10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2013

OR

¨ 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)

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  x    No  ¨

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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a 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	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock (no par value), of which 199,448,985 shares were outstanding as of August 5, 2013.

TABLE OF CONTENTS

		Page Number
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition as of June 30, 2013 and December 31, 2012		2
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2013 and 2012		3
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June  30, 2013 and 2012		4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012		5
	Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		83
Item 4.	Controls and Procedures		83
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		84
Item 1A.	Risk Factors		84
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		84
Item 6.	Exhibits		84
SIGNATURES			85

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(in thousands, except for share data)

	June 30,			December 31,
	2013			2012
Assets
Cash and due from banks	$	401,228		$	390,078
Interest bearing deposits with banks		299,097			463,022
Investment securities:
Held to maturity (fair value of $1,764,181 at June 30, 2013 and $1,657,950 at December 31, 2012)		1,766,947			1,599,707
Available for sale		958,656			807,816
Trading securities		14,170			22,157
Total investment securities		2,739,773			2,429,680
Loans held for sale, at fair value		48,901			120,230
Non-covered loans		10,741,208			10,842,125
Covered loans		141,817			180,674
Less: Allowance for loan losses		(117,444	)		(130,200	)
Net loans		10,765,581			10,892,599
Premises and equipment, net		272,903			278,615
Bank owned life insurance		342,013			339,876
Accrued interest receivable		53,303			52,375
Due from customers on acceptances outstanding		3,775			3,323
FDIC loss-share receivable		40,686			44,996
Goodwill		428,234			428,234
Other intangible assets, net		39,002			31,123
Other assets		542,706			538,495
Total Assets	$	15,977,202		$	16,012,646
Liabilities
Deposits:
Non-interest bearing	$	3,545,735		$	3,558,053
Interest bearing:
Savings, NOW and money market		5,331,794			5,197,199
Time		2,365,093			2,508,766
Total deposits		11,242,622			11,264,018
Short-term borrowings		125,060			154,323
Long-term borrowings		2,695,897			2,697,299
Junior subordinated debentures issued to capital trusts (includes fair value of $150,001 at June 30, 2013 and $147,595 at December 31, 2012 for VNB Capital Trust I)		191,009			188,522
Bank acceptances outstanding		3,775			3,323
Accrued expenses and other liabilities		197,286			202,784
Total Liabilities		14,455,649			14,510,269
Shareholders’ Equity
Preferred stock, (no par value, authorized 30,000,000 shares; none issued)		—			—
Common stock, (no par value, authorized 232,023,233 shares; issued 199,254,687 shares at June 30, 2013 and 198,499,275 shares at December 31, 2012)		69,707			69,494
Surplus		1,396,996			1,390,851
Retained earnings		94,002			93,495
Accumulated other comprehensive loss		(39,152	)		(50,909	)
Treasury stock, at cost (0 common shares at June 30, 2013 and 61,004 common shares at December 31, 2012)		—			(554	)
Total Shareholders’ Equity		1,521,553			1,502,377
Total Liabilities and Shareholders’ Equity	$	15,977,202		$	16,012,646

See accompanying notes to consolidated financial statements.

2

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except for share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Interest Income
Interest and fees on loans	$	133,966		$	143,812		$	266,965		$	292,272
Interest and dividends on investment securities:
Taxable		12,925			18,114			27,414			38,865
Tax-exempt		3,673			3,227			7,322			6,346
Dividends		1,504			1,674			3,184			3,425
Interest on federal funds sold and other short-term investments		302			31			518			86
Total interest income		152,370			166,858			305,403			340,994
Interest Expense
Interest on deposits:
Savings, NOW and money market		4,369			4,690			9,071			10,044
Time		7,794			9,276			15,905			19,461
Interest on short-term borrowings		140			369			284			622
Interest on long-term borrowings and junior subordinated debentures		30,180			30,452			60,220			61,337
Total interest expense		42,483			44,787			85,480			91,464
Net Interest Income		109,887			122,071			219,923			249,530
Provision for credit losses		2,552			7,405			4,321			13,102
Net Interest Income After Provision for Credit Losses		107,335			114,666			215,602			236,428
Non-Interest Income
Trust and investment services		2,257			1,984			4,234			3,758
Insurance commissions		4,062			3,283			8,052			8,719
Service charges on deposit accounts		5,822			6,086			11,512			12,032
Gains on securities transactions, net		41			1,204			3,999			1,047
Other-than-temporary impairment losses on securities		—			—			—			—
Portion recognized in other comprehensive income (before taxes)		—			(550	)		—			(550	)
Net impairment losses on securities recognized in earnings		—			(550	)		—			(550	)
Trading (losses) gains, net		(270	)		1,609			(2,472	)		621
Fees from loan servicing		1,721			1,149			3,238			2,308
Gains on sales of loans, net		14,366			3,141			29,426			6,307
Gains on sales of assets, net		678			256			410			288
Bank owned life insurance		1,424			1,632			2,765			3,591
Change in FDIC loss-share receivable		(2,000	)		(7,022	)		(5,175	)		(7,112	)
Other		4,793			11,258			8,201			15,616
Total non-interest income		32,894			24,030			64,190			46,625
Non-Interest Expense
Salary and employee benefits expense		47,733			51,214			98,305			102,240
Net occupancy and equipment expense		18,179			16,903			37,068			34,265
FDIC insurance assessment		5,574			3,208			8,927			6,827
Amortization of other intangible assets		1,927			2,532			3,530			4,490
Professional and legal fees		4,285			3,345			8,177			6,969
Advertising		1,850			1,841			3,652			3,529
Other		15,798			12,467			31,126			27,738
Total non-interest expense		95,346			91,510			190,785			186,058
Income Before Income Taxes		44,883			47,186			89,007			96,995
Income tax expense		10,961			14,366			23,775			29,644
Net Income	$	33,922		$	32,820		$	65,232		$	67,351
Earnings Per Common Share:
Basic	$	0.17		$	0.17		$	0.33		$	0.34
Diluted		0.17			0.17			0.33			0.34
Cash Dividends Declared per Common Share		0.16			0.16			0.33			0.33
Weighted Average Number of Common Shares Outstanding:
Basic		199,244,243			197,246,322			199,085,501			197,088,528
Diluted		199,244,243			197,250,168			199,085,501			197,105,638

See accompanying notes to consolidated financial statements.

3

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income	$	33,922		$	32,820		$	65,232		$	67,351
Other comprehensive income, net of tax:
Unrealized gains and losses on available for sale securities
Net (losses) gains arising during the period		(16,353	)		2,891			(17,040	)		7,117
Less reclassification adjustment for net gains included in net income		(25	)		(699	)		(2,324	)		(604	)
Total		(16,378	)		2,192			(19,364	)		6,513
Non-credit impairment losses on available for sale securities
Net change in non-credit impairment losses on securities		2,008			4,547			6,751			11,617
Less reclassification adjustment for credit impairment losses included in net income		(43	)		304			(109	)		114
Total		1,965			4,851			6,642			11,731
Unrealized gains and losses on derivatives (cash flow hedges)
Net gains (losses) on derivatives arising during the period		2,036			(3,069	)		1,959			(2,170	)
Less reclassification adjustment for net losses included in net income		995			811			2,086			1,619
Total		3,031			(2,258	)		4,045			(551	)
Defined benefit pension plan
Net gains arising during the period		18,784			—			18,769			—
Amortization of prior service cost		133			103			261			206
Amortization of net loss		471			337			936			675
Recognition of loss due to curtailment		468			—			468			—
Total		19,856			440			20,434			881
Total other comprehensive income		8,474			5,225			11,757			18,574
Total comprehensive income	$	42,396		$	38,045		$	76,989		$	85,925

See accompanying notes to consolidated financial statements.

4

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Six Months Ended
	June 30,
	2013			2012
Cash flows from operating activities:
Net income	$	65,232		$	67,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,886			8,955
Stock-based compensation		3,327			2,701
Provision for credit losses		4,321			13,102
Net amortization of premiums and accretion of discounts on securities and borrowings		13,332			10,420
Amortization of other intangible assets		3,530			4,490
Gains on securities transactions, net		(3,999	)		(1,047	)
Net impairment losses on securities recognized in earnings		—			550
Proceeds from sales of loans held for sale		935,834			198,128
Gains on sales of loans, net		(29,426	)		(6,307	)
Originations of loans held for sale		(846,488	)		(196,622	)
Gains on sales of assets, net		(410	)		(288	)
Change in FDIC loss-share receivable (excluding reimbursements)		5,175			7,112
Net change in:
Trading securities		7,987			(101	)
Fair value of borrowings carried at fair value		2,406			(520	)
Cash surrender value of bank owned life insurance		(2,765	)		(3,591	)
Accrued interest receivable		(928	)		2,781
Other assets		38,758			95,567
Accrued expenses and other liabilities		(27,077	)		(41,523	)
Net cash provided by operating activities		178,695			161,158
Cash flows from investing activities:
Net loan repayments (originations)		287,940			(461,749	)
Loans purchased		(178,486	)		(117,255	)
Investment securities held to maturity:
Purchases		(436,005	)		(135,332	)
Maturities, calls and principal repayments		282,888			329,201
Investment securities available for sale:
Purchases		(283,736	)		(49,012	)
Sales		4,309			58,585
Maturities, calls and principal repayments		104,679			133,496
Death benefit proceeds from bank owned life insurance		628			1,689
Proceeds from sales of real estate property and equipment		6,574			4,139
Purchases of real estate property and equipment		(6,828	)		(8,407	)
(Payments to) reimbursements from the FDIC		(865	)		7,537
Cash and cash equivalents acquired in acquisition		—			117,587
Net cash used in investing activities		(218,902	)		(119,521	)
Cash flows from financing activities:
Net change in deposits		(21,396	)		(181,716	)
Net change in short-term borrowings		(29,263	)		281,273
Repayments of long-term borrowings		(1,000	)		(1,000	)
Redemption of junior subordinated debentures		—			(10,000	)
Dividends paid to common shareholders		(64,492	)		(61,730	)
Common stock issued, net		3,583			4,207
Net cash (used in) provided by financing activities		(112,568	)		31,034
Net change in cash and cash equivalents		(152,775	)		72,671
Cash and cash equivalents at beginning of year		853,100			379,049
Cash and cash equivalents at end of period	$	700,325		$	451,720

See accompanying notes to consolidated financial statements.

5

VALLEY NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(in thousands)

	Six Months Ended
	June 30,
	2013		2012
Supplemental disclosures of cash flow information:
Cash payments for:
Interest on deposits and borrowings	$	84,640	$	91,592
Federal and state income taxes		6,614		35,061
Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned		13,384		9,195
Acquisition:
Non-cash assets acquired:
Investment securities available for sale		—		275,650
Loans		—		1,088,421
Premises and equipment, net		—		9,457
Accrued interest receivable		—		5,294
Goodwill		—		109,758
Other intangible assets, net		—		8,050
Other assets		—		72,137
Total non-cash assets acquired	$	—	$	1,568,767
Liabilities assumed:
Deposits		—		1,380,293
Short-term borrowings		—		29,000
Junior subordinated debentures issued to capital trusts		—		15,645
Other liabilities		—		52,998
Total liabilities assumed		—		1,477,936
Net non-cash assets acquired	$	—	$	90,831
Net cash and cash equivalents acquired in acquisition	$	—	$	117,587
Common stock issued in acquisition	$	—	$	208,418

See accompanying notes to consolidated financial statements.

6

VALLEY NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The unaudited consolidated financial statements of Valley National Bancorp, a New Jersey Corporation (Valley), include the accounts of its commercial bank subsidiary, Valley National Bank (the “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.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly Valley’s financial position, results of operations and cash flows at June 30, 2013 and for all periods presented have been made. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the entire fiscal year.

In preparing the unaudited 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.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP and industry practice have been condensed or omitted pursuant to rules and regulations of the SEC. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

Effective January 1, 2012, Valley acquired State Bancorp, Inc., the holding company for State Bank of Long Island, a commercial bank. See the supplemental schedule of non-cash investing activities for additional information, as well as Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

Note 2. Earnings Per Common Share

The following table shows the calculation of both basic and diluted earnings per common share for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
	(in thousands, except for share data)
Net income	$	33,922	$	32,820	$	65,232	$	67,351
Basic weighted-average number of common shares outstanding		199,244,243		197,246,322		199,085,501		197,088,528
Plus: Common stock equivalents		—		3,846		—		17,110
Diluted weighted-average number of common shares outstanding		199,244,243		197,250,168		199,085,501		197,105,638
Earnings per common share:
Basic	$	0.17	$	0.17	$	0.33	$	0.34
Diluted		0.17		0.17		0.33		0.34

7

Common stock equivalents, in the table above, represent the effect of outstanding common stock options and warrants to purchase Valley’s common shares, excluding those with exercise prices that exceed the average market price of Valley’s common stock during the periods presented and therefore would have an anti-dilutive effect on the diluted earnings per common share calculation. Anti-dilutive common stock options and warrants totaled approximately 7.2 million shares for both the three and six months ended June 30, 2013, and 7.7 million shares for both the three and six months ended June 30, 2012.

Note 3. 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 three and six months ended June 30, 2013.

	Components of Accumulated Other Comprehensive Loss												Total
	Unrealized Gains and Losses on Available for Sale (AFS) Securities			Non-credit Impairment Losses on AFS Securities			Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at March 31, 2013	$	(2,080	)	$	502		$	(11,662	)	$	(34,386	)	$	(47,626	)
Other comprehensive income before reclassifications		(16,353	)		2,008			2,036			18,784			6,475
Amounts reclassified from other comprehensive income		(25	)		(43	)		995			1,072			1,999
Other comprehensive income, net		(16,378	)		1,965			3,031			19,856			8,474
Balance at June 30, 2013	$	(18,458	)	$	2,467		$	(8,631	)	$	(14,530	)	$	(39,152	)
Balance at December 31, 2012	$	906		$	(4,175	)	$	(12,676	)	$	(34,964	)	$	(50,909	)
Other comprehensive income before reclassifications		(17,040	)		6,751			1,959			18,769			10,439
Amounts reclassified from other comprehensive income		(2,324	)		(109	)		2,086			1,665			1,318
Other comprehensive income, net		(19,364	)		6,642			4,045			20,434			11,757
Balance at June 30, 2013	$	(18,458	)	$	2,467		$	(8,631	)	$	(14,530	)	$	(39,152	)

8

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and six months ended June 30, 2013.

	Amounts Reclassified from Accumulated Other Comprehensive Loss
Components of Accumulated Other Comprehensive Loss	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Income Statement Line Item
	(in thousands)
Unrealized gains on AFS securities before tax	$	41		$	3,999			Gains (losses) on securities transactions, net
Tax effect		(16	)		(1,675	)
Total net of tax		25			2,324
Non-credit impairment losses on AFS securities before tax:
Accretion of credit loss impairment due to an increase in expected cash flows		75			188			Interest and dividends on investment
Tax effect		(32	)		(79	)		securities (taxable)
Total net of tax		43			109
Unrealized losses on derivatives (cash flow hedges) before tax		(1,714	)		(3,594	)		Interest expense
Tax effect		719			1,508
Total net of tax		(995	)		(2,086	)
Defined benefit pension plan:
Amortization of prior service cost		(241	)		(443	)*
Amortization of net actuarial loss		(811	)		(1,605	)*
Recognition of loss due to curtailment		(750	)		(750	)*
Total before tax		(1,802	)		(2,798	)
Tax effect		730			1,133
Total net of tax		(1,072	)		(1,665	)
Total reclassifications, net of tax	$	(1,999	)	$	(1,318	)

* These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

Note 4. New Authoritative Accounting Guidance

Accounting Standards Update (ASU) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The ASU No. 2013-11 is effective for public entities for fiscal years beginning after December 15, 2013, and interim periods within those years, with an early adoption permitted and an option to apply the amendments retrospectively to each prior reporting period presented. Valley’s adoption of ASU No. 2013-11 is not expected to have a significant impact on its consolidated financial statements.

ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which requires disclosure of the effects of reclassifications out of accumulated other comprehensive income on net income line items only for those items that are reported in their entirety in net income in the period of reclassification. For reclassification items that are not reclassified in their entirety into net income, a cross reference is required to other U.S. GAAP disclosures. The ASU No. 2013-02 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Valley’s adoption of ASU No. 2013-02 did not have a significant impact on its consolidated financial statements. See Note 3 for related disclosures.

ASU No. 2012-06, “Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution,” addresses subsequent measurement of an indemnification asset recognized in a government-assisted acquisition of a financial institution that includes a loss-sharing agreement. When an entity recognizes an indemnification asset (in

9

accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (i.e., the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). ASU No. 2012-06 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012 with an early adoption permitted, and should be applied prospectively. Valley’s adoption of ASU No. 2012-06 did not have a significant impact on its consolidated financial statements.

ASU No. 2011-11, “Balance Sheet (Topic 210): “Disclosures about Offsetting Assets and Liabilities,” requires an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject an enforceable master netting arrangement or similar agreement regardless of whether they are presented net in the financial statements. ASU No. 2011-11 was effective for annual and interim periods beginning on January 1, 2013, and it is required to be applied retrospectively. Valley’s adoption of ASU No. 2011-11 did not have a significant impact on its consolidated financial statements. See Note 14 for related disclosures.

Note 5. Fair Value Measurement of Assets and Liabilities

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).

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

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at June 30, 2013 and December 31, 2012. The assets presented under “nonrecurring 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:
	June 30, 2013		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	$	89,786	$	89,786	$	—	$	—
U.S. government agency securities		55,808		—		55,808		—
Obligations of states and political subdivisions		39,234		—		39,234		—
Residential mortgage-backed securities		573,827		—		545,687		28,140
Trust preferred securities		68,413		—		17,441		50,972
Corporate and other debt securities		84,246		26,721		57,525		—
Equity securities		47,342		26,675		20,667		—
Total available for sale		958,656		143,182		736,362		79,112
Trading securities		14,170		—		14,170
Loans held for sale (1)		48,901		—		48,901		—
Other assets (2)		7,425		—		7,425		—
Total assets	$	1,029,152	$	143,182	$	806,858	$	79,112
Liabilities
Junior subordinated debentures issued to VNB Capital Trust I (3)	$	150,001	$	150,001	$	—	$	—
Other liabilities (2)		18,971		—		18,971		—
Total liabilities	$	168,972	$	150,001	$	18,971	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (4)		41,835		—		—		41,835
Loan servicing rights		5,558		—		—		5,558
Foreclosed assets		7,192		—		—		7,192
Total	$	54,585	$	—	$	—	$	54,585

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			Fair Value Measurements at Reporting Date Using:
	December 31, 2012		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	$	97,625	$	97,625	$	—	$	—
U.S. government agency securities		45,762		—		45,762		—
Obligations of states and political subdivisions		16,627		—		16,627		—
Residential mortgage-backed securities		510,154		—		478,783		31,371
Trust preferred securities		57,432		—		17,129		40,303
Corporate and other debt securities		30,708		28,444		2,264		—
Equity securities		49,508		28,608		20,900		—
Total available for sale		807,816		154,677		581,465		71,674
Trading securities		22,157		—		22,157		—
Loans held for sale (1)		120,230		—		120,230		—
Other assets (2)		7,916		—		7,916		—
Total assets	$	958,119	$	154,677	$	731,768	$	71,674
Liabilities
Junior subordinated debentures issued to VNB Capital Trust I (3)	$	147,595	$	147,595	$	—	$	—
Other liabilities (2)		26,594		—		26,594		—
Total liabilities	$	174,189	$	147,595	$	26,594	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (4)	$	65,231	$	—	$	—	$	65,231
Loan servicing rights		16,201		—		—		16,201
Foreclosed assets		33,251		—		—		33,251
Total	$	114,683	$	—	$	—	$	114,683

⁽¹⁾  Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $49.1 million and $115.4 million at June 30, 2013 and December 31, 2012, respectively.

⁽²⁾  Derivative financial instruments are included in this category.

⁽³⁾  The junior subordinated debentures had contractual unpaid principal obligations totaling $146.7 million at June 30, 2013 and December 31, 2012.

⁽⁴⁾  Excludes covered loans acquired in the FDIC-assisted transactions and other purchased credit-impaired loans acquired in the first quarter of 2012.

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The changes in Level 3 assets measured at fair value on a recurring basis for the three and six months ended June 30, 2013 and 2012 are summarized below:

	Available for Sale Securities
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	77,920		$	84,720		$	71,674		$	77,311
Total net gains (losses) for the period included in:
Net income		—			(550	)		—			(550	)
Other comprehensive income		3,406			7,847			11,439			18,954
Settlements		(2,214	)		(2,926	)		(4,001	)		(6,624	)
Balance, end of the period	$	79,112		$	89,091		$	79,112		$	89,091
Change in unrealized losses for the period included in earnings for assets held at the end of the reporting period *	$	—		$	(550	)	$	—		$	(550	)

* Represents the net impairment losses on securities recognized in earnings for the period.

During the three and six months ended June 30, 2013 and 2012, there were no transfers of assets between Level 1 and Level 2.

There have been no material changes in the valuation methodologies used at June 30, 2013 from December 31, 2012.

The following valuation techniques were used for financial instruments measured at fair value on a recurring basis. All 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 and trading securities. All U.S. Treasury securities, certain corporate and other debt securities, and certain common and preferred equity securities (including certain trust preferred securities) are reported at fair values 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 trading 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, 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 and trust preferred securities. The cash flows for the residential mortgage-backed securities incorporated the expected cash flow of each security adjusted for default rates,

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loss severities and prepayments of the individual loans collateralizing the security. The cash flows for trust preferred securities reflected the contractual cash flow, adjusted if necessary for potential changes in the amount or timing of cash flows due to the underlying credit worthiness of each issuer.

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at June 30, 2013:

Security Type	Valuation Technique	Unobservable Input	Range			Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate		14.7 -   25.2	%		19.3	%
		Default rate		4.3 -   12.2			7.0
		Loss severity		40.2 -   59.8			51.4
Single issuer trust preferred securities	Discounted cash flow	Loss severity		0.0 - 100.0	%		20.3	%
		Market credit spreads		4.8 -     5.4			5.2
		Discount rate		5.1 -     7.9			6.7

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 private label mortgage-backed 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 two single issuer trust preferred securities in the Level 3 available for sale trust preferred securities, the resulting estimated future cash flows were discounted at a yield, comprised of market rates applicable to the index of the underlying security, estimated market credit spread for similar non-rated securities and an illiquidity premium, if appropriate. The discount rate for each security was applied to three alternative cash flow scenarios, and subsequently weighted based on management’s expectations. The three cash flow alternatives for each security assume a scenario with full issuer repayment, a scenario with a partial issuer repayment and a scenario with a full issuer default.

For two pooled securities in the Level 3 available for sale trust preferred securities category, 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 calculations for both securities are received from an independent valuation advisor. In validating the fair value calculation from an independent valuation advisor, 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

14

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 June 30, 2013 and December 31, 2012 based on the short duration these assets were held, and the high credit quality of these loans.

Junior subordinated debentures issued to capital trusts. The junior subordinated debentures issued to VNB Capital Trust I are reported at fair value using Level 1 inputs. The fair value was estimated using quoted prices in active markets for similar assets, specifically the quoted price of the VNB Capital Trust I preferred stock traded under ticker symbol “VLYPRA” on the New York Stock Exchange. The preferred stock and Valley’s junior subordinated debentures issued to the Trust have identical financial terms and therefore, the preferred stock’s quoted price moves in a similar manner to the estimated fair value and current settlement price of the junior subordinated debentures. The preferred stock’s quoted price includes market considerations for Valley’s credit and non-performance risk and is deemed to represent the transfer price that would be used if the junior subordinated debenture were assumed by a third party. Valley’s potential credit risk did not materially impact the fair value measurement of the junior subordinated debentures at June 30, 2013 and December 31, 2012.

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 flows 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 June 30, 2013), 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 June 30, 2013 and December 31, 2012.

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 nonrecurring basis, including impaired loans reported at the fair value of the underlying collateral, loan servicing rights, other real estate owned and other repossessed assets (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 June 30, 2013, non-current appraisals were discounted up to 13.8 percent based on specific market data by location and property type. During the quarter ended June 30, 2013, 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 $5.2 million and $13.4 million for the three and six months ended June 30, 2013, respectively. At June 30, 2013, collateral dependent impaired loans with a total recorded investment of $49.5 million were reduced by specific valuation allowance allocations totaling $7.7 million to a reported total net carrying amount of $41.8 million.

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 June 30, 2013, the fair value model used prepayment speeds (stated as constant prepayment rates) from 6 percent up to 24 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

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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 recoveries of impairment charges totaling $759 thousand and $2.1 million for the three and six months ended June 30, 2013, respectively.

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. The discounts on appraisals of foreclosed assets were immaterial at June 30, 2013. At June 30, 2013, foreclosed assets included $7.2 million of assets that were measured at fair value upon initial recognition or subsequently re-measured during the quarter ended June 30, 2013. The foreclosed assets charge-offs to the allowance for loan losses totaled $1.6 million and $3.1 million for the three and six months ended June 30, 2013, respectively. The re-measurement of repossessed assets at fair value subsequent to their initial recognition resulted in a loss of $570 thousand within non-interest expense for the six months ended June 30, 2013.

Other Fair Value Disclosures

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets and liabilities carried at fair value for the three and six months ended June 30, 2013 and 2012:

		Gains (Losses) on Change in Fair Value
Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
		(in thousands)
Assets:
Available for sale securities	Net impairment losses on securities	$	—		$	(550	)	$	—		$	(550	)
Trading securities	Trading (losses) gains, net		(36	)		(151	)		(66	)		101
Loans held for sale	Gains on sales of loans, net		14,366			3,141			29,426			6,307
Liabilities:
Junior subordinated debentures issued to capital trusts	Trading (losses) gains, net		(234	)		1,760			(2,406	)		520
		$	14,096		$	4,200		$	26,954		$	6,378

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.

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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 June 30, 2013 and December 31, 2012 were as follows:

		June 30, 2013				December 31, 2012
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	401,228	$	401,228	$	390,078	$	390,078
Interest bearing deposits with banks	Level 1		299,097		299,097		463,022		463,022
Investment securities held to maturity:
U.S. Treasury securities	Level 1		99,792		108,734		99,869		115,329
Obligations of states and political subdivisions	Level 2		542,154		542,614		506,473		531,966
Residential mortgage-backed securities	Level 2		969,341		963,575		813,647		838,116
Trust preferred securities	Level 2		103,453		91,348		127,505		113,657
Corporate and other debt securities	Level 2		52,207		57,910		52,213		58,882
Total investment securities held to maturity			1,766,947		1,764,181		1,599,707		1,657,950
Net loans	Level 3		10,765,581		10,734,500		10,892,599		10,908,742
Accrued interest receivable	Level 1		53,303		53,303		52,375		52,375
Federal Reserve Bank and Federal Home Loan Bank stock(1)	Level 1		138,359		138,359		138,533		138,533
Financial liabilities
Deposits without stated maturities	Level 1		8,877,529		8,877,529		8,755,252		8,755,252
Deposits with stated maturities	Level 2		2,365,093		2,404,271		2,508,766		2,563,726
Short-term borrowings	Level 1		125,060		125,060		154,323		154,323
Long-term borrowings	Level 2		2,695,897		2,994,601		2,697,299		3,100,173
Junior subordinated debentures issued to capital trusts	Level 2		41,008		42,731		40,927		40,776
Accrued interest payable(2)	Level 1		16,766		16,766		15,917		15,917

⁽¹⁾  Included in other assets.

⁽²⁾  Included in accrued expenses and other liabilities.

The following methods and assumptions that 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 non-covered loans (i.e., loans which are not subject to loss-sharing agreements with the FDIC) and covered loans (i.e., loans subject to loss-sharing agreements with the FDIC) 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 re-pricing. 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.

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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. FRB 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 from time to time, federal funds purchased and FHLB borrowings) 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 (excluding VNB Capital Trust I). There is no active market for the trust preferred securities issued by Valley capital trusts, except for the securities issued by VNB Capital Trust I whose related debentures are carried at fair value. Therefore, the fair value of debentures 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). Valley’s credit spread was calculated based on the exchange quoted price for Valley’s trust preferred securities issued by VNB Capital Trust I.

Note 6. Investment Securities

As of June 30, 2013, Valley had approximately $1.8 billion, $958.7 million, and $14.2 million in held to maturity, available for sale, and trading investment securities, respectively. 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 three pooled trust preferred securities), corporate bonds primarily issued by banks, and perpetual preferred and common equity 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. See the “Other-Than-Temporary Impairment Analysis” section below for further discussion.

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Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at June 30, 2013 and December 31, 2012 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	99,792	$	8,942	$	—		$	108,734
Obligations of states and political subdivisions		542,154		10,120		(9,660	)		542,614
Residential mortgage-backed securities		969,341		13,459		(19,225	)		963,575
Trust preferred securities		103,453		377		(12,482	)		91,348
Corporate and other debt securities		52,207		5,704		(1	)		57,910
Total investment securities held to maturity	$	1,766,947	$	38,602	$	(41,368	)	$	1,764,181
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

The age of unrealized losses and fair value of related securities held to maturity at June 30, 2013 and December 31, 2012 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, 2013
Obligations of states and political subdivisions	$	130,784	$	(9,564	)	$	1,345	$	(96	)	$	132,129	$	(9,660	)
Residential mortgage-backed securities		520,005		(19,225	)		—		—			520,005		(19,225	)
Trust preferred securities		15,916		(259	)		51,159		(12,223	)		67,075		(12,482	)
Corporate and other debt securities		49		(1	)		—		—			49		(1	)
Total	$	666,754	$	(29,049	)	$	52,504	$	(12,319	)	$	719,258	$	(41,368	)
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	)

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 June 30, 2013 was 127 as compared to 34 at December 31, 2012. The recent increase in long-term market interest rates materially decreased the fair value of lower yielding obligations of states and political subdivisions (“municipal bonds”) and residential mortgage-backed securities classified as held to maturity. The municipal bonds are all investment grade with no bankruptcies or defaults.

The unrealized losses for the residential mortgage-backed securities category of the held to maturity portfolio at June 30, 2013 are all within the less than twelve months category and all relate to investment grade mortgage-backed securities issued or guaranteed by Ginnie Mae and government sponsored enterprises.

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The unrealized losses for trust preferred securities at June 30, 2013 primarily related to 4 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 June 30, 2013.

Management does not believe that any individual unrealized loss as of June 30, 2013 included in the table above represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes in interest rates, widening credit spreads, and lack of liquidity in the market place, 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, 2013, 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 $759.5 million.

The contractual maturities of investments in debt securities held to maturity at June 30, 2013 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, 2013
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	147,705	$	148,150
Due after one year through five years		41,978		46,652
Due after five years through ten years		238,461		250,285
Due after ten years		369,462		355,519
Residential mortgage-backed securities		969,341		963,575
Total investment securities held to maturity	$	1,766,947	$	1,764,181

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 5.0 years at June 30, 2013.

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Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of securities available for sale at June 30, 2013 and December 31, 2012 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	99,839	$	—	$	(10,053	)	$	89,786
U.S. government agency securities		54,917		1,504		(613	)		55,808
Obligations of states and political subdivisions		40,608		791		(2,165	)		39,234
Residential mortgage-backed securities		590,225		4,414		(20,812	)		573,827
Trust preferred securities*		67,973		6,088		(5,648	)		68,413
Corporate and other debt securities		84,523		2,008		(2,285	)		84,246
Equity securities		48,020		1,220		(1,898	)		47,342
Total investment securities available for sale	$	986,105	$	16,025	$	(43,474	)	$	958,656
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

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

The age of unrealized losses and fair value of related securities available for sale at June 30, 2013 and December 31, 2012 were as follows:

	Less than					More than
	Twelve Months					Twelve Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	89,786	$	(10,053	)	$	—	$	—		$	89,786	$	(10,053	)
U.S. government agency securities		28,188		(613	)		—		—			28,188		(613	)
Obligations of states and political subdivisions		24,204		(2,165	)		—		—			24,204		(2,165	)
Residential mortgage-backed securities		442,850		(18,946	)		13,566		(1,866	)		456,416		(20,812	)
Trust preferred securities		446		(10	)		32,969		(5,638	)		33,415		(5,648	)
Corporate and other debt securities		54,149		(2,192	)		2,407		(93	)		56,556		(2,285	)
Equity securities		1,144		(41	)		12,601		(1,857	)		13,745		(1,898	)
Total	$	640,767	$	(34,020	)	$	61,543	$	(9,454	)	$	702,310	$	(43,474	)
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	)

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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, 2013 was 108 as compared to 74 at December 31, 2012. The recent increase in long-term market interest rates materially decreased the fair value of lower yielding obligations of states and political subdivisions (“municipal bonds”) and residential mortgage-backed securities classified as available for sale. The municipal bonds are all investment grade with no bankruptcies or defaults.

The unrealized losses within the residential mortgage-backed securities category of the available for sale portfolio totaled $20.8 million of at June 30, 2013 and primarily related to $18.4 million in unrealized losses on 25 investment grade residential mortgage-backed securities mainly issued by Ginnie Mae, and a $1.6 million unrealized loss on one non-investment grade private label mortgage-backed security.

The unrealized losses for trust preferred securities at June 30, 2013 in the table above relate to 3 pooled trust preferred and 9 single-issuer bank issued trust preferred securities. The unrealized losses include $4.3 million attributable to 3 pooled trust preferred securities with an amortized cost of $16.5 million and a fair value of $12.2 million and $469 thousand attributable to trust preferred securities of one issuance by one deferring bank holding company with an amortized cost of $16.5 million and a fair value of $16.0 million. The three pooled trust preferred securities included one security with an unrealized loss of $2.6 million and an investment grade rating at June 30, 2013. The other two pooled trust preferred securities had non-investment grade ratings and were initially other-than-temporarily impaired in 2008 with additional estimated credit losses recognized during the period 2009 through 2011. The trust preferred issuances by one deferring holding company were initially other-than-temporarily impaired in 2011 with additional estimated credit impairments recognized during 2012. See “Other-Than-Temporarily Impaired Analysis” section below for more details. All of the remaining single-issuer trust preferred securities are all paying in accordance with their terms and have no deferrals of interest or defaults and, if applicable, meet the regulatory capital requirements to be considered “well-capitalized institutions” at June 30, 2013.

The unrealized losses existing for more than twelve months for equity securities are mostly related to two perpetual preferred security positions with a combined $10.0 million amortized cost and a $1.6 million unrealized loss. At June 30, 2013, these perpetual preferred securities had investment grade ratings and are currently performing and paying quarterly dividends.

Management does not believe that any individual unrealized loss as of June 30, 2013 represents an other-than-temporary impairment, as management mainly attributes the declines in value to changes in interest rates and recent market volatility and wider credit spreads, 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.

As of June 30, 2013, 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 $421.9 million.

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The contractual maturities of investment securities available for sale at June 30, 2013 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, 2013
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	720	$	724
Due after one year through five years		44,295		43,520
Due after five years through ten years		120,195		117,815
Due after ten years		182,650		175,428
Residential mortgage-backed securities		590,225		573,827
Equity securities		48,020		47,342
Total investment securities available for sale	$	986,105	$	958,656

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 June 30, 2013 was 3.2 years.

Other-Than-Temporary Impairment Analysis

To determine whether a security’s impairment is other-than-temporary, Valley considers several factors that include, but are not limited to the following:

• The severity and duration of the decline, including the causes of the decline in fair value, such as an issuer’s credit problems, interest rate fluctuations, or market volatility;

• Adverse conditions specifically related to the issuer of the security, an industry, or geographic area;

• Failure of the issuer of the security to make scheduled interest or principal payments;

• Any changes to the rating of the security by a rating agency or, if applicable, any regulatory actions impacting the security issuer;

• Recoveries or additional declines in fair value after the balance sheet date;

• Our 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; and

• Our intent to sell debt security investments, or if it is more likely than not that we 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 we expect to collect all contractual cash flows.

In assessing the level of other-than-temporary impairment attributable to credit loss for debt securities, 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 amount related to other factors is recognized in other comprehensive income or loss. The total other-than-temporary impairment loss is presented in the consolidated statements of income, less the portion recognized in other comprehensive income or loss. Subsequent assessments may result in additional estimated credit losses on previously impaired securities. These additional estimated credit losses are recorded as reclassifications from the portion of other-than-temporary impairment previously recognized in other comprehensive income or loss to earnings in the period of such assessments. The amortized cost basis of an impaired debt security is reduced by the portion of the total impairment related to credit loss.

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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. No other-than-temporary impairment losses were recognized as a result of our impairment analysis of these securities at June 30, 2013.

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. Over the past several years, an increasing number of banking institutions have been required to defer trust preferred payments and various banking institutions have been put in receivership by the FDIC. 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 June 30, 2013 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.

Within the available for sale portfolio, Valley has other-than-temporarily impaired trust preferred securities issued by one deferring bank holding company with a combined amortized cost and fair value of $41.8 million and $47.3 million, respectively, after credit impairment charges prior to June 30, 2013. The issuer of the trust preferred securities has deferred interest payments on these securities since late 2009 as required by an operating agreement with its bank regulators. In assessing whether a credit loss exists for the securities of the deferring issuer, Valley considers numerous other factors, including but not limited to, such factors highlighted in the bullet points above. From the dates of deferral up to and including the bank holding company’s most recent regulatory filing, the bank issuer continued to accrue and capitalize the interest owed, but has not remitted the interest to its trust preferred security holders. Additionally, the bank subsidiary of the issuer continued to report capital ratios that were above the minimum amounts to be considered a “well-capitalized” financial institution in its most recent regulatory filing. During the fourth quarter of 2011, Valley estimated a decline in the expected cash flows from the securities as it lengthened the estimate of the timeframe over which it could reasonably anticipate receiving such cash flows, and during the third quarter of 2012, Valley estimated an additional decline in cash flows under one of three weighted alternative scenarios utilized to assess impairment of the securities. The declines in estimated cash flows, after careful assessment of all other available factors, resulted in credit impairment charges of $18.3 million and $4.5 million during the fourth quarter of 2011 and third quarter of 2012, respectively. Valley no longer accrued interest on the securities after the initial impairment in 2011. No additional impairment was recognized as a result of our impairment analysis of these securities at June 30, 2013. See Note 5 for information regarding the Level 3 valuation technique used to measure the fair value of these trust preferred securities at June 30, 2013.

For the three pooled trust preferred securities, Valley evaluates the projected cash flows from each of its tranches in the three 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. Two of the pooled trust preferred securities were initially impaired in 2008 with additional estimated credit losses recognized during 2009 and 2011, and are not accruing interest.

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 June 30, 2013. 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.

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Other-Than-Temporarily Impaired Securities

There were no other-than-temporary impairment losses on securities recognized in earnings for the three and six months ended June 30, 2013. For the three and six months ended June 30, 2012, Valley recognized net impairment losses on securities in earnings totaling $550 thousand due to additional estimated credit losses on 1 of 5 previously impaired private label mortgage-backed securities. At June 30, 2013, the 5 impaired private label mortgage-backed securities had a combined amortized cost of $27.7 million and fair value of $28.3 million.

Realized Gains and Losses

Gross gains (losses) realized on sales, maturities and other securities transactions related to investment securities included in earnings for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Sales transactions:
Gross gains	$	1		$	1,234		$	3,381		$	1,374
Gross losses		—			—			—			(298	)
	$	1		$	1,234		$	3,381		$	1,076
Maturities and other securities transactions:
Gross gains	$	41		$	6		$	649		$	19
Gross losses		(1	)		(36	)		(31	)		(48	)
	$	40		$	(30	)	$	618		$	(29	)
Total gains on securities transactions, net	$	41		$	1,204		$	3,999		$	1,047

Valley recognized gross gains from sales transactions totaling $3.4 million for the six months ended June 30, 2013 primarily due to the sales of zero percent yielding Freddie Mac and Fannie Mae perpetual preferred stock with amortized cost totaling $941 thousand during the first quarter of 2013.

The following table presents the changes in the credit loss component of cumulative other-than-temporary impairment losses on debt securities classified as either held to maturity or available for sale that Valley has recognized in earnings, for which a portion of the impairment loss (non-credit factors) was recognized in other comprehensive income for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of period	$	33,177		$	28,767		$	33,290		$	29,070
Additions:
Subsequent credit impairments		—			550			—			550
Reductions:
Accretion of credit loss impairment due to an increase in expected cash flows		(75	)		(66	)		(188	)		(369	)
Balance, end of period	$	33,102		$	29,251		$	33,102		$	29,251

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

25

each period presented. Other-than-temporary impairments recognized in earnings for credit impaired debt securities are presented as additions in two components based upon whether the current period is the first time the debt security was credit impaired (initial credit impairment) or is not the first time the debt security was credit impaired (subsequent credit impairment). The credit loss component is reduced if Valley sells, intends to sell or believes it will be required to sell previously credit impaired debt securities. Additionally, 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 or (iii) the security is fully written down.

Trading Securities

The fair value of trading securities (consisting of 2 single-issuer bank trust preferred securities) was $14.2 million at June 30, 2013 and $22.2 million (consisting of 3 single-issuer bank trust preferred securities) at December 31, 2012. Interest income on trading securities totaled $413 thousand and $462 thousand for the three months ended June 30, 2013 and 2012, respectively, and $855 thousand and $884 thousand for the six months ended June 30, 2013 and 2012, respectively.

Note 7. Loans

The detail of the loan portfolio as of June 30, 2013 and December 31, 2012 was as follows:

	June 30, 2013						December 31, 2012
	Non-PCI Loans		PCI Loans		Total		Non-PCI Loans		PCI Loans		Total
	(in thousands)
Non-covered loans:
Commercial and industrial	$	1,800,818	$	187,586	$	1,988,404	$	1,832,743	$	252,083	$	2,084,826
Commercial real estate:
Commercial real estate		3,893,492		544,220		4,437,712		3,772,084		645,625		4,417,709
Construction		404,084		22,807		426,891		399,855		25,589		425,444
Total commercial real estate loans		4,297,576		567,027		4,864,603		4,171,939		671,214		4,843,153
Residential mortgage		2,397,884		15,084		2,412,968		2,445,627		16,802		2,462,429
Consumer:
Home equity		415,501		39,665		455,166		438,881		46,577		485,458
Automobile		835,271		—		835,271		786,528		—		786,528
Other consumer		184,570		226		184,796		179,417		314		179,731
Total consumer loans		1,435,342		39,891		1,475,233		1,404,826		46,891		1,451,717
Total non-covered loans	$	9,931,620	$	809,588	$	10,741,208	$	9,855,135	$	986,990	$	10,842,125
Covered loans:
Commercial and industrial	$	—	$	32,990	$	32,990	$	—	$	46,517	$	46,517
Commercial real estate		—		95,164		95,164		—		120,268		120,268
Construction		—		3,029		3,029		—		1,924		1,924
Residential mortgage		—		8,920		8,920		—		9,659		9,659
Consumer		—		1,714		1,714		—		2,306		2,306
Total covered loans		—		141,817		141,817		—		180,674		180,674
Total loans	$	9,931,620	$	951,405	$	10,883,025	$	9,855,135	$	1,167,664	$	11,022,799

Total non-covered loans are net of unearned discount and deferred loan fees totaling $8.3 million and $3.4 million at June 30, 2013 and December 31, 2012, respectively. The outstanding balances (representing contractual balances owed to Valley) for non-covered PCI loans and covered loans totaled $886.4 million and $277.8 million at June 30, 2013, and $1.1 billion and $321.9 million at December 31, 2012, respectively.

There were no sales of loans from the held for investment portfolio during the three and six months ended June 30, 2013 and 2012.

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Purchased Credit-Impaired Loans (Including Covered Loans)

Purchased Credit-Impaired (PCI) loans, which include loans acquired in FDIC-assisted transactions (“covered loans”) subject to loss-sharing agreements, are acquired at a discount that is due, in part, to credit quality. 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.

The following table presents changes in the accretable yield for PCI loans during the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of period	$	153,138		$	229,802		$	169,309		$	66,724
Acquisitions		—			—			—			186,262
Accretion		(17,639	)		(20,385	)		(33,874	)		(43,569	)
Net increase in expected cash flows		120,884			—			120,948			—
Balance, end of period	$	256,383		$	209,417		$	256,383		$	209,417

The net 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 life of the individual pools. The net increase was largely due to additional cash flows caused by longer than originally expected durations for certain non-covered PCI loans which increased the average expected life of our non-covered PCI loans (which represent 85 percent of total PCI loans at June 30, 2013) from 2.5 years (at the date of acquisition) to approximately 4.0 years. Additionally, a $20.1 million decrease in the expected credit losses for certain non-covered pools is another component of the net increase in cash flows.

FDIC Loss-Share Receivable

The receivable arising from the loss-sharing agreements (referred to as the “FDIC loss-share receivable” on our consolidated statements of financial condition) 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.

Changes in the FDIC loss-share receivable for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	43,413		$	69,928		$	44,996		$	74,390
Discount accretion of the present value at the acquisition dates		32			81			65			162
Effect of additional cash flows on covered loans (prospective recognition)		(3,467	)		(2,231	)		(4,949	)		(3,868	)
Decrease in the provision for losses on covered loans		(105	)		—			(2,783	)		—
Other reimbursable expenses		1,540			1,088			2,492			2,554
(Reimbursements from) payments to the FDIC		(727	)		(3,165	)		865			(7,537	)
Other		—			(5,960	)		—			(5,960	)
Balance, end of the period	$	40,686		$	59,741		$	40,686		$	59,741

27

The aggregate effect of changes in the FDIC loss-share receivable was a reduction in non-interest income of $2.0 million and $7.0 million for the three months ended June 30, 2013 and 2012, respectively, and a reduction of $5.2 million and $7.1 million to non-interest income for the six months ended June 30, 2013 and 2012, respectively. The reductions in non-interest income for the three and six months ended June 30, 2012 included $6.0 million related to the FDIC’s portion of the estimated losses on unused lines of credit assumed in the FDIC-assisted transactions, which had expired.

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. Valley, in most cases, 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 $300.0 million and $307.0 million at June 30, 2013 and December 31, 2012, respectively.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Loans generally involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. 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.

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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, 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 strength or weakness in 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 minor exposures in credit card loans, personal lines of credit, personal loans and loans secured by cash surrender value of life insurance. Valley believes the aggregate risk exposure of these loans and lines of credit was not significant at June 30, 2013. Unsecured consumer loans totaled approximately $20.7 million and $44.0 million, including $8.2 million and $8.6 million of credit card loans, at June 30, 2013 and December 31, 2012, respectively.

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Credit Quality

The following table presents past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis) by loan portfolio class at June 30, 2013 and December 31, 2012:

	Past Due and Non-Accrual Loans
	30-89 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)
June 30, 2013
Commercial and industrial	$	3,525	$	—	$	20,913	$	24,438	$	1,776,380	$	1,800,818
Commercial real estate:
Commercial real estate		18,946		259		55,390		74,595		3,818,897		3,893,492
Construction		5,772		150		13,617		19,539		384,545		404,084
Total commercial real estate loans		24,718		409		69,007		94,134		4,203,442		4,297,576
Residential mortgage		10,619		2,342		26,054		39,015		2,358,869		2,397,884
Consumer loans:
Home equity		724		—		2,328		3,052		412,449		415,501
Automobile		3,307		152		221		3,680		831,591		835,271
Other consumer		107		197		—		304		184,266		184,570
Total consumer loans		4,138		349		2,549		7,036		1,428,306		1,435,342
Total	$	43,000	$	3,100	$	118,523	$	164,623	$	9,766,997	$	9,931,620
December 31, 2012
Commercial and industrial	$	3,578	$	283	$	22,424	$	26,285	$	1,806,458	$	1,832,743
Commercial real estate:
Commercial real estate		13,245		2,950		58,625		74,820		3,697,264		3,772,084
Construction		6,685		2,575		14,805		24,065		375,790		399,855
Total commercial real estate loans		19,930		5,525		73,430		98,885		4,073,054		4,171,939
Residential mortgage		18,951		2,356		32,623		53,930		2,391,697		2,445,627
Consumer loans:
Home equity		702		—		2,398		3,100		435,781		438,881
Automobile		5,443		469		305		6,217		780,311		786,528
Other consumer		1,082		32		628		1,742		177,675		179,417
Total consumer loans		7,227		501		3,331		11,059		1,393,767		1,404,826
Total	$	49,686	$	8,665	$	131,808	$	190,159	$	9,664,976	$	9,855,135

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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 restructuring, 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 June 30, 2013 and December 31, 2012:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
June 30, 2013
Commercial and industrial	$	3,670	$	53,925	$	57,595	$	73,152	$	11,420
Commercial real estate:
Commercial real estate		21,747		89,450		111,197		127,316		11,729
Construction		5,744		13,690		19,434		21,595		2,903
Total commercial real estate loans		27,491		103,140		130,631		148,911		14,632
Residential mortgage		11,317		15,562		26,879		30,714		2,677
Consumer loans:
Home equity		1,049		137		1,186		1,529		11
Total consumer loans		1,049		137		1,186		1,529		11
Total	$	43,527	$	172,764	$	216,291	$	254,306	$	28,740
December 31, 2012
Commercial and industrial	$	3,236	$	46,461	$	49,697	$	62,183	$	12,088
Commercial real estate:
Commercial real estate		26,724		84,151		110,875		125,875		11,788
Construction		6,339		14,002		20,341		23,678		4,793
Total commercial real estate loans		33,063		98,153		131,216		149,553		16,581
Residential mortgage		8,232		16,659		24,891		27,059		2,329
Consumer loans:
Home equity		672		258		930		1,169		15
Total consumer loans		672		258		930		1,169		15
Total	$	45,203	$	161,531	$	206,734	$	239,964	$	31,013

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The following table presents by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,
	2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	56,017	$	412	$	48,888	$	339
Commercial real estate:
Commercial real estate		114,066		866		98,077		302
Construction		19,932		70		21,412		37
Total commercial real estate loans		133,998		936		119,489		339
Residential mortgage		29,099		349		21,179		238
Consumer loans:
Home equity		1,174		14		274		3
Total consumer loans		1,174		14		274		3
Total	$	220,288	$	1,711	$	189,830	$	919

	Six Months Ended June 30,
	2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	55,644	$	788	$	52,094	$	748
Commercial real estate:
Commercial real estate		113,735		1,617		95,004		991
Construction		19,547		139		21,742		86
Total commercial real estate loans		133,282		1,756		116,746		1,077
Residential mortgage		28,686		532		20,889		374
Consumer loans:
Home equity		1,194		26		277		7
Total consumer loans		1,194		26		277		7
Total	$	218,853	$	3,102	$	190,006	$	2,206

Interest income recognized on a cash basis (included in the table above) was immaterial for the three and six months ended June 30, 2013 and 2012.

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 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.

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Performing TDRs (not reported as non-accrual loans) totaled $117.1 million and $105.4 million as of June 30, 2013 and December 31, 2012, respectively. Non-performing TDRs totaled $43.9 million and $41.8 million as of June 30, 2013 and December 31, 2012, respectively.

The following table presents loans by loan portfolio class modified as TDRs during the three and six months ended June 30, 2013 and 2012. 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 June 30, 2013 and 2012, respectively.

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial		6	$	13,912	$	13,881		8	$	18,278	$	16,623
Commercial real estate:
Commercial real estate		4		7,275		7,266		8		33,677		33,487
Construction		4		4,936		4,979		2		4,557		4,254
Total commercial real estate		8		12,211		12,245		10		38,234		37,741
Residential mortgage		5		1,414		1,259		9		2,926		2,919
Consumer		1		74		74		—		—		—
Total		20	$	27,611	$	27,459		27	$	59,438	$	57,283

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial		10	$	16,750	$	15,232		13	$	19,700	$	17,574
Commercial real estate:
Commercial real estate		9		11,729		11,727		14		35,726		35,453
Construction		5		5,474		5,510		4		6,711		5,278
Total commercial real estate		14		17,203		17,237		18		42,437		40,731
Residential mortgage		22		4,578		4,016		13		3,778		3,767
Consumer		6		452		397		2		69		67
Total		52	$	38,983	$	36,882		46	$	65,984	$	62,139

The majority of the TDR concessions made during the three and six months ended June 30, 2013 and 2012 involved an extension of the loan term and/or an interest rate reduction. The TDRs presented in the table above had allocated specific reserves for loan losses totaling $3.7 million and $9.5 million at June 30, 2013 and 2012, respectively. These specific reserves are included in the allowance for loan losses for loans individually evaluated for impairment disclosed in Note 8. One commercial loan modified as a TDR included in the table above resulted in a $1.1 million charge-off during the six months ended June 30, 2013. There were no charge-offs resulting from loans modified as TDRs during the second quarter of 2013 and the three and six months ended June 30, 2012.

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The following table presents non-PCI loans modified as TDRs within the previous 12 months from, and for which there was a payment default (90 days or more past due) during the three and six months ended June 30, 2013:

Troubled Debt Restructurings Subsequently Defaulted	Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	($ in thousands)
Commercial and industrial		1	$	1,297		1	$	1,297
Commercial real estate		1		531		1		531
Residential mortgage		—		—		9		2,320
Consumer		—		—		2		220
Total		2	$	1,828		13	$	4,368

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 we 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. 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” loans 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 (excluding PCI loans) by class of loans based on the most recent analysis performed at June 30, 2013 and December 31, 2012.

Credit exposure - by internally assigned risk rating	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
June 30, 2013
Commercial and industrial	$	1,634,931	$	70,190	$	95,670	$	27	$	1,800,818
Commercial real estate		3,696,473		60,107		136,912		—		3,893,492
Construction		346,560		33,797		17,927		5,800		404,084
Total	$	5,677,964	$	164,094	$	250,509	$	5,827	$	6,098,394
December 31, 2012
Commercial and industrial	$	1,673,604	$	64,777	$	94,184	$	178	$	1,832,743
Commercial real estate		3,563,530		59,175		149,379		—		3,772,084
Construction		340,357		32,817		19,521		7,160		399,855
Total	$	5,577,491	$	156,769	$	263,084	$	7,338	$	6,004,682

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.

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The following table presents the recorded investment in those loan classes based on payment activity as of June 30, 2013 and December 31, 2012:

Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
June 30, 2013
Residential mortgage	$	2,371,830	$	26,054	$	2,397,884
Home equity		413,173		2,328		415,501
Automobile		835,050		221		835,271
Other consumer		184,570		—		184,570
Total	$	3,804,623	$	28,603	$	3,833,226
December 31, 2012
Residential mortgage	$	2,413,004	$	32,623	$	2,445,627
Home equity		436,483		2,398		438,881
Automobile		786,223		305		786,528
Other consumer		178,789		628		179,417
Total	$	3,814,499	$	35,954	$	3,850,453

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 June 30, 2013 and December 31, 2012.

Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total PCI Loans
	(in thousands)
June 30, 2013
Commercial and industrial	$	216,501	$	4,075	$	220,576
Commercial real estate		594,919		44,465		639,384
Construction		17,150		8,686		25,836
Residential mortgage		20,111		3,893		24,004
Consumer		40,310		1,295		41,605
Total	$	888,991	$	62,414	$	951,405
December 31, 2012
Commercial and industrial	$	292,163	$	6,437	$	298,600
Commercial real estate		715,812		50,081		765,893
Construction		17,967		9,546		27,513
Residential mortgage		22,173		4,288		26,461
Consumer		47,689		1,508		49,197
Total	$	1,095,804	$	71,860	$	1,167,664

Note 8. Allowance for Credit Losses

The allowance for credit losses consists of the allowance for losses on non-covered loans and allowance for losses on covered loans related to credit impairment of certain covered loan pools subsequent to acquisition, as well as 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 losses on non-covered loans is based on ongoing evaluations of the probable estimated losses inherent in the non-covered loan portfolio, including unexpected credit impairment of non-covered PCI loan pools subsequent to the acquisition date.

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The following table summarizes the allowance for credit losses at June 30, 2013 and December 31, 2012:

	June 30, 2013		December 31, 2012
	(in thousands)
Components of allowance for credit losses:
Allowance for non-covered loans	$	110,374	$	120,708
Allowance for covered loans		7,070		9,492
Total allowance for loan losses		117,444		130,200
Allowance for unfunded letters of credit		2,436		2,295
Total allowance for credit losses	$	119,880	$	132,495

The following table summarizes the provision for credit losses for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Components of provision for credit losses:
Provision for non-covered loans	$	2,746		$	7,429		$	6,456		$	12,803
Provision for covered loans		(110	)		—			(2,276	)		—
Total provision for loan losses		2,636			7,429			4,180			12,803
Provision for unfunded letters of credit		(84	)		(24	)		141			299
Total provision for credit losses	$	2,552		$	7,405		$	4,321		$	13,102

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2013 and 2012:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
Three Months Ended June 30, 2013:
Allowance for loan losses:
Beginning balance	$	55,732		$	44,195		$	9,331		$	5,460		$	7,126		$	121,844
Loans charged-off		(1,441	)		(4,389	)		(1,666	)		(860	)		—			(8,356	)
Charged-off loans recovered		602			50			68			600			—			1,320
Net charge-offs		(839	)		(4,339	)		(1,598	)		(260	)		—			(7,036	)
Provision for loan losses		(1,161	)		3,323			788			(116	)		(198	)		2,636
Ending balance	$	53,732		$	43,179		$	8,521		$	5,084		$	6,928		$	117,444
Three Months Ended June 30, 2012:
Allowance for loan losses:
Beginning balance	$	73,311		$	34,415		$	9,837		$	7,940		$	7,367		$	132,870
Loans charged-off *		(5,406	)		(5,379	)		(583	)		(1,015	)		—			(12,383	)
Charged-off loans recovered		1,304			116			111			407			—			1,938
Net charge-offs		(4,102	)		(5,263	)		(472	)		(608	)		—			(10,445	)
Provision for loan losses		1,313			6,406			1,375			(1,523	)		(142	)		7,429
Ending balance	$	70,522		$	35,558		$	10,740		$	5,809		$	7,225		$	129,854

* The allowance for covered loans was reduced by loan charge-offs totaling $1.8 million during the second quarter of 2012.

36

The following tables detail the activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2013 and 2012, including both covered and non-covered loans:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
Six Months Ended June 30, 2013:
Allowance for loan losses:
Beginning balance	$	64,370		$	44,069		$	9,423		$	5,542		$	6,796		$	130,200
Loans charged-off		(8,766	)		(6,382	)		(2,558	)		(2,369	)		—			(20,075	)
Charged-off loans recovered		1,940			65			138			996			—			3,139
Net charge-offs		(6,826	)		(6,317	)		(2,420	)		(1,373	)		—			(16,936	)
Provision for loan losses		(3,812	)		5,427			1,518			915			132			4,180
Ending balance	$	53,732		$	43,179		$	8,521		$	5,084		$	6,928		$	117,444
Six Months Ended June 30, 2012:
Allowance for loan losses:
Beginning balance	$	73,649		$	34,637		$	9,120		$	8,677		$	7,719		$	133,802
Loans charged-off *		(10,213	)		(6,459	)		(1,759	)		(2,498	)		—			(20,929	)
Charged-off loans recovered		2,309			236			625			1,008			—			4,178
Net charge-offs		(7,904	)		(6,223	)		(1,134	)		(1,490	)		—			(16,751	)
Provision for loan losses		4,777			7,144			2,754			(1,378	)		(494	)		12,803
Ending balance	$	70,522		$	35,558		$	10,740		$	5,809		$	7,225		$	129,854

* The allowance for covered loans was reduced by loan charge-offs totaling $1.8 million for the six months ended June 30, 2012.

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 at June 30, 2013 and December 31, 2012.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Unallocated		Total
	(in thousands)
June 30, 2013
Allowance for loan losses:
Individually evaluated for impairment	$	11,420	$	14,632	$	2,677	$	11	$	—	$	28,740
Collectively evaluated for impairment		41,800		22,115		5,721		5,070		6,928		81,634
Loans acquired with discounts related to credit quality		512		6,432		123		3		—		7,070
Total	$	53,732	$	43,179	$	8,521	$	5,084	$	6,928	$	117,444
Loans:
Individually evaluated for impairment	$	57,595	$	130,631	$	26,879	$	1,186	$	—	$	216,291
Collectively evaluated for impairment		1,743,223		4,166,945		2,371,005		1,434,156		—		9,715,329
Loans acquired with discounts related to credit quality		220,576		665,220		24,004		41,605		—		951,405
Total	$	2,021,394	$	4,962,796	$	2,421,888	$	1,476,947	$	—	$	10,883,025
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	12,088	$	16,581	$	2,329	$	15	$	—	$	31,013
Collectively evaluated for impairment		44,877		25,463		7,032		5,527		6,796		89,695
Loans acquired with discounts related to credit quality		7,405		2,025		62		—		—		9,492
Total	$	64,370	$	44,069	$	9,423	$	5,542	$	6,796	$	130,200
Loans:
Individually evaluated for impairment	$	49,697	$	131,216	$	24,891	$	930	$	—	$	206,734
Collectively evaluated for impairment		1,783,046		4,040,723		2,420,736		1,403,896		—		9,648,401
Loans acquired with discounts related to credit quality		298,600		793,406		26,461		49,197		—		1,167,664
Total	$	2,131,343	$	4,965,345	$	2,472,088	$	1,454,023	$	—	$	11,022,799

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Note 9. Goodwill and Other Intangible Assets

Goodwill totaled $428.2 million at June 30, 2013 and December 31, 2012. There were no changes to the carrying amounts of goodwill allocated to Valley’s business segments, or reporting units thereof, for goodwill impairment analysis (as reported in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012). There was no impairment of goodwill during the three and six months ended June 30, 2013 and 2012.

The following table summarizes other intangible assets as of June 30, 2013 and December 31, 2012:

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
June 30, 2013
Loan servicing rights	$	69,244	$	(41,485	)	$	(1,000	)	$	26,759
Core deposits		35,194		(25,805	)		—			9,389
Other		5,878		(3,024	)		—			2,854
Total other intangible assets	$	110,316	$	(70,314	)	$	(1,000	)	$	39,002
December 31, 2012
Loan servicing rights	$	63,377	$	(43,393	)	$	(3,046	)	$	16,938
Core deposits		35,194		(24,160	)		—			11,034
Other		5,878		(2,727	)		—			3,151
Total other intangible assets	$	104,449	$	(70,280	)	$	(3,046	)	$	31,123

Loan servicing rights 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. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $759 thousand and net impairment charges totaling $401 thousand for the three months ended June 30, 2013 and 2012, respectively, and net recoveries of impairment charges totaling $2.1 million and $19 thousand for the six months ended June 30, 2013 and 2012, respectively.

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 approximately 17 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and six months ended June 30, 2013 and 2012.

The following presents the estimated future amortization expense of other intangible assets for the remainder of 2013 through 2017:

	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2013	$	3,064	$	1,432	$	245
2014		6,343		2,359		466
2015		4,929		1,758		434
2016		3,782		1,195		233
2017		2,921		815		220

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Valley recognized amortization expense on other intangible assets, including net impairment charges and recoveries on loan servicing rights, totaling approximately $1.9 million and $2.5 million for the three months ended June 30, 2013 and 2012, respectively, and $3.5 million and $4.5 million for the six months ended June 30, 2013 and 2012, respectively.

Note 10. Benefit Plans

Pension and Director Plans

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).

On June 19, 2013, the Board of Directors approved amendments to freeze the benefits earned under the qualified and non-qualified plans effective December 31, 2013. As a result, participants will not accrue further benefits and their pension benefits will be determined based on the compensation and service up to December 31, 2013. Plan benefits will not increase for any pay or service earned after such date. However, participants will continue to vest with respect to their frozen earned benefits as long as they continue to work for Valley.

As a result of these actions, Valley re-measured the projected benefit obligation of the affected plans and the qualified plan assets at June 30, 2013. The freeze and re-measurement decreased the projected benefit obligations by $22.9 million and decreased accumulated other comprehensive loss, net of tax, by $19.9 million during the three months ended June 30, 2013. The decrease in the plan obligations was mainly due to an increase in the discount rate from December 31, 2012 and the curtailment of plan benefits. At June 30, 2013, Valley used a discount rate of 4.87 percent for the re-measurement of the pension benefit obligation as compared to 4.26 percent at December 31, 2012. The discount rate is based on our consistent methodology of determining our discount rate based on an established yield curve that incorporates a broad group of Aa3 or higher rated bonds with durations equal to the expected benefit payment streams required by each plan. The assumption for the expected rate of return on plan assets was 7.50 percent at June 30, 2013 and remained unchanged from December 31, 2012. Additionally, a curtailment loss totaling $750 thousand was recognized as a component of net periodic pension expense during the second quarter of 2013 due to the re-measurement and freeze of the plans.

The fair value of qualified plan assets increased approximately $32.9 million or 23.7 percent to $171.8 million at June 30, 2013 from $138.9 million at December 31, 2012. In April 2013, Valley made a $25.0 million discretionary contribution to the qualified plan prior to the Valley’s decision to freeze the plan. It is the Bank’s funding policy to contribute annually an amount that can be deducted for federal income tax purposes.

The following table sets forth the components of net periodic pension expense related to the qualified and non-qualified plans for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Service cost	$	2,056		$	1,985		$	4,043		$	3,971
Interest cost		1,708			1,620			3,365			3,239
Expected return on plan assets		(3,183	)		(2,233	)		(5,742	)		(4,466	)
Amortization of prior service cost		241			191			443			382
Amortization of actuarial loss		811			587			1,605			1,175
Curtailment loss		750			—			750			—
Total net periodic pension expense	$	2,383		$	2,150		$	4,464		$	4,301

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The freeze in the plans’ benefits is expected to reduce Valley’s total net periodic pension expense by approximately $2.1 million for the second half of 2013.

Savings and Investment Plan

Effective January 1, 2014, Valley will increase benefits under the Bank’s 401(k) plan in an effort to offset a portion of the employee benefits no longer accruing under the qualified pension plan after December 31, 2013. At such date, Valley’s contributions will be increased to a dollar-for-dollar matching contribution of up to six percent of eligible compensation contributed by an employee each pay period.

Note 11. Stock–Based Compensation

Valley currently has one active employee stock option plan, the 2009 Long-Term Stock Incentive Plan (the “Employee Stock Incentive Plan”), 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 Employee Stock Incentive Plan, Valley may award shares to its employees for up to 7.4 million shares of common stock in the form of incentive stock options, non-qualified stock options, stock appreciation rights and restricted stock awards. 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. An incentive stock option’s maximum term to exercise is ten years from the date of grant and is subject to a vesting schedule. There were no stock options granted by Valley during the three and six months ended June 30, 2013 and 2012. The restricted shares awarded by Valley during the three months ended June 2013, and 2012 were immaterial. Valley awarded restricted stock totaling 471 thousand shares and 540 thousand shares during the six months ended June 30, 2013 and 2012, respectively. As of June 30, 2013, 5.0 million shares of common stock were available for issuance under the Employee Stock Incentive Plan.

Valley recorded stock-based compensation expense for incentive stock options and restricted stock awards of $1.5 million and $1.3 million for the three months ended June 30, 2013 and 2012, respectively, and $3.3 million and $2.7 million for the six months ended June 30, 2013 and 2012, respectively. The fair values of stock awards are expensed over the vesting period. As of June 30, 2013, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $12.2 million and will be recognized over an average remaining vesting period of approximately 4 years.

Note 12. Guarantees

Guarantees that have been entered into by Valley include standby letters of credit of $230.6 million as of June 30, 2013. Standby letters of credit represent the guarantee by Valley of the obligations or performance of a customer in the event the customer is unable to meet or perform its obligations to a third party. Of the total standby letters of credit, $147.3 million, or 63.9 percent are secured and, in the event of non-performance by the customer, Valley has rights to the underlying collateral, which includes commercial real estate, business assets (physical plant or property, inventory or receivables), marketable securities and cash in the form of bank savings accounts and certificates of deposit. As of June 30, 2013, Valley had an $846 thousand liability related to the standby letters of credit.

Note 13. Derivative Instruments and Hedging Activities

Valley is exposed to certain risks arising from both its business operations and economic conditions. Valley principally manages its exposures 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.

40

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 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 June 30, 2013, Valley had the following cash flow hedge derivatives:

• Four forward starting interest rate swaps with a total notional amount of $300 million to hedge the changes in cash flows associated with certain prime-rate-indexed deposits, consisting of consumer and commercial money market deposit accounts. Two of the four swaps, totaling $200 million, expire in October 2016 and require Valley to pay fixed-rate amounts at approximately 4.73 percent, in exchange for the receipt of variable-rate payments at the prime rate. Starting in July 2012, the other two swaps totaling $100 million 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.

• Two interest rate caps with a total notional amount of $100 million, strike rates of 6.00 percent and 6.25 percent, and a maturity date of July 15, 2015 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.

Additionally, two interest rate caps with a total notional amount of $100 million, strike rates of 2.50 percent and 2.75 percent expired on May 1, 2013. These caps were used to hedge the variability in cash flows associated with customer repurchase agreements and money market deposit accounts that have variable interest rates based on the federal funds rate.

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.

At June 30, 2013, Valley had the following fair value hedge derivatives:

• One interest rate swap with a notional amount of approximately $8.7 million used to hedge the change in the fair value of a commercial loan.

• One interest rate swap with a notional amount of $51.0 million, maturing in March 2014, used to hedge the change in the fair value of certain fixed-rate brokered certificates of deposit.

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.

41

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. As of June 30, 2013, Valley had a total of 45 interest rate swaps with an aggregate notional amount of $188.1 million related to this program.

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. As of June 30, 2013, Valley had mortgage banking derivatives with an aggregate notional amount of $103.1 million.

Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows:

		Fair Value
	Balance Sheet Line Item	June 30, 2013		December 31, 2012
		(in thousands)
Asset Derivatives:
Derivatives designated as hedging instruments:
Cash flow hedge interest rate caps and swaps	Other Assets	$	27	$	23
Fair value hedge interest rate swaps	Other Assets		378		652
Total derivatives designated as hedging instruments		$	405	$	675
Derivatives not designated as hedging instruments:
Interest rate swaps	Other Assets	$	4,631	$	7,002
Mortgage banking derivatives	Other Assets		2,389		239
Total derivatives not designated as hedging instruments		$	7,020	$	7,241
Liability Derivatives:
Derivatives designated as hedging instruments:
Cash flow hedge interest rate caps and swaps	Other Liabilities	$	11,408	$	17,198
Fair value hedge interest rate swaps	Other Liabilities		1,675		2,197
Total derivatives designated as hedging instruments		$	13,083	$	19,395
Derivatives not designated as hedging instruments:
Interest rate swaps	Other Liabilities	$	4,631	$	6,999
Mortgage banking derivatives	Other Liabilities		1,257		200
Total derivatives not designated as hedging instruments		$	5,888	$	7,199

Losses included in the consolidated statements of income and in other comprehensive income, on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Interest rate caps on short-term borrowings and deposit accounts:
Amount of loss reclassified from accumulated other comprehensive loss to interest on short-term borrowings	$	(1,714	)	$	(1,398	)	$	(3,594	)	$	(2,790	)
Amount of loss recognized in other comprehensive income		3,508			(5,288	)		3,375			(3,739	)

42

Valley recognized net gains of $73 thousand in other expense for hedge ineffectiveness on the cash flow hedge interest rate caps for the six months ended June 30, 2012. There were no net gains or losses related to hedge ineffectiveness recognized during the three and six months ended June 30, 2013 and the second quarter of 2012. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $8.6 million and $12.7 million at June 30, 2013 and December 31, 2012, 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 $8.2 million will be reclassified as an increase to interest expense over the next twelve months.

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Derivative - interest rate swaps:
Interest income - interest and fees on loans	$	425		$	(251	)	$	522		$	(121	)
Interest expense - interest on time deposits		(134	)		(67	)		(274	)		(27	)
Hedged item - loans and deposits:
Interest income - interest and fees on loans	$	(425	)	$	251		$	(522	)	$	121
Interest expense - interest on time deposits		136			70			279			38

During the three months ended June 30, 2013 and 2012, the amounts recognized in non-interest expense related to ineffectiveness of fair value hedges were immaterial. Valley also recognized a net reduction to interest expense of $145 thousand and $139 thousand for the three months ended June 30, 2013 and 2012, respectively, and $287 thousand and $275 thousand for the six months ended June 30, 2013 and 2012, respectively, related to Valley’s fair value hedges on brokered time deposits, which includes net settlements on the derivatives.

The net gains included in the consolidated statements of income related to derivative instruments not designated as hedging instruments for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(in thousands)
Non-designated hedge interest rate derivatives
Other non-interest income	$	1,461	$	1	$	1,090	$	217

Credit Risk Related Contingent 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 June 30, 2013, Valley was in compliance with all of the provisions of its derivative counterparty agreements.

43

As of June 30, 2013, 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 $16.2 million. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties. No collateral has been assigned or posted by Valley’s counterparties under the agreements at June 30, 2013. At June 30, 2013, Valley had $14.1 million in collateral posted with its counterparties.

Note 14. Balance Sheet Offsetting

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 a gross presentation, the effects of offsetting, and a net presentation of Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of June 30, 2013 and December 31, 2012. The net amounts of derivative assets or liabilities can be reconciled to the fair value of Valley’s derivative financial instruments disclosed in Note 13.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral			Net Amount
	(in thousands)
June 30, 2013
Assets:
Interest rate caps and swaps	$	5,036	$	—	$	5,036	$	(1,025	)	$	—		$	4,011
Liabilities:
Interest rate caps and swaps	$	17,714	$	—	$	17,714	$	(1,025	)	$	(14,110	)	$	2,579
Repurchase agreements		520,000		—		520,000		—			(520,000	)		—
Total	$	537,714	$	—	$	537,714	$	(1,025	)	$	(534,110	)	$	2,579
December 31, 2012
Assets:
Interest rate caps and swaps	$	7,677	$	—	$	7,677	$	(675	)	$	—		$	7,002
Liabilities:
Interest rate caps and swaps	$	26,395	$	—	$	26,395	$	(675	)	$	(25,720	)	$	—
Repurchase agreements		520,000		—		520,000		—			(520,000	)		—
Total	$	546,395	$	—	$	546,395	$	(675	)	$	(545,720	)	$	—

* Represents fair value of investment securities pledged.

Note 15. Business Segments

The information under the caption “Business Segments” in Management’s Discussion and Analysis is incorporated herein by reference.

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Item 2. Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations

The following MD&A should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. The words “Valley,” “the Company,” “we,” “our” and “us” refer to Valley National Bancorp and its wholly owned subsidiaries, unless we indicate otherwise. Additionally, Valley’s principal subsidiary, Valley National Bank, is commonly referred as the “Bank” in this MD&A.

The MD&A contains supplemental financial information, described in the sections that follow, which has been determined by methods other than U.S. generally accepted accounting principles (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.

Cautionary Statement Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q, 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 disclosed in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012, include, but are not limited to:

• a severe decline in the general economic conditions of New Jersey and the New York Metropolitan area;

• larger than expected reductions in our loans originated for sale or a slowdown in new and refinanced residential mortgage loan activity;

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

• 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;

• declines in value in our investment portfolio, including additional other-than-temporary impairment charges on our investment securities;

• unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments or other factors;

• unanticipated deterioration in our loan portfolio;

• Valley’s 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);

• higher than expected increases in our allowance for loan losses;

• an unexpected increase in loan losses or in the level of non-performing loans (including additional losses and elevated levels of non-accrual loans caused by the lengthy foreclosure process in the State of New Jersey);

• 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;

• higher than expected tax rates, including increases resulting from changes in tax laws, regulations and case law;

• an unexpected decline in real estate values within our market areas;

• charges against earnings related to the change in fair value of our junior subordinated debentures;

• higher than expected FDIC insurance assessments;

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

• lack of liquidity to fund our various cash obligations;

• unanticipated reduction in our deposit base;

• potential acquisitions that may disrupt our business;

• legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations) subject us to additional regulatory oversight which may result in higher compliance costs and/or require us to change our business model;

• changes in accounting policies or accounting standards;

• our inability to promptly adapt to technological changes;

• our internal controls and procedures may not be adequate to prevent losses;

• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;

• the inability to realize expected revenue synergies from recent acquisitions in the amounts or in the timeframe anticipated;

• inability to retain customers and employees;

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

• potential 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; and

• other unexpected material adverse changes in our operations or earnings.

Critical Accounting Policies and 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 included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012. We identified our policies on 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. Our critical accounting policies are described in detail in Part II, Item 7 in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

New Authoritative Accounting Guidance

See Note 4 to the consolidated financial statements for a description of new authoritative accounting guidance including the respective dates of adoption and effects on results of operations and financial condition.

Executive Summary

Company Overview. At June 30, 2013, Valley had consolidated total assets of approximately $16.0 billion, total net loans of $10.8 billion, total deposits of $11.2 billion and total shareholders’ equity of $1.5 billion. Our commercial bank operations include branch office locations in northern and central New Jersey and the New York City Boroughs of Manhattan, Brooklyn and Queens, as well as Long Island, New York. Of our current 208-branch network, 79 percent and 21 percent of the branches are located in New Jersey and New York, respectively. We have grown both in asset size and locations significantly over the past several years primarily through both bank acquisitions and de novo branch expansion. See Item 1 of Valley’s Annual Report on Form 10-K for the year ended December 31, 2012 for more details regarding our past merger activity.

Quarterly Results. Net income for the second quarter of 2013 was $33.9 million, or $0.17 per diluted common share, compared to $32.8 million, or $0.17 per diluted common share for the second quarter of 2012. The $1.1 million increase in quarterly net income as compared to the same quarter one year ago was largely due to: (i) an $8.9 million increase in non-interest income resulting primarily from higher gains on sales of residential loans originated for sale and a reduction in non-interest income related to changes in our FDIC loss-share receivable, partly offset by decreases in net

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trading gains and net gains on securities transactions, (ii) a $4.9 million decrease in our provision for credit losses caused, in part, by lower net loan charge-offs and improved expected loss experience and outlook for most of the loan portfolio and (iii) a 6.0 percent decrease in our effective tax rate, partially offset by (iv) a $12.2 million decrease in net interest income largely due to lower yields on new loans and investments caused by the historically low level of market interest rates and the repayment of higher yielding financial instruments within these same categories, and (v) a $3.8 million increase in other non-interest expense due, in part, to higher FDIC insurance assessments and OREO expenses. See the “Net Interest Income,” “Other Non-Interest Income,” “Other Non-Interest Expense,” and “Loan Portfolio” sections below for more details on the items above impacting our second quarter of 2013 results.

Economic Overview and Indicators. Solid consumer spending and housing growth led the U.S. economy to a strong start during the second quarter of 2013, however, government furloughs and spending cuts as a result of the U.S. budget sequester, dampened such growth. The sequester, totaling an $85 billion reduction in government spending, went into effect on March 1, 2013 and is expected to last through September 30, 2013 (fiscal year-end).

The July 2013 unemployment rate of 7.4 percent decreased from 7.6 percent for March 2013. Despite higher taxes and federal spending cuts, which were both introduced at the start of the second quarter, the national monthly hiring average is running at 192 thousand jobs so far this year as compared to 182 thousand for all of 2012. In June alone, the private sector added 196 thousand jobs, while government cuts reduced the net jobs gain to 188 thousand. Private sector growth was driven by trade, finance and business services, and the hospitality industry. Although persistent job growth at current levels could reduce the unemployment rate, a potential influx of reentrants into the workforce may temper any future decrease in the rate.

During the quarter, the Federal Reserve remained consistent with its previously announced intentions to keep short-term interest rates low, in the zero to 0.25 percent range, as long as the unemployment rate remains above 6.5 percent and projected inflation remains below 2.5 percent. In June, the Fed Chairman Ben Bernanke acknowledged that the Federal Reserve could gradually reduce the net amount of mortgage-backed securities and U.S. Treasury securities being purchased each month as the outlook for the labor market or inflation changes. The Chairman’s comments led to a rally in long-term interest rates; however, the sustainability of that rally remains to be seen. Inflation pressure remains low as core inflation, which excludes food and energy, increased a modest 0.2 percent in June. A stubbornly high unemployment rate of 7.4 percent, sub-2 percent economic growth, and 1.8 percent annualized year-to-date inflation suggests that monetary policy may remain unchanged in the near term.

Though unevenly distributed across states, the housing sector continues to show increased demand and recovering housing prices as existing home sales rose from an annualized rate of 4.41 million in June 2012 to 5.08 million in June 2013. During May and June 2013, the existing home sales were at levels not seen since November 2009 when the “first-time home buyers credit” helped to enhance sale volumes. Additionally, the national median existing home price was over $214 thousand for June 2013, a 13.5 percent increase from one year ago. While nationally, housing prices and sales have performed well during the first half of 2013, the recent increase in long-term interest rates tempered demand for residential mortgage refinance activity.

We believe the current low interest rate and high unemployment environment will continue to challenge our business operations and results in many ways during the remainder of 2013; however, any continuation of the recent uptick in long-term market interest rates may help to relieve downward pressure on our net interest margin, as highlighted throughout the remaining MD&A discussion below.

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The following economic indicators are just a few of the many factors that may be used to assess the market conditions in our primary markets of northern and central New Jersey and the New York City metropolitan area. Generally, market conditions have improved from one year ago, however, as outlined above, economic uncertainty and persistent unemployment, may continue to put pressure on the performance of some borrowers and the level of new loan demand within our area.

	For the Month Ended
Selected Economic Indicators:	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
Unemployment rate:
U.S.		7.60	%		7.60	%		7.80	%		7.80	%		8.20	%
New York Metro Region*		8.20	%		8.10	%		8.50	%		8.50	%		9.50	%
New Jersey		8.70	%		9.00	%		9.60	%		9.80	%		9.60	%
New York		7.50	%		8.20	%		8.20	%		8.90	%		8.90	%
	Three Months Ended
	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
	($ in millions)
Personal income:
New Jersey		NA		$	476,944		$	483,404		$	473,813		$	472,756
New York		NA		$	1,037,021		$	1,044,218		$	1,012,959		$	1,011,170
New consumer bankruptcies:
New Jersey		NA			0.12	%		0.12	%		0.12	%		0.14	%
New York		NA			0.07	%		0.08	%		0.08	%		0.09	%
Change in home prices:
U.S.		NA			1.20	%		-0.30	%		-2.10	%		7.10	%
New York Metro Region*		NA			-1.07	%		0.97	%		-0.50	%		0.91	%
New consumer foreclosures:
New Jersey		NA			0.07	%		0.08	%		0.08	%		0.05	%
New York		NA			0.04	%		0.04	%		0.06	%		0.05	%
Homeowner vacancy rates:
New Jersey		1.80	%		3.20	%		2.60	%		2.80	%		1.60	%
New York		1.90	%		1.30	%		1.90	%		1.70	%		1.90	%

NA—not available

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

Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, Federal Reserve Bank of New York, S&P Indices, and the U.S. Census Bureau.

Loans. Overall, our total loan portfolio increased by 2.7 percent on an annualized basis during the second quarter of 2013 as compared to March 31, 2013 largely due to solid organic commercial real estate (excluding construction) loan growth (equaling 7.9 percent on an annualized basis) and approximately $162 million of residential mortgage loans purchased in the second quarter, partially offset by declines mainly within the commercial and industrial loan segment of our purchased credit-impaired (PCI) loan portfolios. We continued to originate for sale a substantial amount of the new and refinanced loan activity (approximately 81 percent of total originations) within our residential mortgage loan portfolio during the second quarter of 2013 due to the low level of market interest rates. While these mortgage sales reduce the interest rate risk of our balance sheet, they also negatively impact our loan growth. Despite strong competition and prepayments, the commercial and industrial loan portfolio combined with the commercial real estate portfolio had loan originations of approximately $317 million during the three months ended June 30, 2013 as compared to a strong linked first quarter of 2013 totaling $305 million. Additionally, our automobile loans increased $24.2 million, or 11.9 percent on an annualized basis during the second quarter of 2013. Total covered loans (i.e., loans subject to our loss-sharing agreements with the FDIC) decreased to $141.8 million, or 1.3 percent of our total loans, at June 30, 2013 as compared to $161.3 million at March 31, 2013, mainly due to normal collection activity.

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During the second quarter of 2013, Valley sold nearly $475 million of residential mortgages (including $131.5 million of loans held for sale at March 31, 2013) as compared to $454 million in the first quarter of 2013, and had $48.9 million in loans held for sale, at fair value, at June 30, 2013. An originate and sell model (started in the second half of 2012) was maintained for much of the quarter as we continued to maximize mortgage banking revenues within non-interest income, while the low level of market interest rates continued to apply pressure to our net interest income and margin. The increased secondary sales materially increased the total gains on the sale of loans recognized in our non-interest income as compared to the second quarter of 2012 and declined slightly from the linked first quarter of 2013 due to lower gain on sale margins. Due to the recent increase in long-term market interest rates prompted by comments from the Federal Reserve during June, we anticipate a slowdown in our refinanced mortgage loan pipeline during the third quarter of 2013 and the amount of our residential mortgage loans originated for sale, as the higher yielding loans become more attractive to hold in our loan portfolio. As a result, our gains on sales of loans are expected to materially decline from the $14.4 million recorded in the second quarter of 2013, but our interest income from residential mortgage loans is expected to mitigate a portion of the lost non-interest income.

Despite the expected negative impact of the recent increase in market interest rates on consumer refinance activity, outlook for the housing recovery remains positive and the impact such higher rates will have on our net interest margin. If the housing market remains strong, we believe we will continue to see steady demand for home purchases and refinance activity, particularly for 2- to 4-unit residential loans, as interest rates still remain at historically low levels. See further details on our loan activities, including the covered loan portfolio, under the “Loan Portfolio” section below.

Asset Quality. Given the slow economic recovery, elevated unemployment levels, personal bankruptcies, and higher delinquency rates reported throughout the banking industry, we believe our loan portfolio’s credit performance remained at an acceptable level at June 30, 2013. 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.

Total loans (excluding PCI loans) past due in excess of 30 days decreased 0.19 percent to 1.51 percent of our total loan portfolio of $10.8 billion as of June 30, 2013 compared to 1.70 percent of $10.8 billion in total loans at March 31, 2013 mainly due to a $12.7 million decline in loans past due 30 to 89 days and moderate decreases in the level of non-accrual loans within each of our loan types (except for construction loans). Non-accrual loans decreased $7.1 million to $118.5 million at June 30, 2013 as compared to $125.6 million at March 31, 2013. The decrease was largely due to $5.2 million of loans transferred to OREO, as well as partial loan charge-offs related to the valuation of certain collateral dependent impaired loans. Although the timing of collection is uncertain, we believe most of our non-accrual loans are well secured and, ultimately, collectible. 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. economic and housing recoveries and high levels of unemployment, management cannot provide assurance that our non-performing assets will remain at, or decline from, the levels reported as of June 30, 2013. See the “Non-performing Assets” section below for further analysis of our credit quality.

Deposits and Other Borrowings. Total deposits decreased $60.0 million to $11.2 billion at June 30, 2013 from March 31, 2013 mostly due to lower time deposit account balances. Valley’s time deposits totaling approximately $2.4 billion at June 30, 2013 decreased $102.7 million as compared to March 31, 2013 largely due to the continued run-off of maturing higher cost retail certificates of deposit and less attractive short-term time deposit rates offered by Valley during the period. Our non-interest bearing deposits totaling $3.5 billion at June 30, 2013 also moderately declined by $30.0 million, or 0.84 percent, from March 31, 2013 due to normal fluctuations in account activity. Partially offsetting the decreases, savings, NOW and money market accounts increased $72.8 million to $5.3 billion at June 30, 2013 as compared to March 31, 2013 due to municipal account balance fluctuations and continued general increases in retail deposits.

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We continue to closely monitor our cost of funds to optimize our net interest margin in the current low interest rate environment, as discussed further in the “Net Interest Income” section below. On July 26, 2013, Valley redeemed $15.5 million of the principal face amount of its junior subordinated debentures issued to VNB Capital Trust I and $15.0 million of the face value of the related trust preferred securities. Both the redeemed debentures and trust preferred securities have fixed interest rates of 7.75 percent. Based upon new interim final regulatory guidance issued during the second quarter of 2013, Valley’s outstanding trust preferred securities issued by its capital trust subsidiaries totaling $186.3 million at June 30, 2013 (prior to the aforementioned redemption) will be fully phased out of Tier 1 capital by January 1, 2016. See the “Capital Adequacy” section below for more details.

Selected Performance Indictors. The following table presents our annualized performance ratios for the periods indicated:

	Three Months Ended June  30,						Six Months Ended June  30,
	2013			2012			2013			2012
Return on average assets		0.85	%		0.83	%		0.82	%		0.86	%
Return on average shareholders’ equity		8.96			8.75			8.64			9.05
Return on average tangible shareholders’ equity (ROATE)		12.93			12.49			12.45			12.95

ROATE, 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:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	($ in thousands)
Net income	$	33,922		$	32,820		$	65,232		$	67,351
Average shareholders’ equity		1,513,942			1,499,516			1,510,474			1,488,825
Less: Average goodwill and other intangible assets		(464,331	)		(448,451	)		(462,427	)		(448,866	)
Average tangible shareholders’ equity	$	1,049,611		$	1,051,065		$	1,048,047		$	1,039,959
Annualized ROATE		12.93	%		12.49	%		12.45	%		12.95	%

Management believes the ROATE measure provides information useful to management and investors in understanding our underlying operational performance, our business and performance trends and the measure facilitates comparisons with the performance of others in the financial services industry. This non-GAAP financial measure should not be considered in isolation or as a substitute for or superior to financial measures calculated in accordance with U.S. GAAP.

All of the above ratios are, from time to time, impacted by net trading gains and losses, net gains and losses on securities transactions, net gains on sales of loans and net impairment losses on securities recognized in non-interest income. These amounts can vary widely from period to period due to the recognition of non-cash gains or losses on the change in the fair value of our junior subordinated debentures carried at fair value and our trading securities portfolio, the level of sales of our investment securities classified as available for sale and residential mortgage loan originations, and the results of our quarter impairment analysis of the held to maturity and available for sale investment portfolios. See the “Non-Interest Income” section below for more details.

Net Interest Income

Net interest income on a tax equivalent basis was $111.9 million for the second quarter of 2013 and remained relatively unchanged from the first quarter of 2013 and declined $11.9 million as compared to the second quarter of 2012. Interest income on a tax equivalent basis decreased $654 thousand from the first quarter of 2013 mainly due to the combination of lower yields on investments and a $62.0 million decrease in average loans, offset mostly by additional interest accretion of approximately $2 million on covered PCI loans caused by better than expected cash flows subsequent to acquisition. The decrease in interest income was partially offset by a $514 thousand decline in interest expense, which was mostly driven by a 3 basis point decline in the cost of savings, NOW and money market deposit accounts and lower average balances for time deposits.

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Average interest earning assets increased to $14.2 billion for the second quarter of 2013 as compared to approximately $14.1 billion for the second quarter of 2012 largely due to an increase of $386.8 million in average federal funds sold and other interest bearing deposits, partially offset by a $311.3 million decrease in average loans. The increase in average federal funds sold and other interest bearing deposits resulted from excess liquidity (mostly held in overnight interest bearing deposits at the Federal Reserve Bank of New York) mainly caused by large repayments within the loan portfolio and an increase in our average deposits over the last twelve month period which both outpaced our overall loan volumes. The decrease in average loans largely resulted from our shift to an originate and sell strategy for most of our new and refinanced residential mortgage loan originations starting in the third quarter of 2012 and continued loan run-off in the PCI loan portfolios. Compared to the first quarter of 2013, average interest earning assets increased $125.3 million primarily due to a $136.8 million increase in average total investment securities. The increase in average investments during the second quarter of 2013 was comprised of increases totaling $119.3 million and $17.5 million in taxable and non-taxable investment securities, respectively, mainly due to the purchases of residential mortgage-backed securities issued by government sponsored agencies, corporate bonds and municipal bond securities over the last six-month period. However, the mix of average loans and overnight interest bearing deposits changed as average loans declined by $62.0 million to $11.0 billion for the second quarter of 2013 and average funds sold and other interest bearing deposits increased $50.5 million to $439.2 million as compared to the first quarter of 2013. The decline in average loans quarter over quarter was mainly due to the aforementioned residential mortgage sales of refinanced loans and strong competition for commercial loans, mainly in the Long Island market.

Average interest bearing liabilities decreased $242.5 million to approximately $10.8 billion for the second quarter of 2013 compared with the second quarter of 2012 mainly due to the normal run-off of maturing high cost certificate of deposit balances over the past twelve month period and a decline in the use of short-term FHLB borrowings for funding residential mortgage originations, partially offset by higher average savings, NOW and money market deposit accounts. Consequently, our average non-interest bearing deposits increased by $377.2 million to $3.6 billion for the three months ended June 30, 2013 as compared to the second quarter of 2012 due, in part, to the lack of acceptable investment alternatives for customers. Compared to the first quarter of 2013, average interest bearing liabilities decreased only $4.5 million for the second quarter of 2013, again, mostly due to the run-off of maturing higher rate certificates of deposit partly offset by increased average balances for savings, NOW and money market accounts.

The net interest margin on a tax equivalent basis was 3.15 percent for the second quarter of 2013, a decrease of 3 basis points from 3.18 percent in the linked first quarter of 2013, and a 37 basis point decline from 3.52 percent for the three months ended June 30, 2012. The yield on average interest earning assets decreased by 6 basis points on a linked quarter basis mainly as a result of the lower yield on average investment securities caused by the current and prolonged low level of market yields on new securities, and the continued repayment of higher yielding interest earning assets, partially offset by one more day during the second quarter of 2013. However, the yield on average loans increased 6 basis points to 4.88 percent for the three months ended June 30, 2013 from the first quarter of 2013. The increase in yield from the prior linked quarter was largely due to an additional seven basis points related to higher interest accretion recognized on certain covered PCI loan pools that continue to perform better than expected at their acquisition date. The overall cost of average interest bearing liabilities decreased by approximately 2 basis points from 1.60 percent in the linked first quarter of 2013 mainly due to a decline of 3 basis points for total interest bearing deposits during the second quarter of 2013, partly offset by one more day during the second quarter of 2013. The decrease in the cost of interest bearing deposits was largely due to a three basis point decline in the cost of average savings, NOW and money market deposit accounts caused by lower interest rates and the expiration of interest rate cap derivatives in May 2013 that hedged the cash flows of certain money market deposit accounts. The maturity of higher cost time deposits also contributed to the decline in deposit costs and resulted in a $74.8 million decrease in average time deposits as compared to the first quarter of 2013. Our cost of total deposits was 0.43 percent for the second quarter of 2013 compared to 0.46 percent for the three months ended March 31, 2013.

The recent increase in long-term market interest rates, potential future loan growth from solid commercial real estate loan demand seen in the early stages of the third quarter, additional interest accretion on our PCI loans, our partial redemption of the 7.75 percent junior subordinated debentures issued to capital trusts totaling $15.5 million in July and the expiration of the interest rate caps during the second quarter are all expected to positively impact our ability to

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maintain or increase the current level of our net interest margin. However, our margin continues to face the risk of compression in the future due to the relatively low level of interest rates on most interest earning asset alternatives combined with the continued re-pricing risk related to the maturity and prepayment of loans and investments that are still yielding higher than market interest rates. However, we continue to tightly manage our balance sheet and our cost of funds to optimize our returns. During the remainder of 2013, we will continue to explore ways to reduce our borrowing costs, whenever possible, and optimize our net interest margin, including further reductions in the level of excess liquidity caused by prepayment activity and/or soft loan demand in certain segments of the portfolio. Although we cannot make any guarantees as to the potential future benefits to our net interest margin, we believe these actions and other asset/liability strategies should reduce the negative impact of the current low interest rate environment.

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The following table reflects the components of net interest income for the three months ended June 30, 2013, March 31, 2013 and June 30, 2012:

Quarterly Analysis of Average Assets, Liabilities and Shareholders’ Equity and

Net Interest Income on a Tax Equivalent Basis

	Three Months Ended
	June 30, 2013									March 31, 2013									June 30, 2012
	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
	($ in thousands)
Assets
Interest earning assets:
Loans (1)(2)	$	10,986,603		$	134,017			4.88	%	$	11,048,612		$	133,054			4.82	%	$	11,297,942		$	143,837			5.09	%
Taxable investments (3)		2,211,207			14,429			2.61			2,091,866			16,169			3.09			2,263,054			19,788			3.50
Tax-exempt investments (1)(3)		586,314			5,651			3.86			568,827			5,614			3.95			464,681			4,965			4.27
Federal funds sold and other interest bearing deposits		439,192			302			0.28			388,669			216			0.22			52,348			31			0.24
Total interest earning assets		14,223,316			154,399			4.34			14,097,974			155,053			4.40			14,078,025			168,621			4.79
Allowance for loan losses		(123,667	)								(130,723	)								(134,805	)
Cash and due from banks		411,053									408,964									419,989
Other assets		1,414,709									1,450,530									1,442,592
Unrealized losses on securities available for sale, net		(3,323	)								(5,525	)								(14,753	)
Total assets	$	15,922,088								$	15,821,220								$	15,791,048
Liabilities and shareholders’ equity Interest bearing liabilities:
Savings, NOW and money market deposits	$	5,332,299		$	4,369			0.33	%	$	5,260,535		$	4,702			0.36	%	$	5,064,315		$	4,690			0.37	%
Time deposits		2,418,524			7,794			1.29			2,493,288			8,111			1.30			2,661,794			9,276			1.39
Total interest bearing deposits		7,750,823			12,163			0.63			7,753,823			12,813			0.66			7,726,109			13,966			0.72
Short-term borrowings		138,910			140			0.40			140,600			144			0.41			376,150			369			0.39
Long-term borrowings (4)		2,886,675			30,180			4.18			2,886,509			30,040			4.16			2,916,670			30,452			4.18
Total interest bearing liabilities		10,776,408			42,483			1.58			10,780,932			42,997			1.60			11,018,929			44,787			1.63
Non-interest bearing deposits		3,581,432									3,448,327									3,204,242
Other liabilities		50,306									84,993									68,361
Shareholders’ equity		1,513,942									1,506,968									1,499,516
Total liabilities and shareholders’ equity	$	15,922,088								$	15,821,220								$	15,791,048
Net interest income/interest rate spread (5)				$	111,916			2.76	%				$	112,056			2.80	%				$	123,834			3.16	%
Tax equivalent adjustment					(2,029	)								(2,020	)								(1,763	)
Net interest income, as reported				$	109,887								$	110,036								$	122,071
Net interest margin (6)								3.09	%								3.12	%								3.47	%
Tax equivalent effect								0.06	%								0.06	%								0.05	%
Net interest margin on a fully tax equivalent basis (6)								3.15	%								3.18	%								3.52	%

(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 financial 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.

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The following table reflects the components of net interest income for the six months ended June 30, 2013 and 2012:

Analysis of Average Assets, Liabilities and Shareholders’ Equity and

Net Interest Income on a Tax Equivalent Basis

	Six Months Ended
	June 30, 2013									June 30, 2012
	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
	($ in thousands)
Assets
Interest earning assets:
Loans (1)(2)	$	11,017,436		$	267,071			4.85	%	$	11,127,304		$	292,307			5.25	%
Taxable investments (3)		2,151,866			30,598			2.84			2,366,056			42,290			3.57
Tax-exempt investments (1)(3)		577,619			11,265			3.90			452,304			9,764			4.32
Federal funds sold and other interest bearing deposits		414,070			518			0.25			73,238			86			0.23
Total interest earning assets		14,160,991			309,452			4.37			14,018,902			344,447			4.91
Allowance for loan losses		(127,176	)								(135,127	)
Cash and due from banks		410,014									443,651
Other assets		1,432,521									1,448,051
Unrealized losses on securities available for sale, net		(4,418	)								(23,379	)
Total assets	$	15,871,932								$	15,752,098
Liabilities and shareholders’ equity Interest bearing liabilities:
Savings, NOW and money market deposits	$	5,296,615		$	9,071			0.34	%	$	5,068,373		$	10,044			0.40	%
Time deposits		2,455,699			15,905			1.30			2,737,188			19,461			1.42
Total interest bearing deposits		7,752,314			24,976			0.64			7,805,561			29,505			0.76
Short-term borrowings		139,750			284			0.41			306,913			622			0.41
Long-term borrowings (4)		2,886,592			60,220			4.17			2,917,443			61,337			4.20
Total interest bearing liabilities		10,778,656			85,480			1.59			11,029,917			91,464			1.66
Non-interest bearing deposits		3,515,247									3,158,101
Other liabilities		67,555									75,255
Shareholders’ equity		1,510,474									1,488,825
Total liabilities and shareholders’ equity	$	15,871,932								$	15,752,098
Net interest income/interest rate spread (5)				$	223,972			2.78	%				$	252,983			3.25	%
Tax equivalent adjustment					(4,049	)								(3,453	)
Net interest income, as reported				$	219,923								$	249,530
Net interest margin (6)								3.11	%								3.56	%
Tax equivalent effect								0.05	%								0.05	%
Net interest margin on a fully tax equivalent basis (6)								3.16	%								3.61	%

(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 financial 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.

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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 us 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

	Three Months Ended June 30, 2013 Compared with June 30, 2012									Six Months Ended June 30, 2013 Compared with June 30, 2012
	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*	$	(3,898	)	$	(5,922	)	$	(9,820	)	$	(2,861	)	$	(22,375	)	$	(25,236	)
Taxable investments		(444	)		(4,915	)		(5,359	)		(3,588	)		(8,104	)		(11,692	)
Tax-exempt investments*		1,207			(521	)		686			2,511			(1,010	)		1,501
Federal funds sold and other interest bearing deposits		265			6			271			426			6			432
Total decrease in interest income		(2,870	)		(11,352	)		(14,222	)		(3,512	)		(31,483	)		(34,995	)
Interest Expense:
Savings, NOW and money market deposits		239			(560	)		(321	)		437			(1,410	)		(973	)
Time deposits		(813	)		(669	)		(1,482	)		(1,906	)		(1,650	)		(3,556	)
Short-term borrowings		(239	)		10			(229	)		(340	)		2			(338	)
Long-term borrowings and junior subordinated debentures		(314	)		42			(272	)		(646	)		(471	)		(1,117	)
Total decrease in interest expense		(1,127	)		(1,177	)		(2,304	)		(2,455	)		(3,529	)		(5,984	)
Total decrease in net interest income	$	(1,743	)	$	(10,175	)	$	(11,918	)	$	(1,057	)	$	(27,954	)	$	(29,011	)

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

Non-Interest Income

The following table presents the components of non-interest income for each of the three and six months ended June 30, 2013 and 2012:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(in thousands)
Trust and investment services	$	2,257		$	1,984		$	4,234		$	3,758
Insurance commissions		4,062			3,283			8,052			8,719
Service charges on deposit accounts		5,822			6,086			11,512			12,032
Gains on securities transactions, net		41			1,204			3,999			1,047
Net impairment losses on securities recognized in earnings		—			(550	)		—			(550	)
Trading (losses) gains, net Trading securities		(36	)		(151	)		(66	)		101
Junior subordinated debentures carried at fair value		(234	)		1,760			(2,406	)		520
Total trading (losses) gains, net		(270	)		1,609			(2,472	)		621
Fees from loan servicing		1,721			1,149			3,238			2,308
Gains on sales of loans, net		14,366			3,141			29,426			6,307
Gains on sales of assets, net		678			256			410			288
Bank owned life insurance		1,424			1,632			2,765			3,591
Change in FDIC loss-share receivable		(2,000	)		(7,022	)		(5,175	)		(7,112	)
Other		4,793			11,258			8,201			15,616
Total non-interest income	$	32,894		$	24,030		$	64,190		$	46,625

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Net gains on securities transactions decreased $1.2 million and increased $3.0 million for the three and six months ended June 30, 2013, respectively, as compared with the same periods in 2012. The decrease from the second quarter of 2012 was due to an immaterial amount of sales of investment securities during the three months ended June 30, 2013. The increase in net gains for the first half of 2013 was primarily due to the sale of zero percent yielding Freddie Mac and Fannie Mae perpetual preferred stock classified as available for sale with amortized cost totaling $941 thousand during the first quarter of 2013.

Net trading losses and gains represent the non-cash mark to market valuation of our junior subordinated debentures (issued by VNB Capital Trust I) carried at fair value and the non-cash mark to market valuations of a small number of single-issuer trust preferred securities held in our trading securities portfolio. Net trading gains decreased $1.9 million and $3.1 million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 mainly due to the change in the valuation adjustments on the debentures carried at fair value based upon the exchange traded market prices of the related trust preferred securities issued by the capital trust. See Note 5 to the consolidated financial statements for more details.

Net gains on sales of loans increased $11.2 million and $23.1million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 primarily due to our decision to sell a larger portion of our residential mortgage originations (starting in the second half of 2012) combined with record mortgage originations during the first half of 2013 caused, in part, by the low level of market interest rates and the continued success of Valley’s low fixed-price refinance programs. 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 (losses) on our loans held of sale carried at fair value each period end. The net change in the fair value of loans held for sale resulted in losses of $3.7 million and $5.0 million for the three and six months ended June 30, 2013, respectively, partially offsetting the net gains on actual loan sales during the periods, as compared to mark to market gains of $830 thousand and $397 thousand for the three and six months ended June 30, 2012, respectively, which increased the net gains recognized in such periods. We expect the overall level of net gains recognized during the second half of 2013 to substantially decline as compared to the six months ended June 30, 2013 due to lower refinanced loan activity caused by the recent increase in market interest rates, as well as our intent to hold for investment a larger portion of our loan originations because of the higher yields. 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. 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 5 of the consolidated financial statements.

The Bank and the FDIC share in the losses on loans and real estate owned as part of the loss-sharing agreements entered into on both of our FDIC-assisted transactions completed in March 2010. The asset arising from the loss-sharing agreements is referred to as the “FDIC loss-share receivable” on 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 expected cash flows on certain covered loan pools. The aggregate effect of changes in the FDIC loss-share receivable amounted to a $2.0 million and $5.2 million net reduction in non-interest income for the three and six months ended June 30, 2013, respectively. The reduction to non-interest income during the second quarter of 2013 was largely due to the prospective recognition of decreases in the FDIC loss-share receivable caused by better than originally expected cash flows on certain pools, partially offset by an increase in the receivable for the FDIC’s portion of reimbursable expenses incurred during the quarter. The $5.2 million net reduction for the first half of 2013 was mainly the result of the aforementioned items and a decrease in additional credit impairment of certain loan pools, which also resulted in a $2.3 million credit to our provision for losses on covered loans for the six months ended June 30, 2013. See “FDIC Loss-Share Receivable Related to Covered Loans and Foreclosed Assets” section below in this MD&A and Note 7 to the consolidated financial statements for further details.

Other non-interest income decreased $6.5 million and $7.4 million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012. Both decreases were largely the result of other non-interest income recognized in the second quarter of 2012 for the reversal of purchase accounting valuation liabilities totaling $7.4 million, which related to expired and unused lines of credit assumed in FDIC-assisted transactions. The reversal also resulted in corresponding reduction in our FDIC loss-share receivable portion of such estimated losses as of the acquisition and were reflected in the change in FDIC loss-share receivable amounts presented for the three and six months ended June 30, 2012 in the table above.

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Non-Interest Expense

The following table presents the components of non-interest expense for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
	(in thousands)
Salary and employee benefits expense	$	47,733	$	51,214	$	98,305	$	102,240
Net occupancy and equipment expense		18,179		16,903		37,068		34,265
FDIC insurance assessment		5,574		3,208		8,927		6,827
Amortization of other intangible assets		1,927		2,532		3,530		4,490
Professional and legal fees		4,285		3,345		8,177		6,969
Advertising		1,850		1,841		3,652		3,529
Other		15,798		12,467		31,126		27,738
Total non-interest expense	$	95,346	$	91,510	$	190,785	$	186,058

Salary and employee benefits expense decreased $3.5 million and $3.9 million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 largely due to the decrease in our cash incentive compensation accruals and medical health insurance expense. Our health care expenses are at times volatile due to our election to self fund a large portion of our insurance plan and these medical expenses are expected to fluctuate based on our plan experience into the foreseeable future.

In June 2013, Valley elected to freeze its non-contributory defined benefit pension plan, the supplemental non-qualified pension plan, and the non-qualified directors’ retirement plan effective December 31, 2013. The freeze is expected to decrease our total pension expense by $2.1 million for the last six months of 2013 as compared to the six months ended June 30, 2013 and considerably decrease our pension costs starting in January 2014. To partially offset the negative impact of these changes to our employees, we enhanced the benefits available under our 401(k) plan effective January 1, 2014. The enhancements include an increase in our employer matching contributions, which is expected to offset a portion of the pension cost reduction expected in 2014. See Note 10 to the consolidated financial statements for more details.

Net occupancy and equipment expenses increased $1.3 million and $2.8 million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 mainly due higher repair and maintenance expenses, as well as an increase in depreciation expense primarily related to technological updates to certain systems, including new deposit automation systems implemented throughout our branch network during 2012.

FDIC insurance assessments increased $2.4 million and $2.1 million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 mostly due to adjustments to our assessment made by the FDIC during the second quarter of 2013. Based upon current estimates, the FDIC insurance assessment is expected to approximate $4.0 million for the third quarter of 2013.

Amortization of other intangibles decreased $605 thousand and $960 thousand for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 mainly due to increases in the net recoveries of impairment charges on certain loan servicing rights during the first half of 2013, partially offset by higher amortization expense caused, in part, by additional loan servicing rights recorded since we implemented an “originate and sell” model for a large portion of our mortgage loan originations starting in the second half of 2012.

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Professional and legal fees increased $1.2 million and $940 thousand for three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 mainly due to increases in legal expenses related to general corporate matters.

Other non-interest expense increased $3.3 million and $3.4 million for the three and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 due to general increases across several small categories, including higher OREO expenses related to our foreclosed commercial real estate and residential properties.

The efficiency ratio measures total non-interest expense as a percentage of net interest income plus total non-interest income. Our efficiency ratio was 66.78 percent and 67.15 percent for the three and six months ended June 30, 2013, respectively, as compared to 62.63 percent and 62.82 percent for the same periods in 2012, respectively. The negative upward movement in our efficiency ratio in the first half 2013 was largely attributable to a $29.6 million decline in net interest income. We strive to maintain a low efficiency ratio through diligent management of our operating expenses and balance sheet. 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.

Income Taxes

Income tax expense was $11.0 million for the three months ended June 30, 2013 reflecting an effective tax rate of 24.4 percent, as compared to $14.4 million for the second quarter of 2012, reflecting an effective tax rate of 30.4 percent. The decrease in rate and tax expense as compared to the second quarter of 2012 was primarily due to the favorable tax effect of a corporate subsidiary’s legal restructuring, an increase in tax credit investments and a lower anticipated effective tax rate for the remainder of 2013.

Income tax expense was $23.8 million and $29.6 million for the six months ended June 30, 2013 and 2012, respectively. The effective tax rate decreased by 3.9 percent to 26.7 percent for the six months ended June 30, 2013 as compared to 30.6 percent for the same period of 2012 primarily due to the aforementioned items.

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. For the remainder of 2013, we anticipate that our effective tax rate will range from 26 to 29 percent.

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. Certain prior period amounts have been reclassified to conform to the current presentation.

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The following tables present the financial data for each business segment for the three months ended June 30, 2013 and 2012:

	Three Months Ended June 30, 2013
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	3,887,451		$	7,099,152		$	3,236,713		$	—		$	14,223,316
Income (loss) before income taxes		20,895			33,290			850			(10,152	)		44,883
Annualized return on average interest earning assets (before tax)		2.15	%		1.88	%		0.11	%		N/A			1.26	%
	Three Months Ended June 30, 2012
	Consumer Lending			Commercial Lending			Investment Management			Corporate and Other Adjustments			Total
	($ in thousands)
Average interest earning assets	$	3,975,534		$	7,322,408		$	2,780,083		$	—		$	14,078,025
Income before income taxes		14,708			22,437			6,866			3,175			47,186
Annualized return on average interest earning assets (before tax)		1.48	%		1.23	%		0.99	%		N/A			1.34	%

Consumer Lending

This segment, representing 35.8 percent of our loan portfolio at June 30, 2013, is mainly comprised of residential mortgage loans, home equity loans and automobile loans. The duration of the residential mortgage loan portfolio, which including covered loans represented 22.3 percent of our loan portfolio at June 30, 2013, is subject to movements in the market level of interest rates and forecasted prepayment speeds. The weighted average life of the automobile loans (representing 7.7 percent of total loans at June 30, 2013) 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.

Average assets for the three months ended June 30, 2013 decreased $88.1 million as compared to the second quarter of 2012. This decrease largely resulted from our continued sales of the majority of our new and refinanced residential mortgage loan originations, partially offset by growth in both auto loans and personal lines of credit over the last twelve months. During the second quarter of 2013, we originated over $482 million in new and refinanced residential mortgage loans and retained only approximately 19 percent of these loans in our loan portfolio at June 30, 2013 as compared to 81 percent of $478 million in new loan originations retained during the second quarter of 2012. In addition, the home equity loan portfolio declined from the second quarter of 2012 mainly due to continued normal repayment activity outpacing new loan origination volumes.

Income before income taxes increased $6.2 million to $20.9 million for the second quarter of 2013 as compared to the second quarter of 2012. The increase was mainly due to higher non-interest income, partially offset by a decrease in net interest income. Non-interest income increased $11.7 million to $25.0 million for the second quarter of 2013 due to an increase in net gains on sales of residential mortgage loans as we sold a larger portion of our mortgage loan originations during the second quarter of 2013. Net interest income decreased $4.3 million as compared with the second quarter of 2012. The decrease was mainly driven by lower average loan balances coupled with lower yields on average new loans, partially offset by a decline in the cost of deposit accounts and lower average balances for time deposits.

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The net interest margin decreased 36 basis points to 2.96 percent for the second quarter of 2013 as compared to the same quarter one year ago mainly as a result of a 44 basis point decrease in yield on average loans caused by the current and prolonged low level of market interest rates on new loans, partially offset by an 8 basis point decrease in costs associated with our funding sources. The decrease in our cost of funds was mainly due the run-off of maturing high cost certificates of deposit, lower interest rates offered on most of our deposit products over the past twelve month, a decline in the cost of long-term borrowings, as well as the expiration of interest rate cap derivatives in May 2013 that hedged the cash flows of certain customer repurchase agreements and money market deposit accounts.

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, including $33.0 million of covered loans, totaled approximately $2.0 billion and represented 18.6 percent of the total loan portfolio at June 30, 2013. Commercial real estate loans and construction loans, including $98.2 million of covered loans, totaled $5.0 billion and represented 45.6 percent of the total loan portfolio at June 30, 2013.

Average assets for the three months ended June 30, 2013 decreased $223.3 million as compared to the second quarter of 2012. This decrease was primarily attributable to continued strong market competition for quality credits, loan repayments, lower line of credit usage, and a $94.2 million decline in the non-covered PCI loan portfolio over the last 12-month period.

For the three months ended June 30, 2013, income before income taxes increased $10.9 million to $33.3 million as compared to the second quarter of 2012 mostly due to a decrease in the provision for credit losses coupled with an increase in non-interest income, partially offset by a decrease in net interest income. The provision for credit losses decreased $5.8 million during the second quarter of 2013 as compared to the same quarter of 2012 mainly due to improved expected loss experience and economic outlook since one year ago. Non-interest income increased $4.3 million as compared to the second quarter of 2012 largely due to the aggregate effect of changes in the FDIC loss-share receivable. Additionally, net interest income decreased $2.7 million mainly due to a decrease in average loan balances as repayments outpaced loan volumes in the commercial and industrial loan portfolio as well as lower yields on average loans, offset mostly by additional interest accretion of approximately $2 million recognized on covered PCI loans during the second quarter of 2013 due to better than expected cash flows for certain loan pools subsequent to acquisition.

The net interest margin decreased 2 basis points to 4.29 for the second quarter of 2013 as compared to the same quarter one year ago mainly as a result of a 10 basis point decrease in yield on average loans, partially offset by the 8 basis point decrease in the costs of our funding sources.

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, trading 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). Net gains and losses on the change in fair value of trading securities and net impairment losses on securities are reflected in the corporate and other adjustments segment.

60

Average investments increased $456.6 million during the second quarter of 2013 as compared to the same quarter in 2012 primarily due to a $386.8 million increase in average federal funds sold and other interest bearing deposits. The increase in average federal funds sold and other interest bearing deposits resulted from excess liquidity (mostly held in overnight interest bearing deposits at the Federal Reserve Bank of New York) mainly caused by large repayments within the loan portfolio and an increase in our average deposits (primarily non-interest bearing deposits) over the last twelve months which both outpaced our overall loan volumes. In addition, the increase in average investments during the second quarter of 2013 was also attributable to purchases of residential mortgage-backed securities issued by government sponsored agencies, corporate bonds and municipal bond securities over the last twelve month period.

For the three months ended June 30, 2013, income before income taxes decreased $6.0 million to $850 thousand for the second quarter of 2013 compared to $6.9 million for the three months ended June 30, 2012 mostly due to a $4.9 million decrease in net interest income and an $888 thousand increase in internal transfer expense. The decrease in net interest income was mainly driven by a 102 basis point decline in the yield on investments resulting from the reinvestment of principal and interest received from higher yielding securities into new securities yielding lower market interest rates over the last twelve months, as well as an increase in the amortization of premiums on certain mortgage-backed securities caused by high prepayment speeds.

The net interest margin decreased 94 basis points to 1.46 percent for the second quarter of 2013 as compared to the same quarter one year ago largely due to the 102 basis point decrease in the yield on investments, partially offset by lower costs associated with our funding sources.

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 trading and securities gains and losses, and net impairment losses on securities not reported in the investment management segment above, interest expense related to the junior subordinated debentures issued to capital trusts, the change in fair value of Valley’s junior subordinated debentures carried at fair value, interest expense related to certain subordinated notes, as well as income and expense from derivative financial instruments.

The income before income taxes for the corporate segment decreased $13.3 million to a $10.2 million loss for the three months ended June 30, 2013 as compared to income of $3.2 million for the three months ended June 30, 2012. Non-interest income decreased $6.9 million largely due to a reversal of purchase accounting valuation liabilities totaling $7.4 million during the three months ended June 30, 2012 related to expired and unused lines of credit assumed in FDIC-assisted transactions. Net gains on securities transactions decreased $1.2 million for the quarter ended June 30, 2013 as compared with the same period in 2012 mainly due to an immaterial amount of investment securities sales during the second quarter of 2013. Net trading gains decreased $1.9 million to a net loss of $270 thousand during the second quarter of 2013 as compared to the same period year ago mainly due to the change in the non-cash mark to market adjustments on our junior subordinated debentures carried at fair value. Additionally, internal transfer income decreased $4.6 million as compared to the same quarter one year ago.

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The following tables present the financial data for each business segment for the six months ended June 30, 2013 and 2012:

	Six Months Ended June 30, 2013
										Corporate
	Consumer			Commercial			Investment			and Other
	Lending			Lending			Management			Adjustments			Total
	($ in thousands)
Average interest earning assets	$	3,883,596		$	7,133,840		$	3,143,555		$	—		$	14,160,991
Income (loss) before income taxes		41,132			57,098			1,876			(11,099	)		89,007
Annualized return on average interest earning assets (before tax)		2.12	%		1.60	%		0.12	%		N/A			1.26	%
	Six Months Ended June 30, 2012
										Corporate
	Consumer			Commercial			Investment			and Other
	Lending			Lending			Management			Adjustments			Total
	($ in thousands)
Average interest earning assets	$	3,851,981		$	7,275,323		$	2,891,598		$	—		$	14,018,902
Income (loss) before income taxes		27,713			59,799			14,034			(4,551	)		96,995
Annualized return on average interest earning assets (before tax)		1.44	%		1.64	%		0.97	%		N/A			1.38	%

Consumer Lending

Average interest earning assets for the six months ended June 30, 2013 increased $31.6 million, or approximately 1 percent, as compared to the same period in 2012. The modest increase was mainly due to growth in auto loans and personal lines of credit, partially offset by a slight decline in residential mortgage loans as we sold a large portion of our mortgage loan originations due, in part, to the sustained low level of market interest rates over the last twelve month period.

Income before income taxes increased $13.4 million for the six months ended June 30, 2013 to $41.1 million as compared to $27.7 million for the same period in 2012, mostly due to an increase in non-interest income, partially offset by a decrease in net interest income. Non-interest income increased $23.0 million for the first half of 2013 as compared to the same period in 2012 mainly due to a $23.1 million increase in the net gains on sales of loans caused by the aforementioned high level of mortgage loan originations for sale. Net interest income decreased $7.0 million for the six months ended June 30, 2013 as compared to the same period in 2012 mainly due to lower yielding new and refinanced loans and a decrease in the mix of higher yielding residential mortgage loan balances within the segments composition.

The net interest margin decreased 39 basis points to 2.99 percent for the six months ended June 30, 2013 as compared to the same period of 2012 due to a 48 basis point decrease in interest yield, partially offset by a 9 basis point decrease in costs associated with our funding sources.

Commercial Lending

Average interest earning assets for the six months ended June 30, 2013 decreased $141.5 million as compared to the same period in 2012. This decrease was primarily attributable to continued loan repayments (largely within the PCI loan portfolios) including some full loan repayments from a few large borrowers which outpaced loan volumes in the commercial and industrial loan portfolio, lower line of credit usage, and continued strong market competition for quality credits, especially in our new Long Island marketplace.

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For the six months ended June 30, 2013, income before income taxes decreased $2.7 million to $57.1 million compared with the same period one year ago. The decrease was primarily due to lower net interest income, partially offset by a decline in the provision for loan losses and a decrease in internal transfer expense. Net interest income decreased $12.4 million during the first half of 2013 to $149.8 million as compared to $162.3 million for the same period in 2012 and was driven by lower interest rates on new and refinanced loans, as well as lower average loan balances. The provision for loan losses decreased $7.6 million during the first six months of 2013 as compared to the same period in 2012 due to a lower provision for credit losses on non-covered loans and a $2.3 million credit to the provision for covered loans recorded during the first half of 2013 as a result of decline in additional estimated credit losses. Internal transfer expense also decreased $3.3 million to $58.0 million for the six months ended June 30, 2013 as compared to the same period of 2012.

The net interest margin decreased 26 basis points to 4.20 percent for the six months ended June 30, 2013 as compared to the same period of 2012 due to a 35 basis point decrease in interest yield, partially offset by a 9 basis points decrease in costs associated with our funding sources.

Investment Management

Average investments increased $252.0 million during the six months ended June 30, 2013 as compared to the same period one year ago primarily due to a high level of excess liquidity maintained in overnight funds throughout 2013 and the latter half of 2012 mainly caused by large repayments within the loan portfolio and an increase in our average deposits over the last twelve months which both outpaced our overall loan volumes.

Income before income taxes decreased $12.2 million to $1.9 million for the six months ended June 30, 2013 compared to $14.0 million for the same period of 2012 primarily due to a $9.7 million decrease in net interest income and a $1.6 million increase in the internal transfer expense. The decrease in net interest income was driven by the aforementioned decline in the yield on investments mainly resulting from the reinvestment of principal and interest received from higher yielding securities into new securities yielding lower market interest rates over the last twelve months, as well as an increase in the amortization of premiums on certain mortgage-backed securities.

The net interest margin decreased 81 basis points to 1.62 percent for the first half of 2013 as compared to the same period one year ago as a result of the aforementioned decrease in yield on investments, partially offset by a 9 basis point decrease in costs associated with our funding sources.

Corporate Segment

The loss before income taxes for the corporate segment increased $6.5 million to $11.1 million for the six months ended June 30, 2013 as compared to a $4.6 million for the same period of 2012. Non-interest income decreased $5.3 million as compared to the six months ended June 30, 2012 largely due to a reversal of purchase accounting valuation liabilities totaling $7.4 million during the six months ended June 30, 2012 related to expired and unused lines of credit assumed in FDIC-assisted transactions. The internal transfer income also decreased $1.5 million during the six months ended June 2013 as compared to the same period in 2012.

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

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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.

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 June 30, 2013. 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 June 30, 2013. 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 June 30, 2013. Although the size of Valley’s balance sheet is forecasted to remain static as of June 30, 2013 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 the second quarter of 2013. The model utilizes an immediate parallel shift in the market interest rates at June 30, 2013.

The following table reflects management’s expectations of the change in our net interest income over the next twelve month-period in light of the aforementioned assumptions:

	Estimated Change in
	Future Net Interest Income
	Dollar			Percentage
Changes in Interest Rates	Change			Change
(in basis points)	($ in thousands)
+200	$	11,363			2.56	%
+100		384			0.09
-100		(12,270	)		(2.76	)

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.

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As noted in the table above, a 100 basis point immediate increase in interest rates is projected to increase net interest income over the next twelve months by only 0.09 percent. Our balance sheet sensitivity to such a move in interest rates at June 30, 2013 decreased as compared to March 31, 2013 (which was an increase of 1.83 percent in net interest income over a 12 month period) largely due to a $289.1 million decrease in interest bearing deposits with banks, comprised mostly of overnight cash deposits that are immediately sensitive to a rise in interest rates. These cash deposits, largely held at the Federal Reserve Bank of New York, decreased due to the redeployment of such excess liquidity into less rate-sensitive new loans and investments during the second quarter of 2013. Additionally, our current positive sensitivity to a 100 basis point increase in interest rates is somewhat limited by the fact that many of our adjustable rate loans are tied to the Valley prime rate (set by management), which currently exceeds the U.S. prime rate by 125 basis points. Due to its current level above the U.S. prime rate, the Valley prime rate is not projected to increase under the 100 basis point immediate increase scenario in our simulation, but would increase and positively impact our net interest income in a 200 basis point immediate increase in interest rates scenario. 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.

Although we do not expect our Valley prime rate loan portfolio to have an immediate benefit to our interest income in a rising interest rate environment, we attempt to manage the Bank’s aggregate sensitivity in a manner to mitigate the potential lag in the portfolios re-pricing. We expect interest income on many of our residential mortgage-backed securities with unamortized purchase premiums to improve if interest rates were to move upward and prepayment speeds on the underlying mortgages decline. The decline in prepayments will lengthen the expected life of each security and reduce the amount of premium amortization expense recognized against interest income each period. However, many of the residential mortgage-backed securities have rapidly paid down in the current low interest rate environment, and the resulting acceleration of the securities’ premium amortization has negatively impacted our interest income during the six months ended June 30, 2013 and may continue to do so if the market interest rates remain at relatively low historical levels.

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 short-term borrowings based on the prime rate (as reported by The Wall Street Journal). We have 4 cash flow hedge interest rate swaps with a total notional value of $300 million at June 30, 2013 that currently pay fixed and receive floating rates. Additionally, we utilize fair value and non-designated hedge interest rate swaps at times to effectively convert fixed rate loans and deposits to floating rate instruments. Most of these actions 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 caps negatively impacted our net interest income during both the three months ended June 30, 2013 and 2012. We expect this negative trend to continue into the foreseeable future due to the Federal Reserve’s pledge to keep market interest rates low in an effort to help the ailing economy. See Note 13 to the consolidated financial statements for further details on our derivative transactions.

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 asset-based liquidity to cover potential funding requirements in order to minimize our dependence on volatile and potentially unstable funding markets.

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 120 percent and non-core funding (which generally includes certificates of deposit $100 thousand and over, federal funds purchased, repurchase agreements and FHLB advances) greater than 50 percent of total assets. The Bank was in compliance with the foregoing policies at June 30, 2013.

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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 percent of original cost basis has been repaid), investment securities available for sale, trading securities, 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 12.9 percent of earning assets, at June 30, 2013 and $1.9 billion, representing 13.4 percent of earning assets, at December 31, 2012. Of the $1.8 billion of liquid assets at June 30, 2013, approximately $422 million of various investment securities were pledged to counterparties to support our earning asset funding strategies. We anticipate the receipt of approximately $404 million in principal from securities in the total investment portfolio over the next twelve 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 June 30, 2013) are projected to be approximately $3.6 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. Our core deposit base, which generally excludes certificates of deposit over $100 thousand as well as brokered certificates of deposit, represents the largest of these sources. Core deposits averaged approximately $10.1 billion and $9.9 billion for the second quarter of 2013 and for the year ended December 31, 2012, respectively, representing 71.2 percent and 70.3 percent of average earning assets for the same periods of 2013 and 2012, 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.

Additional funding may be provided from short-term liquidity borrowings through deposit gathering networks and in the form of federal funds purchased 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 $970 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. Furthermore, we are able to obtain overnight borrowings from the Federal Reserve Bank via the discount window as a contingency for additional liquidity. At June 30, 2013, our borrowing capacity under the Fed’s discount window was approximately $994 million.

We also have access to other short-term and long-term borrowing sources to support our asset base, such as securities sold under agreements to repurchase (repos). Our short-term borrowings decreased $29.2 million to $125.1 million at June 30, 2013 as compared to $154.3 million at December 31, 2012 due to lower repo balances. At June 30, 2013 and December 31, 2012, all short-term repos represent customer deposit balances being swept into this vehicle overnight.

Corporation Liquidity

Valley’s recurring cash requirements primarily consist of dividends to common shareholders and interest expense on junior subordinated debentures issued to capital trusts. 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 common dividends, if declared, and interest expense payable to 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 funds, cash and sale of investments, as well as potential borrowed funds from outside sources. In the event Valley would exercise the right to defer payments on the junior subordinated debentures, and therefore distributions on its trust preferred securities, Valley would be unable to pay dividends on its common stock until the deferred payments are made.

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As part of our on-going asset/liability management strategies, Valley could use cash to repurchase shares of its outstanding common stock under its share repurchase program or redeem its callable junior subordinated debentures issued to VNB Capital Trust I, State Bancorp Capital Trust I, and State Bancorp Capital Trust II using Valley’s own funds and/or dividends received from the Bank, as well as new borrowed funds or capital issuances. On July 26, 2013, we redeemed $15.0 million of the principal face value of the trust preferred securities issued by VNB Capital Trust I (included in Valley’s Tier 1 capital position) and approximately $15.5 million of the principal face amount of the related outstanding junior subordinated debentures carried at fair value within our interest bearing liabilities at June 30, 2013.

Investment Securities Portfolio

As of June 30, 2013, we had approximately $1.8 billion, $958.7 million, and $14.2 million in held to maturity, available for sale and trading securities, respectively. At June 30, 2013, our investment portfolio was comprised of U.S. Treasury securities, U.S. government agencies, tax-exempt issues of states and political subdivisions, residential mortgage-backed securities (including 15 private label mortgage-backed securities), single-issuer trust preferred securities principally issued by bank holding companies (including 3 pooled securities), high quality corporate bonds and perpetual preferred and common 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 and Fannie Mae.

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

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.

Other-than-temporary impairment means we believe the security’s impairment is due to factors that could include its inability to pay interest or dividends, its potential for default, and/or other factors. As a result of the current authoritative accounting guidance, when a held to maturity or available for sale debt security is assessed for other-than-temporary impairment, we have to first consider (i) whether we intend to sell the security, and (ii) whether it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis. If one of these circumstances applies to a security, an other-than-temporary impairment loss is recognized in the statement of income equal to the full amount of the decline in fair value below amortized cost. If neither of these circumstances applies to a security, but we do not expect to recover the entire amortized cost basis, an other-than-temporary impairment loss has occurred that must be separated into two categories: (i) the amount related to credit loss, and (ii) the amount related to other factors. In assessing the level of other-than-temporary impairment attributable to credit loss, we compare the present value of cash flows expected to be collected with the amortized cost basis of the security. As discussed above, the portion of the total other-than-temporary impairment related to credit loss is recognized in earnings, while the amount 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. The amount of an additional other-than-temporary impairment related to credit losses recognized during the period may be recorded as a reclassification adjustment from the accumulated other comprehensive 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. To determine whether a security’s impairment is other-than-temporary, Valley considers several factors that include, but are not limited to the following:

• The severity and duration of the decline, including the causes of the decline in fair value, such as credit problems, interest rate fluctuations, or market volatility;

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• Adverse conditions specifically related to the security, an industry, or geographic area;

• Failure of the issuer of the security to make scheduled interest or principal payments;

• Any changes to the rating of the security by a rating agency or, if applicable, any regulatory actions impacting the security issuer;

• Recoveries or additional declines in fair value after the balance sheet date;

• Our 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; and

• Our intent to sell debt security investments, or if it is more likely than not that we 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 we expect to collect all contractual cash flows. See “Other-Than-Temporary Impairment Analysis” section of Note 6 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 June 30, 2013.

	June 30, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(in thousands)
Held to maturity investment grades:*
AAA Rated	$	1,184,524	$	24,949	$	(21,737	)	$	1,187,736
AA Rated		275,645		6,566		(7,147	)		275,064
A Rated		23,531		945		(2	)		24,474
BBB Rated		68,240		4,931		(91	)		73,080
Non-investment grade		29,320		1,185		(342	)		30,163
Not rated		185,687		26		(12,049	)		173,664
Total investment securities held to maturity	$	1,766,947	$	38,602	$	(41,368	)	$	1,764,181
Available for sale investment grades:*
AAA Rated	$	729,936	$	5,027	$	(31,763	)	$	703,200
AA Rated		14,034		747		(417	)		14,364
A Rated		52,118		914		(3,864	)		49,168
BBB Rated		73,064		1,240		(2,400	)		71,904
Non-investment grade		46,947		1,087		(4,263	)		43,771
Not rated		70,006		7,010		(767	)		76,249
Total investment securities available for sale	$	986,105	$	16,025	$	(43,474	)	$	958,656

* Rated using external rating agencies (primarily S&P and Moody’s). Ratings categories include the 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.

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The held to maturity portfolio includes $185.7 million in investments not rated by the rating agencies with aggregate unrealized losses of $12.0 million at June 30, 2013. The unrealized losses for this category mostly 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 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 June 30, 2013, 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.

The available for sale portfolio includes non-investment grade rated investments with amortized costs and fair values totaling $46.9 million and $43.8 million, respectively, at June 30, 2013. The $4.3 million in unrealized losses for this category primarily relate to 2 private label mortgage-backed securities (including 1 security with total loss of $1.6 million) and 4 trust preferred securities (including 2 pooled trust preferred securities). Of the six securities, three were found to be other-than-temporarily impaired prior to December 31, 2012. The available for sale portfolio also includes investments not rated by the rating agencies with aggregate fair values and unrealized losses of $76.2 million and $767 thousand, respectively, at June 30, 2013. The unrealized losses for this category are largely related to trust preferred securities issued by one deferring bank holding company that were other-than-temporarily impaired prior to December 31, 2012. See further details regarding these impaired securities and our other-than-temporary analysis in Note 6 to the consolidated financial statements and “Other-Than-Temporarily Impaired Securities” section below.

Other-Than-Temporarily Impaired Securities

Other-than-temporary impairment is a non-cash charge and not necessarily an indicator of a permanent decline in value. Security valuations require significant estimates, judgments and assumptions by management and are considered a critical accounting policy of Valley.

There were no other-than-temporary impairment losses on securities recognized in earnings for the three and six months ended June 30, 2013. For the three and six months ended June 30, 2012, Valley recognized net impairment losses on securities in earnings totaling $550 thousand due to additional estimated credit losses on 1 of 5 previously impaired private label mortgage-backed securities. At June 30, 2013, the 5 impaired private label mortgage-backed securities had a combined amortized cost of $27.7 million and fair value of $28.3 million.

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Loan Portfolio

The following table reflects the composition of the loan portfolio as of the dates presented:

	June 30,			March 31,			December 31,			September 30,			June 30,
	2013			2013			2012			2012			2012
							($ in thousands)
Non-covered loans
Commercial and industrial	$	1,988,404		$	2,045,514		$	2,084,826		$	2,118,870		$	2,165,656
Commercial real estate:
Commercial real estate		4,437,712			4,351,291			4,417,709			4,445,338			4,441,026
Construction		426,891			438,674			425,444			435,939			411,639
Total commercial real estate		4,864,603			4,789,965			4,843,153			4,881,277			4,852,665
Residential mortgage		2,412,968			2,352,560			2,462,429			2,499,554			2,745,101
Consumer:
Home equity		455,166			462,297			485,458			492,338			499,749
Automobile		835,271			811,060			786,528			789,248			778,181
Other consumer		184,796			188,827			179,731			160,118			155,963
Total consumer loans		1,475,233			1,462,184			1,451,717			1,441,704			1,433,893
Total non-covered loans		10,741,208			10,650,223			10,842,125			10,941,405			11,197,315
Covered loans (1)		141,817			161,276			180,674			207,533			226,537
Total loans (2)	$	10,883,025		$	10,811,499		$	11,022,799		$	11,148,938		$	11,423,852
As a percent of total loans:
Commercial and industrial		18.3	%		18.9	%		19.0	%		19.0	%		18.9	%
Commercial real estate		44.6			44.3			43.9			43.8			42.5
Residential mortgage		22.2			21.8			22.3			22.4			24.0
Consumer loans		13.6			13.5			13.2			12.9			12.6
Covered loans		1.3			1.5			1.6			1.9			2.0
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

(1) Covered loans primarily consist of commercial real estate loans and commercial and industrial loans.

(2) Total loans are net of unearned discount and deferred loan fees totaling $8.3 million, $6.8 million, $3.4 million, $3.8 million, and $1.2 million at June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012, and June 30, 2012, respectively.

Non-covered Loans

Non-covered loans (loans not subject to loss-sharing agreements with the FDIC) increased $91.0 million to $10.7 billion at June 30, 2013 from March 31, 2013 largely due to solid organic commercial real estate (excluding construction) loan growth and approximately $162 million of residential mortgage loans purchased in the second quarter of 2013, partially offset by declines mainly within the commercial and industrial loan segment of our purchased credit-impaired (PCI) loan portfolios.

Total commercial and industrial loans decreased $57.1 million from March 31, 2013 to approximately $2.0 billion at June 30, 2013 mainly due to a $46.4 million decline in the PCI loan portfolio. During the second quarter, we continued to experience strong market competition for quality credits, as well as a slight reduction in line of credit usage, which offset an increase in our total line commitments from the prior quarter.

Total commercial real estate loans (excluding construction loans) increased $86.4 million from the first quarter of 2013 to $4.4 billion at June 30, 2013, despite a $49.4 million decrease in non-covered PCI loans acquired and purchased in 2012. Strong loan origination volumes were seen across many types of commercial real estate borrowers and led by co-op building loans within our New York markets. The decline in the PCI loans was due to normal payments, as well as prepayments caused by strong competition in the Long Island market and, to some extent, excess borrower liquidity. Additionally, construction loans decreased $11.8 million to $426.9 million at June 30, 2013 from March 31, 2013 mainly due to a decline in the non-PCI loan portion of the portfolio caused by normal paydowns on existing construction loans and soft demand.

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Total residential mortgage loans increased $60.4 million to $2.4 billion at June 30, 2013 from March 31, 2013 mostly due to two loan purchases from third party originators totaling approximately $162 million, partially offset by a high volume of second quarter refinancing activity where many of the new loans were either sold in the secondary market or held for sale at June 30, 2013. From time to time, the Bank purchases residential mortgage loans, as well as automobile loans (see discussion below), originated by, and sometimes serviced by, other financial institutions based on several factors, including current loan origination volumes, market interest rates, excess liquidity and 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. Of the $162 million of loan purchases in the second quarter, approximately $70 million are serviced and fully guaranteed by a third party originator with a Moody’s debt rating of Aa1. During the second quarter of 2013, we originated over $482 million in new and refinanced residential mortgage loans and retained approximately 19 percent of these loans in our loan portfolio at June 30, 2013. Loans held for sale carried at fair value decreased $86.2 million to $48.9 million (with $49.1 million in unpaid contractual balances) at June 30, 2013 as compared to $135.1 million (with $131.5 million in unpaid contractual balances) at March 31, 2013. Our residential mortgage pipeline was robust for most of the second quarter mainly due to the continued success of our low fixed-price refinance programs and the low level of market interest rates. However, based upon the recent increase in market interest rates prompted by comments from the Federal Reserve during June, we expect to originate and hold a larger portion of our mortgage loan originations during the remainder of 2013, assuming that market rates continue to hold at acceptable levels and we are able to maintain an appropriate mix of residential mortgage loans on our balance sheet. Although we expect our retention of the mortgages to benefit the net interest margin during the third quarter of 2013, net gains on sales of loans are expected to substantially decline as compared to the first two quarters of 2013 based upon a decrease in sales and lower sale margins.

Total consumer loans increased $13.0 million from March 31, 2013 largely due to an increase in the automobile loan portfolio, partially offset by a decrease in other consumer loan portfolio as well as paydowns of home equity loans during the second quarter of 2013. Automobile loans increased by $24.2 million to $835.3 million at June 30, 2013 as compared to March 31, 2013 as our new loan volume remained strong throughout the first half of 2013. During the second quarter of 2013, we also purchased approximately $5.5 million in auto loans as compared to $10.5 million in purchased loans during the first quarter of 2013. Home equity loans declined $7.1 million to $455.2 million at June 30, 2013 as compared to March 31, 2013 due to continued normal repayment activity outpacing new loan origination volumes. Other consumer loans also decreased $4.0 million to $184.8 million at June 30, 2013 as compared to $188.8 million at March 31, 2013 mainly due to lower collateralized personal lines of credit usage. Overall, consumer demand has remained somewhat soft as borrowers’ appetite for additional debt continues to be tempered by the uncertain sustainability of a slowly improving economy.

Purchased Credit-Impaired Loans (Including Covered Loans)

PCI loans are comprised of loans acquired and purchased in the first quarter of 2012 and covered loans for which the Bank will share losses with the FDIC which totaled $809.6 million and $141.8 million, respectively, at June 30, 2013. Our covered loans, consisting primarily of commercial real estate loans and commercial and industrial loans, were acquired from LibertyPointe Bank and The Park Avenue Bank as a part of two FDIC-assisted transactions in 2010. As required by U.S. GAAP, all of our PCI loans are accounted 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, an 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

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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, Valley uses a third party service provider to assist with determining 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 individually reviewed by Valley. 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 is 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 are 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.

At the time of acquisition, the estimated cash flows on our PCI loans were based on observable market information, as well as Valley’s own specific assumptions regarding each loan. Valley performed credit due diligence on the majority of the loans acquired in 2012 and the FDIC-assisted transactions. In addition, Valley engaged a third party to perform credit valuations and expected cash flow forecasts on the acquired loans. The initial expected cash flows for loans accounted for under ASC Subtopic 310-30 were prepared on a loan-level basis utilizing the assumptions developed by Valley in conjunction with the third party. In accordance with ASC Subtopic 310-30, the individual loan-level cash flow assumptions were then aggregated on the basis of pools of loans with similar risk characteristics. Thereafter, 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.

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The following tables summarize the changes in the carrying amounts of non-covered PCI loans and covered loans (net of the allowance for losses on covered loans), and the accretable yield on these loans for the three and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,
	2013						2012
	Carrying			Accretable			Carrying			Accretable
	Amount, Net			Yield			Amount, Net			Yield
	(in thousands)
Non-covered PCI loans:
Balance, beginning of the period	$	909,752		$	113,952		$	1,165,169		$	171,450
Accretion		12,462			(12,462	)		15,625			(15,625	)
Payments received		(112,626	)		—			(66,344	)		—
Net increase in expected cash flows		—			120,884			—			—
Balance, end of the period	$	809,588		$	222,374		$	1,114,450		$	155,825
Covered loans:
Balance, beginning of the period	$	154,096		$	39,186		$	238,657		$	58,352
Accretion		5,177			(5,177	)		4,760			(4,760	)
Payments received		(22,751	)		—			(27,321	)		—
Transfers to other real estate owned		(1,885	)		—			(1,330	)		—
Provision for losses on covered loans		110			—			—			—
Balance, end of the period	$	134,747		$	34,009		$	214,766		$	53,592
	Six Months Ended June 30,
	2013						2012
	Carrying			Accretable			Carrying			Accretable
	Amount, Net			Yield			Amount, Net			Yield
	(in thousands)
Non-covered PCI loans:
Balance, beginning of the period	$	986,990		$	126,749		$	—		$	—
Acquisitions		—			—			1,216,203			186,262
Accretion		25,259			(25,259	)		30,437			(30,437	)
Payments received		(202,661	)		—			(132,190	)		—
Net increase in expected cash flows		—			120,884			—			—
Balance, end of the period	$	809,588		$	222,374		$	1,114,450		$	155,825
Covered loans:
Balance, beginning of the period	$	171,182		$	42,560		$	258,316		$	66,724
Accretion		8,615			(8,615	)		13,132			(13,132	)
Payments received		(41,907	)		—			(50,757	)		—
Net increase in expected cash flows		—			64			—			—
Transfers to other real estate owned		(5,419	)		—			(5,925	)		—
Provision for losses on covered loans		2,276			—			—			—
Balance, end of the period	$	134,747		$	34,009		$	214,766		$	53,592

The net 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 life of the individual pools. The $120.9 million net increase in expected cash flows for non-covered PCI loans during the second quarter of 2013 was largely due to additional cash flows caused by longer than originally expected durations for certain loans which increased the average expected life of our non-covered PCI loans (which represent 85 percent of total PCI loans at June 30, 2013) from 2.5 years (at the date of acquisition) to approximately 4.0 years. Additionally, a $20.1 million decrease in the expected credit losses for certain non-covered pools is another component of the net increase in cash flows.

Covered loans in the table above are presented net of the allowance for losses on covered loans, which totaled $7.1 million at June 30, 2013 as compared to $11.8 million at June 30, 2012. This allowance was established due to a decrease in the expected cash flows for certain pools of covered loans based on higher levels of credit impairment than originally forecasted by us at the acquisition dates. During the three and six months ended June 30, 2013, we recorded a credit to the provision for losses on covered loans totaling $110 thousand and $2.3 million, respectively, as a component of our provision for credit losses in the consolidated statement of income due to declines in the additional estimated credit impairment since acquisition.

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Although we recognized additional credit impairment for certain covered pools prior to 2012, on an aggregate basis the acquired pools of covered and non-covered loans continue to perform better than originally expected. Based on our current estimates, we expect to receive more future cash flows than originally modeled at the acquisition dates. 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 accordingly. During the three and six months ended June 30, 2013, we reduced our FDIC loss-share receivable by $3.5 million and $4.9 million, respectively, due to the prospective recognition of the effect of additional cash flows from covered loan pools with a corresponding reduction in non-interest income for the period (see table in the next section below).

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

The receivable arising from the loss sharing agreements (referred to as the “FDIC loss-share receivable” on our statements of financial condition) 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. As of the acquisition dates for the two FDIC-assisted transactions, we recorded an aggregate FDIC loss-share receivable of $108.0 million, consisting of the present value of the expected future cash flows the Bank expected to receive from the FDIC under the loss sharing agreements. The FDIC loss-share receivable is reduced as the loss sharing payments are received from the FDIC for losses realized on covered loans and other real estate owned acquired in the FDIC-assisted transactions. Actual or expected losses in excess of the acquisition date estimates, accretion of the acquisition date present value discount, and other reimbursable expenses covered by the FDIC loss-sharing agreements will result in an increase in the FDIC loss-share receivable and the immediate recognition of non-interest income in our financial statements, together with an increase in the non-accretable difference. A decrease in expected losses would generally result in a corresponding decline in the FDIC loss-share receivable and the non-accretable difference. Reductions in the FDIC loss-share receivable due to actual or expected losses that are less than the acquisition date estimates are recognized prospectively over the shorter of (i) the estimated life of the applicable pools of covered loans or (ii) the term of the loss sharing agreements with the FDIC.

The following table presents changes in the FDIC loss-share receivable for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	43,413		$	69,928		$	44,996		$	74,390
Discount accretion of the present value at the acquisition dates		32			81			65			162
Effect of additional cash flows on covered loans (prospective recognition)		(3,467	)		(2,231	)		(4,949	)		(3,868	)
Decrease in the provision for losses on covered loans		(105	)		—			(2,783	)		—
Other reimbursable expenses		1,540			1,088			2,492			2,554
(Reimbursements from) payments to the FDIC		(727	)		(3,165	)		865			(7,537	)
Other		—			(5,960	)		—			(5,960	)
Balance, end of the period	$	40,686		$	59,741		$	40,686		$	59,741

The aggregate effect of changes in the FDIC loss-share receivable was a reduction in non-interest income of $2.0 million and $7.0 million for the three months ended June 30, 2013 and 2012, respectively, and a $5.2 million and a $7.1 million reduction for the six months ended June 30, 2013 and 2012, respectively. The reductions in non-interest income for the three and six months of 2012 included $6.0 million related to the FDIC’s portion of the estimated losses on unused lines of credit assumed in the FDIC-assisted transactions, which expired.

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Non-performing Assets

Non-performing assets (excluding PCI loans) include non-accrual loans, other real estate owned (OREO), and other repossessed assets which consist of three aircraft and several automobiles at June 30, 2013. 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. Given the state of the economic recovery, and comparable to many of our peers, the level of non-performing assets remained relatively low as a percentage of the total loan portfolio and non-performing assets at June 30, 2013, but has increased from one year ago (as shown in the table below).

Our past due loans and non-accrual loans in the table below exclude our non-covered and covered 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.

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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:

	June 30,			March 31,			December 31,			September 30,			June 30,
	2013			2013			2012			2012			2012
							($ in thousands)
Accruing past due loans:(1)
30 to 89 days past due:
Commercial and industrial	$	3,525		$	7,656		$	3,578		$	17,459		$	2,275
Commercial real estate		18,946			21,665			13,245			6,236			11,483
Construction		5,772			8,812			6,685			—			270
Residential mortgage		10,619			12,424			18,951			16,961			10,148
Consumer		4,138			5,096			7,227			6,463			5,872
Total 30 to 89 days past due		43,000			55,653			49,686			47,119			30,048
90 or more days past due:
Commercial and industrial		—			31			283			—			512
Commercial real estate		259			259			2,950			221			—
Construction		150			—			2,575			1,024			—
Residential mortgage		2,342			1,885			2,356			1,051			727
Consumer		349			229			501			197			246
Total 90 or more days past due		3,100			2,404			8,665			2,493			1,485
Total accruing past due loans	$	46,100		$	58,057		$	58,351		$	49,612		$	31,533
Non-accrual loans:(1)
Commercial and industrial	$	20,913		$	21,692		$	22,424		$	12,296		$	12,652
Commercial real estate		55,390			56,042			58,625			58,541			61,864
Construction		13,617			13,199			14,805			15,139			16,502
Residential mortgage		26,054			31,905			32,623			31,564			32,045
Consumer		2,549			2,766			3,331			3,831			3,165
Total non-accrual loans		118,523			125,604			131,808			121,371			126,228
Other real estate owned (OREO) (2)		21,327			18,463			15,612			15,403			14,724
Other repossessed assets		7,549			8,053			7,805			7,733			8,548
Non-accrual debt securities(3)		50,972			48,143			40,303			40,779			45,921
Total non-performing assets (NPAs)	$	198,371		$	200,263		$	195,528		$	185,286		$	195,421
Performing troubled debt restructured loans	$	117,052		$	108,654		$	105,446		$	109,282		$	113,610
Total non-accrual loans as a % of loans		1.09	%		1.16	%		1.20	%		1.09	%		1.10	%
Total NPAs as a % of loans and NPAs		1.81			1.82			1.74			1.63			1.68
Total accruing past due and non-accrual loans as a % of loans		1.51			1.70			1.73			1.53			1.38
Allowance for losses on non-covered loans as a % of non-accrual loans		93.12			91.29			91.58			98.67			93.55

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

⁽²⁾ This table excludes OREO properties related to the FDIC-assisted transactions totaling $13.0 million, $11.1 million and $8.9 million at June 30, 2013, March 31, 2013 and December 31, 2012, respectively, and $11.2 million at both September 30, 2012 and June 30, 2012 and is subject to the loss-sharing agreements with the FDIC.

⁽³⁾ Include other-than-temporarily impaired trust preferred securities classified as available for sale, which are presented at carrying value net of unrealized gains totaling $3.8 million at June 30, 2013 and $965 thousand at March 31, 2013, and net unrealized losses totaling $6.9 million, $6.4 million, $5.8 million at December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

Total NPAs decreased $1.9 million from March 31, 2013 to $198.4 million at June 30, 2013 mainly due to a decline in non-accrual loans, partially offset by an increase in OREO balances and $2.8 million increase in the estimated fair value of non-accrual debt securities (consisting of other-than-temporarily impaired trust preferred securities classified as available for sale) totaling $51.0 million at June 30, 2013. The increase in the carrying value of non-accrual debt securities from March 31, 2013 was entirely due to a decrease in the unrealized losses (or non-credit impairment) on such securities. There was no change in the number of debt securities on non-accrual status during the second quarter of 2013. See Note 5 to the consolidated financial statements for additional information on the valuation techniques used to fair value these securities.

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Loans past due 30 to 89 days decreased $12.7 million to $43.0 million at June 30, 2013 compared to March 31, 2013 due to lower delinquencies across all of our loan categories. Within this past due category, commercial and industrial loans decreased $4.1 million largely due to the renewal of $3.3 million in matured performing loans reported in this category at March 31, 2013. Commercial real estate and construction loans experienced similar declines during the second quarter due to the renewal of $3.1 million and $3.9 million of matured performing loans, respectively. Valley believes the majority of all loan types in this past due category are well secured, in the process of collection.

Loans past due 90 days or more and still accruing increased $696 thousand to $3.1 million of total loans at June 30, 2013 compared to $2.4 million at March 31, 2013. The increase in this past due category was mostly due to a slightly higher amount of residential mortgage loans totaling $2.3 million at June 30, 2013 being included in this category.

Non-accrual loans decreased $7.1 million to $118.5 million at June 30, 2013 as compared to $125.6 million at March 31, 2013. The decrease was largely due to $5.2 million of loans transferred to OREO, as well as partial loan charge-offs related to the valuation of certain collateral dependent impaired loans. At June 30, 2013, March 31, 2013 and December 31, 2012, our non-accrual loans also included performing residential mortgage and home equity loans totaling $5.7 million, $6.0 million and $3.0 million, respectively, which were classified as non-accrual loans due to the Office of the Comptroller of the Currency (OCC) guidelines on borrowers in Chapter 7 bankruptcy issued during the latter half of 2012. 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. Our impaired loans, mainly consisting of non-accrual and troubled debt restructured commercial and commercial real estate loans, totaled $216.3 million at June 30, 2013 and had $28.7 million in related specific reserves included in our total allowance for loan losses.

OREO (which consists of 42 commercial and residential properties), excluding OREO subject to loss-sharing agreements with the FDIC and other repossessed assets, totaled $21.3 million and $7.5 million, respectively, at June 30, 2013 as compared to $18.5 million and $8.1 million, respectively, at March 31, 2013. The $2.8 million increase in OREO was mainly due to the completed foreclosures of 11 commercial real estate and residential properties during the second quarter of 2013, net of normal sales activity. The transferred properties totaled $4.3 million at June 30, 2013 (after partial charge-offs to the allowance for loan losses at the transfer date). 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. We believe this lengthy legal process negatively impacts the level of our non-accrual loans, NPA’s, and the ability to compare our NPA levels to similar banks located outside of our primary markets.

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 $117.1 million at June 30, 2013 and consisted of 98 loans (primarily in the commercial and industrial loan and commercial real estate portfolios) as compared to $108.7 million at March 31, 2013. On an aggregate basis, the $117.1 million in performing TDRs at June 30, 2013 had a modified weighted average interest rate of approximately 5.25 percent as compared to a pre-modification weighted average interest rate of 6.01 percent. See Note 7 to the consolidated financial statements for more information regarding our TDR loans.

Allowance for Credit Losses

The allowance for credit losses consists of the allowance for losses on non-covered loans, the allowance for unfunded letters of credit, and the allowance for losses on covered loans related to credit impairment of certain covered loan pools subsequent to acquisition. Management maintains the allowance for credit losses at a level estimated to absorb probable losses inherent in the loan portfolio and unfunded letters 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 non-covered loans 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;

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• tracking the historical levels of classified loans and delinquencies;

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

• providing specific reserves on impaired loans;

• evaluating the non-covered PCI loan pools for additional credit impairment subsequent to the acquisition dates; and

• applying economic outlook factors, assigning specific incremental reserves where necessary.

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 when evaluating the adequacy of the allowance for credit losses. Allowance for credit losses methodology and accounting policy are fully described in Part II, Item 7 and Note 1 to the consolidated financial statements in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

While management utilizes its best judgment and information available, the ultimate adequacy of the allowance for credit losses is dependent upon a variety of factors largely beyond our control, including the view of the OCC toward loan classifications, performance of the loan portfolio, and the economy. The OCC 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.

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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 periods indicated:

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2013			2013			2012			2013			2012
	($ in thousands)
Average loans outstanding	$	10,986,603		$	11,048,612		$	11,297,942		$	11,017,436		$	11,127,304
Beginning balance—Allowance for credit losses	$	124,364		$	132,495		$	135,576		$	132,495		$	136,185
Loans charged-off:
Commercial and industrial		(1,441	)		(7,325	)		(5,406	)		(8,766	)		(10,213	)
Commercial real estate		(4,014	)		(598	)		(4,895	)		(4,612	)		(5,465	)
Construction		(375	)		(1,395	)		(484	)		(1,770	)		(994	)
Residential mortgage		(1,666	)		(892	)		(583	)		(2,558	)		(1,759	)
Consumer		(860	)		(1,509	)		(1,015	)		(2,369	)		(2,498	)
		(8,356	)		(11,719	)		(12,383	)		(20,075	)		(20,929	)
Charged-off loans recovered:
Commercial and industrial		602			1,338			1,304			1,940			2,309
Commercial real estate		50			15			66			65			186
Construction		—			—			50			—			50
Residential mortgage		68			70			111			138			625
Consumer		600			396			407			996			1,008
		1,320			1,819			1,938			3,139			4,178
Net charge-offs *		(7,036	)		(9,900	)		(10,445	)		(16,936	)		(16,751	)
Provision charged for credit losses		2,552			1,769			7,405			4,321			13,102
Ending balance—Allowance for credit losses	$	119,880		$	124,364		$	132,536		$	119,880		$	132,536
Components of allowance for credit losses:
Allowance for non-covered loans	$	110,374		$	114,664		$	118,083		$	110,374		$	118,083
Allowance for covered loans		7,070			7,180			11,771			7,070			11,771
Allowance for loan losses		117,444			121,844			129,854			117,444			129,854
Allowance for unfunded letters of credit		2,436			2,520			2,682			2,436			2,682
Allowance for credit losses	$	119,880		$	124,364		$	132,536		$	119,880		$	132,536
Components of provision for credit losses:
Provision for losses on non-covered loans	$	2,746		$	3,710		$	7,429		$	6,456		$	12,803
Provision for losses on covered loans		(110	)		(2,166	)		—			(2,276	)		—
Provision for loan losses		2,636			1,544			7,429			4,180			12,803
Provision for unfunded letters of credit		(84	)		225			(24	)		141			299
Provision for credit losses	$	2,552		$	1,769		$	7,405		$	4,321		$	13,102
Ratio of net charge-offs of non-covered loans to average loans outstanding		0.26	%		0.35	%		0.31	%		0.30	%		0.27	%
Ratio of total net charge-offs to average loans outstanding		0.26			0.36			0.37			0.31			0.30
Allowance for non-covered loan losses as a % of non-covered loans		1.03			1.08			1.05			1.03			1.05
Allowance for credit losses as a % of total loans		1.10			1.15			1.16			1.10			1.16

* Include covered loan charge-offs totaling $146 thousand for the three and six months ended June 30, 2013 and $1.8 million for the three and six months ended June 30, 2012. These charge-offs are substantially offset by reimbursements under the FDIC loss-sharing agreements.

Net loan charge-offs totaling $7.0 million for the second quarter of 2013 decreased $2.9 million and $3.4 million from the three months ended March 31, 2013 and June 30, 2012, respectively. The decrease from the first quarter of 2013 was largely the result of a $5.0 million loss during the first quarter related to one commercial loan participation (caused by the borrower’s bankruptcy which was precipitated by fraudulent employee activities). Additionally, there were no charge-offs related to the covered loan pools for the second quarter of 2013 as compared to $146 thousand and $1.8 million in charge-offs during the three months ended March 31, 2013 and June 30, 2012, respectively. Covered loan charge-offs are substantially covered by loss-sharing agreements with the FDIC.

The provision for credit losses totaled $2.6 million for the second quarter of 2013 as compared to $1.8 million for the first quarter of 2013 and $7.4 million for the second quarter of 2012. The increase from the first quarter was due, in part, to a $2.2 million credit to the provision for losses on covered loans recorded during the first quarter of 2013 related to a decrease in the estimated additional credit impairment of certain loan pools subsequent to acquisition as compared to a credit of $110 thousand for the three months ended June 30, 2013. We did not record a provision for losses on covered loans during the first half of 2012.

79

The provision for losses on non-covered loans and unfunded letters of credit was $2.7 million for the second quarter of 2013 as compared to $3.9 million for the first quarter of 2013 and $7.4 million for the second quarter of 2012. The decrease from the first quarter was due to several factors, including improved expected loss experience and outlook for most of the loan portfolio categories, the lack of loan growth within the commercial loan portfolio and moderately improving economic indicators during the first half of 2013.

The following table summarizes the allocation of the allowance for credit losses to specific loan portfolio categories and the allocations as a percentage of each loan category:

	June 30, 2013					March 31, 2013					June 30, 2012
			Allocation					Allocation					Allocation
			as a % of					as a % of					as a % of
	Allowance		Loan			Allowance		Loan			Allowance		Loan
	Allocation		Category			Allocation		Category			Allocation		Category
	($ in thousands)
Loan Category:
Commercial and Industrial loans *	$	55,656		2.80	%	$	57,740		2.82	%	$	63,521		2.93	%
Commercial real estate loans:
Commercial real estate		25,193		0.57	%		25,910		0.60	%		20,900		0.47	%
Construction		11,554		2.71	%		11,853		2.70	%		12,632		3.07	%
Total commercial real estate loans		36,747		0.76	%		37,763		0.79	%		33,532		0.69	%
Residential mortgage loans		8,398		0.35	%		9,098		0.39	%		10,678		0.39	%
Consumer loans:
Home equity		1,600		0.35	%		1,695		0.37	%		1,872		0.37	%
Auto and other consumer		3,481		0.34	%		3,762		0.38	%		3,937		0.42	%
Total consumer loans		5,081		0.34	%		5,457		0.37	%		5,809		0.41	%
Unallocated		6,928		—			7,126		—			7,225		—
Allowance for non-covered loans and unfunded letters of credit		112,810		1.05	%		117,184		1.10	%		120,765		1.08	%
Allowance for covered loans		7,070		4.99	%		7,180		4.45	%		11,771		5.20	%
Total allowance for credit losses	$	119,880		1.10	%	$	124,364		1.15	%	$	132,536		1.16	%

* Includes the reserve for unfunded letters of credit.

The allowance for non-covered loans and unfunded letters of credit as a percentage of total non-covered loans was 1.05 percent at June 30, 2013 as compared to 1.10 percent and 1.08 percent at March 31, 2013 and June 30, 2012, respectively. The allocation percentages for the construction loan category at June 30, 2013 shown in the table above decreased 0.36 percent from the second quarter of 2012 largely due to improved expected loss experience and outlook for this portfolio. At June 30, 2013, the expected loss experience declined for most loan categories as compared to March 31, 2013 based upon several factors, including the level of loan delinquencies, charge-offs and gradually improving economic and housing indicators. Our specific reserves for impaired loans included in the allowance allocations by loan category in the table above remained relatively unchanged at June 30, 2013 as compared to March 31, 2013. See Note 8 to the consolidated financial statements for more details.

Our allowance for non-covered loans and unfunded letters of credit as a percentage of total non-covered loans (excluding non-covered PCI loans with carrying values totaling approximately $809.6 million) was 1.14 percent at June 30, 2013 as compared to 1.20 percent at March 31, 2013. PCI loans 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. There were no allocated reserves for non-covered PCI loans at June 30, 2013, March 31, 2013 and June 30, 2012.

Management believes that the unallocated allowance is appropriate given the uncertain strength of the economic and housing market recoveries, the size of the loan portfolio and level of loan delinquencies at June 30, 2013.

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Loan Repurchase Contingencies

We engage in the origination of residential mortgages for sale into the secondary market. Such loan sales increased significantly since the third quarter of 2012 due to our shift to an “originate and sell” model for most of our mortgage loan production through the end of the second quarter of 2013. 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 (including only two requests in 2013), of which none of the loan repurchases resulted in losses. Accordingly, no reserves pertaining to loans sold were established on our consolidated financial statements at June 30, 2013 and December 31, 2012. See Part I, 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 Valley’s Annual Report on Form 10-K for the year ended December 31, 2012 for additional information.

Capital Adequacy

A significant measure of the strength of a financial institution is its shareholders’ equity. At June 30, 2013 and December 31, 2012, shareholders’ equity totaled approximately $1.5 billion or 9.5 percent of total assets. During the six months ended June 30, 2013, total shareholders’ equity increased $19.2 million, which comprised of (i) net income of $65.2 million, (ii) a $11.8 million decrease in our accumulated other comprehensive loss, (iii) $3.9 million in net proceeds from 393 thousand shares from the reissuance of treasury stock or authorized common shares issued under our dividend reinvestment plan, and (iv) a $3.0 million increase attributable to the effect of our stock incentive plan, partially offset by cash dividends declared on common stock totaling $64.7 million. See Note 3 to the consolidated financial statements for additional information regarding changes in our accumulated other comprehensive loss during the three and six months ended June 30, 2013.

Risk-based capital guidelines define a two-tier capital framework. Tier 1 capital consists of common shareholders’ equity and eligible long-term borrowing related to VNB Capital Trust I, GCB Capital Trust III, State Bancorp Capital Trust I and State Bancorp Capital Trust II less disallowed intangibles and adjusted to exclude unrealized gains and losses, net of deferred tax. Total risk-based capital consists of Tier 1 capital, Valley National Bank’s subordinated borrowings and the allowance for credit losses up to 1.25 percent of risk-adjusted assets. Risk-adjusted assets are determined by assigning various levels of risk to different categories of assets and off-balance sheet activities.

On July 2, 2013, the Federal Reserve Board and the FDIC issued (interim) final rules implementing the Basel III regulatory capital framework and related Dodd-Frank Act changes. The rules revise minimum capital requirements and adjust prompt corrective action thresholds. Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by Valley and the Bank. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5 percent and a common equity Tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets. The final rules also raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0 percent to 6.0 percent and require a minimum leverage ratio of 4.0 percent. The final rule will become effective January 1, 2015, subject to a transition period.

Valley’s Tier 1 capital position included $186.3 million of its outstanding trust preferred securities issued by capital trusts as of June 30, 2013 and December 31, 2012. Based upon the new interim final regulatory guidance, our Tier 1 capital treatment of the trust preferred securities issued by our capital trusts (currently allowable under the Dodd-Frank Act) will be 75 percent disallowed starting on January 1, 2015 and fully phased out of Tier 1 capital on January 1, 2016. On July 26, 2013, Valley redeemed $15.0 million of the face value of its trust preferred securities issued by VNB Capital Trust I.

81

The following table presents Valley’s and Valley National Bank’s actual capital positions and ratios under risk-based capital guidelines at June 30, 2013 and December 31, 2012.

	Actual					Minimum Capital Requirements					To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						($in thousands)
As of June 30, 2013
Total Risk-based Capital
Valley	$	1,418,330		12.4	%	$	915,057		8.0	%	$	N/A		N/A	%
Valley National Bank		1,390,117		12.2			913,966		8.0			1,142,457		10.0
Tier 1 Risk-based Capital
Valley		1,258,450		11.0			457,528		4.0			N/A		N/A
Valley National Bank		1,230,237		10.8			456,983		4.0			685,474		6.0
Tier 1 Leverage Capital
Valley		1,258,450		8.2			617,356		4.0			N/A		N/A
Valley National Bank		1,230,237		8.0			616,422		4.0			770,527		5.0
As of December 31, 2012
Total Risk-based Capital
Valley	$	1,413,901		12.4	%	$	913,402		8.0	%	$	N/A		N/A	%
Valley National Bank		1,374,059		12.1			912,179		8.0			1,140,224		10.0
Tier 1 Risk-based Capital
Valley		1,241,316		10.9			456,701		4.0			N/A		N/A
Valley National Bank		1,201,499		10.5			456,090		4.0			684,134		6.0
Tier 1 Leverage Capital
Valley		1,241,316		8.1			613,471		4.0			N/A		N/A
Valley National Bank		1,201,499		7.8			612,636		4.0			765,795		5.0

Management believes the tangible book value per share ratio provides information useful to management and 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. This non-GAAP financial measure 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 is computed by dividing shareholders’ equity less goodwill and other intangible assets by common shares outstanding as follows:

	June 30,		December 31,
	2013		2012
	($ in thousands except for share data)
Common shares outstanding		199,254,687		198,438,271
Shareholders’ equity	$	1,521,553	$	1,502,377
Less: Goodwill and other intangible assets		467,236		459,357
Tangible shareholders’ equity	$	1,054,317	$	1,043,020
Tangible book value per common share	$	5.29	$	5.26
Book value per share	$	7.64	$	7.57

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) per common share. Our retention ratio was less than one percent for the six months ended June 30, 2013. The low retention ratio was largely caused by the continued negative impact of the low interest rate environment on our net interest income and, to a lesser extent, the non-cash mark to market losses on our junior subordinated debentures carried at fair value. While we expect that our rate of earnings retention will increase to a more acceptable level in future periods due, in part, to the recent increase in market interest rates, the potential future mark to market losses on our debentures, net impairment losses on securities, and other deterioration in our earnings and financial condition resulting from the weak economic conditions may negatively impact our future earnings and ability to maintain our dividend at current levels.

82

Cash dividends declared amounted to $0.33 per common share for both the six months ended June 30, 2013 and 2012 but, consistent with its conservative philosophy, the Board is committed to examine and weigh 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 bank holding companies about distributing dividends which reduce its capital. Also, the OCC has cautioned banks to carefully consider the dividend payout ratio to ensure they maintain sufficient capital to be able to lend to credit worthy borrowers.

Off-Balance Sheet Arrangements, Contractual Obligations and Other Matters

For a discussion of Valley’s off-balance sheet arrangements and contractual obligations see information included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012 in the MD&A section –“Off-Balance Sheet Arrangements” and Notes 12 and 13 to the consolidated financial statements included in this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, and commodity prices. Valley’s market risk is composed primarily of interest rate risk. See page 63 for a discussion of interest rate sensitivity.

Item 4. Controls and Procedures

Valley’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), with the assistance of other members of Valley’s management, have evaluated the effectiveness of Valley’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, Valley’s CEO and CFO have concluded that Valley’s disclosure controls and procedures are effective.

Valley’s CEO and CFO have also concluded that there have not been any changes in Valley’s internal control over financial reporting during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, Valley’s internal control over financial reporting.

Valley’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent all error 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.

83

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, we may be a party to various outstanding legal proceedings and claims. There have been no material changes in the legal proceedings previously disclosed under Part I, Item 3 of Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

Item 1A. Risk Factors

There has been no material change in the risk factors previously disclosed under Part I, Item 1A of Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of equity securities not registered under the Securities Act of 1933, as amended, or purchases of equity securities by the issuer or affiliated purchasers during the quarter ended June 30, 2013.

Item 6. Exhibits

(3)	Articles of Incorporation and By-laws: A.     Amendment to the Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to the Registrant’s Form 8-K Current Report filed on May 24, 2012. B.     Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to the Registrant’s Form 8-K Current Report filed on May 21, 2010. C.     By-laws of the Registrant, as amended, incorporated herein by reference to the Registrant’s Form 8-K Current Report filed on January 31, 2011.
(31.1)	Certification pursuant to Securities Exchange Rule 13a-14(a)/15d-14(a) signed by Gerald H. Lipkin, Chairman of the Board, President and Chief Executive Officer of the Company.*
(31.2)	Certification pursuant to Securities Exchange Rule 13a-14(a)/15d-14(a) signed by Alan D. Eskow, Senior Executive Vice President and Chief Financial Officer of the Company.*
(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 of the Board, President 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.

** As provided in Rule 406T of Regulation S-T, this information is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933 and is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

84

SIGNATURES

Pursuant to the requirements 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
	(Registrant)
Date: August 8, 2013	/s/ Gerald H. Lipkin
	Gerald H. Lipkin
	Chairman of the Board, President
	and Chief Executive Officer

Date: August 8, 2013	/s/ Alan D. Eskow
	Alan D. Eskow
	Senior Executive Vice President and
	Chief Financial Officer

85

EX-31.1

EXHIBIT (31.1)

CERTIFICATION

I, Gerald H. Lipkin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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: August 8, 2013

/s/ Gerald H. Lipkin

Gerald H. Lipkin

Chairman of the Board, President and

Chief Executive Officer

EX-31.2

EXHIBIT (31.2)

I, Alan D. Eskow, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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: August 8, 2013

/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 Quarterly Report on Form 10-Q of Valley National Bancorp (the “Company”) for the period ended June 30, 2013 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, President and
Chief Executive Officer

August 8, 2013

/s/ Alan D. Eskow

Alan D. Eskow

Senior Executive Vice President and
Chief Financial Officer

August 8, 2013

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Stock-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under stock incentive plan	7,400,000		7,400,000
Stock-based compensation expense			$ 3,327,000	$ 2,701,000
Stock-based compensation amortization expense unrecognized	12,200,000		12,200,000
Average remaining vesting, years			4 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive stock option's maximum term, years			10 years
Stock options and restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,500,000	$ 1,300,000	$ 3,300,000	$ 2,700,000
Employee Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares, awarded during the period			471,000	540,000
Number of shares, available for grant	5,000,000		5,000,000

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Derivative Instruments and Hedging Activities - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Derivative [Line Items]
Maturity date, derivative instrument			Jul. 15, 2015
Total interest rate swaps aggregate notional amount	$ 188,100,000		$ 188,100,000
Number of interest rate swaps	45		45
Aggregate notional amount of mortgage banking derivatives	103,100,000		103,100,000
Aggregate fair value of net liability position	16,200,000		16,200,000
Collateral posted with counterparties	14,100,000		14,100,000
Interest rate swaps [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivative	300,000,000		300,000,000
Accumulated net after-tax losses related to effective cash flow hedges	8,600,000		8,600,000		12,700,000
Estimated amount of interest rate derivatives to be reclassified to interest expense			8,200,000
Recognized a net reduction to interest expense	145,000	139,000	287,000	275,000
Interest rate caps [Member]
Derivative [Line Items]
Gain (loss) on cash flow hedge ineffectiveness				73,000
Customer repurchase agreements and money market deposit accounts [Member] | Interest Rate Swaps Due July Twelve Two Thousand Twelve [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivative	100,000,000		100,000,000
Customer repurchase agreements and money market deposit accounts [Member] | Interest Rate Swaps Due July Fifteen Two Thousand Fifteen [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivatives	100,000,000		100,000,000
Derivatives designated as hedging instruments [Member] | Consumer and commercial money market deposit accounts [Member] | Interest rate swaps [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivative	8,700,000		8,700,000
Derivatives designated as hedging instruments [Member] | Consumer and commercial money market deposit accounts [Member] | Interest rate swaps [Member] | Fixed-rate at approximately 4.73% [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivatives	200,000,000		200,000,000
Maturity date, derivative instrument			Oct. 01, 2016
Fixed interest rate	4.73%		4.73%
Interest rate swap, starting date	July 2012		July 2012
Derivatives designated as hedging instruments [Member] | Consumer and commercial money market deposit accounts [Member] | Interest rate swaps [Member] | Fixed-rate at approximately 5.11% [Member]
Derivative [Line Items]
Maturity date, derivative instrument			Jul. 01, 2017
Fixed interest rate	5.11%		5.11%
Derivatives designated as hedging instruments [Member] | Consumer and commercial money market deposit accounts [Member] | Interest rate caps [Member] | Minimum [Member]
Derivative [Line Items]
Strike rates	6.00%		6.00%
Derivatives designated as hedging instruments [Member] | Consumer and commercial money market deposit accounts [Member] | Interest rate caps [Member] | Maximum [Member]
Derivative [Line Items]
Strike rates	6.25%		6.25%
Derivatives designated as hedging instruments [Member] | Customer repurchase agreements and money market deposit accounts [Member] | Interest rate swaps [Member] | Fixed-rate at approximately 4.73% [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivative	51,000,000		51,000,000
Maturity date, derivative instrument			Mar. 01, 2014
Derivatives designated as hedging instruments [Member] | Customer repurchase agreements and money market deposit accounts [Member] | Interest rate caps [Member]
Derivative [Line Items]
Maturity date, derivative instrument			May 01, 2013
Derivatives designated as hedging instruments [Member] | Customer repurchase agreements and money market deposit accounts [Member] | Interest rate caps [Member] | Minimum [Member]
Derivative [Line Items]
Strike rates	2.50%		2.50%
Derivatives designated as hedging instruments [Member] | Customer repurchase agreements and money market deposit accounts [Member] | Interest rate caps [Member] | Maximum [Member]
Derivative [Line Items]
Strike rates	2.75%		2.75%
Derivatives designated as hedging instruments [Member] | Customer repurchase agreements and money market deposit accounts [Member] | Interest Rate Swaps Due May One Two Thousand Thirteen [Member]
Derivative [Line Items]
Aggregate notional amount of interest rate derivatives	$ 100,000,000		$ 100,000,000

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 11. Stock–Based Compensation

Valley currently has one active employee stock option plan, the 2009 Long-Term Stock Incentive Plan (the “Employee Stock Incentive Plan”), 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 Employee Stock Incentive Plan, Valley may award shares to its employees for up to 7.4 million shares of common stock in the form of incentive stock options, non-qualified stock options, stock appreciation rights and restricted stock awards. 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. An incentive stock option’s maximum term to exercise is ten years from the date of grant and is subject to a vesting schedule. There were no stock options granted by Valley during the three and six months ended June 30, 2013 and 2012. The restricted shares awarded by Valley during the three months ended June 2013, and 2012 were immaterial. Valley awarded restricted stock totaling 471 thousand shares and 540 thousand shares during the six months ended June 30, 2013 and 2012, respectively. As of June 30, 2013, 5.0 million shares of common stock were available for issuance under the Employee Stock Incentive Plan.

Valley recorded stock-based compensation expense for incentive stock options and restricted stock awards of $1.5 million and $1.3 million for the three months ended June 30, 2013 and 2012, respectively, and $3.3 million and $2.7 million for the six months ended June 30, 2013 and 2012, respectively. The fair values of stock awards are expensed over the vesting period. As of June 30, 2013, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $12.2 million and will be recognized over an average remaining vesting period of approximately 4 years.

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Investment Securities - Realized Gains and Losses on Sales of Investment Securities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Investments Debt And Equity Securities [Abstract]
Gross gains, Sales transactions	$ 1	$ 1,234	$ 3,381	$ 1,374
Gross losses, Sales transactions				(298)
Gains on Sales transactions, net	1	1,234	3,381	1,076
Gross gains, Maturities and other securities transactions	41	6	649	19
Gross losses, Maturities and other securities transactions	(1)	(36)	(31)	(48)
Gains (losses) on Maturities and other securities transactions, net	40	(30)	618	(29)
Total gains on securities transactions, net	$ 41	$ 1,204	$ 3,999	$ 1,047

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest Income
Interest and fees on loans	$ 133,966	$ 143,812	$ 266,965	$ 292,272
Interest and dividends on investment securities:
Taxable	12,925	18,114	27,414	38,865
Tax-exempt	3,673	3,227	7,322	6,346
Dividends	1,504	1,674	3,184	3,425
Interest on federal funds sold and other short-term investments	302	31	518	86
Total interest income	152,370	166,858	305,403	340,994
Interest Expense
Savings, NOW and money market	4,369	4,690	9,071	10,044
Time	7,794	9,276	15,905	19,461
Interest on short-term borrowings	140	369	284	622
Interest on long-term borrowings and junior subordinated debentures	30,180	30,452	60,220	61,337
Total interest expense	42,483	44,787	85,480	91,464
Net Interest Income	109,887	122,071	219,923	249,530
Provision for credit losses	2,552	7,405	4,321	13,102
Net Interest Income After Provision for Credit Losses	107,335	114,666	215,602	236,428
Non-Interest Income
Trust and investment services	2,257	1,984	4,234	3,758
Insurance commissions	4,062	3,283	8,052	8,719
Service charges on deposit accounts	5,822	6,086	11,512	12,032
Gains on securities transactions, net	41	1,204	3,999	1,047
Other-than-temporary impairment losses on securities
Portion recognized in other comprehensive income (before taxes)		(550)		(550)
Net impairment losses on securities recognized in earnings		(550)		(550)
Trading (losses) gains, net	(270)	1,609	(2,472)	621
Fees from loan servicing	1,721	1,149	3,238	2,308
Gains on sales of loans, net	14,366	3,141	29,426	6,307
Gains on sales of assets, net	678	256	410	288
Bank owned life insurance	1,424	1,632	2,765	3,591
Change in FDIC loss-share receivable	(2,000)	(7,022)	(5,175)	(7,112)
Other	4,793	11,258	8,201	15,616
Total non-interest income	32,894	24,030	64,190	46,625
Non-Interest Expense
Salary and employee benefits expense	47,733	51,214	98,305	102,240
Net occupancy and equipment expense	18,179	16,903	37,068	34,265
FDIC insurance assessment	5,574	3,208	8,927	6,827
Amortization of other intangible assets	1,927	2,532	3,530	4,490
Professional and legal fees	4,285	3,345	8,177	6,969
Advertising	1,850	1,841	3,652	3,529
Other	15,798	12,467	31,126	27,738
Total non-interest expense	95,346	91,510	190,785	186,058
Income Before Income Taxes	44,883	47,186	89,007	96,995
Income tax expense	10,961	14,366	23,775	29,644
Net Income	$ 33,922	$ 32,820	$ 65,232	$ 67,351
Earnings Per Common Share:
Basic	$ 0.17	$ 0.17	$ 0.33	$ 0.34
Diluted	$ 0.17	$ 0.17	$ 0.33	$ 0.34
Cash Dividends Declared per Common Share	$ 0.16	$ 0.16	$ 0.33	$ 0.33
Weighted Average Number of Common Shares Outstanding:
Basic	199,244,243	197,246,322	199,085,501	197,088,528
Diluted	199,244,243	197,250,168	199,085,501	197,105,638

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New Authoritative Accounting Guidance

6 Months Ended

Jun. 30, 2013

Accounting Changes And Error Corrections [Abstract]

New Authoritative Accounting Guidance

Note 4. New Authoritative Accounting Guidance

Accounting Standards Update (ASU) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The ASU No. 2013-11 is effective for public entities for fiscal years beginning after December 15, 2013, and interim periods within those years, with an early adoption permitted and an option to apply the amendments retrospectively to each prior reporting period presented. Valley’s adoption of ASU No. 2013-11 is not expected to have a significant impact on its consolidated financial statements.

ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which requires disclosure of the effects of reclassifications out of accumulated other comprehensive income on net income line items only for those items that are reported in their entirety in net income in the period of reclassification. For reclassification items that are not reclassified in their entirety into net income, a cross reference is required to other U.S. GAAP disclosures. The ASU No. 2013-02 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Valley’s adoption of ASU No. 2013-02 did not have a significant impact on its consolidated financial statements. See Note 3 for related disclosures.

ASU No. 2012-06, “Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution,” addresses subsequent measurement of an indemnification asset recognized in a government-assisted acquisition of a financial institution that includes a loss-sharing agreement. When an entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (i.e., the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). ASU No. 2012-06 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012 with an early adoption permitted, and should be applied prospectively. Valley’s adoption of ASU No. 2012-06 did not have a significant impact on its consolidated financial statements.

ASU No. 2011-11, “Balance Sheet (Topic 210): “Disclosures about Offsetting Assets and Liabilities,” requires an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject an enforceable master netting arrangement or similar agreement regardless of whether they are presented net in the financial statements. ASU No. 2011-11 was effective for annual and interim periods beginning on January 1, 2013, and it is required to be applied retrospectively. Valley’s adoption of ASU No. 2011-11 did not have a significant impact on its consolidated financial statements. See Note 14 for related disclosures.

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Loss After Tax

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the three and six months ended June 30, 2013.

	Components of Accumulated Other Comprehensive Loss												Total
	Unrealized Gains and Losses on Available for Sale (AFS) Securities			Non-credit Impairment Losses on AFS Securities			Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at March 31, 2013	$	(2,080	)	$	502		$	(11,662	)	$	(34,386	)	$	(47,626	)
Other comprehensive income before reclassifications		(16,353	)		2,008			2,036			18,784			6,475
Amounts reclassified from other comprehensive income		(25	)		(43	)		995			1,072			1,999
Other comprehensive income, net		(16,378	)		1,965			3,031			19,856			8,474
Balance at June 30, 2013	$	(18,458	)	$	2,467		$	(8,631	)	$	(14,530	)	$	(39,152	)
Balance at December 31, 2012	$	906		$	(4,175	)	$	(12,676	)	$	(34,964	)	$	(50,909	)
Other comprehensive income before reclassifications		(17,040	)		6,751			1,959			18,769			10,439
Amounts reclassified from other comprehensive income		(2,324	)		(109	)		2,086			1,665			1,318
Other comprehensive income, net		(19,364	)		6,642			4,045			20,434			11,757
Balance at June 30, 2013	$	(18,458	)	$	2,467		$	(8,631	)	$	(14,530	)	$	(39,152	)

Schedule of Accumulated Other Comprehensive Loss

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and six months ended June 30, 2013.

	Amounts Reclassified from Accumulated Other Comprehensive Loss
Components of Accumulated Other Comprehensive Loss	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Income Statement Line Item
	(in thousands)
Unrealized gains on AFS securities before tax	$	41		$	3,999			Gains (losses) on securities transactions, net
Tax effect		(16	)		(1,675	)
Total net of tax		25			2,324
Non-credit impairment losses on AFS securities before tax:
Accretion of credit loss impairment due to an increase in expected cash flows		75			188			Interest and dividends on investment
Tax effect		(32	)		(79	)		securities (taxable)
Total net of tax		43			109
Unrealized losses on derivatives (cash flow hedges) before tax		(1,714	)		(3,594	)		Interest expense
Tax effect		719			1,508
Total net of tax		(995	)		(2,086	)
Defined benefit pension plan:
Amortization of prior service cost		(241	)		(443	)*
Amortization of net actuarial loss		(811	)		(1,605	)*
Recognition of loss due to curtailment		(750	)		(750	)*
Total before tax		(1,802	)		(2,798	)
Tax effect		730			1,133
Total net of tax		(1,072	)		(1,665	)
Total reclassifications, net of tax	$	(1,999	)	$	(1,318	)

* These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

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Allowance for Credit Losses - Summary of Provision for Credit Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Banking And Thrift Interest [Abstract]
Provision for non-covered loans	$ 2,746	$ 7,429	$ 6,456	$ 12,803
Provision for covered loans	(110)		(2,276)
Total provision for loan losses	2,636	7,429	4,180	12,803
Provision for unfunded letters of credit	(84)	(24)	141	299
Total provision for credit losses	$ 2,552	$ 7,405	$ 4,321	$ 13,102

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Loans - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013 D	Jun. 30, 2012	Jun. 30, 2013 D SecurityLoan	Jun. 30, 2012	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans net of unearned discount and deferred loan fees	$ 8,300,000		$ 8,300,000		$ 3,400,000
Non-covered loans	10,741,208,000		10,741,208,000		10,842,125,000
Sales of loans	0	0	0	0
Decrease in expected credit losses for non covered pools			20,100,000
Percentage of total PCI loans not covered			85.00%
Average expected life of non-covered PCI loans at date of acquisition			2 years 6 months
Average expected life of non-covered PCI loans at reporting date			4 years
Non-interest income, increase (decrease)	(2,000,000)	(7,000,000)	(5,200,000)	(7,100,000)
Combined loan-to-value ratio home equity loan	75.00%		75.00%
TDRs not reported as non-accrual loans	117,100,000		117,100,000		105,400,000
Non-performing TDRs	43,900,000		43,900,000		41,800,000
Specific reserves for loan losses			3,700,000	9,500,000
Commercial loan modified charge-off	1,100,000		1,100,000
Number of commercial loan modified			1
Number of days loans placed on non-accrual status	90		90
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unsecured loans	300,000,000		300,000,000		307,000,000
Commercial and industrial [Member] | Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired loans	250,000		250,000
Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	1,475,233,000		1,475,233,000		1,451,717,000
Unsecured loans	20,700,000		20,700,000		44,000,000
Credit card [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unsecured loans	8,200,000		8,200,000		8,600,000
PCI Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding contractual principal balances	277,800,000		277,800,000		321,900,000
Non-covered loans	886,400,000		886,400,000		1,100,000,000
Covered By Fdic Loss Share [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-interest income, increase (decrease)		$ (6,000,000)		$ (6,000,000)

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Guarantees

6 Months Ended

Jun. 30, 2013

Guarantees [Abstract]

Guarantees

Note 12. Guarantees

Guarantees that have been entered into by Valley include standby letters of credit of $230.6 million as of June 30, 2013. Standby letters of credit represent the guarantee by Valley of the obligations or performance of a customer in the event the customer is unable to meet or perform its obligations to a third party. Of the total standby letters of credit, $147.3 million, or 63.9 percent are secured and, in the event of non-performance by the customer, Valley has rights to the underlying collateral, which includes commercial real estate, business assets (physical plant or property, inventory or receivables), marketable securities and cash in the form of bank savings accounts and certificates of deposit. As of June 30, 2013, Valley had an $846 thousand liability related to the standby letters of credit.

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Investment Securities - Contractual Maturities of Debt Securities Held to Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investments Debt And Equity Securities [Abstract]
Due in one year, Amortized Cost	$ 147,705
Due after one year through five years, Amortized Cost	41,978
Due after five years through ten years, Amortized Cost	238,461
Due after ten years, Amortized Cost	369,462
Residential mortgage-backed securities, Amortized Cost	969,341
Total investment securities held to maturity, Amortized Cost	1,766,947	1,599,707
Due in one year, Fair Value	148,150
Due after one year through five years, Fair Value	46,652
Due after five years through ten years, Fair Value	250,285
Due after ten years, Fair Value	355,519
Residential mortgage-backed securities, Fair Value	963,575
Fair Value	$ 1,764,181	$ 1,657,950

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Derivative Instruments and Hedging Activities - Losses Related to Interest Rate Derivatives Designated as Hedges of Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
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 on short-term borrowings	$ (42,483)	$ (44,787)	$ (85,480)	$ (91,464)
Amount of loss recognized in other comprehensive income	3,508	(5,288)	3,375	(3,739)
Reclassification out of accumulated other comprehensive income (loss) [Member]
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 on short-term borrowings	$ (1,714)	$ (1,398)	$ (3,594)	$ (2,790)

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Loans - Changes in Accretable Yield for Covered Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Receivables [Abstract]
Balance, beginning of period	$ 153,138	$ 229,802	$ 169,309	$ 66,724
Acquisitions				186,262
Accretion	(17,639)	(20,385)	(33,874)	(43,569)
Net increase in expected cash flows	120,884		120,948
Balance, end of period	$ 256,383	$ 209,417	$ 256,383	$ 209,417

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Fair Value Measurement of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	$ 958,656	$ 807,816
Trading securities	14,170	22,157
U.S. Treasury securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	89,786	97,625
U.S. government agency securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	55,808	45,762
Obligations of states and political subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	39,234	16,627
Residential mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	573,827	510,154
Trust preferred securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	68,413	57,432
Corporate and other debt securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	84,246	30,708
Equity securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	47,342	49,508
Fair Value [Member] | Recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	958,656	807,816
Trading securities	14,170	22,157
Loans held for sale	48,901	120,230
Other assets	7,425	7,916
Total assets	1,029,152	958,119
Junior subordinated debentures issued to VNB Capital Trust I	150,001	147,595
Other liabilities	18,971	26,594
Total liabilities	168,972	174,189
Fair Value [Member] | Recurring fair value measurements [Member] | U.S. Treasury securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	89,786	97,625
Fair Value [Member] | Recurring fair value measurements [Member] | U.S. government agency securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	55,808	45,762
Fair Value [Member] | Recurring fair value measurements [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	39,234	16,627
Fair Value [Member] | Recurring fair value measurements [Member] | Residential mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	573,827	510,154
Fair Value [Member] | Recurring fair value measurements [Member] | Trust preferred securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	68,413	57,432
Fair Value [Member] | Recurring fair value measurements [Member] | Corporate and other debt securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	84,246	30,708
Fair Value [Member] | Recurring fair value measurements [Member] | Equity securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	47,342	49,508
Fair Value [Member] | Non-recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral dependent impaired loans	41,835	65,231
Loan servicing rights	5,558	16,201
Foreclosed assets	7,192	33,251
Total	54,585	114,683
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	143,182	154,677
Trading securities
Loans held for sale
Other assets
Total assets	143,182	154,677
Junior subordinated debentures issued to VNB Capital Trust I	150,001	147,595
Other liabilities
Total liabilities	150,001	147,595
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | U.S. Treasury securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	89,786	97,625
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | U.S. government agency securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | Residential mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | Trust preferred securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | Corporate and other debt securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	26,721	28,444
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring fair value measurements [Member] | Equity securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	26,675	28,608
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Non-recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral dependent impaired loans
Loan servicing rights
Foreclosed assets
Total
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	736,362	581,465
Trading securities	14,170	22,157
Loans held for sale	48,901	120,230
Other assets	7,425	7,916
Total assets	806,858	731,768
Junior subordinated debentures issued to VNB Capital Trust I
Other liabilities	18,971	26,594
Total liabilities	18,971	26,594
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | U.S. Treasury securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | U.S. government agency securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	55,808	45,762
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	39,234	16,627
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Residential mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	545,687	478,783
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Trust preferred securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	17,441	17,129
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Corporate and other debt securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	57,525	2,264
Significant Other Observable Inputs (Level 2) [Member] | Recurring fair value measurements [Member] | Equity securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	20,667	20,900
Significant Other Observable Inputs (Level 2) [Member] | Non-recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral dependent impaired loans
Loan servicing rights
Foreclosed assets
Total
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	79,112	71,674
Trading securities
Loans held for sale
Other assets
Total assets	79,112	71,674
Junior subordinated debentures issued to VNB Capital Trust I
Other liabilities
Total liabilities
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | U.S. Treasury securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | U.S. government agency securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Residential mortgage-backed securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	28,140	31,371
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Trust preferred securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	50,972	40,303
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Corporate and other debt securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Significant Unobservable Inputs (Level 3) [Member] | Recurring fair value measurements [Member] | Equity securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities
Significant Unobservable Inputs (Level 3) [Member] | Non-recurring fair value measurements [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral dependent impaired loans	41,835	65,231
Loan servicing rights	5,558	16,201
Foreclosed assets	7,192	33,251
Total	$ 54,585	$ 114,683

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Loans (Tables)

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Schedule of Loan Portfolio Non-Covered and Covered PCI Loans and Non-PCI Loans

The detail of the loan portfolio as of June 30, 2013 and December 31, 2012 was as follows:

	June 30, 2013						December 31, 2012
	Non-PCI Loans		PCI Loans		Total		Non-PCI Loans		PCI Loans		Total
	(in thousands)
Non-covered loans:
Commercial and industrial	$	1,800,818	$	187,586	$	1,988,404	$	1,832,743	$	252,083	$	2,084,826
Commercial real estate:
Commercial real estate		3,893,492		544,220		4,437,712		3,772,084		645,625		4,417,709
Construction		404,084		22,807		426,891		399,855		25,589		425,444
Total commercial real estate loans		4,297,576		567,027		4,864,603		4,171,939		671,214		4,843,153
Residential mortgage		2,397,884		15,084		2,412,968		2,445,627		16,802		2,462,429
Consumer:
Home equity		415,501		39,665		455,166		438,881		46,577		485,458
Automobile		835,271		—		835,271		786,528		—		786,528
Other consumer		184,570		226		184,796		179,417		314		179,731
Total consumer loans		1,435,342		39,891		1,475,233		1,404,826		46,891		1,451,717
Total non-covered loans	$	9,931,620	$	809,588	$	10,741,208	$	9,855,135	$	986,990	$	10,842,125
Covered loans:
Commercial and industrial	$	—	$	32,990	$	32,990	$	—	$	46,517	$	46,517
Commercial real estate		—		95,164		95,164		—		120,268		120,268
Construction		—		3,029		3,029		—		1,924		1,924
Residential mortgage		—		8,920		8,920		—		9,659		9,659
Consumer		—		1,714		1,714		—		2,306		2,306
Total covered loans		—		141,817		141,817		—		180,674		180,674
Total loans	$	9,931,620	$	951,405	$	10,883,025	$	9,855,135	$	1,167,664	$	11,022,799

Changes in Accretable Yield for Covered Loans

The following table presents changes in the accretable yield for PCI loans during the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of period	$	153,138		$	229,802		$	169,309		$	66,724
Acquisitions		—			—			—			186,262
Accretion		(17,639	)		(20,385	)		(33,874	)		(43,569	)
Net increase in expected cash flows		120,884			—			120,948			—
Balance, end of period	$	256,383		$	209,417		$	256,383		$	209,417

Changes in FDIC Loss-Share Receivable

Changes in the FDIC loss-share receivable for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	43,413		$	69,928		$	44,996		$	74,390
Discount accretion of the present value at the acquisition dates		32			81			65			162
Effect of additional cash flows on covered loans (prospective recognition)		(3,467	)		(2,231	)		(4,949	)		(3,868	)
Decrease in the provision for losses on covered loans		(105	)		—			(2,783	)		—
Other reimbursable expenses		1,540			1,088			2,492			2,554
(Reimbursements from) payments to the FDIC		(727	)		(3,165	)		865			(7,537	)
Other		—			(5,960	)		—			(5,960	)
Balance, end of the period	$	40,686		$	59,741		$	40,686		$	59,741

Past Due, Non-Accrual and Current Non-Covered Loans by Loan Portfolio Class

The following table presents past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis) by loan portfolio class at June 30, 2013 and December 31, 2012:

	Past Due and Non-Accrual Loans
	30-89 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)
June 30, 2013
Commercial and industrial	$	3,525	$	—	$	20,913	$	24,438	$	1,776,380	$	1,800,818
Commercial real estate:
Commercial real estate		18,946		259		55,390		74,595		3,818,897		3,893,492
Construction		5,772		150		13,617		19,539		384,545		404,084
Total commercial real estate loans		24,718		409		69,007		94,134		4,203,442		4,297,576
Residential mortgage		10,619		2,342		26,054		39,015		2,358,869		2,397,884
Consumer loans:
Home equity		724		—		2,328		3,052		412,449		415,501
Automobile		3,307		152		221		3,680		831,591		835,271
Other consumer		107		197		—		304		184,266		184,570
Total consumer loans		4,138		349		2,549		7,036		1,428,306		1,435,342
Total	$	43,000	$	3,100	$	118,523	$	164,623	$	9,766,997	$	9,931,620
December 31, 2012
Commercial and industrial	$	3,578	$	283	$	22,424	$	26,285	$	1,806,458	$	1,832,743
Commercial real estate:
Commercial real estate		13,245		2,950		58,625		74,820		3,697,264		3,772,084
Construction		6,685		2,575		14,805		24,065		375,790		399,855
Total commercial real estate loans		19,930		5,525		73,430		98,885		4,073,054		4,171,939
Residential mortgage		18,951		2,356		32,623		53,930		2,391,697		2,445,627
Consumer loans:
Home equity		702		—		2,398		3,100		435,781		438,881
Automobile		5,443		469		305		6,217		780,311		786,528
Other consumer		1,082		32		628		1,742		177,675		179,417
Total consumer loans		7,227		501		3,331		11,059		1,393,767		1,404,826
Total	$	49,686	$	8,665	$	131,808	$	190,159	$	9,664,976	$	9,855,135

Impaired Loans

The following table presents the information about impaired loans by loan portfolio class at June 30, 2013 and December 31, 2012:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
June 30, 2013
Commercial and industrial	$	3,670	$	53,925	$	57,595	$	73,152	$	11,420
Commercial real estate:
Commercial real estate		21,747		89,450		111,197		127,316		11,729
Construction		5,744		13,690		19,434		21,595		2,903
Total commercial real estate loans		27,491		103,140		130,631		148,911		14,632
Residential mortgage		11,317		15,562		26,879		30,714		2,677
Consumer loans:
Home equity		1,049		137		1,186		1,529		11
Total consumer loans		1,049		137		1,186		1,529		11
Total	$	43,527	$	172,764	$	216,291	$	254,306	$	28,740
December 31, 2012
Commercial and industrial	$	3,236	$	46,461	$	49,697	$	62,183	$	12,088
Commercial real estate:
Commercial real estate		26,724		84,151		110,875		125,875		11,788
Construction		6,339		14,002		20,341		23,678		4,793
Total commercial real estate loans		33,063		98,153		131,216		149,553		16,581
Residential mortgage		8,232		16,659		24,891		27,059		2,329
Consumer loans:
Home equity		672		258		930		1,169		15
Total consumer loans		672		258		930		1,169		15
Total	$	45,203	$	161,531	$	206,734	$	239,964	$	31,013

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 three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,
	2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	56,017	$	412	$	48,888	$	339
Commercial real estate:
Commercial real estate		114,066		866		98,077		302
Construction		19,932		70		21,412		37
Total commercial real estate loans		133,998		936		119,489		339
Residential mortgage		29,099		349		21,179		238
Consumer loans:
Home equity		1,174		14		274		3
Total consumer loans		1,174		14		274		3
Total	$	220,288	$	1,711	$	189,830	$	919

	Six Months Ended June 30,
	2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	55,644	$	788	$	52,094	$	748
Commercial real estate:
Commercial real estate		113,735		1,617		95,004		991
Construction		19,547		139		21,742		86
Total commercial real estate loans		133,282		1,756		116,746		1,077
Residential mortgage		28,686		532		20,889		374
Consumer loans:
Home equity		1,194		26		277		7
Total consumer loans		1,194		26		277		7
Total	$	218,853	$	3,102	$	190,006	$	2,206

Pre-Modification and Post-Modification Outstanding Recorded Investments

The following table presents loans by loan portfolio class modified as TDRs during the three and six months ended June 30, 2013 and 2012. 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 June 30, 2013 and 2012, respectively.

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial		6	$	13,912	$	13,881		8	$	18,278	$	16,623
Commercial real estate:
Commercial real estate		4		7,275		7,266		8		33,677		33,487
Construction		4		4,936		4,979		2		4,557		4,254
Total commercial real estate		8		12,211		12,245		10		38,234		37,741
Residential mortgage		5		1,414		1,259		9		2,926		2,919
Consumer		1		74		74		—		—		—
Total		20	$	27,611	$	27,459		27	$	59,438	$	57,283

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial		10	$	16,750	$	15,232		13	$	19,700	$	17,574
Commercial real estate:
Commercial real estate		9		11,729		11,727		14		35,726		35,453
Construction		5		5,474		5,510		4		6,711		5,278
Total commercial real estate		14		17,203		17,237		18		42,437		40,731
Residential mortgage		22		4,578		4,016		13		3,778		3,767
Consumer		6		452		397		2		69		67
Total		52	$	38,983	$	36,882		46	$	65,984	$	62,139

Non-Covered Loans Modified as TDR

The following table presents non-PCI loans modified as TDRs within the previous 12 months from, and for which there was a payment default (90 days or more past due) during the three and six months ended June 30, 2013:

Troubled Debt Restructurings Subsequently Defaulted	Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	($ in thousands)
Commercial and industrial		1	$	1,297		1	$	1,297
Commercial real estate		1		531		1		531
Residential mortgage		—		—		9		2,320
Consumer		—		—		2		220
Total		2	$	1,828		13	$	4,368

Risk Category of Loans

The following table presents the risk category of loans (excluding PCI loans) by class of loans based on the most recent analysis performed at June 30, 2013 and December 31, 2012.

Credit exposure - by internally assigned risk rating	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
June 30, 2013
Commercial and industrial	$	1,634,931	$	70,190	$	95,670	$	27	$	1,800,818
Commercial real estate		3,696,473		60,107		136,912		—		3,893,492
Construction		346,560		33,797		17,927		5,800		404,084
Total	$	5,677,964	$	164,094	$	250,509	$	5,827	$	6,098,394
December 31, 2012
Commercial and industrial	$	1,673,604	$	64,777	$	94,184	$	178	$	1,832,743
Commercial real estate		3,563,530		59,175		149,379		—		3,772,084
Construction		340,357		32,817		19,521		7,160		399,855
Total	$	5,577,491	$	156,769	$	263,084	$	7,338	$	6,004,682

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 June 30, 2013 and December 31, 2012:

Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
June 30, 2013
Residential mortgage	$	2,371,830	$	26,054	$	2,397,884
Home equity		413,173		2,328		415,501
Automobile		835,050		221		835,271
Other consumer		184,570		—		184,570
Total	$	3,804,623	$	28,603	$	3,833,226
December 31, 2012
Residential mortgage	$	2,413,004	$	32,623	$	2,445,627
Home equity		436,483		2,398		438,881
Automobile		786,223		305		786,528
Other consumer		178,789		628		179,417
Total	$	3,814,499	$	35,954	$	3,850,453

Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total PCI Loans
	(in thousands)
June 30, 2013
Commercial and industrial	$	216,501	$	4,075	$	220,576
Commercial real estate		594,919		44,465		639,384
Construction		17,150		8,686		25,836
Residential mortgage		20,111		3,893		24,004
Consumer		40,310		1,295		41,605
Total	$	888,991	$	62,414	$	951,405
December 31, 2012
Commercial and industrial	$	292,163	$	6,437	$	298,600
Commercial real estate		715,812		50,081		765,893
Construction		17,967		9,546		27,513
Residential mortgage		22,173		4,288		26,461
Consumer		47,689		1,508		49,197
Total	$	1,095,804	$	71,860	$	1,167,664

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2013

Investments Debt And Equity Securities [Abstract]

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 June 30, 2013 and December 31, 2012 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	99,792	$	8,942	$	—		$	108,734
Obligations of states and political subdivisions		542,154		10,120		(9,660	)		542,614
Residential mortgage-backed securities		969,341		13,459		(19,225	)		963,575
Trust preferred securities		103,453		377		(12,482	)		91,348
Corporate and other debt securities		52,207		5,704		(1	)		57,910
Total investment securities held to maturity	$	1,766,947	$	38,602	$	(41,368	)	$	1,764,181
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

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 June 30, 2013 and December 31, 2012 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, 2013
Obligations of states and political subdivisions	$	130,784	$	(9,564	)	$	1,345	$	(96	)	$	132,129	$	(9,660	)
Residential mortgage-backed securities		520,005		(19,225	)		—		—			520,005		(19,225	)
Trust preferred securities		15,916		(259	)		51,159		(12,223	)		67,075		(12,482	)
Corporate and other debt securities		49		(1	)		—		—			49		(1	)
Total	$	666,754	$	(29,049	)	$	52,504	$	(12,319	)	$	719,258	$	(41,368	)
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	)

Contractual Maturities of Debt Securities Held to Maturity

The contractual maturities of investments in debt securities held to maturity at June 30, 2013 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, 2013
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	147,705	$	148,150
Due after one year through five years		41,978		46,652
Due after five years through ten years		238,461		250,285
Due after ten years		369,462		355,519
Residential mortgage-backed securities		969,341		963,575
Total investment securities held to maturity	$	1,766,947	$	1,764,181

Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of securities available for sale at June 30, 2013 and December 31, 2012 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	99,839	$	—	$	(10,053	)	$	89,786
U.S. government agency securities		54,917		1,504		(613	)		55,808
Obligations of states and political subdivisions		40,608		791		(2,165	)		39,234
Residential mortgage-backed securities		590,225		4,414		(20,812	)		573,827
Trust preferred securities*		67,973		6,088		(5,648	)		68,413
Corporate and other debt securities		84,523		2,008		(2,285	)		84,246
Equity securities		48,020		1,220		(1,898	)		47,342
Total investment securities available for sale	$	986,105	$	16,025	$	(43,474	)	$	958,656
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

* 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 June 30, 2013 and December 31, 2012 were as follows:

	Less than					More than
	Twelve Months					Twelve Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	89,786	$	(10,053	)	$	—	$	—		$	89,786	$	(10,053	)
U.S. government agency securities		28,188		(613	)		—		—			28,188		(613	)
Obligations of states and political subdivisions		24,204		(2,165	)		—		—			24,204		(2,165	)
Residential mortgage-backed securities		442,850		(18,946	)		13,566		(1,866	)		456,416		(20,812	)
Trust preferred securities		446		(10	)		32,969		(5,638	)		33,415		(5,648	)
Corporate and other debt securities		54,149		(2,192	)		2,407		(93	)		56,556		(2,285	)
Equity securities		1,144		(41	)		12,601		(1,857	)		13,745		(1,898	)
Total	$	640,767	$	(34,020	)	$	61,543	$	(9,454	)	$	702,310	$	(43,474	)
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	)

Contractual Maturities of Investment Securities Available for Sale

The contractual maturities of investment securities available for sale at June 30, 2013 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, 2013
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	720	$	724
Due after one year through five years		44,295		43,520
Due after five years through ten years		120,195		117,815
Due after ten years		182,650		175,428
Residential mortgage-backed securities		590,225		573,827
Equity securities		48,020		47,342
Total investment securities available for sale	$	986,105	$	958,656

Realized Gains and Losses on Sales of Investment Securities

Gross gains (losses) realized on sales, maturities and other securities transactions related to investment securities included in earnings for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Sales transactions:
Gross gains	$	1		$	1,234		$	3,381		$	1,374
Gross losses		—			—			—			(298	)
	$	1		$	1,234		$	3,381		$	1,076
Maturities and other securities transactions:
Gross gains	$	41		$	6		$	649		$	19
Gross losses		(1	)		(36	)		(31	)		(48	)
	$	40		$	(30	)	$	618		$	(29	)
Total gains on securities transactions, net	$	41		$	1,204		$	3,999		$	1,047

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 for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of period	$	33,177		$	28,767		$	33,290		$	29,070
Additions:
Subsequent credit impairments		—			550			—			550
Reductions:
Accretion of credit loss impairment due to an increase in expected cash flows		(75	)		(66	)		(188	)		(369	)
Balance, end of period	$	33,102		$	29,251		$	33,102		$	29,251

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Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities Held to Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 1,766,947	$ 1,599,707
Gross Unrealized Gains	38,602	73,573
Gross Unrealized Losses	(41,368)	(15,330)
Fair Value	1,764,181	1,657,950
U.S. Treasury securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	99,792	99,869
Gross Unrealized Gains	8,942	15,460
Fair Value	108,734	115,329
Obligations of states and political subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	542,154	506,473
Gross Unrealized Gains	10,120	25,690
Gross Unrealized Losses	(9,660)	(197)
Fair Value	542,614	531,966
Residential mortgage-backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	969,341	813,647
Gross Unrealized Gains	13,459	24,824
Gross Unrealized Losses	(19,225)	(355)
Fair Value	963,575	838,116
Trust preferred securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	103,453	127,505
Gross Unrealized Gains	377	930
Gross Unrealized Losses	(12,482)	(14,778)
Fair Value	91,348	113,657
Corporate and other debt securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	52,207	52,213
Gross Unrealized Gains	5,704	6,669
Gross Unrealized Losses	(1)
Fair Value	$ 57,910	$ 58,882

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Earnings Per Common Share - Calculation of Both Basic and Diluted Earnings Per Common Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Net income	$ 33,922	$ 32,820	$ 65,232	$ 67,351
Basic weighted-average number of common shares outstanding	199,244,243	197,246,322	199,085,501	197,088,528
Plus: Common stock equivalents		3,846		17,110
Diluted weighted-average number of common shares outstanding	199,244,243	197,250,168	199,085,501	197,105,638
Earnings per common share:
Basic	$ 0.17	$ 0.17	$ 0.33	$ 0.34
Diluted	$ 0.17	$ 0.17	$ 0.33	$ 0.34

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Fair Value Measurement of Assets and Liabilities - Changes in Level 3 Assets Measured at Fair Value on Recurring Basis (Detail) (Available for Sale Securities [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Available for Sale Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of the period	$ 77,920	$ 84,720	$ 71,674	$ 77,311
Total net gains (losses) for the period included in, Net income		(550)		(550)
Total net gains (losses) for the period included in, Other comprehensive income	3,406	7,847	11,439	18,954
Settlements	(2,214)	(2,926)	(4,001)	(6,624)
Balance, end of the period	79,112	89,091	79,112	89,091
Change in unrealized losses for the period included in earnings for assets held at the end of the reporting period		$ (550)		$ (550)

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Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities Available for Sale (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 986,105	$ 813,474
Gross Unrealized Gains	16,025	13,821
Gross Unrealized Losses	(43,474)	(19,479)
Fair Value	958,656	807,816
U.S. Treasury securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	99,839	99,843
Gross Unrealized Gains
Gross Unrealized Losses	(10,053)	(2,218)
Fair Value	89,786	97,625
U.S. government agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	54,917	44,215
Gross Unrealized Gains	1,504	1,547
Gross Unrealized Losses	(613)
Fair Value	55,808	45,762
Obligations of states and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	40,608	16,210
Gross Unrealized Gains	791	417
Gross Unrealized Losses	(2,165)
Fair Value	39,234	16,627
Residential mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	590,225	506,695
Gross Unrealized Gains	4,414	6,818
Gross Unrealized Losses	(20,812)	(3,359)
Fair Value	573,827	510,154
Trust preferred securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	67,973	68,931
Gross Unrealized Gains	6,088	240
Gross Unrealized Losses	(5,648)	(11,739)
Fair Value	68,413	57,432
Corporate and other debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	84,523	28,274
Gross Unrealized Gains	2,008	2,728
Gross Unrealized Losses	(2,285)	(294)
Fair Value	84,246	30,708
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	48,020	49,306
Gross Unrealized Gains	1,220	2,071
Gross Unrealized Losses	(1,898)	(1,869)
Fair Value	$ 47,342	$ 49,508

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

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:

		Fair Value
	Balance Sheet Line Item	June 30, 2013		December 31, 2012
		(in thousands)
Asset Derivatives:
Derivatives designated as hedging instruments:
Cash flow hedge interest rate caps and swaps	Other Assets	$	27	$	23
Fair value hedge interest rate swaps	Other Assets		378		652
Total derivatives designated as hedging instruments		$	405	$	675
Derivatives not designated as hedging instruments:
Interest rate swaps	Other Assets	$	4,631	$	7,002
Mortgage banking derivatives	Other Assets		2,389		239
Total derivatives not designated as hedging instruments		$	7,020	$	7,241
Liability Derivatives:
Derivatives designated as hedging instruments:
Cash flow hedge interest rate caps and swaps	Other Liabilities	$	11,408	$	17,198
Fair value hedge interest rate swaps	Other Liabilities		1,675		2,197
Total derivatives designated as hedging instruments		$	13,083	$	19,395
Derivatives not designated as hedging instruments:
Interest rate swaps	Other Liabilities	$	4,631	$	6,999
Mortgage banking derivatives	Other Liabilities		1,257		200
Total derivatives not designated as hedging instruments		$	5,888	$	7,199

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, on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Interest rate caps on short-term borrowings and deposit accounts:
Amount of loss reclassified from accumulated other comprehensive loss to interest on short-term borrowings	$	(1,714	)	$	(1,398	)	$	(3,594	)	$	(2,790	)
Amount of loss recognized in other comprehensive income		3,508			(5,288	)		3,375			(3,739	)

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:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Derivative - interest rate swaps:
Interest income - interest and fees on loans	$	425		$	(251	)	$	522		$	(121	)
Interest expense - interest on time deposits		(134	)		(67	)		(274	)		(27	)
Hedged item - loans and deposits:
Interest income - interest and fees on loans	$	(425	)	$	251		$	(522	)	$	121
Interest expense - interest on time deposits		136			70			279			38

Gains Related to Derivative Instruments Not Designated as Hedging Instruments

The net gains included in the consolidated statements of income related to derivative instruments not designated as hedging instruments for the three months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(in thousands)
Non-designated hedge interest rate derivatives
Other non-interest income	$	1,461	$	1	$	1,090	$	217

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Loans - Risk Category of Loans (Detail) (Non-PCI Loans [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	$ 6,098,394	$ 6,004,682
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	1,800,818	1,832,743
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	3,893,492	3,772,084
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	404,084	399,855
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	5,677,964	5,577,491
Pass [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	1,634,931	1,673,604
Pass [Member] | Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	3,696,473	3,563,530
Pass [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	346,560	340,357
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	164,094	156,769
Special Mention [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	70,190	64,777
Special Mention [Member] | Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	60,107	59,175
Special Mention [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	33,797	32,817
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	250,509	263,084
Substandard [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	95,670	94,184
Substandard [Member] | Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	136,912	149,379
Substandard [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	17,927	19,521
Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	5,827	7,338
Doubtful [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	27	178
Doubtful [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Non-PCI Loans	$ 5,800	$ 7,160

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Goodwill and Other Intangible Assets - Other Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	$ 110,316	$ 104,449
Accumulated Amortization	(70,314)	(70,280)
Valuation Allowance	(1,000)	(3,046)
Net Intangible Assets	39,002	31,123
Loan servicing rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	69,244	63,377
Accumulated Amortization	(41,485)	(43,393)
Valuation Allowance	(1,000)	(3,046)
Net Intangible Assets	26,759	16,938
Core deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	35,194	35,194
Accumulated Amortization	(25,805)	(24,160)
Valuation Allowance
Net Intangible Assets	9,389	11,034
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	5,878	5,878
Accumulated Amortization	(3,024)	(2,727)
Valuation Allowance
Net Intangible Assets	$ 2,854	$ 3,151

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Loans - Non-Covered Loans Modified as TDR (Detail) (Troubled Debt Restructurings Subsequently Defaulted [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013 Contract	Jun. 30, 2013 Contract
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	2	13
Recorded Investment	$ 1,828	$ 4,368
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	1	1
Recorded Investment	1,297	1,297
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	1	1
Recorded Investment	531	531
Residential mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts		9
Recorded Investment		2,320
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts		2
Recorded Investment		$ 220

XML

Fair Value Measurement of Assets and Liabilities - Schedule of Gains and Losses from Fair Value Changes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Gains And Losses From Fair Value Changes [Line Items]
Gains (Losses) on Change in Fair Value	$ 14,096	$ 4,200	$ 26,954	$ 6,378
Net impairment losses on securities [Member] | Available for Sale Securities [Member]
Gains And Losses From Fair Value Changes [Line Items]
Gains (Losses) on Change in Fair Value		(550)		(550)
Trading (losses) gains, net [Member] | Trading Securities [Member]
Gains And Losses From Fair Value Changes [Line Items]
Gains (Losses) on Change in Fair Value	(36)	(151)	(66)	101
Trading (losses) gains, net [Member] | Junior subordinated debentures [Member]
Gains And Losses From Fair Value Changes [Line Items]
Gains (Losses) on Change in Fair Value	(234)	1,760	(2,406)	520
Gains on sales of loans, net [Member] | Loans held for sale [Member]
Gains And Losses From Fair Value Changes [Line Items]
Gains (Losses) on Change in Fair Value	$ 14,366	$ 3,141	$ 29,426	$ 6,307

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Allowance for Credit Losses - Summary of Activity in Allowance for Loan Losses (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Receivables [Abstract]
Loan charge-offs	$ 1.8	$ 1.8

XML

Fair Value Measurement of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

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 nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at June 30, 2013 and December 31, 2012. The assets presented under “nonrecurring 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:
	June 30, 2013		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	$	89,786	$	89,786	$	—	$	—
U.S. government agency securities		55,808		—		55,808		—
Obligations of states and political subdivisions		39,234		—		39,234		—
Residential mortgage-backed securities		573,827		—		545,687		28,140
Trust preferred securities		68,413		—		17,441		50,972
Corporate and other debt securities		84,246		26,721		57,525		—
Equity securities		47,342		26,675		20,667		—
Total available for sale		958,656		143,182		736,362		79,112
Trading securities		14,170		—		14,170
Loans held for sale (1)		48,901		—		48,901		—
Other assets (2)		7,425		—		7,425		—
Total assets	$	1,029,152	$	143,182	$	806,858	$	79,112
Liabilities
Junior subordinated debentures issued to VNB Capital Trust I (3)	$	150,001	$	150,001	$	—	$	—
Other liabilities (2)		18,971		—		18,971		—
Total liabilities	$	168,972	$	150,001	$	18,971	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (4)		41,835		—		—		41,835
Loan servicing rights		5,558		—		—		5,558
Foreclosed assets		7,192		—		—		7,192
Total	$	54,585	$	—	$	—	$	54,585

			Fair Value Measurements at Reporting Date Using:
	December 31, 2012		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	$	97,625	$	97,625	$	—	$	—
U.S. government agency securities		45,762		—		45,762		—
Obligations of states and political subdivisions		16,627		—		16,627		—
Residential mortgage-backed securities		510,154		—		478,783		31,371
Trust preferred securities		57,432		—		17,129		40,303
Corporate and other debt securities		30,708		28,444		2,264		—
Equity securities		49,508		28,608		20,900		—
Total available for sale		807,816		154,677		581,465		71,674
Trading securities		22,157		—		22,157		—
Loans held for sale (1)		120,230		—		120,230		—
Other assets (2)		7,916		—		7,916		—
Total assets	$	958,119	$	154,677	$	731,768	$	71,674
Liabilities
Junior subordinated debentures issued to VNB Capital Trust I (3)	$	147,595	$	147,595	$	—	$	—
Other liabilities (2)		26,594		—		26,594		—
Total liabilities	$	174,189	$	147,595	$	26,594	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (4)	$	65,231	$	—	$	—	$	65,231
Loan servicing rights		16,201		—		—		16,201
Foreclosed assets		33,251		—		—		33,251
Total	$	114,683	$	—	$	—	$	114,683

⁽¹⁾  Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $49.1 million and $115.4 million at June 30, 2013 and December 31, 2012, respectively.

⁽²⁾  Derivative financial instruments are included in this category.

⁽³⁾  The junior subordinated debentures had contractual unpaid principal obligations totaling $146.7 million at June 30, 2013 and December 31, 2012.

⁽⁴⁾  Excludes covered loans acquired in the FDIC-assisted transactions and other purchased credit-impaired loans acquired in the first quarter of 2012.

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 three and six months ended June 30, 2013 and 2012 are summarized below:

	Available for Sale Securities
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	77,920		$	84,720		$	71,674		$	77,311
Total net gains (losses) for the period included in:
Net income		—			(550	)		—			(550	)
Other comprehensive income		3,406			7,847			11,439			18,954
Settlements		(2,214	)		(2,926	)		(4,001	)		(6,624	)
Balance, end of the period	$	79,112		$	89,091		$	79,112		$	89,091
Change in unrealized losses for the period included in earnings for assets held at the end of the reporting period *	$	—		$	(550	)	$	—		$	(550	)

* Represents the net impairment losses on securities recognized in earnings for the period.

Schedule of Quantitative Information About Level 3 Inputs Used to Measure the 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 June 30, 2013:

Security Type	Valuation Technique	Unobservable Input	Range			Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate		14.7 -   25.2	%		19.3	%
		Default rate		4.3 -   12.2			7.0
		Loss severity		40.2 -   59.8			51.4
Single issuer trust preferred securities	Discounted cash flow	Loss severity		0.0 - 100.0	%		20.3	%
		Market credit spreads		4.8 -     5.4			5.2
		Discount rate		5.1 -     7.9			6.7

Schedule of Gains and Losses from Fair Value Changes

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets and liabilities carried at fair value for the three and six months ended June 30, 2013 and 2012:

		Gains (Losses) on Change in Fair Value
Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
		(in thousands)
Assets:
Available for sale securities	Net impairment losses on securities	$	—		$	(550	)	$	—		$	(550	)
Trading securities	Trading (losses) gains, net		(36	)		(151	)		(66	)		101
Loans held for sale	Gains on sales of loans, net		14,366			3,141			29,426			6,307
Liabilities:
Junior subordinated debentures issued to capital trusts	Trading (losses) gains, net		(234	)		1,760			(2,406	)		520
		$	14,096		$	4,200		$	26,954		$	6,378

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 June 30, 2013 and December 31, 2012 were as follows:

		June 30, 2013				December 31, 2012
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	401,228	$	401,228	$	390,078	$	390,078
Interest bearing deposits with banks	Level 1		299,097		299,097		463,022		463,022
Investment securities held to maturity:
U.S. Treasury securities	Level 1		99,792		108,734		99,869		115,329
Obligations of states and political subdivisions	Level 2		542,154		542,614		506,473		531,966
Residential mortgage-backed securities	Level 2		969,341		963,575		813,647		838,116
Trust preferred securities	Level 2		103,453		91,348		127,505		113,657
Corporate and other debt securities	Level 2		52,207		57,910		52,213		58,882
Total investment securities held to maturity			1,766,947		1,764,181		1,599,707		1,657,950
Net loans	Level 3		10,765,581		10,734,500		10,892,599		10,908,742
Accrued interest receivable	Level 1		53,303		53,303		52,375		52,375
Federal Reserve Bank and Federal Home Loan Bank stock(1)	Level 1		138,359		138,359		138,533		138,533
Financial liabilities
Deposits without stated maturities	Level 1		8,877,529		8,877,529		8,755,252		8,755,252
Deposits with stated maturities	Level 2		2,365,093		2,404,271		2,508,766		2,563,726
Short-term borrowings	Level 1		125,060		125,060		154,323		154,323
Long-term borrowings	Level 2		2,695,897		2,994,601		2,697,299		3,100,173
Junior subordinated debentures issued to capital trusts	Level 2		41,008		42,731		40,927		40,776
Accrued interest payable(2)	Level 1		16,766		16,766		15,917		15,917

⁽¹⁾  Included in other assets.

⁽²⁾  Included in accrued expenses and other liabilities.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 65,232	$ 67,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,886	8,955
Stock-based compensation	3,327	2,701
Provision for credit losses	4,321	13,102
Net amortization of premiums and accretion of discounts on securities and borrowings	13,332	10,420
Amortization of other intangible assets	3,530	4,490
Gains on securities transactions, net	(3,999)	(1,047)
Net impairment losses on securities recognized in earnings		550
Proceeds from sales of loans held for sale	935,834	198,128
Gains on sales of loans, net	(29,426)	(6,307)
Originations of loans held for sale	(846,488)	(196,622)
Gains on sales of assets, net	(410)	(288)
Change in FDIC loss-share receivable (excluding reimbursements)	5,175	7,112
Net change in:
Trading securities	7,987	(101)
Fair value of borrowings carried at fair value	2,406	(520)
Cash surrender value of bank owned life insurance	(2,765)	(3,591)
Accrued interest receivable	(928)	2,781
Other assets	38,758	95,567
Accrued expenses and other liabilities	(27,077)	(41,523)
Net cash provided by operating activities	178,695	161,158
Cash flows from investing activities:
Net loan repayments (originations)	287,940	(461,749)
Loans purchased	(178,486)	(117,255)
Investment securities held to maturity:
Purchases	(436,005)	(135,332)
Maturities, calls and principal repayments	282,888	329,201
Investment securities available for sale:
Purchases	(283,736)	(49,012)
Sales	4,309	58,585
Maturities, calls and principal repayments	104,679	133,496
Death benefit proceeds from bank owned life insurance	628	1,689
Proceeds from sales of real estate property and equipment	6,574	4,139
Purchases of real estate property and equipment	(6,828)	(8,407)
(Payments to) reimbursements from the FDIC	(865)	7,537
Cash and cash equivalents acquired in acquisition		117,587
Net cash used in investing activities	(218,902)	(119,521)
Cash flows from financing activities:
Net change in deposits	(21,396)	(181,716)
Net change in short-term borrowings	(29,263)	281,273
Repayments of long-term borrowings	(1,000)	(1,000)
Redemption of junior subordinated debentures		(10,000)
Dividends paid to common shareholders	(64,492)	(61,730)
Common stock issued, net	3,583	4,207
Net cash (used in) provided by financing activities	(112,568)	31,034
Net change in cash and cash equivalents	(152,775)	72,671
Cash and cash equivalents at beginning of year	853,100	379,049
Cash and cash equivalents at end of period	700,325	451,720
Supplemental disclosures of cash flow information:
Interest on deposits and borrowings	84,640	91,592
Federal and state income taxes	6,614	35,061
Supplemental schedule of non-cash investing activities:
Transfer of loans to other real estate owned	13,384	9,195
Non-cash assets acquired:
Investment securities available for sale		275,650
Loans		1,088,421
Premises and equipment, net		9,457
Accrued interest receivable		5,294
Goodwill		109,758
Other intangible assets, net		8,050
Other assets		72,137
Total non-cash assets acquired		1,568,767
Liabilities assumed:
Deposits		1,380,293
Short-term borrowings		29,000
Junior subordinated debentures issued to capital trusts		15,645
Other liabilities		52,998
Total liabilities assumed		1,477,936
Net non-cash assets acquired		90,831
Net cash and cash equivalents acquired in acquisition		117,587
Common stock issued in acquisition		$ 208,418

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Common Share

Note 2. Earnings Per Common Share

The following table shows the calculation of both basic and diluted earnings per common share for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(in thousands, except for share data)
Net income	$	33,922	$	32,820	$	65,232	$	67,351
Basic weighted-average number of common shares outstanding		199,244,243		197,246,322		199,085,501		197,088,528
Plus: Common stock equivalents		—		3,846		—		17,110
Diluted weighted-average number of common shares outstanding		199,244,243		197,250,168		199,085,501		197,105,638
Earnings per common share:
Basic	$	0.17	$	0.17	$	0.33	$	0.34
Diluted		0.17		0.17		0.33		0.34

Common stock equivalents, in the table above, represent the effect of outstanding common stock options and warrants to purchase Valley’s common shares, excluding those with exercise prices that exceed the average market price of Valley’s common stock during the periods presented and therefore, would have an anti-dilutive effect on the diluted earnings per common share calculation. Anti-dilutive common stock options and warrants totaled approximately 7.2 million shares for both the three and six months ended June 30, 2013, and 7.7 million shares for both the three and six months ended June 30, 2012.

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Fair Value Measurement of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

Note 5. Fair Value Measurement of Assets and Liabilities

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 and Non-recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at June 30, 2013 and December 31, 2012. The assets presented under “nonrecurring 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:
	June 30, 2013		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	$	89,786	$	89,786	$	—	$	—
U.S. government agency securities		55,808		—		55,808		—
Obligations of states and political subdivisions		39,234		—		39,234		—
Residential mortgage-backed securities		573,827		—		545,687		28,140
Trust preferred securities		68,413		—		17,441		50,972
Corporate and other debt securities		84,246		26,721		57,525		—
Equity securities		47,342		26,675		20,667		—
Total available for sale		958,656		143,182		736,362		79,112
Trading securities		14,170		—		14,170
Loans held for sale (1)		48,901		—		48,901		—
Other assets (2)		7,425		—		7,425		—
Total assets	$	1,029,152	$	143,182	$	806,858	$	79,112
Liabilities
Junior subordinated debentures issued to VNB Capital Trust I (3)	$	150,001	$	150,001	$	—	$	—
Other liabilities (2)		18,971		—		18,971		—
Total liabilities	$	168,972	$	150,001	$	18,971	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (4)		41,835		—		—		41,835
Loan servicing rights		5,558		—		—		5,558
Foreclosed assets		7,192		—		—		7,192
Total	$	54,585	$	—	$	—	$	54,585

			Fair Value Measurements at Reporting Date Using:
	December 31, 2012		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	$	97,625	$	97,625	$	—	$	—
U.S. government agency securities		45,762		—		45,762		—
Obligations of states and political subdivisions		16,627		—		16,627		—
Residential mortgage-backed securities		510,154		—		478,783		31,371
Trust preferred securities		57,432		—		17,129		40,303
Corporate and other debt securities		30,708		28,444		2,264		—
Equity securities		49,508		28,608		20,900		—
Total available for sale		807,816		154,677		581,465		71,674
Trading securities		22,157		—		22,157		—
Loans held for sale (1)		120,230		—		120,230		—
Other assets (2)		7,916		—		7,916		—
Total assets	$	958,119	$	154,677	$	731,768	$	71,674
Liabilities
Junior subordinated debentures issued to VNB Capital Trust I (3)	$	147,595	$	147,595	$	—	$	—
Other liabilities (2)		26,594		—		26,594		—
Total liabilities	$	174,189	$	147,595	$	26,594	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (4)	$	65,231	$	—	$	—	$	65,231
Loan servicing rights		16,201		—		—		16,201
Foreclosed assets		33,251		—		—		33,251
Total	$	114,683	$	—	$	—	$	114,683

⁽¹⁾  Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $49.1 million and $115.4 million at June 30, 2013 and December 31, 2012, respectively.

⁽²⁾  Derivative financial instruments are included in this category.

⁽³⁾  The junior subordinated debentures had contractual unpaid principal obligations totaling $146.7 million at June 30, 2013 and December 31, 2012.

⁽⁴⁾  Excludes covered loans acquired in the FDIC-assisted transactions and other purchased credit-impaired loans acquired in the first quarter of 2012.

The changes in Level 3 assets measured at fair value on a recurring basis for the three and six months ended June 30, 2013 and 2012 are summarized below:

	Available for Sale Securities
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	77,920		$	84,720		$	71,674		$	77,311
Total net gains (losses) for the period included in:
Net income		—			(550	)		—			(550	)
Other comprehensive income		3,406			7,847			11,439			18,954
Settlements		(2,214	)		(2,926	)		(4,001	)		(6,624	)
Balance, end of the period	$	79,112		$	89,091		$	79,112		$	89,091
Change in unrealized losses for the period included in earnings for assets held at the end of the reporting period *	$	—		$	(550	)	$	—		$	(550	)

* Represents the net impairment losses on securities recognized in earnings for the period.

During the three and six months ended June 30, 2013 and 2012, there were no transfers of assets between Level 1 and Level 2.

There have been no material changes in the valuation methodologies used at June 30, 2013 from December 31, 2012.

The following valuation techniques were used for financial instruments measured at fair value on a recurring basis. All 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 and trading securities. All U.S. Treasury securities, certain corporate and other debt securities, and certain common and preferred equity securities (including certain trust preferred securities) are reported at fair values 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 trading 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, 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 and trust preferred 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 cash flows for trust preferred securities reflected the contractual cash flow, adjusted if necessary for potential changes in the amount or timing of cash flows due to the underlying credit worthiness of each issuer.

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at June 30, 2013:

Security Type	Valuation Technique	Unobservable Input	Range			Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate		14.7 -   25.2	%		19.3	%
		Default rate		4.3 -   12.2			7.0
		Loss severity		40.2 -   59.8			51.4
Single issuer trust preferred securities	Discounted cash flow	Loss severity		0.0 - 100.0	%		20.3	%
		Market credit spreads		4.8 -     5.4			5.2
		Discount rate		5.1 -     7.9			6.7

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 private label mortgage-backed 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 two single issuer trust preferred securities in the Level 3 available for sale trust preferred securities, the resulting estimated future cash flows were discounted at a yield, comprised of market rates applicable to the index of the underlying security, estimated market credit spread for similar non-rated securities and an illiquidity premium, if appropriate. The discount rate for each security was applied to three alternative cash flow scenarios, and subsequently weighted based on management’s expectations. The three cash flow alternatives for each security assume a scenario with full issuer repayment, a scenario with a partial issuer repayment and a scenario with a full issuer default.

For two pooled securities in the Level 3 available for sale trust preferred securities category, 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 calculations for both securities are received from an independent valuation advisor. In validating the fair value calculation from an independent valuation advisor, 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 June 30, 2013 and December 31, 2012 based on the short duration these assets were held, and the high credit quality of these loans.

Junior subordinated debentures issued to capital trusts. The junior subordinated debentures issued to VNB Capital Trust I are reported at fair value using Level 1 inputs. The fair value was estimated using quoted prices in active markets for similar assets, specifically the quoted price of the VNB Capital Trust I preferred stock traded under ticker symbol “VLYPRA” on the New York Stock Exchange. The preferred stock and Valley’s junior subordinated debentures issued to the Trust have identical financial terms and therefore, the preferred stock’s quoted price moves in a similar manner to the estimated fair value and current settlement price of the junior subordinated debentures. The preferred stock’s quoted price includes market considerations for Valley’s credit and non-performance risk and is deemed to represent the transfer price that would be used if the junior subordinated debenture were assumed by a third party. Valley’s potential credit risk did not materially impact the fair value measurement of the junior subordinated debentures at June 30, 2013 and December 31, 2012.

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 flows 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 June 30, 2013), 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 June 30, 2013 and December 31, 2012.

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 nonrecurring basis, including impaired loans reported at the fair value of the underlying collateral, loan servicing rights, other real estate owned and other repossessed assets (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 June 30, 2013, non-current appraisals were discounted up to 13.8 percent based on specific market data by location and property type. During the quarter ended June 30, 2013, 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 $5.2 million and $13.4 million for the three and six months ended June 30, 2013, respectively. At June 30, 2013, collateral dependent impaired loans with a total recorded investment of $49.5 million were reduced by specific valuation allowance allocations totaling $7.7 million to a reported total net carrying amount of $41.8 million.

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 June 30, 2013, the fair value model used prepayment speeds (stated as constant prepayment rates) from 6 percent up to 24 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 recoveries of impairment charges totaling $759 thousand and $2.1 million for the three and six months ended June 30, 2013, respectively.

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. The discounts on appraisals of foreclosed assets were immaterial at June 30, 2013. At June 30, 2013, foreclosed assets included $7.2 million of assets that were measured at fair value upon initial recognition or subsequently re-measured during the quarter ended June 30, 2013. The foreclosed assets charge-offs to the allowance for loan losses totaled $1.6 million and $3.1 million for the three and six months ended June 30, 2013, respectively. The re-measurement of repossessed assets at fair value subsequent to their initial recognition resulted in a loss of $570 thousand within non-interest expense for the six months ended June 30, 2013.

Other Fair Value Disclosures

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets and liabilities carried at fair value for the three and six months ended June 30, 2013 and 2012:

		Gains (Losses) on Change in Fair Value
Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
		(in thousands)
Assets:
Available for sale securities	Net impairment losses on securities	$	—		$	(550	)	$	—		$	(550	)
Trading securities	Trading (losses) gains, net		(36	)		(151	)		(66	)		101
Loans held for sale	Gains on sales of loans, net		14,366			3,141			29,426			6,307
Liabilities:
Junior subordinated debentures issued to capital trusts	Trading (losses) gains, net		(234	)		1,760			(2,406	)		520
		$	14,096		$	4,200		$	26,954		$	6,378

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 June 30, 2013 and December 31, 2012 were as follows:

		June 30, 2013				December 31, 2012
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	401,228	$	401,228	$	390,078	$	390,078
Interest bearing deposits with banks	Level 1		299,097		299,097		463,022		463,022
Investment securities held to maturity:
U.S. Treasury securities	Level 1		99,792		108,734		99,869		115,329
Obligations of states and political subdivisions	Level 2		542,154		542,614		506,473		531,966
Residential mortgage-backed securities	Level 2		969,341		963,575		813,647		838,116
Trust preferred securities	Level 2		103,453		91,348		127,505		113,657
Corporate and other debt securities	Level 2		52,207		57,910		52,213		58,882
Total investment securities held to maturity			1,766,947		1,764,181		1,599,707		1,657,950
Net loans	Level 3		10,765,581		10,734,500		10,892,599		10,908,742
Accrued interest receivable	Level 1		53,303		53,303		52,375		52,375
Federal Reserve Bank and Federal Home Loan Bank stock(1)	Level 1		138,359		138,359		138,533		138,533
Financial liabilities
Deposits without stated maturities	Level 1		8,877,529		8,877,529		8,755,252		8,755,252
Deposits with stated maturities	Level 2		2,365,093		2,404,271		2,508,766		2,563,726
Short-term borrowings	Level 1		125,060		125,060		154,323		154,323
Long-term borrowings	Level 2		2,695,897		2,994,601		2,697,299		3,100,173
Junior subordinated debentures issued to capital trusts	Level 2		41,008		42,731		40,927		40,776
Accrued interest payable(2)	Level 1		16,766		16,766		15,917		15,917

⁽¹⁾  Included in other assets.

⁽²⁾  Included in accrued expenses and other liabilities.

The following methods and assumptions that 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 non-covered loans (i.e., loans which are not subject to loss-sharing agreements with the FDIC) and covered loans (i.e., loans subject to loss-sharing agreements with the FDIC) 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 re-pricing. 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. FRB 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 from time to time, federal funds purchased and FHLB borrowings) 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 (excluding VNB Capital Trust I). There is no active market for the trust preferred securities issued by Valley capital trusts, except for the securities issued by VNB Capital Trust I whose related debentures are carried at fair value. Therefore, the fair value of debentures 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). Valley’s credit spread was calculated based on the exchange quoted price for Valley’s trust preferred securities issued by VNB Capital Trust I.

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Goodwill and Other Intangible Assets - Estimated Future Amortization Expense (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Loan servicing rights [Member]
Finite-Lived Intangible Assets [Line Items]
2013	$ 3,064
2014	6,343
2015	4,929
2016	3,782
2017	2,921
Core deposits [Member]
Finite-Lived Intangible Assets [Line Items]
2013	1,432
2014	2,359
2015	1,758
2016	1,195
2017	815
Other [Member]
Finite-Lived Intangible Assets [Line Items]
2013	245
2014	466
2015	434
2016	233
2017	$ 220

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Accumulated Other Comprehensive Loss

Note 3. 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 three and six months ended June 30, 2013.

	Components of Accumulated Other Comprehensive Loss												Total
	Unrealized Gains and Losses on Available for Sale (AFS) Securities			Non-credit Impairment Losses on AFS Securities			Unrealized Gains and Losses on Derivatives			Defined Benefit Pension Plan			Accumulated Other Comprehensive Loss
	(in thousands)
Balance at March 31, 2013	$	(2,080	)	$	502		$	(11,662	)	$	(34,386	)	$	(47,626	)
Other comprehensive income before reclassifications		(16,353	)		2,008			2,036			18,784			6,475
Amounts reclassified from other comprehensive income		(25	)		(43	)		995			1,072			1,999
Other comprehensive income, net		(16,378	)		1,965			3,031			19,856			8,474
Balance at June 30, 2013	$	(18,458	)	$	2,467		$	(8,631	)	$	(14,530	)	$	(39,152	)
Balance at December 31, 2012	$	906		$	(4,175	)	$	(12,676	)	$	(34,964	)	$	(50,909	)
Other comprehensive income before reclassifications		(17,040	)		6,751			1,959			18,769			10,439
Amounts reclassified from other comprehensive income		(2,324	)		(109	)		2,086			1,665			1,318
Other comprehensive income, net		(19,364	)		6,642			4,045			20,434			11,757
Balance at June 30, 2013	$	(18,458	)	$	2,467		$	(8,631	)	$	(14,530	)	$	(39,152	)

The following table presents amounts reclassified from each component of accumulated other comprehensive loss on a gross and net of tax basis for the three and six months ended June 30, 2013.

	Amounts Reclassified from Accumulated Other Comprehensive Loss
Components of Accumulated Other Comprehensive Loss	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Income Statement Line Item
	(in thousands)
Unrealized gains on AFS securities before tax	$	41		$	3,999			Gains (losses) on securities transactions, net
Tax effect		(16	)		(1,675	)
Total net of tax		25			2,324
Non-credit impairment losses on AFS securities before tax:
Accretion of credit loss impairment due to an increase in expected cash flows		75			188			Interest and dividends on investment
Tax effect		(32	)		(79	)		securities (taxable)
Total net of tax		43			109
Unrealized losses on derivatives (cash flow hedges) before tax		(1,714	)		(3,594	)		Interest expense
Tax effect		719			1,508
Total net of tax		(995	)		(2,086	)
Defined benefit pension plan:
Amortization of prior service cost		(241	)		(443	)*
Amortization of net actuarial loss		(811	)		(1,605	)*
Recognition of loss due to curtailment		(750	)		(750	)*
Total before tax		(1,802	)		(2,798	)
Tax effect		730			1,133
Total net of tax		(1,072	)		(1,665	)
Total reclassifications, net of tax	$	(1,999	)	$	(1,318	)

* These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

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Fair Value Measurement of Assets and Liabilities - Schedule of Quantitative Information About Level 3 Inputs Used to Measure the Fair Value of Available For Sale Securities (Detail) (Significant Unobservable Inputs (Level 3) [Member])	6 Months Ended
	Jun. 30, 2013
Residential mortgage-backed securities [Member]
Fair Value Assets Measured On Recurring Basis [Line Items]
Prepayment rate, Weighted Average of unobservable inputs	19.30%
Default rate, Weighted Average of unobservable inputs	7.00%
Loss severity, Weighted Average of unobservable inputs	51.40%
Trust preferred securities [Member]
Fair Value Assets Measured On Recurring Basis [Line Items]
Loss severity, Weighted Average of unobservable inputs	20.30%
Market credit spreads, Weighted Average of unobservable inputs	5.20%
Discount rate, Weighted Average of unobservable inputs	6.70%
Minimum [Member] | Residential mortgage-backed securities [Member]
Fair Value Assets Measured On Recurring Basis [Line Items]
Prepayment rate, Range of unobservable inputs	14.70%
Default rate, Range of unobservable inputs	4.30%
Loss severity, Range of unobservable inputs	40.20%
Minimum [Member] | Trust preferred securities [Member]
Fair Value Assets Measured On Recurring Basis [Line Items]
Loss severity, Range of unobservable inputs	0.00%
Market credit spreads, Range of unobservable inputs	4.80%
Discount rate, Range of unobservable inputs	5.10%
Maximum [Member] | Residential mortgage-backed securities [Member]
Fair Value Assets Measured On Recurring Basis [Line Items]
Prepayment rate, Range of unobservable inputs	25.20%
Default rate, Range of unobservable inputs	12.20%
Loss severity, Range of unobservable inputs	59.80%
Maximum [Member] | Trust preferred securities [Member]
Fair Value Assets Measured On Recurring Basis [Line Items]
Loss severity, Range of unobservable inputs	100.00%
Market credit spreads, Range of unobservable inputs	5.40%
Discount rate, Range of unobservable inputs	7.90%

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Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Summary of Allowance for Credit Losses

The following table summarizes the allowance for credit losses at June 30, 2013 and December 31, 2012:

	June 30, 2013		December 31, 2012
	(in thousands)
Components of allowance for credit losses:
Allowance for non-covered loans	$	110,374	$	120,708
Allowance for covered loans		7,070		9,492
Total allowance for loan losses		117,444		130,200
Allowance for unfunded letters of credit		2,436		2,295
Total allowance for credit losses	$	119,880	$	132,495

Summary of Provision for Credit Losses

The following table summarizes the provision for credit losses for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Components of provision for credit losses:
Provision for non-covered loans	$	2,746		$	7,429		$	6,456		$	12,803
Provision for covered loans		(110	)		—			(2,276	)		—
Total provision for loan losses		2,636			7,429			4,180			12,803
Provision for unfunded letters of credit		(84	)		(24	)		141			299
Total provision for credit losses	$	2,552		$	7,405		$	4,321		$	13,102

Summary of Activity in Allowance for Loan Losses

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2013 and 2012:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
Three Months Ended June 30, 2013:
Allowance for loan losses:
Beginning balance	$	55,732		$	44,195		$	9,331		$	5,460		$	7,126		$	121,844
Loans charged-off		(1,441	)		(4,389	)		(1,666	)		(860	)		—			(8,356	)
Charged-off loans recovered		602			50			68			600			—			1,320
Net charge-offs		(839	)		(4,339	)		(1,598	)		(260	)		—			(7,036	)
Provision for loan losses		(1,161	)		3,323			788			(116	)		(198	)		2,636
Ending balance	$	53,732		$	43,179		$	8,521		$	5,084		$	6,928		$	117,444
Three Months Ended June 30, 2012:
Allowance for loan losses:
Beginning balance	$	73,311		$	34,415		$	9,837		$	7,940		$	7,367		$	132,870
Loans charged-off *		(5,406	)		(5,379	)		(583	)		(1,015	)		—			(12,383	)
Charged-off loans recovered		1,304			116			111			407			—			1,938
Net charge-offs		(4,102	)		(5,263	)		(472	)		(608	)		—			(10,445	)
Provision for loan losses		1,313			6,406			1,375			(1,523	)		(142	)		7,429
Ending balance	$	70,522		$	35,558		$	10,740		$	5,809		$	7,225		$	129,854

* The allowance for covered loans was reduced by loan charge-offs totaling $1.8 million during the second quarter of 2012.

The following tables detail the activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2013 and 2012, including both covered and non-covered loans:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
Six Months Ended June 30, 2013:
Allowance for loan losses:
Beginning balance	$	64,370		$	44,069		$	9,423		$	5,542		$	6,796		$	130,200
Loans charged-off		(8,766	)		(6,382	)		(2,558	)		(2,369	)		—			(20,075	)
Charged-off loans recovered		1,940			65			138			996			—			3,139
Net charge-offs		(6,826	)		(6,317	)		(2,420	)		(1,373	)		—			(16,936	)
Provision for loan losses		(3,812	)		5,427			1,518			915			132			4,180
Ending balance	$	53,732		$	43,179		$	8,521		$	5,084		$	6,928		$	117,444
Six Months Ended June 30, 2012:
Allowance for loan losses:
Beginning balance	$	73,649		$	34,637		$	9,120		$	8,677		$	7,719		$	133,802
Loans charged-off *		(10,213	)		(6,459	)		(1,759	)		(2,498	)		—			(20,929	)
Charged-off loans recovered		2,309			236			625			1,008			—			4,178
Net charge-offs		(7,904	)		(6,223	)		(1,134	)		(1,490	)		—			(16,751	)
Provision for loan losses		4,777			7,144			2,754			(1,378	)		(494	)		12,803
Ending balance	$	70,522		$	35,558		$	10,740		$	5,809		$	7,225		$	129,854

* The allowance for covered loans was reduced by loan charge-offs totaling $1.8 million for the six months ended June 30, 2012.

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 at June 30, 2013 and December 31, 2012.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Unallocated		Total
	(in thousands)
June 30, 2013
Allowance for loan losses:
Individually evaluated for impairment	$	11,420	$	14,632	$	2,677	$	11	$	—	$	28,740
Collectively evaluated for impairment		41,800		22,115		5,721		5,070		6,928		81,634
Loans acquired with discounts related to credit quality		512		6,432		123		3		—		7,070
Total	$	53,732	$	43,179	$	8,521	$	5,084	$	6,928	$	117,444
Loans:
Individually evaluated for impairment	$	57,595	$	130,631	$	26,879	$	1,186	$	—	$	216,291
Collectively evaluated for impairment		1,743,223		4,166,945		2,371,005		1,434,156		—		9,715,329
Loans acquired with discounts related to credit quality		220,576		665,220		24,004		41,605		—		951,405
Total	$	2,021,394	$	4,962,796	$	2,421,888	$	1,476,947	$	—	$	10,883,025
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	12,088	$	16,581	$	2,329	$	15	$	—	$	31,013
Collectively evaluated for impairment		44,877		25,463		7,032		5,527		6,796		89,695
Loans acquired with discounts related to credit quality		7,405		2,025		62		—		—		9,492
Total	$	64,370	$	44,069	$	9,423	$	5,542	$	6,796	$	130,200
Loans:
Individually evaluated for impairment	$	49,697	$	131,216	$	24,891	$	930	$	—	$	206,734
Collectively evaluated for impairment		1,783,046		4,040,723		2,420,736		1,403,896		—		9,648,401
Loans acquired with discounts related to credit quality		298,600		793,406		26,461		49,197		—		1,167,664
Total	$	2,131,343	$	4,965,345	$	2,472,088	$	1,454,023	$	—	$	11,022,799

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Balance Sheet Offsetting (Tables)

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Gross Presentation Effects of Offsetting and Net Presentation of Valley's Financial Instruments

The table below presents a gross presentation, the effects of offsetting, and a net presentation of Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of June 30, 2013 and December 31, 2012. The net amounts of derivative assets or liabilities can be reconciled to the fair value of Valley’s derivative financial instruments disclosed in Note 13.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral			Net Amount
	(in thousands)
June 30, 2013
Assets:
Interest rate caps and swaps	$	5,036	$	—	$	5,036	$	(1,025	)	$	—		$	4,011
Liabilities:
Interest rate caps and swaps	$	17,714	$	—	$	17,714	$	(1,025	)	$	(14,110	)	$	2,579
Repurchase agreements		520,000		—		520,000		—			(520,000	)		—
Total	$	537,714	$	—	$	537,714	$	(1,025	)	$	(534,110	)	$	2,579
December 31, 2012
Assets:
Interest rate caps and swaps	$	7,677	$	—	$	7,677	$	(675	)	$	—		$	7,002
Liabilities:
Interest rate caps and swaps	$	26,395	$	—	$	26,395	$	(675	)	$	(25,720	)	$	—
Repurchase agreements		520,000		—		520,000		—			(520,000	)		—
Total	$	546,395	$	—	$	546,395	$	(675	)	$	(545,720	)	$	—

* Represents fair value of investment securities pledged.

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Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 428,234,000		$ 428,234,000		$ 428,234,000
Goodwill, Other Changes			0	0
Net recoveries of impairment charges on its loan servicing rights	759,000	401,000	2,100,000	19,000
Impairment of core deposits and intangibles	0	0	0	0
Total amortization expense - other intangible assets	$ 1,900,000	$ 2,500,000	$ 3,500,000	$ 4,500,000
Core deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period, years			11 years
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization period, years			17 years

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Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Reclassification Out Of Accumulated Other Comprehensive Loss [LineItems]
Interest and dividends on investment securities (taxable)	$ 75	$ 66	$ 188	$ 369
Interest expense	(42,483)	(44,787)	(85,480)	(91,464)
Amounts Reclassified from Accumulated Other Comprehensive Loss, tax effect	(10,961)	(14,366)	(23,775)	(29,644)
Defined benefit pension plan:
Amortization of prior service cost	(2,056)	(1,985)	(4,043)	(3,971)
Tax effect	(10,961)	(14,366)	(23,775)	(29,644)
Reclassification out of accumulated other comprehensive income (loss) [Member]
Reclassification Out Of Accumulated Other Comprehensive Loss [LineItems]
Interest expense	(1,714)	(1,398)	(3,594)	(2,790)
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	(1,999)		(1,318)
Defined benefit pension plan:
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	(1,999)		(1,318)
Reclassification out of accumulated other comprehensive income (loss) [Member] | Unrealized Gains and Losses on Available for Sale (AFS) Securities [Member]
Reclassification Out Of Accumulated Other Comprehensive Loss [LineItems]
Gains (losses) on securities transactions, net	41		3,999
Amounts Reclassified from Accumulated Other Comprehensive Loss, tax effect	(16)		(1,675)
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	25		2,324
Defined benefit pension plan:
Tax effect	(16)		(1,675)
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	25		2,324
Reclassification out of accumulated other comprehensive income (loss) [Member] | Non-credit Impairment Losses on AFS Securities [Member]
Reclassification Out Of Accumulated Other Comprehensive Loss [LineItems]
Interest and dividends on investment securities (taxable)	75		188
Amounts Reclassified from Accumulated Other Comprehensive Loss, tax effect	(32)		(79)
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	43		109
Defined benefit pension plan:
Tax effect	(32)		(79)
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	43		109
Reclassification out of accumulated other comprehensive income (loss) [Member] | Unrealized Losses on Derivatives (Cash Flow Hedges) Before Tax [Member]
Reclassification Out Of Accumulated Other Comprehensive Loss [LineItems]
Interest expense	(1,714)		(3,594)
Amounts Reclassified from Accumulated Other Comprehensive Loss, tax effect	719		1,508
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	(995)		(2,086)
Defined benefit pension plan:
Tax effect	719		1,508
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	(995)		(2,086)
Reclassification out of accumulated other comprehensive income (loss) [Member] | Defined Benefit Pension Plans [Member]
Reclassification Out Of Accumulated Other Comprehensive Loss [LineItems]
Amounts Reclassified from Accumulated Other Comprehensive Loss, tax effect	730		1,133
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	(1,072)		(1,665)
Defined benefit pension plan:
Amortization of prior service cost	(241)		(443)
Amortization of net actuarial loss	(811)		(1,605)
Recognition of loss due to curtailment	(750)		(750)
Total before tax	(1,802)		(2,798)
Tax effect	730		1,133
Amounts Reclassified from Accumulated Other Comprehensive Loss, net of tax	$ (1,072)		$ (1,665)

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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 $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Allowance for loan losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	$ 28,740	$ 31,013
Collectively evaluated for impairment	81,634	89,695
Loans acquired with discounts related to credit quality	7,070	9,492
Total	117,444	130,200
Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	216,291	206,734
Collectively evaluated for impairment	9,715,329	9,648,401
Loans acquired with discounts related to credit quality	951,405	1,167,664
Total	10,883,025	11,022,799
Commercial and industrial [Member] | Allowance for loan losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	11,420	12,088
Collectively evaluated for impairment	41,800	44,877
Loans acquired with discounts related to credit quality	512	7,405
Total	53,732	64,370
Commercial and industrial [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	57,595	49,697
Collectively evaluated for impairment	1,743,223	1,783,046
Loans acquired with discounts related to credit quality	220,576	298,600
Total	2,021,394	2,131,343
Commercial real estate loans [Member] | Allowance for loan losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	14,632	16,581
Collectively evaluated for impairment	22,115	25,463
Loans acquired with discounts related to credit quality	6,432	2,025
Total	43,179	44,069
Commercial real estate loans [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	130,631	131,216
Collectively evaluated for impairment	4,166,945	4,040,723
Loans acquired with discounts related to credit quality	665,220	793,406
Total	4,962,796	4,965,345
Residential mortgage [Member] | Allowance for loan losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	2,677	2,329
Collectively evaluated for impairment	5,721	7,032
Loans acquired with discounts related to credit quality	123	62
Total	8,521	9,423
Residential mortgage [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	26,879	24,891
Collectively evaluated for impairment	2,371,005	2,420,736
Loans acquired with discounts related to credit quality	24,004	26,461
Total	2,421,888	2,472,088
Consumer [Member] | Allowance for loan losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	11	15
Collectively evaluated for impairment	5,070	5,527
Loans acquired with discounts related to credit quality	3
Total	5,084	5,542
Consumer [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	1,186	930
Collectively evaluated for impairment	1,434,156	1,403,896
Loans acquired with discounts related to credit quality	41,605	49,197
Total	1,476,947	1,454,023
Unallocated [Member] | Allowance for loan losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment
Collectively evaluated for impairment	6,928	6,796
Loans acquired with discounts related to credit quality
Total	6,928	6,796
Unallocated [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment
Collectively evaluated for impairment
Loans acquired with discounts related to credit quality
Total

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Loans - Schedule of Loan Portfolio Non-Covered and Covered PCI Loans and Non-PCI Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	$ 10,741,208	$ 10,842,125
Covered loans	141,817	180,674
Total loans	10,883,025	11,022,799
Commercial real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	4,864,603	4,843,153
Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	1,475,233	1,451,717
Covered loans	1,714	2,306
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	1,988,404	2,084,826
Covered loans	32,990	46,517
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	4,437,712	4,417,709
Covered loans	95,164	120,268
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	426,891	425,444
Covered loans	3,029	1,924
Residential mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	2,412,968	2,462,429
Covered loans	8,920	9,659
Home equity [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	455,166	485,458
Automobile [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	835,271	786,528
Other consumer [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	184,796	179,731
Non-PCI Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	9,931,620	9,855,135
Covered loans
Total loans	9,931,620	9,855,135
Non-PCI Loans [Member] | Commercial real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	4,297,576	4,171,939
Non-PCI Loans [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	1,435,342	1,404,826
Covered loans
Non-PCI Loans [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	1,800,818	1,832,743
Covered loans
Non-PCI Loans [Member] | Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	3,893,492	3,772,084
Covered loans
Non-PCI Loans [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	404,084	399,855
Covered loans
Non-PCI Loans [Member] | Residential mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	2,397,884	2,445,627
Covered loans
Non-PCI Loans [Member] | Home equity [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	415,501	438,881
Non-PCI Loans [Member] | Automobile [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	835,271	786,528
Non-PCI Loans [Member] | Other consumer [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	184,570	179,417
PCI Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	809,588	986,990
Covered loans	141,817	180,674
Total loans	951,405	1,167,664
PCI Loans [Member] | Commercial real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	567,027	671,214
PCI Loans [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	39,891	46,891
Covered loans	1,714	2,306
PCI Loans [Member] | Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	187,586	252,083
Covered loans	32,990	46,517
PCI Loans [Member] | Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	544,220	645,625
Covered loans	95,164	120,268
PCI Loans [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	22,807	25,589
Covered loans	3,029	1,924
PCI Loans [Member] | Residential mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	15,084	16,802
Covered loans	8,920	9,659
PCI Loans [Member] | Home equity [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	39,665	46,577
PCI Loans [Member] | Automobile [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans
PCI Loans [Member] | Other consumer [Member] | Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-covered loans	$ 226	$ 314

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Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities Available for Sale (Parenthetical) (Detail)	Jun. 30, 2013 Security	Dec. 31, 2012 Security
Schedule of Available-for-sale Securities [Line Items]
Number of pooled trust preferred securities	108	74
Pooled trust preferred securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of pooled trust preferred securities	3	3

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Investment Securities - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended						3 Months Ended	6 Months Ended													6 Months Ended
	Jun. 30, 2013 Security Y	Jun. 30, 2012	Jun. 30, 2013 Security Y	Jun. 30, 2012	Dec. 31, 2012 Security	Jun. 30, 2013 Trust preferred securities [Member]	Sep. 30, 2012 Trust preferred securities [Member]	Dec. 31, 2011 Trust preferred securities [Member]	Mar. 31, 2013 Trust preferred securities [Member] Zero percent yielding Freddie Mac and Fannie Mae perpetual preferred stock [Member]	Jun. 30, 2013 Trust preferred securities [Member] Zero percent yielding Freddie Mac and Fannie Mae perpetual preferred stock [Member]	Jun. 30, 2013 Trust Preferred Securities [Member] Securities	Jun. 30, 2013 Trust Preferred Securities [Member] Non-rated [Member]	Jun. 30, 2013 Single-issuer bank trust preferred securities [Member]	Dec. 31, 2012 Single-issuer bank trust preferred securities [Member]	Jun. 30, 2013 Perpetual Preferred Securities [Member] Security	Jun. 30, 2013 Pooled trust preferred securities [Member] Securities	Dec. 31, 2012 Pooled trust preferred securities [Member] Securities	Jun. 30, 2013 Pooled trust preferred securities [Member] Investment grade [Member] Securities	Jun. 30, 2013 Pooled trust preferred securities [Member] Non-investment grade [Member] Securities	Jun. 30, 2013 Residential mortgage-backed securities [Member]	Dec. 31, 2012 Residential mortgage-backed securities [Member]	Jun. 30, 2013 Residential mortgage-backed securities [Member] Investment grade [Member] Securities	Jun. 30, 2013 Private label mortgage-backed securities [Member]	Jun. 30, 2013 Private label mortgage-backed securities [Member] Non-investment grade [Member] Securities
Investment Securities [Line Items]
Held to maturity, fair value	$ 1,764,181,000		$ 1,764,181,000		$ 1,657,950,000															$ 963,575,000	$ 838,116,000
Available for sale	958,656,000		958,656,000		807,816,000	16,000,000										12,200,000				573,827,000	510,154,000
Fair value of trading securities	14,170,000		14,170,000		22,157,000								14,200,000	22,200,000
Number of security positions in the securities available for sale portfolio in an unrealized loss position	108		108		74						9				2	3	3	1	2					1
Number of security positions in the securities held to maturity portfolio in an unrealized loss position	127		127		34							4
Fair value of investments held to maturity pledged as collateral	759,500,000		759,500,000
Weighted-average remaining expected life of residential mortgage-backed securities held to maturity, years	5.0		5.0
Gross unrealized losses	43,474,000		43,474,000		19,479,000	469,000									1,600,000	4,300,000				20,812,000	3,359,000	18,400,000		1,600,000
Number of non-investment grade private label mortgage-backed securities																						25
Amortized Cost	986,105,000		986,105,000		813,474,000	16,500,000									10,000,000	16,500,000				590,225,000	506,695,000
Unrealized losses, available-for-sale securities	43,474,000		43,474,000		19,479,000													2,600,000		20,812,000	3,359,000
Fair value of securities available for sale pledged as collateral	421,900,000		421,900,000
Weighted-average remaining expected life of residential mortgage-backed securities available for sale, years	3.2		3.2
Other-than-temporarily impaired trust preferred securities, amortized cost	41,800,000
Other-than-temporarily impaired trust preferred securities, fair value	47,300,000		47,300,000
Impairment charge part of combined amortized cost of the securities							4,500,000	18,300,000
Net impairment losses on securities		550,000		550,000
Other-than-temporarily impaired mortgage-backed securities, amortized cost																							27,700,000
Other-than-temporarily impaired mortgage-backed securities, fair value																							28,300,000
Gains from sales transactions										3,400,000
Preferred stock, amortized cost									941,000
Interest income on trading securities	$ 413,000	$ 462,000	$ 855,000	$ 884,000

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Held to maturity, fair value	$ 1,764,181	$ 1,657,950
Junior subordinated debentures issued to capital trusts, fair value	$ 150,001	$ 147,595
Preferred stock, par value
Preferred stock, shares authorized	30,000,000	30,000,000
Preferred stock, shares issued
Common stock, par value
Common stock, shares authorized	232,023,233	232,023,233
Common stock, shares issued	199,254,687	198,499,275
Treasury stock, shares	0	61,004

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Allowance for Credit Losses

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Allowance for Credit Losses

Note 8. Allowance for Credit Losses

The allowance for credit losses consists of the allowance for losses on non-covered loans and allowance for losses on covered loans related to credit impairment of certain covered loan pools subsequent to acquisition, as well as 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 losses on non-covered loans is based on ongoing evaluations of the probable estimated losses inherent in the non-covered loan portfolio, including unexpected credit impairment of non-covered PCI loan pools subsequent to the acquisition date.

The following table summarizes the allowance for credit losses at June 30, 2013 and December 31, 2012:

	June 30, 2013		December 31, 2012
	(in thousands)
Components of allowance for credit losses:
Allowance for non-covered loans	$	110,374	$	120,708
Allowance for covered loans		7,070		9,492
Total allowance for loan losses		117,444		130,200
Allowance for unfunded letters of credit		2,436		2,295
Total allowance for credit losses	$	119,880	$	132,495

The following table summarizes the provision for credit losses for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Components of provision for credit losses:
Provision for non-covered loans	$	2,746		$	7,429		$	6,456		$	12,803
Provision for covered loans		(110	)		—			(2,276	)		—
Total provision for loan losses		2,636			7,429			4,180			12,803
Provision for unfunded letters of credit		(84	)		(24	)		141			299
Total provision for credit losses	$	2,552		$	7,405		$	4,321		$	13,102

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2013 and 2012:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
Three Months Ended June 30, 2013:
Allowance for loan losses:
Beginning balance	$	55,732		$	44,195		$	9,331		$	5,460		$	7,126		$	121,844
Loans charged-off		(1,441	)		(4,389	)		(1,666	)		(860	)		—			(8,356	)
Charged-off loans recovered		602			50			68			600			—			1,320
Net charge-offs		(839	)		(4,339	)		(1,598	)		(260	)		—			(7,036	)
Provision for loan losses		(1,161	)		3,323			788			(116	)		(198	)		2,636
Ending balance	$	53,732		$	43,179		$	8,521		$	5,084		$	6,928		$	117,444
Three Months Ended June 30, 2012:
Allowance for loan losses:
Beginning balance	$	73,311		$	34,415		$	9,837		$	7,940		$	7,367		$	132,870
Loans charged-off *		(5,406	)		(5,379	)		(583	)		(1,015	)		—			(12,383	)
Charged-off loans recovered		1,304			116			111			407			—			1,938
Net charge-offs		(4,102	)		(5,263	)		(472	)		(608	)		—			(10,445	)
Provision for loan losses		1,313			6,406			1,375			(1,523	)		(142	)		7,429
Ending balance	$	70,522		$	35,558		$	10,740		$	5,809		$	7,225		$	129,854

* The allowance for covered loans was reduced by loan charge-offs totaling $1.8 million during the second quarter of 2012.

The following tables detail the activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2013 and 2012, including both covered and non-covered loans:

	Commercial and Industrial			Commercial Real Estate			Residential Mortgage			Consumer			Unallocated			Total
	(in thousands)
Six Months Ended June 30, 2013:
Allowance for loan losses:
Beginning balance	$	64,370		$	44,069		$	9,423		$	5,542		$	6,796		$	130,200
Loans charged-off		(8,766	)		(6,382	)		(2,558	)		(2,369	)		—			(20,075	)
Charged-off loans recovered		1,940			65			138			996			—			3,139
Net charge-offs		(6,826	)		(6,317	)		(2,420	)		(1,373	)		—			(16,936	)
Provision for loan losses		(3,812	)		5,427			1,518			915			132			4,180
Ending balance	$	53,732		$	43,179		$	8,521		$	5,084		$	6,928		$	117,444
Six Months Ended June 30, 2012:
Allowance for loan losses:
Beginning balance	$	73,649		$	34,637		$	9,120		$	8,677		$	7,719		$	133,802
Loans charged-off *		(10,213	)		(6,459	)		(1,759	)		(2,498	)		—			(20,929	)
Charged-off loans recovered		2,309			236			625			1,008			—			4,178
Net charge-offs		(7,904	)		(6,223	)		(1,134	)		(1,490	)		—			(16,751	)
Provision for loan losses		4,777			7,144			2,754			(1,378	)		(494	)		12,803
Ending balance	$	70,522		$	35,558		$	10,740		$	5,809		$	7,225		$	129,854

* The allowance for covered loans was reduced by loan charge-offs totaling $1.8 million for the six months ended June 30, 2012.

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 at June 30, 2013 and December 31, 2012.

	Commercial and Industrial		Commercial Real Estate		Residential Mortgage		Consumer		Unallocated		Total
	(in thousands)
June 30, 2013
Allowance for loan losses:
Individually evaluated for impairment	$	11,420	$	14,632	$	2,677	$	11	$	—	$	28,740
Collectively evaluated for impairment		41,800		22,115		5,721		5,070		6,928		81,634
Loans acquired with discounts related to credit quality		512		6,432		123		3		—		7,070
Total	$	53,732	$	43,179	$	8,521	$	5,084	$	6,928	$	117,444
Loans:
Individually evaluated for impairment	$	57,595	$	130,631	$	26,879	$	1,186	$	—	$	216,291
Collectively evaluated for impairment		1,743,223		4,166,945		2,371,005		1,434,156		—		9,715,329
Loans acquired with discounts related to credit quality		220,576		665,220		24,004		41,605		—		951,405
Total	$	2,021,394	$	4,962,796	$	2,421,888	$	1,476,947	$	—	$	10,883,025
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	12,088	$	16,581	$	2,329	$	15	$	—	$	31,013
Collectively evaluated for impairment		44,877		25,463		7,032		5,527		6,796		89,695
Loans acquired with discounts related to credit quality		7,405		2,025		62		—		—		9,492
Total	$	64,370	$	44,069	$	9,423	$	5,542	$	6,796	$	130,200
Loans:
Individually evaluated for impairment	$	49,697	$	131,216	$	24,891	$	930	$	—	$	206,734
Collectively evaluated for impairment		1,783,046		4,040,723		2,420,736		1,403,896		—		9,648,401
Loans acquired with discounts related to credit quality		298,600		793,406		26,461		49,197		—		1,167,664
Total	$	2,131,343	$	4,965,345	$	2,472,088	$	1,454,023	$	—	$	11,022,799

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 33,922	$ 32,820	$ 65,232	$ 67,351
Other comprehensive income, net of tax:
Net (losses) gains arising during the period	(16,353)	2,891	(17,040)	7,117
Less reclassification adjustment for net gains included in net income	(25)	(699)	(2,324)	(604)
Total	(16,378)	2,192	(19,364)	6,513
Non-credit impairment losses on available for sale securities
Net change in non-credit impairment losses on securities	2,008	4,547	6,751	11,617
Less reclassification adjustment for credit impairment losses included in net income	(43)	304	(109)	114
Total	1,965	4,851	6,642	11,731
Unrealized gains and losses on derivatives (cash flow hedges)
Net gains (losses) on derivatives arising during the period	2,036	(3,069)	1,959	(2,170)
Less reclassification adjustment for net losses included in net income	995	811	2,086	1,619
Total	3,031	(2,258)	4,045	(551)
Defined benefit pension plan
Net gains arising during the period	18,784		18,769
Amortization of prior service cost	133	103	261	206
Amortization of net loss	471	337	936	675
Recognition of loss due to curtailment	468		468
Total	19,856	440	20,434	881
Total other comprehensive income	8,474	5,225	11,757	18,574
Total comprehensive income	$ 42,396	$ 38,045	$ 76,989	$ 85,925

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Loans - Changes in FDIC Loss-Share Receivable (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Receivables [Abstract]
Balance, beginning of the period	$ 43,413	$ 69,928	$ 44,996	$ 74,390
Discount accretion of the present value at the acquisition dates	32	81	65	162
Effect of additional cash flows on covered loans (prospective recognition)	(3,467)	(2,231)	(4,949)	(3,868)
Decrease in the provision for losses on covered loans	(105)		(2,783)
Other reimbursable expenses	1,540	1,088	2,492	2,554
(Reimbursements from) payments to the FDIC	(727)	(3,165)	865	(7,537)
Other		(5,960)		(5,960)
Balance, end of the period	$ 40,686	$ 59,741	$ 40,686	$ 59,741

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets
Cash and due from banks	$ 401,228	$ 390,078
Interest bearing deposits with banks	299,097	463,022
Investment securities:
Held to maturity (fair value of $1,764,181 at June 30, 2013 and $1,657,950 at December 31, 2012)	1,766,947	1,599,707
Available for sale	958,656	807,816
Trading securities	14,170	22,157
Total investment securities	2,739,773	2,429,680
Loans held for sale, at fair value	48,901	120,230
Non-covered loans	10,741,208	10,842,125
Covered loans	141,817	180,674
Less: Allowance for loan losses	(117,444)	(130,200)
Net loans	10,765,581	10,892,599
Premises and equipment, net	272,903	278,615
Bank owned life insurance	342,013	339,876
Accrued interest receivable	53,303	52,375
Due from customers on acceptances outstanding	3,775	3,323
FDIC loss-share receivable	40,686	44,996
Goodwill	428,234	428,234
Other intangible assets, net	39,002	31,123
Other assets	542,706	538,495
Total Assets	15,977,202	16,012,646
Liabilities
Non-interest bearing	3,545,735	3,558,053
Interest bearing:
Savings, NOW and money market	5,331,794	5,197,199
Time	2,365,093	2,508,766
Total deposits	11,242,622	11,264,018
Short-term borrowings	125,060	154,323
Long-term borrowings	2,695,897	2,697,299
Junior subordinated debentures issued to capital trusts (includes fair value of $150,001 at June 30, 2013 and $147,595 at December 31, 2012 for VNB Capital Trust I)	191,009	188,522
Bank acceptances outstanding	3,775	3,323
Accrued expenses and other liabilities	197,286	202,784
Total Liabilities	14,455,649	14,510,269
Shareholders' Equity
Preferred stock, (no par value, authorized 30,000,000 shares; none issued)
Common stock, (no par value, authorized 232,023,233 shares; issued 199,254,687 shares at June 30, 2013 and 198,499,275 shares at December 31, 2012)	69,707	69,494
Surplus	1,396,996	1,390,851
Retained earnings	94,002	93,495
Accumulated other comprehensive loss	(39,152)	(50,909)
Treasury stock, at cost (0 common shares at June 30, 2013 and 61,004 common shares at December 31, 2012)		(554)
Total Shareholders' Equity	1,521,553	1,502,377
Total Liabilities and Shareholders' Equity	$ 15,977,202	$ 16,012,646

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Investment Securities - Age of Unrealized Losses and Fair Value of Related Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	$ 640,767	$ 374,643
Less than Twelve Months, Unrealized Losses	(34,020)	(4,118)
More than Twelve Months, Fair Value	61,543	63,882
More than Twelve Months, Unrealized Losses	(9,454)	(15,361)
Total, Fair Value	702,310	438,525
Total, Unrealized Losses	(43,474)	(19,479)
U.S. Treasury securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	89,786	97,625
Less than Twelve Months, Unrealized Losses	(10,053)	(2,218)
More than Twelve Months, Fair Value
More than Twelve Months, Unrealized Losses
Total, Fair Value	89,786	97,625
Total, Unrealized Losses	(10,053)	(2,218)
Residential mortgage-backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	442,850	269,895
Less than Twelve Months, Unrealized Losses	(18,946)	(1,256)
More than Twelve Months, Fair Value	13,566	21,089
More than Twelve Months, Unrealized Losses	(1,866)	(2,103)
Total, Fair Value	456,416	290,984
Total, Unrealized Losses	(20,812)	(3,359)
Trust preferred securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	446	760
Less than Twelve Months, Unrealized Losses	(10)	(511)
More than Twelve Months, Fair Value	32,969	27,865
More than Twelve Months, Unrealized Losses	(5,638)	(11,228)
Total, Fair Value	33,415	28,625
Total, Unrealized Losses	(5,648)	(11,739)
Corporate and other debt securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	54,149	5,394
Less than Twelve Months, Unrealized Losses	(2,192)	(58)
More than Twelve Months, Fair Value	2,407	2,264
More than Twelve Months, Unrealized Losses	(93)	(236)
Total, Fair Value	56,556	7,658
Total, Unrealized Losses	(2,285)	(294)
Equity securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	1,144	969
Less than Twelve Months, Unrealized Losses	(41)	(75)
More than Twelve Months, Fair Value	12,601	12,664
More than Twelve Months, Unrealized Losses	(1,857)	(1,794)
Total, Fair Value	13,745	13,633
Total, Unrealized Losses	(1,898)	(1,869)
U.S. government agency securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	28,188
Less than Twelve Months, Unrealized Losses	(613)
More than Twelve Months, Fair Value
More than Twelve Months, Unrealized Losses
Total, Fair Value	28,188
Total, Unrealized Losses	(613)
Obligations of states and political subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less than Twelve Months, Fair Value	24,204
Less than Twelve Months, Unrealized Losses	(2,165)
More than Twelve Months, Fair Value
More than Twelve Months, Unrealized Losses
Total, Fair Value	24,204
Total, Unrealized Losses	$ (2,165)

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Derivative Instruments and Hedging Activities - Consolidated Statements of Financial Condition Related to Fair Value of Derivative Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Other Assets [Member] | Derivatives designated as hedging instruments [Member]
Derivative [Line Items]
Asset Derivatives, Fair Value	$ 405	$ 675
Other Assets [Member] | Derivatives designated as hedging instruments [Member] | Cash flow hedge interest rate caps and swaps [Member]
Derivative [Line Items]
Asset Derivatives, Fair Value	27	23
Other Assets [Member] | Derivatives designated as hedging instruments [Member] | Fair value hedge interest rate swaps [Member]
Derivative [Line Items]
Asset Derivatives, Fair Value	378	652
Other Assets [Member] | Derivatives not designated as hedging instrument [Member]
Derivative [Line Items]
Asset Derivatives, Fair Value	7,020	7,241
Other Assets [Member] | Derivatives not designated as hedging instrument [Member] | Interest rate swaps [Member]
Derivative [Line Items]
Asset Derivatives, Fair Value	4,631	7,002
Other Assets [Member] | Derivatives not designated as hedging instrument [Member] | Mortgage Banking Derivatives [Member]
Derivative [Line Items]
Asset Derivatives, Fair Value	2,389	239
Other Liabilities [Member] | Derivatives designated as hedging instruments [Member]
Derivative [Line Items]
Liability Derivatives, Fair Value	13,083	19,395
Other Liabilities [Member] | Derivatives designated as hedging instruments [Member] | Cash flow hedge interest rate caps and swaps [Member]
Derivative [Line Items]
Liability Derivatives, Fair Value	11,408	17,198
Other Liabilities [Member] | Derivatives designated as hedging instruments [Member] | Fair value hedge interest rate swaps [Member]
Derivative [Line Items]
Liability Derivatives, Fair Value	1,675	2,197
Other Liabilities [Member] | Derivatives not designated as hedging instrument [Member]
Derivative [Line Items]
Liability Derivatives, Fair Value	5,888	7,199
Other Liabilities [Member] | Derivatives not designated as hedging instrument [Member] | Interest rate swaps [Member]
Derivative [Line Items]
Liability Derivatives, Fair Value	4,631	6,999
Other Liabilities [Member] | Derivatives not designated as hedging instrument [Member] | Mortgage Banking Derivatives [Member]
Derivative [Line Items]
Liability Derivatives, Fair Value	$ 1,257	$ 200

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Benefit Plans - Components of Net Periodic Pension Expense Related to Qualified and Non-Qualified Plans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Compensation And Retirement Disclosure [Abstract]
Service cost	$ 2,056	$ 1,985	$ 4,043	$ 3,971
Interest cost	1,708	1,620	3,365	3,239
Expected return on plan assets	(3,183)	(2,233)	(5,742)	(4,466)
Amortization of prior service cost	241	191	443	382
Amortization of actuarial loss	811	587	1,605	1,175
Curtailment loss	750		750
Total net periodic pension expense	$ 2,383	$ 2,150	$ 4,464	$ 4,301

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Other Intangible Assets

The following table summarizes other intangible assets as of June 30, 2013 and December 31, 2012:

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
June 30, 2013
Loan servicing rights	$	69,244	$	(41,485	)	$	(1,000	)	$	26,759
Core deposits		35,194		(25,805	)		—			9,389
Other		5,878		(3,024	)		—			2,854
Total other intangible assets	$	110,316	$	(70,314	)	$	(1,000	)	$	39,002
December 31, 2012
Loan servicing rights	$	63,377	$	(43,393	)	$	(3,046	)	$	16,938
Core deposits		35,194		(24,160	)		—			11,034
Other		5,878		(2,727	)		—			3,151
Total other intangible assets	$	104,449	$	(70,280	)	$	(3,046	)	$	31,123

Estimated Future Amortization Expense

The following presents the estimated future amortization expense of other intangible assets for the remainder of 2013 through 2017:

	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2013	$	3,064	$	1,432	$	245
2014		6,343		2,359		466
2015		4,929		1,758		434
2016		3,782		1,195		233
2017		2,921		815		220

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [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 three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(in thousands, except for share data)
Net income	$	33,922	$	32,820	$	65,232	$	67,351
Basic weighted-average number of common shares outstanding		199,244,243		197,246,322		199,085,501		197,088,528
Plus: Common stock equivalents		—		3,846		—		17,110
Diluted weighted-average number of common shares outstanding		199,244,243		197,250,168		199,085,501		197,105,638
Earnings per common share:
Basic	$	0.17	$	0.17	$	0.33	$	0.34
Diluted		0.17		0.17		0.33		0.34

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Fair Value Measurement of Assets and Liabilities - Carrying Amounts and Estimated Fair Values of Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Deposits with stated maturities	$ 2,365,093	$ 2,508,766
Interest bearing deposits with banks	299,097	463,022
Total investment securities held to maturity	1,764,181	1,657,950
Accrued interest receivable	53,303	52,375
Carrying Amount [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Cash and due from banks	401,228	390,078
Interest bearing deposits with banks	299,097	463,022
Accrued interest receivable	53,303	52,375
Federal Reserve Bank and Federal Home Loan Bank stock	138,359	138,533
Deposits without stated maturities	8,877,529	8,755,252
Short-term borrowings	125,060	154,323
Accrued interest payable	16,766	15,917
Carrying Amount [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	99,792	99,869
Carrying Amount [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Deposits with stated maturities	2,365,093	2,508,766
Long-term borrowings	2,695,897	2,697,299
Junior subordinated debentures issued to capital trusts	41,008	40,927
Total investment securities held to maturity	1,766,947	1,599,707
Carrying Amount [Member] | Significant Other Observable Inputs (Level 2) [Member] | Obligations of states and political subdivisions [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	542,154	506,473
Carrying Amount [Member] | Significant Other Observable Inputs (Level 2) [Member] | Residential mortgage-backed securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	969,341	813,647
Carrying Amount [Member] | Significant Other Observable Inputs (Level 2) [Member] | Trust preferred securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	103,453	127,505
Carrying Amount [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate and other debt securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	52,207	52,213
Carrying Amount [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Net loans	10,765,581	10,892,599
Fair Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Cash and due from banks	401,228	390,078
Interest bearing deposits with banks	299,097	463,022
Accrued interest receivable	53,303	52,375
Federal Reserve Bank and Federal Home Loan Bank stock	138,359	138,533
Deposits without stated maturities	8,877,529	8,755,252
Short-term borrowings	125,060	154,323
Accrued interest payable	16,766	15,917
Fair Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	108,734	115,329
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Deposits with stated maturities	2,404,271	2,563,726
Long-term borrowings	2,994,601	3,100,173
Junior subordinated debentures issued to capital trusts	42,731	40,776
Total investment securities held to maturity	1,764,181	1,657,950
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member] | Obligations of states and political subdivisions [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	542,614	531,966
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member] | Residential mortgage-backed securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	963,575	838,116
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member] | Trust preferred securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	91,348	113,657
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate and other debt securities [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Total investment securities held to maturity	57,910	58,882
Fair Value [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair value and carrying amounts of assets and liabilities not measured and not reported at fair value on the consolidated statement of financial condition
Net loans	$ 10,734,500	$ 10,908,742

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Guarantees - Additional Information (Detail) (USD $)	Jun. 30, 2013
Guarantor Obligations [Line Items]
Guarantor obligations, standby letters of credit	$ 230,600,000
Liability related to standby letters of credit	846,000
Secured [Member]
Guarantor Obligations [Line Items]
Guarantor obligations, standby letters of credit	$ 147,300,000
Percent of secured letters of credit	63.90%

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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, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Investments Debt And Equity Securities [Abstract]
Balance, beginning of period	$ 33,177	$ 28,767	$ 33,290	$ 29,070
Additions: Subsequent credit impairments		550		550
Reductions: Accretion of credit loss impairment due to an increase in expected cash flows	(75)	(66)	(188)	(369)
Balance, end of period	$ 33,102	$ 29,251	$ 33,102	$ 29,251

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Loans - Recorded Investment in Loan Classes Based on Payment Activity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Non-PCI Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	$ 3,833,226	$ 3,850,453
Non-PCI Loans [Member] | Residential mortgage [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	2,397,884	2,445,627
Non-PCI Loans [Member] | Home equity [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	415,501	438,881
Non-PCI Loans [Member] | Automobile loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	835,271	786,528
Non-PCI Loans [Member] | Other consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	184,570	179,417
PCI Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	951,405	1,167,664
PCI Loans [Member] | Residential mortgage [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	24,004	26,461
PCI Loans [Member] | Commercial and industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	220,576	298,600
PCI Loans [Member] | Commercial real estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	639,384	765,893
PCI Loans [Member] | Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	25,836	27,513
PCI Loans [Member] | Consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	41,605	49,197
Performing Loans [Member] | Non-PCI Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	3,804,623	3,814,499
Performing Loans [Member] | Non-PCI Loans [Member] | Residential mortgage [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	2,371,830	2,413,004
Performing Loans [Member] | Non-PCI Loans [Member] | Home equity [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	413,173	436,483
Performing Loans [Member] | Non-PCI Loans [Member] | Automobile loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	835,050	786,223
Performing Loans [Member] | Non-PCI Loans [Member] | Other consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	184,570	178,789
Performing Loans [Member] | PCI Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	888,991	1,095,804
Performing Loans [Member] | PCI Loans [Member] | Residential mortgage [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	20,111	22,173
Performing Loans [Member] | PCI Loans [Member] | Commercial and industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	216,501	292,163
Performing Loans [Member] | PCI Loans [Member] | Commercial real estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	594,919	715,812
Performing Loans [Member] | PCI Loans [Member] | Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	17,150	17,967
Performing Loans [Member] | PCI Loans [Member] | Consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	40,310	47,689
Non-Performing Loans [Member] | Non-PCI Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	28,603	35,954
Non-Performing Loans [Member] | Non-PCI Loans [Member] | Residential mortgage [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	26,054	32,623
Non-Performing Loans [Member] | Non-PCI Loans [Member] | Home equity [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	2,328	2,398
Non-Performing Loans [Member] | Non-PCI Loans [Member] | Automobile loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	221	305
Non-Performing Loans [Member] | Non-PCI Loans [Member] | Other consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans		628
Non-Performing Loans [Member] | PCI Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	62,414	71,860
Non-Performing Loans [Member] | PCI Loans [Member] | Residential mortgage [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	3,893	4,288
Non-Performing Loans [Member] | PCI Loans [Member] | Commercial and industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	4,075	6,437
Non-Performing Loans [Member] | PCI Loans [Member] | Commercial real estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	44,465	50,081
Non-Performing Loans [Member] | PCI Loans [Member] | Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	8,686	9,546
Non-Performing Loans [Member] | PCI Loans [Member] | Consumer [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	$ 1,295	$ 1,508

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Fair Value Measurement of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Unpaid principal balances of loans held for sale	$ 49.1	$ 115.4
Contractual unpaid principal [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Junior subordinated notes	$ 146.7	$ 146.7

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Earnings Per Common Share - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Anti-dilutive common stock options and warrants	7.2	7.7	7.2	7.7

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Accumulated Other Comprehensive Loss - Schedule of Changes in Accumulated Other Comprehensive Loss After Tax (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total Accumulated Other Comprehensive Income (Loss), Beginning Balance			$ (50,909)
Total other comprehensive income	8,474	5,225	11,757	18,574
Total Accumulated Other Comprehensive Income (Loss), Ending Balance	(39,152)		(39,152)
Unrealized Gains and Losses on Available for Sale (AFS) Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total Accumulated Other Comprehensive Income (Loss), Beginning Balance	(2,080)		906
Other comprehensive income before reclassifications	(16,353)		(17,040)
Amounts reclassified from other comprehensive income	(25)		(2,324)
Total other comprehensive income	(16,378)		(19,364)
Total Accumulated Other Comprehensive Income (Loss), Ending Balance	(18,458)		(18,458)
Non-credit Impairment Losses on AFS Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total Accumulated Other Comprehensive Income (Loss), Beginning Balance	502		(4,175)
Other comprehensive income before reclassifications	2,008		6,751
Amounts reclassified from other comprehensive income	(43)		(109)
Total other comprehensive income	1,965		6,642
Total Accumulated Other Comprehensive Income (Loss), Ending Balance	2,467		2,467
Unrealized Gains and Losses on Derivatives [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total Accumulated Other Comprehensive Income (Loss), Beginning Balance	(11,662)		(12,676)
Other comprehensive income before reclassifications	2,036		1,959
Amounts reclassified from other comprehensive income	995		2,086
Total other comprehensive income	3,031		4,045
Total Accumulated Other Comprehensive Income (Loss), Ending Balance	(8,631)		(8,631)
Defined Benefit Pension Plan [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total Accumulated Other Comprehensive Income (Loss), Beginning Balance	(34,386)		(34,964)
Other comprehensive income before reclassifications	18,784		18,769
Amounts reclassified from other comprehensive income	1,072		1,665
Total other comprehensive income	19,856		20,434
Total Accumulated Other Comprehensive Income (Loss), Ending Balance	(14,530)		(14,530)
Total Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total Accumulated Other Comprehensive Income (Loss), Beginning Balance	(47,626)		(50,909)
Other comprehensive income before reclassifications	6,475		10,439
Amounts reclassified from other comprehensive income	1,999		1,318
Total other comprehensive income	8,474		11,757
Total Accumulated Other Comprehensive Income (Loss), Ending Balance	$ (39,152)		$ (39,152)

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Loans

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Loans

Note 7. Loans

The detail of the loan portfolio as of June 30, 2013 and December 31, 2012 was as follows:

	June 30, 2013						December 31, 2012
	Non-PCI Loans		PCI Loans		Total		Non-PCI Loans		PCI Loans		Total
	(in thousands)
Non-covered loans:
Commercial and industrial	$	1,800,818	$	187,586	$	1,988,404	$	1,832,743	$	252,083	$	2,084,826
Commercial real estate:
Commercial real estate		3,893,492		544,220		4,437,712		3,772,084		645,625		4,417,709
Construction		404,084		22,807		426,891		399,855		25,589		425,444
Total commercial real estate loans		4,297,576		567,027		4,864,603		4,171,939		671,214		4,843,153
Residential mortgage		2,397,884		15,084		2,412,968		2,445,627		16,802		2,462,429
Consumer:
Home equity		415,501		39,665		455,166		438,881		46,577		485,458
Automobile		835,271		—		835,271		786,528		—		786,528
Other consumer		184,570		226		184,796		179,417		314		179,731
Total consumer loans		1,435,342		39,891		1,475,233		1,404,826		46,891		1,451,717
Total non-covered loans	$	9,931,620	$	809,588	$	10,741,208	$	9,855,135	$	986,990	$	10,842,125
Covered loans:
Commercial and industrial	$	—	$	32,990	$	32,990	$	—	$	46,517	$	46,517
Commercial real estate		—		95,164		95,164		—		120,268		120,268
Construction		—		3,029		3,029		—		1,924		1,924
Residential mortgage		—		8,920		8,920		—		9,659		9,659
Consumer		—		1,714		1,714		—		2,306		2,306
Total covered loans		—		141,817		141,817		—		180,674		180,674
Total loans	$	9,931,620	$	951,405	$	10,883,025	$	9,855,135	$	1,167,664	$	11,022,799

Total non-covered loans are net of unearned discount and deferred loan fees totaling $8.3 million and $3.4 million at June 30, 2013 and December 31, 2012, respectively. The outstanding balances (representing contractual balances owed to Valley) for non-covered PCI loans and covered loans totaled $886.4 million and $277.8 million at June 30, 2013, and $1.1 billion and $321.9 million at December 31, 2012, respectively.

There were no sales of loans from the held for investment portfolio during the three and six months ended June 30, 2013 and 2012.

Purchased Credit-Impaired Loans (Including Covered Loans)

Purchased Credit-Impaired (PCI) loans, which include loans acquired in FDIC-assisted transactions (“covered loans”) subject to loss-sharing agreements, are acquired at a discount that is due, in part, to credit quality. 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.

The following table presents changes in the accretable yield for PCI loans during the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of period	$	153,138		$	229,802		$	169,309		$	66,724
Acquisitions		—			—			—			186,262
Accretion		(17,639	)		(20,385	)		(33,874	)		(43,569	)
Net increase in expected cash flows		120,884			—			120,948			—
Balance, end of period	$	256,383		$	209,417		$	256,383		$	209,417

The net 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 life of the individual pools. The net increase was largely due to additional cash flows caused by longer than originally expected durations for certain non-covered PCI loans which increased the average expected life of our non-covered PCI loans (which represent 85 percent of total PCI loans at June 30, 2013) from 2.5 years (at the date of acquisition) to approximately 4.0 years. Additionally, a $20.1 million decrease in the expected credit losses for certain non-covered pools is another component of the net increase in cash flows.

FDIC Loss-Share Receivable

The receivable arising from the loss-sharing agreements (referred to as the “FDIC loss-share receivable” on our consolidated statements of financial condition) 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.

Changes in the FDIC loss-share receivable for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of the period	$	43,413		$	69,928		$	44,996		$	74,390
Discount accretion of the present value at the acquisition dates		32			81			65			162
Effect of additional cash flows on covered loans (prospective recognition)		(3,467	)		(2,231	)		(4,949	)		(3,868	)
Decrease in the provision for losses on covered loans		(105	)		—			(2,783	)		—
Other reimbursable expenses		1,540			1,088			2,492			2,554
(Reimbursements from) payments to the FDIC		(727	)		(3,165	)		865			(7,537	)
Other		—			(5,960	)		—			(5,960	)
Balance, end of the period	$	40,686		$	59,741		$	40,686		$	59,741

The aggregate effect of changes in the FDIC loss-share receivable was a reduction in non-interest income of $2.0 million and $7.0 million for the three months ended June 30, 2013 and 2012, respectively, and a reduction of $5.2 million and $7.1 million to non-interest income for the six months ended June 30, 2013 and 2012, respectively. The reductions in non-interest income for the three and six months ended June 30, 2012 included $6.0 million related to the FDIC’s portion of the estimated losses on unused lines of credit assumed in the FDIC-assisted transactions, which had expired.

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. Valley, in most cases, 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 $300.0 million and $307.0 million at June 30, 2013 and December 31, 2012, respectively.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans. Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Loans generally involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. 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, 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 strength or weakness in 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 minor exposures in credit card loans, personal lines of credit, personal loans and loans secured by cash surrender value of life insurance. Valley believes the aggregate risk exposure of these loans and lines of credit was not significant at June 30, 2013. Unsecured consumer loans totaled approximately $20.7 million and $44.0 million, including $8.2 million and $8.6 million of credit card loans, at June 30, 2013 and December 31, 2012, respectively.

Credit Quality

The following table presents past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis) by loan portfolio class at June 30, 2013 and December 31, 2012:

	Past Due and Non-Accrual Loans
	30-89 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)
June 30, 2013
Commercial and industrial	$	3,525	$	—	$	20,913	$	24,438	$	1,776,380	$	1,800,818
Commercial real estate:
Commercial real estate		18,946		259		55,390		74,595		3,818,897		3,893,492
Construction		5,772		150		13,617		19,539		384,545		404,084
Total commercial real estate loans		24,718		409		69,007		94,134		4,203,442		4,297,576
Residential mortgage		10,619		2,342		26,054		39,015		2,358,869		2,397,884
Consumer loans:
Home equity		724		—		2,328		3,052		412,449		415,501
Automobile		3,307		152		221		3,680		831,591		835,271
Other consumer		107		197		—		304		184,266		184,570
Total consumer loans		4,138		349		2,549		7,036		1,428,306		1,435,342
Total	$	43,000	$	3,100	$	118,523	$	164,623	$	9,766,997	$	9,931,620
December 31, 2012
Commercial and industrial	$	3,578	$	283	$	22,424	$	26,285	$	1,806,458	$	1,832,743
Commercial real estate:
Commercial real estate		13,245		2,950		58,625		74,820		3,697,264		3,772,084
Construction		6,685		2,575		14,805		24,065		375,790		399,855
Total commercial real estate loans		19,930		5,525		73,430		98,885		4,073,054		4,171,939
Residential mortgage		18,951		2,356		32,623		53,930		2,391,697		2,445,627
Consumer loans:
Home equity		702		—		2,398		3,100		435,781		438,881
Automobile		5,443		469		305		6,217		780,311		786,528
Other consumer		1,082		32		628		1,742		177,675		179,417
Total consumer loans		7,227		501		3,331		11,059		1,393,767		1,404,826
Total	$	49,686	$	8,665	$	131,808	$	190,159	$	9,664,976	$	9,855,135

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 restructuring, 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 June 30, 2013 and December 31, 2012:

	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
June 30, 2013
Commercial and industrial	$	3,670	$	53,925	$	57,595	$	73,152	$	11,420
Commercial real estate:
Commercial real estate		21,747		89,450		111,197		127,316		11,729
Construction		5,744		13,690		19,434		21,595		2,903
Total commercial real estate loans		27,491		103,140		130,631		148,911		14,632
Residential mortgage		11,317		15,562		26,879		30,714		2,677
Consumer loans:
Home equity		1,049		137		1,186		1,529		11
Total consumer loans		1,049		137		1,186		1,529		11
Total	$	43,527	$	172,764	$	216,291	$	254,306	$	28,740
December 31, 2012
Commercial and industrial	$	3,236	$	46,461	$	49,697	$	62,183	$	12,088
Commercial real estate:
Commercial real estate		26,724		84,151		110,875		125,875		11,788
Construction		6,339		14,002		20,341		23,678		4,793
Total commercial real estate loans		33,063		98,153		131,216		149,553		16,581
Residential mortgage		8,232		16,659		24,891		27,059		2,329
Consumer loans:
Home equity		672		258		930		1,169		15
Total consumer loans		672		258		930		1,169		15
Total	$	45,203	$	161,531	$	206,734	$	239,964	$	31,013

The following table presents by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,
	2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	56,017	$	412	$	48,888	$	339
Commercial real estate:
Commercial real estate		114,066		866		98,077		302
Construction		19,932		70		21,412		37
Total commercial real estate loans		133,998		936		119,489		339
Residential mortgage		29,099		349		21,179		238
Consumer loans:
Home equity		1,174		14		274		3
Total consumer loans		1,174		14		274		3
Total	$	220,288	$	1,711	$	189,830	$	919

	Six Months Ended June 30,
	2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	55,644	$	788	$	52,094	$	748
Commercial real estate:
Commercial real estate		113,735		1,617		95,004		991
Construction		19,547		139		21,742		86
Total commercial real estate loans		133,282		1,756		116,746		1,077
Residential mortgage		28,686		532		20,889		374
Consumer loans:
Home equity		1,194		26		277		7
Total consumer loans		1,194		26		277		7
Total	$	218,853	$	3,102	$	190,006	$	2,206

Interest income recognized on a cash basis (included in the table above) was immaterial for the three and six months ended June 30, 2013 and 2012.

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 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 $117.1 million and $105.4 million as of June 30, 2013 and December 31, 2012, respectively. Non-performing TDRs totaled $43.9 million and $41.8 million as of June 30, 2013 and December 31, 2012, respectively.

The following table presents loans by loan portfolio class modified as TDRs during the three and six months ended June 30, 2013 and 2012. 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 June 30, 2013 and 2012, respectively.

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial		6	$	13,912	$	13,881		8	$	18,278	$	16,623
Commercial real estate:
Commercial real estate		4		7,275		7,266		8		33,677		33,487
Construction		4		4,936		4,979		2		4,557		4,254
Total commercial real estate		8		12,211		12,245		10		38,234		37,741
Residential mortgage		5		1,414		1,259		9		2,926		2,919
Consumer		1		74		74		—		—		—
Total		20	$	27,611	$	27,459		27	$	59,438	$	57,283

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial		10	$	16,750	$	15,232		13	$	19,700	$	17,574
Commercial real estate:
Commercial real estate		9		11,729		11,727		14		35,726		35,453
Construction		5		5,474		5,510		4		6,711		5,278
Total commercial real estate		14		17,203		17,237		18		42,437		40,731
Residential mortgage		22		4,578		4,016		13		3,778		3,767
Consumer		6		452		397		2		69		67
Total		52	$	38,983	$	36,882		46	$	65,984	$	62,139

The majority of the TDR concessions made during the three and six months ended June 30, 2013 and 2012 involved an extension of the loan term and/or an interest rate reduction. The TDRs presented in the table above had allocated specific reserves for loan losses totaling $3.7 million and $9.5 million at June 30, 2013 and 2012, respectively. These specific reserves are included in the allowance for loan losses for loans individually evaluated for impairment disclosed in Note 8. One commercial loan modified as a TDR included in the table above resulted in a $1.1 million charge-off during the six months ended June 30, 2013. There were no charge-offs resulting from loans modified as TDRs during the second quarter of 2013 and the three and six months ended June 30, 2012.

The following table presents non-PCI loans modified as TDRs within the previous 12 months from, and for which there was a payment default (90 days or more past due) during the three and six months ended June 30, 2013:

Troubled Debt Restructurings Subsequently Defaulted	Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	($ in thousands)
Commercial and industrial		1	$	1,297		1	$	1,297
Commercial real estate		1		531		1		531
Residential mortgage		—		—		9		2,320
Consumer		—		—		2		220
Total		2	$	1,828		13	$	4,368

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 we 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. 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” loans 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 (excluding PCI loans) by class of loans based on the most recent analysis performed at June 30, 2013 and December 31, 2012.

Credit exposure - by internally assigned risk rating	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
June 30, 2013
Commercial and industrial	$	1,634,931	$	70,190	$	95,670	$	27	$	1,800,818
Commercial real estate		3,696,473		60,107		136,912		—		3,893,492
Construction		346,560		33,797		17,927		5,800		404,084
Total	$	5,677,964	$	164,094	$	250,509	$	5,827	$	6,098,394
December 31, 2012
Commercial and industrial	$	1,673,604	$	64,777	$	94,184	$	178	$	1,832,743
Commercial real estate		3,563,530		59,175		149,379		—		3,772,084
Construction		340,357		32,817		19,521		7,160		399,855
Total	$	5,577,491	$	156,769	$	263,084	$	7,338	$	6,004,682

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 June 30, 2013 and December 31, 2012:

Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
June 30, 2013
Residential mortgage	$	2,371,830	$	26,054	$	2,397,884
Home equity		413,173		2,328		415,501
Automobile		835,050		221		835,271
Other consumer		184,570		—		184,570
Total	$	3,804,623	$	28,603	$	3,833,226
December 31, 2012
Residential mortgage	$	2,413,004	$	32,623	$	2,445,627
Home equity		436,483		2,398		438,881
Automobile		786,223		305		786,528
Other consumer		178,789		628		179,417
Total	$	3,814,499	$	35,954	$	3,850,453

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 June 30, 2013 and December 31, 2012.

Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total PCI Loans
	(in thousands)
June 30, 2013
Commercial and industrial	$	216,501	$	4,075	$	220,576
Commercial real estate		594,919		44,465		639,384
Construction		17,150		8,686		25,836
Residential mortgage		20,111		3,893		24,004
Consumer		40,310		1,295		41,605
Total	$	888,991	$	62,414	$	951,405
December 31, 2012
Commercial and industrial	$	292,163	$	6,437	$	298,600
Commercial real estate		715,812		50,081		765,893
Construction		17,967		9,546		27,513
Residential mortgage		22,173		4,288		26,461
Consumer		47,689		1,508		49,197
Total	$	1,095,804	$	71,860	$	1,167,664

XML

Loans - Pre-Modification and Post-Modification Outstanding Recorded Investments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Contract	Jun. 30, 2012 Contract	Jun. 30, 2013 Contract	Jun. 30, 2012 Contract
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	20	27	52	46
Pre-Modification Outstanding Recorded Investment	$ 27,611	$ 59,438	$ 38,983	$ 65,984
Post-Modification Outstanding Recorded Investment	27,459	57,283	36,882	62,139
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	6	8	10	13
Pre-Modification Outstanding Recorded Investment	13,912	18,278	16,750	19,700
Post-Modification Outstanding Recorded Investment	13,881	16,623	15,232	17,574
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	4	8	9	14
Pre-Modification Outstanding Recorded Investment	7,275	33,677	11,729	35,726
Post-Modification Outstanding Recorded Investment	7,266	33,487	11,727	35,453
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	4	2	5	4
Pre-Modification Outstanding Recorded Investment	4,936	4,557	5,474	6,711
Post-Modification Outstanding Recorded Investment	4,979	4,254	5,510	5,278
Commercial real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	8	10	14	18
Pre-Modification Outstanding Recorded Investment	12,211	38,234	17,203	42,437
Post-Modification Outstanding Recorded Investment	12,245	37,741	17,237	40,731
Residential mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	5	9	22	13
Pre-Modification Outstanding Recorded Investment	1,414	2,926	4,578	3,778
Post-Modification Outstanding Recorded Investment	1,259	2,919	4,016	3,767
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	1	0	6	2
Pre-Modification Outstanding Recorded Investment	74	0	452	69
Post-Modification Outstanding Recorded Investment	$ 74		$ 397	$ 67

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Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2013

Compensation And Retirement Disclosure [Abstract]

Components of Net Periodic Pension Expense Related to Qualified and Non-Qualified Plans

The following table sets forth the components of net periodic pension expense related to the qualified and non-qualified plans for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Service cost	$	2,056		$	1,985		$	4,043		$	3,971
Interest cost		1,708			1,620			3,365			3,239
Expected return on plan assets		(3,183	)		(2,233	)		(5,742	)		(4,466	)
Amortization of prior service cost		241			191			443			382
Amortization of actuarial loss		811			587			1,605			1,175
Curtailment loss		750			—			750			—
Total net periodic pension expense	$	2,383		$	2,150		$	4,464		$	4,301

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Fair Value Measurement of Assets and Liabilities - Additional Information (Detail) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
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		13.80%
Impaired collateral dependent loans, charge-offs	$ 5,200,000	$ 13,400,000
Collateral dependent impaired loans, recorded investment	49,500,000	49,500,000
Specific valuation allowance allocations	7,700,000	7,700,000
Reported net carrying amount of impaired loans	41,800,000	41,800,000
Foreclosed assets measured at fair value upon initial recognition	7,200,000	7,200,000
Allowance for loan losses, charge-offs	1,600,000	3,100,000
Loss due to re-measurement of repossessed assets		570,000
Loan servicing rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation of loan servicing rights, discount rate		8.00%
Net recoveries of impairment charges	$ 759,000	$ 2,100,000
Loan servicing rights [Member] | Minimum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation of loan servicing rights, prepayment rate		6.00%
Loan servicing rights [Member] | Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation of loan servicing rights, prepayment rate		24.00%

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Benefit Plans

6 Months Ended

Jun. 30, 2013

Compensation And Retirement Disclosure [Abstract]

Benefit Plans

Note 10. Benefit Plans

Pension and Director Plans

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).

On June 19, 2013, the Board of Directors approved amendments to freeze the benefits earned under the qualified and non-qualified plans effective December 31, 2013. As a result, participants will not accrue further benefits and their pension benefits will be determined based on the compensation and service up to December 31, 2013. Plan benefits will not increase for any pay or service earned after such date. However, participants will continue to vest with respect to their frozen earned benefits as long as they continue to work for Valley.

As a result of these actions, Valley re-measured the projected benefit obligation of the affected plans and the qualified plan assets at June 30, 2013. The freeze and re-measurement decreased the projected benefit obligations by $22.9 million and decreased accumulated other comprehensive loss, net of tax, by $19.9 million during the three months ended June 30, 2013. The decrease in the plan obligations was mainly due to an increase in the discount rate from December 31, 2012 and the curtailment of plan benefits. At June 30, 2013, Valley used a discount rate of 4.87 percent for the re-measurement of the pension benefit obligation as compared to 4.26 percent at December 31, 2012. The discount rate is based on our consistent methodology of determining our discount rate based on an established yield curve that incorporates a broad group of Aa3 or higher rated bonds with durations equal to the expected benefit payment streams required by each plan. The assumption for the expected rate of return on plan assets was 7.50 percent at June 30, 2013 and remained unchanged from December 31, 2012. Additionally, a curtailment loss totaling $750 thousand was recognized as a component of net periodic pension expense during the second quarter of 2013 due to the re-measurement and freeze of the plans.

The fair value of qualified plan assets increased approximately $32.9 million or 23.7 percent to $171.8 million at June 30, 2013 from $138.9 million at December 31, 2012. In April 2013, Valley made a $25.0 million discretionary contribution to the qualified plan prior to the Valley’s decision to freeze the plan. It is the Bank’s funding policy to contribute annually an amount that can be deducted for federal income tax purposes.

The following table sets forth the components of net periodic pension expense related to the qualified and non-qualified plans for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Service cost	$	2,056		$	1,985		$	4,043		$	3,971
Interest cost		1,708			1,620			3,365			3,239
Expected return on plan assets		(3,183	)		(2,233	)		(5,742	)		(4,466	)
Amortization of prior service cost		241			191			443			382
Amortization of actuarial loss		811			587			1,605			1,175
Curtailment loss		750			—			750			—
Total net periodic pension expense	$	2,383		$	2,150		$	4,464		$	4,301

The freeze in the plans’ benefits is expected to reduce Valley’s total net periodic pension expense by approximately $2.1 million for the second half of 2013.

Savings and Investment Plan

Effective January 1, 2014, Valley will increase benefits under the Bank’s 401(k) plan in an effort to offset a portion of the employee benefits no longer accruing under the qualified pension plan after December 31, 2013. At such date, Valley’s contributions will be increased to a dollar-for-dollar matching contribution of up to six percent of eligible compensation contributed by an employee each pay period.

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Benefit Plans - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Apr. 30, 2013	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Compensation And Retirement Disclosure [Abstract]
Decrease in projected benefit obligations		$ (22,900,000)
Decrease in accumulated other comprehensive income, net of tax		(19,900,000)
Discount rate for the re-measure of pension benefit obligation		4.87%	4.87%	4.26%
Expected rate of return on plan assets			7.50%	7.50%
Curtailment loss		(750,000)	(750,000)
Increase in fair value of qualified plan assets			32,900,000
Increased percent in fair value of qualified plan assets			23.70%
Fair value of plan assets		171,800,000	171,800,000	138,900,000
Contribution to qualified plan	25,000,000
Decrease in total net periodic pension expense			$ 2,100,000
Percentage increase in contribution			6.00%

XML

Investment Securities

6 Months Ended

Jun. 30, 2013

Investments Debt And Equity Securities [Abstract]

Investment Securities

Note 6. Investment Securities

As of June 30, 2013, Valley had approximately $1.8 billion, $958.7 million, and $14.2 million in held to maturity, available for sale, and trading investment securities, respectively. 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 three pooled trust preferred securities), corporate bonds primarily issued by banks, and perpetual preferred and common equity 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. See the “Other-Than-Temporary Impairment Analysis” section below for further discussion.

Held to Maturity

The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at June 30, 2013 and December 31, 2012 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	99,792	$	8,942	$	—		$	108,734
Obligations of states and political subdivisions		542,154		10,120		(9,660	)		542,614
Residential mortgage-backed securities		969,341		13,459		(19,225	)		963,575
Trust preferred securities		103,453		377		(12,482	)		91,348
Corporate and other debt securities		52,207		5,704		(1	)		57,910
Total investment securities held to maturity	$	1,766,947	$	38,602	$	(41,368	)	$	1,764,181
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

The age of unrealized losses and fair value of related securities held to maturity at June 30, 2013 and December 31, 2012 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, 2013
Obligations of states and political subdivisions	$	130,784	$	(9,564	)	$	1,345	$	(96	)	$	132,129	$	(9,660	)
Residential mortgage-backed securities		520,005		(19,225	)		—		—			520,005		(19,225	)
Trust preferred securities		15,916		(259	)		51,159		(12,223	)		67,075		(12,482	)
Corporate and other debt securities		49		(1	)		—		—			49		(1	)
Total	$	666,754	$	(29,049	)	$	52,504	$	(12,319	)	$	719,258	$	(41,368	)
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	)

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 June 30, 2013 was 127 as compared to 34 at December 31, 2012. The recent increase in long-term market interest rates materially decreased the fair value of lower yielding obligations of states and political subdivisions (“municipal bonds”) and residential mortgage-backed securities classified as held to maturity. The municipal bonds are all investment grade with no bankruptcies or defaults.

The unrealized losses for the residential mortgage-backed securities category of the held to maturity portfolio at June 30, 2013 are all within the less than twelve months category and all relate to investment grade mortgage-backed securities issued or guaranteed by Ginnie Mae and government sponsored enterprises.

The unrealized losses for trust preferred securities at June 30, 2013 primarily related to 4 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 June 30, 2013.

Management does not believe that any individual unrealized loss as of June 30, 2013 included in the table above represents other-than-temporary impairment as management mainly attributes the declines in fair value to changes in interest rates, widening credit spreads, and lack of liquidity in the market place, 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, 2013, 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 $759.5 million.

The contractual maturities of investments in debt securities held to maturity at June 30, 2013 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, 2013
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	147,705	$	148,150
Due after one year through five years		41,978		46,652
Due after five years through ten years		238,461		250,285
Due after ten years		369,462		355,519
Residential mortgage-backed securities		969,341		963,575
Total investment securities held to maturity	$	1,766,947	$	1,764,181

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 5.0 years at June 30, 2013.

Available for Sale

The amortized cost, gross unrealized gains and losses and fair value of securities available for sale at June 30, 2013 and December 31, 2012 were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	99,839	$	—	$	(10,053	)	$	89,786
U.S. government agency securities		54,917		1,504		(613	)		55,808
Obligations of states and political subdivisions		40,608		791		(2,165	)		39,234
Residential mortgage-backed securities		590,225		4,414		(20,812	)		573,827
Trust preferred securities*		67,973		6,088		(5,648	)		68,413
Corporate and other debt securities		84,523		2,008		(2,285	)		84,246
Equity securities		48,020		1,220		(1,898	)		47,342
Total investment securities available for sale	$	986,105	$	16,025	$	(43,474	)	$	958,656
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

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

The age of unrealized losses and fair value of related securities available for sale at June 30, 2013 and December 31, 2012 were as follows:

	Less than					More than
	Twelve Months					Twelve Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
June 30, 2013
U.S. Treasury securities	$	89,786	$	(10,053	)	$	—	$	—		$	89,786	$	(10,053	)
U.S. government agency securities		28,188		(613	)		—		—			28,188		(613	)
Obligations of states and political subdivisions		24,204		(2,165	)		—		—			24,204		(2,165	)
Residential mortgage-backed securities		442,850		(18,946	)		13,566		(1,866	)		456,416		(20,812	)
Trust preferred securities		446		(10	)		32,969		(5,638	)		33,415		(5,648	)
Corporate and other debt securities		54,149		(2,192	)		2,407		(93	)		56,556		(2,285	)
Equity securities		1,144		(41	)		12,601		(1,857	)		13,745		(1,898	)
Total	$	640,767	$	(34,020	)	$	61,543	$	(9,454	)	$	702,310	$	(43,474	)
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	)

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, 2013 was 108 as compared to 74 at December 31, 2012. The recent increase in long-term market interest rates materially decreased the fair value of lower yielding obligations of states and political subdivisions (“municipal bonds”) and residential mortgage-backed securities classified as available for sale. The municipal bonds are all investment grade with no bankruptcies or defaults.

The unrealized losses within the residential mortgage-backed securities category of the available for sale portfolio totaled $20.8 million of at June 30, 2013 and primarily related to $18.4 million in unrealized losses on 25 investment grade residential mortgage-backed securities mainly issued by Ginnie Mae, and a $1.6 million unrealized loss on one non-investment grade private label mortgage-backed security.

The unrealized losses for trust preferred securities at June 30, 2013 in the table above relate to 3 pooled trust preferred and 9 single-issuer bank issued trust preferred securities. The unrealized losses include $4.3 million attributable to 3 pooled trust preferred securities with an amortized cost of $16.5 million and a fair value of $12.2 million and $469 thousand attributable to trust preferred securities of one issuance by one deferring bank holding company with an amortized cost of $16.5 million and a fair value of $16.0 million. The three pooled trust preferred securities included one security with an unrealized loss of $2.6 million and an investment grade rating at June 30, 2013. The other two pooled trust preferred securities had non-investment grade ratings and were initially other-than-temporarily impaired in 2008 with additional estimated credit losses recognized during the period 2009 through 2011. The trust preferred issuances by one deferring holding company were initially other-than-temporarily impaired in 2011 with additional estimated credit impairments recognized during 2012. See “Other-Than-Temporarily Impaired Analysis” section below for more details. All of the remaining single-issuer trust preferred securities are all paying in accordance with their terms and have no deferrals of interest or defaults and, if applicable, meet the regulatory capital requirements to be considered “well-capitalized institutions” at June 30, 2013.

The unrealized losses existing for more than twelve months for equity securities are mostly related to two perpetual preferred security positions with a combined $10.0 million amortized cost and a $1.6 million unrealized loss. At June 30, 2013, these perpetual preferred securities had investment grade ratings and are currently performing and paying quarterly dividends.

Management does not believe that any individual unrealized loss as of June 30, 2013 represents an other-than-temporary impairment, as management mainly attributes the declines in value to changes in interest rates and recent market volatility and wider credit spreads, 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.

As of June 30, 2013, 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 $421.9 million.

The contractual maturities of investment securities available for sale at June 30, 2013 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, 2013
	Amortized Cost		Fair Value
	(in thousands)
Due in one year	$	720	$	724
Due after one year through five years		44,295		43,520
Due after five years through ten years		120,195		117,815
Due after ten years		182,650		175,428
Residential mortgage-backed securities		590,225		573,827
Equity securities		48,020		47,342
Total investment securities available for sale	$	986,105	$	958,656

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 June 30, 2013 was 3.2 years.

Other-Than-Temporary Impairment Analysis

To determine whether a security’s impairment is other-than-temporary, Valley considers several factors that include, but are not limited to the following:

• The severity and duration of the decline, including the causes of the decline in fair value, such as an issuer’s credit problems, interest rate fluctuations, or market volatility;

• Adverse conditions specifically related to the issuer of the security, an industry, or geographic area;

• Failure of the issuer of the security to make scheduled interest or principal payments;

• Any changes to the rating of the security by a rating agency or, if applicable, any regulatory actions impacting the security issuer;

• Recoveries or additional declines in fair value after the balance sheet date;

• Our 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; and

• Our intent to sell debt security investments, or if it is more likely than not that we 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 we expect to collect all contractual cash flows.

In assessing the level of other-than-temporary impairment attributable to credit loss for debt securities, 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 amount related to other factors is recognized in other comprehensive income or loss. The total other-than-temporary impairment loss is presented in the consolidated statements of income, less the portion recognized in other comprehensive income or loss. Subsequent assessments may result in additional estimated credit losses on previously impaired securities. These additional estimated credit losses are recorded as reclassifications from the portion of other-than-temporary impairment previously recognized in other comprehensive income or loss to earnings in the period of such assessments. The amortized cost basis of an impaired debt security is reduced by the portion of the total impairment related to credit loss.

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. No other-than-temporary impairment losses were recognized as a result of our impairment analysis of these securities at June 30, 2013.

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. Over the past several years, an increasing number of banking institutions have been required to defer trust preferred payments and various banking institutions have been put in receivership by the FDIC. 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 June 30, 2013 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.

Within the available for sale portfolio, Valley has other-than-temporarily impaired trust preferred securities issued by one deferring bank holding company with a combined amortized cost and fair value of $41.8 million and $47.3 million, respectively, after credit impairment charges prior to June 30, 2013. The issuer of the trust preferred securities has deferred interest payments on these securities since late 2009 as required by an operating agreement with its bank regulators. In assessing whether a credit loss exists for the securities of the deferring issuer, Valley considers numerous other factors, including but not limited to, such factors highlighted in the bullet points above. From the dates of deferral up to and including the bank holding company’s most recent regulatory filing, the bank issuer continued to accrue and capitalize the interest owed, but has not remitted the interest to its trust preferred security holders. Additionally, the bank subsidiary of the issuer continued to report capital ratios that were above the minimum amounts to be considered a “well-capitalized” financial institution in its most recent regulatory filing. During the fourth quarter of 2011, Valley estimated a decline in the expected cash flows from the securities as it lengthened the estimate of the timeframe over which it could reasonably anticipate receiving such cash flows, and during the third quarter of 2012, Valley estimated an additional decline in cash flows under one of three weighted alternative scenarios utilized to assess impairment of the securities. The declines in estimated cash flows, after careful assessment of all other available factors, resulted in credit impairment charges of $18.3 million and $4.5 million during the fourth quarter of 2011 and third quarter of 2012, respectively. Valley no longer accrued interest on the securities after the initial impairment in 2011. No additional impairment was recognized as a result of our impairment analysis of these securities at June 30, 2013. See Note 5 for information regarding the Level 3 valuation technique used to measure the fair value of these trust preferred securities at June 30, 2013.

For the three pooled trust preferred securities, Valley evaluates the projected cash flows from each of its tranches in the three 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. Two of the pooled trust preferred securities were initially impaired in 2008 with additional estimated credit losses recognized during 2009 and 2011, and are not accruing interest.

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 June 30, 2013. 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 were no other-than-temporary impairment losses on securities recognized in earnings for the three and six months ended June 30, 2013. For the three and six months ended June 30, 2012, Valley recognized net impairment losses on securities in earnings totaling $550 thousand due to additional estimated credit losses on 1 of 5 previously impaired private label mortgage-backed securities. At June 30, 2013, the 5 impaired private label mortgage-backed securities had a combined amortized cost of $27.7 million and fair value of $28.3 million.

Realized Gains and Losses

Gross gains (losses) realized on sales, maturities and other securities transactions related to investment securities included in earnings for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Sales transactions:
Gross gains	$	1		$	1,234		$	3,381		$	1,374
Gross losses		—			—			—			(298	)
	$	1		$	1,234		$	3,381		$	1,076
Maturities and other securities transactions:
Gross gains	$	41		$	6		$	649		$	19
Gross losses		(1	)		(36	)		(31	)		(48	)
	$	40		$	(30	)	$	618		$	(29	)
Total gains on securities transactions, net	$	41		$	1,204		$	3,999		$	1,047

Valley recognized gross gains from sales transactions totaling $3.4 million for the six months ended June 30, 2013 primarily due to the sales of zero percent yielding Freddie Mac and Fannie Mae perpetual preferred stock with amortized cost totaling $941 thousand during the first quarter of 2013.

The following table presents the changes in the credit loss component of cumulative other-than-temporary impairment losses on debt securities classified as either held to maturity or available for sale that Valley has recognized in earnings, for which a portion of the impairment loss (non-credit factors) was recognized in other comprehensive income for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Balance, beginning of period	$	33,177		$	28,767		$	33,290		$	29,070
Additions:
Subsequent credit impairments		—			550			—			550
Reductions:
Accretion of credit loss impairment due to an increase in expected cash flows		(75	)		(66	)		(188	)		(369	)
Balance, end of period	$	33,102		$	29,251		$	33,102		$	29,251

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. Other-than-temporary impairments recognized in earnings for credit impaired debt securities are presented as additions in two components based upon whether the current period is the first time the debt security was credit impaired (initial credit impairment) or is not the first time the debt security was credit impaired (subsequent credit impairment). The credit loss component is reduced if Valley sells, intends to sell or believes it will be required to sell previously credit impaired debt securities. Additionally, 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 or (iii) the security is fully written down.

Trading Securities

The fair value of trading securities (consisting of 2 single-issuer bank trust preferred securities) was $14.2 million at June 30, 2013 and $22.2 million (consisting of 3 single-issuer bank trust preferred securities) at December 31, 2012. Interest income on trading securities totaled $413 thousand and $462 thousand for the three months ended June 30, 2013 and 2012, respectively, and $855 thousand and $884 thousand for the six months ended June 30, 2013 and 2012, respectively.

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

The unaudited consolidated financial statements of Valley National Bancorp, a New Jersey Corporation (Valley), include the accounts of its commercial bank subsidiary, Valley National Bank (the “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.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly Valley’s financial position, results of operations and cash flows at June 30, 2013 and for all periods presented have been made. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the entire fiscal year.

In preparing the unaudited 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.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP and industry practice have been condensed or omitted pursuant to rules and regulations of the SEC. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

Effective January 1, 2012, Valley acquired State Bancorp, Inc., the holding company for State Bank of Long Island, a commercial bank. See the supplemental schedule of non-cash investing activities for additional information, as well as Valley’s Annual Report on Form 10-K for the year ended December 31, 2012.

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Investment Securities - Contractual Maturities of Investment Securities Available for Sale (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Due in one year, Amortized Cost	$ 720
Due after one year through five years, Amortized Cost	44,295
Due after five years through ten years, Amortized Cost	120,195
Due after ten years, Amortized Cost	182,650
Total investment securities available for sale, Amortized Cost	986,105
Due in one year, Fair Value	724
Due after one year through five years, Fair Value	43,520
Due after five years through ten years, Fair Value	117,815
Due after ten years, Fair Value	175,428
Total investment securities available for sale, Fair Value	958,656
Residential mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities without a single maturity date, Amortized Cost	590,225
Securities without a single maturity date, Fair Value	573,827
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities without a single maturity date, Amortized Cost	48,020
Securities without a single maturity date, Fair Value	$ 47,342

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Investment Securities - Age of Unrealized Losses and Fair Value of Related Securities Held to Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	$ 666,754	$ 124,360
Less than Twelve Months, Unrealized Losses	(29,049)	(760)
More than Twelve Months, Fair Value	52,504	48,802
More than Twelve Months, Unrealized Losses	(12,319)	(14,570)
Total, Fair Value	719,258	173,162
Total, Unrealized Losses	(41,368)	(15,330)
Obligations of states and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	130,784	15,518
Less than Twelve Months, Unrealized Losses	(9,564)	(197)
More than Twelve Months, Fair Value	1,345
More than Twelve Months, Unrealized Losses	(96)
Total, Fair Value	132,129	15,518
Total, Unrealized Losses	(9,660)	(197)
Residential mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	520,005	80,152
Less than Twelve Months, Unrealized Losses	(19,225)	(355)
Total, Fair Value	520,005	80,152
Total, Unrealized Losses	(19,225)	(355)
Trust preferred securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	15,916	28,690
Less than Twelve Months, Unrealized Losses	(259)	(208)
More than Twelve Months, Fair Value	51,159	48,802
More than Twelve Months, Unrealized Losses	(12,223)	(14,570)
Total, Fair Value	67,075	77,492
Total, Unrealized Losses	(12,482)	(14,778)
Corporate and other debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	49
Less than Twelve Months, Unrealized Losses	(1)
Total, Fair Value	49
Total, Unrealized Losses	$ (1)

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Derivative Instruments and Hedging Activities - Gains Related to Derivative Instruments Not Designated as Hedging Instruments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Non-designated hedge interest rate derivatives
Other non-interest income	$ 1,461	$ 1	$ 1,090	$ 217

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Basis of Presentation - Additional Information (Detail) (State Bancorp, Inc. [Member])	12 Months Ended
	Dec. 31, 2012
State Bancorp, Inc. [Member]
Summary Of Significant Accounting Policies [Line Items]
Acquisition date	Jan. 01, 2012

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Derivative Instruments and Hedging Activities - Gains (Losses) Related to Interest Rate Derivatives Designated as Hedges of Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Amounts Related To Interest Rate Derivatives Designated As Hedges Of Fair Value [Line Items]
Interest income - interest and fees on loans	$ 133,966	$ 143,812	$ 266,965	$ 292,272
Interest expense - interest on time deposits	42,483	44,787	85,480	91,464
Interest rate caps and swaps, Assets [Member] | Derivatives not designated as hedging instrument [Member]
Amounts Related To Interest Rate Derivatives Designated As Hedges Of Fair Value [Line Items]
Interest income - interest and fees on loans	425	(251)	522	(121)
Interest rate caps and swaps, Assets [Member] | Derivatives designated as hedging instruments [Member]
Amounts Related To Interest Rate Derivatives Designated As Hedges Of Fair Value [Line Items]
Interest income - interest and fees on loans	(425)	251	(522)	121
Liability [Member] | Derivatives not designated as hedging instrument [Member]
Amounts Related To Interest Rate Derivatives Designated As Hedges Of Fair Value [Line Items]
Interest expense - interest on time deposits	(134)	(67)	(274)	(27)
Liability [Member] | Derivatives designated as hedging instruments [Member]
Amounts Related To Interest Rate Derivatives Designated As Hedges Of Fair Value [Line Items]
Interest expense - interest on time deposits	$ 136	$ 70	$ 279	$ 38

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Allowance for Credit Losses - Summary of Allowance for Credit Losses (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Receivables [Abstract]
Allowance for non-covered loans	$ 110,374		$ 120,708
Allowance for covered loans	7,070		9,492
Total allowance for loan losses	117,444	121,844	130,200	129,854	132,870	133,802
Allowance for unfunded letters of credit	2,436		2,295
Total allowance for credit losses	$ 119,880		$ 132,495

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Loans - Past Due, Non-Accrual and Current Non-Covered Loans by Loan Portfolio Class (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	$ 43,000	$ 49,686
Accruing Loans 90 Days Or More Past Due	3,100	8,665
Non-Accrual Loans	118,523	131,808
Total Past Due Loans	164,623	190,159
Current Non-PCI Loans	9,766,997	9,664,976
Total Non-PCI Loans	9,931,620	9,855,135
Commercial real estate loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	24,718	19,930
Accruing Loans 90 Days Or More Past Due	409	5,525
Non-Accrual Loans	69,007	73,430
Total Past Due Loans	94,134	98,885
Current Non-PCI Loans	4,203,442	4,073,054
Total Non-PCI Loans	4,297,576	4,171,939
Consumer loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	4,138	7,227
Accruing Loans 90 Days Or More Past Due	349	501
Non-Accrual Loans	2,549	3,331
Total Past Due Loans	7,036	11,059
Current Non-PCI Loans	1,428,306	1,393,767
Total Non-PCI Loans	1,435,342	1,404,826
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	3,525	3,578
Accruing Loans 90 Days Or More Past Due		283
Non-Accrual Loans	20,913	22,424
Total Past Due Loans	24,438	26,285
Current Non-PCI Loans	1,776,380	1,806,458
Total Non-PCI Loans	1,800,818	1,832,743
Commercial real estate [Member] | Commercial real estate loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	18,946	13,245
Accruing Loans 90 Days Or More Past Due	259	2,950
Non-Accrual Loans	55,390	58,625
Total Past Due Loans	74,595	74,820
Current Non-PCI Loans	3,818,897	3,697,264
Total Non-PCI Loans	3,893,492	3,772,084
Construction [Member] | Commercial real estate loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	5,772	6,685
Accruing Loans 90 Days Or More Past Due	150	2,575
Non-Accrual Loans	13,617	14,805
Total Past Due Loans	19,539	24,065
Current Non-PCI Loans	384,545	375,790
Total Non-PCI Loans	404,084	399,855
Residential mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	10,619	18,951
Accruing Loans 90 Days Or More Past Due	2,342	2,356
Non-Accrual Loans	26,054	32,623
Total Past Due Loans	39,015	53,930
Current Non-PCI Loans	2,358,869	2,391,697
Total Non-PCI Loans	2,397,884	2,445,627
Home equity [Member] | Consumer loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	724	702
Accruing Loans 90 Days Or More Past Due
Non-Accrual Loans	2,328	2,398
Total Past Due Loans	3,052	3,100
Current Non-PCI Loans	412,449	435,781
Total Non-PCI Loans	415,501	438,881
Automobile [Member] | Consumer loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	3,307	5,443
Accruing Loans 90 Days Or More Past Due	152	469
Non-Accrual Loans	221	305
Total Past Due Loans	3,680	6,217
Current Non-PCI Loans	831,591	780,311
Total Non-PCI Loans	835,271	786,528
Other consumer [Member] | Consumer loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-89 Days Past Due Loans	107	1,082
Accruing Loans 90 Days Or More Past Due	197	32
Non-Accrual Loans		628
Total Past Due Loans	304	1,742
Current Non-PCI Loans	184,266	177,675
Total Non-PCI Loans	$ 184,570	$ 179,417

XML

Balance Sheet Offsetting - Gross Presentation Effects of Offsetting and Net Presentation of Valley's Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Derivatives And Hedging Activities [Line Items]
Gross Amounts Recognized, Total	$ 537,714	$ 546,395
Gross Amounts Offset, Total
Net Amounts Presented, Total	537,714	546,395
Net Amount, Total	2,579
Repurchase agreements [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Recognized, Liabilities	520,000	520,000
Gross Amounts Offset, Liabilities
Net Amounts Presented, Liabilities	520,000	520,000
Interest rate caps and swaps, Liabilities [Member]
Derivatives And Hedging Activities [Line Items]
Net Amount, Total	2,579
Gross Amounts Recognized, Liabilities	17,714	26,395
Gross Amounts Offset, Liabilities
Net Amounts Presented, Liabilities	17,714	26,395
Interest rate caps and swaps, Assets [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Recognized, Assets	5,036	7,677
Gross Amounts Offset, Assets
Net Amounts Presented, Assets	5,036	7,677
Gross Amounts Not Offset, Assets	4,011	7,002
Financial Instruments [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Total	(1,025)	(675)
Financial Instruments [Member] | Repurchase agreements [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Liabilities
Financial Instruments [Member] | Interest rate caps and swaps, Liabilities [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Liabilities	(1,025)	(675)
Financial Instruments [Member] | Interest rate caps and swaps, Assets [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Assets	(1,025)	(675)
Cash Collateral [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Total	(534,110)	(545,720)
Cash Collateral [Member] | Repurchase agreements [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Liabilities	(520,000)	(520,000)
Cash Collateral [Member] | Interest rate caps and swaps, Liabilities [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Liabilities	(14,110)	(25,720)
Cash Collateral [Member] | Interest rate caps and swaps, Assets [Member]
Derivatives And Hedging Activities [Line Items]
Gross Amounts Not Offset, Assets

XML

Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Note 13. Derivative Instruments and Hedging Activities

Valley is exposed to certain risks arising from both its business operations and economic conditions. Valley principally manages its exposures 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 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 June 30, 2013, Valley had the following cash flow hedge derivatives:

• Four forward starting interest rate swaps with a total notional amount of $300 million to hedge the changes in cash flows associated with certain prime-rate-indexed deposits, consisting of consumer and commercial money market deposit accounts. Two of the four swaps, totaling $200 million, expire in October 2016 and require Valley to pay fixed-rate amounts at approximately 4.73 percent, in exchange for the receipt of variable-rate payments at the prime rate. Starting in July 2012, the other two swaps totaling $100 million 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.

• Two interest rate caps with a total notional amount of $100 million, strike rates of 6.00 percent and 6.25 percent, and a maturity date of July 15, 2015 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.

Additionally, two interest rate caps with a total notional amount of $100 million, strike rates of 2.50 percent and 2.75 percent expired on May 1, 2013. These caps were used to hedge the variability in cash flows associated with customer repurchase agreements and money market deposit accounts that have variable interest rates based on the federal funds rate.

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.

At June 30, 2013, Valley had the following fair value hedge derivatives:

• One interest rate swap with a notional amount of approximately $8.7 million used to hedge the change in the fair value of a commercial loan.

• One interest rate swap with a notional amount of $51.0 million, maturing in March 2014, used to hedge the change in the fair value of certain fixed-rate brokered certificates of deposit.

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.

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. As of June 30, 2013, Valley had a total of 45 interest rate swaps with an aggregate notional amount of $188.1 million related to this program.

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. As of June 30, 2013, Valley had mortgage banking derivatives with an aggregate notional amount of $103.1 million.

Amounts included in the consolidated statements of financial condition related to the fair value of Valley’s derivative financial instruments were as follows:

		Fair Value
	Balance Sheet Line Item	June 30, 2013		December 31, 2012
		(in thousands)
Asset Derivatives:
Derivatives designated as hedging instruments:
Cash flow hedge interest rate caps and swaps	Other Assets	$	27	$	23
Fair value hedge interest rate swaps	Other Assets		378		652
Total derivatives designated as hedging instruments		$	405	$	675
Derivatives not designated as hedging instruments:
Interest rate swaps	Other Assets	$	4,631	$	7,002
Mortgage banking derivatives	Other Assets		2,389		239
Total derivatives not designated as hedging instruments		$	7,020	$	7,241
Liability Derivatives:
Derivatives designated as hedging instruments:
Cash flow hedge interest rate caps and swaps	Other Liabilities	$	11,408	$	17,198
Fair value hedge interest rate swaps	Other Liabilities		1,675		2,197
Total derivatives designated as hedging instruments		$	13,083	$	19,395
Derivatives not designated as hedging instruments:
Interest rate swaps	Other Liabilities	$	4,631	$	6,999
Mortgage banking derivatives	Other Liabilities		1,257		200
Total derivatives not designated as hedging instruments		$	5,888	$	7,199

Losses included in the consolidated statements of income and in other comprehensive income, on a pre-tax basis, related to interest rate derivatives designated as hedges of cash flows were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Interest rate caps on short-term borrowings and deposit accounts:
Amount of loss reclassified from accumulated other comprehensive loss to interest on short-term borrowings	$	(1,714	)	$	(1,398	)	$	(3,594	)	$	(2,790	)
Amount of loss recognized in other comprehensive income		3,508			(5,288	)		3,375			(3,739	)

Valley recognized net gains of $73 thousand in other expense for hedge ineffectiveness on the cash flow hedge interest rate caps for the six months ended June 30, 2012. There were no net gains or losses related to hedge ineffectiveness recognized during the three and six months ended June 30, 2013 and the second quarter of 2012. The accumulated net after-tax losses related to effective cash flow hedges included in accumulated other comprehensive loss were $8.6 million and $12.7 million at June 30, 2013 and December 31, 2012, 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 $8.2 million will be reclassified as an increase to interest expense over the next twelve months.

Gains (losses) included in the consolidated statements of income related to interest rate derivatives designated as hedges of fair value were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands)
Derivative - interest rate swaps:
Interest income - interest and fees on loans	$	425		$	(251	)	$	522		$	(121	)
Interest expense - interest on time deposits		(134	)		(67	)		(274	)		(27	)
Hedged item - loans and deposits:
Interest income - interest and fees on loans	$	(425	)	$	251		$	(522	)	$	121
Interest expense - interest on time deposits		136			70			279			38

During the three months ended June 30, 2013 and 2012, the amounts recognized in non-interest expense related to ineffectiveness of fair value hedges were immaterial. Valley also recognized a net reduction to interest expense of $145 thousand and $139 thousand for the three months ended June 30, 2013 and 2012, respectively, and $287 thousand and $275 thousand for the six months ended June 30, 2013 and 2012, respectively, related to Valley’s fair value hedges on brokered time deposits, which includes net settlements on the derivatives.

The net gains included in the consolidated statements of income related to derivative instruments not designated as hedging instruments for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(in thousands)
Non-designated hedge interest rate derivatives
Other non-interest income	$	1,461	$	1	$	1,090	$	217

Credit Risk Related Contingent 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 June 30, 2013, Valley was in compliance with all of the provisions of its derivative counterparty agreements.

As of June 30, 2013, 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 $16.2 million. Valley has derivative counterparty agreements that require minimum collateral posting thresholds for certain counterparties. No collateral has been assigned or posted by Valley’s counterparties under the agreements at June 30, 2013. At June 30, 2013, Valley had $14.1 million in collateral posted with its counterparties.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Note 9. Goodwill and Other Intangible Assets

Goodwill totaled $428.2 million at June 30, 2013 and December 31, 2012. There were no changes to the carrying amounts of goodwill allocated to Valley’s business segments, or reporting units thereof, for goodwill impairment analysis (as reported in Valley’s Annual Report on Form 10-K for the year ended December 31, 2012). There was no impairment of goodwill during the three and six months ended June 30, 2013 and 2012.

The following table summarizes other intangible assets as of June 30, 2013 and December 31, 2012:

	Gross Intangible Assets		Accumulated Amortization			Valuation Allowance			Net Intangible Assets
	(in thousands)
June 30, 2013
Loan servicing rights	$	69,244	$	(41,485	)	$	(1,000	)	$	26,759
Core deposits		35,194		(25,805	)		—			9,389
Other		5,878		(3,024	)		—			2,854
Total other intangible assets	$	110,316	$	(70,314	)	$	(1,000	)	$	39,002
December 31, 2012
Loan servicing rights	$	63,377	$	(43,393	)	$	(3,046	)	$	16,938
Core deposits		35,194		(24,160	)		—			11,034
Other		5,878		(2,727	)		—			3,151
Total other intangible assets	$	104,449	$	(70,280	)	$	(3,046	)	$	31,123

Loan servicing rights 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. Impairment charges on loan servicing rights are recognized in earnings when the book value of a stratified group of loan servicing rights exceeds its estimated fair value. Valley recorded net recoveries of impairment charges on its loan servicing rights totaling $759 thousand and net impairment charges totaling $401 thousand for the three months ended June 30, 2013 and 2012, respectively, and net recoveries of impairment charges totaling $2.1 million and $19 thousand for the six months ended June 30, 2013 and 2012, respectively.

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 approximately 17 years. Valley evaluates core deposits and other intangibles for impairment when an indication of impairment exists. No impairment was recognized during the three and six months ended June 30, 2013 and 2012.

The following presents the estimated future amortization expense of other intangible assets for the remainder of 2013 through 2017:

	Loan Servicing Rights		Core Deposits		Other
	(in thousands)
2013	$	3,064	$	1,432	$	245
2014		6,343		2,359		466
2015		4,929		1,758		434
2016		3,782		1,195		233
2017		2,921		815		220

Valley recognized amortization expense on other intangible assets, including net impairment charges and recoveries on loan servicing rights, totaling approximately $1.9 million and $2.5 million for the three months ended June 30, 2013 and 2012, respectively, and $3.5 million and $4.5 million for the six months ended June 30, 2013 and 2012, respectively.

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Allowance for Credit Losses - Summary of Activity in Allowance for Loan Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 121,844	$ 132,870	$ 130,200	$ 133,802
Loans charged-off	(8,356)	(12,383)	(20,075)	(20,929)
Charged-off loans recovered	1,320	1,938	3,139	4,178
Net charge-offs	(7,036)	(10,445)	(16,936)	(16,751)
Provision for loan losses	2,636	7,429	4,180	12,803
Ending balance	117,444	129,854	117,444	129,854
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	55,732	73,311	64,370	73,649
Loans charged-off	(1,441)	(5,406)	(8,766)	(10,213)
Charged-off loans recovered	602	1,304	1,940	2,309
Net charge-offs	(839)	(4,102)	(6,826)	(7,904)
Provision for loan losses	(1,161)	1,313	(3,812)	4,777
Ending balance	53,732	70,522	53,732	70,522
Commercial real estate loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	44,195	34,415	44,069	34,637
Loans charged-off	(4,389)	(5,379)	(6,382)	(6,459)
Charged-off loans recovered	50	116	65	236
Net charge-offs	(4,339)	(5,263)	(6,317)	(6,223)
Provision for loan losses	3,323	6,406	5,427	7,144
Ending balance	43,179	35,558	43,179	35,558
Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	9,331	9,837	9,423	9,120
Loans charged-off	(1,666)	(583)	(2,558)	(1,759)
Charged-off loans recovered	68	111	138	625
Net charge-offs	(1,598)	(472)	(2,420)	(1,134)
Provision for loan losses	788	1,375	1,518	2,754
Ending balance	8,521	10,740	8,521	10,740
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	5,460	7,940	5,542	8,677
Loans charged-off	(860)	(1,015)	(2,369)	(2,498)
Charged-off loans recovered	600	407	996	1,008
Net charge-offs	(260)	(608)	(1,373)	(1,490)
Provision for loan losses	(116)	(1,523)	915	(1,378)
Ending balance	5,084	5,809	5,084	5,809
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	7,126	7,367	6,796	7,719
Provision for loan losses	(198)	(142)	132	(494)
Ending balance	$ 6,928	$ 7,225	$ 6,928	$ 7,225

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New Authoritative Accounting Guidance (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Changes And Error Corrections [Abstract]

New Authoritative Accounting Guidance

Accounting Standards Update (ASU) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The ASU No. 2013-11 is effective for public entities for fiscal years beginning after December 15, 2013, and interim periods within those years, with an early adoption permitted and an option to apply the amendments retrospectively to each prior reporting period presented. Valley’s adoption of ASU No. 2013-11 is not expected to have a significant impact on its consolidated financial statements.

ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which requires disclosure of the effects of reclassifications out of accumulated other comprehensive income on net income line items only for those items that are reported in their entirety in net income in the period of reclassification. For reclassification items that are not reclassified in their entirety into net income, a cross reference is required to other U.S. GAAP disclosures. The ASU No. 2013-02 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Valley’s adoption of ASU No. 2013-02 did not have a significant impact on its consolidated financial statements. See Note 3 for related disclosures.

ASU No. 2012-06, “Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution,” addresses subsequent measurement of an indemnification asset recognized in a government-assisted acquisition of a financial institution that includes a loss-sharing agreement. When an entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (i.e., the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). ASU No. 2012-06 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012 with an early adoption permitted, and should be applied prospectively. Valley’s adoption of ASU No. 2012-06 did not have a significant impact on its consolidated financial statements.

ASU No. 2011-11, “Balance Sheet (Topic 210): “Disclosures about Offsetting Assets and Liabilities,” requires an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject an enforceable master netting arrangement or similar agreement regardless of whether they are presented net in the financial statements. ASU No. 2011-11 was effective for annual and interim periods beginning on January 1, 2013, and it is required to be applied retrospectively. Valley’s adoption of ASU No. 2011-11 did not have a significant impact on its consolidated financial statements. See Note 14 for related disclosures.

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Balance Sheet Offsetting

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Balance Sheet Offsetting

Note 14. Balance Sheet Offsetting

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 a gross presentation, the effects of offsetting, and a net presentation of Valley’s financial instruments that are eligible for offset in the consolidated statements of financial condition as of June 30, 2013 and December 31, 2012. The net amounts of derivative assets or liabilities can be reconciled to the fair value of Valley’s derivative financial instruments disclosed in Note 13.

							Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments			Cash Collateral			Net Amount
	(in thousands)
June 30, 2013
Assets:
Interest rate caps and swaps	$	5,036	$	—	$	5,036	$	(1,025	)	$	—		$	4,011
Liabilities:
Interest rate caps and swaps	$	17,714	$	—	$	17,714	$	(1,025	)	$	(14,110	)	$	2,579
Repurchase agreements		520,000		—		520,000		—			(520,000	)		—
Total	$	537,714	$	—	$	537,714	$	(1,025	)	$	(534,110	)	$	2,579
December 31, 2012
Assets:
Interest rate caps and swaps	$	7,677	$	—	$	7,677	$	(675	)	$	—		$	7,002
Liabilities:
Interest rate caps and swaps	$	26,395	$	—	$	26,395	$	(675	)	$	(25,720	)	$	—
Repurchase agreements		520,000		—		520,000		—			(520,000	)		—
Total	$	546,395	$	—	$	546,395	$	(675	)	$	(545,720	)	$	—

* Represents fair value of investment securities pledged.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 05, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	VLY
Entity Registrant Name	VALLEY NATIONAL BANCORP
Entity Central Index Key	0000714310
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		199,448,985

XML

Business Segments

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Business Segments

Note 15. Business Segments

The information under the caption “Business Segments” in Management’s Discussion and Analysis is incorporated herein by reference.

XML

Loans - Average Recorded Investment and Interest Income Recognized on Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 220,288	$ 189,830	$ 218,853	$ 190,006
Interest Income Recognized	1,711	919	3,102	2,206
Commercial real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	133,998	119,489	133,282	116,746
Interest Income Recognized	936	339	1,756	1,077
Consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	1,174	274	1,194	277
Interest Income Recognized	14	3	26	7
Commercial and industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	56,017	48,888	55,644	52,094
Interest Income Recognized	412	339	788	748
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	114,066	98,077	113,735	95,004
Interest Income Recognized	866	302	1,617	991
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	19,932	21,412	19,547	21,742
Interest Income Recognized	70	37	139	86
Residential mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	29,099	21,179	28,686	20,889
Interest Income Recognized	349	238	532	374
Home equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	1,174	274	1,194	277
Interest Income Recognized	$ 14	$ 3	$ 26	$ 7

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Loans - Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	$ 43,527	$ 45,203
Recorded Investment With Related Allowance	172,764	161,531
Total Recorded Investment	216,291	206,734
Unpaid Contractual Principal Balance	254,306	239,964
Related Allowance	28,740	31,013
Commercial real estate loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	27,491	33,063
Recorded Investment With Related Allowance	103,140	98,153
Total Recorded Investment	130,631	131,216
Unpaid Contractual Principal Balance	148,911	149,553
Related Allowance	14,632	16,581
Consumer loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	1,049	672
Recorded Investment With Related Allowance	137	258
Total Recorded Investment	1,186	930
Unpaid Contractual Principal Balance	1,529	1,169
Related Allowance	11	15
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	3,670	3,236
Recorded Investment With Related Allowance	53,925	46,461
Total Recorded Investment	57,595	49,697
Unpaid Contractual Principal Balance	73,152	62,183
Related Allowance	11,420	12,088
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	21,747	26,724
Recorded Investment With Related Allowance	89,450	84,151
Total Recorded Investment	111,197	110,875
Unpaid Contractual Principal Balance	127,316	125,875
Related Allowance	11,729	11,788
Construction [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	5,744	6,339
Recorded Investment With Related Allowance	13,690	14,002
Total Recorded Investment	19,434	20,341
Unpaid Contractual Principal Balance	21,595	23,678
Related Allowance	2,903	4,793
Residential mortgage [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	11,317	8,232
Recorded Investment With Related Allowance	15,562	16,659
Total Recorded Investment	26,879	24,891
Unpaid Contractual Principal Balance	30,714	27,059
Related Allowance	2,677	2,329
Home equity [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	1,049	672
Recorded Investment With Related Allowance	137	258
Total Recorded Investment	1,186	930
Unpaid Contractual Principal Balance	1,529	1,169
Related Allowance	$ 11	$ 15