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Investment Securities
 3 Months Ended
Mar. 31, 2017
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at March 31, 2017 and December 31, 2016 were as follows: 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(in thousands)
March 31, 2017
 
 
 
 
 
 
 
U.S. Treasury securities
$
138,793

 
$
8,626

 
$
—

 
$
147,419

U.S. government agency securities
10,722

 
159

 
—

 
10,881

Obligations of states and political subdivisions:
 
 
 
 
 
 
 
Obligations of states and state agencies
250,905

 
8,005

 
(1,362
)
 
257,548

Municipal bonds
287,127

 
7,335

 
(222
)
 
294,240

Total obligations of states and political subdivisions
538,032

 
15,340

 
(1,584
)
 
551,788

Residential mortgage-backed securities
1,113,413

 
7,958

 
(17,601
)
 
1,103,770

Trust preferred securities
59,810

 
32

 
(11,808
)
 
48,034

Corporate and other debt securities
41,559

 
1,072

 
—

 
42,631

Total investment securities held to maturity
$
1,902,329

 
$
33,187

 
$
(30,993
)
 
$
1,904,523

December 31, 2016
 
 
 
 
 
 
 
U.S. Treasury securities
$
138,830

 
$
8,665

 
$
—

 
$
147,495

U.S. government agency securities
11,329

 
135

 
—

 
11,464

Obligations of states and political subdivisions:
 
 
 
 
 
 
 
Obligations of states and state agencies
252,185

 
6,692

 
(1,428
)
 
257,449

Municipal bonds
314,405

 
6,438

 
(466
)
 
320,377

Total obligations of states and political subdivisions
566,590

 
13,130

 
(1,894
)
 
577,826

Residential mortgage-backed securities
1,112,460

 
8,432

 
(18,090
)
 
1,102,802

Trust preferred securities
59,804

 
40

 
(12,554
)
 
47,290

Corporate and other debt securities
36,559

 
1,190

 
(29
)
 
37,720

Total investment securities held to maturity
$
1,925,572

 
$
31,592

 
$
(32,567
)
 
$
1,924,597


The age of unrealized losses and fair value of related securities held to maturity at March 31, 2017 and December 31, 2016 were as follows: 
 
Less than
Twelve Months
 
More than
Twelve Months
 
Total
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
(in thousands)
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and state agencies
$
75,169

 
$
(1,362
)
 
$
—

 
$
—

 
$
75,169

 
$
(1,362
)
Municipal bonds
21,820

 
(222
)
 
—

 
—

 
21,820

 
(222
)
Total obligations of states and political subdivisions
96,989

 
(1,584
)
 
—

 
—

 
96,989

 
(1,584
)
Residential mortgage-backed securities
648,365

 
(14,179
)
 
122,764

 
(3,422
)
 
771,129

 
(17,601
)
Trust preferred securities
—

 
—

 
46,649

 
(11,808
)
 
46,649

 
(11,808
)
Total
$
745,354

 
$
(15,763
)
 
$
169,413

 
$
(15,230
)
 
$
914,767

 
$
(30,993
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and state agencies
$
98,114

 
$
(1,428
)
 
$
—

 
$
—

 
$
98,114

 
$
(1,428
)
Municipal bonds
27,368

 
(466
)
 
—

 
—

 
27,368

 
(466
)
Total obligations of states and political subdivisions
125,482

 
(1,894
)
 
—

 
—

 
125,482

 
(1,894
)
Residential mortgage-backed securities
692,108

 
(14,420
)
 
114,505

 
(3,670
)
 
806,613

 
(18,090
)
Trust preferred securities


 


 
45,898

 
(12,554
)
 
45,898

 
(12,554
)
Corporate and other debt securities
2,971

 
(29
)
 
—

 
—

 
2,971

 
(29
)
Total
$
820,561

 
$
(16,343
)
 
$
160,403

 
$
(16,224
)
 
$
980,964

 
$
(32,567
)


The unrealized losses on investment securities held to maturity are primarily due to changes in interest rates (including, in certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 119 at March 31, 2017 and 132 at December 31, 2016.

The unrealized losses within the residential mortgage-backed securities category of the held to maturity portfolio at March 31, 2017 mainly related to investment grade securities issued by Ginnie Mae.
The unrealized losses existing for more than twelve months for trust preferred securities at March 31, 2017 primarily related to four non-rated single-issuer trust preferred 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 March 31, 2017.
Management does not believe that any individual unrealized loss as of March 31, 2017 included in the table above represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes in interest rates and market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management believes there are no credit losses on these securities. Valley does not have the intent to sell, nor is it more likely than not that Valley will be required to sell, the securities contained in the table above before the recovery of their amortized cost basis or maturity.
As of March 31, 2017, the fair value of investments held to maturity that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $1.1 billion.
The contractual maturities of investments in debt securities held to maturity at March 31, 2017 are set forth in the table below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.  
 
March 31, 2017
 
Amortized
Cost
 
Fair
Value
 
(in thousands)
Due in one year
$
66,622

 
$
66,712

Due after one year through five years
220,086

 
229,218

Due after five years through ten years
338,507

 
353,152

Due after ten years
163,701

 
151,671

Residential mortgage-backed securities
1,113,413

 
1,103,770

Total investment securities held to maturity
$
1,902,329

 
$
1,904,523


Actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.
The weighted-average remaining expected life for residential mortgage-backed securities held to maturity was 7.3 years at March 31, 2017.

Available for Sale
The amortized cost, gross unrealized gains and losses and fair value of securities available for sale at March 31, 2017 and December 31, 2016 were as follows: 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(in thousands)
March 31, 2017
 
 
 
 
 
 
 
U.S. Treasury securities
$
51,014

 
$
6

 
$
(1,240
)
 
$
49,780

U.S. government agency securities
47,080

 
216

 
(21
)
 
47,275

Obligations of states and political subdivisions:
 
 
 
 
 
 
 
Obligations of states and state agencies
39,624

 
133

 
(203
)
 
39,554

Municipal bonds
79,935

 
201

 
(528
)
 
79,608

Total obligations of states and political subdivisions
119,559

 
334

 
(731
)
 
119,162

Residential mortgage-backed securities
1,171,958

 
2,673

 
(16,567
)
 
1,158,064

Trust preferred securities*
7,848

 
—

 
(1,455
)
 
6,393

Corporate and other debt securities
62,411

 
599

 
(293
)
 
62,717

Equity securities
10,504

 
901

 
(465
)
 
10,940

Total investment securities available for sale
$
1,470,374

 
$
4,729

 
$
(20,772
)
 
$
1,454,331

December 31, 2016
 
 
 
 
 
 
 
U.S. Treasury securities
$
51,020

 
$
6

 
$
(1,435
)
 
$
49,591

U.S. government agency securities
22,815

 
232

 
(6
)
 
23,041

Obligations of states and political subdivisions:
 
 
 
 
 
 
 
Obligations of states and state agencies
40,696

 
70

 
(424
)
 
40,342

Municipal bonds
80,045

 
147

 
(767
)
 
79,425

Total obligations of states and political subdivisions
120,741

 
217

 
(1,191
)
 
119,767

Residential mortgage-backed securities
1,029,827

 
2,061

 
(16,346
)
 
1,015,542

Trust preferred securities*
10,164

 
—

 
(2,155
)
 
8,009

Corporate and other debt securities
60,651

 
436

 
(522
)
 
60,565

Equity securities
20,505

 
1,114

 
(761
)
 
20,858

Total investment securities available for sale
$
1,315,723

 
$
4,066

 
$
(22,416
)
 
$
1,297,373

 
*
Includes two pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies, at March 31, 2017 and December 31, 2016.


The age of unrealized losses and fair value of related securities available for sale at March 31, 2017 and December 31, 2016 were as follows: 
 
Less than
Twelve Months
 
More than
Twelve Months
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(in thousands)
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
48,852

 
$
(1,240
)
 
$
—

 
$
—

 
$
48,852

 
$
(1,240
)
U.S. government agency securities
29,314

 
(18
)
 
3,940

 
(3
)
 
33,254

 
(21
)
Obligations of states and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and state agencies
16,778

 
(203
)
 
—

 
—

 
16,778

 
(203
)
Municipal bonds
29,738

 
(314
)
 
11,136

 
(214
)
 
40,874

 
(528
)
Total obligations of states and political subdivisions
46,516

 
(517
)
 
11,136

 
(214
)
 
57,652

 
(731
)
Residential mortgage-backed securities
732,989

 
(11,579
)
 
141,743

 
(4,988
)
 
874,732

 
(16,567
)
Trust preferred securities
—

 
—

 
6,393

 
(1,455
)
 
6,393

 
(1,455
)
Corporate and other debt securities
26,384

 
(92
)
 
15,113

 
(201
)
 
41,497

 
(293
)
Equity securities
—

 
—

 
5,179

 
(465
)
 
5,179

 
(465
)
Total
$
884,055

 
$
(13,446
)
 
$
183,504

 
$
(7,326
)
 
$
1,067,559

 
$
(20,772
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
48,660

 
$
(1,435
)
 
$
—

 
$
—

 
$
48,660

 
$
(1,435
)
U.S. government agency securities
2,530

 
(4
)
 
4,034

 
(2
)
 
6,564

 
(6
)
Obligations of states and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and state agencies
28,628

 
(404
)
 
753

 
(20
)
 
29,381

 
(424
)
Municipal bonds
42,573

 
(506
)
 
11,081

 
(261
)
 
53,654

 
(767
)
Total obligations of states and political subdivisions
71,201

 
(910
)
 
11,834

 
(281
)
 
83,035

 
(1,191
)
Residential mortgage-backed securities
788,030

 
(11,889
)
 
132,718

 
(4,457
)
 
920,748

 
(16,346
)
Trust preferred securities


 


 
8,009

 
(2,155
)
 
8,009

 
(2,155
)
Corporate and other debt securities
32,292

 
(294
)
 
15,192

 
(228
)
 
47,484

 
(522
)
Equity securities
—

 
—

 
14,883

 
(761
)
 
14,883

 
(761
)
Total
$
942,713

 
$
(14,532
)
 
$
186,670

 
$
(7,884
)
 
$
1,129,383

 
$
(22,416
)

The unrealized losses on investment securities available for sale are primarily due to changes in interest rates (including, in certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security positions in the securities available for sale portfolio in an unrealized loss position at March 31, 2017 was 288 as compared to 298 at December 31, 2016.
The unrealized losses more than twelve months for the residential mortgage-backed securities category of the available for sale portfolio at March 31, 2017 largely related to several investment grade residential mortgage-backed securities mainly issued by Ginnie Mae.
The unrealized losses more than twelve months for trust preferred securities at March 31, 2017 in the table above largely relate to 2 pooled trust preferred securities with an amortized cost of $7.9 million and a fair value of $6.4 million. One of the two pooled trust preferred securities had unrealized loss of $709 thousand and an investment grade rating at March 31, 2017.

As of March 31, 2017, the fair value of securities available for sale that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $547.5 million.
The contractual maturities of investment securities available for sale at March 31, 2017 are set forth in the following table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.
 
March 31, 2017
 
Amortized
Cost
 
Fair
Value
 
(in thousands)
Due in one year
$
24,953

 
$
24,844

Due after one year through five years
69,116

 
69,513

Due after five years through ten years
113,108

 
111,725

Due after ten years
80,735

 
79,245

Residential mortgage-backed securities
1,171,958

 
1,158,064

Equity securities
10,504

 
10,940

Total investment securities available for sale
$
1,470,374

 
$
1,454,331


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 9.1 years at March 31, 2017.
Other-Than-Temporary Impairment Analysis

Valley records impairment charges on its investment securities when the decline in fair value is considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities; decline in the creditworthiness of the issuer; absence of reliable pricing information for investment securities; adverse changes in business climate; adverse actions by regulators; prolonged decline in value of equity investments; or unanticipated changes in the competitive environment could have a negative effect on Valley’s investment portfolio and may result in other-than-temporary impairment on certain investment securities in future periods. Valley’s investment portfolios include private label mortgage-backed securities, trust preferred securities principally issued by bank holding companies (including two pooled trust preferred securities), corporate bonds and perpetual preferred securities issued by banks. These investments may pose a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy and its potential negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the security.

There were no other-than-temporary impairment losses on securities recognized in earnings for the three months ended March 31, 2017 and 2016. At March 31, 2017, four previously impaired private label mortgage-backed securities (prior to December 31, 2012) had a combined amortized cost and fair value of $9.7 million and $9.4 million, respectively, while one previously impaired pooled trust preferred security had an amortized cost and fair value of $2.8 million and $2.0 million, respectively. The previously impaired pooled trust preferred security was not accruing interest during the three months ended March 31, 2017 and 2016.

The following table presents the changes in the credit loss component of cumulative other-than-temporary impairment losses on debt securities classified as either held to maturity or available for sale that Valley has previously recognized in earnings, for which a portion of the impairment loss (non-credit factors) was recognized in other comprehensive income for the three months ended March 31, 2017 and 2016: 
 
Three Months Ended
March 31,
 
2017
 
2016
 
(in thousands)
Balance, beginning of period
$
4,916

 
$
5,837

Accretion of credit loss impairment due to an increase in expected cash flows
(149
)
 
(489
)
Balance, end of period
$
4,767

 
$
5,348



The credit loss component of the impairment loss represents the difference between the present value of expected future cash flows and the amortized cost basis of the security prior to considering credit losses. The beginning balance represents the credit loss component for debt securities for which other-than-temporary impairment occurred prior to each period presented. The credit loss component increases if other-than-temporary impairments (initial and subsequent) are recognized in earnings for credit impaired debt securities. The credit loss component is reduced if (i) Valley receives cash flows in excess of what it expected to receive over the remaining life of the credit impaired debt security, (ii) the security matures, (iii) the security is fully written down, or (iv) Valley sells, intends to sell or believes it will be required to sell previously credit impaired debt securities.
Realized Gains and Losses

Gross gains (losses) realized on sales, maturities and other securities transactions related to investment securities included in earnings were immaterial for the three months ended March 31, 2017 and 2016.