Valley National Bancorp Annual Report 2018

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FY2018 Annual Report · Valley National Bancorp

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Annual Report 2018

Valley National Bancorp
Form 10-K & Proxy Statement

1455 Valley Road • Wayne, NJ 07470

Our Mission
To give people and businesses
the power to succeed.

Ira Robbins
President & CEO

Letter to Our Shareholders

Dear shareholders,
customers, and employees:

2018 marked the 91st year in Valley’s proud history.
Last year we laid out several important themes that
revolved around improving our relevance. This focus was
designed to improve upon the rich traditions of the Bank,
while enhancing the future trajectory of shareholder
returns. We have made great strides towards improving
efficiency, growth, and core profitability, all while
sculpting a culture that enhances accountability and
empowers our customers and employees. We are proud
to share our progress with you and tell you about how we
continue to shape a great future for all stakeholders.

Valley has always maintained a reputation for strong
ethics, conservative lending practices and superior
customer service. However, our company is much more
than that. We are community members and business
leaders driven to help people and businesses be
successful. In 2018, we defined a new mission statement
around this purpose—to give people and businesses the
power to succeed.

On January 1, 2018, we closed the largest merger in
Valley’s history, acquiring USAmeriBank, expanding our
footprint in Florida and, for the first time, into Alabama.
We advanced numerous projects within our technology
roadmap, creating more intuitive customer experiences
and enhancing the ability of our associates to serve our
customers. We also launched a branch transformation
initiative that will redefine the retail banking experience,
while unveiling our new branding, designed to reflect our
progress and direction forward.

We’ve been busy, but we’re just getting started.

Diluted Earnings Per Share

Reported

21% CAGR*

$0.75

$0.63

$0.58

2016

2017

2018

Return on Average Assets

Reported

0.86%

0.76%

0.69%

2016

2017

2018

Efficiency Ratio

Reported

66.00%

65.96%

63.46%

1.00%

0.95%

0.90%

0.85%

0.80%

0.75%

0.70%

0.65%

0.60%

0.55%

0.50%

1.00%

0.95%

0.90%

0.85%

0.80%

0.75%

0.70%

0.65%

0.60%

0.55%

0.50%

70.0%

68.0%

66.0%

64.0%

62.0%

60.0%

58.0%

56.0%

54.0%

2016

2017

2018

*Compounded annual growth rate based on diluted earnings per share

Financial achievements
For the full year 2018, we reported net income
of $261.4 million and $0.75 per diluted share as
compared to $161.9 million and $0.58, respectively,
in 2017.

We made solid progress toward achieving our
strategic goals over the past year. The actions we
have taken are expected to provide shareholder
value over the long-term and we are already seeing
the results. In 2018, we achieved year-over-year
reported diluted earnings per share growth of 29%.

We reported record loan growth of 13.4% for the
full year—far outpacing the industry and our stated
goals of 8 to 10%, net of loan sales. This growth was
achieved via the same stringent credit standards
that have long been a hallmark of Valley. Product
expansion, strong organic growth from newly
acquired markets, and additions to our lending staff
drove the impressive results.

The return on average assets increased to 0.86%
up from 0.69% in the prior year. Driving our returns
higher remains a top priority and is achievable
through a combination of higher operating leverage
and smarter expense allocation. This coincides with
our focus on improving efficiency across the entire
company. In 2018, our reported efficiency ratio
declined to 63.46%, down 2.50% from the prior year.

Many of these metrics are even more impressive
when we take into consideration several infrequent
items highlighted in our Form 10-K and the
reinvestment for the future that occurred over the
course of 2018.

2018

Taking technology to the next level
We spent a lot of time over the past few years examining
the typical customer experience and how technology
can help redefine interaction with our customers. We
built an enterprise-wide data hub that is allowing us to
harness analytics in a meaningful way and empower
our associates to deliver the customized solutions our
customers need. To complement these efforts, we’ve
made significant upgrades to our digital loan application
platforms and streamlined credit approval processes so
our customers can get the funding they need sooner to
grow their business, purchase a home or plan for their
future.

In January, we launched the new Valley.com. Our
new website has an intuitive design that reflects our
commitment to innovation and allows our customers
to easily access their accounts, find relevant content
and insight, and conduct banking on their terms. In
tandem with our new website, we introduced new mobile
banking capabilities (including biometric authorization
and mobile wallet), migrated to a new commercial
treasury solutions platform and launched a new online
residential mortgage platform—all to provide a simpler
and more convenient omni-channel experience.

Redefining the traditional branch experience
In 2018, we embarked on Branch Transformation—a
strategy to overhaul our retail network and be
responsive to the evolving demands of customer
behavior.

This multi-year effort is focused on improving the sales
and advisory expertise within our retail branch network,
combined with improving aesthetics, function, and
performance of the branches.

Through Branch Transformation, we’ve identified
many branches within New Jersey and New York that
did not meet certain internal performance measures.
While some of the identified branches have or will be
consolidated as a result, the majority have been given
customized strategies to improve performance and will
be monitored for progress.

In addition to creating efficiencies, Branch
Transformation is about improving the service and
experience we provide to our customers. One of the
major changes we’re making is the transition from
traditional tellers and platform roles to Universal
Bankers—elite banking professionals who can serve a
wide array of customer needs.

Finally, along with sculpting the footprint of branches,
improving performance, and elevating staff expertise,
comes aesthetic changes.

Over the coming months and years, there will be many
physical upgrades to Valley branches, reflective of our
vision for creating an enhanced customer experience.

Branch Transformation is essential to our long-term
relevancy by providing an enhanced digital and in-branch
banking experience while simultaneously improving
productivity and operating efficiencies.

New branding. New exchange. New era.
As customer preferences and industry trends continue
to revolutionize the business of banking, we felt a need
to refresh our brand to show that we’re committed to
staying ahead of the curve while still honoring our
91-year legacy. Our new logo signifies our commitment
to innovation and forward-thinking solutions, while
paying homage to our heritage of authenticity,
high ethics, and dedication to our customers and
communities.

2018 marked another noteworthy change, moving
Valley’s common stock listing to the Nasdaq Global
Select Market from the New York Stock Exchange. The
Nasdaq trading platform and marketing initiatives offer
Valley the most cost-effective listing option and are
aligned with our goals to enhance operating efficiencies.
Furthermore, the Nasdaq brand is one that evokes
energy and innovation, much like the culture we’re
fostering at Valley today.

Building a diverse, talented and unified
corporate culture
Valley’s transformation truly comes from within our
culture. We’re moving to become “one Valley” — a
collaborative organization focused on living up to our
mission. As such, we’re making all the necessary
changes to drive a culture that puts the customer and
our local communities first.

The vision for our organization is to be a local bank that’s
committed to the success of every person, business
and community we serve. That last component is so
important —community success. We believe that if our
communities don’t succeed, we don’t either. Through
our Corporate Social Responsibility initiatives and our
Community Impact work, we’re engaging and supporting
causes important to our associates. We’re also giving
our associates the power to do more by instilling a
Volunteer Time Off policy and encouraging them to get
more involved in their communities.

When our associates know that their company is
supporting them and united around a common purpose
of helping our communities succeed, it creates a more
proactive and productive workforce.

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We’re cultivating a culture that encourages performance and accountability
throughout the organization. Accordingly, in 2018, we materially increased the
component of compensation tied to relative stock performance for every single
executive. We also tied greater levels of incentive to performance for all lending
and deposit-gathering employees and continue to make VLY shares a greater
portion of overall compensation. We believe driving increased ownership across
a greater employee base is in the best interest for every Valley stakeholder over
the long term.

The greater good of community banks
Community banks serve a vital role as contributors to the nation’s economic
resilience. Their strength and stability have an incalculable impact on millions
of lives. For us, being a community bank is about more than just business
opportunities and opening branches on every Main Street. It’s about embracing
our role as an advocate for our communities’ success. Our vision is to make a
lasting and sustainable impact on our communities. We are proud of developing
stronger relationships with organizations like Habitat for Humanity, Big Brothers
Big Sisters, the Boys & Girls Club, and many others in 2018.

Helping business owners grow their businesses is another way that we support
the growth of stronger communities. Small businesses are the backbone of our
economy and the key drivers of community growth. And while we continue to
serve larger business customers, we’re remaining committed to providing more
opportunities to small businesses throughout our footprint by expanding our
SBA program into New York and New Jersey in 2019.

Being socially responsible isn’t just a “check the box” exercise for us, it’s about
deepening our relationships with the communities we serve. We do this by
knowing our communities and their needs, and being responsible, reliable and
supportive. Ultimately, prosperity within the markets we serve translates to
greater success for our Company.

A new vision for our future
We’re excited about our organization and the direction we’re headed. Improving
on the foundation of our company will position the Bank to be more successful
for years to come. As we move forward, we’re focused on acquiring new
customers and deepening core deposit relationships. We’ll do this by engaging
our customers and providing high-touch, personal service to fulfill the entire
spectrum of their financial needs. This approach to relationship banking will
strengthen loyalty by improving the customer experience and providing a wide
range of convenient and innovative services.

As we look ahead, we believe Valley will operate more efficiently and continue to
enhance earnings. We believe Valley will represent a better experience for all our
customers. And we believe Valley will continue to be a driving force that helps
our customers and communities succeed.

Your investment in Valley has enabled us to thrive for more than 90 years. Thank
you for your continued trust and support.

Ira Robbins
President & CEO

Our Executive Management Team

Joseph V. Chillura

Executive Vice President
Regional President of Commercial Banking
for Florida & Alabama

Kevin Chittenden
Executive Vice President

Chief Residential Lending Officer

Mark Fernandez
Executive Vice President

Chief Marketing Officer

Bernadette M. Mueller
Executive Vice President
Corporate Social Responsibility - CRA

Mark Saeger
Executive Vice President
Chief Credit Officer

Melissa F. Scofield

Executive Vice President

Chief Risk Officer

Yvonne Surowiec
Executive Vice President

Chief Human Resources Officer

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 Banking Officer

Ronald H. Janis

Senior Executive Vice President

General Counsel

Robert J. Bardusch

Senior Executive Vice President

Chief Operating Officer

Morris Habitat for Humanity Blitz Build
We were honored to be the lead sponsor of Morris
Habitat for Humanity’s 10-day Blitz in Mine Hill,
New Jersey. Our donation covered the complete
construction of one of three homes. Over 125 Valley
associates and interns worked at the build site over
the 10-day period to help three deserving families
realize their dream of homeownership.

in community
development loans

in community
development investments

participated in community
development services,
volunteer activities & board roles

community
development events

in total
charitable giving

Our Commitment to Community

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

At Valley, we embrace our role as an advocate for our communities’
success. We do this by knowing the local communities and being
responsible, reliable and supportive. We’re proud of the progress we
made in 2018, and we continue to build a brighter future by investing
our time, contributing resources and sharing our passion for making
a positive impact on society.

$384MILLION$187MILLION2,616EMPLOYEES3,880$2.3MILLIONCOMMUNITY FOODBANK OF NJ

Valley Gives Thanks
Valley Gives Thanks was a bank-wide employee
volunteer campaign throughout the month of
November. Employees gave back to our local
communities by volunteering at local food banks
and soup kitchens. We logged over 300+ hours of
volunteerism across our footprint at numerous
organizations.

Community FoodBank of New Jersey
We supported the Community FoodBank of
New Jersey, the state’s largest anti-hunger and
anti-poverty organization, serving 16 counties
throughout the state. Our donation will help fund
the FoodBank’s Food Service Training Academy, a
free, 15-week culinary, life-skills and internship
program that provides low-income individuals
marketable job skills that can lead to a living wage.

VALLEY GIVES THANKS

MENTAL HEALTH CLINIC OF PASSAIC

BOYS AND GIRLS CLUB
PROSPECT PARK SCHOOL

BOYS AND GIRLS CLUBS OF
CLIFTON, PATERSON AND PASSAIC

CORNERSTONE SCHOOLS
BIRMINGHAM

ST. PETER CLAVER
TAMPA

BOYS AND GIRLS CLUB

PROSPECT PARK SCHOOL

Pop Up Moments

We reinforced our commitment to
the community by hosting Pop Up
Moments—events designed to randomly
surprise individuals and groups who
make a positive difference in the local
community.

ST. JOSEPH’S HOSPITAL
PEDIATRIC ONCOLOGY

ST. JOSEPH’S HOSPITAL

PEDIATRIC ONCOLOGY

VALLEY FOR VETERANS

Valley Goes Pink
In honor of breast cancer awareness month,
we hosted our 10th annual Valley Goes Pink!
Cancer Walk on Saturday, October 13th in
Wayne, New Jersey. 100% of the donations
raised benefited the Cure Breast Cancer
Foundation (CBCF) to support
Dr. Larry Norton and colleagues at the
world-renowned Memorial Sloan-Kettering
Cancer Center and other national and
international research facilities. Over the
last 10 years, we’ve raised nearly $1 million
to help CBCF get closer to achieving its
mission of finding a cure for breast cancer.

Valley for Veterans
We partnered with the University of South
Florida’s (USF) football program to deliver
scholarships to first-generation USF students
who are also U.S. military veterans. Scholarship
funds from the “Valley for Veterans” program
were matched two-to-one by the state of Florida
and the USF Foundation’s First-Generation
Matching Grant program.

VALLEY GOES PINK!

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
2018 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, New Jersey 07470
tzarkadas@valley.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
Shareholder Relations Dept.
Attn: Tina Zarkadas
(800) 522-4100, extension 3380
(973) 305-3380

Financial Information

Stock Listing

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

Valley National Bancorp common
stock is traded on the Nasdaq
under the symbol VLY.

Rick Kraemer

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

Annual Meeting
April 17, 2019
9:00 am

Valley National Bancorp
100 Furler Street
Totowa, New Jersey 07512

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, 2018

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

Name of exchange on which registered
The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 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, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer
Non-accelerated filer

Accelerated filer

Smaller reporting company
Emerging growth 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 $3.9 billion on June 30, 2018.

There were 331,983,842 shares of Common Stock outstanding at February 26, 2019.

Documents incorporated by reference:

Certain portions of the registrant’s Definitive Proxy Statement (the “2019 Proxy Statement”) for the 2019 Annual Meeting of

Shareholders to be held April 17, 2019 will be incorporated by reference in Part III. The 2019 Proxy Statement will be filed within 120 days
of December 31, 2018.

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

140

141

144

148

149

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, 2018, Valley had
consolidated total assets of $31.9 billion, total net loans of $24.9 billion, total deposits of $24.5 billion and total shareholders’
equity of $3.4 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, State Bancorp Capital Trusts I and II, and
Aliant Statutory Trust II at December 31, 2018 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 220 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 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, 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 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 York with services in New Jersey;

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

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 its 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
$5.1 billion in assets, $3.7 billion in net loans and $3.6 billion in deposits, after purchase accounting adjustments, and maintained
a branch network of 29 offices at December 31, 2018. The acquisition represents a significant addition to Valley’s Florida presence,
primarily in the Tampa Bay market. The acquisition also brought Valley to 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. The total consideration for the acquisition was approximately $737 million, consisting of
64.9 million shares of Valley common stock and the outstanding USAB stock-based awards.

2018 Form 10-K

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 $27.6 million, or 0.1 percent of total loans, at December 31, 2018 are covered by residential
mortgage related loan loss sharing agreements acquired from 1st United that will expire between 2019 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 $4.3 billion and represented
17.3 percent of the total loan portfolio at December 31, 2018. 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. Loans originated from Florida accounted for
approximately 28 percent of total commercial and industrial loans at December 31, 2018 as compared to 14 percent of such 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 $580.5 million at December 31,
2018. In addition, we provide financing to the medical equipment leasing market through our leasing subsidiary, Highland Capital
Corp.

The commercial portfolio also includes approximately $121.8 million and $8.4 million of New York City and Chicago taxi
medallion loans at December 31, 2018, respectively, which we continue to closely monitor due to the weakness exhibited in the

2018 Form 10-K

taxi industry caused by strong competition from alternative ride-sharing services. At December 31, 2018, the medallion portfolio
included impaired loans totaling $73.7 million with related reserves of $27.9 million within the allowance for loan losses. While
most of the taxi medallion loans within the portfolio at December 31, 2018 are currently performing to their contractual terms,
negative trends in the market valuations of the underlying taxi medallion collateral and a decline in borrower cash flows, among
other factors, could impact the future performance of this portfolio. See the “Non-performing Assets” section of “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) for additional information
regarding our taxi medallion loans.

Commercial real estate loans. Commercial real estate and construction loans totaled $13.9 billion and represented 55.5
percent of the total loan portfolio at December 31, 2018. 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 Florida lending represented 28 percent of the total commercial real estate loans
at December 31, 2018 as compared to 13 percent of such 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 $1.5 billion at December 31, 2018 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 $4.1 billion and represented 16.4 percent of the total loan
portfolio at December 31, 2018. Our residential mortgage loans include fixed and variable interest rate loans mostly located in
New Jersey, New York and Florida. 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 also 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, as well as targeted
purchases of loans guaranteed by third parties. 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
through an approved appraisal management company. The appraisal management company adheres to all regulatory requirements.
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 include both
fixed rate and adjustable rate mortgage (ARM) products with 10-year to 30-year maturities. The adjustable rate loans have a fixed-
rate, fixed payment, introductory period of 5 to 10 years that is selected by the borrower. The adjustable rate residential mortgage
loans totaled approximately $898 million and $218 million at December 31, 2018 and 2017, respectively. Additionally, Valley
began to originate interest-only (i.e., non-amortizing) residential mortgage loans during 2017 due to demand for this type of loan
product in the New York City and northern New Jersey markets. Valley's interest-only residential mortgage loans have 15-year to
30-year maturities and totaled $75.4 million (or 1.8 percent of the total residential mortgage loan portfolio) at December 31, 2018.
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 5 to the consolidated financial
statements for further details.

2018 Form 10-K

Other consumer loans. Other consumer loans totaled $2.7 billion and represented 10.8 percent of the total loan portfolio
at December 31, 2018. Our other consumer loan portfolio is primarily comprised of direct and indirect automobile loans, loans
secured by the cash surrender value of life insurance, home equity loans and lines of credit, 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, Delaware and Alabama 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 its bank acquisitions in Florida since 2014,
as auto lending was not a focus of the acquired operations. However, we implemented our indirect auto lending model in Florida
during 2015, and Alabama in 2018 using our New Jersey based underwriting and loan servicing platform. The relatively new
Florida auto dealer network generated over $154 million and $106 million of auto loans in 2018 and 2017, respectively, while the
auto loans originated from Alabama were not material in 2018. 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 territories. We 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. Other consumer loans include
direct consumer term loans, both secured and unsecured, but are largely comprised of personal lines of credit secured by cash
surrender value of life insurance. The product is mainly originated through the Bank’s retail branch network and third party
financial advisors. Unsecured consumer loans totaled approximately $58.1 million, including $10.4 million of credit card loans,
at December 31, 2018.

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, 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, 2018,
our total investment securities and interest bearing deposits with banks were $3.8 billion and $177.1 million, respectively. See the
“Investment Securities Portfolio” section of the 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, 2018 and 2017, approximately 74 percent of Valley’s gross loans totaling $25.0 billion and $18.3 billion,
respectively, consisted of commercial real estate (including construction loans), residential mortgage, and home equity loans. The
remaining 26 percent at both December 31, 2018 and 2017 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.

2018 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, 2018.

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

32%
27
28
1
1
1
10
100%

31%
34
28
1
1

5
100%

44%
24
19
2
6
1
4
100%

37%
29
15
9
1
2
7
100%

34%
31
25
2
2
1
5
100%

Represents less than one percent of the loan portfolio segment.

Risk Management

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 strategic, credit, interest
rate, liquidity, compliance, operational (including information security risk), reputation and price risk (and ensures that risks are
managed within those tolerances), and monitors compliance with applicable laws and regulations. With guidance from and
oversight by the Risk Committee, management continually refines and enhances its risk management policies, procedures and
monitoring programs to maintain effective risk management programs and processes.

In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) was signed into
law. On July 6, 2018, the Board of Governors of the Federal Reserve System (FRB), Office of the Comptroller of the Currency
(OCC) and Federal Deposit Insurance Corporation (FDIC) issued a joint interagency statement regarding the impact of the
EGRRCPA. As a result of this statement and the EGRRCPA, Valley and the Bank are no longer subject to Dodd-Frank Act stress
testing requirements. While Valley is no longer required to publish company-run annual stress tests, it continues to internally run
stress tests of its capital position that are subject to review by Valley's primary regulators. Additionally, the results of the internal
stress tests are considered in combination with other risk management and monitoring practices at Valley to maintain an effective
risk management program.

Cyber Security

Information security is a significant operational risk for Valley. Information security includes the risk of losses resulting
from cyber attacks. Valley frequently experiences attempted cyber security attacks against its systems. However, to date, none of
these incidents have resulted in material losses, known breaches of customer data or significant disruption of services to our
customers. Within the past few years, we have significantly increased the resources dedicated to cyber security. We believe that
further increases are likely to be required in the future, in anticipation of increases in the sophistication and persistency of cyber-
attacks. We employ personnel dedicated to overseeing the infrastructure and systems necessary to defend against cyber security
incidents. Senior management is regularly briefed on information and cyber security matters, preparedness and any incidents
requiring a response.

2018 Form 10-K

Valley’s Board through its Risk Committee has primary oversight responsibility for information security and receives regular
updates and reporting from management on information and cyber security matters, including information related to any third-
party assessments of Valley’s cyber program. The Risk Committee periodically approves Valley’s information security policies.

We may be required to expend significant additional resources to modify our protective measures, to investigate and remediate
vulnerabilities or other exposures and if we experienced a cyber security breach of customer data, to make required notifications
to customers and disclosure to government officials. As a result, cyber security and the continued development and enhancement
of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or
unauthorized access is a high priority for us. While we have faith in our cyber security practices and personnel, we also know we
are not immune from a costly and successful attack.

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
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 or an affiliated corporate entity 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 commercial real estate underwriting guidelines require 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, refinancings 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, refinancings 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 the collectability of our loan. In general, the period of time

2018 Form 10-K

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 $1.0 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
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 the 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 and industrial, and 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 loans (including commercial and industrial and commercial real estate loans), and residential
mortgage loans totaled approximately $1.5 billion and $1.1 billion, respectively, at December 31, 2018 representing 8.74 percent,
and 25.74 percent of our total commercial and residential mortgage loans, respectively.

At December 31, 2018, the commercial real estate loans originated by third parties had loans past due 30 days or more
totaling 1.37 percent as compared to 0.20 percent for our total commercial real estate portfolio, including all delinquencies.

2018 Form 10-K

Residential mortgage loans originated by third parties had loans past due 30 days or more totaling 1.64 percent of these loans at
December 31, 2018 as compared to 0.49 percent for our total residential mortgage 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 201 FDIC-insured financial
institutions in the New York, Northern New Jersey and Long Island deposit markets as of June 30, 2018. The FDIC also ranked
Valley 7th, 39th, 23rd, and 15th in the states of New Jersey, New York, Florida, and Alabama, respectively, based on deposit market
share as of June 30, 2018. While our FDIC rankings reflect a solid foundation in our primary markets, the market for banking and
bank-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 fewer 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 220 branches, an extensive ATM network, and our telephone and on-line banking systems. Our
competitive advantage also lies in our strong community presence with over 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, 2018, Valley National Bank and its subsidiaries employed 3,192 full-time equivalent persons. Management

considers relations with its employees to be satisfactory.

2018 Form 10-K

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

Melissa F. Scofield

Yvonne M. Surowiec

Mark Saeger

Eugene M. Fernandez

Mitchell L. Crandell

Age at
December 31,
2018
44

Executive
Officer
Since
2009

1993

2014

2015

2017

2016

2009

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
Senior 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 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 and Chief Credit Officer of Valley
National Bank
Executive Vice President of Valley and Chief Marketing Officer of
Valley National Bank
First Senior Vice President, Chief Accounting Officer of Valley and
Valley National Bank

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.valley.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 five percent or more of the voting shares of any company which is not a bank and from engaging in any business other than

2018 Form 10-K

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 five percent or more 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.

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.

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.

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

•

4.5 percent CET1 (common equity Tier 1) 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”).

As of January 1, 2019, Basel III required 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. As
of January 1, 2019, we and the Bank maintained the required capital conservation buffer of 2.5 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 were previously scheduled to be 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.

2018 Form 10-K

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 2018 and 2017.

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
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. On January 1, 2019, the capital conservation buffer was fully phased in, and
as a result, the capital ratios applicable to depository institutions under Basel III now 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. 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, 2018 under
the “prompt corrective action” regulations in effect as of such date.

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 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.

Under the Durbin Amendment contained in the Dodd-Frank Act, the Federal Reserve adopted rules applying to banks with
more than $10 billion in assets which established a maximum permissible interchange fee equal to no more than 21 cents plus 5
basis points of the transaction value for many types of debit interchange transactions. The Federal Reserve also adopted a rule to
allow a debit card issuer to recover 1 cent per transaction for fraud prevention purposes if the issuer complies with certain fraud-
related requirements required by the Federal Reserve. The Federal Reserve also has rules governing routing and exclusivity that
require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. As we exceed $10
billion in assets, we are subject to the interchange fee cap.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”) was signed
into law. On July 6, 2018, the Fed, the OCC and the FDIC issued a joint interagency statement regarding the impact of the
EGRRCPA. As a result of this statement and the EGRRCPA, Valley and the Bank are no longer subject to Dodd-Frank Act stress
testing requirements. However, under safety and soundness requirements we will continue to conduct stress testing of our own
design.

Volcker Rule

The Volcker Rule (contained in 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 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, 2018 that meet the definition of Covered Funds. Regulators are currently
considering modifying certain aspects of the Volcker Rule.

2018 Form 10-K

Incentive Compensation

The Dodd-Frank Act requires the federal bank regulators and the SEC to maintain guidelines prohibiting incentive-based
payment arrangements at specified regulated entities, including us and our Bank, having at least $1 billion in total assets that
encourage inappropriate risks by providing an executive officer, employee, director or principal stockholder with excessive
compensation, fees, or benefits or that could lead to material financial loss to the entity.

The Federal Reserve will review, as part of the regular, risk-focused examination process, the incentive compensation
arrangements of banking organizations, such as us, 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, without consent, 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. In addition, the bank regulatory agencies have the authority to prohibit us from paying dividends 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 to our shareholders that exceeds
our earnings for the trailing four-quarter period in which the dividend is being paid.

Transactions with 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.

Section 22 of the Federal Reserve Act prohibits the Bank from paying to a director, officer, attorney or employee a rate on

deposits that is greater than the rate paid to other depositors on similar deposits with the Bank.

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 USAB and CNL in January 2018 and December 2015, respectively,
were unconditional, however, 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.valley.com.

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

acquisitions.

2018 Form 10-K

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.

NASDAQ, 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 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.

Office of Foreign Assets Control Regulation

The U.S. Treasury Department’s OFAC administers and enforces economic and trade sanctions against targeted foreign
countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC
publishes lists of specially designated targets and countries. We and our Bank are responsible for, among other things, blocking
accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them
and reporting blocked transactions after their occurrence. Failure to comply with these sanctions could have serious legal and
reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition
transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.

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

2018 Form 10-K

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.

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
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 continued until the Bank's December 2018 assessment invoice, which covered the assessment period
from July 1, 2018 through September 30, 2018. After that invoice, the FDIC assessment no longer included a quarterly surcharge.

London Interbank Offered Rate

Central banks around the world, including the Fed, have commissioned working groups of market participants and official
sector representatives with the goal of finding suitable replacements for the London Interbank Offered Rate (“LIBOR”) based on
observable market transactions because of the probable phase out of LIBOR. It is expected that a transition away from the widespread
use of LIBOR to alternative rates will occur over the course of the next few years. Although the full impact of a transition, including
the potential or actual discontinuance of LIBOR publication, remains unclear, this change may have an adverse impact on the
value of, return on and trading markets for a broad array of financial products, including any LIBOR-based securities, loans and
derivatives that are included in our financial assets and liabilities. A transition away from LIBOR may also require extensive
changes to the contracts that govern these LIBOR-based products, as well as our systems and processes. A number of the bank's
commercial loans and some residential loans are based upon LIBOR. The Bank is working on replacement language where
necessary.

2018 Form 10-K

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.

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
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.

Our investments in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact

on our results of operations.

We invest in certain tax-advantaged investments that support qualified affordable housing projects, community development
and renewable energy resources. Our investments in these projects are designed to generate a return primarily through the realization
of federal and state income tax credits, and other tax benefits, over specified time periods. Due diligence review is performed both
prior to the initial investment and on an ongoing basis. We are subject to the risk that previously recorded tax credits, which remain
subject to recapture by taxing authorities based on compliance features required to be met at the project level, may fail to meet
certain government compliance requirements and may not be able to be realized. The possible inability to realize these tax credits
and other tax benefits may have a negative impact on our financial results. The risk of not being able to realize the tax credits and
other tax benefits depends on many factors outside our control, including changes in the applicable tax code and the ability of the
projects to be completed. We previously invested in mobile solar generators sold and managed by DC Solar and its affiliates (DC
Solar). For reasons that were not known to us, DC Solar had its assets frozen in December 2018. DC Solar filed for Chapter 11
bankruptcy protection in February 2019. In February 2019, an affidavit from a Federal Bureau of Investigation (FBI) special agent
stated that DC Solar was operating a fraudulent "Ponzi-like scheme" and that the majority of mobile solar generators sold to
investors and managed by DC Solar and the majority of the related lease revenues claimed to have been received by DC Solar
may not have existed. Certain investors in DC Solar, including us, received tax credits for making these renewable resource
investments. As a result of the information provided in the FBI special agent's affidavit filed in the U.S. District Court for the
Eastern District of California, we believe that, in 2019, we may be required to record an uncertain tax position liability under

2018 Form 10-K

Accounting Standards Codification 740, Income Taxes for a significant portion of the tax credit benefits we received in the past.
We will continue to evaluate our existing tax positions, as well as new positions as they arise. However, if we are required to
recognize an uncertain tax position liability in our 2019 consolidated financial statements, the uncertain tax position liability and
charge-offs may have an adverse impact on our income tax liabilities, results of operations and financial condition.

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 lowered Valley’s
income tax expense as a percentage of its taxable income in 2018 and will in subsequent years, other provisions of the Tax Act
negatively impacted Valley's consolidated financial statements and it may adversely affect Valley in the future. For example, under
the new provisions of the Tax Act, the Bank's FDIC insurance assessment totaling $28.3 million for the year ended December 31,
2018 was partially non-tax deductible based upon the asset size of the Bank.

The Tax Act also 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 level of lending activity and the financial health of our customers. The negative impact to customers could
potentially result 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 and our customers is uncertain and may 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. During 2018, Valley settled
litigation matters (including one settlement subsequently approved by the courts in February 2019) resulting in a total charge of
$12.2 million within professional and legal fees.

See the "Litigation" section under Note 15 to the consolidated financial statements for information regarding significant

pending lawsuits.

Cyber-attacks 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.

Valley regularly collects, processes, transmits and stores confidential information regarding its customers, employees and
others for whom it services loans. In some cases, this confidential or proprietary information is collected, compiled, processed,
transmitted or stored by third parties on Valley’s behalf.

Information security risks have increased because of the proliferation of new technologies and the increased sophistication
and activities of perpetrators of cyber-attacks. 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 Valley frequently
experiences attempted cybersecurity attacks against its systems, to date, none of these incidents have resulted in material losses,
known breaches of customer data or significant disruption of services to Valley’s customers. However, there can be no assurance
that Valley 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.

In managing our cyber risks, when entering a new vendor relationship, we review and gage the cyber security risk of such
third-party service providers. A successful attack on one of our third-party service providers could adversely affect our business
and result in the disclosure or misuse of our confidential information. While we believe we are taking reasonable, risk-based
precautions to manage the risk of cyber-attacks against third party service providers, there can be no assurance that our third-party
service providers will not suffer a cyber-attack that exposes us to significant operational costs and damages.

2018 Form 10-K

While we believe we have risk based technology reasonably capable of discovering cyber-attacks, and personnel who are
qualified to monitor our technology and systems to detect cyber-attacks, we can offer no assurance that we will be able to identify
and prevent cyber-attacks when they occur. Significant damage may occur if Valley fails to identify, or there is a delay in identifying,
a cyber-attack on our systems, or those of our third-party service providers.

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, 2018, 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 those which are 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 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 approximately 15 percent and 19 percent of our non-interest
income for the years ended December 31, 2018 and 2017, respectively. 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.

2018 Form 10-K

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 increased from 0.22 percent of total loans at December 31, 2016 to 0.35 percent of total loans at
December 31, 2018 largely due to a significant increase in non-accrual taxi medallion loans within our commercial and industrial
loan portfolio since 2016. While most of the taxi medallion loans are currently performing to their contractual terms, 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. Additionally, 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.

Non-performing assets (including non-accrual loans, other real estate owned, and other repossessed assets) totaled $98.6
million at December 31, 2018. 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
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.

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.

The loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit

retention targets under our branch transformation strategy, 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. Additionally, our customers largely bank with us because of our local customer service and
convenience. For a certain percentage customers, this convenience could be negatively impacted by recent branch consolidation
activity undergone as part of our branch transformation strategy. 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.

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

2018 Form 10-K

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 as of December 31, 2017 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. During the first quarter of 2018, Valley initiated remediation efforts. Management reviewed the design
and operation of the controls and made enhancements to the proper identification and escalation 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. During the third quarter of 2018, management completed the implementation of such
enhancements and the new controls and procedures were placed in operation. Management evaluated these new controls and
procedures and determined that the Company’s internal control over financial reporting was effective as of December 31, 2018.

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 2018
and 2017 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
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, 2018, our goodwill totaled
$1.1 billion. See Note 8 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.

Extensive regulation and supervision have 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

2018 Form 10-K

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 December 2016, Valley issued 9.24 million shares of common stock and used the proceeds for 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, purchased credit-impaired loans, goodwill and other
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

2018 Form 10-K

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 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 on 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, such as the FHLB and certain brokered deposit channels established by the
Bank.

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.

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 fewer 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.

Our ability to make opportunistic acquisitions is subject to significant risks, including the risk that regulators will not provide

the requisite approvals.

We may make opportunistic whole or partial acquisitions of other banks, branches, financial institutions, or related businesses
from time to time that we expect may further our business strategy. Any possible acquisition will be subject to regulatory approval,
and there can be no assurance that we will be able to obtain such approval in a timely manner or at all. Even if we obtain regulatory
approval, these acquisitions could involve numerous risks, including lower than expected performance or higher than expected
costs, difficulties related to integration, diversion of management's attention from other business activities, changes in relationships
with customers, and the potential loss of key employees. In addition, we may not be successful in identifying acquisition candidates,
integrating acquired institutions, or preventing deposit erosion or loan quality deterioration at acquired institutions. Competition
for acquisitions can be highly competitive, and we may not be able to acquire other institutions on attractive terms. There can be
no assurance that we will be successful in completing or will even pursue future acquisitions, or if such transactions are completed,
that we will be successful in integrating acquired businesses into operations. Ability to grow may be limited if we choose not to
pursue or are unable to successfully make acquisitions in the future.

2018 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, Florida and Alabama 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

2018 Form 10-K

severe property 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, while typically retaining the loan
servicing. 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
aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $3.2 billion and $2.8
billion at December 31, 2018 and 2017, respectively. 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 five and two loan repurchases
in 2018 and 2017, respectively). None of the loan repurchases resulted in material loss. As of December 31, 2018, 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.

Possible replacement of the LIBOR benchmark interest rate may have an impact on Valley’s business, financial condition

or results of operations.

On July 27, 2017, the Financial Conduct Authority (FCA), a regulator of financial services firms in the United Kingdom,
announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. The FCA and the submitting
LIBOR banks have indicated they will support the LIBOR indices through 2021 to allow for an orderly transition to an alternative
reference rate. In the United States, efforts to identify a set of alternative U.S. dollar reference interest rates include proposals by
the Alternative Reference Rates Committee of the Federal Reserve Board. Other financial services regulators and industry groups
are evaluating the possible phase-out of LIBOR and the development of alternate reference rate indices or reference rates. Many
of Valley’s assets and liabilities are indexed to LIBOR. We are evaluating the potential impact of the possible replacement of the
LIBOR benchmark interest rate, but are not able to predict whether LIBOR will cease to be available after 2021, whether the
alternative rates the Federal Reserve Board proposes to publish will become market benchmarks in place of LIBOR, or what the
impact of such a transition will have on Valley’s business, financial condition, or results of operations.

Item 1B.

Unresolved Staff Comments

None.

2018 Form 10-K

Item 2.

Properties

We conduct our business at 220 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.

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

99
25
124

12
12
9
5
38
43
15
220

45.0
11.4
56.4

5.5
5.5
4.1
2.3
17.3
19.5
6.8
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.

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.

During the second half of 2018, Valley embarked on a new strategy to overhaul its retail network. The Bank is striving to
create a branch infrastructure that is more reflective of current and future activity within our target markets. During 2018, we
identified several branches within New Jersey and New York that did not meet certain internal performance measures. Of those
identified, we closed 7 branches in 2018 and closed or will close 13 additional branches during the first quarter of 2019.

The total net book value of our premises and equipment (including land, buildings, leasehold improvements and furniture
and equipment) was $341.6 million at December 31, 2018. 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.

During February 2019, we entered into an agreement for the sale-leaseback of 29 of our currently owned properties. The
transaction is expected to close in the first or second quarter of 2019, and is subject to change or termination due to buyer due
diligence on the identified properties. See the "Recent Event" section of the MD&A and Note 23 to the consolidated financial
statements for more information.

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.

2018 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 NASDAQ under the ticker symbol “VLY”. There were 7,330 shareholders of record as

of December 31, 2018.

Performance Graph

The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2013
in: (a) Valley’s common stock; (b) the KBW Regional Banking Index (KRX) and (c) 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.

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

100.00 $
100.00
100.00

100.30 $
102.43
113.68

106.44 $
108.56
115.24

131.50 $
151.04
129.02

131.61 $
153.77
157.17

108.20
126.88
150.27

12/13

12/14

12/15

12/16

12/17

12/18

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, 2018:

Period
October 1, 2018 to October 31, 2018
November 1, 2018 to November 30, 2018
December 1, 2018 to December 31, 2018

Total

Total Number of
Shares Purchased (1)
1,821
41,478
62,839
106,138

Average Price
Paid Per
Share

10.56
10.02
9.32

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.

2018 Form 10-K

(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, 2018.

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.

2018 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

Net income available to common shareholders

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

2018

As of or for the Years Ended December 31,
2015
2016
2017
($ in thousands, except for share data)

2014

1,164,967

842,457

770,270

705,879

642,334

302,045
862,922

5,719

857,203

32,501

824,702

(2,342)

20,515

(2,402)

118,281

134,052

—

24,200

604,861

629,061

329,693

68,265

261,428

12,688

174,107
668,350

8,303

660,047

9,942

650,105

(20)

20,814

(95)

91,007

111,706

—

41,747

467,326

509,073

252,738

90,831

161,907

9,449

148,774
621,496

8,382

613,114
11,869

601,245

777

22,030

1,358

84,095

108,260

315

34,744

441,066

476,125

233,380

65,234

168,146

7,188

156,754
549,125

7,866

541,259

8,101

533,158

2,487

4,245

2,776

83,304

92,812

51,129

27,312

420,634

499,075

126,895

23,938

102,957

3,813

161,846
480,488

7,933

472,555

1,884

470,671

745

1,731

18,087

59,255

79,818

10,132

24,196

368,927

403,255

147,234

31,062

116,172
—

248,740

152,458

160,958

99,144

116,172

0.75
0.75
0.44
9.48
5.97

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

331,258,964

264,038,123

254,841,571

234,405,909

205,716,293

332,693,718

264,889,007

255,268,336

234,437,000

205,716,293

0.86%

0.69%

0.76%

0.53%

0.69%

7.91

12.21

10.93

6.45

63.46

58.67

7.57

8.43

9.30

11.34

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

31,863,088

$ 24,002,306

$ 22,864,439

$ 21,612,616

$ 18,792,491

24,883,610

24,452,974

3,350,454

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

See Notes to the Selected Financial Data that follow.

2018 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 federal tax rate of 21 percent for 2018 and 35 percent for 2017, 2016, 2015 and 2014. 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.
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:

2018

2017

At December 31,
2016
($ in thousands, except for share data)

2015

2014

Common shares outstanding

Shareholders’ equity

Less: Preferred stock

Less: Goodwill and other intangible assets

Tangible common shareholders’ equity

Tangible book value per common share

331,431,217

264,468,851

263,638,830

253,787,561

232,110,975

3,350,454

2,533,165

2,377,156

2,207,091

1,863,017

209,691

1,161,655

1,979,108

5.97

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

(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

2018

2017

Years Ended December 31,
2016
($ in thousands)

2015

2014

261,428

3,304,531

161,907

2,471,751

168,146

2,253,570

102,957

1,958,757

116,172

1,618,965

1,163,397

734,200

734,520

614,084

486,769

2,141,134

1,737,551

1,519,050

1,344,673

1,132,196

Return on average tangible shareholders’ equity

12.21%

9.32%

11.07%

7.66%

10.26%

(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:

2018

2017

At December 31,
2016

($ in thousands)

2015

2014

Tangible common shareholders’ equity

1,979,108

1,590,330

1,529,445

1,360,280

1,248,350

Total assets

$ 31,863,088

$ 24,002,306

$ 22,864,439

$ 21,612,616

$ 18,792,491

Less: Goodwill and other intangible assets

1,161,655

733,144

736,121

735,221

614,667

Tangible assets

$ 30,701,433

$ 23,269,162

$ 22,128,318

$ 20,877,395

$ 18,177,824

Tangible common shareholders’ equity to tangible

assets

6.45%

6.83%

6.91%

6.52%

6.87%

(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, 2018, 2017, 2016 and 2015 were calculated under Basel III rules which became

effective January 1, 2015.

2018 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;
the inability to retain USAB’s customers and key employees;

the inability to grow customer deposits to keep pace with loan growth;

an increase in our allowance for credit losses due to higher than expected loan losses within one or more segments of our
loan portfolio;

less than expected cost reductions and revenue enhancement from Valley's cost reduction plans, including its earnings
enhancement program called "LIFT" and branch transformation strategy;

greater than expected technology related costs due to, among other factors, prolonged or failed implementations, additional
project staffing and obsolescence caused by continuous and rapid market innovations;

the loss of or decrease in lower-cost funding sources within our deposit base, including our inability to achieve deposit
retention targets under Valley's branch transformation strategy;

the effect of the partial U.S. Government shutdown on levels of economic activity in the markets in which we operate and
on levels of end market demand in the economy in general;

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,
reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;

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;

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;

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;

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

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; and

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

•

2018 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, purchased credit-impaired loans, 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 collateral dependent impaired loans (including New York City taxi cab medallion loan valuations based on
the estimated value of the underlying medallions) could be adversely impacted by illiquidity or dislocation in certain markets,
resulting in depressed market valuations of the underlying collateral, thus leading to additional provisions for loan 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 are 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

2018 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. Valley had
no allowance reserves related to PCI loans at December 31, 2018 and 2017.

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 $151.9 million at December 31, 2018.

For impaired credits, if the present value of expected cash flows were 10 percent higher or lower, the allowance would have
decreased $3.3 million or increased $4.8 million, respectively, at December 31, 2018. If the fair value of the collateral (for collateral
dependent loans) was 10 percent higher or lower, the allowance would have decreased $4.3 million or increased $4.7 million,
respectively, at December 31, 2018.

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
$24.9 million as of December 31, 2018. 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 $11.0 million, respectively,
at December 31, 2018. Moreover, if the expected loss rate applied to classified loans were to increase or decrease by 10 percent,
the allowance would have been $930 thousand higher or lower, respectively, at December 31, 2018.

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 totaling $4.2 billion at December 31, 2018 primarily consists of loans acquired
in business combinations subsequent to 2011. The PCI loans 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. We estimate 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 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.” 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. 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 our estimate of the expected cash flows of the loan pools.

On a quarterly basis, 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 require the continued use of key
assumptions and estimates 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.

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.

See Notes 1 and 5 to the consolidated financial statements, and "Loan Portfolio" section included in this MD&A for further
PCI loan details, including net increases and decreases in expected cash flows subsequent to the applicable PCI loan acquisition
dates impacting the accretable yield in 2018 and 2017.

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 $1.1 billion at
December 31, 2018 is not amortized but is subject to annual tests for impairment or more often, if events or circumstances indicate

2018 Form 10-K

it may be impaired. Other intangible assets totaling $77.0 million at December 31, 2018 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.

Currently, the goodwill impairment analysis is generally a two-step test. During 2018, 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 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, 2018, the impact of a five percent impairment charge on these intangible assets would
result in a reduction in pre-tax income of approximately $58.1 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 incorporate 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, 2018 and 2017, management
determined it is more likely than not that Valley will realize its net deferred tax assets, except for a valuation allowance of $733
thousand established at December 31, 2018. 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. During 2018, we recognized a $2.3 million tax benefit related to the adjustment of the Tax
Act provisional amounts in our final 2017 tax returns completed in the fourth quarter of 2018. During 2017, we also reduced our
state deferred tax assets by $4.5 million to reflect the effect of our organic and acquisition-based expansion primarily in Florida
on our existing state deferred tax assets. During 2018 and 2017, the charge to our income tax expense related to the reduction of
such deferred tax assets was immaterial. The $2.3 million and $19.9 million in total adjustments were reflected as credits and
charges, respectively, to our income tax expense for 2018 and 2017, respectively.

Historically, we maintained 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. During the fourth quarter of 2018, income tax expense included a net tax benefit of $3.3 million related

2018 Form 10-K

to the elimination of our remaining reserve for unrecognized tax benefits caused by the expiration of the statute of limitations for
certain tax positions.

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, 2018, Valley had consolidated total assets of $31.9 billion, total net loans of $24.9
billion, total deposits of $24.5 billion and total shareholders’ equity of $3.4 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 220 branch network,
56 percent, 17 percent, 20 percent and 7 percent of the branches are located in New Jersey, New York, Florida and Alabama,
respectively. Despite our current and past branch consolidation activity, 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, had approximately
$5.1 billion in assets, $3.7 billion in net loans and $3.6 billion in deposits, and maintained a branch network of 29 offices as of
December 31, 2018. 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. The total
consideration for the acquisition was approximately $737.2 million, and the transaction resulted in $394.0 million of goodwill
and $45.9 million of core deposit intangible assets subject to amortization. Full systems integration was completed in the second
quarter of 2018 with minimal disruption to our customers.

Re-Branding. During October 2018, Valley National Bank announced a new look and feel for its brand and, in many
instances, will start referring to itself with a simpler name: “Valley.” The Bank’s brand refresh includes a new logo, visual changes
to its web and mobile platforms, and a plan for transforming branches with new signage and a sleek, modern look. In conjunction
with the re-branding effort, the listing for Valley's common stock, preferred stock and warrants switched from the New York Stock
Exchange to NASDAQ. Valley’s common stock symbol remained VLY.

Branch Transformation. During the second half of 2018, Valley embarked on a new strategy to overhaul its retail network.
The Bank is striving to create a branch infrastructure that is more reflective of current and future activity within our target markets.
We intend to place greater emphasis on service, sales, and efficiency. We are in the process of upgrading many staff and training
components placing greater importance on mobile and digital implementation, as well as customer education and promotion of
those products. Valley's branch transformation will also include the repositioning, re-branding, functionality, aesthetics, and in
many cases, reducing the square footage of our branches.

During 2018, we identified several branches within New Jersey and New York that did not meet certain internal performance
measures. Of those identified, we closed 7 branches in 2018 and closed or will close 13 additional branches during the first quarter
of 2019. The estimated annual operating expense savings from the 20 branch closures is expected to be approximately $9 million.
We recognized severance costs and branch asset impairment charges of $2.7 million and $1.8 million, respectively, related to the
branch closures and branch staff reductions in 2018.

For the remaining branch network, we continue to monitor the operating performance of each branch and implement tailored

action plans focused on improving profitability and deposit levels for those branches that underperform.

While we expect the repositioning, renovations and consolidation to be mostly complete by the end of 2020, it is important
to recognize the evolving retail banking landscape combined with our expectation regarding profitability will make this activity
a permanent component of Valley's overall strategy.

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

2018 Form 10-K

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.

As of December 31, 2018, Valley had completed LIFT enhancements that will result in cost reductions greater than 83
percent of the $22 million annual goal. We remain on track to fully implement the LIFT program generated enhancements and
realize the total cost reduction goal by June 30, 2019, although we can provide no assurance that all of the program generated
enhancements and cost reductions will ultimately be realized.

Tax Cuts and Jobs Act. During the fourth quarter of 2017, we incurred a $18.5 million charge due to 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 charge, $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.

Recent Event. During February 2019, we announced that the Bank entered into an agreement for the sale-leaseback of 29
of its currently owned properties. The properties, consisting of 1 corporate location and 28 branches, are expected to be sold for
an aggregate cash purchase price of approximately $107 million. Valley expects to realize a pre-tax gain of approximately $81
million net of transaction related expenses. The transaction is expected to close in the first or second quarter of 2019 and is subject
to change or termination due to current buyer due diligence on the identified properties.

In addition, Valley announced its plan to eliminate approximately 60 corporate positions as a part of continuous efforts to
improve operating efficiencies. The annualized salary and benefit expense associated with these eliminations is expected to be in
excess of $5 million, excluding severance charges. Valley expects to implement the majority of cost saves by the end of the second
quarter of 2019.

Other Matters. We have previously invested in mobile solar generators sold and managed by DC Solar, which were included
in other assets on the balance sheet and separately disclosed in Note 14 of the consolidated financial statements. For reasons that
were not known to us, DC Solar had its assets frozen in December 2018. DC Solar filed for Chapter 11 bankruptcy protection in
February 2019. In February 2019, an affidavit from an FBI special agent stated that DC Solar was operating a fraudulent "Ponzi-
like scheme" and that the majority of mobile solar generators sold to investors and managed by DC Solar and the majority of the
related lease revenues claimed to have been received by DC Solar may not have existed. Certain investors in DC Solar, including
us, received tax credits for making these renewable resource investments. We claimed tax credit benefits of approximately $22.8
million in our consolidated financial statements between 2013 through 2015. If the allegations set forth in the declaration filed by
the FBI are proven to be accurate, up to the entire amount of the tax credits claimed by us could potentially be disallowed. Based
on the information known as of the date of this Annual Report on the Form 10-K, we believe that this has not met the more-likely-
than-not criterion to record an uncertain tax position liability. As a result of the information in the FBI declaration, we are evaluating
whether or not an unrecognized tax liability exists under ASC 740 for an uncertain tax position in 2019 for at least part, if not
potentially all, of the tax credit benefits that we claimed. If we are required to recognize an uncertain tax position liability in our
2019 consolidated financial statements, the uncertain tax position liability and charge-offs may have an adverse impact on our
income tax liabilities, results of operations and financial condition. For additional information on the risks of our investments in
tax-advantaged investments, see Item 1A. Risk Factors.

Annual Results. Net income totaled $261.4 million, or $0.75 per diluted common share, for the year ended December 31,
2018 compared to $161.9 million in 2017, or $0.58 per diluted common share. The increase in net income was largely due to: (i)
a $197.2 million, or 29.9 percent, increase in our net interest income driven by a $5.5 billion increase in average loan balances,
partially offset by interest expense related to higher short-term interest rates and a $4.9 billion increase in average interest bearing
liabilities as compared to 2017, (ii) a $22.3 million increase in non-interest income partly due to higher service charges on deposit
accounts and other income related to our USAB acquisition and a $6.5 million gain on the sale of Visa Class B shares in 2018,
(iii) a $22.6 million decrease in income tax expense largely due to the net impact of the Tax Act, partially offset by (iv) a $120.0
million, or 23.6 percent, increase in total non-interest expense largely due to increased operational size from the USAB acquisition,
as well as an increase of $14.8 million in USAB merger expenses, $12.2 million in legal expense related to litigation reserves,
higher costs related to Branch Transformation, re-branding and technology, and (v) a $22.6 million increase in our provision for
credit losses. 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 2018 annual results.

Operating Environment. U.S. economic growth accelerated, and labor market conditions strengthened in 2018. Real gross

domestic product expanded 3.0 percent for 2018, compared to 2.2 and 1.6 percent in 2017 and 2016, respectively.

During 2018, the Federal Reserve gradually increased the target range for the federal funds rate four times throughout the
year. As a result, the target range increased from 1.25 percent to 1.50 percent as of January 1, 2018 to 2.25 percent to 2.50 percent

2018 Form 10-K

at December 31, 2018. The Federal Open Market Committee left the target range for the federal funds rate unchanged at their
January 2019 meeting and noted it would be patient and look at incoming data to determine if additional interest rate increases
would be appropriate in the future.

The 10-year U.S. Treasury note yield ended the fourth quarter of 2018 at 2.69 percent, 29 basis points higher compared with
December 31, 2017. However, the spread between the 2-year and 10-year U.S. Treasury note yields ended the fourth quarter of
2018 at 0.15 percent, 8 basis points lower than September 30, 2018 and 41 basis points lower compared with December 31, 2017.

For all commercial banks in the U.S., loan growth accelerated in 2018 to 5.2 percent compared to 4.1 percent in 2017.
Alternatively, deposit growth decelerated from 4.2 percent in 2017 to 4.1 percent in 2018. Core deposit growth continues to be
challenged by traditional rate driven market competition, attractive investment options due to a strong economy, as well as the
rapid adoption of non-traditional digital banking platforms by more consumers.

See further discussion of our loans, deposits and the impact of the current economic and interest rate environments as

highlighted throughout the remaining MD&A discussion below.

Loans. Total loans increased by $6.7 billion to $25.0 billion at December 31, 2018 from December 31, 2017, net of residential
mortgage loans sold during 2018. Adjusted for $3.7 billion of loans acquired from USAB on January 1, 2018, total loans grew by
13.4 percent in 2018 due to strong demand in most loan categories. For 2019, we have established a goal to grow our overall loan
portfolio in the range of 6 to 8 percent. 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, 2018, our PCI loan portfolio totaled
$4.2 billion, or 16.7 percent of our total loan portfolio, and includes all of the loans acquired from USAB on January 1, 2018.

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 0.62 percent and 0.70 percent at December 31, 2018 and 2017, respectively. Total accruing past due loans
decreased to $67.7 million at December 31, 2018 from $80.5 million at December 31, 2017 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 reported at December 31, 2017. Non-accrual loans totaled $88.4 million, or 0.35 percent of our entire
loan portfolio of $25.0 billion, at December 31, 2018 as compared to $47.2 million, or 0.26 percent of total loans, at December 31,
2017. The increase in non-accruals was largely due to a $49.2 million increase in the commercial and industrial loan category
caused by taxi cab medallion loans internally downgraded to doubtful, partially offset by a $9.0 million decline in commercial
real estate loans. Overall, our non-performing assets increased by 71.6 percent to $98.6 million at December 31, 2018 as compared
to $57.5 million at December 31, 2017 primarily due to the increase in non-accrual loans.

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, 2018. See the “Non-
performing Assets” section below for further analysis of our asset quality.

Investments. During the year ended December 31, 2018, we recognized net losses on securities transactions of $2.3 million
as compared to net losses totaling $20 thousand in 2017 and net gains of $777 thousand in 2016. The 2018 net losses were partly
related to the sale of all the private label mortgage-backed securities classified as available for sale in our investment portfolio
during the fourth quarter. See further details in the “Investment Securities Portfolio” section below and Note 4 to the consolidated
financial statements.

Deposits and Other Borrowings. Our mix of total deposits slightly shifted to time deposits during 2018 as compared to
2017 largely due to the greater use of brokered time deposits in the second half of 2018. Non-interest bearing deposits represented
approximately 28 percent of total average deposits for the year ended December 31, 2018, while savings, NOW and money market
accounts were 49 percent and time deposits were 23 percent. Average non-interest bearing deposits increased $1.0 billion to
approximately $6.2 billion for the year ended December 31, 2018 as compared to 2017 due, in large part, to $887.1 million of
deposits assumed from USAB and our continuous efforts to encourage new and existing loan borrowers to maintain deposit
accounts at Valley. Average savings, NOW and money market account balances increased $2.2 billion to $11.1 billion in 2018
largely due to $1.7 billion of deposits assumed from USAB and several retail and business account initiatives. Average time
deposits also increased $1.8 billion to $5.1 billion in 2018 due to (i) $999.6 million of deposits assumed from USAB, (ii) increased
use of brokered CDs as an alternative to more costly FHLB borrowings with shorter or similar maturities and (iii) successful retail

2018 Form 10-K

deposit gathering efforts. Ending balances of brokered money market deposit accounts and brokered time deposits totaled $1.1
billion and $2.1 billion, respectively, at December 31, 2018 as compared to $1.4 billion and $71.1 million, respectively, at December
31, 2017.

Average short-term borrowings increased $702.0 million to $2.2 billion for 2018 as compared to 2017 largely due to new
FHLB advances used for funding of loan growth and balancing the appropriate mix of short- and long-term funding in the current
interest rate environment. Valley also assumed $650.0 million of very short duration borrowings from USAB on January 1, 2018.

Average long-term borrowings increased $226.3 million to approximately $2.1 billion for 2018 as compared to 2017 largely
due to an increase in average FHLB advances to fund loan growth during 2018, and to a lesser extent $100.5 million of borrowings
assumed from USAB. See further discussion of our average interest bearing liabilities under the “Net Interest Income” section
below.

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. During 2018, Valley elected to reclassify fee income related
to derivative interest rate swaps executed with commercial loan customers totaling $16.4 million from interest and fees on loans
to other non-interest income within the presentation of its net interest margin below and the consolidated financial statements.
The applicable prior period amounts have also been reclassified to conform to this current presentation. See further discussion of
the swap fees in the "Non-Interest Income" section below.

Annual Period 2018. Net interest income on a tax equivalent basis increased by $194.6 million to $862.9 million for 2018
as compared to 2017. The increase was mainly driven by a $5.5 billion increase in average loan balances and a 31 basis point
increase in loan yield, partially offset by interest expense related to a $4.9 billion increase in average interest bearing liabilities
and a 36 basis point increase in the cost of such liabilities as compared to 2017. 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 3.11 percent for the year ended December 31, 2018 and remained
unchanged as compared to 2017. However, the yield on average interest earning assets increased 29 basis points mainly attributable
to the increased yield on average loans. The yield on average loans increased 31 basis points to 4.43 percent for 2018 as compared
to 4.12 percent in 2017 largely due to new and renewed loan volumes and higher market interest rates in 2018. Our average non-
taxable investment portfolio yield decreased 45 basis points during 2018 as compared to one year ago due to a lower tax equivalent
yield caused by the Tax Act, partially offset by higher market rates on securities acquired and purchased in 2018. Offsetting the
increase in the yield on average interest earning assets, the cost of average interest bearing liabilities increased 36 basis points to
1.47 percent for 2018. The increase in the overall cost as compared to 2017 was mainly driven by increases of 36, 89 and 32 basis
points in our cost of average savings, NOW and money market deposit accounts; short-term borrowings; and time deposits,
respectively, in 2018. The increases were largely due to a gradual increase in short-term market interest rates during 2018 that
were influenced by five individual increases of 0.25 percent in the federal funds target rate from mid-December 2017 to mid-
December 2018 by the FOMC, as well as strong market competition for customer deposits. The annual average of the daily effective
federal funds rate increased 83 basis points to 1.83 percent for 2018 from 1.00 percent in 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 2.33 percent in 2017 to 2.91 percent in 2018, positively impacting our yield on average loans as new
and renewed fixed-rate loans originated in 2018. Additionally, the U.S. prime rate increased to 5.50 percent from 5.25 percent in
mid-December 2017 and has increased five times since mid-December 2017 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 6.375 percent from 6.125 percent during
December 2018, will have an immediate positive impact on the yield of our U.S. and Valley prime rate based loan portfolios for
2019 as compared to 2018. 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 $27.7 billion for the year ended December 31, 2018 increased $6.2 billion, or 28.9
percent, as compared to 2017. Average loan balances increased $5.5 billion to $23.3 billion in 2018 and drove the majority of the
$299.5 million increase in the interest income on a tax equivalent basis for loans as compared to 2017. The growth in average
loans during 2018 was due to $3.7 billion of loans acquired from USAB on January 1, 2018, strong loan demand in all commercial
loan categories and greater retention of residential mortgage loan production. Much of the new loan production in the commercial
area came from additional business with current customer relationships, including opportunities to expand the former USAB

2018 Form 10-K

lending limits with customers in our new Tampa Bay market. Average investment securities increased $663.8 million to
approximately $4.1 billion in 2018 due to $522.6 million of securities acquired from USAB, as well as a moderate expansion of
residential mortgage-backed securities held in the taxable portfolio. Average federal funds sold and other interest bearing deposits
increased $29.3 million to $218.9 million for the year ended December 31, 2018 as compared to 2017 mostly due to slightly higher
levels of overnight liquidity held primarily caused by fluctuations in the timing of new loan originations.

Average interest bearing liabilities increased $4.9 billion to $20.5 billion for the year ended December 31, 2018 from the
same period in 2017 due to increases in all of our funding categories. Average savings, NOW and money market accounts increased
$2.2 billion mostly due to $1.7 billion of such deposits assumed from USAB and retail money market account gathering initiatives
during 2018, partially offset by slightly lower utilization of brokered money market account balances in our loan growth funding
strategy and other liquidity needs in 2018. Average time deposits increased $1.8 billion to $5.1 billion for 2018 as compared to
2017 mainly due to $999.6 million of CDs assumed from USAB, retail CDs strategies executed in 2018 and increased use of
brokered CDs in the second half of 2018. Average short-term and long-term borrowings increased $702.0 million and $226.3
million in 2018, respectively, as compared to 2017 due, in part, to a higher level of FHLB borrowings used to fund new loan and
investment activities, and, to a lesser extent, $650.0 million and $100.5 million, respectively, of such borrowings assumed from
USAB. See the "Fourth Quarter of 2018" section below for more information regarding changes in our interest bearing liabilities
during 2018.

Fourth Quarter of 2018. Net interest income on a tax equivalent basis totaling $223.4 million for the fourth quarter of 2018
increased $52.0 million and $5.3 million as compared to the fourth quarter of 2017 and third quarter of 2018, respectively. The
increase as compared to the fourth quarter of 2017 was largely due to the acquisition of USAB on January 1, 2018 and loan growth
during 2018. Interest income on a tax equivalent basis increased $17.6 million to $316.0 million for the fourth quarter of 2018 as
compared to the third quarter of 2018, largely due to an increase of $871.7 million in average loans and a 11 basis point increase
in the yield on average loans. Interest expense of $92.5 million for the three months ended December 31, 2018 increased $12.3
million from the third quarter of 2018 largely due to higher interest rates on many of our interest bearing deposit products and
FHLB borrowings, and a $756.9 million increase in average interest-bearing liabilities. The increase in average interest-bearing
liabilities was largely driven by both brokered and retail time deposit gathering initiatives, partially offset by lower short-term and
long-term FHLB borrowings.

The net interest margin on a tax equivalent basis of 3.10 percent for the fourth quarter of 2018 decreased 3 basis points and
2 basis points from 3.13 percent and 3.12 percent for the fourth quarter of 2017 and third quarter of 2018, respectively. The yield
on average interest earning assets increased by 12 basis points on a linked quarter basis due to the higher yields on average loans
and investment securities. The yield on average loans increased to 4.61 percent for the fourth quarter of 2018 from 4.50 percent
for the third quarter of 2018, mostly due to the high volume of new loan originations at current market rates. The increased yield
on average investment securities was partly caused by a decrease in premium amortization on residential mortgage-backed
securities, due to lower prepayments on such financial instruments. The cost of average interest bearing liabilities increased by
17 basis points to 1.72 percent for the fourth quarter of 2018 as compared to the linked third quarter of 2018. The increase was
due to a 23 basis point increase in both the cost of average interest bearing deposits and short-term borrowings, largely driven by
higher market interest rates. The cost of average long-term borrowings also increased 21 basis points as compared to the third
quarter of 2018 largely due to the change in the composition of such borrowings caused by the maturity and repayment of lower
cost borrowings in the second half of 2018. Our cost of total average deposits was 1.07 percent for the fourth quarter of 2018 as
compared to 0.88 percent for the three months ended September 30, 2018.

Looking forward, we expect moderate compression pressure on our net interest margin for the first quarter of 2019 due to
the potential narrowing of the spread between short and long-term interest rates and two less days during the quarter. For the full
year of 2019, we anticipate net interest income growth of approximately 5 to 7 percent. However, our net interest margin and net
interest income could both experience an unexpected material decline as compared to the fourth quarter of 2018 due to a multitude
of other conditional and sometimes unpredictable factors.

2018 Form 10-K

The following table reflects the components of net interest income for each of the three years ended December 31, 2018,

2017 and 2016:

ANALYSIS OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY AND

NET INTEREST INCOME ON A TAX EQUIVALENT BASIS

2018

2017

2016

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

($ in thousands)

$ 23,340,330

$1,033,996

4.43% $ 17,819,003

$ 734,485

4.12% $ 16,400,745

$ 680,892

4.15%

3,409,687

100,515

733,956

27,220

218,938

3,236

2.95

3.71

1.48

4.21

2,910,390

82,488

569,469

23,691

189,636

1,793

21,488,498

842,457

2.83

4.16

0.95

3.92

2,536,197

64,349

604,188

23,903

288,182

1,126

19,829,312

770,270

2.54

3.96

0.39

3.88

Assets

Interest earning assets:

(1)(2)

Loans

Taxable investments

(3)

Tax-exempt investments

(1)(3)

Interest bearing deposits with

banks

Total interest earning assets

27,702,911

1,164,967

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

(136,775)

278,181

2,431,537

(46,578)

$ 30,229,276

(117,529)

236,297

1,886,035

(14,503)

$ 23,478,798

(109,084)

291,021

2,032,704

921

$ 22,044,874

$ 11,093,136

$ 108,394

0.98% $

8,934,335

$ 55,300

0.62% $

8,563,208

$ 39,787

0.46%

Time deposits

5,131,167

81,959

Total interest bearing deposits

16,224,303

190,353

Short-term borrowings

Long-term borrowings

(4)

2,187,998

2,116,619

45,930

65,762

Total interest bearing liabilities

20,528,920

302,045

1.60

1.17

2.10

3.11

1.47

3,329,693

12,264,028

1,486,001

42,546

97,846

18,034

1,890,288

58,227

15,640,317

174,107

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

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)

6,193,839

201,986

3,304,531

5,192,087

174,643

2,471,751

5,067,124

199,299

2,253,570

$ 30,229,276

$ 23,478,798

$ 22,044,874

862,922

2.74%

668,350

2.81%

621,496

2.86%

(5,719)

$ 857,203

(8,303)

$ 660,047

(8,382)

$ 613,114

3.09%

0.02

3.11%

3.07%

0.04

3.11%

3.09%

0.04%

3.13%

(1)

Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate for 2018, and a 35 percent federal tax rate for
both 2017 and 2016, respectively.

(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.

2018 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,

2018 Compared to 2017
Change
Due to
Rate

Change
Due to
Volume

Total
Change

2017 Compared to 2016
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 in interest income

Interest expense:

Savings, NOW and money market deposits

Time deposits

Short-term borrowings

Long-term borrowings and junior

subordinated debentures

Total increase in interest expense

241,292

58,219

299,511

59,125

(2,302) $

14,611

6,303

311

262,517

15,640

26,955

10,962

7,028

60,585

3,416

(2,774)

1,132

59,993

37,454

12,458

16,934

507

67,353

18,027

3,529

1,443

322,510

53,094

39,413

27,896

7,535

127,938

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

(10,381)

8,740

Increase (decrease) in net interest income

201,932

(7,360) $

194,572

50,744

(660) $

56,823

18,139

(212)

667

75,417

15,513

4,771

6,012

(963)

25,333

50,084

Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate for 2018, and a 35 percent federal tax rate for
both 2017 and 2016, respectively.

Non-Interest Income

Non-interest income represented 10.4 percent and 11.8 percent of total interest income plus non-interest income for 2018
and 2017, respectively. For the year ended December 31, 2018, non-interest income increased $22.3 million as compared to the
year ended December 31, 2017.

The following table presents the components of non-interest income for the years ended December 31, 2018, 2017, and

2016:

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

2018

Years Ended December 31,
2017
(in thousands)

2016

12,633
15,213
26,817
(2,342)
9,319
20,515
8,691
43,206
134,052

11,538
18,156
21,529
(20)
7,384
20,814
7,338
24,967
111,706

10,345
19,106
20,879
777
6,441
22,030
6,694
21,988
108,260

2018 Form 10-K

Trusts and investment services income increased $1.1 million for the year ended December 31, 2018 as compared to 2017
mainly due to higher investment and advisory fees resulting from increased assets under management during 2018. The increase
in assets under management was largely due to higher market valuations and asset appreciation during 2018.

Insurance commissions decreased $2.9 million for the year ended December 31, 2018 from $18.2 million in 2017 mainly

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

Service charges on deposit accounts increased $5.3 million for the year ended December 31, 2018 as compared to 2017

mostly driven by the acquisition of USAB on January 1, 2018.

Net losses on securities transactions increased $2.3 million for the year ended December 31, 2018 as compared to 2017.
The higher level of net losses was partly due to the sale of all of our private label mortgage-backed securities classified as available
for sale for an aggregate net loss of $1.5 million during the fourth quarter of 2018, as well as the sale of equity securities previously
classified as available for sale and certain municipal securities acquired from USAB.

Fees from loan servicing increased $1.9 million for the year ended December 31, 2018 from $18.2 million in 2017 mainly
due to additional fees from mortgage servicing rights of loans originated and sold by us during the last 12 months. The aggregate
principal balances of residential mortgage loans serviced by us for others increased approximately $300 million to $3.2 billion,
at December 31, 2018 from $2.8 billion at December 31, 2017.

Net gains on sales of loans remained relatively unchanged for the year ended December 31, 2018 as compared to 2017
despite a lower volume of loans sold during 2018, mainly due to higher spreads (margins) on individual loan sales as compared
to 2017. During 2018, we sold $675.9 million of residential mortgages originated for sale as compared to $800.9 million of
residential mortgage loans sold during 2017. Residential mortgage loan originations (including both new and refinanced loans)
increased 82.4 percent to $1.7 billion for the year ended December 31, 2018 as compared to $955.7 million in 2017. 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 gains in the fair value of loans
held for sale totaled $211 thousand and $782 thousand in 2018 and 2017, respectively. 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.

Other non-interest income increased $18.2 million for the year ended December 31, 2018 from 2017 partly due to (i) a $8.1
million increase in fee income related to derivative interest rate swaps executed with commercial lending customers, (ii) a $6.5
million gain realized on the sale of our Visa Class B shares during the fourth quarter of 2018 and (iii) additional other income
generated from the USAB acquisition. Swap fee income totaled $16.4 million and $8.3 million for the years ended December 31,
2018 and 2017, respectively. Partially offsetting these items, we also recognized branch asset impairment charges of $1.8 million
related to branch closures during the third quarter of 2018.

Non-Interest Expense

Non-interest expense increased $120.0 million to $629.1 million for the year ended December 31, 2018 as compared to
2017. The following table presents the components of non-interest expense for the years ended December 31, 2018, 2017 and
2016:

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

Total non-interest expense

2018

Years Ended December 31,
2017
(in thousands)

2016

333,816
108,763
28,266
18,416
34,141
24,200
12,102
69,357
629,061

263,337
92,243
19,821
10,016
25,834
41,747
9,921
46,154
509,073

243,222
87,140
20,100
11,327
17,755
34,744
10,021
51,816
476,125

Salary and employee benefits expense increased by $70.5 million for the year ended December 31, 2018 as compared to
2017 largely due to (i) normal increases in annual compensation and incentives (including additional staffing related to the USAB

2018 Form 10-K

acquisition), (ii) expansion of our technology and home mortgage consultant teams, (iii) $9.8 million of change in control, severance
and retention expenses related to the USAB acquisition, and (iv) $2.7 million of severance costs related to our Branch
Transformation strategy during the fourth quarter of 2018. Stock-based compensation expense increased $7.0 million to $18.8
million for the year ended December 31, 2018 as compared to 2017.

Net occupancy and equipment expenses increased $16.5 million for the year ended December 31, 2018 as compared to 2017
largely due to costs related to the 29-branch network acquired from USAB and higher technology equipment related expense.
Repair and maintenance, and depreciation expense increased $11.0 million and $2.7 million for the year ended December 31,
2018, respectively, as compared to 2017. USAB merger related expenses within the category totaled $856 thousand for the year
ended December 31, 2018.

The FDIC insurance assessment increased $8.4 million for the year ended December 31, 2018 from the year ended
December 31, 2017 mainly due to the USAB acquisition and the organic growth of our balance sheet over the last 12-month period.

Amortization of other intangible assets increased $8.4 million for the year ended December 31, 2018 as compared to 2017
mainly due to an increase of $7.5 million in amortization expense of core deposit intangibles (CDI) during 2018. The increase in
the amortization of CDI was driven by the recognition of $45.9 million of CDI in the USAB acquisition (see Note 8 to the
consolidated financial statements for more details). Higher amortization expense of loan servicing rights, caused by additional
loan servicing rights recorded over the last twelve-month period, also contributed to the increase in 2018.

Professional and legal fees increased $8.3 million for the year ended December 31, 2018 as compared to 2017, largely due
to litigation reserve charges of $12.2 million and merger related expenses of $837 thousand during 2018. These increases were
partially offset by lower consulting and advisory fees for the year ended December 31, 2018 as compared to 2017, which included
additional fees related to the LIFT Project and USAB acquisition.

Amortization of tax credit investments decreased $17.5 million for the year ended December 31, 2018 as compared to 2017
mostly due to normal differences in the timing and amount of such investments and recognition of the related tax credits, as well
as a $4.3 million charge during the fourth quarter of 2017 related to the impairment of tax credit investments caused by the Tax
Act. 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 increased $23.2 million for the year ended December 31, 2018 as compared to 2017 partly due
to increases of $5.9 million and $5.6 million in data processing fees and USAB merger related expense during 2018, respectively.
During 2018, we also experienced moderate increases in several other significant components of other expense, such as travel and
entertainment, debit card and ATM expense, postage, and stationary and print expenses. These additional expenses were largely
driven by our growth both organically and through the acquisition of USAB. Advertising expense included in this category
increased $3.8 million to $5.7 million for the year ended December 31, 2018 as compared to 2017 mostly due to focused campaigns
in the new Florida markets, as well as the more recent Valley re-branding efforts.

2018 Form 10-K

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 mostly by the amortization of tax credit
investments, merger related expenses, litigation expenses, severance costs, and gains and losses on securities transactions. See
table below for more details.

The following table presents our efficiency ratio and a reconciliation of the efficiency ratio adjusted for such items during

the years ended December 31, 2018, 2017 and 2016:

Total non-interest expense, as reported

Less: Amortization of tax credit investments (pre-tax)
Less: LIFT program expenses (pre-tax) (1)
Less: Merger related expenses (pre-tax) (2)
Less: Severance expense (branch transformation only, pre-tax)

Less: Legal expenses (litigation reserve impact only, pre-tax)

Total non-interest expense, as adjusted

Net interest income

Total non-interest income, as reported

Add: Branch related asset impairment (pre-tax) (3)
Add: Losses (gains) on securities transactions, net (pre-tax)

Less: Gain on the sale of Visa Class B shares (pre-tax)

Total non-interest income, as adjusted
Gross operating income, as adjusted

Efficiency ratio

Efficiency ratio, adjusted

Years Ended December 31,

2018

2017

2016

($ in thousands)

$ 629,061

$ 509,073

$ 476,125

24,200

—

17,445

2,662

12,184

41,747

9,875

2,620

—

34,744

—

$ 572,570

$ 454,831

857,203

134,052

1,821

2,342

660,047

111,706

—

6,530
$ 131,685
$ 988,888

—
$ 111,726
$ 771,773

$ 441,381
613,114

108,260

—
(777)
—
$ 107,483
$ 720,597

63.46%

57.90%

65.96%

58.93%

66.00%

61.25%

(1) LIFT program expenses are primarily within professional and legal fees and salary and employee benefits expense.
(2) Merger related expenses are primarily within salary and employee benefits and other expense.
(3) Branch related asset impairment is included in net losses on sale of assets within non-interest income.

See the “Results of Operations—2017 Compared to 2016” section later in this MD&A for the discussion and analysis of

changes in our non-interest expense from 2016 to 2017.

Income Taxes

Effective January 1, 2018, the federal corporate income tax rate decreased from 35 percent to 21 percent under the Tax Act.
Income tax expense was $68.3 million for the year ended December 31, 2018, reflecting an effective tax rate of 20.7 percent, as
compared to $90.8 million for the year ended 2017, reflecting an effective tax rate of 35.9 percent. The decrease in both income
tax expense and the effective tax rate in 2018 as compared to 2017 was primarily caused by the lower 2018 federal tax rate and a
$15.4 million charge recognized in the fourth quarter of 2017 resulting from the re-measurement of Valley's estimated net deferred
tax asset as of December 31, 2017 under the Tax Act. The income tax expense and effective tax rate for 2018 also reflect a net tax
benefit of $3.3 million related to the reduction in our reserve for unrecognized tax benefits due to the expiration of the statute of
limitations for certain tax positions.

On July 1, 2018, The State of New Jersey enacted new legislation that created a temporary surtax effective for tax years 2018
through 2021 and will require companies to file combined tax returns beginning in 2019. The surtax did not have a material impact
on our reported income tax expense for the year ended December 31, 2018. The New Jersey surtax equals 2.5 percent for the years
2018 and 2019 and decreases to 1.5 percent for 2020 and 2021.

2018 Form 10-K

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 22 percent
to 24 percent for 2019, primarily reflecting the estimated impacts of the changes in federal and state tax laws (including the New
Jersey surtax effective July 1, 2018), tax-exempt income, tax-advantaged investments and general business credits.

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,
secured personal lines of credit and home equity loans and represented in the aggregate 27.2 percent of the total loan portfolio at
December 31, 2018. The duration of the residential mortgage loan portfolio (which represented 16.4 percent of our total loan
portfolio at December 31, 2018) is subject to movements in the market level of interest rates and forecasted prepayment speeds.
The weighted average life of the automobile loans (representing 5.3 percent of total loans at December 31, 2018) 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 $1.0 billion to $6.2 billion for the year ended December 31, 2018
as compared to 2017. The increase was mainly attributable to organic residential mortgage loan growth driven by our home
mortgage consulting team, as well as $365.9 million and $109.8 million of residential mortgage loans and home equity loans,
respectively, acquired from USAB on January 1, 2018. Automobile loans and other consumer loans (mainly consisting of secured
personal lines) also grew by 9.2 percent and 18.3 percent, respectively, over the last 12 months.

Income before income taxes generated by the consumer lending segment decreased $6.2 million to $57.3 million for the
year ended December 31, 2018 as compared to $63.5 million for the year ended December 31, 2017. The decrease was largely
attributable to increases in non-interest expense and internal transfer expense, partially offset by an increase in net interest income.
Non-interest expense increased $20.3 million as compared to 2017 due, in part, to higher salary and employee benefits expense
related to the USAB acquisition and additional compensation related to our growing home mortgage consultant team. The internal
transfer expense increased $9.2 million, as compared to 2017. The negative impact of these items was partially offset by an increase
of $27.7 million in net interest income, mostly due to higher average loans and yields on new loan volumes, partially offset by
higher funding costs.

The net interest margin on the consumer lending portfolio was 2.77 percent for the years ended December 31, 2017 and
December 31, 2018. The 2018 margin remained unchanged from 2017 due to a 27 basis point increase in the yield on average
loans that was fully offset by a 27 basis point increase in the costs associated with our funding sources. The increased loan yield
was due to higher market interest rates on new loan volumes. The increased 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 2018 and intense

2018 Form 10-K

competition for deposits mainly in our New Jersey and New York markets. See the "Executive Summary" and the "Net Interest
Income" sections above for more details on our loans, deposits and other borrowings.

The return on average interest earning assets before income taxes for the consumer lending segment was 0.92 percent for

2018 compared to 1.23 percent for 2017.

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 $4.3 billion and represented 17.3 percent of the total loan portfolio at
December 31, 2018. Commercial real estate loans and construction loans totaled $13.9 billion and represented 55.5 percent of the
total loan portfolio at December 31, 2018.

Average interest earning assets in this segment increased $4.5 billion to $17.1 billion for the year ended December 31, 2018
as compared to 2017. The increase was primarily attributable to approximately $3.2 billion of commercial PCI loans acquired
from USAB and strong loan growth during the last 12 months.

For the year ended December 31, 2018, income before income taxes for the commercial lending segment increased $85.1
million to $308.5 million as compared to 2017. Net interest income increased $165.0 million to $621.7 million for the year ended
December 31, 2018 as compared to 2017 largely due to the aforementioned increase in average loan balances, as well as an increase
in yield on new loan originations. Non-interest income increased $10.9 million for the year ended December 31, 2018 as compared
to 2017 mainly due to fee income related to derivative interest rate swaps executed with commercial loan customers which totaled
$16.4 million for the year ended December 31, 2018 as compared to $8.3 million in 2017. The positive impact of these items was
partially offset by an increase in the internal transfer expense, non-interest expense and the provision for credit losses. The provision
for credit losses increased $20.2 million to $27.0 million for the year ended December 31, 2018 as compared to 2017 (See details
in the "Allowance for Credit Losses" section of this MD&A). The internal transfer expense and non-interest expense increased
$46.6 million and $24.0 million, respectively, for the year ended December 31, 2018 as compared to 2017, due, in part, to the
USAB acquisition.

The net interest margin for this segment increased 2 basis points to 3.63 percent during 2018 as a result of a 29 basis point
increase in the yield on average loans, partially offset by a 27 basis point increase in the cost of our funding sources as compared
to 2017.

The return on average interest earning assets before income taxes for this segment was 1.80 percent for 2018 compared to

1.77 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, 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 $693.1 million to $4.4 billion for the year ended December 31, 2018 as compared
to 2017 mostly due to investment securities acquired from USAB and some additional investment in residential mortgage-backed
securities. Average other interest bearing deposits also increased $29.3 million to $218.9 million for the year ended December 31,
2018 as compared to 2017.

For the year ended December 31, 2018, income before income taxes for the investment management segment increased
$529 thousand to $38.9 million as compared to 2017 primarily due to a $5.6 million increase in net interest income and a $946
thousand increase in non-interest income, partially offset by a $6.0 million increase in the internal transfer expense. The increase
in net interest income was mainly driven by higher average investment balances during the year ended December 31, 2018 as
compared to 2017.

The net interest margin for this segment decreased 21 basis points to 1.97 percent during the year ended December 31, 2018
as compared to 2017 as a result of a 27 basis point increase in costs associated with our funding sources, partially offset by a 6
basis point increase in the yield on average investments. The increase in the yield on average investments was partly due to
purchases of higher yielding securities and the positive impact of increased market interest rates on the variable rate portion of
our securities portfolio.

2018 Form 10-K

The return on average interest earning assets before income taxes for this segment was 0.89 percent for 2018 compared to

1.05 percent for 2017.

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, 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 $2.5 million for the year ended December 31, 2018 to $75.0 million
as compared to $72.5 million in 2017. The higher net loss during 2018 for this segment was mainly due to an increase in non-
interest expense, partially offset by an increase in internal transfer income. The non-interest expense increased $75.7 million to
$440.2 million for the year ended December 31, 2018 as compared to 2017 largely due to higher salaries and employee benefits
expenses related to the USAB acquisition, USAB merger expense and professional and legal fees related to litigation reserves.
See further details in the "Non-Interest Expense" section in this MD&A. Internal transfer income increased $61.7 million to $344.9
million for the year ended December 31, 2018 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, 2018. 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, 2018. The impact of interest rate derivatives, such as interest rate swaps, 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,
2018. Although the size of Valley’s balance sheet is forecasted to remain static as of December 31, 2018, 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 2018. The model utilizes an immediate parallel shift in the market interest rates at December 31, 2018.

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
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

2018 Form 10-K

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
- 200

Estimated Change in
Future Net Interest Income

Dollar
Change

Percentage
Change

($ in thousands)
16,547
9,410
(4,473)
(27,716)

1.82%
1.04
(0.49)
(3.06)

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 moderately increase net interest income
over the next 12 months by 1.04 percent. The Bank’s asset sensitivity to changes in market rates increased as compared to
December 31, 2017 (which projected a decrease of 0.35 percent in net interest income over a 12-month period). The change in the
sensitivity of our balance sheet since December 31, 2017 was primarily due to the impact of the interest earning assets and interest
bearing liabilities acquired from USAB in the first quarter of 2018. However, the net asset sensitivity of the acquired financial
instruments was partially mitigated by a significant increase in short-term borrowings used for funding loan growth during 2018.
Future changes including, but not limited to, deposit and borrowings strategies, 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.

2018 Form 10-K

The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at
December 31, 2018 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

2019

2020

2021

2022

2023

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

Total interest sensitive

assets

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

2.35% $

177,088

— $

177,088

3.52

2.85

4.65

4.49

437,470

274,955

262,828

215,431

188,457

689,105

2,068,246

2,034,943

135,166

285,461

234,334

258,821

148,426

687,336

1,749,544

35,155

—

35,155

10,559,163

3,056,634

2,703,476

2,312,576

2,106,710

4,296,910

25,035,469

24,068,755

4.31% $ 11,344,042

$ 3,617,050

$ 3,200,638

$ 2,786,828

$ 2,443,593

$ 5,673,351

$ 29,065,502

$ 28,065,485

0.78% $ 11,213,495

— $

— $ 11,213,495

$ 11,213,495

2.10

2.45

3.30

5.10

4,987,313

1,551,066

163,059

176,727

143,287

42,532

7,063,984

7,005,573

2,118,914

—

2,118,914

2,091,892

244,666

25,000

840,000

250,000

194,602

100,000

1,654,268

1,751,194

55,370

—

55,370

55,692

1.56% $ 18,619,758

$ 1,576,066

$ 1,003,059

426,727

337,889

142,532

$ 22,106,031

$ 22,117,846

$ (7,275,716) $ 2,040,984

$ 2,197,579

$ 2,360,101

$ 2,105,704

$ 5,530,819

$ 6,959,471

$ 5,947,639

0.61:1

2.29:1

3.19:1

6.53:1

7.23:1

39.80:1

1.31:1

1.27:1

The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2018 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, 2018 was a negative $7.3 billion, representing a ratio of interest
sensitive assets to interest sensitive liabilities of 0.61:1. 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, 2018. 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, 2018 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.

2018 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 30 percent of total funding. The Bank was in compliance with the foregoing policies at December 31, 2018.

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 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 $2.3 billion, representing 8.0
percent of earning assets, at December 31, 2018 and $2.0 billion, representing 9.3 percent of earning assets, at December 31, 2017.
Of the $2.3 billion of liquid assets at December 31, 2018, approximately $1.1 billion of various investment securities were pledged
to counterparties to support our earning asset funding strategies. We anticipate the receipt of approximately $747 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, 2018) are projected to be approximately $5.9 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 $18.1 billion and $15.4 billion for the years ended December 31,
2018 and 2017, respectively, representing 65.3 percent and 71.8 percent of average earning assets at December 31, 2018 and 2017,
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, 2018:

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

Total

2018
(in thousands)

268,842
249,448
288,064
303,048
1,109,402

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 $512 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. 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,
2018, our borrowing capacity under the Federal Reserve Bank's discount window was approximately $1.2 billion.

We also have access to other short-term and long-term borrowing sources to support our asset base, such as repos (i.e.,
securities sold under agreements to repurchase). Short-term borrowings (consisting of FHLB advances, repos, and from time to

2018 Form 10-K

time, federal funds purchased) increased $1.4 billion to $2.1 billion at December 31, 2018 as compared to $748.6 million at
December 31, 2017 mostly due to new FHLB advances used for normal loan funding activity and liquidity purposes. The change
in short-term borrowings is generally driven by the levels of loan originations both for investment and 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.

Average short-term FHLB advances exceeded 30 percent of total shareholders' equity at December 31, 2018 and 2017,
respectively. The following table sets forth information regarding Valley’s short-term FHLB advances at the dates and for the
years ended December 31, 2018 and 2017:

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

2018

2017

($ in thousands)

1,828,751
2,607,000
1,732,000

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

1.00%
2.44

1.07%
1.34

Corporation Liquidity. Valley’s recurring cash requirements primarily consist of dividends to preferred and common
shareholders and interest expense 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, 2018, our investment portfolio was comprised of U.S. Treasury securities, U.S. government agency
securities, taxable and tax-exempt issues of states and political subdivisions, residential mortgage-backed securities, single-issuer
trust preferred securities principally issued by bank holding companies and high quality corporate bonds. 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 trust preferred securities and corporate bonds (including some issued by banks)
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.

2018 Form 10-K

Investment securities at December 31, 2018, 2017 and 2016 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

$
$

2018

2017

(in thousands)

2016

138,517
8,721

138,676
9,859

138,830
11,329

341,702
243,954
585,656
1,266,770
37,332
31,250
2,068,246

49,306
36,277

97,113
99,979
197,092
1,429,782
—
37,087
1,749,544
—
1,749,544
3,817,790

$
$

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

As of December 31, 2018, total investments increased $481.2 million or 14.4 percent as compared to 2017 largely due to
an increase in residential mortgage-backed securities classified as held for maturity and available for sale totaling a combined
$341.3 million, and a $204.0 million combined increase in obligations of states and state agencies classified as held to maturity
and available for sale. These increases were mainly driven by investment securities acquired from USAB. See Note 2 to the
consolidated financial statements for additional information.

At December 31, 2018, we had $1.3 billion and $1.4 billion of residential mortgage-backed securities classified as held to
maturity and available for sale, respectively. Approximately 71 percent and 69 percent of these residential mortgage-backed
securities, respectively, were issued and guaranteed by Ginnie Mae. The remainder of our outstanding residential mortgage-backed
security balances at December 31, 2018 were issued by either Freddie Mac or Fannie Mae.

2018 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, 2018:

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)

—

—% $ 108,966

2.90% $ 29,551

3.06% $

—

—% $ 138,517

2.93%

—

8,721

2.53

8,721

2.53

8,125

11,293

1.59

4.16

48,680

105,492

5.07

4.03

135,071

76,861

4.64

3.92

149,826

50,308

3.60

6.12

341,702

243,954

4.17

4.43

19,418

3.08

154,172

4.36

211,932

4.38

200,134

4.23

585,656

4.28

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

Corporate and other debt securities

2,000

2.37

11,250

—

5,197

—

3.19

—

2.77

23,047

1,353

18,000

3.03

8.23

4.64

1,238,526

35,979

—

2.92

4.86

—

1,266,770

37,332

31,250

2.92

4.98

3.82

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)

Corporate and other debt securities

$ 21,418

3.02% $ 279,585

3.70% $ 283,883

4.17% $1,483,360

3.14% $ 2,068,246

3.36%

—

—% $ 49,306

1.60% $

—

2,850

1.64

—

—% $

—

—% $

49,306

1.60%

—

33,427

3.18

36,277

3.06

2,002

2,640

2.28

2.71

18,484

37,502

3.36

2.69

24,091

30,372

4.39

4.49

52,536

29,465

4.24

4.80

97,113

99,979

4.07

3.86

4,642

2.52

55,986

2.91

54,463

4.45

82,001

4.44

197,092

3.96

—

5.08

—

9,039

14,910

2.38

2.92

80,570

22,177

2.74

4.55

1,340,158

—

2.84

—

1,429,782

37,087

2.83

3.89

Total

4,657

2.53% $ 132,091

2.36% $ 157,210

3.59% $1,455,586

2.94% $ 1,749,544

2.95%

(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 21 percent.

(4) Residential mortgage-backed securities are shown using stated final maturity.

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
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.

2018 Form 10-K

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, 2018.

Held to maturity investment grades:*

AAA Rated
AA Rated
A Rated
BBB 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, 2018

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair Value

1,628,611
285,607
36,606
3,000
—
114,422
2,068,246

1,616,252
88,204
21,227
17,982
10,436
42,303
1,796,404

9,684
4,113
366
60
—
213
14,436

1,725
42
27
127
—
74
1,995

(36,504) $
(1,698)
(353)
—
—
(9,184)
(47,739) $

(43,851) $
(1,705)
(412)
(367)
(1,267)
(1,253)
(48,855) $

1,601,791
288,022
36,619
3,060
—
105,451
2,034,943

1,574,126
86,541
20,842
17,742
9,169
41,124
1,749,544

* 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 unrealized losses in the AAA rated category (in the above table) in both held to maturity and available for sale investment
securities are mainly related to residential mortgage-backed securities mainly issued by Ginnie Mae, Fannie Mae, and Freddie
Mac. The held to maturity portfolio includes $114.4 million in investments not rated by the rating agencies with aggregate unrealized
losses of $9.2 million at December 31, 2018. The unrealized losses for this category included $5.9 million of unrealized losses
related to 4 single-issuer bank trust preferred issuances with a combined amortized cost of $36 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, 2018, 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, 2018, 2017 and 2016 as the collateral supporting much of the investment securities
has improved or performed as expected. During the fourth quarter of 2018, we sold all of our private label mortgage-backed
securities classified as available for sale, including securities that were previously impaired and rated non-investment grade, for
an aggregate net loss of $1.5 million.

2018 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

2018

2017

4,331,032

2,741,425

At December 31,
2016
($ in thousands)
2,638,195
$

2015

2014

2,540,491

2,251,111

12,407,275
1,488,132
13,895,407
4,111,400

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

517,089
1,319,571
860,970
2,697,630
$ 25,035,469

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

17.3%
55.5
16.4
10.8
100%

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%

* Total loans are net of unearned premiums and deferred loan costs of $21.5 million, $22.2 million, $15.3 million and $3.5 million at
December 31, 2018, 2017, 2016 and 2015, respectively, as compared to unearned discounts and deferred loan fees of $9.0 million at
December 31, 2014.

Total loans increased by $6.7 billion to $25.0 billion at December 31, 2018 from December 31, 2017, net of residential
mortgage loans sold during 2018. Adjusted for $3.7 billion of loans acquired from USAB on January 1, 2018, total loans grew
by 13.4 percent in 2018 due to strong demand in most loan categories discussed further below. During 2018, Valley also originated
$406.1 million of residential mortgage loans for sale rather than investment. Loans held for sale totaled $35.2 million and $15.1
million at December 31, 2018 and 2017, respectively. See additional information regarding our residential mortgage loan activities
below.

Our loan portfolio includes PCI loans, which are loans acquired at a discount that is due, in part, to credit quality. At
December 31, 2018, our PCI loan portfolio increased $2.8 billion to $4.2 billion as compared to December 31, 2017 primarily due
to the PCI loan classification of all the loans acquired from USAB on January 1, 2018.

Commercial and industrial loans totaled $4.3 billion at December 31, 2018 and increased by $1.6 billion from December 31,
2017 mainly due to a $1.0 billion increase from December 31, 2017 in the non-PCI loan portfolio, and $583 million of PCI loans
acquired from USAB. The increase in non-PCI loans was due to strong organic growth mostly driven by new small to middle
market lending relationships within our regions established by focused calling efforts by our experienced lending teams. We have
enhanced the commercial teams through targeted hires over the last 12 to 18 months. The growth is also partly due to our lending
teams in the new Florida markets, and, to a lesser extent, increased new business investment by pre-existing Valley relationships.
While we are optimistic about the first quarter of 2019 and current loan pipeline, we do expect some leveling off of loan growth
as compared to 2018 due to a number of factors, including a competitive marketplace for strong borrowers, lower business
investment, a decline in the initial expansion opportunities with existing customers in the Tampa, Florida market, as well as normal
PCI and other loan repayments.

Commercial real estate loans (excluding construction loans) increased $2.9 billion to $12.4 billion at December 31, 2018
from December 31, 2017 mainly due to $1.7 billion of PCI loans acquired from USAB and a $1.4 billion increase in non-PCI loan
portfolio from December 31, 2017, partly offset by normal PCI loan repayments. The increase in non-PCI loans was primarily
due to strong organic loan volumes generated across a broad-based segment of borrowers within the commercial real estate portfolio
mainly from pre-exiting relationships in our Florida market area where we have taken full advantage of Valley's higher lending

2018 Form 10-K

capacity with former USAB customers, as well as targeted growth in New Jersey and New York. Construction loans totaled $1.5
billion at December 31, 2018 and increased $637.0 million from December 31, 2017 partly due to $338 million of PCI loans
acquired from USAB. The remaining net increase was mainly driven by organic growth in the new Florida markets, as well as
advances on existing construction projects.

Residential mortgage loans totaled $4.1 billion at December 31, 2018 and increased by $1.3 billion from December 31, 2017
due to strong production from our home mortgage consultant team over the past 12 months. Our new and refinanced residential
mortgage loan originations increased 82.4 percent to $1.7 billion for the year ended December 31, 2018 as compared to $955.7
million in 2017. Of the $1.7 billion in total originations, $262 million represented Florida residential mortgage loans. During 2018,
Valley sold $676 million of residential mortgages originated for sale as compared to approximately $801 million of mortgages
sold during the year ended December 31, 2017. 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 2018, Valley purchased
approximately $105 million of 1-4 family loans, qualifying for CRA purposes.

Our residential mortgage production declined approximately 12 percent in the fourth quarter of 2018 as compared to the
linked third quarter of 2018. However, we have seen good loan application volumes in the early stages of the first quarter of 2019
and the current economy and market interest rates for residential mortgages have remained favorable for consumer demand.

Consumer loans totaled $2.7 billion at December 31, 2018 and increased $314.4 million from December 31, 2017 mainly
due to growth in automobile and secured personal lines of credit. Automobile loans increased $110.7 million to $1.3 billion at
December 31, 2018 from December 31, 2017 primarily due to higher indirect auto application activity during the second half of
2018. Additionally, our Florida dealership network contributed over $155 million in auto loan originations, representing
approximately 24 percent of Valley's total new auto loan production for 2018 as compared to $106 million, or 19 percent, of total
originations in 2017. While we're optimistic that this positive trend in new loan production will continue into the first quarter of
2019, we can provide no assurance that our auto loans will not decline in future periods. Other consumer loans increased $132.9
million to $861.0 million at December 31, 2018 as compared to 2017 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 increased only $70.8 million in 2018 from $446.3 million at December 31,
2017 mainly due to $91.2 million loans acquired from USAB, partially offset by normal repayment activity. The non-PCI loans
slightly declined year over year, as new home equity loan volumes and customer usage of existing home equity lines of credit
continued to be weak in 2018. We believe this trend may continue for the first quarter of 2019 due to many factors, including the
Tax Act changes that limit the deductibility of mortgage interest expense for homeowners.

Despite the overall strong organic loan growth experienced in 2018, we expect this trend to moderately slowdown in both
commercial and consumer lending activities in 2019. However, we will continue to focus on new niche commercial loan programs
to increase the overall yield of our loan portfolio and provide supplemental growth opportunities. For 2019, we anticipate overall
loan portfolio growth in the range of 6 to 8 percent. However, there can be no assurance that we will achieve such levels, or balances
will not decline from December 31, 2018 given the potential for unforeseen changes in consumer confidence, the economy and
other market conditions.

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 primarily from 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. To
mitigate our geographic risks, we make 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 our primary lending
markets through bank acquisitions, such as our recent acquisition of USAB, as well as select de novo branch efforts or adding
lending staff.

2018 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, 2018:

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

570,642
517,618
228,724
719,553
2,036,537

(in thousands)

747,242
677,808
89,687
282,150
1,796,887

953,144
864,578
40,526
127,492
1,985,740

2,271,028
2,060,004
358,937
1,129,195
5,819,164

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 increased $2.8 billion to $4.2 billion at December 31, 2018 from $1.4 billion at December 31, 2017 mainly due
to $3.7 billion of PCI loans acquired from USAB on January 1, 2018, partially offset by normal repayment activity. Our PCI loans
include 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 $27.6 million at December 31, 2018.

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 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 loan
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 is subsequently aggregated on a pool basis.
The expected payment data, discount rates, impairment data and changes to the accretable yield are 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.

2018 Form 10-K

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,
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, 2018 and 2017.

Balance, beginning of the period

Acquisition
Accretion
Payments received
Net increase in expected cash flows

Transfers to other real estate owned

Balance, end of the period

2018

2017

Carrying
Amount

Accretable
Yield

Carrying
Amount

Accretable
Yield

1,387,215
3,736,984
235,741
(1,169,661)
—
(193)
4,190,086

(in thousands)

282,009
559,907
(235,741)
—
269,783
—
875,958

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

294,514
—
(89,770)
—
77,265
—
282,009

The net increase 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 $269.8 million for the year ended December 31, 2018 was largely due to higher interest rates and increased
construction loan balances (mainly acquired from USAB) captured in the cash flow reforecast in the fourth quarter of 2018. The
net increase in the expected cash flows totaling $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.

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, 2018. 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 totaling $98.6 million at December 31, 2018 increased 71.6 percent over the last 12-month period (as shown
in the table below) primarily due to higher non-accrual commercial and industrial loans, which included $58.4 million of non-
accrual taxi medallion loans at December 31, 2018 as compared to $14.2 million of such loans at December 31, 2017. NPAs as a
percentage of total loans and NPAs totaled 0.39 percent and 0.31 percent at December 31, 2018 and 2017, respectively. Despite
the year over year increase largely driven by the taxi medallion loan portfolio, we believe the total NPAs has remained relatively
low as a percentage of the total loan portfolio and NPAs over the past five years. The moderate level of NPAs 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.

2018 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

2018

2017

At December 31,
2016

($ in thousands)

2015

2014

13,085
9,521
2,829
16,576
9,740
51,751

3,768
530
—
2,458
1,386
8,142

6,156
27
—
1,288
341
7,812
67,705

70,096
2,372
356
12,917
2,655
88,396
—
9,491
744
—

98,631

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

77,216

$ 117,176

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

97,743

0.35%
0.39

0.26%
0.31

0.22%
0.29

0.39%
0.49

0.41%
0.61

0.62

0.70

0.55

0.65

171.79

255.92

305.05

170.98

183.57

2018 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
and $9.2 million at December 31, 2016, 2015, and 2014, respectively. There were no covered OREO properties at December 31, 2018
and 2017.

Loans past due 30 to 59 days increased $2.9 million to $51.8 million at December 31, 2018 as compared to $48.9 million
at December 31, 2017, mostly due to an increase in commercial and industrial loan delinquencies, partially offset by decreases in
construction loan and commercial real estate loan delinquencies. Commercial and industrial loan delinquencies increased $9.4
million as compared to December 31, 2017 partly due to two loan relationships in the normal process of renewal totaling $6.0
million at December 31, 2018. Construction loans within this delinquency category decreased $10.1 million to $2.8 million at
December 31, 2018 as compared to one year ago mainly due to two loan relationships reported at December 31, 2017 of which
both were subsequently brought current to their contractual terms.

Loans past due 60 to 89 days decreased $20.3 million to $8.1 million at December 31, 2018 as compared to December 31,
2017 largely due to an $18.8 million decrease in construction loan delinquencies. This decrease was mainly due to four loan
relationships in the normal process of renewal or collection that were included in this loan category at December 31, 2017.

Loans 90 days or more past due and still accruing increased $4.7 million to $7.8 million at December 31, 2018 as compared
to December 31, 2017. Commercial and industrial loan delinquencies increased $6.2 million mainly due to one large loan
relationship in the process of collection included in this category at December 31, 2018. 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 $41.2 million to $88.4 million at December 31, 2018 as compared to December 31, 2017 mainly
due to an increase in taxi medallion loans within the commercial and industrial loan category. Non-accrual taxi medallion loans
increased $44.3 million to $58.5 million at December 31, 2018 as compared to $14.2 million at December 31, 2017 mainly due
to continued weakness in the New York City taxi industry. The majority of the non-accrual taxi medallion loans were previously
performing troubled debt restructured (TDR) loans and included in our impaired loans at both December 31, 2018 and 2017. 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,
2018, 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 $156.6 million at December 31,
2018 and had $33.0 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 $3.6 million, $2.5 million and $2.1 million for the years ended December 31, 2018, 2017 and 2016, respectively;
none of these amounts were included in interest income during these periods.

During 2018, we continued to closely monitor the performance of our New York City (NYC) and Chicago taxi medallion
loans totaling $121.8 million and $8.4 million, respectively, within the commercial and industrial loan portfolio at December 31,
2018. While most of the taxi medallion loans are currently performing to their contractual terms, 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, 2018, the medallion portfolio
included impaired loans totaling $73.7 million with related reserves of $27.9 million within the allowance for loan losses as
compared to impaired loans totaling $63.9 million with related reserves of $9.1 million at December 31, 2017. At December 31,
2018, the impaired medallion loans largely consisted of $58.5 million of non-accrual taxi cab medallion loans classified as doubtful,
as well as performing troubled debt restructured (TDR) loans classified as substandard loans.

Valley's historical taxi medallion lending criteria was conservative in regard to capping the loan amounts in relation to the
prevailing market valuations at the time of origination, as well as obtaining personal guarantees and other collateral in certain
instances. However, the severe decline in the market valuation of taxi medallions over the last several years has adversely affected
the estimated fair valuation of these loans and, as a result, increased the level of our allowance for loan losses at December 31,
2018 (See the "Allowance for Credit Losses" section below). Potential further declines in the market valuation of taxi medallions
could also negatively impact the future performance of this portfolio. For example, a 25 percent decline in our current estimated
market value of the taxi medallions would require additional allocated reserves of $10.6 million within the allowance for loan
losses based upon the impaired taxi medallion loan balances at December 31, 2018. Additionally, Valley currently has $22.5
million of performing non-impaired taxi medallion loans which are scheduled to mature in 2019, and $18.3 million that mature
between 2023 and 2027. If the loans with 2019 maturities were renewed and became TDRs, an additional reserve of $8.6 million
would be required based on the allowance methodology at December 31, 2018.

2018 Form 10-K

OREO (which consists of 52 commercial and residential properties) decreased $304 thousand to $9.5 million at December 31,
2018 as compared to $9.8 million at December 31, 2017. See additional information regarding OREO and other repossessed
assets, including our foreclosed asset activity, in Notes 1 and 3 to the consolidated financial statements.

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) decreased $40.0 million to $77.2 million at December 31, 2018 as compared to $117.2 million at December 31,
2017 mainly due to the taxi medallion loans migrating to non-accrual loan status during 2018. Performing TDRs consisted of 119
loans and 141 loans (primarily in the commercial and industrial loan and commercial real estate portfolios) at December 31, 2018
and 2017, respectively. On an aggregate basis, the $77.2 million in performing TDRs at December 31, 2018 had a modified
weighted average interest rate of approximately 5.37 percent as compared to a pre-modification weighted average interest rate of
4.70 percent. See Note 5 to the consolidated financial statements for additional disclosures regarding our TDRs. The increase in
the modified weighted average interest rate of the performing TDRs as compared to the pre-modification weighted average interest
rate was largely due to loans restructured at higher current market interest rates, but with extended loan terms.

Potential Problem Loans

Although we believe that substantially all risk elements at December 31, 2018 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 $142.8 million and $146.0 million in potential problem loans (consisting mostly of
commercial and industrial loans) at December 31, 2018 and 2017, 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, 2018, the potential problem loans consisted of various types of performing commercial credits internally
risk rated substandard, including taxi medallion loans, 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, 2018.

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 $3.4 billion of PCI loans, represent approximately 74
percent of total loans at December 31, 2018. 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 mostly located in New Jersey, New York and Florida. We
do provide mortgage loans secured by homes beyond this primary geographic area; however, lending outside this primary area
has generally consisted of loans made in support of existing customer relationships, as well as targeted purchases of certain loans
guaranteed by third parties. Our mortgage loan originations are comprised of both jumbo (i.e., loans with balances above
conventional conforming loan limits) and conventional loans based on underwriting standards that generally comply with Fannie
Mae and/or Freddie Mac requirements. The weighted average loan-to-value ratio of all residential mortgage originations in 2018
was 70 percent while FICO® (independent objective criteria measuring the creditworthiness of a borrower) scores averaged 748.
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.

2018 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, 2018, a $33.0 million
specific valuation allowance was included in the allowance for credit losses related to $156.6 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.

2018 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

$ 23,340,330

$17,819,003

$16,400,745

$ 14,447,020

$12,081,683

2018

Years Ended December 31,
2016

2017

2015

2014

($ in thousands)

Beginning balance—Allowance for credit

losses

Loans charged-off:

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total loan charge-offs
Charged-off loans recovered:

Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Total Consumer

Total loan recoveries

Net charge-offs
Provision charged for credit losses
Ending balance—Allowance for credit

losses

Components of allowance for credit

losses:

Allowance for loan losses
Allowance for unfunded letters of
credit

Allowance for credit losses
Components of provision for credit
losses:

Provision for loan losses *
Provision for unfunded letters of credit

Provision for credit losses

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

124,452

116,604

108,367

104,287

117,112

(2,515)
(348)
—
(223)
(4,977)
(8,063)

4,623
417
—
272
2,093
7,405

(658)
32,501

(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

156,295

124,452

116,604

108,367

104,287

151,859

120,856

114,419

106,178

102,353

4,436
156,295

31,661
840
32,501

3,596
124,452

8,531
1,411
9,942

2,185
116,604

11,873
(4)
11,869

2,189
108,367

7,846
255
8,101

1,934
104,287

3,445
(1,561)
1,884

0.00%

0.01%

0.02%

0.03%

0.12%

0.75

0.62

0.73

0.68

0.75

0.68

0.79

0.68

0.89

0.77

* Includes a negative (credit) provision for covered loans totaling $5.9 million for 2014. There was no provision for covered loans in 2018, 2017, 2016, and

2015.

Our net loan charge-offs decreased $1.4 million to $658 thousand in 2018 as compared to $2.1 million in 2017. The
improvement in net loan charge-offs as compared to the year ended December 31, 2017 was due, in part, to lower commercial and
industrial loan gross charge-offs during 2018.

Net charge-offs have steadily declined over the last four years and have remained relatively low over the last five years as
compared to many of our peers. During this five-year period, our net charge-offs were at a high of 0.12 percent of average loans

2018 Form 10-K

during 2014 and a low of 0.00 percent of average loans during 2018. The lower level of our net loan charge-offs during 2018 was
largely as a result of the continued solid performance of our loan portfolio, strong collections and a favorable 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 not deteriorate in 2019, especially given the relatively modest levels realized in the past five
years.

Despite the low level of net loan charge-offs, the provision for credit losses increased $22.6 million to $32.5 million in 2018
as compared to 2017 largely due to strong loan growth and higher allocated reserves for impaired loans (mostly related to taxi
medallion loans within commercial and industrial loans).

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

past five years:

2018

2017

2016

2015

2014

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

95,392

17.3% $

60,828

15.0% $

53,005

15.3% $

50,956

15.8 % $

45,610

16.7%

26,482

23,168

5,041

6,212

—

49.6

5.9

16.4

10.8

—

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

—

$ 156,295

100% $ 124,452

100% $ 116,604

100% $ 108,367

100 % $

104,287

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 0.62 percent at December 31, 2018 and 0.68 percent at December 31, 2017. Our allowance allocations
for losses at December 31, 2018 increased across most loan categories mainly due strong organic loan growth. The increased
allowance allocation for the commercial and industrial loans category (see table above) at December 31, 2018 was also partly due
to higher specific reserves for impaired taxi medallion loans. At December 31, 2018, the allowance allocation for commercial real
estate loans declined to $26.5 million from $36.3 million at December 31, 2017 mainly due to a continued decline in historical
loss rates over the prolonged current economic cycle. Additionally, our estimate of the allowance for credit losses at December 31,
2018 was impacted by the 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 $4.2 billion) was 0.75 percent at December 31, 2018 as compared to 0.73 percent at December 31, 2017. 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, 2018 and 2017. See Notes 1 and 6 to the consolidated financial statements for additional information regarding our
allowance for loan losses.

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, 2018, 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.

2018 Form 10-K

Loan Repurchase Contingencies

We engage in the origination of residential mortgages for sale into the secondary market. 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 combined with portfolio loan sales, loan sales totaled
approximately $676 million and $801 million for 2018 and 2017, respectively.

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 five loan repurchases in 2018 and two loan repurchase in 2017). 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, 2018 and 2017. 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, 2018 and 2017,
shareholders’ equity totaled approximately $3.4 billion and $2.5 billion, or 10.5 percent and 10.6 percent of total assets, respectively.
During 2018, total shareholders’ equity increased by $817.3 million primarily due to (i) the additional capital of $737.2 million
issued in the USAB acquisition, (ii) net income of $261.4 million, (iii) a $17.2 million increase attributable to the effect of our
stock incentive plan, and (iv) net proceeds of $1.0 million from the reissuance of treasury stock and issuance of authorized common
shares issued under our dividend reinvestment plan totaling 87 thousand shares. The positive changes were partially offset by (i)
cash dividends declared on common and preferred stock totaling a combined $159.0 million, (ii) $23.4 million of other
comprehensive losses, and (iii) a $17.1 million net cumulative effect adjustment to retained earnings for the adoption of new
accounting guidance as of January 1, 2018.

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 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
was 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, which was fully phased-in on January 1, 2019.
As of December 31, 2018 and 2017, 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, 2018 and 2017.

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 41.3 percent and 24.1 percent for the years ended December 31, 2018 and 2017, respectively. Our
retention ratio increased from the year ended December 31, 2017, however it was negatively impacted by infrequent charges,
including legal expenses related to litigation reserves, USAB merger expense, branch asset impairment and severance costs related
to our Branch Transformation strategy. Our retention ratio is expected to improve in 2019 due to, among other factors, higher
earnings from continued loan growth and further implementation of our LIFT and Branch Transformation initiatives.

Cash dividends declared amounted to $0.44 per common share for both years ended December 31, 2018 and 2017. 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.

2018 Form 10-K

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, 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 and 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 strength 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 stock issuances.

Contractual Obligations and 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, 2018. 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.

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

Note 9

Note 10

Note 11

Note 15

One Year
or Less

One to
Three Years

Three to
Five Years

Over Five
Years

Total

(in thousands)

$ 4,987,313

$ 1,714,126

320,014

42,531

$ 7,063,984

255,000

865,000

375,000

160,000

1,655,000

—

29,093

51,526

44,357

—

58,304

—

1,488

$ 5,367,289

$ 2,638,918

Note 15

$ 3,709,389

$ 1,623,627

210,685

58,897

41,803

—

52,626

—

747,684

508,858

37,377

—

60,827

262,200

—

60,827

402,223

51,526

45,889

525,558

$ 9,279,449

805,257

$ 6,647,131

27,076

—

316,941

58,897

$ 3,978,971

$ 1,665,430

546,235

832,333

$ 7,022,969

(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

2018 Form 10-K

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 $1.8 million ownership interest in the common securities of our statutory
trusts to issue trust preferred securities at December 31, 2018. See Note 11 of the consolidated financial statements for additional
information on our statutory trusts and the related junior subordinated debentures and trust preferred securities.

Results of Operations—2017 Compared to 2016

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, partially offset by interest
expense related to a $1.1 billion increase in average interest bearing liabilities as compared to 2016.

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 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.

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 as compared to 2016
mainly due to increases in net gains on sales of loans, trust and investment services income, and fees from loans servicing, partially
offset by lower insurance commissions.

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.

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.

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. Valley retains
loan servicing on the majority of its loans originated and sold in the secondary market.

2018 Form 10-K

The increases in non-interest income were partially offset by a decrease in insurance commissions totaling $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.

Non-interest expense increased $32.9 million to $509.1 million for the year ended December 31, 2017 as compared to 2016.
The increase was mainly attributable to increases in salaries and employee benefits, professional and legal fees, amortization of
tax credit investments, and net occupancy and equipment expenses.

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, stock-based compensation expense as well as severance costs totaling $3.8 million related to our LIFT initiative recognized
during the third quarter of 2017. Professional and legal fees also 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.
In addition, 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. Lastly, 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.

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
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.

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.”

2018 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 $2,034,943 at December 31, 2018 and

$1,837,620 at December 31, 2017)

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; authorized 50,000,000 shares:

Series A (4,600,000 shares issued at December 31, 2018 and December 31, 2017)
Series B (4,000,000 shares issued at December 31, 2018 and December 31, 2017)

Common stock (no par value, authorized 450,000,000 shares; issued 331,634,951
shares at December 31, 2018 and 264,498,643 shares at December 31, 2017)

Surplus
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost (203,734 shares at December 31, 2018 and 29,792 shares at
December 31, 2017)

Total Shareholders’ Equity

December 31,

2018

2017

(in thousands except for share data)

251,541
177,088

243,310
172,800

2,068,246
1,749,544
3,817,790
35,155
25,035,469
(151,859)
24,883,610
341,630
439,602
95,296
1,084,665
76,990
659,721
31,863,088

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

6,175,495

5,224,928

11,213,495
7,063,984
24,452,974
2,118,914
1,654,268
55,370
231,108
28,512,634

111,590
98,101

116,240

2,796,499
299,642
(69,431)

(2,187)
3,350,454

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

Total Liabilities and Shareholders’ Equity

31,863,088

24,002,306

See accompanying notes to consolidated financial statements.

2018 Form 10-K

CONSOLIDATED STATEMENTS OF INCOME

2018

Years Ended December 31,
2017
(in thousands, except for share data)

2016

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

Taxable
Tax-exempt
Dividends

Interest on 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
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

1,033,993

734,474

680,876

87,306
21,504
13,209
3,236
1,159,248

108,394
81,959
45,930
65,762
302,045
857,203
32,501
824,702

12,633
15,213
26,817
(2,342)
9,319
20,515
8,691
43,206
134,052

333,816
108,763
28,266
18,416
34,141
24,200
12,102
69,357
629,061
329,693
68,265
261,428
12,688
248,740

0.75
0.75
0.44

72,676
15,399
9,812
1,793
834,154

55,300
42,546
18,034
58,227
174,107
660,047
9,942
650,105

11,538
18,156
21,529
(20)
7,384
20,814
7,338
24,967
111,706

263,337
92,243
19,821
10,016
25,834
41,747
9,921
46,154
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
761,888

39,787
37,775
12,022
59,190
148,774
613,114
11,869
601,245

10,345
19,106
20,879
777
6,441
22,030
6,694
21,988
108,260

243,222
87,140
20,100
11,327
17,755
34,744
10,021
51,816
476,125
233,380
65,234
168,146
7,188
160,958

0.63
0.63
0.44

331,258,964
332,693,718

264,038,123
264,889,007

254,841,571
255,268,336

See accompanying notes to consolidated financial statements.

2018 Form 10-K

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income

261,428

161,907

168,146

2018

Years Ended December 31,
2017
(in thousands)

2016

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

Net (losses) gains 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 gains (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 (loss) income

Total comprehensive income

(22,932)

1,857
(21,075)

—

380

1,874

2,494

4,368

(7,151)
146

447
(6,558)
(22,885)
238,543

352

11
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

165,922

171,748

See accompanying notes to consolidated financial statements.

2018 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, 2015

111,590

253,788

$ 88,626

$1,927,399

$125,171

(45,695) $ — $ 2,207,091

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

Reclassification due to the

adoption of ASU No. 2016-01

Reclassification due to the

adoption of ASU No. 2017-12
Adjustment due to the adoption of

ASU No. 2016-16
Balance - January 1, 2018

Net income

Other comprehensive loss,

net of tax

Cash dividends declared on

preferred stock

Cash dividends declared on

common stock

Effect of stock incentive plan, net

Common stock issued

—

365

9,794

3,362

— 168,146

—

(7,188)

— (113,212)

10,737

106,265

(143)

(20)

—

3,602

—

— (3,894)

—

2,045

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

209,691

264,469

92,727

2,060,356

216,733

(46,005)

(337)

2,533,165

—

480

— (17,611)

(480)

(61)

—

(17,611)

209,691

264,469

92,727

2,060,356

199,663

(46,546)

(337)

2,305,863

— 261,428

—

(22,885)

—

1,955

65,007

— (12,688)

—

771

22,742

— (146,346)

21,022

715,121

(2,415)

—

— (2,198)

—

348

261,428

(22,885)

(12,688)

(146,346)

17,180

738,211

Balance - December 31, 2018

209,691

331,431

$116,240

$2,796,499

$299,642

(69,431) $ (2,187) $ 3,350,454

See accompanying notes to consolidated financial statements.

2018 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 (benefit) expense

Net change in:

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
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,

2018

2017

2016

(in thousands)

261,428

161,907

168,146

27,554
19,472
32,501

38,454
18,416
2,342
687,983
(20,515)
(406,087)
2,402
(11,780)

—
(8,691)
(9,183)
(33,145)
(7,562)
593,589

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

(3,257,939)

(1,418,073)

(1,379,431)

(264,721)
241,077

(289,554)
44,377
255,031
4,220
7,786
(26,440)
156,612
(3,129,551) $

(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)

2018 Form 10-K

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

Years Ended December 31,

2018

2017

2016

(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 held to maturity
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
Junior subordinated debentures issued to capital trusts
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

$
$
$
$

2,734,669
720,307
—
(750,682)
—
(15,859)
(138,857)
(3,801)
2,704
2,548,481
12,519
416,110
428,629

290,444
53,587

743
289,633

214,217
308,385
3,736,984
62,066
49,052
12,123
394,028
45,906
100,059
4,922,820

3,564,843
649,979
87,283
13,249
26,848
4,342,202
580,618
156,612
737,230

$
$
$
$

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

— $
—
—
—
—
—
—
—
—
— $

— $
—
—
—
—
— $
— $
— $
— $

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—

See accompanying notes to consolidated financial statements.

2018 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 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 York with services in New Jersey;

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

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, purchased credit-impaired loans, the evaluation of goodwill and other intangible assets for impairment,
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 $120.7 million and $122.0 million at December 31, 2018 and 2017, respectively.

2018 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. 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 available-for-sale securities 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; and 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 2018, 2017 and 2016. 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 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.

2018 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 $27.6 million of mainly
residential mortgage loans subject to loss sharing agreements (referred to as "covered loans") 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, 2018 and 2017.

On a quarterly basis, 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 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.

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, 2018 and 2017. 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
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.

2018 Form 10-K

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 all principal and 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.

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

2018 Form 10-K

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 $9.5 million and $9.8 million at December 31,
2018 and 2017, respectively. OREO included foreclosed residential real estate properties totaling $852 thousand and $7.3 million
at December 31, 2018 and 2017, respectively. Residential mortgage and consumer loans secured by residential real estate properties
for which formal foreclosure proceedings are in process totaled $1.8 million and $3.8 million at December 31, 2018 and 2017,
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 2018 and 2017, 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) and customer lists 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
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.

2018 Form 10-K

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.

Revenue Recognition

On January 1, 2018, Valley adopted Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers
(Topic 606)" and subsequent related updates that modify the guidance used to recognize revenue from contracts with customers
for transfers of goods and services and transfers of non-financial assets, unless those contracts are within the scope of other
guidance. The adoption did not materially change Valley's recognition of revenues within the scope of Accounting Standards
Codification (ASC) Topic 606. Valley's revenue contracts generally have a single performance obligation, as the promise to transfer
the individual goods or services is not separately identifiable, or distinct from other obligations within the contracts. Valley does
not have a material amount of long-term customer agreements that include multiple performance obligations requiring price
allocation and differences in the timing of revenue recognition. Valley has no customer contracts with variable fee agreements
based upon performance.

The following revenues, reported separately within total non-interest income on the consolidated statements of income, are

within the scope of ASC Topic 606:

Trust and investment services. Trust and investments services include fees from investment management, investment
advisory, trust, custody and other products. Trust and investment management fee income is primarily from client assets under
management (AUM) for which the fees are determined based upon a tiered scale relative to the market value of the AUM. The
revenue from trust and investment services is typically earned over the service period specified in the contract.

Service charges on deposit accounts. Service charges on deposit accounts include fees from checking accounts, savings
accounts, overdrafts, insufficient funds, ATM transactions and other activities. The revenues for most deposit related fees are
recognized immediately upon performance of the service due to the short-term nature of the contractual terms.

Other income. Other income within the scope of ASC Topic 606 within this revenue category includes fee income related
to derivative interest rate swaps executed with commercial loan customers, and fees from interchange, wire transfers, credit cards,
safe deposit box, ACH, lockbox and various other products and services-related income. These fees are either recognized
immediately at the related transaction date or over the period in which the related service is provided. Other income also consists
of items which are outside the scope of ASC Topic 606, including letters of credit fees, net gains and losses on sales of assets and
income or expense related to certain changes in FDIC loss-share receivables.

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.

2018 Form 10-K

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
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, 2018, 2017 and 2016:

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

2018

2017
(in thousands, except for share data)

2016

248,740

152,458

160,958

331,258,964

1,434,754

264,038,123

254,841,571

850,884

426,765

332,693,718

264,889,007

255,268,336

0.75

0.58

0.63

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 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. Average outstanding anti-dilutive warrants and, to a lesser extent, common stock
options equaled approximately 2.1 million, 3.1 million, and 4.0 million of common shares for the years ended December 31, 2018,
2017 and 2016, respectively. All of the outstanding warrants expired unexercised in the fourth quarter of 2018. See Note 18 for
details.

2018 Form 10-K

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, risk participation agreements sharing the risk of default on the interest rate swaps for certain
purchased or sold loan participations, 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 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 designated as fair value hedges 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 2018

ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements
for Fair Value Measurement" eliminates, amends and adds disclosure requirements for fair value measurements. In addition, the
amendments eliminate the term "at a minimum" from the disclosure requirements under Topic 820 to promote an appropriate
exercise of discretion to consider materiality when evaluating required disclosures. ASU No. 2018-13, issued in August 2018, is
effective for all entities for reporting periods beginning January 1, 2020 with early adoption permitted. Early adoption is allowed
for any period for which the financial statements have not been issued yet or have not been made available for issuance. As a
result, Valley elected to early adopt ASU No. 2018-13 during the third quarter of 2018. The adoption resulted in the removal of
the Level 3 assets roll-forward and qualitative and quantitative disclosures regarding valuation techniques and unobservable inputs
used to measure the fair value of Level 3 assets previously presented in Note 3 due to the immaterial amount of such assets (which
were also subsequently sold during the fourth 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. Valley elected to early adopt ASU No. 2017-12 for annual and

2018 Form 10-K

interim reporting periods beginning January 1, 2018. The adoption of ASU No. 2017-12 required a modified retrospective method
to be used by Valley and resulted in an immaterial cumulative-effect adjustment to retained earnings as of January 1, 2018 to
eliminate the separate measurement of ineffectiveness from accumulated comprehensive income (see Note 19).

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 was effective for Valley for its annual and interim reporting periods beginning January 1, 2018.
ASU No. 2017-07 did 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 previous
U.S. GAAP, the tax effects of intercompany sales were deferred until the transferred asset is sold to a third party or otherwise
recovered through amortization. This was an exception to the accounting for income taxes that generally requires recognition of
current and deferred income taxes. Effective January 1, 2018, ASU No. 2016-16 eliminated the exception for intercompany sales
of assets. ASU No. 2016-16 was applied using the modified retrospective method, and, as a result, Valley recorded a $17.6 million
cumulative effect adjustment that reduced retained earnings effective January 1, 2018 to record net deferred tax liabilities related
to pre-existing transactions.

ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments"
clarifies how certain cash receipts and cash payments should be classified and presented in the statement of cash flows. ASU No.
2016-15 includes guidance on eight specific cash flow issues with the objective of reducing the existing diversity of practice in
how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 was
effective for Valley for annual and interim reporting periods beginning January 1, 2018 and it was applied using a retrospective
transition method to each period presented. ASU No. 2016-15 did 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 caused by a change in instrument-specific credit risk in other comprehensive income,
(iv) entities must assess whether a valuation allowance is required for deferred tax assets related to available-for-sale debt securities,
and (v) entities are required to use the exit price notion when measuring the fair value of financial instruments for disclosure
purposes. ASU No. 2016-01 also eliminates the requirement for public business entities to disclose the methods and significant
assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost
on the balance sheet (see Note 3). ASU No. 2016-01 was effective for Valley for reporting periods beginning January 1, 2018 and
did 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 modify 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. The guidance does not apply to
revenue associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP. Valley
adopted the guidance on January 1, 2018 using the modified retrospective method, however, Valley did not record a cumulative-
effect adjustment to opening retained earnings at the adoption date because it found no material changes related to the timing or
amount of revenue recognition. Consequently, the new revenue recognition standard did not have a material impact on Valley’s
consolidated financial statements. Valley has also concluded that additional disaggregation of revenue categories that are within
the scope of the new guidance is not necessary. See the "Revenue Recognition" section of Note 1 above for additional information.

ASU No. 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for
Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” requires implementation costs
incurred in cloud computing arrangements which do not include a software license to be deferred and expensed over the term of
the hosting arrangement. The implementation costs should be deferred using the Topic 350-40 “Internal-Use Software” model to

2018 Form 10-K

determine which implementation costs are eligible to be capitalized based on the project stage and nature of the cost. The expense
should be presented in the same income statement line item as the fees associated with the cloud computing arrangement. ASU
No. 2018-15 will be effective for public entities' annual and interim reporting periods beginning January 1, 2020 with early adoption
permitted. ASU No. 2018-15 should be applied either retrospectively or prospectively. However, prospective transition would be
applied to any eligible costs incurred on or after the adoption date related to arrangements entered into before and after the adoption
date. During the fourth quarter of 2018, Valley adopted ASU No. 2018-15 on a prospective basis. The adoption of ASU No.
2018-15 did not have a significant impact on Valley's consolidated financial statements.

New Accounting Guidance to be Adopted in the First Quarter of 2019

ASU No. 2016-02, “Leases (Topic 842)” and subsequent related updates require lessees to recognize leases on balance sheet
and disclose key information about leasing arrangements. The new standard establishes a right-of-use model that requires lessees
to recognize a right of use (ROU) asset and related lease liability for all leases with a term longer than 12 months. 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. Leases will continue to be classified as finance or operating, with classification affecting
the pattern and classification of expense recognition in the income statement. Topic 842 became effective for Valley for reporting
periods after January 1, 2019 and it had a material effect on our financial statements related to the recognition of new ROU assets
and lease liabilities and significant new disclosures about leasing activities. The new standard also provides several optional
practical expedients in transition and accounting policy elections. Valley elected the "package of practical expedients," the practical
expedient to not separate lease and non-lease components, and the short-term lease recognition exemption accounting policy
election.

Valley initially applied Topic 842 at the adoption date and recognized a cumulative-effect adjustment to the opening balance
of retained earnings as of January 1, 2019 under the new optional transition method provided by ASU No. 2018-11, "Leases (Topic
842): Targeted Improvements". Upon adoption, Valley recorded a right of use asset of approximately $216 million (net of the
reversal of the current deferred rent liability) and lease obligation of approximately $241 million as of January 1, 2019. The
recognized right of use asset is expected to negatively impact total risk-based capital by approximately 10 to 12 basis points and
tier 1 capital by approximately 7 to 9 basis points during the first quarter of 2019. Valley applied the hindsight practical expedient
and concluded that several lease terms should be reduced. As a result, Valley will adjust the initial recognition of the carrying
amount of ROU asset and lease obligation and record an adjustment to the opening balance of retained earnings as of January 1,
2019 totaling $6.2 million. The comparative prior periods reported in the financial statements in the period of adoption will continue
to be presented in accordance with current GAAP in Topic 840.

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 the modified retrospective method. Additionally, in the period of adoption,
entities should provide disclosures about a change in accounting principle. ASU No. 2017-08 will not have a significant impact
on Valley's consolidated financial statements.

New Accounting Guidance Not Yet Adopted

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.

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. ASU No. 2016-13 adds to U.S. GAAP

2018 Form 10-K

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’s implementation effort is managed through
several cross-functional working groups. These groups continue to evaluate the requirements of the new standard, assess its impact
on current operational processes, and develop loss models that accurately project lifetime expected loss estimates. Valley expects
that the adoption of ASU No. 2016-13 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 8)
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.

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 $5.1 billion in assets, $3.7 billion in net
loans and $3.6 billion in deposits, after purchase accounting adjustments, and maintained a branch network of 29 offices at
December 31, 2018. The acquisition represents a significant addition to Valley’s Florida presence, primarily in the Tampa Bay
market. The acquisition also brought Valley to 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. The total consideration for the acquisition was approximately $737 million, consisting of 64.9 million shares of
Valley common stock and the outstanding USAB stock-based awards.

Merger expenses totaled $17.4 million for the year ended December 31, 2018, which primarily related to salary and employee

benefits and other expenses are included in non-interest expense on the consolidated statements of income.

2018 Form 10-K

The following table sets forth assets acquired, and liabilities assumed in the USAB acquisition, at their estimated fair values

as of the closing date of the transaction:

Assets acquired:

Cash and cash equivalents

Investment securities held to maturity

Investment securities available for sale

Loans

Premises and equipment

Bank owned life insurance

Accrued interest receivable

Goodwill

Other intangible assets

Other assets:

Deferred taxes

Other real estate owned

FHLB and FRB stock

Tax credit investments

Other

Total other assets

Total assets acquired

Liabilities assumed:

Deposits:

Non-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 assumed

Common stock issued in acquisition

January 1, 2018
(in thousands)

156,612

214,217

308,385

3,736,984

62,066

49,052

12,123

394,028

45,906

10,623

4,073

38,809

20,138

26,416

100,059

5,079,432

887,083

1,678,115

999,645

3,564,843

649,979

87,283

13,249
26,848

4,342,202

737,230

The determination of the fair value of the assets acquired and liabilities assumed required management to make estimates
about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature
and subject to change. The fair value estimates are subject to change for up to one year after the closing date of the transaction if
additional information (existing at the date of closing) relative to closing date fair values becomes available. Valley revised the
estimated fair values of the acquired assets as of the acquisition date due to additional acquisition date information obtained during
the second half of 2018. The adjustments related to the fair value of certain purchased credit-impaired (PCI) loans and deferred
tax assets which, on a combined basis, resulted in a $5.8 million net increase in goodwill (see Note 8 for amount of goodwill as
allocated to Valley's business segments).

2018 Form 10-K

Fair Value Measurement of Assets Acquired and Liabilities Assumed

Described below are the methods used to determine the fair values of the significant assets acquired and liabilities

assumed in the USAB acquisition.

Cash and cash equivalents. The estimated fair values of cash and cash equivalents approximate their stated face amounts,

as these financial instruments are either due on demand or have short-term maturities.

Investment securities. The estimated fair values of the investment securities were calculated utilizing Level 2 inputs. The
prices for these instruments are obtained through an independent pricing service when available, or dealer market participants
with whom Valley has historically transacted both purchases and sales of investment securities. The prices are 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 reviewed 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.

Loans. The acquired loan portfolio was segregated into categories for valuation purposes primarily based on loan type
(commercial, commercial real estate, residential and consumer) and credit risk rating. The estimated fair values were computed
by discounting the expected cash flows from the respective portfolios. Management estimated the contractual cash flows expected
to be collected at the acquisition date by using valuation models that incorporated estimates of current key assumptions, such as
prepayment speeds, default rates, and loss severity rates. Prepayment assumptions were developed by reference to recent or
historical prepayment speeds observed for loans with similar underlying characteristics. Prepayment assumptions were influenced
by many factors, including, but not limited to, forward interest rates, loan and collateral types, payment status, and current loan-
to-value ratios. Default and loss severity rates were developed by reference to recent or historical default and loss rates observed
for loans with similar underlying characteristics. Default and loss severity assumptions were influenced by many factors, including,
but not limited to, underwriting processes and documentation, vintages, collateral types, collateral locations, estimated collateral
values, loan-to-value ratios, and debt-to-income ratios.

The expected cash flows from the acquired loan portfolios were discounted to present value based on the estimated market
rates. The market rates were estimated using a buildup approach based on the following components: funding cost, servicing cost
and consideration of liquidity premium. The funding cost estimated for the loans was based on a mix of wholesale borrowing and
equity funding. The methods used to estimate the Level 3 fair values of loans are extremely sensitive to the assumptions and
estimates used. While management attempted to use assumptions and estimates that best reflected the acquired loan portfolios
and current market conditions, a greater degree of subjectivity is inherent in these values than in those determined in active markets.

The difference between the fair value and the expected cash flows from the acquired loans will be accreted to interest income
over the remaining term of the loans in accordance with ASC Subtopic 310-30, “Loans and Debt Securities Acquired with
Deteriorated Credit Quality.” See Note 5 for further details.

Other intangible assets. Other intangible assets mostly consisting of core deposit intangibles (CDI) are measures of the
value of non-maturity checking, savings, NOW and money market deposits that are acquired in a business combination. The fair
value of the CDI is based on the present value of the expected cost savings attributable to the core deposit funding, relative to an
alternative source of funding. The CDI is amortized over an estimated useful life of 10 years to approximate the existing deposit
relationships acquired.

Deposits. The fair values of deposit liabilities with no stated maturity (i.e., non-interest bearing accounts and savings, NOW
and money market accounts) are equal to the carrying amounts payable on demand. The fair values of certificates of deposit
represent contractual cash flows, discounted to present value using interest rates currently offered on deposits with similar
characteristics and remaining maturities.

Short-term borrowings. The short-term borrowings consist of securities sold under agreements to repurchase and FHLB

advances. The carrying amounts approximate their fair values because they frequently re-price to a market rate.

Long-term borrowings. The fair values of long-term borrowings consisting of subordinated notes and FHLB advances were
estimated by discounting the estimated future cash flows using market discount rates for borrowings with similar characteristics,
terms and remaining maturities. See Note 10 for further details.

2018 Form 10-K

Junior subordinated debentures issued to capital trusts. There is no active market for the trust preferred securities issued
by Aliant Statutory Trust II; therefore, the fair value of junior subordinated debentures was estimated utilizing the income approach.
Valuation methods under the income approach include those methods that provide for the direct capitalization of earnings estimates,
as well as valuation methods calling for the forecasting of future benefits (earnings or cash flows) and then discounting those
benefits to the present at an appropriate discount rate. Under the income approach, the expected cash flows over the remaining
estimated life were discounted to the present at an appropriate discount rate. See Note 11 for further details.

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).

2018 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, 2018
and 2017. 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,
2018

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
Corporate and other debt 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

$
$

49,306
36,277

49,306
—

— $

36,277

197,092
1,429,782
37,087
1,749,544

35,155

48,979
1,833,678

23,681
23,681

45,245

273

5,673
51,191

$
$

—
—
—
49,306

—

—
49,306

— $
— $

— $

—

—
— $

—
—

—
—
—
—

—

—
—

197,092
1,429,782
37,087
1,700,238

35,155

48,979
1,784,372

23,681
23,681

$
$

— $

—

—
— $

45,245

273

5,673
51,191

2018 Form 10-K

Fair Value Measurements at Reporting Date Using:

December 31,
2017

Quoted Prices
in Active Markets
for Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(in thousands)

49,642
42,505

49,642
—

— $

42,505

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

$
$

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

$
$

—
—

—
7,360
—
—
—
7,360

—

7,360

—
—

—
—
—
7,783
1,382
58,807

—

112,884
1,215,935
3,214
43,381
9,819
1,427,738

15,119

26,417

58,807

1,469,274

$
$

24,330
24,330

— $
— $

— $
—

—
— $

— $
—

—
— $

48,373
5,350

3,472
57,195

(1) Represents residential mortgage loans held for sale that are carried at fair value and had contractual unpaid principal

balances totaling approximately $34.6 million and $14.8 million at December 31, 2018 and 2017, respectively.

(2) Derivative financial instruments are included in this category.
(3) Excludes PCI loans.

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 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. 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.

2018 Form 10-K

For certain private mortgage-backed securities reported at December 31, 2017, Valley prepared present value cash flow
models derived from unobservable market information (Level 3 inputs). During the fourth quarter of 2018, Valley sold all of the
its Level 3 available for sale securities, including 4 private label mortgage-backed securities.

Loans held for sale. 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. 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.
Non-performance risk did not materially impact the fair value of mortgage loans held for sale at December 31, 2018 and 2017
based on the short duration these assets were held and the 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, 2018 and 2017), is determined based on the current market prices for similar instruments. 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, 2018 and 2017.

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, 2018, certain appraisals may be discounted based on specific market data by location and property type. During
2018 and 2017, 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 $638 thousand and $2.1 million for
the years ended December 31, 2018 and 2017, respectively. These collateral dependent impaired loans with a total recorded
investment of $73.7 million and $57.5 million at December 31, 2018 and 2017, respectively, were reduced by specific valuation
allowance allocations totaling $28.5 million and $9.1 million to a reported total net carrying amount of $45.2 million and $48.4
million at December 31, 2018 and 2017, 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, 2018, the fair value model used prepayment
speeds (stated as constant prepayment rates) from 0 percent up to 24 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 $388 thousand and
$429 thousand the years ended December 31, 2018 and 2017, respectively.

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
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, 2018. During the years ended December 31, 2018 and 2017, foreclosed assets measured at fair value upon initial
recognition or subsequent re-measurement totaled $5.7 million and $3.5 million, respectively. The charge-offs of foreclosed assets
to the allowance for loan losses totaled $2.0 million and $1.9 million for the years ended December 31, 2018 and 2017, respectively.
The re-measurement of foreclosed assets at fair value subsequent to their initial recognition resulted in losses of $390 thousand,
$361 thousand and $1.0 million included in non-interest expense for the years ended December 31, 2018, 2017 and 2016,
respectively.

2018 Form 10-K

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.

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, 2018 and 2017 were as follows:

December 31,

2018

2017

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

251,541

234,310

Level 1

177,088

172,800

234,310

172,800

145,257

9,981

477,479
1,118,044
40,088

46,771
1,837,620
17,562,153

Level 1

Level 2

Level 2
Level 2
Level 2

Level 2

Level 3

Level 1

138,517

8,721

142,049

8,641

138,676

9,859

585,656
1,266,770
37,332

31,250
2,068,246
24,883,610

586,033
1,235,605
31,486

31,129
2,034,943
24,068,755

465,878
1,131,945
49,824

46,509
1,842,691
18,210,724

95,296

73,990

Level 1

232,080

178,668

Level 1

Level 2

Level 1

Level 2

Level 1

17,388,990

14,589,941

7,063,984
2,118,914

1,654,268

55,370

25,762

7,005,573

2,091,892

1,751,194

55,692

25,762

3,563,521

3,465,373

748,628

679,316

2,315,819

2,453,797

41,774

14,161

37,289

14,161

(1)

(2)

Included in other assets.
Included in accrued expenses and other liabilities.

2018 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,

2018 and 2017 were as follows:

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair Value

December 31, 2018
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, 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

138,517

3,532

8,721

341,702

243,954

585,656

1,266,770

37,332

31,250

2,068,246

138,676

9,859

244,272

221,606

465,878

1,131,945

49,824

46,509

4,332

3,141

7,473

3,203

14,436

6,581

122

7,083

6,199

13,282

4,842

532

Total investment securities held to maturity

1,842,691

25,419

— $

(135)

(5,735)
(1,361)

(7,096)
(34,368)
(5,923)
(217)
(47,739) $

— $

—

(1,653)
(28)

(1,681)
(18,743)
(9,796)
(270)
(30,490) $

142,049

8,641

340,299

245,734

586,033

1,235,605

31,486

31,129

2,034,943

145,257

9,981

249,702

227,777

477,479
1,118,044

40,088

46,771

1,837,620

2018 Form 10-K

The age of unrealized losses and fair value of related securities held to maturity at December 31, 2018 and 2017 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)

— $

6,074

(135) $

6,074

(135)

16,098

3,335

(266)
(37)

138,437

60,078

(5,469)
(1,324)

154,535

63,413

(5,735)
(1,361)

19,433

(303)

198,515

(6,793)

217,948

(7,096)

72,240

—

9,948

(852)
—
(52)

846,671

30,055

4,835

(33,516)
(5,923)
(165)

918,911
30,055

14,783

(34,368)
(5,923)
(217)

101,621

(1,207) $ 1,086,150

(46,532) $ 1,187,771

(47,739)

6,342

4,644

(50) $
(25)

53,034

561

(1,603) $
(3)

59,376

5,205

(1,653)
(28)

10,986

(75)

53,595

(1,606)

64,581

(1,681)

December 31, 2018
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

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

Total

365,182

344,216

—

9,980

(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)

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 held to maturity portfolio in an unrealized loss position at December 31, 2018 was 378 as compared to
152 at December 31, 2017.

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, 2018 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, 2018 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, 2018.

As of December 31, 2018, 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 $1.3 billion.

The contractual maturities of investments in debt securities held to maturity at December 31, 2018 are set forth in the table
below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages

2018 Form 10-K

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, 2018

Amortized Cost

Fair Value

(in thousands)

21,418
274,389
260,835
244,834
1,266,770
2,068,246

21,459
278,051
267,813
232,015
1,235,605
2,034,943

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 7.7 years at

December 31, 2018.

Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of investment securities available for sale at December 31,

2018 and 2017 were as follows:

December 31, 2018
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
Corporate and other debt securities

Total investment securities available for sale

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

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair
Value

50,975
36,844

— $
71

(1,669) $
(638)

49,306
36,277

100,777
101,207
201,984
1,469,059
37,542
1,796,404

50,997
42,384

38,435
74,752
113,187
1,239,534
3,726
50,701
10,505
1,511,034

18
209
227
1,484
213
1,995

(3,682)
(1,437)
(5,119)
(40,761)
(668)
(48,855) $

97,113
99,979
197,092
1,429,782
37,087
1,749,544

— $
158

(1,355) $
(37)

49,642
42,505

158
477
635
2,423
—
623
1,190
5,029

(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

2018 Form 10-K

The age of unrealized losses and fair value of related securities available for sale at December 31, 2018 and 2017 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)

— $

2,120

— $
(20)

49,306
26,775

(1,669) $
(618)

49,306
28,895

(1,669)
(638)

17,560

5,018

22,578

119,645
12,339
156,682

916
31,177

13,337

31,669

45,006

406,940

—

5,855
—
489,894

(95)
(106)

75,718

70,286

(3,587)
(1,331)

93,278

75,304

(3,682)
(1,437)

(201)

146,004

(4,918)

168,582

(5,119)

(668)
(161)

1,221,942
12,397
(1,050) $ 1,456,424

(2) $
(37)

48,726
—

(131)
(256)

(387)

(2,461)
—
(45)
—
(2,932) $

7,792

12,133

19,925

599,167

3,214

15,115
5,150
691,297

(40,093)
(507)

1,341,587
24,736
(47,805) $ 1,613,106

(1,353) $
—

49,642
31,177

(243)
(308)

(551)

21,129

43,802

64,931

1,006,107

3,214

(16,201)
(512)
(115)
(494)

20,970
5,150
(19,226) $ 1,181,191

(40,761)
(668)
(48,855)

(1,355)
(37)

(374)
(564)

(938)

(18,662)
(512)
(160)
(494)
(22,158)

December 31, 2018
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

Corporate and other debt securities

Total

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

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, 2018 was 545 as compared to
327 at December 31, 2017.

The unrealized losses more than twelve months for the residential mortgage-backed securities category of the available for
sale portfolio at December 31, 2018 largely related to several investment grade securities mainly issued by Ginnie Mae, Fannie
Mae, and Freddie Mac.

As of December 31, 2018, 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 $1.1 billion.

2018 Form 10-K

The contractual maturities of investments securities available for sale at December 31, 2018 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.

December 31, 2018

Amortized Cost

Fair Value

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 available for sale

(in thousands)
4,666
125,825
78,305
118,549
1,469,059
1,796,404

4,643
123,051
76,640
115,428
1,429,782
1,749,544

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 was 7.8 years at

December 31, 2018.

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; 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 trust preferred securities and corporate bonds (including 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.

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, 2018 that were at or above the minimum
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, 2018, approximately 40.6 percent of the $782.7 million carrying value of obligations of states and political
subdivisions were issued by the states of (or municipalities within) New Jersey, Utah, Texas, and Maryland. The obligations of
states and political subdivisions mainly consist of general obligation bonds and, to lesser extent, special revenue bonds which had
an aggregated amortized cost and fair value of $198.8 million and $193.1 million, respectively, at December 31, 2018. Special
revenue bonds were largely issued by the Utah and Minnesota and other state housing authorities, as well Port Authority of New
York and New Jersey. 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, 2018, 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.

There were no other-than-temporary impairment losses on securities recognized in earnings for the years ended December 31,
2018 and 2017. Management does not believe that any individual unrealized loss as of December 31, 2018 included in the investment
portfolio tables above represents other-than-temporary impairment as management mainly attributes the declines in fair value to

2018 Form 10-K

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.

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, 2018, 2017 and 2016 were as follows:

Sales transactions:

Gross gains

Gross losses

Maturities and other securities transactions:

Gross gains

Gross losses

(Losses) gains on securities transactions, net

2018

2017
(in thousands)

2016

1,769
(3,881)
(2,112) $

42
(272)
(230) $
(2,342) $

— $
(25)
(25) $

43
(38)
5
$
(20) $

271
(58)
213

615
(51)
564

777

Net losses on sales transactions in 2018 (as presented in the table above) primarily related to the sales of equity securities
previously classified as available for sale, certain municipal securities acquired from USAB and all of Valley's private label
mortgage-backed securities classified as available for sale, including securities that were previously impaired.

LOANS (Note 5)

The detail of the loan portfolio as of December 31, 2018 and 2017 was as follows:

December 31, 2018

December 31, 2017

Non-PCI
Loans

PCI
Loans*

Total

Non-PCI
Loans

PCI
Loans*

Total

(in thousands)

$ 3,590,375

740,657

$ 4,331,032

$ 2,549,065

192,360

$ 2,741,425

9,912,309

1,122,348

2,494,966

12,407,275

8,561,851

365,784

1,488,132

809,964

11,034,657
3,682,984

2,860,750

13,895,407

428,416

4,111,400

9,371,815

2,717,744

934,926

41,141

976,067

141,291

9,496,777

851,105

10,347,882

2,859,035

371,340

1,319,206

846,821

2,537,367

145,749

517,089

373,631

72,649

446,280

365

1,319,571

1,208,804

1,208,902

14,149

160,263

860,970

723,306

2,697,630

2,305,741

4,750

77,497

728,056

2,383,238

$ 20,845,383

$ 4,190,086

$ 25,035,469

$ 16,944,365

$ 1,387,215

$ 18,331,580

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 $27.6 million and $38.7 million at December 31,
2018 and 2017, respectively.

Total loans (excluding PCI covered loans) include net of unearned premiums and deferred loan costs totaling $21.5 million
and $22.2 million at December 31, 2018 and 2017, respectively. The outstanding balances (representing contractual balances owed
to Valley) for PCI loans totaled $4.4 billion and $1.5 billion at December 31, 2018 and 2017, respectively.

2018 Form 10-K

Valley transferred $289.6 million and $313.2 million of residential mortgage loans from the loan portfolio to loans held for
sale in 2018 and 2017, respectively. Exclusive of such transfers, there were no other sales or transfers of loans from the held for
investment portfolio during 2018 and 2017.

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 information regarding the estimates of the contractually required payments, the cash flows
expected to be collected, and the estimated fair value of the PCI loans acquired in the USAB acquisition as of January 1, 2018
(See Note 2 for more details):

Contractually required principal and interest

Contractual cash flows not expected to be collected (non-accretable difference)

Expected cash flows to be collected

Interest component of expected cash flows (accretable yield)

Fair value of acquired loans

January 1, 2018

(in thousands)

4,398,687
(101,796)
4,296,891
(559,907)
3,736,984

The following table presents changes in the accretable yield for PCI loans for the years ended December 31, 2018 and 2017:

Balance, beginning of period

Acquisition
Accretion
Net increase in expected cash flows

Balance, end of period

2018

2017

(in thousands)

282,009
559,907
(235,741)
269,783
875,958

294,514
—
(89,770)
77,265
282,009

The net increase 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 $269.8 million for the year ended December 31, 2018 was largely due to higher interest rates and increased
construction loan balances (mainly acquired from USAB) captured in the cash flow reforecast in the fourth quarter of 2018. 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.

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. All loans to related parties are performing as of December 31, 2018.

2018 Form 10-K

The following table summarizes the changes in the total amounts of loans and advances to the related parties during the year

ended December 31, 2018:

Outstanding at beginning of year
New loans and advances
Repayments

Outstanding at end of year

2018
(in thousands)

151,265
86,837
(23,994)
214,108

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.

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 $580.5 million and $401.8
million at December 31, 2018 and 2017, respectively.

The commercial portfolio also includes taxi medallion loans, most of which consist of loans to fleet owners of New City
medallions. At December 31, 2018, the taxi medallion loans totaled $130.2 million and were classified as either substandard or
doubtful loans. While most of the taxi medallion loans within the portfolio at December 31, 2018 are currently performing to
their contractual terms, negative trends in the market valuations of the underlying taxi medallion collateral and a decline in borrower
cash flows, among other factors, could impact the future performance of this portfolio.

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.

2018 Form 10-K

100

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 are 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 mostly located in northern and central New
Jersey, the New York City metropolitan area, and Florida. 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
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 (mainly those secured by cash surrender
value of life insurance), credit card loans and personal loans. Unsecured consumer loans totaled approximately $58.1 million and
$18.1 million, including $10.4 million and $8.2 million of credit card loans, at December 31, 2018 and 2017, respectively. Valley
believes the aggregate risk exposure to unsecured loans and lines of credit was not significant at December 31, 2018.

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, 2018 and 2017:

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, 2018
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

13,085

3,768

6,156

$ 70,096

93,105

$ 3,497,270

$ 3,590,375

9,521

2,829

12,350

16,576

872

7,973

895

9,740

530

—

530

2,458

1,299

1,386

—

1,288

—

308

341

2,372

356

2,728

12,917

2,156

419

12,450

3,185

15,635

33,239

3,068

9,660

1,394

9,899,859
1,119,163

9,912,309

1,122,348

11,019,022

11,034,657

3,649,745

3,682,984

368,272

371,340

1,309,546

1,319,206

845,427

846,821

2,655

14,122

2,523,245

2,537,367

Total

51,751

8,142

7,812

$ 88,396

$ 156,101

$ 20,689,282

$ 20,845,383

101

2018 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)

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

—

18,845

7,903

987

118

—

2,779

—

271

11,328

732

12,060

12,405

1,777

22,578

32,526

55,104

35,756

2,880

7,038

1,844
11,762
$ 127,706

8,539,273

8,561,851

777,438

809,964

9,316,711

2,681,988

9,371,815

2,717,744

370,751

1,201,766

721,462
2,293,979

373,631

1,208,804

723,306
2,305,741

$ 16,816,659

$ 16,944,365

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

Total

8,409
48,900

1,199
28,491

284
3,090

1,870
$ 47,225

If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income
would have amounted to approximately $3.6 million, $2.5 million, and $2.1 million for the years ended December 31, 2018, 2017
and 2016, 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.

2018 Form 10-K

102

The following table presents information about impaired loans by loan portfolio class at December 31, 2018 and 2017:

Recorded
Investment
With No
Related
Allowance

Recorded
Investment
With
Related
Allowance

Total
Recorded
Investment
(in thousands)

Unpaid
Contractual
Principal
Balance

Related
Allowance

8,339

89,513

97,852

104,007

29,684

16,732
803
17,535
7,826

125
125
33,825

9,946

28,709
1,904
30,613
5,654

3,096
3,096
49,309

25,606
457
26,063
6,078

1,146
1,146
122,800

75,553

29,771
467
30,238
8,402

42,338
1,260
43,598
13,904

1,271
1,271
156,625

85,499

58,480
2,371
60,851
14,056

44,337
1,260
45,597
14,948

1,366
1,366
165,918

90,269

62,286
2,394
64,680
15,332

664
664
114,857

3,760
3,760
164,166

4,917
4,917
175,198

2,615
13
2,628
600

113
113
33,025

11,044

2,718
17
2,735
718

64
64
14,561

December 31, 2018
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, 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

Interest income recognized on a cash basis for impaired loans classified as non-accrual was not material for the years ended

December 31, 2018, 2017 and 2016.

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, 2018, 2017 and 2016:

2018

2017

2016

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

(in thousands)

108,071

1,822

80,974

1,459

36,552

1,045

44,838

1,517

46,355

15,384

865

2,289

2,358

506

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

170,675

4,707

158,777

4,373

125,941

4,291

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

103

2018 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 $77.2 million and $117.2 million as of December 31, 2018
and 2017, respectively. Non-performing TDRs totaled $55.0 million and $27.0 million as of December 31, 2018 and 2017,
respectively.

The following table presents non-PCI loans by loan class modified as TDRs during the years ended December 31, 2018 and
2017. 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, 2018 and 2017, respectively.

Troubled Debt
Restructurings

December 31, 2018
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction

Total commercial real estate
Residential mortgage
Consumer

Total

December 31, 2017
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction

Total commercial real estate
Residential mortgage

Total

Number of
Contracts

Pre-Modification
Outstanding
Recorded Investment

Post-Modification
Outstanding
Recorded Investment

($ in thousands)

16,251

8
1
9
8
2
44

6
3
9
7
106

5,643
532
6,175
1,500
99
24,025

75,894

23,781
1,188
24,969
1,769
102,632

15,105

6,600
356
6,956
1,461
101
23,623

69,020

23,548
932
24,480
1,727
95,227

The total TDRs presented in the table above had allocated specific reserves for loan losses that totaled $6.5 million and $8.7
million at December 31, 2018 and 2017, 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 2018 and 2017. At December 31, 2018, the commercial and industrial loan category in the above table largely consisted
of non-performing and performing TDR taxi cab medallion loans classified as substandard and non-accrual doubtful loans.

2018 Form 10-K

104

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, 2018 and 2017 were as follows:

Troubled Debt Restructurings Subsequently Defaulted

Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

Years Ended December 31,

2018

2017

Commercial and industrial

Commercial real estate
Residential mortgage

Total

10
—
3
13

($ in thousands)
8,829
—
490
9,319

7
1
5
13

5,841
165
1,125
7,131

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, 2018 and 2017.

Credit exposure—
by internally assigned risk rating

Pass

Special
Mention

Substandard
(in thousands)

Doubtful

Total Non-PCI
Loans

December 31, 2018
Commercial and industrial
Commercial real estate
Construction
Total

December 31, 2017
Commercial and industrial
Commercial real estate
Construction
Total

3,399,426
9,828,744
1,121,321
$ 14,349,491

2,375,689
8,447,865
808,091
$ 11,631,645

31,996
30,892
215
63,103

62,071
48,009
360
110,440

92,320
51,710
812
144,842

96,555
65,977
1,513
164,045

66,633
963
—
67,596

14,750
—
—
14,750

3,590,375
9,912,309
1,122,348
$ 14,625,032

2,549,065
8,561,851
809,964
$ 11,920,880

At December 31, 2018, the commercial and industrial loans rated substandard and doubtful in the above table included

performing TDR taxi medallion loans and non-accrual taxi medallion loans, respectively.

105

2018 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, 2018 and
2017:

Credit exposure—
by payment activity

December 31, 2018
Residential mortgage
Home equity
Automobile
Other consumer
Total

December 31, 2017
Residential mortgage
Home equity
Automobile
Other consumer
Total

Performing
Loans

Non-Performing
Loans
(in thousands)

Total Non-PCI
Loans

3,670,067
369,184
1,319,126
846,402
6,204,779

2,705,339
371,854
1,208,731
723,286
5,009,210

12,917
2,156
80
419
15,572

12,405
1,777
73
20
14,275

3,682,984
371,340
1,319,206
846,821
6,220,351

2,717,744
373,631
1,208,804
723,306
5,023,485

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, 2018 and 2017:

Credit exposure—
by payment activity

December 31, 2018
Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Consumer

Total

December 31, 2017
Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Consumer

Total

Performing
Loans

Non-Performing
Loans
(in thousands)

Total
PCI Loans

710,045
2,478,990
364,815
421,609
158,502
4,133,961

172,105
924,574
39,802
135,745
76,901
1,349,127

30,612
15,976
969
6,807
1,761
56,125

20,255
10,352
1,339
5,546
596
38,088

740,657
2,494,966
365,784
428,416
160,263
4,190,086

192,360
934,926
41,141
141,291
77,497
1,387,215

2018 Form 10-K

106

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, 2018 and 2017.

The following table summarizes the allowance for credit losses at December 31, 2018 and 2017:

Components of allowance for credit losses:
Allowance for loan losses
Allowance for unfunded letters of credit
Total allowance for credit losses

December 31,

2018

2017

(in thousands)

151,859
4,436
156,295

120,856
3,596
124,452

The following table summarizes the provision for credit losses for the years ended December 31, 2018, 2017 and 2016:

Components of provision for credit losses:

Provision for loan losses
Provision for unfunded letters of credit

Total provision for credit losses

2018

2017
(in thousands)

2016

31,661
840

32,501

8,531
1,411

9,942

11,873
(4)
11,869

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31,

2018 and 2017:

December 31, 2018
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, 2017
Allowance for loan losses:

Beginning balance

Loans charged-off

Charged-off loans recovered
Net (charge-offs) recoveries

Provision for loan losses

Ending balance

57,232

Commercial
and Industrial

Commercial
Real Estate

Residential
Mortgage

Consumer

Total

(in thousands)

57,232

54,954

3,605

5,065

$ 120,856

(2,515)

4,623

2,108

31,616
90,956

(348)

417

69
(5,373)
49,650

(223)

272

1,387
5,041

(4,977)

2,093
(2,884)
4,031
6,212

(8,063)

7,405
(658)
31,661
$ 151,859

50,820

55,851

3,702

4,046

$ 114,419

(5,421)
4,736
(685)
7,097

(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

107

2018 Form 10-K

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, 2018 and 2017. 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, 2018
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, 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

29,684

61,272
90,956

97,852

2,628

47,022
49,650

43,598

600

4,441
5,041

13,904

113

6,099
6,212

1,271

33,025

118,834
151,859

156,625

3,492,523

10,991,059

3,669,080

2,536,096

20,688,758

740,657
4,331,032

2,860,750
$13,895,407

428,416
$ 4,111,400

160,263
$ 2,697,630

4,190,086
$ 25,035,469

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

PREMISES AND EQUIPMENT, NET (Note 7)

At December 31, 2018 and 2017, 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

2018

2017

(in thousands)

93,600
250,510
77,425
263,604
685,139
(343,509)
341,630

77,235
210,335
79,217
255,189
621,976
(334,271)
287,705

Depreciation and amortization of premises and equipment included in non-interest expense for the years ended December 31,

2018, 2017 and 2016 was approximately $27.6 million, $24.8 million, and $24.4 million, respectively.

2018 Form 10-K

108

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, 2016

Balance at December 31, 2017

Goodwill from business combinations

Balance at December 31, 2018

21,218

—

21,218

200,103

86,922

287,025

316,258

241,592

557,850

153,058

65,514

218,572

690,637

394,028

1,084,665

* 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.

The goodwill from business combinations during 2018 set forth in the table above relates to the USAB acquisition. During
2018, Valley adjusted the fair value of certain PCI loans and deferred tax assets which, on a combined basis, resulted in a $5.8
million net increase in goodwill. See Note 2 for further details related to the USAB acquisition.

There was no impairment of goodwill during the years ended December 31, 2018, 2017 and 2016.

The following tables summarize other intangible assets as of December 31, 2018 and 2017:

December 31, 2018
Loan servicing rights
Core deposits
Other

Total other intangible assets

December 31, 2017
Loan servicing rights
Core deposits
Other

Total other intangible assets

Gross
Intangible
Assets

Accumulated
Amortization

Valuation
Allowance

(in thousands)

Net
Intangible
Assets

87,354
80,470
3,945
171,769

79,138
43,396
4,087
126,621

(63,161) $
(29,136)
(2,399)
(94,696) $

(57,054) $
(24,297)
(2,292)
(83,643) $

(83) $
—
—
(83) $

(471) $
—
—
(471) $

24,110
51,334
1,546
76,990

21,613
19,099
1,795
42,507

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 8 years. The
line item labeled “Other” included in the table above primarily consists of customer lists which are amortized over their expected
lives generally using a straight-line method and have a weighted average amortization period of 7.6 years. Valley recorded
approximately $44.6 million and $1.4 million of core deposit intangibles and loan servicing rights, respectively, resulting from
the USAB acquisition. 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, 2018, 2017 and 2016.

109

2018 Form 10-K

The following table summarizes the change in loan servicing rights during the years ended December 31, 2018, 2017 and

2016:

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

2018

2017
(in thousands)

2016

$
$

22,084
8,216
(6,107)
24,193

(471) $
388
(83) $
$

24,110

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

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 $3.2 billion, $2.8
billion and $2.5 billion at December 31, 2018, 2017 and 2016, 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 $18.4 million, $10.0 million and $11.3 million for the years ended December 31,
2018, 2017 and 2016, respectively.

The following table presents the estimated amortization expense of other intangible assets over the next five-year period:

Year

2019
2020
2021
2022
2023

DEPOSITS (Note 9)

Loan Servicing
Rights

Core
Deposits
(in thousands)

Other

5,574
4,590
3,614
2,872
2,286

10,961
9,607
8,252
6,898
5,544

235
220
206
191
131

Included in time deposits are certificates of deposit over $250 thousand totaling $1.1 billion and $647.3 million at
December 31, 2018 and 2017, respectively. Interest expense on time deposits of $250 thousand or more totaled approximately
$6.6 million, $1.3 million, and $1.1 million in 2018, 2017 and 2016, respectively.

The scheduled maturities of time deposits as of December 31, 2018 are as follows:

Year

2019
2020
2021
2022
2023
Thereafter

Total time deposits

2018 Form 10-K

110

Amount
(in thousands)

4,987,313
1,551,067
163,059
176,727
143,287
42,531
7,063,984

Deposits from certain directors, executive officers and their affiliates totaled $66.8 million and $77.7 million at December 31,

2018 and 2017, respectively.

BORROWED FUNDS (Note 10)

Short-Term Borrowings

Short-term borrowings at December 31, 2018 and 2017 consisted of the following:

FHLB advances
Securities sold under agreements to repurchase
Federal funds purchased

Total short-term borrowings

2018

2017

(in thousands)

1,732,000
261,914
125,000
2,118,914

427,000
321,628
—
748,628

The weighted average interest rate for short-term borrowings was 2.45 percent and 1.05 percent at December 31, 2018 and

2017, respectively.

Long-Term Borrowings

Long-term borrowings at December 31, 2018 and 2017 consisted of the following:

FHLB advances, net (1)
Subordinated debt, net (2)
Securities sold under agreements to repurchase

Total long-term borrowings

2018

2017

(in thousands)

1,309,666
294,602
50,000

1,654,268

1,980,666
235,153
100,000

2,315,819

(1)

(2)

FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $10.3 million
and $14.3 million at December 31, 2018 and 2017, respectively.
Subordinated debt is presented net of unamortized debt issuance costs totaling $1.4 million and $1.7 million at December 31, 2018 and
2017, 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 FHLB advance totaling $405.0 million (maturing in August 2021). 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 collateral at the FHLB of Atlanta and resulted in the recognition of a $315 thousand
loss on extinguishment of debt reported within other non-interest expense for the year ended December 31, 2016.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 3.13 percent and 2.52 percent at
December 31, 2018 and 2017, 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.

111

2018 Form 10-K

The long-term FHLB advances at December 31, 2018 are scheduled for contractual balance repayments as follows:

Year

2019
2020
2021
2022

Total long-term FHLB advances

Amount
(in thousands)

255,000
25,000
840,000
200,000
1,320,000

There are no FHLB advances which are callable for early redemption by the FHLB in the table above.

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 $99.3 million
and $99.2 million at December 31, 2018 and 2017, 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 $134.2 million and $135.2 million at December 31, 2018 and 2017, respectively.

On January 1, 2018, Valley assumed $60 million of 6.25 percent subordinated notes, in connection with the acquisition of
USAB. The notes are due April 1, 2026 callable beginning April 2021. Interest on the subordinated debentures is payable semi-
annually in arrears on April 1 and October 1 of each year. After purchase accounting adjustments, the subordinated notes had a
net carrying value of $61.1 million at December 31, 2018.

Long-term securities sold under agreements. The long-term securities sold under agreements had a weighted average

interest rate of 3.70 percent and 3.37 percent at December 31, 2018 and 2017, respectively.

The long-term repos at December 31, 2018 are scheduled for contractual balance repayments as follows:

Year

2022

Total long-term securities sold under agreements to repurchase

Amount
(in thousands)

50,000

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 $2.4 billion and $1.9 billion for December 31, 2018 and
2017, respectively.

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 11)

All of the statutory trusts presented in the table below were acquired in past bank acquisitions, including the Aliant Statutory
Trust II acquired from USAB on January 1, 2018. These 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.

2018 Form 10-K

112

The table below summarizes the outstanding junior subordinated debentures and the related trust preferred securities issued

by each trust as of December 31, 2018 and 2017:

GCB
Capital Trust III

State Bancorp
Capital Trust I

State Bancorp
Capital Trust II

Aliant

Statutory Trust II

($ in thousands)

Junior Subordinated
Debentures:

December 31, 2018
Carrying value (1)
Contractual principal balance

December 31, 2017
Carrying value (1)
Contractual principal balance
Annual interest rate (2)
Stated maturity date

Initial call date
Trust Preferred Securities:
December 31, 2018 and 2017
Face value
Annual distribution rate (2)
Issuance date
Distribution dates (3)

24,743

8,924

10,310

8,824

10,310

8,337

10,310

8,207

10,310

13,366

15,464

3-mo. LIBOR+1.4%

3-mo. LIBOR+3.45%

3-mo. LIBOR+2.85%

3-mo. LIBOR+1.8%

July 30, 2037

November 7, 2032

January 23, 2034

December 15, 2036

July 30, 2017

November 7, 2007

January 23, 2009

December 15, 2011

24,000

10,000

15,000

3-mo. LIBOR+1.4%

3-mo. LIBOR+3.45%

3-mo. LIBOR+2.85%

3-mo. LIBOR+1.8%

July 2, 2007

October 29, 2002

December 19, 2003

December 14, 2006

Quarterly

(1) The carrying values include unamortized purchase accounting adjustments at December 31, 2018 and 2017.
(2)

Interest on GCB Capital Trust III was fixed at an annual rate of 6.96 percent until July 30, 2017, thereafter, it resets quarterly to 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, 2018 and 2017.

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 their 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.

113

2018 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, 2018 and 2017:

Change in projected benefit obligation:
Projected benefit obligation at beginning of year

Interest cost
Actuarial (gain) 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 (loss) 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

2018

2017

(in thousands)

170,566
5,542
(11,540)
(7,204)
157,364

222,124
(5,545)
1,133
(7,204)
210,508

53,144
157,364

161,306
5,713
10,148
(6,601)
170,566

206,639
21,468
618
(6,601)
222,124

51,558
170,566

Includes accrued interest receivable of $660 thousand and $993 thousand as of December 31, 2018 and 2017, 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 $309 thousand of the net actuarial loss reported in the following table as of
December 31, 2018 as a component of net periodic pension expense during 2019.

Net actuarial loss
Deferred tax benefit

Total

2018

2017

(in thousands)

42,893
(12,205)
30,688

33,602
(14,044)
19,558

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

2018

2017

(in thousands)

18,708
18,708
—

20,175
20,175
—

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 was 4.30 percent and 3.69 percent as of December 31, 2018 and 2017, respectively.

2018 Form 10-K

114

The net periodic pension income for the qualified and non-qualified plans reported within other non-interest expense (due
to the adoption of ASU No. 2017-07) included the following components for the years ended December 31, 2018, 2017 and 2016:

Interest cost
Expected return on plan assets
Amortization of net loss

Total net periodic pension income

2018

2017
(in thousands)

2016

5,542
(15,912)
625
(9,745) $

5,713
(15,163)
381
(9,069) $

6,681
(14,539)
294
(7,564)

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. Valley believes this provides a better estimate of service and interest costs. Valley accounted for this change in estimate
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, 2018 and 2017 were as follows:

2018

2017

Net loss
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)
9,917
(35)
(625)
9,257

3,843
(35)
(381)
3,427

(453) $

(5,607)

The benefit payments, which reflect expected future service, as appropriate, expected to be paid in future years are presented

in the following table:

Year

2019
2020
2021
2022
2023
Thereafter

Amount
(in thousands)

8,213
8,491
8,764
8,938
9,182
47,835

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, 2018, 2017 and 2016 were as follows:

Discount rate
Expected long-term return on plan assets
Rate of compensation increase

2018

2017

2016

3.69%
7.50%
N/A

4.12%
7.50%
N/A

4.33%
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.

115

2018 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 is an approximate equal weighting of 50 percent fixed income
securities and 50 percent equity securities. 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,
2018

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)

28% $
24
17
24
4
3

100% $

59,447
50,889
36,293
50,838
7,429
4,952
209,848

59,447
—
36,293
50,838
7,429
—
154,007

— $

50,889
—
—
—
4,952
55,841

—
—
—
—
—
—
—

% 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

—
—
—
—
—
—
—

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.

2018 Form 10-K

116

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, 2018 and 2017, the remaining obligations under these plans were $1.7 million
and $2.1 million, respectively, of which $512 thousand and $682 thousand, respectively, were funded by Valley.

As of December 31, 2018 and 2017, all of the obligations were included in other liabilities and $872 thousand (net of a
$345 thousand tax benefit) and $994 thousand (net of a $400 thousand tax benefit), respectively, were recorded in accumulated
other comprehensive loss. The $816 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 $18.8 million, $10.8 million and $10.5 million during 2018, 2017 and 2016, 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 invested in accordance with each participant’s
investment elections. The Bank recorded $8.5 million, $7.1 million and $6.7 million in expense for contributions to the plan for
the years ended December 31, 2018, 2017 and 2016, respectively.

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.

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, 2018, 5.5 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

117

2018 Form 10-K

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 $19.5 million, $12.2
million and $10.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. The stock-based compensation
expense for 2018, 2017 and 2016 included $4.3 million, $4.3 million and $3.5 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, 2018, the unrecognized amortization expense for all stock-
based compensation totaled approximately $16.6 million and will be recognized over an average remaining vesting period of
approximately 2.1 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,

2018, 2017 and 2016:

Outstanding at beginning of year

Granted
Vested
Forfeited

Outstanding at end of year

Restricted Stock Awards Outstanding
2017

2016

2018

1,771,702
1,263,144
(1,128,521)
(185,357)
1,720,968

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

The RSAs granted in 2018 have vesting periods ranging from one to five years. The average grant date fair value of RSAs
granted during the year ended December 31, 2018 was $11.85 per share. Included in the RSAs granted (in the table above) during
2018 and 2017, 60 thousand and 45 thousand shares, respectively, were issued to Valley directors. In 2018 and 2017, each non-
management director received $60 thousand and $50 thousand, respectively, of RSAs 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 of Directors.

During 2014, 240 thousand shares of performance-based RSAs were granted to executive officers and vested based on the
same performance measures for the RSU grants discussed below. During 2017 and 2016, 85 thousand and 53 thousand restricted
shares, respectively, vested related to the performance-based RSAs. 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 (RSUs). 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, 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 $12.36, $11.05 and $8.32 per share for the years
ended December 31, 2018, 2017, and 2016, respectively. Compensation costs related to RSUs totaled $5.5 million, $3.8 million
and $2.8 million, and were included in total stock-based compensation expense for the years ended December 31, 2018, 2017 and
2016, respectively.

2018 Form 10-K

118

The following table sets forth the changes in RSUs outstanding for the years ended December 31, 2018, 2017 and 2016:

Outstanding at beginning of year

Acquired from USAB
Granted
Vested
Forfeited

Outstanding at end of year

Restricted Stock Units Outstanding
2017

2016

2018

1,114,962
336,379
509,725
(503,879)
(78,301)
1,378,886

744,281
—
370,681
—
—
1,114,962

313,212
—
431,069
—
—
744,281

In connection with the USAB acquisition on January 1, 2018, Valley assumed 336 thousand time-based RSUs (of which 179
thousand remained unvested and outstanding as of December 31, 2018). The stock plan under which the stock awards were issued
is no longer active. Stock-based compensation expense related to the USAB RSUs totaled $1.6 million for the year ended
December 31, 2018.

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, 2018, 2017 and 2016 and changes during the

years ended on those dates:

2018

2017

2016

Stock Options
Outstanding at beginning of year

Acquired from USAB
Exercised
Forfeited or expired
Outstanding at end of year
Exercisable at year-end

446,980
1,803,165
(975,325)
(223,033)
1,051,787

604,003

Weighted
Average
Exercise
Price

13
5
5
14
7

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

In connection with the USAB acquisition on January 1, 2018, Valley assumed stock option awards totaling 1.8 million shares
of Valley common stock (of which options for 813 thousand shares remained outstanding as of December 31, 2018) at a weighted
average exercise price of $5.47.

The following table summarizes information about stock options outstanding and exercisable at December 31, 2018:

Range of Exercise Prices
$2-$4
4-6
6-10
10-18

Options Outstanding and Exercisable

Number of Options

Weighted Average
Remaining Contractual
Life in Years

Weighted Average
Exercise Price

40,870
284,912
42,094
236,127
604,003

2.9
5.1
7.6
1.9
3.9

3
5
7
12
7

119

2018 Form 10-K

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 terminated in April 2018 when
the remaining restricted stock under the plan vested.

The following table sets forth the changes in director’s restricted stock awards outstanding for the years ended December 31,

2018, 2017 and 2016:

Outstanding at beginning of year

Vested

Outstanding at end of year

INCOME TAXES (Note 13)

Restricted Stock Awards Outstanding
2017

2016

2018

17,885
(17,885)
—

55,510
(37,625)
17,885

80,117
(24,607)
55,510

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 reduced the U.S. statutory corporate 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 made
reasonable estimates of the effects and recorded provisional amounts in its financial statements as of December 31, 2017. The
accounting for the tax effects of the Tax Act was completed with the final 2017 tax returns in the fourth quarter of 2018, resulting
in a $2.3 million tax benefit for the year ended December 31, 2018.

Income tax expense for the years ended December 31, 2018, 2017 and 2016 consisted of the following:

Current expense:
Federal
State

Deferred (benefit) expense:

Federal
State

Total income tax expense

2018

2017
(in thousands)

2016

51,147
28,898
80,045

(17,463)
5,683
(11,780)
68,265

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

2018 Form 10-K

120

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as

of December 31, 2018 and 2017 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
Capital loss carryforward
Other

Total deferred tax assets

Deferred tax liabilities:
Pension plans
Other investments
Deferred income
Core deposit intangibles
Other

Total deferred tax liabilities

Valuation Allowance

Net deferred tax asset (included in other assets)

2018

2017

(in thousands)

42,882
19,111
13,301
13,222
21,570
33,629
830
21,274
165,819

18,786
17,758
—
14,223
8,858
59,625
733
105,461

34,885
8,336
10,596
5,021
30,658
18,819
—
21,930
130,245

18,912
13,234
37,952
5,182
7,469
82,749
—
47,496

Valley's federal net operating loss carryforwards totaled approximately $80.2 million at December 31, 2018 and expire
during the period from 2029 through 2034. Valley's capital loss carryforwards totaled $3.1 million at December 31, 2018 and
expire at December 31, 2023. State net operating loss carryforwards totaled approximately $104 million at December 31, 2018
and expire during the period from 2029 through 2038.

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, net of an immaterial valuation
allowance, 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 21 percent for the year ended December 31, 2018, and 35 percent for the
years ended December 31, 2017 and 2016 were as follows:

2018

2017

(in thousands)

2016

Federal income tax at expected statutory rate

69,235

88,458

81,683

Increase (decrease) due to:

State income tax expense, net of federal tax effect

23,851

21,046

19,197

Tax-exempt interest, net of interest incurred to carry tax-

exempt securities

Bank owned life insurance

Tax credits from securities and other investments

FDIC insurance premium

Impact of the Tax Act
Other, net

Income tax expense

(3,974)
(1,734)
(20,798)
3,318
(2,274)
641

(5,245)
(2,568)
(27,037)
—

15,441
736

68,265

90,831

(5,308)
(2,343)
(25,954)
—

—
(2,041)
65,234

121

2018 Form 10-K

A reconciliation of Valley’s gross unrecognized tax benefits for 2018, 2017 and 2016 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

2018

2017
(in thousands)

2016

4,238
—
—
(4,238)

— $

16,144
1,121
(13,027)
—
4,238

19,892
3,958
(4,820)
(2,886)
16,144

The entire balance of unrecognized tax benefits, if recognized, would favorably affect our effective income tax rate. Valley’s
policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley 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 believes no provisions for income tax uncertainties consistent with ASC 740 should be recorded as of December 31,
2018. Valley is evaluating the possibility of recording an uncertain tax position liability in 2019 with regards to its investments in
mobile solar generators sold and managed by DC Solar and its affiliates (DC Solar). For further information, see Note 23 -
Subsequent Events.

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, 2018.

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, 2018 and 2017:

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

2018 Form 10-K

122

December 31,

2018

2017

(in thousands)

36,961

68,052

105,013

4,520

8,756

13,276

22,135

42,015

64,150

3,690

15,020

18,710

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, 2018, 2017 and 2016:

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

2018

2017

2016

(in thousands)

6,713

21,351

28,064

1,880

2,544

1,970

17,806

7,383

35,530

42,913

2,748

4,684

2,866

31,449

24,200

41,747

5,013

33,294

38,307

2,077

450

790

31,427

34,744

* 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.

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

2019
2020
2021
2022
2023
Thereafter

Total lease commitments

Gross Rents

Sublease
Rents
(in thousands)

Net Rents

29,093
29,379
28,925
27,562
25,064
262,200
402,223

2,382
2,290
2,160
2,002
1,938
8,558
19,330

26,711
27,089
26,765
25,560
23,126
253,642
382,893

Net occupancy expense for years ended December 31, 2018, 2017, and 2016 included rental expense of $29.0 million, $27.7
million, and $27.7 million, respectively, net of rental income of $3.5 million, $3.9 million, and $4.0 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.

123

2018 Form 10-K

The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2018 and

2017:

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 under unused lines of credit—credit card
Commitments to sell loans
Commercial letters of credit

2018

2017

(in thousands)

5,164,186
1,178,306
316,941
235,310
66,229
58,897
3,100

3,401,653
1,006,329
250,536
192,685
54,906
57,405
2,115

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
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 matter 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. 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.

Maritza Gaston and George Gallart v. Valley National Bancorp and Valley National Bank. In April 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. The
Federal Magistrate granted conditional certification for the class and collective action in late 2017. In October 2018, following
mediation, Valley and Plaintiffs agreed to a settlement in principal for a total payment by Valley of $1.5 million. The settlement
was subsequently approved by the court in February 2019.

2018 Form 10-K

124

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, 2018, Valley had the following cash flow hedge derivatives:

• Two forward starting interest rate swaps, each with a notional amount of $75 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 of approximately 2.72 percent and 2.97 percent, in exchange for the receipt of variable-
rate payments at the three-month LIBOR rate. The two swaps have expiration dates of November 2019 and 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.

Valley terminated an interest rate cap with a notional amount of $125 million in May 2018. The terminated swap, originally
maturing in September 2023, was used to hedge the change in cash flows associated with prime rate indexed deposits, consisting
of consumer and commercial money market accounts, which variable rates are indexed to the prime rate.

One interest rate swap with an amount of $150 million used to hedge the changes in cash flows associated with certain

brokered money market deposits, matured in November 2018.

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, 2018, Valley had one interest rate swap with a notional amount of approximately $7.5 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.

Valley sometimes enters into risk participation agreements with external lenders where the banks are sharing their risk of
default on the interest rate swaps on participated loans. Valley either pays or receives 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

125

2018 Form 10-K

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, 2018, Valley had 18 credit swaps with an aggregate notional amount of $109.4 million related to risk
participation agreements.

At December 31, 2018, Valley had one "steepener" swap with a total current notional amount of $10.4 million where the
receive rate on the swap mirrors the pay rate on the brokered deposits. The rates 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, 2018

December 31, 2017

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

— $
—

27
347

$ 332,000
7,536

650
—

81
637

$ 607,000
7,775

— $

374

$ 339,536

650

718

$ 614,775

48,642
337

22,533
774

$ 3,390,578
105,247

25,696
71

23,494
118

$ 1,687,005
113,233

48,979

23,307

$ 3,495,825

25,767

23,612

$ 1,800,238

The Chicago Mercantile Exchange (CME) and London Clearing House (LCH) have enacted rulebook changes that re-
characterize variation margin as settlements of the outstanding derivative instead of cash collateral. The CME and LCH variation
margins are classified as a single-unit of account with the fair value of certain cash flow and non-designated derivative instruments
on a prospective basis effective January 1, 2017 for derivatives outstanding with the CME and January 1, 2018 for derivatives
outstanding with the LCH. As a result, the fair value of the designated cash flow interest rate swaps assets, and designated and
non-designated interest rate swaps liabilities were offset by variation margins posted by (with) the applicable counterparties and
reported in the table above on a net basis at December 31, 2018.

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:

Amount of loss reclassified from accumulated other comprehensive loss to

interest expense

Amount of gain (loss) recognized in other comprehensive income

(3,493) $
2,651

(8,579) $
1,005

(13,034)
(4,035)

2018

2017
(in thousands)

2016

2018 Form 10-K

126

The net gains or losses related to cash flow hedge ineffectiveness were immaterial during the years ended December 31,
2018, 2017 and 2016. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other
comprehensive loss were $4.0 million and $8.3 million at December 31, 2018 and 2017, 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 $1.3 million
will be reclassified as an increase to interest expense in 2019.

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

2018

2017
(in thousands)

2016

290
—

(290) $
—

348
—

(348) $
—

320
6,670

(320)
(6,645)

Fee income related to derivative interest rate swaps executed with commercial loan customers totaled $16.4 million, $8.3

million and $5.0 million for the years ended December 31, 2018, 2017 and 2016, respectively.

The following table presents the hedged items related to interest rate derivatives designated as hedges of fair value and the

cumulative basis fair value adjustment included in the net carrying amount of the hedged items at December 31, 2018:

Line Item in the Statement of Financial Position in
Which the Hedged Item is Included

Carrying Amount of the Hedged
Asset

Cumulative Amount of Fair Value
Hedging Adjustment Included in
the Carrying Amount of the
Hedged Asset

Loans

7,882

8,412

346

637

Net (losses) gains included in the consolidated statements of income related to derivative instruments not designated as

hedging instruments were as follows:

2018

2017

2018

2017

(in thousands)

2018

2017
(in thousands)

2016

Non-designated hedge interest rate and credit derivatives

Other non-interest expense

(792) $

(744) $

690

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, 2018, Valley was in compliance with all of the provisions of
its derivative counterparty agreements. As of December 31, 2018, 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 $2.2 million.
Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties.

127

2018 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, 2018 and 2017.

Gross Amounts
Recognized

Gross Amounts
Offset

Net Amounts
Presented

Financial
Instruments

Cash
Collateral

Net
Amount

(in thousands)

Gross Amounts Not Offset

December 31, 2018
Assets:

Interest rate caps and swaps $

48,642

Liabilities:

Interest rate caps and swaps $
Repurchase agreements

Total

22,907
150,000
172,907

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

— $

48,642

— $
—
— $

22,907
150,000
172,907

— $

26,346

— $
—
— $

24,212
200,000
224,212

(1,214) $

—

(1,214) $
—

(1,852)
(150,000) *

(1,214) $ (151,852)

(5,376) $

—

(5,376) $
—

(8,141)
(200,000) *

(5,376) $ (208,141)

47,428

19,841
—
19,841

20,970

10,695
—
10,695

* 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.

2018 Form 10-K

128

to the minimum requirements for capital adequacy purposes. The capital conservation buffer was subject to a three-year phase-
in period that started on January 1, 2016, at 0.625 percent of risk-weighted assets and increased 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, 2018 and 2017,
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, 2018 and 2017:

Actual

Minimum Capital
Requirements

To Be Well
Capitalized Under
Prompt Corrective
Action Provision

Amount

Ratio

Amount

Ratio

Amount

Ratio

($ in thousands)

$ 2,786,971
2,698,654

11.34% $ 2,426,975
2,424,059
10.99

9.875%
9.875

N/A
$ 2,454,743

N/A
10.00%

2,071,871
2,442,359

2,286,676
2,442,359

8.43
9.95

9.30
9.95

7.57
8.09

1,566,781
1,564,899

1,935,435
1,933,110

1,208,882
1,207,039

6.375
6.375

7.875
7.875

4.00
4.00

N/A
1,595,583

N/A
1,963,794

N/A
1,508,798

N/A

6.50

N/A

8.00

N/A

5.00

$ 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

As of December 31, 2018

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, 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

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. Valley also issues shares in business combinations and shares related to stock awards under the 2016
Plan. See Notes 2 and 12 for further details.

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 2018, 2017 and 2016, 87 thousand, 713 thousand, and 554 thousand common shares, respectively, were reissued

129

2018 Form 10-K

from treasury stock or issued from authorized common shares under the DRIP for net proceeds totaling $1.0 million, $8.2 million
and $5.2 million, respectively. The aspect of the DRIP allowing Valley to issue shares was terminated effective February 12, 2018.
Valley's transfer agent maintains a DRIP with shares purchased in the open market.

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 expired unexercised on December 5, 2018.

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. Each warrant entitled
the holder to purchase approximately 1.103 Valley common shares at $16.12 per share. All of the warrants expired unexercised
on 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. Under the repurchase plan, Valley made no purchases of its outstanding shares during the years ended
December 31, 2018, 2017 and 2016.

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. During the years ended December 31, 2018, 2017 and 2016, Valley
purchased approximately 441 thousand, 218 thousand and 328 thousand shares, respectively, of its outstanding common stock at
an average price of $11.83, $12.12 and $9.73, 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, 2018 and 2017.

2018 Form 10-K

130

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, 2018, 2017 and 2016. 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

2018

Tax
Effect

After
Tax

Before
Tax

2017

Tax
Effect

(in thousands)

After
Tax

Before
Tax

2016

Tax
Effect

After
Tax

Unrealized gains and losses on

available for sale (AFS) securities

Net (losses) gains 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 (loss)

income

$ (32,123) $

9,191

$ (22,932) $

636

(284) $

352

$ (7,294) $

3,001

$ (4,293)

2,342

(485)

1,857

(29,781)

8,706

(21,075)

656

(9)

(293)

363

(777)

312

(465)

(8,071)

3,313

(4,758)

—

849

(351)

498

719

(302)

417

531

(151)

380

(284)

565

117

(234)

(167)

331

(921)

(202)

382

(539)

(122)

2,651

(777)

1,874

1,005

(429)

576

(4,035)

1,574

(2,461)

3,493

6,144

(999)

(1,776)

2,494

4,368

8,579

9,584

(3,551)

(3,980)

5,028

5,604

13,034

8,999

(5,393)

(3,819)

7,641

5,180

(9,916)

2,765

(7,151)

(3,843)

1,121

(2,722)

5,837

(2,539)

3,298

212

625

(66)

(178)

146

447

268

381

(9,079)

2,521

(6,558)

(3,194)

(77)

(133)

911

191

248

(300)

294

119

(109)

(181)

185

(2,283)

5,831

(2,529)

3,302

$ (32,185) $

9,300

$ (22,885) $

7,611

$ (3,596) $

4,015

6,557

$ (2,955) $

3,602

(1) Included in (losses) 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.

131

2018 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, 2018, 2017 and 2016:

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, 2015

(5,336) $

(520) $

(in thousands)
(17,644) $

(22,195) $

(45,695)

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

Reclassification due to the adoption of ASU No.

2016-01

Reclassification due to the adoption of ASU No.

2017-12

Balance-January 1, 2018

Other comprehensive (loss) income before

reclassifications

Amounts reclassified from other comprehensive

(loss) income

Other comprehensive (loss) income, net

(4,293)

417

(2,461)

3,298

(3,039)

(465)

(4,758)

(10,094)

352

11
363

(2,273)

(12,004)

(480)

—

(12,484)

(22,932)

1,857

(21,075)

(539)
(122)
(642)

498

(167)
331

(69)
(380)

—

—
(380)

—

380

7,641

5,180
(12,464)

576

5,028
5,604

(1,478)
(8,338)

3,302
(18,893)

(2,722)

439
(2,283)

(4,107)
(25,283)

6,641

3,602
(42,093)

(1,296)

5,311
4,015

(7,927)
(46,005)

—

(480)

—
(25,283)

(61)
(46,546)

(7,151)

(28,209)

(61)
(8,399)

1,874

2,494

593

4,368
(4,031) $

(6,558)
(31,841) $

5,324

(22,885)
(69,431)

Balance-December 31, 2018

(33,559) $

— $

2018 Form 10-K

132

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 2018

March 31

June 30

September 30

December 31

(in thousands, except for share data)

267,495

280,118

297,041

314,594

59,897

207,598

10,948

6,753

25,498

5,274

168,478

55,149

13,184
41,965

3,172

38,793

69,366

210,752

7,142

7,642

30,427

4,470

145,446

91,763

18,961
72,802

3,172

69,630

80,241

216,800

6,552

3,748

25,290

5,412

146,269

87,605

18,046
69,559

3,172

66,387

0.12

0.11

0.21

0.11

0.20

0.11

92,541

222,053

7,859

2,372

32,322

9,044

144,668

95,176

18,074
77,102

3,172

73,930

0.22

0.11

Basic

Diluted

330,727,416

331,318,381

331,486,500

331,492,648

332,465,527

332,895,483

333,000,242

332,856,385

133

2018 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 2017

March 31

June 30

September 30

December 31

(in thousands, except for share data)

198,455

207,007

210,741

217,951

36,587

161,868

2,470

4,128

21,592

5,324
115,628

64,166

18,071

46,095

1,797

44,298

42,187

164,820

3,632

4,791

24,039

7,732

111,507

70,779

20,714

50,065

1,797

48,268

46,796

163,945

1,640

5,520

21,477

8,389

124,176

56,737

17,088

39,649

2,683

36,966

0.17

0.17
0.11

0.18

0.18
0.11

0.14

0.14
0.11

48,537

169,414

2,200

6,375

23,784

20,302

116,015

61,056

34,958

26,098

3,172

22,926

0.09

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

2018 Form 10-K

134

PARENT COMPANY INFORMATION (Note 21)

Condensed Statements of Financial Condition

Assets
Cash

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,

2018

2017

(in thousands)

109,839

—

3,609,836

32,721

3,752,396

37,644

294,602

55,370

14,326

3,350,454

90,807

254

2,738,700

36,277

2,866,038

33,100

235,153

41,774

22,846

2,533,165

2,866,038

Total Liabilities and Shareholders’ Equity

3,752,396

Condensed Statements of Income

Income
Dividends from subsidiary

Income from subsidiary

Gains on securities transactions, net

Losses on sales of assets, net

Other interest and income

Total Income

Total Expenses

Income before income tax and equity in undistributed earnings of

subsidiary

Income tax benefit

Income before equity in undistributed earnings of subsidiary
Equity in undistributed earnings of subsidiary
Net Income

Dividends on preferred stock
Net Income Available to Common Shareholders

Years Ended December 31,
2017

2016

2018

(in thousands)

155,000

122,000

4,550

3
(147)
39

159,445

32,269

127,176
(20,547)
147,723
113,705

261,428

12,688

4,550

—

135

126,685

39,621

87,064
(30,179)
117,243
44,664

161,907

9,449

248,740

152,458

90,000

4,550

239

—

94,823

33,604

61,219
(23,349)
84,568

83,578

168,146

7,188

160,958

135

2018 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 of subsidiary

Stock-based compensation

Net amortization of premiums and accretion of discounts on

borrowings

Gains on securities transactions, net

Losses on sales of assets, 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

Net cash provided by (used in) investing activities

Cash flows from financing activities:
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 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,
2017

2016

2018

(in thousands)

261,428

161,907

168,146

(113,705)
19,472

(44,664)
12,204

63
(3)
147

9,928
(10,657)
166,673

257

7,915

—

8,172

—
(15,859)
(138,857)
(3,801)
2,704
(155,813)
19,032

90,807

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

109,839

90,807

(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

69,009

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
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.

2018 Form 10-K

136

The consumer lending segment is mainly comprised of residential mortgages and automobile loans, and to a lesser extent,
secured personal lines of credit, home equity loans 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. The 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, 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 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,

2018, 2017 and 2016:

Year Ended December 31, 2018

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)

$ 6,197,161

$ 17,143,169

$ 4,362,581

235,264

798,974

130,971

64,083

171,181

5,550

165,631

61,280

92,462

77,164

57,285

177,273

621,701

26,951

594,750

22,275

95,171

213,399

308,455

45,112

85,859

—

85,859

8,691

1,251

54,353

38,946

Corporate
and Other
Adjustments

Total

— $ 27,702,911

(5,961) $ 1,159,248
15,577
302,045
(21,538)
—

857,203

32,501

(21,538)
41,806

440,177
(344,916)
(74,993) $

824,702

134,052

629,061

—

329,693

0.92%

1.80%

0.89%

N/A

1.19%

137

2018 Form 10-K

Year Ended December 31, 2017

Consumer
Lending

Commercial
Lending

Investment
Management

($ in thousands)

$ 5,166,171

$ 12,652,832

$ 3,669,495

182,508

552,297

107,972

39,018

143,490

3,197

140,293

63,375

72,207

68,007

63,454

95,562

456,735

6,745

449,990

11,414

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) $

834,154

174,107

660,047

9,942

650,105

111,706

509,073

—

252,738

1.23%

1.77%

1.05%

N/A

1.18%

Year Ended December 31, 2016

Consumer
Lending

Commercial
Lending

Investment
Management

($ in thousands)

$ 5,081,798

$ 11,318,947

$ 3,428,567

176,929

504,341

35,175

141,754

905

140,849

63,443

62,721

71,578

69,993

78,347

425,994

10,964

415,030

8,327

70,145

160,198

193,014

89,378

23,732

65,646

—

65,646

6,694

1,281

48,475

22,584

Corporate
and Other
Adjustments

Total

— $ 19,829,312

(8,760) $
11,520
(20,280)
—

(20,280)
29,796

341,978
(280,251)
(52,211) $

761,888

148,774

613,114

11,869

601,245

108,260

476,125

—

233,380

1.38%

1.71%

0.66%

N/A

1.18%

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)

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)

SUBSEQUENT EVENTS (Note 23)

During February 2019, Valley announced that the Bank entered into an agreement for the sale-leaseback of 29 of its currently
owned properties. The properties, consist of 1 corporate location and 28 branches. Valley expects to realize a material pre-tax gain
net of transaction related expenses. The transaction is expected to close in the first or second quarter of 2019 and is subject to
change or termination due to buyer due diligence on the identified properties.

Valley has previously invested in mobile solar generators sold and managed by DC Solar, which were included in other
assets on the balance sheet and the tax credit investments in Note 14. For reasons that were not known to Valley, DC Solar had its
assets frozen in December 2018. DC Solar filed for Chapter 11 bankruptcy protection in February 2019. In February 2019, an
affidavit from a Federal Bureau of Investigation (FBI) special agent stated that DC Solar was operating a fraudulent "Ponzi-like
scheme" and that the majority of mobile solar generators sold to investors and managed by DC Solar and the majority of the related
lease revenues claimed to have been received by DC Solar may not have existed. Certain investors in DC Solar, including Valley,

2018 Form 10-K

138

received tax credits for making these renewable resource investments. Valley has claimed tax credit benefits of approximately
$22.8 million in the consolidated financial statements between 2013 through 2015. If the allegations set forth in the declaration
filed by the FBI are proven to be accurate, up to the entire amount of the tax credits claimed by Valley could potentially be
disallowed. Based on the information known as of the date of this Annual Report on the Form 10-K, Valley believes that this has
not met the more-likely-than-not criterion to record an uncertain tax position liability. As a result of the information in the FBI
declaration, Valley is evaluating whether or not an unrecognized tax liability exists under ASC 740 for an uncertain tax position
in 2019 for at least part, if not potentially all, of the tax credit benefits Valley has claimed.

139

2018 Form 10-K

Report of Independent Registered Public Accounting Firm

To 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 (the Company) as
of December 31, 2018 and 2017, 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, 2018, 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, 2018 and 2017, and the results of its operations and its cash flows for
each of the years in the three year period ended December 31, 2018, 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, 2018, 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 February 28, 2019 expressed an unqualified 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
February 28, 2019

2018 Form 10-K

140

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of 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, are 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 effective as of December 31, 2018 (the end
of the period covered by this Annual Report on Form 10-K).

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, 2018, 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.

Based on this assessment, management determined that, as of December 31, 2018, Valley’s internal control over financial

141

2018 Form 10-K

reporting was effective 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.

KPMG LLP, the independent registered public accounting firm that audited Valley’s December 31, 2018 consolidated financial
statements included in this Annual Report on Form 10-K, has issued an audit report expressing an opinion on the effectiveness of
Valley’s internal control over financial reporting as of December 31, 2018. The report is included in this item under the heading
“Report of Independent Registered Public Accounting Firm.”

Remediation of Material Weakness

As previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2017, management identified

the following material weakness in internal controls as of December 31, 2017:

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.

During the first quarter of 2018, Valley initiated remediation efforts. Management reviewed the design and operation of the
controls and made enhancements to the proper identification and escalation 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. During the third quarter of 2018, management completed the implementation of such enhancements
and the new controls and procedures were placed in operation. Management evaluated the new controls and procedures designed
to remediate the material weakness and determined that the Company’s internal control over financial reporting was effective as
of December 31, 2018.

Changes in Internal Control over Financial Reporting

Except as noted above relative to the remediation of the prior year material weakness, there were no changes in Valley’s
internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the fourth quarter of 2018 that have materially affected, or are reasonably likely to materially affect, Valley’s internal control over
financial reporting.

2018 Form 10-K

142

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Valley National Bancorp:

Opinion on Internal Control Over Financial Reporting

We have audited Valley National Bancorp’s (the Company) internal control over financial reporting as of December 31, 2018,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2018, 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, 2018 and 2017, 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, 2018, and the related notes (collectively, the consolidated financial statements), and
our report dated February 28, 2019 expressed an unqualified opinion 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
February 28, 2019

143

2018 Form 10-K

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 2019 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 2019 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 2019 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 2019 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 2019 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
69
70
71
72
73
75
140

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.

2018 Form 10-K

144

(b) Exhibits (numbered in accordance with Item 601 of Regulation S-K):

(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 October 23, 2018.

(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).

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)), incorporated herein by
reference to Exhibit 4G to the Registrant's Form 10-K Annual Report filed on February 28, 2017.

(10) Material Contracts:

Amended and Restated Change in Control Agreements among Valley National Bank, Valley 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 (applicable only to Gerald H. Lipkin guaranteed retirement agreement) +

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). Continues until December 31,2022
for Melissa F. Scofield and Bernadette M. Mueller. +

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).+

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.+

145

2018 Form 10-K

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.+

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 (in use prior to 2019).+

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 (in use prior to
2019).+

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 (in use
prior to 2019).+

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.+

2016 Change in Control Severance Plan applicable to First Senior Vice Presidents and Senior Vice
Presidents (applicable until January 1, 2020), 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 (applicable until December 31, 2022).+

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 (applicable until December 31,
2022). +

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.+

2018 Form 10-K

146

AA.

BB.

CC.

DD.

EE.

FF.

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 (applicable until December 31, 2022).+

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 (applicable until December 31,
2022). +

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 Registration Statement 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 Registration Statement 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, incorporated herein by
reference to Exhibit LL to the Registrant's Form 10-K filed on March 1, 2018 (in use prior to 2019). +

Form of Change in Control Agreement for Executive Vice President, dated January 16, 2019 (covering
Yvonne M. Surowiec, Mark Saeger and Eugene M. Fernandez). +*

Form of Change in Control Agreement for Senior Executive Vice President, dated January 16, 2019
(covering Robert J. Bardusch). +*

Form of Agreement to Reduce Change in Control Severance, effective January 1, 2023 (applicable to Ira
Robbins, Thomas A. Iadanza, Ronald H. Janis, Dianne M. Grenz, Bernadette M. Mueller and Melissa
Scofield). +*

Form of Change in Control Agreement for President and Chief Executive Officer, dated January 16, 2019
and effective January 1, 2023 (applicable to Ira Robbins). +*

Amendment to 2016 Change in Central Severance Plan for First Senior Vice Presidents and Senior
Vice Presidents (applicable after January 1, 2020).+*

2019 Change in Control Severance Plan applicable to First Senior Vice Presidents and Senior Vice
Presidents. +*

Form of Change in Control Agreement for Senior Executive Vice President, effective January 1, 2023
(covering Thomas A. Iadanza, Ronald H. Janis and Dianne M. Grenz). +*

Valley National Bancorp 2016 Long-Term Stock Incentive Plan, as amended, adopted on January 30,
2019 for use in 2019 and after.+*

Form of Valley National Bancorp Agreement for Performance Based Restricted Stock Unit Award, in
connection with Valley National Bancorp 2016 Long-Term Stock Incentive Plan, (for use in 2019 and
thereafter).+*

MM.

Form of Valley National Bancorp Restricted Stock Unit Award Agreement, in connection with Valley
National Bancorp 2016 Long-Term Stock Incentive Plan, (for use in 2019 and thereafter).+*

NN.

Form of Valley National Bancorp Director Restricted Stock Unit Award Agreement, in connection with
Valley National Bancorp 2016 Long-Term Stock Incentive Plan, (for use in 2019 and thereafter).+*

147

2018 Form 10-K

OO.

Agreement for the purchase and sale of real property and Form of Lease Agreement incorporated herein
by reference to Exhibits 10.1 and 10.2, respectively, to the Registrant’s Form 8-K Current Report filed
on February 13, 2019.

(21)

List of Subsidiaries as of December 31, 2018:

(a)

Name
Subsidiaries of Valley:
Valley National Bank
Aliant Statutory Trust II
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.
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
VNB Route 23 Realty LLC

Life Line Planning, Inc.
RISC One, Inc.
Subsidiaries of Valley Securities Holdings, LLC:
SAR II, Inc.
Shrewsbury Capital Corporation
Valley Investments, Inc.
Subsidiary of SAR II, Inc.:
VNB Realty, Inc.
Subsidiary of Shrewsbury Capital Corporation:
GCB Realty, LLC
Subsidiary of VNB Realty, Inc.:
VNB Capital Corp.

(d)

(e)

(f)

(g)

Jurisdiction of
Incorporation

Percentage of Voting
Securities Owned by the Parent
Directly or Indirectly

United States

Delaware
Delaware
Delaware
Delaware

New Jersey
New Jersey
New York
New York
New Jersey
New Jersey
New Jersey
New York
New York
New Jersey

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%

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.

2018 Form 10-K

148

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: February 28, 2019

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

GRAHAM O. JONES*
Graham O. Jones

GERALD KORDE*
Gerald Korde

MICHAEL L. LARUSSO*
Michael L. LaRusso

MARC J. LENNER*
Marc J. Lenner

Title

Date

President and Chief Executive Officer

February 28, 2019

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

February 28, 2019

149

2018 Form 10-K

Signature

SURESH L. SANI*
Suresh L. Sani

MELISSA J. SCHULTZ*
Melissa J. Schultz

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

February 28, 2019

2018 Form 10-K

150

1455 VALLEY ROAD
WAYNE, NEW JERSEY 07470
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD, WEDNESDAY, APRIL 17, 2019

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 Wednesday, April 17, 2019 at 9:00 a.m., local time to vote on the following matters:

1. Election of 12 directors;

2. Ratification of the appointment of KPMG LLP as Valley's independent registered public accounting firm for

the fiscal year ending December 31, 2019;

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 8, 2019. 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 19, 2019 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,

Ira Robbins
President and Chief Executive Officer

Gerald H. Lipkin
Chairman

Wayne, New Jersey
March 8, 2019

Important notice regarding the availability of proxy materials for the 2019 Annual Meeting of Shareholders: This Proxy
Statement for the 2019 Annual Meeting of Shareholders, our 2018 Annual Report to Shareholders and the proxy card
or voting instruction form are available on our website at: http:www.valley.com/filings.html.

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
Grants of Plan-Based Awards
Outstanding Equity Awards at Fiscal Year-End
2018 Stock Vested
2018 Pension Benefits
2018 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

1
4
10
11
12
12
12
12
13
13
14
15
15
15
16
17
18
20
22
22
31
31
32
34
35
36
36
37
38
42
43
44
44
44
44
45
46
47
48
49

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 2019 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 Wednesday, April 17, 2019 at 9:00 a.m., local
time. This proxy statement is first being made available to
shareholders on or about March 8, 2019.

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 2019 notice of annual meeting of shareholders, this proxy
statement, the Company’s 2018 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.valley.com/filings.html.

SHAREHOLDERS ENTITLED TO VOTE

The record date for the meeting is Tuesday, February 19,
2019. 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 331,564,079 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@valley.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:

•

Item 1 – FOR the election of each of the 12 nominees
for director named in this proxy statement;

2019 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 hold our shares in our Savings and Investment Plan
(401(k) plan), 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.

2019 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, 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 2019), 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 NASDAQ, 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 Equiniti (US)
Services LLC a fee of $7,000 plus out of pocket expenses to
assist with solicitation of proxies.

2019 Proxy Statement

Committee considered a skills matrix that represents certain
of the skills that the Committee identified as particularly
valuable to the effective oversight of the Company and
execution of its business. The following matrix shows those
skills and the number of directors having each skill,
highlighting the diversity of skills on the Board.

Director Experience

Business/Market Knowledge

CEO/Business Head

Finance, Audit & Tax

Financial Services Industry

Banking or Bank Regulatory

Risk Management

Public Company Finance/Accounting

Public Company Corporate Governance

Capital Markets

Director Tenure 2019

< 5 Years

5-10 Years

10-20 Years

20+ Years

ITEM 1

ELECTION OF DIRECTORS

DIRECTOR INFORMATION

Our Board is recommending 12 nominees for election as
directors at our annual meeting. All nominees currently serve
as directors on our Board. Other than Ms. Lisa Schultz, who
was appointed to our Board in January 2019, all nominees
were elected by you at our 2018 annual meeting of
shareholders. If any nominee is unable to stand for election
for any reason, the shares represented at our annual meeting
may be voted for another candidate proposed by our Board,
or our Board may choose to reduce its size. The Board has no
reason to believe any nominee is not available or will not serve
if elected.

Each director is nominated to serve until our 2020 annual
meeting or until a successor is duly elected and qualified.

Mr. Lipkin, who has been on the Board since 1986, will not
serve as Chairman after the Annual Meeting and will retire
from the Board at the end of 2019. Gerald Korde, who joined
the Board in 1989 and Pam Bronander who joined the Board
in 1993, are retiring from the Board after the Annual Meeting.
We thank them for their service and the expertise they shared
with the Board.

In selecting these nominees, our CEO, the Nominating and
Corporate Governance Committee (Nominating Committee)
and the Board refreshed its focus on aspects of corporate
governance highlighted in the “Corporate Governance”
section below.

The biography of each nominee is set out below and contains
information regarding the nominee’s tenure as a director, their
age, business experience, other public company directorships
held during the last five years, non-public directorships and
the experiences, qualifications, attributes or skills that caused
the Nominating Committee and the Board to determine that
the person should be nominated to serve as a director.

The Board considers certain personal characteristics
including:

•

experience;

integrity;

judgment;

a collaborative approach in working with other
directors; and

the time commitment available to the Company from
the nominee.

The Nominating Committee
focused on a mix of
characteristics and skills that it thought appropriate for the
functioning of the Board in its oversight role. The Nominating

2019 Proxy Statement

Ira Robbins, 44

Andrew B. Abramson, 65

President and Chief Executive
Officer of Valley National
Bancorp and Valley National
Bank.

Director since: 2018

President and Chief Executive
Officer, Value Companies, Inc.
(a real estate development and
property management firm).

Director since: 1994

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 President and CEO of the Company and
Valley National Bank 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
from
Science Degree
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.

in Finance and Economics

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 39 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.

Peter J. Baum, 63

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 60 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 40
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. Mr. Baum appears
on CNBC (US & Asia) providing commentary on Asia
developments.

2019 Proxy Statement

Eric P. Edelstein, 69

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.

Consultant.

Director since: 2003

Michael L. LaRusso, 73

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 32
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
in auditing and preparation of financial
experience
statements.

Graham O. Jones, 74

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.

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

2019 Proxy Statement

Marc J. Lenner, 53

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.

Gerald H. Lipkin, 78

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 53 years of
experience
in
conjunction with his leadership ability make him a valuable
member of our Board of Directors.

lending and commercial banking

Suresh L. Sani, 54

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 27
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.

2019 Proxy Statement

Melissa (Lisa) J. Schultz, 57

Jennifer W. Steans, 55

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
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.

and Catastrophe

Solutions,

Director since: 2019

Ms. Schultz retired as co-head of Capital Markets at Keefe,
Bruyette & Woods, a Stifel Company, as of year-end 2018.
She joined KBW as part of the merger between Stifel
Financial and Keefe, Bruyette. She joined Stifel as part of
the merger between Stifel and Ryan, Beck & Co, where she
was the Director of Equity and Fixed Income Capital
Markets. During her
tenure, she has had primary
responsibility for raising billions of dollars of capital for US
depository institutions. She started her career at Drexel
Burnham Lambert in 1983. She received her Bachelor’s
Degree from Simmons College in 1983. With Ms. Schultz’s
experience, she brings expertise in strategic positioning,
investor perspective, capital alternatives and the financial
services markets to the Board of Directors.

2019 Proxy Statement

Jeffrey S. Wilks, 59

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.

2019 Proxy Statement

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.

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 2018. 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.

The Audit Committee believes that retaining KPMG in 2019
is in the best interests of the Company and our shareholders.
Therefore, the Audit Committee requests that shareholders
ratify the appointment.

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 2019.

ITEM 2

RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

In accordance with its charter, the Audit Committee of the
Board is directly responsible for the appointment of the
independent registered public accounting firm retained to
audit the Company’s financial statements as well as
monitoring
and
independence of that firm. The Audit Committee has
appointed KPMG LLP (KPMG) as the independent
registered public accounting firm for the Company in 2019.
KPMG has served as the Company’s independent registered
public accounting firm continuously since 2008.

qualifications

performance,

the

Before reappointing KPMG for 2019, the Audit Committee
considered KPMG’s qualifications as an independent
registered public accounting firm. This included a review of
KPMG’s performance in prior years, its knowledge of the
company and its operations, as well as its reputation for
integrity and competence in the fields of accounting and
auditing. The Audit Committee’s review also included
matters required to be considered under rules of the SEC on
auditor independence, including the nature and extent of non-
audit services, to ensure that the provision of such services
will not impair the independence of the auditors. In addition,
the Audit Committee interviews and approves the selection
of KPMG’s new lead engagement partner with each rotation.

The fees billed for services rendered to us by KPMG for the
years ended December 31, 2018 and 2017 were as follows:

Audit fees
Audit-related fees (1)
Tax fees (2)
All other fees (3)
Total

2018
$ 1,625,000
491,000
15,722
0

2017
$ 1,352,750
330,000
15,724
0

$ 2,131,722

$ 1,698,474

__________
(1) Fees paid for benefit plan audits, business combination (2018), and
a review of Form S-4 registration statements and related expert
consents (2017).

(2) Includes fees rendered in connection with tax services relating to

state and local matters.

(3) KPMG did not provide "other services" during 2018 and 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
in
independent accountants are

reviewed

regularly

2019 Proxy Statement

During the course of 2018, 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 2018 Annual Report on Form 10-K.

Eric P. Edelstein, Chairman

Andrew B. Abramson

Peter J. Baum

Pamela R. Bronander
Michael L. LaRusso

Suresh L. Sani

Jeffrey S. Wilks

REPORT OF THE AUDIT COMMITTEE

February 25, 2019

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
2018. With respect to fiscal year 2018, 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 2018 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
2018.

to Section 404 of

the Sarbanes-Oxley Act,
Pursuant
management is required to prepare as part of the Company’s
2018 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 2018 Annual Report on Form 10-K, the auditors’
attestation report on management’s assessment.

2019 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 the Bank. It is our policy that all directors
attend the annual meeting absent a compelling reason, such
as family or medical emergencies. In 2018, all directors
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 NASDAQ 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, and Ms. Schultz was added
in January 2019. With respect to tenure, two of our longest
serving directors, Pamela Bronander and Gerald Korde are
not standing for reelection this year. While Mr. Lipkin has
been renominated as a director, he will not serve beyond the
end of 2019.

BOARD LEADERSHIP STRUCTURE AND THE
BOARD’S ROLE IN RISK OVERSIGHT

Independent Oversight Structure. Our Board believes that
an independent oversight function is a foundation of
corporate governance. Since 2014 we have utilized an
independent Lead Director to assure that the Board had
independent leadership. We realize that some companies
utilize an independent chairperson and others an independent
Lead Director or Presiding Director. We also believe the
structure of independent leadership should be examined
regularly. During 2018, our Board utilized an independent
Lead Director. The Board expects to continue to evaluate the
best structure.

Risk Oversight. Our Board is currently comprised of 14
directors, of whom 11 are independent under NASDAQ
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 with a separate chairman, which is
responsible for overseeing risk management. In addition, our
Audit Committee engages in oversight of financial statement

2019 Proxy 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 in 2014 and each year has appointed Mr. Abramson
as its Lead Director. In accordance with our corporate
governance guidelines, our independent directors elect the
Lead Director. 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.

Chairman/CEO Decision for 2018. For 2018, the Board
determined to separate the Chairman and CEO positions.
Considering the circumstances of the CEO succession that
year and the duties and authority of the Lead Director, the
Board also determined an independent Chairperson was
unnecessary. The Board further believed that maintaining Mr.
Lipkin’s continuing service as non-executive Chairman of
the Board following his retirement as Chief Executive Officer
provided an effective leadership model for our Board and our
Company at that time.

DIRECTOR INDEPENDENCE

The Board has determined that 11 of our directors and all
the Nominating and Corporate
current members of
Governance, Compensation and Human Resources, and
Audit Committees are “independent” for purposes of the
independence standards of the NASDAQ, and that all of the
members of the Audit Committee are also “independent” for
purposes of Section 10A(m)(3) of the 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,
Lisa Schultz, Jennifer W. Steans and Jeffrey S. Wilks.

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 falls 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, 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 $30,000 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 $200,000 or five percent
(5%) of the gross revenues of the business.

The Board considered the following categories together with the information set forth under "Certain Transactions with
Management", for each director it determined was independent:

Name

Loans*

Trust Services/
Assets
Under Management

Banking Relationship with
VNB

Professional
Services to
Valley

Andrew B. Abramson

Commercial and Residential
Mortgages, Personal and Commercial
Line of Credit

Trust Services

Peter J. Baum

Commercial 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

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

Lisa J. Schultz

Jennifer W. Steans

Jeffrey S. Wilks

____________

* In compliance with Regulation O.

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

Checking, Money Market

Money Market

Checking

None

EXECUTIVE SESSIONS OF NON-MANAGEMENT
DIRECTORS

management directors. In each instance the Lead Director is
the presiding director for the session.

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-

SHAREHOLDER AND INTERESTED PARTIES
COMMUNICATIONS WITH DIRECTORS

The Board of Directors has established the following
party
procedures

shareholder

interested

for

2019 Proxy Statement

communications with the Board of Directors or with the Lead
Director of the Board:

•

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, 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 2018, 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 a
Community Reinvestment Act Committee, Investment
Investment Trustees
Committee, Pension/Savings &
Committee, Risk Committee and a Trust Committee.

Each director attended at least 96% 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, 2018. Our
Board met 12 times during 2018.

The following table presents 2018 membership information
for each of our Audit, Nominating and Corporate
Governance, and Compensation and Human Resources
Committees.

2019 Proxy Statement

Nominating
and

Compensation
and
Human
Corporate
Resources
Governance

(Chair)

Name

Audit

Andrew B. Abramson

Peter J. Baum

Pamela R. Bronander

Eric P. Edelstein

(Chair)

Gerald Korde

Michael L. LaRusso

Marc J. Lenner

Suresh L. Sani

Jennifer W. Steans

Jeffrey S. Wilks

2018 Number of
Meetings*

____________

* Includes telephonic meetings.

AUDIT COMMITTEE. The Audit Committee met 5 times
during 2018.

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
NASDAQ. 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
Committee charter gives the Audit Committee the authority
and
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. Other responsibilities of
the Audit Committee pursuant to the charter include:

the appointment,

responsibility

for

• 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 5 times during 2018. 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 Transaction Policy. The Nominating and Corporate
Governance Committee is responsible for approving and
recommending to the Board our corporate governance
guidelines which include:

For stock awards to employees other than executives, a block
of shares is allocated by the Committee. The individual
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.

Stock 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.

• Director qualifications and standards;

COMPENSATION CONSULTANTS

• 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
corporate governance and director candidates.

COMPENSATION AND HUMAN RESOURCES
COMMITTEE. The Compensation and Human Resources
Committee met 6 times during 2018 and early 2019. This
Committee determines CEO compensation, recommends to
the Board compensation levels for directors and sets
compensation for named executive officers ("NEOs") and
other executive officers. It also administers the 2016 Long-
Term Stock Incentive Plan, and makes awards pursuant to
the plan.

that

those

relate

(except

In January 2018 and February 2019, in undertaking its
responsibilities, the Committee received from the CEO
recommendations
to his
compensation) for salary, cash bonus, and equity awards for
NEOs and other executive officers. After considering the
possible payments and discussing the recommendations with
the CEO, the Committee approved the compensation of
executive officers, other than the CEO. The Committee met
in executive session with its compensation consultant and
legal advisors without the CEO to decide on all elements of
the CEO compensation, including salary, cash bonus and
equity awards.

In 2018, the Committee engaged Fredric 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 as
well as 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.

COMPENSATION AS IT RELATES TO RISK
MANAGEMENT

The Chief Risk Officer evaluated all incentive-based
compensation for 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 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 can be viewed at our website www.valley.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.

2019 Proxy Statement

NOMINATION OF DIRECTORS

Nominations of directors for election may 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 a shareholder of the Company who meets the eligibility
and notice requirements set forth in our By-laws.

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
2020 annual meeting, the notice must be received by our
Secretary at our Wayne, New Jersey office no later than
December 19, 2019 nor earlier than November 19, 2019. If
the annual meeting is called for a date that is not within 30
days before or after the anniversary date of our 2019 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.

2019 Proxy Statement

Requests to include director nominees in our proxy materials
for our 2020 annual meeting must be received by our
Secretary at our Wayne, New Jersey office no earlier than
October 10, 2019 and no later than November 9, 2019. If the
annual meeting is called for a date that is not within 30 days
before or after the anniversary date of our 2019 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.

Director Qualifications. The Board of Directors has
established criteria for members of the Board. These include:

• The maximum age for an individual to join the
Board is age 65, 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 the states in which the
Bank has branch offices or within 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 is expected to be above
reproach in their personal and professional lives and
their financial dealings with Valley, the Bank and
the community;

•

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

• To the extent it is convenient, 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 2020, we must receive this notice
on or after September 10, 2019, and on or before October 10,
2019.

The following factors, are considered by the Nominating and
Corporate Governance Committee director candidates to the
Board:

• Appropriate mix of educational background,
professional background and business experience to
make a significant contribution to the overall
composition of the Board;

• Whether the candidate would be considered a
financial expert or financially literate as described
in SEC and NASDAQ rules;

• Whether the candidate would be considered

independent under NASDAQ rules;

• 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 above and in

Valley’s Corporate Governance Guidelines.

Diversity is one of the factors that the Nominating and
Corporate Governance Committee considers in identifying
nominees for director. 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.valley.com/charters. The Code of Conduct and Ethics
is also available in print to any 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
Guidelines are available on our website at www.valley.com/
charters. The Corporate Governance Guidelines are also
available in print to any shareholder who requests them.

2019 Proxy Statement

COMPENSATION OF DIRECTORS

DIRECTOR COMPENSATION

The total 2018 compensation of our non-employee directors is shown in the following table. Each of these compensation
components is described in detail below. As explained below, in January 2019, the Board took steps to change director fees to
reduce average director compensation.

2018 DIRECTOR COMPENSATION

Fees Earned
or Paid in
Cash (2)

Stock
Awards (3)

Change in Pension
Value and Non-
Qualified
Deferred
Compensation
Earnings (4)

All Other
Compensation (5)

Total

192,000 $

60,000 $

0 $

1,639 $

132,500

117,500

144,500

66,750

132,500

147,000

125,750

120,250

505,750

132,000

116,500

120,250

60,000

983

3,899

1,639

37,726

1,639

253,639

194,139

179,139

206,139

66,750

195,122

212,538

187,389

181,889
603,476 (6)

193,639

178,139

181,889

Name

Andrew B. Abramson (1)
Peter J. Baum

Pamela R. Bronander
Eric P. Edelstein (1)
Mary Guilfoile

Graham O. Jones
Gerald Korde (1)
Michael L. LaRusso
Marc J. Lenner (1)
Gerald H. Lipkin

Suresh L. Sani

Jennifer W. Steans

Jeffrey S. Wilks
____________

(1) Lead Director or Bancorp Committee Chairman (see Committees of the Board on page 14 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 2018.

(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 2018 considering 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 for Messrs. Abramson, Baum,
Edelstein, LaRusso, Lenner, Sani, Wilks and Mmes. Bronander and Guilfoile was a net decrease of $10,843, $1,309, $3,312, $297, $4,950, $4,894,
$1,472, $13,096, and $5,836 from the present value reported as of December 31, 2017, respectively; therefore the amount reported is zero. This decrease
is attributable to the increase in the discount rate from 3.69% to 4.30%.

(5) This column reflects the deferred cash dividends earned in 2018 on the restricted stock that is part of the director's annual retainer, granted on the date
of the annual shareholders’ meeting and includes perquisites. For Mr. Lipkin, perquisites including automobile and driver ($12,103) and country club
membership ($23,984).

(6) Mr. Lipkin received certain additional director compensation in connection with the CEO succession process and that compensation does not extend

beyond the 2019 Annual Meeting of Shareholders.

2019 Proxy Statement

ANNUAL BOARD RETAINER

Non-employee directors received an annual cash retainer of
$25,000 per year, paid quarterly, plus an equity award of
$60,000 (see below).

BOARD MEETING FEES

Non-employee directors also 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. Attendance fees are paid only for one
telephonic attendance a 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
$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 non-management directors are paid for attending each
committee meeting of which they are a member 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 Audit, Compensation and
Nominating. These additional 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
except Trust for which the attendance fee is $1,500.

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 2018 annual meeting, each non-management
director received a $60,000 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. In 2019 the
awards will be granted in restricted stock units and will
accelerate upon retirement as well as upon a change in
control, death or disability.

REDUCTION IN AVERAGE DIRECTOR
COMPENSATION COMMENCING IN APRIL 2019

January 2019,

the Compensation Committee
In
recommended and the Board approved a change in director
fees, with the expectation that the average director
compensation would be reduced. The Compensation and
Human Resources Committee recommended that for the
2019 Board year (April to April) that Board meeting fees be
reduced from $4,250 to $2,000 and committee meeting fees
be reduced from $2,500 to $1,500 for all committees except
the trust committee for which the meeting fees will be reduced
from $1,500 to $750, that the equity retainer remain at
$60,000 but the cash retainer be increased from $25,000 to
$50,000. Committee Chair retainers and the Lead Director
fee would remain the same. As a result, FW Cook estimated
that average director compensation would decline
approximately 10% in 2019 compared to 2018.

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 through December 31,
2013, multiplied by 5%, multiplied by the final annual
retainer paid to directors as of December 31, 2013 ($40,000).
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.

DIRECTOR COMPENSATION FOR MR. LIPKIN
DURING TRANSITION

In connection with the announcement in November 2017 of
the CEO succession from Mr. Lipkin to Mr. Robbins, the
Board determined that Mr. Lipkin should continue to serve
as chairman until the 2019 Annual Meeting of Shareholders
and, as a director, he also should be available to assist and
consult with the new CEO and other senior staff at the CEO’s
request. Mr. Lipkin was paid $150,000 at the time of his
election in April 2018 as non-independent chairman. For his
availability to assist and consult, Mr. Lipkin was paid
$350,000 in quarterly installments commencing in April
2018. These transition arrangements and compensation will
end at the 2019 Annual Meeting of Shareholders.

2019 Proxy Statement

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, 2019 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)

Name of Beneficial Owner
Directors and Named
Executive Officers:

Percent of
Class (2)

0.08%

—

0.02

0.01

0.10

0.02

0.01

0.27

0.70

0.01

0.07

0.17

0.03

0.02

0.01

1.23

0.13

260,977 (3)
12,343
52,755 (4)
43,330 (5)
37,443
319,189 (6)

76,377
45,189 (7)
896,722 (8)
2,330,202 (9)
46,692 (10)

228,749 (11)
559,615 (12)
105,921 (13)
67,406 (14)
20,000
4,074,964 (15)
429,563 (16)

9,913,776 (17)

2.99

Andrew B. Abramson

Robert J. Bardusch

Peter J. Baum

Pamela R. Bronander

Eric P. Edelstein

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis
Graham O. Jones

Gerald Korde

Michael L. LaRusso

Marc J. Lenner

Gerald H. Lipkin

Ira Robbins

Suresh L. Sani

Lisa J. Schultz

Jennifer W. Steans
Jeffrey S. Wilks

Directors and Executive
Officers as a group (26
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.
For executives and directors, the number of shares includes unvested
restricted stock.

held by that individual are also taken into account to the extent such
options were exercisable within 60 days.*

(3) This total includes 15,343 shares held by Mr. Abramson’s wife,
13,349 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,
and 2,636 shares in a self-directed IRA held by his wife.
Mr. Abramson disclaims beneficial ownership of shares held by his
wife and shares held for his children.

(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.

(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.

(6) This total includes 51,796 shares held by Mr. Eskow’s wife, 5,779
shares held in Mr. Eskow’s 401(k) plan, 10,578 shares held in his
Roth IRA, 1,584 shares held in his IRA, 13,871 shares held jointly
with his wife, 1,544 shares in an IRA held by his wife, and 21,170*
shares purchasable pursuant to stock options exercisable within 60
days.

(7) This total includes 10,205 shares held by Mr. Janis wife.

(8) This total includes 7,124 shares owned by trusts for the benefit of

Mr. Jones’ children of which his wife is co-trustee.

(9) This total includes 72,133 shares held jointly with Mr. Korde’s wife,
338,923 shares held in the name of Mr. Korde’s wife, 890,352 shares
held by his wife as custodian for his children, 315,378 shares held
by a trust of which Mr. Korde is a trustee, and 126,438 shares held
in Mr. Korde’s self-directed IRA.

(10) This total includes 18,760 shares held jointly with Mr. LaRusso’s

wife.

(11) This total includes 22,504 shares held in a retirement pension, 618
shares held by Mr. Lenner’s wife, 31,717 shares held by his children,
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),
20,052 shares held by a charitable foundation.

(12) This total includes 342,760 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, 889 shares held in a Roth IRA, 58 shares
held in his 401(k) plan, and 44,819 shares held by a family charitable
foundation of which Mr. Lipkin is a co-trustee. This total includes
44,016* shares purchasable pursuant to stock options exercisable
within 60 days.

(13) This total includes 2,000 shares held by Mr. Robbins' wife and 307

shares held in trusts for benefit of Mr. Robbins' nieces.

(14) 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.

(15) This total includes 729,700 shares held by Ms. Steans' spouse,
211,468 shares held by her spouse in a trust, 868,890 shares held in
a family trust of which Ms. Steans is a trustee, 651,374 shares held
by a partnership of which Ms. Steans is one of three partners and
shares held in custody for her child. Ms. Steans has 20,000 shares
in her own name. The remaining 4,049,997 shares are pledged as
security for loans.

(2) For purposes of calculating these percentages, there were
331,484,485 shares of our common stock outstanding as of February
1, 2019. For purposes of calculating each individual’s percentage
of the class owned, the number of shares underlying stock options

(16) 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

2019 Proxy Statement

the benefit of his wife, 266,804 shares held in estate created trusts
for which Mr. Wilks and his wife are trustees and under which
Mr. Wilks' wife is a beneficiary. Mr. Wilks disclaims beneficial
ownership of shares held by the estate created trusts.

PRINCIPAL SHAREHOLDERS. The following table
contains information about the beneficial ownership at
December 31, 2018 by persons or groups that beneficially
own 5% or more of our common stock.

(17) This total includes 306,339 shares owned by 8 executive officers
who are not directors or named executive officers, which total
includes 12,264 shares in 401(k) plans and/or IRAs, 149 indirect
shares, and 6,602* 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 and information on restricted stock which has not vested.
As of the record date of February 19, 2019, exercisable options outstanding
have exercise price that is higher than Valley’s market price.

OUR HEDGING POLICY. We adopted a policy that
prohibits hedging of Valley equity securities for directors,
executives and officers with the title of First Senior Vice
President or above. While there is no prohibition against
employees who do not hold the title of First Senior Vice
President or above hedging equity securities,
these
employees are not eligible for annual stock awards and are
prohibited from trading Valley securities while in the position
of material non-public information. The anti-hedging
policies are set forth in full below.

Name and Address of
Beneficial Owner

BlackRock, Inc.(2)
55 East 52nd Street,
New York, NY 10055
The Vanguard Group(3)
100 Vanguard Blvd.,
Malvern, PA 19355
State Street Corporation(4)
One Lincoln Street
Boston, MA 02111

____________

Number of
Shares
Beneficially
Owned

Percent of
Class(1)

44,400,658

13.39%

30,568,804

9.22

16,642,732

5.02

(1) For purposes of calculating these percentages, there were
331,484,485 shares of our common stock outstanding as of February
1, 2019.

(2) Based on a Schedule 13G/A Information Statement filed January 31,
2019 by BlackRock, Inc. The Schedule 13G/A discloses that
BlackRock has sole voting power as to 43,624,080 shares and sole
dispositive power as to 44,400,658 shares, and 0 shares as to shared
voting power and shared dispositive power.

Short Sales. Directors and officers at the level of First Senior
Vice President and above may not engage in short sales of
the Company’s securities (sales of securities that are not then
owned), including a “sale against the box” (a sale with
delayed delivery).

(3) Based on a Schedule 13G/A Information Statement filed
February 11, 2019 by The Vanguard Group. The Schedule 13G/A
discloses that The Vanguard Group has sole voting power as to
318,539 shares, shared voting power as to 31,051 shares, sole
dispositive power as to 30,249,870 shares, and shared dispositive
power as to 318,934 shares.

(4) Based on a Schedule 13G Information Statement filed February 14,
2019 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; 15,649,438 as to shared voting power
and 16,642,731 shares as to shared dispositive power.

Publicly Traded Options. Directors and officers at the level
of First Senior Vice President and above may not engage in
transactions in publicly traded options in the Company’s
securities, such as puts, calls and other derivative securities,
on an exchange or in any other organized market. Directors
and officers at the level of First Senior Vice President and
above also may not engage in such transactions privately
(excluding Company granted stock options or phantom stock
options).

Hedging Transactions. Directors and officers at the level of
First Senior Vice President and above are prohibited from
entering into hedging transactions or similar arrangements
involving Company securities, such as equity swaps, collars,
exchange funds and forward sale contracts. These hedging
transactions allow an owner of securities to lock in much of
the value of his or her stock holdings, often in exchange for
all or part of the potential for upside appreciation in the stock.

2019 Proxy Statement

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS ("CD&A")

EXECUTIVE SUMMARY

Say-on-Pay Vote

At the 2018 Annual Meeting of Shareholders, approximately
90% of the votes cast were in favor of the advisory vote to
approve executive compensation. 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 continuing outreach program to our
large institutional shareholders and the changes that we made
to our compensation program as a result of those
conversations. We continue to make additional changes to
our compensation program, including putting an even greater
emphasis on performance based compensation.

In February 2019, the Compensation and Human Resources
Committee (the “Committee”) made compensation decisions
based on 2018 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, under the leadership of our
new President and CEO, continued to make meaningful
strides in transitioning the Company into one that is able to
more effectively capitalize on the opportunities in the markets
we serve. We continue to significantly invest in technology
which we believe will allow us to compete in the new digital
environment. We also continue to look to cut costs and
This was reflected in 2018 through the
expenses.
improvement in one of the two key metrics which we use to
measure Company performance - Total Shareholder Return
(“TSR”). Our one year 2018 relative TSR was in the 49th
percentile compared to the KBW Regional Bank Index (the
“KBW Index”) and was in the 60th percentile when measured
against our self-selected peer group.

Net income for the year ended December 31, 2018 was
$261.4 million, or $0.75 per diluted common share, compared
to 2017 earnings of $161.9 million, or $0.58 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 and the writedown of State deferred tax
assets, (ii) $9.9 million ($5.8 million after-tax) in charges
related to the “LIFT” program, and (iii) and $2.6 million ($2.3
million after-tax) of expenses related to our acquisition of
USAmeriBancorp, Inc. (“USAB”). The Committee viewed

2019 Proxy Statement

the Company’s overall financial performance in 2018 to be
positive, while acknowledging that more work needs to be
done to fully implement the Company’s strategic plan.

The following is a summary of how we approached our 2019
compensation program based on 2018 results:

•

Increased Mr. Robbins’ actual
total direct
compensation (salary, non-equity incentive award
and equity awards) approximately 23% over 2017
levels and 12% over his target 2018 compensation
in recognition of his 2018 promotion and
accomplishments in the position of President and
CEO;

Increased Mr. Robbins’ non-equity incentive award
by $210,000, or 47% from 2017, and by $65,000,
or 11%, from 2018 target amounts;

Increased Mr. Robbins’ equity compensation by
$250,000, or 20%, from both his 2017 amount and
his 2018 target amount;

target

Set Mr. Robbins’ 2019
total direct
compensation at $3,300,000, compared to target
direct compensation of $2,695,000 and actual direct
compensation of $3,010,000 for 2018 to reflect the
multi-year ramp up to median compensation levels
(Mr. Robbins’ 2019 target total direct compensation
remains below the peer median);

• Modified the performance based nature of the
compensation program to increase from 2/3 to 3/4
performance equity awards and to increase from
25% to 40% the relative TSR component of our
performance equity awards 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
relative TSR portion of the performance equity
awards to target if the TSR is negative;

• As a result of the 2017 Tax Act reducing the marginal
corporate tax rate from 35% to 21%, the Committee,
with respect to outstanding awards, deducted from
the reported increase in Tangible Book Value an
amount attributable to a reduction in the tax rate and
increased target performance levels for new awards.

The Company’s “TSR” refers to the Company’s share price
performance (plus dividends); the result is ranked relative to

the performance of the KBW Index 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 named
executive officer (“NEO”) as determined under SEC rules
and set forth in the Summary Compensation Table on page
32.

Our Company’s Performance

Other highlights of 2018 include:

• The continuing implementation of our “LIFT”

earning enhancement program;

• The implementation of our strategic plan to target
technology resources to more value-added activities
and deliver on the financial banking experience
expected by our customers;

• The integration of USAB, which acquisition was
completed effective January 1, 2018, the largest
acquisition ever undertaken by the Company;

• A 61% increase in net income in 2018 compared to
2017 and a 30% increase in net interest income in
2018 compared to 2017; and

• A one year TSR in 2018 which was in the 49th
percentile of the KBW Index, and in the 60th
percentile when measured against our self-selected
peer group, even though it was negative.

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 imposed significant
revised and increased 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 earnings enhancement

and expense reduction program;

Key Governance Features

• Our year over year increase in earnings;

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 equity and unpaid cash bonus
awards in the event of a material financial restatement or
material misconduct by an executive. The policy also
provides for the recoupment of vested incentive awards of
stock and cash in the event of intentional fraud or intentional
misconduct by an executive.

• Our increase in percentile rank in TSR relative to
our peer companies and tangible book value growth;

• Maintaining Valley’s strong commitment to credit

quality;

• Development of a long term strategic plan which

supports Valley’s franchise growth; and

• Recruiting, developing and engaging talent to
deliver on Valley’s goals as well as plan for
succession.

OUR COMPENSATION PROCESS

Our Committee sets the compensation of our CEO and all
our NEOs, as well as all executive officers. We met 6 times
during 2018 and early 2019 to discuss NEO compensation
for 2018. At Committee meetings the Committee holds in-
depth executive sessions at which our
independent
compensation consultant is present and provides advice.

2019 Proxy Statement

Appendix A, on page 49, lists all financial institutions in the
peer group. The peer group consists of companies with assets
between $10.6 billion and $51.9 billion and market
capitalization between $674 million and $5.7 billion. Valley
ranked in the 72nd and 26th 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 CEO and NEO total compensation at levels
that are at the median of our peer group.

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 all 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. Robbins, our CEO, and other NEOs attended portions of
the meetings. Mr. Robbins presented and discussed with the
Committee his recommendations for compensation for the
NEOs and the executive team without the other NEOs
present. Mr. Robbins neither made a recommendation to the
Committee about his own compensation nor was he present
when his compensation was discussed or set by the
Committee. The Committee also sought input from external
counsel. The Committee sets executive compensation with
only Committee members, consultants, and external counsel
present after presentations by the CEO.

OUR PEER GROUP

In setting compensation for our executives, we compared
total compensation, each compensation element, and Valley’s
financial performance to a peer group. For purposes of
determining 2018 compensation, our peer group consisted of
20 bank holding companies, each with assets within a
reasonable range above and below Valley’s asset size. Seven
of these companies are in the NY/NJ/CT metropolitan area
or Florida and the thirteen 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 locations; and

• The companies in the peer group are, on average,

similar in size and complexity to Valley.

2019 Proxy Statement

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

Non-Equity Incentive
Awards

Time Vested Equity Awards

Performance Equity Awards

Salary

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.

Equity
performance and vested over time.

incentives earned based on

Equity incentives earned based upon
performance and vested based on 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).

Salaries are determined by an evaluation of individual NEO
responsibilities, compensation history, as well as peer
comparison.

Non-Equity Incentive Awards

We award non-equity incentive awards in February. A target
award is established based on a percentage of the executive’s
base salary and the actual award is determined based on each
NEO’s performance against a scorecard of metrics
established in the prior year.

Time Vested Equity Awards

We award time vested restricted stock unit awards in February

which vest pro rata on an annual basis over a three-year
period.

Performance Equity Awards

We award performance based awards. Consistent with prior
years, awards granted in 2019 vest based on the Company’s
adjusted Growth in Tangible Book Value and relative TSR
performance against the KBW Index measured over a three-
year performance period. However, unlike prior years, the
percentage of performance based awards which vest based
on relative TSR performance has been increased from 25%
to 40%.

OVERALL DESIGN AND MIX OF EQUITY GRANTS

Consistent with 2017 and 2018 awards, the following table summarizes the overall design and mix of our annual long-term
equity incentives granted for 2019:

Form of Award
Time Vested Award

Growth in Tangible
Book Value
Performance Award

TSR Performance
Award

Percentage of
Total Target
Equity Award
Value
25%

Purpose

Encourages retention.
Fosters shareholder mentality among the
executive team.

Performance
Measured
N/A

Earned and Vesting Periods

Vests on the first, second, and third
anniversaries of the grant date.

45%

30%

Encourages retention and ties executive
compensation to our operational
performance.

Growth in Tangible
Book Value (as
defined)

Earned and vests after three-year
performance period based on Growth in
Tangible Book Value.

Encourages retention and ties executive
compensation to our long-term market
performance.

Relative TSR

Earned and vests after three-year
performance period based on TSR
against the KBW Index.

The percentage mixes described in the chart above are based on the dollar value of the awards granted. In 2019, all equity awards
were in the form of restricted stock units ("RSUs"). The dollar value is translated into a number of units using the closing price
of our common stock the day before the effective date of the grant.

2019 Proxy Statement

2018 TIME VESTED AWARDS

For Mr. Robbins and the other NEOs, 25% of the aggregate
dollar value of their target annual equity awards granted for
2018 was in the form of time-based vesting restricted stock
unit awards. Once granted, the awards vest based solely on
continued service with the Company, with one third vesting
on each February 1st thereafter.

2018 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
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 and
shareholder value creation 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 units and the 2016 Stock Plan, the Committee
has the authority to adjust the calculation of the Growth in
Tangible Book Value for certain items that are one time in
nature. The Committee uses this authority to avoid either
penalizing or rewarding executives for decisions which may
adversely or positively affect long term growth of the
Company. For example, when it determined the amounts
earned with respect to awards made in January 2016 which
vested in January 2019, the Committee adjusted the
calculation of the Growth in Tangible Book Value for 2018
and determined that a negative adjustment would be made to
reflect the unanticipated positive impact arising from the new
lower corporate tax rates.

For Mr. Robbins and the other NEOs, 45% of the aggregate
dollar value of their equity awards granted for 2018 were in
the form of performance RSUs to be earned based upon
Growth in Tangible Book Value (each, a Growth in Tangible
Book Value Performance Award). The Growth in Tangible
Book Value Performance Awards are earned based on average
annual Growth in Tangible Book Value during the years 2019
through 2021. Earned Growth in Tangible Book Value
Performance Awards vest on February 1 after the end of the
3-year
following Committee
period
certification of performance results. The number of shares
that can be earned may range from 0% to 175% of the target,
depending on performance (with linear interpolation between
performance levels) as follows:

performance

Average Annual Growth in Tangible
Book Value 2019-2021

Percentage of Target
Shares Earned

Below 10.35%

10.35% (Threshold)

12.0% (Target)

14.75% or higher (Maximum)

None

50%

100%

175%

At its February 2019 meeting, the Committee made the
determination to increase the Maximum performance level
from 13.65% to 14.75% to further motivate outperformance
and the creation of shareholder value, with a corresponding
increase to the Maximum payout from 150% to 175% of the
target number of shares.

Growth in Tangible Book Value Performance Awards are
settled in common stock with any dividend equivalents
accrued during the performance period paid in cash. The
increase in Maximum was determined by the Committee with
the advice of the Compensation Consultant after reviewing
the Company’s multi-year strategic plan as well as peer
company practices, which most commonly have a Maximum
payout equal to 200% of target.

The table below shows the status of the performance based
equity awards subject to vesting based on Growth in Tangible
Book Value for awards granted in 2016 (for 2015
performance), in 2017 (for 2016 performance) and in 2018
(for 2017 performance). Prior to 2018, the Threshold was
9.5%, the Target was 11% and the Maximum was 12.5%. In
2018 increases were made due to the Tax Act and the
Threshold was 10.35%, the Target was 12% and the
Maximum was 13.65%. Note that the status reported in the
below tables for other than 2016 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
2016 awards vested in January 2019 at above Target
performance (124% payout) due to the three-year Growth in
Tangible Book Value of 11.73%.

Growth in Tangible Book Value

Grant
Date

Performance
in 2016

Performance
in 2017

Performance
in 2018

1/30/2016

12.51%

1/28/2017

1/24/2018

N/A

____________

11.63%

N/A

11.06%

11.06%
12.36%*

Cumulative
Perfor-
mance
Measured
to Year
End 2018

11.73%

11.35%
12.36%*

* Excludes a negative adjustment for the Tax Act but with higher
Target (12%), Max (13.65%) and Threshold (10.35%) levels.

2019 Proxy Statement

2018 RELATIVE TSR PERFORMANCE AWARDS

For Mr. Robbins and the other NEOs, 30% of the aggregate
dollar value of their target annual equity awards granted for
2018 was in the form of RSUs to be earned based on the
Company’s relative TSR for the 3-year performance period
from January 2019 through December 2021 against the KBW
Index (a TSR Performance Award). The KBW Index is used
as a broad indicator of Valley’s relative market performance.
Earned TSR Performance Awards vest at the end of the 3-
year performance period and will be settled on February 1
following the end of the three-year performance period. The
number of shares that may be earned ranges from 0% to 150%
of the target, depending on performance (with linear
interpolation between performance levels) as follows:

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 are settled in
common stock with any dividend equivalents accrued during
the performance period paid in cash.

The Company’s cumulative TSR was 5.01% for the three-
year period ended December 31, 2018. The percentile rank
against Valley’s peer group was 20.22% for that time period.
Accordingly, none of 2016 TSR Performance Awards vested
in 2019, which was also the case for the 2015 TSR
Performance Awards.

PAY DETERMINATIONS

Summary

increased Mr. Robbins’

The Committee
total direct
compensation by $560,000, or approximately 23%, from last
year. More specifically, the Committee made the following
compensation determinations with respect to Mr. Robbins:

•

Increased his base salary by $100,000;

Increased his non-equity
incentive award
$660,000 for 2018 from $450,000 for 2017; and

Increased his total equity award to $1,500,000 from
$1,250,000 for 2017.

The Committee believes that, as President and CEO, Mr.
Robbins’ 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 2018. The large
increase in Mr. Robbins’ compensation was due to (i) his
appointment to the position of President and CEO effective
January 1, 2018, (ii) Mr. Robbins’ performance against his
individual goals as set forth in his scorecard, (iii) the positive
transformation the Company made in 2018 and continues to
make, and (iv) the improvement in financial results in 2018
compared to 2017, after adjusting for the Tax Act boost to
earnings.

Rationale for Compensation Decisions

In making the compensation decisions described below, the
Committee considered the performance of the Company as
a whole against goals as well as each NEO’s scorecard
performance against his 2018 goals.

The chart below provides a brief synopsis of the 2018
scorecard of the Company as a whole.

Goal

Growth

Efficiency

Profitability

Risk
Management

Customer
Focus

Community

Employee
Empowerment

Integration of
USAB

Discussion

Performance Relative to Goal

Commercial and consumer loans grew

substantially

Core deposits and residential

mortgages grew modestly

Several technology initiatives were

launched
X Other efficiency projects were not fully
implemented

Two major initiatives were successfully

completed

Mixed results in implementing
FinTech and profitability measurement
tools

Credit quality and risk profile levels are

acceptable

Successful implementation of several

major customer initiatives

Branch transformation continues

NEO and senior management community

engagement expanded

Several employee engagement initiatives

were launched

Clients and key employees were

successfully retained

Assimilation of culture needs to be

completed

The Committee assigned significant weight to the Company’s
scorecard above in assessing Mr. Robbins’ performance. Mr.
Robbins was viewed as having materially exceeded his
individual goals and materially contributed to the successful
goals in the Company’s scorecard above. In particular, the
Committee considered Mr. Robbins’ leadership and his
efforts to fundamentally transform the Company into a more
competitive institution and the Committee believed that the
Company made strong progress in 2018 toward its long term
goals. The Committee also weighted heavily the Company’s

2019 Proxy Statement

While the Target Non-Equity award is measured against the
salary set at the beginning of the year, Mr. Bardusch’s salary
was increased during the year in connection with his
appointment as Chief Operating Officer.

Equity Incentive Awards. As with non-equity incentive
awards, the Committee sets total target equity incentive
awards for each NEO. As described in more detail below,
the equity awards are granted in the form of time-based
awards (25%) and performance based awards (75%). The
Committee in February 2019 made equity awards based on
the performance of each executive in 2018.

The table below shows the total equity awards for each NEO
relative to target as well as the amount of the actual awards
relative to target awards.

2018 Target
Equity
Incentive
Awards

Actual Equity
Incentive
Awards
for 2018

2018 Equity
Incentive
Awards as a
% of Target

NEO

Ira Robbins

1,250,000 $

1,500,000

120%

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

750,000

700,000

500,000

700,000

800,000

700,000

550,000

107

100

110

NEO

Ira Robbins

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

Time Based
Restricted Shares

Value of Shares
at Grant Date

35,954

16,779

19,175

16,779

13,183

375,000

175,000

200,000

175,000

137,500

improved net income and net interest income in 2018. These
factors resulted in the Committee increasing Mr. Robbins’
base salary and setting his equity and non-equity awards at
above target. The Committee’s decision to issue Mr. Iadanza
equity and non-equity awards at above target was primarily
based on the strong loan growth of the Company in 2018 and
his strong performance against his scorecard. The other
executives’ awards were at target which reflected their strong
efforts and positive individual scorecards.

Salaries. Mr. Robbins’ base salary for 2019 increased to
$900,000 from $850,000. Other than Mr. Bardusch, who
received a $25,000 increase, none of the other NEOs received
any increase in base salary.

Non-Equity Incentive Awards. For each NEO, the
Committee sets a target non-equity incentive award
calculated as a percentage of such executive’s base salary.
For 2018, these targets were 70% for Mr. Robbins, 40% for
Messrs. Eskow, Iadanza and Janis, and 35% for Mr. Bardusch.
The actual non-equity incentive award for Mr. Robbins was
higher than last year’s award and his target 2018 award by
$210,000 and $65,000, respectively. The actual non-equity
incentive award for Mr. Iadanza was higher than last year’s
award and his target 2018 award by $75,000 and $85,000,
respectively. The other NEOs received non-equity incentive
awards that were generally consistent with both 2017 awards
and target 2018 awards.

The following table shows the non-equity incentive awards
for each NEO, as well as the amount of the actual awards
relative to target awards.

Non-Equity Incentive Awards

2018
Target
Non-
Equity
Awards
Amount

Non-
Equity
Incentive

2018
Target
Non-
Equity
Awards as
% of Base
Salary

2018
Non-
Equity
Incentive
Awards
as % of
Target

2018
Base
Salary

NEO

Ira Robbins $ 850,000 $ 595,000 $ 660,000

70%

111%

Alan D.
Eskow

Thomas A.
Iadanza

Ronald H.
Janis

Robert J.
Bardusch

575,000

230,000

600,000

240,000

325,000

515,000

206,000

450,000

148,750

150,000

100

135

100

101

2019 Proxy Statement

The following table shows the performance based equity awards issued to our NEOs and the grant date fair value of each award.
Of these awards, 60% are subject to vesting based on the attainment of Growth in Tangible Book Value and the remaining 40%
are based on relative TSR.

Performance Based Stock Awards at Target

Performance Based Stock Awards at Maximum

Named Executive Officer

Based on TSR

Based on
Growth in
TBV

Total

Based on TSR

Based on
Growth in
TBV

Total

Ira Robbins

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

Other Compensation

450,000 $

675,000 $

1,125,000

675,000 $

1,181,250 $

1,856,250

210,000

240,000

210,000

165,000

315,000

360,000

315,000

247,500

525,000

600,000

525,000

412,500

315,000

360,000

315,000

247,500

551,250

630,000

551,250

433,125

866,250

990,000

866,250

680,625

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 “2018 Nonqualified Deferred Compensation -
Deferral Compensation Plan”.

We also provide perquisites to senior officers. We offer them
either a taxable monthly allowance or the use of a company-
owned automobile. The automobile facilitates NEO travel
between our offices, to business meetings with customers and
vendors and to investor presentations. NEOs may use the
automobile for personal transportation. Personal use of the
automobile 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
taxable 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
and prospective customers
informal
environment. We require that any personal use of the country
club facilities be paid by the NEO. The club membership
dues are
in our Summary
Compensation Table in accordance with SEC guidance. We
also provide severance agreements and change in control

included as perquisites

relaxed,

in a

agreements to our NEOs. 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.”

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 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.

Effective for 2019 and thereafter, the Committee, based upon
a recommendation from FW Cook, adopted a new program
for our executive officers, including our NEOs regarding
change in control benefits. Under this new program, change
in control benefits are as follows:

•

For the CEO, three times the sum of salary plus
highest cash bonus in the last three years;

For the other NEOs, two times (reduced from three
times) the sum of salary plus highest cash bonus in
the last three years.

In 2019 Messrs. Robbins, Iadanza and Janis entered into new
agreements to reduce their change in control benefits under
the new program. Due to the nature of their existing
agreements, the new agreements do not go into effect until
January 1, 2023. Mr. Bardusch entered into a new agreement
which became effective as of January 1, 2019 because his
benefits were increased under the new program. Mr. Eskow’s
existing change in control agreement remains unchanged
because his agreement was previously grandfathered.

Also, in connection with the new program, commencing in
2019 all equity awards will provide for accelerated vesting

2019 Proxy Statement

INCOME TAX CONSIDERATIONS

Section 162(m) of the Internal Revenue Code ("Section
162(m)") generally disallows a tax deduction to a public
corporation for compensation over $1,000,000 paid in any
fiscal year to a company's chief executive officer or other
named executive officers (excluding the company's principal
financial officer, in the case of tax years commencing before
2018). However, in the case of tax years commencing before
2018, the statute exempted qualifying performance based
compensation
if certain
requirements were met. The Company’s 2016 Long-Term
Stock Incentive Plan (the “2016 Stock Plan”) includes
provisions for performance awards which were intended to
allow these awards to be deductible under Section 162(m).
Previously, the Company also implemented an Executive
Incentive Plan which was designed to allow both time-based
restricted stock and cash awards to be deductible under
Section 162(m).

the deduction

from

limit

Section 162(m) was amended in December 2017 by the Tax
Cuts and Jobs Act to eliminate the exemption for
performance-based compensation (other than with respect to
to certain "grandfathered"
payments made pursuant
arrangements entered into prior to November 2, 2017) and to
expand the group of current and former executive officers
who may be covered by the deduction limit under Section
the Company's shareholder approved
162(m). While
incentive plans were previously structured to provide that
certain awards could be made in a manner intended to qualify
for the performance-based compensation exemption, that
exemption will no longer be available for future tax years
to certain "grandfathered"
(other
arrangements as noted above).

than with respect

The Compensation Committee expects in the future to
authorize compensation in excess of $1,000,000 to named
executive officers that will not be deductible under Section
162(m).

only upon a “double trigger”; i.e., a change in control
followed by a qualifying termination of employment.

A more detailed explanation of these and other matters are
set forth in this Proxy Statement under “2019 Action to
Reduce Certain Change in Control and Retirement Benefits”
on page 38.

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
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 from the year of their appointment to the
position. The Compensation Committee increased the
ownership requirements this year. The table below shows
the minimum holdings required of each NEO. Shares held
by spouse and minor children are counted against the
requirement, as well as unvested time vesting restricted stock
units.

NEO Minimum Stock Ownership Requirements

Title

CEO

Senior EVP

EVP

Minimum Dollar Value
of Required Common
Stock Ownership

5 times base salary

3 times base salary

2 times base salary

2019 Proxy Statement

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

Eric P. Edelstein

Michael L. LaRusso

Marc J. Lenner

Suresh L. Sani

Jennifer W. Steans

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information regarding our
equity compensation plan as of December 31, 2018.

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*

2,852,300 $

6.86

5,476,751

—

2,852,300 $

—

6.86

—

5,476,751

Plan Category

Equity
compensation plans
approved by
security holders

Equity
compensation plans
not approved by
security holders

Total

____________

* Amount includes 1,051,787 options outstanding with a weighted
average exercise price of $6.86; 1,800,513 performance-based
restricted stock units measured at maximum vesting at December 31,
2018. Amount does not include 1,720,968 outstanding restricted
shares and 178,544 outstanding restricted stock units acquired from
the merger with USAB on January 1, 2018.

2019 Proxy Statement

SUMMARY COMPENSATION TABLE

The following table summarizes all compensation in 2018, 2017 and 2016 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.

Name and Principal
Position

Year

Salary

Stock

Awards(1)

Change in
Pension
Value and
Non-
Qualified
Deferred
Compen-
sation
Earnings(3)

Non-Equity

Incentive

Plan
Compen-
sation(2)

All Other
Compen-
sation(4)

Total

Ira Robbins

2018 $

850,000 $

1,468,505 $

0 $

206,414 $

President and CEO

Alan D. Eskow

Senior EVP, CFO and

Corporate Secretary

Thomas A. Iadanza

Senior EVP and

Chief Banking Officer

Ronald H. Janis

Senior EVP and

General Counsel

2017

2016

2018

2017

2016

2018

2017

750,000

525,000

575,000

545,750

600,000

1,250,000

750,000

685,306

675,000

783,198

660,000

450,000

250,000

230,000

250,000

200,000

325,000

515,000

500,000

685,306

800,000

206,000

250,000

Robert J. Bardusch

2018

450,000

538,447

150,000

Senior EVP and COO

___________

80,405

45,718

15,279

142,745

77,757

156,210

156,701

118,714

106,251

3,184,919

2,673,150

1,648,475

1,646,516

1,671,980

1,539,464

1,814,449

90,006

50,131

1,496,312

1,600,131

44,170

1,182,617

(1) Stock awards reported in 2018 reflect the grant date fair value of the restricted stock unit 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 2018 results. The grant date fair value of time based restricted stock unit awards reported in this column for each of our NEOs was as follows:
Mr. Robbins, $375,000, Mr. Eskow, $175,000; Mr. Iadanza, $200,000; Mr. Janis, $175,000 and Mr. Bardusch $137,500. Restrictions on time based
restricted stock unit 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 on February 1st
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

Target Value at Grant Date FV Maximum Value at Grant Date

Ira Robbins

1,093,505 $

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

510,306

583,198

510,306

400,947

1,809,015

844,215

964,797

844,215

663,297

(2) For 2018, represents the non-equity incentive award paid in cash in 2019 based on 2018 performance. Non-Equity awards earned for the years ending
before 2018 were distributed as follows: 50% of the non-equity award was paid on award and the remaining balance was paid in eight equal quarterly
cash 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 annual increase in present value of Mr. Robbins and Mr. Eskow accumulated
benefits as of December 31, 2018 was a net decrease of $62,532 and $202,373 from the present value reported as of December 31, 2017, respectively,
therefore, the amount reported for 2018 is zero. The decrease is attributable to the increase in the discount rate from 3.69% to 4.30%.

(4) All other compensation includes perquisites and other personal benefits paid in 2018 including automobile, accrued dividends on nonvested restricted
stock and restricted stock units, 401(k) contribution payments, 401(k) SERP contribution payments by Valley (including interest earned) and group term
life insurance and club dues (see table below).

2019 Proxy Statement

Name

Auto(1)

Accrued Dividends
Earned on
Nonvested Stock
Awards(2)

401(k)(3)

DCP(4)

GTL(5)

Club Dues

Other

Total

Ira Robbins

7,704 $

94,626 $

13,750 $

56,424 $

1,140 $

28,924 $

3,846 $

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

___________

14,484

8,005

21,150

5,663

72,612

45,333

21,003

19,512

13,750

30,963

31,149

24,527

20,632

7,524

7,276

1,055

3,769

490

2,300

4,190

206,414

156,210

106,251

90,006

44,170

(1) Auto represents the cost to the Company of the portion of personal use of a company-owned vehicle by the NEO and, parking

(if applicable), during 2018.

(2) Accrued dividends on non-vested time and performance based restricted stock units until such time as the vesting takes place.
Dividends on performance based 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 and 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 2018 Nonqualified Deferred Compensation 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.

2019 Proxy Statement

The following table represents the grants of awards to the NEOs in 2019 for 2018 performance made under the 2016 Stock
Plan.

GRANTS OF PLAN-BASED AWARDS

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

595,000 $

1,190,000

53,931

107,862

177,973

1,093,505

230,000

460,000

25,168

50,336

83,055

240,000

480,000

28,763

57,526

94,918

206,000

412,000

25,168

50,336

83,055

148,750

297,500

19,775

39,549

65,256

35,954

16,779

19,175

16,779

13,183

375,000

510,306

175,000

583,198

200,000

510,306

175,000

400,947

137,500

Name

Ira Robbins

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

___________

Grant
Date

2/12/2019

(1) The Compensation Committee set targets awards for 2018 as follows: Mr. Robbins as CEO 70% of salary; Messrs. Eskow, Iadanza and Janis 40% of
salary; and Mr. Bardusch 35% of salary. Awards were paid based upon achievement of a scorecard of goals. See "Compensation Discussion and Analysis."
The Compensation Committee awarded each NEO the cash amount reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary
Compensation Table for 2018. The Compensation Committee also granted each NEO an award of time-based restricted stock units under the 2016 Stock
Plan (reported above under “All Other Stock Awards: Number of Shares of Stock”). The Compensation Committee also made grants to the NEOs under
the 2016 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. See our Compensation Discussion and Analysis for information regarding these time-based restricted
stock units 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 on
February 1st following the completion of the three-year performance period. Restrictions on time based restricted stock unit
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. However, changes were made to grants issued in 2019 to implement "double trigger"
vesting. As a result, vesting is no longer automatic upon a change in control. See below "2019 Action to Reduce Certain Change
in Control and Retirement Benefits."

The per share grant date fair values under ASC Topic 718 of each share of time based restricted stock unit and performance
based restricted stock units (with no market condition vesting requirement) was $10.43 per share awarded on 2/12/2019.
Performance based restricted stock units with market condition vesting requirements (i.e., TSR) awarded on 2/12/2019 had a
$9.70 per share grant date fair value.

2019 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, 2018 (including February 12, 2019 awards which were based on 2018 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)

Name

Grant Date

Ira Robbins

2/12/2019

2/1/2018

1/24/2017

1/29/2016

1/27/2016

Total awards (#)

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)

177,973 $

1,580,400

99,642

66,431

77,115

884,821

589,907

684,781

421,161 $

3,739,909

83,055 $

53,700

59,787

79,319

737,528

476,856

530,909

704,353

35,954 $

33,015

14,762

8,629

92,360 $

16,779 $

17,900

13,286

319,272

293,173

131,087

76,626

820,158

148,998

158,952

117,980

Alan D. Eskow

2/12/2019

2/1/2018

1/24/2017

1/29/2016

1/27/2016

11/15/2010

Total awards (#)

Market value of in-the-money
options ($) (3)

Thomas A. Iadanza

Total awards (#)

Ronald H. Janis

Total awards (#)

2/12/2019

2/1/2018

1/24/2017

1/29/2016

1/27/2016

2/12/2019

2/1/2018

Robert J. Bardusch

2/12/2019

2/1/2018

1/24/2017

Total awards (#)

____________

21,170

0 $

11.91

11/15/2020

8,876

78,819

56,841 $

504,749

275,861 $

2,449,646

19,175 $

17,900

6,495

3,629

47,199 $

16,779 $

15,911

32,690 $

170,274

158,952

57,676

32,226

419,128

148,998

141,290

290,288

94,918 $

53,700

28,565

32,433

842,872

476,856

253,657

288,005

209,616 $

1,861,390

83,055 $

47,733

737,528

423,869

130,788 $

1,161,397

13,183 $

117,065

65,256 $

9,547

3,838

84,777

34,081

29,832

16,608

26,568 $

235,923

111,696 $

579,473

264,908

147,479

991,860

(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 and restricted stock unit 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 year after of the date of grant.

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, 1/24/2017 award, 2/1/2018 award and 2/12/2019 award.

(3) At per share closing market price of $8.88 as of December 31, 2018.

2019 Proxy Statement

The following table shows the restricted stock and restricted stock units held by our NEOs that vested in 2018, as well as
performance-based awards which vested in early 2019 based on the three-year performance period ended December 31, 2018,
and the value realized upon vesting. None of our NEOs exercised any options in 2018.

2018 STOCK VESTED

Name

Ira Robbins

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

____________

Stock Awards

Number of
Shares Acquired
Upon Vesting (#)

Value Realized on
Vesting ($)(*)

67,592 $

73,023

29,773

1,919

746,697

812,895

331,063

23,527

* 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 1/29/2016 for Mr. Robbins (47,938 shares), Mr. Eskow (49,308 shares), and Mr. Iadanza (20,163 shares).
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, 2018. 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 1/29/2016
subject to vesting based on relative TSR performance lapsed without any vesting.

2018 PENSION BENEFITS

PENSION PLAN

Valley maintains a non-contributory, defined benefit pension
plan (the "Pension Plan") which was frozen effective January
1, 2014. The annual retirement benefit under the Pension Plan
generally 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 employee’s average social
security wage base up to the annual compensation limit under
the law, (iii) multiplied by the years of credited service (up
to a maximum of 35 years). An employee’s “average final
compensation” is the employee’s highest consecutive five-
year average of the employee’s annual salary. Employees
hired on or after July 1, 2011, including Mr. Iadanza, Mr.
Janis and Mr. Bardusch, 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.

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, which was frozen effective January 1,
2014. Benefits are generally determined as follows: (i) the
benefit calculated under Valley pension plan formula 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. Mr.

Robbins and Mr. Eskow are participants in the BEP.
Executives hired on or after July 1, 2011 including Mr.
Iadanza, Mr. Janis and Mr. Bardusch, are not participants 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, 2018.

Name
Ira Robbins

Plan Name

VNB Pension Plan

VNB BEP

Alan D. Eskow VNB Pension Plan

VNB BEP

# of
Years
Credited
Service

Present
Value of
Accu-
mulated
Benefits ($)

389,386

159,796

705,739

1,474,123

Present values of the accumulated benefits under the BEP
and Pension Plan were determined as of January 1, 2019
based upon the accrued benefits under each plan as of
December 31, 2018 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-2018, (ii) interest at an annual effective rate

2019 Proxy Statement

of 4.30% 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, 2019) 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.

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
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
vested 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.

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 $13,750 in 2018.

2018 NONQUALIFIED DEFERRED
COMPENSATION

DEFERRED COMPENSATION PLAN

Valley established the Valley National Bancorp Deferred
Compensation Plan (the "Plan") for the benefit of certain
eligible employees in 2017. The Plan is maintained for the
purpose of providing deferred compensation for selected
employees participating
the 401(k) Plan whose
in
contributions are limited as a result of the limitations 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
Participant vests 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
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.

2019 Proxy Statement

The following table shows each NEO's deferred compensation plan activity during 2018 and in aggregate:

Name

NEO
Contribution in
2018

Valley's
Contribution in
2018*

Aggregate
Earnings in
2018*

Aggregate
Withdrawals/
Distributions

Aggregate
Balance at
12/31/2018

Ira Robbins

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

_________

50,481 $

27,500

27,981

21,884

27,500

27,981

21,884

5,943

3,463

3,168

2,643

0 $

153,722

89,564

81,954

68,343

* Included in the Summary Compensation Table above, under "All Other Compensation" for 2018.

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, Iadanza,
Janis and Bardusch. The following discussion describes the
agreements currently in place with each of our named
executive officers.

2019 ACTION TO REDUCE CERTAIN CHANGE IN
CONTROL AND RETIREMENT BENEFITS

Based upon a recommendation from FW Cook concerning
current practices, the Compensation Committee endorsed a
new program to bring consistency to change in control
agreements for executives of the Company. The impact of
the new program was to reduce potential benefits for many
of the Company’s executives.

Under the new program, change in control severance benefits
for executives will be as follows:

• Chief Executive Officer (CEO): Three times (3x) (i)
salary, and (ii) highest cash bonus in the last three
(3) years.

•

Senior Executive Vice Presidents (SEVP): Two
times (2x) (i) salary, and (ii) highest cash bonus in
the last three (3) years.

• Executive Vice Presidents (EVP): Two times (2x)
salary, plus a pro-rata bonus for year of termination.

• Under all agreements the executive also receives a
lump sum payment equal to the salary multiplier (3x
or 2x) multiplied by his or her COBRA premium
minus his or her required employee contribution.

•

Internal Revenue Code 280G imposes a 20% excise
tax on an individual receiving “excess parachute
payments” and disallows a deduction for the
company paying excess parachute payments above
a base level. To deal with tax issues, the change in

2019 Proxy Statement

control agreements provide for “net best” tax
treatment. Under this treatment the executive’s
severance benefits are cut back to eliminate any
excess parachute payments unless the executive
would end up with more after-tax income by paying
the 20% excise tax. In the latter case, severance
benefits are not cut back but the executive pays the
20% excise tax in addition to all federal and state
income taxes.

Previously, severance benefits under change in control
agreements were inconsistent based upon title and included
a life insurance benefit that has been eliminated.

Under this new program, in 2019 Mr. Robbins, Mr. Iadanza
and Mr. Janis entered into agreements to reduce their benefits
by replacing existing change in control agreements with new
agreements effective January 1, 2023. The delayed effective
date for the reduced benefits was caused by the rolling three-
year term in the existing agreements.

Because his existing benefits were less than those provided
for in the new program, Mr. Bardusch entered into a change
in control agreement with increased benefits effective
January 2019.

Mr. Eskow's existing change in control agreement remains
in effect.

The change in control agreements contain the same terms as
the Company’s prior change in control agreements except
with the exception of the new program terms described above.

As an additional part of the Compensation Committee’s new
program, equity awards granted in 2019 and thereafter
require a double trigger to vest upon a change in control.
Currently, the vesting of equity awards accelerates upon a
change in control. Under the new program, there will not be
an acceleration of vesting upon a change in control; equity
awards will accelerate only if within two years after a change
in control, the employee dies or there is a qualifying
termination. A qualifying termination is (i) a termination
without cause or, (ii) or a resignation for good reason under
a change in control agreement or the change in control
severance plan.

Furthermore, vesting of equity on a qualified retirement was
reduced. Starting with awards granted in 2019, upon a
qualified retirement, equity awards outstanding less than one
year will vest pro rata based upon the number of full months
that the award was outstanding divided by twelve. Awards
outstanding more than one year will vest in full on retirement.
Prior to 2019, awards vested in full on a qualified retirement.

The description of benefits below describes the agreements
that were in effect at December 31, 2018, as do the amounts
set forth in the tables 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 prior to termination
in the current calendar year divided by (b) 12. The severance
agreements of Messrs. Robbins, Iadanza, and Janis, 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 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, Iadanza 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.

CHANGE IN CONTROL ("CIC") AGREEMENT
PROVISIONS

Each NEO is a party to a CIC Agreement. 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 (one times for Mr. Bardusch). 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, Mr. Iadanza 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

2019 Proxy Statement

who were serving as our directors on the day before
the first public announcement about the event;

• 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
in board
Directors. This means
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;

PARACHUTE PAYMENT REIMBURSEMENT

Mr. Eskow is entitled to receive a tax “gross-up” payment in
the event that payments to him 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 agreement of Mr. Eskow, Valley adopted a policy
prohibiting tax “gross-up” payments. The tax “gross-up”
payment provision was in effect prior to adoption of such
policy and thus remain in effect. Mr. Robbins, Mr. Iadanza,
Mr. Janis and Mr. Bardusch are not entitled to receive tax
gross-up payments under their agreements. Mr. Robbins and
Mr. Iadanza have a net best provision in change in control
agreement whereby they would be entitled to the greater after-
tax benefit of either: (i) his full change in their 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 and Mr.
Bardusch have 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 Messrs. Eskow
and Robbins 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, 2019 based on RP-2014 White
Collar Tables projected generationally with Scale MP-2015,
and interest at an annual effective rate of 4.30% compounded
annually for the pension plan and the BEP.

• We reduce the NEO’s annual base compensation;

EQUITY AWARD ACCELERATION

• 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.

2019 Proxy Statement

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 and stock unit 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 Long-Term Stock Incentive Plan, 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.

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, 2018, 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, 2018. 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.

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)

Ira 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 (1)
Deferred compensation
Welfare benefits lump sum payment
Automobile & club dues (2)
“Parachute Penalty” tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan
Pension plan

Total

Alan D. 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 (1)
Deferred compensation
Welfare benefits lump sum payment
Automobile & club dues (2)
“Parachute Penalty” tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan (3)
Pension plan

Total

Thomas A. Iadanza
Amounts payable in full on indicated date of termination:
Severance – Salary component
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (1)
Deferred compensation
Welfare benefits lump sum payment
Automobile & club dues (2)
“Parachute Penalty” tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan
Pension plan

Total

0 $
0
500,888
983,149
153,722
63,145
0
N/A
1,700,904

0
233,911
1,934,815 $

0 $
0
355,748
671,843
89,564
11,250
0
N/A
1,128,405

1,518,684
725,918
3,373,007 $

0 $
0
248,859
487,006
81,954
53,769
0
N/A
871,588

N/A
N/A
871,588 $

0 $
0
0
0
153,722
0
0
N/A
153,722

0
233,911
387,633 $

0 $
0
355,748
671,843
89,564
0

0
N/A
1,117,155

1,518,684
725,918
3,361,757 $

0 $
0
0
0
81,954
0
0
N/A
81,954

N/A
N/A
81,954 $

1,700,000 $
660,000
0
0
153,722
63,145
0
N/A
2,576,867

0
233,911
2,810,778 $

575,000 $

0
0
0
89,564
11,250

0
N/A
675,814

1,518,684
725,918
2,920,416 $

1,200,000 $
325,000
0
0
81,954
53,769
0
N/A
1,660,723

N/A
N/A
1,660,723 $

2,550,000
1,980,000
500,888
983,149
153,722
65,091
102,978
N/A
6,335,828

114,650
233,911
6,684,389

1,725,000
750,000
355,748
671,843
89,564
11,250
40,721
1,514,681
5,158,807

1,824,735
725,918
7,709,460

1,800,000
975,000
248,859
487,006
81,954
54,125
22,506
N/A
3,669,450

N/A
N/A
3,669,450

2019 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)

Ronald H. Janis
Amounts payable in full on indicated date of termination:
Severance – Salary component (4)
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (1)
Deferred compensation (5)
Welfare benefits lump sum payment
Automobile & club dues (2)
“Parachute Penalty” Tax gross-up

Sub Total

Present value of annuities commencing on indicated date of termination:
Benefit equalization plan
Pension plan

Total

Robert J. Bardusch
Amounts payable in full on indicated date of termination:
Severance – Salary component
Severance – Non-equity incentive
Restricted stock awards
Performance restricted stock unit awards (1)
Deferred compensation
Welfare benefits lump sum payment (6)
Automobile & club dues (2)
“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 – Not applicable.

0 $
0
141,290
282,579
34,171
48,144
0
N/A
506,184

N/A
N/A
506,184 $

0 $
0
118,859
274,925
N/A
0
0
N/A
393,784

N/A
N/A
393,784 $

0 $
0
0
0
34,171
0
0
N/A
34,171

N/A
N/A
34,171 $

0 $
0
0
0
N/A
0
0
N/A
0

N/A
N/A

0 $

1,030,000 $
206,000
0
0
34,171
48,144
0
N/A
1,318,315

N/A
N/A
1,318,315 $

69,231 $
0
0
0
N/A
2,629
0
N/A
71,860

N/A
N/A
71,860 $

1,206,597
618,000
141,290
282,579
68,343
49,625
59,462
N/A
2,425,896

N/A
N/A
2,425,896

450,000
175,000
118,859
274,925
N/A
22,288
10,786
N/A
1,051,858

N/A
N/A
1,051,858

(1) Upon death, dismissal without cause upon a change-in-control, or resignation for good reason upon a change-in-control, unearned performance restricted
stock awards immediately vest at the target amount. Upon retirement, performance restricted stock awards continue to vest according to the schedules
set forth in their respective award agreements; therefore the same amount is shown in all columns assuming the target amount is earned.

(2) Automobile and club dues include the present value of the continuation of the personal use of a company-owned vehicle by the NEO and driving services

and parking (if applicable), and membership in a country club through the contract period following the change-in-control.

(3) Upon dismissal for cause, Mr. Eskow would receive BEP benefits.

(4) 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 $338,403 to reduce Mr. Janis's parachute payments to his 280G limit.

(5)

In case of death, retirement or resignation, or dismissal w/o 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.

(6)

In the event of dismissal without cause, Mr. Bardusch would receive benefits assistance for two months.

CEO PAY RATIO

Under SEC rules, we are required to disclose the pay ratio of
our CEO to our median employee. The pay ratio disclosure
below is a reasonable estimate calculated in a manner
consistent with SEC rules and guidance.

Under SEC rules we may continue to use the same median
employee for three years if we reasonably believe no change
occurred that would significantly impact the pay ratio. We
reviewed the information we collected for the calculation of
the 2017 pay ratio as well as information about our 2018
compensation. From that review, we determined that the
median employee continued to be employed by us. After

reviewing our 2018 workforce and changes occurring as a
result of our 2018 acquisition of USAmeriBank, we
determined that there were no changes in the employee base
or compensation arrangements that would significantly
change the pay ratio. Thus, for determining the 2018 pay ratio
we used the same median employee.

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

2019 Proxy Statement

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
2018, approximately 90% of the shares voted on the proposal
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).

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
that reasonable reflects
the annual compensation of
employees.

As in 2017, we calculated the annual total compensation for
the employee using the same methodology we used for the
CEO, as set forth in the Summary Compensation Table.

The annual total compensation in 2018 for our median
employee using this methodology was $52,936.

The annual total compensation in 2018 for our CEO using
this methodology is shown in the Summary Compensation
Table and was $3,184,919.

The ratio of the annual total compensation of our CEO to the
annual total compensation of our median employee in 2018
was 60 to 1.

ITEM 3

ADVISORY VOTE ON EXECUTIVE
COMPENSATION

(the

Under the Dodd-Frank Wall Street Reform and Consumer
“Dodd-Frank Act”), Valley’s
Protection Act
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 section of this
Proxy Statement describes
the Company’s executive
compensation program and the decisions made by the
Compensation and Human Resources Committee in 2018 and
early 2019.

The Company requests shareholder approval of
the
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

2019 Proxy Statement

COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

contractual rights.
compliance with the related party transaction policy.

The Audit Committee oversees

The members of the Compensation and Human Resources
Committee are Gerald Korde, Andrew B. Abramson, Eric P.
Edelstein, Michael L. LaRusso, Marc J. Lenner, Suresh L.
Sani and Jennifer W. Steans. None of the members of the
Compensation and Human Resources Committee, or their
affiliates have engaged in transactions or relationships
required to be reported under the compensation committee
interlock rules promulgated by the Securities and Exchange
Commission with respect to members of our Compensation
and Human Resources Committee.

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

2019 Proxy Statement

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 2018, 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 2018, Valley and its borrowers made
payments totaling approximately $308,404 for legal
services to a law firm in which director Graham O.
Jones is the sole equity partner. The fees represented
27% of the firm's gross revenues.

•

Of the fees paid by Valley and its borrowers to
Jones & Jones, $203,106 were for loan review
services and approximately $105,298 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.

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 2018, Mr. Lipkin’s son-in-law received $22,736
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 2018) to
the son-in-law totaled approximately $841,644 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 2033).

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 by certain deadlines. During 2018, Gerald
Korde filed a late Form 4 (reporting the sale of 3,000 shares
held by his adult son's grantor trust of which his adult son is
the sole beneficiary) due to legal questions related to whether
the sale by his son should be reported.

We believe all our other directors and executive officers
complied with their Section 16(a) reporting requirements in
2018.

•

In 2011 Valley acquired State Bancorp, Inc. At the
time of acquisition, State Bancorp leased a branch
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
2018 represented approximately less than 1/2 of 1%
of
larger
organization.

the annual gross revenue of

the

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. Dianne Grenz is an
executive officer of Valley. Valley employs her daughter, who
in 2018 earned $139,061. The daughter and son-in-law of
Rudy Schupp, a former executive officer of Valley, are
employed by Valley and in 2018 and earned $123,000 and
$161,147, respectively.

2019 Proxy Statement

ITEM 4

SHAREHOLDER PROPOSAL

Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY
11021, the beneficial owner of no less than 300 shares of
Common Stock, has advised the Company that he intends to
propose a resolution at the 2019 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 - Independent Board Chairman

Shareholders request our Board of Directors to adopt as
policy, and amend our governing documents as necessary,
to require henceforth that the Chair of the Board of
Directors, whenever possible, to be an independent member
of the Board. The Board would have the discretion to phase
in this policy for the next Chief Executive Officer transition,
implemented so it does not violate any existing agreement.

If the Board determines that a Chairman, who was
independent when selected is no longer independent, the
Board shall select a new Chairman who satisfies the
requirements of the policy within a reasonable amount of
time. Compliance with this policy is waived if no
independent director is available and willing to serve as
Chairman. This proposal requests that all the necessary
steps be taken to accomplish the above.

This proposal topic won 50%-plus support at 5 major U.S.
companies in 2013 including 73% support at Netflix. These
5 majority votes would have been a still higher majority if
all shareholders had access to independent proxy voting
advice.

An independent Board Chairman is more important because
Valley National seems to have a serious problem with board
refreshment. Plus our stock was at $10 five-years ago and
was still at a flat $10 at the time this proposal was submitted.
The following directors had excessive tenure which erodes
their independence:

Gerald Lipkin
Gerald Korde
Pamela Bronander
Andrew Abramson
Graham Jones
Eric Edelstein
Michael LaRusso

32-years
29-years
25-years
24-years
21-years
15-years
14-years

2019 Proxy Statement

Plus these directors had an oversized influence on our most
important board committees - holding 12 of the 21
positions. Plus Jeffrey Wilkes received 20% in negative
votes. And then Andrew Abramson (Lead Director), Gerald
Korde, Marc Lenner, Pamela Bronander each received
more than 10% in negative votes.

Also our insider Chairman, Gerald Lipkin, had 32-years
long tenure and our Lead Director, Andrew Abramson, had
long-tenure of 24-years. Long-tenure can impair the
independence of a director -no matter how well qualified.
Independence is a priceless attribute in a Chairman and a
Lead Director.

An independent Chairman is best positioned to build up the
oversight capabilities of our directors while our CEO
addresses the challenging day-to-day issues facing the
company.

Please vote yes:

Independent Board Chairman - Proposal 4

Board of Directors Statement in Opposition to
Shareholder Proposal 4 on

Independent Board Chairman

The Board recommends you vote AGAINST this proposal
for the following reasons:

The Board recognizes that an independent Board is critical
to its role of management oversight and representing the
interests of shareholders. The Board also recognizes the
significance of board refreshment to effective corporate
governance.

The Board believes that its processes and results demonstrate
a continuing commitment to independence and management
oversight as well as Board refreshment.

The proposal requests a specific means to achieve an
independent Board - namely an independent chairperson. An
independent chairperson means separating the CEO and
chairperson position.

The Board believes it is important to preserve flexibility in
choosing the best leadership structure for the Company. The
directors believe that maintaining a strong, independent
board may take different forms. An independent Lead
Director is crucial when the chairperson is not independent.
For the last year, the CEO/Chair position has been separated
but the chairperson was not independent. The Board
anticipates that going forward it may combine the role of
chairperson and CEO. The Board does not believe the
combined Chair/CEO position weakens
independent
corporate governance or impedes its ability to provide

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
2020 proxy materials must be received by the Corporate
Secretary of Valley National Bancorp no later than
November 8, 2019. If we change our 2020 annual meeting
date to a date more than 30 days from the anniversary of our
2019 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 2020 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.

effective independent oversight. An independent chairperson
is not a measure of independent board leadership.

The Board currently believes that independent Board
leadership is effectively provided by the election by the
independent directors of an independent Lead Director. As
provided in the Corporate Governance Guidelines, the Lead
Director:

• Has the responsibility to identify issues for Board
consideration and assist in forming a consensus
among directors;

• Has the authority to call meetings of independent
directors and/or non-management directors and
preside at all executive sessions of independent and
non-management directors;

• Establishes the agenda for all meetings and
executive sessions of the independent directors and/
or non-management directors, with input from other
directors;

• Has the authority to retain outside advisors who
report directly to the Board, with the prior approval
of the Board;

•

Serves as a liaison between the CEO and the other
directors and assists the CEO and/or chairperson
with establishing meeting agendas, meeting
schedules and assuring sufficient
for
discussion of agenda items; and

time

• Leads the independent director evaluation of the
effectiveness of the CEO and any non-independent
Chairman.

Separately, no prevailing empirical evidence supports the
merits of independent chairs.

RECOMMENDATION ON ITEM 4

THE VALLEY BOARD UNANIMOUSLY
RECOMMENDS A VOTE “AGAINST” THE
SHAREHOLDER PROPOSAL.

2019 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

Wayne, New Jersey

March 8, 2019

A copy of our Annual Report on Form 10-K (without exhibits) for the year ended December 31, 2018 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.valley.com/filings.html

2019 Proxy Statement

VALLEY NATIONAL BANCORP
Valley Peer 20
2018 Size Comparisons

Company

Banc of California, Inc.

BankUnited, Inc.

Berkshire Hills Bancorp, Inc.

Community Bank System, Inc.

Cullen/Frost Bankers, Inc.

F.N.B. Corporation

Fulton Financial Corporation

IBERIABANK Corp.

Investors Bancorp, Inc.

New York Community Bancorp, Inc.

Old National Bancorp

PacWest Bancorp

People's United Financial, Inc.

Prosperity Bancshares

Signature Bank

Sterling Bancorp

Texas Capital Bancshares, Inc.

Umpqua Holdings Corporation

United Bankshares, Inc.

Webster Financial Corporation

Valley National Bancorp

Ticker

BANC

BKU

BHLB

CBU

CFR

FNB

FULT

IBKC

ISBC

NYCB

ONB

PACW

PBCT

SBNY

STL

TCBI

UMPQ

UBSI

WBS

VLY

Net Income
(in thous.)

Total Revenue
(in thous.)

Total Assets
(in thous.)

45,472 $

309,991 $

10,630,067 $

324,866

105,765

168,641

454,918

372,858

208,393

370,249

202,576

422,417

190,830

465,339

468,100

321,812

505,342

447,254

300,824

316,263

256,342

360,418

261,428

1,182,115

469,235

569,114

1,309,178

1,208,140

825,981

1,165,810

689,175

1,122,553

732,907

1,189,549

1,602,400

745,605

1,322,265

1,070,600

992,884

1,218,056

717,357

1,189,249

991,255

32,164,326

12,212,231

10,608,359

32,293,000

33,101,840

20,682,152

30,826,166

26,229,008

51,899,376

19,728,435

25,731,354

47,877,300

22,693,402

47,364,816

31,383,307

28,257,767

26,939,781

19,250,498

27,610,315

31,863,088

APPENDIX A

Market
Capitalization
(in mil.)

674.0

2,968.0

1,225.0

2,988.0

5,539.0

3,191.0

2,634.0

3,522.0

2,977.0

4,456.0

2,697.0

4,100.0

5,444.0

4,351.0

5,659.0

3,570.0

2,565.0

3,502.0

3,183.0

4,547.0

2,943.0

2019 Proxy Statement

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Valley.com 800.522.4100

1455 Valley Road • Wayne, NJ 07470