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Investment Securities

12 Months Ended

Dec. 31, 2024

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES (Note 4)

Equity Securities

Equity securities totaled $71.5 million and $64.5 million at December 31, 2024 and 2023, respectively. See Note 3 for further details on equity securities.

Trading Debt Securities

Valley had no trading debt securities at December 31, 2024. The fair value of trading debt securities totaled $4.0 million at December 31, 2023. Net trading gains are included in net gains and losses on securities transactions within non-interest income. See the “Realized Gains and Losses” section below.

Available for Sale Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of AFS debt securities at December 31, 2024 and 2023 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
December 31, 2024
U.S. Treasury securities	$	319,551	$	—	$	(28,002)	$	291,549
U.S. government agency securities	24,636		20		(2,113)		22,543
Obligations of states and political subdivisions:
Obligations of states and state agencies	46,211		—		(682)		45,529
Municipal bonds	179,284		—		(32,304)		146,980
Total obligations of states and political subdivisions	225,495		—		(32,986)		192,509
Residential mortgage-backed securities	2,784,895		3,796		(107,615)		2,681,076
Corporate and other debt securities	197,696		247		(15,896)		182,047
Total	$	3,552,273	$	4,063	$	(186,612)	$	3,369,724
December 31, 2023
U.S. Treasury securities	$	313,772	$	—	$	(25,615)	$	288,157
U.S. government agency securities	25,967		19		(2,284)		23,702
Obligations of states and political subdivisions:
Obligations of states and state agencies	48,283		—		(588)		47,695
Municipal bonds	170,260		—		(26,265)		143,995
Total obligations of states and political subdivisions	218,543		—		(26,853)		191,690
Residential mortgage-backed securities	703,875		728		(78,031)		626,572
Corporate and other debt securities	192,282		—		(25,827)		166,455
Total	$	1,454,439	$	747	$	(158,610)	$	1,296,576

Accrued interest on investments, which is excluded from the amortized cost of AFS debt securities, totaled $13.1 million and $5.9 million at December 31, 2024 and 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

The age of unrealized losses and fair value of related AFS debt securities at December 31, 2024 and 2023 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)
December 31, 2024
U.S. Treasury securities	$	—	$	—	$	291,549	$	(28,002)	$	291,549	$	(28,002)
U.S. government agency securities	—		—		21,281		(2,113)		21,281		(2,113)
Obligations of states and political subdivisions:
Obligations of states and state agencies	—		—		6,208		(682)		6,208		(682)
Municipal bonds	—		—		139,216		(32,304)		139,216		(32,304)
Total obligations of states and political subdivisions	—		—		145,424		(32,986)		145,424		(32,986)
Residential mortgage-backed securities	1,483,442		(22,242)		501,858		(85,373)		1,985,300		(107,615)

Corporate and other debt securities	—		—		166,800		(15,896)		166,800		(15,896)
Total	$	1,483,442	$	(22,242)	$	1,126,912	$	(164,370)	$	2,610,354	$	(186,612)
December 31, 2023
U.S. Treasury securities	$	—	$	—	$	288,156	$	(25,615)	$	288,156	$	(25,615)
U.S. government agency securities	—		—		22,364		(2,284)		22,364		(2,284)
Obligations of states and political subdivisions:
Obligations of states and state agencies	—		—		8,276		(588)		8,276		(588)
Municipal bonds	1,019		(4)		142,976		(26,261)		143,995		(26,265)
Total obligations of states and political subdivisions	1,019		(4)		151,252		(26,849)		152,271		(26,853)
Residential mortgage-backed securities	9,010		(3)		569,629		(78,028)		578,639		(78,031)

Corporate and other debt securities	4,977		(23)		161,478		(25,804)		166,455		(25,827)

Total	$	15,006	$	(30)	$	1,192,879	$	(158,580)	$	1,207,885	$	(158,610)

Within the AFS debt securities portfolio, the total number of security positions in an unrealized loss position was 726 and 687 at December 31, 2024 and 2023, respectively.

As of December 31, 2024, the fair value of securities AFS that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $1.8 billion.

Contractual Maturities

The contractual maturities of AFS debt securities at December 31, 2024 are set forth in the following table. Contractual maturities may differ from actual maturities as borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Residential mortgage-backed securities are not included in the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without penalties.


	December 31, 2024
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	177,290	$	174,474
Due after one year through five years	123,053		117,533
Due after five years through ten years	174,490		157,526
Due after ten years	292,545		239,115
Residential mortgage-backed securities	2,784,895		2,681,076

Total	$	3,552,273	$	3,369,724

The weighted-average remaining expected life for residential mortgage-backed securities AFS was 8.23 years at December 31, 2024.

Impairment Analysis of Available for Sale Debt Securities

Valley’s AFS debt securities portfolio includes corporate bonds and revenue bonds, among other securities. These types of securities may pose a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy, and their potential negative effect on the future performance of the security issuers.

AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. See Note 1 for further information regarding Valley's accounting policy. Valley also evaluated AFS debt securities that were in an unrealized loss position as of December 31, 2024 included in the tables above and has determined that the declines in fair value are mainly attributable to interest rates, credit spreads, market volatility and liquidity conditions, not credit quality or other factors. During the first quarter 2023, Valley recognized a credit-related impairment of one corporate bond issued by Signature Bank resulting in both a provision for credit losses and full charge-off security totaling $5.0 million. The credit-related impairment was based on a comparison of the present value of expected cash flows to the amortized cost. The bond was subsequently sold and the sale resulted in a $869 thousand gain during the fourth quarter 2023. There was no impairment recognized during years ended December 31, 2024 and 2022.

Valley does not intend to sell any of its AFS debt securities in an unrealized loss position prior to recovery of their amortized cost basis, and it is more likely than not that Valley will not be required to sell any of its securities prior to recovery of their amortized cost basis. None of the AFS debt securities were past due as of December 31, 2024. As a result, there was no allowance for credit losses for AFS debt securities at December 31, 2024 and 2023.

Held to Maturity Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of HTM debt securities at December 31, 2024 and 2023 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Net Carrying Value
	(in thousands)
December 31, 2024
U.S. Treasury securities	$	25,480	$	—	$	(19)	$	25,461	$	—	$	25,480
U.S. government agency securities	301,315		—		(49,013)		252,302		—		301,315
Obligations of states and political subdivisions:
Obligations of states and state agencies	68,025		—		(5,335)		62,690		2		68,023
Municipal bonds	304,464		9		(20,802)		283,671		48		304,416
Total obligations of states and political subdivisions	372,489		9		(26,137)		346,361		50		372,439
Residential mortgage-backed securities	2,710,642		2,088		(420,582)		2,292,148		—		2,710,642
Trust preferred securities	36,081		—		(6,936)		29,145		414		35,667
Corporate and other debt securities	86,213		10		(3,356)		82,867		183		86,030
Total	$	3,532,220	$	2,107	$	(506,043)	$	3,028,284	$	647	$	3,531,573
December 31, 2023
U.S. Treasury securities	$	26,232	$	—	$	(254)	$	25,978	$	—	$	26,232
U.S. government agency securities	305,996		—		(44,441)		261,555		—		305,996
Obligations of states and political subdivisions:
Obligations of states and state agencies	88,556		552		(4,155)		84,953		395		88,161
Municipal bonds	316,914		40		(14,380)		302,574		49		316,865
Total obligations of states and political subdivisions	405,470		592		(18,535)		387,527		444		405,026
Residential mortgage-backed securities	2,885,303		6,059		(369,436)		2,521,926		—		2,885,303
Trust preferred securities	37,062		—		(6,412)		30,650		506		36,556
Corporate and other debt securities	80,350		—		(5,674)		74,676		255		80,095
Total	$	3,740,413	$	6,651	$	(444,752)	$	3,302,312	$	1,205	$	3,739,208

Accrued interest on investments, which is excluded from the amortized cost of HTM debt securities, totaled $13.0 million and $13.9 million at December 31, 2024 and 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition. HTM debt securities are carried net of an allowance for credit losses (as shown in the table above).

The age of unrealized losses and fair value of related HTM debt securities at December 31, 2024 and 2023 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)
December 31, 2024
U.S. Treasury securities	$	25,461	$	(19)	$	—	$	—	$	25,461	$	(19)
U.S. government agency securities	22,621		(75)		229,143		(48,938)		251,764		(49,013)
Obligations of states and political subdivisions:
Obligations of states and state agencies	20,632		(517)		42,058		(4,818)		62,690		(5,335)
Municipal bonds	36,766		(440)		210,723		(20,362)		247,489		(20,802)
Total obligations of states and political subdivisions	57,398		(957)		252,781		(25,180)		310,179		(26,137)
Residential mortgage-backed securities	216,651		(2,687)		1,917,644		(417,895)		2,134,295		(420,582)
Trust preferred securities	—		—		29,145		(6,936)		29,145		(6,936)
Corporate and other debt securities	5,977		(23)		63,879		(3,333)		69,856		(3,356)
Total	$	328,108	$	(3,761)	$	2,492,592	$	(502,282)	$	2,820,700	$	(506,043)
December 31, 2023
U.S. Treasury securities	$	—	$	—	$	25,978	$	(254)	$	25,978	$	(254)
U.S. government agency securities	43,664		(151)		216,759		(44,290)		260,423		(44,441)
Obligations of states and political subdivisions:
Obligations of states and state agencies	10,700		(102)		48,149		(4,053)		58,849		(4,155)
Municipal bonds	11,958		(121)		207,520		(14,259)		219,478		(14,380)
Total obligations of states and political subdivisions	22,658		(223)		255,669		(18,312)		278,327		(18,535)
Residential mortgage-backed securities	57,085		(505)		2,164,704		(368,931)		2,221,789		(369,436)
Trust preferred securities	938		(63)		29,712		(6,349)		30,650		(6,412)
Corporate and other debt securities	12,575		(426)		59,102		(5,248)		71,677		(5,674)
Total	$	136,920	$	(1,368)	$	2,751,924	$	(443,384)	$	2,888,844	$	(444,752)

Within the HTM securities portfolio, the total number of security positions in an unrealized loss position was 798 and 762 at December 31, 2024 and 2023, respectively.

As of December 31, 2024, the fair value of debt securities HTM that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law was $1.2 billion.

Contractual Maturities

The contractual maturities of investments in HTM debt securities at December 31, 2024 are set forth in the table below. Contractual maturities may differ from actual maturities as borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Residential mortgage-backed securities are not included in the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without penalties.


	December 31, 2024
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	59,345	$	59,271
Due after one year through five years	65,022		63,861
Due after five years through ten years	173,753		163,055
Due after ten years	523,458		449,949
Residential mortgage-backed securities	2,710,642		2,292,148
Total	$	3,532,220	$	3,028,284

The weighted-average remaining expected life for residential mortgage-backed securities HTM was 9.41 years at December 31, 2024.

Credit Quality Indicators

Valley monitors the credit quality of the HTM debt securities utilizing the most current credit ratings from external rating agencies. The following table summarizes the amortized cost of HTM debt securities by external credit rating at December 31, 2024 and 2023.


	AAA/AA/A Rated		BBB rated		Non-investment grade rated		Non-rated		Total
	(in thousands)
December 31, 2024
U.S. Treasury securities	$	25,480	$	—	$	—	$	—	$	25,480
U.S. government agency securities	301,315		—		—		—		301,315
Obligations of states and political subdivisions:
Obligations of states and state agencies	52,770		—		—		15,255		68,025
Municipal bonds	277,921		—		—		26,543		304,464
Total obligations of states and political subdivisions	330,691		—		—		41,798		372,489
Residential mortgage-backed securities	2,710,642		—		—		—		2,710,642
Trust preferred securities			—		—		36,081		36,081
Corporate and other debt securities	—		6,000		—		80,213		86,213
Total	$	3,368,128	$	6,000	$	—	$	158,092	$	3,532,220
December 31, 2023
U.S. Treasury securities	$	26,232	$	—	$	—	$	—	$	26,232
U.S. government agency securities	305,996		—		—		—		305,996
Obligations of states and political subdivisions:
Obligations of states and state agencies	66,502		—		5,330		16,724		88,556
Municipal bonds	283,441		—		—		33,473		316,914
Total obligations of states and political subdivisions	349,943		—		5,330		50,197		405,470
Residential mortgage-backed securities	2,885,303		—		—		—		2,885,303
Trust preferred securities	—		—		—		37,062		37,062
Corporate and other debt securities	—		6,000		—		74,350		80,350
Total	$	3,567,474	$	6,000	$	5,330	$	161,609	$	3,740,413

Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations. At December 31, 2024, most of the obligations of states and political subdivisions were rated investment grade and a large portion of the “non-rated” category included municipal bonds 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 zero loss expectation for certain securities within the HTM 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 security types which it believes qualify for this exclusion: U.S. Treasury securities, U.S. government 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 HTM debt securities that have loss expectations, Valley estimates the expected credit losses using a discounted cash flow model developed by a third-party. See Note 1 for further details.

HTM debt securities are carried net of an allowance for credit losses. The following table details the activity in the allowance for credit losses for the years ended December 31, 2024, 2023 and 2022:


	2024		2023		2022
	(in thousands)
Beginning balance	$	1,205	$	1,646	$	1,165

(Credit) provision for credit losses	(558)		(441)		481
Ending balance	$	647	$	1,205	$	1,646

There were no net charge-offs of HTM debt securities in the respective periods presented in the table above.

Realized Gains and Losses

Gross gains and losses realized on sales, maturities and other securities transactions related to AFS securities and net gains and losses on trading debt securities included in earnings for the years ended December 31, 2024, 2023 and 2022 were as follows:


	2024		2023		2022
	(in thousands)
Sales transactions:
Gross gains	$	—	$	869	$	—

Total	—		869		—
Maturities and other securities transactions:
Gross gains	3		21		171
Gross losses	(18)		(488)		(76)
Total	(15)		(467)		95
Net gains (losses) on trading debt securities	115		702		(1,325)
Gains (losses) on securities transactions, net	$	100	$	1,104	$	(1,230)

The gross gains on sales transactions for the year ended December 31, 2023 resulted from the sale of a previously impaired and fully charged-off corporate bond issued by Signature Bank.