VALLEY NATIONAL BANCORPVLY
VALLEY NATIONAL BANCORP Income Taxes Disclosure
INCOME TAXES (Note 12)
Income tax expense for the years ended December 31, 2025, 2024 and 2023 consisted of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Current expense: | |||||||||||||||||
| Federal | $ | 70,830 | $ | 26,308 | $ | 123,569 | |||||||||||
| State | 64,161 | 38,079 | 65,611 | ||||||||||||||
| 134,991 | 64,387 | 189,180 | |||||||||||||||
| Deferred expense (benefit): | |||||||||||||||||
| Federal | 7,096 | (6,966) | (8,035) | ||||||||||||||
| State | 3,800 | 827 | (1,324) | ||||||||||||||
| 10,896 | (6,139) | (9,359) | |||||||||||||||
| Total income tax expense | $ | 145,887 | $ | 58,248 | $ | 179,821 | |||||||||||
The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 164,781 | $ | 157,629 | |||||||
| Employee benefits | 40,597 | 41,808 | |||||||||
| Investment securities | 23,871 | 48,652 | |||||||||
| Net operating loss carryforwards | 7,124 | 9,078 | |||||||||
| Purchase accounting | 40,806 | 47,932 | |||||||||
| FDIC special assessment | 1,544 | 10,673 | |||||||||
| Other | 10,556 | 23,744 | |||||||||
| Total deferred tax assets | 289,279 | 339,516 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Pension plans | 62,547 | 52,783 | |||||||||
| Depreciation | 13,539 | 12,314 | |||||||||
| Other investments | 27,369 | 17,088 | |||||||||
| Core deposit intangibles | 15,683 | 21,287 | |||||||||
| Other intangibles | 5,302 | 6,493 | |||||||||
| Goodwill | 10,085 | 9,322 | |||||||||
| Other | 10,734 | 15,356 | |||||||||
| Total deferred tax liabilities | 145,259 | 134,643 | |||||||||
| Valuation allowance | — | 1,263 | |||||||||
| Net deferred tax asset (included in other assets) | $ | 144,020 | $ | 203,610 | |||||||
Valley's federal net operating loss carryforwards totaled $23.7 million at December 31, 2025, and expire during the period from 2029 through 2034. State net operating loss carryforwards totaled $49.3 million at December 31, 2025, 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 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, 2025, 2024, and 2023 were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 156,213 | 21.0 | % | $ | 92,089 | 21.0 | % | $ | 142,450 | 21.0 | % | |||||||||||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||||||||||||||
State income tax expense, net of federal tax effect * | 53,689 | 7.2 | 30,736 | 7.0 | 50,787 | 7.5 | |||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| New market tax credits | (50,699) | (6.8) | (28,041) | (6.4) | (18,722) | (2.8) | |||||||||||||||||||||||||||||
| Other tax credits | (5,908) | (0.8) | (4,063) | (0.9) | (4,286) | (0.6) | |||||||||||||||||||||||||||||
| Nontaxable or non-deductible items | |||||||||||||||||||||||||||||||||||
| Disallowed FDIC insurance premiums | 10,195 | 1.3 | 11,071 | 2.5 | 7,950 | 1.2 | |||||||||||||||||||||||||||||
| Other nontaxable or non-deductible | (4,029) | (0.5) | (1,075) | (0.2) | (1,291) | (0.2) | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | — | — | (46,431) | (10.6) | — | — | |||||||||||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||||||||||||||
| Federal tax refund | (11,417) | (1.5) | — | — | — | — | |||||||||||||||||||||||||||||
| Other adjustments | (2,157) | (0.3) | 3,962 | 0.9 | 2,933 | 0.4 | |||||||||||||||||||||||||||||
| Income tax expense | $ | 145,887 | 19.6 | % | $ | 58,248 | 13.3 | % | $ | 179,821 | 26.5 | % | |||||||||||||||||||||||
*State taxes in New York, New York City, and New Jersey made up the majority (greater than 50 percent) of the tax effect in this category.
A reconciliation of Valley’s gross unrecognized tax benefits for the years ended December 31, 2024 and 2023 is presented in the table below:
| 2024 | 2023 | ||||||||||
| (in thousands) | |||||||||||
| Beginning balance | $ | 30,359 | $ | 30,359 | |||||||
| Reductions due to expiration of statute of limitations | (30,359) | — | |||||||||
| Ending balance | $ | — | $ | 30,359 | |||||||
Valley did not have an unrecognized tax benefit recorded as of December 31, 2025. Valley’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley monitors its tax positions for the underlying facts, circumstances, and information available including changes in tax laws, case law, and regulations that may necessitate subsequent de-recognition of previous tax benefits.
The following table presents income taxes paid for the years ended December 31, 2025, 2024 and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Federal taxes paid | $ | 26,484 | $ | 54,227 | $ | 162,502 | |||||||||||
| State and city taxes paid: | |||||||||||||||||
| New York | 13,054 | 12,447 | 25,718 | ||||||||||||||
| New Jersey | 400 | 7,475 | 19,006 | ||||||||||||||
| New York City | 8,533 | 8,407 | 13,307 | ||||||||||||||
| Other | 4,990 | 7,145 | 15,970 | ||||||||||||||
| Total state and city taxes paid | 26,977 | 35,474 | 74,001 | ||||||||||||||
| Total income taxes paid | $ | 53,461 | $ | 89,701 | $ | 236,503 | |||||||||||
Valley files income tax returns in 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 2020. Valley is under routine examination by various state jurisdictions. Valley expects all current examinations to be completed within the next 12 months.
Valley has considered, for all open audit examinations, any potential adjustments needed in establishing a reserve for unrecognized tax benefits as of December 31, 2025. No reserve was deemed necessary during 2025.
TAX CREDIT INVESTMENTS (Note 13)
Valley’s tax credit investments are related to investments promoting qualified affordable housing projects and other investments related to community development, largely consisting of new market tax credit investments. Some of these tax-advantaged investments support Valley’s regulatory compliance with the CRA. 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. Certain liabilities 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 in 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 impairments, if applicable. See the “Impairment Analysis” section below.
The following table presents the balances of Valley’s affordable housing tax credit investments and other tax credit investments at December 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Other assets: | |||||||||||
| $ | 28,665 | $ | 22,742 | ||||||||
| Other tax credit investments, net | 471,961 | 278,468 | |||||||||
Total tax credit investments, net | $ | 500,626 | $ | 301,210 | |||||||
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, 2025, 2024 and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Components of income tax expense: | |||||||||||||||||
| $ | 7,435 | $ | 5,319 | $ | 5,872 | ||||||||||||
| Other tax credit investment credits and tax benefits | 60,873 | 32,091 | 20,069 | ||||||||||||||
Total reduction in income tax expense | $ | 68,308 | $ | 37,410 | $ | 25,941 | |||||||||||
| Amortization of tax credit investments: | |||||||||||||||||
| Affordable housing tax credit investment losses | $ | 4,172 | $ | 3,501 | $ | 3,198 | |||||||||||
| Affordable housing tax credit investment impairment losses | 1,281 | 983 | 2,466 | ||||||||||||||
| Other tax credit investment losses | 8,300 | 5,143 | 1,266 | ||||||||||||||
| Other tax credit investment impairment losses | 28,039 | 9,319 | 11,079 | ||||||||||||||
Total amortization of tax credit investments recorded in non-interest expense | $ | 41,792 | $ | 18,946 | $ | 18,009 | |||||||||||
Impairment Analysis
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 periodic basis, Valley obtains financial reporting on its underlying tax credit investment assets for each fund. 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 varies 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 as a result of 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 10, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.