10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

o 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)
1455 Valley Road Wayne, NJ	07470
(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	Name of exchange on which registered
Common Stock, no par value	New York Stock Exchange
Non-Cumulative Perpetual Preferred Stock, Series A, no par value	New York Stock Exchange
Warrants to purchase Common Stock	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes  þ    No  o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes  o   No  þ

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  þ    No  o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files.)    Yes  þ    No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer	þ	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)     Yes  o    No  þ

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $2.2 billion on June 30, 2016.

There were 263,838,587 shares of Common Stock outstanding at February 23, 2017.

Documents incorporated by reference:

Certain portions of the registrant’s Definitive Proxy Statement (the “2017 Proxy Statement”) for the 2017 Annual Meeting of Shareholders to be held April 25, 2017 will be incorporated by reference in Part III. The 2017 Proxy Statement will be filed within 120 days of December 31, 2016.

1 2016 Form 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	25
Item 3.	Legal Proceedings	25
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and  Issuer Purchases of Equity Securities	26
Item 6.	Selected Financial Data	28
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	71
Item 8.	Financial Statements and Supplementary Data:	72
	Valley National Bancorp and Subsidiaries:
	Consolidated Statements of Financial Condition	72
	Consolidated Statements of Income	73
	Consolidated Statements of Comprehensive Income	74
	Consolidated Statements of Changes in Shareholders’ Equity	75
	Consolidated Statements of Cash Flows	76
	Notes to Consolidated Financial Statements	78
	Report of Independent Registered Public Accounting Firm	143
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	144
Item 9A.	Controls and Procedures	144
Item 9B.	Other Information	146
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	146
Item 11.	Executive Compensation	146
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	146
Item 13.	Certain Relationships and Related Transactions, and Director Independence	146
Item 14.	Principal Accountant Fees and Services	146
PART IV
Item 15.	Exhibits and Financial Statement Schedules	146
	Signatures	151

2016 Form 10-K 2

PART I

Item 1. Business

The disclosures set forth in this item are qualified by Item 1A—Risk Factors and the section captioned “Cautionary Statement Concerning Forward-Looking Statements” in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements set forth elsewhere in this report.

Valley National Bancorp, headquartered in Wayne, New Jersey, is a New Jersey corporation organized in 1983 and is registered as a bank holding company with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended (“Holding Company Act”). The words “Valley,” “the Company,” “we,” “our” and “us” refer to Valley National Bancorp and its wholly owned subsidiaries, unless we indicate otherwise. At December 31, 2016, Valley had consolidated total assets of $22.9 billion, total net loans of $17.1 billion, total deposits of $17.7 billion and total shareholders’ equity of $2.4 billion. In addition to its principal subsidiary, Valley National Bank (commonly referred to as the “Bank” in this report), Valley owns all of the voting and common shares of GCB Capital Trust III and State Bancorp Capital Trusts I and II through which trust preferred securities were issued. These trusts are not consolidated subsidiaries. See Note 11 to the consolidated financial statements.

Valley National Bank is a national banking association chartered in 1927 under the laws of the United States. Currently, the Bank has 209 branches serving northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, and Florida. The Bank offers a full range of commercial, retail, insurance and wealth management financial services products. The Bank also provides a variety of banking services including automated teller machines, telephone and internet banking, remote deposit capture, overdraft facilities, drive-in and night deposit services, and safe deposit facilities. In addition, certain international banking services to customers including standby letters of credit, documentary letters of credit and related products, and certain ancillary services such as foreign exchange, documentary collections, foreign wire transfers and the maintenance of foreign bank accounts are available products and services, as well as transaction accounts for non-resident aliens.

Valley National Bank’s wholly-owned subsidiaries are all included in the consolidated financial statements of Valley (See Exhibit 21 at Part IV, Item 15 for a list of subsidiaries). These subsidiaries include, but are not limited to:

• an all-line insurance agency offering property and casualty, life and health insurance;

• an asset management adviser that is a registered investment adviser with Securities and Exchange Commission (SEC);

• title insurance agencies in New Jersey, New York and Florida;

• subsidiaries which hold, maintain and manage investment assets for the Bank;

• a subsidiary which owns and services auto loans;

• a subsidiary which specializes in health care equipment lending and other commercial equipment leases; and

• a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the REIT subsidiaries) which own real estate related investments and a REIT subsidiary, which owns some of the real estate utilized by the Bank and related real estate investments. Except for Valley’s REIT subsidiaries, all subsidiaries mentioned above are directly or indirectly wholly owned by the Bank. Because each REIT must have 100 or more shareholders to qualify as a REIT, each REIT has issued less than 20 percent of their outstanding non-voting preferred stock to individuals, most of whom are current and former (non-executive officer) Bank employees. The Bank owns the remaining preferred stock and all the common stock of the REITs.

Recent Acquisitions

Valley has grown significantly in the past five years primarily through bank acquisitions that expanded our branch footprint into Florida and Long Island, New York. Recent bank transactions are discussed further below.

CNLBancshares, Inc. On December 1, 2015, Valley completed its acquisition of CNLBancshares, Inc. (CNL) and its wholly-owned subsidiary, CNLBank, headquartered in Orlando, Florida, a commercial bank with approximately $1.6 billion in assets, $825 million in loans, $1.2 billion in deposits and 16 branch offices on the date of its acquisition by Valley. The CNL acquisition increased Valley's Florida branch network (first started with the acquisition of 1st United Bancorp, Inc. in 2014 discussed further below) to a total of 31 branches (after 5 branch closures mostly resulting from branch efficiency efforts during 2016) covering most major markets in central and southern Florida. The acquired branches allow us to service Florida's west coast markets of Naples, Bonita Springs, Fort Myers and Sarasota. We also added three offices in the Jacksonville area and expanded our presence

3 2016 Form 10-K

in the Orlando market. The common shareholders of CNL received 0.705 of a share of Valley common stock for each CNL share they owned prior to the merger. The total consideration for the acquisition was approximately $230 million, consisting of 20.6 million shares of Valley common stock.

1st United Bancorp, Inc. On November 1, 2014, Valley acquired 1st United Bancorp, Inc. (1st United) and its wholly-owned subsidiary, 1st United Bank, a commercial bank with approximately $1.7 billion in assets, $1.2 billion in loans, and $1.4 billion in deposits, after purchase accounting adjustments. The 1st United acquisition gave Valley its first Florida branch network consisting of 20 branch offices covering some of the most attractive urban banking markets in Florida, including locations throughout southeast Florida, the Treasure Coast, central Florida and central Gulf Coast regions. The common shareholders of 1st United received 0.89 of a share of Valley common stock for each 1st United share they owned prior to the merger. The total consideration for the acquisition was approximately $300 million, consisting of 30.7 million shares of Valley common stock and $8.9 million of cash consideration paid to 1st United stock option holders. In conjunction with the merger, Valley shareholders approved an amendment of its certificate of incorporation to increase its authorized common shares by 100 million shares during the third quarter of 2014.

In connection with the 1st United acquisition, we acquired loans and other real estate owned subject to Federal Deposit Insurance Corporation (FDIC) loss-share agreements (referred to as “covered loans” and “covered OREO”, together “covered assets”). The FDIC loss-share agreements relate to three previous FDIC-assisted acquisitions completed by 1st United from 2009 to 2011. The Bank shares losses on covered assets in accordance with provisions of each loss-share agreement. The vast majority of Valley's covered loans totaling $70.4 million, or 0.4 percent of our total loans, at December 31, 2016 are covered by commercial loan and single-family (residential) loss sharing agreements acquired from 1st United that will expire between 2017 and 2021.

State Bancorp, Inc. On January 1, 2012, Valley acquired State Bancorp, Inc. (State Bancorp), the holding company for State Bank of Long Island, a commercial bank with approximately $1.7 billion in assets, $1.1 billion in loans, and $1.4 billion in deposits and 16 branches in Nassau, Suffolk, Queens, and Manhattan at December 31, 2011. Of the acquired branch offices, 12 remain within our 38 branch network in New York and are located in Long Island and Queens. The common shareholders of State Bancorp received a fixed one- for- one exchange ratio for Valley National Bancorp common stock. The total consideration for the all stock acquisition equaled $208 million.

Additionally, a warrant issued by State Bancorp (in connection with its previously redeemed preferred stock issuance) to the U.S. Treasury in December 2008 was assumed by Valley as of the acquisition date. The ten-year warrant to purchase up to 489 thousand of Valley common shares has an exercise price of $11.30 per share, and is exercisable on a net exercise basis until December 5, 2018. At the request of the U.S. Treasury, the warrant shares were individually sold at public auction in May 2015. All of the warrants remained outstanding and unexercised at December 31, 2016.

Business Segments

Our business segments are reassessed by management, at least on an annual basis, to ensure the proper identification and reporting of our operating segments. Valley currently reports the results of its operations and manages its business through four business segments: commercial lending, consumer lending, investment management, and corporate and other adjustments. Valley’s Wealth Management Division comprised of trust, asset management and insurance services, is included in the consumer lending segment. See Note 22 to the consolidated financial statements for details of the financial performance of our business segments. We offer a variety of products and services within the commercial and consumer lending segments as described below.

Commercial Lending Segment

Commercial and Industrial Loans. Commercial and industrial loans totaled approximately $2.6 billion and represented 15.3 percent of the total loan portfolio at December 31, 2016. We make commercial loans to small and middle market businesses most often located in the New Jersey and New York area, as well as Florida which accounted for approximately 7 percent of the $2.6 billion in commercial and industrial loans at December 31, 2016. A significant proportion of Valley’s commercial and industrial loan portfolio is granted to long-standing customers of proven ability, strong repayment performance, and high character. Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, most of the loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Our loan decisions include consideration of a borrower’s willingness to repay debts, collateral coverage, standing in the community and other forms of support. Strong consideration is given to long-term existing customers that have maintained a favorable relationship with the Bank. Commercial loan products offered consist of term loans for equipment purchases, working capital lines of credit that assist our customers’ financing of accounts receivable and inventory, and commercial mortgages for owner occupied properties. Working capital advances are generally used to finance seasonal requirements and are repaid at the end of the cycle. Short-term commercial business loans may be collateralized by a lien on accounts receivable, inventory, equipment and/or partly collateralized

2016 Form 10-K 4

by real estate. Short-term loans may also be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, we obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured loans, when made, are generally granted to the Bank’s most creditworthy borrowers. Unsecured commercial and industrial loans totaled $455.5 million at December 31, 2016. In addition, we provide financing to the medical equipment leasing market through our leasing subsidiary, Highland Capital Corp.

The commercial portfolio also includes approximately $151 million of taxi medallion loans (including $19.1 million of contractual outstanding balances within our purchased credit-impaired loan portfolio) at December 31, 2016, most of which consist of loans to fleet owners of New York City medallions. Valley's historical lending criteria has been conservative in regards to capping both the loan amounts and market valuations for taxi medallions, as well as obtaining personal guarantees whenever possible. While a substantial majority of loans in this portfolio are performing at December 31, 2016, we will continue to closely monitor this portfolio's performance and the potential impact of the changes in market valuations for taxi medallions due to competing car service providers and other factors.

Commercial Real Estate Loans. Commercial real estate and construction loans totaled $9.5 billion and represented 55.4 percent of the total loan portfolio at December 31, 2016. We originate commercial real estate loans that are largely secured by multi-unit residential property and non-owner occupied commercial, industrial, and retail property within New Jersey, New York, Pennsylvania and Florida. Loans originated from our Florida lending operations represented 14.5 percent of the $9.5 billion in total commercial real estate loans at December 31, 2016. Loans are generally written on an adjustable basis with rates tied to a specifically identified market rate index. Adjustment periods generally range between five to ten years and repayment is generally structured on a fully amortizing basis for terms up to thirty years. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans but generally they involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets. With respect to loans to developers and builders, we originate and manage construction loans structured on either a revolving or a non-revolving basis, depending on the nature of the underlying development project. Our construction loans totaling approximately $825 million at December 31, 2016 are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Consumer Lending Segment

Residential Mortgage Loans. Residential mortgage loans totaled $2.9 billion and represented 16.6 percent of the total loan portfolio at December 31, 2016. We offer a full range of residential mortgage loans for the purpose of purchasing or refinancing one-to-four family residential properties. Our residential mortgage loans include fixed and variable interest rate loans generally located in counties where we have a branch presence in New Jersey, New York and Florida, as well as contiguous counties, if applicable, including eastern Pennsylvania. Valley’s ability to be repaid on such loans is closely linked to the economic and real estate market conditions in our lending markets. We occasionally make mortgage loans secured by homes beyond this primary geographic area; however, lending outside this primary area is generally made in support of existing customer relationships. Mortgage loan originations are based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO^® and other proprietary, credit scoring models is employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. In deciding whether to originate each residential mortgage, Valley considers the qualifications of the borrower, the value of the underlying property and other factors that we believe are predictive of future loan performance. Valley originated first mortgages are generally fixed-rate amortizing loans with 10 year to 30 year maturities. Valley's non-amortizing (i.e., interest-only) residential mortgage loan portfolio was immaterial at December 31, 2016. The small amount of interest-only loans is running off year over year, as Valley has no longer originated this type of residential mortgage loan product for many years.

5 2016 Form 10-K

The Bank is also a servicer of residential mortgage portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights purchased in the secondary market and loans originated and sold by the Bank. See Note 8 to the consolidated financial statements for further details.

Other Consumer Loans. Other consumer loans totaled $2.2 billion and represented 12.7 percent of the total loan portfolio at December 31, 2016. Our other consumer loan portfolio is primarily comprised of direct and indirect automobile loans, home equity loans and lines of credit, loans secured by the cash surrender value of life insurance, and to a lesser extent, secured and unsecured other consumer loans (including credit card loans). Valley is an auto lender in New Jersey, New York, Pennsylvania, Florida, Connecticut and Delaware offering indirect auto loans secured by either new or used automobiles. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Valley acquired an immaterial amount of automobile loans from both the CNL and 1st United acquisitions in 2015 and 2014, respectively, as auto lending was not a focus of the acquired operations. However, we implemented our indirect auto lending model in Florida during 2015 using our New Jersey based underwriting and loan servicing platform. The new Florida auto dealer network generated $36.4 million and $11.5 million of auto loans in 2016 and 2015, respectively. Home equity lending consists of both fixed and variable interest rate products mainly to provide home equity loans to our residential mortgage customers or take a secondary position to another lender’s first lien position within the footprint of our primary lending territory. We generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 75 percent when originating a home equity loan. Other consumer loans include direct consumer term loans, both secured and unsecured. From time to time, the Bank will also purchase prime consumer loans originated by and serviced by other financial institutions based on several factors, including current secondary market rates, excess liquidity and other asset/liability management strategies. Unsecured consumer loans totaled approximately $20.6 million, including $7.0 million of credit card loans, at December 31, 2016.

Wealth Management. Our Wealth Management Division provides coordinated and integrated delivery of asset management advisory, general insurance, title insurance and trust services. Asset management advisory services include investment services for individuals and small to medium sized businesses, trusts and custom tailored investment strategies designed for various types of retirement plans. Trust services include living and testamentary trusts, investment management, custodial and escrow services, and estate administration, primarily to individuals.

Investment Management Segment

Although we are primarily focused on our lending and wealth management services, a large portion of our income is generated through investments in various types of 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. As of December 31, 2016, our total investment securities and interest bearing deposits with banks were $3.2 billion and $171.7 million, respectively. See the “Investment Securities Portfolio” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) and Note 4 to the consolidated financial statements for additional information concerning our investment securities.

Changes in Loan Portfolio Composition

At December 31, 2016, approximately 75 percent of Valley’s gross loans totaling $17.2 billion consisted of commercial real estate (including construction loans), residential mortgage, and home equity loans as compared to 74 percent at December 31, 2015. The remaining 25 percent and 26 percent at December 31, 2016 and 2015, respectively, consisted of loans not collateralized by real estate. Valley has no internally planned changes that would significantly impact the current composition of our loan portfolio by loan type. However, we have continued to diversify the geographic concentrations (primarily the New Jersey and New York City Metropolitan area) within our loan portfolio through our bank acquisitions in Florida during both 2014 and 2015 (see table and discussion below). Many external factors outlined in “Item 1A. Risk Factors”, the “Executive Summary” section of our MD&A, and elsewhere in this report may impact our ability to maintain the current composition of our loan portfolio. See the “Loan Portfolio” section of our MD&A in this report for further discussion of our loan composition and concentration risks.

2016 Form 10-K 6

The following table presents the loan portfolio segments by state as an approximate percentage of each applicable segment and our percentage of total loans by state at December 31, 2016.

	Percentage of Loan Portfolio Segment:
	Commercial and  Industrial		Commercial Real Estate		Residential		Consumer		% of  Total Loans
New Jersey	43	%	32	%	68	%	48	%	42	%
New York	42		46		10		26		37
Florida	2		16		8		7		12
Pennsylvania	1		2		2		12		3
California	2		*		8		1		2
Connecticut	1		1		*		3		1
Other	9		3		4		3		3
Total	100	%	100	%	100	%	100	%	100	%

* Represents less than one percent of the loan portfolio segment.

The percentage of total loans for New Jersey, New York and Florida was 44 percent, 34 percent and 12 percent at December 31, 2015, respectively, as compared to the percentages shown in the table above at December 31, 2016. The percentage of loans by loan portfolio segment and by total loans presented for all other states above did not materially change from December 31, 2015.

Risk Management

Effective risk management is critical to our success. Financial institutions must manage a variety of business risks that can significantly affect their financial performance. Significant risks we confront are credit risks and asset/liability management risks, which include interest rate and liquidity risks. Credit risk is the risk of not collecting payments pursuant to the contractual terms of loan, lease and investment assets. Interest rate risk results from changes in interest rates which may impact the re-pricing of assets and liabilities in different amounts or at different dates. Liquidity risk is the risk that we will be unable to fund obligations to loan customers, depositors or other creditors at a reasonable cost.

Valley’s Board performs its risk oversight function primarily through several standing committees, including the Risk Committee, all of which report to the full Board. The Risk Committee assists the Board by, among other things, establishing an enterprise-wide risk management framework that is appropriate for Valley’s capital, business activities, size and risk appetite. The Risk Committee also reviews and recommends to the Board appropriate risk tolerances and limits for credit, compliance, interest rate, liquidity, operational, strategic and price risk (and ensures that risk is managed within those tolerances), and monitors compliance with laws and regulations. With guidance from and oversight by the Risk Committee, management continually refines and enhances its risk management policies and procedures to maintain effective risk management programs and processes.

Additionally, The Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") mandated that stress tests be developed and performed to ensure that financial institutions have sufficient capital to absorb losses and support operations during multiple economic and bank scenarios. On October 9, 2012, the Federal Reserve Board (FRB) published final rules implementing the stress testing requirements for banks, such as the Bank, with total consolidated assets of more than $10.0 billion but less than $50.0 billion.  These rules set forth the timing and type of stress test activities, as well as rules governing controls, oversight and disclosure. On July 28, 2016, we submitted our latest stress testing results, utilizing data as of December 31, 2015, to the FRB. The full disclosure of the stress testing results, including the results for Valley National Bank, a summary of the supervisory severely adverse scenario and additional information regarding the methodologies used to conduct the stress test may be found on the Shareholder Relations section of our website (www.valleynationalbank.com) under the Dodd-Frank Act Stress Test Reports section. Through the stress testing program that has been implemented and reviewed by the Risk Committee, Valley complies with current regulations. The results of stress testing activities are considered in combination with other risk management and monitoring practices to maintain an effective risk management program.

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Credit Risk Management and Underwriting Approach

Credit risk management. For all loan types, we adhere to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk. 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 a Credit Committee. A reporting system supplements the review process by providing management with frequent reports concerning loan production, loan quality, concentrations of credit, loan delinquencies, non-performing, and potential problem loans. Loan portfolio diversification is an important factor utilized by us to manage the portfolio’s risk across business sectors and through cyclical economic circumstances.

Our historical and current loan underwriting practice prohibits the origination of payment option adjustable residential mortgages which allow for negative interest amortization and subprime loans. Virtually all of our residential mortgage loan originations in recent years have conformed to rules requiring documentation of income, assets sufficient to close the transactions and debt to income ratios that support the borrower’s ability to repay under the loan’s proposed terms and conditions. These rules are applied to all loans originated for retention in our portfolio or for sale in the secondary market.

Loan Underwriting and Loan documentation. Loans are well documented in accordance with specific and detailed underwriting policies and verification procedures. General underwriting guidance is consistent across all loan types with possible variations in procedures and due diligence dictated by specific loan requests. Due diligence standards require acquisition and verification of sufficient financial information to determine a borrower’s or guarantor’s credit worthiness, capital support, capacity to repay, collateral support, and character. Credit worthiness is generally verified using personal or business credit reports from independent credit reporting agencies. Capital support is determined by acquisition of independent verifications of deposits, investments or other assets. Capacity to repay the loan is based on verifiable liquidity and earnings capacity as shown on financial statements and/or tax returns, banking activity levels, operating statements, rent rolls or independent verification of employment. Finally, collateral valuation is determined via appraisals from independent, bank-approved, certified or licensed property appraisers, valuation services, or readily available market resources.

Types of collateral. Loan collateral, when required, may consist of any one or a combination of the following asset types depending upon the loan type and intended purpose: commercial or residential real estate; general business assets including working assets such as accounts receivable, inventory, or fixed assets such as equipment or rolling stock; marketable securities or other forms of liquid assets such as bank deposits or cash surrender value of life insurance; automobiles; or other assets wherein adequate protective value can be established and/or verified by reliable outside independent appraisers. In addition to these types of collateral, we, in many cases, will obtain the personal guarantee of the borrower’s principals to mitigate the risk of certain commercial and industrial loans and commercial real estate loans.

Many times, we will underwrite loans to legal entities formed for the limited purpose of the business which is being financed. Credit granted to these entities and the ultimate repayment of such loans is primarily based on the cash flow generated from the property securing the loan or the business that occupies the property. The underlying real property securing the loans is considered a secondary source of repayment, and normally such loans are also supported by guarantees of the legal entity members. Absent such guarantees or approval by our credit committee, our policy requires that the loan to value ratio (at origination) should not exceed 60 percent, except for certain low risk loan categories where the loan to value ratio requirement may be higher, based on the estimated market value of the property as established by an independent licensed appraiser.

Reevaluation of collateral values. Commercial loan renewals, refinancing and other subsequent transactions that include the advancement of new funds or result in the extension of the amortization period beyond the original term, require a new or updated appraisal. Renewals, refinancing and other subsequent transactions that do not include the advancement of new funds (other than for reasonable closing costs) or, in the case of commercial loans, the extension of the amortization period beyond the original term, do not require a new appraisal unless management believes there has been a material change in market conditions or the physical aspects of the property which may negatively impact collectability of our loan. In general, the period of time an appraisal continues to be relevant will vary depending upon the circumstances affecting the property and the marketplace. Examples of factors that could cause material changes to reported values include the passage of time, the volatility of the local market, the availability of financing, the inventory of competing properties, new improvements to, or lack of maintenance of, the subject or competing surrounding properties, changes in zoning and environmental contamination.

Certain impaired loans are reported at the fair value of the underlying collateral (less estimated selling costs) if repayment is expected solely from the collateral and are commonly referred to as “collateral dependent impaired loans.” Collateral values for such loans are typically estimated using individual appraisals performed every 12 months (or 18 months for impaired loans no greater than $1 million with current loan to value ratios less than 75 percent). Between scheduled appraisals, property values are monitored within the commercial portfolio by reference to recent trends in commercial property sales as published by leading industry sources. Property values are monitored within the residential mortgage portfolio by reference to available market indicators, including real estate price indices within Valley’s primary lending areas.

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All refinanced residential mortgage loans require new appraisals for loans held in our loan portfolio. However, certain residential mortgage loans may be originated for sale and sold without new appraisals when the investor (Fannie Mae or Freddie Mac) presents a refinance of an existing government sponsored enterprise loan without the benefit of a new appraisal. Additionally, all loan types are assessed for full or partial charge-off when they are between 90 and 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy) based upon their estimated net realizable value. See Note 1 to our consolidated financial statements for additional information concerning our loan portfolio risk elements, credit risk management and our loan charge-off policy.

Loan Renewals and Modifications

In the normal course of our lending business, we may renew loans to existing customers upon maturity of the existing loan. These renewals are granted provided that the new loan meets our standard underwriting criteria for such loan type. Additionally, on a case-by-case basis, we may extend, restructure, or otherwise modify the terms of existing loans from time to time to remain competitive and retain certain profitable customers, as well as assist 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).

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 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.

Extension of Credit to Past Due Borrowers

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. Valley’s historic and current policy prohibits the advancement of additional funds on non-accrual and TDR loans, except under certain workout plans if such extension of credit is intended to mitigate losses.

Loans Originated by Third Parties

From time to time, the Bank makes purchases of commercial real estate loans and loan participations, residential mortgage loans, automobile loans, and other loan types, originated by, and sometimes serviced by, other financial institutions. The purchase decision is usually based on several factors, including current loan origination volumes, market interest rates, excess liquidity, our continuous efforts to meet the credit needs of certain borrowers under Community Reinvestment Act, as well as other asset/liability management strategies. All of the purchased loans are selected using Valley’s normal underwriting criteria at the time of purchase, or in some cases guaranteed by third parties. Purchased commercial real estate participation loans are generally seasoned loans with expected shorter durations. Additionally, each purchased participation loan is stress-tested by Valley to assure its credit quality.

Purchased commercial real estate loans, residential mortgage loans and automobile loans (excluding purchased credit-impaired loans acquired in business combinations or FDIC-assisted transactions) totaled approximately $1.3 billion, $818.6 million and $4.7 million, respectively, at December 31, 2016 representing 15.24 percent, 30.50 percent and 0.41 percent of our total commercial real estate, residential mortgage and automobile loan portfolios, respectively. At December 31, 2016, the commercial real estate loans originated by third parties had loans past due 30 days or more totaling 0.67 percent of these loans as compared to 0.27 percent for our total commercial real estate portfolio, including all delinquencies. Residential mortgage loans originated by third parties had loans past due 30 days or more totaling 1.11 percent of these loans at December 31, 2016 as compared to 0.64 percent for our total residential mortgage portfolio. The purchased automobile portfolio had loans past due 30 days or more totaling 0.84 percent of these loans at December 31, 2016 as compared to 0.36 percent for our total automobile loan portfolio.

Additionally, Valley has performed credit due diligence on the majority of the loans acquired in our bank acquisitions and FDIC-assisted transactions (disclosed under the "Recent Acquisitions" section above) in determining the estimated cash flows receivable from such loans. See the "Loan Portfolio" section of Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report below for additional information.

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Competition

Valley National Bank is one of the largest commercial banks headquartered in New Jersey, with its primary markets located in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, and Florida. Valley ranked 17th in competitive ranking and market share based on the deposits reported by 213 FDIC-insured financial institutions in the New York, Northern New Jersey and Long Island deposit market as of June 30, 2016. The FDIC also ranked Valley 9th, 40th and 30th in the states of New Jersey, New York and Florida, respectively, based on deposit market share as of June 30, 2016. Our FDIC deposit market share ranking improved in Florida from 40th one year earlier due, in large part, to the assumption of $1.2 billion in deposits from the acquisition of CNL. While our FDIC rankings reflect a solid foundation in our primary markets, the market for banking and bank-related services is highly competitive and we face substantial competition in all phases of our operations. In addition to the FDIC-insured commercial banks in our principal metropolitan markets, we also compete with other providers of financial services such as savings institutions, credit unions, mutual funds, captive finance companies, mortgage companies, title agencies, asset managers, insurance companies and a growing list of other local, regional and national companies which offer various financial services. Many of these competitors may have fewer regulatory constraints, broader geographic service areas, greater capital, and, in some cases, lower cost structures.

In addition, competition has further intensified as a result of recent changes in regulation, and advances in technology and product delivery systems. We face strong competition for our borrowers, depositors, and other customers from Fintech companies that provide innovative web-based solutions to traditional retail banking services and products. Fintech companies tend to have stronger operating efficiencies and less regulatory burdens than their traditional bank counterparts, including Valley. Within our markets, we also compete with some of the largest financial institutions in the world that have greater human and financial resources are able to offer a large range of products and services at competitive rates and prices. Nevertheless, we believe we can compete effectively as a result of utilizing various strategies including our long history of local customer service and convenience as part of a relationship management culture, in conjunction with the pricing of loans and deposits. Our customers are influenced by the convenience, quality of service from our knowledgeable staff, personal contacts and attention to customer needs, as well as availability of products and services and related pricing. We provide such convenience through our banking network of 209 branches, an extensive ATM network of 224 locations, and our 24-hour telephone and on-line banking systems.

We continually review our pricing, products, locations, alternative delivery channels and various acquisition prospects, and periodically engage in discussions regarding possible acquisitions to maintain and enhance our competitive position.

Personnel

At December 31, 2016, Valley National Bank and its subsidiaries employed 2,828 full-time equivalent persons. Management considers relations with its employees to be satisfactory.

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Executive Officers

Name	Age at December 31, 2016	Executive Officer Since	Office
Gerald H. Lipkin	75	1975	Chairman of the Board and Chief Executive Officer of Valley and Valley National Bank
Ira D. Robbins	42	2009	Senior Executive Vice President of Valley and President of Valley National Bank
Rudy E. Schupp	66	2014	President of Valley and Chief Banking Officer of Valley National Bank
Alan D. Eskow	68	1993	Senior Executive Vice President, Chief Financial Officer and Corporate Secretary of Valley and Valley National Bank
Dianne M. Grenz	54	2014	Senior Executive Vice President of Valley and Chief Consumer Banking Officer of Valley National Bank
Thomas A. Iadanza	58	2015	Senior Executive Vice President of Valley and Chief Lending Officer of Valley National Bank
Ronald H. Janis	68	2017	Senior Executive Vice President and General Counsel of Valley and Valley National Bank
Robert J. Bardusch	51	2016	Executive Vice President of Valley and Chief Information Officer of Valley National Bank
Kevin Chittenden	52	2016	Executive Vice President of Valley and Chief Residential Lending Officer of Valley National Bank
Bernadette M. Mueller	58	2009	Executive Vice President of Valley and Valley National Bank
Andrea T. Onorato	59	2014	Executive Vice President of Valley and Valley National Bank
Melissa F. Scofield	57	2015	Executive Vice President of Valley and Valley National Bank
Mitchell L. Crandell	46	2007	First Senior Vice President, Chief Accounting Officer of Valley and Valley National Bank
Sherry Ambrosini	61	2014	First Senior Vice President of Valley National Bank

All officers serve at the pleasure of the Board of Directors.

Available Information

We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments thereto available on our website at www.valleynationalbank.com without charge as soon as reasonably practicable after filing or furnishing them to the SEC. Also available on the website are Valley’s Code of Conduct and Ethics that applies to all of our employees including our executive officers and directors, Valley’s Audit Committee Charter, Valley’s Compensation and Human Resources Committee Charter, Valley’s Nominating and Corporate Governance Committee Charter, and Valley’s Corporate Governance Guidelines.

Additionally, we will provide without charge a copy of our Annual Report on Form 10-K or the Code of Conduct and Ethics to any shareholder by mail. Requests should be sent to Valley National Bancorp, Attention: Shareholder Relations, 1455 Valley Road, Wayne, NJ 07470.

SUPERVISION AND REGULATION

The banking industry is highly regulated. Statutory and regulatory controls increase a bank holding company’s cost of doing business and limit the options of its management to deploy assets and maximize income. The following discussion is not intended to be a complete list of all the activities regulated by the banking laws or of the impact of such laws and regulations on Valley or Valley National Bank. It is intended only to briefly summarize some material provisions.

Bank Holding Company Regulation

Valley is a bank holding company within the meaning of the Holding Company Act. As a bank holding company, Valley is supervised by the FRB and is required to file reports with the FRB and provide such additional information as the FRB may require.

The Holding Company Act prohibits Valley, with certain exceptions, from acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company which is not a bank and from engaging in any business other than

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that of banking, managing and controlling banks or furnishing services to subsidiary banks, except that it may, upon application, engage in, and may own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking “as to be a proper incident thereto.” The Holding Company Act requires prior approval by the FRB of the acquisition by Valley of more than five percent of the voting stock of any other bank. Satisfactory capital ratios, Community Reinvestment Act ratings, and anti-money laundering policies are generally prerequisites to obtaining federal regulatory approval to make acquisitions. The policy of the FRB provides that a bank holding company is expected to act as a source of financial strength to its subsidiary bank and to commit resources to support the subsidiary bank in circumstances in which it might not do so absent that policy. Acquisitions through the Bank require approval of the Office of the Comptroller of the Currency (OCC). The Holding Company Act does not place territorial restrictions on the activities of non-bank subsidiaries of bank holding companies. The Gramm-Leach-Bliley Act, discussed below, allows Valley to expand into insurance, securities and other activities that are financial in nature if Valley elects to become a financial holding company.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 enables bank holding companies to acquire banks in states other than its home state and to open branches in other states, subject to certain restrictions. The Dodd-Frank Act, discussed below, authorized interstate de novo branching regardless of state law.

Regulation of Bank Subsidiary

Valley National Bank is subject to the supervision of, and to regular examination by, the OCC. Various laws and the regulations thereunder applicable to Valley and its bank subsidiary impose restrictions and requirements in many areas, including capital requirements, the maintenance of reserves, establishment of new offices, the making of loans and investments, consumer protection, employment practices, bank acquisitions and entry into new types of business. There are various legal limitations, including Sections 23A and 23B of the Federal Reserve Act, which govern the extent to which a bank subsidiary may finance or otherwise supply funds to its holding company or its holding company’s non-bank subsidiaries. Under federal law, no bank subsidiary may, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, its parent or the non-bank subsidiaries of its parent (other than direct subsidiaries of such bank which are not financial subsidiaries) or take their securities as collateral for loans to any borrower. Each bank subsidiary is also subject to collateral security requirements for any loans or extensions of credit permitted by such exceptions.

Capital Requirements

Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), each federal banking agency has promulgated regulations, specifying the levels at which a financial institution would be considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized,” and to take certain mandatory and discretionary supervisory actions based on the capital level of the institution. To qualify to engage in financial activities under the Gramm-Leach-Bliley Act, all depository institutions must be “well capitalized.” The financial holding company of a national bank will be put under directives to raise its capital levels or divest its activities if the depository institution falls from that level.

In July 2013, the FRB and the OCC published final rules establishing a new comprehensive capital framework for U.S. banking organizations, referred to herein as the Basel III rules. Basel III rules implement the Basel Committee’s December 2010 framework, commonly referred to as Basel III, for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. Basel III substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions, including Valley and Valley National Bank. Basel III became effective for us on January 1, 2015 (subject to phase-in periods for certain components).

Basel III (i) introduced a new capital measure called “Common Equity Tier 1,” or CET1, (ii) specified that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) applied most deductions/adjustments to regulatory capital measures to CET1 and not to the other components of capital, thus potentially requiring higher levels of CET1 in order to meet minimum ratios, and (iv) expanded the scope of the reductions/adjustments from capital as compared to existing regulations.

Under Basel III, the minimum capital ratios for us and Valley National Bank are as follows:

• 4.5 percent CET1 to risk-weighted assets.

• 6.0 percent Tier 1 capital (i.e., CET1 plus Additional Tier 1) to risk-weighted assets.

• 8.0 percent Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets.

• 4.0 percent Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).

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When fully phased in on January 1, 2019, Basel III also requires us and Valley National Bank to maintain a 2.5 percent “capital conservation buffer”, composed entirely of CET1, on top of the minimum risk-weighted asset ratios, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0 percent, (ii) Tier 1 capital to risk-weighted assets of at least 8.5 percent, and (iii) total capital to risk-weighted assets of at least 10.5 percent. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of (i) CET1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625 percent level and will increase by 0.625 percent on each subsequent January 1st, until it reaches 2.5 percent on January 1, 2019. As of January 1, 2017, we and the Bank were required to maintain a capital conservation buffer of 1.25 percent.

Basel III provides for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in common equity issued by nonconsolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10 percent of CET1 or all such categories in the aggregate exceed 15 percent of CET1. The deductions and other adjustments to CET1 are being phased in incrementally between January 1, 2015 and January 1, 2018.

Under current capital standards, the effects of accumulated other comprehensive income items included in capital are excluded for the purposes of determining regulatory capital ratios. Under Basel III, the effects of certain accumulated other comprehensive items are not excluded; however, non-advanced approaches banking organizations, including Valley and Valley National Bank, were permitted to make a one-time permanent election to continue to exclude these items effective as of January 1, 2015. We made this one-time election in the applicable bank regulatory reports as of March 31, 2015.

Basel III, with respect to us, required that our trust preferred securities be eliminated from Tier 1 capital by January 1, 2016. Accordingly, none of Valley’s trust preferred securities were included in Tier 1 capital during 2016.

With respect to Valley National Bank, Basel III also revised the “prompt corrective action” regulations pursuant to Section 38 of the FDICIA, by (i) introducing a CET1 ratio requirement at each capital quality level (other than critically undercapitalized); (ii) increasing the minimum Tier 1 capital ratio requirement for each category; and (iii) requiring a leverage ratio of 5 percent to be well-capitalized. The OCC’s regulations implementing these provisions of FDICIA provide that an institution will be classified as “well capitalized” if it (i) has a total risk-based capital ratio of at least 10.0 percent, (ii) has a Tier 1 risk-based capital ratio of at least 8.0 percent, (iii) has a CET1 ratio of at least 6.5 percent, (iv) has a Tier 1 leverage ratio of at least 5.0 percent, and (v) meets certain other requirements. An institution will be classified as “adequately capitalized” if it meets the aforementioned minimum capital ratios under Basel III. An institution will be classified as "undercapitalized" if it (i) has a total risk-based capital ratio of less than 8.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 6.0 percent, (iii) has a CET1 ratio of less than 4.5 percent or (iv) has Tier 1 leverage ratio of less than 4.0 percent. An institution will be classified as “significantly undercapitalized” if it (i) has a total risk-based capital ratio of less than 6.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 4.0 percent, (iii) has a CET1 ratio of less than 3.0 percent or (iv) has a Tier 1 leverage ratio of less than 3.0 percent. An institution will be classified as “critically undercapitalized” if it has a tangible equity to total assets ratio that is equal to or less than 2.0 percent. An insured depository institution may be deemed to be in a lower capitalization category if it receives an unsatisfactory examination rating. Similar categories apply to bank holding companies. When the capital conservation buffer is fully phased in, the capital ratios applicable to depository institutions under Basel III will exceed the ratios to be considered well-capitalized under the prompt corrective action regulations.

Basel III prescribes a standardized approach for calculating risk-weighted assets that expand the risk-weighting categories from the four Basel I-derived categories (0 percent, 20 percent, 50 percent and 100 percent) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets.

Valley National Bank’s capital ratios were all above the minimum levels required for it to be considered a “well capitalized” financial institution at December 31, 2016 under the “prompt corrective action” regulations in effect as of such date. We believe that, as of December 31, 2016, Valley and Valley National Bank would meet all capital adequacy requirements under Basel III on a fully phased-in basis if such requirements were currently effective.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

The Dodd-Frank Act was signed into law on July 21, 2010. The Dodd-Frank Act significantly changed the bank regulatory landscape and has impacted the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. Some of the effects are discussed below.

The Dodd-Frank Act-mandated covered banks and bank holding companies with more than $10 billion in total consolidated assets (such as Valley) to conduct annual company-run stress tests.

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The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB) and shifted most of the federal consumer protection rules applicable to banks and the enforcement power with respect to such rules to the CFPB. The CFPB has issued a series of final rules related to mortgage loan origination and mortgage loan servicing. The CFPB issued a rule amending Regulation Z to implement certain amendments to the Truth in Lending Act. The CFPB also issued a rule implementing amendments to the Truth in Lending Act and the Real Estate Settlement Procedures Act. 

In addition, the CFPB amended Regulation B to implement changes to the Equal Credit Opportunity Act. The CFPB also amended Regulation Z to implement requirements and restrictions to the Truth in Lending Act concerning loan originator compensation, qualifications of, and registration or licensing of loan originators, compliance procedures for depository institutions, mandatory arbitration, and the financing of single-premium credit insurance.  

Finally, the CFPB issued rules to implement the new ability-to-repay and qualified mortgage provisions provided for by the Dodd-Frank Act which became effective in January 2014. The ability-to-repay provision requires creditors to make reasonable, good faith determinations that borrowers are able to repay their mortgages before extending the credit based on a number of factors and consideration of financial information about the borrower from reasonably reliable third-party documents.

The CFPB has continued to issue final rules regarding mortgages, including amendments to certain mortgage servicing rules regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X and prompt crediting and periodic statement requirements under Regulation Z. We cannot assure you that existing or future regulations will not have a material adverse impact on our residential mortgage loan business or the housing markets in which we participate.

To the effect the Dodd-Frank Act remains in place, it is likely to continue to increase our cost of doing business, limit our permissible activities, and affect the competitive balance within our industry and market areas.

Volcker Rule

The Volcker Rule (contained in section 619 of the Dodd-Frank Act) prohibits an insured depository institution and its affiliates from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain types of funds (Covered Funds) subject to certain limited exceptions. The rule also effectively prohibits short-term trading strategies by any U.S. banking entity if those strategies involve instruments other than those specifically permitted for trading and prohibits the use of some hedging strategies. We identified no investments held as of December 31, 2016 that meet the definition of Covered Funds.

Incentive Compensation

The Dodd-Frank Act requires the federal bank regulatory agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities with at least $1 billion in total assets, such as Valley and the Bank, that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity. In addition, these agencies must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements. The agencies proposed such regulations in April 2011 and subsequently proposed revised regulations in May 2016, but the revised regulations have not been finalized. If the revised regulations are adopted in the form proposed, they will impose limitations on the manner in which Valley may structure compensation for its executives and employees.

In 2010, the FRB, OCC and FDIC issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. These three principles are incorporated into the proposed joint compensation regulations under the Dodd-Frank Act.

The FRB will review, as part of its regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as Valley, that are not “large, complex banking organizations.” These reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take other actions. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

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Dividend Limitations

Valley is a legal entity separate and distinct from its subsidiaries. Valley’s revenues (on a parent company only basis) result in substantial part from dividends paid by the Bank. The Bank’s dividend payments, without prior regulatory approval, are subject to regulatory limitations. Under the National Bank Act, dividends may be declared only if, after payment thereof, capital would be unimpaired and remaining surplus would equal 100 percent of capital. Moreover, a national bank may declare, in any one year, dividends only in an amount aggregating not more than the sum of its net profits for such year and its retained net profits for the preceding two years. However, declared dividends in excess of net profits in either of the preceding two years can be offset by retained net profits in the third and fourth years preceding the current year when determining the Bank’s dividend limitation. In addition, the bank regulatory agencies have the authority to prohibit the Bank from paying dividends or otherwise supplying funds to Valley if the supervising agency determines that such payment would constitute an unsafe or unsound banking practice.

Loans to Related Parties

Valley National Bank’s authority to extend credit to its directors, executive officers and 10 percent shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of the National Bank Act, Sarbanes-Oxley Act and Regulation O of the FRB thereunder. Among other things, these provisions require that extensions of credit to insiders (i) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (ii) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s capital. In addition, extensions of credit in excess of certain limits must be approved by the Bank’s Board of Directors. Under the Sarbanes-Oxley Act, Valley and its subsidiaries, other than the Bank under the authority of Regulation O, may not extend or arrange for any personal loans to its directors and executive officers.

Community Reinvestment

Under the Community Reinvestment Act (CRA), as implemented by OCC regulations, a national bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community. The CRA requires the OCC, in connection with its examination of a national bank, to assess the association’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such association. The CRA also requires all institutions to make public disclosure of their CRA ratings. Valley National Bank received a “satisfactory” CRA rating in its most recent examination.

The OCC conditioned its approval of Valley’s acquisition of 1st United, on the commitment of Valley National Bank to submit to the OCC before the end of 2014 a CRA plan consistent with the correspondence Valley submitted to the OCC during the application process. Valley National Bank submitted its CRA plan to the OCC prior to the end of 2014, and received a "no supervisory objection" to the plan from the OCC during May 2015.  While the OCC approval of the most recent acquisition of CNL in December 2015 was unconditional, the OCC noted it will continue to monitor the Bank's progress with the CRA plan, and any necessary enhancements based upon new markets or otherwise, through its normal supervisory reviews. Valley National Bank's CRA plan is available for review on its website at www.valleynationalbank.com.

A bank which does not have a CRA program that is deemed satisfactory by its regulator will be prevented from making acquisitions.

Corporate Governance

The Sarbanes-Oxley Act of 2002 added new legal requirements for public companies affecting corporate governance, accounting and corporate reporting, to increase corporate responsibility and to protect investors. Among other things, the Sarbanes-Oxley Act of 2002:

• required our management to evaluate our disclosure controls and procedures and our internal control over financial reporting, and required our auditors to issue a report on our internal control over financial reporting;

• imposed on our chief executive officer and chief financial officer additional responsibilities with respect to our external financial statements, including certification of financial statements within the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q by the chief executive officer and the chief financial officer;

• established independence requirements for audit committee members and outside auditors;

• created the Public Company Accounting Oversight Board which oversees public accounting firms; and

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• increased various criminal penalties for violations of securities laws.

The New York Stock Exchange (NYSE), where Valley common stock is listed, has corporate governance listing standards, including rules strengthening director independence requirements for boards, as well as the audit committee and the compensation committee, and requiring the adoption of charters for the nominating, corporate governance, compensation and audit committees.

USA PATRIOT Act

As part of the USA PATRIOT Act, Congress adopted the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 (the “Anti Money Laundering Act”). The Anti Money Laundering Act authorizes the Secretary of the U.S. Treasury, in consultation with the heads of other government agencies, to adopt special measures applicable to financial institutions such as banks, bank holding companies, broker-dealers and insurance companies. Among its other provisions, the Anti Money Laundering Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls that are reasonably designed to detect and report instances of money laundering in United States private banking accounts and correspondent accounts maintained for non-United States persons or their representatives; and (iii) to avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, a foreign shell bank that does not have a physical presence in any country.

Regulations implementing the due diligence requirements require minimum standards to verify customer identity and maintain accurate records, encourage cooperation among financial institutions, federal banking agencies, and law enforcement authorities regarding possible money laundering or terrorist activities, prohibit the anonymous use of “concentration accounts,” and requires all covered financial institutions to have in place an anti-money laundering compliance program.

The OCC, along with other banking agencies, have strictly enforced various anti-money laundering and suspicious activity reporting requirements using formal and informal enforcement tools to cause banks to comply with these provisions.

A bank which is issued a formal or informal enforcement requirement with respect to its Anti Money Laundering program will be prevented from making acquisitions.

Consumer Financial Protection Bureau Supervision

As a financial institution with more than $10 billion in assets, Valley National Bank is supervised by the CFPB for consumer protection purposes. The CFPB’s regulation of Valley National Bank is focused on risks to consumers and compliance with the federal consumer financial laws and includes regular examinations of the Bank. The CFPB, along with the Department of Justice and bank regulatory authorities also seek to enforce discriminatory lending laws. In such actions, the CFPB and others have used a disparate impact analysis, which measures discriminatory results without regard to intent. Consequently, unintentional actions by Valley could have a material adverse impact on our lending and results of operations if the actions are found to be discriminatory by our regulators.

Valley National Bank is subject to federal consumer protection statutes and regulations promulgated under those laws, including, but not limited to the following:

• Truth-In-Lending Act and Regulation Z, governing disclosures of credit terms to consumer borrowers;

• Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide certain information about home mortgage and refinanced loans;

• Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit;

• Fair Credit Reporting Act and Regulation V, governing the provision of consumer information to credit reporting agencies and the use of consumer information; and

• Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies.

Valley National Bank’s deposit operations are also subject to the following federal statutes and regulations, among others:

• The Truth in Savings Act and Regulation DD, which requires disclosure of deposit terms to consumers;

• Regulation CC, which relates to the availability of deposit funds to consumers;

• The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and

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• Electronic Funds Transfer Act and Regulation E, governing automatic deposits to, and withdrawals from, deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

The CFPB examines Valley National Bank's compliance with such laws and the regulations under them.

Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Financial Modernization Act of 1999 (Gramm-Leach-Bliley Act) became effective in early 2000. The Gramm-Leach-Bliley Act allowed bank holding companies meeting management, capital and CRA standards to become financial holding companies and thereby to engage in a substantially broader range of non-banking activities than was previously permissible, including insurance underwriting and securities underwriting.

The OCC adopted rules to allow national banks to form subsidiaries to engage in financial activities allowed for financial holding companies, subject to certain restrictions. While Valley National Bank may elect to create financial subsidiaries, Valley has not elected to become a financial holding company.

Insurance of Deposit Accounts

The Bank’s deposits are insured up to applicable limits by the FDIC. Under the FDIC’s risk-based system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors with less risky institutions paying lower assessments on their deposits.

As required by the Dodd-Frank Act, the FDIC has adopted rules that revise the assessment base to consist of average consolidated total assets during the assessment period minus the average tangible equity during the assessment period. In addition, the rules eliminated the adjustment for secured borrowings, including Federal Home Loan Bank (FHLB) advances, and made certain other changes to the impact of unsecured borrowings and brokered deposits on an institution’s deposit insurance assessment. The rules also revised the assessment rate schedule to provide initial base assessment rates ranging from 5 to 35 basis points and total base assessment rates ranging from 2.5 to 45 basis points after adjustment. The Dodd-Frank Act made permanent a $250 thousand limit for federal deposit insurance.

In 2016, the FDIC added a surcharge to the insurance assessments for banks with over $10 billion in assets, which became effective in July 2016 and which will continue until the FDIC reserve ratio reaches 1.35% or the end of 2018, whichever comes first.

The FDIC has authority to further increase insurance assessments. A significant increase in insurance premiums may have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance assessment rates will be in the future.

Item 1A. Risk Factors

An investment in our securities is subject to risks inherent to our business. The material risks and uncertainties that management believes may affect Valley are described below. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report. The risks and uncertainties described below are not the only ones facing Valley. Additional risks and uncertainties that management is not aware of or that management currently believes are immaterial may also impair Valley’s business operations. The value or market price of our securities could decline due to any of these identified or other risks, and you could lose all or part of your investment. This report is qualified in its entirety by these risk factors.

Our financial results and condition may be adversely impacted by weak economic conditions.

Currently, we are operating in a slow growth economic environment accompanied by, despite recent increases, a relatively low level of market interest rates. Financial institutions can be affected by changing conditions in the real estate and financial markets. Dramatic declines in the housing market in past years, with falling home prices and increasing foreclosures and unemployment, resulted in significant write-downs of asset values by financial institutions. While the economy and real estate market conditions have significantly improved in recent years, a return to a recessionary economy could result in financial stress on our borrowers that would adversely affect our financial condition and results of operations. The majority of Valley’s lending is in northern and central New Jersey, New York City metropolitan area and Florida. As a result of this geographic concentration, a significant broad-based deterioration in economic conditions in these areas could have a material adverse impact on the quality of Valley’s loan portfolio, results of operations and future growth potential. Adverse economic conditions in our market areas can reduce our rate of growth, affect our customers’ ability to repay loans and adversely impact our financial condition and earnings.

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General economic conditions, including inflation, unemployment and money supply fluctuations, also may affect our profitability adversely.

Changes in interest rates or prolonged low levels of interest rates could reduce our net interest income and earnings.

Valley’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds. Interest rates are sensitive to many factors that are beyond Valley’s control, including general economic conditions, competition, and policies of various governmental and regulatory agencies and, in particular, the policies of the FRB. Changes in monetary policy, including changes in interest rates, could influence not only the interest Valley receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) Valley’s ability to originate loans and obtain deposits, (ii) the fair value of Valley’s financial assets, including the held to maturity and available for sale investment securities portfolios, and (iii) the average duration of Valley’s interest-earning assets and liabilities. This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rate indices underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk). Any substantial or unexpected change in market interest rates or a prolonged period of low interest rates, such as those experienced in 2016 despite any potential movements in the FRB's accommodative monetary policy, could have a material adverse effect on Valley’s financial condition and results of operations. See additional information at the “Net Interest Income” and “Interest Rate Sensitivity” sections of our MD&A.

Claims and litigation could result in losses and damage to our reputation.

From time to time as part of Valley’s normal course of business, customers, bankruptcy trustees, former customers, contractual counterparties, third parties and former employees make claims and take legal action against Valley based on actions or inactions of Valley. If such claims and legal actions are not resolved in a manner favorable to Valley, they may result in financial liability and/or adversely affect the market perception of Valley and its products and services. This may also impact customer demand for Valley’s products and services. Any financial liability or reputation damage could have a material adverse effect on Valley’s business, which, in turn, could have a material adverse effect on its financial condition and results of operations. See the "Litigation" section under Note 15 to the consolidated financial statements for additional information and a significant pending lawsuit.

Future acquisitions may dilute shareholder value.

We regularly evaluate opportunities to acquire other financial institutions. As a result, merger and acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt, or equity securities may occur at any time. Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future acquisitions.

Future offerings of common stock, debt or other securities may adversely affect the market price of our stock and dilute the holdings of existing shareholders.

In the future, we may increase our capital resources or, if our or the Bank’s actual or projected capital ratios fall below or near the current (Basel III) regulatory required minimums, we or the Bank could be forced to raise additional capital by making additional offerings of common stock, preferred stock or debt securities. Upon liquidation, holders of our debt securities and shares of preferred stock, and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. In June 2015, Valley issued 4.6 million shares of non-cumulative perpetual preferred stock with a liquidation preference of $25 per share. In December 2016, Valley issued 9.24 million shares of common stock with the intention to use the proceeds for continued growth in the Bank’s loan portfolio, as well as other general corporate purposes. See Note 18 to the consolidated financial statements for more details on our common and preferred stock.

A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could adversely affect our asset quality and profitability for those loans secured by real property and increase the number of defaults and the level of losses within our loan portfolio.

A significant portion of our loan portfolio is secured by real estate. As of December 31, 2016, approximately 75 percent of our total loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and could deteriorate in value during the time the credit is extended. A downturn in the real estate market in our primary market areas could result in an increase in the number of borrowers

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who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected. The declines in home or commercial real estate prices in the New Jersey, New York and Florida markets we primarily serve, along with the reduced availability of mortgage credit, also may result in increases in delinquencies and losses in our loan portfolios. Unexpected decreases in home or commercial real estate prices coupled with slow economic growth and elevated levels of unemployment could drive losses beyond that which is provided for in our allowance for loan losses. In that event, our earnings could be adversely affected.

The secondary market for residential mortgage loans, for the most part, is limited to conforming Fannie Mae and Freddie Mac loans. The effects of this limited mortgage market combined with another correction in residential real estate market prices and reduced levels of home sales, could result in price reductions in single-family home values, adversely affecting the value of collateral securing mortgage loans held, mortgage loan originations and gains on sale of mortgage loans. Declines in real estate values and home sales volumes, and financial stress on borrowers as a result of job losses or other factors, could have further adverse effects on borrowers that result in higher delinquencies and greater charge-offs in future periods, which could adversely affect our financial condition or results of operations. For additional risks related to our sales of residential mortgages in the secondary market, see the “We may incur future losses in connection with repurchases and indemnification payments related to mortgages that we have sold into the secondary market” risk factor below.

Higher charge-offs and weak credit conditions could require us to increase our allowance for credit losses through a provision charge to earnings.

We maintain an allowance for credit losses based on our assessment of credit losses inherent in our loan portfolio (including unfunded credit commitments). The process for determining the amount of the allowance is critical to our financial results and conditions. It requires difficult, subjective and complex judgments about the future, including the impact of national and regional economic conditions on the ability of our borrowers to repay their loans. If our judgment proves to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio. Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. Additionally, bank regulators review the classification of our loans in their examination of us and we may be required in the future to change the classification on certain of our loans, which may require us to increase our provision for loan losses or loan charge-offs. If actual net charge-offs were to exceed Valley’s allowance, its earnings would be negatively impacted by additional provisions for loan losses. Any increase in our allowance for loan losses or loan charge-offs as required by the OCC or otherwise could have an adverse effect on our results of operations or financial condition.

We may be required to increase our allowance for credit losses as a result of a recent change to an accounting standard.

In 2016, the FASB released a new standard for determining the amount of the allowance for credit losses. The new standard will be effective for Valley for reporting periods beginning January 1, 2020. The new credit loss model will be a significant change from the standard in place today, as it requires the allowance for credit losses to be calculated based on current expected credit losses (commonly referred to as the "CECL model") rather than losses inherent in the portfolio as of a point in time. When adopted, the CECL model will likely increase our allowance for credit losses, which could materially affect our financial condition and future results of operations. The extent of the increase and its impact to our financial condition is under evaluation, but will ultimately depend upon the nature and characteristics of Valley's portfolio at the adoption date, and the macroeconomic conditions and forecasts at that date; therefore, the potential financial impact is currently unknown.

Cyber-attacks and information security breaches could compromise our information or result in the data of our customers being improperly divulged, which could expose us to liability and losses.

Many financial institutions and companies engaged in data processing have reported significant breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage systems, often through the introduction of computer viruses or malware, cyber-attacks and other means. Although we have not experienced, to date, any material losses relating to such cyber-attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future. Additionally, our risk exposure to security matters may remain elevated or increase in the future due to, among other things, the increasing size and prominence of Valley in the financial services industry, our expansion of Internet and mobile banking tools and products based on customer needs, and the system and customer account conversions associated with the integration of merger targets.

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We may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose us to additional liability and could have a material adverse effect on us.

We are required to comply with anti-money laundering, anti-terrorism and other laws and regulations in the United States. These laws and regulations require us, among other things, to adopt and enforce “know-your-customer” policies and procedures and to report suspicious and large transactions to applicable regulatory authorities. These laws and regulations have become increasingly complex and detailed, require improved systems and sophisticated monitoring and compliance personnel and have become the subject of enhanced government supervision.

While we have adopted policies and procedures aimed at detecting and preventing the use of our banking network for money laundering and related activities, those policies and procedures may not completely eliminate instances in which we may be used by customers to engage in money laundering and other illegal or improper activities. To the extent we fail to fully comply with applicable laws and regulations, the OCC, along with other banking agencies, have the authority to impose fines and other penalties on us. In addition, our business and reputation could suffer if customers use our banking network for money laundering or illegal or improper purposes.

We could incur future goodwill impairment

If our estimates of the fair value of our goodwill change as a result of changes in our business or other factors, we may determine a goodwill impairment charge is necessary. Estimates of the fair value of goodwill are determined using several factors and assumptions, including, but not limited to, industry pricing multiples and estimated cash flows. Based upon Valley’s 2016 goodwill impairment testing, the fair values of its four reporting units, wealth management, consumer lending, commercial lending, and investment management, were in excess of their carrying values. If the fair values of the four reporting units were less than their book value of the total common shareholders’ equity for an extended period of time, Valley would consider this and other factors, including the anticipated cash flows of each of the reporting units, to determine whether goodwill is impaired. No assurance can be given that we will not record an impairment loss on goodwill in the future and any such impairment loss could have a material adverse effect on our results of operations and financial condition. At December 31, 2016, our goodwill totaled $690.6 million, including $113.6 million acquired in the acquisition of CNL in December 2015. See Note 8 to the consolidated financial statements for additional information.

We may reduce or eliminate the cash dividend on our common stock, which could 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 and may reduce or eliminate our common stock cash dividend in the future depending upon our results of operations, financial condition or other metrics. This could adversely affect the market price of our common stock. Additionally, as a bank holding company, our ability to declare and pay dividends is dependent on federal regulatory policies and regulations including the supervisory policies and guidelines of the OCC and the FRB regarding capital adequacy and dividends. Among other things, consultation of the FRB supervisory staff is required in advance of our declaration or payment of a dividend that exceeds our earnings for a four-quarter period in which the dividend is being paid.

If our subsidiaries are unable to make dividends and distributions to us, we may be unable to make dividend payments to our preferred and common shareholders or interest payments on our long-term borrowings and junior subordinated debentures issued to capital trusts.

We are a separate and distinct legal entity from our banking and non-banking subsidiaries and depend on dividends, distributions, and other payments from the Bank and its non-banking subsidiaries to fund cash dividend payments on our preferred and common stock and to fund most payments on our other obligations. Regulations relating to capital requirements affect the ability of the Bank to pay dividends and other distributions to us and to make loans to us. Additionally, if our subsidiaries’ earnings are not sufficient to make dividend payments to us while maintaining adequate capital levels, we may not be able to make dividend payments to our preferred and common shareholders or interest payments on our long-term borrowings and junior subordinated debentures issued to capital trusts. Furthermore, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.

The required accounting treatment of purchased credit-impaired (PCI) loans, including loans acquired through business combinations, FDIC-assisted transactions, or bulk loan purchases could result in higher net interest margins and interest income in current periods and lower net interest margins and interest income in future periods.

Under U.S. GAAP, we record loans acquired at a discount (that is due, in part, to credit,) at fair value which may underestimate the actual performance of such loans. As a result, if these loans outperform our original fair value estimates, the difference between

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our original estimate and the actual performance of the loan (the “discount”) is accreted into net interest income. Thus, our net interest margins may initially appear higher. We expect the yields on our loans to decline as our acquired loan portfolio pays down or matures and we expect downward pressure on our interest income to the extent that the runoff on our acquired loan portfolio is not replaced with comparable high-yielding loans. This could result in higher net interest margins and interest income in current periods and lower net interest rate margin and lower interest income in future periods. See the “Loan Portfolio” section of our MD&A and Note 5 to the consolidated financial statements for additional analysis and discussion of our PCI loans.

An increase in our non-performing assets may reduce our interest income and increase our net loan charge-offs, provision for loan losses, and operating expenses.

Our non-accrual loans decreased from 1.20 percent at December 31, 2012 to 0.41 percent and 0.22 percent of total loans at December 31, 2015 and 2016, respectively. Although the economy continued to gradually improve during 2016, a downturn in economic or real estate market conditions could result in increased charge-offs to our allowance for loan losses and lost interest income relating to non-performing loans. Non-performing assets (including non-accrual loans, other real estate owned, other repossessed assets and non-accrual debt securities) totaled $49.4 million at December 31, 2016. These non-performing assets can adversely affect our net income mainly through decreased interest income and increased operating expenses incurred to maintain such assets or loss charges related to subsequent declines in the estimated fair value of foreclosed assets. Adverse changes in the value of our non-performing assets, or the underlying collateral, or in the borrowers’ performance or financial conditions could adversely affect our business, results of operations and financial condition. There can be no assurance that we will not experience increases in non-performing loans in the future, or that our non-performing assets will not result in lower financial returns in the future.

Extensive regulation and supervision may have a negative impact on our ability to compete in a cost effective manner and subject us to material compliance costs and penalties.

Valley, primarily through its principal subsidiary and certain non-bank subsidiaries, is subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole. Many laws and regulations affect Valley’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. They encourage Valley to ensure a satisfactory level of lending in defined areas, and establish and maintain comprehensive programs relating to anti-money laundering and customer identification. Congress, state legislatures, and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect Valley in substantial and unpredictable ways. Such changes could subject Valley to additional costs, limit the types of financial services and products it may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on Valley’s business, financial condition and results of operations. Valley’s compliance with certain of these laws will be considered by banking regulators when reviewing bank merger and bank holding company acquisitions.

Changes in accounting policies or accounting standards could cause us to change the manner in which we report our financial results and condition in adverse ways and could subject us to additional costs and expenses.

Valley’s accounting policies are fundamental to understanding its financial results and condition. Some of these policies require the use of estimates and assumptions that may affect the value of Valley’s assets or liabilities and financial results. Valley identified its accounting policies regarding the allowance for loan losses, security valuations and impairments, goodwill and other intangible assets, and income taxes to be critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. Under each of these policies, it is possible that materially different amounts would be reported under different conditions, using different assumptions, or as new information becomes available.

From time to time, the FASB and the SEC change their guidance governing the form and content of Valley’s external financial statements. In addition, accounting standard setters and those who interpret U.S. generally accepted accounting principles (U.S. GAAP), such as the FASB, SEC, banking regulators and Valley’s independent registered public accounting firm, may change or even reverse their previous interpretations or positions on how these standards should be applied. Such changes are expected to continue, and may accelerate dependent upon the FASB and International Accounting Standards Board commitments to achieving convergence between U.S. GAAP and International Financial Reporting Standards. Changes in U.S. GAAP and changes in current interpretations are beyond Valley’s control, can be hard to predict and could materially impact how Valley reports its financial results and condition. In certain cases, Valley could be required to apply a new or revised guidance retroactively or apply existing guidance differently (also retroactively) which may result in Valley restating prior period financial statements for material amounts. Additionally, significant changes to U.S. GAAP may require costly technology changes, additional training and personnel, and other expenses that will negatively impact our results of operations.

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We may be required to recognize losses on certain financial transactions due to the credit default or liquidation of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including the Federal Home Loan Bank of New York, commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount due to us. Any such losses could have a material adverse effect on our financial condition and results of operations.

We may be unable to adequately manage our liquidity risk, which could affect our ability to meet our obligations as they become due, capitalize on growth opportunities, or pay regular dividends on our common stock.

Liquidity risk is the potential that Valley will be unable to meet its obligations as they come due, capitalize on growth opportunities as they arise, or pay regular dividends on our common stock because of an inability to liquidate assets or obtain adequate funding in a timely basis, at a reasonable cost and within acceptable risk tolerances.

Liquidity is required to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital expenditures.

Liquidity is derived primarily from retail deposit growth and retention; principal and interest payments on loans; principal and interest payments on investment securities; sale, maturity and prepayment of investment securities; net cash provided from operations, and access to other funding sources.

Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could have a detrimental impact to our access to liquidity sources include a decrease in the level of our business activity due to persistent weakness, or downturn, in the economy or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not necessarily specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole.

The loss of or decrease in lower-cost funding sources within our deposit base may adversely impact our net interest income and net income.

Checking and savings, NOW, and money market deposit account balances and other forms of customer deposits can decrease when customers perceive alternative investments, such as the stock market or money market or fixed income mutual funds, as providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investments, Valley could lose a low cost source of funds, increasing its funding costs and reducing Valley’s net interest income and net income.

Our market share and income may be adversely affected by our inability to successfully compete against larger and more diverse financial service providers and digital Fintech start-up firms.

Valley faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may have more financial resources than Valley to deal with the potential negative changes in the financial markets and regulatory landscape. Valley competes with other providers of financial services such as commercial and savings banks, savings and loan associations, credit unions, money market and mutual funds, mortgage companies, title agencies, asset managers, insurance companies, and a large list of other local, regional and national institutions which offer financial services. Additionally, the financial services industry is facing a wave of digital disruption from Fintech companies that provide innovative web-based solutions to traditional retail banking services and products. Fintech companies tend to have stronger operating efficiencies and less regulatory burdens than their traditional bank counterparts, including Valley.

Mergers and acquisitions of financial institutions within New Jersey, the New York Metropolitan area and Florida may also occur given the current difficult banking environment and add more competitive pressure to a substantial portion of our marketplace. Our profitability depends upon our continued ability to successfully compete in our market area. If Valley is unable to compete effectively, it may lose market share and its income generated from loans, deposits, and other financial products may decline.

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Our ability to make opportunistic acquisitions is subject to significant risks, including the risk that regulators will not provide the requisite approvals.

We may make opportunistic whole or partial acquisitions of other banks, branches, financial institutions, or related businesses from time to time that we expect may further our business strategy (including through participation in FDIC-assisted acquisitions or assumption of deposits from troubled institutions should such opportunities exist). Any possible acquisition will be subject to regulatory approval, and there can be no assurance that we will be able to obtain such approval in a timely manner or at all. Even if we obtain regulatory approval, these acquisitions could involve numerous risks, including lower than expected performance or higher than expected costs, difficulties related to integration, diversion of management’s attention from other business activities, changes in relationships with customers, and the potential loss of key employees. In addition, we may not be successful in identifying acquisition candidates, integrating acquired institutions, or preventing deposit erosion or loan quality deterioration at acquired institutions. Competition for acquisitions can be highly competitive, and we may not be able to acquire other institutions on attractive terms. There can be no assurance that we will be successful in completing or will even pursue future acquisitions, or if such transactions are completed, that we will be successful in integrating acquired businesses into operations. Ability to grow may be limited if we choose not to pursue or are unable to successfully make acquisitions in the future.

Failure to successfully implement our growth strategies could cause us to incur substantial costs and expenses which may not be recouped and adversely affect our future profitability.

From time to time, Valley may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. Valley may invest significant time and resources to develop and market new lines of business and/or products and services. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting customer preferences, may also impact the successful implementation of a new line of business or a new product or service. Additionally, any new line of business and/or new product or service could have a significant impact on the effectiveness of Valley’s system of internal controls. Failure to successfully manage these risks could have a material adverse effect on Valley’s business, results of operations and financial condition.

We may not keep pace with technological change within the financial services industry, negatively affecting our ability to remain competitive and profitable.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Valley’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in Valley’s operations. Many of Valley’s competitors have substantially greater resources to invest in technological improvements. Valley may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on Valley’s business and, in turn, Valley’s financial condition and results of operations.

We rely on our systems, employees and certain service providers, and if our system fails, our operations could be disrupted.

We face the risk that the design of our controls and procedures, including those to mitigate the risk of fraud by employees or outsiders, may prove to be inadequate or are circumvented, thereby causing delays in detection of errors or inaccuracies in data and information. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

We may also be subject to disruptions of our systems arising from events that are wholly or partially beyond our control (including, for example, electrical or telecommunications outages), which may give rise to losses in service to customers and to financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as us) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate. We maintain a system of comprehensive policies and a control framework designed to monitor vendor risks including, among other things, (i) changes in the vendor’s organizational structure or internal controls, (ii) changes in the vendor’s financial condition, (iii) changes in the vendor’s support for existing products and services and (iv) changes in the vendor’s strategic focus. While we believe these policies and procedures help to mitigate risk, the failure of an external vendor to perform in accordance with the contracted arrangements

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under service level agreements could be disruptive to our operations, which could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

We may not be able to attract and retain skilled people.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most activities in which we engage can be intense and we may not be able to hire people or to retain them. The unexpected loss of services of one or more of our key personnel, including, but not limited to, the executive officers disclosed in Item 1 of this Annual Report, could have a material adverse impact on our business because we would lose the employees’ skills, knowledge of the market, and years of industry experience and may have difficulty promptly finding qualified replacement personnel.

Severe weather, acts of terrorism and other external events could significantly impact our ability to conduct our business.

A significant portion of our primary markets is located near coastal waters which could generate naturally occurring severe weather, or in response to climate change, that could have a significant impact on our ability to conduct business. Many areas in New Jersey, New York and Florida in which our branches operate are subject to severe flooding from time to time and significant weather related disruptions may become common events in the future. Heavy storms and hurricanes can also cause severe property damage and result in business closures, negatively impacting both the financial health of retail and commercial customers and our ability to operate our business. The risk of significant disruption and potential losses from future storm activity exists in all of our primary markets.

Additionally, New York City and New Jersey remain central targets for potential acts of terrorism against the United States. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Although we have established and regularly test disaster recovery policies and procedures, the occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.

We are subject to environmental liability risk associated with lending activities which could have a material adverse effect on our financial condition and results of operations.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review prior to originating certain commercial real estate loans, as well as before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations.

We may incur future losses in connection with repurchases and indemnification payments related to mortgages that we have sold into the secondary market.

We engage in the origination of residential mortgages for sale into the secondary market. In connection with such sales, we make representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred in respect of such loans. The substantial decline in residential real estate values and the standards used by some originators has resulted in more repurchase requests to many secondary market participants from secondary market purchasers. Since January 1, 2006, we have originated and sold over 20,200 individual residential mortgages totaling approximately $4.3 billion. Of the $4.3 billion in originations, approximately $9.2 million in unpaid principal balances remain outstanding from the origination years 2006 through 2008. These particular years are considered to be ‘high risk’ years in the mortgage industry due to the escalation in housing prices, and subsequent decline during the financial crisis. However, these potentially higher risk loans in our retained mortgage loan servicing portfolio continued to outperform Fannie Mae’s overall portfolio performance (for each applicable origination year) at December 31, 2016. Over the past several years, we have experienced a nominal amount of repurchase requests, and only a few of which have actually resulted in repurchases by Valley (only one loan repurchase in 2016 and no repurchases in 2015). None of the loan repurchases resulted in material loss. As of December 31, 2016, no reserves pertaining to loans sold were established on our financial statements. While we currently believe our repurchase risk remains low based upon our careful loan underwriting and documentation standards, it is possible that requests to repurchase loans could occur in the future and such requests may have a negative financial impact on us.

2016 Form 10-K 24

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We conduct our business at 209 retail banking centers locations throughout New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, and Florida. We own 99 of our banking center facilities and several non-branch operating facilities. The other properties are leased for various terms.

The following table summarizes our retail banking centers by district in each state:

	Number of banking centers	% of Total
New Jersey
Northern	114	54.6
Central	26	12.5
Total New Jersey	140	67.1
New York
Manhattan	12	5.7
Long Island	12	5.7
Brooklyn	9	4.3
Queens	5	2.4
Total New York	38	18.1
Florida
Southern	19	9.1
Central and Northeast	12	5.7
Total Florida	31	14.8
Total	209	100.0	%

Our principal business office is located at 1455 Valley Road, Wayne, New Jersey. Including our principal business office, we own four office buildings in Wayne, New Jersey and one building in Chestnut Ridge, New York, which are used for various operations of Valley National Bank and its subsidiaries. Our New York City corporate headquarters are located at One Penn Plaza in Manhattan and are primarily used as a central hub for New York based lending activities of senior executives and other commercial lenders. We also lease four non-bank office facilities in Florida, used for operational, executive and lending purposes.

In the second quarter of 2015, we disclosed a branch efficiency plan to "right-size" our branch network. We, like many in the banking industry, have experienced a significant decline in branch foot traffic as the emergence of self-service technology continues to reshape the banking industry. In response to these shifts in customer preference we have invested in new delivery channels and systems that will modernize the branch banking experience. Mobile banking, remote deposit, enhanced ATMs, online account opening, cash recyclers and complementary online services are part of our modernization plan and will redefine the traditional banking experience at Valley. As a result of our reviews and the evolution of banking in general, our plan included the closure and consolidation of 31 branch locations based upon our continuous evaluation of customer delivery channel preferences, branch usage patterns, and other factors. Of the 31 branches, 30 branches were closed by September 30, 2016. The remaining branch, located in Sebastian, Florida, was sold with its deposits totaling approximately $13 million to another financial institution during the fourth quarter of 2016 and resulted in an immaterial gain for the year ended December 31, 2016. The majority of the closed branches were located in New Jersey, and consisted of both leased and owned properties.

The total net book value of our premises and equipment (including land, buildings, leasehold improvements and furniture and equipment) was $291.2 million at December 31, 2016. We believe that all of our properties and equipment are well maintained, in good operating condition and adequate for all of our present and anticipated needs.

Item 3. Legal Proceedings

In the normal course of business, we may be a party to various outstanding legal proceedings and claims. In the opinion of management, our financial condition, results of operations, and liquidity should not be materially affected by the outcome of such legal proceedings and claims. See Note 15 to the consolidated financial statements for further details.

25 2016 Form 10-K

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the NYSE under the ticker symbol “VLY”. The following table sets forth for each quarter period indicated the high and low sales prices for our common stock, as reported by the NYSE, and the cash dividends declared per common share for each quarter. The amounts shown in the table below have been adjusted for all stock dividends and stock splits.

	2016						2015
	High		Low		Dividend		High		Low		Dividend
First Quarter	$	9.76	$	8.31	$	0.11	$	9.80	$	8.80	$	0.11
Second Quarter	10.20		8.49		0.11		10.48		9.26		0.11
Third Quarter	9.86		8.73		0.11		10.50		9.04		0.11
Fourth Quarter	12.14		9.36		0.11		11.24		9.50		0.11

There were 7,736 shareholders of record as of December 31, 2016.

Restrictions on Dividends

The timing and amount of cash dividends paid depend on our earnings, capital requirements, financial condition and other relevant factors. The primary source for dividends paid to our common stockholders is dividends paid to us from Valley National Bank. Federal laws and regulations contain restrictions on the ability of national banks, like Valley National Bank, to pay dividends. For more information regarding the restrictions on the Bank’s dividends, see “Item 1. Business—Supervision and Regulation—Dividend Limitations” and “Item 1A. Risk Factors—We May Reduce or Eliminate the Cash Dividend on Our Common Stock” above, and the “Liquidity” section of our MD&A of this Annual Report. Under our non-cumulative preferred stock issued in June 2015, we cannot issue dividends on our common stock if we do not pay dividends on the preferred stock. In addition, under the terms of the trust preferred securities issued by GCB Capital Trust III and State Bancorp Capital Trusts I and II we cannot pay dividends on our common stock if we defer payments on the junior subordinated debentures which provide the cash flow for the payments on the related trust preferred securities.

Performance Graph

The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2011 in: (a) Valley’s common stock; (b) Valley's custom peer group of 17 U.S. Banks (Valley Peer 17) in the States located in the Northeast and Mid-Atlantic; (c) Valley's custom peer group of 18 U.S. Banks (Valley Peer 18) in the States located in the Northeast, Mid-Atlantic, Florida and other metropolitan areas with total assets ranging from $6.0 billion to $50.0 billion (see below for details); and (d) the Standard and Poor’s (S&P) 500 Stock Index. The graph is calculated assuming that all dividends are reinvested during the relevant periods. The graph shows how a $100 investment would increase or decrease in value over time based on dividends (stock or cash) and increases or decreases in the market price of the stock.

From time to time, certain banks within both the Valley Peer 17 and Valley Peer 18 groups (included in the table below) may enter into merger agreements to be acquired, or announce or complete acquisitions of other institutions.  These pending or completed transactions may impact the overall performance of the common stock of the peer groups as compared to Valley’s common stock.

2016 Form 10-K 26

	12/11		12/12		12/13		12/14		12/15		12/16
Valley	$	100.00	$	83.98	$	97.01	$	97.28	$	103.16	$	127.41
Valley Peer 17*	100.00		111.30		159.05		168.16		194.72		239.94
Valley Peer 18*	100.00		107.71		158.01		162.42		177.33		230.06
S&P 500	100.00		115.98		153.51		174.47		176.88		197.98

* The Valley peer group index (Valley Peer 17) was comprised of the following 17 banks in 2015: Astoria Financial Corporation, Inc., Community Bank System, Inc., BankUnited, Inc., Dime Community Bancshares, Inc., EverBank Financial Corp., First Niagara Financial Group, Inc., Flushing Financial Corporation, Fulton Financial Corporation, Investors Bancorp, Inc., NBT Bancorp Inc., National Penn Bancshares, Inc., New York Community Bancorp, Inc., People's United Financial, Inc., Provident Financial Services, Inc., Signature Bank, Sterling Bancorp, and Webster Financial Corporation. In 2016, Valley added PacWest Bancorp, Private Bancorp, Prosperity Bancshares and Texas Capital Bancshares to the custom peer index, and removed First Niagara Financial Group, Inc. and National Penn Bancshares, Inc., due to their acquisitions by, and merger into other institutions during 2016. Astoria Financial was also removed in 2016 prior to the publicly announced termination of the pending merger with, and into New York Community Bancorp, Inc. The revised peer group index is referred to as Valley Peer 18 in the table above.

Issuer Repurchase of Equity Securities

The following table presents the purchases of equity securities by the issuer and affiliated purchasers during the three months ended December 31, 2016:

Period	Total Number of Shares Purchased (2)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans(1)	Maximum Number of Shares that May Yet Be Purchased       Under the Plans (1)
October 1, 2016 to October 31, 2016	7,846	$	9.60	—	4,112,465
November 1, 2016 to November 30, 2016	45,379	10.39		—	4,112,465
December 1, 2016 to December 31, 2016	84,211	11.22		—	4,112,465
Total	137,436			—

⁽¹⁾  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 December 31, 2016.

⁽²⁾  Represents repurchases made in connection with the vesting of employee stock awards and the payment of withholding taxes with sale proceeds.

Equity Compensation Plan Information

The information set forth in Item 12 of Part III of this Annual Report under the heading “Equity Compensation Plan Information” is incorporated by reference herein.

27 2016 Form 10-K

Item 6. Selected Financial Data

The following selected financial data should be read in conjunction with Valley’s consolidated financial statements and the accompanying notes thereto presented herein in response to Item 8 of this Annual Report.

	As of or for the Years Ended December 31,
	2016			2015			2014			2013			2012
	($ in thousands, except for share data)
Summary of Operations:
Interest income—tax equivalent basis (1)	$	775,305		$	714,889		$	644,536		$	623,986		$	678,410
Interest expense	148,774			156,754			161,846			168,377			181,312
Net interest income—tax equivalent basis (1)	626,531			558,135			482,690			455,609			497,098
Less: tax equivalent adjustment	8,382			7,866			7,933			7,889			7,217
Net interest income	618,149			550,269			474,757			447,720			489,881
Provision for credit losses	11,869			8,101			1,884			16,095			25,552
Net interest income after provisions for credit losses	606,280			542,168			472,873			431,625			464,329
Non-interest income:
Gains on securities transactions, net	777			2,487			745			14,678			2,587
Net impairment losses on securities recognized in earnings	—			—			—			—			(5,247		)
Gains on sales of loans, net	22,030			4,245			1,731			33,695			46,998
Gains (losses) on sales of assets, net	1,358			2,776			18,087			10,947			(329		)
Other non-interest income	79,060			74,294			57,053			69,333			76,937
Total non-interest income	103,225			83,802			77,616			128,653			120,946
Non-interest expense:
Loss on extinguishment of debt	315			51,129			10,132			—			—
Amortization of tax credit investments	34,744			27,312			24,196			14,352			4,157
Other non-interest expense	441,066			420,634			368,927			366,986			370,743
Total non-interest expense	476,125			499,075			403,255			381,338			374,900
Income before income taxes	233,380			126,895			147,234			178,940			210,375
Income tax expense	65,234			23,938			31,062			46,979			66,748
Net income	168,146			102,957			116,172			131,961			143,627
Dividends on preferred stock	7,188			3,813			—			—			—
Net income available to common shareholders	$	160,958		$	99,144		$	116,172		$	131,961		$	143,627
Per Common Share (2) :
Earnings per share:
Basic	$	0.63		$	0.42		$	0.56		$	0.66		$	0.73
Diluted	0.63			0.42			0.56			0.66			0.73
Dividends declared	0.44			0.44			0.44			0.60			0.65
Book value	8.59			8.26			8.03			7.72			7.57
Tangible book value (3)	5.80			5.36			5.38			5.39			5.26
Weighted average shares outstanding:
Basic	254,841,571			234,405,909			205,716,293			199,309,425			178,424,883
Diluted	255,268,336			234,437,000			205,716,293			199,309,425			178,426,070
Ratios:
Return on average assets	0.76		%	0.53		%	0.69		%	0.83		%	0.91		%
Return on average shareholders’ equity	7.46			5.26			7.18			8.69			9.57
Return on average tangible shareholders’ equity (4)	11.07			7.66			10.26			12.51			13.65
Average shareholders’ equity to average assets	10.08			10.08			9.62			9.51			9.48
Tangible common equity to tangible assets (5)	6.91			6.52			6.87			6.86			6.71
Efficiency ratio (6)	66.00			78.71			73.00			66.16			61.38
Dividend payout	69.80			105.00			78.40			90.90			89.04
Tier 1 leverage capital (7)	7.74			7.90			7.46			7.27			8.09
Common equity Tier 1 capital(7)	9.27			9.01			N/A			N/A			N/A
Tier 1 risk-based capital (7)	9.90			9.72			9.73			9.65			10.87
Total risk-based capital (7)	12.15			12.02			11.42			11.87			12.38
Financial Condition:
Assets	$	22,864,439		$	21,612,616		$	18,792,491		$	16,154,929		$	16,012,402
Net loans	17,121,684			15,936,929			13,371,560			11,453,995			10,892,599
Deposits	17,730,708			16,253,551			14,034,116			11,319,262			11,264,018
Shareholders’ equity	2,377,156			2,207,091			1,863,017			1,541,040			1,502,377

See Notes to the Selected Financial Data that follow.

2016 Form 10-K 28

Notes to Selected Financial Data

⁽¹⁾  In this report a number of amounts related to net interest income and net interest margin are presented on a tax equivalent basis using a 35 percent federal tax rate. Valley believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules.

⁽²⁾  All per common share amounts reflect all common stock dividends and all stock splits prior to 2013.

⁽³⁾  This Annual Report on Form 10-K contains supplemental financial information which has been determined by methods other than 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 facilitates 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.

Tangible book value per common share, which is a non-GAAP measure, is computed by dividing shareholders’ equity less goodwill and other intangible assets by common shares outstanding as follows:

	At December 31,
	2016		2015		2014		2013		2012
	($ in thousands, except for share data)
Common shares outstanding	263,638,830		253,787,561		232,110,975		199,593,109		198,438,271
Shareholders’ equity	$	2,377,156	$	2,207,091	$	1,863,017	$	1,541,040	$	1,502,377
Less: Preferred stock	111,590		111,590		—		—		—
Less: Goodwill and other intangible assets	736,121		735,221		614,667		464,364		459,357
Tangible common shareholders’ equity	$	1,529,445	$	1,360,280	$	1,248,350	$	1,076,676	$	1,043,020
Tangible book value per common share	$	5.80	$	5.36	$	5.38	$	5.39	$	5.26

⁽⁴⁾  Return on average tangible shareholders’ equity, which is a non-GAAP measure, is computed by dividing net income by average shareholders’ equity less average goodwill and average other intangible assets, as follows:

	Years Ended December 31,
	2016			2015			2014			2013			2012
	($ in thousands)
Net income	$	168,146		$	102,957		$	116,172		$	131,961		$	143,627
Average shareholders’ equity	$	2,253,570		$	1,958,757		$	1,618,965		$	1,519,299		$	1,500,997
Less: Average goodwill and other intangible assets	734,520			614,084			486,769			464,085			449,078
Average tangible shareholders’ equity	$	1,519,050		$	1,344,673		$	1,132,196		$	1,055,214		$	1,051,919
Return on average tangible shareholders’ equity	11.07		%	7.66		%	10.26		%	12.51		%	13.65		%

⁽⁵⁾  Tangible common shareholders’ equity to tangible assets, which is a non-GAAP measure, is computed by dividing tangible shareholders’ equity (shareholders’ equity less goodwill and other intangible assets) by tangible assets, as follows:

	At December 31,
	2016			2015			2014			2013			2012
							($ in thousands)
Tangible common shareholders’ equity	$	1,529,445		$	1,360,280		$	1,248,350		$	1,076,676		$	1,043,020
Total assets	$	22,864,439		$	21,612,616		$	18,792,491		$	16,154,929		$	16,012,402
Less: Goodwill and other intangible assets	736,121			735,221			614,667			464,364			459,357
Tangible assets	$	22,128,318		$	20,877,395		$	18,177,824		$	15,690,565		$	15,553,045
Tangible common shareholders’ equity to tangible assets	6.91		%	6.52		%	6.87		%	6.86		%	6.71		%

⁽⁶⁾  The efficiency ratio measures total non-interest expense as a percentage of net interest income plus total non-interest income.

⁽⁷⁾  December 31, 2016 and 2015 capital positions and ratios were calculated under Basel III rules which became effective January 1, 2015.

29 2016 Form 10-K

Item 7. Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations

The purpose of this analysis is to provide the reader with information relevant to understanding and assessing Valley’s results of operations for each of the past three years and financial condition for each of the past two years. In order to fully appreciate this analysis the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing under Item 8 of this report, and statistical data presented in this document.

Cautionary Statement Concerning Forward-Looking Statements

This Annual Report on Form 10-K, 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. These statements may be identified by such forward-looking terminology as “should,” “expect,” “believe,” “view,” “opportunity,” “allow,” “continues,” “reflects,” “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 in addition to those risk factors listed under the “Risk Factors” section in Part1, Item 1A of this Annual Report on Form 10-K include, but are not limited to:

• weakness or a decline in the U.S. economy, in particular in New Jersey, New York Metropolitan area (including Long Island) and Florida as well as an unexpected decline in commercial real estate values within our market areas;

• less than expected cost savings and revenue enhancement from Valley's cost reduction plans including earnings enhancement program called "LIFT";

• damage verdicts or settlements or restrictions related to existing or potential litigations arising from claims of breach of fiduciary responsibility, negligence, fraud, contractual claims, environmental laws, patent or trade mark infringement, and other matters;

• 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 OCC, the FRB, the 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, require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities;

• changes in accounting policies or accounting standards, including the new authoritative accounting guidance (known as the current expected credit loss (CECL) model) which may increase the required level of our allowance for credit losses after adoption on January 1, 2020;

• higher or lower than expected income tax expense or tax rates, including increases or decreases resulting from changes in tax laws, regulations and case law;

• government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve;

• unexpected changes in market interest rates for interest earning assets and/or interest bearing liabilities;

• changes in investor sentiment or consumer spending savings behavior;

• our inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital requirements (including those resulting from the U.S. implementation of Basel III requirements);

• less than expected cost savings from the maturity, modification or prepayment of long-term borrowings that mature through 2022;

• further prepayment penalties related to the early extinguishment of high cost borrowings;

• higher than expected loan losses within one or more segments of our loan portfolio;

• lower than expected cash flows from purchased credit-impaired loans;

2016 Form 10-K 30

• unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather 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;

• the failure of other financial institutions with whom we have trading, clearing, counterparty and other financial relationships; and

• inability to retain and attract customers and qualified employees.

Critical Accounting Policies and Estimates

Our accounting and reporting policies conform, in all material respects, to U.S. GAAP. In preparing the consolidated financial statements, management has made estimates, judgments 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. Actual results could differ materially from those estimates.

Valley’s accounting policies are fundamental to understanding management’s discussion and analysis of its financial condition and results of operations. Our significant accounting policies are presented in Note 1 to the consolidated financial statements. We identified our policies for the allowance for loan losses, security valuations and impairments, goodwill and other intangible assets, and income taxes to be critical 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. Management has reviewed the application of these policies with the Audit Committee of Valley’s Board of Directors.

The judgments used by management in applying the critical accounting policies discussed below may be affected by significant changes in the economic environment, which may result in changes to future financial results. Specifically, subsequent evaluations of the loan portfolio, in light of the factors then prevailing, may result in material changes in the allowance for loan losses in future periods, and the inability to collect on outstanding loans could result in increased loan losses. In addition, the valuation of certain securities (including debt security valuations based on the expected future cash flows of their underlying collateral) in our investment portfolio could be negatively impacted by illiquidity or dislocation in marketplaces resulting in depressed market prices thus leading to further impairment losses.

Allowance for Loan Losses. The allowance for credit losses includes the allowance for loan losses and the reserve for unfunded commercial letters of credit and represents management’s estimate of credit losses inherent in the loan portfolio at the balance sheet date. The determination of the appropriate level of the allowance is based on periodic evaluations of the loan portfolios. There are numerous components that enter into the evaluation of the allowance for loan losses, which includes a quantitative analysis, as well as a qualitative review of its results. The qualitative review is subjective and requires a significant amount of judgment. Various banking regulators, as an integral part of their examination process, also review the allowance for loan losses. Such regulators may require, based on their judgments about information available to them at the time of their examination, that certain loan balances be charged off or require that adjustments be made to the allowance for loan losses when their credit evaluations differ from those of management. Additionally, our allowance for credit losses methodology includes loan portfolio evaluations at the portfolio segment level, which consist of the commercial and industrial, commercial real estate, construction, residential mortgage, home equity, automobile and other consumer loan portfolios.

The allowance for loan losses consists of the following:

• specific reserves for individually impaired loans;

• reserves for adversely classified loans, and higher risk rated loans that are not impaired loans;

• reserves for other loans that are not impaired; and, if applicable,

• reserves for impairment of purchased credit-impaired (PCI) loans, including covered loans subject to the loss-sharing agreements with the FDIC, subsequent to their acquisition date.

Our reserves on classified and non-classified loans also include reserves based on general economic conditions and other qualitative risk factors both internal and external to Valley, including changes in loan portfolio volume, the composition and concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing.

Reserves for PCI loans within the Allowance for Loan Losses

We evaluated the acquired PCI loans and elected to account for them in accordance with Accounting Standards Codification (ASC) Subtopic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality,” since all of these loans were

31 2016 Form 10-K

acquired at a discount attributable, at least in part, to credit quality. The PCI loans are initially recorded at their estimated fair values segregated into pools of loans sharing common risk characteristics, exclusive of the loss-sharing agreements with the FDIC applicable to covered PCI loans. The fair values include estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.

The PCI loans are subject to our internal credit review. If and when unexpected credit deterioration occurs at the loan pool level subsequent to the acquisition date, a provision for credit losses for the PCI loans will be charged to earnings for the full amount of the decline in expected cash flows for the pool, without regard to the FDIC loss-sharing agreements applicable to covered PCI loans. Under the accounting guidance of ASC Subtopic 310-30, for acquired credit impaired loans, the allowance for loan losses on (or reserves for) PCI loans is measured at each financial reporting date based on future expected cash flows. This assessment and measurement is performed at the pool level and not at the individual loan level. Accordingly, decreases in expected cash flows resulting from further credit deterioration on a pool of acquired PCI loan pools as of such measurement date compared to those originally estimated are recognized by recording a provision and allowance for loan losses on PCI loans. Subsequent increases in the expected cash flows of the loans in that pool would first reduce any allowance for loan losses on PCI loans; and any excess will be accreted for prospectively as a yield adjustment. Any portion of the additional estimated losses related to covered PCI loans that is reimbursable from the FDIC under the loss-sharing agreements is recorded in non-interest income and increases the FDIC loss-share receivable asset included in other assets in our consolidated financial statements. Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015.

Note 1 to the consolidated financial statements describes the methodology used to determine the allowance for loan losses and a discussion of the factors driving changes in the amount of the allowance for loan losses is included in this MD&A.

Changes in Our Allowance for Loan Losses

Valley considers it difficult to quantify the impact of changes in forecast on its allowance for loan losses. However, management believes the following discussion may enable investors to better understand the variables that drive the allowance for loan losses, which amounted to $114.4 million at December 31, 2016.

For impaired credits, if the present value of expected cash flows were 10 percent higher or lower, the allowance would have decreased $4.5 million or increased $5.7 million, respectively, at December 31, 2016. If the fair value of the collateral (for collateral dependent loans) was 10 percent higher or lower, the allowance would have decreased $275 thousand or increased $458 thousand, respectively, at December 31, 2016.

The credit rating assigned to each non-classified credit is an important variable in determining the allowance. If each non-classified credit were rated one grade worse, the allowance would have increased by approximately $5.4 million as of December 31, 2016. Additionally, if the historical loss factors used to calculate the allowance for non-classified loans were 10 percent higher or lower, the allowance would have increased or decreased by approximately $9.7 million, respectively, at December 31, 2016. Moreover, if the expected loss rate applied to classified loans were to increase or decrease by 10 percent, the allowance would have been $651thousand higher or lower, respectively, at December 31, 2016.

Security Valuations and Impairments. Management utilizes various inputs to determine the fair value of its investment portfolio. To the extent they exist, unadjusted quoted market prices in active markets (Level 1) or quoted prices on similar assets (Level 2) are utilized to determine the fair value of each investment in the portfolio. In the absence of quoted prices and liquid markets, valuation techniques would be used to determine fair value of any investments that require inputs that are both significant to the fair value measurement and unobservable (Level 3). Valuation techniques are based on various assumptions, including, but not limited to, cash flows, discount rates, rate of return, adjustments for nonperformance and liquidity, and liquidation values. A significant degree of judgment is involved in valuing investments using Level 3 inputs. The use of different assumptions could have a positive or negative effect on our consolidated financial condition or results of operations. See Note 3 to the consolidated financial statements for more details on our security valuation techniques.

Management must periodically evaluate if unrealized losses (as determined based on the securities valuation methodologies discussed above) on individual securities classified as held to maturity or available for sale in the investment portfolio are considered to be other-than-temporary. The analysis of other-than-temporary impairment requires the use of various assumptions, including, but not limited to, the length of time an investment’s book value is greater than fair value, the severity of the investment’s decline, any credit deterioration of the investment, whether management intends to sell the security, and whether it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis. Debt investment securities deemed to be other-than-temporarily impaired are written down by the impairment related to the estimated credit loss and the non-credit related impairment is recognized in other comprehensive income or loss. Other-than-temporarily impaired equity securities are written down to fair value and a non-cash impairment charge is recognized in the period of such evaluation. See the “Investment Securities” section of this MD&A and Note 4 to the consolidated financial statements for additional analysis and discussion of our other-than-temporary impairment charges.

2016 Form 10-K 32

Goodwill and Other Intangible Assets. We record all assets, liabilities, and non-controlling interests in the acquiree in purchase acquisitions, including goodwill and other intangible assets, at fair value as of the acquisition date, and expense all acquisition related costs as incurred as required by ASC Topic 805, “Business Combinations.” Goodwill totaling $690.6 million at December 31, 2016 is not amortized but is subject to annual tests for impairment or more often, if events or circumstances indicate it may be impaired. Other intangible assets totaling $45.5 million at December 31, 2016 are amortized over their estimated useful lives and are subject to impairment tests if events or circumstances indicate a possible inability to realize the carrying amount. Such evaluation of other intangible assets is based on undiscounted cash flow projections. The initial recording of goodwill and other intangible assets requires subjective judgments concerning estimates of the fair value of the acquired assets and assumed liabilities.

Currently, the goodwill impairment analysis is generally a two-step test. During 2016, Valley elected to perform step one of the two-step goodwill impairment test for all of its reporting units but may choose to perform an optional qualitative assessment allowable for one or more units in the future periods to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Step one compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, an additional step must be performed. That additional step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in a manner similar to the amount of goodwill calculated in a business combination, i.e., by measuring the excess of the estimated fair value of the reporting unit, as determined in the first step above, over the aggregate estimated fair values of the individual assets, liabilities, and identifiable intangibles, as if the reporting unit was being acquired in a business combination at the impairment test date. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The loss establishes a new basis in the goodwill and subsequent reversal of goodwill impairment losses is not permitted.

Fair value may be determined using: market prices, comparison to similar assets, market multiples, discounted cash flow analysis and other determinants. Estimated cash flows may extend far into the future and, by their nature, are difficult to determine over an extended timeframe. Factors that may materially affect the estimates include, among others, competitive forces, customer behaviors and attrition, changes in revenue growth trends, cost structures and technology, and changes in discount rates, terminal values, and specific industry or market sector conditions. To assist in assessing the impact of potential goodwill or other intangible assets impairment charges at December 31, 2016, the impact of a five percent impairment charge on these intangible assets would result in a reduction in pre-tax income of approximately $36.8 million. See Note 8 to consolidated financial statements for additional information regarding goodwill and other intangible assets.

Income Taxes. We are subject to the income tax laws of the U.S., its states and municipalities. The income tax laws of the jurisdictions in which we operate are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws to our business activities, as well as the timing of when certain items may affect taxable income.

Our interpretations may be subject to review during examination by taxing authorities and disputes may arise over the respective tax positions. We attempt to resolve these disputes during the tax examination and audit process and ultimately through the court systems when applicable. We monitor relevant tax authorities and revise our estimate of accrued income taxes due to changes in income tax laws and their interpretation by the courts and regulatory authorities on a quarterly basis. Revisions of our estimate of accrued income taxes also may result from our own income tax planning and from the resolution of income tax controversies. Such revisions in our estimates may be material to our operating results for any given quarter.

The provision for income taxes is composed of current and deferred taxes. Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. We perform regular reviews to ascertain the realizability of our deferred tax assets. These reviews include management’s estimates and assumptions regarding future taxable income, which also incorporates various tax planning strategies. In connection with these reviews, if we determine that a portion of the deferred tax asset is not realizable, a valuation allowance is established. As of December 31, 2016 and 2015, management determined it is more likely than not that Valley will realize its net deferred tax assets and therefore a valuation allowance was not established. However, in 2015 we reduced our deferred tax assets by $3.1 million due to the expiration of certain state tax net operating loss carryforwards. In addition to our judgments regarding the realizable amount of our deferred tax assets, we are required to adjust our state deferred tax assets for the impact of our expansion outside of our traditional markets, specifically New Jersey.  During the fourth quarters of 2015 and 2014, we reduced our state deferred tax assets by $3.3 million and $7.6 million, respectively, to reflect the effect of the CNL and 1st United acquisitions in Florida on our existing state deferred tax assets.  The $6.4 million and $7.6 million in total reductions were reflected as charges to our (state) income tax expense for 2015 and 2014, respectively.  During 2016, the charge to our income tax expense related to the reduction of such deferred tax assets were immaterial.

33 2016 Form 10-K

However, future adjustments to our state deferred tax assets may be required, dependent on any significant changes in the nature, location and composition of our income producing assets.

We maintain a reserve related to certain tax positions that management believes contain an element of uncertainty. We adjust our unrecognized tax benefits as necessary when additional information becomes available. Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured based on the largest amount of benefit that management believes is more likely than not to be realized. It is possible that the reassessment of our unrecognized tax benefits may have a material impact on our effective tax rate in the period in which the reassessment occurs.

See Notes 1 and 13 to the consolidated financial statements and the “Income Taxes” section in this MD&A for an additional discussion on the accounting for income taxes.

New Authoritative Accounting Guidance. See Note 1 of the consolidated financial statements for a description of recent accounting pronouncements including the dates of adoption and the anticipated effect on our results of operations and financial condition.

Executive Summary

Company Overview. At December 31, 2016, Valley had consolidated total assets of $22.9 billion, total net loans of $17.1 billion, total deposits of $17.7 billion and total shareholders’ equity of $2.4 billion. Our commercial bank operations include branch office locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island and Florida. Of our current 209-branch network, 67 percent, 18 percent and 15 percent of the branches are located in New Jersey, New York and Florida, respectively. Despite significant branch consolidation activity in 2016, we have grown both in asset size and locations significantly over the past several years primarily through bank acquisitions.

On November 1, 2014, Valley expanded its physical banking presence from New Jersey and New York into Florida through the acquired 1st United Bancorp, Inc. ("1st United") and its wholly-owned subsidiary, 1st United Bank, a commercial bank with approximately $1.7 billion in assets, $1.2 billion in loans, and $1.4 billion in deposits, after purchase accounting adjustments. The 1st United acquisition provided Valley unique access to Florida's high growth market through its experienced management team and a 20 branch network covering some of the most attractive urban banking markets in Florida, including locations throughout southeast and central Florida, including the Treasure Coast and central Gulf Coast regions. On December 1, 2015, Valley followed up this highly successful entry into the Florida market with its acquisition of CNLBancshares, Inc. (CNL) and its wholly-owned subsidiary, CNLBank, a commercial bank with approximately $1.6 billion in assets, $825 million in loans, and $1.2 billion in deposits, after purchase accounting adjustments, and a branch network of 16 offices on the date of its acquisition by Valley. Today, Valley's Florida branch network totals 31 branches covering most major markets in central and southern Florida. See Item 1 of this Annual Report for more details regarding our past merger activity, as well as Note 2 to the consolidated financial statements.

Borrowing Strategy. As part of its funding and asset/liability management strategies, Valley periodically assesses the viability of the prepayment or modification of various levels of debt on its balance sheet, including a portion of its relatively high cost borrowings (mostly from the Federal Home Loan Bank of New York) that contractually mature through the end of 2022. As time moves closer to such maturity dates, the cash charge (or the "prepayment penalty") related to the early repayment of these borrowings, while substantial, may decline and become a more advantageous option to Valley dependent upon the current level of market interest rates for similar or alternate funding sources. In August 2016, we elected to prepay $405 million of FHLB borrowings with various maturity dates in 2018. The prepaid borrowings with a total average cost of 3.69 percent were funded with a new fixed-rate five-year FHLB advance totaling $405 million. The transaction was accounted for as a debt modification under U.S. GAAP. As a result, the new advance has an adjusted annual interest rate of 2.51 percent, after amortization of prepayment penalties totaling $20.0 million paid to the FHLB. During 2016, we also repaid borrowings of $182 million with an average cost of 4.69 percent that matured in March and April 2016, and another $75 million of borrowings with a cost of 5.00 percent matured in July 2016. In 2013, we entered into forward starting interest rate swaps, including $182 million (hedging the changes in market interest rates prior to the maturity of our borrowings) with an average fixed rate of 2.74 percent that became effective in March and April 2016 and have maturity dates ranging from March 2019 to September 2020.

Additionally, in August 2016 Valley terminated an interest rate swap with a notional amount of $125 million and September 2023 maturity. The terminated swap was used to hedge the change in the fair value of Valley’s 5.125 percent subordinated notes issued in September 2013. The transaction resulted in an adjusted fixed annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date. See Note 15 to the consolidated financial statements for additional information regarding our derivative transactions.

2016 Form 10-K 34

Similar to the 2016 debt prepayments, we elected to prepay $845 million of our borrowings during the fourth quarter of 2015. The prepaid borrowings had maturities in 2017 and 2018, and a total average cost of 3.72 percent. The settlement of such borrowings resulted in the recognition of pre-tax prepayment penalty charges of $51.1 million ($29.8 million after-tax) for the year ended December 31, 2015. Funding for the transaction was obtained from new sources consisting of both brokered money market deposits and securities sold under agreements to repurchase (repos) totaling $800 million, as well as a portion of our low yielding excess liquidity. In late December 2014, we also elected to use a portion of our low yielding excess liquidity to prepay $275 million of our long-term borrowings, which had a combined weighted average interest rate of 4.52 percent and contractual maturity dates in November 2015. The debt extinguishment resulted in a loss consisting of prepayment penalties totaling approximately $10.1 million for the year ended December 31, 2014.

While not considered part of the higher cost borrowings portfolio, we also prepaid $87 million of FHLB advances assumed in the acquisition of CNL during May 2016. The $87 million prepayment of FHLB borrowings was entirely funded by cash balances that were held as collateral at the FHLB of Atlanta, and resulted in the recognition of a $315 thousand loss on extinguishment of debt for the year ended December 31, 2016.

Moving forward, we will continue to evaluate all of our remaining high cost borrowings maturing for future opportunities, including potential prepayments, to enhance our net interest income and margin. Our ability to take action is dependent on the level of market interest rates, our ability to obtain similar amounts of debt instruments, as well as other factors. See Note 10 to the consolidated financial statements for more details on our borrowed funds.

Annual Results. Net income totaled $168.1 million, or $0.63 per diluted common share, for the year ended December 31, 2016 compared to $103.0 million in 2015, or $0.42 per diluted common share. The increase in net income was largely due to: (i) a $67.9 million, or 12.3 percent, increase in our net interest income largely caused by a $2.0 billion increase in average loans and a $840.1 million decrease in average long-term borrowings largely resulting from the fourth quarter of 2015 prepayment of $845 million in high cost borrowings, (ii) a $23.0 million, or 4.6 percent, decrease in total non-interest expense mostly caused by the $50.8 million decline in the recognition of losses on the extinguishment of debt as compared to 2015, partially offset by higher amortization of tax credit investments and general increases in operating expenses resulting from the acquisition of CNL on December 1, 2015 and (iii) a $19.4 million, or 23.2 percent, increase in total non-interest income mainly due to higher net gains on sales of loans and lower charges to the non-interest income related to the changes in our FDIC loss-share receivable, partially offset by (iv) a $41.3 millionincrease in income tax expense largely due to higher pre-tax income and (v) a $3.8 millionincrease in our provision for credit losses due to significant loan growth during 2016. 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 2016 annual results. The Non-Interest Expense section also includes information regarding our earnings enhancement programs.

Economic Overview and Indicators. The U.S. economy continued to expand in 2016. Real gross domestic product expanded 1.6 percent in 2016, after advancing 2.6 percent and 2.4 percent in 2015 and 2014, respectively. Nonfarm payroll growth remained solid, business investment increased somewhat in the second half of the year and the housing market improved further. Long-term interest rates trended mostly lower throughout 2016; more recently, interest rates have risen as inflation expectations have increased considerably.

Labor market conditions improved further during 2016, with solid job gains, a pickup in wage growth and a lower unemployment rate as compared with the end of 2015. In 2016, nonfarm payrolls added approximately 2.2 million jobs compared to 2.7 million and 3.0 million in 2015 and 2014, respectively. The unemployment rate ended the fourth quarter of 2016 at 4.7 percent (as noted in the table below), and 30 basis points lower than compared to December 31, 2015.

Consumer spending was supported by an improving labor market. Personal consumption expenditures for 2016 compared to the previous year increased 2.7 percent compared to 3.2 percent and 2.9 percent in 2015 and 2014, respectively. Despite some slowing in the pace of hiring, recent increases in wage growth should help maintain buoyant consumption figures.

The housing market improved further in 2016 with sales of both new and existing homes increasing compared to the prior two years. In addition, prices continued to climb as inventories remained low and activity increased. Sales of existing U.S. homes in 2016 advanced at an annual average pace of 5.4 million compared to 5.2 million and 4.9 million in 2015 and 2014, respectively. New single-family home sales advanced at an average annual rate of 561 thousand compared to 502 thousand and 440 thousand in 2015 and 2014, respectively.

The Federal Reserve’s Open Market Committee (FOMC) increased the target range for the federal funds rate to 0.50 to 0.75 percent in the December 2016 meeting. However, at their February 2017 meeting, the FOMC cited inflation had increased in recent quarters but remains below their long-term objective for such measure. In determining future policy actions, the FOMC will assess (both realized and expected) progress toward its objectives of maximum employment and two percent inflation. The FOMC has maintained its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-

35 2016 Form 10-K

backed securities in agency mortgage-backed securities and will continue rolling over maturing Treasury securities at auction. This policy should help maintain accommodative financial conditions until the normalization of the level of the federal funds rate is well under way. The FOMC has continued to emphasize that changes in monetary policy will be data dependent.

The 10-year U.S. Treasury note yield ended the fourth quarter of 2016 at 2.45 percent, 18 basis points higher compared with December 31, 2015. The spread between the 2-year and 10-year U.S. Treasury note yields ended the fourth quarter of 2016 at 1.25 percentage points, 42 basis points higher than September 30, 2016 and 4 basis points higher compared with December 31, 2015.

Market interest rates for residential mortgages increased considerably in the fourth quarter of 2016, yet remain below historical averages. In addition, rates on automobile loans increased modestly during the fourth quarter. These rate dynamics, combined with other positive economic indicators, such as the consumer confidence index, are expected to positively impact the profitability of our consumer lending segment during the first quarter of 2017. However at this point, we do not expect the loan activity in 2017, particularly refinanced residential mortgage loans, to match the consumer demand and volumes that we experienced in 2016. In the fourth quarter of 2016 and early 2017, we also continued to see strong demand for commercial real estate and construction loans in most of our primary markets. However, our business operations and results may be challenged in the future due to several factors, including, but not limited to an unexpected decline in the spread between short- and long-term market interest rates or slower than expected economic activity within our markets.

The following economic indicators reflect certain factors that may be used to assess the market conditions in our primary markets of northern and central New Jersey, the New York City metropolitan area, and Florida.

	For the Month Ended
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Selected Economic Indicators:
Unemployment rate:
U.S.	4.70	%	4.90	%	4.90	%	5.00	%	5.00	%
New York Metro Region (1)	4.80		5.20		4.40		4.70		4.40
New Jersey	5.00		5.30		4.90		4.40		4.90
New York	5.10		4.80		4.80		4.80		5.30
Miami-Fort Lauderdale Metro Region	4.90		5.10		4.60		4.90		5.00
Florida	4.90		4.70		4.70		5.00		5.10
	Three Months Ended
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
2-year U.S. Treasury rate (2)	1.01	%	0.73	%	0.77	%	0.84	%	0.84	%
10-year U.S. Treasury rate (2)	2.14		1.56		1.75		1.91		2.19
Real Gross Domestic Product (3)	1.90		2.90		1.20		1.10		1.40
Change in personal income (4) :
New Jersey	NA		3.42		2.86		3.28		3.65
New York	NA		2.76		2.69		4.08		2.89
Florida	NA		4.79		4.42		4.34		5.00
Homeowner vacancy rates:
New Jersey	2.70		1.80		1.90		1.80		1.40
New York	2.30		2.20		2.10		2.20		2.40
Florida	1.90		2.30		2.30		2.30		2.70
Number of U.S. regional existing home sales (5) :
Northeast census region	766,667		700,000		756,667		703,333		726,667
South census region	2,226,667		2,173,333		2,233,333		2,226,667		2,116,667
Number of building permits authorized for new homes (2) :
New Jersey	2,048		1,909		1,749		2,581		2,809
New York	3,362		2,982		2,322		2,380		5,632
Florida	9,774		10,372		8,664		8,536		9,907

2016 Form 10-K 36

NA—not available

(1) As reported by the Bureau of Labor Statistics for the NY-NJ-PA Metropolitan Statistical Area.

(2) Quarterly average for the period presented.

(3) Quarterly, compounded annual rate of change.

(4) Quarterly average, year over year percent change.

(5) Quarterly average, seasonally adjusted annual rate.

Sources: Bureau of Labor Statistics, U.S. Census Bureau, Federal Reserve Economic Data (FRED)

Loans. Total loans increased by $1.2 billion, or 7.4 percent, to $17.2 billion at December 31, 2016 from December 31, 2015 largely due to organic commercial real estate loan growth, loan participations with other banks that largely consisted of multi-family and 1-4 family mortgage loans, as well as organic growth in several loan categories in 2016. Total commercial real estate loans of $9.5 billion at December 31, 2016 grew by $1.4 billion, or 16.7 percent, as compared to December 31, 2015 and were supplemented by the purchase of loan participations totaling approximately $719 million during the year ended December 31, 2016. Commercial and industrial loans totaled $2.6 billion at December 31, 2016 and increased by $97.7 million, or 3.8 percent, from December 31, 2015 largely due to organic loan growth from new customer activity in the second half of 2016. At December 31, 2016, other consumer loans totaled $577.1 million and increased by $135.2 million from December 31, 2015 largely due to continued growth and customer usage of collateralized personal lines of credit. Residential mortgage loans totaled $2.9 billion at December 31, 2016 and decreased$262.6 million, or 8.4 percent, from December 31, 2015 due, in part, to the sale of approximately $558 million loans (both new originations and seasoned loans) that were largely a function of our normal management of the overall interest rate risk associated with our balance sheet during 2016. Automobile loans decreased$100.1 million, or 8.1 percent, to $1.1 billion at December 31, 2016 from December 31, 2015, mostly due to a negative trend in the level of our new indirect auto loan volumes during the first nine months of 2016 caused by new regulatory constraints on market pricing and fees, partially offset by new production from enhancements adopted to address these changes in regulation and our relatively new Florida auto dealer network. Home equity loans totaled $469.0 million at December 31, 2016 and decreased$42.2 million from December 31, 2015 due to normal repayment activity and lower line of credit usage as new customer demand remained tepid despite the low level of market interest rates in 2016. Total covered loans (i.e., loans subject to our loss-sharing agreements with the FDIC) decreased to only $70.4 million, or 0.4 percent of our total loans, at December 31, 2016 as compared to $122.3 million, or 0.8 percent of our total loans, at December 31, 2015 mainly due to normal collection and prepayment activity, as well as the expiration of certain loss-sharing agreements.

Our residential mortgage loan origination activity increased in 2016 as compared to 2015 largely due to the continued success of our low fixed price mortgage refinance program, the relatively low level of market interest rates, and a solid increase in the level of consumer refinance activity mainly during the second half of 2016. Our new and refinanced residential mortgage loan originations increased81.7 percent to $891.0 million for the year ended December 31, 2016 as compared to $490.4 million in 2015. During 2016, Valley sold $558.1 million of residential mortgage loans (including $16.4 million of residential mortgage loans held for sale at December 31, 2015), as compared to approximately $135.2 million of mortgages sold during the year ended December 31, 2015. Net gains on sales of residential mortgage loans increased to $22.0 million for the year ended December 31, 2016 as compared to $4.2 million in 2015 largely due to an increase in sales volumes for 2016, including the transfer and sale of approximately $170 million of performing 30-year fixed rate mortgages during the second half of 2016 as part of our on-going asset/liability management activities. Although our residential mortgage production increased 43.8 percent in the fourth quarter of 2016 as compared to the linked third quarter of 2016, we did experience a large decline in loan application volumes during December 2016 and the early stages of the first quarter of 2017. The decreased application volume is largely attributable to the recent increase in the level of market interest rates. As a result of the anticipated decrease in volume coupled with the $7.3 million gain realized on $170 million of seasoned loans sold in the fourth quarter of 2016, we anticipate a significant decrease in gains on loan sales during the first quarter of 2017 as compared to the fourth quarter of 2016.

For 2017, we anticipate our overall loan portfolio growth to be in the range of six to eight percent, however, there can be no assurance that we will achieve such levels given the potential for unforeseen changes in the market and other conditions. See further details on our loan activities under the “Loan Portfolio” section below.

Asset Quality. Our past due loans and non-accrual loans, discussed further below, exclude PCI loans. Under U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are not subject to delinquency classification in the same manner as loans originated by Valley. At December 31, 2016, our PCI loan portfolio totaled $1.8 billion, or 10.3 percent of our total loan portfolio, and includes all of the loans acquired from CNL on December 1, 2015.

Total non-PCI loan portfolio delinquencies (including loans past due 30 days or more and non-accrual loans) as a percentage of total loans was 0.55 percent at both December 31, 2016 and 2015. However, total accruing past due loans increased to $56.7 million at December 31, 2016 from $26.1 million at December 31, 2015 mostly due to normal fluctuations in early stage delinquencies, loan growth in 2016, and a few large matured performing loans in the normal process of renewal at December 31, 2016. Non-accrual loans totaled $37.5 million, or 0.22 percent of our entire loan portfolio of $17.2 billion, at December 31, 2016

37 2016 Form 10-K

as compared to $62.1 million, or 0.39 percent of total loans, at December 31, 2015. Overall, our non-performing assets decreased by 36.8 percent to $49.4 million at December 31, 2016 as compared to $78.2 million at December 31, 2015 largely due to the aforementioned decrease in non-accrual loans, as well as a $4.0 million decline in other real estate owned (OREO).

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 unpredictable future strength of the U.S. economy and the housing and the labor markets, management cannot provide assurance that our non-performing assets will remain at, or decline from, the levels reported as of December 31, 2016. See the “Non-performing Assets” section below for further analysis of our asset quality.

Investments. During the year ended December 31, 2016, we recognized net gains on securities transactions of $777 thousand as compared to $2.5 million and $745 thousand in 2015 and 2014, respectively. Valley recognized no other-than-temporary impairment charges attributable to credit on investment securities during the years ended December 31, 2016, 2015 and 2014. See further details in the “Investment Securities Portfolio” section below and Note 4 to the consolidated financial statements.

Deposits and Other Borrowings. The mix of total deposits remained relatively unchanged during 2016 as compared to 2015. Non-interest bearing deposits represented approximately 30 percent of total average deposits for the year ended December 31, 2016, while savings, NOW and money market accounts were 51 percent and time deposits were 19 percent. Average non-interest bearing deposits increased $670.8 million to approximately $5.1 billion for the year ended December 31, 2016 as compared to 2015 due, in part, to $501.7 million of non-interest bearing deposits assumed from CNL in December 2015. Additionally, both retail and commercial non-interest bearing deposits grew organically during 2016 mainly due to our continuous efforts to encourage new loan borrowers to maintain deposit accounts at Valley, and the prolonged low level of fixed interest rate investment alternatives, such as time deposits. Average savings, NOW and money market account balances also increased $1.3 billion to $8.6 billion in 2016 largely due to increased use of brokered money market account balances in our loan growth funding strategy and other liquidity needs (including the funding of a portion of the prepaid borrowings in the fourth quarter of 2015) and $562.2 million in deposits assumed from CNL. Lastly, average time deposits increased $150.6 million to $3.1 billion for 2016 as compared to 2015 mainly due to $103.9 million in time deposits assumed from CNL and organic growth from retail time deposit campaigns mostly during the third quarter of 2016.

Average short-term borrowings increased $1.0 billion to $1.2 billion for 2016 as compared to 2015. Within the category, average FHLB advances, repos with commercial counterparties, and customer (deposit sweep) repos increased $834.7 million, $83.9 million, and $74.5 million, respectively, as compared to 2015. The increase in average balances for 2016 were largely caused by the combination of new borrowings in the fourth quarter of 2015, which included $526 million of FHLB advances and $235 million of repos with commercial counterparties, and general increases in our customer repo account balances and FHLB advances (used for funding purposes) during the year ended December 31, 2016. The majority of the new funds in the fourth quarter of 2015 were used to partially fund the prepayment of high cost long-term borrowings in 2015.

Average long-term borrowings decreased $840.1 million to approximately $1.6 billion for 2016 as compared to 2015 largely due to the aforementioned prepayment of $845 million in the fourth quarter of 2015. See further discussion of our average interest bearing liabilities under the “Net Interest Income” section below.

Operating Environment. The financial markets continue to work through a period marked by unprecedented change due to current and future regulatory and market reform, including regulations under the Dodd-Frank Act and the Basel Rules highlighted in the “Supervision and Regulation” section of Item 1 of this Annual Report. During 2016, U.S. economic environment and labor markets continued to show gradual, but consistent improvement throughout the year. Despite these positives, considerable uncertainty remains in the economic outlook for 2017 due to several factors, including possible changes in U.S. fiscal and other policies, the future path of productivity growth and other global economic developments. These factors combined with the level of market interest rates may pose significant obstacles in the future for us and the markets in which we participate. However, we believe our current capital position, ability to evaluate credit and other investment opportunities, conservative balance sheet, and commitment to excellent customer service will afford us a competitive advantage in the future. Additionally, we believe we are well positioned to move quickly on market expansion opportunities as they may arise, including through possible acquisitions of other institutions within New Jersey, the New York City Metropolitan area and Florida.

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. The net interest margin on a fully tax equivalent basis is calculated by dividing tax equivalent net interest income by average interest earning assets and is a key measurement used in the banking industry to measure income from interest earning assets.

2016 Form 10-K 38

Annual Period 2016. Net interest income on a tax equivalent basis increased by $68.4 million to $626.5 million for 2016 compared with $558.1 million for 2015. The increase was mainly driven by a $2.0 billionincrease in average loan balances and a $840.1 milliondecrease in average long-term borrowings as compared to 2015. See further discussion of the changes in our average interest earning assets and interest-bearing liabilities below.

The net interest margin on a tax equivalent basis was 3.16 percent for the year ended December 31, 2016, a decrease of 4 basis points as compared to 3.20 percent for 2015. The decrease was largely due to a 19 basis point decline in the yield on interest earning assets, which was mainly attributable to the low market interest rates on (new and refinanced) loans throughout 2016 as compared to our overall yield of the portfolio and a large volume of prepayments of high yielding loans, including some PCI loans where borrower prepayment was encouraged by management. As a result, the yield on average loans decreased20 basis points to 4.18 percent for 2016 as compared to 4.38 percent in 2015. Additionally, our average taxable investment portfolio yield decreased17 basis points during 2016 as compared to one year ago largely due to normal repayments of higher yielding securities combined with higher prepayments and premium amortization on residential mortgage-backed securities. Largely mitigating these lower asset yields, the cost of interest bearing liabilities decreased by approximately 19 basis points to 1.02 percent for 2016. The decline in the overall cost as compared to 2015 was mainly due to a 22 basis point decrease in our cost of average long-term borrowings driven by the prepayment and modification of high cost borrowings totaling $845 million and $405 million in the fourth quarter of 2015 and third quarter of 2016, respectively. Additionally, but to a much lesser extent, our cost of long-term borrowings was positively impacted by the maturity of high cost borrowings with a combined total of $182 million in March and April 2016, and another $75 million of such borrowings in July 2016 (See "Borrowings Strategy" section above for more details). Partially offsetting the lower cost of long-term borrowings, the cost of savings, NOW and money market deposits increased 12 basis points mainly due to an increased use of brokered money market deposits for both prepayment and normal repayment of long-term borrowings, as well as the funding of new loan growth and other liquidity needs during 2016 as compared to 2015.

Our earning asset portfolio is comprised of both fixed-rate and adjustable-rate loans and investments. Many of our earning assets are priced based upon the prevailing treasury rates, the Valley prime rate (set by Valley management based on various internal and external factors) or on the U.S. prime interest rate as published in The Wall Street Journal. On average, the 10 year treasury rate decreased from 2.14 percent in 2015 to 1.83 percent in 2016, negatively impacting our yield on average loans as new and renewed fixed-rate loans originated in 2016 were typically originated at rates below the overall yield of 4.38 percent on average loans in 2015. However, the 10 year treasury rate averaged approximately 2.39 percent from November 9, 2016 (i.e., the day after the presidential election) through December 31, 2016 and has remained at this relative level in the early stages of 2017. Additionally, the U.S. prime rate increased to 3.75 percent from 3.50 percent in mid-December 2016 driven by the Federal Reserve's 25 basis point increase in the targeted federal funds rate. The increase, and our increase in the Valley prime rate to 4.875 percent from 4.75 percent at the same time, will have an immediate positive impact on the yield of our U.S. and Valley prime rate based loan portfolios for 2017 as compared to 2016. Should the treasury rates remain at or increase above current levels, this will also have a positive, but more gradual, effect on our interest income based on our ability to originate new and renewed fixed rate loans.

Average interest earning assets totaling $19.8 billion for the year ended December 31, 2016increased $2.4 billion, or 13.8 percent, as compared to 2015. Average loan balances increased $2.0 billion to $16.4 billion in 2016 and drove all of the $52.7 millionincrease in the interest income on a tax equivalent basis for loans as compared to 2015, which was partially offset by the low interest rates on new and renewed loans. The growth in average loans during 2016 was fueled mostly by solid demand for commercial real estate loans and secured personal lines of credit throughout the year, $892.8 million of purchased loans primarily consisting of participations in multi-family loans and whole 1-4 family loans (that were a mix of qualifying and non-qualifying CRA loans with adjustable and fixed rates) and $825.5 million in loans acquired from CNL on December 1, 2015. Average investment securities increased $433.2 million to approximately $3.1 billion in 2016 primarily due to $327.3 million of investment securities acquired from CNL, and moderate expansion of our investment portfolio as compared to 2015 largely due to higher levels of available liquidity and low cost funding during the second half of 2016. Average federal funds sold and other interest bearing deposits increased $16.9 million to $288.2 million for the year ended December 31, 2016 as compared to 2015 mostly caused by higher levels of overnight liquidity held primarily due to the timing of new loan originations and loan purchases.

Average interest bearing liabilities increased $1.6 billion to $14.5 billion for the year ended December 31, 2016 from the same period in 2015 mainly due to a $1.3 billionincrease in average savings, NOW, and money market accounts mostly due to increased use of brokered money market account balances in our loan growth funding strategy and other liquidity needs (including the funding of a portion of the prepaid borrowings in the fourth quarter of 2015). Average time deposits increased $150.6 million to $3.1 billion for 2016 as compared to 2015 mainly due to $103.9 million in time deposits assumed from CNL and organic growth from retail time deposit campaigns mostly during the third quarter of 2016. Average short-term borrowings increased $1.0 billion to $1.2 billion for 2016 as compared to 2015 due, in part, to the combination of new borrowings in the fourth quarter of 2015, which included $526 million of FHLB advances and $235 million of repos with commercial counterparties, and general increases in our customer repo account balances and FHLB advances in 2016. Average long-term borrowings decreased $840.1 million to approximately $1.6 billion for 2016 as compared to 2015 largely due to the aforementioned prepayment of $845 million in the

39 2016 Form 10-K

fourth quarters of 2015. See the "Fourth Quarter of 2016" section below for more information regarding changes in our interest bearing liabilities during 2016.

Fourth Quarter of 2016. Net interest income on a tax equivalent basis totaling $166.6 million for the fourth quarter of 2016increased $10.3 million and $16.5 million as compared to the third quarter of 2016 and fourth quarter of 2015, respectively. Interest income on a tax equivalent basis increased $9.9 million to $203.3 million for the fourth quarter of 2016 as compared to the third quarter of 2016 largely due to a 14 basis point increase in the yield on average loans, and increases of $209.0 million and $152.0 million in average loans and investment securities, respectively. The increase in loan yield was supplemented by higher interest accretion on certain acquired PCI loan pools caused by improvements in their forecasted cash flows during the fourth quarter of 2016, as well as a moderate increase in market interest rates, including higher rates on our prime rate-indexed loan portfolios during mid-December 2016. The loan yield for the fourth quarter of 2016 also included approximately $5.0 million of additional periodic fee income related to derivative interest rate swaps executed with commercial lending customers and loan prepayment penalty fees as compared to the third quarter of 2016. Interest expense of $36.7 million for the three months ended December 31, 2016decreased$357 thousand from the third quarter of 2016, and decreased $848 thousand as compared to the fourth quarter of 2015. During the fourth quarter of 2016, our interest expense on long-term borrowings declined by $693 thousand largely due to the full-quarter benefit of the interest rate reduction resulting from the modification of $405 million in FHLB borrowings during August 2016, as well as the maturity of $75 million in high-cost borrowings in late July 2016. The decrease was partially offset by higher interest expense on savings, NOW and money market deposits resulting from a $524.8 million increase in average balances as compared to the third quarter of 2016. The increase in average balances resulted from our utilization of more low-cost brokered money market deposits for liquidity and loan funding purposes, and a moderate shift from short-term borrowings that were previously used, in part, to fund the repayment of matured long-term borrowings during 2016.

The net interest margin on a tax equivalent basis was 3.27 percent for the fourth quarter of 2016, an increase of 13 basis points from 3.14 percent in the linked third quarter of 2016 and a 3 basis point decrease from 3.30 percent for the three months ended December 31, 2015. The yield on average interest earning assets also increased by 10 basis points on a linked quarter basis. The higher yield was mainly a result of the aforementioned increase in the yield on average loans to 4.27 percent for the fourth quarter of 2016. This was caused, in part, by the aforementioned $5.0 million increase in periodic loan fee income as compared to the third quarter of 2016. The $5.0 million increase represented approximately 12 basis points of the 4.27 percent yield on average loans for the fourth quarter of 2016, and 10 basis points of the 13 basis point increase in our net interest margin from the third quarter of 2016. The yield on average investment securities also moderately increased during the fourth quarter of 2016. The overall cost of average interest bearing liabilities decreased by 4 basis points from 1.02 percent in the linked third quarter of 2016. The decrease was primarily due to a 12 basis point decrease in the cost of long-term borrowings mostly caused by the aforementioned debt modification and an increase in the portion of our funding base represented by low-cost brokered deposits, partially offset by an 11 basis point increase in the cost of short-term borrowings. Our cost of deposits totaled 0.46 percent for the fourth quarter of 2016 as compared to 0.47 percent for the three months ended September 30, 2016.

Looking forward, our net interest margin for the first quarter of 2017 may decline as compared to the fourth quarter of 2016 due to lower levels of loan fee income, as well as a multitude of conditional, and sometimes unpredictable, factors that can impact our actual margin results. For example, our margin may continue to face the risk of compression in the future due to, among other factors, the relatively low level of interest rates despite the incremental increase in market interest rates during the fourth quarter, further repayment of higher yielding interest earning assets, and the re-pricing risk related to interest bearing deposits and short-term borrowings. Additionally, our investment portfolios include a large number of residential mortgage-backed securities purchased at a premium. The amortization of such premiums, which impacts both the yield and interest income recognized on such securities, may increase or decrease dependent upon the level of principal prepayments and market interest rates. To manage these risks, we continuously explore ways to maximize our mix of interest earning assets on our balance sheet, while maintaining a low cost of funds to optimize our net interest margin and overall returns. The increase in both the U.S. and Valley prime rates driven by the Federal Reserve's 25 basis point increase in the targeted federal funds rate in December 2016 and the recent increase in mortgage loan rates, should benefit both our future net interest income and margin. Additionally, potential future loan growth from both the commercial and consumer lending segments (based upon solid loan pipelines seen in the early stages of 2017) is anticipated to positively impact our future net interest income.

2016 Form 10-K 40

The following table reflects the components of net interest income for each of the three years ended December 31, 2016, 2015 and 2014:

ANALYSIS OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY AND

NET INTEREST INCOME ON A TAX EQUIVALENT BASIS

	2016								2015								2014
	Average Balance			Interest			Average Rate		Average Balance			Interest			Average Rate		Average Balance			Interest			Average Rate
	($ in thousands)
Assets
Interest earning assets:
Loans (1)(2)	$	16,400,745		$	685,927		4.18	%	$	14,447,020		$	633,220		4.38	%	$	12,081,683		$	552,847		4.58	%
Taxable investments (3)	2,536,197			64,349			2.54		2,161,094			58,607			2.71		2,232,559			68,730			3.08
Tax-exempt investments (1)(3)	604,188			23,903			3.96		546,129			22,413			4.10		556,067			22,590			4.06
Federal funds sold and other interest bearing deposits	288,182			1,126			0.39		271,261			649			0.24		170,474			369			0.22
Total interest earning assets	19,829,312			775,305			3.91		17,425,504			714,889			4.10		15,040,783			644,536			4.29
Allowance for loan losses	(109,084		)						(105,126		)						(109,341		)
Cash and due from banks	291,021								311,732								318,380
Other assets	2,032,704								1,809,504								1,598,642
Unrealized losses on securities available for sale, net	921								(3,559		)						(23,152		)
Total assets	$	22,044,874							$	19,438,055							$	16,825,312
Liabilities and Shareholders’ Equity
Interest bearing liabilities:
Savings, NOW and money market deposits	$	8,563,208		$	39,787		0.46	%	$	7,259,838		$	24,824		0.34	%	$	5,938,245		$	19,671		0.33	%
Time deposits	3,104,307			37,775			1.22		2,953,689			35,432			1.20		2,249,189			27,882			1.24
Total interest bearing deposits	11,667,515			77,562			0.66		10,213,527			60,256			0.59		8,187,434			47,553			0.58
Short-term borrowings	1,246,790			12,022			0.96		243,192			919			0.38		290,818			972			0.33
Long-term borrowings (4)	1,610,576			59,190			3.68		2,450,628			95,579			3.90		2,837,088			113,321			3.99
Total interest bearing liabilities	14,524,881			148,774			1.02		12,907,347			156,754			1.21		11,315,340			161,846			1.43
Non-interest bearing deposits	5,067,124								4,396,331								3,731,727
Other liabilities	199,299								175,620								159,280
Shareholders’ equity	2,253,570								1,958,757								1,618,965
Total liabilities and shareholders’ equity	$	22,044,874							$	19,438,055							$	16,825,312
Net interest income/interest rate spread (5)				626,531			2.89	%				558,135			2.89	%				482,690			2.86	%
Tax equivalent adjustment				(8,382		)						(7,866		)						(7,933		)
Net interest income, as reported				$	618,149							$	550,269							$	474,757
Net interest margin (6)							3.12	%							3.16	%							3.16	%
Tax equivalent effect							0.04								0.04								0.05
Net interest margin on a fully tax equivalent basis (6)							3.16	%							3.20	%							3.21	%

⁽¹⁾  Interest income is presented on a tax equivalent basis using a 35 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 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.

41 2016 Form 10-K

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 Valley 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

	Years Ended December 31,
	2016 Compared to 2015									2015 Compared to 2014
	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*	$	82,703		$	(29,996	)	$	52,707		$	104,482		$	(24,109	)	$	80,373
Taxable investments	9,695			(3,953		)	5,742			(2,145		)	(7,978		)	(10,123		)
Tax-exempt investments*	2,319			(829		)	1,490			(406		)	229			(177		)
Federal funds sold and other interest bearing deposits	43			434			477			238			42			280
Total increase (decrease) in interest income	94,760			(34,344		)	60,416			102,169			(31,816		)	70,353
Interest expense:
Savings, NOW and money market deposits	4,990			9,973			14,963			4,501			652			5,153
Time deposits	1,827			516			2,343			8,477			(927		)	7,550
Short-term borrowings	8,069			3,034			11,103			(171		)	118			(53		)
Long-term borrowings and junior subordinated debentures	(31,145		)	(5,244		)	(36,389		)	(15,126		)	(2,616		)	(17,742		)
Total (decrease) increase in interest expense	(16,259		)	8,279			(7,980		)	(2,319		)	(2,773		)	(5,092		)
Increase (decrease) in net interest income	$	111,019		$	(42,623	)	$	68,396		$	104,488		$	(29,043	)	$	75,445

*    Interest income is presented on a fully tax equivalent basis using a 35 percent federal tax rate.

Non-Interest Income

Non-interest income represented 11.9 percent and 10.6 percent of total interest income plus non-interest income for 2016 and 2015, respectively. For the year ended December 31, 2016, non-interest income increased $19.4 million compared with 2015 mainly due to an increase in net gains on sales of loans and a decrease in the negative impact on non-interest income from the change of the FDIC loss-share receivable. The following table presents the components of non-interest income for the years ended December 31, 2016, 2015, and 2014:

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Trust and investment services	$	10,345		$	10,020		$	9,512
Insurance commissions	19,106			17,233			16,853
Service charges on deposit accounts	20,879			21,176			22,771
Gains on securities transactions, net	777			2,487			745
Fees from loan servicing	6,441			6,641			7,013
Gains on sales of loans, net	22,030			4,245			1,731
Gains on sales of assets, net	1,358			2,776			18,087
Bank owned life insurance	6,694			6,815			6,392
Change in FDIC loss-share receivable	(1,291		)	(3,326		)	(20,792		)
Other	16,886			15,735			15,304
Total non-interest income	$	103,225		$	83,802		$	77,616

2016 Form 10-K 42

Insurance commissions increased$1.9 million for the year ended December 31, 2016 from $17.2 million in 2015 mainly due to additional commissions generated from the Bank's insurance agency subsidiary. The increased commissions were mainly driven by the customer lists (i.e., intangible assets) acquired from an independent insurance agency in January 2016. See Note 2 to the consolidated financial statements for more details on this acquisition.

Net gains on securities transactions decreased$1.7 million to $777 thousand for the year ended December 31, 2016 as compared to $2.5 million in 2015 due to an immaterial amount of investment securities sold during 2016. Net gains during 2015 related to the sale of corporate debt securities and trust preferred securities with a total unamortized cost of approximately $34.2 million, including one corporate debt security classified as held to maturity with amortized cost of $9.8 million. The sales of these securities were primarily due to an investment portfolio re-balancing during the first quarter of 2015 due to changes in our regulatory capital calculation under the new Basel III regulatory capital reform (effective for Valley on January 1, 2015). The sale of held to maturity securities based upon the change in capital requirements is permitted without tainting the remaining held to maturity investment portfolio.

Net gains on sales of loans increased$17.8 million for the year ended December 31, 2016 as compared to 2015 largely due to an increase in loan volumes combined with a higher percentage of residential mortgage loans originated for sale during 2016. The increased volume was caused by the continued success of our low fixed-cost mortgage refinance programs and the low level of market interest rates for the majority of 2016. Residential mortgage loan originations (including both new and refinanced loans) increased81.7 percent to $891.0 million for the year ended December 31, 2016 as compared to $490.4 million in 2015. During 2016, we sold $558.1 million of residential mortgages originated for sale (including $16.1 million of residential mortgage loans held for sale at December 31, 2015), as compared to $135.2 million of residential mortgage loans sold during 2015. In addition, of the $22.0 million in net gains on sales of loans for 2016, $7.3 million related to gains on the sale of approximately $170 million of performing 30-year fixed rate mortgages that were transferred to loans held for sale from the loan portfolio during the third quarter of 2016. 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 held for sale carried at fair value at each period end. The net change in the fair value of loans held for sale totaled a net loss of $473 thousand in 2016 as compared to a net gain of $313 thousand gain in 2015. Our decision to either sell or retain our mortgage loan production is dependent upon, amongst other factors, the levels of interest rates, consumer demand, the economy and our ability to maintain the appropriate level of interest rate risk on our balance sheet. The market interest rates for residential mortgages increased during the fourth quarter of 2016, yet remain relatively low as compared to recent historical norms. Despite this fact, the higher interest rates are expected to negatively impact the future level of refinanced loan volumes, and likely the amount of net gains on the sales of residential mortgage loans originated for sale recognized in the first quarter of 2017 if we cannot generate compensating new loan volumes. See further discussions of our residential mortgage loan origination activity under “Loans” in the "Executive Summary" section of this MD&A above and the fair valuation of our loans held for sale at Note 3 of the consolidated financial statements.

Net gains on sales of assets decreased$1.4 million for the year ended December 31, 2016 as compared to $2.8 million for 2015. The net gains on sales of $1.4 million in 2016 were mainly due to net gains on the sale of five former branch locations that were closed during 2016. The net gains on sales of assets during 2015 were largely caused by net gains totaling $4.8 million on the sale of two branch offices in the fourth quarter of 2015. The 2015 fourth quarter net gains were also net of non-cash fixed asset impairment charges totaling $1.9 million related to actual and planned branch closures as of December 31, 2015. See the "Earnings Enhancement Programs" section below for additional information.

The Bank and the FDIC share in the losses on loans and real estate owned as part of the loss-sharing agreements related to various past FDIC-assisted transactions described in Note 1 to the consolidated financial statements. The asset arising from the loss-sharing agreements is referred to as the “FDIC loss-share receivable” in our consolidated statements of financial condition. Within the non-interest income category, we may recognize income or expense related to the change in the FDIC loss-share receivable resulting from (i) a change in the estimated credit losses on the pools of covered loans, (ii) income from reimbursable expenses incurred during the period, (iii) accretion of the discount resulting from the present value of the receivable recorded at the acquisition dates, and (iv) prospective recognition of decreases in the receivable attributable to better than originally estimated cash flows on certain covered loan pools. The aggregate effect of changes in the FDIC loss-share receivable amounted to a $1.3 million net reduction in non-interest income for the year ended December 31, 2016 as compared to $3.3 million and $20.8 million for 2015 and 2014, respectively. The majority of the reduction in both the receivable and non-interest income during all three periods related to the prospective adjustment to the receivable related to better than originally estimated cash flows on certain pools of covered loans since the acquisition date. The large reduction for 2014 was mainly due to the better than originally expected cash flows on certain loan pools mostly covered by a commercial loss-sharing agreement with the FDIC that expired in March 2015, as well as a negative (credit) provision for losses on covered loans resulting in a $4.6 million decrease in the estimated losses covered by the loss-share agreements with the FDIC in 2014. See “FDIC Loss-Share Receivable Related to Covered Loans and Foreclosed Assets” section below in this MD&A and Note 5 to the consolidated financial statements for further details.

43 2016 Form 10-K

See the “Results of Operations—2015 Compared to 2014” section later in this MD&A for the discussion and analysis of changes in our non-interest income from 2014 to 2015.

Non-Interest Expense

Non-interest expense decreased $23.0 million to $476.1 million for the year ended December 31, 2016 from $499.1 million for 2015. The decrease was mainly attributable to the significant loss on the extinguishment of debt in 2015, partially offset by various increases caused by the acquisition of CNL on December 1, 2015 as well as other reasons discussed in more detail below. The following table presents the components of non-interest expense for the years ended December 31, 2016, 2015 and 2014:

	Years Ended December 31,
	2016		2015		2014
			(in thousands)
Salary and employee benefits expense	$	235,853	$	221,765	$	193,489
Net occupancy and equipment expense	87,140		90,521		74,492
FDIC insurance assessment	20,100		16,867		14,051
Amortization of other intangible assets	11,327		9,169		9,919
Professional and legal fees	17,755		18,945		16,859
Loss on extinguishment of debt	315		51,129		10,132
Amortization of tax credit investments	34,744		27,312		24,196
Telecommunication expense	10,021		8,259		6,993
Other	58,870		55,108		53,124
Total non-interest expense	$	476,125	$	499,075	$	403,255

Salary and employee benefits expense increased by $14.1 million for the year ended December 31, 2016 largely due to additional staffing expenses related to our acquisition of CNL on December 1, 2015 and moderately higher stock and cash incentive compensation expense as compared to 2015. These increases were partially offset by a $1.2 million increase in net periodic pension income from our frozen qualified and non-qualified benefit plans as compared to 2015 (See Note 12 to the consolidated financial statements for more information). Within this category, medical health insurance expenses increased $1.7 million to $19.1 million during the year ended December 31, 2016 as compared to 2015. While this increase can be partially attributed to the CNL acquisition, our health care expenses are at times volatile due to self-funding of a large portion of our insurance plan and these medical expenses can fluctuate based on our plan experience into the foreseeable future.

Net occupancy and equipment expenses decreased$3.4 million for the year ended December 31, 2016 as compared to 2015 mainly due, in part, to (i) a reduction in branch rental expense caused by branch closures in 2016, as well as branch closures commencing in the second half of 2015, (ii) the reversal of an accrued lease obligation of a terminated lease for a previously closed branch location during the third quarter of 2016 and (iii) lower repairs and maintenance expenses during 2016 as compared to 2015. These decreases were partially offset by an increase in depreciation expense mostly caused by the acquired CNL branches.

The FDIC insurance assessment increased$3.2 million for the year ended December 31, 2016 as compared to 2015 largely due to our growth resulting from the CNL acquisition and expansion of our commercial lending segment over the last 12 month period.

Amortization of intangible assets increased$2.2 million for the year ended December 31, 2016 as compared to 2015 largely due to higher amortization expense of core deposit intangibles during 2016 caused by the CNL acquisition, partially offset by a decrease in the amortization of loan servicing rights mostly caused by a moderate decline in the level of serviced loan repayments. See Note 8 to the consolidated financial statements for more details.

Professional and legal fees decreased$1.2 million for the year ended December 31, 2016 as compared to 2015 mostly due to a lower level of legal expenses related to general corporate matters and the acquisition of CNL in 2015.

The loss on extinguishment of debt decreased $50.8 million for the year ended December 31, 2016 as compared to 2015 primarily due to the prepayment penalties incurred in connection with the early repayment of $845 million in high cost long-term borrowings during the fourth quarter of 2015. The 2016 losses related to the prepayment of $87 million of FHLB advances assumed in the acquisition of CNL. See the " Executive Summary - Borrowings Strategy" section of this MD&A above for more details.

Amortization of tax credit investments increased$7.4 million for the year ended December 31, 2016 as compared to 2015 primarily due to continued impairment of maturing tax credit investments in renewable energy sources. Tax credit investments,

2016 Form 10-K 44

while negatively impacting the level of our operating expenses and efficiency ratio, directly reduce our income tax expense and effective tax rate. See Note 14 to the consolidated financial statements for additional information.

Telecommunication expense increased$1.8 million for the year ended December 31, 2016 as compared to 2015 mostly due to the expansion of our Florida operations as a result of the CNL acquisition.

Other non-interest expense increased$3.8 million for the year ended December 31, 2016 as compared to 2015 due to moderate increases in several significant components of other expense, such as data processing, travel and entertainment, insurance, debit card and ATM expenses, as well as other operating losses during the year ended December 31, 2016 partly caused by our growth, both organically and through acquisition.

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 within non-interest expense, reductions in our non-interest income related to changes in the FDIC loss-share receivable and, from time to time, loss on extinguishment of debt.

The following table presents our efficiency ratio and a reconciliation of the efficiency ratio adjusted for such items during the years ended December 31, 2016, 2015 and 2014:

	Years Ended December 31,
	2016			2015			2014
	($ in thousands)
Total non-interest expense	$	476,125		$	499,075		$	403,255
Less: Amortization of tax credit investments	34,744			27,312			24,196
Less: Loss on extinguishment of debt	315			51,129			10,132
Total non-interest expense, adjusted	$	441,066		$	420,634		$	368,927
Net interest income	618,149			550,269			474,757
Total non-interest income	103,225			83,802			77,616
Total net interest income and non-interest income	721,374			634,071			552,373
Less: Change in FDIC loss-share receivable	(1,291		)	(3,326		)	(20,792		)
Total net interest income and non-interest income, adjusted	$	722,665		$	637,397		$	573,165
Efficiency ratio	66.00		%	78.71		%	73.00		%
Efficiency ratio, adjusted	61.03		%	65.99		%	64.37		%

Earnings Enhancement Programs.In December 2016, Valley announced a company-wide earnings enhancement initiative called LIFT. The LIFT program will seek to identify both additional operating expense reduction and revenue enhancement opportunities, which together are anticipated to contribute to sustainable improvement in our earnings for years to come. Valley has selected EHS Partners, LLC, a New York based consulting firm, to help achieve its program goals. The planning and discovery phase for LIFT has already commenced and is scheduled for completion during the first half of 2017 (with the implementation phase to begin soon thereafter). Management believes that the LIFT program will not only be a short-term catalyst to improving the operating performance of Valley, but also a comprehensive effort to identify new sources of revenue to ensure we deliver on our long-term goals.

In 2015, we disclosed a branch efficiency plan to "right-size" our branch network. Our plan included the closure and consolidation of 31 branch locations based upon our continuous evaluation of customer delivery channel preferences, branch usage patterns, and other factors. Of the 31 branches, 30 branches were closed by September 30, 2016. The remaining branch, located in Sebastian, Florida, was sold with its deposits totaling approximately $13 million to another financial institution during the fourth quarter of 2016 and resulted in an immaterial gain for the year ended December 31, 2016. The majority of the closed branches were located in New Jersey, and consisted of both leased and owned properties.

As part of the LIFT program and beyond, we will continue to evaluate the operational efficiency of our entire branch network (consisting of 110 leased and 99 owned office locations at December 31, 2016) to ensure the optimal performance of our retail operations, in conjunction with several other factors, including our customers’ delivery channel preferences, branch usage patterns,

45 2016 Form 10-K

and the potential opportunity to move existing customer relationships to another branch location without imposing a negative impact on their banking experience.

In addition to the branch closures, Valley commenced a cost reduction plan in the fourth quarter of 2015 aimed at achieving operational efficiencies through streamlining various aspects of Valley's business model, staff reductions and further utilization of technological enhancements. These measures saved nearly $20 million in pre-tax operating expenses for the full year of 2016, exclusive of the CNL staffing reductions effective April 1, 2016.

See the “Results of Operations—2015 Compared to 2014” section later in this MD&A for the discussion and analysis of changes in our non-interest expense from 2014 to 2015.

Income Taxes

Income tax expense was $65.2 million for the year ended December 31, 2016, reflecting an effective tax rate of 28.0 percent, as compared to $23.9 million for the year ended 2015, reflecting an effective tax rate of 18.9 percent. The increase in both income tax expense and the effective tax rate in 2016 was primarily the result of higher pre-tax income caused, in part, by the absence of the $51.1 million pre-tax loss on extinguishment of debt recognized in 2015 and a $3.8 million decline in tax credits as compared to 2015. The 2015 income tax expense also included $6.4 million in charges to our state income tax expenses related to both the expiration of certain net operating loss carryforwards and a reduction in our deferred taxes. See discussion of our income taxes under the "Critical Accounting Polices and Estimates" section above for more details.

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. Based on the current information available, we anticipate that our effective tax rate will range from 27 percent to 31 percent for 2017, primarily reflecting the impacts of tax-exempt income, tax-advantaged investments and general business credits, exclusive of any potential future tax reform measures or other unanticipated changes in tax laws and regulations.

See additional information regarding our income taxes under our “Critical Accounting Policies and Estimates” section above, as well as Note 13 to the consolidated financial statements.

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 “pool funding” methodology, which involves the allocation of uniform funding cost based on each segments’ average earning assets 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. See Note 22 to the consolidated financial statements for the segments’ financial data.

Consumer lending. The consumer lending segment is mainly comprised of residential mortgage loans, automobile loans and home equity loans and represented in aggregate 29.3 percent of the total loan portfolio at December 31, 2016. The duration of the residential mortgage loan portfolio (which represented 16.6 percent of our total loan portfolio at December 31, 2016) is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans (representing 6.6 percent of total loans at December 31, 2016) 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 Division, comprised of trust, asset management, insurance services, and asset-based lending support services.

2016 Form 10-K 46

Average interest earning assets in this segment increased$317.5 million to $5.1 billion for the year ended December 31, 2016 as compared to 2015. The increase was largely attributable to continued organic growth in secured personal lines of credit over the last 12-month period and $283 million of PCI loans acquired from CNL in December 2015, partially offset by declines in auto loan volume and our election to originate a higher volume of residential mortgage loans for sale, rather than for investment during 2016.

Income before income taxes generated by the consumer lending segment increased$27.3 million to $70.0 million for the year ended December 31, 2016 as compared to $42.7 million in 2015 mainly due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. Net interest income increased $11.0 million to $141.8 million for the year ended December 31, 2016 as compared to 2015 mostly caused by the additional interest income generated from higher average loan balances. Non-interest income increased$18.1 million to $63.4 million for the year ended December 31, 2016 as compared to 2015 largely due to a $17.8 million increase in net gains on sales of loans caused by a higher level of sales volumes in 2016 as compared to 2015 (see further details in the "Non-Interest Income" section above). The positive impact of these items was partially offset by a $2.9 million increase in non-interest expense as compared to the year ended December 31, 2015.

The net interest margin on the consumer lending portfolio increased5 basis points to 2.79 percent for the year ended December 31, 2016 as compared to 2015 due to a 15 basis point decrease in the costs associated with our funding sources that was partially offset by a 10 basis point decline in the yield on average loans. The decrease in our cost of funding was mainly driven by our prepayments and modifications of higher cost long-term borrowings in both the fourth quarter of 2015 and third quarter of 2016 (see "Borrowings Strategy" section above for more details), as well as some maturities of other high-cost borrowings. The decrease in yield on average loans was largely caused by new and refinanced loan volumes that remained at relatively low interest rates throughout 2016 as compared to the overall yield of our loan portfolio, as well as repayment of higher yielding loans, including some PCI loans. See the "Net Interest Income" section above for more detail regarding net interest margin.

The return on average interest earning assets before income taxes for the consumer lending segment was 1.38 percent for 2016 compared to 0.90 percent for 2015.

Commercial lending. The commercial lending segment is mainly comprised of floating rate and adjustable rate commercial and industrial 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 $2.6 billion and represented 15.3 percent of the total loan portfolio at December 31, 2016. Commercial real estate loans and construction loans totaled $9.5 billion and represented 55.4 percent of the total loan portfolio at December 31, 2016.

Average interest earning assets in this segment increased$1.6 billion to $11.3 billion for the year ended December 31, 2016 as compared to $9.7 billion in 2015. The increase was primarily attributable to purchases of participations in multi-family loans totaling over $718 million during 2016, and $542 million of PCI loans acquired from CNL in December 2015, as well as continued organic loan growth (including new loan production from our Florida market) mostly within the non-PCI commercial real estate loan portfolio over the last 12 months.

For the year ended December 31, 2016, income before income taxes for the commercial lending segment increased$31.6 million to $193.0 million as compared to 2015 mostly due to an increase in net interest income coupled with an increase in non-interest income, partially offset by increases in internal transfer expense, non-interest expense and the provision for credit losses. Net interest income increased$48.8 million to $431.0 million for the year ended December 31, 2016 as compared to 2015 largely due to the aforementioned increase in average loan balances. Non-interest income increased$2.5 million to $3.3 million for the year ended December 31, 2016 as compared to 2015 due to a decline in the charge to non-interest income related to the change in our FDIC loss-share receivable. See further details in the "Non-Interest Income" section above. The increases of $13.7 million and $2.5 million in internal transfer expense and non-interest expense, respectively, as compared to 2015 were due, in part, to additional operating expenses related to our growth, including the acquisition of CNL. The provision for credit losses increased$4.0 million to $11.0 million for the year ended December 31, 2016 as compared to 2015 largely due to organic and purchased loan growth, as well as other qualitative factors. See further details in the "Allowance for Credit Losses" section below.

The net interest margin for this segment decreased13 basis points to 3.81 percent during 2016 as a result of a 28 basis point decrease in the yield on average loans, partially offset by a 15 basis point decrease in the cost of our funding sources as compared to 2015. The decrease in the yield on loans was primarily due to the new and refinanced loan volumes at current interest rates that were relatively low compared to the overall yield of our loan portfolio, as well as repayment of higher yielding loans during 2016.

The return on average interest earning assets before income taxes for this segment was 1.71 percent for 2016 compared to 1.67 percent for the prior year period.

47 2016 Form 10-K

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 increased$450.1 million to $3.4 billion for the year ended December 31, 2016 as compared to 2015 mostly due to an increase in average investment balances and a moderate increase in average federal funds sold and other interest bearing deposits. The increase in average investment balances was partially due to $327.3 million of investment securities acquired from CNL, and some expansion of our investment portfolio as compared to 2015 due to higher levels of available liquidity and low cost of funding sources mainly during the second half of 2016. Average federal funds sold and other interest bearing deposits increased $16.9 million to $288.2 million for the year ended December 31, 2016 as compared to 2015 due to higher levels of overnight liquidity held due to the high volume and timing of new loan originations and loan purchases.

For the year ended December 31, 2016, income before income taxes for the investment management segment increased$5.5 million to $22.6 million as compared to 2015 largely due to a $8.9 millionincrease in net interest income, partially offset by a $3.0 millionincrease in internal transfer expense. The increase in net interest income was mainly driven by higher average interest earning balances.

The net interest margin for this segment increased2 basis points to 1.92 percent during the year ended December 31, 2016 as compared to 2015 as a result of a 15 basis point decrease in costs associated with our funding sources, partially offset by a 13 basis point decrease in the yield on average investments driven downward by principal repayments of higher yielding investments and new investments at lower market interest rates.

The return on average interest earning assets before income taxes for this segment was 0.66 percent for 2016 compared to 0.57 percent for 2015.

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, losses on the extinguishment of debt, interest expense related to subordinated notes, as well as income and expense from derivative financial instruments.

The pre-tax net loss for the corporate segment decreased $42.0 million for the year ended December 31, 2016 to $52.2 million as compared to 2015. The decline in the net loss for this segment was mainly due to a decrease in non-interest expense coupled with an increase in internal transfer income. The non-interest expense decreased$28.1 million to $342.0 million for the year ended December 31, 2016 as compared to 2015 largely due to a $50.8 million decrease in the loss on extinguishment of debt during 2016, partially offset by increases of $14.1 million and $7.4 million in salary and employee benefits expense and the amortization of tax credit investments, respectively (see further details in the "Non-Interest Expense" section above). Internal transfer income increased $15.9 million to $280.3 million for the year ended December 31, 2016 as compared to the prior year.

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 attempts to achieve consistent accounting and economic benefits for financial assets and their related funding sources. We have predominately 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.

2016 Form 10-K 48

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 twelve and twenty-four 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 December 31, 2016. The model assumes changes in interest rates without any proactive change in the composition or size of the balance sheet by management. In the model, the forecasted shape of the yield curve remains static as of December 31, 2016. The impact of interest rate derivatives, such as interest rate swaps and caps, is also included in the model.

Our simulation model is based on market interest rates and prepayment speeds prevalent in the market as of December 31, 2016. Although the size of Valley’s balance sheet is forecasted to remain static as of December 31, 2016 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 2016. The model utilizes an immediate parallel shift in the market interest rates at December 31, 2016.

The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the table above, 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 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 above. 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	$	(1,479	)	(0.23	)%
+100	166			0.03
- 100	(14,519		)	(2.26	)

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 0.03 percent. The sensitivity of our balance sheet to such a move in interest rates at December 31, 2016 decreased as compared to December 31, 2015 (which was an increase of 1.26 percent in net interest income over a 12 month period). Despite the decrease in asset sensitivity as compared to December 31, 2015, we believe the balance sheet remains well-positioned to respond positively to a rising market interest rate environment. Our current asset sensitivity to a 100 basis point immediate increase in interest rates is impacted by, among other factors, asset cash flow and repricing characteristics complemented by a funding structure that provides for very stable earnings and low volatility. Additionally, the recent steepening of the yield curve with a greater increase in long-term rates (generally tied to asset repricing), as opposed to a move in short-term rates (generally tied to liability repricing), is usually a positive environment for the generation of net interest income. Future changes including, but not limited to, the slope of the yield curve and projected cash flows, will affect our net interest income results and may increase or decrease the level of net interest income sensitivity.

49 2016 Form 10-K

Our interest rate swaps and caps designated as cash flow hedging relationships are designed to protect us from upward movements in interest rates on certain deposits and other borrowings based on the prime rate (as reported by The Wall Street Journal) or the three-month LIBOR rate. Our cash flow interest rate swaps had a total notional value of $582 million at December 31, 2016 and currently pay fixed and receive floating rates. We also utilize fair value and non-designated hedge interest rate swaps to effectively convert fixed rate loans and brokered certificates of deposit to floating rate instruments. The cash flow hedges are expected to benefit our net interest income in a rising interest rate environment. However, due to the prolonged low level of market interest rates and the strike rate of these instruments, the cash flow hedge interest rate swaps and cap negatively impacted our net interest income during 2016. This negative trend will likely continue based upon the current market expectations regarding the Federal Reserve’s monetary policies which are designed to impact the level of market interest rates. See Note 15 to the consolidated financial statements for further details on our derivative transactions.

Despite the negative impact of such derivative transactions, the possibility of an improving U.S. economy, the debt modification of $405 million in high cost FHLB borrowings during August 2016, the repayment of $75 million in high cost borrowings that matured in July 2016, and the commercial lending demand and approved new loan pipelines during the first quarter of 2017 could all benefit our future net interest income.

The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at December 31, 2016 and their associated fair values. The expected cash flows are categorized based on each financial instrument’s anticipated maturity or interest rate reset date in each of the future periods presented.

INTEREST RATE SENSITIVITY ANALYSIS

	Rate		2017		2018		2019		2020		2021		Thereafter		Total Balance		Fair Value
	($ in thousands)
Interest sensitive assets:
Interest bearing deposits with banks	0.30	%	$	171,710	$	—	$	—	$	—	$	—	$	—	$	171,710	$	171,710
Investment securities held to maturity	3.06		440,253		197,071		155,580		187,703		134,702		810,263		1,925,572		1,924,597
Investment securities available for sale	2.35		281,865		183,626		133,374		127,120		92,321		479,067		1,297,373		1,297,373
Loans held for sale, at fair value	3.31		57,708		—		—		—		—		—		57,708		57,708
Loans	3.85		6,680,911		2,110,877		2,042,900		1,670,338		1,512,877		3,218,200		17,236,103		16,871,074
Total interest sensitive assets	3.65	%	$	7,632,447	$	2,491,574	$	2,331,854	$	1,985,161	$	1,739,900	$	4,507,530	$	20,688,466	$	20,322,462
Interest sensitive liabilities:
Deposits:
Savings, NOW and money market	0.26	%	$	3,027,898	$	835,617	$	677,100	$	500,918	$	412,833	$	3,884,646	$	9,339,012	$	9,339,012
Time	1.22		2,122,906		473,924		98,763		147,547		162,687		133,044		3,138,871		3,160,572
Short-term borrowings	0.65		1,080,960		—		—		—		—		—		1,080,960		1,081,751
Long-term borrowings	3.54		75,000		50,000		—		—		840,000		468,906		1,433,906		1,523,386
Junior subordinated debentures	5.78		—		24,743		—		—		—		16,834		41,577		45,785
Total interest sensitive liabilities	0.82	%	$	6,306,764	$	1,384,284	$	775,863	$	648,465	$	1,415,520	$	4,503,430	$	15,034,326	$	15,150,506
Interest sensitivity gap			$	1,325,683	$	1,107,290	$	1,555,991	$	1,336,696	$	324,380	$	4,100	$	5,654,140	$	5,171,956
Ratio of interest sensitive assets to interest sensitive liabilities			1.21:1		1.80:1		3.01:1		3.06:1		1.23:1		1.00:1		1.38:1		1.34:1

The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2016 on the basis of contractual maturities, adjusted for anticipated prepayments of principal (including anticipated call dates on long-term borrowings and junior subordinated debentures), and scheduled rate adjustments. The prepayment experience reflected herein is based on historical experience combined with market consensus expectations derived from independent external sources. The actual repayments of these instruments could vary substantially if future prepayments differ from historical experience or current market expectations. For non-maturity deposit liabilities, in accordance with standard industry practice and our historical experience, we used prepayment and decay rates to estimate deposit runoff.

2016 Form 10-K 50

Our cash flow derivatives are designed to protect us from upward movement in interest rates on certain deposits. The interest rate sensitivity table reflects the sensitivity at current interest rates. As a result, the notional amount of our derivatives is not included in the table. We use various assumptions to estimate fair values. See Note 3 of the consolidated financial statements for further discussion of fair value measurements.

The total gap re-pricing within one year as of December 31, 2016 was a positive $1.3 billion, representing a ratio of interest sensitive assets to interest sensitive liabilities of 1.21:1. Current market prepayment speeds and balance sheet management strategies implemented throughout 2016 have allowed us to maintain our asset sensitivity level reported in the table above comparable to December 31, 2015. The total gap re-pricing position, as reported in the table above, reflects the projected interest rate sensitivity of our principal cash flows based on market conditions as of December 31, 2016. As the market level of interest rates and associated prepayment speeds move, the total gap re-pricing position will change accordingly, but not likely in a linear relationship. Management does not view our one year gap position as of December 31, 2016 as presenting an unusually high risk potential, although no assurances can be given that we are not at risk from interest rate increases or decreases.

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 monitored by our Asset/Liability Management Committee and the Investment Committee of the Board of Directors of Valley National Bank, which review 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 125 percent or reliance on wholesale funding greater than 25 percent of total funding. The Bank was in compliance with the foregoing policies at December 31, 2016.

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., 85.0 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. These liquid assets totaled approximately $1.8 billion, representing 8.9 percent of earning assets, at December 31, 2016 and $2.1 billion, representing 10.7 percent of earning assets, at December 31, 2015. Of the $1.8 billion of liquid assets at December 31, 2016, approximately $537.4 million of various investment securities were pledged to counterparties to support our earning asset funding strategies. We anticipate the receipt of approximately $557 million in principal 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 December 31, 2016) are projected to be approximately $4.5 billion over the next 12 months. As a contingency plan for significant funding needs, liquidity could also be derived from the sale of conforming residential mortgages from our loan portfolio, or 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. Core deposits averaged approximately $14.7 billion and $14.5 billion for the years ended December 31, 2016 and 2015, respectively, representing 73.9 percent and 67.2 percent of average earning assets at December 31, 2016 and 2015, respectively. 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.

51 2016 Form 10-K

The following table lists, by maturity, all certificates of deposit of $100 thousand and over at December 31, 2016:

	2016
	(in thousands)
Less than three months	$	337,889
Three to six months	545,451
Six to twelve months	306,302
More than twelve months	515,058
Total	$	1,704,700

Additional funding may be provided from short-term liquidity borrowings through deposit gathering networks and in the form of federal funds purchased obtained through our well established relationships with several correspondent banks. While there are no firm lending commitments currently in place, management believes that we could borrow approximately $727 million for a short time from these banks on a collective basis. The Bank is also a member of the Federal Home Loan Bank of New York 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. In addition to the FHLB advances, the Bank has pledged such assets to collateralize a $100 million letter of credit issued by the FHLB on Valley’s behalf to secure certain public deposits at December 31, 2016. Furthermore, we are able to obtain overnight borrowings from the Federal Reserve Bank via the discount window as a contingency for additional liquidity. At December 31, 2016, our borrowing capacity under the Fed’s discount window was approximately $1.1 billion.

We also have access to other short-term and long-term borrowing sources to support our asset base. Short-term borrowings include securities sold under repos, federal funds purchased and FHLB advances. Our short-term borrowings remained relatively unchanged at approximately $1.1 billion at both December 31, 2016 and 2015. At December 31, 2016, FHLB advances increased by $256 million but were almost entirely offset by decreases of $202 million and $50 million in repo balances and overnight federal funds purchased, respectively, as compared to December 31, 2015. The change in short-term borrowings is generally driven by the levels of loan originations (including residential mortgages originated for sale), repayments of long-term borrowings, and our use of time deposits, fully insured brokered deposits and other short-term funding in our current liquidity/funding strategies.

During 2016, average short-term FHLB advances exceeded 30 percent of total shareholders' equity at December 31, 2016. The following table sets forth information regarding Valley’s short-term FHLB advances at the dates and for the years ended December 31, 2016 and 2015:

	2016			2015
	($ in thousands)
FHLB advances:
Average balance outstanding	$	868,541		$	33,841
Maximum outstanding at any month-end during the period	1,163,000			526,000
Balance outstanding at end of period	782,000			526,000
Weighted average interest rate during the period	1.19		%	0.40		%
Weighted average interest rate at the end of the period	0.80			0.90

Corporation Liquidity. Valley’s recurring cash requirements primarily consist of quarterly dividend payments to preferred and common shareholders and interest expense payments 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 subsidiary. 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.

2016 Form 10-K 52

Investment Securities Portfolio

The primary purpose of the investment portfolio is to provide a source of earnings, be a source of liquidity, and serve as a tool for managing interest rate risk. The decision to purchase or sell securities is based upon the current assessment of long and short-term economic and financial conditions, including the interest rate environment and other statement of financial condition components. See additional information under "Interest Rate Sensitivity", "Liquidity" and "Capital Adequacy" sections elsewhere in this MD&A.

As of December 31, 2016, our investment portfolio was comprised of U.S. Treasury securities, U.S. government agencies, taxable and tax-exempt issues of states and political subdivisions, residential mortgage-backed securities (including 12 private label mortgage-backed securities), single-issuer trust preferred securities principally issued by bank holding companies (including 2 pooled securities), high quality corporate bonds and perpetual preferred equity securities issued by banks. 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, Fannie Mae and Freddie Mac. Securities with limited marketability and/or restrictions, such as Federal Home Loan Bank and Federal Reserve Bank stocks, are carried at cost and are included in other assets.

Among other securities, our investments in the private label mortgage-backed securities, trust preferred securities, perpetual preferred securities and bank issued corporate bonds may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the security.

Investment securities at December 31, 2016, 2015 and 2014 were as follows:

	2016		2015		2014
	(in thousands)
Held to maturity
U.S. Treasury securities	$	138,830	$	138,978	$	139,121
U.S. government agency securities	11,329		12,859		14,081
Obligations of states and political subdivisions:
Obligations of states and state agencies	252,185		194,547		197,440
Municipal bonds	314,405		310,318		302,578
Total obligations of states and political subdivisions	566,590		504,865		500,018
Residential mortgage-backed securities	1,112,460		852,289		986,992
Trust preferred securities	59,804		59,785		98,456
Corporate and other debt securities	36,559		27,609		39,648
Total investment securities held to maturity (amortized cost)	$	1,925,572	$	1,596,385	$	1,778,316
Available for sale
U.S. Treasury securities	$	49,591	$	549,473	$	49,443
U.S. government agency securities	23,041		29,963		33,825
Obligations of states and political subdivisions:
Obligations of states and state agencies	40,342		44,414		11,136
Municipal bonds	79,425		80,552		32,915
Total obligations of states and political subdivisions	119,767		124,966		44,051
Residential mortgage-backed securities	1,015,542		696,428		644,276
Trust preferred securities	8,009		8,404		20,537
Corporate and other debt securities	60,565		77,552		74,012
Total debt securities	1,276,515		1,486,786		866,144
Equity securities	20,858		20,075		20,826
Total investment securities available for sale (fair value)	$	1,297,373	$	1,506,861	$	886,970
Trading
Trust preferred securities	$	—	$	—	$	14,233
Total trading securities (fair value)	$	—	$	—	$	14,233
Total investment securities	$	3,222,945	$	3,103,246	$	2,679,519

53 2016 Form 10-K

As of December 31, 2016, total investments increased$119.7 million or 3.9 percent as compared to 2015 largely due to an increase in residential mortgage-backed securities classified as held for maturity and available for sale totaling a combined $579.3 million, and, to a much lesser extent, an increase of $57.6 million in obligations of states and state agencies classified as held to maturity. These increases were partially offset by a $499.9 million decrease in U.S. Treasury securities classified as available for sale largely due to the maturity of short-term U.S. Treasuries purchased in late December 2015.

At December 31, 2016, we had $1.1 billion and $1.0 billion of residential mortgage-backed securities classified as held to maturity and available for sale, respectively. Approximately 91 percent and 68 percent of these residential mortgage-backed securities, respectively, were issued and guaranteed by Ginnie Mae. The residential mortgage-backed securities also include $168 thousand and $11.8 million of private label mortgage-backed securities classified as held to maturity and available for sale, respectively, at December 31, 2016. The remainder of our outstanding residential mortgage-backed security balances at December 31, 2016 were issued by either Freddie Mac or Fannie Mae.

The following table presents the remaining contractual maturities (unadjusted for any expected prepayments) with the corresponding weighted-average yields of held to maturity and available for sale debt securities at December 31, 2016:

	0-1 year				1-5 years				5-10 years				Over 10 years				Total
	Amount (1)		Yield (2)		Amount (1)		Yield (2)		Amount (1)		Yield (2)		Amount (1)		Yield (2)		Amount (1)		Yield (2)
	($ in thousands)
Held to maturity
U.S. Treasury securities	$	—	—	%	$	68,402	2.92	%	$	70,428	2.97	%	$	—	—	%	$	138,830	2.94	%
U.S. government agency securities	—		—		—		—		—		—		11,329		3.52		11,329		3.52
Obligations of states and political subdivisions: (3)
Obligations of states and state agencies	—		—		14,162		2.71		147,150		4.71		90,873		4.07		252,185		4.37
Municipal bonds	85,089		1.50		85,393		5.08		133,643		4.58		10,280		4.54		314,405		3.88
Total obligations of states and political subdivisions	85,089		1.50		99,555		4.74		280,793		4.64		101,153		4.12		566,590		4.10
Residential mortgage-backed securities (4)	—		—		577		4.41		15,724		3.09		1,096,159		2.33		1,112,460		2.34
Trust preferred securities	—		—		—		—		—		—		59,804		5.03		59,804		5.03
Corporate and other debt securities	50		2.39		23,250		6.47		13,250		4.71		9		—		36,559		5.82
Total	$	85,139	1.13	%	$	191,784	4.11	%	$	380,195	4.18	%	$	1,268,454	2.99	%	$	1,925,572	3.06	%
Available for sale
U.S. Treasury securities	$	—	—	%	$	931	1.84	%	$	48,660	1.60	%	$	—	—	%	$	49,591	1.61	%
U.S. government agency securities	—		—		5,803		1.40		2,530		2.29		14,708		2.60		23,041		2.26
Obligations of states and political subdivisions: (3)
Obligations of states and state agencies	—		—		10,329		3.70		23,138		3.97		6,875		4.70		40,342		4.03
Municipal bonds	4,551		—		29,639		2.65		18,731		4.97		26,504		4.29		79,425		3.59
Total obligations of states and political subdivisions	4,551		—		39,968		2.92		41,869		4.42		33,379		4.37		119,767		3.74
Residential mortgage-backed securities (4)	37		5.43		3,765		5.05		35,722		6.88		976,018		2.53		1,015,542		2.69
Trust preferred securities	—		—		—		—		—		—		8,009		1.00		8,009		10.00
Corporate and other debt securities	14,103		1.32		27,456		2.54		19,004		3.69		2		—		60,565		2.62
Total (5)	$	18,691	0.02	%	$	77,923	2.79	%	$	147,785	2.68	%	$	1,032,116	2.78	%	$	1,276,515	2.73	%

⁽¹⁾  Held to maturity amounts are presented at amortized costs, stated at cost less principal reductions, if any, and adjusted for accretion of discounts and amortization of premiums. Available for sale amounts are presented at fair value.

⁽²⁾  Average yields are calculated on a yield-to-maturity basis.

⁽³⁾  Average yields on obligations of states and political subdivisions are generally tax-exempt and calculated on a tax-equivalent basis using a statutory federal income tax rate of 35 percent.

⁽⁴⁾  Residential mortgage-backed securities are shown using stated final maturity.

⁽⁵⁾  Excludes equity securities, which do not have maturities.

2016 Form 10-K 54

The residential mortgage-backed securities portfolio is a significant source of our liquidity through the monthly cash flow of principal and interest. Mortgage-backed securities, like all securities, are sensitive to change in the interest rate environment, increasing and decreasing in value as interest rates fall and rise. As interest rates fall, the potential increase in prepayments can reduce the yield on the mortgage-backed securities portfolio, and reinvestment of the proceeds will be at lower yields. Conversely, rising interest rates may reduce cash flows from prepayments and extend anticipated duration of these assets. We monitor the changes in interest rates, cash flows and duration, in accordance with our investment policies. Management seeks out investment securities with an attractive spread over our cost of funds.

Other-Than-Temporary Impairment Analysis

We may be required to record impairment charges on our investment securities if they suffer a decline in value that is considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities, absence of reliable pricing information for investment securities, adverse changes in business climate, adverse actions by regulators, or unanticipated changes in the competitive environment could have a negative effect on our investment portfolio and may result in other-than temporary impairment on our investment securities in future periods. For debt securities, the primary consideration in determining whether impairment is other-than-temporary is whether or not Valley expects to collect all contractual cash flows. See “Other-Than-Temporary Impairment Analysis” section of Note 4 to the consolidated financial statements for additional information regarding our quarterly impairment analysis by security type.

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.

The following table presents the held to maturity and available for sale investment securities portfolios by investment grades at December 31, 2016.

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Held to maturity investment grades:*
AAA Rated	$	1,412,662	$	22,629	$	(18,298	)	$	1,416,993
AA Rated	249,047		6,857		(598		)	255,306
A Rated	38,182		2,011		—			40,193
Non-investment grade	3,678		2		(66		)	3,614
Not rated	222,003		93		(13,605		)	208,491
Total investment securities held to maturity	$	1,925,572	$	31,592	$	(32,567	)	$	1,924,597
Available for sale investment grades:*
AAA Rated	$	1,141,645	$	1,986	$	(17,788	)	$	1,125,843
AA Rated	69,014		190		(1,795		)	67,409
A Rated	26,844		7		(105		)	26,746
BBB Rated	39,555		428		(628		)	39,355
Non-investment grade	13,093		1,126		(1,391		)	12,828
Not rated	25,572		329		(709		)	25,192
Total investment securities available for sale	$	1,315,723	$	4,066	$	(22,416	)	$	1,297,373

* Rated using external rating agencies (primarily S&P and Moody’s). Ratings categories include 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 held to maturity portfolio includes $222.0 million in investments not rated by the rating agencies with aggregate unrealized losses of $13.6 million at December 31, 2016. The unrealized losses for this category mainly relate to 4 single-issuer bank trust preferred issuances with a combined amortized cost of $35.9 million. All single-issuer bank trust preferred securities classified as held to maturity, including the aforementioned four securities, are paying in accordance with their terms and have no deferrals of interest or defaults. Additionally, we analyze the performance of each issuer on a quarterly basis, including a review of performance

55 2016 Form 10-K

data from the issuer’s most recent bank regulatory report to assess the company’s credit risk and the probability of impairment of the contractual cash flows of the applicable security. Based upon our quarterly review at December 31, 2016, all of the issuers appear to meet the regulatory capital minimum requirements to be considered a “well-capitalized” financial institution and/or have maintained performance levels adequate to support the contractual cash flows of the security.

There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its securities during the years ended December 31, 2016, 2015 and 2014 as the collateral supporting much of the investment securities has improved or performed as expected. See Note 4 to our consolidated financial statements for additional information regarding our other-than-temporary impairment analysis.

Loan Portfolio

The following table reflects the composition of the loan portfolio for the years indicated.

	At December 31,
	2016			2015			2014			2013			2012
	($ in thousands)
Commercial and industrial	$	2,638,195		$	2,540,491		$	2,251,111		$	2,021,333		$	2,131,343
Commercial real estate:
Commercial real estate	8,719,667			7,424,636			6,160,881			5,043,169			4,537,977
Construction	824,946			754,947			533,134			429,231			427,368
Total commercial real estate	9,544,613			8,179,583			6,694,015			5,472,400			4,965,345
Residential mortgage	2,867,918			3,130,541			2,576,372			2,507,588			2,472,088
Consumer:
Home equity	469,009			511,203			497,247			449,292			485,702
Automobile	1,139,227			1,239,313			1,144,831			901,399			786,528
Other consumer	577,141			441,976			310,337			215,600			181,793
Total consumer loans	2,185,377			2,192,492			1,952,415			1,566,291			1,454,023
Total loans (1)(2)	$	17,236,103		$	16,043,107		$	13,473,913		$	11,567,612		$	11,022,799
As a percent of total loans:
Commercial and industrial	15.3		%	15.8		%	16.7		%	17.5		%	19.4		%
Commercial real estate	55.4			51.0			49.7			47.3			45.0
Residential mortgage	16.6			19.5			19.1			21.7			22.4
Consumer loans	12.7			13.7			14.5			13.5			13.2
Total	100		%	100		%	100		%	100		%	100		%

⁽¹⁾  Includes covered loans totaling $70.4 million, $122.3 million, $211.9 million, $96.2 million and $180.7 million at December 31, 2016, 2015, 2014, 2013 and 2012, respectively (primarily consisting of commercial real estate loans and residential mortgage loans).

⁽²⁾  Total loans are net of unearned premiums and deferred loan costs of $15.3 million and $3.5 million at December 31, 2016 and 2015, respectively, as compared to unearned discounts and deferred loan fees of $9.0 million, $5.6 million and $3.4 million at December 31, 2014, 2013, and 2012, respectively.

Total loans increased$1.2 billion to approximately $17.2 billion at December 31, 2016 from December 31, 2015. Our loan portfolio includes PCI loans, which are loans acquired at a discount that is due, in part, to credit quality. At December 31, 2016, our PCI loan portfolio decreased $469.0 million to $1.8 billion as compared to December 31, 2015 primarily due to larger loan repayments, of which some resulted from continued efforts by management to encourage borrower prepayment. The non-PCI loan portion of the loan portfolio increased $1.7 billion at December 31, 2016 as compared to December 31, 2015 largely due to organic commercial real estate growth, loan participations with other banks that largely consisted of multi-family and 1-4 family mortgage loans, and organic growth in several loan categories in 2016 discussed further below. During 2016, Valley also originated $421.3 million of residential mortgage loans for sale rather than investment. Loans held for sale totaled $57.7 million and $16.4 million at December 31, 2016 and 2015, respectively. See additional information regarding our residential mortgage loan activities below.

Commercial and industrial loans totaled $2.6 billion at December 31, 2016 and increased by $97.7 million from December 31, 2015, despite a $102.8 million decline in the PCI loan portion of the portfolio during 2016. Exclusive of the decline in PCI loans, the non-PCI commercial and industrial loan portfolio increased by $200.5 million from December 31, 2015. This growth was partially driven by new organic customer relationships originated during 2016 and a new secured commercial lending agreement with a large regional auto retailer during the fourth quarter of 2016. In addition to the PCI loan repayments, the level of loan

2016 Form 10-K 56

growth within this portfolio continues to be challenged by strong market competition for both new and existing commercial loan borrowers within our primary markets, and relatively unchanged outstanding balances on lines of credit by our customers at December 31, 2016 as compared to December 31, 2015 despite an increase in total commitments under lines of credit during the year.

Commercial real estate loans (excluding construction loans) increased $1.3 billion to $8.7 billion at December 31, 2016 from December 31, 2015 largely due to $719 million of loan participations in multi-family loans (mostly in New York City) purchased during 2016 and solid organic loan volumes from all of our primary markets. The purchased participation loans are seasoned loans with expected shorter durations. Each purchased participation loan is reviewed under Valley's normal underwriting criteria and stress-tested by Valley to assure its credit quality. The organic loan volumes generated across a broad based segment of borrowers within the commercial real estate portfolio were partially offset by a $263.8 million decline in the acquired PCI loan portion of the portfolio. Construction loans totaled $824.9 million at December 31, 2016 and increased$70.0 million from December 31, 2015 mostly due to advances on existing construction projects.

Residential mortgage loans totaled $2.9 billion at December 31, 2016 and decreased by $262.6 million from December 31, 2015 mostly due to a large percentage of new loans originated for sale rather than investment during 2016 and the transfer of $174.5 million in performing residential mortgage loans to loans held for sale during the third quarter of 2016. Our new and refinanced residential mortgage loan originations increased81.7 percent to $891.0 million for the year ended December 31, 2016 as compared to $490.4 million in 2015. Of the $891.0 million in total originations, $58.5 million represented new Florida residential mortgage loans. During 2016, Valley sold $558.1 million of residential mortgages originated for sale (including $16.1 million of residential mortgage loans held for sale at December 31, 2015) as compared to approximately $135.2 million of mortgages sold during the year ended December 31, 2015. We retain mortgage originations based on credit criteria and loan to value levels, the composition of our interest earning assets and interest bearing liabilities and our ability to manage the interest rate risk associated with certain levels of these instruments. From time to time, we purchase residential mortgage loans originated by, and sometimes serviced by, other financial institutions based on several factors, including current loan origination volumes, market interest rates, excess liquidity, CRA and other asset/liability management strategies. All of the purchased loans are selected using Valley’s normal underwriting criteria at the time of purchase. During 2016, Valley purchased approximately $173.9 million of 1-4 family loans, of which a large portion of the loans qualify for CRA purposes.

Due to the recent increase in market interest rates, our mortgage loan pipeline, particularly refinanced loans, has declined as compared to the activity in the fourth quarter of 2016. However, we do expect to continue to sell a significant portion of our new conforming fixed rate residential mortgage loan originations as part of our overall interest rate risk management strategies during the first quarter of 2017. While we do anticipate a sequential quarterly decline in net gains on loan sales largely due to $7.3 million of gains from approximately $170 million of seasoned portfolio loans sold during the fourth quarter of 2016, we do not expect a significant decline in gains from our normal levels of production of new loans originated for sale in the first quarter of 2017.

Consumer loans totaled $2.2 billion at December 31, 2016 and decreased only $7.1 million from December 31, 2015 as declines in both automobile and home equity loans were largely offset by an increase other consumer loans. Automobile loans decreased$100.1 million to $1.1 billion at December 31, 2016 from December 31, 2015 mainly due to a decline in indirect auto originations during the first nine months of 2016 largely caused by current market loan pricing and fee constraints resulting from new regulatory lending guidance. During the third quarter of 2016, management implemented various strategies to enhance new auto volumes, including new technology to improve the decision-making process for our auto dealer network. These enhancements and continued growth in our relatively new Florida markets led to improved new loan volumes during the fourth quarter of 2016. During the fourth quarter of 2016, automobile loans increased by $17.6 million from September 30, 2016. While we're optimistic that this positive trend in new loan production will continue into the first quarter of 2017, we can provide no assurance that our auto loans will not decline in future periods. Home equity loans decreased$42.2 million in 2016 from $511.2 million at December 31, 2015 mostly due to normal repayment activity largely within the PCI loan portion of the portfolio. New home equity loan volumes and customer usage of existing home equity lines of credit continued to be weak during 2016 despite the relatively favorable low interest rate environment. Other consumer loans increased$135.2 million to $577.1 million at December 31, 2016 as compared to 2015 largely due to continued strong growth and customer usage of collateralized personal lines of credit that allow the customer to manage their liquidity needs by accessing the cash value of their whole life insurance policy.

We are optimistic that both commercial and consumer lending activity will continue to be brisk in 2017, despite the expected reduction in refinanced residential mortgage loan activity caused by the recent increase in interest rates and, while not anticipated, any potential setbacks that could occur in the indirect automobile loan volumes or other portfolio segments. For 2017, we anticipate our overall loan portfolio growth to be in the range of six to eight percent. However, there can be no assurance that we will achieve such levels or that the overall loan portfolio balance will not decline from December 31, 2016.

57 2016 Form 10-K

Most of our lending is in northern and central New Jersey, New York City, Long Island and Florida, with the exception of smaller auto and residential mortgage loan portfolios derived from the other neighboring states of New Jersey, which could present a geographic and credit risk if there was another significant broad based economic downturn or a prolonged economic recovery within these regions. We are witnessing new loan activity across Valley's entire geographic footprint, including new loans and solid loan pipelines from our Florida lending operations. Valley’s Florida Division accounted for approximately $485 million of approximately $4.2 billion in new and purchased commercial loan volume, excluding lines of credit, during 2016. However, the New Jersey and New York Metropolitan markets continue to account for a disproportionately larger percentage of our lending activity. To mitigate these risks, we are making 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. Geographically, we may make further inroads into the Florida lending market, through acquisition, select de novo branch efforts or adding lending staff.

The following table reflects the contractual maturity distribution of the commercial and industrial and construction loans within our loan portfolio as of December 31, 2016:

	One Year or Less		One to Five Years		Over Five Years		Total
	(in thousands)
Commercial and industrial—fixed-rate	$	787,532	$	435,868	$	44,348	$	1,267,748
Commercial and industrial—adjustable-rate	851,329		471,178		47,940		1,370,447
Construction—fixed-rate	66,352		125,810		15,606		207,768
Construction—adjustable-rate	197,099		373,724		46,355		617,178
	$	1,902,312	$	1,406,580	$	154,249	$	3,463,141

We may renew loans at maturity when requested by a customer. In such instances, we generally conduct a review which includes an analysis of the borrower’s financial condition and, if applicable, a review of the adequacy of collateral via a new appraisal from an independent, bank approved, certified or licensed property appraiser or readily available market resources. A rollover of the loan at maturity may require a principal reduction or other modified terms.

Purchased Credit-Impaired Loans (Including Covered Loans)

PCI loans totaling $1.8 billion and $2.2 billion at December 31, 2016 and 2015, respectively, mostly consist of loans acquired in business combinations subsequent to 2011, and covered loans in which the Bank will share losses with the FDIC under loss-sharing agreements. Our covered loans, consisting primarily of residential mortgage loans and commercial real estate loans, totaled $70.4 million and $122.3 million at December 31, 2016 and 2015, respectively. During 2016 and 2015, we reclassified $27.5 million and $30.7 million of PCI loans, respectively, from our covered loan portfolio due to the expiration of certain commercial loan loss-sharing agreements with the FDIC.

As required by U.S. GAAP, all of our PCI loans are accounted for under ASC Subtopic 310-30. This accounting guidance requires the PCI loans to be aggregated and accounted for as pools of loans based on common risk characteristics. A pool is accounted for as one asset with a single composite interest rate, aggregate fair value and expected cash flows. For PCI loan pools accounted for under ASC Subtopic 310-30, the difference between the contractually required payments due and the cash flows expected to be collected, considering the impact of prepayments, is referred to as the non-accretable difference. The contractually required payments due represent the total undiscounted amount of all uncollected principal and interest payments. Contractually required payments due may increase or decrease for a variety of reasons, e.g. when the contractual terms of the loan agreement are modified, when interest rates on variable rate loans change, or when principal and/or interest payments are received. The Bank estimates the undiscounted cash flows expected to be collected by incorporating several key assumptions including probability of default, loss given default, and the amount of actual prepayments after the acquisition dates. The non-accretable difference, which is neither accreted into income nor recorded on our consolidated balance sheet, reflects estimated future credit losses and uncollectable contractual interest expected to be incurred over the life of the loans. The excess of the undiscounted cash flows expected at the acquisition date over the carrying amount (fair value) of the PCI loans is referred to as the accretable yield. This amount is accreted into interest income over the remaining life of the loans, or pool of loans, using the level yield method. The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment assumptions, and changes in expected principal and interest payments over the estimated lives of the loans. Prepayments affect the estimated life of PCI loans and could change the amount of interest income, and possibly principal, expected to be collected. Reclassifications of the non-accretable difference to the accretable yield may occur subsequent to the loan acquisition dates due to increases in expected cash flows of the loan pools.

At both acquisition and subsequent quarterly reporting dates, we use a third party service provider to assist with validation of our assessment of the contractual and estimated cash flows. Valley provides the third party with updated loan-level information derived from Valley’s main operating system, contractually required loan payments and expected cash flows for each loan pool

2016 Form 10-K 58

individually reviewed by us. Using this information, the third party provider determines both the contractual cash flows and cash flows expected to be collected. The loan-level information used to reforecast the cash flows was subsequently aggregated on a pool basis. The expected payment data, discount rates, impairment data and changes to the accretable yield received back from the third party were reviewed by Valley to determine whether this information is accurate and the resulting financial statement effects are reasonable.

Similar to contractual cash flows, we reevaluate expected cash flows on a quarterly basis. Unlike contractual cash flows which are determined based on known factors, significant management assumptions are necessary in forecasting the estimated cash flows. We attempt to ensure the forecasted expectations are reasonable based on the information currently available; however, due to the uncertainties inherent in the use of estimates, actual cash flow results may differ from our forecast and the differences may be significant. To mitigate such differences, we carefully prepare and review the assumptions utilized in forecasting estimated cash flows.

On a quarterly basis, Valley analyzes the actual cash flow versus the forecasts at the loan pool level and variances are reviewed to determine their cause. In re-forecasting future estimated cash flow, Valley will adjust the credit loss expectations for loan pools, as necessary. These adjustments are based, in part, on actual loss severities recognized for each loan type, as well as changes in the probability of default. For periods in which Valley does not reforecast estimated cash flows, the prior reporting period’s estimated cash flows are adjusted to reflect the actual cash received and credit events which transpired during the current reporting period.

The following tables summarize the changes in the carrying amounts of PCI loans and the accretable yield on these loans for the years ended December 31, 2016 and 2015.

	2016						2015
	Carrying Amount			Accretable Yield			Carrying Amount			Accretable Yield
	(in thousands)
Balance, beginning of the period	$	2,240,471		$	415,179		$	1,721,601		$	336,208
Acquisition	—			—			824,882			126,930
Accretion	107,482			(107,482		)	105,078			(105,078		)
Payments received	(572,081		)	—			(407,890		)	—
Net (decrease) increase in expected cash flows	—			(9,989		)	—			57,119
Transfers to other real estate owned	(1,176		)	—			(3,200		)	—
Other, net	(3,194		)	(3,194		)	—			—
Balance, end of the period	$	1,771,502		$	294,514		$	2,240,471		$	415,179

The net decrease or increase in expected cash flows for certain pools of loans (included in the table above) is recognized prospectively as an adjustment to the yield over the estimated remaining life of the individual pools. The net decrease in the expected cash flows totaling approximately $10.0 million for 2016 was largely due to better than expected collections, including loan prepayments, within certain loan pools which reduced the remaining reforecasted accretable yield during the fourth quarter of 2016. The net increase of $57.1 million during 2015 was mainly related to a decrease in the expected losses for certain loan pools during the fourth quarter of 2015.

For the pools with better than expected cash flows, the forecasted increase is recorded as a prospective adjustment to our interest income on these loan pools over future periods. The decrease in the FDIC loss-share receivable due to the increase in expected cash flows for covered loan pools is recognized on a prospective basis over the shorter period of the lives of the loan pools and the loss-share agreements, with a corresponding reduction in non-interest income for the period. See section below for further details regarding the FDIC loss-share receivable. Conversely, an increase or decrease in expected future cash flows of covered loans since the acquisition dates will increase or decrease (if applicable) the clawback liability (the amount the FDIC requires us to pay back if certain thresholds are met) accordingly. 

FDIC Loss-Share Receivable Related to Covered Loans and Foreclosed Assets

The receivable arising from the loss-sharing agreements with the FDIC is measured separately from the covered loan portfolio because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans. The FDIC loss-share receivable (which is included in other assets on Valley's consolidated statements of financial condition) totaled $7.2 million and $8.3 million at December 31, 2016 and 2015, respectively. The aggregate effects of changes in the FDIC loss-share receivable was a reduction in non-interest income of $1.3 million, $3.3 million and $20.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

See Note 1 to the consolidated financial statements for further details on the FDIC loss-share receivable and the related FDIC-assisted transactions.

59 2016 Form 10-K

Non-performing Assets

Non-performing assets (NPAs), which exclude non-performing PCI loans, include non-accrual loans, other real estate owned (OREO), other repossessed assets (which mainly consist of automobiles) and non-accrual debt securities at December 31, 2016. 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 cost to sell at the time of acquisition and at the lower of fair value, less estimated costs to sell, or cost thereafter. The level of non-performing assets has decreased 36.8 percent over the last 12 month period and 74.7 percent since December 31, 2012 (as shown in the table below) mostly due to strong downward trend within non-accrual loan category, and a steady decline in the other non-performing asset categories. Overall, we believe the total non-performing assets has remained relatively low as a percentage of the total loan portfolio and non-performing assets over the past five years and is reflective of our consistent approach to the loan underwriting criteria for both Valley originated loans and loans purchased from third parties. Past due loans and non-accrual loans in the table below exclude PCI loans. Under U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are accounted for on a pool basis and are not subject to delinquency classification in the same manner as loans originated by Valley. For details regarding performing and non-performing PCI loans, see the "Credit quality indicators" section in Note 5 to the consolidated financial statements.

2016 Form 10-K 60

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:

	At December 31,
	2016			2015			2014			2013			2012
	($ in thousands)
Accruing past due loans (1)
30 to 59 days past due
Commercial and industrial	$	6,705		$	3,920		$	1,630		$	6,398		$	3,397
Commercial real estate	5,894			2,684			8,938			9,142			11,214
Construction	6,077			1,876			448			1,186			1,793
Residential mortgage	12,005			6,681			6,200			6,595			13,730
Total Consumer	4,197			3,348			2,982			3,792			5,887
Total 30 to 59 days past due	34,878			18,509			20,198			27,113			36,021
60 to 89 days past due
Commercial and industrial	5,010			524			1,102			571			181
Commercial real estate	8,642			—			113			2,442			2,031
Construction	—			2,799			—			4,577			4,892
Residential mortgage	3,564			1,626			3,575			1,939			5,221
Total Consumer	1,147			626			764			784			1,340
Total 60 to 89 days past due	18,363			5,575			5,554			10,313			13,665
90 or more days past due
Commercial and industrial	142			213			226			233			283
Commercial real estate	474			131			49			7,591			2,950
Construction	1,106			—			3,988			—			2,575
Residential mortgage	1,541			1,504			1,063			1,549			2,356
Total Consumer	209			208			152			118			501
Total 90 or more days past due	3,472			2,056			5,478			9,491			8,665
Total accruing past due loans	$	56,713		$	26,140		$	31,230		$	46,917		$	58,351
Non-accrual loans (1)
Commercial and industrial	$	8,465		$	10,913		$	8,467		$	21,029		$	22,424
Commercial real estate	15,079			24,888			22,098			43,934			58,625
Construction	715			6,163			5,223			8,116			14,805
Residential mortgage	12,075			17,930			17,760			19,949			32,623
Total Consumer	1,174			2,206			2,209			2,035			3,331
Total non-accrual loans	37,508			62,100			55,757			95,063			131,808
Non-performing loans held for sale	—			—			7,130			—			—
Other real estate owned (OREO) (2)	9,612			13,563			14,249			19,580			15,612
Other repossessed assets	384			437			1,232			6,447			7,805
Non-accrual debt securities (3)	1,935			2,142			4,729			3,771			40,303
Total non-performing assets	$	49,439		$	78,242		$	83,097		$	124,861		$	195,528
Performing troubled debt restructured loans	$	85,166		$	77,627		$	97,743		$	107,037		$	105,446
Total non-accrual loans as a % of loans	0.22		%	0.39		%	0.41		%	0.82		%	1.20		%
Total NPAs as a % of loans and NPAs	0.29			0.49			0.61			1.07			1.74
Total accruing past due and non-accrual loans as a % of loans	0.55			0.55			0.65			1.23			1.73
Allowance for loan losses as a % of non-accrual loans	305.05			170.98			183.57			119.52			98.78

⁽¹⁾  Past due loans and non-accrual loans exclude PCI loans that are accounted for on a pool basis.

61 2016 Form 10-K

⁽²⁾  This table excludes OREO properties related to the FDIC-assisted transactions totaling $558 thousand, $5.0 million, $9.2 million, $12.3 million and $8.9 million at December 31, 2016, 2015, 2014, 2013 and 2012, respectively, and is subject to the loss-sharing agreements with the FDIC.

⁽³⁾  Includes other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value, net of unrealized losses totaling $817 thousand, $610 thousand, $621 thousand, $1.6 million and $6.9 million at December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

Loans past due 30 to 59 days increased$16.4 million to $34.9 million at December 31, 2016 compared to $18.5 million at December 31, 2015 mostly due to increases in both residential mortgage loans and construction loans. Residential mortgage loans within this delinquency category increased $5.3 million to $12.0 million at December 31, 2016 compared to $6.7 million at December 31, 2015. The $4.2 million increase in construction loans was caused by the late receipt of payment from a $4.2 million relationship brought current as to all contractual payments in January 2017. In addition, the commercial and industrial loans within this delinquency category included two new loan relationships totaling $4.5 million of the $6.7 million at December 31, 2016. While this delinquency category at December 31, 2016 was significantly higher than the low levels seen at December 31, 2015, we continue to closely monitor this category and we do not believe the increase in delinquencies at December 31, 2016 represents a material negative trend within our total loan portfolio exceeding $17 billion.

Loans past due 60 to 89 days increased$12.8 million to $18.4 million at December 31, 2016 as compared to December 31, 2015 largely due to increases in both commercial real estate loans and commercial and industrial loans, partially offset by a decrease in construction loans. The $8.6 million increase in commercial real estate loans was primarily due to two matured performing loans (in the normal process of renewal) with a combined total of a $4.5 million and one potential problem loan of $3.8 million included within this delinquency category at December 31, 2016. Commercial and industrial loans also increased $4.5 million from December 31, 2015 largely due to matured performing loans with an aggregate total of $4.5 million at December 31, 2016. These matured loans represent one loan relationship collateralized by New York City (NYC) taxi cab medallions. Valley believes this relationship is well-secured and in the normal process of collection. See discussion of the taxi cab medallion loan portfolio below.

Loans 90 days or more past due and still accruing increased$1.4 million to $3.5 million at December 31, 2016 compared to $2.1 million at December 31, 2015. The increase in this delinquency category was caused by matured performing construction and commercial real estate loans totaling $1.1 million and $343 thousand, respectively, at December 31, 2016. These loans were in the normal process of renewal at December 31, 2016. 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 decreased$24.6 million to $37.5 million at December 31, 2016 as compared to $62.1 million at December 31, 2015 due to significant declines in all of the loan categories. The decrease in the commercial categories was largely due to strong collections resulting in several full repayments of impaired loans, as well as a commercial real estate loans totaling $3.4 million transferred to OREO during the third quarter of 2016. Although the timing of collection is uncertain, management believes that most of the non-accrual loans are well secured and largely collectible based on, in part, our quarterly review of impaired loans and the valuation of the underlying collateral, if applicable. Our impaired loans (mainly consisting of non-accrual commercial and industrial loans and commercial real estate loans over $250 thousand and all troubled debt restructured loans) totaled $114.8 million at December 31, 2016 and had $10.5 million in related specific reserves included in our total allowance for loan losses. If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income would have amounted to approximately $2.1 million, $3.5 million and $2.2 million for the years ended December 31, 2016, 2015 and 2014, respectively; none of these amounts were included in interest income during these periods. Interest income recognized on a cash basis for loans classified as non-accrual totaled $207 thousand, $1.3 million and $735 thousand for the years ended December 31, 2016, 2015 and 2014, respectively.

At December 31, 2016, our commercial and industrial loan portfolio included $151.2 million of taxi medallion loans mostly to fleet owners, which consist of $140.2 million and $11.0 million of NYC and Chicago taxi medallion loans, respectively. During the fourth quarter of 2016, $4.9 million of performing Chicago taxi medallion loans were restructured into amortizing loans and had related reserves within the allowance of loan losses totaling $2.7 million at December 31, 2016. At December 31, 2016, the Chicago medallion portfolio included one other impaired non-accrual loan relationship totaling $1.5 million, after a $3.7 million charge-off recognized in the third quarter of 2016. With the exception of the aforementioned matured performing $4.5 million NYC medallion relationship within the loans past due 60 to 89 days category, there were no past due or non-accruing loans within the NYC medallion portfolio at December 31, 2016. Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees and other collateral whenever possible. We will continue to closely monitor this portfolio's performance and the potential impact of the changes in market valuation for taxi medallions due to competing car service providers and other factors. Overall, we believe our credit quality

2016 Form 10-K 62

metrics continue to reflect our solid underwriting standards at December 31, 2016. However, we can provide no assurances as to the future level of our loan delinquencies.

OREO (which consists of 23 commercial and residential properties), excluding OREO subject to loss-sharing agreements with the FDIC, decreased $4.0 million to $9.6 million at December 31, 2016 as compared to $13.6 million at December 31, 2015. The decrease was mainly due to a higher volume of sales of foreclosed properties in 2016 as compared to 2015. During 2016, we sold 33 OREO properties totaling $13.6 million as compared to 45 properties totaling $11.4 million sold in 2015. In addition, covered OREO properties totaling $1.8 million were reclassified to non-covered OREO due to the expiration of certain FDIC loss-share agreements in 2016. Overall, our residential mortgage loan foreclosure activity remains low due to the nominal amount of individual loan delinquencies within the residential mortgage and home equity portfolios and the average time to complete a foreclosure in the State of New Jersey, which currently exceeds two and a half years. The residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in-process totaled $7.1 million at December 31, 2016. We believe this lengthy legal process negatively impacts the level of our non-accrual loans and NPAs, and the ability to compare our NPA levels to similar banks located outside of our primary markets as of December 31, 2016. See additional information regarding our foreclosed asset activity, including OREO and other repossessed assets, in Note 3 to the consolidated financial statements.

The non-accrual debt securities consists of one other-than-temporarily impaired security with a carrying value of $1.9 million and $2.1 million at December 31, 2016 and 2015, respectively. The security had an aggregate unamortized cost of $2.8 million at both December 31, 2016 and 2015. See additional information at the “Investment Securities Portfolio” section of this MD&A and Note 4 to the consolidated financial statements.

Troubled debt restructured loans (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) totaled $85.2 million at December 31, 2016 and consisted of 96 loans (primarily in the commercial and industrial loan and commercial real estate portfolios) as compared to $77.6 million at December 31, 2015. On an aggregate basis, the $85.2 million in performing TDRs at December 31, 2016 had a modified weighted average interest rate of approximately 4.68 percent as compared to a pre-modification weighted average interest rate of 4.75 percent. See Note 5 to the consolidated financial statements for additional disclosures regarding our TDRs.

Potential Problem Loans

Although we believe that substantially all risk elements at December 31, 2016 have been disclosed in the categories presented above, it is possible that for a variety of reasons, including economic conditions, certain borrowers may be unable to comply with the contractual repayment terms on certain real estate and commercial loans. As part of the analysis of the loan portfolio, management determined that there were approximately $131.4 million and $101.1 million in potential problem loans at December 31, 2016 and 2015, respectively, which were not classified as non-accrual loans in the non-performing asset table above. Potential problem loans are defined as performing loans for which management has concerns about the ability of such borrowers to comply with the loan repayment terms and which may result in a non-performing loan. Our decision to include performing loans in potential problem loans does not necessarily mean that management expects losses to occur, but that management recognizes potential problem loans carry a higher probability of default. At December 31, 2016, the potential problem loans consisted of various types of performing commercial credits internally risk rated substandard because the loans exhibited well-defined weaknesses and required additional attention by management. See further discussion regarding our internal loan classification system at Note 5 to the consolidated financial statements. There can be no assurance that Valley has identified all of its potential problem loans at December 31, 2016.

Asset Quality and Risk Elements

Lending is one of the most important functions performed by Valley and, by its very nature, lending is also the most complicated, risky and profitable part of our business. For our commercial loan portfolio, comprised of commercial and industrial loans, commercial real estate loans, and construction loans, a separate credit department is responsible for risk assessment and periodically evaluating overall creditworthiness of a borrower. Additionally, efforts are made to limit concentrations of credit so as to minimize the impact of a downturn in any one economic sector. We believe our loan portfolio is diversified as to type of borrower and loan. However, loans collateralized by real estate, including $1.5 billion of PCI loans, represent approximately 75 percent of total loans at December 31, 2016. Most of the loans collateralized by real estate are in northern and central New Jersey, New York City, and Florida presenting a geographical credit risk if there was a further significant broad-based deterioration in economic conditions within these regions (see Part I, Item 1A. Risk Factors - "Our financial results and condition may be adversely impacted by weak economic conditions").

Consumer loans are comprised of residential mortgage loans, home equity loans, automobile loans and other consumer loans. Residential mortgage loans are secured by 1-4 family properties generally located in counties where we have branch presence

63 2016 Form 10-K

in New Jersey, New York and Florida, as well as counties contiguous thereto, if applicable, including eastern Pennsylvania. We do provide mortgage loans secured by homes beyond this primary geographic area; however, lending outside this primary area is generally made in support of existing customer relationships. Residential mortgage loan underwriting policies based on Fannie Mae and Freddie Mac guidelines are adhered to for loan requests of conforming and non-conforming amounts. The weighted average loan-to-value ratio of all residential mortgage originations in 2016 was 59 percent while FICO^® (independent objective criteria measuring the creditworthiness of a borrower) scores averaged 767. Home equity and automobile loans are secured loans and are made based on an evaluation of the collateral and the borrower’s creditworthiness. In addition to our primary markets, automobile loans are mostly originated in several other contiguous states. Due to the level of our underwriting standards applied to all loans, management believes the out of market loans generally present no more risk than those made within the market. However, each loan or group of loans made outside of our primary markets poses different geographic risks based upon the economy of that particular region.

Management realizes that some degree of risk must be expected in the normal course of lending activities. Allowances are maintained to absorb such loan losses inherent in the portfolio. The allowance for credit losses and related provision are an expression of management’s evaluation of the credit portfolio and economic climate.

Allowance for Credit Losses

The allowance for credit losses includes the allowance for loan losses and the reserve for unfunded commercial letters of credit. Management maintains the allowance for credit losses at a level estimated to absorb probable losses inherent in the loan portfolio and unfunded letter of credit commitments at the balance sheet dates, based on ongoing evaluations of the loan portfolio. Our methodology for evaluating the appropriateness of the allowance for loan losses includes:

• segmentation of the loan portfolio based on the major loan categories, which consist of commercial, commercial real estate (including construction), residential mortgage, and other consumer loans (including automobile and home equity loans);

• tracking the historical levels of classified loans and delinquencies;

• assessing the nature and trend of loan charge-offs;

• providing specific reserves on impaired loans; and

• evaluating the PCI loan pools for additional credit impairment subsequent to the acquisition dates.

Additionally, the qualitative factors, such as the volume of non-performing loans, concentration risks by size, type, and geography, new markets, collateral adequacy, credit policies and procedures, staffing, underwriting consistency, loan review and economic conditions are taken into consideration when evaluating the adequacy of the allowance for credit losses.

The allowance for loan losses consists of four elements: (i) specific reserves for individually impaired credits, (ii) reserves for adversely classified, or higher risk rated, loans that are not impaired, (iii) reserves for other loans based on historical loss factors (using the appropriate loss look-back and loss emergence periods) adjusted for both internal and external qualitative risk factors to Valley, including the aforementioned factors, as well as changes in both organic and purchased loan portfolio volumes, the composition and concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing, and (iv) an allowance for PCI loan pools impaired subsequent to the acquisition date, if applicable.

The Credit Risk Management Department individually evaluates non-accrual (non-homogeneous) loans within the commercial and industrial loan and commercial real estate loan portfolio segments over $250 thousand and troubled debt restructured loans within all the loan portfolio segments for impairment based on the underlying anticipated method of payment consisting of either the expected future cash flows or the related collateral. If payment is expected solely based on the underlying collateral, an appraisal is completed to assess the fair value of the collateral. Collateral dependent impaired loan balances are written down to the 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. (See the “Assets and Liabilities Measured at Fair Value on Non-recurring Basis” section of Note 3 to the consolidated financial statements for further details). 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 a specific valuation allowance in the allowance for credit losses. At December 31, 2016, a $10.5 million specific valuation allowance was included in the allowance for credit losses related to $114.8 million of impaired loans that had such an allowance. See Note 5 to the consolidated financial statements for more details regarding impaired loans.

The allowance allocations for non-classified loans within all of our loan portfolio segments are calculated by applying historical loss factors by specific loan types to the applicable outstanding loans and unfunded commitments. Loss factors are based on the Bank’s historical loss experience over a look-back period determined to provide the appropriate amount of data to accurately

2016 Form 10-K 64

estimate expected losses as of period end. Additionally, management assesses the loss emergence period for the expected losses of each loan segment and adjusts each historical loss factor accordingly. The loss emergence period is the estimated time from the date of a loss event (such as a personal bankruptcy) to the actual recognition of the loss (typically via the first full or partial loan charge-off), and is determined based upon a study of our past loss experience by loan segment. The loss factors may also be adjusted for significant changes in the current loan portfolio quality that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date.

The following table summarizes the relationship among loans, loans charged-off, loan recoveries, the provision for credit losses and the allowance for credit losses for the years indicated:

	Years Ended December 31,
	2016			2015			2014			2013			2012
	($ in thousands)
Average loans outstanding	$	16,400,745		$	14,447,020		$	12,081,683		$	11,187,968		$	11,238,269
Beginning balance—Allowance for credit losses	$	108,367		$	104,287		$	117,112		$	132,495		$	136,185
Loans charged-off: (1)
Commercial and industrial	(5,990		)	(7,928		)	(12,722		)	(19,837		)	(16,103		)
Commercial real estate	(650		)	(1,864		)	(4,894		)	(7,060		)	(9,596		)
Construction	—			(926		)	(4,576		)	(3,786		)	(2,092		)
Residential mortgage	(866		)	(813		)	(1,004		)	(4,446		)	(3,518		)
Total Consumer	(3,463		)	(3,441		)	(3,702		)	(5,120		)	(5,339		)
Total loan charge-offs	(10,969		)	(14,972		)	(26,898		)	(40,249		)	(36,648		)
Charged-off loans recovered: (2)
Commercial and industrial	2,852			7,233			6,874			4,219			4,475
Commercial real estate	2,047			846			2,198			816			222
Construction	10			913			912			929			50
Residential mortgage	774			421			248			768			701
Total Consumer	1,654			1,538			1,957			2,039			1,958
Total loan recoveries	7,337			10,951			12,189			8,771			7,406
Net charge-offs (1)(2)	(3,632		)	(4,021		)	(14,709		)	(31,478		)	(29,242		)
Provision charged for credit losses	11,869			8,101			1,884			16,095			25,552
Ending balance—Allowance for credit losses	$	116,604		$	108,367		$	104,287		$	117,112		$	132,495
Components of allowance for credit losses:
Allowance for loan losses (3)	$	114,419		$	106,178		$	102,353		$	113,617		$	130,200
Allowance for unfunded letters of credit	2,185			2,189			1,934			3,495			2,295
Allowance for credit losses	$	116,604		$	108,367		$	104,287		$	117,112		$	132,495
Components of provision for credit losses:
Provision for loan losses (4)	$	11,873		$	7,846		$	3,445		$	14,895		$	25,640
Provision for unfunded letters of credit	(4		)	255			(1,561		)	1,200			(88		)
Provision for credit losses	$	11,869		$	8,101		$	1,884		$	16,095		$	25,552
Ratio of net charge-offs during the period to average loans outstanding	0.02		%	0.03		%	0.12		%	0.28		%	0.26		%
Allowance for credit losses as a % of non-PCI loans	0.75			0.79			0.89			1.09			1.34
Allowance for credit losses as a % of total loans	0.68			0.68			0.77			1.01			1.20

(1) Includes covered loans charge-offs totaling $200 thousand, $1.5 million, $146 thousand and $4.0 million during 2015, 2014, 2013 and 2012, respectively. There were no covered loans charge-offs during 2016.

(2) Includes charged-off covered loan recoveries totaling $462 thousand during 2014. There were no recoveries of charged-off covered loans during 2016, 2015, 2013 and 2012.

65 2016 Form 10-K

(3) Includes reserve allocations related to covered loans totaling $200 thousand, $7.1 million and $9.5 million at December 31, 2014, 2013 and 2012, respectively. There were no allocated reserves related to covered loans at December 31, 2016 and 2015.

(4) Includes a negative (credit) provision for covered loans totaling $5.9 million and $2.3 million for 2014 and 2013, respectively. There was no provision for covered loans in 2016, 2015 and 2012.

Our net loan charge-offs decreased$389 thousand to $3.6 million in 2016 as compared to $4.0 million in 2015 mainly due to lower gross charge-offs in all of the commercial loan categories (as shown in the table above). Total commercial and industrial loan charge-offs declined $1.9 million to $6.0 million for the year ended December 31, 2016 as compared to 2015, despite a $3.7 million partial charge-off related to one Chicago taxi medallion relationship within this loan category during 2016.

Net charge-offs significantly declined in the last two years and have remained relatively low over the last five years as compared to many of our peers, despite the moderate pace of economic growth over most of such period. During this five-year period, our net charge-offs were at a high of 0.28 percent of average loans during 2013 and a low of 0.02 percent during 2016. The moderate level of our net loan charge-offs during 2016 was largely as a result of the continued solid performance of our loan portfolio and the gradual, but steadily improving economic environment. While we have a positive outlook for the future performance of the loan portfolio and the economy, there can be no assurance that our levels of net-charge-offs will continue to improve during 2017, and not deteriorate in the future.

The provision for credit losses increased$3.8 million to $11.9 million in 2016 as compared to $8.1 million in 2015 and was mostly due to the 7.4 percent annual loan growth in 2016, as well as moderate increases in the estimated loss emergence periods for most of our commercial loan portfolios based upon our most recent annual loss emergence study performed at September 30, 2016. The loss emergence period (LEP) assumption represents the estimated average amount of time from the point at which a loss is incurred to the point at which a loss is confirmed, typically by a charge-off. A longer LEP assumption will increase the level of the allowance for loan losses, and conversely, a shorter LEP will reduce the level of such reserves. The negative provision for covered loans in 2014 related to a decrease in the estimated additional credit impairment of certain covered loan pools (initially recognized in 2011 and 2010) subsequent to acquisition dates.

The following table summarizes the allocation of the allowance for credit losses to specific loan portfolio categories for the past five years: 

	2016				2015				2014				2013				2012
	Allowance Allocation		Percent of Loan Category to total loans		Allowance Allocation		Percent of Loan Category to total loans		Allowance Allocation		Percent of Loan Category to total loans		Allowance Allocation		Percent of Loan Category to total loans		Allowance Allocation		Percent of Loan Category to total loans
	($ in thousands)
Loan Category:
Commercial and industrial*	$	53,005	15.3	%	$	50,956	15.8	%	$	45,610	16.7	%	$	55,046	17.5	%	$	66,665	19.4	%
Commercial real estate:
Commercial real estate	36,405		50.6		32,037		46.3		27,426		45.7		32,002		43.6		26,676		41.1
Construction	19,446		4.8		15,969		4.7		15,414		4.0		10,341		3.7		17,393		3.9
Residential mortgage	3,702		16.6		4,625		19.5		5,093		19.1		7,786		21.7		9,423		22.4
Total Consumer	4,046		12.7		4,780		13.7		5,179		14.5		4,356		13.5		5,542		13.2
Unallocated	—		—		—		—		5,565				7,581		—		6,796		—
Total allowance for credit losses	$	116,604	100	%	$	108,367	100	%	$	104,287	100	%	$	117,112	100	%	$	132,495	100	%

* Includes the allowance for unfunded letters of credit.

The allowance for credit losses, comprised of our allowance for loan losses and reserve for unfunded letters of credit, as a percentage of total loans was 0.68 percent at both December 31, 2016 and 2015. Our allowance allocations for losses at December 31, 2016 mostly increased within the commercial loan categories (see table above) as compared to December 31, 2015. These increases were due, in part, to both purchased and organic loan growth within the non-PCI loan portfolio over the last twelve-month period. Additionally, our estimate of the allowance for credit losses at December 31, 2016 was impacted by the level of net charge-offs and internally classified loans, assumptions based on the current economic environment, as well as other qualitative factors. Total net loan charge-offs of $3.6 million in 2016 were at the lowest level reported since 2005, both in terms of total amount and as a percentage of average loans outstanding during the period. The overall amount of the allowance for credit losses

2016 Form 10-K 66

has continued to be positively impacted by, amongst other factors, the decline in non-accrual loans as a result of the strengthening economy and significant repayments of many of these impaired loan relationships within the portfolio during 2016.

Our allowance for credit losses as a percentage of total non-PCI loans (excluding all PCI loans with carrying values totaling approximately $1.8 billion) was 0.75 percent at December 31, 2016 as compared to 0.76 percent at December 31, 2015. PCI loans, largely acquired through prior bank acquisitions, are accounted for on a pool basis and initially recorded net of fair valuation discounts related to credit which may be used to absorb future losses on such loans before any allowance for loan losses is recognized subsequent to acquisition. Due to the adequacy of such discounts, there were no allowance reserves related to PCI loans at December 31, 2016. See Notes 1 and 6 to the consolidated financial statements for additional information regarding our allowance for loan losses.

Prior to December 31, 2015, the allowance also contained reserves identified as the unallocated portion in the table above to cover inherent losses within a given loan category which have not been otherwise reviewed or measured on an individual basis. Such reserves represented management’s attempt to ensure that the overall allowance reflected a margin for imprecision and the uncertainty that is inherent in estimates of probable credit losses. During 2015, Valley refined and enhanced its assessment of the adequacy of the allowance for loan losses. As a result, Valley no longer has an “unallocated” segment in its allowance for credit losses, as the risks and uncertainties meant to be captured by the unallocated allowance have been included in the qualitative framework for the respective portfolios at December 31, 2016 and 2015. As such, the unallocated allowance has in essence been reallocated to the certain portfolios based on the risks and uncertainties it was meant to capture.

Loan Repurchase Contingencies

We engage in the origination of residential mortgages for sale into the secondary market. Such loan sales were a significant portion of our mortgage loan production from the third quarter of 2012 until late in the second quarter of 2013 when market interest rates were at historical lows and consumer demand was robust. During 2016, loan sales increased significantly from 2015 and 2014 as refinance activity once again strengthened due to a favorably low interest rate environment for most of the year. In connection with loan sales, we make representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred due to such loans. However, the performance of our loans sold has been historically strong due to our strict underwriting standards and procedures. Over the past several years, we have experienced a nominal amount of repurchase requests, and only a few of which have actually resulted in repurchases by Valley (only one loan repurchase in 2016 and no repurchases in 2015). None of the loan repurchases resulted in material loss. Accordingly, no reserves pertaining to loans sold were established on our consolidated financial statements at December 31, 2016 and 2015. See “Item 1A. Risk Factors - We may incur future losses in connection with repurchases and indemnification payments related to mortgages that we have sold into the secondary market” of this Annual Report for additional information.

Capital Adequacy

A significant measure of the strength of a financial institution is its shareholders’ equity. At December 31, 2016 and 2015, shareholders’ equity totaled approximately $2.4 billion and $2.2 billion, or 10.4 percent and 10.2 percent of total assets, respectively. During 2016, total shareholders’ equity increased by $170.1 million primarily due to (i) net income of $168.1 million, (ii) net proceeds of $106.4 million from issuance of 9.24 million shares of common stock, no par value per share, (iii) a $7.2 million increase attributable to the effect of our stock incentive plan, (iv) net proceeds of $5.2 million from the reissuance of treasury stock and issuance of authorized common shares issued under our dividend reinvestment plan totaling 554 thousand shares, and (v) a $3.6 million decrease in our accumulated other comprehensive loss. These increases were partially offset by cash dividends declared on common and preferred stock totaling a combined $120.4 million. See Note 19 to the consolidated financial statements for more information regarding the changes in our accumulated other comprehensive loss during 2016.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve Bank 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.

Effective January 1, 2015, Valley implemented the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Basel III final rules require a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and minimum leverage ratio of 4.0 percent. The new rule changes included the implementation of a new capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation buffer is subject to a three year phase-in period that started on January 1, 2016, at 0.625 percent of risk-weighted assets and increases each subsequent year by 0.625 percent until reaching its final level of 2.5 percent when fully phased-in on January 1,

67 2016 Form 10-K

2019. As of December 31, 2016 and 2015, Valley and Valley National Bank exceeded all capital adequacy requirements with the capital conservation buffer under the Basel III Capital Rules. See Note 17 for Valley’s and Valley National Bank’s regulatory capital positions and capital ratios at December 31, 2016 and 2015.

The Dodd-Frank Act requires federal banking agencies to issue regulations that require banks with total consolidated assets of more than $10.0 billion to conduct and publish company-run annual stress tests to assess the potential impact of different scenarios on the consolidated earnings and capital of each bank and certain related items over a nine-quarter forward-looking planning horizon, taking into account all relevant exposures and activities. On October 9, 2012, the FRB published final rules implementing the stress testing requirements for banks with total consolidated assets of more than $10.0 billion but less than $50.0 billion. These rules set forth the timing and type of stress test activities, as well as rules governing controls, oversight and disclosure.

In March 2014, the FRB, OCC, and FDIC issued final supervisory guidance for these stress tests. This joint final supervisory guidance discusses supervisory expectations for stress test practices, provides examples of practices that would be consistent with those expectations, and offers additional details about stress test methodologies. It also emphasizes the importance of stress testing as an ongoing risk management practice.

On July 28, 2016, we submitted our latest stress testing results, utilizing data as of December 31, 2015, to the FRB. The full disclosure of the stress testing results, including the results for Valley National Bank, a summary of the supervisory severely adverse scenario and additional information regarding the methodologies used to conduct the stress test may be found on the Shareholder Relations section of our website (www.valleynationalbank.com) under the Dodd-Frank Act Stress Test Reports section.

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 30.2 and zero for the years ended December 31, 2016 and 2015, respectively. Our rate of earnings retention increased from the year ended December 31, 2015 which was negatively impacted by $51.1 million in pre-tax debt prepayment penalties recognized during the fourth quarter of 2015, and, to a much lesser extent, merger costs from the acquisition of CNL in December 2015. We expect our annual retention rate to improve in 2017 due to, among other factors, (i) synergies realized from the integration of CNL's back office operations completed in February 2016 and the related CNL staffing reductions effective April 1, 2016, (ii) solid loan growth, (iii) the recent increase in long-term market interest rates, and (iv) potential earnings improvement from our earnings enhancement program called LIFT just begun in the first quarter of 2017 (discussed elsewhere in this MD&A).

Cash dividends declared amounted to $0.44 per common share for both years ended December 31, 2016 and 2015. 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 in this economic environment. 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 in light of 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.

Valley maintains an effective shelf registration statement with the SEC that allows Valley to periodically offer and sell in one or more offerings, individually or in any combination, of Valley’s common stock, preferred stock and other non-equity securities. The shelf registration statement provides Valley with capital raising flexibility and enables Valley to promptly access the capital markets in order to pursue growth opportunities that may become available in the future or permits Valley to comply with any changes in the regulatory environment that call for increased capital requirements. Valley’s ability, and any decision to issue and sell securities pursuant to the shelf registration statement, is subject to market conditions and Valley’s capital needs at such time. Additional equity offerings, including shares issued under Valley’s dividend reinvestment plan, may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both. Such offerings may be necessary in the future due to several reasons beyond management’s control, including numerous external factors that could negatively impact the strengthening of the U.S. economy or our ability to maintain or increase the level of our net income. See Note 18 to the consolidated financial statements for additional information on Valley’s common and preferred stock issuances, as well as activity within its dividend reinvestment plan.

Off-Balance Sheet Arrangements

Contractual Obligations and Commitments. In the ordinary course of operations, Valley enters into various financial obligations, including contractual obligations that may require future cash payments. As a financial services provider, we routinely enter into commitments to extend credit, including loan commitments, standby and commercial letters of credit. Such commitments are subject to the same credit policies and approval process accorded to loans made by the Bank. See Note 15 of the consolidated financial statements for additional information.

2016 Form 10-K 68

The following table summarizes Valley’s contractual obligations and other commitments to make future payments as of December 31, 2016. Payments for deposits, borrowings and debentures do not include interest. Payments related to leases, capital expenditures, other purchase obligations and commitments to sell loans are based on actual payments specified in the underlying contracts. Commitments to extend credit and standby letters of credit are presented at contractual amounts; however, since many of these commitments are expected to expire unused or only partially used based upon our historical experience, the total amounts of these commitments do not necessarily reflect future cash requirements.

	Note to Financial Statements	One Year or Less		One to Three Years		Three to Five Years		Over Five Years		Total
						(in thousands)
Contractual obligations:
Time deposits	Note 9	$	2,122,906	$	572,687	$	310,235	$	133,043	$	3,138,871
Long-term borrowings (1)	Note 10	75,000		50,000		840,000		475,000		1,440,000
Junior subordinated debentures issued to capital trusts (1)	Note 11	—		—		—		45,363		45,363
Operating leases	Note 15	27,256		53,224		52,212		281,310		414,002
Capital expenditures		7,050		—		—		—		7,050
Other purchase obligations (2)		27,429		799		383		—		28,611
Total		$	2,259,641	$	676,710	$	1,202,830	$	934,716	$	5,073,897
Other commitments:
Commitments to extend credit	Note 15	$	3,245,372	$	627,981	$	55,785	$	554,854	$	4,483,992
Standby letters of credit	Note 15	121,924		22,470		73,301		—		217,695
Commitments to sell loans	Note 15	147,250		—		—		—		147,250
Total		$	3,514,546	$	650,451	$	129,086	$	554,854	$	4,848,937

⁽¹⁾  Amounts presented consist of the contractual principal balances. Carrying values and call dates are set forth in Notes 10 and 11 to the consolidated financial statements for long-term borrowings and junior subordinated debentures issued to capital trusts, respectively.

⁽²⁾  This category primarily consists of contractual obligations for communication and technology costs.

Valley also has obligations under its pension benefit plans, not included in the above table, as further described in Note 12 of the consolidated financial statements.

Derivative Instruments and Hedging Activities. We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of our assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, we enter 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. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments mainly related to certain variable-rate borrowings and fixed-rate loan assets. Valley also 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 rates on Valley’s commitments to fund the loans as well as on its portfolio of mortgage loans held for sale.

See Note 15 to the consolidated financial statements for quantitative information on our derivative financial instruments and hedging activities.

Trust Preferred Securities. In addition to the commitments and derivative financial instruments of the types described above, our off-balance sheet arrangements include a $1.4 million ownership interest in the common securities of our statutory trusts to issue trust preferred securities. See “Capital Adequacy” section above and Note 11 of the consolidated financial statements.

69 2016 Form 10-K

Results of Operations—2015 Compared to 2014

Net interest income on a tax equivalent basis increased by $75.4 million to $558.1 million for 2015 compared with $482.7 million for 2014. The increase was mainly driven by a $2.4 billion increase in average loan balances and a $386.5 million decrease in average long-term borrowings as compared to 2014. The growth in average loans during 2015 was fueled mostly by solid demand for commercial real estate loans, automobile loans and secured personal lines of credit throughout the year, $1.2 billion of purchased participations in multi-family loans and whole 1-4 family loans (that were a mix of qualifying and non-qualifying CRA loans with adjustable and fixed rates), $1.2 billion in loans acquired from 1st United on November 1, 2014 and, to a much lesser extent, approximately $825 million in loans acquired from CNL on December 1, 2015.

Average interest earning assets totaling $17.4 billion for the year ended December 31, 2015 increased $2.4 billion, or 15.9 percent, as compared to 2014. Average loan balances increased $2.4 billion to $14.4 billion in 2015 and drove all of the $80.4 million increase in the interest income on a tax equivalent basis for loans as compared to 2014, which was partially offset by the low interest rates on new and renewed loans. The increase in average loans was primarily due to the aforementioned commercial real estate loans, automobile loans and secured personal lines of credit growth throughout the year and purchased participations in multi-family loans and whole 1-4 family loans. Average investment securities decreased $81.4 million to approximately $2.7 billion in 2015 primarily due to a lower level of reinvestment of principal and interest payments from investments due to the funding needs related to our organic and purchased loan growth during 2015. Average federal funds sold and other interest bearing deposits increased $100.8 million to $271.3 million for the year ended December 31, 2015 as compared to 2014 due to higher levels of overnight liquidity held primarily due to the timing of new loan originations and loan purchases, funds held from the issuance of subordinated notes in June 2015 used to repay the notes that matured in July 2015, and to a lesser extent, excess funds used for a portion of our prepayment of high cost borrowings in the fourth quarter of 2015.

Average interest bearing liabilities increased $1.6 billion to $12.9 billion for the year ended December 31, 2015 from the same period in 2014 mainly due to a $1.3 billion increase in average savings, NOW, and money market accounts mostly resulting from (1) $591.7 million in deposits assumed from 1st United, (2) increased use of brokered money market account balances in our loan growth funding strategy and other liquidity needs (including $500 million of such deposits we used to fund the prepayment of high cost borrowings totaling $795 million in late October 2015), and (3) approximately $46 million in average balances related to deposits assumed from CNL. Average time deposits also increased $704.5 million to $3.0 billion for 2015 as compared to 2014 mainly due to significant organic growth from retail time deposit campaigns in New Jersey, New York and Florida in the fourth quarter of 2014 and second quarter of 2015 and $256.5 million in deposits assumed from 1st United during the fourth quarter of 2014. Average short-term borrowings decreased $47.6 million to $243.2 million for 2015 as compared to 2014 mostly due to lower levels of overnight federal funds purchased and short-term FHLB advances utilized as short-term funding sources for loan growth throughout most of 2015. Average long-term borrowings decreased to approximately $2.5 billion for 2015 as compared to $2.8 billion in 2014 largely due to the prepayments of high cost borrowings of $275 million and $845 million in the fourth quarters of 2014 and 2015, respectively.

Non-interest income represented 11 percent of total interest income plus non-interest income for both 2015 and 2014, respectively. For the year ended December 31, 2015, non-interest income increased $6.2 million compared with 2014 mainly due to a decrease in the negative impact on non-interest income from the change of the FDIC loss-share receivable and increases in both net gains on sales of loans and net gains on securities transactions, partially offset by a decrease in net gains on sales of assets.

The aggregate effect of changes in the FDIC loss-share receivable amounted to a $3.3 million net reduction in non-interest income for the year ended December 31, 2015 as compared to $20.8 million for 2014. The majority of the reduction in both the receivable and non-interest income during both 2015 and 2014 relates to the prospective adjustment to the receivable related to better than originally estimated cash flows on certain pools of covered loans since the acquisition date.

Net gains on sales of loans increased $2.5 million for the year ended December 31, 2015 as compared to 2014 largely due to an increase in sales volumes, and decreased $29.5 million from December 31, 2013 mostly due to a significant decline in loans originated for sale as our new and refinanced loan origination volumes were slowed by the higher level of long-term market interest rates since June 2013.

Net gains on securities transactions increased $1.7 million to $2.5 million for the year ended December 31, 2015 as compared to $745 thousand in 2014. The increase was largely due to gross gains totaling $3.3 million on the sale of corporate debt securities and trust preferred securities with amortized cost totaling $25.9 million during 2015, and, to a much lesser extent, an increase in net gains from the normal maturities and early redemptions of certain securities. The sale transactions included a corporate debt security classified as held to maturity and a previously impaired pooled trust preferred security with amortized costs of $9.8 million and $2.6 million, respectively. These gains were partially offset by $947 thousand of gross losses recognized on the sale of trust preferred securities with a total amortized cost of $8.3 million.

2016 Form 10-K 70

Net gains on sales of assets decreased $15.3 million for the year ended December 31, 2015 as compared to $18.1 million for 2014. The decrease in 2015 was mainly the result of a $17.8 million gain recognized in December 2014 from the sale of a Manhattan branch location.

Non-interest expense increased $95.8 million to $499.1 million for the year ended December 31, 2015 from $403.3 million for 2014. The increase from 2014 was mainly attributable to increases in the loss on extinguishment of debt, salaries and employee benefits, and net occupancy and equipment. The loss on extinguishment of debt totaling $51.1 million and $10.1 million for the years ended December 31, 2015 and December 31, 2014, respectively, entirely consisted of prepayment penalties incurred in connection with the early repayment of $845 million and $275 million in high cost long-term borrowings during the fourth quarters of 2015 and 2014, respectively. Salary and employee benefits expense increased by $28.3 million for the year ended December 31, 2015 across most categories as compared to 2014 largely due to the additional staffing expenses related to our acquisition of 1st United on November 1, 2014 and, to a much lesser extent, general increases in 2015 and the acquisition of CNL on December 1, 2015. Additionally, many of the back office efficiencies related to the 1st United transaction were not fully realized until after the systems conversion in the latter part of the first quarter of 2015. Within the salary and employee benefits category, medical health insurance expenses increased $2.4 million to $17.4 million during the year ended December 31, 2015 as compared to 2014 due, in part, to general cost increases, as well as the acquisition of 1st United. In addition, net occupancy and equipment expenses increased $16.0 million for the year ended December 31, 2015 as compared to 2014. The increase was largely due to additional rents and other costs associated with the 20 branch network acquired from 1st United in 2014, as well as a general increase in repairs and maintenance expenses. During the fourth quarter of 2015, we also recorded $2.6 million of additional lease obligation expense related to 15 planned branch closures for 2016.

We also incurred merger expenses (largely within professional and legal fees) totaling $1.8 million for the year ended December 31, 2015 related to the acquisition of CNL as compared to $2.6 million for the year ended December 31, 2014 related to the acquisition of 1st United. See Note 2 to the consolidated financial statements for further details regarding the acquisition.

Income tax expense was $23.9 million for the year ended December 31, 2015, reflecting an effective tax rate of 18.9 percent, as compared to $31.1 million for the year ended 2014, reflecting an effective tax rate of 21.1 percent. The decrease in both 2015 tax expense and the effective tax rate was primarily the result of the lower pre-tax income.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

For information regarding Quantitative and Qualitative Disclosures About Market Risk, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Sensitivity.”

71 2016 Form 10-K

Item 8. Financial Statements and Supplementary Data

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	December 31,
	2016			2015
	(in thousands except for share data)
Assets
Cash and due from banks	$	220,791		$	243,575
Interest bearing deposits with banks	171,710			170,225
Investment securities:
Held to maturity (fair value of $1,924,597 at December 31, 2016 and $1,621,039 at December 31, 2015)	1,925,572			1,596,385
Available for sale	1,297,373			1,506,861
Total investment securities	3,222,945			3,103,246
Loans held for sale, at fair value	57,708			16,382
Loans	17,236,103			16,043,107
Less: Allowance for loan losses	(114,419		)	(106,178		)
Net loans	17,121,684			15,936,929
Premises and equipment, net	291,180			298,943
Bank owned life insurance	391,830			387,542
Accrued interest receivable	66,816			63,554
Goodwill	690,637			686,339
Other intangible assets, net	45,484			48,882
Other assets	583,654			656,999
Total Assets	$	22,864,439		$	21,612,616
Liabilities
Deposits:
Non-interest bearing	$	5,252,825		$	4,914,285
Interest bearing:
Savings, NOW and money market	9,339,012			8,181,362
Time	3,138,871			3,157,904
Total deposits	17,730,708			16,253,551
Short-term borrowings	1,080,960			1,076,991
Long-term borrowings	1,433,906			1,810,728
Junior subordinated debentures issued to capital trusts	41,577			41,414
Accrued expenses and other liabilities	200,132			222,841
Total Liabilities	20,487,283			19,405,525
Shareholders’ Equity
Preferred stock (no par value, authorized 30,000,000 shares; issued 4,600,000 shares at December 31, 2016 and 2015)	111,590			111,590
Common stock (no par value, authorized 332,023,233 shares; issued 263,804,877 shares at December 31, 2016 and 253,787,561 shares at December 31, 2015)	92,353			88,626
Surplus	2,044,401			1,927,399
Retained earnings	172,754			125,171
Accumulated other comprehensive loss	(42,093		)	(45,695		)
Treasury stock, at cost (166,047 common shares at December 31, 2016)	(1,849		)	—
Total Shareholders’ Equity	2,377,156			2,207,091
Total Liabilities and Shareholders’ Equity	$	22,864,439		$	21,612,616

See accompanying notes to consolidated financial statements.

2016 Form 10-K 72

CONSOLIDATED STATEMENTS OF INCOME

	Years Ended December 31,
	2016			2015			2014
	(in thousands, except for share data)
Interest Income
Interest and fees on loans	$	685,911		$	633,199		$	552,821
Interest and dividends on investment securities:
Taxable	58,143			52,050			62,458
Tax-exempt	15,537			14,568			14,683
Dividends	6,206			6,557			6,272
Interest on federal funds sold and other short-term investments	1,126			649			369
Total interest income	766,923			707,023			636,603
Interest Expense
Interest on deposits:
Savings, NOW and money market	39,787			24,824			19,671
Time	37,775			35,432			27,882
Interest on short-term borrowings	12,022			919			972
Interest on long-term borrowings and junior subordinated debentures	59,190			95,579			113,321
Total interest expense	148,774			156,754			161,846
Net Interest Income	618,149			550,269			474,757
Provision for credit losses	11,869			8,101			1,884
Net Interest Income After Provision for Credit Losses	606,280			542,168			472,873
Non-Interest Income
Trust and investment services	10,345			10,020			9,512
Insurance commissions	19,106			17,233			16,853
Service charges on deposit accounts	20,879			21,176			22,771
Gains on securities transactions, net	777			2,487			745
Fees from loan servicing	6,441			6,641			7,013
Gains on sales of loans, net	22,030			4,245			1,731
Gains on sales of assets, net	1,358			2,776			18,087
Bank owned life insurance	6,694			6,815			6,392
Change in FDIC loss-share receivable	(1,291		)	(3,326		)	(20,792		)
Other	16,886			15,735			15,304
Total non-interest income	103,225			83,802			77,616
Non-Interest Expense
Salary and employee benefits expense	235,853			221,765			193,489
Net occupancy and equipment expense	87,140			90,521			74,492
FDIC insurance assessment	20,100			16,867			14,051
Amortization of other intangible assets	11,327			9,169			9,919
Professional and legal fees	17,755			18,945			16,859
Loss on extinguishment of debt	315			51,129			10,132
Amortization of tax credit investments	34,744			27,312			24,196
Telecommunication expenses	10,021			8,259			6,993
Other	58,870			55,108			53,124
Total non-interest expense	476,125			499,075			403,255
Income Before Income Taxes	233,380			126,895			147,234
Income tax expense	65,234			23,938			31,062
Net Income	168,146			102,957			116,172
Dividends on preferred stock	7,188			3,813			—
Net Income Available to Common Shareholders	$	160,958		$	99,144		$	116,172
Earnings Per Common Share:
Basic	$	0.63		$	0.42		$	0.56
Diluted	0.63			0.42			0.56
Cash Dividends Declared Per Common Share	0.44			0.44			0.44
Weighted Average Number of Common Shares Outstanding:
Basic	254,841,571			234,405,909			205,716,293
Diluted	255,268,336			234,437,000			205,716,293

See accompanying notes to consolidated financial statements.

73 2016 Form 10-K

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Net income	$	168,146		$	102,957		$	116,172
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on securities available for sale
Net (losses) gains arising during the period	(4,293		)	(2,000		)	19,398
Less reclassification adjustment for net gains included in net income	(465		)	(1,446		)	(433		)
Total	(4,758		)	(3,446		)	18,965
Non-credit impairment losses on available for sale and held to maturity securities
Net change in non-credit impairment losses on securities	417			(241		)	1,334
Less reclassification adjustment for accretion of credit impairment losses included in net income	(539		)	(424		)	(383		)
Total	(122		)	(665		)	951
Unrealized gains and losses on derivatives (cash flow hedges)
Net losses on derivatives arising during the period	(2,461		)	(7,239		)	(12,147		)
Less reclassification adjustment for net losses included in net income	7,641			4,127			3,886
Total	5,180			(3,112		)	(8,261		)
Defined benefit pension plan
Net gains (losses) arising during the period	3,298			3,444			(16,207		)
Amortization of prior service cost	(181		)	117			177
Amortization of net loss	185			462			132
Total	3,302			4,023			(15,898		)
Total other comprehensive income (loss)	3,602			(3,200		)	(4,243		)
Total comprehensive income	$	171,748		$	99,757		$	111,929

See accompanying notes to consolidated financial statements.

2016 Form 10-K 74

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

			Common Stock								Accumulated
	Preferred Stock		Shares	Amount		Surplus		Retained Earnings			Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
	($ in thousands)
Balance - December 31, 2013	$	—	199,593	$	69,941	$	1,403,375	$	106,340		$	(38,252	)	$	(364	)	$	1,541,040
Net income	—		—	—		—		116,172			—			—			116,172
Other comprehensive loss, net of tax	—		—	—		—		—			(4,243		)	—			(4,243		)
Cash dividends declared on common stock	—		—	—		—		(91,581		)	—			—			(91,581		)
Effect of stock incentive plan, net	—		1,299	234		6,269		(83		)	—			(614		)	5,806
Common stock issued	—		31,219	10,897		284,108		(3		)	—			821			295,823
Balance - December 31, 2014	—		232,111	81,072		1,693,752		130,845			(42,495		)	(157		)	1,863,017
Net income	—		—	—		—		102,957			—			—			102,957
Other comprehensive loss,  net of tax	—		—	—		—		—			(3,200		)	—			(3,200		)
Preferred stock issued	111,590		—	—		—		—			—			—			111,590
Cash dividends declared on preferred stock	—		—	—		—		(3,813		)	—			—			(3,813		)
Cash dividends declared on common stock	—		—	—		—		(104,753		)	—			—			(104,753		)
Effect of stock incentive plan, net	—		500	190		7,153		(30		)	—			(2,598		)	4,715
Common stock issued	—		21,177	7,364		226,494		(35		)	—			2,755			236,578
Balance - December 31, 2015	111,590		253,788	88,626		1,927,399		125,171			(45,695		)	—			2,207,091
Net income	—		—	—		—		168,146			—			—			168,146
Other comprehensive income, net of tax	—		—	—		—		—			3,602			—			3,602
Cash dividends declared on preferred stock	—		—	—		—		(7,188		)	—			—			(7,188		)
Cash dividends declared on common stock	—		—	—		—		(113,212		)	—			—			(113,212		)
Effect of stock incentive plan, net	—		57	365		10,737		(143		)	—			(3,894		)	7,065
Common stock issued	—		9,794	3,362		106,265		(20		)	—			2,045			111,652
Balance - December 31, 2016	$	111,590	263,639	$	92,353	$	2,044,401	$	172,754		$	(42,093	)	$	(1,849	)	$	2,377,156

See accompanying notes to consolidated financial statements.

75 2016 Form 10-K

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Cash flows from operating activities:
Net income	$	168,146		$	102,957		$	116,172
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	24,431			21,082			19,465
Stock-based compensation	10,032			7,575			7,489
Provision for credit losses	11,869			8,101			1,884
Net amortization of premiums and accretion of discounts on securities and borrowings	24,310			22,080			26,949
Amortization of other intangible assets	11,327			9,169			9,919
Gains on securities transactions, net	(777		)	(2,487		)	(745		)
Proceeds from sales of loans held for sale	572,439			144,790			85,452
Gains on sales of loans, net	(22,030		)	(4,245		)	(1,731		)
Originations of loans held for sale	(425,713		)	(134,328		)	(91,463		)
Gains on sales of assets, net	(1,358		)	(2,776		)	(18,087		)
Net deferred income tax expense	27,154			16,453			11,455
FDIC loss-share receivable (excluding reimbursements)	1,291			3,326			20,792
Net change in:
Trading securities	—			14,233			31
Fair value of borrowings hedged by derivative transactions	6,158			1,473			1,364
Cash surrender value of bank owned life insurance	(6,694		)	(6,815		)	(6,392		)
Accrued interest receivable	(3,262		)	(2,480		)	423
Other assets	46,167			(74,589		)	15,867
Accrued expenses and other liabilities	(24,313		)	31,410			(14,868		)
Net cash provided by operating activities	419,177			154,929			183,976
Cash flows from investing activities:
Net loan originations and purchases	(1,379,218		)	(1,756,578		)	(778,300		)
Investment securities held to maturity:
Purchases	(669,157		)	(239,608		)	(397,186		)
Sales	—			11,666			—
Maturities, calls and principal repayments	325,766			402,485			347,531
Investment securities available for sale:
Purchases	(679,530		)	(594,327		)	(28,415		)
Sales	4,782			140,640			62,025
Maturities, calls and principal repayments	867,998			142,588			153,673
Death benefit proceeds from bank owned life insurance	2,406			—			—
Proceeds from sales of real estate property and equipment	20,560			23,861			43,360
Purchases of real estate property and equipment	(20,707		)	(34,040		)	(21,862		)
(Payments to) reimbursements from the FDIC	(213		)	1,889			5,582
Cash and cash equivalents acquired in acquisitions	—			201,025			102,025
Net cash used in investing activities	(1,527,313		)	(1,700,399		)	(511,567		)

2016 Form 10-K 76

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Cash flows from financing activities:
Net change in deposits	$	1,477,157		$	1,051,660		$	1,300,011
Net change in short-term borrowings	3,969			873,123			(151,470		)
Proceeds from issuance of long-term borrowings, net	385,000			162,792			—
Repayments of long-term borrowings	(769,182		)	(970,000		)	(275,000		)
Proceeds from issuance of preferred stock, net	—			111,590			—
Cash dividends paid to preferred shareholders	(7,188		)	(3,813		)	—
Cash dividends paid to common shareholders	(111,813		)	(102,279		)	(88,119		)
Purchase of common shares to treasury	(3,191		)	(2,108		)	(1,688		)
Common stock issued, net	112,085			7,898			5,096
Net cash provided by financing activities	1,086,837			1,128,863			788,830
Net change in cash and cash equivalents	(21,299		)	(416,607		)	461,239
Cash and cash equivalents at beginning of year	413,800			830,407			369,168
Cash and cash equivalents at end of year	$	392,501		$	413,800		$	830,407
Supplemental disclosures of cash flow information:
Cash payments for:
Interest on deposits and borrowings	$	151,209		$	159,170		$	162,762
Federal and state income taxes	26,564			50,027			34,236
Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned	$	8,089		$	8,828		$	11,012
Loans transferred to loans held for sale	174,501			—			27,329
Acquisition:
Non-cash assets acquired:
Investments securities held to maturity	$	—		$	—		$	7,930
Investment securities available for sale	—			327,152			216,074
Loans	—			822,716			1,160,269
Premises and equipment	—			8,550			11,234
Bank owned life insurance	—			5,090			25,224
Accrued interest receivable	—			3,741			3,792
Goodwill	—			113,587			148,115
Other intangible assets	—			18,616			9,750
Other assets	—			49,831			52,349
Total non-cash assets acquired	—			1,349,283			1,634,737
Liabilities assumed:
Deposits	—			1,167,725			1,414,843
Short-term borrowings	—			57,087			16,796
Long-term borrowings	—			90,738			—
Accrued expenses and other liabilities	—			5,156			13,900
Total liabilities assumed	—			1,320,706			1,445,539
Net non-cash assets acquired	$	—		$	28,577		$	189,198
Net cash and cash equivalents acquired in acquisition	$	—		$	201,025		$	102,025
Common stock issued in acquisition	$	—		$	229,602		$	291,223

See accompanying notes to consolidated financial statements.

77 2016 Form 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Note 1)

Business

Valley National Bancorp, a New Jersey Corporation (Valley), is a bank holding company whose principal wholly-owned subsidiary is Valley National Bank (the “Bank”), a national banking association providing a full range of commercial, retail and trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, and Florida. The Bank is subject to intense competition from other financial services companies and is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by certain regulatory authorities.

Valley National Bank’s subsidiaries are all included in the consolidated financial statements of Valley. These subsidiaries include, but are not limited to:

• an all-line insurance agency offering property and casualty, life and health insurance;

• an asset management adviser that is a registered investment adviser with Securities and Exchange Commission (SEC);

• title insurance agencies in New Jersey, New York and Florida;

• subsidiaries which hold, maintain and manage investment assets for the Bank;

• a subsidiary which owns and services auto loans;

• a subsidiary which specializes in health care equipment lending and other commercial equipment leases; and

• a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the “REIT” subsidiaries) which own real estate related investments and a REIT subsidiary which owns some of the real estate utilized by the Bank and related real estate investments. Except for Valley’s REIT subsidiaries, all subsidiaries mentioned above are directly or indirectly wholly-owned by the Bank. Because each REIT subsidiary must have 100 or more shareholders to qualify as a REIT, each REIT subsidiary has issued less than 20 percent of its outstanding non-voting preferred stock to individuals, most of whom are non-senior management Bank employees. The Bank owns the remaining preferred stock and all the common stock of the REITs.

Basis of Presentation

The consolidated financial statements of Valley include the accounts of its commercial bank subsidiary, Valley National 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. See Note 11 for more details. Certain prior period amounts have been reclassified to conform to the current presentation.

In preparing the 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 are particularly susceptible to change are: the allowance for loan losses; the evaluation of goodwill and other intangible assets, and investment securities for impairment; fair value measurements of assets and liabilities; 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.

2016 Form 10-K 78

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest bearing deposits in other banks (including the Federal Reserve Bank of New York) and, from time to time, overnight federal funds sold. The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank based on a percentage of deposits. These reserve balances totaled $113.8 million and $59.9 million at December 31, 2016 and 2015, respectively.

Investment Securities

At the time of purchase, management generally elects to classify investment securities into one of two categories: held to maturity or available for sale. Investment securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold to maturity. Investment securities to be held for indefinite periods are classified as available for sale and carried at fair value, with unrealized holding gains and losses reported as a component of other comprehensive income or loss, net of tax. Realized gains or losses on the sale of available for sale are recognized by the specific identification method and are included in net gains on securities transactions. Investments in Federal Home Loan Bank and Federal Reserve Bank stock, which have limited marketability, are carried at cost in other assets.

Quarterly, Valley evaluates its investment securities classified as held to maturity and available for sale for other-than-temporary impairment. Other-than-temporary impairment means Valley believes the security’s impairment is due to factors that could include the issuer’s inability to pay interest or dividends, the potential for default, and/or other factors. When a held to maturity or available for sale debt security is assessed for other-than-temporary impairment, Valley has to first consider (a) whether it intends to sell the security, and (b) whether it is more likely than not that Valley will be required to sell the security prior to recovery of its amortized cost basis. If neither of these circumstances applies to a security, but Valley does not expect to recover the entire amortized cost basis, an other-than-temporary impairment loss has occurred that must be separated into two categories: (a) the amount related to credit loss, and (b) the amount related to other factors. In assessing the level of other-than-temporary impairment attributable to credit loss, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. The portion of the total other-than-temporary impairment related to credit loss is recognized in earnings, while the portion related to other factors is recognized in other comprehensive income or loss. The total other-than-temporary impairment loss is presented in the statement of income, less the portion recognized in other comprehensive income or loss. When a debt security becomes other-than-temporarily impaired, its amortized cost basis is reduced to reflect the portion of the total impairment related to credit loss. There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its securities during 2016, 2015 and 2014.

To determine whether a security’s impairment is other-than-temporary, Valley considers factors that include, among others, the causes of the decline in fair value, such as credit problems, interest rate fluctuations, or market volatility; the severity and duration of the decline; Valley’s ability and intent to hold equity security investments until they recover in value (as well as the likelihood of such a recovery in the near term); Valley’s intent to sell security investments; and whether it is more likely than not that Valley will be required to sell such securities before recovery of their individual amortized cost basis. For debt securities, the primary consideration in determining whether impairment is other-than-temporary is whether or not it is probable that current and/or future contractual cash flows have been or may be impaired. See the “Other-Than-Temporary Impairment Analysis” section of Note 4 for further discussion.

Interest income on investments includes amortization of purchase premiums and discounts. Realized gains and losses are derived based on the amortized cost of the security sold. 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.

Loans Held for Sale

Loans held for sale generally consist of conforming residential mortgage loans originated and intended for sale in the secondary market and are carried at their estimated fair value on an instrument-by-instrument basis as permitted by the fair value option election under U.S. GAAP. Changes in fair value are recognized in non-interest income in the accompanying consolidated statements of income as a component of net gains on sales of loans. Origination fees and costs related to loans held for sale are recognized as earned and as incurred. Loans held for sale are generally sold with loan servicing rights retained by Valley. Gains recognized on loan sales include the value assigned to the rights to service the loan. See “Loan Servicing Rights” section below.

79 2016 Form 10-K

Loans and Loan Fees

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans and premium or discounts on purchased loans, except for purchased credit-impaired loans. Loan origination and commitment fees, net of related costs are deferred and amortized as an adjustment of loan yield over the estimated life of the loans approximating the effective interest method.

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. Payments received on non-accrual loans are generally applied against principal. 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.

Purchased Credit-Impaired Loans (Including Covered Loans)

Purchased credit-impaired (PCI) loans are loans acquired at a discount (that is due, in part, to credit quality). Valley's PCI loan portfolio primarily consists of loans acquired in business combinations subsequent to 2011 and (covered) loans in which the Bank will share losses with the FDIC under loss-sharing agreements that have resulted from past FDIC-assisted transactions by Valley and acquired from 1st United Bancorp, Inc. (1st United) in 2014. The PCI loans are initially recorded at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Interest income on PCI loans has been accounted for based on the acquired loans’ expected cash flows. The PCI loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flow.

The difference between the undiscounted cash flows expected at acquisition and the investment in the loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or an allowance for loan losses. Increases in expected cash flows subsequent to the acquisition are recognized prospectively through adjustment of the yield on the pool over its remaining life, while decreases in expected cash flows are recognized as impairment through a loss provision and an increase in the allowance for loan losses. Therefore, the allowance for loan losses on these impaired pools reflect only losses incurred after the acquisition (representing the present value of all cash flows that were expected at acquisition but currently are not expected to be received). Any allowance for loan losses related to covered PCI loans is determined without consideration of the amounts recoverable through the FDIC loss-share agreements (see “FDIC Loss-Share Receivable” below). Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015.

The Bank periodically evaluates the remaining contractual required payments due and estimates of cash flows expected to be collected for the underlying loans of each PCI loan pool. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Changes in the contractual required payments due and estimated cash flows expected to be collected may result in changes in the accretable yield and non-accretable difference or reclassifications between accretable yield and the non-accretable difference. For the pools with better than expected cash flows, the forecasted increase is recorded as an additional accretable yield that is recognized as a prospective increase to our interest income on loans and the FDIC loss-share receivable, if applicable, is prospectively reduced by the guaranteed portion of the additional cash flows expected to be received, with a corresponding reduction to non-interest income. See Note 5 for additional information.

PCI loans that may have been classified as non-performing loans by an acquired bank are no longer classified as non-performing because these loans are accounted for on a pooled basis. Management’s judgment is required in classifying loans in pools as performing loans, and is dependent on having a reasonable expectation about the timing and amount of the pool cash flows to be collected, even if certain loans within the pool are contractually past due.

FDIC Loss-Share Receivable

Valley National Bank has several loss-share agreements with the FDIC (referred to as the “FDIC loss-share receivable” reported within other assets on Valley’s consolidated statements of financial condition) which relate to the LibertyPointe Bank and The Park Avenue Bank transactions entered into by Valley in 2010, as well as three prior FDIC-assisted transactions by 1st United (including Republic Federal Bank, The Bank of Miami and Old Harbor Bank) acquired by Valley in 2014. The FDIC loss-share receivable arising from the loss-share agreements is measured separately from the covered loan pools because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans.

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At the date of acquisition, the FDIC loss-share receivable was measured at its fair value based on expected future cash flows covered by the loss share agreements. In addition, the asset is based on the credit adjustments estimated for each loan pool and the loss-share percentages. Our FDIC loss-share receivable totaled $7.2 million and $8.3 million at December 31, 2016 and 2015, respectively. Although this asset represents a contractual receivable from the FDIC, there is no contractual interest rate associated with the asset.

The difference between the present value and the undiscounted cash flow expected to be collected from the FDIC is accreted into non-interest income over the life of the FDIC loss-share receivable. Actual or expected losses in excess of the acquisition date estimates result in an increase in the FDIC loss-share receivable. Conversely, when actual or expected losses are less than the acquisition date estimates, the loss share receivable is decreased. This reduction is recognized prospectively over the shorter of (i) the estimated life of the respective pools of covered loans or (ii) the term of the loss-sharing agreements with the FDIC. The FDIC loss-share receivable is also reduced and increased as loss-sharing payments are received from and made to the FDIC.

Effective January 1, 2015, the losses on commercial related loans (commercial and industrial loans and commercial real estate loans) from the Republic Federal Bank transaction ceased being covered under the loss-share agreement. Any recoveries, net of expenses, of losses incurred prior to January 1, 2015 on such loans will continue to be covered (and must be shared with the FDIC in accordance with the loss-share agreement) through December 31, 2017. The losses on consumer related loans (residential mortgage loans and consumer loans) continue to be covered under the loss-share agreement through December 31, 2019. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loan and other real estate owned portfolio between 80 percent and 95 percent based upon certain aggregate loss limits.

Effective April 1, 2015, the losses on commercial related loans from the LibertyPointe Bank and The Park Avenue Bank transactions ceased to be covered under the loss-share agreements. Any recoveries, net of expenses, of losses incurred prior to April 1, 2015 on such loans will continue to be covered by the loss-sharing agreement through March 31, 2018. The losses on consumer related loans will continue to be covered under the loss-share agreements through March 31, 2020. Under the terms of the loss-sharing agreements for the LibertyPointe Bank and The Park Avenue Bank transaction, the FDIC is obligated to reimburse Valley for 80 percent and 95 percent, respectively, of any future losses on covered consumer loans up to certain aggregate loss limits.

Effective January 1, 2016, the losses on commercial related loans from The Bank of Miami transaction ceased to be covered under the loss-share agreement. Any recoveries, net of expenses, of losses incurred prior to January 1, 2016 on such loans will continue to be covered through December 31, 2018. The losses on consumer related loans continue to be covered under the loss-share agreement through December 31, 2020. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loan and other real estate owned portfolio up to 80 percent of the covered assets acquired.

Effective January 1, 2017, the losses on commercial related loans from the Old Harbor Bank transaction ceased to be covered under the loss-share agreement. Any recoveries, net of expenses, on losses incurred prior that date will be shared with the FDIC in accordance with the loss-share agreement through December 31, 2019. The losses on consumer related loans will continue to be covered under the loss-share agreement through October 31, 2021. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loans and other real estate owned portfolio up to 70 percent of those covered assets within certain aggregate loss limits.

Allowance for Credit Losses

The allowance for credit losses (the “allowance”) is increased through provisions charged against current earnings and additionally by crediting amounts of recoveries received, if any, on previously charged-off loans. The allowance is reduced by charge-offs on loans or unfunded letters of credit which are determined to be a loss, in accordance with established policies, when all efforts of collection have been exhausted.

The allowance is maintained at a level estimated to absorb probable credit losses inherent in the loan portfolio as well as other credit risk related charge-offs. The allowance is based on ongoing evaluations of the probable estimated losses inherent in the non-PCI loan portfolio and off-balance sheet unfunded letters of credit, as well as reserves for impairment of PCI loans subsequent to their acquisition date. As discussed under the “Purchased Credit-Impaired Loans” section above, Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015. The Bank’s methodology for evaluating the appropriateness of the allowance includes grouping the non-covered loan portfolio into loan segments based on common risk characteristics, tracking the historical levels of classified loans and delinquencies, estimating the appropriate loss look-back and loss emergence periods related to historical losses for each loan segment, providing specific reserves on impaired loans, and assigning incremental reserves where necessary based upon qualitative and economic outlook factors including numerous variables, such as the nature and trends of recent loan charge-offs. Additionally, the volume of non-performing loans, concentration risks by size, type, and geography, new markets, collateral adequacy, credit policies and procedures, staffing, underwriting consistency, loan review and economic conditions are taken into consideration.

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The allowance for loan losses consists of four elements: (i) specific reserves for individually impaired credits, (ii) reserves for adversely classified, or higher risk rated, loans that are not impaired, (iii) reserves for other loans based on historical loss factors (using the appropriate loss look-back and loss emergence periods) adjusted for both internal and external qualitative risk factors to Valley, including the aforementioned factors, as well as changes in both organic and purchased loan portfolio volumes, the composition and concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing, and (iv) an allowance for PCI loan pools impaired subsequent to the acquisition date, if applicable.

The Credit Risk Management Department individually evaluates non-accrual (non-homogeneous) commercial and industrial loans and commercial real estate loans over $250 thousand and all troubled debt restructured loans. The value of an impaired loan is measured based upon the underlying anticipated method of payment consisting of either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent, and its payment is expected solely based on the underlying collateral. If the value of an impaired loan is less than its carrying amount, impairment is recognized through a provision to the allowance for loan losses. Collateral dependent impaired 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. 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 a specific valuation allowance in the allowance for loan losses. Accrual of interest is discontinued on an impaired loan when management believes, after considering collection efforts and other factors, the borrower’s financial condition is such that collection of interest is doubtful. Cash collections from non-accrual loans are generally credited to the loan balance, and no interest income is recognized on these loans until the principal balance has been determined to be fully collectible. Residential mortgage loans and consumer loans usually consist of smaller balance homogeneous loans that are collectively evaluated for impairment, and are specifically excluded from the impaired loan portfolio, except where the loan is classified as a troubled debt restructured loan.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of the loans. Loans are evaluated based on an internal credit risk rating system for the commercial and industrial loan and commercial real estate loan portfolio segments and non-performing loan status for the residential and consumer loan portfolio segments. Loans are risk-rated based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial and industrial loans and commercial real estate loans, and evaluated by the Loan Review Department on a test basis. Loans with a grade that is below “Pass” grade are adversely classified. See Note 5 for details. Any change in the credit risk grade of adversely classified performing and/or non-performing loans affects the amount of the related allowance. Once a loan is adversely classified, the assigned relationship manager and/or a special assets officer in conjunction with the Credit Risk Management Department analyze the loan to determine whether the loan is impaired and, if impaired, the need to specifically assign a valuation allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. Loans identified as losses by management are charged-off. Commercial loans are generally assessed for full or partial charge-off to the net realizable value for collateral dependent loans when a loan is between 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectable. Residential loans and home equity loans are generally charged-off to net realizable value when the loan is 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy). Automobile loans are fully charged-off when the loan is 120 days past due or partially charged-off to the net realizable value of collateral, if the collateral is recovered prior to such time. Unsecured consumer loans are generally fully charged-off when the loan is 150 days past due.

The allowance allocations for other loans (i.e., risk rated loans that are not adversely classified and loans that are not risk rated) are calculated by applying historical loss factors for each loan portfolio segment to the applicable outstanding loan portfolio balances. Loss factors are calculated using statistical analysis supplemented by management judgment. The statistical analysis considers historical default rates, historical loss severity in the event of default, and the average loss emergence period for each loan portfolio segment. The management analysis includes an evaluation of loan portfolio volumes, the composition and concentrations of credit, credit quality and current delinquency trends.

See Notes 5 and 6 for Valley’s loan credit quality and additional allowance disclosures.

Premises and Equipment, Net

Premises and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives range from 3 years for capitalized software to up to 40 years for buildings. Leasehold improvements are amortized over the term of the lease or estimated useful life of the asset, whichever is shorter. Major improvements are capitalized, while repairs and maintenance costs are charged to operations as incurred. Upon retirement or disposition, any gain or loss is credited or charged to operations. See Note 7 for further details.

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Bank Owned Life Insurance

Valley owns bank owned life insurance (BOLI) to help offset the cost of employee benefits. BOLI is recorded at its cash surrender value. Valley’s BOLI is invested primarily in U.S. Treasury securities and residential mortgage-backed securities issued by government sponsored enterprises and Ginnie Mae. The majority of the underlying investment portfolio is managed by one independent investment firm. The change in the cash surrender value is included as a component of non-interest income and is exempt from federal and state income taxes as long as the policies are held until the death of the insured individuals.

Other Real Estate Owned

Valley acquires other real estate owned (OREO) through foreclosure on loans secured by real estate. OREO is reported at the lower of cost or fair value, as established by a current appraisal (less estimated costs to sell), and is included in other assets. Any write-downs at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred to maintain these properties, unrealized losses resulting from valuation write-downs after the date of foreclosure, and realized gains and losses upon sale of the properties are included in other non-interest expense. OREO and other repossessed assets totaled $10.6 million and $19.0 million (including $588 thousand and $5.0 million of OREO properties related to the FDIC-assisted transactions, which are subject to the loss-sharing agreements) at December 31, 2016 and 2015, respectively. At December 31, 2016, OREO included foreclosed residential real estate properties totaling $1.6 million. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $7.1 million at December 31, 2016.

Goodwill

Intangible assets resulting from acquisitions under the acquisition method of accounting consist of goodwill and other intangible assets (see “Other Intangible Assets” below). Goodwill is not amortized and is subject to an annual assessment for impairment. Currently, the goodwill impairment analysis is generally a two-step test. However, Valley may choose to perform an optional qualitative assessment to determine whether it is necessary to perform the two-step quantitative goodwill impairment test for one or more units in future periods. During 2016 and 2015, Valley elected to perform step one of the two-step goodwill impairment test for all of its reporting units.

Goodwill is allocated to Valley’s reporting unit, which is a business segment or one level below, at the date goodwill is actually recorded. If the carrying value of a reporting unit exceeds its estimated fair value, a second step in the analysis is performed to determine the amount of impairment, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying value of a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded equal to the excess amount in the current period earnings. Valley reviews goodwill annually or more frequently if a triggering event indicates impairment may have occurred, to determine potential impairment by determining if the fair value of the reporting unit has fallen below the carrying value.

Other Intangible Assets

Other intangible assets primarily consist of loan servicing rights (largely generated from loan servicing retained by the Bank on residential mortgage loan originations sold in the secondary market to government sponsored enterprises), core deposits (the portion of an acquisition purchase price which represents value assigned to the existing deposit base), customer lists, and covenants not to compete obtained through acquisitions. Other intangible assets are amortized using various methods over their estimated lives and are periodically evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impairment is deemed to exist, an adjustment is recorded to earnings in the current period for the difference between the fair value of the asset and its carrying amount. See further details regarding loan servicing rights below.

Loan Servicing Rights

Loan servicing rights are recorded when originated mortgage loans are sold with servicing rights retained, or when servicing rights are purchased. Valley initially records the loan servicing rights at fair value. Subsequently, the loan servicing rights are carried at the lower of unamortized cost or market (i.e., fair value). The fair values of the loan servicing rights are determined using a method which utilizes servicing income, discount rates, prepayment speeds and default rates specifically relative to Valley’s portfolio for originated mortgage servicing rights.

The unamortized costs associated with acquiring loan servicing rights, net of any valuation allowances, are included in other intangible assets in the consolidated statements of financial condition and are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets in proportion to and over the period of 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. A valuation allowance is established through an impairment charge to earnings to the extent

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the unamortized cost of a stratified group of loan servicing rights exceeds its estimated fair value. Increases in the fair value of impaired loan servicing rights are recognized as a reduction of the valuation allowance, but not in excess of such allowance. The amortization of loan servicing rights is recorded in non-interest income.

Stock-Based Compensation

Compensation expense for stock options and restricted stock awards (i.e., non-vested stock awards) is based on the fair value of the award on the date of the grant and is recognized ratably over the service period of the award. Under Valley’s long-term incentive compensation plans, award grantees that are eligible for retirement do not have a service period requirement. Compensation expense for these awards is recognized immediately in earnings. The service period for non-retirement eligible employees is the shorter of the stated vesting period of the award or the period until the employee’s retirement eligibility date. The fair value of each option granted is estimated using a binomial option pricing model. The fair value of restricted stock awards is based upon the last sale price reported for Valley’s common stock on the date of grant or the last sale price reported preceding such date, except for performance-based restricted stock and restricted stock unit awards with a market condition. The grant date fair value of a performance-based restricted stock or restrict stock unit award that vests based on a market condition is determined by a third party specialist using a Monte Carlo valuation model. See Note 12 for additional information.

Fair Value Measurements

In general, fair values of financial instruments are based upon quoted market prices, where available. When observable market prices and parameters are not fully available, management uses valuation techniques based upon internal and third party models requiring more management judgment to estimate the appropriate fair value measurements. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, including adjustments based on internal cash flow model projections that utilize assumptions similar to those incorporated by market participants. Other adjustments may include amounts to reflect counterparty credit quality and Valley’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. See Note 3 for additional information.

Income Taxes

Valley uses the asset and liability method to provide income taxes on all transactions recorded in the consolidated financial statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the enacted tax rates that will be in effect when the underlying items of income and expense are expected to be realized.

Valley’s expense for income taxes includes the current and deferred portions of that expense. Deferred tax assets are recognized if, in management's judgment, their realizability is determined to be more likely than not. A valuation allowance is established to reduce deferred tax assets to the amount we expect to realize. Deferred income tax expense or benefit results from differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Valley maintains a reserve related to certain tax positions that management believes contain an element of uncertainty. An uncertain tax position is measured based on the largest amount of benefit that management believes is more likely than not to be realized. Periodically, Valley evaluates each of its tax positions and strategies to determine whether the reserve continues to be appropriate. See Note 13 for further analysis of Valley’s accounting for income taxes.

Comprehensive Income

Comprehensive income or loss is defined as the change in equity of a business entity during a period due to transactions and other events and circumstances, excluding those resulting from investments by and distributions to shareholders. Comprehensive income consists of net income and other comprehensive income or loss. Valley’s components of other comprehensive income or loss, net of deferred tax, include: (i) unrealized gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges relating to these securities); (ii) unrealized gains and losses on derivatives used in cash flow hedging relationships; and (iii) the pension benefit adjustment for the unfunded portion of its various employee, officer, and director pension plans. Valley presents comprehensive income and its components in the consolidated statements of comprehensive income for all periods presented. See Note 19 for additional disclosures.

Earnings Per Common Share

In Valley's computation of the earnings per common share, the numerator of both the basic and diluted earnings per common share is net income available to common shareholders (which is equal to net income less dividends on preferred stock). The

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weighted average number of common shares outstanding used in the denominator for basic earnings per common share is increased to determine the denominator used for diluted earnings per common share by the effect of potentially dilutive common stock equivalents utilizing the treasury stock method.

The following table shows the calculation of both basic and diluted earnings per common share for the years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands, except for share data)
Net income available to common shareholders	$	160,958	$	99,144	$	116,172
Basic weighted-average number of common shares outstanding	254,841,571		234,405,909		205,716,293
Plus: Common stock equivalents	426,765		31,091		—
Diluted weighted-average number of common shares outstanding	255,268,336		234,437,000		205,716,293
Earnings per common share:
Basic	$	0.63	$	0.42	$	0.56
Diluted	0.63		0.42		0.56

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of performance-based restricted stock units, common stock options and warrants to purchase Valley’s common shares. Common stock options and warrants with exercise prices that exceed the average market price 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 and warrants equaled approximately 4.0 million, 4.7 million, and 6.2 million of common shares for the years ended December 31, 2016, 2015, and 2014, respectively.

Preferred and Common Stock Dividends

In June 2015, Valley issued 4.6 million shares of non-cumulative perpetual preferred stock which were initially recorded at fair value (see Note 18 for additional details on the preferred stock issuance). The preferred shares are senior to Valley common stock, whereas the current year dividends must be paid before Valley can pay dividends to its common stockholders. Preferred dividends declared are deducted from net income for computing income available to common stockholders and earnings per common share computations.

Cash dividends to both preferred and common stockholders are payable and accrued when declared by Valley's Board of Directors.

Treasury Stock

Treasury stock is recorded using the cost method and accordingly is presented as a reduction of shareholders’ equity.

Derivative Instruments and Hedging Activities

As part of its asset/liability management strategies and to accommodate commercial borrowers, Valley has used interest rate swaps and caps to hedge variability in cash flows or fair values caused by changes in interest rates. Valley also uses derivatives not designated as hedges for non-speculative purposes to manage its exposure to interest rate movements related to a service for commercial lending customers, mortgage banking activities consisting of customer interest rate lock commitments and forward contracts to sell residential mortgage loans, and hybrid instruments, consisting of market linked certificates of deposit with an embedded swap contract. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Valley records all derivatives as assets or liabilities at fair value on the consolidated statements of financial condition.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income or loss and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. On a quarterly basis, Valley assesses the effectiveness of each hedging relationship by comparing the changes in cash flows or fair value of the derivative hedging instrument with the changes in cash flows or fair value of the designated

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hedged item or transaction. If a hedging relationship is terminated due to ineffectiveness, and the derivative instrument is not re-designated to a new hedging relationship, the subsequent change in fair value of such instrument is charged directly to earnings. Derivatives not designated as hedges do not meet the hedge accounting requirements under U.S. GAAP. Changes in fair value of derivatives not designated in hedging relationships are recorded directly in earnings. Valley made an accounting policy election to use the exception under the ASU No. 2011-04 and calculate the credit valuation adjustments to the fair value of derivatives on a net basis by counterparty portfolio. See Note 3 for additional information.

New Authoritative Accounting Guidance

Accounting Standards Update (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 is effective for Valley for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is not expected to have a significant impact on the presentation Valley's consolidated financial statements. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" clarifies on how certain cash receipts and cash payments should be classified and presented in the statement of cash flow. The ASU No. 2016-15 includes guidance on eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 is effective for Valley for fiscal years beginning after December 15, 2017 and it should be applied using a retrospective transition method to each period presented. ASU No. 2016-15 is not expected to have a significant impact on the presentation Valley's consolidated statements of cash flows.

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 ASU No. 2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity is required to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 is effective for Valley for reporting periods beginning January 1, 2020. Management is currently evaluating the impact of the ASU on Valley’s consolidated financial statements. Valley expects that the new guidance will result in an increase in its allowance for credit losses due to several factors, including: (i) the allowance related to Valley loans will increase to include credit losses over the full remaining expected life of the portfolio, and will consider expected future changes in macroeconomic conditions, (ii) the non-accretable difference (as defined in Note 5) on PCI loans will be recognized as an allowance, offset by an increase in the carrying value of the related loans, and (iii) an allowance will be established for estimated credit losses on investment securities classified as held to maturity. The extent of the increase is under evaluation, but will depend upon the nature and characteristics of the Valley's loan and investment portfolios at the adoption date, and the economic conditions and forecasts at that date.

ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" simplifies several aspects of the stock compensation guidance in Topic 718 and other related guidance. The amendments focus on income tax accounting upon vesting or exercise of share-based payments, award classification, liability classification exception for statutory tax withholding requirements, estimating forfeitures, and cash flow presentation. ASU No. 2016-09 is effective for Valley for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018 with an early adoption permitted. ASU No. 2016-09 is not expected to have a significant impact on Valley's consolidated financial statements.

ASU No. 2016-02, “Leases (Topic 842)” requires the recognition of a right of use asset and related lease liability by lessees for leases classified as operating leases under current GAAP. Topic 842, which replaces the current guidance under Topic 840, retains a distinction between finance leases and operating leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee also will not significantly change from current GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right of use assets and lease liabilities. Topic 842 will be effective for Valley for reporting periods beginning January 1, 2019, with an early adoption permitted. Valley must apply a modified retrospective transition approach for the applicable leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective

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approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Management is currently evaluating the impact of Topic 842 on Valley’s consolidated financial statements by reviewing its existing lease contracts and service contracts that may include embedded leases. Valley expects a gross-up of its consolidated statements of financial condition as a result of recognizing lease liabilities and right of use assets; the extent of such gross-up is under evaluation. Valley does not expect material changes to the recognition of operating lease expense in its consolidated statements of income.

ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities” requires that: (i) equity investments with readily determinable fair values must be measured at fair value with changes in fair value recognized in net income, (ii) equity investments without readily determinable fair values must be measured at either fair value or at cost adjusted for changes in observable prices minus impairment with changes in value under either of these methods recognized in net income, (iii) entities that record financial liabilities at fair value due to a fair value option election must recognize changes in fair value in other comprehensive income if it is related to instrument-specific credit risk, and (iv) entities must assess whether a valuation allowance is required for deferred tax assets related to available-for-sale debt securities. ASU No. 2016-01 is effective for Valley for reporting periods beginning January 1, 2018 and is not expected to have a material effect on Valley’s consolidated financial statements.

ASU No. 2015-07, "Fair Value Measurement (Topic 820) - Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)", which removes the requirement to categorize within the fair value hierarchy all investments for which the fair value is measured using the net asset value per share practical expedient. ASU No. 2015-07 also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. ASU No. 2015-07 became effective for Valley for reporting periods after January 1, 2016 and did not have an impact on Valley's fair value measurement disclosures at Note 6.

ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in the ASU No. 2015-03. ASU No. 2015-03 is effective for reporting periods beginning January 1, 2016 (with early adoption permitted), and is to be applied retrospectively. At December 31, 2015, Valley early adopted ASU No. 2015-03 to reflect the reclassification of the debt issuance costs from other assets to long-term borrowings for all periods presented in our consolidated statements of financial condition. See Note 10 to the consolidated financial statements for more details.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)" implements a common revenue standard that clarifies the principles for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In 2016, the Financial Accounting Standards Board issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” to further clarify the new guidance under Topic 606. ASU No. 2014-09 and its aforementioned amendments are effective on January 1, 2018. Management is currently evaluating by identification of revenue within the scope of the guidance to assess potential impact. Management has not yet identified any material changes in the timing of revenue recognition and it does not expect the new revenue guidance to have a significant impact on Valley’s consolidated financial statements.

BUSINESS COMBINATIONS (Note 2)

Masters Coverage Corp.

On January 4, 2016, Masters Coverage Corp., an all-line insurance agency that is a wholly-owned subsidiary of the Bank, acquired certain assets of an independent insurance agency located in New York. The purchase price totaled approximately $1.4 million in cash and future cash consideration.

CNLBancshares, Inc.

On December 1, 2015, Valley completed its acquisition of CNLBancshares, Inc. (CNL) and its wholly-owned subsidiary, CNLBank, headquartered in Orlando, Florida, a commercial bank with approximately $1.6 billion in assets, $825 million in loans, $1.2 billion in deposits and 16 Florida branch offices at the date of its acquisition by Valley. The CNL acquisition increased Valley's Florida branch network to a total of 31 branches (after 5 branch closures mostly resulting from branch efficiency efforts during 2016) covering most major markets in central and southern Florida. The common shareholders of CNL received 0.705 of a share of Valley common stock for each CNL share they owned prior to the merger. The total consideration for the acquisition was approximately $230 million, consisting of 20.6 million shares of Valley common stock.

87 2016 Form 10-K

Merger expenses totaled $1.8 million for the year ended December 31, 2015, which largely related to professional and legal fees included in non-interest expense on the consolidated statements of income. Valley also recorded a $3.3 million charge within income tax expense during 2015, which mostly related to the effect of the CNL acquisition on the valuation of our deferred tax assets.

1st United Bancorp, Inc.

On November 1, 2014, Valley acquired 1st United Bancorp, Inc. (1st United) and its wholly-owned subsidiary, 1st United Bank, a commercial bank with approximately $1.7 billion in assets, $1.2 billion in loans, and $1.4 billion in deposits, before purchase accounting adjustments. The 1st United acquisition gave Valley its first Florida branch network consisting of 20 branches covering some of the most attractive urban banking markets in Florida, including locations throughout southeast Florida, the Treasure Coast, central Florida and central Gulf Coast regions. The common shareholders of 1st United received 0.89 of a share of Valley common stock for each 1st United share they owned prior to the merger. The total consideration for the acquisition was approximately $300 million, consisting of 30.7 million shares of Valley common stock and $8.9 million of cash consideration paid to 1st United stock option holders. In conjunction with the merger, Valley shareholders approved an amendment of its certificate of incorporation to increase its authorized common shares by 100 million shares during the third quarter of 2014.

Merger expenses totaled $2.6 million for the year ended December 31, 2014, which largely related to professional and legal fees included in non-interest expense on the consolidated statements of income. Valley also recorded a $7.6 million charge within income tax expense for the fourth quarter of 2014 which mostly related to the effect of the 1st United acquisition on the valuation of our deferred tax assets.

See Note 8 for addition information regarding goodwill and intangible assets resulting from business combinations.

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Note 3)

Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurements and Disclosures,” 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).

2016 Form 10-K 88

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

The following tables present the assets and liabilities that are measured at fair value on a recurring and non-recurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at December 31, 2016 and 2015. The assets presented under “non-recurring fair value measurements” in the table 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).

			Fair Value Measurements at Reporting Date Using:
	December 31, 2016		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:
Available for sale:
U.S. Treasury securities	$	49,591	$	49,591	$	—	$	—
U.S. government agency securities	23,041		—		23,041		—
Obligations of states and political subdivisions	119,767		—		119,767		—
Residential mortgage-backed securities	1,015,542		—		1,005,589		9,953
Trust preferred securities	8,009		—		6,074		1,935
Corporate and other debt securities	60,565		8,064		52,501		—
Equity securities	20,858		1,306		19,552		—
Total available for sale	1,297,373		58,961		1,226,524		11,888
Loans held for sale (1)	57,708		—		57,708		—
Other assets (2)	29,055		—		29,055		—
Total assets	$	1,384,136	$	58,961	$	1,313,287	$	11,888
Liabilities
Other liabilities (2)	$	44,077	$	—	$	44,077	$	—
Total liabilities	$	44,077	$	—	$	44,077	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	5,385	$	—	$	—	$	5,385
Loan servicing rights	6,489		—		—		6,489
Foreclosed assets (4)	4,532		—		—		4,532
Total	$	16,406	$	—	$	—	$	16,406

89 2016 Form 10-K

			Fair Value Measurements at Reporting Date Using:
	December 31, 2015		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:
Available for sale:
U.S. Treasury securities	$	549,473	$	549,473	$	—	$	—
U.S. government agency securities	29,963		—		29,963		—
Obligations of states and political subdivisions	124,966		—		124,966		—
Residential mortgage-backed securities	696,428		—		684,777		11,651
Trust preferred securities	8,404		—		6,262		2,142
Corporate and other debt securities	77,552		17,710		59,842		—
Equity securities	20,075		1,198		18,877		—
Total available for sale	1,506,861		568,381		924,687		13,793
Loans held for sale (1)	16,382		—		16,382		—
Other assets (2)	33,774		—		33,774		—
Total assets	$	1,557,017	$	568,381	$	974,843	$	13,793
Liabilities
Other liabilities (2)	$	50,844	$	—	$	50,844	$	—
Total liabilities	$	50,844	$	—	$	50,844	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	15,427	$	—	$	—	$	15,427
Loan servicing rights	2,571		—		—		2,571
Foreclosed assets (4)	16,672		—		—		16,672
Total	$	34,670	$	—	$	—	$	34,670

⁽¹⁾  Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $58.2 million and $16.1 million at December 31, 2016 and 2015, respectively.

⁽²⁾  Amount represents derivative financial instruments.

⁽³⁾  Excludes PCI loans.

⁽⁴⁾  Includes covered other real estate owned totaling $300 thousand and $4.2 million at December 31, 2016 and 2015, respectively.

2016 Form 10-K 90

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2016, 2015 and 2014 are summarized below:

	Available For Sale Securities
	2016			2015			2014
	(in thousands)
Balance, beginning of the period	$	13,793		$	19,309		$	28,523
Net (losses) gains included in other comprehensive income	(203		)	(1,072		)	1,648
Sales	—			(2,674		)	(7,718		)
Settlements, net	(1,702		)	(1,770		)	(3,144		)
Balance, end of the period	$	11,888		$	13,793		$	19,309

There were no changes in unrealized gains or losses on Level 3 assets included in earnings during 2016, 2015 and 2014.

Transfers into and out of Level 3 assets are generally made in response to a decrease or an increase, respectively, in the availability of observable market data used in the securities’ pricing obtained primarily through independent pricing services or dealer market participants. See further details regarding the valuation techniques used for the fair value measurement of the financial instruments below. There were no transfers of assets into and out of Level 3, or between Level 1 and Level 2 during 2016 and 2015.

There have been no material changes in the valuation methodologies used at December 31, 2016 from December 31, 2015.

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 of 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.

Available for sale securities. All U.S. Treasury securities, certain corporate and other debt securities, and certain common and preferred equity 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. For certain securities, the inputs used by either dealer market participants or an independent pricing service may be derived from unobservable market information (Level 3 inputs). In these instances, Valley evaluates the appropriateness and quality of the assumption and the resulting price. In addition, Valley reviews the volume and level of activity for all available for sale and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume. For securities meeting these criteria, the quoted prices received from either market participants or an independent pricing service may be adjusted, as necessary, to estimate fair value and this results in fair values based on Level 3 inputs. In determining fair value, Valley utilizes unobservable inputs which reflect Valley’s own assumptions about the inputs that market participants would use in pricing each security. In developing its assertion of market participant assumptions, Valley utilizes the best information that is both reasonable and available without undue cost and effort.

In calculating the fair value for the available for sale securities under Level 3, Valley prepared present value cash flow models for certain private label mortgage-backed securities. The cash flows for the residential mortgage-backed securities incorporated the expected cash flow of each security adjusted for default rates, loss severities and prepayments of the individual loans collateralizing the security.

91 2016 Form 10-K

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at December 31, 2016:

Security Type	Valuation Technique	Unobservable Input	Range	Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate	15.0 - 22.5%	19.1	%
		Default rate	3.6 - 33.2	9.0
		Loss severity	45.6 - 66.0	60.0

Significant increases or decreases in any of the unobservable inputs in the table above in isolation would result in a significantly lower or higher fair value measurement of the securities. Generally, a change in the assumption used for the default rate is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

For the Level 3 available for sale residential mortgage-backed securities (consisting of four private label securities), cash flow assumptions incorporated independent third party market participant data based on vintage year for each security. The discount rate utilized in determining the present value of cash flows for the mortgage-backed securities was arrived at by combining the yield on orderly transactions for similar maturity government sponsored mortgage-backed securities with (i) the historical average risk premium of similar structured private label securities, (ii) a risk premium reflecting current market conditions, including liquidity risk, and (iii) if applicable, a forecasted loss premium derived from the expected cash flows of each security. The estimated cash flows for each private label mortgage-backed security were then discounted at the aforementioned effective rate to determine the fair value. The quoted prices received from either market participants or independent pricing services are weighted with the internal price estimate to determine the fair value of each instrument.

For the Level 3 available for sale trust preferred securities (consisting of one pooled security), the resulting estimated future cash flows were discounted at a yield determined by reference to similarly structured securities for which observable orderly transactions occurred. The discount rate for each security was applied using a pricing matrix based on credit, security type and maturity characteristics to determine the fair value. The fair value calculation is received from an independent valuation adviser. In validating the fair value calculation from an independent valuation adviser, Valley reviews the accuracy of the inputs and the appropriateness of the unobservable inputs utilized in the valuation to ensure the fair value calculation is reasonable from a market participant perspective.

Loans held for sale.  The conforming 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. To determine these fair values, the mortgages held for sale are put into multiple tranches, or pools, based on the coupon rate and maturity of each mortgage. The market prices for each tranche are obtained from both Fannie Mae and Freddie Mac. 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. The market prices received from Fannie Mae and Freddie Mac are then averaged and interpolated or extrapolated, where required, to calculate the fair value of each tranche. Depending upon the time elapsed since the origination of each loan held for sale, non-performance risk and changes therein were addressed in the estimate of fair value based upon the delinquency data provided to both Fannie Mae and Freddie Mac for market pricing and changes in market credit spreads. Non-performance risk did not materially impact the fair value of mortgage loans held for sale at December 31, 2016 and 2015 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 value of Valley’s derivatives are determined using third party prices that are based on discounted cash flow analyses 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 December 31, 2016 and 2015), is determined based on the current market prices for similar instruments provided by Freddie Mac and Fannie Mae. 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 December 31, 2016 and 2015.

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 non-recurring 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.

2016 Form 10-K 92

Impaired loans.  Certain impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral and are commonly referred to as “collateral dependent impaired loans.” Collateral values are estimated using Level 3 inputs, consisting of individual appraisals that are significantly adjusted based on customized discounting criteria. At December 31, 2016, appraisals were discounted up to 6.3 percent based on specific market data by location and property type. During 2016 and 2015, collateral dependent impaired loans were individually re-measured and reported at fair value through direct loan charge-offs to the allowance for loan losses and/or a specific valuation allowance allocation based on the fair value of the underlying collateral. The collateral dependent loan charge-offs to the allowance for loan losses totaled $4.3 million and $5.4 million for the years ended December 31, 2016 and 2015, respectively. These collateral dependent impaired loans with a total recorded investment of $8.4 million and $15.8 million at December 31, 2016 and 2015, respectively, were reduced by specific valuation allowance allocations totaling $3.0 million and $352 thousand to a reported total net carrying amount of $5.4 million and $15.4 million at December 31, 2016 and 2015, respectively.

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 December 31, 2016, the fair value model used prepayment speeds (stated as constant prepayment rates) from 0 percent up to 27 percent and a discount rate of 8 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. Valley recognized net impairment charges on loan servicing rights totaling $611 thousand and $88 thousand for the years ended December 31, 2016 and 2014, respectively, as compared to net recoveries of impairment charges totaling $303 thousand for the year ended December 31, 2015.

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 through a charge-off to the allowance for loan losses based upon the fair value of the foreclosed assets. The fair value of a foreclosed asset, upon initial recognition, is typically estimated using Level 3 inputs, consisting of an appraisal that is adjusted based on customized discounting criteria, similar to the criteria used for impaired loans described above. There were no adjustments to the appraisals of foreclosed assets at December 31, 2016. During the years ended December 31, 2016 and 2015, foreclosed assets measured at fair value upon initial recognition or subsequent re-measurement totaled $4.5 million and $16.7 million, respectively. The charge-offs of foreclosed assets to the allowance for loan losses totaled $1.7 million and $1.6 million for the years ended December 31, 2016 and 2015, respectively. The re-measurement of foreclosed assets at fair value subsequent to their initial recognition resulted in losses of $1.0 million, $2.0 million and $4.7 million included in non-interest expense for the years ended December 31, 2016, 2015 and 2014, respectively.

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.

93 2016 Form 10-K

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 December 31, 2016 and 2015 were as follows:

		December 31,
		2016				2015
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	220,791	$	220,791	$	243,575	$	243,575
Interest bearing deposits with banks	Level 1	171,710		171,710		170,225		170,225
Investment securities held to maturity:
U.S. Treasury securities	Level 1	138,830		147,495		138,978		149,483
U.S. government agency securities	Level 2	11,329		11,464		12,859		13,130
Obligations of states and political subdivisions	Level 2	566,590		577,826		504,865		527,263
Residential mortgage-backed securities	Level 2	1,112,460		1,102,802		852,289		855,272
Trust preferred securities	Level 2	59,804		47,290		59,785		46,437
Corporate and other debt securities	Level 2	36,559		37,720		27,609		29,454
Total investment securities held to maturity		1,925,572		1,924,597		1,596,385		1,621,039
Net loans	Level 3	17,121,684		16,756,655		15,936,929		15,824,475
Accrued interest receivable	Level 1	66,816		66,816		63,554		63,554
Federal Reserve Bank and Federal Home Loan Bank stock (1)	Level 1	147,127		147,127		145,068		145,068
Financial liabilities
Deposits without stated maturities	Level 1	14,591,837		14,591,837		13,095,647		13,095,647
Deposits with stated maturities	Level 2	3,138,871		3,160,572		3,157,904		3,203,389
Short-term borrowings	Level 1	1,080,960		1,081,751		1,076,991		1,076,991
Long-term borrowings	Level 2	1,433,906		1,523,386		1,810,728		1,945,741
Junior subordinated debentures issued to capital trusts	Level 2	41,577		45,785		41,414		44,127
Accrued interest payable (2)	Level 1	10,675		10,675		13,110		13,110

⁽¹⁾  Included in other assets.

⁽²⁾  Included in accrued expenses and other liabilities.

The following methods and assumptions were used to estimate the fair value of other financial assets and financial liabilities in the table above:

Cash and due from banks and interest bearing deposits with banks.  The carrying amount is considered to be a reasonable estimate of fair value because of the short maturity of these items.

Investment securities held to maturity.  Fair values are based on prices 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 (Level 2 inputs). Additionally, Valley reviews the volume and level of activity for all classes of held to maturity securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume. For securities meeting these criteria, the quoted prices received from either market participants or an independent pricing service may be adjusted, as necessary. If applicable, the adjustment to fair value is derived based on present value cash flow model projections prepared by Valley utilizing assumptions similar to those incorporated by market participants.

Loans.  Fair values of loans are estimated by discounting the projected future cash flows using market discount rates that reflect the credit and interest-rate risk inherent in the loan. The discount rate is a product of both the applicable index and credit

2016 Form 10-K 94

spread, subject to the estimated current new loan interest rates. The credit spread component is static for all maturities and may not necessarily reflect the value of estimating all actual cash flows repricing. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for comparable loans.

Accrued interest receivable and payable.  The carrying amounts of accrued interest approximate their fair value due to the short-term nature of these items.

Federal Reserve Bank and Federal Home Loan Bank stock.  Federal Reserve Bank and FHLB stock are non-marketable equity securities and are reported at their redeemable carrying amounts, which approximate the fair value.

Deposits.  The carrying amounts of deposits without stated maturities (i.e., non-interest bearing, savings, NOW, and money market deposits) approximate their estimated fair value. The fair value of time deposits is based on the discounted value of contractual cash flows using estimated rates currently offered for alternative funding sources of similar remaining maturity.

Short-term and long-term borrowings.  The carrying amounts of certain short-term borrowings, including securities sold under agreement to repurchase and FHLB borrowings (and from time to time, federal funds purchased) approximate their fair values because they frequently re-price to a market rate. The fair values of other short-term and long-term borrowings are estimated by obtaining quoted market prices of the identical or similar financial instruments when available. When quoted prices are unavailable, the fair values of the borrowings are estimated by discounting the estimated future cash flows using current market discount rates of financial instruments with similar characteristics, terms and remaining maturity.

Junior subordinated debentures issued to capital trusts.  The fair value of debentures issued to capital trusts not carried at fair value is estimated utilizing the income approach, whereby the expected cash flows, over the remaining estimated life of the security, are discounted using Valley’s credit spread over the current yield on a similar maturity of U.S. Treasury security or the three-month LIBOR for the variable rate indexed debentures (Level 2 inputs). The credit spread used to discount the expected cash flows was calculated based on the median current spreads for all fixed and variable publicly traded trust preferred securities issued by banks.

95 2016 Form 10-K

INVESTMENT SECURITIES (Note 4)

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31, 2016 and 2015 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	138,830	$	8,665	$	—		$	147,495
U.S. government agency securities	11,329		135		—			11,464
Obligations of states and political subdivisions:
Obligations of states and state agencies	252,185		6,692		(1,428		)	257,449
Municipal bonds	314,405		6,438		(466		)	320,377
Total obligations of states and political subdivisions	566,590		13,130		(1,894		)	577,826
Residential mortgage-backed securities	1,112,460		8,432		(18,090		)	1,102,802
Trust preferred securities	59,804		40		(12,554		)	47,290
Corporate and other debt securities	36,559		1,190		(29		)	37,720
Total investment securities held to maturity	$	1,925,572	$	31,592	$	(32,567	)	$	1,924,597
December 31, 2015
U.S. Treasury securities	$	138,978	$	10,505	$	—		$	149,483
U.S. government agency securities	12,859		271		—			13,130
Obligations of states and political subdivisions:
Obligations of states and state agencies	194,547		10,538		(10		)	205,075
Municipal bonds	310,318		11,955		(85		)	322,188
Total obligations of states and political subdivisions	504,865		22,493		(95		)	527,263
Residential mortgage-backed securities	852,289		11,018		(8,035		)	855,272
Trust preferred securities	59,785		36		(13,384		)	46,437
Corporate and other debt securities	27,609		1,894		(49		)	29,454
Total investment securities held to maturity	$	1,596,385	$	46,217	$	(21,563	)	$	1,621,039

2016 Form 10-K 96

The age of unrealized losses and fair value of related securities held to maturity at December 31, 2016 and 2015 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, 2016
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	98,114	$	(1,428	)	$	—	$	—		$	98,114	$	(1,428	)
Municipal bonds	27,368		(466		)	—		—			27,368		(466		)
Total obligations of states and political subdivisions	125,482		(1,894		)	—		—			125,482		(1,894		)
Residential mortgage-backed securities	692,108		(14,420		)	114,505		(3,670		)	806,613		(18,090		)
Trust preferred securities						45,898		(12,554		)	45,898		(12,554		)
Corporate and other debt securities	2,971		(29		)	—		—			2,971		(29		)
Total	$	820,561	$	(16,343	)	$	160,403	$	(16,224	)	$	980,964	$	(32,567	)
December 31, 2015
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	6,837	$	(5	)	$	1,965	$	(5	)	$	8,802	$	(10	)
Municipal bonds	8,814		(72		)	10,198		(13		)	19,012		(85		)
Total obligations of states and political subdivisions	15,651		(77		)	12,163		(18		)	27,814		(95		)
Residential mortgage-backed securities	244,440		(2,916		)	162,756		(5,119		)	407,196		(8,035		)
Trust preferred securities	—		—			45,047		(13,384		)	45,047		(13,384		)
Corporate and other debt securities	2,951		$	(49	)	$	—	$	—		$	2,951	$	(49	)
Total	$	263,042	$	(3,042	)	$	219,966	$	(18,521	)	$	483,008	$	(21,563	)

The unrealized losses on investment securities held to maturity are primarily due to changes in interest rates (including, in certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security positions in the securities held to maturity portfolio in an unrealized loss position at December 31, 2016 was 132 as compared to 74 at December 31, 2015.

The unrealized losses within the residential mortgage-backed securities category of the held to maturity portfolio at December 31, 2016 mostly related to investment grade securities issued by Ginnie Mae.

The unrealized losses existing for more than twelve months for trust preferred securities at December 31, 2016 primarily related to four non-rated single-issuer securities, issued by bank holding companies. All single-issuer trust preferred securities classified as held to maturity are paying in accordance with their terms, have no deferrals of interest or defaults and, if applicable, the issuers meet the regulatory capital requirements to be considered “well-capitalized institutions” at December 31, 2016.

Management does not believe that any individual unrealized loss as of December 31, 2016 included in the table above represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes in interest rates and market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management believes there are no credit losses on these securities. Valley does not have the intent to sell, nor is it more likely than not that Valley will be required to sell, the securities contained in the table above before the recovery of their amortized cost basis or maturity.

During 2015, Valley sold one corporate debt security classified as held to maturity with an amortized cost of $9.8 million. See "Realized Gains and Losses" section below for further details regarding this transaction.

97 2016 Form 10-K

As of December 31, 2016, the fair value of investments held to maturity that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law was $968.0 million.

The contractual maturities of investments in debt securities held to maturity at December 31, 2016 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.

	December 31, 2016
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	85,139	$	85,139
Due after one year through five years	191,207		199,327
Due after five years through ten years	364,471		377,665
Due after ten years	172,295		159,664
Residential mortgage-backed securities	1,112,460		1,102,802
Total investment securities held to maturity	$	1,925,572	$	1,924,597

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 6.7 years at December 31, 2016.

2016 Form 10-K 98

Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of investment securities available for sale at December 31, 2016 and 2015 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	51,020	$	6	$	(1,435	)	$	49,591
U.S. government agency securities	22,815		232		(6		)	23,041
Obligations of states and political subdivisions:
Obligations of states and state agencies	40,696		70		(424		)	40,342
Municipal bonds	80,045		147		(767		)	79,425
Total obligations of states and political subdivisions	120,741		217		(1,191		)	119,767
Residential mortgage-backed securities	1,029,827		2,061		(16,346		)	1,015,542
Trust preferred securities*	10,164		—		(2,155		)	8,009
Corporate and other debt securities	60,651		436		(522		)	60,565
Equity securities	20,505		1,114		(761		)	20,858
Total investment securities available for sale	$	1,315,723	$	4,066	$	(22,416	)	$	1,297,373
December 31, 2015
U.S. Treasury securities	$	551,173	$	4	$	(1,704	)	$	549,473
U.S. government agency securities	29,316		665		(18		)	29,963
Obligations of states and political subdivisions:
Obligations of states and state agencies	44,285		196		(67		)	44,414
Municipal bonds	80,717		209		(374		)	80,552
Total obligations of states and political subdivisions	125,002		405		(441		)	124,966
Residential mortgage-backed securities	701,764		3,348		(8,684		)	696,428
Trust preferred securities*	10,458		—		(2,054		)	8,404
Corporate and other debt securities	78,202		1,239		(1,889		)	77,552
Equity securities	21,022		575		(1,522		)	20,075
Total investment securities available for sale	$	1,516,937	$	6,236	$	(16,312	)	$	1,506,861

* Includes two pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies, at December 31, 2016 and 2015.

99 2016 Form 10-K

The age of unrealized losses and fair value of related securities available for sale at December 31, 2016 and 2015 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, 2016
U.S. Treasury securities	$	48,660	$	(1,435	)	$	—	$	—		$	48,660	$	(1,435	)
U.S. government agency securities	2,530		(4		)	4,034		(2		)	6,564		(6		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	28,628		(404		)	753		(20		)	29,381		(424		)
Municipal bonds	42,573		(506		)	11,081		(261		)	53,654		(767		)
Total obligations of states and political subdivisions	71,201		(910		)	11,834		(281		)	83,035		(1,191		)
Residential mortgage-backed securities	788,030		(11,889		)	132,718		(4,457		)	920,748		(16,346		)
Trust preferred securities						8,009		(2,155		)	8,009		(2,155		)
Corporate and other debt securities	32,292		(294		)	15,192		(228		)	47,484		(522		)
Equity securities	—		—			14,883		(761		)	14,883		(761		)
Total	$	942,713	$	(14,532	)	$	186,670	$	(7,884	)	$	1,129,383	$	(22,416	)
December 31, 2015
U.S. Treasury securities	$	548,538	$	(1,704	)	$	—	$	—		$	548,538	$	(1,704	)
U.S. government agency securities	3,489		(5		)	4,736		(13		)	8,225		(18		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	24,359		(67		)	—		—			24,359		(67		)
Municipal bonds	38,207		(128		)	13,551		(246		)	51,758		(374		)
Total obligations of states and political subdivisions	62,566		(195		)	13,551		(246		)	76,117		(441		)
Residential mortgage-backed securities	293,615		(4,147		)	164,010		(4,537		)	457,625		(8,684		)
Trust preferred securities	—		—			8,404		(2,054		)	8,404		(2,054		)
Corporate and other debt securities	21,203		(471		)	36,137		(1,418		)	57,340		(1,889		)
Equity securities	—		—			14,273		(1,522		)	14,273		(1,522		)
Total	$	929,411	$	(6,522	)	$	241,111	$	(9,790	)	$	1,170,522	$	(16,312	)

The unrealized losses on investment securities available for sale are primarily due to changes in interest rates (including, in certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security positions in the securities available for sale portfolio in an unrealized loss position at December 31, 2016 was 298 as compared to 291 at December 31, 2015.

The unrealized losses more than twelve months for the residential mortgage-backed securities category of the available for sale portfolio at December 31, 2016 largely related to several investment grade securities mainly issued by Ginnie Mae.

The unrealized losses for trust preferred securities at December 31, 2016 in the more than twelve months category in the table above entirely relate to 2 pooled trust preferred securities with a combined amortized cost of $10.2 million and a fair value of $8.0 million. One of the two pooled trust preferred securities had an unrealized loss of $1.3 million and an investment grade rating at December 31, 2016.

As of December 31, 2016, the fair value of securities available for sale that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $537.4 million.

2016 Form 10-K 100

The contractual maturities of investments securities available for sale at December 31, 2016 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.

	December 31, 2016
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	18,770	$	18,654
Due after one year through five years	73,904		74,158
Due after five years through ten years	114,174		112,063
Due after ten years	58,543		56,098
Residential mortgage-backed securities	1,029,827		1,015,542
Equity securities	20,505		20,858
Total investment securities available for sale	$	1,315,723	$	1,297,373

Actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

The weighted-average remaining expected life for residential mortgage-backed securities available for sale at December 31, 2016 was 8.6 years.

Other-Than-Temporary Impairment Analysis

Valley records impairment charges on its investment securities when the decline in fair value is considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities; decline in the creditworthiness of the issuer; absence of reliable pricing information for investment securities; adverse changes in business climate; adverse actions by regulators; prolonged decline in value of equity investments; or unanticipated changes in the competitive environment could have a negative effect on Valley’s investment portfolio and may result in other-than-temporary impairment on certain investment securities in future periods.

Among other securities, our investments in the private label mortgage-backed securities, trust preferred securities (including two pooled securities), corporate bonds, perpetual preferred securities and bank issued corporate bonds may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the security.

Valley’s investment portfolios include private label mortgage-backed securities, trust preferred securities principally issued by bank holding companies (including two pooled trust preferred securities), corporate bonds, and perpetual preferred securities issued by banks. These investments may pose a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy and its potential negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the security.

For residential mortgage-backed securities, Valley estimates loss projections for each security by stressing the cash flows from the individual loans collateralizing the security using expected default rates, loss severities, and prepayment speeds, in conjunction with the underlying credit enhancement (if applicable) for each security. Based on collateral and origination vintage specific assumptions, a range of possible cash flows is identified to determine whether other-than-temporary impairment exists.

For the single-issuer trust preferred securities and corporate and other debt securities, Valley reviews each portfolio to determine if all the securities are paying in accordance with their terms and have no deferrals of interest or defaults. A deferral event by a bank holding company for which Valley holds trust preferred securities may require the recognition of an other-than-temporary impairment charge if Valley determines that it is more likely than not that all contractual interest and principal cash flows may not be collected. Among other factors, the probability of the collection of all interest and principal determined by Valley in its impairment analysis declines if there is an increase in the estimated deferral period of the issuer. Additionally, a FDIC receivership for any single-issuer would result in an impairment and significant loss. Including the other factors outlined above, Valley analyzes the performance of the issuers on a quarterly basis, including a review of performance data from the issuers’ most recent bank regulatory report, if applicable, to assess their credit risk and the probability of impairment of the contractual cash flows of the applicable security. All of the issuers had capital ratios at December 31, 2016 that were at or above the minimum amounts to be considered a “well-capitalized” financial institution, if applicable, and/or have maintained performance levels adequate to support the contractual cash flows of the trust preferred securities.

101 2016 Form 10-K

Management does not believe that any individual unrealized loss as of December 31, 2016 represents an other-than-temporary impairment, as management mainly attributes the declines in value to changes in interest rates and recent market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management believes there are no credit losses on these securities. Valley has no intent to sell, nor is it more likely than not that Valley will be required to sell, the securities contained in the table above before the recovery of their amortized cost basis or, if necessary, maturity.

At December 31, 2016, approximately 43 percent of the $686.4 million carrying value of obligations of states and political subdivisions were issued by the states of (or municipalities within) New Jersey, New York, Utah and Maryland. The obligations of states and political subdivisions mainly consist of general obligation bonds and, to much lesser extent, special revenue bonds which had an aggregated amortized cost and fair value of $20.3 million and $20.8 million, respectively, at December 31, 2016. The special revenue bonds were mainly issued by the Port Authorities of New York and New Jersey, as well as various school districts. 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. Substantially all of these investments are investment grade. As of December 31, 2016, these securities are expected to perform in accordance with their contractual terms and, as a result, Valley expects to recover the entire amortized cost basis of these securities.

For the two pooled trust preferred securities, Valley evaluates the projected cash flows from each of its tranches in the two securities to determine if they are adequate to support their future contractual principal and interest payments. Valley assesses the credit risk and probability of impairment of the contractual cash flows by projecting the default rates over the life of the security. Higher projected default rates will decrease the expected future cash flows from each security. If the projected decrease in cash flows affects the cash flows projected for the tranche held by Valley, the security would be considered to be other-than-temporarily impaired.

The perpetual preferred securities, reported in equity securities, are hybrid investments that are assessed for impairment by Valley as if they were debt securities. Therefore, Valley assessed the creditworthiness of each security issuer, as well as any potential change in the anticipated cash flows of the securities as of December 31, 2016. Based on this analysis, management believes the declines in fair value of these securities are attributable to a lack of liquidity in the marketplace and are not reflective of any deterioration in the creditworthiness of the issuers.

Other-Than-Temporarily Impaired Securities

There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its securities during 2016 , 2015 and 2014. At December 31, 2016, four previously impaired private label mortgage-backed securities had a combined amortized cost of $10.2 million and fair value of $9.9 million, respectively, while one previously impaired pooled trust preferred security had an amortized cost of $2.8 million and fair value of $1.9 million, respectively.

The previously impaired trust preferred securities discussed above were not accruing interest during the years ended December 31, 2016, 2015, and 2014. See Note 1 for details regarding Valley's policy for the recognition of interest on impaired 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 or loss for the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Balance, beginning of period	$	5,837		$	8,947		$	9,990
Accretion of credit loss impairment due to an increase in expected cash flows	(921		)	(728		)	(661		)
Sales	—			(2,382		)	(382		)
Balance, end of period	$	4,916		$	5,837		$	8,947

The credit loss component of the impairment loss represents the difference between the present value of expected future cash flows and the amortized cost basis of the security prior to considering credit losses. The beginning balance represents the credit loss component for debt securities for which other-than-temporary impairment occurred prior to each period presented. The credit loss component increases if other-than-temporary impairments (initial and subsequent) are recognized in earnings for credit impaired debt securities. The credit loss component is reduced if (i) Valley receives cash flows in excess of what it expected to

2016 Form 10-K 102

receive over the remaining life of the credit impaired debt security, (ii) the security matures, (iii) the security is fully written down, or (iv) Valley sells, intends to sell or believes it will be required to sell previously credit impaired debt securities.

Realized Gains and Losses

Gross gains and losses realized on sales, maturities and other securities transactions included in earnings for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Sales transactions:
Gross gains	$	271		$	3,274		$	746
Gross losses	(58		)	(947		)	(2		)
	$	213		$	2,327		$	744
Maturities and other securities transactions:
Gross gains	$	615		$	293		$	10
Gross losses	(51		)	(133		)	(9		)
	$	564		$	160		$	1
Gains on securities transactions, net	$	777		$	2,487		$	745

LOANS (Note 5)

The detail of the loan portfolio as of December 31, 2016 and 2015 was as follows:

	December 31, 2016						December 31, 2015
	Non-PCI Loans		PCI Loans*		Total		Non-PCI Loans		PCI Loans*		Total
	(in thousands)
Loans:
Commercial and industrial	$	2,357,018	$	281,177	$	2,638,195	$	2,156,549	$	383,942	$	2,540,491
Commercial real estate:
Commercial real estate	7,628,328		1,091,339		8,719,667		6,069,532		1,355,104		7,424,636
Construction	710,266		114,680		824,946		607,694		147,253		754,947
Total commercial real estate loans	8,338,594		1,206,019		9,544,613		6,677,226		1,502,357		8,179,583
Residential mortgage	2,684,195		183,723		2,867,918		2,912,079		218,462		3,130,541
Consumer:
Home equity	376,213		92,796		469,009		391,809		119,394		511,203
Automobile	1,139,082		145		1,139,227		1,238,826		487		1,239,313
Other consumer	569,499		7,642		577,141		426,147		15,829		441,976
Total consumer loans	2,084,794		100,583		2,185,377		2,056,782		135,710		2,192,492
Total loans	$	15,464,601	$	1,771,502	$	17,236,103	$	13,802,636	$	2,240,471	$	16,043,107

* PCI loans include covered loans (mostly consisting of residential mortgage and commercial real estate loans) totaling $70.4 million and $122.3 million at December 31, 2016 and 2015, respectively.

Total non-PCI loans are net of unearned premiums and deferred loan costs totaling $15.3 million and $3.5 million at December 31, 2016 and 2015, respectively. The outstanding balances (representing contractual balances owed to Valley) for PCI loans totaled $1.9 billion and $2.4 billion at December 31, 2016 and 2015, respectively.

Valley transferred $174.5 million of residential mortgage loans from the loan portfolio to loans held for sale during the third quarter of 2016. These loans were sold during the fourth quarter of 2016 resulting in net gains totaling $7.3 million. Exclusive of such transfers, there were no other sales or transfers of loans from the held for investment portfolio during 2016 and 2015.

103 2016 Form 10-K

Purchased Credit-Impaired Loans (Including Covered Loans)

PCI loans are accounted for in accordance with ASC Subtopic 310-30 and are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance (i.e., the allowance for loan losses), and aggregated and accounted for as pools of loans based on common risk characteristics. The difference between the undiscounted cash flows expected at acquisition and the initial carrying amount (fair value) of the PCI loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment, as a loss accrual or a valuation allowance. Reclassifications of the non-accretable difference to the accretable yield may occur subsequent to the loan acquisition dates due to increases in expected cash flows of the loan pools. Valley's PCI loan portfolio included covered loans (i.e., loans in which the Bank will share losses with the FDIC under loss-sharing agreements) totaling $70.4 million and $122.3 million at December 31, 2016 and 2015, respectively. See Note 1 for additional information.

The following table presents changes in the accretable yield for PCI loans for the years ended December 31, 2016 and 2015:

	2016			2015
	(in thousands)
Balance, beginning of period	$	415,179		$	336,208
Acquisition	—			126,930
Accretion	(107,482		)	(105,078		)
Net (decrease) increase in expected cash flows	(9,989		)	57,119
Other, net	(3,194		)	—
Balance, end of period	$	294,514		$	415,179

The net (decrease) increase in expected cash flows for certain pools of loans (included in the table above) is recognized prospectively as an adjustment to the yield over the estimated remaining life of the individual pools. The net decrease in the expected cash flows totaling approximately $10.0 million for 2016 was largely due to better than expected collections, including loan prepayments, within certain loan pools which reduced the remaining reforecasted accretable yield during the fourth quarter of 2016. The net increase of $57.1 million during 2015 was mainly related to a decrease in the expected losses for certain loan pools during the fourth quarter of 2015.

FDIC Loss-Share Receivable

The receivable arising from the loss-sharing agreements with the FDIC is measured separately from the covered loan portfolio because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans. The FDIC loss share receivable (which is included in other assets on Valley's consolidated statements of financial condition) totaled $7.2 million and $8.3 million at December 31, 2016 and 2015, respectively. The aggregate effects of changes in the FDIC loss-share receivable was a reduction in non-interest income of $1.3 million, $3.3 million and $20.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Related Party Loans

In the ordinary course of business, Valley has granted loans to certain directors, executive officers and their affiliates (collectively referred to as “related parties”). These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons and do not involve more than normal risk of collectability.

The following table summarizes the changes in the total amounts of loans and advances to the related parties during the year ended December 31, 2016:

	2016
	(in thousands)
Outstanding at beginning of year	$	191,566
New loans and advances	26,736
Repayments	(52,982		)
Outstanding at end of year	$	165,320

All loans to related parties are performing as of December 31, 2016.

2016 Form 10-K 104

Loan Portfolio Risk Elements and Credit Risk Management

Credit risk management.  For all of its loan types discussed below, Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk. 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, 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.

Commercial and industrial loans.  A significant proportion of Valley’s commercial and industrial loan portfolio is granted to long standing customers of proven ability, strong repayment performance, and high character. Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, a significant number of the loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Short-term loans may be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, Valley will obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured loans, when made, are generally granted to the Bank’s most credit worthy borrowers. Unsecured commercial and industrial loans totaled $455.5 million and $386.6 million at December 31, 2016 and 2015, respectively. The commercial portfolio also includes taxi medallion loans, most of which consist of loans to fleet owners of New York City medallions. Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees whenever possible. While the vast majority of these loans are performing at December 31, 2016, we continue to closely monitor this portfolio's performance and the potential impact of the changes in market valuations for taxi medallions due to competing car service providers and other factors.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans but generally they involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.

Construction loans.  With respect to loans to developers and builders, Valley originates and manages construction loans structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Residential mortgages.  Valley originates residential, first mortgage loans based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO^® and other proprietary credit scoring models is employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. Residential mortgage loans include fixed and variable interest rate loans secured by one to four family homes generally located in northern and central New Jersey, the New York City metropolitan area, Florida and eastern Pennsylvania. Valley’s ability to be repaid on such loans is closely linked to the economic and real estate market conditions in this region. In deciding whether to originate each residential mortgage, Valley considers the qualifications of the borrower as well as the value of the underlying property.

105 2016 Form 10-K

Home equity loans.  Home equity lending consists of both fixed and variable interest rate products. Valley mainly provides home equity loans to its residential mortgage customers within the footprint of its primary lending territory. Valley generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 75 percent when originating a home equity loan.

Automobile loans.  Valley uses both judgmental and scoring systems in the credit decision process for automobile loans. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Automotive collateral is generally a depreciating asset and there are times in the life of an automobile loan where the amount owed on a vehicle may exceed its collateral value. Additionally, automobile charge-offs will vary based on the strength or weakness of the used vehicle market, original advance rate, when in the life cycle of a loan a default occurs and the condition of the collateral being liquidated. Where permitted by law, and subject to the limitations of the bankruptcy code, deficiency judgments are sought and acted upon to ultimately collect all money owed, even when a default resulted in a loss at collateral liquidation. Valley uses a third party to actively track collision and comprehensive risk insurance required of the borrower on the automobile and this third party provides coverage to Valley in the event of an uninsured collateral loss.

Other consumer loans.  Valley’s other consumer loan portfolio includes direct consumer term loans, both secured and unsecured. The other consumer loan portfolio includes exposures in personal lines of credit (including those secured by cash surrender value of life insurance), credit card loans and personal loans. Unsecured consumer loans totaled approximately $20.6 million and $18.8 million, including $7.0 million and $7.1 million of credit card loans, at December 31, 2016 and 2015, respectively. Valley believes the aggregate risk exposure of these loans and lines of credit was not significant at December 31, 2016.

Credit Quality

The following tables present past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis) by loan portfolio class at December 31, 2016 and 2015:

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing  Loans 90 Days Or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	6,705	$	5,010	$	142	$	8,465	$	20,322	$	2,336,696	$	2,357,018
Commercial real estate:
Commercial real estate	5,894		8,642		474		15,079		30,089		7,598,239		7,628,328
Construction	6,077		—		1,106		715		7,898		702,368		710,266
Total commercial real estate loans	11,971		8,642		1,580		15,794		37,987		8,300,607		8,338,594
Residential mortgage	12,005		3,564		1,541		12,075		29,185		2,655,010		2,684,195
Consumer loans:
Home equity	929		415		—		1,028		2,372		373,841		376,213
Automobile	3,192		723		188		146		4,249		1,134,833		1,139,082
Other consumer	76		9		21		—		106		569,393		569,499
Total consumer loans	4,197		1,147		209		1,174		6,727		2,078,067		2,084,794
Total	$	34,878	$	18,363	$	3,472	$	37,508	$	94,221	$	15,370,380	$	15,464,601

2016 Form 10-K 106

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing  Loans 90 Days Or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2015
Commercial and industrial	$	3,920	$	524	$	213	$	10,913	$	15,570	$	2,140,979	$	2,156,549
Commercial real estate:
Commercial real estate	2,684		—		131		24,888		27,703		6,041,829		6,069,532
Construction	1,876		2,799		—		6,163		10,838		596,856		607,694
Total commercial real estate loans	4,560		2,799		131		31,051		38,541		6,638,685		6,677,226
Residential mortgage	6,681		1,626		1,504		17,930		27,741		2,884,338		2,912,079
Consumer loans:
Home equity	1,308		111		—		2,088		3,507		388,302		391,809
Automobile	1,969		491		164		118		2,742		1,236,084		1,238,826
Other consumer	71		24		44		—		139		426,008		426,147
Total consumer loans	3,348		626		208		2,206		6,388		2,050,394		2,056,782
Total	$	18,509	$	5,575	$	2,056	$	62,100	$	88,240	$	13,714,396	$	13,802,636

If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income would have amounted to approximately $2.1 million, $3.5 million, and $2.2 million for the years ended December 31, 2016, 2015 and 2014, respectively; none of these amounts were included in interest income during these periods. 

Impaired loans.  Impaired loans, consisting of non-accrual commercial and industrial loans and commercial real estate loans over $250 thousand and all loans which were modified in troubled debt restructurings, are individually evaluated for impairment. PCI loans are not classified as impaired loans because they are accounted for on a pool basis.

107 2016 Form 10-K

The following table presents the information about impaired loans by loan portfolio class at December 31, 2016 and 2015:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
December 31, 2016
Commercial and industrial	$	3,609	$	27,031	$	30,640	$	35,957	$	5,864
Commercial real estate:
Commercial real estate	21,318		36,974		58,292		60,267		3,612
Construction	1,618		2,379		3,997		3,997		260
Total commercial real estate loans	22,936		39,353		62,289		64,264		3,872
Residential mortgage	8,398		9,958		18,356		19,712		725
Consumer loans:
Home equity	1,182		2,352		3,534		3,626		70
Total consumer loans	1,182		2,352		3,534		3,626		70
Total	$	36,125	$	78,694	$	114,819	$	123,559	$	10,531
December 31, 2015
Commercial and industrial	$	7,863	$	17,851	$	25,714	$	33,071	$	3,439
Commercial real estate:
Commercial real estate	30,113		37,440		67,553		71,263		3,354
Construction	8,847		5,530		14,377		14,387		317
Total commercial real estate loans	38,960		42,970		81,930		85,650		3,671
Residential mortgage	7,842		14,770		22,612		24,528		1,377
Consumer loans:
Home equity	263		1,869		2,132		2,224		295
Total consumer loans	263		1,869		2,132		2,224		295
Total	$	54,928	$	77,460	$	132,388	$	145,473	$	8,782

Interest income recognized on a cash basis for impaired loans classified as non-accrual totaled $207 thousand, $1.3 million and $735 thousand for the years ended December 31, 2016, 2015 and 2014, respectively.

The following table presents, by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2016, 2015 and 2014:

	2016				2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	36,552	$	1,045	$	28,451	$	893	$	30,485	$	1,114
Commercial real estate:
Commercial real estate	59,633		2,122		77,154		2,380		74,256		2,488
Construction	5,790		182		16,399		534		21,515		547
Total commercial real estate loans	65,423		2,304		93,553		2,914		95,771		3,035
Residential mortgage	21,340		874		24,435		728		26,863		812
Consumer loans:
Home equity	2,626		68		3,852		111		2,214		49
Total consumer loans	2,626		68		3,852		111		2,214		49
Total	$	125,941	$	4,291	$	150,291	$	4,646	$	155,333	$	5,010

2016 Form 10-K 108

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). Valley’s PCI loans are excluded from the TDR disclosures below because they are evaluated for impairment on a pool by pool basis. When an individual PCI loan within a pool is modified as a TDR, it is not removed from its pool. All TDRs are classified as impaired loans and are included in the impaired loan disclosures above.

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 $85.2 million and $77.6 million as of December 31, 2016 and 2015, respectively. Non-performing TDRs totaled $10.6 million and $21.0 million as of December 31, 2016 and 2015, respectively.

The following table presents non-PCI loans by loan class modified as TDRs during the years ended December 31, 2016 and 2015. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts at December 31, 2016 and 2015, respectively.

Troubled Debt Restructurings	Number of  Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)
December 31, 2016
Commercial and industrial	19	$	18,186	$	16,277
Commercial real estate:
Commercial real estate	4	8,325		7,092
Construction	3	2,922		3,626
Total commercial real estate	7	11,247		10,718
Residential mortgage	7	1,867		1,826
Consumer	1	54		51
Total	34	$	31,354	$	28,872
December 31, 2015
Commercial and industrial	17	$	8,409	$	6,793
Commercial real estate:
Commercial real estate	5	6,768		6,709
Construction	2	646		1,391
Total commercial real estate	7	7,414		8,100
Residential mortgage	7	2,659		2,603
Consumer	2	1,111		1,095
Total	33	$	19,593	$	18,591

The total TDRs presented in the table above had allocated specific reserves for loan losses that totaled $4.8 million and $1.4 million at December 31, 2016 and 2015, respectively. These specific reserves are included in the allowance for loan losses for loans individually evaluated for impairment disclosed in Note 6. Partial loan charge-offs related to loans modified as TDRs presented in the table above totaled $320 thousand during 2015. There were no loan charge-offs related to loans modified as TDRs during 2016.

109 2016 Form 10-K

The non-PCI loans modified as TDRs within the previous 12 months and for which there was a payment default (90 or more days past due) for the years ended December 31, 2016 and 2015 were as follows:

	Years Ended December 31,
	2016			2015
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	—	$	—	1	$	129
Commercial real estate	2	357		1	87
Residential mortgage	4	853		1	214
Consumer	—	—		1	75
Total	6	$	1,210	4	$	505

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 risk category of loans by class of loans (excluding PCI loans) based on the most recent analysis performed at December 31, 2016 and 2015.

Credit exposure— by internally assigned risk rating			Special						Total Non-PCI
	Pass		Mention		Substandard		Doubtful		Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	2,246,457	$	44,316	$	64,649	$	1,596	$	2,357,018
Commercial real estate	7,486,469		57,591		84,268		—		7,628,328
Construction	708,070		200		1,996		—		710,266
Total	$	10,440,996	$	102,107	$	150,913	$	1,596	$	10,695,612
December 31, 2015
Commercial and industrial	$	2,049,752	$	68,243	$	36,254	$	2,300	$	2,156,549
Commercial real estate	5,893,354		79,279		96,899		—		6,069,532
Construction	596,530		1,102		10,062		—		607,694
Total	$	8,539,636	$	148,624	$	143,215	$	2,300	$	8,833,775

2016 Form 10-K 110

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 was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2016 and 2015:

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2016
Residential mortgage	$	2,672,120	$	12,075	$	2,684,195
Home equity	375,185		1,028		376,213
Automobile	1,138,936		146		1,139,082
Other consumer	569,499		—		569,499
Total	$	4,755,740	$	13,249	$	4,768,989
December 31, 2015
Residential mortgage	$	2,894,149	$	17,930	$	2,912,079
Home equity	389,721		2,088		391,809
Automobile	1,238,708		118		1,238,826
Other consumer	426,147		—		426,147
Total	$	4,948,725	$	20,136	$	4,968,861

Valley evaluates the credit quality of its PCI loan pools based on the expectation of the underlying cash flows of each pool, derived from the aging status and by payment activity of individual loans within the pool. The following table presents the recorded investment in PCI loans by class based on individual loan payment activity as of December 31, 2016 and 2015:

Credit exposure—	Performing		Non-Performing		Total
by payment activity	Loans		Loans		PCI Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	272,483	$	8,694	$	281,177
Commercial real estate	1,080,376		10,963		1,091,339
Construction	113,370		1,310		114,680
Residential mortgage	179,793		3,930		183,723
Consumer	98,469		2,114		100,583
Total	$	1,744,491	$	27,011	$	1,771,502
December 31, 2015
Commercial and industrial	$	373,665	$	10,277	$	383,942
Commercial real estate	1,342,030		13,074		1,355,104
Construction	141,547		5,706		147,253
Residential mortgage	214,713		3,749		218,462
Consumer	129,891		5,819		135,710
Total	$	2,201,846	$	38,625	$	2,240,471

111 2016 Form 10-K

ALLOWANCE FOR CREDIT LOSSES (Note 6)

The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded letters of credit. Management maintains the allowance for credit losses at a level estimated to absorb probable loan losses of the loan portfolio and unfunded letter of credit commitments at the balance sheet date. The allowance for loan losses is based on ongoing evaluations of the probable estimated losses inherent in the loan portfolio, including unexpected additional credit impairment of PCI loan pools subsequent to acquisition. There was no allowance allocation for PCI loan losses at December 31, 2016 and 2015.

The following table summarizes the allowance for credit losses at December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Components of allowance for credit losses:
Allowance for loan losses	$	114,419	$	106,178
Allowance for unfunded letters of credit	2,185		2,189
Total allowance for credit losses	$	116,604	$	108,367

The following table summarizes the provision for credit losses for the years ended December 31, 2016, 2015 and 2014:

	2016			2015		2014
	(in thousands)
Components of provision for credit losses:
Provision for loan losses	$	11,873		$	7,846	$	3,445
Provision for unfunded letters of credit	(4		)	255		(1,561		)
Total provision for credit losses	$	11,869		$	8,101	$	1,884

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2016 and 2015:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
December 31, 2016
Allowance for loan losses:
Beginning balance	$	48,767		$	48,006		$	4,625		$	4,780		$	—		$	106,178
Loans charged-off	(5,990		)	(650		)	(866		)	(3,463		)	—			(10,969		)
Charged-off loans recovered	2,852			2,057			774			1,654			—			7,337
Net charge-offs	(3,138		)	1,407			(92		)	(1,809		)	—			(3,632		)
Provision for loan losses	5,191			6,438			(831		)	1,075						11,873
Ending balance	$	50,820		$	55,851		$	3,702		$	4,046		$	—		$	114,419
December 31, 2015
Allowance for loan losses:
Beginning balance	$	43,676		$	42,840		$	5,093		$	5,179		$	5,565		$	102,353
Loans charged-off	(7,928		)	(2,790		)	(813		)	(3,441		)	—			(14,972		)
Charged-off loans recovered	7,233			1,759			421			1,538			—			10,951
Net charge-offs	(695		)	(1,031		)	(392		)	(1,903		)	—			(4,021		)
Provision for loan losses	5,786			6,197			(76		)	1,504			(5,565		)	7,846
Ending balance	$	48,767		$	48,006		$	4,625		$	4,780		$	—		$	106,178

During 2015, Valley refined and enhanced its assessment of the adequacy of the allowance for loan losses, including both changes to look-back periods for certain portfolios, as well as enhancements to its qualitative factor framework. The enhancements were meant to increase the level of precision in the allowance for credit losses. As a result, Valley no longer has an “unallocated” segment in its allowance for credit losses, as the risks and uncertainties meant to be captured by the unallocated allowance have

2016 Form 10-K 112

been included in the qualitative framework for the respective portfolios (reported in the table above) at December 31, 2016 and 2015. As such, the unallocated allowance has in essence been reallocated to the certain portfolios based on the risks and uncertainties it was meant to capture. See Note 1 to the consolidated financial statements for additional information regarding our allowance for loan losses.

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the impairment methodology for the years ended December 31, 2016 and 2015. Loans individually evaluated for impairment represent Valley’s impaired loans. Loans acquired with discounts related to credit quality represent Valley’s PCI loans.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
December 31, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	5,864	$	3,872	$	725	$	70	$	10,531
Collectively evaluated for impairment	44,956		51,979		2,977		3,976		103,888
Total	$	50,820	$	55,851	$	3,702	$	4,046	$	114,419
Loans:
Individually evaluated for impairment	$	30,640	$	62,289	$	18,356	$	3,534	$	114,819
Collectively evaluated for impairment	2,326,378		8,276,305		2,665,839		2,081,260		15,349,782
Loans acquired with discounts related to credit quality	281,177		1,206,019		183,723		100,583		1,771,502
Total	$	2,638,195	$	9,544,613	$	2,867,918	$	2,185,377	$	17,236,103
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	3,439	$	3,671	$	1,377	$	295	$	8,782
Collectively evaluated for impairment	45,328		44,335		3,248		4,485		97,396
Total	$	48,767	$	48,006	$	4,625	$	4,780	$	106,178
Loans:
Individually evaluated for impairment	$	25,714	$	81,930	$	22,612	$	2,132	$	132,388
Collectively evaluated for impairment	2,130,835		6,595,296		2,889,467		2,054,650		13,670,248
Loans acquired with discounts related to credit quality	383,942		1,502,357		218,462		135,710		2,240,471
Total	$	2,540,491	$	8,179,583	$	3,130,541	$	2,192,492	$	16,043,107

PREMISES AND EQUIPMENT, NET (Note 7)

At December 31, 2016 and 2015, premises and equipment, net consisted of:

	2016			2015
	(in thousands)
Land	$	78,116		$	80,519
Buildings	210,012			211,923
Leasehold improvements	73,405			70,314
Furniture and equipment	240,424			224,340
Total premises and equipment	601,957			587,096
Accumulated depreciation and amortization	(310,777		)	(288,153		)
Total premises and equipment, net	$	291,180		$	298,943

Depreciation and amortization of premises and equipment included in non-interest expense for the years ended December 31, 2016, 2015 and 2014 was approximately $24.4 million, $21.1 million, and $19.5 million, respectively.

113 2016 Form 10-K

GOODWILL AND OTHER INTANGIBLE ASSETS (Note 8)

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, 2014	$	20,517	$	168,922	$	252,900	$	133,553	$	575,892
Goodwill from business combinations	—		30,197		61,360		18,890		110,447
Balance at December 31, 2015	$	20,517	$	199,119	$	314,260	$	152,443	$	686,339
Goodwill from business combinations	701		984		1,998		615		4,298
Balance at December 31, 2016	$	21,218	$	200,103	$	316,258	$	153,058	$	690,637

* 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.

Certain estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date. During 2016, goodwill from business combinations primarily related to the effect of the combined adjustments to the estimated fair values of the acquired assets and liabilities as of the acquisition date of CNL, as well as $701 thousand of goodwill from the acquisition of certain assets from an independent insurance agency during the first quarter of 2016. The adjustments mostly related to the fair value of certain PCI loans, core deposit intangibles and time deposits which, resulted in an increase in goodwill totaling $3.6 million. There was no impairment of goodwill during the years ended December 31, 2016, 2015 and 2014.

The following tables summarize other intangible assets as of December 31, 2016 and 2015:

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
December 31, 2016
Loan servicing rights	$	73,002	$	(52,634	)	$	(900	)	$	19,468
Core deposits	61,504		(37,562		)	—			23,942
Other	4,087		(2,013		)	—			2,074
Total other intangible assets	$	138,593	$	(92,209	)	$	(900	)	$	45,484
December 31, 2015
Loan servicing rights	$	75,932	$	(59,251	)	$	(289	)	$	16,392
Core deposits	62,714		(31,934		)	—			30,780
Other	4,374		(2,664		)	—			1,710
Total other intangible assets	$	143,020	$	(93,849	)	$	(289	)	$	48,882

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 11 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 20 years. In 2016, Valley recorded $660 thousand in other intangibles, consisting of customer lists acquired from an independent insurance agency. In 2015, Valley recorded $19.3 million in core deposit intangibles resulting from the CNL acquisition. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the years ended December 31, 2016, 2015 and 2014.

2016 Form 10-K 114

The following table summarizes the change in loan servicing rights during the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Loan servicing rights
Balance at beginning of year	$	16,681		$	20,446		$	26,068
Origination of loan servicing rights	8,479			1,696			1,065
Amortization expense	(4,792		)	(5,461		)	(6,687		)
Balance at end of year	$	20,368		$	16,681		$	20,446
Valuation allowance
Balance at beginning of year	$	(289	)	$	(592	)	$	(504	)
Impairment adjustment	(611		)	303			(88		)
Balance at end of year	$	(900	)	$	(289	)	$	(592	)
Balance at end of year, net of valuation allowance	$	19,468		$	16,392		$	19,854

Loan servicing rights are accounted for using the amortization method (see Note 1 for more details).

The Bank is a servicer of residential mortgage and SBA loan portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights of loans originated and sold by the Bank, and to a lesser extent, purchased mortgage servicing rights. The aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $2.5 billion, $2.1 billion and $2.3 billion at December 31, 2016, 2015 and 2014, respectively. The SBA loans serviced by the Bank for third-party investors totaled $23.8 million, $32.3 million and $26.9 million at December 31, 2016, 2015 and 2014, respectively. The outstanding balance of all loans serviced for others is not included in the consolidated statements of financial condition.

Valley recognized amortization expense on other intangible assets, including recoveries and net impairment charges on loan servicing rights (reflected in the table above), of $11.3 million, $9.2 million and $9.9 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The following table presents the estimated amortization expense of other intangible assets over the next five-year period:

Year	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2017	$	4,888	$	4,842	$	280
2018	3,989		4,215		249
2019	3,101		3,671		235
2020	2,417		3,127		220
2021	1,771		2,582		206

DEPOSITS (Note 9)

Included in time deposits are certificates of deposit over $100 thousand totaling $1.7 billion at both December 31, 2016 and 2015. Interest expense on time deposits of $100 thousand or more totaled approximately $1.5 million, $4.0 million, and $5.9 million in 2016, 2015 and 2014, respectively.

The scheduled maturities of time deposits as of December 31, 2016 are as follows:

Year	Amount
	(in thousands)
2017	$	2,122,906
2018	473,924
2019	98,763
2020	147,548
2021	162,687
Thereafter	133,043
Total time deposits	$	3,138,871

115 2016 Form 10-K

Deposits from certain directors, executive officers and their affiliates totaled $85.6 million and $57.3 million at December 31, 2016 and 2015, respectively.

BORROWED FUNDS (Note 10)

Short-Term Borrowings

Short-term borrowings at December 31, 2016 and 2015 consisted of the following:

	2016		2015
	(in thousands)
Securities sold under agreements to repurchase	$	298,960	$	500,991
Federal funds purchased	—		50,000
FHLB advances	782,000		526,000
Total short-term borrowings	$	1,080,960	$	1,076,991

The weighted average interest rate for short-term borrowings was 0.65 percent and 0.69 percent at December 31, 2016 and 2015, respectively.

Long-Term Borrowings

Long-term borrowings at December 31, 2016 and 2015 consisted of the following:

	2016		2015
	(in thousands)
FHLB advances, net (1)	$	1,031,666	$	1,272,591
Securities sold under agreements to repurchase	165,000		307,500
Subordinated debt, net (2)	236,731		230,573
Other	509		64
Total long-term borrowings	$	1,433,906	$	1,810,728

(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $18.3 million and $3.6 million at December 31, 2016 and 2015, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $1.9 million and $2.2 million at December 31, 2016 and 2015, respectively.

In August 2016, Valley prepaid $355 million and $50 million of the long-term FHLB advances and securities sold under agreements to repurchase, respectively. These prepaid borrowings, which had contractual maturity dates in 2018 and a total average interest rate of 3.69 percent, were funded with a new fixed-rate five-year FHLB advance totaling $405.0 million. The transaction was accounted for as a debt modification under U.S. GAAP. As a result, the new advance has an adjusted annual interest rate of 2.51 percent, after amortization of prepayment penalties totaling $20.0 million paid to the FHLB.

In May 2016, Valley prepaid $87 million of FHLB advances assumed in the acquisition of CNL. The prepayment was entirely funded by cash balances that were held as a collateral at the FHLB of Atlanta and resulted in the recognition of a $315 thousand loss on extinguishment of debt for the year ended December 31, 2016.

In December 2015, Valley prepaid $625 million and $220 million of the long-term FHLB advances and securities sold under agreements to repurchase, respectively. These prepaid borrowings had contractual amounts of $795 million and $50 million maturing in 2017 and 2018, respectively, and had a combined weighted average interest rate of 3.72 percent. The debt extinguishment resulted in a loss, consisting of prepayment penalties, totaling approximately $51.1 million for the year ended December 31, 2015.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 3.37 percent and 3.96 percent at December 31, 2016 and 2015, respectively. These 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 pledged assets to the FHLB also collateralize a $100 million letter of credit issued by the FHLB on Valley’s behalf to secure certain public deposits held at the Bank.

2016 Form 10-K 116

The long-term FHLB advances at December 31, 2016 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2017	$	10,000
2021	840,000
Thereafter	200,000
Total long-term FHLB advances	$	1,050,000

Valley has no FHLB advances maturing in the years 2018 to 2020. The FHLB advances with scheduled repayments in years after 2017, reported in the table above, include $10 million in advances which are callable for early redemption by the FHLB during 2017 with interest rates ranging from 2.27 percent to 3.25 percent.

Long-term borrowings for securities sold under agreements. The long-term borrowings for securities sold under agreements had a weighted average interest rate of 2.41 percent and 3.35 percent at December 31, 2016 and 2015, respectively.

The long-term repos at December 31, 2016 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2017	$	65,000
2018	50,000
Thereafter	50,000
Total long-term securities sold under agreements to repurchase	$	165,000

Subordinated Debt. In June 2015, the Bank issued $100 million of 4.55 percent subordinated debentures (notes) due July 30, 2025 with no call dates or prepayments allowed unless certain conditions exist. This subordinated note issuance was intended to replace our $100 million of 5 percent subordinated notes which matured and were repaid in July 2015. Interest on the subordinated notes is payable semi-annually in arrears on June 30 and December 30 of each year.

In September 2013, Valley issued $125 million of its 5.125 percent subordinated notes due September 27, 2023 with no call dates or prepayments allowed, unless certain conditions exist. Interest on the subordinated debentures is payable semi-annually in arrears on March 27 and September 27 of each year. In conjunction with the issuance, Valley entered into an interest rate swap transaction used to hedge the change in the fair value of the subordinated notes. In August 2016, the fair value interest rate swap with a notional amount of $125 million was terminated resulting in an adjusted fixed annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date (see Note 15). The subordinated notes had a net carrying value of $136.7 million and $130.6 million at December 31, 2016 and 2015, respectively.

Pledged Securities. The fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit, FHLB advances and for other purposes required by law approximated $1.5 billion and $1.4 billion at December 31, 2016 and 2015, respectively.

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 11)

Valley acquired GCB Capital Trust III, State Bancorp Capital Trust I, and State Bancorp Capital Trust II in past bank acquisitions. These statutory trusts were established for the sole purpose of issuing trust preferred securities and related trust common securities. The proceeds from such issuances were used by the trust to purchase an equivalent amount of junior subordinated debentures issued by the acquired bank, and now assumed by Valley. The junior subordinated debentures, the sole assets of the trusts, are unsecured obligations of Valley, and are subordinate and junior in right of payment to all present and future senior and subordinated indebtedness and certain other financial obligations of Valley. Valley does not consolidate its capital trusts based on U.S. GAAP but wholly owns all of the common securities of each trust.

117 2016 Form 10-K

The table below summarizes the outstanding junior subordinated debentures and the related trust preferred securities issued by each trust as of December 31, 2016 and 2015:

	GCB Capital Trust III			State Bancorp Capital Trust I		State Bancorp Capital Trust II
	($ in thousands)
Junior Subordinated Debentures:
December 31, 2016
Carrying value (1)	$	24,777		$	8,724	$	8,076
Contractual principal balance	24,743			10,310		10,310
December 31, 2015
Carrying value (1)	$	24,846		$	8,624	$	7,944
Contractual principal balance	24,743			10,310		10,310
Annual interest rate (2)	6.96		%	3-month LIBOR+3.45%		3-month LIBOR+2.85%
Stated maturity date	July 30, 2037			November 7, 2032		January 23, 2034
Initial call date	July 30, 2017			November 7, 2007		January 23, 2009
Trust Preferred Securities:
December 31, 2016 and 2015
Face value	$	24,000		$	10,000	$	10,000
Annual distribution rate (2)	6.96		%	3-month LIBOR+3.45%		3-month LIBOR+2.85%
Issuance date	July 2, 2007			October 29, 2002		December 19, 2003
Distribution dates (3)	Quarterly			Quarterly		Quarterly

(1) The carrying values include unamortized purchase accounting adjustments at December 31, 2016 and 2015.

(2) Interest on GCB Capital Trust III is fixed until July 30, 2017, then resets to 3-month LIBOR plus 1.4 percent. The annual interest rate for all of the junior subordinated debentures and related trust preferred securities excludes the effect of the purchase accounting adjustments.

(3) All cash distributions are cumulative.

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at the stated maturity date or upon redemption on the date no earlier than the call dates noted in the table above. The trusts’ ability to pay amounts due on the trust preferred securities is solely dependent upon Valley making payments on the related junior subordinated debentures. Valley’s obligation under the junior subordinated debentures and other relevant trust agreements, in aggregate, constitutes a full and unconditional guarantee by Valley of the trusts’ obligations under the trust preferred securities issued. Under the junior subordinated debenture agreements, Valley has the right to defer payment of interest on the debentures and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity dates in the table above. Currently, Valley has no intention to exercise its right to defer interest payments on the debentures.

The trust preferred securities are included in Valley’s total risk-based capital (as Tier 2 capital) for regulatory purposes at December 31, 2016. Based on the regulatory capital guidance under the Basel III rules, the trust preferred securities issued by our capital trusts were fully phased out of Tier 1 capital on January 1, 2016.

BENEFIT PLANS (Note 12)

Pension Plan

The Bank has a non-contributory defined benefit plan (qualified plan) covering most of its employees. The qualified plan benefits are based upon years of credited service and the employee’s highest average compensation as defined. Additionally, the Bank has a supplemental non-qualified, non-funded retirement plan, which is designed to supplement the pension plan for key officers, and Valley has a non-qualified, non-funded directors’ retirement plan (both of these plans are referred to as the “non-qualified plans” below).

Effective December 31, 2013 the benefits earned under the qualified and non-qualified were frozen. As a result, Valley re-measured the projected benefit obligation of the affected plans and the funded status of each plan at June 30, 2013. Consequently, participants in each plan will not accrue further benefits and their pension benefits will be determined based on the compensation and service as of December 31, 2013. Plan benefits will not increase for any compensation or service earned after such date. However, participants’ benefits will continue to vest as long as they work for Valley.

2016 Form 10-K 118

The following table sets forth the change in the projected benefit obligation, the change in fair value of plan assets and the funded status and amounts recognized in Valley’s consolidated financial statements for the qualified and non-qualified plans at December 31, 2016 and 2015:

	2016			2015
	(in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	157,661		$	176,339
Interest cost	6,681			6,889
Actuarial loss (gain)	2,047			(17,177		)
Benefits paid	(5,546		)	(8,390		)
Projected benefit obligation at end of year	$	161,306		$	157,661
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	189,414		$	194,646
Actual return on plan assets	22,424			2,875
Employer contributions	347			283
Benefits paid	(5,546		)	(8,390		)
Fair value of plan assets at end of year*	$	206,639		$	189,414
Funded status of the plan
Asset recognized	$	45,333		$	31,753
Accumulated benefit obligation	161,306			157,661

*    Includes accrued interest receivable of $606 thousand and $607 thousand as of December 31, 2016 and 2015, respectively.

Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized as a component of the net periodic pension expense for Valley’s qualified and non-qualified plans are presented in the following table. Valley expects to recognize approximately $367 thousand of the net actuarial loss reported in the following table as of December 31, 2016 as a component of net periodic pension expense during 2017.

	2016			2015
	(in thousands)
Net actuarial loss	$	30,140		$	36,271
Deferred tax benefit	(12,647		)	(15,118		)
Total	$	17,493		$	21,153

The non-qualified plans had a projected benefit obligation, accumulated benefit obligation, and fair value of plan assets as follows:

	2016		2015
	(in thousands)
Projected benefit obligation	$	18,286	$	17,411
Accumulated benefit obligation	18,286		17,411
Fair value of plan assets	—		—

In determining discount rate assumptions, management looks to current rates on fixed-income corporate debt securities that receive a rating of AA or higher from either Moody’s or S&P with durations equal to the expected benefit payments streams required of each plan. The weighted average discount rate used in determining the actuarial present value of benefit obligations for the qualified and non-qualified plans were 4.11 percent and 4.33 percent as of December 31, 2016 and 2015, respectively. 

119 2016 Form 10-K

The net periodic pension income for the qualified and non-qualified plans included the following components for the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Interest cost	$	6,681		$	6,889		$	6,897
Expected return on plan assets	(14,539		)	(14,023		)	(12,967		)
Amortization of net loss	294			790			226
Total net periodic pension income	$	(7,564	)	$	(6,344	)	$	(5,844	)

At the end of 2016, Valley changed the method utilized to estimate the interest cost component of net periodic pension costs for our qualified and non-qualified plans. Historically, Valley estimated the interest cost component (and the service cost component when it was applicable) using a single weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Valley will elect to use a spot rate approach for the plans in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve to the relevant projected cash flows, as Valley believes this provides a better estimate of service and interest costs. Valley considers this a change in estimate and, accordingly, will account for it prospectively starting in 2017. This change does not affect the measurement of the total benefit obligation. For 2017, the change in estimate is expected to increase net periodic pension income by approximately $765 thousand when compared to the prior approach.

Other changes in the qualified and non-qualified plan assets and benefit obligations recognized in other comprehensive income/loss for the years ended December 31, 2016 and 2015 were as follows:

	2016			2015
	(in thousands)
Net gain	$	(5,837	)	$	(6,030	)
Prior service cost	462			—
Amortization of actuarial loss	(294		)	(790		)
Total recognized in other comprehensive income	$	(5,669	)	$	(6,820	)
Total recognized in net periodic pension income and other comprehensive income/loss (before tax)	$	(13,233	)	$	(13,163	)

The benefit payments, which reflect expected future service, as appropriate, expected to be paid in future years are presented in the following table:

Year	Amount
	(in thousands)
2017	$	6,847
2018	7,206
2019	7,744
2020	8,081
2021	8,423
Thereafter	45,462

The weighted average discount rate, expected long-term rate of return on assets and rate of compensation increase used in determining Valley’s pension expense for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016		2015		2014
Discount rate	4.33	%	4.02	%	4.89	%
Expected long-term return on plan assets	7.50	%	7.50	%	7.50	%
Rate of compensation increase	N/A		N/A		N/A

The expected rate of return on plan assets assumption is based on the concept that it is a long-term assumption independent of the current economic environment and changes would be made in the expected return only when long-term inflation expectations change, asset allocations change or when asset class returns are expected to change for the long-term.

In accordance with Section 402 (c) of ERISA, the qualified plan’s investment managers are granted full discretion to buy, sell, invest and reinvest the portions of the portfolio assigned to them consistent with the Bank’s Pension Committee’s policy and

2016 Form 10-K 120

guidelines. The target asset allocation set for the qualified plan are equity securities ranging from 25 percent to 65 percent and fixed income securities ranging from 35 percent to 75 percent. The absolute investment objective for the equity portion is to earn at least 7 percent cumulative annualized real return, after adjustment by the Consumer Price Index (CPI), over rolling five-year periods, while the relative objective is to earn returns above the S&P 500 Index over rolling three-year periods. For the fixed income portion, the absolute objective is to earn at least a 3 percent cumulative annual real return, after adjustment by the CPI over rolling five-year periods with a relative objective of earning returns above the Merrill Lynch Intermediate Government/Corporate Index over rolling three-year periods. Cash equivalents will be invested in money market funds or in other high quality instruments approved by the Trustees of the qualified plan.

The exposure of the plan assets of the qualified plan to a concentration of credit risk is limited by the Bank’s Pension Committee’s diversification of the investments into various investment options with multiple asset managers. The Pension Committee engages an investment management advisory firm that regularly monitors the performance of the asset managers and ensures they are within compliance of the policies adopted by the Trustees. If the risk profile and overall return of assets managed are not in line with the risk objectives or expected return benchmarks for the qualified plan, the advisory firm may recommend the termination of an asset manager to the Pension Committee.

In general, the plan assets of the qualified plan are investment securities that are well-diversified in terms of industry, capitalization and asset class. The following table presents the qualified plan weighted-average asset allocations by asset category that are measured at fair value on a recurring basis by level within the fair value hierarchy under ASC Topic 820. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 3 for further details regarding the fair value hierarchy.

					Fair Value Measurements at Reporting Date Using:
	% of Total Investments		December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	($ in thousands)
Assets:
Investments:
Equity securities	43	%	$	88,250	$	88,250	$	—	$	—
Corporate bonds	21		43,152		—		43,152		—
Mutual funds	19		38,975		38,975		—		—
U.S. Treasury securities	12		24,910		24,910		—		—
Cash and money market funds	5		10,402		10,402		—		—
U.S. government agency securities	*		344		—		344		—
Total investments	100	%	$	206,033	$	162,537	$	43,496	$	—

					Fair Value Measurements at Reporting Date Using:
	% of Total Investments		December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	($ in thousands)
Assets:
Investments:
Equity securities	41	%	$	76,578	$	76,578	$	—	$	—
Corporate bonds	22		41,786		—		41,786		—
Mutual funds	19		36,052		36,052		—		—
U.S. Treasury securities	12		22,130		2,213		—		—
Cash and money market funds	6		11,913		11,913		—		—
U.S. government agency securities	*		348		—		348		—
Total investments	100	%	$	188,807	$	126,756	$	42,134	$	—

* Represents less than one percent of total investments.

121 2016 Form 10-K

The following is a description of the valuation methodologies used for assets measured at fair value:

Equity securities, U.S. Treasury securities and cash and money market funds are valued at fair value in the table above utilizing exchange quoted prices in active markets for identical instruments (Level 1 inputs). Mutual funds are measured at their respective net asset values, which represents fair values of the securities held in the funds based on exchange quoted prices available in active markets (Level 1 inputs).

Corporate bonds and U.S. government agency securities are reported at fair value utilizing Level 2 inputs. The prices for these investments are derived from market quotations and matrix pricing obtained through an independent pricing service. Such 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.

Based upon actuarial estimates, Valley does not expect to make any contributions to the qualified plan. Funding requirements for subsequent years are uncertain and will significantly depend on whether the plan’s actuary changes any assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes, Valley may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

Other Non-Qualified Plans

Valley maintains other non-qualified plans for former directors of banks acquired, as well as a non-qualified plan for former senior management of Merchants Bank of New York acquired in January of 2001. Valley did not merge these plans into its existing non-qualified plans. Collectively, at December 31, 2016 and 2015, the remaining obligations under these plans were $3.3 million and $3.4 million, respectively, of which $1.5 million and $1.6 million, respectively, were funded by Valley. As of December 31, 2016 and 2015, the entire obligations were included in other liabilities and $867 thousand (net of a $614 thousand tax benefit) and $1.0 million (net of a $748 thousand tax benefit), respectively, were recorded in accumulated other comprehensive loss. The $1.5 million in accumulated other comprehensive loss will be reclassified to expense on a straight-line basis over the remaining benefit periods of these non-qualified plans.

Bonus Plan

Valley National Bank and its subsidiaries may award cash incentive and merit bonuses to its officers and employees based upon a percentage of the covered employees’ compensation as determined by the achievement of certain performance objectives. Amounts charged to salary expense were $10.5 million, $9.0 million and $6.8 million during 2016, 2015 and 2014, respectively.

Savings and Investment Plan

Valley National Bank maintains a KSOP, which is defined as a 401(k) plan with an employee stock ownership feature. This plan covers eligible employees of the Bank and its subsidiaries and allows employees to contribute a percentage of their salary, with the Bank matching a certain percentage of the employee contribution in cash and invested in accordance with each participant’s investment elections. The Bank recorded $6.7 million, $7.1 million and $6.0 million in expense for contributions to the plan for the years ended December 31, 2016, 2015 and 2014, respectively.

Effective January 1, 2016, Valley amended the benefits under the Bank’s 401(k) plan. Under the amendment, Valley’s matching contribution increased to a 100 percent of the first 4 percent of compensation contributed by an employee each pay period, and 50 percent of the next 2 percent of compensation contributed, for a maximum matching contribution of 5 percent with an annual limit of $13,250 in 2016. During 2015 and 2014, Valley's matching contribution was dollar-for-dollar up to 6 percent of compensation contributed by an employee each pay period.

Stock-Based Compensation

Valley currently has one active employee stock option 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 provides for certain increases and decreases in the number of shares available for grant under Valley's 2009 Long-Term Stock Incentive Plan (the "2009 Stock Plan"). Effective January 1, 2016, the 2.2 million of common shares remaining under the 2009 Stock Plan became available for future grants under the 2016 Stock Plan. Accordingly, Valley will no longer grant new awards under the 2009 Stock Plan.

The Employee Stock Incentive 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.

2016 Form 10-K 122

The purpose of the Employee Stock Incentive 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 to its employees and non-employee directors in the form of stock appreciation rights, both incentive and non-qualified stock options, restricted stock and restricted stock units (RSUs). As of December 31, 2016, 8.3 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. The maximum term to exercise an incentive stock option is ten years from the date of grant and is subject to a vesting schedule.

Valley recorded total stock-based compensation expense, primarily for restricted stock awards, totaling $10.0 million, $8.8 million and $7.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. The stock-based compensation expense for 2016, 2015 and 2014 included $3.5 million, $2.6 million and $3.9 million, respectively, related to stock awards granted to retirement eligible employees and was immediately recognized. The fair values of all other stock awards are expensed over the shorter of the vesting or required service period. As of December 31, 2016, the unrecognized amortization expense for all stock-based compensation totaled approximately $13.8 million and will be recognized over an average remaining vesting period of approximately 2.5 years.

Restricted Stock.  Restricted stock is awarded to key employees providing for the immediate award of our common stock subject to certain vesting and restrictions under the Employee Stock Incentive Plan. Compensation expense is measured based on the grant-date fair value of the shares.

The following table sets forth the changes in restricted stock awards outstanding for the years ended December 31, 2016, 2015 and 2014:

	Restricted Stock Awards Outstanding
	2016		2015		2014
Outstanding at beginning of year	2,755,138		2,574,616		1,709,312
Granted	544,307		886,427		1,488,960
Vested	(1,050,293	)	(559,958	)	(524,663	)
Forfeited	(148,336	)	(145,947	)	(98,993	)
Outstanding at end of year	2,100,816		2,755,138		2,574,616

The restricted stock awards granted in 2016 have vesting periods ranging from three to six years. The average grant date fair value of restricted stock awarded during the year ended December 31, 2016 was $8.84 per share. Included in the restricted shares granted (in the table above) during 2014, 240 thousand shares were performance-based awards made to executive officers. The performance-based restricted stock awards vest based on the same performance measures for the RSU grants discussed further below. A portion of the performance-based restricted stock awards vest after three years based on the cumulative performance of Valley during that time period with an opportunity for earlier vesting of a portion of the shares based on growth in tangible book value performance. During 2016 and 2015, 53 thousand and 50 thousand restricted shares, respectively, of the performance-based restricted stock awards vested. The remaining outstanding awards were unvested as of December 31, 2016, of which 85 thousand shares vested during the first quarter of 2017. The remaining unvested restricted stock awards were subsequently forfeited during the first quarter of 2017 due to failure to meet the performance and market conditions.

Restricted Stock Units. Valley granted 431 thousand shares and 313 thousand shares of performance-based RSUs to certain executive officers for the year ended December 31, 2016 and 2015, respectively. The RSUs vest based on (i) growth in tangible book value per share plus dividends (75 percent of performance shares) and (ii) total shareholder return as compared to our peer group (25 percent of performance shares). 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 share) over the applicable performance period. Dividend equivalents and accrued interest, per the terms of the agreements, 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 was $8.32 and $8.98 per share for the years ended December 31, 2016 and 2015, respectively. Compensation costs related to RSUs totaled $2.8 million and $2.3 million, and were included in total stock-based compensation expense for the years ended December 31, 2016 and 2015, respectively.

123 2016 Form 10-K

Our 2016 Stock Plan provides for our non-employee directors to be eligible recipients of limited equity awards. Commencing with our 2017 annual meeting, each non-employee director will receive RSU awards totaling $50,000 in grant date fair value as part of their annual retainer. The RSUs will be granted on the date of the annual shareholders’ meeting, with the number of RSUs to be determined using the closing market price on the date prior to grant. The RSUs vest on the earliest of the next annual shareholders’ meeting or the first anniversary of the grant date, with acceleration upon a change in control, death or disability, but not resignation from the board.

Stock Options.  The fair value of each option granted on the date of grant is estimated using a binomial option pricing model. The fair values are estimated using assumptions for dividend yield based on the annual dividend rate; the stock volatility, based on Valley’s historical and implied stock price volatility; the risk free interest rates, based on the U.S. Treasury constant maturity bonds, in effect on the actual grant dates, with a remaining term approximating the expected term of the options; and expected exercise term calculated based on Valley’s historical exercise experience.

The following table summarizes stock options activity as of December 31, 2016, 2015 and 2014 and changes during the years ended on those dates:

	2016				2015				2014
			Weighted Average Exercise				Weighted Average Exercise				Weighted Average Exercise
Stock Options	Shares		Price		Shares		Price		Shares		Price
Outstanding at beginning of year	1,383,365		$	16	1,828,591		$	17	2,322,593		$	17
Granted	—		—		100,000		11		—		—
Forfeited or expired	(650,876	)	18		(545,226	)	18		(494,002	)	19
Outstanding at end of year	732,489		14		1,383,365		16		1,828,591		17
Exercisable at year-end	632,489		14		1,283,365		16		1,828,591		17

The following table summarizes information about stock options outstanding and exercisable at December 31, 2016:

Options Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price
$10-14	134,681	3.6	$	12
14-15	445,654	1.1	15
15-17	3,388	1.1	16
18-19	48,766	0.1	19
	632,489	1.6	14

Director Restricted Stock Plan. The Director Restricted Stock Plan provides the non-employee members of the Board of Directors with the opportunity to forgo some or their entire annual cash retainer and meeting fees in exchange for shares of Valley restricted stock. On January 29, 2014, the Director Restricted Stock Plan was amended to provide that no additional fees may be exchanged for Valley’s restricted stock effective April 1, 2014. The Director Restricted Stock Plan will terminate after April 2018 when the remaining restricted stock under the plan vests and is delivered, or is forfeited pursuant to such plan.

The following table sets forth the changes in director’s restricted stock awards outstanding for the years ended December 31, 2016, 2015 and 2014:

	Restricted Stock Awards Outstanding
	2016		2015		2014
Outstanding at beginning of year	80,117		98,086		121,792
Vested	(24,607	)	(17,969	)	(23,706	)
Outstanding at end of year	55,510		80,117		98,086

2016 Form 10-K 124

INCOME TAXES (Note 13)

Income tax expense for the years ended December 31, 2016, 2015 and 2014 consisted of the following:

	2016		2015			2014
	(in thousands)
Current expense (benefit):
Federal	$	25,176	$	7,978		$	25,156
State	12,904		(493		)	(5,549		)
	38,080		7,485			19,607
Deferred expense:
Federal	10,658		(7,539		)	(13,888		)
State	16,496		23,992			25,343
	27,154		16,453			11,455
Total income tax expense	$	65,234	$	23,938		$	31,062

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:

	2016		2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	47,485	$	44,382
Depreciation	12,432		15,661
Employee benefits	16,121		16,104
Investment securities, including other-than-temporary impairment losses	17,272		18,697
Net operating loss carryforwards	46,667		57,722
Purchase accounting	33,172		40,585
Other	22,183		21,310
Total deferred tax assets	195,332		214,461
Deferred tax liabilities:
Pension plans	24,575		18,861
Other investments	20,831		15,720
Other	20,418		21,449
Total deferred tax liabilities	65,824		56,030
Net deferred tax asset (included in other assets)	$	129,508	$	158,431

Valley's federal net operating loss carryforwards totaled approximately $77.6 million at December 31, 2016 and expire during the period from 2029 through 2034 and state net operating loss carryforwards totaled approximately $514.3 million at December 31, 2016 and expire during the period from 2017 through 2036. Valley’s federal and state alternative minimum tax credit carryforwards were approximately $1.9 million and $3.7 million at December 31, 2016, respectively, and can be carried forward indefinitely.

Based upon taxes paid and projections of future taxable income over the periods in which the net deferred tax assets are deductible, management believes that it is more likely than not that Valley will realize the benefits of these deductible differences and loss carryforwards.

125 2016 Form 10-K

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 35 percent for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Federal income tax at expected statutory rate	$	81,683		$	44,413		$	51,532
Increase (decrease) due to:
State income tax expense, net of federal tax effect	19,197			15,274			12,866
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(5,308		)	(4,864		)	(4,406		)
Bank owned life insurance	(2,343		)	(2,385		)	(2,237		)
Tax credits from securities and other investments	(25,954		)	(28,988		)	(20,555		)
Reduction in reserve for uncertainties	—			—			(6,971		)
Other, net	(2,041		)	488			833
Income tax expense	$	65,234		$	23,938		$	31,062

A reconciliation of Valley’s gross unrecognized tax benefits for 2016, 2015 and 2014 are presented in the table below:

	2016			2015		2014
	(in thousands)
Beginning balance	$	19,892		$	18,647	$	30,713
Additions based on tax positions related to prior years	3,958			1,245		1,408
Settlements with taxing authorities	(4,820		)	—		(9,050		)
Reductions due to expiration of statute of limitations	(2,886		)	—		(4,424		)
Ending balance	$	16,144		$	19,892	$	18,647

The entire balance of unrecognized tax benefits, if recognized, would favorably affect our effective income tax rate. It is reasonably possible that the liability for unrecognized tax benefits could increase or decrease in the next twelve months due to completion of tax authorities’ exams or the expiration of statutes of limitations. Management estimates that the liability for unrecognized tax benefits could decrease by $16.1 million within the next twelve months.

Valley’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley has accrued approximately $4.6 million and $5.2 million of interest associated with Valley’s uncertain tax positions at December 31, 2016 and 2015, respectively.

Valley files income tax returns in the U.S. federal and various state jurisdictions. With few exceptions, Valley is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2009. Valley is under examination by the IRS and also currently under routine examination by various state jurisdictions, and we expect the examinations to be completed within the next twelve months. Valley has considered, for all open audits, any potential adjustments in establishing our reserve for unrecognized tax benefits as of December 31, 2016.

TAX CREDIT INVESTMENTS (Note 14)

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. 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 of the consolidated statements of income using the equity method of accounting. An impairment loss is recognized when the fair value of the tax credit investment is less than its carrying value.

2016 Form 10-K 126

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	29,567	$	32,094
Other tax credit investments, net	44,763		70,681
Total tax credit investments, net	$	74,330	$	102,775
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	4,850	$	7,330
Unfunded other tax credit commitments	7,276		12,545
Total unfunded tax credit commitments	$	12,126	$	19,875

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	5,013	$	4,709	$	5,296
Other tax credit investment credits and tax benefits	33,294		23,877		14,357
Total reduction in income tax expense	$	38,307	$	28,586	$	19,653
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	2,077	$	2,594	$	3,184
Affordable housing tax credit investment impairment losses	450		1,321		3,211
Other tax credit investment losses	790		1,079		2,359
Other tax credit investment impairment losses	31,427		22,318		15,442
Total amortization of tax credit investments recorded in non-interest expense	$	34,744	$	27,312	$	24,196

COMMITMENTS AND CONTINGENCIES (Note 15)

Lease Commitments

Certain bank facilities are occupied under non-cancelable long-term operating leases, which expire at various dates through 2058. Certain lease agreements provide for renewal options and increases in rental payments based upon increases in the consumer price index or the lessors’ cost of operating the facility. Minimum aggregate lease payments for the remainder of the lease terms are as follows:

			Sublease
Year	Gross Rents		Rents		Net Rents
	(in thousands)
2017	$	27,256	$	2,888	$	24,368
2018	26,863		2,260		24,603
2019	26,361		2,125		24,236
2020	26,458		2,059		24,399
2021	25,754		1,972		23,782
Thereafter	281,310		9,631		271,679
Total lease commitments	$	414,002	$	20,935	$	393,067

127 2016 Form 10-K

Net occupancy expense for years ended December 31, 2016, 2015, and 2014 included net rental expense of $27.7 million, $31.7 million, and $21.2 million, respectively, net of rental income of $4.0 million, $3.8 million, and $3.1 million, respectively, for leased bank facilities.

Financial Instruments With Off-balance Sheet Risk

In the ordinary course of business in meeting the financial needs of its customers, Valley, through its subsidiary Valley National Bank, is a party to various financial instruments, which are not reflected in the consolidated financial statements. These financial instruments include standby and commercial letters of credit, unused portions of lines of credit and commitments to extend various types of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated financial statements. The commitment or contract amount of these instruments is an indicator of the Bank’s level of involvement in each type of instrument as well as the exposure to credit loss in the event of non-performance by the other party to the financial instrument. The Bank seeks to limit any exposure of credit loss by applying the same credit policies in making commitments, as it does for on-balance sheet lending facilities.

The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2016 and 2015:

	2016		2015
	(in thousands)
Commitments under commercial loans and lines of credit	$	2,855,326	$	2,554,146
Home equity and other revolving lines of credit	904,999		822,506
Outstanding commercial mortgage loan commitments	560,929		724,236
Standby letters of credit	217,695		198,253
Commitments to sell loans	147,250		41,860
Outstanding residential mortgage loan commitments	108,063		54,293
Commitments under unused lines of credit—credit card	49,715		50,532
Commercial letters of credit	4,960		4,249

Obligations to advance funds under commitments to extend credit, including commitments under unused lines of credit, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have specified expiration dates, which may be extended upon request, or other termination clauses and generally require payment of a fee. These commitments do not necessarily represent future cash requirements as it is anticipated that many of these commitments will expire without being fully drawn upon. The Bank’s lending activity for outstanding loan commitments is primarily to customers within the states of New Jersey, New York, and Florida.

Standby letters of credit represent the guarantee by the Bank of the obligations or performance of the bank customer in the event of the default of payment or nonperformance to a third party beneficiary.

Loan sale commitments represent contracts for the sale of residential mortgage loans to third parties in the ordinary course of the Bank’s business. These commitments require the Bank to deliver loans within a specific period to the third party. The risk to the Bank is its non-delivery of loans required by the commitment, which could lead to financial penalties. The Bank has not defaulted on its loan sale commitments.

Litigation

In the normal course of business, Valley is a party to various outstanding legal proceedings and claims. In the opinion of management, the financial condition, results of operations and liquidity of Valley should not be materially affected by the outcome of such legal proceedings and claims. However, in the event of an unexpected adverse outcome in one or more of our legal proceedings, operating results for a particular period may be negatively impacted. Disclosure is required when a risk of material loss in a litigation or claim is more than remote, even when the risk of a material loss is less than likely. Unless an estimate cannot be made, disclosure is also required of the estimate of the reasonably possible loss or range of loss.

Although there can be no assurance as to the ultimate outcome, Valley has generally denied, or believes it has a meritorious defense and will deny liability in litigation pending against Valley and claims made, including the matter described below. Valley intends to defend vigorously each case against it. Liabilities are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.

Merrick Bank Corporation v. Valley National Bank and American Express Travel Related Services v. Valley National Bank litigation. For about a decade, Valley served as the depository bank for various charter operators under regulations of the Department of Transportation (DOT) and contracts entered into with charter operators under those regulations. The purported

2016 Form 10-K 128

intent of the regulations is to afford some protection to the customers of the charter operators. A charter operator has several options with regard to fulfilling its obligations under the regulations, with one option requiring the charter operator to deposit the proceeds of tickets purchased for a charter flight into an FDIC insured bank account. The funds for a flight are released when the charter operator certifies that the flight has been completed. Valley stopped serving as a depository bank for the charter business due to the narrow profit in that business combined with the legal expenses incurred to defend itself in a prior case in which Valley was completely successful and the anticipated legal expenses from the following similar cases that are still pending.

Valley served as the depository bank for Myrtle Beach Direct Air (Direct Air) under a contract between Direct Air and Valley approved by the DOT under the DOT regulations. Direct Air commenced operations in 2007 but in March 2012 Direct Air ceased operations and filed for bankruptcy. Thereafter the United States Justice Department charged three of the principals of Direct Air with criminal fraud; that case is expected to go to trial in September 2017. Merrick Bank Corp. (Merrick) was the merchant bank for Direct Air and processed credit card purchases for Direct Air. Following the bankruptcy of Direct Air, Merrick incurred chargebacks in the approximate amount of $26.2 million when the Direct Air customers whose flights had been canceled obtained a credit from their card issuing banks for the cost of the ticket or other item purchased from Direct Air. Merrick was not able to recover the chargebacks from Direct Air. Direct Air’s depository account at Valley contained approximately $1.0 million at the time Direct Air ceased operations.

Merrick filed an action against Valley with ten counts in December 2013. Valley moved to dismiss five of the counts and, in March 2015, the court dismissed four of the five counts. American Express Travel Related Services (American Express) filed a similar action against Valley claiming about $3.0 million in chargebacks. Five of American Express’ eleven counts have been dismissed. The two cases have now been consolidated in the Federal District Court of New Jersey.

The parties are scheduled for mediation in March 2017 after which, if the mediation is not successful, Valley will file summary judgment motions on all of the remaining counts in both the Merrick and American Express cases.

At December 31, 2016, Valley could not estimate an amount or range of reasonably possible losses related to the matter described above. Based upon information currently available and advice of counsel, Valley believes that the eventual outcome of such claims will not have a material adverse effect on Valley’s consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of the matters, if unfavorable, may be material to Valley’s results of operations for a particular period.

Derivative Instruments and Hedging Activities

Valley is exposed to certain risks arising from both its business operations and economic conditions. Valley principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. Valley manages economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of its assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, 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. Valley’s derivative financial instruments are used to manage differences in the amount, timing, and duration of Valley’s known or expected cash receipts and its known or expected cash payments related to assets and liabilities as outlined below.

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 and caps 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. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

At December 31, 2016, Valley had the following cash flow hedge derivatives:

• Two interest rate swaps with a total notional amount of $100 million to hedge the changes in cash flows associated with prime-rate-indexed deposits, consisting of consumer and commercial money market deposit accounts. The swaps require the payment by Valley of fixed-rate amounts at approximately 5.11 percent in exchange for the receipt of variable-rate payments at the prime rate and expire in July 2017.

• One interest rate cap with a total notional amount of $125 million with a strike rate of 7.44 percent and a maturity date of September 27, 2023 used to hedge the total change in cash flows associated with prime-rate indexed deposits, consisting of consumer and commercial money market deposit accounts, which have variable interest rates indexed to the prime rate.

• Three forward starting interest rate swaps with a total notional amount of $300 million to hedge the changes in cash flows associated with certain brokered money market deposits. Starting in November 2015, the interest rate swaps required Valley to pay fixed-rate amounts ranging from approximately 2.57 percent to 2.97 percent, in exchange for the receipt

129 2016 Form 10-K

of variable-rate payments at the three-month LIBOR rate. The three swaps have expiration dates ranging from November 2018 to November 2020.

• Four forward starting interest rate swaps with a total notional amount of $182 million to hedge the changes in cash flows associated with borrowed funds. Starting in March and April 2016, the interest rate swaps required Valley to pay fixed-rate amounts ranging from approximately 2.51 percent to 2.88 percent, in exchange for the receipt of variable-rate payments at the three-month LIBOR rate. The four swaps have expiration dates ranging from March 2019 to September 2020.

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 uses 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.

At December 31, 2016, Valley had one interest rate swap with a notional amount of approximately $8.0 million used to hedge the change in the fair value of a commercial loan.

In August 2016, Valley terminated an interest rate swap with a notional amount of $125 million. The terminated swap, originally maturing in September 2023, was used to hedge the change in the fair value of Valley’s $125 million of 5.125 percent subordinated notes issued in September 2013. The transaction resulted in an adjusted annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date.

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.

In 2014, Valley issued $25 million of market linked certificates of deposit through a broker dealer. The rate paid on these hybrid instruments is based on a formula derived from the spread between the long and short ends of the constant maturity swap (CMS) rate curve. This type of instrument is referred to as a "steepener" since it derives its value from the slope of the CMS curve. Valley has determined that these hybrid instruments contain an embedded swap contract which has been bifurcated from the host contract. Valley entered into a swap (with a total notional amount of $25 million) almost simultaneously with the deposit issuance where the receive rate on the swap mirrors the pay rate on the brokered deposits. The bifurcated derivative and the stand alone swap are both marked to market through other non-interest expense. Although these 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 also 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 rates on Valley’s commitments to fund the loans as well as on its portfolio of mortgage loans held for sale.

2016 Form 10-K 130

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

	December 31, 2016						December 31, 2015
	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 caps and swaps	$	802	$	15,641	$	707,000	$	1,284	$	24,823	$	907,000
Fair value hedge interest rate swaps	—		986		7,999		7,658		1,306		133,209
Total derivatives designated as hedging instruments	$	802	$	16,627	$	714,999	$	8,942	$	26,129	$	1,040,209
Derivatives not designated as hedging instruments:
Interest rate swaps and embedded derivatives	$	25,285	$	25,284	$	1,075,722	$	24,628	$	24,623	$	654,134
Mortgage banking derivatives	2,968		2,166		246,583		204		92		73,438
Total derivatives not designated as hedging instruments	$	28,253	$	27,450	$	1,322,305	$	24,832	$	24,715	$	727,572

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

	2016			2015			2014
	(in thousands)
Amount of loss reclassified from accumulated other comprehensive loss to interest expense	$	(13,034	)	$	(7,075	)	$	(6,663	)
Amount of loss recognized in other comprehensive income	(4,035		)	(12,360		)	(20,910		)

The net gains or losses related to cash flow hedge ineffectiveness were immaterial during the years ended December 31, 2016, 2015 and 2014. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $12.5 million and $17.6 million at December 31, 2016 and 2015, 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 $8.8 million will be reclassified as an increase to interest expense in 2017.

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

	2016			2015			2014
	(in thousands)
Derivative—interest rate swaps:
Interest income	$	320		$	176		$	(13	)
Interest expense	6,670			1,400			9,380
Hedged item—loans, deposits and long-term borrowings:
Interest income	$	(320	)	$	(176	)	$	13
Interest expense	(6,645		)	(1,473		)	(9,449		)

During the years ended December 31, 2016, 2015 and 2014, the amounts recognized in non-interest expense related to the ineffectiveness of fair value hedges were immaterial.

131 2016 Form 10-K

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

	2016		2015		2014
	(in thousands)
Non-designated hedge interest rate derivatives
Other non-interest expense	$	690	$	158	$	(214	)

Collateral Requirements and Credit Risk Related Contingency 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 December 31, 2016, Valley was in compliance with all of the provisions of its derivative counterparty agreements. As of December 31, 2016, 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 $25.2 million. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties. At December 31, 2016, Valley had $52.4 million in collateral posted with its counterparties.

BALANCE SHEET OFFSETTING (Note 16)

Certain financial instruments, including derivatives (consisting of interest rate caps and swaps) 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. 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.

2016 Form 10-K 132

The table below presents information about Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of December 31, 2016 and 2015.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral				Net Amount
	(in thousands)
December 31, 2016
Assets:
Interest rate caps and swaps	$	26,087	$	—	$	26,087	$	(5,268	)	$	—			$	20,819
Liabilities:
Interest rate caps and swaps	$	41,911	$	—	$	41,911	$	(5,268	)	$	(36,643	)	(1)	$	—
Repurchase agreements	165,000		—		165,000		—			(165,000		)	(2)	—
Total	$	206,911	$	—	$	206,911	$	(5,268	)	$	(201,643	)		$	—
December 31, 2015
Assets:
Interest rate caps and swaps	$	33,570	$	—	$	33,570	$	(8,942	)	$	—			$	24,628
Liabilities:
Interest rate caps and swaps	$	50,752	$	—	$	50,752	$	(8,942	)	$	(41,810	)	(1)	$	—
Repurchase agreements	475,000		—		475,000		—			(475,000		)	(2)	—
Total	$	525,752	$	—	$	525,752	$	(8,942	)	$	(516,810	)		$	—

(1) Represents the amount of collateral posted with counterparties that offsets net liabilities at December 31, 2016 and 2015, respectively. Actual cash collateral posted with counterparties totaled $52.4 million and $53.0 million at December 31, 2016 and 2015, respectively.

(2) Represents the fair value of non-cash pledged investment securities.

REGULATORY AND CAPITAL REQUIREMENTS (Note 17)

Valley’s primary source of cash is dividends from the Bank. Valley National Bank, a national banking association, is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. In addition, the dividends declared cannot be in excess of the amount which would cause the subsidiary bank to fall below the minimum required for capital adequacy purposes.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve Bank and the OCC. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct significant impact on Valley’s consolidated financial statements. Under capital adequacy guidelines Valley and Valley National Bank must meet specific capital guidelines that involve quantitative measures of Valley’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

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.

Effective January 1, 2015, Valley implemented the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Basel III final rules require a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and minimum leverage ratio of 4.0 percent. The new rule changes included the implementation of a new capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation buffer is subject to a three year phase-in period that started on January 1, 2016, at 0.625 percent of risk-weighted assets and increases each subsequent year by 0.625 percent until reaching its final level of 2.5 percent when fully phased-in on January 1, 2019. The final rule also revised the definition and calculation of Tier 1 capital, total capital and risk-weighted assets. As of December 31, 2016 and 2015, Valley and Valley National Bank exceeded all capital adequacy requirements with the capital conservation buffer under the Basel III Capital Rules (see table below).

133 2016 Form 10-K

The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under the Basel III risk-based capital guidelines at December 31, 2016 and 2015:

	Actual				Minimum Capital Requirements				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	($ in thousands)
As of December 31, 2016
Total Risk-based Capital
Valley	$	2,084,531	12.15	%	$	1,480,006	8.625	%	N/A		N/A
Valley National Bank	2,023,857		11.82		1,476,767		8.625		$	1,712,193	10.00	%
Common Equity Tier 1 Capital
Valley	1,590,825		9.27		879,424		5.125		N/A		N/A
Valley National Bank	1,807,201		10.55		877,499		5.125		1,112,926		6.50
Tier 1 Risk-based Capital
Valley	1,698,767		9.90		1,136,816		6.625		N/A		N/A
Valley National Bank	1,807,201		10.55		1,134,328		6.625		1,369,755		8.00
Tier 1 Leverage Capital
Valley	1,698,767		7.74		878,244		4.00		N/A		N/A
Valley National Bank	1,807,201		8.25		876,026		4.00		1,095,032		5.00
As of December 31, 2015
Total Risk-based Capital
Valley	$	1,910,304	12.02	%	$	1,271,171	8.00	%	N/A		N/A
Valley National Bank	1,826,420		11.53		1,266,942		8.00		$	1,583,677	10.00	%
Common Equity Tier 1 Capital
Valley	1,431,973		9.01		715,034		4.50		N/A		N/A
Valley National Bank	1,618,053		10.22		712,655		4.50		1,029,390		6.50
Tier 1 Risk-based Capital
Valley	1,543,937		9.72		953,378		6.00		N/A		N/A
Valley National Bank	1,618,053		10.22		950,206		6.00		1,266,942		8.00
Tier 1 Leverage Capital
Valley	1,543,937		7.90		781,388		4.00		N/A		N/A
Valley National Bank	1,618,053		8.29		780,831		4.00		976,039		5.00

2016 Form 10-K 134

COMMON AND PREFERRED STOCK (Note 18)

Common Stock

Common Stock Issuance. In December 2016, Valley issued and sold 9.24 million of its common stock in a registered public offering. The net proceeds of the offering were $106.4 million and will be used to, among other things, support continued loan growth at the Bank.

Dividend Reinvestment Plan.  Valley may issue up to 10.0 million authorized and previously unissued or treasury shares of Valley common stock for purchases under Valley’s dividend reinvestment plan (DRIP). Under the DRIP, a shareholder may choose to have future cash dividends automatically invested in Valley common stock and make voluntary optional cash payments of up to $100 thousand per quarter to purchase shares of Valley common stock. Shares purchased under this plan will be issued directly from Valley or in open market transactions. During 2016, 2015 and 2014, 554 thousand, 713 thousand, and 499 thousand of common shares, respectively, were reissued from treasury stock or issued from authorized common shares under the DRIP for net proceeds totaling $5.2 million, $7.0 million and $5.0 million, respectively.

Common Stock Warrants.  On January 1, 2012, Valley assumed in the acquisition of State Bancorp, Inc. a warrant issued (in connection with State Bancorp's redeemed preferred stock issuance) to the U.S. Treasury in December 2008. The ten-year warrant to purchase up to 489 thousand of Valley common shares has an exercise price of $11.30 per share, and is exercisable on a net exercise basis. During May 2015, the U.S. Treasury sold the warrant shares individually through a public action, in which Valley did not receive any of the proceeds. All of the warrants, which will expire on December 5, 2018, remained outstanding and unexercised at December 31, 2016.

In connection with the issuance of senior preferred shares in 2008 under the TARP program, Valley issued to the U.S. Treasury a ten-year warrant to purchase up to approximately $2.5 million of Valley common shares. During 2010, the U.S. Treasury sold the warrant shares individually through a public auction, in which Valley did not receive any of the proceeds. The warrants are currently traded on the New York Stock Exchange under the ticker symbol “VLY WS”. Each warrant entitles the holder to purchase approximately 1.103 Valley common shares at $16.12 per share and is exercisable through the expiration date of November 14, 2018.

Repurchase Plan. In 2007, Valley’s Board of Directors approved the repurchase of up to $4.7 million of common shares. Purchases of Valley’s common shares may be made from time to time in the open market or in privately negotiated transactions generally not exceeding prevailing market prices. Repurchased shares are held in treasury and are expected to be used for general corporate purposes or issued under the dividend reinvestment plan. Under the repurchase plan, Valley made no purchases of its outstanding shares during the years ended December 31, 2016, 2015 and 2014.

Other Stock Repurchases. Valley also purchases shares directly from its employees in connection with employee elections to withhold taxes related to the vesting of stock awards, including vested stock options exchanged for Valley common stock in the CNL acquisition. During the years ended December 31, 2016, 2015 and 2014, Valley purchased approximately 328 thousand, 387 thousand and 174 thousand shares, respectively, of its outstanding common stock at an average price of $9.73, $9.95 and $9.68, respectively, for such purpose.

Preferred Stock

On June 19, 2015, Valley issued 4.6 million shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $25 per share. Dividends on the preferred stock accrue and are payable quarterly in arrears, at a fixed rate per annum equal to 6.25 percent from the original issue date to, but excluding, June 30, 2025, and thereafter at a floating rate per annum equal to three-month LIBOR plus a spread of 3.85 percent. The net proceeds from the preferred stock offering totaled approximately $111.6 million. The preferred stock is included in Valley's Tier 1 capital and total risk-based capital at December 31, 2016 and 2015.

135 2016 Form 10-K

OTHER COMPREHENSIVE INCOME (Note 19)

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014. Components of other comprehensive income (loss) include changes in net unrealized gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges relating to certain securities during the period); unrealized gains and losses on derivatives used in cash flow hedging relationships; and the pension benefit adjustment for the unfunded portion of various employee, officer and director pension plans.

	2016									2015									2014
	Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax
	(in thousands)
Unrealized gains and losses on available for sale (AFS) securities
Net (losses) gains arising during the period	$	(7,294	)	$	3,001		$	(4,293	)	$	(3,458	)	$	1,458		$	(2,000	)	$	33,329		$	(13,931	)	$	19,398
Less reclassification adjustment for net gains included in net income (1)	(777		)	312			(465		)	(2,487		)	1,041			(1,446		)	(745		)	312			(433		)
Net change	(8,071		)	3,313			(4,758		)	(5,945		)	2,499			(3,446		)	32,584			(13,619		)	18,965
Non-credit impairment losses on securities available for sale and held to maturity
Net change in non-credit impairment losses on securities	719			(302		)	417			(416		)	175			(241		)	2,299			(965		)	1,334
Less reclassification adjustment for accretion of credit impairment losses included in net income (2)	(921		)	382			(539		)	(728		)	304			(424		)	(661		)	278			(383		)
Net change	(202		)	80			(122		)	(1,144		)	479			(665		)	1,638			(687		)	951
Unrealized gains and losses on derivatives (cash flow hedges)
Net (losses) gains arising during the period	(4,035		)	1,574			(2,461		)	(12,360		)	5,121			(7,239		)	(20,910		)	8,763			(12,147		)
Less reclassification adjustment for net losses included in net income (3)	13,034			(5,393		)	7,641			7,075			(2,948		)	4,127			6,663			(2,777		)	3,886
Net change	8,999			(3,819		)	5,180			(5,285		)	2,173			(3,112		)	(14,247		)	5,986			(8,261		)
Defined benefit pension plan
Net gains (losses) arising during the period	5,837			(2,539		)	3,298			6,030			(2,586		)	3,444			(27,902		)	11,695			(16,207		)
Amortization of prior service cost (4)	(300		)	119			(181		)	206			(89		)	117			305			(128		)	177
Amortization of net loss (4)	294			(109		)	185			790			(328		)	462			226			(94		)	132
Net change	5,831			(2,529		)	3,302			7,026			(3,003		)	4,023			(27,371		)	11,473			(15,898		)
Total other comprehensive income (loss)	$	6,557		$	(2,955	)	$	3,602		$	(5,348	)	$	2,148		$	(3,200	)	$	(7,396	)	$	3,153		$	(4,243	)

(1) Included in gains on securities transactions, net.

(2) Included in interest and dividends on investment securities (taxable).

(3) Included in interest expense.

(4) Included in the computation of net periodic pension cost. See Note 12 for details.

2016 Form 10-K 136

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the years ended December 31, 2016, 2015 and 2014:

	Components of Accumulated Other Comprehensive Loss												Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on AFS Securities			Non-credit Impairment Losses on Securities			Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance-December 31, 2013	$	(20,855	)	$	(806	)	$	(6,271	)	$	(10,320	)	$	(38,252	)
Other comprehensive income (loss) before reclassifications	19,398			1,334			(12,147		)	(16,207		)	(7,622		)
Amounts reclassified from other comprehensive income (loss)	(433		)	(383		)	3,886			309			3,379
Other comprehensive income (loss), net	18,965			951			(8,261		)	(15,898		)	(4,243		)
Balance-December 31, 2014	(1,890		)	145			(14,532		)	(26,218		)	(42,495		)
Other comprehensive (loss) income before reclassifications	(2,000		)	(241		)	(7,239		)	3,444			(6,036		)
Amounts reclassified from other comprehensive (loss) income	(1,446		)	(424		)	4,127			579			2,836
Other comprehensive (loss) income, net	(3,446		)	(665		)	(3,112		)	4,023			(3,200		)
Balance-December 31, 2015	(5,336		)	(520		)	(17,644		)	(22,195		)	(45,695		)
Other comprehensive (loss) income before reclassifications	(4,293		)	417			(2,461		)	3,298			(3,039		)
Amounts reclassified from other comprehensive (loss) income	(465		)	(539		)	7,641			4			6,641
Other comprehensive (loss) income, net	(4,758		)	(122		)	5,180			3,302			3,602
Balance-December 31, 2016	$	(10,094	)	$	(642	)	$	(12,464	)	$	(18,893	)	$	(42,093	)

137 2016 Form 10-K

QUARTERLY FINANCIAL DATA (UNAUDITED) (Note 20)

	Quarters Ended 2016
	March 31		June 30		September 30		December 31
	(in thousands, except for share data)
Interest income	$	185,597	$	189,028	$	191,203	$	201,095
Interest expense	37,444		37,573		37,057		36,700
Net interest income	148,153		151,455		154,146		164,395
Provision for credit losses	800		1,429		5,840		3,800
Non-interest income:
Gains on sales of loans, net	1,795		3,105		4,823		12,307
Other non-interest income	19,653		21,159		20,030		20,353
Non-interest expense:
Loss on extinguishment of debt	—		315		—		—
Amortization of tax credit investments	7,264		7,646		6,450		13,384
Other non-interest expense	110,961		111,842		106,818		111,445
Income before income taxes	50,576		54,487		59,891		68,426
Income tax expense	14,389		15,460		17,049		18,336
Net income	36,187		39,027		42,842		50,090
Dividend on preferred stock	1,797		1,797		1,797		1,797
Net income available to common shareholders	34,390		37,230		41,045		48,293
Earnings per common share:
Basic	$	0.14	$	0.15	$	0.16	$	0.19
Diluted	0.14		0.15		$	0.16	0.19
Cash dividends declared per common share	0.11		0.11		0.11		0.11
Weighted average number of common shares outstanding:
Basic	254,075,349		254,381,170		254,473,994		256,422,437
Diluted	254,347,420		254,771,213		254,940,307		256,952,036

	Quarters Ended 2015
	March 31		June 30		September 30		December 31
	(in thousands, except for share data)
Interest income	$	170,985	$	175,754	$	174,690	$	185,594
Interest expense	38,899		39,577		40,730		37,548
Net interest income	132,086		136,177		133,960		148,046
Provision for credit losses	—		4,500		94		3,507
Non-interest income:
Gains on sales of loans, net	598		422		2,014		1,211
Other non-interest income	18,047		19,778		18,905		22,827
Non-interest expense:
Loss on extinguishment of debt	—		—		—		51,129
Amortization of tax credit investments	4,496		4,511		5,224		13,081
Other non-interest expense	103,622		102,901		103,428		110,683
Income before income taxes	42,613		44,465		46,133		(6,316		)
Income tax expense	12,272		12,474		10,179		(10,987		)
Net income	30,341		31,991		35,954		4,671
Dividend on preferred stock	—		—		2,017		1,796
Net income available to common shareholders	30,341		31,991		33,937		2,875
Earnings per common share:
Basic	$	0.13	$	0.14	$	0.15	$	0.01
Diluted	0.13		0.14		0.15		0.01
Cash dividends declared per common share	0.11		0.11		0.11		0.11
Weighted average number of common shares outstanding:
Basic	232,338,775		232,565,404		232,737,953		239,916,562
Diluted	232,341,921		232,586,616		232,780,219		239,972,546

2016 Form 10-K 138

PARENT COMPANY INFORMATION (Note 21)

Condensed Statements of Financial Condition

	December 31,
	2016		2015
	(in thousands)
Assets
Cash	$	68,927	$	63,330
Interest bearing deposits with banks	82		135
Investment securities available for sale	239		806
Investments in and receivables due from subsidiaries	2,591,982		2,398,784
Other assets	36,188		61,365
Total Assets	$	2,697,418	$	2,524,420
Liabilities and Shareholders’ Equity
Dividends payable to shareholders	$	29,477	$	28,054
Long-term borrowings	236,731		230,573
Junior subordinated debentures issued to capital trusts	41,577		41,414
Accrued expenses and other liabilities	12,477		17,288
Shareholders’ equity	2,377,156		2,207,091
Total Liabilities and Shareholders’ Equity	$	2,697,418	$	2,524,420

Condensed Statements of Income

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Income
Dividends from subsidiary	$	90,000		$	110,000		$	110,000
Income from subsidiary	4,550			2,363			—
Gains on securities transactions, net	239			—			—
Other interest and income	34			211			436
Total Income	94,823			112,574			110,436
Total Expenses	33,604			20,578			11,172
Income before income tax benefit and equity in undistributed (losses) earnings of subsidiary	61,219			91,996			99,264
Income tax benefit	(23,349		)	(21,939		)	(3,245		)
Income before equity in undistributed earnings (losses) of subsidiary	84,568			113,935			102,509
Equity in undistributed earnings (losses) of subsidiary	83,578			(10,978		)	13,663
Net Income	168,146			102,957			116,172
Dividends on preferred stock	7,188			3,813			—
Net Income Available to Common Shareholders	$	160,958		$	99,144		$	116,172

139 2016 Form 10-K

Condensed Statements of Cash Flows

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Cash flows from operating activities:
Net Income	$	168,146		$	102,957		$	116,172
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed (earnings) losses of subsidiary	(83,578		)	10,978			(13,663		)
Depreciation and amortization	—			—			18
Stock-based compensation	10,032			7,575			7,489
Net amortization of premiums and accretion of discounts on securities	163			162			163
Gains on securities transactions, net	(239		)	—			—
Net change in:
Other assets	8,007			(41,452		)	6,632
Accrued expenses and other liabilities	18,381			9,604			(1,851		)
Net cash provided by operating activities	120,912			89,824			114,960
Cash flows from investing activities:
Investment securities available for sale:
Sales	739			49			46
Purchases	—			—			(500		)
Cash and cash equivalents acquired in acquisitions	—			109			14,776
Capital contributions to subsidiary	(106,000		)	(115,000		)	—
Subordinated debt issued by subsidiary	—			(100,000		)	—
Net cash (used in) provided by investing activities	(105,261		)	(214,842		)	14,322
Cash flows from financing activities:
Proceeds from issuance of long-term borrowings, net	—			98,897			—
Proceeds from issuance of preferred stock, net	—			111,590			—
Dividends paid to preferred shareholders	(7,188		)	(3,813		)	—
Dividends paid to common shareholders	(111,813		)	(102,279		)	(88,119		)
Purchase of common shares to treasury	(3,191		)	(2,108		)	(1,688		)
Common stock issued, net	112,085			7,898			5,096
Net cash (used in) provided by financing activities	(10,107		)	110,185			(84,711		)
Net change in cash and cash equivalents	5,544			(14,833		)	44,571
Cash and cash equivalents at beginning of year	63,465			78,298			33,727
Cash and cash equivalents at end of year	$	69,009		$	63,465		$	78,298

BUSINESS SEGMENTS (Note 22)

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 “pool funding” methodology, which involves the allocation of uniform funding cost based on each segments’ average earning assets 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

2016 Form 10-K 140

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 consumer lending segment is mainly comprised of residential mortgages, home equity loans and automobile loans. The duration of the residential mortgage loan portfolio is subject to movements in the market level of interest rates and forecasted prepayment speeds. The average weighted life of the automobile loans within the portfolio 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. Consumer lending segment also includes the Wealth Management Division, comprised of trust, asset management, insurance services, and asset-based lending support services.

The commercial lending segment is mainly comprised of floating rate and adjustable rate commercial and industrial 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.

The investment management segment generates a large portion of Valley’s income through investments in various types of securities. These securities are mainly comprised of fixed rate investments 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 assets that are least sensitive assets to immediate 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 Valley’s balance sheet.

The amounts disclosed as “corporate and other adjustments” represent income and expense items not directly attributable to a specific segment, including net gains and losses on securities not reported in the investment management segment above, interest expense related to subordinated notes and income and expense from derivative financial instruments.

The following tables represent the financial data for Valley’s four business segments for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31, 2016
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	5,081,798		$	11,318,947		$	3,428,567		$	—		$	19,829,312
Interest income	$	176,929		$	509,376		$	89,378		$	(8,760	)	$	766,923
Interest expense	35,175			78,347			23,732			11,520			148,774
Net interest income (loss)	141,754			431,029			65,646			(20,280		)	618,149
Provision for credit losses	905			10,964			—			—			11,869
Net interest income (loss) after provision for credit losses	140,849			420,065			65,646			(20,280		)	606,280
Non-interest income	63,443			3,292			6,694			29,796			103,225
Non-interest expense	62,721			70,145			1,281			341,978			476,125
Internal expense transfer	71,578			160,198			48,475			(280,251		)	—
Income (loss) before income taxes	$	69,993		$	193,014		$	22,584		$	(52,211	)	$	233,380
Return on average interest earning assets (pre-tax) (unaudited)	1.38		%	1.71		%	0.66		%	N/A			1.18		%

141 2016 Form 10-K

	Year Ended December 31, 2015
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	4,764,306		$	9,682,714		$	2,978,484		$	—		$	17,425,504
Interest income	$	170,569		$	463,062		$	81,669		$	(8,277	)	$	707,023
Interest expense	39,787			80,861			24,873			11,233			156,754
Net interest income (loss)	130,782			382,201			56,796			(19,510		)	550,269
Provision for credit losses	1,153			6,948			—			—			8,101
Net interest income (loss) after provision for credit losses	129,629			375,253			56,796			(19,510		)	542,168
Non-interest income	45,306			744			6,815			30,937			83,802
Non-interest expense	59,794			68,156			1,074			370,051			499,075
Internal expense transfer	72,441			146,463			45,460			(264,364		)	—
Income (loss) before income taxes	$	42,700		$	161,378		$	17,077		$	(94,260	)	$	126,895
Return on average interest earning assets (pre-tax) (unaudited)	0.90		%	1.67		%	0.57		%	N/A			0.73		%

	Year Ended December 31, 2014
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	4,122,468		$	7,959,215		$	2,959,100		$	—		$	15,040,783
Interest income	$	154,078		$	399,192		$	91,689		$	(8,356	)	$	636,603
Interest expense	41,343			79,820			29,676			11,007			161,846
Net interest income (loss)	112,735			319,372			62,013			(19,363		)	474,757
Provision for credit losses	438			1,446			—			—			1,884
Net interest income (loss) after provision for credit losses	112,297			317,926			62,013			(19,363		)	472,873
Non-interest income	40,611			(19,624		)	6,392			50,237			77,616
Non-interest expense	59,051			58,142			1,369			284,693			403,255
Internal expense transfer	65,477			126,465			47,060			(239,002		)	—
Income (loss) before income taxes	$	28,380		$	113,695		$	19,976		$	(14,817	)	$	147,234
Return on average interest earning assets (pre-tax) (unaudited)	0.69		%	1.43		%	0.68		%	N/A			0.98		%

2016 Form 10-K 142

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Valley National Bancorp:

We have audited the accompanying consolidated statements of financial condition of Valley National Bancorp (the "Company") as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2017 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Short Hills, New Jersey

February 28, 2017

143 2016 Form 10-K

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. 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, is 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 Securities Exchange Act of 1934, as amended, 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 its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Valley’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Valley’s disclosure controls and procedures. Based on such evaluation, Valley’s Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective as of December 31, 2016 (the end of the period covered by this Annual Report on Form 10-K).

Valley’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system 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 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 controls 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.

Changes in Internal Control Over Financial Reporting

There have been no changes in Valley’s internal control over financial reporting during the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, Valley’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Valley’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Valley’s internal control over financial reporting is a process designed to provide reasonable assurance to Valley’s management and Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, 2016 management assessed the effectiveness of Valley’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Management’s assessment included an evaluation of the design of Valley’s internal control over financial reporting and testing of the operating effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee.

Based on this assessment, management determined that, as of December 31, 2016, Valley’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

KPMG LLP, the independent registered public accounting firm that audited Valley’s December 31, 2016 consolidated financial statements included in this Annual Report on Form 10-K, has issued an audit report expressing an opinion on the effectiveness of Valley’s internal control over financial reporting as of December 31, 2016. The report is included in this item under the heading “Report of Independent Registered Public Accounting Firm.”

2016 Form 10-K 144

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Valley National Bancorp:

We have audited Valley National Bancorp’s (the "Company") internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's Management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial condition of the Company as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016, and our report dated February 28, 2017 expressed an unqualified opinion on those consolidated financial statements.

Short Hills, New Jersey

February 28, 2017

145 2016 Form 10-K

Item 9B. Other Information

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Certain information regarding executive officers is included under the section captioned “Executive Officers” in Item 1 of this Annual Report on Form 10-K. The information set forth under the captions “Director Information”, “Corporate Governance”, and “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2017 Proxy Statement is incorporated herein by reference.

Item 11. Executive Compensation

The information set forth under the captions “Director Compensation”, “Compensation Committee Interlocks and Insider Participation” and “Executive Compensation” in the 2017 Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information set forth under the captions “Equity Compensation Plan Information” and “Stock Ownership of Management and Principal Shareholders” in the 2017 Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information set forth under the captions “Compensation Committee Interlocks and Insider Participation”, “Certain Transactions with Management” and “Corporate Governance” in the 2017 Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information set forth under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm” in the 2017 Proxy Statement is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Financial Statements and Schedules:

The following Financial Statements and Supplementary Data are filed as part of this annual report:

	Page
Consolidated Statements of Financial Condition	72
Consolidated Statements of Income	73
Consolidated Statements of Comprehensive Income	74
Consolidated Statements of Changes in Shareholders’ Equity	75
Consolidated Statements of Cash Flows	76
Notes to Consolidated Financial Statements	78
Report of Independent Registered Public Accounting Firm	143

All financial statement schedules are omitted because they are either inapplicable or not required, or because the required information is included in the Consolidated Financial Statements or notes thereto.

2016 Form 10-K 146

(b) Exhibits (numbered in accordance with Item 601 of Regulation S-K):

(3) Articles of Incorporation and By-laws:

A. Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to Exhibit 3.A of the Registrant’s Form 10-K Annual Report for the year ended December 31, 2015.

B. 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 December 7, 2016.

(4) Instruments Defining the Rights of Security Holders:

A. Indenture, dated as of September 27, 2013, by and between Valley and The Bank of New York Mellon Trust Company, N.A., as Trustee, incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K Current Report filed on September 27, 2013. (Valley 5.125% sub debt due September 27, 2023).

B. First Supplemental Indenture, dated as of September 27, 2013, by and between Valley and The Bank of New York Mellon Trust Company, N.A., as Trustee, including the form of the Notes attached as Exhibit A thereto, incorporated herein by reference to Exhibit 4.2 to the Registrant’s Form 8-K Current Report filed on September 27, 2013 (Valley 5.125% sub debt due September 27, 2023).

C. Warrant to purchase Common Stock of Valley National Bancorp, incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K Current Report filed on January 3, 2012 (No. 001-11277) (Warrants to purchase at $11.87, exercisable until December 5, 2018).

D. Specimen stock certificate of Valley National Bancorp 6.25% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, incorporated herein by reference to Exhibit 4.2 to the Registrant’s Form 8-A/A filed on July 9, 2015.

E. Indenture, dated as of June 19, 2015, by and between Valley and The Bank of New York Mellon Trust Company, N.A., as Trustee, incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K Current Report filed on June 19, 2015. (Valley 4.55% sub debt due July 30, 2025).

F. First Supplemental Indenture, dated as of June 19, 2015, by and between Valley and The Bank of New York Mellon Trust Company, N.A., as Trustee, including the form of the Notes attached as Exhibit A thereto, incorporated herein by reference to Exhibit 4.2 to the Registrant’s Form 8-K Current Report filed on June 19, 2015 (Valley 4.55% sub debt due July 30, 2025).

G. Agreement to provide SEC with Indentures not filed. (Item 601(b)(4)(iii)(A).*

(10) Material Contracts:

A. Amended and Restated Change in Control Agreements among Valley National Bank, Valley and Gerald H. Lipkin and Alan D. Eskow, dated June 22, 2011, incorporated herein by reference to Exhibits 10.A and 10.C to the Registrant’s Form 10-Q Quarterly Report filed on August 9, 2011 (No. 001-11277).+

B. Severance Agreement dated January 24, 2017 between Valley, Valley National Bank and Gerald H. Lipkin, which replaced in full all predecessor severance and guaranteed retirement agreements, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed on January 26, 2017.+

C. Severance Agreements dated January 22, 2008 between Valley, Valley National Bank and Alan D. Eskow, incorporated herein by reference to Exhibits 10.7 to the Registrant’s Form 8-K Current Report filed on January 28, 2008 (No. 001-11277).+

D. Form of Amended and Restated Change in Control Agreement applicable to Executive Vice Presidents of Valley National Bank and Valley, incorporated herein by reference to Exhibit 10.E to the Registrant’s Form 10-Q Quarterly Report filed on August 9, 2011 (No. 001-11277).+

147 2016 Form 10-K

E. Valley National Bancorp 2010 Executive Incentive Plan, incorporated herein by reference to Exhibit 10 to the Registrant’s Form 8-K Current Report filed on April 19, 2010 (No. 001-11277).+

F. The Valley National Bancorp Benefit Equalization Plan, as Amended and Restated, incorporated herein by reference to Exhibit 10 to the Registrant’s Form 10-Q Quarterly Report filed on November 6, 2015.+

G. Form of Participant Agreement for the Benefit Equalization Plan, incorporated herein by reference to Exhibit 10.J to the Registrant's Form 10-K Annual Report for the year ended December 31, 2011 (No. 001-11277).+

H. The Valley National Bancorp 2004 Director Restricted Stock Plan, as amended, incorporated herein by reference to Exhibit 10.L to the Registrant’s Form 10-K Annual Report for the year ended December 31, 2013.+

I. Form of Restricted Stock Award Agreement used in connection with Valley National Bancorp 2004 Director Restricted Stock Plan, incorporated herein by reference to Exhibit 10.H to the Registrant’s Form 10-K Annual Report for the year ended December 31, 2010 (No. 001-11277).+

J. Valley National Bancorp 2009 Long-Term Stock Incentive Plan, as amended, incorporated herein by reference to Exhibit 10.P to the Registrant’s Form 10-K Annual Report for the year ended December 31, 2014.+

K. Form of Valley National Bancorp Incentive Stock Option Agreement used in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277).+

L. Form of Valley National Bancorp Non-Qualified Stock Option Agreement used in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277).+

M. Form of Valley National Bancorp Restricted Stock Award Agreement used in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277).+

N. Form of Valley National Bancorp Escrow Agreement for Restricted Stock Award used in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit 10.4 to the Registrant’s Form 8-K Current Report filed on May 27, 2009 (No. 001-11277)+

O. Form of Valley National Bancorp Agreement for Performance Based Restricted Stock Unit Award used in connection with Valley National Bancorp 2009 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit 10.V to the Registrant's Form 10-K Annual Report for the year ended December 31, 2014.+

P. Valley National Bancorp 2016 Long-Term Stock Incentive Plan, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed on May 2, 2016.+

Q. Form of Valley National Bancorp Agreement for Performance Based Restricted Stock Unit Award, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K Current Report filed on May 2, 2016.+

R. Form of Valley National Bancorp Agreement for Restricted Stock Award used in connection with Valley National Bancorp 2016 Long-Term Stock Incentive Plan.+*

S. Valley National Bancorp Deferred Compensation Plan, dated as of January 1, 2017.+ *

T. Employment Agreement, dated as of May 7, 2014, by and among Rudy Schupp, Valley and Valley National Bank, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed on May 8, 2014.+

2016 Form 10-K 148

U. Amendment to the Employment Agreement, dated as of September 23, 2016, by and among Rudy Schupp, Valley and Valley National Bank, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q Quarterly Report filed on November 8, 2016.+

V. Change in Control Agreement between Valley, Valley National Bank and Rudy Schupp, dated as of November 18, 2014.+*

W. Change in Control Agreement between Valley, Valley National Bank and Robert Bardusch, dated April 18, 2016, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 10-Q Quarterly Report filed on August 8, 2016.+

X. Change in Control Severance Plan applicable to First Senior Vice Presidents and Senior Vice Presidents who previously had or were eligible for change in control agreements, incorporated herein by reference to Exhibit 10.4 to the Registrant’s Form 10-Q Quarterly Report filed on August 8, 2016.+

Y. Severance Letter Agreement, dated as of September 21, 2016, between Valley National Bank, Valley and Ira Robbins, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed on September 27, 2016.+

Z. Amended and Restated Change in Control Agreement, dated as of September 21, 2016, among Valley National Bank, Valley and Ira Robbins, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form 8-K Current Report filed on September 27, 2016.+

AA. Form of Change in Control Agreements for First Senior Vice Presidents and Senior Vice Presidents who have not yet been brought into the Change in Control Plan.+*

BB. Severance Letter Agreement, dated as of September 21, 2016, between Valley National Bank, Valley and Thomas A. Iadanza, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Form 8-K Current Report filed on September 27, 2016.+

CC. Amended and Restated Change in Control Agreement, dated as of September 21, 2016, among Valley National Bank, Valley and Thomas A. Iadanza, incorporated herein by reference to Exhibit 10.4 to the Registrant’s Form 8-K Current Report filed on September 27, 2016.+

DD. Severance Letter Agreement, dated as of January 3, 2017, between Valley, Valley National Bank and Ronald H. Janis.+*

EE. Change in Control Agreement, dated as of January 3, 2017, between Valley, Valley National Bank and Ronald H. Janis.+*

FF. Consulting and Retirement Agreement, dated as of January 4, 2017, between Valley, Valley National Bank and Peter Crocitto, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K Current Report filed on January 9, 2017.+

(12.1) Computation of Ratios of Earnings to Fixed Charges.*

(12.2) Computation of Ratios of Earnings to Fixed Charges Including Preferred Stock.*

149 2016 Form 10-K

(21) List of Subsidiaries:

	Name	Jurisdiction of Incorporation	Percentage of Voting Securities Owned by the Parent Directly or Indirectly
(a)	Subsidiaries of Valley:
	Valley National Bank	United States	100%
	GCB Capital Trust III	Delaware	100%
	State Bancorp Capital Trust I	Delaware	100%
	State Bancorp Capital Trust II	Delaware	100%
(b)	Subsidiaries of Valley National Bank:
	Hallmark Capital Management, Inc.	New Jersey	100%
	Highland Capital Corp.	New Jersey	100%
	Intracoastal Title Services of Florida, Inc.	Florida	100%
	Masters Coverage Corp.	New York	100%
	New York Metro Title Agency, Inc.	New York	100%
	Valley Commercial Capital, LLC	New Jersey	100%
	Valley National Title Services, Inc.	New Jersey	100%
	Valley Securities Holdings, LLC	New Jersey	100%
	VNB Loan Services, Inc.	New York	100%
	VNB New York, LLC	New York	100%
(c)	Subsidiaries of Masters Coverage Corp.:
	Life Line Planning, Inc.	New York	100%
	RISC One, Inc.	New York	100%
(d)	Subsidiaries of Valley Securities Holdings, LLC:
	Shrewsbury Capital Corporation	New Jersey	100%
	Valley Investments, Inc.	New Jersey	100%
	VNB Realty, Inc.	New Jersey	100%
(e)	Subsidiary of Shrewsbury Capital Corporation:
	GCB Realty, LLC	New Jersey	100%
(f)	Subsidiary of VNB Realty, Inc.:
	VNB Capital Corp.	New York	100%

(23) Consent of KPMG LLP.*

(24) Power of Attorney of Certain Directors and Officers of Valley.*

(31.1) Certification of Gerald H. Lipkin, Chairman of the Board and Chief Executive Officer of the Company, pursuant to Securities Exchange Rule 13a-14(a).*

(31.2) Certification of Alan D. Eskow, Senior Executive Vice President and Chief Financial Officer of the Company, pursuant to Securities Exchange Rule 13a-14(a).*

(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 Gerald H. Lipkin, Chairman and Chief Executive Officer of the Company and Alan D. Eskow, Senior Executive Vice President and Chief Financial Officer of the Company.*

(101) Interactive Data File. * 

* Filed herewith.

+ Management contract and compensatory plan or arrangement.

2016 Form 10-K 150

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) 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
By:	/S/    GERALD H. LIPKIN
	Gerald H. Lipkin,Chairman of the Board and Chief Executive Officer
By:	/s/    ALAN D. ESKOW
	Alan D. Eskow, Senior Executive Vice President and Chief Financial Officer

Dated: February 28, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated:

Signature	Title	Date
/S/    GERALD H. LIPKIN	Chairman of the Board and Chief Executive Officer and Director	February 28, 2017
Gerald H. Lipkin
/S/    ALAN D. ESKOW	Senior Executive Vice President, Chief Financial Officer (Principal Financial Officer) and Corporate Secretary	February 28, 2017
Alan D. Eskow
/S/    MITCHELL L. CRANDELL	First Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	February 28, 2017
Mitchell L. Crandell
ANDREW B. ABRAMSON*	Director	February 28, 2017
Andrew B. Abramson
PETER J. BAUM*	Director	February 28, 2017
Peter J. Baum
PAMELA R. BRONANDER*	Director	February 28, 2017
Pamela R. Bronander
ERIC P. EDELSTEIN*	Director	February 28, 2017
Eric P. Edelstein
MARY J. STEELE GUILFOILE*	Director	February 28, 2017
Mary J. Steele Guilfoile
GRAHAM O. JONES*	Director	February 28, 2017
Graham O. Jones
GERALD KORDE*	Director	February 28, 2017
Gerald Korde
MICHAEL L. LARUSSO*	Director	February 28, 2017
Michael L. LaRusso

151 2016 Form 10-K

Signature	Title	Date
MARC J. LENNER*		February 28, 2017
Marc J. Lenner	Director
BARNETT RUKIN*		February 28, 2017
Barnett Rukin	Director
SURESH L. SANI*		February 28, 2017
Suresh L. Sani	Director
JEFFREY S. WILKS*		February 28, 2017
Jeffrey S. Wilks	Director

*

/S/    ALAN D. ESKOW	February 28, 2017
Alan D. Eskow, attorney-in fact.

2016 Form 10-K 152

EX-4.G

EXHIBIT 4G

Agreement to Provide Documents Upon Request

In accordance with Regulation S-K Item 601(b)(4)(iii)(A), Valley National Bancorp hereby agrees to provide the Securities Exchange Commission, on request, the Indentures and related documents for GCB Capital Trust III, State Bancorp Capital Trust I and State Bancorp Capital Trust II.

Valley National Bancorp

/s/ Ronald H. Janis

Ronald H. Janis

Senior Executive

Vice President and General Counsel

EX-10.AA

EXHIBIT 10.AA

FIRST SENIOR VICE PRESIDENT

CHANGE-IN-CONTROL AGREEMENT

[EMPLOYEE NAME]

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”), is made as of this [DAY] day of [MONTH], [YEAR], among VALLEY NATIONAL BANK (“Bank”), a national banking association with its principal office at 1455 Valley Road, Wayne, New Jersey, VALLEY NATIONAL BANCORP (“Valley”), a New Jersey corporation which maintains its principal office at 1455 Valley Road, Wayne, New Jersey (Valley and the Bank collectively are the “Company”) and [EMPLOYEE NAME] (the “Executive”).

BACKGROUND

WHEREAS, the Executive has been continuously employed by the Bank for at least three full years;

WHEREAS, the Executive has worked diligently in the Executive’s position in the business of the Bank and Valley;

WHEREAS, the Boards of Directors of the Bank and Valley (either one, the “Board of Directors” and, together, the “Company Boards”) believe that the future services of the Executive are of great value to the Bank and Valley and that it is important for the growth and development of the Bank that the Executive continue in the Executive’s position;

WHEREAS, if the Company receives any proposal from a third person concerning a possible business combination with, or acquisition of equities securities of, the Company, the Company Boards believe it is imperative that the Company and the Company Boards be able to rely upon the Executive to continue in the Executive’s position, and that they be able to receive and rely upon the Executive’s advice, if they request it, as to the best interests of the Company and its shareholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a proposal;

EXHIBIT 10.AA

WHEREAS, to achieve that goal, and to retain the Executive’s services prior to any such activity, the Company Boards and the Executive have agreed to enter into this Agreement to govern the Executive’s termination benefits in the event of a Change in Control of the Company, as hereinafter defined.

NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of the Executive’s advice and counsel notwithstanding the possibility, threat or occurrence of a bid to take over control of the Company, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive, each intending to be legally bound hereby agree as follows:

1.Definitions

a.Base Salary. “Base Salary”, as used in Section 9 hereof, means the annual cash base salary (excluding any bonus and the value of any fringe benefits) paid to the Executive at the time of the termination of employment unless such amount has been reduced after a Change in Control, in which case such amount shall be the highest base salary in effect during the 18 months prior to the Change in Control.

b.Cause. For purposes of this Agreement “Cause” with respect to the termination by the Company of Executive’s employment shall mean (i) willful and continued failure by the Executive to perform the Executive’s duties for the Company under this Agreement after at least one warning in writing from the Board of Directors identifying specifically any such failure; (ii) the willful engaging by the Executive in misconduct which causes material injury to the Company as specified in a written notice to the Executive from the Board of Directors; or (iii) conviction of a crime, other than a traffic violation, habitual drunkenness, drug abuse, or excessive absenteeism other than for illness, after a warning (with respect to drunkenness or absenteeism only) in writing from the Board of Directors to refrain from such behavior. No act or failure to act on the part of the Executive shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.

EXHIBIT 10.AA

c.Change in Control. “Change in Control” means any of the following events: (i) when Valley or a Valley Subsidiary acquires actual knowledge that any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliate of Valley or a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates, is or becomes the beneficial owner (as defined in Rule 13d‑3 of the Exchange Act) directly or indirectly, of securities of Valley representing more than twenty‑five percent (25%) of the combined voting power of Valley’s then outstanding securities (a “Control Person”); (ii) upon the first purchase of Valley’s common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by Valley, a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates); (iii) the consummation of (A) a transaction, other than a Non‑Control Transaction, pursuant to which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation, (B) a sale or disposition of all or substantially all of Valley’s assets or (C) a plan of liquidation or dissolution of Valley; (iv) if during any period of two (2) consecutive years, individuals (the “Continuing Directors”) who at the beginning of such period constitute the Board of Directors of Valley (the “Valley Board”) cease for any reason to constitute at least 60% thereof or, following a Non‑Control Transaction, 60% of the board of directors of the Surviving Corporation; provided that any individual whose election or nomination for election as a member of the Valley Board (or, following a Non‑Control Transaction, the board of directors of the Surviving Corporation) was approved by a vote of at least two‑thirds of the Continuing Directors then in office shall be considered a Continuing Director; or (v) upon a sale of (A) common stock of the Bank if after such sale any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than Valley, an employee benefit plan established or maintained by Valley or a Valley Subsidiary, or an affiliate of Valley or a Valley Subsidiary, owns a majority of the Bank’s common stock or (B) all or substantially all of the Bank’s assets (other than in the ordinary course of business). For purposes of this paragraph: (I) Valley will be deemed to have become a subsidiary of another corporation if any other corporation (which term shall include, in addition to a corporation, a limited liability company,

EXHIBIT 10.AA

partnership, trust, or other organization) owns, directly or indirectly, 50 percent or more of the total combined outstanding voting power of all classes of stock of Valley or any successor to Valley; (II) “Non‑Control Transaction” means a transaction in which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation pursuant to a definitive agreement providing that at least 60% of the directors of the Surviving Corporation immediately after the transaction are persons who were directors of Valley on the day before the first public announcement relating to the transaction; (III) the “Surviving Corporation” in a transaction in which Valley becomes the subsidiary of another corporation is the ultimate parent entity of Valley or Valley’s successor; (IV) the “Surviving Corporation” in any other transaction pursuant to which Valley is merged with or into another corporation is the surviving or resulting corporation in the merger or consolidation; and (V) “Valley Subsidiary” means any corporation in an unbroken chain of corporations, beginning with Valley, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

d.Continuously Employed. “Continuously employed”, as used in Section 9, means continuously employed by the Bank but excludes any period of employment by a bank or financial institution acquired by or merged into the Bank and excludes any period of employment by the Bank if such period is separated from the current employment with the Bank by a break in service (other a break in service resulting solely from illness, disability or family leave).

e.Contract Period. “Contract Period” shall mean the period commencing the day immediately preceding a Change in Control and ending on the earlier of (i) the second anniversary of the Change in Control or (ii) the death of the Executive. For the purpose of this Agreement, a Change in Control shall be deemed to have occurred at the date specified in the definition of Change-in-Control.

f.Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

EXHIBIT 10.AA

g.Good Reason. When used with reference to a voluntary termination by Executive of the Executive’s employment with the Company, “Good Reason” shall mean any of the following, if taken without Executive’s express written consent:

(1) The assignment to Executive of any duties inconsistent with, or the reduction of powers or functions associated with, Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change in Control. A change in title or positions resulting merely from a merger of the Bank or Valley into or with another bank or company which does not downgrade in any way the Executive’s powers, duties and responsibilities shall not meet the requirements of this paragraph;

(2)    A reduction by the Company in Executive’s annual base compensation as in effect immediately prior to a Change in Control or the failure to award Executive annual increases in accordance herewith;

(3)    A failure by the Company to continue any bonus plan in which Executive participated immediately prior to the Change in control or a failure by the Company to continue Executive as a participant in such plan on at least the same basis as Executive participated in such plan prior to the Change in Control;

(4)    The Company’s transfer of Executive to another geographic location more than 35 miles from the Executive’s present office location, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations immediately prior to such Change in Control;

(5)    The failure by the Company to continue in effect any employee benefit plan, program or arrangement (including, without limitation the Company’s retirement plan, benefit equalization plan, life insurance plan, health and accident plan, disability plan, deferred compensation plan or long term stock incentive plan) in which Executive is participating immediately prior to a Change in Control (except that the Company may institute or continue plans, programs or arrangements providing Executive with substantially similar benefits); the taking of any action by the Company which would adversely

EXHIBIT 10.AA

affect Executive’s participation in or materially reduce Executive’s benefits under, any of such plans, programs or arrangements; the failure to continue, or the taking of any action which would deprive Executive, of any material fringe benefit enjoyed by Executive immediately prior to such Change in Control; or the failure by the Company to provide Executive with the number of paid vacation days to which Executive was entitled immediately prior to such Change in Control;

(6)    The failure by the Company to obtain an assumption in writing of the obligations of the Company to perform this Agreement by any successor to the Company and to provide such assumption to the Executive prior to any Change in Control; or

(7)    Any purported termination of Executive’s employment by the Company during the term of this Agreement which is not effected pursuant to all of the requirements of this Agreement; and, for purposes of this Agreement, no such purported termination shall be effective.

h. Pro-rata Bonus Amount. “Pro-rata Bonus Amount”, as used in Section 9, means an amount equal to a “portion” of the highest cash bonus awarded to the Executive in or for the three calendar years immediately prior to the Change in Control, regardless of when paid. The “portion” of such cash bonus shall be a fraction, the numerator of which is the number of calendar months or part thereof which the Executive has worked in the calendar year in which the termination occurs and the denominator of which is 12.

2.    Employment. The Company hereby agrees to employ the Executive, and the Executive hereby accepts employment, during the Contract Period upon the terms and conditions set forth herein.

3.    Position. During the Contract Period the Executive shall be employed by the bank as a Senior Officer, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Company, with substantially the same title and the same duties and responsibilities as before the Change in Control. The Executive shall devote full time and attention to the business of the Company, and shall not during the Contract Period be engaged in any other business

EXHIBIT 10.AA

activity. This paragraph shall not be construed as preventing the Executive from managing any investments which do not require any service on the Executive’s part in the operation of such investments.

4.    Cash Compensation. The Company shall pay to the Executive compensation for services during the Contract Period as follows:

a.Base Salary. A base annual salary equal to the annual salary in effect as of the Change in Control. The annual salary shall be payable in installments in accordance with the Company’s usual payroll method.

b.Annual Bonus. An annual cash bonus equal to at least the average of the cash bonuses awarded to the Executive in the three years prior to the Change in Control (excluding any year for which cash bonuses were prohibited by law or regulation). Subject to any express regulatory requirements, the bonus shall be paid within 45 days of the end of the calendar year for which the bonus is awarded.

c.Annual Review. The Board of Directors during the Contract Period shall review annually, or at more frequent intervals which the Board of Directors determines is appropriate, the Executive’s compensation and shall award the Executive additional compensation to reflect the Executive’s performance, the performance of the Company and competitive compensation levels, all as determined in the discretion of the Board of Directors.

5.    Expenses and Fringe Benefits.

a.Expenses. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by the Executive with respect to the business of the Company in the same manner and to the same extent as such expenses were previously reimbursed to the Executive immediately prior to the Change in Control.

b.Benefit Equalization Plan. During the Contract Period, if the Executive was entitled to benefits under the Company’s Benefit Equalization Plan (“BEP”) prior to the Change in Control,

EXHIBIT 10.AA

the Executive shall be entitled to continued benefits under the BEP after the Change in Control and such BEP may not be modified to reduce or eliminate such benefits during the Contract Period.

c.Club Membership and Automobile. If prior to the Change in Control, the Executive was entitled to membership in a country club and/or the use of an automobile, the Executive shall be entitled to the same membership and/or use of an automobile at least comparable to the automobile provided to the Executive prior to the Change in Control.

d.Other Benefits. The Executive also shall be entitled to vacations and sick days, in accordance with the practices and procedures of the Company, as such existed immediately prior to the Change in Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other benefits enjoyed, from time to time, by senior officers of the Company, all upon terms as favorable as those enjoyed by other senior officers of the Company. Notwithstanding anything in this paragraph 5(d) to the contrary, if the Company adopts any change in the benefits provided for senior officers of the Company, and such policy is uniformly applied to all officers of the Company (and any successor or acquirer of the Company, if any), then no such change shall be deemed to be contrary to this paragraph.

6.    Termination for Cause. The Company shall have the right to terminate the Executive for Cause, upon written notice to the Executive of the termination which notice shall specify the reasons for the termination. In the event of termination for Cause the Executive shall not be entitled to any further benefits under this Agreement.

7.    Disability. During the Contract Period if the Executive becomes permanently disabled, or is unable to perform the duties contemplated hereunder for 4 consecutive months in any 12 month period, the Company may terminate the employment of the Executive. In such event, the Executive shall not be entitled to any further benefits under this Agreement.

8.    Death Benefits. Upon the Executive’s death during the Contract Period, the Executive’s estate shall not be entitled to any further benefits under this Agreement.

EXHIBIT 10.AA

9.    Termination Without Cause or Resignation for Good Reason. The Company may terminate the Executive without Cause during the Contract Period by written notice to the Executive providing four weeks notice. The Executive may resign for Good Reason during the Contract Period upon four weeks’ written notice to the Company specifying facts and circumstances claimed to support the Good Reason. The Executive shall be entitled to give a Notice of Termination that his or her employment is being terminated for Good Reason at any time during the Contract Period, not later than twelve months after any occurrence of an event stated to constitute Good Reason. If the Company terminates the Executive’s employment during the Contract Period without Cause or if the Executive Resigns for Good Reason, the Company shall, subject to section 12 hereof:

a. within 20 business days of the termination of employment pay the Executive a lump sum equal to: (i), if the Executive has been continuously employed by the Bank for less than 6 full years but more than three years, then one (1) year of Base Salary plus a Pro-rata Bonus Amount or (ii), if the Executive has been continuously employed by the Bank for more than 6 full years, then two (2) years of Base Salary plus a Pro-rata Bonus Amount;

b. the Company shall, within 20 business days of the termination of employment with the Company, pay the Executive a lump sum amount equal to one hundred percent (100%) of the premium of the life insurance coverage provided to a similarly situated active employee (based upon the coverage and rates in effect on the date the Executive terminates employment) for the equivalent period of the lump sum severance payment (i.e. one (1) year or two (2) years); and

c. the Company shall, within 20 business days of the termination of employment with the Company, pay the Executive a lump sum amount equal to one hundred twenty-five percent (125%) of (A) the aggregate COBRA premium amounts (based upon COBRA rates then in effect) for the equivalent period of the lump sum payment (i.e. one (1) year or two (2) years) of the medical and dental coverage that was being provided to the Executive (and his spouse) at the time of termination of employment, minus (B)

EXHIBIT 10.AA

the aggregate amount of any employee contribution that would have been required of the Executive (determined as of the termination of employment) for such period.

The Executive shall not have a duty to mitigate the damages suffered by the Executive in connection with the termination by the Company of the Executive’s employment without Cause or a resignation for Good Reason during the Contract Period. If the Company fails to pay the Executive any lump sum amounts due the Executive hereunder, the Executive, after giving 10 days’ written notice to the Company identifying the Company’s failure, shall be entitled to recover from the Company all of the Executive’s reasonable legal fees and expenses incurred in connection with enforcement against the Company of the terms of this Agreement. The Executive shall be denied payment of legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause.

10.    Resignation Without Good Reason. The Executive shall be entitled to resign from the employment of the Company at any time during the Contact Period without Good Reason, but upon such resignation the Executive shall not be entitled to any additional compensation for the time after which the Executive ceases to be employed by the Company, and shall not be entitled to any of the other benefits provided hereunder. No such resignation shall be effective unless in writing with four weeks’ notice thereof.

11.    Non-Disclosure of Confidential Information.

a.    Non-Disclosure of Confidential Information. Except in the course of the Executive’s employment with the Company and in the pursuit of the business of the Company or any of its subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use, any confidential information or proprietary data of the Company or any of its subsidiaries or affiliates. The Executive agrees that, among other things, all information concerning the identity of and the Company’s relations with its customers is confidential information.

b.    Specific Performance. Executive agrees that the Company does not have an adequate remedy at law for the breach of this section and agrees that he or she shall be subject to injunctive

EXHIBIT 10.AA

relief and equitable remedies as a result of the breach of this section. The invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining valid portions.

c. Survival. This section shall survive the termination of the Executive’s employment hereunder and the expiration of this Agreement.

12. Certain Reduction of Payments by the Company.

a. Anything in this Agreement to the contrary notwithstanding, prior to the payment of any lump sum amount payable hereunder, the certified public accountants of the Company immediately prior to a Change of Control (the “Certified Public Accountants”) shall determine as promptly as practical and in any event within 20 business days following the termination of employment of Executive whether any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would more likely than not be nondeductible by the Company for Federal income purposes because of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and if it is then the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are thereinafter referred to as “Agreement Payments”) shall be reduced (but not below zero) to the reduced Amount. For purposes of this paragraph, the “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Company because of said Section 280G of the Code.

b. If under paragraph (a) of this section the Certified Public Accountants determine that any Payment would more likely than not be nondeductible by the Company because of Section 280G of the Code, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Executive may then elect, in the Executive’s sole discretion, which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Agreement Payments equals the Reduced Amount), and shall

EXHIBIT 10.AA

advise the Company in writing of the election within 20 business days of the receipt of notice. If no such election is made by the Executive within such 20-day period, the Company may elect which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the Aggregate present Value of the Agreement Payments equals the Reduced Amount) and shall notify the Executive promptly of such election. For purposes of this paragraph, present Value shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations made by the Certified Public Accountants shall be binding upon the Company and Executive shall be made within 20 business days of a termination of employment of Executive. With the consent of the Executive, the Company may suspend part or all of the lump sum payment due under Section 9 hereof and any other payments due to the Executive hereunder until the Certified Public Accountants finish the determination and the Executive (or the Company, as the case may be) elect how to reduce the Agreement Payments, if necessary. As promptly as practicable following such determination and the elections hereunder, the Company shall pay to or distribute to or for the benefit of Executive such amounts as are then due to Executive under this Agreement and shall promptly pay to or distribute for the benefit of Executive in the future such amounts as become due to Executive under this Agreement.

c. As a result of the uncertainty in the application of Section 280G of the Code, it is possible that Agreement Payments may have been made by the Company which should not have been made (“Overpayment”) or that additional Agreement Payments which will have not been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Certified Public Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive which said Certified Public Accountants believe has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to Executive which Executive shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, however, that no amount shall be payable by Executive to the Company in and for the extent

EXHIBIT 10.AA

such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Certified Public Accountants, based upon controlling precedent, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

13.    Term and Effect Prior to Change in Control.

a. Term. Except as otherwise provided for hereunder, this Agreement shall commence on the date hereof and shall remain in effect for a period of 3 years from the date hereof (the “Initial Term”) or until the end of the Contract Period, whichever is later. The Initial Term shall be automatically extended for an additional one year period on the anniversary date hereof (so that the Initial Term is always 3 years) unless, prior to a Change in Control, the Compensation and Human Resources Committee of the Bank notifies the Executive in writing at any time that the Contract is not so extended, in which case the Initial Term shall end upon the later of (i) 3 years after the date hereof, or (ii) twenty-four months after the date of such written notice.

b. No Effect Prior to Change in Control. This Agreement shall not effect any rights of the Company to terminate the Executive prior to a Change in Control or any rights of the Executive granted in any other agreement or contract or plan with the Company. The rights, duties and benefits provided hereunder shall only become effective upon and after a Change in Control. If the full-time employment of the Executive by the Company is ended for any reason prior to a Change in Control, this Agreement shall thereafter be of no further force and effect.

14. Severance Compensation and Benefits Not in Derogation of Other Benefits. Anything to the contrary herein contained notwithstanding, the payment or obligation to pay any monies, or granting of any benefits, rights or privileges to Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of or

EXHIBIT 10.AA

agreements with the Company, except that if the Executive received any payment hereunder, the Executive shall not be entitled to any payment under the Company’s severance policy for officers and directors.

15.    Delay in Payment. Notwithstanding anything else to the contrary in this Agreement, the BEP, or any other plan, contract, program or otherwise, the Company (and its affiliates) are expressly authorized to delay any scheduled payments under this Agreement, the BEP, and any other plan, contract, program or otherwise, as such payments relate to the Executive, if the Company (or its affiliate) determines that such delay is necessary in order to comply with the requirements of Section 409A of the Internal Revenue Code. No such payment may be delayed beyond the date that is six (6) months following the Executive ’s separation from service (as defined in Section 409A). At the end of such period of delay, the Executive will be paid the delayed payment amounts, plus interest for the period of any such delay. For purposes of the preceding sentence, interest shall be calculated using the six (6) month Treasury Bill rate in effect on the date on which the payment is delayed, and shall be compounded daily. If the conditions of the severance exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) (or any successor Regulation thereto) are satisfied, payment of benefits shall not be delayed for six (6) months following termination of employment to the extent permitted under the severance exception.

16.    Miscellaneous. This Agreement is the joint and several obligation of the Bank and Valley. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey. This Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby, including expressly any prior agreement with the Company concerning change in control benefits. The amendment or termination of this Agreement may be made only in a writing executed by the Company and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company. This Agreement is personal to the Executive and the Executive may not assign any of the Executive’s rights or duties hereunder but this Agreement shall be enforceable by the

EXHIBIT 10.AA

Executive’s legal representatives, executors or administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each have caused this Agreement to be signed by their duly authorized representatives pursuant to the authority of their Boards of Directors, and the Executive has personally executed this Agreement, all as of the day and year first written above.

ATTEST:	VALLEY NATIONAL BANCORP
_________________________	By: ___________________________
Alan D. Escrow, Secretary	Gerald H. Lipkin, Chairman
	and Chief Executive Officer
ATTEST:	VALLEY NATIONAL BANK
_____________________
Alan D. Escrow, Secretary	By: ___________________________
	Gerald H. Lipkin, Chairman
	and Chief Executive Officer
WITNESS:
_________________________	________________________________
	[EMPLOYEE NAME], Executive

EXHIBIT 10.AA

SENIOR VICE PRESIDENT

CHANGE-IN-CONTROL AGREEMENT

[EMPLOYEE NAME]

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”), is made as of this [DAY] day of [MONTH], [YEAR], among VALLEY NATIONAL BANK (“Bank”), a national banking association with its principal office at 1455 Valley Road, Wayne, New Jersey, VALLEY NATIONAL BANCORP (“Valley”), a New Jersey corporation which maintains its principal office at 1455 Valley Road, Wayne, New Jersey (Valley and the Bank collectively are the “Company”) and [EMPLOYEE NAME] (the “Executive”).

BACKGROUND

WHEREAS, the Executive has been continuously employed by the Bank for at least three full years;

WHEREAS, the Boards of Directors of the Bank and Valley (either one, the “Board of Directors” and, together, the “Company Boards”) believe that the future services of the Executive are of great value to the Bank and Valley and that it is important for the growth and development of the Bank that the Executive continue in the Executive’s position;

WHEREAS, if the Company receives any proposal from a third person concerning a possible business combination with, or acquisition of equities securities of, the Company, the Company Boards believe it is imperative that the Company and the Company Boards be able to rely upon the Executive to continue in the Executive’s position, and that they be able to receive and rely upon the Executive’s advice, if they request it, as to the best interests of the Company and its shareholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a proposal;

WHEREAS, to achieve that goal, and to retain the Executive’s services prior to any such activity, the Company Boards and the Executive have agreed to enter into this Agreement to govern the Executive’s termination benefits in the event of a Change in Control of the Company, as hereinafter defined.

EXHIBIT 10.AA

NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of the Executive’s advice and counsel notwithstanding the possibility, threat or occurrence of a bid to take over control of the Company, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive, each intending to be legally bound hereby agree as follows:

1.Definitions

a.Base Salary. “Base Salary”, as used in Section 9 hereof, means the annual cash base salary (excluding any bonus and the value of any fringe benefits) paid to the Executive at the time of the termination of employment unless such amount has been reduced after a Change in Control, in which case such amount shall be the highest base salary in effect during the 18 months prior to the Change in Control.

b.Cause. For purposes of this Agreement “Cause” with respect to the termination by the Company of Executive’s employment shall mean (i) willful and continued failure by the Executive to perform the duties for the Company contemplated under this Agreement after at least one warning in writing from the Board of Directors identifying specifically any such failure; (ii) the willful engaging by the Executive in misconduct which causes material injury to the Company as specified in a written notice to the Executive from the Board of Directors; or (iii) conviction of a crime, other than a traffic violation, habitual drunkenness, drug abuse, or excessive absenteeism other than for illness, after a warning (with respect to drunkenness or absenteeism only) in writing from the Board of Directors to refrain from such behavior. No act or failure to act on the part of the Executive shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.

c.Change in Control. “Change in Control” means any of the following events: (i) when Valley or a Valley Subsidiary acquires actual knowledge that any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliate of Valley or a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates, is or becomes

EXHIBIT 10.AA

the beneficial owner (as defined in Rule 13d‑3 of the Exchange Act) directly or indirectly, of securities of Valley representing more than twenty‑five percent (25%) of the combined voting power of Valley’s then outstanding securities (a “Control Person”); (ii) upon the first purchase of Valley’s common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by Valley, a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates); (iii) the consummation of (A) a transaction, other than a Non‑Control Transaction, pursuant to which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation, (B) a sale or disposition of all or substantially all of Valley’s assets or (C) a plan of liquidation or dissolution of Valley; (iv) if during any period of two (2) consecutive years, individuals (the “Continuing Directors”) who at the beginning of such period constitute the Board of Directors of Valley (the “Valley Board”) cease for any reason to constitute at least 60% thereof or, following a Non‑Control Transaction, 60% of the board of directors of the Surviving Corporation; provided that any individual whose election or nomination for election as a member of the Valley Board (or, following a Non‑Control Transaction, the board of directors of the Surviving Corporation) was approved by a vote of at least two‑thirds of the Continuing Directors then in office shall be considered a Continuing Director; or (v) upon a sale of (A) common stock of the Bank if after such sale any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than Valley, an employee benefit plan established or maintained by Valley or a Valley Subsidiary, or an affiliate of Valley or a Valley Subsidiary, owns a majority of the Bank’s common stock or (B) all or substantially all of the Bank’s assets (other than in the ordinary course of business). For purposes of this paragraph: (I) Valley will be deemed to have become a subsidiary of another corporation if any other corporation (which term shall include, in addition to a corporation, a limited liability company, partnership, trust, or other organization) owns, directly or indirectly, 50 percent or more of the total combined outstanding voting power of all classes of stock of Valley or any successor to Valley; (II) “Non‑Control Transaction” means a transaction in which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation pursuant to a definitive agreement providing that at least 60% of the directors of the Surviving Corporation

EXHIBIT 10.AA

immediately after the transaction are persons who were directors of Valley on the day before the first public announcement relating to the transaction; (III) the “Surviving Corporation” in a transaction in which Valley becomes the subsidiary of another corporation is the ultimate parent entity of Valley or Valley’s successor; (IV) the “Surviving Corporation” in any other transaction pursuant to which Valley is merged with or into another corporation is the surviving or resulting corporation in the merger or consolidation; and (V) “Valley Subsidiary” means any corporation in an unbroken chain of corporations, beginning with Valley, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

d. Continuously Employed. “Continuously employed”, as used in Section 9, means continuously employed by the Bank but excludes any period of employment by a bank or financial institution acquired by or merged into the Bank and excludes any period of employment by the Bank if such period is separated from the current employment with the Bank by a break in service (other a break in service resulting solely from illness, disability or family leave).

e. Contract Period. “Contract Period” shall mean the period commencing the day immediately preceding a Change in Control and ending on the earlier of (i) the first anniversary of the Change in Control or (ii) the death of the Executive. For the purpose of this Agreement, a Change in Control shall be deemed to have occurred at the date specified in the definition of Change-in-Control.

f. Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

g. Good Reason. When used with reference to a voluntary termination by Executive of employment with the Company, “Good Reason” shall mean any of the following, if taken without Executive’s express written consent:

(1) The assignment to Executive of any duties inconsistent with, or the reduction of powers or functions associated with, Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change in Control. A change in title or positions resulting merely from

EXHIBIT 10.AA

a merger of the Bank or Valley into or with another bank or company which does not downgrade in any way the Executive’s powers, duties and responsibilities shall not meet the requirements of this paragraph;

(2)    A reduction by the Company in Executive’s annual base compensation as in effect immediately prior to a Change in Control or the failure to award Executive annual increases in accordance herewith;

(3)    A failure by the Company to continue any bonus plan in which Executive participated immediately prior to the Change in control or a failure by the Company to continue Executive as a participant in such plan on at least the same basis as Executive participated in such plan prior to the Change in Control;

(4)    The Company’s transfer of Executive to another geographic location more than 35 miles from the Executive’s present office location, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations immediately prior to such Change in Control;

(5)    The failure by the Company to continue in effect any employee benefit plan, program or arrangement (including, without limitation the Company’s retirement plan, life insurance plan, health and accident plan, disability plan, or long term stock incentive plan) in which Executive is participating immediately prior to a Change in Control (except that the Company may institute or continue plans, programs or arrangements providing Executive with substantially similar benefits); the taking of any action by the Company which would adversely affect Executive’s participation in or materially reduce Executive’s benefits under, any of such plans, programs or arrangements; the failure to continue, or the taking of any action which would deprive Executive, of any material fringe benefit enjoyed by Executive immediately prior to such Change in Control; or the failure by the Company to provide Executive with the number of paid vacation days to which Executive was entitled immediately prior to such Change in Control;

EXHIBIT 10.AA

(6)    The failure by the Company to obtain an assumption in writing of the obligations of the Company to perform this Agreement by any successor to the Company and to provide such assumption to the Executive prior to any Change in Control; or

(7)    Any purported termination of Executive’s employment by the Company during the term of this Agreement which is not effected pursuant to all of the requirements of this Agreement; and, for purposes of this Agreement, no such purported termination shall be effective.

h. Pro-rata Bonus Amount. “Pro-rata Bonus Amount”, as used in Section 9, means an amount equal to a “portion” of the highest cash bonus awarded to the Executive in or for the three calendar years immediately prior to the Change in Control, regardless of when paid. The “portion” of such cash bonus shall be a fraction, the numerator of which is the number of calendar months or part thereof which the Executive has worked in the calendar year in which the termination occurs and the denominator of which is 12.

2.    Employment. The Company hereby agrees to employ the Executive, and the Executive hereby accepts employment, during the Contract Period upon the terms and conditions set forth herein.

3.    Position. During the Contract Period the Executive shall be employed as a Senior Officer by the bank, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Company, with substantially the same title and the same duties and responsibilities as before the Change in Control. The Executive shall devote full time and attention to the business of the Company, and shall not during the Contract Period be engaged in any other business activity. This paragraph shall not be construed as preventing the Executive from managing any investments which do not require any service on the Executive’s part in the operation of such investments.

4.    Cash Compensation. The Company shall pay to the Executive compensation for services during the Contract Period as follows:

EXHIBIT 10.AA

a.    Base Salary. A base annual salary equal to the annual salary in effect as of the Change in Control. The annual salary shall be payable in installments in accordance with the Company’s usual payroll method.

a.Annual Bonus. An annual cash bonus equal to at least the average of the cash bonuses awarded to the Executive in the three years prior to the Change in Control (excluding any year for which cash bonuses were prohibited by law or regulation). Subject to any express regulatory requirements, the bonus shall be paid within 45 days of the end of the calendar year for which the bonus is awarded.

c. Annual Review. The Board of Directors during the Contract Period shall review annually, or at more frequent intervals which the Board of Directors determines is appropriate, the Executive’s compensation and shall award the Executive additional compensation to reflect the Executive’s performance, the performance of the Company and competitive compensation levels, all as determined in the discretion of the Board of Directors.

5.    Expenses and Fringe Benefits.

a. Expenses. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by the Executive with respect to the business of the Company in the same manner and to the same extent as such expenses were previously reimbursed to the Executive immediately prior to the Change in Control.

b. Other Benefits. The Executive also shall be entitled to vacations and sick days, in accordance with the practices and procedures of the Company, as such existed immediately prior to the Change in Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other benefits enjoyed, from time to time, by senior officers of the Company, all upon terms as favorable as those enjoyed by other senior officers of the Company. Notwithstanding anything in this paragraph 5(b) to the contrary, if the Company adopts any change in the benefits provided for senior officers of the Company, and such policy is uniformly applied to all officers of the Company (and any

EXHIBIT 10.AA

successor or acquiror of the Company, if any), then no such change shall be deemed to be contrary to this paragraph.

6.    Termination for Cause. The Company shall have the right to terminate the Executive for Cause, upon written notice to the Executive of the termination which notice shall specify the reasons for the termination. In the event of termination for Cause the Executive shall not be entitled to any further benefits under this Agreement.

7.    Disability. During the Contract Period if the Executive becomes permanently disabled, or is unable to perform the Executive’s duties hereunder for 4 consecutive months in any 12 month period, the Company may terminate the employment of the Executive. In such event, the Executive shall not be entitled to any further benefits under this Agreement.

8.    Death Benefits. Upon the Executive’s death during the Contract Period, the Executive’s estate shall not be entitled to any further benefits under this Agreement.

9.     Termination Without Cause or Resignation for Good Reason. The Company may terminate the Executive without Cause during the Contract Period by written notice to the Executive providing four weeks notice. The Executive may resign for Good Reason during the Contract Period upon four weeks’ written notice to the Company specifying facts and circumstances claimed to support the Good Reason. The Executive shall be entitled to give a Notice of Termination that his or her employment is being terminated for Good Reason at any time during the Contract Period, not later than twelve months after any occurrence of an event stated to constitute Good Reason. If the Company terminates the Executive’s employment during the Contract Period without Cause or if the Executive Resigns for Good Reason, the Company shall, subject to section 12 hereof:

a. Within 20 business days of the termination of employment pay the Executive a lump sum equal to: (i), if the Executive has been continuously employed by the Bank for less than 6 full years but more than 3 years, then six (6) months of Base Salary plus a Pro-rata Bonus Amount; or (ii), if the

EXHIBIT 10.AA

Executive has been continuously employed by the Bank for 6 full years or more, one (1) year of Base Salary plus a Pro-rata Bonus Amount;

b.     the Company shall, within 20 business days of the termination of employment with the Company, pay the Executive a lump sum amount equal to one hundred percent (100%) of the premium of the life insurance coverage provided to a similarly situated active employee (based upon the coverage and rates in effect on the date the Executive terminates employment) for the equivalent period of the lump sum severance payment (i.e. six (6) months or one (1) year); and

c.    the Company shall, within 20 business days of the termination of employment, pay the Executive a lump sum amount equal to one hundred twenty-five percent (125%) of (A) the aggregate COBRA premium amounts (based upon COBRA rates then in effect) for the equivalent period of the lump sum payment (i.e. six (6) months or one (1) year) of the medical and dental coverage that was being provided to the Executive (and his spouse) at the time of termination of employment with the Company, minus (B) the aggregate amount of any employee contribution that would have been required of the Executive (determined as of the termination of employment) for such period.

The Executive shall not have a duty to mitigate the damages suffered by the Executive in connection with the termination by the Company of the Executive’s employment without Cause or a resignation for Good Reason during the Contract Period. If the Company fails to pay the Executive any lump sum amounts due the Executive hereunder, the Executive, after giving 10 days’ written notice to the Company identifying the Company’s failure, shall be entitled to recover from the Company all of the Executive’s reasonable legal fees and expenses incurred in connection with the enforcement against the Company of the terms of this Agreement. The Executive shall be denied payment of his or her legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause.

10.    Resignation Without Good Reason. The Executive shall be entitled to resign from the employment of the Company at any time during the Contact Period without Good Reason, but upon such resignation the Executive shall not be entitled to any additional compensation for the time after which the

EXHIBIT 10.AA

Executive ceases to be employed by the Company, and shall not be entitled to any of the other benefits provided hereunder. No such resignation shall be effective unless in writing with four weeks’ notice thereof.

11.    Non-Disclosure of Confidential Information.

a.    Non-Disclosure of Confidential Information. Except in the course of the Executive’s employment with the Company and in the pursuit of the business of the Company or any of its subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use, any confidential information or proprietary data of the Company or any of its subsidiaries or affiliates. The Executive agrees that, among other things, all information concerning the identity of and the Company’s relations with its customers is confidential information.

b.    Specific Performance. Executive agrees that the Company does not have an adequate remedy at law for the breach of this section and agrees that the Executive shall be subject to injunctive relief and equitable remedies as a result of the breach of this section. The invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining valid portions.

c. Survival. This section shall survive the termination of the Executive’s employment hereunder and the expiration of this Agreement.

12. Certain Reduction of Payments by the Company.

a. Anything in this Agreement to the contrary notwithstanding, prior to the payment of any lump sum amount payable hereunder, the certified public accountants of the Company immediately prior to a Change of Control (the “Certified Public Accountants) shall determine as promptly as practical and in any event within 20 business days following the termination of employment of Executive whether any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would more likely than not be nondeductible by the Company for Federal income purposes because of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and if it is then the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such

EXHIBIT 10.AA

payments or distributions pursuant to this Agreement are thereinafter referred to as “Agreement Payments”) shall be reduced (but not below zero) to the reduced Amount. For purposes of this paragraph, the “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Company because of said Section 280G of the Code.

b. If under paragraph (a) of this section the Certified Public Accountants determine that any Payment would more likely than not be nondeductible by the Company because of Section 280G of the Code, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Executive may then elect, in the Executive’s sole discretion, which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Agreement Payments equals the Reduced Amount), and shall advise the Company in writing of his or her election within 20 business days of the receipt of notice. If no such election is made by the Executive within such 20-day period, the Company may elect which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the Aggregate present Value of the Agreement Payments equals the Reduced Amount) and shall notify the Executive promptly of such election. For purposes of this paragraph, present Value shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations made by the Certified Public Accountants shall be binding upon the Company and Executive shall be made within 20 business days of a termination of employment of Executive. With the consent of the Executive, the Company may suspend part or all of the lump sum payment due under Section 9 hereof and any other payments due to the Executive hereunder until the Certified Public Accountants finish the determination and the Executive (or the Company, as the case may be) elect how to reduce the Agreement Payments, if necessary. As promptly as practicable following such determination and the elections hereunder, the Company shall pay to or distribute to or for the benefit of Executive such amounts as are then due to Executive under this Agreement and shall promptly pay to or

EXHIBIT 10.AA

distribute for the benefit of Executive in the future such amounts as become due to Executive under this Agreement.

c. As a result of the uncertainty in the application of Section 280G of the Code, it is possible that Agreement Payments may have been made by the Company which should not have been made (“Overpayment”) or that additional Agreement Payments which will have not been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Certified Public Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive which said Certified Public Accountants believe has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to Executive which Executive shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, however, that no amount shall be payable by Executive to the Company in and for the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Certified Public Accountants, based upon controlling precedent, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

13.    Term and Effect Prior to Change in Control.

a. Term. Except as otherwise provided for hereunder, this Agreement shall commence on the date hereof and shall remain in effect for a period of 3 years from the date hereof (the “Initial Term”) or until the end of the Contract Period, whichever is later. The Initial Term shall be automatically extended for an additional one year period on the anniversary date hereof (so that the Initial Term is always 3 years) unless, prior to a Change in Control, the Compensation and Human Resources Committee of the Bank notifies the Executive in writing at any time that the Contract is not so extended, in which case the Initial Term shall end upon the later of (i) 3 years after the date hereof, or (ii) nine months after the date of such written notice.

EXHIBIT 10.AA

b. No Effect Prior to Change in Control. This Agreement shall not effect any rights of the Company to terminate the Executive prior to a Change in Control or any rights of the Executive granted in any other agreement or contract or plan with the Company. The rights, duties and benefits provided hereunder shall only become effective upon and after a Change in Control. If the full-time employment of the Executive by the Company is ended for any reason prior to a Change in Control, this Agreement shall thereafter be of no further force and effect.

14. Severance Compensation and Benefits Not in Derogation of Other Benefits. Anything to the contrary herein contained notwithstanding, the payment or obligation to pay any monies, or granting of any benefits, rights or privileges to Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of or agreements with the Company, except that if the Executive received any payment hereunder, the Executive shall not be entitled to any payment under the Company’s severance policy for officers and directors.

15.    Delay in Payment. Notwithstanding anything else to the contrary in this Agreement, the BEP, or any other plan, contract, program or otherwise, the Company (and its affiliates) are expressly authorized to delay any scheduled payments under this Agreement, the BEP, and any other plan, contract, program or otherwise, as such payments relate to the Executive, if the Company (or its affiliate) determines that such delay is necessary in order to comply with the requirements of Section 409A of the Internal Revenue Code. No such payment may be delayed beyond the date that is six (6) months following the Executive’s separation from service (as defined in Section 409A). At the end of such period of delay, the Executive will be paid the delayed payment amounts, plus interest for the period of any such delay. For purposes of the preceding sentence, interest shall be calculated using the six (6) month Treasury Bill rate in effect on the date on which the payment is delayed, and shall be compounded daily. If the conditions of the severance exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) (or any successor Regulation thereto) are satisfied, payment of benefits shall not be delayed for six (6) months following termination of employment to the extent permitted under the severance exception.

EXHIBIT 10.AA

16.    Miscellaneous. This Agreement is the joint and several obligation of the Bank and Valley. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey. This Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby, including expressly any prior agreement with the Company concerning change in control benefits. The amendment or termination of this Agreement may be made only in a writing executed by the Company and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company. This Agreement is personal to the Executive and the Executive may not assign any of the Executive’s rights or duties hereunder but this Agreement shall be enforceable by the Executive’s legal representatives, executors or administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

EXHIBIT 10.AA

IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each have caused this Agreement to be signed by their duly authorized representatives pursuant to the authority of their Boards of Directors, and the Executive has personally executed this Agreement, all as of the day and year first written above.

ATTEST:	VALLEY NATIONAL BANCORP
_________________________	By: ___________________________
Alan D. Escrow, Secretary	Gerald H. Lipkin, Chairman
	and Chief Executive Officer
ATTEST:	VALLEY NATIONAL BANK
_____________________
Alan D. Escrow, Secretary	By: ___________________________
	Gerald H. Lipkin, Chairman
	and Chief Executive Officer
WITNESS:
_________________________	________________________________
	[EMPLOYEE NAME], Executive

EX-10.DD

EXHIBIT 10.DD

VALLEY NATIONAL BANK

1455 Valley Road

Wayne, NJ 07470

January 3, 2017

Mr. Ronald H. Janis

Senior Executive Vice President and General Counsel

Valley National Bancorp

Valley National Bank

1455 Valley Road

Wayne, New Jersey 07470

Dear Mr. Janis:

The Compensation and Human Resources Committee of the Board of Directors of Valley National Bancorp (“Bancorp”) and Valley National Bank (the “Bank”) (collectively, the “Company”) have determined that it is in the best interests of the Bancorp and the Bank for the Company to agree to provide you with certain limited severance rights as provided herein.

The Board recognizes that your employment by the Company without any severance agreement, other than your Change in Control Agreement dated the date hereof (“Change in Control Agreement”), creates tensions which may cause you to seek opportunities elsewhere or affect your views of your present compensation. These arrangements are being made to alleviate, in part, those concerns.

In view of the foregoing, in consideration of your employment with the Company and your consent to this letter, the Company agrees:

1.    If the Company elects to terminate you as a Senior Executive Vice President and General Counsel of Valley National Bancorp and/or Valley National Bank (or such office as you shall then hold), the Company will pay you a lump sum severance benefit equal to 24 months of your annual base salary plus an amount equal to the sum of (i) one times your most recent annual cash bonus and (ii) a fraction of your most recent annual cash bonus, with the numerator of the fraction being the number of months that has elapsed in the current calendar year prior to your termination date and the denominator of which is 12. The Company will pay you such amount within 5 business days following the date that the Release described in Paragraph 3 is effective and irrevocable. This severance benefit will not be paid if the Company terminates you for “Cause”. “Cause” means (i) willful and continued failure by the Executive to perform his duties for the Company after at least one warning in writing from the Company’s Board of Directors identifying specifically any such failure; (ii) the willful engaging by the Executive in misconduct which causes material injury to the Company as specified in a written notice to the Executive from the Board of Directors; or (iii) conviction of a crime, other than a traffic violation, habitual drunkenness, drug abuse, or excessive absenteeism other than for illness, after a warning (with respect to drunkenness or absenteeism only) in writing from the Board of Directors to refrain from such behavior. No act or failure to act on the part of the Executive shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company. No severance benefits will be paid

EXHIBIT 10.DD

under paragraphs 1 and 2 hereof in the event you are paid a severance benefit pursuant to your Change in Control Agreement.

2.     If you are terminated other than for Cause, the Company shall pay you (or your estate in the case of death) a lump sum amount equal to one hundred twenty-five percent (125%), less applicable withholdings, of (A) the aggregate COBRA premium amounts (based upon COBRA rates in effect at date of termination) for three (3) years of the health, hospitalization and medical insurance coverage that was being provided to you (and your spouse) at the time of termination of employment, minus (B) the aggregate amount of any employee contributions that would have been required of you (determined as of the termination of employment) for such three (3) year period. The Company also shall pay you a lump sum amount equal to one hundred twenty-five percent (125%), less applicable withholdings, of the Company’s share of the premium for three (3) years of the life insurance coverage provided to a similarly situated active employee (based upon the coverage and group rates in effect on the date of termination of employment). The Company will pay you such amounts within 5 business days following the date that the Release described in Paragraph 3 is effective and irrevocable.

3.    Notwithstanding anything else to the contrary in this letter agreement, the Company may delay payment of benefits provided in Sections 1 and 2 herein for six (6) months following your termination from employment to the extent necessary to comply with Section 409A of the Internal Revenue Code. At the end of such period of delay, you will be paid the delayed payment amounts, plus interest for the period of any such delay. For purposes of the preceding sentence, interest shall be calculated using the six (6) month Treasury Bill rate in effect on the date on which the payment is delayed, and shall be compounded daily. If the conditions of the severance exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) or the short-term deferral rate under Treasury Regulation 1.409A-1(b)(4) (or any successor Regulations thereto) are satisfied, payment of benefits shall not be delayed for six (6) months following termination of employment to the extent permitted under the severance exceptions.

Notwithstanding anything else to the contrary in this letter agreement, .payments and benefits provided under Sections 1 and 2 herein are subject to required federal, state and local tax withholding requirements, theexecution by you of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a reasonable form to be provided by the Company (the “Release”) and such Release becoming effective and irrevocable in accordance with applicable law. The Release will include your resignation from all other positions with the Company.

As partial consideration for the Company entering into this letter agreement, you agree as follows:

4.     Following the termination of your employment with the Company for any reason, you shall retain in confidence any confidential information known to you concerning the Company and its business.

5.     While you are employed by the Company and for a period of one year thereafter, you will not, without the prior written approval of the Board of Directors of Bancorp, directly or indirectly, as officer, director, employee, five (5) percent shareholder, principal or agent, or in any other capacity, own, manage, operate, consult with or be employed by any insured depository institution which transacts business in the States of New Jersey, New York or Florida if such insured depository institution employs or utilizes you in any capacity to solicit the Company’s loan, trust, deposit customers, or other customers of the Company, or employees of the Company. This paragraph shall have no force or effect after the occurrence of a Change in Control, as such term is defined in your Change in Control Agreement.

You agree that the Company has no adequate remedy at law for the violation of paragraphs 4 and 5 and that the Company shall be entitled to injunctive relief to enforce such provisions.

EXHIBIT 10.DD

Both parties mutually agree as follows:

6.    In the event the Company fails to pay to you or your spouse any of the benefits provided herein for a period in excess of ten (10) business days after a written request to do so, you (or your spouse) shall be entitled to be paid or reimbursed by the Company for the legal fees and expenses incurred by you (or your spouse) in enforcing or interpreting the provisions of this letter agreement. The Company hereby agrees to pay or reimburse you for such fees and expenses on a monthly basis, upon your submission of bills or requests for payment. A court shall be entitled to deny you your legal fees and expenses only if it finds you made a claim for benefits hereunder not in good faith and without reasonable cause.

7.    This letter agreement shall commence on the date hereof and expire on January 1, 2019 (January 1, 2019 is referred to hereafter as the “Expiration Date”). On January 1 of each year starting January 1, 2018, the Expiration Date shall be automatically extended for an additional one (1) year period (so this letter agreement remains a two (2) year contract) unless you or Bancorp otherwise elect and so notify the other party in writing 60 calendar days prior to January 1 of any year starting with January 1, 2018, in which case this letter agreement shall terminate on the then existing Expiration Date. The payments required under Sections 1 and 2 shall not be applicable if you voluntarily retire from the Company and any outstanding stock awards are vested in connection with that retirement or after you reach age 75.

8.    This letter agreement shall be of no further force and effect following the occurrence of a “Change in Control” as such term is defined in your Change in Control Agreement and after the occurrence of a Change in Control your employment and severance benefits shall be governed only by your Change in Control Agreement.

9.    This letter agreement shall be binding upon and inure to the benefit of you, your estate and the Company, and any successor to the Company. Neither this letter agreement nor any rights arising hereunder may be assigned or pledged by you. This letter agreement may be amended, supplemented or changed at any time only by a writing signed by Bancorp and yourself. This letter agreement constitutes the entire agreement between the Company and you with respect to the matters covered hereby and replaces any prior agreements or understandings (whether written or unwritten) with respect to such matters. In the event your services are terminated and you are entitled to payments, you shall not be obligated to mitigate your damages and the Company may not offset amounts due to you hereunder. However, in the event you breach the non-compete contained in paragraph 5 hereof during any period when it is effective, the Company shall not thereafter be obligated to provide you with any benefits hereunder and you shall not be entitled to be paid your legal fees or expenses as provided in paragraph 6 hereof.

EXHIBIT 10.DD

If you are in agreement with the foregoing, please so indicate by signing and returning to the Company the enclosed copy of this letter, whereupon this letter shall constitute an agreement between you and the Company.

Very truly yours,

	VALLEY NATIONAL BANCORP
	By: ___________________________
AGREED AND ACCEPTED:	Gerald Korde, Chairman,
	Compensation and Human Resources
	Committee
_____________________	VALLEY NATIONAL BANK
Ronald H. Janis
	By: ___________________________
	Gerald Korde, Chairman,
	Compensation and Human Resources
	Committee

EX-10.EE

EXHIBIT 10.EE

CHANGE-IN-CONTROL AGREEMENT

RONALD H. JANIS

THIS CHANGE-IN-CONTROL AGREEMENT (this “Agreement”), is made as of this 3^rd day of January, 2017, among VALLEY NATIONAL BANK (“Bank”), a national banking association with its principal office at 1455 Valley Road, Wayne, New Jersey, VALLEY NATIONAL BANCORP (“Valley”), a New Jersey corporation which maintains its principal office at 1455 Valley Road, Wayne, New Jersey (Valley and the Bank collectively are the “Company”) and RONALD H. JANIS (the “Executive”).

BACKGROUND

WHEREAS, the Boards of Directors of the Bank and Valley (either one, the Board of Directors” and together, the Boards) believe that the future services of the Executive are of great value to the Bank and Valley;

WHEREAS, if the Company receives any proposal from a third person concerning a possible business combination with, or acquisition of equities securities of, the Company, the Boards believe it is imperative that the Company and the Boards be able to rely upon the Executive to continue in the Executive’s position, and that they be able to receive and rely upon the Executive’s advice, if they request it, as to the best interests of the Company and its shareholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a proposal;

WHEREAS, to achieve that goal, and to retain the Executive’s services prior to any such activity, the Compensation Committee of the Boards has approved entering into this Agreement to govern the Executive’s employment terms and termination benefits in the event of and for a period of time after a Change-in-Control of the Company, as hereinafter defined;

NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of the Executive’s advice and counsel notwithstanding the possibility, threat or occurrence of an acquisition or bid to take over control of the Company, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive, each intending to be legally bound hereby agree as follows:

1.Definitions.

a.Cause. For purposes of this Agreement “Cause” with respect to the termination by the Company of Executive’s employment shall mean (i) willful and continued failure by the Executive to perform the Executive’s duties for the Company under this Agreement after at least one warning in writing from the Board of Directors identifying specifically any such

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failure; (ii) the willful engaging by the Executive in misconduct which causes material injury to the Company as specified in a written notice to the Executive from the Board of Directors; or (iii) conviction of a crime (other than a traffic violation), habitual drunkenness, drug abuse, or excessive absenteeism other than for illness, after a warning (required with respect to drunkenness or absenteeism only) in writing from the Board of Directors to refrain from such behavior. No act or failure to act on the part of the Executive shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.

b.Change-in-Control. “Change-in-Control” means any of the following events: (i) when Valley or a Valley Subsidiary acquires actual knowledge that any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act), other than an affiliate of Valley or a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates, is or becomes the beneficial owner (as defined in Rule 13d‑3 of the Exchange Act) directly or indirectly, of securities of Valley representing more than twenty‑five percent (25%) of the combined voting power of Valley’s then outstanding securities (a “Control Person”); (ii) upon the first purchase of Valley’s common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by Valley, a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates); (iii) the consummation of (A) a transaction, other than a Non‑Control Transaction, pursuant to which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation, (B) a sale or disposition of all or substantially all of Valley’s assets or (C) a plan of liquidation or dissolution of Valley; (iv) if during any period of two (2) consecutive years, individuals (the “Continuing Directors”) who at the beginning of such period constitute the Board of Directors of Valley (the “Valley Board”) cease for any reason to constitute at least 60% thereof or, following a Non‑Control Transaction, 60% of the board of directors of the Surviving Corporation; provided that any individual whose election or nomination for election as a member of the Valley Board (or, following a Non‑Control Transaction, the board of directors of the Surviving Corporation) was approved by a vote of at least two‑thirds of the Continuing Directors then in office shall be considered a Continuing Director; or (v) upon a sale of (A) common stock of the Bank if after such sale any person other than Valley, an employee benefit plan established or maintained by Valley or a Valley Subsidiary, or an affiliate of Valley or a Valley Subsidiary, owns a majority of the Bank’s common stock or (B) all or substantially all of the Bank’s assets (other than in the ordinary course of business). For purposes of this paragraph: (I) Valley will be deemed to have become a subsidiary of another corporation if any other corporation (which term shall include, in addition to a corporation, a limited liability company, partnership, trust, or other organization) owns, directly or indirectly, 50 percent or more of the total combined outstanding voting power of all classes of stock of Valley or any successor to Valley; (II) “Non‑Control Transaction” means a transaction in which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation pursuant to a definitive agreement providing

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that at least 60% of the directors of the Surviving Corporation immediately after the transaction are individuals who were directors of Valley on the day before the first public announcement relating to the transaction; (III) the “Surviving Corporation” in a transaction in which Valley becomes the subsidiary of another corporation is the ultimate parent entity of Valley or Valley’s successor; (IV) the “Surviving Corporation” in any other transaction pursuant to which Valley is merged with or into another corporation is the surviving or resulting corporation in the merger or consolidation; and (V) “Valley Subsidiary” means any corporation in an unbroken chain of corporations, beginning with Valley, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

c.Contract Period. “Contract Period” shall mean the period commencing the day immediately preceding a Change-in-Control and ending on the earlier of (i) the third anniversary of the Change-in-Control or (ii) the death of the Executive. For the purpose of this Agreement, a Change-in-Control shall be deemed to have occurred at the date specified in the definition of Change-in-Control.

d.Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

e.Good Reason. When used with reference to a voluntary termination by Executive of the Executive’s employment with the Company, “Good Reason” shall mean any of the following, if taken without Executive’s express written consent:

(1)The assignment to Executive of any duties inconsistent with, or the reduction of powers or functions associated with, Executive’s position, title, duties, responsibilities and status with the Company immediately prior to a Change-in-Control; any removal of Executive from, or any failure to re-elect Executive to any positions(s) or offices(s) Executive held immediately prior to such Change-in-Control;

(2)A reduction by the Company in Executive’s annual base compensation as in effect immediately prior to a Change-in-Control or the failure to award Executive annual increases in accordance herewith;

(3)A failure by the Company to continue any bonus plan in which Executive participated immediately prior to the Change-in-Control (except that the Company may institute plans, programs or arrangements providing the Executive substantially similar benefits) or a failure by the Company to continue Executive as a participant in such plan on at least the same basis as Executive participated in such plan prior to the Change-in-Control; or a failure to pay the Executive the bonus provided for in Section 4.b hereof at the time and in the manner therein specified;

EXHIBIT 10.EE

(4)The Company’s requiring the office of Executive to be at geographic location outside of Manhattan, New York, or more than 10 miles from the Executive’s present New York City office location, except for required occasional travel on the Company’s business to an extent consistent with Executive’s business travel obligations immediately prior to such Change-in-Control;

(5)The failure by the Company to continue in effect any employee benefit plan, program or arrangement (including, without limitation the Company’s retirement plan, benefit equalization plan, life insurance plan, health and accident plan, disability plan, deferred compensation plan or long term stock incentive plan) in which Executive is participating immediately prior to a Change-in-Control (except that the Company may institute or continue plans, programs or arrangements providing Executive with substantially similar benefits); the taking of any action by the Company which would adversely affect Executive’s participation in or materially reduce Executive’s benefits under, any of such plans, programs or arrangements; the failure to continue, or the taking of any action which would deprive Executive, of any material fringe benefit enjoyed by Executive immediately prior to such Change-in-Control; or the failure by the Company to provide Executive with the number of paid vacation days to which Executive was entitled immediately prior to such Change-in-Control;

(6)The failure by the Company to obtain an assumption in writing of the obligations of the Company to perform this Agreement by any successor to the Company and to provide such assumption to the Executive prior to any Change-in-Control; or

(7)Any purported termination of Executive’s employment by the Company during the term of this Agreement which is not effected pursuant to all of the requirements of this Agreement; and, for purposes of this Agreement, no such purported termination shall be effective.

2.Employment. The Company hereby agrees to employ the Executive, and the Executive hereby accepts employment, during the Contract Period upon the terms and conditions set forth herein.

3.Position. During the Contract Period the Executive shall be employed by the Company in the position the Executive held with the Company prior to the Change-in-Control, or with such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Company, with the same title and the same duties and responsibilities as before the Change-in-Control. The Executive shall devote full time and attention to the business of the Company, and shall not during the Contract Period be engaged in any other business activity. This paragraph shall not be construed

EXHIBIT 10.EE

as preventing the Executive from managing any investments which do not require any service on the Executive’s part in the operation of such investments or from continuing to serve on any boards of directors or trustees which he served prior to the Change-in-Control or for which consent is provided after a Change-in-Control.

4.Cash Compensation. The Company shall pay to the Executive compensation for services during the Contract Period as follows:

a.Base Salary. A base annual salary equal to the annual salary in effect as of the Change-in-Control. The annual salary shall be payable in installments in accordance with the Company’s usual payroll method.

b.Annual Bonus. An annual cash bonus equal to the average of the cash bonuses awarded to the Executive in the three years prior to the Change-in-Control (excluding any year for which cash bonuses were prohibited by law or regulation and excluding any year prior to the 2014 performance year, although that may require only a two year average). Subject to any express regulatory requirements, the bonus shall be paid within 45 days of the end of the calendar year for which the bonus is awarded.

c.Annual Review. The Board of Directors during the Contract Period shall review annually, or at more frequent intervals which the Board of Directors determines is appropriate, the Executive’s compensation and shall award the Executive additional compensation to reflect the Executive’s performance, the performance of the Company and competitive compensation levels, all as determined in the discretion of the Board of Directors.

5.        Expenses and Fringe Benefits.

a.Expenses. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by the Executive with respect to the business of the Company in the same manner and to the same extent as such expenses were previously reimbursed to the Executive immediately prior to the Change-in-Control.

b.Benefit Equalization Plan. During the Contract Period, if the Executive was entitled to benefits under the Company’s Benefit Equalization Plan (“BEP”) prior to the Change-in-Control, the Executive shall be entitled to continued benefits under the BEP after the Change-in-Control and such BEP may not be modified or terminated to reduce or eliminate such benefits during the Contract Period.

c.Club Membership and Automobile. If prior to the Change-in-Control, the Executive was entitled to membership in a country club and/or the use of an automobile, during the Contract Period, the Executive shall be entitled to the

EXHIBIT 10.EE

same membership and/or use of an automobile at least comparable to the automobile provided to the Executive prior to the Change-in-Control.

d.Other Benefits. During the Contract Period, the Executive also shall be entitled to vacations and sick days, in accordance with the practices and procedures of the Company, as such existed immediately prior to the Change-in-Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other benefits enjoyed, from time to time, by senior officers of the Company, all upon terms as favorable as those enjoyed by other senior officers of the Company. Notwithstanding anything in this paragraph 5(d) to the contrary, if the Company adopts any change in the benefits provided for senior officers of the Company, and such policy is uniformly applied to all officers of the Company (and any successor or acquirer of the Company, if any) including the chief executive officer of such entities, then no such change shall be deemed to be contrary to this paragraph.

6.    Termination for Cause. During the Contract Period, the Company shall have the right to terminate the Executive for Cause, upon written notice to the Executive of the termination which notice shall specify the reasons for the termination. In the event of termination for Cause the Executive shall be entitled to any compensation or benefits earned through the date of termination but shall not be entitled to any further compensation or benefits under this Agreement.

7.    Disability. During the Contract Period if the Executive becomes permanently disabled, or is unable to perform the duties hereunder for 4 consecutive months, the Company may terminate the employment of the Executive. In such event, the Executive shall be entitled to any compensation or benefits earned through the date of such termination plus a lump sum payable within ten business days of termination of employment equal to one twelfth of the Executive’s highest annual salary (including any 401(k) plan deferral) paid in any of the three calendar years immediately prior to the Change-in-Control but the Executive shall not be entitled to any further compensation or benefits under this Agreement.

8.    Death Benefits. Upon the Executive’s death during the Contract Period, the Executive’s estate shall be entitled to any compensation or benefits earned through the date of death plus a lump sum payable within thirty business days of the date of death equal to one twelfth of the Executive’s highest annual salary (including any 401(k) plan deferral) paid in any of the three calendar years immediately prior to the Change-in-Control but the Executive shall not be entitled to any further compensation or benefits under this Agreement.

9.    Termination Without Cause or Resignation for Good Reason. The Company may terminate the Executive without Cause during the Contract Period by written notice to the Executive providing four weeks notice. The Executive may resign for

EXHIBIT 10.EE

Good Reason during the Contract Period upon four weeks’ written notice to the Company specifying facts and circumstances claimed to support the Good Reason. The Executive shall be entitled to give a Notice of Termination that his or her employment is being terminated for Good Reason at any time during the Contract Period, not later than twelve months after any occurrence of an event stated to constitute Good Reason. If the Company terminates the Executive’s employment during the Contract Period without Cause or if the Executive Resigns for Good Reason during the Contract Period, the Company shall, subject to section 12 hereof:

a.within 20 business days of the termination of employment, pay the Executive a lump sum severance payment equal to three (3) times the Executive’s highest annual compensation paid during or for a calendar year, in any of the three calendar years immediately prior to the Change-in-Control, where annual compensation means (i) salary paid during a calendar year (including any 401(k) plan deferral) plus (ii) cash bonuses awarded to the Executive for such calendar year, regardless of when paid.

b.within 20 business days of the termination of employment, pay the Executive in an amount equal to three (3) times one hundred percent (100%) of the premium of the life insurance coverage provided to a similarly situated active employee (based upon the coverage and rates in effect on the date the Executive terminates employment); and

c.within 20 business days of the termination of employment, pay the Executive a lump sum amount equal three (3) times one hundred twenty-five percent (125%) of (A) the aggregate annual COBRA premium amounts (based upon COBRA rates then in effect) and annual dental coverage premium amounts, reflecting what was being provided to the Executive (and his spouse and family) at the time of termination of employment, minus (B) the aggregate annual amount of any employee contribution that would have been required of the Executive (determined as of the termination of employment).

The Executive shall not have a duty to mitigate the damages suffered by the Executive in connection with the termination by the Company of the Executive’s employment without Cause or a resignation for Good Reason during the Contract Period. If the Company fails to pay the Executive any lump sum amounts or other benefits due the Executive hereunder, the Executive, after giving 10 days’ written notice to the Company identifying the Company’s failure, shall be entitled to recover from the Company on a monthly basis as incurred all of the Executive’s reasonable legal fees and expenses incurred in connection with enforcement against the Company of the terms of this Agreement. The Executive shall be denied payment of legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause and not in good faith.

EXHIBIT 10.EE

10.    Resignation Without Good Reason. The Executive shall be entitled to resign from the employment of the Company at any time during the Contact Period without Good Reason, but upon such resignation the Executive shall not be entitled to any additional compensation for the time after which the Executive ceases to be employed by the Company, and shall not be entitled to any of the other benefits provided hereunder. No such resignation shall be effective unless in writing with four weeks’ notice thereof.

11.    Non-Disclosure of Confidential Information.

a.Non-Disclosure of Confidential Information. Except in the course of the Executive’s employment with the Company and in the pursuit of the business of the Company or any of its subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use, any confidential information or proprietary data of the Company or any of its subsidiaries or affiliates. The Executive agrees that, among other things, all information concerning the identity of and the Company’s relations with its customers is confidential information.

b.Specific Performance. Executive agrees that the Company does not have an adequate remedy at law for the breach of this section and agrees that he shall be subject to injunctive relief and equitable remedies as a result of the breach of this section. The invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining valid portions. No alleged breach or breach of this Section 11 shall give the Company the right to withhold or offset against any payments or benefits due the Executive under this Agreement.

c.Survival. This section shall survive the termination of the Executive’s employment hereunder and the expiration of this Agreement.

12.     Certain Reduction of Payments by the Company.

a.     Cutback. Anything in this Agreement to the contrary notwithstanding, prior to the payment of any lump sum amount payable hereunder, the certified public accountants of the Company immediately prior to a Change of Control (the “Certified Public Accountants”) shall determine as promptly as practical and in any event within 20 business days following the termination of employment of Executive whether any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would more likely than not be nondeductible by the Company for Federal income purposes because of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and if it is then the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are

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thereinafter referred to as “Agreement Payments”) shall be reduced (but not below zero) to the reduced Amount. For purposes of this paragraph, the “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Company because of said Section 280G of the Code.

b.     Notice and Choice of Cutback. If under paragraph (a) of this section the Certified Public Accountants determine that any Payment would more likely than not be nondeductible by the Company because of Section 280G of the Code, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Executive may then elect, in the Executive’s sole discretion, which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Agreement Payments equals the Reduced Amount), and shall advise the Company in writing of the election within 20 business days of the receipt of notice. If no such election is made by the Executive within such 20-day period, the Company may elect which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the Aggregate present Value of the Agreement Payments equals the Reduced Amount) and shall notify the Executive promptly of such election. For purposes of this paragraph, present Value shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations made by the Certified Public Accountants shall be binding upon the Company and Executive shall be made within 20 business days of a termination of employment of Executive. With the consent of the Executive, the Company may suspend part or all of the lump sum payment due under Section 9 hereof and any other payments due to the Executive hereunder until the Certified Public Accountants finish the determination and the Executive (or the Company, as the case may be) elect how to reduce the Agreement Payments, if necessary. As promptly as practicable following such determination and the elections hereunder, the Company shall pay to or distribute to or for the benefit of Executive such amounts as are then due to Executive under this Agreement and shall promptly pay to or distribute for the benefit of Executive in the future such amounts as become due to Executive under this Agreement.

c.     Correction for Overpayment. As a result of the uncertainty in the application of Section 280G of the Code, it is possible that Agreement Payments may have been made by the Company which should not have been made (“Overpayment”) or that additional Agreement Payments which will have not been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Certified Public Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive which said Certified Public Accountants believe has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to Executive which Executive shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, however, that no amount

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shall be payable by Executive to the Company in and for the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Certified Public Accountants, based upon controlling precedent, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

13.    Term and Effect Prior to Change-in-Control.

a.Term. Except as otherwise provided in section b below, this Agreement shall commence on the date hereof and shall remain in effect for a period of 3 years from the date hereof (the “Term”) or until the end of the Contract Period, whichever is later. The Term shall be automatically extended for an additional one year period on the anniversary date hereof (so that the Term is always 3 years) unless, prior to a Change-in-Control, the Personnel and Compensation Committee of Valley notifies the Executive in writing that the Contract is not so extended, in which case the Term shall end at the expiration of then current 3 year Term.

b.No Effect Prior to Change-in-Control. This Agreement shall not effect any rights of the Company to terminate the Executive prior to a Change-in-Control or any rights of the Executive granted in any other agreement or contract or plan with the Company. The rights, duties and benefits provided hereunder shall only become effective upon and after a Change-in-Control. If the full-time employment of the Executive by the Company is ended for any reason prior to a Change-in-Control, this Agreement shall thereafter be of no further force and effect.

14.    Severance Compensation and Benefits Not in Derogation of Other Benefits. Anything to the contrary herein contained notwithstanding, the payment or obligation to pay any monies, or granting of any benefits, rights or privileges to Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of or agreements with the Company, except that as long as the Executive receives the lump sum payments due under Section 9 hereunder, the Executive shall not be entitled to any other severance payments under the Company’s severance policy for officers and employees or under the Executive’s letter agreement providing for severance, dated the date hereof.

15.    Notice. During the Contract Period, any notice of termination of the employment of the Executive by the Company or by the Executive to the Company shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a dated notice which shall (i) indicate the specific termination provision in this Agreement relied upon; (ii) set forth, if necessary, in reasonable detail the facts and circumstances claimed to

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provide a basis for termination of the employment of the Executive or from the Company under the provision so indicated; (iii) specify a date of termination, which shall be not less than two weeks nor more than six weeks after such Notice of Termination is given, except in the case of termination of employment by the Company of the Executive for Cause pursuant to Section 6 hereof, in which case the Notice of Termination may specify a date of termination as of the date such Notice of Termination is given; and (iv) be given by personal delivery or, if the individual is not personally available, by certified mail to the last known address of the individual. Upon the death of the Executive, no Notice of Termination need be given.

16.    Payroll and Withholding Taxes. All payments to be made or benefits to be provided hereunder by the Company shall be subject to applicable federal and state payroll or withholding taxes, including if applicable the Excise Tax.

17.    Section 409A Compliance. This Agreement is intended to be compliant with, or exempt from, the requirements of Section 409A of the Internal Revenue Code (“Section 409A”), taking into account the severance pay exception and the short term deferral rules that are applicable under 409A, and it shall be administered accordingly. Notwithstanding anything else to the contrary in this Agreement, the BEP, or any other plan, contract, program or otherwise, the Company (and its affiliates) are expressly authorized to delay any scheduled payments under this Agreement, the BEP, and any other plan, contract, program or otherwise, as such payments relate to the Executive, if the Company (or its affiliate) determines that such delay is necessary in order to comply with the requirements of Section 409A of the Internal Revenue Code. Any such payment (which shall be considered to be a separate payment and, and not a series of payments) shall be delayed until the first day of the month following the date that is six (6) months after the Executive ’s separation from service (as defined and determined under Section 409A). At the end of such period of delay, the Executive will be paid the delayed payment amounts, plus interest for the period of any such delay. For purposes of the preceding sentence, interest shall be calculated using the six (6) month Treasury Bill rate in effect on the date on which the payment is delayed, and shall be compounded daily.

18.    Miscellaneous. This Agreement is the joint and several obligation of the Bank and Valley. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey. This Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby. The amendment or termination of this Agreement may be made only in a writing executed by the Company and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company. This Agreement is personal to the Executive and the Executive may not assign any of the Executive’s rights or duties hereunder but this Agreement shall be enforceable by the Executive’s legal representatives, executors or

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administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each have caused this Agreement to be signed by their duly authorized representatives pursuant to the authority of their Boards of Directors, and the Executive has personally executed this Agreement, all as of the day and year first written above.

ATTEST:	VALLEY NATIONAL BANCORP
_________________________	By: ___________________________
, Secretary	Gerald Korde, Chairman,
	Compensation and Human Resources
	Committee
ATTEST:	VALLEY NATIONAL BANK
_____________________
, Secretary	By: ___________________________
	Gerald Korde, Chairman,
	Compensation and Human Resources
	Committee
WITNESS:
_________________________	________________________________
	Ronald H. Janis, Senior Executive
	Vice President and General Counsel
	of Valley and Valley National Bank

EX-10.R

EXHIBIT 10.R

Name of Employee:No. of Shares:

VALLEY NATIONAL BANCORP

RESTRICTED STOCK AWARD AGREEMENT

VALLEY NATIONAL BANCORP, a New Jersey corporation (the “Company”), this 24^th day of January, 2017 (the “Award Date”), hereby grants to [[FIRSTNAME]] [[LASTNAME]] (the “Employee”), an employee of the Company, pursuant to the Company’s 2016 Long-Term Stock Incentive Plan (the “Plan”), shares of the Common Stock, no par value, of the Company subject to the restrictions set forth herein (“Restricted Stock”) in the amount and on the terms and conditions hereinafter set forth.

1.Incorporation by Reference of Plan. The provisions of the Plan, which is available on the VNB Intranet to the Employee, are incorporated by reference herein and shall govern as to all matters not expressly provided for in this Agreement. Capitalized terms not defined herein have the meanings set forth in the Plan. In the event of any conflict between the terms of this Agreement and the Plan, the terms of the Plan shall govern.

For purposes of this Agreement, Section 2, Definitions, Subsection (z), is amended as follows (see the Compensation and Human Resources Committee meeting minutes of February 7, 2012):

“Retirement” means the retirement from active employment with the Company of an employee or officer, but only if such person meets all of the requirements contained in clause (i) or contained in clause (ii) below:

(i) they have a minimum combined total of years of service and age equal to eighty (80); they are age fifty-five (55) or older; and they provide one (1) year prior written notice to the Company of the retirement; or

(ii) they have a minimum of five (5) years of service; they are age sixty-five (65) or older and they provide one (1) year prior written notice to the Company of the retirement.

This change in notice requirements pertains only to this award.

2.    Award of Restricted Stock; Escrow. A record of the Restricted Stock awarded hereunder (the “Shares”) shall be evidenced by the Company in restricted book entry accounts maintained for each Employee with the Company’s transfer agent, or such other administrator designated by the Compensation Committee of the Company's Board of Directors (the "Committee"), subject to such stop-transfer orders and other terms deemed appropriate by the Committee to reflect the restrictions applicable to such Award (the “Restrictions”), until all the Restrictions specifically set forth in this Agreement and in Section 8 of the Plan with respect to the Shares shall expire or be canceled. Upon the lapse of Restrictions relating to any Shares, the Company shall remove the notations on any such Shares issued in book-entry form. Restricted Stock shall have all dividends (including cash and stock dividends) and voting rights as set forth in Section 8 of the Plan. However, dividends (including cash and stock dividends) paid on the Restricted Stock shall be deferred until the Restrictions with respect to the Shares upon which such dividends were paid expire or are canceled, at which time the Company shall evidence the delivery to the Employee of all such dividends, with interest, if any, in the restricted book entry accounts maintained for each Employee. If the Employee forfeits any Shares awarded hereunder, such Shares and any dividends (including cash and stock dividends) with respect thereto, with

EXHIBIT 10.R

interest, if any, shall automatically revert to the Company (without any payment by the Company to the Employee) and shall no longer be reflected in the restricted book entry account for the Employee.

3.    Restrictions    (a)    Vesting. The Shares and all related dividends shall not be delivered to the Employee and may not be sold, assigned, transferred, pledged or otherwise encumbered by the Employee until such Shares have vested in accordance with the following schedule:

Percentage of Shares Which Vest	Date on Which Such Shares Vest
33%	1 year after Award Date
66%	2 years after Award Date
100%	3 years after Award Date

(b)    Acceleration. In the event of a Change in Control (as such term is defined in the Plan) of the Company, all restrictions upon any Shares shall immediately lapse.

(c)    Forfeiture. Shares not yet vested (and any related dividends (including cash and stock dividends) and interest) shall be forfeited to the Company automatically and immediately upon the Employee’s ceasing to be employed by the Company and its Subsidiaries for any reason whatsoever, other than death or Retirement (as such term is defined in the Plan) of the Employee. Upon termination of employment by reason of death or Retirement (as such term is defined in the Plan) all restrictions upon the Shares shall thereupon immediately lapse.

4.    Accelerated Restricted Stock. With respect to an Employee who is or was at any time a named executive officer (as determined under Item 402 of Regulation S-K of the Securities Exchange Act of 1934, as amended), the Shares are subject to all the terms and conditions set forth in the Plan regarding Accelerated Restricted Stock including, but not limited to, the following:

a.      The retention requirements as provided in Section 8(c) of the Plan;

b. The inclusion on the certificate issued by the Escrow Agent pursuant to Section 8(e) of a legend restricting transfer of Shares subject to the retention requirements as provided in Section 8(c) of the Plan; and

c. The continued holding of the certificates representing the Accelerated Restricted Stock until the expiration of the retention requirements as provided in Section 8(c) of the Plan.

5.    Registration. If Shares are issued in a transaction exempt from registration under the Securities Act of 1933, as amended, then, if deemed necessary by Company’s counsel, as a condition to the Company issuing certificates representing the Shares, the Employee shall represent in writing to the Company that the Employee is acquiring the Shares for investment purposes only and not with a view to distribution, and the certificates representing the Shares shall bear the following legend:

“These shares have not been registered under the Securities Act of 1933. No transfer of the shares may be affected without an opinion of counsel to the Company stating that the transfer is exempt from registration under the Act and any applicable state securities laws or that the transfer of the shares is covered by an effective registration statement with respect to the shares.”

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6.    Incorporation of Plan. The Employee hereby acknowledges that the Employee has access to the Plan on the VNB Intranet (and is aware that he or she may request a written copy) and represents and warrants that the Employee has read and is familiar with the terms and conditions of the Plan. The execution of this Agreement by the Employee shall constitute the Employee’s acceptance of and agreement to all of the terms and conditions of the Plan and this Agreement.

7.    Notices. Except as specifically provided in the Plan or this Agreement, all notices and other communications required or permitted under the Plan and this Agreement shall be in writing and shall be given either by (i) personal delivery or regular mail, in each case against receipt, or (ii) first class registered or certified mail, return receipt requested. Any such communication shall be deemed to have been given (i) on the date of receipt in the cases referred to in clause (i) of the preceding sentence and (ii) on the second day after the date of mailing in the cases referred to in clause (ii) of the preceding sentence. All such communications to the Company shall be addressed to it, to the attention of its Secretary or Treasurer, at its then principal office and to the Employee at the Employee’s last address appearing on the records of the Company or, in each case, to such other person or address as may be designated by like notice hereunder.

8.    Tax Withholding. If requested by the Employee, the Committee shall cancel Shares of Restricted Stock to be delivered to the Employee having a Fair Market Value, on the day preceding the date of vesting of the Restricted Stock, equal to the aggregate required tax withholding (or, if permitted by the Company, a rate that is higher than the minimum statutory withholding rate) in connection with such vesting, and to apply the value of such Shares of Restricted Stock as payment for the Employee’s aggregate required tax withholding for the vesting of any Shares of Restricted Stock. The form to be used in making this request is attached.

9.    Clawback.    In the event that the Committee, within 3 years of the date of the Award hereunder, determines that the Award of Restricted Stock made under this Agreement was based on materially inaccurate financial statements (including, but not limited to, statements of earnings, revenues, or gains) or other materially inaccurate performance metric criteria, then the Company has the right to cancel the unvested Restricted Stock awarded to the Employee under this Agreement and, with respect to vested Restricted Stock awarded under this Agreement, the Employee agrees that the Company has the right to cancel the Shares awarded to the Employee under this Agreement if still owned by the Employee or, if such Shares are no longer owned by the Employee or the Company is otherwise unable to cancel the Shares, to recover from the Employee the value of the vested Restricted Stock awarded under this Agreement. The Committee may also cancel this Award if the Employee has engaged in or engages in an activity that is in conflict with or adverse to the interest of the Company while employed by or providing services to the Company or any Subsidiary, including fraud or conduct contributing to any financial restatements or irregularities.    In addition, to the extent required by applicable law (including, without limitation, Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) and/or the rules and regulations of any securities exchange or inter-dealer quotation service on which the Company’s Shares are listed or quoted, or if so required pursuant to a written policy adopted by the Company, this Award shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements.

10.    Miscellaneous.  This Agreement and the Plan contain a complete statement of all the arrangements between the parties with respect to the subject matter hereof, and this Agreement cannot be changed except by a writing executed by both parties. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to agreements made and to be performed exclusively in New Jersey.

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

VALLEY NATIONAL BANCORP            EMPLOYEE

By: Gerald Korde                        By: [[FIRSTNAME]] [[LASTNAME]]

Awards of incentive compensation are also subject to the Valley National Bancorp Clawback Policy which is attached.

Tax Withholding Election Form

This form cannot be executed during a blackout period; and must be submitted toStock Option Support in the Accounting Departmentat least 20 days prior to a scheduled restricted stock vesting.

The undersigned has received, pursuant to one or all of the Company’s 2016 Long-Term Stock Incentive Plan, 2009 Long-Term Stock Incentive Plan and 1999 Long-Term Stock Incentive Plan (the “Plans”), shares of the Common Stock, no par value, of the Company (“Restricted Stock”) subject to the restrictions set forth in one or more Restricted Stock Award Agreement(s) (each an “Agreement”). Capitalized terms used herein without definition shall have the meanings ascribed to them in the appropriate Plan pursuant to which the Restricted Stock was granted.

With respect to the satisfaction of any and all withholding tax obligations relating to the vesting of the Restricted Stock (except those shares of Restricted Stock covered by the Agreements listed below) and pursuant to the terms of the appropriate Agreement, the undersigned hereby voluntarily elects (please choose one and initial on the space provided):

____	(i)	to have the Company withhold a number of shares of Common Stock otherwise issuable or deliverable sufficient to cover the undersigned’s withholding tax obligations (or, if requested by the undersigned and permitted by the Company, a rate that is higher than the minimum statutory withholding rate) in connection with the vesting of the Restricted Stock subject to the Agreement.
____	(ii)	to withdraw the voluntary election dated _________ in connection with the vesting of the Restricted Stock subject to the Agreement. This tax withholding election shall be deemed revoked by the undersigned when the Company receives a superseding Tax Withholding Election Form where this item (ii) is checked.

The undersigned understands that the Company may defer issuance and delivery of Common Stock until all tax withholding requirements are satisfied.

The vesting of the Restricted Stock subject to the Agreement may at times occur during a blackout period. In such an event, you would be unable to elect to have shares of Common Stock withheld to cover withholding tax obligations. Thus, consistent with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, where item (i) above is checked, this Tax Withholding Election Form serves as your authorization to have the Company withhold a number of shares of Common Stock otherwise issuable or deliverable sufficient to cover the undersigned’s withholding tax obligations in connection with the vesting of the Restricted Stock subject to the Agreement.

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By executing this Tax Withholding Election Form, the undersigned represents and warrants that as of the date hereof he/she is not aware of any material nonpublic information with respect to the Company or any of its securities.

Date	Employee Name (Print)
	Employee Signature

Valley National Bancorp Clawback Policy

The Compensation and Human Resources Committee of Valley National Bancorp (the “Company”) operates under the following Clawback Policy:

▪ Triggers to Recoup Unvested Awards: The Company may cancel any unvested stock awards granted to and cancel the payout of any unpaid cash bonus award to be paid to (recoup) any executive officer of the Company or its subsidiaries upon the following events:

1. A material restatement of the Company’s financial statements and the award was based upon materially inaccurate performance metrics, in which case the recoupment applies to the relevant period.

2. The Executive is terminated for cause involving material misconduct detrimental to the Company, in which case the recoupment applies to all periods on or after the material misconduct.

▪ Triggers to Recoup Vested Awards: The Company may recoup vested incentive awards of stock and cash made to any executive in the following events:

1. The executive engaged in intentional fraud against the Company or any of its subsidiaries, in which case the recoupment may apply to any awards from the date of the fraud.

2. Because of intentional misconduct detrimental to the Company, the Company suffers a material financial loss and governmental enforcement action against the Company or its subsidiaries.

▪ Procedures for Applying Policy: The Compensation and Human Resources Committee of the Company will be responsible for exercising the Company’s rights under this Policy. In exercising its authority under this policy, the Committee shall take into account uncertainties and mitigating circumstances. The Committee shall not be obligated in any case under this policy to exercise its discretion to obtain recoupment. Conversely, the Committee shall not be prevented from exercising its right to obtain recoupment due to uncertainties or mitigating circumstances.

▪ Amendments: The Committee may amend or supplement this policy at any time. However no such amendment or supplement which is materially adverse to the executive may apply retroactively.

EX-10.S

EXHIBIT 10.S

VALLEY NATIONAL BANCORP

DEFERRED COMPENSATION PLAN

Effective as of January 1, 2017

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SECTION 1DEFINITIONS

1.01 Whenever used in the Plan, the following terms shall have the respective meanings set forth below unless otherwise expressly provided in the Plan:

(a) “401(k) Plan” shall mean the Valley National Bank 401(k) Plan.

(b) “Administrator” shall mean the Compensation and Human Resources Committee of the Board of Directors, or any other committee that may be designated as such by the Board of Directors.

(c) “Benefit” shall mean the amount due to a Participant under the terms of this Plan.

(d) “Beneficiary” shall mean one or more persons, trusts, estates or other entities specifically designated by the Participant on a beneficiary designation form filed with the Administrator to receive benefits under this Plan upon his or her death. In the absence of a valid beneficiary designation form, the Participant’s estate shall be his or her Beneficiary.

(e) “Board of Directors” shall mean the Board of Directors of Valley National Bancorp.

(f) “Code” means the Internal Revenue Code of 1986 as amended.

(g) “Company” shall mean Valley National Bancorp, Valley National Bank, any successors thereto, and any of the Company’s subsidiaries which adopt the Plan with the consent of the Board of Directors.

(h) “Company Matching Contribution” shall mean the Company matching contribution made in accordance with Section 3.02(b).

(i) “Deferral Election Agreement” shall mean the written (or electronic) form submitted by a Participant to the Administrator before the relevant Election Date, in which the Participant indicates the amount, if any, by which his or her Eligible Compensation shall be reduced and deferred under this Plan. A Deferral Election Agreement shall remain in effect until such time as it is amended or revoked by the Participant and any such amendment or revocation shall only apply to Eligible Compensation earned by the Participant after the next relevant Election Date.

(j) “Effective Date” shall mean January 1, 2017.

(k) “Election Date” shall mean the date which is no later than thirty (30) days following the date on which an Eligible Employee is first designated as a Participant, and in all other circumstances shall mean December 31^st of any calendar year.

(l) “Eligible Class” shall mean an Employee of the Company who is a member of a select group of management or highly compensated employees as defined by ERISA and who serves in one of the following positions: Corporate Executive Vice President; Senior Executive Vice President; President; or Chief Executive Officer.

(m) “Eligible Compensation” shall mean a Participant’s base and cash bonus compensation earned in any Plan Year from the Company without regard to Section 401(a)(17) of the Code, including any deferrals and amounts of such compensation that the Company contributes to a plan on

EXHIBIT 10.S

behalf of a Participant pursuant to a salary reduction agreement and which are not includible in the Participant’s gross income under Section 125, 402(e)(3), 402(h) and 403(b) of the Code. Eligible Compensation for purposes of this Plan, however, shall not include Eligible Compensation that does not exceed the Section 401(a)(17) compensation limit.

(n) “Eligible Employee” shall mean an Employee of the Company who is a participant in the 401(k) Plan, whose compensation does or is expected to exceed the limit on compensation under Section 401(a)(17) of the Code, and who is a member of the Eligible Class of Employees.

(o) “Employee” shall mean a person who is an employee of the Company, excluding any individual retained by the Company to perform services for the Company (for either a definite or indefinite duration) and is characterized thereby as a fee-for-service worker or independent contractor or in a similar capacity (rather than in the capacity of an employee), regardless of such individual’s status under common law, including, without limitation, any such individual who is or has been determined by a third party, including, without limitation, a government agency or board or court or arbitrator, to be an employee of the Company for any purpose, including, without limitation, for purposes of any employee benefit plan of the Company or for purposes of federal, state or local tax withholding, employment tax or employment law.

(p) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

(q) “Participant” shall mean an Eligible Employee who is designated a Participant in this Plan by the Administrator in accordance with Section 3.01.

(r) “Participant Deferral Contributions”shall mean the Participant’s deferrals of Eligible Compensation made in accordance with Section 3.02(a).

(s) “Periodic Adjustment Rate” shall mean, unless otherwise determined by the Administrator with respect to a Plan Year, the one-month London Interbank Offered Rate (LIBOR) average for the applicable Plan Year plus 200 basis points.

(t) “Plan” shall mean this Valley National Bancorp Deferred Compensation Plan either in its present form or any form subsequently amended pursuant to Section 6.

(u) “Plan Year” shall mean the calendar year.

(v) “Separation from Service” shall mean a separation from service with the Company, and all related entities, as determined by the Administrator in accordance with Section 409A of the Code and the regulations issued thereunder. A Separation from Service does not include military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six (6) months, or if longer, so long as the Participant’s right to reemployment is guaranteed by statute or contract. In the event the leave of absence described in the preceding sentence is for a period in excess of six (6) months and the individual’s right to reemployment is not guaranteed, the Separation from Service will be deemed to have occurred on the first date immediately following such six (6) month period.

EXHIBIT 10.S

SECTION 2ESTABLISHMENT OF THE PLAN

2.01 Establishment of the Plan

(a) The Company hereby establishes the Valley National Bancorp Deferred Compensation Plan for the benefit of certain Eligible Employees, effective as of the Effective Date.

(b) The Plan is intended to constitute a nonqualified, unfunded plan for federal tax purposes and for purposes of Title I of ERISA. The Plan is maintained for the purpose of providing deferred compensation for selected employees participating in the 401(k) Plan whose contributions are limited as a result of the limitations under section 401(a)(17) of the Code on the amount of compensation which can be taken into account under the 401(k) Plan and who elect to defer a portion of their income pursuant to this Plan. The Plan shall function as a “top hat plan” providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(3), and 401(a)(1) of ERISA. As such, this Plan is subject to limited ERISA reporting and disclosure requirements, and is exempt from all other ERISA requirements.

SECTION 3
PARTICIPATION

3.01 General Participation Rule

(a) An Eligible Employee of the Company shall become a Participant upon the Administrator’s designation of the Eligible Employee as a Participant in the Plan and execution by the Eligible Employee of the Deferral Election Agreement.

(b) Upon the designation of an Eligible Employee as a Participant, such Employee shall complete such forms and/or make such elections as the Administrator may require. In particular, in order to defer any Eligible Compensation earned in any Plan Year under the Plan, a Participant must make, prior to the commencement of that year, an irrevocable deferral election pursuant to a Deferral Election Agreement. A Participant’s annual election to make deferrals of Eligible Compensation shall be irrevocable for the Plan Year.

(c) If an Employee becomes newly eligible to participate in the Plan mid-year as a result of being newly qualified to participate in the Plan (e.g., promotion), such newly Eligible Employee shall have 30 days from the date he or she becomes eligible to make an irrevocable election pursuant to a Deferral Election Agreement for the remainder of the current Plan Year.

(d) A Participant’s Deferral Election Agreement shall remain in effect until it is amended or revoked, and such amendment or revocation shall only apply with respect to Eligible Compensation during the next following Plan Year.

(e) In the event that a Participant ceases to be a member of the Eligible Class, then he or she shall not be eligible to make a Deferral Election with respect to the next following (or any future) Plan Year.

EXHIBIT 10.S

3.02 Contributions

(a) Participant Deferral Contributions. Each Participant shall be permitted to defer, as specified in the applicable Deferral Election Agreement for that Plan Year, up to five percent (5%) of the portion of the Participant’s Eligible Compensation above the limit in effect for that Plan Year under Section 401(a)(17) of the Code. The Administrator shall have the authority to increase or decrease the above percentage limit, but any such change shall only apply to Plan Years beginning after such action is taken by the Administrator. No deferrals shall be effected hereunder until a Participant’s Eligible Compensation for such Plan Year is in excess of the limit in effect under Section 401(a)(17) of the Code.

(b) Company Matching Contributions. Each Plan Year, the Company shall match 100% of a Participant’s Deferral Contributions under the Plan. Notwithstanding the immediately preceding sentence, matching contribution shall not be made on Participant deferrals that exceed five percent (5%) of such Participant’s Eligible Compensation, unless the Administrator provides otherwise.

SECTION 4
BENEFITS

4.01 Bookkeeping Accounts

(a) A bookkeeping account shall be established for each Plan Participant to record his or her interest in the Plan. Each Participant’s account shall be divided into a Participant Deferral Contribution subaccount, a Company Matching Contribution subaccount, and such other subaccounts as the Administrator determines are necessary to keep track of Participants’ interests under the Plan.

(b) A Participant shall always be 100% vested in his or her Participant Deferral Contribution subaccount.

(c) A Participant shall vest in the Company Matching Contribution subaccount at the same rate and in the same manner as he or she vests in the corresponding subaccount under the 401(k) Plan.

4.02 Benefit Credits

Each Plan Year, the Company shall credit to a Participant’s notional account an amount equal to the following credits:

(a) the Participant Deferral Contribution, as elected in accordance with Section 3.02;

(b) the Company Matching Contribution.

4.03 Investment Credits and Adjustments

Except as otherwise provided in Section 4.05, Participant Deferral Contributions and Company Matching Contributions shall be adjusted at the end of each Plan Year by an amount equal to the Periodic Adjustment Rate for the applicable Plan Year, multiplied by the balance in the Participant’s notional account at the end of the Plan Year.

EXHIBIT 10.S

4.04 Amount of Benefit

Except as otherwise provided in Section 4.05, the amount payable to the Participant shall equal the amount credited to the Participant’s notional account as of the Participant’s Separation from Service, net of all applicable employment and income tax withholdings.

4.05 Form and Time of Payment

A Benefit shall be paid in a single cash lump sum distribution, net of all applicable employment and income tax withholdings, and shall represent a complete discharge of any obligation under the Plan and no further benefits shall be due the Participant or any Beneficiary. Except as provided in the following paragraph, payment shall be made within thirty (30) days following the earlier of (i) the Participant’s Separation from Service, or (ii) the date on which a change of control occurs with respect to the Company. For purposes of the preceding sentence only, a change of control shall be defined as a change in the ownership or effective control, or a change in the ownership of a substantial portion of the assets, of the Employer, all as determined under Treas. Reg. Section 1.409A-3(i)(5).

Notwithstanding the foregoing, if the Participant is determined by the Administrator to be a “specified employee’ within the meaning of Section 409A(a)(2)(B)(i) of the Code, payment of such Participant’s Benefit shall be delayed until the first day of the seventh (7^th) month following the Participant’s Separation from Service. In the event the Participant’s Benefit is delayed, the Participant’s notional account shall continue to be adjusted in accordance with Section 4.03 until the Participant’s Benefit is payable.

In the event that the Participant is not living at the time of distribution, his or her Beneficiary shall receive the Benefit, within sixty (60) days following death.

4.06 Benefits Are Paid from General Assets

All Benefits under the Plan shall be payable only from the general assets of the Company and only to the extent that the assets of the Company are sufficient for this purpose. Each Participant shall look solely to the Company for any Benefit under the Plan, and each Participant shall remain a general unsecured creditor of the Company. Nothing in this Plan shall prohibit the Administrator at a subsequent date from establishing a grantor trust or other arrangement to provide for benefits under the Plan provided the assets, if any, under the arrangement are subject to the general creditors of the Company.

4.07 Non-Alienation of the Right to Receive Payments

Except as may be expressly permitted by law, none of the Benefits or rights of any person hereunder shall be subject to any claim of any creditor, and in particular, shall not be subject to attachment or garnishment or legal process by any creditor, nor shall such person have any right to alienate, anticipate, sell, transfer, pledge, encumber, or assign any of the Benefits which he or she may expect to receive under the Plan; provided, however, that the Company shall have the authority, unless prohibited by applicable law, to direct the application of any Benefits hereunder to the satisfaction of a Participant’s legal liability, if any, to the Company.

EXHIBIT 10.S

4.08 Procedure for Claiming a Payment

(a)    Any claim for a Benefit hereunder shall be filed by a Participant or Beneficiary (claimant) of this Plan on the form prescribed for such purpose with the Administrator, or in lieu thereof, by written communication which is made by the claimant or the claimant’s authorized representative which is reasonably calculated to bring the claim to the attention of the Administrator.

(a) If a claim for a Benefit is wholly or partially denied, notice of the decision shall be furnished to the claimant by the Administrator within ninety (90) days after receipt of the claim by the Administrator, unless special circumstances require an extension of time for processing, in which case a decision shall be reached within a reasonable period of time, but not later than one hundred eighty (180) days after receipt of the claim by the Administrator.

(b) Any claimant who is denied a claim for Benefit shall be furnished written notice setting forth:

(1) the specific reason or reasons for the denial;

(2) specific reference to the pertinent Plan provisions upon which the denial is based;

(3) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;

(4) an explanation of the Plan’s claim review procedure.

The notice described in this Section 4.08(c) of the Plan shall provide, in addition to a description of the Plan’s claims review procedure, the time limitations applicable to such procedures, and a statement of the claimant’s right to bring an arbitration action described in Section 7.06 below if the claim denial is appealed to the Administrator and the Administrator fully or partially denies the claim.

(c) In order that a claimant may appeal denial of a claim, a claimant or his or her duly authorized representative:

(1) may request a review by written application to the Administrator not later than sixty (60) days after receipt by the claimant of written notification of denial of a claim;

(2) may review pertinent documents; and

(3) may submit issues and comments in writing.

(d) A decision on review of a denied claim shall be made not later than sixty (60) days after the Plan’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered within a reasonable period of time, but not later than one hundred twenty (120) days after receipt of a request for review.

The decision on review shall be in writing and shall include the specific reason(s) for the decision and the specific reference(s) to the pertinent Plan provisions on which the decision is based.

EXHIBIT 10.S

The notice described in this Section 4.08(e) of the Plan shall provide, in addition to the specific reasons for the denial of the claim and specific reference to pertinent provisions of the Plan on which the denial is based, a statement of the claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits and a statement informing the claimant about the right to bring a civil action under ERISA.

SECTION 5
ADMINISTRATION OF THE PLAN

5.01 Plan Administration

The Administrator shall administer the Plan and shall establish, adopt or revise such rules and regulations as it may deem necessary or advisable. The Administrator may appoint one or more individuals and delegate such of its powers and duties as it deems desirable to any such individuals.

The Administrator:

(a) Shall have all powers, duties, responsibilities and obligations imposed by law and by the provisions of the Plan for the administration of the Plan, including the discretionary authority to interpret its provisions and supply omissions, to authorize payments, to establish and enforce such rules and regulations as it shall deem proper for the administration of the Plan, and to determine the amount of Benefits which shall be payable to any person in accordance with the provisions of the Plan;

(b) Shall have authority to engage counsel and consultants in order to fulfill its responsibilities, and to rely on the advice of same;

(c) Shall have responsibility with respect to reporting and disclosure requirements, if any, under ERISA;

(d) Shall from time to time execute such Plan amendments as the Company or the Administrator may deem appropriate;

(e) Upon written request to it by any Participant pursuant to Section 4.08 hereof, shall have final authority under the Plan with respect to the Benefits and the amount or form thereof payable under the Plan to any such person;

(f) Shall be authorized, in its discretion, to allocate responsibilities among one or more of its members and to delegate responsibilities to any person or persons selected by it; and

(g) May establish a trust fund hereunder and appoint a trustee to manage the assets of such trust, provided such trust is a grantor trust within the meaning of Sections 671 through 679 of the Code.

EXHIBIT 10.S

5.02 Administrator Actions

Any action taken by the Administrator shall be taken by a majority of its members at a meeting or by written instrument signed by such majority in the absence of a meeting. A written resolution attested to by any member of the Administrator shall be sufficient evidence to any person of any action taken by the Administrator.

5.03 Accounts and Records

The accounts and all records necessary for the administration of the Plan shall be maintained by the Administrator and shall accurately disclose the history and status of payments made to each Participant or other person under the Plan.

5.04 Expenses

The expenses of administering the Plan shall be paid out of the general funds of the Company.

SECTION 6
AMENDMENT OR TERMINATION OF THE PLAN

6.01 Amendment

The Plan may, at any time and from time to time, be amended or modified in whole or in part by action of the Board. No Plan amendment or modification shall deprive a Participant of any portion of those vested Benefits to which he or she is entitled as of the date of such amendment or modification.

6.02 Termination

The Plan may be suspended or terminated prospectively at any time by action of the Board; provided, however, that all Participants with respect to whom the Plan has been terminated shall receive the Benefits accrued under the Plan, as provided in Section 4 hereof, as of the date of any suspension or termination. Notwithstanding the foregoing, the Plan may be terminated only if such termination is effected in accordance with the requirements of Section 409A of the Code.

SECTION 7
MISCELLANEOUS PROVISIONS

7.01 Effect of Mistake

In the event of a mistake or misstatement as to the eligibility of any person, or the amount or kind of payments made or to be made to a Participant, the Administrator shall, to the extent it deems possible, make such adjustments as will in its judgment accord to such Participant the payments to which he or she is properly entitled under the Plan, and upon the Administrator’s determination, the Company shall be entitled to recover any over-payments made under the Plan.

7.02 Non-Expansion of Rights

Nothing contained in this Plan shall give any Participant the right to be retained as an employee of the Company or serve as consideration for, or an inducement or condition of, the service of any

EXHIBIT 10.S

Employee. Neither the provisions of this Plan nor any act of the Company hereunder shall be construed as giving to any Participant or other person any legal or equitable right or claim against the Company for the payment of any Benefits hereunder except as otherwise specifically provided.

7.03 Headings of Sections and Subsections

The headings of Sections and subsections are included solely for convenience of reference, and if there is any conflict between such headings and the text of the Plan, the text shall control.

7.04 Severability

The invalidity of any particular provision of this Plan shall not affect the other provisions of this Plan, but the Plan shall be construed in all respects as if such invalid provision were omitted.

7.05 Applicable Law

This Plan shall be governed by the laws of the State of New Jersey, except to the extent preempted by federal law.

7.06 Arbitration

The parties agree that any dispute or claim arising out of or relating to this Plan, including whether such disputes or claims are subject to arbitration, will be settled by binding arbitration. The arbitration proceeding will be conducted before a single arbitrator at a location within the State of New Jersey convenient to the parties and under the rules of the American Arbitration Association. The decision or award of the Arbitrator made under these rules shall be exclusive, final and binding on both parties, their beneficiaries, executors, administrators, successors and assigns. The arbitration procedure may be invoked by written notice to the American Arbitration Association stating with particularity the issue proposed for arbitration. A copy of that written notice shall be served upon the other party by registered mail.

7.07 Indemnification

In addition to any other indemnification that a fiduciary, including but not limited to a member of the Plan Administrator, is entitled to, the Company shall indemnify such fiduciary from all claims for liability, loss or damage, including payment of expenses in connection with defense against such claim) arising from any act or failure to act which constitutes a breach of such individual’s fiduciary responsibility with respect to this Plan.

7.08 No Guarantee of Non-Taxability

Neither the Company nor the Administrator guarantees that any Benefit or any contribution is or shall remain non-taxable during the deferral period. If it is determined at some time that the amounts deferred hereunder are taxable, the Participant shall be responsible for any tax or penalties due with respect to amounts contributed on his or her behalf.

7.09 Plan Subject to Section 409A of the Code

The Plan is intended to comply with Section 409A of the Code and the regulations issued thereunder, and any ambiguities shall be interpreted consistent with this intent. Without affecting the validity of any other provision of the Plan, to the extent that any Plan provision does not meet the requirements

EXHIBIT 10.S

of Section 409A of the Code and the regulations issued thereunder, the Plan shall be construed and administered as necessary to comply with such requirements until the Plan is appropriately amended to comply with such requirements.

IN WITNESS WHEREOF, the Company, acting by its undersigned officer, duly authorized, hereby executes the Plan to be effective as herein provided.

VALLEY NATIONAL BANCORP

By___________________________    

EX-10.V

EXHIBIT 10.V

CHANGE-IN-CONTROL AGREEMENT

RUDY SCHUPP

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”), is made as of this 18th day of November, 2014, among VALLEY NATIONAL BANK (“Bank”), a national banking association with its principal office at 1455 Valley Road, Wayne, New Jersey, VALLEY NATIONAL BANCORP (“Valley”), a New Jersey corporation which maintains its principal office at 1455 Valley Road, Wayne, New Jersey (Valley and the Bank collectively are the “Company”) and RUDY SCHUPP (the “Executive”).

BACKGROUND

WHEREAS, the Executive has worked diligently in the Executive’s position in the business of the Bank and Valley;

WHEREAS, the Boards of Directors of the Bank and Valley (either one, the “Board of Directors” and, together, the “Company Boards”) believe that the future services of the Executive are of great value to the Bank and Valley and that it is important for the growth and development of the Bank that the Executive continue in the Executive’s position;

WHEREAS, if the Company receives any proposal from a third person concerning a possible business combination with, or acquisition of equities securities of, the Company, the Company Boards believe it is imperative that the Company and the Company Boards be able to rely upon the Executive to continue in the Executive’s position, and that they be able to receive and rely upon the Executive’s advice, if they request it, as to the best interests of the Company and its shareholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a proposal;

EXHIBIT 10.V

WHEREAS, to achieve that goal, and to retain the Executive’s services prior to any such activity, the Company Boards and the Executive have agreed to enter into this Agreement to govern the Executive’s termination benefits in the event of a Change in Control of the Company, as hereinafter defined.

NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of the Executive’s advice and counsel notwithstanding the possibility, threat or occurrence of a bid to take over control of the Company, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive, each intending to be legally bound hereby agree as follows:

1.Definitions

a.Base Salary. “Base Salary”, as used in Section 9 hereof, means the annual cash base salary (excluding any bonus and the value of any fringe benefits) paid to the Executive at the time of the termination of employment unless such amount has been reduced after a Change in Control, in which case such amount shall be the highest base salary in effect during the 18 months prior to the Change in Control.

b.Cause. For purposes of this Agreement “Cause” with respect to the termination by the Company of Executive’s employment shall mean (i) willful and continued failure by the Executive to perform the Executive’s duties for the Company under this Agreement after at least one warning in writing from the Board of Directors identifying specifically any such failure; (ii) the willful engaging by the Executive in misconduct which causes material injury to the Company as specified in a written notice to the Executive from the Board of Directors; or (iii) conviction of a crime, other than a traffic violation, habitual drunkenness, drug abuse, or excessive absenteeism other than for illness, after a warning (with respect to drunkenness or absenteeism only) in writing from the Board of Directors to refrain from such behavior. No act or failure to act on the part of the Executive shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.

EXHIBIT 10.V

c.Change in Control. “Change in Control” means any of the following events: (i) when Valley or a Valley Subsidiary acquires actual knowledge that any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliate of Valley or a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates, is or becomes the beneficial owner (as defined in Rule 13d‑3 of the Exchange Act) directly or indirectly, of securities of Valley representing more than twenty‑five percent (25%) of the combined voting power of Valley’s then outstanding securities (a “Control Person”); (ii) upon the first purchase of Valley’s common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by Valley, a Valley Subsidiary or an employee benefit plan established or maintained by Valley, a Valley Subsidiary or any of their respective affiliates); (iii) the consummation of (A) a transaction, other than a Non‑Control Transaction, pursuant to which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation, (B) a sale or disposition of all or substantially all of Valley’s assets or (C) a plan of liquidation or dissolution of Valley; (iv) if during any period of two (2) consecutive years, individuals (the “Continuing Directors”) who at the beginning of such period constitute the Board of Directors of Valley (the “Valley Board”) cease for any reason to constitute at least 60% thereof or, following a Non‑Control Transaction, 60% of the board of directors of the Surviving Corporation; provided that any individual whose election or nomination for election as a member of the Valley Board (or, following a Non‑Control Transaction, the board of directors of the Surviving Corporation) was approved by a vote of at least two‑thirds of the Continuing Directors then in office shall be considered a Continuing Director; or (v) upon a sale of (A) common stock of the Bank if after such sale any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than Valley, an employee benefit plan established or maintained by Valley or a Valley Subsidiary, or an affiliate of Valley or a Valley Subsidiary, owns a majority of the Bank’s common stock or (B) all or substantially all of the Bank’s assets (other than in the ordinary course of business). For purposes of this paragraph: (I) Valley will be deemed to have become a subsidiary of another corporation if any other corporation (which term shall include, in addition to a corporation, a limited liability company,

EXHIBIT 10.V

partnership, trust, or other organization) owns, directly or indirectly, 50 percent or more of the total combined outstanding voting power of all classes of stock of Valley or any successor to Valley; (II) “Non‑Control Transaction” means a transaction in which Valley is merged with or into, or is consolidated with, or becomes the subsidiary of another corporation pursuant to a definitive agreement providing that at least 60% of the directors of the Surviving Corporation immediately after the transaction are persons who were directors of Valley on the day before the first public announcement relating to the transaction; (III) the “Surviving Corporation” in a transaction in which Valley becomes the subsidiary of another corporation is the ultimate parent entity of Valley or Valley’s successor; (IV) the “Surviving Corporation” in any other transaction pursuant to which Valley is merged with or into another corporation is the surviving or resulting corporation in the merger or consolidation; and (V) “Valley Subsidiary” means any corporation in an unbroken chain of corporations, beginning with Valley, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

d.Continuously Employed. “Continuously employed”, as used in Section 9, means continuously employed by the Bank but excludes any period of employment by a bank or financial institution acquired by or merged into the Bank and excludes any period of employment by the Bank if such period is separated from the current employment with the Bank by a break in service (other a break in service resulting solely from illness, disability or family leave).

e.Contract Period. “Contract Period” shall mean the period commencing the day immediately preceding a Change in Control and ending on the earlier of (i) the second anniversary of the Change in Control or (ii) the death of the Executive. For the purpose of this Agreement, a Change in Control shall be deemed to have occurred at the date specified in the definition of Change-in-Control.

f.Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

EXHIBIT 10.V

g.Good Reason. When used with reference to a voluntary termination by Executive of the Executive’s employment with the Company, “Good Reason” shall mean any of the following, if taken without Executive’s express written consent:

(1) The assignment to Executive of any duties inconsistent with, or the reduction of powers or functions associated with, Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change in Control. A change in title or positions resulting merely from a merger of the Bank or Valley into or with another bank or company which does not downgrade in any way the Executive’s powers, duties and responsibilities shall not meet the requirements of this paragraph;

(2)    A reduction by the Company in Executive’s annual base compensation as in effect immediately prior to a Change in Control or the failure to award Executive annual increases in accordance herewith;

(3)    A failure by the Company to continue any bonus plan in which Executive participated immediately prior to the Change in control or a failure by the Company to continue Executive as a participant in such plan on at least the same basis as Executive participated in such plan prior to the Change in Control;

(4)    The Company’s transfer of Executive to another geographic location more than 35 miles from the Executive’s present office location, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations immediately prior to such Change in Control;

(5)    The failure by the Company to continue in effect any employee benefit plan, program or arrangement (including, without limitation the Company’s retirement plan, benefit equalization plan, life insurance plan, health and accident plan, disability plan, deferred compensation plan or long term stock incentive plan) in which Executive is participating immediately prior to a Change in Control (except that the Company may institute or continue plans, programs or arrangements providing Executive with substantially similar benefits); the taking of any action by the Company which would adversely

EXHIBIT 10.V

affect Executive’s participation in or materially reduce Executive’s benefits under, any of such plans, programs or arrangements; the failure to continue, or the taking of any action which would deprive Executive, of any material fringe benefit enjoyed by Executive immediately prior to such Change in Control; or the failure by the Company to provide Executive with the number of paid vacation days to which Executive was entitled immediately prior to such Change in Control;

(6)    The failure by the Company to obtain an assumption in writing of the obligations of the Company to perform this Agreement by any successor to the Company and to provide such assumption to the Executive prior to any Change in Control; or

(7)    Any purported termination of Executive’s employment by the Company during the term of this Agreement which is not effected pursuant to all of the requirements of this Agreement; and, for purposes of this Agreement, no such purported termination shall be effective.

h. Pro-rata Bonus Amount. “Pro-rata Bonus Amount”, as used in Section 9, means an amount equal to a “portion” of the highest cash bonus awarded to the Executive in or for the three calendar years immediately prior to the Change in Control, regardless of when paid. The “portion” of such cash bonus shall be a fraction, the numerator of which is the number of calendar months or part thereof which the Executive has worked in the calendar year in which the termination occurs and the denominator of which is 12.

2.    Employment. The Company hereby agrees to employ the Executive, and the Executive hereby accepts employment, during the Contract Period upon the terms and conditions set forth herein.

3.    Position. During the Contract Period the Executive shall be employed by the bank as a Senior Officer, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Company, with substantially the same title and the same duties and responsibilities as before the Change in Control. The Executive shall devote full time and attention to the business of the Company, and shall not during the Contract Period be engaged in any other business

EXHIBIT 10.V

activity. This paragraph shall not be construed as preventing the Executive from managing any investments which do not require any service on the Executive’s part in the operation of such investments.

4.    Cash Compensation. The Company shall pay to the Executive compensation for services during the Contract Period as follows:

a.Base Salary. A base annual salary equal to the annual salary in effect as of the Change in Control. The annual salary shall be payable in installments in accordance with the Company’s usual payroll method.

b.Annual Bonus. An annual cash bonus equal to at least the average of the cash bonuses awarded to the Executive in the three years prior to the Change in Control (excluding any year for which cash bonuses were prohibited by law or regulation). Subject to any express regulatory requirements, the bonus shall be paid within 45 days of the end of the calendar year for which the bonus is awarded.

c.Annual Review. The Board of Directors during the Contract Period shall review annually, or at more frequent intervals which the Board of Directors determines is appropriate, the Executive’s compensation and shall award the Executive additional compensation to reflect the Executive’s performance, the performance of the Company and competitive compensation levels, all as determined in the discretion of the Board of Directors.

5.    Expenses and Fringe Benefits.

a.Expenses. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by the Executive with respect to the business of the Company in the same manner and to the same extent as such expenses were previously reimbursed to the Executive immediately prior to the Change in Control.

b.Benefit Equalization Plan. During the Contract Period, if the Executive was entitled to benefits under the Company’s Benefit Equalization Plan (“BEP”) prior to the Change in Control,

EXHIBIT 10.V

the Executive shall be entitled to continued benefits under the BEP after the Change in Control and such BEP may not be modified to reduce or eliminate such benefits during the Contract Period.

c.Club Membership and Automobile. If prior to the Change in Control, the Executive was entitled to membership in a country club and/or the use of an automobile, the Executive shall be entitled to the same membership and/or use of an automobile at least comparable to the automobile provided to the Executive prior to the Change in Control.

d.Other Benefits. The Executive also shall be entitled to vacations and sick days, in accordance with the practices and procedures of the Company, as such existed immediately prior to the Change in Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other benefits enjoyed, from time to time, by senior officers of the Company, all upon terms as favorable as those enjoyed by other senior officers of the Company. Notwithstanding anything in this paragraph 5(d) to the contrary, if the Company adopts any change in the benefits provided for senior officers of the Company, and such policy is uniformly applied to all officers of the Company (and any successor or acquirer of the Company, if any), then no such change shall be deemed to be contrary to this paragraph.

6.    Termination for Cause. The Company shall have the right to terminate the Executive for Cause, upon written notice to the Executive of the termination which notice shall specify the reasons for the termination. In the event of termination for Cause the Executive shall not be entitled to any further benefits under this Agreement.

7.    Disability. During the Contract Period if the Executive becomes permanently disabled, or is unable to perform the duties contemplated hereunder for 4 consecutive months in any 12 month period, the Company may terminate the employment of the Executive. In such event, the Executive shall not be entitled to any further benefits under this Agreement.

8.    Death Benefits. Upon the Executive’s death during the Contract Period, the Executive’s estate shall not be entitled to any further benefits under this Agreement.

EXHIBIT 10.V

9.    Termination Without Cause or Resignation for Good Reason. The Company may terminate the Executive without Cause during the Contract Period by written notice to the Executive providing four weeks notice. The Executive may resign for Good Reason during the Contract Period upon four weeks’ written notice to the Company specifying facts and circumstances claimed to support the Good Reason. The Executive shall be entitled to give a Notice of Termination that his or her employment is being terminated for Good Reason at any time during the Contract Period, not later than twelve months after any occurrence of an event stated to constitute Good Reason. If the Company terminates the Executive’s employment during the Contract Period without Cause or if the Executive Resigns for Good Reason, the Company shall, subject to section 12 hereof:

a. within 20 business days of the termination of employment pay the Executive a lump sum equal to three (3) years of Base Salary plus a Pro-rata Bonus Amount.

b. the Company shall, within 20 business days of the termination of employment with the Company, pay the Executive a lump sum amount equal to one hundred percent (100%) of the premium of the life insurance coverage provided to a similarly situated active employee (based upon the coverage and rates in effect on the date the Executive terminates employment) for the equivalent period of the lump sum severance payment (i.e. one (1) year or two (2) years); and

c. the Company shall, within 20 business days of the termination of employment with the Company, pay the Executive a lump sum amount equal to one hundred twenty-five percent (125%) of (A) the aggregate COBRA premium amounts (based upon COBRA rates then in effect) for the equivalent period of the lump sum payment (i.e. one (1) year or two (2) years) of the medical and dental coverage that was being provided to the Executive (and his spouse) at the time of termination of employment, minus (B) the aggregate amount of any employee contribution that would have been required of the Executive (determined as of the termination of employment) for such period.

The Executive shall not have a duty to mitigate the damages suffered by the Executive in connection with the termination by the Company of the Executive’s employment without Cause or a

EXHIBIT 10.V

resignation for Good Reason during the Contract Period. If the Company fails to pay the Executive any lump sum amounts due the Executive hereunder, the Executive, after giving 10 days’ written notice to the Company identifying the Company’s failure, shall be entitled to recover from the Company all of the Executive’s reasonable legal fees and expenses incurred in connection with enforcement against the Company of the terms of this Agreement. The Executive shall be denied payment of legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause.

10.    Resignation Without Good Reason. The Executive shall be entitled to resign from the employment of the Company at any time during the Contact Period without Good Reason, but upon such resignation the Executive shall not be entitled to any additional compensation for the time after which the Executive ceases to be employed by the Company, and shall not be entitled to any of the other benefits provided hereunder. No such resignation shall be effective unless in writing with four weeks’ notice thereof.

11.    Non-Disclosure of Confidential Information.

a.    Non-Disclosure of Confidential Information. Except in the course of the Executive’s employment with the Company and in the pursuit of the business of the Company or any of its subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use, any confidential information or proprietary data of the Company or any of its subsidiaries or affiliates. The Executive agrees that, among other things, all information concerning the identity of and the Company’s relations with its customers is confidential information.

b.    Specific Performance. Executive agrees that the Company does not have an adequate remedy at law for the breach of this section and agrees that he or she shall be subject to injunctive relief and equitable remedies as a result of the breach of this section. The invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining valid portions.

c. Survival. This section shall survive the termination of the Executive’s employment hereunder and the expiration of this Agreement.

12. Certain Reduction of Payments by the Company.

EXHIBIT 10.V

a. Anything in this Agreement to the contrary notwithstanding, prior to the payment of any lump sum amount payable hereunder, the certified public accountants of the Company immediately prior to a Change of Control (the “Certified Public Accountants”) shall determine as promptly as practical and in any event within 20 business days following the termination of employment of Executive whether any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would more likely than not be nondeductible by the Company for Federal income purposes because of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and if it is then the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are thereinafter referred to as “Agreement Payments”) shall be reduced (but not below zero) to the reduced Amount. For purposes of this paragraph, the “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Company because of said Section 280G of the Code.

b. If under paragraph (a) of this section the Certified Public Accountants determine that any Payment would more likely than not be nondeductible by the Company because of Section 280G of the Code, the Company shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Executive may then elect, in the Executive’s sole discretion, which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Agreement Payments equals the Reduced Amount), and shall advise the Company in writing of the election within 20 business days of the receipt of notice. If no such election is made by the Executive within such 20-day period, the Company may elect which and how much of the Agreement Payments shall be eliminated or reduced (as long as after such election the Aggregate present Value of the Agreement Payments equals the Reduced Amount) and shall notify the Executive promptly of such election. For purposes of this paragraph, present Value shall be determined in accordance

EXHIBIT 10.V

with Section 280G(d)(4) of the Code. All determinations made by the Certified Public Accountants shall be binding upon the Company and Executive shall be made within 20 business days of a termination of employment of Executive. With the consent of the Executive, the Company may suspend part or all of the lump sum payment due under Section 9 hereof and any other payments due to the Executive hereunder until the Certified Public Accountants finish the determination and the Executive (or the Company, as the case may be) elect how to reduce the Agreement Payments, if necessary. As promptly as practicable following such determination and the elections hereunder, the Company shall pay to or distribute to or for the benefit of Executive such amounts as are then due to Executive under this Agreement and shall promptly pay to or distribute for the benefit of Executive in the future such amounts as become due to Executive under this Agreement.

c. As a result of the uncertainty in the application of Section 280G of the Code, it is possible that Agreement Payments may have been made by the Company which should not have been made (“Overpayment”) or that additional Agreement Payments which will have not been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Certified Public Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive which said Certified Public Accountants believe has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to Executive which Executive shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, however, that no amount shall be payable by Executive to the Company in and for the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Certified Public Accountants, based upon controlling precedent, determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

EXHIBIT 10.V

13.    Term and Effect Prior to Change in Control.

a. Term. Except as otherwise provided for hereunder, this Agreement shall commence on the date hereof and shall remain in effect for a period of 3 years from the date hereof (the “Initial Term”) or until the end of the Contract Period, whichever is later. The Initial Term shall be automatically extended for an additional one year period on the anniversary date hereof (so that the Initial Term is always 3 years) unless, prior to a Change in Control, the Personnel and Compensation Committee of the Bank notifies the Executive in writing at any time that the Contract is not so extended, in which case the Initial Term shall end upon the later of (i) 3 years after the date hereof, or (ii) twenty-four months after the date of such written notice.

b. No Effect Prior to Change in Control. This Agreement shall not effect any rights of the Company to terminate the Executive prior to a Change in Control or any rights of the Executive granted in any other agreement or contract or plan with the Company. The rights, duties and benefits provided hereunder shall only become effective upon and after a Change in Control. If the full-time employment of the Executive by the Company is ended for any reason prior to a Change in Control, this Agreement shall thereafter be of no further force and effect.

14. Severance Compensation and Benefits Not in Derogation of Other Benefits. Anything to the contrary herein contained notwithstanding, the payment or obligation to pay any monies, or granting of any benefits, rights or privileges to Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of or agreements with the Company, except that if the Executive received any payment hereunder, the Executive shall not be entitled to any payment under the Company’s severance policy for officers and directors.

15.    Delay in Payment. Notwithstanding anything else to the contrary in this Agreement, the BEP, or any other plan, contract, program or otherwise, the Company (and its affiliates) are expressly authorized to delay any scheduled payments under this Agreement, the BEP, and any other plan, contract, program or otherwise, as such payments relate to the Executive, if the Company (or its affiliate) determines

EXHIBIT 10.V

that such delay is necessary in order to comply with the requirements of Section 409A of the Internal Revenue Code. No such payment may be delayed beyond the date that is six (6) months following the Executive ’s separation from service (as defined in Section 409A). At the end of such period of delay, the Executive will be paid the delayed payment amounts, plus interest for the period of any such delay. For purposes of the preceding sentence, interest shall be calculated using the six (6) month Treasury Bill rate in effect on the date on which the payment is delayed, and shall be compounded daily. If the conditions of the severance exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) (or any successor Regulation thereto) are satisfied, payment of benefits shall not be delayed for six (6) months following termination of employment to the extent permitted under the severance exception.

16.    Miscellaneous. This Agreement is the joint and several obligation of the Bank and Valley. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey. This Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby, including expressly any prior agreement with the Company concerning change in control benefits. The amendment or termination of this Agreement may be made only in a writing executed by the Company and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company. This Agreement is personal to the Executive and the Executive may not assign any of the Executive’s rights or duties hereunder but this Agreement shall be enforceable by the Executive’s legal representatives, executors or administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

EXHIBIT 10.V

IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each have caused this Agreement to be signed by their duly authorized representatives pursuant to the authority of their Boards of Directors, and the Executive has personally executed this Agreement, all as of the day and year first written above.

ATTEST:	VALLEY NATIONAL BANCORP
______________________	By:
Alan Eskow, Secretary	Gerald Korde, Chairman,
	Compensation and Human Resources
	Committee
ATTEST:	VALLEY NATIONAL BANK
______________________	By:
Alan Eskow, Secretary	Gerald Korde, Chairman,
	Compensation and Human Resources
	Committee
WITNESS:
_________________________	________________________________
	Rudy Schupp, Executive

EX-12.1

							EXHIBIT 12.1
Computation of Ratios of Earnings to Fixed Charges
	Years ended December 31,
	2016		2015		2014		2013		2012
Excluding interest on deposits	3.91		2.19		2.21		2.41		2.60
Including interest on deposits	2.48		1.76		1.87		2.02		2.11
Note: The ratio of earnings to fixed charges is calculated by adding income before income taxes plus fixed charges and dividing that sum by fixed charges.
	Years ended December 31,
	2016		2015		2014		2013		2012
	(in thousands)
Income before income taxes	$	233,380	$	126,895	$	147,234	$	178,940	$	210,375
Interest on deposits	$	77,562	$	60,256	$	47,553	$	47,791	$	57,556
Borrowings and long-term debt	71,212		96,498		114,293		120,586		123,756
1/3 of net rental expense	9,052		10,582		7,082		6,631		7,949
Total fixed charges, including interest on deposits	$	157,826	$	167,336	$	168,928	$	175,008	$	189,261
Total fixed charges, excluding interest on deposits	$	80,264	$	107,080	$	121,375	$	127,217	$	131,705

EX-12.2

							EXHIBIT 12.2
Computation of Ratios of Earnings to Fixed Charges Including Preferred Stock
	Years ended December 31,
	2016		2015		2014		2013		2012
Excluding interest on deposits	3.67		2.14		2.21		2.41		2.60
Including interest on deposits	2.41		1.74		1.87		2.02		2.11
Note: The ratio of earnings to fixed charges is calculated by adding income before income taxes plus fixed charges and dividing that sum by fixed charges.
	Years ended December 31,
	2016		2015		2014		2013		2012
	(in thousands)
Income before income taxes	$	233,380	$	126,895	$	147,234	$	178,940	$	210,375
Interest on deposits	$	77,562	$	60,256	$	47,553	$	47,791	$	57,556
Borrowings and long-term debt	71,212		96,498		114,293		120,586		123,756
Preferred dividend	7,188		3,813		—		—		—
1/3 of net rental expense	9,052		10,582		7,082		6,631		7,949
Total fixed charges, including interest on deposits	$	165,014	$	171,149	$	168,928	$	175,008	$	189,261
Total fixed charges, excluding interest on deposits	$	87,452	$	107,080	$	121,375	$	127,217	$	131,705

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Valley National Bancorp:

We consent to the incorporation by reference in the registration statements No. 333-211060, No. 333-178867, No. 333-159050, No. 333-133430, No. 333-124215, No. 333-53888, No. 333-80507, No. 333-77673, No. 333-75889, No. 333-65993, No. 333-36667, No. 333-25419, No. 033-61547, No. 033-56933, and No. 033-52809 on Form S-8; No. 333-71546 on Form S-3; No. 333-202916 on Form S-3ASR; and No. 333-160285 and No. 333-56425 on Form S-3D of Valley National Bancorp of our reports dated February 28, 2017, with respect to the consolidated statements of financial condition of Valley National Bancorp as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016, and the effectiveness of internal control over financial reporting as of December 31, 2016, which reports appear in the December 31, 2016 annual report on Form 10-K of Valley National Bancorp.

/s/ KPMG LLP

February 28, 2017

EX-24

EXHIBIT 24

POWER OF ATTORNEY

We, the undersigned directors and officers of Valley National Bancorp, hereby severally constitute and lawfully appoint Gerald H. Lipkin and Alan D. Eskow, and each of them singly, our true and lawful attorneys-in-fact with full power to them and each of them to sign for us, in our names in the capacities indicated below, the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 of Valley National Bancorp and any and all amendments thereto, and to file the same with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Signature	Title	Date
/s/ Gerald H. Lipkin	Chairman of the Board and Chief Executive Officer and Director	February 28, 2017
Gerald H. Lipkin
/s/ Alan D. Eskow	Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 28, 2017
Alan D. Eskow
/s/ Mitchell L. Crandell	First Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	February 28, 2017
Mitchell L. Crandell
/s/ Andrew B. Abramson	Director	February 28, 2017
Andrew B. Abramson
/s/ Peter J. Baum	Director	February 28, 2017
Peter J. Baum
/s/ Pamela R. Bronander	Director	February 28, 2017
Pamela R. Bronander
/s/ Eric P. Edelstein	Director	February 28, 2017
Eric P. Edelstein
/s/ Mary J. Steele Guilfoile	Director	February 28, 2017
Mary J. Steele Guilfoile
/s/ Graham O. Jones	Director	February 28, 2017
Graham O. Jones
/s/ Gerald Korde	Director	February 28, 2017
Gerald Korde
/s/ Michael L. LaRusso	Director	February 28, 2017
Michael L. LaRusso
/s/ Marc J. Lenner	Director	February 28, 2017
Marc J. Lenner
/s/ Barnett Rukin	Director	February 28, 2017
Barnett Rukin
/s/ Suresh L. Sani	Director	February 28, 2017
Suresh L. Sani
/s/ Jeffrey S. Wilks	Director	February 28, 2017
Jeffrey S. Wilks

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Gerald H. Lipkin, certify that:

1    I have reviewed this Annual Report on Form 10-K 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: February 28, 2017

/s/ Gerald H. Lipkin

Gerald H. Lipkin

Chairman of the Board and

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Alan D. Eskow, certify that:

1 I have reviewed this Annual Report on Form 10-K 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: February 28, 2017

/s/ Alan D. Eskow

Alan D. Eskow

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 Annual Report on Form 10-K of Valley National Bancorp (the “Company”) for the period ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Gerald H. Lipkin, as Chief Executive Officer of the Company, and Alan D. Eskow, 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/ Gerald H. Lipkin

Gerald H. Lipkin

Chairman of the Board

and Chief Executive Officer

February 28, 2017

/s/ Alan D. Eskow

Alan D. Eskow

Senior Executive Vice President

and Chief Financial Officer

February 28, 2017

XML

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2016	Feb. 23, 2017	Jun. 30, 2016
Document And Entity Information [Abstract]
Document Type	10-K
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Trading Symbol	VLY
Amendment Flag	false
Entity Registrant Name	Valley National Bancorp
Entity Central Index Key	0000714310
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		263,838,587
Entity Public Float			$ 2.2

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 220,791	$ 243,575
Interest bearing deposits with banks	171,710	170,225
Investment securities:
Held to maturity (fair value of $1,924,597 at December 31, 2016 and $1,621,039 at December 31, 2015)	1,925,572	1,596,385
Available for sale	1,297,373	1,506,861
Total investment securities	3,222,945	3,103,246
Loans held for sale, at fair value	57,708	16,382
Loans	17,236,103	16,043,107
Less: Allowance for loan losses	(114,419)	(106,178)
Net loans	17,121,684	15,936,929
Premises and equipment, net	291,180	298,943
Bank owned life insurance	391,830	387,542
Accrued interest receivable	66,816	63,554
Goodwill	690,637	686,339
Other intangible assets, net	45,484	48,882
Other assets	583,654	656,999
Total Assets	22,864,439	21,612,616
Liabilities
Non-interest bearing	5,252,825	4,914,285
Interest bearing:
Savings, NOW and money market	9,339,012	8,181,362
Time	3,138,871	3,157,904
Total deposits	17,730,708	16,253,551
Short-term borrowings	1,080,960	1,076,991
Long-term borrowings	1,433,906	1,810,728
Junior subordinated debentures issued to capital trusts	41,577	41,414
Accrued expenses and other liabilities	200,132	222,841
Total Liabilities	20,487,283	19,405,525
Shareholders’ Equity
Preferred stock (no par value, authorized 30,000,000 shares; issued 4,600,000 shares at December 31, 2016 and 2015)	111,590	111,590
Common stock (no par value, authorized 332,023,233 shares; issued 263,804,877 shares at December 31, 2016 and 253,787,561 shares at December 31, 2015)	92,353	88,626
Surplus	2,044,401	1,927,399
Retained earnings	172,754	125,171
Accumulated other comprehensive loss	(42,093)	(45,695)
Treasury stock, at cost (166,047 common shares at December 31, 2016)	(1,849)	0
Total Shareholders’ Equity	2,377,156	2,207,091
Total Liabilities and Shareholders’ Equity	$ 22,864,439	$ 21,612,616

XML

Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Investment securities held to maturity	$ 1,924,597	$ 1,621,039
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	30,000,000	30,000,000
Preferred stock, shares issued	4,600,000	4,600,000
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	332,023,233	332,023,233
Common stock, shares issued	263,804,877	253,787,561
Treasury stock, shares	166,047	0

XML

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Interest Income
Interest and fees on loans	$ 685,911	$ 633,199	$ 552,821
Interest and dividends on investment securities:
Taxable	58,143	52,050	62,458
Tax-exempt	15,537	14,568	14,683
Dividends	6,206	6,557	6,272
Interest on federal funds sold and other short-term investments	1,126	649	369
Total interest income	766,923	707,023	636,603
Interest Expense
Savings, NOW and money market	39,787	24,824	19,671
Time	37,775	35,432	27,882
Interest on short-term borrowings	12,022	919	972
Interest on long-term borrowings and junior subordinated debentures	59,190	95,579	113,321
Total interest expense	148,774	156,754	161,846
Net Interest Income	618,149	550,269	474,757
Provision for credit losses	11,869	8,101	1,884
Net Interest Income After Provision for Credit Losses	606,280	542,168	472,873
Non-Interest Income
Trust and investment services	10,345	10,020	9,512
Insurance commissions	19,106	17,233	16,853
Service charges on deposit accounts	20,879	21,176	22,771
Gains on securities transactions, net	777	2,487	745
Fees from loan servicing	6,441	6,641	7,013
Gains on sales of loans, net	22,030	4,245	1,731
Gains on sales of assets, net	1,358	2,776	18,087
Bank owned life insurance	6,694	6,815	6,392
Change in FDIC loss-share receivable	(1,291)	(3,326)	(20,792)
Other	16,886	15,735	15,304
Total non-interest income	103,225	83,802	77,616
Non-Interest Expense
Salary and employee benefits expense	235,853	221,765	193,489
Net occupancy and equipment expense	87,140	90,521	74,492
FDIC insurance assessment	20,100	16,867	14,051
Amortization of other intangible assets	11,327	9,169	9,919
Professional and legal fees	17,755	18,945	16,859
Loss on extinguishment of debt	315	51,129	10,132
Amortization of tax credit investments	34,744	27,312	24,196
Telecommunication expenses	10,021	8,259	6,993
Other	58,870	55,108	53,124
Total non-interest expense	476,125	499,075	403,255
Income before income taxes	233,380	126,895	147,234
Income tax expense	65,234	23,938	31,062
Net Income	168,146	102,957	116,172
Dividends on preferred stock	7,188	3,813	0
Net Income Available to Common Shareholders	$ 160,958	$ 99,144	$ 116,172
Earnings Per Common Share:
Basic (in usd per share)	$ 0.63	$ 0.42	$ 0.56
Diluted (in usd per share)	0.63	0.42	0.56
Cash dividends declared per common share (in usd per share)	$ 0.44	$ 0.44	$ 0.44
Weighted Average Number of Common Shares Outstanding:
Basic (in shares)	254,841,571	234,405,909	205,716,293
Diluted (in shares)	255,268,336	234,437,000	205,716,293

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 168,146	$ 102,957	$ 116,172
Other comprehensive income (loss), net of tax:
Net (losses) gains arising during the period	(4,293)	(2,000)	19,398
Less reclassification adjustment for net gains included in net income	(465)	(1,446)	(433)
Total	(4,758)	(3,446)	18,965
Non-credit impairment losses on available for sale and held to maturity securities
Net change in non-credit impairment losses on securities	417	(241)	1,334
Less reclassification adjustment for accretion of credit impairment losses included in net income	(539)	(424)	(383)
Total	(122)	(665)	951
Unrealized gains and losses on derivatives (cash flow hedges)
Net losses on derivatives arising during the period	(2,461)	(7,239)	(12,147)
Less reclassification adjustment for net losses included in net income	7,641	4,127	3,886
Total	5,180	(3,112)	(8,261)
Defined benefit pension plan
Net gains (losses) arising during the period	3,298	3,444	(16,207)
Amortization of prior service cost	(181)	117	177
Amortization of net loss	185	462	132
Total	3,302	4,023	(15,898)
Total other comprehensive income (loss)	3,602	(3,200)	(4,243)
Total comprehensive income	$ 171,748	$ 99,757	$ 111,929

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Preferred Stock	Common Stock	Preferred Stock	Preferred Stock Preferred Stock	Common Stock	Common Stock Common Stock	Surplus	Surplus Common Stock	Retained Earnings	Retained Earnings Preferred Stock	Retained Earnings Common Stock	Accumulated Other Comprehensive Loss	Treasury Stock	Treasury Stock Common Stock
Beginning balance at Dec. 31, 2013	$ 1,541,040			$ 0		$ 69,941		$ 1,403,375		$ 106,340			$ (38,252)	$ (364)
Beginning balance, shares at Dec. 31, 2013						199,593
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	116,172									116,172
Other comprehensive loss, net of tax	(4,243)												(4,243)
Cash dividends declared on stock	(91,581)									(91,581)
Effect of stock incentive plan, net	5,806					$ 234		6,269		(83)				(614)
Effect of stock incentive plan, net, shares						1,299
Stock issued	295,823					$ 10,897		284,108		(3)				821
Stock issued, shares						31,219
Ending balance at Dec. 31, 2014	1,863,017			0		$ 81,072		1,693,752		130,845			(42,495)	(157)
Ending balance, shares at Dec. 31, 2014						232,111
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	102,957									102,957
Other comprehensive loss, net of tax	(3,200)												(3,200)
Cash dividends declared on stock		$ (3,813)	$ (104,753)								$ (3,813)	$ (104,753)
Effect of stock incentive plan, net	4,715					$ 190		7,153		(30)				(2,598)
Effect of stock incentive plan, net, shares						500
Stock issued		111,590	236,578		$ 111,590		$ 7,364		$ 226,494			(35)		2,755
Stock issued, shares							21,177
Ending balance at Dec. 31, 2015	2,207,091			111,590		$ 88,626		1,927,399		125,171			(45,695)	0
Ending balance, shares at Dec. 31, 2015						253,788
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	168,146									168,146
Other comprehensive loss, net of tax	3,602												3,602
Cash dividends declared on stock		$ (7,188)	(113,212)								$ (7,188)	(113,212)
Effect of stock incentive plan, net	7,065					$ 365		10,737		(143)				(3,894)
Effect of stock incentive plan, net, shares						57
Stock issued			$ 111,652				$ 3,362		$ 106,265			$ (20)			$ 2,045
Stock issued, shares							9,794
Ending balance at Dec. 31, 2016	$ 2,377,156			$ 111,590		$ 92,353		$ 2,044,401		$ 172,754			$ (42,093)	$ (1,849)
Ending balance, shares at Dec. 31, 2016						263,639

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 168,146	$ 102,957	$ 116,172
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	24,431	21,082	19,465
Stock-based compensation	10,032	7,575	7,489
Provision for credit losses	11,869	8,101	1,884
Net amortization of premiums and accretion of discounts on securities and borrowings	24,310	22,080	26,949
Amortization of other intangible assets	11,327	9,169	9,919
Gains on securities transactions, net	(777)	(2,487)	(745)
Proceeds from sales of loans held for sale	572,439	144,790	85,452
Gains on sales of loans, net	(22,030)	(4,245)	(1,731)
Originations of loans held for sale	(425,713)	(134,328)	(91,463)
Gains on sales of assets, net	(1,358)	(2,776)	(18,087)
Net deferred income tax expense	27,154	16,453	11,455
FDIC loss-share receivable (excluding reimbursements)	1,291	3,326	20,792
Net change in:
Trading securities	0	14,233	31
Fair value of borrowings hedged by derivative transactions	6,158	1,473	1,364
Cash surrender value of bank owned life insurance	(6,694)	(6,815)	(6,392)
Accrued interest receivable	(3,262)	(2,480)	423
Other assets	46,167	(74,589)	15,867
Accrued expenses and other liabilities	(24,313)	31,410	(14,868)
Net cash provided by operating activities	419,177	154,929	183,976
Cash flows from investing activities:
Net loan originations and purchases	(1,379,218)	(1,756,578)	(778,300)
Investment securities held to maturity:
Purchases	(669,157)	(239,608)	(397,186)
Sales	0	11,666	0
Maturities, calls and principal repayments	325,766	402,485	347,531
Investment securities available for sale:
Purchases	(679,530)	(594,327)	(28,415)
Sales	4,782	140,640	62,025
Maturities, calls and principal repayments	867,998	142,588	153,673
Death benefit proceeds from bank owned life insurance	2,406	0	0
Proceeds from sales of real estate property and equipment	20,560	23,861	43,360
Purchases of real estate property and equipment	(20,707)	(34,040)	(21,862)
(Payments to) reimbursements from the FDIC	(213)	1,889	5,582
Cash and cash equivalents acquired in acquisitions	0	201,025	102,025
Net cash used in investing activities	(1,527,313)	(1,700,399)	(511,567)
Cash flows from financing activities:
Net change in deposits	1,477,157	1,051,660	1,300,011
Net change in short-term borrowings	3,969	873,123	(151,470)
Proceeds from issuance of long-term borrowings, net	385,000	162,792	0
Repayments of long-term borrowings	(769,182)	(970,000)	(275,000)
Proceeds from issuance of preferred stock, net	0	111,590	0
Dividends paid to preferred shareholders	(7,188)	(3,813)	0
Cash dividends paid to common shareholders	(111,813)	(102,279)	(88,119)
Purchase of common shares to treasury	(3,191)	(2,108)	(1,688)
Common stock issued, net	112,085	7,898	5,096
Net cash provided by financing activities	1,086,837	1,128,863	788,830
Net change in cash and cash equivalents	(21,299)	(416,607)	461,239
Cash and cash equivalents at beginning of year	413,800	830,407	369,168
Cash and cash equivalents at end of year	392,501	413,800	830,407
Supplemental disclosures of cash flow information:
Interest on deposits and borrowings	151,209	159,170	162,762
Federal and state income taxes	26,564	50,027	34,236
Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned	8,089	8,828	11,012
Loans transferred to loans held for sale	174,501	0	27,329
Non-cash assets acquired:
Loans	0	822,716	1,160,269
Premises and equipment	0	8,550	11,234
Bank owned life insurance	0	5,090	25,224
Accrued interest receivable	0	3,741	3,792
Goodwill	0	113,587	148,115
Other intangible assets	0	18,616	9,750
Other assets	0	49,831	52,349
Total non-cash assets acquired	0	1,349,283	1,634,737
Liabilities assumed:
Deposits	0	1,167,725	1,414,843
Short-term borrowings	0	57,087	16,796
Long-term borrowings	0	90,738	0
Accrued expenses and other liabilities	0	5,156	13,900
Total liabilities assumed	0	1,320,706	1,445,539
Net non-cash assets acquired	0	28,577	189,198
Net cash and cash equivalents acquired in acquisition	0	201,025	102,025
Common stock issued in acquisition	0	229,602	291,223
Held-to-maturity securities
Non-cash assets acquired:
Investments acquired	0	0	7,930
Available for sale securities
Non-cash assets acquired:
Investments acquired	$ 0	$ 327,152	$ 216,074

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Note 1)

Business

Valley National Bancorp, a New Jersey Corporation (Valley), is a bank holding company whose principal wholly-owned subsidiary is Valley National Bank (the “Bank”), a national banking association providing a full range of commercial, retail and trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, and Florida. The Bank is subject to intense competition from other financial services companies and is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by certain regulatory authorities.

Valley National Bank’s subsidiaries are all included in the consolidated financial statements of Valley. These subsidiaries include, but are not limited to:

• an all-line insurance agency offering property and casualty, life and health insurance;

• an asset management adviser that is a registered investment adviser with Securities and Exchange Commission (SEC);

• title insurance agencies in New Jersey, New York and Florida;

• subsidiaries which hold, maintain and manage investment assets for the Bank;

• a subsidiary which owns and services auto loans;

• a subsidiary which specializes in health care equipment lending and other commercial equipment leases; and

• a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the “REIT” subsidiaries) which own real estate related investments and a REIT subsidiary which owns some of the real estate utilized by the Bank and related real estate investments. Except for Valley’s REIT subsidiaries, all subsidiaries mentioned above are directly or indirectly wholly-owned by the Bank. Because each REIT subsidiary must have 100 or more shareholders to qualify as a REIT, each REIT subsidiary has issued less than 20 percent of its outstanding non-voting preferred stock to individuals, most of whom are non-senior management Bank employees. The Bank owns the remaining preferred stock and all the common stock of the REITs.

Basis of Presentation

The consolidated financial statements of Valley include the accounts of its commercial bank subsidiary, Valley National 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. See Note 11 for more details. Certain prior period amounts have been reclassified to conform to the current presentation.

In preparing the 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 are particularly susceptible to change are: the allowance for loan losses; the evaluation of goodwill and other intangible assets, and investment securities for impairment; fair value measurements of assets and liabilities; 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.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest bearing deposits in other banks (including the Federal Reserve Bank of New York) and, from time to time, overnight federal funds sold. The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank based on a percentage of deposits. These reserve balances totaled $113.8 million and $59.9 million at December 31, 2016 and 2015, respectively.

Investment Securities

At the time of purchase, management generally elects to classify investment securities into one of two categories: held to maturity or available for sale. Investment securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold to maturity. Investment securities to be held for indefinite periods are classified as available for sale and carried at fair value, with unrealized holding gains and losses reported as a component of other comprehensive income or loss, net of tax. Realized gains or losses on the sale of available for sale are recognized by the specific identification method and are included in net gains on securities transactions. Investments in Federal Home Loan Bank and Federal Reserve Bank stock, which have limited marketability, are carried at cost in other assets.

Quarterly, Valley evaluates its investment securities classified as held to maturity and available for sale for other-than-temporary impairment. Other-than-temporary impairment means Valley believes the security’s impairment is due to factors that could include the issuer’s inability to pay interest or dividends, the potential for default, and/or other factors. When a held to maturity or available for sale debt security is assessed for other-than-temporary impairment, Valley has to first consider (a) whether it intends to sell the security, and (b) whether it is more likely than not that Valley will be required to sell the security prior to recovery of its amortized cost basis. If neither of these circumstances applies to a security, but Valley does not expect to recover the entire amortized cost basis, an other-than-temporary impairment loss has occurred that must be separated into two categories: (a) the amount related to credit loss, and (b) the amount related to other factors. In assessing the level of other-than-temporary impairment attributable to credit loss, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. The portion of the total other-than-temporary impairment related to credit loss is recognized in earnings, while the portion related to other factors is recognized in other comprehensive income or loss. The total other-than-temporary impairment loss is presented in the statement of income, less the portion recognized in other comprehensive income or loss. When a debt security becomes other-than-temporarily impaired, its amortized cost basis is reduced to reflect the portion of the total impairment related to credit loss. There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its securities during 2016, 2015 and 2014.

To determine whether a security’s impairment is other-than-temporary, Valley considers factors that include, among others, the causes of the decline in fair value, such as credit problems, interest rate fluctuations, or market volatility; the severity and duration of the decline; Valley’s ability and intent to hold equity security investments until they recover in value (as well as the likelihood of such a recovery in the near term); Valley’s intent to sell security investments; and whether it is more likely than not that Valley will be required to sell such securities before recovery of their individual amortized cost basis. For debt securities, the primary consideration in determining whether impairment is other-than-temporary is whether or not it is probable that current and/or future contractual cash flows have been or may be impaired. See the “Other-Than-Temporary Impairment Analysis” section of Note 4 for further discussion.

Interest income on investments includes amortization of purchase premiums and discounts. Realized gains and losses are derived based on the amortized cost of the security sold. 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.

Loans Held for Sale

Loans held for sale generally consist of conforming residential mortgage loans originated and intended for sale in the secondary market and are carried at their estimated fair value on an instrument-by-instrument basis as permitted by the fair value option election under U.S. GAAP. Changes in fair value are recognized in non-interest income in the accompanying consolidated statements of income as a component of net gains on sales of loans. Origination fees and costs related to loans held for sale are recognized as earned and as incurred. Loans held for sale are generally sold with loan servicing rights retained by Valley. Gains recognized on loan sales include the value assigned to the rights to service the loan. See “Loan Servicing Rights” section below.

Loans and Loan Fees

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans and premium or discounts on purchased loans, except for purchased credit-impaired loans. Loan origination and commitment fees, net of related costs are deferred and amortized as an adjustment of loan yield over the estimated life of the loans approximating the effective interest method.

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. Payments received on non-accrual loans are generally applied against principal. 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.

Purchased Credit-Impaired Loans (Including Covered Loans)

Purchased credit-impaired (PCI) loans are loans acquired at a discount (that is due, in part, to credit quality). Valley's PCI loan portfolio primarily consists of loans acquired in business combinations subsequent to 2011 and (covered) loans in which the Bank will share losses with the FDIC under loss-sharing agreements that have resulted from past FDIC-assisted transactions by Valley and acquired from 1st United Bancorp, Inc. (1st United) in 2014. The PCI loans are initially recorded at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Interest income on PCI loans has been accounted for based on the acquired loans’ expected cash flows. The PCI loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flow.

The difference between the undiscounted cash flows expected at acquisition and the investment in the loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or an allowance for loan losses. Increases in expected cash flows subsequent to the acquisition are recognized prospectively through adjustment of the yield on the pool over its remaining life, while decreases in expected cash flows are recognized as impairment through a loss provision and an increase in the allowance for loan losses. Therefore, the allowance for loan losses on these impaired pools reflect only losses incurred after the acquisition (representing the present value of all cash flows that were expected at acquisition but currently are not expected to be received). Any allowance for loan losses related to covered PCI loans is determined without consideration of the amounts recoverable through the FDIC loss-share agreements (see “FDIC Loss-Share Receivable” below). Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015.

The Bank periodically evaluates the remaining contractual required payments due and estimates of cash flows expected to be collected for the underlying loans of each PCI loan pool. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Changes in the contractual required payments due and estimated cash flows expected to be collected may result in changes in the accretable yield and non-accretable difference or reclassifications between accretable yield and the non-accretable difference. For the pools with better than expected cash flows, the forecasted increase is recorded as an additional accretable yield that is recognized as a prospective increase to our interest income on loans and the FDIC loss-share receivable, if applicable, is prospectively reduced by the guaranteed portion of the additional cash flows expected to be received, with a corresponding reduction to non-interest income. See Note 5 for additional information.

PCI loans that may have been classified as non-performing loans by an acquired bank are no longer classified as non-performing because these loans are accounted for on a pooled basis. Management’s judgment is required in classifying loans in pools as performing loans, and is dependent on having a reasonable expectation about the timing and amount of the pool cash flows to be collected, even if certain loans within the pool are contractually past due.

FDIC Loss-Share Receivable

Valley National Bank has several loss-share agreements with the FDIC (referred to as the “FDIC loss-share receivable” reported within other assets on Valley’s consolidated statements of financial condition) which relate to the LibertyPointe Bank and The Park Avenue Bank transactions entered into by Valley in 2010, as well as three prior FDIC-assisted transactions by 1st United (including Republic Federal Bank, The Bank of Miami and Old Harbor Bank) acquired by Valley in 2014. The FDIC loss-share receivable arising from the loss-share agreements is measured separately from the covered loan pools because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans. At the date of acquisition, the FDIC loss-share receivable was measured at its fair value based on expected future cash flows covered by the loss share agreements. In addition, the asset is based on the credit adjustments estimated for each loan pool and the loss-share percentages. Our FDIC loss-share receivable totaled $7.2 million and $8.3 million at December 31, 2016 and 2015, respectively. Although this asset represents a contractual receivable from the FDIC, there is no contractual interest rate associated with the asset.

The difference between the present value and the undiscounted cash flow expected to be collected from the FDIC is accreted into non-interest income over the life of the FDIC loss-share receivable. Actual or expected losses in excess of the acquisition date estimates result in an increase in the FDIC loss-share receivable. Conversely, when actual or expected losses are less than the acquisition date estimates, the loss share receivable is decreased. This reduction is recognized prospectively over the shorter of (i) the estimated life of the respective pools of covered loans or (ii) the term of the loss-sharing agreements with the FDIC. The FDIC loss-share receivable is also reduced and increased as loss-sharing payments are received from and made to the FDIC.

Effective January 1, 2015, the losses on commercial related loans (commercial and industrial loans and commercial real estate loans) from the Republic Federal Bank transaction ceased being covered under the loss-share agreement. Any recoveries, net of expenses, of losses incurred prior to January 1, 2015 on such loans will continue to be covered (and must be shared with the FDIC in accordance with the loss-share agreement) through December 31, 2017. The losses on consumer related loans (residential mortgage loans and consumer loans) continue to be covered under the loss-share agreement through December 31, 2019. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loan and other real estate owned portfolio between 80 percent and 95 percent based upon certain aggregate loss limits.

Effective April 1, 2015, the losses on commercial related loans from the LibertyPointe Bank and The Park Avenue Bank transactions ceased to be covered under the loss-share agreements. Any recoveries, net of expenses, of losses incurred prior to April 1, 2015 on such loans will continue to be covered by the loss-sharing agreement through March 31, 2018. The losses on consumer related loans will continue to be covered under the loss-share agreements through March 31, 2020. Under the terms of the loss-sharing agreements for the LibertyPointe Bank and The Park Avenue Bank transaction, the FDIC is obligated to reimburse Valley for 80 percent and 95 percent, respectively, of any future losses on covered consumer loans up to certain aggregate loss limits.

Effective January 1, 2016, the losses on commercial related loans from The Bank of Miami transaction ceased to be covered under the loss-share agreement. Any recoveries, net of expenses, of losses incurred prior to January 1, 2016 on such loans will continue to be covered through December 31, 2018. The losses on consumer related loans continue to be covered under the loss-share agreement through December 31, 2020. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loan and other real estate owned portfolio up to 80 percent of the covered assets acquired.

Effective January 1, 2017, the losses on commercial related loans from the Old Harbor Bank transaction ceased to be covered under the loss-share agreement. Any recoveries, net of expenses, on losses incurred prior that date will be shared with the FDIC in accordance with the loss-share agreement through December 31, 2019. The losses on consumer related loans will continue to be covered under the loss-share agreement through October 31, 2021. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loans and other real estate owned portfolio up to 70 percent of those covered assets within certain aggregate loss limits.

Allowance for Credit Losses

The allowance for credit losses (the “allowance”) is increased through provisions charged against current earnings and additionally by crediting amounts of recoveries received, if any, on previously charged-off loans. The allowance is reduced by charge-offs on loans or unfunded letters of credit which are determined to be a loss, in accordance with established policies, when all efforts of collection have been exhausted.

The allowance is maintained at a level estimated to absorb probable credit losses inherent in the loan portfolio as well as other credit risk related charge-offs. The allowance is based on ongoing evaluations of the probable estimated losses inherent in the non-PCI loan portfolio and off-balance sheet unfunded letters of credit, as well as reserves for impairment of PCI loans subsequent to their acquisition date. As discussed under the “Purchased Credit-Impaired Loans” section above, Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015. The Bank’s methodology for evaluating the appropriateness of the allowance includes grouping the non-covered loan portfolio into loan segments based on common risk characteristics, tracking the historical levels of classified loans and delinquencies, estimating the appropriate loss look-back and loss emergence periods related to historical losses for each loan segment, providing specific reserves on impaired loans, and assigning incremental reserves where necessary based upon qualitative and economic outlook factors including numerous variables, such as the nature and trends of recent loan charge-offs. Additionally, the volume of non-performing loans, concentration risks by size, type, and geography, new markets, collateral adequacy, credit policies and procedures, staffing, underwriting consistency, loan review and economic conditions are taken into consideration.

The allowance for loan losses consists of four elements: (i) specific reserves for individually impaired credits, (ii) reserves for adversely classified, or higher risk rated, loans that are not impaired, (iii) reserves for other loans based on historical loss factors (using the appropriate loss look-back and loss emergence periods) adjusted for both internal and external qualitative risk factors to Valley, including the aforementioned factors, as well as changes in both organic and purchased loan portfolio volumes, the composition and concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing, and (iv) an allowance for PCI loan pools impaired subsequent to the acquisition date, if applicable.

The Credit Risk Management Department individually evaluates non-accrual (non-homogeneous) commercial and industrial loans and commercial real estate loans over $250 thousand and all troubled debt restructured loans. The value of an impaired loan is measured based upon the underlying anticipated method of payment consisting of either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent, and its payment is expected solely based on the underlying collateral. If the value of an impaired loan is less than its carrying amount, impairment is recognized through a provision to the allowance for loan losses. Collateral dependent impaired 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. 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 a specific valuation allowance in the allowance for loan losses. Accrual of interest is discontinued on an impaired loan when management believes, after considering collection efforts and other factors, the borrower’s financial condition is such that collection of interest is doubtful. Cash collections from non-accrual loans are generally credited to the loan balance, and no interest income is recognized on these loans until the principal balance has been determined to be fully collectible. Residential mortgage loans and consumer loans usually consist of smaller balance homogeneous loans that are collectively evaluated for impairment, and are specifically excluded from the impaired loan portfolio, except where the loan is classified as a troubled debt restructured loan.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of the loans. Loans are evaluated based on an internal credit risk rating system for the commercial and industrial loan and commercial real estate loan portfolio segments and non-performing loan status for the residential and consumer loan portfolio segments. Loans are risk-rated based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial and industrial loans and commercial real estate loans, and evaluated by the Loan Review Department on a test basis. Loans with a grade that is below “Pass” grade are adversely classified. See Note 5 for details. Any change in the credit risk grade of adversely classified performing and/or non-performing loans affects the amount of the related allowance. Once a loan is adversely classified, the assigned relationship manager and/or a special assets officer in conjunction with the Credit Risk Management Department analyze the loan to determine whether the loan is impaired and, if impaired, the need to specifically assign a valuation allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. Loans identified as losses by management are charged-off. Commercial loans are generally assessed for full or partial charge-off to the net realizable value for collateral dependent loans when a loan is between 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectable. Residential loans and home equity loans are generally charged-off to net realizable value when the loan is 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy). Automobile loans are fully charged-off when the loan is 120 days past due or partially charged-off to the net realizable value of collateral, if the collateral is recovered prior to such time. Unsecured consumer loans are generally fully charged-off when the loan is 150 days past due.

The allowance allocations for other loans (i.e., risk rated loans that are not adversely classified and loans that are not risk rated) are calculated by applying historical loss factors for each loan portfolio segment to the applicable outstanding loan portfolio balances. Loss factors are calculated using statistical analysis supplemented by management judgment. The statistical analysis considers historical default rates, historical loss severity in the event of default, and the average loss emergence period for each loan portfolio segment. The management analysis includes an evaluation of loan portfolio volumes, the composition and concentrations of credit, credit quality and current delinquency trends.

See Notes 5 and 6 for Valley’s loan credit quality and additional allowance disclosures.

Premises and Equipment, Net

Premises and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives range from 3 years for capitalized software to up to 40 years for buildings. Leasehold improvements are amortized over the term of the lease or estimated useful life of the asset, whichever is shorter. Major improvements are capitalized, while repairs and maintenance costs are charged to operations as incurred. Upon retirement or disposition, any gain or loss is credited or charged to operations. See Note 7 for further details.

Bank Owned Life Insurance

Valley owns bank owned life insurance (BOLI) to help offset the cost of employee benefits. BOLI is recorded at its cash surrender value. Valley’s BOLI is invested primarily in U.S. Treasury securities and residential mortgage-backed securities issued by government sponsored enterprises and Ginnie Mae. The majority of the underlying investment portfolio is managed by one independent investment firm. The change in the cash surrender value is included as a component of non-interest income and is exempt from federal and state income taxes as long as the policies are held until the death of the insured individuals.

Other Real Estate Owned

Valley acquires other real estate owned (OREO) through foreclosure on loans secured by real estate. OREO is reported at the lower of cost or fair value, as established by a current appraisal (less estimated costs to sell), and is included in other assets. Any write-downs at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred to maintain these properties, unrealized losses resulting from valuation write-downs after the date of foreclosure, and realized gains and losses upon sale of the properties are included in other non-interest expense. OREO and other repossessed assets totaled $10.6 million and $19.0 million (including $588 thousand and $5.0 million of OREO properties related to the FDIC-assisted transactions, which are subject to the loss-sharing agreements) at December 31, 2016 and 2015, respectively. At December 31, 2016, OREO included foreclosed residential real estate properties totaling $1.6 million. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $7.1 million at December 31, 2016.

Goodwill

Intangible assets resulting from acquisitions under the acquisition method of accounting consist of goodwill and other intangible assets (see “Other Intangible Assets” below). Goodwill is not amortized and is subject to an annual assessment for impairment. Currently, the goodwill impairment analysis is generally a two-step test. However, Valley may choose to perform an optional qualitative assessment to determine whether it is necessary to perform the two-step quantitative goodwill impairment test for one or more units in future periods. During 2016 and 2015, Valley elected to perform step one of the two-step goodwill impairment test for all of its reporting units.

Goodwill is allocated to Valley’s reporting unit, which is a business segment or one level below, at the date goodwill is actually recorded. If the carrying value of a reporting unit exceeds its estimated fair value, a second step in the analysis is performed to determine the amount of impairment, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying value of a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded equal to the excess amount in the current period earnings. Valley reviews goodwill annually or more frequently if a triggering event indicates impairment may have occurred, to determine potential impairment by determining if the fair value of the reporting unit has fallen below the carrying value.

Other Intangible Assets

Other intangible assets primarily consist of loan servicing rights (largely generated from loan servicing retained by the Bank on residential mortgage loan originations sold in the secondary market to government sponsored enterprises), core deposits (the portion of an acquisition purchase price which represents value assigned to the existing deposit base), customer lists, and covenants not to compete obtained through acquisitions. Other intangible assets are amortized using various methods over their estimated lives and are periodically evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impairment is deemed to exist, an adjustment is recorded to earnings in the current period for the difference between the fair value of the asset and its carrying amount. See further details regarding loan servicing rights below.

Loan Servicing Rights

Loan servicing rights are recorded when originated mortgage loans are sold with servicing rights retained, or when servicing rights are purchased. Valley initially records the loan servicing rights at fair value. Subsequently, the loan servicing rights are carried at the lower of unamortized cost or market (i.e., fair value). The fair values of the loan servicing rights are determined using a method which utilizes servicing income, discount rates, prepayment speeds and default rates specifically relative to Valley’s portfolio for originated mortgage servicing rights.

The unamortized costs associated with acquiring loan servicing rights, net of any valuation allowances, are included in other intangible assets in the consolidated statements of financial condition and are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets in proportion to and over the period of 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. A valuation allowance is established through an impairment charge to earnings to the extent the unamortized cost of a stratified group of loan servicing rights exceeds its estimated fair value. Increases in the fair value of impaired loan servicing rights are recognized as a reduction of the valuation allowance, but not in excess of such allowance. The amortization of loan servicing rights is recorded in non-interest income.

Stock-Based Compensation

Compensation expense for stock options and restricted stock awards (i.e., non-vested stock awards) is based on the fair value of the award on the date of the grant and is recognized ratably over the service period of the award. Under Valley’s long-term incentive compensation plans, award grantees that are eligible for retirement do not have a service period requirement. Compensation expense for these awards is recognized immediately in earnings. The service period for non-retirement eligible employees is the shorter of the stated vesting period of the award or the period until the employee’s retirement eligibility date. The fair value of each option granted is estimated using a binomial option pricing model. The fair value of restricted stock awards is based upon the last sale price reported for Valley’s common stock on the date of grant or the last sale price reported preceding such date, except for performance-based restricted stock and restricted stock unit awards with a market condition. The grant date fair value of a performance-based restricted stock or restrict stock unit award that vests based on a market condition is determined by a third party specialist using a Monte Carlo valuation model. See Note 12 for additional information.

Fair Value Measurements

In general, fair values of financial instruments are based upon quoted market prices, where available. When observable market prices and parameters are not fully available, management uses valuation techniques based upon internal and third party models requiring more management judgment to estimate the appropriate fair value measurements. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, including adjustments based on internal cash flow model projections that utilize assumptions similar to those incorporated by market participants. Other adjustments may include amounts to reflect counterparty credit quality and Valley’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. See Note 3 for additional information.

Income Taxes

Valley uses the asset and liability method to provide income taxes on all transactions recorded in the consolidated financial statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the enacted tax rates that will be in effect when the underlying items of income and expense are expected to be realized.

Valley’s expense for income taxes includes the current and deferred portions of that expense. Deferred tax assets are recognized if, in management's judgment, their realizability is determined to be more likely than not. A valuation allowance is established to reduce deferred tax assets to the amount we expect to realize. Deferred income tax expense or benefit results from differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Valley maintains a reserve related to certain tax positions that management believes contain an element of uncertainty. An uncertain tax position is measured based on the largest amount of benefit that management believes is more likely than not to be realized. Periodically, Valley evaluates each of its tax positions and strategies to determine whether the reserve continues to be appropriate. See Note 13 for further analysis of Valley’s accounting for income taxes.

Comprehensive Income

Comprehensive income or loss is defined as the change in equity of a business entity during a period due to transactions and other events and circumstances, excluding those resulting from investments by and distributions to shareholders. Comprehensive income consists of net income and other comprehensive income or loss. Valley’s components of other comprehensive income or loss, net of deferred tax, include: (i) unrealized gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges relating to these securities); (ii) unrealized gains and losses on derivatives used in cash flow hedging relationships; and (iii) the pension benefit adjustment for the unfunded portion of its various employee, officer, and director pension plans. Valley presents comprehensive income and its components in the consolidated statements of comprehensive income for all periods presented. See Note 19 for additional disclosures.

Earnings Per Common Share

In Valley's computation of the earnings per common share, the numerator of both the basic and diluted earnings per common share is net income available to common shareholders (which is equal to net income less dividends on preferred stock). The weighted average number of common shares outstanding used in the denominator for basic earnings per common share is increased to determine the denominator used for diluted earnings per common share by the effect of potentially dilutive common stock equivalents utilizing the treasury stock method.

The following table shows the calculation of both basic and diluted earnings per common share for the years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands, except for share data)
Net income available to common shareholders	$	160,958	$	99,144	$	116,172
Basic weighted-average number of common shares outstanding	254,841,571		234,405,909		205,716,293
Plus: Common stock equivalents	426,765		31,091		—
Diluted weighted-average number of common shares outstanding	255,268,336		234,437,000		205,716,293
Earnings per common share:
Basic	$	0.63	$	0.42	$	0.56
Diluted	0.63		0.42		0.56

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of performance-based restricted stock units, common stock options and warrants to purchase Valley’s common shares. Common stock options and warrants with exercise prices that exceed the average market price 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 and warrants equaled approximately 4.0 million, 4.7 million, and 6.2 million of common shares for the years ended December 31, 2016, 2015, and 2014, respectively.

Preferred and Common Stock Dividends

In June 2015, Valley issued 4.6 million shares of non-cumulative perpetual preferred stock which were initially recorded at fair value (see Note 18 for additional details on the preferred stock issuance). The preferred shares are senior to Valley common stock, whereas the current year dividends must be paid before Valley can pay dividends to its common stockholders. Preferred dividends declared are deducted from net income for computing income available to common stockholders and earnings per common share computations.

Cash dividends to both preferred and common stockholders are payable and accrued when declared by Valley's Board of Directors.

Treasury Stock

Treasury stock is recorded using the cost method and accordingly is presented as a reduction of shareholders’ equity.

Derivative Instruments and Hedging Activities

As part of its asset/liability management strategies and to accommodate commercial borrowers, Valley has used interest rate swaps and caps to hedge variability in cash flows or fair values caused by changes in interest rates. Valley also uses derivatives not designated as hedges for non-speculative purposes to manage its exposure to interest rate movements related to a service for commercial lending customers, mortgage banking activities consisting of customer interest rate lock commitments and forward contracts to sell residential mortgage loans, and hybrid instruments, consisting of market linked certificates of deposit with an embedded swap contract. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Valley records all derivatives as assets or liabilities at fair value on the consolidated statements of financial condition.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income or loss and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. On a quarterly basis, Valley assesses the effectiveness of each hedging relationship by comparing the changes in cash flows or fair value of the derivative hedging instrument with the changes in cash flows or fair value of the designated hedged item or transaction. If a hedging relationship is terminated due to ineffectiveness, and the derivative instrument is not re-designated to a new hedging relationship, the subsequent change in fair value of such instrument is charged directly to earnings. Derivatives not designated as hedges do not meet the hedge accounting requirements under U.S. GAAP. Changes in fair value of derivatives not designated in hedging relationships are recorded directly in earnings. Valley made an accounting policy election to use the exception under the ASU No. 2011-04 and calculate the credit valuation adjustments to the fair value of derivatives on a net basis by counterparty portfolio. See Note 3 for additional information.

New Authoritative Accounting Guidance

Accounting Standards Update (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 is effective for Valley for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is not expected to have a significant impact on the presentation Valley's consolidated financial statements. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" clarifies on how certain cash receipts and cash payments should be classified and presented in the statement of cash flow. The ASU No. 2016-15 includes guidance on eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 is effective for Valley for fiscal years beginning after December 15, 2017 and it should be applied using a retrospective transition method to each period presented. ASU No. 2016-15 is not expected to have a significant impact on the presentation Valley's consolidated statements of cash flows.

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 ASU No. 2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity is required to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 is effective for Valley for reporting periods beginning January 1, 2020. Management is currently evaluating the impact of the ASU on Valley’s consolidated financial statements. Valley expects that the new guidance will result in an increase in its allowance for credit losses due to several factors, including: (i) the allowance related to Valley loans will increase to include credit losses over the full remaining expected life of the portfolio, and will consider expected future changes in macroeconomic conditions, (ii) the non-accretable difference (as defined in Note 5) on PCI loans will be recognized as an allowance, offset by an increase in the carrying value of the related loans, and (iii) an allowance will be established for estimated credit losses on investment securities classified as held to maturity. The extent of the increase is under evaluation, but will depend upon the nature and characteristics of the Valley's loan and investment portfolios at the adoption date, and the economic conditions and forecasts at that date.

ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" simplifies several aspects of the stock compensation guidance in Topic 718 and other related guidance. The amendments focus on income tax accounting upon vesting or exercise of share-based payments, award classification, liability classification exception for statutory tax withholding requirements, estimating forfeitures, and cash flow presentation. ASU No. 2016-09 is effective for Valley for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018 with an early adoption permitted. ASU No. 2016-09 is not expected to have a significant impact on Valley's consolidated financial statements.

ASU No. 2016-02, “Leases (Topic 842)” requires the recognition of a right of use asset and related lease liability by lessees for leases classified as operating leases under current GAAP. Topic 842, which replaces the current guidance under Topic 840, retains a distinction between finance leases and operating leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee also will not significantly change from current GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right of use assets and lease liabilities. Topic 842 will be effective for Valley for reporting periods beginning January 1, 2019, with an early adoption permitted. Valley must apply a modified retrospective transition approach for the applicable leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Management is currently evaluating the impact of Topic 842 on Valley’s consolidated financial statements by reviewing its existing lease contracts and service contracts that may include embedded leases. Valley expects a gross-up of its consolidated statements of financial condition as a result of recognizing lease liabilities and right of use assets; the extent of such gross-up is under evaluation. Valley does not expect material changes to the recognition of operating lease expense in its consolidated statements of income.

ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities” requires that: (i) equity investments with readily determinable fair values must be measured at fair value with changes in fair value recognized in net income, (ii) equity investments without readily determinable fair values must be measured at either fair value or at cost adjusted for changes in observable prices minus impairment with changes in value under either of these methods recognized in net income, (iii) entities that record financial liabilities at fair value due to a fair value option election must recognize changes in fair value in other comprehensive income if it is related to instrument-specific credit risk, and (iv) entities must assess whether a valuation allowance is required for deferred tax assets related to available-for-sale debt securities. ASU No. 2016-01 is effective for Valley for reporting periods beginning January 1, 2018 and is not expected to have a material effect on Valley’s consolidated financial statements.

ASU No. 2015-07, "Fair Value Measurement (Topic 820) - Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)", which removes the requirement to categorize within the fair value hierarchy all investments for which the fair value is measured using the net asset value per share practical expedient. ASU No. 2015-07 also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. ASU No. 2015-07 became effective for Valley for reporting periods after January 1, 2016 and did not have an impact on Valley's fair value measurement disclosures at Note 6.

ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in the ASU No. 2015-03. ASU No. 2015-03 is effective for reporting periods beginning January 1, 2016 (with early adoption permitted), and is to be applied retrospectively. At December 31, 2015, Valley early adopted ASU No. 2015-03 to reflect the reclassification of the debt issuance costs from other assets to long-term borrowings for all periods presented in our consolidated statements of financial condition. See Note 10 to the consolidated financial statements for more details.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)" implements a common revenue standard that clarifies the principles for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In 2016, the Financial Accounting Standards Board issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” to further clarify the new guidance under Topic 606. ASU No. 2014-09 and its aforementioned amendments are effective on January 1, 2018. Management is currently evaluating by identification of revenue within the scope of the guidance to assess potential impact. Management has not yet identified any material changes in the timing of revenue recognition and it does not expect the new revenue guidance to have a significant impact on Valley’s consolidated financial statements.

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Business Combinations

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Business Combinations

BUSINESS COMBINATIONS (Note 2)

Masters Coverage Corp.

On January 4, 2016, Masters Coverage Corp., an all-line insurance agency that is a wholly-owned subsidiary of the Bank, acquired certain assets of an independent insurance agency located in New York. The purchase price totaled approximately $1.4 million in cash and future cash consideration.

CNLBancshares, Inc.

On December 1, 2015, Valley completed its acquisition of CNLBancshares, Inc. (CNL) and its wholly-owned subsidiary, CNLBank, headquartered in Orlando, Florida, a commercial bank with approximately $1.6 billion in assets, $825 million in loans, $1.2 billion in deposits and 16 Florida branch offices at the date of its acquisition by Valley. The CNL acquisition increased Valley's Florida branch network to a total of 31 branches (after 5 branch closures mostly resulting from branch efficiency efforts during 2016) covering most major markets in central and southern Florida. The common shareholders of CNL received 0.705 of a share of Valley common stock for each CNL share they owned prior to the merger. The total consideration for the acquisition was approximately $230 million, consisting of 20.6 million shares of Valley common stock.

Merger expenses totaled $1.8 million for the year ended December 31, 2015, which largely related to professional and legal fees included in non-interest expense on the consolidated statements of income. Valley also recorded a $3.3 million charge within income tax expense during 2015, which mostly related to the effect of the CNL acquisition on the valuation of our deferred tax assets.

1st United Bancorp, Inc.

On November 1, 2014, Valley acquired 1st United Bancorp, Inc. (1st United) and its wholly-owned subsidiary, 1st United Bank, a commercial bank with approximately $1.7 billion in assets, $1.2 billion in loans, and $1.4 billion in deposits, before purchase accounting adjustments. The 1st United acquisition gave Valley its first Florida branch network consisting of 20 branches covering some of the most attractive urban banking markets in Florida, including locations throughout southeast Florida, the Treasure Coast, central Florida and central Gulf Coast regions. The common shareholders of 1st United received 0.89 of a share of Valley common stock for each 1st United share they owned prior to the merger. The total consideration for the acquisition was approximately $300 million, consisting of 30.7 million shares of Valley common stock and $8.9 million of cash consideration paid to 1st United stock option holders. In conjunction with the merger, Valley shareholders approved an amendment of its certificate of incorporation to increase its authorized common shares by 100 million shares during the third quarter of 2014.

Merger expenses totaled $2.6 million for the year ended December 31, 2014, which largely related to professional and legal fees included in non-interest expense on the consolidated statements of income. Valley also recorded a $7.6 million charge within income tax expense for the fourth quarter of 2014 which mostly related to the effect of the 1st United acquisition on the valuation of our deferred tax assets.

See Note 8 for addition information regarding goodwill and intangible assets resulting from business combinations.

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Fair Value Measurement of Assets and Liabilities

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Note 3)

Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurements and Disclosures,” 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 Basis and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and non-recurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at December 31, 2016 and 2015. The assets presented under “non-recurring fair value measurements” in the table 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).

			Fair Value Measurements at Reporting Date Using:
	December 31, 2016		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:
Available for sale:
U.S. Treasury securities	$	49,591	$	49,591	$	—	$	—
U.S. government agency securities	23,041		—		23,041		—
Obligations of states and political subdivisions	119,767		—		119,767		—
Residential mortgage-backed securities	1,015,542		—		1,005,589		9,953
Trust preferred securities	8,009		—		6,074		1,935
Corporate and other debt securities	60,565		8,064		52,501		—
Equity securities	20,858		1,306		19,552		—
Total available for sale	1,297,373		58,961		1,226,524		11,888
Loans held for sale (1)	57,708		—		57,708		—
Other assets (2)	29,055		—		29,055		—
Total assets	$	1,384,136	$	58,961	$	1,313,287	$	11,888
Liabilities
Other liabilities (2)	$	44,077	$	—	$	44,077	$	—
Total liabilities	$	44,077	$	—	$	44,077	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	5,385	$	—	$	—	$	5,385
Loan servicing rights	6,489		—		—		6,489
Foreclosed assets (4)	4,532		—		—		4,532
Total	$	16,406	$	—	$	—	$	16,406

			Fair Value Measurements at Reporting Date Using:
	December 31, 2015		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:
Available for sale:
U.S. Treasury securities	$	549,473	$	549,473	$	—	$	—
U.S. government agency securities	29,963		—		29,963		—
Obligations of states and political subdivisions	124,966		—		124,966		—
Residential mortgage-backed securities	696,428		—		684,777		11,651
Trust preferred securities	8,404		—		6,262		2,142
Corporate and other debt securities	77,552		17,710		59,842		—
Equity securities	20,075		1,198		18,877		—
Total available for sale	1,506,861		568,381		924,687		13,793
Loans held for sale (1)	16,382		—		16,382		—
Other assets (2)	33,774		—		33,774		—
Total assets	$	1,557,017	$	568,381	$	974,843	$	13,793
Liabilities
Other liabilities (2)	$	50,844	$	—	$	50,844	$	—
Total liabilities	$	50,844	$	—	$	50,844	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	15,427	$	—	$	—	$	15,427
Loan servicing rights	2,571		—		—		2,571
Foreclosed assets (4)	16,672		—		—		16,672
Total	$	34,670	$	—	$	—	$	34,670

⁽¹⁾  Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $58.2 million and $16.1 million at December 31, 2016 and 2015, respectively.

⁽²⁾  Amount represents derivative financial instruments.

⁽³⁾  Excludes PCI loans.

⁽⁴⁾  Includes covered other real estate owned totaling $300 thousand and $4.2 million at December 31, 2016 and 2015, respectively.

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2016, 2015 and 2014 are summarized below:

	Available For Sale Securities
	2016			2015			2014
	(in thousands)
Balance, beginning of the period	$	13,793		$	19,309		$	28,523
Net (losses) gains included in other comprehensive income	(203		)	(1,072		)	1,648
Sales	—			(2,674		)	(7,718		)
Settlements, net	(1,702		)	(1,770		)	(3,144		)
Balance, end of the period	$	11,888		$	13,793		$	19,309

There were no changes in unrealized gains or losses on Level 3 assets included in earnings during 2016, 2015 and 2014.

Transfers into and out of Level 3 assets are generally made in response to a decrease or an increase, respectively, in the availability of observable market data used in the securities’ pricing obtained primarily through independent pricing services or dealer market participants. See further details regarding the valuation techniques used for the fair value measurement of the financial instruments below. There were no transfers of assets into and out of Level 3, or between Level 1 and Level 2 during 2016 and 2015.

There have been no material changes in the valuation methodologies used at December 31, 2016 from December 31, 2015.

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 of 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.

Available for sale securities. All U.S. Treasury securities, certain corporate and other debt securities, and certain common and preferred equity 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. For certain securities, the inputs used by either dealer market participants or an independent pricing service may be derived from unobservable market information (Level 3 inputs). In these instances, Valley evaluates the appropriateness and quality of the assumption and the resulting price. In addition, Valley reviews the volume and level of activity for all available for sale and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume. For securities meeting these criteria, the quoted prices received from either market participants or an independent pricing service may be adjusted, as necessary, to estimate fair value and this results in fair values based on Level 3 inputs. In determining fair value, Valley utilizes unobservable inputs which reflect Valley’s own assumptions about the inputs that market participants would use in pricing each security. In developing its assertion of market participant assumptions, Valley utilizes the best information that is both reasonable and available without undue cost and effort.

In calculating the fair value for the available for sale securities under Level 3, Valley prepared present value cash flow models for certain private label mortgage-backed securities. The cash flows for the residential mortgage-backed securities incorporated the expected cash flow of each security adjusted for default rates, loss severities and prepayments of the individual loans collateralizing the security.

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at December 31, 2016:

Security Type	Valuation Technique	Unobservable Input	Range	Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate	15.0 - 22.5%	19.1	%
		Default rate	3.6 - 33.2	9.0
		Loss severity	45.6 - 66.0	60.0

Significant increases or decreases in any of the unobservable inputs in the table above in isolation would result in a significantly lower or higher fair value measurement of the securities. Generally, a change in the assumption used for the default rate is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

For the Level 3 available for sale residential mortgage-backed securities (consisting of four private label securities), cash flow assumptions incorporated independent third party market participant data based on vintage year for each security. The discount rate utilized in determining the present value of cash flows for the mortgage-backed securities was arrived at by combining the yield on orderly transactions for similar maturity government sponsored mortgage-backed securities with (i) the historical average risk premium of similar structured private label securities, (ii) a risk premium reflecting current market conditions, including liquidity risk, and (iii) if applicable, a forecasted loss premium derived from the expected cash flows of each security. The estimated cash flows for each private label mortgage-backed security were then discounted at the aforementioned effective rate to determine the fair value. The quoted prices received from either market participants or independent pricing services are weighted with the internal price estimate to determine the fair value of each instrument.

For the Level 3 available for sale trust preferred securities (consisting of one pooled security), the resulting estimated future cash flows were discounted at a yield determined by reference to similarly structured securities for which observable orderly transactions occurred. The discount rate for each security was applied using a pricing matrix based on credit, security type and maturity characteristics to determine the fair value. The fair value calculation is received from an independent valuation adviser. In validating the fair value calculation from an independent valuation adviser, Valley reviews the accuracy of the inputs and the appropriateness of the unobservable inputs utilized in the valuation to ensure the fair value calculation is reasonable from a market participant perspective.

Loans held for sale.  The conforming 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. To determine these fair values, the mortgages held for sale are put into multiple tranches, or pools, based on the coupon rate and maturity of each mortgage. The market prices for each tranche are obtained from both Fannie Mae and Freddie Mac. 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. The market prices received from Fannie Mae and Freddie Mac are then averaged and interpolated or extrapolated, where required, to calculate the fair value of each tranche. Depending upon the time elapsed since the origination of each loan held for sale, non-performance risk and changes therein were addressed in the estimate of fair value based upon the delinquency data provided to both Fannie Mae and Freddie Mac for market pricing and changes in market credit spreads. Non-performance risk did not materially impact the fair value of mortgage loans held for sale at December 31, 2016 and 2015 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 value of Valley’s derivatives are determined using third party prices that are based on discounted cash flow analyses 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 December 31, 2016 and 2015), is determined based on the current market prices for similar instruments provided by Freddie Mac and Fannie Mae. 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 December 31, 2016 and 2015.

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 non-recurring 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.

Impaired loans.  Certain impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral and are commonly referred to as “collateral dependent impaired loans.” Collateral values are estimated using Level 3 inputs, consisting of individual appraisals that are significantly adjusted based on customized discounting criteria. At December 31, 2016, appraisals were discounted up to 6.3 percent based on specific market data by location and property type. During 2016 and 2015, collateral dependent impaired loans were individually re-measured and reported at fair value through direct loan charge-offs to the allowance for loan losses and/or a specific valuation allowance allocation based on the fair value of the underlying collateral. The collateral dependent loan charge-offs to the allowance for loan losses totaled $4.3 million and $5.4 million for the years ended December 31, 2016 and 2015, respectively. These collateral dependent impaired loans with a total recorded investment of $8.4 million and $15.8 million at December 31, 2016 and 2015, respectively, were reduced by specific valuation allowance allocations totaling $3.0 million and $352 thousand to a reported total net carrying amount of $5.4 million and $15.4 million at December 31, 2016 and 2015, respectively.

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 December 31, 2016, the fair value model used prepayment speeds (stated as constant prepayment rates) from 0 percent up to 27 percent and a discount rate of 8 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. Valley recognized net impairment charges on loan servicing rights totaling $611 thousand and $88 thousand for the years ended December 31, 2016 and 2014, respectively, as compared to net recoveries of impairment charges totaling $303 thousand for the year ended December 31, 2015.

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 through a charge-off to the allowance for loan losses based upon the fair value of the foreclosed assets. The fair value of a foreclosed asset, upon initial recognition, is typically estimated using Level 3 inputs, consisting of an appraisal that is adjusted based on customized discounting criteria, similar to the criteria used for impaired loans described above. There were no adjustments to the appraisals of foreclosed assets at December 31, 2016. During the years ended December 31, 2016 and 2015, foreclosed assets measured at fair value upon initial recognition or subsequent re-measurement totaled $4.5 million and $16.7 million, respectively. The charge-offs of foreclosed assets to the allowance for loan losses totaled $1.7 million and $1.6 million for the years ended December 31, 2016 and 2015, respectively. The re-measurement of foreclosed assets at fair value subsequent to their initial recognition resulted in losses of $1.0 million, $2.0 million and $4.7 million included in non-interest expense for the years ended December 31, 2016, 2015 and 2014, respectively.

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 December 31, 2016 and 2015 were as follows:

		December 31,
		2016				2015
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	220,791	$	220,791	$	243,575	$	243,575
Interest bearing deposits with banks	Level 1	171,710		171,710		170,225		170,225
Investment securities held to maturity:
U.S. Treasury securities	Level 1	138,830		147,495		138,978		149,483
U.S. government agency securities	Level 2	11,329		11,464		12,859		13,130
Obligations of states and political subdivisions	Level 2	566,590		577,826		504,865		527,263
Residential mortgage-backed securities	Level 2	1,112,460		1,102,802		852,289		855,272
Trust preferred securities	Level 2	59,804		47,290		59,785		46,437
Corporate and other debt securities	Level 2	36,559		37,720		27,609		29,454
Total investment securities held to maturity		1,925,572		1,924,597		1,596,385		1,621,039
Net loans	Level 3	17,121,684		16,756,655		15,936,929		15,824,475
Accrued interest receivable	Level 1	66,816		66,816		63,554		63,554
Federal Reserve Bank and Federal Home Loan Bank stock (1)	Level 1	147,127		147,127		145,068		145,068
Financial liabilities
Deposits without stated maturities	Level 1	14,591,837		14,591,837		13,095,647		13,095,647
Deposits with stated maturities	Level 2	3,138,871		3,160,572		3,157,904		3,203,389
Short-term borrowings	Level 1	1,080,960		1,081,751		1,076,991		1,076,991
Long-term borrowings	Level 2	1,433,906		1,523,386		1,810,728		1,945,741
Junior subordinated debentures issued to capital trusts	Level 2	41,577		45,785		41,414		44,127
Accrued interest payable (2)	Level 1	10,675		10,675		13,110		13,110

⁽¹⁾  Included in other assets.

⁽²⁾  Included in accrued expenses and other liabilities.

The following methods and assumptions were used to estimate the fair value of other financial assets and financial liabilities in the table above:

Cash and due from banks and interest bearing deposits with banks.  The carrying amount is considered to be a reasonable estimate of fair value because of the short maturity of these items.

Investment securities held to maturity.  Fair values are based on prices 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 (Level 2 inputs). Additionally, Valley reviews the volume and level of activity for all classes of held to maturity securities and attempts to identify transactions which may not be orderly or reflective of a significant level of activity and volume. For securities meeting these criteria, the quoted prices received from either market participants or an independent pricing service may be adjusted, as necessary. If applicable, the adjustment to fair value is derived based on present value cash flow model projections prepared by Valley utilizing assumptions similar to those incorporated by market participants.

Loans.  Fair values of loans are estimated by discounting the projected future cash flows using market discount rates that reflect the credit and interest-rate risk inherent in the loan. The discount rate is a product of both the applicable index and credit spread, subject to the estimated current new loan interest rates. The credit spread component is static for all maturities and may not necessarily reflect the value of estimating all actual cash flows repricing. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for comparable loans.

Accrued interest receivable and payable.  The carrying amounts of accrued interest approximate their fair value due to the short-term nature of these items.

Federal Reserve Bank and Federal Home Loan Bank stock.  Federal Reserve Bank and FHLB stock are non-marketable equity securities and are reported at their redeemable carrying amounts, which approximate the fair value.

Deposits.  The carrying amounts of deposits without stated maturities (i.e., non-interest bearing, savings, NOW, and money market deposits) approximate their estimated fair value. The fair value of time deposits is based on the discounted value of contractual cash flows using estimated rates currently offered for alternative funding sources of similar remaining maturity.

Short-term and long-term borrowings.  The carrying amounts of certain short-term borrowings, including securities sold under agreement to repurchase and FHLB borrowings (and from time to time, federal funds purchased) approximate their fair values because they frequently re-price to a market rate. The fair values of other short-term and long-term borrowings are estimated by obtaining quoted market prices of the identical or similar financial instruments when available. When quoted prices are unavailable, the fair values of the borrowings are estimated by discounting the estimated future cash flows using current market discount rates of financial instruments with similar characteristics, terms and remaining maturity.

Junior subordinated debentures issued to capital trusts.  The fair value of debentures issued to capital trusts not carried at fair value is estimated utilizing the income approach, whereby the expected cash flows, over the remaining estimated life of the security, are discounted using Valley’s credit spread over the current yield on a similar maturity of U.S. Treasury security or the three-month LIBOR for the variable rate indexed debentures (Level 2 inputs). The credit spread used to discount the expected cash flows was calculated based on the median current spreads for all fixed and variable publicly traded trust preferred securities issued by banks.

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Investment Securities

12 Months Ended

Dec. 31, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Securities

INVESTMENT SECURITIES (Note 4)

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31, 2016 and 2015 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	138,830	$	8,665	$	—		$	147,495
U.S. government agency securities	11,329		135		—			11,464
Obligations of states and political subdivisions:
Obligations of states and state agencies	252,185		6,692		(1,428		)	257,449
Municipal bonds	314,405		6,438		(466		)	320,377
Total obligations of states and political subdivisions	566,590		13,130		(1,894		)	577,826
Residential mortgage-backed securities	1,112,460		8,432		(18,090		)	1,102,802
Trust preferred securities	59,804		40		(12,554		)	47,290
Corporate and other debt securities	36,559		1,190		(29		)	37,720
Total investment securities held to maturity	$	1,925,572	$	31,592	$	(32,567	)	$	1,924,597
December 31, 2015
U.S. Treasury securities	$	138,978	$	10,505	$	—		$	149,483
U.S. government agency securities	12,859		271		—			13,130
Obligations of states and political subdivisions:
Obligations of states and state agencies	194,547		10,538		(10		)	205,075
Municipal bonds	310,318		11,955		(85		)	322,188
Total obligations of states and political subdivisions	504,865		22,493		(95		)	527,263
Residential mortgage-backed securities	852,289		11,018		(8,035		)	855,272
Trust preferred securities	59,785		36		(13,384		)	46,437
Corporate and other debt securities	27,609		1,894		(49		)	29,454
Total investment securities held to maturity	$	1,596,385	$	46,217	$	(21,563	)	$	1,621,039

The age of unrealized losses and fair value of related securities held to maturity at December 31, 2016 and 2015 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, 2016
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	98,114	$	(1,428	)	$	—	$	—		$	98,114	$	(1,428	)
Municipal bonds	27,368		(466		)	—		—			27,368		(466		)
Total obligations of states and political subdivisions	125,482		(1,894		)	—		—			125,482		(1,894		)
Residential mortgage-backed securities	692,108		(14,420		)	114,505		(3,670		)	806,613		(18,090		)
Trust preferred securities						45,898		(12,554		)	45,898		(12,554		)
Corporate and other debt securities	2,971		(29		)	—		—			2,971		(29		)
Total	$	820,561	$	(16,343	)	$	160,403	$	(16,224	)	$	980,964	$	(32,567	)
December 31, 2015
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	6,837	$	(5	)	$	1,965	$	(5	)	$	8,802	$	(10	)
Municipal bonds	8,814		(72		)	10,198		(13		)	19,012		(85		)
Total obligations of states and political subdivisions	15,651		(77		)	12,163		(18		)	27,814		(95		)
Residential mortgage-backed securities	244,440		(2,916		)	162,756		(5,119		)	407,196		(8,035		)
Trust preferred securities	—		—			45,047		(13,384		)	45,047		(13,384		)
Corporate and other debt securities	2,951		$	(49	)	$	—	$	—		$	2,951	$	(49	)
Total	$	263,042	$	(3,042	)	$	219,966	$	(18,521	)	$	483,008	$	(21,563	)

The unrealized losses on investment securities held to maturity are primarily due to changes in interest rates (including, in certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security positions in the securities held to maturity portfolio in an unrealized loss position at December 31, 2016 was 132 as compared to 74 at December 31, 2015.

The unrealized losses within the residential mortgage-backed securities category of the held to maturity portfolio at December 31, 2016 mostly related to investment grade securities issued by Ginnie Mae.

The unrealized losses existing for more than twelve months for trust preferred securities at December 31, 2016 primarily related to four non-rated single-issuer securities, issued by bank holding companies. All single-issuer trust preferred securities classified as held to maturity are paying in accordance with their terms, have no deferrals of interest or defaults and, if applicable, the issuers meet the regulatory capital requirements to be considered “well-capitalized institutions” at December 31, 2016.

Management does not believe that any individual unrealized loss as of December 31, 2016 included in the table above represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes in interest rates and market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management believes there are no credit losses on these securities. Valley does not have the intent to sell, nor is it more likely than not that Valley will be required to sell, the securities contained in the table above before the recovery of their amortized cost basis or maturity.

During 2015, Valley sold one corporate debt security classified as held to maturity with an amortized cost of $9.8 million. See "Realized Gains and Losses" section below for further details regarding this transaction.

As of December 31, 2016, the fair value of investments held to maturity that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law was $968.0 million.

The contractual maturities of investments in debt securities held to maturity at December 31, 2016 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.

	December 31, 2016
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	85,139	$	85,139
Due after one year through five years	191,207		199,327
Due after five years through ten years	364,471		377,665
Due after ten years	172,295		159,664
Residential mortgage-backed securities	1,112,460		1,102,802
Total investment securities held to maturity	$	1,925,572	$	1,924,597

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 6.7 years at December 31, 2016.

Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of investment securities available for sale at December 31, 2016 and 2015 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	51,020	$	6	$	(1,435	)	$	49,591
U.S. government agency securities	22,815		232		(6		)	23,041
Obligations of states and political subdivisions:
Obligations of states and state agencies	40,696		70		(424		)	40,342
Municipal bonds	80,045		147		(767		)	79,425
Total obligations of states and political subdivisions	120,741		217		(1,191		)	119,767
Residential mortgage-backed securities	1,029,827		2,061		(16,346		)	1,015,542
Trust preferred securities*	10,164		—		(2,155		)	8,009
Corporate and other debt securities	60,651		436		(522		)	60,565
Equity securities	20,505		1,114		(761		)	20,858
Total investment securities available for sale	$	1,315,723	$	4,066	$	(22,416	)	$	1,297,373
December 31, 2015
U.S. Treasury securities	$	551,173	$	4	$	(1,704	)	$	549,473
U.S. government agency securities	29,316		665		(18		)	29,963
Obligations of states and political subdivisions:
Obligations of states and state agencies	44,285		196		(67		)	44,414
Municipal bonds	80,717		209		(374		)	80,552
Total obligations of states and political subdivisions	125,002		405		(441		)	124,966
Residential mortgage-backed securities	701,764		3,348		(8,684		)	696,428
Trust preferred securities*	10,458		—		(2,054		)	8,404
Corporate and other debt securities	78,202		1,239		(1,889		)	77,552
Equity securities	21,022		575		(1,522		)	20,075
Total investment securities available for sale	$	1,516,937	$	6,236	$	(16,312	)	$	1,506,861

* Includes two pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies, at December 31, 2016 and 2015.

The age of unrealized losses and fair value of related securities available for sale at December 31, 2016 and 2015 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, 2016
U.S. Treasury securities	$	48,660	$	(1,435	)	$	—	$	—		$	48,660	$	(1,435	)
U.S. government agency securities	2,530		(4		)	4,034		(2		)	6,564		(6		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	28,628		(404		)	753		(20		)	29,381		(424		)
Municipal bonds	42,573		(506		)	11,081		(261		)	53,654		(767		)
Total obligations of states and political subdivisions	71,201		(910		)	11,834		(281		)	83,035		(1,191		)
Residential mortgage-backed securities	788,030		(11,889		)	132,718		(4,457		)	920,748		(16,346		)
Trust preferred securities						8,009		(2,155		)	8,009		(2,155		)
Corporate and other debt securities	32,292		(294		)	15,192		(228		)	47,484		(522		)
Equity securities	—		—			14,883		(761		)	14,883		(761		)
Total	$	942,713	$	(14,532	)	$	186,670	$	(7,884	)	$	1,129,383	$	(22,416	)
December 31, 2015
U.S. Treasury securities	$	548,538	$	(1,704	)	$	—	$	—		$	548,538	$	(1,704	)
U.S. government agency securities	3,489		(5		)	4,736		(13		)	8,225		(18		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	24,359		(67		)	—		—			24,359		(67		)
Municipal bonds	38,207		(128		)	13,551		(246		)	51,758		(374		)
Total obligations of states and political subdivisions	62,566		(195		)	13,551		(246		)	76,117		(441		)
Residential mortgage-backed securities	293,615		(4,147		)	164,010		(4,537		)	457,625		(8,684		)
Trust preferred securities	—		—			8,404		(2,054		)	8,404		(2,054		)
Corporate and other debt securities	21,203		(471		)	36,137		(1,418		)	57,340		(1,889		)
Equity securities	—		—			14,273		(1,522		)	14,273		(1,522		)
Total	$	929,411	$	(6,522	)	$	241,111	$	(9,790	)	$	1,170,522	$	(16,312	)

The unrealized losses on investment securities available for sale are primarily due to changes in interest rates (including, in certain cases, changes in credit spreads) and, in some cases, lack of liquidity in the marketplace. The total number of security positions in the securities available for sale portfolio in an unrealized loss position at December 31, 2016 was 298 as compared to 291 at December 31, 2015.

The unrealized losses more than twelve months for the residential mortgage-backed securities category of the available for sale portfolio at December 31, 2016 largely related to several investment grade securities mainly issued by Ginnie Mae.

The unrealized losses for trust preferred securities at December 31, 2016 in the more than twelve months category in the table above entirely relate to 2 pooled trust preferred securities with a combined amortized cost of $10.2 million and a fair value of $8.0 million. One of the two pooled trust preferred securities had an unrealized loss of $1.3 million and an investment grade rating at December 31, 2016.

As of December 31, 2016, the fair value of securities available for sale that were pledged to secure public deposits, repurchase agreements, lines of credit, and for other purposes required by law, was $537.4 million.

The contractual maturities of investments securities available for sale at December 31, 2016 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.

	December 31, 2016
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	18,770	$	18,654
Due after one year through five years	73,904		74,158
Due after five years through ten years	114,174		112,063
Due after ten years	58,543		56,098
Residential mortgage-backed securities	1,029,827		1,015,542
Equity securities	20,505		20,858
Total investment securities available for sale	$	1,315,723	$	1,297,373

Actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

The weighted-average remaining expected life for residential mortgage-backed securities available for sale at December 31, 2016 was 8.6 years.

Other-Than-Temporary Impairment Analysis

Valley records impairment charges on its investment securities when the decline in fair value is considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities; decline in the creditworthiness of the issuer; absence of reliable pricing information for investment securities; adverse changes in business climate; adverse actions by regulators; prolonged decline in value of equity investments; or unanticipated changes in the competitive environment could have a negative effect on Valley’s investment portfolio and may result in other-than-temporary impairment on certain investment securities in future periods.

Among other securities, our investments in the private label mortgage-backed securities, trust preferred securities (including two pooled securities), corporate bonds, perpetual preferred securities and bank issued corporate bonds may pose a higher risk of future impairment charges to us as a result of the uncertain economic environment and its potential negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the security.

Valley’s investment portfolios include private label mortgage-backed securities, trust preferred securities principally issued by bank holding companies (including two pooled trust preferred securities), corporate bonds, and perpetual preferred securities issued by banks. These investments may pose a higher risk of future impairment charges by Valley as a result of the unpredictable nature of the U.S. economy and its potential negative effect on the future performance of the security issuers and, if applicable, the underlying mortgage loan collateral of the security.

For residential mortgage-backed securities, Valley estimates loss projections for each security by stressing the cash flows from the individual loans collateralizing the security using expected default rates, loss severities, and prepayment speeds, in conjunction with the underlying credit enhancement (if applicable) for each security. Based on collateral and origination vintage specific assumptions, a range of possible cash flows is identified to determine whether other-than-temporary impairment exists.

For the single-issuer trust preferred securities and corporate and other debt securities, Valley reviews each portfolio to determine if all the securities are paying in accordance with their terms and have no deferrals of interest or defaults. A deferral event by a bank holding company for which Valley holds trust preferred securities may require the recognition of an other-than-temporary impairment charge if Valley determines that it is more likely than not that all contractual interest and principal cash flows may not be collected. Among other factors, the probability of the collection of all interest and principal determined by Valley in its impairment analysis declines if there is an increase in the estimated deferral period of the issuer. Additionally, a FDIC receivership for any single-issuer would result in an impairment and significant loss. Including the other factors outlined above, Valley analyzes the performance of the issuers on a quarterly basis, including a review of performance data from the issuers’ most recent bank regulatory report, if applicable, to assess their credit risk and the probability of impairment of the contractual cash flows of the applicable security. All of the issuers had capital ratios at December 31, 2016 that were at or above the minimum amounts to be considered a “well-capitalized” financial institution, if applicable, and/or have maintained performance levels adequate to support the contractual cash flows of the trust preferred securities.

Management does not believe that any individual unrealized loss as of December 31, 2016 represents an other-than-temporary impairment, as management mainly attributes the declines in value to changes in interest rates and recent market volatility, not credit quality or other factors. Based on a comparison of the present value of expected cash flows to the amortized cost, management believes there are no credit losses on these securities. Valley has no intent to sell, nor is it more likely than not that Valley will be required to sell, the securities contained in the table above before the recovery of their amortized cost basis or, if necessary, maturity.

At December 31, 2016, approximately 43 percent of the $686.4 million carrying value of obligations of states and political subdivisions were issued by the states of (or municipalities within) New Jersey, New York, Utah and Maryland. The obligations of states and political subdivisions mainly consist of general obligation bonds and, to much lesser extent, special revenue bonds which had an aggregated amortized cost and fair value of $20.3 million and $20.8 million, respectively, at December 31, 2016. The special revenue bonds were mainly issued by the Port Authorities of New York and New Jersey, as well as various school districts. 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. Substantially all of these investments are investment grade. As of December 31, 2016, these securities are expected to perform in accordance with their contractual terms and, as a result, Valley expects to recover the entire amortized cost basis of these securities.

For the two pooled trust preferred securities, Valley evaluates the projected cash flows from each of its tranches in the two securities to determine if they are adequate to support their future contractual principal and interest payments. Valley assesses the credit risk and probability of impairment of the contractual cash flows by projecting the default rates over the life of the security. Higher projected default rates will decrease the expected future cash flows from each security. If the projected decrease in cash flows affects the cash flows projected for the tranche held by Valley, the security would be considered to be other-than-temporarily impaired.

The perpetual preferred securities, reported in equity securities, are hybrid investments that are assessed for impairment by Valley as if they were debt securities. Therefore, Valley assessed the creditworthiness of each security issuer, as well as any potential change in the anticipated cash flows of the securities as of December 31, 2016. Based on this analysis, management believes the declines in fair value of these securities are attributable to a lack of liquidity in the marketplace and are not reflective of any deterioration in the creditworthiness of the issuers.

Other-Than-Temporarily Impaired Securities

There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its securities during 2016 , 2015 and 2014. At December 31, 2016, four previously impaired private label mortgage-backed securities had a combined amortized cost of $10.2 million and fair value of $9.9 million, respectively, while one previously impaired pooled trust preferred security had an amortized cost of $2.8 million and fair value of $1.9 million, respectively.

The previously impaired trust preferred securities discussed above were not accruing interest during the years ended December 31, 2016, 2015, and 2014. See Note 1 for details regarding Valley's policy for the recognition of interest on impaired 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 or loss for the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Balance, beginning of period	$	5,837		$	8,947		$	9,990
Accretion of credit loss impairment due to an increase in expected cash flows	(921		)	(728		)	(661		)
Sales	—			(2,382		)	(382		)
Balance, end of period	$	4,916		$	5,837		$	8,947

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

Realized Gains and Losses

Gross gains and losses realized on sales, maturities and other securities transactions included in earnings for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Sales transactions:
Gross gains	$	271		$	3,274		$	746
Gross losses	(58		)	(947		)	(2		)
	$	213		$	2,327		$	744
Maturities and other securities transactions:
Gross gains	$	615		$	293		$	10
Gross losses	(51		)	(133		)	(9		)
	$	564		$	160		$	1
Gains on securities transactions, net	$	777		$	2,487		$	745

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Loans

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Loans

LOANS (Note 5)

The detail of the loan portfolio as of December 31, 2016 and 2015 was as follows:

	December 31, 2016						December 31, 2015
	Non-PCI Loans		PCI Loans*		Total		Non-PCI Loans		PCI Loans*		Total
	(in thousands)
Loans:
Commercial and industrial	$	2,357,018	$	281,177	$	2,638,195	$	2,156,549	$	383,942	$	2,540,491
Commercial real estate:
Commercial real estate	7,628,328		1,091,339		8,719,667		6,069,532		1,355,104		7,424,636
Construction	710,266		114,680		824,946		607,694		147,253		754,947
Total commercial real estate loans	8,338,594		1,206,019		9,544,613		6,677,226		1,502,357		8,179,583
Residential mortgage	2,684,195		183,723		2,867,918		2,912,079		218,462		3,130,541
Consumer:
Home equity	376,213		92,796		469,009		391,809		119,394		511,203
Automobile	1,139,082		145		1,139,227		1,238,826		487		1,239,313
Other consumer	569,499		7,642		577,141		426,147		15,829		441,976
Total consumer loans	2,084,794		100,583		2,185,377		2,056,782		135,710		2,192,492
Total loans	$	15,464,601	$	1,771,502	$	17,236,103	$	13,802,636	$	2,240,471	$	16,043,107

* PCI loans include covered loans (mostly consisting of residential mortgage and commercial real estate loans) totaling $70.4 million and $122.3 million at December 31, 2016 and 2015, respectively.

Total non-PCI loans are net of unearned premiums and deferred loan costs totaling $15.3 million and $3.5 million at December 31, 2016 and 2015, respectively. The outstanding balances (representing contractual balances owed to Valley) for PCI loans totaled $1.9 billion and $2.4 billion at December 31, 2016 and 2015, respectively.

Valley transferred $174.5 million of residential mortgage loans from the loan portfolio to loans held for sale during the third quarter of 2016. These loans were sold during the fourth quarter of 2016 resulting in net gains totaling $7.3 million. Exclusive of such transfers, there were no other sales or transfers of loans from the held for investment portfolio during 2016 and 2015.

Purchased Credit-Impaired Loans (Including Covered Loans)

PCI loans are accounted for in accordance with ASC Subtopic 310-30 and are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance (i.e., the allowance for loan losses), and aggregated and accounted for as pools of loans based on common risk characteristics. The difference between the undiscounted cash flows expected at acquisition and the initial carrying amount (fair value) of the PCI loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment, as a loss accrual or a valuation allowance. Reclassifications of the non-accretable difference to the accretable yield may occur subsequent to the loan acquisition dates due to increases in expected cash flows of the loan pools. Valley's PCI loan portfolio included covered loans (i.e., loans in which the Bank will share losses with the FDIC under loss-sharing agreements) totaling $70.4 million and $122.3 million at December 31, 2016 and 2015, respectively. See Note 1 for additional information.

The following table presents changes in the accretable yield for PCI loans for the years ended December 31, 2016 and 2015:

	2016			2015
	(in thousands)
Balance, beginning of period	$	415,179		$	336,208
Acquisition	—			126,930
Accretion	(107,482		)	(105,078		)
Net (decrease) increase in expected cash flows	(9,989		)	57,119
Other, net	(3,194		)	—
Balance, end of period	$	294,514		$	415,179

The net (decrease) increase in expected cash flows for certain pools of loans (included in the table above) is recognized prospectively as an adjustment to the yield over the estimated remaining life of the individual pools. The net decrease in the expected cash flows totaling approximately $10.0 million for 2016 was largely due to better than expected collections, including loan prepayments, within certain loan pools which reduced the remaining reforecasted accretable yield during the fourth quarter of 2016. The net increase of $57.1 million during 2015 was mainly related to a decrease in the expected losses for certain loan pools during the fourth quarter of 2015.

FDIC Loss-Share Receivable

The receivable arising from the loss-sharing agreements with the FDIC is measured separately from the covered loan portfolio because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans. The FDIC loss share receivable (which is included in other assets on Valley's consolidated statements of financial condition) totaled $7.2 million and $8.3 million at December 31, 2016 and 2015, respectively. The aggregate effects of changes in the FDIC loss-share receivable was a reduction in non-interest income of $1.3 million, $3.3 million and $20.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Related Party Loans

In the ordinary course of business, Valley has granted loans to certain directors, executive officers and their affiliates (collectively referred to as “related parties”). These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other unaffiliated persons and do not involve more than normal risk of collectability.

The following table summarizes the changes in the total amounts of loans and advances to the related parties during the year ended December 31, 2016:

	2016
	(in thousands)
Outstanding at beginning of year	$	191,566
New loans and advances	26,736
Repayments	(52,982		)
Outstanding at end of year	$	165,320

All loans to related parties are performing as of December 31, 2016.

Loan Portfolio Risk Elements and Credit Risk Management

Credit risk management.  For all of its loan types discussed below, Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk. 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, 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.

Commercial and industrial loans.  A significant proportion of Valley’s commercial and industrial loan portfolio is granted to long standing customers of proven ability, strong repayment performance, and high character. Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, a significant number of the loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Short-term loans may be made on an unsecured basis based on a borrower’s financial strength and past performance. Whenever possible, Valley will obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured loans, when made, are generally granted to the Bank’s most credit worthy borrowers. Unsecured commercial and industrial loans totaled $455.5 million and $386.6 million at December 31, 2016 and 2015, respectively. The commercial portfolio also includes taxi medallion loans, most of which consist of loans to fleet owners of New York City medallions. Valley's historical taxi medallion lending criteria has been conservative in regards to capping the loan amounts in relation to market valuations, as well as obtaining personal guarantees whenever possible. While the vast majority of these loans are performing at December 31, 2016, we continue to closely monitor this portfolio's performance and the potential impact of the changes in market valuations for taxi medallions due to competing car service providers and other factors.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans but generally they involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Repayment of most loans is dependent upon the cash flow generated from the property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy and accordingly, conservative loan to value ratios are required at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.

Construction loans.  With respect to loans to developers and builders, Valley originates and manages construction loans structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon the presale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Residential mortgages.  Valley originates residential, first mortgage loans based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO^® and other proprietary credit scoring models is employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. Residential mortgage loans include fixed and variable interest rate loans secured by one to four family homes generally located in northern and central New Jersey, the New York City metropolitan area, Florida and eastern Pennsylvania. Valley’s ability to be repaid on such loans is closely linked to the economic and real estate market conditions in this region. In deciding whether to originate each residential mortgage, Valley considers the qualifications of the borrower as well as the value of the underlying property.

Home equity loans.  Home equity lending consists of both fixed and variable interest rate products. Valley mainly provides home equity loans to its residential mortgage customers within the footprint of its primary lending territory. Valley generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 75 percent when originating a home equity loan.

Automobile loans.  Valley uses both judgmental and scoring systems in the credit decision process for automobile loans. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Automotive collateral is generally a depreciating asset and there are times in the life of an automobile loan where the amount owed on a vehicle may exceed its collateral value. Additionally, automobile charge-offs will vary based on the strength or weakness of the used vehicle market, original advance rate, when in the life cycle of a loan a default occurs and the condition of the collateral being liquidated. Where permitted by law, and subject to the limitations of the bankruptcy code, deficiency judgments are sought and acted upon to ultimately collect all money owed, even when a default resulted in a loss at collateral liquidation. Valley uses a third party to actively track collision and comprehensive risk insurance required of the borrower on the automobile and this third party provides coverage to Valley in the event of an uninsured collateral loss.

Other consumer loans.  Valley’s other consumer loan portfolio includes direct consumer term loans, both secured and unsecured. The other consumer loan portfolio includes exposures in personal lines of credit (including those secured by cash surrender value of life insurance), credit card loans and personal loans. Unsecured consumer loans totaled approximately $20.6 million and $18.8 million, including $7.0 million and $7.1 million of credit card loans, at December 31, 2016 and 2015, respectively. Valley believes the aggregate risk exposure of these loans and lines of credit was not significant at December 31, 2016.

Credit Quality

The following tables present past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis) by loan portfolio class at December 31, 2016 and 2015:

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing  Loans 90 Days Or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	6,705	$	5,010	$	142	$	8,465	$	20,322	$	2,336,696	$	2,357,018
Commercial real estate:
Commercial real estate	5,894		8,642		474		15,079		30,089		7,598,239		7,628,328
Construction	6,077		—		1,106		715		7,898		702,368		710,266
Total commercial real estate loans	11,971		8,642		1,580		15,794		37,987		8,300,607		8,338,594
Residential mortgage	12,005		3,564		1,541		12,075		29,185		2,655,010		2,684,195
Consumer loans:
Home equity	929		415		—		1,028		2,372		373,841		376,213
Automobile	3,192		723		188		146		4,249		1,134,833		1,139,082
Other consumer	76		9		21		—		106		569,393		569,499
Total consumer loans	4,197		1,147		209		1,174		6,727		2,078,067		2,084,794
Total	$	34,878	$	18,363	$	3,472	$	37,508	$	94,221	$	15,370,380	$	15,464,601

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing  Loans 90 Days Or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2015
Commercial and industrial	$	3,920	$	524	$	213	$	10,913	$	15,570	$	2,140,979	$	2,156,549
Commercial real estate:
Commercial real estate	2,684		—		131		24,888		27,703		6,041,829		6,069,532
Construction	1,876		2,799		—		6,163		10,838		596,856		607,694
Total commercial real estate loans	4,560		2,799		131		31,051		38,541		6,638,685		6,677,226
Residential mortgage	6,681		1,626		1,504		17,930		27,741		2,884,338		2,912,079
Consumer loans:
Home equity	1,308		111		—		2,088		3,507		388,302		391,809
Automobile	1,969		491		164		118		2,742		1,236,084		1,238,826
Other consumer	71		24		44		—		139		426,008		426,147
Total consumer loans	3,348		626		208		2,206		6,388		2,050,394		2,056,782
Total	$	18,509	$	5,575	$	2,056	$	62,100	$	88,240	$	13,714,396	$	13,802,636

If interest on non-accrual loans had been accrued in accordance with the original contractual terms, such interest income would have amounted to approximately $2.1 million, $3.5 million, and $2.2 million for the years ended December 31, 2016, 2015 and 2014, respectively; none of these amounts were included in interest income during these periods. 

Impaired loans.  Impaired loans, consisting of non-accrual commercial and industrial loans and commercial real estate loans over $250 thousand and all loans which were modified in troubled debt restructurings, are individually evaluated for impairment. PCI loans are not classified as impaired loans because they are accounted for on a pool basis.

The following table presents the information about impaired loans by loan portfolio class at December 31, 2016 and 2015:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
December 31, 2016
Commercial and industrial	$	3,609	$	27,031	$	30,640	$	35,957	$	5,864
Commercial real estate:
Commercial real estate	21,318		36,974		58,292		60,267		3,612
Construction	1,618		2,379		3,997		3,997		260
Total commercial real estate loans	22,936		39,353		62,289		64,264		3,872
Residential mortgage	8,398		9,958		18,356		19,712		725
Consumer loans:
Home equity	1,182		2,352		3,534		3,626		70
Total consumer loans	1,182		2,352		3,534		3,626		70
Total	$	36,125	$	78,694	$	114,819	$	123,559	$	10,531
December 31, 2015
Commercial and industrial	$	7,863	$	17,851	$	25,714	$	33,071	$	3,439
Commercial real estate:
Commercial real estate	30,113		37,440		67,553		71,263		3,354
Construction	8,847		5,530		14,377		14,387		317
Total commercial real estate loans	38,960		42,970		81,930		85,650		3,671
Residential mortgage	7,842		14,770		22,612		24,528		1,377
Consumer loans:
Home equity	263		1,869		2,132		2,224		295
Total consumer loans	263		1,869		2,132		2,224		295
Total	$	54,928	$	77,460	$	132,388	$	145,473	$	8,782

Interest income recognized on a cash basis for impaired loans classified as non-accrual totaled $207 thousand, $1.3 million and $735 thousand for the years ended December 31, 2016, 2015 and 2014, respectively.

The following table presents, by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2016, 2015 and 2014:

	2016				2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	36,552	$	1,045	$	28,451	$	893	$	30,485	$	1,114
Commercial real estate:
Commercial real estate	59,633		2,122		77,154		2,380		74,256		2,488
Construction	5,790		182		16,399		534		21,515		547
Total commercial real estate loans	65,423		2,304		93,553		2,914		95,771		3,035
Residential mortgage	21,340		874		24,435		728		26,863		812
Consumer loans:
Home equity	2,626		68		3,852		111		2,214		49
Total consumer loans	2,626		68		3,852		111		2,214		49
Total	$	125,941	$	4,291	$	150,291	$	4,646	$	155,333	$	5,010

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). Valley’s PCI loans are excluded from the TDR disclosures below because they are evaluated for impairment on a pool by pool basis. When an individual PCI loan within a pool is modified as a TDR, it is not removed from its pool. All TDRs are classified as impaired loans and are included in the impaired loan disclosures above.

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 $85.2 million and $77.6 million as of December 31, 2016 and 2015, respectively. Non-performing TDRs totaled $10.6 million and $21.0 million as of December 31, 2016 and 2015, respectively.

The following table presents non-PCI loans by loan class modified as TDRs during the years ended December 31, 2016 and 2015. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts at December 31, 2016 and 2015, respectively.

Troubled Debt Restructurings	Number of  Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)
December 31, 2016
Commercial and industrial	19	$	18,186	$	16,277
Commercial real estate:
Commercial real estate	4	8,325		7,092
Construction	3	2,922		3,626
Total commercial real estate	7	11,247		10,718
Residential mortgage	7	1,867		1,826
Consumer	1	54		51
Total	34	$	31,354	$	28,872
December 31, 2015
Commercial and industrial	17	$	8,409	$	6,793
Commercial real estate:
Commercial real estate	5	6,768		6,709
Construction	2	646		1,391
Total commercial real estate	7	7,414		8,100
Residential mortgage	7	2,659		2,603
Consumer	2	1,111		1,095
Total	33	$	19,593	$	18,591

The total TDRs presented in the table above had allocated specific reserves for loan losses that totaled $4.8 million and $1.4 million at December 31, 2016 and 2015, respectively. These specific reserves are included in the allowance for loan losses for loans individually evaluated for impairment disclosed in Note 6. Partial loan charge-offs related to loans modified as TDRs presented in the table above totaled $320 thousand during 2015. There were no loan charge-offs related to loans modified as TDRs during 2016.

The non-PCI loans modified as TDRs within the previous 12 months and for which there was a payment default (90 or more days past due) for the years ended December 31, 2016 and 2015 were as follows:

	Years Ended December 31,
	2016			2015
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	—	$	—	1	$	129
Commercial real estate	2	357		1	87
Residential mortgage	4	853		1	214
Consumer	—	—		1	75
Total	6	$	1,210	4	$	505

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 risk category of loans by class of loans (excluding PCI loans) based on the most recent analysis performed at December 31, 2016 and 2015.

Credit exposure— by internally assigned risk rating			Special						Total Non-PCI
	Pass		Mention		Substandard		Doubtful		Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	2,246,457	$	44,316	$	64,649	$	1,596	$	2,357,018
Commercial real estate	7,486,469		57,591		84,268		—		7,628,328
Construction	708,070		200		1,996		—		710,266
Total	$	10,440,996	$	102,107	$	150,913	$	1,596	$	10,695,612
December 31, 2015
Commercial and industrial	$	2,049,752	$	68,243	$	36,254	$	2,300	$	2,156,549
Commercial real estate	5,893,354		79,279		96,899		—		6,069,532
Construction	596,530		1,102		10,062		—		607,694
Total	$	8,539,636	$	148,624	$	143,215	$	2,300	$	8,833,775

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 was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2016 and 2015:

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2016
Residential mortgage	$	2,672,120	$	12,075	$	2,684,195
Home equity	375,185		1,028		376,213
Automobile	1,138,936		146		1,139,082
Other consumer	569,499		—		569,499
Total	$	4,755,740	$	13,249	$	4,768,989
December 31, 2015
Residential mortgage	$	2,894,149	$	17,930	$	2,912,079
Home equity	389,721		2,088		391,809
Automobile	1,238,708		118		1,238,826
Other consumer	426,147		—		426,147
Total	$	4,948,725	$	20,136	$	4,968,861

Valley evaluates the credit quality of its PCI loan pools based on the expectation of the underlying cash flows of each pool, derived from the aging status and by payment activity of individual loans within the pool. The following table presents the recorded investment in PCI loans by class based on individual loan payment activity as of December 31, 2016 and 2015:

Credit exposure—	Performing		Non-Performing		Total
by payment activity	Loans		Loans		PCI Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	272,483	$	8,694	$	281,177
Commercial real estate	1,080,376		10,963		1,091,339
Construction	113,370		1,310		114,680
Residential mortgage	179,793		3,930		183,723
Consumer	98,469		2,114		100,583
Total	$	1,744,491	$	27,011	$	1,771,502
December 31, 2015
Commercial and industrial	$	373,665	$	10,277	$	383,942
Commercial real estate	1,342,030		13,074		1,355,104
Construction	141,547		5,706		147,253
Residential mortgage	214,713		3,749		218,462
Consumer	129,891		5,819		135,710
Total	$	2,201,846	$	38,625	$	2,240,471

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Allowance for Credit Losses

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Allowance for Credit Losses

ALLOWANCE FOR CREDIT LOSSES (Note 6)

The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded letters of credit. Management maintains the allowance for credit losses at a level estimated to absorb probable loan losses of the loan portfolio and unfunded letter of credit commitments at the balance sheet date. The allowance for loan losses is based on ongoing evaluations of the probable estimated losses inherent in the loan portfolio, including unexpected additional credit impairment of PCI loan pools subsequent to acquisition. There was no allowance allocation for PCI loan losses at December 31, 2016 and 2015.

The following table summarizes the allowance for credit losses at December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Components of allowance for credit losses:
Allowance for loan losses	$	114,419	$	106,178
Allowance for unfunded letters of credit	2,185		2,189
Total allowance for credit losses	$	116,604	$	108,367

The following table summarizes the provision for credit losses for the years ended December 31, 2016, 2015 and 2014:

	2016			2015		2014
	(in thousands)
Components of provision for credit losses:
Provision for loan losses	$	11,873		$	7,846	$	3,445
Provision for unfunded letters of credit	(4		)	255		(1,561		)
Total provision for credit losses	$	11,869		$	8,101	$	1,884

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2016 and 2015:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
December 31, 2016
Allowance for loan losses:
Beginning balance	$	48,767		$	48,006		$	4,625		$	4,780		$	—		$	106,178
Loans charged-off	(5,990		)	(650		)	(866		)	(3,463		)	—			(10,969		)
Charged-off loans recovered	2,852			2,057			774			1,654			—			7,337
Net charge-offs	(3,138		)	1,407			(92		)	(1,809		)	—			(3,632		)
Provision for loan losses	5,191			6,438			(831		)	1,075						11,873
Ending balance	$	50,820		$	55,851		$	3,702		$	4,046		$	—		$	114,419
December 31, 2015
Allowance for loan losses:
Beginning balance	$	43,676		$	42,840		$	5,093		$	5,179		$	5,565		$	102,353
Loans charged-off	(7,928		)	(2,790		)	(813		)	(3,441		)	—			(14,972		)
Charged-off loans recovered	7,233			1,759			421			1,538			—			10,951
Net charge-offs	(695		)	(1,031		)	(392		)	(1,903		)	—			(4,021		)
Provision for loan losses	5,786			6,197			(76		)	1,504			(5,565		)	7,846
Ending balance	$	48,767		$	48,006		$	4,625		$	4,780		$	—		$	106,178

During 2015, Valley refined and enhanced its assessment of the adequacy of the allowance for loan losses, including both changes to look-back periods for certain portfolios, as well as enhancements to its qualitative factor framework. The enhancements were meant to increase the level of precision in the allowance for credit losses. As a result, Valley no longer has an “unallocated” segment in its allowance for credit losses, as the risks and uncertainties meant to be captured by the unallocated allowance have been included in the qualitative framework for the respective portfolios (reported in the table above) at December 31, 2016 and 2015. As such, the unallocated allowance has in essence been reallocated to the certain portfolios based on the risks and uncertainties it was meant to capture. See Note 1 to the consolidated financial statements for additional information regarding our allowance for loan losses.

The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the impairment methodology for the years ended December 31, 2016 and 2015. Loans individually evaluated for impairment represent Valley’s impaired loans. Loans acquired with discounts related to credit quality represent Valley’s PCI loans.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
December 31, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	5,864	$	3,872	$	725	$	70	$	10,531
Collectively evaluated for impairment	44,956		51,979		2,977		3,976		103,888
Total	$	50,820	$	55,851	$	3,702	$	4,046	$	114,419
Loans:
Individually evaluated for impairment	$	30,640	$	62,289	$	18,356	$	3,534	$	114,819
Collectively evaluated for impairment	2,326,378		8,276,305		2,665,839		2,081,260		15,349,782
Loans acquired with discounts related to credit quality	281,177		1,206,019		183,723		100,583		1,771,502
Total	$	2,638,195	$	9,544,613	$	2,867,918	$	2,185,377	$	17,236,103
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	3,439	$	3,671	$	1,377	$	295	$	8,782
Collectively evaluated for impairment	45,328		44,335		3,248		4,485		97,396
Total	$	48,767	$	48,006	$	4,625	$	4,780	$	106,178
Loans:
Individually evaluated for impairment	$	25,714	$	81,930	$	22,612	$	2,132	$	132,388
Collectively evaluated for impairment	2,130,835		6,595,296		2,889,467		2,054,650		13,670,248
Loans acquired with discounts related to credit quality	383,942		1,502,357		218,462		135,710		2,240,471
Total	$	2,540,491	$	8,179,583	$	3,130,541	$	2,192,492	$	16,043,107

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Premises and Equipment, Net

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Premises and Equipment, Net

PREMISES AND EQUIPMENT, NET (Note 7)

At December 31, 2016 and 2015, premises and equipment, net consisted of:

	2016			2015
	(in thousands)
Land	$	78,116		$	80,519
Buildings	210,012			211,923
Leasehold improvements	73,405			70,314
Furniture and equipment	240,424			224,340
Total premises and equipment	601,957			587,096
Accumulated depreciation and amortization	(310,777		)	(288,153		)
Total premises and equipment, net	$	291,180		$	298,943

Depreciation and amortization of premises and equipment included in non-interest expense for the years ended December 31, 2016, 2015 and 2014 was approximately $24.4 million, $21.1 million, and $19.5 million, respectively.

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS (Note 8)

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, 2014	$	20,517	$	168,922	$	252,900	$	133,553	$	575,892
Goodwill from business combinations	—		30,197		61,360		18,890		110,447
Balance at December 31, 2015	$	20,517	$	199,119	$	314,260	$	152,443	$	686,339
Goodwill from business combinations	701		984		1,998		615		4,298
Balance at December 31, 2016	$	21,218	$	200,103	$	316,258	$	153,058	$	690,637

* 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.

Certain estimates for acquired assets and assumed liabilities are subject to change for up to one year after the acquisition date. During 2016, goodwill from business combinations primarily related to the effect of the combined adjustments to the estimated fair values of the acquired assets and liabilities as of the acquisition date of CNL, as well as $701 thousand of goodwill from the acquisition of certain assets from an independent insurance agency during the first quarter of 2016. The adjustments mostly related to the fair value of certain PCI loans, core deposit intangibles and time deposits which, resulted in an increase in goodwill totaling $3.6 million. There was no impairment of goodwill during the years ended December 31, 2016, 2015 and 2014.

The following tables summarize other intangible assets as of December 31, 2016 and 2015:

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
December 31, 2016
Loan servicing rights	$	73,002	$	(52,634	)	$	(900	)	$	19,468
Core deposits	61,504		(37,562		)	—			23,942
Other	4,087		(2,013		)	—			2,074
Total other intangible assets	$	138,593	$	(92,209	)	$	(900	)	$	45,484
December 31, 2015
Loan servicing rights	$	75,932	$	(59,251	)	$	(289	)	$	16,392
Core deposits	62,714		(31,934		)	—			30,780
Other	4,374		(2,664		)	—			1,710
Total other intangible assets	$	143,020	$	(93,849	)	$	(289	)	$	48,882

Core deposits are amortized using an accelerated method and have a weighted average amortization period of 11 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 20 years. In 2016, Valley recorded $660 thousand in other intangibles, consisting of customer lists acquired from an independent insurance agency. In 2015, Valley recorded $19.3 million in core deposit intangibles resulting from the CNL acquisition. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the years ended December 31, 2016, 2015 and 2014.

The following table summarizes the change in loan servicing rights during the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Loan servicing rights
Balance at beginning of year	$	16,681		$	20,446		$	26,068
Origination of loan servicing rights	8,479			1,696			1,065
Amortization expense	(4,792		)	(5,461		)	(6,687		)
Balance at end of year	$	20,368		$	16,681		$	20,446
Valuation allowance
Balance at beginning of year	$	(289	)	$	(592	)	$	(504	)
Impairment adjustment	(611		)	303			(88		)
Balance at end of year	$	(900	)	$	(289	)	$	(592	)
Balance at end of year, net of valuation allowance	$	19,468		$	16,392		$	19,854

Loan servicing rights are accounted for using the amortization method (see Note 1 for more details).

The Bank is a servicer of residential mortgage and SBA loan portfolios, and it is compensated for loan administrative services performed for mortgage servicing rights of loans originated and sold by the Bank, and to a lesser extent, purchased mortgage servicing rights. The aggregate principal balances of residential mortgage loans serviced by the Bank for others approximated $2.5 billion, $2.1 billion and $2.3 billion at December 31, 2016, 2015 and 2014, respectively. The SBA loans serviced by the Bank for third-party investors totaled $23.8 million, $32.3 million and $26.9 million at December 31, 2016, 2015 and 2014, respectively. The outstanding balance of all loans serviced for others is not included in the consolidated statements of financial condition.

Valley recognized amortization expense on other intangible assets, including recoveries and net impairment charges on loan servicing rights (reflected in the table above), of $11.3 million, $9.2 million and $9.9 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The following table presents the estimated amortization expense of other intangible assets over the next five-year period:

Year	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2017	$	4,888	$	4,842	$	280
2018	3,989		4,215		249
2019	3,101		3,671		235
2020	2,417		3,127		220
2021	1,771		2,582		206

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Deposits

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

Deposits

DEPOSITS (Note 9)

Included in time deposits are certificates of deposit over $100 thousand totaling $1.7 billion at both December 31, 2016 and 2015. Interest expense on time deposits of $100 thousand or more totaled approximately $1.5 million, $4.0 million, and $5.9 million in 2016, 2015 and 2014, respectively.

The scheduled maturities of time deposits as of December 31, 2016 are as follows:

Year	Amount
	(in thousands)
2017	$	2,122,906
2018	473,924
2019	98,763
2020	147,548
2021	162,687
Thereafter	133,043
Total time deposits	$	3,138,871

Deposits from certain directors, executive officers and their affiliates totaled $85.6 million and $57.3 million at December 31, 2016 and 2015, respectively.

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Borrowed Funds

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Borrowed Funds

BORROWED FUNDS (Note 10)

Short-Term Borrowings

Short-term borrowings at December 31, 2016 and 2015 consisted of the following:

	2016		2015
	(in thousands)
Securities sold under agreements to repurchase	$	298,960	$	500,991
Federal funds purchased	—		50,000
FHLB advances	782,000		526,000
Total short-term borrowings	$	1,080,960	$	1,076,991

The weighted average interest rate for short-term borrowings was 0.65 percent and 0.69 percent at December 31, 2016 and 2015, respectively.

Long-Term Borrowings

Long-term borrowings at December 31, 2016 and 2015 consisted of the following:

	2016		2015
	(in thousands)
FHLB advances, net (1)	$	1,031,666	$	1,272,591
Securities sold under agreements to repurchase	165,000		307,500
Subordinated debt, net (2)	236,731		230,573
Other	509		64
Total long-term borrowings	$	1,433,906	$	1,810,728

(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $18.3 million and $3.6 million at December 31, 2016 and 2015, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $1.9 million and $2.2 million at December 31, 2016 and 2015, respectively.

In August 2016, Valley prepaid $355 million and $50 million of the long-term FHLB advances and securities sold under agreements to repurchase, respectively. These prepaid borrowings, which had contractual maturity dates in 2018 and a total average interest rate of 3.69 percent, were funded with a new fixed-rate five-year FHLB advance totaling $405.0 million. The transaction was accounted for as a debt modification under U.S. GAAP. As a result, the new advance has an adjusted annual interest rate of 2.51 percent, after amortization of prepayment penalties totaling $20.0 million paid to the FHLB.

In May 2016, Valley prepaid $87 million of FHLB advances assumed in the acquisition of CNL. The prepayment was entirely funded by cash balances that were held as a collateral at the FHLB of Atlanta and resulted in the recognition of a $315 thousand loss on extinguishment of debt for the year ended December 31, 2016.

In December 2015, Valley prepaid $625 million and $220 million of the long-term FHLB advances and securities sold under agreements to repurchase, respectively. These prepaid borrowings had contractual amounts of $795 million and $50 million maturing in 2017 and 2018, respectively, and had a combined weighted average interest rate of 3.72 percent. The debt extinguishment resulted in a loss, consisting of prepayment penalties, totaling approximately $51.1 million for the year ended December 31, 2015.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 3.37 percent and 3.96 percent at December 31, 2016 and 2015, respectively. These 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 pledged assets to the FHLB also collateralize a $100 million letter of credit issued by the FHLB on Valley’s behalf to secure certain public deposits held at the Bank.

The long-term FHLB advances at December 31, 2016 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2017	$	10,000
2021	840,000
Thereafter	200,000
Total long-term FHLB advances	$	1,050,000

Valley has no FHLB advances maturing in the years 2018 to 2020. The FHLB advances with scheduled repayments in years after 2017, reported in the table above, include $10 million in advances which are callable for early redemption by the FHLB during 2017 with interest rates ranging from 2.27 percent to 3.25 percent.

Long-term borrowings for securities sold under agreements. The long-term borrowings for securities sold under agreements had a weighted average interest rate of 2.41 percent and 3.35 percent at December 31, 2016 and 2015, respectively.

The long-term repos at December 31, 2016 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2017	$	65,000
2018	50,000
Thereafter	50,000
Total long-term securities sold under agreements to repurchase	$	165,000

Subordinated Debt. In June 2015, the Bank issued $100 million of 4.55 percent subordinated debentures (notes) due July 30, 2025 with no call dates or prepayments allowed unless certain conditions exist. This subordinated note issuance was intended to replace our $100 million of 5 percent subordinated notes which matured and were repaid in July 2015. Interest on the subordinated notes is payable semi-annually in arrears on June 30 and December 30 of each year.

In September 2013, Valley issued $125 million of its 5.125 percent subordinated notes due September 27, 2023 with no call dates or prepayments allowed, unless certain conditions exist. Interest on the subordinated debentures is payable semi-annually in arrears on March 27 and September 27 of each year. In conjunction with the issuance, Valley entered into an interest rate swap transaction used to hedge the change in the fair value of the subordinated notes. In August 2016, the fair value interest rate swap with a notional amount of $125 million was terminated resulting in an adjusted fixed annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date (see Note 15). The subordinated notes had a net carrying value of $136.7 million and $130.6 million at December 31, 2016 and 2015, respectively.

Pledged Securities. The fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit, FHLB advances and for other purposes required by law approximated $1.5 billion and $1.4 billion at December 31, 2016 and 2015, respectively.

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Junior Subordinated Debentures Issued to Capital Trusts

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Junior Subordinated Debentures Issued to Capital Trusts

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Note 11)

Valley acquired GCB Capital Trust III, State Bancorp Capital Trust I, and State Bancorp Capital Trust II in past bank acquisitions. These statutory trusts were established for the sole purpose of issuing trust preferred securities and related trust common securities. The proceeds from such issuances were used by the trust to purchase an equivalent amount of junior subordinated debentures issued by the acquired bank, and now assumed by Valley. The junior subordinated debentures, the sole assets of the trusts, are unsecured obligations of Valley, and are subordinate and junior in right of payment to all present and future senior and subordinated indebtedness and certain other financial obligations of Valley. Valley does not consolidate its capital trusts based on U.S. GAAP but wholly owns all of the common securities of each trust.

The table below summarizes the outstanding junior subordinated debentures and the related trust preferred securities issued by each trust as of December 31, 2016 and 2015:

	GCB Capital Trust III			State Bancorp Capital Trust I		State Bancorp Capital Trust II
	($ in thousands)
Junior Subordinated Debentures:
December 31, 2016
Carrying value (1)	$	24,777		$	8,724	$	8,076
Contractual principal balance	24,743			10,310		10,310
December 31, 2015
Carrying value (1)	$	24,846		$	8,624	$	7,944
Contractual principal balance	24,743			10,310		10,310
Annual interest rate (2)	6.96		%	3-month LIBOR+3.45%		3-month LIBOR+2.85%
Stated maturity date	July 30, 2037			November 7, 2032		January 23, 2034
Initial call date	July 30, 2017			November 7, 2007		January 23, 2009
Trust Preferred Securities:
December 31, 2016 and 2015
Face value	$	24,000		$	10,000	$	10,000
Annual distribution rate (2)	6.96		%	3-month LIBOR+3.45%		3-month LIBOR+2.85%
Issuance date	July 2, 2007			October 29, 2002		December 19, 2003
Distribution dates (3)	Quarterly			Quarterly		Quarterly

(1) The carrying values include unamortized purchase accounting adjustments at December 31, 2016 and 2015.

(2) Interest on GCB Capital Trust III is fixed until July 30, 2017, then resets to 3-month LIBOR plus 1.4 percent. The annual interest rate for all of the junior subordinated debentures and related trust preferred securities excludes the effect of the purchase accounting adjustments.

(3) All cash distributions are cumulative.

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at the stated maturity date or upon redemption on the date no earlier than the call dates noted in the table above. The trusts’ ability to pay amounts due on the trust preferred securities is solely dependent upon Valley making payments on the related junior subordinated debentures. Valley’s obligation under the junior subordinated debentures and other relevant trust agreements, in aggregate, constitutes a full and unconditional guarantee by Valley of the trusts’ obligations under the trust preferred securities issued. Under the junior subordinated debenture agreements, Valley has the right to defer payment of interest on the debentures and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity dates in the table above. Currently, Valley has no intention to exercise its right to defer interest payments on the debentures.

The trust preferred securities are included in Valley’s total risk-based capital (as Tier 2 capital) for regulatory purposes at December 31, 2016. Based on the regulatory capital guidance under the Basel III rules, the trust preferred securities issued by our capital trusts were fully phased out of Tier 1 capital on January 1, 2016.

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Benefit Plans

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Benefit Plans

BENEFIT PLANS (Note 12)

Pension Plan

The Bank has a non-contributory defined benefit plan (qualified plan) covering most of its employees. The qualified plan benefits are based upon years of credited service and the employee’s highest average compensation as defined. Additionally, the Bank has a supplemental non-qualified, non-funded retirement plan, which is designed to supplement the pension plan for key officers, and Valley has a non-qualified, non-funded directors’ retirement plan (both of these plans are referred to as the “non-qualified plans” below).

Effective December 31, 2013 the benefits earned under the qualified and non-qualified were frozen. As a result, Valley re-measured the projected benefit obligation of the affected plans and the funded status of each plan at June 30, 2013. Consequently, participants in each plan will not accrue further benefits and their pension benefits will be determined based on the compensation and service as of December 31, 2013. Plan benefits will not increase for any compensation or service earned after such date. However, participants’ benefits will continue to vest as long as they work for Valley.

The following table sets forth the change in the projected benefit obligation, the change in fair value of plan assets and the funded status and amounts recognized in Valley’s consolidated financial statements for the qualified and non-qualified plans at December 31, 2016 and 2015:

	2016			2015
	(in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	157,661		$	176,339
Interest cost	6,681			6,889
Actuarial loss (gain)	2,047			(17,177		)
Benefits paid	(5,546		)	(8,390		)
Projected benefit obligation at end of year	$	161,306		$	157,661
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	189,414		$	194,646
Actual return on plan assets	22,424			2,875
Employer contributions	347			283
Benefits paid	(5,546		)	(8,390		)
Fair value of plan assets at end of year*	$	206,639		$	189,414
Funded status of the plan
Asset recognized	$	45,333		$	31,753
Accumulated benefit obligation	161,306			157,661

*    Includes accrued interest receivable of $606 thousand and $607 thousand as of December 31, 2016 and 2015, respectively.

Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized as a component of the net periodic pension expense for Valley’s qualified and non-qualified plans are presented in the following table. Valley expects to recognize approximately $367 thousand of the net actuarial loss reported in the following table as of December 31, 2016 as a component of net periodic pension expense during 2017.

	2016			2015
	(in thousands)
Net actuarial loss	$	30,140		$	36,271
Deferred tax benefit	(12,647		)	(15,118		)
Total	$	17,493		$	21,153

The non-qualified plans had a projected benefit obligation, accumulated benefit obligation, and fair value of plan assets as follows:

	2016		2015
	(in thousands)
Projected benefit obligation	$	18,286	$	17,411
Accumulated benefit obligation	18,286		17,411
Fair value of plan assets	—		—

In determining discount rate assumptions, management looks to current rates on fixed-income corporate debt securities that receive a rating of AA or higher from either Moody’s or S&P with durations equal to the expected benefit payments streams required of each plan. The weighted average discount rate used in determining the actuarial present value of benefit obligations for the qualified and non-qualified plans were 4.11 percent and 4.33 percent as of December 31, 2016 and 2015, respectively. 

The net periodic pension income for the qualified and non-qualified plans included the following components for the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Interest cost	$	6,681		$	6,889		$	6,897
Expected return on plan assets	(14,539		)	(14,023		)	(12,967		)
Amortization of net loss	294			790			226
Total net periodic pension income	$	(7,564	)	$	(6,344	)	$	(5,844	)

At the end of 2016, Valley changed the method utilized to estimate the interest cost component of net periodic pension costs for our qualified and non-qualified plans. Historically, Valley estimated the interest cost component (and the service cost component when it was applicable) using a single weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Valley will elect to use a spot rate approach for the plans in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve to the relevant projected cash flows, as Valley believes this provides a better estimate of service and interest costs. Valley considers this a change in estimate and, accordingly, will account for it prospectively starting in 2017. This change does not affect the measurement of the total benefit obligation. For 2017, the change in estimate is expected to increase net periodic pension income by approximately $765 thousand when compared to the prior approach.

Other changes in the qualified and non-qualified plan assets and benefit obligations recognized in other comprehensive income/loss for the years ended December 31, 2016 and 2015 were as follows:

	2016			2015
	(in thousands)
Net gain	$	(5,837	)	$	(6,030	)
Prior service cost	462			—
Amortization of actuarial loss	(294		)	(790		)
Total recognized in other comprehensive income	$	(5,669	)	$	(6,820	)
Total recognized in net periodic pension income and other comprehensive income/loss (before tax)	$	(13,233	)	$	(13,163	)

The benefit payments, which reflect expected future service, as appropriate, expected to be paid in future years are presented in the following table:

Year	Amount
	(in thousands)
2017	$	6,847
2018	7,206
2019	7,744
2020	8,081
2021	8,423
Thereafter	45,462

The weighted average discount rate, expected long-term rate of return on assets and rate of compensation increase used in determining Valley’s pension expense for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016		2015		2014
Discount rate	4.33	%	4.02	%	4.89	%
Expected long-term return on plan assets	7.50	%	7.50	%	7.50	%
Rate of compensation increase	N/A		N/A		N/A

The expected rate of return on plan assets assumption is based on the concept that it is a long-term assumption independent of the current economic environment and changes would be made in the expected return only when long-term inflation expectations change, asset allocations change or when asset class returns are expected to change for the long-term.

In accordance with Section 402 (c) of ERISA, the qualified plan’s investment managers are granted full discretion to buy, sell, invest and reinvest the portions of the portfolio assigned to them consistent with the Bank’s Pension Committee’s policy and guidelines. The target asset allocation set for the qualified plan are equity securities ranging from 25 percent to 65 percent and fixed income securities ranging from 35 percent to 75 percent. The absolute investment objective for the equity portion is to earn at least 7 percent cumulative annualized real return, after adjustment by the Consumer Price Index (CPI), over rolling five-year periods, while the relative objective is to earn returns above the S&P 500 Index over rolling three-year periods. For the fixed income portion, the absolute objective is to earn at least a 3 percent cumulative annual real return, after adjustment by the CPI over rolling five-year periods with a relative objective of earning returns above the Merrill Lynch Intermediate Government/Corporate Index over rolling three-year periods. Cash equivalents will be invested in money market funds or in other high quality instruments approved by the Trustees of the qualified plan.

The exposure of the plan assets of the qualified plan to a concentration of credit risk is limited by the Bank’s Pension Committee’s diversification of the investments into various investment options with multiple asset managers. The Pension Committee engages an investment management advisory firm that regularly monitors the performance of the asset managers and ensures they are within compliance of the policies adopted by the Trustees. If the risk profile and overall return of assets managed are not in line with the risk objectives or expected return benchmarks for the qualified plan, the advisory firm may recommend the termination of an asset manager to the Pension Committee.

In general, the plan assets of the qualified plan are investment securities that are well-diversified in terms of industry, capitalization and asset class. The following table presents the qualified plan weighted-average asset allocations by asset category that are measured at fair value on a recurring basis by level within the fair value hierarchy under ASC Topic 820. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 3 for further details regarding the fair value hierarchy.

					Fair Value Measurements at Reporting Date Using:
	% of Total Investments		December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	($ in thousands)
Assets:
Investments:
Equity securities	43	%	$	88,250	$	88,250	$	—	$	—
Corporate bonds	21		43,152		—		43,152		—
Mutual funds	19		38,975		38,975		—		—
U.S. Treasury securities	12		24,910		24,910		—		—
Cash and money market funds	5		10,402		10,402		—		—
U.S. government agency securities	*		344		—		344		—
Total investments	100	%	$	206,033	$	162,537	$	43,496	$	—

					Fair Value Measurements at Reporting Date Using:
	% of Total Investments		December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	($ in thousands)
Assets:
Investments:
Equity securities	41	%	$	76,578	$	76,578	$	—	$	—
Corporate bonds	22		41,786		—		41,786		—
Mutual funds	19		36,052		36,052		—		—
U.S. Treasury securities	12		22,130		2,213		—		—
Cash and money market funds	6		11,913		11,913		—		—
U.S. government agency securities	*		348		—		348		—
Total investments	100	%	$	188,807	$	126,756	$	42,134	$	—

* Represents less than one percent of total investments.

The following is a description of the valuation methodologies used for assets measured at fair value:

Equity securities, U.S. Treasury securities and cash and money market funds are valued at fair value in the table above utilizing exchange quoted prices in active markets for identical instruments (Level 1 inputs). Mutual funds are measured at their respective net asset values, which represents fair values of the securities held in the funds based on exchange quoted prices available in active markets (Level 1 inputs).

Corporate bonds and U.S. government agency securities are reported at fair value utilizing Level 2 inputs. The prices for these investments are derived from market quotations and matrix pricing obtained through an independent pricing service. Such 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.

Based upon actuarial estimates, Valley does not expect to make any contributions to the qualified plan. Funding requirements for subsequent years are uncertain and will significantly depend on whether the plan’s actuary changes any assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes, Valley may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

Other Non-Qualified Plans

Valley maintains other non-qualified plans for former directors of banks acquired, as well as a non-qualified plan for former senior management of Merchants Bank of New York acquired in January of 2001. Valley did not merge these plans into its existing non-qualified plans. Collectively, at December 31, 2016 and 2015, the remaining obligations under these plans were $3.3 million and $3.4 million, respectively, of which $1.5 million and $1.6 million, respectively, were funded by Valley. As of December 31, 2016 and 2015, the entire obligations were included in other liabilities and $867 thousand (net of a $614 thousand tax benefit) and $1.0 million (net of a $748 thousand tax benefit), respectively, were recorded in accumulated other comprehensive loss. The $1.5 million in accumulated other comprehensive loss will be reclassified to expense on a straight-line basis over the remaining benefit periods of these non-qualified plans.

Bonus Plan

Valley National Bank and its subsidiaries may award cash incentive and merit bonuses to its officers and employees based upon a percentage of the covered employees’ compensation as determined by the achievement of certain performance objectives. Amounts charged to salary expense were $10.5 million, $9.0 million and $6.8 million during 2016, 2015 and 2014, respectively.

Savings and Investment Plan

Valley National Bank maintains a KSOP, which is defined as a 401(k) plan with an employee stock ownership feature. This plan covers eligible employees of the Bank and its subsidiaries and allows employees to contribute a percentage of their salary, with the Bank matching a certain percentage of the employee contribution in cash and invested in accordance with each participant’s investment elections. The Bank recorded $6.7 million, $7.1 million and $6.0 million in expense for contributions to the plan for the years ended December 31, 2016, 2015 and 2014, respectively.

Effective January 1, 2016, Valley amended the benefits under the Bank’s 401(k) plan. Under the amendment, Valley’s matching contribution increased to a 100 percent of the first 4 percent of compensation contributed by an employee each pay period, and 50 percent of the next 2 percent of compensation contributed, for a maximum matching contribution of 5 percent with an annual limit of $13,250 in 2016. During 2015 and 2014, Valley's matching contribution was dollar-for-dollar up to 6 percent of compensation contributed by an employee each pay period.

Stock-Based Compensation

Valley currently has one active employee stock option 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 provides for certain increases and decreases in the number of shares available for grant under Valley's 2009 Long-Term Stock Incentive Plan (the "2009 Stock Plan"). Effective January 1, 2016, the 2.2 million of common shares remaining under the 2009 Stock Plan became available for future grants under the 2016 Stock Plan. Accordingly, Valley will no longer grant new awards under the 2009 Stock Plan.

The Employee Stock Incentive 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 purpose of the Employee Stock Incentive 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 to its employees and non-employee directors in the form of stock appreciation rights, both incentive and non-qualified stock options, restricted stock and restricted stock units (RSUs). As of December 31, 2016, 8.3 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. The maximum term to exercise an incentive stock option is ten years from the date of grant and is subject to a vesting schedule.

Valley recorded total stock-based compensation expense, primarily for restricted stock awards, totaling $10.0 million, $8.8 million and $7.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. The stock-based compensation expense for 2016, 2015 and 2014 included $3.5 million, $2.6 million and $3.9 million, respectively, related to stock awards granted to retirement eligible employees and was immediately recognized. The fair values of all other stock awards are expensed over the shorter of the vesting or required service period. As of December 31, 2016, the unrecognized amortization expense for all stock-based compensation totaled approximately $13.8 million and will be recognized over an average remaining vesting period of approximately 2.5 years.

Restricted Stock.  Restricted stock is awarded to key employees providing for the immediate award of our common stock subject to certain vesting and restrictions under the Employee Stock Incentive Plan. Compensation expense is measured based on the grant-date fair value of the shares.

The following table sets forth the changes in restricted stock awards outstanding for the years ended December 31, 2016, 2015 and 2014:

	Restricted Stock Awards Outstanding
	2016		2015		2014
Outstanding at beginning of year	2,755,138		2,574,616		1,709,312
Granted	544,307		886,427		1,488,960
Vested	(1,050,293	)	(559,958	)	(524,663	)
Forfeited	(148,336	)	(145,947	)	(98,993	)
Outstanding at end of year	2,100,816		2,755,138		2,574,616

The restricted stock awards granted in 2016 have vesting periods ranging from three to six years. The average grant date fair value of restricted stock awarded during the year ended December 31, 2016 was $8.84 per share. Included in the restricted shares granted (in the table above) during 2014, 240 thousand shares were performance-based awards made to executive officers. The performance-based restricted stock awards vest based on the same performance measures for the RSU grants discussed further below. A portion of the performance-based restricted stock awards vest after three years based on the cumulative performance of Valley during that time period with an opportunity for earlier vesting of a portion of the shares based on growth in tangible book value performance. During 2016 and 2015, 53 thousand and 50 thousand restricted shares, respectively, of the performance-based restricted stock awards vested. The remaining outstanding awards were unvested as of December 31, 2016, of which 85 thousand shares vested during the first quarter of 2017. The remaining unvested restricted stock awards were subsequently forfeited during the first quarter of 2017 due to failure to meet the performance and market conditions.

Restricted Stock Units. Valley granted 431 thousand shares and 313 thousand shares of performance-based RSUs to certain executive officers for the year ended December 31, 2016 and 2015, respectively. The RSUs vest based on (i) growth in tangible book value per share plus dividends (75 percent of performance shares) and (ii) total shareholder return as compared to our peer group (25 percent of performance shares). 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 share) over the applicable performance period. Dividend equivalents and accrued interest, per the terms of the agreements, 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 was $8.32 and $8.98 per share for the years ended December 31, 2016 and 2015, respectively. Compensation costs related to RSUs totaled $2.8 million and $2.3 million, and were included in total stock-based compensation expense for the years ended December 31, 2016 and 2015, respectively.

Our 2016 Stock Plan provides for our non-employee directors to be eligible recipients of limited equity awards. Commencing with our 2017 annual meeting, each non-employee director will receive RSU awards totaling $50,000 in grant date fair value as part of their annual retainer. The RSUs will be granted on the date of the annual shareholders’ meeting, with the number of RSUs to be determined using the closing market price on the date prior to grant. The RSUs vest on the earliest of the next annual shareholders’ meeting or the first anniversary of the grant date, with acceleration upon a change in control, death or disability, but not resignation from the board.

Stock Options.  The fair value of each option granted on the date of grant is estimated using a binomial option pricing model. The fair values are estimated using assumptions for dividend yield based on the annual dividend rate; the stock volatility, based on Valley’s historical and implied stock price volatility; the risk free interest rates, based on the U.S. Treasury constant maturity bonds, in effect on the actual grant dates, with a remaining term approximating the expected term of the options; and expected exercise term calculated based on Valley’s historical exercise experience.

The following table summarizes stock options activity as of December 31, 2016, 2015 and 2014 and changes during the years ended on those dates:

	2016				2015				2014
			Weighted Average Exercise				Weighted Average Exercise				Weighted Average Exercise
Stock Options	Shares		Price		Shares		Price		Shares		Price
Outstanding at beginning of year	1,383,365		$	16	1,828,591		$	17	2,322,593		$	17
Granted	—		—		100,000		11		—		—
Forfeited or expired	(650,876	)	18		(545,226	)	18		(494,002	)	19
Outstanding at end of year	732,489		14		1,383,365		16		1,828,591		17
Exercisable at year-end	632,489		14		1,283,365		16		1,828,591		17

The following table summarizes information about stock options outstanding and exercisable at December 31, 2016:

Options Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price
$10-14	134,681	3.6	$	12
14-15	445,654	1.1	15
15-17	3,388	1.1	16
18-19	48,766	0.1	19
	632,489	1.6	14

Director Restricted Stock Plan. The Director Restricted Stock Plan provides the non-employee members of the Board of Directors with the opportunity to forgo some or their entire annual cash retainer and meeting fees in exchange for shares of Valley restricted stock. On January 29, 2014, the Director Restricted Stock Plan was amended to provide that no additional fees may be exchanged for Valley’s restricted stock effective April 1, 2014. The Director Restricted Stock Plan will terminate after April 2018 when the remaining restricted stock under the plan vests and is delivered, or is forfeited pursuant to such plan.

The following table sets forth the changes in director’s restricted stock awards outstanding for the years ended December 31, 2016, 2015 and 2014:

	Restricted Stock Awards Outstanding
	2016		2015		2014
Outstanding at beginning of year	80,117		98,086		121,792
Vested	(24,607	)	(17,969	)	(23,706	)
Outstanding at end of year	55,510		80,117		98,086

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES (Note 13)

Income tax expense for the years ended December 31, 2016, 2015 and 2014 consisted of the following:

	2016		2015			2014
	(in thousands)
Current expense (benefit):
Federal	$	25,176	$	7,978		$	25,156
State	12,904		(493		)	(5,549		)
	38,080		7,485			19,607
Deferred expense:
Federal	10,658		(7,539		)	(13,888		)
State	16,496		23,992			25,343
	27,154		16,453			11,455
Total income tax expense	$	65,234	$	23,938		$	31,062

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:

	2016		2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	47,485	$	44,382
Depreciation	12,432		15,661
Employee benefits	16,121		16,104
Investment securities, including other-than-temporary impairment losses	17,272		18,697
Net operating loss carryforwards	46,667		57,722
Purchase accounting	33,172		40,585
Other	22,183		21,310
Total deferred tax assets	195,332		214,461
Deferred tax liabilities:
Pension plans	24,575		18,861
Other investments	20,831		15,720
Other	20,418		21,449
Total deferred tax liabilities	65,824		56,030
Net deferred tax asset (included in other assets)	$	129,508	$	158,431

Valley's federal net operating loss carryforwards totaled approximately $77.6 million at December 31, 2016 and expire during the period from 2029 through 2034 and state net operating loss carryforwards totaled approximately $514.3 million at December 31, 2016 and expire during the period from 2017 through 2036. Valley’s federal and state alternative minimum tax credit carryforwards were approximately $1.9 million and $3.7 million at December 31, 2016, respectively, and can be carried forward indefinitely.

Based upon taxes paid and projections of future taxable income over the periods in which the net deferred tax assets are deductible, management believes that it is more likely than not that Valley will realize the benefits of these deductible differences and loss carryforwards.

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 35 percent for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Federal income tax at expected statutory rate	$	81,683		$	44,413		$	51,532
Increase (decrease) due to:
State income tax expense, net of federal tax effect	19,197			15,274			12,866
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(5,308		)	(4,864		)	(4,406		)
Bank owned life insurance	(2,343		)	(2,385		)	(2,237		)
Tax credits from securities and other investments	(25,954		)	(28,988		)	(20,555		)
Reduction in reserve for uncertainties	—			—			(6,971		)
Other, net	(2,041		)	488			833
Income tax expense	$	65,234		$	23,938		$	31,062

A reconciliation of Valley’s gross unrecognized tax benefits for 2016, 2015 and 2014 are presented in the table below:

	2016			2015		2014
	(in thousands)
Beginning balance	$	19,892		$	18,647	$	30,713
Additions based on tax positions related to prior years	3,958			1,245		1,408
Settlements with taxing authorities	(4,820		)	—		(9,050		)
Reductions due to expiration of statute of limitations	(2,886		)	—		(4,424		)
Ending balance	$	16,144		$	19,892	$	18,647

The entire balance of unrecognized tax benefits, if recognized, would favorably affect our effective income tax rate. It is reasonably possible that the liability for unrecognized tax benefits could increase or decrease in the next twelve months due to completion of tax authorities’ exams or the expiration of statutes of limitations. Management estimates that the liability for unrecognized tax benefits could decrease by $16.1 million within the next twelve months.

Valley’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley has accrued approximately $4.6 million and $5.2 million of interest associated with Valley’s uncertain tax positions at December 31, 2016 and 2015, respectively.

Valley files income tax returns in the U.S. federal and various state jurisdictions. With few exceptions, Valley is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2009. Valley is under examination by the IRS and also currently under routine examination by various state jurisdictions, and we expect the examinations to be completed within the next twelve months. Valley has considered, for all open audits, any potential adjustments in establishing our reserve for unrecognized tax benefits as of December 31, 2016.

TAX CREDIT INVESTMENTS (Note 14)

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. 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 of the consolidated statements of income using the equity method of accounting. An impairment loss is recognized when the fair value of the tax credit investment is less than its carrying value.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	29,567	$	32,094
Other tax credit investments, net	44,763		70,681
Total tax credit investments, net	$	74,330	$	102,775
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	4,850	$	7,330
Unfunded other tax credit commitments	7,276		12,545
Total unfunded tax credit commitments	$	12,126	$	19,875

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	5,013	$	4,709	$	5,296
Other tax credit investment credits and tax benefits	33,294		23,877		14,357
Total reduction in income tax expense	$	38,307	$	28,586	$	19,653
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	2,077	$	2,594	$	3,184
Affordable housing tax credit investment impairment losses	450		1,321		3,211
Other tax credit investment losses	790		1,079		2,359
Other tax credit investment impairment losses	31,427		22,318		15,442
Total amortization of tax credit investments recorded in non-interest expense	$	34,744	$	27,312	$	24,196

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Tax Credit Investments

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Tax Credit Investments

INCOME TAXES (Note 13)

Income tax expense for the years ended December 31, 2016, 2015 and 2014 consisted of the following:

	2016		2015			2014
	(in thousands)
Current expense (benefit):
Federal	$	25,176	$	7,978		$	25,156
State	12,904		(493		)	(5,549		)
	38,080		7,485			19,607
Deferred expense:
Federal	10,658		(7,539		)	(13,888		)
State	16,496		23,992			25,343
	27,154		16,453			11,455
Total income tax expense	$	65,234	$	23,938		$	31,062

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:

	2016		2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	47,485	$	44,382
Depreciation	12,432		15,661
Employee benefits	16,121		16,104
Investment securities, including other-than-temporary impairment losses	17,272		18,697
Net operating loss carryforwards	46,667		57,722
Purchase accounting	33,172		40,585
Other	22,183		21,310
Total deferred tax assets	195,332		214,461
Deferred tax liabilities:
Pension plans	24,575		18,861
Other investments	20,831		15,720
Other	20,418		21,449
Total deferred tax liabilities	65,824		56,030
Net deferred tax asset (included in other assets)	$	129,508	$	158,431

Valley's federal net operating loss carryforwards totaled approximately $77.6 million at December 31, 2016 and expire during the period from 2029 through 2034 and state net operating loss carryforwards totaled approximately $514.3 million at December 31, 2016 and expire during the period from 2017 through 2036. Valley’s federal and state alternative minimum tax credit carryforwards were approximately $1.9 million and $3.7 million at December 31, 2016, respectively, and can be carried forward indefinitely.

Based upon taxes paid and projections of future taxable income over the periods in which the net deferred tax assets are deductible, management believes that it is more likely than not that Valley will realize the benefits of these deductible differences and loss carryforwards.

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 35 percent for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Federal income tax at expected statutory rate	$	81,683		$	44,413		$	51,532
Increase (decrease) due to:
State income tax expense, net of federal tax effect	19,197			15,274			12,866
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(5,308		)	(4,864		)	(4,406		)
Bank owned life insurance	(2,343		)	(2,385		)	(2,237		)
Tax credits from securities and other investments	(25,954		)	(28,988		)	(20,555		)
Reduction in reserve for uncertainties	—			—			(6,971		)
Other, net	(2,041		)	488			833
Income tax expense	$	65,234		$	23,938		$	31,062

A reconciliation of Valley’s gross unrecognized tax benefits for 2016, 2015 and 2014 are presented in the table below:

	2016			2015		2014
	(in thousands)
Beginning balance	$	19,892		$	18,647	$	30,713
Additions based on tax positions related to prior years	3,958			1,245		1,408
Settlements with taxing authorities	(4,820		)	—		(9,050		)
Reductions due to expiration of statute of limitations	(2,886		)	—		(4,424		)
Ending balance	$	16,144		$	19,892	$	18,647

The entire balance of unrecognized tax benefits, if recognized, would favorably affect our effective income tax rate. It is reasonably possible that the liability for unrecognized tax benefits could increase or decrease in the next twelve months due to completion of tax authorities’ exams or the expiration of statutes of limitations. Management estimates that the liability for unrecognized tax benefits could decrease by $16.1 million within the next twelve months.

Valley’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Valley has accrued approximately $4.6 million and $5.2 million of interest associated with Valley’s uncertain tax positions at December 31, 2016 and 2015, respectively.

Valley files income tax returns in the U.S. federal and various state jurisdictions. With few exceptions, Valley is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2009. Valley is under examination by the IRS and also currently under routine examination by various state jurisdictions, and we expect the examinations to be completed within the next twelve months. Valley has considered, for all open audits, any potential adjustments in establishing our reserve for unrecognized tax benefits as of December 31, 2016.

TAX CREDIT INVESTMENTS (Note 14)

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. 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 of the consolidated statements of income using the equity method of accounting. An impairment loss is recognized when the fair value of the tax credit investment is less than its carrying value.

The following table presents the balances of Valley’s affordable housing tax credit investments, other tax credit investments, and related unfunded commitments at December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	29,567	$	32,094
Other tax credit investments, net	44,763		70,681
Total tax credit investments, net	$	74,330	$	102,775
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	4,850	$	7,330
Unfunded other tax credit commitments	7,276		12,545
Total unfunded tax credit commitments	$	12,126	$	19,875

The following table presents other information relating to Valley’s affordable housing tax credit investments and other tax credit investments for the years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	5,013	$	4,709	$	5,296
Other tax credit investment credits and tax benefits	33,294		23,877		14,357
Total reduction in income tax expense	$	38,307	$	28,586	$	19,653
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	2,077	$	2,594	$	3,184
Affordable housing tax credit investment impairment losses	450		1,321		3,211
Other tax credit investment losses	790		1,079		2,359
Other tax credit investment impairment losses	31,427		22,318		15,442
Total amortization of tax credit investments recorded in non-interest expense	$	34,744	$	27,312	$	24,196

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES (Note 15)

Lease Commitments

Certain bank facilities are occupied under non-cancelable long-term operating leases, which expire at various dates through 2058. Certain lease agreements provide for renewal options and increases in rental payments based upon increases in the consumer price index or the lessors’ cost of operating the facility. Minimum aggregate lease payments for the remainder of the lease terms are as follows:

			Sublease
Year	Gross Rents		Rents		Net Rents
	(in thousands)
2017	$	27,256	$	2,888	$	24,368
2018	26,863		2,260		24,603
2019	26,361		2,125		24,236
2020	26,458		2,059		24,399
2021	25,754		1,972		23,782
Thereafter	281,310		9,631		271,679
Total lease commitments	$	414,002	$	20,935	$	393,067

Net occupancy expense for years ended December 31, 2016, 2015, and 2014 included net rental expense of $27.7 million, $31.7 million, and $21.2 million, respectively, net of rental income of $4.0 million, $3.8 million, and $3.1 million, respectively, for leased bank facilities.

Financial Instruments With Off-balance Sheet Risk

In the ordinary course of business in meeting the financial needs of its customers, Valley, through its subsidiary Valley National Bank, is a party to various financial instruments, which are not reflected in the consolidated financial statements. These financial instruments include standby and commercial letters of credit, unused portions of lines of credit and commitments to extend various types of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated financial statements. The commitment or contract amount of these instruments is an indicator of the Bank’s level of involvement in each type of instrument as well as the exposure to credit loss in the event of non-performance by the other party to the financial instrument. The Bank seeks to limit any exposure of credit loss by applying the same credit policies in making commitments, as it does for on-balance sheet lending facilities.

The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2016 and 2015:

	2016		2015
	(in thousands)
Commitments under commercial loans and lines of credit	$	2,855,326	$	2,554,146
Home equity and other revolving lines of credit	904,999		822,506
Outstanding commercial mortgage loan commitments	560,929		724,236
Standby letters of credit	217,695		198,253
Commitments to sell loans	147,250		41,860
Outstanding residential mortgage loan commitments	108,063		54,293
Commitments under unused lines of credit—credit card	49,715		50,532
Commercial letters of credit	4,960		4,249

Obligations to advance funds under commitments to extend credit, including commitments under unused lines of credit, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have specified expiration dates, which may be extended upon request, or other termination clauses and generally require payment of a fee. These commitments do not necessarily represent future cash requirements as it is anticipated that many of these commitments will expire without being fully drawn upon. The Bank’s lending activity for outstanding loan commitments is primarily to customers within the states of New Jersey, New York, and Florida.

Standby letters of credit represent the guarantee by the Bank of the obligations or performance of the bank customer in the event of the default of payment or nonperformance to a third party beneficiary.

Loan sale commitments represent contracts for the sale of residential mortgage loans to third parties in the ordinary course of the Bank’s business. These commitments require the Bank to deliver loans within a specific period to the third party. The risk to the Bank is its non-delivery of loans required by the commitment, which could lead to financial penalties. The Bank has not defaulted on its loan sale commitments.

Litigation

In the normal course of business, Valley is a party to various outstanding legal proceedings and claims. In the opinion of management, the financial condition, results of operations and liquidity of Valley should not be materially affected by the outcome of such legal proceedings and claims. However, in the event of an unexpected adverse outcome in one or more of our legal proceedings, operating results for a particular period may be negatively impacted. Disclosure is required when a risk of material loss in a litigation or claim is more than remote, even when the risk of a material loss is less than likely. Unless an estimate cannot be made, disclosure is also required of the estimate of the reasonably possible loss or range of loss.

Although there can be no assurance as to the ultimate outcome, Valley has generally denied, or believes it has a meritorious defense and will deny liability in litigation pending against Valley and claims made, including the matter described below. Valley intends to defend vigorously each case against it. Liabilities are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.

Merrick Bank Corporation v. Valley National Bank and American Express Travel Related Services v. Valley National Bank litigation. For about a decade, Valley served as the depository bank for various charter operators under regulations of the Department of Transportation (DOT) and contracts entered into with charter operators under those regulations. The purported intent of the regulations is to afford some protection to the customers of the charter operators. A charter operator has several options with regard to fulfilling its obligations under the regulations, with one option requiring the charter operator to deposit the proceeds of tickets purchased for a charter flight into an FDIC insured bank account. The funds for a flight are released when the charter operator certifies that the flight has been completed. Valley stopped serving as a depository bank for the charter business due to the narrow profit in that business combined with the legal expenses incurred to defend itself in a prior case in which Valley was completely successful and the anticipated legal expenses from the following similar cases that are still pending.

Valley served as the depository bank for Myrtle Beach Direct Air (Direct Air) under a contract between Direct Air and Valley approved by the DOT under the DOT regulations. Direct Air commenced operations in 2007 but in March 2012 Direct Air ceased operations and filed for bankruptcy. Thereafter the United States Justice Department charged three of the principals of Direct Air with criminal fraud; that case is expected to go to trial in September 2017. Merrick Bank Corp. (Merrick) was the merchant bank for Direct Air and processed credit card purchases for Direct Air. Following the bankruptcy of Direct Air, Merrick incurred chargebacks in the approximate amount of $26.2 million when the Direct Air customers whose flights had been canceled obtained a credit from their card issuing banks for the cost of the ticket or other item purchased from Direct Air. Merrick was not able to recover the chargebacks from Direct Air. Direct Air’s depository account at Valley contained approximately $1.0 million at the time Direct Air ceased operations.

Merrick filed an action against Valley with ten counts in December 2013. Valley moved to dismiss five of the counts and, in March 2015, the court dismissed four of the five counts. American Express Travel Related Services (American Express) filed a similar action against Valley claiming about $3.0 million in chargebacks. Five of American Express’ eleven counts have been dismissed. The two cases have now been consolidated in the Federal District Court of New Jersey.

The parties are scheduled for mediation in March 2017 after which, if the mediation is not successful, Valley will file summary judgment motions on all of the remaining counts in both the Merrick and American Express cases.

At December 31, 2016, Valley could not estimate an amount or range of reasonably possible losses related to the matter described above. Based upon information currently available and advice of counsel, Valley believes that the eventual outcome of such claims will not have a material adverse effect on Valley’s consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of the matters, if unfavorable, may be material to Valley’s results of operations for a particular period.

Derivative Instruments and Hedging Activities

Valley is exposed to certain risks arising from both its business operations and economic conditions. Valley principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. Valley manages economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of its assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, 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. Valley’s derivative financial instruments are used to manage differences in the amount, timing, and duration of Valley’s known or expected cash receipts and its known or expected cash payments related to assets and liabilities as outlined below.

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 and caps 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. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

At December 31, 2016, Valley had the following cash flow hedge derivatives:

• Two interest rate swaps with a total notional amount of $100 million to hedge the changes in cash flows associated with prime-rate-indexed deposits, consisting of consumer and commercial money market deposit accounts. The swaps require the payment by Valley of fixed-rate amounts at approximately 5.11 percent in exchange for the receipt of variable-rate payments at the prime rate and expire in July 2017.

• One interest rate cap with a total notional amount of $125 million with a strike rate of 7.44 percent and a maturity date of September 27, 2023 used to hedge the total change in cash flows associated with prime-rate indexed deposits, consisting of consumer and commercial money market deposit accounts, which have variable interest rates indexed to the prime rate.

• Three forward starting interest rate swaps with a total notional amount of $300 million to hedge the changes in cash flows associated with certain brokered money market deposits. Starting in November 2015, the interest rate swaps required Valley to pay fixed-rate amounts ranging from approximately 2.57 percent to 2.97 percent, in exchange for the receipt of variable-rate payments at the three-month LIBOR rate. The three swaps have expiration dates ranging from November 2018 to November 2020.

• Four forward starting interest rate swaps with a total notional amount of $182 million to hedge the changes in cash flows associated with borrowed funds. Starting in March and April 2016, the interest rate swaps required Valley to pay fixed-rate amounts ranging from approximately 2.51 percent to 2.88 percent, in exchange for the receipt of variable-rate payments at the three-month LIBOR rate. The four swaps have expiration dates ranging from March 2019 to September 2020.

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 uses 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.

At December 31, 2016, Valley had one interest rate swap with a notional amount of approximately $8.0 million used to hedge the change in the fair value of a commercial loan.

In August 2016, Valley terminated an interest rate swap with a notional amount of $125 million. The terminated swap, originally maturing in September 2023, was used to hedge the change in the fair value of Valley’s $125 million of 5.125 percent subordinated notes issued in September 2013. The transaction resulted in an adjusted annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date.

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.

In 2014, Valley issued $25 million of market linked certificates of deposit through a broker dealer. The rate paid on these hybrid instruments is based on a formula derived from the spread between the long and short ends of the constant maturity swap (CMS) rate curve. This type of instrument is referred to as a "steepener" since it derives its value from the slope of the CMS curve. Valley has determined that these hybrid instruments contain an embedded swap contract which has been bifurcated from the host contract. Valley entered into a swap (with a total notional amount of $25 million) almost simultaneously with the deposit issuance where the receive rate on the swap mirrors the pay rate on the brokered deposits. The bifurcated derivative and the stand alone swap are both marked to market through other non-interest expense. Although these 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 also 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 rates 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:

	December 31, 2016						December 31, 2015
	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 caps and swaps	$	802	$	15,641	$	707,000	$	1,284	$	24,823	$	907,000
Fair value hedge interest rate swaps	—		986		7,999		7,658		1,306		133,209
Total derivatives designated as hedging instruments	$	802	$	16,627	$	714,999	$	8,942	$	26,129	$	1,040,209
Derivatives not designated as hedging instruments:
Interest rate swaps and embedded derivatives	$	25,285	$	25,284	$	1,075,722	$	24,628	$	24,623	$	654,134
Mortgage banking derivatives	2,968		2,166		246,583		204		92		73,438
Total derivatives not designated as hedging instruments	$	28,253	$	27,450	$	1,322,305	$	24,832	$	24,715	$	727,572

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

	2016			2015			2014
	(in thousands)
Amount of loss reclassified from accumulated other comprehensive loss to interest expense	$	(13,034	)	$	(7,075	)	$	(6,663	)
Amount of loss recognized in other comprehensive income	(4,035		)	(12,360		)	(20,910		)

The net gains or losses related to cash flow hedge ineffectiveness were immaterial during the years ended December 31, 2016, 2015 and 2014. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $12.5 million and $17.6 million at December 31, 2016 and 2015, 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 $8.8 million will be reclassified as an increase to interest expense in 2017.

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

	2016			2015			2014
	(in thousands)
Derivative—interest rate swaps:
Interest income	$	320		$	176		$	(13	)
Interest expense	6,670			1,400			9,380
Hedged item—loans, deposits and long-term borrowings:
Interest income	$	(320	)	$	(176	)	$	13
Interest expense	(6,645		)	(1,473		)	(9,449		)

During the years ended December 31, 2016, 2015 and 2014, the amounts recognized in non-interest expense related to the ineffectiveness of fair value hedges were immaterial.

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

	2016		2015		2014
	(in thousands)
Non-designated hedge interest rate derivatives
Other non-interest expense	$	690	$	158	$	(214	)

Collateral Requirements and Credit Risk Related Contingency 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 December 31, 2016, Valley was in compliance with all of the provisions of its derivative counterparty agreements. As of December 31, 2016, 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 $25.2 million. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties. At December 31, 2016, Valley had $52.4 million in collateral posted with its counterparties.

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Balance Sheet Offsetting

12 Months Ended

Dec. 31, 2016

Offsetting [Abstract]

Balance Sheet Offsetting

BALANCE SHEET OFFSETTING (Note 16)

Certain financial instruments, including derivatives (consisting of interest rate caps and swaps) 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. 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 December 31, 2016 and 2015.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral				Net Amount
	(in thousands)
December 31, 2016
Assets:
Interest rate caps and swaps	$	26,087	$	—	$	26,087	$	(5,268	)	$	—			$	20,819
Liabilities:
Interest rate caps and swaps	$	41,911	$	—	$	41,911	$	(5,268	)	$	(36,643	)	(1)	$	—
Repurchase agreements	165,000		—		165,000		—			(165,000		)	(2)	—
Total	$	206,911	$	—	$	206,911	$	(5,268	)	$	(201,643	)		$	—
December 31, 2015
Assets:
Interest rate caps and swaps	$	33,570	$	—	$	33,570	$	(8,942	)	$	—			$	24,628
Liabilities:
Interest rate caps and swaps	$	50,752	$	—	$	50,752	$	(8,942	)	$	(41,810	)	(1)	$	—
Repurchase agreements	475,000		—		475,000		—			(475,000		)	(2)	—
Total	$	525,752	$	—	$	525,752	$	(8,942	)	$	(516,810	)		$	—

(1) Represents the amount of collateral posted with counterparties that offsets net liabilities at December 31, 2016 and 2015, respectively. Actual cash collateral posted with counterparties totaled $52.4 million and $53.0 million at December 31, 2016 and 2015, respectively.

(2) Represents the fair value of non-cash pledged investment securities.

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Regulatory and Capital Requirements

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

Regulatory and Capital Requirements

REGULATORY AND CAPITAL REQUIREMENTS (Note 17)

Valley’s primary source of cash is dividends from the Bank. Valley National Bank, a national banking association, is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. In addition, the dividends declared cannot be in excess of the amount which would cause the subsidiary bank to fall below the minimum required for capital adequacy purposes.

Valley and Valley National Bank are subject to the regulatory capital requirements administered by the Federal Reserve Bank and the OCC. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct significant impact on Valley’s consolidated financial statements. Under capital adequacy guidelines Valley and Valley National Bank must meet specific capital guidelines that involve quantitative measures of Valley’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

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.

Effective January 1, 2015, Valley implemented the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Basel III final rules require a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent, Tier 1 capital to risk-weighted assets of 6.0 percent, ratio of total capital to risk-weighted assets of 8.0 percent, and minimum leverage ratio of 4.0 percent. The new rule changes included the implementation of a new capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation buffer is subject to a three year phase-in period that started on January 1, 2016, at 0.625 percent of risk-weighted assets and increases each subsequent year by 0.625 percent until reaching its final level of 2.5 percent when fully phased-in on January 1, 2019. The final rule also revised the definition and calculation of Tier 1 capital, total capital and risk-weighted assets. As of December 31, 2016 and 2015, Valley and Valley National Bank exceeded all capital adequacy requirements with the capital conservation buffer under the Basel III Capital Rules (see table below).

The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under the Basel III risk-based capital guidelines at December 31, 2016 and 2015:

	Actual				Minimum Capital Requirements				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	($ in thousands)
As of December 31, 2016
Total Risk-based Capital
Valley	$	2,084,531	12.15	%	$	1,480,006	8.625	%	N/A		N/A
Valley National Bank	2,023,857		11.82		1,476,767		8.625		$	1,712,193	10.00	%
Common Equity Tier 1 Capital
Valley	1,590,825		9.27		879,424		5.125		N/A		N/A
Valley National Bank	1,807,201		10.55		877,499		5.125		1,112,926		6.50
Tier 1 Risk-based Capital
Valley	1,698,767		9.90		1,136,816		6.625		N/A		N/A
Valley National Bank	1,807,201		10.55		1,134,328		6.625		1,369,755		8.00
Tier 1 Leverage Capital
Valley	1,698,767		7.74		878,244		4.00		N/A		N/A
Valley National Bank	1,807,201		8.25		876,026		4.00		1,095,032		5.00
As of December 31, 2015
Total Risk-based Capital
Valley	$	1,910,304	12.02	%	$	1,271,171	8.00	%	N/A		N/A
Valley National Bank	1,826,420		11.53		1,266,942		8.00		$	1,583,677	10.00	%
Common Equity Tier 1 Capital
Valley	1,431,973		9.01		715,034		4.50		N/A		N/A
Valley National Bank	1,618,053		10.22		712,655		4.50		1,029,390		6.50
Tier 1 Risk-based Capital
Valley	1,543,937		9.72		953,378		6.00		N/A		N/A
Valley National Bank	1,618,053		10.22		950,206		6.00		1,266,942		8.00
Tier 1 Leverage Capital
Valley	1,543,937		7.90		781,388		4.00		N/A		N/A
Valley National Bank	1,618,053		8.29		780,831		4.00		976,039		5.00

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Common and Preferred Stock

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Common and Preferred Stock

COMMON AND PREFERRED STOCK (Note 18)

Common Stock

Common Stock Issuance. In December 2016, Valley issued and sold 9.24 million of its common stock in a registered public offering. The net proceeds of the offering were $106.4 million and will be used to, among other things, support continued loan growth at the Bank.

Dividend Reinvestment Plan.  Valley may issue up to 10.0 million authorized and previously unissued or treasury shares of Valley common stock for purchases under Valley’s dividend reinvestment plan (DRIP). Under the DRIP, a shareholder may choose to have future cash dividends automatically invested in Valley common stock and make voluntary optional cash payments of up to $100 thousand per quarter to purchase shares of Valley common stock. Shares purchased under this plan will be issued directly from Valley or in open market transactions. During 2016, 2015 and 2014, 554 thousand, 713 thousand, and 499 thousand of common shares, respectively, were reissued from treasury stock or issued from authorized common shares under the DRIP for net proceeds totaling $5.2 million, $7.0 million and $5.0 million, respectively.

Common Stock Warrants.  On January 1, 2012, Valley assumed in the acquisition of State Bancorp, Inc. a warrant issued (in connection with State Bancorp's redeemed preferred stock issuance) to the U.S. Treasury in December 2008. The ten-year warrant to purchase up to 489 thousand of Valley common shares has an exercise price of $11.30 per share, and is exercisable on a net exercise basis. During May 2015, the U.S. Treasury sold the warrant shares individually through a public action, in which Valley did not receive any of the proceeds. All of the warrants, which will expire on December 5, 2018, remained outstanding and unexercised at December 31, 2016.

In connection with the issuance of senior preferred shares in 2008 under the TARP program, Valley issued to the U.S. Treasury a ten-year warrant to purchase up to approximately $2.5 million of Valley common shares. During 2010, the U.S. Treasury sold the warrant shares individually through a public auction, in which Valley did not receive any of the proceeds. The warrants are currently traded on the New York Stock Exchange under the ticker symbol “VLY WS”. Each warrant entitles the holder to purchase approximately 1.103 Valley common shares at $16.12 per share and is exercisable through the expiration date of November 14, 2018.

Repurchase Plan. In 2007, Valley’s Board of Directors approved the repurchase of up to $4.7 million of common shares. Purchases of Valley’s common shares may be made from time to time in the open market or in privately negotiated transactions generally not exceeding prevailing market prices. Repurchased shares are held in treasury and are expected to be used for general corporate purposes or issued under the dividend reinvestment plan. Under the repurchase plan, Valley made no purchases of its outstanding shares during the years ended December 31, 2016, 2015 and 2014.

Other Stock Repurchases. Valley also purchases shares directly from its employees in connection with employee elections to withhold taxes related to the vesting of stock awards, including vested stock options exchanged for Valley common stock in the CNL acquisition. During the years ended December 31, 2016, 2015 and 2014, Valley purchased approximately 328 thousand, 387 thousand and 174 thousand shares, respectively, of its outstanding common stock at an average price of $9.73, $9.95 and $9.68, respectively, for such purpose.

Preferred Stock

On June 19, 2015, Valley issued 4.6 million shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $25 per share. Dividends on the preferred stock accrue and are payable quarterly in arrears, at a fixed rate per annum equal to 6.25 percent from the original issue date to, but excluding, June 30, 2025, and thereafter at a floating rate per annum equal to three-month LIBOR plus a spread of 3.85 percent. The net proceeds from the preferred stock offering totaled approximately $111.6 million. The preferred stock is included in Valley's Tier 1 capital and total risk-based capital at December 31, 2016 and 2015.

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Other Comprehensive Income

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Other Comprehensive Income

OTHER COMPREHENSIVE INCOME (Note 19)

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014. Components of other comprehensive income (loss) include changes in net unrealized gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges relating to certain securities during the period); unrealized gains and losses on derivatives used in cash flow hedging relationships; and the pension benefit adjustment for the unfunded portion of various employee, officer and director pension plans.

	2016									2015									2014
	Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax
	(in thousands)
Unrealized gains and losses on available for sale (AFS) securities
Net (losses) gains arising during the period	$	(7,294	)	$	3,001		$	(4,293	)	$	(3,458	)	$	1,458		$	(2,000	)	$	33,329		$	(13,931	)	$	19,398
Less reclassification adjustment for net gains included in net income (1)	(777		)	312			(465		)	(2,487		)	1,041			(1,446		)	(745		)	312			(433		)
Net change	(8,071		)	3,313			(4,758		)	(5,945		)	2,499			(3,446		)	32,584			(13,619		)	18,965
Non-credit impairment losses on securities available for sale and held to maturity
Net change in non-credit impairment losses on securities	719			(302		)	417			(416		)	175			(241		)	2,299			(965		)	1,334
Less reclassification adjustment for accretion of credit impairment losses included in net income (2)	(921		)	382			(539		)	(728		)	304			(424		)	(661		)	278			(383		)
Net change	(202		)	80			(122		)	(1,144		)	479			(665		)	1,638			(687		)	951
Unrealized gains and losses on derivatives (cash flow hedges)
Net (losses) gains arising during the period	(4,035		)	1,574			(2,461		)	(12,360		)	5,121			(7,239		)	(20,910		)	8,763			(12,147		)
Less reclassification adjustment for net losses included in net income (3)	13,034			(5,393		)	7,641			7,075			(2,948		)	4,127			6,663			(2,777		)	3,886
Net change	8,999			(3,819		)	5,180			(5,285		)	2,173			(3,112		)	(14,247		)	5,986			(8,261		)
Defined benefit pension plan
Net gains (losses) arising during the period	5,837			(2,539		)	3,298			6,030			(2,586		)	3,444			(27,902		)	11,695			(16,207		)
Amortization of prior service cost (4)	(300		)	119			(181		)	206			(89		)	117			305			(128		)	177
Amortization of net loss (4)	294			(109		)	185			790			(328		)	462			226			(94		)	132
Net change	5,831			(2,529		)	3,302			7,026			(3,003		)	4,023			(27,371		)	11,473			(15,898		)
Total other comprehensive income (loss)	$	6,557		$	(2,955	)	$	3,602		$	(5,348	)	$	2,148		$	(3,200	)	$	(7,396	)	$	3,153		$	(4,243	)

(1) Included in gains on securities transactions, net.

(2) Included in interest and dividends on investment securities (taxable).

(3) Included in interest expense.

(4) Included in the computation of net periodic pension cost. See Note 12 for details.

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the years ended December 31, 2016, 2015 and 2014:

	Components of Accumulated Other Comprehensive Loss												Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on AFS Securities			Non-credit Impairment Losses on Securities			Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance-December 31, 2013	$	(20,855	)	$	(806	)	$	(6,271	)	$	(10,320	)	$	(38,252	)
Other comprehensive income (loss) before reclassifications	19,398			1,334			(12,147		)	(16,207		)	(7,622		)
Amounts reclassified from other comprehensive income (loss)	(433		)	(383		)	3,886			309			3,379
Other comprehensive income (loss), net	18,965			951			(8,261		)	(15,898		)	(4,243		)
Balance-December 31, 2014	(1,890		)	145			(14,532		)	(26,218		)	(42,495		)
Other comprehensive (loss) income before reclassifications	(2,000		)	(241		)	(7,239		)	3,444			(6,036		)
Amounts reclassified from other comprehensive (loss) income	(1,446		)	(424		)	4,127			579			2,836
Other comprehensive (loss) income, net	(3,446		)	(665		)	(3,112		)	4,023			(3,200		)
Balance-December 31, 2015	(5,336		)	(520		)	(17,644		)	(22,195		)	(45,695		)
Other comprehensive (loss) income before reclassifications	(4,293		)	417			(2,461		)	3,298			(3,039		)
Amounts reclassified from other comprehensive (loss) income	(465		)	(539		)	7,641			4			6,641
Other comprehensive (loss) income, net	(4,758		)	(122		)	5,180			3,302			3,602
Balance-December 31, 2016	$	(10,094	)	$	(642	)	$	(12,464	)	$	(18,893	)	$	(42,093	)

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Quarterly Financial Data

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data

QUARTERLY FINANCIAL DATA (UNAUDITED) (Note 20)

	Quarters Ended 2016
	March 31		June 30		September 30		December 31
	(in thousands, except for share data)
Interest income	$	185,597	$	189,028	$	191,203	$	201,095
Interest expense	37,444		37,573		37,057		36,700
Net interest income	148,153		151,455		154,146		164,395
Provision for credit losses	800		1,429		5,840		3,800
Non-interest income:
Gains on sales of loans, net	1,795		3,105		4,823		12,307
Other non-interest income	19,653		21,159		20,030		20,353
Non-interest expense:
Loss on extinguishment of debt	—		315		—		—
Amortization of tax credit investments	7,264		7,646		6,450		13,384
Other non-interest expense	110,961		111,842		106,818		111,445
Income before income taxes	50,576		54,487		59,891		68,426
Income tax expense	14,389		15,460		17,049		18,336
Net income	36,187		39,027		42,842		50,090
Dividend on preferred stock	1,797		1,797		1,797		1,797
Net income available to common shareholders	34,390		37,230		41,045		48,293
Earnings per common share:
Basic	$	0.14	$	0.15	$	0.16	$	0.19
Diluted	0.14		0.15		$	0.16	0.19
Cash dividends declared per common share	0.11		0.11		0.11		0.11
Weighted average number of common shares outstanding:
Basic	254,075,349		254,381,170		254,473,994		256,422,437
Diluted	254,347,420		254,771,213		254,940,307		256,952,036

	Quarters Ended 2015
	March 31		June 30		September 30		December 31
	(in thousands, except for share data)
Interest income	$	170,985	$	175,754	$	174,690	$	185,594
Interest expense	38,899		39,577		40,730		37,548
Net interest income	132,086		136,177		133,960		148,046
Provision for credit losses	—		4,500		94		3,507
Non-interest income:
Gains on sales of loans, net	598		422		2,014		1,211
Other non-interest income	18,047		19,778		18,905		22,827
Non-interest expense:
Loss on extinguishment of debt	—		—		—		51,129
Amortization of tax credit investments	4,496		4,511		5,224		13,081
Other non-interest expense	103,622		102,901		103,428		110,683
Income before income taxes	42,613		44,465		46,133		(6,316		)
Income tax expense	12,272		12,474		10,179		(10,987		)
Net income	30,341		31,991		35,954		4,671
Dividend on preferred stock	—		—		2,017		1,796
Net income available to common shareholders	30,341		31,991		33,937		2,875
Earnings per common share:
Basic	$	0.13	$	0.14	$	0.15	$	0.01
Diluted	0.13		0.14		0.15		0.01
Cash dividends declared per common share	0.11		0.11		0.11		0.11
Weighted average number of common shares outstanding:
Basic	232,338,775		232,565,404		232,737,953		239,916,562
Diluted	232,341,921		232,586,616		232,780,219		239,972,546

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Parent Company Information

12 Months Ended

Dec. 31, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Parent Company Information

PARENT COMPANY INFORMATION (Note 21)

Condensed Statements of Financial Condition

	December 31,
	2016		2015
	(in thousands)
Assets
Cash	$	68,927	$	63,330
Interest bearing deposits with banks	82		135
Investment securities available for sale	239		806
Investments in and receivables due from subsidiaries	2,591,982		2,398,784
Other assets	36,188		61,365
Total Assets	$	2,697,418	$	2,524,420
Liabilities and Shareholders’ Equity
Dividends payable to shareholders	$	29,477	$	28,054
Long-term borrowings	236,731		230,573
Junior subordinated debentures issued to capital trusts	41,577		41,414
Accrued expenses and other liabilities	12,477		17,288
Shareholders’ equity	2,377,156		2,207,091
Total Liabilities and Shareholders’ Equity	$	2,697,418	$	2,524,420

Condensed Statements of Income

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Income
Dividends from subsidiary	$	90,000		$	110,000		$	110,000
Income from subsidiary	4,550			2,363			—
Gains on securities transactions, net	239			—			—
Other interest and income	34			211			436
Total Income	94,823			112,574			110,436
Total Expenses	33,604			20,578			11,172
Income before income tax benefit and equity in undistributed (losses) earnings of subsidiary	61,219			91,996			99,264
Income tax benefit	(23,349		)	(21,939		)	(3,245		)
Income before equity in undistributed earnings (losses) of subsidiary	84,568			113,935			102,509
Equity in undistributed earnings (losses) of subsidiary	83,578			(10,978		)	13,663
Net Income	168,146			102,957			116,172
Dividends on preferred stock	7,188			3,813			—
Net Income Available to Common Shareholders	$	160,958		$	99,144		$	116,172

Condensed Statements of Cash Flows

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Cash flows from operating activities:
Net Income	$	168,146		$	102,957		$	116,172
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed (earnings) losses of subsidiary	(83,578		)	10,978			(13,663		)
Depreciation and amortization	—			—			18
Stock-based compensation	10,032			7,575			7,489
Net amortization of premiums and accretion of discounts on securities	163			162			163
Gains on securities transactions, net	(239		)	—			—
Net change in:
Other assets	8,007			(41,452		)	6,632
Accrued expenses and other liabilities	18,381			9,604			(1,851		)
Net cash provided by operating activities	120,912			89,824			114,960
Cash flows from investing activities:
Investment securities available for sale:
Sales	739			49			46
Purchases	—			—			(500		)
Cash and cash equivalents acquired in acquisitions	—			109			14,776
Capital contributions to subsidiary	(106,000		)	(115,000		)	—
Subordinated debt issued by subsidiary	—			(100,000		)	—
Net cash (used in) provided by investing activities	(105,261		)	(214,842		)	14,322
Cash flows from financing activities:
Proceeds from issuance of long-term borrowings, net	—			98,897			—
Proceeds from issuance of preferred stock, net	—			111,590			—
Dividends paid to preferred shareholders	(7,188		)	(3,813		)	—
Dividends paid to common shareholders	(111,813		)	(102,279		)	(88,119		)
Purchase of common shares to treasury	(3,191		)	(2,108		)	(1,688		)
Common stock issued, net	112,085			7,898			5,096
Net cash (used in) provided by financing activities	(10,107		)	110,185			(84,711		)
Net change in cash and cash equivalents	5,544			(14,833		)	44,571
Cash and cash equivalents at beginning of year	63,465			78,298			33,727
Cash and cash equivalents at end of year	$	69,009		$	63,465		$	78,298

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Business Segments

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS (Note 22)

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 “pool funding” methodology, which involves the allocation of uniform funding cost based on each segments’ average earning assets 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 consumer lending segment is mainly comprised of residential mortgages, home equity loans and automobile loans. The duration of the residential mortgage loan portfolio is subject to movements in the market level of interest rates and forecasted prepayment speeds. The average weighted life of the automobile loans within the portfolio 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. Consumer lending segment also includes the Wealth Management Division, comprised of trust, asset management, insurance services, and asset-based lending support services.

The commercial lending segment is mainly comprised of floating rate and adjustable rate commercial and industrial 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.

The investment management segment generates a large portion of Valley’s income through investments in various types of securities. These securities are mainly comprised of fixed rate investments 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 assets that are least sensitive assets to immediate 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 Valley’s balance sheet.

The amounts disclosed as “corporate and other adjustments” represent income and expense items not directly attributable to a specific segment, including net gains and losses on securities not reported in the investment management segment above, interest expense related to subordinated notes and income and expense from derivative financial instruments.

The following tables represent the financial data for Valley’s four business segments for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31, 2016
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	5,081,798		$	11,318,947		$	3,428,567		$	—		$	19,829,312
Interest income	$	176,929		$	509,376		$	89,378		$	(8,760	)	$	766,923
Interest expense	35,175			78,347			23,732			11,520			148,774
Net interest income (loss)	141,754			431,029			65,646			(20,280		)	618,149
Provision for credit losses	905			10,964			—			—			11,869
Net interest income (loss) after provision for credit losses	140,849			420,065			65,646			(20,280		)	606,280
Non-interest income	63,443			3,292			6,694			29,796			103,225
Non-interest expense	62,721			70,145			1,281			341,978			476,125
Internal expense transfer	71,578			160,198			48,475			(280,251		)	—
Income (loss) before income taxes	$	69,993		$	193,014		$	22,584		$	(52,211	)	$	233,380
Return on average interest earning assets (pre-tax) (unaudited)	1.38		%	1.71		%	0.66		%	N/A			1.18		%

	Year Ended December 31, 2015
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	4,764,306		$	9,682,714		$	2,978,484		$	—		$	17,425,504
Interest income	$	170,569		$	463,062		$	81,669		$	(8,277	)	$	707,023
Interest expense	39,787			80,861			24,873			11,233			156,754
Net interest income (loss)	130,782			382,201			56,796			(19,510		)	550,269
Provision for credit losses	1,153			6,948			—			—			8,101
Net interest income (loss) after provision for credit losses	129,629			375,253			56,796			(19,510		)	542,168
Non-interest income	45,306			744			6,815			30,937			83,802
Non-interest expense	59,794			68,156			1,074			370,051			499,075
Internal expense transfer	72,441			146,463			45,460			(264,364		)	—
Income (loss) before income taxes	$	42,700		$	161,378		$	17,077		$	(94,260	)	$	126,895
Return on average interest earning assets (pre-tax) (unaudited)	0.90		%	1.67		%	0.57		%	N/A			0.73		%

	Year Ended December 31, 2014
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	4,122,468		$	7,959,215		$	2,959,100		$	—		$	15,040,783
Interest income	$	154,078		$	399,192		$	91,689		$	(8,356	)	$	636,603
Interest expense	41,343			79,820			29,676			11,007			161,846
Net interest income (loss)	112,735			319,372			62,013			(19,363		)	474,757
Provision for credit losses	438			1,446			—			—			1,884
Net interest income (loss) after provision for credit losses	112,297			317,926			62,013			(19,363		)	472,873
Non-interest income	40,611			(19,624		)	6,392			50,237			77,616
Non-interest expense	59,051			58,142			1,369			284,693			403,255
Internal expense transfer	65,477			126,465			47,060			(239,002		)	—
Income (loss) before income taxes	$	28,380		$	113,695		$	19,976		$	(14,817	)	$	147,234
Return on average interest earning assets (pre-tax) (unaudited)	0.69		%	1.43		%	0.68		%	N/A			0.98		%

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Business

Business

Valley National Bancorp, a New Jersey Corporation (Valley), is a bank holding company whose principal wholly-owned subsidiary is Valley National Bank (the “Bank”), a national banking association providing a full range of commercial, retail and trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, and Florida. The Bank is subject to intense competition from other financial services companies and is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by certain regulatory authorities.

Valley National Bank’s subsidiaries are all included in the consolidated financial statements of Valley. These subsidiaries include, but are not limited to:

• an all-line insurance agency offering property and casualty, life and health insurance;

• an asset management adviser that is a registered investment adviser with Securities and Exchange Commission (SEC);

• title insurance agencies in New Jersey, New York and Florida;

• subsidiaries which hold, maintain and manage investment assets for the Bank;

• a subsidiary which owns and services auto loans;

• a subsidiary which specializes in health care equipment lending and other commercial equipment leases; and

• a subsidiary which owns and services New York commercial loans.

The Bank’s subsidiaries also include real estate investment trust subsidiaries (the “REIT” subsidiaries) which own real estate related investments and a REIT subsidiary which owns some of the real estate utilized by the Bank and related real estate investments. Except for Valley’s REIT subsidiaries, all subsidiaries mentioned above are directly or indirectly wholly-owned by the Bank. Because each REIT subsidiary must have 100 or more shareholders to qualify as a REIT, each REIT subsidiary has issued less than 20 percent of its outstanding non-voting preferred stock to individuals, most of whom are non-senior management Bank employees. The Bank owns the remaining preferred stock and all the common stock of the REITs.

Basis of Presentation

Basis of Presentation

The consolidated financial statements of Valley include the accounts of its commercial bank subsidiary, Valley National 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. See Note 11 for more details. Certain prior period amounts have been reclassified to conform to the current presentation.

In preparing the 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 are particularly susceptible to change are: the allowance for loan losses; the evaluation of goodwill and other intangible assets, and investment securities for impairment; fair value measurements of assets and liabilities; 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.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest bearing deposits in other banks (including the Federal Reserve Bank of New York) and, from time to time, overnight federal funds sold. The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank based on a percentage of deposits.

Investment Securities

Investment Securities

At the time of purchase, management generally elects to classify investment securities into one of two categories: held to maturity or available for sale. Investment securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold to maturity. Investment securities to be held for indefinite periods are classified as available for sale and carried at fair value, with unrealized holding gains and losses reported as a component of other comprehensive income or loss, net of tax. Realized gains or losses on the sale of available for sale are recognized by the specific identification method and are included in net gains on securities transactions. Investments in Federal Home Loan Bank and Federal Reserve Bank stock, which have limited marketability, are carried at cost in other assets.

Quarterly, Valley evaluates its investment securities classified as held to maturity and available for sale for other-than-temporary impairment. Other-than-temporary impairment means Valley believes the security’s impairment is due to factors that could include the issuer’s inability to pay interest or dividends, the potential for default, and/or other factors. When a held to maturity or available for sale debt security is assessed for other-than-temporary impairment, Valley has to first consider (a) whether it intends to sell the security, and (b) whether it is more likely than not that Valley will be required to sell the security prior to recovery of its amortized cost basis. If neither of these circumstances applies to a security, but Valley does not expect to recover the entire amortized cost basis, an other-than-temporary impairment loss has occurred that must be separated into two categories: (a) the amount related to credit loss, and (b) the amount related to other factors. In assessing the level of other-than-temporary impairment attributable to credit loss, Valley compares the present value of cash flows expected to be collected with the amortized cost basis of the security. The portion of the total other-than-temporary impairment related to credit loss is recognized in earnings, while the portion related to other factors is recognized in other comprehensive income or loss. The total other-than-temporary impairment loss is presented in the statement of income, less the portion recognized in other comprehensive income or loss. When a debt security becomes other-than-temporarily impaired, its amortized cost basis is reduced to reflect the portion of the total impairment related to credit loss. There was no other-than-temporary impairment recognized in earnings as a result of Valley's impairment analysis of its securities during 2016, 2015 and 2014.

To determine whether a security’s impairment is other-than-temporary, Valley considers factors that include, among others, the causes of the decline in fair value, such as credit problems, interest rate fluctuations, or market volatility; the severity and duration of the decline; Valley’s ability and intent to hold equity security investments until they recover in value (as well as the likelihood of such a recovery in the near term); Valley’s intent to sell security investments; and whether it is more likely than not that Valley will be required to sell such securities before recovery of their individual amortized cost basis. For debt securities, the primary consideration in determining whether impairment is other-than-temporary is whether or not it is probable that current and/or future contractual cash flows have been or may be impaired. See the “Other-Than-Temporary Impairment Analysis” section of Note 4 for further discussion.

Interest income on investments includes amortization of purchase premiums and discounts. Realized gains and losses are derived based on the amortized cost of the security sold. 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.

Loans Held for Sale

Loans Held for Sale

Loans held for sale generally consist of conforming residential mortgage loans originated and intended for sale in the secondary market and are carried at their estimated fair value on an instrument-by-instrument basis as permitted by the fair value option election under U.S. GAAP. Changes in fair value are recognized in non-interest income in the accompanying consolidated statements of income as a component of net gains on sales of loans. Origination fees and costs related to loans held for sale are recognized as earned and as incurred. Loans held for sale are generally sold with loan servicing rights retained by Valley. Gains recognized on loan sales include the value assigned to the rights to service the loan. See “Loan Servicing Rights” section below.

Loans and Loan Fees

Loans and Loan Fees

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans and premium or discounts on purchased loans, except for purchased credit-impaired loans. Loan origination and commitment fees, net of related costs are deferred and amortized as an adjustment of loan yield over the estimated life of the loans approximating the effective interest method.

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. Payments received on non-accrual loans are generally applied against principal. 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.

Purchased Credit-Impaired Loans (Including Covered Loans)

Purchased Credit-Impaired Loans (Including Covered Loans)

Purchased credit-impaired (PCI) loans are loans acquired at a discount (that is due, in part, to credit quality). Valley's PCI loan portfolio primarily consists of loans acquired in business combinations subsequent to 2011 and (covered) loans in which the Bank will share losses with the FDIC under loss-sharing agreements that have resulted from past FDIC-assisted transactions by Valley and acquired from 1st United Bancorp, Inc. (1st United) in 2014. The PCI loans are initially recorded at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Interest income on PCI loans has been accounted for based on the acquired loans’ expected cash flows. The PCI loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flow.

The difference between the undiscounted cash flows expected at acquisition and the investment in the loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or an allowance for loan losses. Increases in expected cash flows subsequent to the acquisition are recognized prospectively through adjustment of the yield on the pool over its remaining life, while decreases in expected cash flows are recognized as impairment through a loss provision and an increase in the allowance for loan losses. Therefore, the allowance for loan losses on these impaired pools reflect only losses incurred after the acquisition (representing the present value of all cash flows that were expected at acquisition but currently are not expected to be received). Any allowance for loan losses related to covered PCI loans is determined without consideration of the amounts recoverable through the FDIC loss-share agreements (see “FDIC Loss-Share Receivable” below). Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015.

The Bank periodically evaluates the remaining contractual required payments due and estimates of cash flows expected to be collected for the underlying loans of each PCI loan pool. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Changes in the contractual required payments due and estimated cash flows expected to be collected may result in changes in the accretable yield and non-accretable difference or reclassifications between accretable yield and the non-accretable difference. For the pools with better than expected cash flows, the forecasted increase is recorded as an additional accretable yield that is recognized as a prospective increase to our interest income on loans and the FDIC loss-share receivable, if applicable, is prospectively reduced by the guaranteed portion of the additional cash flows expected to be received, with a corresponding reduction to non-interest income. See Note 5 for additional information.

PCI loans that may have been classified as non-performing loans by an acquired bank are no longer classified as non-performing because these loans are accounted for on a pooled basis. Management’s judgment is required in classifying loans in pools as performing loans, and is dependent on having a reasonable expectation about the timing and amount of the pool cash flows to be collected, even if certain loans within the pool are contractually past due.

FDIC Loss-Share Receivable

FDIC Loss-Share Receivable

Valley National Bank has several loss-share agreements with the FDIC (referred to as the “FDIC loss-share receivable” reported within other assets on Valley’s consolidated statements of financial condition) which relate to the LibertyPointe Bank and The Park Avenue Bank transactions entered into by Valley in 2010, as well as three prior FDIC-assisted transactions by 1st United (including Republic Federal Bank, The Bank of Miami and Old Harbor Bank) acquired by Valley in 2014. The FDIC loss-share receivable arising from the loss-share agreements is measured separately from the covered loan pools because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans. At the date of acquisition, the FDIC loss-share receivable was measured at its fair value based on expected future cash flows covered by the loss share agreements. In addition, the asset is based on the credit adjustments estimated for each loan pool and the loss-share percentages. Our FDIC loss-share receivable totaled $7.2 million and $8.3 million at December 31, 2016 and 2015, respectively. Although this asset represents a contractual receivable from the FDIC, there is no contractual interest rate associated with the asset.

The difference between the present value and the undiscounted cash flow expected to be collected from the FDIC is accreted into non-interest income over the life of the FDIC loss-share receivable. Actual or expected losses in excess of the acquisition date estimates result in an increase in the FDIC loss-share receivable. Conversely, when actual or expected losses are less than the acquisition date estimates, the loss share receivable is decreased. This reduction is recognized prospectively over the shorter of (i) the estimated life of the respective pools of covered loans or (ii) the term of the loss-sharing agreements with the FDIC. The FDIC loss-share receivable is also reduced and increased as loss-sharing payments are received from and made to the FDIC.

Effective January 1, 2015, the losses on commercial related loans (commercial and industrial loans and commercial real estate loans) from the Republic Federal Bank transaction ceased being covered under the loss-share agreement. Any recoveries, net of expenses, of losses incurred prior to January 1, 2015 on such loans will continue to be covered (and must be shared with the FDIC in accordance with the loss-share agreement) through December 31, 2017. The losses on consumer related loans (residential mortgage loans and consumer loans) continue to be covered under the loss-share agreement through December 31, 2019. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loan and other real estate owned portfolio between 80 percent and 95 percent based upon certain aggregate loss limits.

Effective April 1, 2015, the losses on commercial related loans from the LibertyPointe Bank and The Park Avenue Bank transactions ceased to be covered under the loss-share agreements. Any recoveries, net of expenses, of losses incurred prior to April 1, 2015 on such loans will continue to be covered by the loss-sharing agreement through March 31, 2018. The losses on consumer related loans will continue to be covered under the loss-share agreements through March 31, 2020. Under the terms of the loss-sharing agreements for the LibertyPointe Bank and The Park Avenue Bank transaction, the FDIC is obligated to reimburse Valley for 80 percent and 95 percent, respectively, of any future losses on covered consumer loans up to certain aggregate loss limits.

Effective January 1, 2016, the losses on commercial related loans from The Bank of Miami transaction ceased to be covered under the loss-share agreement. Any recoveries, net of expenses, of losses incurred prior to January 1, 2016 on such loans will continue to be covered through December 31, 2018. The losses on consumer related loans continue to be covered under the loss-share agreement through December 31, 2020. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loan and other real estate owned portfolio up to 80 percent of the covered assets acquired.

Effective January 1, 2017, the losses on commercial related loans from the Old Harbor Bank transaction ceased to be covered under the loss-share agreement. Any recoveries, net of expenses, on losses incurred prior that date will be shared with the FDIC in accordance with the loss-share agreement through December 31, 2019. The losses on consumer related loans will continue to be covered under the loss-share agreement through October 31, 2021. Under the terms of this loss-sharing agreement with the FDIC, losses are shared on the acquired loans and other real estate owned portfolio up to 70 percent of those covered assets within certain aggregate loss limits.

Allowance for Credit Losses

Allowance for Credit Losses

The allowance for credit losses (the “allowance”) is increased through provisions charged against current earnings and additionally by crediting amounts of recoveries received, if any, on previously charged-off loans. The allowance is reduced by charge-offs on loans or unfunded letters of credit which are determined to be a loss, in accordance with established policies, when all efforts of collection have been exhausted.

The allowance is maintained at a level estimated to absorb probable credit losses inherent in the loan portfolio as well as other credit risk related charge-offs. The allowance is based on ongoing evaluations of the probable estimated losses inherent in the non-PCI loan portfolio and off-balance sheet unfunded letters of credit, as well as reserves for impairment of PCI loans subsequent to their acquisition date. As discussed under the “Purchased Credit-Impaired Loans” section above, Valley had no allowance reserves related to PCI loans at December 31, 2016 and 2015. The Bank’s methodology for evaluating the appropriateness of the allowance includes grouping the non-covered loan portfolio into loan segments based on common risk characteristics, tracking the historical levels of classified loans and delinquencies, estimating the appropriate loss look-back and loss emergence periods related to historical losses for each loan segment, providing specific reserves on impaired loans, and assigning incremental reserves where necessary based upon qualitative and economic outlook factors including numerous variables, such as the nature and trends of recent loan charge-offs. Additionally, the volume of non-performing loans, concentration risks by size, type, and geography, new markets, collateral adequacy, credit policies and procedures, staffing, underwriting consistency, loan review and economic conditions are taken into consideration.

The allowance for loan losses consists of four elements: (i) specific reserves for individually impaired credits, (ii) reserves for adversely classified, or higher risk rated, loans that are not impaired, (iii) reserves for other loans based on historical loss factors (using the appropriate loss look-back and loss emergence periods) adjusted for both internal and external qualitative risk factors to Valley, including the aforementioned factors, as well as changes in both organic and purchased loan portfolio volumes, the composition and concentrations of credit, new market initiatives, and the impact of competition on loan structuring and pricing, and (iv) an allowance for PCI loan pools impaired subsequent to the acquisition date, if applicable.

The Credit Risk Management Department individually evaluates non-accrual (non-homogeneous) commercial and industrial loans and commercial real estate loans over $250 thousand and all troubled debt restructured loans. The value of an impaired loan is measured based upon the underlying anticipated method of payment consisting of either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent, and its payment is expected solely based on the underlying collateral. If the value of an impaired loan is less than its carrying amount, impairment is recognized through a provision to the allowance for loan losses. Collateral dependent impaired 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. 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 a specific valuation allowance in the allowance for loan losses. Accrual of interest is discontinued on an impaired loan when management believes, after considering collection efforts and other factors, the borrower’s financial condition is such that collection of interest is doubtful. Cash collections from non-accrual loans are generally credited to the loan balance, and no interest income is recognized on these loans until the principal balance has been determined to be fully collectible. Residential mortgage loans and consumer loans usually consist of smaller balance homogeneous loans that are collectively evaluated for impairment, and are specifically excluded from the impaired loan portfolio, except where the loan is classified as a troubled debt restructured loan.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of the loans. Loans are evaluated based on an internal credit risk rating system for the commercial and industrial loan and commercial real estate loan portfolio segments and non-performing loan status for the residential and consumer loan portfolio segments. Loans are risk-rated based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial and industrial loans and commercial real estate loans, and evaluated by the Loan Review Department on a test basis. Loans with a grade that is below “Pass” grade are adversely classified. See Note 5 for details. Any change in the credit risk grade of adversely classified performing and/or non-performing loans affects the amount of the related allowance. Once a loan is adversely classified, the assigned relationship manager and/or a special assets officer in conjunction with the Credit Risk Management Department analyze the loan to determine whether the loan is impaired and, if impaired, the need to specifically assign a valuation allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. Loans identified as losses by management are charged-off. Commercial loans are generally assessed for full or partial charge-off to the net realizable value for collateral dependent loans when a loan is between 90 or 120 days past due or sooner if it is probable that a loan may not be fully collectable. Residential loans and home equity loans are generally charged-off to net realizable value when the loan is 120 days past due (or sooner when the borrowers’ obligation has been released in bankruptcy). Automobile loans are fully charged-off when the loan is 120 days past due or partially charged-off to the net realizable value of collateral, if the collateral is recovered prior to such time. Unsecured consumer loans are generally fully charged-off when the loan is 150 days past due.

The allowance allocations for other loans (i.e., risk rated loans that are not adversely classified and loans that are not risk rated) are calculated by applying historical loss factors for each loan portfolio segment to the applicable outstanding loan portfolio balances. Loss factors are calculated using statistical analysis supplemented by management judgment. The statistical analysis considers historical default rates, historical loss severity in the event of default, and the average loss emergence period for each loan portfolio segment. The management analysis includes an evaluation of loan portfolio volumes, the composition and concentrations of credit, credit quality and current delinquency trends.

Premises and Equipment, Net

Premises and Equipment, Net

Premises and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives range from 3 years for capitalized software to up to 40 years for buildings. Leasehold improvements are amortized over the term of the lease or estimated useful life of the asset, whichever is shorter. Major improvements are capitalized, while repairs and maintenance costs are charged to operations as incurred. Upon retirement or disposition, any gain or loss is credited or charged to operations.

Bank Owned Life Insurance

Bank Owned Life Insurance

Valley owns bank owned life insurance (BOLI) to help offset the cost of employee benefits. BOLI is recorded at its cash surrender value. Valley’s BOLI is invested primarily in U.S. Treasury securities and residential mortgage-backed securities issued by government sponsored enterprises and Ginnie Mae. The majority of the underlying investment portfolio is managed by one independent investment firm. The change in the cash surrender value is included as a component of non-interest income and is exempt from federal and state income taxes as long as the policies are held until the death of the insured individuals.

Other Real Estate Owned

Other Real Estate Owned

Valley acquires other real estate owned (OREO) through foreclosure on loans secured by real estate. OREO is reported at the lower of cost or fair value, as established by a current appraisal (less estimated costs to sell), and is included in other assets. Any write-downs at the date of foreclosure are charged to the allowance for loan losses. Expenses incurred to maintain these properties, unrealized losses resulting from valuation write-downs after the date of foreclosure, and realized gains and losses upon sale of the properties are included in other non-interest expense.

Goodwill

Goodwill

Intangible assets resulting from acquisitions under the acquisition method of accounting consist of goodwill and other intangible assets (see “Other Intangible Assets” below). Goodwill is not amortized and is subject to an annual assessment for impairment. Currently, the goodwill impairment analysis is generally a two-step test. However, Valley may choose to perform an optional qualitative assessment to determine whether it is necessary to perform the two-step quantitative goodwill impairment test for one or more units in future periods. During 2016 and 2015, Valley elected to perform step one of the two-step goodwill impairment test for all of its reporting units.

Goodwill is allocated to Valley’s reporting unit, which is a business segment or one level below, at the date goodwill is actually recorded. If the carrying value of a reporting unit exceeds its estimated fair value, a second step in the analysis is performed to determine the amount of impairment, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying value of a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded equal to the excess amount in the current period earnings. Valley reviews goodwill annually or more frequently if a triggering event indicates impairment may have occurred, to determine potential impairment by determining if the fair value of the reporting unit has fallen below the carrying value.

Other Intangible Assets

Other Intangible Assets

Other intangible assets primarily consist of loan servicing rights (largely generated from loan servicing retained by the Bank on residential mortgage loan originations sold in the secondary market to government sponsored enterprises), core deposits (the portion of an acquisition purchase price which represents value assigned to the existing deposit base), customer lists, and covenants not to compete obtained through acquisitions. Other intangible assets are amortized using various methods over their estimated lives and are periodically evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impairment is deemed to exist, an adjustment is recorded to earnings in the current period for the difference between the fair value of the asset and its carrying amount. See further details regarding loan servicing rights below.

Loan Servicing Rights

Loan Servicing Rights

Loan servicing rights are recorded when originated mortgage loans are sold with servicing rights retained, or when servicing rights are purchased. Valley initially records the loan servicing rights at fair value. Subsequently, the loan servicing rights are carried at the lower of unamortized cost or market (i.e., fair value). The fair values of the loan servicing rights are determined using a method which utilizes servicing income, discount rates, prepayment speeds and default rates specifically relative to Valley’s portfolio for originated mortgage servicing rights.

The unamortized costs associated with acquiring loan servicing rights, net of any valuation allowances, are included in other intangible assets in the consolidated statements of financial condition and are accounted for using the amortization method. Under this method, Valley amortizes the loan servicing assets in proportion to and over the period of 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. A valuation allowance is established through an impairment charge to earnings to the extent the unamortized cost of a stratified group of loan servicing rights exceeds its estimated fair value. Increases in the fair value of impaired loan servicing rights are recognized as a reduction of the valuation allowance, but not in excess of such allowance. The amortization of loan servicing rights is recorded in non-interest income.

Stock-Based Compensation

Stock-Based Compensation

Compensation expense for stock options and restricted stock awards (i.e., non-vested stock awards) is based on the fair value of the award on the date of the grant and is recognized ratably over the service period of the award. Under Valley’s long-term incentive compensation plans, award grantees that are eligible for retirement do not have a service period requirement. Compensation expense for these awards is recognized immediately in earnings. The service period for non-retirement eligible employees is the shorter of the stated vesting period of the award or the period until the employee’s retirement eligibility date. The fair value of each option granted is estimated using a binomial option pricing model. The fair value of restricted stock awards is based upon the last sale price reported for Valley’s common stock on the date of grant or the last sale price reported preceding such date, except for performance-based restricted stock and restricted stock unit awards with a market condition. The grant date fair value of a performance-based restricted stock or restrict stock unit award that vests based on a market condition is determined by a third party specialist using a Monte Carlo valuation model.

Fair Value Measurements

Fair Value Measurements

In general, fair values of financial instruments are based upon quoted market prices, where available. When observable market prices and parameters are not fully available, management uses valuation techniques based upon internal and third party models requiring more management judgment to estimate the appropriate fair value measurements. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, including adjustments based on internal cash flow model projections that utilize assumptions similar to those incorporated by market participants. Other adjustments may include amounts to reflect counterparty credit quality and Valley’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

Income Taxes

Income Taxes

Valley uses the asset and liability method to provide income taxes on all transactions recorded in the consolidated financial statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the enacted tax rates that will be in effect when the underlying items of income and expense are expected to be realized.

Valley’s expense for income taxes includes the current and deferred portions of that expense. Deferred tax assets are recognized if, in management's judgment, their realizability is determined to be more likely than not. A valuation allowance is established to reduce deferred tax assets to the amount we expect to realize. Deferred income tax expense or benefit results from differences between assets and liabilities measured for financial reporting versus income-tax return purposes. The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Valley maintains a reserve related to certain tax positions that management believes contain an element of uncertainty. An uncertain tax position is measured based on the largest amount of benefit that management believes is more likely than not to be realized. Periodically, Valley evaluates each of its tax positions and strategies to determine whether the reserve continues to be appropriate. See Note 13 for further analysis of Valley’s accounting for income taxes.

Comprehensive Income

Comprehensive Income

Comprehensive income or loss is defined as the change in equity of a business entity during a period due to transactions and other events and circumstances, excluding those resulting from investments by and distributions to shareholders. Comprehensive income consists of net income and other comprehensive income or loss. Valley’s components of other comprehensive income or loss, net of deferred tax, include: (i) unrealized gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges relating to these securities); (ii) unrealized gains and losses on derivatives used in cash flow hedging relationships; and (iii) the pension benefit adjustment for the unfunded portion of its various employee, officer, and director pension plans. Valley presents comprehensive income and its components in the consolidated statements of comprehensive income for all periods presented.

Earnings Per Common Share

Common stock equivalents represent the dilutive effect of additional common shares issuable upon the assumed vesting or exercise, if applicable, of performance-based restricted stock units, common stock options and warrants to purchase Valley’s common shares. Common stock options and warrants with exercise prices that exceed the average market price 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.

Earnings Per Common Share

In Valley's computation of the earnings per common share, the numerator of both the basic and diluted earnings per common share is net income available to common shareholders (which is equal to net income less dividends on preferred stock). The weighted average number of common shares outstanding used in the denominator for basic earnings per common share is increased to determine the denominator used for diluted earnings per common share by the effect of potentially dilutive common stock equivalents utilizing the treasury stock method.

Preferred and Common Stock Dividends

Preferred and Common Stock Dividends

In June 2015, Valley issued 4.6 million shares of non-cumulative perpetual preferred stock which were initially recorded at fair value (see Note 18 for additional details on the preferred stock issuance). The preferred shares are senior to Valley common stock, whereas the current year dividends must be paid before Valley can pay dividends to its common stockholders. Preferred dividends declared are deducted from net income for computing income available to common stockholders and earnings per common share computations.

Cash dividends to both preferred and common stockholders are payable and accrued when declared by Valley's Board of Directors

Treasury Stock

Treasury Stock

Treasury stock is recorded using the cost method and accordingly is presented as a reduction of shareholders’ equity.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

As part of its asset/liability management strategies and to accommodate commercial borrowers, Valley has used interest rate swaps and caps to hedge variability in cash flows or fair values caused by changes in interest rates. Valley also uses derivatives not designated as hedges for non-speculative purposes to manage its exposure to interest rate movements related to a service for commercial lending customers, mortgage banking activities consisting of customer interest rate lock commitments and forward contracts to sell residential mortgage loans, and hybrid instruments, consisting of market linked certificates of deposit with an embedded swap contract. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Valley records all derivatives as assets or liabilities at fair value on the consolidated statements of financial condition.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income or loss and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. On a quarterly basis, Valley assesses the effectiveness of each hedging relationship by comparing the changes in cash flows or fair value of the derivative hedging instrument with the changes in cash flows or fair value of the designated hedged item or transaction. If a hedging relationship is terminated due to ineffectiveness, and the derivative instrument is not re-designated to a new hedging relationship, the subsequent change in fair value of such instrument is charged directly to earnings. Derivatives not designated as hedges do not meet the hedge accounting requirements under U.S. GAAP. Changes in fair value of derivatives not designated in hedging relationships are recorded directly in earnings. Valley made an accounting policy election to use the exception under the ASU No. 2011-04 and calculate the credit valuation adjustments to the fair value of derivatives on a net basis by counterparty portfolio. See Note 3 for additional information.

New Authoritative Accounting Guidance

New Authoritative Accounting Guidance

Accounting Standards Update (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 is effective for Valley for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is not expected to have a significant impact on the presentation Valley's consolidated financial statements. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" clarifies on how certain cash receipts and cash payments should be classified and presented in the statement of cash flow. The ASU No. 2016-15 includes guidance on eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 is effective for Valley for fiscal years beginning after December 15, 2017 and it should be applied using a retrospective transition method to each period presented. ASU No. 2016-15 is not expected to have a significant impact on the presentation Valley's consolidated statements of cash flows.

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 ASU No. 2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity is required to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 is effective for Valley for reporting periods beginning January 1, 2020. Management is currently evaluating the impact of the ASU on Valley’s consolidated financial statements. Valley expects that the new guidance will result in an increase in its allowance for credit losses due to several factors, including: (i) the allowance related to Valley loans will increase to include credit losses over the full remaining expected life of the portfolio, and will consider expected future changes in macroeconomic conditions, (ii) the non-accretable difference (as defined in Note 5) on PCI loans will be recognized as an allowance, offset by an increase in the carrying value of the related loans, and (iii) an allowance will be established for estimated credit losses on investment securities classified as held to maturity. The extent of the increase is under evaluation, but will depend upon the nature and characteristics of the Valley's loan and investment portfolios at the adoption date, and the economic conditions and forecasts at that date.

ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" simplifies several aspects of the stock compensation guidance in Topic 718 and other related guidance. The amendments focus on income tax accounting upon vesting or exercise of share-based payments, award classification, liability classification exception for statutory tax withholding requirements, estimating forfeitures, and cash flow presentation. ASU No. 2016-09 is effective for Valley for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018 with an early adoption permitted. ASU No. 2016-09 is not expected to have a significant impact on Valley's consolidated financial statements.

ASU No. 2016-02, “Leases (Topic 842)” requires the recognition of a right of use asset and related lease liability by lessees for leases classified as operating leases under current GAAP. Topic 842, which replaces the current guidance under Topic 840, retains a distinction between finance leases and operating leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee also will not significantly change from current GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right of use assets and lease liabilities. Topic 842 will be effective for Valley for reporting periods beginning January 1, 2019, with an early adoption permitted. Valley must apply a modified retrospective transition approach for the applicable leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Management is currently evaluating the impact of Topic 842 on Valley’s consolidated financial statements by reviewing its existing lease contracts and service contracts that may include embedded leases. Valley expects a gross-up of its consolidated statements of financial condition as a result of recognizing lease liabilities and right of use assets; the extent of such gross-up is under evaluation. Valley does not expect material changes to the recognition of operating lease expense in its consolidated statements of income.

ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities” requires that: (i) equity investments with readily determinable fair values must be measured at fair value with changes in fair value recognized in net income, (ii) equity investments without readily determinable fair values must be measured at either fair value or at cost adjusted for changes in observable prices minus impairment with changes in value under either of these methods recognized in net income, (iii) entities that record financial liabilities at fair value due to a fair value option election must recognize changes in fair value in other comprehensive income if it is related to instrument-specific credit risk, and (iv) entities must assess whether a valuation allowance is required for deferred tax assets related to available-for-sale debt securities. ASU No. 2016-01 is effective for Valley for reporting periods beginning January 1, 2018 and is not expected to have a material effect on Valley’s consolidated financial statements.

ASU No. 2015-07, "Fair Value Measurement (Topic 820) - Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)", which removes the requirement to categorize within the fair value hierarchy all investments for which the fair value is measured using the net asset value per share practical expedient. ASU No. 2015-07 also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. ASU No. 2015-07 became effective for Valley for reporting periods after January 1, 2016 and did not have an impact on Valley's fair value measurement disclosures at Note 6.

ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in the ASU No. 2015-03. ASU No. 2015-03 is effective for reporting periods beginning January 1, 2016 (with early adoption permitted), and is to be applied retrospectively. At December 31, 2015, Valley early adopted ASU No. 2015-03 to reflect the reclassification of the debt issuance costs from other assets to long-term borrowings for all periods presented in our consolidated statements of financial condition. See Note 10 to the consolidated financial statements for more details.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)" implements a common revenue standard that clarifies the principles for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In 2016, the Financial Accounting Standards Board issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” to further clarify the new guidance under Topic 606. ASU No. 2014-09 and its aforementioned amendments are effective on January 1, 2018. Management is currently evaluating by identification of revenue within the scope of the guidance to assess potential impact. Management has not yet identified any material changes in the timing of revenue recognition and it does not expect the new revenue guidance to have a significant impact on Valley’s consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Calculation of Both Basic and Diluted Earnings Per Common Share

The following table shows the calculation of both basic and diluted earnings per common share for the years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands, except for share data)
Net income available to common shareholders	$	160,958	$	99,144	$	116,172
Basic weighted-average number of common shares outstanding	254,841,571		234,405,909		205,716,293
Plus: Common stock equivalents	426,765		31,091		—
Diluted weighted-average number of common shares outstanding	255,268,336		234,437,000		205,716,293
Earnings per common share:
Basic	$	0.63	$	0.42	$	0.56
Diluted	0.63		0.42		0.56

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Fair Value Measurement of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

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

The following tables present the assets and liabilities that are measured at fair value on a recurring and non-recurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at December 31, 2016 and 2015. The assets presented under “non-recurring fair value measurements” in the table 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).

			Fair Value Measurements at Reporting Date Using:
	December 31, 2016		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:
Available for sale:
U.S. Treasury securities	$	49,591	$	49,591	$	—	$	—
U.S. government agency securities	23,041		—		23,041		—
Obligations of states and political subdivisions	119,767		—		119,767		—
Residential mortgage-backed securities	1,015,542		—		1,005,589		9,953
Trust preferred securities	8,009		—		6,074		1,935
Corporate and other debt securities	60,565		8,064		52,501		—
Equity securities	20,858		1,306		19,552		—
Total available for sale	1,297,373		58,961		1,226,524		11,888
Loans held for sale (1)	57,708		—		57,708		—
Other assets (2)	29,055		—		29,055		—
Total assets	$	1,384,136	$	58,961	$	1,313,287	$	11,888
Liabilities
Other liabilities (2)	$	44,077	$	—	$	44,077	$	—
Total liabilities	$	44,077	$	—	$	44,077	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	5,385	$	—	$	—	$	5,385
Loan servicing rights	6,489		—		—		6,489
Foreclosed assets (4)	4,532		—		—		4,532
Total	$	16,406	$	—	$	—	$	16,406

			Fair Value Measurements at Reporting Date Using:
	December 31, 2015		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:
Available for sale:
U.S. Treasury securities	$	549,473	$	549,473	$	—	$	—
U.S. government agency securities	29,963		—		29,963		—
Obligations of states and political subdivisions	124,966		—		124,966		—
Residential mortgage-backed securities	696,428		—		684,777		11,651
Trust preferred securities	8,404		—		6,262		2,142
Corporate and other debt securities	77,552		17,710		59,842		—
Equity securities	20,075		1,198		18,877		—
Total available for sale	1,506,861		568,381		924,687		13,793
Loans held for sale (1)	16,382		—		16,382		—
Other assets (2)	33,774		—		33,774		—
Total assets	$	1,557,017	$	568,381	$	974,843	$	13,793
Liabilities
Other liabilities (2)	$	50,844	$	—	$	50,844	$	—
Total liabilities	$	50,844	$	—	$	50,844	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	15,427	$	—	$	—	$	15,427
Loan servicing rights	2,571		—		—		2,571
Foreclosed assets (4)	16,672		—		—		16,672
Total	$	34,670	$	—	$	—	$	34,670

⁽¹⁾  Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $58.2 million and $16.1 million at December 31, 2016 and 2015, respectively.

⁽²⁾  Amount represents derivative financial instruments.

⁽³⁾  Excludes PCI loans.

⁽⁴⁾  Includes covered other real estate owned totaling $300 thousand and $4.2 million at December 31, 2016 and 2015, respectively.

Changes in Level 3 Assets Measured at Fair Value on Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2016, 2015 and 2014 are summarized below:

	Available For Sale Securities
	2016			2015			2014
	(in thousands)
Balance, beginning of the period	$	13,793		$	19,309		$	28,523
Net (losses) gains included in other comprehensive income	(203		)	(1,072		)	1,648
Sales	—			(2,674		)	(7,718		)
Settlements, net	(1,702		)	(1,770		)	(3,144		)
Balance, end of the period	$	11,888		$	13,793		$	19,309

Schedule of Quantitative Information about Level 3 Inputs Used to Measure Fair Value of Available for Sale Securities

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at December 31, 2016:

Security Type	Valuation Technique	Unobservable Input	Range	Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate	15.0 - 22.5%	19.1	%
		Default rate	3.6 - 33.2	9.0
		Loss severity	45.6 - 66.0	60.0

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 December 31, 2016 and 2015 were as follows:

		December 31,
		2016				2015
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	220,791	$	220,791	$	243,575	$	243,575
Interest bearing deposits with banks	Level 1	171,710		171,710		170,225		170,225
Investment securities held to maturity:
U.S. Treasury securities	Level 1	138,830		147,495		138,978		149,483
U.S. government agency securities	Level 2	11,329		11,464		12,859		13,130
Obligations of states and political subdivisions	Level 2	566,590		577,826		504,865		527,263
Residential mortgage-backed securities	Level 2	1,112,460		1,102,802		852,289		855,272
Trust preferred securities	Level 2	59,804		47,290		59,785		46,437
Corporate and other debt securities	Level 2	36,559		37,720		27,609		29,454
Total investment securities held to maturity		1,925,572		1,924,597		1,596,385		1,621,039
Net loans	Level 3	17,121,684		16,756,655		15,936,929		15,824,475
Accrued interest receivable	Level 1	66,816		66,816		63,554		63,554
Federal Reserve Bank and Federal Home Loan Bank stock (1)	Level 1	147,127		147,127		145,068		145,068
Financial liabilities
Deposits without stated maturities	Level 1	14,591,837		14,591,837		13,095,647		13,095,647
Deposits with stated maturities	Level 2	3,138,871		3,160,572		3,157,904		3,203,389
Short-term borrowings	Level 1	1,080,960		1,081,751		1,076,991		1,076,991
Long-term borrowings	Level 2	1,433,906		1,523,386		1,810,728		1,945,741
Junior subordinated debentures issued to capital trusts	Level 2	41,577		45,785		41,414		44,127
Accrued interest payable (2)	Level 1	10,675		10,675		13,110		13,110

⁽¹⁾  Included in other assets.

⁽²⁾  Included in accrued expenses and other liabilities.

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2016

Investments, Debt and Equity Securities [Abstract]

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

The amortized cost, gross unrealized gains and losses and fair value of investment securities held to maturity at December 31, 2016 and 2015 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	138,830	$	8,665	$	—		$	147,495
U.S. government agency securities	11,329		135		—			11,464
Obligations of states and political subdivisions:
Obligations of states and state agencies	252,185		6,692		(1,428		)	257,449
Municipal bonds	314,405		6,438		(466		)	320,377
Total obligations of states and political subdivisions	566,590		13,130		(1,894		)	577,826
Residential mortgage-backed securities	1,112,460		8,432		(18,090		)	1,102,802
Trust preferred securities	59,804		40		(12,554		)	47,290
Corporate and other debt securities	36,559		1,190		(29		)	37,720
Total investment securities held to maturity	$	1,925,572	$	31,592	$	(32,567	)	$	1,924,597
December 31, 2015
U.S. Treasury securities	$	138,978	$	10,505	$	—		$	149,483
U.S. government agency securities	12,859		271		—			13,130
Obligations of states and political subdivisions:
Obligations of states and state agencies	194,547		10,538		(10		)	205,075
Municipal bonds	310,318		11,955		(85		)	322,188
Total obligations of states and political subdivisions	504,865		22,493		(95		)	527,263
Residential mortgage-backed securities	852,289		11,018		(8,035		)	855,272
Trust preferred securities	59,785		36		(13,384		)	46,437
Corporate and other debt securities	27,609		1,894		(49		)	29,454
Total investment securities held to maturity	$	1,596,385	$	46,217	$	(21,563	)	$	1,621,039

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 December 31, 2016 and 2015 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, 2016
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	98,114	$	(1,428	)	$	—	$	—		$	98,114	$	(1,428	)
Municipal bonds	27,368		(466		)	—		—			27,368		(466		)
Total obligations of states and political subdivisions	125,482		(1,894		)	—		—			125,482		(1,894		)
Residential mortgage-backed securities	692,108		(14,420		)	114,505		(3,670		)	806,613		(18,090		)
Trust preferred securities						45,898		(12,554		)	45,898		(12,554		)
Corporate and other debt securities	2,971		(29		)	—		—			2,971		(29		)
Total	$	820,561	$	(16,343	)	$	160,403	$	(16,224	)	$	980,964	$	(32,567	)
December 31, 2015
Obligations of states and political subdivisions:
Obligations of states and state agencies	$	6,837	$	(5	)	$	1,965	$	(5	)	$	8,802	$	(10	)
Municipal bonds	8,814		(72		)	10,198		(13		)	19,012		(85		)
Total obligations of states and political subdivisions	15,651		(77		)	12,163		(18		)	27,814		(95		)
Residential mortgage-backed securities	244,440		(2,916		)	162,756		(5,119		)	407,196		(8,035		)
Trust preferred securities	—		—			45,047		(13,384		)	45,047		(13,384		)
Corporate and other debt securities	2,951		$	(49	)	$	—	$	—		$	2,951	$	(49	)
Total	$	263,042	$	(3,042	)	$	219,966	$	(18,521	)	$	483,008	$	(21,563	)

Contractual Maturities of Debt Securities Held to Maturity

The contractual maturities of investments in debt securities held to maturity at December 31, 2016 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.

	December 31, 2016
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	85,139	$	85,139
Due after one year through five years	191,207		199,327
Due after five years through ten years	364,471		377,665
Due after ten years	172,295		159,664
Residential mortgage-backed securities	1,112,460		1,102,802
Total investment securities held to maturity	$	1,925,572	$	1,924,597

Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Investment Securities Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of investment securities available for sale at December 31, 2016 and 2015 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2016
U.S. Treasury securities	$	51,020	$	6	$	(1,435	)	$	49,591
U.S. government agency securities	22,815		232		(6		)	23,041
Obligations of states and political subdivisions:
Obligations of states and state agencies	40,696		70		(424		)	40,342
Municipal bonds	80,045		147		(767		)	79,425
Total obligations of states and political subdivisions	120,741		217		(1,191		)	119,767
Residential mortgage-backed securities	1,029,827		2,061		(16,346		)	1,015,542
Trust preferred securities*	10,164		—		(2,155		)	8,009
Corporate and other debt securities	60,651		436		(522		)	60,565
Equity securities	20,505		1,114		(761		)	20,858
Total investment securities available for sale	$	1,315,723	$	4,066	$	(22,416	)	$	1,297,373
December 31, 2015
U.S. Treasury securities	$	551,173	$	4	$	(1,704	)	$	549,473
U.S. government agency securities	29,316		665		(18		)	29,963
Obligations of states and political subdivisions:
Obligations of states and state agencies	44,285		196		(67		)	44,414
Municipal bonds	80,717		209		(374		)	80,552
Total obligations of states and political subdivisions	125,002		405		(441		)	124,966
Residential mortgage-backed securities	701,764		3,348		(8,684		)	696,428
Trust preferred securities*	10,458		—		(2,054		)	8,404
Corporate and other debt securities	78,202		1,239		(1,889		)	77,552
Equity securities	21,022		575		(1,522		)	20,075
Total investment securities available for sale	$	1,516,937	$	6,236	$	(16,312	)	$	1,506,861

* Includes two pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies, at December 31, 2016 and 2015.

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 December 31, 2016 and 2015 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, 2016
U.S. Treasury securities	$	48,660	$	(1,435	)	$	—	$	—		$	48,660	$	(1,435	)
U.S. government agency securities	2,530		(4		)	4,034		(2		)	6,564		(6		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	28,628		(404		)	753		(20		)	29,381		(424		)
Municipal bonds	42,573		(506		)	11,081		(261		)	53,654		(767		)
Total obligations of states and political subdivisions	71,201		(910		)	11,834		(281		)	83,035		(1,191		)
Residential mortgage-backed securities	788,030		(11,889		)	132,718		(4,457		)	920,748		(16,346		)
Trust preferred securities						8,009		(2,155		)	8,009		(2,155		)
Corporate and other debt securities	32,292		(294		)	15,192		(228		)	47,484		(522		)
Equity securities	—		—			14,883		(761		)	14,883		(761		)
Total	$	942,713	$	(14,532	)	$	186,670	$	(7,884	)	$	1,129,383	$	(22,416	)
December 31, 2015
U.S. Treasury securities	$	548,538	$	(1,704	)	$	—	$	—		$	548,538	$	(1,704	)
U.S. government agency securities	3,489		(5		)	4,736		(13		)	8,225		(18		)
Obligations of states and political subdivisions:
Obligations of states and state agencies	24,359		(67		)	—		—			24,359		(67		)
Municipal bonds	38,207		(128		)	13,551		(246		)	51,758		(374		)
Total obligations of states and political subdivisions	62,566		(195		)	13,551		(246		)	76,117		(441		)
Residential mortgage-backed securities	293,615		(4,147		)	164,010		(4,537		)	457,625		(8,684		)
Trust preferred securities	—		—			8,404		(2,054		)	8,404		(2,054		)
Corporate and other debt securities	21,203		(471		)	36,137		(1,418		)	57,340		(1,889		)
Equity securities	—		—			14,273		(1,522		)	14,273		(1,522		)
Total	$	929,411	$	(6,522	)	$	241,111	$	(9,790	)	$	1,170,522	$	(16,312	)

Contractual Maturities of Investments Securities Available for Sale

The contractual maturities of investments securities available for sale at December 31, 2016 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.

	December 31, 2016
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	18,770	$	18,654
Due after one year through five years	73,904		74,158
Due after five years through ten years	114,174		112,063
Due after ten years	58,543		56,098
Residential mortgage-backed securities	1,029,827		1,015,542
Equity securities	20,505		20,858
Total investment securities available for sale	$	1,315,723	$	1,297,373

Changes in 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 or loss for the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Balance, beginning of period	$	5,837		$	8,947		$	9,990
Accretion of credit loss impairment due to an increase in expected cash flows	(921		)	(728		)	(661		)
Sales	—			(2,382		)	(382		)
Balance, end of period	$	4,916		$	5,837		$	8,947

Gross Gains (Losses) Realized on Sales, Maturities and Other Securities Transactions Included in Earnings

Gross gains and losses realized on sales, maturities and other securities transactions included in earnings for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Sales transactions:
Gross gains	$	271		$	3,274		$	746
Gross losses	(58		)	(947		)	(2		)
	$	213		$	2,327		$	744
Maturities and other securities transactions:
Gross gains	$	615		$	293		$	10
Gross losses	(51		)	(133		)	(9		)
	$	564		$	160		$	1
Gains on securities transactions, net	$	777		$	2,487		$	745

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Loans (Tables)

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Schedule of Loan Portfolio Non-Covered and Covered PCI Loans and Non-PCI Loans

The detail of the loan portfolio as of December 31, 2016 and 2015 was as follows:

	December 31, 2016						December 31, 2015
	Non-PCI Loans		PCI Loans*		Total		Non-PCI Loans		PCI Loans*		Total
	(in thousands)
Loans:
Commercial and industrial	$	2,357,018	$	281,177	$	2,638,195	$	2,156,549	$	383,942	$	2,540,491
Commercial real estate:
Commercial real estate	7,628,328		1,091,339		8,719,667		6,069,532		1,355,104		7,424,636
Construction	710,266		114,680		824,946		607,694		147,253		754,947
Total commercial real estate loans	8,338,594		1,206,019		9,544,613		6,677,226		1,502,357		8,179,583
Residential mortgage	2,684,195		183,723		2,867,918		2,912,079		218,462		3,130,541
Consumer:
Home equity	376,213		92,796		469,009		391,809		119,394		511,203
Automobile	1,139,082		145		1,139,227		1,238,826		487		1,239,313
Other consumer	569,499		7,642		577,141		426,147		15,829		441,976
Total consumer loans	2,084,794		100,583		2,185,377		2,056,782		135,710		2,192,492
Total loans	$	15,464,601	$	1,771,502	$	17,236,103	$	13,802,636	$	2,240,471	$	16,043,107

* PCI loans include covered loans (mostly consisting of residential mortgage and commercial real estate loans) totaling $70.4 million and $122.3 million at December 31, 2016 and 2015, respectively.

Changes in Accretable Yield for Covered Loans

The following table presents changes in the accretable yield for PCI loans for the years ended December 31, 2016 and 2015:

	2016			2015
	(in thousands)
Balance, beginning of period	$	415,179		$	336,208
Acquisition	—			126,930
Accretion	(107,482		)	(105,078		)
Net (decrease) increase in expected cash flows	(9,989		)	57,119
Other, net	(3,194		)	—
Balance, end of period	$	294,514		$	415,179

Summary of Related Party Loans

The following table summarizes the changes in the total amounts of loans and advances to the related parties during the year ended December 31, 2016:

	2016
	(in thousands)
Outstanding at beginning of year	$	191,566
New loans and advances	26,736
Repayments	(52,982		)
Outstanding at end of year	$	165,320

Past Due, Non-Accrual and Current Non-Covered Loans by Loan Portfolio Class

The following tables present past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis) by loan portfolio class at December 31, 2016 and 2015:

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing  Loans 90 Days Or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	6,705	$	5,010	$	142	$	8,465	$	20,322	$	2,336,696	$	2,357,018
Commercial real estate:
Commercial real estate	5,894		8,642		474		15,079		30,089		7,598,239		7,628,328
Construction	6,077		—		1,106		715		7,898		702,368		710,266
Total commercial real estate loans	11,971		8,642		1,580		15,794		37,987		8,300,607		8,338,594
Residential mortgage	12,005		3,564		1,541		12,075		29,185		2,655,010		2,684,195
Consumer loans:
Home equity	929		415		—		1,028		2,372		373,841		376,213
Automobile	3,192		723		188		146		4,249		1,134,833		1,139,082
Other consumer	76		9		21		—		106		569,393		569,499
Total consumer loans	4,197		1,147		209		1,174		6,727		2,078,067		2,084,794
Total	$	34,878	$	18,363	$	3,472	$	37,508	$	94,221	$	15,370,380	$	15,464,601

	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing  Loans 90 Days Or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2015
Commercial and industrial	$	3,920	$	524	$	213	$	10,913	$	15,570	$	2,140,979	$	2,156,549
Commercial real estate:
Commercial real estate	2,684		—		131		24,888		27,703		6,041,829		6,069,532
Construction	1,876		2,799		—		6,163		10,838		596,856		607,694
Total commercial real estate loans	4,560		2,799		131		31,051		38,541		6,638,685		6,677,226
Residential mortgage	6,681		1,626		1,504		17,930		27,741		2,884,338		2,912,079
Consumer loans:
Home equity	1,308		111		—		2,088		3,507		388,302		391,809
Automobile	1,969		491		164		118		2,742		1,236,084		1,238,826
Other consumer	71		24		44		—		139		426,008		426,147
Total consumer loans	3,348		626		208		2,206		6,388		2,050,394		2,056,782
Total	$	18,509	$	5,575	$	2,056	$	62,100	$	88,240	$	13,714,396	$	13,802,636

Impaired Loans

The following table presents the information about impaired loans by loan portfolio class at December 31, 2016 and 2015:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
December 31, 2016
Commercial and industrial	$	3,609	$	27,031	$	30,640	$	35,957	$	5,864
Commercial real estate:
Commercial real estate	21,318		36,974		58,292		60,267		3,612
Construction	1,618		2,379		3,997		3,997		260
Total commercial real estate loans	22,936		39,353		62,289		64,264		3,872
Residential mortgage	8,398		9,958		18,356		19,712		725
Consumer loans:
Home equity	1,182		2,352		3,534		3,626		70
Total consumer loans	1,182		2,352		3,534		3,626		70
Total	$	36,125	$	78,694	$	114,819	$	123,559	$	10,531
December 31, 2015
Commercial and industrial	$	7,863	$	17,851	$	25,714	$	33,071	$	3,439
Commercial real estate:
Commercial real estate	30,113		37,440		67,553		71,263		3,354
Construction	8,847		5,530		14,377		14,387		317
Total commercial real estate loans	38,960		42,970		81,930		85,650		3,671
Residential mortgage	7,842		14,770		22,612		24,528		1,377
Consumer loans:
Home equity	263		1,869		2,132		2,224		295
Total consumer loans	263		1,869		2,132		2,224		295
Total	$	54,928	$	77,460	$	132,388	$	145,473	$	8,782

Average Recorded Investment and Interest Income Recognized on Impaired Loans

The following table presents, by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2016, 2015 and 2014:

	2016				2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	36,552	$	1,045	$	28,451	$	893	$	30,485	$	1,114
Commercial real estate:
Commercial real estate	59,633		2,122		77,154		2,380		74,256		2,488
Construction	5,790		182		16,399		534		21,515		547
Total commercial real estate loans	65,423		2,304		93,553		2,914		95,771		3,035
Residential mortgage	21,340		874		24,435		728		26,863		812
Consumer loans:
Home equity	2,626		68		3,852		111		2,214		49
Total consumer loans	2,626		68		3,852		111		2,214		49
Total	$	125,941	$	4,291	$	150,291	$	4,646	$	155,333	$	5,010

Pre-Modification and Post-Modification Outstanding Recorded Investments

The non-PCI loans modified as TDRs within the previous 12 months and for which there was a payment default (90 or more days past due) for the years ended December 31, 2016 and 2015 were as follows:

	Years Ended December 31,
	2016			2015
Troubled Debt Restructurings Subsequently Defaulted	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	($ in thousands)
Commercial and industrial	—	$	—	1	$	129
Commercial real estate	2	357		1	87
Residential mortgage	4	853		1	214
Consumer	—	—		1	75
Total	6	$	1,210	4	$	505

The following table presents non-PCI loans by loan class modified as TDRs during the years ended December 31, 2016 and 2015. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts at December 31, 2016 and 2015, respectively.

Troubled Debt Restructurings	Number of  Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
		($ in thousands)
December 31, 2016
Commercial and industrial	19	$	18,186	$	16,277
Commercial real estate:
Commercial real estate	4	8,325		7,092
Construction	3	2,922		3,626
Total commercial real estate	7	11,247		10,718
Residential mortgage	7	1,867		1,826
Consumer	1	54		51
Total	34	$	31,354	$	28,872
December 31, 2015
Commercial and industrial	17	$	8,409	$	6,793
Commercial real estate:
Commercial real estate	5	6,768		6,709
Construction	2	646		1,391
Total commercial real estate	7	7,414		8,100
Residential mortgage	7	2,659		2,603
Consumer	2	1,111		1,095
Total	33	$	19,593	$	18,591

Risk Category of Loans

The following table presents the risk category of loans by class of loans (excluding PCI loans) based on the most recent analysis performed at December 31, 2016 and 2015.

Credit exposure— by internally assigned risk rating			Special						Total Non-PCI
	Pass		Mention		Substandard		Doubtful		Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	2,246,457	$	44,316	$	64,649	$	1,596	$	2,357,018
Commercial real estate	7,486,469		57,591		84,268		—		7,628,328
Construction	708,070		200		1,996		—		710,266
Total	$	10,440,996	$	102,107	$	150,913	$	1,596	$	10,695,612
December 31, 2015
Commercial and industrial	$	2,049,752	$	68,243	$	36,254	$	2,300	$	2,156,549
Commercial real estate	5,893,354		79,279		96,899		—		6,069,532
Construction	596,530		1,102		10,062		—		607,694
Total	$	8,539,636	$	148,624	$	143,215	$	2,300	$	8,833,775

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, 2016 and 2015:

Credit exposure— by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
December 31, 2016
Residential mortgage	$	2,672,120	$	12,075	$	2,684,195
Home equity	375,185		1,028		376,213
Automobile	1,138,936		146		1,139,082
Other consumer	569,499		—		569,499
Total	$	4,755,740	$	13,249	$	4,768,989
December 31, 2015
Residential mortgage	$	2,894,149	$	17,930	$	2,912,079
Home equity	389,721		2,088		391,809
Automobile	1,238,708		118		1,238,826
Other consumer	426,147		—		426,147
Total	$	4,948,725	$	20,136	$	4,968,861

The following table presents the recorded investment in PCI loans by class based on individual loan payment activity as of December 31, 2016 and 2015:

Credit exposure—	Performing		Non-Performing		Total
by payment activity	Loans		Loans		PCI Loans
	(in thousands)
December 31, 2016
Commercial and industrial	$	272,483	$	8,694	$	281,177
Commercial real estate	1,080,376		10,963		1,091,339
Construction	113,370		1,310		114,680
Residential mortgage	179,793		3,930		183,723
Consumer	98,469		2,114		100,583
Total	$	1,744,491	$	27,011	$	1,771,502
December 31, 2015
Commercial and industrial	$	373,665	$	10,277	$	383,942
Commercial real estate	1,342,030		13,074		1,355,104
Construction	141,547		5,706		147,253
Residential mortgage	214,713		3,749		218,462
Consumer	129,891		5,819		135,710
Total	$	2,201,846	$	38,625	$	2,240,471

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Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Summary of Allowance for Credit Losses

The following table summarizes the allowance for credit losses at December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Components of allowance for credit losses:
Allowance for loan losses	$	114,419	$	106,178
Allowance for unfunded letters of credit	2,185		2,189
Total allowance for credit losses	$	116,604	$	108,367

Summary of Provision for Credit Losses

The following table summarizes the provision for credit losses for the years ended December 31, 2016, 2015 and 2014:

	2016			2015		2014
	(in thousands)
Components of provision for credit losses:
Provision for loan losses	$	11,873		$	7,846	$	3,445
Provision for unfunded letters of credit	(4		)	255		(1,561		)
Total provision for credit losses	$	11,869		$	8,101	$	1,884

Summary of Activity in Allowance for Loan Losses

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2016 and 2015:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
December 31, 2016
Allowance for loan losses:
Beginning balance	$	48,767		$	48,006		$	4,625		$	4,780		$	—		$	106,178
Loans charged-off	(5,990		)	(650		)	(866		)	(3,463		)	—			(10,969		)
Charged-off loans recovered	2,852			2,057			774			1,654			—			7,337
Net charge-offs	(3,138		)	1,407			(92		)	(1,809		)	—			(3,632		)
Provision for loan losses	5,191			6,438			(831		)	1,075						11,873
Ending balance	$	50,820		$	55,851		$	3,702		$	4,046		$	—		$	114,419
December 31, 2015
Allowance for loan losses:
Beginning balance	$	43,676		$	42,840		$	5,093		$	5,179		$	5,565		$	102,353
Loans charged-off	(7,928		)	(2,790		)	(813		)	(3,441		)	—			(14,972		)
Charged-off loans recovered	7,233			1,759			421			1,538			—			10,951
Net charge-offs	(695		)	(1,031		)	(392		)	(1,903		)	—			(4,021		)
Provision for loan losses	5,786			6,197			(76		)	1,504			(5,565		)	7,846
Ending balance	$	48,767		$	48,006		$	4,625		$	4,780		$	—		$	106,178

Summary of Allocation of Allowance for Loan Losses and Related Loans by Loan Portfolio Segment Disaggregated Based on Impairment 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 impairment methodology for the years ended December 31, 2016 and 2015. Loans individually evaluated for impairment represent Valley’s impaired loans. Loans acquired with discounts related to credit quality represent Valley’s PCI loans.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Total
	(in thousands)
December 31, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	5,864	$	3,872	$	725	$	70	$	10,531
Collectively evaluated for impairment	44,956		51,979		2,977		3,976		103,888
Total	$	50,820	$	55,851	$	3,702	$	4,046	$	114,419
Loans:
Individually evaluated for impairment	$	30,640	$	62,289	$	18,356	$	3,534	$	114,819
Collectively evaluated for impairment	2,326,378		8,276,305		2,665,839		2,081,260		15,349,782
Loans acquired with discounts related to credit quality	281,177		1,206,019		183,723		100,583		1,771,502
Total	$	2,638,195	$	9,544,613	$	2,867,918	$	2,185,377	$	17,236,103
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	3,439	$	3,671	$	1,377	$	295	$	8,782
Collectively evaluated for impairment	45,328		44,335		3,248		4,485		97,396
Total	$	48,767	$	48,006	$	4,625	$	4,780	$	106,178
Loans:
Individually evaluated for impairment	$	25,714	$	81,930	$	22,612	$	2,132	$	132,388
Collectively evaluated for impairment	2,130,835		6,595,296		2,889,467		2,054,650		13,670,248
Loans acquired with discounts related to credit quality	383,942		1,502,357		218,462		135,710		2,240,471
Total	$	2,540,491	$	8,179,583	$	3,130,541	$	2,192,492	$	16,043,107

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Premises and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Components of Premises and Equipment, Net

At December 31, 2016 and 2015, premises and equipment, net consisted of:

	2016			2015
	(in thousands)
Land	$	78,116		$	80,519
Buildings	210,012			211,923
Leasehold improvements	73,405			70,314
Furniture and equipment	240,424			224,340
Total premises and equipment	601,957			587,096
Accumulated depreciation and amortization	(310,777		)	(288,153		)
Total premises and equipment, net	$	291,180		$	298,943

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying Amount 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, 2014	$	20,517	$	168,922	$	252,900	$	133,553	$	575,892
Goodwill from business combinations	—		30,197		61,360		18,890		110,447
Balance at December 31, 2015	$	20,517	$	199,119	$	314,260	$	152,443	$	686,339
Goodwill from business combinations	701		984		1,998		615		4,298
Balance at December 31, 2016	$	21,218	$	200,103	$	316,258	$	153,058	$	690,637

* 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 tables summarize other intangible assets as of December 31, 2016 and 2015:

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
December 31, 2016
Loan servicing rights	$	73,002	$	(52,634	)	$	(900	)	$	19,468
Core deposits	61,504		(37,562		)	—			23,942
Other	4,087		(2,013		)	—			2,074
Total other intangible assets	$	138,593	$	(92,209	)	$	(900	)	$	45,484
December 31, 2015
Loan servicing rights	$	75,932	$	(59,251	)	$	(289	)	$	16,392
Core deposits	62,714		(31,934		)	—			30,780
Other	4,374		(2,664		)	—			1,710
Total other intangible assets	$	143,020	$	(93,849	)	$	(289	)	$	48,882

Schedule of Change in Loan Servicing Rights

The following table summarizes the change in loan servicing rights during the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Loan servicing rights
Balance at beginning of year	$	16,681		$	20,446		$	26,068
Origination of loan servicing rights	8,479			1,696			1,065
Amortization expense	(4,792		)	(5,461		)	(6,687		)
Balance at end of year	$	20,368		$	16,681		$	20,446
Valuation allowance
Balance at beginning of year	$	(289	)	$	(592	)	$	(504	)
Impairment adjustment	(611		)	303			(88		)
Balance at end of year	$	(900	)	$	(289	)	$	(592	)
Balance at end of year, net of valuation allowance	$	19,468		$	16,392		$	19,854

Estimated Future Amortization Expense

The following table presents the estimated amortization expense of other intangible assets over the next five-year period:

Year	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2017	$	4,888	$	4,842	$	280
2018	3,989		4,215		249
2019	3,101		3,671		235
2020	2,417		3,127		220
2021	1,771		2,582		206

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Deposits (Tables)

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

Scheduled Maturities of Time Deposits

The scheduled maturities of time deposits as of December 31, 2016 are as follows:

Year	Amount
	(in thousands)
2017	$	2,122,906
2018	473,924
2019	98,763
2020	147,548
2021	162,687
Thereafter	133,043
Total time deposits	$	3,138,871

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Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of Short-Term Borrowings

Short-term borrowings at December 31, 2016 and 2015 consisted of the following:

	2016		2015
	(in thousands)
Securities sold under agreements to repurchase	$	298,960	$	500,991
Federal funds purchased	—		50,000
FHLB advances	782,000		526,000
Total short-term borrowings	$	1,080,960	$	1,076,991

Schedule of Long-Term Borrowings

Long-term borrowings at December 31, 2016 and 2015 consisted of the following:

	2016		2015
	(in thousands)
FHLB advances, net (1)	$	1,031,666	$	1,272,591
Securities sold under agreements to repurchase	165,000		307,500
Subordinated debt, net (2)	236,731		230,573
Other	509		64
Total long-term borrowings	$	1,433,906	$	1,810,728

(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $18.3 million and $3.6 million at December 31, 2016 and 2015, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $1.9 million and $2.2 million at December 31, 2016 and 2015, respectively.

Schedule of FHLB Repayment

The long-term FHLB advances at December 31, 2016 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2017	$	10,000
2021	840,000
Thereafter	200,000
Total long-term FHLB advances	$	1,050,000

Schedule of Repayment of Long-Term Borrowings for Securities Sold Under Agreements to Repurchase

The long-term repos at December 31, 2016 are scheduled for contractual balance repayments as follows:

Year	Amount
	(in thousands)
2017	$	65,000
2018	50,000
Thereafter	50,000
Total long-term securities sold under agreements to repurchase	$	165,000

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Junior Subordinated Debentures Issued to Capital Trusts (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of Outstanding Junior Subordinated Debentures and Related Trust Preferred Securities Issued by Each Trust

The table below summarizes the outstanding junior subordinated debentures and the related trust preferred securities issued by each trust as of December 31, 2016 and 2015:

	GCB Capital Trust III			State Bancorp Capital Trust I		State Bancorp Capital Trust II
	($ in thousands)
Junior Subordinated Debentures:
December 31, 2016
Carrying value (1)	$	24,777		$	8,724	$	8,076
Contractual principal balance	24,743			10,310		10,310
December 31, 2015
Carrying value (1)	$	24,846		$	8,624	$	7,944
Contractual principal balance	24,743			10,310		10,310
Annual interest rate (2)	6.96		%	3-month LIBOR+3.45%		3-month LIBOR+2.85%
Stated maturity date	July 30, 2037			November 7, 2032		January 23, 2034
Initial call date	July 30, 2017			November 7, 2007		January 23, 2009
Trust Preferred Securities:
December 31, 2016 and 2015
Face value	$	24,000		$	10,000	$	10,000
Annual distribution rate (2)	6.96		%	3-month LIBOR+3.45%		3-month LIBOR+2.85%
Issuance date	July 2, 2007			October 29, 2002		December 19, 2003
Distribution dates (3)	Quarterly			Quarterly		Quarterly

(1) The carrying values include unamortized purchase accounting adjustments at December 31, 2016 and 2015.

(2) Interest on GCB Capital Trust III is fixed until July 30, 2017, then resets to 3-month LIBOR plus 1.4 percent. The annual interest rate for all of the junior subordinated debentures and related trust preferred securities excludes the effect of the purchase accounting adjustments.

(3) All cash distributions are cumulative.

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Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Change in Projected Benefit Obligation

The following table sets forth the change in the projected benefit obligation, the change in fair value of plan assets and the funded status and amounts recognized in Valley’s consolidated financial statements for the qualified and non-qualified plans at December 31, 2016 and 2015:

	2016			2015
	(in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	157,661		$	176,339
Interest cost	6,681			6,889
Actuarial loss (gain)	2,047			(17,177		)
Benefits paid	(5,546		)	(8,390		)
Projected benefit obligation at end of year	$	161,306		$	157,661
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	189,414		$	194,646
Actual return on plan assets	22,424			2,875
Employer contributions	347			283
Benefits paid	(5,546		)	(8,390		)
Fair value of plan assets at end of year*	$	206,639		$	189,414
Funded status of the plan
Asset recognized	$	45,333		$	31,753
Accumulated benefit obligation	161,306			157,661

*    Includes accrued interest receivable of $606 thousand and $607 thousand as of December 31, 2016 and 2015, respectively.

Component of Net Periodic Pension Expense

Valley expects to recognize approximately $367 thousand of the net actuarial loss reported in the following table as of December 31, 2016 as a component of net periodic pension expense during 2017.

	2016			2015
	(in thousands)
Net actuarial loss	$	30,140		$	36,271
Deferred tax benefit	(12,647		)	(15,118		)
Total	$	17,493		$	21,153

Accumulated Benefit Obligation in Excess of Plan

The non-qualified plans had a projected benefit obligation, accumulated benefit obligation, and fair value of plan assets as follows:

	2016		2015
	(in thousands)
Projected benefit obligation	$	18,286	$	17,411
Accumulated benefit obligation	18,286		17,411
Fair value of plan assets	—		—

Components of Net Periodic Pension Expense for Qualified and Non-Qualified Plans

The net periodic pension income for the qualified and non-qualified plans included the following components for the years ended December 31, 2016, 2015 and 2014:

	2016			2015			2014
	(in thousands)
Interest cost	$	6,681		$	6,889		$	6,897
Expected return on plan assets	(14,539		)	(14,023		)	(12,967		)
Amortization of net loss	294			790			226
Total net periodic pension income	$	(7,564	)	$	(6,344	)	$	(5,844	)

Qualified and Non-Qualified Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income or Loss

Other changes in the qualified and non-qualified plan assets and benefit obligations recognized in other comprehensive income/loss for the years ended December 31, 2016 and 2015 were as follows:

	2016			2015
	(in thousands)
Net gain	$	(5,837	)	$	(6,030	)
Prior service cost	462			—
Amortization of actuarial loss	(294		)	(790		)
Total recognized in other comprehensive income	$	(5,669	)	$	(6,820	)
Total recognized in net periodic pension income and other comprehensive income/loss (before tax)	$	(13,233	)	$	(13,163	)

Schedule of Expected Future Benefit Payments

The benefit payments, which reflect expected future service, as appropriate, expected to be paid in future years are presented in the following table:

Year	Amount
	(in thousands)
2017	$	6,847
2018	7,206
2019	7,744
2020	8,081
2021	8,423
Thereafter	45,462

Weighted Average Discount Rate

The weighted average discount rate, expected long-term rate of return on assets and rate of compensation increase used in determining Valley’s pension expense for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016		2015		2014
Discount rate	4.33	%	4.02	%	4.89	%
Expected long-term return on plan assets	7.50	%	7.50	%	7.50	%
Rate of compensation increase	N/A		N/A		N/A

Fair Value Measurement

The following table presents the qualified plan weighted-average asset allocations by asset category that are measured at fair value on a recurring basis by level within the fair value hierarchy under ASC Topic 820. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 3 for further details regarding the fair value hierarchy.

					Fair Value Measurements at Reporting Date Using:
	% of Total Investments		December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	($ in thousands)
Assets:
Investments:
Equity securities	43	%	$	88,250	$	88,250	$	—	$	—
Corporate bonds	21		43,152		—		43,152		—
Mutual funds	19		38,975		38,975		—		—
U.S. Treasury securities	12		24,910		24,910		—		—
Cash and money market funds	5		10,402		10,402		—		—
U.S. government agency securities	*		344		—		344		—
Total investments	100	%	$	206,033	$	162,537	$	43,496	$	—

					Fair Value Measurements at Reporting Date Using:
	% of Total Investments		December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	($ in thousands)
Assets:
Investments:
Equity securities	41	%	$	76,578	$	76,578	$	—	$	—
Corporate bonds	22		41,786		—		41,786		—
Mutual funds	19		36,052		36,052		—		—
U.S. Treasury securities	12		22,130		2,213		—		—
Cash and money market funds	6		11,913		11,913		—		—
U.S. government agency securities	*		348		—		348		—
Total investments	100	%	$	188,807	$	126,756	$	42,134	$	—

* Represents less than one percent of total investments.

Changes in Restricted Stock Awards Outstanding

The following table sets forth the changes in restricted stock awards outstanding for the years ended December 31, 2016, 2015 and 2014:

	Restricted Stock Awards Outstanding
	2016		2015		2014
Outstanding at beginning of year	2,755,138		2,574,616		1,709,312
Granted	544,307		886,427		1,488,960
Vested	(1,050,293	)	(559,958	)	(524,663	)
Forfeited	(148,336	)	(145,947	)	(98,993	)
Outstanding at end of year	2,100,816		2,755,138		2,574,616

Stock Options Activity

The following table summarizes stock options activity as of December 31, 2016, 2015 and 2014 and changes during the years ended on those dates:

	2016				2015				2014
			Weighted Average Exercise				Weighted Average Exercise				Weighted Average Exercise
Stock Options	Shares		Price		Shares		Price		Shares		Price
Outstanding at beginning of year	1,383,365		$	16	1,828,591		$	17	2,322,593		$	17
Granted	—		—		100,000		11		—		—
Forfeited or expired	(650,876	)	18		(545,226	)	18		(494,002	)	19
Outstanding at end of year	732,489		14		1,383,365		16		1,828,591		17
Exercisable at year-end	632,489		14		1,283,365		16		1,828,591		17

Stock Options Outstanding

The following table summarizes information about stock options outstanding and exercisable at December 31, 2016:

Options Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price
$10-14	134,681	3.6	$	12
14-15	445,654	1.1	15
15-17	3,388	1.1	16
18-19	48,766	0.1	19
	632,489	1.6	14

Changes in Director's Restricted Stock Awards

The following table sets forth the changes in director’s restricted stock awards outstanding for the years ended December 31, 2016, 2015 and 2014:

	Restricted Stock Awards Outstanding
	2016		2015		2014
Outstanding at beginning of year	80,117		98,086		121,792
Vested	(24,607	)	(17,969	)	(23,706	)
Outstanding at end of year	55,510		80,117		98,086

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Summary of Income Tax Expense

Income tax expense for the years ended December 31, 2016, 2015 and 2014 consisted of the following:

	2016		2015			2014
	(in thousands)
Current expense (benefit):
Federal	$	25,176	$	7,978		$	25,156
State	12,904		(493		)	(5,549		)
	38,080		7,485			19,607
Deferred expense:
Federal	10,658		(7,539		)	(13,888		)
State	16,496		23,992			25,343
	27,154		16,453			11,455
Total income tax expense	$	65,234	$	23,938		$	31,062

Summary of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to the significant portions of the deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:

	2016		2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	47,485	$	44,382
Depreciation	12,432		15,661
Employee benefits	16,121		16,104
Investment securities, including other-than-temporary impairment losses	17,272		18,697
Net operating loss carryforwards	46,667		57,722
Purchase accounting	33,172		40,585
Other	22,183		21,310
Total deferred tax assets	195,332		214,461
Deferred tax liabilities:
Pension plans	24,575		18,861
Other investments	20,831		15,720
Other	20,418		21,449
Total deferred tax liabilities	65,824		56,030
Net deferred tax asset (included in other assets)	$	129,508	$	158,431

Summary of Income Tax Reconciliation

Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 35 percent for the years ended December 31, 2016, 2015 and 2014 were as follows:

	2016			2015			2014
	(in thousands)
Federal income tax at expected statutory rate	$	81,683		$	44,413		$	51,532
Increase (decrease) due to:
State income tax expense, net of federal tax effect	19,197			15,274			12,866
Tax-exempt interest, net of interest incurred to carry tax-exempt securities	(5,308		)	(4,864		)	(4,406		)
Bank owned life insurance	(2,343		)	(2,385		)	(2,237		)
Tax credits from securities and other investments	(25,954		)	(28,988		)	(20,555		)
Reduction in reserve for uncertainties	—			—			(6,971		)
Other, net	(2,041		)	488			833
Income tax expense	$	65,234		$	23,938		$	31,062

Summary of Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of Valley’s gross unrecognized tax benefits for 2016, 2015 and 2014 are presented in the table below:

	2016			2015		2014
	(in thousands)
Beginning balance	$	19,892		$	18,647	$	30,713
Additions based on tax positions related to prior years	3,958			1,245		1,408
Settlements with taxing authorities	(4,820		)	—		(9,050		)
Reductions due to expiration of statute of limitations	(2,886		)	—		(4,424		)
Ending balance	$	16,144		$	19,892	$	18,647

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Tax Credit Investments (Tables)

12 Months Ended

Dec. 31, 2016

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 December 31, 2016 and 2015:

	December 31,
	2016		2015
	(in thousands)
Other Assets:
Affordable housing tax credit investments, net	$	29,567	$	32,094
Other tax credit investments, net	44,763		70,681
Total tax credit investments, net	$	74,330	$	102,775
Other Liabilities:
Unfunded affordable housing tax credit commitments	$	4,850	$	7,330
Unfunded other tax credit commitments	7,276		12,545
Total unfunded tax credit commitments	$	12,126	$	19,875

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 years ended December 31, 2016, 2015 and 2014:

	2016		2015		2014
	(in thousands)
Components of Income Tax Expense:
Affordable housing tax credits and other tax benefits	$	5,013	$	4,709	$	5,296
Other tax credit investment credits and tax benefits	33,294		23,877		14,357
Total reduction in income tax expense	$	38,307	$	28,586	$	19,653
Amortization of Tax Credit Investments:
Affordable housing tax credit investment losses	$	2,077	$	2,594	$	3,184
Affordable housing tax credit investment impairment losses	450		1,321		3,211
Other tax credit investment losses	790		1,079		2,359
Other tax credit investment impairment losses	31,427		22,318		15,442
Total amortization of tax credit investments recorded in non-interest expense	$	34,744	$	27,312	$	24,196

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Minimum Aggregate Lease Payments

Minimum aggregate lease payments for the remainder of the lease terms are as follows:

			Sublease
Year	Gross Rents		Rents		Net Rents
	(in thousands)
2017	$	27,256	$	2,888	$	24,368
2018	26,863		2,260		24,603
2019	26,361		2,125		24,236
2020	26,458		2,059		24,399
2021	25,754		1,972		23,782
Thereafter	281,310		9,631		271,679
Total lease commitments	$	414,002	$	20,935	$	393,067

Summary of Financial Instruments with Off-Balance Sheet Risk

The following table provides a summary of financial instruments with off-balance sheet risk at December 31, 2016 and 2015:

	2016		2015
	(in thousands)
Commitments under commercial loans and lines of credit	$	2,855,326	$	2,554,146
Home equity and other revolving lines of credit	904,999		822,506
Outstanding commercial mortgage loan commitments	560,929		724,236
Standby letters of credit	217,695		198,253
Commitments to sell loans	147,250		41,860
Outstanding residential mortgage loan commitments	108,063		54,293
Commitments under unused lines of credit—credit card	49,715		50,532
Commercial letters of credit	4,960		4,249

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:

	December 31, 2016						December 31, 2015
	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 caps and swaps	$	802	$	15,641	$	707,000	$	1,284	$	24,823	$	907,000
Fair value hedge interest rate swaps	—		986		7,999		7,658		1,306		133,209
Total derivatives designated as hedging instruments	$	802	$	16,627	$	714,999	$	8,942	$	26,129	$	1,040,209
Derivatives not designated as hedging instruments:
Interest rate swaps and embedded derivatives	$	25,285	$	25,284	$	1,075,722	$	24,628	$	24,623	$	654,134
Mortgage banking derivatives	2,968		2,166		246,583		204		92		73,438
Total derivatives not designated as hedging instruments	$	28,253	$	27,450	$	1,322,305	$	24,832	$	24,715	$	727,572

Gains (Losses) Related to Interest Rate Derivatives Designated as Hedges of Cash Flows

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

	2016			2015			2014
	(in thousands)
Amount of loss reclassified from accumulated other comprehensive loss to interest expense	$	(13,034	)	$	(7,075	)	$	(6,663	)
Amount of loss recognized in other comprehensive income	(4,035		)	(12,360		)	(20,910		)

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:

	2016			2015			2014
	(in thousands)
Derivative—interest rate swaps:
Interest income	$	320		$	176		$	(13	)
Interest expense	6,670			1,400			9,380
Hedged item—loans, deposits and long-term borrowings:
Interest income	$	(320	)	$	(176	)	$	13
Interest expense	(6,645		)	(1,473		)	(9,449		)

Gains (Losses) Related to Derivative Instruments Not Designated as Hedging Instruments

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

	2016		2015		2014
	(in thousands)
Non-designated hedge interest rate derivatives
Other non-interest expense	$	690	$	158	$	(214	)

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Balance Sheet Offsetting (Tables)

12 Months Ended

Dec. 31, 2016

Offsetting [Abstract]

Summary of Valley's Financial Instruments that are Eligible for Offset, 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 December 31, 2016 and 2015.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral				Net Amount
	(in thousands)
December 31, 2016
Assets:
Interest rate caps and swaps	$	26,087	$	—	$	26,087	$	(5,268	)	$	—			$	20,819
Liabilities:
Interest rate caps and swaps	$	41,911	$	—	$	41,911	$	(5,268	)	$	(36,643	)	(1)	$	—
Repurchase agreements	165,000		—		165,000		—			(165,000		)	(2)	—
Total	$	206,911	$	—	$	206,911	$	(5,268	)	$	(201,643	)		$	—
December 31, 2015
Assets:
Interest rate caps and swaps	$	33,570	$	—	$	33,570	$	(8,942	)	$	—			$	24,628
Liabilities:
Interest rate caps and swaps	$	50,752	$	—	$	50,752	$	(8,942	)	$	(41,810	)	(1)	$	—
Repurchase agreements	475,000		—		475,000		—			(475,000		)	(2)	—
Total	$	525,752	$	—	$	525,752	$	(8,942	)	$	(516,810	)		$	—

(1) Represents the amount of collateral posted with counterparties that offsets net liabilities at December 31, 2016 and 2015, respectively. Actual cash collateral posted with counterparties totaled $52.4 million and $53.0 million at December 31, 2016 and 2015, respectively.

(2) Represents the fair value of non-cash pledged investment securities.

Summary of Valley's Financial Instruments that are Eligible for Offset, 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 December 31, 2016 and 2015.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral				Net Amount
	(in thousands)
December 31, 2016
Assets:
Interest rate caps and swaps	$	26,087	$	—	$	26,087	$	(5,268	)	$	—			$	20,819
Liabilities:
Interest rate caps and swaps	$	41,911	$	—	$	41,911	$	(5,268	)	$	(36,643	)	(1)	$	—
Repurchase agreements	165,000		—		165,000		—			(165,000		)	(2)	—
Total	$	206,911	$	—	$	206,911	$	(5,268	)	$	(201,643	)		$	—
December 31, 2015
Assets:
Interest rate caps and swaps	$	33,570	$	—	$	33,570	$	(8,942	)	$	—			$	24,628
Liabilities:
Interest rate caps and swaps	$	50,752	$	—	$	50,752	$	(8,942	)	$	(41,810	)	(1)	$	—
Repurchase agreements	475,000		—		475,000		—			(475,000		)	(2)	—
Total	$	525,752	$	—	$	525,752	$	(8,942	)	$	(516,810	)		$	—

(1) Represents the amount of collateral posted with counterparties that offsets net liabilities at December 31, 2016 and 2015, respectively. Actual cash collateral posted with counterparties totaled $52.4 million and $53.0 million at December 31, 2016 and 2015, respectively.

(2) Represents the fair value of non-cash pledged investment securities.

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Regulatory and Capital Requirements (Tables)

12 Months Ended

Dec. 31, 2016

Banking and Thrift [Abstract]

Schedule of Actual Capital Positions and Ratios under Banking Regulations

The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under the Basel III risk-based capital guidelines at December 31, 2016 and 2015:

	Actual				Minimum Capital Requirements				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	($ in thousands)
As of December 31, 2016
Total Risk-based Capital
Valley	$	2,084,531	12.15	%	$	1,480,006	8.625	%	N/A		N/A
Valley National Bank	2,023,857		11.82		1,476,767		8.625		$	1,712,193	10.00	%
Common Equity Tier 1 Capital
Valley	1,590,825		9.27		879,424		5.125		N/A		N/A
Valley National Bank	1,807,201		10.55		877,499		5.125		1,112,926		6.50
Tier 1 Risk-based Capital
Valley	1,698,767		9.90		1,136,816		6.625		N/A		N/A
Valley National Bank	1,807,201		10.55		1,134,328		6.625		1,369,755		8.00
Tier 1 Leverage Capital
Valley	1,698,767		7.74		878,244		4.00		N/A		N/A
Valley National Bank	1,807,201		8.25		876,026		4.00		1,095,032		5.00
As of December 31, 2015
Total Risk-based Capital
Valley	$	1,910,304	12.02	%	$	1,271,171	8.00	%	N/A		N/A
Valley National Bank	1,826,420		11.53		1,266,942		8.00		$	1,583,677	10.00	%
Common Equity Tier 1 Capital
Valley	1,431,973		9.01		715,034		4.50		N/A		N/A
Valley National Bank	1,618,053		10.22		712,655		4.50		1,029,390		6.50
Tier 1 Risk-based Capital
Valley	1,543,937		9.72		953,378		6.00		N/A		N/A
Valley National Bank	1,618,053		10.22		950,206		6.00		1,266,942		8.00
Tier 1 Leverage Capital
Valley	1,543,937		7.90		781,388		4.00		N/A		N/A
Valley National Bank	1,618,053		8.29		780,831		4.00		976,039		5.00

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Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Schedule of Comprehensive Income

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014. Components of other comprehensive income (loss) include changes in net unrealized gains and losses on securities available for sale (including the non-credit portion of other-than-temporary impairment charges relating to certain securities during the period); unrealized gains and losses on derivatives used in cash flow hedging relationships; and the pension benefit adjustment for the unfunded portion of various employee, officer and director pension plans.

	2016									2015									2014
	Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax
	(in thousands)
Unrealized gains and losses on available for sale (AFS) securities
Net (losses) gains arising during the period	$	(7,294	)	$	3,001		$	(4,293	)	$	(3,458	)	$	1,458		$	(2,000	)	$	33,329		$	(13,931	)	$	19,398
Less reclassification adjustment for net gains included in net income (1)	(777		)	312			(465		)	(2,487		)	1,041			(1,446		)	(745		)	312			(433		)
Net change	(8,071		)	3,313			(4,758		)	(5,945		)	2,499			(3,446		)	32,584			(13,619		)	18,965
Non-credit impairment losses on securities available for sale and held to maturity
Net change in non-credit impairment losses on securities	719			(302		)	417			(416		)	175			(241		)	2,299			(965		)	1,334
Less reclassification adjustment for accretion of credit impairment losses included in net income (2)	(921		)	382			(539		)	(728		)	304			(424		)	(661		)	278			(383		)
Net change	(202		)	80			(122		)	(1,144		)	479			(665		)	1,638			(687		)	951
Unrealized gains and losses on derivatives (cash flow hedges)
Net (losses) gains arising during the period	(4,035		)	1,574			(2,461		)	(12,360		)	5,121			(7,239		)	(20,910		)	8,763			(12,147		)
Less reclassification adjustment for net losses included in net income (3)	13,034			(5,393		)	7,641			7,075			(2,948		)	4,127			6,663			(2,777		)	3,886
Net change	8,999			(3,819		)	5,180			(5,285		)	2,173			(3,112		)	(14,247		)	5,986			(8,261		)
Defined benefit pension plan
Net gains (losses) arising during the period	5,837			(2,539		)	3,298			6,030			(2,586		)	3,444			(27,902		)	11,695			(16,207		)
Amortization of prior service cost (4)	(300		)	119			(181		)	206			(89		)	117			305			(128		)	177
Amortization of net loss (4)	294			(109		)	185			790			(328		)	462			226			(94		)	132
Net change	5,831			(2,529		)	3,302			7,026			(3,003		)	4,023			(27,371		)	11,473			(15,898		)
Total other comprehensive income (loss)	$	6,557		$	(2,955	)	$	3,602		$	(5,348	)	$	2,148		$	(3,200	)	$	(7,396	)	$	3,153		$	(4,243	)

(1) Included in gains on securities transactions, net.

(2) Included in interest and dividends on investment securities (taxable).

(3) Included in interest expense.

(4) Included in the computation of net periodic pension cost. See Note 12 for details.

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 years ended December 31, 2016, 2015 and 2014:

	Components of Accumulated Other Comprehensive Loss												Total Accumulated Other Comprehensive Loss
	Unrealized Gains and Losses on AFS Securities			Non-credit Impairment Losses on Securities			Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan
	(in thousands)
Balance-December 31, 2013	$	(20,855	)	$	(806	)	$	(6,271	)	$	(10,320	)	$	(38,252	)
Other comprehensive income (loss) before reclassifications	19,398			1,334			(12,147		)	(16,207		)	(7,622		)
Amounts reclassified from other comprehensive income (loss)	(433		)	(383		)	3,886			309			3,379
Other comprehensive income (loss), net	18,965			951			(8,261		)	(15,898		)	(4,243		)
Balance-December 31, 2014	(1,890		)	145			(14,532		)	(26,218		)	(42,495		)
Other comprehensive (loss) income before reclassifications	(2,000		)	(241		)	(7,239		)	3,444			(6,036		)
Amounts reclassified from other comprehensive (loss) income	(1,446		)	(424		)	4,127			579			2,836
Other comprehensive (loss) income, net	(3,446		)	(665		)	(3,112		)	4,023			(3,200		)
Balance-December 31, 2015	(5,336		)	(520		)	(17,644		)	(22,195		)	(45,695		)
Other comprehensive (loss) income before reclassifications	(4,293		)	417			(2,461		)	3,298			(3,039		)
Amounts reclassified from other comprehensive (loss) income	(465		)	(539		)	7,641			4			6,641
Other comprehensive (loss) income, net	(4,758		)	(122		)	5,180			3,302			3,602
Balance-December 31, 2016	$	(10,094	)	$	(642	)	$	(12,464	)	$	(18,893	)	$	(42,093	)

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Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Financial Data

	Quarters Ended 2016
	March 31		June 30		September 30		December 31
	(in thousands, except for share data)
Interest income	$	185,597	$	189,028	$	191,203	$	201,095
Interest expense	37,444		37,573		37,057		36,700
Net interest income	148,153		151,455		154,146		164,395
Provision for credit losses	800		1,429		5,840		3,800
Non-interest income:
Gains on sales of loans, net	1,795		3,105		4,823		12,307
Other non-interest income	19,653		21,159		20,030		20,353
Non-interest expense:
Loss on extinguishment of debt	—		315		—		—
Amortization of tax credit investments	7,264		7,646		6,450		13,384
Other non-interest expense	110,961		111,842		106,818		111,445
Income before income taxes	50,576		54,487		59,891		68,426
Income tax expense	14,389		15,460		17,049		18,336
Net income	36,187		39,027		42,842		50,090
Dividend on preferred stock	1,797		1,797		1,797		1,797
Net income available to common shareholders	34,390		37,230		41,045		48,293
Earnings per common share:
Basic	$	0.14	$	0.15	$	0.16	$	0.19
Diluted	0.14		0.15		$	0.16	0.19
Cash dividends declared per common share	0.11		0.11		0.11		0.11
Weighted average number of common shares outstanding:
Basic	254,075,349		254,381,170		254,473,994		256,422,437
Diluted	254,347,420		254,771,213		254,940,307		256,952,036

	Quarters Ended 2015
	March 31		June 30		September 30		December 31
	(in thousands, except for share data)
Interest income	$	170,985	$	175,754	$	174,690	$	185,594
Interest expense	38,899		39,577		40,730		37,548
Net interest income	132,086		136,177		133,960		148,046
Provision for credit losses	—		4,500		94		3,507
Non-interest income:
Gains on sales of loans, net	598		422		2,014		1,211
Other non-interest income	18,047		19,778		18,905		22,827
Non-interest expense:
Loss on extinguishment of debt	—		—		—		51,129
Amortization of tax credit investments	4,496		4,511		5,224		13,081
Other non-interest expense	103,622		102,901		103,428		110,683
Income before income taxes	42,613		44,465		46,133		(6,316		)
Income tax expense	12,272		12,474		10,179		(10,987		)
Net income	30,341		31,991		35,954		4,671
Dividend on preferred stock	—		—		2,017		1,796
Net income available to common shareholders	30,341		31,991		33,937		2,875
Earnings per common share:
Basic	$	0.13	$	0.14	$	0.15	$	0.01
Diluted	0.13		0.14		0.15		0.01
Cash dividends declared per common share	0.11		0.11		0.11		0.11
Weighted average number of common shares outstanding:
Basic	232,338,775		232,565,404		232,737,953		239,916,562
Diluted	232,341,921		232,586,616		232,780,219		239,972,546

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Parent Company Information (Tables)

12 Months Ended

Dec. 31, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Statements of Financial Condition

Condensed Statements of Financial Condition

	December 31,
	2016		2015
	(in thousands)
Assets
Cash	$	68,927	$	63,330
Interest bearing deposits with banks	82		135
Investment securities available for sale	239		806
Investments in and receivables due from subsidiaries	2,591,982		2,398,784
Other assets	36,188		61,365
Total Assets	$	2,697,418	$	2,524,420
Liabilities and Shareholders’ Equity
Dividends payable to shareholders	$	29,477	$	28,054
Long-term borrowings	236,731		230,573
Junior subordinated debentures issued to capital trusts	41,577		41,414
Accrued expenses and other liabilities	12,477		17,288
Shareholders’ equity	2,377,156		2,207,091
Total Liabilities and Shareholders’ Equity	$	2,697,418	$	2,524,420

Schedule of Condensed Statements of Income

Condensed Statements of Income

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Income
Dividends from subsidiary	$	90,000		$	110,000		$	110,000
Income from subsidiary	4,550			2,363			—
Gains on securities transactions, net	239			—			—
Other interest and income	34			211			436
Total Income	94,823			112,574			110,436
Total Expenses	33,604			20,578			11,172
Income before income tax benefit and equity in undistributed (losses) earnings of subsidiary	61,219			91,996			99,264
Income tax benefit	(23,349		)	(21,939		)	(3,245		)
Income before equity in undistributed earnings (losses) of subsidiary	84,568			113,935			102,509
Equity in undistributed earnings (losses) of subsidiary	83,578			(10,978		)	13,663
Net Income	168,146			102,957			116,172
Dividends on preferred stock	7,188			3,813			—
Net Income Available to Common Shareholders	$	160,958		$	99,144		$	116,172

Schedule of Condensed Statements of Cash Flows

Condensed Statements of Cash Flows

	Years Ended December 31,
	2016			2015			2014
	(in thousands)
Cash flows from operating activities:
Net Income	$	168,146		$	102,957		$	116,172
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed (earnings) losses of subsidiary	(83,578		)	10,978			(13,663		)
Depreciation and amortization	—			—			18
Stock-based compensation	10,032			7,575			7,489
Net amortization of premiums and accretion of discounts on securities	163			162			163
Gains on securities transactions, net	(239		)	—			—
Net change in:
Other assets	8,007			(41,452		)	6,632
Accrued expenses and other liabilities	18,381			9,604			(1,851		)
Net cash provided by operating activities	120,912			89,824			114,960
Cash flows from investing activities:
Investment securities available for sale:
Sales	739			49			46
Purchases	—			—			(500		)
Cash and cash equivalents acquired in acquisitions	—			109			14,776
Capital contributions to subsidiary	(106,000		)	(115,000		)	—
Subordinated debt issued by subsidiary	—			(100,000		)	—
Net cash (used in) provided by investing activities	(105,261		)	(214,842		)	14,322
Cash flows from financing activities:
Proceeds from issuance of long-term borrowings, net	—			98,897			—
Proceeds from issuance of preferred stock, net	—			111,590			—
Dividends paid to preferred shareholders	(7,188		)	(3,813		)	—
Dividends paid to common shareholders	(111,813		)	(102,279		)	(88,119		)
Purchase of common shares to treasury	(3,191		)	(2,108		)	(1,688		)
Common stock issued, net	112,085			7,898			5,096
Net cash (used in) provided by financing activities	(10,107		)	110,185			(84,711		)
Net change in cash and cash equivalents	5,544			(14,833		)	44,571
Cash and cash equivalents at beginning of year	63,465			78,298			33,727
Cash and cash equivalents at end of year	$	69,009		$	63,465		$	78,298

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Business Segments (Tables)

12 Months Ended

Dec. 31, 2016

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 years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31, 2016
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	5,081,798		$	11,318,947		$	3,428,567		$	—		$	19,829,312
Interest income	$	176,929		$	509,376		$	89,378		$	(8,760	)	$	766,923
Interest expense	35,175			78,347			23,732			11,520			148,774
Net interest income (loss)	141,754			431,029			65,646			(20,280		)	618,149
Provision for credit losses	905			10,964			—			—			11,869
Net interest income (loss) after provision for credit losses	140,849			420,065			65,646			(20,280		)	606,280
Non-interest income	63,443			3,292			6,694			29,796			103,225
Non-interest expense	62,721			70,145			1,281			341,978			476,125
Internal expense transfer	71,578			160,198			48,475			(280,251		)	—
Income (loss) before income taxes	$	69,993		$	193,014		$	22,584		$	(52,211	)	$	233,380
Return on average interest earning assets (pre-tax) (unaudited)	1.38		%	1.71		%	0.66		%	N/A			1.18		%

	Year Ended December 31, 2015
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	4,764,306		$	9,682,714		$	2,978,484		$	—		$	17,425,504
Interest income	$	170,569		$	463,062		$	81,669		$	(8,277	)	$	707,023
Interest expense	39,787			80,861			24,873			11,233			156,754
Net interest income (loss)	130,782			382,201			56,796			(19,510		)	550,269
Provision for credit losses	1,153			6,948			—			—			8,101
Net interest income (loss) after provision for credit losses	129,629			375,253			56,796			(19,510		)	542,168
Non-interest income	45,306			744			6,815			30,937			83,802
Non-interest expense	59,794			68,156			1,074			370,051			499,075
Internal expense transfer	72,441			146,463			45,460			(264,364		)	—
Income (loss) before income taxes	$	42,700		$	161,378		$	17,077		$	(94,260	)	$	126,895
Return on average interest earning assets (pre-tax) (unaudited)	0.90		%	1.67		%	0.57		%	N/A			0.73		%

	Year Ended December 31, 2014
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets (unaudited)	$	4,122,468		$	7,959,215		$	2,959,100		$	—		$	15,040,783
Interest income	$	154,078		$	399,192		$	91,689		$	(8,356	)	$	636,603
Interest expense	41,343			79,820			29,676			11,007			161,846
Net interest income (loss)	112,735			319,372			62,013			(19,363		)	474,757
Provision for credit losses	438			1,446			—			—			1,884
Net interest income (loss) after provision for credit losses	112,297			317,926			62,013			(19,363		)	472,873
Non-interest income	40,611			(19,624		)	6,392			50,237			77,616
Non-interest expense	59,051			58,142			1,369			284,693			403,255
Internal expense transfer	65,477			126,465			47,060			(239,002		)	—
Income (loss) before income taxes	$	28,380		$	113,695		$	19,976		$	(14,817	)	$	147,234
Return on average interest earning assets (pre-tax) (unaudited)	0.69		%	1.43		%	0.68		%	N/A			0.98		%

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) shares in Millions		1 Months Ended	12 Months Ended
	Jun. 19, 2015	Jun. 30, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Summary Of Significant Accounting Policies [Line Items]
Percentage of preferred stock issued by each REIT - less than			20.00%
Cash reserve or deposits			$ 113,800,000	$ 59,900,000
Allowance for loan losses			114,419,000	106,178,000	$ 102,353,000
FDIC loss-share receivable			7,200,000	8,300,000
OREO and repossessed assets total			10,600,000	19,000,000
Foreclosed assets acquired in FDIC-assisted transactions			588,000	$ 5,000,000
Foreclosed residential real estate properties			1,600,000
Properties for which formal foreclosure proceedings are in process			$ 7,100,000
Anti-dilutive common stock options and warrants			4.0	4.7	6.2
Series A Preferred Stock
Summary Of Significant Accounting Policies [Line Items]
Stock issued, shares	4.6	4.6
Minimum
Summary Of Significant Accounting Policies [Line Items]
Premises and equipment, useful life			3 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Premises and equipment, useful life			40 years
Commercial loans | Minimum
Summary Of Significant Accounting Policies [Line Items]
Number of days past due of loans to be full or partial charged-off			90 days
Commercial loans | Maximum
Summary Of Significant Accounting Policies [Line Items]
Number of days past due of loans to be full or partial charged-off			120 days
Residential loans and home equity loans
Summary Of Significant Accounting Policies [Line Items]
Number of days past due of loans to be full or partial charged-off			120 days
Automobile
Summary Of Significant Accounting Policies [Line Items]
Number of days past due of loans to be fully charged-off			120 days
Unsecured consumer loans
Summary Of Significant Accounting Policies [Line Items]
Number of days past due of loans to be fully charged-off			150 days
First United Bancorp, Inc. | Park Avenue Bank Acquisition
Summary Of Significant Accounting Policies [Line Items]
FDIC loss share coverage percentage up to first tranche			95.00%
First United Bancorp, Inc. | Liberty Pointe Bank Acquisition
Summary Of Significant Accounting Policies [Line Items]
FDIC loss share coverage percentage up to first tranche			80.00%
First United Bancorp, Inc. | The Bank Of Miami
Summary Of Significant Accounting Policies [Line Items]
FDIC loss share coverage percentage up to first tranche			80.00%
First United Bancorp, Inc. | Old Harbor Bank
Summary Of Significant Accounting Policies [Line Items]
FDIC loss share coverage percentage up to first tranche			70.00%
PCI Loans
Summary Of Significant Accounting Policies [Line Items]
Allowance for loan losses			$ 0	$ 0
Commercial and industrial
Summary Of Significant Accounting Policies [Line Items]
Allowance for loan losses			50,820,000	48,767,000	$ 43,676,000
Loans evaluated for impairment			250,000
Trust preferred securities
Summary Of Significant Accounting Policies [Line Items]
Impairment charge part of combined amortized cost of the securities			$ 0	$ 0	$ 0

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Summary of Significant Accounting Policies - Calculation of Both Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Earnings Per Common Share:
Net income available to common shareholders	$ 48,293	$ 41,045	$ 37,230	$ 34,390	$ 2,875	$ 33,937	$ 31,991	$ 30,341	$ 160,958	$ 99,144	$ 116,172
Basic weighted-average number of common shares outstanding (in shares)	256,422,437	254,473,994	254,381,170	254,075,349	239,916,562	232,737,953	232,565,404	232,338,775	254,841,571	234,405,909	205,716,293
Plus: Common stock equivalents (in shares)									426,765	31,091	0
Diluted weighted-average number of common shares outstanding (in shares)	256,952,036	254,940,307	254,771,213	254,347,420	239,972,546	232,780,219	232,586,616	232,341,921	255,268,336	234,437,000	205,716,293
Earnings per common share:
Basic (in usd per share)	$ 0.19	$ 0.16	$ 0.15	$ 0.14	$ 0.01	$ 0.15	$ 0.14	$ 0.13	$ 0.63	$ 0.42	$ 0.56
Diluted (in usd per share)	$ 0.19	$ 0.16	$ 0.15	$ 0.14	$ 0.01	$ 0.15	$ 0.14	$ 0.13	$ 0.63	$ 0.42	$ 0.56

XML

Business Combinations (Detail) $ in Thousands				3 Months Ended									12 Months Ended
	Jan. 04, 2016 USD ($)	Dec. 01, 2015 USD ($) Branch shares	Nov. 01, 2014 USD ($) Branch shares	Dec. 31, 2016 USD ($) Branch shares	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) shares	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2016 USD ($) Branch shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($)	Sep. 30, 2014 shares
Business Acquisition [Line Items]
Shares of common stock authorized (in shares) | shares				332,023,233				332,023,233					332,023,233	332,023,233
Charge within income tax expense				$ 18,336	$ 17,049	$ 15,460	$ 14,389	$ (10,987)	$ 10,179	$ 12,474	$ 12,272		$ 65,234	$ 23,938	$ 31,062
Florida
Business Acquisition [Line Items]
Number of branches operated | Branch				31									31
Number of branches closed | Branch													5
Masters Coverage Corp.
Business Acquisition [Line Items]
Total consideration for acquisition	$ 1,400
CNL Bancshares, Inc.
Business Acquisition [Line Items]
Total consideration for acquisition		$ 230,000
Assets acquired		1,600,000
Loans acquired		825,000
Deposits acquired		$ 1,200,000
Conversion ratio for shares issued		0.705
Shares issued in acquisition | shares		20,600,000
Merger expenses													$ 1,800
Charge within income tax expense													$ 3,300
CNL Bancshares, Inc. | Florida
Business Acquisition [Line Items]
Number of branches acquired | Branch		16
First United Bancorp, Inc.
Business Acquisition [Line Items]
Total consideration for acquisition			$ 300,000
Assets acquired			$ 1,700,000
Conversion ratio for shares issued			0.89
Shares issued in acquisition | shares			30,700,000
Merger expenses														$ 2,600
Loans			$ 1,200,000
Total deposits			1,400,000
Cash portion of consideration			$ 8,900
Shares of common stock authorized (in shares) | shares																100,000,000
Charge within income tax expense												$ 7,600
First United Bancorp, Inc. | Florida
Business Acquisition [Line Items]
Number of branches acquired | Branch			20

XML

Fair Value Measurement of Assets and Liabilities - Schedule of Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets
Available for sale	$ 1,297,373	$ 1,506,861
Liabilities
Foreclosed assets	10,600	19,000
Loans held for sale (which consist of residential mortgages) carried at fair value	58,200	16,100
Covered other real estate	300	4,200
U.S. Treasury securities
Assets
Available for sale	49,591	549,473
U.S. government agency securities
Assets
Available for sale	23,041	29,963
Obligations of states and political subdivisions
Assets
Available for sale	119,767	124,966
Residential mortgage-backed securities
Assets
Available for sale	1,015,542	696,428
Trust preferred securities
Assets
Available for sale	8,009	8,404
Corporate and other debt securities
Assets
Available for sale	60,565	77,552
Equity securities
Assets
Available for sale	20,858	20,075
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements
Assets
Available for sale	58,961	568,381
Loans held for sale	0	0
Other assets	0	0
Total assets	58,961	568,381
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
Assets
Available for sale	49,591	549,473
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | U.S. government agency securities
Assets
Available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Obligations of states and political subdivisions
Assets
Available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Residential mortgage-backed securities
Assets
Available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Trust preferred securities
Assets
Available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Corporate and other debt securities
Assets
Available for sale	8,064	17,710
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring fair value measurements | Equity securities
Assets
Available for sale	1,306	1,198
Quoted Prices in Active Markets for Identical Assets (Level 1) | Non-recurring fair value measurements
Liabilities
Collateral dependent impaired 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
Assets
Available for sale	1,226,524	924,687
Loans held for sale	57,708	16,382
Other assets	29,055	33,774
Total assets	1,313,287	974,843
Liabilities
Other liabilities	44,077	50,844
Total liabilities	44,077	50,844
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | U.S. Treasury securities
Assets
Available for sale	0	0
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | U.S. government agency securities
Assets
Available for sale	23,041	29,963
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Obligations of states and political subdivisions
Assets
Available for sale	119,767	124,966
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Residential mortgage-backed securities
Assets
Available for sale	1,005,589	684,777
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Trust preferred securities
Assets
Available for sale	6,074	6,262
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Corporate and other debt securities
Assets
Available for sale	52,501	59,842
Significant Other Observable Inputs (Level 2) | Recurring fair value measurements | Equity securities
Assets
Available for sale	19,552	18,877
Significant Other Observable Inputs (Level 2) | Non-recurring fair value measurements
Liabilities
Collateral dependent impaired loans	0	0
Loan servicing rights	0	0
Foreclosed assets	0	0
Total	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements
Assets
Available for sale	11,888	13,793
Loans held for sale	0	0
Other assets	0	0
Total assets	11,888	13,793
Liabilities
Other liabilities	0	0
Total liabilities	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | U.S. Treasury securities
Assets
Available for sale	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | U.S. government agency securities
Assets
Available for sale	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Obligations of states and political subdivisions
Assets
Available for sale	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Residential mortgage-backed securities
Assets
Available for sale	9,953	11,651
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Trust preferred securities
Assets
Available for sale	1,935	2,142
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Corporate and other debt securities
Assets
Available for sale	0	0
Significant Unobservable Inputs (Level 3) | Recurring fair value measurements | Equity securities
Assets
Available for sale	0	0
Significant Unobservable Inputs (Level 3) | Non-recurring fair value measurements
Liabilities
Collateral dependent impaired loans	5,385	15,427
Loan servicing rights	6,489	2,571
Foreclosed assets	4,532	16,672
Total	16,406	34,670
Fair Value | Recurring fair value measurements
Assets
Available for sale	1,297,373	1,506,861
Loans held for sale	57,708	16,382
Other assets	29,055	33,774
Total assets	1,384,136	1,557,017
Liabilities
Other liabilities	44,077	50,844
Total liabilities	44,077	50,844
Fair Value | Recurring fair value measurements | U.S. Treasury securities
Assets
Available for sale	49,591	549,473
Fair Value | Recurring fair value measurements | U.S. government agency securities
Assets
Available for sale	23,041	29,963
Fair Value | Recurring fair value measurements | Obligations of states and political subdivisions
Assets
Available for sale	119,767	124,966
Fair Value | Recurring fair value measurements | Residential mortgage-backed securities
Assets
Available for sale	1,015,542	696,428
Fair Value | Recurring fair value measurements | Trust preferred securities
Assets
Available for sale	8,009	8,404
Fair Value | Recurring fair value measurements | Corporate and other debt securities
Assets
Available for sale	60,565	77,552
Fair Value | Recurring fair value measurements | Equity securities
Assets
Available for sale	20,858	20,075
Fair Value | Non-recurring fair value measurements
Liabilities
Collateral dependent impaired loans	5,385	15,427
Loan servicing rights	6,489	2,571
Foreclosed assets	4,532	16,672
Total	$ 16,406	$ 34,670

XML

Fair Value Measurement of Assets and Liabilities - Changes in Level 3 Assets Measured at Fair Value on Recurring Basis (Detail) - Available for sale securities - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of the period	$ 13,793	$ 19,309	$ 28,523
Net (losses) gains included in other comprehensive income	(203)	(1,072)	1,648
Sales	0	(2,674)	(7,718)
Settlements	(1,702)	(1,770)	(3,144)
Balance, end of the period	$ 11,888	$ 13,793	$ 19,309

XML

Fair Value Measurement of Assets and Liabilities - Schedule of Quantitative Information about Level 3 Inputs Used to Measure Fair Value of Available for Sale Securities (Detail) - Significant Unobservable Inputs (Level 3) - Discounted Cash Flow - Residential mortgage-backed securities	12 Months Ended
	Dec. 31, 2016
Fair Value Assets Measured On Recurring Basis [Line Items]
Prepayment rate, Weighted Average of unobservable inputs	19.10%
Default rate, Weighted Average of unobservable inputs	9.00%
Loss severity, Weighted Average of unobservable inputs	60.00%
Minimum
Fair Value Assets Measured On Recurring Basis [Line Items]
Prepayment rate, Range of unobservable inputs	15.00%
Default rate, Range of unobservable inputs	3.60%
Loss severity, Range of unobservable inputs	45.60%
Maximum
Fair Value Assets Measured On Recurring Basis [Line Items]
Prepayment rate, Range of unobservable inputs	22.50%
Default rate, Range of unobservable inputs	33.20%
Loss severity, Range of unobservable inputs	66.00%

XML

Fair Value Measurement of Assets and Liabilities - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Security	Dec. 31, 2015 USD ($) Security	Dec. 31, 2014 USD ($)
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair value, unobservable inputs, quantitative information for assets measured on non-recurring basis, impaired loans non-current appraisal discount percentage	6.30%
Impaired collateral dependent loans, charge-offs	$ 4,300	$ 5,400
Collateral dependent impaired loans, recorded investment	8,400	15,800
Specific valuation allowance allocations	3,000	352
Reported net carrying amount of impaired loans	$ 5,400	15,400
Valuation of loan servicing rights, discount rate	8.00%
Net impairment (recovery of impairment) on loan servicing rights	$ 611	(303)	$ 88
Foreclosed assets measured at fair value upon initial recognition	4,500	16,700
Allowance for loan losses, charge-offs	1,700	1,600
Loss due to re-measurement of repossessed assets	$ 1,000	$ 2,000	$ 4,700
Minimum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation of loan servicing rights, prepayment rate	0.00%
Maximum
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation of loan servicing rights, prepayment rate	27.00%
Trust preferred securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Number of available for sale securities (in security) | Security	2	2
Significant Unobservable Inputs (Level 3) | Residential mortgage-backed securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Number of available for sale securities (in security) | Security	4
Significant Unobservable Inputs (Level 3) | Trust preferred securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Number of available for sale securities (in security) | Security	1

XML

Fair Value Measurement of Assets and Liabilities - Carrying Amounts and Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Interest bearing deposits with banks	$ 171,710	$ 170,225
Investment securities held to maturity	1,924,597	1,621,039
Accrued interest receivable	66,816	63,554
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Deposits with stated maturities	3,138,871	3,157,904
Carrying Amount
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	1,925,572	1,596,385
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and due from banks	220,791	243,575
Interest bearing deposits with banks	171,710	170,225
Accrued interest receivable	66,816	63,554
Federal Reserve Bank and Federal Home Loan Bank stock	147,127	145,068
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Deposits without stated maturities	14,591,837	13,095,647
Short-term borrowings	1,080,960	1,076,991
Accrued interest payable	10,675	13,110
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	138,830	138,978
Carrying Amount | Significant Other Observable Inputs (Level 2)
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Deposits with stated maturities	3,138,871	3,157,904
Long-term borrowings	1,433,906	1,810,728
Junior subordinated debentures issued to capital trusts	41,577	41,414
Carrying Amount | Significant Other Observable Inputs (Level 2) | U.S. government agency securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	11,329	12,859
Carrying Amount | Significant Other Observable Inputs (Level 2) | Obligations of states and political subdivisions
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	566,590	504,865
Carrying Amount | Significant Other Observable Inputs (Level 2) | Residential mortgage-backed securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	1,112,460	852,289
Carrying Amount | Significant Other Observable Inputs (Level 2) | Trust preferred securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	59,804	59,785
Carrying Amount | Significant Other Observable Inputs (Level 2) | Corporate and other debt securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	36,559	27,609
Carrying Amount | Significant Unobservable Inputs (Level 3)
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Net loans	17,121,684	15,936,929
Fair Value
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	1,924,597	1,621,039
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and due from banks	220,791	243,575
Interest bearing deposits with banks	171,710	170,225
Accrued interest receivable	66,816	63,554
Federal Reserve Bank and Federal Home Loan Bank stock	147,127	145,068
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Deposits without stated maturities	14,591,837	13,095,647
Short-term borrowings	1,081,751	1,076,991
Accrued interest payable	10,675	13,110
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	147,495	149,483
Fair Value | Significant Other Observable Inputs (Level 2)
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Deposits with stated maturities	3,160,572	3,203,389
Long-term borrowings	1,523,386	1,945,741
Junior subordinated debentures issued to capital trusts	45,785	44,127
Fair Value | Significant Other Observable Inputs (Level 2) | U.S. government agency securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	11,464	13,130
Fair Value | Significant Other Observable Inputs (Level 2) | Obligations of states and political subdivisions
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	577,826	527,263
Fair Value | Significant Other Observable Inputs (Level 2) | Residential mortgage-backed securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	1,102,802	855,272
Fair Value | Significant Other Observable Inputs (Level 2) | Trust preferred securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	47,290	46,437
Fair Value | Significant Other Observable Inputs (Level 2) | Corporate and other debt securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Investment securities held to maturity	37,720	29,454
Fair Value | Significant Unobservable Inputs (Level 3)
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Net loans	$ 16,756,655	$ 15,824,475

XML

Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Investment Securities Held to Maturity (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	$ 1,925,572	$ 1,596,385
Gross Unrealized Gains	31,592	46,217
Gross Unrealized Losses	(32,567)	(21,563)
Fair Value	1,924,597	1,621,039
U.S. Treasury securities
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	138,830	138,978
Gross Unrealized Gains	8,665	10,505
Gross Unrealized Losses	0	0
Fair Value	147,495	149,483
U.S. government agency securities
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	11,329	12,859
Gross Unrealized Gains	135	271
Gross Unrealized Losses	0	0
Fair Value	11,464	13,130
Obligations of states and state agencies
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	252,185	194,547
Gross Unrealized Gains	6,692	10,538
Gross Unrealized Losses	(1,428)	(10)
Fair Value	257,449	205,075
Municipal bonds
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	314,405	310,318
Gross Unrealized Gains	6,438	11,955
Gross Unrealized Losses	(466)	(85)
Fair Value	320,377	322,188
Total obligations of states and political subdivisions
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	566,590	504,865
Gross Unrealized Gains	13,130	22,493
Gross Unrealized Losses	(1,894)	(95)
Fair Value	577,826	527,263
Residential mortgage-backed securities
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	1,112,460	852,289
Gross Unrealized Gains	8,432	11,018
Gross Unrealized Losses	(18,090)	(8,035)
Fair Value	1,102,802	855,272
Trust preferred securities
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	59,804	59,785
Gross Unrealized Gains	40	36
Gross Unrealized Losses	(12,554)	(13,384)
Fair Value	47,290	46,437
Corporate and other debt securities
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	36,559	27,609
Gross Unrealized Gains	1,190	1,894
Gross Unrealized Losses	(29)	(49)
Fair Value	$ 37,720	$ 29,454

XML

Investment Securities - Age of Unrealized Losses and Fair Value of Related Securities Held to Maturity (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value	$ 820,561	$ 263,042
Less than Twelve Months, Unrealized Losses	(16,343)	(3,042)
More than Twelve Months, Fair Value	160,403	219,966
More than Twelve Months, Unrealized Losses	(16,224)	(18,521)
Total, Fair Value	980,964	483,008
Total, Unrealized Losses	(32,567)	(21,563)
Obligations of states and state agencies
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value	98,114	6,837
Less than Twelve Months, Unrealized Losses	(1,428)	(5)
More than Twelve Months, Fair Value	0	1,965
More than Twelve Months, Unrealized Losses	0	(5)
Total, Fair Value	98,114	8,802
Total, Unrealized Losses	(1,428)	(10)
Municipal bonds
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value	27,368	8,814
Less than Twelve Months, Unrealized Losses	(466)	(72)
More than Twelve Months, Fair Value	0	10,198
More than Twelve Months, Unrealized Losses	0	(13)
Total, Fair Value	27,368	19,012
Total, Unrealized Losses	(466)	(85)
Total obligations of states and political subdivisions
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value	125,482	15,651
Less than Twelve Months, Unrealized Losses	(1,894)	(77)
More than Twelve Months, Fair Value	0	12,163
More than Twelve Months, Unrealized Losses	0	(18)
Total, Fair Value	125,482	27,814
Total, Unrealized Losses	(1,894)	(95)
Residential mortgage-backed securities
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value	692,108	244,440
Less than Twelve Months, Unrealized Losses	(14,420)	(2,916)
More than Twelve Months, Fair Value	114,505	162,756
More than Twelve Months, Unrealized Losses	(3,670)	(5,119)
Total, Fair Value	806,613	407,196
Total, Unrealized Losses	(18,090)	(8,035)
Trust preferred securities
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value		0
Less than Twelve Months, Unrealized Losses		0
More than Twelve Months, Fair Value	45,898	45,047
More than Twelve Months, Unrealized Losses	(12,554)	(13,384)
Total, Fair Value	45,898	45,047
Total, Unrealized Losses	(12,554)	(13,384)
Corporate and other debt securities
Schedule of Held-to-Maturity Securities [Line Items]
Less than Twelve Months, Fair Value	2,971	2,951
Less than Twelve Months, Unrealized Losses	(29)	(49)
More than Twelve Months, Fair Value	0	0
More than Twelve Months, Unrealized Losses	0	0
Total, Fair Value	2,971	2,951
Total, Unrealized Losses	$ (29)	$ (49)

XML

Investment Securities - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2016 USD ($) Security	Dec. 31, 2015 USD ($) Security	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Investment Securities [Line Items]
Number of security positions in the securities held to maturity portfolio in an unrealized loss position | Security	132	74
Held to maturity, fair value	$ 1,925,572,000	$ 1,596,385,000
Fair value of investments held to maturity pledged as collateral	$ 968,000,000
Weighted-average remaining expected life of residential mortgage-backed securities held to maturity, years	6 years 8 months
Number of security positions in the securities available for sale portfolio in an unrealized loss position | Security	298	291
Amortized cost	$ 1,315,723,000	$ 1,516,937,000
Available for sale	1,297,373,000	1,506,861,000
Gross unrealized losses	22,416,000	$ 16,312,000
Fair value of securities available for sale pledged as collateral	$ 537,400,000
Weighted-average remaining expected life of residential mortgage-backed securities available for sale, years	8 years 7 months
Corporate and other debt securities
Investment Securities [Line Items]
Number of held-to-maturity securities sold (in security) | Security		1
Held to maturity, fair value			$ 9,800,000
Single Issuer Trust Preferred Security | Non-Rated [Member]
Investment Securities [Line Items]
Number of security positions in the securities held to maturity portfolio in an unrealized loss position | Security	4
Trust preferred securities
Investment Securities [Line Items]
Impairment charge part of combined amortized cost of the securities	$ 0	$ 0		$ 0
Three Private Label Mortgage-Backed Securities
Investment Securities [Line Items]
Other-than-temporarily impaired mortgage-backed securities, amortized cost	10,200,000
Other-than-temporarily impaired mortgage-backed securities, fair value	$ 9,900,000
Number of previously impaired securities (in security) | Security	4
Pooled Trust Preferred Securities
Investment Securities [Line Items]
Number of security positions in the securities available for sale portfolio in an unrealized loss position | Security	2
Amortized cost	$ 10,200,000
Available for sale	$ 8,000,000
Pooled Trust Preferred Securities | Investment Grade
Investment Securities [Line Items]
Number of security positions in the securities available for sale portfolio in an unrealized loss position | Security	1
Gross unrealized losses	$ 1,300,000
Trust preferred securities
Investment Securities [Line Items]
Held to maturity, fair value	59,804,000	59,785,000
Amortized cost	10,164,000	10,458,000
Available for sale	8,009,000	8,404,000
Gross unrealized losses	$ 2,155,000	$ 2,054,000
Number of available for sale securities (in security) | Security	2	2
Other-than-temporarily impaired mortgage-backed securities, amortized cost	$ 2,800,000
Other-than-temporarily impaired mortgage-backed securities, fair value	$ 1,900,000
Number of previously impaired securities (in security) | Security	1
Obligations of states and political subdivisions
Investment Securities [Line Items]
Held to maturity, fair value	$ 566,590,000	$ 504,865,000
Amortized cost	120,741,000	125,002,000
Available for sale	119,767,000	124,966,000
Gross unrealized losses	1,191,000	$ 441,000
Obligations of states and political subdivisions | Other Than Temporarily Impaired Securities
Investment Securities [Line Items]
Amortized cost	20,300,000
Available for sale	$ 20,800,000
Investment carrying value percentage	43.00%
Investment carrying value	$ 686,400,000

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Investment Securities - Contractual Maturities of Debt Securities Held to Maturity (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Amortized Cost
Due in one year	$ 85,139
Due after one year through five years	191,207
Due after five years through ten years	364,471
Due after ten years	172,295
Residential mortgage-backed securities	1,112,460
Amortized Cost	1,925,572	$ 1,596,385
Fair Value
Due in one year	85,139
Due after one year through five years	199,327
Due after five years through ten years	377,665
Due after ten years	159,664
Residential mortgage-backed securities	1,102,802
Total investment securities held to maturity	$ 1,924,597	$ 1,621,039

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Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Investment Securities Available for Sale (Detail) $ in Thousands	Dec. 31, 2016 USD ($) Security	Dec. 31, 2015 USD ($) Security
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 1,315,723	$ 1,516,937
Gross Unrealized Gains	4,066	6,236
Gross Unrealized Losses	(22,416)	(16,312)
Available for sale	1,297,373	1,506,861
U.S. Treasury securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	51,020	551,173
Gross Unrealized Gains	6	4
Gross Unrealized Losses	(1,435)	(1,704)
Available for sale	49,591	549,473
U.S. government agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	22,815	29,316
Gross Unrealized Gains	232	665
Gross Unrealized Losses	(6)	(18)
Available for sale	23,041	29,963
Obligations of states and state agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	40,696	44,285
Gross Unrealized Gains	70	196
Gross Unrealized Losses	(424)	(67)
Available for sale	40,342	44,414
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	80,045	80,717
Gross Unrealized Gains	147	209
Gross Unrealized Losses	(767)	(374)
Available for sale	79,425	80,552
Total obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	120,741	125,002
Gross Unrealized Gains	217	405
Gross Unrealized Losses	(1,191)	(441)
Available for sale	119,767	124,966
Residential mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	1,029,827	701,764
Gross Unrealized Gains	2,061	3,348
Gross Unrealized Losses	(16,346)	(8,684)
Available for sale	$ 1,015,542	$ 696,428
Trust preferred securities
Schedule of Available-for-sale Securities [Line Items]
Number of available for sale securities (in security) | Security	2	2
Amortized cost	$ 10,164	$ 10,458
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(2,155)	(2,054)
Available for sale	8,009	8,404
Corporate and other debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	60,651	78,202
Gross Unrealized Gains	436	1,239
Gross Unrealized Losses	(522)	(1,889)
Available for sale	60,565	77,552
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	20,505	21,022
Gross Unrealized Gains	1,114	575
Gross Unrealized Losses	(761)	(1,522)
Available for sale	$ 20,858	$ 20,075

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Investment Securities - Age of Unrealized Losses and Fair Value of Related Securities (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	$ 942,713	$ 929,411
Less than Twelve Months, Unrealized Losses	(14,532)	(6,522)
More than Twelve Months, Fair Value	186,670	241,111
More than Twelve Months, Unrealized Losses	(7,884)	(9,790)
Total, Fair Value	1,129,383	1,170,522
Total, Unrealized Losses	(22,416)	(16,312)
U.S. Treasury securities
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	48,660	548,538
Less than Twelve Months, Unrealized Losses	(1,435)	(1,704)
More than Twelve Months, Fair Value	0	0
More than Twelve Months, Unrealized Losses	0	0
Total, Fair Value	48,660	548,538
Total, Unrealized Losses	(1,435)	(1,704)
U.S. government agency securities
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	2,530	3,489
Less than Twelve Months, Unrealized Losses	(4)	(5)
More than Twelve Months, Fair Value	4,034	4,736
More than Twelve Months, Unrealized Losses	(2)	(13)
Total, Fair Value	6,564	8,225
Total, Unrealized Losses	(6)	(18)
Obligations of states and state agencies
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	28,628	24,359
Less than Twelve Months, Unrealized Losses	(404)	(67)
More than Twelve Months, Fair Value	753	0
More than Twelve Months, Unrealized Losses	(20)	0
Total, Fair Value	29,381	24,359
Total, Unrealized Losses	(424)	(67)
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	42,573	38,207
Less than Twelve Months, Unrealized Losses	(506)	(128)
More than Twelve Months, Fair Value	11,081	13,551
More than Twelve Months, Unrealized Losses	(261)	(246)
Total, Fair Value	53,654	51,758
Total, Unrealized Losses	(767)	(374)
Total obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	71,201	62,566
Less than Twelve Months, Unrealized Losses	(910)	(195)
More than Twelve Months, Fair Value	11,834	13,551
More than Twelve Months, Unrealized Losses	(281)	(246)
Total, Fair Value	83,035	76,117
Total, Unrealized Losses	(1,191)	(441)
Residential mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	788,030	293,615
Less than Twelve Months, Unrealized Losses	(11,889)	(4,147)
More than Twelve Months, Fair Value	132,718	164,010
More than Twelve Months, Unrealized Losses	(4,457)	(4,537)
Total, Fair Value	920,748	457,625
Total, Unrealized Losses	(16,346)	(8,684)
Trust preferred securities
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value		0
Less than Twelve Months, Unrealized Losses		0
More than Twelve Months, Fair Value	8,009	8,404
More than Twelve Months, Unrealized Losses	(2,155)	(2,054)
Total, Fair Value	8,009	8,404
Total, Unrealized Losses	(2,155)	(2,054)
Corporate and other debt securities
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	32,292	21,203
Less than Twelve Months, Unrealized Losses	(294)	(471)
More than Twelve Months, Fair Value	15,192	36,137
More than Twelve Months, Unrealized Losses	(228)	(1,418)
Total, Fair Value	47,484	57,340
Total, Unrealized Losses	(522)	(1,889)
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	0	0
Less than Twelve Months, Unrealized Losses	0	0
More than Twelve Months, Fair Value	14,883	14,273
More than Twelve Months, Unrealized Losses	(761)	(1,522)
Total, Fair Value	14,883	14,273
Total, Unrealized Losses	$ (761)	$ (1,522)

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Investment Securities - Contractual Maturities of Investments Securities Available for Sale (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Amortized Cost
Due in one year	$ 18,770
Due after one year through five years	73,904
Due after five years through ten years	114,174
Due after ten years	58,543
Total investment securities available for sale	1,315,723
Fair Value
Due in one year	18,654
Due after one year through five years	74,158
Due after five years through ten years	112,063
Due after ten years	56,098
Total investment securities available for sale	1,297,373
Residential mortgage-backed securities
Amortized Cost
Securities without a single maturity date	1,029,827
Fair Value
Securities without a single maturity date	1,015,542
Equity securities
Amortized Cost
Securities without a single maturity date	20,505
Fair Value
Securities without a single maturity date	$ 20,858

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Investment Securities - Changes in Credit Loss Component of Cumulative Other-than-Temporary Impairment Losses on Debt Securities (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance, beginning of period	$ 5,837	$ 8,947	$ 9,990
Accretion of credit loss impairment due to an increase in expected cash flows	(921)	(728)	(661)
Sales	0	(2,382)	(382)
Balance, end of period	$ 4,916	$ 5,837	$ 8,947

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Investment Securities - Gross Gains (Losses) Realized on Sales, Maturities and Other Securities Transactions Included in Earnings (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Investments, Debt and Equity Securities [Abstract]
Gross gains, sales transactions	$ 271	$ 3,274	$ 746
Gross losses, sales transactions	(58)	(947)	(2)
Gains on sales transactions, net	213	2,327	744
Gross gains, maturities and other securities transactions	615	293	10
Gross losses, maturities and other securities transactions	(51)	(133)	(9)
Gains (losses) on maturities and other securities transactions, net	564	160	1
Gains on securities transactions, net	$ 777	$ 2,487	$ 745

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Loans - Schedule of Loan Portfolio Non-Covered and Covered PCI Loans and Non-PCI Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 17,236,103	$ 16,043,107
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,638,195	2,540,491
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	9,544,613	8,179,583
Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	8,719,667	7,424,636
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	824,946	754,947
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,867,918	3,130,541
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,185,377	2,192,492
Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	469,009	511,203
Consumer | Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,139,227	1,239,313
Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	577,141	441,976
Non-PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	15,464,601	13,802,636
Non-PCI Loans | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,357,018	2,156,549
Non-PCI Loans | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	8,338,594	6,677,226
Non-PCI Loans | Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	7,628,328	6,069,532
Non-PCI Loans | Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	710,266	607,694
Non-PCI Loans | Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,684,195	2,912,079
Non-PCI Loans | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,084,794	2,056,782
Non-PCI Loans | Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	376,213	391,809
Non-PCI Loans | Consumer | Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,139,082	1,238,826
Non-PCI Loans | Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	569,499	426,147
PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,771,502	2,240,471
Covered loans	70,400	122,300
PCI Loans | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	281,177	383,942
PCI Loans | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,206,019	1,502,357
PCI Loans | Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,091,339	1,355,104
PCI Loans | Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	114,680	147,253
PCI Loans | Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	183,723	218,462
PCI Loans | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	100,583	135,710
PCI Loans | Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	92,796	119,394
PCI Loans | Consumer | Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	145	487
PCI Loans | Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 7,642	$ 15,829

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Loans - Additional Information (Detail) - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans net of unearned discount and deferred loan fees	$ 15,300,000				$ 3,500,000				$ 15,300,000	$ 3,500,000
Loans	17,236,103,000				16,043,107,000				17,236,103,000	16,043,107,000
Loans transferred to loans held for sale									174,501,000	0	$ 27,329,000
Gains on sales of loans, net	12,307,000	$ 4,823,000	$ 3,105,000	$ 1,795,000	1,211,000	$ 2,014,000	$ 422,000	$ 598,000	22,030,000	4,245,000	1,731,000
Sales of loans									0	0
Net (decrease) increase in expected cash flows									(9,989,000)	57,119,000
FDIC loss-share receivable	$ 7,200,000				8,300,000				7,200,000	8,300,000
Non-interest income, increase (decrease)									$ 1,300,000	3,300,000	20,800,000
Combined loan-to-value ratio home equity loan	75.00%								75.00%
Accrued interest on non-accrual loans									$ 2,100,000	3,500,000	2,200,000
Interest income recognized and classified as non-accrual									207,000	1,300,000	$ 735,000
TDRs not reported as non-accrual loans	$ 85,200,000				77,600,000				85,200,000	77,600,000
Non-performing TDRs	10,600,000				21,000,000				10,600,000	21,000,000
Specific reserves for loan losses									4,800,000	1,400,000
Troubled debt restructuring, charge-offs									$ 0	320,000
Number of days loans placed on non-accrual status									90 days
PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,771,502,000				2,240,471,000				$ 1,771,502,000	2,240,471,000
Covered loans	70,400,000				122,300,000				70,400,000	122,300,000
PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,900,000,000				2,400,000,000				1,900,000,000	2,400,000,000
Credit card
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unsecured loans	7,000,000				7,100,000				7,000,000	7,100,000
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,867,918,000				3,130,541,000				2,867,918,000	3,130,541,000
Loans transferred to loans held for sale		$ 174,500,000
Gains on sales of loans, net	7,300,000
Residential mortgage | PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	183,723,000				218,462,000				183,723,000	218,462,000
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,638,195,000				2,540,491,000				2,638,195,000	2,540,491,000
Unsecured loans	455,500,000				386,600,000				455,500,000	386,600,000
Impaired loans	250,000								250,000
Commercial and industrial | PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	281,177,000				383,942,000				281,177,000	383,942,000
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,185,377,000				2,192,492,000				2,185,377,000	2,192,492,000
Unsecured loans	20,600,000				18,800,000				20,600,000	18,800,000
Consumer | PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 100,583,000				$ 135,710,000				$ 100,583,000	$ 135,710,000

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Loans - Changes in Accretable Yield for Covered Loans (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance, beginning of period	$ 415,179	$ 336,208
Acquisition	0	126,930
Accretion	(107,482)	(105,078)
Net (decrease) increase in expected cash flows	(9,989)	57,119
Other, net	(3,194)	0
Balance, end of period	$ 294,514	$ 415,179

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Loans - Summary of Related Party Loans (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Loans and Leases Receivable, Related Parties [Roll Forward]
Outstanding at beginning of year	$ 191,566
New loans and advances	26,736
Repayments	(52,982)
Outstanding at end of year	$ 165,320

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Loans - Past Due, Non-Accrual and Current Non-Covered Loans by Loan Portfolio Class (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	$ 37,508	$ 62,100
Total Past Due Loans	94,221	88,240
Current Non-PCI Loans	15,370,380	13,714,396
Total Non-PCI Loans	15,464,601	13,802,636
30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	34,878	18,509
60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	18,363	5,575
Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	3,472	2,056
Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	8,465	10,913
Total Past Due Loans	20,322	15,570
Current Non-PCI Loans	2,336,696	2,140,979
Total Non-PCI Loans	2,357,018	2,156,549
Commercial and industrial | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	6,705	3,920
Commercial and industrial | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	5,010	524
Commercial and industrial | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	142	213
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	15,794	31,051
Total Past Due Loans	37,987	38,541
Current Non-PCI Loans	8,300,607	6,638,685
Total Non-PCI Loans	8,338,594	6,677,226
Commercial real estate | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	11,971	4,560
Commercial real estate | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	8,642	2,799
Commercial real estate | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	1,580	131
Commercial real estate | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	15,079	24,888
Total Past Due Loans	30,089	27,703
Current Non-PCI Loans	7,598,239	6,041,829
Total Non-PCI Loans	7,628,328	6,069,532
Commercial real estate | Commercial real estate | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	5,894	2,684
Commercial real estate | Commercial real estate | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	8,642	0
Commercial real estate | Commercial real estate | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	474	131
Commercial real estate | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	715	6,163
Total Past Due Loans	7,898	10,838
Current Non-PCI Loans	702,368	596,856
Total Non-PCI Loans	710,266	607,694
Commercial real estate | Construction | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	6,077	1,876
Commercial real estate | Construction | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	0	2,799
Commercial real estate | Construction | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	1,106	0
Residential mortgage
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	12,075	17,930
Total Past Due Loans	29,185	27,741
Current Non-PCI Loans	2,655,010	2,884,338
Total Non-PCI Loans	2,684,195	2,912,079
Residential mortgage | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	12,005	6,681
Residential mortgage | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	3,564	1,626
Residential mortgage | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	1,541	1,504
Consumer loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	1,174	2,206
Total Past Due Loans	6,727	6,388
Current Non-PCI Loans	2,078,067	2,050,394
Total Non-PCI Loans	2,084,794	2,056,782
Consumer loans | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	4,197	3,348
Consumer loans | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	1,147	626
Consumer loans | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	209	208
Consumer loans | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	1,028	2,088
Total Past Due Loans	2,372	3,507
Current Non-PCI Loans	373,841	388,302
Total Non-PCI Loans	376,213	391,809
Consumer loans | Home equity | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	929	1,308
Consumer loans | Home equity | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	415	111
Consumer loans | Home equity | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	0	0
Consumer loans | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	146	118
Total Past Due Loans	4,249	2,742
Current Non-PCI Loans	1,134,833	1,236,084
Total Non-PCI Loans	1,139,082	1,238,826
Consumer loans | Automobile | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	3,192	1,969
Consumer loans | Automobile | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	723	491
Consumer loans | Automobile | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	188	164
Consumer loans | Other consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	0	0
Total Past Due Loans	106	139
Current Non-PCI Loans	569,393	426,008
Total Non-PCI Loans	569,499	426,147
Consumer loans | Other consumer | 30-59 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	76	71
Consumer loans | Other consumer | 60-89 Days Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	9	24
Consumer loans | Other consumer | Accruing Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans	$ 21	$ 44

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Loans - Impaired Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	$ 36,125	$ 54,928
Recorded Investment With Related Allowance	78,694	77,460
Total Recorded Investment	114,819	132,388
Unpaid Contractual Principal Balance	123,559	145,473
Related Allowance	10,531	8,782
Commercial and industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	3,609	7,863
Recorded Investment With Related Allowance	27,031	17,851
Total Recorded Investment	30,640	25,714
Unpaid Contractual Principal Balance	35,957	33,071
Related Allowance	5,864	3,439
Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	22,936	38,960
Recorded Investment With Related Allowance	39,353	42,970
Total Recorded Investment	62,289	81,930
Unpaid Contractual Principal Balance	64,264	85,650
Related Allowance	3,872	3,671
Commercial real estate | Commercial real estate
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	21,318	30,113
Recorded Investment With Related Allowance	36,974	37,440
Total Recorded Investment	58,292	67,553
Unpaid Contractual Principal Balance	60,267	71,263
Related Allowance	3,612	3,354
Commercial real estate | Construction
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	1,618	8,847
Recorded Investment With Related Allowance	2,379	5,530
Total Recorded Investment	3,997	14,377
Unpaid Contractual Principal Balance	3,997	14,387
Related Allowance	260	317
Residential mortgage
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	8,398	7,842
Recorded Investment With Related Allowance	9,958	14,770
Total Recorded Investment	18,356	22,612
Unpaid Contractual Principal Balance	19,712	24,528
Related Allowance	725	1,377
Consumer
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	1,182	263
Recorded Investment With Related Allowance	2,352	1,869
Total Recorded Investment	3,534	2,132
Unpaid Contractual Principal Balance	3,626	2,224
Related Allowance	70	295
Consumer | Home equity
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	1,182	263
Recorded Investment With Related Allowance	2,352	1,869
Total Recorded Investment	3,534	2,132
Unpaid Contractual Principal Balance	3,626	2,224
Related Allowance	$ 70	$ 295

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Loans - Average Recorded Investment and Interest Income Recognized on Impaired Loans (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 125,941	$ 150,291	$ 155,333
Interest Income Recognized	4,291	4,646	5,010
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	21,340	24,435	26,863
Interest Income Recognized	874	728	812
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	65,423	93,553	95,771
Interest Income Recognized	2,304	2,914	3,035
Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	59,633	77,154	74,256
Interest Income Recognized	2,122	2,380	2,488
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	5,790	16,399	21,515
Interest Income Recognized	182	534	547
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	36,552	28,451	30,485
Interest Income Recognized	1,045	893	1,114
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	2,626	3,852	2,214
Interest Income Recognized	68	111	49
Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	2,626	3,852	2,214
Interest Income Recognized	$ 68	$ 111	$ 49

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Loans - Pre-Modification and Post-Modification Outstanding Recorded Investments (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Contract	Dec. 31, 2015 USD ($) Contract
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	34	33
Pre-Modification Outstanding Recorded Investment	$ 31,354	$ 19,593
Post-Modification Outstanding Recorded Investment	$ 28,872	$ 18,591
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	19	17
Pre-Modification Outstanding Recorded Investment	$ 18,186	$ 8,409
Post-Modification Outstanding Recorded Investment	$ 16,277	$ 6,793
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	7	7
Pre-Modification Outstanding Recorded Investment	$ 11,247	$ 7,414
Post-Modification Outstanding Recorded Investment	$ 10,718	$ 8,100
Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	4	5
Pre-Modification Outstanding Recorded Investment	$ 8,325	$ 6,768
Post-Modification Outstanding Recorded Investment	$ 7,092	$ 6,709
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	3	2
Pre-Modification Outstanding Recorded Investment	$ 2,922	$ 646
Post-Modification Outstanding Recorded Investment	$ 3,626	$ 1,391
Residential mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	7	7
Pre-Modification Outstanding Recorded Investment	$ 1,867	$ 2,659
Post-Modification Outstanding Recorded Investment	$ 1,826	$ 2,603
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts | Contract	1	2
Pre-Modification Outstanding Recorded Investment	$ 54	$ 1,111
Post-Modification Outstanding Recorded Investment	$ 51	$ 1,095

XML

Loans - Troubled Debt Restructurings Subsequently Defaulted (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) Contract	Dec. 31, 2015 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	6	4
Recorded Investment | $	$ 1,210	$ 505
Commercial and industrial
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	0	1
Recorded Investment | $	$ 0	$ 129
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	2	1
Recorded Investment | $	$ 357	$ 87
Residential mortgage
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	4	1
Recorded Investment | $	$ 853	$ 214
Consumer
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	0	1
Recorded Investment | $	$ 0	$ 75

XML

Loans - Risk Category of Loans (Detail) - Non-PCI Loans - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	$ 10,695,612	$ 8,833,775
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	2,357,018	2,156,549
Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	7,628,328	6,069,532
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	710,266	607,694
Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	10,440,996	8,539,636
Pass | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	2,246,457	2,049,752
Pass | Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	7,486,469	5,893,354
Pass | Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	708,070	596,530
Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	102,107	148,624
Special Mention | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	44,316	68,243
Special Mention | Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	57,591	79,279
Special Mention | Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	200	1,102
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	150,913	143,215
Substandard | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	64,649	36,254
Substandard | Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	84,268	96,899
Substandard | Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	1,996	10,062
Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	1,596	2,300
Doubtful | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	1,596	2,300
Doubtful | Commercial real estate | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	0	0
Doubtful | Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	$ 0	$ 0

XML

Loans - Recorded Investment in Loan Classes Based on Payment Activity (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Non-PCI Loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 4,768,989	$ 4,968,861
Non-PCI Loans | Residential mortgage
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,684,195	2,912,079
Non-PCI Loans | Consumer | Home equity
Financing Receivable, Recorded Investment [Line Items]
Total Loans	376,213	391,809
Non-PCI Loans | Consumer | Automobile
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,139,082	1,238,826
Non-PCI Loans | Consumer | Other consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	569,499	426,147
Non-PCI Loans | Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,755,740	4,948,725
Non-PCI Loans | Performing Loans | Residential mortgage
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,672,120	2,894,149
Non-PCI Loans | Performing Loans | Consumer | Home equity
Financing Receivable, Recorded Investment [Line Items]
Total Loans	375,185	389,721
Non-PCI Loans | Performing Loans | Consumer | Automobile
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,138,936	1,238,708
Non-PCI Loans | Performing Loans | Consumer | Other consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	569,499	426,147
Non-PCI Loans | Non-Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,249	20,136
Non-PCI Loans | Non-Performing Loans | Residential mortgage
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,075	17,930
Non-PCI Loans | Non-Performing Loans | Consumer | Home equity
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,028	2,088
Non-PCI Loans | Non-Performing Loans | Consumer | Automobile
Financing Receivable, Recorded Investment [Line Items]
Total Loans	146	118
Non-PCI Loans | Non-Performing Loans | Consumer | Other consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
PCI Loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,771,502	2,240,471
PCI Loans | Residential mortgage
Financing Receivable, Recorded Investment [Line Items]
Total Loans	183,723	218,462
PCI Loans | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	100,583	135,710
PCI Loans | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	281,177	383,942
PCI Loans | Commercial real estate | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,091,339	1,355,104
PCI Loans | Commercial real estate | Construction
Financing Receivable, Recorded Investment [Line Items]
Total Loans	114,680	147,253
PCI Loans | Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,744,491	2,201,846
PCI Loans | Performing Loans | Residential mortgage
Financing Receivable, Recorded Investment [Line Items]
Total Loans	179,793	214,713
PCI Loans | Performing Loans | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	98,469	129,891
PCI Loans | Performing Loans | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	272,483	373,665
PCI Loans | Performing Loans | Commercial real estate | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,080,376	1,342,030
PCI Loans | Performing Loans | Commercial real estate | Construction
Financing Receivable, Recorded Investment [Line Items]
Total Loans	113,370	141,547
PCI Loans | Non-Performing Loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	27,011	38,625
PCI Loans | Non-Performing Loans | Residential mortgage
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,930	3,749
PCI Loans | Non-Performing Loans | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,114	5,819
PCI Loans | Non-Performing Loans | Commercial and industrial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	8,694	10,277
PCI Loans | Non-Performing Loans | Commercial real estate | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	10,963	13,074
PCI Loans | Non-Performing Loans | Commercial real estate | Construction
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,310	$ 5,706

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Allowance for Credit Losses - Summary of Allowance for Credit Losses (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Receivables [Abstract]
Allowance for loan losses	$ 114,419	$ 106,178	$ 102,353
Allowance for unfunded letters of credit	2,185	2,189
Total allowance for credit losses	$ 116,604	$ 108,367

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Allowance for Credit Losses - Summary of Provision for Credit Losses (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Receivables [Abstract]
Provision for loan losses									$ 11,873	$ 7,846	$ 3,445
Provision for unfunded letters of credit									(4)	255	(1,561)
Total provision for credit losses	$ 3,800	$ 5,840	$ 1,429	$ 800	$ 3,507	$ 94	$ 4,500	$ 0	$ 11,869	$ 8,101	$ 1,884

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Allowance for Credit Losses - Summary of Activity in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	$ 106,178	$ 102,353
Loans charged-off	(10,969)	(14,972)
Charged-off loans recovered	7,337	10,951
Net charge-offs	(3,632)	(4,021)
Provision for loan losses	11,873	7,846
Ending balance	114,419	106,178
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	48,767	43,676
Loans charged-off	(5,990)	(7,928)
Charged-off loans recovered	2,852	7,233
Net charge-offs	(3,138)	(695)
Provision for loan losses	5,191	5,786
Ending balance	50,820	48,767
Commercial Real Estate
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	48,006	42,840
Loans charged-off	(650)	(2,790)
Charged-off loans recovered	2,057	1,759
Net charge-offs	1,407	(1,031)
Provision for loan losses	6,438	6,197
Ending balance	55,851	48,006
Residential Mortgage
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	4,625	5,093
Loans charged-off	(866)	(813)
Charged-off loans recovered	774	421
Net charge-offs	(92)	(392)
Provision for loan losses	(831)	(76)
Ending balance	3,702	4,625
Consumer
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	4,780	5,179
Loans charged-off	(3,463)	(3,441)
Charged-off loans recovered	1,654	1,538
Net charge-offs	(1,809)	(1,903)
Provision for loan losses	1,075	1,504
Ending balance	4,046	4,780
Unallocated
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	0	5,565
Loans charged-off	0	0
Charged-off loans recovered	0	0
Net charge-offs	0	0
Provision for loan losses		(5,565)
Ending balance	$ 0	$ 0

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Allowance for Credit Losses - Summary of Allocation of Allowance for Loan Losses and Related Loans by Loan Portfolio Segment Disaggregated Based on Impairment Methodology (Detail) - USD ($)	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment, allowance for loan losses	$ 10,531,000	$ 8,782,000
Collectively evaluated for impairment, allowance for loan losses	103,888,000	97,396,000
Allowance for loan losses	114,419,000	106,178,000	$ 102,353,000
Individually evaluated for impairment	114,819,000	132,388,000
Collectively evaluated for impairment	15,349,782,000	13,670,248,000
Total loans	17,236,103,000	16,043,107,000
Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses	0	0
Total loans	1,771,502,000	2,240,471,000
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment, allowance for loan losses	5,864,000	3,439,000
Collectively evaluated for impairment, allowance for loan losses	44,956,000	45,328,000
Allowance for loan losses	50,820,000	48,767,000	43,676,000
Individually evaluated for impairment	30,640,000	25,714,000
Collectively evaluated for impairment	2,326,378,000	2,130,835,000
Total loans	2,638,195,000	2,540,491,000
Commercial and Industrial | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	281,177,000	383,942,000
Commercial Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment, allowance for loan losses	3,872,000	3,671,000
Collectively evaluated for impairment, allowance for loan losses	51,979,000	44,335,000
Allowance for loan losses	55,851,000	48,006,000	42,840,000
Individually evaluated for impairment	62,289,000	81,930,000
Collectively evaluated for impairment	8,276,305,000	6,595,296,000
Total loans	9,544,613,000	8,179,583,000
Commercial Real Estate | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	1,206,019,000	1,502,357,000
Residential Mortgage
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment, allowance for loan losses	725,000	1,377,000
Collectively evaluated for impairment, allowance for loan losses	2,977,000	3,248,000
Allowance for loan losses	3,702,000	4,625,000	5,093,000
Individually evaluated for impairment	18,356,000	22,612,000
Collectively evaluated for impairment	2,665,839,000	2,889,467,000
Total loans	2,867,918,000	3,130,541,000
Residential Mortgage | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	183,723,000	218,462,000
Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment, allowance for loan losses	70,000	295,000
Collectively evaluated for impairment, allowance for loan losses	3,976,000	4,485,000
Allowance for loan losses	4,046,000	4,780,000	$ 5,179,000
Individually evaluated for impairment	3,534,000	2,132,000
Collectively evaluated for impairment	2,081,260,000	2,054,650,000
Total loans	2,185,377,000	2,192,492,000
Consumer | Loans acquired with discounts related to credit quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 100,583,000	$ 135,710,000

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Premises and Equipment, Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 601,957	$ 587,096
Accumulated depreciation and amortization	(310,777)	(288,153)
Total premises and equipment, net	291,180	298,943
Depreciation and amortization	24,400	21,100	$ 19,500
Land
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	78,116	80,519
Buildings
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	210,012	211,923
Leasehold improvements
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	73,405	70,314
Furniture and equipment
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 240,424	$ 224,340

XML

Goodwill and Other Intangible Assets - Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Goodwill [Roll Forward]
Beginning balance	$ 686,339	$ 575,892
Goodwill from business combinations	4,298	110,447
Ending balance	690,637	686,339
Wealth Management
Goodwill [Roll Forward]
Beginning balance	20,517	20,517
Goodwill from business combinations	701	0
Ending balance	21,218	20,517
Consumer Lending
Goodwill [Roll Forward]
Beginning balance	199,119	168,922
Goodwill from business combinations	984	30,197
Ending balance	200,103	199,119
Commercial Lending
Goodwill [Roll Forward]
Beginning balance	314,260	252,900
Goodwill from business combinations	1,998	61,360
Ending balance	316,258	314,260
Investment Management
Goodwill [Roll Forward]
Beginning balance	152,443	133,553
Goodwill from business combinations	615	18,890
Ending balance	$ 153,058	$ 152,443

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Goodwill from business combinations	$ 4,298,000	$ 110,447,000
Goodwill impairment	0	0	$ 0
Impairment of core deposits and intangibles	0	0	0
Amortization expense - other intangible assets	$ 11,300,000	9,200,000	9,900,000
Core deposits
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period, years	11 years
Core deposits | State Bancorp, Inc.
Finite-Lived Intangible Assets [Line Items]
Core deposits intangibles from acquisition		19,300,000
Other
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period, years	20 years
Intangible assets acquired	$ 660,000
Residential mortgage
Finite-Lived Intangible Assets [Line Items]
Aggregate principal balances of mortgage loans serviced	2,500,000,000	2,100,000,000	2,300,000,000
SBA Loans
Finite-Lived Intangible Assets [Line Items]
Total amount of loans serviced by bank	23,800,000	32,300,000	$ 26,900,000
Wealth Management
Finite-Lived Intangible Assets [Line Items]
Goodwill from business combinations	701,000	$ 0
Segments excluding Wealth Management
Finite-Lived Intangible Assets [Line Items]
Goodwill from business combinations	$ 3,600,000

XML

Goodwill and Other Intangible Assets - Other Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	$ 138,593	$ 143,020
Accumulated Amortization	(92,209)	(93,849)
Valuation Allowance	(900)	(289)
Net Intangible Assets	45,484	48,882
Loan servicing rights
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	73,002	75,932
Accumulated Amortization	(52,634)	(59,251)
Valuation Allowance	(900)	(289)
Net Intangible Assets	19,468	16,392
Core deposits
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	61,504	62,714
Accumulated Amortization	(37,562)	(31,934)
Valuation Allowance	0	0
Net Intangible Assets	23,942	30,780
Other
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	4,087	4,374
Accumulated Amortization	(2,013)	(2,664)
Valuation Allowance	0	0
Net Intangible Assets	$ 2,074	$ 1,710

XML

Goodwill and Other Intangible Assets - Schedule of Change in Loan Servicing Rights (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Goodwill [Roll Forward]
Balance at beginning of year	$ 16,681	$ 20,446	$ 26,068
Origination of loan servicing rights	8,479	1,696	1,065
Amortization expense	(4,792)	(5,461)	(6,687)
Balance at end of year	20,368	16,681	20,446
Balance at beginning of year	(289)	(592)	(504)
Impairment adjustment	(611)	303	(88)
Balance at end of year	(900)	(289)	(592)
Balance at end of year, net of valuation allowance	$ 19,468	$ 16,392	$ 19,854

XML

Goodwill and Other Intangible Assets - Estimated Future Amortization Expense (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Loan servicing rights
Finite-Lived Intangible Assets [Line Items]
2017	$ 4,888
2018	3,989
2019	3,101
2020	2,417
2021	1,771
Core deposits
Finite-Lived Intangible Assets [Line Items]
2017	4,842
2018	4,215
2019	3,671
2020	3,127
2021	2,582
Other
Finite-Lived Intangible Assets [Line Items]
2017	280
2018	249
2019	235
2020	220
2021	$ 206

XML

Deposits - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Banking and Thrift [Abstract]
Certificates of deposit over $100 thousand	$ 1,700.0	$ 1,700.0
Interest expense on time deposits of $100 thousand or more	1.5	4.0	$ 5.9
Deposits from certain directors, executive officers and their affiliates	$ 85.6	$ 57.3

XML

Deposits - Scheduled Maturities of Time Deposits (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
2017	$ 2,122,906
2018	473,924
2019	98,763
2020	147,548
2021	162,687
Thereafter	133,043
Total time deposits	$ 3,138,871	$ 3,157,904

XML

Borrowed Funds - Schedule of Short-Term Borrowings (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Total short-term borrowings	$ 1,080,960	$ 1,076,991
Short-term borrowings
Debt Instrument [Line Items]
Securities sold under agreements to repurchase	298,960	500,991
Federal funds purchased	0	50,000
FHLB advances	782,000	526,000
Total short-term borrowings	$ 1,080,960	$ 1,076,991

XML

Borrowed Funds - Schedule of Long-Term Borrowings (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Total long-term borrowings	$ 1,433,906	$ 1,810,728
Unamortized prepayment penalties and other purchase accounting adjustments	18,300	3,600
Deferred issuance costs	1,900	2,200
Long-term borrowings
Debt Instrument [Line Items]
FHLB advances, net	1,031,666	1,272,591
Securities sold under agreements to repurchase	165,000	307,500
Subordinated debt, net	236,731	230,573
Other	509	64
Total long-term borrowings	$ 1,433,906	$ 1,810,728

XML

Borrowed Funds - Additional Information (Detail) - USD ($)		1 Months Ended			3 Months Ended								12 Months Ended
	Sep. 27, 2013	Aug. 31, 2016	Jul. 31, 2015	Jun. 30, 2015	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 01, 2016	Aug. 05, 2016	May 31, 2016
Debt Instrument [Line Items]
Weighted average interest rate for short-term borrowings					0.65%				0.69%				0.65%	0.69%
Prepaid long-term FHLB advances									$ 625,000,000					$ 625,000,000			$ 355,000,000	$ 87,000,000
Prepaid long-term FHLB stock									220,000,000					220,000,000			$ 50,000,000
Contractual amounts due in year two									795,000,000					795,000,000
Contractual amounts due in year three									50,000,000					50,000,000
Loss on extinguishment of debt					$ 0	$ 0	$ 315,000	$ 0	$ 51,129,000	$ 0	$ 0	$ 0	$ 315,000	$ 51,129,000	$ 10,132,000
Callable FHLB advances with scheduled maturities beyond 2017					10,000,000								10,000,000
Callable FHLB advances interest rates		3.69%							3.72%					3.72%		2.51%
FHLB advances		$ 405,000,000
Prepayment penalties paid to FHLB													20,000,000
Net carrying value of subordinated debentures					136,700,000				$ 130,600,000				136,700,000	$ 130,600,000
Fair value of securities					$ 1,500,000,000				$ 1,400,000,000				$ 1,500,000,000	$ 1,400,000,000
Interest rate swaps
Debt Instrument [Line Items]
Notional amount of terminated derivative		$ 125,000,000
Minimum
Debt Instrument [Line Items]
Callable FHLB advances interest rates					2.27%								2.27%
Maximum
Debt Instrument [Line Items]
Callable FHLB advances interest rates					3.25%								3.25%
Subordinated debentures
Debt Instrument [Line Items]
Subordinated notes, interest rate			5.00%
Debt matured and repaid			$ 100,000,000
Securities sold under agreements to repurchase
Debt Instrument [Line Items]
Weighted average interest rate for long-term borrowings					2.41%				3.35%				2.41%	3.35%
Subordinated notes
Debt Instrument [Line Items]
Subordinated notes				$ 100,000,000							$ 100,000,000
Subordinated notes, interest rate				4.55%
FHLB
Debt Instrument [Line Items]
Weighted average interest rate for long-term borrowings					3.37%				3.96%				3.37%	3.96%
Collateralized letter of credit					$ 100,000,000								$ 100,000,000
Long-term borrowings
Debt Instrument [Line Items]
Subordinated notes					$ 236,731,000				$ 230,573,000				$ 236,731,000	$ 230,573,000
Subordinated debentures
Debt Instrument [Line Items]
Subordinated notes	$ 125,000,000
Subordinated notes, interest rate	5.125%
Subordinated notes due September 2023 | Subordinated debentures
Debt Instrument [Line Items]
Effective interest rate					3.32%								3.32%

XML

Borrowed Funds - Schedule of FHLB Repayment (Detail) - Long-term borrowings $ in Thousands	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
2017	$ 10,000
2021	840,000
Thereafter	200,000
Total long-term FHLB advances	$ 1,050,000

XML

Borrowed Funds - Schedule of Repayment of Long-Term Borrowings for Securities Sold Under Agreements to Repurchase (Detail) - Long-term borrowings - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
2017	$ 65,000
2018	50,000
Thereafter	50,000
Securities sold under agreements to repurchase	$ 165,000	$ 307,500

XML

Junior Subordinated Debentures Issued to Capital Trusts - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
Maximum allowable period of interest deferment	5 years

XML

Junior Subordinated Debentures Issued to Capital Trusts - Schedule of Outstanding Junior Subordinated Debentures and Related Trust Preferred Securities Issued by Each Trust (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Carrying value	$ 41,577	$ 41,414
GCB Capital Trust III | 3-month LIBOR
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Annual interest rate spread, percentage	1.40%
Junior Subordinated Debentures: | GCB Capital Trust III
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Carrying value	$ 24,777	24,846
Contractual principal balance	$ 24,743	24,743
Annual interest rate	6.96%
Junior Subordinated Debentures: | State Bancorp Capital Trust I
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Carrying value	$ 8,724	8,624
Contractual principal balance	$ 10,310	10,310
Junior Subordinated Debentures: | State Bancorp Capital Trust I | 3-month LIBOR
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Annual interest rate spread, percentage	3.45%
Junior Subordinated Debentures: | State Bancorp Capital Trust II
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Carrying value	$ 8,076	7,944
Contractual principal balance	$ 10,310	10,310
Junior Subordinated Debentures: | State Bancorp Capital Trust II | 3-month LIBOR
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Annual interest rate spread, percentage	2.85%
Trust Preferred Securities: | GCB Capital Trust III
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Face value	$ 24,000	24,000
Annual interest rate	6.96%
Trust Preferred Securities: | State Bancorp Capital Trust I
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Face value	$ 10,000	10,000
Trust Preferred Securities: | State Bancorp Capital Trust I | 3-month LIBOR
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Annual interest rate spread, percentage	3.45%
Trust Preferred Securities: | State Bancorp Capital Trust II
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Face value	$ 10,000	$ 10,000
Trust Preferred Securities: | State Bancorp Capital Trust II | 3-month LIBOR
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Annual interest rate spread, percentage	2.85%

XML

Benefit Plans - Additional Information (Detail) - USD ($)		2 Months Ended	12 Months Ended
	Jan. 29, 2014	Feb. 24, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Net actuarial loss expected to be recognized as a component of net periodic pension expense				$ 367,000
Discount rate used to compute the obligation				4.33%	4.02%	4.89%
Net periodic pension income				$ (7,564,000)	$ (6,344,000)	$ (5,844,000)
Projected benefit obligation				161,306,000	157,661,000
Salary expense				10,500,000	9,000,000	6,800,000
Expense for contributions to savings and investment plan				$ 6,700,000	$ 7,100,000	$ 6,000,000
Maximum annual contributions based on employee's salary				5.00%	6.00%	6.00%
Maximum annual contributions per employee				$ 13,250
Shares of common stock were available for issuance				8,300,000
Stock-based compensation expense				$ 10,032,000	$ 7,575,000	$ 7,489,000
Unrecognized stock-based compensation				$ 13,800,000
Average remaining vesting, years				2 years 6 months
2016 Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Shares of common stock were available for issuance					2,200,000
2009 Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Shares of common stock were available for issuance					0
Director Restricted Stock Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Additional fees	$ 0
Stock Options and Restricted Stock
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Stock-based compensation expense				$ 10,000,000	$ 8,800,000	7,500,000
Stock awards granted				$ 3,500,000	$ 2,600,000	$ 3,900,000
Stock Options and Restricted Stock | Employee Stock Incentive Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Weighted average grant date fair value (usd per share)				$ 8.32	$ 8.98
Restricted Stock
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Granted (in shares)				544,307	886,427	1,488,960
Vested (in shares)				1,050,293	559,958	524,663
Performance Based Restricted Stock
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Award vesting period				3 years
Granted (in shares)					240,000
Vested (in shares)				53,000	50,000
Performance Based Restricted Stock | Subsequent Event
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Vested (in shares)		85,000
Performance Shares
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Award vesting period				3 years
Compensation costs related to restricted stock awards				$ 2,800,000	$ 2,300,000
Granted (in shares)				431,069	313,212
Performance Shares | Employee Stock Incentive Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Weighted average grant date fair value (usd per share)				$ 8.84
Performance Shares | Vesting based on growth in tangible book value per share plus dividends | Employee Stock Incentive Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Annual vesting percentage				75.00%
Performance Shares | Vesting based on total shareholder return as compared to our peer group | Employee Stock Incentive Plan
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Annual vesting percentage				25.00%
Employer Matching Contribution, Percentage Match One
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined contribution plan employee matching percentage				100.00%
Maximum annual contributions based on employee's salary				4.00%
Employer Matching Contribution, Percentage Match Two
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Defined contribution plan employee matching percentage				50.00%
Maximum annual contributions based on employee's salary				2.00%
Minimum | Restricted Stock
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Award vesting period				3 years
Maximum
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Award vesting period				10 years
Maximum | Restricted Stock
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Award vesting period				6 years
Non-qualified plans for former directors
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Projected benefit obligation				$ 3,300,000	$ 3,400,000
Funded plans for former directors
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Projected benefit obligation				1,500,000	1,600,000
Obligation included in other comprehensive loss, net of tax				867,000	1,000,000
Obligation included in other comprehensive loss, tax				614,000	$ 748,000
Non-employee directors | RSUs
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Grant date fair value of awards				$ 50,000
Equity securities
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Target asset allocation for qualified plan, minimum				25.00%
Target asset allocation for qualified plan, maximum				65.00%
Cumulative annual real return				7.00%
Equity securities | Consumer Price Index
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Cumulative annual real return, period				5 years
Equity securities | S&P 500 Index
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Cumulative annual real return, period				3 years
Debt securities
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Target asset allocation for qualified plan, minimum				35.00%
Target asset allocation for qualified plan, maximum				75.00%
Fixed income securities
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Cumulative annual real return				3.00%
Fixed income securities | Consumer Price Index
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Cumulative annual real return, period				5 years
Fixed income securities | Merrill Lynch Intermediate Government/Corporate Index
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Cumulative annual real return, period				3 years
Other Pension Plan, Defined Benefit
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Discount rate used to compute the obligation				4.11%	4.33%
Forecast | Change in Accounting Estimate
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Net periodic pension income			$ 765,000

XML

Benefit Plans - Change in Projected Benefit Obligation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$ 157,661	$ 176,339
Interest cost	6,681	6,889	$ 6,897
Actuarial loss (gain)	2,047	(17,177)
Benefits paid	(5,546)	(8,390)
Projected benefit obligation at end of year	161,306	157,661	176,339
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	189,414	194,646
Actual return on plan assets	22,424	2,875
Employer contributions	347	283
Benefits paid	(5,546)	(8,390)
Fair value of plan assets at end of year	206,639	189,414	$ 194,646
Asset recognized	45,333	31,753
Accumulated benefit obligation	161,306	157,661
Accrued interest receivable	$ 606	$ 607

XML

Benefit Plans - Component of Net Periodic Pension Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Net actuarial loss	$ 30,140	$ 36,271
Deferred tax benefit	(12,647)	(15,118)
Total	$ 17,493	$ 21,153

XML

Benefit Plans - Accumulated Benefit Obligation in Excess of Plan (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Projected benefit obligation	$ 18,286	$ 17,411
Accumulated benefit obligation	18,286	17,411
Fair value of plan assets	$ 0	$ 0

XML

Benefit Plans - Components of Net Periodic Pension Expense for Qualified and Non-Qualified Plans (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Interest cost	$ 6,681	$ 6,889	$ 6,897
Expected return on plan assets	(14,539)	(14,023)	(12,967)
Amortization of net loss	294	790	226
Total net periodic pension income	$ (7,564)	$ (6,344)	$ (5,844)

XML

Benefit Plans - Qualified and Non-Qualified Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income or Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Net gain	$ (5,837)	$ (6,030)
Prior service cost	462	0
Amortization of actuarial loss	(294)	(790)	$ (226)
Total recognized in other comprehensive income	(5,669)	(6,820)
Total recognized in net periodic pension income and other comprehensive income/loss (before tax)	$ (13,233)	$ (13,163)

XML

Benefit Plans - Schedule of Expected Future Benefit Payments (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Compensation and Retirement Disclosure [Abstract]
2017	$ 6,847
2018	7,206
2019	7,744
2020	8,081
2021	8,423
Thereafter	$ 45,462

XML

Benefit Plans - Weighted Average Discount Rate (Detail)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.33%	4.02%	4.89%
Expected long-term return on plan assets	7.50%	7.50%	7.50%

XML

Benefit Plans - Fair Value Measurement (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Investments:
Percent of Total Investments	100.00%	100.00%
Investments	$ 206,033	$ 188,807
Equity securities
Investments:
Percent of Total Investments	43.00%	41.00%
Investments	$ 88,250	$ 76,578
Corporate bonds
Investments:
Percent of Total Investments	21.00%	22.00%
Investments	$ 43,152	$ 41,786
Mutual funds
Investments:
Percent of Total Investments	19.00%	19.00%
Investments	$ 38,975	$ 36,052
U.S. Treasury securities
Investments:
Percent of Total Investments	12.00%	12.00%
Investments	$ 24,910	$ 22,130
Cash and money market funds
Investments:
Percent of Total Investments	5.00%	6.00%
Investments	$ 10,402	$ 11,913
U.S. government agency securities
Investments:
Investments	344	348
Quoted Prices in Active Markets for Identical Assets (Level 1)
Investments:
Investments	162,537	126,756
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities
Investments:
Investments	88,250	76,578
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds
Investments:
Investments	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds
Investments:
Investments	38,975	36,052
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities
Investments:
Investments	24,910	2,213
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and money market funds
Investments:
Investments	10,402	11,913
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government agency securities
Investments:
Investments	0	0
Significant Other Observable Inputs (Level 2)
Investments:
Investments	43,496	42,134
Significant Other Observable Inputs (Level 2) | Equity securities
Investments:
Investments	0	0
Significant Other Observable Inputs (Level 2) | Corporate bonds
Investments:
Investments	43,152	41,786
Significant Other Observable Inputs (Level 2) | Mutual funds
Investments:
Investments	0	0
Significant Other Observable Inputs (Level 2) | U.S. Treasury securities
Investments:
Investments	0	0
Significant Other Observable Inputs (Level 2) | Cash and money market funds
Investments:
Investments	0	0
Significant Other Observable Inputs (Level 2) | U.S. government agency securities
Investments:
Investments	344	348
Significant Unobservable Inputs (Level 3)
Investments:
Investments	0	0
Significant Unobservable Inputs (Level 3) | Equity securities
Investments:
Investments	0	0
Significant Unobservable Inputs (Level 3) | Corporate bonds
Investments:
Investments	0	0
Significant Unobservable Inputs (Level 3) | Mutual funds
Investments:
Investments	0	0
Significant Unobservable Inputs (Level 3) | U.S. Treasury securities
Investments:
Investments	0	0
Significant Unobservable Inputs (Level 3) | Cash and money market funds
Investments:
Investments	0	0
Significant Unobservable Inputs (Level 3) | U.S. government agency securities
Investments:
Investments	$ 0	$ 0

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Benefit Plans - Changes in Restricted Stock Awards Outstanding (Detail) - Restricted Stock - shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding at beginning of year (in shares)	2,755,138	2,574,616	1,709,312
Granted (in shares)	544,307	886,427	1,488,960
Vested (in shares)	(1,050,293)	(559,958)	(524,663)
Forfeited (in shares)	(148,336)	(145,947)	(98,993)
Outstanding at end of year (in shares)	2,100,816	2,755,138	2,574,616

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Benefit Plans - Stock Options Activity (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Shares
Shares, Outstanding at beginning of year	1,383,365	1,828,591	2,322,593
Shares, Granted	0	100,000	0
Shares, Forfeited or expired	(650,876)	(545,226)	(494,002)
Shares, Outstanding at end of year	732,489	1,383,365	1,828,591
Shares, Exercisable at year-end	632,489	1,283,365	1,828,591
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding at beginning of year (in usd per share)	$ 16	$ 17	$ 17
Weighted Average Exercise Price, Granted (in usd per share)	0	11	0
Weighted Average Exercise Price, Forfeited or expired (in usd per share)	18	18	19
Weighted Average Exercise Price, Outstanding at end of year (in usd per share)	14	16	17
Weighted Average Exercise Price, Exercisable at year-end (in usd per share)	$ 14	$ 16	$ 17

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Benefit Plans - Stock Options Outstanding (Detail)	12 Months Ended
	Dec. 31, 2016 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of Options Outstanding (in shares) | shares	632,489
Weighted Average Remaining Contractual Life in Years	1 year 7 months 6 days
Weighted Average Exercise Price (in usd per share)	$ 14
$10-14
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Range Limit (in usd per share)	10
Range of Exercise Prices, Upper Range Limit (in usd per share)	$ 14
Number of Options Outstanding (in shares) | shares	134,681
Weighted Average Remaining Contractual Life in Years	3 years 7 months 6 days
Weighted Average Exercise Price (in usd per share)	$ 12
14-15
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Range Limit (in usd per share)	14
Range of Exercise Prices, Upper Range Limit (in usd per share)	$ 15
Number of Options Outstanding (in shares) | shares	445,654
Weighted Average Remaining Contractual Life in Years	1 year 1 month 6 days
Weighted Average Exercise Price (in usd per share)	$ 15
15-17
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Range Limit (in usd per share)	15
Range of Exercise Prices, Upper Range Limit (in usd per share)	$ 17
Number of Options Outstanding (in shares) | shares	3,388
Weighted Average Remaining Contractual Life in Years	1 year 1 month 6 days
Weighted Average Exercise Price (in usd per share)	$ 16
18-19
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Range Limit (in usd per share)	18
Range of Exercise Prices, Upper Range Limit (in usd per share)	$ 19
Number of Options Outstanding (in shares) | shares	48,766
Weighted Average Remaining Contractual Life in Years	1 month 6 days
Weighted Average Exercise Price (in usd per share)	$ 19

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Benefit Plans - Changes in Director's Restricted Stock Awards (Detail) - Director's Restricted Stock - shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Changes in Director's Restricted Stock Awards
Outstanding at beginning of year (in shares)	80,117	98,086	121,792
Vested (in shares)	(24,607)	(17,969)	(23,706)
Outstanding at end of year (in shares)	55,510	80,117	98,086

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Income Taxes - Summary of Income Tax Expense (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current expense (benefit):
Federal									$ 25,176	$ 7,978	$ 25,156
State									12,904	(493)	(5,549)
Total current expense									38,080	7,485	19,607
Deferred expense:
Federal									10,658	(7,539)	(13,888)
State									16,496	23,992	25,343
Total deferred expense									27,154	16,453	11,455
Income tax expense	$ 18,336	$ 17,049	$ 15,460	$ 14,389	$ (10,987)	$ 10,179	$ 12,474	$ 12,272	$ 65,234	$ 23,938	$ 31,062

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Income Taxes - Summary of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets:
Allowance for loan losses	$ 47,485	$ 44,382
Depreciation	12,432	15,661
Employee benefits	16,121	16,104
Investment securities, including other-than-temporary impairment losses	17,272	18,697
Net operating loss carryforwards	46,667	57,722
Purchase accounting	33,172	40,585
Other	22,183	21,310
Total deferred tax assets	195,332	214,461
Deferred tax liabilities:
Pension plans	24,575	18,861
Other investments	20,831	15,720
Other	20,418	21,449
Total deferred tax liabilities	65,824	56,030
Net deferred tax asset (included in other assets)	$ 129,508	$ 158,431

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Line Items]
Statutory federal income tax rate	35.00%	35.00%	35.00%
Decrease in liability for unrecognized tax benefits within the next twelve months	$ 16.1
Uncertain tax position, accrued interest	4.6	$ 5.2
Federal
Income Taxes [Line Items]
Operating loss carryforwards	77.6
Tax credit carryforward	1.9
Obligations of states and state agencies
Income Taxes [Line Items]
Operating loss carryforwards	514.3
Tax credit carryforward	$ 3.7

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Income Taxes - Summary of Income Tax Reconciliation (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Federal income tax at expected statutory rate									$ 81,683	$ 44,413	$ 51,532
State income tax expense, net of federal tax effect									19,197	15,274	12,866
Tax-exempt interest, net of interest incurred to carry tax-exempt securities									(5,308)	(4,864)	(4,406)
Bank owned life insurance									(2,343)	(2,385)	(2,237)
Tax credits from securities and other investments									(25,954)	(28,988)	(20,555)
Reduction in reserve for uncertainties									0	0	(6,971)
Other, net									(2,041)	488	833
Income tax expense	$ 18,336	$ 17,049	$ 15,460	$ 14,389	$ (10,987)	$ 10,179	$ 12,474	$ 12,272	$ 65,234	$ 23,938	$ 31,062

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Income Taxes - Summary of Reconciliation of Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of Gross Unrecognized Tax Benefits
Beginning balance	$ 19,892	$ 18,647	$ 30,713
Additions based on tax positions related to prior years	3,958	1,245	1,408
Settlements with taxing authorities	(4,820)	0	(9,050)
Reductions due to expiration of statute of limitations	(2,886)	0	(4,424)
Ending balance	$ 16,144	$ 19,892	$ 18,647

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Tax Credit Investments Tax Credit Investments - Affordable Housing Tax Credit Investments, Other Tax Credit Investments, and Related Unfunded Commitments (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Other Assets
Other Assets:
Affordable housing tax credit investments, net	$ 29,567	$ 32,094
Other tax credit investments, net	44,763	70,681
Total tax credit investments, net	74,330	102,775
Other Liabilities
Other Liabilities:
Unfunded affordable housing tax credit commitments	4,850	7,330
Unfunded other tax credit commitments	7,276	12,545
Total unfunded tax credit commitments	$ 12,126	$ 19,875

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Tax Credit Investments Tax Credit Investments - Affordable Housing Tax Credit Investments and Other Tax Credit Investments (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Affordable housing tax credits and other tax benefits	$ 5,013	$ 4,709	$ 5,296
Other tax credit investment credits and tax benefits	33,294	23,877	14,357
Total reduction in income tax expense	38,307	28,586	19,653
Amortization Recorded in Non-Interest Expenses
Schedule of Equity Method Investments [Line Items]
Affordable housing tax credit investment losses	2,077	2,594	3,184
Affordable housing tax credit investment impairment losses	450	1,321	3,211
Other tax credit investment losses	790	1,079	2,359
Other tax credit investment impairment losses	31,427	22,318	15,442
Total amortization of tax credit investments recorded in non-interest expense	$ 34,744	$ 27,312	$ 24,196

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Commitments and Contingencies - Additional Information (Detail)	1 Months Ended		12 Months Ended
	Aug. 31, 2016 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2016 USD ($) Contract	Dec. 31, 2015 USD ($) claim	Dec. 31, 2014 USD ($)	Dec. 31, 2013 claim	Jun. 30, 2014 USD ($)
Commitments And Contingencies [Line Items]
Net rental expense			$ 27,700,000	$ 31,700,000	$ 21,200,000
Net of rental income			4,000,000	3,800,000	$ 3,100,000
Deposits			17,730,708,000	16,253,551,000
Aggregate fair value of net liability position			25,200,000
Collateral posted			52,400,000	53,000,000
Subordinated debentures | Subordinated notes due September 2023
Commitments And Contingencies [Line Items]
Face value			$ 125,000,000
Debt instrument percentage			5.125%
Effective interest rate			3.32%
Derivatives designated as hedging instruments
Commitments And Contingencies [Line Items]
Notional amount of interest rate derivatives			$ 714,999,000	1,040,209,000
Derivatives not designated as hedging instruments:
Commitments And Contingencies [Line Items]
Notional amount of interest rate derivatives			1,322,305,000	727,572,000
Interest rate swaps
Commitments And Contingencies [Line Items]
Notional amount of terminated derivative	$ 125,000,000
Accumulated net after-tax losses related to effective cash flow hedges			12,500,000	17,600,000
Estimated amount of interest rate derivatives to be reclassified to interest expense			8,800,000
Interest rate swaps | Derivatives not designated as hedging instruments:
Commitments And Contingencies [Line Items]
Notional amount of interest rate derivatives			$ 1,075,722,000	654,134,000
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Associated With Prime-Rate Indexed Deposits
Commitments And Contingencies [Line Items]
Number of derivative contracts held (in contract) | Contract			2
Notional amount of interest rate derivatives			$ 100,000,000
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Associated With Prime-Rate Indexed Deposits | Fixed Rate At Approximately Five Point Eleven Percent
Commitments And Contingencies [Line Items]
Fixed interest rate			5.11%
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due September 27, 2023
Commitments And Contingencies [Line Items]
Number of derivative contracts held (in contract) | Contract			1
Notional amount of derivative asset			$ 125,000,000
Derivative, interest rate cap			7.44%
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due Between November 2018 And November 2020
Commitments And Contingencies [Line Items]
Number of derivative contracts held (in contract) | Contract			3
Notional amount of derivative asset			$ 300,000,000
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due Between November 2018 And November 2020 | Minimum
Commitments And Contingencies [Line Items]
Fixed interest rate			2.57%
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due Between November 2018 And November 2020 | Maximum
Commitments And Contingencies [Line Items]
Fixed interest rate			2.97%
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due Between March 2019 And September 2020
Commitments And Contingencies [Line Items]
Number of derivative contracts held (in contract) | Contract			4
Notional amount of derivative asset			$ 182,000,000
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due Between March 2019 And September 2020 | Minimum
Commitments And Contingencies [Line Items]
Fixed interest rate			2.51%
Cash flow hedge | Interest rate swaps | Derivatives designated as hedging instruments | Interest Rate Swaps Due Between March 2019 And September 2020 | Maximum
Commitments And Contingencies [Line Items]
Fixed interest rate			2.88%
Fair value hedge | Interest rate swaps | Derivatives designated as hedging instruments
Commitments And Contingencies [Line Items]
Notional amount of interest rate derivatives			$ 7,999,000	$ 133,209,000			$ 25,000,000
Pending litigation | Merrick Bank Corporation v. Valley National Bank
Commitments And Contingencies [Line Items]
Chargebacks incurred from Direct Air Bankruptcy		$ 26,200,000
Pending litigation | Merrick Bank Corporation v. Valley National Bank | Direct Air
Commitments And Contingencies [Line Items]
Deposits		1,000,000
Pending litigation | American Express Travel Related Services v. Valley National Bank
Commitments And Contingencies [Line Items]
Chargebacks incurred from Direct Air Bankruptcy		$ 3,000,000
Claims dismissed (in claim) | claim				5
Claims filed (in claim) | claim						11

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Commitments and Contingencies - Minimum Aggregate Lease Payments (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Leases [Abstract]
Gross Rents, 2017	$ 27,256
Gross Rents, 2018	26,863
Gross Rents, 2019	26,361
Gross Rents, 2020	26,458
Gross Rents, 2021	25,754
Gross Rents, Thereafter	281,310
Gross Rents, Total lease commitments	414,002
Sublease Rents, 2017	2,888
Sublease Rents, 2018	2,260
Sublease Rents, 2019	2,125
Sublease Rents, 2020	2,059
Sublease Rents, 2021	1,972
Sublease Rents, Thereafter	9,631
Sublease Rents, Total lease commitments	20,935
Net Rents, 2017	24,368
Net Rents, 2018	24,603
Net Rents, 2019	24,236
Net Rents, 2020	24,399
Net Rents, 2021	23,782
Net Rents, Thereafter	271,679
Net Rents, Total lease commitments	$ 393,067

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Commitments and Contingencies - Summary of Financial Instruments with Off-Balance Sheet Risk (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to sell loans	$ 147,250	$ 41,860
Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	217,695	198,253
Commercial letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commercial letters of credit	4,960	4,249
Commercial loans | Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	2,855,326	2,554,146
Commercial loans | Loan origination commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	560,929	724,236
Home equity | Unused lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	904,999	822,506
Residential mortgage | Loan origination commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	108,063	54,293
Credit card | Unused lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments with off-balance sheet risk	$ 49,715	$ 50,532

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Commitments and Contingencies - Consolidated Statements of Financial Condition Related to Fair Value of Derivative Financial Instruments (Detail) - USD ($)	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2014
Interest rate caps and swaps
Derivative [Line Items]
Other Assets	$ 0	$ 0
Other Liabilities	41,911,000	50,752,000
Derivatives designated as hedging instruments:
Derivative [Line Items]
Notional Amount	714,999,000	1,040,209,000
Derivatives not designated as hedging instruments:
Derivative [Line Items]
Notional Amount	1,322,305,000	727,572,000
Derivatives not designated as hedging instruments: | Interest rate swaps
Derivative [Line Items]
Notional Amount	1,075,722,000	654,134,000
Derivatives not designated as hedging instruments: | Mortgage banking derivatives
Derivative [Line Items]
Notional Amount	246,583,000	73,438,000
Other Assets | Derivatives designated as hedging instruments:
Derivative [Line Items]
Other Assets	802,000	8,942,000
Other Assets | Derivatives not designated as hedging instruments:
Derivative [Line Items]
Other Assets	28,253,000	24,832,000
Other Assets | Derivatives not designated as hedging instruments: | Interest rate swaps
Derivative [Line Items]
Other Assets	25,285,000	24,628,000
Other Assets | Derivatives not designated as hedging instruments: | Mortgage banking derivatives
Derivative [Line Items]
Other Assets	2,968,000	204,000
Other Liabilities | Derivatives designated as hedging instruments:
Derivative [Line Items]
Other Liabilities	16,627,000	26,129,000
Other Liabilities | Derivatives not designated as hedging instruments:
Derivative [Line Items]
Other Liabilities	27,450,000	24,715,000
Other Liabilities | Derivatives not designated as hedging instruments: | Interest rate swaps
Derivative [Line Items]
Other Liabilities	25,284,000	24,623,000
Other Liabilities | Derivatives not designated as hedging instruments: | Mortgage banking derivatives
Derivative [Line Items]
Other Liabilities	2,166,000	92,000
Fair value hedge | Derivatives designated as hedging instruments: | Interest rate swaps
Derivative [Line Items]
Notional Amount	7,999,000	133,209,000	$ 25,000,000
Fair value hedge | Other Assets | Derivatives designated as hedging instruments: | Interest rate swaps
Derivative [Line Items]
Other Assets	0	7,658,000
Fair value hedge | Other Liabilities | Derivatives designated as hedging instruments: | Interest rate swaps
Derivative [Line Items]
Other Liabilities	986,000	1,306,000
Cash flow hedge | Derivatives designated as hedging instruments: | Interest rate caps and swaps
Derivative [Line Items]
Notional Amount	707,000,000	907,000,000
Cash flow hedge | Other Assets | Derivatives designated as hedging instruments: | Interest rate caps and swaps
Derivative [Line Items]
Other Assets	802,000	1,284,000
Cash flow hedge | Other Liabilities | Derivatives designated as hedging instruments: | Interest rate caps and swaps
Derivative [Line Items]
Other Liabilities	$ 15,641,000	$ 24,823,000

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Commitments and Contingencies - Gains (Losses) Related to Interest Rate Derivatives Designated as Hedges of Cash Flows (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Amounts Related To Interest Rate Derivatives Included In Income Designated As Hedges Of Cash Flows [Line Items]
Amount of loss reclassified from accumulated other comprehensive loss to interest expense	$ (36,700)	$ (37,057)	$ (37,573)	$ (37,444)	$ (37,548)	$ (40,730)	$ (39,577)	$ (38,899)	$ (148,774)	$ (156,754)	$ (161,846)
Amount of loss recognized in other comprehensive income									(4,035)	(12,360)	(20,910)
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 loss reclassified from accumulated other comprehensive loss to interest expense									$ (13,034)	$ (7,075)	$ (6,663)

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Commitments and Contingencies - Gains (Losses) Related to Interest Rate Derivatives Designated as Hedges of Fair Value (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gains (losses) included in the consolidated statements of income	$ 690	$ 158	$ (214)
Fair value hedge | Interest rate swaps | Interest income
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gains (losses) included in the consolidated statements of income	320	176	(13)
Fair value hedge | Interest rate swaps | Interest expense
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gains (losses) included in the consolidated statements of income	6,670	1,400	9,380
Fair value hedge | Interest rate caps and swaps | Derivatives designated as hedging instruments | Interest income
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gains (losses) included in the consolidated statements of income	(320)	(176)	13
Fair value hedge | Interest rate caps and swaps | Derivatives designated as hedging instruments | Interest expense
Gain Loss On Fair Value Hedges Recognized In Earnings [Line Items]
Gains (losses) included in the consolidated statements of income	$ (6,645)	$ (1,473)	$ (9,449)

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Commitments and Contingencies - Gains (Losses) Related to Derivative Instruments Not Designated as Hedging Instruments (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Non-designated hedge interest rate derivatives
Other non-interest expense	$ 690	$ 158	$ (214)

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Balance Sheet Offsetting - Summary of Valley's Financial Instruments that are Eligible for Offset (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Offsetting Liabilities
Gross Amounts Recognized	$ 206,911	$ 525,752
Gross Amounts Offset	0	0
Net Amounts Presented	206,911	525,752
Gross Amounts Not Offset, Financial Instruments	(5,268)	(8,942)
Gross Amounts Not Offset, Cash Collateral	(201,643)	(516,810)
Net Amount	0	0
Collateral posted	52,400	53,000
Repurchase agreements
Offsetting Liabilities
Gross Amounts Recognized	165,000	475,000
Gross Amounts Offset	0	0
Securities sold under agreements to repurchase	165,000	475,000
Gross Amounts Not Offset, Financial Instruments	0	0
Gross Amounts Not Offset, Cash Collateral	(165,000)	(475,000)
Net Amount	0	0
Interest rate caps and swaps
Offsetting Assets
Gross Amounts Recognized	26,087	33,570
Gross Amounts Offset	0	0
Net Amounts Presented	26,087	33,570
Gross Amounts Not Offset, Financial Instruments	(5,268)	(8,942)
Gross Amounts Not Offset, Cash Collateral	0	0
Net Amount	20,819	24,628
Offsetting Liabilities
Gross Amounts Recognized	41,911	50,752
Gross Amounts Offset	0	0
Net Amounts Presented	41,911	50,752
Gross Amounts Not Offset, Financial Instruments	(5,268)	(8,942)
Gross Amounts Not Offset, Cash Collateral	(36,643)	(41,810)
Net Amount	$ 0	$ 0

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Regulatory and Capital Requirements - Schedule of Actual Capital Positions and Ratios under Banking Regulations (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Total Risk-based Capital
Risk-based Capital Actual, Amount	$ 2,084,531	$ 1,910,304
Risk-based Capital Actual, Ratio	12.15%	12.02%
Risk-based Capital Minimum Capital Requirements, Amount	$ 1,480,006	$ 1,271,171
Risk-based Capital Minimum Capital Requirements, Ratio	8.625%	8.00%
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital, Amount	$ 1,590,825	$ 1,431,973
Common Equity Tier 1 Capital, Ratio	9.27%	9.01%
Common Equity Tier 1 Capital	$ 879,424	$ 715,034
Common Equity Tier 1 Capital Minimum Capital Requirements, Ratio	5.125%	4.50%
Tier 1 Risk-based Capital
Tier 1 Risk-based Capital Actual, Amount	$ 1,698,767	$ 1,543,937
Tier 1 Risk-based Capital Actual, Ratio	9.90%	9.72%
Tier 1 Risk-based Capital Minimum Capital Requirements, Amount	$ 1,136,816	$ 953,378
Tier 1 Risk-based Capital Minimum Capital Requirements, Ratio	6.625%	6.00%
Tier 1 Leverage Capital
Tier 1 Leverage Capital Actual, Amount	$ 1,698,767	$ 1,543,937
Tier 1 Leverage Capital Actual, Ratio	7.74%	7.90%
Tier 1 Leverage Capital Minimum Capital Requirements, Amount	$ 878,244	$ 781,388
Tier 1 Leverage Capital Minimum Capital Requirements, Ratio	4.00%	4.00%
Valley National Bank [Member]
Total Risk-based Capital
Risk-based Capital Actual, Amount	$ 2,023,857	$ 1,826,420
Risk-based Capital Actual, Ratio	11.82%	11.53%
Risk-based Capital Minimum Capital Requirements, Amount	$ 1,476,767	$ 1,266,942
Risk-based Capital Minimum Capital Requirements, Ratio	8.625%	8.00%
Risk-based Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Amount	$ 1,712,193	$ 1,583,677
Risk-based Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Ratio	10.00%	10.00%
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital, Amount	$ 1,807,201	$ 1,618,053
Common Equity Tier 1 Capital, Ratio	10.55%	10.22%
Common Equity Tier 1 Capital	$ 877,499	$ 712,655
Common Equity Tier 1 Capital Minimum Capital Requirements, Ratio	5.125%	4.50%
Common Equity Tier 1 Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Amount	$ 1,112,926	$ 1,029,390
Common Equity Tier 1 Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Ratio	6.50%	6.50%
Tier 1 Risk-based Capital
Tier 1 Risk-based Capital Actual, Amount	$ 1,807,201	$ 1,618,053
Tier 1 Risk-based Capital Actual, Ratio	10.55%	10.22%
Tier 1 Risk-based Capital Minimum Capital Requirements, Amount	$ 1,134,328	$ 950,206
Tier 1 Risk-based Capital Minimum Capital Requirements, Ratio	6.625%	6.00%
Tier 1 Risk-based Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Amount	$ 1,369,755	$ 1,266,942
Tier 1 Risk-based Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Ratio	8.00%	8.00%
Tier 1 Leverage Capital
Tier 1 Leverage Capital Actual, Amount	$ 1,807,201	$ 1,618,053
Tier 1 Leverage Capital Actual, Ratio	8.25%	8.29%
Tier 1 Leverage Capital Minimum Capital Requirements, Amount	$ 876,026	$ 780,831
Tier 1 Leverage Capital Minimum Capital Requirements, Ratio	4.00%	4.00%
Tier 1 Leverage Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Amount	$ 1,095,032	$ 976,039
Tier 1 Leverage Capital To Be Well Capitalized Under Prompt Corrective Action Provision, Ratio	5.00%	5.00%

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Common and Preferred Stock (Detail) - USD ($)				1 Months Ended		12 Months Ended
	Jun. 19, 2015	Jan. 01, 2012	Jun. 29, 2009	Dec. 31, 2016	Jun. 30, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2010	Jun. 30, 2025	Dec. 31, 2008	Dec. 31, 2007
Common Stock [Line Items]
Net proceeds from issuance of common stock				$ 106,400,000		$ 112,085,000	$ 7,898,000	$ 5,096,000
Shares of common stock authorized (in shares)				332,023,233		332,023,233	332,023,233
Maximum voluntary optional cash payments made by shareholders to purchase common shares			$ 100,000
Warrant exercise period		10 years
Number of common stock issued upon exercise of warrant (in shares)		489,000
Exercise price of warrant (in usd per share)		$ 11.30
Dividend Reinvestment Plan
Common Stock [Line Items]
Number of shares reissued from treasury stock (in shares)						554,000	713,000	499,000
Proceeds from treasury stock reissued						$ 5,200,000	$ 7,000,000	$ 5,000,000
Parent Company
Common Stock [Line Items]
Net proceeds from issuance of common stock						$ 112,085,000	$ 7,898,000	$ 5,096,000
Parent Company | Repurchase Plan
Common Stock [Line Items]
Amount authoried under share repurchase program												$ 4,700,000
Number of shares repurchased						0	0	0
Parent Company | Other Stock Repurchases
Common Stock [Line Items]
Number of shares repurchased						328,000	387,000	174,000
Average price of shares purchased (in usd per share)						$ 9.73	$ 9.95	$ 9.68
Parent Company | U.S. Treasury Warrants
Common Stock [Line Items]
Exercise price of warrant (in usd per share)									$ 16.12
Amount of shares each warrant entitles buyer to purchase									1.1030
Parent Company | Dividend Reinvestment Plan
Common Stock [Line Items]
Shares of common stock authorized (in shares)			10,000,000
Parent Company | Warrants | U.S. Treasury Warrants
Common Stock [Line Items]
Value of warrants to purchase common stock											$ 2,500,000
Common Stock
Common Stock [Line Items]
Stock issued (in shares)				9,240,000
Series A Preferred Stock
Common Stock [Line Items]
Stock issued (in shares)	4,600,000				4,600,000
Liquidation preference per share (in usd per share)	$ 25
Fixed dividend rate per annum	6.25%
Proceeds from issuance of preferred stock, net of issuance costs	$ 111,600,000
Series A Preferred Stock | LIBOR | Forecast
Common Stock [Line Items]
Spread on variable dividend rate per annum										3.85%

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Other Comprehensive Income - Schedule of Comprehensive Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Equity [Abstract]
Net (losses) gains arising during the period, Before Tax	$ (7,294)	$ (3,458)	$ 33,329
Less reclassification adjustment for net gains included in net income, Before Tax	(777)	(2,487)	(745)
Net change, Unrealized gains on AFS securities, Before Tax	(8,071)	(5,945)	32,584
Net change in non-credit impairment losses on securities, Before Tax	719	(416)	2,299
Less reclassification adjustment for accretion of credit impairment losses included in net income, Before Tax	(921)	(728)	(661)
Net change, Non-credit impairment losses on securities available for sale and held to maturity, Before Tax	(202)	(1,144)	1,638
Net (losses) gains arising during the period, Before Tax	(4,035)	(12,360)	(20,910)
Less reclassification adjustment for losses included in net income, Before Tax	13,034	7,075	6,663
Net change, Unrealized gains and (losses) on derivatives (cash flow hedges), Before Tax	8,999	(5,285)	(14,247)
Net gains (losses) arising during the period, Before Tax	5,837	6,030	(27,902)
Amortization of prior service cost, Before Tax	(300)	206	305
Amortization of net loss, Before Tax	294	790	226
Net change, Defined benefit pension plan, Before Tax	5,831	7,026	(27,371)
Total other comprehensive income (loss), Before Tax	6,557	(5,348)	(7,396)
Net (losses) gains arising during the period, Tax Effect	3,001	1,458	(13,931)
Less reclassification adjustment for net gains included in net income, Tax Effect	312	1,041	312
Net change in non-credit impairment losses on securities, Tax Effect	3,313	2,499	(13,619)
Net change in non-credit impairment losses on securities	(302)	175	(965)
Less reclassification adjustment for accretion of credit impairment losses included in net income, Tax Effect	382	304	278
Net change, Non-credit impairment losses on securities available for sale and held to maturity, Tax Effect	80	479	(687)
Net (losses) gains arising during the period, Tax Effect	1,574	5,121	8,763
Less reclassification adjustment for losses included in net income, Tax Effect	(5,393)	(2,948)	(2,777)
Net change, Unrealized gains and (losses) on derivatives (cash flow hedges), Tax Effect	(3,819)	2,173	5,986
Net gains (losses) arising during the period, Tax Effect	(2,539)	(2,586)	11,695
Amortization of prior service cost, Tax Effect	119	(89)	(128)
Amortization of net loss, Tax Effect	(109)	(328)	(94)
Net change, Defined benefit pension plan, Tax Effect	(2,529)	(3,003)	11,473
Total other comprehensive income (loss), Tax Effect	(2,955)	2,148	3,153
Net (losses) gains arising during the period, After Tax	(4,293)	(2,000)	19,398
Less reclassification adjustment for net gains included in net income, After Tax	(465)	(1,446)	(433)
Total	(4,758)	(3,446)	18,965
Net change in non-credit impairment losses on securities, After Tax	417	(241)	1,334
Less reclassification adjustment for accretion of credit impairment losses included in net income, After Tax	(539)	(424)	(383)
Total	(122)	(665)	951
Net gains (losses) arising during the period, After Tax	(2,461)	(7,239)	(12,147)
Less reclassification adjustment for losses included in net income, After Tax	7,641	4,127	3,886
Total	5,180	(3,112)	(8,261)
Net gains (losses) arising during the period, After Tax	3,298	3,444	(16,207)
Amortization of prior service cost, After Tax	(181)	117	177
Amortization of net loss, After Tax	185	462	132
Total	3,302	4,023	(15,898)
Total other comprehensive income (loss)	$ 3,602	$ (3,200)	$ (4,243)

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Other Comprehensive Income - Schedule of Changes in Accumulated Other Comprehensive Loss after Tax (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 2,207,091	$ 1,863,017	$ 1,541,040
Other comprehensive (loss) income before reclassifications	(3,039)	(6,036)	(7,622)
Amounts reclassified from other comprehensive (loss) income	6,641	2,836	3,379
Other comprehensive (loss) income, net	3,602	(3,200)	(4,243)
Ending balance	2,377,156	2,207,091	1,863,017
Unrealized Gains and Losses on AFS Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(5,336)	(1,890)	(20,855)
Other comprehensive (loss) income before reclassifications	(4,293)	(2,000)	19,398
Amounts reclassified from other comprehensive (loss) income	(465)	(1,446)	(433)
Other comprehensive (loss) income, net	(4,758)	(3,446)	18,965
Ending balance	(10,094)	(5,336)	(1,890)
Non-credit Impairment Losses on Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(520)	145	(806)
Other comprehensive (loss) income before reclassifications	417	(241)	1,334
Amounts reclassified from other comprehensive (loss) income	(539)	(424)	(383)
Other comprehensive (loss) income, net	(122)	(665)	951
Ending balance	(642)	(520)	145
Unrealized Gains and Losses on Derivatives
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(17,644)	(14,532)	(6,271)
Other comprehensive (loss) income before reclassifications	(2,461)	(7,239)	(12,147)
Amounts reclassified from other comprehensive (loss) income	7,641	4,127	3,886
Other comprehensive (loss) income, net	5,180	(3,112)	(8,261)
Ending balance	(12,464)	(17,644)	(14,532)
Defined Benefit Pension Plan
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(22,195)	(26,218)	(10,320)
Other comprehensive (loss) income before reclassifications	3,298	3,444	(16,207)
Amounts reclassified from other comprehensive (loss) income	4	579	309
Other comprehensive (loss) income, net	3,302	4,023	(15,898)
Ending balance	(18,893)	(22,195)	(26,218)
Total Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(45,695)	(42,495)	(38,252)
Ending balance	$ (42,093)	$ (45,695)	$ (42,495)

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Quarterly Financial Data - Summary of Quarterly Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
Interest income	$ 201,095	$ 191,203	$ 189,028	$ 185,597	$ 185,594	$ 174,690	$ 175,754	$ 170,985	$ 766,923	$ 707,023	$ 636,603
Interest expense	36,700	37,057	37,573	37,444	37,548	40,730	39,577	38,899	148,774	156,754	161,846
Net interest income	164,395	154,146	151,455	148,153	148,046	133,960	136,177	132,086	618,149	550,269	474,757
Provision for credit losses	3,800	5,840	1,429	800	3,507	94	4,500	0	11,869	8,101	1,884
Non-Interest Income
Gains on sales of loans, net	12,307	4,823	3,105	1,795	1,211	2,014	422	598	22,030	4,245	1,731
Other non-interest income	20,353	20,030	21,159	19,653	22,827	18,905	19,778	18,047	16,886	15,735	15,304
Non-Interest Expense
Loss on extinguishment of debt	0	0	315	0	51,129	0	0	0	315	51,129	10,132
Amortization of tax credit investments	13,384	6,450	7,646	7,264	13,081	5,224	4,511	4,496	34,744	27,312	24,196
Other	111,445	106,818	111,842	110,961	110,683	103,428	102,901	103,622	58,870	55,108	53,124
Income before income taxes	68,426	59,891	54,487	50,576	(6,316)	46,133	44,465	42,613	233,380	126,895	147,234
Income tax expense	18,336	17,049	15,460	14,389	(10,987)	10,179	12,474	12,272	65,234	23,938	31,062
Net Income	50,090	42,842	39,027	36,187	4,671	35,954	31,991	30,341	168,146	102,957	116,172
Dividends on preferred stock	1,797	1,797	1,797	1,797	1,796	2,017	0	0	7,188	3,813	0
Net Income Available to Common Shareholders	$ 48,293	$ 41,045	$ 37,230	$ 34,390	$ 2,875	$ 33,937	$ 31,991	$ 30,341	$ 160,958	$ 99,144	$ 116,172
Earnings Per Common Share:
Basic (in usd per share)	$ 0.19	$ 0.16	$ 0.15	$ 0.14	$ 0.01	$ 0.15	$ 0.14	$ 0.13	$ 0.63	$ 0.42	$ 0.56
Diluted (in usd per share)	0.19	0.16	0.15	0.14	0.01	0.15	0.14	0.13	0.63	0.42	0.56
Cash dividends declared per common share (in usd per share)	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.44	$ 0.44	$ 0.44
Weighted Average Number of Common Shares Outstanding:
Basic (in shares)	256,422,437	254,473,994	254,381,170	254,075,349	239,916,562	232,737,953	232,565,404	232,338,775	254,841,571	234,405,909	205,716,293
Diluted (in shares)	256,952,036	254,940,307	254,771,213	254,347,420	239,972,546	232,780,219	232,586,616	232,341,921	255,268,336	234,437,000	205,716,293

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Parent Company Information - Schedule of Condensed Statements of Financial Condition (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Condensed Balance Sheet Statements, Captions [Line Items]
Interest bearing deposits with banks	$ 171,710	$ 170,225
Investment securities available for sale	1,297,373	1,506,861
Other assets	583,654	656,999
Total Assets	22,864,439	21,612,616
Long-term borrowings	1,433,906	1,810,728
Junior subordinated debentures issued to capital trusts	41,577	41,414
Shareholders’ equity	2,377,156	2,207,091	$ 1,863,017	$ 1,541,040
Total Liabilities and Shareholders’ Equity	22,864,439	21,612,616
Parent Company
Condensed Balance Sheet Statements, Captions [Line Items]
Cash	68,927	63,330
Interest bearing deposits with banks	82	135
Investment securities available for sale	239	806
Investments in and receivables due from subsidiaries	2,591,982	2,398,784
Other assets	36,188	61,365
Total Assets	2,697,418	2,524,420
Dividends payable to shareholders	29,477	28,054
Long-term borrowings	236,731	230,573
Junior subordinated debentures issued to capital trusts	41,577	41,414
Accrued expenses and other liabilities	12,477	17,288
Shareholders’ equity	2,377,156	2,207,091
Total Liabilities and Shareholders’ Equity	$ 2,697,418	$ 2,524,420

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Parent Company Information - Schedule of Condensed Statements of Income (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Income Statements, Captions [Line Items]
Gains (losses) on securities transactions, net									$ 777	$ 2,487	$ 745
Income tax benefit	$ 18,336	$ 17,049	$ 15,460	$ 14,389	$ (10,987)	$ 10,179	$ 12,474	$ 12,272	65,234	23,938	31,062
Net Income	50,090	42,842	39,027	36,187	4,671	35,954	31,991	30,341	168,146	102,957	116,172
Dividends on preferred stock	1,797	1,797	1,797	1,797	1,796	2,017	0	0	7,188	3,813	0
Net Income Available to Common Shareholders	$ 48,293	$ 41,045	$ 37,230	$ 34,390	$ 2,875	$ 33,937	$ 31,991	$ 30,341	160,958	99,144	116,172
Parent Company
Condensed Income Statements, Captions [Line Items]
Dividends from subsidiary									90,000	110,000	110,000
Income from subsidiary									4,550	2,363	0
Gains (losses) on securities transactions, net									239	0	0
Other interest and income									34	211	436
Total Income									94,823	112,574	110,436
Total Expenses									33,604	20,578	11,172
Income before income tax benefit and equity in undistributed (losses) earnings of subsidiary									61,219	91,996	99,264
Income tax benefit									(23,349)	(21,939)	(3,245)
Income before equity in undistributed earnings (losses) of subsidiary									84,568	113,935	102,509
Equity in undistributed earnings (losses) of subsidiary									83,578	(10,978)	13,663
Net Income									168,146	102,957	116,172
Dividends on preferred stock									7,188	3,813	0
Net Income Available to Common Shareholders									$ 160,958	$ 99,144	$ 116,172

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Parent Company Information - Schedule of Condensed Statements of Cash Flows (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Cash Flow Statements, Captions [Line Items]
Net Income		$ 50,090	$ 42,842	$ 39,027	$ 36,187	$ 4,671	$ 35,954	$ 31,991	$ 30,341	$ 168,146	$ 102,957	$ 116,172
Depreciation and amortization										24,431	21,082	19,465
Stock-based compensation										10,032	7,575	7,489
Net amortization of premiums and accretion of discounts on securities										24,310	22,080	26,949
Gains on securities transactions, net										(777)	(2,487)	(745)
Other assets										46,167	(74,589)	15,867
Net cash provided by operating activities										419,177	154,929	183,976
Sales										4,782	140,640	62,025
Purchases										(679,530)	(594,327)	(28,415)
Cash and cash equivalents acquired in acquisitions										0	201,025	102,025
Net cash used in investing activities										(1,527,313)	(1,700,399)	(511,567)
Proceeds from issuance of long-term borrowings, net										385,000	162,792	0
Proceeds from issuance of preferred stock, net										0	111,590	0
Dividends paid to preferred shareholders										(7,188)	(3,813)	0
Dividends paid to common shareholders										(111,813)	(102,279)	(88,119)
Purchase of common shares to treasury										(3,191)	(2,108)	(1,688)
Common stock issued, net	$ 106,400									112,085	7,898	5,096
Net cash provided by financing activities										1,086,837	1,128,863	788,830
Net change in cash and cash equivalents										(21,299)	(416,607)	461,239
Cash and cash equivalents at beginning of year					413,800				830,407	413,800	830,407	369,168
Cash and cash equivalents at end of year	392,501	392,501				413,800				392,501	413,800	830,407
Parent Company
Condensed Cash Flow Statements, Captions [Line Items]
Net Income										168,146	102,957	116,172
Adjustments to reconcile net income to net cash provided by operating activities:										(83,578)	10,978	(13,663)
Depreciation and amortization										0	0	18
Stock-based compensation										10,032	7,575	7,489
Net amortization of premiums and accretion of discounts on securities										163	162	163
Gains on securities transactions, net										(239)	0	0
Other assets										8,007	(41,452)	6,632
Accrued expenses and other liabilities										18,381	9,604	(1,851)
Net cash provided by operating activities										120,912	89,824	114,960
Sales										739	49	46
Purchases										0	0	(500)
Cash and cash equivalents acquired in acquisitions										0	109	14,776
Capital contributions to subsidiary										(106,000)	(115,000)	0
Subordinated debt issued by subsidiary										0	(100,000)	0
Net cash used in investing activities										(105,261)	(214,842)	14,322
Proceeds from issuance of long-term borrowings, net										0	98,897	0
Proceeds from issuance of preferred stock, net										0	111,590	0
Dividends paid to preferred shareholders										(7,188)	(3,813)	0
Dividends paid to common shareholders										(111,813)	(102,279)	(88,119)
Purchase of common shares to treasury										(3,191)	(2,108)	(1,688)
Common stock issued, net										112,085	7,898	5,096
Net cash provided by financing activities										(10,107)	110,185	(84,711)
Net change in cash and cash equivalents										5,544	(14,833)	44,571
Cash and cash equivalents at beginning of year					$ 63,465				$ 78,298	63,465	78,298	33,727
Cash and cash equivalents at end of year	$ 69,009	$ 69,009				$ 63,465				$ 69,009	$ 63,465	$ 78,298

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Business Segments - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2016 Segment
Segment Reporting [Abstract]
Number of business segments	4

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Business Segments - Schedule of Financial Data for Business Segments (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Average interest earning assets (unaudited)	$ 19,829,312				$ 17,425,504				$ 19,829,312	$ 17,425,504	$ 15,040,783
Interest income	201,095	$ 191,203	$ 189,028	$ 185,597	185,594	$ 174,690	$ 175,754	$ 170,985	766,923	707,023	636,603
Interest expense	36,700	37,057	37,573	37,444	37,548	40,730	39,577	38,899	148,774	156,754	161,846
Net Interest Income	164,395	154,146	151,455	148,153	148,046	133,960	136,177	132,086	618,149	550,269	474,757
Provision for credit losses	3,800	5,840	1,429	800	3,507	94	4,500	0	11,869	8,101	1,884
Net Interest Income After Provision for Credit Losses									606,280	542,168	472,873
Non-interest income									103,225	83,802	77,616
Non-interest expense:									476,125	499,075	403,255
Internal expense transfer									0	0	0
Income before income taxes	$ 68,426	$ 59,891	$ 54,487	$ 50,576	$ (6,316)	$ 46,133	$ 44,465	$ 42,613	$ 233,380	$ 126,895	$ 147,234
Return on average interest earning assets (pre-tax)	1.18%				0.73%				1.18%	0.73%	0.98%
Corporate and Other Adjustments
Segment Reporting Information [Line Items]
Average interest earning assets (unaudited)	$ 0				$ 0				$ 0	$ 0	$ 0
Interest income									(8,760)	(8,277)	(8,356)
Interest expense									11,520	11,233	11,007
Net Interest Income									(20,280)	(19,510)	(19,363)
Provision for credit losses									0	0	0
Net Interest Income After Provision for Credit Losses									(20,280)	(19,510)	(19,363)
Non-interest income									29,796	30,937	50,237
Non-interest expense:									341,978	370,051	284,693
Internal expense transfer									(280,251)	(264,364)	(239,002)
Income before income taxes									(52,211)	(94,260)	(14,817)
Consumer Lending | Operating Segments
Segment Reporting Information [Line Items]
Average interest earning assets (unaudited)	$ 5,081,798				$ 4,764,306				5,081,798	4,764,306	4,122,468
Interest income									176,929	170,569	154,078
Interest expense									35,175	39,787	41,343
Net Interest Income									141,754	130,782	112,735
Provision for credit losses									905	1,153	438
Net Interest Income After Provision for Credit Losses									140,849	129,629	112,297
Non-interest income									63,443	45,306	40,611
Non-interest expense:									62,721	59,794	59,051
Internal expense transfer									71,578	72,441	65,477
Income before income taxes									$ 69,993	$ 42,700	$ 28,380
Return on average interest earning assets (pre-tax)	1.38%				0.90%				1.38%	0.90%	0.69%
Commercial Lending | Operating Segments
Segment Reporting Information [Line Items]
Average interest earning assets (unaudited)	$ 11,318,947				$ 9,682,714				$ 11,318,947	$ 9,682,714	$ 7,959,215
Interest income									509,376	463,062	399,192
Interest expense									78,347	80,861	79,820
Net Interest Income									431,029	382,201	319,372
Provision for credit losses									10,964	6,948	1,446
Net Interest Income After Provision for Credit Losses									420,065	375,253	317,926
Non-interest income									3,292	744	(19,624)
Non-interest expense:									70,145	68,156	58,142
Internal expense transfer									160,198	146,463	126,465
Income before income taxes									$ 193,014	$ 161,378	$ 113,695
Return on average interest earning assets (pre-tax)	1.71%				1.67%				1.71%	1.67%	1.43%
Investment Management | Operating Segments
Segment Reporting Information [Line Items]
Average interest earning assets (unaudited)	$ 3,428,567				$ 2,978,484				$ 3,428,567	$ 2,978,484	$ 2,959,100
Interest income									89,378	81,669	91,689
Interest expense									23,732	24,873	29,676
Net Interest Income									65,646	56,796	62,013
Provision for credit losses									0	0	0
Net Interest Income After Provision for Credit Losses									65,646	56,796	62,013
Non-interest income									6,694	6,815	6,392
Non-interest expense:									1,281	1,074	1,369
Internal expense transfer									48,475	45,460	47,060
Income before income taxes									$ 22,584	$ 17,077	$ 19,976
Return on average interest earning assets (pre-tax)	0.66%				0.57%				0.66%	0.57%	0.68%