Valley National Bancorp Annual Report 2019

FY2019 Annual Report · Valley National Bancorp

Loading PDF…

Annual Report 2019

VVaVaVaVaVaValllllllllleyeyeyeyeyyyeyy NNNNNNNNNNatatatatatataata ioioioooi nanananananaannal l l ll BaBaBaBaancncnncncncncororororrrpppppp

FoFoFoFoFoFoFFF rmrmrmrmm 111110-0-0-0-0-0-0-00 KK K K K K K K & & & && &&& PrPrPrPrPrPrPrProxoxoxxxoxy yyyy StStStStatatatatatemememememememenenenennenttttt

OUR MISSION
To give people and businesses
the power to succeed.

LETTER TO
OUR SHAREHOLDERS

Dear Shareholders, Customers and
Associates:

There is always a sense of optimism that surrounds the
start of a new year, but when you’re at the beginning
of a new decade, you can’t help but envision the
possibilities ahead. What we envision for the future of
our organization is coming to fruition more and more
with each passing day, month and year.

I’m proud to report that in 2019 we delivered another
year of exceptional performance, and our organization
has emerged stronger and more focused than ever.
(cid:56)(cid:70)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:716)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)(cid:84)(cid:85)(cid:83)(cid:74)(cid:69)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:80)(cid:83)(cid:78)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:86)(cid:83)(cid:84)(cid:70)(cid:77)(cid:87)(cid:70)(cid:84)(cid:1)
into a high-performance organization where our
associates are empowered to make important decisions
and are provided the tools and training to take their
skills to the next level. We’ve enhanced our digital
(cid:67)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:66)(cid:81)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:716)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)(cid:81)(cid:83)(cid:80)(cid:72)(cid:83)(cid:70)(cid:84)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)
changing the customer experience both online and at
our branches. Most importantly, we stayed true to our
commitment to our communities.

This letter is just one of the ways we’re sharing our
accomplishments with our shareholders, customers
and associates and I hope you’re as proud of the
progress we made as I am.

STRONG FINANCIAL PERFORMANCE
(cid:48)(cid:86)(cid:83)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:1)(cid:83)(cid:70)(cid:84)(cid:86)(cid:77)(cid:85)(cid:84)(cid:1)(cid:83)(cid:70)(cid:717)(cid:70)(cid:68)(cid:85)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:84)(cid:85)(cid:83)(cid:80)(cid:79)(cid:72)(cid:1)(cid:70)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:72)(cid:66)(cid:74)(cid:79)(cid:84)(cid:85)(cid:1)
(cid:80)(cid:86)(cid:83)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)(cid:74)(cid:79)(cid:74)(cid:85)(cid:74)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:15)(cid:1)(cid:56)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:74)(cid:79)(cid:86)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:78)(cid:66)(cid:76)(cid:70)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:716)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)
strides toward delivering on our stated goals of
(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:13)(cid:1)(cid:74)(cid:78)(cid:81)(cid:83)(cid:80)(cid:87)(cid:70)(cid:69)(cid:1)(cid:80)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:718)(cid:68)(cid:74)(cid:70)(cid:79)(cid:68)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
(cid:72)(cid:83)(cid:70)(cid:66)(cid:85)(cid:70)(cid:83)(cid:1)(cid:69)(cid:74)(cid:87)(cid:70)(cid:83)(cid:84)(cid:74)(cid:716)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:83)(cid:70)(cid:87)(cid:70)(cid:79)(cid:86)(cid:70)(cid:15)(cid:1)

Our ability to execute on stated initiatives was at
(cid:85)(cid:73)(cid:70)(cid:1)(cid:73)(cid:70)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:15)(cid:1)(cid:56)(cid:70)(cid:1)
(cid:66)(cid:68)(cid:73)(cid:74)(cid:70)(cid:87)(cid:70)(cid:69)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:716)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1)(cid:74)(cid:79)(cid:1)(cid:69)(cid:74)(cid:77)(cid:86)(cid:85)(cid:70)(cid:69)(cid:1)(cid:70)(cid:66)(cid:83)(cid:79)(cid:74)(cid:79)(cid:72)(cid:84)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)
common share and attained our highest return on
average assets since 2011. Net revenues and after-tax
earnings were records of $1.1 billion and $310 million,
respectively, for Valley. Book value per common share
and tangible book value per common share increased
by 9 and 13 percent to $10.35 and $6.73, respectively, in
2019 as compared to one year ago.

As I look ahead to what we have
planned in 2020 and beyond, I can’t
help but be excited about the idea of
making this new decade the best one
in our organization’s great history. We’ll
do it by working together to remain
(cid:85)(cid:72)(cid:79)(cid:72)(cid:89)(cid:68)(cid:81)(cid:87)(cid:15)(cid:3)(cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:15)(cid:3)(cid:72)(cid:73)(cid:388)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)
being the Bank people want to work for
and bank with.

Loan growth has consistently been above industry
averages while maintaining the same prudent
underwriting standards that have long been a hallmark
of Valley. For the full year 2019, organic loan growth was
approximately 9 percent. One measure of credit quality,
non-accrual assets as a percentage of loans, declined
favorably from 0.35 percent at the end of 2018 to 0.31
percent at December 31, 2019.

During the year, we maintained the strength and
quality of Valley’s balance sheet and earnings while
balancing our investments in infrastructure, technology
and new products. We continued to leverage exciting
new technologies in 2019 to improve our operating
(cid:70)(cid:718)(cid:68)(cid:74)(cid:70)(cid:79)(cid:68)(cid:90)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:77)(cid:80)(cid:79)(cid:72)(cid:14)(cid:85)(cid:70)(cid:83)(cid:78)(cid:15)(cid:1)(cid:48)(cid:86)(cid:83)(cid:1)(cid:83)(cid:70)(cid:77)(cid:70)(cid:79)(cid:85)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:71)(cid:80)(cid:68)(cid:86)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)
(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:718)(cid:68)(cid:74)(cid:70)(cid:79)(cid:68)(cid:90)(cid:1)(cid:66)(cid:68)(cid:83)(cid:80)(cid:84)(cid:84)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:80)(cid:83)(cid:72)(cid:66)(cid:79)(cid:74)(cid:91)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
automation initiatives during the year were successful in
driving down our operating expenses. For the year ended
(cid:37)(cid:70)(cid:68)(cid:70)(cid:78)(cid:67)(cid:70)(cid:83)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:13)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:70)(cid:718)(cid:68)(cid:74)(cid:70)(cid:79)(cid:68)(cid:90)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:1)(cid:88)(cid:66)(cid:84)(cid:1)(cid:22)(cid:23)(cid:15)(cid:24)(cid:24)(cid:1)(cid:81)(cid:70)(cid:83)(cid:68)(cid:70)(cid:79)(cid:85)(cid:1)
representing a 6.69 percent absolute improvement
compared to the year ended December 31, 2018.

As expenses remained virtually unchanged, we still
generated growth in net revenues of $121.3 million or
approximately 12 percent compared to 2018. Our ability
to drive operating leverage is attributed to the initiatives
we outlined over the past years and validates our
ability to execute on them. Both net interest income and
noninterest income grew at a solid pace as we produced
strong loan growth and recognized a substantial gain
from the sale and leaseback of several Valley properties
in 2019.

Our 2019 earning per diluted common share of $0.87
was up 17 percent compared to 2018. We are proud of
this accomplishment since we delivered these results
in a challenging macroeconomic environment which
has put pressure on net interest margins for the entire
industry. Our return on average assets improved notably
and represented our highest level of performance since
2011. Our return on average assets for 2019 increased 7
basis points to 0.93 percent as compared to 0.86 percent
in the prior year.

One of the biggest stories for us in 2019 was our
December acquisition of New Jersey-based Oritani
Bank. Oritani had approximately $4.3 billion in assets,
$3.4 billion in net loans, $2.9 billion in deposits, after
purchase accounting adjustments, and a branch network
of 26 locations. This acquisition doubled our market

NONINTEREST INCOME
TO NET REVENUE
(in percent)

2017

2018

2019

20171

20182

20193

14.5

13.5

19.3

LOAN GROWTH
(in percent)

4.0

14.3

8.6

1Percent change for 2017 reflects an adjustment to the ending balance of
approximately $184 million in loans that were purchased during the year.

2Percent change for 2018 reflects an adjustment to the beginning balance of
approximately $3.8 billion in loans that were acquired from USAmeriBank.

3Percent change for 2019 reflects an adjustment to the ending balance of
approximately $3.4 billion in loans that were acquired from Oritani Bank and
$0.8 billion of loans that were sold.

EFFICIENCY RATIO
(in percent)

2017

2018

2019

66.0

63.5

56.8

share in Bergen County, New Jersey – one of
(cid:85)(cid:73)(cid:70)(cid:1)(cid:78)(cid:80)(cid:84)(cid:85)(cid:1)(cid:66)(cid:719)(cid:86)(cid:70)(cid:79)(cid:85)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:71)(cid:80)(cid:80)(cid:85)(cid:81)(cid:83)(cid:74)(cid:79)(cid:85)(cid:1)(cid:114)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
bolstered capital, providing greater balance
sheet optionality and the acceleration of our
strategic initiatives. Oritani’s conservative credit
culture, combined with their customer focus
mirrors Valley’s vision. The systems conversion
in February 2020 and the integration of Oritani’s
operations into Valley has progressed seamlessly.

The acquisition of Oritani played an important role
in growing our bank. With approximately $37.5
billion in assets, Valley is now the 39th largest
commercial bank in the country excluding banks
that are based outside of the U.S.

(cid:45)(cid:66)(cid:84)(cid:85)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:88)(cid:70)(cid:1)(cid:78)(cid:70)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:1)(cid:81)(cid:74)(cid:80)(cid:79)(cid:70)(cid:70)(cid:83)(cid:84)(cid:1)
to introduce new and better ways to improve
our customers’ banking experience. And these
partnerships have already produced amazing results,
helping us simplify processes, enhance security and
add valuable digital functionality for both commercial
and consumer customers.

Valley is even supporting the broader ecosystem
of organizations that incubate and support early
stage innovative companies. Over the last couple of
years, we’ve developed strong relationships with
organizations like the New Jersey Tech Council, the
accelerator Tampa Bay Wave, Silicon Valley’s Plug
and Play and Quesnay in New York City to sponsor

and support programs that can help
technology companies grow and
develop.

Our commitment to innovation has ignited a
passion for creative thought and new ideas.

Also, in 2019, we launched a new
(cid:67)(cid:83)(cid:66)(cid:79)(cid:69)(cid:13)(cid:1)(cid:55)(cid:66)(cid:77)(cid:77)(cid:70)(cid:90)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:716)(cid:83)(cid:84)(cid:85)(cid:1)
product in that brand is an end-to-
end digital savings account featuring
one of the most competitive savings
rates in the market. Valley Direct
marks a major milestone in our
strategic vision, helping us to grow
deposits, enhance the digital experience and expand
our customer base beyond our geographic footprint.

At the end of the day, innovation is about people and
Valley is focused on empowering our associates to be
part of the process. Through in-depth Design Thinking
workshops, innovation challenges, hackathons
and other opportunities, we’re challenging people
to think creatively for solutions that can improve
our operations and, most importantly, enhance the
customer experience. This is our way forward to
maintain relevancy in a rapidly evolving industry and a
new era in banking.

CREATING A BETTER CUSTOMER
EXPERIENCE
Today’s banking experience looks nothing like it did
10 years ago – and in 10 years it will look nothing
like it does today. We understand that people have
(cid:69)(cid:74)(cid:715)(cid:70)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:88)(cid:66)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:79)(cid:70)(cid:70)(cid:69)(cid:84)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:88)(cid:70)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:85)(cid:77)(cid:90)(cid:1)
innovating to meet those expectations. Loyalty is
hard won these days because customers are less
attached to brands and more concerned about having

Shareholder value creation is a top priority.
As previously noted, we delivered 13 percent
tangible book value growth for the full year while
announcing and closing the Oritani acquisition.
Our growth has continued while paying a
meaningful cash dividend and reinvesting in our
products, people and infrastructure.

RELEVANCY IN A NEW ERA
As the saying goes: the only constant is change. The
customer experience is undergoing an evolution
– one built on technology and innovation bringing
change at an unprecedented pace. Digital tools are
making banking faster and easier than ever. And
with this disruption comes endless opportunities.
Our commitment to innovation has ignited a
passion for creative thought and new ideas. In
2019, we expanded our focus on innovation aimed
(cid:66)(cid:85)(cid:27)(cid:1)(cid:69)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:74)(cid:79)(cid:72)(cid:1)(cid:69)(cid:74)(cid:715)(cid:70)(cid:83)(cid:70)(cid:79)(cid:85)(cid:74)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:81)(cid:83)(cid:80)(cid:69)(cid:86)(cid:68)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)
for current and future customers; broadening our
network of partnerships with the vast ecosystem
(cid:80)(cid:71)(cid:1)(cid:84)(cid:85)(cid:66)(cid:83)(cid:85)(cid:86)(cid:81)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:716)(cid:79)(cid:85)(cid:70)(cid:68)(cid:73)(cid:84)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:79)(cid:68)(cid:80)(cid:86)(cid:83)(cid:66)(cid:72)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:79)(cid:1)
innovative culture across the organization.

an exceptional experience. That’s why the customer
experience is so important to us.

and value to all customer interactions at Valley
branches.

(cid:34)(cid:84)(cid:1)(cid:66)(cid:1)(cid:83)(cid:70)(cid:84)(cid:86)(cid:77)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:70)(cid:715)(cid:80)(cid:83)(cid:85)(cid:84)(cid:13)(cid:1)(cid:88)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:69)(cid:1)(cid:84)(cid:80)(cid:78)(cid:70)(cid:1)(cid:87)(cid:70)(cid:83)(cid:90)(cid:1)
positive feedback. Our Net Promoter Score (NPS)
– a widely used customer satisfaction metric that
measures how likely customers are to recommend
a business, has continued to improve consecutively
year over year since 2017.

Valley is committing more resources and
investments to developing new solutions that
leverage data, advanced analytics, digital
technologies and new delivery platforms to improve
the way we serve customers. To reinforce this
commitment, we assembled a Customer Strategy
Team focused entirely on improving the customer
experience and making sure every product, service
and method of banking is based on what our clients
want and need.

As another part of our commitment to creating a
better customer experience, we launched one of
the most ambitious projects in our Bank’s history
with Branch Transformation. Branches are being
redesigned to integrate new digital services while
creating more open space and less barriers between
customers and Valley associates. In addition to the
physical changes, we’re transforming the way we
(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:1)(cid:68)(cid:86)(cid:84)(cid:85)(cid:80)(cid:78)(cid:70)(cid:83)(cid:84)(cid:15)(cid:1)(cid:48)(cid:86)(cid:83)(cid:1)(cid:79)(cid:70)(cid:88)(cid:1)(cid:67)(cid:83)(cid:66)(cid:79)(cid:68)(cid:73)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:84)(cid:85)(cid:66)(cid:715)(cid:70)(cid:69)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)
talented professionals who are trained to perform
everything from accepting deposits and cashing
checks, to opening accounts, processing loans and
(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:72)(cid:86)(cid:74)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:15)(cid:1)(cid:53)(cid:73)(cid:74)(cid:84)(cid:1)(cid:79)(cid:70)(cid:88)(cid:1)(cid:67)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)
(cid:78)(cid:80)(cid:69)(cid:70)(cid:77)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:84)(cid:1)(cid:66)(cid:69)(cid:69)(cid:70)(cid:69)(cid:1)(cid:68)(cid:80)(cid:79)(cid:87)(cid:70)(cid:79)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:13)(cid:1)(cid:717)(cid:70)(cid:89)(cid:74)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)

SHAPING OUR CULTURE FOR TOMORROW
Everything we achieve comes from the hard
work and dedication of our people. That’s why
we’re making substantial investments in people
(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:70)(cid:68)(cid:73)(cid:79)(cid:80)(cid:77)(cid:80)(cid:72)(cid:90)(cid:1)(cid:85)(cid:80)(cid:1)(cid:78)(cid:66)(cid:76)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:74)(cid:83)(cid:1)(cid:75)(cid:80)(cid:67)(cid:84)(cid:1)(cid:78)(cid:80)(cid:83)(cid:70)(cid:1)(cid:70)(cid:718)(cid:68)(cid:74)(cid:70)(cid:79)(cid:85)(cid:1)
and to deliver both a better customer and
employee experience. This means ensuring that
our associates have access to better education
and training, and opportunities to take on more
leadership roles throughout the organization.
Employee engagement continues to be a key focus
at Valley. In 2019, we designed a more insightful
employee engagement survey to allow for
transparent feedback that can help us make positive
changes based on the needs of our associates.
This invaluable feedback uncovers opportunities
for improvement, areas of strength to leverage
and gives guidance on actions required to enhance
engagement and performance.

By fostering an inclusive work environment which
embraces diverse perspectives and backgrounds,
we’re able to attract and retain talented and
dedicated individuals. Creating this type of work
environment inspires collaboration and innovation
– all key elements in our strategy for growth and
relevancy.

In 2019, we also made a series of executive
promotions, which further strengthens our
leadership team and succession planning for the
future of Valley. A key change was the appointment
of Michael Hagedorn to join our executive leadership
(cid:85)(cid:70)(cid:66)(cid:78)(cid:1)(cid:66)(cid:84)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:36)(cid:73)(cid:74)(cid:70)(cid:71)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:48)(cid:718)(cid:68)(cid:70)(cid:83)(cid:15)(cid:1)(cid:34)(cid:1)(cid:71)(cid:80)(cid:83)(cid:78)(cid:70)(cid:83)(cid:1)
President and CEO for a mid-size bank, Michael will
(cid:77)(cid:70)(cid:66)(cid:69)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:76)(cid:70)(cid:90)(cid:1)(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:70)(cid:84)(cid:1)
for the bank, while working closely with the Board
(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:77)(cid:70)(cid:66)(cid:69)(cid:70)(cid:83)(cid:84)(cid:73)(cid:74)(cid:81)(cid:1)(cid:85)(cid:80)(cid:1)(cid:69)(cid:70)(cid:716)(cid:79)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:89)(cid:70)(cid:68)(cid:86)(cid:85)(cid:70)(cid:1)
all corporate plans and initiatives. He is a highly
successful leader who brings a wealth of knowledge
to this critical role. His deep experience in banking
(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:71)(cid:66)(cid:68)(cid:70)(cid:85)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:67)(cid:70)(cid:1)(cid:66)(cid:1)(cid:85)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:69)(cid:80)(cid:86)(cid:84)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)
to our organization.

BUILDING STRONGER COMMUNITIES
We’ve always been passionate about addressing
local community issues, expanding social
awareness and making a positive and sustainable
economic impact on people’s lives. We know that
we play an essential role in creating stronger
communities. That’s why we’ve built stronger
relationships with organizations like Habitat for
Humanity, Big Brothers Big Sisters and community
food banks, across all the communities we serve.
(cid:34)(cid:79)(cid:69)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:70)(cid:715)(cid:80)(cid:83)(cid:85)(cid:84)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:79)(cid:110)(cid:85)(cid:1)(cid:72)(cid:80)(cid:79)(cid:70)(cid:1)(cid:86)(cid:79)(cid:79)(cid:80)(cid:85)(cid:74)(cid:68)(cid:70)(cid:69)(cid:15)

We’re proud to share that Valley received
(cid:66)(cid:79)(cid:1)(cid:48)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:48)(cid:718)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
Comptroller of the Currency for exceeding the
terms of the Community Reinvestment Act exam.
This is an honor and distinction received by less
(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:18)(cid:17)(cid:1)(cid:81)(cid:70)(cid:83)(cid:68)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:84)(cid:85)(cid:74)(cid:85)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:77)(cid:66)(cid:84)(cid:85)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:15)(cid:1)
The Community Reinvestment Act requires banks
to meet the credit needs of low- and moderate-
income communities across America and rates
institutions in three categories: lending, investment
(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:15)(cid:1)(cid:53)(cid:80)(cid:1)(cid:67)(cid:70)(cid:85)(cid:85)(cid:70)(cid:83)(cid:1)(cid:69)(cid:70)(cid:716)(cid:79)(cid:70)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:68)(cid:80)(cid:78)(cid:78)(cid:74)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)
(cid:68)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:84)(cid:80)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:84)(cid:81)(cid:80)(cid:79)(cid:84)(cid:74)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:88)(cid:70)(cid:110)(cid:87)(cid:70)(cid:1)(cid:74)(cid:69)(cid:70)(cid:79)(cid:85)(cid:74)(cid:716)(cid:70)(cid:69)(cid:1)(cid:71)(cid:80)(cid:86)(cid:83)(cid:1)
(cid:76)(cid:70)(cid:90)(cid:1)(cid:81)(cid:74)(cid:77)(cid:77)(cid:66)(cid:83)(cid:84)(cid:27)(cid:1)(cid:81)(cid:83)(cid:80)(cid:78)(cid:80)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:715)(cid:80)(cid:83)(cid:69)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:73)(cid:80)(cid:78)(cid:70)(cid:84)(cid:28)(cid:1)(cid:74)(cid:79)(cid:84)(cid:81)(cid:74)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)
innovation through entrepreneurship; stimulating
economic and community development; and living
our commitment to impactful, local, leadership.
(cid:48)(cid:86)(cid:83)(cid:1)(cid:68)(cid:80)(cid:78)(cid:78)(cid:74)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:84)(cid:70)(cid:1)(cid:81)(cid:74)(cid:77)(cid:77)(cid:66)(cid:83)(cid:84)(cid:1)(cid:83)(cid:70)(cid:717)(cid:70)(cid:68)(cid:85)(cid:84)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:67)(cid:70)(cid:77)(cid:74)(cid:70)(cid:71)(cid:1)
that corporate social responsibility is fundamental
to our culture and purpose.

Additionally, in our major markets, we established
Community Advisory Boards. Our boards are in the
New Jersey and New York-region, as well as Florida
(cid:66)(cid:79)(cid:69)(cid:1)(cid:34)(cid:77)(cid:66)(cid:67)(cid:66)(cid:78)(cid:66)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:83)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:73)(cid:74)(cid:72)(cid:73)(cid:77)(cid:90)(cid:1)(cid:82)(cid:86)(cid:66)(cid:77)(cid:74)(cid:716)(cid:70)(cid:69)(cid:1)
community leaders who provide valuable feedback
to Valley’s management.

We’re cognizant of our role and impact on society
as a responsible corporate citizen. That’s why we
continue to integrate Environmental, Social and
Governance (ESG) considerations in all aspects
of our business – from lending, investments,
policies and principles to corporate philanthropy
and sustainability. These ESG factors align with
our long-term strategy, strengthening our risk
management framework and adding sustainable
value to our organization.

In late 2019, we joined a consortium consisting of
(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:84)(cid:85)(cid:74)(cid:85)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:13)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:72)(cid:80)(cid:87)(cid:70)(cid:83)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:66)(cid:77)(cid:1)(cid:80)(cid:83)(cid:72)(cid:66)(cid:79)(cid:74)(cid:91)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)
and law enforcement agencies that was tasked
(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:69)(cid:74)(cid:84)(cid:83)(cid:86)(cid:81)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:69)(cid:74)(cid:84)(cid:78)(cid:66)(cid:79)(cid:85)(cid:77)(cid:74)(cid:79)(cid:72)(cid:1)(cid:73)(cid:86)(cid:78)(cid:66)(cid:79)(cid:1)(cid:85)(cid:83)(cid:66)(cid:718)(cid:68)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)
networks operating in the Miami-Dade area during
the 2020 professional football championship game.
(cid:41)(cid:86)(cid:78)(cid:66)(cid:79)(cid:1)(cid:85)(cid:83)(cid:66)(cid:718)(cid:68)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:74)(cid:79)(cid:68)(cid:83)(cid:70)(cid:66)(cid:84)(cid:70)(cid:84)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:79)(cid:70)(cid:79)(cid:85)(cid:74)(cid:66)(cid:77)(cid:77)(cid:90)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)
national sporting events and we were proud to be part
(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:74)(cid:84)(cid:1)(cid:68)(cid:80)(cid:77)(cid:77)(cid:66)(cid:67)(cid:80)(cid:83)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:70)(cid:715)(cid:80)(cid:83)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:716)(cid:72)(cid:73)(cid:85)(cid:1)(cid:73)(cid:86)(cid:78)(cid:66)(cid:79)(cid:1)(cid:85)(cid:83)(cid:66)(cid:718)(cid:68)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:74)(cid:79)(cid:1)
all its forms.

For us, being a local bank is about more than
just expanding business opportunities. It’s about
embracing our role as a leader for our communities’
success. Because, at the end of the day, we know that
we are only as strong as the communities we serve.

A VISION FOR 2020
For all our many achievements and success, we
know there’s still more to do.

Technology and seismic shifts in customer
preferences continue to disrupt and revolutionize
our industry. We’re embracing these changes and
reimagining our vision of how banking is done with
bold, new ideas. Our goal is to drive change and
create a better experience for our customers and for
(cid:85)(cid:73)(cid:70)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:716)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:84)(cid:85)(cid:66)(cid:76)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:15)(cid:1)(cid:56)(cid:70)(cid:110)(cid:87)(cid:70)(cid:1)(cid:79)(cid:70)(cid:87)(cid:70)(cid:83)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)
more excited about the direction of our bank and we
hope you share our enthusiasm. It’s our mission to
continue to prove it to you every day in everything
we do.

As we look ahead to what we have planned in
2020 and beyond, we can’t help but be enthusiastic
about making this new decade the best one in
our organization’s great history. We’ll accomplish
this goal by working together to remain relevant,
(cid:74)(cid:79)(cid:79)(cid:80)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:13)(cid:1)(cid:70)(cid:718)(cid:68)(cid:74)(cid:70)(cid:79)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:67)(cid:70)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:81)(cid:70)(cid:80)(cid:81)(cid:77)(cid:70)(cid:1)
want to work for and bank with.

On behalf of our directors, the Valley management
team and our valued associates, I thank you for your
continued trust and support.

Ira Robbins
President & CEO

SHAREHOLDER RELATIONS

COCOCOCOCOCOCCOCC RPRPRPRPRPRPPR ORORORORORORATATATATATTEEEEEE HEHEHEHEEHEHEEADADADADAADADDQUQUQUQUQUQUQUARARARARARAARARTETETETETETERSRSRSRSRSSR

Valley National Bancorp
One Penn Plaza
New York, New York 10119

FOFFOFOFOFOFOFFFORMRMRMRMRMMRMRMM 111110-0-0-0--KKKKK

You may obtain a copy
of Valley National Bancorp’s
2019 Annual Report on Form 10-K
by submitting a request in writing to:

Tina Zarkadas

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

FIFIFIFIFFF NANANANANANANAAAANCNCNCNCNCCCCIAIAIAIAAAIAAIAL LLLLL INININININNINFOFOFOFOFOFOFFOFORMRMRMRMRRMRMR ATATATATATATTTIOIOIOIIOOOONNNNNNN

STSTSTSSTSTSSTSTOCOCOCCOCOCOOCK KKKKKK LILILILILILISTSSTSTSTSTSSSS INNNINNNGGGGGG

Investors, security analysts and others seeking
(cid:716)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:84)(cid:73)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:84)(cid:86)(cid:67)(cid:78)(cid:74)(cid:85)(cid:1)(cid:66)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)
writing to:

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

Rick Kraemer

First Senior Vice President,
(cid:42)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:80)(cid:83)(cid:1)(cid:51)(cid:70)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:48)(cid:718)(cid:68)(cid:70)(cid:83)
Valley National Bancorp
1455 Valley Road
Wayne, New Jersey 07470
rkraemer@valley.com

ANANANANANANNAANNUNUNUNUNUNUNUNUALALALAALA MMMMMMMMEEEEEEEEEEEEEEETITITITITITTT NGNGNGNGNGNG

May 1, 2020
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, 2019

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)

One Penn Plaza
New York, NY
(Address of principal executive office)

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

10119
(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

g y
Trading Symbols

VLY
VLYPP
VLYPO

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

(cid:3)(cid:3)(cid:3)No

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 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

No N

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $3.5 billion on June 30, 2019.

There were 403,748,667 shares of Common Stock outstanding at March 10, 2020.

Documents incorporated by reference:

Certain portions of the registrant’s Definitive Proxy Statement (the “2020 Proxy Statement”) for the 2020 Annual Meeting of

Shareholders to be held May 1, 2020 will be incorporated by reference in Part III. The 2020 Proxy Statement will be filed within 120 days of
December 31, 2019.

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

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

Item 15.

Exhibits and Financial Statement Schedules

Signatures

Pageg

143

147

150

155

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, 2019, Valley had
consolidated total assets of $37.4 billion, total net loans of $29.5 billion, total deposits of $29.2 billion and total shareholders’
equity of $4.4 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, 2019 through which trust preferred securities were issued. These trusts are not consolidated
subsidiaries. See Note 12 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 238 branches serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens,
Long Island, Florida and Alabama. The Bank offers a full suite of banking solutions through various commercial, retail, insurance
and wealth management financial services products. These products include, but are not limited to, traditional commercial and
industrial lending, commercial real estate financing, small business loans, equipment, basic consumer and commercial deposit
products, personal financing solutions such as residential mortgages, home equity loans and automobile financing, as well as
solutions for homeowners associations and a full service line of cash management solutions. The Bank 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.

Our primary focus is to build and develop profitable customer relationships across all lines of business and create a convenient
and innovative omni-channel customer experience beyond our traditional branch footprint, including our recent launch of
ValleyDirect on-line savings account.

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 the Securities and Exchange Commission (SEC);

a title insurance agency in New York which also provides 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.

2019 Form 10-K

Oritani Financial Corp. On December 1, 2019, Valley completed its acquisition of Oritani Financial Corp. ("Oritani")
and its wholly-owned subsidiary, Oritani Bank. Oritani had approximately $4.3 billion in assets, $3.4 billion in net loans, $2.9
billion in deposits, after purchase accounting adjustments, and a branch network of 26 locations. The acquisition represents a
significant addition to Valley's New Jersey franchise, and will meaningfully enhance its presence in the Bergen County market.
The common shareholders of Oritani received 1.60 shares of Valley common stock for each Oritani share that they owned prior
to merger. The total consideration for the acquisition was approximately $835 million, consisting of approximately 71.1 million
shares of Valley common stock and the outstanding Oritani stock-based awards.

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 owned prior to merger. 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.

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.

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 23 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 $4.8 billion and represented
16.2 percent of the total loan portfolio at December 31, 2019. We make commercial loans to small and middle market businesses
most often located in New Jersey, New York, Florida and Alabama. Loans originated from Florida accounted for approximately
30 percent of total commercial and industrial loans at December 31, 2019 as compared to 28 percent of such loans at December 31,
2018. 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 occur as expected and the
collateral securing these loans may fluctuate in value. In the case of loans secured by accounts receivable, the ability of the borrower
to collect all amounts due from its customers may be impaired. 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 receivablea
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 $606.1 million at December 31, 2019. In addition,
we provide financing to the health care and industrial equipment leasing market through our leasing subsidiary, Highland Capital
Corp.

2019 Form 10-K

The commercial portfolio also includes approximately $107.5 million and $7.3 million of New York City and Chicago taxi
medallion loans at December 31, 2019, respectively, which we continue to closely monitor due to the weakness exhibited in the
taxi industry caused by strong competition from alternative ride-sharing services. At December 31, 2019, the medallion portfolio
included impaired loans totaling $87.1 million with related reserves of $35.5 million within the allowance for loan losses. While
most of the taxi medallion loans within the portfolio at December 31, 2019 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 $17.6 billion and represented 59.5
percent of the total loan portfolio at December 31, 2019. We originate commercial real estate loans that are secured by various
diversified property types across the New York metropolitan area (New Jersey, New York and Pennsylvania) along with Florida
and our Alabama footprint. Property types in this portfolio range from multi-family residential properties to non-owner occupied
commercial, industrial/warehouse and retail. Loans originated from Florida lending represented 25 percent of the total commercial
real estate loans at December 31, 2019 as compared to 28 percent of such loans at December 31, 2018. 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 $1.6 billion at December 31, 2019 are generally secured by the real estate aa
to be developed and may also be secured by additional real estate to mitigate the risk. Within our construction portfolio we have
a diverse mix of both residential (for sale and rental) and commercial development projects. 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 $4.4 billion and represented 14.7 percent of the total loan
portfolio at December 31, 2019. 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 $1.0 billion and $898 million at December 31, 2019 and 2018, 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 $54.6 million (or 1.3 percent of the total residential mortgage loan portfolio) at December 31, 2019. The

2019 Form 10-K

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.

Other consumer loans. Other consumer loans totaled $2.9 billion and represented 9.6 percent of the total loan portfolio at
December 31, 2019. 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 $169 million and $154 million of auto loans in 2019 and 2018, respectively, while the
auto loans originated from Alabama totaled $39.4 million in 2019 as compared to $5.4 million 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 WW
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 $53.9 million, including
$8.2 million of credit card loans, at December 31, 2019.

Wealth Management. Our Wealth Management and Insurance Services Division provides asset management advisory
services, 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, 2019,
our total investment securities and interest bearing deposits with banks were $3.9 billion and $178.4 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, 2019 and 2018, approximately 76 percent and 74 percent, respectively, of Valley’s gross loans totaling
$29.7 billion and $25.0 billion, respectively, consisted of commercial real estate (including construction loans), residential
mortgage, and home equity loans. The remaining 24 percent and 26 percent at December 31, 2019 and 2018, respectively, consisted
of loans not collateralized by real estate. Valley has no internally planned changes that would significantly impact the current
composition of our loan portfolio by loan type. However, we have continued to diversify the geographic concentrations in the
New Jersey and New York City Metropolitan area within our loan portfolio primarily through our bank acquisitions in Florida
since 2014, including our 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 Item 7—Management’s Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) in this report for further discussion of our loan composition and concentration risks.

2019 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, 2019.

New Jersey
New York
Florida
Pennsylvania
Alaba ama
California
Connecticut
Other

Total

Percentage of Loan Portfolio Segment:

Commercial
and
Industrial

Commercial
Real Estate

Residential

Consumer

% of Total
Loans

27%
27
30
1
1
2
1
11
100%

28%
37
25
3
2
1

4
100%

41%
28
20
2
1
4
1
3
100%

36%
28
17
8
2
1
2
6
100%

30%
34
24
3
2
1
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 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 briefed on information and cyber security matters, preparedness and any incidents requiring a
response.

2019 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 appetite. Management reviews and approves these policies and procedures on a regular
basis with subsequent approval by the Board of Directors annually. Credit authority relating to a significant dollar percentage of
the overall portfolio is centralized and controlled by the Credit Risk Management Division and by a Credit Committee. A reporting
system supplements the review process by providing management with frequent reports concerning loan production, loan quality,
internal loan classifications, 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

2019 Form 10-K

or the physical aspects of the property which may negatively impact the collectability of our loan. In general, the period of time
an appraisal continues to be relevant will vary depending upon the circumstances affecting the property and the marketplace.
Examples of factors that could cause material changes to reported values include the passage of time, the volatility of the local
market, the availability of financing, the inventory of competing properties, new improvements to, or lack of maintenance of, thett
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 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 (CRA), as well as other
asset/liability management strategies. Valley purchased approximately $35 million and $105 million of 1-4 family loans, qualifying
for CRA purposes during 2019 and 2018, respectively. 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.

2019 Form 10-K

Purchased commercial loans (including commercial and industrial and commercial real estate loans), and residential
mortgage loans totaled approximately $741.7 million and $955.2 million, respectively, at December 31, 2019 representing 3.56
percent, and 21.82 percent of our total commercial and residential mortgage loans, respectively.

At December 31, 2019, the commercial real estate loans originated by third parties had loans past due 30 days or more
totaling 1.51 percent as compared to 0.12 percent for our total commercial real estate portfolio, including all delinquencies.
Residential mortgage loans originated by third parties had loans past due 30 days or more totaling 1.85 percent of these loans at
December 31, 2019 as compared to 0.53 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 our MD&A 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 17th in competitive ranking and market share based on the deposits reported by 187 FDIC-insured financial
institutions in the New York, Northern New Jersey and Long Island deposit markets as of June 30, 2019. The FDIC also ranked
Valley 7th, 37th, 22nd, and 16th in the states of New Jersey, New York, Florida, and Alabama, respectively, based on deposit
market share as of June 30, 2019. 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. In
addition, we face an intense competition among direct banks because online banking provides customers the ability to rapidly
deposit and withdraw funds and open and close accounts in favor of products and services offered by competitors. 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 238 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, 2019, Valley National Bank and its subsidiaries employed 3,174 full-time equivalent persons. Management

considers relations with its employees to be satisfactory.

2019 Form 10-K

Information about our Executive Officers

Name

Ira Robbins

Michael D.
Hagedorn

Thomas A.
Iadanza

Ronald H. Janis

Robert J.
Bardusch

Melissa F.
Scofield

Yvonne M.
Surowiec

Mark Saeger

Mitchell L.
Crandell

Age at
December 31,
2019
45

Executive
Officer
Since
2009

2019

2015

2017

2016

2015

2017

2018

2007

Office

Principal occupation during last five
years other than Valley

Chairman of the Board, President, and
Chief Executive Officer of Valley and
Valley National Bank

Senior Executive Vice President, Chief
Financial Officer of Valley and Valley
National Bank.

2015 - 2018 Vice Chairman, UMB
Financial Corporation, President and
CEO, UMB Bank n.a.

Senior Executive Vice President of
Valley and Chief Banking Officer of
Valley National Bank

Senior Executive Vice President,
General Counsel, and Corporate
Secretary 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 Risk Officer of Valley National
Bank

1992 - 2016 Partner, SEC, Banking and
Merger & Acquisitions, Day Pitney
LLP

2014 - 2016 Executive Vice President,
Chief Information Officer, Head of
Technology and Operations, MVB
Financial Corp.
2015 Assistant Deputy Comptroller,
National Bank Examiner and Federal
Thrift Regulator, Office of the
Comptroller of the Currency, New York
Metro. Field Office

Senior Executive Vice President of
Valley and Chief Human Resources
Officer of Valley National Bank

2014 - 2016 Executive Vice President
and Chief Human Resources Officer,
CDK Global

Executive Vice President of Valley and
Chief Credit Officer of Valley National
Bank

Executive Vice President, Chief
Accounting Officer of Valley and
Valley National Bank

2012 - 2015 Managing Director of
Credit, Santander Bank, N.A.

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

Available Information

The SEC maintains a website at www.sec.gov which contains reports and other information filed with the SEC electronically.
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 our 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.

2019 Form 10-K

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
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

The FRB and the OCC have rules establishing a comprehensive capital framework for U.S. banking organizations, referred

to 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 also maintain a 2.5 percent “capital conservation
buffer” 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. Basel III also
provides for a number of complex deductions from and adjustments to its various capital components.

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.

With respect to Valley National Bank, Basel III also revised the “prompt corrective action” regulations of FDICIA, by (i)
introducing a CET1 ratio requirement at each capital quality level (other than critically undercapitalized); (ii) increasing the

2019 Form 10-K

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.

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, 2019, under the “prompt corrective action” regulations.

In December 2018, the Federal Banking Agencies issued a final rule to address regulatory capital treatment of credit loss
allowances under the current expected credit loss (“CECL”) model. The CECL model was effective for Valley as of January 1,
2020. The final rule revised the Federal Banking Agencies’ regulatory capital rules to identify which credit loss allowances under
the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over ee
three years any day-one adverse effects on regulatory capital that may result from the adoption of the CECL model.

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

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 Board (FRB) 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 FRB 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 FRB. The FRB also has rules governing routing and exclusivity that require issuers to offer
two unaffiliated networks for routing transactions on each debit or prepaid product. Because 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). The rule also
effectively prohibits most short-term trading strategies investments and prohibits the use of some hedging strategies. We identified
no investments held as of December 31, 2019 that meet the definition of Covered Funds.

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.

2019 Form 10-K

The Federal Reserve reviews, 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.

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 by the Bank 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. Regulation W governs and limits
transactions between the Bank and Valley.

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 “outstanding” CRA rating in its most recent examination.

A bank which does not have a CRA program that is deemed satisfactory or better by its regulator may be prevented from

making acquisitions.

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 Statesaa
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.

2019 Form 10-K

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 (OFAC)

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
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.

2019 Form 10-K

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 year. 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 also requires 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, certain residential loans, derivative positions, trust preferred securities issued to our capital trusts, and the reset provisions
for our preferred stock issuances are based upon LIBOR. The Bank has established a working group to identify and prepare
replacement provisions.

Prohibitions Against Tying Arrangements

Banks are subject to the prohibitions of 12 U.S.C. Section 1972 on certain tying arrangements. A depository institution is
prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration
for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or
its affiliates or not obtain services of a competitor of the institution.

Item 1A.

Risk Factors

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

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

The success of our merger with Oritani (which was completed in the fourth quarter 2019) will depend, in part, on Valley’s
ability to realize anticipated cost savings and to combine the businesses of Valley and Oritani in a manner that permits growth
opportunities to be realized and does not materially disrupt the existing customer relationships of Oritani nor result in decreased
revenues due to any loss of customers. However, to realize these anticipated benefits, the businesses of Valley and Oritani must
be successfully combined. If the combined company is not able to achieve these objectives, the anticipated benefits of the merger
may not be realized fully or at all or may take longer to realize than expected. The anticipated cost savings from the merger area
largely expected to derive from the closure of certain Valley or Oritani branches and from the absorption by Valley of many of
Oritani’s back-office administrative functions and the conversion of Oritani’s operating platform to Valley’s systems. Valley
completed the conversion of Oritani's operating platform and closed 6 of the 26 acquired branch offices during February 2020.
However, some normal post-systems integration matters involving back-office and other functions, as well as further planned
branch consolidation efforts, were still underway at the filing date of this report.

Another expected benefit from the merger is an expected increase in the revenues of the combined company from anticipated
sales of Valley’s wider variety of financial products, and from increased lending out of Valley’s substantially larger capital base,
to Oritani’s existing customers and to new customers in Oritani’s market area who may be attracted by the combined company’s
enhanced offerings. An inability to successfully market Valley’s products to Oritani’s customer base could cause the earnings of
the combined company to be less than anticipated.

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

Valley’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference
between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on

2019 Form 10-K

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 in 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.

Financial institutions can be affected by changing conditions in the real estate and financial markets. Weak economic
conditions could result in financial stress on our borrowers that would adversely affect our financial condition and results of
operations. Volatility in the housing markets, real estate values and unemployment levels could result in significant write-downs ww
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 business, financial condition and results of operations could be adversely affected by the outbreak of pandemic disease,

acts of terrorism, and other external events.

The emergence of widespread health emergencies or pandemics, such as the potential spread of the coronavirus, could lead
to regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability.
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.

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, prior to 2019, 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. Third parties
perform diligence on these investments for us on which we rely both at inception and on an on-going 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 leased back by DC Solar and its affiliates (DC Solar). DC Solar
had its assets frozen in December 2018 by the U.S. Department of Justice. DC Solar and related entities are in Chapter 7 bankruptcy.
A group of investors who purchased mobile solar generators from, and leased them back to, DC Solar, including us received tax
credits for making these renewable resource investments. During the fourth quarter 2019, several of the co-conspirators pleaded
guilty to fraud in the on-going federal investigation. Based upon this new information, Valley deemed that its tax positions related
to the DC Solar funds did not meet the more likely than not recognition threshold in Valley's tax reserve assessment at December
31, 2019. As a result, our net income for the year ended December 31, 2019 included an increase to our provision for income taxes
of $31.1 million, reflecting the reserve for uncertain tax liability positions related to tax credits and other tax benefits previously
recognized from the investments in the DC Solar funds plus interest. The principals pled guilty to fraud in early 2020.

2019 Form 10-K

While we believe that Valley was fully reserved for the tax positions related to DC Solar at December 31, 2019, we continue to
evaluate all our existing tax positions each quarter under U.S. GAAP. If we are required to recognize an increase to our uncertain
tax position liability in our 2020 consolidated financial statements, the resulting charge to income tax expense may have an adverse
impact on our results of operations and financial condition.

The 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 FRB. Other financial services regulators and industry groups are evaluating the
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 impact of the possible replacement of the LIBOR benchmark interest rate, and
whether the alternative rates the FRB expects 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. The proposed Secured Overnight
Financing Rate (SOFR) is a “near risk-free" rate whereas LIBOR is credit related.

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 2019 and 2018, 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 $2.5 million and $3.3 million of the Bank's total FDIC insurance assessment for the years ended December 31,
2019 and 2018, respectively, was non-tax deductible based upon the asset size of the Bank.

The Tax Act also imposes limitations for individuals 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 future impact of the Tax Act or subsequent amendments to the tax rates
and laws on our business and our customers 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 current 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.

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.

2019 Form 10-K

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.

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, 2019, approximately 76 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 9 percent and 15 percent of our non-interest
income for the years ended December 31, 2019 and 2018, 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.

Our adoption of the CECL model for determining our allowance for credit losses expected to increase the level of our

allowance and could add significant volatility to our provision for credit losses and earnings

Effective January 1, 2020, Valley adopted the FASB's new accounting guidance on the impairment of financial instruments,
commonly known as the current expected credit loss (CECL) model. The CECL model requires the allowance for credit losses
for certain financial assets, including loans, held to maturity securities and certain off-balance sheet credit exposures, to be calculated
based on current expected credit losses over the lives of the assets rather than incurred losses as of a point in time.

The adoption of the CECL model is anticipated to increase our allowance for credit losses, which may have a material negative
impact on our financial condition and results of operations. Actual allowance for credit losses may be materially different than

2019 Form 10-K

the amounts reported due to the inherent uncertainty in the estimation process, including future loss estimates based upon reasonable
and supportable economic forecasts. Also, future amount could differ materially from those estimates due to changes in values
and circumstances after the balance sheet date. See Note 1 to the consolidated financial statements for additional information
regarding the impact of the adoption of the CECL model.

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

charge to earnings.

The process for determining the amount of the allowance for credit losses 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 credit
losses may not be sufficient to cover losses inherent in our loan and investment portfolios. Deterioration in economic conditions o
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 credit 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 internal classification
on certain loans, which may require us to increase our provision for credit 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 credit losses. Any increase
in our allowance for credit 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.

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 0.31 percent of total loans at
December 31, 2019 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 credit losses. Additionally, a downturn
in economic or real estate market conditions could result in increased charge-offs to our allowance for credit 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 $104.4
million at December 31, 2019. 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.

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

2019 Form 10-K

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 canaa
provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the
controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse
effect on our business, results of operations and financial condition.

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 2019
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. However, due to lower yields on our investment portfolio
and reinvestment of normal repayments from investment securities into new loan originations, our investment management segment
experienced downward pressure on its fair value. While not expected at this time, we may be required to record a charge to earnings
should there be a deficiency in our estimated fair value of the investment management and other reporting units during our
subsequent impairment tests. 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,
2019, our goodwill totaled $1.4 billion. See Note 9 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 pay dividends or make 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
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

2019 Form 10-K

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 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 19 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
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.

2019 Form 10-K

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.

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

2019 Form 10-K

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 thet
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.

Climate change and severe weather 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
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.

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

2019 Form 10-K

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 $3.4 billion and $3.2
billion at December 31, 2019 and 2018, 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 four and five loan repurchases
in 2019 and 2018, respectively). None of the loan repurchases resulted in material loss. As of December 31, 2019, no reserves
pertaining to loans sold were established on our financial statements. While we currently believe our repurchase risk remains low
based upon our careful loan underwriting and documentation standards, it is possible that requests to repurchase loans could occur
in the future and such requests may have a negative financial impact on us.

Item 1B.

Unresolved Staff Comments

None.

2019 Form 10-K

Item 2.

Properties

We conduct our business at 238 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 106 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

117
25
142

12
12
9
5
38
42
16
238

49.2
10.5
59.7

5.0
5.0
3.8
2.2
16.0
17.6
6.7
100.0%

Our principal executive office is located at One Penn Plaza in Manhattan, New York. Many of our bank operations are
located in Wayne, New Jersey, where we own five office buildings. Our New York City corporate headquarters 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 December 1, 2019, the acquisition of Oritani added 26 banking centers mostly located in northern New Jersey. In
February 2020, we closed and consolidated 6 of the 26 acquired branches into nearby legacy Valley branches. See Item 7 of Part
II of this Annual Report "Executive Summary" section for details on other planned changes to our branch network in 2020.

The total net book value of our premises and equipment (including land, buildings, leasehold improvements and furniture
and equipment) was $334.5 million at December 31, 2019. We believe that all of our properties and equipment are well maintained,
in good operating condition and adequate for all of our present and anticipated needs.

Item 3.

Legal Proceedings

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

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 Global Select Market under the ticker symbol “VLY”. There were 7,115

shareholders of record as of December 31, 2019.

2019 Form 10-K

Performance Graph

The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2014
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

106.12 $
105.99
101.37

131.11 $
147.46
113.49

131.22 $
150.13
138.26

107.87 $
123.87
132.19

144.83
153.43
173.80

12/14

12/15

12/16

12/17

12/18

12/19

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, 2019:

Period
October 1, 2019 to October 31, 2019
November 1, 2019 to November 30, 2019
December 1, 2019 to December 31, 2019

Total

Total Number of
Shares Purchased (1)
4,510
9,440
12,312
26,262

Average Price
Paid Per
Share

10.76
11.99
11.55

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

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

(1) Represents repurchases made in connection with the vesting of employee stock awards.
(2) On January 17, 2007, Valley publicly announced its intention to repurchase up to 4.7 million outstanding common shares in the open
market or in privately negotiated transactions. The repurchase plan has no stated expiration date. No repurchase plans or programs
expired or terminated during the three months ended December 31, 2019.

2019 Form 10-K

Selected Financial Data

Item 6.
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

Gains (losses) 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
Tangible common equity to tangible assets (4)
Efficiency ratio (5)
Dividend payout

Tier 1 leverage capital

Common equity Tier 1 capital

Tier 1 risk-based capital

Total risk-based capital
Financial Condition:
Assets

Net loans

Deposits

Shareholders’ equity

2019

As of or for the Years Ended December 31,
2018
2016
2017
($ in thousands, except for share data)

2015

1,325,631

1,164,967

842,457

770,270

422,952

902,679

4,631

898,048

24,218

873,830

(150)

18,914

78,333

117,423

214,520

31,995

20,392

579,168

631,555

456,795

147,002

309,793

12,688

297,105

0.88

0.87

0.44

10.35

6.73

302,045

862,922

5,719

857,203

32,501

824,702

(2,342)

20,515

(2,401)

118,280

134,052

—

24,200

604,861

629,061

329,693

68,265

261,428

12,688

248,740

0.75

0.44

9.48

5.97

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

152,458

0.58

0.44

8.59

6.01

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

160,958

0.63

0.44

8.59

5.80

705,879

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

99,144

0.42

0.44

8.26

5.36

337,792,270

331,258,964

264,038,123

254,841,571

234,405,909

340,117,808

332,693,718

264,889,007

255,268,336

234,437,000

0.93%

0.86%

0.69%

0.76%

0.53%

8.71

13.05

10.63

7.54

56.77

50.57

8.76

9.42

10.15

11.72

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

$ 37,436,020

$ 31,863,088

$ 24,002,306

$ 22,864,439

$ 21,612,616

29,537,449

29,185,837

4,384,188

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

2019 Form 10-K

See Notes to the Selected Financial Data that follow.

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 2019 and 2018 and 35 percent for 2017, 2016, and 2015. 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:

2019

2018

At December 31,
2017
($ in thousands, except for share data)

2016

2015

Common shares outstanding

Shareholders’ equity

Less: Preferred stock

Less: Goodwill and other intangible assets

Tangible common shareholders’ equity

Tangible book value per common share

403,278,390

331,431,217

264,468,851

263,638,830

253,787,561

4,384,188

3,350,454

2,533,165

2,377,156

2,207,091

209,691

1,460,397

2,714,100

6.73

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

(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

Return on average tangible shareholders’ equity

2019

2018

Years Ended December 31,
2017
($ in thousands)

2016

2015

309,793

3,555,483

261,428

3,304,531

161,907

2,471,751

168,146

2,253,570

102,957

1,958,757

1,182,140

1,163,397

734,200

734,520

614,084

2,373,343

2,141,134

1,737,551

1,519,050

1,344,673

13.05%

12.21%

9.32%

11.07%

7.66%

(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:

2019

2018

At December 31,
2017

($ in thousands)

2016

2015

Tangible common shareholders’ equity

2,714,100

1,979,108

1,590,330

1,529,445

1,360,280

Total assets

$ 37,436,020

$ 31,863,088

$ 24,002,306

$ 22,864,439

$ 21,612,616

Less: Goodwill and other intangible assets

1,460,397

1,161,655

733,144

736,121

735,221

Tangible assets

$ 35,975,623

$ 30,701,433

$ 23,269,162

$ 22,128,318

$ 20,877,395

Tangible common shareholders’ equity to tangible

assets

7.54%

6.45%

6.83%

6.91%

6.52%

(5) The efficiency ratio measures total non-interest expense as a percentage of net interest income plus total non-interest income.

2019 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 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. For comparison of our results of operations for the years ended December 31, 2018 and 2017,
please refer to Item 7. MD&A of Financial Condition and Results of Operations of our Report on Form 10-K for the year ended
December 31, 2018, filed with the SEC on February 28, 2019.

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:

•

the inability to realize expected cost savings and synergies from the Oritani merger in amounts or in the timeframe anticipated;

costs or difficulties relating to Oritani integration matters might be greater than expected;

the inability to retain customers and qualified employees of Oritani;

higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in
uncertain tax position liabilities, tax laws, regulations and case law;

• 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 grow customer deposits to keep pace with loan growth;

a material change in our expected allowance for credit losses due to the adoption of current expected credit loss (CECL)
model effective January 1, 2020;

the need to supplement debt or equity capital to maintain or exceed internal capital thresholds;

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;

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 violations of
laws or regulations brought as class actions, breach of fiduciary responsibility, negligence, fraud, contractual claims,
environmental laws, patent or trademark infringement, employment related claims, and other matters;

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.

•

2019 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 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 thet
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; and

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

2019 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, 2019 and 2018.

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.

Effective January 1, 2020, Valley adopted new accounting guidance which replaces the incurred loss impairment methodology
(discussed above and elsewhere in this MD&A) with a current expected credit loss (CECL) model. Under the new guidance, Valley
will be required to measure expected credit losses by utilizing forward-looking information to assess its allowance for credit losses.
The guidance also requires consideration of a broader range of reasonable and supportable information to inform credit loss
estimates. The measurement of expected credit losses is based on relevant information about past events, including historical
experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. See
Note 1 of the consolidated financial statements for further details.

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 $161.8 million at December 31, 2019.

For impaired credits, if the present value of expected cash flows were 10 percent higher or lower, the allowance would have
decreased $2.2 million or increased $4.1 million, respectively, at December 31, 2019. If the fair value of the collateral (for collateral
dependent loans) was 10 percent higher or lower, the allowance would have decreased $3.8 million or increased $4.5 million,
respectively, at December 31, 2019.

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
$47.5 million as of December 31, 2019. Additionally, if the loss factors used to calculate the allowance for non-classified loans a
were 10 percent higher or lower, the allowance would have increased or decreased by approximately $11.6 million, respectively,
at December 31, 2019. Moreover, if the expected loss rate applied to classified loans were to increase or decrease by 10 percent,
the allowance would have been $740 thousand higher or lower, respectively, at December 31, 2019.

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 $6.6 billion at December 31, 2019 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, or more frequent basis, the Bank 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.

2019 Form 10-K

See Notes 1 and 5 to the consolidated financial statements, and the "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 2019 and 2018.

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 $1.4 billion at
December 31, 2019 is not amortized but is subject to annual tests for impairment or more often, if events or circumstances indicate
it may be impaired. Other intangible assets totaling $86.8 million at December 31, 2019 are amortized over their estimated usefulff
lives and are subject to impairment tests if events or circumstances indicate a possible inability to realize the carrying amount.uu
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.

Prior to new accounting guidance effective January 1, 2020, the goodwill impairment analysis was generally a two-step test.
During 2019, 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 a 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 ist
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.

Based upon Valley’s 2019 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. However, due to
lower yields on our investment portfolio and reinvestment of normal repayments from investment securities into new loan
originations, our investment management segment experienced downward pressure on its fair value. While not expected at this
time, we may be required to record a charge to earnings should there be a deficiency in our estimated fair value of the investment
management and other reporting units during our subsequent annual (or more frequent) impairment tests. See the "Business
Segments" section below for more information regarding our business segments/reporting units.

Fair value may be determined using market prices, comparison to similar assets, market multiples, certain discounted cash
flow analyses 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, 2019, the impact of a five percent impairment charge on these intangible
assets would result in a reduction in pre-tax income of approximately $73.0 million. Note 9 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

2019 Form 10-K

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. Management determined it is more likely than not
that Valley will realize its net deferred tax assets, except for immaterial valuation allowances, as of December 31, 2019 and 2018.

During 2018, we recognized a $2.3 million tax benefit related to the adjustment of the Tax Cuts and Jobs Act of 2017 (Tax
Act) provisional amounts in our final 2017 tax returns completed in the fourth quarter 2018. In the fourth quarter 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. The adjustments of $2.3 million and $15.4 million to
deferred tax assets were reflected as credits and charges, respectively, to our income tax expense for 2018 and 2017, respectively.

We also maintain 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 2019, our income tax expense reflected an $31.1 million increase to our tax provision related to reserve for
uncertain tax liability positions at December 31, 2019 as compared to a $3.3 million net tax benefit in 2018 related to the reduction
of reserves caused by the expiration of the statute of limitations for certain tax positions.

See Notes 1 and 14 to the consolidated financial statements and the "Executive Summary" and “Income Taxes” sections 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, 2019, Valley had consolidated total assets of $37.4 billion, total net loans of $29.5
billion, total deposits of $29.2 billion and total shareholders’ equity of $4.4 billion. Our commercial bank operations 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 238 branch network, 59 percent, 16 percent, 18 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. On
January 1, 2018, Valley completed its acquisition of USAmeriBancorp, Inc. (USAB) and meaningfully enhanced its presence in
the Tampa Bay, Florida market. 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.

Acquisition of Oritani Financial Corp. Effective December 1, 2019, Valley completed its acquisition of Oritani Financial
Corp. ("Oritani") and its wholly-owned subsidiary, Oritani Bank. Oritani had approximately $4.3 billion in assets, $3.4 billion in
net loans, $2.9 billion in deposits, after purchase accounting adjustments, and a branch network of 26 locations. The acquisition
represents a significant addition to Valley's New Jersey franchise, and will meaningfully enhance its presence in the Bergen County
market. The common shareholders of Oritani received 1.60 shares of Valley common stock for each Oritani share that they owned.
The total consideration for the acquisition was approximately $835 million, and the transaction resulted in $289 million of goodwill
and $21 million of core deposit intangible assets subject to amortization. Full systems integration was completed in February 2020
with minimal disruption to our customers. However, some normal post-systems integration matters involving back-office and
other functions were still underway at the filing date of this report.

We also closed and consolidated 6 of the 26 acquired Oritani branches into nearby legacy Valley branches during February
2020. Valley plans to close and consolidate three legacy Valley branches into branches acquired from Oritani during the second
quarter 2020. We do not expect these branch closings to impact the timing of the planned closures discussed in the "Branch
Transformation" section below.

Branch Transformation. As previously disclosed, Valley has embarked on a strategy to overhaul its retail network.
Approximately one year ago, we established the foundation of what the transformation of our branch network would look like in
coming years. At that time, we identified 74 branches that did not meet certain internal performance measures, including 20
branches that were closed and consolidated by the end of the first quarter 2019. For the remaining 54 branches, we implemented
tailored action plans focused on improving profitability and deposit levels, as well as upgrades in staffing and training, within a
defined timeline.

At December 31, 2019, the majority of the 54 branches have seen measurable success in terms of relative cost of deposits,
deposit mix and overall balance growth. However, some locations have not met our established performance targets. As such, we
currently expect to close approximately 10 branches during 2020.

2019 Form 10-K

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.

Sale Leaseback. During March 2019, Valley closed a sale-leaseback transaction for 26 properties resulting in a pre-tax gain

of $78.5 million for the first quarter 2019.

Investment in DC Solar Funds. From 2013 to 2015, Valley invested in three federal renewable energy tax credit funds
sponsored by DC Solar and claimed the related federal tax credit benefits of approximately $22.8 million in its consolidated
financial statements during these periods. In late February 2019, we learned of allegations of fraudulent conduct by DC Solar,
including information about asset seizures of DC Solar property and assets of its principals and ongoing federal investigations.
Since learning of the allegations, Valley has conducted an ongoing investigation coordinated with other DC Solar fund investors,
investors' outside counsel and a third party specialist.

During the nine months ended September 30, 2019, given the circumstances that we were aware of at that time and
management's best judgments regarding the settlement of the tax positions that it would ultimately accept with the IRS, Valley
expected a partial loss and tax benefit recapture. During the fourth quarter 2019, several of the co-conspirators pleaded guilty to
fraud in the on-going federal investigation. Based upon this new information, Valley deemed that its tax positions related to the
DC Solar funds did not meet the more likely than not recognition threshold in Valley's tax reserve assessment at December 31,
2019. As a result, our net income for the fourth quarter 2019 and the year ended December 31, 2019 includes increases to our
provision for income taxes of $18.7 million and $31.1 million, respectively, reflecting the reserve for uncertain tax liability positions
related to renewable energy tax credits and other tax benefits previously recognized from the investments in the DC Solar funds
plus interest. During the first quarter 2019, we also recognized a full write down of the related unamortized investments totaling
$2.4 million (previously presented in other assets) due to other than temporary impairment losses.

Valley believes it is fully reserved for its tax positions related to DC Solar at December 31, 2019. See Item 1A. Risk Factors
as well as Notes 14 and 15 to the consolidated financial statements for additional information related to our tax credit investments
and reserves for uncertain tax liability positions.

Annual Results. Net income totaled $309.8 million, or $0.87 per diluted common share, for the year ended December 31,
2019 compared to $261.4 million in 2018, or $0.75 per diluted common share. The increase in net income was largely due to: (i)
a $40.8 million, or 4.8 percent, increase in our net interest income driven by a $2.9 billion increase in average loan balances and
higher loan yields, partially offset by interest expense related to higher short-term interest rates and a $2.4 billion increase in
average interest bearing liabilities as compared to 2018, (ii) a $80.5 million increase in non-interest income mostly related to a
$78.5 million gain on the sale (and leaseback) of several Valley properties in the first quarter 2019, partially offset by (iii) a $78.7
million increase in income tax expense largely due to an increase in pre-tax income and a $31.1 million addition to our reserves
for uncertain tax positions, (iv) a $8.3 million decline in our provision for credit losses and (v) a $2.5 million increase in total non-
interest expense. See the “Net Interest Income,” “Non-Interest Income,” “Non-Interest Expense,” and “Income Taxes” sections
below for more details on the items above and other infrequent items, including merger expenses and the loss on extinguishment
of debt, impacting our 2019 annual results.

Operating Environment. During 2019, real gross domestic product expanded 2.3 percent as compared to 2.9 percent in

2018 due, in part, to weaker business fixed investment and a slower pace of services consumption by households.

The federal funds target rate was increased five times by the Federal Open Market Committee (FOMC) from mid-December
2017 to mid-December 2018. During 2019, the FOMC held the target range of 2.25 to 2.50 percent until the end of July 2019,
and then cut the target three times to a range of 1.50 to 1.75 percent during the second half of 2019. In early March 2020, the
FOMC cut interest rates by 50 basis points to a target range of 1.00 to 1.25 percent in an effort to contain the coronavirus's economic
fallout. The interest rate cut was the first emergency rate move since the 2008 financial crisis.

The 10-year U.S. Treasury note yield ended 2019 at 1.92 percent, 77 basis points lower compared with December 31, 2018.
The spread between the 2- and 10-year U.S. Treasury note yields ended the year at 0.34 percent, 13 basis points higher compared
to the end of 2018. However, this spread has contracted during early March 2020 as compared to December 31, 2019 and could
remain that way for an extended period due to current economic concerns.

For all commercial banks in the U.S., loans and leases grew approximately 4.2 percent from December 31, 2018 to December
31, 2019. For the industry, banks reported that demand for most commercial loan products had declined compared to the end of
2018. The decline was driven by weakening demand among small firms for commercial and industrial loans and tightening of
underwriting standards, particularly for commercial real estate loans.

2019 Form 10-K

Valley continued to see solid demand for commercial loans across its geographies during 2019, and was able to grow core
deposits. However, should demand weaken for commercial loans and competition for deposits increase further in Valley's markets,
these factors and others, including a flat or inverted yield curve environment, may challenge our business operations and results,
as highlighted throughout the remaining MD&A discussion below.

Loans. Total loans increased by $4.7 billion to $29.7 billion at December 31, 2019 from December 31, 2018. Adjusted for
$3.4 billion of loans acquired from Oritani on December 1, 2019 and approximately $800 million of sales from the commercial
real estate loan portfolio in the fourth quarter 2019, total loans grew by over 9 percent in 2019 due to strong demand in most loan
categories. For 2020, we are targeting net loan growth 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, 2019, our PCI loan portfolio totaled
$6.6 billion, or 22.3 percent of our total loan portfolio, and includes all of the loans acquired from USAB and Oritani on January
1, 2018 and December 1, 2019, respectively.

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 0.54 percent and 0.62 percent at December 31, 2019 and 2018, respectively. Total accruing past due loans
increased to $68.2 million at December 31, 2019 from $67.7 million at December 31, 2018. Non-accrual loans totaled $93.1
million, or 0.31 percent of our entire loan portfolio of $29.7 billion, at December 31, 2019 as compared to $88.4 million, or 0.35
percent of total loans, at December 31, 2018. The increase in non-accruals was largely due to a $6.6 million increase in commercial
real estate loans, partially offset by a $1.5 million decrease in the commercial and industrial loan category. Overall, our non-
performing assets increased by 5.9 percent to $104.4 million at December 31, 2019 as compared to $98.6 million at December 31,
2018 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 future performance of our loan portfolio. However, due to the potential for future credit deterioration caused by any
unexpected downturn in economic conditions or other geopolitical factors, management cannot provide assurance that our non-
performing assets will remain at, or increase from, the levels reported as of December 31, 2019. See the “Non-performing Assets”
section below for further analysis of our asset quality.

Investments. During the year ended December 31, 2019, we recognized net impairment losses on securities totaling $2.9
million in earnings due to one bond in default of its contractual payments. There were no net impairment losses on securities
during 2018 and 2017. During the year ended December 31, 2019, we recognized net losses on securities transactions of $150
thousand as compared to net losses totaling $2.3 million in 2018 and $20 thousand in 2017. 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 2019 as compared to
2018 largely due to the greater use of brokered time deposits since the second half of 2018 relative to other wholesale funding
sources included in other borrowings. Non-interest bearing deposits represented approximately 25 percent of total average deposits
for the year ended December 31, 2019, while savings, NOW and money market accounts were 45 percent and time deposits were
30 percent. Average non-interest bearing deposits increased $171.1 million to approximately $6.4 billion for the year ended
December 31, 2019 as compared to 2018 due, in large part, to our continuous efforts to encourage new and existing loan borrowers
to maintain deposit accounts at Valley and, to a lesser extent, $142.6 million of deposits assumed from Oritani on December 1,
2019. Average savings, NOW and money market account balances increased $312.9 million to $11.4 billion in 2019 largely due
to several retail and business account initiatives and $1.6 billion of such deposits assumed from Oritani. Average time deposits
also increased $2.4 billion to $7.5 billion in 2019 due to (i) increased use of brokered CDs as an alternative to more costly FHLB
borrowings with shorter or similar maturities, (ii) successful retail deposit gathering efforts and (iii) $1.2 billion of deposits assumed
from USAB. Ending balances of brokered deposits (consisting of both time and money market deposit accounts) were $4.1 billion
and $3.2 billion at December 31, 2019 and 2018, respectively.

Average short-term borrowings decreased $117.7 million to $2.1 billion for 2019 as compared to 2018 largely due to a
decline in FHLB advances used for funding of loan growth caused by the success of our retail and brokered deposit gathering
efforts. Valley assumed only $10.5 million of very short duration borrowings in the Oritani acquisition during 2019.

2019 Form 10-K

Average long-term borrowings decreased $165.4 million to approximately $2.0 billion for 2019 as compared to 2018 largely
due to an normal repayments of FHLB borrowings during 2019 and, to a much lesser extent, the prepayment of $635 million of
high cost FHLB borrowings in December 2019. 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.

Annual Period 2019. Net interest income on a tax equivalent basis increased by $39.8 million to $902.7 million for 2019
as compared to 2018. The increase was mainly driven by a $2.9 billion increase in average loan balances and a 14 basis point
increase in loan yield, partially offset by interest expense related to a $2.4 billion increase in average interest bearing liabilities
and a 37 basis point increase in the cost of such liabilities as compared to 2018. 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 2.95 percent for the year ended December 31, 2019 and decreased 16
basis points as compared to 2018. However, the yield on average interest earning assets increased 13 basis points mainly attributable
to the increased yield on average loans. The yield on average loans increased 14 basis points to 4.57 percent for 2019 as compared
to 4.43 percent in 2018 largely due to new loan volumes and higher market interest rates in the second half of 2018 and a gradual
decline in 2019. Our average non-taxable investment portfolio yield decreased 30 basis points during 2019 as compared to one
year ago due to repayment and prepayment of mostly higher yield residential mortgage-backed securities, increased premium
amortization and lower yielding new investments in 2019. Offsetting the increase in the yield on average interest earning assets,
the cost of average interest bearing liabilities increased 37 basis points to 1.84 percent for 2019. The increase in the overall cost
as compared to 2018 was mainly driven by higher market rates on most new stated rate maturity deposits and term funding in the
second half of 2018 through approximately the first nine months of 2019. The cost of funds were largely influenced by a 33 basis
point increase in the annual average of the daily effective federal funds rate to 2.16 percent for 2019 from 1.83 percent in 2018,
as well as strong market competition for customer deposits. The federal funds target rate was increased five times by the FOMC
from mid-December 2017 to mid-December 2018. In 2019, the FOMC held the target range of 2.25 to 2.50 percent until the end
of July 2019, and then cut the target three times to a range of 1.50 to 1.75 percent during the second half of 2019.

Average interest earning assets totaling $30.6 billion for the year ended December 31, 2019 increased $2.9 billion, or 10.4
percent, as compared to 2018. Average loan balances increased $2.9 billion to $26.2 billion in 2019 and drove approximately 80
percent of the $164.9 million increase in the interest income on a tax equivalent basis for loans as compared to 2018. The growth
in average loans during 2019 was mostly due to strong loan demand and successful lending team efforts, particularly in the
commercial loan categories, over the last two years. The new loan production in the commercial area came from a blend of new
and existing customer relationships with significant geographic and product diversification across our primary markets. Average
federal funds sold and other interest bearing deposits increased $79.8 million to $298.7 million for the year ended December 31,
2019 as compared to 2018 due to slightly higher levels of overnight liquidity primarily caused by fluctuations in the timing of
new loan originations. Average investment securities decreased $102.1 million to approximately $4.0 billion in 2019 due to normal
securities repayment activity and higher reinvestment of such funds in new loan originations.

Average interest bearing liabilities increased $2.4 billion to $22.9 billion for the year ended December 31, 2019 from the
same period in 2018 due to increases in most of our deposit product categories. Average savings, NOW and money market accounts
increased $312.9 million largely due to retail money market account gathering initiatives during late 2018 and 2019, partially
offset by continued lower utilization of brokered money market account balances in our loan growth funding strategy and other
liquidity needs in 2019. Average time deposits increased $2.4 billion to $7.5 billion for 2019 as compared to 2018 mainly due to
retail CDs strategies executed in both 2018 and 2019 and increased use of brokered CDs since the second half of 2018. Average
short-term and long-term borrowings decreased $117.7 million and $165.4 million in 2019, respectively, as compared to 2018
primarily due to a lower level of FHLB borrowings used to fund new loan activities. See the "Fourth Quarter 2019" section below
for more information regarding changes in our interest bearing liabilities during 2019.

Fourth Quarter 2019. Net interest income on a tax equivalent basis totaling $239.6 million for the fourth quarter 2019
increased $16.2 million and $17.9 million as compared to the fourth quarter 2018 and third quarter 2019, respectively. The increase
compared to the third quarter 2019 was largely due to higher average loan balances and lower costs of interest-bearing liabilities,
partly offset by low loan yields. Interest income on a tax equivalent basis increased $14.5 million to $344.8 million for the fourth
quarter 2019 as compared to the third quarter 2019 mainly due to a $1.8 billion increase in average loans, partly offset by 6 basis
point decrease in the yield on average loans. Interest expense of $105.2 million for the three months ended December 31, 2019

2019 Form 10-K

decreased $3.4 million from the third quarter 2019 largely due to lower interest rates on many of our interest-bearing deposit
products and other borrowings, partly offset by additional interest expense from a $1.4 billion 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, as well as the Oritani acquisition.

The net interest margin on a tax equivalent basis of 2.96 percent for the fourth quarter 2019 decreased 14 basis points as
compared to 3.10 percent for the fourth quarter 2018, and increased 5 basis points from 2.91 percent for the third quarter 2019.
The yield on average interest earning assets decreased by 6 basis points on a linked quarter basis due to the lower yields on average
loans and investment securities. The yield on average loans decreased to 4.51 percent for the fourth quarter 2019 from 4.57 percent
for the third quarter 2019 mostly due to the high volume of new loan originations at current market rates and repayment of higher
yielding loans. The decreased yield on average investment securities was partly caused by an increase in premium amortization
on residential mortgage-backed securities, due to higher prepayments on such financial instruments. The overall cost of average
interest-bearing liabilities decreased by 16 basis points to 1.74 percent for the fourth quarter 2019 as compared to the linked third
quarter 2019 due to lower interest rates on certain deposits and borrowings repricing during the second half of 2019. Our prepayment
of $635 million in higher cost long-term borrowings during December 2019 is expected to positively impact our average cost of
funds for its first full period of extinguishment during the first quarter 2020. Our cost of total average deposits was 1.20 percent
for the fourth quarter 2019 as compared to 1.27 percent for the three months ended September 30, 2019.

Looking forward, we expect moderate interest rate pressures on the level of our net interest margin for the first quarter 2020
due to lower yielding loan originations and one less day during the quarter. However, we are encouraged by the current level of
market interest rates for most of our funding sources and the potential ability to reprice stated maturity deposits and other borrowings
coming due for us over the next 12-month period. Based upon our most recent projection, we anticipate net interest income growtht
of approximately 13 to 16 percent for the full year of 2020 as compared to 2019.

2019 Form 10-K

The following table reflects the components of net interest income for each of the three years ended December 31, 2019,

2018 and 2017:

ANALYSIS OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY AND

NET INTEREST INCOME ON A TAX EQUIVALENT BASIS

Total interest earning assets

30,575,530

1,325,631

2019

2018

2017

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

($ in thousands)

$ 26,235,253

$1,198,908

4.57% $ 23,340,330

$ 1,033,996

4.43% $ 17,819,003

$ 734,485

4.12%

3,394,397

647,178

98,949

22,051

298,702

5,723

2.92

3.41

1.92

4.34

3,409,687

100,515

733,956

27,220

218,938

3,236

27,702,911

1,164,967

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

(157,562)

275,619

2,762,478

(13,327)

$ 33,442,738

(136,775)

278,181

2,431,537

(46,578)

$ 30,229,276

(117,529)

236,297

1,886,035

(14,503)

$ 23,478,798

$ 11,406,073

$ 145,177

1.27% $ 11,093,136

108,394

0.98% $ 8,934,335

$ 55,300

0.62%

7,521,338

18,927,411

2,070,258

166,693

311,870

47,862

1,951,203

63,220

6,364,986

573,397

3,555,483

2.22

1.65

2.31

3.24

1.84

5,131,167

16,224,303

2,187,998

2,116,619

20,528,920

6,193,839

201,986

3,304,531

81,959

190,353

45,930

65,762

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

5,192,087

174,643

2,471,751

$ 33,442,738

$ 30,229,276

$ 23,478,798

902,679

2.50%

862,922

2.74%

668,350

2.81%

(4,631)

$ 898,048

(5,719)

857,203

(8,303)

$ 660,047

2.94%

0.01

2.95%

3.09%

0.02

3.11%

3.07%

0.04%

3.11%

Assets

Interest earning assets:

(1)(2)

Loans

Taxable investments

(3)

Tax-exempt investments

(1)(3)

Interest bearing deposits with

banks

Allowance for loan losses

Cash and due from banks

Other assets

Unrealized losses on securities

available for sale, net

Total assets

Liabilities and Shareholders’

Equity

Interest bearing liabilities:

Savings, NOW and money

market deposits

Time deposits

Total interest bearing deposits

Short-term borrowings

Long-term borrowings

(4)

Non-interest bearing deposits

Other liabilities

Shareholders’ equity

Total liabilities and

shareholders’ equity

Net interest income/interest

rate spread (5)

Tax equivalent adjustment

Net interest income, as

reported

Net interest margin

(6)

Tax equivalent effect

Net interest margin on a fully
tax equivalent basis (6)

Total interest bearing liabilities

22,948,872

422,952

(1)

(2)

(3)

(4)

(5)

Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate for both 2019 and 2018, respectively, and a 35
percent federal tax rate for 2017.
Loans are stated net of unearned income and include non-accrual loans.
The yield for securities that are classified as available for sale is based on the average historical amortized cost.
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.

2019 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,

2019 Compared to 2018
Change
Due to
Rate

Change
Due to
Volume

Total
Change

2018 Compared to 2017
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

131,473

33,439

164,912

241,292

58,219

299,511

(449)

(3,063)

1,372

129,333

3,137

46,254

(2,558)

(5,282)

41,551

(1,117)

(2,106)

1,115

31,331

33,646

38,480

4,490

2,740

79,356

(1,566)

(5,169)

2,487

160,664

36,783

84,734

1,932

(2,542)

120,907

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

Increase (decrease) in net interest income

87,782

(48,025) $

39,757

201,932

(7,360) $

194,572

Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate for 2019 and 2018, respectively, and a 35 percent
federal tax rate for 2017.

2019 Form 10-K

Non-Interest Income

Non-interest income represented 14.0 percent and 10.4 percent of total interest income plus non-interest income for 2019
and 2018, respectively. For the year ended December 31, 2019, non-interest income increased $80.5 million as compared to the
year ended December 31, 2018 largely due to the gain on the sale of several Valley properties in 2019. See further details below.

The following table presents the components of non-interest income for the years ended December 31, 2019, 2018, and

2017:

Trust and investment services
Insurance commissions
Service charges on deposit accounts
Losses on securities transactions, net
Other-than-temporary impairment losses on securities

Portion recognized in other comprehensive income (before taxes)
Net impairment losses on securities recognized in earnings

Fees from loan servicing
Gains on sales of loans, net
Gains (losses) on sales of assets, net
Bank owned life insurance
Other

Total non-interest income

2019

Years Ended December 31,
2018
(in thousands)

2017

12,646
10,409
23,636
(150)
(2,928)
—
(2,928)
9,794
18,914
78,333
8,232
55,634
214,520

12,633
15,213
26,817
(2,342)
—
—
—
9,319
20,515
(2,401)
8,691
45,607
134,052

11,538
18,156
21,529
(20)
—
—
—
7,384
20,814
(95)
7,338
25,062
111,706

Insurance commissions decreased $4.8 million for the year ended December 31, 2019 from $15.2 million in 2018 mainly

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

Service charges on deposit accounts decreased $3.2 million for the year ended December 31, 2019 as compared to 2018

mostly due to lower checking and ATM fees.

Net losses on securities transactions decreased $2.2 million for the year ended December 31, 2019 as compared to 2018.
The higher level of net losses in 2018 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 2018, as well as the sale of equity securities
previously classified as available for sale and certain municipal securities acquired from USAB.

Other-than-temporary impairment losses on securities for the year ended December 31, 2019 relate to one special revenue
bond in default of its contractual payments. See the “Investment Securities Portfolio” section of this MD&A and Note 4 to the
consolidated financial statements for further details on our investment securities impairment analysis.

Fees from loan servicing increased $475 thousand for the year ended December 31, 2019 from $9.3 million in 2018 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 $113 million to $3.4 billion,
at December 31, 2019 from $3.2 billion at December 31, 2018.

Net gains on sales of loans decreased $1.6 million for the year ended December 31, 2019 as compared to 2018, largely due
to lower volume of residential mortgage loan sales and interest rate spreads on loans sold. During 2019, we sold $934.5 million
of residential mortgages as compared to $965.5 million of residential mortgage loans sold during 2018, including $436 million
and $290 million of pre-existing loans sold from our residential mortgage loan portfolio, respectively. Residential mortgage loan
originations (including both new and refinanced loans) decreased 9.2 percent to $1.6 billion for the year ended December 31, 2019
as compared to $1.7 billion in 2018. 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 $1.0 million and $211 thousand in 2019 and 2018,
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.

Net gains (losses) on sales of assets increased $80.7 million primarily due to a $78.5 million gain on the sale (and leaseback)

of 25 branches and 1 corporate location recognized during the first quarter 2019.

2019 Form 10-K

Other non-interest income increased $10.0 million for the year ended December 31, 2019 from 2018 mainly due to a $17.0
million increase in fee income related to derivative interest rate swaps executed with commercial lending customers. Swap fee
income totaled $33.4 million and $16.4 million for the years ended December 31, 2019 and 2018, respectively. The increase in
swap fees was partially offset by a decrease in other income during 2019 related to a $6.5 million gain realized on the sale of our
Visa Class B shares during the fourth quarter 2018.

Non-Interest Expense

Non-interest expense increased $2.5 million to $631.6 million for the year ended December 31, 2019 as compared to 2018.

The following table presents the components of non-interest expense for the years ended December 31, 2019, 2018 and 2017:

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

Total non-interest expense

2019

2018
(in thousands)

2017

327,431
118,191
21,710
18,080
20,810
31,995
20,392
9,883
63,063
631,555

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

Salary and employee benefits expense decreased $6.4 million for the year ended December 31, 2019 as compared to 2018,
largely due to (i) lower headcount caused by our recent branch transformation and new universal banker model, as well as other
operational improvements, (ii) a $4.5 million decrease in stock-based compensation expense, and (iii) a $2.8 million decrease in
commission expense mainly related to our home mortgage consultant teams. These decreases were partially offset by higher
merger related and other corporate severance expense. The change in control, severance and retention expenses related to bank
acquisitions totaled $13.9 million and $9.8 million for the years ended December 31, 2019 and 2018, respectively. Severance costs
related to our branch transformation strategy totaled $4.8 million and $2.7 million for the years ended December 31, 2019 and
2018, respectively.

Net occupancy and equipment expenses increased $9.4 million for the year ended December 31, 2019 as compared to 2018
largely due to higher rental expense resulting from the sale leaseback transaction for 26 locations closed during the first quarter
2019. In addition, repair and equipment expense, and depreciation expense increased $4.5 million and $1.8 million, respectively,yy
for the year ended December 31, 2019 as compared to 2018. Merger expenses related to bank acquisitions within the category
totaled $870 thousand and $856 thousand for the years ended December 31, 2019 and 2018, respectively.

The FDIC insurance assessment decreased $6.6 million for the year ended December 31, 2019 as compared to 2018 largely

due to the FDIC's termination of the large bank surcharge portion of our quarterly assessment effective September 30, 2018.

Professional and legal fees decreased $13.3 million for the year ended December 31, 2019 as compared to 2018. The decrease
was mainly caused by a $12.2 million litigation reserve charge recognized in 2018. Professional and legal fees included merger
expenses of approximately $1.9 million related to the Oritani acquisition and $837 thousand of merger expense related to the
USAB acquisition for the year ended December 31, 2019 and 2018, respectively.

Loss on extinguishment of debt totaling $32.0 million for the year ended December 31, 2019 related to prepayment of $635.0
million of the long-term FHLB advances during the fourth quarter 2019 accounted for as an early debt extinguishment. See Note
11 for additional details.

Amortization of tax credit investments decreased $3.8 million for the year ended December 31, 2019 as compared to 2018
mostly due to normal differences in the timing and amount of such investments and recognition of the related tax credits, partially
offset by a $2.4 million other-than-temporary impairment charge related to investments in three federal renewable energy tax
credit funds during the year ended December 31, 2019. 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 15 to the consolidated
financial statements for additional information.

2019 Form 10-K

Telecommunications expense decreased $2.2 million for the year ended December 31, 2019 as compared to 2018 partly due

to branch reductions and other operating efficiencies.

Other non-interest expense decreased $6.3 million for the year ended December 31, 2019 as compared to 2018. The decrease
was mainly due to $5.6 million of USAB merger related charges recognized during 2018 and a $1.4 million increase in net gains
on sale of OREO properties. Merger expenses related to the Oritani acquisition were immaterial within other non-interest expense
during 2019. Advertising expense included in this category decreased $1.3 million to $4.5 million for the year ended December 31,
2019 as compared to 2018. During 2019, we also experienced moderate decreases in several other significant components of other
expense, such as travel, debit card and ATM expense, postage, and stationery and print expenses. The positive impact of these
items was partially offset by higher data processing costs during 2019 as compared to 2018.

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 loss on extinguishment ee
of debt, amortization of tax credit investments, merger related expenses, and the gain on our sale-leaseback transaction during
2019. 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, 2019, 2018 and 2017:

Total non-interest expense, as reported

Less: Loss on extinguishment of debt (pre-tax)

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 (mainly branch transformation, pre-tax)(3)
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: Net impairment losses on securities (pre-tax)
Add: Branch related asset impairment (pre-tax)(4)
Add: Losses on securities transactions, net (pre-tax)
Less: Gain on the sale of Visa Class B shares (pre-tax)(5)
Less: Gain on sale leaseback transaction (pre-tax)(6)

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

Efficiency ratio

Efficiency ratio, adjusted

2019

2018

2017

$ 631,555

($ in thousands)
$ 629,061

$ 509,073

31,995

20,392

—

16,579

4,838

—

24,200

—

17,445

2,662

12,184

—

41,747

9,875

2,620

—

$ 557,751

$ 572,570

$ 454,831

898,048
214,520
2,928

—

150
—

857,203

134,052

—

1,821

2,342
6,530

660,047

111,706

—

20
—

78,505
$ 139,093
$ 1,037,141

—
$ 131,685
$ 988,888

—
$ 111,726
$ 771,773

56.77%

53.78%

63.46%

57.90%

65.96%

58.93%

(1) Costs related to implementation of Valley's LIFT earnings enhancement program in 2017 are primarily within professional and legal

fees and salary and employee benefits expense.

(2) Merger related expenses are primarily within salary and employee benefits expense, professional and legal fees, and other expense.
(3) Severance expenses are included in salary and employee benefits.
(4) Branch related asset impairment is included in net losses on sale of assets within non-interest income.
(5) The gain from the sale of non-marketable securities is included in other non-interest income.
(6) The gain on sale leaseback transactions is included in gains on the sales of assets within other non-interest income.

Management continuously monitors its expenses in an effort to optimize Valley's performance. Based upon these efforts and
our revenue goals, we achieved an adjusted efficiency ratio (as shown in the table above) of 53.78 percent for 2019 that exceeded

2019 Form 10-K

our previously announced goal of 55 percent or lower for the year. Valley expects to achieve an adjusted efficiency ratio of 51
percent or lower for the full year of 2020 as it remains committed to technology and business process enhancements throughout
the organization. However, we can provide no assurance that our adjusted efficiency ratio will meet our target for 2020 or remain
at the level reported for 2019.

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 $147.0 million for the year ended December 31, 2019, reflecting an effective tax rate of 32.2 percent, as
compared to $68.3 million for the year ended 2018, reflecting an effective tax rate of 20.7 percent. The increase in both income
tax expense and the effective tax rate in 2019 as compared to 2018 was largely caused by an $31.2 million increase in Valley's
reserve for uncertain tax liability positions at December 31, 2019 related to renewable energy tax credits and other tax benefits
previously recognized from the investments in the DC Solar funds plus interest. As a result, Valley believes it is fully reserved for
its tax positions related to DC Solar at December 31, 2019. In addition, the income tax expense and effective tax rate for 2018
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.

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 24 percent
to 26 percent for 2020.

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

as well as Note 14 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 23 to the consolidated financial statements for the segments’ financial
data.

Consumer lending. The consumer lending segment representing 24.3 percent of the total loan portfolio at December 31,
2019, is mainly comprised of residential mortgage loans and automobile loans, and to a lesser extent, home equity loans, secured
personal lines of credit and other consumer loans (including credit card loans).The duration of the residential mortgage loan
portfolio (which represented 14.7 percent of our total loan portfolio at December 31, 2019) is subject to movements in the market
level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans portfolio (representing
4.9 percent of total loans at December 31, 2019) 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.

Average interest earning assets in this segment increased $694.3 million to $6.9 billion for the year ended December 31,
2019 as compared to 2018. The increase was largely due to loan growth from new and refinanced residential mortgage loan
originations held for investment generated from our home mortgage consulting team, moderately low level of market mortgage
interest rates, and strength of the labor markets, net of loan portfolio transfers and sales in 2019. Automobile loans and other

2019 Form 10-K

consumer loans (mainly consisting of collateralized personal lines of credits) also grew by 10.0 percent and 6.1 percent, respectively,
over the last 12 months.

Income before income taxes generated by the consumer lending segment increased $20.2 million to $77.5 million for the
year ended December 31, 2019 as compared to $57.3 million for the year ended December 31, 2018, largely due to lower non-
interest expense coupled with an increase in net interest income, partially offset by a decrease in non-interest income. Non-interest
expense decreased $16.4 million as compared to 2018 due, in part, to lower salary and employee benefits expense. Net interest
income increased $9.8 million mostly due to the increase in average loans. The decrease of $3.3 million in non-interest income
for the year ended December 31, 2019 was largely due to lower insurance commissions generated by the Wealth Management
Division and a moderate decline in net gains of sale of residential mortgage loans.

The net interest margin on the consumer lending portfolio was 2.63 percent and 2.77 percent for the years ended December 31,
2018 and December 31, 2019, respectively. The 2019 margin decreased 14 basis points from 2018 due to a 30 basis point increase
in the costs associated with our funding sources, partially offset by16 basis point increase in the yield on average loans. The
increase in our cost of funds was primarily due to greater use of brokered and retail time deposit funding in our overall mix of
deposit balances and higher rates on most deposit products and wholesale borrowings during the first half of 2019. 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 1.12 percent for

2019 compared to 0.92 percent for 2018.

Commercial lending. 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. Commercial and industrial loans totaled approximately $4.8 billion and represented 16.2 percent of the total
loan portfolio at December 31, 2019. Commercial real estate loans and construction loans totaled $17.6 billion and represented
59.5 percent of the total loan portfolio at December 31, 2019.

Average interest earning assets in this segment increased $2.2 billion to $19.3 billion for the year ended December 31, 2019

as compared to 2018. The average increase was primarily attributable to solid organic loan growth during both 2019 and 2018.

For the year ended December 31, 2019, income before income taxes for the commercial lending segment increased $60.8
million to $369.2 million as compared to 2018. Net interest income increased $47.0 million to $668.7 million for the year ended
December 31, 2019 as compared to 2018 largely due to higher average balances and an increase in yield on new loan originations,
partially offset by higher interest expense. Non-interest income increased $18.9 million for the year ended December 31, 2019 as
compared to 2018 mainly due to fee income related to derivative interest rate swaps executed with commercial loan customers
which totaled $33.4 million for the year ended December 31, 2019 as compared to $16.4 million in 2018. The provision for credit
losses decreased $9.4 million to $17.5 million for the year ended December 31, 2019 as compared to 2018. (See details in the
"Allowance for Credit Losses" section of this MD&A). Internal transfer expense and non-interest expense increased $7.7 million
and $6.8 million for the year ended December 31, 2019, respectively, as compared to 2018.

The net interest margin for this segment decreased 17 basis points to 3.46 percent during 2019 as a result of a 30 basis point
increase in the cost of our funding sources, partially offset by a 13 basis point increase in the yield on average loans as compared
to 2018. The increase in yield on average loans was largely due to new loan volumes at higher market interest rates in the second
half of 2018 and a gradual decline in the new loan interest rates in 2019.

The return on average interest earning assets before income taxes for this segment was 1.91 percent for 2019 compared to

1.80 percent for the prior year period.

Investment management. The investment management segment generates a large portion of our income through
investments in various types of securities and interest-bearing deposits with other banks. These investments are mainly comprised
of fixed rate securities and, depending on our liquid cash position, federal funds sold and interest-bearing deposits with banks
(primarily the Federal Reserve Bank 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/Liabilitytt
Management” section below for further analysis.

Average interest earning assets decreased $22.3 million to $4.3 billion for the year ended December 31, 2019 as compared
to 2018 mostly due to a decline of $102.1 million in average investment securities partially offset by a $79.8 million increase in
federal funds sold and other interest bearing deposits. Average investments declined due to the reinvestment of normal cash flows
into higher yielding new loan activity in 2019. Average federal funds sold and other interest bearing deposits increased to $298.7

2019 Form 10-K

million for the year ended December 31, 2019 as compared to 2018 due to higher levels of overnight liquidity primarily caused
by normal fluctuations in the timing of new loan originations and other treasury management activity.

For the year ended December 31, 2019, income before income taxes for the investment management segment decreased
$11.9 million to $27.0 million as compared to 2018 primarily due to a $17.0 million decrease in net interest income, partially
offset by a $4.7 million decrease in the internal transfer expense. The decrease in net interest income was mainly driven by lower
average investment balances and normal repayment of higher yielding securities during the year ended December 31, 2019 as
compared to 2018.

The net interest margin for this segment decreased 38 basis points to 1.59 percent during the year ended December 31, 2019
as compared to 2018 as a result of a 30 basis point increase in costs associated with our funding sources and an 8 basis point
decrease in the yield on average investments. The decrease in the yield on average investments during 2019 as compared to one
year ago was mainly due to repayment and prepayment of mostly higher yield residential mortgage-backed securities, increased
premium amortization and lower yielding new investments purchased during 2019.

The return on average interest earning assets before income taxes for this segment was 0.62 percent for 2019 compared to

0.89 percent for 2018.

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 gains and losses on securities and net impairment losses
subordinated notes, amortization of tax
not reported in the investment management segment above, interest expense related to b di
f
credit investments, as well as infrequent items, such as the loss on extinguishment of debt, gain on sale leaseback transaction
s and
credit investments
merger expenses.

The pre-tax net loss for the corporate segment decreased $58.0 million for the year ended December 31, 2019 to $17.0
million as compared to $75.0 million in 2018. The lower net loss during 2019 for this segment was mainly due to a increase in
non-interest income, as well as internal transfer income, partially offset by a increase in non-interest expense. The non-interest
income increased $64.8 million to $106.6 million for the year ended December 31, 2019 from 2018 primarily due to a $78.5
million net gain on the sale (and leaseback) of 26 Valley properties during the first quarter 2019. Internal transfer income increased
$4.6 million to $349.5 million for the year ended December 31, 2019 as compared to the prior year. The non-interest expense
increased $12.4 million to $452.6 million for the year ended December 31, 2019 as compared to 2018 largely due to a loss on
extinguishment of debt totaling $32.0 million for 2019, partially offset by decreases in several items, including professional and
legal fees. See further details in the "Non-Interest Expense" section in this MD&A.

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 exposureuu
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, 2019. 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, 2019. 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,
2019. Although the size of Valley’s balance sheet is forecasted to remain static as of December 31, 2019, in our model, the composition

2019 Form 10-K

is adjusted to reflect new interest earning assets and funding originations coupled with rate spreads utilizing our actual originations
during 2019. The model utilizes an immediate parallel shift in the market interest rates at December 31, 2019.

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 a
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
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)
13,025
7,980
31,600
53,548

1.32%
0.81
3.19
5.42

As noted in the table above, a 100 basis point immediate decrease in interest rates combined with a static balance sheet where
the size, mix, and proportions of assets and liabilities remain unchanged is projected to increase net interest income over the next
12 months by 3.19 percent. This is primarily due to a significant volume of term retail deposit funding that will reprice lower over
the next 12 months. Valley's sensitivity to changes in market rates as compared to December 31, 2018 (which projected a decrease
of 0.49 percent in net interest income over a 12-month period) increased partly due to changes in balance sheet structure related to
funding composition and a slightly longer asset duration. Management believes the interest rate sensitivity remains within an
acceptable tolerance range at December 31, 2019. However, the level of net interest income sensitivity may increase or decrease
in the future as a result of changes in deposit and borrowings strategies, the slope of the yield curve and projected cash flows.

2019 Form 10-K

The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at
December 31, 2019 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

($ in thousands)

Total
Balance

Fair
Value

Interest sensitive
assets:

Interest bearing deposits

with banks

Equity securities

Investment securities
available for sale

Investment securities
held to maturity

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

2.00% $

178,423

— $

178,423

2.09

2.55

3.12

3.78

4.30

28,454

1,148

8,364

41,410

399,818

273,267

275,683

133,200

93,466

391,367

1,566,801

600,600

424,736

328,684

242,926

140,282

598,867

2,336,095

2,358,720

76,113

—

76,113

8,564,837

4,378,981

3,223,970

2,422,534

1,846,143

9,262,743

29,699,208

28,964,396

4.12% $ 9,848,245

$ 5,078,132

$ 3,829,485

$ 2,799,808

$ 2,081,039

$10,261,341

$ 33,898,050

$ 33,185,863

0.72% $ 12,757,484

— $

— $ 12,757,484

$ 12,757,484

2.18

1.67

2.55

6.00

8,507,854

1,093,280

657,365

343,225

134,800

56,775

17,926

9,717,945

—

1,093,280

83,418

1,294,768

171,419

267,821

200,000

105,000

2,122,426

9,747,868

1,081,879

2,181,401

—

55,718

53,889

1.47% $ 22,442,036

$ 1,952,133

514,644

402,621

256,775

178,644

$ 25,746,853

$ 25,822,521

$(12,593,791) $ 3,125,999

$ 3,314,841

$ 2,397,187

$ 1,824,264

$10,082,697

$ 8,151,197

7,363,342

0.44:1

2.6:1

7.44:1

6.95:1

8.1:1

57.44:1

1.32:1

1.29:1

The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2019 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 2019 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, 2019 was a negative $12.6 billion, representing a ratio of interest
sensitive assets to interest sensitive liabilities of 0.44:1. 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, 2019. 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, 2019 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.

2019 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 carefully performed and reported by our Treasury Department to
two Board committees. Among other actions, Treasury reviews 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 requires that we may not have a ratio of loans to deposits in excess of 125 percent or reliance on wholesale funding
greater than 27.5 percent of total funding. The Bank was in compliance with the foregoing policies at December 31, 2019.

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. Our equities securities carried at fair value are restricted assets held for
certain Valley obligations at December 31, 2019 and unavailable as liquidity sources. Liquid assets totaled approximately $2.2
billion, representing 6.4 percent of earning assets, at December 31, 2019 and $2.3 billion, representing 8.0 percent of earning
assets, at December 31, 2018. Of the $2.2 billion of liquid assets at December 31, 2019, approximately $1.0 billion of various
investment securities were pledged to counterparties to support our earning asset funding strategies. We anticipate the receipt of
approximately $1.2 billion 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, 2019) are projected to be approximately $8.6 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. Average core deposits totaled approximately $20.4 billion and $18.1 billion for the years ended
December 31, 2019 and 2018, respectively, representing 66.8 percent and 65.3 percent of average earning assets at December 31,
2019 and 2018, 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, 2019:

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

Total

2019
(in thousands)

654,225
445,433
389,515
197,307
1,686,480

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 $1.0 billion 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 of New York via the discount window as a contingency for additional liquidity. At
December 31, 2019, our borrowing capacity under the Federal Reserve Bank's discount window was approximately $1.8 billion.

2019 Form 10-K

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
time, federal funds purchased) decreased $1.0 billion to $1.1 billion at December 31, 2019 as compared to $2.1 billion at
December 31, 2018 largely due to a decrease of $792 million in FHLB advances and lower repo and federal funds purchased
balances. The change in short-term borrowings is generally driven by the levels of loan originations both for investment and sale,
the success of our deposit gathering initiatives (including brokered deposits) and changes in long-term borrowings used in our
current liquidity/funding strategies.

Average short-term FHLB advances exceeded 30 percent of total shareholders' equity at December 31, 2019 and 2018,
respectively. The following table sets forth information regarding Valley’s short-term FHLB advances at the dates and for the years
ended December 31, 2019 and 2018:

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

2019

2018

($ in thousands)

1,681,844
2,510,000
940,000

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

1.88%
1.85

1.00%
2.44

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, 2019, our investment portfolio was comprised of equity securities (consisting of a money market mutual
fund), 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 and Fannie Mae. 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, bank issued corporate bonds and special revenue bonds
may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential
negative effect on the future performance of the security issuers.

2019 Form 10-K

Investment securities at December 31, 2019, 2018 and 2017 were as follows:

Equity securities *
Available for sale debt securities
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 available for sale debt securities
Total investment securities (fair value)

Held to maturity debt securities
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)

Total investment securities

2018

(in thousands)

2017

41,410

— $

11,201

50,943
29,243

78,573
91,478
170,051
1,254,786
—
61,778
1,566,801
1,608,211

138,352
7,345

297,454
203,251
500,705
1,620,119
37,324
32,250

2,336,095

3,944,306

49,306
36,277

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

138,517
8,721

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

2,068,246

3,817,790

49,642
42,505

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

138,676
9,859

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

1,842,691

3,336,596

* Equity securities at December 31, 2017 were reclassified from available for sale securities to conform to the current

presentation in accordance with Accounting Standards Update No. 2016-01 adopted on January 1, 2018.

As of December 31, 2019, total investments increased $126.5 million or 3.3 percent as compared to 2018 largely due to a
combined net increase of $178.4 million in residential mortgage-backed securities classified as held for maturity and available for
sale and a $41.4 million increase in equity securities, partially offset by a combined $112.0 million decrease in obligations of states
and state agencies classified as held to maturity and available for sale. The net increase in total residential mortgage-backed
securities was mainly driven by purchases of Ginnie Mae and Fannie Mae securities classified as held to maturity and securities
acquired from Oritani classified as available for sale that were offset by a high level of paydowns during 2019. We acquired $335.9
million of available for sale debt securities from Oritani, consisting mostly of residential mortgage-backed securities. See Note 2
to the consolidated financial statements for additional information. The decrease in obligations of states and state agencies fromff
2018 was largely a result of a high level of calls and redemptions within the held for maturity portfolio during 2019.

At December 31, 2019, we had $1.6 billion and $1.3 billion of residential mortgage-backed securities classified as held to
maturity and available for sale, respectively. Approximately 56 percent and 66 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, 2019 were issued by either Fannie Mae or Freddie Mac.

2019 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, 2019:

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)

905

1.84% $ 50,038

1.59% $

3.10

2,726

0.22

—

—% $

—

—% $

50,943

1.59%

26,507

2.89

29,243

2.64

5,781

10,405

3.08

3.06

16,369

28,604

3.82

2.68

17,020

28,008

6.05

4.10

39,403

24,461

4.25

5.20

78,573

91,478

4.46

3.83

16,186

3.07

44,973

3.09

45,028

4.84

63,864

4.61

170,051

4.12

3,837

2,510

0.09

3.32

21,487

13,064

2.04

2.69

88,105

46,204

2.76

4.53

1,141,357

2.53

1,254,786

—

61,778

2.53

4.09

Available for sale debt securities

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

Total

$ 23,448

2.56% $ 132,288

2.26% $ 179,337

3.74% $1,231,728

2.65% $ 1,566,801

2.74%

Held to maturity debt securities

U.S. Treasury securities

$ 69,624

2.91% $ 39,807

2.88% $ 28,921

3.06% $

—

—% $ 138,352

2.93%

U.S. government agency securities

—

7,345

2.53

7,345

2.53

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

1,013

16,593

3.12

3.96

40,722

79,837

4.34

3.89

112,610

60,553

4.88

3.75

143,109

46,268

3.62

4.74

297,454

203,251

4.19

4.05

17,606

3.91

120,559

4.04

173,163

4.48

189,379

3.89

500,705

4.13

Corporate and other debt securities

9,000

2.66

10,250

3.81

—

8,821

3.01

—

11,611

1,353

13,000

2.87

8.23

4.81

1,599,687

35,971

—

2.64

4.04

1,620,119

37,324

32,250

2.64

4.19

3.89

Total

$ 96,230

3.70% $ 179,437

3.72% $ 228,048

4.26% $1,832,382

2.80% $ 2,336,095

3.02%

(1) Held to maturity debt securities 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.

2019 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.
See Note 4 to our consolidated financial statements for additional information regarding our other-than-temporary impairment
analysis.

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

at December 31, 2019.

Amortized
Cost

December 31, 2019

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair Value

Available for sale investment grades:*

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

Total debt securities available for sale

Held to maturity investment grades:*

AAA Rated

AA Rated

A Rated

BBB Rated

Not rated

1,386,925
67,598
21,050
28,069
6,827
48,318
1,558,787

1,979,283

220,202

17,507

10,722

108,381

12,252
566
222
353
—
203
13,596

27,745

5,779

401

325

306

Total securities held to maturity

2,336,095

34,556

(5,324) $
(34)
(22)
—
(51)
(151)
(5,582) $

(5,391) $
(10)
—
(48)
(6,482)
(11,931) $

1,393,853
68,130
21,250
28,422
6,776
48,370
1,566,801

2,001,637

225,971

17,908

10,999

102,205

2,358,720

* Rated using external rating agencies. 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 for both available for sale and held to maturity investment debt securities
presented in the table above are mostly related to residential mortgage-backed securities primarily issued by Ginnie Mae, Fannie
Mae and Freddie Mac. The held to maturity portfolio includes $108.4 million in investments not rated by the rating agencies witht
aggregate unrealized losses of $6.5 million at December 31, 2019. The unrealized losses for this category included $6.0 million
of unrealized losses related to four single-issuer bank trust preferred issuances with a combined amortized cost of $36.0 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, 2019, 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.

During 2019, Valley recognized a $2.9 million other-than-temporary credit impairment charge on one special revenue bond
classified as available for sale (within the obligations of states and state agencies in the tables above). The credit impairment was
due to severe credit deterioration disclosed by the issuer in the second quarter 2019, as well as the issuer's default on its contractual
payment. At December 31, 2019, the impaired security had an adjusted amortized cost and fair value of $680 thousand.
Comparatively, there was no other-than-temporary impairment recognized in earnings during the years ended December 31, 2018
and 2017. During the fourth quarter 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.

2019 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

2019

2018

4,825,997

4,331,032

At December 31,
2017
($ in thousands)
2,741,425
$

2016

2015

2,638,195

2,540,491

15,996,741
1,647,018
17,643,759
4,377,111

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

487,272
1,451,623
913,446
2,852,341
$ 29,699,208

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

16.2%
59.5
14.7
9.6
100%

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%

* Total loans are net of unearned premiums and deferred loan costs of $12.6 million, $21.5 million, $22.2 million, $15.3 million, and $3.5

million at December 31, 2019, 2018, 2017, 2016, and 2015, respectively.

Total loans increased by $4.7 billion, or 18.6 percent to $29.7 billion at December 31, 2019 from December 31, 2018.
Adjusted for $3.2 billion of acquired Oritani loan balances as of December 31, 2019 and the $800 million of commercial real
estate loans sold, total loans grew by 8.8 percent in 2019 due to strong demand in most loan categories as discussed further below.
During 2019, Valley also originated $538.0 million of residential mortgage loans for sale. Loans held for sale totaled $76.1 million
and $35.2 million at December 31, 2019 and 2018, 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, 2019, our PCI loan portfolio increased $2.4 billion to $6.6 billion as compared to December 31, 2018 primarily due
to the PCI loan classification of all the loans acquired from Oritani on December 1, 2019, partially offset by normal loan repayments.

Commercial and industrial loans totaled $4.8 billion at December 31, 2019 and increased by $495.0 million from
December 31, 2018 mainly due to a $553.6 million increase in the non-PCI loan portfolio, partially offset by $58.6 million decrease
in PCI loans. The increase in non-PCI loans was due to strong organic growth mostly driven by new small to middle market lending
relationships within our markets aided by our ability to hire strong lending talent and the success of focused calling efforts in 2019.
In addition, our premium finance division grew by approximately $41 million during 2019 from a year ago. Commercial and
industrial loans acquired from Oritani during the fourth quarter 2019 were not material.

Commercial real estate loans (excluding construction loans) increased $3.6 billion to $16.0 billion at December 31, 2019
from December 31, 2018 mainly due to $3.0 billion of PCI loans acquired from Oritani and a $1.0 billion increase in the non-PCI
loan portfolio, 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 new
and pre-exiting relationships in our Florida market area, as well as targeted growth in New Jersey and New York and some migration
of completed construction projects to permanent financing during 2019. The increase in non-PCI loans was partially offset by the
aforementioned sale of approximately $800 million of commercial real estate loans, mostly within New York City during the fourtht
quarter 2019. Construction loans totaled $1.6 billion at December 31, 2019 and increased $158.9 million from December 31, 2018.
Exclusive of a $214.5 million decline in PCI loans, the non-PCI construction loans increased $373.4 million or 33.3 percent largely

2019 Form 10-K

due to strong demand for investor occupied projects within our primary markets, and to a lesser extent, migration of completed
construction projects to permanent financing.

Residential mortgage loans totaled $4.4 billion at December 31, 2019 and increased by $265.7 million from December 31,
2018 partly due to a $114.0 million increase in our non-PCI loans. Our PCI loans increased $151.7 million largely due to $248.3
million of loans acquired from Oritani, net of normal repayment activity. Our new and refinanced residential mortgage loan
originations decreased 9.2 percent to $1.6 billion for the year ended December 31, 2019 as compared to $1.7 billion in 2018. Of
the $1.6 billion in total originations, $333 million represented Florida residential mortgage loans. During 2019, we sold $934.5
million of residential mortgages as compared to $965.5 million of residential mortgage loans sold during 2018, including $436
million and $290 million of pre-existing loans sold from our residential mortgage loan portfolio, respectively. 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. Valley purchased approximately $35 million and $105 million of 1-4 family loans, qualifying for CRA
purposes during 2019 and 2018, respectively.

Consumer loans totaled $2.9 billion at December 31, 2019 and increased $154.7 million from December 31, 2018 mainly
due to increases in automobile and secured personal lines of credit, partially offset by a decrease in the home equity loan portfolio.
Automobile loans increased $132.1 million or 10.0 percent to $1.5 billion at December 31, 2019 from December 31, 2018 primarily
due to higher indirect auto application activity during 2019. Additionally, our Florida dealership network contributed over $169
million in auto loan originations, representing approximately 23 percent of Valley's total new auto loan production for 2019 as
compared to $155 million, or 24 percent, of total originations in 2018. Other consumer loans increased $52.5 million to $913.4
million at December 31, 2019 as compared to 2018 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 lifeff
insurance policy. Home equity loans decreased $29.8 million in 2019 from $517.1 million at December 31, 2018. The modest
organic growth of $4.7 million in non-PCI loans during 2019 was more than offset by $34.5 million decline in PCI loans caused
by normal repayments.

For 2020, 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, 2019 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.

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

within our loan portfolio as of December 31, 2019:

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

599,716
714,997
211,720
834,397
2,360,830

(in thousands)

800,798
721,193
109,893
260,144
1,892,028

847,794
1,141,499
169,998
60,866
2,220,157

2,248,308
2,577,689
491,611
1,155,407
6,473,015

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.

2019 Form 10-K

Purchased Credit-Impaired Loans

PCI loans increased $2.4 billion to $6.6 billion at December 31, 2019 from $4.2 billion at December 31, 2018 mainly due
to $3.4 billion of PCI loans acquired from Oritani on December 1, 2019, partially offset by normal repayment activity. Our PCI
loans almost entirely include loans acquired in business combinations subsequent to 2011.

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 lifeff
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, or more frequent 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 thet
differences may be significant. To mitigate such differences, we carefully prepare and review the assumptions utilized in forecasting
estimated cash flows.

On a quarterly basis, Valley analyzes the actual cash flow versus the forecasts at the loan pool level and variances are reviewed
to determine their cause. In re-forecasting future estimated cash flow, Valley will adjust the credit loss expectations for loan pools,
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, 2019 and 2018.

2019

2018

Carrying
Amount

Accretable
Yield

Carrying
Amount

Accretable
Yield

Balance, beginning of the period

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

Transfers to other real estate owned

Balance, end of the period

4,190,086
3,380,841
214,415
(1,152,793)
—
(2,950)
6,629,599

2019 Form 10-K

(in thousands)

875,958
600,178
(214,415)
—
(10,995)
—
1,250,726

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

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

The net (decrease) 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 decrease in the
expected cash flows totaling approximately $11.0 million for the year ended December 31, 2019 was largely due to the high volume
of contractual principal prepayments caused by the low level of market interest rates. The net increase in the expected cash flows
totaling $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 2018.

Non-performing Assets

Non-performing assets (NPAs), which exclude non-performing PCI loans, include non-accrual loans, other real estate owned
(OREO), other repossessed assets (which consist of automobiles) and non-accrual debt securities at December 31, 2019. 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 $104.4 million at December 31, 2019 increased 5.9 percent over the
last 12-month period (as shown in the table below) primarily due to higher non-accrual commercial real estate loans. NPAs as a
percentage of total loans and NPAs totaled 0.35 percent and 0.39 percent at December 31, 2019 and 2018, respectively. We believe
our total NPAs has remained relatively low as a percentage of the total loan portfolio 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.

2019 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*
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*

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

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

2019

2018

At December 31,
2017

($ in thousands)

2016

2015

11,700
2,560
1,486
17,143
13,704
46,593

2,227
4,026
1,343
4,192
2,527
14,315

3,986
579
—
2,042
711
7,318
68,226

68,636
9,004
356
12,858
2,204
93,058
9,414
1,276
680

104,428

73,012

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

0.31%
0.35

0.35%
0.39

0.26%
0.31

0.22%
0.29

0.39%
0.49

0.54

0.62

0.70

0.55

173.83

171.79

255.92

305.05

170.98

Past due loans and non-accrual loans exclude PCI loans that are accounted for on a pool basis.

2019 Form 10-K

Loans past due 30 to 59 days decreased $5.2 million to $46.6 million at December 31, 2019 as compared to $51.8 million
at December 31, 2018, mostly due to improved performance in all commercial loan delinquency categories, partially offset by
increases in residential mortgage and consumer loan delinquencies. We do not believe that the higher level of residential mortgage
and consumer loan delinquencies at December 31, 2019 represent any material negative trend within our total loan portfolio. All
of the loans in this delinquency category are generally well secured and in the process of collection.

Loans past due 60 to 89 days increased $6.2 million to $14.3 million at December 31, 2019 as compared to December 31,
2018 partly due to two loan relationships totaling $3.7 million and $1.3 million within the commercial real estate and construction
loan delinquencies, respectively, at December 31, 2019. The construction loan relationship was in the normal matured loan in the
process of renewal and was subsequently brought current to its contractual terms.

Loans 90 days or more past due and still accruing decreased $494 thousand to $7.3 million at December 31, 2019 as compared
to December 31, 2018. Commercial and industrial loan delinquencies decreased $2.2 million as compared to 2018 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 $4.7 million to $93.1 million at December 31, 2019 as compared to December 31, 2018 mainly
due to an increase in commercial real estate loans, partially offset by a decrease in commercial and industrial loans. The $6.6
million increase in commercial real estate loans was partly due to a $3.9 million non-accrual loan at December 31, 2019. This
loan had no related reserves within the allowance for loan losses at December 31, 2019 based upon the adequacy of the collateral
valuation. The decrease in commercial and industrial loan category was mainly driven by non-accrual taxi medallion loans charge-
offs totaling $6.5 million for the year ended December 31, 2019. Non-accrual taxi medallion loans totaled $63.3 million at
December 31, 2019 as compared to $58.5 million at December 31, 2018 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, 2019 and 2018. 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,
2019, are well secured and largely collectible based on, in part, our quarterly review of impaired loans and the valuation of thet
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 $163.6 million at December 31,
2019 and had $38.6 million in related specific reserves included in our total allowance for loan losses. If interest on non-accrual
loans had been accrued in accordance with the original contractual terms, such interest income would have amounted to
approximately $2.5 million, $3.6 million and $2.5 million for the years ended December 31, 2019, 2018 and 2017, respectively;
none of these amounts were included in interest income during these periods.

During 2019, we continued to closely monitor the performance of our New York City and Chicago taxi medallion loans
totaling $107.5 million and $7.3 million, respectively, within the commercial and industrial loan portfolio at December 31, 2019.
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, 2019, the medallion portfolio included
impaired loans totaling $87.1 million with related reserves of $35.5 million within the allowance for loan losses as compared to
impaired loans totaling $73.7 million with related reserves of $27.9 million at December 31, 2018. At December 31, 2019, the
impaired medallion loans largely consisted of $63.3 million of non-accrual taxi cab medallion loans classified as doubtful, and
$23.8 million performing 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,
2019 (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 $11.8 million within the allowance for loan
losses based upon the impaired taxi medallion loan balances at December 31, 2019.

OREO (which consisted of 30 commercial and residential properties) decreased to $9.4 million at December 31, 2019 as
compared to $9.5 million at December 31, 2018. During 2019, we transferred 13 properties totaling $5.1 million and sold 35
properties for total proceeds of $6.6 million. The sales of OREO properties resulted in net gains of $1.3 million for the year ended
December 31, 2019 as compared to an immaterial net loss for the year ended December 31, 2018. See additional information

2019 Form 10-K

regarding OREO and other repossessed assets, including our foreclosed asset activity, in Notes 1 and 3 to the consolidated financial
statements.

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
$4.2 million to $73.0 million at December 31, 2019 as compared to $77.2 million at December 31, 2018 mainly due to paydowns
of several commercial and industrial loans during 2019. Performing TDRs consisted of 120 loans and 119 loans (primarily in the
commercial and industrial loan and commercial real estate portfolios) at December 31, 2019 and 2018, respectively. On an aggregate
basis, the $73.0 million in performing TDRs at December 31, 2019 had a modified weighted average interest rate of approximately
5.45 percent as compared to a pre-modification weighted average interest rate of 4.89 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 interest rates due to the level of current market interest rates, but with extended loan terms and/or new contractual interest
rates below market terms for similar credit risk profiles.

Potential Problem Loans

Although we believe that substantially all risk elements at December 31, 2019 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 $91.7 million and $142.8 million in potential problem loans (consisting mostly of
commercial and industrial loans) at December 31, 2019 and 2018, 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, 2019, 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, 2019.

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 $5.9 billion of PCI loans, represent approximately 76
percent of total loans at December 31, 2019. 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 2019
was 72 percent while FICO® (independent objective criteria measuring the creditworthiness of a borrower) scores averaged 751.
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.

2019 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 loana
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 area
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, 2019, a $38.6 million
specific valuation allowance was included in the allowance for credit losses related to $163.6 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 accuratelyaa
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.

2019 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

$ 26,235,253

$23,340,330

($ in thousands)
$17,819,003

$ 16,400,745

$14,447,020

2019

Years Ended December 31,
2017

2018

2016

2015

156,295

124,452

116,604

108,367

104,287

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

(13,260)
(158)
—
(126)
(8,671)
(22,215)

2,397
1,237
—
66
2,606
6,306
(15,909)
24,218

(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

164,604

156,295

124,452

161,759

151,859

120,856

2,845
164,604

25,809
(1,591)

24,218

4,436
156,295

31,661
840

32,501

3,596
124,452

8,531
1,411

9,942

116,604

108,367

114,419

106,178

2,185
116,604

11,873
(4)

11,869

2,189
108,367

7,846
255

8,101

0.06%

0.00%

0.01%

0.02%

0.03%

0.71

0.55

0.75

0.62

0.73

0.68

0.75

0.68

0.79

0.68

Our net loan charge-offs increased $15.3 million to $15.9 million in 2019 as compared to $658 thousand in 2018 mainly
due to higher gross charge-offs in the commercial and industrial and consumer loan categories, as well as lower gross commercial
and industrial loan recoveries during 2019. The higher level of commercial and industrial loan charge-offs in 2019 was mostly
driven by taxi medallion loan partial charge-offs totaling $6.5 million and 5 other larger loan charge-offs totaling a combined $5.1
million for the year ended December 31, 2019.

Net charge-offs increased during 2019, but have remained relatively low over the last five years and within management's
expectations for the credit quality of Valley's loan portfolio, its underwriting standards and the current economic environment.
During this five-year period, our net charge-offs were at a high of 0.06 percent of average loans during 2019 and near zero during
2018. While we have a positive outlook for the future performance of the loan portfolio and the economy, there can be no assurance

2019 Form 10-K

that our levels of net charge-offs will not deteriorate in 2020, especially given the relatively low levels realized in the past five
years.

The provision for credit losses decreased $8.3 million to $24.2 million in 2019 as compared to 2018 largely due to continued
improvements in the credit quality of the loan portfolio, including internally assigned risk ratings of commercial loans, higher
impaired taxi medallion loans charge-offs and lower loan concentration risk in certain loan categories during 2019. Additionally,
the decline in the provision in 2019 as compared to 2018 was partly due to a $1.6 million decrease in reserves for unfunded letters
of credit (reported in the commercial and industrial loans category).

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

past five years:

Loan Category:

Commercial and
industrial*

Commercial real

estate:

Commercial real

estate

Construction

Total commercial
real estate

Residential
mortgage

Total Consumer

Total allowance

2019

2018

2017

2016

2015

Percent
of Loan
Category
to total
loans

Allowance
Allocation

Percent
of Loan
Category
to total
loans

Allowance
Allocation

Percent
of Loan
Category
to total
loans

Allowance
Allocation

($ in thousands)

$ 106,904

16.2% $

95,392

17.3% $

60,828

15.0% $

53,005

15.3 % $

50,956

15.8%

20,019

25,654

45,673

5,060

6,967

53.9

5.6

59.5

14.7

9.6

26,482

23,168

49,650

5,041

6,212

49.6

5.9

55.5

16.4

10.8

36,293

18,661

54,954

3,605

5,065

51.8

4.6

56.4

15.6

13.0

36,405

19,446

50.6

4.8

32,037

15,969

55,851

55.4

48,006

3,702

4,046

16.6

12.7

4,625

4,780

46.3

4.7

51.0

19.5

13.7

for credit losses

$ 164,604

100% $ 156,295

100% $ 124,452

100% $ 116,604

100 % $

108,367

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 0.55 percent at December 31, 2019 and 0.62 percent at December 31, 2018. Our allowance allocations
for losses at December 31, 2019 increased across most loan categories mainly due to strong organic loan growth. The increased
allowance allocation for the commercial and industrial loans category (see table above) at December 31, 2019 was also partly due
to higher specific reserves for impaired taxi medallion loans. At December 31, 2019, the allowance allocation for commercial real
estate loans declined to $20.0 million from $26.5 million at December 31, 2018 mainly due to a continued decline in historical
loss rates over the prolonged current economic cycle.

Our allowance for credit losses as a percentage of total non-PCI loans (excluding PCI loans with carrying values totaling
approximately $6.6 billion) was 0.71 percent at December 31, 2019 as compared to 0.75 percent at December 31, 2018. 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, 2019 and 2018. See Notes 1 and 6 to the consolidated financial statements for additional information regarding our
allowance for loan losses.

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 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 $934 million and $676 million for 2019 and 2018, 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,

2019 Form 10-K

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 four loan repurchases in 2019 and five loan repurchase in 2018). 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, 2019 and 2018. 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, 2019 and 2018,
shareholders’ equity totaled approximately $4.4 billion and $3.4 billion, or 11.7 percent and 10.5 percent of total assets, respectively.
During 2019, total shareholders’ equity increased by $1.0 billion primarily due to (i) the additional capital of $835.3 million issued
in the Oritani acquisition, (ii) net income of $309.8 million, (iii) $37.2 million of other comprehensive income, (iv) $15.9 million
increase attributable to the effect of our stock incentive plan, and (v) a $3.0 million net cumulative effect adjustment to retained
earnings for the adoption of new accounting guidance as of January 1, 2019. These positive changes were partially offset by cash
dividends declared on common and preferred stock totaling a combined $167.4 million.

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.

We are required to maintain 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, plus a 2.5 percent capital conservation buffer added to the minimum requirements for capital adequacy purposes. As of
December 31, 2019 and 2018, Valley and Valley National Bank exceeded all capital adequacy requirements. See Note 18 for
Valley’s and Valley National Bank’s regulatory capital positions and capital ratios at December 31, 2019 and 2018.

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 49.4 percent and 41.3 percent for the years ended December 31, 2019 and 2018, respectively. Our
retention ratio increased from the year ended December 31, 2018 mainly due to higher net interest income driven by strong loan
growth and continued focus by management on our operational efficiency, partially offset by net charges from several infrequent
items within our non-interest income and expense discussed elsewhere in this MD&A.

Cash dividends declared amounted to $0.44 per common share for both years ended December 31, 2019 and 2018. 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 considering the increased capital levels as required
under the Basel III rules. Prior to the date of this filing, Valley has received no objection or adverse guidance from the FRB or the
OCC regarding the current level of its quarterly common stock dividend.

Valley maintains an effective shelf registration statement with the SEC that allows us to periodically offer and sell in one
or more offerings, individually or in any combination, 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 19 to the consolidated financial statements for additional information on Valley’s preferred stock issuances.

2019 Form 10-K

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, 2019. 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 10
Note 11

Note 12

Note 7

One Year
or Less

One to
Three Years

Three to
Five Years

Over Five
Years

Total

(in thousands)

$ 8,507,854
83,418

$ 1,000,590
1,466,188

191,575
408,164

17,926
160,000

$ 9,717,945
2,117,770

—

36,022

14,805

40,592

—

69,311

—

959

$ 8,682,691

$ 2,537,048

Note 16

$ 4,518,984

$ 1,338,786

238,305

68,492

9,598

—

59,887

—

1,402

661,028

374,973

40,699

—

60,827

228,644

—

60,827

393,864

14,805

42,953

467,397

$12,348,164

978,510

$ 7,211,253

7,434

—

296,036

68,492

$ 4,825,781

$ 1,348,384

415,672

985,944

$ 7,575,781

(1) Amounts presented consist of the contractual principal balances. Carrying values and call dates are set forth in Notes 11 and 12 to the
consolidated financial statements for long-term borrowings and junior subordinated debentures issued to capital trusts, respectively.
This category primarily consists of contractual obligations for communication and technology costs.

(2)

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

in Note 13 of the consolidated financial statements.

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

2019 Form 10-K

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, 2019. See Note 12 of the consolidated financial statements for additional
information on our statutory trusts and the related junior subordinated debentures and trust preferred securities.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Information regarding Quantitative and Qualitative Disclosures About Market Risk is discussed in the "Interest Rate
Sensitivity" section contained in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations" and it is incorporated herein by reference.

2019 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:
Equity securities
Available for sale debt securities
Held to maturity debt securities (fair value of $2,358,720 at December 31, 2019

and $2,034,943 at December 31, 2018)
Total investment securities

Loans held for sale, at fair value
Loans

Less: Allowance for loan losses

Net loans
Premises and equipment, net
Lease right of use assets
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
Lease liabilities
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, 2019 and December 31, 2018)
Series B (4,000,000 shares issued at December 31, 2019 and December 31, 2018)

Common stock (no par value, authorized 450,000,000 shares; issued 403,322,773
shares at December 31, 2019 and 331,634,951 shares at December 31, 2018)

Surplus
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost (44,383 common shares at December 31, 2019 and 203,734

common shares at December 31, 2018)
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity

December 31,

2019

2018

(in thousands except for share data)

256,264
178,423

251,541
177,088

41,410
1,566,801

2,336,095
3,944,306
76,113
29,699,208
(161,759)
29,537,449
334,533
285,129
540,169
105,637
1,373,625
86,772
717,600
37,436,020

—
1,749,544

2,068,246
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

6,710,408

6,175,495

12,757,484
9,717,945
29,185,837
1,093,280
2,122,426
55,718
309,849
284,722
33,051,832

111,590
98,101

141,423
3,622,208
443,559
(32,214)

11,213,495
7,063,984
24,452,974
2,118,914
1,654,268
55,370
3,125
227,983
28,512,634

111,590
98,101

116,240
2,796,499
299,642
(69,431)

(479)
4,384,188
37,436,020

(2,187)
3,350,454
31,863,088

See accompanying notes to consolidated financial statements.

2019 Form 10-K

CONSOLIDATED STATEMENTS OF INCOME

2019

Years Ended December 31,
2018
(in thousands, except for share data)

2017

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 on securities transactions, net
Other-than-temporary impairment losses on securities

Portion recognized in other comprehensive income (before taxes)

Net impairment losses on securities recognized in earnings

Fees from loan servicing
Gains on sales of loans, net
Gains (losses) on sales of assets, net
Bank owned life insurance
Other

Total non-interest income

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

1,198,908

1,033,993

734,474

86,926
17,420
12,023
5,723
1,321,000

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

145,177
166,693
47,862
63,220
422,952
898,048
24,218
873,830

12,646
10,409
23,636
(150)
(2,928)
—
(2,928)
9,794
18,914
78,333
8,232
55,634
214,520

327,431
118,191
21,710
18,080
20,810
31,995
20,392
9,883
63,063
631,555
456,795
147,002
309,793
12,688
297,105

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
(2,401)
8,691
45,607
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

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
(95)
7,338
25,062
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

2019 Form 10-K

CONSOLIDATED STATEMENTS OF INCOME—(Continued)

2019

Years Ended December 31,
2018
(in thousands, except for share data)

2017

Earnings Per Common Share:

Basic
Diluted

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

Basic
Diluted

0.88
0.87
0.44

0.75
0.75
0.44

0.58
0.58
0.44

337,792,270
340,117,808

331,258,964
332,693,718

264,038,123
264,889,007

See accompanying notes to consolidated financial statements.

2019 Form 10-K

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income

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

Net gains (losses) arising during the period

Less reclassification adjustment for net losses (gains) included

in net income

Total

Unrealized gains and losses on derivatives (cash flow hedges)
Net (losses) gains on derivatives arising during the period

Less reclassification adjustment for net losses included in net

income

Total

Defined benefit pension plan

Net losses arising during the period

Amortization of prior service (credit) cost

Amortization of net loss

Total

Total other comprehensive income (loss)

2019

2018
(in thousands)

2017

309,793

261,428

161,907

39,262

119
39,381

(989)

1,291

302

(2,561)
(93)
188
(2,466)
37,217

(22,932)

2,237
(20,695)

1,874

2,494

4,368

(7,151)
146

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

850

(156)
694

576

5,028

5,604

(2,722)
191

248
(2,283)
4,015

165,922

Total comprehensive income

347,010

See accompanying notes to consolidated financial statements.

2019 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)

111,590

263,639

$ 92,353

$ 2,044,401

$ 172,754

(42,093) $ (1,849) $ 2,377,156

—

7,927

(7,927)

—

111,590

263,639

92,353

2,044,401

180,681

(50,020)

(1,849)

2,377,156

—

98,101

—

—
—

—

—
—

117

713

—

—
—

229

145

— 161,907

—

(7,188)

(2,261)

—
— (116,332)

11,297

4,658

(18)

(56)

—

4,015

—

—
—

—

—
—

— (1,948)

—

3,460

161,907

4,015

98,101

(7,188)

(2,261)

(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)

2,515,554

—

— 261,428

—

(22,885)

—

(7,188)

(5,500)

— (146,346)

—

1,955

65,007

771

22,742

21,022

715,121

(2,415)

—

— (2,198)

—

348

—

261,428

(22,885)

(7,188)

(5,500)

(146,346)

17,180

738,211

Balance - December 31, 2016

Reclassification due to the

adoption of ASU No. 2018-02

Balance - January 1, 2017

Net income

Other comprehensive income,

net of tax

Preferred Stock Issued

Cash dividends declared:

Preferred stock, Series A, $1.56

per share

Preferred stock, Series B, $0.57

per share

Common Stock, $0.44 per share

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:

Preferred stock, Series A, $1.56

per share

Preferred stock, Series B, $1.38

per share

Common Stock, $0.44 per share

Effect of stock incentive plan, net

Common stock issued

Balance - December 31, 2018

209,691

331,431

$116,240

$ 2,796,499

$ 299,642

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

2019 Form 10-K

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY—(Continued)

Common Stock

Preferred
Stock

Amount

Surplus

Accumulated

Other
Comprehensive
Loss

Retained
Earnings

Treasury
Stock

Total
Shareholders’
Equity

Balance - December 31, 2018

209,691

331,431

$116,240

$ 2,796,499

$ 299,642

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

Adjustment due to the adoption of

ASU No. 2016-02

Adjustment due to the adoption of

ASU No. 2017-08

Balance - January 1, 2019
Net income

Other comprehensive income,

net of tax

Cash dividends declared:

Preferred stock, Series A, $1.56

per share

Preferred stock, Series B, $1.38

per share

Common Stock, $0.44 per share

Effect of stock incentive plan, net

Common stock issued

—

4,414

(1,446)

—

4,414

(1,446)

209,691

331,431

116,240

2,796,499

302,610

(69,431)

(2,187)

3,353,422

—

— 309,793

—

37,217

—

(7,188)

(5,500)

— (154,689)

—

1,708

—

309,793

37,217

(7,188)

(5,500)

(154,689)

15,878

835,255

—

726

291

71,121

24,892

15,346

810,363

(1,467)

—

Balance - December 31, 2019

209,691

403,278

$141,423

$ 3,622,208

$ 443,559

(32,214) $

(479) $ 4,384,188

See accompanying notes to consolidated financial statements.

2019 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 on securities transactions, net

Proceeds from sales of loans held for sale

Gains on sales of loans, net

Net impairment losses on securities recognized in earnings

Originations of loans held for sale

(Gains) losses on sales of assets, net

Net deferred income tax (benefit) expense

Net change in:

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

Equity securities:

Purchases

Sales

Held to maturity debt securities:

Purchases

Maturities, calls and principal repayments

Available for sale debt securities:

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,

2019

2018

2017

(in thousands)

309,793

261,428

161,907

53,317

14,726

24,218

29,512

18,080

150

1,743,470

(18,914)

2,928

(537,985)

(78,333)

15,228

(8,232)

1,440

(163,330)

57,882

1,463,950

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

813,855

(20,814)

—

(444,290)

76,848

(7,338)

(7,174)

(57,353)

121

619,230

(2,538,909)

(3,257,939)

(1,418,073)

(14,776)

24,748

(701,879)

424,475

(30,392)

271,901

316,024

9,560

109,043

(23,375)

22,239

—

(264,721)

241,077

(220,356)

290,929

(289,554)

(411,788)

44,377

255,031

4,220

7,786

(26,440)

156,612

2,727

204,684

13,089

9,357

(18,117)

—

(2,131,341) $

(3,129,551) $

(1,547,548)

2019 Form 10-K

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

Years Ended December 31,

2019

2018
(in thousands)

2017

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

Other, 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

Lease right of use assets obtained in exchange for operating lease liabilities

Acquisition:

Non-cash assets acquired:

Equity securities

Investment securities available for sale

Investment securities held to maturity

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

1,808,148

2,734,669

(1,036,134)

950,000

(890,000)

—

(12,688)

(146,537)

(1,805)

2,957

(492)

673,449

6,058

428,629

720,307

—

(750,682)

—

(15,859)

(138,857)

(3,801)

2,704

—

2,548,481

12,519

416,110

434,687

428,629

415,649

290,444

106,336

53,587

5,100

743

1,234,022

312,143

289,633

—

51,382

— $

335,894

4,877

308,385

214,217

3,380,841

3,736,984

23,585

101,896

11,781

288,960

20,690

50,174
4,270,080

2,924,716

10,500

430,130

—

91,718
3,457,064
813,016

22,239

835,255

$
$

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

—

—
—

—

—
—
—

—

2019 Form 10-K

See accompanying notes to consolidated financial statements.

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 the Securities and Exchange Commission (SEC);

a title insurance agency in New York, which also provides 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 12 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.

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 $114.4 million and $120.7 million at December 31, 2019 and 2018, respectively.

Investment Securities

Debt securities are classified at the time of purchase based on management’s intention, as securities available-for-sale or
securities held-to-maturity. 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

2019 Form 10-K

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 areaa
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 and losses on securities transactions. Equity securities are stated at fair value with any unrealized and realized
gains and losses reported in non-interest income. Investments in Federal Home Loan Bank and Federal Reserve Bank stock, which
have limited marketability, are carried at cost in other assets. Security transactions are recorded on a trade-date basis.

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-temporaryaa
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. 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 the “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. Loanaa
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.

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. 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

2019 Form 10-K

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, 2019 and 2018.

On a quarterly or more frequent basis, the Bank 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. 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, 2019 and 2018. The Bank’s methodology for evaluating the appropriateness
of the allowance includes grouping the 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.

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

2019 Form 10-K

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 thet
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.

Leases

Lessor Arrangements. Valley's lessor arrangements primarily consist of direct financing and sales-type leases for equipment
included in the commercial and industrial loan portfolio. Lease agreements may include options to renew and for the lessee to
purchase the leased equipment at the end of the lease term.

Lessee Arrangements. Valley's lessee arrangements predominantly consist of operating and finance leases for premises and
equipment. The majority of the operating leases include one or more options to renew that can significantly extend the lease terms.
Valley’s leases have a wide range of lease expirations through the year 2062.

Operating and finance leases are recognized as right of use (ROU) assets and lease liabilities in the consolidated statements
of financial position. The ROU assets represent the right to use underlying assets for the lease terms and lease liabilities represent
Valley’s obligations to make lease payments arising from the lease. The ROU assets include any prepaid lease payments and initial
direct costs, less any lease incentives. At the commencement dates of leases, ROU assets and lease liabilities are initially recognized
based on their net present values with the lease terms including options to extend or terminate the lease when Valley is reasonably
certain that the options will be exercised to extend. ROU assets are amortized into net occupancy and equipment expense over the
expected lives of the leases.

Lease liabilities are discounted to their net present values on the balance sheet based on incremental borrowing rates as
determined at the lease commencement dates using quoted interest rates for readily available borrowings, such as fixed rate FHLB
advances, with similar terms as the lease obligations. Lease liabilities are reduced by actual lease payments.

2019 Form 10-K

See Note 7 for additional information on Valley's lease related assets and obligations.

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 8 for further details.

Bank Owned Life Insurance

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

Other Real Estate Owned

Valley acquires other real estate owned (OREO) through foreclosure on loans secured by real estate. OREO is reported at
the lower of cost or fair value, as established by a current appraisal (less estimated costs to sell), and is included in other assets.
Any write-downs at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred to maintain these
properties, unrealized losses resulting from valuation write-downs after the date of foreclosure, and realized gains and losses upon
sale of the properties are included in other non-interest expense. OREO totaled $9.4 million and $9.5 million at December 31,
2019 and 2018, respectively. OREO included foreclosed residential real estate properties totaling $2.1 million and $852 thousand
at December 31, 2019 and 2018, respectively. Residential mortgage and consumer loans secured by residential real estate properties
for which formal foreclosure proceedings are in process totaled $2.8 million and $1.8 million at December 31, 2019 and 2018,
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 2019 and 2018, 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.

2019 Form 10-K

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 for each risk-
stratified group of loan servicing rights are calculated using a fair value model from a third party vendor that 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.

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. Valley
amortizes the loan servicing assets in proportion to and over the period of estimated net servicing revenues. On a quarterly basis,
Valley stratifies its loan servicing assets into groupings based on risk characteristics and assesses each group for impairment based
on fair value. A valuation allowance is established through an impairment charge to earnings to the extent the unamortized cost
of a stratified group of loan servicing rights exceeds its estimated fair value. Increases in the fair value of impaired loan servicing
rights are recognized as a reduction of the valuation allowance, but not in excess of such allowance. The amortization of loan
servicing rights is recorded in non-interest income.

Stock-Based Compensation

Compensation expense for restricted stock units, restricted stock and stock option 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. Beginning
in 2019, Valley's long-term incentive compensation plan was amended for award grantees that are eligible for retirement to include
a service period requirement, in which an award will vest at one-twelve per month after the grant date. Compensation expense
for these awards is amortized monthly over a one year period after the grant date. Prior to 2019, award grantees that were eligible
for retirement did 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 stock awards with a market
condition. The grant date fair value of a performance-based stock award that vests based on a market condition is determined by
a third party specialist using a Monte Carlo valuation model. See Note 13 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 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. Valley's revenue within the
scope of ASC Topic 606 includes: (i) trust and investment services income from investment management, investment advisory,
trust, custody and other products; (ii) service charges on deposit accounts from checking accounts, savings accounts, overdrafts,
insufficient funds, ATM transactions and other activities; and (iii) other income from 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.

2019 Form 10-K

Income Taxes

Valley uses the asset and liability method to provide income taxes on all transactions recorded in the consolidated financial
statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between
the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each
temporary difference is determined based on the enacted tax rates that will be in effect when the underlying items of income and
expense are expected to be realized.

Valley’s expense for income taxes includes the current and deferred portions of that expense. Deferred tax assets are
recognized if, in management's judgment, their realizability is determined to be more likely than not. A valuation allowance is
established to reduce deferred tax assets to the amount we expect to realize. Deferred income tax expense or benefit results from
differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The effect on deferred
taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. See Note 14 for
details regarding the impact of the Tax 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;
(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 20 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, 2019, 2018 and 2017:

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
(in thousands, except for share data)

2017

297,105

248,740

152,458

337,792,270

2,325,538

331,258,964

1,434,754

264,038,123

850,884

340,117,808

332,693,718

264,889,007

0.88

0.87

0.75

0.58

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

2019 Form 10-K

options equaled approximately 288 thousand, 2.1 million, and 3.1 million of common shares for the years ended December 31,
2019, 2018 and 2017, respectively. All of the outstanding warrants expired unexercised in the fourth quarter 2018.

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 19 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 (1) manage its exposure to interest rate movements related to a service
for commercial lending customers, (2) share the risk of default on the interest rate swaps related to certain purchased or sold loan
participations through the use of risk participation agreements and (3) manage the interest rate risk of mortgage banking activities
with customer interest rate lock commitments and forward contracts to sell residential mortgage loans. Valley also has hybrid
instruments, consisting of market linked certificates of deposit with an embedded swap contract. Valley records all derivatives as
assets or liabilities at fair value on the consolidated statements of financial condition.

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 firmr
commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. 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 thet
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 2019

Accounting Standards Update (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 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 continue to be classified as finance or operating,
with classification affecting the pattern and classification of expense recognition in the income statement.

Effective January 1, 2019, Valley adopted ASU No. 2016-02 (and subsequent related updates) and recorded ROU assets of
approximately $216 million (net of the reversal of the deferred rent liability at such date) and lease obligations of approximatelyaa
$241 million. Valley elected the "package of practical expedients," as permitted under the transition guidance within Topic 842.
The practical expedients enable Valley to carry forward lease classifications under the prior accounting guidance (Topic 840).
Additionally, the expedients enable the use of hindsight, through which Valley reassessed the likelihood of extending leases under

2019 Form 10-K

extension clauses available to Valley. This shortened the expected lives of certain leases. As a result, Valley recorded a $4.4 million
(net of tax) credit adjustment to the opening balance of retained earnings as of January 1, 2019. Valley also made accounting policy
elections to (i) separate non-lease components from its lease obligations with the non-lease components being charged to earnings
when incurred and to (ii) exclude short-term leases of 12 months or less from the balance sheet. The comparative periods prior to
the adoption date of Topic 842 will continue to be presented in the financial statements in accordance with prior GAAP (Topic
840). See Note 7 for the additional required disclosures.

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 was effective for Valley on January 1, 2019 and was applied using the modified retrospective method,
resulting in a cumulative-effect adjustment to the opening balance of retained earnings totaling $1.4 million (net of tax) as of
January 1, 2019. ASU No. 2017-08 did not have a significant impact on Valley's consolidated financial statements.

ASU No. 2019-01, "Leases (Topic 842): Codification Improvements" reinstates the fair value exception in ASC 840, in
which lessors will measure fair value, at lease commencement, as cost, reflecting any applicable volume or trade discounts. ASU
No. 2019-01 also requires lessors that are depository or lending institutions in the scope of Topic 842 to classify the principal
portion of lease payments received under sales-type and direct financing leases as cash flows from investing activities. The interest
portion of those and all lease payments received under operating leases are classified as cash flows from operating activities.
Effective January 1, 2019, Valley early adopted ASU No. 2019-01 concurrent with its adoption of Topic 842. The adoption of
ASU No. 2019-01 did not have a material impact on Valley's consolidated financial statements.

New Accounting Guidance Adopted in the First Quarter 2020

ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments" amends the accounting guidance on the impairment of financial instruments. The FASB issued an amendment to
replace today's incurred loss impairment methodology with a new current credit loss (CECL) model. Under the new guidance,
Valley will be required to measure expected credit losses by utilizing forward-looking information to assess its allowance for credit
losses. The guidance also requires consideration of a broader range of reasonable and supportable information to inform credit
loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical
experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Valley
anticipates utilizing a two-year reasonable and supportable forecast period followed by a one-year period over which estimated
losses revert to historical loss experience for the remaining life of the loan. The measurement of expected credit loss under thet
CECL methodology is applicable to financial assets measured at amortized cost, including loans, held to maturity investments
and purchased financial assets with credit deterioration (PCD) assets. It also applies to certain off-balance sheet credit exposures.
In November 2019, the FASB issued ASU No. 2019-11, "Codification Improvements to Topic 326, Financial Instruments-Credit
Losses", which clarifies that expected recoveries of amounts previously written off or expected to be written off should be included
in the estimate of allowance for credit losses for purchased financial assets with credit deterioration, provides certain transition
relief for TDR accounting when the discounted cash flow method is used to estimate credit losses, allows entities to elect to disclose
separately the total amount of accrued interest included in the amortized cost basis as a single balance to meet certain disclosure
requirements, and clarifies that an entity should assess whether it reasonably expects the borrower will be able to continually
replenish collateral securing financial assets when electing a practical expedient to measure the estimate of expected credit losses
by comparing the amortized cost basis of the financial asset and the fair value of collateral securing the financial asset as of the
reporting date.

Valley will adopt the new CECL accounting guidance effective January 1, 2020 using the modified retrospective approach
for all financial assets measured at amortized cost (except for PCD loans) and off-balance sheet credit exposures. Valley has
established a governance structure to implement the CECL accounting guidance and has developed a methodology and set of
models to be used upon adoption. At December 31, 2019, Valley’s loan portfolio totaled $29.7 billion with a corresponding
allowance for loan losses ("ALL") of $161.8 million under current GAAP. Based on Valley's current CECL model results that it
has performed alongside the current ALL process, Valley estimates that the adoption of the new guidance will result in an increase
to the allowance for credit losses, including the reserve for off-balance sheet credit exposures (included within other liabilities),
of $30 million to $40 million, excluding PCD loans. Valley elected the prospective transition approach for PCD loans that were
previously classified as purchased-credit impaired (PCI) loans. Under this guidance, Valley is not required to reassess whether
PCI loans met the PCD loans criteria as of the date of the date of adoption. For PCD loans, the allowance for credit losses recorded
is recognized through a gross-up that increases the amortized cost basis of loans with a corresponding allowance for credit losses,
and therefore results in no expected impact to the cumulative effect adjustment to retained earnings. The anticipated increase to

2019 Form 10-K

the allowance for credit losses related to PCD loans is $60 million to $65 million. The remaining non-credit discount will be
accreted into interest income over the life of the loans at the effective interest rate effective January 1, 2020.

For other assets within the scope of the new CECL accounting guidance, such as debt securities held-to-maturity, trade and

other receivables, management expects the impact from the adoption to be inconsequential.

Valley is reviewing the performance of its most recent model run, including certain qualitative adjustments and certain
assumptions related to the reserve for off-balance sheet credit exposures. As Valley finalizes the implementation of the new
guidance in the first quarter of 2020, final decisions by management will result in the specific January 1, 2020 allowance for credit
losses impact being established and the related impact to the financial statements and disclosures.

Valley does not expect the adoption of the new CECL accounting guidance to have a significant impact on Valley’s regulatory

capital ratios.

ASU No. 2019-11, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses" amends or clarifies
the guidance in ASC 326 on credit losses. ASU No. 2019-11: (i) permits entities to record a negative allowance when measuring
the expected credit losses for a PCD financial asset, not to exceed the total amount of the amortized cost basis previously written
off and expected to be written off, (ii) provides transition relief for troubled debt restructurings, (iii) provides disclosure relief for
accrued interest receivable and (iv) offers a practical expedient for financial assets secured by collateral maintenance provisions
(e.g., the borrower is contractually required to adjust the amount of the collateral securing the financial asset). Valley adopted
ASU No. 2019-11 on January 1, 2020. The adoption of this ASU is not expected to have a significant impact on the presentation
of Valley's consolidated financial statements.

ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives
and Hedging, and Topic 825, Financial Instruments" clarifies and improves areas of guidance related to the recently issued standards
on credit losses, hedging, and recognition and measurement. The most significant provisions of the ASU relate to how companies
will estimate expected credit losses under Topic 326 by incorporating (1) expected recoveries of financial assets, including
recoveries of amounts expected to be written off and those previously written off, and (2) clarifying that contractual extensions
or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term
over which expected credit losses are measured. Valley adopted ASU No. 2019-04 on January 1, 2020. See more details regarding
our adoption of Topic 326 and ASU No. 2016-13 above.

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 and interim, if applicable, goodwill impairment tests in fiscal
years beginning January 1, 2020.

BUSINESS COMBINATIONS (Note 2)

Oritani Financial Corp.

On December 1, 2019, Valley completed its acquisition of Oritani Financial Corp. ("Oritani") and its wholly-owned
subsidiary, Oritani Bank. Oritani had approximately $4.3 billion in assets, $3.4 billion in net loans and $2.9 billion in deposits,
after purchase accounting adjustments, and a branch network of 26 locations. The acquisition represents a significant addition to
Valley's New Jersey franchise, and meaningfully enhanced its presence in the Bergen County market. The common shareholders
of Oritani received 1.60 shares of Valley common stock for each Oritani share that they owned prior to merger. The total consideration
for the acquisition was approximately $835.3 million, consisting of 71.1 million shares of Valley common stock and the outstanding
Oritani stock-based awards.

Merger expenses totaled $16.6 million for the year ended December 31, 2019, which primarily related to salary and employee

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

2019 Form 10-K

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

as of the closing date of the transaction:

Assets acquired:

Cash and cash equivalents

Equity securities

Investment securities available for sale

Investment securities held to maturity

Loans

Premises and equipment

Bank owned life insurance

Accrued interest receivable

Goodwill

Other intangible assets

Other assets:

Deferred tax assets

FHLB and FRB stock

Other assets

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

Accrued expense and other liabilities

Total liabilities assumed

Common stock issued in acquisition

December 1, 2019
(in thousands)

22,239

51,382

335,894

4,877

3,380,841

23,585

101,896

11,781

288,960

20,690

24,707

23,479

1,988

50,174

4,292,319

142,630

1,596,690

1,185,396

2,924,716

10,500

430,130

91,718

3,457,064

835,255

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 natureuu
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.

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 Oritani 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

2019 Form 10-K

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, multifamily, residential, and consumer) and credit risk rating. The estimated fair values were
computed by discounting the expected cash flows from the respective portfolios to present value based on estimated market rates.
Management estimated the cash flows expected to be collected at the acquisition date by using valuation models that incorporated
loan contractual characteristics (such as payment type, amortization type, and term to maturity) as well as estimates of key valuation
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, vintage,
coupon band, and payment status. 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 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. In addition, coupon rates for recently originated loans and available market data regarding
origination rates were also considered in the analysis. 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 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 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 11 for further details.

2019 Form 10-K

Had the acquisition of Oritani taken place on the beginning of the annual periods presented, Valley’s revenues (defined as
the sum of net interest income and non-interest income), net income, basic earnings per share, and diluted earnings per share would
have equaled the amounts indicated in the following table for the years ended December 31, 2019 and 2018:

(in thousands, except per share data)
Revenues
Net income
Basic earnings per share
Diluted earnings per share

USAmeriBancorp, Inc.

December 31,

2019

2018

Unaudited

1,219,887
361,079
0.86
0.85

1,106,012
313,977
0.75
0.75

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 represented 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 owned prior to merger. 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.

Had the acquisition of USAB taken place on January 1, 2017 Valley’s revenues (defined as the sum of net interest income
and non-interest income), net income, basic earnings per share, and diluted earnings per share would have equaled the amounts
indicated in the following table for the year ended December 31, 2017:

(in thousands, except per share data)
Revenues
Net income
Basic earnings per share
Diluted earnings per share

December 31,
2017
Unaudited

931,255
196,921
0.57
0.57

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 - 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.

• Level 2 - 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.

• Level 3 - 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).

2019 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, 2019
and 2018. 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,
2019

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

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(in thousands)

41,410

— $

Recurring fair value measurements:

Assets

Investment securities:

Equity securities

Available for sale debt securities:

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 debt securities

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

50,943
29,243

170,051

1,254,786

61,778

1,566,801

76,113

158,532

1,842,856

43,926

39,075

1,591

10,807

51,473

—

—
—

—

680

—

680

—

50,943
—

—

50,943

—

—
29,243

170,051

1,254,786

61,098

1,515,178

76,113

158,532

92,353

1,749,823

43,926

— $

—

— $

—

— $

39,075

1,591

10,807

51,473

2019 Form 10-K

Fair Value Measurements at Reporting Date Using:

December 31,
2018

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

197,092

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

35,155

48,979

1,833,678

23,681

45,245

273

5,673

51,191

—

49,306

—

49,306

—

— $

36,277

197,092

1,429,782

37,087

1,700,238

35,155

48,979

49,306

1,784,372

23,681

— $

—

— $

—

— $

45,245

273

5,673

51,191

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

balances totaling approximately $74.5 million and $34.6 million at December 31, 2019 and 2018, 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 thet
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.

Equity Securities. Fair values of equity securities, consisting of one publicly traded mutual fund, are derived from quoted

market prices in active markets.

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.

2019 Form 10-K

In calculating the fair value of one impaired special revenue bond (within obligations of states and political subdivisions in
the table above) under Level 3, Valley prepared its best estimate of the present value of the cash flows to determine an internal
price estimate. In determining the internal price, Valley utilized recent financial information and developments provided by the
issuer, as well as other unobservable inputs which reflect Valley’s own assumptions about the inputs that market participants would
use in pricing of the defaulted security. A quoted price received from an independent pricing service was weighted with the internal
price estimate to determine the fair value of the instrument at December 31, 2019. See Note 4 for additional information regarding
this impaired security.

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, 2019 and 2018
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, 2019 and 2018), 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, 2019 and 2018.

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, 2019, certain appraisals may be discounted based on specific market data by location and property type. During
2019 and 2018, collateral dependent impaired loans were individually re-measured and reported at fair value through direct loan
charge-offs to the allowance for loan losses and/or a specific valuation allowance allocation based on the fair value of the underlying
collateral. The collateral dependent loan charge-offs to the allowance for loan losses totaled $2.1 million and $638 thousand for
the years ended December 31, 2019 and 2018, respectively. These collateral dependent impaired loans with a total recorded
investment of $74.6 million and $73.7 million at December 31, 2019 and 2018, respectively, were reduced by specific valuation
allowance allocations totaling $35.5 million and $28.5 million to a reported total net carrying amount of $39.1 million and $45.2
million at December 31, 2019 and 2018, 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, 2019, the fair value model used a blended
prepayment speed (stated as constant prepayment rates) of 11.6 percent and a discount rate of 9.6 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. At December 31, 2019, certain loan servicing rights were re-measured at fair value totaling $1.6 million.
Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $36 thousand, $388 thousand and $429
thousand for the years ended December 31, 2019, 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, 2019. During the years ended December 31, 2019 and 2018, foreclosed assets measured at fair value upon initial

2019 Form 10-K

recognition or subsequent re-measurement totaled $10.8 million and $5.7 million, respectively. The charge-offs of foreclosed
assets to the allowance for loan losses totaled $3.0 million and $2.0 million for the years ended December 31, 2019 and 2018,
respectively. The re-measurement of foreclosed assets at fair value subsequent to their initial recognition resulted in losses of $896
thousand, $390 thousand and $361 thousand included in non-interest expense for the years ended December 31, 2019, 2018 and
2017, respectively.

Other Fair Value Disclosures

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities,
including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or
non-recurring basis.

The fair value estimates presented in the following table were based on pertinent market data and relevant information on
the financial instruments available as of the valuation date. These estimates do not reflect any premium or discount that could
result from offering for sale at one time the entire portfolio of financial instruments. Because no market exists for a portion of the
financial instruments, fair value estimates may be based on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that are not considered financial instruments. For instance, Valley
has certain fee-generating business lines (e.g., its mortgage servicing operation, trust and investment management departments)
that were not considered in these estimates since these activities are not financial instruments. In addition, the tax implications
related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been
considered in any of the estimates.

2019 Form 10-K

The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the

consolidated statements of financial condition at December 31, 2019 and 2018 were as follows:

December 31,

2019

2018

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

Held to maturity debt securities:

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

256,264

251,541

Level 1

178,423

177,088

251,541

177,088

142,049

8,641

586,033
1,235,605
31,486

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

Level 1

Level 2

Level 2
Level 2
Level 2

Level 2

Level 3

Level 1

138,352

7,345

144,113

7,362

138,517

8,721

500,705
1,620,119
37,324

32,250
2,336,095
29,537,449

513,607
1,629,572
31,382

32,684
2,358,720
28,964,396

585,656
1,266,770
37,332

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

105,637

95,296

Level 1

214,421

232,080

Level 1
Level 2

Level 1

Level 2

Level 1

19,467,892
9,717,945
1,093,280

2,122,426

55,718

33,066

19,467,892

17,388,990

9,747,867

1,081,879

2,181,401

53,889

33,066

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

(1)

(2)

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

2019 Form 10-K

INVESTMENT SECURITIES (Note 4)

Equity Securities

Equity securities carried at fair value totaled $41.4 million at December 31, 2019. Valley's equity securities consist of one
publicly traded money market mutual fund held in trust to secure Valley's assumed obligations under certain former Oritani non-
qualified director and employee benefit plans. See Note 13 for further details.

Available for Sale Debt Securities

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

2019 and 2018 were as follows:

December 31, 2019
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, 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

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair
Value

50,952
28,982

12
280

(21) $
(19)

50,943
29,243

78,116
90,662
168,778
1,248,814
61,261
1,558,787

50,975
36,844

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

540
902
1,442
11,234
628
13,596

— $
71

18
209
227
1,484
213
1,995

(83)
(86)
(169)
(5,262)
(111)
(5,582) $

(1,669) $
(638)

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

78,573
91,478
170,051
1,254,786
61,778
1,566,801

49,306
36,277

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

2019 Form 10-K

The age of unrealized losses and fair value of related securities available for sale at December 31, 2019 and 2018 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)

25,019
—

(21) $
—

— $

1,783

— $
(19)

25,019
1,783

(21)
(19)

18,540

—

18,540

(21)
—

(21)

8,755

13,177

21,932

240,412
5,139
289,110

(1,194)
(111)
(1,347) $

282,798
—
306,513

— $

2,120

— $
(20)

49,306
26,775

(62)
(86)

27,295

13,177

(148)

40,472

(4,068)
—
(4,235) $

523,210
5,139
595,623

(1,669) $
(618)

49,306
28,895

(83)
(86)

(169)

(5,262)
(111)
(5,582)

(1,669)
(638)

December 31, 2019
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, 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

17,560

5,018

22,578

119,645

12,339

(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

1,341,587

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

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

(40,093)
(507)

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

Total

156,682

The unrealized losses on investment debt 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, 2019 was 182 as compared to
545 at December 31, 2018.

The unrealized losses existing for more than twelve months for the residential mortgage-backed securities category of the
available for sale portfolio at December 31, 2019 were largely related to several investment grade securities mainly issued by
Ginnie Mae, Fannie Mae, and Freddie Mac.

As of December 31, 2019, 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 $1.0 billion.

2019 Form 10-K

The contractual maturities of investment debt securities available for sale at December 31, 2019 are set forth in the following
table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying
the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the
maturity categories in the following summary.

Due in one year
Due after one year through five years
Due after five years through ten years
Due after ten years
Residential mortgage-backed securities

Total investment securities available for sale

December 31, 2019

Amortized Cost

Fair Value

(in thousands)

19,554
110,337
90,297
89,785
1,248,814
1,558,787

19,611
110,801
91,232
90,371
1,254,786
1,566,801

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 5.7 years at

December 31, 2019.

2019 Form 10-K

Held to Maturity Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of investment debt securities held to maturity at

December 31, 2019 and 2018 were as follows:

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

(in thousands)

Fair Value

December 31, 2019
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, 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

138,352
7,345

5,761

297,454

203,251

500,705

1,620,119

37,324

32,250

2,336,095

138,517

8,721

341,702

243,954

585,656

1,266,770

37,332

31,250

7,745

5,696

13,441

14,803

454

34,556

3,532

4,332

3,141

7,473

3,203

Total investment securities held to maturity

2,068,246

14,436

— $
(41)

(529)
(10)

(539)
(5,350)
(5,981)
(20)
(11,931) $

— $

(135)

(5,735)
(1,361)

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

144,113

7,362

304,670

208,937

513,607

1,629,572

31,382

32,684

2,358,720

142,049

8,641

340,299

245,734

586,033

1,235,605

31,486

31,129

2,034,943

2019 Form 10-K

The age of unrealized losses and fair value of related securities held to maturity at December 31, 2019 and 2018 were as

follows:

Twelve Months

More than
Twelve Months

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

(in thousands)

5,183

(41) $

— $

5,183

(41)

11,178

—

11,178

307,885
—

—

(55)
—

(55)

32,397

798

(474)
(10)

43,575

798

33,195

(484)

44,373

(1,387)
—

—

254,915
29,990

4,980

(3,963)
(5,981)
(20)

562,800
29,990

4,980

(529)
(10)

(539)

(5,350)
(5,981)
(20)

324,246

(1,483) $

323,080

(10,448) $

647,326

(11,931)

—

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)

December 31, 2019
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, 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

101,621

72,240

—

9,948

(852)
—
(52)

846,671

30,055

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

918,911

30,055

4,835
(1,207) $ 1,086,150

14,783
(46,532) $ 1,187,771

(34,368)
(5,923)
(217)
(47,739)

The unrealized losses on investment debt 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, 2019 was 82 as compared to
378 at December 31, 2018.

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, 2019 were largely 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, 2019 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, 2019.

As of December 31, 2019, the fair value of debt securities held to maturity that were pledged to secure public deposits,

repurchase agreements, lines of credit, and for other purposes required by law was $1.4 billion.

The contractual maturities of investments in debt securities held to maturity at December 31, 2019 are set forth in the table
below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages

2019 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, 2019

Amortized Cost

Fair Value

(in thousands)

96,230
170,615
216,437
232,694
1,620,119
2,336,095

97,223
176,005
226,086
229,834
1,629,572
2,358,720

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 5.2 years at

December 31, 2019.

Other-Than-Temporary Impairment Analysis

Valley records impairment charges on its investment debt 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. Among other securities,
Valley's investments in trust preferred securities, bank issued corporate bonds and special revenue bonds may pose a higher risk
of future impairment charges to Valley as a result of the uncertain economic environment and its potential negative effect on thet
future performance of the security issuers.

For the single-issuer trust preferred, 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 thet
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, 2019 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.

During 2019, Valley recognized a $2.9 million other-than-temporary credit impairment charge on one special revenue bond
classified as available for sale (within the obligations of states and state agencies in the tables above). The credit impairment was
due to severe credit deterioration disclosed by the issuer in the second quarter 2019, as well as the issuer's default on its contractual
payment. At December 31, 2019, the impaired security had an adjusted amortized cost and fair value of $680 thousand.
Comparatively, there were no other-than-temporary impairment losses on securities recognized in earnings for the years ended
December 31, 2018 and 2017. The impaired special revenue bond was not accruing interest as of December 31, 2019.

At December 31, 2019, approximately 41.5 percent of the $670.8 million carrying value of obligations of states and political
subdivisions were issued by the states of (or municipalities within) New Jersey, Utah, Texas, and Idaho. The obligations of states
and political subdivisions mainly consist of general obligation bonds and, to lesser extent, special revenue bonds with amortized
cost and fair value totaling $294.9 million and $299.0 million, respectively, at December 31, 2019. Special revenue bonds were
largely issued by the Utah, Idaho, Florida 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, Valley's 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. Exclusive of thet
impaired security, these investments are a mix of bonds with investment grade ratings or not rated paying in accordance with their

2019 Form 10-K

contractual terms. The vast majority of the bonds not rated by the rating agencies are state housing finance agency revenue bonds
secured by Ginnie Mae securities that are commonly referred to as Tax Exempt Mortgage Securities (TEMS). Valley will continue
to closely monitor the special revenue bond portfolio as part of its quarterly impairment analysis.

Management does not believe that any individual unrealized loss as of December 31, 2019 included in the investment portfolio
tables above represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes
in interest rates and market volatility, not credit quality or other factors. Based on a comparison of the present value of expected
cash flows to the amortized cost, management believes there are no credit losses on these securities, except for the impaired special
revenue bond discussed above.

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, 2019, 2018 and 2017 were as follows:

Sales transactions:

Gross gains

Gross losses

Maturities and other securities transactions:

Gross gains

Gross losses

Net losses on securities transactions

2019

2018
(in thousands)

2017

— $

—
— $

67
(217)
(150) $
(150) $

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

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

—
(25)
(25)

43
(38)
5
(20)

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.

2019 Form 10-K

LOANS (Note 5)

The detail of the loan portfolio as of December 31, 2019 and 2018 was as follows:

December 31, 2019

December 31, 2018

Non-PCI
Loans

PCI
Loans

Total

Non-PCI
Loans

PCI
Loans

Total

(in thousands)

$ 4,143,983

682,014

$ 4,825,997

$ 3,590,375

740,657

$ 4,331,032

Loans:
Commercial and industrial

Commercial real estate:

Commercial real estate

10,902,893

5,093,848

15,996,741

Construction

1,495,717

151,301

1,647,018

9,912,309

1,122,348

2,494,966

12,407,275

365,784

1,488,132

Total commercial real estate

loans

Residential mortgage

Consumer:

Home equity

Automobile
Other consumer

Total consumer loans

Total loans

12,398,610

5,245,149

17,643,759

11,034,657

2,860,750

13,895,407

3,796,942

580,169

4,377,111

3,682,984

428,416

4,111,400

376,020

1,451,352

902,702

2,730,074

111,252

487,272

371,340

145,749

517,089

271

1,451,623

1,319,206

365

1,319,571

10,744

122,267

913,446

846,821

2,852,341

2,537,367

14,149

160,263

860,970

2,697,630

$ 23,069,609

$ 6,629,599

$ 29,699,208

$ 20,845,383

$ 4,190,086

$ 25,035,469

Total loans include net unearned premiums and deferred loan costs totaling $12.6 million and $21.5 million at December 31,
2019 and 2018, respectively. The outstanding balances (representing contractual balances owed to Valley) for PCI loans totaled
$6.8 billion and $4.4 billion at December 31, 2019 and 2018, respectively.

Valley transferred $436.5 million and $289.6 million of residential mortgage loans from the loan portfolio to loans held for
sale in 2019 and 2018, respectively. Valley transferred $798 million of commercial real estate loans from the loan portfolio to
loans held for sale in 2019. Excluding the loan transfers, there were no other sales or transfers of loans from the held for investment
portfolio during 2019 and 2018.

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 asd
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 Oritani acquisition as of December 1, 2019
(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

2019 Form 10-K

100

December 1, 2019

(in thousands)

4,017,103
(36,084)
3,981,019
(600,178)
3,380,841

The following table presents changes in the accretable yield for PCI loans for the years ended December 31, 2019 and 2018:

Balance, beginning of period

Acquisition
Accretion
Net (decrease) increase in expected cash flows

Balance, end of period

2019

2018

(in thousands)

875,958
600,178
(214,415)
(10,995)
1,250,726

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

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, 2019.

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

ended December 31, 2019:

Outstanding at beginning of year
New loans and advances
Repayments

Outstanding at end of year

2019
(in thousands)

214,108
13,172
(33,999)
193,281

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 appetite. Management reviews and approves these policies
and procedures on a regular basis with subsequent approval by the Board of Directors annually. Credit authority relating to a
significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and
by the Credit Committee. A reporting system supplements the management review process by providing management with frequent
reports concerning loan production, loan quality, internal loan classification, concentrations of credit, loan delinquencies, non-
performing, and potential problem loans. Loan portfolio diversification is an important factor utilized by Valley to manage its risk
across business sectors and through cyclical economic circumstances.

Commercial and industrial loans. A significant portion 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 $606.1 million and $580.5 million at
December 31, 2019 and 2018, respectively.

The commercial portfolio also includes taxi medallion loans, most of which consist of loans to fleet owners of New York
City medallions. At December 31, 2019, the taxi medallion loans totaled $114.8 million and were classified as either substandard

101

2019 Form 10-K

or doubtful loans. While most of the taxi medallion loans within the portfolio at December 31, 2019 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 aa
secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan
or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real
estate markets or in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as
stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial
real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.

Construction loans. With respect to loans to developers and builders, Valley originates and manages construction loans
structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These
loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk.
Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially
dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be
from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley
until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential
construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely
monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment
being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability
of long-term financing.

Residential mortgages. Valley originates residential, first mortgage loans based on underwriting standards that generally
comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly
with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal
management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary
regulator. Credit scoring, using FICO® and other proprietary credit scoring models 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 thet
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 $53.9 million and
$58.1 million, including $8.2 million and $10.4 million of credit card loans, at December 31, 2019 and 2018, respectively. Valley
believes the aggregate risk exposure to unsecured loans and lines of credit was not significant at December 31, 2019.

2019 Form 10-K

102

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, 2019 and 2018:

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, 2019
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

11,700

2,227

3,986

$ 68,636

86,549

$ 4,057,434

$ 4,143,983

2,560

1,486

4,046

17,143

1,051

11,482

1,171

13,704

4,026

1,343

5,369

4,192

1,581

866

2,527

579

—

579

2,042

—

681

711

9,004

356

9,360

12,858

1,646

334

224

2,204

16,169

3,185

19,354

36,235

2,777

14,078

2,291

19,146

10,886,724

10,902,893

1,492,532

1,495,717

12,379,256

12,398,610

3,760,707

3,796,942

373,243

376,020

1,437,274

1,451,352

900,411

902,702

2,710,928

2,730,074

Total

46,593

14,315

7,318

$ 93,058

$ 161,284

$ 22,908,325

$ 23,069,609

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

If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income
would have amounted to approximately $2.5 million, $3.6 million, and $2.5 million for the years ended December 31, 2019, 2018
and 2017, respectively; none of these amounts were included in interest income during these periods.

103

2019 Form 10-K

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.

The following table presents information about impaired loans by loan portfolio class at December 31, 2019 and 2018:

Recorded
Investment
With No
Related
Allowance

Recorded
Investment
With
Related
Allowance

Total
Recorded
Investment
(in thousands)

Unpaid
Contractual
Principal
Balance

Related
Allowance

14,617

86,243

100,860

114,875

36,662

26,046
354
26,400
5,836

366
366
47,219

8,339

16,732
803
17,535
7,826

125
125
33,825

24,842
—
24,842
4,853

487
487
116,425

89,513

25,606
457
26,063
6,078

50,888
354
51,242
10,689

853
853
163,644

97,852

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

51,258
354
51,612
11,800

956
956
179,243

104,007

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

1,146
1,146
122,800

1,271
1,271
156,625

1,366
1,366
165,918

1,338
—
1,338
518

58
58
38,576

29,684

2,615
13
2,628
600

113
113
33,025

December 31, 2019
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, 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

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

December 31, 2019, 2018 and 2017.

2019 Form 10-K

104

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, 2019, 2018 and 2017:

2019

2018

2017

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

(in thousands)

120,376

1,849

108,071

1,822

80,974

1,459

52,191

354

52,545

12,081

576

2,246

—

2,246

390

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

185,578

4,496

170,675

4,707

158,777

4,373

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

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 ind
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 $73.0 million and $77.2 million as of December 31, 2019 and
2018, respectively. Non-performing TDRs totaled $65.1 million and $55.0 million as of December 31, 2019 and 2018, respectively.

105

2019 Form 10-K

The following table presents non-PCI loans by loan class modified as TDRs during the years ended December 31, 2019 and
2018. 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, 2019 and 2018, respectively.

Troubled Debt
Restructurings

December 31, 2019
Commercial and industrial
Commercial real estate:

Commercial real estate
Total commercial real estate
Residential mortgage
Consumer

Total

December 31, 2018
Commercial and industrial
Commercial real estate:

Commercial real estate
Construction

Total commercial real estate
Residential mortgage
Consumer
Total

Number of
Contracts

Pre-Modification
Outstanding
Recorded Investment

Post-Modification
Outstanding
Recorded Investment

($ in thousands)

111

77,781

2
2
2
2
117

8
1
9
8
2
44

3,143
3,143
376
215
81,515

16,251

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

73,503

3,098
3,098
374
207
77,182

15,105

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

The total TDRs presented in the table above had allocated specific reserves for loan losses that totaled $36.0 million and
$6.5 million at December 31, 2019 and 2018, respectively. These specific reserves are included in the allowance for loan losses
for loans individually evaluated for impairment disclosed in Note 6. There were $4.9 million in loan charge-offs related to loans aa
modified as TDRs for the year ended December 31, 2019. However, there were no loan charge-offs related to loans modified as
TDRs during 2018. At December 31, 2019, 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.

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, 2019 and 2018 were as follows:

Troubled Debt Restructurings Subsequently Defaulted

Commercial and industrial

Residential mortgage

Total

Years Ended December 31,

2019

2018

Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

43
1
44

($ in thousands)
31,782
154
31,936

10
3
13

8,829
490
9,319

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

2019 Form 10-K

106

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, 2019 and 2018.

Credit exposure—
by internally assigned risk rating

Pass

Special
Mention

Substandard
(in thousands)

Doubtful

Total Non-PCI
Loans

December 31, 2019
Commercial and industrial
Commercial real estate
Construction
Total

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

3,982,453
10,781,587
1,487,877
$ 16,251,917

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

33,718
77,884
7,486
119,088

31,996
30,892
215
63,103

66,511
42,560
354
109,425

92,320
51,710
812
144,842

61,301
862
—
62,163

66,633
963
—
67,596

4,143,983
10,902,893
1,495,717
$ 16,542,593

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

At December 31, 2019, the commercial and industrial loans rated substandard and doubtful in the above table were mainly

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

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, 2019 and
2018:

Credit exposure—
by payment activity

December 31, 2019
Residential mortgage
Home equity
Automobile
Other consumer
Total

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

Performing
Loans

Non-Performing
Loans
(in thousands)

Total Non-PCI
Loans

3,784,084
374,374
1,451,018
902,478
6,511,954

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

12,858
1,646
334
224
15,062

12,917
2,156
80
419
15,572

3,796,942
376,020
1,451,352
902,702
6,527,016

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

107

2019 Form 10-K

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, 2019 and 2018:

Credit exposure—
by payment activity

December 31, 2019
Commercial and industrial
Commercial real estate
Construction
Residential mortgage
Consumer

Total

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

Total

Performing
Loans

Non-Performing
Loans
(in thousands)

Total
PCI Loans

653,997
5,065,388
148,692
571,006
120,356
6,559,439

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

28,017
28,460
2,609
9,163
1,911
70,160

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

682,014
5,093,848
151,301
580,169
122,267
6,629,599

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

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, 2019 and 2018.

The following table summarizes the allowance for credit losses at December 31, 2019 and 2018:

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

December 31,

2019

2018

(in thousands)

161,759
2,845
164,604

151,859
4,436
156,295

The following table summarizes the provision for credit losses for the years ended December 31, 2019, 2018 and 2017:

Components of provision for credit losses:

Provision for loan losses
Provision for unfunded letters of credit
Total provision for credit losses

2019

2018
(in thousands)

2017

25,809
(1,591)
24,218

31,661

840

32,501

8,531

1,411

9,942

2019 Form 10-K

108

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

2019 and 2018:

December 31, 2019
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, 2018
Allowance for loan losses:

Beginning balance

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

Provision for loan losses

Commercial
and Industrial

Commercial
Real Estate

Residential
Mortgage

Consumer

Total

(in thousands)

90,956

49,650

5,041

6,212

$ 151,859

(13,260)

2,397
(10,863)
23,966

104,059

(158)

1,237

1,079
(5,056)
45,673

(126)

66
(60)
79

(8,671)

2,606
(6,065)
6,820

(22,215)

6,306
(15,909)
25,809

5,060

6,967

$ 161,759

57,232

54,954

3,605

5,065

$ 120,856

(2,515)
4,623

2,108

31,616

(348)
417

69
(5,373)
49,650

(223)
272

1,387

(4,977)
2,093
(2,884)
4,031

(8,063)
7,405
(658)
31,661

5,041

6,212

$ 151,859

Ending balance

90,956

109

2019 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, 2019 and 2018. 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

Commercial
Real Estate

Residential
Mortgage
(in thousands)

Consumer

Total

December 31, 2019
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, 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

LEASES (Note 7)

36,662

67,397
104,059

100,860

1,338

44,335
45,673

51,242

518

4,542
5,060

10,689

6,909
6,967

853

38,576

123,183
161,759

163,644

4,043,123

12,347,368

3,786,253

2,729,221

22,905,965

682,014
4,825,997

5,245,149
$17,643,759

580,169
$ 4,377,111

122,267
$ 2,852,341

6,629,599
$ 29,699,208

29,684

61,272
90,956

97,852
3,492,523

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

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

The following table presents the components of the right of use (ROU) assets and lease liabilities in the consolidated

statements of position by lease type at December 31, 2019.

ROU assets:

Operating leases

Finance leases

Total

Lease liabilities:

Operating leases

Finance leases

Total

2019

(in thousands)

284,255

874

285,129

308,060

1,789

309,849

In March 2019, Valley closed a sale-leaseback transaction for 26 properties, consisting of 25 branches and 1 corporate office,
for an aggregate sales price of $100.5 million. As a result, Valley recorded a pre-tax net gain totaling $78.5 million during the first
quarter 2019. Additionally, Valley recorded ROU assets and lease obligations totaling $78.4 million, respectively, for the lease of
the 26 properties with an expected term of 12.0 years. The lease was determined to be an operating lease and Valley expects to
record lease costs of approximately $7.9 million within occupancy and equipment expense on a straight-line basis annually over
the term of the lease.

2019 Form 10-K

110

The following table presents the components by lease type, of total lease cost recognized in the consolidated statements of

income for the year ended December 31, 2019:

Finance lease cost:

Amortization of ROU assets

Interest on lease liabilities

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost (included in net occupancy and equipment expense)

2019

(in thousands)

291

191

34,175

410

3,573
(3,422)

35,218

The following table presents supplemental cash flow information related to leases for the year ended December 31, 2019:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

The following table presents supplemental information related to leases at December 31, 2019:

Weighted-average remaining lease term

Operating leases

Finance leases

Weighted-average discount rate

Operating leases

Finance leases

2019

(in thousands)

34,380

192

492

2019

12.8 years

3.00 years

3.68%

8.25%

The following table presents a maturity analysis of lessor and lessee arrangements outstanding as of December 31, 2019:

2020

2021

2022

2023

2024

Thereafter

Total lease payments

Less: present value discount

Total

Lessor

Direct Financing
and Sales-Type
Leases

Lessee

Operating
Leases

(in thousands)

Finance Leases

146,397

36,022

126,196

102,873

77,953

44,651

25,103

523,173
(44,345)
478,828

35,393

33,918

30,745

29,142

228,644

393,864
(85,804)
308,060

684

—

2,052
(263)
1,789

The total net investment in direct financing and sales-type leases was $478.8 million and $327.3 million at December 31,

2019 and 2018, respectively, comprised of $477.1 million and $326.2 million in lease receivables and $1.7 million and

111

2019 Form 10-K

$1.1 million in unguaranteed residuals, respectively. Total lease income was $19.4 million, $14.7 million and $13.6 million for
the years ended December 31, 2019, 2018, and 2017, respectively.

The following table presents minimum aggregate lease payments in accordance with ASC Topic 840 at December 31,

2018:

2019

2020

2021

2022

2023

Thereafter

Total lease payments

Sublease
Income

(in thousands)

Net Rents

29,093

2,382

29,379

28,925

27,562

25,064

262,200

2,290

2,160

2,002

1,938

8,558

402,223

19,330

26,711

27,089

26,765

25,560

23,126

253,642

382,893

Net occupancy and equipment expense included lease cost of $29.0 million and $27.7 million, net of sublease income of

$3.5 million and $3.9 million, for the years ended December 31, 2018 and 2017, respectively.

PREMISES AND EQUIPMENT, NET (Note 8)

At December 31, 2019 and 2018, 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

2019

2018

(in thousands)

93,594
220,140
85,042
274,715
673,491
(338,958)
334,533

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

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

2019, 2018 and 2017 was approximately $29.4 million, $27.6 million, and $24.8 million, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS (Note 9)

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

Investment
Management

Total

Balance at December 31, 2017

Goodwill from business combinations

Balance at December 31, 2018

Goodwill from business combinations

Balance at December 31, 2019

21,218

—

21,218

—

21,218

200,103

86,922

287,025

19,547

306,572

(in thousands)
316,258

241,592

557,850

267,917

825,767

153,058

65,514

218,572

1,496

220,068

690,637

394,028

1,084,665

288,960

1,373,625

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.

2019 Form 10-K

112

The goodwill from business combinations during 2019 and 2018 set forth in the table above relates to the Oritani and USAB

acquisitions, respectively. See Note 2 for further details.

There was no impairment of goodwill during the years ended December 31, 2019, 2018 and 2017.

The following tables summarize other intangible assets as of December 31, 2019 and 2018:

December 31, 2019
Loan servicing rights
Core deposits
Other

Total other intangible assets

December 31, 2018
Loan servicing rights
Core deposits
Other

Total other intangible assets

Gross
Intangible
Assets

Accumulated
Amortization

Valuation
Allowance

(in thousands)

Net
Intangible
Assets

94,827
101,160
3,945
199,932

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

(70,095) $
(40,384)
(2,634)
(113,113) $

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

(47) $
—
—
(47) $

(83) $
—
—
(83) $

24,685
60,776
1,311
86,772

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

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 8.9 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 $20.7
million of core deposit intangibles resulting from the Oritani 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, 2019,
2018 and 2017.

The following table summarizes the change in loan servicing rights during the years ended December 31, 2019, 2018 and

2017:

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

2019

2018
(in thousands)

2017

$
$

24,193
7,473
(6,934)
24,732

(83) $
36
(47) $
$

24,685

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

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 $3.4 billion, $3.2
billion and $2.8 billion at December 31, 2019, 2018 and 2017, 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 net recoveries of impairment charges on loan
servicing rights (reflected in the table above), of $18.1 million, $18.4 million and $10.0 million for the years ended December 31,
2019, 2018 and 2017, respectively.

113

2019 Form 10-K

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

Year

2020
2021
2022
2023
2024

Loan Servicing
Rights

Core
Deposits
(in thousands)

Other

4,263
3,532
2,929
2,429
2,016

13,363
11,607
9,876
8,146
6,537

220
206
191
131
117

DEPOSITS (Note 10)

Included in time deposits are certificates of deposit over $250 thousand totaling $1.7 billion and $1.1 billion at December 31,
2019 and 2018, respectively. Interest expense on time deposits of $250 thousand or more totaled approximately $5.8 million, $6.6
million and $1.3 million in 2019, 2018 and 2017, respectively.

The scheduled maturities of time deposits as of December 31, 2019 are as follows:

Year

2020
2021
2022
2023
2024
Thereafter

Total time deposits

Amount
(in thousands)

8,507,854
657,366
343,224
134,800
56,775
17,926
9,717,945

Deposits from certain directors, executive officers and their affiliates totaled $67.1 million and $66.8 million at December 31,

2019 and 2018, respectively.

BORROWED FUNDS (Note 11)

Short-Term Borrowings

Short-term borrowings at December 31, 2019 and 2018 consisted of the following:

FHLB advances
Securities sold under agreements to repurchase
Federal funds purchased

Total short-term borrowings

2019

2018

(in thousands)

940,000
153,280
—
1,093,280

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

The weighted average interest rate for short-term borrowings was 1.68 percent and 2.45 percent at December 31, 2019 and

2018, respectively.

2019 Form 10-K

114

Long-Term Borrowings

Long-term borrowings at December 31, 2019 and 2018 consisted of the following:

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

Total long-term borrowings

2019

2018

(in thousands)

1,480,012
350,000
292,414

2,122,426

1,309,666
50,000
294,602

1,654,268

(1)

(2)

FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $2.8 million
and $10.3 million at December 31, 2019 and 2018, respectively.
Subordinated debt is presented net of unamortized debt issuance costs totaling $1.2 million and $1.4 million at December 31, 2019 and
2018, respectively.

In 2019, Valley prepaid $635.0 million of the long-term FHLB advances. These prepaid borrowings had contractual maturity
dates in 2021 and 2022 and a total average interest rate of 3.93 percent. The debt prepayment was funded by cash proceeds from
the sale of commercial real estate loans and overnight borrowings. The transaction was accounted for as an early debt extinguishment
resulting in a loss of $32.0 million, reported within non-interest expense, for the year ended December 31, 2019.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 2.23 percent and 3.13 percent at
December 31, 2019 and 2018, 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.

Valley assumed $430.1 million of FHLB advances in connection with the Oritani acquisition on December 1, 2019.

The long-term FHLB advances at December 31, 2019 are scheduled for contractual balance repayments as follows:

Year

2020
2021
2022
2023
2024
Thereafter

Total long-term FHLB advances

Amount
(in thousands)

83,418
994,768
121,419
78,164
200,000
5,000
1,482,769

There are no FHLB advances with scheduled repayments in years 2020 and thereafter, reported in the table above, which

are callable for early redemption by the FHLB during 2020.

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 $99.4 million
and $99.3 million at December 31, 2019 and 2018, 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 $132.4 million and $134.2 million at December 31, 2019 and 2018, respectively.

115

2019 Form 10-K

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 $60.6 million and $61.1 million at December 31, 2019 and 2018, respectively.

Long-term securities sold under agreements to repurchase (repos). The long-term repos had a weighted average interest

rate of 1.94 percent and 3.70 percent at December 31, 2019 and 2018, respectively.

The long-term repos at December 31, 2019 are scheduled for contractual balance repayments as follows:

Year

2021
2022

Total long-term securities sold under agreements to repurchase

Amount

(in thousands)

300,000
50,000
350,000

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 $2.3 billion and $2.4 billion for December 31, 2019 and
2018, respectively.

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 12)

All of the statutory trusts presented in the table below were acquired in past bank acquisitions, including the Aliant Statutoryrr
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.

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

by each trust as of December 31, 2019 and 2018:

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, 2019
Carrying value (1)
Contractual principal balance
December 31, 2018
Carrying value (1)
Contractual principal balance

Annual interest rate

Stated maturity date

Initial call date
Trust Preferred Securities:
December 31, 2019 and 2018
Face value

Annual distribution rate

Issuance date
Distribution dates (2)

24,743

9,025

10,310

8,924

10,310

8,468

10,310

8,337

10,310

13,482

15,464

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, 2019 and 2018.
(2) All cash distributions are cumulative.

2019 Form 10-K

116

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, 2019 and 2018.

BENEFIT PLANS (Note 13)

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.

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, 2019 and 2018:

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

Interest cost
Actuarial loss (gain)
Benefits paid

Projected benefit obligation at end of year
Change in fair value of plan assets:
Fair value of plan assets at beginning of year
Actual return (loss) 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

2019

2018

(in thousands)

157,364
6,113
20,001
(8,073)
175,405

210,508
32,835
1,351
(8,073)
236,621

61,216
175,405

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

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

53,144
157,364

Includes accrued interest receivable of $641 thousand and $660 thousand as of December 31, 2019 and 2018, respectively.

117

2019 Form 10-K

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 $952 thousand of the net actuarial loss reported in the following table as of
December 31, 2019 as a component of net periodic pension expense during 2020.

Net actuarial loss
Prior service cost
Deferred tax benefit

Total

2019

2018

(in thousands)

46,248
357
(13,168)
33,437

42,893
392
(12,205)
31,080

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

2019

2018

(in thousands)

20,081
20,081
—

18,708
18,708
—

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 3.32 percent and 4.30 percent as of December 31, 2019 and 2018, respectively.

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, 2019, 2018 and 2017:

Interest cost
Expected return on plan assets
Amortization of net loss

Total net periodic pension income

2019

2018
(in thousands)

2017

6,113
(16,453)
264
(10,076) $

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

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

Valley estimated the interest cost component of net periodic pension income (as shown in the table above) using a spot rate
approach for the plans by applying the specific spot rates along the yield curve to the relevant projected cash flows. Valley believes
this provides a better estimate of interest costs than a single weighted average discount rate derived from the yield curve used to
measure the benefit obligation at the beginning of the applicable period.

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, 2019 and 2018 were as follows:

2019

2018

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)

2019 Form 10-K

118

(in thousands)
3,619
(35)
(264)
3,320

(6,721) $

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

(453)

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

in the following table:

Year

2020
2021
2022
2023
2024
Thereafter

Amount
(in thousands)

8,533
8,815
9,002
9,238
9,367
48,374

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, 2019, 2018 and 2017 were as follows:

Discount rate - projected benefit obligation
Discount rate - interest cost
Expected long-term return on plan assets
Rate of compensation increase

2019

2018

2017

4.30%
3.99%
7.50%
N/A

3.69%
3.31%
7.50%
N/A

4.12%
3.61%
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.

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.

119

2019 Form 10-K

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,
2019

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)

32% $
22
21
18
4
3

100% $

75,633
51,732
51,221
42,119
9,013
6,263
235,981

75,633
51,732
—
42,119
9,013
—
178,497

— $
—
51,221
—
—
6,263
57,484

—
—
—
—
—
—
—

% 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
24
18
4
2

100% $

59,447
50,838
50,003
37,178
7,429
4,952
209,847

59,447
50,838
—
37,178
7,429
—
154,892

— $
—
50,003
—
—
4,952
54,955

—
—
—
—
—
—
—

Assets:
Investments:

Equity securities
U.S. Treasury securities
Corporate bonds
Mutual funds
Cash and money market funds
U.S. government agency securities

Total investments

Assets:
Investments:

Equity securities
U.S. Treasury securities
Corporate bonds
Mutual funds
Cash and money market funds
U.S. government agency securities

Total investments

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.

2019 Form 10-K

120

Other Qualified Plan

On December 1, 2019, Valley assumed obligations under Oritani’s Pentegra Defined Benefit Plan for Financial Institutions
(“Pentegra DB Plan”). The Pentegra DB Plan's Employer Identification Number is 13-5645888 and the Plan Number is 333. The
Pentegra DB Plan is a tax-qualified defined-benefit multiple-employer plan. Under the Pentegra DB Plan, contributions made by
a participating employer may be used to provide benefits to participants of other participating employers. The Pentegra DB Plan
was frozen as of December 31, 2008. At the acquisition date, Valley determined that it would withdraw from the Pentegra DB
Plan and, as a result, recorded an estimated liability of $3.0 million. During 2020, plan participants are expected to receive annuities
based on the actuarial estimates of the pension obligation.

Other Non-Qualified Plans

Valley maintains separate non-qualified plans for former directors and senior management of Merchants Bank of New York
acquired in January of 2001. At December 31, 2019 and 2018, the remaining obligations under these plans were $1.6 million and
$1.7 million, respectively, of which $451 thousand and $512 thousand, respectively, were funded by Valley. As of December 31,
2019 and 2018, all of the obligations were included in other liabilities and $803 thousand (net of a $314 thousand tax benefit) and
$872 thousand (net of a $345 thousand tax benefit), respectively, were recorded in accumulated other comprehensive loss. The
$1.1 million 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.

Valley assumed, in the Oritani acquisition on December 1, 2019, certain obligations under non-qualified retirement plans

described below:

• Non-qualified benefit equalization plans (BEP) that provided supplemental benefits to certain eligible executives and
officers The BEP plans were terminated on November 30, 2019 and the accrued benefits will be fully distributed to the
participants on July 1, 2020. The funded obligation under the BEP plans totaled $26.8 million at December 31, 2019.

• An non-qualified benefit equalization pension plan that provided benefits to certain officers who were disallowed certain
benefits under former Oritani’s qualified pension plan. This plan was terminated on November 30, 2019 and the accrued
benefits will be distributed to plan participants over 5 years beginning on December 1, 2020. The funded obligation under
this plan totaled $1.6 million at December 31, 2019.

• A Supplemental Executive Retirement Income Agreement (the SERP) for the former CEO of Oritani. The SERP is a
retirement benefit with a minimum payment period of 20 years upon death, disability, normal retirement, early retirement
or separation from service after a change in control. Distributions from the plan will begin on July 1, 2020. The funded
obligation under the SERP totaled $13.0 million at December 31, 2019.

The above Oritani non-qualified plans are secured by investments in money market mutual funds which are held in a trust

and classified as equity securities on the consolidated statements of financial condition at December 31, 2019.

Valley also assumed an Executive Group Life Insurance Replacement (“Split-Dollar”) Plan from Oritani. The Split-Dollar
plan provides life insurance benefits to certain eligible employees upon death while employed or following termination of
employment due to disability, retirement or change in control. Participants in the Split-Dollar plan are entitled to up to two times
their base annual salary, as defined by the plan. The remaining accrued liability for the Split-Dollar plan totaled $961 thousand at
December 31, 2019.

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 $19.1 million, $18.8 million and $10.8 million during 2019, 2018 and 2017, 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, yy
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 $8.6 million, $8.5 million and $7.1 million in expense for contributions to the plan for
the years ended December 31, 2019, 2018 and 2017, respectively.

121

2019 Form 10-K

Stock-Based Compensation

Valley currently has one active employee stock 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 primary 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
(for acting in their roles as board members). As of December 31, 2019, 4.3 million shares of common stock were available for
issuance under the 2016 Stock Plan. The essential features of each award are described in the award agreement relating to that
award. The grant, exercise, vesting, settlement or payment of an award may be based upon the fair value of Valley’s common
stock on the last sale price reported for Valley’s common stock on such date or the last sale price reported preceding such date,
except for performance-based awards with a market condition. The grant date fair values of performance-based awards that vest
based on a market condition are determined by a third party specialist using a Monte Carlo valuation model.

Valley recorded total stock-based compensation expense, primarily for restricted stock awards, totaling $15.0 million, $19.5
million and $12.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The stock-based compensation
expense for 2019, 2018 and 2017 included $2.1 million, $4.3 million and $4.3 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, 2019, the unrecognized amortization expense for all stock-
based compensation totaled approximately $15.6 million and will be recognized over an average remaining vesting period of
approximately 2.0 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,

2019, 2018 and 2017:

Outstanding at beginning of year

Granted
Vested
Forfeited

Outstanding at end of year

Restricted Stock Awards Outstanding
2018

2017

2019

1,720,968
—
(547,653)
(114,634)
1,058,681

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

Valley did not award shares of restricted stock during 2019. 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 thet
grant date, with acceleration upon a change in control, death or disability, but not resignation from the Board of Directors.

On December 1, 2019, Valley completed the acquisition of Oritani, at which time each outstanding Oritani RSA became

fully vested. The stock plan under which the Oritani stock awards were issued is no longer active.

Restricted Stock Units (RSUs). Restricted stock units are awarded as (1) performance-based RSUs and (2) time-based
RSUs. Performance based RSUs vest based on (i) growth in tangible book value per share plus dividends and (ii) total shareholder
return as compared to our peer group. The performance based RSUs "cliff" vest after three years based on the cumulative
performance of Valley during that time period. Generally, time-based RSUs vest ratably one-third each year over a three-year
vesting period. The RSUs earn dividend equivalents (equal to cash dividends paid on Valley's common share) over the applicable
performance or service period. Dividend equivalents, per the terms of the agreements, are accumulated and paid to the grantee at aa
the vesting date, or forfeited if the applicable performance or service conditions are not met. The grant date fair value of the RSUs
was $10.43, $12.36 and $11.05 per share for the years ended December 31, 2019, 2018, and 2017, respectively. Compensation

2019 Form 10-K

122

costs related to RSUs totaled $3.6 million, $5.5 million and $3.8 million, and were included in total stock-based compensation
expense for the years ended December 31, 2019, 2018 and 2017, respectively.

The following table sets forth the changes in RSUs outstanding for the years ended December 31, 2019, 2018 and 2017:

Outstanding at beginning of year

Acquired in business combinations
Granted
Vested
Forfeited

Outstanding at end of year

Restricted Stock Units Outstanding
2018

2017

2019

1,378,886
—
1,412,941
(500,204)
(133,368)
2,158,255

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

744,281
—
370,681
—
—
1,114,962

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, 2019, 2018 and 2017 and changes during the

years ended on those dates:

2019

2018

2017

Stock Options
Outstanding at beginning of year

Acquired in business combinations
Exercised
Forfeited or expired
Outstanding at end of year
Exercisable at year-end

Shares
1,051,787
3,130,171
(716,920)
(11,522)
3,453,516

3,339,517

Weighted
Average
Exercise
Price

13
5
5
14
7

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

604,003

7
8
7
8
8

Shares
732,489
—
—
(285,509)
446,980

446,980

Weighted
Average
Exercise
Price

The following table summarizes information about stock options outstanding and exercisable at December 31, 2019:

Range of Exercise Prices
$2-$4
4-6
6-8
8-10
10-12

Options Outstanding and Exercisable

Number of Options

Weighted Average
Remaining Contractual
Life in Years

Weighted Average
Exercise Price

124,105
153,317
2,718,834
112,000
231,261
3,339,517

2.5
5.4
1.8
7.9
1.8
2.2

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.

123

2019 Form 10-K

14
—
—
16
13

3
5
7
10
11
8

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

2018 and 2017:

Outstanding at beginning of year

Vested

Outstanding at end of year

INCOME TAXES (Note 14)

Restricted Stock Awards Outstanding

2018

2017

17,885
(17,885)
—

55,510
(37,625)
17,885

The U.S. Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted on December 22, 2017 and introduced 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 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, 2019, 2018 and 2017 consisted of the following:

Current expense:
Federal
State

Deferred expense (benefit):

Federal
State

Total income tax expense

2019

2018
(in thousands)

2017

95,317
36,457
131,774

10,444
4,784
15,228
147,002

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

2019 Form 10-K

124

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

of December 31, 2019 and 2018 were as follows:

Deferred tax assets:

Allowance for loan losses
Depreciation
Employee benefits
Investment securities, including other-than-temporary impairment losses
Net operating loss carryforwards
Purchase accounting
Other

Total deferred tax assets

Deferred tax liabilities:
Pension plans
Depreciation
Investment securities, including other-than-temporary impairment losses
Other investments
Core deposit intangibles
Other

Total deferred tax liabilities

Valuation Allowance

Net deferred tax asset (included in other assets)

2019

2018

(in thousands)

44,486
—
28,263
—
19,768
41,857
19,904
154,278

19,686
4,527
2,319
7,731
16,620
13,665
64,548
916
88,814

42,882
19,111
13,301
13,222
21,570
33,629
22,104
165,819

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

Valley's federal net operating loss carryforwards totaled approximately $72.1 million at December 31, 2019 and expire
during the period from 2029 through 2034. Valley's capital loss carryforwards totaled $3.1 million at December 31, 2019 and
expire at December 31, 2023. State net operating loss carryforwards totaled approximately $85.3 million at December 31, 2019
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 years ended December 31, 2019 and 2018, and 35 percent
for the year ended December 31, 2017 were as follows:

2019

2018

(in thousands)

2017

Federal income tax at expected statutory rate

95,927

69,235

88,458

Increase (decrease) due to:

State income tax expense, net of federal tax effect

32,581

23,851

21,046

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

Addition to reserve for uncertainties

Other, net

Income tax expense

(3,118)
(1,637)
(11,636)
2,507

—

31,123

1,255

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

641

(5,245)
(2,568)
(27,037)
—

15,441

—

736

147,002

68,265

90,831

125

2019 Form 10-K

The federal energy investment tax credit (FEITC) program encourages the use of renewable energy, including solar energy.
The energy program reduces federal income taxes by offering a 30 percent tax credit to owners of energy property that meets
established performance and quality standards. In addition, there are other returns from tax losses and cash flows generated by
the investment. Typically, an owner and the tax credit investor, such as Valley, establish a limited partnership. The tax credit
investor usually has a substantial, but passive, interest in the partnership and the owner of the solar energy property has a small
interest. The ownership structure permits the tax benefits to pass through to the tax credit investor with an expected exit from
ownership after five years.

The amount of the FEITC is calculated based on the total cost of a renewable energy property. From 2013 to 2015, Valley
invested in three FEITC funds (Fund VI, Fund XII and Fund XIX) sponsored by DC Solar to purchase a total of 512 mobile solar
generator units. The valuation of the unit price of the solar units was supported by an appraisal prepared by a well-recognized
national appraisal firm. The total tax credits of $22.8 million were used to reduce Valley’s federal income taxes payable in its
consolidated financial statements from 2013 to 2015.

The full value of the FEITC is earned immediately when a solar energy property is placed in service. However, the tax credit
is subject to recapture for federal tax purposes for a five-year compliance period, if the property ceases to remain eligible for the
tax credit. A property may become ineligible during the compliance period due to (i) a sale or disposal of the property, (ii) lease
of the property to a tax exempt entity or (iii) its removal from service (i.e., no longer available for lease). During the first year
after the property has been placed in service, the recapture rate is 100 percent of the tax credit. The rate declines by 20 percent
each year thereafter until the end of the fifth year. The compliance period expires at the end of the fifth year after the property has
been placed in service. All three funds leased the mobile solar generator units to DC Solar distributions, which stated its intention
to sublease the units to third parties.

An entity shall initially recognize the financial statement effects of a tax position when it is more likely than not (or a
likelihood of more than 50 percent), based on the technical merits, that the position will be sustained upon examination. The level
of evidence that is necessary and appropriate to support an entity's assessment of the technical merits of a tax position is a matter
of judgment that depends on all available information. At each of the investment dates, Valley obtained two tax opinions from
national law firms that, based upon the facts recited, support the recognition of the tax credits in its tax returns. Based upon
management's review of the tax opinions on the investment’s legal structure, Valley recognized and measured each tax position
at 100 percent of the tax credit.

Valley's subsequent measurement of a tax position is based on management’s best judgment given the facts, circumstances,
and information available at the latest quarterly reporting date. A change in judgment that results in subsequent derecognition or
change in measurement of a tax position taken in a prior annual period (including any related interest and penalties) is recognized
as a discrete item in the period in which the change occurs.

In late February 2019, Valley learned of Federal Bureau of Investigation allegations of fraudulent conduct by DC Solar,
including information about asset seizures of DC Solar property and assets of its principals and ongoing federal investigations.
Since learning of the allegations, Valley conducted an ongoing investigation coordinated with other DC Solar fund investors,
investors' outside counsel and a third party specialist. The facts uncovered to date by the investor group impact each investor
differently, affecting their likelihood of loss and the ultimate amount of tax benefit likely to be recaptured. To date, over 97 percent
of the 512 solar generator units purchased by Valley's three funds have been positively identified by a third party specialist at
several leasee and other locations throughout the United States. Valley also learned through its investigation that the IRS has
challenged the valuation appraisals of similar solar generator units that were used to determine the federal renewable energy tax
credits related to another DC Solar fund owned by an unrelated investor.

Given the circumstances that Valley was aware of during the first nine months of 2019, including the aforementioned IRS
challenge of the appraisals of similar units used by an unrelated fund investor, and management's best judgments regarding the
settlement of the tax positions that it would ultimately accept with the IRS, Valley expected a partial loss and tax benefit recapture.
During the fourth quarter 2019, several of the co-conspirators pleaded guilty to fraud in the on-going federal investigation. Based
upon this new information, Valley deemed that its tax positions related to the DC Solar funds did not meet the more likely than
not recognition threshold (discussed above) in Valley's tax reserve assessment at December 31, 2019. As result of this assessment
and a partial reserve recognized by Valley in the first quarter 2019, Valley's net income for the year ended December 31, 2019
includes an increase to Valley's provision for income taxes of $31.1 million reflecting the reserve for uncertain tax liability positions
established in 2019 (shown in the table below). As of December 31, 2019, Valley believes it is fully reserved for the renewable
energy tax credits and other tax benefits previously recognized from the investments in the DC Solar funds plus interest. However,
Valley can provide no assurance that it will not recognize additional tax provisions related to this uncertain tax liability in the
future.

2019 Form 10-K

126

A reconciliation of Valley’s gross unrecognized tax benefits for 2019, 2018 and 2017 are presented in the table below:

2019

2018
(in thousands)

2017

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

— $

31,918
—
—
31,918

4,238
—
—
(4,238)

— $

16,144
1,121
(13,027)
—
4,238

The entire balance of unrecognized tax benefits, if recognized, would favorably affect Valley's 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 $6.1 million and $1.8 million of interest expense associated with Valley’s uncertain tax positions at December 31,
2019 and 2017, respectively. There was no interest expense accrued for uncertain tax positions during the year ended December
31, 2018.

Valley monitors its tax positions for the underlying facts, circumstances, and information available including the federal
investigation of DC Solar and changes in tax laws, case law and regulations that may necessitate subsequent de-recognition of
previous tax benefits.

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 2014. Valley is 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, 2019.

TAX CREDIT INVESTMENTS (Note 15)

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.
After initial measurement, the carrying amounts of tax credit investments with non-readily determinable fair values are increased
to reflect Valley's share of income of the investee and are reduced to reflect its share of losses of the investee, dividends received
and other-than-temporary impairments, if applicable. See the "Other-Than-Temporary Impairment Analysis" section below.

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, 2019 and 2018:

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

2019

2018

(in thousands)

25,049

59,081

84,130

1,539

1,139

2,678

36,961

68,052

105,013

4,520

8,756

13,276

127

2019 Form 10-K

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, 2019, 2018 and 2017:

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

Other-Than-Temporary Impairment Analysis

2019

2018

2017

(in thousands)

6,757

10,205

16,962

2,184

3,295

5,668

9,245

6,713

21,351

28,064

1,880

2,544

1,970

17,806

20,392

24,200

7,383

35,530

42,913

2,748

4,684

2,866

31,449

41,747

An impairment loss is recognized when the fair value of the tax credit investment is less than its carrying value. The
determination of whether a decline in value of a tax credit investment is other-than-temporary requires significant judgment and
is performed separately for each investment. The tax credit investments are reviewed for impairment quarterly, or whenever events
or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. These circumstances
can include, but are not limited to, the following factors:

• Evidence that Valley does not have the ability to recover the carrying amount of the investment;
• The inability of the investee to sustain earnings;
• A current fair value of the investment based upon cash flow projections that is less than the carrying amount; and
• Change in the economic or technological environment that could adversely affect the investee’s operations

On a quarterly basis, Valley obtains financial reporting on its underlying tax credit investment assets for each fund from the
fund manager who is independent of Valley and the Fund Sponsor. The financial reporting is reviewed for deterioration in the
financial condition of the fund, the level of cash flows and any significant losses or impairment charges. Valley also regularly
reviews the condition and continuing prospects of the underlying operations of the investment with the fund manager, including
any observations from site visits and communications with the Fund Sponsor, if available. Annually, Valley obtains the audited
financial statements prepared by an independent accounting firm for each investment, as well as the annual tax returns. Generally,
none of the aforementioned review factors are individually conclusive and the relative importance of each factor will vary based
on facts and circumstances. However, the longer the expected period of recovery, the stronger and more objective the positive
evidence needs to be in order to overcome the presumption that the impairment is other than temporary. If management determines
that a decline in value is other than temporary per its quarterly and annual reviews, including current probable cash flow projections,
the applicable tax credit investment is written down to its estimated fair value through an impairment charge to earnings, which
establishes the new cost basis of the investment.

The aggregate unamortized investment related to three federal renewable energy tax credit funds sponsored by DC Solar
represented approximately $2.4 million (or approximately $800 thousand for each fund) of the $59.1 million of net other tax credit
investments reported as of December 31, 2019. These funds are disclosed in detail in Note 14. During the first quarter 2019, Valley
determined that future cash flows related to the remaining investments in all three funds were not probable based upon new
information available, including the sponsor’s bankruptcy proceedings which were reclassified to Chapter 7 from Chapter 11 in
late March 2019. As a result, Valley recognized an other-than-temporary impairment charge for the entire aggregate unamortized
investment of $2.4 million during the first quarter 2019, which is included within amortization of tax credit investments for thet
year ended December 31, 2019.

As a result of the Tax Act, Valley incurred additional impairment of $2.2 million and $2.1 million related to certain affordable

housing tax credit investments and other tax credit investments, respectively, during the fourth quarter 2017.

2019 Form 10-K

128

COMMITMENTS AND CONTINGENCIES (Note 16)

Financial Instruments with Off-balance Sheet Risk

In the ordinary course of business in meeting the financial needs of its customers, Valley, through its subsidiary Valley
National Bank, is a party to various financial instruments, which are not reflected in the consolidated financial statements. These
financial instruments include standby and commercial letters of credit, unused portions of lines of credit and commitments to
extend various types of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts
recognized in the consolidated financial statements. The commitment or contract amount of these instruments is an indicator of
the Bank’s level of involvement in each type of instrument as well as the exposure to credit loss in the event of non-performance
by the other party to the financial instrument. The Bank seeks to limit any exposure of credit loss by applying the same credit
policies in making commitments, as it does for on-balance sheet lending facilities.

The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2019 and

2018:

Commitments under commercial loans and lines of credit
Home equity and other revolving lines of credit
Standby letters of credit
Outstanding residential mortgage loan commitments
Commitments to sell loans
Commitments under unused lines of credit—credit card
Commercial letters of credit

2019

2018

(in thousands)

5,550,967
1,379,581
296,036
233,291
68,492
44,527
2,887

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

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.

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 tod
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.

129

2019 Form 10-K

At December 31, 2019, Valley had the following cash flow hedge derivatives:

• One forward starting interest rate swap, 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 swap required
Valley to pay fixed-rate amounts of approximately 2.97 percent, in exchange for the receipt of variable-rate payments at
the three-month LIBOR rate. The swap has an expiration date of November 2020.

• Two forward starting interest rate swaps with a total notional amount of $50 million and $55 million, respectively, to
hedge the changes in cash flows associated with borrowed funds. Starting in March 2016, the interest rate swaps required
Valley to pay fixed-rate amounts of 2.87 percent and 2.88 percent, respectively, in exchange for the receipt of variable-
rate payments at the three-month LIBOR rate. The two swaps have expiration dates in March 2020 and September 2020,
respectively.

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, 2019, Valley had one interest rate swap with a notional amount of approximately $7.3 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
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, 2019, Valley had 23 credit swaps with an aggregate notional amount of $152.9 million related to risk
participation agreements.

At December 31, 2019, 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.

2019 Form 10-K

130

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, 2019

December 31, 2018

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

— $
—

1,484
229

$ 180,000
7,281

— $
—

27
347

$ 332,000
7,536

— $

1,713

$ 187,281

— $

374

$ 339,536

Derivatives not designated as hedging

instruments:

Interest rate swaps, and embedded
and credit derivatives

Mortgage banking derivatives

Total derivatives not designated as

hedging instruments

$ 158,382
150

42,020
193

$ 4,113,106
142,760

48,642
337

22,533
774

$ 3,390,578
105,247

$ 158,532

42,213

$ 4,255,866

48,979

23,307

$ 3,495,825

The Chicago Mercantile Exchange and London Clearing House variation margins are classified as a single-unit of account
with the fair value of certain cash flow and non-designated derivative instruments. As a result, the fair value of the designated
cash flow 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, 2019.and
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:

2019

2018
(in thousands)

2017

Amount of loss reclassified from accumulated other comprehensive loss to

interest expense

Amount of (loss) gain recognized in other comprehensive income

(1,808) $
(1,380)

(3,493) $
2,651

(8,579)
1,005

The net gains or losses related to cash flow hedge ineffectiveness were immaterial during the years ended December 31,
2019, 2018 and 2017. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other
comprehensive loss were $3.7 million and $4.0 million at December 31, 2019 and 2018, 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 $2.3 million
will be reclassified as an increase to interest expense in 2020.

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of

fair value were as follows:

2019

2018
(in thousands)

2017

Derivative—interest rate swaps:

Interest income

Hedged item—loans, deposits and long-term borrowings:

Interest income

133

290

(133) $

(290) $

348

(348)

Fee income related to derivative interest rate swaps executed with commercial loan customers totaled $33.4 million, $16.4

million and $8.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

131

2019 Form 10-K

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, 2019 and 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

2019

2018

2019

2018

7,510

(in thousands)
7,882

229

346

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

instruments were as follows:

2019

2018
(in thousands)

2017

Non-designated hedge interest rate and credit derivatives

Other non-interest expense

898

792

744

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 counterpartya
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 thet
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, 2019, Valley was in compliance with all of the provisions of
its derivative counterparty agreements. As of December 31, 2019, 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 $17.2 million.
Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties.

2019 Form 10-K

132

BALANCE SHEET OFFSETTING (Note 17)

Certain financial instruments, including derivatives (consisting of interest rate swaps and caps) 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, 2019 and 2018.

Gross Amounts
Recognized

Gross Amounts
Offset

Net Amounts
Presented

Financial
Instruments

Cash
Collateral

Net
Amount

(in thousands)

Gross Amounts Not Offset

December 31, 2019
Assets:

Interest rate swaps

Liabilities:

Interest rate swaps

Repurchase agreements

Total

December 31, 2018
Assets:

158,382

43,733
350,000
393,733

Interest rate swaps and caps $

48,642

Liabilities:

Interest rate swaps and caps $
Repurchase agreements

Total

22,907
150,000
172,907

— $

158,382

— $
—
— $

43,733
350,000
393,733

— $

48,642

— $
—
— $

22,907
150,000
172,907

(118) $

—

$ 158,264

(118) $ (16,881)

—

(350,000) *

(118) $ (366,881)

(1,214) $

—

(1,214) $
—

(1,852)
(150,000) *

(1,214) $ (151,852)

26,734
—
26,734

47,428

19,841
—
19,841

* Represents the fair value of non-cash pledged investment securities.

REGULATORY AND CAPITAL REQUIREMENTS (Note 18)

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.

Valley is required to maintain a 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, plus a 2.5 percent capital conservation buffer. On January 1, 2019, the capital conversation buffer was fully phased-in.
As of December 31, 2019 and 2018, Valley and Valley National Bank exceeded all capital adequacy requirements (see table below).

133

2019 Form 10-K

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, 2019 and 2018:

Actual

Minimum Capital
Requirements

To Be Well
Capitalized Under
Prompt Corrective
Action Provision

Amount

Ratio

Amount

Ratio

Amount

Ratio

($ in thousands)

$ 3,427,134
3,416,674

11.72% $ 3,070,687
3,069,894
11.69

10.50%
10.50

N/A
$ 2,923,709

N/A
10.00%

2,754,524
3,152,070

2,968,530
3,152,070

9.42
10.78

10.15
10.78

8.76
9.31

2,047,125
2,046,596

2,485,795
2,485,153

1,355,378
1,354,693

7.00
7.00

8.50
8.50

4.00
4.00

N/A
1,900,411

N/A
2,338,967

N/A
1,693,366

N/A

6.50

N/A

8.00

N/A

5.00

$ 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

As of December 31, 2019

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, 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

COMMON AND PREFERRED STOCK (Note 19)

Dividend Reinvestment Plan. Valley's transfer agent maintains its dividend reinvestment plan (DRIP) with shares
purchased in the open market. The ability to issue authorized and previously unissued common stock or reissue treasury stock as
part of Valley's DRIP was terminated effective February 12, 2018. During 2018 and 2017, 87 thousand and 713 thousand common
shares, respectively, were reissued from treasury stock or issued from authorized common shares under the DRIP for net proceeds
totaling $1.0 million and $8.2 million, respectively.

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, 2019, 2018 and 2017 in the open market.

Other Stock Repurchases. Valley 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, 2019, 2018 and 2017, Valley purchased
approximately 175 thousand, 441 thousand and 218 thousand shares, respectively, of its outstanding common stock at an average
price of $10.45, $11.83 and $12.12, respectively, for such purpose.

2019 Form 10-K

134

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, 2019 and 2018.

OTHER COMPREHENSIVE INCOME (Note 20)

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the years
ended December 31, 2019, 2018 and 2017. Components of other comprehensive income (loss) include changes in net unrealized
gains and losses on debt 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

2019

Tax
Effect

After
Tax

Before
Tax

2018

Tax
Effect

(in thousands)

After
Tax

Before
Tax

2017

Tax
Effect

After
Tax

Unrealized gains and losses on
available for sale (AFS) debt
securities

Net gains (losses) arising during the

period

Less reclassification adjustment for
net losses (gains) included in net
income (1)
Net change

Unrealized gains and losses on

derivatives (cash flow hedges)

Net (losses) gains arising during the

period

Less reclassification adjustment for

net losses included in net income (2)

Net change

Defined benefit pension plan

Net (losses) gains arising during the

period

Amortization of prior service (cost)

credit(3)

Amortization of net loss (3)

$ 54,723

$ (15,461) $ 39,262

$ (32,123) $

9,191

$ (22,932) $

1,485

(635) $

850

150

(31)

119

2,873

(636)

2,237

(264)

54,873

(15,492)

39,381

(29,250)

8,555

(20,695)

1,221

108

(527)

(156)

694

(1,380)

391

(989)

2,651

(777)

1,874

1,005

(429)

576

1,808

428

(517)

(126)

1,291

302

3,493

6,144

(999)

(1,776)

2,494

4,368

8,579

9,584

(3,551)

(3,980)

5,028

5,604

(2,385)

(176)

(2,561)

(9,916)

2,765

(7,151)

(3,843)

1,121

(2,722)

(135)

264

(76)

(93)

188

212

625

(66)

(178)

146

447

268

381

(77)

(133)

911

191

248

(2,283)

Net change

(2,256)

(210)

(2,466)

(9,079)

2,521

(6,558)

(3,194)

Total other comprehensive income

(loss)

$ 53,045

$ (15,828) $ 37,217

$ (32,185) $

9,300

$ (22,885) $

7,611

$ (3,596) $

4,015

(1) Included in losses on securities transactions, net.
(2) Included in interest expense.
(3) Included in the computation of net periodic pension cost. See Note 13 for details.

135

2019 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, 2019, 2018 and 2017:

Components of Accumulated Other Comprehensive Loss

Unrealized Gains
and Losses on
AFS Securities

Unrealized Gains
and Losses on
Derivatives

(in thousands)

Defined
Benefit
Pension
Plan

Total
Accumulated
Other
Comprehensive
Loss

Balance-December 31, 2016

(10,736) $

(12,464) $

(18,893) $

(42,093)

Reclassification due to the adoption of ASU No.

2018-02

Balance-January 1, 2017

Other comprehensive income (loss) before

reclassifications

Amounts reclassified from other comprehensive

income (loss)

Other comprehensive income (loss), net

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 income (loss) before

reclassifications

Amounts reclassified from other comprehensive

income (loss)

Other comprehensive income (loss), net

Balance-December 31, 2018

Other comprehensive income (loss) before

reclassifications

Amounts reclassified from other comprehensive

income (loss)

Other comprehensive income (loss), net

(2,342)
(13,078)

850

(156)
694
(12,384)

(480)

—
(12,864)

(22,932)

2,237
(20,695)
(33,559)

39,262

119

39,381

Balance-December 31, 2019

5,822

(1,478)
(13,942)

576

5,028

5,604
(8,338)

—

(61)
(8,399)

1,874

2,494

4,368
(4,031)

(989)

(4,107)
(23,000)

(2,722)

439
(2,283)
(25,283)

—

—
(25,283)

(7,151)

593
(6,558)
(31,841)

(2,561)

1,291

302
(3,729) $

95
(2,466)
(34,307) $

(7,927)
(50,020)

(1,296)

5,311

4,015
(46,005)

(480)

(61)
(46,546)

(28,209)

5,324
(22,885)
(69,431)

35,712

1,505

37,217
(32,214)

2019 Form 10-K

136

QUARTERLY FINANCIAL DATA (UNAUDITED) (Note 21)

March 31

June 30

September 30

December 31

Quarters Ended 2019

Interest income

Interest expense

Net interest income

Provision for credit losses

Non-interest income:

Net impairment losses on securities recognized in
earnings

Gains on sales of loans, net

Gains (losses) on sales of assets, net

Other non-interest income

Non-interest expense:

Loss on extinguishment of debt
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:

320,224

101,576

218,648

8,000

—

4,576

77,720

25,377

—
7,173

140,622

170,526

57,196

113,330

3,172

110,158

(in thousands, except for share data)
329,261
$

327,742

107,508

220,234

2,100

(2,928)
3,930
(564)
27,165

—
4,863

136,874

104,000

27,532

76,468

3,172

73,296

108,636

220,625

8,700

—

5,194
(159)
36,115

—
4,385

141,492

107,198

25,307

81,891

3,172

78,719

0.33

0.11

0.22

0.11

0.24

0.11

343,773

105,232

238,541

5,418

—

5,214

1,336

31,544

31,995
3,971

160,180

75,071

36,967

38,104

3,172

34,932

0.10

0.11

Basic

Diluted

331,601,260

331,748,552

331,797,982

355,821,005

332,834,466

332,959,802

333,405,196

358,864,876

137

2019 Form 10-K

Interest income

Interest expense
Net interest income
Provision for credit losses
Non-interest income:

Gains on sales of loans, net

Losses on sales of assets

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:

March 31

June 30

September 30

December 31

Quarters Ended 2018

267,495
59,897

207,598

10,948

6,753
(97)
25,595

5,274

168,478

55,149

13,184

41,965

3,172

38,793

(in thousands, except for share data)
297,041
$
80,241

280,118
69,366

210,752

7,142

216,800

6,552

7,642
(125)
30,552

4,470

145,446

91,763

18,961

72,802

3,172

69,630

3,748
(1,899)
27,189

5,412

146,269

87,605

18,046

69,559

3,172

66,387

314,594
92,541

222,053

7,859

2,372
(280)
32,602

9,044

144,668

95,176

18,074

77,102

3,172

73,930

0.12

0.11

0.21

0.11

0.20

0.11

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

2019 Form 10-K

138

PARENT COMPANY INFORMATION (Note 22)

Condensed Statements of Financial Condition

Assets
Cash

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

2019

2018

(in thousands)

119,213

4,671,578

12,953

4,803,744

45,796

292,414

55,718

25,628

4,384,188

109,839

3,609,836

32,721

3,752,396

37,644

294,602

55,370

14,326

3,350,454

3,752,396

Total Liabilities and Shareholders’ Equity

4,803,744

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 expense (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,
2018

2019

2017

(in thousands)

160,000

155,000

4,550

—

164,601

27,998

136,603

24,524

112,079

197,714
309,793
12,688

4,550

3
(147)
39

159,445

32,269

127,176
(20,547)
147,723

113,705

261,428

12,688

297,105

248,740

122,000

4,550

—

135

126,685

39,621

87,064
(30,179)
117,243

44,664

161,907

9,449

152,458

139

2019 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:
Sales of investment securities available for sale

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 23)

Years Ended December 31,
2018

2019

2017

(in thousands)

309,793

261,428

161,907

(197,714)
14,726

(113,705)
19,472

(44,664)
12,204

124

—

19,768

8,803
155,500

—

11,947

—

11,947

—
(12,688)
(146,537)
(1,805)
2,957
(158,073)
9,374

109,839

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

119,213

109,839

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

90,807

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 thet
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,yy
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.

2019 Form 10-K

140

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 and net impairment losses not reported in the investment
management segment above, interest expense related to subordinated notes, amortization of tax credit investments, as well as
infrequent items, such as the loss on extinguishment of debt, gain on sale leaseback transactions and merger expenses.

subordinated notes, amortization of tax credit investments

The following tables represent the financial data for Valley’s four business segments for the years ended December 31, 2019,

2018 and 2017:

Year Ended December 31, 2019

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)

$ 6,891,462

$ 19,343,791

$ 4,340,277

272,773

926,328

126,723

91,798

180,975

6,688

174,287

57,981
76,046

78,743

77,479

257,670

668,658

17,530

651,128

41,157
101,924

221,113

369,248

57,815

68,908

—

68,908

8,818
1,034

49,670

27,022

Corporate
and Other
Adjustments

Total

— $ 30,575,530

(4,824) $ 1,321,000
15,669
422,952
(20,493)
—

898,048

24,218

(20,493)
106,564
452,551
(349,526)
(16,954) $

873,830

214,520
631,555

—

456,795

1.12%

1.91%

0.62%

N/A

1.49%

141

2019 Form 10-K

Year Ended December 31, 2018

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)
15,577
(21,538)
—

(21,538)
41,806

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

$ 1,159,248

302,045

857,203

32,501

824,702

134,052

629,061

—

329,693

0.92%

1.80%

0.89%

N/A

1.19%

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%

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)

2019 Form 10-K

142

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Valley National Bancorp:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of Valley National Bancorp and subsidiaries
(the Company) as of December 31, 2019 and 2018, 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, 2019, 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, 2019 and 2018, and the results of its operations
and its cash flows for each of the years in the three-year period ended December 31, 2019, 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, 2019, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated March 10, 2020 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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on
the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the allowance for loan losses related to non-PCI loans collectively evaluated for impairment

As discussed in Notes 1 and 6 to the consolidated financial statements, the Company’s allowance for loan losses related to
loans collectively evaluated for impairment (general reserve) was $123.2 million of a total allowance for loan losses of $161.8
million as of December 31, 2019. The Company estimates the general reserve by developing loss factors based on historical
losses adjusted for qualitative factors, to better estimate incurred losses in the current portfolio.

We identified the assessment of the general reserve as a critical audit matter. The estimation of the general reserve involved
significant measurement uncertainty and, as a result, our assessment of the general reserve required complex auditor judgments,
and knowledge and experience in the industry in order to evaluate the methodologies, inputs, and assumptions used to estimate
the reserve. Inputs and assumptions included (1) the loss factors developed from historical loss experience, and their key
factors and assumptions, which included the pooling of loans with similar risk characteristics, the historical look-back period,
the loss emergence periods, and credit risk ratings for commercial loans, and (2) the qualitative factor adjustments. In addition,
auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

143

2019 Form 10-K

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal
controls over the (1) development and approval of the general reserve methodology, (2) determination of key factors and
assumptions used to estimate the historical loss factors, and (3) qualitative framework and related factors. We tested the
relevance of sources of data and key assumptions related to the look-back period by evaluating (1) the loss data in the look-
back period compared to the credit characteristics of the current portfolio and (2) the sufficiency of loss data within the look-
back period. We assessed the loss emergence period assumptions by considering the Company’s credit risk policies and testing
loss data. We involved credit risk professionals with industry knowledge and experience who assisted in:

•

evaluating the Company’s methodology to estimate the general reserve for compliance with U.S. generally accepted
accounting principles,

evaluating the methodology to calculate the loss factors, including key inputs and assumptions,

evaluating the framework used to develop the resulting qualitative factors and the effect of those factors on the
general reserve compared with relevant credit risk factors and credit trends, and

testing individual loan risk ratings by evaluating the financial performance of the borrower, underlying collateral,
and guarantor support.

We evaluated the collective results of the procedures performed to assess the sufficiency of the audit evidence obtained related
to the Company’s general reserve.

Assessment of the remaining expected cash flows for purchase credit impaired loans

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company’s purchased credit impaired (PCI) loan
portfolio had a carrying value of $6.6 billion at December 31, 2019, and consists primarily of loans acquired in business
combinations subsequent to 2011. The PCI loans are aggregated into pools based on common risk characteristics, initially
recorded at fair value based on the present value of expected future cash flows, and subsequently accounted for as pools of
loans. The undiscounted cash flows expected to be collected (expected cash flows) are estimated by incorporating several
key assumptions, including probability of default (PD), loss given default (LGD), and the actual prepayments after the
acquisition date. The difference between the expected cash flows at acquisition and the initial carrying value or fair value of
the PCI loans, or accretable yield, is recognized as interest income utilizing the level-yield method over the life of each pool.
The non-accretable difference, which is neither accreted into income nor recorded on the consolidated balance sheet, reflects
estimated future credit losses and uncollectable contractual interest expected to be incurred over the life of the loans.

We identified the assessment of the remaining expected cash flows and the impact to the accretable yield and the non-accretable
difference related to PCI loans as a critical audit matter. The estimation of the expected cash flows involved significant
measurement uncertainty, and as a result, our assessment required complex auditor judgment and knowledge and experience
in the industry in order to evaluate the methodologies, inputs, and assumptions used to estimate the remaining expected cash
flows. Inputs and assumptions included (1) the PD and LGD, which include the credit risk ratings for commercial loans, and
(2) the prepayment assumptions which are used to estimate future prepayments which impact the overall timing of cash flows.
The assessment also included an evaluation of the mathematical accuracy of the estimation of future cash flows and calculation
of the accretable yield and non-accretable difference.

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal
controls over the (1) development of the methodology to estimate expected cash flows over the remaining life of the PCI
loans, and (2) the determination of key factors and assumptions used to estimate the PD, LGD, and prepayment assumptions.
We involved credit risk professionals with specialized industry knowledge and experience who assisted in testing individual
credit risk ratings of a selection of commercial loan relationships. We involved valuation professionals with industry knowledge
and experience who assisted in:

•

evaluating the Company’s methodology for compliance with U.S. generally accepted accounting principles,

evaluating the key assumptions used by the Company in developing the estimate by comparing them to those used
by similar market participants,

recalculating the estimation of expected cash flows based on key inputs and assumptions used by the Company, and

evaluating the Company’s ability to estimate future losses and prepayments by comparing prior period estimates to
actual results.

2019 Form 10-K

144

Assessment of the fair value measurement of the acquired loans in the Oritani Financial Corp. business combination

As discussed in Note 2 to the consolidated financial statements, on December 1, 2019 the Company completed its acquisition
of Oritani Financial Corp. (Oritani). The transaction was accounted for as a business combination using the acquisition method
of accounting. Accordingly, assets acquired, liabilities assumed, and consideration paid for Oritani were recorded at their fair
values at the acquisition date, including the fair value of acquired loans of $3.4 billion. The fair value of acquired loans was
based on a discounted cash flow methodology that used a forecast of principal and interest payments based on certain key
valuation assumptions including risk ratings on commercial loan relationships, probability of default, loss given default,
discount rate, and prepayment rate. The difference between the fair value and the expected cash flows from the acquired loans
will be accreted into income over the remaining terms of the loans.

We identified the assessment of the fair value measurement of the acquired loans in the Oritani business combination as a
critical audit matter. The fair value estimate involved significant measurement uncertainty and required industry knowledge
and experience to evaluate. Specifically, the assessment of the fair value measurement encompassed the evaluation of the fair
value methodology and the development of key valuation assumptions. The assessment also included an evaluation of
mathematical accuracy of the calculations. Additionally, there was auditor judgment involved in designing and performing
audit procedures in order to test the key assumptions utilized to determine the estimate.

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal
controls over the Company’s fair value measurement process, including controls related to (1) the development of the
methodology to calculate the fair value of the acquired loans, (2) the determination of key inputs and valuation assumptions
used by considering their relevance and reliability in the acquired loan fair value estimate, and (3) the calculation of the fair
value estimate. We involved credit risk professionals with industry knowledge and experience who assisted in testing individual
loan risk ratings for a selection of commercial loan relationships. We involved valuation professionals with industry knowledge
and experience who assisted in:

•

evaluating the valuation methodology for compliance with U.S. generally accepted accounting principles, and

developing an independent estimate of the fair value of the acquired loan portfolio using key assumptions used by
other market participants and comparing the results to the Company’s fair value estimate.

Assessment of the carrying value of goodwill in the Investment Management reporting unit

As discussed in Notes 1 and 9 to the consolidated financial statements, the carrying value of the Company’s goodwill balance
related to the Investment Management reporting unit is $220.1 million of a total goodwill balance of $1.4 billion as of December
31, 2019. The Company’s goodwill is not amortized but is subject to annual tests for impairment, or more often, if events or
circumstances indicate it may be impaired. The impairment test compares the fair value of the reporting unit with its carrying
amount, including goodwill. Fair value is determined using market multiples and discounted cash flow analyses. If the fair
value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not impaired; however, if the
carrying amount of the reporting unit exceeds its fair value, an additional step must be performed. The additional step compares
the implied fair value of the reporting unit’s goodwill with the carrying amount of the goodwill. An impairment loss is recorded
to the extent that the carrying amount of goodwill exceeds its implied fair value and the loss establishes a new basis in the
goodwill.

We identified the goodwill impairment assessment of the Investment Management reporting unit as a critical audit matter.
The principal considerations for this determination was the degree of auditor judgment in performing procedures over the
key assumptions, which include the discount rate and long term growth rate used in the discounted cash flow analyses. In
addition, auditor judgment was required to evaluate the overall fair value of the Investment Management reporting unit which
incorporated discounted cash flow analyses and a market multiples approach.

The primary procedures we performed to address the critical audit matter included the following. We tested certain internal
controls over the Company’s goodwill impairment process, including controls related to the key assumptions used in the
discounted cash flow analyses and the application of the market multiples approach. We involved valuation professionals
with specialized skill and knowledge, who assisted in:

•

evaluating the Company’s fair value methodology for the Investment Management reporting unit,

evaluating the Company’s long term growth rate and discount rate by comparing the inputs to the development of
the assumptions to publicly available data,

assessing the Company’s market multiples by comparing them to market multiples of comparable companies in the
banking industry,

•

reconciling the Company’s estimated fair value to its market capitalization as of the measurement date, and

145

2019 Form 10-K

•

assessing the results of the impairment analysis considering the discounted cash flow analyses and the market
multiples approach.

/s/ KPMG LLP

We have served as the Company’s auditor since 2008.

Short Hills, New Jersey
March 10, 2020

2019 Form 10-K

146

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, 2019 (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 f
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, 2019, 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, 2019, Valley’s internal control over financial

147

2019 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, 2019 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, 2019. The report is included in this item
under the heading “Report of Independent Registered Public Accounting Firm.”

Changes in Internal Control over Financial Reporting

There have been no changes in Valley’s internal control over financial reporting during the year ended December 31, 2019 that

have materially affected, or are reasonably likely to materially affect, Valley’s internal control over financial reporting.

2019 Form 10-K

148

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board Directors
Valley National Bancorp:

Opinion on Internal Control Over Financial Reporting

We have audited Valley National Bancorp and subsidiaries (the Company) internal control over financial reporting as of
December 31, 2019, 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, 2019, 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, 2019 and 2018, 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, 2019, and the related notes (collectively, the consolidated financial statements), and
our report dated March 10, 2020 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, 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 rr
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Short Hills, New Jersey
March 10, 2020

149

2019 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 “ Information about our Executive
Officers” in Item 1 of this Annual Report on Form 10-K. The information set forth under the captions “Director Information” and
“Corporate Governance” in the 2020 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 2020 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 2020 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 2020 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 2020 Proxy Statement is incorporated herein by reference.

Item 15.

Exhibits and Financial Statement Schedules

(a) Financial Statements and Schedules:

PART IV

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
67
68
70
71
73
75
143

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.

2019 Form 10-K

150

(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.

Description of Valley Securities.*

(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) +

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.+

151

2019 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 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).+

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.+

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.+

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).+

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, incorporated
herein by reference to Exhibit CC to the Registrant's Form 10-K filed on February 28, 2019. +

Form of Change in Control Agreement for Senior Executive Vice President, dated January 16, 2019,
incorporated herein by reference to Exhibit DD to the Registrant's Form 10-K filed on February 28,
2019. +

2019 Form 10-K

152

AA.

BB.

CC.

DD.

EE.

FF.

GG.

Form of Agreement to Reduce Change in Control Severance, effective January 1, 2023 (applicable to Ira
Robbins, Thomas A. Iadanza, Ronald H. Janis, Bernadette M. Mueller and Melissa Scofield), incorporated
herein by reference to Exhibit EE to the Registrant's Form 10-K filed on February 28, 2019. +

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), incorporated herein by reference to Exhibit FF
to the Registrant's Form 10-K filed on February 28, 2019. +

Amendment to 2016 Change in Central Severance Plan for First Senior Vice Presidents and Senior Vice
Presidents (applicable after January 1, 2020), incorporated herein by reference to Exhibit GG to the
Registrant's Form 10-K filed on February 28, 2019. +

2019 Change in Control Severance Plan applicable to First Senior Vice Presidents and Senior Vice
Presidents, incorporated herein by reference to Exhibit HH to the Registrant's Form 10-K filed on February
28, 2019. +

Form of Change in Control Agreement for Senior Executive Vice President, effective January 1, 2023
(covering Thomas A. Iadanza and Ronald H. Janis), incorporated herein by reference to Exhibit II to the
Registrant's Form 10-K filed on February 28, 2019. +

Valley National Bancorp 2016 Long-Term Stock Incentive Plan, as amended, adopted on January 30,
2019 for use in 2019 and after, incorporated herein by reference to Exhibit KK to the Registrant's Form
10-K filed on February 28, 2019. +

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), incorporated herein by reference to Exhibit LL to the Registrant's Form 10-K filed on February
28, 2019. +

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), incorporated
herein by reference to Exhibit MM to the Registrant's Form 10-K filed on February 28, 2019. +

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),
incorporated herein by reference to Exhibit NN to the Registrant's Form 10-K filed on February 28,
2019. +

Oritani Financial Corp. 2007 Equity Incentive Plan, incorporated by reference to Appendix A of the proxy
statement for the Special Meeting of Oritani Stockholders (Commission File No. 001-33223) filed by
Oritani under the Securities Exchange Act of 1934, as amended, on March 20, 2008. +

Oritani Financial Corp. 2011 Equity Incentive Plan, incorporated by reference to Appendix A of the proxy
statement for the Special Meeting of Oritani Stockholders (Commission File No. 001-34786) filed by
Oritani under the Securities Exchange Act of 1934, as amended, on June 27, 2011. +

153

2019 Form 10-K

(21)

List of Subsidiaries as of December 31, 2019:

(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.
Metro Title and Settlement Agency, Inc.
Valley Commercial Capital, LLC
Valley Securities Holdings, LLC
VNB New York, LLC

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

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 York
New York

New York
New York

New Jersey
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%

(23)
(24)
(31.1) Certification of Ira Robbins, Chairman of the Board, President and Chief Executive Officer of the Company,

Consent of KPMG LLP.*
Power of Attorney of Certain Directors and Officers of Valley.*

pursuant to Securities Exchange Rule 13a-14(a).*

(31.2) Certification of Michael D. Hagedorn, Senior Executive Vice President and Chief Financial Officer of the

(32)

(101)

Company, 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, Chairman of the Board, President and Chief Executive Officer of the Company and
Michael D. Hagedorn, Senior Executive Vice President and Chief Financial Officer of the Company.*
Interactive Data File (XBRL Instance Document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document) *

(104) Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

Filed herewith.

Management contract and compensatory plan or arrangement.

(d)

(e)

(f)

(g)

2019 Form 10-K

154

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, Chairman of the Board, President
and Chief Executive Officer

/s/ MICHAEL D. HAGEDORN
Michael D. Hagedorn,
Senior Executive Vice President
and Chief Financial Officer

Dated: March 10, 2020

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/ MICHAEL D. HAGEDORN
Michael D. Hagedorn

/S/ MITCHELL L. CRANDELL
Mitchell L. Crandell

ANDREW B. ABRAMSON*
Andrew B. Abramson

PETER J. BR

AUM*

Peter J. Baum

ERIC P. EDELSTEIN*
Eric P. Edelstein

GRAHAM O. JONES*
Graham O. Jones

MICHAEL L. LARUSSO*
Michael L. LaRusso

MARC J. LENNER*
Marc J. Lenner

KEVIN J. LYNCH*
Kevin J. Lynch

PETER V. MR

AIO*

Peter V. Maio

SURESH L. SANI*
Suresh L. Sani

Title

Chairman of the Board, President and
Chief Executive Officer and Director
(Principal Executive Officer)

Senior Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)

Executive Vice President and
Chief Accounting Officer
(Principal Accounting Officer)

Director

155

Date

March 10, 2020

2019 Form 10-K

Signature

LISA J. SCHULTZ*
Lisa J. Schultz

JENNIFER W. S

TEANS*

Jennifer W. Steans

JEFFREY S. WILKS*
Jeffrey S. Wilks

By: /s/ MICHAEL D. HAGEDORN

Michael D. Hagedorn, attorney-in fact

Title

Director

Date

March 10, 2020

2019 Form 10-K

156

1455 VALLEY ROAD
WAYNE, NEW JERSEY 07470
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD, FRIDAY, MAY 1, 2020

To Our Shareholders:

We invite you to the Annual Meeting of Shareholders of Valley National Bancorp ("Valley") to be held at 100 Furler Street,
Totowa, NJ on Friday, May 1, 2020 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, 2020;

3. An advisory vote on executive compensation;
4. An amendment to the Restated Certificate of Incorporation of Valley National Bancorp to increase the number

of authorized shares of common stock; and

5. 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 19, 2020. 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 Wednesday, March 11, 2020 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 5 – "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
Chairman, President and Chief Executive Officer

Wayne, New Jersey
March 19, 2020

Important notice regarding the availability of proxy materials for the 2020 Annual Meeting of Shareholders: This
Proxy Statement for the 2020 Annual Meeting of Shareholders, our 2019 Annual Report to Shareholders and the
proxy card or voting instruction form are available on our website at: http:www.valley.com/filings.html.

F
TABLE OF
TT

CONTENTS

PP
PAGE

What's New
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
2019 Stock Vested
2019 Pension Benefits
2019 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

Delinquent Section 16(a) Reports
Item 4 – Amendment to the Restated Certificate of Incorporation
Shareholder Proposals
Item 5 - Shareholder Proposal
Other Matters
Appendix A

1
3
6
11
12
13
17
17
18
19
19
19
21
21
21
22
23
25
27
29
29
38
39
40
42
43
44
44
45
46
52
53
54
54
54
54
55
56
57
57
59
60

What's New?

This year, we have expanded our
r
discussion of
Valley's governance, human capital and social
VV
responsibility practices. We believe pr
oviding a
r
broader understanding of our
items will be beneficial to you as you consider this
year's voting matters. This year's updated items
include:
•

Summary of our corporate governance practice
(see below)

perspective on these

• Extended examples of our Board commitment to

engagement (see page 14)

• Explanation of our focus on Human Capital

Management (see page 15)

• Explanation of our Commitment to Social

Responsibility (see page 15)

We are committed to common sense
corporate governance practices

eviews its composition for the

Our Board r
appropriate mix of experience, refreshment, skills,
and diversity

• We seek diversity across a full spectrum of

• We seek directors with experience and skills

WW
relevant to the Company's business and operations
who will contribute to the Board's collegial
dynamic.
WW
attributes.
Five new directors, including two women, have
joined the Board in the last two years. Four long
serving directors have left the Board in the last
two years.

•

• The tenure of almost sixty percent of our directors

up for election is less than ten years.

A strA ong Lead Independent Director rr ole
facilitates independent board oversight of
management

• Our Corporate Governance Guidelines require the
independent directors annually to appoint a Lead
Independent Director if the role of the Chairman
is combined with that of the CEO.

• The Board reviews its leadership structure

annually as part of its self-assessment process.
• Responsibilities of the Lead Independent Director

include:

Serve as liaison between independent directors and

the CEO

Preside at Board meetings in the CEO's absence
Preside over executive sessions of independent and

non-management directors

Facilitate Board agreement on the number and

frequency of Board meetings

Meet one-on-one with the CEO following

executive sessions of independent and non-

management directors

Assist with establishing agenda items for Board
meetings and establish agenda items for meetings
of independent and non-management directors

Advise the CEO of the Board's information needs
Engage with regulators, major shareholders and

other constituencies, where appropriate

Exercise the authority to call for a meeting of
directors without management or with only
independent directors

Provide advice to the CEO on executing long-term

strategy

Guide full Board consideration of CEO succession
Guide annual performance review of the CEO by

independent and non-management directors

Board

ovides independent oversight of

Our Board pr
Valley's business and affairs. Our
r
VV
VV
• Reviews Valley's strategic plan
•

Selects individual directors to meet with
management on aspects of the plan and report
back to the full board
VV

• Oversees Valley's risk management
• Evaluates the CEO's performance and talent
management of other senior executives
• Oversees Valley's approach to community

investment and commitment

• Oversees Valley's financial performance and

condition

WW
We actively engage with shar

eholders

• Directors and senior management have regular
and ongoing discussions with shareholders
throughout the year on a wide variety of topics,
such as financial performance, strategy,yy
competitive environment, regulatory landscape,
and corporate governance matters.

Our governance practices pr
effectiveness

omote Board

• Through Annual Board self assessments

conducted by the Chair of our Nominating and
Corporate Governance Committee, involving both
anonymous questionnaires and one on one
meetings with directors.

• Annual major committee self-assessments
• Majority voting for all director elections
• Robust shareholder rights:

–
–

proxy access
right to call a special meeting

•
•
•

Stock ownership requirements for directors
100% independence on major committees
Policies to prohibit hedging and pledging of
Valley stock by directors and of
ff
ficers, with a
VV
limited exception from pledging only for directors
who join the Board while having pledged shares

2020 Proxy Statement

and only if approved by the Nominating and
Corporate Governance Committee.

• Executive sessions of non-management directors
at the end of each regular Board meeting and
executive sessions of independent directors
periodically.

2020 Proxy Statement

VV
VALLEY

TIONAL
NAY
L
AA
1455 Valley Road
VV
WW
Wayne, New Jersey 07470

BANCORP

AA
PROXY STY ATT TEMENT

AA
GENERAL INFORMA
L

TION

We WW are providing this proxy statement in connection with the
solicitation of proxies by the Board of Directors of Valley
,"yy the "Company,"yy "we," "our" and
National Bancorp ("ValleyVV
"us") for use at Valley’
s 2020 Annual Meeting of
Shareholders (the "Annual Meeting") and at any adjournment
or postponement of the meeting. You YY are cordially invited to
attend the meeting, which will be held at 100 Furler Street,
Totowa,
NJ, on Friday, yy May 1, 2020 at 9:00 a.m., local time.
TT
This proxy statement is first being made available to
shareholders on or about March 19, 2020.

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,ww 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 2020 notice of annual meeting of shareholders, this proxy
statement, the Company’s 2019 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 Wednesday
,yy March 11,
2020. 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 403,748,667 shares of common
stock outstanding. Each share is entitled to one vote on each
matter properly brought before the meeting.

HOUSEHOLDING

shareholders.

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
Similarly,yy
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.

brokers

WeWW 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 TT
receive these additional copies, you may write or call Tina
President, Shareholder Relations
Zarkadas, Assistant Vice VV
Specialist, Valley
Road,
VV
Wayne,WW
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.

National Bancorp, at 1455 ValleyVV

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 YY vote is important and you are encouraged to submit your
proxy 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;

2020 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;

Item 4 – FOR the approval of the amendment to
Restated Certificate of Incorporation to
VV
Valley's
increase the number of authorized shares of Valley's
common stock; and

•

Item 5 - AGAINST the shareholder proposal.

We are of
ff
fering you four alternative ways to vote your
WW
shares:

BY INTERNET.TT 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 TT vote 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.

in Person" and "Revoking Your YY

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
Proxy". If you are
VV
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.

2020 Proxy Statement

REVOKING YOUR PROXY

YouYY can revoke your proxy at any time before it is exercised
by:

•

Delivery of a properly executed, later-dated proxy;
or

A written revocation of your proxy.

National Bancorp, at 1455 Valley

A later-dated proxy or written revocation must be received
before the meeting by the Corporate Secretary of the
Company,yy Valley
Road,
Wayne,WW
NJ 07470, or it must be delivered to the Corporate
Secretary at the meeting before proxies are voted. YouYY may
also revoke your proxy by submitting a new proxy via
telephone or the Internet. You YY will be able to change your
vote as many times as you wish prior to the Annual Meeting
and the last proxy received chronologically will supersede
any prior proxies.

QUORUM REQUIRED TO HOLD THE ANNUAL
MEETING

The presence, in person or by proxy, yy 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, the
amendment to the Restated Certificate of Incorporation or
the shareholder proposal.

REQUIRED VOTE

•

To TT 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 voted "AGAINST" the nominee). Each
director has executed a resignation letter which
becomes effective
if he or she does not receive a
majority of the votes cast in an election that is not
contested and the Board votes to accept the
resignation. 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 2020), directors would be
elected by a plurality of votes cast at the Annual
Meeting.

•

The ratification of the appointment of KPMG LLP
will be approved if a majority of the votes cast are

voted FOR the proposal. Abstentions are not
counted as votes cast and will have no effect
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
ff
effect

on the outcome.

•

The vote to approve the amendment to Valley's
Restated Certificate of Incorporation to increase the
number of authorized shares of Valley's
common
stock will be approved if a majority of the votes cast
are voted FOR such 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

AA
ATTENDANCE

Only shareholders or their proxy holders and Valley
guests
may attend the Annual Meeting. For registered shareholders
receiving paper copies of 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 SOLICITATT TION

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
ff
of the Company in person, by mail, telephone, facsimile or
other electronic means. We WW 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 WW are paying Equiniti (US)
Services LLC a fee of $8,000 plus out of pocket expenses to
assist with solicitation of proxies.

2020 Proxy Statement

ITEM 1

ELECTION OF DIRECT

ORS

matrix shows the 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

TT
Technology

Director Tenur

e 2019

< 5 YearsYY

5-10 YearsYY
10-20 YearsYY

20+ YearsYY

2
3

The biography of each nominee is set out below and contains
information regarding the nominee’s tenure as a director, their
age, business experience, for at least the last five years, other
public company directorships held during the last five years,
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.

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 Kevin Lynch
and Peter
Maio, all nominees were elected by you at our 2019 annual
meeting of shareholders.

Mr. Lynch
was added to our Board in December 2019 in
LL
connection with the closing of the acquisition of Oritani
Financial Corp.

After extensive interviews and based upon, among other
attributes, his background in bank technology, yy Mr. Maio was
added to our Board in January 2020. Mr. Maio was suggested
.
as a potential director by an executive officer

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 2021 annual
meeting and thereafter until a successor is duly elected and
qualified.

Mr. Lipkin, who served on the Board since 1986, retired from
the Board at the end of 2019. Mr. LaRusso, who served on the
Board since 2004, is not standing for re-election at the Annual
Meeting. We WW thank these directors for their service and the
important expertise they shared with the Board.

In selecting these nominees, the Nominating and Corporate
Governance Committee (Nominating Committee) and the
Board as a whole refreshed their focus on various aspects of
corporate governance, including tenure, contributions, skills,
and diversity.

The Board considers
including:

certain personal characteristics

•

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 following

2020 Proxy Statement

Ira Robbins, 45

Andrew B. Abramson, 66

r Valley National

President & Chief Executive
Officer of
Bancorp and Valley National
VV
Bank, Chairman of the Board

Director since: 2018

faster, more efficient

Mr. Robbins is President and CEO of Valley
Bank and
approaches his role from a unique perspective. He joined
Valley
in 1996 as part of the Bank's Management Associate
VV
Program and has grown along with the company. From
college student to thought leader, his twenty-plus year career
at Valley
has seen him through several key positions where
his invaluable contributions have helped shape Valley's
growth and success. As CEO, Mr. Robbins has led Valley
into the future while keeping true to the company's roots as
a local bank. In an ever-evolving digital and mobile world,
leadership team strive to create a
he and the rest of Valley's
stronger,
and more responsive
ff
organization. His vision for success is building a purpose-
driven organization which includes embracing innovation,
being customer-centric, promoting social responsibility,yy and
empowering Valley's
associates. Mr. Robbins earned his
Bachelor of Science degree in Finance and Economics from
Susquehanna University,yy his MBA in Finance from Pace
University, yy and is a graduate of the Stonier Graduate School
of Banking. He is a Certified Public Accountant in New
Jersey and a member of both the New Jersey Society of
Certified Public Accountants and the American Institute of
Public Accountants. He serves on the board of the Jewish
Vocational
Service of MetroWest WW NJ (JVS) and is on the
VV
Morris Habitat for Humanity Leadership Council. Mr.
Robbins takes great pride in community outreach and is an
active supporter of several philanthropic organizations in his
community as well.

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

Director since: 1994

Mr. Abramson is a licensed real estate broker in the States
of New Jersey and New York YY
and is a licensed building
contractor in the State of Florida. He is the co-founder and
treasurer of the Cure Breast Cancer Foundation, Inc., a
501c(3) not-for-profit charity that supports innovation and
groundbreaking breast cancer research. Mr. Abramson
graduated from Cornell University with a Bachelor’s Degree,
and a Master’s Degree, both in Civil Engineering. With W 40
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, 64

r
rr

Chief Financial Officer and
Chief Operating Officer, Essex
Manufacturing, Inc.
(manufacturer, importer
r
distributor of consumer
products)

and

Director since: 2011

Mr. Baum joined Essex Manufacturing, Inc. in 1978 as an
Asian sourcing manager. Essex Manufacturing, Inc. has been
in business over 70 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. He brings over 45 years
of business experience, including as a business owner for 25
years, as well as financial experience and expertise to
s Board of Directors. Mr. Baum appears on CNBC
VV
Valley’
(US & Asia) providing commentary on Asia developments.

2020 Proxy Statement

Eric P. Edelstein, 70

was a President and Director for Adwildon Corporation
(bank holding company). Mr. Jones received his Bachelor’s
Degree from Brown University and his Juris Doctor Degree
from the University of North Carolina School of Law. WithW
his business and banking affiliations,
including partnerships
and directorships, as well as professional and civic
he brings a long history of banking law expertise
ff
affiliations,
and a variety of business experience and professional
achievements to Valley’

s Board of Directors.

Consultant

Director since: 2003

Marc J. Lenner, 54rr

Chief Executive Officer and
Chief Financial Officer, Lester
M. Entin Associates (a real
estate development and
management company)
Director since: 2007

in the New York YY

and Chief
Mr. Lenner became the Chief Executive Officer
at Lester M. Entin Associates in January
Financial Officer
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
tri-state area), including
a focus
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
PP
where he earned a Bachelor’s Degree in both Business
Administration and Accounting. With W his financial and
professional background, he provides management, finance
VV
and real estate experience to Valley’

s Board of Directors.

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
Board of Directors with extensive
VV
provides Valley's
experience
in auditing and preparation of financial
statements. With W 32 years of experience as a practicing CPAPP
and as a management consultant, Mr. Edelstein is a former
Director of Aeroflex, Incorporated and Computer Horizon
Corp. He is also a former Executive Vice VV President and Chief
Financial Officer
Corporation (a diversified
manufacturing and holding company) and a former
Managing Partner at Arthur Andersen LLP (an accounting
firm). He 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. Mr.
Edelstein received his Bachelor’s Degree in Business
Administration and his Master’s Degree in Professional
Accounting from Rutgers University.

of Griffonff

Graham O. Jones, 75

Partner and
yy
Attorney, Law
r
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). Mr. Jones was a
Director and General Counsel for 12 years at Midland
Company.
Bancorporation, Inc. and Midland Bank & Trust
He was a partner at Norwood Associates II for 10 years and

2020 Proxy Statement

LL
Kevin J. Lynch, 73

Board of Advisors of the North Carolina Technology
Association from 2015 to 2018. Mr. Maio holds a Bachelor
of Science Degree in Economics from The Wharton School
at the University of Pennsylvania and a Masters of
Business Administration in Information Systems and
International Business from the Stern School of Business
at New York University
W
. With more than 35 years of
technology experience in financial services firms, he
brings to Valley's Board of Directors in-depth experience
in formulating and executing information technology
strategy as well as experience of technology solution
delivery driven from business-based vision.

Former Chairman, President
and Chief Executive Officer of
Oritani Financial Corp.
Director since: 2019

Other dir
r
Financial Corp.

ectorships: Oritani

Suresh L. Sani, 55

is the former President and CEO of Oritani
LL
Mr. Lynch
Financial Corp. and Oritani Bank. He held this position from
1993 until Oritani merged with Valley
in December 2019.
Mr. Lynch
is a director of Pentegra Services Inc., a national
LL
provider of full-service retirement programs. He is a former
Chairman of the New Jersey League of Community and
Savings Bankers, having served as a member of its Board of
Governors for several years, as well as a former member of
the Board of Directors of Bergen County Habitat for
Humanity. Mr. Lynch
is a former director of the FHLB-NY
and served on its Executive Compensation and Housing
Committees in addition to having served on the Board of
Directors of Thrift Institutions Community Investment Corp.
He is a member of the American Bar Association and a
licensed attorney in the State of New Jersey. Mr. Lynch
brings
valuable banking experience and knowledge of financial
Board of Directors.
markets to Valley's

Peter V. Maio, 58

Consultant

Director since: 2020

Mr. Maio is a former Chief Information Officer at
Bank with responsibility for Customer Information,
Analytics and Corporate Technology
TT
he held various technology leadership positions at large
financial services companies including CIT, Charles
Schwab, and Fidelity Investments. Mr. Maio served on the

. Prior to joining Ally,yy

Ally

President, First Pioneer
Properties, Inc. (a commercial
real estate management
company)

Director since: 2007

Mr. Sani is a former Real Estate 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 30 years of experience in managing and owning
commercial real estate in Valley’
s lending market area.
VV
Mr. Sani received his Bachelor’s Degree from Harvard
College and a Juris Doctor Degree from the New YorkYY
University School of Law. Mr. Sani brings a legal
background, small business network management and real
estate expertise to Valley’

s Board of Directors.

2020 Proxy Statement

Lisa J. Schultz, 58

Director since: 2019

ger between

Ms. Schultz retired as co-head of Capital Markets at
Keefe, Bruyette & Woods, a Stifel Company
-
, as of year
yy
end 2018. She joined KBW as part of the mer
W
Stifel Financial and Keefe, Bruyette. Ms. Schultz 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 had
primary responsibility for raising billions of dollars of
capital for US depository institutions. She started her
career at Drexel Burnham Lambert. Ms. Schultz received
her Bachelor’s Degree from Simmons College in 1983.
With Ms. Schultz’
s experience, she brings expertise in
W
strategic positioning, investor perspective, capital
alternatives and the financial services markets to Valley's
Board of Directors.

WW
Jennifer W. Steans, 56

President and CEO, Financial
Investments Corporation,
("FIC"), a private asset
management firm

Director since: 2018

ectorships: MB

Other dir
r
Financial, Inc.;
USAmeriBancorp, Inc.

Ms. Steans is the President and CEO of the private asset
management firm, Financial Investments Corporation
(“FIC”), where she oversees private equity investments
and the Steans Family Office operations. She was the
former Chairman of USAmeriBancorp, Inc., until acquired
by Valley in 2018. Her business af
ff
filiations are
substantial, also serving as a Director of Catastrophe
Solutions and on the Advisory Board for Carlyle Asia
Growth Partners III, LP, Resource Land Fund, Siena
Capital Partners, and is on the Executive Committee of
The Commercial Club of Chicago. Prior to joining Valley's
Board of Directors, Ms. Steans served as a Director of MB
Financial (MBFI), a publicly traded regional bank holding
company located in Chicago. She also served as a Director
of Cole Taylor Bank and

TT
Taylor Capital before being

2020 Proxy Statement

acquired by MBFI. Ms. Steans is active in the nonprofit
community,yy serving on several boards, including Chair of
Ravinia Festival, Kellogg Advisory Board, and RUSH
University Medical Center. She is also involved in many
community organizations and ventures in the Greater
Chicago Area. Ms. Steans brings a strong financial
background, knowledge about banking strategy and a diverse
background to Valley's
Board of Directors. She received a
bachelor's degree from Davidson College and her MBA from
the Kellogg School of Management at Northwestern
University. In 2013, she was named as one of American
WW
Banker's 25 Most Powerful Women

in Finance.

Jeffrey S. Wilks, 60

President and Chief Executive
Officer of Spiegel Associates (a
real estate ownership and
development company)

Director since: 2012

Other dir
r
Bancorp, Inc.

ectorships: State

Mr. WilksW 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
January 1, 2012. From 1992 to 1995,
Bancorp, Inc., effective
he was an Associate Director of Sandler O’Neill, an
investment bank specializing in the banking industry. Prior
to that, Mr. WilksWW was a ViceVV President of Corporate Finance
at NatWest WW USA and ViceVV President of NatWest WW USA Capital
Corp. and NatWest WW Equity Corp., each an investment affiliate
of NatWest WW USA. He serves on the board of directors of the
New Cassell Business Association, is a member of the board
of the Museum at Eldridge Street, is a member of the Board
of City Parks Foundation and is a member of the board of
directors of The Association for A Better Long Island. Mr.
served as Director of the Banking and Finance
WilksW
Committee of the UJA - Federation of New York YY
from 1991
to 2001. He earned his BSBA in Accounting and Finance
from Boston University and brings experience in banking,
VV
finance, and investments to Valley’

s Board of Directors.

RECOMMENDATION ON ITEM 1

Y
THE VALLEY
VV

BOARD UNANIMOUSL

YLL

RECOMMENDS A VOTE “FOR” THE NOMINATEDAA

F
SLATE OF

DIRECT

ORS.

ITEM 2

AA
RATIFICA

TION 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
performance,
independence of that firm. The Audit Committee has
appointed KPMG LLP (KPMG) as
the independent
registered public accounting firm for the Company in 2020.
KPMG has served as the Company’s independent registered
public accounting firm continuously since 2008.

qualifications

the

Before reappointing KPMG for 2020, 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, 2019 and 2018 were as follows:

Audit fees
Audit-related fees (1)
(2)
Tax fees
TT
TotalTT

2019
$ 2,167,500
500,000
29,591
$ 2,697,091

2018
$ 1,625,000
491,000
15,722
$ 2,131,722

__________
(1) Fees paid for benefit plan audits, business combination, and a
review of Form S-4 and Form S-8 registration statements and
related expert consents.

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

state and local matters.

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
ValleyVV
. The policy requires that all services to be performed
by KPMG, including audit services, audit-related services
and permitted non-audit services, be pre-approved by the
Audit Committee. Specific services being provided by the
independent accountants
in
are
accordance with the pre-approval policy. At each subsequent
Audit Committee meeting, the Audit Committee receives

reviewed

regularly

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 2019. 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 2020
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

Y
THE VALLEY
VV

YLL
BOARD UNANIMOUSL
RECOMMENDS A VOTE “FOR” RATIFICA
AA
AA
TION
AS VALLEY’S
OF THE APPOINTMENT OF KPMG

INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2020.

2020 Proxy Statement

During the course of 2019, management regularly discussed
the internal control review and assessment process with the
Audit Committee, including the framework used to evaluate
of such internal control, and at regular
the effectiveness
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 2019 Annual Report on Form 10-K.

Eric P. Edelstein, Chairman

Peter J. Baum

Michael L. LaRusso

Lisa J. Schultz
WW
Jennifer W. Steans

REPORTRR OF THE AUDIT COMMITTEE

February 25, 2020

TT
To the Board of Directors of

VV
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
2019. With WW respect to fiscal year 2019, the Audit Committee
has:

•

reviewed and discussed Valley’
statements with management and KPMG;

s audited financial

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 the applicable requirements of the
Public Company Accounting Oversight Board and
SEC;

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 concerning independence, and discussed
with KPMG their independence from management
VV
and Valley;

and

•

approved the audit and non-audit services provided
during fiscal year 2019 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
2019.

to Section 404 of

the Sarbanes-Oxley Act,
Pursuant
management is required to prepare as part of the Company’s
2019 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 2019 Annual Report on Form 10-K, the auditors’
attestation report on management’s assessment.

2020 Proxy Statement

CORPORATE GOVERNANCE

are managed under the direction of
Our business and affairs
the Board of Directors. Members of the Board are kept
s business through discussions with the
informed of Valley’
VV
CEO and our other officers,
by reviewing materials provided
ff
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 2019, 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, while still considering other
stakeholders' interests. The Board has adopted corporate
governance practices which
the Board and senior
management believe promote this purpose. Periodically, yy
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.

2020 Proxy Statement

Board engagement with the Valley's stakeholders
_____________________________________________________

Our Board believes engagement with stakeholders helps us
realize our goals.

Engagement
The Board, as a group or as a subset of one or more
directors, meets periodically with Valley’
s shareholders,
employees and regulators, and with non-governmental
organizations and other persons interested in our strategy,yy
business practices, governance, culture and performance.

Engagement with shareholders
We have an active and ongoing approach to engagement on
WW
a wide variety of topics (e.g., strategy, performance,
corporate severance and competitive environment)
throughout the year. We interact with and receive feedback
from our shareholders and other interested parties. Our
ff
shareholder engagement efforts are outlined below

Engagement with employees
Our Board and senior management are committed to
maintaining a strong corporate culture that instills and
enhances a sense of participation and personal
accountability on the part of all of Valley's employees.
Senior management including our CEO holds regional
summits with our employees on a regular basis.

Engagement with regulators
Our Board and senior leaders commit significant time
meeting with our regulators. Frequent interaction helps us
learn firsthand from regulators about matters of importance
to them and their expectations of us. It also gives the Board
and management a forum for keeping our regulators well-
informed about Valley's performance and business
practices.

Engagement with ESG stakeholders
We engage with numerous non-governmental or
WW
on a diverse range of issues about our business that are
important to customers and consumers. For example,
through Valley's Regional Community

Advisory

ganizations

2020 Proxy Statement

-facing practices,

Committees, our CEO and senior executives engage with
national consumer policy groups to discuss issues related
to Valley's products, policies, customer
communications and public policy issues. We also engage
with organizations on environmental and social issues and
provide philanthropic support to a broad range of nonprofit
organizations that work on issues that are important to
ValleyVV
these relationships and engagements with the Board.
Valley is committed to being transparent about reporting on
VV
our efforts. One way we do this is by publishing an annual
Corporate Social Responsibility Report. The report is
available on our website at valley.com/why-valley/our-
community- commitment.

. Management shares insights and feedback from

Other corporate governance policies and practices
_____________________________________________________

Shareholder rights
VV
Valley's Restated Certificate of Incorporation and By-laws
provide shareholders with important rights, including:

Proxy access, which enables eligible shareholders
to include their nominees in Valley's proxy
statement.

The ability to call a special meeting by
shareholders holding at least 25% of the
outstanding shares of our common stock.

The ability of shareholders to amend the By-laws

Majority election of directors

No "poison pill"

No super-majority vote requirements in our
Certificate of Incorporation or By-laws

Code of Conduct
Employees are trained annually on our Code of Conduct
and Ethics and are required to speak up about misconduct
and report suspected or known violations of the Code, or
any law or regulation applicable to Valley's business.
We WW
also provide procedures regarding the review and treatment
of employee-initiated complaints, including the proper
escalation of suspected or known violations of the Code,
other Valley policy or the law
retaliation against anyone who in good faith raises an issue
or concern.

. The Code prohibits

Employees can report any known or suspected violations
of the Code in person or via the Ethics Hotline. The Ethics
Hotline is anonymous and is maintained by an outside
service provider.

Suspected violations of the Code, other Valley policy or the
VV
law are investigated by Valley and may result in an
employee being cleared of the suspected violation or in an
escalating range of actions, including termination of
employment, depending upon the facts and circumstances.

The Ethics Officer reports quarterly to the
Audit
Committee on ethics complaints from all sources.

. The Third

Supplier Code of Conduct
Suppliers are expected to have high standards of business
conduct, integrity, and adherence to the law
Party Code of Conduct and Ethics applies to our suppliers,
vendors, consultants, contractors, and other third parties
working on behalf of ValleyVV
. The Code of Conduct
communicates our expectations on a range of issues,
including our suppliers' responsibility to comply with laws
and regulations and Valley's obligations to its customers.
The Supplier Code is available on our website at
valley.com/why-vnb/company-information.

VV
Valley received an Outstanding

Board Focus on Social Responsibility and Sustainability
We are proud that
WW
Community Investment Act rating from the Office of the
Comptroller of the Currency in late 2019 for the years
2015 through 2018. This is an honor and distinction
received by less than 10% of financial institutions in 2019.

The Community Reinvestment Act requires banks to meet
the credit needs of low- and moderate-income communities
in which it operates. The rating is based upon an
assessment of three categories: lending, investment, and
services. Included in the assessment are bank practices
such as mortgage lending, small business lending,
community development lending, investments and services
to communities, along with employee community
involvement.

Our Board in 2015 established a Community Reinvestment
Act Committee which supported and provided oversight to
senior management in its efforts to achieve this outstanding
rating. Management worked to encourage and incentivize
ficers and employees to participate in community
Valley of
ff
VV
activities. Valley established Regional Community
VV
Advisory Committees and our CEO and senior
management received advice from advisory board
members in each region and from community partners.
Encouraged by our Board, senior management shaped a
culture that embraces social responsibility.

Below is a snapshot of some of our 2018 investments in
the community included in our 2018 Corporate Social
Responsibility Report. Our 2019 report when published
will show a similar commitment

Human Capital Management
Attracting, developing, and retaining the most qualified
people is crucial to all aspects of Valley's activities and
long-term success, and is central to our long-term strategy.
We are investing in our employees to ensure that we are the
WW
employer of choice. We seek to build an inclusive culture
that empowers employees, encourages innovative thinking
and welcomes everyone.

Employee Development and Engagement
Valley understands that becoming an employer of choice
VV
requires providing training and development opportunities.
WW
We strive to achieve this through a number of forums.

that building an

WeWW recognize
inclusive and high
performance culture requires an engaged workforce, where
employees are motivated. We WW communicate with our
employees in a number of ways, and we seek their input on
a variety of subjects through our employee survey. In 2019,
we received an 84 percent response rate and our scores
improved across a number of categories.

2020 Proxy Statement

Diversity and Inclusion
Valley is committed to cultivating a diverse and inclusive
VV
environment that supports the development and
advancement of all. We foster a feeling of connectedness
in the workplace and support diversity of background,
experience and thought, including gender and racial/ethnic
diversity.

We review our compensation and employment practices to
WW
create alignment with our commitment.

2020 Proxy Statement

TENURE AND REFRESHMENT

The Board believes its policies provide for refreshment and
tenure limits. WithW respect to refreshment, Ms. Steans and
Mr. Robbins were added in 2018, Ms. Schultz and Mr. Lynch
were added in 2019 and Mr. Maio was added in 2020, even
as the size of our Board was reduced to 12. Over 40 percent
of our directors' tenure is less than 3 years and almost 60
percent less than 10 years.

BOARD SELF-ASSESSMENT

The Nominating and Corporate Governance Committee
leads a robust self-assessment process. The Committee
circulates an extensive questionnaire and this year employed
one on one meetings with the CEO and separate one on one
meetings by the Chair of the Nominating Committee with
some directors. Our directors in early 2020 engaged in a
discussion on ways to improve the process further.

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 WW realize that some companies
utilize an independent chairperson and others an independent
Lead Director or Presiding Director. We WW also believe the
structure of independent leadership should be examined
regularly. During 2019, our Board utilized an independent
Lead Director.

Risk Oversight. Our Board is currently comprised of 12
directors, of whom 10 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 WW 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
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
and the chairman of the Risk Committee.
ff
officers

Lead Director. rr The Board created the position of independent
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 annually. As set forth in our Corporate
Governance Guidelines, the Lead Director is selected from
among our independent directors. The position is filled unless
the Chairman is an independent director (presently not the
case). Our non-management directors meet in executive

session after every regular Board meeting and our
independent directors meet in executive session periodically.
These meetings are chaired by Mr. Abramson in his role as
Lead Director. As provided in the Corporate Governance
Guidelines, the Lead Director, among other things:

•

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
for
ff
and assuring sufficient
discussion of agenda items; and

time

Leads the independent director evaluation of the
effectiveness
of the CEO and any non-independent
ff
Chairman.

The Nominating Committee engaged in a robust discussion
in early 2020 about whether to rotate Committee Chairs and
the position of Lead Director. The Committee supports the
rotation of Committee Chairs and Lead Director and believes
such actions are a component of effective
corporate
governance. The Committee expects that it may recommend
continued rotation of Committee Chairs and that of Lead
Director at future Organizational Meetings following the
2021 Annual Shareholder Meeting.

Chairman/CEO Decision for 2019. For 2019, the Board
determined to combine the Chairman and CEO positions.
Considering the performance of Mr. Robbins during his first
14 months as CEO, the Board believed that electing him as
Chairman was appropriate. As explained previously, yy the
Board believes that independent Board leadership is provided
by the independent Lead Director in light of the position's
authority,yy responsibilities, and duties.

Oversight of Environmental, Social and Governance
("ESG") matters. The Board directly and through its
Committees oversees the Company's approach to ESG
matters,
the Company's governance-related
policies and practices; our systems of risk management and
controls; our human capital strategy; the manner in which we

including:

2020 Proxy Statement

serve our customers and support our communities; and how
we advance sustainability in our businesses and operations.
The Committees of the Board oversee a range of ESG matters
in accordance with the scope of their charters. We WW know that
the long-term success of Valley
requires a continued focus
on these evolving topics.

Corporate Governance Committee discussed what it heard
with Mr. WilksW and as a result Mr. WilksW no longer serves on
the Audit Committee.

To TT 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:

•

DIRECTOR INDEPENDENCE

The Board has determined that 10 of our directors and all
current members of
the Nominating and Corporate
Governance, Compensation and Human Resources, and
Audit Committees are “independent” for purposes of the
independence standards of the NASDAQ, and that all of the
members of the Audit Committee are also “independent” for
purposes of Section 10A(m)(3) of the Securities and
Exchange Act of 1934 (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, yy affiliations
and family and other
relationships and on discussions with the directors. Our
independent directors are: Andrew B. Abramson, Peter J.
Baum, Eric P. PP Edelstein, Marc J. Lenner, Kevin J. Lynch,
Peter V. VV Maio, Suresh L. Sani, Lisa J. Schultz, Jennifer W. WW
Steans and Jeffrey

S. Wilks.W

in determining that he was
With W respect to Mr. Wilks,W
independent, the Board recognized that his spouse benefits
from leasing a branch to the Bank. As set forth in the section
"Certain Transactions
with Management", the annual lease
TT
payments are made to a limited partnership from which Mr.
spouse benefits. The limited partnership is part of a
Wilks' W
much larger entity from which Mr. Wilks' WW
spouse also
benefits. The lease payments are less than 1/2 of 1% of the
annual gross revenue of the larger organization. The annual
lease payments are $190,000 a year, with no additional
payments due from the Bank for real estate taxes, insurance
or parking lot maintenance. This payment has remained fixed
acquired the branch in a merger in 2011 and no
VV
since Valley
annual increases are built in. Based upon these factors, the
Nominating and Corporate Governance Committee and the
Board reached the judgment this year and in the past that
because the lease transaction was de minimis to Mr. Wilks,W
Mr. WilksW was "independent".

Nonetheless, at last year's annual meeting of shareholders,
Mr. Wilks W received slightly less than an 80% "For" vote. As
a result, the Board engaged with a number of institutional
shareholders to gather information. While shareholders also
viewed the interest as de minimis, the Board was advised that
even such a de minimis interest was not advisable for a
member of the Audit Committee. The Nominating and

2020 Proxy Statement

A loan made by the Bank to a director, his or her
with a
immediate family or an entity affiliated
director or his or her immediate family,yy 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,yy or similar customer relationship between
or its subsidiaries and a director, his or her
Valley
VV
immediate family or an affiliate
of his or her
ff
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
VV
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
of the business; or
not serve as an executive officer

,yy or any of
Purchases of goods or services by ValleyVV
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
Management", for each director it determined was independent:

with

Name

Loans*

Trust Services/
TT
Assets
Under Management

Banking Relationship with
VNB

Professional
Services to
ValleyVV

Commercial and Residential
Mortgages, Personal and Commercial
Line of Credit

Commercial Mortgage

Residential Mortgage
Commercial Mortgage, Residential
Mortgage, Personal Line of Credit
and Home Equity

None

Trust Services

None

Commercial Mortgage

None

Commercial Mortgage, Personal Line
of Credit

None

Checking, Savings,
Certificate of
Deposit

Checking

Checking
Checking, Money
Market, Certificate
of Deposit, IRA

Checking, Money Market

Money Market

Checking, Money
Market

Checking, Money Market

Money Market

Checking

None

Andrew B. Abramson

Peter J. Baum

Eric P. Edelstein

Marc J. Lenner

Kevin J. Lynch

Peter V. Maio

Suresh L. Sani

Lisa J. Schultz

WW
Jennifer W. Steans

Jeffrey S.

Wilks

____________

* In compliance with Regulation O.

EXECUTIVE SESSIONS OF NON-MANAGEMENT
DIRECTORS

Valley’
s Corporate Governance Guidelines require the Board
VV
to hold separate executive sessions for both independent and
non-management directors. The Board holds an executive
session at least once a year with only independent directors
and holds an executive session with non-management
directors after each Board meeting. In each instance the Lead
Director is the presiding director for the session.

SHAREHOLDER AND INTERESTED PARPP
RR
WITH DIRECTORS
COMMUNICATIONS

TIES

The Board of Directors has established the following
procedures
party
communications with the Board of Directors or with the Lead
Director of the Board:

shareholder

interested

for

•

Shareholders or interested parties wishing to
communicate with the Board of Directors, the non-
management or independent directors, or with the
Lead Director should send any communication to
National Bancorp, Corporate Secretary, yy at
VV
Valley
1455 Valley
NJ 07470. Any such
VV
communication should state the number of shares
owned by the shareholder.

WW
Road, Wayne,

• 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.

COMMITTEES OF THE BOARD OF DIRECT
F
BOARD OF DIRECT

ORS MEETINGS

ORS;

In 2019,
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
s operations. These include a
VV
oversee other areas of Valley’
Investment
Community Reinvestment Act Committee,
Committee, Pension Committee, Risk Committee and a Trust
TT
Committee.

Each director attended at least 91% 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, 2019. Our
Board met 10 times during 2019.

The following table presents 2019 membership information
for each of our Audit, Nominating and Corporate
Governance, and Compensation and Human Resources
Committees.

2020 Proxy Statement

Name

Audit

Nominating
and

Compensation
and
Corporate
Governance

man
Resources

Andrew B. Abramson

Peter J. Baum

Eric P. Edelstein

Michael L. LaRusso

Marc J. Lenner

Suresh L. Sani

Lisa J. Schultz

WW
Jennifer W. Steans

Jeffrey S.

WilksW

2019 Number of
Meetings*

____________

(Chair)

X**

(Chair)

* Includes telephonic meetings.
** Mr. Wilks no longer serves on the
W
Audit Committee.

AUDIT COMMITTEE. The Audit Committee met 6 times
during 2019.

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
NASDAQ. The Board of Directors has also determined that
Mr. Edelstein meets the SEC criteria of an “Audit Committee
Financial Expert.” The Committee charter gives the Audit
Committee the authority and responsibility for
the
appointment, retention, compensation and oversight of our
independent registered public accounting firm, including pre-
approval of all audit and non-audit services to be performed
by our independent registered public accounting firm. Other
responsibilities of the Audit Committee pursuant to the
charter include:

• Reviewing the scope and results of the audit with
s independent registered public accounting

Valley’
VV
firm;

• Reviewing with management

VV
and Valley's
independent registered public accounting firm
Valley’
s interim and year-end operating results
VV
including SEC periodic reports and press releases;

• Considering the appropriateness of the internal
accounting and auditing procedures of Valley;

• Considering

the

independence

s
of Valley’
VV

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

2020 Proxy Statement

•

Reporting to the full Board on significant matters
coming to the attention of the Audit Committee.

AND CORPORATE AA

GOVERNANCE
NOMINATING
COMMITTEE. The Nominating
and Corporate
Governance Committee met 7 times during 2019. This
Committee reviews the qualifications of and recommends to
the Board candidates for election as directors of ValleyVV
, yy
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
Policy. The Nominating and
Related Party Transaction
Corporate Governance Committee
responsible for
approving and recommending to the Board our Corporate
Governance Guidelines which include:

•

Director qualifications and standards;

Director responsibilities;

Director orientation and continuing education;

Limitations on Board members serving on other
boards of directors;

Director access to management and records;

Criteria for the annual self-assessment of the Board,
and its effectiveness;

and

Responsibilities of the Lead Director.

The Nominating and Corporate Governance Committee
reviews recommendations from shareholders regarding
corporate governance and director candidates.

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

It also administers the 2016 Long-Term

In January 2020, in undertaking its responsibilities, the
Committee received from the CEO recommendations (except
those that relate to his compensation) for salary,yy cash bonus,
and equity awards for NEOs and other executive officers.
After considering the possible payments and discussing the
recommendations with the CEO, in February 2020, 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's compensation,
including salary,yy cash bonus and equity awards.

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 ff
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
retention awards, awards
incentive awards for non-officers,
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.

COMPENSATION CONSUL

TLL ANTS

In 2019, the Committee engaged Fredric W. WW 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 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
MANAGEMENT

AS IT RELATES

TO RISK

evaluated all

incentive-based
The Chief Risk Officer
compensation for employees of the Company and reported
to the Compensation and Human Resources Committee that
none of our incentive-based awards individually, yy or taken
together, was reasonably likely to have a material adverse
on ValleyVV
effect
. None of the compensation or incentives for
ff
Valley
employees were considered as encouraging undue or
VV
unwarranted risk. The Compensation and Human Resources
Committee accepted the Chief Risk Officer

’s report.

AVAA AILABILITY

F
OFY

RR
COMMITTEE CHAR

TERS

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.

2020 Proxy Statement

F
NOMINATION OF
AA

DIRECT

ORS

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,ww
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. ToTT 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 TT be timely for our
2021 annual meeting, the notice must be received by our
no later than
Secretary at our Wayne,
December 21, 2020 nor earlier than November 21, 2020. If
the annual meeting is called for a date that is not within 30
days before or after the anniversary date of our 2020 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.

New Jersey office

Nominations for Inclusion in our Proxy
Shareholder
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
is
Company’s annual meeting proxy materials. This
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.

2020 Proxy Statement

New Jersey office

Requests to include director nominees in our proxy materials
for our 2021 annual meeting must be received by our
no earlier than
Secretary at our Wayne,WW
October 10, 2020 and no later than November 9, 2020. If the
annual meeting is called for a date that is not within 30 days
before or after the anniversary date of our 2020 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
The Board of Directors has
established criteria for members of the Board. These include:

Qualifications.

•

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
benefit the
for an additional year will sufficiently
Company;

Each Board member must demonstrate that he or
regardless of
she is able to contribute effectively
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
or within 100 miles from
Bank has branch offices
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;

on or after September 10, 2020, and on or before October 10,
2020.

Each Board member is expected to be above
reproach in their personal and professional lives and
their financial dealings with ValleyVV
,yy 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
s Code of
bankruptcy, yy (c) materially violates Valley’
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
s Board without the approval of
member of Valley’
VV
Valley’

s Board of Directors;

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

W
business judgment;

to apply sound and independent

Board members should understand basic financial
principles and represent a variety of areas of
expertise and diversity in personal and professional
backgrounds and experiences;

•

Ability to work productively with the other
members of the Board;

AA
Availability
responsibilities of a Valley

the
VV

for

director; and

substantial

duties

and

Each Board member should be an advocate for the
Bank within the community; and

• Meets the additional criteria set forth above and in

VV
Valley’

s Corporate Governance Guidelines.

•

To TT 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

rr
s Director

shareholder must

Recommendations for

Shareholder
Candidates. 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
s annual meeting in 2021, we must receive this notice
VV
Valley’

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.

F
OFY

AVAA AILABILITY
ETHICS AND CORPORATE GOVERNANCE
GUIDELINES

CODE OF
F
AA

CONDUCT

AND

WeWW have adopted a Code of Conduct and Ethics which applies
, principal financial officer
to our chief executive officer
,
and to all of our other directors,
principal accounting officer
and employees. The Code of Conduct and Ethics is
officers
ff
available
at
and can be viewed on our website
www.valley.com/charters. The Code of Conduct and Ethics
is also available in print to any shareholder who requests it.
WeWW will disclose any substantive amendments to or waiver
from provisions of the Code of Conduct and Ethics made with
, principal financial
respect to the chief executive officer
or any other executive
ff
officer
ff
officer

or principal accounting officer
or a director on that website.

WeWW have also adopted Corporate Governance Guidelines,
which are intended to provide guidelines for the governance

2020 Proxy Statement

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.

2020 Proxy Statement

COMPENSATION

OF DIRECTORS

DIRECTOR COMPENSATION

The total 2019 compensation of our non-employee directors is shown in the following table. Each of these compensation
components is described in detail below.

2019 DIRECTOR COMPENSATION

Fees Earned
or Paid in
r
Cash (2)

Stock
AA
Awards

(3)

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

All Other
Compensation (5)

TotalTT

164,250 $

60,000 $

40,631 $

1,906 $

115,375

129,750

90,500

106,438

113,625

182,000

4,500

122,250

98,417

108,625

126,125

60,000

—

60,000

4,243

18,315

24,044

13,637

13,035

—

13,075

—

4,340

1,906

26,843

—

1,906

266,787

181,524

209,971

176,450

181,981

188,566

268,843

4,500

197,231

160,323

170,531

192,371

Name

Andrew B. Abramson (1)
Peter J. Baum

Eric P. Edelstein
Graham O. Jones

(1)

Michael L. LaRusso
Marc J. Lenner (1)
Gerald H. Lipkin

Kevin J. Lynch
L
Suresh L. Sani (1)
Lisa J. Schultz

WW
Jennifer W. Steans

Jeffrey S.
WilksWW
____________

(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 2019.
For Mr. Lipkin it includes the last installment of his 2018-2019 consulting fees. See below "Director Compensation for Mr. Lipkin Until His Retirement
on December 31, 2019".
Stock Incentive Plan (the “2016 Plan”) provides for non-employee directors to be eligible recipients of
National Bancorp's 2016 Long-Term
VV
(3) Valley
limited equity awards. Commencing with Valley's
2019 annual meeting, each non-employee director received a $60,000 restricted stock unit award
VV
(“RSUs”) as part of their annual retainer, granted on the date of the annual shareholders’ meeting. The number of RSUs was 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, yy but not resignation from the Board.

(4) Represents the change in the present value of pension benefits for 2019 under the Directors Retirement Plan considering the age of each director, a present
value factor, an interest discount factor and time remaining until retirement. As disclosed below, ww the Board of Directors retirement plan was frozen for
purposes of benefit accrual in 2013. The increase in the present value of the accumulated benefits as of December 31, 2019 is attributable to the decrease
in the discount rate from 4.30% to 3.30%.

(5) This column reflects the deferred cash dividends earned in 2019 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 includes country club membership ($24,937).

2020 Proxy Statement

After our 2019 Annual Meeting of Shareholders, each non-
management director received a $60,000 restricted stock unit
award (“RSU”) as part of their annual retainer. The RSUs
were granted on the date of the Annual Shareholders meeting,
with the number of RSUs determined using the closing
market price on the date prior to grant. The RSUs vest on
the earlier of the next Annual Meeting of Shareholders
meeting or the first anniversary of the grant date, with
acceleration upon a change in control, death or disability,yy
retirement (age 65 with 5 years of service) but not resignation
from the board.

DIRECTORS RETIREMENT PLAN

WeWW 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
AA
UNTIL HIS RETIREMENT

ON DECEMBER 31, 2019

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, and that he also should be available to assist
and consult with the new CEO and other senior staff ff at the
CEO’s request. For his availability to assist and consult, Mr.
Lipkin was paid $350,000
installments
commencing in April 2018 continuing through the 2019
Annual Meeting of Shareholders. The compensation
arrangement ended at the 2019 Annual Meeting of
Shareholders.

in quarterly

ANNUAL BOARD RETAINER

Non-employee directors received an annual cash retainer of
$50,000 per year, paid quarterly,yy plus an equity award of
$60,000.

BOARD MEETING FEES

Non-employee directors also receive a Board meeting fee of
$2,000 for each meeting 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. Non-management directors are paid $750 for each
strategic planning meeting which they attend. This year the
Board had two strategic planning meetings, each of which
stretched over two days for which a director received $1,500
in total.

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:
$1,500 for Audit, $1,500 for Compensation and Human
Resources, and $1,500 for Nominating and Corporate
Governance.

The Company and the Bank also have a number of
in addition to Audit, Compensation and
committees
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 $12,500, with the
exception of the Pension Committee Chairman who receives
$6,250. There is an attendance fee of $1,500 for each
committee meeting, except for the Trust
Committee for which
the fee is $750.

DIRECTOR EQUITY AWAA ARDS

Stock Incentive Plan (the “2016 Plan”)
Our 2016 Long-Term
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.

2020 Proxy Statement

F
STOCK OWNERSHIP OFP

MANAGEMENT

L
AND PRINCIPALPP

SHAREHOLDERS

STOCK OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS. The following table contains
information about the beneficial ownership of our common
stock at February 1, 2020 by each director and by each of our
("NEOs") named in this proxy
Named Executive Officers
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 ValleyVV

Number ofr
Shares
Beneficially
Owned (1)

Name of Beneficial Owner
Directors and Named
Executive Officers:

Andrew B. Abramson

Robert J. Bardusch

Peter J. Baum

Eric P. Edelstein

Michael D. Hagedorn

Thomas A. Iadanza

Ronald H. Janis

Graham O. Jones

Marc J. Lenner

Kevin J. Lynch

Peter Maio

Ira Robbins

Suresh L. Sani

Lisa J. Schultz

WW
Jennifer W. Steans
Jeffrey S.

Wilks

265,330 (3)
12,343
52,755 (4)
37,443

—

87,986
45,189 (5)
896,722 (6)
232,070 (7)
2,588,199 (8)
20,000 (9)
130,694 (10)

67,406 (11)

20,000
4,074,964 (12)
429,563 (13)

Percent of
Class (2)

0.07%

—

0.01

—

0.02

0.01

0.22

0.06

0.64

—

0.03

0.02

—

1.01

0.11

Directors and Executive
Officers as a group
persons)

(20

9,043,753 (14)

2.24

____________

(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.
The total includes unvested restricted stock but not unvested
restricted stock units.

(2) For purposes of calculating these percentages,

there were
403,248,157 shares of our common stock outstanding as of February
1, 2020. For purposes of calculating each individual’s percentage
of the class owned, the number of shares underlying stock options
held by that individual are also taken into account to the extent such
options were exercisable within 60 days.*

(3) This total includes 15,832 shares held by Mr. Abramson’s wife,
13,576 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 a 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 10,205 shares held by Mr. Janis' wife.

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

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

(7) This total includes 23,217 shares held in a retirement pension, 638
shares held by Mr. Lenner’s wife, 32,722 shares held by his children,
122,150 shares held by a trust of which Mr. Lenner is 50% trustee
(Mr. Lenner is an indirect beneficiary of only 25% of the trust and
disclaims any pecuniary interest in the ownership of the other portion
of the trust), and 20,687 shares held by a charitable foundation.

(8) This total includes 1,257,484 shares held jointly with Mr. Lynch's
wife and 1,330,715* shares purchasable pursuant to stock options
exercisable within 60 days.

(9) Mr. Maio purchased 20,000 shares shortly after his election to the

Board on January 28, 2020.

(10) This total includes 2,000 shares held by Mr. Robbins' wife and 321

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

(11) This total includes 5,705 shares held in Mr. Sani’s Keogh Plan, 5,705
shares held in trusts for the benefit of his children, 44,390 shares
held in pension trusts of which Mr. Sani is co-trustee.

(12) 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, 906,374 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 24,967 shares
in her own name. The remaining 4,049,997 shares are pledged as
security for loans.

(13) This total includes 74,026 shares held by Mr. Wilks’W

wife, 10,058
shares held by his wife in trust for one of their children, 2,747 shares
held jointly with his wife for a family foundation, 20,346 shares as
trustee for the benefit of their children, 12,187 shares as trustee for
the benefit of his wife, 266,804 shares held in estate created trusts
for which Mr. WilksW and his wife are trustees and under which
Mr. Wilks'W
wife is a beneficiary. Mr. WilksW disclaims beneficial
ownership of shares held by the estate created trusts.

(14) This total includes 83,089 shares owned by 4 executive officers

who
are not directors or named executive officers.
The total does not
include shares held by the Bank’s trust department in fiduciary
capacity for third parties.

__________

OUR HEDGING POLICY.YY We WW adopted a policy that
equity securities for directors,
prohibits hedging of Valley
VV
executives and officers
with the title of First Senior Vice VV
President or above. While there is no prohibition against
employees who do not hold the title of First Senior Vice VV
President or above hedging equity securities,
these
employees are not eligible for annual stock awards and are
securities while in possession
prohibited from trading Valley

2020 Proxy Statement

of material non-public information. The anti-hedging
policies are set forth in full below.

Short Sales. Directors and officers
at the level of First Senior
ViceVV 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).

Ms. Steans became a director of our Company she owned
20,000 shares in her own name which were not and currently
are not pledged. Shares Ms. Steans or her husband acquire
VV
after she became a director of Valley

may not be pledged.

No executive officers
have pledged any shares covered by
the Policy. Except for Ms. Steans, directors do not have any
shares pledged covered by the Policy.

SHAREHOLDERS. The following table
PRINCIPALPP
contains information about the beneficial ownership at
December 31, 2019 by persons or groups that beneficially
own 5% or more of our common stock.

Name and Address of
Beneficial Owner

Number of
r
Shares
Beneficially
Owned

Percent of
Class(1)

BlackRock, Inc.(2)
55 East 52nd Street,
Y
New York, NY
10055
(3)

VV
VV

The Vanguard Group
100 Vanguard Blvd.,
A
Malvern, PAPP 19355
Dimensional Fund
Advisors LP(4)
Building One
6300 Bee Cave Road
Austin, Texas, 78746

54,442,458

13.50%

37,268,004

9.24%

22,485,997

5.58%

____________

(1) For purposes of calculating these percentages, there were
403,248,157 shares of our common stock outstanding as of February
1, 2020.

(2) Based on a Schedule 13G/AInformation Statement filed February 3,
2020 by BlackRock, Inc. The Schedule 13G/A discloses that
BlackRock has sole voting power as to 53,520,893 shares and sole
dispositive power as to 54,442,458 shares, and 0 shares as to shared
voting power and shared dispositive power.

(3) Based on a Schedule 13G/A Information Statement filed
February 10, 2020 by The Vanguard
VV
Group. The Schedule 13G/A
Group has sole voting power as to
discloses that The Vanguard
373,904 shares, shared voting power as to 54,717 shares, sole
dispositive power as to 36,889,148 shares, and shared dispositive
power as to 378,856 shares.

(4) Based on a Schedule 13G Information Statement filed February 12,
2020 by Dimensional Fund Advisors LP.PP The Schedule 13G
discloses that Dimensional Fund Advisors LP has 22,020,046 shares
as to sole voting power and 22,485,997 shares as to sole dispositive
power, 0 shares as to shared voting and shared dispositive powers.

Options. Directors and officers

Publicly Traded
at the level
of First Senior Vice VV 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 ViceVV President and
ff
above also may not engage in such transactions privately
(excluding Company granted stock options or phantom stock
options).

Directors and officers

at the level of
ff
Hedging Transactions.
First Senior ViceVV
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.

OUR PLEDGING POLICY.YY Directors and executive
officers
are prohibited from purchasing Company securities
ff
on margin, borrowing against Company securities held in a
margin account, or pledging Company securities as collateral
for a loan. If executive officers
have Company stock pledged
when they join the Company, yy they are required to report this
and are required to
to the Company's Chief Financial Officer
unwind the pledging as promptly as possible but in any event
within three years. If directors have Company stock pledged
when they join the board, the director is required to report
this to the Company's Chief Financial Officer
and should
unwind the pledging as promptly as possible but in any event
within three years. For directors only, yy the Nominating and
Corporate Governance Committee upon request may exempt
some or all of the pledged shares from this requirement in its
discretion. The prohibition on pledging securities applies to
directors, executive officers,
their spouses, children who
share such person's home and trusts if the director or
executive officer

is the trustee and sole beneficiary.

In January 2020, at the request of Ms. Steans, the Nominating
and Corporate Governance Committee allowed her to
continue pledging the shares she owned which were pledged
at the time she became a director. The Committee considered
the fact that she and her husband owned shares which were
pledged while she was the Chair of USAmeriBancorp, Inc.
in 2018. Pursuant to the terms of
which merged with Valley
shares. When
the merger, shares were converted to Valley

2020 Proxy Statement

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION

AND ANALYSIS ("CD&A")

Summary of our Compensation Program

y f

We WW believe that Valley’
s executive compensation should be
structured to balance the expectations of our shareholders,
our regulators and our executives. We WW have adopted a
compensation philosophy that seeks to achieve this balance
by taking into consideration the following factors:

with performance

p
and will be
Pay y is substantiallyy aligned
further aligned
in 2020: WeWW assess our
with performance
performance and strive to hold our NEOs, and in particular
our CEO, Ira Robbins, accountable. In 2019, we successfully
achieved many of the quantitative and qualitative goals that
were set by the board and Mr. Robbins, including increased
ratio and the acquisition of
earnings and a lower efficiency
other
among
Financial
Oritani
accomplishments, allowed us to increase our capital ratios.
As explained below,ww we also have set the framework for our
non-equity compensation for 2020 to be 50% based upon

Corp. which,

Company financial goals and 25% to be based upon the
accomplishment of other Company strategic goals (the other
25% to be based on key individual performance goals).

p
package

g
g against

p
our peer
WeWW benchmark our compensation
group:
p We WW inform our compensation decisions by measuring
g
our practices against bank holding companies that are similar
in size and complexity to ValleyVV
In particular, our
.
performance based restricted stock unit awards vest in
substantial part based on how the total return from our shares
performed against a leading bank stock index.

Balanced compensation
structure: We WW employ a mixture of
short-term and long-term financial rewards to our executives.
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
AA
Awards

Key features
Certain cash payment based on position,
responsibilities and experience.

Annual cash awards which are tied to
achievement of both company and
individual goals.

Time Vested Equity

AA
Awards

Equity
performance and vested over time.

incentives

earned based on

Performance Equity Awards

Equity incentives earned based upon
performance and vested based on meeting
performance targets.

Purpose
a stable source of income.

Offers

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).

VV
Valley's 2019 Performance

The Company's 2019 financial performance is summarized
below:

•

Net income available to our common shareholders
was $297 million, or $0.87 per diluted common
share, compared to 2018 earnings of $249 million,
or $0.75 per diluted common share;
Loans increased $4.7 billion, or 18.8 percent, to
approximately $29.7 billion at December 31, 2019
from December 31, 2018, inclusive of loans
acquired as a result of the Oritani Financial Corp.
acquisition;
Net interest income on a tax equivalent basis of
$903 million for 2019 increased $40 million as
compared to 2018;
Our net interest margin on a tax equivalent basis
decreased 16 basis points to 2.95 percent for 2019
as compared to 3.11 percent for 2018;

•

Our return on average assets and our return on
tangible common equity increased to 0.98 percent
and 13.1 percent, respectively, in 2019 from 0.86
percent and 12.2 percent, respectively, in 2018;
Our total shareholder return was in the 91st
percentile of our peers; and
Net loans charge-offs totaled $15.9 million for
2019, as compared to $0.7 million for 2018. Non-
accrual loans represented 0.31 percent of total
loans at December 31, 2019.

g
Strategic Plan

In 2019, we focused on four areas that we believe will
drive Company performance and allow us to meet our
financial objectives. In addition to well-defined Company
financial goals, each of our executive officers was asked to
focus on each of these four areas, and their performance
was the basis for the compensation decisions discussed
below.

2020 Proxy Statement

•

These

include investments

Employee Empowerment. We WW focus on evolving our
organizational structure and enabling a purpose
increase our
order
driven culture
competitiveness in our industry. We WW believe that this
focus will drive talent and allow us to recruit and
retain the current and future leaders of our
organization. We WW are embracing an enterprise wide
diversity and inclusion plan that will enhance our
workforce. Although we have made strides through
programs and initiatives throughout our workforce,
management acknowledges more work is necessary.
Diversity and inclusion will be a strong focus for
the Company in 2020.
Relevance. We WW strive to invest in technologies that
we believe will increase our relevance in the
marketplace.
in
“fintech” and the creation of a digital bank. We WW have
developed a “technology roadmap” to execute on
strategic reprioritization.
technologies
include not only customer facing technologies but
also technologies designed to streamline our back
office
operations. In 2019 we were able to execute
ff
on many of our key projects but other secondary
projects were not on schedule. We WW plan to devote
even greater resources to this area in 2020.
Customer Journey.yy Our focus is on building a
customer experience
our
commitment to providing the services, products and
banking methods required by our customers. WeWW
have introduced new and improved products
designed to improve and streamline the customer
experience, including our branch transformation
process, data analytics and cloud based customer
products. We WW continue to strive to set aggressive
goals to close loans and simplify the account
opening process. We WW are continuing to work on
adapting the customer experience in today's ever
evolving marketplace.
Community.yy We WW have created an enterprise wide
that
corporate social
encompasses the communities in which we serve,
our Community Reinvestment Act
(“CRA”)
responsibilities and our employees. We WW are proud
that in our most recent regulatory examination, we
were given an “Outstanding” rating under the CRA,
a designation received by less than 10% of financial
institutions in 2019. We WW have also worked hard to
expand our strategic partnerships with socially
conscious organizations and have encouraged our
executive officers
to participate on non-profit
boards.

responsibility platform

that demonstrates

p
Our Compensation

Process

Our Compensation and Human Resources Committee sets
the compensation of our CEO and all our NEOs, as well as
all executive officers.
We WW met 6 times during 2019 and early
2020 to discuss NEO compensation for 2019. At Committee
meetings, the Committee holds in-depth executive sessions
at which our independent compensation consultant is present
and provides advice.

The Committee has the authority to directly retain the services
of independent compensation consultants and other experts
to assist in fulfilling its responsibilities. The Committee
engaged the services of FW Cook, a national executive
compensation consulting firm, to review and provide
recommendations concerning all the components of the
Company’s executive compensation program. FW Cook
performs services solely on behalf of the Committee and has
no relationship with the Company or management except as
it may relate to performing such services. FW Cook assists
the Committee in defining Valley’
s peer companies for
VV
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.

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.

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;
Our year over year increase in earnings;
Our increase in percentile rank in TSR relative to
our peer companies and tangible book value growth;
s strong commitment to credit

• Maintaining Valley’

•

2020 Proxy Statement

quality;
Development of a long term strategic plan which
supports Valley’
Recruiting, developing and engaging talent to
deliver on Valley's goals as well as plan for
VV
succession.

s franchise growth; and

During 2019, the Committee approved a significant change
to the Company's compensation process beginning in 2020.
Under this new program, each executive will be compensated
based on his and the Company’s performance against
weighted goals. The first goal will be a shared company
financial goal with a 50% weight. The second goal will be
comprised of several shared company strategic goals with a
25% weight and the third goal will be comprised of individual
goals with a 25% weight. The non-equity incentive award
will be determined based on achievement against these pre-
established goals.

p
2019 Compensation

Designg

In determining our NEO's 2019 compensation package, the
Committee utilized a combination of base salary, yy equity
awards and non-equity awards as detailed below.

Elements of Compensation

•

Salary.yy Salaries were determined by an evaluation
of individual NEO responsibilities, compensation
history, yy as well as peer comparison.
rr We WW awarded non-
Non-Equity Incentive Awards.
equity cash compensation. For each NEO, we set a
target award in early 2019 based on a percentage of
the executive's base salary. The actual award was
determined based on each NEO's performance
against a scorecard of metrics established at the time
the target award was set.

•

VV
Vested

Equity Awards.

TimeTT
rr We WW awarded time vested
restricted stock unit awards which vest pro rata on
an annual basis over a three-year period.
Performance Equity Awards.
We WW awarded
performance based awards. Consistent with prior
years, awarded granted in 2020 vest based on the
Book
Company's adjusted Growth in Tangible
and relative TSR performance against the
ValueVV
KBW Index measured over a
three-year
performance period.

q
Non-Equity

y Incentive Awards

The Committee set the following target non-equity incentive
awards calculated as a percentage of such executive's base
salary as follows:

Title

CEO

Percentage

100% of base salary

Senior Executive Vice Presidents

45% to 50% of base salary

Equity

y Awards

The following table summarizes the overall design and mix
of our annual long-term equity incentives granted in 2020:

AA
Form of Award
AwardAA

VV
Time Vested

Growth in Tangible
Book ValueVV
Performance AwardAA

TSR Performance
AA
Award

Percentage of
Total Target
Equity Award
AA
Value
25%

Purpose

Encourages retention.
Fosters shareholder mentality among the
executive team.

Performance
Measured
N/A

VV
Earned and Vesting Periods

Vests on the first, second, and third
VV
anniversaries of the grant date.

45%

30%

Encourages retention and ties executive
compensation to our operational
performance.

Growth in Tangible
Book Value (as
VV
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
W
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.

TimeTT

VV
Vested

Awardsrr

25% of the aggregate dollar
.
value of their target annual equity awards granted in 2020
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,yy with one third vesting
on each February 1st thereafter.

Awardsrr

Growth

in Tangible

VV
Book Value

TT
VV
Book Value,

rr
. Growth
when used in this CD&A, means
in Tangible
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.
over
The Committee chose Growth in Tangible
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

Book ValueVV

2020 Proxy Statement

units and the 2016 Stock Plan, the Committee has the
authority to adjust the calculation of the Growth in Tangible
for certain items that are one time in nature. The
VV
Book Value
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, in setting the amounts earned with respect to awards
made in January 2017 which vested in January 2020, the
Committee adjusted the Growth in Tangible
for
2018 and 2019, as it determined that a negative adjustment
the unanticipated positive impact
was necessary to offset
arising from the new lower corporate tax rates. Other positive
adjustments were made for 2019, including the impact from
the acquisitions of USAmeriBancorp, Inc. and Oritani
Financial Corp.

VV
Book Value

TT
TT

Book ValueVV
Performance Award).
Performance Awards
TT

45% of the aggregate dollar value of the equity awards
granted in 2020 were in the form of performance RSUs to be
(each, a
earned based upon Growth in Tangible
TT
The
Book ValueVV
Growth in Tangible
are
Growth in Tangible
VV
Book Value
earned based on average annual Growth in Tangible
Book
during the years 2020 through 2022. Earned Growth
ValueVV
vest on
TT
in Tangible
February 1 after the end of the 3-year performance period
following Committee 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 Awards

VV
Book Value

AA
AA

AA
Average

Annual Growth in Tangible

TT
Book Value 2020-2022

Below 10.75%

10.75% (Threshold)

12.50% (Target)

15.125% or higher (Maximum)

Percentage of Target
Shares Earned

None

50%

100%

175%

In 2020, the Committee determined to raise each Threshold,
TarTT get and Maximum goal in order to align these goals with
the Company's current improved performance. Accordingly, yy
the Threshold was raised to 10.75% from 10.35%, the TarTT get
was raised to 12.50% from 12.0%, and the Maximum was
raised to 15.125% from 14.75%.

are
VV
Growth in Tangible
Book Value
settled in common stock with any dividend equivalents
accrued during the performance period paid in cash.

Performance Awards

Growth

in Tangible

VV
Book Value

Payout For
2017-2019 Cycle. The table below shows how the
performance based equity awards based on Growth in
Tangible
granted in 2017 (for 2016 performance)
TT
vested based upon the Company's performance during
2017-2019. The Threshold was 9.5%, the TarTT get was 11%
and the Maximum was 12.5%. The 2017 awards vested in
January 2020 at above TarTT get performance (143.33% payout)

VV
Book Value

2020 Proxy Statement

due to the three-year Growth in Tangible
12.30%

Book ValueVV

Growth in Tangible Book V

alueVV

Grant
Date

Performance
in 2017

Performance
in 2018

Performance
in 2019

Cumulative
Perfor-
mance
Measured
to YearYY
End 2019

1/28/2017

11.63%

11.06%

14.22%

12.3%

Relative TSR Performance Awardsrr

. 30% of the
aggregate dollar value of the target annual equity awards
granted for 2019 was in the form of RSUs to be earned
based on the Company’s relative TSR for the 3-year
performance period from January 2020 through December
AA
2022 against the KBW Index (a
TSR Performance Award).
s
Valley’
VV
The KBW Index is used as a broad indicator of
relative market performance. Earned TSR Performance
Awards vest at the end of the 3-year performance period
AA
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 175% 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 (TarTT get)
87.5th percentile of peer group (Maximum)

Percentage of
Target Shar
es
TT
Earned
None

50%

100%

175%

At its January 2020 meeting, the Committee made the
determination to increase the Maximum performance level
from the 75th percentile to the 87.5th percentile 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.

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.

TSR Payout For 2017-2019 Cycle. The Company’s
cumulative TSR was 10.40% for the three-year period ended
December 31, 2019. The percentile rank against Valley’
s peer
group was 70.47% for that time period. Accordingly,yy the 2017
TSR Performance Awards
vested at 140.94% level using
linear interpolation between performance levels.

Goal

Financial
r
Targets

Employee
Empowerment

Relevance

Customer
Journey

Community

Ira Robbins

Scorecard Performance

In determining total compensation for our NEOs the
Committee considered Valley's
2019 financial performance
against its scorecard, the leadership our NEOs demonstrated
as a group in achieving Valley’
s goals, and the individual
performance of each NEO against their individual scorecard.
The following is a summary of how ValleyVV
as a whole and
each NEO individually, yy performed against their respective
scorecards:

ValleyyVV

The chart below provides a brief synopsis of the 2019
scorecard of ValleyVV

as a whole.

Performance Relative to Goal

Exceeded or met financial tar
gets through:
Increased net income and assets
Solid or
ganic loan growth
Achievement of deposit goals
Substantial improvement in

TSR ranking

The Committee credited Mr. Robbins for the successful
development of the Company strategic plan and his diligence
in ensuring that the plan is successfully deployed. The
Committee believes that the Company has vastly improved
its financial performance under Mr. Robbins’ leadership, in
particular the Company’s improved TSR relative to its peers.
The Company also successfully completed the acquisition of
Oritani Financial Corp. under Mr. Robbins’ leadership. The
Company continued to grow tangible book value and
maintain high credit quality while implementing many new
strategic initiatives.

Michael Hagedorn

Mr. Hagedorn joined the Company as CFO in July 2019. Mr.
Hagedorn realigned the reporting structure within the
Company's Treasury
department to improve both risk
assessment and strategic direction. Further, Mr. Hagedorn
enhanced the Company’s internal financial reporting system
s general ledger
and began the process of replacing Valley’
system.

Alan D. Eskow

retired

Evolved a purpose driven culture through:
Launch of performance acceleration and
competencies
as CFO of the Company in August 2019
. Eskow
Mr
Establishment of succession plans for key executives
Recruitment of high caliber lenders, technology,yy
moved to the position of Senior Executive ViceVV President
credit and operations employees
and
Broadening of development opportunities for
and Senior Advisor. Mr. Eskow assisted with the transition
managers
of the CFO role to Mr. Hagedorn and provided valuable
assistance to Mr. Hagedorn throughout his first several
months
with the Company. In addition, Mr. Eskow has been
actively engaged in managing customer relationships and
assisting with various other activities at the request of
Enhanced customer experience through:
management.
Company
Execution against our Branch transformation strategy
Creation of private banking model
Data analytics and tools
Successful launch of Cloud based products

Increased our relevancy in the marketplace through:
TT
Expansion of T
echnology roadmap
Implementation of Fintech strategy
Establishment of Digital bank
ff
Improved back office ef
ficiency

Thomas A. Iadanza

Created an enterprise wide Corporate social
responsibility platform and:
Expanded strategic partnerships with key community
groups
Received "Outstanding" CRA
A
Increased active participation of executive officers
on non-profit boards

rating

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
to fundamentally transform the Company into a more
ff
efforts
competitive institution and the Committee believed that the
Company made strong progress in 2019 toward its long term
goals. However, the Committee acknowledges that Valley's
transformation is a multi-year journey and achieving
individual objectives are only a component of the long-term
strategy.

The Committee believes that Mr. Iadanza was substantially
responsible for the Company’s 9% organic loan growth in
2019 (net of commercial loan sales). His team exceeded or
met all of its financial goals including net income, loan
origination and growth and non-interest income. Mr. Iadanza
strengthened the Company’s lending team through several
strategic hires and the creation of a consumer lending
customer experience team and the transformation of the
Company’s retail organization. Mr. Iadanza’s staff ff is focused
on improving the Company’s customer journey and is
developing a concierge structure for its top customers. Mr.
Iadanza helped to meet all of the Company's CRAgoals which
helped the Company obtain its "outstanding" CRA rating.

Ronald H. Janis

As General Counsel, Mr. Janis is responsible for oversight of
the Company's compliance with federal and state laws and
regulations. Mr. Janis and his legal team successfully
controlled the Company’s legal budget through lower
litigation and transactional expenses. Mr. Janis assisted the
Board with corporate governance issues as well as with
managing the relationship with the Company’s Fintech

2020 Proxy Statement

partners. He and his legal team were responsible for legal
matters related to the Company’s acquisition of Oritani. Mr.
Janis and his team also developed strategies intended to
reduce the Company's litigation exposure.

Robert J. Bardusch

Mr. Bardusch was primarily responsible for developing and
implementing the Company’s technology roadmap and
associated operational enhancements.
The Committee
believes that Mr. Bardusch’s efforts
to develop the roadmap
ff
have been outstanding although the implementation of
certain initiatives lagged original projections. Mr. Bardusch
has overseen the implementation of multiple employee
engagement initiatives and enhanced employee mobility and
collaboration platforms. He also upgraded the Company's
Project Management
strengthened
succession within operations and loan servicing. On the
customer side, Mr. Bardusch has overseen the Company’s
partnership with Fintech companies and developed products
utilizing customer facing technologies. Lastly, yy Mr. Bardusch
assisted the Company’s efforts
to transform its branches
through workspace and technology enhancements.

capabilities

and

p
Key y Compensation

Decisions and Actions

Summaryy

total direct
The Committee increased Mr. Robbins’
compensation by $540,000 ($3,550,000 in 2019 vs.
$3,010,000 in 2018), or approximately 17.9%, from last year.
Mr. Robbins also earned $250,000, or approximately 7.6%,
more than his target total direct compensation of $3,300,000.
More specifically, yy the Committee made the following
compensation determinations with respect to Mr. Robbins:

•

Increased his non-equity
to
$1,000,000 for 2019 from $660,000 in 2018 (or
111% of target in 2019); and

incentive award

Increased his total equity award to $1,650,000 from
$1,500,000 for 2018 (or 110% of target in 2019).

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 2019. The meaningful
increase in Mr. Robbins’ compensation was due to (i) the
Company's performance against its goals as set forth in the
scorecard, (ii) the Company's improvement in TSR in 2019,
(iii) the positive transformation the Company made in 2019
and continues to make, (iv) the improvement in financial
results in 2019 compared to 2018, and (v) the continued ramp
up of his compensation to median levels.

Mr.
Iadanza earned $1,850,000 in 2019 total direct
compensation, consisting of $600,000 in base salary, yy a

2020 Proxy Statement

$330,000 non-equity incentive award, and a total equity
award of $920,000. The total direct compensation paid for
2019 represents a 7.2% increase from 2018 and an 8.8%
increase over target compensation.
In particular, Mr.
Iadanza’s non-equity award was 110% of target and his equity
award was 115% of target. Mr. Iadanza’s compensation
reflects his excellent performance against the scorecard, and
his key role in increasing the loan and deposit growth of the
Company in 2019.

Mr. Hagedorn succeeded Mr. Eskow as CFO in July 2019.
He was awarded a base salary of $590,000 and a pro-rated
non-equity award of $125,000. His equity award for 2019
was $725,000 and Mr. Hagedorn also received a sign on grant
of time vested restricted stock units equal to $300,000.

In 2019, Mr. Eskow announced his retirement as CFO and
transition to a Senior Advisor of the Company. Mr. Eskow
earned $1,558,750 in direct compensation for 2019, which
was a 3.6% increase from 2018 and in line with his 2019
target direct compensation.

Mr. Janis' total direct compensation was $1,446,750, an
increase of 1.8% from 2018 and in line with his 2019 target
direct compensation.

Mr. Bardusch was awarded $1,457,000 in total direct
compensation for 2019 consisting of $475,000 in base salary,yy
a $182,000 non-equity incentive award and a $800,000 equity
award that includes a special, one time, grant of $200,000 in
restricted stock units which vest at the end of a three year
period dependent on the achievement by Mr. Bardusch of
certain specified goals related to the Company future
operating model. Mr. Bardusch’s total direct compensation
represents an increase of 29.5% from 2018 or an 11.7%
increase excluding the one-time grant.

Salaries

Mr. Robbins' base salary will increase to $1,000,000 for 2020
from $900,000 in 2019. None of the other NEOs received an
increase in base salary in 2020.

q
Non-Equity

y Incentive Awards

The non-equity incentive award of $1,000,000 for Mr.
Robbins was higher than last year’s award and his target 2019
award by $340,000 and $100,000, respectively. The
extraordinary
Committee
contribution to the Company's success in 2019 by awarding
him 111% of his 2019 non-equity award target.

recognized Mr. Robbins'

Mr. Iadanza's non-equity award was 110% of his 2019 target,
recognizing his accomplishments in driving loan and deposit
growth for the Company. Mr. Hagedorn was awarded a pro-
rated $125,000 non-equity award. The other NEOs were each
granted non-equity awards in amounts that were at 100% of

target 2019 awards, with the exception of Mr. Bardusch
whose non-equity award was at 85% of target.

The following table shows the time based equity awards in
both share amounts and dollar value.

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

2019
Target
Non-
Equity
Awards
AA
Amount

Non-
Equity
Incentive

2019
Target
TT
Non-
Equity
Awards as
AA
% of Base
Salary

2019
Non-
Equity
Incentive
Awards
AA
as % of
TT
Target

2019
Base
Salary

NEO

Ira Robbins $ 900,000 $900,000 $1,000,000

100%

111%

Michael D.
Hagedorn*

Alan D.
Eskow

Thomas A.
Iadanza

Ronald H.
Janis

Robert J.
Bardusch
_________

590,000

N/A

125,000

N/A

575,000

258,750

600,000

300,000

330,000

515,000

231,750

475,000

213,750

182,000

100

110

100

* Mr. Hagedorn's non-equity incentive award was pro-rated and based
upon a 45% target award in 2019.

NEO

Ira Robbins

Michael D. Hagedorn

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

Time Based
AA
Equity Awards

Value at Grant
VV
Date

38,124

16,751

21,257

16,174

13,863

412,500

181,250

230,000

175,000

150,000

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
VV
Book Value
and the remaining 40% are based on relative TSR. The table
below excludes (i) the $200,000 special grant to Mr. Bardusch
(which vests over three years based on the achievement of
certain strategic initiatives) and (ii) the $300,000 time based
sign-on equity grant to Mr. Hagedorn.

Equity

y Incentive Awards.

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.

2019 Target
Equity
Incentive
AA
Awards

Actual Equity
Incentive
AA
Awards
r
for 2019

2019 Equity
Incentive
Awards as a
AA
TT
% of Target

NEO

Ira Robbins

1,500,000 $

1,650,000

110%

Michael D. Hagedorn

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

725,000

800,000

700,000

600,000

725,000

920,000

700,000

800,000

100

115

100

133

2020 Proxy Statement

Performance Based Equity Awards at

Target

Performance Based Equity Awards at Maximum

Named Executive Officer

Based on TSR

Based on
Growth in
TBV

Total

Based on TSR

Based on
Growth in
TBV

TotalTT

Ira Robbins

495,000 $

742,500 $

1,237,500

866,250 $

1,299,375 $

2,165,625

Michael D. Hagedorn

Alan D. Eskow

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

Other Compensation

217,500

276,000

210,000

180,000

326,250

414,000

315,000

270,000

543,750

690,000

525,000

450,000

380,625

483,000

367,500

315,000

570,938

724,500

551,250

472,500

951,563

1,207,500

918,750

787,500

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”.

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 ValleyVV
. 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. In connection with Mr. Eskow's retirement as
CFO in 2019, the Company and Mr. Eskow mutually agreed
to terminate his existing severance agreement as of January
1, 2020. His existing change of control agreement remains
ff
in effect.

ff
We WW offer

them
We WW also provide perquisites to senior officers.
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 WW also support and encourage our customer facing
executives to hold a membership in a local country club for
which we pay admission costs, dues and other business
related expenses. We WW find that the club membership is an
effective
means of obtaining business as it allows executives
ff
to interact with present and prospective customers in a
relaxed, informal environment. We WW require that any personal
use of the country club facilities be paid by the NEO. The
club membership dues are included as perquisites in our
Summary Compensation TableTT
in accordance with SEC
guidance.

We WW also provide severance agreements and change in control
agreements to our NEOs. The severance agreements provide
benefits to our NEOs in the form of lump sum cash payments
without cause. The terms of
if they are terminated by Valley

2020 Proxy Statement

for 2019 and thereafter, the Committee, based upon
Effective
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. 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
as his benefits were increased under the new program. Mr.
Hagedorn entered into an agreement upon his appointment
to Senior Executive Vice VV President and CFO. 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 provide for accelerated vesting 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 45.

•

Our Peer Groupp

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 2019 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 ValleyVV
. 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 ValleyVV

Appendix A, on page 60, lists all financial institutions in the
peer group. The peer group consists of companies with assets
between $7.8 billion and $58.6 billion and market
capitalization between $874 million and $7.5 billion. The
peer group was unchanged from last year.

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.

p
Corporate

Governance Practices

What we do:

•

Hold Past Termination:
If an NEO terminates
TT
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: For a period of 6 years after the date of
the award, the Committee may (i) cancel unvested
equity awards if there is a material restatement of
our financial statements, or material misconduct by
the Company
the
financially, yy and (ii) recoup vested equity awards and
previously paid cash awards in the event of
intentional fraud or intentional misconduct by the
executive.

executive which

harms

Stock Ownership: To TT 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 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

What we don't do:

Minimum Dollar ValueVV
of Required Common
Stock Ownership

5 times base salary

3 times base salary

2 times base salary

•

ff
We do not of
fer any
WW

No Excise Tax Gr
rr
oss ups:
excise tax gross ups for new executive change in
control arrangements.
Change in Control rr Payments:
Non Single Trigger
WeWW have recently revised our change in control
agreements (other than Mr. Eskow's agreement) to
specify that in a change in control executive officers
are not entitled to severance following a change in
control unless he or she is terminated from
employment following the change in control.
No Hedging or Pledging: WeWW adopted a policy
from entering into
ff
prohibiting executive officers
hedging and pledging transactions
involving
s common stock. The Board believes that
Valley’
VV
such transactions, which have the effect
of
mitigating the risks and rewards of ownership, may
the interests of management and
result
shareholders of Valley
being misaligned.
No Excessive Risk Taking:
We WW design our equity
compensation plans in a manner that we believe
does not encourage or foster excessive risk taking
but instead aligns our NEOs financial interests with
those of our shareholders.

y
2019 Say-on-Pay

y VoteVV

At the 2019 Annual Meeting of Shareholders, approximately
97% of the votes cast were in favor of the advisory vote to
approve executive compensation. WeWW 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

2020 Proxy Statement

large institutional shareholders and the changes that we made
to our compensation program as a result of those
conversations.

Income Tax TT Considerations

Section 162(m) of the Internal Revenue Code 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
, chief financial officer
executive officers.

ff
ff

The Compensation Committee has and 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).

COMPENSATION COMMITTEE REPOR
AA
CERTIFICA

TION

TRR AND

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.

Suresh L. Sani, Committee Chairman
Andrew B. Abramson

Eric P. Edelstein

Michael L. LaRusso

Marc J. Lenner

WW
Jennifer W. Steans

2020 Proxy Statement

AA
EQUITY COMPENSA

AA
TION PLAN INFORMA

TION

The following table provides information regarding our
equity compensation plans as of December 31, 2019.

Number of
shares to
be issued
upon
exercise of
outstanding
options and
rights*

Weighted
WW
average
exercise
price
on out-
standing
options
and
rights

Number of shar
r
remaining
available for futur
e
issuance under
equity
compensation
plans (excluding
shares
reflected in the
first column)

5,386,562 $

7.52

4,287,585

—

5,386,562 $

—

7.52

—

4,287,585

Plan Category

Equity
compensation plans
approved by
security holders

Equity
compensation plans
not approved by
security holders

TotalTT

____________

* Amount includes 3,453,516 options outstanding with a weighted
average exercise price of $7.52 and 1,933,046 performance-based
restricted stock units measured at maximum vesting at December 31,
2019. Amount does not include 1,058,681 outstanding restricted
shares and 869,558 outstanding restricted stock units.

2020 Proxy Statement

AA
SUMMARYRR COMPENSA

TION

TT
TABLE

The following table summarizes all compensation in 2019, 2018 and 2017 earned by our chief executive officer
officer
ff
capacities for ValleyVV

and the three most highly paid executive officers

, former chief financial officer

, chief financial
(NEOs) for services performed in all

and its subsidiaries.

Name and Principal
Position

YearYY

Salary

AA
Awards

Stock

(1)

Change in
Pension
Value and
VV
Non-
Qualified
Deferred
Compen-
sation
Earnings(3)

Non-Equity

Incentive

Plan
Compen-
sation(2)

All Other
Compen-
sation(4)

TotalTT

Ira Robbins

2019 $

900,000 $

1,669,676 $

1,000,000 $

175,882 $

221,493 $

President and CEO

Alan D. Eskow

Senior EVP, Former CFO and

Corporate Secretary

Michael D. Hagedorn

Senior EVP, CFO

Thomas A. Iadanza

Senior EVP and

Chief Banking Officer

Ronald H. Janis

Senior EVP and

General Counsel

Robert J. Bardusch

P
Senior EVP and COO

___________

2018

2017

2019

2018

2017

2019

2018

2019

2018

2017

2019

2018

850,000

750,000

575,000

590,000

600,000

515,000

500,000

475,000

450,000

1,468,505

1,250,000

733,648

685,306

675,000

733,648

930,965

783,198

708,340

685,306

800,000

807,155

538,447

660,000

450,000

258,750

230,000

250,000

125,000

330,000

325,000

231,750

206,000

250,000

182,000

150,000

—

80,405

107,135

—

15,279

—

206,414

142,745

177,668

156,210

156,701

131,401

107,958

106,251

66,104

90,006

50,131

48,908

44,170

3,967,051

3,184,919

2,673,150

1,852,201

1,646,516

1,671,980

1,580,049

1,968,923

1,814,449

1,521,194

1,496,312

1,600,131

1,513,063

1,182,617

(1) Stock awards reported in 2019 reflect the grant date fair value of the restricted stock unit and performance based restricted stock unit awards under
Accounting Standards Codification TopicTT
718") granted by the Compensation Committee
No. 718, Compensation-Stock Compensation ("ASC TopicTT
based on 2019 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, $412,500; Mr. Eskow,ww $181,250; Mr. Hagedorn, $181,250; Mr. Iadanza, $230,000; Mr. Janis, $175,000 and Mr. Bardusch $150,000.
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

TT
Target

VV
Value at Grant Date FV

Maximum Value at Grant Date

Ira Robbins

1,257,176 $

Alan D. Eskow

Michael D. Hagedorn

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

552,398

700,965

533,340

657,155

2,200,060

966,692

1,226,696

933,352

1,000,031

* includes one-time grant of $200,000 in restricted stock units (see Compensation Discussion
and Analysis)

2020 Proxy Statement

(2) For 2019, represents the non-equity incentive award paid in cash in 2020 based on 2019 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 increase in the present value of the accumulated benefits as of December 31,
2019 is attributable to the decrease in the discount rate from 4.30% to 3.30%.

(4) All other compensation includes perquisites and other personal benefits paid in 2019 including automobile, actual dividends paid on vested restricted
(including interest earned) and group term

stock and restricted stock units, 401(k) contribution payments, 401(k) SERP contribution payments by ValleyVV
life insurance and club dues (see table below).

Name

Auto(1)

Actual Dividends
Paid In 2019(2)

401(k)(3)

DCP(4)

GTL(5)

Club Dues

Other

TotalTT

Ira Robbins

Alan D. Eskow

Michael D. Hagedorn

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

___________

7,434 $

86,006 $

14,000 $

75,373 $

1,710 $

26,970 $

10,000 $

6,378

6,000

990

19,150

6,061

85,274

14,000

32,248

11,124

24,436

4,208

—

36,888

2,334

3,089

—

14,000

10,894

14,000

—

38,433

26,797

18,446

401

7,524

5,129

1,160

—

125,000

9,633

—

490

1,800

6,152

221,493

177,668

131,401

107,958

66,104

48,908

(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 2019.

(2) Dividends paid on time and performance based restricted stock units vesting in 2019.
(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
ff

January 1, 2017, ValleyVV

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.

established the ValleyVV

(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.

2020 Proxy Statement

The following table represents the potential non-equity incentive awards of the NEOs for 2019 and grants of equity awards to
the NEOs in 2020 for 2019 performance made under the 2016 Stock Plan.

GRANTS OF PLAN-BASED

AWAA ARDS

Estimated Possible Payouts Under
Non-Equity Incentive Plan

AA
Awards

(1)

Estimated Possible Payouts
Under Equity Incentive Plan

AA
Awards (#)

(1)

All Other
Stock
AA
Awards:
Number ofr
Shares of
Stock (#)(1)

Grant Date
Fair Value
VV
of Stock
(2)
AA
Awards

Name

Ira Robbins

Alan D. Eskow

Michael D. Hagedorn

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

___________

Grant
Date

2/11/2020

Threshold

TT
Target

Maximum Threshold Target

Maximum

900,000 $

1,800,000

57,186

114,372

200,151

1,257,176

258,750

517,500

25,127

50,254

87,945

265,500

531,000

25,127

50,254

87,945

300,000

600,000

31,886

63,771

111,599

231,750

463,500

24,261

48,521

84,912

213,750

427,500

30,037

60,074

91,267

38,124

16,751

21,257

16,174

13,863

412,500

552,398

181,250

552,398

181,250

700,965

230,000

533,340

175,000

657,155

150,000

(1) The Compensation Committee set target awards for 2019 as follows: Mr. Robbins as CEO 100% of salary; Messrs. Eskow, Hagedorn, Janis, Bardusch
45% of salary; and Mr. Iadanza 50% 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 2019. 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 the 2016 Stock 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, unless otherwise provided in the grant agreement. Changes were made to grants
issued in 2019 and thereafter 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."

718 of each share of time based restricted stock unit and performance
The per share grant date fair values under ASC Topic
based restricted stock units (with no market condition vesting requirement) was $10.82 per share awarded on 2/11/2020.
Performance based restricted stock units with market condition vesting requirements (i.e., TSR) awarded on 2/11/2020 had a
$11.25 per share grant date fair value.

2020 Proxy Statement

OUTSTANDING EQUITY

AWAA ARDS

ATAA FISCAL YEAR-END

The following table represents stock option, restricted stock and restricted stock unit awards outstanding for each NEO as of
December 31, 2019 (including February 11, 2020 awards which were based on 2019 performance).

AA
Option Awards

(1)

AA
Stock Awards

(2)

Number ofr
Securities
Underlying
Unexercised
Options
Exercisable

Number ofr
Securities
Underlying
Unexercised
Options
Unexercisable

Option
Exercise
Price

Option
Expiration
Date

Number of
r
Shares
or Units of
r
Stock
That Have
Not
VV
Vested

Market ValueVV
of Shares or
Units of
Stock That
Have Not
(3)
VV
Vested

Name

Grant Date

Equity
Incentive
Plan Awards:
AA
Number ofr
Unearned
Shares

That

r
or Units
Have Not
VV
Vested

Equity Incentive
Plan Awards:
AA
Market Value of
VV
Unearned
Shares or Units
That Have Not
VV
Vested

(3)

Ira Robbins

Total awards

Alan D. Eskow

2/11/2020

2/12/2019

2/1/2018

1/24/2017

2/11/2020

2/12/2019

2/1/2018

1/24/2017

11/15/2010

TT
Total awards

Market value of in-the-money options
($) (3)

Michael D. Hagedorn

Total awards

Thomas A. Iadanza

Total awards

Ronald H. Janis

TT
Total awards

Robert J. Bardusch

TT
Total awards

____________

2/11/2020

8/1/2019

2/11/2020

2/12/2019

2/1/2018

1/24/2017

2/11/2020

2/12/2019

2/1/2018

2/11/2020

2/12/2019

2/1/2018

1/24/2017

38,124 $

35,954

22,010

7,381

436,520

411,673

252,015

84,512

200,151 $

177,973

99,642

66,431

2,291,729

2,037,791

1,140,901

760,635

103,469 $

1,184,720

544,197 $

6,231,056

21,170

0 $

11.91

11/15/2020

16,751 $

16,779

11,933

6,643

191,799

192,120

136,633

76,062

87,945 $

1,006,970

83,055

53,700

59,787

950,980

614,865

684,561

52,106 $

596,614

284,487 $

3,257,376

16,751 $

26,882

43,633 $

21,257 $

19,175

11,933

3,248

55,613 $

16,174 $

16,779

10,607

43,560 $

13,863 $

13,183

6,365

1,919

191,799

307,799

499,598

243,393

219,554

136,633

37,190

636,770

185,192

192,120

121,450

498,762

158,731

150,945

72,879

21,973

87,945 $

1,006,970

87,945 $

1,006,970

111,599 $

94,918

53,700

28,565

1,277,809

1,086,811

614,865

327,069

288,782 $

3,306,554

84,912 $

83,055

47,733

972,242

950,980

546,543

215,700 $

2,469,765

91,267 $

1,045,007

65,256

29,832 $

16,608

747,181

341,576

190,162

35,330 $

404,528

202,963 $

2,323,926

(1) All stock option awards are currently exercisable.

(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.

Number of Unearned Shares or Units That Have Not
Restrictions on performance based restricted stock unit awards (reported above under “Equity Incentive Plan Awards:
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
VV
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:
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 1/24/2017 award, 2/1/2018 award, 2/12/2019 award and 2/11/2020 award.

Number of Unearned Shares or Units That Have Not Vested"

(3) At per share closing market price of $11.45 as of December 31, 2019.

2020 Proxy Statement

2019 STOCK VESTED

The following table shows the restricted stock and restricted stock units held by our NEOs that vested in 2019, as well as
performance-based awards which vested in early 2020 based on the three-year performance period ended December 31, 2019,
and the value realized upon vesting. None of our NEOs exercised any options in 2019.

AA
Stock Awards

Name

Ira Robbins

Alan D. Eskow

Michael D. Hagedorn

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

____________

Number of
Shares Acquired
Upon Vesting (#)

Value Realized on
VV
VV
Vesting ($)

(*)

138,165 $

127,685

—

60,186

5,304

20,904

1,460,580

1,350,526

—

635,730

53,623

222,866

* The value realized on vesting of restricted stock/units 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 1/24/2017 for Mr. Robbins (63,212 shares), Mr. Eskow (56,891 shares), Mr. Iadanza (27,180
shares), and Mr. Bardusch (15,803 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, 2019. 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/units.

2019 PENSION BENEFITS

PENSION PLAN

maintains a non-contributory,yy defined benefit pension
Valley
VV
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, ww (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, Mr. Bardusch and Mr. Hagedorn, 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

ValleyVV
maintains a Benefit Equalization Plan ("BEP") which
provides retirement benefits in excess of the amounts payable
from the Pension Plan for certain highly compensated
January 1,
executive officers,
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

which was frozen effective

2020 Proxy Statement

plan, minus (ii) the individual’s pension plan benefit. Mr.
Robbins and Mr. Eskow are participants in the BEP. PP
Executives hired on or after July 1, 2011 including Mr.
Iadanza, Mr. Janis, Mr. Bardusch and Mr. Hagedorn, are not
participants in the BEP.PP 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, 2019.

Name
Ira Robbins

Plan Name

VNB Pension Plan

VNB BEP

Alan D. Eskow VNB Pension Plan

VNB BEP

# of
YearsYY
Credited
Service

Present
Value of
VV
Accu-
mulated
Benefits ($)

513,588

211,476

738,958

1,548,039

Present values of the accumulated benefits under the BEP
and Pension Plan were determined as of January 1, 2020
based upon the accrued benefits under each plan as of
December 31, 2019 and valued in accordance with the
following principal actuarial assumptions:
(i) post-
retirement mortality in accordance with the Pre-2012 White

rolled back to 2006, projected generationally
Collar Tables,
TT
with Scale MP-2019, (ii) interest at an annual effective
rate
of 3.30% compounded annually, yy (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, 2020) 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.

EARLYLL 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, yy 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 AA

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 $14,000 in 2019.

2019 NONQUALIFIED DEFERRED
COMPENSATION

DEFERRED COMPENSATION

PLAN

established the Valley

Valley
VV
Compensation Plan (the "Plan") for the benefit of certain

National Bancorp Deferred

eligible employees in 2017. The Plan is maintained for the
purpose of providing deferred compensation for selected
the 401(k) Plan whose
in
employees participating
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
under the Company's 401(k) Plan.
excess of the limit in effect

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 ValleyVV
,yy 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.

2020 Proxy Statement

The following table shows each NEO's deferred compensation plan activity during 2019 and in aggregate:

Name

NEO
Contribution in
2019

Valley's
Contribution in
2019*

Aggregate
Earnings in
2019*

Aggregate
Withdrawals/
Distributions

Aggregate
Balance at
12/31/2019

Ira Robbins

Alan D. Eskow

Michael D. Hagedorn

Thomas A. Iadanza

Ronald H. Janis

Robert J. Bardusch

_________

63,519 $

26,250

—

32,250

22,050

17,010

26,250

—

32,250

22,050

17,010

11,853

5,998

—

6,183

4,747

1,436

— $

—

292,614

148,062

152,637

117,190

35,455

* Included in the Summary Compensation Table above, under "All Other Compensation" for 2019.