Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Amortized Cost, Gross Unrealized Gains And Losses and Fair Value of Securities Held to Maturity

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at September 30, 2012 and December 31, 2011 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
September 30, 2012
U.S. Treasury securities	$	99,906	$	16,355	$	-		$	116,261
Obligations of states and political subdivisions		492,617		26,030		(77	)		518,570
Residential mortgage-backed securities		852,375		33,898		(117	)		886,156
Trust preferred securities		127,510		1,067		(17,176	)		111,401
Corporate and other debt securities		52,167		4,858		-			57,025
Total investment securities held to maturity	$	1,624,575	$	82,208	$	(17,370	)	$	1,689,413
December 31, 2011
U.S. Treasury securities	$	100,018	$	13,841	$	-		$	113,859
Obligations of states and political subdivisions		433,284		19,931		(14	)		453,201
Residential mortgage-backed securities		1,180,104		51,041		(152	)		1,230,993
Trust preferred securities		193,312		4,308		(22,867	)		174,753
Corporate and other debt securities		52,198		3,799		(1,606	)		54,391
Total investment securities held to maturity	$	1,958,916	$	92,920	$	(24,639	)	$	2,027,197

Age of Unrealized Losses and Fair Value of Related Securities Held to Maturity

The age of unrealized losses and fair value of related securities held to maturity at September 30, 2012 and December 31, 2011 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)
September 30, 2012
Obligations of states and political subdivisions	$	11,653	$	(77	)	$	-	$	-		$	11,653	$	(77	)
Residential mortgage-backed securities		35,959		(117	)		-		-			35,959		(117	)
Trust preferred securities		9,818		(37	)		80,119		(17,139	)		89,937		(17,176	)
Total	$	57,430	$	(231	)	$	80,119	$	(17,139	)	$	137,549	$	(17,370	)
December 31, 2011
Obligations of states and political subdivisions	$	1,854	$	(13	)	$	50	$	(1	)	$	1,904	$	(14	)
Residential mortgage-backed securities		33,520		(152	)		-		-			33,520		(152	)
Trust preferred securities		35,527		(730	)		55,612		(22,137	)		91,139		(22,867	)
Corporate and other debt securities		14,756		(192	)		7,560		(1,414	)		22,316		(1,606	)
Total	$	85,657	$	(1,087	)	$	63,222	$	(23,552	)	$	148,879	$	(24,639	)

Contractual Maturities of Debt Securities Held to Maturity

The contractual maturities of investments in debt securities held to maturity at September 30, 2012 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.

	September 30, 2012
	Amortized		Fair
	Cost		Value
	(in thousands)
Due in one year	$	109,488	$	109,564
Due after one year through five years		43,154		44,797
Due after five years through ten years		240,982		267,688
Due after ten years		378,576		381,208
Residential mortgage-backed securities		852,375		886,156
Total investment securities held to maturity	$	1,624,575	$	1,689,413

Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities Available for Saleor-sale

Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of securities available for sale at September 30, 2012 and December 31, 2011 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(in thousands)
September 30, 2012
U.S. government agency securities	$	46,148	$	1,465	$	(36	)	$	47,577
Obligations of states and political subdivisions		16,772		229		(529	)		16,472
Residential mortgage-backed securities		463,489		10,460		(3,222	)		470,727
Trust preferred securities*		72,336		623		(14,364	)		58,595
Corporate and other debt securities		28,320		3,076		(9	)		31,387
Equity securities		50,306		731		(1,884	)		49,153
Total investment securities available for sale	$	677,371	$	16,584	$	(20,044	)	$	673,911
December 31, 2011
U.S. government agency securities	$	89,787	$	1,204	$	(243	)	$	90,748
Obligations of states and political subdivisions		18,893		1,322		(1	)		20,214
Residential mortgage-backed securities		304,631		10,950		(5,444	)		310,137
Trust preferred securities*		106,931		78		(36,585	)		70,424
Corporate and other debt securities		30,663		2,554		(173	)		33,044
Equity securities		47,932		1,320		(7,299	)		41,953
Total investment securities available for sale	$	598,837	$	17,428	$	(49,745	)	$	566,520

* Includes three pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies.

Age of Unrealized Losses and Fair Value of Related Securities

The age of unrealized losses and fair value of related securities available for sale at September 30, 2012 and December 31, 2011 were as follows:

	Less than					More than
	Twelve Months					Twelve Months					Total
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
	(in thousands)
September 30, 2012
U.S. government agency securities	$	8,534	$	(4	)	$	7,110	$	(32	)	$	15,644	$	(36	)
Obligations of states and political subdivisions		10,660		(529	)		-		-			10,660		(529	)
Residential mortgage-backed securities		43,368		(901	)		21,967		(2,321	)		65,335		(3,222	)
Trust preferred securities		1,173		(506	)		27,669		(13,858	)		28,842		(14,364	)
Corporate and other debt securities		-		-			2,491		(9	)		2,491		(9	)
Equity securities		772		(40	)		12,614		(1,844	)		13,386		(1,884	)
Total	$	64,507	$	(1,980	)	$	71,851	$	(18,064	)	$	136,358	$	(20,044	)
December 31, 2011
U.S. government agency securities	$	7,980	$	(243	)	$	-	$	-		$	7,980	$	(243	)
Obligations of states and political subdivisions		141		(1	)		-		-			141		(1	)
Residential mortgage-backed securities		41,673		(1,655	)		22,639		(3,789	)		64,312		(5,444	)
Trust preferred securities		23,962		(1,061	)		44,758		(35,524	)		68,720		(36,585	)
Corporate and other debt securities		3,243		(173	)		-		-			3,243		(173	)
Equity securities		20,570		(4,430	)		12,551		(2,869	)		33,121		(7,299	)
Total	$	97,569	$	(7,563	)	$	79,948	$	(42,182	)	$	177,517	$	(49,745	)

Contractual Maturities of Investments Securities Available for Sale

The contractual maturities of investment securities available for sale at September 30, 2012 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.

	September 30, 2012
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	940	$	958
Due after one year through five years		2,117		2,134
Due after five years through ten years		50,960		53,464
Due after ten years		109,559		97,475
Residential mortgage-backed securities		463,489		470,727
Equity securities		50,306		49,153
Total investment securities available for sale	$	677,371	$	673,911

Other-Than-Temporary Impairment Losses on Securities Recognized In Earnings

Other-Than-Temporarily Impaired Securities

The following table provides information regarding our other-than-temporary impairment losses on securities recognized in earnings for the three and nine months ended September 30, 2012 and 2011.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(in thousands)
Available for sale:
Residential mortgage-backed securities	$	172	$	-	$	722	$	-
Trust preferred securities		4,525		-		4,525		825
Net impairment losses on securities recognized in earnings	$	4,697	$	-	$	5,247	$	825

Realized Gains and Losses on Sales of Investment Securities

Realized Gains and Losses

Gross gains (losses) realized on sales, maturities and other securities transactions related to investment securities included in earnings for the three and nine months ended September 30, 2012 and 2011 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(in thousands)
Sales transactions:
Gross gains	$	4,513		$	450		$	5,887		$	19,418
Gross losses		-			-			(298	)		-
	$	4,513		$	450		$	5,589		$	19,418
Maturities and other securities transactions:
Gross gains	$	2,242		$	414		$	2,261		$	622
Gross losses		(5,259	)		(1	)		(5,307	)		(6	)
	$	(3,017	)	$	413		$	(3,046	)	$	616
Total gains on securities transactions, net	$	1,496		$	863		$	2,543		$	20,034

Changes in the Credit Loss Component of Cumulative Other-Than-Temporary Impairment Losses on Debt Securities

The following table presents the changes in the credit loss component of cumulative other-than-temporary impairment losses on debt securities classified as either held to maturity or available for sale that Valley has recognized in earnings, for which a portion of the impairment loss (non-credit factors) was recognized in other comprehensive income for the three and nine months ended September 30, 2012 and 2011:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(in thousands)
Balance, beginning of period	$	29,251		$	11,076		$	29,070		$	10,500
Additions:
Subsequent credit impairments		4,697			-			5,247			825
Reductions:
Accretion of credit loss impairment due to an increase in expected cash flows		(590	)		(109	)		(959	)		(358	)
Balance, end of period	$	33,358		$	10,967		$	33,358		$	10,967