10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2020

OR

☐ 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		22-2477875
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
One Penn Plaza
New York,	NY	10119
(Address of principal executive office)		(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	Trading Symbols	Name of exchange on which registered
Common Stock, no par value	VLY	The Nasdaq Stock Market LLC
Non-Cumulative Perpetual Preferred Stock, Series A, no par value	VLYPP	The Nasdaq Stock Market LLC
Non-Cumulative Perpetual Preferred Stock, Series B, no par value	VLYPO	The Nasdaq Stock Market LLC

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  ☒    No ☐

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  ☒    No  ☐

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	☒	Accelerated filer	☐	Smaller reporting company	☐
Non-accelerated filer	☐			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  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock (no par value), of which 403,797,596 shares were outstanding as of August 5, 2020.

TABLE OF CONTENTS

		Page Number
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition as of June 30, 2020 and December 31, 2019	2
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019	3
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019	5
	Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2020 and 2019	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	88
Item 4.	Controls and Procedures	88
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	89
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 6.	Exhibits	93
SIGNATURES		94

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except for share data)

	June 30, 2020			December 31, 2019
Assets	(Unaudited)
Cash and due from banks	$	388,753		$	256,264
Interest bearing deposits with banks	1,521,572			178,423
Investment securities:
Equity securities	54,379			41,410
Available for sale debt securities	1,689,388			1,566,801
Held to maturity debt securities (net of allowance for credit losses of $1,593 at June 30, 2020)	2,131,834			2,336,095
Total investment securities	3,875,601			3,944,306
Loans held for sale, at fair value	120,599			76,113
Loans	32,314,611			29,699,208
Less: Allowance for loan losses	(309,614		)	(161,759		)
Net loans	32,004,997			29,537,449
Premises and equipment, net	329,889			334,533
Lease right of use assets	273,811			285,129
Bank owned life insurance	535,383			540,169
Accrued interest receivable	122,807			105,637
Goodwill	1,375,409			1,373,625
Other intangible assets, net	77,921			86,772
Other assets	1,090,523			717,600
Total Assets	$	41,717,265		$	37,436,020
Liabilities
Deposits:
Non-interest bearing	$	8,989,818		$	6,710,408
Interest bearing:
Savings, NOW and money market	14,165,415			12,757,484
Time	8,272,772			9,717,945
Total deposits	31,428,005			29,185,837
Short-term borrowings	2,082,880			1,093,280
Long-term borrowings	2,907,535			2,122,426
Junior subordinated debentures issued to capital trusts	55,891			55,718
Lease liabilities	299,260			309,849
Accrued expenses and other liabilities	469,206			284,722
Total Liabilities	37,242,777			33,051,832
Shareholders’ Equity
Preferred stock, no par value; 50,000,000 authorized shares:
Series A (4,600,000 shares issued at June 30, 2020 and December 31, 2019)	111,590			111,590
Series B (4,000,000 shares issued at June 30, 2020 and December 31, 2019)	98,101			98,101
Common stock (no par value, authorized 650,000,000 shares; issued 403,823,728 shares at June 30, 2020 and 403,322,773 shares at December 31, 2019)	141,667			141,423
Surplus	3,628,792			3,622,208
Retained earnings	499,511			443,559
Accumulated other comprehensive loss	(4,938		)	(32,214		)
Treasury stock, at cost (28,029 common shares at June 30, 2020 and 44,383 common shares at December 31, 2019)	(235		)	(479		)
Total Shareholders’ Equity	4,474,488			4,384,188
Total Liabilities and Shareholders’ Equity	$	41,717,265		$	37,436,020

See accompanying notes to consolidated financial statements.

2

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except for share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Interest Income
Interest and fees on loans	$	321,883		$	296,934		$	654,951		$	585,211
Interest and dividends on investment securities:
Taxable	19,447			22,489			41,380			45,365
Tax-exempt	3,692			4,356			7,618			9,160
Dividends	3,092			2,795			6,493			5,969
Interest on federal funds sold and other short-term investments	411			1,168			1,876			2,261
Total interest income	348,525			327,742			712,318			647,966
Interest Expense
Interest on deposits:
Savings, NOW and money market	16,627			38,020			51,140			74,303
Time	29,857			40,331			72,671			78,502
Interest on short-term borrowings	1,980			14,860			6,687			27,409
Interest on long-term borrowings and junior subordinated debentures	17,502			14,297			33,922			28,870
Total interest expense	65,966			107,508			164,420			209,084
Net Interest Income	282,559			220,234			547,898			438,882
Provision for credit losses for held to maturity securities	41			—			800			—
Provision for credit losses for loans	41,115			2,100			75,039			10,100
Net Interest Income After Provision for Credit Losses	241,403			218,134			472,059			428,782
Non-Interest Income
Trust and investment services	2,826			3,096			6,239			6,000
Insurance commissions	1,659			2,649			3,610			5,174
Service charges on deposit accounts	3,557			5,827			9,237			11,730
(Losses) gains on securities transactions, net	(41		)	11			(81		)	(21		)
Other-than-temporary impairment losses on securities	—			(2,928		)	—			(2,928		)
Portion recognized in other comprehensive income (before taxes)	—			—			—			—
Net impairment losses on securities recognized in earnings	—			(2,928		)	—			(2,928		)
Fees from loan servicing	2,227			2,367			4,975			4,797
Gains on sales of loans, net	8,337			3,930			12,887			8,506
(Losses) gains on sales of assets, net	(299		)	(564		)	(178		)	77,156
Bank owned life insurance	5,823			2,205			8,965			4,092
Other	20,741			11,010			40,573			20,770
Total non-interest income	44,830			27,603			86,227			135,276
Non-Interest Expense
Salary and employee benefits expense	78,532			76,183			164,260			159,288
Net occupancy and equipment expense	33,217			29,700			65,658			57,586
FDIC insurance assessment	6,135			4,931			10,011			11,052
Amortization of other intangible assets	6,681			4,170			12,151			8,481
Professional and legal fees	7,797			4,145			13,884			9,416
Amortization of tax credit investments	3,416			4,863			6,644			12,036
Telecommunication expense	2,866			2,351			5,153			4,619
Other	18,522			15,394			35,061			27,054
Total non-interest expense	157,166			141,737			312,822			289,532
Income Before Income Taxes	129,067			104,000			245,464			274,526
Income tax expense	33,466			27,532			62,595			84,728
Net Income	95,601			76,468			182,869			189,798
Dividends on preferred stock	3,172			3,172			6,344			6,344
Net Income Available to Common Shareholders	$	92,429		$	73,296		$	176,525		$	183,454

3

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (continued)

(in thousands, except for share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Earnings Per Common Share:
Basic	$	0.23	$	0.22	$	0.44	$	0.55
Diluted	0.23		0.22		0.44		0.55
Cash Dividends Declared per Common Share	0.11		0.11		0.22		0.22
Weighted Average Number of Common Shares Outstanding:
Basic	403,790,242		331,748,552		403,654,665		331,675,313
Diluted	404,631,845		332,959,802		405,043,183		332,929,359

See accompanying notes to consolidated financial statements.

4

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income	$	95,601		$	76,468		$	182,869		$	189,798
Other comprehensive income, net of tax:
Unrealized gains and losses on available for sale securities
Net gains arising during the period	3,013			18,488			29,081			34,755
Less reclassification adjustment for net losses (gains) included in net income	31			(8		)	58			18
Total	3,044			18,480			29,139			34,773
Unrealized gains and losses on derivatives (cash flow hedges)
Net losses on derivatives arising during the period	(1,280		)	(683		)	(2,337		)	(1,065		)
Less reclassification adjustment for net (gains) losses included in net income	(308		)	274			130			482
Total	(1,588		)	(409		)	(2,207		)	(583		)
Defined benefit pension plan
Amortization of actuarial net loss	172			55			344			110
Total other comprehensive income	1,628			18,126			27,276			34,300
Total comprehensive income	$	97,229		$	94,594		$	210,145		$	224,098

See accompanying notes to consolidated financial statements.

5

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the Six Months Ended June 30, 2020

			Common Stock								Accumulated
	Preferred Stock		Shares	Amount		Surplus		Retained Earnings			Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
	(in thousands)
Balance - December 31, 2019	$	209,691	403,278	$	141,423	$	3,622,208	$	443,559		$	(32,214	)	$	(479	)	$	4,384,188
Adjustment due to the adoption of ASU No. 2016-13	—		—	—		—		(28,187		)	—			—			(28,187		)
Balance - January 1, 2020	209,691		403,278	141,423		3,622,208		415,372			(32,214		)	(479		)	4,356,001
Net income	—		—	—		—		87,268			—			—			87,268
Other comprehensive income, net of tax	—		—	—		—		—			25,648			—			25,648
Cash dividends declared:
Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797		)	—			—			(1,797		)
Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375		)	—			—			(1,375		)
Common stock, $0.11 per share	—		—	—		—		(44,979		)	—			—			(44,979		)
Effect of stock incentive plan, net	—		466	190		1,828		(2,065		)	—			279			232
Balance - March 31, 2020	209,691		403,744	141,613		3,624,036		452,424			(6,566		)	(200		)	4,420,998
Net income	—		—	—		—		95,601			—			—			95,601
Other comprehensive income, net of tax	—		—	—		—		—			1,628			—			1,628
Cash dividends declared:
Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797		)	—			—			(1,797		)
Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375		)	—			—			(1,375		)
Common stock, $0.11 per share	—		—	—		—		(44,750		)	—			—			(44,750		)
Effect of stock incentive plan, net	—		52	54		4,756		(592		)	—			(35		)	4,183
Balance - June 30, 2020	$	209,691	403,796	$	141,667	$	3,628,792	$	499,511		$	(4,938	)	$	(235	)	$	4,474,488

6

For the Six Months Ended June 30, 2019

			Common Stock								Accumulated
	Preferred Stock		Shares	Amount		Surplus		Retained Earnings			Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
	(in thousands)
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	—		—	—		—		4,414			—			—			4,414
Adjustment due to the adoption of ASU No. 2017-08	—		—	—		—		(1,446		)	—			—			(1,446		)
Balance - January 1, 2019	209,691		331,431	116,240		2,796,499		302,610			(69,431		)	(2,187		)	3,353,422
Net income	—		—	—		—		113,330			—			—			113,330
Other comprehensive income, net of tax	—		—	—		—		—			16,174			—			16,174
Cash dividends declared:
Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797		)	—			—			(1,797		)
Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375		)	—			—			(1,375		)
Common stock, $0.11 per share	—		—	—		—		(36,686		)	—			—			(36,686		)
Effect of stock incentive plan, net	—		302	226		2,935		(99		)	—			(1,251		)	1,811
Balance - March 31, 2019	209,691		331,733	116,466		2,799,434		375,983			(53,257		)	(3,438		)	3,444,879
Net income	—		—	—		—		76,468			—			—			76,468
Other comprehensive income, net of tax	—		—	—		—		—			18,126			—			18,126
Cash dividends declared:
Preferred stock, Series A, $0.39 per share	—		—	—		—		(1,797		)	—			—			(1,797		)
Preferred stock, Series B, $0.34 per share	—		—	—		—		(1,375		)	—			—			(1,375		)
Common stock, $0.11 per share	—		—	—		—		(36,712		)	—			—			(36,712		)
Effect of stock incentive plan, net	—		55	105		4,625		(377		)	—			176			4,529
Balance - June 30, 2019	$	209,691	331,788	$	116,571	$	2,804,059	$	412,190		$	(35,131	)	$	(3,262	)	$	3,504,118

See accompanying notes to consolidated financial statements.

7

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net income	$	182,869		$	189,798
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	29,608			25,240
Stock-based compensation	8,199			8,282
Provision for credit losses	75,839			10,100
Net amortization of premiums and accretion of discounts on securities and borrowings	15,305			14,287
Amortization of other intangible assets	12,151			8,481
Losses on securities transactions, net	81			21
Proceeds from sales of loans held for sale	408,785			205,429
Gains on sales of loans, net	(12,887		)	(8,506		)
Net impairment losses on securities, recognized in earnings	—			2,928
Originations of loans held for sale	(443,684		)	(200,877		)
Losses (gains) on sales of assets, net	178			(77,156		)
Net change in:
Cash surrender value of bank owned life insurance	(8,965		)	(4,092		)
Accrued interest receivable	(17,170		)	(3,769		)
Other assets	(426,776		)	(186,674		)
Accrued expenses and other liabilities	166,490			65,970
Net cash (used in) provided by operating activities	(9,977		)	49,462
Cash flows from investing activities:
Net loan originations and purchases	(2,568,893		)	(992,236		)
Equity securities:
Purchases	(5,365		)	—
Held to maturity debt securities:
Purchases	(107,136		)	(261,446		)
Maturities, calls and principal repayments	301,004			155,002
Available for sale debt securities:
Purchases	(302,071		)	—
Maturities, calls and principal repayments	213,348			109,045
Death benefit proceeds from bank owned life insurance	13,751			1,350
Proceeds from sales of real estate property and equipment	8,202			102,500
Proceeds from sales of loans held for investment	30,020			216,301
Purchases of real estate property and equipment	(14,469		)	(9,336		)
Net cash used in investing activities	(2,431,609		)	(678,820		)

8

VALLEY NATIONAL BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
	Six Months Ended June 30,
	2020			2019
Cash flows from financing activities:
Net change in deposits	2,242,168			320,955
Net change in short-term borrowings	989,600			268,870
Proceeds from issuance of long-term borrowings, net	838,388			400,000
Repayments of long-term borrowings	(53,418		)	(255,000		)
Cash dividends paid to preferred shareholders	(6,344		)	(3,172		)
Cash dividends paid to common shareholders	(89,122		)	(73,546		)
Purchase of common shares to treasury	(4,924		)	(1,462		)
Common stock issued, net	1,140			(480		)
Other, net	(264		)	(240		)
Net cash provided by financing activities	3,917,224			655,925
Net change in cash and cash equivalents	1,475,638			26,567
Cash and cash equivalents at beginning of year	434,687			428,629
Cash and cash equivalents at end of period	$	1,910,325		$	455,196
Supplemental disclosures of cash flow information:
Cash payments for:
Interest on deposits and borrowings	$	178,337		$	198,815
Federal and state income taxes	14,731			80,116
Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned	$	2,750		$	1,016
Transfer of loans to loans held for sale	30,020			216,301
Lease right of use assets obtained in exchange for operating lease liabilities	6,407			296,064

See accompanying notes to consolidated financial statements.

9

VALLEY NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The unaudited consolidated financial statements of Valley National Bancorp, a New Jersey corporation (Valley), include the accounts of its commercial bank subsidiary, Valley National Bank (the 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. Certain prior period amounts have been reclassified to conform to the current presentation.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly Valley’s financial position, results of operations, changes in shareholders' equity and cash flows at June 30, 2020 and for all periods presented have been made. The results of operations for the three and six months ended on June 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP and industry practice have been condensed or omitted pursuant to rules and regulations of the SEC. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019.

Significant Estimates. In preparing the unaudited 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 require application of management’s most difficult, subjective or complex judgment and are particularly susceptible to change include: the allowance for credit losses, 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. Actual amounts as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

Impact of COVID-19. During the first half of 2020, economies throughout the world were severely disrupted by the effects of quarantines, business closures, and the reluctance of individuals to leave their homes as a result of the outbreak of the novel coronavirus (COVID-19). Our primary market areas within New Jersey, New York, Florida and Alabama have all experienced significant outbreaks and disruptions during the COVID-19 pandemic. The full impact of COVID-19 is unknown and still evolving. The outbreak and any preventative or protective actions that Valley or its customers have taken or may take in respect of this virus have resulted and may continue to result in extended periods of disruption to Valley, its customers, service providers, and third parties. Any future financial impact cannot be reasonably estimated at this time but may materially affect the business and Valley’s financial condition and results of operations. The extent to which COVID-19 impacts Valley’s results will depend on future developments, which are highly uncertain and cannot be predicted. Banking and financial services have been designated essential businesses; therefore, Valley’s operations are continuing, subject to certain modifications to business practices imposed to safeguard the health and wellness of Valley’s customers and employees, and to comply with applicable government directives.

10

Note 2. Business Combinations

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 the 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 $366 thousand and $1.7 million for the three and six months ended June 30, 2020, respectively, which primarily related to professional and legal expenses and other expenses included in non-interest expense on the consolidated statements of income.

During the first quarter 2020, Valley revised the estimated fair values of the acquired assets as of the Oritani acquisition date due to additional information obtained that existed as of December 1, 2019. The adjustments mostly related to the fair value of certain loans and deferred tax assets as of the acquisition date and resulted in a $1.8 million increase in goodwill (see Note 9 for amount of goodwill as allocated to Valley's business segments). If additional information (that existed as of the acquisition date) becomes available, the fair value estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date.

Note 3. Earnings Per Common Share

The following table shows the calculation of both basic and diluted earnings per common share for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands, except for share data)
Net income available to common shareholders	$	92,429	$	73,296	$	176,525	$	183,454
Basic weighted average number of common shares outstanding	403,790,242		331,748,552		403,654,665		331,675,313
Plus: Common stock equivalents	841,603		1,211,250		1,388,518		1,254,046
Diluted weighted average number of common shares outstanding	404,631,845		332,959,802		405,043,183		332,929,359
Earnings per common share:
Basic	$	0.23	$	0.22	$	0.44	$	0.55
Diluted	0.23		0.22		0.44		0.55

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of restricted stock units and common stock options to purchase Valley’s common shares. Common stock options with exercise prices that exceed the average market price per share 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. Anti-dilutive common stock options equaled approximately 2.7 million shares and 2.3 million shares for the three and six months ended June 30, 2020, respectively, and 482 thousand shares and 494 thousand shares for the three and six months ended June 30, 2019, respectively.

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Note 4. Accumulated Other Comprehensive Loss

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the three and six months ended June 30, 2020: 

	Components of Accumulated Other Comprehensive Loss								Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance at March 31, 2020	$	31,917	$	(4,348	)	$	(34,135	)	$	(6,566	)
Other comprehensive income (loss) before reclassification	3,013		(1,280		)	—			1,733
Amounts reclassified from other comprehensive income	31		(308		)	172			(105		)
Other comprehensive income (loss), net	3,044		(1,588		)	172			1,628
Balance at June 30, 2020	$	34,961	$	(5,936	)	$	(33,963	)	$	(4,938	)

	Components of Accumulated Other Comprehensive Loss								Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance at December 31, 2019	$	5,822	$	(3,729	)	$	(34,307	)	$	(32,214	)
Other comprehensive income (loss) before reclassification	29,081		(2,337		)	—			26,744
Amounts reclassified from other comprehensive income	58		130			344			532
Other comprehensive income (loss), net	29,139		(2,207		)	344			27,276
Balance at June 30, 2020	$	34,961	$	(5,936	)	$	(33,963	)	$	(4,938	)

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and six months ended June 30, 2020 and 2019:

	Amounts Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended June 30,						Six Months Ended June 30,
Components of Accumulated Other Comprehensive Loss	2020			2019			2020			2019			Income Statement Line Item
	(in thousands)
Unrealized (losses) gains on AFS securities before tax	$	(41	)	$	11		$	(81	)	$	(21	)	(Losses) gains on securities transactions, net
Tax effect	10			(3		)	23			3
Total net of tax	(31		)	8			(58		)	(18		)
Unrealized gains (losses) on derivatives (cash flow hedges) before tax	438			(383		)	(177		)	(673		)	Interest expense
Tax effect	(130		)	109			47			191
Total net of tax	308			(274		)	(130		)	(482		)
Defined benefit pension plan:
Amortization of actuarial net loss	(229		)	(78		)	(465		)	(156		)	*
Tax effect	57			23			121			46
Total net of tax	(172		)	(55		)	(344		)	(110		)
Total reclassifications, net of tax	$	105		$	(321	)	$	(532	)	$	(610	)

* Amortization of net loss is included in the computation of net periodic pension cost recognized within other non-interest expense.

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Note 5. New Authoritative Accounting Guidance

New Accounting Guidance Adopted in 2020

Accounting Standards Update (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 the incurred loss impairment methodology under prior accounting guidance with a new current expected credit loss (CECL) model. 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 utilizes 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 the 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.

Valley adopted ASU No. 2016-13 on 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. At adoption, Valley recorded a $100.4 million increase to its allowance for credit losses, including reserves of $92.5 million, $7.1 million and $793 thousand related to loans, unfunded credit commitments and held to maturity debt securities, respectively. Of the $92.5 million in loan reserves, $61.6 million represents PCD loan related reserves which were recognized through a gross-up that increases the amortized cost basis of loans with a corresponding increase to the allowance for credit losses, and therefore results in no impact to shareholders' equity. The remaining non-credit discount of $97.7 million related to PCD loans is accreted into interest income over the life of the loans at the effective interest rate effective January 1, 2020. The non-PCD loan related increase to the allowance for credit losses of $38.8 million, including the reserves for unfunded loan commitments and held to maturity debt securities, was offset in shareholders' equity and deferred tax assets.

For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) net of taxes will be phased in over the same time frame.

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 was effective for Valley on January 1, 2020 and Valley applied this new guidance in its annual goodwill impairment test performed during the second quarter 2020.

New Accounting Guidance issued in 2020

ASU No. 2020-04, "Reference Rate Reform (Topic 848)" provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued, subject to meeting certain criteria. Under the new guidance, an entity can elect by accounting topic or industry subtopic to account for the modification of a contract affected by reference rate reform

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as a continuation of the existing contract, if certain conditions are met. In addition, the new guidance allows an entity to elect on a hedge-by-hedge basis to continue to apply hedge accounting for hedging relationships in which the critical terms change due to reference rate reform, if certain conditions are met. A one-time election to sell and/or transfer held-to-maturity debt securities that reference a rate affected by reference rate reform is also allowed. ASU No. 2020-04 became effective for all entities as of March 12, 2020 and will apply to all LIBOR reference rate modifications through December 31, 2022.

Note 6. Fair Value Measurement of Assets and Liabilities

ASC Topic 820, “Fair Value Measurements” 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).

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Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at June 30, 2020 and December 31, 2019. The assets presented under “nonrecurring fair value measurements” in the tables 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). 

	June 30, 2020		Fair Value Measurements at Reporting Date Using:
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Equity securities (1)	$	54,379	$	46,897	$	—	$	—
Available for sale:
U.S. Treasury securities	52,621		52,621		—		—
U.S. government agency securities	27,924		—		27,924		—
Obligations of states and political subdivisions	147,505		—		146,140		1,365
Residential mortgage-backed securities	1,382,726		—		1,382,726		—
Corporate and other debt securities	78,612		—		78,612		—
Total available for sale debt securities	1,689,388		52,621		1,635,402		1,365
Loans held for sale (2)	120,599		—		120,599		—
Other assets (3)	468,275		—		468,275		—
Total assets	$	2,332,641	$	99,518	$	2,224,276	$	1,365
Liabilities
Other liabilities (3)	$	170,273	$	—	$	170,273	$	—
Total liabilities	$	170,273	$	—	$	170,273	$	—
Non-recurring fair value measurements:
Collateral dependent loans	$	42,807	$	—	$	—	$	42,807
Loan servicing rights	14,373		—		—		14,373
Foreclosed assets	6,679		—		—		6,679
Total	$	63,859	$	—	$	—	$	63,859

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			Fair Value Measurements at Reporting Date Using:
	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)
Recurring fair value measurements:
Assets
Investment securities:
Equity securities at fair value	$	41,410	$	41,410	$	—	$	—
Available for sale:
U.S. Treasury securities	50,943		50,943		—		—
U.S. government agency securities	29,243		—		29,243		—
Obligations of states and political subdivisions	170,051		—		169,371		680
Residential mortgage-backed securities	1,254,786		—		1,254,786		—
Corporate and other debt securities	61,778		—		61,778		—
Total available for sale	1,566,801		50,943		1,515,178		680
Loans held for sale (2)	76,113		—		76,113		—
Other assets (3)	158,532		—		158,532		—
Total assets	$	1,842,856	$	92,353	$	1,749,823	$	680
Liabilities
Other liabilities (3)	$	43,926	$	—	$	43,926	$	—
Total liabilities	$	43,926	$	—	$	43,926	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans	$	39,075	$	—	$	—	$	39,075
Loan servicing rights	1,591		—		—		1,591
Foreclosed assets	10,807		—		—		10,807
Total	$	51,473	$	—	$	—	$	51,473

(1) Includes equity securities measured at net asset value (NAV) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy totaling $7.5 million at June 30, 2020.

(2) Represents residential mortgage loans originated for sale that are carried at fair value and had contractual unpaid principal balances totaling approximately $115.0 million and $74.5 million at June 30, 2020 and December 31, 2019, respectively.

(3) Derivative financial instruments are included in this category.

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 the valuation techniques described below apply to the unpaid principal balance, excluding any accrued interest or dividends at the measurement date. Interest income and expense are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.

Equity securities. The fair value of equity securities, primarily consists of one publicly traded mutual fund, is derived from quoted market prices in active markets. Equity securities also include Community Reinvestment Act (CRA) investment funds carried at quoted market prices if publicly traded, and at NAV if privately held.

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Available for sale securities. U.S. Treasury 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 securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume.

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 June 30, 2020 and December 31, 2019.

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 June 30, 2020 and December 31, 2019 based on the short duration these assets were held, and the high credit quality of these loans.

Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The fair values of Valley’s derivatives are determined using third-party prices that are based on discounted cash flow analysis 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 June 30, 2020 and December 31, 2019), 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 June 30, 2020 and December 31, 2019.

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 nonrecurring 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.

Collateral Dependent Loans. Collateral dependent loans are loans when foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and substantially all of the repayment is expected from the collateral. Collateral dependent loans are reported at the fair value of the underlying collateral. Collateral values are estimated using Level 3 inputs, consisting of individual third-party appraisals that may be adjusted based on certain discounting criteria. Certain real estate appraisals may be discounted based on specific market data by location and property type. At June 30, 2020, collateral dependent loans were individually re-measured and reported at fair value through direct loan charge-offs to the allowance for credit loan losses and/or a specific valuation allowance allocation based on the fair value of the underlying collateral. At June 30, 2020, collateral dependent

17

loans, primarily consisting of taxi medallion loans, with a total amortized cost of $110.9 million were reduced by specific valuation allowance allocations totaling $68.1 million to a reported total net carrying amount of $42.8 million.

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 June 30, 2020, the fair value model used a blended prepayment speed (stated as constant prepayment rates) of 17.0 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 June 30, 2020, certain loan servicing rights were re-measured at fair value totaling $14.4 million. See Note 9 for additional information.

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 using Level 3 inputs, consisting of a third-party appraisal adjusted to the lower of cost or estimated fair value, less estimated cost to sell. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If further declines in the estimated fair value of the asset occur, an asset is re-measured and reported at fair value through a write-down recorded in non-interest expense. There were no discount adjustments of the appraisals of foreclosed assets at June 30, 2020.

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.

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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 June 30, 2020 and December 31, 2019 were as follows: 

	Fair Value Hierarchy	June 30, 2020				December 31, 2019
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	388,753	$	388,753	$	256,264	$	256,264
Interest bearing deposits with banks	Level 1	1,521,572		1,521,572		178,423		178,423
Investment securities held to maturity:
U.S. Treasury securities	Level 1	138,268		147,415		138,352		144,113
U.S. government agency securities	Level 2	6,657		6,921		7,345		7,362
Obligations of states and political subdivisions	Level 2	466,836		481,736		500,705		513,607
Residential mortgage-backed securities	Level 2	1,451,581		1,495,599		1,620,119		1,629,572
Trust preferred securities	Level 2	37,335		29,900		37,324		31,382
Corporate and other debt securities	Level 2	32,750		33,305		32,250		32,684
Total investment securities held to maturity (1)		2,133,427		2,194,876		2,336,095		2,358,720
Net loans	Level 3	32,004,997		31,815,938		29,537,449		28,964,396
Accrued interest receivable	Level 1	122,807		122,807		105,637		105,637
Federal Reserve Bank and Federal Home Loan Bank stock (2)	Level 2	282,755		282,755		214,421		214,421
Financial liabilities
Deposits without stated maturities	Level 1	23,155,233		23,155,233		19,467,892		19,467,892
Deposits with stated maturities	Level 2	8,272,772		8,335,442		9,717,945		9,747,867
Short-term borrowings	Level 2	2,082,880		2,083,500		1,093,280		1,081,879
Long-term borrowings	Level 2	2,907,535		3,023,213		2,122,426		2,181,401
Junior subordinated debentures issued to capital trusts	Level 2	55,891		44,231		55,718		53,889
Accrued interest payable (3)	Level 1	19,148		19,148		33,066		33,066

(1) The carrying amount is presented gross without the allowance for credit losses.

(2) Included in other assets.

(3) Included in accrued expenses and other liabilities.

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Note 7. Investment Securities

Equity Securities

Equity securities carried at fair value totaled $54.4 million and $41.4 million at June 30, 2020 and December 31, 2019, respectively. Valley's equity securities consist mainly of one publicly traded money market mutual fund totaling $41.8 million and $41.4 million at June 30, 2020 and December 31, 2019, respectively. The remainder of the balance at June 30, 2020 represents investments made for CRA purposes.

Available for Sale Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of available for sale debt securities at June 30, 2020 and December 31, 2019 were as follows: 

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	50,940	$	1,681	$	—		$	52,621
U.S. government agency securities	26,778		1,174		(28		)	27,924
Obligations of states and political subdivisions:
Obligations of states and state agencies	65,620		1,477		(54		)	67,043
Municipal bonds	79,100		1,363		(1		)	80,462
Total obligations of states and political subdivisions	144,720		2,840		(55		)	147,505
Residential mortgage-backed securities	1,340,614		43,039		(927		)	1,382,726
Corporate and other debt securities	78,225		1,251		(864		)	78,612
Total investment securities available for sale	$	1,641,277	$	49,985	$	(1,874	)	$	1,689,388
December 31, 2019
U.S. Treasury securities	$	50,952	$	12	$	(21	)	$	50,943
U.S. government agency securities	28,982		280		(19		)	29,243
Obligations of states and political subdivisions:
Obligations of states and state agencies	78,116		540		(83		)	78,573
Municipal bonds	90,662		902		(86		)	91,478
Total obligations of states and political subdivisions	168,778		1,442		(169		)	170,051
Residential mortgage-backed securities	1,248,814		11,234		(5,262		)	1,254,786
Corporate and other debt securities	61,261		628		(111		)	61,778
Total investment securities available for sale	$	1,558,787	$	13,596	$	(5,582	)	$	1,566,801

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The age of unrealized losses and fair value of related securities available for sale at June 30, 2020 and December 31, 2019 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)
June 30, 2020
U.S. government agency securities	$	—	$	—		$	1,627	$	(28	)	$	1,627	$	(28	)
Obligations of states and political subdivisions:
Obligations of states and state agencies	24,913		(37		)	1,036		(17		)	25,949		(54		)
Municipal bonds	210		(1		)	—		—			210		(1		)
Total obligations of states and political subdivisions	25,123		(38		)	1,036		(17		)	26,159		(55		)
Residential mortgage-backed securities	101,162		(458		)	49,368		(469		)	150,530		(927		)
Corporate and other debt securities	27,194		(864		)	—		—			27,194		(864		)
Total	$	153,479	$	(1,360	)	$	52,031	$	(514	)	$	205,510	$	(1,874	)
December 31, 2019
U.S. Treasury securities	$	25,019	$	(21	)	$	—	$	—		$	25,019	$	(21	)
U.S. government agency securities	—		—			1,783		(19		)	1,783		(19		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	18,540		(21		)	8,755		(62		)	27,295		(83		)
Municipal bonds	—		—			13,177		(86		)	13,177		(86		)
Total obligations of states and political subdivisions	18,540		(21		)	21,932		(148		)	40,472		(169		)
Residential mortgage-backed securities	240,412		(1,194		)	282,798		(4,068		)	523,210		(5,262		)
Corporate and other debt securities	5,139		(111		)	—		—			5,139		(111		)
Total	$	289,110	$	(1,347	)	$	306,513	$	(4,235	)	$	595,623	$	(5,582	)

Within the available for sale debt securities portfolio, the total number of security positions in an unrealized loss position was 95 and 182 at June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, the fair value of available for sale debt securities that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $1.1 billion.

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The contractual maturities of available for sale debt securities at June 30, 2020 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.

	June 30, 2020
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	26,643	$	26,742
Due after one year through five years	97,248		99,501
Due after five years through ten years	104,076		106,154
Due after ten years	72,696		74,265
Residential mortgage-backed securities	1,340,614		1,382,726
Total investment securities available for sale	$	1,641,277	$	1,689,388

Actual maturities of available for sale 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 4.8 years at June 30, 2020.

Impairment Analysis of Available For Sale Debt Securities

Valley's available for sale debt securities portfolio includes corporate bonds and special revenue bonds, among other securities, which 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, including due to the economic effects of COVID-19.

Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. In performing an assessment of whether any decline in fair value is due to a credit loss, Valley considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level such as credit deterioration of the issuer or collateral underlying the security. In assessing the impairment, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. Valley also assesses the intent to sell the securities (as well as the likelihood of a near-term recovery). If Valley intends to sell an available for sale debt security or it is more likely than not that Valley will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged to the debt security’s fair value at the reporting date with any incremental impairment reported in earnings.

The obligations of states and political subdivisions classified as available for sale include special revenue bonds which had an aggregate amortized cost and fair value of $80.2 million and $81.8 million, respectively, at June 30, 2020. There were $56 thousand in gross unrealized losses associated with the special revenue bonds as of June 30, 2020. Approximately 54 percent of the special revenue bonds were issued by the states of (or municipalities within) Utah, Illinois, North Carolina and Florida. As part of Valley’s pre-purchase analysis and on-going quarterly assessment of impairment of the obligations of states and political subdivisions, our Credit Risk Management Department conducts a financial analysis and risk rating assessment of each security issuer based on the issuer’s most recently issued financial statements and other publicly available information. These investments are a mix of municipal bonds with investment grade ratings or non-rated revenue bonds paying in accordance with their 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

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that are commonly referred to as Tax Exempt Mortgage Securities (TEMS). Valley continues to monitor the special revenue bond portfolio as part of its quarterly impairment analysis.

Valley has evaluated available for sale debt securities that are in an unrealized loss position as of June 30, 2020 included in the table above and has determined that the declines in fair value are mainly attributable to 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 recognized no impairment during the three and six months ended June 30, 2020 and, as a result, there is no allowance for credit losses for available for sale debt securities at June 30, 2020.

During the three months ended June 30, 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 of 2019, as well as the issuer's default on its contractual payment. At June 30, 2020, the impaired security had an adjusted amortized cost and fair value of $680 thousand and $1.4 million, respectively.

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.

Held to Maturity Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of debt securities held to maturity at June 30, 2020 and December 31, 2019 were as follows: 

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	138,268	$	9,147	$	—		$	147,415
U.S. government agency securities	6,657		264		—			6,921
Obligations of states and political subdivisions:
Obligations of states and state agencies	280,187		8,569		(545		)	288,211
Municipal bonds	186,649		6,876		—			193,525
Total obligations of states and political subdivisions	466,836		15,445		(545		)	481,736
Residential mortgage-backed securities	1,451,581		44,327		(309		)	1,495,599
Trust preferred securities	37,335		48		(7,483		)	29,900
Corporate and other debt securities	32,750		556		(1		)	33,305
Total investment securities held to maturity	$	2,133,427	$	69,787	$	(8,338	)	$	2,194,876
December 31, 2019
U.S. Treasury securities	$	138,352	$	5,761	$	—		$	144,113
U.S. government agency securities	7,345		58		(41		)	7,362
Obligations of states and political subdivisions:
Obligations of states and state agencies	297,454		7,745		(529		)	304,670
Municipal bonds	203,251		5,696		(10		)	208,937
Total obligations of states and political subdivisions	500,705		13,441		(539		)	513,607
Residential mortgage-backed securities	1,620,119		14,803		(5,350		)	1,629,572
Trust preferred securities	37,324		39		(5,981		)	31,382
Corporate and other debt securities	32,250		454		(20		)	32,684
Total investment securities held to maturity	$	2,336,095	$	34,556	$	(11,931	)	$	2,358,720

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The age of unrealized losses and fair value of related debt securities held to maturity at June 30, 2020 and December 31, 2019 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)
June 30, 2020
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	10,544	$	(266	)	$	20,022	$	(279	)	$	30,566	$	(545	)
Total obligations of states and political subdivisions	10,544		(266		)	20,022		(279		)	30,566		(545		)
Residential mortgage-backed securities	37,394		(305		)	2,710		(4		)	40,104		(309		)
Trust preferred securities	—		—			28,499		(7,483		)	28,499		(7,483		)
Corporate and other debt securities	17,749		(1		)	—		—			17,749		(1		)
Total	$	65,687	$	(572	)	$	51,231	$	(7,766	)	$	116,918	$	(8,338	)
December 31, 2019
U.S. government agency securities	$	5,183	$	(41	)	$	—	$	—		$	5,183	$	(41	)
Obligations of states and political subdivisions:
Obligations of states and state agencies	11,178		(55		)	32,397		(474		)	43,575		(529		)
Municipal bonds	—		—			798		(10		)	798		(10		)
Total obligations of states and political subdivisions	11,178		(55		)	33,195		(484		)	44,373		(539		)
Residential mortgage-backed securities	307,885		(1,387		)	254,915		(3,963		)	562,800		(5,350		)
Trust preferred securities	—		—			29,990		(5,981		)	29,990		(5,981		)
Corporate and other debt securities	—		—			4,980		(20		)	4,980		(20		)
Total	$	324,246	$	(1,483	)	$	323,080	$	(10,448	)	$	647,326	$	(11,931	)

Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 26 and 82 at June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, 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 $1.3 billion.

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The contractual maturities of investments in debt securities held to maturity at June 30, 2020 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.  

	June 30, 2020
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	92,432	$	93,313
Due after one year through five years	171,778		179,833
Due after five years through ten years	203,555		215,200
Due after ten years	214,081		210,931
Residential mortgage-backed securities	1,451,581		1,495,599
Total investment securities held to maturity	$	2,133,427	$	2,194,876

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 3.9 years at June 30, 2020.

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Credit Quality Indicators

Valley monitors the credit quality of the held to maturity debt securities through the use of the most current credit ratings from external rating agencies. The following table summarizes the amortized cost of held to maturity debt securities by external credit rating at June 30, 2020 and December 31, 2019.

	AAA/AA/A Rated		BBB rated		Non-investment grade rated		Non-rated		Total
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	138,268	$	—	$	—	$	—	$	138,268
U.S. government agency securities	6,657		—		—		—		6,657
Obligations of states and political subdivisions:
Obligations of states and state agencies	239,811		—		5,686		34,690		280,187
Municipal bonds	182,140		—		—		4,509		186,649
Total obligations of states and political subdivisions	421,951		—		5,686		39,199		466,836
Residential mortgage-backed securities	1,451,581		—		—		—		1,451,581
Trust preferred securities	—		—		—		37,335		37,335
Corporate and other debt securities	—		5,000		—		27,750		32,750
Total investment securities held to maturity	$	2,018,457	$	5,000	$	5,686	$	104,284	$	2,133,427
December 31, 2019
U.S. Treasury securities	$	138,352	$	—	$	—	$	—	$	138,352
U.S. government agency securities	7,345		—		—		—		7,345
Obligations of states and political subdivisions:
Obligations of states and state agencies	248,533		5,722		—		43,199		297,454
Municipal bonds	202,642		—		—		609		203,251
Total obligations of states and political subdivisions	451,175		5,722		—		43,808		500,705
Residential mortgage-backed securities	1,620,119		—		—		—		1,620,119
Trust preferred securities	—		—		—		37,324		37,324
Corporate and other debt securities	—		5,000		—		27,250		32,250
Total investment securities held to maturity	$	2,216,991	$	10,722	$	—	$	108,382	$	2,336,095

Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations. At June 30, 2020, most of the obligations of states and political subdivisions were rated investment grade and the "non-rated" category included mostly TEMS securities secured by Ginnie Mae securities. Trust preferred securities consist of non-rated single-issuer securities, issued by bank holding companies. Corporate bonds consist of debt primarily issued by banks.

Allowance for Credit Losses for Held to Maturity Debt Securities

Valley has a zero loss expectation for certain securities within the held to maturity portfolio, and therefore it is not required to estimate an allowance for credit losses related to these securities under the CECL standard. After an evaluation of qualitative factors, Valley identified the following securities types which it believes qualify for this exclusion: U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds called TEMS.

To measure the expected credit losses on held to maturity debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third-party. Assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. The model is adjusted for a probability

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weighted multi-scenario economic forecast to estimate future credit losses. Valley uses 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 investment security. The economic forecast methodology and governance for debt securities is aligned with Valley's economic forecast used for the loan portfolio discussed in more detail in Note 8. Accrued interest receivable is excluded from the estimate of credit losses.

At June 30, 2020, held to maturity debt securities were carried net of allowance for credit losses totaling $1.6 million.

The provision was not material during three and six months ended June 30, 2020, respectively, and there were no net charge-offs of debt securities in the respective periods.

Note 8. Loans and Allowance for Credit Losses for Loans

The detail of the loan portfolio as of June 30, 2020 and December 31, 2019 was as follows: 

	June 30, 2020		December 31, 2019
	(in thousands)
Loans:
Commercial and industrial *	$	6,884,689	$	4,825,997
Commercial real estate:
Commercial real estate	16,571,877		15,996,741
Construction	1,721,352		1,647,018
Total commercial real estate loans	18,293,229		17,643,759
Residential mortgage	4,405,147		4,377,111
Consumer:
Home equity	471,115		487,272
Automobile	1,369,489		1,451,623
Other consumer	890,942		913,446
Total consumer loans	2,731,546		2,852,341
Total loans	$	32,314,611	$	29,699,208

* Includes $2.2 billion of loans originated under the SBA Paycheck Protection Program (PPP), net of unearned fees totaling $62.1 million at June 30, 2020.

Total loans includes net unearned discounts and deferred loan fees of $131.3 million at June 30, 2020 and net unearned premiums and deferred loan costs of $12.6 million at December 31, 2019. Net unearned discounts and deferred loan fees at June 30, 2020 include the non-credit discount on PCD loans and net unearned fees related to SBA PPP loans.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $104.2 million and $86.3 million at June 30, 2020 and December 31, 2019, respectively, and is presented separately in the consolidated statements of financial condition.

Valley transferred and sold approximately $30.0 million and $216.3 million of residential mortgage loans from the loan portfolio to loans held for sale during the six months ended June 30, 2020 and 2019, respectively. Excluding the loan transfers, there were no sales of loans from the held for investment portfolio during the six months ended June 30, 2020 and 2019.

Credit Risk Management

For all of its loan types, 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

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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. See Valley’s Annual Report on Form 10-K for the year ended December 31, 2019 for further details.

Credit Quality

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. Cash collections from non-accrual loans are generally applied against principal, and no interest income is recognized on these loans until the principal balance has been determined to be fully collectible.

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.

The following table presents past due, current and non-accrual loans without an allowance for credit losses by loan portfolio class (including PCD loans) at June 30, 2020.

	Past Due and Non-Accrual Loans
	30-59  Days  Past Due Loans		60-89  Days  Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Credit Losses
	(in thousands)
June 30, 2020
Commercial and industrial	$	6,206	$	4,178	$	5,220	$	130,876	$	146,480	$	6,738,209	$	6,884,689	$	13,501
Commercial real estate:
Commercial real estate	13,912		1,543		—		43,678		59,133		16,512,744		16,571,877		40,476
Construction	—		—		—		3,308		3,308		1,718,044		1,721,352		2,830
Total commercial real estate loans	13,912		1,543		—		46,986		62,441		18,230,788		18,293,229		43,306
Residential mortgage	35,263		4,169		3,812		25,776		69,020		4,336,127		4,405,147		13,717
Consumer loans:
Home equity	3,236		864		363		5,326		9,789		461,326		471,115		145
Automobile	8,254		2,171		1,173		1,621		13,219		1,356,270		1,369,489		—
Other consumer	1,472		751		546		—		2,769		888,173		890,942		—
Total consumer loans	12,962		3,786		2,082		6,947		25,777		2,705,769		2,731,546		145
Total	$	68,343	$	13,676	$	11,114	$	210,585	$	303,718	$	32,010,893	$	32,314,611	$	70,669

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The following table presents past due, non-accrual and current loans by loan portfolio class at December 31, 2019. At December 31, 2019, purchased credit-impaired (PCI) loans were excluded from past due and non-accrual loans reported because they continued to earn interest income from the accretable yield at the pool level. The PCI loan pools are accounted for as PCD loans (on a loan level basis with a related allowance for credit losses) under the CECL standard adopted at January 1, 2020 and reported in the past due loans and non-accrual loans in the tables above at June 30, 2020.

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89  Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		PCI Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	11,700	$	2,227	$	3,986	$	68,636	$	86,549	$	4,057,434	$	682,014
Commercial real estate:
Commercial real estate	2,560		4,026		579		9,004		16,169		10,886,724		5,093,848
Construction	1,486		1,343		—		356		3,185		1,492,532		151,301
Total commercial real estate loans	4,046		5,369		579		9,360		19,354		12,379,256		5,245,149
Residential mortgage	17,143		4,192		2,042		12,858		36,235		3,760,707		580,169
Consumer loans:
Home equity	1,051		80		—		1,646		2,777		373,243		111,252
Automobile	11,482		1,581		681		334		14,078		1,437,274		271
Other consumer	1,171		866		30		224		2,291		900,411		10,744
Total consumer loans	13,704		2,527		711		2,204		19,146		2,710,928		122,267
Total	$	46,593	$	14,315	$	7,318	$	93,058	$	161,284	$	22,908,325	$	6,629,599

Credit quality indicators. Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as "Pass," "Special Mention," "Substandard," "Doubtful," and "Loss." Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses, and, therefore, not presented in the table below. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories but pose weaknesses that deserve management’s close attention are deemed Special Mention. Loans rated as Pass do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants.

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The following table presents the internal loan classification risk by loan portfolio class by origination year (including PCD loans) based on the most recent analysis performed at June 30, 2020:

	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2020	2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Commercial and industrial
Risk Rating:
Pass	$	2,680,515	$	697,134	$	644,080	$	306,259	$	169,439	$	422,608	$	1,705,273	$	466	$	6,625,774
Special Mention	77		9,522		1,408		10,669		11,138		15,595		45,635		88		94,132
Substandard	5,963		7,356		1,269		2,155		3,331		13,704		13,040		57		46,875
Doubtful	—		1,340		—		17,577		—		97,769		1,222		—		117,908
Total commercial and industrial	$	2,686,555	$	715,352	$	646,757	$	336,660	$	183,908	$	549,676	$	1,765,170	$	611	$	6,884,689
Commercial real estate
Risk Rating:
Pass	$	1,589,407	$	3,175,366	$	2,480,315	$	2,059,141	$	1,957,684	$	4,775,400	$	198,836	$	12,031	$	16,248,180
Special Mention	—		18,913		31,799		18,620		32,853		73,609		3,496		—		179,290
Substandard	4,783		100		10,855		18,186		5,636		102,424		—		—		141,984
Doubtful	—		—		—		811		—		1,612		—		—		2,423
Total commercial real estate	$	1,594,190	$	3,194,379	$	2,522,969	$	2,096,758	$	1,996,173	$	4,953,045	$	202,332	$	12,031	$	16,571,877
Construction
Risk Rating:
Pass	$	43,118	$	135,181	$	160,452	$	28,928	$	49,000	$	99,014	$	1,186,010	$	—	$	1,701,703
Special Mention	—		—		—		—		9,774		435		6,114		—		16,323
Substandard	—		—		—		—		2,405		921		—		—		3,326
Total construction	$	43,118	$	135,181	$	160,452	$	28,928	$	61,179	$	100,370	$	1,192,124	$	—	$	1,721,352

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For residential mortgages, automobile, home equity and other consumer loan portfolio classes, 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 amortized cost in those loan classes (including PCD loans) based on payment activity by origination year as of June 30, 2020.

	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2020	2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	414,014	$	827,300	$	851,792	$	701,366	$	426,897	$	1,097,287	$	73,757	$	—	$	4,392,413
90 days or more past due	—		1,316		2,973		3,880		4,565		—		—		—		12,734
Total residential mortgage	$	414,014	$	828,616	$	854,765	$	705,246	$	431,462	$	1,097,287	$	73,757	$	—	$	4,405,147
Consumer loans
Home equity
Performing	$	3,816	$	12,678	$	15,090	$	11,387	$	6,941	$	18,823	$	347,142	$	53,086	$	468,963
90 days or more past due	—		—		—		—		25		321		1,046		760		2,152
Total home equity	3,816		12,678		15,090		11,387		6,966		19,144		348,188		53,846		471,115
Automobile
Performing	184,095		524,849		338,665		200,947		75,553		42,550		—		—		1,366,659
90 days or more past due	49		921		824		620		197		219		—		—		2,830
Total automobile	184,144		525,770		339,489		201,567		75,750		42,769		—		—		1,369,489
Other Consumer
Performing	910		6,286		13,232		1,306		1,723		12,179		854,340		408		890,384
90 days or more past due	—		15		—		—		—		4		539		—		558
Total other consumer	910		6,301		13,232		1,306		1,723		12,183		854,879		408		890,942
Total Consumer	$	188,870	$	544,749	$	367,811	$	214,260	$	84,439	$	74,096	$	1,203,067	$	54,254	$	2,731,546

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: 

Credit exposure— by internally assigned risk rating			Special						Total Non-PCI
	Pass		Mention		Substandard		Doubtful		Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	3,982,453	$	33,718	$	66,511	$	61,301	$	4,143,983
Commercial real estate	10,781,587		77,884		42,560		862		10,902,893
Construction	1,487,877		7,486		354		—		1,495,717
Total	$	16,251,917	$	119,088	$	109,425	$	62,163	$	16,542,593

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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 is presented above, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2019:

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2019
Residential mortgage	$	3,784,084	$	12,858	$	3,796,942
Home equity	374,374		1,646		376,020
Automobile	1,451,018		334		1,451,352
Other consumer	902,478		224		902,702
Total	$	6,511,954	$	15,062	$	6,527,016

The following table summarizes information pertaining to loans that were identified as PCI loans by class based on individual loan payment activity as of December 31, 2019:  

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	653,997	$	28,017	$	682,014
Commercial real estate	5,065,388		28,460		5,093,848
Construction	148,692		2,609		151,301
Residential mortgage	571,006		9,163		580,169
Consumer	120,356		1,911		122,267
Total	$	6,559,439	$	70,160	$	6,629,599

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). At the adoption of ASU 2016-13, Valley was not required to reassess whether modifications to individual PCI loans prior to January 1, 2020 met the TDR loan criteria.

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 $53.9 million and $73.0 million as of June 30, 2020 and December 31, 2019, respectively. Non-performing TDRs totaled $85.6 million and $65.1 million as of June 30, 2020 and December 31, 2019, respectively.

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The following table presents the pre- and post-modification amortized cost of loans by loan class modified as TDRs (excluding PCI loans prior to the adoption of ASU 2016-13) during the three and six months ended June 30, 2020 and 2019. Post-modification amounts are presented as of June 30, 2020 and 2019.

	Three Months Ended June 30,
	2020					2019
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount
	($ in thousands)
Commercial and industrial	4	$	9,052	$	7,047	17	$	14,663	$	14,187
Commercial real estate:
Commercial real estate	1	885		900		1	3,067		3,067
Construction	2	435		218		—	—		—
Total commercial real estate	3	1,320		1,118		1	3,067		3,067
Residential mortgage	—	—		—		1	155		155
Total	7	$	10,372	$	8,165	19	$	17,885	$	17,409

	Six Months Ended June 30,
	2020					2019
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount
	($ in thousands)
Commercial and industrial	20	$	22,196	$	19,674	53	$	38,216	$	37,248
Commercial real estate:
Commercial real estate	2	4,748		4,762		2	4,665		4,665
Construction	2	435		218		—	—		—
Total commercial real estate	4	5,183		4,980		2	4,665		4,665
Residential mortgage	—	—		—		1	155		155
Total	24	$	27,379	$	24,654	56	$	43,036	$	42,068

The total TDRs presented in the above table had allocated reserves for loan losses of $8.4 million and $11.7 million at June 30, 2020 and 2019, respectively. There were $2.9 million and $3.7 million of partial charge-offs related to TDRs for the three and six months ended June 30, 2020, respectively. There were $1.1 million and $2.0 million of partial charge-offs related to TDRs for the three and six months ended June 30, 2019, respectively. Valley did not extend any commitments to lend additional funds to borrowers whose loans have been modified as TDRs during the three and six months ended June 30, 2020 and 2019.

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Loans modified as TDRs (excluding PCI loan modifications prior to the adoption of ASU 2016-13) within the previous 12 months and for which there was a payment default (90 or more days past due) for the three and six months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30,
	2020			2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Amortized Cost		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	20	$	14,986	18	$	12,322
Commercial real estate	—	—		1	383
Residential mortgage	1	220		—	—
Consumer	2	204		—	—
Total	23	$	15,410	19	$	12,705

	Six Months Ended June 30,
	2020			2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Amortized Cost		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	20	$	14,986	18	$	12,322
Commercial real estate	—	—		1	383
Residential mortgage	1	220		2	215
Consumer	2	204		1	18
Total	23	$	15,410	22	$	12,938

In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that were insignificant, when requested by customers. These modifications complied with the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide temporary payment relief to those borrowers directly impacted by COVID-19 who were not more than 30 days past due as of December 31, 2019. Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days, for a maximum of 180 days on a cumulative and successive basis. As of June 30, 2020, Valley had approximately 7,000 loans totaling approximately $3.1 billion in their contractual deferred payment period in accordance with short-term modification terms. Under the applicable guidance, none of these loans were considered TDRs as of June 30, 2020.

Loans in Process of Foreclosure. Other real estate owned (OREO) totaled $8.3 million and $9.4 million at June 30, 2020 and December 31, 2019, respectively. OREO included foreclosed residential real estate properties totaling $2.5 million and $2.1 million at June 30, 2020 and December 31, 2019, respectively. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $1.8 million and $2.8 million at June 30, 2020 and December 31, 2019, respectively.

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Allowance for Credit Losses for Loans

The allowance for credit losses for loans under the new CECL standard adopted on January 1, 2020, consisted of: (1) the allowance for loan losses and (2) the allowance for unfunded credit commitments. Prior periods reflect the allowance for credit losses for loans under the incurred loss model.

The following table summarizes the allowance for credit losses for loans at June 30, 2020 and December 31, 2019: 

	June 30, 2020		December 31, 2019
	(in thousands)
Components of allowance for credit losses for loans:
Allowance for loan losses	$	309,614	$	161,759
Allowance for unfunded credit commitments	10,109		2,845
Total allowance for credit losses for loans	$	319,723	$	164,604

The following table summarizes the provision for credit losses for loans for the periods indicated:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Components of provision for credit losses for loans:
Provision for loan losses	$	41,025	$	3,706		$	74,876	$	11,562
Provision for unfunded credit commitments	90		(1,606		)	163		(1,462		)
Total provision for credit losses for loans	$	41,115	$	2,100		$	75,039	$	10,100

Allowance for Loan Losses

The allowance for loan losses is a valuation account that is deducted from loans' amortized cost basis to present the net amount expected to be collected on loans. Valley's methodology to establish the allowance for loan losses has two basic components: (1) a collective (pooled) reserve component for estimated lifetime expected credit losses for pools of loans that share similar risk characteristics and (2) an individual reserve component for loans that do not share common risk characteristics.

Reserves for loans that share common risk characteristics. In estimating the component of the allowance on a collective basis, Valley uses a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by generating probability of default and loss given default metrics. The metrics are based on the migration of loans from performing to loss by credit quality rating or delinquency categories using historical life-of-loan analysis periods for each loan portfolio pool, and the severity of loss, based on the aggregate net lifetime losses incurred. The model's expected losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) lending policies and procedures, (ii) current business conditions and economic developments that affect the loan collectability, (iii) concentration risks by size, type, and geography, (iv) the potential volume and migration of loan forbearances to non-performing status, and (v) the effect of external factors such as legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Valley utilizes 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 forecasts consist of a multi-scenario economic forecast model to estimate future credit losses that is governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. Valley has identified and selected key variables that most closely correlated to our historical credit performance, which include: GDP, unemployment and the Case-Shiller Home Price Index.

35

Reserves for loans that that do not share common risk characteristics. Valley measures specific reserves for individual loans that do not share common risk characteristics with other loans, consisting of collateral dependent, TDR, and expected TDR loans, based on the amount of lifetime expected credit losses calculated on those loans and charge-offs of those amounts determined to be uncollectible. Factors considered by Valley in measuring the extent of expected credit loss include payment status, collateral value, borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest payments when due. 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 the allowance for credit losses. The effective interest rate used to discount expected cash flows is adjusted to incorporate expected prepayments, if applicable.

When Valley determines that foreclosure is probable, collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) of each loan’s underlying collateral resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process. Valley elected a practical expedient to use the estimated current fair value (less estimated selling costs) of the collateral to measure expected credit losses on collateral dependent loans when foreclosure is not probable.

The following table presents collateral dependent loans by class as of June 30, 2020:

	June 30, 2020
	(in thousands)
Commercial and industrial	$	124,323
Commercial real estate:
Commercial real estate	51,386
Construction	2,830
Total commercial real estate loans	54,216
Residential mortgage	15,581
Home equity	276
Total	$	194,396

Commercial and industrial loans are primarily collateralized by taxi medallions in the table above. Commercial real estate loans are collateralized by real estate and construction loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Residential and home equity loans are collateralized by residential real estate.

Allowance for Unfunded Credit Commitments

The allowance for unfunded credit commitments generally consists of undisbursed non-cancellable lines of credit, new loan commitments and commercial letters of credit valued using a similar methodology as used for loans. Management's estimate of expected losses inherent in these off-balance sheet credit exposures also incorporates estimated usage factors over the commitment's contractual period or an expected pull-through rate for new loan commitments. The allowance for unfunded credit commitments totaling $10.1 million at June 30, 2020 is included in accrued expenses and other liabilities on the consolidated statements of financial condition.

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The following table details the activity in the allowance for loan losses by loan portfolio segment for three and six months ended June 30, 2020 and 2019: 

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Three Months Ended June 30, 2020
Allowance for loan losses:
Beginning balance	$	127,437		$	111,585		$	29,456		$	14,864		$	283,342
Loans charged-off	(14,024		)	(27		)	(5		)	(2,601		)	(16,657		)
Charged-off loans recovered	799			51			545			509			1,904
Net (charge-offs) recoveries	(13,225		)	24			540			(2,092		)	(14,753		)
Provision for loan losses	17,827			20,093			(366		)	3,471			41,025
Ending balance	$	132,039		$	131,702		$	29,630		$	16,243		$	309,614
Three Months Ended June 30, 2019
Allowance for losses:
Beginning balance	$	94,630		$	47,762		$	5,139		$	6,850		$	154,381
Loans charged-off	(3,073		)	—			—			(1,752		)	(4,825		)
Charged-off loans recovered	1,195			22			9			617			1,843
Net (charge-offs) recoveries	(1,878		)	22			9			(1,135		)	(2,982		)
Provision for loan losses	1,632			1,194			71			809			3,706
Ending balance	$	94,384		$	48,978		$	5,219		$	6,524		$	155,105

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Six Months Ended June 30, 2020
Allowance for loan losses:
Beginning balance	$	104,059		$	45,673		$	5,060		$	6,967		$	161,759
Impact of ASU 2016-13 adoption*	15,169			49,797			20,575			6,990			92,531
Loans charged-off	(17,384		)	(71		)	(341		)	(5,166		)	(22,962		)
Charged-off loans recovered	1,368			144			595			1,303			3,410
Net (charge-offs) recoveries	(16,016		)	73			254			(3,863		)	(19,552		)
Provision for loan losses	28,827			36,159			3,741			6,149			74,876
Ending balance	$	132,039		$	131,702		$	29,630		$	16,243		$	309,614
Six Months Ended June 30, 2019
Allowance for losses:
Beginning balance	$	90,956		$	49,650		$	5,041		$	6,212		$	151,859
Loans charged-off	(7,355		)	—			(15		)	(3,780		)	(11,150		)
Charged-off loans recovered	1,678			43			10			1,103			2,834
Net (charge-offs) recoveries	(5,677		)	43			(5		)	(2,677		)	(8,316		)
Provision for loan losses	9,105			(715		)	183			2,989			11,562
Ending balance	$	94,384		$	48,978		$	5,219		$	6,524		$	155,105

* Includes a $61.6 million reclassification adjustment representing the estimated expected credit losses for PCD loans.

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The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the allowance measurement methodology at June 30, 2020 and December 31, 2019.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
June 30, 2020
Allowance for loan losses:
Individually evaluated for credit losses	$	69,333	$	1,237	$	430	$	498	$	71,498
Collectively evaluated for credit losses	62,706		130,465		29,200		15,745		238,116
Total	$	132,039	$	131,702	$	29,630	$	16,243	$	309,614
Loans:
Individually evaluated for credit losses	$	138,120	$	77,914	$	22,148	$	3,096	$	241,278
Collectively evaluated for credit losses	6,746,569		18,215,315		4,382,999		2,728,450		32,073,333
Total	$	6,884,689	$	18,293,229	$	4,405,147	$	2,731,546	$	32,314,611
December 31, 2019
Allowance for loan losses:
Individually evaluated for credit losses	$	36,662	$	1,338	$	518	$	58	$	38,576
Collectively evaluated for credit losses	67,397		44,335		4,542		6,909		123,183
Total	$	104,059	$	45,673	$	5,060	$	6,967	$	161,759
Loans:
Individually evaluated for credit losses	$	100,860	$	51,242	$	10,689	$	853	$	163,644
Collectively evaluated for credit losses	4,043,123		12,347,368		3,786,253		2,729,221		22,905,965
Loans acquired with discounts related to credit quality	682,014		5,245,149		580,169		122,267		6,629,599
Total	$	4,825,997	$	17,643,759	$	4,377,111	$	2,852,341	$	29,699,208

Impaired loans. Impaired loans disclosures presented below as of December 31, 2019 represent requirements prior to the adoption of ASU No. 2016-13 on January 1, 2020. Impaired loans, consisting of non-accrual commercial and industrial loans, commercial real estate loans over $250 thousand and all loans which were modified in troubled debt restructurings, were individually evaluated for impairment. PCI loans were not classified as impaired loans because they are accounted for on a pool basis.

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

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
December 31, 2019
Commercial and industrial	$	14,617	$	86,243	$	100,860	$	114,875	$	36,662
Commercial real estate:
Commercial real estate	26,046		24,842		50,888		51,258		1,338
Construction	354		—		354		354		—
Total commercial real estate loans	26,400		24,842		51,242		51,612		1,338
Residential mortgage	5,836		4,853		10,689		11,800		518
Consumer loans:
Home equity	366		487		853		956		58
Total consumer loans	366		487		853		956		58
Total	$	47,219	$	116,425	$	163,644	$	179,243	$	38,576

Purchased Credit-Impaired Loans

The table below includes disclosure requirements prior to the adoption of ASU No. 2016-13 on January 1, 2020, and presents the changes in the accretable yield for PCI loans during the three and six months ended June 30, 2019:

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
	(in thousands)
Balance, beginning of period	$	890,771		$	875,958
Accretion	(55,014		)	(108,506		)
Net increase in expected cash flows	18,130			86,435
Balance, end of period	$	853,887		$	853,887

Note 9. Goodwill and Other Intangible Assets

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
	(in thousands)
Balance at December 31, 2019	$	21,218	$	306,572	$	825,767	$	220,068	$	1,373,625
Goodwill from business combinations	—		121		1,654		9		1,784
Balance at June 30, 2020	$	21,218	$	306,693	$	827,421	$	220,077	$	1,375,409

* 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.

During the six months ended June 30, 2020, Valley recorded additional goodwill as set forth in the table above related to the Oritani acquisition, reflecting the effect of the combined adjustments to the fair value of certain loans and deferred tax assets as of the acquisition date. Certain estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date. See Note 2 for details.

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During the second quarter 2020, Valley performed the annual goodwill impairment test at its normal assessment date. As a result, there was no charge for impairment of goodwill during the three and six months ended June 30, 2020 and 2019.

The following table summarizes other intangible assets as of June 30, 2020 and December 31, 2019: 

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
June 30, 2020
Loan servicing rights	$	98,127	$	(74,624	)	$	(825	)	$	22,678
Core deposits	101,160		(47,118		)	—			54,042
Other	3,945		(2,744		)	—			1,201
Total other intangible assets	$	203,232	$	(124,486	)	$	(825	)	$	77,921
December 31, 2019
Loan servicing rights	$	94,827	$	(70,095	)	$	(47	)	$	24,685
Core deposits	101,160		(40,384		)	—			60,776
Other	3,945		(2,634		)	—			1,311
Total other intangible assets	$	199,932	$	(113,113	)	$	(47	)	$	86,772

Loan servicing rights are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets over the period of the economic life of the assets arising from 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. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net impairment charges on its loan servicing rights totaling $669 thousand and $778 thousand for the three and six months ended June 30, 2020, respectively. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $107 thousand and $83 thousand for the three and six months ended June 30, 2019, respectively. See the “Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis” section of Note 6 for additional information regarding the fair valuation.

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 and covenants not to compete, which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of approximately 7.6 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and six months ended June 30, 2020 and 2019.

The following table presents the estimated future amortization expense of other intangible assets for the remainder of 2020 through 2024: 

	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2020	$	5,161	$	6,629	$	110
2021	4,179		11,607		206
2022	3,226		9,876		191
2023	2,483		8,146		131
2024	1,931		6,537		117

Valley recognized amortization expense on other intangible assets, including net impairment (or recovery of impairment) charges on loan servicing rights, totaling approximately $6.7 million and $4.2 million for the three

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months ended June 30, 2020 and 2019, respectively, and $12.2 million and $8.5 million for the six months ended June 30, 2020 and 2019, respectively.

Note 10. Borrowed Funds

Short-Term Borrowings

Short-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following: 

	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances	$	1,235,000	$	940,000
Federal funds purchased	678,900		—
Securities sold under agreements to repurchase	168,980		153,280
Total short-term borrowings	$	2,082,880	$	1,093,280

The contractual weighted average interest rate for short-term borrowings was 0.37 percent and 1.68 percent at June 30, 2020 and December 31, 2019, respectively. Short-term FHLB advances totaling $500 million were hedged with cash flow interest rate swaps during the six months ended June 30, 2020. See Note 12 for additional details.

Long-Term Borrowings

Long-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following: 

	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances, net (1)	$	2,153,052	$	1,480,012
Subordinated debt, net (2)	404,455		292,414
Securities sold under agreements to repurchase	350,000		350,000
Other	28		—
Total long-term borrowings	$	2,907,535	$	2,122,426

(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $1.2 million and $2.8 million at June 30, 2020 and December 31, 2019, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $2.9 million and $1.2 million at June 30, 2020 and December 31, 2019, respectively.

FHLB advances. Long-term FHLB advances had a weighted average interest rate of 2.13 percent and 2.23 percent at June 30, 2020 and December 31, 2019, respectively. 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.

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The long-term FHLB advances at June 30, 2020 are scheduled for contractual balance repayments as follows: 

Year	Amount
	(in thousands)
2020	$	30,000
2021	994,769
2022	121,420
2023	428,164
2024	300,000
Thereafter	279,931
Total long-term FHLB advances	$	2,154,284

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.

Securities sold under agreements to repurchase (repos). The long-term repos had a weighted average interest rate of 2.88 percent and 1.94 percent at June 30, 2020 and December 31, 2019, respectively.

The long-term repos at June 30, 2020 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2021	$	300,000
2022	50,000
Total long-term securities sold under agreements to repurchase	$	350,000

Subordinated debt. On June 5, 2020, Valley issued $115.0 million of 5.25 percent Fixed-to-Floating Rate subordinated notes due June 15, 2030. Interest on the subordinated notes during the initial five year term through June 15, 2025 is payable semi-annually on June 15 and December 15. Thereafter, interest is expected to be set based on Three-Month Term SOFR plus 514 basis points and paid quarterly through maturity of the notes. The subordinated notes had a carrying value of $113.1 million at June 30, 2020, net of debt issuance costs.

Valley also had the following subordinated debt outstanding at June 30, 2020:

• $100 million of 4.55 percent subordinated notes due July 30, 2025 with no call dates or prepayments allowed unless certain conditions exist;

• $125 million of 5.125 percent subordinated notes due September 27, 2023 with no call dates or prepayments allowed, unless certain conditions exist; and

• $60 million of 6.25 percent subordinated notes due April 1, 2026 and callable beginning April 1, 2021.

See Note 11 in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019 for further details.

Note 11. 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.

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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 June 30, 2020, 2.5 million shares of common stock were available for issuance under the 2016 Stock Plan. The essential features of each award are described in the award agreement relating to that award. The grant, exercise, vesting, settlement or payment of an award may be based upon the fair value of Valley’s common stock on the last sale price reported for Valley’s common stock on such date or the last sale price reported preceding such date, except for performance-based awards with a market 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.

Restricted Stock Units (RSUs). Valley granted 142 thousand and 92 thousand of time-based RSUs during the three months ended June 30, 2020 and 2019, respectively, and 1.2 million and 826 thousand during the six months ended June 30, 2020 and 2019, respectively. Generally, time-based RSUs vest ratably one-third each year over a three-year vesting period. The average grant date fair value of the RSUs granted during the six months ended June 30, 2020 and 2019 was $10.48 per share and $10.40 per share, respectively.

Valley granted 589 thousand and 532 thousand of performance-based RSUs to certain executive officers for the six months ended June 30, 2020 and 2019, respectively. The performance-based RSU awards include RSUs with vesting conditions based upon certain levels of growth in Valley's tangible book value per share plus dividends and RSUs with vesting conditions based upon Valley's total shareholder return as compared to our peer group. The RSUs “cliff” vest after three years based on the cumulative performance of Valley during that time period. The RSUs earn dividend equivalents (equal to cash dividends paid on Valley's common stock) over the applicable performance period. Dividend equivalents are accumulated and paid to the grantee at the vesting date or forfeited if the performance conditions are not met. The grant date fair value of the RSUs granted during the six months ended June 30, 2020 and 2019 was $10.82 per share and $10.43 per share, respectively.

Valley recorded total stock-based compensation expense of $4.2 million for both the three months ended June 30, 2020 and 2019, and $8.2 million and $8.3 million for the six months ended June 30, 2020 and 2019, respectively. The fair values of stock awards are expensed over the shorter of the vesting or required service period. As of June 30, 2020, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $25.4 million and will be recognized over an average remaining vesting period of 2.0 years.

Note 12. Derivative Instruments and Hedging Activities

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.

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 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, respectively.

During the six months ended June 30, 2020, Valley entered into new interest rate swap agreements designated as cash flow hedges with a total notional amount of $900 million. The swaps are intended to hedge the changes in cash flows associated with certain FHLB advances and brokered deposits. Valley is required to pay fixed-rates of interest ranging from 0.46 percent to 0.67 percent and receives variable rates of interest that reset quarterly based on three-month LIBOR. Expiration dates for the swaps range from April 2021 to March 2022.

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 has used 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

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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.

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 June 30, 2020, Valley had 22 credit swaps with an aggregate notional amount of $166.4 million related to risk participation agreements. 

At June 30, 2020, Valley had two “steepener” swaps, each with a current notional amount of $10.4 million where the receive rate on the swap mirrors the pay rate on the brokered deposits and 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 the 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 rate on Valley's commitments to fund the loans as well as on its portfolio of mortgage loans held for sale.

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Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows: 

	June 30, 2020						December 31, 2019
	Fair Value						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 swaps	$	—	$	4,722	$	1,030,000	$	—	$	1,484	$	180,000
Fair value hedge interest rate swaps	—		147		7,147		—		229		7,281
Total derivatives designated as hedging instruments	$	—	$	4,869	$	1,037,147	$	—	$	1,713	$	187,281
Derivatives not designated as hedging instruments:
Interest rate swaps and embedded derivatives	$	467,606	$	161,997	$	7,293,947	$	158,382	$	42,020	$	4,113,106
Mortgage banking derivatives	669		3,407		558,379		150		193		142,760
Total derivatives not designated as hedging instruments	$	468,275	$	165,404	$	7,852,326	$	158,532	$	42,213	$	4,255,866

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 June 30, 2020 and December 31, 2019.

Gains (losses) included in the consolidated statements of income and other comprehensive income, on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows were as follows: 

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense	$	438		$	(383	)	$	(177	)	$	(673	)
Amount of loss recognized in other comprehensive income	(1,773		)	(962		)	(3,253		)	(1,512		)

The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $5.9 million and $3.7 million at June 30, 2020 and December 31, 2019, 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 $4.5 million will be reclassified as an increase to interest expense over the next 12 months.

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Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Derivative - interest rate swaps:
Interest income	$	71		$	49		$	82		$	73
Hedged item - loans:
Interest income	$	(71	)	$	(49	)	$	(82	)	$	(73	)

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 June 30, 2020 and December 31, 2019.

Line Item in the Statement of Financial Condition 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
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
	(in thousands)
Loans	$	7,294	$	7,510	$	147	$	229

The net losses (gains) included in the consolidated statements of income related to derivative instruments not designated as hedging instruments were as follows: 

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Non-designated hedge interest rate swaps and credit derivatives
Other non-interest expense	$	1,416	$	(347	)	$	1,505	$	(757	)

Other non-interest income included fee income related to non-designated hedge derivative interest rate swaps (not designated as hedging instruments) executed with commercial loan customers totaling $14.7 million and $5.4 million for the three months ended June 30, 2020 and 2019, respectively, and $28.9 million and $9.5 million for the six months ended June 30, 2020 and 2019, respectively.

Credit Risk Related Contingent Features. By using derivatives, Valley is exposed to credit risk if counterparties to the derivative contracts do not perform as expected. Management attempts to minimize counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral where appropriate. Credit risk exposure associated with derivative contracts is managed at Valley in conjunction with Valley’s consolidated counterparty risk management process. Valley’s counterparties and the risk limits monitored by management are periodically reviewed and approved by the Board of Directors.

Valley has agreements with its derivative counterparties providing that if Valley defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Valley could also be declared in default on its derivative counterparty agreements. Additionally, Valley has an agreement with several of its derivative counterparties that contains provisions that require Valley’s debt to maintain an investment grade credit rating from each of the major credit rating agencies from which it receives a credit rating. If Valley’s

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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 June 30, 2020, Valley was in compliance with all of the provisions of its derivative counterparty agreements. As of June 30, 2020, 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 $176.7 million. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties.

Note 13. Balance Sheet Offsetting

Certain financial instruments, including interest rate swap derivatives 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 (i.e., the threshold for posting collateral is reduced to zero, subject to certain minimum transfer amounts). 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 June 30, 2020 and December 31, 2019.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments				Cash Collateral				Net Amount
	(in thousands)
June 30, 2020
Assets:
Interest rate swaps	$	467,606	$	—	$	467,606	$	—			$	—			$	467,606
Liabilities:
Interest rate swaps	$	166,866	$	—	$	166,866	$	—			$	(166,866	)		$	—
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—				—
Total	$	516,866	$	—	$	516,866	$	(350,000	)		$	(166,866	)		$	—
December 31, 2019
Assets:
Interest rate swaps	$	158,382	$	—	$	158,382	$	(118	)		$	—			$	158,264
Liabilities:
Interest rate swaps	$	43,733	$	—	$	43,733	$	(118	)		$	(16,881	)		$	26,734
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—			*	—
Total	$	393,733	$	—	$	393,733	$	(350,118	)		$	(16,881	)		$	26,734

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

Note 14. Tax Credit Investments

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 (CRA). Valley’s investments in these entities generate a return primarily through the realization of federal income tax

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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 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.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	22,874	$	25,049
Other tax credit investments, net	51,569		59,081
Total tax credit investments, net	$	74,443	$	84,130
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	1,402	$	1,539
Unfunded other tax credit commitments	1,139		1,139
Total unfunded tax credit commitments	$	2,541	$	2,678

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the three and six months ended June 30, 2020 and 2019: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	1,393	$	1,708	$	2,627	$	3,421
Other tax credit investment credits and tax benefits	2,540		2,158		3,840		4,961
Total reduction in income tax expense	$	3,933	$	3,866	$	6,467	$	8,382
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	537	$	593	$	1,091	$	1,266
Affordable housing tax credit investment impairment losses	665		794		1,083		1,524
Other tax credit investment losses	679		2,509		1,223		3,496
Other tax credit investment impairment losses	1,535		967		3,247		5,750
Total amortization of tax credit investments recorded in non-interest expense	$	3,416	$	4,863	$	6,644	$	12,036

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Note 15. Business Segments

Valley has four business segments that it monitors and reports on to manage Valley’s business operations. These segments are consumer lending, commercial lending, investment management, and corporate and other adjustments. Valley’s reportable segments have been determined based upon its internal structure of operations and lines of business. Each business segment is reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Expenses related to the branch network, all other components of retail banking, along with the back office departments of our subsidiary bank are allocated from the corporate and other adjustments segment to each of the other three business segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each business segment utilizing a transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets and/or liabilities 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.

The following tables represent the financial data for Valley’s four business segments for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,214,368		$	24,826,832		$	5,737,187		$	—		$	37,778,387
Interest income	$	66,807		$	255,152		$	27,623		$	(1,057	)	$	348,525
Interest expense	11,469			40,640			9,728			4,129			65,966
Net interest income (loss)	55,338			214,512			17,895			(5,186		)	282,559
Provision for credit losses	3,106			38,009			41			—			41,156
Net interest income (loss) after provision for credit losses	52,232			176,503			17,854			(5,186		)	241,403
Non-interest income	17,175			16,172			5,823			5,660			44,830
Non-interest expense	20,440			23,250			642			112,834			157,166
Internal expense transfer	19,406			66,858			15,505			(101,769		)	—
Income (loss) before income taxes	$	29,561		$	102,567		$	7,530		$	(10,591	)	$	129,067
Return on average interest earning assets (pre-tax)	1.64		%	1.65		%	0.52		%	N/A			1.37		%

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	Three Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,756,322		$	18,796,093		$	4,324,969		$	—		$	29,877,384
Interest income	$	67,617		$	229,366		$	31,966		$	(1,207	)	$	327,742
Interest expense	23,428			65,141			14,994			3,945			107,508
Net interest income (loss)	44,189			164,225			16,972			(5,152		)	220,234
Provision for credit losses	885			1,215			—			—			2,100
Net interest income (loss) after provision for credit losses	43,304			163,010			16,972			(5,152		)	218,134
Non-interest income	13,037			7,688			2,560			4,318			27,603
Non-interest expense	18,392			26,324			216			96,805			141,737
Internal expense transfer	19,291			53,722			12,399			(85,412		)	—
Income (loss) before income taxes	$	18,658		$	90,652		$	6,917		$	(12,227	)	$	104,000
Return on average interest earning assets (pre-tax)	1.10		%	1.93		%	0.64		%	N/A			1.39		%

	Six Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,215,756		$	23,804,558		$	5,205,918		$	—		$	36,226,232
Interest income	$	135,062		$	520,027		$	59,392		$	(2,163	)	$	712,318
Interest expense	31,169			102,826			22,488			7,937			164,420
Net interest income (loss)	103,893			417,201			36,904			(10,100		)	547,898
Provision for credit losses	9,891			65,148			800			—			75,839
Net interest income (loss) after provision for credit losses	94,002			352,053			36,104			(10,100		)	472,059
Non-interest income	31,852			31,771			8,965			13,639			86,227
Non-interest expense	40,311			47,408			1,029			224,074			312,822
Internal expense transfer	39,741			131,054			28,680			(199,475		)	—
Income (loss) before income taxes	$	45,802		$	205,362		$	15,360		$	(21,060	)	$	245,464
Return on average interest earning assets (pre-tax)	1.27		%	1.73		%	0.59		%	N/A			1.36		%

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	Six Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,788,511		$	18,615,885		$	4,316,619		$	—		$	29,721,015
Interest income	$	135,644		$	449,650		$	65,190		$	(2,518	)	$	647,966
Interest expense	45,952			126,012			29,220			7,900			209,084
Net interest income (loss)	89,692			323,638			35,970			(10,418		)	438,882
Provision for credit losses	2,983			7,117			—			—			10,100
Net interest income (loss) after provision for credit losses	86,709			316,521			35,970			(10,418		)	428,782
Non-interest income	26,819			14,470			4,678			89,309			135,276
Non-interest expense	37,097			51,568			303			200,564			289,532
Internal expense transfer	38,718			106,259			24,686			(169,663		)	—
Income (loss) before income taxes	$	37,713		$	173,164		$	15,659		$	47,990		$	274,526
Return on average interest earning assets (pre-tax)	1.11		%	1.86		%	0.73		%	N/A			1.85		%

Item 2. Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations

The following MD&A should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. The words "Valley," the "Company," "we," "our" and "us" refer to Valley National Bancorp and its wholly owned subsidiaries, unless we indicate otherwise. Additionally, Valley’s principal subsidiary, Valley National Bank, is commonly referred to as the “Bank” in this MD&A.

The MD&A contains supplemental financial information, described in the sections that follow, which has been determined by methods other than U.S. generally accepted accounting principles (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 facilitate 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. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies.

Cautionary Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q, 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, including the potential effects of the COVID-19 pandemic on our businesses and financial results and conditions. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “will,” “opportunity,” “allow,” “continues,” “would,” “could,” “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, include, but are not limited to:

• the impact of COVID-19 on the U.S. and the global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients;

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• the impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 arise in various locations, including Florida and Alabama;

• potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic or as a result of our action in response to, or failure to implement or effectively implement, federal, state and local laws, rules or executive orders requiring that we grant forbearances or not act to collect our loans;

• the impact of forbearances or deferrals we are required or agree to as a result of customer requests and/or government actions, including, but not limited to our potential inability to recover fully deferred payments from the borrower or the collateral;

• damage verdicts or settlements or restrictions related to existing or potential class action litigation or individual litigation arising from claims of violations of laws or regulations, contractual claims, breach of fiduciary responsibility, negligence, fraud, environmental laws, patent or trademark infringement, employment related claims, and other matters;

• a prolonged downturn 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;

• 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;

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

• a material change in our allowance for credit losses under CECL due to forecasted economic conditions and/or unexpected credit deterioration in our loan and investment portfolios;

• 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 Office of the Comptroller of the Currency (OCC), the Federal Reserve Bank (FRB), the Consumer Financial Protection Bureau (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;

• 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, the COVID-19 pandemic 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.

A detailed discussion of factors that could affect our results is included in our SEC filings, including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019 and in Item 1A of this report.

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Critical Accounting Policies and Estimates

We identified our policies on the allowance for credit losses, goodwill and other intangible assets, and income taxes to be critical accounting policies 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.

Determining the allowance for loan losses has historically been identified as a critical accounting estimate. On January 1, 2020, we adopted new accounting guidance which requires entities to estimate and recognize an allowance for lifetime expected credit losses for loans, unfunded credit commitments and held to maturity debt securities measured at amortized cost. Previously, an allowance for credit losses on loans was recognized based on probable incurred losses. See Notes 5, 7 and 8 to the consolidated financial statements for further discussion of our accounting policies and methodologies for establishing the allowance for credit losses.

The accounting estimates relating to the allowance for credit losses remains a "critical accounting estimate" for the following reasons:

• Changes in the provision for credit losses can materially affect our financial results;

• Estimates relating to the allowance for credit losses require us to project future borrower performance, delinquencies and charge-offs, along with, when applicable, collateral values, based on a reasonable and supportable forecast period utilizing forward-looking economic scenarios in order to estimate probability of default and loss given default;

• The allowance for credit losses is influenced by factors outside of our control such as industry and business trends, geopolitical events and the effects of laws and regulations as well as economic conditions such as trends in housing prices, interest rates, gross domestic product (GDP), inflation, energy prices and unemployment; and

• Judgment is required to determine whether the models used to generate the allowance for credit losses produce an estimate that is sufficient to encompass the current view of lifetime expected credit losses.

Our estimation process is subject to risks and uncertainties, including a reliance on historical loss and trend information that may not be representative of current conditions and indicative of future performance. Changes in such estimates could significantly impact our allowance and provision for credit losses. Accordingly, our actual credit loss experience may not be in line with our expectations.

As discussed further in the "Allowance for Credit Losses" section in this MD&A, we incorporated a multi-scenario economic forecast for estimating lifetime expected credit losses at June 30, 2020. As a result of the deterioration in economic conditions caused by the COVID-19 pandemic during the first half of 2020 and the related increase in economic uncertainty, we increased our probability weighting for the most severe economic scenario as compared to those at January 1, 2020. As a result, over 40 percent of the provision of credit losses for loans totaling $75.0 million for the six months ended June 30, 2020 reflected the impact of the adverse economic forecast within Valley's lifetime expected credit loss estimate.

Details regarding our critical accounting policies for goodwill and other intangible assets, and income taxes are described in detail in Part II, Item 7 in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019.

New Authoritative Accounting Guidance

See Note 5 to the consolidated financial statements for a description of new authoritative accounting guidance, including the respective dates of adoption and effects on results of operations and financial condition.

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Executive Summary

Company Overview. At June 30, 2020, Valley had consolidated total assets of approximately $41.7 billion, total net loans of $32.0 billion, total deposits of $31.4 billion and total shareholders’ equity of $4.5 billion. Our commercial bank operations include branch office locations in northern and central New Jersey, the New York City Boroughs of Manhattan, Brooklyn, Queens, and Long Island, Florida and Alabama. Of our current 236 branch network, 59 percent, 16 percent, 18 percent and 7 percent of the branches are in New Jersey, New York, Florida and Alabama, respectively. Despite targeted branch consolidation activity, we have significantly grown both in asset size and locations over the past several years primarily through bank acquisitions, including our acquisition of Oritani Financial Corp. (Oritani) on December 1, 2019. See Note 2 to the consolidated financial statements for more information regarding the Oritani acquisition.

Impact of COVID-19. The widespread outbreak of the novel Coronavirus Disease 2019 (COVID-19) has created a global public health crisis that has resulted in unprecedented uncertainty, volatility and disruption in financial markets and in governmental, commercial and consumer activity, including in the markets that we serve. Our markets within Florida and Alabama have experienced a recent increase in COVID-19 infection rates and such negative trends could hamper reopening and economic recovery in these markets. Uncertainties and disruptions from COVID-19 have slowed our traditional new commercial loan volumes and many consumer loan products, such as automobile loans during the second quarter 2020. Any sustained economic downturn or other long-term changes in consumer and business behaviors from COVID-19 may also adversely impact the value of assets that serve as collateral for our loans.

The $659 billion Paycheck Protection Program (PPP) provided for in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as supplemented by the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act), was designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. These loans are intended to guarantee 8 to 24 weeks of payroll and other costs to help those businesses remain viable and allow their workers to pay their bills. Valley National Bank is a certified Small Business Administration (SBA) lender and during the second quarter of 2020 dedicated significant staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the program, obtain SBA approval and receive funding as quickly as possible. To date, Valley has facilitated over 12,800 SBA-approved PPP loans and had over $2.2 billion of these loans outstanding as of June 30, 2020. We expect the majority of these loans to be forgiven in accordance with rules, application and documentation requirements for this program, some of which have only recently been released. The loan forgiveness rules may be subject to further revisions and additional SBA guidance in the coming months.

During the latter part of second quarter 2020, we have taken steps to reopen most branches in New Jersey and New York that had been either temporarily closed or had reduced lobby services due to COVID-19, while acting with an abundance of caution in order to safeguard the health and wellness of our customers and employees. We will continue to closely monitor local conditions in the areas we serve and will take actions as circumstances warrant, which may necessitate resumption of certain branch or other office closures and reduced lobby services. Our business continuity plan continues to remain in effect and a significant portion of our non-customer facing employees continue to work remotely as we work through our return to work plans and monitor the level of the health crisis in our primary markets.

In response to the COVID-19 pandemic and its economic impact on certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant, when requested by customers. Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days, for a maximum of 180 days on a cumulative and successive basis. To date, Valley has granted over 10,000 loan forbearances totaling approximately $4.6 billion in support of our customers. Of these, approximately 5,000 loans totaling $1.9 billion have completed the contractual deferral period and returned to regularly scheduled payments.

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Significant uncertainties as to future economic conditions exist, and we have taken purposeful actions in response, including continued heightened levels of balance sheet liquidity during the second quarter 2020. Additionally, the economic pressures, coupled with the implementation of an expected loss methodology for determining our provision for credit losses as required by CECL, have contributed to an increased provision for credit losses for the first half of 2020. We continue to monitor the impact of COVID-19 closely, as well as any effects that may result from the CARES Act, Enhancement Act and other government stimulus or Federal Reserve actions. However, the extent to which the COVID-19 pandemic will impact our operations and financial results during the remainder of 2020 is highly uncertain. See the "Operating Environment" section and our risk factors under Part II Item 1A below for more details.

Branch Transformation. As previously disclosed, Valley has embarked on a strategy to overhaul its retail network. Over 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. During the first quarter 2020, we permanently closed an additional 9 branches located in New Jersey, including the consolidation of 6 acquired Oritani branches into nearby legacy Valley branches. We currently expect to permanently close 10 branches during the remainder of 2020. 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. At this time, we plan to reopen branches temporarily closed due to the impact of the COVID-19 pandemic, although the timing of reopening these branches is uncertain.

Quarterly Results. Net income for the second quarter 2020 was $95.6 million, or $0.23 per diluted common share, compared to $76.5 million, or $0.22 per diluted common share, for the second quarter 2019. The $19.1 million increase in quarterly net income as compared to the same quarter one year ago was largely due to: (i) a $62.3 million increase in net interest income driven by organic and Oritani acquired loan growth over the last 12 months combined with our ability to significantly reduce our deposit and other funding costs in the current low interest rate environment, (ii) a $17.2 million increase in non-interest income mainly caused by strong commercial loan customer swap fees, higher BOLI income and additional gains on the sales of residential mortgage loans, partially offset by (iii) a $39.1 million increase in our provision for credit losses for loans due to the adoption of CECL and the impact of the COVID-19 pandemic on the model results, (iv) a $15.4 million increase in non-interest expense due to our expanded franchise following the Oritani acquisition, higher technology consulting and certain additional expenses due to COVID-19, and (v) a $5.9 million increase in income tax expense. See the “Net Interest Income”, “Non-Interest Income”, “Non-Interest Expense”, and “Income Taxes” sections below for more details on the items above impacting our second quarter 2020 results, as well as other items discussed elsewhere in this MD&A, for more details on the impact of the items above on our second quarter 2020 results.

Operating Environment. During the second quarter 2020, real gross domestic product declined 32.9 percent. COVID-19 and the measures taken to mitigate the health crisis have caused households and businesses to sharply reduce consumption and investment. As a result, job losses have increased sharply while prices for goods and services have fallen. The unemployment rate was 11.1 percent in June 2020 compared to 4.4 percent in March of this year. The ongoing public health crisis will weigh heavily on economic activity, employment and inflation. To support the flow of credit, the Federal Reserve reduced the target range for the federal funds rate earlier this year. In addition, the Federal Reserve began purchasing Treasury securities and agency residential and commercial mortgage-backed securities. Currently, the target range for the federal funds rate is between zero and 0.25 percent. The 10-year U.S. Treasury note yield ended the second quarter at 0.66 percent, 134 basis points lower compared with June 30, 2019.

The current economic environment has weakened traditional commercial loan demand, while residential mortgage loan volumes for both purchased and refinanced activity are relatively solid in the early stages of the third quarter 2020. The low market interest rates for new loans will continue to put pressure on our overall loan yields and net interest margin. In parts of the Bank’s footprint, particularly Florida, the number have COVID-19 cases have

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recently increased, which may hinder attempts to resume normal business activity in those regions. More broadly, the ongoing health crisis has caused household and business confidence to remain subdued which is likely to weigh on Valley’s financial results, as highlighted in the remaining MD&A discussion below.

Loans. Loans increased $1.9 billion to approximately $32.3 billion at June 30, 2020 from March 31, 2020 largely due to approximately $2.2 billion of SBA PPP loan originations within the commercial and industrial loan category during the second quarter 2020. Commercial real estate loans increased $181.6 million, or 4.4 percent on an annualized basis, to $16.6 billion at June 30, 2020 as compared to March 31, 2020 mainly due to our strong loan commitment pipeline at March 31, 2020 and slower repayment activity in the second quarter. Residential mortgage and the consumer loan categories all experienced moderate declines in the second quarter due to the impact of COVID-19 and our normal mortgage banking sales activity. During the second quarter 2020, we originated $296 million of residential mortgage loans for sale rather than held for investment and sold approximately $237 million of these loans. Residential mortgage loans held for sale at fair value totaled $120.6 million and $58.9 million at June 30, 2020 and March 31, 2020, respectively. See further details on our loan activities under the “Loan Portfolio” section below.

Asset Quality. Total non-performing assets (NPAs), consisting of non-accrual loans, other real estate owned (OREO), other repossessed assets and non-accrual debt securities increased $3.7 million to $224.2 million at June 30, 2020 as compared to March 31, 2020. Non-accrual loans increased $4.7 million to $210.6 million at June 30, 2020 as compared to March 31, 2020 partially due to one commercial real estate loan which moved to non-accrual status during the second quarter 2020, as well as a moderately higher level of non-accrual consumer loans at June 30, 2020. Non-accrual loans represented 0.65 percent of total loans at June 30, 2020, as compared to 0.68 percent at March 31, 2020.

Total accruing past due loans (i.e., loans past due 30 days or more and still accruing interest) decreased $66.3 million to $93.1 million, or 0.29 percent of total loans, at June 30, 2020 as compared to $159.4 million, or 0.52 percent of total loans, at March 31, 2020 due to a decline in early stage delinquencies for all loan categories. Commercial real estate loans past due 30 to 59 days and 60 to 89 days decreased by $27.8 million and $14.4 million, respectively, as compared to March 31, 2020. The improved performance within the 30 to 59 day category was mainly due to restored customer payments delayed by business disruptions caused by COVID-19 related factors at the end of the first quarter 2020. Commercial real estate loans past due 60 to 90 days at June 30, 2020 declined primarily due to the normal renewal of a $13.8 million performing matured loan reported in this category at March 31, 2020. See further details in the "Non-performing Assets" section below.

Deposits and Other Borrowings. Average non-interest bearing deposits; savings, NOW and money market deposits; and time deposits represented approximately 27 percent, 45 percent and 28 percent of total deposits as of June 30, 2020, respectively. Overall, average deposits increased by $2.0 billion to $30.8 billion for the second quarter 2020 as compared to the first quarter 2020. Our mix of the deposit categories of total average deposits for the second quarter 2020 as compared to the first quarter 2020 experienced a shift to non-interest bearing deposits largely due to new deposits resulting from the funding of customer PPP loans, as well as a continued migration of maturing retail CD customers into more flexible and lower-cost transaction account types.

Actual ending balances for deposits increased $2.4 billion to approximately $31.4 billion at June 30, 2020 from March 31, 2020 largely due to increases of $2.0 billion and $666.6 million in non-interest bearing deposits and interest-bearing deposits without stated maturities, respectively. The increases were mostly driven by the aforementioned deposits from PPP loan customers, higher depositor balances due to the uncertain financial markets, as well as a partial shift to more liquid account types for maturing retail CD customers. As a result, time deposits decreased $294.3 million at June 30, 2020 as compared to March 31, 2020. Total brokered deposits (consisting of both time and money market deposit accounts) were $3.6 billion at June 30, 2020 as compared to $3.4 billion at March 31, 2020. While we believe the current operating environment will likely continue to be favorable for Valley’s deposit gathering initiatives, we cannot guarantee that we will be able to maintain deposit levels at or near those reported at June 30, 2020. Additionally, the vast majority of the PPP loan customers that are Valley depositors are expected to use the funds for qualifying payroll and other costs over an 8 to 24 week period to obtain loan

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forgiveness. The resulting outflow of funds for such expenditures may contribute to lower levels of deposit balances in the second half of 2020.

Average short-term borrowings increased $1.0 billion to $2.3 billion for the second quarter 2020 as compared to the first quarter 2020 driven by our prudent steps to increase our liquidity levels starting in the end of the first quarter 2020 in the face of the escalating economic crisis created by the COVID-19 pandemic. Average long-term borrowings (including junior subordinated debentures issued to capital trusts which are presented separately on the consolidated statements of financial condition) increased by $111.0 million to $2.9 billion for the second quarter 2020 as compared to the first quarter 2020 mostly due to $100 million of new long-term FHLB advances executed in March 2020 as part of our overall liquidity strategy.

Actual ending balances for short-term borrowings moderately decreased by $12.8 million to $2.1 billion at June 30, 2020 as compared to March 31, 2020. Long-term borrowings increased $101.9 million to $2.9 billion at June 30, 2020 as compared to March 31, 2020 mainly due to our $115.0 million issuance of 5.25 percent fixed-to-floating rate subordinated notes on June 5, 2020.

Selected Performance Indicators. The following table presents our annualized performance ratios for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Return on average assets	0.92	%	0.94	%	0.92	%	1.17	%
Return on average assets, as adjusted	0.92		0.96		0.93		0.95
Return on average shareholders’ equity	8.54		8.79		8.23		11.04
Return on average shareholders’ equity, as adjusted	8.57		9.05		8.29		8.94
Return on average tangible shareholders’ equity (ROATE)	12.66		13.16		12.26		16.65
ROATE, as adjusted	12.70		13.56		12.34		13.49

Adjusted return on average assets, adjusted return on average shareholders' equity, ROATE and adjusted ROATE included in the table above are non-GAAP measures. Management believes these measures provide information useful to management and investors in understanding our underlying operational performance, business and performance trends, and the measures facilitate comparisons of our prior performance 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. These non-GAAP financial measures may also be calculated differently from similar measures disclosed by other companies. The non-GAAP measure reconciliations are presented below.

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Adjusted net income is computed as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Net income, as reported	$	95,601	$	76,468		$	182,869	$	189,798
Add: Net impairment losses on securities (net of tax)	—		2,078			—		2,078
Add: Losses (gains) on securities transactions (net of tax)	29		(8		)	58		15
Add: Severance expense (net of tax) (1)	—		—			—		3,433
Add: Tax credit investment impairment (net of tax) (2)	—		—			—		1,757
Add: Merger related expenses (net of tax) (3)	263		25			1,199		25
Add: Income tax expense (4)	—		223			—		12,323
Less: Gain on sale-leaseback transaction (net of tax) (5)	—		—			—		(55,707		)
Net income, as adjusted	$	95,893	$	78,786		$	184,126	$	153,722

⁽¹⁾    Severance expense is included in salary and employee benefits expense.

⁽²⁾    Impairment is included in the amortization of tax credit investments.

⁽³⁾  Merger related expenses are primarily within salary and employee benefits expense, professional and legal fees, and other non-interest expenses.

⁽⁴⁾  Income tax expense related to reserves for uncertain tax positions.

⁽⁵⁾  The gain on sale leaseback transactions is included in net gains on the sales of assets within other non-interest income.

Adjusted annualized return on average assets is computed by dividing adjusted net income by average assets, as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	($ in thousands)
Net income, as adjusted	$	95,893		$	78,786		$	184,126		$	153,722
Average assets	$	41,503,514		$	32,707,144		$	39,800,441		$	32,502,744
Annualized return on average assets, as adjusted	0.92		%	0.96		%	0.93		%	0.95		%

Adjusted annualized return on average shareholders' equity is computed by dividing adjusted net income by average shareholders' equity, as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	($ in thousands)
Net income, as adjusted	$	95,893		$	78,786		$	184,126		$	153,722
Average shareholders' equity	$	4,477,446		$	3,481,519		$	4,443,016		$	3,438,344
Annualized return on average shareholders' equity, as adjusted	8.57		%	9.05		%	8.29		%	8.94		%

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ROATE and adjusted ROATE are computed by dividing net income and adjusted net income, respectively, by average shareholders’ equity less average goodwill and average other intangible assets, as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	($ in thousands)
Net income	$	95,601		$	76,468		$	182,869		$	189,798
Net income, as adjusted	$	95,893		$	78,786		$	184,126		$	153,722
Average shareholders’ equity	$	4,477,446		$	3,481,519		$	4,443,016		$	3,438,344
Less: Average goodwill and other intangible assets	1,456,781			1,156,703			1,458,885			1,158,596
Average tangible shareholders’ equity	$	3,020,665		$	2,324,816		$	2,984,131		$	2,279,748
Annualized ROATE	12.66		%	13.16		%	12.26		%	16.65		%
Annualized ROATE, as adjusted	12.70		%	13.56		%	12.34		%	13.49		%

In addition to the items used to calculate net income, as adjusted, in the tables above, our net income is, from time to time, impacted by fluctuations in the level of net gains on sales of loans and swap fees recognized from commercial loan customer transactions. These amounts can vary widely from period to period due to, among other factors, the amount of residential mortgage loans originated for sale, bulk loan portfolio sales and commercial loan customer demand for certain products. See the “Non-Interest Income” section below for more details.

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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.

Net interest income on a tax equivalent basis totaling $283.5 million for the second quarter 2020 increased $62.1 million as compared to the second quarter 2019 and increased $17.2 million as compared to the first quarter 2020. The increase as compared to the first quarter 2020 was largely driven by our ability to significantly reduce our deposit and other funding costs in the current low interest rate environment and a $2.0 billion increase in average loan balances largely resulting from PPP loan originations. Interest expense of $66.0 million for the second quarter 2020 decreased $32.5 million as compared to the first quarter 2020 largely due to the overall lower cost of funds, partially offset by the interest cost associated with higher average interest-bearing deposits without stated maturities and other borrowings. However, interest income on a tax equivalent basis decreased $15.3 million to $349.5 million for the second quarter 2020 as compared to the first quarter 2020. The decrease was mainly due to overall lower loan yields caused, in part, by normal repayments of higher yielding loans, variable rate loan resets and a $3.1 million decline in loan discount accretion in second quarter 2020 due to lower prepayments for certain loans.

Average interest earning assets increased $7.9 billion to $37.8 billion for the second quarter 2020 as compared to the second quarter 2019 primarily due to $3.8 billion of interest earning assets acquired from Oritani and organic loan growth over the 12-month period, including $2.2 billion of PPP loans originated in the second quarter 2020. As compared to the first quarter 2020, average interest earning assets increased by $3.1 billion from $34.7 billion largely due to the PPP loan originations and higher overnight funds resulting from our increased liquidity levels in response to the COVID-19 pandemic.

Average interest bearing liabilities increased $5.3 billion to $27.6 billion for the second quarter 2020 as compared to the second quarter 2019 mainly due to deposits and borrowings totaling a combined $3.4 billion assumed in the Oritani acquisition, organic growth of retail deposits and additional long-term borrowings caused by the funding of loan growth and our increased liquidity in response to COVID-19. As compared to the first quarter 2020, average interest bearing liabilities increased by $1.4 billion in the second quarter 2020 primarily due to increased levels of short-term borrowings and growth in deposits driven by PPP loan customers and organic growth from higher depositor balances partly caused by the uncertain financial markets. See additional information under "Deposits and Other Borrowings" in the Executive Summary section above.

Our net interest margin on a tax equivalent basis of 3.00 percent for the second quarter 2020 increased by 4 basis points from 2.96 percent in second quarter 2019 and decreased by 7 basis points from 3.07 percent for the first quarter 2020. The yield on average interest earning assets decreased by 51 basis points on a linked quarter basis mostly due to the impact of the lower interest rate environment. The yield on average loans decreased by 42 basis points to 4.02 percent for the second quarter 2020 as compared to the first quarter 2020 largely due to the repayment of higher yielding loans, lower yielding variable and new loans, including the origination of $2.2 billion of PPP loans in second quarter 2020, and an increase in excess liquidity held in low yield overnight investments. The overall cost of average interest bearing liabilities decreased 54 basis points to 0.96 percent for the second quarter 2020 as compared to the linked first quarter 2020 due to the significantly lower interest rates paid on deposits and borrowings. During the first half of 2020, we also benefited from the prepayment of $635 million high cost FHLB advances in December 2019. Our cost of total average deposits was 0.60 percent for the second quarter 2020 as compared to 1.07 percent for the first quarter 2020.

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The following table reflects the components of net interest income for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019:

Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and

Net Interest Income on a Tax Equivalent Basis

	Three Months Ended
	June 30, 2020								March 31, 2020								June 30, 2019
	Average Balance			Interest			Average Rate		Average Balance			Interest			Average Rate		Average Balance			Interest			Average Rate
	($ in thousands)
Assets
Interest earning assets:
Loans (1)(2)	$	32,041,200		$	321,883		4.02	%	$	29,999,428		$	333,068		4.44	%	$	25,552,415		$	296,934		4.65	%
Taxable investments (3)	3,673,090			22,539			2.45		3,557,913			25,334			2.85		3,453,676			25,284			2.93
Tax-exempt investments (1)(3)	562,172			4,673			3.32		585,987			4,970			3.39		658,727			5,514			3.35
Interest bearing deposits with banks	1,501,925			411			0.11		530,747			1,465			1.10		212,566			1,168			2.20
Total interest earning assets	37,778,387			349,506			3.70		34,674,075			364,837			4.21		29,877,384			328,900			4.40
Allowance for loan losses	(284,184		)						(256,675		)						(156,747		)
Cash and due from banks	424,625								293,276								265,015
Other assets	3,540,513								3,378,372								2,744,661
Unrealized gains (losses) on securities available for sale, net	44,173								8,316								(23,169		)
Total assets	$	41,503,514							$	38,097,364							$	32,707,144
Liabilities and shareholders’ equity
Interest bearing liabilities:
Savings, NOW and money market deposits	$	13,788,951		$	16,627		0.48	%	$	13,219,896		$	34,513		1.04	%	$	11,293,885		$	38,020		1.35	%
Time deposits	8,585,782			29,857			1.39		8,897,934			42,814			1.92		7,047,319			40,331			2.29
Total interest bearing deposits	22,374,733			46,484			0.83		22,117,830			77,327			1.40		18,341,204			78,351			1.71
Short-term borrowings	2,317,992			1,980			0.34		1,322,699			4,707			1.42		2,380,294			14,860			2.50
Long-term borrowings (4)	2,886,016			17,502			2.43		2,775,049			16,420			2.37		1,607,046			14,297			3.56
Total interest bearing liabilities	27,578,741			65,966			0.96		26,215,578			98,454			1.50		22,328,544			107,508			1.93
Non-interest bearing deposits	8,463,230								6,694,102								6,358,034
Other liabilities	984,097								779,099								539,047
Shareholders’ equity	4,477,446								4,408,585								3,481,519
Total liabilities and shareholders’ equity	$	41,503,514							$	38,097,364							$	32,707,144
Net interest income/interest rate spread (5)				$	283,540		2.74	%				$	266,383		2.71	%				$	221,392		2.47	%
Tax equivalent adjustment				(981		)						(1,044		)						(1,158		)
Net interest income, as reported				$	282,559							$	265,339							$	220,234
Net interest margin (6)							2.99	%							3.06	%							2.95	%
Tax equivalent effect							0.01	%							0.01	%							0.01	%
Net interest margin on a fully tax equivalent basis (6)							3.00	%							3.07	%							2.96	%

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The following table reflects the components of net interest income for the six months ended June 30, 2020 and 2019:

	Six Months Ended
	June 30, 2020								June 30, 2019
	Average Balance			Interest			Average Rate		Average Balance			Interest			Average Rate
	($ in thousands)
Assets
Interest earning assets:
Loans (1)(2)	$	31,020,314		$	654,951		4.22	%	$	25,404,396		$	585,211		4.61	%
Taxable investments (3)	3,615,502			47,873			2.65		3,422,317			51,334			3.00
Tax-exempt investments (1)(3)	574,080			9,643			3.36		674,116			11,595			3.44
Interest bearing deposits with banks	1,016,336			1,876			0.37		220,186			2,261			2.05
Total interest earning assets	36,226,232			714,343			3.94		29,721,015			650,401			4.38
Allowance for loan losses	(270,430		)						(154,864		)
Cash and due from banks	358,951								276,170
Other assets	3,459,443								2,694,473
Unrealized gains (losses) on securities available for sale, net	26,245								(34,050		)
Total assets	$	39,800,441							$	32,502,744
Liabilities and shareholders’ equity
Interest bearing liabilities:
Savings, NOW and money market deposits	$	13,504,424		$	51,140		0.76	%	$	11,371,980		$	74,303		1.31	%
Time deposits	8,741,858			72,671			1.66		7,130,628			78,502			2.20
Total interest bearing deposits	22,246,282			123,811			1.11		18,502,608			152,805			1.65
Short-term borrowings	1,820,346			6,687			0.73		2,196,880			27,409			2.50
Long-term borrowings (4)	2,830,533			33,922			2.40		1,636,755			28,870			3.53
Total interest bearing liabilities	26,897,161			164,420			1.22		22,336,243			209,084			1.87
Non-interest bearing deposits	7,578,666								6,238,159
Other liabilities	881,598								489,998
Shareholders’ equity	4,443,016								3,438,344
Total liabilities and shareholders’ equity	$	39,800,441							$	32,502,744
Net interest income/interest rate spread (5)				$	549,923		2.72	%				$	441,317		2.51	%
Tax equivalent adjustment				(2,025		)						(2,435		)
Net interest income, as reported				$	547,898							$	438,882
Net interest margin (6)							3.02	%							2.95	%
Tax equivalent effect							0.02	%							0.02	%
Net interest margin on a fully tax equivalent basis (6)							3.04	%							2.97	%

(1) Interest income is presented on a tax equivalent basis using a 21 percent federal tax rate.

(2) Loans are stated net of unearned income and include non-accrual loans.

(3) The yield for securities that are classified as available for sale is based on the average historical amortized cost.

(4) Includes junior subordinated debentures issued to capital trusts which are presented separately on the consolidated

statements of financial condition.

(5) 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.

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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 us 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

	Three Months Ended June 30, 2020 Compared to June 30, 2019									Six Months Ended June 30, 2020 Compared to June 30, 2019
	Change Due to Volume			Change Due to Rate			Total Change			Change Due to Volume			Change Due to Rate			Total Change
	(in thousands)
Interest Income:
Loans*	$	68,741		$	(43,792	)	$	24,949		$	121,530		$	(51,790	)	$	69,740
Taxable investments	1,533			(4,278		)	(2,745		)	2,787			(6,248		)	(3,461		)
Tax-exempt investments*	(803		)	(38		)	(841		)	(1,686		)	(266		)	(1,952		)
Interest bearing deposits with banks	1,265			(2,022		)	(757		)	2,709			(3,094		)	(385		)
Total increase (decrease) in interest income	70,736			(50,130		)	20,606			125,340			(61,398		)	63,942
Interest Expense:
Savings, NOW and money market deposits	7,019			(28,412		)	(21,393		)	12,126			(35,289		)	(23,163		)
Time deposits	7,570			(18,044		)	(10,474		)	15,654			(21,485		)	(5,831		)
Short-term borrowings	(379		)	(12,501		)	(12,880		)	(4,050		)	(16,672		)	(20,722		)
Long-term borrowings and junior subordinated debentures	8,791			(5,586		)	3,205			16,367			(11,315		)	5,052
Total increase (decrease) in interest expense	23,001			(64,543		)	(41,542		)	40,097			(84,761		)	(44,664		)
Total increase in net interest income	$	47,735		$	14,413		$	62,148		$	85,243		$	23,363		$	108,606

* Interest income is presented on a tax equivalent basis using 21 percent as the federal tax rate.

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Non-Interest Income

Non-interest income increased $17.2 million and $49.0 million for the three and six months ended June 30, 2020 as compared to the same periods of 2019. The following table presents the components of non-interest income for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Trust and investment services	$	2,826		$	3,096		$	6,239		$	6,000
Insurance commissions	1,659			2,649			3,610			5,174
Service charges on deposit accounts	3,557			5,827			9,237			11,730
(Losses) gains on securities transactions, net	(41		)	11			(81		)	(21		)
Net impairment losses on securities recognized in earnings	—			(2,928		)	—			(2,928		)
Fees from loan servicing	2,227			2,367			4,975			4,797
Gains on sales of loans, net	8,337			3,930			12,887			8,506
(Losses) gains on sales of assets, net	(299		)	(564		)	(178		)	77,156
Bank owned life insurance	5,823			2,205			8,965			4,092
Other	20,741			11,010			40,573			20,770
Total non-interest income	$	44,830		$	27,603		$	86,227		$	135,276

Insurance commissions declined $1.0 million and $1.6 million for the three and six months ended June 30, 2020 as compared to the corresponding periods in 2019 mainly due to lower volumes of business generated by the Bank's insurance agency subsidiary.

Service charges on deposit accounts decreased by $2.3 million and $2.5 million for the three and six months ended June 30, 2020, respectively, as compared to the corresponding periods in 2019 mostly due to waived fees related to COVID-19 customer relief efforts in the second quarter 2020.

The other-than-temporary impairment losses on securities for the three and six months ended June 30, 2019 related to one special revenue bond in default of its contractual payments starting in the second quarter 2019.

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 originated for sale and carried at fair value at each period end. The net gains from the change in the fair value of loans held for sale totaled $3.2 million and $4.0 million for the three and six months ended June 30, 2020, respectively, as compared to $225 thousand and $549 thousand for the three and six months ended June 30, 2019. During the second quarter 2020, we sold approximately $237 million of residential mortgage loans as compared to $223 million during the second quarter 2019. See further discussions of our residential mortgage loan origination activity under the “Loan Portfolio” section of this MD&A below.

Net gains on sales of assets decreased $77.3 million for the six months ended June 30, 2020, primarily due to a $78.5 million gain on the sale (and leaseback) of 26 locations recognized during the first quarter 2019.

Bank owned life insurance income increased $3.6 million and $4.9 million for the three and six months ended June 30, 2020, respectively as compared to the same periods in 2019 due to income from bank owned life insurance acquired from Oritani during the fourth quarter 2019 and death benefits received in the 2020 periods.

Other non-interest income increased $9.7 million and $19.8 million for the three and six months ended June 30, 2020 as compared to the same periods in 2019. The increase was primarily due to swap fee income related to

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derivative interest rate swaps executed with commercial loan customers totaling $14.7 million and $5.4 million for the three months ended June 30, 2020 and June 30, 2019, respectively and $28.9 million and $9.5 million for the six months ended June 30, 2020 and June 30, 2019, respectively.

Non-Interest Expense

Non-interest expense increased $15.4 million and $23.3 million for the three and six months ended June 30, 2020 as compared to the same periods of 2019. The following table presents the components of non-interest expense for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Salary and employee benefits expense	$	78,532	$	76,183	$	164,260	$	159,288
Net occupancy and equipment expense	33,217		29,700		65,658		57,586
FDIC insurance assessment	6,135		4,931		10,011		11,052
Amortization of other intangible assets	6,681		4,170		12,151		8,481
Professional and legal fees	7,797		4,145		13,884		9,416
Amortization of tax credit investments	3,416		4,863		6,644		12,036
Telecommunications expense	2,866		2,351		5,153		4,619
Other	18,522		15,394		35,061		27,054
Total non-interest expense	$	157,166	$	141,737	$	312,822	$	289,532

Salary and employee benefits expense increased $2.3 million and $5.0 million for the three and six months ended June 30, 2020, respectively. As compared to second quarter 2019, the increase was largely due to additional salaries related to bank branch and other operational staff retained from the Oritani acquisition and higher accrued cash incentive compensation. These additional expenses were partially offset by cost reductions from our ongoing branch transformation efforts and other operational improvements over the last 12 months. The increase for the six months ended June 30, 2020 as compared to the same period in 2019 was also partly driven by a $1.8 million special bonus paid to hourly employees impacted by COVID-19 that was incurred in the first quarter of 2020.

Net occupancy and equipment expense increased $3.5 million and $8.1 million for the three and six months ended June 30, 2020, respectively, as compared to the same periods of 2019. These increases were mostly due to additional costs associated with branches and other facilities acquired from Oritani, which were partially offset by costs savings from branch closures over the last 12 months. During the three and six months ended June 30, 2020, we incurred higher expenses for equipment and certain other COVID-19 related expenses which included additional cleaning services for facilities to maintain employee and customer safety. In addition, the increase for the six months June 30, 2020 was driven by rental expenses resulting from a sale leaseback transaction completed towards the end of the first quarter of 2019.

Amortization of other intangibles increased $2.5 million and $3.7 million for the three and six months ended June 30, 2020, respectively, as compared to the same periods of 2019 largely due to higher amortization expense of loan servicing rights and core deposit intangible amortization acquired in the recent Oritani acquisition. See Note 9 to the consolidated financial statements for more details.

Professional and legal fees increased $3.7 million and $4.5 million for the three and six months ended June 30, 2020, respectively, as compared to the same periods of 2019, largely due to higher costs from technology transformation consulting services and remote work readiness costs incurred in the second quarter 2020.

Amortization of tax credit investments decreased $1.4 million and $5.4 million for the three and six months ended June 30, 2020, respectively, as compared to the same periods of 2019. The first half of 2019 included a $2.4 million impairment charge related to investments in three federal renewable energy tax credit funds sponsored by DC Solar. The remainder of the variances from the prior periods were mainly due to normal differences in the timing and

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amount of such investments and recognition of the related tax credits. Tax credit investments, while negatively impacting the level of our operating expenses and efficiency ratio, produce tax credits that reduce our income tax expense and effective tax rate. See Note 14 to the consolidated financial statements for more details on our tax credit investments.

Other non-interest expense increased $3.1 million and $8.0 million for the three and six months ended June 30, 2020, respectively, as compared to the same periods of 2019. The increases were primarily due to incrementally higher operating expenses in several categories due to the expansion of our operations both organically and through the acquisition of Oritani in the fourth quarter 2020, certain PPP loan costs, such as advertising, and other COVID-19 related costs. Net gains on the sales of OREO properties also declined $583 thousand and $1.3 million for the three and six months ended June 30, 2020, respectively, as compared to the same periods of 2019.

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 by the amortization of tax credit investments, as well as infrequent charges within non-interest income and expense.

The following table presents our efficiency ratio and a reconciliation of the efficiency ratio adjusted for certain items during the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	($ in thousands)
Total non-interest expense	$	157,166		$	141,737		$	312,822		$	289,532
Less: Severance expense (pre-tax)	—			—			—			4,838
Less: Amortization of tax credit investments (pre-tax)	3,416			4,863			6,644			12,036
Less: Merger related expenses (pre-tax)	366			35			1,668			35
Total non-interest expense, adjusted	$	153,384		$	136,839		$	304,510		$	272,623
Net interest income	$	282,559		$	220,234		$	547,898		$	438,882
Total non-interest income	44,830			27,603			86,227			135,276
Less: Gain on sale-leaseback transaction (pre-tax)	—			—			—			78,505
Add: Losses (gains) on securities transactions, net (pre-tax)	41			(11		)	81			21
Add: Net impairment losses on securities (pre-tax)	—			2,928			—			2,928
Total net interest income and non-interest income	$	327,430		$	250,754		$	634,206		$	498,602
Efficiency ratio	48.01		%	57.19		%	49.33		%	50.43		%
Efficiency ratio, adjusted	46.84		%	54.57		%	48.01		%	54.68		%

Income Taxes

Income tax expense totaled $33.5 million for the second quarter 2020 as compared to $29.1 million and $27.5 million for the first quarter 2020 and second quarter 2019, respectively. Our effective tax rate was 25.9 percent, 25.0 percent and 26.5 percent for the second quarter 2020, first quarter 2020 and second quarter 2019, respectively. The slightly higher effective tax rate in the second quarter 2020 as compared to the first quarter 2020 was primarily attributable to higher pre-tax income in second quarter 2020.

The CARES Act did not have a material impact on our reported income tax expense for the six months ended June 30, 2020.

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.

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 transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets and/or liabilities 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.

The following tables present the financial data for each business segment for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,214,368		$	24,826,832		$	5,737,187		$	—		$	37,778,387
Income (loss) before income taxes	29,561			102,567			7,530			(10,591		)	129,067
Annualized return on average interest earning assets (before tax)	1.64		%	1.65		%	0.52		%	N/A			1.37		%

 

	Three Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,756,322		$	18,796,093		$	4,324,969		$	—		$	29,877,384
Income (loss) before income taxes	18,658			90,652			6,917			(12,227		)	104,000
Annualized return on average interest earning assets (before tax)	1.10		%	1.93		%	0.64		%	N/A			1.39		%

Consumer Lending

This segment, representing approximately 22.1 percent of our loan portfolio at June 30, 2020, 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

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portfolio (which represented 13.6 percent of our loan portfolio at June 30, 2020) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans (representing 4.2 percent of total loans at June 30, 2020) 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 and Insurance Services Division, comprised of trust, asset management, and insurance services.

Average interest earning assets in this segment increased $458.0 million to $7.2 billion for the three months ended June 30, 2020 as compared to the second quarter 2019. The increase was largely due to approximately $255 million of loans acquired from Oritani, loan growth from residential mortgage loan originations for investment over most of the last 12 month period, as well as solid demand for both automobile loans and collateralized personal lines of credit prior to the second quarter 2020 economic slowdown due to the COVID-19 pandemic.

Income before income taxes generated by the consumer lending segment increased $10.9 million to $29.6 million for the second quarter 2020 as compared to the second quarter 2019 largely due to an $11.1 million increase in net interest income mainly driven by lower funding costs and the increase in average loans. The increase in net interest income was partially offset by increases of $2.2 million and $2.0 million in the provision for loan losses and non-interest expense, respectively. The increase in non-interest expense was partly due to higher amortization expense of loan servicing rights for the three months ended June 30, 2020 as compared to the second quarter 2019. The increase in the provision for loan losses for the second quarter 2020 as compared to the second quarter 2019 was mainly due to the impact of the adverse economic forecast caused by COVID-19 included in our estimate of lifetime expected credit losses for this segment. See further details in the "Allowance for Credit Losses" section of this MD&A.

The net interest margin on the consumer lending portfolio increased 44 basis points to 3.05 percent for the second quarter 2020 as compared to the second quarter 2019 mainly due to a 74 basis point decrease in the costs associated with our funding sources, partially offset by a 30 basis point decrease in the yield on average loans. The decrease in our funding costs was mainly due to both deposits and borrowings continuing to reprice at lower interest rates and the prepayment of the $635 million high cost FHLB advances in December 2019. The 30 basis point decrease in loan yield was largely due to lower yielding new loan volumes. See the "Executive Summary" and the "Net Interest Income" sections above for more details on our net interest margin and funding sources.

Commercial Lending

The commercial lending segment is 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 $6.9 billion and represented 21.3 percent of the total loan portfolio at June 30, 2020. Commercial real estate loans and construction loans totaled $18.3 billion and represented 56.6 percent of the total loan portfolio at June 30, 2020.

Average interest earning assets in this segment increased approximately $6.0 billion to $24.8 billion for the three months ended June 30, 2020 as compared to the second quarter 2019. The increase was mostly due to strong organic loan growth within the commercial and industrial and commercial real estate loan portfolios over most of the last 12-month period, including $2.2 billion of PPP loans originated in the second quarter 2020, as well as loans acquired from Oritani during the fourth quarter 2019.

For the three months ended June 30, 2020, income before income taxes for the commercial lending segment increased $11.9 million to $102.6 million as compared to the same quarter 2019 mainly due to increases in both net interest income and non-interest income. Net interest income increased $50.3 million to $214.5 million for the second quarter 2020 as compared to the same period in 2019 largely due to higher average loan balances. Non-interest income increased $8.5 million to $16.2 million during the three months ended June 30, 2020 as compared to

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the second quarter 2019 mainly due to a $9.3 million increase in swap fee income related to derivative interest rate swaps executed with commercial loan customers. The positive impact of the aforementioned items was partially offset by a $36.8 million increase in the provision for credit losses mainly due to the adverse economic forecast for lifetime expected credit losses, higher specific reserves associated with our tax medallion loan portfolio and additional qualitative management adjustments to reflect the potential for higher levels of credit stress for COVID-19 impacted borrowers. Internal transfer expense also increased $13.1 million for the second quarter 2020 as compared to the second quarter 2019 partly due to acquired and organic growth in our business since June 30, 2019.

The net interest margin for this segment decreased 3 basis points to 3.46 percent for the second quarter 2020 as compared to the first quarter 2019 largely due to a 77 basis point decrease in the yield on average loans, partially offset by a 74 basis point decrease in the cost of our funding sources.

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/Liability Management” section below for further analysis.

Average interest earning assets in this segment increased $1.4 billion during the second quarter 2020 as compared to the second quarter 2019 primarily due to a $1.3 billion increase in average interest bearing deposits with banks and, to a lesser extent, an increase in the investment securities portfolio. The increase in average overnight interest bearing deposits with banks was primarily caused by our prudent strategy to increase our excess liquidity during second quarter 2020, as well as the normal timing of loan and investment activity, including SBA PPP loan originations within the commercial lending segment.

For the quarter ended June 30, 2020, income before income taxes for the investment management segment increased $613 thousand to $7.5 million as compared to the second quarter 2019 mainly due to a $923 thousand increase in net interest income.

The net interest margin for this segment decreased 29 basis points to 1.28 percent for the second quarter 2020 as compared to the same quarter 2019 largely due to a 103 basis point decrease in the yield on average investments, partially offset by a 74 basis point decrease in costs associated with our funding sources. The decrease in the yield on average investments as compared to the second quarter 2019 was mainly due to repayment and prepayment of higher yield residential mortgage-backed securities, increased premium amortization and lower yielding new investments purchased over the last 12 months, and higher levels of average overnight investments at a yield of 11 basis points during the second quarter 2020.

Corporate and other adjustments

The amounts disclosed as “corporate and other adjustments” represent income and expense items not directly attributable to a specific segment, including net securities gains and losses not reported in the investment management segment above, interest expense related to subordinated notes, amortization and impairment of tax credit investments, as well as non-core items, including merger expenses.

The corporate segment recognized a $10.6 million and $12.2 million pre-tax loss for the three months ended June 30, 2020 and 2019, respectively. Lower pre-tax loss for the second quarter 2020 was mainly due to a $1.3 million increase in non-interest income. Non-interest expense increased $16.0 million and was more than offset by a $16.4 million increase in internal transfer income for the three months ended June 30, 2020 from the second quarter 2019. See further details in the "Non-Interest Income" and "Non-Interest Expense" sections of this MD&A.

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The following tables present the financial data for each business segment for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,215,756		$	23,804,558		$	5,205,918		$	—		$	36,226,232
Income (loss) before income taxes	45,802			205,362			15,360			(21,060		)	245,464
Annualized return on average interest earning assets (before tax)	1.27		%	1.73		%	0.59		%	N/A			1.36		%

	Six Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments		Total
	($ in thousands)
Average interest earning assets	$	6,788,511		$	18,615,885		$	4,316,619		$	—	$	29,721,015
Income before income taxes	37,713			173,164			15,659			47,990		274,526
Annualized return on average interest earning assets (before tax)	1.11		%	1.86		%	0.73		%	N/A		1.85		%

Consumer Lending

Average interest earning assets in this segment increased $427.2 million to $7.2 billion for the six months ended June 30, 2020 as compared to the same period in 2019. The increase was largely due to approximately $255 million of loans acquired from Oritani, loan growth from residential mortgage loan originations for investment over most of the last 12 month period, as well as solid demand for both automobile loans and collateralized personal lines of credit prior to the second quarter 2020 economic slowdown due to the COVID-19 pandemic.

Income before income taxes generated by the consumer lending segment increased $8.1 million to $45.8 million for the six months ended June 30, 2020 as compared to the same period in 2019 largely due to increases of $14.2 million and $5.0 million in net interest income and non-interest income, respectively. The increase in net interest income was mainly driven by lower funding costs and the increase in average loans. The increase in non-interest income was largely attributable to higher net gains on sales of loans for the six months ended June 30, 2020 as compared to the same period in 2019. The positive impact of the aforementioned items was partially offset by increases of $6.9 million and $3.2 million in provision for loan losses and non-interest expense, respectively. The increase in the provision for loan losses for the first half of 2020 as compared to the same period of 2019 was mainly due to the adverse economic forecast caused by COVID-19 included in our estimate of lifetime expected credit losses for this segment. See further details in the "Allowance for Credit Losses" section of this MD&A.

The net interest margin on the consumer lending portfolio increased 23 basis points to 2.88 percent for the six months ended June 30, 2020 as compared to the same period one year ago mainly due to a 49 basis point decrease in the costs associated with our funding sources, partially offset by a 26 basis point decrease in the yield on average loans. The decrease in our funding costs was mainly due to both deposits and borrowings continuing to reprice at lower interest rates and the prepayment of the $635 million high cost FHLB advances in December 2019. The 26 basis point decrease in loan yield was largely due to lower yielding new loan volumes.

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Commercial Lending

Average interest earning assets in this segment increased $5.2 billion to $23.8 billion for the six months ended June 30, 2020 as compared to the same period in 2019. This increase was primarily due to organic loan growth over most of the last 12-month period, including SBA PPP loans originations of $2.2 billion in the second quarter 2020, and loans acquired from Oritani.

For the six months ended June 30, 2020, income before income taxes for the commercial lending segment increased $32.2 million to $205.4 million as compared to the same period in 2019. Net interest income increased $93.6 million to $417.2 million for the six months ended June 30, 2020 as compared to the same period in 2019 largely due to the higher average loan balances. Non-interest income also increased $17.3 million for the six months ended June 30, 2020 as compared to the same period in 2019 due, in part, to a $19.4 million increase in fee income related to derivative interest rate swaps executed with commercial loan customers. The positive impact of the aforementioned items was partially offset by a $58.0 million increase in the provision for credit losses to $65.1 million during the six months ended June 30, 2020 as compared to $7.1 million for the same period in 2019. The increase in the provision for credit losses mainly due to the adverse economic forecast for lifetime expected credit losses during the first half of 2020, higher specific reserves for tax medallion loans and qualitative adjustments for potential credit stress related to COVID-19 impacted borrowers. See further details in the "Allowance for Credit Losses" section in this MD&A.

The net interest margin for this segment increased 3 basis points to 3.51 percent for the six months ended June 30, 2020 as compared to the same period in 2019 due to a 49 basis point decrease in the cost of our funding sources, partially offset by a 46 basis point decrease in yield on average loans.

Investment Management

Average interest earning assets in this segment increased $889.3 million during the six months ended June 30, 2020 as compared to the same period in 2019 largely due to increases of $796.2 million and $93.1 million in average interest bearing deposits with banks and average investments, respectively. The increase in overnight investments and deposits with other banks was largely due to our higher levels of excess liquidity during the second quarter 2020.

For the six months ended June 30, 2020, income before income taxes for the investment management segment moderately decreased $299 thousand to $15.4 million as compared to the same period in 2019. Net interest income increased $934 thousand during the six months ended June 30, 2020 as compared to the same period of 2019 but was partially offset by a $800 thousand provision for credit losses for debt securities held to maturity during the first half of 2020 under the new CECL standard. Non-interest income increased $4.3 million to $9.0 million for the six months ended June 30, 2020 as compared to the same period of 2019 partly due to higher bank owned life insurance income. However, internal transfer expense increased $4.0 million for the six months ended June 30, 2020 as compared to the same period of 2019.

The net interest margin for this segment decreased 25 basis points to 1.42 percent for the six months ended June 30, 2020 as compared to the same period in 2019 largely due to a 74 basis point decrease in the yield on average investments, partially offset by a 49 basis point decrease in costs associated with our funding sources. The decrease in the yield on average investments as compared to the same period of 2019 was mainly due to repayment and prepayment of higher yield residential mortgage-backed securities, increased premium amortization and lower yielding new investments purchased over the last 12 months, and low yielding excess liquidity held in overnight investments.

Corporate and other adjustments

The pre-tax net loss for the corporate segment totaled $21.1 million for the six months ended June 30, 2020 as compared to the net income of $48.0 million for the same period in 2019. The negative change of $69.1 million was mainly due to a decrease in non-interest income coupled with an increase in non-interest expense. The non-interest

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income decreased $75.7 million to $13.6 million for the six months ended June 30, 2020 as compared to the same period in 2019 primarily due to a $78.5 million gain on the sale (and leaseback) of several bank locations recognized during the first half of 2019. Non-interest expense increased $23.5 million to $224.1 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 largely due to increases in net occupancy and equipment expense, salaries and employee benefits expenses and professional and legal fees. (See further details in the "Non-Interest Expense" section above). Internal transfer income increased $29.8 million to $199.5 million for the six months ended June 30, 2020 as compared to the same period in 2019.

ASSET/LIABILITY MANAGEMENT

Interest Rate Sensitivity

Our success is largely dependent upon our ability to manage interest rate risk. Interest rate risk can be defined as the exposure of our interest rate sensitive assets and liabilities to the movement in interest rates. Our Asset/Liability Management Committee is responsible for managing such risks and establishing policies that monitor and coordinate our sources and uses of funds. Asset/Liability management is a continuous process due to the constant change in interest rate risk factors. In assessing the appropriate interest rate risk levels for us, management weighs the potential benefit of each risk management activity within the desired parameters of liquidity, capital levels and management’s tolerance for exposure to income fluctuations. Many of the actions undertaken by management utilize fair value analysis and attempt to achieve consistent accounting and economic benefits for financial assets and their related funding sources. We have predominantly 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 June 30, 2020. The model assumes immediate changes in interest rates without any proactive change in the composition or size of the balance sheet, or other future actions that management might undertake to mitigate this risk. In the model, the forecasted shape of the yield curve remains static as of June 30, 2020. 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 June 30, 2020. Although the size of Valley’s balance sheet is forecasted to remain static as of June 30, 2020 in our model, the composition is adjusted to reflect new interest earning assets and funding originations coupled with rate spreads utilizing our actual originations during the second quarter 2020. The model also utilizes an immediate parallel shift in market interest rates at June 30, 2020.

The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the table below due to the frequency and timing of changes in interest rates and changes in spreads between maturity and re-pricing categories. Overall, our net interest income is affected by changes in interest rates and cash flows from our loan and investment portfolios. We actively manage these cash flows in conjunction with our liability mix, duration and interest rates to optimize the net interest income, while structuring the balance sheet in response to actual or potential changes in interest rates. Additionally, our net interest income is impacted by the level of competition within our marketplace. Competition can negatively impact the level of interest rates attainable on loans and increase the cost of deposits, which may result in downward pressure on our net interest margin in future periods. Other factors, including, but not limited to, the slope of the yield curve and

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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 below. 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.

	Estimated Change in Future Net Interest Income
Changes in Interest Rates	Dollar Change			Percentage Change
(in basis points)	($ in thousands)
+200	$	63,164		5.55	%
+100	35,521			3.12
–100	(21,298		)	(1.87	)

As noted in the table above, a 100 basis point immediate increase in interest rates combined with a static balance

sheet where the size, mix, and proportions of assets and liabilities remain unchanged is projected to increase net interest income over the next 12 months by 3.12 percent. Valley's sensitivity to changes in market rates as compared to March 31, 2020 is mostly due to the significant changes in items included in interest income and Valley's slightly asset sensitive profile. Management believes the interest rate sensitivity remains within an acceptable tolerance range at June 30, 2020 and sees the likelihood of rates decreasing further as a minimal risk whereas an increase in rates longer term has a higher probability of occurrence. 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.

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 routinely reported by our Treasury Department to the Investment Committee established by the Board of Directors and also to the Asset and Liability Committee. 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 maintains that we may not have a ratio of loans to deposits in excess of 110 percent or reliance on wholesale funding greater than 25 percent of total funding. The Bank was in compliance with the foregoing policies at June 30, 2020.

During March 2020, Valley activated a contingent funding plan to prudently increase our liquidity position in response to the financial and public health crisis caused by the COVID-19 pandemic. At June 30, 2020, our cash

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and cash equivalents totaled $1.9 billion, an increase from $1.0 billion at March 31, 2020. In the early stage of the third quarter 2020, we continue to believe that holding excess liquidity is prudent given the uncertain environment that we currently face. Going forward, we will closely monitor external events and adjust our mix and levels of funding accordingly. See the "Deposits and Other Borrowings" section and Note 10 to the consolidated financial statements for more information.

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. Total liquid assets were approximately $3.8 billion, representing 10.1 percent of earning assets at June 30, 2020 and $2.2 billion, representing 6.4 percent of earning assets at December 31, 2019. Of the $3.8 billion of liquid assets at June 30, 2020, approximately $1.1 billion of various investment securities were pledged to counterparties to support our earning asset funding strategies. We anticipate the receipt of approximately $1.1 billion in principal payments 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 June 30, 2020) are projected in accordance with their scheduled contractual terms to be approximately $8.8 billion over the next 12 months. As a contingency plan for any liquidity constraints, liquidity could also be derived from the sale of conforming residential mortgages from our loan portfolio or alleviated 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 $24.8 billion and $20.4 billion for the six months ended June 30, 2020 and for the year ended December 31, 2019, respectively, representing 68.3 percent and 66.8 percent of average earning assets for the respective periods. 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.

Additional funding may be provided through deposit gathering networks and in the form of federal funds purchased through our well established relationships with numerous correspondent banks. While there are no firm lending commitments currently in place, management believes that we could borrow approximately $1.2 billion for a short term from these banks on a collective basis. The Bank is also a member of the Federal Home Loan Bank of New York (FHLB) 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 can obtain overnight borrowings from the FRB via the discount window as a contingency for additional liquidity. At June 30, 2020, our traditional borrowing capacity, excluding PPP loans, under the Federal Reserve's discount window was $1.6 billion.

We also have access to other short-term and long-term borrowing sources to support our asset base, such as repos (i.e., securities sold under agreements to repurchase). Short-term borrowings (consisting of FHLB advances, repos, and from time to time, federal funds purchased) increased approximately $1.0 billion to $2.1 billion at June 30, 2020, as compared to December 31, 2019. The increase in both short-term borrowings was primarily driven by our goal to increase liquidity levels in response to the COVID-19 crisis, as well as funding of SBA PPP loan originations in the second quarter 2020. As of June 30, 2020, the short-term borrowings mainly consisted of FHLB advances totaling $1.2 billion with a weighted interest rate of 0.55 percent and federal funds purchased totaling $678.9 million.

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Average short-term FHLB advances exceeded 30 percent of total shareholders' equity at June 30, 2020 and December 31, 2019, respectively. The following table sets forth information regarding Valley’s short-term FHLB advances at the dates and for the year to date periods ended June 30, 2020 and December 31, 2019:

	June 30, 2020			December 31, 2019
	($ in thousands)
FHLB advances:
Average balance outstanding	$	1,383,104		$	1,681,844
Maximum outstanding at any month-end during the period	1,930,000			2,510,000
Balance outstanding at end of period	1,235,000			940,000
Weighted average interest rate during the period	0.28		%	1.88		%
Weighted average interest rate at the end of the period	0.55			1.85

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. 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.

Valley's ability to maintain quarterly dividends to its preferred and common shareholders is heavily dependent on the ability of its principal subsidiary, the Bank, to pay dividends to Valley. However, we cannot accurately predict the extent of the economic decline due to COVID-19 or other factors that may result in inadequate earnings (primarily by the Bank), regulatory restrictions and limitations, changes in our capital requirements, or a decision to increase capital by retention of earnings, that may result in Valley's inability or determination by its Board not to pay dividends at current levels, or at all.

Investment Securities Portfolios

As of June 30, 2020, we had $54.4 million, $1.7 billion and $2.1 billion in equities, available for sale debt securities and held to maturity debt securities, respectively. Our equity securities portfolio was comprised of a money market mutual fund and, to a lesser extent, investments in public and private Community Reinvestment Act funds. Our held to maturity and available for sale debt securities portfolios were comprised of U.S. Treasury securities, U.S. government agency securities, tax-exempt and taxable issuances of states and political subdivisions (including special revenue bonds), residential mortgage-backed securities, single-issuer trust preferred securities principally issued by bank holding companies, and high quality corporate bonds issued by banks at June 30, 2020. 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. Additionally, certain securities with limited marketability and/or restrictions, such as FHLB and FRB stocks, are carried at cost and are included in other assets. See Note 7 to the consolidated financial statements for additional information.

Allowance for Credit Losses and Impairment Analysis

Effective January 1, 2020, Valley adopted ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires an estimate of lifetime expected credit

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losses for held to maturity debt securities established as an allowance for credit losses and replaces the other-than-temporarily impaired model for available for sale debt securities.

Available for sale debt securities. The new guidance in ASC Topic 326-30 requires credit losses to be presented as an allowance, rather than as a write-down if management does not intend to sell an available for sale debt security before recovery of its amortized cost basis. Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through other comprehensive income, net of applicable taxes.

We have evaluated all available for sale debt securities that are in an unrealized loss position as of June 30, 2020 and determined that the declines in fair value are mainly attributable to changes in market volatility, due to factors such as interest rates and spread factors, but not attributable to credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management recognized no impairment charges during the three and six months ended June 30, 2020 and, as a result, no allowance for credit losses for available for sale debt securities at June 30, 2020.

Held to maturity debt securities. As discussed in Note 7 to the consolidated financial statements, Valley has a zero loss expectation for certain securities within the held to maturity portfolio, including, U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds. To measure the expected credit losses on held to maturity debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third party. Assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. At June 30, 2020, held to maturity debt securities were carried net of allowance for credit losses totaling $1.6 million. We recorded a provision of $41 thousand and $800 thousand during three and six months ended June 30, 2020, respectively, and no net charge-offs of debt securities in the respective periods.

See Note 7 to the consolidated financial statements for additional information regarding our available for sale and held to maturity securities.

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.

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The following table presents the held to maturity and available for sale investment securities portfolios by investment grades at June 30, 2020:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Held to maturity investment grades: *
AAA Rated	$	1,802,760	$	61,704	$	(309	)	$	1,864,155
AA Rated	199,665		6,870		—			206,535
A Rated	16,032		462		—			16,494
BBB Rated	5,000		348		—			5,348
Non-investment grade	5,686		—		(232		)	5,454
Not rated	104,284		403		(7,797		)	96,890
Total investment securities held to maturity	$	2,133,427	$	69,787	$	(8,338	)	$	2,194,876
Available for sale investment grades: *
AAA Rated	$	1,471,623	$	46,898	$	(955	)	$	1,517,566
AA Rated	53,538		864		(28		)	54,374
A Rated	17,777		416		—			18,193
BBB Rated	24,389		588		(21		)	24,956
Non-investment grade	11,828		51		(475		)	11,404
Not rated	62,122		1,168		(395		)	62,895
Total investment securities available for sale	$	1,641,277	$	49,985	$	(1,874	)	$	1,689,388

* Rated using external rating agencies. Ratings categories include the 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 investment securities held to maturity portfolio includes $104.3 million in investments not rated by the rating agencies with aggregate unrealized losses of $7.8 million at June 30, 2020. The unrealized losses for this category included $7.5 million of unrealized losses related to four single-issuer bank trust preferred issuances with a combined amortized cost of $36.0 million.

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Loan Portfolio

The following table reflects the composition of the loan portfolio as of the dates presented:

	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
	($ in thousands)
Loans
Commercial and industrial	$	6,884,689		$	4,998,731		$	4,825,997		$	4,695,608		$	4,615,765
Commercial real estate:
Commercial real estate	16,571,877			16,390,236			15,996,741			13,365,454			12,798,017
Construction	1,721,352			1,727,046			1,647,018			1,537,590			1,528,968
Total commercial real estate	18,293,229			18,117,282			17,643,759			14,903,044			14,326,985
Residential mortgage	4,405,147			4,478,982			4,377,111			4,133,331			4,072,450
Consumer:
Home equity	471,115			481,751			487,272			489,808			501,646
Automobile	1,369,489			1,436,734			1,451,623			1,436,608			1,362,466
Other consumer	890,942			914,587			913,446			908,760			922,850
Total consumer loans	2,731,546			2,833,072			2,852,341			2,835,176			2,786,962
Total loans*	$	32,314,611		$	30,428,067		$	29,699,208		$	26,567,159		$	25,802,162
As a percent of total loans:
Commercial and industrial	21.3		%	16.5		%	16.2		%	17.7		%	17.9		%
Commercial real estate	56.6			59.5			59.5			56.1			55.5
Residential mortgage	13.6			14.6			14.7			15.5			15.8
Consumer loans	8.5			9.4			9.6			10.7			10.8
Total	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

* Includes net unearned discount and deferred loan fees of $131.3 million and $76.4 million at June 30, 2020 and March 31, 2020, respectively, and net unearned premiums and deferred loan fees of $12.6 million, $18.3 million and $19.6 million at December 31, 2019, September 30, 2019 and June 30, 2019, respectively. Net unearned discounts and deferred loan fees at June 30, 2020 and March 31, 2020 include the non-credit discount on PCD loans as well as $62.1 million of net unearned fees related to SBA PPP loans at June 30, 2020.

Loans increased $1.9 billion to approximately $32.3 billion at June 30, 2020 from March 31, 2020 largely due to approximately $2.2 billion of SBA PPP loan originations within the commercial and industrial loan category during the second quarter 2020, partially offset by moderate declines in residential mortgage and the consumer loan categories. During the second quarter 2020, we originated $296 million of residential mortgage loans for sale (rather than held for investment) and sold approximately $237 million. Residential mortgage loans held for sale totaled $120.6 million and $58.9 million at June 30, 2020 and March 31, 2020, respectively.

Total commercial and industrial loans increased $1.9 billion from March 31, 2020 to approximately $6.9 billion at June 30, 2020 largely due to the $2.2 billion of SBA PPP loan originations in the second quarter. Excluding the SBA PPP loans, commercial and industrial loans decreased $328.4 million, or 26.3 percent on an annualized basis, at June 30, 2020 compared to March 31, 2020 as the lack of economic activity has weighed on loan demand in our markets. Additionally, commercial and industrial line utilization moderately declined from March 31, 2020.

Commercial real estate loans (excluding construction loans) increased $181.6 million, or 4.4 percent on an annualized basis, to $16.6 billion at June 30, 2020 from March 31, 2020 mainly due to a strong refinance market driven by historic low interest rates and slower repayment activity in the second quarter 2020. Construction loans decreased $5.7 million to $1.7 billion at June 30, 2020 from March 31, 2020 mainly due to migration of completed  existing construction projects to permanent financing during the second quarter 2020.

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Total residential mortgage loans decreased $73.8 million to approximately $4.4 billion at June 30, 2020 from March 31, 2020 largely due to higher mortgage banking sales activity. New and refinanced residential mortgage loan originations totaled approximately $494.2 million for the second quarter 2020, as compared to $358.9 million and $347.1 million for the first quarter 2020 and second quarter 2019, respectively. Of the total originations for the second quarter 2020, $296 million of residential mortgage loans were originated for sale rather than held for investment and sold approximately $237 million of these loans. We expect to continue to sell a large portion of our new fixed rate residential mortgage loan originations during the remainder of 2020 assuming the low level of market interest rates continues and we are able to maintain an appropriate mix of residential mortgage loans on our balance sheet.

Home equity loans totaled $471.1 million at June 30, 2020, and decreased $10.6 million from March 31, 2020 largely due to normal repayments that outpaced new loan origination and line activity.

Automobile loans decreased by $67.2 million to $1.4 billion at June 30, 2020 as compared to March 31, 2020. The second quarter annualized decline was 18.7 percent due to lower application volumes as compared to the first quarter 2020 largely due to the COVID-19 impact. During the second quarter 2020, auto dealerships in our primary market areas were largely shut down as a result of shelter-in-place restrictions in connection with the pandemic. Our Florida dealership network contributed $14.3 million in auto loan originations, representing approximately 20 percent of Valley's total new auto loan production during the second quarter 2020, as compared to $28.3 million, representing approximately 21 percent, during the first quarter 2020.

Other consumer loans decreased $23.6 million to $890.9 million at June 30, 2020, as compared to $914.6 million at March 31, 2020 mostly due to lower volumes of new collateralized personal lines of credit as compared to the first quarter 2020.

Most of our lending is in northern and central New Jersey, New York City, Long Island and Florida, except for smaller auto and residential mortgage loan portfolios derived from other neighboring states of New Jersey, which could present a geographic and credit risk due to the recent economic downturn within these regions caused by the COVID-19 pandemic and the uncertain path forward to restart the U.S. economy. 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.

During the second quarter COVID-related economic shutdowns in our markets have slowed both new loan originations and contractual principal and interest payments. As traditional commercial origination activity has slowed, we focused additional resources on assisting our clients through the economic crisis and managing the demands of the SBA PPP loan forgiveness. As of mid-July 2020, we had originated approximately 12,800 PPP loans with an aggregate balance of $2.3 billion before unearned loan fees and costs. Our expectation is that approximately 75 percent of loans made under this program will be either fully or partially forgiven and are expected to come off our balance sheet over the next 12 months. During the early stages of the third quarter 2020, we have seen some improved levels of commercial loan activity, solid new and refinanced residential mortgage loan volumes, as well as better auto loan applications activity from borrowers with strong credit scores.

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Non-performing Assets

Prior to our adoption of the CECL standard on January 1, 2020, our past due loans and non-accrual loans discussed further below excluded those loans which were classified as Purchased Credit-Impaired (PCI) loans. Under previous U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) were accounted for on a pool basis and not subject to delinquency classification in the same manner as loans originated by Valley. Under the CECL standard, Valley's former PCI loan pools are accounted for as purchased credit deteriorated (PCD) loans on a loan level basis and, if applicable, are reported in our past due and non-accrual loans at June 30, 2020 and March 31, 2020.

Non-performing assets include non-accrual loans, other real estate owned (OREO), other repossessed assets (which primarily consists of automobiles and taxi medallions) and non-accrual debt securities at June 30, 2020. 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 estimated cost to sell. Our non-performing assets increased $3.7 million to $224.2 million at June 30, 2020 as compared to March 31, 2020, mainly due to a $4.7 million increase in non-accrual loans, partially offset by a decline in OREO during the second quarter 2020. Non-performing assets as a percentage of total loans and non-performing assets totaled 0.69 percent and 0.72 percent at June 30, 2020 and March 31, 2020, respectively (as shown in the table below). For additional details, see the "Credit quality indicators" section in Note 8 to the consolidated financial statements.

Our lending strategy is based on underwriting standards designed to maintain high credit quality and we remain optimistic regarding the overall future performance of our loan portfolio. However, due to the potential for future credit deterioration caused by the recent downturn in economic conditions impacted by the COVID-19 pandemic and a number of our borrowers performing under short-term forbearance agreements, management cannot provide assurance that our non-performing assets will not increase substantially from the levels reported at June 30, 2020.

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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: 

	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
	($ in thousands)
Accruing past due loans: *
30 to 59 days past due:
Commercial and industrial	$	6,206		$	9,780		$	11,700		$	5,702		$	14,119
Commercial real estate	13,912			41,664			2,560			20,851			6,202
Construction	—			7,119			1,486			11,523			—
Residential mortgage	35,263			38,965			17,143			12,945			19,131
Total Consumer	12,962			19,508			13,704			13,079			11,932
Total 30 to 59 days past due	68,343			117,036			46,593			64,100			51,384
60 to 89 days past due:
Commercial and industrial	4,178			7,624			2,227			3,158			4,135
Commercial real estate	1,543			15,963			4,026			735			354
Construction	—			49			1,343			7,129			1,342
Residential mortgage	4,169			9,307			4,192			4,417			3,635
Total Consumer	3,786			2,309			2,527			1,577			1,484
Total 60 to 89 days past due	13,676			35,252			14,315			17,016			10,950
90 or more days past due:
Commercial and industrial	5,220			4,049			3,986			4,133			3,298
Commercial real estate	—			161			579			1,125			—
Residential mortgage	3,812			1,798			2,042			1,347			1,054
Total Consumer	2,082			1,092			711			756			359
Total 90 or more days past due	11,114			7,100			7,318			7,361			4,711
Total accruing past due loans	$	93,133		$	159,388		$	68,226		$	88,477		$	67,045
Non-accrual loans: *
Commercial and industrial	$	130,876		$	132,622		$	68,636		$	75,311		$	76,216
Commercial real estate	43,678			41,616			9,004			9,560			6,231
Construction	3,308			2,972			356			356			—
Residential mortgage	25,776			24,625			12,858			13,772			12,069
Total Consumer	6,947			4,095			2,204			2,050			1,999
Total non-accrual loans	210,585			205,930			93,058			101,049			96,515
Other real estate owned (OREO)	8,283			10,198			9,414			6,415			7,161
Other repossessed assets	3,920			3,842			1,276			2,568			2,358
Non-accrual debt securities	1,365			531			680			680			680
Total non-performing assets (NPAs)	$	224,153		$	220,501		$	104,428		$	110,712		$	106,714
Performing troubled debt restructured loans	$	53,936		$	48,024		$	73,012		$	79,364		$	74,385
Total non-accrual loans as a % of loans	0.65		%	0.68		%	0.31		%	0.38		%	0.37		%
Total NPAs as a % of loans and NPAs	0.69			0.72			0.35			0.41			0.41
Total accruing past due and non-accrual loans as a % of loans	0.94			1.20			0.54			0.71			0.63
Allowance for loan losses as a % of non-accrual loans	147.03			137.59			173.83			160.17			160.71

* Past due loans and non-accrual loans presented in periods prior to March 31, 2020 exclude PCI loans. PCI loans were accounted for on a pool basis and are were not subject to delinquency classification.

Loans past due 30 to 59 days decreased $48.7 million to $68.3 million at June 30, 2020 as compared to March 31, 2020 due to improved performance across most categories. Commercial real estate loan delinquencies within this category decreased by $27.8 million as compared to March 31, 2020 mainly due to restored customer payments delayed by business disruptions caused by COVID-19 related factors at the end of the first quarter 2020. In addition, commercial real estate and construction loans decreased mainly due to matured performing commercial real estate and

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construction loans totaling $4.3 million and $5.0 million, respectively, that were in the normal process of renewal reported in this category at March 31, 2020.

Loans past due 60 to 89 days decreased $21.6 million to $13.7 million at June 30, 2020 as compared to March 31, 2020 mainly due to matured performing commercial real estate and commercial and industrial loans totaling $13.8 million and $4.5 million, respectively, that were in the normal process of renewal reported in this category at March 31, 2020.

Loans past due 90 days or more and still accruing interest increased $4.0 million to $11.1 million at June 30, 2020 as compared to $7.1 million at March 31, 2020. 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 $210.6 million at June 30, 2020 as compared to $205.9 million at March 31, 2020. The increase in non-accrual loans was partially due to one commercial real estate loan which moved to non-accrual status during the second quarter 2020, as well as a moderately higher level of non-accrual consumer loans at June 30, 2020. Non-accrual loans represented 0.65 percent of total loans at June 30, 2020 compared to 0.68 percent at March 31, 2020.

During the second quarter 2020, we continued to closely monitor our New York City and Chicago taxi medallion loans totaling $99.8 million and $7.0 million, respectively, within the commercial and industrial loan portfolio at June 30, 2020. Due to continued negative trends in market valuations of the underlying taxi medallion collateral, a weak operating environment and uncertain borrower performance, the remainder of our previously accruing taxi medallion loans were placed on non-accrual status during the first quarter 2020. At June 30, 2020, non-accrual taxi medallion loans totaling $106.8 million had related reserves of $61.6 million within the allowance for loan losses as compared to $109.8 million with related reserves of $56.8 million at March 31, 2020.

Valley's historical taxi medallion lending criteria had been conservative regarding capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees and other collateral in certain instances. However, the severe decline in the market valuation of taxi medallions has adversely affected the estimated fair valuation of these loans and, as a result, increased the level of our allowance for loan losses at June 30, 2020 (See the "Allowance for Credit Losses" section below). Potential further declines in the market valuation of taxi medallions and the stressed operating environment within both New York City and Chicago due to COVID-19 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 $16.0 million within the allowance for loan losses based upon the impaired taxi medallion loan balances at June 30, 2020.

OREO properties decreased $1.9 million to $8.3 million at June 30, 2020 from $10.2 million at March 31, 2020 due to sales of several properties. Sales of OREO properties resulted in net gains of $274 thousand and $431 thousand for the three and six months ended June 30, 2020, respectively, as compared to net gains of $857 thousand and $1.7 million for the three and six months ended June 30, 2019, respectively. The residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $1.8 million at June 30, 2020.

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) increased $5.9 million to $53.9 million at June 30, 2020 as compared to $48.0 million at March 31, 2020. Performing TDRs consisted of 87 loans at June 30, 2020. On an aggregate basis, the $53.9 million in performing TDRs at June 30, 2020 had a modified weighted average interest rate of approximately 4.92 percent as compared to a pre-modification weighted average interest rate of 4.72 percent.

Loan Forbearance. In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant, when requested by customers. Generally, the modification terms allow for a

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deferral of payments for up to 90 days, which Valley may extend for an additional 90 days, for a maximum of 180 days on a cumulative and successive basis. To date, Valley has granted over 10,000 loan forbearances totaling approximately $4.6 billion in support of our customers. Of these, approximately 5,000 loans totaling $1.9 billion have completed the contractual deferral period and returned to regularly scheduled payments.

Higher Risk COVID-19 Credit Exposures. Valley has identified certain borrower industries as being potentially exposed to the effects of economic shutdowns related to COVID-19. These industries include doctor and surgery centers, retail trade, hotels and hospitality, restaurants and food service, and entertainment and recreation. As of June 30, 2020, Valley had outstanding loans of approximately $2.1 billion to borrowers in these industries representing approximately 7 percent of total outstanding loans. Industries that may have secondary exposure to the COVID-19 pandemic include nursing and residential care, wholesale trade, manufacturing, and child care and education. As of June 30, 2020, Valley had outstanding loans of approximately $2.4 billion to borrowers in these industries representing approximately 7.8 percent of total outstanding loans. The large majority of loans to the aforementioned industries were pass-rated under Valley’s internal risk rating system as of June 30, 2020. As of July 10, 2020, Valley had loans in forbearance representing approximately 12 percent of our loans in the aforementioned industries.

Allowance for Credit Losses for Loans

The allowance for credit losses for loans consists of the allowance for loan losses and the reserve for unfunded credit commitments. Effective January 1, 2020, we adopted the new CECL standard, which is based on lifetime expected credit losses rather than incurred losses. At adoption, Valley recorded a $99.6 million increase to its allowance for credit losses for loans, including reserves of $61.6 million related to PCD loans. See Note 5 to the consolidated financial statements for further details on the Day 1 CECL adoption.

Our methodology to establish the allowance for loan losses has two basic components: (1) a collective (pooled) reserve component for estimated expected credit losses for pools of loans that share similar risk characteristics and (2) an individual reserve component for loans that do not share risk characteristics, consisting of collateral dependent, TDR, and expected TDR loans. Valley also maintains a separate allowance for unfunded credit commitments mainly consisting of undisbursed non-cancellable lines of credit, new loan commitments and commercial letters of credit.

In estimating the component of the allowance on a collective basis we use a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by generating probability of default and loss given default metrics. The metrics are based on the migration of loans from performing to loss by credit quality rating or delinquency categories using historical life-of-loan analysis periods for each loan portfolio pool and the severity of loss based on the aggregate net lifetime losses incurred. The model's expected losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) lending policies and procedures, (ii) current business conditions and economic developments that affect the loan collectability; (iii) concentration risks by size, type, and geography (iv) the potential volume and migration of of loan forbearances to non-performing status, and (v) the effect of external factors such as legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Valley utilizes 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 forecasts consist of a multi-scenario economic forecast model to estimate future credit losses and is governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. We have identified and selected key variables that most closely correlated to our historical credit performance, which include: GDP, unemployment and the Case-Shiller Home Price Index.

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For the second quarter 2020, we continued to incorporate a probability weighted three-scenario economic forecast, including Moody's Baseline, S-3 and S-4 scenarios. The S-4 forecast is the most severe economic scenario and includes the following assumptions:

• Assumes that the COVID-19 crisis will persist and continue to meaningfully impact the economy;

• National unemployment rate will remain elevated throughout the remainder of the year and peak at 13.2 percent in the fourth quarter 2021;

• Federal funds interest rates will remain at or near zero for foreseeable future; and

• A prolonged downturn in the economy until the fourth quarter 2021.

The allowance for credit losses for loans methodology and accounting policy are fully described in Note 8 to the consolidated financial statements.

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The table below summarizes the relationship among loans, loans charged-off, loan recoveries, the provision for credit losses and the allowance for credit losses for loans for the periods indicated.

	Three Months Ended									Six Months Ended
	June 30, 2020			March 31, 2020			June 30, 2019			June 30, 2020			June 30, 2019
	($ in thousands)
Average loans outstanding	$	32,041,200		$	29,999,428		$	25,552,415		$	31,020,314		$	25,404,396
Beginning balance - Allowance for credit losses for loans	293,361			164,604			158,961			164,604			156,295
Impact of ASU No. 2016-13 adoption on January 1, 2020 (1)	—			37,989			—			37,989			—
Allowance for purchased credit deteriorated (PCD) loans (1)	—			61,643			—			61,643			—
Beginning balance, adjusted	293,361			264,236			158,961			264,236			156,295
Loans charged-off: (2)
Commercial and industrial	(14,024		)	(3,360		)	(3,073		)	(17,384		)	(7,355		)
Commercial real estate	(27		)	(44		)	—			(71		)	—
Residential mortgage	(5		)	(336		)	—			(341		)	(15		)
Total Consumer	(2,601		)	(2,565		)	(1,752		)	(5,166		)	(3,780		)
Total charge-offs	(16,657		)	(6,305		)	(4,825		)	(22,962		)	(11,150		)
Charged-off loans recovered:
Commercial and industrial	799			569			1,195			1,368			1,678
Commercial real estate	31			73			22			104			43
Construction	20			20			—			40			—
Residential mortgage	545			50			9			595			10
Total Consumer	509			794			617			1,303			1,103
Total recoveries	1,904			1,506			1,843			3,410			2,834
Net charge-offs	(14,753		)	(4,799		)	(2,982		)	(19,552		)	(8,316		)
Provision charged for credit losses	41,115			33,924			2,100			75,039			10,100
Ending balance - Allowance for credit for losses	$	319,723		$	293,361		$	158,079		$	319,723		$	158,079
Components of allowance for credit losses for loans:
Allowance for loan losses	$	309,614		$	283,342		$	155,105		$	309,614		$	155,105
Allowance for unfunded credit commitments	10,109			10,019			2,974			10,109			2,974
Allowance for credit losses for loans	$	319,723		$	293,361		$	158,079		$	319,723		$	158,079
Components of provision for credit losses for loans:
Provision for credit losses for loans	$	41,025		$	33,851		$	3,706		$	74,876		$	11,562
Provision for unfunded credit commitments (3)	90			73			(1,606		)	163			(1,462		)
Total provision for credit losses for loans	$	41,115		$	33,924		$	2,100		$	75,039		$	10,100
Annualized ratio of net charge-offs to average loans outstanding	0.18		%	0.06		%	0.05		%	0.13		%	0.07		%

(1) The adjustment represents an increase in the allowance for credit losses for loans as a result of the adoption of ASU 2016-13 effective January 1, 2020.

(2) Charge-offs and recoveries presented for periods prior to March 31, 2020 exclude loans formerly accounting for as PCI loans.

(3) Periods prior to March 31, 2020 represent the allowance and provision for unfunded letters of credit only.

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Net loan charge-offs totaled $14.8 million for the second quarter 2020 as compared to $4.8 million and $3.0 million for the first quarter 2020 and second quarter 2019, respectively. The increase in net loan charge-offs was largely due to the partial charge-off of one commercial and industrial loan totaling $7.8 million for the second quarter 2020. Additionally, gross loan charge-offs related to taxi medallion loans totaled $3.2 million, $1.3 million and $2.3 million for the second quarter 2020, first quarter 2020 and second quarter 2019, respectively. The overall level of loan charge-offs (as presented in the above table) continues to trend within management's expectations for the credit quality of the loan portfolio.

During the second quarter 2020, we recorded a $41.1 million provision for credit losses as compared to $33.9 million and $2.1 million for the first quarter 2020 and the second quarter 2019, respectively. The second quarter 2020 provision mainly reflects the reserve build caused by deterioration in Valley's view of the macroeconomic outlook since the end of the first quarter, higher specific reserves associated with our taxi medallion loan portfolio and additional qualitative management adjustments to reflect the potential for higher levels of credit stress for COVID-19 impacted borrowers.

The following table summarizes the allocation of the allowance for credit losses for loans to loan portfolio categories and the allocations as a percentage of each loan category:

	June 30, 2020				March 31, 2020				June 30, 2019
	Allowance Allocation *		Allocation as a % of Loan Category		Allowance Allocation*		Allocation as a % of Loan Category		Allowance Allocation*		Allocation as a % of Loan Category
	($ in thousands)
Loan Category:
Commercial and Industrial loans	$	132,039	1.92	%	$	127,437	2.55	%	$	94,384	2.11	%
Commercial real estate loans:
Commercial real estate	117,743		0.71	%	97,876		0.60	%	23,796		0.19	%
Construction	13,959		0.81	%	13,709		0.79	%	25,182		1.65	%
Total commercial real estate loans	131,702		0.72	%	111,585		0.62	%	48,978		0.34	%
Residential mortgage loans	29,630		0.67	%	29,456		0.66	%	5,219		0.13	%
Consumer loans:
Home equity	4,766		1.01	%	4,463		0.93	%	505		0.10	%
Auto and other consumer	11,477		0.51	%	10,401		0.44	%	6,019		0.26	%
Total consumer loans	16,243		0.59	%	14,864		0.52	%	6,524		0.23	%
Total allowance for loan losses	309,614		0.96	%	283,342		0.93	%	155,105		0.60	%
Allowance for unfunded credit commitments	10,109				10,019				2,974
Total allowance for credit losses for loans	$	319,723			$	293,361			$	158,079
Allowance for credit losses for loans as a % loans			0.99	%			0.96	%			0.61	%

* CECL was adopted January 1, 2020. Prior periods reflect the allowance for credit losses for loans under the incurred loss model.

The allowance for credit losses for loans, comprised of our allowance for loan losses and unfunded credit commitments, as a percentage of total loans was 0.99 percent, 0.96 percent and 0.61 percent at June 30, 2020, March 31, 2020 and June 30, 2019, respectively. At June 30, 2020, the allowance allocations for credit losses as a percentage of total loans increased for most loan categories as compared to March 31, 2020. However, the allocated reserves as a percentage of commercial and industrial loans declined by 0.63 percent due to $2.2 billion of SBA PPP loans with no related allowance at June 30, 2020. PPP loans originated in the second quarter 2020 are 100 percent guaranteed by the SBA and totaled approximately $2.2 billion at June 30, 2020. Our allowance of credit losses for loans as a percentage of non-PPP loans was 1.06 percent at June 30, 2020.

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Capital Adequacy

A significant measure of the strength of a financial institution is its shareholders’ equity. At June 30, 2020 and December 31, 2019, shareholders’ equity totaled approximately $4.5 billion and $4.4 billion, which represented 10.7 percent and 11.7 percent of total assets, respectively. During the six months ended June 30, 2020, total shareholders’ equity increased by $90.3 million primarily due to (i) net income of $182.9 million, (ii) an increase in other comprehensive income of $27.3 million, and (iii) a $4.4 million increase attributable to the effect of our stock incentive plan. These positive changes were partially offset by (i) cash dividends declared on common and preferred stock totaling a combined $96.1 million, and (ii) a $28.2 million net cumulative effect adjustment to retained earnings for the adoption of new accounting guidance as of January 1, 2020.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the FRB 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 ratio 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 June 30, 2020 and December 31, 2019, Valley and Valley National Bank exceeded all capital adequacy requirements (see tables below).

For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) net of taxes for the six months ended June 30, 2020 will be phased in over the same time frame.

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The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under Basel III risk-based capital guidelines at June 30, 2020 and December 31, 2019:

	Actual				Minimum Capital Requirements				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	($ in thousands)
As of June 30, 2020
Total Risk-based Capital
Valley	$	3,672,021	12.19	%	$	3,162,478	10.50	%	N/A		N/A
Valley National Bank	3,688,957		12.25		3,161,772		10.50		$	3,011,211	10.00	%
Common Equity Tier 1 Capital
Valley	2,864,828		9.51		2,108,319		7.00		N/A		N/A
Valley National Bank	3,385,605		11.24		2,107,848		7.00		1,957,287		6.50
Tier 1 Risk-based Capital
Valley	3,079,669		10.23		2,560,101		8.50		N/A		N/A
Valley National Bank	3,385,605		11.24		2,559,530		8.50		2,408,969		8.00
Tier 1 Leverage Capital
Valley	3,079,669		7.70		1,599,880		4.00		N/A		N/A
Valley National Bank	3,385,605		8.47		1,599,569		4.00		1,999,461		5.00
As of December 31, 2019
Total Risk-based Capital
Valley	$	3,427,134	11.72	%	$	3,070,687	10.50	%	N/A		N/A
Valley National Bank	3,416,674		11.69		3,069,894		10.50		$	2,923,709	10.00	%
Common Equity Tier 1 Capital
Valley	2,754,524		9.42		2,047,125		7.00		N/A		N/A
Valley National Bank	3,152,070		10.78		2,046,596		7.00		1,900,411		6.50
Tier 1 Risk-based Capital
Valley	2,968,530		10.15		2,485,795		8.50		N/A		N/A
Valley National Bank	3,152,070		10.78		2,485,153		8.50		2,338,967		8.00
Tier 1 Leverage Capital
Valley	2,968,530		8.76		1,355,378		4.00		N/A		N/A
Valley National Bank	3,152,070		9.31		1,354,693		4.00		1,693,366		5.00

Tangible book value per common share is computed by dividing shareholders’ equity less preferred stock, goodwill and other intangible assets by common shares outstanding as follows: 

	June 30, 2020		December 31, 2019
	($ in thousands, except for share data)
Common shares outstanding	403,795,699		403,278,390
Shareholders’ equity	$	4,474,488	$	4,384,188
Less: Preferred stock	209,691		209,691
Less: Goodwill and other intangible assets	1,453,330		1,460,397
Tangible common shareholders’ equity	$	2,811,467	$	2,714,100
Tangible book value per common share	$	6.96	$	6.73
Book value per common share	$	10.56	$	10.35

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Management believes the tangible book value per common share ratio provides information useful to management and 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. This non-GAAP financial measure should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP. This non-GAAP financial measure may also be calculated differently from similar measures disclosed by other companies.

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 approximately 50.0 percent for the six months ended June 30, 2020 as compared to 49.4 percent for the year ended December 31, 2019.

Cash dividends declared amounted to $0.22 per common share for each of the six months ended June 30, 2020 and 2019. 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. However, the FRB recently reiterated its long-standing guidance that banking organizations should consult them before declaring dividends in excess of earnings for the corresponding quarter. The renewed guidance was largely due to the increased risk of the COVID-19 pandemic negatively impacting the future level of bank earnings. See the risk factors at Part II, Item 1A of this report for additional information.

Off-Balance Sheet Arrangements, Contractual Obligations and Other Matters

For a discussion of Valley’s off-balance sheet arrangements and contractual obligations see information included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019 in the MD&A section - “Contractual Obligations and Off-Balance Sheet Arrangements” and Notes 12 and 13 to the consolidated financial statements included in this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, and commodity prices. Valley’s market risk is composed primarily of interest rate risk. See page 71 for a discussion of interest rate sensitivity.

Item 4. Controls and Procedures

(a) 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, (Exchange Act) 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 Exchange Act 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 Valley’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

Valley’s CEO and CFO, with the assistance of other members of Valley’s management, have evaluated the effectiveness of Valley’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, Valley’s CEO and CFO have concluded that Valley’s disclosure controls and procedures were effective as of the end of the period covered by this report.

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(b) Changes in internal controls over financial reporting. Beginning January 1, 2020, Valley adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Valley implemented changes to the policies, processes, and controls over the estimation of the allowance for credit losses to support the adoption of ASU No. 2016-13. Many controls under this new standard remained unchanged under prior GAAP. New controls were established over the review of economic forecasting projections obtained externally. Except as related to the adoption of ASU No. 2016-13, Valley’s CEO and CFO have also concluded that there have not been any changes in Valley’s internal control over financial reporting in the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, Valley’s internal control over financial reporting.

Valley has not experienced any material impact to Valley’s internal controls over financial reporting due to the fact that most of Valley’s employees responsible for financial reporting are working remotely during the COVID-19 pandemic. Valley is continually monitoring and assessing the impact of the COVID-19 pandemic on Valley’s internal controls to minimize the impact to their design and operating effectiveness

Valley’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A system of internal control, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the system of internal control are met. The design of a system of internal control reflects resource constraints and the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Valley have been or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of a simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions; over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION 

Item 1. Legal Proceedings

In the normal course of business, we may be a party to various outstanding legal proceedings and claims. There have been no material changes in the legal proceedings, if any, previously disclosed under Part I, Item 3 of Valley’s Annual Report on Form 10-K for the year ended December 31, 2019.

Item 1A. Risk Factors

The section titled Risk Factors in Part I, Item 1A of our 2019 Annual Report on Form 10-K includes a discussion of the many risks and uncertainties we face, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity). The information presented below provides an update to, and should be read in conjunction with, the risk factors and other information contained in our 2019 Annual Report on Form 10-K. Except as presented below, there have been no material changes to these risk factors.

The COVID-19 pandemic is adversely affecting us and our customers, counterparties, employees, and third-party service providers, and the full extent of the adverse impacts on our business, financial position, results of operations, and prospects could be significant.

The spread of COVID-19 has created a global public-health crisis that has resulted in widespread volatility and deteriorations in business, economic, and market conditions and household incomes, including in the states of New

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Jersey, New York, Florida and Alabama where we conduct nearly all of our business. The extent of the impact of the COVID-19 pandemic on our capital and liquidity, and on our business, results of operations, financial position and prospects generally will depend on a number of evolving factors, including:

The duration, extent, and severity of the pandemic. COVID-19 has not yet been contained and could affect significantly more households and businesses. The duration and severity of the pandemic, including the degree of resurgence after the initial containment, continue to be impossible to predict. Following any containment, there is also substantial uncertainty surrounding the pace of economic recovery and the return of business and consumer confidence.

The response of governmental and nongovernmental authorities. Many of their actions have been directed toward curtailing household and business activity to contain COVID-19 while simultaneously deploying fiscal- and monetary-policy measures to partially mitigate the adverse effects on individual households and businesses. These actions are not always coordinated or consistent across jurisdictions but, in general, have rapidly expanded in scope and intensity, contributing to substantial market volatility.

The effect on our customers, counterparties, employees, and third-party service providers. COVID-19 and its associated consequences and uncertainties, including increased unemployment rates, are affecting individuals, households, and businesses differently and unevenly. Many, however, have already changed their behavior in response to governmental mandates and advisories to sharply restrain commercial and social interactions and discretionary spending. As a result, in the near term, our credit, operational, and other risks have generally increased and, for the foreseeable future, are expected to remain elevated or increase further.

The effect on economies and markets. Whether the actions of governmental and nongovernmental authorities will be successful in mitigating the adverse effects of COVID-19 is unclear. National, regional, and local economies (including the local economies in the markets areas which we serve) and markets could suffer disruptions that are lasting. Governmental actions are meaningfully influencing the interest-rate environment and financial-market activity, which could adversely affect our results of operations and financial condition.

During the first half of 2020, the most notable impacts to our results of operations were a higher provision expense for credit losses, which we expect to continue. Our provision expense was $75.8 million for the first half of 2020 as compared to $10.1 million for the first half of 2019. With recent increases in COVID-19 infection rates in Florida and Alabama, our forecast of macroeconomic conditions and operating results, including expected lifetime credit losses on our loan portfolio, remains subject to meaningful uncertainty.

Governments have taken unprecedented steps to partially mitigate the adverse effects of their containment measures. For example, on March 27, 2020, the CARES Act was enacted to inject more than $2 trillion of financial assistance into the U.S. economy. The FRB has taken decisive and sweeping actions as well. Since March 15, 2020, these have included a reduction in the target range for the federal funds rate to 0 to 0.25 percent, a program to purchase an indeterminate amount of Treasury securities and agency mortgage-backed securities, and numerous facilities to support the flow of credit to households and businesses.

The degree to which our actions and those of governments and others will directly or indirectly assist our customers, counterparties, and third-party service providers and advance our business and the economy generally is not yet clear. For example, while our short-term loan modifications granted to certain customers impacted by COVID-19 may better position them to resume their regular payments to us in the future and enhance our brand and customer loyalty, these modifications may negatively impact our cash flows and results of operations at least in the near term, may produce a higher degree of requests for extensions and rewrites than we have anticipated, and may not be as successful as we expect in managing our credit risk. In addition, while the FRB’s accommodative monetary policy may benefit us to some degree by supporting economic activity among our customers, this policy and sudden shifts in it may inhibit our ability to grow or sustain net interest income and effectively manage interest rate risk.

In order to safeguard the health and wellness of our customers and employees, and to comply with applicable government directives, we have modified our business practices, including temporarily closure of certain offices, restricting employee travel and directing employees to work from home whenever possible, temporary closure of

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some branches and, in branches that remain open, offering only restricted drive-up service or lobby service by appointment, and have implemented our business continuity plans to the extent necessary. These measures, and further actions we may take as required by government authorities or that we otherwise determine are in the best interests of our customers and employees, could increase certain risks, including cybersecurity risks, impair our ability to perform critical functions and adversely impact our results of operations.

We are unable to estimate the near-term and ultimate impacts of COVID-19 on our business and operations at this time. The pandemic could cause us to experience higher credit losses in our lending portfolio, additional increases in our allowance for credit losses, impairment of our goodwill and other financial assets, diminished access to capital markets and other funding sources, further reduced demand for our products and services, and other negative impacts on our financial position, results of operations, and prospects. In addition, sustained adverse effects may impair our capital and liquidity positions, require us to take capital actions, prevent us from satisfying our minimum regulatory capital ratios and other supervisory requirements, result in downgrades in our credit ratings, and the reduction or elimination of our common stock dividend in future periods.

As a participating lender in the SBA Paycheck Protection Program, we are subject to additional risks of litigation from our customers or other parties regarding our processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties, which could have a significant adverse impact on our business, financial position, results of operations, and prospects.

The CARES Act included a $349 billion loan program administered through the SBA referred to as the PPP. Under the PPP, small businesses and other entities and individuals can apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. On April 16, 2020, the SBA notified lenders that the original $349.0 billion of funding under the PPP was exhausted, and on April 24, 2020, Congress allocated an additional $310.0 billion to the program. We participated as a lender in both rounds of the PPP because of the short timeframe between the passing of the CARES Act and the opening of the PPP, there was and continues to be some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes us to risks relating to noncompliance with the PPP. Since the opening of the PPP banks have been subject to class action litigation regarding the process and procedures that such banks used in processing applications for the PPP and their refusal to pay agent fees. Class action litigation has been filed against us, along with many other banks claiming the banks are obligated to pay agent fees. If these cases are not resolved in a manner favorable to us, it may result in significant financial liability and adversely affect our reputation. In addition, litigation can be costly, regardless of outcome. Any financial liability, litigation costs or reputational damage caused by PPP-related litigation could have a material adverse impact on our business, financial position, results of operations and prospects.

We may have a credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced by us, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded, or serviced by us, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from us, which could adversely impact our business, financial position, results of operations and prospects.

We may be required to consult with the Federal Reserve Bank (FRB) before declaring cash dividends on our common stock, which ultimately may delay, reduce, or eliminate such dividends and 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. We may reduce or eliminate our common stock cash dividend in the future depending upon our results of operations, financial condition or other metrics which could be adversely impacted by the unknown full impact of COVID-19.

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In July 2020, the FRB updated its supervisory guidance to provide greater clarity regarding the situations in which bank holding companies, like Valley, may expect an expedited consultation in connection with the declaration of dividends that exceed quarterly earnings. To qualify, amongst other criteria, total commercial real estate loan concentrations cannot represent 300 percent or more of total capital and the outstanding balance of the commercial real estate loan portfolio cannot increase by 50 percent or more during the prior 36 months. Currently, we believe that Valley does not meet this standard for expedited consultation and approval of its dividend, should it be required, due to strong organic and acquired commercial real estate loan growth over the past three years. As a result, Valley could be subject to a lengthier and possibly more burdensome review process by the FRB when considering paying dividends that exceed quarterly earnings. The delay, reduction or elimination of our quarterly dividend could adversely affect the market price of our common stock. See additional information regarding our quarterly cash dividend and the current rate of earnings retention at the "Capital Adequacy" section of the MD&A.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter, we did not sell any equity securities not registered under the Securities Act of 1933, as amended. Purchases of equity securities by the issuer and affiliated purchasers during the three months ended June 30, 2020 were as follows:

ISSUER PURCHASES OF EQUITY SECURITIES 

Period	Total  Number of Shares  Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)
April 1, 2020 to April 30, 2020	1,254	$	7.14	—	4,112,465
May 1, 2020 to May 31, 2020	1,837	7.61		—	4,112,465
June 1, 2020 to June 30, 2020	3,650	7.77		—	4,112,465
Total	6,741	$	7.61	—

(1) Represents repurchases made in connection with the vesting of employee restricted 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 June 30, 2020.

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Item 6. Exhibits

 

(3)	Articles of Incorporation and By-laws:
	(3.1)	Restated Certificate of Incorporation of the Registrant.*
	(3.2)	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.
(10)	Material Contracts
	(10.1)	Employment Agreement with Joseph Chillura, dated July 25,2017, effective January 1, 2018.*
(31.1)	Certification pursuant to Securities Exchange Rule 13a-14(a)/15d-14(a) signed by Ira Robbins, Chairman of the Board, President and Chief Executive Officer of the Company.*
(31.2)	Certification pursuant to Securities Exchange Rule 13a-14(a)/15d-14(a) signed by Michael D. Hagedorn, Senior Executive Vice President and Chief Financial Officer of the Company.*
(32)	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.**
(101)	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.
**	Furnished herewith

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SIGNATURES

Pursuant to the requirements 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.

	VALLEY NATIONAL BANCORP
	(Registrant)
Date:	/s/ Ira Robbins
August 7, 2020	Ira Robbins
	Chairman of the Board, President
	and Chief Executive Officer
	(Principal Executive Officer)
Date:	/s/ Michael D. Hagedorn
August 7, 2020	Michael D. Hagedorn
	Senior Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)

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EX-3.1

EXHIBIT 3.1

RESTATED
CERTIFICATE OF INCORPORATION

OF

VALLEY NATIONAL BANCORP

The Board of Directors of Valley National Bancorp pursuant to the provisions of Section 14A:9-5(2) of the New Jersey Business Corporation Act has adopted this Restated Certificate of Incorporation to restate and integrate in a single certificate the provisions of its Certificate of Incorporation as heretofore amended. Valley National Bancorp does hereby certify as follows:

ARTICLE I

CORPORATE NAME

The name of the Corporation is Valley National Bancorp (hereinafter the “Corporation”).

ARTICLE II

CURRENT REGISTERED OFFICE

AND CURRENT REGISTERED AGENT

The address of the Corporation’s current registered office is 1455 Valley Road, Wayne, New Jersey 07470. The name of the current registered agent at that address is Ronald H. Janis.

ARTICLE III

NUMBER OF DIRECTORS

The number of directors shall be governed by the by-laws of the Corporation. The number of directors constituting the current Board of Directors of the Corporation is twelve (12), and the names and addresses of the persons who are currently serving as such directors are:

-1-

EXHIBIT 3.1

Andrew B. Abramson	1455 Valley Road Wayne, NJ 07470
Peter J. Baum	1455 Valley Road Wayne, NJ 07470
Eric P. Edelstein	1455 Valley Road Wayne, NJ 07470
Graham O. Jones	1455 Valley Road Wayne, NJ 07470
Marc J. Lenner	1455 Valley Road Wayne, NJ 07470
Kevin J. Lynch	1455 Valley Road Wayne, NJ 07470
Peter V. Maio	1455 Valley Road Wayne, NJ 07470
Ira Robbins	1455 Valley Road Wayne, NJ 07470
Suresh L. Sani	1455 Valley Road Wayne, NJ 07470
Lisa J. Schultz	1455 Valley Road Wayne, NJ 07470
Jennifer W. Steans	1455 Valley Road Wayne, NJ 07470
Jeffrey S. Wilks	1455 Valley Road Wayne, NJ 07470

ARTICLE IV

CORPORATE PURPOSE

The purpose for which the Corporation is organized is to engage in any activities for which corporations may be organized under the New Jersey Business Corporation Act, subject to any restrictions

-2-

EXHIBIT 3.1

which may be imposed from time to time by the laws of the United States or the State of New Jersey with regard to the activities of a bank holding company.

ARTICLE V

CAPITAL STOCK

(A) The total authorized capital stock of the Corporation shall be 700,000,000 shares, consisting of 650,000,000 shares of Common Stock and 50,000,000 shares of Preferred Stock which may be issued in one or more classes or series. The shares of Common Stock shall constitute a single class and shall be without nominal or par value. The shares of Preferred Stock of each class or series shall be without nominal or par value, except that the amendment authorizing the initial issuance of any class or series, adopted by the Board of Directors as provided herein, may provide that shares of any class or series shall have a specified par value per share, in which event all of the shares of such class or series shall have the par value per share so specified.

(B) The Board of Directors of the Corporation is expressly authorized from time to time to adopt and to cause to be executed and filed without further approval of the shareholders amendments to this Certificate of Incorporation authorizing the issuance of one or more classes or series of Preferred Stock for such consideration as the Board of Directors may fix. In an amendment authorizing any class or series of Preferred Stock, the Board of Directors is expressly authorized to determine:

(a) The distinctive designation of the class or series and the number of shares which will constitute the class or series, which number may be increased or decreased (but not below the number of shares then outstanding in that class or above the total shares authorized herein) from time to time by action of the Board of Directors;

(b) The dividend rate on the shares of the class or series, whether dividends will be cumulative, and, if so, from what date or dates;

(c) The price or prices at which, and the terms and conditions on which, the shares of the class or series may be redeemed at the option of the Corporation;

(d) Whether or not the shares of the class or series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;

(e) Whether or not the shares of the class or series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities, and if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such

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EXHIBIT 3.1

conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(f) The rights of the shares of the class or series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(g) Whether or not the shares of the class or series will have priority over, parity with, or be junior to the shares of any other class or series in any respect, whether or not the shares of the class or series will be entitled to the benefit of limitations restricting the issuance of shares of any other class or series having priority over or on parity with the shares of such class or series and whether or not the shares of the class or series are entitled to restrictions on the payment of dividends on, the making of other distributions in respect of, and the purchase or redemption of shares of any other class or series of Preferred Stock or Common Stock ranking junior to the shares of the class or series;

(h) Whether the class or series will have voting rights, in addition to any voting rights provided by law, and if so, the terms of such voting rights; and

(i) Any other preferences, qualifications, privileges, options and other relative or special rights and limitations of that class or series.

(C) Express Terms of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A

1. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A” (the “Series A Non-Cumulative Perpetual Preferred Stock”). The authorized number of shares of Series A Non-Cumulative Perpetual Preferred Stock initially shall be up to 4,600,000 shares. Such number may from time to time be increased (but not in excess of the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares of Series A Non-Cumulative Perpetual Preferred Stock then outstanding) by further resolution duly adopted by the Board; provided that any such additional shares of Series A Non-Cumulative Perpetual Preferred Stock are not treated as “disqualified preferred stock” within the meaning of Section 1059(f)(2) of the Internal Revenue Code of 1986, as amended, and such additional shares of Series A Non-Cumulative Perpetual Preferred Stock are otherwise treated as fungible with the Preferred Stock for U.S. federal income tax purposes. The additional shares would form a single series with the Series A Non-Cumulative Perpetual Preferred Stock.

2. Standard Provisions - Series A Non-Cumulative Perpetual Preferred Stock. The Standard Provisions - Series A Non-Cumulative Perpetual Preferred Stock contained in Annex A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part hereof to the same extent as if such provisions had been set forth in full herein.

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EXHIBIT 3.1

3. Definitions. The following terms are used herein (including the Standard Provisions - Series A Non-Cumulative Perpetual Preferred Stock in Annex A hereto) as defined below:

3.1 “Common Stock” means the common stock, no par value per share, of the Corporation.

3.2 “Junior Stock” means the Common Stock, and any other class or series of capital stock of the Corporation the terms of which expressly provide that it ranks junior in priority to the Series A Non-Cumulative Perpetual Preferred Stock as to dividend rights and as to rights on liquidation, dissolution or winding up of the Corporation.

3.3 “Liquidation Preference” means $25 per share of Series A Non-Cumulative Perpetual Preferred Stock plus any declared and unpaid dividends thereon, without regard to any undeclared dividends.

3.3 “Liquidation Value” means $25 per share of Series A Non-Cumulative Perpetual Preferred Stock.

3.4 “Parity Stock” means the Series B Non-Cumulative Perpetual Preferred Stock and any other class or series of capital stock of the Corporation the terms of which expressly provide that it ranks equally with the Series A Non-Cumulative Perpetual Preferred Stock as to dividend rights and as to rights on liquidation, dissolution or winding up of the Corporation.

4. Certain Voting Matters. Holders of the Preferred Stock shall have no voting rights, except as to certain matters set forth herein or as otherwise provided by applicable law.

(D) Express Terms of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B

1. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B” (the “Series B Non-Cumulative Perpetual Preferred Stock”). The authorized number of shares of Series B Non-Cumulative Perpetual Preferred Stock initially shall be up to 4,600,000 shares. Such number may from time to time be increased (but not in excess of the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares of Series B Non-Cumulative Perpetual Preferred Stock then outstanding) by further resolution duly adopted by the Board; provided that any such additional shares of Series B Non-Cumulative Perpetual Preferred Stock are not treated as “disqualified preferred stock” within the meaning of Section 1059(f)(2) of the Internal Revenue Code of 1986, as amended, and such additional shares of Series B Non-Cumulative Perpetual Preferred Stock are otherwise treated as fungible with the Preferred Stock for U.S. federal income tax purposes. The additional shares would form a single series with the Series B Non-Cumulative Perpetual Preferred Stock.

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EXHIBIT 3.1

2. Standard Provisions - Series B Non-Cumulative Perpetual Preferred Stock. The Standard Provisions - Series B Non-Cumulative Perpetual Preferred Stock contained in Annex B attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part hereof to the same extent as if such provisions had been set forth in full herein.

3. Definitions. The following terms are used herein (including the Standard Provisions - Series B Non-Cumulative Perpetual Preferred Stock in Annex B hereto) as defined below:

3.1 “Common Stock” means the common stock, no par value per share, of the Corporation.

3.2 “Junior Stock” means the Common Stock, and any other class or series of capital stock of the Corporation the terms of which expressly provide that it ranks junior in priority to the Series B Non-Cumulative Perpetual Preferred Stock as to dividend rights and as to rights on liquidation, dissolution or winding up of the Corporation.

3.3 “Liquidation Preference” means $25 per share of Series B Non-Cumulative Perpetual Preferred Stock plus any declared and unpaid dividends thereon, without regard to any undeclared dividends.

3.3 “Liquidation Value” means $25 per share of Series B Non-Cumulative Perpetual Preferred Stock.

3.4 “Parity Stock” means the Series A Non-Cumulative Perpetual Preferred Stock and any other class or series of capital stock of the Corporation the terms of which expressly provide that it ranks equally with the Series B Non-Cumulative Perpetual Preferred Stock as to dividend rights and as to rights on liquidation, dissolution or winding up of the Corporation.

4. Certain Voting Matters. Holders of the Preferred Stock shall have no voting rights, except as to certain matters set forth herein or as otherwise provided by applicable law.

ARTICLE VI

INDEMNIFICATION

The Corporation shall indemnify its officers, directors, employees and agents and former officers, directors, employees and agents, and any other persons serving at the request of the Corporation as an officer, director, employee or agent of another corporation, association, partnership, joint venture, trust, or other enterprise, against expenses (including attorney’s fees, judgments, fines, and amounts paid in settlement) incurred in connection with any pending or threatened action, suit, or proceeding, whether civil, criminal, administrative or investigative, with respect to which such officer, director, employee, agent or other person is a party, or is threatened to be made a party, to the full extent permitted by the New Jersey Business Corporation Act. The indemnification provided herein shall not be deemed exclusive of any other right to which any person seeking indemnification may be entitled under any by-

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EXHIBIT 3.1

law, agreement, or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity, and shall inure to the benefit of the heirs, executors, and the administrators of any such person. The Corporation shall have the power to purchase and maintain insurance on behalf of any persons enumerated above against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provision of this Article.

ARTICLE VII

LIMITATION OF LIABILITY

A director or officer of the Corporation shall not be personally liable to the Corporation or its shareholders for damages for breach of any duty owed to the Corporation or its shareholders, except that such provision shall not relieve a director or officer from liability for any breach of duty based upon an act or omission (i) in breach of such person’s duty of loyalty to the Corporation or its shareholders, (ii) not in good faith or involving a knowing violation of law, or (iii) resulting in receipt by such person of an improper personal benefit. If the New Jersey Business Corporation Act is amended after approval by the shareholders of this provision to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director and/or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the New Jersey Business Corporation Act as so amended.

Any repeal or modification of the foregoing paragraph by the shareholders of the Corporation or otherwise shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.

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EXHIBIT 3.1

Annex A

STANDARD PROVISIONS - SERIES A NON-CUMULATIVE PERPETUAL PREFERRED STOCK

Section 1. General Matters. Each share of Series A Non-Cumulative Perpetual Preferred Stock shall be identical in all respects to every other share of Series A Non-Cumulative Perpetual Preferred Stock, except for the Original Issue Date from which dividends shall accrue. The Series A Non-Cumulative Perpetual Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard Provisions that form a part of the Certificate of Designation (as defined below). The Series A Non-Cumulative Perpetual Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding-up of the Corporation.

Section 2. Standard Definitions. As used herein with respect to Series A Non-Cumulative Perpetual Preferred Stock:

(a) “Applicable Dividend Rate” means, when, as and if declared by the Board or a duly authorized committee of the Board, (i) 6.25% per annum on each Dividend Payment Date relating to a Fixed Rate Period (and for such Fixed Rate Period) and (ii) Three-month LIBOR on the related Dividend Determination Date plus 3.85% per annum on each Dividend Payment Date relating to a Floating Rate Period (and for such Floating Rate Period).

(b) “Appropriate Federal Banking Agency” means the Federal Reserve or any “appropriate Federal banking agency” with respect to the Corporation as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

(c) “Business Day” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions are not authorized or obligated by law, regulation or executive order to close in the City of New York.

(d) “By-laws” means the By-laws of the Corporation, as amended, as they may be amended from time to time.

(e) “Calculation Agent” means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time.

(f) “Certificate of Designation” means the Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Corporation designating the preferences, rights and limitations of the Series A Non-Cumulative Perpetual Preferred Stock, of which these Standard Provisions form a part, as it may be amended from time to time.

(g) “Dividend Determination Date” means, with respect to the Floating Rate Period, the second London Business Day immediately preceding the first day of the applicable Dividend Period.

(h) “Dividend Payment Date” has the meaning set forth in Section 3(a).

(i) “Dividend Period” has the meaning set forth in Section 3(a).

(j) “Dividend Record Date” has the meaning set forth in Section 3(a).

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EXHIBIT 3.1

(k) “DTC” means The Depository Trust Company, together with its successors and assigns.

(l) “Federal Reserve” means the Board of Governors of the Federal Reserve System and its delegates.

(m) “Fixed Rate Period” means each Dividend Period relating to a Dividend Payment Date to, but excluding, June 30, 2025.

(n) “Floating Rate Period” means each Dividend Period relating to a Dividend Payment Date from, and including, June 30, 2025.

(o) “London Business Day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.

(p) “Nonpayment Event” has the meaning specified in Section 7(b).

(q) “Original Issue Date” means the date on which shares of Series A Non-Cumulative Perpetual Preferred Stock are issued.

(r) “Preferred Director” has the meaning set forth in Section 7(b).

(s) “Preferred Stock” means any and all classes and series of preferred stock of the Corporation, including the Series A Non-Cumulative Perpetual Preferred Stock.

(t) “Redemption Price” means $25 per share of Series A Non-Cumulative Perpetual Preferred Stock, plus the per share amount of any declared and unpaid dividends, without regard to any undeclared dividends, to, but excluding, the redemption date.

(u) A “Regulatory Capital Treatment Event” means the good faith determination by the Board or a duly authorized committee of the Board that, as a result of any (i) amendment to, or change (including any announced prospective amendment or change) in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the Original Issue Date; (ii) proposed change in those laws or regulations that is announced or becomes effective after the Original Issue Date; or (iii) official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the Original Issue Date, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full Liquidation Value of all shares of Series A Non-Cumulative Perpetual Preferred Stock then outstanding as Tier 1 capital (or its equivalent) for purposes of the capital adequacy guidelines or regulations of the Federal Reserve or other Appropriate Federal Banking Agency, as then in effect and applicable, for as long as any share of Series A Non-Cumulative Perpetual Preferred Stock is outstanding.

(v) “Reuters Screen LIBOR01” means the display designated on the Reuters 3000 Xtra (or such other page as may replace that page on that service or such other service as may be nominated by the British Bankers’ Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits).

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EXHIBIT 3.1

(w) “Standard Provisions - Series A Non-Cumulative Perpetual Preferred Stock” means these Standard Provisions - Series A Non-Cumulative Perpetual Preferred Stock that form a part of the Certificate of Designation relating to the Series A Non-Cumulative Perpetual Preferred Stock.

(x) “Three-month LIBOR” means, with respect to any Floating Rate Period, the rate expressed as a percentage per annum for deposits in U.S. dollars for a three-month period that appears on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on the Dividend Determination Date for such Floating Rate Period.

If no such rate appears, the Calculation Agent shall request the principal London offices of each of four major reference banks in the London interbank market, selected by the Calculation Agent as directed by the Corporation, to provide the Calculation Agent with its offered quotation at approximately 11:00, a.m., London time, on such Dividend Determination Date for deposits in U.S. dollars for a three-month period, commencing on the first day of such Floating Rate Period, to prime banks in the London interbank market and in a principal amount that is representative of a single transaction in U.S. dollars in that market at that time. If at least two such quotations are provided, Three-month LIBOR for such Floating Rate Period shall be the arithmetic mean of such quotations (rounded upward if necessary to the nearest 0.00001 of 1%).

If fewer than two such quotations are provided as described in the preceding paragraph, Three-month LIBOR with respect to such Floating Rate Period shall be the arithmetic mean (rounded upward if necessary to the nearest 0.00001 of 1%) of the rates quoted at approximately 11:00 a.m., New York City time, on such Dividend Determination Date by three major banks in the City of New York, selected by the Calculation Agent as directed by the Corporation, for loans in U.S. dollars to leading European banks for a three-month period, commencing on the first day of such Floating Rate Period, and in a principal amount that is representative of a single transaction in U.S. dollars in that market at that time.

If fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described in the preceding paragraph, Three-month LIBOR with respect to such Floating Rate Period determined on the Dividend Determination Date shall be the Three-month LIBOR in effect for the immediately preceding Floating Rate Period or, if there was no such preceding Floating Rate Period, the dividend payable will be based on the Applicable Dividend Rate relating to the Fixed Rate Period.

(y) “Voting Parity Stock” means, with regard to any matter as to which the holders of Series A Non-Cumulative Perpetual Preferred Stock are entitled to vote as specified in Sections 7(a) and 7(b) of these Standard Provisions that form a part of the Certificate of Designation, any and all classes or series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter.

Section 3. Dividends.

(a) Rate. Holders of the Series A Non-Cumulative Perpetual Preferred Stock shall be entitled to receive, on each share of Series A Non-Cumulative Perpetual Preferred Stock, if, when and as declared by the Board, or any duly authorized committee of the Board, but only out of legally available assets, non-cumulative cash dividends. Dividends are not mandatory. Such dividends shall not be cumulative and shall be payable quarterly, in arrears, on the 30th day of March, June, September and December of each year, beginning on September 30, 2015 (each such date, a “Dividend Payment Date”). Dividends on the Series A Non-Cumulative Perpetual Preferred Stock shall accrue on the Liquidation Value per share of Series A Non-Cumulative Perpetual Preferred Stock at the Applicable Dividend Rate. A “Dividend Period” is the period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date, except that the initial Dividend Period shall commence on and include the Original Issue Date. Any dividend payable on Series A Non-Cumulative Perpetual Preferred Stock in respect of any Dividend

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EXHIBIT 3.1

Period will be computed by the Calculation Agent (i) in respect of the Fixed Rate Period, on the basis of a 360-day year consisting of twelve 30-day months and (ii) in respect of the Floating Rate Period, on the basis of a 360-day year and the actual number of days in such Dividend Period. Dollar amounts resulting from that calculation shall be rounded to the nearest cent, with one-half cent being rounded upward. If any Dividend Payment Date applicable to a Fixed Rate Period is not a Business Day, then the related payment of dividends will be made on the next succeeding Business Day, and no additional dividends will accrue on any payment. If any Dividend Payment Date applicable to a Floating Rate Period is not a Business Day, then such Dividend Payment Date will be postponed to the next succeeding Business Day unless such day falls in the next calendar month, in which case such Dividend Payment Date will be the immediately preceding Business Day, and, in any case, dividends will accrue to, but excluding, the applicable Business Day.

The Corporation shall not pay interest or any sum of money instead of interest on any dividend payment that may be in arrears on the Series A Non-Cumulative Perpetual Preferred Stock. The Calculation Agent’s determination of the Applicable Dividend Rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporation’s principal offices and will be available to any holder of Series A Non-Cumulative Perpetual Preferred Stock upon request and will be final and binding in the absence of manifest error. The Corporation may terminate the appointment of the Calculation Agent and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series A Non-Cumulative Perpetual Preferred Stock is outstanding, an entity appointed and serving as such agent. The Calculation Agent may be an entity affiliated with the Corporation.

Dividends that are payable on the Series A Non-Cumulative Perpetual Preferred Stock on any Dividend Payment Date will be payable to holders of record of Series A Non-Cumulative Perpetual Preferred Stock as they appear on the books of the Corporation on the applicable record date, which shall not be less than 15 calendar days or more than 30 calendar days before the applicable Dividend Payment Date, as shall be fixed by the Board or any duly authorized committee of the Board (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.

Holders of Series A Non-Cumulative Perpetual Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series A Non-Cumulative Perpetual Preferred Stock as specified in this Section 3. If the Board (or a duly authorized committee of the Board) does not declare a full dividend on the Series A Non-Cumulative Perpetual Preferred Stock in respect of a Dividend Period before the related Dividend Payment Date, then no dividend shall be deemed to have accrued for such Dividend Period, no dividend shall be payable on the applicable Dividend Payment Date, and the Corporation shall have no obligation to pay any dividend for such Dividend Period, whether or not the Board (or a duly authorized committee of the Board) declares a dividend for any future Dividend Period with respect to the Series A Non-Cumulative Perpetual Preferred Stock or at any future time with respect to any other class or series of the Corporation’s capital stock.

(b) Priority of Dividends. So long as any share of Series A Non-Cumulative Perpetual Preferred Stock remains outstanding, unless the full dividends for the most recently completed Dividend Period have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside) on all outstanding shares of Series A Non-Cumulative Perpetual Preferred Stock, (A) no dividend or distribution shall be declared, paid or set aside for payment on any Junior Stock (other than (1) a dividend payable solely in Junior Stock or warrants, options or other rights which are exercisable for or convertible into Junior Stock, or (2) a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of rights, stock or other property under any such plan,

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EXHIBIT 3.1

or the redemption or repurchase of any rights under such plan); (B) no Junior Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly, other than (1) as a result of any reclassification of Junior Stock for or into other Junior Stock, (2) the exchange or conversion of Junior Stock for or into other Junior Stock, (3) through the use of the proceeds of a substantially contemporaneous sale of other Junior Stock, (4) purchases, redemptions or other acquisitions of Junior Stock in connection with any employee contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants of the Corporation, (5) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market-making, stabilization or customer facilitation transactions in Junior Stock in the ordinary course of its business, (6) purchases of shares of Junior Stock pursuant to a contractually binding requirement to buy Junior Stock existing prior to the most recently completed Dividend Period, including under a contractually binding stock repurchase plan, (7) purchase of fractional interests in shares of Junior Stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, (8) purchases by a broker-dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary or (9) the acquisition by the Corporation or any of its subsidiaries of record ownership in Junior Stock for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of its subsidiaries), including as trustees or custodians; and (C) no Parity Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly, other than (1) pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series A Non-Cumulative Perpetual Preferred Stock and any Parity Stock, (2) as a result of a reclassification of any Parity Stock for or into other Parity Stock, (3) the exchange or conversion of any Parity Stock for or into other Parity Stock or Junior Stock, (4) through the use of the proceeds of a substantially contemporaneous sale of other shares of Parity Stock or Junior Stock, (5) purchases of shares of Parity Stock pursuant to a contractually binding requirement to buy Parity Stock existing prior to the most recently completed Dividend Period, including under a contractually binding stock repurchase plan, (6) purchase of fractional interests in shares of Parity Stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, (7) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market making, stabilization or customer facilitation transactions in Parity Stock in the ordinary course of business, (8) purchases by a broker-dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary, or (9) the acquisition by the Corporation or any of its subsidiaries of record ownership in Parity Stock for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of its subsidiaries), including as trustees or custodians. No monies shall be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation.

If dividends are not paid in full on the shares of Series A Non-Cumulative Perpetual Preferred Stock and any shares of Parity Stock, dividends may be declared and paid on the Series A Non-Cumulative Perpetual Preferred Stock and all such Parity Stock on a proportional basis so that the amount of dividends declared per share shall bear to each other the same ratio that accrued dividends for the then current Dividend Period per share of the Series A Non-Cumulative Perpetual Preferred Stock and accrued dividends, including any accumulations, on any Parity Stock bear to each other.

Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise), as may be determined by the Board or any duly authorized committee of the Board, may be declared and paid on the Common Stock and any other Junior Stock or Parity Stock, from time to time out of any assets legally available for such payment, and the holders of the Series A Non-Cumulative Perpetual Preferred Stock shall not be entitled to participate in any such dividends. Holders of Series A Non-Cumulative Perpetual Preferred Stock shall not be

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EXHIBIT 3.1

entitled to receive any dividends not declared by the Board (or a duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.

Dividends on the Series A Non-Cumulative Perpetual Preferred Stock shall not be declared, paid or set aside for payment to the extent such act would cause the Corporation to fail to comply with laws and regulations applicable thereto, including the applicable capital adequacy guidelines of the Federal Reserve or, as and if applicable, the capital adequacy guidelines or regulations of any successor or other Appropriate Federal Banking Agency.

Section 4. Liquidation Rights.

(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series A Non-Cumulative Perpetual Preferred Stock shall be entitled to receive the Liquidation Preference for each share of Series A Non-Cumulative Perpetual Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to shareholders of the Corporation, subject to the rights of any creditors of the Corporation, and subject to the rights of holders of any securities ranking senior to Series A Non-Cumulative Perpetual Preferred Stock with respect to distributions upon the voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other capital stock of the Corporation ranking junior to Series A Non-Cumulative Perpetual Preferred Stock as to such distribution. After payment of the full amount of such liquidation distribution, the holders of Series A Non-Cumulative Perpetual Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Corporation.

(b) Partial Payment. If in any distribution described in Section 4(a) above, the assets of the Corporation or the proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Series A Non-Cumulative Perpetual Preferred Stock and the corresponding amounts payable with respect of any other capital stock of the Corporation ranking equally with Series A Non-Cumulative Perpetual Preferred Stock as to such distribution, holders of Series A Non-Cumulative Perpetual Preferred Stock and the holders of such other capital stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series A Non-Cumulative Perpetual Preferred Stock and the corresponding amounts payable with respect of any other capital stock of the Corporation ranking equally with Series A Non-Cumulative Perpetual Preferred Stock as to such distribution have been paid in full, the holders of Junior Stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4, neither the sale, conveyance, exchange or transfer (whether for cash, securities or other property) of all or substantially all of the assets or business of the Corporation nor the merger or consolidation of the Corporation with or into any other corporation or other entity, or by another entity with or into the Corporation, whether for cash, securities or other property, individually or as part of a series of transactions, including a merger or consolidation in which the holders of Series A Non-Cumulative Perpetual Preferred Stock receive cash, securities or property for their shares, shall constitute a liquidation, dissolution or winding up of the Corporation.

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EXHIBIT 3.1

Section 5. Redemption.

(a) Optional Redemption. Except as provided below, the Series A Non-Cumulative Perpetual Preferred Stock may not be redeemed. On and after June 30, 2025, the Corporation may, at its option, on any Dividend Payment Date, subject to the prior approval of the Federal Reserve or other Appropriate Federal Banking Agency, if required, redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Series A Non-Cumulative Perpetual Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at the Redemption Price.

Notwithstanding the foregoing, within 90 days of the occurrence of a Regulatory Capital Treatment Event, the Corporation may, at its option, subject to the prior approval of the Federal Reserve or other Appropriate Federal Banking Agency, if required, upon notice given as provided in Section 5(c) below, redeem, all (but not less than all) of the shares of Series A Non-Cumulative Perpetual Preferred Stock at the time outstanding at the Redemption Price.

The Redemption Price for any shares of Series A Non-Cumulative Perpetual Preferred Stock shall be payable on the date fixed for redemption to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent, if the shares of Series A Non-Cumulative Perpetual Preferred Stock are issued in certificated form. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the Redemption Price on the dated fixed for redemption but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 3 above.

(b) No Sinking Fund. The Series A Non-Cumulative Perpetual Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series A Non-Cumulative Perpetual Preferred Stock will have no right to require redemption or repurchase of any shares of Series A Non-Cumulative Perpetual Preferred Stock.

(c) Notice of Redemption. Notice of every redemption of shares of Series A Non-Cumulative Perpetual Preferred Stock shall be given to the holders of record of the shares to be redeemed by first class mail, postage prepaid, addressed to the holders of record of such shares to be redeemed at their respective last addresses appearing on the stock register of the Corporation (provided that, if Series A Non-Cumulative Perpetual Preferred Stock is held in book-entry form through DTC, the Corporation may give such notice in any manner permitted by DTC). Such notice shall be mailed (or otherwise given as permitted by DTC) not less than 30 days nor more than 60 days prior to the date fixed for redemption. Any notice mailed (or otherwise given as permitted by DTC) as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail (or otherwise as permitted by DTC), or any defect in such notice or in the mailing (or other method of giving such notice as permitted by DTC) thereof, to any holder of shares of Series A Non-Cumulative Perpetual Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series A Non-Cumulative Perpetual Preferred Stock. Each notice of redemption given to a holder shall state: (1) the date fixed for redemption; (2) the number of shares of the Series A Non-Cumulative Perpetual Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the Redemption Price; (4) if the shares of Series A Non-Cumulative Perpetual Preferred Stock are issued in certificated form, the place or places where the certificates, if any, evidencing shares of Series A Non-Cumulative Perpetual Preferred Stock are to be surrendered for payment of the Redemption Price; and (5) that dividends on the shares of Series A Non-Cumulative Perpetual Preferred Stock to be redeemed shall cease to accrue on the date fixed for redemption.

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EXHIBIT 3.1

(d) Partial Redemption. In case of any redemption of only part of the shares of Series A Non-Cumulative Perpetual Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot or in such other manner as the Corporation may determine to be equitable and permitted by the rules of any national securities exchange on which the Series A Non-Cumulative Perpetual Preferred Stock is listed. Subject to the provisions hereof, and to the prior approval of the Federal Reserve or other applicable Appropriate Federal Banking Agency, the Board or any duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Series A Non-Cumulative Perpetual Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate (if the shares of Series A Non-Cumulative Perpetual Preferred Stock are issued in certificated form) are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the date fixed for redemption specified in the notice, all funds necessary for the redemption have been deposited by the Corporation, separate and apart from its other assets, in trust for the benefit of the holders of the shares of Series A Non-Cumulative Perpetual Preferred Stock called for redemption, with a bank or trust company doing business in the Borough of Manhattan, City of New York, and having a capital and surplus of at least $500 million and selected by the Board, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate (if the shares of Series A Non-Cumulative Perpetual Preferred Stock are issued in certificated form) for any share so called for redemption has not been surrendered for cancellation, whether or not the shares of Series A Non-Cumulative Perpetual Preferred Stock are issued in certificated form, on and after the date fixed for redemption dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such date fixed for redemption cease and terminate, except only the right of the holders thereof to receive the Redemption Price from such bank or trust company out of the funds so deposited, without interest. The Corporation shall then be entitled to receive, from time to time, from the date fixed for redemption any interest accrued on such funds, and the holders of any shares called for redemption shall have no claim to any such interest. Any funds so deposited and unclaimed at the end of three years from the date fixed for redemption shall, to the extent permitted by law, be released or repaid to the Corporation, and in the event of such repayment to the Corporation, the holders of record of the shares of Series A Non-Cumulative Perpetual Preferred Stock called for redemption shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of such shares and so repaid to the Corporation, but shall in no event be entitled to any interest thereon.

(f) Status of Redeemed Shares. Shares of Series A Non-Cumulative Perpetual Preferred Stock that are redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but unissued shares of Preferred Stock, provided that any such cancelled shares of Series A Non-Cumulative Perpetual Preferred Stock may be reissued only as shares of any class or series of Preferred Stock other than Series A Non-Cumulative Perpetual Preferred Stock.

(g) Regulatory Approval. Any redemption of the Series A Non-Cumulative Perpetual Preferred Stock may be subject to our receipt of any required prior approval by the Federal Reserve and to the satisfaction of any conditions set forth in the capital guidelines or regulations of the Federal Reserve applicable to redemption of the Series A Non-Cumulative Perpetual Preferred Stock or, as and if applicable, the capital adequacy guidelines or regulations of any successor or other Appropriate Federal Banking Agency.

Section 6. No Conversion Rights. Holders of shares of Series A Non-Cumulative Perpetual Preferred Stock shall have no right to exchange or convert such shares into any other class or series of the Corporation’s securities.

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EXHIBIT 3.1

Section 7. Voting Rights.

(a) General. The holders of Series A Non-Cumulative Perpetual Preferred Stock shall not have any voting rights except as set forth below or as required by law.

(b) Preferred Directors. If and whenever, at any time or times, dividends payable on the shares of Series A Non-Cumulative Perpetual Preferred Stock or Voting Parity Stock have not been paid for an aggregate amount equal to the amount of dividends payable on the Series A Non-Cumulative Perpetual Preferred Stock for at least three semi-annual or six quarterly Dividend Periods, whether or not consecutive (a “Nonpayment Event”), the authorized number of directors of the Corporation shall automatically be increased by two and the holders of the Series A Non-Cumulative Perpetual Preferred Stock, with holders of any Voting Parity Stock outstanding at the time, voting together as a class based on respective liquidation preferences, shall have the right to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”), provided that the election of any such Preferred Director shall not cause the Corporation to violate the corporate governance requirements of the New York Stock Exchange (or any stock exchange on which the Corporation’s securities may be listed) that listed companies must have a majority of independent directors and provided further that the Board shall at no time include more than two Preferred Directors, to fill such newly created directorships at the Corporation’s next annual meeting of shareholders (or at a special meeting called at the request of the holders of at least 20% of the Series A Non-Cumulative Perpetual Preferred Stock or any other series of Voting Parity Stock for that purpose prior to such next annual meeting (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders, in which event such election shall be held at such next annual or special meeting of shareholders)) and at each subsequent annual meeting of shareholders until all full dividends have been declared and paid on the Series A Non-Cumulative Perpetual Preferred Stock and all Voting Parity Stock then outstanding for at least one year after the Nonpayment Event, except as provided by law, subject to re-vesting in the event of each and every subsequent Nonpayment Event. Such request to call a special meeting for the initial election of Preferred Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series A Non-Cumulative Perpetual Preferred Stock or other Voting Parity Stock, and delivered to the Corporate Secretary of the Corporation in such manner as provided herein, or as may otherwise be required by law. When dividends have been declared and paid in full on the Series A Non-Cumulative Perpetual Preferred Stock for at least one year after a Nonpayment Event, then the right of the holders of Series A Non-Cumulative Perpetual Preferred Stock to elect the Preferred Directors shall cease (but subject always to re-vesting of such voting rights in the case of any future Nonpayment Event), and the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately and the Corporation’s authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto, assuming that the rights of holders of Voting Parity Stock have similarly terminated. In addition, if and when the rights of holders of Series A Non-Cumulative Perpetual Preferred Stock terminate under circumstances described in Section 5 hereof, the right of the holders of Series A Non-Cumulative Perpetual Preferred Stock to elect the Preferred Directors shall cease along with the other rights (except, if applicable, the right to receive the Redemption Price), and the Preferred Directors shall cease to be qualified as directors, the term of office of any Preferred Director then in office shall terminate immediately and the Corporation’s authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto, assuming that the rights of holders of Voting Parity Stock have similarly terminated. Any Preferred Director may be removed at any time, with or without cause by a majority of the outstanding shares of Series A Non-Cumulative Perpetual Preferred Stock and any Voting Parity Stock, voting together as a class based on respective liquidation preferences. So long as a Nonpayment Event may continue, if the office of any Preferred Director becomes vacant (other than prior to the initial election of the Preferred Directors) for any reason, the remaining

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Preferred Director may choose, by means of written consent, a successor who shall hold office for the unexpired term in respect of which such vacancy occurred, or if none remains in office, by a vote of the holders of a majority of the outstanding shares of Series A Non-Cumulative Perpetual Preferred Stock and any Voting Parity Stock, voting together as a class based on respective liquidation preferences provided that the election of any such Preferred Director shall not cause the Corporation to violate the corporate governance requirements of the New York Stock Exchange (or any stock exchange on which the Corporation’s securities may be listed) that listed companies must have a majority of independent directors. Any such vote to remove, or to fill a vacancy in the office of, a Preferred Director may be taken only at a special meeting called at the request the holders of at least 20% of the Series A Non-Cumulative Perpetual Preferred Stock or any other series of Voting Parity Stock for that purpose (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders, in which event such election shall be held at such next annual or special meeting of shareholders). The Preferred Directors shall each be entitled to one vote per director on any matter.

(c) Class Voting Rights as to Particular Matters. So long as any shares of Series A Non-Cumulative Perpetual Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by the Certificate, the vote or consent of the holders of at least 66 2/3% of the shares of the Series A Non-Cumulative Perpetual Preferred Stock at the time outstanding, voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate, including the Certificate of Designation, to create, issue, authorize or increase the authorized amount of any class or series of capital stock of the Corporation ranking senior to the Series A Non-Cumulative Perpetual Preferred Stock with respect to payment of dividends or as to distributions upon the liquidation, distribution or winding-up of the Corporation, or to issue any obligation or security convertible into, exchangeable for or evidencing the right to purchase any such class or series of capital stock;

(ii) Amendment, Alteration or Repeal of Series A Non-Cumulative Perpetual Preferred Stock. Any amendment, alteration or repeal of the Certificate or the Certificate of Designation, whether by merger, consolidation, or otherwise, so as to adversely affect the special powers, preferences, privileges or rights of the Series A Non-Cumulative Perpetual Preferred Stock, taken as a whole; or

(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series A Non-Cumulative Perpetual Preferred Stock, the sale, conveyance, exchange or transfer of all or substantially all of the assets or business of the Corporation or a merger or consolidation of the Corporation with or into another entity, unless in each case the shares of Series A Non-Cumulative Perpetual Preferred Stock (x) remain outstanding or (y) are converted into or exchanged for preference securities of the surviving entity or any entity controlling such surviving entity and such new preference securities have terms that are not materially less favorable than the Series A Non-Cumulative Perpetual Preferred Stock immediately prior to such consummation;

provided, however, that for all purposes of this Section 7(c), the authorization, creation and issuance, or an increase in the authorized or issued amount of, Junior Stock or any class or series of capital stock, or any securities convertible into or exchangeable or exercisable for Junior Stock or any class or series of capital stock, that by its terms expressly provides that it ranks pari passu with the Series A Non-Cumulative Perpetual Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and as to distributions upon the liquidation, dissolution or winding-up of the Corporation shall not be deemed to adversely

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affect the special powers, preferences, privileges or rights, and shall not require the affirmative vote or consent of, the holders of any outstanding shares of Series A Non-Cumulative Perpetual Preferred Stock.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in Section 7(c) would adversely affect one or more but not all series of Voting Parity Stock (including the Series A Non-Cumulative Perpetual Preferred Stock for this purpose), then only such series of Voting Parity Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a class based on respective liquidation preferences in lieu of all other series of Voting Parity Stock. If all series of Voting Parity Stock are not equally affected by the proposed amendment, alteration, repeal, share exchange, reclassification, merger or consolidation described above, there shall be required the approval of the holders of at least 66 2/3% of the shares of each series, voting as separate classes, that will have a diminished status.

(d) Changes after Provision for Redemption. No vote or consent of the holders of Series A Non-Cumulative Perpetual Preferred Stock shall be required pursuant to Section 7(c) above if, at or prior to the time when the act with respect to which any such vote or consent would otherwise be required pursuant to such Section shall be effected, all outstanding shares of the Series A Non-Cumulative Perpetual Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for such redemption, in each case pursuant to Section 5 above.

(e) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series A Non-Cumulative Perpetual Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such meeting or such consents shall be governed by any rules that the Board or any duly authorized committee of the Board, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate, the By-laws, and applicable law and the rules of any national securities exchange or other trading facility on which the Series A Non-Cumulative Perpetual Preferred Stock is listed or traded at the time.

Section 8. No Preemptive Rights. No share of Series A Non-Cumulative Perpetual Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for Series A Non-Cumulative Perpetual Preferred Stock may deem and treat the record holder of any share of Series A Non-Cumulative Perpetual Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.

Section 10. Notices. All notices or communications in respect of Series A Non-Cumulative Perpetual Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, and, with respect to any redemption thereof, not less than 30 days nor more than 60 days prior to the date fixed for such redemption, or if given in such other manner as may be permitted in these Certificate of Designation, in the Certificate or By-laws or by applicable law. Notwithstanding the foregoing, if shares of Series A Non-Cumulative Perpetual Preferred Stock are issued in book-entry form through DTC or any similar facility, such notices may be given to the holders of Series A Non-Cumulative Perpetual Preferred Stock in any manner permitted by DTC or such facility.

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EXHIBIT 3.1

Section 11. Certificates. The Corporation may at its option issue shares of Series A Non-Cumulative Perpetual Preferred Stock without certificates. If certificated, the Corporation shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation.

Section 12. Transfer Agent and Registrar. The Corporation shall appoint a transfer agent for the Series A Non-Cumulative Perpetual Preferred Stock. The Corporation may, in its sole discretion, remove the transfer agent in accordance with the agreement between the Corporation and the transfer agent; provided that the Corporation shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal. The Corporation shall appoint a registrar for the Series A Non-Cumulative Perpetual Preferred Stock. The Corporation may, in its sole discretion, remove the registrar in accordance with the agreement between the Corporation and the registrar; provided that the Corporation shall appoint a successor registrar who shall accept such appointment prior to the effectiveness of such removal.

Section 13. Other Rights. The shares of Series A Non-Cumulative Perpetual Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate or as provided by applicable law.

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EXHIBIT 3.1

Annex B

STANDARD PROVISIONS - SERIES B NON-CUMULATIVE PERPETUAL PREFERRED STOCK

Section 1. General Matters. Each share of Series B Non-Cumulative Perpetual Preferred Stock shall be identical in all respects to every other share of Series B Non-Cumulative Perpetual Preferred Stock, except for the Original Issue Date from which dividends shall accrue. The Series B Non-Cumulative Perpetual Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard Provisions that form a part of the Certificate of Designation (as defined below). The Series B Non-Cumulative Perpetual Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding-up of the Corporation.

Section 2. Standard Definitions. As used herein with respect to Series B Non-Cumulative Perpetual Preferred Stock:

(a) “Applicable Dividend Rate” means, when, as and if declared by the Board or a duly authorized committee of the Board, (i) 5.50% per annum on each Dividend Payment Date relating to a Fixed Rate Period (and for such Fixed Rate Period) and (ii) Three-month LIBOR on the related Dividend Determination Date plus 3.578% per annum on each Dividend Payment Date relating to a Floating Rate Period (and for such Floating Rate Period).

(b) “Appropriate Federal Banking Agency” means the Federal Reserve or any “appropriate Federal banking agency” with respect to the Corporation as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

(c) “Business Day” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions are not authorized or obligated by law, regulation or executive order to close in the City of New York.

(d) “By-laws” means the By-laws of the Corporation, as amended, as they may be amended from time to time.

(e) “Calculation Agent” means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time.

(f) “Certificate of Designation” means the Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Corporation designating the preferences, rights and limitations of the Series B Non-Cumulative Perpetual Preferred Stock, of which these Standard Provisions form a part, as it may be amended from time to time.

(g) “Dividend Determination Date” means, with respect to the Floating Rate Period, the second London Business Day immediately preceding the first day of the applicable Dividend Period.

(h) “Dividend Payment Date” has the meaning set forth in Section 3(a).

(i) “Dividend Period” has the meaning set forth in Section 3(a).

(j) “Dividend Record Date” has the meaning set forth in Section 3(a).

(k) “DTC” means The Depository Trust Company, together with its successors and assigns.

(l) “Federal Reserve” means the Board of Governors of the Federal Reserve System and its delegates.

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(m) “Fixed Rate Period” means each Dividend Period relating to a Dividend Payment Date to, but excluding, September 30, 2022.

(n) “Floating Rate Period” means each Dividend Period relating to a Dividend Payment Date from, and including, September 30, 2022.

(o) “London Business Day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.

(p) “Nonpayment Event” has the meaning specified in Section 7(b).

(q) “Original Issue Date” means the date on which shares of Series B Non-Cumulative Perpetual Preferred Stock are issued.

(r) “Preferred Director” has the meaning set forth in Section 7(b).

(s) “Preferred Stock” means any and all classes and series of preferred stock of the Corporation, including the Series B Non-Cumulative Perpetual Preferred Stock.

(t) “Redemption Price” means $25 per share of Series B Non-Cumulative Perpetual Preferred Stock, plus the per share amount of any declared and unpaid dividends, without regard to any undeclared dividends, to, but excluding, the redemption date.

(u) A “Regulatory Capital Treatment Event” means the good faith determination by the Board or a duly authorized committee of the Board that, as a result of any (i) amendment to, or change (including any announced prospective amendment or change) in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the Original Issue Date; (ii) proposed change in those laws or regulations that is announced or becomes effective after the Original Issue Date; or (iii) official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the Original Issue Date, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full Liquidation Value of all shares of Series B Non-Cumulative Perpetual Preferred Stock then outstanding as Tier 1 capital (or its equivalent) for purposes of the capital adequacy guidelines or regulations of the Federal Reserve or other Appropriate Federal Banking Agency, as then in effect and applicable, for as long as any share of Series B Non-Cumulative Perpetual Preferred Stock is outstanding.

(v) “Reuters Screen LIBOR01” means the display designated on the Reuters 3000 Xtra (or such other page as may replace that page on that service or such other service as may be nominated by the British Bankers’ Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits).

(w) “Standard Provisions - Series B Non-Cumulative Perpetual Preferred Stock” means these Standard Provisions - Series B Non-Cumulative Perpetual Preferred Stock that form a part of the Certificate of Designation relating to the Series B Non-Cumulative Perpetual Preferred Stock.

(x) “Three-month LIBOR” means, with respect to any Floating Rate Period, the rate expressed as a percentage per annum for deposits in U.S. dollars for a three-month period that appears on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on the Dividend Determination Date for such Floating Rate Period.

If no such rate appears, the Calculation Agent shall request the principal London offices of each of four major reference banks in the London interbank market, selected by the Calculation Agent as directed by the Corporation, to provide the Calculation Agent with its offered quotation at approximately 11:00, a.m., London time, on such Dividend Determination Date for deposits in U.S. dollars for a three-month period, commencing on the first day of such Floating Rate Period, to prime banks in the London interbank market and in a principal amount that is

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EXHIBIT 3.1

representative of a single transaction in U.S. dollars in that market at that time. If at least two such quotations are provided, Three-month LIBOR for such Floating Rate Period shall be the arithmetic mean of such quotations (rounded upward if necessary to the nearest 0.00001 of 1%).

If fewer than two such quotations are provided as described in the preceding paragraph, Three-month LIBOR with respect to such Floating Rate Period shall be the arithmetic mean (rounded upward if necessary to the nearest 0.00001 of 1%) of the rates quoted at approximately 11:00 a.m., New York City time, on such Dividend Determination Date by three major banks in the City of New York, selected by the Calculation Agent as directed by the Corporation, for loans in U.S. dollars to leading European banks for a three-month period, commencing on the first day of such Floating Rate Period, and in a principal amount that is representative of a single transaction in U.S. dollars in that market at that time.

If fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described in the preceding paragraph, Three-month LIBOR with respect to such Floating Rate Period determined on the Dividend Determination Date shall be the Three-month LIBOR in effect for the immediately preceding Floating Rate Period or, if there was no such preceding Floating Rate Period, the dividend payable will be based on the Applicable Dividend Rate relating to the Fixed Rate Period.

(y) “Voting Parity Stock” means, with regard to any matter as to which the holders of Series B Non-Cumulative Perpetual Preferred Stock are entitled to vote as specified in Sections 7(a) and 7(b) of these Standard Provisions that form a part of the Certificate of Designation, any and all classes or series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter.

Section 3. Dividends.

(a) Rate. Holders of the Series B Non-Cumulative Perpetual Preferred Stock shall be entitled to receive, on each share of Series B Non-Cumulative Perpetual Preferred Stock, if, when and as declared by the Board, or any duly authorized committee of the Board, but only out of legally available assets, non-cumulative cash dividends. Dividends are not mandatory. Such dividends shall not be cumulative and shall be payable quarterly, in arrears, on the 30th day of March, June, September and December of each year, beginning on September 30, 2017 (each such date, a “Dividend Payment Date”). Dividends on the Series B Non-Cumulative Perpetual Preferred Stock shall accrue on the Liquidation Value per share of Series B Non-Cumulative Perpetual Preferred Stock at the Applicable Dividend Rate. A “Dividend Period” is the period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date, except that the initial Dividend Period shall commence on and include the Original Issue Date. Any dividend payable on Series B Non-Cumulative Perpetual Preferred Stock in respect of any Dividend Period will be computed by the Calculation Agent (i) in respect of the Fixed Rate Period, on the basis of a 360-day year consisting of twelve 30-day months and (ii) in respect of the Floating Rate Period, on the basis of a 360-day year and the actual number of days in such Dividend Period. Dollar amounts resulting from that calculation shall be rounded to the nearest cent, with one-half cent being rounded upward. If any Dividend Payment Date applicable to a Fixed Rate Period is not a Business Day, then the related payment of dividends will be made on the next succeeding Business Day, and no additional dividends will accrue on any payment. If any Dividend Payment Date applicable to a Floating Rate Period is not a Business Day, then such Dividend Payment Date will be postponed to the next succeeding Business Day unless such day falls in the next calendar month, in which case such Dividend Payment Date will be the immediately preceding Business Day, and, in any case, dividends will accrue to, but excluding, the applicable Business Day.

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EXHIBIT 3.1

The Corporation shall not pay interest or any sum of money instead of interest on any dividend payment that may be in arrears on the Series B Non-Cumulative Perpetual Preferred Stock. The Calculation Agent’s determination of the Applicable Dividend Rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporation’s principal offices and will be available to any holder of Series B Non-Cumulative Perpetual Preferred Stock upon request and will be final and binding in the absence of manifest error. The Corporation may terminate the appointment of the Calculation Agent and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series B Non-Cumulative Perpetual Preferred Stock is outstanding, an entity appointed and serving as such agent. The Calculation Agent may be an entity affiliated with the Corporation.

Dividends that are payable on the Series B Non-Cumulative Perpetual Preferred Stock on any Dividend Payment Date will be payable to holders of record of Series B Non-Cumulative Perpetual Preferred Stock as they appear on the books of the Corporation on the applicable record date, which shall not be less than 15 calendar days or more than 30 calendar days before the applicable Dividend Payment Date, as shall be fixed by the Board or any duly authorized committee of the Board (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.

Holders of Series B Non-Cumulative Perpetual Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series B Non-Cumulative Perpetual Preferred Stock as specified in this Section 3. If the Board (or a duly authorized committee of the Board) does not declare a full dividend on the Series B Non-Cumulative Perpetual Preferred Stock in respect of a Dividend Period before the related Dividend Payment Date, then no dividend shall be deemed to have accrued for such Dividend Period, no dividend shall be payable on the applicable Dividend Payment Date, and the Corporation shall have no obligation to pay any dividend for such Dividend Period, whether or not the Board (or a duly authorized committee of the Board) declares a dividend for any future Dividend Period with respect to the Series B Non-Cumulative Perpetual Preferred Stock or at any future time with respect to any other class or series of the Corporation’s capital stock.

(b) Priority of Dividends. So long as any share of Series B Non-Cumulative Perpetual Preferred Stock remains outstanding, unless the full dividends for the most recently completed Dividend Period have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside) on all outstanding shares of Series B Non-Cumulative Perpetual Preferred Stock, (A) no dividend or distribution shall be declared, paid or set aside for payment on any Junior Stock (other than (1) a dividend payable solely in Junior Stock or warrants, options or other rights which are exercisable for or convertible into Junior Stock, or (2) a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of rights, stock or other property under any such plan, or the redemption or repurchase of any rights under such plan); (B) no Junior Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly, other than (1) as a result of any reclassification of Junior Stock for or into other Junior Stock, (2) the exchange or conversion of Junior Stock for or into other Junior Stock, (3) through the use of the proceeds of a substantially contemporaneous sale of other Junior Stock, (4) purchases, redemptions or other acquisitions of Junior Stock in connection with any employee contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants of the Corporation, (5) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market-making, stabilization or customer facilitation transactions in Junior Stock in the ordinary course of its business, (6) purchases of shares of Junior Stock pursuant to a contractually binding requirement to buy Junior Stock existing prior to the most recently completed Dividend Period, including under a contractually binding stock

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EXHIBIT 3.1

repurchase plan, (7) purchase of fractional interests in shares of Junior Stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, (8) purchases by a broker-dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary or (9) the acquisition by the Corporation or any of its subsidiaries of record ownership in Junior Stock for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of its subsidiaries), including as trustees or custodians; and (C) no Parity Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly, other than (1) pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series B Non-Cumulative Perpetual Preferred Stock and any Parity Stock, (2) as a result of a reclassification of any Parity Stock for or into other Parity Stock, (3) the exchange or conversion of any Parity Stock for or into other Parity Stock or Junior Stock, (4) through the use of the proceeds of a substantially contemporaneous sale of other shares of Parity Stock or Junior Stock, (5) purchases of shares of Parity Stock pursuant to a contractually binding requirement to buy Parity Stock existing prior to the most recently completed Dividend Period, including under a contractually binding stock repurchase plan, (6) purchase of fractional interests in shares of Parity Stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, (7) purchases or other acquisitions by a broker-dealer subsidiary of the Corporation solely for the purpose of market making, stabilization or customer facilitation transactions in Parity Stock in the ordinary course of business, (8) purchases by a broker-dealer subsidiary of the Corporation of capital stock of the Corporation for resale pursuant to an offering by the Corporation of such capital stock underwritten by such broker-dealer subsidiary, or (9) the acquisition by the Corporation or any of its subsidiaries of record ownership in Parity Stock for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of its subsidiaries), including as trustees or custodians. No monies shall be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation.

If dividends are not paid in full on the shares of Series B Non-Cumulative Perpetual Preferred Stock and any shares of Parity Stock, dividends may be declared and paid on the Series B Non-Cumulative Perpetual Preferred Stock and all such Parity Stock on a proportional basis so that the amount of dividends declared per share shall bear to each other the same ratio that accrued dividends for the then current Dividend Period per share of the Series B Non-Cumulative Perpetual Preferred Stock and accrued dividends, including any accumulations, on any Parity Stock bear to each other.

Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise), as may be determined by the Board or any duly authorized committee of the Board, may be declared and paid on the Common Stock and any other Junior Stock or Parity Stock, from time to time out of any assets legally available for such payment, and the holders of the Series B Non-Cumulative Perpetual Preferred Stock shall not be entitled to participate in any such dividends. Holders of Series B Non-Cumulative Perpetual Preferred Stock shall not be entitled to receive any dividends not declared by the Board (or a duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.

Dividends on the Series B Non-Cumulative Perpetual Preferred Stock shall not be declared, paid or set aside for payment to the extent such act would cause the Corporation to fail to comply with laws and regulations applicable thereto, including the applicable capital adequacy guidelines of the Federal Reserve or, as and if applicable, the capital adequacy guidelines or regulations of any successor or other Appropriate Federal Banking Agency.

Section 4. Liquidation Rights.

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EXHIBIT 3.1

(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series B Non-Cumulative Perpetual Preferred Stock shall be entitled to receive the Liquidation Preference for each share of Series B Non-Cumulative Perpetual Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to shareholders of the Corporation, subject to the rights of any creditors of the Corporation, and subject to the rights of holders of any securities ranking senior to Series B Non-Cumulative Perpetual Preferred Stock with respect to distributions upon the voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other capital stock of the Corporation ranking junior to Series B Non-Cumulative Perpetual Preferred Stock as to such distribution. After payment of the full amount of such liquidation distribution, the holders of Series B Non-Cumulative Perpetual Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Corporation.

(b) Partial Payment. If in any distribution described in Section 4(a) above, the assets of the Corporation or the proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Series B Non-Cumulative Perpetual Preferred Stock and the corresponding amounts payable with respect of any other capital stock of the Corporation ranking equally with Series B Non-Cumulative Perpetual Preferred Stock as to such distribution, holders of Series B Non-Cumulative Perpetual Preferred Stock and the holders of such other capital stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series B Non-Cumulative Perpetual Preferred Stock and the corresponding amounts payable with respect of any other capital stock of the Corporation ranking equally with Series B Non-Cumulative Perpetual Preferred Stock as to such distribution have been paid in full, the holders of Junior Stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4, neither the sale, conveyance, exchange or transfer (whether for cash, securities or other property) of all or substantially all of the assets or business of the Corporation nor the merger or consolidation of the Corporation with or into any other corporation or other entity, or by another entity with or into the Corporation, whether for cash, securities or other property, individually or as part of a series of transactions, including a merger or consolidation in which the holders of Series B Non-Cumulative Perpetual Preferred Stock receive cash, securities or property for their shares, shall constitute a liquidation, dissolution or winding up of the Corporation.

Section 5. Redemption.

(a) Optional Redemption. Except as provided below, the Series B Non-Cumulative Perpetual Preferred Stock may not be redeemed. On and after September 30, 2022, the Corporation may, at its option, on any Dividend Payment Date, subject to the prior approval of the Federal Reserve or other Appropriate Federal Banking Agency, if required, redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Series B Non-Cumulative Perpetual Preferred Stock at the time outstanding, upon notice given as provided in Section 5(c) below, at the Redemption Price.

Notwithstanding the foregoing, within 90 days of the occurrence of a Regulatory Capital Treatment Event, the Corporation may, at its option, subject to the prior approval of the Federal Reserve or other Appropriate Federal Banking Agency, if required, upon notice given as provided in Section 5(c) below, redeem, all (but not less than all) of the shares of Series B Non-Cumulative Perpetual Preferred Stock at the time outstanding at the Redemption Price.

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EXHIBIT 3.1

The Redemption Price for any shares of Series B Non-Cumulative Perpetual Preferred Stock shall be payable on the date fixed for redemption to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent, if the shares of Series B Non-Cumulative Perpetual Preferred Stock are issued in certificated form. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the Redemption Price on the dated fixed for redemption but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 3 above.

(b) No Sinking Fund. The Series B Non-Cumulative Perpetual Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series B Non-Cumulative Perpetual Preferred Stock will have no right to require redemption or repurchase of any shares of Series B Non-Cumulative Perpetual Preferred Stock.

(c) Notice of Redemption. Notice of every redemption of shares of Series B Non-Cumulative Perpetual Preferred Stock shall be given to the holders of record of the shares to be redeemed by first class mail, postage prepaid, addressed to the holders of record of such shares to be redeemed at their respective last addresses appearing on the stock register of the Corporation (provided that, if Series B Non-Cumulative Perpetual Preferred Stock is held in book-entry form through DTC, the Corporation may give such notice in any manner permitted by DTC). Such notice shall be mailed (or otherwise given as permitted by DTC) not less than 30 days nor more than 60 days prior to the date fixed for redemption. Any notice mailed (or otherwise given as permitted by DTC) as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail (or otherwise as permitted by DTC), or any defect in such notice or in the mailing (or other method of giving such notice as permitted by DTC) thereof, to any holder of shares of Series B Non-Cumulative Perpetual Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series B Non-Cumulative Perpetual Preferred Stock. Each notice of redemption given to a holder shall state: (1) the date fixed for redemption; (2) the number of shares of the Series B Non-Cumulative Perpetual Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the Redemption Price; (4) if the shares of Series B Non-Cumulative Perpetual Preferred Stock are issued in certificated form, the place or places where the certificates, if any, evidencing shares of Series B Non-Cumulative Perpetual Preferred Stock are to be surrendered for payment of the Redemption Price; and (5) that dividends on the shares of Series B Non-Cumulative Perpetual Preferred Stock to be redeemed shall cease to accrue on the date fixed for redemption.

(d) Partial Redemption. In case of any redemption of only part of the shares of Series B Non-Cumulative Perpetual Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot. Subject to the provisions hereof, and to the prior approval of the Federal Reserve or other applicable Appropriate Federal Banking Agency, the Board or any duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Series B Non-Cumulative Perpetual Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate (if the shares of Series B Non-Cumulative Perpetual Preferred Stock are issued in certificated form) are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the date fixed for redemption specified in the notice, all funds necessary for the redemption have been deposited by the Corporation, separate and apart from its other assets, in trust for the benefit of the holders of the shares of Series B Non-Cumulative Perpetual Preferred Stock called for redemption, with a bank or trust company doing business in

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EXHIBIT 3.1

the Borough of Manhattan, City of New York, and having a capital and surplus of at least $500 million and selected by the Board, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate (if the shares of Series B Non-Cumulative Perpetual Preferred Stock are issued in certificated form) for any share so called for redemption has not been surrendered for cancellation, whether or not the shares of Series B Non-Cumulative Perpetual Preferred Stock are issued in certificated form, on and after the date fixed for redemption dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such date fixed for redemption cease and terminate, except only the right of the holders thereof to receive the Redemption Price from such bank or trust company out of the funds so deposited, without interest. The Corporation shall then be entitled to receive, from time to time, from the date fixed for redemption any interest accrued on such funds, and the holders of any shares called for redemption shall have no claim to any such interest. Any funds so deposited and unclaimed at the end of three years from the date fixed for redemption shall, to the extent permitted by law, be released or repaid to the Corporation, and in the event of such repayment to the Corporation, the holders of record of the shares of Series B Non-Cumulative Perpetual Preferred Stock called for redemption shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of such shares and so repaid to the Corporation, but shall in no event be entitled to any interest thereon.

(f) Status of Redeemed Shares. Shares of Series B Non-Cumulative Perpetual Preferred Stock that are redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but unissued shares of Preferred Stock, provided that any such cancelled shares of Series B Non-Cumulative Perpetual Preferred Stock may be reissued only as shares of any class or series of Preferred Stock other than Series B Non-Cumulative Perpetual Preferred Stock.

(g) Regulatory Approval. Any redemption of the Series B Non-Cumulative Perpetual Preferred Stock may be subject to our receipt of any required prior approval by the Federal Reserve and to the satisfaction of any conditions set forth in the capital guidelines or regulations of the Federal Reserve applicable to redemption of the Series B Non-Cumulative Perpetual Preferred Stock or, as and if applicable, the capital adequacy guidelines or regulations of any successor or other Appropriate Federal Banking Agency.

Section 6. No Conversion Rights. Holders of shares of Series B Non-Cumulative Perpetual Preferred Stock shall have no right to exchange or convert such shares into any other class or series of the Corporation’s securities.

Section 7. Voting Rights.

(a) General. The holders of Series B Non-Cumulative Perpetual Preferred Stock shall not have any voting rights except as set forth below or as required by law.

(b) Preferred Directors. If and whenever, at any time or times, dividends payable on the shares of Series B Non-Cumulative Perpetual Preferred Stock or Voting Parity Stock have not been paid for an aggregate amount equal to the amount of dividends payable on the Series B Non-Cumulative Perpetual Preferred Stock for at least six quarterly Dividend Periods, whether or not consecutive (a “Nonpayment Event”), the authorized number of directors of the Corporation shall automatically be increased by two and the holders of the Series B Non-Cumulative Perpetual Preferred Stock, with holders of any Voting Parity Stock outstanding at the time, voting together as a class based on respective liquidation preferences, shall have the right to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”), provided that the election of any such Preferred Director shall not cause the Corporation to violate the corporate governance requirements of the New York Stock Exchange (or any stock exchange on which the Corporation’s securities may be listed) that listed companies must have a majority of independent directors and provided further that the Board shall at no time include more than two Preferred

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EXHIBIT 3.1

Directors, to fill such newly created directorships at the Corporation’s next annual meeting of shareholders (or at a special meeting called at the request of the holders of at least 20% of the Series B Non-Cumulative Perpetual Preferred Stock or any other series of Voting Parity Stock for that purpose prior to such next annual meeting (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders, in which event such election shall be held at such next annual or special meeting of shareholders)) and at each subsequent annual meeting of shareholders until all full dividends have been declared and paid on the Series B Non-Cumulative Perpetual Preferred Stock and all Voting Parity Stock then outstanding for at least one year after the Nonpayment Event, except as provided by law, subject to re-vesting in the event of each and every subsequent Nonpayment Event. Such request to call a special meeting for the initial election of Preferred Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series B Non-Cumulative Perpetual Preferred Stock or other Voting Parity Stock, and delivered to the Corporate Secretary of the Corporation in such manner as provided herein, or as may otherwise be required by law. When dividends have been declared and paid in full on the Series B Non-Cumulative Perpetual Preferred Stock for at least one year after a Nonpayment Event, then the right of the holders of Series B Non-Cumulative Perpetual Preferred Stock to elect the Preferred Directors shall cease (but subject always to re-vesting of such voting rights in the case of any future Nonpayment Event), and the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately and the Corporation’s authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto, assuming that the rights of holders of Voting Parity Stock have similarly terminated. In addition, if and when the rights of holders of Series B Non-Cumulative Perpetual Preferred Stock terminate under circumstances described in Section 5 hereof, the right of the holders of Series B Non-Cumulative Perpetual Preferred Stock to elect the Preferred Directors shall cease along with the other rights (except, if applicable, the right to receive the Redemption Price), and the Preferred Directors shall cease to be qualified as directors, the term of office of any Preferred Director then in office shall terminate immediately and the Corporation’s authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto, assuming that the rights of holders of Voting Parity Stock have similarly terminated. Any Preferred Director may be removed at any time, with or without cause by a majority of the outstanding shares of Series B Non-Cumulative Perpetual Preferred Stock and any Voting Parity Stock, voting together as a class based on respective liquidation preferences. So long as a Nonpayment Event may continue, if the office of any Preferred Director becomes vacant (other than prior to the initial election of the Preferred Directors) for any reason, the remaining Preferred Director may choose, by means of written consent, a successor who shall hold office for the unexpired term in respect of which such vacancy occurred, or if none remains in office, by a vote of the holders of a majority of the outstanding shares of Series B Non-Cumulative Perpetual Preferred Stock and any Voting Parity Stock, voting together as a class based on respective liquidation preferences provided that the election of any such Preferred Director shall not cause the Corporation to violate the corporate governance requirements of the New York Stock Exchange (or any stock exchange on which the Corporation’s securities may be listed) that listed companies must have a majority of independent directors. Any such vote to remove, or to fill a vacancy in the office of, a Preferred Director may be taken only at a special meeting called at the request the holders of at least 20% of the Series B Non-Cumulative Perpetual Preferred Stock or any other series of Voting Parity Stock for that purpose (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders, in which event such election shall be held at such next annual or special meeting of shareholders). The Preferred Directors shall each be entitled to one vote per director on any matter.

(c) Class Voting Rights as to Particular Matters. So long as any shares of Series B Non-Cumulative Perpetual Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by the Certificate, the vote or consent of the holders of at least 66 2/3% of the shares of the Series B Non-Cumulative

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EXHIBIT 3.1

Perpetual Preferred Stock at the time outstanding, voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate, including the Certificate of Designation, to create, issue, authorize or increase the authorized amount of any class or series of capital stock of the Corporation ranking senior to the Series B Non-Cumulative Perpetual Preferred Stock with respect to payment of dividends or as to distributions upon the liquidation, distribution or winding-up of the Corporation, or to issue any obligation or security convertible into, exchangeable for or evidencing the right to purchase any such class or series of capital stock;

(ii) Amendment, Alteration or Repeal of Series B Non-Cumulative Perpetual Preferred Stock. Any amendment, alteration or repeal of the Certificate or the Certificate of Designation, whether by merger, consolidation, or otherwise, so as to adversely affect the special powers, preferences, privileges or rights of the Series B Non-Cumulative Perpetual Preferred Stock, taken as a whole; or

(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series B Non-Cumulative Perpetual Preferred Stock, the sale, conveyance, exchange or transfer of all or substantially all of the assets or business of the Corporation or a merger or consolidation of the Corporation with or into another entity, unless in each case the shares of Series B Non-Cumulative Perpetual Preferred Stock (x) remain outstanding or (y) are converted into or exchanged for preference securities of the surviving entity or any entity controlling such surviving entity and such new preference securities have terms that are not materially less favorable than the Series B Non-Cumulative Perpetual Preferred Stock immediately prior to such consummation;

provided, however, that for all purposes of this Section 7(c), the authorization, creation and issuance, or an increase in the authorized or issued amount of, Junior Stock or any class or series of capital stock, or any securities convertible into or exchangeable or exercisable for Junior Stock or any class or series of capital stock, that by its terms expressly provides that it ranks pari passu with the Series B Non-Cumulative Perpetual Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and as to distributions upon the liquidation, dissolution or winding-up of the Corporation shall not be deemed to adversely affect the special powers, preferences, privileges or rights, and shall not require the affirmative vote or consent of, the holders of any outstanding shares of Series B Non-Cumulative Perpetual Preferred Stock.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in Section 7(c) would adversely affect one or more but not all series of Voting Parity Stock (including the Series B Non-Cumulative Perpetual Preferred Stock for this purpose), then only such series of Voting Parity Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a class based on respective liquidation preferences in lieu of all other series of Voting Parity Stock. If all series of Voting Parity Stock are not equally affected by the proposed amendment, alteration, repeal, share exchange, reclassification, merger or consolidation described above, there shall be required the approval of the holders of at least 66 2/3% of the shares of each series, voting as separate classes, that will have a diminished status.

(d) Changes after Provision for Redemption. No vote or consent of the holders of Series B Non-Cumulative Perpetual Preferred Stock shall be required pursuant to Section 7(c) above if, at or prior to the time when the act with respect to which any such vote or consent would otherwise be required pursuant to such Section shall be effected, all outstanding shares of the Series B Non-Cumulative Perpetual Preferred Stock shall have been

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EXHIBIT 3.1

redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for such redemption, in each case pursuant to Section 5 above.

(e) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series B Non-Cumulative Perpetual Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such meeting or such consents shall be governed by any rules that the Board or any duly authorized committee of the Board, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate, the By-laws, and applicable law and the rules of any national securities exchange or other trading facility on which the Series B Non-Cumulative Perpetual Preferred Stock is listed or traded at the time.

Section 8. No Preemptive Rights. No share of Series B Non-Cumulative Perpetual Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for Series B Non-Cumulative Perpetual Preferred Stock may deem and treat the record holder of any share of Series B Non-Cumulative Perpetual Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.

Section 10. Notices. All notices or communications in respect of Series B Non-Cumulative Perpetual Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, and, with respect to any redemption thereof, not less than 30 days nor more than 60 days prior to the date fixed for such redemption, or if given in such other manner as may be permitted in these Certificate of Designation, in the Certificate or By-laws or by applicable law. Notwithstanding the foregoing, if shares of Series B Non-Cumulative Perpetual Preferred Stock are issued in book-entry form through DTC or any similar facility, such notices may be given to the holders of Series B Non-Cumulative Perpetual Preferred Stock in any manner permitted by DTC or such facility.

Section 11. Certificates. The Corporation may at its option issue shares of Series B Non-Cumulative Perpetual Preferred Stock without certificates. If certificated, the Corporation shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation.

Section 12. Transfer Agent and Registrar. The Corporation shall appoint a transfer agent for the Series B Non-Cumulative Perpetual Preferred Stock. The Corporation may, in its sole discretion, remove the transfer agent in accordance with the agreement between the Corporation and the transfer agent; provided that the Corporation shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal. The Corporation shall appoint a registrar for the Series B Non-Cumulative Perpetual Preferred Stock. The Corporation may, in its sole discretion, remove the registrar in accordance with the agreement between the Corporation and the registrar; provided that the Corporation shall appoint a successor registrar who shall accept such appointment prior to the effectiveness of such removal.

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EXHIBIT 3.1

Section 13. Other Rights. The shares of Series B Non-Cumulative Perpetual Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate or as provided by applicable law.

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EX-10.1

EXHIBIT 10.1

Execution Version

Employment Agreement

This Employment Agreement (the “Agreement”) is made and entered into as of July 25, 2017, by and among Joseph V. Chillura (the “Executive”), Valley National Bancorp, a New Jersey corporation (the “Corporation”), and Valley National Bank, a national banking association (the “Bank”). The Corporation, the Bank and the Executive are collectively referred to hereinafter as the “Parties” and each individually as a “Party”.

WHEREAS, the Corporation and the Bank desire to employ the Executive on the terms and conditions set forth herein; and

WHEREAS, the Executive desires to be employed by the Corporation and the Bank on such terms and conditions.

NOW, THEREFORE, in consideration of the mutual covenants, promises and obligations set forth herein, the Parties agree as follows:

1. Term. The Executive’s employment hereunder shall be effective as of the date (the “Effective Date”) of the closing of the merger (the “Merger”) provided for in that certain Agreement and Plan of Merger, dated as of July 25, 2017, between the Corporation and USAmeriBancorp, Inc. (the “Merger Agreement”) and shall continue until the third anniversary thereof, unless terminated earlier pursuant to Section 5 of this Agreement. If the Merger Agreement terminates for any reason before the Merger becomes effective, this Agreement will terminate and be of no further force and effect and there will be no liability of any kind under this Agreement. The period during which the Executive is employed by the Bank hereunder is hereinafter referred to as the “Employment Term”.

2. Position and Duties.

2.1 Position. During the Employment Term, the Executive shall serve as the Regional President of Florida West Coast (Tampa to Naples) and Alabama division of the Bank with officer title of Executive Vice President, reporting to the Chief Lending Officer, Senior Executive Vice President, currently Thomas Iadanza. In such position, the Executive shall have such duties, authority and responsibility as shall be determined from time to time by the Chief Lending Officer, Senior Vice President,

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EXHIBIT 10.1

which duties, authority and responsibility are consistent with the Executive’s position.

2.2 Duties. During the Employment Term, the Executive shall devote substantially all of his business time and attention to the performance of the Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise that would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the board of directors of the Bank (the “Board”). Notwithstanding the foregoing, the Executive will be permitted to, with the prior written consent of the Board (which consent will not be unreasonably withheld or delayed), act or serve as a director, trustee, committee member or principal of any type of for-profit business or civic or charitable organization as long as such activities are disclosed in writing to the Bank and do not interfere or conflict with the performance of the Executive’s duties and responsibilities to the Bank as provided hereunder, including, but not limited to, the obligations set forth in Section 2 hereof. The Executive has received prior written consent from the President of the Bank or the Bank Board to serve the for-profit businesses and civic or charitable organizations identified in Exhibit A hereto.

3. Place of Performance. The principal place of the Executive’s employment shall be the Bank’s offices in the Tampa/Clearwater offices; provided that, the Executive may be required to travel on Bank business during the Employment Term.

4. Compensation.

4.1 Base Salary. The Bank shall pay the Executive an annual rate of base salary of $510,000 in periodic installments in accordance with the Bank’s customary payroll practices, but no less frequently than monthly. The Executive’s base salary shall be reviewed at least annually by the executive management, consisting of the CEO, the President of the Bank and the President of the Corporation (“Executive Management”) and Executive Management may, but shall not be required to, adjust the base salary during the Employment Term. The Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as “Base Salary”.

4.2 Annual Bonus. For each calendar year of the Employment Term, the Executive shall be eligible to receive an annual bonus in cash (the “Annual Bonus”). However, the decision to provide any Annual Bonus and the amount and terms of any Annual Bonus shall be in the discretion of Executive Management .

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4.3 Equity Awards. During the Employment Term, the Executive shall be eligible to receive annual equity awards under the Corporation’s 2016 Long-Term Stock Incentive Plan (the “2016 LTIP”) or any successor plan, as recommended by the Executive Management and determined by the Compensation Committee of the Corporation.

4.4 Fringe Benefits and Perquisites. During the Employment Term, the Executive shall be eligible to receive fringe benefits and perquisites as are available to other similarly situated executive officers of the Bank as determined by the Executive Management.

4.5 Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in employee 401(k), life, health and disability benefit plans, practices and programs maintained by the Corporation and the Bank as in effect from time to time as determined by the Executive Management, subject to necessary Board of Directors oversight or approval (collectively, “Employee Benefit Plans”). The Bank and Executive Management reserve the right to amend or cancel any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.

4.6 Vacation; Paid Time-off. During the Employment Term, the Executive shall be entitled to receive paid vacation days per calendar year (prorated for partial years) in accordance with the Bank’s vacation policies for its senior executive officers as in effect from time to time. The Executive shall receive other paid time-off in accordance with the Bank’s policies for senior executive officers as such policies may exist from time to time.

4.7 Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Bank that is subject to recovery under the Bank’s or the Corporation’s clawback policies then in effect and any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such policy, law, government regulation or stock exchange listing requirement.

4.8 Expense Reimbursement. The Executive shall be reimbursed by the Bank for all reasonable travel, entertainment and other expenses incurred during the course of

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performing his obligations under this Agreement upon substantiation of such expenses in accordance with the applicable policies and procedures of the Bank.

5. Termination of Employment. The Employment Term and the Executive’s employment hereunder may be terminated by either the Bank or the Executive at any time and for any reason; provided that, unless otherwise provided herein, either Party shall be required to give the other Party written notice of termination of the Executive’s employment in accordance with Section 5.4 and Section 5.5 of this Agreement. Upon termination of the Executive’s employment during the Employment Term, the Executive shall be entitled to the compensation and benefits described in this Section 5 and shall have no further rights to any compensation or any other benefits from the Bank or any of its affiliates.

5.1Termination For Cause or Without Good Reason.  

(a) The Executive’s employment hereunder may be terminated by the Bank for Cause or by the Executive without Good Reason. If the Executive’s employment is terminated by the Bank for Cause or by the Executive without Good Reason, the Executive shall be entitled to receive:

(i) any accrued but unpaid Base Salary and accrued but unused vacation days, which shall be paid within one (1) week following the Termination Date (as defined below) in accordance with the Bank’s customary payroll procedures;

(ii) any earned but unpaid Annual Bonus with respect to any completed calendar year immediately preceding the Termination Date, which shall be paid on the otherwise applicable payment date; provided that if the Executive’s employment is terminated by the Bank for Cause, then any such accrued but unpaid Annual Bonus shall be forfeited;

(iii) reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid in accordance with the Bank’s expense reimbursement policy; and

(iv) such employee benefits (including equity compensation), if any, to which the Executive may be entitled under the Bank’s employee benefit plans as of the Termination Date; provided that in no event shall the Executive be entitled to any payments in the nature of

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severance or termination payments except as specifically provided herein.

Items 5.1(a)(i) through 5.1(a)(iv) are referred to herein collectively as the “Accrued Amounts”.

(b) For purposes of this Agreement, “Cause” shall mean:

(i) the Executive’s willful failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness);

(ii) the Executive’s willful failure to comply with any valid and legal directive of the Executive’s supervisor, the President of the Bank or the Board;

(iii) the Executive’s engagement in dishonesty, illegal conduct or misconduct, which is, in each case, injurious to the Bank or its affiliates;

(iv) the Executive’s embezzlement, misappropriation or fraud, whether or not related to the Executive’s employment with the Bank;

(v) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude; or

(vi) any material failure by the Executive to comply with the Bank’s written policies or rules as may be in effect from time to time during the Employment Term.

Except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, the Executive shall have thirty (30) business days from the delivery of written notice by the Bank within which to cure any acts constituting Cause; provided, however, that if the Bank reasonably expects irreparable injury from a delay of thirty (30) business days, the Bank may give the Executive notice of such shorter period within which to cure as is reasonable under the circumstances, or may take other action, which may include the termination of the Executive’s employment without notice and with immediate effect. The Bank may place the Executive on paid leave for up to sixty (60) days while it is determining whether there is a basis to terminate the Executive’s employment for Cause. This will not constitute Good Reason.

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(c) For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following, in each case during the Employment Term without the Executive’s written consent:

(i) a material reduction in the Executive’s Base Salary other than a general reduction in Base Salary that affects all similarly situated executive officers in substantially the same proportions; or

(ii) a relocation of the Executive’s principal place of employment by more than twenty-five (25) miles.

The Executive cannot terminate his employment for Good Reason unless he has provided written notice to the Bank of the existence of the circumstances providing grounds for termination for Good Reason within thirty (30) days of the initial existence of such grounds and the Bank has had at least thirty (30) days from the date on which such notice is provided to cure such circumstances. If the Executive does not give notice of the termination of his employment for Good Reason within thirty (30) days after the first occurrence of the applicable grounds, then the Executive will be deemed to have waived his right to terminate for Good Reason with respect to such grounds.

5.2 Without Cause or for Good Reason. The Employment Term and the Executive’s employment hereunder may be terminated by the Executive for Good Reason or by the Bank without Cause. In the event of such termination, the Executive shall be entitled to receive the Accrued Amounts and subject to the Executive’s continued compliance with Section 6, Section 7, Section 8 and Section 9 of this Agreement and his execution of a release of claims in favor of the Corporation and the Bank, its affiliates and their respective officers and directors in substantially the form attached hereto as Exhibit B (the “Release”) and such Release becoming effective within thirty (30) days following the Termination Date (such thirty (30) day period, the “Release Execution Period”), the Executive shall be entitled to receive his normal Base Salary payments that the Executive would have earned had he remained employed until the greater of (i) twelve (12) months from the Termination Date, and (ii) the end of the Employment Term. In the event the Executive’s employment is terminated by the Executive for Good Reason or by the Bank without Cause on or within one (1) year following a change in control of the Corporation or the Bank (as defined under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”)), the Executive shall instead be entitled to receive, within sixty (60) days of such termination, a lump sum payment equal to the greater of: (i) twenty-

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four (24) months of his normal Base Salary payments; or (ii) his normal Base Salary payments that the Executive would have earned had he remained employed until the end of the Employment Term. The treatment of any outstanding equity awards shall be determined in accordance with the terms of the 2016 LTIP and the applicable award agreements. In the event that the Executive violates the provisions of Section 6, Section 7, Section 8 or Section 9 of this Agreement, the Corporation and the Bank may cease making the payments due to the Executive pursuant to this Section 5.2.

5.3 Death or Disability.  

(a) The Executive’s employment hereunder shall terminate automatically upon the Executive’s death during the Employment Term, and the Bank may terminate the Executive’s employment on account of the Executive’s Disability.

(b) If the Executive’s employment is terminated during the Employment Term on account of the Executive’s death or Disability, the Executive (or the Executive’s estate and/or beneficiaries, as the case may be) shall be entitled to receive only the Accrued Amounts.

(c) Notwithstanding any other provision contained herein, all payments made in connection with the Executive’s Disability shall be provided in a manner which is consistent with Federal and state law.

(d) For purposes of this Agreement, Disability shall mean the Executive is entitled to receive long-term disability benefits under the Bank’s long-term disability plan, or if there is no such plan, the Executive’s inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities under this Agreement for one hundred eighty (180) days out of any three hundred sixty-five (365) day period or one hundred twenty (120) consecutive days.

5.4 Notice of Termination. Any termination of the Executive’s employment hereunder by the Bank or by the Executive during the Employment Term (other than termination pursuant to Section 5.3(a) on account of the Executive’s death) shall be communicated by written notice of termination (“Notice of Termination”) to the other Party hereto in accordance with Section 23. The Notice of Termination shall specify:

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(a) The termination provision of this Agreement relied upon;

(b) To the extent applicable, the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated; and

(c) The applicable Termination Date.

5.5 Termination Date. The Executive’s Termination Date shall be:

(a) If the Executive’s employment hereunder terminates on account of the Executive’s death, the date of the Executive’s death;

(b) If the Executive’s employment hereunder is terminated on account of the Executive’s Disability, the date that it is determined that the Executive has a Disability;

(c) If the Bank terminates the Executive’s employment hereunder for Cause, the date the Notice of Termination is delivered to the Executive;

(d) If the Bank terminates the Executive’s employment hereunder without Cause, the date specified in the Notice of Termination, which shall be no less than ten (10) days following the date on which the Notice of Termination is delivered;

(e) If the Executive terminates his employment hereunder (i) without Good Reason, the date specified in the Executive’s Notice of Termination, which shall be no less than sixty (60) days following the date on which the Notice of Termination is delivered, (ii) with Good Reason, the date specified in the Executive’s Notice of Termination, which shall be no less than ten (10) days following the date on which the Notice of Termination is delivered, plus, if applicable, an additional thirty (30) days during which the Corporation shall have the right to cure as provided in Section 5.1(c) hereof; provided that, in either case, the Bank may waive all or any part of the notice period for no consideration by giving written notice to the Executive and for all purposes of this Agreement, the Executive’s Termination Date shall be the date determined by the Bank; and

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Notwithstanding anything contained herein, the Termination Date shall not occur until the date on which the Executive incurs a “separation from service” within the meaning of Section 409A.

5.6 Resignation of All Other Positions. Upon termination of the Executive’s employment hereunder for any reason, the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the board of directors (or a committee thereof) of the Bank or any of its affiliates.

6. Cooperation. The Parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Bank in connection with matters arising out of the Executive’s service to the Bank; provided that the Bank shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Bank shall reimburse the Executive for reasonable expenses incurred in connection with such cooperation.

7. Confidential Information. The Executive understands and acknowledges that during the Employment Term, he will have access to and learn about Confidential Information as defined below.

7.1 Confidential Information Defined.  

(a) Definition.

For purposes of this Agreement, “Confidential Information” includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: regulatory reports, examinations and agreements, business processes, practices, methods, policies, plans, documents, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, computer programs, computer software, records, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, market studies, sales information, revenue, costs, product plans, customer information, customer lists, client information and client lists of the Bank or its businesses or any

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existing or prospective customer, supplier, investor or other associated third party or of any other person or entity that has entrusted information to the Bank in confidence.

The Executive understands that the above list is not exhaustive and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used.

The Executive understands and agrees that Confidential Information includes information developed by him in the course of his employment by the Bank as if the Bank furnished the same Confidential Information to the Executive in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Executive; provided that such disclosure is through no direct or indirect fault of the Executive or person(s) acting on the Executive’s behalf.

(b) DisclosureandUse Restrictions.

The Executive agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate or make available Confidential Information, or allow it to be disclosed, published, communicated or made available, in whole or part, to any entity or person whatsoever (including other employees of the Bank) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Bank and, in any event, not to anyone outside of the direct employ of the Bank except as required in the performance of the Executive’s authorized employment duties to the Bank (and then, such disclosure shall be made only within the limits and to the extent of such duties); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media or other resources containing any Confidential Information, or remove any such documents, records, files, media or other resources from the premises or control of the Bank, except as required in the performance of the Executive’s authorized employment duties to the Bank (and then, such disclosure shall be made only within the limits and to the extent of such duties). Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order.

The Executive understands and acknowledges that his obligations under this Agreement with regard to any particular Confidential Information shall commence immediately upon the Executive first having access to such Confidential Information (whether before or after

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he begins employment by the Bank) and shall continue during and after his employment by the Bank until such time as such Confidential Information has become public knowledge other than as a result of the Executive’s breach of this Agreement or breach by those acting in concert with the Executive or on the Executive’s behalf.

8. Restrictive Covenants.

8.1 Acknowledgment. The Executive understands that the nature of the Executive’s position gives him access to and knowledge of Confidential Information and places him in a position of trust and confidence with the Bank. The Executive understands and acknowledges that the intellectual services he provides to the Bank are unique, special or extraordinary.

The Executive further understands and acknowledges that the Bank’s ability to reserve these for the exclusive knowledge and use of the Bank is of great competitive importance and commercial value to the Bank, and that improper use or disclosure by the Executive is likely to result in unfair or unlawful competitive activity.

8.2 Non-competition. Because of the Bank’s legitimate business interest as described herein and the good and valuable consideration offered to the Executive, during the Employment Term and for the two (2) year period thereafter, to run consecutively, beginning on the last day of the Executive’s employment with the Bank, for any reason or no reason and whether employment is terminated at the option of the Executive or the Bank, the Executive agrees and covenants not to engage in Prohibited Activity (as defined below) or become employed with an entity which engages in Prohibited Activity within fifty (50) miles of any location(s) in which the Corporation or the Bank has banking or other offices or has filed an application for regulatory approval to establish an office.

For purposes of this Section 8, “Prohibited Activity” is activity in which the Executive contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in any business in which the Bank or any of its subsidiaries is currently engaged in (the “Bank Business”). Prohibited Activity also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information or Confidential Information.

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Nothing contained herein shall prohibit the Executive from purchasing or owning less than two percent (2%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation.

8.3 Non-solicitation of Employees. The Executive agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Bank during a period of two (2) years, to run consecutively, beginning on the last day of the Executive’s employment with the Bank.

8.4 Non-solicitation of Customers. The Executive understands and acknowledges that because of the Executive’s experience with and relationship to the Bank, he will have access to and learn about much or all of the Bank’s customer information. “Customer information” includes, but is not limited to, names, phone numbers, addresses, e-mail addresses and other information identifying facts and circumstances specific to the customer and relevant to the Bank Business.

The Executive understands and acknowledges that loss of this customer information and any customer relationships and/or goodwill will cause significant and irreparable harm.

The Executive agrees and covenants, during a period of two (2) years, to run consecutively, beginning on the last day of the Executive’s employment with the Bank, not to directly or indirectly solicit, contact (including, but not limited to, e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Bank’s current, former or prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Bank. The Corporation and the Bank agree that their executive officers will not at any time disparage the Executive or engage in conduct resulting in, or likely to result in, damage to the business or professional reputation of the Executive.

9. Non-disparagement. The Executive agrees and covenants that he will not, at any time, make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Bank or its businesses, or any of its employees, officers, existing and prospective customers, suppliers, investors or other associated third parties.

10. Additional Payment. The Bank will pay or cause USAmeriBank to pay a lump sum of $2,326,299 to the Executive immediately prior to the Effective Date representing the amount

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Executive would be entitled to as Severance Pay and as the value of the COBRA Benefits under the Change in Control Plan in consideration of (i) the Executive’s release and waiver of the rights he possesses under the USAmeriBancorp, Inc. Executive Change in Control Severance Plan and related Participation Agreement, between USAmeriBancorp, Inc. and the Executive (collectively, the “Change in Control Plan”) as set forth in Section 12 of this Agreement and (ii) the agreements and covenants of the Executive set forth in Section 7, Section 8 and Section 9 of this Agreement.

11. Acknowledgement. The Executive acknowledges and agrees that the services to be rendered by him to the Bank are of a special and unique character; that the Executive will obtain knowledge and skill relevant to the Bank’s industry, methods of doing business and marketing strategies by virtue of the Executive’s employment; and that the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interests of the Bank.

The Executive further acknowledges that the amount of his compensation and the payments set forth in Section 10 of this Agreement reflect, in part, his obligations and the Bank’s rights under Section 7, Section 8 and Section 9 of this Agreement; that he has no expectation of any additional compensation, royalties or other payment of any kind not otherwise referenced herein in connection herewith; that he will not be subject to undue hardship by reason of his full compliance with the terms and conditions of Section 7, Section 8 and Section 9 of this Agreement or the Bank’s enforcement thereof.

12. Waiver and Release of Rights under Change in Control Plan. In consideration of the benefits this Agreement confers upon the Executive and his employment by the Bank and conditioned upon the Bank’s performance in all material respects of its obligations under this Agreement, the Executive agrees to release and waive any and all rights he possesses under the Change in Control Plan effective immediately prior to the effective time of the Merger on the Effective Date. This waiver and release will remain in effect despite the discovery or existence of any new additional fact or any fact different from that which the Executive now knows or believes to be true. The Executive acknowledges the receipt and sufficiency of the consideration provided, that he has read this release and understands its terms, conditions, and comprehensive scope. This release is the Executive’s free act and deed, and the Executive has not been compelled to sign it by economic hardship or any other form of duress.

13. Remedies. In the event of a breach or threatened breach by the Executive of Section 7, Section 8 or Section 9 of this Agreement, the Executive hereby consents and agrees that the Bank shall

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be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, and not in lieu of, legal remedies, monetary damages or other available forms of relief.

14. Governing Law; Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of the State of Florida without regard to conflicts of law principles. Any action or proceeding by either of the Parties to enforce this Agreement shall be brought only in a state or Federal court located in the State of Florida. The Parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

15. Entire Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Bank pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. The Parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.

16. Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and by any executive officer of the Bank. No waiver by either of the Parties of any breach by the other Party hereto of any condition or provision of this Agreement to be performed by the other Party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the Parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.

17. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the Parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement.

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The Parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement (including, without limitation, Section 8 hereof) in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the Parties as embodied herein to the maximum extent permitted by law.

The Parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had not been set forth herein.

18. Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.

19. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

20. Tolling. Should the Executive violate any of the terms of the restrictive covenant obligations articulated herein, including, without limitation, Section 8 hereof, the obligation at issue will run from the first date on which the Executive ceases to be in violation of such obligation.

21. Section 409A.

21.1 General Compliance. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be

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treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. To the extent that the Release Execution Period spans two tax years of the Executive, then no payments will be made until the later of (1) the end of the revocation period or (2) the first business day of the second tax year, unless an applicable exemption under Section 409A applies. Notwithstanding the foregoing, the Bank makes no representations or warranties that the payments and benefits provided under this Agreement will comply with Section 409A and in no event shall the Bank be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

21.2 Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then solely to the extent necessary to comply with Section 409A, such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date (the “Specified Employee Payment Date”) or, if earlier, on the Executive’s death. The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

21.3 Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

(a) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

(b) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

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(c) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

22. Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. If the Executive dies while he is entitled to payments under Section 5.2 of this Agreement, the payments shall continue to be made to his spouse or if he has no spouse at the time of his death, his estate. The Bank may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Bank. This Agreement shall inure to the benefit of the Bank and its permitted successors and assigns.

23. Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the Parties at the addresses set forth below (or such other addresses as specified by the Parties by like notice):

If to the Corporation or the Bank:

Valley National Bank

1455 Valley Road

Wayne, New Jersey 07470

Attn: Ira Robbins, President

If to the Executive:

Joseph V. Chillura

2924 West Villa Rosa Park

Tampa, Florida 33611

24. Representations of the Executive. The Executive represents and warrants to the Bank that:

24.1 The Executive’s acceptance of employment with the Bank and the performance of his duties hereunder will not conflict with or result in a violation of, a breach of, or a default under any contract, agreement or understanding to which he is a party or is otherwise bound.

24.2 The Executive’s acceptance of employment with the Bank and the performance of his duties hereunder will not violate any non-solicitation, non-competition or other similar covenant or agreement of a prior employer.

17

97565204.6

EXHIBIT 10.1

25. Withholding. The Bank shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Bank to satisfy any withholding tax obligation it may have under any applicable law or regulation.

26. Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the Parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the Parties under this Agreement.

27. Acknowledgment of Full Understanding. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.

[SIGNATURE PAGE FOLLOWS]

18

97565204.6

EXHIBIT 10.1

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

VALLEY NATIONAL BANCORP

By /s/ Rudy Schupp

Name:    Rudy Schupp

Title: President

VALLEY NATIONAL BANK

By /s/ Ira Robbins

Name: Ira Robbins

Title: President

THE EXECUTIVE

Signature: /s/ Joseph V. Chillura

Print Name: Joseph V. Chillura

19

97565204.6

EXHIBIT 10.1

EXHIBIT A

PERMITTED OUTSIDE ACTIVITIES

20

97565204.6

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

EXHIBIT B

DRAFT RELEASE AGREEMENT

THIS RELEASE AGREEMENT (“Release Agreement”) is made and entered into by and between Valley National Bancorp, a New Jersey corporation, Valley National Bank, a national banking association (collectively, or individually, the “Employer”) and [ ] (the “Executive”).

WHEREAS, the Employer and the Executive have entered into an Employment Agreement dated [___________, 2017] (“Employment Agreement”); and

WHEREAS, the Employment Agreement provides for certain consideration to be provided to the Executive upon the occurrence of certain events set forth in Section 5 of the Employment Agreement, which is conditioned upon the Executive executing a release of claims in favor of the Employer, its affiliates and their respective officers and directors in the form provided by the Bank.    

NOW, THEREFORE, in consideration of the mutual covenants contained herein, Employer and Executive agree as follows:

1.    Executive and Employer acknowledge and agree that Executive’s receipt of the consideration as set forth in Section 5 of the Employment Agreement is contingent upon the Executive’s execution of this Release Agreement.

2.    Executive further acknowledges his continuing obligations under the terms of the Employment Agreement, including, but not limited to, the ongoing duties and obligations set forth in Section 6, Section 7, Section 8 and Section 9 of the Employment Agreement and the additional sections enforcing those terms.

3.    (a)    Executive hereby irrevocably and unconditionally releases, remits, acquits and discharges Employer, its past and present parents, subsidiaries, affiliates, and divisions, and its

21

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EXHIBIT 10.1

and their past and present officers, directors, attorneys, accountants, shareholders, employees and agents as well as any benefit plans and the trustees, fiduciaries, and administrators of those plans, and all successors and assigns of any of the foregoing (hereinafter referred to as “Releasees”) jointly and individually, from any and all claims, known or unknown, civil or criminal, vested or contingent, which Executive, Executive’s heirs, successors or assigns have or may have against Releasees to the date of this Release Agreement, and from any and all liability which Releasees have or may have to Executive whether denominated claims, demands, causes of action, obligations, damages, or liabilities arising from any and all bases, to the date of this Agreement and Release.

(b)     The claims released by Executive include, but are not limited to, any claims of failure to accommodate a disability or religion, retaliation, harassment or discrimination (for example, on the basis of age, sex, race, religion, disability, sexual orientation, or national origin) under any federal, state or local law, rule or regulation, including, but not limited to the Americans with Disabilities Act (“ADA”); the Rehabilitation Act of 1973; the Worker Adjustment and Retraining Notification Act (also known as “WARN”); the Age Discrimination in Employment Act of 1967 (“ADEA”); the Employee Retirement Income Security Act of 1974 (“ERISA”); the Family and Medical Leave Act (“FMLA”); the Equal Pay Act; Title VII of the Civil Rights Act of 1964; the Fair Credit Reporting Act; the Sarbanes-Oxley Act of 2002; the Uniformed Services Employment and Reemployment Rights Act the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee Protection Act; the New Jersey Family Leave Act; the New Jersey Civil Rights Act; the Florida Civil Rights Act; the Florida Whistleblower Protections; the Alabama Age Discrimination in Employment Act; the Workers’ Compensation Law of Alabama Ala. Code;the United States, New Jersey, Florida, or Alabama Constitutions; and/or any other federal, state or local statutes, laws, rules and regulations pertaining to employment, as well as any and all claims under state or federal contract or tort law including wrongful or constructive discharge, breach of contract, breach of a covenant of good faith and fair dealing, emotional distress, promissory estoppel, violation of public policy, or for any other compensation or benefits (except vested benefits, claims for reported and incurred but unreported events under welfare benefit plans, insurance continuation and coverage conversion rights required to be offered under applicable law). Executive understands that this release includes known and unknown claims.

22

97565204.6

EXHIBIT 10.1

(c)    Executive certifies that as of the date this Release Agreement is signed, he has received all compensation, wages, overtime pay, bonuses, commissions, and/or benefits to which he may be entitled and has reported all accidents, injuries or known illnesses relating to or arising from his employment with Employer. Executive further certifies that as of the date this Release Agreement is signed, Executive has been granted any leave to which Executive was entitled under federal, state or local leave or disability accommodation laws.

(d)    This Release Agreement does not affect Executive’s rights, if any, to vested benefits, including under any tax-qualified retirement plan, to benefits (including benefits related to reported and incurred but unreported claims) under welfare benefit plans, insurance continuation and coverage conversion rights required to be offered under applicable law, to rights as a depositor, debtor or customer, or to rights as a shareholder, and nothing in this paragraph is intended, nor shall be construed, to release future claims arising after the date of execution of this Release Agreement. However, in all other respects it is understood and agreed that pursuant to this Release Agreement Executive has waived and released any and all other claims against any of the Releasees relating in any way to his employment with Employer.

4.     Executive further agrees that he has not initiated and will not initiate any complaint, lawsuit or charge against Releasees seeking any personal recovery or personal injunctive relief with respect to any matter in any way arising out of his employment with Employer. Executive further agrees that he will not voluntarily participate in any action, charge, claim or complaint initiated or pursued by any individual, partnership, corporation or any other entity against the Releasees with respect to any matter in any way arising out of his employment with Employer, except as required by court order, subpoena, governmental agency or other judicial or arbitration process.

5. Nothing in paragraphs 3 (release), 4 (covenant not to sue) or 5 (confidentiality of agreement) of this Release Agreement or Sections 6 (Cooperation) or 9 (Nondisparagement) of the Employment Agreement shall prohibit Executive from (a) bringing an action to enforce the terms of this Release Agreement; (b) filing a timely charge or complaint with, or providing information to, the Equal Employment Opportunity Commission (“EEOC”) or an equivalent

23

97565204.6

EXHIBIT 10.1

state or local agency; (c) participating in any investigation or proceeding conducted by the EEOC or equivalent agency regarding any claim of employment discrimination (although as to (b) and (c) and noted above Executive has waived any right to personal recovery or personal injunctive relief in connection with any such charge or complaint); or (d) initiating or engaging in communication with, responding to any inquiry from, or otherwise providing information to the SEC or any other federal or state regulatory, self-regulatory, or enforcement agency or authority regarding securities law violations, other possible violations of federal law or regulation including under the whistleblower provisions of federal law or regulation and receiving a a whistleblower award. 

6.    Executive agrees not to divulge the terms of this Release Agreement to anyone except his attorney, accountant, and immediate family members or spouse, except as required by law. To the extent that he does divulge the terms of this Release Agreement to such persons, he will advise them that they must not divulge the terms of this Release Agreement.

7.    Executive further acknowledges that the only consideration for signing this Release Agreement is as set forth in this Release Agreement and his Employment Agreement; that the consideration received for executing this Release Agreement is greater than that to which he would otherwise be entitled; that no other promise or agreements of any kind have been made to him by any person or entity whatsoever to cause him to sign this Release Agreement; and that except as specifically set forth herein or in the Employment Agreement, Executive is not entitled to additional payments under any Employer policy or plan.

8.    Executive understands and acknowledges that, pursuant to the Older Workers Benefit Protection Act (“OWBPA”) and the Age Discrimination in Employment Act (“ADEA”), Executive shall be provided up to twenty-one (21) days to review and consider this Release Agreement before signing. If Executive voluntarily elects to sign this Release Agreement prior to the expiration of twenty-one (21) days, Executive waives any and all claims under the OWBPA and the ADEA based on not waiting the full twenty-one days.

9.    Executive further acknowledges that he is competent to execute this Release Agreement, has been given at least twenty-one (21) days to consider this Release Agreement and has been advised that he should, and has been given the opportunity to, consult an attorney

24

97565204.6

EXHIBIT 10.1

of his own choosing; and that he fully understands the meaning and intent of this Release Agreement and enters into it freely, voluntarily and without duress or coercion.

10.    By this Release Agreement, the parties do not admit misconduct or violation of any federal or state law or regulation or any Releasees’ policy or procedure. Accordingly, this Release Agreement shall not be admissible in any proceeding as evidence of any admission by the Executive or Releasees, except that the Release Agreement may be introduced in any proceeding to enforce the Release Agreement or the terms of the Employment Agreement.

11.    If any provision of this Release Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications and to this end the provisions of this Release Agreement are declared to be severable; provided, however, that upon a finding by a court of competent jurisdiction that the waiver and release contained in paragraph 3 above is invalid or unenforceable in any way, Executive agrees, upon request by Employer, to promptly execute a waiver and release of comparable scope that is valid and enforceable.

12.    This Release Agreement shall be construed under the laws of the State of Florida and shall not be interpreted strictly for or against any party.

13.    It is understood and agreed that this Release Agreement shall not be effective or enforceable for a period of seven (7) days following execution by Executive, and Executive may revoke this Release Agreement for any reason during this seven (7) day period by delivering written notice of revocation to the Employer at 1455 Valley Road, Wayne, New Jersey 07470. It is further understood and agreed that no payments will be made to Executive hereunder until after the seven (7) day revocation period has ended.

I acknowledge that I have carefully read this Release Agreement and understand and agree to all of its terms including the full and final waiver and release of claims set forth above. I further acknowledge that I have voluntarily entered into this Release Agreement, that I have not relied upon any representation or statement, written or oral, other than those set forth in this Release Agreement, and that I have been advised that I should consult with an attorney before signing this Release Agreement and have had an opportunity to consult with an attorney if I wished to do so. I

25

97565204.6

EXHIBIT 10.1

acknowledge that I have been provided with twenty-one (21) days to consider this Release Agreement and seven (7) days to revoke my signature of this Release Agreement.

Agreed and accepted:

_____________________________________            Date

________________________

WITNESS:

______________________________________            Date _______________________

THIS IS A LEGAL RELEASE AGREEMENT, AND COVENANT NOT TO SUE.

READ CAREFULLY BEFORE SIGNING.

26

97565204.6

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Ira Robbins, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Valley National Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2020

/s/ Ira Robbins

Ira Robbins

Chairman of the Board, President and

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, Michael D. Hagedorn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Valley National Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2020

/s/ Michael D. Hagedorn

Michael D. Hagedorn

Senior Executive Vice President and

Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CEO AND CFO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Valley National Bancorp (the “Company”) for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ira Robbins, as Chief Executive Officer of the Company, and Michael D. Hagedorn, as Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ira Robbins

Ira Robbins

Chairman of the Board, President and

Chief Executive Officer

August 7, 2020

/s/ Michael D. Hagedorn

Michael D. Hagedorn

Senior Executive Vice President and

Chief Financial Officer

August 7, 2020

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2020	Aug. 05, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	1-11277
Entity Registrant Name	Valley National Bancorp
Entity Incorporation, State or Country Code	NJ
Entity Tax Identification Number	22-2477875
Entity Address, Address Line One	One Penn Plaza
Entity Address, City or Town	New York,
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10119
City Area Code	973
Local Phone Number	305-8800
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		403,797,596
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Period Period Focus	Q2
Entity Central Index Key	0000714310
Current Fiscal Year End Date	--12-31
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	VLY
Security Exchange Name	NASDAQ
Non-Cumulative Perpetual Preferred Stock, Series A
Entity Information [Line Items]
Title of 12(b) Security	Non-Cumulative Perpetual Preferred Stock, Series A, no par value
Trading Symbol	VLYPP
Security Exchange Name	NASDAQ
Non-Cumulative Perpetual Preferred Stock, Series B
Entity Information [Line Items]
Title of 12(b) Security	Non-Cumulative Perpetual Preferred Stock, Series B, no par value
Trading Symbol	VLYPO
Security Exchange Name	NASDAQ

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and due from banks	$ 388,753	$ 256,264
Interest bearing deposits with banks	1,521,572	178,423
Investment securities:
Equity securities	54,379	41,410
Available for sale debt securities	1,689,388	1,566,801
Held to maturity debt securities (net of allowance for credit losses of $1,593 at June 30, 2020)	2,131,834
Held to maturity debt securities (net of allowance for credit losses of $1,593 at June 30, 2020)	2,133,427	2,336,095
Total investment securities	3,875,601	3,944,306
Loans held for sale, at fair value	120,599	76,113
Loans	32,314,611	29,699,208
Less: Allowance for loan losses	(309,614)	(161,759)
Net loans	32,004,997	29,537,449
Premises and equipment, net	329,889	334,533
Lease right of use assets	273,811	285,129
Bank owned life insurance	535,383	540,169
Accrued interest receivable	122,807	105,637
Goodwill	1,375,409	1,373,625
Other intangible assets, net	77,921	86,772
Other assets	1,090,523	717,600
Total Assets	41,717,265	37,436,020
Deposits:
Non-interest bearing	8,989,818	6,710,408
Interest bearing:
Savings, NOW and money market	14,165,415	12,757,484
Time	8,272,772	9,717,945
Total deposits	31,428,005	29,185,837
Short-term borrowings	2,082,880	1,093,280
Long-term borrowings	2,907,535	2,122,426
Junior subordinated debentures issued to capital trusts	55,891	55,718
Lease liabilities	299,260	309,849
Accrued expenses and other liabilities	469,206	284,722
Total Liabilities	37,242,777	33,051,832
Shareholders’ Equity
Common stock (no par value, authorized 650,000,000 shares; issued 403,823,728 shares at June 30, 2020 and 403,322,773 shares at December 31, 2019)	141,667	141,423
Surplus	3,628,792	3,622,208
Retained earnings	499,511	443,559
Accumulated other comprehensive loss	(4,938)	(32,214)
Treasury stock, at cost (28,029 common shares at June 30, 2020 and 44,383 common shares at December 31, 2019)	(235)	(479)
Total Shareholders’ Equity	4,474,488	4,384,188
Total Liabilities and Shareholders’ Equity	41,717,265	37,436,020
Series A
Shareholders’ Equity
Preferred stock, no par value; authorized 50,000,000 shares	111,590	111,590
Series B
Shareholders’ Equity
Preferred stock, no par value; authorized 50,000,000 shares	$ 98,101	$ 98,101

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Allowance for credit losses	$ 1,593
Preferred stock, par value (usd per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, par value (usd per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	650,000,000	650,000,000
Common stock, shares issued (in shares)	403,823,728	403,322,773
Treasury stock, shares (in shares)	28,029	44,383
Series A
Preferred stock, shares issued (in shares)	4,600,000	4,600,000
Series B
Preferred stock, shares issued (in shares)	4,000,000	4,000,000

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest Income
Interest and fees on loans	$ 321,883	$ 296,934	$ 654,951	$ 585,211
Interest and dividends on investment securities:
Taxable	19,447	22,489	41,380	45,365
Tax-exempt	3,692	4,356	7,618	9,160
Dividends	3,092	2,795	6,493	5,969
Interest on federal funds sold and other short-term investments	411	1,168	1,876	2,261
Total interest income	348,525	327,742	712,318	647,966
Interest on deposits:
Savings, NOW and money market	16,627	38,020	51,140	74,303
Time	29,857	40,331	72,671	78,502
Interest on short-term borrowings	1,980	14,860	6,687	27,409
Interest on long-term borrowings and junior subordinated debentures	17,502	14,297	33,922	28,870
Total interest expense	65,966	107,508	164,420	209,084
Net Interest Income	282,559	220,234	547,898	438,882
Provision for credit losses for held to maturity securities	41	0	800	0
Provision for credit losses for loans	41,115	2,100	75,039	10,100
Net Interest Income After Provision for Credit Losses	241,403	218,134	472,059	428,782
Non-Interest Income
Insurance commissions	1,659	2,649	3,610	5,174
(Losses) gains on securities transactions, net	(41)	11	(81)	(21)
Other-than-temporary impairment losses on securities	0	(2,928)	0	(2,928)
Portion recognized in other comprehensive income (before taxes)	0	0	0	0
Net impairment losses on securities recognized in earnings	0	(2,928)	0	(2,928)
Fees from loan servicing	2,227	2,367	4,975	4,797
Gains on sales of loans, net	8,337	3,930	12,887	8,506
(Losses) gains on sales of assets, net	(299)	(564)	(178)	77,156
Bank owned life insurance	5,823	2,205	8,965	4,092
Other	20,741	11,010	40,573	20,770
Total non-interest income	44,830	27,603	86,227	135,276
Non-Interest Expense
Salary and employee benefits expense	78,532	76,183	164,260	159,288
Net occupancy and equipment expense	33,217	29,700	65,658	57,586
FDIC insurance assessment	6,135	4,931	10,011	11,052
Amortization of other intangible assets	6,681	4,170	12,151	8,481
Professional and legal fees	7,797	4,145	13,884	9,416
Amortization of tax credit investments	3,416	4,863	6,644	12,036
Telecommunication expense	2,866	2,351	5,153	4,619
Other	18,522	15,394	35,061	27,054
Total non-interest expense	157,166	141,737	312,822	289,532
Income Before Income Taxes	129,067	104,000	245,464	274,526
Income tax expense	33,466	27,532	62,595	84,728
Net Income	95,601	76,468	182,869	189,798
Dividends on preferred stock	3,172	3,172	6,344	6,344
Net Income Available to Common Shareholders	$ 92,429	$ 73,296	$ 176,525	$ 183,454
Earnings Per Common Share:
Basic (usd per share)	$ 0.23	$ 0.22	$ 0.44	$ 0.55
Diluted (usd per share)	0.23	0.22	0.44	0.55
Cash Dividends Declared per Common Share (usd per share)	$ 0.11	$ 0.11	$ 0.22	$ 0.22
Weighted Average Number of Common Shares Outstanding:
Basic (in shares)	403,790,242	331,748,552	403,654,665	331,675,313
Diluted (in shares)	404,631,845	332,959,802	405,043,183	332,929,359
Trust and investment services
Non-Interest Income
Revenue from contracts with customer	$ 2,826	$ 3,096	$ 6,239	$ 6,000
Service charges on deposit accounts
Non-Interest Income
Revenue from contracts with customer	$ 3,557	$ 5,827	$ 9,237	$ 11,730

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 95,601	$ 76,468	$ 182,869	$ 189,798
Unrealized gains and losses on available for sale securities
Net gains arising during the period	3,013	18,488	29,081	34,755
Less reclassification adjustment for net losses (gains) included in net income	31	(8)	58	18
Total	3,044	18,480	29,139	34,773
Unrealized gains and losses on derivatives (cash flow hedges)
Net losses on derivatives arising during the period	(1,280)	(683)	(2,337)	(1,065)
Less reclassification adjustment for net (gains) losses included in net income	(308)	274	130	482
Total	(1,588)	(409)	(2,207)	(583)
Defined benefit pension plan
Amortization of actuarial net loss	172	55	344	110
Total other comprehensive income	1,628	18,126	27,276	34,300
Total comprehensive income	$ 97,229	$ 94,594	$ 210,145	$ 224,098

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Preferred Series A	Preferred Series B	Common stock	Preferred Stock	Common stock	Surplus	Retained Earnings	Retained Earnings Preferred Series A	Retained Earnings Preferred Series B	Retained Earnings Common stock	Accumulated Other Comprehensive Loss	Treasury Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adjustment due to adoption of ASUs | ASU 2016-02	$ 4,414							$ 4,414
Adjustment due to adoption of ASUs | ASU 2017-08	(1,446)							(1,446)
Beginning Balance, adjusted	3,353,422				$ 209,691	$ 116,240	$ 2,796,499	302,610				$ (69,431)	$ (2,187)
Beginning balance at Dec. 31, 2018	3,350,454				209,691	$ 116,240	2,796,499	299,642				(69,431)	(2,187)
Beginning balance (in shares) at Dec. 31, 2018						331,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	113,330							113,330
Other comprehensive income, net of tax	16,174											16,174
Cash dividends declared:
Cash dividends declared on preferred stock		$ (1,797)	$ (1,375)						$ (1,797)	$ (1,375)
Cash dividends declared on common stock				$ (36,686)							$ (36,686)
Effect of stock incentive plan, net (in shares)						302
Effect of stock incentive plan, net	1,811					$ 226	2,935	(99)					(1,251)
Ending balance at Mar. 31, 2019	3,444,879				209,691	$ 116,466	2,799,434	375,983				(53,257)	(3,438)
Ending balance (in shares) at Mar. 31, 2019						331,733
Beginning balance at Dec. 31, 2018	3,350,454				209,691	$ 116,240	2,796,499	299,642				(69,431)	(2,187)
Beginning balance (in shares) at Dec. 31, 2018						331,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	189,798
Ending balance at Jun. 30, 2019	3,504,118				209,691	$ 116,571	2,804,059	412,190				(35,131)	(3,262)
Ending balance (in shares) at Jun. 30, 2019						331,788
Beginning balance at Mar. 31, 2019	3,444,879				209,691	$ 116,466	2,799,434	375,983				(53,257)	(3,438)
Beginning balance (in shares) at Mar. 31, 2019						331,733
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	76,468							76,468
Other comprehensive income, net of tax	18,126											18,126
Cash dividends declared:
Cash dividends declared on preferred stock		(1,797)	(1,375)						(1,797)	(1,375)
Cash dividends declared on common stock				(36,712)							(36,712)
Effect of stock incentive plan, net (in shares)						55
Effect of stock incentive plan, net	4,529					$ 105	4,625	(377)					176
Ending balance at Jun. 30, 2019	3,504,118				209,691	$ 116,571	2,804,059	412,190				(35,131)	(3,262)
Ending balance (in shares) at Jun. 30, 2019						331,788
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adjustment due to adoption of ASUs | ASU 2016-13	(28,187)							(28,187)
Beginning Balance, adjusted	4,356,001				209,691	$ 141,423	3,622,208	415,372				(32,214)	(479)
Beginning balance at Dec. 31, 2019	4,384,188				209,691	$ 141,423	3,622,208	443,559				(32,214)	(479)
Beginning balance (in shares) at Dec. 31, 2019						403,278
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	87,268							87,268
Other comprehensive income, net of tax	25,648											25,648
Cash dividends declared:
Cash dividends declared on preferred stock		(1,797)	(1,375)						(1,797)	(1,375)
Cash dividends declared on common stock				(44,979)							(44,979)
Effect of stock incentive plan, net (in shares)						466
Effect of stock incentive plan, net	232					$ 190	1,828	(2,065)					279
Ending balance at Mar. 31, 2020	4,420,998				209,691	$ 141,613	3,624,036	452,424				(6,566)	(200)
Ending balance (in shares) at Mar. 31, 2020						403,744
Beginning balance at Dec. 31, 2019	4,384,188				209,691	$ 141,423	3,622,208	443,559				(32,214)	(479)
Beginning balance (in shares) at Dec. 31, 2019						403,278
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	182,869
Ending balance at Jun. 30, 2020	4,474,488				209,691	$ 141,667	3,628,792	499,511				(4,938)	(235)
Ending balance (in shares) at Jun. 30, 2020						403,796
Beginning balance at Mar. 31, 2020	4,420,998				209,691	$ 141,613	3,624,036	452,424				(6,566)	(200)
Beginning balance (in shares) at Mar. 31, 2020						403,744
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	95,601							95,601
Other comprehensive income, net of tax	1,628											1,628
Cash dividends declared:
Cash dividends declared on preferred stock		$ (1,797)	$ (1,375)						$ (1,797)	$ (1,375)
Cash dividends declared on common stock				$ (44,750)							$ (44,750)
Effect of stock incentive plan, net (in shares)						52
Effect of stock incentive plan, net	4,183					$ 54	4,756	(592)					(35)
Ending balance at Jun. 30, 2020	$ 4,474,488				$ 209,691	$ 141,667	$ 3,628,792	$ 499,511				$ (4,938)	$ (235)
Ending balance (in shares) at Jun. 30, 2020						403,796

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Cash dividends declared (usd per share)	$ 0.11		$ 0.11
Preferred Series A
Cash dividends declared (usd per share)	0.39	$ 0.39	0.39	$ 0.39
Preferred Series B
Cash dividends declared (usd per share)	0.34	0.34	0.34	0.34
Common stock
Cash dividends declared (usd per share)	$ 0.11	$ 0.11	$ 0.11	$ 0.11

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net income	$ 182,869	$ 189,798
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	29,608	25,240
Stock-based compensation	8,199	8,282
Provision for credit losses	75,839	10,100
Net amortization of premiums and accretion of discounts on securities and borrowings	15,305	14,287
Amortization of other intangible assets	12,151	8,481
Losses on securities transactions, net	81	21
Proceeds from sales of loans held for sale	408,785	205,429
Gains on sales of loans, net	(12,887)	(8,506)
Net impairment losses on securities, recognized in earnings	0	2,928
Originations of loans held for sale	(443,684)	(200,877)
Losses (gains) on sales of assets, net	178	(77,156)
Net change in:
Cash surrender value of bank owned life insurance	(8,965)	(4,092)
Accrued interest receivable	(17,170)	(3,769)
Other assets	(426,776)	(186,674)
Accrued expenses and other liabilities	166,490	65,970
Net cash (used in) provided by operating activities	(9,977)	49,462
Cash flows from investing activities:
Net loan originations and purchases	(2,568,893)	(992,236)
Equity securities:
Purchases	(5,365)	0
Held to maturity debt securities:
Purchases	(107,136)	(261,446)
Maturities, calls and principal repayments	301,004	155,002
Available for sale debt securities:
Purchases	(302,071)	0
Maturities, calls and principal repayments	213,348	109,045
Death benefit proceeds from bank owned life insurance	13,751	1,350
Proceeds from sales of real estate property and equipment	8,202	102,500
Proceeds from sales of loans held for investment	30,020	216,301
Purchases of real estate property and equipment	(14,469)	(9,336)
Net cash used in investing activities	(2,431,609)	(678,820)
Cash flows from financing activities:
Net change in deposits	2,242,168	320,955
Net change in short-term borrowings	989,600	268,870
Proceeds from issuance of long-term borrowings, net	838,388	400,000
Repayments of long-term borrowings	(53,418)	(255,000)
Cash dividends paid to preferred shareholders	(6,344)	(3,172)
Cash dividends paid to common shareholders	(89,122)	(73,546)
Purchase of common shares to treasury	(4,924)	(1,462)
Common stock issued, net	1,140	(480)
Other, net	(264)	(240)
Net cash provided by financing activities	3,917,224	655,925
Net change in cash and cash equivalents	1,475,638	26,567
Cash and cash equivalents at beginning of year	434,687	428,629
Cash and cash equivalents at end of period	1,910,325	455,196
Cash payments for:
Interest on deposits and borrowings	178,337	198,815
Federal and state income taxes	14,731	80,116
Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned	2,750	1,016
Transfer of loans to loans held for sale	30,020	216,301
Lease right of use assets obtained in exchange for operating lease liabilities	$ 6,407	$ 296,064

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Basis of Presentation

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated financial statements of Valley National Bancorp, a New Jersey corporation (Valley), include the accounts of its commercial bank subsidiary, Valley National Bank (the 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. Certain prior period amounts have been reclassified to conform to the current presentation.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly Valley’s financial position, results of operations, changes in shareholders' equity and cash flows at June 30, 2020 and for all periods presented have been made. The results of operations for the three and six months ended on June 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP and industry practice have been condensed or omitted pursuant to rules and regulations of the SEC. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019.

Significant Estimates. In preparing the unaudited 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 require application of management’s most difficult, subjective or complex judgment and are particularly susceptible to change include: the allowance for credit losses, 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. Actual amounts as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

Impact of COVID-19. During the first half of 2020, economies throughout the world were severely disrupted by the effects of quarantines, business closures, and the reluctance of individuals to leave their homes as a result of the outbreak of the novel coronavirus (COVID-19). Our primary market areas within New Jersey, New York, Florida and Alabama have all experienced significant outbreaks and disruptions during the COVID-19 pandemic. The full impact of COVID-19 is unknown and still evolving. The outbreak and any preventative or protective actions that Valley or its customers have taken or may take in respect of this virus have resulted and may continue to result in extended periods of disruption to Valley, its customers, service providers, and third parties. Any future financial impact cannot be reasonably estimated at this time but may materially affect the business and Valley’s financial condition and results of operations. The extent to which COVID-19 impacts Valley’s results will depend on future developments, which are highly uncertain and cannot be predicted. Banking and financial services have been designated essential businesses; therefore, Valley’s operations are continuing, subject to certain modifications to business practices imposed to safeguard the health and wellness of Valley’s customers and employees, and to comply with applicable government directives.

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Business Combinations

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Business Combinations

Business Combinations

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 the 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 $366 thousand and $1.7 million for the three and six months ended June 30, 2020, respectively, which primarily related to professional and legal expenses and other expenses included in non-interest expense on the consolidated statements of income.

During the first quarter 2020, Valley revised the estimated fair values of the acquired assets as of the Oritani acquisition date due to additional information obtained that existed as of December 1, 2019. The adjustments mostly related to the fair value of certain loans and deferred tax assets as of the acquisition date and resulted in a $1.8 million increase in goodwill (see Note 9 for amount of goodwill as allocated to Valley's business segments). If additional information (that existed as of the acquisition date) becomes available, the fair value estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date.

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

The following table shows the calculation of both basic and diluted earnings per common share for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands, except for share data)
Net income available to common shareholders	$	92,429	$	73,296	$	176,525	$	183,454
Basic weighted average number of common shares outstanding	403,790,242		331,748,552		403,654,665		331,675,313
Plus: Common stock equivalents	841,603		1,211,250		1,388,518		1,254,046
Diluted weighted average number of common shares outstanding	404,631,845		332,959,802		405,043,183		332,929,359
Earnings per common share:
Basic	$	0.23	$	0.22	$	0.44	$	0.55
Diluted	0.23		0.22		0.44		0.55

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of restricted stock units and common stock options to purchase Valley’s common shares. Common stock options with exercise prices that exceed the average market price per share 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. Anti-dilutive common stock options equaled approximately 2.7 million shares and 2.3 million shares for the three and six months ended June 30, 2020, respectively, and 482 thousand shares and 494 thousand shares for the three and six months ended June 30, 2019, respectively.

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the three and six months ended June 30, 2020: 

	Components of Accumulated Other Comprehensive Loss								Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance at March 31, 2020	$	31,917	$	(4,348	)	$	(34,135	)	$	(6,566	)
Other comprehensive income (loss) before reclassification	3,013		(1,280		)	—			1,733
Amounts reclassified from other comprehensive income	31		(308		)	172			(105		)
Other comprehensive income (loss), net	3,044		(1,588		)	172			1,628
Balance at June 30, 2020	$	34,961	$	(5,936	)	$	(33,963	)	$	(4,938	)

	Components of Accumulated Other Comprehensive Loss								Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance at December 31, 2019	$	5,822	$	(3,729	)	$	(34,307	)	$	(32,214	)
Other comprehensive income (loss) before reclassification	29,081		(2,337		)	—			26,744
Amounts reclassified from other comprehensive income	58		130			344			532
Other comprehensive income (loss), net	29,139		(2,207		)	344			27,276
Balance at June 30, 2020	$	34,961	$	(5,936	)	$	(33,963	)	$	(4,938	)

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and six months ended June 30, 2020 and 2019:

	Amounts Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended June 30,						Six Months Ended June 30,
Components of Accumulated Other Comprehensive Loss	2020			2019			2020			2019			Income Statement Line Item
	(in thousands)
Unrealized (losses) gains on AFS securities before tax	$	(41	)	$	11		$	(81	)	$	(21	)	(Losses) gains on securities transactions, net
Tax effect	10			(3		)	23			3
Total net of tax	(31		)	8			(58		)	(18		)
Unrealized gains (losses) on derivatives (cash flow hedges) before tax	438			(383		)	(177		)	(673		)	Interest expense
Tax effect	(130		)	109			47			191
Total net of tax	308			(274		)	(130		)	(482		)
Defined benefit pension plan:
Amortization of actuarial net loss	(229		)	(78		)	(465		)	(156		)	*
Tax effect	57			23			121			46
Total net of tax	(172		)	(55		)	(344		)	(110		)
Total reclassifications, net of tax	$	105		$	(321	)	$	(532	)	$	(610	)

* Amortization of net loss is included in the computation of net periodic pension cost recognized within other non-interest expense.

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New Authoritative Accounting Guidance

6 Months Ended

Jun. 30, 2020

Accounting Changes and Error Corrections [Abstract]

New Authoritative Accounting Guidance

New Authoritative Accounting Guidance

New Accounting Guidance Adopted in 2020

Accounting Standards Update (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 the incurred loss impairment methodology under prior accounting guidance with a new current expected credit loss (CECL) model. 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 utilizes 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 the 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.

Valley adopted ASU No. 2016-13 on 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. At adoption, Valley recorded a $100.4 million increase to its allowance for credit losses, including reserves of $92.5 million, $7.1 million and $793 thousand related to loans, unfunded credit commitments and held to maturity debt securities, respectively. Of the $92.5 million in loan reserves, $61.6 million represents PCD loan related reserves which were recognized through a gross-up that increases the amortized cost basis of loans with a corresponding increase to the allowance for credit losses, and therefore results in no impact to shareholders' equity. The remaining non-credit discount of $97.7 million related to PCD loans is accreted into interest income over the life of the loans at the effective interest rate effective January 1, 2020. The non-PCD loan related increase to the allowance for credit losses of $38.8 million, including the reserves for unfunded loan commitments and held to maturity debt securities, was offset in shareholders' equity and deferred tax assets.

For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) net of taxes will be phased in over the same time frame.

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 was effective for Valley on January 1, 2020 and Valley applied this new guidance in its annual goodwill impairment test performed during the second quarter 2020.

New Accounting Guidance issued in 2020

ASU No. 2020-04, "Reference Rate Reform (Topic 848)" provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued, subject to meeting certain criteria. Under the new guidance, an entity can elect by accounting topic or industry subtopic to account for the modification of a contract affected by reference rate reform

as a continuation of the existing contract, if certain conditions are met. In addition, the new guidance allows an entity to elect on a hedge-by-hedge basis to continue to apply hedge accounting for hedging relationships in which the critical terms change due to reference rate reform, if certain conditions are met. A one-time election to sell and/or transfer held-to-maturity debt securities that reference a rate affected by reference rate reform is also allowed. ASU No. 2020-04 became effective for all entities as of March 12, 2020 and will apply to all LIBOR reference rate modifications through December 31, 2022.

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Fair Value Measurement of Assets and Liabilities

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

Fair Value Measurement of Assets and Liabilities

ASC Topic 820, “Fair Value Measurements” 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).

Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at June 30, 2020 and December 31, 2019. The assets presented under “nonrecurring fair value measurements” in the tables 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). 

	June 30, 2020		Fair Value Measurements at Reporting Date Using:
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Equity securities (1)	$	54,379	$	46,897	$	—	$	—
Available for sale:
U.S. Treasury securities	52,621		52,621		—		—
U.S. government agency securities	27,924		—		27,924		—
Obligations of states and political subdivisions	147,505		—		146,140		1,365
Residential mortgage-backed securities	1,382,726		—		1,382,726		—
Corporate and other debt securities	78,612		—		78,612		—
Total available for sale debt securities	1,689,388		52,621		1,635,402		1,365
Loans held for sale (2)	120,599		—		120,599		—
Other assets (3)	468,275		—		468,275		—
Total assets	$	2,332,641	$	99,518	$	2,224,276	$	1,365
Liabilities
Other liabilities (3)	$	170,273	$	—	$	170,273	$	—
Total liabilities	$	170,273	$	—	$	170,273	$	—
Non-recurring fair value measurements:
Collateral dependent loans	$	42,807	$	—	$	—	$	42,807
Loan servicing rights	14,373		—		—		14,373
Foreclosed assets	6,679		—		—		6,679
Total	$	63,859	$	—	$	—	$	63,859

			Fair Value Measurements at Reporting Date Using:
	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)
Recurring fair value measurements:
Assets
Investment securities:
Equity securities at fair value	$	41,410	$	41,410	$	—	$	—
Available for sale:
U.S. Treasury securities	50,943		50,943		—		—
U.S. government agency securities	29,243		—		29,243		—
Obligations of states and political subdivisions	170,051		—		169,371		680
Residential mortgage-backed securities	1,254,786		—		1,254,786		—
Corporate and other debt securities	61,778		—		61,778		—
Total available for sale	1,566,801		50,943		1,515,178		680
Loans held for sale (2)	76,113		—		76,113		—
Other assets (3)	158,532		—		158,532		—
Total assets	$	1,842,856	$	92,353	$	1,749,823	$	680
Liabilities
Other liabilities (3)	$	43,926	$	—	$	43,926	$	—
Total liabilities	$	43,926	$	—	$	43,926	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans	$	39,075	$	—	$	—	$	39,075
Loan servicing rights	1,591		—		—		1,591
Foreclosed assets	10,807		—		—		10,807
Total	$	51,473	$	—	$	—	$	51,473

(1) Includes equity securities measured at net asset value (NAV) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy totaling $7.5 million at June 30, 2020.

(2) Represents residential mortgage loans originated for sale that are carried at fair value and had contractual unpaid principal balances totaling approximately $115.0 million and $74.5 million at June 30, 2020 and December 31, 2019, respectively.

(3) Derivative financial instruments are included in this category.

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 the valuation techniques described below apply to the unpaid principal balance, excluding any accrued interest or dividends at the measurement date. Interest income and expense are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.

Equity securities. The fair value of equity securities, primarily consists of one publicly traded mutual fund, is derived from quoted market prices in active markets. Equity securities also include Community Reinvestment Act (CRA) investment funds carried at quoted market prices if publicly traded, and at NAV if privately held.

Available for sale securities. U.S. Treasury 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 securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume.

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 June 30, 2020 and December 31, 2019.

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 June 30, 2020 and December 31, 2019 based on the short duration these assets were held, and the high credit quality of these loans.

Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The fair values of Valley’s derivatives are determined using third-party prices that are based on discounted cash flow analysis 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 June 30, 2020 and December 31, 2019), 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 June 30, 2020 and December 31, 2019.

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 nonrecurring 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.

Collateral Dependent Loans. Collateral dependent loans are loans when foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and substantially all of the repayment is expected from the collateral. Collateral dependent loans are reported at the fair value of the underlying collateral. Collateral values are estimated using Level 3 inputs, consisting of individual third-party appraisals that may be adjusted based on certain discounting criteria. Certain real estate appraisals may be discounted based on specific market data by location and property type. At June 30, 2020, collateral dependent loans were individually re-measured and reported at fair value through direct loan charge-offs to the allowance for credit loan losses and/or a specific valuation allowance allocation based on the fair value of the underlying collateral. At June 30, 2020, collateral dependent

loans, primarily consisting of taxi medallion loans, with a total amortized cost of $110.9 million were reduced by specific valuation allowance allocations totaling $68.1 million to a reported total net carrying amount of $42.8 million.

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 June 30, 2020, the fair value model used a blended prepayment speed (stated as constant prepayment rates) of 17.0 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 June 30, 2020, certain loan servicing rights were re-measured at fair value totaling $14.4 million. See Note 9 for additional information.

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 using Level 3 inputs, consisting of a third-party appraisal adjusted to the lower of cost or estimated fair value, less estimated cost to sell. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If further declines in the estimated fair value of the asset occur, an asset is re-measured and reported at fair value through a write-down recorded in non-interest expense. There were no discount adjustments of the appraisals of foreclosed assets at June 30, 2020.

Other Fair Value Disclosures

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

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

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

The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the consolidated statements of financial condition at June 30, 2020 and December 31, 2019 were as follows: 

	Fair Value Hierarchy	June 30, 2020				December 31, 2019
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	388,753	$	388,753	$	256,264	$	256,264
Interest bearing deposits with banks	Level 1	1,521,572		1,521,572		178,423		178,423
Investment securities held to maturity:
U.S. Treasury securities	Level 1	138,268		147,415		138,352		144,113
U.S. government agency securities	Level 2	6,657		6,921		7,345		7,362
Obligations of states and political subdivisions	Level 2	466,836		481,736		500,705		513,607
Residential mortgage-backed securities	Level 2	1,451,581		1,495,599		1,620,119		1,629,572
Trust preferred securities	Level 2	37,335		29,900		37,324		31,382
Corporate and other debt securities	Level 2	32,750		33,305		32,250		32,684
Total investment securities held to maturity (1)		2,133,427		2,194,876		2,336,095		2,358,720
Net loans	Level 3	32,004,997		31,815,938		29,537,449		28,964,396
Accrued interest receivable	Level 1	122,807		122,807		105,637		105,637
Federal Reserve Bank and Federal Home Loan Bank stock (2)	Level 2	282,755		282,755		214,421		214,421
Financial liabilities
Deposits without stated maturities	Level 1	23,155,233		23,155,233		19,467,892		19,467,892
Deposits with stated maturities	Level 2	8,272,772		8,335,442		9,717,945		9,747,867
Short-term borrowings	Level 2	2,082,880		2,083,500		1,093,280		1,081,879
Long-term borrowings	Level 2	2,907,535		3,023,213		2,122,426		2,181,401
Junior subordinated debentures issued to capital trusts	Level 2	55,891		44,231		55,718		53,889
Accrued interest payable (3)	Level 1	19,148		19,148		33,066		33,066

(1) The carrying amount is presented gross without the allowance for credit losses.

(2) Included in other assets.

(3)

Included in accrued expenses and other liabilities.

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Investment Securities

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

Equity Securities

Equity securities carried at fair value totaled $54.4 million and $41.4 million at June 30, 2020 and December 31, 2019, respectively. Valley's equity securities consist mainly of one publicly traded money market mutual fund totaling $41.8 million and $41.4 million at June 30, 2020 and December 31, 2019, respectively. The remainder of the balance at June 30, 2020 represents investments made for CRA purposes.

Available for Sale Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of available for sale debt securities at June 30, 2020 and December 31, 2019 were as follows: 

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	50,940	$	1,681	$	—		$	52,621
U.S. government agency securities	26,778		1,174		(28		)	27,924
Obligations of states and political subdivisions:
Obligations of states and state agencies	65,620		1,477		(54		)	67,043
Municipal bonds	79,100		1,363		(1		)	80,462
Total obligations of states and political subdivisions	144,720		2,840		(55		)	147,505
Residential mortgage-backed securities	1,340,614		43,039		(927		)	1,382,726
Corporate and other debt securities	78,225		1,251		(864		)	78,612
Total investment securities available for sale	$	1,641,277	$	49,985	$	(1,874	)	$	1,689,388
December 31, 2019
U.S. Treasury securities	$	50,952	$	12	$	(21	)	$	50,943
U.S. government agency securities	28,982		280		(19		)	29,243
Obligations of states and political subdivisions:
Obligations of states and state agencies	78,116		540		(83		)	78,573
Municipal bonds	90,662		902		(86		)	91,478
Total obligations of states and political subdivisions	168,778		1,442		(169		)	170,051
Residential mortgage-backed securities	1,248,814		11,234		(5,262		)	1,254,786
Corporate and other debt securities	61,261		628		(111		)	61,778
Total investment securities available for sale	$	1,558,787	$	13,596	$	(5,582	)	$	1,566,801

The age of unrealized losses and fair value of related securities available for sale at June 30, 2020 and December 31, 2019 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)
June 30, 2020
U.S. government agency securities	$	—	$	—		$	1,627	$	(28	)	$	1,627	$	(28	)
Obligations of states and political subdivisions:
Obligations of states and state agencies	24,913		(37		)	1,036		(17		)	25,949		(54		)
Municipal bonds	210		(1		)	—		—			210		(1		)
Total obligations of states and political subdivisions	25,123		(38		)	1,036		(17		)	26,159		(55		)
Residential mortgage-backed securities	101,162		(458		)	49,368		(469		)	150,530		(927		)
Corporate and other debt securities	27,194		(864		)	—		—			27,194		(864		)
Total	$	153,479	$	(1,360	)	$	52,031	$	(514	)	$	205,510	$	(1,874	)
December 31, 2019
U.S. Treasury securities	$	25,019	$	(21	)	$	—	$	—		$	25,019	$	(21	)
U.S. government agency securities	—		—			1,783		(19		)	1,783		(19		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	18,540		(21		)	8,755		(62		)	27,295		(83		)
Municipal bonds	—		—			13,177		(86		)	13,177		(86		)
Total obligations of states and political subdivisions	18,540		(21		)	21,932		(148		)	40,472		(169		)
Residential mortgage-backed securities	240,412		(1,194		)	282,798		(4,068		)	523,210		(5,262		)
Corporate and other debt securities	5,139		(111		)	—		—			5,139		(111		)
Total	$	289,110	$	(1,347	)	$	306,513	$	(4,235	)	$	595,623	$	(5,582	)

Within the available for sale debt securities portfolio, the total number of security positions in an unrealized loss position was 95 and 182 at June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, the fair value of available for sale debt securities 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 available for sale debt securities at June 30, 2020 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.

	June 30, 2020
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	26,643	$	26,742
Due after one year through five years	97,248		99,501
Due after five years through ten years	104,076		106,154
Due after ten years	72,696		74,265
Residential mortgage-backed securities	1,340,614		1,382,726
Total investment securities available for sale	$	1,641,277	$	1,689,388

Actual maturities of available for sale 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 4.8 years at June 30, 2020.

Impairment Analysis of Available For Sale Debt Securities

Valley's available for sale debt securities portfolio includes corporate bonds and special revenue bonds, among other securities, which 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, including due to the economic effects of COVID-19.

Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. In performing an assessment of whether any decline in fair value is due to a credit loss, Valley considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level such as credit deterioration of the issuer or collateral underlying the security. In assessing the impairment, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. Valley also assesses the intent to sell the securities (as well as the likelihood of a near-term recovery). If Valley intends to sell an available for sale debt security or it is more likely than not that Valley will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged to the debt security’s fair value at the reporting date with any incremental impairment reported in earnings.

The obligations of states and political subdivisions classified as available for sale include special revenue bonds which had an aggregate amortized cost and fair value of $80.2 million and $81.8 million, respectively, at June 30, 2020. There were $56 thousand in gross unrealized losses associated with the special revenue bonds as of June 30, 2020. Approximately 54 percent of the special revenue bonds were issued by the states of (or municipalities within) Utah, Illinois, North Carolina and Florida. As part of Valley’s pre-purchase analysis and on-going quarterly assessment of impairment of the obligations of states and political subdivisions, our Credit Risk Management Department conducts a financial analysis and risk rating assessment of each security issuer based on the issuer’s most recently issued financial statements and other publicly available information. These investments are a mix of municipal bonds with investment grade ratings or non-rated revenue bonds paying in accordance with their 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 continues to monitor the special revenue bond portfolio as part of its quarterly impairment analysis.

Valley has evaluated available for sale debt securities that are in an unrealized loss position as of June 30, 2020 included in the table above and has determined that the declines in fair value are mainly attributable to 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 recognized no impairment during the three and six months ended June 30, 2020 and, as a result, there is no allowance for credit losses for available for sale debt securities at June 30, 2020.

During the three months ended June 30, 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 of 2019, as well as the issuer's default on its contractual payment. At June 30, 2020, the impaired security had an adjusted amortized cost and fair value of $680 thousand and $1.4 million, respectively.

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.

Held to Maturity Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of debt securities held to maturity at June 30, 2020 and December 31, 2019 were as follows: 

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	138,268	$	9,147	$	—		$	147,415
U.S. government agency securities	6,657		264		—			6,921
Obligations of states and political subdivisions:
Obligations of states and state agencies	280,187		8,569		(545		)	288,211
Municipal bonds	186,649		6,876		—			193,525
Total obligations of states and political subdivisions	466,836		15,445		(545		)	481,736
Residential mortgage-backed securities	1,451,581		44,327		(309		)	1,495,599
Trust preferred securities	37,335		48		(7,483		)	29,900
Corporate and other debt securities	32,750		556		(1		)	33,305
Total investment securities held to maturity	$	2,133,427	$	69,787	$	(8,338	)	$	2,194,876
December 31, 2019
U.S. Treasury securities	$	138,352	$	5,761	$	—		$	144,113
U.S. government agency securities	7,345		58		(41		)	7,362
Obligations of states and political subdivisions:
Obligations of states and state agencies	297,454		7,745		(529		)	304,670
Municipal bonds	203,251		5,696		(10		)	208,937
Total obligations of states and political subdivisions	500,705		13,441		(539		)	513,607
Residential mortgage-backed securities	1,620,119		14,803		(5,350		)	1,629,572
Trust preferred securities	37,324		39		(5,981		)	31,382
Corporate and other debt securities	32,250		454		(20		)	32,684
Total investment securities held to maturity	$	2,336,095	$	34,556	$	(11,931	)	$	2,358,720

The age of unrealized losses and fair value of related debt securities held to maturity at June 30, 2020 and December 31, 2019 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)
June 30, 2020
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	10,544	$	(266	)	$	20,022	$	(279	)	$	30,566	$	(545	)
Total obligations of states and political subdivisions	10,544		(266		)	20,022		(279		)	30,566		(545		)
Residential mortgage-backed securities	37,394		(305		)	2,710		(4		)	40,104		(309		)
Trust preferred securities	—		—			28,499		(7,483		)	28,499		(7,483		)
Corporate and other debt securities	17,749		(1		)	—		—			17,749		(1		)
Total	$	65,687	$	(572	)	$	51,231	$	(7,766	)	$	116,918	$	(8,338	)
December 31, 2019
U.S. government agency securities	$	5,183	$	(41	)	$	—	$	—		$	5,183	$	(41	)
Obligations of states and political subdivisions:
Obligations of states and state agencies	11,178		(55		)	32,397		(474		)	43,575		(529		)
Municipal bonds	—		—			798		(10		)	798		(10		)
Total obligations of states and political subdivisions	11,178		(55		)	33,195		(484		)	44,373		(539		)
Residential mortgage-backed securities	307,885		(1,387		)	254,915		(3,963		)	562,800		(5,350		)
Trust preferred securities	—		—			29,990		(5,981		)	29,990		(5,981		)
Corporate and other debt securities	—		—			4,980		(20		)	4,980		(20		)
Total	$	324,246	$	(1,483	)	$	323,080	$	(10,448	)	$	647,326	$	(11,931	)

Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 26 and 82 at June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, 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 $1.3 billion.

The contractual maturities of investments in debt securities held to maturity at June 30, 2020 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.  

	June 30, 2020
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	92,432	$	93,313
Due after one year through five years	171,778		179,833
Due after five years through ten years	203,555		215,200
Due after ten years	214,081		210,931
Residential mortgage-backed securities	1,451,581		1,495,599
Total investment securities held to maturity	$	2,133,427	$	2,194,876

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 3.9 years at June 30, 2020.

Credit Quality Indicators

Valley monitors the credit quality of the held to maturity debt securities through the use of the most current credit ratings from external rating agencies. The following table summarizes the amortized cost of held to maturity debt securities by external credit rating at June 30, 2020 and December 31, 2019.

	AAA/AA/A Rated		BBB rated		Non-investment grade rated		Non-rated		Total
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	138,268	$	—	$	—	$	—	$	138,268
U.S. government agency securities	6,657		—		—		—		6,657
Obligations of states and political subdivisions:
Obligations of states and state agencies	239,811		—		5,686		34,690		280,187
Municipal bonds	182,140		—		—		4,509		186,649
Total obligations of states and political subdivisions	421,951		—		5,686		39,199		466,836
Residential mortgage-backed securities	1,451,581		—		—		—		1,451,581
Trust preferred securities	—		—		—		37,335		37,335
Corporate and other debt securities	—		5,000		—		27,750		32,750
Total investment securities held to maturity	$	2,018,457	$	5,000	$	5,686	$	104,284	$	2,133,427
December 31, 2019
U.S. Treasury securities	$	138,352	$	—	$	—	$	—	$	138,352
U.S. government agency securities	7,345		—		—		—		7,345
Obligations of states and political subdivisions:
Obligations of states and state agencies	248,533		5,722		—		43,199		297,454
Municipal bonds	202,642		—		—		609		203,251
Total obligations of states and political subdivisions	451,175		5,722		—		43,808		500,705
Residential mortgage-backed securities	1,620,119		—		—		—		1,620,119
Trust preferred securities	—		—		—		37,324		37,324
Corporate and other debt securities	—		5,000		—		27,250		32,250
Total investment securities held to maturity	$	2,216,991	$	10,722	$	—	$	108,382	$	2,336,095

Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations. At June 30, 2020, most of the obligations of states and political subdivisions were rated investment grade and the "non-rated" category included mostly TEMS securities secured by Ginnie Mae securities. Trust preferred securities consist of non-rated single-issuer securities, issued by bank holding companies. Corporate bonds consist of debt primarily issued by banks.

Allowance for Credit Losses for Held to Maturity Debt Securities

Valley has a zero loss expectation for certain securities within the held to maturity portfolio, and therefore it is not required to estimate an allowance for credit losses related to these securities under the CECL standard. After an evaluation of qualitative factors, Valley identified the following securities types which it believes qualify for this exclusion: U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds called TEMS.

To measure the expected credit losses on held to maturity debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third-party. Assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. The model is adjusted for a probability

weighted multi-scenario economic forecast to estimate future credit losses. Valley uses 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 investment security. The economic forecast methodology and governance for debt securities is aligned with Valley's economic forecast used for the loan portfolio discussed in more detail in Note 8. Accrued interest receivable is excluded from the estimate of credit losses.

At June 30, 2020, held to maturity debt securities were carried net of allowance for credit losses totaling $1.6 million.

The provision was not material during three and six months ended June 30, 2020, respectively, and there were no net charge-offs of debt securities in the respective periods.

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Loans and Allowance for Credit Losses for Loans

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Loans and Allowance for Credit Losses for Loans

Loans and Allowance for Credit Losses for Loans

The detail of the loan portfolio as of June 30, 2020 and December 31, 2019 was as follows: 

	June 30, 2020		December 31, 2019
	(in thousands)
Loans:
Commercial and industrial *	$	6,884,689	$	4,825,997
Commercial real estate:
Commercial real estate	16,571,877		15,996,741
Construction	1,721,352		1,647,018
Total commercial real estate loans	18,293,229		17,643,759
Residential mortgage	4,405,147		4,377,111
Consumer:
Home equity	471,115		487,272
Automobile	1,369,489		1,451,623
Other consumer	890,942		913,446
Total consumer loans	2,731,546		2,852,341
Total loans	$	32,314,611	$	29,699,208

* Includes $2.2 billion of loans originated under the SBA Paycheck Protection Program (PPP), net of unearned fees totaling $62.1 million at June 30, 2020.

Total loans includes net unearned discounts and deferred loan fees of $131.3 million at June 30, 2020 and net unearned premiums and deferred loan costs of $12.6 million at December 31, 2019. Net unearned discounts and deferred loan fees at June 30, 2020 include the non-credit discount on PCD loans and net unearned fees related to SBA PPP loans.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $104.2 million and $86.3 million at June 30, 2020 and December 31, 2019, respectively, and is presented separately in the consolidated statements of financial condition.

Valley transferred and sold approximately $30.0 million and $216.3 million of residential mortgage loans from the loan portfolio to loans held for sale during the six months ended June 30, 2020 and 2019, respectively. Excluding the loan transfers, there were no sales of loans from the held for investment portfolio during the six months ended June 30, 2020 and 2019.

Credit Risk Management

For all of its loan types, 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. See Valley’s Annual Report on Form 10-K for the year ended December 31, 2019 for further details.

Credit Quality

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. Cash collections from non-accrual loans are generally applied against principal, and no interest income is recognized on these loans until the principal balance has been determined to be fully collectible.

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.

The following table presents past due, current and non-accrual loans without an allowance for credit losses by loan portfolio class (including PCD loans) at June 30, 2020.

	Past Due and Non-Accrual Loans
	30-59  Days  Past Due Loans		60-89  Days  Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Credit Losses
	(in thousands)
June 30, 2020
Commercial and industrial	$	6,206	$	4,178	$	5,220	$	130,876	$	146,480	$	6,738,209	$	6,884,689	$	13,501
Commercial real estate:
Commercial real estate	13,912		1,543		—		43,678		59,133		16,512,744		16,571,877		40,476
Construction	—		—		—		3,308		3,308		1,718,044		1,721,352		2,830
Total commercial real estate loans	13,912		1,543		—		46,986		62,441		18,230,788		18,293,229		43,306
Residential mortgage	35,263		4,169		3,812		25,776		69,020		4,336,127		4,405,147		13,717
Consumer loans:
Home equity	3,236		864		363		5,326		9,789		461,326		471,115		145
Automobile	8,254		2,171		1,173		1,621		13,219		1,356,270		1,369,489		—
Other consumer	1,472		751		546		—		2,769		888,173		890,942		—
Total consumer loans	12,962		3,786		2,082		6,947		25,777		2,705,769		2,731,546		145
Total	$	68,343	$	13,676	$	11,114	$	210,585	$	303,718	$	32,010,893	$	32,314,611	$	70,669

The following table presents past due, non-accrual and current loans by loan portfolio class at December 31, 2019. At December 31, 2019, purchased credit-impaired (PCI) loans were excluded from past due and non-accrual loans reported because they continued to earn interest income from the accretable yield at the pool level. The PCI loan pools are accounted for as PCD loans (on a loan level basis with a related allowance for credit losses) under the CECL standard adopted at January 1, 2020 and reported in the past due loans and non-accrual loans in the tables above at June 30, 2020.

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89  Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		PCI Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	11,700	$	2,227	$	3,986	$	68,636	$	86,549	$	4,057,434	$	682,014
Commercial real estate:
Commercial real estate	2,560		4,026		579		9,004		16,169		10,886,724		5,093,848
Construction	1,486		1,343		—		356		3,185		1,492,532		151,301
Total commercial real estate loans	4,046		5,369		579		9,360		19,354		12,379,256		5,245,149
Residential mortgage	17,143		4,192		2,042		12,858		36,235		3,760,707		580,169
Consumer loans:
Home equity	1,051		80		—		1,646		2,777		373,243		111,252
Automobile	11,482		1,581		681		334		14,078		1,437,274		271
Other consumer	1,171		866		30		224		2,291		900,411		10,744
Total consumer loans	13,704		2,527		711		2,204		19,146		2,710,928		122,267
Total	$	46,593	$	14,315	$	7,318	$	93,058	$	161,284	$	22,908,325	$	6,629,599

Credit quality indicators. Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as "Pass," "Special Mention," "Substandard," "Doubtful," and "Loss." Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses, and, therefore, not presented in the table below. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories but pose weaknesses that deserve management’s close attention are deemed Special Mention. Loans rated as Pass do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants.

The following table presents the internal loan classification risk by loan portfolio class by origination year (including PCD loans) based on the most recent analysis performed at June 30, 2020:

	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2020	2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Commercial and industrial
Risk Rating:
Pass	$	2,680,515	$	697,134	$	644,080	$	306,259	$	169,439	$	422,608	$	1,705,273	$	466	$	6,625,774
Special Mention	77		9,522		1,408		10,669		11,138		15,595		45,635		88		94,132
Substandard	5,963		7,356		1,269		2,155		3,331		13,704		13,040		57		46,875
Doubtful	—		1,340		—		17,577		—		97,769		1,222		—		117,908
Total commercial and industrial	$	2,686,555	$	715,352	$	646,757	$	336,660	$	183,908	$	549,676	$	1,765,170	$	611	$	6,884,689
Commercial real estate
Risk Rating:
Pass	$	1,589,407	$	3,175,366	$	2,480,315	$	2,059,141	$	1,957,684	$	4,775,400	$	198,836	$	12,031	$	16,248,180
Special Mention	—		18,913		31,799		18,620		32,853		73,609		3,496		—		179,290
Substandard	4,783		100		10,855		18,186		5,636		102,424		—		—		141,984
Doubtful	—		—		—		811		—		1,612		—		—		2,423
Total commercial real estate	$	1,594,190	$	3,194,379	$	2,522,969	$	2,096,758	$	1,996,173	$	4,953,045	$	202,332	$	12,031	$	16,571,877
Construction
Risk Rating:
Pass	$	43,118	$	135,181	$	160,452	$	28,928	$	49,000	$	99,014	$	1,186,010	$	—	$	1,701,703
Special Mention	—		—		—		—		9,774		435		6,114		—		16,323
Substandard	—		—		—		—		2,405		921		—		—		3,326
Total construction	$	43,118	$	135,181	$	160,452	$	28,928	$	61,179	$	100,370	$	1,192,124	$	—	$	1,721,352

For residential mortgages, automobile, home equity and other consumer loan portfolio classes, 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 amortized cost in those loan classes (including PCD loans) based on payment activity by origination year as of June 30, 2020.

	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2020	2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	414,014	$	827,300	$	851,792	$	701,366	$	426,897	$	1,097,287	$	73,757	$	—	$	4,392,413
90 days or more past due	—		1,316		2,973		3,880		4,565		—		—		—		12,734
Total residential mortgage	$	414,014	$	828,616	$	854,765	$	705,246	$	431,462	$	1,097,287	$	73,757	$	—	$	4,405,147
Consumer loans
Home equity
Performing	$	3,816	$	12,678	$	15,090	$	11,387	$	6,941	$	18,823	$	347,142	$	53,086	$	468,963
90 days or more past due	—		—		—		—		25		321		1,046		760		2,152
Total home equity	3,816		12,678		15,090		11,387		6,966		19,144		348,188		53,846		471,115
Automobile
Performing	184,095		524,849		338,665		200,947		75,553		42,550		—		—		1,366,659
90 days or more past due	49		921		824		620		197		219		—		—		2,830
Total automobile	184,144		525,770		339,489		201,567		75,750		42,769		—		—		1,369,489
Other Consumer
Performing	910		6,286		13,232		1,306		1,723		12,179		854,340		408		890,384
90 days or more past due	—		15		—		—		—		4		539		—		558
Total other consumer	910		6,301		13,232		1,306		1,723		12,183		854,879		408		890,942
Total Consumer	$	188,870	$	544,749	$	367,811	$	214,260	$	84,439	$	74,096	$	1,203,067	$	54,254	$	2,731,546

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: 

Credit exposure— by internally assigned risk rating			Special						Total Non-PCI
	Pass		Mention		Substandard		Doubtful		Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	3,982,453	$	33,718	$	66,511	$	61,301	$	4,143,983
Commercial real estate	10,781,587		77,884		42,560		862		10,902,893
Construction	1,487,877		7,486		354		—		1,495,717
Total	$	16,251,917	$	119,088	$	109,425	$	62,163	$	16,542,593

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 is presented above, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2019:

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2019
Residential mortgage	$	3,784,084	$	12,858	$	3,796,942
Home equity	374,374		1,646		376,020
Automobile	1,451,018		334		1,451,352
Other consumer	902,478		224		902,702
Total	$	6,511,954	$	15,062	$	6,527,016

The following table summarizes information pertaining to loans that were identified as PCI loans by class based on individual loan payment activity as of December 31, 2019:  

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	653,997	$	28,017	$	682,014
Commercial real estate	5,065,388		28,460		5,093,848
Construction	148,692		2,609		151,301
Residential mortgage	571,006		9,163		580,169
Consumer	120,356		1,911		122,267
Total	$	6,559,439	$	70,160	$	6,629,599

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). At the adoption of ASU 2016-13, Valley was not required to reassess whether modifications to individual PCI loans prior to January 1, 2020 met the TDR loan criteria.

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 $53.9 million and $73.0 million as of June 30, 2020 and December 31, 2019, respectively. Non-performing TDRs totaled $85.6 million and $65.1 million as of June 30, 2020 and December 31, 2019, respectively.

The following table presents the pre- and post-modification amortized cost of loans by loan class modified as TDRs (excluding PCI loans prior to the adoption of ASU 2016-13) during the three and six months ended June 30, 2020 and 2019. Post-modification amounts are presented as of June 30, 2020 and 2019.

	Three Months Ended June 30,
	2020					2019
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount
	($ in thousands)
Commercial and industrial	4	$	9,052	$	7,047	17	$	14,663	$	14,187
Commercial real estate:
Commercial real estate	1	885		900		1	3,067		3,067
Construction	2	435		218		—	—		—
Total commercial real estate	3	1,320		1,118		1	3,067		3,067
Residential mortgage	—	—		—		1	155		155
Total	7	$	10,372	$	8,165	19	$	17,885	$	17,409

	Six Months Ended June 30,
	2020					2019
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount
	($ in thousands)
Commercial and industrial	20	$	22,196	$	19,674	53	$	38,216	$	37,248
Commercial real estate:
Commercial real estate	2	4,748		4,762		2	4,665		4,665
Construction	2	435		218		—	—		—
Total commercial real estate	4	5,183		4,980		2	4,665		4,665
Residential mortgage	—	—		—		1	155		155
Total	24	$	27,379	$	24,654	56	$	43,036	$	42,068

The total TDRs presented in the above table had allocated reserves for loan losses of $8.4 million and $11.7 million at June 30, 2020 and 2019, respectively. There were $2.9 million and $3.7 million of partial charge-offs related to TDRs for the three and six months ended June 30, 2020, respectively. There were $1.1 million and $2.0 million of partial charge-offs related to TDRs for the three and six months ended June 30, 2019, respectively. Valley did not extend any commitments to lend additional funds to borrowers whose loans have been modified as TDRs during the three and six months ended June 30, 2020 and 2019.

Loans modified as TDRs (excluding PCI loan modifications prior to the adoption of ASU 2016-13) within the previous 12 months and for which there was a payment default (90 or more days past due) for the three and six months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30,
	2020			2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Amortized Cost		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	20	$	14,986	18	$	12,322
Commercial real estate	—	—		1	383
Residential mortgage	1	220		—	—
Consumer	2	204		—	—
Total	23	$	15,410	19	$	12,705

	Six Months Ended June 30,
	2020			2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Amortized Cost		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	20	$	14,986	18	$	12,322
Commercial real estate	—	—		1	383
Residential mortgage	1	220		2	215
Consumer	2	204		1	18
Total	23	$	15,410	22	$	12,938

In response to the COVID-19 pandemic and its economic impact to certain customers, Valley implemented short-term loan modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that were insignificant, when requested by customers. These modifications complied with the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide temporary payment relief to those borrowers directly impacted by COVID-19 who were not more than 30 days past due as of December 31, 2019. Generally, the modification terms allow for a deferral of payments for up to 90 days, which Valley may extend for an additional 90 days, for a maximum of 180 days on a cumulative and successive basis. As of June 30, 2020, Valley had approximately 7,000 loans totaling approximately $3.1 billion in their contractual deferred payment period in accordance with short-term modification terms. Under the applicable guidance, none of these loans were considered TDRs as of June 30, 2020.

Loans in Process of Foreclosure. Other real estate owned (OREO) totaled $8.3 million and $9.4 million at June 30, 2020 and December 31, 2019, respectively. OREO included foreclosed residential real estate properties totaling $2.5 million and $2.1 million at June 30, 2020 and December 31, 2019, respectively. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $1.8 million and $2.8 million at June 30, 2020 and December 31, 2019, respectively.

Allowance for Credit Losses for Loans

The allowance for credit losses for loans under the new CECL standard adopted on January 1, 2020, consisted of: (1) the allowance for loan losses and (2) the allowance for unfunded credit commitments. Prior periods reflect the allowance for credit losses for loans under the incurred loss model.

The following table summarizes the allowance for credit losses for loans at June 30, 2020 and December 31, 2019: 

	June 30, 2020		December 31, 2019
	(in thousands)
Components of allowance for credit losses for loans:
Allowance for loan losses	$	309,614	$	161,759
Allowance for unfunded credit commitments	10,109		2,845
Total allowance for credit losses for loans	$	319,723	$	164,604

The following table summarizes the provision for credit losses for loans for the periods indicated:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Components of provision for credit losses for loans:
Provision for loan losses	$	41,025	$	3,706		$	74,876	$	11,562
Provision for unfunded credit commitments	90		(1,606		)	163		(1,462		)
Total provision for credit losses for loans	$	41,115	$	2,100		$	75,039	$	10,100

Allowance for Loan Losses

The allowance for loan losses is a valuation account that is deducted from loans' amortized cost basis to present the net amount expected to be collected on loans. Valley's methodology to establish the allowance for loan losses has two basic components: (1) a collective (pooled) reserve component for estimated lifetime expected credit losses for pools of loans that share similar risk characteristics and (2) an individual reserve component for loans that do not share common risk characteristics.

Reserves for loans that share common risk characteristics. In estimating the component of the allowance on a collective basis, Valley uses a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by generating probability of default and loss given default metrics. The metrics are based on the migration of loans from performing to loss by credit quality rating or delinquency categories using historical life-of-loan analysis periods for each loan portfolio pool, and the severity of loss, based on the aggregate net lifetime losses incurred. The model's expected losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) lending policies and procedures, (ii) current business conditions and economic developments that affect the loan collectability, (iii) concentration risks by size, type, and geography, (iv) the potential volume and migration of loan forbearances to non-performing status, and (v) the effect of external factors such as legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Valley utilizes 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 forecasts consist of a multi-scenario economic forecast model to estimate future credit losses that is governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. Valley has identified and selected key variables that most closely correlated to our historical credit performance, which include: GDP, unemployment and the Case-Shiller Home Price Index.

Reserves for loans that that do not share common risk characteristics. Valley measures specific reserves for individual loans that do not share common risk characteristics with other loans, consisting of collateral dependent, TDR, and expected TDR loans, based on the amount of lifetime expected credit losses calculated on those loans and charge-offs of those amounts determined to be uncollectible. Factors considered by Valley in measuring the extent of expected credit loss include payment status, collateral value, borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest payments when due. 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 the allowance for credit losses. The effective interest rate used to discount expected cash flows is adjusted to incorporate expected prepayments, if applicable.

When Valley determines that foreclosure is probable, collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) of each loan’s underlying collateral resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process. Valley elected a practical expedient to use the estimated current fair value (less estimated selling costs) of the collateral to measure expected credit losses on collateral dependent loans when foreclosure is not probable.

The following table presents collateral dependent loans by class as of June 30, 2020:

	June 30, 2020
	(in thousands)
Commercial and industrial	$	124,323
Commercial real estate:
Commercial real estate	51,386
Construction	2,830
Total commercial real estate loans	54,216
Residential mortgage	15,581
Home equity	276
Total	$	194,396

Commercial and industrial loans are primarily collateralized by taxi medallions in the table above. Commercial real estate loans are collateralized by real estate and construction loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Residential and home equity loans are collateralized by residential real estate.

Allowance for Unfunded Credit Commitments

The allowance for unfunded credit commitments generally consists of undisbursed non-cancellable lines of credit, new loan commitments and commercial letters of credit valued using a similar methodology as used for loans. Management's estimate of expected losses inherent in these off-balance sheet credit exposures also incorporates estimated usage factors over the commitment's contractual period or an expected pull-through rate for new loan commitments. The allowance for unfunded credit commitments totaling $10.1 million at June 30, 2020 is included in accrued expenses and other liabilities on the consolidated statements of financial condition.

The following table details the activity in the allowance for loan losses by loan portfolio segment for three and six months ended June 30, 2020 and 2019: 

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Three Months Ended June 30, 2020
Allowance for loan losses:
Beginning balance	$	127,437		$	111,585		$	29,456		$	14,864		$	283,342
Loans charged-off	(14,024		)	(27		)	(5		)	(2,601		)	(16,657		)
Charged-off loans recovered	799			51			545			509			1,904
Net (charge-offs) recoveries	(13,225		)	24			540			(2,092		)	(14,753		)
Provision for loan losses	17,827			20,093			(366		)	3,471			41,025
Ending balance	$	132,039		$	131,702		$	29,630		$	16,243		$	309,614
Three Months Ended June 30, 2019
Allowance for losses:
Beginning balance	$	94,630		$	47,762		$	5,139		$	6,850		$	154,381
Loans charged-off	(3,073		)	—			—			(1,752		)	(4,825		)
Charged-off loans recovered	1,195			22			9			617			1,843
Net (charge-offs) recoveries	(1,878		)	22			9			(1,135		)	(2,982		)
Provision for loan losses	1,632			1,194			71			809			3,706
Ending balance	$	94,384		$	48,978		$	5,219		$	6,524		$	155,105

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Six Months Ended June 30, 2020
Allowance for loan losses:
Beginning balance	$	104,059		$	45,673		$	5,060		$	6,967		$	161,759
Impact of ASU 2016-13 adoption*	15,169			49,797			20,575			6,990			92,531
Loans charged-off	(17,384		)	(71		)	(341		)	(5,166		)	(22,962		)
Charged-off loans recovered	1,368			144			595			1,303			3,410
Net (charge-offs) recoveries	(16,016		)	73			254			(3,863		)	(19,552		)
Provision for loan losses	28,827			36,159			3,741			6,149			74,876
Ending balance	$	132,039		$	131,702		$	29,630		$	16,243		$	309,614
Six Months Ended June 30, 2019
Allowance for losses:
Beginning balance	$	90,956		$	49,650		$	5,041		$	6,212		$	151,859
Loans charged-off	(7,355		)	—			(15		)	(3,780		)	(11,150		)
Charged-off loans recovered	1,678			43			10			1,103			2,834
Net (charge-offs) recoveries	(5,677		)	43			(5		)	(2,677		)	(8,316		)
Provision for loan losses	9,105			(715		)	183			2,989			11,562
Ending balance	$	94,384		$	48,978		$	5,219		$	6,524		$	155,105

* Includes a $61.6 million reclassification adjustment representing the estimated expected credit losses for PCD loans.

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the allowance measurement methodology at June 30, 2020 and December 31, 2019.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
June 30, 2020
Allowance for loan losses:
Individually evaluated for credit losses	$	69,333	$	1,237	$	430	$	498	$	71,498
Collectively evaluated for credit losses	62,706		130,465		29,200		15,745		238,116
Total	$	132,039	$	131,702	$	29,630	$	16,243	$	309,614
Loans:
Individually evaluated for credit losses	$	138,120	$	77,914	$	22,148	$	3,096	$	241,278
Collectively evaluated for credit losses	6,746,569		18,215,315		4,382,999		2,728,450		32,073,333
Total	$	6,884,689	$	18,293,229	$	4,405,147	$	2,731,546	$	32,314,611
December 31, 2019
Allowance for loan losses:
Individually evaluated for credit losses	$	36,662	$	1,338	$	518	$	58	$	38,576
Collectively evaluated for credit losses	67,397		44,335		4,542		6,909		123,183
Total	$	104,059	$	45,673	$	5,060	$	6,967	$	161,759
Loans:
Individually evaluated for credit losses	$	100,860	$	51,242	$	10,689	$	853	$	163,644
Collectively evaluated for credit losses	4,043,123		12,347,368		3,786,253		2,729,221		22,905,965
Loans acquired with discounts related to credit quality	682,014		5,245,149		580,169		122,267		6,629,599
Total	$	4,825,997	$	17,643,759	$	4,377,111	$	2,852,341	$	29,699,208

Impaired loans. Impaired loans disclosures presented below as of December 31, 2019 represent requirements prior to the adoption of ASU No. 2016-13 on January 1, 2020. Impaired loans, consisting of non-accrual commercial and industrial loans, commercial real estate loans over $250 thousand and all loans which were modified in troubled debt restructurings, were individually evaluated for impairment. PCI loans were 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:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
December 31, 2019
Commercial and industrial	$	14,617	$	86,243	$	100,860	$	114,875	$	36,662
Commercial real estate:
Commercial real estate	26,046		24,842		50,888		51,258		1,338
Construction	354		—		354		354		—
Total commercial real estate loans	26,400		24,842		51,242		51,612		1,338
Residential mortgage	5,836		4,853		10,689		11,800		518
Consumer loans:
Home equity	366		487		853		956		58
Total consumer loans	366		487		853		956		58
Total	$	47,219	$	116,425	$	163,644	$	179,243	$	38,576

Purchased Credit-Impaired Loans

The table below includes disclosure requirements prior to the adoption of ASU No. 2016-13 on January 1, 2020, and presents the changes in the accretable yield for PCI loans during the three and six months ended June 30, 2019:

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
	(in thousands)
Balance, beginning of period	$	890,771		$	875,958
Accretion	(55,014		)	(108,506		)
Net increase in expected cash flows	18,130			86,435
Balance, end of period	$	853,887		$	853,887

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

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
	(in thousands)
Balance at December 31, 2019	$	21,218	$	306,572	$	825,767	$	220,068	$	1,373,625
Goodwill from business combinations	—		121		1,654		9		1,784
Balance at June 30, 2020	$	21,218	$	306,693	$	827,421	$	220,077	$	1,375,409

* 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.

During the six months ended June 30, 2020, Valley recorded additional goodwill as set forth in the table above related to the Oritani acquisition, reflecting the effect of the combined adjustments to the fair value of certain loans and deferred tax assets as of the acquisition date. Certain estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date. See Note 2 for details.

During the second quarter 2020, Valley performed the annual goodwill impairment test at its normal assessment date. As a result, there was no charge for impairment of goodwill during the three and six months ended June 30, 2020 and 2019.

The following table summarizes other intangible assets as of June 30, 2020 and December 31, 2019: 

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
June 30, 2020
Loan servicing rights	$	98,127	$	(74,624	)	$	(825	)	$	22,678
Core deposits	101,160		(47,118		)	—			54,042
Other	3,945		(2,744		)	—			1,201
Total other intangible assets	$	203,232	$	(124,486	)	$	(825	)	$	77,921
December 31, 2019
Loan servicing rights	$	94,827	$	(70,095	)	$	(47	)	$	24,685
Core deposits	101,160		(40,384		)	—			60,776
Other	3,945		(2,634		)	—			1,311
Total other intangible assets	$	199,932	$	(113,113	)	$	(47	)	$	86,772

Loan servicing rights are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets over the period of the economic life of the assets arising from 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. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net impairment charges on its loan servicing rights totaling $669 thousand and $778 thousand for the three and six months ended June 30, 2020, respectively. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $107 thousand and $83 thousand for the three and six months ended June 30, 2019, respectively. See the “Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis” section of Note 6 for additional information regarding the fair valuation.

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 and covenants not to compete, which are amortized over their expected lives generally using a straight-line method and have a weighted average amortization period of approximately 7.6 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and six months ended June 30, 2020 and 2019.

The following table presents the estimated future amortization expense of other intangible assets for the remainder of 2020 through 2024: 

	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2020	$	5,161	$	6,629	$	110
2021	4,179		11,607		206
2022	3,226		9,876		191
2023	2,483		8,146		131
2024	1,931		6,537		117

Valley recognized amortization expense on other intangible assets, including net impairment (or recovery of impairment) charges on loan servicing rights, totaling approximately $6.7 million and $4.2 million for the three

months ended June 30, 2020 and 2019, respectively, and $12.2 million and $8.5 million for the six months ended June 30, 2020 and 2019, respectively.

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Borrowed Funds

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Borrowed Funds

Borrowed Funds

Short-Term Borrowings

Short-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following: 

	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances	$	1,235,000	$	940,000
Federal funds purchased	678,900		—
Securities sold under agreements to repurchase	168,980		153,280
Total short-term borrowings	$	2,082,880	$	1,093,280

The contractual weighted average interest rate for short-term borrowings was 0.37 percent and 1.68 percent at June 30, 2020 and December 31, 2019, respectively. Short-term FHLB advances totaling $500 million were hedged with cash flow interest rate swaps during the six months ended June 30, 2020. See Note 12 for additional details.

Long-Term Borrowings

Long-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following: 

	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances, net (1)	$	2,153,052	$	1,480,012
Subordinated debt, net (2)	404,455		292,414
Securities sold under agreements to repurchase	350,000		350,000
Other	28		—
Total long-term borrowings	$	2,907,535	$	2,122,426

(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $1.2 million and $2.8 million at June 30, 2020 and December 31, 2019, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $2.9 million and $1.2 million at June 30, 2020 and December 31, 2019, respectively.

FHLB advances. Long-term FHLB advances had a weighted average interest rate of 2.13 percent and 2.23 percent at June 30, 2020 and December 31, 2019, respectively. 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.

The long-term FHLB advances at June 30, 2020 are scheduled for contractual balance repayments as follows: 

Year	Amount
	(in thousands)
2020	$	30,000
2021	994,769
2022	121,420
2023	428,164
2024	300,000
Thereafter	279,931
Total long-term FHLB advances	$	2,154,284

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.

Securities sold under agreements to repurchase (repos). The long-term repos had a weighted average interest rate of 2.88 percent and 1.94 percent at June 30, 2020 and December 31, 2019, respectively.

The long-term repos at June 30, 2020 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2021	$	300,000
2022	50,000
Total long-term securities sold under agreements to repurchase	$	350,000

Subordinated debt. On June 5, 2020, Valley issued $115.0 million of 5.25 percent Fixed-to-Floating Rate subordinated notes due June 15, 2030. Interest on the subordinated notes during the initial five year term through June 15, 2025 is payable semi-annually on June 15 and December 15. Thereafter, interest is expected to be set based on Three-Month Term SOFR plus 514 basis points and paid quarterly through maturity of the notes. The subordinated notes had a carrying value of $113.1 million at June 30, 2020, net of debt issuance costs.

Valley also had the following subordinated debt outstanding at June 30, 2020:

• $100 million of 4.55 percent subordinated notes due July 30, 2025 with no call dates or prepayments allowed unless certain conditions exist;

• $125 million of 5.125 percent subordinated notes due September 27, 2023 with no call dates or prepayments allowed, unless certain conditions exist; and

• $60 million of 6.25 percent subordinated notes due April 1, 2026 and callable beginning April 1, 2021.

See Note 11 in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019 for further details.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

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 June 30, 2020, 2.5 million shares of common stock were available for issuance under the 2016 Stock Plan. The essential features of each award are described in the award agreement relating to that award. The grant, exercise, vesting, settlement or payment of an award may be based upon the fair value of Valley’s common stock on the last sale price reported for Valley’s common stock on such date or the last sale price reported preceding such date, except for performance-based awards with a market 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.

Restricted Stock Units (RSUs). Valley granted 142 thousand and 92 thousand of time-based RSUs during the three months ended June 30, 2020 and 2019, respectively, and 1.2 million and 826 thousand during the six months ended June 30, 2020 and 2019, respectively. Generally, time-based RSUs vest ratably one-third each year over a three-year vesting period. The average grant date fair value of the RSUs granted during the six months ended June 30, 2020 and 2019 was $10.48 per share and $10.40 per share, respectively.

Valley granted 589 thousand and 532 thousand of performance-based RSUs to certain executive officers for the six months ended June 30, 2020 and 2019, respectively. The performance-based RSU awards include RSUs with vesting conditions based upon certain levels of growth in Valley's tangible book value per share plus dividends and RSUs with vesting conditions based upon Valley's total shareholder return as compared to our peer group. The RSUs “cliff” vest after three years based on the cumulative performance of Valley during that time period. The RSUs earn dividend equivalents (equal to cash dividends paid on Valley's common stock) over the applicable performance period. Dividend equivalents are accumulated and paid to the grantee at the vesting date or forfeited if the performance conditions are not met. The grant date fair value of the RSUs granted during the six months ended June 30, 2020 and 2019 was $10.82 per share and $10.43 per share, respectively.

Valley recorded total stock-based compensation expense of $4.2 million for both the three months ended June 30, 2020 and 2019, and $8.2 million and $8.3 million for the six months ended June 30, 2020 and 2019, respectively. The fair values of stock awards are expensed over the shorter of the vesting or required service period. As of June 30, 2020, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $25.4 million and will be recognized over an average remaining vesting period of 2.0 years.

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Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

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.

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 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, respectively.

During the six months ended June 30, 2020, Valley entered into new interest rate swap agreements designated as cash flow hedges with a total notional amount of $900 million. The swaps are intended to hedge the changes in cash flows associated with certain FHLB advances and brokered deposits. Valley is required to pay fixed-rates of interest ranging from 0.46 percent to 0.67 percent and receives variable rates of interest that reset quarterly based on three-month LIBOR. Expiration dates for the swaps range from April 2021 to March 2022.

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 has used 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.

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 June 30, 2020, Valley had 22 credit swaps with an aggregate notional amount of $166.4 million related to risk participation agreements. 

At June 30, 2020, Valley had two “steepener” swaps, each with a current notional amount of $10.4 million where the receive rate on the swap mirrors the pay rate on the brokered deposits and 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 the 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 rate on Valley's commitments to fund the loans as well as on its portfolio of mortgage loans held for sale.

Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows: 

	June 30, 2020						December 31, 2019
	Fair Value						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 swaps	$	—	$	4,722	$	1,030,000	$	—	$	1,484	$	180,000
Fair value hedge interest rate swaps	—		147		7,147		—		229		7,281
Total derivatives designated as hedging instruments	$	—	$	4,869	$	1,037,147	$	—	$	1,713	$	187,281
Derivatives not designated as hedging instruments:
Interest rate swaps and embedded derivatives	$	467,606	$	161,997	$	7,293,947	$	158,382	$	42,020	$	4,113,106
Mortgage banking derivatives	669		3,407		558,379		150		193		142,760
Total derivatives not designated as hedging instruments	$	468,275	$	165,404	$	7,852,326	$	158,532	$	42,213	$	4,255,866

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 June 30, 2020 and December 31, 2019.

Gains (losses) included in the consolidated statements of income and other comprehensive income, on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows were as follows: 

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense	$	438		$	(383	)	$	(177	)	$	(673	)
Amount of loss recognized in other comprehensive income	(1,773		)	(962		)	(3,253		)	(1,512		)

The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $5.9 million and $3.7 million at June 30, 2020 and December 31, 2019, 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 $4.5 million will be reclassified as an increase to interest expense over the next 12 months.

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Derivative - interest rate swaps:
Interest income	$	71		$	49		$	82		$	73
Hedged item - loans:
Interest income	$	(71	)	$	(49	)	$	(82	)	$	(73	)

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 June 30, 2020 and December 31, 2019.

Line Item in the Statement of Financial Condition 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
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
	(in thousands)
Loans	$	7,294	$	7,510	$	147	$	229

The net losses (gains) included in the consolidated statements of income related to derivative instruments not designated as hedging instruments were as follows: 

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Non-designated hedge interest rate swaps and credit derivatives
Other non-interest expense	$	1,416	$	(347	)	$	1,505	$	(757	)

Other non-interest income included fee income related to non-designated hedge derivative interest rate swaps (not designated as hedging instruments) executed with commercial loan customers totaling $14.7 million and $5.4 million for the three months ended June 30, 2020 and 2019, respectively, and $28.9 million and $9.5 million for the six months ended June 30, 2020 and 2019, respectively.

Credit Risk Related Contingent Features. By using derivatives, Valley is exposed to credit risk if counterparties to the derivative contracts do not perform as expected. Management attempts to minimize counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral where appropriate. Credit risk exposure associated with derivative contracts is managed at Valley in conjunction with Valley’s consolidated counterparty risk management process. Valley’s counterparties and the risk limits monitored by management are periodically reviewed and approved by the Board of Directors.

Valley has agreements with its derivative counterparties providing that if Valley defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Valley could also be declared in default on its derivative counterparty agreements. Additionally, Valley has an agreement with several of its derivative counterparties that contains provisions that require Valley’s debt to maintain an investment grade credit rating from each of the major credit rating agencies from which it receives a credit rating. If Valley’s

credit rating is reduced below investment grade, or such rating is withdrawn or suspended, then the counterparty could terminate the derivative positions and Valley would be required to settle its obligations under the agreements. As of June 30, 2020, Valley was in compliance with all of the provisions of its derivative counterparty agreements. As of June 30, 2020, 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 $176.7 million. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties.

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Balance Sheet Offsetting

6 Months Ended

Jun. 30, 2020

Offsetting [Abstract]

Balance Sheet Offsetting

Balance Sheet Offsetting

Certain financial instruments, including interest rate swap derivatives 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 (i.e., the threshold for posting collateral is reduced to zero, subject to certain minimum transfer amounts). 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 June 30, 2020 and December 31, 2019.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments				Cash Collateral				Net Amount
	(in thousands)
June 30, 2020
Assets:
Interest rate swaps	$	467,606	$	—	$	467,606	$	—			$	—			$	467,606
Liabilities:
Interest rate swaps	$	166,866	$	—	$	166,866	$	—			$	(166,866	)		$	—
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—				—
Total	$	516,866	$	—	$	516,866	$	(350,000	)		$	(166,866	)		$	—
December 31, 2019
Assets:
Interest rate swaps	$	158,382	$	—	$	158,382	$	(118	)		$	—			$	158,264
Liabilities:
Interest rate swaps	$	43,733	$	—	$	43,733	$	(118	)		$	(16,881	)		$	26,734
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—			*	—
Total	$	393,733	$	—	$	393,733	$	(350,118	)		$	(16,881	)		$	26,734

*

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

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Tax Credit Investments

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Tax Credit Investments

Tax Credit Investments

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 (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. 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 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.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	22,874	$	25,049
Other tax credit investments, net	51,569		59,081
Total tax credit investments, net	$	74,443	$	84,130
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	1,402	$	1,539
Unfunded other tax credit commitments	1,139		1,139
Total unfunded tax credit commitments	$	2,541	$	2,678

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the three and six months ended June 30, 2020 and 2019: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	1,393	$	1,708	$	2,627	$	3,421
Other tax credit investment credits and tax benefits	2,540		2,158		3,840		4,961
Total reduction in income tax expense	$	3,933	$	3,866	$	6,467	$	8,382
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	537	$	593	$	1,091	$	1,266
Affordable housing tax credit investment impairment losses	665		794		1,083		1,524
Other tax credit investment losses	679		2,509		1,223		3,496
Other tax credit investment impairment losses	1,535		967		3,247		5,750
Total amortization of tax credit investments recorded in non-interest expense	$	3,416	$	4,863	$	6,644	$	12,036

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Business Segments

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Business Segments

Business Segments

Valley has four business segments that it monitors and reports on to manage Valley’s business operations. These segments are consumer lending, commercial lending, investment management, and corporate and other adjustments. Valley’s reportable segments have been determined based upon its internal structure of operations and lines of business. Each business segment is reviewed routinely for its asset growth, contribution to income before income taxes and return on average interest earning assets and impairment (if events or circumstances indicate a possible inability to realize the carrying amount). Expenses related to the branch network, all other components of retail banking, along with the back office departments of our subsidiary bank are allocated from the corporate and other adjustments segment to each of the other three business segments. Interest expense and internal transfer expense (for general corporate expenses) are allocated to each business segment utilizing a transfer pricing methodology, which involves the allocation of operating and funding costs based on each segment's respective mix of average earning assets and/or liabilities 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.

The following tables represent the financial data for Valley’s four business segments for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,214,368		$	24,826,832		$	5,737,187		$	—		$	37,778,387
Interest income	$	66,807		$	255,152		$	27,623		$	(1,057	)	$	348,525
Interest expense	11,469			40,640			9,728			4,129			65,966
Net interest income (loss)	55,338			214,512			17,895			(5,186		)	282,559
Provision for credit losses	3,106			38,009			41			—			41,156
Net interest income (loss) after provision for credit losses	52,232			176,503			17,854			(5,186		)	241,403
Non-interest income	17,175			16,172			5,823			5,660			44,830
Non-interest expense	20,440			23,250			642			112,834			157,166
Internal expense transfer	19,406			66,858			15,505			(101,769		)	—
Income (loss) before income taxes	$	29,561		$	102,567		$	7,530		$	(10,591	)	$	129,067
Return on average interest earning assets (pre-tax)	1.64		%	1.65		%	0.52		%	N/A			1.37		%

	Three Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,756,322		$	18,796,093		$	4,324,969		$	—		$	29,877,384
Interest income	$	67,617		$	229,366		$	31,966		$	(1,207	)	$	327,742
Interest expense	23,428			65,141			14,994			3,945			107,508
Net interest income (loss)	44,189			164,225			16,972			(5,152		)	220,234
Provision for credit losses	885			1,215			—			—			2,100
Net interest income (loss) after provision for credit losses	43,304			163,010			16,972			(5,152		)	218,134
Non-interest income	13,037			7,688			2,560			4,318			27,603
Non-interest expense	18,392			26,324			216			96,805			141,737
Internal expense transfer	19,291			53,722			12,399			(85,412		)	—
Income (loss) before income taxes	$	18,658		$	90,652		$	6,917		$	(12,227	)	$	104,000
Return on average interest earning assets (pre-tax)	1.10		%	1.93		%	0.64		%	N/A			1.39		%

	Six Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,215,756		$	23,804,558		$	5,205,918		$	—		$	36,226,232
Interest income	$	135,062		$	520,027		$	59,392		$	(2,163	)	$	712,318
Interest expense	31,169			102,826			22,488			7,937			164,420
Net interest income (loss)	103,893			417,201			36,904			(10,100		)	547,898
Provision for credit losses	9,891			65,148			800			—			75,839
Net interest income (loss) after provision for credit losses	94,002			352,053			36,104			(10,100		)	472,059
Non-interest income	31,852			31,771			8,965			13,639			86,227
Non-interest expense	40,311			47,408			1,029			224,074			312,822
Internal expense transfer	39,741			131,054			28,680			(199,475		)	—
Income (loss) before income taxes	$	45,802		$	205,362		$	15,360		$	(21,060	)	$	245,464
Return on average interest earning assets (pre-tax)	1.27		%	1.73		%	0.59		%	N/A			1.36		%

	Six Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,788,511		$	18,615,885		$	4,316,619		$	—		$	29,721,015
Interest income	$	135,644		$	449,650		$	65,190		$	(2,518	)	$	647,966
Interest expense	45,952			126,012			29,220			7,900			209,084
Net interest income (loss)	89,692			323,638			35,970			(10,418		)	438,882
Provision for credit losses	2,983			7,117			—			—			10,100
Net interest income (loss) after provision for credit losses	86,709			316,521			35,970			(10,418		)	428,782
Non-interest income	26,819			14,470			4,678			89,309			135,276
Non-interest expense	37,097			51,568			303			200,564			289,532
Internal expense transfer	38,718			106,259			24,686			(169,663		)	—
Income (loss) before income taxes	$	37,713		$	173,164		$	15,659		$	47,990		$	274,526
Return on average interest earning assets (pre-tax)	1.11		%	1.86		%	0.73		%	N/A			1.85		%

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New Authoritative Accounting Guidance (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Changes and Error Corrections [Abstract]

Basis of Presentation

The unaudited consolidated financial statements of Valley National Bancorp, a New Jersey corporation (Valley), include the accounts of its commercial bank subsidiary, Valley National Bank (the 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.

Reclassification

Certain prior period amounts have been reclassified to conform to the current presentation.

Significant Estimates

Significant Estimates. In preparing the unaudited 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 require application of management’s most difficult, subjective or complex judgment and are particularly susceptible to change include: the allowance for credit losses, 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. Actual amounts as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

New Accounting Guidance Adopted and Not Yet Adopted

New Accounting Guidance Adopted in 2020

Accounting Standards Update (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 the incurred loss impairment methodology under prior accounting guidance with a new current expected credit loss (CECL) model. 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 utilizes 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 the 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.

Valley adopted ASU No. 2016-13 on 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. At adoption, Valley recorded a $100.4 million increase to its allowance for credit losses, including reserves of $92.5 million, $7.1 million and $793 thousand related to loans, unfunded credit commitments and held to maturity debt securities, respectively. Of the $92.5 million in loan reserves, $61.6 million represents PCD loan related reserves which were recognized through a gross-up that increases the amortized cost basis of loans with a corresponding increase to the allowance for credit losses, and therefore results in no impact to shareholders' equity. The remaining non-credit discount of $97.7 million related to PCD loans is accreted into interest income over the life of the loans at the effective interest rate effective January 1, 2020. The non-PCD loan related increase to the allowance for credit losses of $38.8 million, including the reserves for unfunded loan commitments and held to maturity debt securities, was offset in shareholders' equity and deferred tax assets.

For regulatory capital purposes, in connection with the Federal Reserve Board’s final interim rule as of April 3, 2020, 100 percent of the CECL Day 1 impact to shareholders' equity equaling $28.2 million after-tax will be deferred over a two-year period ending January 1, 2022, at which time it will be phased in on a pro-rata basis over a three-year period ending January 1, 2025. Additionally, 25 percent of the reserve build (i.e., provision for credit losses less net charge-offs) net of taxes will be phased in over the same time frame.

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 was effective for Valley on January 1, 2020 and Valley applied this new guidance in its annual goodwill impairment test performed during the second quarter 2020.

New Accounting Guidance issued in 2020

ASU No. 2020-04, "Reference Rate Reform (Topic 848)" provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued, subject to meeting certain criteria. Under the new guidance, an entity can elect by accounting topic or industry subtopic to account for the modification of a contract affected by reference rate reform

as a continuation of the existing contract, if certain conditions are met. In addition, the new guidance allows an entity to elect on a hedge-by-hedge basis to continue to apply hedge accounting for hedging relationships in which the critical terms change due to reference rate reform, if certain conditions are met. A one-time election to sell and/or transfer held-to-maturity debt securities that reference a rate affected by reference rate reform is also allowed. ASU No. 2020-04 became effective for all entities as of March 12, 2020 and will apply to all LIBOR reference rate modifications through December 31, 2022.

Impairment Analysis of Available For Sale Debt Securities and Allowance for Credit Losses for Held to Maturity Debt Securities

Impairment Analysis of Available For Sale Debt Securities

Valley's available for sale debt securities portfolio includes corporate bonds and special revenue bonds, among other securities, which 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, including due to the economic effects of COVID-19.

Available for sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. In performing an assessment of whether any decline in fair value is due to a credit loss, Valley considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level such as credit deterioration of the issuer or collateral underlying the security. In assessing the impairment, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. Valley also assesses the intent to sell the securities (as well as the likelihood of a near-term recovery). If Valley intends to sell an available for sale debt security or it is more likely than not that Valley will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged to the debt security’s fair value at the reporting date with any incremental impairment reported in earnings.

The obligations of states and political subdivisions classified as available for sale include special revenue bonds which had an aggregate amortized cost and fair value of $80.2 million and $81.8 million, respectively, at June 30, 2020. There were $56 thousand in gross unrealized losses associated with the special revenue bonds as of June 30, 2020. Approximately 54 percent of the special revenue bonds were issued by the states of (or municipalities within) Utah, Illinois, North Carolina and Florida. As part of Valley’s pre-purchase analysis and on-going quarterly assessment of impairment of the obligations of states and political subdivisions, our Credit Risk Management Department conducts a financial analysis and risk rating assessment of each security issuer based on the issuer’s most recently issued financial statements and other publicly available information. These investments are a mix of municipal bonds with investment grade ratings or non-rated revenue bonds paying in accordance with their 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 continues to monitor the special revenue bond portfolio as part of its quarterly impairment analysis.

Valley has evaluated available for sale debt securities that are in an unrealized loss position as of June 30, 2020 included in the table above and has determined that the declines in fair value are mainly attributable to 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 recognized no impairment during the three and six months ended June 30, 2020 and, as a result, there is no allowance for credit losses for available for sale debt securities at June 30, 2020.

During the three months ended June 30, 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 of 2019, as well as the issuer's default on its contractual payment. At June 30, 2020, the impaired security had an adjusted amortized cost and fair value of $680 thousand and $1.4 million, respectively.

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.

Allowance for Credit Losses for Held to Maturity Debt Securities

Valley has a zero loss expectation for certain securities within the held to maturity portfolio, and therefore it is not required to estimate an allowance for credit losses related to these securities under the CECL standard. After an evaluation of qualitative factors, Valley identified the following securities types which it believes qualify for this exclusion: U.S. Treasury securities, U.S. agency securities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and collateralized municipal bonds called TEMS.

To measure the expected credit losses on held to maturity debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third-party. Assumptions used in the model for pools of securities with common risk characteristics include the historical lifetime probability of default and severity of loss in the event of default, with the model incorporating several economic cycles of loss history data to calculate expected credit losses given default at the individual security level. The model is adjusted for a probability

weighted multi-scenario economic forecast to estimate future credit losses. Valley uses 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 investment security. The economic forecast methodology and governance for debt securities is aligned with Valley's economic forecast used for the loan portfolio discussed in more detail in Note 8.

Allowance for Unfunded Credit Commitments

The allowance for unfunded credit commitments generally consists of undisbursed non-cancellable lines of credit, new loan commitments and commercial letters of credit valued using a similar methodology as used for loans. Management's estimate of expected losses inherent in these off-balance sheet credit exposures also incorporates estimated usage factors over the commitment's contractual period or an expected pull-through rate for new loan commitments. The allowance for unfunded credit commitments totaling $10.1 million at June 30, 2020 is included in accrued expenses and other liabilities on the consolidated statements of financial condition.

Allowance for Loan Losses

The allowance for loan losses is a valuation account that is deducted from loans' amortized cost basis to present the net amount expected to be collected on loans. Valley's methodology to establish the allowance for loan losses has two basic components: (1) a collective (pooled) reserve component for estimated lifetime expected credit losses for pools of loans that share similar risk characteristics and (2) an individual reserve component for loans that do not share common risk characteristics.

Reserves for loans that share common risk characteristics. In estimating the component of the allowance on a collective basis, Valley uses a transition matrix model which calculates an expected life of loan loss percentage for each loan pool by generating probability of default and loss given default metrics. The metrics are based on the migration of loans from performing to loss by credit quality rating or delinquency categories using historical life-of-loan analysis periods for each loan portfolio pool, and the severity of loss, based on the aggregate net lifetime losses incurred. The model's expected losses based on loss history are adjusted for qualitative factors. Among other things, these adjustments include and account for differences in: (i) lending policies and procedures, (ii) current business conditions and economic developments that affect the loan collectability, (iii) concentration risks by size, type, and geography, (iv) the potential volume and migration of loan forbearances to non-performing status, and (v) the effect of external factors such as legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

Valley utilizes 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 forecasts consist of a multi-scenario economic forecast model to estimate future credit losses that is governed by a cross-functional committee. The committee meets each quarter to determine which economic scenarios developed by Moody's will be incorporated into the model, as well as the relative probability weightings of the selected scenarios, based upon all readily available information. The model projects economic variables under each scenario based on detailed statistical analyses. Valley has identified and selected key variables that most closely correlated to our historical credit performance, which include: GDP, unemployment and the Case-Shiller Home Price Index.

Reserves for loans that that do not share common risk characteristics. Valley measures specific reserves for individual loans that do not share common risk characteristics with other loans, consisting of collateral dependent, TDR, and expected TDR loans, based on the amount of lifetime expected credit losses calculated on those loans and charge-offs of those amounts determined to be uncollectible. Factors considered by Valley in measuring the extent of expected credit loss include payment status, collateral value, borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest payments when due. 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 the allowance for credit losses. The effective interest rate used to discount expected cash flows is adjusted to incorporate expected prepayments, if applicable.

When Valley determines that foreclosure is probable, collateral dependent loan balances are written down to the estimated current fair value (less estimated selling costs) of each loan’s underlying collateral resulting in an immediate charge-off to the allowance, excluding any consideration for personal guarantees that may be pursued in the Bank’s collection process. Valley elected a practical expedient to use the estimated current fair value (less estimated selling costs) of the collateral to measure expected credit losses on collateral dependent loans when foreclosure is not probable.

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table shows the calculation of both basic and diluted earnings per common share for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands, except for share data)
Net income available to common shareholders	$	92,429	$	73,296	$	176,525	$	183,454
Basic weighted average number of common shares outstanding	403,790,242		331,748,552		403,654,665		331,675,313
Plus: Common stock equivalents	841,603		1,211,250		1,388,518		1,254,046
Diluted weighted average number of common shares outstanding	404,631,845		332,959,802		405,043,183		332,929,359
Earnings per common share:
Basic	$	0.23	$	0.22	$	0.44	$	0.55
Diluted	0.23		0.22		0.44		0.55

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the three and six months ended June 30, 2020: 

	Components of Accumulated Other Comprehensive Loss								Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance at March 31, 2020	$	31,917	$	(4,348	)	$	(34,135	)	$	(6,566	)
Other comprehensive income (loss) before reclassification	3,013		(1,280		)	—			1,733
Amounts reclassified from other comprehensive income	31		(308		)	172			(105		)
Other comprehensive income (loss), net	3,044		(1,588		)	172			1,628
Balance at June 30, 2020	$	34,961	$	(5,936	)	$	(33,963	)	$	(4,938	)

	Components of Accumulated Other Comprehensive Loss								Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on Available for Sale (AFS) Securities		Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance at December 31, 2019	$	5,822	$	(3,729	)	$	(34,307	)	$	(32,214	)
Other comprehensive income (loss) before reclassification	29,081		(2,337		)	—			26,744
Amounts reclassified from other comprehensive income	58		130			344			532
Other comprehensive income (loss), net	29,139		(2,207		)	344			27,276
Balance at June 30, 2020	$	34,961	$	(5,936	)	$	(33,963	)	$	(4,938	)

Reclassification from Each Component of Accumulated Other Comprehensive Loss

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and six months ended June 30, 2020 and 2019:

	Amounts Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended June 30,						Six Months Ended June 30,
Components of Accumulated Other Comprehensive Loss	2020			2019			2020			2019			Income Statement Line Item
	(in thousands)
Unrealized (losses) gains on AFS securities before tax	$	(41	)	$	11		$	(81	)	$	(21	)	(Losses) gains on securities transactions, net
Tax effect	10			(3		)	23			3
Total net of tax	(31		)	8			(58		)	(18		)
Unrealized gains (losses) on derivatives (cash flow hedges) before tax	438			(383		)	(177		)	(673		)	Interest expense
Tax effect	(130		)	109			47			191
Total net of tax	308			(274		)	(130		)	(482		)
Defined benefit pension plan:
Amortization of actuarial net loss	(229		)	(78		)	(465		)	(156		)	*
Tax effect	57			23			121			46
Total net of tax	(172		)	(55		)	(344		)	(110		)
Total reclassifications, net of tax	$	105		$	(321	)	$	(532	)	$	(610	)

* Amortization of net loss is included in the computation of net periodic pension cost recognized within other non-interest expense.

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Fair Value Measurement of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at June 30, 2020 and December 31, 2019. The assets presented under “nonrecurring fair value measurements” in the tables 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). 

	June 30, 2020		Fair Value Measurements at Reporting Date Using:
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Equity securities (1)	$	54,379	$	46,897	$	—	$	—
Available for sale:
U.S. Treasury securities	52,621		52,621		—		—
U.S. government agency securities	27,924		—		27,924		—
Obligations of states and political subdivisions	147,505		—		146,140		1,365
Residential mortgage-backed securities	1,382,726		—		1,382,726		—
Corporate and other debt securities	78,612		—		78,612		—
Total available for sale debt securities	1,689,388		52,621		1,635,402		1,365
Loans held for sale (2)	120,599		—		120,599		—
Other assets (3)	468,275		—		468,275		—
Total assets	$	2,332,641	$	99,518	$	2,224,276	$	1,365
Liabilities
Other liabilities (3)	$	170,273	$	—	$	170,273	$	—
Total liabilities	$	170,273	$	—	$	170,273	$	—
Non-recurring fair value measurements:
Collateral dependent loans	$	42,807	$	—	$	—	$	42,807
Loan servicing rights	14,373		—		—		14,373
Foreclosed assets	6,679		—		—		6,679
Total	$	63,859	$	—	$	—	$	63,859

			Fair Value Measurements at Reporting Date Using:
	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)
Recurring fair value measurements:
Assets
Investment securities:
Equity securities at fair value	$	41,410	$	41,410	$	—	$	—
Available for sale:
U.S. Treasury securities	50,943		50,943		—		—
U.S. government agency securities	29,243		—		29,243		—
Obligations of states and political subdivisions	170,051		—		169,371		680
Residential mortgage-backed securities	1,254,786		—		1,254,786		—
Corporate and other debt securities	61,778		—		61,778		—
Total available for sale	1,566,801		50,943		1,515,178		680
Loans held for sale (2)	76,113		—		76,113		—
Other assets (3)	158,532		—		158,532		—
Total assets	$	1,842,856	$	92,353	$	1,749,823	$	680
Liabilities
Other liabilities (3)	$	43,926	$	—	$	43,926	$	—
Total liabilities	$	43,926	$	—	$	43,926	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans	$	39,075	$	—	$	—	$	39,075
Loan servicing rights	1,591		—		—		1,591
Foreclosed assets	10,807		—		—		10,807
Total	$	51,473	$	—	$	—	$	51,473

(1) Includes equity securities measured at net asset value (NAV) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy totaling $7.5 million at June 30, 2020.

(2) Represents residential mortgage loans originated for sale that are carried at fair value and had contractual unpaid principal balances totaling approximately $115.0 million and $74.5 million at June 30, 2020 and December 31, 2019, respectively.

(3) Derivative financial instruments are included in this category.

Carrying Amounts and Estimated Fair Values of Financial Instruments

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 June 30, 2020 and December 31, 2019 were as follows: 

	Fair Value Hierarchy	June 30, 2020				December 31, 2019
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	388,753	$	388,753	$	256,264	$	256,264
Interest bearing deposits with banks	Level 1	1,521,572		1,521,572		178,423		178,423
Investment securities held to maturity:
U.S. Treasury securities	Level 1	138,268		147,415		138,352		144,113
U.S. government agency securities	Level 2	6,657		6,921		7,345		7,362
Obligations of states and political subdivisions	Level 2	466,836		481,736		500,705		513,607
Residential mortgage-backed securities	Level 2	1,451,581		1,495,599		1,620,119		1,629,572
Trust preferred securities	Level 2	37,335		29,900		37,324		31,382
Corporate and other debt securities	Level 2	32,750		33,305		32,250		32,684
Total investment securities held to maturity (1)		2,133,427		2,194,876		2,336,095		2,358,720
Net loans	Level 3	32,004,997		31,815,938		29,537,449		28,964,396
Accrued interest receivable	Level 1	122,807		122,807		105,637		105,637
Federal Reserve Bank and Federal Home Loan Bank stock (2)	Level 2	282,755		282,755		214,421		214,421
Financial liabilities
Deposits without stated maturities	Level 1	23,155,233		23,155,233		19,467,892		19,467,892
Deposits with stated maturities	Level 2	8,272,772		8,335,442		9,717,945		9,747,867
Short-term borrowings	Level 2	2,082,880		2,083,500		1,093,280		1,081,879
Long-term borrowings	Level 2	2,907,535		3,023,213		2,122,426		2,181,401
Junior subordinated debentures issued to capital trusts	Level 2	55,891		44,231		55,718		53,889
Accrued interest payable (3)	Level 1	19,148		19,148		33,066		33,066

(1) The carrying amount is presented gross without the allowance for credit losses.

(2) Included in other assets.

(3) Included in accrued expenses and other liabilities.

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Debt Securities Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of available for sale debt securities at June 30, 2020 and December 31, 2019 were as follows: 

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	50,940	$	1,681	$	—		$	52,621
U.S. government agency securities	26,778		1,174		(28		)	27,924
Obligations of states and political subdivisions:
Obligations of states and state agencies	65,620		1,477		(54		)	67,043
Municipal bonds	79,100		1,363		(1		)	80,462
Total obligations of states and political subdivisions	144,720		2,840		(55		)	147,505
Residential mortgage-backed securities	1,340,614		43,039		(927		)	1,382,726
Corporate and other debt securities	78,225		1,251		(864		)	78,612
Total investment securities available for sale	$	1,641,277	$	49,985	$	(1,874	)	$	1,689,388
December 31, 2019
U.S. Treasury securities	$	50,952	$	12	$	(21	)	$	50,943
U.S. government agency securities	28,982		280		(19		)	29,243
Obligations of states and political subdivisions:
Obligations of states and state agencies	78,116		540		(83		)	78,573
Municipal bonds	90,662		902		(86		)	91,478
Total obligations of states and political subdivisions	168,778		1,442		(169		)	170,051
Residential mortgage-backed securities	1,248,814		11,234		(5,262		)	1,254,786
Corporate and other debt securities	61,261		628		(111		)	61,778
Total investment securities available for sale	$	1,558,787	$	13,596	$	(5,582	)	$	1,566,801

Age of Unrealized Losses and Fair Value of Related Debt Securities Available for Sale

The age of unrealized losses and fair value of related securities available for sale at June 30, 2020 and December 31, 2019 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)
June 30, 2020
U.S. government agency securities	$	—	$	—		$	1,627	$	(28	)	$	1,627	$	(28	)
Obligations of states and political subdivisions:
Obligations of states and state agencies	24,913		(37		)	1,036		(17		)	25,949		(54		)
Municipal bonds	210		(1		)	—		—			210		(1		)
Total obligations of states and political subdivisions	25,123		(38		)	1,036		(17		)	26,159		(55		)
Residential mortgage-backed securities	101,162		(458		)	49,368		(469		)	150,530		(927		)
Corporate and other debt securities	27,194		(864		)	—		—			27,194		(864		)
Total	$	153,479	$	(1,360	)	$	52,031	$	(514	)	$	205,510	$	(1,874	)
December 31, 2019
U.S. Treasury securities	$	25,019	$	(21	)	$	—	$	—		$	25,019	$	(21	)
U.S. government agency securities	—		—			1,783		(19		)	1,783		(19		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	18,540		(21		)	8,755		(62		)	27,295		(83		)
Municipal bonds	—		—			13,177		(86		)	13,177		(86		)
Total obligations of states and political subdivisions	18,540		(21		)	21,932		(148		)	40,472		(169		)
Residential mortgage-backed securities	240,412		(1,194		)	282,798		(4,068		)	523,210		(5,262		)
Corporate and other debt securities	5,139		(111		)	—		—			5,139		(111		)
Total	$	289,110	$	(1,347	)	$	306,513	$	(4,235	)	$	595,623	$	(5,582	)

Contractual Maturities of Debt Securities Available for Sale

The contractual maturities of available for sale debt securities at June 30, 2020 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.

	June 30, 2020
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	26,643	$	26,742
Due after one year through five years	97,248		99,501
Due after five years through ten years	104,076		106,154
Due after ten years	72,696		74,265
Residential mortgage-backed securities	1,340,614		1,382,726
Total investment securities available for sale	$	1,641,277	$	1,689,388

Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Debt Securities Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of debt securities held to maturity at June 30, 2020 and December 31, 2019 were as follows: 

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	138,268	$	9,147	$	—		$	147,415
U.S. government agency securities	6,657		264		—			6,921
Obligations of states and political subdivisions:
Obligations of states and state agencies	280,187		8,569		(545		)	288,211
Municipal bonds	186,649		6,876		—			193,525
Total obligations of states and political subdivisions	466,836		15,445		(545		)	481,736
Residential mortgage-backed securities	1,451,581		44,327		(309		)	1,495,599
Trust preferred securities	37,335		48		(7,483		)	29,900
Corporate and other debt securities	32,750		556		(1		)	33,305
Total investment securities held to maturity	$	2,133,427	$	69,787	$	(8,338	)	$	2,194,876
December 31, 2019
U.S. Treasury securities	$	138,352	$	5,761	$	—		$	144,113
U.S. government agency securities	7,345		58		(41		)	7,362
Obligations of states and political subdivisions:
Obligations of states and state agencies	297,454		7,745		(529		)	304,670
Municipal bonds	203,251		5,696		(10		)	208,937
Total obligations of states and political subdivisions	500,705		13,441		(539		)	513,607
Residential mortgage-backed securities	1,620,119		14,803		(5,350		)	1,629,572
Trust preferred securities	37,324		39		(5,981		)	31,382
Corporate and other debt securities	32,250		454		(20		)	32,684
Total investment securities held to maturity	$	2,336,095	$	34,556	$	(11,931	)	$	2,358,720

Age of Unrealized Losses and Fair Value of Related Debt Securities Held to Maturity

The age of unrealized losses and fair value of related debt securities held to maturity at June 30, 2020 and December 31, 2019 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)
June 30, 2020
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	10,544	$	(266	)	$	20,022	$	(279	)	$	30,566	$	(545	)
Total obligations of states and political subdivisions	10,544		(266		)	20,022		(279		)	30,566		(545		)
Residential mortgage-backed securities	37,394		(305		)	2,710		(4		)	40,104		(309		)
Trust preferred securities	—		—			28,499		(7,483		)	28,499		(7,483		)
Corporate and other debt securities	17,749		(1		)	—		—			17,749		(1		)
Total	$	65,687	$	(572	)	$	51,231	$	(7,766	)	$	116,918	$	(8,338	)
December 31, 2019
U.S. government agency securities	$	5,183	$	(41	)	$	—	$	—		$	5,183	$	(41	)
Obligations of states and political subdivisions:
Obligations of states and state agencies	11,178		(55		)	32,397		(474		)	43,575		(529		)
Municipal bonds	—		—			798		(10		)	798		(10		)
Total obligations of states and political subdivisions	11,178		(55		)	33,195		(484		)	44,373		(539		)
Residential mortgage-backed securities	307,885		(1,387		)	254,915		(3,963		)	562,800		(5,350		)
Trust preferred securities	—		—			29,990		(5,981		)	29,990		(5,981		)
Corporate and other debt securities	—		—			4,980		(20		)	4,980		(20		)
Total	$	324,246	$	(1,483	)	$	323,080	$	(10,448	)	$	647,326	$	(11,931	)

Contractual Maturities of Debt Securities Held to Maturity

The contractual maturities of investments in debt securities held to maturity at June 30, 2020 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.  

	June 30, 2020
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	92,432	$	93,313
Due after one year through five years	171,778		179,833
Due after five years through ten years	203,555		215,200
Due after ten years	214,081		210,931
Residential mortgage-backed securities	1,451,581		1,495,599
Total investment securities held to maturity	$	2,133,427	$	2,194,876

Amortized Cost of Debt Securities Held to Maturity by External Credit Rating

The following table summarizes the amortized cost of held to maturity debt securities by external credit rating at June 30, 2020 and December 31, 2019.

	AAA/AA/A Rated		BBB rated		Non-investment grade rated		Non-rated		Total
	(in thousands)
June 30, 2020
U.S. Treasury securities	$	138,268	$	—	$	—	$	—	$	138,268
U.S. government agency securities	6,657		—		—		—		6,657
Obligations of states and political subdivisions:
Obligations of states and state agencies	239,811		—		5,686		34,690		280,187
Municipal bonds	182,140		—		—		4,509		186,649
Total obligations of states and political subdivisions	421,951		—		5,686		39,199		466,836
Residential mortgage-backed securities	1,451,581		—		—		—		1,451,581
Trust preferred securities	—		—		—		37,335		37,335
Corporate and other debt securities	—		5,000		—		27,750		32,750
Total investment securities held to maturity	$	2,018,457	$	5,000	$	5,686	$	104,284	$	2,133,427
December 31, 2019
U.S. Treasury securities	$	138,352	$	—	$	—	$	—	$	138,352
U.S. government agency securities	7,345		—		—		—		7,345
Obligations of states and political subdivisions:
Obligations of states and state agencies	248,533		5,722		—		43,199		297,454
Municipal bonds	202,642		—		—		609		203,251
Total obligations of states and political subdivisions	451,175		5,722		—		43,808		500,705
Residential mortgage-backed securities	1,620,119		—		—		—		1,620,119
Trust preferred securities	—		—		—		37,324		37,324
Corporate and other debt securities	—		5,000		—		27,250		32,250
Total investment securities held to maturity	$	2,216,991	$	10,722	$	—	$	108,382	$	2,336,095

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Loans and Allowance for Credit Losses for Loans (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Schedule of Loan Portfolio

The detail of the loan portfolio as of June 30, 2020 and December 31, 2019 was as follows: 

	June 30, 2020		December 31, 2019
	(in thousands)
Loans:
Commercial and industrial *	$	6,884,689	$	4,825,997
Commercial real estate:
Commercial real estate	16,571,877		15,996,741
Construction	1,721,352		1,647,018
Total commercial real estate loans	18,293,229		17,643,759
Residential mortgage	4,405,147		4,377,111
Consumer:
Home equity	471,115		487,272
Automobile	1,369,489		1,451,623
Other consumer	890,942		913,446
Total consumer loans	2,731,546		2,852,341
Total loans	$	32,314,611	$	29,699,208

*

Includes $2.2 billion of loans originated under the SBA Paycheck Protection Program (PPP), net of unearned fees totaling $62.1 million at June 30, 2020.

Past Due, Non-Accrual and Current Loans by Loan Portfolio Class

The following table presents past due, current and non-accrual loans without an allowance for credit losses by loan portfolio class (including PCD loans) at June 30, 2020.

	Past Due and Non-Accrual Loans
	30-59  Days  Past Due Loans		60-89  Days  Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Loans		Total Loans		Non-Accrual Loans Without Allowance for Credit Losses
	(in thousands)
June 30, 2020
Commercial and industrial	$	6,206	$	4,178	$	5,220	$	130,876	$	146,480	$	6,738,209	$	6,884,689	$	13,501
Commercial real estate:
Commercial real estate	13,912		1,543		—		43,678		59,133		16,512,744		16,571,877		40,476
Construction	—		—		—		3,308		3,308		1,718,044		1,721,352		2,830
Total commercial real estate loans	13,912		1,543		—		46,986		62,441		18,230,788		18,293,229		43,306
Residential mortgage	35,263		4,169		3,812		25,776		69,020		4,336,127		4,405,147		13,717
Consumer loans:
Home equity	3,236		864		363		5,326		9,789		461,326		471,115		145
Automobile	8,254		2,171		1,173		1,621		13,219		1,356,270		1,369,489		—
Other consumer	1,472		751		546		—		2,769		888,173		890,942		—
Total consumer loans	12,962		3,786		2,082		6,947		25,777		2,705,769		2,731,546		145
Total	$	68,343	$	13,676	$	11,114	$	210,585	$	303,718	$	32,010,893	$	32,314,611	$	70,669

The following table presents past due, non-accrual and current loans by loan portfolio class at December 31, 2019. At December 31, 2019, purchased credit-impaired (PCI) loans were excluded from past due and non-accrual loans reported because they continued to earn interest income from the accretable yield at the pool level. The PCI loan pools are accounted for as PCD loans (on a loan level basis with a related allowance for credit losses) under the CECL standard adopted at January 1, 2020 and reported in the past due loans and non-accrual loans in the tables above at June 30, 2020.

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89  Days Past Due Loans		90 Days or More Past Due Loans		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		PCI Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	11,700	$	2,227	$	3,986	$	68,636	$	86,549	$	4,057,434	$	682,014
Commercial real estate:
Commercial real estate	2,560		4,026		579		9,004		16,169		10,886,724		5,093,848
Construction	1,486		1,343		—		356		3,185		1,492,532		151,301
Total commercial real estate loans	4,046		5,369		579		9,360		19,354		12,379,256		5,245,149
Residential mortgage	17,143		4,192		2,042		12,858		36,235		3,760,707		580,169
Consumer loans:
Home equity	1,051		80		—		1,646		2,777		373,243		111,252
Automobile	11,482		1,581		681		334		14,078		1,437,274		271
Other consumer	1,171		866		30		224		2,291		900,411		10,744
Total consumer loans	13,704		2,527		711		2,204		19,146		2,710,928		122,267
Total	$	46,593	$	14,315	$	7,318	$	93,058	$	161,284	$	22,908,325	$	6,629,599

Risk Category of Loans

The following table presents the internal loan classification risk by loan portfolio class by origination year (including PCD loans) based on the most recent analysis performed at June 30, 2020:

	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2020	2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Commercial and industrial
Risk Rating:
Pass	$	2,680,515	$	697,134	$	644,080	$	306,259	$	169,439	$	422,608	$	1,705,273	$	466	$	6,625,774
Special Mention	77		9,522		1,408		10,669		11,138		15,595		45,635		88		94,132
Substandard	5,963		7,356		1,269		2,155		3,331		13,704		13,040		57		46,875
Doubtful	—		1,340		—		17,577		—		97,769		1,222		—		117,908
Total commercial and industrial	$	2,686,555	$	715,352	$	646,757	$	336,660	$	183,908	$	549,676	$	1,765,170	$	611	$	6,884,689
Commercial real estate
Risk Rating:
Pass	$	1,589,407	$	3,175,366	$	2,480,315	$	2,059,141	$	1,957,684	$	4,775,400	$	198,836	$	12,031	$	16,248,180
Special Mention	—		18,913		31,799		18,620		32,853		73,609		3,496		—		179,290
Substandard	4,783		100		10,855		18,186		5,636		102,424		—		—		141,984
Doubtful	—		—		—		811		—		1,612		—		—		2,423
Total commercial real estate	$	1,594,190	$	3,194,379	$	2,522,969	$	2,096,758	$	1,996,173	$	4,953,045	$	202,332	$	12,031	$	16,571,877
Construction
Risk Rating:
Pass	$	43,118	$	135,181	$	160,452	$	28,928	$	49,000	$	99,014	$	1,186,010	$	—	$	1,701,703
Special Mention	—		—		—		—		9,774		435		6,114		—		16,323
Substandard	—		—		—		—		2,405		921		—		—		3,326
Total construction	$	43,118	$	135,181	$	160,452	$	28,928	$	61,179	$	100,370	$	1,192,124	$	—	$	1,721,352

The following table presents the amortized cost in those loan classes (including PCD loans) based on payment activity by origination year as of June 30, 2020.

	Term Loans
	Amortized Cost Basis by Origination Year
June 30, 2020	2020		2019		2018		2017		2016		Prior to 2016		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans		Total
	(in thousands)
Residential mortgage
Performing	$	414,014	$	827,300	$	851,792	$	701,366	$	426,897	$	1,097,287	$	73,757	$	—	$	4,392,413
90 days or more past due	—		1,316		2,973		3,880		4,565		—		—		—		12,734
Total residential mortgage	$	414,014	$	828,616	$	854,765	$	705,246	$	431,462	$	1,097,287	$	73,757	$	—	$	4,405,147
Consumer loans
Home equity
Performing	$	3,816	$	12,678	$	15,090	$	11,387	$	6,941	$	18,823	$	347,142	$	53,086	$	468,963
90 days or more past due	—		—		—		—		25		321		1,046		760		2,152
Total home equity	3,816		12,678		15,090		11,387		6,966		19,144		348,188		53,846		471,115
Automobile
Performing	184,095		524,849		338,665		200,947		75,553		42,550		—		—		1,366,659
90 days or more past due	49		921		824		620		197		219		—		—		2,830
Total automobile	184,144		525,770		339,489		201,567		75,750		42,769		—		—		1,369,489
Other Consumer
Performing	910		6,286		13,232		1,306		1,723		12,179		854,340		408		890,384
90 days or more past due	—		15		—		—		—		4		539		—		558
Total other consumer	910		6,301		13,232		1,306		1,723		12,183		854,879		408		890,942
Total Consumer	$	188,870	$	544,749	$	367,811	$	214,260	$	84,439	$	74,096	$	1,203,067	$	54,254	$	2,731,546

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: 

Credit exposure— by internally assigned risk rating			Special						Total Non-PCI
	Pass		Mention		Substandard		Doubtful		Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	3,982,453	$	33,718	$	66,511	$	61,301	$	4,143,983
Commercial real estate	10,781,587		77,884		42,560		862		10,902,893
Construction	1,487,877		7,486		354		—		1,495,717
Total	$	16,251,917	$	119,088	$	109,425	$	62,163	$	16,542,593

Schedule Of Recorded Investment In Loan Classes Based On Payment Activity

The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2019:

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2019
Residential mortgage	$	3,784,084	$	12,858	$	3,796,942
Home equity	374,374		1,646		376,020
Automobile	1,451,018		334		1,451,352
Other consumer	902,478		224		902,702
Total	$	6,511,954	$	15,062	$	6,527,016

The following table summarizes information pertaining to loans that were identified as PCI loans by class based on individual loan payment activity as of December 31, 2019:  

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2019
Commercial and industrial	$	653,997	$	28,017	$	682,014
Commercial real estate	5,065,388		28,460		5,093,848
Construction	148,692		2,609		151,301
Residential mortgage	571,006		9,163		580,169
Consumer	120,356		1,911		122,267
Total	$	6,559,439	$	70,160	$	6,629,599

Pre-Modification and Post-Modification Outstanding Recorded Investments and Non-PCI Loans that Subsequently Defaulted

Loans modified as TDRs (excluding PCI loan modifications prior to the adoption of ASU 2016-13) within the previous 12 months and for which there was a payment default (90 or more days past due) for the three and six months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30,
	2020			2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Amortized Cost		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	20	$	14,986	18	$	12,322
Commercial real estate	—	—		1	383
Residential mortgage	1	220		—	—
Consumer	2	204		—	—
Total	23	$	15,410	19	$	12,705

	Six Months Ended June 30,
	2020			2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Amortized Cost		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	20	$	14,986	18	$	12,322
Commercial real estate	—	—		1	383
Residential mortgage	1	220		2	215
Consumer	2	204		1	18
Total	23	$	15,410	22	$	12,938

The following table presents the pre- and post-modification amortized cost of loans by loan class modified as TDRs (excluding PCI loans prior to the adoption of ASU 2016-13) during the three and six months ended June 30, 2020 and 2019. Post-modification amounts are presented as of June 30, 2020 and 2019.

	Three Months Ended June 30,
	2020					2019
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount
	($ in thousands)
Commercial and industrial	4	$	9,052	$	7,047	17	$	14,663	$	14,187
Commercial real estate:
Commercial real estate	1	885		900		1	3,067		3,067
Construction	2	435		218		—	—		—
Total commercial real estate	3	1,320		1,118		1	3,067		3,067
Residential mortgage	—	—		—		1	155		155
Total	7	$	10,372	$	8,165	19	$	17,885	$	17,409

	Six Months Ended June 30,
	2020					2019
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount		Number of Contracts	Pre-Modification Amortized Carrying Amount		Post-Modification Amortized Carrying Amount
	($ in thousands)
Commercial and industrial	20	$	22,196	$	19,674	53	$	38,216	$	37,248
Commercial real estate:
Commercial real estate	2	4,748		4,762		2	4,665		4,665
Construction	2	435		218		—	—		—
Total commercial real estate	4	5,183		4,980		2	4,665		4,665
Residential mortgage	—	—		—		1	155		155
Total	24	$	27,379	$	24,654	56	$	43,036	$	42,068

Summary of Allowance for Credit Losses

The following table summarizes the allowance for credit losses for loans at June 30, 2020 and December 31, 2019: 

	June 30, 2020		December 31, 2019
	(in thousands)
Components of allowance for credit losses for loans:
Allowance for loan losses	$	309,614	$	161,759
Allowance for unfunded credit commitments	10,109		2,845
Total allowance for credit losses for loans	$	319,723	$	164,604

Summary of Provision for Credit Losses

The following table summarizes the provision for credit losses for loans for the periods indicated:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Components of provision for credit losses for loans:
Provision for loan losses	$	41,025	$	3,706		$	74,876	$	11,562
Provision for unfunded credit commitments	90		(1,606		)	163		(1,462		)
Total provision for credit losses for loans	$	41,115	$	2,100		$	75,039	$	10,100

Summary of Collateral Dependent Loans

The following table presents collateral dependent loans by class as of June 30, 2020:

	June 30, 2020
	(in thousands)
Commercial and industrial	$	124,323
Commercial real estate:
Commercial real estate	51,386
Construction	2,830
Total commercial real estate loans	54,216
Residential mortgage	15,581
Home equity	276
Total	$	194,396

Summary of Activity in Allowance for Loan Losses

The following table details the activity in the allowance for loan losses by loan portfolio segment for three and six months ended June 30, 2020 and 2019: 

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Three Months Ended June 30, 2020
Allowance for loan losses:
Beginning balance	$	127,437		$	111,585		$	29,456		$	14,864		$	283,342
Loans charged-off	(14,024		)	(27		)	(5		)	(2,601		)	(16,657		)
Charged-off loans recovered	799			51			545			509			1,904
Net (charge-offs) recoveries	(13,225		)	24			540			(2,092		)	(14,753		)
Provision for loan losses	17,827			20,093			(366		)	3,471			41,025
Ending balance	$	132,039		$	131,702		$	29,630		$	16,243		$	309,614
Three Months Ended June 30, 2019
Allowance for losses:
Beginning balance	$	94,630		$	47,762		$	5,139		$	6,850		$	154,381
Loans charged-off	(3,073		)	—			—			(1,752		)	(4,825		)
Charged-off loans recovered	1,195			22			9			617			1,843
Net (charge-offs) recoveries	(1,878		)	22			9			(1,135		)	(2,982		)
Provision for loan losses	1,632			1,194			71			809			3,706
Ending balance	$	94,384		$	48,978		$	5,219		$	6,524		$	155,105

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Total
	(in thousands)
Six Months Ended June 30, 2020
Allowance for loan losses:
Beginning balance	$	104,059		$	45,673		$	5,060		$	6,967		$	161,759
Impact of ASU 2016-13 adoption*	15,169			49,797			20,575			6,990			92,531
Loans charged-off	(17,384		)	(71		)	(341		)	(5,166		)	(22,962		)
Charged-off loans recovered	1,368			144			595			1,303			3,410
Net (charge-offs) recoveries	(16,016		)	73			254			(3,863		)	(19,552		)
Provision for loan losses	28,827			36,159			3,741			6,149			74,876
Ending balance	$	132,039		$	131,702		$	29,630		$	16,243		$	309,614
Six Months Ended June 30, 2019
Allowance for losses:
Beginning balance	$	90,956		$	49,650		$	5,041		$	6,212		$	151,859
Loans charged-off	(7,355		)	—			(15		)	(3,780		)	(11,150		)
Charged-off loans recovered	1,678			43			10			1,103			2,834
Net (charge-offs) recoveries	(5,677		)	43			(5		)	(2,677		)	(8,316		)
Provision for loan losses	9,105			(715		)	183			2,989			11,562
Ending balance	$	94,384		$	48,978		$	5,219		$	6,524		$	155,105

* Includes a $61.6 million reclassification adjustment representing the estimated expected credit losses for PCD loans.

Summary of Allocation of Allowance for Loan Losses and Related Loans by Loan Portfolio Segment Disaggregated Based on Allowance Measurement Methodology

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the allowance measurement methodology at June 30, 2020 and December 31, 2019.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
June 30, 2020
Allowance for loan losses:
Individually evaluated for credit losses	$	69,333	$	1,237	$	430	$	498	$	71,498
Collectively evaluated for credit losses	62,706		130,465		29,200		15,745		238,116
Total	$	132,039	$	131,702	$	29,630	$	16,243	$	309,614
Loans:
Individually evaluated for credit losses	$	138,120	$	77,914	$	22,148	$	3,096	$	241,278
Collectively evaluated for credit losses	6,746,569		18,215,315		4,382,999		2,728,450		32,073,333
Total	$	6,884,689	$	18,293,229	$	4,405,147	$	2,731,546	$	32,314,611
December 31, 2019
Allowance for loan losses:
Individually evaluated for credit losses	$	36,662	$	1,338	$	518	$	58	$	38,576
Collectively evaluated for credit losses	67,397		44,335		4,542		6,909		123,183
Total	$	104,059	$	45,673	$	5,060	$	6,967	$	161,759
Loans:
Individually evaluated for credit losses	$	100,860	$	51,242	$	10,689	$	853	$	163,644
Collectively evaluated for credit losses	4,043,123		12,347,368		3,786,253		2,729,221		22,905,965
Loans acquired with discounts related to credit quality	682,014		5,245,149		580,169		122,267		6,629,599
Total	$	4,825,997	$	17,643,759	$	4,377,111	$	2,852,341	$	29,699,208

Schedule of Impaired Loans by Portfolio Class

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

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
December 31, 2019
Commercial and industrial	$	14,617	$	86,243	$	100,860	$	114,875	$	36,662
Commercial real estate:
Commercial real estate	26,046		24,842		50,888		51,258		1,338
Construction	354		—		354		354		—
Total commercial real estate loans	26,400		24,842		51,242		51,612		1,338
Residential mortgage	5,836		4,853		10,689		11,800		518
Consumer loans:
Home equity	366		487		853		956		58
Total consumer loans	366		487		853		956		58
Total	$	47,219	$	116,425	$	163,644	$	179,243	$	38,576

Schedule Of Accretable Yield For PCI Loans

The table below includes disclosure requirements prior to the adoption of ASU No. 2016-13 on January 1, 2020, and presents the changes in the accretable yield for PCI loans during the three and six months ended June 30, 2019:

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
	(in thousands)
Balance, beginning of period	$	890,771		$	875,958
Accretion	(55,014		)	(108,506		)
Net increase in expected cash flows	18,130			86,435
Balance, end of period	$	853,887		$	853,887

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

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
	(in thousands)
Balance at December 31, 2019	$	21,218	$	306,572	$	825,767	$	220,068	$	1,373,625
Goodwill from business combinations	—		121		1,654		9		1,784
Balance at June 30, 2020	$	21,218	$	306,693	$	827,421	$	220,077	$	1,375,409

*

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.

Other Intangible Assets

The following table summarizes other intangible assets as of June 30, 2020 and December 31, 2019: 

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
June 30, 2020
Loan servicing rights	$	98,127	$	(74,624	)	$	(825	)	$	22,678
Core deposits	101,160		(47,118		)	—			54,042
Other	3,945		(2,744		)	—			1,201
Total other intangible assets	$	203,232	$	(124,486	)	$	(825	)	$	77,921
December 31, 2019
Loan servicing rights	$	94,827	$	(70,095	)	$	(47	)	$	24,685
Core deposits	101,160		(40,384		)	—			60,776
Other	3,945		(2,634		)	—			1,311
Total other intangible assets	$	199,932	$	(113,113	)	$	(47	)	$	86,772

Estimated Future Amortization Expense

The following table presents the estimated future amortization expense of other intangible assets for the remainder of 2020 through 2024: 

	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2020	$	5,161	$	6,629	$	110
2021	4,179		11,607		206
2022	3,226		9,876		191
2023	2,483		8,146		131
2024	1,931		6,537		117

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Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of Short-Term Borrowings

Short-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following: 

	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances	$	1,235,000	$	940,000
Federal funds purchased	678,900		—
Securities sold under agreements to repurchase	168,980		153,280
Total short-term borrowings	$	2,082,880	$	1,093,280

Schedule of Long-Term Borrowings

Long-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following: 

	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances, net (1)	$	2,153,052	$	1,480,012
Subordinated debt, net (2)	404,455		292,414
Securities sold under agreements to repurchase	350,000		350,000
Other	28		—
Total long-term borrowings	$	2,907,535	$	2,122,426

(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $1.2 million and $2.8 million at June 30, 2020 and December 31, 2019, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $2.9 million and $1.2 million at June 30, 2020 and December 31, 2019, respectively.

Schedule of FHLB Repayment

The long-term FHLB advances at June 30, 2020 are scheduled for contractual balance repayments as follows: 

Year	Amount
	(in thousands)
2020	$	30,000
2021	994,769
2022	121,420
2023	428,164
2024	300,000
Thereafter	279,931
Total long-term FHLB advances	$	2,154,284

Schedule of Repayment of Long-Term Borrowings for Securities Sold Under Agreements to Repurchase

The long-term repos at June 30, 2020 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2021	$	300,000
2022	50,000
Total long-term securities sold under agreements to repurchase	$	350,000

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Consolidated Statements of Financial Condition Related to Fair Value of Derivative Financial Instruments

Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows: 

	June 30, 2020						December 31, 2019
	Fair Value						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 swaps	$	—	$	4,722	$	1,030,000	$	—	$	1,484	$	180,000
Fair value hedge interest rate swaps	—		147		7,147		—		229		7,281
Total derivatives designated as hedging instruments	$	—	$	4,869	$	1,037,147	$	—	$	1,713	$	187,281
Derivatives not designated as hedging instruments:
Interest rate swaps and embedded derivatives	$	467,606	$	161,997	$	7,293,947	$	158,382	$	42,020	$	4,113,106
Mortgage banking derivatives	669		3,407		558,379		150		193		142,760
Total derivatives not designated as hedging instruments	$	468,275	$	165,404	$	7,852,326	$	158,532	$	42,213	$	4,255,866

(Losses) Gains Related to Interest Rate Derivatives Designated as Hedges of Cash Flows

osses) included in the consolidated statements of income and other comprehensive income, on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows were as follows: 

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense	$	438		$	(383	)	$	(177	)	$	(673	)
Amount of loss recognized in other comprehensive income	(1,773		)	(962		)	(3,253		)	(1,512		)

Gains (Losses) Related to Interest Rate Derivatives Designated as Hedges of Fair Value

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(in thousands)
Derivative - interest rate swaps:
Interest income	$	71		$	49		$	82		$	73
Hedged item - loans:
Interest income	$	(71	)	$	(49	)	$	(82	)	$	(73	)

Interest Rate Derivatives Designated as Hedges

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 June 30, 2020 and December 31, 2019.

Line Item in the Statement of Financial Condition 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
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
	(in thousands)
Loans	$	7,294	$	7,510	$	147	$	229

Net Gains (Losses) Related to Derivative Instruments Not Designated as Hedging Instruments

The net losses (gains) included in the consolidated statements of income related to derivative instruments not designated as hedging instruments were as follows: 

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)
Non-designated hedge interest rate swaps and credit derivatives
Other non-interest expense	$	1,416	$	(347	)	$	1,505	$	(757	)

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Balance Sheet Offsetting (Tables)

6 Months Ended

Jun. 30, 2020

Offsetting [Abstract]

Offsetting Assets

The table below presents information about Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of June 30, 2020 and December 31, 2019.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments				Cash Collateral				Net Amount
	(in thousands)
June 30, 2020
Assets:
Interest rate swaps	$	467,606	$	—	$	467,606	$	—			$	—			$	467,606
Liabilities:
Interest rate swaps	$	166,866	$	—	$	166,866	$	—			$	(166,866	)		$	—
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—				—
Total	$	516,866	$	—	$	516,866	$	(350,000	)		$	(166,866	)		$	—
December 31, 2019
Assets:
Interest rate swaps	$	158,382	$	—	$	158,382	$	(118	)		$	—			$	158,264
Liabilities:
Interest rate swaps	$	43,733	$	—	$	43,733	$	(118	)		$	(16,881	)		$	26,734
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—			*	—
Total	$	393,733	$	—	$	393,733	$	(350,118	)		$	(16,881	)		$	26,734

*

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

Offsetting Liabilities

The table below presents information about Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of June 30, 2020 and December 31, 2019.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments				Cash Collateral				Net Amount
	(in thousands)
June 30, 2020
Assets:
Interest rate swaps	$	467,606	$	—	$	467,606	$	—			$	—			$	467,606
Liabilities:
Interest rate swaps	$	166,866	$	—	$	166,866	$	—			$	(166,866	)		$	—
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—				—
Total	$	516,866	$	—	$	516,866	$	(350,000	)		$	(166,866	)		$	—
December 31, 2019
Assets:
Interest rate swaps	$	158,382	$	—	$	158,382	$	(118	)		$	—			$	158,264
Liabilities:
Interest rate swaps	$	43,733	$	—	$	43,733	$	(118	)		$	(16,881	)		$	26,734
Repurchase agreements	350,000		—		350,000		(350,000		)	*	—			*	—
Total	$	393,733	$	—	$	393,733	$	(350,118	)		$	(16,881	)		$	26,734

*

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

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Tax Credit Investments (Tables)

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Affordable Housing Tax Credit Investments, Other Tax Credit Investments, and Related Unfunded Commitments

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	22,874	$	25,049
Other tax credit investments, net	51,569		59,081
Total tax credit investments, net	$	74,443	$	84,130
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	1,402	$	1,539
Unfunded other tax credit commitments	1,139		1,139
Total unfunded tax credit commitments	$	2,541	$	2,678

Affordable Housing Tax Credit Investments and Other Tax Credit Investments

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the three and six months ended June 30, 2020 and 2019: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	1,393	$	1,708	$	2,627	$	3,421
Other tax credit investment credits and tax benefits	2,540		2,158		3,840		4,961
Total reduction in income tax expense	$	3,933	$	3,866	$	6,467	$	8,382
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	537	$	593	$	1,091	$	1,266
Affordable housing tax credit investment impairment losses	665		794		1,083		1,524
Other tax credit investment losses	679		2,509		1,223		3,496
Other tax credit investment impairment losses	1,535		967		3,247		5,750
Total amortization of tax credit investments recorded in non-interest expense	$	3,416	$	4,863	$	6,644	$	12,036

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Business Segments (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Schedule of Financial Data for Business Segments

The following tables represent the financial data for Valley’s four business segments for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,214,368		$	24,826,832		$	5,737,187		$	—		$	37,778,387
Interest income	$	66,807		$	255,152		$	27,623		$	(1,057	)	$	348,525
Interest expense	11,469			40,640			9,728			4,129			65,966
Net interest income (loss)	55,338			214,512			17,895			(5,186		)	282,559
Provision for credit losses	3,106			38,009			41			—			41,156
Net interest income (loss) after provision for credit losses	52,232			176,503			17,854			(5,186		)	241,403
Non-interest income	17,175			16,172			5,823			5,660			44,830
Non-interest expense	20,440			23,250			642			112,834			157,166
Internal expense transfer	19,406			66,858			15,505			(101,769		)	—
Income (loss) before income taxes	$	29,561		$	102,567		$	7,530		$	(10,591	)	$	129,067
Return on average interest earning assets (pre-tax)	1.64		%	1.65		%	0.52		%	N/A			1.37		%

	Three Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,756,322		$	18,796,093		$	4,324,969		$	—		$	29,877,384
Interest income	$	67,617		$	229,366		$	31,966		$	(1,207	)	$	327,742
Interest expense	23,428			65,141			14,994			3,945			107,508
Net interest income (loss)	44,189			164,225			16,972			(5,152		)	220,234
Provision for credit losses	885			1,215			—			—			2,100
Net interest income (loss) after provision for credit losses	43,304			163,010			16,972			(5,152		)	218,134
Non-interest income	13,037			7,688			2,560			4,318			27,603
Non-interest expense	18,392			26,324			216			96,805			141,737
Internal expense transfer	19,291			53,722			12,399			(85,412		)	—
Income (loss) before income taxes	$	18,658		$	90,652		$	6,917		$	(12,227	)	$	104,000
Return on average interest earning assets (pre-tax)	1.10		%	1.93		%	0.64		%	N/A			1.39		%

	Six Months Ended June 30, 2020
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	7,215,756		$	23,804,558		$	5,205,918		$	—		$	36,226,232
Interest income	$	135,062		$	520,027		$	59,392		$	(2,163	)	$	712,318
Interest expense	31,169			102,826			22,488			7,937			164,420
Net interest income (loss)	103,893			417,201			36,904			(10,100		)	547,898
Provision for credit losses	9,891			65,148			800			—			75,839
Net interest income (loss) after provision for credit losses	94,002			352,053			36,104			(10,100		)	472,059
Non-interest income	31,852			31,771			8,965			13,639			86,227
Non-interest expense	40,311			47,408			1,029			224,074			312,822
Internal expense transfer	39,741			131,054			28,680			(199,475		)	—
Income (loss) before income taxes	$	45,802		$	205,362		$	15,360		$	(21,060	)	$	245,464
Return on average interest earning assets (pre-tax)	1.27		%	1.73		%	0.59		%	N/A			1.36		%

	Six Months Ended June 30, 2019
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	6,788,511		$	18,615,885		$	4,316,619		$	—		$	29,721,015
Interest income	$	135,644		$	449,650		$	65,190		$	(2,518	)	$	647,966
Interest expense	45,952			126,012			29,220			7,900			209,084
Net interest income (loss)	89,692			323,638			35,970			(10,418		)	438,882
Provision for credit losses	2,983			7,117			—			—			10,100
Net interest income (loss) after provision for credit losses	86,709			316,521			35,970			(10,418		)	428,782
Non-interest income	26,819			14,470			4,678			89,309			135,276
Non-interest expense	37,097			51,568			303			200,564			289,532
Internal expense transfer	38,718			106,259			24,686			(169,663		)	—
Income (loss) before income taxes	$	37,713		$	173,164		$	15,659		$	47,990		$	274,526
Return on average interest earning assets (pre-tax)	1.11		%	1.86		%	0.73		%	N/A			1.85		%

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Business Combinations (Details) $ in Thousands, shares in Millions		3 Months Ended	6 Months Ended
	Dec. 01, 2019 USD ($) office shares	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Business Acquisition [Line Items]
Loans		$ 32,004,997	$ 32,004,997	$ 29,537,449
Oritani
Business Acquisition [Line Items]
Assets	$ 4,300,000
Loans	3,400,000
Deposits	$ 2,900,000
Number of branches | office	26
Conversion ratio for shares issued	1.60
Consideration transferred	$ 835,300
Shares issued in connection with acquisition (in shares) | shares	71.1
Merger expenses		366	$ 1,700
Goodwill increase		$ 1,800

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share Reconciliation
Net income available to common shareholders	$ 92,429	$ 73,296	$ 176,525	$ 183,454
Basic weighted average number of common shares outstanding (in shares)	403,790,242	331,748,552	403,654,665	331,675,313
Plus: Common stock equivalents (in shares)	841,603	1,211,250	1,388,518	1,254,046
Diluted weighted average number of common shares outstanding (in shares)	404,631,845	332,959,802	405,043,183	332,929,359
Earnings per common share:
Basic (usd per share)	$ 0.23	$ 0.22	$ 0.44	$ 0.55
Diluted (usd per share)	$ 0.23	$ 0.22	$ 0.44	$ 0.55
Anti-dilutive common stock options and warrants (in shares)	2,700,000	482,000	2,300,000	494,000

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Accumulated Other Comprehensive Loss - Components of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Accumulated Other Comprehensive Income (Loss)
Beginning balance	$ 4,420,998	$ 3,444,879	$ 4,384,188	$ 3,350,454
Other comprehensive income (loss) before reclassification	1,733		26,744
Amounts reclassified from other comprehensive income	(105)	321	532	610
Total other comprehensive income	1,628	18,126	27,276	34,300
Ending balance	4,474,488	3,504,118	4,474,488	3,504,118
Unrealized Gains and Losses on Available for Sale (AFS) Securities
Accumulated Other Comprehensive Income (Loss)
Beginning balance	31,917		5,822
Other comprehensive income (loss) before reclassification	3,013		29,081
Amounts reclassified from other comprehensive income	31		58
Total other comprehensive income	3,044		29,139
Ending balance	34,961		34,961
Unrealized Gains and Losses on Derivatives
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(4,348)		(3,729)
Other comprehensive income (loss) before reclassification	(1,280)		(2,337)
Amounts reclassified from other comprehensive income	(308)		130
Total other comprehensive income	(1,588)		(2,207)
Ending balance	(5,936)		(5,936)
Defined Benefit Pension Plan
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(34,135)		(34,307)
Other comprehensive income (loss) before reclassification	0		0
Amounts reclassified from other comprehensive income	172	55	344	110
Total other comprehensive income	172		344
Ending balance	(33,963)		(33,963)
Total Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(6,566)	(53,257)	(32,214)	(69,431)
Ending balance	$ (4,938)	$ (35,131)	$ (4,938)	$ (35,131)

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Accumulated Other Comprehensive Loss - Reclassifications from AOCI (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Reclassification Out Of Accumulated Other Comprehensive Loss
(Losses) gains on securities transactions, net	$ (41)		$ 11		$ (81)	$ (21)
Tax effect	(33,466)		(27,532)		(62,595)	(84,728)
Total net of tax	95,601	$ 87,268	76,468	$ 113,330	182,869	189,798
Interest expense	(65,966)		(107,508)		(164,420)	(209,084)
Total reclassifications, net of tax	105		(321)		(532)	(610)
Unrealized (losses) gains on AFS securities before tax
Reclassification Out Of Accumulated Other Comprehensive Loss
Total reclassifications, net of tax	(31)				(58)
Unrealized gains (losses) on derivatives (cash flow hedges) before tax
Reclassification Out Of Accumulated Other Comprehensive Loss
Total reclassifications, net of tax	308				(130)
Defined benefit pension plan
Reclassification Out Of Accumulated Other Comprehensive Loss
Amortization of actuarial net loss	(229)		(78)		(465)	(156)
Tax effect	57		23		121	46
Total reclassifications, net of tax	(172)		(55)		(344)	(110)
Amounts Reclassified from Accumulated Other Comprehensive Loss
Reclassification Out Of Accumulated Other Comprehensive Loss
Interest expense	438		(383)		(177)	(673)
Amounts Reclassified from Accumulated Other Comprehensive Loss | Unrealized (losses) gains on AFS securities before tax
Reclassification Out Of Accumulated Other Comprehensive Loss
(Losses) gains on securities transactions, net	(41)		11		(81)	(21)
Tax effect	10		(3)		23	3
Total net of tax	(31)		8		(58)	(18)
Amounts Reclassified from Accumulated Other Comprehensive Loss | Unrealized gains (losses) on derivatives (cash flow hedges) before tax
Reclassification Out Of Accumulated Other Comprehensive Loss
Tax effect	(130)		109		47	191
Total net of tax	308		(274)		(130)	(482)
Interest expense	$ 438		$ (383)		$ (177)	$ (673)

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New Authoritative Accounting Guidance (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Forecast period	2 years
Historical loss experience period	1 year
Allowance for loan losses	$ 309,614	$ 161,759	$ 283,342	$ 155,105	$ 154,381	$ 151,859
Allowance for unfunded credit commitments	10,109	2,845
Allowance for credit losses	1,593
Stockholders' equity	(4,474,488)	(4,384,188)	(4,420,998)	(3,504,118)	(3,444,879)	(3,350,454)
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholders' equity	$ (499,511)	(443,559)	$ (452,424)	$ (412,190)	$ (375,983)	$ (299,642)
Cumulative Effect, Period Of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses		100,400
Allowance for loan losses		92,531
Allowance for unfunded credit commitments		7,100
Allowance for credit losses		793
PCD loans related reserves		61,600
Non-credit discount		97,700
Cumulative Effect, Period Of Adoption, Adjustment | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholders' equity		28,200
Cumulative Effect, Period Of Adoption, Adjustment | Non-PCD Loans
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for loan losses		$ 38,800

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Fair Value Measurement of Assets and Liabilities - Recurring and Non-Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Investment securities
Equity securities	$ 54,379	$ 41,410
Available for sale
Available for sale debt securities	1,689,388	1,566,801
Non-recurring fair value measurements:
Loan servicing rights	14,400
Unpaid principal balances of loans held for sale	115,000	74,500
U.S. Treasury securities
Available for sale
Available for sale debt securities	52,621	50,943
U.S. government agency securities
Available for sale
Available for sale debt securities	27,924	29,243
Obligations of states and political subdivisions
Available for sale
Available for sale debt securities	147,505	170,051
Residential mortgage-backed securities
Available for sale
Available for sale debt securities	1,382,726	1,254,786
Corporate and other debt securities
Available for sale
Available for sale debt securities	78,612	61,778
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements
Investment securities
Equity securities	46,897	41,410
Available for sale
Available for sale debt securities	52,621	50,943
Loans held for sale	0	0
Other assets	0	0
Total assets	99,518	92,353
Liabilities
Other liabilities	0	0
Total liabilities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | U.S. Treasury securities
Available for sale
Available for sale debt securities	52,621	50,943
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | U.S. government agency securities
Available for sale
Available for sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Obligations of states and political subdivisions
Available for sale
Available for sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Residential mortgage-backed securities
Available for sale
Available for sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Corporate and other debt securities
Available for sale
Available for sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Non-recurring fair value measurements
Non-recurring fair value measurements:
Collateral dependent loans	0	0
Loan servicing rights	0	0
Foreclosed assets	0	0
Total	0	0
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements
Investment securities
Equity securities	0	0
Available for sale
Available for sale debt securities	1,635,402	1,515,178
Loans held for sale	120,599	76,113
Other assets	468,275	158,532
Total assets	2,224,276	1,749,823
Liabilities
Other liabilities	170,273	43,926
Total liabilities	170,273	43,926
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | U.S. Treasury securities
Available for sale
Available for sale debt securities	0	0
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | U.S. government agency securities
Available for sale
Available for sale debt securities	27,924	29,243
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Obligations of states and political subdivisions
Available for sale
Available for sale debt securities	146,140	169,371
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Residential mortgage-backed securities
Available for sale
Available for sale debt securities	1,382,726	1,254,786
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Corporate and other debt securities
Available for sale
Available for sale debt securities	78,612	61,778
Significant Other Observable Inputs (Level 2) | Non-recurring fair value measurements
Non-recurring fair value measurements:
Collateral dependent loans	0	0
Loan servicing rights	0	0
Foreclosed assets	0	0
Total	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements
Investment securities
Equity securities	0	0
Available for sale
Available for sale debt securities	1,365	680
Loans held for sale	0	0
Other assets	0	0
Total assets	1,365	680
Liabilities
Other liabilities	0	0
Total liabilities	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | U.S. Treasury securities
Available for sale
Available for sale debt securities	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | U.S. government agency securities
Available for sale
Available for sale debt securities	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Obligations of states and political subdivisions
Available for sale
Available for sale debt securities	1,365	680
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Residential mortgage-backed securities
Available for sale
Available for sale debt securities	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Corporate and other debt securities
Available for sale
Available for sale debt securities	0	0
Significant Unobservable Inputs (Level 3) | Non-recurring fair value measurements
Non-recurring fair value measurements:
Collateral dependent loans	42,807	39,075
Loan servicing rights	14,373	1,591
Foreclosed assets	6,679	10,807
Total	63,859	51,473
Fair Value | Recurring fair value measurements
Investment securities
Equity securities	54,379	41,410
Available for sale
Available for sale debt securities	1,689,388	1,566,801
Loans held for sale	120,599	76,113
Other assets	468,275	158,532
Total assets	2,332,641	1,842,856
Liabilities
Other liabilities	170,273	43,926
Total liabilities	170,273	43,926
Fair Value | Recurring fair value measurements | U.S. Treasury securities
Available for sale
Available for sale debt securities	52,621	50,943
Fair Value | Recurring fair value measurements | U.S. government agency securities
Available for sale
Available for sale debt securities	27,924	29,243
Fair Value | Recurring fair value measurements | Obligations of states and political subdivisions
Available for sale
Available for sale debt securities	147,505	170,051
Fair Value | Recurring fair value measurements | Residential mortgage-backed securities
Available for sale
Available for sale debt securities	1,382,726	1,254,786
Fair Value | Recurring fair value measurements | Corporate and other debt securities
Available for sale
Available for sale debt securities	78,612	61,778
Fair Value | Non-recurring fair value measurements
Non-recurring fair value measurements:
Collateral dependent loans	42,807	39,075
Loan servicing rights	14,373	1,591
Foreclosed assets	6,679	10,807
Total	63,859	$ 51,473
Fair Value | NAV | Recurring fair value measurements
Investment securities
Equity securities	$ 7,500

XML

Fair Value Measurement of Assets and Liabilities - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Fair Value Disclosures [Abstract]
Collateral dependent loans, charge-offs		$ 938
Collateral dependent loans amortized cost	$ 110,900
Specific valuation allowance allocations	68,100
Reported net carrying amount of collateral dependent loans	$ 42,800
Valuation of loan servicing rights, prepayment rate	17.00%
Valuation of loan servicing rights, discount rate	9.60%
Loan servicing rights	$ 14,400

XML

Fair Value Measurement of Assets and Liabilities - Carrying Amounts and Estimated Fair Values (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest bearing deposits with banks	$ 1,521,572	$ 178,423
Total investment securities held to maturity	2,194,876	2,358,720
Accrued interest receivable	122,807	105,637
Deposits with stated maturities	8,272,772	9,717,945
Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	2,133,427	2,336,095
Carrying Amount | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and due from banks	388,753	256,264
Interest bearing deposits with banks	1,521,572	178,423
Accrued interest receivable	122,807	105,637
Deposits without stated maturities	23,155,233	19,467,892
Short-term borrowings	2,082,880	1,093,280
Accrued interest payable	19,148	33,066
Carrying Amount | Level 1 | U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	138,268	138,352
Carrying Amount | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Federal Reserve Bank and Federal Home Loan Bank stock	282,755	214,421
Deposits with stated maturities	8,272,772	9,717,945
Long-term borrowings	2,907,535	2,122,426
Junior subordinated debentures issued to capital trusts	55,891	55,718
Carrying Amount | Level 2 | U.S. government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	6,657	7,345
Carrying Amount | Level 2 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	466,836	500,705
Carrying Amount | Level 2 | Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	1,451,581	1,620,119
Carrying Amount | Level 2 | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	37,335	37,324
Carrying Amount | Level 2 | Corporate and other debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	32,750	32,250
Carrying Amount | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net loans	32,004,997	29,537,449
Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	2,194,876	2,358,720
Fair Value | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and due from banks	388,753	256,264
Interest bearing deposits with banks	1,521,572	178,423
Accrued interest receivable	122,807	105,637
Deposits without stated maturities	23,155,233	19,467,892
Short-term borrowings	2,083,500	1,081,879
Accrued interest payable	19,148	33,066
Fair Value | Level 1 | U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	147,415	144,113
Fair Value | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Federal Reserve Bank and Federal Home Loan Bank stock	282,755	214,421
Deposits with stated maturities	8,335,442	9,747,867
Long-term borrowings	3,023,213	2,181,401
Junior subordinated debentures issued to capital trusts	44,231	53,889
Fair Value | Level 2 | U.S. government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	6,921	7,362
Fair Value | Level 2 | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	481,736	513,607
Fair Value | Level 2 | Residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	1,495,599	1,629,572
Fair Value | Level 2 | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	29,900	31,382
Fair Value | Level 2 | Corporate and other debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities held to maturity	33,305	32,684
Fair Value | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net loans	$ 31,815,938	$ 28,964,396

XML

Investment Securities - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) security	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Investment Securities [Line Items]
Equity securities	$ 54,379,000		$ 54,379,000	$ 41,410,000
Number of security positions in the debt securities available for sale portfolio in an unrealized loss position (in security) | security	95		95	182
Fair value of debt securities available for sale pledged as collateral	$ 1,100,000,000		$ 1,100,000,000
Weighted-average remaining expected life of residential mortgage-backed securities available for sale, years			4 years 9 months 18 days
Amortized cost	1,641,277,000		$ 1,641,277,000	$ 1,558,787,000
Fair Value	1,689,388,000		1,689,388,000	1,566,801,000
Gross unrealized losses	1,874,000		1,874,000	$ 5,582,000
Impairment loss	0	$ 2,900,000	0
Allowance for credit losses	$ 0		$ 0
Number of security positions in the securities held to maturity portfolio in an unrealized loss position (in security) | security	26		26	82
Fair value of investments held to maturity pledged as collateral	$ 1,300,000,000		$ 1,300,000,000
Weighted-average remaining expected life of residential mortgage-backed securities held to maturity, years			3 years 10 months 24 days
Forecast period			2 years
Historical loss experience period			1 year
Allowance for credit losses	1,593,000		$ 1,593,000
Charge-offs of debt securities	0		0
US States and Political Subdivisions Debt Securities, Special Revenue Bonds
Investment Securities [Line Items]
Amortized cost	80,200,000		80,200,000
Fair Value	81,800,000		81,800,000
Gross unrealized losses	56,000		$ 56,000
Investment percentage			54.00%
US States And Political Subdivisions Debt Securities, Special Revenue Bonds, Impaired Securities
Investment Securities [Line Items]
Amortized cost	680,000		$ 680,000
Fair Value	1,400,000		1,400,000
Money market mutual fund
Investment Securities [Line Items]
Equity securities	$ 41,800,000		$ 41,800,000	$ 41,400,000

XML

Investment Securities - Amortized Cost, Debt Securities Available for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 1,641,277	$ 1,558,787
Gross Unrealized Gains	49,985	13,596
Gross Unrealized Losses	(1,874)	(5,582)
Fair Value	1,689,388	1,566,801
U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	50,940	50,952
Gross Unrealized Gains	1,681	12
Gross Unrealized Losses	0	(21)
Fair Value	52,621	50,943
U.S. government agency securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	26,778	28,982
Gross Unrealized Gains	1,174	280
Gross Unrealized Losses	(28)	(19)
Fair Value	27,924	29,243
Obligations of states and state agencies
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	65,620	78,116
Gross Unrealized Gains	1,477	540
Gross Unrealized Losses	(54)	(83)
Fair Value	67,043	78,573
Municipal bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	79,100	90,662
Gross Unrealized Gains	1,363	902
Gross Unrealized Losses	(1)	(86)
Fair Value	80,462	91,478
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	144,720	168,778
Gross Unrealized Gains	2,840	1,442
Gross Unrealized Losses	(55)	(169)
Fair Value	147,505	170,051
Residential mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,340,614	1,248,814
Gross Unrealized Gains	43,039	11,234
Gross Unrealized Losses	(927)	(5,262)
Fair Value	1,382,726	1,254,786
Corporate and other debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	78,225	61,261
Gross Unrealized Gains	1,251	628
Gross Unrealized Losses	(864)	(111)
Fair Value	$ 78,612	$ 61,778

XML

Investment Securities - Unrealized Losses and Fair Value Debt Securities Available for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value
Less than Twelve Months	$ 153,479	$ 289,110
More than Twelve Months	52,031	306,513
Total	205,510	595,623
Unrealized Losses
Less than Twelve Months	(1,360)	(1,347)
More than Twelve Months	(514)	(4,235)
Total	(1,874)	(5,582)
U.S. Treasury securities
Fair Value
Less than Twelve Months		25,019
More than Twelve Months		0
Total		25,019
Unrealized Losses
Less than Twelve Months		(21)
More than Twelve Months		0
Total		(21)
U.S. government agency securities
Fair Value
Less than Twelve Months	0	0
More than Twelve Months	1,627	1,783
Total	1,627	1,783
Unrealized Losses
Less than Twelve Months	0	0
More than Twelve Months	(28)	(19)
Total	(28)	(19)
Obligations of states and state agencies
Fair Value
Less than Twelve Months	24,913	18,540
More than Twelve Months	1,036	8,755
Total	25,949	27,295
Unrealized Losses
Less than Twelve Months	(37)	(21)
More than Twelve Months	(17)	(62)
Total	(54)	(83)
Municipal bonds
Fair Value
Less than Twelve Months	210	0
More than Twelve Months	0	13,177
Total	210	13,177
Unrealized Losses
Less than Twelve Months	(1)	0
More than Twelve Months	0	(86)
Total	(1)	(86)
Obligations of states and political subdivisions
Fair Value
Less than Twelve Months	25,123	18,540
More than Twelve Months	1,036	21,932
Total	26,159	40,472
Unrealized Losses
Less than Twelve Months	(38)	(21)
More than Twelve Months	(17)	(148)
Total	(55)	(169)
Residential mortgage-backed securities
Fair Value
Less than Twelve Months	101,162	240,412
More than Twelve Months	49,368	282,798
Total	150,530	523,210
Unrealized Losses
Less than Twelve Months	(458)	(1,194)
More than Twelve Months	(469)	(4,068)
Total	(927)	(5,262)
Corporate and other debt securities
Fair Value
Less than Twelve Months	27,194	5,139
More than Twelve Months	0	0
Total	27,194	5,139
Unrealized Losses
Less than Twelve Months	(864)	(111)
More than Twelve Months	0	0
Total	$ (864)	$ (111)

XML

Investment Securities - Contractual Maturities of Debt Securities Available for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Amortized Cost
Due in one year	$ 26,643
Due after one year through five years	97,248
Due after five years through ten years	104,076
Due after ten years	72,696
Residential mortgage-backed securities	1,340,614
Amortized Cost	1,641,277	$ 1,558,787
Fair Value
Due in one year	26,742
Due after one year through five years	99,501
Due after five years through ten years	106,154
Due after ten years	74,265
Residential mortgage-backed securities	1,382,726
Total investment securities available for sale	$ 1,689,388	$ 1,566,801

XML

Investment Securities - Amortized Cost, Debt Securities Held to Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 2,133,427	$ 2,336,095
Gross Unrealized Gains	69,787	34,556
Gross Unrealized Losses	(8,338)	(11,931)
Fair Value	2,194,876	2,358,720
U.S. Treasury securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	138,268	138,352
Gross Unrealized Gains	9,147	5,761
Gross Unrealized Losses	0	0
Fair Value	147,415	144,113
U.S. government agency securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	6,657	7,345
Gross Unrealized Gains	264	58
Gross Unrealized Losses	0	(41)
Fair Value	6,921	7,362
Obligations of states and state agencies
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	280,187	297,454
Gross Unrealized Gains	8,569	7,745
Gross Unrealized Losses	(545)	(529)
Fair Value	288,211	304,670
Municipal bonds
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	186,649	203,251
Gross Unrealized Gains	6,876	5,696
Gross Unrealized Losses	0	(10)
Fair Value	193,525	208,937
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	466,836	500,705
Gross Unrealized Gains	15,445	13,441
Gross Unrealized Losses	(545)	(539)
Fair Value	481,736	513,607
Residential mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	1,451,581	1,620,119
Gross Unrealized Gains	44,327	14,803
Gross Unrealized Losses	(309)	(5,350)
Fair Value	1,495,599	1,629,572
Trust preferred securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	37,335	37,324
Gross Unrealized Gains	48	39
Gross Unrealized Losses	(7,483)	(5,981)
Fair Value	29,900	31,382
Corporate and other debt securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	32,750	32,250
Gross Unrealized Gains	556	454
Gross Unrealized Losses	(1)	(20)
Fair Value	$ 33,305	$ 32,684

XML

Investment Securities - Unrealized Losses and Fair Value of Debt Securities Held to Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value
Less than Twelve Months	$ 65,687	$ 324,246
More than Twelve Months	51,231	323,080
Total	116,918	647,326
Unrealized Losses
Less than Twelve Months	(572)	(1,483)
More than Twelve Months	(7,766)	(10,448)
Total	(8,338)	(11,931)
U.S. government agency securities
Fair Value
Less than Twelve Months		5,183
More than Twelve Months		0
Total		5,183
Unrealized Losses
Less than Twelve Months		(41)
More than Twelve Months		0
Total		(41)
Obligations of states and state agencies
Fair Value
Less than Twelve Months	10,544	11,178
More than Twelve Months	20,022	32,397
Total	30,566	43,575
Unrealized Losses
Less than Twelve Months	(266)	(55)
More than Twelve Months	(279)	(474)
Total	(545)	(529)
Municipal bonds
Fair Value
Less than Twelve Months		0
More than Twelve Months		798
Total		798
Unrealized Losses
Less than Twelve Months		0
More than Twelve Months		(10)
Total		(10)
Obligations of states and political subdivisions
Fair Value
Less than Twelve Months	10,544	11,178
More than Twelve Months	20,022	33,195
Total	30,566	44,373
Unrealized Losses
Less than Twelve Months	(266)	(55)
More than Twelve Months	(279)	(484)
Total	(545)	(539)
Residential mortgage-backed securities
Fair Value
Less than Twelve Months	37,394	307,885
More than Twelve Months	2,710	254,915
Total	40,104	562,800
Unrealized Losses
Less than Twelve Months	(305)	(1,387)
More than Twelve Months	(4)	(3,963)
Total	(309)	(5,350)
Trust preferred securities
Fair Value
Less than Twelve Months	0	0
More than Twelve Months	28,499	29,990
Total	28,499	29,990
Unrealized Losses
Less than Twelve Months	0	0
More than Twelve Months	(7,483)	(5,981)
Total	(7,483)	(5,981)
Corporate and other debt securities
Fair Value
Less than Twelve Months	17,749	0
More than Twelve Months	0	4,980
Total	17,749	4,980
Unrealized Losses
Less than Twelve Months	(1)	0
More than Twelve Months	0	(20)
Total	$ (1)	$ (20)

XML

Investment Securities - Contractual Maturities of Debt Securities Held to Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Amortized Cost
Due in one year	$ 92,432
Due after one year through five years	171,778
Due after five years through ten years	203,555
Due after ten years	214,081
Residential mortgage-backed securities	1,451,581
Amortized Cost	2,133,427	$ 2,336,095
Fair Value
Due in one year	93,313
Due after one year through five years	179,833
Due after five years through ten years	215,200
Due after ten years	210,931
Residential mortgage-backed securities	1,495,599
Total investment securities held to maturity	$ 2,194,876	$ 2,358,720

XML

Investment Securities - Amortized Cost of Debt Securities Held to Maturity by External Credit Rating (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	$ 2,133,427	$ 2,336,095
U.S. Treasury securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	138,268	138,352
U.S. government agency securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	6,657	7,345
Obligations of states and state agencies
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	280,187	297,454
Municipal bonds
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	186,649	203,251
Obligations of states and political subdivisions
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	466,836	500,705
Residential mortgage-backed securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	1,451,581	1,620,119
Trust preferred securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	37,335	37,324
Corporate and other debt securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	32,750	32,250
AAA/AA/A Rated
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	2,018,457	2,216,991
AAA/AA/A Rated | U.S. Treasury securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	138,268	138,352
AAA/AA/A Rated | U.S. government agency securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	6,657	7,345
AAA/AA/A Rated | Obligations of states and state agencies
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	239,811	248,533
AAA/AA/A Rated | Municipal bonds
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	182,140	202,642
AAA/AA/A Rated | Obligations of states and political subdivisions
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	421,951	451,175
AAA/AA/A Rated | Residential mortgage-backed securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	1,451,581	1,620,119
AAA/AA/A Rated | Trust preferred securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
AAA/AA/A Rated | Corporate and other debt securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
BBB rated
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	5,000	10,722
BBB rated | U.S. Treasury securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
BBB rated | U.S. government agency securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
BBB rated | Obligations of states and state agencies
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	5,722
BBB rated | Municipal bonds
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
BBB rated | Obligations of states and political subdivisions
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	5,722
BBB rated | Residential mortgage-backed securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
BBB rated | Trust preferred securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
BBB rated | Corporate and other debt securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	5,000	5,000
Non-investment grade rated
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	5,686	0
Non-investment grade rated | U.S. Treasury securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-investment grade rated | U.S. government agency securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-investment grade rated | Obligations of states and state agencies
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	5,686	0
Non-investment grade rated | Municipal bonds
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-investment grade rated | Obligations of states and political subdivisions
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	5,686	0
Non-investment grade rated | Residential mortgage-backed securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-investment grade rated | Trust preferred securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-investment grade rated | Corporate and other debt securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-rated
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	104,284	108,382
Non-rated | U.S. Treasury securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-rated | U.S. government agency securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-rated | Obligations of states and state agencies
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	34,690	43,199
Non-rated | Municipal bonds
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	4,509	609
Non-rated | Obligations of states and political subdivisions
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	39,199	43,808
Non-rated | Residential mortgage-backed securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	0	0
Non-rated | Trust preferred securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	37,335	37,324
Non-rated | Corporate and other debt securities
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized cost of held to maturity debt securities	$ 27,750	$ 27,250

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Loans and Allowance for Credit Losses for Loans - Loans Portfolio (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 32,314,611	$ 29,699,208
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	6,884,689	4,825,997
Loans, PPP	2,200,000
Loans, deferred income, PPP	62,100
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	18,293,229	17,643,759
Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	16,571,877	15,996,741
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,721,352	1,647,018
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	4,405,147	4,377,111
Consumer loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,731,546	2,852,341
Consumer loans | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	471,115	487,272
Consumer loans | Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,369,489	1,451,623
Consumer loans | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 890,942	$ 913,446

XML

Loans and Allowance for Credit Losses for Loans - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) component	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) component SecurityLoan	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans net of unearned premiums and deferred loan fees	$ 131,300,000		$ 131,300,000		$ 12,600,000
Accrued interest	104,200,000		104,200,000		86,300,000
Transfer of loans to loans held for sale			30,020,000	$ 216,301,000
Sales of loans			$ 0	0
Number of consecutive months for performing restructured loans to be put on accrual status			6 months
TDRs not reported as non-accrual loans	53,900,000		$ 53,900,000		73,000,000.0
Non-performing TDRs	85,600,000		85,600,000		65,100,000
Specific reserves for loan losses			8,400,000	11,700,000
Loan charge-offs related to loans modified as TDRs	2,900,000	$ 1,100,000	$ 3,700,000	2,000,000.0
Number of modified loans | SecurityLoan			7,000
Amount from modified loans			$ 3,100,000,000
Other real estate owned	$ 8,300,000		$ 8,300,000		9,400,000
Number of basic components | component	2		2
Forecast period			2 years
Historical loss experience period			1 year
Allowance for unfunded credit commitments	$ 10,109,000		$ 10,109,000		2,845,000
Residential real estate properties
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other real estate owned	2,500,000		2,500,000		2,100,000
In formal foreclosure proceedings
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential mortgage and consumer loans secured by residential real estate properties	$ 1,800,000		1,800,000		2,800,000
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Transfer of loans to loans held for sale			$ 30,000,000.0	$ 216,300,000
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired loans threshold					$ 250,000

XML

Loans and Allowance for Credit Losses for Loans - Past Due, Non-Accrual and Current Non-Covered Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	$ 210,585	$ 93,058
Total Past Due Loans	303,718	161,284
Current Loans	32,010,893	22,908,325
Total Loans	32,314,611
Non-Accrual Loans Without Allowance for Credit Losses	70,669
PCI Loans		6,629,599
30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	68,343	46,593
60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	13,676	14,315
90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	11,114	7,318
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	130,876	68,636
Total Past Due Loans	146,480	86,549
Current Loans	6,738,209	4,057,434
Total Loans	6,884,689
Non-Accrual Loans Without Allowance for Credit Losses	13,501
PCI Loans		682,014
Commercial and industrial | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	6,206	11,700
Commercial and industrial | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	4,178	2,227
Commercial and industrial | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	5,220	3,986
Commercial real estate
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	46,986	9,360
Total Past Due Loans	62,441	19,354
Current Loans	18,230,788	12,379,256
Total Loans	18,293,229
Non-Accrual Loans Without Allowance for Credit Losses	43,306
PCI Loans		5,245,149
Commercial real estate | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	13,912	4,046
Commercial real estate | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	1,543	5,369
Commercial real estate | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	0	579
Commercial real estate | Commercial real estate
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	43,678	9,004
Total Past Due Loans	59,133	16,169
Current Loans	16,512,744	10,886,724
Total Loans	16,571,877
Non-Accrual Loans Without Allowance for Credit Losses	40,476
PCI Loans		5,093,848
Commercial real estate | Commercial real estate | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	13,912	2,560
Commercial real estate | Commercial real estate | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	1,543	4,026
Commercial real estate | Commercial real estate | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	0	579
Commercial real estate | Construction
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	3,308	356
Total Past Due Loans	3,308	3,185
Current Loans	1,718,044	1,492,532
Total Loans	1,721,352
Non-Accrual Loans Without Allowance for Credit Losses	2,830
PCI Loans		151,301
Commercial real estate | Construction | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	0	1,486
Commercial real estate | Construction | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	0	1,343
Commercial real estate | Construction | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	0	0
Residential mortgage
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	25,776	12,858
Total Past Due Loans	69,020	36,235
Current Loans	4,336,127	3,760,707
Total Loans	4,405,147
Non-Accrual Loans Without Allowance for Credit Losses	13,717
PCI Loans		580,169
Residential mortgage | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	35,263	17,143
Residential mortgage | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	4,169	4,192
Residential mortgage | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	3,812	2,042
Consumer loans
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	6,947	2,204
Total Past Due Loans	25,777	19,146
Current Loans	2,705,769	2,710,928
Total Loans	2,731,546
Non-Accrual Loans Without Allowance for Credit Losses	145
PCI Loans		122,267
Consumer loans | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	12,962	13,704
Consumer loans | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	3,786	2,527
Consumer loans | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	2,082	711
Consumer loans | Home equity
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	5,326	1,646
Total Past Due Loans	9,789	2,777
Current Loans	461,326	373,243
Total Loans	471,115
Non-Accrual Loans Without Allowance for Credit Losses	145
PCI Loans		111,252
Consumer loans | Home equity | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	3,236	1,051
Consumer loans | Home equity | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	864	80
Consumer loans | Home equity | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	363	0
Consumer loans | Automobile
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	1,621	334
Total Past Due Loans	13,219	14,078
Current Loans	1,356,270	1,437,274
Total Loans	1,369,489
Non-Accrual Loans Without Allowance for Credit Losses	0
PCI Loans		271
Consumer loans | Automobile | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	8,254	11,482
Consumer loans | Automobile | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	2,171	1,581
Consumer loans | Automobile | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	1,173	681
Consumer loans | Other consumer
Financing Receivable, Past Due [Line Items]
Non-Accrual Loans	0	224
Total Past Due Loans	2,769	2,291
Current Loans	888,173	900,411
Total Loans	890,942
Non-Accrual Loans Without Allowance for Credit Losses	0
PCI Loans		10,744
Consumer loans | Other consumer | 30-59 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	1,472	1,171
Consumer loans | Other consumer | 60-89 Days Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	751	866
Consumer loans | Other consumer | 90 Days or More Past Due Loans
Financing Receivable, Past Due [Line Items]
Past Due Loans	$ 546	$ 30

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Loans and Allowance for Credit Losses for Loans - Internal Loan Classification Risk by Loan Portfolio Class by Origination Year (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 32,314,611	$ 29,699,208
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	2,686,555
2019	715,352
2018	646,757
2017	336,660
2016	183,908
Prior to 2016	549,676
Revolving Loans Amortized Cost Basis	1,765,170
Revolving Loans Converted to Term Loans	611
Total	6,884,689	4,825,997
Commercial and industrial | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
2020	2,680,515
2019	697,134
2018	644,080
2017	306,259
2016	169,439
Prior to 2016	422,608
Revolving Loans Amortized Cost Basis	1,705,273
Revolving Loans Converted to Term Loans	466
Total	6,625,774
Commercial and industrial | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
2020	77
2019	9,522
2018	1,408
2017	10,669
2016	11,138
Prior to 2016	15,595
Revolving Loans Amortized Cost Basis	45,635
Revolving Loans Converted to Term Loans	88
Total	94,132
Commercial and industrial | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
2020	5,963
2019	7,356
2018	1,269
2017	2,155
2016	3,331
Prior to 2016	13,704
Revolving Loans Amortized Cost Basis	13,040
Revolving Loans Converted to Term Loans	57
Total	46,875
Commercial and industrial | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1,340
2018	0
2017	17,577
2016	0
Prior to 2016	97,769
Revolving Loans Amortized Cost Basis	1,222
Revolving Loans Converted to Term Loans	0
Total	117,908
Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total	18,293,229	$ 17,643,759
Commercial real estate | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1,594,190
2019	3,194,379
2018	2,522,969
2017	2,096,758
2016	1,996,173
Prior to 2016	4,953,045
Revolving Loans Amortized Cost Basis	202,332
Revolving Loans Converted to Term Loans	12,031
Total	16,571,877
Commercial real estate | Commercial real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
2020	1,589,407
2019	3,175,366
2018	2,480,315
2017	2,059,141
2016	1,957,684
Prior to 2016	4,775,400
Revolving Loans Amortized Cost Basis	198,836
Revolving Loans Converted to Term Loans	12,031
Total	16,248,180
Commercial real estate | Commercial real estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	18,913
2018	31,799
2017	18,620
2016	32,853
Prior to 2016	73,609
Revolving Loans Amortized Cost Basis	3,496
Revolving Loans Converted to Term Loans	0
Total	179,290
Commercial real estate | Commercial real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
2020	4,783
2019	100
2018	10,855
2017	18,186
2016	5,636
Prior to 2016	102,424
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	141,984
Commercial real estate | Commercial real estate | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	811
2016	0
Prior to 2016	1,612
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	2,423
Construction | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	43,118
2019	135,181
2018	160,452
2017	28,928
2016	61,179
Prior to 2016	100,370
Revolving Loans Amortized Cost Basis	1,192,124
Revolving Loans Converted to Term Loans	0
Total	1,721,352
Construction | Commercial real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
2020	43,118
2019	135,181
2018	160,452
2017	28,928
2016	49,000
Prior to 2016	99,014
Revolving Loans Amortized Cost Basis	1,186,010
Revolving Loans Converted to Term Loans	0
Total	1,701,703
Construction | Commercial real estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	9,774
Prior to 2016	435
Revolving Loans Amortized Cost Basis	6,114
Revolving Loans Converted to Term Loans	0
Total	16,323
Construction | Commercial real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	2,405
Prior to 2016	921
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	$ 3,326

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Loans and Allowance for Credit Losses for Loans - Amortized Cost In Those Loan Classes Based on Payment Activity by Origination Year (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 32,314,611	$ 29,699,208
Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2020	414,014
2019	828,616
2018	854,765
2017	705,246
2016	431,462
Prior to 2016	1,097,287
Revolving Loans Amortized Cost Basis	73,757
Revolving Loans Converted to Term Loans	0
Total	4,405,147	4,377,111
Residential mortgage | Performing Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	414,014
2019	827,300
2018	851,792
2017	701,366
2016	426,897
Prior to 2016	1,097,287
Revolving Loans Amortized Cost Basis	73,757
Revolving Loans Converted to Term Loans	0
Total	4,392,413
Consumer loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	188,870
2019	544,749
2018	367,811
2017	214,260
2016	84,439
Prior to 2016	74,096
Revolving Loans Amortized Cost Basis	1,203,067
Revolving Loans Converted to Term Loans	54,254
Total	2,731,546	$ 2,852,341
Consumer loans | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
2020	3,816
2019	12,678
2018	15,090
2017	11,387
2016	6,966
Prior to 2016	19,144
Revolving Loans Amortized Cost Basis	348,188
Revolving Loans Converted to Term Loans	53,846
Total	471,115
Consumer loans | Home equity | Performing Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	3,816
2019	12,678
2018	15,090
2017	11,387
2016	6,941
Prior to 2016	18,823
Revolving Loans Amortized Cost Basis	347,142
Revolving Loans Converted to Term Loans	53,086
Total	468,963
Consumer loans | Automobile
Financing Receivable, Credit Quality Indicator [Line Items]
2020	184,144
2019	525,770
2018	339,489
2017	201,567
2016	75,750
Prior to 2016	42,769
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	1,369,489
Consumer loans | Automobile | Performing Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	184,095
2019	524,849
2018	338,665
2017	200,947
2016	75,553
Prior to 2016	42,550
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	1,366,659
Consumer loans | Other consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2020	910
2019	6,301
2018	13,232
2017	1,306
2016	1,723
Prior to 2016	12,183
Revolving Loans Amortized Cost Basis	854,879
Revolving Loans Converted to Term Loans	408
Total	890,942
Consumer loans | Other consumer | Performing Loans
Financing Receivable, Credit Quality Indicator [Line Items]
2020	910
2019	6,286
2018	13,232
2017	1,306
2016	1,723
Prior to 2016	12,179
Revolving Loans Amortized Cost Basis	854,340
Revolving Loans Converted to Term Loans	408
Total	890,384
90 Days or More Past Due Loans | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1,316
2018	2,973
2017	3,880
2016	4,565
Prior to 2016	0
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	12,734
90 Days or More Past Due Loans | Consumer loans | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	25
Prior to 2016	321
Revolving Loans Amortized Cost Basis	1,046
Revolving Loans Converted to Term Loans	760
Total	2,152
90 Days or More Past Due Loans | Consumer loans | Automobile
Financing Receivable, Credit Quality Indicator [Line Items]
2020	49
2019	921
2018	824
2017	620
2016	197
Prior to 2016	219
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term Loans	0
Total	2,830
90 Days or More Past Due Loans | Consumer loans | Other consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	15
2018	0
2017	0
2016	0
Prior to 2016	4
Revolving Loans Amortized Cost Basis	539
Revolving Loans Converted to Term Loans	0
Total	$ 558

XML

Loans and Allowance for Credit Losses for Loans - Credit Exposure by Internally Assigned Risk Rating by Class of Loans (Excluding PCI Loans) (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	$ 16,542,593
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	16,251,917
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	119,088
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	109,425
Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	62,163
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	4,143,983
Commercial and industrial | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	3,982,453
Commercial and industrial | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	33,718
Commercial and industrial | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	66,511
Commercial and industrial | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	61,301
Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	10,902,893
Commercial real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	10,781,587
Commercial real estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	77,884
Commercial real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	42,560
Commercial real estate | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	862
Commercial real estate | Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	1,495,717
Commercial real estate | Construction | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	1,487,877
Commercial real estate | Construction | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	7,486
Commercial real estate | Construction | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	354
Commercial real estate | Construction | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Financing receivable recorded investment non-PCI loans	$ 0

XML

Loans and Allowance for Credit Losses for Loans - Recorded Investment Based on Payment Activity - Non-PCI Loans (Details) - Non-PCI Loans $ in Thousands	Dec. 31, 2019 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 6,527,016
Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	6,511,954
Non-Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	15,062
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	3,796,942
Residential mortgage | Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	3,784,084
Residential mortgage | Non-Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,858
Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	376,020
Consumer | Home equity | Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	374,374
Consumer | Home equity | Non-Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,646
Consumer | Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,451,352
Consumer | Automobile | Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,451,018
Consumer | Automobile | Non-Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	334
Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	902,702
Consumer | Other consumer | Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	902,478
Consumer | Other consumer | Non-Performing Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 224

XML

Loans and Allowance for Credit Losses for Loans - Recorded Investment Based on Payment Activity - PCI Loans (Details) - PCI Loans $ in Thousands	Dec. 31, 2019 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	$ 6,629,599
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	682,014
Commercial real estate | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	5,093,848
Commercial real estate | Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	151,301
Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	580,169
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	122,267
Performing Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	6,559,439
Performing Loans | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	653,997
Performing Loans | Commercial real estate | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	5,065,388
Performing Loans | Commercial real estate | Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	148,692
Performing Loans | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	571,006
Performing Loans | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	120,356
Non-Performing Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	70,160
Non-Performing Loans | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	28,017
Non-Performing Loans | Commercial real estate | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	28,460
Non-Performing Loans | Commercial real estate | Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	2,609
Non-Performing Loans | Residential mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	9,163
Non-Performing Loans | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	$ 1,911

XML

Loans and Allowance for Credit Losses for Loans - Pre-Modification and Post-Modification (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) contract	Jun. 30, 2019 USD ($) contract	Jun. 30, 2020 USD ($) contract	Jun. 30, 2019 USD ($) contract
Troubled Debt Restructurings
Days past due to place on non-accrual status	90 days	90 days	90 days	90 days
Number of contracts, troubled restructurings (in contract) | contract	7	19	24	56
Pre-Modification Outstanding Recorded Investment	$ 10,372	$ 17,885	$ 27,379	$ 43,036
Post-Modification Outstanding Recorded Investment	$ 8,165	$ 17,409	$ 24,654	$ 42,068
Number of contracts, troubled debt restructurings subsequently defaulted (in contract) | contract	23	19	23	22
Amortized Cost	$ 15,410	$ 12,705	$ 15,410	$ 12,938
Commercial and industrial
Troubled Debt Restructurings
Number of contracts, troubled restructurings (in contract) | contract	4	17	20	53
Pre-Modification Outstanding Recorded Investment	$ 9,052	$ 14,663	$ 22,196	$ 38,216
Post-Modification Outstanding Recorded Investment	$ 7,047	$ 14,187	$ 19,674	$ 37,248
Number of contracts, troubled debt restructurings subsequently defaulted (in contract) | contract	20	18	20	18
Amortized Cost	$ 14,986	$ 12,322	$ 14,986	$ 12,322
Commercial real estate
Troubled Debt Restructurings
Number of contracts, troubled restructurings (in contract) | contract	3	1	4	2
Pre-Modification Outstanding Recorded Investment	$ 1,320	$ 3,067	$ 5,183	$ 4,665
Post-Modification Outstanding Recorded Investment	$ 1,118	$ 3,067	$ 4,980	$ 4,665
Number of contracts, troubled debt restructurings subsequently defaulted (in contract) | contract	0	1	0	1
Amortized Cost	$ 0	$ 383	$ 0	$ 383
Commercial real estate | Commercial real estate
Troubled Debt Restructurings
Number of contracts, troubled restructurings (in contract) | contract	1	1	2	2
Pre-Modification Outstanding Recorded Investment	$ 885	$ 3,067	$ 4,748	$ 4,665
Post-Modification Outstanding Recorded Investment	$ 900	$ 3,067	$ 4,762	$ 4,665
Commercial real estate | Construction
Troubled Debt Restructurings
Number of contracts, troubled restructurings (in contract) | contract	2	0	2	0
Pre-Modification Outstanding Recorded Investment	$ 435	$ 0	$ 435	$ 0
Post-Modification Outstanding Recorded Investment	$ 218	$ 0	$ 218	$ 0
Residential mortgage
Troubled Debt Restructurings
Number of contracts, troubled restructurings (in contract) | contract	0	1	0	1
Pre-Modification Outstanding Recorded Investment	$ 0	$ 155	$ 0	$ 155
Post-Modification Outstanding Recorded Investment	$ 0	$ 155	$ 0	$ 155
Number of contracts, troubled debt restructurings subsequently defaulted (in contract) | contract	1	0	1	2
Amortized Cost	$ 220	$ 0	$ 220	$ 215
Consumer
Troubled Debt Restructurings
Number of contracts, troubled debt restructurings subsequently defaulted (in contract) | contract	2	0	2	1
Amortized Cost	$ 204	$ 0	$ 204	$ 18

XML

Loans and Allowance for Credit Losses for Loans - Summary of Allowance for Credit Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Receivables [Abstract]
Allowance for loan losses	$ 309,614	$ 283,342	$ 161,759	$ 155,105	$ 154,381	$ 151,859
Allowance for unfunded credit commitments	10,109		2,845
Total allowance for credit losses	$ 319,723		$ 164,604

XML

Loans and Allowance for Credit Losses for Loans - Summary of Provision for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Receivables [Abstract]
Provision for loan losses	$ 41,025	$ 3,706	$ 74,876	$ 11,562
Provision for unfunded credit commitments	90	(1,606)	163	(1,462)
Total provision for credit losses for loans	$ 41,115	$ 2,100	$ 75,039	$ 10,100

XML

Loans and Allowance for Credit Losses for Loans - Summary of Collateral Dependent Loans (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	$ 194,396
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	124,323
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	54,216
Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	51,386
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	2,830
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	15,581
Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral dependent loans	$ 276

XML

Loans and Allowance for Credit Losses for Loans - Summary of Activity in Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	$ 283,342	$ 154,381	$ 161,759	$ 151,859
Loans charged-off	(16,657)	(4,825)	(22,962)	(11,150)
Charged-off loans recovered	1,904	1,843	3,410	2,834
Net (charge-offs) recoveries	(14,753)	(2,982)	(19,552)	(8,316)
Provision for loan losses	41,025	3,706	74,876	11,562
Ending balance	309,614	155,105	309,614	155,105
Allowance for PCD loans reclassification			61,600
Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance			92,531
Commercial and Industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	127,437	94,630	104,059	90,956
Loans charged-off	(14,024)	(3,073)	(17,384)	(7,355)
Charged-off loans recovered	799	1,195	1,368	1,678
Net (charge-offs) recoveries	(13,225)	(1,878)	(16,016)	(5,677)
Provision for loan losses	17,827	1,632	28,827	9,105
Ending balance	132,039	94,384	132,039	94,384
Commercial and Industrial | Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance			15,169
Commercial Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	111,585	47,762	45,673	49,650
Loans charged-off	(27)	0	(71)	0
Charged-off loans recovered	51	22	144	43
Net (charge-offs) recoveries	24	22	73	43
Provision for loan losses	20,093	1,194	36,159	(715)
Ending balance	131,702	48,978	131,702	48,978
Commercial Real Estate | Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance			49,797
Residential Mortgage
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	29,456	5,139	5,060	5,041
Loans charged-off	(5)	0	(341)	(15)
Charged-off loans recovered	545	9	595	10
Net (charge-offs) recoveries	540	9	254	(5)
Provision for loan losses	(366)	71	3,741	183
Ending balance	29,630	5,219	29,630	5,219
Residential Mortgage | Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance			20,575
Consumer
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance	14,864	6,850	6,967	6,212
Loans charged-off	(2,601)	(1,752)	(5,166)	(3,780)
Charged-off loans recovered	509	617	1,303	1,103
Net (charge-offs) recoveries	(2,092)	(1,135)	(3,863)	(2,677)
Provision for loan losses	3,471	809	6,149	2,989
Ending balance	$ 16,243	$ 6,524	16,243	$ 6,524
Consumer | Cumulative Effect, Period Of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance			$ 6,990

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Loans and Allowance for Credit Losses for Loans - Summary of Allocation of Allowance for Loan Losses and Related Loans by Loan Portfolio Segment Disaggregated Based on Allowance Measurement Methodology (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	$ 71,498		$ 38,576
Collectively evaluated for impairment	238,116		123,183
Total	309,614	$ 283,342	161,759	$ 155,105	$ 154,381	$ 151,859
Individually evaluated for impairment	241,278		163,644
Collectively evaluated for impairment	32,073,333		22,905,965
Total	32,314,611		29,699,208
Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Loss [Line Items]
Total			6,629,599
Commercial and Industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	69,333		36,662
Collectively evaluated for impairment	62,706		67,397
Total	132,039	127,437	104,059	94,384	94,630	90,956
Individually evaluated for impairment	138,120		100,860
Collectively evaluated for impairment	6,746,569		4,043,123
Total	6,884,689		4,825,997
Commercial and Industrial | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Loss [Line Items]
Total			682,014
Commercial Real Estate
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	1,237		1,338
Collectively evaluated for impairment	130,465		44,335
Total	131,702	111,585	45,673	48,978	47,762	49,650
Individually evaluated for impairment	77,914		51,242
Collectively evaluated for impairment	18,215,315		12,347,368
Total	18,293,229		17,643,759
Commercial Real Estate | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Loss [Line Items]
Total			5,245,149
Residential Mortgage
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	430		518
Collectively evaluated for impairment	29,200		4,542
Total	29,630	29,456	5,060	5,219	5,139	5,041
Individually evaluated for impairment	22,148		10,689
Collectively evaluated for impairment	4,382,999		3,786,253
Total	4,405,147		4,377,111
Residential Mortgage | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Loss [Line Items]
Total			580,169
Consumer
Financing Receivable, Allowance for Credit Loss [Line Items]
Individually evaluated for impairment	498		58
Collectively evaluated for impairment	15,745		6,909
Total	16,243	$ 14,864	6,967	$ 6,524	$ 6,850	$ 6,212
Individually evaluated for impairment	3,096		853
Collectively evaluated for impairment	2,728,450		2,729,221
Total	$ 2,731,546		2,852,341
Consumer | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Loss [Line Items]
Total			$ 122,267

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Loans and Allowance for Credit Losses for Loans - Impaired Loans (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	$ 47,219
Recorded Investment With Related Allowance	116,425
Total Recorded Investment	163,644
Unpaid Contractual Principal Balance	179,243
Related Allowance	38,576
Commercial and industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	14,617
Recorded Investment With Related Allowance	86,243
Total Recorded Investment	100,860
Unpaid Contractual Principal Balance	114,875
Related Allowance	36,662
Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	26,400
Recorded Investment With Related Allowance	24,842
Total Recorded Investment	51,242
Unpaid Contractual Principal Balance	51,612
Related Allowance	1,338
Commercial real estate | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	26,046
Recorded Investment With Related Allowance	24,842
Total Recorded Investment	50,888
Unpaid Contractual Principal Balance	51,258
Related Allowance	1,338
Commercial real estate | Construction
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	354
Recorded Investment With Related Allowance	0
Total Recorded Investment	354
Unpaid Contractual Principal Balance	354
Related Allowance	0
Residential mortgage
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	5,836
Recorded Investment With Related Allowance	4,853
Total Recorded Investment	10,689
Unpaid Contractual Principal Balance	11,800
Related Allowance	518
Consumer loans
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	366
Recorded Investment With Related Allowance	487
Total Recorded Investment	853
Unpaid Contractual Principal Balance	956
Related Allowance	58
Consumer loans | Home equity
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	366
Recorded Investment With Related Allowance	487
Total Recorded Investment	853
Unpaid Contractual Principal Balance	956
Related Allowance	$ 58

XML

Loans and Allowance for Credit Losses for Loans - Changes in Accretable Yield (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance, beginning of period	$ 890,771	$ 875,958
Accretion	(55,014)	(108,506)
Net increase in expected cash flows	18,130	86,435
Balance, end of period	$ 853,887	$ 853,887

XML

Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 1,373,625
Goodwill from business combinations	1,784
Goodwill, ending balance	1,375,409
Consumer Lending
Goodwill [Roll Forward]
Goodwill, beginning balance	306,572
Goodwill from business combinations	121
Goodwill, ending balance	306,693
Commercial Lending
Goodwill [Roll Forward]
Goodwill, beginning balance	825,767
Goodwill from business combinations	1,654
Goodwill, ending balance	827,421
Investment Management
Goodwill [Roll Forward]
Goodwill, beginning balance	220,068
Goodwill from business combinations	9
Goodwill, ending balance	220,077
Wealth Management
Goodwill [Roll Forward]
Goodwill, beginning balance	21,218
Goodwill from business combinations	0
Goodwill, ending balance	$ 21,218

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Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Net impairment (net recovery)	$ 669,000	$ 107,000	$ 778,000	$ 83,000
Goodwill impairment	0	0	0	0
Amortization of other intangible assets	6,681,000	4,170,000	$ 12,151,000	8,481,000
Core Deposits
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period, years			8 years 10 months 24 days
Other
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period, years			7 years 7 months 6 days
Core Deposits and Other
Finite-Lived Intangible Assets [Line Items]
Impairment of core deposits and other intangibles	$ 0	$ 0	$ 0	$ 0

XML

Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	$ 203,232	$ 199,932
Accumulated Amortization	(124,486)	(113,113)
Valuation Allowance	(825)	(47)
Net Intangible Assets	77,921	86,772
Loan servicing rights
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	98,127	94,827
Accumulated Amortization	(74,624)	(70,095)
Valuation Allowance	(825)	(47)
Net Intangible Assets	22,678	24,685
Core deposits
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	101,160	101,160
Accumulated Amortization	(47,118)	(40,384)
Valuation Allowance	0	0
Net Intangible Assets	54,042	60,776
Other
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	3,945	3,945
Accumulated Amortization	(2,744)	(2,634)
Valuation Allowance	0	0
Net Intangible Assets	$ 1,201	$ 1,311

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Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Loan Servicing Rights
Finite-Lived Intangible Assets [Line Items]
2020	$ 5,161
2021	4,179
2022	3,226
2023	2,483
2024	1,931
Core Deposits
Finite-Lived Intangible Assets [Line Items]
2020	6,629
2021	11,607
2022	9,876
2023	8,146
2024	6,537
Other
Finite-Lived Intangible Assets [Line Items]
2020	110
2021	206
2022	191
2023	131
2024	$ 117

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Borrowed Funds - Schedule of Short-Term Borrowings (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Total short-term borrowings	$ 2,082,880	$ 1,093,280
Short-term borrowings
Debt Instrument [Line Items]
FHLB advances	1,235,000	940,000
Federal funds purchased	678,900	0
Securities sold under agreements to repurchase	168,980	153,280
Total short-term borrowings	$ 2,082,880	$ 1,093,280

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Borrowed Funds - Additional Information (Detail) - USD ($) $ in Thousands		6 Months Ended
	Jun. 05, 2020	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Weighted average interest rate for short-term borrowings		0.37%		1.68%
Advances of long-term borrowings		$ 838,388	$ 400,000
Subordinated borrowing interest rate	5.25%
Net subordinated note carrying value		$ 113,100
Federal Home Loan Bank Advances
Debt Instrument [Line Items]
Weighted average interest rate for long-term borrowings		2.13%		2.23%
Federal Home Loan Bank Advances | Minimum
Debt Instrument [Line Items]
Term of debt		3 years
Long-Term Borrowings
Debt Instrument [Line Items]
Weighted average interest rate for long-term borrowings		2.88%		1.94%
Subordinated Debt
Debt Instrument [Line Items]
Subordinated debt, net	$ 115,000
Subordinated debt initial term	5 years
Subordinated debt SOFR term	3 months
Federal Home Loan Bank Advances
Debt Instrument [Line Items]
Amount of hedged debt		$ 500,000
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Subordinated Debt
Debt Instrument [Line Items]
Subordinated debt basis points	514.00%
Subordinated Notes Due July 2025
Debt Instrument [Line Items]
Subordinated borrowing interest rate		4.55%
Subordinated Notes Due July 2025 | Subordinated Debt
Debt Instrument [Line Items]
Subordinated debt, net		$ 100,000
Subordinated Notes Due September 2023
Debt Instrument [Line Items]
Subordinated borrowing interest rate		5.125%
Subordinated Notes Due September 2023 | Subordinated Debt
Debt Instrument [Line Items]
Subordinated debt, net		$ 125,000
Subordinated Notes Due June 2026
Debt Instrument [Line Items]
Subordinated borrowing interest rate		6.25%
Subordinated Notes Due June 2026 | Subordinated Debt
Debt Instrument [Line Items]
Subordinated debt, net		$ 60,000

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Borrowed Funds - Schedule of Long-Term Borrowings (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Net subordinated note carrying value	$ 113,100
Long-term borrowings
Debt Instrument [Line Items]
FHLB advances, net	2,153,052	$ 1,480,012
Net subordinated note carrying value	404,455	292,414
Securities sold under agreements to repurchase	350,000	350,000
Other	28	0
Total long-term borrowings	2,907,535	2,122,426
Unamortized prepayment penalties and other purchase accounting adjustments	1,200	2,800
Deferred issuance costs	$ 2,900	$ 1,200

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Borrowed Funds - Schedule of FHLB Repayment (Detail) - Long-term borrowings $ in Thousands	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
2020	$ 30,000
2021	994,769
2022	121,420
2023	428,164
2024	300,000
Thereafter	279,931
Total long-term FHLB advances	$ 2,154,284

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Borrowed Funds - Schedule of Repayment of Long-Term Borrowings for Securities Sold Under Agreements to Repurchase (Detail) - Long-Term Borrowings $ in Thousands	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
2021	$ 300,000
2022	50,000
Net Amounts Presented	$ 350,000

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Stock-Based Compensation (Details) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) shares	Jun. 30, 2019 USD ($) shares	Jun. 30, 2020 USD ($) employee_stock_plan $ / shares shares	Jun. 30, 2019 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of active employee stock plans | employee_stock_plan			1
Number of shares available for grant (in shares)	2,500,000		2,500,000
Stock-based compensation expense (in USD) | $	$ 4.2	$ 4.2	$ 8.2	$ 8.3
Stock-based compensation amortization expense unrecognized (in USD) | $	$ 25.4		$ 25.4
Average remaining vesting period (in years)			2 years
Time-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period (in shares)	142,000	92,000	1,200,000	826,000
Award vesting rights as a percentage			33.33%
Award vesting period (in years)			3 years
Average grant date fair value (usd per share) | $ / shares			$ 10.48	$ 10.40
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period (in shares)			589,000	532,000
Award vesting period (in years)			3 years
Average grant date fair value (usd per share) | $ / shares			$ 10.82	$ 10.43

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Derivative Instruments and Hedging Activities - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) swap	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) swap	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Derivative [Line Items]
Number of credit swaps | swap	22		22
Aggregate fair value of net liability position	$ 176,700,000		$ 176,700,000
Interest rate swaps
Derivative [Line Items]
Accumulated net after-tax losses related to effective cash flow hedges	5,900,000		5,900,000		$ 3,700,000
Estimated amount of interest rate derivatives to be reclassified to interest expense			4,500,000
Fair value hedge | Noninterest Income | Interest rate swaps
Derivative [Line Items]
Fee income related to derivative interest rate swaps executed with commercial loan customers	14,700,000	$ 5,400,000	28,900,000	$ 9,500,000
Derivatives designated as hedging instruments
Derivative [Line Items]
Notional amount	1,037,147,000		1,037,147,000		187,281,000
Derivatives designated as hedging instruments | Cash flow hedge
Derivative [Line Items]
Notional amount	900,000,000		900,000,000
Derivatives designated as hedging instruments | Fair value hedge | Interest rate swaps
Derivative [Line Items]
Notional amount	7,147,000		7,147,000		7,281,000
Derivatives not designated as hedging instruments
Derivative [Line Items]
Notional amount	7,852,326,000		7,852,326,000		4,255,866,000
Aggregate notional amount of derivative asset	166,400,000		166,400,000
Derivatives not designated as hedging instruments | Interest rate swaps
Derivative [Line Items]
Notional amount	$ 7,293,947,000		$ 7,293,947,000		$ 4,113,106,000
Derivatives not designated as hedging instruments | Fair value hedge | Interest rate swaps
Derivative [Line Items]
Number of instruments held | swap	2		2
Derivatives not designated as hedging instruments | Fair value hedge | Steepener swap, derivative one
Derivative [Line Items]
Notional amount	$ 10,400,000		$ 10,400,000
Derivatives not designated as hedging instruments | Fair value hedge | Steepener swap, derivative two
Derivative [Line Items]
Notional amount	$ 10,400,000.0		$ 10,400,000.0
Minimum | Derivatives designated as hedging instruments | Cash flow hedge
Derivative [Line Items]
Fixed interest rate	0.46%		0.46%
Maximum | Derivatives designated as hedging instruments | Cash flow hedge
Derivative [Line Items]
Fixed interest rate	0.67%		0.67%

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Derivative Instruments and Hedging Activities - Balance Sheet Disclosures (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Interest rate swaps
Derivative [Line Items]
Other Assets	$ 0	$ 0
Other Liabilities	166,866,000	43,733,000
Derivatives designated as hedging instruments
Derivative [Line Items]
Other Assets	0	0
Other Liabilities	4,869,000	1,713,000
Notional Amount	1,037,147,000	187,281,000
Derivatives designated as hedging instruments | Cash flow hedge interest rate swaps
Derivative [Line Items]
Notional Amount	900,000,000
Derivatives designated as hedging instruments | Cash flow hedge interest rate swaps | Interest rate swaps
Derivative [Line Items]
Other Assets	0	0
Other Liabilities	4,722,000	1,484,000
Notional Amount	1,030,000,000	180,000,000
Derivatives designated as hedging instruments | Fair value hedge interest rate swaps | Interest rate swaps
Derivative [Line Items]
Other Assets	0	0
Other Liabilities	147,000	229,000
Notional Amount	7,147,000	7,281,000
Derivatives not designated as hedging instruments
Derivative [Line Items]
Other Assets	468,275,000	158,532,000
Other Liabilities	165,404,000	42,213,000
Notional Amount	7,852,326,000	4,255,866,000
Derivatives not designated as hedging instruments | Interest rate swaps
Derivative [Line Items]
Other Assets	467,606,000	158,382,000
Other Liabilities	161,997,000	42,020,000
Notional Amount	7,293,947,000	4,113,106,000
Derivatives not designated as hedging instruments | Mortgage banking derivatives
Derivative [Line Items]
Other Assets	669,000	150,000
Other Liabilities	3,407,000	193,000
Notional Amount	$ 558,379,000	$ 142,760,000

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Derivative Instruments and Hedging Activities - Interest Rate Derivatives Designated as Cash Flow Hedges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Amounts Related To Interest Rate Derivatives Included In Income Designated As Hedges Of Cash Flows [Line Items]
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense	$ (65,966)	$ (107,508)	$ (164,420)	$ (209,084)
Amount of loss recognized in other comprehensive income	(1,773)	(962)	(3,253)	(1,512)
Amounts Reclassified from Accumulated Other Comprehensive Loss
Amounts Related To Interest Rate Derivatives Included In Income Designated As Hedges Of Cash Flows [Line Items]
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense	$ 438	$ (383)	$ (177)	$ (673)

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Derivative Instruments and Hedging Activities - Gains (Losses) on Interest Rate Derivatives Designated as Fair Value Hedges (Details) - Fair value hedge - Interest income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest rate swaps
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gain (loss) related to derivative interest rate swaps	$ 71	$ 49	$ 82	$ 73
Loans | Derivatives designated as hedging instruments
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gain (loss) related to hedged loans	$ (71)	$ (49)	$ (82)	$ (73)

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Derivative Instruments and Hedging Activities - Interest Rate Derivatives Designated as Hedges (Details) - Fair value hedge - Derivatives designated as hedging instruments - Interest rate swaps - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Derivative [Line Items]
Carrying Amount of the Hedged Asset	$ 7,294	$ 7,510
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset	$ 147	$ 229

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Derivative Instruments and Hedging Activities - Net Losses Related to Derivatives Not Designated as Hedges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Non-designated hedge interest rate swaps and credit derivatives
Other non-interest expense	$ 1,416	$ (347)	$ 1,505	$ (757)

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Balance Sheet Offsetting (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Offsetting Liabilities
Gross Amounts Recognized	$ 516,866	$ 393,733
Gross Amounts Offset	0	0
Net Amounts Presented	516,866	393,733
Gross Amounts Not Offset, Financial Instruments	(350,000)	(350,118)
Gross Amounts Not Offset, Cash Collateral	(166,866)	(16,881)
Net Amount	0	26,734
Repurchase agreements
Offsetting Repurchase Agreement Liabilities
Gross Amounts Recognized	350,000	350,000
Gross Amounts Offset	0	0
Net Amounts Presented	350,000	350,000
Gross Amounts Not Offset, Financial Instruments	(350,000)	(350,000)
Gross Amounts Not Offset, Cash Collateral	0
Net Amount	0	0
Interest rate swaps
Offsetting Assets
Gross Amounts Recognized	467,606	158,382
Gross Amounts Offset	0	0
Net Amounts Presented	467,606	158,382
Gross Amounts Not Offset, Financial Instruments	0	(118)
Gross Amounts Not Offset, Cash Collateral	0	0
Net Amount	467,606	158,264
Offsetting Liabilities
Gross Amounts Recognized	166,866	43,733
Gross Amounts Offset	0	0
Net Amounts Presented	166,866	43,733
Gross Amounts Not Offset, Financial Instruments	0	(118)
Gross Amounts Not Offset, Cash Collateral	(166,866)	(16,881)
Net Amount	$ 0	$ 26,734

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Tax Credit Investments - Balance Sheet Disclosures (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other Assets
Other Assets:
Affordable housing tax credit investments, net	$ 22,874	$ 25,049
Other tax credit investments, net	51,569	59,081
Total tax credit investments, net	74,443	84,130
Other Liabilities
Other Liabilities:
Unfunded affordable housing tax credit commitments	1,402	1,539
Unfunded other tax credit commitments	1,139	1,139
Total unfunded tax credit commitments	$ 2,541	$ 2,678

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Tax Credit Investments - Income Statement Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$ 1,393	$ 1,708	$ 2,627	$ 3,421
Other tax credit investment credits and tax benefits	2,540	2,158	3,840	4,961
Total reduction in income tax expense	3,933	3,866	6,467	8,382
Non-Interest Expenses
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	537	593	1,091	1,266
Affordable housing tax credit investment impairment losses	665	794	1,083	1,524
Other tax credit investment losses	679	2,509	1,223	3,496
Other tax credit investment impairment losses	1,535	967	3,247	5,750
Total amortization of tax credit investments recorded in non-interest expense	$ 3,416	$ 4,863	$ 6,644	$ 12,036

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Business Segments - Additional Information (Detail) - segment	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting [Abstract]
Number of business segments	4	4	4	4

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Business Segments - Schedule of Financial Data for Business Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting Information [Line Items]
Average interest earning assets	$ 37,778,387	$ 29,877,384	$ 36,226,232	$ 29,721,015
Interest income	348,525	327,742	712,318	647,966
Interest expense	65,966	107,508	164,420	209,084
Net Interest Income	282,559	220,234	547,898	438,882
Provision for credit losses	41,156	2,100	75,839	10,100
Net Interest Income After Provision for Credit Losses	241,403	218,134	472,059	428,782
Non-interest income	44,830	27,603	86,227	135,276
Non-interest expense	157,166	141,737	312,822	289,532
Internal expense transfer	0	0	0	0
Income Before Income Taxes	$ 129,067	$ 104,000	$ 245,464	$ 274,526
Return on average interest earning assets (pre-tax)	1.37%	1.39%	1.36%	1.85%
Consumer Lending
Segment Reporting Information [Line Items]
Average interest earning assets	$ 7,214,368	$ 6,756,322	$ 7,215,756	$ 6,788,511
Interest income	66,807	67,617	135,062	135,644
Interest expense	11,469	23,428	31,169	45,952
Net Interest Income	55,338	44,189	103,893	89,692
Provision for credit losses	3,106	885	9,891	2,983
Net Interest Income After Provision for Credit Losses	52,232	43,304	94,002	86,709
Non-interest income	17,175	13,037	31,852	26,819
Non-interest expense	20,440	18,392	40,311	37,097
Internal expense transfer	19,406	19,291	39,741	38,718
Income Before Income Taxes	$ 29,561	$ 18,658	$ 45,802	$ 37,713
Return on average interest earning assets (pre-tax)	1.64%	1.10%	1.27%	1.11%
Commercial Lending
Segment Reporting Information [Line Items]
Average interest earning assets	$ 24,826,832	$ 18,796,093	$ 23,804,558	$ 18,615,885
Interest income	255,152	229,366	520,027	449,650
Interest expense	40,640	65,141	102,826	126,012
Net Interest Income	214,512	164,225	417,201	323,638
Provision for credit losses	38,009	1,215	65,148	7,117
Net Interest Income After Provision for Credit Losses	176,503	163,010	352,053	316,521
Non-interest income	16,172	7,688	31,771	14,470
Non-interest expense	23,250	26,324	47,408	51,568
Internal expense transfer	66,858	53,722	131,054	106,259
Income Before Income Taxes	$ 102,567	$ 90,652	$ 205,362	$ 173,164
Return on average interest earning assets (pre-tax)	1.65%	1.93%	1.73%	1.86%
Investment Management
Segment Reporting Information [Line Items]
Average interest earning assets	$ 5,737,187	$ 4,324,969	$ 5,205,918	$ 4,316,619
Interest income	27,623	31,966	59,392	65,190
Interest expense	9,728	14,994	22,488	29,220
Net Interest Income	17,895	16,972	36,904	35,970
Provision for credit losses	41	0	800	0
Net Interest Income After Provision for Credit Losses	17,854	16,972	36,104	35,970
Non-interest income	5,823	2,560	8,965	4,678
Non-interest expense	642	216	1,029	303
Internal expense transfer	15,505	12,399	28,680	24,686
Income Before Income Taxes	$ 7,530	$ 6,917	$ 15,360	$ 15,659
Return on average interest earning assets (pre-tax)	0.52%	0.64%	0.59%	0.73%
Corporate and Other Adjustments
Segment Reporting Information [Line Items]
Average interest earning assets	$ 0	$ 0	$ 0	$ 0
Interest income	(1,057)	(1,207)	(2,163)	(2,518)
Interest expense	4,129	3,945	7,937	7,900
Net Interest Income	(5,186)	(5,152)	(10,100)	(10,418)
Provision for credit losses	0	0	0	0
Net Interest Income After Provision for Credit Losses	(5,186)	(5,152)	(10,100)	(10,418)
Non-interest income	5,660	4,318	13,639	89,309
Non-interest expense	112,834	96,805	224,074	200,564
Internal expense transfer	(101,769)	(85,412)	(199,475)	(169,663)
Income Before Income Taxes	$ (10,591)	$ (12,227)	$ (21,060)	$ 47,990