INVESTMENT SECURITIES (Tables)

12 Months Ended

Dec. 31, 2012

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

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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
December 31, 2012
U.S. Treasury securities	$	99,869	$	15,460	$	—		$	115,329
Obligations of states and political subdivisions		506,473		25,690		(197	)		531,966
Residential mortgage-backed securities		813,647		24,824		(355	)		838,116
Trust preferred securities		127,505		930		(14,778	)		113,657
Corporate and other debt securities		52,213		6,669		—			58,882
Total investment securities held to maturity	$	1,599,707	$	73,573	$	(15,330	)	$	1,657,950
December 31, 2011
U.S. Treasury securities	$	100,018	$	13,841	$	—		$	113,859
Obligations of states and political subdivisions		433,284		19,931		(14	)		453,201
Residential mortgage-backed securities		1,180,104		51,041		(152	)		1,230,993
Trust preferred securities		193,312		4,308		(22,867	)		174,753
Corporate and other debt securities		52,198		3,799		(1,606	)		54,391
Total investment securities held to maturity	$	1,958,916	$	92,920	$	(24,639	)	$	2,027,197

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

The age of unrealized losses and fair value of related securities held to maturity at December 31, 2012 and 2011 were as follows:

	Less than Twelve Months					More than Twelve Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
December 31, 2012
Obligations of states and political subdivisions	$	15,518	$	(197	)	$	—	$	—		$	15,518	$	(197	)
Residential mortgage-backed securities		80,152		(355	)		—		—			80,152		(355	)
Trust preferred securities		28,690		(208	)		48,802		(14,570	)		77,492		(14,778	)
Total	$	124,360	$	(760	)	$	48,802	$	(14,570	)	$	173,162	$	(15,330	)
December 31, 2011
Obligations of states and political subdivisions	$	1,854	$	(13	)	$	50	$	(1	)	$	1,904	$	(14	)
Residential mortgage-backed securities		33,520		(152	)		—		—			33,520		(152	)
Trust preferred securities		35,527		(730	)		55,612		(22,137	)		91,139		(22,867	)
Corporate and other debt securities		14,756		(192	)		7,560		(1,414	)		22,316		(1,606	)
Total	$	85,657	$	(1,087	)	$	63,222	$	(23,552	)	$	148,879	$	(24,639	)

Contractual Maturities of Debt Securities Held to Maturity

The contractual maturities of investments in debt securities held to maturity at December 31, 2012 are set forth in the table below. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.

	December 31, 2012
	Amortized		Fair
	Cost		Value
	(in thousands)
Due in one year	$	113,890	$	113,941
Due after one year through five years		41,597		43,810
Due after five years through ten years		239,769		266,844
Due after ten years		390,804		395,239
Residential mortgage-backed securities		813,647		838,116
Total investment securities held to maturity	$	1,599,707	$	1,657,950

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

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

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(in thousands)
December 31, 2012
U.S. Treasury securities	$	99,843	$	—	$	(2,218	)	$	97,625
U.S. government agency securities		44,215		1,547		—			45,762
Obligations of states and political subdivisions		16,210		417		—			16,627
Residential mortgage-backed securities		506,695		6,818		(3,359	)		510,154
Trust preferred securities*		68,931		240		(11,739	)		57,432
Corporate and other debt securities		28,274		2,728		(294	)		30,708
Equity securities		49,306		2,071		(1,869	)		49,508
Total investment securities available for sale	$	813,474	$	13,821	$	(19,479	)	$	807,816
December 31, 2011
U.S. government agency securities	$	89,787	$	1,204	$	(243	)	$	90,748
Obligations of states and political subdivisions		18,893		1,322		(1	)		20,214
Residential mortgage-backed securities		304,631		10,950		(5,444	)		310,137
Trust preferred securities*		106,931		78		(36,585	)		70,424
Corporate and other debt securities		30,663		2,554		(173	)		33,044
Equity securities		47,932		1,320		(7,299	)		41,953
Total investment securities available for sale	$	598,837	$	17,428	$	(49,745	)	$	566,520

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

Age of Unrealized Losses and Fair Value of Related Securities

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

	Less than Twelve Months					More than Twelve Months					Total
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
	(in thousands)
December 31, 2012
U.S. Treasury securities	$	97,625	$	(2,218	)	$	—	$	—		$	97,625	$	(2,218	)
Residential mortgage-backed securities		269,895		(1,256	)		21,089		(2,103	)		290,984		(3,359	)
Trust preferred securities		760		(511	)		27,865		(11,228	)		28,625		(11,739	)
Corporate and other debt securities		5,394		(58	)		2,264		(236	)		7,658		(294	)
Equity securities		969		(75	)		12,664		(1,794	)		13,633		(1,869	)
Total	$	374,643	$	(4,118	)	$	63,882	$	(15,361	)	$	438,525	$	(19,479	)
December 31, 2011
U.S. government agency securities	$	7,980	$	(243	)	$	—	$	—		$	7,980	$	(243	)
Obligations of states and political subdivisions		141		(1	)		—		—			141		(1	)
Residential mortgage-backed securities		41,673		(1,655	)		22,639		(3,789	)		64,312		(5,444	)
Trust preferred securities		23,962		(1,061	)		44,758		(35,524	)		68,720		(36,585	)
Corporate and other debt securities		3,243		(173	)		—		—			3,243		(173	)
Equity securities		20,570		(4,430	)		12,551		(2,869	)		33,121		(7,299	)
Total	$	97,569	$	(7,563	)	$	79,948	$	(42,182	)	$	177,517	$	(49,745	)

Contractual Maturities of Investments Securities Available for Sale

The contractual maturities of investments securities available for sale at December 31, 2012 are set forth in the following table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.

	December 31, 2012
	Amortized		Fair
	Cost		Value
	(in thousands)
Due in one year	$	851	$	865
Due after one year through five years		6,140		6,246
Due after five years through ten years		95,454		97,354
Due after ten years		155,028		143,689
Residential mortgage-backed securities		506,695		510,154
Equity securities		49,306		49,508
Total investment securities available for sale	$	813,474	$	807,816

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

The following table provides information regarding our other-than-temporary impairment losses on securities recognized in earnings for the years ended December 31, 2012, 2011 and 2010.

	2012		2011		2010
	(in thousands)
Held to maturity:
Trust preferred securities	$	—	$	18,314	$	—
Available for sale:
Residential mortgage-backed securities		722		829		2,265
Trust preferred securities		4,525		825		2,377
Net impairment losses on securities recognized in earnings	$	5,247	$	19,968	$	4,642

Realized Gains and Losses on Sales of Investment Securities

Gross gains (losses) realized on sales, maturities and other securities transactions included in earnings for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011			2010
	(in thousands)
Sales transactions:
Gross gains	$	6,621		$	31,456		$	8,615
Gross losses		(1,050	)		—			(96	)
	$	5,571		$	31,456		$	8,519
Maturities and other securities transactions:
Gross gains	$	2,327		$	623		$	3,158
Gross losses		(5,311	)		(11	)		(79	)
	$	(2,984	)	$	612		$	3,079
Gains on securities transactions, net	$	2,587		$	32,068		$	11,598

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

The following table presents the changes in the credit loss component of cumulative other-than-temporary impairment losses on debt securities classified as either held to maturity or available for sale that Valley has recognized in earnings, for which a portion of the impairment loss (non-credit factors) was recognized in other comprehensive income or loss for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
	(in thousands)
Balance, beginning of period	$	29,070		$	10,500		$	6,119
Additions:
Initial credit impairments		—			19,143			124
Subsequent credit impairments		5,247			825			4,518
Reductions:
Accretion of credit loss impairment due to an increase in expected cash flows		(1,027	)		(1,398	)		(261	)
Balance, end of period	$	33,290		$	29,070		$	10,500