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Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2016
Receivables [Abstract]  
Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES (Note 6)
The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded letters of credit. Management maintains the allowance for credit losses at a level estimated to absorb probable loan losses of the loan portfolio and unfunded letter of credit commitments at the balance sheet date. The allowance for loan losses is based on ongoing evaluations of the probable estimated losses inherent in the loan portfolio, including unexpected additional credit impairment of PCI loan pools subsequent to acquisition. There was no allowance allocation for PCI loan losses at December 31, 2016 and 2015.
The following table summarizes the allowance for credit losses at December 31, 2016 and 2015:
 
December 31,
 
2016
 
2015
 
(in thousands)
Components of allowance for credit losses:
 
 
 
Allowance for loan losses
$
114,419

 
$
106,178

Allowance for unfunded letters of credit
2,185

 
2,189

Total allowance for credit losses
$
116,604

 
$
108,367


The following table summarizes the provision for credit losses for the years ended December 31, 2016, 2015 and 2014: 
 
2016
 
2015
 
2014
 
(in thousands)
Components of provision for credit losses:
 
 
 
 
 
Provision for loan losses
$
11,873

 
$
7,846

 
$
3,445

Provision for unfunded letters of credit
(4
)
 
255

 
(1,561
)
Total provision for credit losses
$
11,869

 
$
8,101

 
$
1,884


The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2016 and 2015: 
 
Commercial
and Industrial
 
Commercial
Real Estate
 
Residential
Mortgage
 
Consumer
 
Unallocated
 
Total
 
(in thousands)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
48,767

 
$
48,006

 
$
4,625

 
$
4,780

 
$
—

 
$
106,178

Loans charged-off
(5,990
)
 
(650
)
 
(866
)
 
(3,463
)
 
—

 
(10,969
)
Charged-off loans recovered
2,852

 
2,057

 
774

 
1,654

 
—

 
7,337

Net charge-offs
(3,138
)
 
1,407

 
(92
)
 
(1,809
)
 
—

 
(3,632
)
Provision for loan losses
5,191

 
6,438

 
(831
)
 
1,075

 


 
11,873

Ending balance
$
50,820

 
$
55,851

 
$
3,702

 
$
4,046

 
$
—

 
$
114,419

December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
43,676

 
$
42,840

 
$
5,093

 
$
5,179

 
$
5,565

 
$
102,353

Loans charged-off
(7,928
)
 
(2,790
)
 
(813
)
 
(3,441
)
 
—

 
(14,972
)
Charged-off loans recovered
7,233

 
1,759

 
421

 
1,538

 
—

 
10,951

Net charge-offs
(695
)
 
(1,031
)
 
(392
)
 
(1,903
)
 
—

 
(4,021
)
Provision for loan losses
5,786

 
6,197

 
(76
)
 
1,504

 
(5,565
)
 
7,846

Ending balance
$
48,767

 
$
48,006

 
$
4,625

 
$
4,780

 
$
—

 
$
106,178



During 2015, Valley refined and enhanced its assessment of the adequacy of the allowance for loan losses, including both changes to look-back periods for certain portfolios, as well as enhancements to its qualitative factor framework. The enhancements were meant to increase the level of precision in the allowance for credit losses. As a result, Valley no longer has an “unallocated” segment in its allowance for credit losses, as the risks and uncertainties meant to be captured by the unallocated allowance have been included in the qualitative framework for the respective portfolios (reported in the table above) at December 31, 2016 and 2015. As such, the unallocated allowance has in essence been reallocated to the certain portfolios based on the risks and uncertainties it was meant to capture. See Note 1 to the consolidated financial statements for additional information regarding our allowance for loan losses.
The following table represents the allocation of the allowance for loan losses and the related loans by loan portfolio segment disaggregated based on the impairment methodology for the years ended December 31, 2016 and 2015. Loans individually evaluated for impairment represent Valley’s impaired loans. Loans acquired with discounts related to credit quality represent Valley’s PCI loans. 
 
Commercial
and Industrial
 
Commercial
Real Estate
 
Residential
Mortgage
 
Consumer
 
Total
 
(in thousands)
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
5,864

 
$
3,872

 
$
725

 
$
70

 
$
10,531

Collectively evaluated for impairment
44,956

 
51,979

 
2,977

 
3,976

 
103,888

Total
$
50,820

 
$
55,851

 
$
3,702

 
$
4,046

 
$
114,419

Loans:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
30,640

 
$
62,289

 
$
18,356

 
$
3,534

 
$
114,819

Collectively evaluated for impairment
2,326,378

 
8,276,305

 
2,665,839

 
2,081,260

 
15,349,782

Loans acquired with discounts related to credit quality
281,177

 
1,206,019

 
183,723

 
100,583

 
1,771,502

Total
$
2,638,195

 
$
9,544,613

 
$
2,867,918

 
$
2,185,377

 
$
17,236,103

December 31, 2015
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
3,439

 
$
3,671

 
$
1,377

 
$
295

 
$
8,782

Collectively evaluated for impairment
45,328

 
44,335

 
3,248

 
4,485

 
97,396

Total
$
48,767

 
$
48,006

 
$
4,625

 
$
4,780

 
$
106,178

Loans:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
25,714

 
$
81,930

 
$
22,612

 
$
2,132

 
$
132,388

Collectively evaluated for impairment
2,130,835

 
6,595,296

 
2,889,467

 
2,054,650

 
13,670,248

Loans acquired with discounts related to credit quality
383,942

 
1,502,357

 
218,462

 
135,710

 
2,240,471

Total
$
2,540,491

 
$
8,179,583

 
$
3,130,541

 
$
2,192,492

 
$
16,043,107