BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2012

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, 2012 and 2011:

	2012			2011
	(in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	133,796		$	108,146
Service cost		7,253			5,951
Interest cost		6,429			6,147
Plan amendments		556			338
Actuarial loss		14,040			16,678
Benefits paid		(3,510	)		(3,464	)
Projected benefit obligation at end of year	$	158,564		$	133,796
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	95,746		$	83,937
Actual return on plan assets		11,516			2,168
Employer contributions		35,105			13,105
Benefits paid		(3,510	)		(3,464	)
Fair value of plan assets at end of year*	$	138,857		$	95,746
Funded status of the plan	$	(19,707	)	$	(38,050	)
Liability recognized	$	(19,707	)	$	(38,050	)
Accumulated benefit obligation	$	141,889		$	120,564

* Includes accrued interest receivable of $526 thousand and $309 thousand as of December 31, 2012 and 2011, respectively.

Component of Net Periodic Pension Expense

Valley expects to recognize approximately $3.0 million of the net actuarial loss and $806 thousand of prior service cost reported in the following table as of December 31, 2013 as a component of net periodic pension expense during 2013.

	2012			2011
	(in thousands)
Net actuarial loss	$	54,571		$	45,487
Prior service cost		1,720			1,982
Deferred tax benefit		(23,617	)		(19,903	)
Total	$	32,674		$	27,566

Accumulated Benefit Obligation in Excess Of Plan

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

	2012		2011
	(in thousands)
Projected benefit obligation	$	15,010	$	12,731
Accumulated benefit obligation		14,365		12,337
Fair value of plan assets		—		—

Actuarial Present Value of Benefit Obligations

The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of benefit obligations for the qualified and non-qualified plans as of December 31, 2012 and 2011 were as follows:

	2012			2011
Discount rate		4.26	%		4.87	%
Future compensation increase rate		2.75			2.75

Net Periodic Pension Expense

The net periodic pension expense for the qualified and non-qualified plans included the following components for the years ended December 31, 2012, 2011, and 2010:

	2012			2011			2010
	(in thousands)
Service cost	$	7,253		$	5,951		$	5,544
Interest cost		6,429			6,147			5,709
Expected return on plan assets		(8,937	)		(6,698	)		(6,214	)
Amortization of prior service cost		818			707			643
Amortization of net loss		2,377			1,525			1,098
Total net periodic pension expense	$	7,940		$	7,632		$	6,780

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 or loss for the years ended December 31, 2012 and 2011 were as follows:

	2012			2011
	(in thousands)
Net loss	$	11,461		$	21,208
Prior service cost		556			338
Amortization of prior service cost		(818	)		(707	)
Amortization of actuarial loss		(2,377	)		(1,525	)
Total recognized in other comprehensive income	$	8,822		$	19,314
Total recognized in net periodic pension expense and other comprehensive income (before tax)	$	16,762		$	26,946

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)
2013	$	5,581
2014		6,158
2015		6,493
2016		6,805
2017		7,096
2018 to 2022		43,135

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, 2012, 2011, and 2010 were as follows:

	2012			2011			2010
Discount rate		4.87	%		5.75	%		6.00	%
Expected long-term return on plan assets		7.50			8.00			8.00
Rate of compensation increase		2.75			3.25			3.50

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:
						Quoted Prices in Active Markets		Significant Other		Significant Unobservable
	% of Total Investments			December 31, 2012		for Identical Assets (Level 1)		Observable Inputs (Level 2)		Inputs (Level 3)
						(in thousands)
Assets:
Investments:
Equity securities		49	%	$	67,653	$	67,653	$	—	$	—
U.S. Treasury securities		10			13,249		13,249		—		—
Corporate bonds		20			28,153		—		28,153		—
Mutual funds		10			13,545		13,545		—		—
Cash and money market funds		9			12,355		12,355		—		—
U.S. government agency securities		1			1,615		—		1,615		—
Trust preferred securities		1			1,761		1,761		—		—
Total investments		100	%	$	138,331	$	108,563	$	29,768	$	—

						Fair Value Measurements at Reporting Date Using:
						Quoted Prices in Active Markets		Significant Other		Significant Unobservable
	% of Total Investments			December 31, 2011		for Identical Assets (Level 1)		Observable Inputs (Level  2)		Inputs (Level 3)
						(in thousands)
Assets:
Investments:
Equity securities		49	%	$	46,446	$	46,446	$	—	$	—
U.S. Treasury securities		17			16,418		16,418		—		—
Corporate bonds		12			11,743		—		11,743		—
Mutual funds		11			10,360		10,360		—		—
Cash and money market funds		7			6,354		6,354		—		—
U.S. government agency securities		2			2,421		—		2,421		—
Trust preferred securities		2			1,695		1,695		—		—
Total investments		100	%	$	95,437	$	81,273	$	14,164	$	—

Stock Options Activity

Summary of stock options activity under the Employee Stock Incentive Plan as of December 31, 2012, 2011 and 2010 and changes during the years ended on those dates is presented below:

	2012				2011				2010
				Weighted				Weighted				Weighted
				Average				Average				Average
				Exercise				Exercise				Exercise
Stock Options	Shares			Price	Shares			Price	Shares			Price
Outstanding at beginning of year		3,000,406		$17		3,511,173		$18		3,661,258		$17
Granted		—		—		—		—		141,942		11
Exercised		—		—		—		—		(26,070	)	11
Forfeited or expired		(495,796	)	16		(510,767	)	14		(265,957	)	14
Outstanding at end of year		2,504,610		17		3,000,406		18		3,511,173		17
Exercisable at year-end		2,435,051		18		2,737,814		18		3,002,736		17
Weighted-average fair value of options granted during the year		N/A				N/A			$	2.03

Stock Options Outstanding

The following table summarizes information about stock options outstanding at December 31, 2012:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Options Outstanding		Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price	Number of Options Exercisable		Weighted Average Exercise Price
$10-14		193,364	6.1	$12		136,741	$12
14-15		472,094	5.2	15		425,457	15
15-17		195,991	3.6	17		195,261	17
17-18		511,651	2.9	18		511,604	18
18-21		1,486,981	2.2	19		1,486,944	19
		2,860,081	3.2	17		2,756,007	18

Changes in Restricted Stock Awards Outstanding

The following table sets forth the changes in restricted stock awards outstanding for the years ended December 31, 2012, 2011 and 2010:

	Restricted Stock Awards Outstanding
	2012			2011			2010
Outstanding at beginning of year		316,488			537,653			555,361
Granted		1,423,152			14,866			217,021
Vested		(192,870	)		(232,274	)		(230,756	)
Forfeited		(54,710	)		(3,757	)		(3,973	)
Outstanding at end of year		1,492,060			316,488			537,653

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, 2012, 2011 and 2010:

	Restricted Stock Awards Outstanding
	2012			2011			2010
Outstanding at beginning of year		106,544			104,646			119,443
Granted		28,902			24,607			18,392
Vested		(18,299	)		(22,287	)		(33,188	)
Forfeited		—			(422	)		—
Outstanding at end of year		117,147			106,544			104,646