Benefit Plans

Pension and Director Plans

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, participants are not accruing further benefits and their total pension benefits will be determined based on the compensation and service as of December 31, 2013. Plan benefits will not increase for any pay or service earned after such date. However, participants' benefits will continue to vest as long as they work for Valley.

The fair value of qualified plan assets increased approximately $6.3 million, or 3.4 percent, to $191.2 million at September 30, 2014 from $184.9 million at December 31, 2013. There were no contributions to the qualified plan during the nine months ended September 30, 2014. Based upon actuarial estimates, Valley does not expect to make any contributions during the fourth quarter of 2014.

The following table sets forth the components of net periodic pension expense related to the qualified and non-qualified plans for the three and nine months ended September 30, 2014 and 2013:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)
Service cost	$	—		$	1,530		$	—		$	5,573
Interest cost	1,731			1,640			5,194			5,005
Expected return on plan assets	(3,242		)	(3,334		)	(9,727		)	(9,076		)
Amortization of prior service cost	—			229			—			672
Amortization of net loss	63			357			187			1,962
Curtailment loss	—			—			—			750
Total net periodic pension (income) expense	$	(1,448	)	$	422		$	(4,346	)	$	4,886

Largely due to the freeze in the plans' benefits effective December 31, 2013, Valley recorded net periodic pension income of $1.4 million and $4.3 million for the three and nine months ended September 30, 2014, respectively.

Savings and Investment Plan

Effective January 1, 2014, Valley increased the benefits under the Bank’s 401(k) plan in an effort to offset a portion of the employee benefits no longer accruing under the qualified pension plan after December 31, 2013. At such date, Valley’s contributions increased to a dollar-for-dollar matching contribution of up to six percent of eligible compensation contributed by an employee each pay period. The Bank recorded $1.4 million and $715 thousand in expense for contributions to the plan for the three months ended September 30, 2014 and 2013, respectively, and $4.5 million and $2.0 million for the nine months ended September 30, 2014 and 2013, respectively.