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Investment Securities
 6 Months Ended
Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at June 30, 2017 and December 31, 2016 were as follows: 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(in thousands)
June 30, 2017
 
 
 
 
 
 
 
U.S. Treasury securities
$
138,754

 
$
8,902

 
$
—

 
$
147,656

U.S. government agency securities
10,597

 
205

 
—

 
10,802

Obligations of states and political subdivisions:
 
 
 
 
 
 
 
Obligations of states and state agencies
249,607

 
9,623

 
(1,688
)
 
257,542

Municipal bonds
251,795

 
8,519

 
(26
)
 
260,288

Total obligations of states and political subdivisions
501,402

 
18,142

 
(1,714
)
 
517,830

Residential mortgage-backed securities
1,070,137

 
7,658

 
(15,787
)
 
1,062,008

Trust preferred securities
59,814

 
32

 
(11,578
)
 
48,268

Corporate and other debt securities
41,559

 
927

 
(318
)
 
42,168

Total investment securities held to maturity
$
1,822,263

 
$
35,866

 
$
(29,397
)
 
$
1,828,732

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


The age of unrealized losses and fair value of related securities held to maturity at June 30, 2017 and December 31, 2016 were as follows: 
 
Less than
Twelve Months
 
More than
Twelve Months
 
Total
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
(in thousands)
June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and state agencies
$
63,537

 
$
(1,688
)
 
$
—

 
$
—

 
$
63,537

 
$
(1,688
)
Municipal bonds
4,664

 
(26
)
 
—

 
—

 
4,664

 
(26
)
Total obligations of states and political subdivisions
68,201

 
(1,714
)
 
—

 
—

 
68,201

 
(1,714
)
Residential mortgage-backed securities
622,527

 
(11,860
)
 
156,974

 
(3,927
)
 
779,501

 
(15,787
)
Trust preferred securities
—

 
—

 
36,883

 
(11,578
)
 
36,883

 
(11,578
)
Corporate and other debt securities
4,682

 
(318
)
 
—

 
—

 
4,682

 
(318
)
Total
$
695,410

 
$
(13,892
)
 
$
193,857

 
$
(15,505
)
 
$
889,267

 
$
(29,397
)
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
)


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. Within the held to maturity portfolio, the total number of security positions in an unrealized loss position was 121 at June 30, 2017 and 132 at December 31, 2016.

The unrealized losses within the residential mortgage-backed securities category of the held to maturity portfolio at June 30, 2017 mainly related to investment grade securities issued by Ginnie Mae.
The unrealized losses existing for more than twelve months for trust preferred securities at June 30, 2017 primarily related to four non-rated single-issuer trust preferred 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 June 30, 2017.
Management does not believe that any individual unrealized loss as of June 30, 2017 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.
As of June 30, 2017, 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 $997.2 million.
The contractual maturities of investments in debt securities held to maturity at June 30, 2017 are set forth in the table below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.  
 
June 30, 2017
 
Amortized
Cost
 
Fair
Value
 
(in thousands)
Due in one year
$
53,859

 
$
54,621

Due after one year through five years
210,615

 
218,428

Due after five years through ten years
325,933

 
343,717

Due after ten years
161,719

 
149,958

Residential mortgage-backed securities
1,070,137

 
1,062,008

Total investment securities held to maturity
$
1,822,263

 
$
1,828,732


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 7.5 years at June 30, 2017.

Available for Sale
The amortized cost, gross unrealized gains and losses and fair value of securities available for sale at June 30, 2017 and December 31, 2016 were as follows: 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(in thousands)
June 30, 2017
 
 
 
 
 
 
 
U.S. Treasury securities
$
51,009

 
$
7

 
$
(919
)
 
$
50,097

U.S. government agency securities
46,147

 
292

 
(71
)
 
46,368

Obligations of states and political subdivisions:
 
 
 
 
 
 
 
Obligations of states and state agencies
39,286

 
336

 
(218
)
 
39,404

Municipal bonds
79,824

 
459

 
(493
)
 
79,790

Total obligations of states and political subdivisions
119,110

 
795

 
(711
)
 
119,194

Residential mortgage-backed securities
1,175,171

 
2,564

 
(14,015
)
 
1,163,720

Trust preferred securities*
7,796

 
—

 
(1,577
)
 
6,219

Corporate and other debt securities
67,177

 
701

 
(204
)
 
67,674

Equity securities
10,505

 
737

 
(460
)
 
10,782

Total investment securities available for sale
$
1,476,915

 
$
5,096

 
$
(17,957
)
 
$
1,464,054

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

 
*
Includes two pooled trust preferred securities, principally collateralized by securities issued by banks and insurance companies, at June 30, 2017 and December 31, 2016.


The age of unrealized losses and fair value of related securities available for sale at June 30, 2017 and December 31, 2016 were as follows: 
 
Less than
Twelve Months
 
More than
Twelve Months
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(in thousands)
June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
49,168

 
$
(919
)
 
$
—

 
$
—

 
$
49,168

 
$
(919
)
U.S. government agency securities
31,236

 
(68
)
 
3,808

 
(3
)
 
35,044

 
(71
)
Obligations of states and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and state agencies
13,118

 
(169
)
 
1,628

 
(49
)
 
14,746

 
(218
)
Municipal bonds
18,302

 
(193
)
 
11,059

 
(300
)
 
29,361

 
(493
)
Total obligations of states and political subdivisions
31,420

 
(362
)
 
12,687

 
(349
)
 
44,107

 
(711
)
Residential mortgage-backed securities
739,362

 
(9,680
)
 
136,402

 
(4,335
)
 
875,764

 
(14,015
)
Trust preferred securities
—

 
—

 
6,219

 
(1,577
)
 
6,219

 
(1,577
)
Corporate and other debt securities
30,335

 
(75
)
 
11,034

 
(129
)
 
41,369

 
(204
)
Equity securities
—

 
—

 
5,184

 
(460
)
 
5,184

 
(460
)
Total
$
881,521

 
$
(11,104
)
 
$
175,334

 
$
(6,853
)
 
$
1,056,855

 
$
(17,957
)
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
)

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 June 30, 2017 was 274 as compared to 298 at December 31, 2016.
The unrealized losses for the residential mortgage-backed securities category of the available for sale portfolio at June 30, 2017 largely related to several investment grade residential mortgage-backed securities mainly issued by Ginnie Mae.
The unrealized losses more than twelve months for trust preferred securities at June 30, 2017 in the table above largely relate to 2 pooled trust preferred securities with an amortized cost of $7.8 million and a fair value of $6.2 million. One of the two pooled trust preferred securities had unrealized loss of $703 thousand and an investment grade rating at June 30, 2017.

As of June 30, 2017, 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 $703.9 million.
The contractual maturities of investment securities available for sale at June 30, 2017 are set forth in the following table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.
 
June 30, 2017
 
Amortized
Cost
 
Fair
Value
 
(in thousands)
Due in one year
$
24,831

 
$
24,752

Due after one year through five years
70,802

 
74,052

Due after five years through ten years
115,497

 
114,927

Due after ten years
80,109

 
78,821

Residential mortgage-backed securities
1,175,171

 
1,163,720

Equity securities
10,505

 
10,782

Total investment securities available for sale
$
1,476,915

 
$
1,467,054


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 was 9.1 years at June 30, 2017.
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. 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) and corporate bonds 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.

There were no other-than-temporary impairment losses on securities recognized in earnings for the three and six months ended June 30, 2017 and 2016. At June 30, 2017, four previously impaired private label mortgage-backed securities (prior to December 31, 2012) had a combined amortized cost and fair value of $9.1 million and $8.9 million, respectively, while one previously impaired pooled trust preferred security had an amortized cost and fair value of $2.8 million and $1.9 million, respectively. The previously impaired pooled trust preferred security was not accruing interest during the three and six months ended June 30, 2017 and 2016.

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 previously recognized in earnings, for which a portion of the impairment loss (non-credit factors) was recognized in other comprehensive income for the three and six months ended June 30, 2017 and 2016: 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
 
(in thousands)
 
 
 
 
Balance, beginning of period
$
4,767

 
$
5,348

 
$
4,916

 
$
5,837

Accretion of credit loss impairment due to an increase in expected cash flows
(67
)
 
—

 
(216
)
 
(489
)
Balance, end of period
$
4,700

 
$
5,348

 
$
4,700

 
$
5,348



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 investment securities transactions included in earnings were immaterial for the three and six months ended June 30, 2017 and 2016.