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Investment Securities

3 Months Ended

Mar. 31, 2025

Investments, Debt and Equity Securities [Abstract]

Equity Securities

Equity securities totaled $74.4 million and $71.5 million at March 31, 2025 and December 31, 2024, respectively. See Note 5 for further details on equity securities.

Available for Sale Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of AFS debt securities at March 31, 2025 and December 31, 2024 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
March 31, 2025
U.S. Treasury securities	$	321,009	$	—	$	(24,756)	$	296,253
U.S. government agency securities	23,850		22		(1,472)		22,400
Obligations of states and political subdivisions:
Obligations of states and state agencies	45,848		—		(840)		45,008
Municipal bonds	179,928		—		(37,555)		142,373
Total obligations of states and political subdivisions	225,776		—		(38,395)		187,381
Residential mortgage-backed securities	3,034,723		16,242		(83,430)		2,967,535

Corporate and other debt securities	198,802		310		(13,977)		185,135
Total	$	3,804,160	$	16,574	$	(162,030)	$	3,658,704
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

Accrued interest on investments, which is excluded from the amortized cost of AFS debt securities, totaled $14.7 million and $13.1 million at March 31, 2025 and December 31, 2024, 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 the related AFS debt securities at March 31, 2025 and December 31, 2024 were as follows:


	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
March 31, 2025
U.S. Treasury securities	$	—	$	—	$	296,253	$	(24,756)	$	296,253	$	(24,756)
U.S. government agency securities	—		—		21,158		(1,472)		21,158		(1,472)
Obligations of states and political subdivisions:
Obligations of states and state agencies	—		—		5,938		(840)		5,938		(840)
Municipal bonds	—		—		134,643		(37,555)		134,643		(37,555)
Total obligations of states and political subdivisions	—		—		140,581		(38,395)		140,581		(38,395)
Residential mortgage-backed securities	683,881		(8,598)		499,009		(74,832)		1,182,890		(83,430)

Corporate and other debt securities	4,750		(250)		165,075		(13,727)		169,825		(13,977)
Total	$	688,631	$	(8,848)	$	1,122,076	$	(153,182)	$	1,810,707	$	(162,030)
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)

Within the AFS debt securities portfolio, the total number of security positions in an unrealized loss position was 677 and 726 at March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, the fair value of AFS securities that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $902.5 million.

Contractual Maturities

The contractual maturities of AFS debt securities at March 31, 2025 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.


	March 31, 2025
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	178,207	$	176,182
Due after one year through five years	124,394		120,137
Due after five years through ten years	171,134		155,918
Due after ten years	295,702		238,932
Residential mortgage-backed securities	3,034,723		2,967,535
Total	$	3,804,160	$	3,658,704

The weighted average remaining expected life for residential mortgage-backed securities AFS was 9.42 years at March 31, 2025.

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 due to a variety of factors such as the unpredictable nature of the U.S. economy and its 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. Valley also evaluated AFS debt securities that were in an unrealized loss position as of March 31, 2025 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. Based on a comparison of the present value of expected cash flows to the amortized cost, there was no impairment recognized during the three months ended March 31, 2025 and 2024.

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 March 31, 2025. As a result, there was no allowance for credit losses for AFS debt securities at March 31, 2025 and December 31, 2024.

Held to Maturity Debt Securities

The amortized cost, gross unrealized gains and losses and fair value of HTM debt securities at March 31, 2025 and December 31, 2024 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses		Net Carrying Value
	(in thousands)
March 31, 2025
U.S. Treasury securities	$	25,290	$	—	$	(21)	$	25,269	$	—	$	25,290
U.S. government agency securities	300,865		—		(40,993)		259,872		—		300,865
Obligations of states and political subdivisions:
Obligations of states and state agencies	66,602		53		(4,799)		61,856		1		66,601
Municipal bonds	291,584		11		(24,330)		267,265		46		291,538
Total obligations of states and political subdivisions	358,186		64		(29,129)		329,121		47		358,139
Residential mortgage-backed securities	2,742,355		4,985		(374,064)		2,373,276		—		2,742,355
Trust preferred securities	36,086		—		(6,606)		29,480		418		35,668
Corporate and other debt securities	83,179		8		(2,571)		80,616		168		83,011
Total	$	3,545,961	$	5,057	$	(453,384)	$	3,097,634	$	633	$	3,545,328
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

Accrued interest on investments, which is excluded from the amortized cost of HTM debt securities, totaled $12.1 million and $13.0 million at March 31, 2025 and December 31, 2024, 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 March 31, 2025 and December 31, 2024 were as follows:


	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
March 31, 2025
U.S. Treasury securities	$	25,269	$	(21)	$	—	$	—	$	25,269	$	(21)
U.S. government agency securities	22,109		(58)		237,231		(40,935)		259,340		(40,993)
Obligations of states and political subdivisions:
Obligations of states and state agencies	5,948		(8)		43,721		(4,791)		49,669		(4,799)
Municipal bonds	35,687		(572)		191,086		(23,758)		226,773		(24,330)
Total obligations of states and political subdivisions	41,635		(580)		234,807		(28,549)		276,442		(29,129)
Residential mortgage-backed securities	43,444		(821)		1,920,109		(373,243)		1,963,553		(374,064)
Trust preferred securities	—		—		29,480		(6,606)		29,480		(6,606)
Corporate and other debt securities	12,991		(9)		57,616		(2,562)		70,607		(2,571)
Total	$	145,448	$	(1,489)	$	2,479,243	$	(451,895)	$	2,624,691	$	(453,384)
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)

Within the HTM securities portfolio, the total number of security positions in an unrealized loss position was 743 and 798 at March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, 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 March 31, 2025 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.


	March 31, 2025
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	64,515	$	64,387
Due after one year through five years	56,432		55,699
Due after five years through ten years	167,145		157,478
Due after ten years	515,514		446,794
Residential mortgage-backed securities	2,742,355		2,373,276
Total	$	3,545,961	$	3,097,634

The weighted-average remaining expected life for residential mortgage-backed securities HTM was 10.22 years at March 31, 2025.

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 March 31, 2025 and December 31, 2024.


	AAA/AA/A Rated		BBB rated		Non-rated		Total
	(in thousands)
March 31, 2025
U.S. Treasury securities	$	25,290	$	—	$	—	$	25,290
U.S. government agency securities	300,865		—		—		300,865
Obligations of states and political subdivisions:
Obligations of states and state agencies	51,881		—		14,721		66,602
Municipal bonds	263,230		—		28,354		291,584
Total obligations of states and political subdivisions	315,111		—		43,075		358,186
Residential mortgage-backed securities	2,742,355		—		—		2,742,355
Trust preferred securities	—		—		36,086		36,086
Corporate and other debt securities	—		6,000		77,179		83,179
Total	$	3,383,621	$	6,000	$	156,340	$	3,545,961
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

Obligations of states and political subdivisions include municipal bonds and revenue bonds issued by various municipal corporations. At March 31, 2025, 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.

The following table details the activity in the allowance for credit losses for HTM securities for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Beginning balance	$	647	$	1,205
Credit for credit losses	(14)		(74)
Ending balance	$	633	$	1,131

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