certifies the payout level as a result of such performance achievement. Restrictions on time based
restricted stock awards lapse at the rate of 33% per year.

Dividends are credited on restricted stock and restricted stock units at the same time and in the same amount as dividends paid
to all other common shareholders. Credited dividends are accumulated and paid upon vesting, and are subject to the same time
based and performance based restrictions as the underlying restricted stock and units. Upon a “change in control,” as defined
in that plan, all restrictions on shares of time based restricted stock will lapse and restrictions on shares of performance based
restricted stock units will lapse at target.

The per share grant date fair values under ASC Topic 718 of each share of time based restricted stock and performance based
restricted stock units (with no market condition vesting requirement) was $12.57 per share awarded on February 1, 2018.
Performance based restricted stock units with market condition vesting requirements (i.e., TSR) awarded on February 1, 2018
had a $11.71 per share grant date fair value.

2018 Proxy Statement

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table represents stock option, restricted stock and restricted stock unit awards outstanding for each NEO as of
December 31, 2017 (including February 1, 2018 awards which were based on 2017 performance). All awards have been
adjusted for stock dividends and stock splits, as applicable.

Option Awards(1)

Stock Awards(2)

Number of
Securities
Underlying
Unexercised
Options
Exercisable

Number of
Securities
Underlying
Unexercised
Options
Unexercisable

Option
Exercise
Price

Option
Expiration
Date

Number of
Shares
or Units of
Stock
That Have
Not
Vested

Market Value
of Shares or
Units of
Stock That
Have Not
Vested(3)

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares
or Units That
Have Not
Vested

Equity Incentive
Plan Awards:
Market Value of
Unearned
Shares or Units
That Have Not
Vested(3)

Name

Grant Date

Gerald H. Lipkin

Total awards (#)

2/1/2018

1/24/2017

1/29/2016

1/27/2016

1/30/2015

11/15/2010

2/12/2008

Market value of in-the-money
options ($) (3)
Ira Robbins

2/1/2018

1/24/2017

1/29/2016

1/27/2016

1/30/2015

44,015

44,671

88,686

11.91

14.65

11/15/2020

2/12/2018

0 $

11/17/2008

1,216

0 $

14.24

11/17/2018

11.91

14.65

11/15/2020

2/12/2018

Total awards (#)

Market value of in-the-money
options ($) (3)

Alan D. Eskow

2/1/2018

1/24/2017

1/29/2016

1/27/2016

1/30/2015

11/15/2010

2/12/2008

Total awards (#)

Market value of in-the-money
options ($) (3)
Rudy E. Schupp

2/1/2018

1/24/2017

1/29/2016

1/27/2016

1/30/2015

Total awards (#)

Ronald H. Janis

2/1/2018

Total awards (#)

Market value of in-the-money
options ($) (3)
____________

1,216

21,170

21,059

42,229

0 $

39,777 $

39,858

29,586

13,661

446,298

447,207

331,955

153,276

155,132 $

172,719

202,967

1,740,581

1,937,907

2,277,290

122,951

1,379,510

122,882 $

1,378,736

653,769 $

7,335,288

33,015 $

22,143

17,259

3,643

370,428

248,444

193,646

40,874

99,642 $

1,117,983

66,431

77,115

745,356

865,230

32,787

367,870

76,060 $

853,392

275,975 $

3,096,439

17,900 $

19,929

17,751

8,197

200,838

223,603

199,166

91,970

53,700 $

59,787

79,319

602,514

670,810

889,959

73,770

827,699

63,777 $

715,577

266,576 $

2,990,982

20,684 $

22,143

17,259

3,643

232,074

248,444

193,646

40,874

64,439 $

66,431

77,115

723,006

745,356

865,230

32,787

367,870

63,729 $

715,038

240,772 $

2,701,462

15,911 $

178,521

47,733 $

535,564

15,911 $

178,521

47,733 $

535,564

2018 Proxy Statement

(1) All stock option awards are currently exercisable, however, the exercise prices may be higher than Valley's market price.
(2) Restrictions on time based restricted stock awards (reported above under “Number of Shares or Units of Stock That Have Not Vested”) lapse at the rate of 33% per year

commencing with the first anniversary of the date of grant. The 2018 awards represent the time-based restricted stock granted out of the 2017 EIP bonus pool.

Restrictions on performance based restricted stock unit awards (reported above under “Equity Incentive Plan Awards: Number of Unearned Shares or Units That Have Not
Vested”) lapse based on achievement of the performance goals set forth in the award agreement. Dividends are credited on these awards at the same time and in the same
amount as dividends paid to all other common shareholders. Credited dividends are accumulated and paid upon vesting, and are subject to the same time based or performance
based restrictions as the underlying restricted stock unit.

The award amount in the "Equity Incentive Plan Awards: Number of Unearned Shares or Units That Have Not Vested" column, represents the number of shares that may be
earned based on maximum performance achievement over the cumulative three-year performance period with respect to both the growth in tangible book value and total
shareholder return performance metrics, for the 1/29/2016 award, 1/24/2017 award and 2/1/2018 award.

(3) At per share closing market price of $11.22 as of December 31, 2017.

The following table shows the restricted stock that vested by NEOs in 2017 and the value realized upon vesting. None of our
NEOs exercised any options in 2017.

2017 STOCK VESTED

Name
Gerald H. Lipkin

Ira Robbins

Alan D. Eskow

Rudy E. Schupp

Ronald H. Janis

____________

Stock Awards

Number of
Shares Acquired
Upon Vesting (#)

Value Realized on
Vesting ($)(*)

161,973 $

40,484

86,095

33,092

17,182

2,009,129

503,682

1,071,636

414,460

202,919

* The value realized on vesting of restricted stock represents the aggregate dollar amount realized upon vesting by multiplying the number of shares of
restricted stock/units that vested by the fair market value of the underlying shares on the vesting date. Included above is the vesting of the final portion
of the performance-based awards granted on 1/30/2015 for Mr. Lipkin (78,074 shares), Mr. Robbins (20,820 shares), Mr. Eskow (46,844 shares) and
Mr. Schupp (20,820). These shares vested based on achievement of the performance goals set forth in the award agreement based on the applicable
growth in tangible book value conditions measured over the three-year performance period ending December 31, 2017. Dividends are credited on
these awards at the same time and in the same amount as dividends paid to all other common shareholders. Credited dividends are accumulated and
paid upon vesting, and are subject to the same time based or performance based restrictions as the underlying restricted stock. The performance based
awards granted on 1/30/2015 subject to vesting based on relative TSR performance lapsed without any vesting.

2018 Proxy Statement

2017 PENSION BENEFITS

PENSION PLAN

average

security wage

Valley maintains a non-contributory, defined benefit pension
plan (the "Pension Plan") for all eligible employees which
was frozen effective January 1, 2014. The annual retirement
benefit under the Pension Plan was (i) 0.85% of the
employee’s average final compensation up to the employee’s
average social security wage base plus (ii) 1.15% of the
employee’s average final compensation in excess of the
base,
social
employee’s
(iii) multiplied by the years of credited service (up to a
maximum of 35 years). Employees who were participants in
the Pension Plan on December 31, 1988 are entitled to the
higher of the foregoing or their accrued benefit as of
December 31, 1988 under the terms of the plan then in effect.
An employee’s “average final compensation” is the
employee’s highest consecutive five-year average of the
non-equity
employee’s
compensation, overtime pay and other special pay), i.e., the
amount listed as “Salary” in the Summary Compensation
Table, subject to each year’s annual compensation limit.
Employees hired on or after July 1, 2011, including Mr.
Schupp and Mr. Janis, are not eligible to participate in the
Pension Plan. As a result of amendments to the Pension Plan
adopted in 2013, participants will not accrue further benefits
and their pension benefits will be determined based on their
compensation and service up to December 31, 2013. Plan
benefits will not increase for any pay or service earned after
such date.

(excluding

annual

salary

BENEFIT EQUALIZATION PLAN

Valley maintains a Benefit Equalization Plan ("BEP") which
provides retirement benefits in excess of the amounts payable
from the Pension Plan for certain highly compensated
executive officers. The BEP was first adopted January 1,
1989 and was frozen effective January 1, 2014. Benefits were
determined as follows: (i) the benefit calculated under Valley
pension plan formula in effect prior to January 1, 1989 and
without regard to the limits on recognized compensation and
maximum benefits payable from a qualified defined benefit
plan, minus (ii) the individual’s pension plan benefit. In
general, officers of Valley who are participants in the Pension
Plan and who received annual compensation in excess of the
compensation limits under the qualified plan were eligible to
participate in the BEP. Mr. Lipkin, Mr. Robbins and
Mr. Eskow were participants in the BEP. One other executive
officer participated in the BEP. Executives hired on or after
July 1, 2011, including Mr. Schupp and Mr. Janis, are not
eligible to participate in the BEP. As a result of amendments
to the BEP adopted in 2013, participants will not accrue
further benefits and their benefits will be determined based
on their compensation for service and years of service up to
December 31, 2013. Benefits under the BEP will not increase
for any pay or service earned after such date except
participants may be granted up to three additional years of

service if employment is terminated in the event of a change
in control. The following table shows each pension plan that
the NEO participates in, the number of years of credited
service and the present value of accumulated benefits as of
December 31, 2017.

Name

Plan Name

Gerald H. Lipkin VNB Pension Plan

VNB BEP

Alan D. Eskow VNB Pension Plan

VNB BEP

Ira Robbins

VNB Pension Plan

VNB BEP

# of
Years
Credited
Service

Present
Value of
Accu-
mulated
Benefits ($)

$ 2,371,591

8,352,547

768,734

1,613,501

433,438

178,276

Present values of the accumulated benefits under the BEP
and Pension Plan were determined as of January 1, 2018
based upon the accrued benefits under each plan as of
December 31, 2017 and valued in accordance with the
following principal actuarial assumptions:
(i) post-
retirement mortality in accordance with the RP-2014 White
Collar Tables, rolled back to 2006, projected generationally
with Scale MP-2017, (ii) interest at an annual effective rate
of 3.69% compounded annually, (iii) retirement at the earliest
age (subject to a minimum age of 55 and a maximum age
equal to the greater of 65 and the participant’s age on
January 1, 2018) at which unreduced benefits would be
payable assuming continuation of employment and (iv) for
the BEP payment is based on an election by the participant
and for the Pension Plan it is assumed that 50% of participants
will elect a joint and two-thirds survivor annuity and 50%
will elect a straight life annuity (except for Mr. Lipkin whose
benefits are assumed to be payable in the form of a joint and
two-thirds survivor annuity as described below). Due to his
anticipated retirement the present value of Mr. Lipkin's
Pension Plan and BEP accrued benefits assume
commencement at May 1, 2018.

Gerald H. Lipkin. Pursuant to an amended and restated
agreement dated January 24, 2017, an annual combined
benefit from the Pension Plan, the BEP and, to the extent
necessary, from the Company, in the form of a joint and two-
thirds survivor annuity (the “Annual Combined Benefit”)
will be provided to Mr. Lipkin upon his retirement and will
continue for as long as Mr. Lipkin survives. The Annual
Combined Benefit is estimated to be $866,478 as of
December 31, 2017. The Annual Combined Benefit is
estimated to be $890,100 as of Mr. Lipkin’s anticipated
retirement date of May 1, 2018.

The agreement provides that, should Mr. Lipkin survive past
the tenth anniversary of his retirement (the “Initial Ten Year
Period”), and should his spouse survive him, she will be
entitled to a survivor benefit of two-thirds of the Annual
Combined Benefit per year for the remainder of her life (the

2018 Proxy Statement

“Annual Post 10 Year Spousal Survivor Benefit”), which is
estimated to be $577,652 as of December 31, 2017 ($593,436
as of May 1, 2018). If Mr. Lipkin dies (i) before commencing
receipt of benefits under the Pension Plan or (ii) before the
end of the Initial Ten Year Period, and, in either case, if his
spouse survives him, she will be entitled to an annual survivor
benefit equal to the Annual Combined Benefit through the
end of the Initial Ten Year Period (the “Annual 10 Year
Spousal Survivor Benefit”) and, thereafter, the Annual Post
10 Year Spousal Survivor Benefit. In the event that both Mr.
Lipkin and his spouse die prior to the end of the Initial Ten
Year Period, the estate of the last surviving of Mr. Lipkin and
his spouse will be entitled to a lump sum payment equal to
the Annual Combined Benefit multiplied by the number of
years (including fractional years) from the date of decease to
the end of the Initial Ten Year Period (the “10 Year Estate
Benefit”). The foregoing description assumes that pension
benefits under the Pension Plan and the BEP are paid to Mr.
Lipkin in the form of a joint and two-thirds survivor annuity
with his current wife. The agreement provides that for both
the Pension Plan and the BEP the actuarial adjustment from
the single life annuity to the joint and two-thirds survivor
annuity in the BEP will be made using the actuarial factor
defined in the Pension Plan.

The agreement also specifies the manner in which Mr.
Lipkin’s annuity payments are to be actuarially converted
into a lump sum in the event of a change in control. Mr.
Lipkin elected to take his BEP benefits as a lump sum in the
event of a change in control and is the only participant to have
made that election. Under the BEP, the lump sum is to be
calculated using the lesser of 6% or the applicable interest
rate under the Pension Plan. Under the agreement the
actuarial assumptions used to convert the guaranteed annuity
benefit specified above are more fully defined and instead of
the BEP assumption on interest rates the agreement uses the
lesser of 6% or the Pension Benefit Guaranty Corporation
immediate interest rate used to determine lump sum payments
for the calendar month immediately preceding the month the
lump sum payments is made. Assuming the current interest
rate environment, the agreement provides for a greater lump
sum benefit payable upon a change in control than would
otherwise be provided using the BEP formula.

EARLY RETIREMENT BENEFITS

An NEO’s accrued benefits under the Pension Plan and BEP
are payable at age 65, the individual’s normal retirement age.
If an executive terminates employment after both attainment
of age 55 and completion of 10 years of service, he is eligible
for early retirement. Upon early retirement, an executive may
elect to receive his accrued benefit unreduced at age 65 or,
alternatively, to receive a reduced benefit commencing on the
first day of any month following termination of employment
and prior to age 65. The amount of reduction is 0.5% for each
of the first 60 months and 0.25% for each of the next 60
months that benefits commence prior to the executive’s
normal retirement date (resulting in a 45% reduction at age

2018 Proxy Statement

55, the earliest retirement age under the plans). However,
there is no reduction for early retirement prior to the normal
retirement date if the sum of the executive’s age and years of
credited service at the benefit commencement date equals or
exceeds 80.

LATE RETIREMENT BENEFITS

Effective December 31, 2013, the BEP was amended to
specify the manner in which actuarial increases would be
applied to benefits for executives postponing retirement
beyond April 1st of the year in which the executive reaches
age 70 1/2. The only NEO covered by the BEP who has
currently postponed retirement beyond April 1st of the year
in which he reached age 70 1/2 is Mr. Lipkin.

401(k) PLAN

Under the 401(k) Plan, Valley matches the first four percent
(4%) of salary contributed by an employee each pay period,
and 50% of the next 2% of salary contributed, for a maximum
matching contribution of five percent (5%), with an annual
limit of $13,500 in 2017.

2017 NONQUALIFIED DEFERRED
COMPENSATION

DEFERRED COMPENSATION PLAN

Effective January 1, 2017, Valley established the Valley
National Bancorp Deferred Compensation Plan (the "Plan")
for the benefit of certain eligible employees. The Plan is
intended to constitute a nonqualified, unfunded plan for
federal tax purposes and for purposes of Title I of ERISA.
The Plan is maintained for the purpose of providing deferred
compensation for selected employees participating in the
401(k) Plan whose contributions are limited as a result of the
limitations under Section 401(a)(17) of the Code on the
amount of compensation which can be taken into account
under the 401(k) Plan. Each of our NEOs participates in the
Plan.

Participant Deferral Contributions. Each participant in
the Plan is permitted to defer, for that calendar year, up to
five percent (5%) of the portion of the participant’s salary
and cash bonus above the limit in effect for that calendar year
under the Company's 401(k) Plan. The Compensation
Committee has the authority to change the deferral
percentage, but any such change only applies to calendar
the
years beginning after such action
Compensation Committee. No deferrals may be taken until
a participant’s salary and bonus for such calendar year is in
excess of the limit in effect under the Company's 401(k) Plan.

taken by

Company Matching Contributions. Each calendar year, it
is expected the Company will match 100% of a participant’s
deferral contributions under the Plan that do not exceed five
percent (5%) of the participant’s salary and bonus. A

withholdings. The benefit will be paid to the participant in
a single lump sum within thirty days following the earlier of
the participant’s separation from service with Valley or the
date on which a change in control occurs, and will represent
a complete discharge of any obligation under the Plan.

Participant shall vest in the Company Matching Contribution
after two years of participation in the Plan.

Earnings on Deferrals. Participants’ deferral contributions
and company matching contributions will be adjusted at the
end of each calendar year by an amount equal to the one-
month LIBOR average for the applicable calendar year plus
200 basis points, multiplied by the balance in the participant’s
notional account at the end of the calendar year. The
Compensation Committee may adjust the earnings rate
prospectively.

Amount, Form and Time of Payment. The amount payable
to the participant will equal the amount credited to the
participant’s account as of his or her separation from service
with Valley, net of all applicable employment and income tax

The following table shows each NEO's deferred compensation plan activity during 2017 and in aggregate:

Name

NEO
Contribution in
2017

Valley's
Contribution in
2017*

Aggregate
Earnings in
2017*

Aggregate
Withdrawals/
Distributions

Aggregate
Balance at
12/31/2017

Gerald H. Lipkin

Ira Robbins

Alan D. Eskow

Rudy E. Schupp

Ronald H. Janis

_________

42,675 $

2,657 $

0 $

22,702

15,081

22,702

10,635

22,702

15,081

22,702

10,635

1,413

939

1,413

662

88,007

46,817

31,101

46,817

21,932

* Included in the Summary Compensation Table above, under "All Other Compensation" for 2017.

OTHER POTENTIAL POST-EMPLOYMENT
PAYMENTS

EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

Valley and the Bank are parties to severance and change in
control arrangements with Messrs. Robbins, Eskow and Janis
and a retirement term sheet with Mr. Lipkin. The following
discussion describes the agreements currently in place with
each of our named executive officers.

In connection with his retirement as CEO on December 31,
2017, the Board and various Committees of the Board
clarified Mr. Lipkin’s role after his retirement in a term sheet.
The term sheet provides that after his retirement, Mr. Lipkin
would continue as an employee until the 2018 Annual
Meeting at his current salary, he would receive cash bonuses
and equity awards for his service in 2017, a pro-rata cash
bonus for his services in 2018 and the post retirement
provisions in his severance agreement would continue except
for those relating to severance pay. The term sheet also
provided that he would be renominated as a director for
election at the 2018 Annual Meeting and continue as
Chairman of the Board until the 2019 Annual Meeting. It

also provided that upon his reelection to the Board at the 2018
Annual Shareholders meeting he would be paid the standard
non-management director fees, plus $150,000 for service as
Chairman and $350,000 for making himself available to
assist and consult with the CEO and other senior staff at the
CEO’s request. The term sheet also provided for continuation
of certain of his business-related perquisites. By its terms
Mr. Lipkin’s change in control agreement ceases after he is
no longer an employee of the Company.

Mr. Schupp retired on January 15, 2018 and thus his
employment and change in control agreements have lapsed,
except as set forth below.

SEVERANCE AGREEMENT PROVISIONS

In the event of termination of employment without cause, the
severance agreement with Mr. Eskow provides for a lump
sum payment equal to twelve months of base salary as in
effect on the date of termination, plus a fraction of the NEO’s
most recent annual cash bonus, which is equal to (a) the
number of months which have elapsed in the current calendar
year divided by (b) 12. Mr. Robbins’ and Mr. Janis' severance
agreements, provide, in the event of termination of
employment without cause, a lump sum payment equal to
twenty four months of base salary as in effect on the date of

2018 Proxy Statement

termination, plus the sum of one times his most recent annual
cash bonus and a fraction of his most recent annual cash bonus
calculated in the same manner referenced above. No
severance payment is made under the severance agreements
if the NEO receives severance under a change in control
agreement (described below). Under Mr. Janis' severance
agreement, his equity awards would also vest as if he retired.

For the purpose of the severance agreements, “cause” means
willful and continued failure to perform employment duties
after written notice specifying the failure, willful misconduct
causing material injury to us that continues after written
notice specifying the misconduct, or a criminal conviction
(other than a traffic violation), drug abuse or, after a written
warning, alcohol abuse or excessive absence for reasons other
than illness.

Under the severance agreements with Messrs. Robbins,
Eskow and Janis, we provide the NEOs with a lump sum cash
payment in place of medical benefits. The payment is 125%
of total monthly premium payments under COBRA reduced
by the amount of the employee contribution normally made
for the health-related benefits the NEO was receiving at
termination of employment, multiplied by 36. COBRA
provides temporary continuation of health coverage at group
rates after termination of employment. Under the severance
agreements with these NEOs, we also provide a lump sum
life insurance benefit equal to 125% of our share of the
premium for three years of coverage, based on the coverage
and rates in effect on the date of termination.

Under these agreements, each NEO is required to keep
confidential all confidential information that he obtained in
the course of his employment with us and is also restricted
from competing with us in certain states during the term of
his employment with us and for a period after termination of
his employment.

In connection with the acquisition of 1st United Bank, where
Mr. Schupp served as CEO, Valley entered into an
employment agreement with Mr. Schupp for him to serve as
the President of the Florida Division of the Bank. The
agreement had a three-year term, expiring on November 1,
2017. Mr. Schupp’s Employment Agreement was extended
on October 31, 2017 for another year until October 31, 2018.
The extension provided that if Mr. Schupp retired his
retirement would be treated as a qualified retirement under
the Company’s stock plans so that his previously granted
equity awards would vest and he would still be entitled to a
cash bonus and equity award for his service in 2017. The
extension agreement also reiterated that the 15-year post
employment health and lump sum life insurance benefits
provided for in his employment agreement would be honored.
Mr. Schupp retired on January 15, 2018.

CHANGE IN CONTROL ("CIC") AGREEMENT
PROVISIONS

Each of Messrs. Eskow, Robbins and Janis is a party to a CIC
Agreement. Mr. Lipkin and Mr. Schupp's CIC Agreements
terminated or will terminate upon their respective retirement
dates. If one of these NEOs is terminated without cause or
resigns for good reason following a CIC during the contract
period (which is defined as the period beginning on the day
prior to the CIC and ending on the earlier of (i) the third
anniversary of the CIC or (ii) the NEO’s death), the NEO
would receive three times the highest annual salary and non-
equity incentive received in the three years prior to the CIC.
The NEOs would also receive payments for medical and life
insurance identical to the benefits described above under
“Severance Agreement Provisions.” Certain of the CIC
Agreements also provide for a lump sum cash payment upon
termination due to death or disability during the contract
period equal to, for Mr. Eskow, the highest annual salary paid
to him during any calendar year in the three years preceding
the CIC, and for Mr. Robbins and Mr. Janis, one-twelfth of
this amount.

Payments under the CIC Agreements are triggered by the
specified termination events following a “change in control.”
The events defined in the agreements as a change in control
are:

• Outsider stock accumulation. We learn, or one of
our subsidiaries learns, that a person or business
entity has acquired 25% or more of Valley’s
common stock, and that person or entity is neither
our “affiliate” (meaning someone who is controlled
by, or under common control with, Valley) nor one
of our employee benefit plans;

• Outsider tender/exchange offer. The first purchase
of our common stock is made under a tender offer
or exchange offer by a person or entity that is neither
our “affiliate” nor one of our employee benefit
plans;

• Outsider subsidiary stock accumulation. The sale of
our common stock to a person or entity that is neither
our “affiliate” nor one of our employee benefit plans
that results in the person or entity owning more than
50% of the Bank’s common stock;

• Business combination transaction. We complete a
merger or consolidation with another company, or
we become another company’s subsidiary (meaning
that the other company owns at least 50% of our
common stock), unless, after the happening of either
event, 60% or more of the directors of the merged
company, or of our new parent company, are people
who were serving as our directors on the day before
the first public announcement about the event;

2018 Proxy Statement

• Asset sale. We sell or otherwise dispose of all or
substantially all of our assets or the Bank’s assets;

• Dissolution/Liquidation. We adopt a plan of

dissolution or liquidation; and

changes

• Board turnover. We experience a substantial and
rapid turnover in the membership of our Board of
Directors. This means
in board
membership occurring within any period of two
consecutive years that result in 40% or more of our
board members not being “continuing directors.” A
“continuing director” is a board member who was
serving as a director at the beginning of the two-
year period, or one who was nominated or elected
by the vote of at least 2/3 of the “continuing
directors” who were serving at the time of his/her
nomination or election.

“Cause” for termination of an NEO’s employment under the
CIC Agreements means his willful and continued failure to
perform employment duties, willful misconduct in office
causing material injury to the Company, a criminal
conviction, drug or alcohol abuse or excessive absence.
“Good reason” for a NEO’s voluntary termination of
employment under the CIC Agreements means any of the
following actions by us or our successor:

• We change the NEO’s employment duties to include
duties not in keeping with his position within Valley
or the Bank prior to the change in control;

• We demote the NEO or reduce his authority;

• We reduce the NEO’s annual base compensation;

• We terminate the NEO’s participation in any non-
equity incentive plan in which the NEO participated
before the change in control, or we terminate any
employee benefit plan
the NEO
participated before the change in control without
providing another plan that confers benefits similar
to the terminated plan;

in which

• We relocate the NEO to a new employment location
that is outside of New Jersey or more than 25 miles
away from his former location, or in the case of Mr.
Janis, outside of 10 miles of his New York office;

• We fail to get the person or entity who took control
of Valley to assume our obligations under the NEO’s
CIC Agreement; and

• We terminate the NEO’s employment before the end
of the contract period, without complying with all
the provisions in the NEO’s CIC Agreement.

PARACHUTE PAYMENT REIMBURSEMENT

Mr. Eskow is entitled to receive a tax “gross-up” payment in
the event that payments to such executive following a change
in control of Valley exceed the limit provided under Section
280G of the Internal Revenue Code. Since the execution of
the change in control agreements of Mr. Eskow, Valley
adopted a policy prohibiting tax “gross-up” payments. The
tax “gross-up” payment provisions were in effect prior to
adoption of such policy and thus remain in effect. Mr. Robbins
and Mr. Janis are not entitled to receive tax gross-up payments
under their agreements. Mr. Robbins has a net best provision
in his change in control agreement whereby he would be
entitled to the greater after-tax benefit of either (i) his full
change in control payment and benefits less any 280G excise
tax, the payment of which would be his responsibility, or (ii)
his change in control payment and benefits cut back to the
amount that would not result in 280G excise tax. Mr. Janis
has a cut back provision which would bring his total 280G
parachute payment to the Section 280G limit.

PENSION PLAN PAYMENTS

The present value of the benefits to be paid to each NEO who
is a participant in our pension plans following termination of
employment over his estimated lifetime is set forth in the
table below. Each such NEO receives three years additional
service under the BEP upon termination without cause or
resignation for good reason occurring during their change in
control contract period. Present values of the BEP and
Pension Plan were determined as of January 1, 2018 based
on RP-2014 White Collar Tables projected generationally
with Scale MP-2015, and interest at an annual effective rate
of 4.11% compounded annually for the pension plan and the
BEP.

EQUITY AWARD ACCELERATION

In the event of a change in control or termination of
employment as a result of death, all restrictions on an NEO’s
equity awards will immediately lapse (for performance based
restricted stock units, all restrictions will lapse with respect
to the target amount of shares). In the case of retirement (as
defined), all restrictions will lapse on outstanding time based
restricted stock awards, and performance based restricted
stock unit awards will remain outstanding and vest in
accordance with the original vesting schedule based on actual
performance. For awards made under the 2016 and 2009
LTSIP, a minimum of 50% of any accelerated equity award
must be retained by the NEO for a period of 18 months or in
some cases 24 months. Upon termination of employment for
any other reason (other than termination due to disability
which may be treated differently), NEOs will forfeit all shares
whose restrictions have not lapsed unless otherwise provided.

2018 Proxy Statement

SEVERANCE BENEFITS TABLE

The table set forth below illustrates the severance amounts and benefits that would be paid to each of the current NEOs, if he
had terminated employment with the Bank on December 31, 2017, the last business day of the most recently completed fiscal
year, under each of the following retirement or termination circumstances: (i) death; (ii) retirement or resignation; (iii) dismissal
without cause; and (iv) dismissal without cause or resignation for good reason following a change in control of Valley on
December 31, 2017. Upon dismissal for cause, the NEOs would receive only their salary through the date of termination and
their vested BEP and pension benefits. These payments are considered estimates as of specific dates as they contain some
assumptions regarding stock price, life expectancy, salary and non-incentive compensation amounts and income tax rates and
laws. Mr. Lipkin retired as CEO on December 31, 2017; his post-retirement benefits are described under the previous section.
Mr. Lipkin's continuing pension, benefit equalization plan benefits and acceleration of equity awards are described below. Mr.
Schupp retired effective January 15, 2018, and the benefits he received are described under the previous sections. Mr. Schupp's
continuing welfare benefits and his acceleration of equity awards are described below.

Executive Benefits and Payments Upon Termination

Death

Retirement or
Resignation

Dismissal
Without Cause (3)

Dismissal without
Cause or
Resignation for Good
Reason
(Following a Change in
Control)

Mr. Lipkin
Amounts payable in full on indicated date of termination:
Severance – Salary component
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (2)
Deferred compensation
Welfare benefits lump sum payment
“Parachute Penalty” tax gross-up (1)

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan (3)
Pension plan (3)

Total

Mr. Robbins
Amounts payable in full on indicated date of termination:
Severance – Salary component
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (2)
Deferred compensation
Welfare benefits lump sum payment
“Parachute Penalty” tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan (2)
Pension plan (2)

Total

Mr. Eskow
Amounts payable in full on indicated date of termination:
Severance – Salary component
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (2)
Deferred compensation
Welfare benefits lump sum payment
“Parachute Penalty” Tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan (3)
Pension plan (3)

Total

N/A
N/A
932,438 $

2,810,128
85,350
48,991
N/A
3,876,907

8,730,725
2,395,773
15,003,405 $

0 $
0
482,965
1,073,720
45,404
75,489
N/A
1,677,578

0
294,773
1,972,351 $

0 $
0
514,740
1,040,509
30,163
11,250
N/A
1,596,662

1,701,695
808,473
4,106,830 $

N/A
N/A
932,438 $

2,810,128
85,350
48,991
N/A
3,876,907

8,730,725
2,395,773
15,003,405 $

0 $
0
0
0
45,404
0
N/A
45,404

0
294,773
340,177 $

0 $
0
514,740
1,040,509
30,163
0
N/A
1,585,412

1,701,695
808,473
4,095,580 $

N/A
N/A

0 $
0
85,350
48,991
N/A
134,341

8,730,725
2,395,773
11,260,839 $

1,500,000 $
250,000
0
0
45,404
75,489
N/A
1,870,893

0
294,773
2,165,666 $

575,000 $

0
0
0
30,163
11,250
N/A
616,413

1,701,695
808,473
3,126,581 $

N/A
N/A
932,438
2,810,128
85,350
46,384
N/A
3,874,300

10,964,498
2,395,773
17,234,571

2,250,000
1,350,000
482,965
1,073,720
45,404
77,435
N/A
5,279,524

212,184
294,773
5,786,481

1,725,000
750,000
514,740
1,040,509
30,163
11,250
2,133,080
6,204,742

2,044,627
808,473
9,057,842

2018 Proxy Statement

Executive Benefits and Payments Upon Termination

Death

Retirement or
Resignation

Dismissal
Without Cause (3)

Dismissal without
Cause or
Resignation for Good
Reason
(Following a Change in
Control)

Mr. Schupp
Amounts payable in full on indicated date of termination:
Severance – Salary component
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (2)
Deferred compensation
Welfare benefits continuation (4)
“Parachute Penalty” tax gross-up (1)

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan
Pension plan

Total

Mr. Janis
Amounts payable in full on indicated date of termination:
Severance – Salary component (5)
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (2)
Deferred compensation (6)
Welfare benefits lump sum payment
“Parachute Penalty” Tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan
Pension plan

Total

N/A
N/A
482,965 $

1,073,720
45,404
471,997
N/A
2,074,086

N/A
N/A
2,074,086 $

0 $
0
0
0
10,635
51,798
N/A
62,433

N/A
N/A
62,433 $

N/A
N/A
482,965 $

1,073,720
45,404
471,997
N/A
2,074,086

N/A
N/A
2,074,086 $

0 $
0
0
0
10,635
0
N/A
10,635

N/A
N/A
10,635 $

N/A
N/A

0 $
0
45,404
471,997
N/A
517,401

N/A
N/A
517,401 $

1,000,000 $
200,000
0
0
10,635
51,798
N/A
1,262,433

N/A
N/A
1,262,433 $

N/A
N/A
482,965
1,073,720
45,404
471,997
N/A
2,074,086

N/A
N/A
2,074,086

1,477,709
600,000
0
0
21,269
53,280
N/A
2,152,258

N/A
N/A
2,152,258

____________
N/A – Not applicable (a parachute penalty tax gross up is payable only upon a CIC).

(1)

Messrs. Lipkin and Schupp's 280G status was not considered due to their retirements.

(2) Upon death, dismissal without cause upon a change in control or resignation for good reason upon a change in control, unearned performance restricted
unit awards immediately vest at the target amount. Upon retirement, performance restricted stock unit awards continue to vest according to the schedules
set forth in their respective award agreements, therefore the same amounts is shown in all columns assuming the target amount is earned.

(3) Upon dismissal for cause, Messrs. Lipkin and Eskow would receive BEP benefits.

(4) Mr. Schupp's welfare benefits continuation is equal to fifteen years of medical and dental coverage assuming cost remains at rates as of 12/31/2017

plus a lump sum payment of $23,277 in lieu of life insurance.

(5) Mr. Janis's payments will be "cut back" in the event that his parachute payments exceed his 280G limit. In the table above, the "Severance - Salary

Component" has been reduced by $22,291 to reduce Mr. Janis's parachute payments to his 280G limit.

(6)

In case of death, retirement or resignation, or dismissal without cause, Mr. Janis would only receive the contributions he made under the Company's
deferred compensation plan. In the event of a change-in-control, the Company contributions would vest immediately.

CEO PAY RATIO

Beginning with our 2018 proxy statement, we are required
to disclose the pay ratio of our CEO to our median employee
under the Dodd-Frank Act and SEC rules.

The pay ratio disclosure below is a reasonable estimate
calculated in a manner consistent with SEC rules and
guidance. We identified the median employee for 2017 by
examining the 2017 total W-2 compensation, including
401(k) deferrals, for all individuals, excluding our CEO, who
were employed by us on October 13, 2017. We included all
employees, whether employed on a full-time, part-time,
temporary or seasonal basis as of that payroll date. We did
not make any assumptions, adjustments or estimates with

respect to such total W-2 reported compensation. We did not
annualize the compensation for any full or part time
employees that were not employed by us for all of 2017. We
believe the use of total W-2 compensation, including 401(k)
deferrals, for all employees is a consistently applied
compensation measure.

for such employee using

After identifying the median employee based upon the
methodology described above, we calculated annual total
compensation
the same
methodology we used for our CEO and other named
executive officers as set forth in the 2017 Summary
Compensation Table in this proxy statement. The annual total
compensation in 2017 for our median employee using this
methodology was $48,271.

2018 Proxy Statement

voted in favor of the Company’s executive compensation
program.

RECOMMENDATION ON ITEM 3

THE VALLEY BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE NON-
BINDING APPROVAL OF THE COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
DETERMINED BY THE COMPENSATION AND
HUMAN RESOURCES COMMITTEE AS
DISCLOSED PURSUANT TO THE SEC’S
COMPENSATION DISCLOSURE RULES
(INCLUDING THE COMPENSATION
DISCUSSION AND ANALYSIS, COMPENSATION
TABLES AND RELATED NARRATIVE
DISCUSSION).

The annual total compensation in 2017 for our CEO using
this methodology is shown in the Summary Compensation
Table and was $4,844,838.

The ratio of the annual total compensation of our CEO to the
annual total compensation of our median employee in 2017
was 100 to 1.

If the total cost of the Company paid health insurance is
factored in for both the median employee and our CEO, the
ratio declines to 92 to 1.

ITEM 3

ADVISORY VOTE ON EXECUTIVE
COMPENSATION

(the

Under the Dodd-Frank Wall Street Reform and Consumer
Protection Act
“Dodd-Frank Act”), Valley’s
shareholders are entitled to vote at the Annual Meeting to
approve the compensation of our named executive officers,
as disclosed in this proxy statement, commonly referred to
as a "say-on-pay vote." Pursuant to the Dodd-Frank Act, the
shareholder vote on executive compensation is an advisory
vote only and is not binding on Valley or the Board of
Directors. We currently hold an annual say-on-pay vote.

The Company’s goal for its executive compensation program
is to reward executives who provide leadership for and
contribute to our financial success. The Company seeks to
accomplish this goal in a way that is aligned with the long-
term interests of the Company’s shareholders. The Company
believes that its executive compensation program satisfies
this goal.

The Compensation Discussion and Analysis beginning on
page 22 of this Proxy Statement, describes the Company’s
executive compensation program and the decisions made by
the Compensation and Human Resources Committee in 2017
and early 2018.

the
The Company requests shareholder approval of
compensation of the Company’s named executive officers as
disclosed pursuant to the SEC’s compensation disclosure
rules
the Compensation
Discussion and Analysis, the compensation tables and related
narrative discussion).

(which disclosure

includes

As an advisory vote, this proposal is not binding upon the
Board of Directors or the Company. However, the
Compensation and Human Resources Committee, which is
responsible for designing and administering the Company’s
executive compensation program, values the opinions
expressed by shareholders in their vote on this proposal, and
will consider the outcome of the vote when making future
compensation decisions for named executive officers. In
2017, approximately 97% of the shares voted on the proposal

2018 Proxy Statement

COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

The members of the Compensation and Human Resources
Committee are Gerald Korde, Andrew B. Abramson, Pamela
Bronander, Eric P. Edelstein, Michael L. LaRusso, Marc J.
Lenner, and Suresh L. Sani. All of the members of the
Compensation and Human Resources Committee, or their
affiliates, have engaged in loan transactions with the Bank,
as discussed below,
in “Certain Transactions with
Management”. No other relationships required to be reported
rules
under
promulgated by the Securities and Exchange Commission
exist with respect to members of our Compensation and
Human Resources Committee.

the compensation committee

interlock

CERTAIN TRANSACTIONS WITH MANAGEMENT

POLICY AND PROCEDURES FOR REVIEW, APPROVAL OR
RATIFICATION OF RELATED PARTY TRANSACTIONS. Our
related party transactions between Valley or any of its
subsidiaries and an executive officer, director or an
immediate family member and the companies such persons
may own or control or have a substantial ownership interest
in (collectively "insiders") are governed by our written
related party transaction policy. Insiders may use Valley's
services or may provide services to Valley. We require our
directors and executive officers to complete a questionnaire,
annually, to provide information specific to related party
transactions. We expect our directors and officers to use the
services of Valley National Bank.

With respect to the use of the Bank’s services by insiders,
loans to insiders by the Bank are governed by Regulation O.
Regulation O requires that such loans (i) be made on the same
or substantially similar terms and conditions, including
interest rates and collateral, as those prevailing at the time
for comparable loans to third parties, and (ii) not involve more
than the normal risk of collectability. Regulation O also
requires that such loans be approved by a majority of the
directors with the director who is the borrower, or related to
the borrower, not present or voting.

With respect to other bank services provided to insiders, those
services are provided on the same terms and conditions as
provided to third parties, with no Board approval required.

With respect to insiders providing products or services, these
transactions are subject to the related party transaction policy.

Under the related party transactions policy, transactions are
referred for review and approval to the Nominating and
Corporate Governance Committee. If the transaction
presents a continuing relationship the activity is reviewed
and, if appropriate, approved by the Committee. If the
transaction is new, the Committee is charged with reviewing
it and approving it if it is believed to be in the best interests
of Valley. If a transaction is not approved, the services offered

will not be used. If an ongoing transaction fails to be ratified
it will, if possible, be cancelled in accordance with any
The Audit Committee oversees
contractual rights.
compliance with the related party transaction policy.

TRANSACTIONS. The Bank has made loans to its directors
and executive officers and their associates and, assuming
continued compliance with generally applicable credit
standards, it expects to continue to make such loans. All of
these loans (i) were made in the ordinary course of business,
(ii) were made on the same terms, including interest rates and
collateral, as those available to other persons not related to
Valley, and (iii) did not involve more than the normal risk of
collectability or present other unfavorable features.

During 2017, Valley made payments for services to insider
entities with which at least one director is affiliated; except
as indicated, the payments were less than 5% of the entity’s
gross revenue. Each of the following payments were
approved, under our related party transaction policy.

• During 2017, Valley and its borrowers made
payments totaling approximately $356,590 for legal
services to a law firm in which director Graham O.
Jones is the sole equity partner. The fees represented
30% of the firm's gross revenues.

Of the fees paid by Valley and its borrowers to
Jones & Jones, $251,630 were for loan review
services and approximately $104,960 were for
collection proceedings.

With respect to loan closings, Valley sets the fees to
be paid by a borrower when Jones & Jones acts as
its review counsel in commercial real estate loan
transactions which fees are subject to the acceptance
by the borrower. In collection actions, the fee must
be reasonable. Valley currently utilizes over 100 law
firms for loan closings and collection efforts. Jones
and Jones’ fees are comparable.

• During 2017, Valley made payments totaling
$465,000 for fees pursuant to a long-standing
consulting agreement with MG Advisors, Inc. MG
Advisors is 100% owned by Michael Guilfoile, the
spouse of Mary Guilfoile.

Valley paid MG Advisors a monthly retainer totaling
$90,000 in 2017 under an agreement first entered
into in 1993. The monthly fees paid are considered
comparable to other professional fees which are
available to Valley. Mr. Guilfoile’s 40 years of
consulting and investment banking experience in
the financial services sector and his knowledge of
Valley through his over 31-year association with the
Company is the basis for the belief that the
agreement is in the best interest of the Company.
The retainer agreement also provides for additional
mutually agreed upon fees to MG Advisors if a
transaction Mr. Guilfoile works on is consummated.

2018 Proxy Statement

located in Westbury, New York. In connection with
the acquisition of State Bancorp, the Boards of State
Bancorp and Valley agreed that Mr. Wilks was to be
elected to the Board of Valley National Bancorp. In
connection with the merger of State Bancorp into
Valley, effective January 1, 2012, Valley assumed
the lease for the Westbury, New York branch. The
lease provides for fixed rental payments of
approximately $190,000 per year with no additional
rent, such as real estate taxes, insurance and parking
lot maintenance. The lease may be terminated at
any time by the landlord upon not less than 130 days
written notice. The landlord, Westbury Plaza
Associates, L.P., is a limited partnership which is
controlled by the Estate of Mr. Wilks’ father-in-law
and beneficially owned by both the Estate and a trust
for the benefit of Mr. Wilks’ spouse. Westbury Plaza
Associates is a limited partnership which is part of
a larger organization. Valley’s rental payments in
2017 represented approximately 0.42% of the
annual gross revenue of the larger organization.

EMPLOYMENT OF IMMEDIATE FAMILY MEMBERS. Valley has
always welcomed as new employees qualified relatives of
our current employees. Currently, a number of our employees
have relatives who also work for Valley. Rudy Schupp was
President of Valley National Bancorp until January 2018.
Valley employs Mr. Schupp’s son-in-law, who in 2017 earned
$156,427. Dianne Grenz is an executive officer of Valley.
Valley employs her daughter, who in 2017 earned $134,164.

SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
our directors, executive officers and any beneficial owners
of more than 10% of our common stock to file reports relating
to their ownership and changes in ownership of our common
stock with the SEC and NYSE by certain deadlines. Based
on information provided by our directors and executive
officers, Mr. Crandell filed a Form 4 (to report a grant of
shares and shares withheld for taxes in connection with
restricted stock vesting) late due to administrative error.

We believe all our other directors and executive officers
complied with their Section 16(a) reporting requirements in
2017.

•

$375,000 of such fees were paid in connection with
the USAB transaction for 2017.

Under the monthly retainer, Mr. Guilfoile is
available to all senior management and the board of
directors for strategic advisory matters, merger and
financial
transactions, and other
acquisition
transactions related to the Company’s activities.
Ms. Guilfoile, does not provide any advice to Valley
through MG Advisors. Ms. Guilfoile joined the
Valley Board in 2003 after serving in various full
time positions in the financial services industry,
most recently as Treasurer of JP Morgan Chase.

In 2001, Valley National Bank purchased $150
million of bank-owned life insurance ("BOLI")
from a nationally known life insurance company
after a lengthy competitive selection process and
substantial negotiations over policy costs and terms.
The amount of the premiums and the terms of the
policies are substantially the same as those
prevailing for comparable policies with other
insurance companies and brokers. During 2007, the
Bank purchased $75 million of additional BOLI
from the same life insurance company. This
purchase was also completed after a competitive
selection process with other vendors. The son-in-
law of Mr. Lipkin is a licensed insurance broker who
introduced Valley to the program offered by this
nationally recognized life insurance company.
Mr. Lipkin’s son-in-law was introduced to an
insurance broker for the life insurance company
sometime in 2000 or 2001 by a mutual friend. The
son-in-law introduced the broker to Valley National
Bank and provided assistance during the BOLI
proposal and selection process. As is customary
among brokers who introduce a client to another
broker, Mr. Lipkin’s
receives
commissions (with a percentage dollar amount and
time period for payment which are each typical for
such referral services) for the life of the policy.

son-in-law

In 2017, Mr. Lipkin’s son-in-law received $23,605
in insurance commissions relating to the Bank’s
BOLI purchases, pursuant to the arrangement he
entered into with the insurance broker associated
with the insurance company. The aggregate amount
of commissions paid to date (from 2001 to 2017) to
the son-in-law totaled approximately $818,908 and
the anticipated aggregate amount of commissions
he will receive over the next 15 years is
approximately $300,000 (the compensation was
structured as a declining revenue stream; for
example, he would earn approximately $11,000 in
year 2032).

•

In 2011 Valley acquired State Bancorp, Inc. At the
time of acquisition, State Bancorp leased a branch

2018 Proxy Statement

ITEM 4

SHAREHOLDER PROPOSAL

Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY
11021, the beneficial owner of no less than 500 shares of
Common Stock, has advised the Company that he intends to
propose a resolution at the 2018 Annual Meeting. Mr. Steiner
has appointed John Chevedden of 2215 Nelson Ave., No. 205
Redondo Beach, CA 90278, and/or his designee to act on his
behalf in matters relating to the proposed resolution. In
accordance with SEC rules, the text of the resolution and
supporting statement appear below, printed verbatim from
the submission.

For the reasons set forth in the Statement in Opposition
immediately following this shareholder proposal, our Board
of Directors recommends that you vote AGAINST this
proposal.

Proposal 4 - Special Shareowners Meetings

Resolved, Shareowners ask our board to take the steps
necessary (unilaterally if possible) to amend our bylaws and
each appropriate governing document to give holders in the
aggregate of 10% of our outstanding common stock the power
to call a special shareowner meeting (or the closest percentage
to 10% permitted by state law). This proposal does not impact
our board’s current power to call a special meeting.

Scores of Fortune 500 companies, which typically have better
governance than smaller capitalized companies, enable
shareholders to call special meetings and to act by written
consent. Special meetings allow shareowners to vote on
important matters, such as electing new directors that can
arise between annual meetings.

Shareowner input on the timing of shareowner meetings is
especially important when events unfold quickly and issues
may become moot by the next annual meeting. This is
important because there could be 15-months or more between
annual meetings. Special meetings can be a means to elect
directors with better qualifications than current directors after
2018. This can be of greater important to a company like
Valley National since our stock was at only $11 in 2017
compared to $9 five-years ago.

The right to call a special meeting to elect directors is also
more important at Valley National because Valley National
may have a problem with board refreshment. The following
directors exceeded 20-years tenure in 2017:

Gerald Lipkin
Gerald Korde
Pamela Bronander
Andrew Abramson
Graham Jones

31-years
28- years
24-years
23-years
20-years

Long-tenure can impair the independence of any director no
matter how well qualified.
Long-tenure may be a factor in 4 directors each getting more
than 9% in negative votes-unopposed directors usually get
from 1% to 5% in negative votes. Our board also had 4
directors in their 70s - up to age 76. Having a number of
long-tenured directors can also be a sign that our top
management is opposed to board diversity.

Please vote to enhance shareholder oversight:
Special Shareowner Meetings - Proposal 4

Board of Directors Statement
to
Shareholder Proposal 4 on Special Shareholder Meetings

in Opposition

The Board recommends you vote AGAINST this proposal
for the following reasons:

The Board believes it is important that shareholders have a
meaningful right to call a special shareholder meeting. New
Jersey corporate law, which is applicable to our Company,
provides the right for shareholders holding at least 10% of
the Company’s shares to call a special meeting upon the
showing of good cause. By requiring a showing of good
cause, the New Jersey law allows special meetings to be
called by shareholders for legitimate purposes, while
protecting against the potential for abuse. The Board believes
the showing of good cause is a prudent protection for all
shareholders when the threshold is set at 10%. Since
shareholders already have an effective right to seek a special
shareholder meeting, the Board does not support the proposal.

The Board believes that an unfettered right for shareholders
with only 10% of the Company’s shares to call a special
shareholders meeting sets too low a threshold. The Board
engaged its larger institutional shareholders to discuss an
appropriate threshold and received feedback that a threshold
of 20% to 25% is reasonable and a 10% threshold is not
reasonable. The Board will continue to engage with
shareholders on this issue and will consider adopting a
reasonable
to ensure a
threshold with requirements
meaningful special shareholder meeting could be called.

RECOMMENDATION ON ITEM 4

THE VALLEY BOARD UNANIMOUSLY
RECOMMENDS A VOTE “AGAINST” THE
SHAREHOLDER PROPOSAL.

2018 Proxy Statement

SHAREHOLDER PROPOSALS

New Jersey corporate law requires that the notice of
shareholders’ meeting (for either a regular or special meeting)
specify the purpose or purposes of the meeting. Thus, any
substantive proposal, including shareholder proposals, must
be referred to in our Notice of Annual Meeting of
Shareholders in order for the proposal to be considered at a
meeting of Valley's shareholders.

An SEC rule requires certain shareholder proposals be
included in the notice of meeting. Proposals of shareholders
which are eligible under the SEC rule to be included in our
2019 proxy materials must be received by the Corporate
Secretary of Valley National Bancorp no later than
November 9, 2018. If we change our 2019 annual meeting
date to a date more than 30 days from the anniversary of our
2018 annual meeting, then the deadline will be changed to a
reasonable time before we begin to print and mail our proxy
materials. If we change the date of our 2019 annual meeting
by more than 30 days from the anniversary of this annual
meeting, we will so state in first quarterly report on Form 10-
Q we file with the SEC after the date change, or will notify
our shareholders by another reasonable method.

2018 Proxy Statement

OTHER MATTERS

The Board of Directors is not aware of any other matters that may come before the annual meeting. However, in the event such
other matters come before the meeting, it is the intention of the persons named in the proxy to vote on any such matters in
accordance with the recommendation of the Board of Directors.

Shareholders are urged to vote by Internet or telephone or sign the enclosed proxy and return it in the enclosed envelope. The
proxy is solicited on behalf of the Board of Directors.

By Order of the Board of Directors,

Alan D. Eskow
Corporate Secretary

Wayne, New Jersey
March 9, 2018

A copy of our Annual Report on Form 10-K (without exhibits) for the year ended December 31, 2017 filed with the
Securities and Exchange Commission will be furnished to any shareholder upon written request addressed to Tina
Zarkadas, Assistant Vice President, Shareholder Relations Specialist, Valley National Bancorp, 1455 Valley Road, Wayne,
New Jersey 07470. Our Annual Report on Form 10-K (without exhibits) is also available on our website at the following
link: http://www.valleynationalbank.com/filings.html

2018 Proxy Statement

Ticker

BANC

BKU

CBU

EVER

FNB

FULT

ISBC

MBFI

NBTB

NYCB

PBCT

PFS

SBNY

STL

TCBI

WBS

VLY

Net Income
(in thous.)

Total Revenue
(in thous.)

Total Assets
(in thous.)

57,709 $

348,860 $

10,327,852 $

614,273

150,717

144,931

199,204

171,753

126,744

304,040

82,151

466,201

337,200

272,165

93,949

387,209

93,031

197,063

255,439

1,108,176

518,098

897,415

1,098,883

783,338

714,822

969,250

404,797

1,346,883

1,453,400

733,496

333,899

1,273,627

640,345

835,584

1,055,765

30,346,986

10,746,198

27,838,086

31,417,635

20,036,905

25,129,244

20,086,940

9,136,812

49,124,195

44,453,400

22,587,292

9,845,274

43,117,720

30,359,541

25,075,645

26,487,645

161,907 $

771,753 $

24,002,306 $

APPENDIX A

Market
Capitalization
(in mil.)

1,044.7

4,350.9

2,724.9

2,470.9

4,470.3

3,135.5

4,249.0

3,736.0

1,602.0

6,360.1

6,481.4

4,869.2

1,794.5

7,546.3

5,529.7

4,413.3

5,172.4

2,967.3

VALLEY NATIONAL BANCORP
Valley Peer 17
2017 Size Comparisons

Company

Banc of California, Inc.

BankUnited, Inc.

Community Bank System, Inc.

EverBank Financial Corp.*

F.N.B Ccrporation

Fulton Financial Corporation

Investors Bancorp, Inc.

MB Financial, Inc.

NBT Bancorp Inc.

New York Community Bancorp, Inc.

People's United Financial, Inc.

Prosperity Bancshares

Provident Financial Services, Inc.

Signature Bank

Sterling Bancorp

Texas Capital Bancshares, Inc.

Webster Financial Corporation

Valley National Bancorp

__________

* Acquired by another institution in June 2017. Data presented is as of 12/31/2016.

2018 Proxy Statement

1455 Valley Road

Wayne, NJ 07470

973-305-3380

ValleyNationalBank.com

ANNUAL

REPORT

20172017

Form 10-K and Proxy Statement

®®